On December 18 2001 the Office of the Director of Telecommunications Regulation (ODTR) launched its competition for the allocation of 3G licences in Ireland. The launch of the competition had been delayed for over a year due to a difference of opinion between the minister for finance, Charlie McCreevy, and the director of telecommunications regulation, Etain Doyle, over the price of the licences. The compromise fee structure will involve the payment of fees to the Exchequer over a 15-year period.

Four licences are available, each for a 20-year duration. The award of the licences will be by way of a comparative evaluation process or 'beauty contest'. There are two categories of 3G licences available - one 'A' and three 'B' licences. The two categories differ in terms of coverage, roll-out requirements and Mobile Virtual Network Operator (MVNO) access. The A licence will require an 80% population coverage by the end of 2005 and the A licensee will be invited to offer access to MVNOs. The B licence will require a minimum coverage of five major cities (53%) by the end of June 2008, but with slower minimum roll-out conditions than the A licence. Additional spectrum will be offered to new market entrants.

The "innovative fee structure" announced by the ODTR involves an overall spectrum access fee of €27 million for the A licence and €74 million for the B licence using the standard industry discount rate of 9%. The up-front fee for the A licence will be €12.7 million and €44.4 million for the B licence. There is then a moratorium of five and three years respectively on the A and B licences, to take account of network build and the need for market development. Nominal spectrum access fees will be €50.7 million for the A licence and €114.3 million for the B licence, with payments spread out up to year 15.

The competition will encourage network sharing to reduce build costs. Existing mobile licensees will be obliged to provide national roaming facilities to all new market entrants who meet minimum roll-out conditions.

The mobile penetration rate in Ireland is relatively high, with approximately 75% of the population currently subscribing to one of the three mobile operators. Internet penetration rates are also high, with approximately one-third of the population having home internet access.

The closing date for receipt of applications is March 27 2002 and it is expected that the highest-ranked applicants will be announced in June 2002.

For further information on this topic please contact David Sanfey at A & L Goodbody by telephone (+353 1 649 2000) or by fax (+353 1 649 2649) or by email ([email protected]). The A & L Goodbody website can be accessed at www.algoodbody.ie.