Mòviles Fights for Quam

Europe’s 3G license debacle shows no sign of abating this new year, following reports that Telefònica Mòviles SA will oppose attempts by the German telecom regulator to withdraw its permit to offer third-generation services (see Euro 3G's License Lunacies).

In October 2002 the Spanish carrier closed down its failed joint German 3G venture with TeliaSonera AB (Nasdaq: TLSN), known as Quam (see Quam Quits for Good and German 3G Player Folds). Telefònica Mòviles later revealed it was to pull the plug on all of its European 3G subsidaries and concentrate on its core business in Spain (see Telefònica Plots 3G Escape).

German business magazine WirtschaftsWoche now claims Mòviles will sue if the regulator Regulierungsbehörde für Telekommunikation und Post (RegTP) [ed. note: Gesundheit!] demands that the company hand back the license it bought for DM16.446 billion (US$10.6 billion) in August 2000. The regulator is expected to cancel the license, as Quam has frozen the rollout of its 3G network and will miss coverage requirements.

“The regulator is currently not entitled to check whether the coverage requirements are met,” argues Quam’s head of legal affairs, Georg Berger, adding that this can only happen once 3G technology is ready for commercial launch.

According to the report, Telefònica Mòviles hopes to sell the license in order to recover some of its losses. Last week the carrier sold its Austrian 3G operation to Mobilkom Austria AG & Co. KG, marking the first sale of UMTS (Universal Mobile Telecommunications System) spectrum in Europe (see Móviles Sells Austrian 3G Arm).

UMTS is the 3G upgrade to the GSM standard, using a wideband-CDMA air interface on top of the GSM core network to increase voice capacity and boost data-transfer speeds to a theoretical 2 Mbit/s.

The failure of Quam, coupled with MobilCom AG's recent decision to hand back its UMTS license to RegTP (see Mobicom Returns UMTS License), leaves the German 3G market with only four potential players -- T-Mobile International AG, Vodafone Group plc (NYSE: VOD), KPN Mobile’s E-Plus Mobilfunk GmbH, and mmO2 plc’s German unit.

Telefònica Mòviles had not returned calls by press time.

— Justin Springham, Senior Editor, Europe, Unstrung