UK Government Issues a Report into UK 3G Spectrum Auction

The UK National Audit Office, which scrutinizes government spending has issued a report that suggests the UK's 3G spectrum auction well designed and efficient. The NAO report does not aim to predict the future of the industry, but it says that there are indications that the Agency's auction has not harmed the future of 3G telephony. The operators will suffer to the extent that they have paid for spectrum, which in previous generations of telephony the government allocated to them at negligible cost. Their rates of return on their investments, and the value of their businesses, will be lower than they would otherwise have been.

The report notes that each of the UK licensees also holds licenses in several other European countries. The NAO considers that licensees would tend to average their license costs across each of the markets in which they operate. This would tend to indicate that the European markets that offered cheaper licenses are effectively subsidizing the UK market.

The report also has some interesting issues about timing - saying that the auction would have occurred several months earlier if the process hadn't been delayed by legal action. As it was, the auction took place at the height of the telecoms stocks euphoria and the networks paid even more for their licenses than if the auction has occurred a few months earlier. The legal action was initiated by one2one and orange which were unhappy about the mandatory roaming agreements they had to agree to if they were to enter the auction. We wonder if Vodafone or BTCellnet will consider suing one2one and orange for compensation because of that comment ??

The full report (65 pages) can be read here"

Posted to the site on 22nd October 2001