BT threatens legal action over 3G licence auction

BT has claimed it can legally challenge the outcome of the third generation (3G) mobile phone licence auctions, raising the potential of further delays for the government.

The telecoms giant wrote to the Radio Communications Agency outlining concerns that changes to government regulations has led to possible conflicts of interest in the bidding process.

It is apprehensive because 3G licence bidder, Vodafone, now owns Orange - as a result of its takeover of Mannesmann - yet Orange is bidding for a licence separately. BT insisted this could lead to an unfair outcome to the auction if the two companies collaborate to win the bid.

Recently the government reversed rules preventing one company from bidding for two licences.

BT said it will monitor the auction and will take legal action if it sees evidence the process has been unfair. The company has denied it is trying to stop Orange from bidding for a licence, and denied it is trying to find legal redress in case it loses its own bid. A BT spokesman said: "Some people may see it as sour grapes in the event that we lose, but that's not it - we just want to ensure an open and fair auction."

The auction process is due to start on Monday, 6 March and is being held by the Radio Communications Agency, part of the DTI. The 3G licences are widely seen as the key to developing mobile Internet services in the UK.