BT Threatens To Sue British Government Over Mobile Spectrum Allocation

The British government’s plans for providing fast broadband internet connection to each and every British household by 2012 have run into a major roadblock.

Britain's telecom giant, BT, has threatened to take legal action against the government if it goes ahead with its plans to liberalise the country’s mobile phone spectrum.

According to the plans under the "Digital Britain" scheme, the government plans to provide universal broadband access of at least 2mbps to every household by the time the London Olympics begin.

However, in order to provide universal access, changes have to be made in the way UK's five major mobile networks distribute the airwaves between themselves, so that they are able to offer mobile broadband services in rural areas where fixed line broadband is extremely slow.

The universal access will also require the sale of new space on the spectrum that will available when the analogue-TV network is switched off in 2012.

BT has sent a "letter before action" to the business secretary Lord Mandelson in which the company has asked the government not to use the soon-to-be-available spectrum for to serve this purpose and has threatened to take legal action if the government goes ahead with these plans.

The company believes that the government is granting unreasonable subsidies to the mobile phone companies because if these plans go-ahead, they will have their 3G licenses extended indefinitely.

Our Comments

Interesting case that pits the interests of a formerly owned public company, now a privately owned business, against its former owner. From a purely business perspective, BT is possibly right as governmental subsidies are likely to have a negative impact on its business.

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