The Irish Ministry for Transport, Energy and Communications deferred indefinitely its June 23 application deadline for companies intending to bid on the country’s second cellular license-a result of the recent quandary over license fees and other competition terms.
The successful bidder will be expected to pay an annual license fee to operate its Global System for Mobile communications-based cellular network, according to Joe Jennings of the Ministry’s press office. Sources estimate the fee will be about $1 million per year.
Open to debate is whether government-owned Eircell, which operates Ireland’s existing and sole cellular network, will be assessed a license fee as well in the interest of creating a level playing field for its challenger.
Because of this and other competition issues, Minister Michael Lowry instigated discussions with the European Union commission. In a June 16 news release, Lowry indicated the proceedings could take up to four more weeks.
No new deadline has been announced, but Lowry said he remains confident the licenses will be issued by the end of 1995. Luca Tassan, an analyst at Economic and Management Consultants International Inc.’s London-based office, said he believes the licenses will be awarded by the end of the year, despite the application deadline delay.
The second license is valued between $32 million and $80 million. The winner could invest up to $48 million in new operations.
Despite earlier predictions that up to 15 consortia intended to bid, only a handful now appear to be strong contenders. U.S. companies among the bidding entities include Comcast Corp., AT&T Corp. and Motorola Inc. A group headed by Ireland-based ESAT Telecom has confirmed plans to bid.
The delay associated with license fees naturally will affect when licenses are awarded, said Mark Schultz, vice president of international affairs for AT&T, adding he expects the entire licensing process will be set back at least 60 days.
Eircell is a subsidiary of Telecom Eirann, Ireland’s telecommunications provider. Eircell currently has about 79,000 analog customers, with the number of GSM digital subscribers growing rapidly, the organization noted. In March, Eircell said its cellular service covered 90 percent of the country’s population and 80 percent of its land mass.
With such a low penetration rate, Ireland’s cellular market is predicted to grow by more than 200 percent, to 250,0000 subscribers within the next five years, according to market sources.