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This came as something of a surprise to me, as I always thought that Oftel was doing a pretty decent job of it, and was proceeding at a rate that was both technologically sustainable (that is, the current players could reasonably keep up with it) and also one of the fastest in Europe.
Mobile Mayhem
The problem at the moment, it appears, surrounds the mobile phone network run by Vodafone AirTouch (LSE: VOD), and the access to it that Mobilicom is seeking. Mobilicom apparently asked Oftel, in February 1998, to rule on its gaining access to Vodafone's network, but such access has not so far been granted "at a reasonable price".
Whilst opening up the core telecommunications infrastructure that was built up by British Telecommunications (LSE: BT.A) while it was still under the protection of its old state monopoly status has to be a good thing for the industry, just how much should governments try to influence and control the industry? And what say should Brussels have in it all?
When Vodafone AirTouch built up its network, for example, it did it in a free marketplace, in direct competition with BT Cellnet, Orange and One2One, didn't it? Vodafone wasn't protected from market forces and had to compete from day one. So why should Vodafone be forced to give up some of its hard-earned high-value assets to a newcomer who shouldered none of the early risk?
Free Markets Rule, Right?
Many free market supporters would have none of this "interference", because free market economics is by far the most effective agent for the efficient distribution of capital that our species has been able to come up with during our four and a half million years on the planet (or however long it is). In fact, no other method of overseeing the distribution of capital has ever come close, at least not when measured by the ensuing generation of real wealth.
But Mobilicom has a point, in this case. The existing cellular phone infrastructure, though built up in a free-market environment, was not initiated in such conditions. The non-market bit was the rights to access that vital resource, radio spectrum. Mobile operators can't operate without spectrum, of course (and "spectrum" is effectively just the radio jargon for bandwidth). Instead of being decided by purely economic means, the four available spectrum licences were dished out by the Government, acting in its central-planning benefactor role.
So maybe there is some justification in forcing access to the airwaves for those not lucky enough to have their own licences. But it will always be a somewhat arbitrary process, and will inevitably end up with a less efficient distribution of those resources than a free market approach would have provided.
No Central Planning Please, We're British
The country's future 3G mobile networks will be operating in a genuine free market, because the allocation of the necessary radio spectrum was carried out according to free market principles. If a resource is scarce, its price should be high and the highest bidders should secure the rights to use it. There are plenty of people who think that this is not the best way to go about it, and that the Government should go back to some sort of centrally planned "merit" system. But then, there are plenty of Russians who want to go back to Communism too.
As far as 3G licences go, the new owners bid for them fairly and freely and should now be able to do with them as they please. If they want to sell on parts of their spectrum or share access to it in some other way, they should be free to do so. If they want to keep the whole lot for themselves, then that should be their prerogative too.
In reality, it is the free market bidding process itself and the high prices that resulted from it that will be the driving forces behind the provision of spectrum access to smaller players who didn't win the bidding (or even take part in it). With the billions being stumped up, some of the licence holders will need to offer access, selling it in the wholesale market just as fixed line bandwidth is sold, in order to justify the costs.
Providing the licence holders stick to the terms of their licences, then no other body should have any say over how the resources are used. Not Oftel, and certainly not the European Commission, because that would be harking back to central planning again. And we don't want that.
That's just one Fool's opinion, of course. All others are welcome on the Fool's Eye View discussion board.
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