Quam

» see quam.de as it lived, on the wayback machine

~ the obit ~

The German UMTS auction of summer 2000 raised about 100 billion marks from six bidders and is still the largest sum any government has extracted from the telecom industry in one sitting. Group 3G, a joint venture of Spain's Telefónica Móviles and Finland's Sonera, paid 16.45 billion of it. The venture had no German network and no German customers. It built a brand first and called it Quam.

Quam went live on 22 November 2001 as Germany's fifth mobile brand, running as a virtual operator on E-Plus's GSM network while the 3G build it had bought a license for stayed theoretical. The SIM cards carried two identities so a customer could hop onto Telefónica's Spanish network as a local. The prepaid product was called Quam Now. Within weeks there were interconnection problems and Quam subscribers could not be reached directly from several rival networks, which is close to fatal for a phone company in its first quarter.

On 26 July 2002 Telefónica announced it was leaving Germany. Quam stopped commercial activity that month with roughly 200,000 customers on the books, and the network was switched off on 15 November 2002. Customer service limped on until November 2003. In 2004 the German regulator inspected, found nothing built, and took the UMTS license back for failure to meet the coverage obligation. The frequencies were auctioned again in 2010.

~ the rap sheet ~

~ what 16.45 billion marks bought ~

Nothing was built. That is the entire content of the transaction. The license came with an obligation to cover a quarter of the German population by the end of 2003, and when the regulator went looking in 2004 there was no network to inspect. Sonera wrote off around 4.2 billion euros and the write-down became a national argument in Finland about how a state-influenced company had come to gamble that much on a market it had never operated in.

The auction itself is where the damage was done. Six operators bid each other into the high tens of billions on the assumption that mobile data would arrive immediately and be worth paying for immediately. It arrived about eight years later and was worth a fraction of the price for most of the intervening period. Quam was simply the bidder with the least room to absorb being wrong.

~ the shops that served coffee ~

The retail plan is the part Germans still tell each other about. Quam took prominent city center storefronts and fitted them out as lounges where you could sit down and be offered a coffee, on the theory that a premium brand should feel like one before it had a product to sell. It collected the Goldener Marketingflop award for 2001.

None of it was stupid in isolation. The dual identity SIM was genuinely ahead of its time and the prepaid tariff was competitive. What the storefronts could not do was fix the interconnect fault, and by December 2001 Quam had suspended sales while it sorted out why its own subscribers could not be reached.

~ giving the license back ~

Turkey ran its own version of this a year earlier and got a worse result. Aria and Aycell burned through their launches, merged into Avea, and the whole Turkish mobile market of 2001 to 2004 was a rolling argument about licenses bought at prices set during a boom that had already ended. What I remember from that side of it is the newspaper economics: enormous numbers in headlines, attached to networks nobody I knew was actually using.

Quam is the cleanest specimen of the type because there is no operational story to muddle it. A company paid 16.45 billion marks, about 8.4 billion euros, for permission to build something, never built it, ran a reseller business for twelve months, and handed the permission back. The frequencies went out again in 2010 to operators who paid a small fraction of the 2000 price and made money on them.

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