EU Rules 3G License Refunds are Not State Aid

­A court advisor to the European Union's Court of Justice has recommended that the EU Court had been correct in dismissing a complaint by French mobile operator, Bouygues that the allocation of 3G licenses was incorrectly carried out.

In 2000, the French government auctioned off two 3G licenses to Vivendi and France Telecom for EUR4.95 billion - but when it sold a 3rd license to Bouygues Telecom following the bursting of the telecoms bubble, the price was just EUR619 million. As a result, the regulator chose to refund the difference paid back to the two earlier operators.

Bouygues had argued that a decision by the French regulator to lower the cost of 3G licenses awarded to its rival operators was a form of illegal state aid - especially as the French government owns 26.7% of France Telecom.

The EU Court had ruled last year that the price reduction was legal, and Bouygues chose to appeal. The court advisor's recommendation is not the final decision, although it is very rare for the court to issue a judgment which goes against the advisors recommendation.

Earlier this year, the telecoms regulator, Arcep approved applications by Orange and SFR to offer 3G services in the 900Mhz. Third 3G license holder, Bouygues Telecom says that it will apply for an amendment to its license to reuse its 900Mhz spectrum in 2009.

The country still has an option to award a fourth 3G license, although viable applicants have been few in number.

Posted to the site on 8th October 2008