TMA warns 3G auction will inflate mobile prices

The Telecommunications Managers Association (TMA) has backed up last week's claim by Internet guru Nicholas Negroponte that the UK's 3G auction will result in overpriced mobile services for users.

David Harrington, director general of the TMA, warned the DTI and the Radiocommunications Agency are about to make the same mistake again by auctioning off Broadband Fixed Wireless Access (BFWA) spectrum in September.

"Operators could bid on specific investment and service roll-out programs, coverage areas, quality of service and consumer price levels," Harrington said. "The government doesn't appear to want that, and intends to apply the same, consumer-unfriendly approach in September."

Both the TMA and the Telecommunications Users Association have accused the government of pricing fixed wireless access out of users' reach.

Harrington is unconvinced by the claim that the £22.5bn from the 3G auction will reduce the national debt for years to come.

Harrington responded: "That sounds to me very much like a general argument for taxation. In other words, you're suggesting that it's a social issue. Perhaps it might be, but I would contend that the main objective here is not to raise windfall taxes but to push forward the needs and benefits of the Information Society."

The DTI has responded that it has no plans to cancel the BFWA auction.

"The auction does determine what these companies feel is the true market value of the licence," said a DTI spokesman. "They've done their estimates and their market testing. If the services are overpriced, no one will buy them."

Andrew Herron, the CEO of mobile services firm, Onphone.com, agreed: "The only hope the network operators have of recouping their license and infrastructure investments is to price their services for the broadest possible consumer take up. If they concentrate on high-priced services or focus on the so-called 'business users' they will have no chance of gaining enough subscribers or revenues."