Dáil Éireann debate -
Tuesday, 16 May 2000

Vol. 519 No. 2

Written Answers. - Telecommunications Licences.

Ivan Yates

Question:

99 Mr. Yates asked the Minister for Public Enterprise if she will have considerations made, as a matter of policy, that future telecommunications licensing procedures will be on the basis of tenders and auctions rather than other selection processes in view of the current litigation arising out of the procedure to award both a third mobile telephone licence and the wireless local loop licences and the consequent delays in proceeding with the roll-out of these services and in view of the large windfall to the Exchequer in other EU states; and the reason the Government should continue the policy that would in effect represent subsidies to successful applicants. [13319/00]

Minister for Public Enterprise (Mrs. O'Rourke)

As Minister for Public Enterprise with responsibility for the telecommunications sector, my overriding concern in regard to the approach to be adopted in the allocation of telecommunications licences is to ensure that in each case the most appropriate process is chosen which will guarantee that the economy and the consumer are the prime beneficiaries.

As the Deputy is no doubt aware, several options are available to Ireland in terms of licence allocation procedures. These include the holding of auctions, as used recently by the UK in the allocation of third generation mobile licences. They also include the use of comparative selection processes or so-called "beauty contests", and the distribution of licences by means of lotteries. It is also possible to use combinations of each of these options.

As I pointed out in reply to a recent parliamentary question on the licensing of third generation (3G) mobile phone systems, arrangements for licensing are, in the first instance, a matter for the director of telecommunications regulation. As Minister for Public Enterprise, I have an overall policy role on the telecommunications sector. The Minister for Finance also has a role in this area regarding the fees that may be imposed for such licences.

The approach chosen for any licence process will depend on the type and number of licences offered in each case. I do not consider it appropriate in the circumstances to restrict the options available to the director in the way suggested by the Deputy.

As for the use of auctions, while this option may seem attractive as a means of extracting the maximum amount of money from successful applicants or as a way of avoiding lengthy liti gation, the issue is not as clear-cut as might first appear.

First, where operators pay a high price, there are concerns that this will simply end up being passed on to the consumer. The high cost can also have a negative effect on an operator's ability in the areas of research and development, infrastructure roll-out, and the delivery of advanced services. Ultimately, while there should be no question of subsidising these operators, a balance must be struck between ensuring that the optimum amount is paid by operators, especially for a valuable national resource such as radio frequency spectrum, and making sure that the user benefits to the maximum extent in terms of the charges imposed and range of services offered by the successful operator.

As for the question of avoiding litigation, no allocation method, including auctions, has proven itself to be immune from this possible eventuality. Consideration is being given by one of the successful candidates in the recent UK third generation licensing process to the question of bringing a legal challenge regarding the arrangements being made by the UK Government for payment of the fees by some of the other successful applicants.

On the issue of delays caused by litigation, the Deputy should be aware that I recently enacted a Statutory Instrument, S.I. No. 70 of 2000, which amends the licensing regulations and which, I expect, will reduce significantly the type of delays previously experienced in the issuing of certain licences as a result of legal appeals against decisions of the director. Following the enactment of this S.I., it is now a matter for the courts to decide whether the nature of an appeal is serious enough to warrant the suspension of the director's decision, and I am confident this will have a very positive effect on the licensing process.