We are a fickle people. What is in vogue one week can be quickly out of fashion the next. So it seems with government comments about the prices paid by telecom carriers in Europe for some third-generation wireless licenses.
Yesterday, governments were salivating at the prospect of revenues from those large fees. Today, the tables are turning.
Mario Monti, the European Union commissioner for competition policy, warned telecom carriers not to pass on to consumers the high prices they paid for 3G licenses, according to a report by Total Telecom.
“We shall not consider the huge investments made in acquiring the licenses as a justification for excessive consumer prices, unacceptable concentration levels or leniency on state aid,” Monti said, in a classic case of wanting to have your cake and eat it, too.
A few mere months ago (April), countries were eagerly watching the prices for 3G licenses climb in Great Britain, culminating at $35 billion pledged for five UMTS licenses. Several countries actually changed their own license-award strategies, hoping to cash in on the apparent desperation of telecom carriers worried they would not be a long-term telecom play if they didn’t have 3G spectrum.
Now Monti issues a warning that carriers can’t charge too much for services?
How else can these for-profit telecom carriers pay for services other than by raising their prices? The very carriers willing to pay those astronomical prices were willing to bet that customers would be willing to pay a pretty penny for new innovative 3G services. That’s the way it works in a free-market economy.
At no point do I remember the European Union or Oftel or anybody else putting a maximum bid limit on those licenses.
The prices paid were high. Agreed. In fact, the carriers will be the first ones to admit that, and some have seen the financial markets react to those high prices in lower stock values. However, the price bidders paid this year may seem inexpensive in the future.
Regardless, government can’t come in this soon and issue veiled warnings, while at the same time taking the money.
The process must play out. Wireless carriers should not be able to go back to the government and ask for reprieves from license payments. But they should be able to find out how much customers are willing to pay for services.
Users will tell 3G carriers when their prices are too high, either by churning to a cheaper carrier or by turning off service.
