Responding to Petri Ojala's questioning of handset subsidies, I wrote:
> [About markets without subsidies..]
> > Is this really true? Bear in mind that a guaranteed monopoly is
> > an indirect subsidy: ...
> [snip]
> > I don't know Finnish telecom, but my impression was one of
> > "regulated oligopoly".
>
> Yes, although the regulation has been rather relaxed. However the
> two incumbent GSM operators have been in tough competition with
> their dirty tricks and everything. One could also argue that
> they have benefit from their existing telecomms revenue and
> infrastructure when building the mobile networks.
OK, then Finnish regulated oligopoly has essentially the same
effect as NTT's landline monopoly in Japan: landline users
effectively subsidize mobile development, even for upstart
mobile operators. Yes, you have competition, but in both cases,
it's subsidized competition. Finland wins because wireless telecom
technology is a leading export area. In this way, maybe
Scandinavia is like East Asia: use local consumer spending
power to finance export market initiatives.
I grew up with free local calls. It was quite a shock to come
to Japan. And to find out that Japan was actually more
like the rest of the world. Of course, free local calling was,
arguably, itself an outcome of regulated monopoly telecom.
> It's also a question of what's reasonable. A country with only
> max 5 million users and a lot of sparsely inhabited areas to
> cover, I wouldn't like to pay for too many overlapping networks.
Here, Japan really *is* different. Greater Tokyo alone is several
times Finland's population, and mind-bogglingly densely
populated. And people are on foot a lot, with real money
to spend. A souped-up walky-talky technology like PHS
probably couldn't have gotten started anywhere else, at
least not as quickly.
But it also couldn't have taken off as fast without "free" (or
below cost) handsets, I think Which, in turn, require
subsidies of some kind, at least at the outset.
Michael Turner
www.idiom.com/~turner
leap@gol.com
Received on Tue Jul 18 18:12:34 2000