Japan 18 months ahead on phones, says Gent

Sir Christopher Gent, the former chief executive of the mobile operator Vodafone, last night blamed the heavy cost of third-generation phone licences for allowing Japan to steal an 18-month lead on Europe's mobile phone industry.

"The auctions conducted in Europe for 3G spectrum, particularly in Germany and the UK, were the turning point of investor confidence in the future of mobile," Sir Christopher said.

"The massive transfer of capital from shareholders to taxpayers has also had a big impact on Europe's once leading industrial position, so that we are now 18 months behind Japan," he said. "In Japan, DoCoMo and other operators have benefited from more benign regulations and no penal costs for spectrum."

Sir Christopher, who stepped down as chief executive of Vodafone after the company's annual meeting but continues at the company until the end of the year, was addressing the Royal Academy of Engineering last night. He stressed that in his view, not Vodafone's, the UK and German governments "had the objective of maximising returns for taxpayers at the expense of industry and shareholders".

"While I believe open auctions are a fair way to distribute scarce resources, in this case the auction rules were deliberately distorted to maximise returns," he said. "The European operators and supply side have suffered a big penalty compared with the Far East."

Nevertheless he said he believed the future growth of mobile communications would be "even greater" than the massive growth witnessed in the past few years. "I believe that by the end of the decade the number of mobile users will have doubled," he said, noting that China was growing at a rate of 4-5 million users a month, the US had only half the penetration of Italy, while South America, Asia and Africa were all growing rapidly.

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