One2One's High Court victory against the Department of Trade and Industry (DTi) could set the UK back more than a year in its race for deployment of third generation (3G) mobile technology.
One2One, which was supported by Orange, rejected the government's condition that a new mobile entrant should have the right to roam on its network. (see Newswire 11 August)
Both carriers had argued that the obligation to allow the new entrant to piggy-back its network is effectively a change of the terms of their original licence, and that any such changes would need to be reviewed by the Competition Commission.
"The DTi will have to go back to the drawing board, so the auction [for 3G licences] will be delayed for at least six months. This could become 18 months if the government decides to appeal," said Tim Sheedy, analyst at research group, IDC.
When the DTi announced that it would put five 3G mobile licences up for auction at the end of this year, it promised that at least one of these licences would be issued to a new entrant to the mobile market. Incumbent operators can only bid for a licence if they allow the new entrant roaming rights on their network.
The auction of these 3G licences, which should have begun at the end of 1998, is expected to raise more than £1 billion for the government. It was delayed until this year because of technical and commercial disputes. One2One's victory will further delay the process.
The UK's progress compares poorly to other countries: Finland, for instance, has already awarded its licences, and Japan is already offering 3G services.
One2One, however, rejected criticism that it is standing in the way of the technology. It argued that the auction can still go ahead without the roaming condition, as operators would have enough commercial incentive to provide roaming without being forced to do so.
Sheedy commented: "One2One had a good case because the DTi didn't have any right to change its licence, but the verdict will have some dramatic repercussions."
Sheedy feels that if the decision is final, it could put the new entrant at a big disadvantage because it won't be able to gain 3G revenue until it has built its own network. But he added: "The new bidders will need more time to consider their position now because they'll need more finance. However, it might mean that the service is deployed quicker because they might put up their own network faster.
"There's no reason why the new operator can't do well without roaming if they offer better services and prices and use some clever marketing," he added.
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