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UMTS auction likely to be a cheap deal

UMTS graphic: Dec 2000

(Keystone)

Switzerland's auction of third generation mobile phone licences gets underway on Wednesday, after weeks of controversy sparked by the cancellation of the original auction.

Most observers agree it be an anti-climax, because it is unlikely to raise anything like the revenues received in auctions in other European countries.

There are only four companies bidding for the four Universal Mobile Telecommunications System (UMTS) licences, so it is not expected that the bidders will have to pay much more than the SFr50 million ($30 million) opening price.

The only factor that might push up the opening bids is the UMTS frequency which operators want.

UMTS will in future enable providers to offer a whole new range of fast mobile Internet, data and multimedia services that are way beyond the capabilities of current Global System for Mobile (GSM) networks.

The UMTS auction in Switzerland was due to have taken place in November, following a series of highly publicised auctions around Europe which brought in billions of francs into government coffers.

The top auctions raised SFr79 billion in Germany and SFr56 billion in Britain. However, there have also been disappointments. The licences in Italy, for example, went for a total of SFr18 billion.

Licences in the Netherlands attracted SFr4 billion and SFr1.07 billion in Austria.

The Swiss auction is, however, not expected to bring in much more than the minimum SFr200 million, a figure considered much too low by some, in particular the Social Democratic Party which has criticised the Federal Communications Commission (COMCOM) for setting the starting bids so low.

The Commission is responsible, among other things, for the assignment of telecommunication licences.

The Swiss auction was postponed by the Federal Office of Communications because, on the eve of the election, there were only four bidders left from the original 10 for the four UMTS licences to be granted.

The four are the country's largest operator Swisscom, as well as Orange, Telefonica of Spain and Sunrise/diAx.

Following consultations, COMCOM authorised the auction to go ahead without any changes to the original procedure.

COMCOM has argued that it is not to blame for the situation. "The Commission's obligation is to make sure that the telecom law is properly applied and that a fair and effective competitive telecom environment develops in Switzerland," said COMCOM vice-president Gian Vital.

"It has never been our task to maximise cash input to the federal finance department," he told swissinfo.

However, Vital says the Commission is disappointed. "I agree that SFr200 million isn't much but I prefer a healthy service provider competing for customers with good and innovative services," he said.

Critics of COMCOM have argued that the minimum bidding price should have been changed after the postponement to SFr200 or SFr250 million, which would have brought in revenue on a par with Austria.

But COMCOM says the main reason why the auction rules were not changed was the fear that the bidders would take the matter to court, causing both embarrassment and a delay.

"I think political damage would also have been caused in the European context if Switzerland had changed the rules in the middle of the process," Vital told swissinfo.

The auction can be viewed at the Internet address below.

by Rob Brookes


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