Row erupts as France plumps for 3G beauty contest

French officials are on the back foot this week over their decision to award third-generation (3G) mobile licences using the beauty contest method. This goes against the recent auctions in the UK and Germany, which saw huge sums raised for the respective governments.

Christian Pierret, secretary of state for France, spoke out amid speculation that the Spanish government - which also plumped for the beauty contest method - was seeking to bolster income by imposing new taxes on its mobile operators.

It raised only E500m (£304m) from its 3G beauty contest. Britain earned E38bn (£23bn) and Germany E50bn (£30bn) from their national auctions.

In a statement, Pierret reiterated the reasons his government has chosen to hold a beauty contest with an entry fee of E4.95bn (£3bn) per licence.

He said France has to ensure the licences work to build a national network to improve accessibilty to the internet.

"The government wants to take into account the economic interests of all consumers, operators and taxpayers," said Pierret.

Four licences are on offer and bids are expected from Bouygues Telecom, France Telecom, SFR and Telefonica.

Pierret said the call to candidates is "completely opened and transparent" but entrance fees must be lodged by January 2001. The licences will be allocated six months later with services starting by January 2002.

Each operator will have to pay the first half of the licence fee in six successive payments through 2001 and 2002. The remaining fees will be paid in 14 annual payments.