Final phase of German 3G auction raises $US260M more

The second and final phase of Germany's auction of licences to operate third-generation (3G) wireless networks ended on Friday.

          The second and final phase of Germany's auction of licences to operate third-generation (3G) wireless networks ended on Friday.

          The bidding, which lasted one day, added just 561 million marks ($US260 million) to the 98.8 billion marks ($46.2 billion) raised in the first phase.

          In the first phase of the auction, which ended on Thursday, six companies won nationwide, 20-year licences to operate third-generation (3G) mobile telecommunications networks. The winning bids totaled 98.8 billion marks ($46.2 billion), around five times what the German regulatory authority is reported to have been expecting.

          Using the developing technology standard UMTS (Universal Mobile Telecommunications System), 3G networks will deliver mobile multimedia services such as video telephony, Internet access and entertainment services. While other countries have seen banks and entertainment companies joining the bidding consortia, Germany's would-be operators were all telecommunications operators.

          While some fear that the price of licences will result in higher charges to use the services when they are eventually introduced, others suggest that market forces will keep services affordable.

          "These licences will have an impact on pricing, but at the end of the day, it's users that will determine prices," says Dirk Bout, senior analyst with Dataquest's mobile communications group in Amsterdam.

          "If anyone should worry, it's the shareholders, because if users aren't willing to pay for (the cost of the licenses) then they (the shareholders) will have to."

          The winners in the first phase of the auction, which had been running since July 31, are E-Plus Hutchison, Group 3G, Mannesmann Mobilfunk, MobilCom Multimedia, T-Mobil (owned by Deutsche Telekom) and VIAG Interkom, says state telecommunications regulator Regulierungsbehörde für Telekommunikation und Post (RegTP).

          Hutchison Whampoa withdrew from the E-Plus Hutchison consortium a few hours after the auction, leaving its share to running mate E-Plus, jointly owned by KPN Mobile NV and BellSouth.

          For Spanish operator Telefónica, which with Finnish mobile network Sonera formed the Group 3G consortium, this was the first 3G licence win outside its home country.

          MobilCom Multimedia brought together France Télécom SA and the German service provider MobilCom, in which France Télécom owns a 28.5% stake.

          Each of the first-phase licence winners paid a little over 16 billion marks for the right to use, until 2020, two blocks of 5MHz paired radio spectrum. Paired spectrum means that the channels from mobile to base station and base station to mobile are of equal size. It is useful for symmetric services such as video telephony or corporate network access.

          In the second phase of the auction, completed Friday, the first-phase winners bid for five additional blocks of so-called unpaired radio spectrum. VIAG Interkom was unsuccessful, leaving the other five companies with 5MHz each of unpaired spectrum, which will likely be used for low-mobility applications such as in-building coverage. In this situation, there are plenty of other alternatives, including ADSL (asymmetric digital subscriber line) or wireless LAN (local area network) technologies such as IEEE 802.11.

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