Germany's auction for third-generation (3G) mobile phone licences last summer was more like a spree in a Las Vegas casino than a business deal. When the successful bidders emerged to face the media, they seemed a little unsure about how long they had been bidding and were almost in denial at how much they had spent.
The auction, in a former army barracks in Mainz, ran for 14 days and the six successful bidders walked away almost DM100 billion (€50.15 billion) poorer.
With transmission speeds nearly 40 times faster than the existing standard, telecoms companies hope 3G will open the door to mobile Internet access and "m-commerce", where people use mobile phones to pay for goods and services.
However none of the German telecoms companies had expected to pay so much for a slice of the 3G pie. As soon as the bidding stopped, the recriminations started. Smaller bidders like Viag Interkom, a subsidiary of British Telecom, accused Deutsche Telekom and Vodafone of driving up the cost of the licences unnecessarily in an unsuccessful bid to secure a three-frequency block needed to build a national network.
Even Germany's telecoms regulator complained that he was having trouble squeezing any money out of the debt-laden telecoms companies.
The only person smiling was Germany's finance minister, Mr Hans Eichel, who pocketed the €50 billion proceeds from the auction, five times more than he was expecting.
After almost a year of bickering, the six successful 3G bidders received some good news last week in the form of "helpful advice" from Mr Matthias Kurth, president of RegTP, the German telecoms regulator.
Mr Kurth said he had no objections to 3G operators sharing masts, antennas and radio base stations, provided companies used separate technology to maintain control over their own networks.
"The objective is to ensure competitive independence between operators and to guarantee that they have complete control over the networks," said Mr Kurth. "Our interpretation merely allows the networks to be deployed faster and cheaper. It is up to the operators to grab the opportunity, and I will not be upset if they do not."
The decision is a significant financial boost to the telecoms companies already saddled with huge debts, particularly smaller operators like Viag Interkom and E-Plus.
According to the strict terms agreed, licencees must be able to reach 50 per cent of the German population by 2005.
Until this week's announcement, the smaller companies faced the unattractive and expensive task of having to build new mobile networks. If they are prepared to co-operate, they estimate they will halve the cost of building their new network, some DM4 billion, as well as DM200 million a year in running costs.
Bigger operators such as Vodafone and Deutsche Telekom, which have already built their own networks at great cost, had threatened legal action if the terms of the licences were changed.
In the end, Deutsche Telekom gave a cautious welcome to the news but Vodafone, which controls D2, Germany's second largest operator, is sticking to its guns. "Everybody entered into the process on the basis of rules, so it is inappropriate to press for a change to the rules after the process," the company said in a statement.
Vodafone lawyers are looking at the regulator's decision and the company has not ruled out legal action if it believes the terms of the licences have been changed. RegTP's Mr Kurth said that by allowing infrastructure sharing he is not rewriting the rule book, just reinterpreting the existing licence terms to encourage 3G development.
"We do not need to change the law, we just offer guidelines spelling out what is allowed," he said. Mr Kurth's decision was broadly welcomed by analysts as a well-judged attempt to ensure Germany does not fall behind the rest of Europe in the introduction of 3G.
However, many analysts still believe that consolidation is inevitable among the successful 3G bidders in Germany, even though the terms of the licence agreements make that an unattractive prospect.
If two operators merge they are not permitted to pool their spectrum; instead one has to be returned to RegTP without compensation.
There has been huge interest in UMTS (universal mobile telecommunication system) technology from telecoms companies around Europe, with last year's auction in Britain raising £29 billion sterling (€47.5 billion) for the British Treasury.
The Republic followed France's example by deciding to hold a "beauty contest" instead of an auction, looking at the merits of each candidate rather than how much they would pay.
Since last summer's marathon auction in Germany, share prices in the country's debtladen telecoms companies have slumped and analysts have questioned whether the decision to award the licences by auction was a wise one.
