Editorial

The third 3G licence has been a long time in coming. The Malta Communications Authority has just announced it would grant a licence to 3G Telecommunications Ltd, two years after Vodafone and Go Mobile got theirs. At the time, MCA halted the due diligence process for 3G Telecommunications because of "various material changes to the original application", which were never specified. The company appealed a few weeks later and the Appeals Board eventually decided that the MCA should proceed. 3G Telecommunications submitted an updated application and, finally, the long wait was over.

The first inkling of a third mobile operator was seen in 2004, when the Communications Ministry issued a consultation paper on the introduction of 3G. At the time, there were already 308,400 subscribers to the 2G network. Now, there are 353,500, a 14.6 per cent rise in an already fairly saturated market but one which, nevertheless, grew by 6.5 per cent in the second quarter of this year. The normal indicator is the number of subscriptions per 100 population. In 2004, it was 74; in mid-2007 it was 86.6. However, that is only part of the story: There has also been growth in the number of minutes used (up 18.4 per cent in the second quarter), in text messages (21.1 per cent), in MMS (9.6 per cent) and in WAP (12.4 per cent).

The Vodafone-Go Mobile duopoly has been around for a long time - but clearly the market is far from stagnant. The big question is whether it can sustain another operator - or two. Melita Cable is thinking about offering mobile telephony on the back of an existing operator, just as Sky Telecom does with the Go network.

Vodafone and Go Mobile had objected straightaway to a third 3G licence. Their argument is that a third operator would wriggle its way into the market by cutting costs, forcing them to do the same, thereby cutting their profits - which translates into less money for investment in new technology which, admittedly, is very costly.

What is 3G Telecommunications after? Its majority shareholding is in the hands of M/C Venture Partners, a US venture capital firm that has invested in the sector for over 20 years, with $1 billion in capital.

The question is whether a venture capital firm is in it for the long-term or whether they want to make a quick buck. Given the considerable investment needed to get started - the licence for the bandwidth cost Lm2.5 million and the technology will run to over Lm10 million - there is not much chance of the latter.

Could they be after the licence because it is available and because it may be more valuable to someone else in the future? This strategy worked well for Multiplus, which languished as a television provider but in the end did very well for itself when Maltacom preferred to buy something already up and running than to re-invent the wheel.

MCA, as the regulator, will undoubtedly be on the lookout for any hints of changes to the conditions it laid down, including the fact that 3G Telecommunications must roll out its service in 60 months.

The sector has been really shaken up over the past years and the scramble to offer quadruple play (fixed line, mobile, television and broadband) will only get more complicated once broadband wireless access also becomes available.

The big question is whether the consumer will be better served or not in the long run.