Three G's Next Victim: Wireline Carriers?
In Japan today, I saw a good article in the print version Asian Wall Street Journal (subscription required) regarding how 3G now poses a threat to incumbent fixed-line carriers. The argument is predicated on the failure of early 3G wireless firms to sell the service as a "premium". With that failure, the firms have resorted to attracting customers by lowering prices. If the military is considered the "employer of last resort" then the marketing manager's analogous "competitive move of last resort" is lower prices. Hey, if you can't be good at marketing, at least you can slap the discount sticker on the service. The Asian WSJ goes on to mention that 3G, however maligned, has much lower Operational Expenses (due to much improved spectral efficiency) than 2G cellular, and therefore 3G operators can afford to offer the lower prices and still cover OPEX. Thus 3G carriers can effectively "dump" voice Minutes of Use (MoU)at cut-rates, which will hurt 2G wireless operators, and also fixed line voice carriers. As example 25 quid on "3" will get you 500 MoU, while 30 quid at 2G Vodafone will only buy 200 anytime MoUs. Intersting... Mike and I had a look at this effect on June 10. Update from Mike Here's a direct link to the WSJ piece (came out a day earlier in the US). We usually avoid linking to pay only sites, but on some occasions when the content is worth it to make an important point we'll still post.
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