Denis slams 3G menace

23 Oct 2003

Telecoms entrepreneur Denis O’Brien has hit out at what he described as the “hype of 3G” and the lunacy of spending billions on a technology that would fail to deliver.

Speaking at the Telecoms & Internet Federation (TIF) annual conference in Dublin this morning the former Esat Telecom boss, who now heads up Digicel, a Caribbean mobile network, criticised the EU for pushing the 3G auction system, the Irish Government for hyping the promise of 3G, and handset manufacturers for “duping” mobile operators into believing their exhorbitant claims for the technology.

“Everybody bought the myth but they all got rogered themselves,” said O’Brien bluntly. “The manufacturers said we’d be getting bandwidth of 2 megabits per second but in reality 384 [kilobits per second] is all we get. Everyone knows 3G technology is unstable, difficult to roll out and, above all, lacking a killer application.”

With only weeks to go before 3G services officially become available in Ireland on 1 January 2004, O’Brien exhorted the European telecoms industry to forget about 3G and go straight to 4G technologies such as wireless LANs which he said were better and faster. He also advised the Irish Government to hand back the money paid for 3G licences – some €100m in total – which he described as “a tax on the creation of a knowledge economy”.

In a hard-hitting presentation, O’Brien graphically described the devastating impact 3G licences and capital investment had had on the European telecoms industry where fixed-line operators like BT, Deutsche Telekom and France Telecom had written down billions of euro in the value of their assets as a result of the 3G-fuelled telecoms boom. Mobile operators in the UK and Germany had respectively coughed up $576 and $567 per head of population for 3G licences. “PTTs [incumbent telecoms operators] had gambled their balance sheets on 3G licences at home and away,” O’Brien noted, adding: “All the money spent on 3G has been flushed.”

O’Brien contended that the 3G auctions effectively destroyed the competitive telecoms market in Europe, as shown by the fact that incumbent operators are now stronger than ever. In addition, Europe’s hope of creating an information society lay “in flitters” because the wrong horse – 3G – had been backed. He asserted that if wireless broadband services ever materialised, they would cost more than they would have done, because of the huge debts incurred by operators. For this reason he described the 3G fiasco as a “tax on broadband”.

The domestic telecoms market was suffering the consequences of 3G as much as any other country, continued O’Brien. Although the price of telecoms services had fallen by 60 to 70pc in the last five years, small business and residential users were be disadvantaged by the fact that Eircom could not afford to invest heavily in its network (a claim that Eircom’s commercial director, David McRedmond, would later dispute).

3G was not the only new technology to have been criticised by O’Brien. DSL he described as “useless” and at best a stepping stone to something bigger and better. He urged the industry and the Government to work together to “move straight to fibre” and called on the Government to extend its 19-town fibre network programme to include all towns of more than 1,500 people.

O’Brien concluded by saying that not all opportunities in the telecoms market had been lost. There was, he argued, still a gap in the market for a new telecoms operator to build out a high-speed fibre network that could cover 750,000 homes, businesses in schools in the country. He estimated that such a company would need to raise €2bn from the markets and, now that the capital markets had returned a more even keel, investors were again “nearly ready” to invest in such a venture.

By Brian Skelly