Only in Europe. Telecos want a big suck off the government teat.
Europe protests pricey 3G auctions
By Ben Charny
Special to CNET News.com
March 26, 2001, 4:15 p.m. PT
Some of the European businesses that paid a total of $190 billion last
summer to buy the spectrum needed to run third-generation phone
services on the continent want their money back.
It was disclosed Monday that nearly 2,000 European business leaders have
quietly signed a petition demanding governments in Germany, the United
Kingdom, France, Italy and other European countries return the cash, then sell
the spectrum all over again in a cheaper, and fairer, way.
Instead of an auction, which drove the prices up, the governments should decide
using applications submitted by companies. In the applications, the companies
would spell out their qualifications, according to Declan J. Ganley of
GrowthPlus, a European business association and one of the sponsors of the
petition.
Nothing less than the
economic health of an
entire continent is at
stake, Ganley said. Most
of the spectrum winners
are financing the auction
fees by going to the
capital markets. British
Telecom, for example, is
undergoing an initial
public offering. Other
spectrum auction
winners have sought the
cash on the bond
markets.
Third-generation, or 3G,
wireless technologies
are expected to enable high-speed, always-on Internet connections for a
number of devices including mobile phones, handheld computers and laptops
within the next few years. Estimates vary as to exactly when 3G systems will be
readily available, but most analysts expect the new technology to be well
received once it debuts.
While 3G licenses may have skyrocketed in Europe, the available capital for
such ventures has not. In fact, Ganley said, the $190 billion the companies need
to find is a billion dollars less than the entire pool of equity available in 1999 for
all European business.
"That money is dead money. It's not creating jobs. It's not funding the growth of
new business," Ganley said. "The Communists, in their worst days, couldn't
have dreamt up a tax as (bad) as this. The way this highway robbery has taken
place has crippled the industry."
Some industry watchers say that while the European auctions were excessive,
the telecom companies may be fighting a lost cause because governments
rarely return money that they've already made plans to spend. Plus, the analysts
say, the petition could also easily be misinterpreted as whining about why
companies had to pay so much money for licenses in Europe, while 3G licenses
elsewhere are already dropping in price.
The petition is just the latest sign of unrest over last summer's auctions. Last
Monday, members of the European Union (EU) commission demanded a
review of how the auctions were held. Some EU leaders are also asking that
instead of paying in a lump sum, the spectrum winners be allowed to pay the
money using installment plans, like a bank does for loan recipients.
And in a rare admission, the head of British Telecom, Peter Bonfield, said his
company spent about $15 billion too much for their licenses.
While the U.S. government made about $17 billion when it auctioned off 3G
licenses recently, there are signs of a slowdown.
An upcoming French auction of four licenses has only drawn two bidders. Only
three operators have said they'd bid for four 3G licenses in Belgium.
Also on Monday, Australian leaders said companies including a Qualcomm
subsidiary called 3G Investments won the rights to spectrum in an auction that
garnered only half of the proceeds expected.
3G Investments said its bid of $79 million won the right to administer
next-generation service for a potential customer base of 12.3 million people in
some of Australia's larger cities.
Other winners announced by the Australian government include Telstra, Cable &
Wireless, Hutchinson Telecommunications and Vodaphy Group. |
