UK keeps firm line on 3G licences

Despite speculation that the 3G sector could be heading for catastrophe, the British government isn't planning to make things easier for UK 3G licence-holders

The British government has insisted that UK 3G licence conditions will not be relaxed, despite increasing concern that European mobile operators could be crushed by their attempts to launch third-generation mobile services. The Department of Trade and Industry (DTI) still believes there is no need to change the terms of the five UK 3G licences that were auctioned off in April 2000. Contrary to some observers, the DTI thinks that 3G will be a success. "All of the UK operators are proceeding with rollout of their 3G networks and we expect that UK consumers will be among first in the world to benefit from 3G services. The auction process brought a new entrant into the market, which will bring benefits to customers through increased competition and innovative services," a DTI spokesman told ZDNet UK. Vodafone, Orange, T-Mobile, mmO2 and Hutchison 3G all own UK 3G licences that last until 2021, having spent a total of £22.5bn in the April 200 auction. The conditions of these licences dictate that each operator must have built a 3G network covering 80 percent of the UK population by 31 December, 2007. It is thought that some of these companies have been privately lobbying the DTI to either return some of the £22.5bn, extend the lifetime of the licences or relax the rollout conditions. The DTI spokesman was unable to comment on these claims, though. If the UK government does decide to change the 3G licence conditions, it is likely to face legal action from the companies who failed to win licences in the 3G auction process. 3G meltdown?
Mobile operators spent around 110bn euros (£71bn) on European 3G licences, and some analysts have claimed that this 3G debt could force many mobile phone companies into bankruptcy. Faced with the additional cost of building networks, amid the backdrop of plunging share prices and a still-turbulent stock market, some operators are being advised to ditch their 3G ambitions altogether. Datamonitor analyst Nick Greenway said last week that operators should abort their 3G plans, despite the billions of pounds they have spent on licences and building the networks. Earlier this month, Orange applied to vary the terms of its 3G licence in Sweden. The firm has asked for an extra three years to complete its rollout, and a relaxation of the minimum population coverage. Orange blamed its request on the late entry into the Swedish market of a fifth 3G operator, Telia, but the move raised speculation that Orange might end its Swedish 3G plans if its request is not granted. Vodafone somewhat spooked the 3G sector last week, when it asked for a one-month delay before paying a 44m euro (£28m) instalment on its Irish 3G licence. The company could decide not to build a 3G network in Ireland.

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