Faster mobile Internet access could be a long time coming in spite of the government kicking off the first round of bidding for the 3G licences.

At the time of writing, bidding for the five licences on offer had begun, Vodaphone offering the highest bid of £1.4 billion.  Vodaphone's bid was followed by that of SpectrumCo, a consortium led by the Virgin group, which is bidding for licence A, the licence reserved for a new UK telco.  The bidding has already exceeded the collective reserve price of the licences of £500 million.

The government believes the auctions will encourage competition in the telecomms market in the move towards Mobile or M-commerce.  "The government is delivering on its commitments to... introduce measures to attract one or more new entrants.  The increased competition and innovation in the mobile market this will bring good news for the UK economy," says e-Minister Patricia Hewitt.

However, some say that the cost of the licence is the tip of the iceberg for mobile operators.  "UMTS [3G] requires the operators to build an entirely new wireless network.  A UK-sized network would cost up to 2.6 billion euros to deploy the base stations and they [mobile operators] will need millions more for marketing," says Matthew Nordan, mobile analyst for Forrester Research.

It could also be some time before 3G is actually rolled out.  There'll be a lot of standardisation and interoperability issues to start off with.  Users will not replace their phones quickly enough to provide a critical mass; they're buying two phones every five years.  As a result I'd say the best case scenario [for the implementation of 3G] is 2005," says Nordon.  The companies involved in the bidding process were unable to comment for legal reasons.

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