A High Court judge in London ruled that Trade and Industry Secretary Stephen Byers acted unlawfully in telling One2One, Orange, BT Cellnet and Vodafone that they must share their lines with the newcomer.

Byers: aiming to get new competitors in UK mobile market

The case was brought by One2One, backed by rival Orange.

Mr Justice Moses said Mr Byers exceeded his legal powers when he laid down conditions for the auctioning of "third generation" mobile phone licences, due to take place before January 2002.

Mr Byers had made it a condition of any bid for a new licence by the current operators that they allowed any new entrant to rent capacity from, and "roam" across, their expensively established networks.

His aim was to level the playing field a little for new entrants to the UK mobile telecommunications market when the next generation of phone licences are awarded.

Ready to appeal

At stake is a potentially huge market with the third generation mobile technology allowing the introduction of high-speed Internet access and video-conferencing "on the move".

Roaming rights were considered essential because otherwise a new entrant would struggle to survive against the established competition, said the judge.

But the judge upheld One2One and Orange's case that Mr Byers had no power unilaterally to force a modification of the existing second generation licences - which did not incorporate roaming rights - without the licence-holder's consent.

The DTI was given leave to appeal against the ruling, saying it wanted to ensure there was enough competition to provide choice for consumers.

"Third generation mobiles will play an important role in promoting competition and innovation, which will bring exciting new benefits to consumers," said a DTI spokesman.

"The Government will continue to promote sustainable competition in the UK mobile market and to help to provide a level playing field for potential new entrants," he added.

Trailing Finland

"It is discussing with potential new entrants the best way of approaching this."

One2One said later it took the action to "clarify the circumstances under which operators' existing licences can be modified".

The company had argued operators had the option, under the 1984 Telecommunications Act, to have licence modifications referred to the Competition Commission for consideration of the public interest issues involved.

One2One said: "If operators are to invest millions of pounds in the UK economy, they need to know that ministers and the regulator will follow the rules laid down by Parliament."

The company stressed: "This case was about process, not policy. One2One backs increased competition in the mobile market.

"We believe that the Government should now move swiftly to auction the third generation of mobile licences if the UK is not to fall behind its competitors in Europe.

"Finland, a world leader in mobile telecommunications, has already issued its third generation licences."