rance Telecom excessively geared and brought Sonera and KPN to the brink of financial collapse. The UK UMTS auction in 2002 is an example of this law of unintended consequences. The auction raised £22.5 billion none of which was spent on anything relevant to ICT. It was assumed that the investment would be treated as a sunk cost and not be passed on to the customer but in practice the licenses have added £1.56 to every bill for every month for 20 years. Digital Britain is being financed from old ladies' telephone bills. The impact on operator balance sheets was equally catastrophic. Taking T Mobile and Orange together their pro forma return on investment including spectral license cost shows cumulative investment increasing from 70 billion euros in 2001 to just under $100 billion in 2008 with a cumulative cash flow of $20 billion euros. The merger of the two entities into Everything Everywhere may delay the point at which a write down is made but does not disguise the net destruction of industry value that has occurred. This translates in the relatively short term into a destruction of shareholder value. In the longer term the impact is more insidious. One of the easiest and fastest ways to cut costs either with or without a merger is to reduce research and development spending. The problem with this 2 My thanks to John Tysoe of The Mobile World for these insights, which as always are both colourful and acutely observed. Making Telecoms Work is that it becomes harder to realise value from present and future spectral and network assets. Thus, a short-term three- to five-month gain for a national treasury translates into a longer-term loss of industrial capability that may have a negative impact lasting thirty to fifty years. In the US, the 700-MHz auctions between 2005 and 2007 allowed the two largest incumbent operators to squeeze out smaller competitors and resulted in a payment to the US Treasury of $20 billion dollars. The band plan is, however, technically inefficient. In particular, it is proving difficult t