The Goodwins Perspective - Branson's attack...

Virgin set to `attack' telecoms market
Written by Rupert Goodwins, Contributor

With his unerring nose for low-cost, high-profile PR, Branson is making waves in telecommunications. His timing, as ever, is exquisite: if he could bottle that, he'd be a rich man.

But what he's saying doesn't quite make sense. Cellular communications will make a lot of money, and the third generation of very fast data phones -- called UMTS and working to megabits a second -- will undoubtedly be as important as the Internet. There will be money. But, like the Internet, nobody's quite sure where the money will come from or when.

UMTS will be a high-risk business, and that's not Virgin's brand space. Whenever Virgin has expanded, it's been into areas where competitors have already created a mature market - and even then there's no guarantee of success.

Nobody in the world has a UMTS network yet, and nobody will have one for two years. It's not just another cellular network, because it is mostly an online technology. Look how far and how radically online usage has changed over the past two years, and try and predict what it's going to look like in another two. Now add in the added factor of wireless -- difficult, eh?

If Branson is serious about making a big noise in the telecoms world, he should do what he's best at: finding existing markets where there's still lots of margin to carve up, a complacent main player and a well-established set of expectations among the consumers.

And that's wired telecommunications. Virgin's got network infrastructure experience and it's understood the free model. It's also been talking to the sort of telephone infrastructure companies that make the wired stuff.

Just a thought: if there's enough money in the free model to run an ISP, there's enough to run a transatlantic telco. Virgin Atlantic is a success, to the intense annoyance of BA -- could Virgin Atlantic Freecall make just as much of a monkey out of BT?

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