To avoid paying over the odds, contenders in the auction for third-generation (3G) wireless licenses are keeping bids as low as possible early in the bidding process, an industry expert said yesterday.
"That's why today's bidding progress was even slower than on the first day, and bidders are focusing on the license with the lowest price," said Dung Chia-chung (
On Wednesday, six firms began bidding for five 3G licenses, with the floor price of each license based on the amount of bandwidth.
The companies will continue bidding for the licenses until one of the companies pulls out, which should be by the end of this month, according to the government's schedule.
Yesterday, the second day of bidding, the only bids made were for the license with the smallest bandwidth. After chasing each other for eight rounds, Yuan-Ze Telecom Co (遠致電信) raised its bid against 3GO Telecommunications Corp (世界全通) from NT$4.242 billion to NT$4.598 billion.
There were no bids for the remaining four licenses on day two, with Taiwan Cellular Corp (台灣大哥大), Taiwan PCS Network Inc (聯邦電信), Chunghwa Telecom Co (中華電信) and Asia Pacific Broadband Wireless Communication Inc (亞太行動寬頻) posting the highest bids.
Bids for the five hit NT$35.017 billion, around NT$1.42 billion higher than the minimum price set by the government, which had hoped the final license sales would generate NT$60 billion for state coffers.
The smaller bandwidth implies smaller system capacity, and therefore less customer usage. That factor keeps away the big players.
"Mega-players like Chunghwa and Taiwan Cellular are not interested in it," Dung said.
However, the analyst said Yuan-Ze, a unit of Far EasTone Telecommunication Ltd (遠傳電信), might not stick to that license if the price keeps rising.
When the bid for that license rises above NT$6 billion, the contenders may abandon the small-capacity license and move on to a larger capacity one, Dung said.
Meanwhile, based on the glacial progress of the auction, one official said the government's target amount would be "hard to get."
"We estimate the final amount can only be 20 or 30 percent more than the minimum prices set by the government," said an anonymous official at the Directorate General of Telecommunications.
And although high-speed wireless operators want to capitalize on public expectations of being able to access the Internet via their cellular phones, these kinds of services are still far from reality.
"Taking into consideration the time needed to establish the network, for testing, to make the handsets and adapt the applications, 3G access is at least three years off in Taiwan," said Nathan Lin (林宗賢), a telecom analyst at National Securities Corp (建宏證券).
"It is a long-term, huge investment which only giants can afford," he said.
In 2000, auctions for 3G licenses in Britain and Germany generated a combined US$78 billion for those governments, but critics said the multi-billion dollar price puts too high a financial burden on mobile operators and hampers their ability to develop the technology to its fullest potential.
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