Skip to main content
Update
Non-financial boards have been closed.

Non-financial boards have been closed but will continue to be accessible in read-only form. If you're disappointed, we understand. Thank you for being an active participant in this community. We have more community features in development that we look forward to sharing soon.

Fool.com | The Motley Fool Community
Message Font: Serif | Sans-Serif
 
No. of Recommendations: 0
Hi Bhhurd, and thanks for your post.

Many observers have questioned the way the auctions have gone, but I agree somewhat with the previous poster that the companies in question seem to be more than willing to absorb these costs, and there must be a reason.

Some of those reasons are:

First, they expect penetration rates to get much higher, not stay the same as you suggest. In Germany, if I recall correctly, the numbers of cell phone users are relatively low right now.

Secondly, with always-on wireless connections to the Internet, which is what 3G promises, and billing potentially based on packet size, rather than length of time connected, carriers are expecting to get larger monthly fees, and indications are that they probably will -- users of DoCoMo's i-mode have higher bills than their voice-only counterparts.

Finally, they expect to get money from more than just connection time. Whether they're right or not is up in the air, but a lot of these companies expect to get a cut of mobile commerce and other services.

I do agree with you though, that, it would be risky to invest in the carriers right now, simply because they've laid all this money out while people are still figuring out how to make money from wireless services. That's (partly) why stocks for companies such as Deutsche Telekom and other European telcos have been hit pretty hard recently.

Incidentally, I believe a lot of the European countries got the idea from US auctions of spectrum in the early '90s, for what it's worth :-).

Fool on,

Chris
TMF RFK
Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.