Telecoms groups will be able to bid for two different types of third generation (3G) mobile phone licences in the Republic under a competition that is expected to raise up to £400 million (€507 million) for the Exchequer.
Analysts said last night that the complicated terms of the bidding process had been designed to avoid lengthy legal battles by disgruntled mobile phone operators.
The sale of 3G licences - which enable mobile operators to offer high speed internet services - has proved controversial with licence fees costing billions of pounds in several European countries. Ireland has opted for what is known as a "beauty contest" structure, which does not award the licence to the highest bidder, but considers a range of factors.
The telecoms regulator, Ms Etain Doyle, yesterday confirmed four licences would be available for tender early next year. One licence will be allocated to a new entrant.
However, in a surprise move, she revealed the tender for one of these licences, type A, would favour operators who agreed to offer virtual mobile operators access to their own mobile networks.
Virtual operators, such as Imagine or Virgin Mobile, do not own a mobile licence or an extensive mobile network but buy airtime and piggyback on existing networks.
The remaining three licences, known as type B, would not include the stipulation that virtual mobile operators must be given access to their networks.
Ms Doyle had originally considered allowing virtual operators access to networks as part of the conditions for tendering for all licences.
Existing operators such as Esat Digifone and Eircell had lobbied hard to remove these conditions.
The issue of virtual operators and 3G licensing has also proved a stumbling block in talks between British mobile operator Vodafone and Eircom on the sale of Eircell.
Mr John Gunnigan, director of interconnect and regulatory affairs at Digifone, criticised the format as "unnecessarily complex". He said it was difficult to welcome until the fees had been revealed .
Dr George Young, chairman of IBEC's telecoms committee, said: "Fee arrangements in respect of licences must be resolved so that applicants can make an informed appraisal of the commercial issues involved."
Ms Doyle would not reveal the cost of each licence yesterday although analysts have speculated they could be worth up to £100 million each.
Licence fees would be disclosed with the tender documents some time before Christmas, said Ms Doyle.
The two different licence types contain different roll-out requirements and spectrum allocations.
The minimum requirement for coverage on the B licence is 53 per cent of the population by 2006.
Minimum coverage equal to 80 per cent of the population is required by 2005 to qualify for licence A and the successful bidder will be offered an additional allocation of 900 MHz spectrum if it allows access to virtual operators.
Interested parties will be allowed to apply for both licences but will only be able to take up one. If there are no bids for licence A, only three third generation licences would be allocated, said Ms Doyle.
The decision to issue one licence on the basis of enabling access to virtual operators is a clear attempt to increase competition.
Eircell and Digifone have consistently opposed virtual operators, with the former embroiled in a long-running legal dispute with the Imagine service.
The 3G licences will be valid for 15 years and are expected to be awarded by the end of May.
About 20 parties expressed an interest in the regulator's consultation paper on 3G, including UK operator Orange, NTL, WorldCom and French operator Vivendi Telecom International.
