Page last updated at 13:06 GMT, Monday, 12 April 2010 14:06 UK

Europe's first major 4G auction opens in Germany

An Orange and T-Mobile shop in Liverpool
Deutsche Telekom, which owns T-Mobile is one of the four bidders

Four mobile phone firms have started bidding in Europe's first major auction for fourth generation (4G) spectrum.

The amount raised by the German government is expected to be well below the 50bn euros (£44bn; $68bn) made from auctioning 3G licences in 2000.

But the demand is strong, with analysts expecting the government to make between 5bn and 10bn euros.

Operators are hoping 4G will bring near-broadband speed technology to mobile phones.

This could mean ten-times faster downloads than 3G, bringing better videos and games to mobiles.

Germany is Europe's biggest mobile phone market in terms of total customers and four network providers - T-Mobile Deutschland, Vodafone D2, Royal KPN's E-Plus and Telefonica O2 Germany - will be bidding for 4G spectrum.

The 4G technology, also known as Long Term Evolution (LTE) will mean that the extra data traffic generated by technologies such as broadband will be transferred on these operators' networks at faster speeds.

However, there is still a question mark over whether it will deliver better mobile services for consumers, according to Michael Kovacocy, European telecoms analyst, Daiwa Capital Markets.

"LTE promises to deliver a near fixed-line internet experience over mobile phones. From an operator's perspective, the technology may allow them to provide data services at a lower cost," he says.

"This auction will be a good indication of how much operators going to pay for licences throughout Europe and how serious they are in developing their mobile broadband vision."

Mr Kovacocy says that this auction will be followed by other major markets including the UK.

"The question is whether BT, a fixed line provider, will enter the auction in the UK. It's already a very crowded market that's very competitive."

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