T-Mobile has been forced to connect its mobile network to the phone numbers of a start-up which uses Wi-Fi networks to offer mobile users cheap phone calls. T-mobile was accused in the High Court of abusing a dominant market position.
T-Mobile was the only UK mobile operator not to connect its network to the numbers and, after negotiations broke down, the new phone company, Truphone, asked the High Court for an interim order forcing T-Mobile to connect its numbers. The Court agreed.
Truphone uses Voice over Internet Protocol (VoIP) technology to transmit calls as data over the internet. Widely used in the landline market, VoIP has not yet been commonly used in the mobile phone market. It offers significantly cheaper call costs than traditional connections.
Handsets using Truphone numbers connect to Wi-Fi networks where possible. Voice traffic is sent over the internet to Truphone's data centre, which diverts calls on to the public telephone network. The service is intended for customers who have another provider, whose network can be used when Wi-Fi coverage is not available. To use the Truphone service, customers each need an additional telephone number.
In order for T-Mobile customers to receive calls from Truphone numbers the company has to activate those blocks of numbers on its system. It is the only mobile network in the UK to refuse to do so. It first refused on the grounds of price, then when the price question was settled, it refused because it said it was unhappy with other contractual issues.
Truphone asked for interim court orders forcing T-Mobile to connect it while the companies wait for a full trial. It said that the VoIP market moved so fast that it could face ruin if it had to wait for a full trial before it could launch its service.
Truphone argued that T-Mobile's refusal to connect its numbers was an unlawful abuse of a dominant market position without objective justification.
Robin Knowles QC, sitting as a deputy High Court judge, said that the balance of convenience was in making the interim orders.
" I am quite satisfied that the risk of injustice if these interim orders are refused outweighs the risk of injustice if they are granted," said Knowles. "On the one side there is the risk of injustice to Truphone in the form of potential destruction of its viability as a business, and permanent damage to its time-critical attempt to introduce a new service based on technology that has been in development over several years. On the other side there is the risk of injustice to T-Mobile in the form of its being forced to do what all other MNOs are doing."
The two companies had settled their differences about cost by Truphone agreeing to T-Mobile's tariffs, to which it had objected, to ensure that a service was launched.
"The evidence is that all other MNOs have activated Truphone's numbers," said Knowles in his ruling. "T-Mobile has activated numbers allocated to other communications providers. It does not contend that any technical, safety or other like issue makes it more difficult or problematic to activate Truphone's numbers than those allocated to other communications providers."
In order to have abused its position, T-Mobile must be deemed by a court to have significant market power. T-Mobile said that it only had a 22% share of the market for UK mobile phone services, and that it would have to have a 30% share in order to be deemed to have enough market power for market abuse laws to apply.
Truphone said that the relevant market was in fact the supply of services to T-Mobile customers, and so that it had did have sufficient market power.
"My present view is that Truphone's definition of the relevant market may be too narrowly drawn, and T-Mobile's too widely drawn," said Knowles. "Definitions of market in this area can be variously drawn. Although the present case is not concerned with termination on T-Mobile's network it is notable that in concluding that each of five mobile network operators (MNOs) (including T-Mobile) has Significant Market Power "in the market for termination of voice calls on its network(s)", Ofcom concluded that each MNO provided a separate market for wholesale mobile voice call termination (Ofcom Statement dated 27 March 2007 'Mobile call termination')."
"However even if T-Mobile's definition is used, it is to my mind seriously arguable that a percentage somewhere between 22 and 30% may be sufficient to create dominance in a market defined so widely and of this nature," he said.
The case must still face a full trial, and the question of whether or not T-Mobile had significant market power is likely to be one of the trial's most hotly contested issues.