Written Answers - Mobile Phone Licence.
Robert Molloy
Ceist:
28
Mr. Molloy
asked the
Minister for Transport, Energy and Communications
the representations, if any, he has received from the unsuccessful bidders for the second GSM licence to provide openness and transparency in explaining the reason for awarding the contract to ESAT; the reason each of the unsuccessful tenderers were rejected; and if he will make a statement on the matter.
[2046/96]
Of the six applicants in the competition for the right to become Ireland's second mobile operator, four consortia or their members have sought additional information on the reasons underlying the recommendation that Esat Digifone be awarded the GSM licence.
Announcing the opening of the GSM competition in March of last year, I emphasised that my objective was to improve the quality and availability of mobile services throughout the country with the advent of competition and consumer choice. I was determined to select a winner whose application displayed technical skill and financial credibility as well as an ability to develop the market aggressively with the introduction of competitive tariffing. These were the selection criteria which held the highest priority and the heaviest weighting during the evaluation of applications. Esat Digifone won the GSM competition because this consortium had both the entrepreneurial flair, the youthful energy and the determination to compete against the best and come out on top. Across the range of selection criteria, Esat Digifone proved itself the best all-rounder. This is why I had no hesitation in accepting the recommendation of my consultants and in nominating Esat Digifone as the winner. It must be encouraging to other comparable companies and entrepreneurs in this country that it is possible to seize competitive opportunities and win, once the process is fair and the applicants correctly assess what is required.
As I have emphasised on numerous occasions before, I am fully satisfied that the evaluation was conducted in a fair and objective manner throughout. Furthermore, the thoroughness of the comparative approach adopted by the evaluators left no question as to the clear-cut result contained in the consultants' report, who acted as guarantors of objectivity during the entire process.
The Deputy is already aware that I have made commitments to each of the applicants with regard to the confidentiality of their applications. Four of the six applicants requested and all were given assurances that the information in their bids would be kept confidential on a permanent basis. To date, this has constrained me from releasing details of the comparative evaluation of the applications, since I believe that such disclosure must involve a serious breach of confidence on my part and would lead to disclosure of information essential to protect the winner's interests.
On the other hand, following representations from some of the unsuccessful applicants, I also recognise that an understanding of how their applications were assessed could assist consortia in preparing applications for similar competitions in the future. Consequently the question of whether it is possible to release additional information to the unsuccessful applicants without breaching confidentiality is currently under active consideration. Pending a final decision on this matter, I am not willing to release any further details on the evaluation at this point.
Liz O'Donnell
Ceist:
29
Ms O'Donnell
asked the
Minister for Transport, Energy and Communications
if he will confirm recent newspaper reports in the Irish Independent that he accepted that the GSM licence was worth much more than £15 million but that the cost of mobile phone calls was of primary concern in awarding the second GSM mobile phone licence; and if he will make a statement on the matter.
[2050/96]
Helen Keogh
Ceist:
34
Ms Keogh
asked the
Minister for Transport, Energy and Communications
if his attention has been drawn to the study undertaken by Professor Rodney Thom into the granting of the second GSM mobile telephone licence and the conclusions in that report that the price paid by ESAT does not reflect the true economic price of a second cellular licence in Ireland; and if he will make a statement on the matter.
[2054/96]
Máirín Quill
Ceist:
59
Miss Quill
asked the
Minister for Transport, Energy and Communications
if he accepts that the second GSM mobile phone licence was awarded by him for approximately £22 million less than its economic value; and if he will make a statement on the matter.
[2040/96]
I will take Questions Nos. 29, 34 and 59 together.
When the GSM competition was first launched it included an "auction" element as the fourth selection criterion in descending order of priority ranking below the tariff deal for consumers and other important criteria. The imposition of a fee on Eircell was not envisaged and bidders would have borne this in mind when determining the amount offered. It is public knowledge that the EU Commission raised legal arguments against this aspect of the competition. After taking the advice of the Attorney General's Office my Department entered discussions with the Commission which led to a modification of the fee requirement. The thrust of the Commission's argument was that Eircell would have to pay a fee closely related to that to be imposed on the new operator. Accordingly a cap of £15 million was put on the licence fee for the new operator in the context that Eircell would pay £10 million. This significantly changed the bidding environment. The amounts were determined as not being onerous on operators and preserving a competitive framework for tariffs and service quality. This approach was approved by the European Commission. I was also fully satisfied with this solution as was the Minister for Finance.
It is public knowledge that very high fees were taken in a limited number of countries from both the new and existing operators but there are numerous other countries where fees, if they exist at all, are only to cover administration costs.
With regard to the study undertaken by Professor Rodney Thom referred to by Deputy Keogh, I should say that I have not seen the study although I am aware of some reports of its conclusions in the media. In this context I would like to point out that there is no true economic value of a licence to enter a duopoly market where both operators must pay a similar fee when they can fix their charges accordingly. Where a fee is levied on both operators, it is the consumer that pays in the form of higher tariffs because both operators face substantially higher costs arising from the fee. I therefore reject the speculation in the Deputies' questions that I could have extracted substantial amounts from existing and potential mobile phone users. I simply was not prepared to impose a higher fee at the expense of higher costs and tariffs.
I should say in response to Deputy O'Donnell's question that I have not said that the GSM licence was worth more than £15 million. I can confirm now however that reducing the cost of mobile phone calls was of primary concern in selecting the second GSM operator. My declared objective throughout the GSM competition process was to secure a new operator who would have a progressive approach to market development, a commitment to a high quality nationwide service and an innovative approach to tariffs. I am confident that in selecting Esat Digifone to become the new operator that this objective will be achieved by a consortium featuring a new Irish company as a lead member having won an open competition under a fair and rigorous process.
