Mobile firms have spent too much on those vaunted third generation licences, and now the EU may have to help bail them out.

European Union heads of state have ordered the European Commission to look into the mess that arose from the auctioning of 3G mobile licences in some EU countries.

The heads of the 15 EU countries concluded from their meeting in Stockholm last week that the EC should "examine the effect of third generation licensing on competitiveness and the advancement of the information and communications technology field".

"We will be drafting a report on how to alleviate the financial burden [on telcos pioneering 3G]", said EC spokesman Per Haugaard.

3G, or UMTS (universal mobile telecommunications system), mobile phones will start to replace the second generation of GSM phones in the next five years.

The prices paid by telecom companies for licenses have varied hugely. The UK and Germany, the EU's two biggest mobile phone markets, received enormous windfall gains from their auctions of licences.

Commissioner for the information society, Erkki Liikanen, criticised the present situation of 15 diverging national laws on licensing. Liikanen said the different prices paid by countries would badly affect how or when some of them would introduce the technology.