Judge deals setback to pounds 2bn licence auction

THE GOVERNMENT'S pounds 2bn auction of the next generation of mobile telephone licences suffered a major setback yesterday after a High Court judge ruled that it has acted illegally.

Mr Justice Moses upheld the claim brought by the UK mobile operator One2One, that established telephone companies bidding in the auction should not have a mandatory obligation to allow new entrants to roam on their network.

In a statement commenting on the victory, One2One said: "We welcome this judgment and believe all other telecommunications operators will too. If operators are to invest millions of pounds into the UK economy, they need to know that ministers and the regulator will follow the rules laid down by policy."

One2One argued that mobile operators should have the option to have licence modifications referred to the Competition Commission.

It said the Government's decision to make acceptance of a national roaming licence modification a pre-condition for bidding in the auction denied operators that right. Rival company Orange was declared as an interested party in the action.

A Department of Trade and Industry spokesman said: "The Government is determined not to let the benefits of third generation mobile licences be lost to consumers. We note that the judge has recognised the ability to roam onto existing networks will be an important means of ensuring that a new entrant can take part in the auction."

He said the Government would continue to help provide a level playing field for new entrants and was discussing its next move with potential new bidders.

The Government unveiled its plans to issue a third generation of mobile licences in its 1997 manifesto. The sale of five licences was originally scheduled for last spring but has already been set back by delays in drawing up documentation.

The Government will be seeking a swift resolution to the issues raised by One2One if the UK is to avoid falling behing its European competitors. Finland, a world leader in mobile telecommunications, has already issued its third generation licences.

The DTI spokesman said: "The UK is committed to retaining its world leading position at the cutting edge of telecommunications market development."

How long the auction will be delayed will depend on the course of action the Government decides to take. But analysts estimate that the sale could take place up to a year behind schedule.