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Government to auction off fifth licence

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The DTI has announced that it is to let a new mobile phone rival penetrate the UK market. Five separate third generation licences for cellular phones are to be auctioned off by the Department of Trade and Industry. This will include a larger licence reserved for a new entrant, according to DTI telecomms minister Michael Wills. Wills made the statement in response to a Parliamentary Question from Ian Pearson, MP for Dudley South. Today's move will add an extra competitor to the field currently dominated by Vodafone, Cellnet, Orange and One-2-One. According to a government statement: "Increased competition in the mobile telecommunications market is expected to lead to significant benefits for consumers, including lower prices and the faster rollout of more innovative services." It could also pose a threat to fixed-line providers like British Telecom, according to industry analysts IDC. Today’s decision will put paid to BT's lobbying to keep the number of third generation, or Universal Mobile Telecommunication System (UMTS), licences to four in this country. Tim Sheedy, IDC research analyst for European telecommunications, said traditionally non-telecom centric companies could be in the running for the extra licence. Household names such as Tesco, Sainsbury's and Virgin are possibilities, along with Deutsche Telekom and France Telecom. But Sheedy was uncertain of the US giants' interest in the UMTS licences, which allow mobile users to surf the Net, access email or hold videoconferences. "This is new technology, and US companies don't even know when or if it will be implemented in their own country. IDC doesn't expect this market to have great subscriber growth in the UK until 2002 or 2003," said Sheedy. ®2

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