3G Update

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Well following my post last week about Vodaphone and 3G in Europe there seems to be more news today that backs-up the argument questioning the economic viability of the thing.

Firtsly shares of NTT DoCoMo, the world’s No. 2 mobile-phone and the leading 3G operator, just had their biggest one-day drop ever after the company said operating profit may drop 25 percent and sales may fall (by 2.5%) this year on more competition in Japan.

Meantime Investment bank Nomura are predicting that Hutchison Whampoa could walk away from its loss-making 3G mobile business by end 2006. Their analyst reckons HW could rack-up operating losses of about $2.7 billion this year simply on the 3G operation alone.

Normura failed to see how Hutchison 3G (H3G) can achieve an economic return on capital and value the company at a negative HK$63 billion. “Our Hutchison Whampoa estimates include an assumption that the company walks away from its 3G ventures by the end of the full year of 2006,” James said.

The survival of 3 Italia was also called into question despite signing up the highest number of 3G subscribers among Hutchison’s 3G business. The company announced in March that it had 453,000 customers in Italy.

Obviously the DoCoMo situation is not all down to 3G, and in some ways it could be declared a success: DoCoMo had 3.05 million 3G users at the end of March 2004 compared to 330,000 a year earlier. However finding a realistic pricing model to extract revenue seems to be a problem, and they have now announced that they will be offering unlimited mobile internet on their 3G FOMA service for a monthly flat fee of 3,900 yen. At current rates that is about a manageable 29 euros a month. Which would be fine for a lot of users, but then you have to subtract the downside: all those ADSL customers who may decide to switch over. As I said, great idea, but the economics are far from clear.

“If we don’t succeed, we run the risk of failure.”
J Danforth Quayle

What’s sauce for one may not be for another

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Via Mad Musings Of Me, here’s an interesting article from The Times (subscription may be required for some) discussing on the differing ratings films get across Europe and how what can be seen as controversial in one country can be completely ignored just over the border.

The report stems from Robin Duval, the outgoing director of the British Board of Film Classification (BBFC), dismissing proposals for European-wide film classification. The article points out several examples of where standards differ:

Britons take a stronger stance than most countries against sex, violence, swearing and drug use. Use of Anglo-Saxon oaths is especially frowned on in Englishspeaking countries, causing anomalies with films such as Billy Elliot, which contained no sex, drugs or violence but an estimated 50 swearwords.

In Britain it was rated 15, but in France and Spain it received the equivalent of a universal certificate. America demanded cuts to allow it to be rated PG-13, in which parents are cautioned not to let younger children watch. Germany and Sweden allowed children of seven into screenings.

France has the most relaxed attitude to film censorship, especially over sex. The most extreme example is American Beauty, rated 18 in Britain but given a universal certificate in France. The Exorcist, Gangs of New York, Hannibal, Pulp Fiction and Secretary were all given an 18 certificate in Britain but a 12 in France.

Of course, there are some stereotypes that no journalist can resist:

Scandinavian countries are very liberal on sex and drug use, but take a hard line on violence. The first The Lord of the Rings film, which was passed at PG in Britain because violence was inflicted on fantasy beasts rather than human beings, was restricted to 11 and over in Sweden and Norway. Despite Britain?s relatively high tolerance for violence, it can occasionally be outstripped by Italy. The Passion of the Christ, Mel Gibson?s film in which James Caviezel is whipped for 25 minutes, was rated 18 in Britain but awarded a universal certificate in Italy.

I’d have to agree with Duval that European-wide classification isn’t going to possible in most cases, but it’s interesting to note that in Britain, while the BBFC has the general power to classify films, local authorities also have powers in this area. Michael Brooke has discussed this issue in the past.

As a final point, I’ve noticed that DVDs released onto the British market are often now (presumably to save costs) labelled with the Irish certification as well as the British (interestingly, Ireland still has a Film Censor’s office, whereas Britain’s, of course, is just a classifier – no censorship here folks, oh no) – in most cases they’re the same rating, though I have noticed a couple of DVDs (the names escape me now) where they have a lower certificate in Ireland than in Britain.

It’s not absurd when you live it

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I just mentioned Living With Caucasians in the post on Adjara in the sidebar, but I thought this quote was of wider relevance and worth quoting in full here:

Here?s the thing: this country is small. Tiny, even. Russia?s military involvement in Adjara is no joke, and the money that comes through the Adjaran port and the border with Turkey isn?t either. When the bridges get blown up, they?re blown up a few hours? drive away, and the economy of all of Georgia is affected, as are your tax dollars, particularly if you?re American, as are your gas and oil supply, as are the people I hang out with every day. These are real people, and a lot of them are better read than you. Nobody here needs a teacher to tell them how to write, read, do journalism, paint, run a revolution. They need an open interchange of dialogue about all of those issues, but not a deus ex machina.

This is why I think deriding everything that goes on in post-Soviet space as “absurd” ? including the whole cult of thinking the Turkmenbashi is funny, so don?t even go there ? is a colossal mistake. Those are real refugees starting to come over the border from your banal “tinpot dictator” joke. This coldness and ability to distance from what?s going on is one of the reasons US visitors quickly lose sympathy and friendship here, and I?d bet a lot of other places as well, and it’s one of the things in my own relationships here that I people anticipate from me as a westerner, and which I constantly struggle to counteract. It?s not really all that funny; it?s a goddamn dictatorship, under which people struggle pretty damn hard to do whatever they can – even if, yes, it means that it’s ten lari to cross a river on a pony.

And another thing: history shows that people sometimes choose dictators because dictators work in concrete, viable, short-term goals: win the war, get the gas on, let us live our lives and hold our heads up. I think our responsibility is to make democracy a viable, justifiable, immediate alternative that fulfils or at least explains all those things, something I don?t see happening with any sort of clarity in places emerging into contact with the United States. Irony is not a useful weapon of international change.

What’s In A Headline?

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According to the FT it was a case of “Pick-up in pay awards forced rate increase”, yet for the Guardian the point was rather “Housing boom forces third rise in rates”. My sympathies here are with the Guardian. Of course it is the case that the Bank of England pointed to the rising level of pay increases as the justification for raising its main interest rate by a quarter point to 4.25 per cent yesterday.

But they would say that, wouldn’t they. The Bank of England Monetary Policy Committee has an inflation target of 2%. Now the last time the Bank was able to stoke inflation up to 2% was in 1998 (it is currently at 1.1%), so there would hardly seem to be any great urgency to raise what are already reasonably tight rates by international standards. Except, of course, for the housing situation.
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Poland And The EU: Happy Precedents?

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Nick has a quicklink to a piece in Business Week which is worth the read. One passage in particular struck me:

There are precedents for a happy entry into the EU from which Poland is trying to learn. Spain boomed after joining in 1986 because successive governments spent the funds they received from the EU shrewdly, restructured state finances successfully, and continued to liberalize and deregulate the economy. The results were rapid growth, rising living standards, and, after a period of painful restructuring, lower unemployment. Spain’s per capita GDP is now about $22,500, almost 90% of the EU average. Polish GDP per capita, in contrast, is less than $6,000. “If we could do what the Spanish did, I’d be very happy,” says Janusz Onyszkiewicz, senior fellow at the Center for International Relations in Warsaw and a former Defense Minister.

I’ve already been having a bit of a problem this week with simplistic arguments: looks like I just found another one.
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Parliamentary Democracy?

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The race to become the next President of the European Commission got interesting yesterday.

Well, maybe not that interesting, but the announcement by European Parliament President Pat Cox that he would not be seeking re-election as an Irish MEP in June is widely agreed to be a signal that he’s interested in the other Presidency.

As this Independent article discusses, Cox doesn’t appear to be any government’s first choice for the job, though that could be a benefit rather than a hindrance as first choices often fall at the first hurdle in the horse-trading that determines who’ll get the Presidency.

(An interesting sidebar to the discussion is that the UK may block Jacques Chirac’s preferred choice – Belgian PM Verhofstadt – allowing the Daily Express to recycle it’s ‘Britain Blocks The Belgian’ headline from when John Major vetoed Jean-Luc Dehaene in 1994)

But, the most interesting part of these negotiations is that the results of next month’s European Parliament elections could have a decisive effect on who’s up for the job and who’s not. If the EPP and ELDR have a combined majority in the Parliament they may be able to insist on the appointment of Cox as Commission President which, I think, may be one of the more interesting developments in EU politics of recent times, in that it’ll mean the Commission has a President who owes his job as much to the Parliament (of which he is a 15-year veteran) as he does the member governments.

Sit back and watch – this could get interesting.

On Your Marks, Get Set……… Hang on A Minute

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Tuesday’s announcement by Vodaphone that they will launch their new 3G mobile service in Germany and Portugal is another topic which rattles some skeletons which have recently been kept well locked-away and out of reach.

As the Times is only too willing to remind us: “the auction of 3G licences conducted in the UK was the largest process of its kind ever conducted, earning for the Government some ?22 billion in 2000”. And then suddenly everything went strangely quiet!

Really 3G has been plagued with problems, and I have the feeling that it is a hot potatoe that nobody really knows where to put down. Clearly it is a visionary, future-oriented technology: but is there a market for it, will it be profitable, and if so, when?

Well the race is now well and truly on with Hutchison Whampoa, Orange (which launched its first 3G services in “Pilot City” Toulouse on Monday) and T-Mobile ( which has reacted to the Vodafone move by saying it will start selling 3G handsets immediately and by bringing forward its planned launch by a week).

Vodafone?s chief marketing officer, Peter Bamford, puts it like this:

“Consumer trials have indicated that early adopters are keen to try this technology and so we are giving them a taste of it prior to the full launch of enhanced services later in the year.?

My own feeling is that there is a market, but not a sufficient one given the existing cost structure. In plain terms: if they make it too expensive virtually no-one will use it, and if it is too cheap there will be users but no profits. Either way it seems like it could be losing proposition in the short run.

Among the other details of interest are the choice of the Samsung Z105 for the launch (ouch Nokia!). And of course underlying it all the history of the alleged superiority of the EU planned standards-based roll-out over the anarchic and disruptive US ‘deregulated’ model. You certainly don’t seem to hear too much about this here in Europe these days. As I said, haven’t they gone quiet!