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Only three companies bid for 3G licences
Wednesday, March 27 2002
by John Kennedy


Ireland's telecoms regulator has conceded disappointment that just three out of
an expected four bidders have emerged for the country's four 3G mobile licences.





Hong Kong-based Hutchison Whampoa Group, O2 (formerly Digifone) and Vodafone
(formerly Eircell) all applied for the 3G licences when the deadline expired at
noon on Wednesday. Four 20-year licences were on offer, one A licence and three B
licences.



The Office of the Director of Telecommunications Regulation announced that each
of the three operators applied for the A licence, which provides for 80 percent
population coverage and potentially extra spectrum for enabling MVNO, or mobile
virtual network operators, services. 



However, only Vodafone and O2 bid for the three B licences that were available,
leaving one B licence left that was not applied for. The three B licences provide
for a minimum of coverage of Ireland's five major cities (53 percent of the
country) and slower roll-out conditions compared to the A licence.



"While we're glad to see that there's competition for the A licence, we would
have liked to have seen more competition for the B licence," said ODTR
spokesperson Brighid Smyth. She explained that the ODTR will be examining options
for dealing with the remaining B licence. "We need to check out a number of
things before we take any measures, and the current applications have to be
evaluated and decided upon," she said. 



UK mobile giant Orange, which previously tried to enter the Irish mobile market
when the third GSM licence was on offer four years ago, was understood to be
still considering submitting a bid for one of the four 3G licences on Tuesday
night. However, it decided against submitting an application.



Media reports allege that because there was no applicant for the remaining B
licence, the State could be faced with a potential loss of EUR50m on the 3G
licensing process.



The ODTR said that bidders for the A licences are invited to offer access for
mobile virtual network operators (MVNOs) and will be offered additional spectrum
on the basis of justifiable demand to support the MVNO requirement. 



Additional spectrum is also being offered to new market entrants "in order to
level the playing field with incumbent operators who will have an inherent
advantage in rolling out 3G networks," according to an ODTR statement.



The overall spectrum access fee is EUR27m for the A licence and EUR74m for the B
licence using the standard industry discount rate of 9 percent. The upfront fee
for the A licence is EUR12.7m and for the B licence is EUR44.4m. 



Applying operators will then have to agree to a moratorium of five and three
years respectively on the A and B licences to take account of the network build
and the need for market development. 



Nominal spectrum access fees will be EUR50.7m for the A licence and EUR114.3m for
the B licence, with payments spread out over 15 years.