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BBC News Online: Business

Monday, 6 March, 2000, 16:05 GMT

Canadians top mobile bids

The race to operate the mobile phone networks of the future is under way in the UK.

There are 13 telecoms groups bidding for licences of the third generation of mobile phones, which could raise more than Ł5bn for the government's coffers.

The first round of the auction saw Canada's Telesystem International Wireless top the bidding with an offer of Ł170m ($267m) for one licence, the Department of Trade and Industry's Radio Communications Agency announced on its website.

UK mobile operator Orange was the next highest bidder, with Ł107.4m, for another of the licences.

There were no bidders for a third licence.

All remain in contest

While Crescent Wireless of the US and Australia's One.Tel Global Wireless tied for licence D and Epsilon Tele.Com, a unit of Nomura, tied with One 2 One for licence E. All four bid the minimum Ł89.3m.

A minimum price of Ł500m has been set for the five licences.

However the way the auction is structured means that the price for each is likely to be higher.

There will be a number of public bidding rounds with contenders able to raise their bids until there are five left in the contest.

A view to the future

None of the bidders has withdrawn from the auction, with another bidding round due on Tuesday.

The next generation of phones will allow high speed internet access for uses such as the showing of high quality video on demand or use as video phones.

We are a couple of years ahead of the US, and that's very important
Patricia Hewitt, government minister

The licences allow them to provide such services using a new technical standard called UMTS.

It is at the heart of great hopes for the growth of the wireless internet (the accessing of web pages and audio/video via handheld devices rather than personal computers).

The industry expectation is that within a few years more people will be accessing the internet on the move than via PCs at home or work.

Heavyweight contenders

The interest in the UK licences is even greater because it is seen by many telecoms companies as a chance to develop services for other European and US markets when UMTS systems go live there.

The four current UK mobile phone licence holders face a costly battle to ensure that they win the next licences.

Vodafone AirTouch, Orange, BT and One2One, owned by Deutsche Telekom, face some heavyweight contenders.

Orange's position is complicated by its ownership.

It was bought last year by Germany's Mannesmann - later taken over by Vodafone - and Vodafone now plans to sell Orange.

Applications have been received from a consortium including Virgin and Tesco, a partnership of NTL and France Telecom, Irish phones group Eircom and Japanese finance house Nomura, among others.

Trade and Industry Minister Patricia Hewitt told BBC Radio 4's Today programme: "We are a couple of years ahead of the US, and that's very important, because third generation mobile phones are going to be the next big leap forward in terms of internet access."

Related to this story:
Gambling billions on next generation mobiles (02 Mar 00 | Sci/Tech)
Battle for mobile licences heats up (14 Feb 00 | Business)
The Telecom Revolution (21 Oct 99 | Business Basics)

Internet links: Official licence auction site |
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