Government wireless licence plans are a taxing business

Government plans to hold a second auction of high-speed wireless Internet licences have been condemned by business...

Government plans to hold a second auction of high-speed wireless Internet licences have been condemned by business representatives.

Antony Savvas

The Communication Management Association (CMA) fears that a decision to make bidders pay a minimum reserve price will amount to a "tax on broadband access".

A Government auction of 42 wireless Internet licences held last year was a failure, with most left unsold. The licences were designed to give companies high-speed broadband access without the need for new cabling.

User concerns that only the licences serving big urban areas would prove attractive were shown to be just. The CMA had called for the licences to be sold at modest prices in a "beauty contest" auction, which would have seen bidders having to convince the Government that they intended to offer universal access, covering rural areas as well.

Last year's auction raised only £36m, instead of analyst estimates of £1bn, with the licences sold barely covering their reserve price.

In the second sale, the Government will allow operators to buy the remaining 23 licences for an undisclosed reserve price. If several companies want to obtain a specific licence, there will be a further auction.

CMA director general David Harrington said, "Whether the existing operators who have paid more for their licences will now be asking for a refund is anyone's guess."

He claimed that, in effect, it was a tax, which seemed at odds with the e-minister Patricia Hewitt's goal to make Britain the most competitive broadband market among major economies by 2005.

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