TMA fears mobile data price hike

Users are bracing themselves for higher mobile data costs and more expensive handsets following the close of the third generation...

Users are bracing themselves for higher mobile data costs and more expensive handsets following the close of the third generation (3G) mobile phone spectrum auctions, which raised £22.5bn.

Antony Savvas

Analysts say operators may be forced to increase prices to cover costs when introducing commercial 3G, which could offer businesses high-speed mobile data services from 2003. And because four of the five operators already run networks offering 2G GSM services, there are also fears that existing customers will soon be asked to help subsidise the future offerings.

The Telecommunications Managers' Association (TMA) fears higher prices and has slammed the Government for not using the cash raised from the auctions to help build the broadband networks which the UK needs to take advantage of e-commerce.

A TMA spokesman said, "The cost of each new 3G network will cost at least another £3bn on top of the licence cost, which will affect the prices charged to customers, these are certain to be inflated if the winners are to avoid bankruptcy."

The Government says users will not pay more and that the market will keep prices fair.

Val Jervis, an analyst at NetCom Consultants, said the ending of the auctions meant companies at least knew which suppliers they would be dealing with. Jervis predicted the first services would be introduced by the beginning of 2002, with wide-scale roll-outs by 2003.

Jervis also, expected moves to increase prices, but she believed customers would not be as "price elastic" on services as the operators would hope. Instead, she said operators would not subsidise handsets as much as they do now.

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