E-minister flogs dead wireless licence horse

Not this one again

By Kieren McCarthy, 20th July 2001

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New e-minister Alexander Douglas (or is that the other way around?) has pulled out the wireless whip and started flogging the dead auction horse. His predecessor's three efforts to get the nag moving failed miserably, but he obviously reckons he's got the knack.

What we on about? Those 15-year fixed wireless licences that provide point-to-point Internet access for subscribers. They offer fast, permanently connected Internet access without the need for cable or telephone connections and high-capacity data transfer rates of between 2 and 5 Mbps. They're worth having but the DTi's complete mismanagement of the auction back in November last year meant what could have been a successful extension of broadband Britain ended up in a shambles.

That November auction - which had already been delayed twice for a total of six months - was based on the 3G auction that saw companies fighting frantically for the licences and providing the Treasury with billions of pounds of easy money. The DTi thought it would do the same but completely misread the companies that would be taking part and managed to alienate all but 10 of them.

The expected revenue from the 42 licences was originally pegged at £2 billion, swiftly reduced to £1 billion before it took place. It made a pathetic £38.2 million. That was because only 16 of the licences even received a bid. Most of them weren't even contested.

The problem was the government's arrogance. We spoke to a number of companies who said they would have been interested in the auction but the DTi was so unhelpful that they decided not to bother. There was also the problem that the reserve prices on the licences were felt to be too high or just unnecessary.

Once the full scale of the disaster became clear, the then e-minister Patricia Hewitt went into hiding and refused to answer questions about it. Then, three months later, she popped up again saying they would sell the licences again - but with exactly the same system.

The government just will not accept the fact it made a big mistake and so when people didn't come rushing forward it ignored the whole thing again. Until yesterday, when the new e-minister made his first proper "announcement" - that they will sell the licences again. But with exactly the same system. He probably didn't know what he was letting himself in for.

Anyway, Mr Douglas says the bidding will start again in September and the DTi welcomes any bids from companies now. For the official notice go here.

The DTi is desperate to get the licences out the way but won't back down from its auction system. Plus it wants the money. On top of that, it has a second set of licences for 40GHz (these ones are for 28GHz) that it has said it will only sell after this set has gone. The auction for the 40GHz licences were supposed to take place this year but that now looks more and more unlikely. ®