Third generation Irish mobile phone licences should cost much lower than £100 million (€127 million) each if competing telecoms operators are granted mandatory access to the networks of third generation (3G) licence holders, according to Mr Barry Maloney, chief executive of Esat Digifone.
The Irish telecoms regulator, Ms Etain Doyle, is proposing to issue four licences for the provision of 3G services by means of a "beauty contest" process next year. Consumers can expect 3G technology to given them access to high speed data and Internet services via their mobile phones.
According to Mr Maloney, Ms Doyle's proposal to enable competing operators to access 3G licence holders' networks would lower the value of the licences involved.
"I think for the Government to get a reasonably high price for the licences it must be of economic value to operators," said Mr Maloney. "We can't put restrictions on operators. It should either be a high licence fee with no restrictions or a low fee."
The debate on 3G licence fees is about to take centre stage here as telecoms companies worldwide continue to face huge financial difficulties as they spend billions on licences and corresponding network upgrades.
A consultation paper issued by Ms Doyle has proposed a "beauty contest" rather than a straight auction process as a means of distributing licences here. This should lower the price of licences and encourage technological development in the Republic, according to Ms Doyle.
This is good news for the telecoms operators who claim it will lead also to cheaper prices for consumers. Critics have questioned Ms Doyle's decision as it will deprive the Exchequer of a potentially huge windfall from the sale of licences.
However, it is the regulator's proposal that operators would have to pass an initial qualification - part of which is based on their willingness to open up their networks - which has enraged the two dominant network operators and which has gone relatively unnoticed so far.
It means that an operator which does not propose to allow access to its 3G network to operators may not gain entry to the contest. In the UK no such mandatory access exists for virtual operators who have to seal commercial agreements with network operators.
A similar process of enabling access to the fixed networks of incumbent operators such as Eircom - known as unbudling the local loop - is soon to be introduced throughout Europe.
However, mobile operators such as Eircell and Digifone have argued that the high costs involved in building a mobile network should exempt them from allowing competitors to access their networks.
Eircell is currently involved in protracted legal dispute with the virtual operator Cellular 3 over a deal which enables the Imagine service to offer customers mobile services using the Eircell second generation GSM network.
The regulator's proposal to enable access to mobile networks is likely to increase competition in the mobile arena by encouraging the development of so called mobile virtual network operators, a form of which is offered by Virgin in the UK.
This would increase competition at the retail level and bring innovation in terms of products and services, according to Mr Sean Bolger, managing director of Cellular 3.
"Irish consumers have been left exposed to a cosy cartel in this country with some of the highest prices in Europe for second generation," he added.
Some 19 responses to her consultation process were received by the regulator last month. Interest in the licences was expressed by most of the major Irish operators such as Eircell, Esat Digifone and Meteor and several foreign companies including Orange and Tele2 of Sweden.
The regulator has yet to set the price for the four licences on offer. But it is expected that they will cost considerably less than in countries which chose the auction process.
A further consultation paper is expected from the regulator's office on the 3G licensing process in mid-November and lobbying by both network operators and potential virtual operators is likely to continue for some time.
