Letters To The Editor - Letter to the Editor

CommunicationsWeek International, August 13, 2001

Regulators, bandwidth and 3G: readers reply

Regulators were lost to begin with You ask in the title of your recent supplement, "Have regulators lost their way?" I believe they never had it, since how can you regulate when the sector does not know what is going on. The telecoms industry does not know what their product is and hence cannot discuss market share, interconnection and costing.

Mending the situation needs applying basic rules: understand the communication network economics first and then allocate cost by cause. It is regulators' foremost task to understand costs. This would solve many of the problems such as access to the local loop, determination of market share and fair interconnection pricing.

Arthur Heyne

Economist and consultant, Bonn, Germany

Bandwidth index: a bull market

The creation of a financial index would be a major step towards the commoditization of bandwidth, a trend proclaimed irreversible by online capacity exchanges and carriers with a utilities background, yet widely ignored by traditional carriers.

The initiative to develop a financial price index for bandwidth is taking its first move on the liquid route between London and New York The next step would be to develop indices for terrestrial routes linking countries and national destinations.

Yet here lies the biggest obstacle in the creation of a common price index for bandwidth. The price structure for leased lines in the U.S., for example, is completely different from those of Europe in general, and in particular from the different European national price structures. In the U.S. there is a linear relationship between distance and price, whereas in routes linking European cities prices tend to depend primarily on the specific route.

A unified price index would be the end of the beginning of bandwidth commoditization and the beginning of the end of the (traditional telco) carriers' fight to maintain their rules and distribution channel mechanisms on the bandwidth market.

Oliver Meisenberg

Strategic consultant, Detecon, Bonn, Germany

DoCoMo makes a good partner

I was interested to read your front page article on DoCoMo last month. At Roland Berger we believe that ultimately the European comms market business model will be driven by partnerships, as currently seen in the Japanese market.

We have recently conducted research in Japan, and we now see information service providers teaming up with network operators. This enables them to provide customers with comprehensive new media packages at a low cost, i.e wireless internet such as DoCoMo's i-mode.

While the success of these partnerships in Japan has largely been down to the introduction of i-mode, and the Japanese propensity for small electronic gadgets, Europe will be able to provide paralleled technology via GPRS, and later UMTS (3G).

Partnership models that achieve a successful mix of the operators' network provision, and the service providers' innovative content, will be essential to drive mobile services. In Europe, as large media players such as AOL Time Warner start to dominate the mobile data market, regulators, far from being opposed, will welcome the increased competition such partnerships will produce.

Rolf Schmitz

Senior Strategist, Roland Berger, London

Reading the 3G tea leaves

What is in short supply in the high decibel 3G debate these days is data. Disinterested, side-by-side field comparisons of competing technologies should supplant rhetoric. Fortunately, that is about to happen. Ironically the "battleground" between the two North Atlantic rival technologies will take place on distant shores. China's Ministry of Information Industry will shortly commence a one-year, four-carrier field test of WCDMA, cdma2000 and that nation's own 3G technology, TD-SCDMA. China can hardly be said to harbor any proUS prejudice favoring cdma2000. China Mobile operates the largest GSM network in the world, affording GSM's third generation progeny WCDMA, a natural leverage point into the world's leading mobile market. Should GSM continue to hold its advantage in the Chinese market, the chances of WCDMA becoming the de facto 3G world standard would be substantially enhanced. However, should the field tests demonstrate cdma2000 superiority, so be it. In the quest for a universal standard, science shoul d prevail over national passions.

Robert G. Allen

Director of the telecom consulting group, International Technology & Trade Associates, Washington, D.C. and former senior counsel in the Spectrum Auctions Division of the U.S. Federal Communications Commission.