Commission probes 3G licence shambles

Date: 18/10/01

The European Commission is launching a study into the way some EU governments caused havoc by charging huge licence fees for third generation mobile services, while others charged far less or nothing.

The move comes as Paris decided to slash the cost of licences in France from 4.95 billion to 619 million and extended their life from 15 to 20 years in a bid to support the country's ailing telecoms sector.

The EU executive said its study would help "assess the impact of the fragmentation of licence conditions on the competitiveness of the sector and on the internal market".

The report, expected early next year, will help the Commission form future policy in the area - although this could be too late to boost the launch of 3G services.

In a speech in Sweden last week, telecoms chief Erkki Liikanen said the mobile market remained fragmented along national lines. "This was illustrated by the incoherence in the licensing regime for 3G mobile services," he said.

The Finnish commissioner wants EU governments to allow the Commission to veto any decisions taken by national telecom regulators that conflict with the single market. Unsurprisingly, the member states strongly oppose any such move.

The issue was raised at this week's meeting of EU telecom ministers - although a final deal by governments on reforms in the sector is not expected until December.

The licensing saga took off in the UK last year when the government had game theorists to thank for raising 35 billion from a auction system for 3G - then expected to be a sure-fire winner with consumers. Other finance ministries were quick to grab their share of the spoils - with Germany raising a mammoth 51 billion for six licences.

But soon after the bubble burst as subsequent auctions flopped, amid fears that the prices could not be justified by expected revenues and fears that some operators were saddling themselves with huge debts.

Shares in the two French telecom operators already awarded 3G licences - Vivendi Universal and France Telecom - leapt on the news that they were getting a respite from the huge fees. Other firms rose on the prospect that they now be able to afford to snap up the two remaining licences.

The European Commission is launching a study into the way some EU governments caused havoc by charging huge licence fees for third generation mobile services, while others charged far less or nothing.