The government's auction of 3G mobile licences was before a court again today as BT and One2One launched an appeal claiming the government's handling of the payment schedule was unfair and amounted to "state aid" for their competitors.
Last year, BT and One2One began legal action over the way that 3G auction winners paid the government for their licences. The companies claimed that they lost around £80m each because the government allowed rival licence holders Vodafone and Orange three extra months to pay.
The department of trade and industry allowed Vodafone and Orange to pay in September, rather than May, because Vodafone had to split from Orange in order to comply with the government's rule that no operator could own more than one licence. Vodafone paid nearly £6bn for its licence while Orange paid £4bn.
BT subsidiary BT3G and One2One argued that because they were forced to pay the £4bn cost of their licences at an earlier date, their rivals benefited by earning millions of pounds in interest on the money.
BT3G and One2One lost their bid in December, but today began a high court appeal of the decision.
The 3G auction netted the government £22.5bn, which Gordon Brown immediately said he would spend to pay off part of the national debt. However, the auction has been criticised by analysts who claim the high cost of licences will be passed on to consumers when 3G phones finally hit the streets.
The companies themselves have also struggled to convince the stock market that the heavy debt will be justified by widespread uptake of the technology. They were not cheered by a recent study that predicted it could be more than 10 years before telecoms companies begin turning a profit on 3G.
The government has ruled out any change in the terms and conditions of the licences, quashing rumours that ministers were considering refunding part of the licence fees.
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22.12.00: BT loses auction payments action
17.11.2000: Consumers pay the price in 3G auction
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