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Business leaders call for reversal of 3G auctions

Around 2,000 European business leaders have signed a petition calling for the governments of the UK, Germany, France, Italy and elsewhere to reverse the effect of the auctions last year for 3G mobile phone licences.27 Mar 2001

Meanwhile, BT’s former head of technology, Peter Cochrane, has told the BBC’s Money Programme (due for broadcast on Wednesday) that 3G phones may never appear and that he expects many telcos to collapse under the financial strain of developing and running the services. Cochrane described the auction process as “a really good study in madness.” In the UK, Vodafone, Orange, BT Cellnet and One-to-One paid £22 billion for licences.

Dutch telco KPN has amassed debt of €22 billion (£14 billion), almost half of which was attributable to its purchase of a 3G licence. It has this week announced it will sell parts of its business to reduce its debt, possibly including its mobile phone division.

European business association GrowthPlus, a sponsor of the new petition, argues that at a time when European business is feeling the impact of the stock market bubble, the effect of the 3G licences further exacerbates the lack of capital currently available in Europe to fund innovation and growth, because venture capital funds have been weakened to support the purchasing of the licences which it says across Europe cost over €130 billion (£81 billion).

"The fact is that these billions are not going to pay for new technology, job creation or economic growth but are going straight to government coffers," said Denis Payre, Vice-President of Growth Plus, the founder of Business Objects, the first French company to be listed on Nasdaq. He added:

"These auctions should be seen for what they truly are: taxation. The largest, most damaging tax of all, as it is not based on the production of success, wealth or growth; it is being taken up-front before anything of service or value is created."

"Europe is currently the world's leader in mobile technology. Only reversal of the 3G license auctions can ensure that enough capital remains available to support innovation and maintain this leadership position", argues Declan J. Ganley, President of GrowthPlus Ireland and the person responsible for leading the campaign across Europe.