back to article Dutch operators: Ugh, we really overdid it on the 4G last night...

Dutch operators are waking with something of a hangover following panicked bidding on 4G telephony licences in the overcrowded Netherlands market. The country’s 4G spectrum auction altogether generated nearly €3.8bn. Vodafone shares tumbled 2.8 per cent and KPN said it wouldn't be able pay its promised end-of-year dividend as it …

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Big Brother

As usual...

The Gov't raise megadosh from the carriers who increase their costs to cover it so yet AGAIN we end up paying over the odds to fund the failures and fantasies of the ruling élite.

God give me strength!

(and maybe a guillotine, and an AK, and some nooses...)

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FAIL

Re: As usual...

Is someone holding your child over a balcony saying "Buy 4G service or the kid gets it"?

If you don't want 4G, don't get it.

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Anonymous Coward

Re: Tom38

Do you really think that the cost of the spectrum auction will only be applied to those who take out a 4G contract? Costs across their whole range of services will increase to cover this so everybody ends up paying for it, not just those who want it.

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zb

Re: As usual...

I am waiting for the price of 3G to come down low enough for me to want it.

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Re: As usual...

Erm... 6 or 7 years ago £35 a month got me a 3 contract with unlimited texts and calls. A quick look at 3's site tells me that for £35 (which is actually less in real terms than 7 years ago) I can get "all-you-can-eat" data* + a stupid number of calls and texts. Considering I can use Skype / viber / whatsapp / FB or G messenger for calls / messages, that means that effectively I could use my phone for anything I want short of downloading full-length albums /movies.

Bottom line, the service I can get has increased immensely, while the bottom line price is the same (actually less in real terms). If you REALLY believe that you will end up paying over the odds, just don't renew your contract.

*Yes I'm sure some fair usage / small print applies

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Anonymous Coward

Re: As usual...

The governments raise these huge sums on day and then (correctly) the companies claim them back against their taxes as a cost - so the actual amount raised is substantially less. Plus anything that increases costs will be repaid by the users eventually - so the users lose out in the end with higher costs / delays in service. Plus of course if these companies pay $1bn they will want to recoup far more than that in the long run.

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Anonymous Coward

Re: As usual...

"I am waiting for the price of 3G to come down low enough for me to want it."

Still use candles to light your house as well...?

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@AC: Which operator do you think will raise their 2G/3G prices to absorb their 4G costs?

Which operators raised their 2G prices at all after spending 6 times as much on the 3G auction as they are anticipated to pay for the 4G auction?

I expect that the monthly cost of my 3G contract will continue to fall, as it has since I first got one in 2008.

I expect that a bunch of twats will pay over and beyond to get 4G now.

I expect that eventually I will get 4G when it is comparable to the cost of 3G and I need a new phone.

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The monthly cost for my 3G service has not dropped since 2009. My overage fees have dropped from $50/GB to $15/GB, but I had to sign a new contract to get the lower overage fees. Yay USA cellular service!

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Re: Tom38

Yes I do believe that, just like I believed that being careful with *my* income/mortgage commitment would mean that I wouldn't end up in misery when the bubble burst.

Gullible, me.

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FAIL

Re: As usual...

"If you REALLY believe that you will end up paying over the odds, just don't renew your contract."

The radio spectrum surrounding us belongs to us. Governments selling it to Telcos who increase their charges to pay for it is simply a substantial stealth tax on mobile communications.

If they instead introduced a 40% VAT rate for mobile communications that would also be OK because you get more texts than you used to?

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Anonymous Coward

Re: As usual...

There is no real reason to use 4G. As it isn't essential you could happily sit by and wait for all the fools to pay for it.

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Re: As usual...

Nonsense. Don't bring that government is evil silliness here.

Those billions raised is money coming back to the tax payer - either by reducing tax or improving public services. I'm sure we can agree that government can waste money but it will do that irrespective of maximising tax revenue from large corporates. What is not true is that carriers price to recuperate. They price to what the market will accept. However much they've paid for spectrum does not significantly alter that.

The real scandal is when spectrum is auctioned off below market value like has happened in India recently. That's what weak (corrupt) government looks like.

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This post has been deleted by its author

FAIL

As a Dutchy..

let me just say I'm looking forward to blowing my ever decreasing monthly data-limit even faster.

(last contract 2 GB, then 1 GB, now 500 MB... )

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3G

Am I incorrect or did the 3G auction here raise something nuts like £37b?

That can't be right looking at it...I will check on Hotbot,

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Re: 3G

£22.4bn not £37bn. In USD it was $35bn.

Licence A: TIW £4.3847bn

Licence B: Vodafone Airtouch £5.964bn

Licence C: BT £4.03bn

Licence D: One2One £4.003bn

Licence E: Orange £4.095bn

The 3G auction in Germany raised £30bn.

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Re: 3G

http://news.bbc.co.uk/1/hi/business/727831.stm - £22.47bn ($35.4bn) - back in 2000.

See also http://www.ofcom.org.uk/static/archive/spectrumauctions/auction/auction_index.htm for some good olde schoole website design :)

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Old shool website design

OK so the graphics are cheesy, but it doesn't half load fast.

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Stop

Re: Old shool website design

Augh! My eyes! That header's worse than the blink tag!

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Anonymous Coward

Re: 3G

Maybe dollars instead of pounds. It was £22.5bn.

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Coat

Re: 3G

Try dollars instead of punds ..... It was £22.5bn.

Searching my jacket for my wallet !!!

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Childcatcher

Re: 3G

Yep, the insane UK 3g auctions cost the operators several hundred pounds for every single man, woman and child in the UK and that cost was before they'd installed any new infrastructure or posted off a single subsidised handset.

I make this Netherlands auction about 225 euros per head of population - a relative bargain.

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Re: Old shool website design

That header is functional and lightweight. It is that sort of attitude that has made the Internet of 2012 the slow & bloated mess that it is.

I swear, it doesn't seem to matter how fast my network connection and PC gets, "the Internet" just seems to get slower and slower with every passing week.

Thank god for Ghostery, it would probably be even worse without that.

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Re: 3G

Same old, same old.

This is exactly what happened with the 3G auctions and prices for everyone rocketed afterwards, we never had 2 year contracts before the 3G auctions but did afterwards. After the UK and Germany had extracted all the money the operators had, the remainder of the 3G licences were issued on the 'beauty contest' basis.

3G is still over-priced for most consumers and 4G will be even worse. Wonder how long contracts will become, would you sign up for a 3 or 4 year contract at extortionate prices?

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Re: Old shool website design

@Goat Jam - I didn't mean the header tag - I meant the horrific, rippling gif used as a page header. Yes, simpler is better, but does it really have to be so UGLY? I drive a smaller car for better fuel efficiency, but I don't paint it fuchsia...

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FAIL

This will be a legitimate business expense they'll be able to offset against tax, right? So the <insert offshore tax haven> gets less of the corporation tax these companies might have paid if they weren't already fiddling most of it anyway. Poor Luxembourg.

(and they'll screw the bill payer for whatever they can too)

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In the UK, it would be classed as capital expenditure which isn't automatically allowable. It certainly isn't covered by any of the Annual Investment Allowances on offer at the moment, so that leaves the Plant & Machinery allowance which allows you to deduct 18% of the cost against your taxable profits. The definition of Plant & Machinery is pretty broad, but I'm not sure that covers spectrum licences either.

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Facepalm

> Luxembourg.

> Offshore Tax Haven

MFW

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Holmes

Over how many years is the depreciation on a 4g license calculated?

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Licence term is typically 20 years but with rollout and coverage milestones.

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My understanding is that Vodafone is already building a network on 800MHz in the UK. This means that they pretty much have to win at least 2x10MHz of 800MHz spectrum in the UK, whatever it costs. The fact that this spectrum was rather more expensive in the Dutch auction than was expected might be seen as evidence that the UK spectrum is going to be more expensive than expected. So yes, I can see why the Vodafone share price would take a hit.

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mike@plokta.com

What we need (but won't get) from the UK auction is for there to one fewer licences for incumbent companies than there are incumbent companies, so that they all know that someone will be losing out. That will not only give them an incentive to bid the most they can, it will stop them from extracting the cost from their customers, since there will be at least one company with no 4G licences and no licence costs to bear undercutting them on 2G and 3G services.

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Re: mike@plokta.com

In effect, two 4G licences have been sold already at 1800MHz: the one that EE are already using, and the one consisting of the 1800MHz spectrum that EE were obliged to sell as a condition of the T-Mobile/Orange merger, and that has been bought by Three (but which they are not allowed to use until September 2013). Both these companies will be able to offer 4G services fairly decently even if they buy nothing at all in the forthcoming auction. So, unless all the 800Mhz and 2.6GHz spectrum is to be sold as a single lot to one company, any auction will lead to every exisitng operator having some 4G spectrum. Given that, OfCom's choice to sell the spectrum as lots of little lots rather than a small number of prepackaged "licences" probably does make sense. EE and Three will almost certainly buy at least a little spectrum at 800MHz in addition to what they already have at 1800MHz, and O2 and Vodafone will buy possibly larger lots at 800MHz and also some at 2600MHz. Whether EE and Three feel the need to buy anything at 2600MHz remains to be seen. The entry of new players might stir things up a bit, but as it is, though, there is plenty of spectrum to go round.

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Re: mike@plokta.com

The 1800MHz licences that EE have deployed 4G (LTE) in just had there terms and conditions changed, no money changed has as EE already owned the spectrum.

It literally could have cost the time to write a letter and the stamp to send it to OFCOM.

The other operators could also ask for the same change in T&C's to do exactly the same thing. The technology restriction in the licence to GSM only is one of the reasons why GSM has become a global technology that pretty much works in any part of the world,.

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Re: mike@plokta.com

O2 of course did just that to switch some of their 900MHz spectrum over to 3G use.

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Where's the down side?

People with too much money will have to pay for premium mobile monthly contracts to help top up the flagging economy. Sweet. Thumbs down anyone (yes, you are the "people with too much money") . :-P

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Pint

Well, someone hasn't learned from the 3G auction disaster that wrecked Deutsche Telecom.

Where's the SHRUG icon?

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People saying prices haven't increased?

Really? They think the prices of contracts haven't increased? Sure, your contract is still £35 a month (which in most cases isn't true - my £45 contract is now £47.56 a month due to 'inflation'), but 5 years ago, contracts were usually 12 - 18 months only. Now, 24 months is pretty much standard, yet the cost of the handsets hasn't shot up *that* much. So, you're paying more for the same thing realistically.

Overbidding on 4G will lead to higher bills, plain and simple. Especially as they aren't allowed to do longer than 24 month contracts now due to EU diktat.

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Re: People saying prices haven't increased?

Depends. I have a SIM only contract on Three that gives me 600 mins, 3000 (or some vastly larger number than I use) texts and 1Gb of data for £12 a month. You can buy a Nexus 4 for £220 or something, assuming you can find one. (I am guessing that there will be more availability after Christmas. Anyway, there are plenty of good unlocked smartphones you can have for under £300). Over two years that works out at about £21 a month, which is certainly better than I could have got five years ago, notwithstanding the fact that smartphones were much more primitive and there was less to use the data for. So I think prices have come down (or at least not increased) if you shop around. Sure, the networks will gouge you if you let them, but nothing new in that.

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Re: People saying prices haven't increased?

If you think prices have increased and you're on an 18 month contract, then you're one of the morons subsidizing me (thx!). I have zero commitment to my phone provider, if they were to raise prices for 3G (they won't) I can just leave for elsewhere.

my £45 contract is now £47.56 a month due to 'inflation'

Play that game then - your £47.56 a month is only worth £45 in 2008.

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Happy

Re: People saying prices haven't increased?

But you also have a crap phone

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Devil

What's far more interesting in the BBC article is the list of companies that failed to win 3G licenses, and then what happened next in terms of new MVNOs and takeovers.

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People saying prices haven't increased?

The customer base is Im sure is much larger these days per supplier than a few years ago so the personal end user costs which may seem lower are if taken as a total much larger for the vendor.

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Ouch! Don't do it UK!

How daft can they get?

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"The radio spectrum surrounding us belongs to us. Governments selling it to Telcos who increase their charges to pay for it is simply a substantial stealth tax on mobile communications."

I'm sure if the government gave out free licences to the telcos you would also be complaining that the government had been negligent for not extracting the maximum value from our public resources.

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