Hutchison Poised To Sue UK Regulator
By Carlo Longino, Fri Dec 17 21:45:00 GMT 2004

3 UK could launch legal action against UK telecom regulator Ofcom should it relax 3G coverage rules.

The UK's 3G license rules require operators to cover 80% of the British population by 2007, a mark 3 said it hit last week. But Ofcom, the country's telecom regulator, is considering loosening the stipulation, or dropping it all together, a move Hutchison says will give other operators a competitive advantage. The company is prepared to go to court to sue and try to recover some of the money it spent building out its network to meet the regulations.

3 parent Hutchison Whampoa spent 4.4 billion pounds on its license, and experts say it has a strong case to win compensation from the government should Ofcom relax the license terms. The regulator evidently believes the market is already competitive enough that it doesn't need to intervene, and much of that competition is due to 3 and its aggressive pricing of handsets and voice service.

Hutchison Whampoa said its global 3G operations now have almost 6 million users, and results from November showed slightly improved numbers over earlier in the year. While customer acquisition costs edged back up from July, 3's new users raised total revenue enough -- even though ARPU slipped -- to cover the difference.

Ofcom is prepared to make some other changes affecting mobile operators as well. It's expected to announce plans to sell off spectrum in the 2.5-2.69GHz range, potentially for 3G or other wireless broadband usage, but even more frustratingly for the carriers, could the "3G expansion band". It's doubtful that these auctions would command the sky-high prices of several years ago, and operators see this giving new bidders an unfair advantage. It's all give-and-take with Ofcom, though, who in addition to relaxing the 80% requirement, could also change the terms of the current 3G licenses to make them permanent, rather than expiring in 2021.