According to the public sector watchdog, the auction, which raised £22.5bn from the five successful bidders, was ‘well designed and efficient’.
The NAO found the process was well managed, with the running costs kept to just 0.1 per cent of the money raised by the Radiocommunications Agency, the body responsible for marketing the licences.
Fears that the money paid for the radio spectrum would be damaging to the telecoms industry were dismissed by the report.
Though there has been a downturn in confidence in the industry since the auction, ‘difficulties are not solely due to auctions and operators are still able to invest in developing services’, according to the NAO.
In fact, the report suggests the high prices paid for the licences would speed up the delivery of third generation services.
‘The high cost of the licences to operators gives them an added incentive to roll-out services more quickly than if the spectrum had been given away,’ the report said.
The five winners of the bidding process, BT, Vodafone, Orange, One2One and new entrant Hutchison, have all expressed reservations about the auction costs. Earlier this week One2One and BT lost a High Court appeal against the UK government’s handling of the auctions. The telecoms companies challenged the government over its decision to delay payments due from Vodafone and Orange.
But praising the process, Sir John Bourn, head of the NAO, said: ‘The Radiocommunications Agency successfully applied an innovative technique to allocate radio spectrum for the next generation of mobile phones to those operators who value it most.’
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