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UK govt twists National Audit Office report into 3G licence auction

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The National Audit Office has today released its report into the auction for next-generation 3G mobiles licences, and concluded that the whole thing was well run and will not have a damaging affect on the mobile industry. Or has it?

We were surprised to find ourselves disagreeing strongly with parts of the NAO report when normally it is the epitome of fairness and understanding. While its review of the auction system set up to allocate five 3G licences back in May last year was spot-on, the "indications" it claimed to have found that show the mobile industry will not be unduly affected seemed unduly confident.

Then, it struck us. Like most lazy journalists, we were reading only the official government press release rather than the report itself. A review of the report's executive summary and a scan of the full report told a very different story.

According to the press release: "Though there has been a downturn in confidence in the industry since the auction, difficulties are not solely due to auctions and operators are still able to invest in developing services. The high cost of the licences to operators gives them an added incentive to roll-out services more quickly than if the spectrum had been given away." This, we thought, is clearly bollocks. But where exactly does the report say this? It doesn't.

Oh yes, hang on, an NAO spokesman told us - paragraph 22. "Vodafone and Hutchinson told us the high cost of their licence gave them an added incentive to roll-out 3G services..." Not exactly the same as saying the report says that though, is it? "Well, we were told that and we agree with it."

Another example: "Mobile telephone services in the United Kingdom are usually priced according to what the market will bear, as opposed to simply passing on costs" - that is true, and in the report, but it continues: "If operators' business plans prove to have been over-optimistic the main effect will be on the companies' share prices rather than on their investment plans or consumers." There's no evidence of that at all. And we don't reckon it's right either. And, would you believe it, it's not in the report either.

Well, it is, to a degree. It's just a small extrapolation of what is in the report. But, again, the press release purports to say what is in the report - not what they believe the report means.

Most of the rest of the press release strays less from what the actual report says but bends it to make the auction of the licences come out as a shining example of how the UK government has got it right. It also carefully avoids any criticism of the process.

The real report showers the auction in far less praise and makes various conclusions and recommendations.

Why would the government wish to make a scrutinising report in the auction look better than it was? Er, probably something to do with the fact that BT and One2One are trying to take it to court for £85 million a piece. And then perhaps growing criticism over the subsequent auction for fixed wireless spectra - that was a complete disaster and has just been re-re-released for the fourth time. And of course the next swathe of spectrum auctions coming up soon - that have already been delayed for a year.

The report itself - in pdf format here in full and here in executive summary - is in fact as excellent as ever and worth a read if auctions are your thing. But we remain concerned that the government is applying a sheen on official documents (or "spin" as we should call it).

Then again, it wouldn't work unless journalists were as lazy and unquestioning as they are. ®

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Full report
Executive summary
Press release

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