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.