U.S. Attorney General Barr's comments are interesting. I'm going to do a thread on them here. First of all, and to be up front, I'm a fan of Barr, so wanted to be up front about that. On the need to ensure Nokia, Ericsson (& I'd add Samsung) have big viable markets, he's spot on.
However, one of the fastest ways to kill Nokia 7 Ericsson would be for any govt to ‘Nationalise’ them by taking controlling stakes. It'd end up further compounding the series of mistakes on the wireless industry that Western govts have made since the 3G licence auctions started.
& Huawei would probably be quietly delighted. They’d be nowhere near as important were it not for the regulatory capture increasingly exercised by the carrier oligopoly in Europe & the U.S. since one off spectrum auctions (& resulting industry ecosystem paralysis) began.
So the 1st thing Western govt's need to stop doing is what was & is the root cause of this problem in the 1st place. One off spectrum auctions, which are now the play things of the mobile carrier oligopoly & more a means to keep competition & price disruption out than innovating.
Barr is onto a very big point though, the fact that Huawei (&ZTE) have the backing of Beijing & bring immense resources to the fight because of it. As those tracking these tweets for a long time know, it's been a theme of mine for years.
He is also right that resources need to be channeled to Ericsson & Nokia (& Samsung & others) to make sure they're viable. I think the best place to find that demand is in the market, by freeing up the vital 'development land' that is spectrum.
Do that and you won't need to subsidise or nationalise Nokia, Ericsson or anyone else. It's about unlocking what makes investors want to buy loads of kit. Ask yourself, what's the biggest single barrier to entry to anyone wanting to do that?
It's the price of up front entry into the market. The one off spectrum auctions are the biggest single barriers to entry of all & they've unintentionally created a crop of rent seekers with cartel instincts. Protect the price of capacity, block any disruptive business model.
What's slowed orders for Ericsson, Nokia & Samsung from what they otherwise would be is yes, predatory pricing & vendor financing from Beijing. But the bigger thing is the handicaps we have placed on our own demand creation. The mobile carrier cartel & its regulatory capture.
If you leave the mobile carrier oligopoly intact & undisturbed in their status quo, you definitely end up losing to Beijing. If you try to directly & indirectly subsidise the status quo, you might win a bit of time but you'll still lose, but just blow even more money doing it.
So new experimental software enabled networks, buying up or subsidising existing network kit manufacturers, providing soft financing like the Chinese do, all such things are tactics but none of them flip the table to a win. Only changing the broken wireless business model does.
This report of Barr's comments is further enlightening. There is clear recognition that software enabled networks won't flip the table soon enough. The problem with the C-Band auction is that it won't either (& I know Barr isn't suggesting it's a cure all)
axios.com/barr-scoffs-at…
axios.com/barr-scoffs-at…
The C-Band, together with the more important DOD bands, could be very useful in the need to aggregate scale. Doing a traditional auction will just take it off the battlefield in any transformative sense. It'll end up with the carriers & their price protection slow roll game.
