Links to
GPRS launch timetable and 3G licence awards

The Danish government is hoping to discover this week whether its decision to become the first European country to award its 3G licences through a sealed-bid auction process, instead of an open auction or a beauty contest, has paid off.

The national regulator, the National Telecom Agency (NTA), has been examining the applications. It was expected to decide some time this week which of the applicants will be allowed to proceed to the auction itself. It will then open the sealed bids and rank them in order, revealing how much the government has raised in total.

But the process already appears to have achieved one success. The competition looks like the first in western Europe this year to have attracted as many bidders as there are licences.

The last time this happened was in Portugal last December. The four subsequent contests in Belgium, France, Greece and Liechtenstein have all left at least one licence unallocated (see table at bottom). And fears of a similar outcome continue to surround the forthcoming competitions in Luxembourg and Ireland.

Three of the four existing Danish operators have confirmed that they have submitted bids - market leader TDC, the Swedish-owned Telia Danmark and the France Telecom-owned Orange (formerly Mobilix). But the fourth operator, Sonofon, is not participating directly because of a disagreement between majority owner Telenor of Norway and fellow shareholder BellSouth of the US. Instead, Telenor is bidding alone.

There are also unconfirmed rumours of a fifth bid from HI3G, the Swedish 3G licensee controlled by Hutchison Whampoa of Hong Kong (60 per cent) and the Investor group, which is owned by the Wallenberg family, (40 per cent). But many analysts are sceptical about whether such a bid has actually been made.

The presence of a fifth applicant would certainly vindicate the Danish government's decision to opt for a sealed-bid process, given that the main reasons for choosing it were to encourage outside bidders and to prevent collusion between the incumbents.

But the government will be hoping that the mere possibility of such a bid - even if it did not materialise- will have encouraged all the domestic applicants to bid significantly more than the minimum of DKr500m (E67m). Under the rules of the auction, the licensees will each pay a fee equivalent to the amount bid by the lowest of the four winners. If there are fewer than four winners, they will each pay the reserve price.

Meanwhile in Liechtenstein, the government is still wrestling with the results of its decision to take the very different approach of simply offering 3G licences to the four existing operators. While Viag Europlatform and Tele 2 have agreed to take up their 3G rights, Telecom FL has refused.

Mobilcom Liechtenstein says that it is willing to take up its rights, but under conditions that are different from those proposed by the government. The authorities are due to decide shortly whether to agree to this. They will then have to work out what to do with the licences that remain unallocated.

The main problem in Liechtenstein is that the government wants 3G operators to site all their core system components inside the country. Given the tiny size of the market, this is an expense that some are unwilling to incur. For instance, Telecom FL, which a subsidiary of Swisscom, wanted to offer 3G services by extending its parent's 3G network into Liechtenstein.

Market size could also be a problem in Luxembourg, where the government is also offering four licences and is due to invite bids this month for a beauty contest which is expected to start in November. It is unclear how many bidders there will be other than the two existing operators - the state-owned P+T and Tango, which is owned by Netcom of Sweden.

And in Ireland, the authorities are still unable to say when they will be inviting applications for their four-licence beauty contest - despite the EU's deadline for the start of services being just over three months away.

The delay is due to a continuing dispute between the Department of Finance and the ODTR, the national regulator, over how much to charge for the licences.

Meanwhile, western European operators are continuing to roll out services using GPRS, the interim higher-speed technology which runs on existing 2G GSM networks. Three operators - Radiolinja of Finland and Telia and Tele 2 of Sweden - are launching services this month. This takes the total to 39 in the major markets,

Neil McCartney is editor-in-chief of Wireless Internet: www.mmwirelessinternet.com