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Groups Seek Phone License Proceeds

August 15, 2000

MAINZ, Germany (AP) _ The bidding in Germany’s auction for next-generation mobile phone licenses reached $39.4 billion Tuesday and interest groups jostled for a piece of the proceeds.

The bids have come from six firms who want rights to transmit phone and data calls over the newly opened airwaves being auctioned off by the German government.

That amount reached in the third week of bidding for next generation mobile phone transmitting technology, known as the Universal Mobile Telecommunications System, far outstrips the Finance Ministry’s expectation that it would raise $9.2 billion from the auction to be used for deficit reduction.

It also surpassed analyst forecasts for a $27.6 billion haul and the unexpected $35.6 billion bonanza Britain reaped during its own auction last April.

The new mobile phone standard has a transmission speed nearly 40 times the existing standard, allowing mobile-phones be used more like computers with the capacity to access the Internet and even display video.

``We are in the home stretch,″ said Klaus-Dieter Scheurle, president of the German telecommunications and postal regulatory authority.

But even as Scheurle hinted the auction was winding down, some analysts were raising their forecasts saying companies would keeping bidding to $46 billion.

That massive cash windfall has special interest groups around the country hoping to divert some of the funds away from reducing the federal debt.

Lawmaker Heidi Lippmann, of the formerly communist Party for Democratic Socialism, wants $920 million to help offset the losses by the Expo 2000 world’s fair in her home district city of Hanover.

A coalition of environmental groups suggested using 1 percent of the proceeds to research possible radiation dangers of mobile phones.

And the governor of the southwestern state of Baden-Wuerttemberg argued that individual states, not just the federal government, should get a cut for their own debt reduction.

Finance Minister Hans Eichel wants the government’s proceeds to be used for repaying the $1.1 trillion federal debt.

The ministry estimates that for every $4.6 billion in debt paid off, the government saves $230 million in interest.

And the government already has plans to spend those savings on education and transportation, with up to $1.22 billion channeled into schools in distressed areas and for expanding the state-owned railway network, Finance Ministry spokesman Joerg Mueller said.

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