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According to documents released by ODTR on Tuesday, the overall spectrum access fee for 3G licences will be EUR27 million for the "A" licence and EUR74 million for the three "B" licences using the standard industry discount rate of nine percent. Additionally, the structure of the payments will offer some relief for the cash strapped telecoms by letting them make payments in installments.
The upfront fee for the A licence is EUR12.7 million and the fee for the B licence is EUR44.4 million. There is then a moratorium of five and three years respectively on the A and B licenses to take account of network build and the need for market development. Nominal spectrum access fees will be EUR50.7 million (IEP40 million) for the "A" licence and EUR114.3 million (IEP90 Million) for the "B" licences, with payments spread out up to year 15.
"I am pleased that we have agreed the spectrum access fee structure for the 3G licences," Etain Doyle, the telecoms regulator said. "Taking account of market conditions and the expenditures involved in rollout and development of services, an innovative fee structure has been devised." She went on to say that the process had been designed to promote competition in both infrastructure and services with the overall objective of generating the most "competitive and robust mobile market structure possible."
The ODTR said it expects to announce the highest ranked applicants, who will be selected by means of a comparative evaluation process, in June 2002 and the government agency also anticipates that successful licensees will begin to rollout service by January 2004.
The class A licence will require roll-out on a phased basis with coverage of 53 percent of the national population (equivalent to the five major cities) by the end of 2005 and with the fulfilment of the minimum 80 percent population requirement by the end of 2007. Additionally, the A licence provides for the possibility of extra spectrum to carry MVNO (mobile virtual network operators) services. ODTR claims this method provides an opportunity for potential bidders to propose alternative ways of entering the 3G market here.
The class B licence will also require phased roll-out but on a less stringent basis, covering 33 percent of the population by the end of June 2006 and 53 percent by the end of June 2008.
The ODTR also said licence winners who already have a GSM network will be obliged to provide national roaming facilities to new entrants on their networks. Doyle said she is keen to encourage site and mast sharing and where possible to ensure rapid roll out.
While the cost of licences remains what many analysts had expected, the telecoms across Europe, including Vodafone and mmO2, are currently under significant pressure to unburden themselves of debt. And while the strategy devised by the ODTR has taken this and the market conditions into account, many analysts have said that there is a potential the government will have difficulty selling the fourth license to an operator other than Digifone, Eircell Vodafone or Meteor.
Furthermore, both Digifone and Meteor said on Tuesday that the prices introduced by the ODTR were higher than the two companies had hoped for or expected. Nevertheless, both companies said they would consider making a bid.
Responding to this a spokesperson for the ODTR told ElectricNews.Net that the Irish mobile market is a "vibrant" one and the office has every confidence that all four licences will be auctioned without much difficulty.
The spokesperson pointed to statistics in the ODTR's most recent industry review which said the mobile penetration rate in Ireland is now 75 percent and there are currently 2.8 million users. On average each mobile subscriber sends 46 SMS messages a month, a statistic which ostensibly shows that Irish consumers are already familiar with and are willing to use data services.
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