Comparing of 3G Tenders in Denmark and the Netherlands

           

Editor’s Note:

 

The following information was adapted from ITU Trends in Telecommunications Reform – 2004/05:  Licensing in an Era of Convergence (Geneva:  ITU, 2004).

 

 

Denmark was the only country in Western Europe to adopt a single-round, sealed-bid structure for its 3G auction, which was held in September 2001, after most of the other European 3G auctions had concluded.  Denmark’s intention was to auction the same number of 3G licences (four) as there were GSM operators.

 

The Dutch, by contrast, had used a multi-round, ascending-bid auction structure in a similar situation (five licences and five incumbents), and did not attract competitive bids from any potential new entrants.  One company, Versatel, did participate in the bidding but dropped out at an early stage.  The auction resulted in gross proceeds of less than EUR 3 billion.  This fell short of predicted proceeds of more than EUR 10 billion, which had been based on the results from the United Kingdom.

 

By contrast, the Danes adopted a sealed bid structure, hoping that it would attract serious bids from potential new entrants.  The reserve price was set at EUR 67 million, with the licence fee for all four licensees set as equal to the lowest amount bid by a successful bidder.  Ultimately, the Danish tender was considered a success, attracting a serious bid from a new entrant and resulting in revenues that almost doubled expectations.[1].

  

TRT-PN-M2-290

 

 



[i] See Paul Klemperer, “How (Not) to Run Auctions: the European 3G Telecoms Auctions”, http://www.paulklemperer.org, 2001, p.4-15 for a useful analysis of the different auction structures employed by EU countries in 2000 and 2001 and the reasons why certain structures were successful in certain situations but not in others.

 

Learn More