One2One launches legal challenge to mobile auction

GOVERNMENT plans to auction the next generation of mobile telephone licences early next year are being challenged legally by One2One, which has gone to court to seek a judicial review of the proposals.

Vodafone, the country's largest mobile operator, is also known to favour modifications to the DTI's current licensing has not joined the review. The two other mobile network operators, Orange and BT Cellnet, are understood to privately support One2One but have not taken a formal role in the action.

One2One is challenging the DTI's proposal that existing mobile operators must agree to allow new licence winners to use an existing operator's network while the new operator builds a network. How long this would last and what access charges would be paid is being considered by Oftel.

In February, the Government postponed the licence auction, which could raise some pounds 1bn-pounds 2bn, until early 2000. That followed delays in agreeing network standards, and also reflected the need to allow the Secretary of State for Trade and Industry Stephen Byers to become familiar with the technology and business issues surrounding 3G services after he replaced Peter Mandelson.

Yesterday the DTI appeared unbending about the licence conditions it is proposing, though a concerted industry push could yet bring about policy changes. "We are disappointed they have launched the action," said a DTI spokeswoman, commenting on One2One's move. "It will delay the introduction of services. We think our position is lawful and we don't expect to lose in court."

All four existing operators are certain to apply for one of the five proposed third generation or 3G licences, although one licence is to be reserved for a new entrant. Firms that have indicated they will bid include: alternative telecoms company Energis, United News & Media, cable operator NTL and Virgin. Foreign players that could enter the fray, either as sole bidders or members of consortia, may include French media group Vivendi, Deutsche Telekom and US mobile operator BellSouth.

But Britain's existing operators seem determined to resist opening up their existing GSM digital networks to a licence winning bidder on what executives claim would be non-commercial terms. Though 3G services have yet to capture consumers' imagination, big business - ranging from mobile operators to media and computer companies - are plotting to tap into what is likely to be the fastest growing business sector of the early 21st century.

Services will be based on 3G mobile networks having access to considerably greater spectrum or bandwidth than is available to GSM networks. That enhanced capacity will allow future models of mobile phones with expanded screens to browse the Internet at speeds 10 times faster than the fixed line access speed - about 40 kilobits per second - now available to consumers.

The handsets will also feature two way video communication, e-mail and other information facilities, as well as software for playing interactive games or checking traffic routes when on the move.

Some of these features will become available late this year using existing GSM network technology and new handsets called WAP phones. But the full range of interactive functionality will ultimately require the greater capacity and higher transmission speeds of broadband 3G systems.

The new networks presage the eventual truimph of Internet Protocol (IP), the technology used to move data around computer networks. IP technology breaks information into packages of digital code, and through multiplexing, transmits those packets over networks to be reassembled at the other end.

With IP technology sweeping all before it, designs for the next generation of mobile phones and hand-held computing devices are attracting interest from telecoms equipment makers as well as software and computer companies. Microsoft wants to secure the adoption of its Windows CE system in handheld devises and networks, and has agreed a non-exclusive alliance with BT.

Lining up in competition are Ericsson, Motorola and Nokia - the top three mobile manufacturers with over 60 per cent global market share. They are partners with UK hand held computer maker Psion in a venture called Symbian which aims to set the operating system standard for 3G handsets.

On a broader level, One2One's legal move reflects frustration among mobile phone company executives who believe Britain is losing a valuable first-mover advantage by delaying the introduction of 3G network frequencies. They point to the industrial advantage gained by telecoms manufacturing companies like Ericsson and Nokia when Nordic countries agreed common regional mobile standards in the early 1980s - well before the UK or continental Europe.