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Singapore's 3G blues

Third-generation wireless telephone service suffers a setback as the government of Singapore slashes millions off the opening price for the 3G licenses it plans to auction.

Third-generation wireless telephone service suffered another setback this week when the government of Singapore slashed millions off the opening price for the 3G licenses it plans to auction in April.

The government had also pushed back the deadline to launch the high-speed "3G" services in this tiny island nation of four million. Carriers now have to meet a Dec. 31, 2004, deadline to offer 3G services instead of Dec. 31, 2003.

Government officials made the changes after reviewing comments from telecommunications providers including British Telecommunications, which has expressed interest in participating in the auction.

The opening price tag of $85 million was reduced to $56 million.

"The assessment is that the market value of 3G licenses has dropped considerably," Yeo Cheow Tong, Singapore's Minister for Communications and Information Technology, said in a recent address to the Singapore parliament.

The news from this tiny island nation is the latest in a series of setbacks to 3G wireless phone service, a technology by which consumers can get high-speed Internet access. It also follows auctions of similar licenses in Europe that, while amassing $100 billion for various governments, was considered a disappointment.

Analysts think such an announcement is unusual coming from an Asian country that traditionally has led the race to offer 3G. Japan's NTT DoCoMo is expected to be the first to offer 3G technology, with service starting in May.

"Wireless technologies usually advance according to the international date line--first Asian, then it goes to Europe and then America," said Kelly Quinn, a wireless analyst with Aberdeen Group.

The announcement is also "a realistic appraisal in Singapore based on state of tech and state of economy," said Alan Reiter, president of the Maryland-based consulting firm Wireless Internet and Mobile Computing.

He said it's the first he's heard of a country lowering the opening bid level requirements.

Tong told parliament the opening bid price was set last year, before the economic malaise set into the world's technology sector. He said government officials also took into account that analysts have begun downgrading their assessments of some of those companies that bid on European licenses, doubting they'll ever be able to recoup the funds.

Lowering the prices was done in the hopes of keeping interest in the auction alive, he said.

"Many larger players have lost their investment grade ratings," which will lead to higher financing costs to build out 3G infrastructures, Tong told parliament. It "may slow down the rollout of 3G networks and services."