| Alatto's
Perspective on the Irish 3G License Competition
"A fair price for a great resource."
On Tuesday 18th December 2001, the Office of the Director
of Telecommunications Regulation (ODTR) finally launched the
competition for the selection of third generation (3G) mobile
phone licenses.
John Whelan at Alatto, an Irish consultancy that has worked
for 3G operators throughout Europe and Asia, offers perspectives
on the Irish situation.
:: In reaching this clever compromise, the ODTR has learned
from mistakes made elsewhere. Its innovative solution will
add significant value to telcos and their customers. The access
fees may look expensive today. However, I believe that within
5 years they will have become a license to print money! It
is not so long ago since the doomsayers were similarly predicting
that telcos would never recover their investment in GSM!
:: In any event, given the importance of 3G to the development
of telecoms infrastructure in Ireland, the ODTR could not
have offered the licenses for much less. Instead, the pricing
structure places a financial obligation on successful bidders
to quickly rollout their networks.
:: The conditions with which Irish players have to contend
are considerably more favourable than those faced by their
European counterparts. For example, over the past two years
alone, companies spent some Euro50 billion for licenses in
Germany and Euro40 billion for licenses in the UK. In contrast,
Irish bidders have received generous terms with a differentiation
in fees, deferred payment and a twenty-year payback period.
:: At least one license will be awarded to a green field operator
rather than an incumbent. This will prevent existing players
from preserving the status quo and continuing to earn considerable
revenues from the existing networks. Experience in the UK
and Germany has already shown that the green field operators
will offer innovative services and competitive pricing to
entice customers to take up the new wave of technologies.
|
|
|
::
However, one of the biggest risks facing successful bidders
will be environmentalists’ objections to the erection
of new masts. 3G operates at higher frequencies which do not
travel as far as GSM. This means that many more masts are required.
However, the higher frequency also requires that the transmitters
are located closer to ground level and as such may not be regarded
as masts by the planning regulations. Recent protests against
3G transmitter sites in Germany are an indication of what is
to come in this country.
:: The over marketing and under performance of WAP has created
a cynicism about 3G’s prospects. In reality, 3G offers
real benefits to users, including superior quality audio. The
new 3G networks will resolve the capacity bottlenecks which
are becoming more commonplace as current networks struggle to
cope with the volume of users.
3G Around the World
Japan: The world’s first 3G network was launched
on 1 October 2001. To date, the network only covers Tokyo, although
it is currently being expanded to two other cities. Despite
a low key marketing approach, almost 30,000 3G handsets have
already been sold to consumers. In particular, the video phone
is causing quite a stir among consumers.
Hong Kong: charged a percentage of turnover
for its recently awarded licenses. In the long run this may
turn out to be a shrewd move, as the return to the exchequer
will be directly linked to the success of the licensees.
Portugal: 4 licenses awarded for a flat fee
of EUR100m in an economy that is often compared to Ireland.
Considering the larger population the price is roughly equivalent
to the Irish fee.
About Alatto
Alatto
Technologies Limited is a leading supplier of consultancy on
revenue generating services and applications in the wireless
space. Alatto is a privately funded company based in Dublin,
Ireland.
Clients
include leading 2G and 3G telcos in Europe and Asia, suppliers
of mobile applications, System Integrators and enabling technology
companies. www.alatto.com]
We
hope you will find these perspectives to be a useful. For further
information or a demonstration of 3G technology, please contact
John Whelan by e-mail at john.whelan@alatto.com or Tel: +353
1 209 0700.
|
|
