UK mobile auction could face probe

The National Audit Office (NAO) is considering whether to launch an investigation into the UK government's auction of third generation (3G) mobile phone licences earlier this year.

In April, the government netted a £22.5bn windfall through the auction of five 3G licences. But many experts have expressed concern that the huge bids will harm the UK's position as a leading information society, by forcing consumers to pay too much for services.

The NAO, which conducts financial audits of all government departments and agencies, presents 50 reports to Parliament each year. It has identified the 3G auction as an area which could need investigating.

"We are holding a preliminary study into the auction and will monitor the area closely before we decide whether it requires a full investigation," said a NAO spokesman. "If we do decide to investigate the auction, it is not likely to happen until early autumn."

Areas that could be investigated include the amount of money spent on the licences, the potential effect on the consumer and the lessons for the future, said the spokesman.

The government has been widely criticised over the prices paid for the 3G licences. Some analysts have expressed concern that operators will have spent so much on licences that they will not be able to afford the cost of building networks, leaving consumers with high charges.

Following the 3G auction the Telecommunications Managers Association suggested that the "monies taken by the Exchequer via spectrum auctions should be ploughed back into providing an up-to-date high-capacity local loop infrastructure".

User groups are also worried that the government's second online auction in September for broadband and fixed wireless access licences will also attract huge bids, which they argue consumers will ultimately pay for.