No End in Sight as U.K. 3G Auction Passes $33B

LONDON (04/17/2000) - Seven companies are still raising their bids as the high bids in the auction for third-generation (3G) mobile licenses in the U.K. today reached a combined total of 21.15 billion pounds (US$33.6 billion).

The amount means that total cost of the five mobile licenses is roughly double the gross domestic product of Cuba.

Seven of the original 13 bidders remain, according to the auction's official Web site. They are competing for the five 20-year, 3G licenses based on the UMTS (Universal Mobile Telecommunications System) standard. In addition to voice, the 3G networks are designed to provide data rates of up to 2M bps (bits per second).

The only company of the remaining seven that has let a sign of weakness show is Spanish Telecommunications company Telefonica SA, which used two of its three passes in the rounds leading up to the 106th. In the 106th round, the company used its single chance to call a one-day recess. [See, "Telefonica Hedges as 3G Stakes Increase in U.K.," April 7.]The last company to drop from the auction was WorldCom Wireless (UK) Ltd., the bidding arm of the U.S. telecommunications giant MCI WorldCom Inc. WorldCom withdrew from the auction last Thursday morning, after failing to outbid NTL Mobile Ltd., the joint venture of France Telecom SA and cable company NTL, for license D. The company had not placed a bid for two rounds. [See "WorldCom Drops Out as U.K. Auction Nears $30B," April 13.]When WorldCom dropped out of the bidding on Thursday, the auction was at 18.5 billion pounds; the total has risen by nearly 3 billion pounds since then.

There are four mobile license incumbents in the U.K., who currently hold second-generation licenses, all four still remain in the bidding.

The most powerful of the five licenses are License A, which is reserved for a newcomer to the U.K. market, and License B, which is open only to incumbents.

Licenses A and B have equal bandwidth, which is higher than the remaining three licenses.

At the end of round 133, TIW UMTS (UK) Ltd. -- a subsidiary of Canada's Telesystem International Wireless Inc. -- is the current high bidder for License A, with a bid of 4.38 billion pounds. Since WorldCom's last attempt at seizing the high bid before dropping out, control has been passed between TIW and NTL.

Incumbent carrier Vodafone AirTouch PLC has led the bidding for License B, by far the most expensive of the Licenses, since round 112. BT3G, the bidding arm of fellow incumbent British Telecommunications PLC has been the only company challenging Vodafone for the license since the 78th round.

The bidding arm of British Telecommunications PLC, BT3G, has been jumping between bidding for License B and License C since WorldCom dropped out. Prior to WorldCom dropping out, BT3G had been devoting 100 percent of its attention to license B. Vodafone's high bid for License B is currently 5.66 billion pounds.

Licenses C and D are still open races, with incumbent One2One PLC, Telefonica SA, and NTL Mobile openly competing for the two. Incumbent carrier Orange PLC has placed its focus completely on License E since the 79th round, with the occasional interruption by Telefonica or One2One, BT3G just placed its first bid on license E since the 74th round.

The high bid for License C is currently NTL's 3.76 billion pounds; One2One currently controls License D, at 3.68 billion pounds; License E is ruled by BT3G at 3.74 billion pounds.

More information on the auction, including the most recent bids and a round by round recap, can be found on the Web at http://www.spectrumauctions.gov.uk/.

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More about British TelecommunicationsFrance TelecomMCIMCI WorldComNTLNTL MobileOne2OneTelefonicaTelesystem International WirelessUMTSVodafoneWorldCom

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