Electronics Times: Operators gamble on mobile targets

Gamblers interested in running the UK's next-generation (3G) mobile networks will need nerves of steel and deep, deep pockets. But will the auction of the airwaves lead to any surprises?

The first predictable outcome after the government set the roulette wheel in motion was to hear some still rehearse the argument that the licences for 3G should be awarded on the usual `beauty contest' basis. This is no longer tenable.

And we suspect that some European governments, which still plan to pick the winners for which conglomerates can use this increasingly valuable and scarce resource, will change their stance once they see just how much the UK Treasury has raised.

Neither is it a surprise to see how hard the government insists that the procedure is anything as crude as a tax on the mobile phone industry of the future. Of course it is.

What is the point of trying to hide it? If we accept that the airwaves belong to all of us, why shouldn't everyone benefit? It could conceivably lead to lower taxes. If that is too idealistic, we would settle for the government spending the extra money on helping the electronics industry to increase the number of students taking up the subject and increasing the country's skills base.

The process chosen is a tortuous modification of the auctioning that the Federal Communications Commission in the US has used successfully to sell off the spectrum there. While this increases uncertainty over the winners and will make for much nail-biting next March, it is most unlikely that the four incumbent operators will not conspire to each gain one of the five licences.

What does concern us is that, in its overriding eagerness to ensure competition, the government seems to be rigging the contest so that the new incumbent is guaranteed to get the chunkiest slice of the spectrum. With five operators, competition would seem to be assured. It's the applications that are not, nor the eventual time scale for rolling out 3G.