Government continues to deny secret 3G talks

Newspapers keep claiming that officials are going to help out the mobile companies, but the official line remains that discussions simply aren't taking place
Written by Graeme Wearden, Contributor

Officials at the Department of Trade and Industry (DTI) are this week continuing to deny that they are holding secret meetings with telecom companies to discuss ways of helping the telcos set up third-generation (3G) networks in the UK.

Several newspapers over the weekend, and on Monday, claimed that the government was being urged to return some of the £22bn spent by mobile companies in last year's auction of 3G licences, or to assist them to roll out 3G -- which some experts think could cost another £25bn. According to these reports, high-level officials have privately agreed that some form of rebate is inevitable.

Similar allegations were made last month, and the DTI -- the Whitehall department responsible for technology and e-government -- is sticking to its position that such matters are not on the agenda.

"We have not been approached by the 3G licence holders to talk about these matters, although we're obviously in regular talks with them over a range of issues," a DTI spokeswoman told ZDNet on Monday. "Without a formal request, such matters simply won't be discussed," she said.

The DTI also refuses to admit that the network operators spent too much acquiring 3G licences. "The price paid for 3G licences was established by the market, based on the operator's business plans," the spokeswoman added.

When an auction of the UK's 3G wireless spectrum was first conceived, it was expected to only raise £5bn. The five licences, which were auctioned off in April 2000, eventually raised a total of £22.5bn. The bidding was driven by mobile companies who were convinced that 3G networks, which will allow high-speed, always-on connections to the Internet, would generate large amounts of revenue.

The German auction, held a month after Britain's, brought in the equivalent of £28bn.

Analysts are convinced that spending so much money on 3G licences was a mistake, and one that could have severe repercussions for Europe's mobile sector. In a recent report, research group Forrester forecast that 3G licence-holders were facing years of losses.

Telecoms analyst Lars Godell believes network operators will be forced to merge, diversify or collapse. "European mobile operators will consolidate or disappear, and UMTS will be remembered as the trigger that imploded Europe's mobile industry," he said. Goddell believes that there will only be five major European mobile network operators by 2008.

The European Union is also getting interested in 3G, and is reported to be concerned that the rollout of 3G across the continent could collapse. Earlier this month it failed in an attempt to take more control of the regulation of telecommunications across all member countries.

Take me to the ZDNet Road to 3G News Special.

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