German 3G auction bids top UK's

Bidding in Germany's third generation (3G) mobile licence auction has exceeded the huge prices paid in the UK earlier this year.

Despite experts warning against using the auction process after bids in the UK reached £22.5bn, telcos have so far bid more than 43.79bn euros (£26.38bn) for licences on offer from the German government.

Industry groups in the UK criticised the UK government's decision to hold an auction for five spectrum licences in April, which they said led to "rocketing" prices. The Telecoms Managers Association said: "The cost of the new networks, with at least another £3bn on top of the bids, will affect the prices charged to customers."

The Association also pointed to the US where it said the auction concept led to secondary reselling and business failures as a direct result of "bidding inflation", and urged the government to rethink the use of any further auctions.

Analysts also warned that huge costs generated by an auction could mean that operators will have spent so much on licences that they will be unable to afford the cost of building networks.

In the German auction, which has been running for 12 days, companies do not bid for the licence itself, but for 12 different spectrum blocks. Bidders must win two blocks to qualify for a licence, while three guarantees having a network which covers the whole country.

Viag Interkom, backed by BT, has said it will only bid for the two minimum spectrum licences, owing to the spiralling costs. E-Plus Hutchinson, backed by KPN and Japan's DoCoMo, has also confirmed it will not seek three blocks.

The German government has said it plans to use the money to reduce its budget deficit.