A second auction of third generation mobile (3G) telephone licences, scheduled for 2007 will gross only one tenth of the £22.5 billion secured in the first auction making the Treasury just £2.5 billion, according to Government advisor Quotient Associates.
This prediction is likely to anger the five main mobile operators, who paid a total of £22.5 billion for licenses to operate third generation mobiles in 2000. The fear is that the new regulations will lower the price of 3G licences, thus enabling a new operator to set up in competition at a lower cost.
The new service has taken longer than expected to develop and many providers have not yet seen a return on their investment. Vodafone only launched 3G phones in November last year, while T-mobile and mmO2 have yet to launch their services.
Last month it was reported that 3 Mobile is planning to sue Ofcom over the proposed cut in licence fee(see 3 Mobile Plan To Sue Government). 3 mobile is the only mobile phone company to hit the regulations set out by the Government when it bid for its 3G licence four years ago, reaching 80% population coverage three years before the official requirement of 2007, as set out by the Government.
It is now thought that, in a consultation paper released later this week, Ofcom will relax or abandon the targets set four years ago as 3G technology has taken far longer than expected to develop, with some smaller mobile operators being nowhere near the Government’s targets.
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