This story in the Guardian looks at the process, and the ethics, of the British (and other European) allocation of 3G licenses. 3G fiasco - only the porn barons win

How are the mighty fallen. MMO2's announcement of the second biggest loss in British corporate history brings back some memories.

Of the early months of 2000, in fact, when an astonished British public was treated to the spectacle of highly paid (and hitherto apparently rational) telecom executives going bonkers. The occasion was the auction of licences to operate 3G cellular telephone networks in the UK.

The auction opened on 6 March and closed on 27 April. [...] The unfortunate 'winners' were TIW, Vodafone, BT3G (which later became MMO2), OnetoOne (later T-Mobile) and Orange.

In a further certifiable decision all five opted to pay for their licences up front, and by September 2000 all had a licence to lose money in their hot little corporate hands.

MMO2 paid about £4 billion for its licence (together with a further £5bn for licences in Germany). In total, the auction raised about £23bn for the Treasury.

It also added greatly to the nation's entertainment, for it was clear even to the meanest intelligence that the sums paid for these tickets to corporate oblivion were manifestly absurd.

There was something deeply comic about seeing the private sector - which in the shape of buffoons such as CBI chairmen regularly lectures the public sector about the need for efficiency, cost control and fiscal prudence - squandering shareholders' money on such a staggering scale.

We now learn (from an interesting Radio Four programme by Simon Singh) that the 3G auction was designed by a game theorist named Ken Binmore from University College, London. If so, Professor Binmore is a genius.

[...]
In fact, some of his mathematical colleagues were astonished by the bidding strategies adopted by the mobile networks during the auction, and have written several learned papers trying to infer what the companies thought they were doing.

This is no doubt a fruitful subject for academic research, but it raises in my mind a different question - namely whether maximising the Government's 'take' from the auction was actually in the public interest.