3 set to take Ofcom to court over 3G rules

December 18, 2004 - source: BWCS

Furious greenfield mobile operator, 3, is set to take legal action if the UK telecoms regulator presses ahead with plans to formally relax roll out regulations contained in the 3G licences it awarded in May 2000. The Hutchison-backed 3G operator is the only one of the five British licence holders to have complied with the conditions, so far. A feat which it says has cost it at least £1 billion. Should Ofcom now turn round and decide that coverage is not an issue, 3 believes its rivals will be handed a major advantage.

The UK regulator is known to be sympathetic to the plight of would-be 3G operators which spent heavily on acquiring licences four years ago, but have since seen the technology take longer than expected to mature. Ofcom has recently been dropping heavy hints that it plans to allow operators to develop next generation mobile networks at their own speed and not to hold them to the rules laid out in the licence awards. The regulator believes there is enough competition in the marketplace to ensure the operators use their licences effectively without the need for regulatory intervention.

According to reports in the British press, this has lead 3 to examine its options for seeking compensation. The operator successfully met its 3G network roll-out target last week, some two years ahead of schedule. At the very least, 3 is expected to claim back some part of the £4.4 billion fee it paid for a licence in May 2000, the full amount will depend on how far Ofcom relaxes the rules.

As the Times of London put it "It is difficult to see why the regulator feels that it is able to treat people who have not met their obligations with greater generosity than those who have and it seems like a bad precedent."