The Swedish government has put back its 3G license awards until December 16.
The Swedish government announced on Friday that it is still processing applications from the 10 prospective 3G operators; it will not make the week’s original deadline. The Swedish government chose not to award licenses based on auctions but by a ‘beauty contest’. The winners will be the applicants with the best financial standing, technical and commercial abilities, and geographical coverage.
With these conditions, the three incumbent operators (Telia, Vodafone’s Europolitan, and Netcom’s Tele 2) are almost certain to obtain licenses, since their existing network infrastructure should allow them to roll out a new network much faster than a challenger. Predicting the fourth winner, however, looks all but impossible. Most of the mobile telecoms giants, including Hutchison, France Telecom’s Orange, and Deutsche Telekom, are involved, and it would be unrealistic to suggest that any of these will have a major problem meeting the criteria.
The final decision, therefore, risks looking subjective and could cause trouble for all involved. If one of the major operators feels it has been unfairly denied the license, then the resulting legal action could potentially delay the license awards. This could prove embarrassing, since the government has chosen to demand only a nominal charge upfront, instead levying a yearly charge of 0.15% of turnover. This model is designed to allow the operators to build networks quickly and efficiently; they will only have to pay substantial fees when they start making substantial revenues.
If the process goes smoothly, all stakeholders, from consumers to equipment manufactures, should benefit. But since the focus is strongly on the early rollout of a world-class network, any delays would look particularly bad.
Eventually, the Swedish mobile market should prove profitable for all concerned. One million Swedes out of a population of nine million are expected to have a 3G phone by 2005, higher than the European average, and the government will gain substantial license revenue. However, the scheme that the government designed to accelerate rollout by sacrificing the potential windfalls from a license auction may not be as successful as originally hoped.
