Fri, Feb 22, 2013 - Page 13 News List

‘Reasonable’ price urged for 4G auction

KEY ISSUES:One problem is that some of the frequencies to be auctioned off for 4G licenses are now being used by 2G providers, whose contracts do not expire until 2017

By Lisa Wang  /  Staff reporter

Industry leaders yesterday urged the government to set a reasonable price and clear rules for the year-end bidding for fourth-generation (4G), or LTE, licenses.

Six local telecoms operators, including Chunghwa Telecom Co (中華電信), have said they were interested in bidding for a 4G license that would offer Internet connections that are five times faster than the current 3G technology provides.

However, a major problem facing the winners is that those that win one of the frequencies now used by 2G operators could be forced to delay network construction until 2017, when the 2G licenses expire, instead of being able to start next year.

“It is important for the government to set clear game rules for 4G license holders so they will have networks that will work,” Acer Inc (宏碁) chairman J.T. Wang (王振堂), who serves as chairman of the Taipei Computer Association (TAC), told reporters on the sidelines of the opening of the annual telecoms show.

National Communications Commission Vice Chairperson Yu Hsiao-cheng (虞孝成) said smaller telecoms operators Vibo Inc (威寶) and Asia Pacific Telecom (亞太電信) have suggested the government try to persuade the 2G license holders to relinquish their frequencies before the expiry date to facilitate construction of 4G networks.

The commission will discuss the issue with 2G license holders and the Ministry of Transportation and Communications, Yu said.

Price is another key issue.

“We hope the 4G licenses will not be as expensive as the ones for 3G licenses were,” said Shih Mu-piao (石木標), chief technology official of Chunghwa Telecom, the nation’s biggest telecoms company.

It was difficult for telecoms operators to make profits as revenue growth has lagged behind spending on bandwidth expansion, Shih said. Operators need to cut costs to make ends meet and cost savings are an important measure, he said.

“Paying less for a license would be a cost-saving measure,” Shih said.

The government auctioned off five 3G licenses in 2002 for NT$48.9 billion (US$1.65 billion at the current exchange rate), which made the licenses the most expensive in the world. Chunghwa Telecom paid NT$10.18 billion for its 3G license.

The company began to turn a profit from its 3G services two years ago, but it has not cleared the accumulated loss from operating the service, Shih said.

Marginal 3G services providers are still struggling to make a profit, he said.

The UK’s latest 4G license auction could serve as a reference point for the government, he said.

The UK government sold a 4G license on Wednesday for 38 percent less than the price of a 3G license auctioned in 2000, he said.

The UK raised £2.34 billion (US$3.56 billion) in the 4G auction.

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