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U.K. Government Plans Another Wireless Auction

Having pitted the telcos against each other in a profit-draining $30 billion auction for mobile phone licenses, the U.K. government is to do the same again with broadband fixed wireless access.

Small Business and E-Commerce Minister Patricia Hewitt this week announced plans for a September auction for the spectrum available at 28 GHz for broadband fixed wireless access. During the summer the Government will also announce its proposals for awarding 40 GHz licences.

With BFWA, users can get cheap, fast Internet and multimedia access via radio rather than via a telephone line. However, such access is inexpensive only if the companies providing it do not have to stump up billions for a Government license, a distinct possibility if the mobile auction is taken as a model.

The U.K. Government says it intends to issue three licenses in each coverage area, awarding them on a regional basis.

Patricia Hewitt noted that there is an increasing demand for broadband services, especially from small businesses and consumers. She said she wants these services to be developed as quickly as possible.

"Awarding licenses by auction will ensure that they are taken up by those operators best placed to develop services most efficiently. The license package is designed to encourage new entrants and the development of a competitive market," said Hewitt.

Many industry experts believe that the currently-running auction to operate the next generation of mobile phone services has pushed bidders into over-spending on a grand scale. The $30 billion+ that the telcos will pay the Government can be recouped only by passing costs onto the consumer.

The government has argued forcefully that auctions are the best method of ensuring that the most efficient companies are successful in gaining the licenses.

Governments of other European countries have indicated their intention to follow the British example, with hopes of tapping what is clearly becoming a major source of government revenue in the U.K.