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EEMA critical of UK Government over 3G licence auction

date: April 30, 2001 - source: eema.org

EEMA has expressed criticism and concern about the way in which the UK Government handled the auction of the 3G licenses in the Spring of 2000.

In EEMA’s opinion, the UK Government failed to achieve its objective ‘… to secure for the long-term benefit of UK customers and the national economy . . . sustained provision of third-generation services in the UK' and today submitted its comments concerning the consequences of the auction to the National Audit Office.

Stuart McRae, who sits on the EEMA board of directors and is chair of the association’s unified messaging interest group said “in our opinion, the UK auction process used to select the 3G licensees was not structured to provide the country with the best possible infrastructure for next generation wireless services, but instead to provide maximum revenue for the UK Government. Although this short-term approach benefited the country financially (resulting in a revenue of £22.5 billion, far exceeding the Government’s expectations of £1.5 billion) the prohibitively high license costs paid by the five licensees could be considered to be the ‘last straw’ in relation to the Telecommunications industry and were a catalyst in the lack of confidence in world markets in the sector.”

EEMA, the leading European not-for-profit e-Business association with the aim to further e-Business throughout Europe, felt that not only were the set-up costs prohibitively high, but that the cost of provision and support of five separate networks (possibly more than five times the cost of providing one) would further stretch the resources of the licensees, resulting in the cost being passed down to business and the consumer in the guise of higher charges. “The added cost of supporting the networks is a major concern” added Rick Chandler, also an EEMA board member and chair of EEMA’s wireless work group. “This is true not only in the UK but also in other European countries, in particular in France and Germany, where the respective Governments entered into the auction process, and revenues of £12 billion and £32 billion were achieved. The revenues in all three countries were seriously out of balance with the rest of Europe. Again, EEMA sees this as unfair to the licensees and users alike” he concluded.

Also of concern were the potential interoperability issues that could evolve as a result of having five UK license holders, all of which will be engineered differently with different market aims, with each providing less coverage than the aggregated whole. EEMA believes that the best possible 3G technologies should be deployed for use by UK businesses and citizens in a way which is interoperable across Europe and feels that this goal was sacrificed in return for short-term financial gain by the UK government. “We look forward to the result of the National Audit Office investigation into this matter” concluded McRae.

 



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