Consumers will be able to choose a new mobile phone provider that specialises in next-generation technology from 2004, following a decision to award a licence yesterday to Hong Kong-based firm Hutchison Whampoa.
The licence will enable the firm to offer internet, video and picture services to customers, as well as voice services, by increasing the speed at which mobiles can send and receive data.
The results of the "beauty contest" evaluation process, published yesterday by telecoms regulator Ms Etain Doyle, show Hutchison was ranked ahead of incumbent firms O2 and Vodafone in a contest for the single type "A" licence on offer.
Hutchison will pay €50.7 million over 15 years to the Exchequer for the right to operate the service. It will also face costs of hundreds of millions of euros to build a new network that must supply 80 per cent of the Irish population with services.
The beauty contest-style process used here to award third-generation (3G) licences will not be completed until Hutchison Whampoa formally accepts the "A" licence, and the two other bidders make representations to the regulator on the process.
Ms Doyle will then be able to award two of the remaining three 3G licences, called "B" licences, to Vodafone and O2.
A third "B" licence will not be awarded for the foreseeable future due to Meteor's decision not to enter the process and a lack of interest shown by other international mobile phone firms.
The "B" licences will cost firms €114.3 million each over 15 years but will not have the same stringent roll-out requirements as the "A" licence, requiring just 53 per cent population coverage.
O2 and Vodafone will not be required to offer so-called "virtual operators" access to their networks, whereas the "A" licence makes this approach mandatory for the new entrant.
Virtual operators could add to the competitive environment here by leasing network from Hutchison and supplying their own branded service to customers. However, experts remain divided on whether this will boost revenues for the network firm or cannibalise its sales.
Hutchison, which is also a majority shareholder in several European 3G mobile operators, welcomed the licence award yesterday.
"We believe Irish people will be particularly receptive to, and benefit from, the next generation in mobile communications," said Mr Canning Fok, group managing director of Hutchison Whampoa Limited. "We also expect to derive tremendous synergy with our existing third-generation business in the UK."
Hutchison, which is perceived as the mobile operator most committed to developing 3G technology, expects to introduce its first service in Britain by November.
But the operator has already delayed its set-up once, underlining that there are technical difficulties with 3G technology and that it remains unproven as a revenue generator.
The world's first 3G service, which was started in October in Japan by DoCoMo, has signed up just 112,000 subscribers in eight months, below initial forecasts. Technical difficulties and limited coverage in only a few urban centres have also undermined the technology's appeal.
Each licence will have a duration of 20 years and it is a minimum requirement for all licencees to offer a commercial service by January 1st, 2004. Under the licence conditions that apply to Hutchison, the firm will have to roll out its network faster than O2 and Vodafone, covering 53 per cent of the population by December 2005 and 80 per cent of the population by December 2007.
The decision to award the licences follows a lengthy process that has taken more than 18 months to complete, following a dispute between the regulator and the Minister for Finance, Mr McCreevy, over the cost of the licences.
The Exchequer will net about €280 million in fees from the three successful bidders for licences.
