Europe’s Airwave Auctions Wrong, Says Deutsche Telekom Chief

When a government is buried in debt, making money from thin air sure sounds like a good idea.

The U.K. and the Netherlands were among the latest European countries to sell wireless frequencies — the right to use certain airwaves for mobile-phone voice and data — cashing in almost $8.6 billion since December.

But it’s wrong, says Deutsche Telekom AG Chief Executive Officer Rene Obermann — because it eats up funds that phone companies need to build faster networks.

“Are you aware what’s going on?” he asked an audience at the Mobile World Congress in Barcelona. “Spectrum is the scarcest resource, and auctions are designed to maximize the outcome. But for whom? For those who auction the spectrum.”

Wireless frequencies “should not be used to compensate for state deficits. I’m getting very nervous about this,” he fumed.

Wireless veteran Obermann surely remembers that a decade ago, when few had any doubts as to the ability of Greece to pay its debts, phone companies dished out much larger amounts for wireless frequencies — 50 billion euros ($65.3 billion) in Germany alone. The 3G auction in U.K. in 2000, during the height of the dot-com boom, raised 22.5 billion pounds ($34.1 billion).

Now, when both sides are having financial trouble, words easily turn bitter.

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