Disappointing 4G Auction To Be Investigated By National Audit Office

[interestrateripoff]

http://www.guardian.co.uk/technology/2013/apr/14/4g-auction-national-audit-office

The National Audit Office is to investigate the low amount raised by Ofcom's auction of the 4G airwaves, which in June generated £2.3bn – a total of £1.2bn less than the Treasury had forecast, and £3bn less than the theoretical maximum.

In a letter seen by the Guardian, the NAO's auditor general, Amyas Morse, told the Labour MP Helen Goodman, shadow minister for media and communications: "I intend to conduct a value-for-money study of Ofcom's recent auction of 4G spectrum."

The Treasury's forecast of £3.5bn from the auction was included in the government finances in the autumn statement last December, and allowed the chancellor, George Osborne, to claim that government borrowing was falling.

The Guardian understands that the NAO is preparing the terms of an investigation after complaints from Goodman, who pointed to remarks by the Ofcom chief executive, Ed Richards, indicating the government had not made maximising revenues the prime aim of the auction.

"By not making maximising the auction's revenues an objective for Ofcom, the government has failed to get value for money on this project," Goodman complained to Morse.

Does the govt ever get "value" for money?

Surely govt knew that the bids where below forecasts?

[The Knimbies who say No]

http://www.guardian.co.uk/technology/2013/apr/14/4g-auction-national-audit-office

Does the govt ever get "value" for money?

Surely govt knew that the bids where below forecasts?

They certainly got value for money last time around. One of the few results that McRuin can be pleased with.

[corevalue]

The telco's presumably don't keep cash floats of a few billion around on the off-chance that the government wants to sell them some airwaves, so this money has to be borrowed by the telco's. Now, where did I hear that banks weren't too keen on lending out the governments own money given to them via QE?

I'll save the audit office some work. Here's an easy diagram for them

Expected money trail:

Government ==> bank ==> telco ==> government.

Actual money trail:

Government ==> bank.

[Bloo Loo]

Odd.

If it was a house, they would rent it out...= returns year on year.

yet, they wanted to sell the right to use the airwaves?....surely they could have got the maximum price PLUS if theyd rented it?? year in, year out.

[RichB]

Didn't we keep hearing for years about how the telecoms companies massively overpaid for 3G and that was why bills skyrocketed?

Ah yes... http://en.wikipedia.org/wiki/Telecoms_crash

Edited April 15, 2013 by RichB

[RufflesTheGuineaPig]

Does the govt ever get "value" for money?

Surely govt knew that the bids where below forecasts?

The idea wasn't to get the most money, it was to provide the best deal for the UK population. No point selling to the highest bidder if they then don't use it to provide a worthwhile affordables service.

If it was a house, they would rent it out...= returns year on year.

yet, they wanted to sell the right to use the airwaves?....surely they could have got the maximum price PLUS if theyd rented it?? year in, year out.

Using the frequencies require billions of pounds of investment in hardware. No-one would make that investment if there was a risk they would lose the frequencies the next year.

Imagine, you win the licence for 2013 for £500m, spend £2bn building the hardware/network, then next year your competitor outbids you for the licence and you're left with a load of worthless kit you can't use. Also, would your customers sign up with you if there was a chance you could lose the licence next year? No-one would bid on a short-term basis. The only way to make it work would be for the telecoms groups to form a join venture to rent the licences and run the towers. In which case, they could offer a quid for them.

And on top of all that, remember that the licence costs get passed directly onto the consumer through increas eline rental and call charges. Most of the reason we had the highest mobile costs in europe was that the mobile firms had to recoup the cost of the licences.

[Executive Sadman]

The 3G auction was ridiculous, this seems more fair value.

Investigating it is a waste of money. And they never prosecute anyone when they do find 'irregularities'. so whats the point?

[interestrateripoff]

The 3G auction was ridiculous, this seems more fair value.

Investigating it is a waste of money. And they never prosecute anyone when they do find 'irregularities'. so whats the point?

It gives them something to do for a few months to justify their salaries?

[Bloo Loo]

The idea wasn't to get the most money, it was to provide the best deal for the UK population. No point selling to the highest bidder if they then don't use it to provide a worthwhile affordables service.

Using the frequencies require billions of pounds of investment in hardware. No-one would make that investment if there was a risk they would lose the frequencies the next year.

Imagine, you win the licence for 2013 for £500m, spend £2bn building the hardware/network, then next year your competitor outbids you for the licence and you're left with a load of worthless kit you can't use. Also, would your customers sign up with you if there was a chance you could lose the licence next year? No-one would bid on a short-term basis. The only way to make it work would be for the telecoms groups to form a join venture to rent the licences and run the towers. In which case, they could offer a quid for them.

And on top of all that, remember that the licence costs get passed directly onto the consumer through increas eline rental and call charges. Most of the reason we had the highest mobile costs in europe was that the mobile firms had to recoup the cost of the licences.

nonsense.

the big firms would have created a consortium, built the masts and shared the airwave costs based on useage.

no reason why a rental agreement couldnt last 20 years...

the reason the Government didnt get the price they calculated is the usual one....incompetance and government optimism.

[frederick]

When the mobile companies overpaid last time it proper f**ked them up, it was seen at the time as a license to print money, the telecoms bubble burst, (who on this site could work that kind of thing might happen) why would anyone wont to destroy their company by overpaying like that again, and why do they need an enquiry into the patently obvious.

[jonb]

They certainly got value for money last time around. One of the few results that McRuin can be pleased with.

Last time round, the telcos thought they could set up their own app stores, music stores and so on and get money from selling all that sort of stuff over 3G.

While we did eventually see those sorts of things available for sale on mobile devices, the money goes to companies that don't have a 3G licence, and the telcos just get to provide the bandwidth for transmitting it.

They now realise there isn't so much money to be made out of mobile internet, so that is why they bid a lot less this time round.

[Rare Bear]

Suppose that the companies have the idea that they might be able to squirt as much data over the 3G network that they have already paid the license fee for in the fairly near future?

[RufflesTheGuineaPig]

the big firms would have created a consortium, built the masts and shared the airwave costs based on useage.

If they created a consortium, the government would have got f*ck all for the licence, since they would be the only bidder.

[OnlyMe]

Last time round, the telcos thought they could set up their own app stores, music stores and so on and get money from selling all that sort of stuff over 3G.

While we did eventually see those sorts of things available for sale on mobile devices, the money goes to companies that don't have a 3G licence, and the telcos just get to provide the bandwidth for transmitting it.

They now realise there isn't so much money to be made out of mobile internet, so that is why they bid a lot less this time round.

Quite so, even BT tried to become a content and material provider and ditched it prety much as soon as they started, sure fire way to ensure you won;t be one of the few suppliers, but then I suppose that are having a second go with on demand TV, wonder how long they will keep with that.

Mobile specturm is a bit like a utility, the govt should have had no right to screw the supplier for access as last time round, the bill jsut gets passed to the public, so it is a tax. Talking of tax if provides are sifted offshore then any telco that does so should be told how pointless it would be making a tender for access.

[MrPin]

Surely an auction is exactly how you find out how much stuff is "worth"! If they won't pay the reserve, then it ain't is it?

[Traktion]

Mobile phone users ultimately foot the bill regardless.

[South Lorne]

http://www.guardian.co.uk/technology/2013/apr/14/4g-auction-national-audit-office

Does the govt ever get "value" for money?

Surely govt knew that the bids where below forecasts?

..the value is equal to the amount someone is willing to pay ...to price it before hand by some civil servant seems to be a exercise not worthy of the expense....

[Pindar]

The government is reacting in s similar way to a boomer who held out for years to sell at 2007 prices, only to discover that their house is only worth 60% of what they think it should be. Since the telecoms giants don't stand to gain a great deal from this crappy spectrum with all the technical problems that'll come with DVB interference etc., they're not inclined to compete with each other to offer exciting money for it. Perhaps parliament will consider a punitive new tax on telcos to temporarily plaster over a piece of the national debt, failing that they could sell the BBC.

[THE BALD MAN]

The government is reacting in s similar way to a boomer who held out for years to sell at 2007 prices, only to discover that their house is only worth 60% of what they think it should be. Since the telecoms giants don't stand to gain a great deal from this crappy spectrum with all the technical problems that'll come with DVB interference etc., they're not inclined to compete with each other to offer exciting money for it. Perhaps parliament will consider a punitive new tax on telcos to temporarily plaster over a piece of the national debt, failing that they could sell the BBC.

The BBC is ripe for reform...

[Traktion]

The government is reacting in s similar way to a boomer who held out for years to sell at 2007 prices, only to discover that their house is only worth 60% of what they think it should be. Since the telecoms giants don't stand to gain a great deal from this crappy spectrum with all the technical problems that'll come with DVB interference etc., they're not inclined to compete with each other to offer exciting money for it. Perhaps parliament will consider a punitive new tax on telcos to temporarily plaster over a piece of the national debt, failing that they could sell the BBC.

Taxing corporations is just taxing individuals who use their services by proxy.

The more the telcos paid for 4G, the more everyone would end up paying for 4G services.

When the state 'sells' radio bandwidth to telcos, what they're really doing is taxing individuals for their use of the radio bandwidth.

Therefore, we should celebrate that the auction was a flop. It means less tax and by implication, cheaper 4G.