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Govt 3G greed hurts us all – EITO

Never mind the telcos, what about the IT market?

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The British and German governments have manufactured a high-tech recession by their greed in taking too much out of the 3G/UMTS mobile phone auctions, according to researchers at EITO, the European Information Technology Observatory.

Dr Bernhard Rohleder, EITO's managing director and CEO, accused the two governments of shooting themselves in the feet by taking so much money out of the high-tech business. "If you calculate the general economic effect of that money, the state did not win anything," he said. "For example, Germany has lost 28,000 jobs in ICT (information and communication technology)."

Whether you feel sorrow or contempt for the telcos who overbid in their desperation to secure 3G/UMTS licences, it seems that the after-effects have spread far beyond the mobile phone business. EITO's research shows that the countries which took the highest licence fees now have the weakest ICT markets in Western Europe - Germany is in recession this year with -1.3 per cent, and although the UK will show growth of 1.6 per cent, that puts it behind such economic powerhouses as Italy and Spain.

"Across Europe, €100bn has been spent on UMTS [3G] licences, most of it in Germany and the UK, and that is the main problem," Rohleder said. "All the software and services companies are affected by taking so much money out of the telecoms market, as it leads to cuts in investment.

"UMTS is the only reason for the decline. It's like throwing a stone into water - the large network operators have no money to invest with their suppliers, and as the ripples spread out they get weaker but broader."

Rohleder said that putting just €5bn back into the German or UK market would have instead produced growth of at least three or four per cent. "The governments set the wrong framework, and it was not harmonised across Europe," he added. "For example, UMTS licences in Germany were 352 times more expensive than in Switzerland." ®

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