EU telecoms ministers meet to save 3G

The EU considers bailing out network operators who feel they paid too much for licences, but some countries are opposed
Written by Graeme Wearden, Contributor on

EU telecoms ministers including UK e-minister Patricia Hewitt met today to discuss methods of helping those companies that paid large sums of money for third-generation (3G) network licences.

The EU Telecoms Council was expected to recommend that mobile network operators cooperate and build 3G networks together, and will also consider the possibility of extending the lifetime of 3G licences. Suggestions that governments should pay back some of the money they have made from the sell-off of 3G spectrum has been rejected by Belgium which insists that it would be wrong to provide compensation for any mobile network provider that had paid too much for a 3G licence.

The European Commission is keen to ensure a successful 3G rollout across Europe. Hampering that is the fact that certain European countries made very large sums of money from auctioning 3G licences -- leading to fears that some telecoms firms have paid too much and will be unable to afford to set up and run 3G networks.

However, Belgian industry minister Rik Daems insisted on Tuesday that it would be wrong to attempt to compensate debt-ridden telecom companies. "You can't have a government getting all those licence fees from those companies, and then have those companies in as good a financial position as those that didn't pay so much," he told FT.com on Wednesday.

3G auctions held by Germany and the UK both raised large sums of money -- generating £28bn and £22.5bn respectively. Both were completed by summer 2000. But since then, doubts have been raised about the ability of mobile firms to generate large amounts of money from 3G. Belgium's 3G auction, held in November 2000, raised less than £300m.

Earlier this week, it was reported that German companies were considering sharing the burden of rolling out a 3G infrastructure. BT Wireless, which won one of the five UK licences, said on Monday it had contacted other British mobile operators about sharing the cost of building a third-generation UK network, which is estimated to cost around £1.5bn.

Many analysts believe that the prices paid for 3G licences in the UK and Germany were much too high. A recent report from Forrester Research claimed that network operators were facing years of losses because of their 3G investment, and that many would be forced to consolidate or close down.

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