When spectrum auctions go bad

Singapore's telecommunications regulator has moved to prevent the kind of collusion that is wreaking havoc with 3G radio spectrum auctions in Europe.

          Telecommunications regulator Infocomm Development Authority of Singapore (IDA) is taking measures to ensure there will be no collusion among bidders for 3G (third-generation) mobile phone licenses here, such as that which has threatened to wreck similar auctions in Europe recently.

          The Southeast Asian island-state will conduct an open auction for four 3G licenses in February, starting from a reserve price of $S150 million ($US86.1 million) per license.

          In the detailed rules for the auction, to be published in December, IDA will include a structure aimed at preventing collusive bids, according to Andy Haire, IDA's senior director for policy and regulation.

          The details have not been finalised, Haire said, but will probably involve investment banks being asked to inform IDA of any changes in shareholding among bidders which could potentially create a platform for collusion.

          In addition, IDA is trying to attract the largest possible number of bidders for the four licenses, on the understanding that problems, and collusion, within auctions chiefly occur when the number of bidders is only slightly higher than the number of licenses on offer.

          "We are actively seeking a wide range of bidders in order to ensure a competitive process," Haire said at a media briefing Tuesday.

          Haire conceded that it would be very hard to track informal collusion between bidders who have no cross-shareholding ties.

          "But the (regulation of telecommunications) code does prohibit that -- if we can find them," he said.

          Singapore will also encode regulation for the time when 3G services begin, to ensure that new players are competitive with incumbent 2G licensees from day one. This will include giving new 3G players roaming access onto existing 2G networks so they can achieve initial coverage and deploy services quickly, Haire said.

          Suggestions of collusion, auction collapses and low prices for licenses caused by a lack of bidders, have hit 3G auctions around the world in the last month.

          The Swiss 3G auction collapsed Monday when two of the bidders merged, leaving just four bidders for four licenses. Investigations will be held there into possible bid collusion.

          Auctions in Holland, Austria and Italy faced similar problems earlier this month.

          Auctions in Australia and New Zealand are both expected to generate considerably less money than originally hoped. Forthcoming 3G auctions include Belgium's in December and Australia's in January 2001.

          IDA can be contacted http://www.ida.gov.sg/.

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