Italy to Allow Trade in 3G Bandwidth

The minister, Maurizio Gasparri, said he planned to introduce a law over the next few months, which would make it legal to trade in frequencies. The frequencies were originally assigned by the state as part of an auction of third-generation (3G) mobile-phone operating licences. At present, under the laws prevailing in all EU countries, a company that wishes to offload some of its frequencies has no option but to return them to the government.

Italy will be the first to relax this system, and Britain is considering following suit.

But in Germany, telecoms regulator Matthias Kurth has many times reiterated his opposition to frequency trading.

Under a new EU guideline, the decision on whether to allow frequency trading is to be left to individual member-states. But Gasparri plans to argue the case for EU-wide liberalization. "I am a proponent of uniform regulations. We will also discuss frequency trading in the Council of Ministers," he told Handelsblatt. In Gasparri's view, frequency trading will make the market more efficient and dynamic.

Some analysts share his view, arguing it makes no sense to retain a system under which some companies have excess bandwidth capacity while others don't have enough.

The manager of one Italian telecoms company described the legalization of frequency trading as an important step, particularly if it opened the way to trade in the 3G licences themselves. "These could be subject to market prices, but these prices would, one presumes, be drastically below what was paid in the auctions, particularly in countries such as Germany and Britain."

The outcome would be that companies whose mobile phone business is relatively small, e.g. Telefonica de España or KPN of the Netherlands, would be the ones selling off spare frequencies, and having to undertake further write-downs in the process. Whereas the bigger players, Vodafone or Deutsche Telekom's T-Mobile, would be able to buy up extra bandwidth at relatively favorable prices.