Government stands firm over 3G licence appeal

Government officials are insisting that last year's 3G licence auction was not unlawful, as BT and One2One try to persuade the Court of Appeal that they were treated badly.

The two mobile network firms claim that the government gave an unfair advantage to rival mobile operators Vodafone and Orange by giving them more time to pay their bids for 3G licences. All four companies successfully bid for a 3G licence but while BT and One2One paid up in May 2000, Vodafone and Orange were allowed to wait until September.

BT and One2One claim that paying up earlier cost them over £80m each in extra borrowing charges. A high court judge rejected these claims last December, but both companies have appealed.

The Department of Trade and Industry (DTI), which ran last year's auction, is confident that it will win this week's appeal hearing. "We're fully satisfied that the 3G auction was fair to all parties, and complied with all legal requirements," a DTI spokeswoman said on Tuesday.

Under the terms of the 3G auction, no company was allowed to own more than one licence. Because Vodafone had bought Orange's parent company Mannesman, the two companies were allowed to hold off paying for their 3G licences until Orange had been sold to France Telecom.

The appeal hearing is expected to last until the end of this week.

Vodafone's 3G licence cost nearly £6bn, while BT, One2One and Orange each won a licence with bids between £4bn and £4.1bn. Canadian firm Hutchinson won the fifth 3G licence.

Find out more about what's coming up in the wireless world with ZDNet UK's Special Report: The Road to 3G.

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