Low sales prompt auction probe

Patricia Hewitt: to investigate airwave auctions

Airwave sales, which earned the government a £22bn windfall in the spring, are to be reviewed after a follow-up auction ended with more than half the lots unsold.

Patricia Hewitt, the e-Commerce minister, is to hold talks with telecoms chiefs after the government raised only £36.16m from selling off airwaves which will carry high-speed internet services.

The sum equates to 90p per person covered, compared to the equivalent of £400 per person earned from the spring's sale of spectra used in providing next-generation mobile phone connections.

The latest sell-off had been expected to earn about £1bn, or about £16.50 per Briton.

"I look forward to a competitive auction," Ms Hewitt said last month, ahead of the auction.

Unsold concessions

But bidding closed on Monday with 26 of the 42 licences unsold. Concessions for areas including Wales and the South West failed to attract a single bid.

"I have asked for a report on the outcome of the auction to help us plan for future spectrum auctions," Ms Hewitt said on Monday.

A further tranche of airwaves used in providing high-speed, or 'broadband', telecoms services is to be put up for sale next year.

The result threatens to leave 40% of the population without an alternative to traditional copper-wires for carrying broadband services to their home or business.

Slower service

Landlines are said to be significantly slower.

Results of 28ghz broadband fixed access auction

Raised: £36.16m

On offer: 42 licences in 14 areas

Most popular areas (3 licences sold):

London, Manchester, West Midlands, Northern Ireland

Least popular (no licences sold):

Wales and, in England, South Central, South West, East Anglia, East Midlands

Firms offering broadband services via the airwaves claim to offer internet access speeds of up to 2 megabits per second, about four times faster than the high-speed landline service offered by BT.

But the government will work with private and public sector organisations to ensure high-speed services, known as 'broadband', can reach all parts of the UK through the airwaves, she said.

Monday's result follows a series of auctions of spectra throughout Europe which have reaped decreasingly small returns since the UK's £22bn windfall in April.

Three of 10 firms pulled out of the bidding in the first few days of the broadband auction, which opened on 10 November.