Lord Mandelson is to forge ahead with a consultation to extend indefinitely mobile phone companies’ 3G licences, despite the threat of a judicial review from BT.
The fixed-line phone group has written a “letter before action” to the Business Secretary, condemning plans to hand over for good the valuable licences to Vodafone and its peers as part of the Government’s Digital Britain project. It alleges that such a move “represents a gift of several billion pounds from the taxpayer to the mobile operators and is a barrier to competition and innovation in the mobile market”.
The Department for Business, Innovation and Skills insisted that it remained undeterred. A spokesman said: “Our consultation is ongoing and BT, like any other interested party, is welcome to comment.” She emphasised that, if the plans were to go ahead, the mobile companies would still pay an annual fee for the licences.
The Government’s Digital Britain White Paper, published in June, proposed that all households should receive broadband at a minimum standard speed of two megabits per second by 2012. In return for help with achieving that aim and for providing mobile broadband in rural areas, it proposed that mobile phone companies could keep their 3G licences indefinitely.
The licences, for which mobile companies paid out a total of £22.5 billion during frenzied bidding in 2000, are due to expire in 2021.
Responding to BT’s claims, the mobile phone companies denied they would be receiving unfair treatment. A spokesman for 3 said: “A 3G licence extension is simply a move, in 11 years’ time, to the same annual fee structure levied on the vast majority of the radio spectrum used by mobile operators today.”
BT’s threatened legal action comes amid warnings from analysts that Britain risks slipping behind its global competitors in the broadband league table.
As the technology enters its second decade, they said that there were serious issues that Britain must fix. These include the persistent failure of uptake among a section of households, poor customer service and stubbornly low speeds.
Tim Johnson, chief analyst at PointTopic, the broadband consultancy, said: “After a slow start, the UK proved to be one of the fastest-growing broadband countries. In the past year or two things have been a bit more sluggish, with the UK not doing a good job of bringing the whole population on board.
“Broadband brings considerable social and economic benefits and if you don’t keep up, you lose out on those.”
Nearly two thirds of UK households have a fixed-line broadband connection — a good score compared with other countries. The Government is working to bring on board the remaining rump. It recently appointed Martha Lane Fox, the internet entrepreneur and founder of Lastminute.com, as a new internet “czar” to encourage those without broadband to get wired up. But experts warn it is not enough.
Mr Johnson said: “You can’t force it on people, but much more can be done to persuade no-net homes to get online and this needs to be a key objective for the next decade.”
Speed is another area that needs tackling urgently. Some super-fast speeds are on offer in the UK, but they are not widely available and the standard offer from BT is still only up to eight megabits per second (Mbps). In contrast, speeds of 100 Mbps are quite widely available in France and Japan.
In his Digital Britain report, Lord Carter of Barnes examined the issue of speed in detail. Yet many within the industry were left disappointed by his decision to set only 2 Mbps as the minimum target standard speed for all homes by 2012.
Question marks also remain over how the roll-out of “super-fast” broadband will be funded.
The report proposed a £6 per year tax on fixed-line phone connections to help to fund the roll-out of high speeds to rural areas. The Conservatives might scrap that plan if they win the general election next year.
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