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The New York CeBIT conference in June has me thinking about what’s wrong with the bandwidth business in the United States and what might be done to fix it. The keynote speakers provided thunder and technical vision in abundance. And it is undeniable that while Internet stocks melted down two years ago, Internet use keeps expanding. But hardly anyone turned up to exhibit new technology. Worse, perhaps, hardly anyone turned up to tour what exhibits were there. Mark Dineen, managing director of CeBIT America, estimated about 15,000 attendees, about one third of what he had hoped for. In contrast, CeBIT in Hanover, Germany, attracted 560,000 this March. Isn’t New York supposed to throw big parties?

“Consumers will pay for new stuff, but not for more of the old stuff,” intoned Michael Capellas, the MCI repairman, er, CEO in the opening keynote. Capellas, and almost everyone else at CeBIT, said this translates into telephony and the Internet merging, and robust mobile connectivity. Instant messaging becomes peer-to-peer video. What it doesn’t translate into, however, is investor interest or a valid business plan. If a show like CeBIT can’t attract a crowd in New York, it is clear that IT is not attracting much Wall Street mindshare.

In a weird way, MCI’s troubles make things worse for the whole industry. Capellas took over what was then called Worldcom last December after an $11 billion accounting scandal and bankruptcy. In this case, bankruptcy gives MCI a competitive edge: the company gets out from under a huge debt load, and thus can undercut its major U.S. wireless competitors-folks like T-Mobile, ATT Wireless, and Verizon, who haven’t had to destroy their shareholders’ futures by declaring bankruptcy themselves.

Of course, in bankruptcy the worth of common stock sinks to zero, which is not much lower than what a lot of competitors’ shares are selling for now. But the MCI debacle reinforces the path U.S. wireless carriers have taken-to offer more of the old stuff, at a low price. And low prices don’t generate enough profit to allow these folks to create much in the way of new businesses themselves. Investors, for their part, keep looking for the next big thing, to no avail. As Capellas noted, “under the covers,” the online and wireless world has continued to expand from a consumer point of view, even as companies have been going bust. Or, as he put it, “business has slowed down from a business point of view.”

We got into this situation because investors in the mid-1990s believed Internet use would double every year-which it had in one year, 1994. Then they believed we’d spend our time watching bandwidth-munching video online.

The gutsiest exhibitor at the New York CeBIT was NTT DoCoMo, which last year launched a high-speed, third generation (3G) wireless service (branded FOMA) in Japan. The launch created barrels of red ink. Speaking at CeBIT, NTT DoCoMo president and CEO Nabuharo Ono said his company is looking for breakeven in three years and full recovery of the startup investment in five. Only a half-million of DoCoMo’s 33 million subscribers were using 3G by late spring, despite its lower costs for basic services. In Japan, voice connections typically cost 31 yen per minute (about 25 cents), with the FOMA service. E-mail is 0.02 yen per 1-kilobit packet, with a volume discount that requires users to spend 8,000 yen a month (about $65). But Ono could have signed up everyone in the audience of his keynote address. It was easily the highlight of the show.

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