UMTS extension questioned
Telecoms watchdog UrzÄ…d Regulacji Telekomunikacji is to award a fourth UMTS concession on 1 January 2002 although takers may be hard to find at a price tag of EUR650m.
Three UMTS licences were granted in a licensing fiasco several months ago. The government had hoped to follow the British and German examples and make a killing on licence fees only to be bitterly disappointed and in the end was forced to award the licences to the three GSM operators for much less than it hoped. However it left the door open for a fourth concession at the beginning of next year.
The first problem of the fourth licence is that the military must release the frequency for use by another party. Currently the frequency is used for navigation systems. This in turn will be a costly exercise as all equipment using this frequency will have to be reprogrammed.
Even if that problem can be resolved it is undeniable that telecoms operators have increasing doubts about the sense of pushing technology further and further. In the last two weeks alone Norway and Lichtenstein decided against issuing UMTS licences and in the Czech Republic there were only two companies interested in the three concessions available. Looking at this logically, UMTS is beginning to look like the Irydium satellite telephone system which has swallowed USD4bn and so far has been a complete failure. When the first three licences were issued it was assumed that the fourth would have the same conditions attached. However no operator that might have EUR650m to spare immediately comes to mind. Rumour now has it that the URT may decide to lower the cost of the licence to encourage potential bidders. The URT has denied this suggestion as speculation. However the plans would appear to be to reduce licence costs to EUR500m for Era, Plus and Idea and charge the new company the same. In this way the treasury would end up with a little extra cash (EUR50m) and consumers would get more choice.
The GSM operators do not see it that way fearing an extra competitor sharing a market that is likely to be pretty thin. The URT is of course under considerable pressure from the government who are under enough pressure to find cash and is highly unlikely to go along with this risky scenario.