The Dutch government most likely will auction two mobile phone licenses in the spring, rather than the end of this year, because the European Commission blocked the government’s plan to charge existing mobile phone operators for their licenses.
The Ministry of Public Works and Transportation originally proposed legislation that would charge incumbent operators for mobile licenses they already operate for free, said Mark Armitage, commercial officer with the American Embassy in The Hauge, the Netherlands. Libertel, one of the country’s existing operators, issued a complaint to the EC, and the commission ruled in its favor. New legislation was proposed, delaying the auction process.
The auction originally was scheduled for the beginning of this year, but has been plagued with many delays, causing one strong consortium that planned to bid to disband in August. Orange plc, an 1800 MHz operator in the United Kingdom, T-Mobil, the German-based Deutsche Telekom mobile subsidiary, along with Dutch bank ABN-Ambro and Enertel, a group of Dutch electricity and cable service providers, formed a consortium in January, but broke up because of the delays and the government’s decision to change frequency assignments and tender more than one license.
According to Armitage, Enertel has been looking for new partners, Orange has withdrawn its interest altogether and the ABN-Ambro bank and T-Mobil have teamed up with France Telecom Group and a Dutch bank to bid for a license. Enertel and Telfort both offer nationwide voice telephony over fixed lines and are interested in adding a mobile license to their current services. Telfort is a joint venture between British Telecommunications plc and the Netherlands Railways. It has established a separate mobile subsidiary alongside its partner and teamed up with Tele Danmark to bid for a license, said Armitage.
Each license the Dutch government plans to offer will be a unique combination of the Digital Communications Services 1800 (10 megahertz) and the extended Global System for Mobile communications band (5 megahertz), requiring the networks to use dual-band equipment and handsets, said Armitage in a recent industry report.
In addition to the two licenses, the country’s national broadcasting company, Nozema, will release 50 megahertz of spectrum that will be made available for auction in the summer of 1998, said Armitage. Post Telephone and Telegraph Telecom BV and Libertel, the Netherlands’ two existing cellular carriers, are excluded from bidding for the licenses, and cannot obtain 1800 MHz spectrum until 2000.
The Netherlands’ mobile penetration rate is about 7 percent, and is expected to reach 9 percent by 1998, said Armitage. Though the penetration percentage is still low, it has increased rapidly since the introduction of a second GSM cellular operator in 1995, he said.
With the exception of Lucent Technologies Inc., Motorola Inc. and a few Asian suppliers, European manufacturers traditionally have dominated the Dutch mobile phone market, said Armitage. U.S. companies have been more successful at providing services than equipment. As penetration rates grow, the U.S. share of the market should increase from its current level of 10 percent, he said.
