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Ireland to award 3G licences at last
Monday, December 17 2001
by Sheila McDonald


Ireland will begin its competition for 3G mobile licences this week, ending a
government squabble that made Ireland the last in Europe to award its licences.











Following more than a year of discussions, the Office of the Director of
Telecommunications Regulation and the Department of Finance have reportedly
agreed to a compromise that will bring in some EUR394 million (IEP310 million) in
licence fees for the government. 



The Irish government had been hoping for higher fees, eyeing the successes of
countries like the UK and Germany, which together brought in some STG60 billion
when they awarded their 3G licences at auction. But those auctions helped
kick-start the telecoms sector crash in particular and the IT recession in
general, and the competitors for Ireland's licences were unlikely to pay anything
like the fees they had agreed to in Europe.



Ireland will award four licences in all, including three Class B licences at
EUR114 million apiece and one Class A licence at EUR51 million, according to
media reports. Although the Class A licence has a lower overall fee, the operator
that wins that licence will be required to roll out its service quickly across
Ireland, while Class B licence holders will have at least an extra year to
achieve the same level of coverage. 



When telecoms regulator Etain Doyle first announced the structure of Ireland's 3G
licences last December, she said the Class A and Class B licence holders would
have until 2005 and 2006 respectively to reach 80 percent coverage. That deadline
could be extended in light of the delay in starting the competition.



The regulator also said last year that she would look favourably on companies
competing for the Class A licence if they also agreed to resell 3G airtime to
rivals who want to offer a Mobile Virtual Network Operator service (MVNO). But in
the time since the regulator first made that announcement Ireland's only MVNOs,
Meridian's Cellular 3 and Spirit Mobile, have disappeared following a dispute
with Eircell that cut off their access to mobile airtime in Ireland. 



Jemma Houlihan, telecoms analyst with ABN AMRO stockbrokers, said the waning
competition in Ireland's telecoms sector could dampen enthusiasm among
competitors for the licences.



"We would not expect to see intense competition for the mobile licences," she
said, adding that while offers are expected from Eircell Vodafone, Digifone and
Meteor, other outside parties may not find the fees or the licences attractive.



"It would be difficult to see another outsider come in to made a credible
offer," she said. "There is a possibility that there will not be a fourth
bidder."



The ODTR is expected to announce fees for the licences this week, and in addition
to the local operators both Hutchinson Whampoa and a consortium backed by Denis
O'Brien have been named as possible competitors for the 3G licences.