From: "JAPON.NET" <web@japon.net> (Vincent Luna)
> Technically:
> Well, I am not sure how many auction winners have fully paid for the
> licenses (ie. French,Spanish telcos) so this is an ongoing evaluation...
Last I looked, a number of Euro providers were appealing for
clemency on payment, and getting antitrust exemptions on
sharing of what would have been competing 3G infrastructure.
(I should note: it's unfair to lay all this at the door of
"irrational exuberance" about 3G mobile per se, as
implied by my subject line. Some have pointed out
in this forum that 3G includes network upgrades that
can enhance landline connectivity as well.)
[snip]
> Corporations should be held responsible for their actions, and
> gambling on 3G with totally unrealistic spreadsheets has naturally
> added to some overexposed positions.
*Sigh*...I wish, but in the real world, distress will cause most large
businesses -- even whole industries - to swoon into the
arms of government. And usually with the following
arguments for being rescued:
(a) "We're a public service -- admit it, we remind you of you.
We're huge, lumbering, and prone to the occasional
catastrophic decision, with catastrophic consequences.
But we do it for the people. You -- and we -- have a duty
to the public on the supply side. So: how 'bout bailing us
out with voters' tax money. They'll thank you in the end."
and
(b) "Let us twist in the wind if you think that's the fair, 'market-
oriented' thing to do, but -- do you really *need* another
unemployment rate uptick just now? You have a duty to
*yourselves* to support the demand side. The unwinding of
unwise financial positions can take place in its own sweet
time, but elections are another story. So: bail us out with
voters' tax money. They'll thank you in the end."
These arguments work almost every time.
> To reason that the Japanese govt. is largely responsible for DoCoMo's
> profitability brings the point that some European govts. would be
> "responsible" for their telco's "wealth destruction"....
This is the seed of a whole dissertation on the interplay
between government, technology bubbles, and nation-scale
networks. I doubt that we're looking at something so terribly
unprecedented here.
Basically: emerging nation-scale network technologies cause
bubbles, and bubbles, when they burst, cause crises that
only governments can solve (or cushion) without causing
too much chaos. Yes, "creative destruction" works better
in the long run, but in the long run, as Keynes pointed out,
we're all dead--or voted out of office, anyway.
Some of you are already screaming in frustration and
outrage, I'm sure. Hold your fire.
In more detail:
3G mobile is still just fancy mobile, mobile telephony is
is still just fancy telecom, telecom is relatively new in some sense,
but....if telegraphy counts as "digital telecom", then digital
telecom as a national strategic asset probably helped decide
the U.S. Civil War sooner rather than later. It's been around.
And telecom is nation-scale resource networking, which has its
parallels in networks of trains and canal systems. (Note that
these are also "communications networks" because they
bring people together, not just goods.) Radio, when it came
along, had its own bubble. RCA stock took decades to recover
the level it reached before the '29 crash.
These networking technologies, upon hitting their stride,
gave rise to investment bubbles, and many saw government
intervention in the end, just to return their industries
to a modicum of sanity and efficiency. (Well, maybe
not "efficiency", exactly, but at least not laughable
duplication of effort.)
In this view of things, NTT has sidestepped the usual
bullet and taken Japan mobile telecom to somewhere
near where it would have ended up anyway. It had
this option by virtue of DoCoMo being a member of
a virtual national telecom monopoly with heavy govern-
ment investment and a high degree of overt bureaucratic
(and covert elite) government control.
(Did it sidestep this bullet consciously and purposely, or
was it ducking some other projectile already? Hmm,
good question.)
OK, so who won and who lost?
Did DoCoMo's route "create" wealth, as this article
in The Economist implies? Or did it "destroy" wealth
in some other way that's not so obvious?
Arguably, NTT destroys wealth all the time, with its
high landline rates subsidizing a top-heavy bureaucracy.
And this indirectly "created wealth" in mobile telephony
because those high rates, plus pent-up demand for
mobile, put DoCoMo in an excellent position to
capitalize quickly, and unfairly, on the keitai boom.
So it's still theft. Yeah! Let's all bash Japan now....
Another way to look at it, though: every Japanese
taxpayer is a DoCoMo stockholder, indirectly, because
NTT is almost-majority (de facto majority) owned
by the Japanese government. NTT dividends
and stock appreciation reduce household tax bills,
indirectly.
The "cost of capital" (risk) is low, since
the only real threat is gaiatsu (foreign pressure to
open markets). The government won't slice this
golden-egg-laying goose open any time soon, and
will keep others' knives away as well.
In other words, DoCoMo, high-tech, high-flying
DoCoMo, is already a utility. I.e., the kind
of stock your grandmother put in your college
fund when you were nine years old, when she
finally decided that, despite her child's disastrous
choice of spouse, the resulting offspring didn't
turn out mentally retarded after all.
Or maybe DoCoMo has fundamentally crashed, but
is still defying gravity. Remember how great Enron
looked a few months ago? How many people
saw the wires holding them up in that levitation
act?
I don't know which view is closer to the truth.
But I wonder if anyone else does either.
After all, this is Japan. Japan is different.
When I look at those scattergrams of
economic statistics about countries, I
sometimes feel that macroeconomics
will be forever out of reach of my increasingly-
enfeebled mind. I've noticed one thing about
these sprays of dots over the years, though:
Japan's dot is rarely near the trend line.
It's always floating off toward some odd corner
of the graph. You're being asked to believe
that Japan is more like Mongolia here, and
more like Portugal there. It's maddening.
Between the weird and ever-suspect numbers
from the government, and the fact that things
are simply organized differently here, any
attempt at pre-judgment about Japan mobile
telecom "wealth creation" will seem premature
to me at this point.
-michael turner
leap@gol.com
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Received on Fri Dec 7 06:19:55 2001