UK gov't dismisses 3G mobile phone stealth tax charge

Give us £50m now, £500m by Easter and the licence is yours

E-minister Patricia Hewitt yesterday dismissed accusations that the government is imposing a stealth tax on the telecoms industry with its auction for third-generation mobile phones operator licences. A £50 million deposit is required to even enter the game. All interested parties will then take part in an 18-day auction with minimum increments of £100,000. The five lucky winners will be those still standing on 24 March 2000. Final bids are expected to reach £500 million for each licence, netting the Revenue £2.5 billion. The increase in the number of licences from four to five is also seen as a transparent way of increasing takings. Hewitt claimed the system is not a tax but a way of ensuring that the best companies win access to the limited radio spectrum. The licences will be awarded to whichever companies stump up the most cash. Hewitt said: "This method is fast and fair, and is much more transparent than the government attempting to pick winners and losers through some kind of beauty contest." Hans Snook, Orange CEO, is not so sure. Nor is corporate commerce director at Vodafone, Mike Caldwell. Both would prefer a different system, but that won't stop them battling it out. The government is on to a winner here. Despite their annoyance, the major telecoms firms admit they have little choice but to take part. Without access to the bandwidth needed for the next generation devices they may as well pack up and go home. And with a potential 70 per cent of the UK's population up for grabs there is certain to be a big scrap. Aside from the UK's big four mobile companies -- Vodafone, Orange, BT Cellnet and One2One -- the process is certain to draw interest from power-hungry giants such as MCI Worldcom, Bell Atlantic, Energis and BSkyB. ®

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