The one thing that stands out immediately about how we have finally decided to award third-generation (3G) mobile telephone licences is that no one in Government seems to understand the concept of the time value of money. It sounds like one of those complicated financial measures by which investment analysts befuddle the public but the basic idea is really quite simple. How much would you pay me now for the right to receive $100 from me in one year's time? If you say $100 you have an instant deal. I take your $100 and, even if I play things safe by depositing it in the bank, I keep $4 in deposit interest at the end of the year and give you your $100 back. If you say $50, no deal. I will need too much luck to make up that other $50 in a year's time. Let us call it $90. This is the same as saying that we are discounting your $100 by 10 per cent a year. Now compound that over five years and a 10 per cent discount rate means that the right to receive $100 in five years' time is worth $59.05 today. Understand this well. In financial terms there is no difference between $59.05 today and the promise of $100 in five years' time if we agree that 10 per cent is the appropriate discount rate on that promise. Of course it may not be $59.05 tomorrow if tomorrow we think that the discount rate should change. But if we knew what tomorrow would bring we would make a slight adjustment and value it today on a one-day discount from tomorrow. Go at it however you please, the same result ensues. The two are worth the same. So if the Government chooses to make operators of 3G networks bid for a flat fee that they will pay for their network rights why should it choose to stage that payment over five years rather than demand it as one lump sum up front? That concept of time value of money says it makes no difference. You have an obvious answer to this of course. If the Government demands it all up front then three existing small operators of second-generation (2G) networks plus others who want to get into the business may not be able to raise the money they need while making it a staged payment will allow them to find that money from their network revenues. We do not want to give 3G only to the well-heeled big boys, do we? First of all, do we? Follow that chain of reasoning to its logical conclusion and we are back to Mao Zedong's idea of everyone having a steel mill in his garden. If it is a big boys' business, and it probably is, then we only make it inefficient by tempting the small boys into it. Yes, great for social consciousness in case you ask and Karl Marx's grave is that-a-way. What we do in financial terms by taking this route is transfer a private financial risk to the public purse. If the small boys go bust those staged payments are gone. We would have had the money if we demanded it up front. Let us put it more simply. Let the banks determine whether the credit risk in financing an up-front payment by the small boys is worthwhile. If credit professionals think it is not, why should credit amateurs in Government think it is? Then we have those percentage royalties on turnover on which prospective operators must also bid for the following 10 years. First of all there are ways to make turnover look like something else and not pay a cent and secondly they will encourage irresponsibility among the bidders. The wildest dreamers will walk away with the prizes. It is no skin off their noses. If their gambles succeed they win. If their gambles fail the Government loses. Those royalties will not be forthcoming. And that is what happens when we scorn simple solutions for tangled webs. Up-front lump sum auction was the proven way to go but, no, we are clever people, we know better.