3G licences too expensive, says Commons Committee

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Fears that the excessive cost of 3G licences could be passed on to the consumer in higher mobile charges have been supported by a Parliamentary Report on the issue. This stunning conclusion was issued by the House of Commons Public Accounts Committee today, in a report that claims the "extraordinary" £22.5bn sum extracted from the mobile industry for 3G licences could "slow the successful development of the industry and limiting the extent of competition". The UK UMTS auctions concluded in April 2000, and prices were driven to stratospheric levels as the incumbent mobile operators feared losing out could mean an end to their involvement in the high-value end of the business. Industry analysts were quick to point out some of the possible negative consequences of the auctions process, and the share prices of the auction winners have been on the slide ever since - Vodafone, worth close to 400p in early 2000, now trades at little over 100p. mmO2's entire market capitalisation is now only £3.9bn, less than the £4.03bn its former parent BT spent on the UK 3G licence. In a report so out of date it was nearly published in tapestry form, the committee also said: "The Radiocommunications Agency and Oftel will need to look seriously at the scope for containing the industry's costs, for example through allowing operators to share networks or trade spectrum where this is consistent with consumers' interests."