Phone giants face massive lawsuits

MOBILE phone operators could face multi-million pound lawsuits from low-cost telecoms providers following a shock ruling from the Competition Appeal Tribunal.

The competition case between defunct Floe Telecom, former regulator Oftel, plus mobile phone giants Vodafone and T-Mobile hinged on the use of special equipment used to lower bills.

At the request of phone operators, Oftel had outlawed GSM Gateways. These are boxes that hold Sim cards from each network and route calls from customers the cheapest way possible, normally making it appear as if both caller and receiver are on the same network.

Oftel ruled that these boxes needed licences and because large numbers of calls went through them, causing bottlenecks on mobile networks, it refused to grant licences to gateways that were open to the public.

The operators started switching off the boxes and Floe protested that this was anti-competitive. But Floe appealed and on Friday the tribunal ruled that Oftel was wrong to allow the mobile phone groups to cut off the gateways.

It has now sent the case back to Ofcom, which replaced Oftel at the end of last year.

A source at one gateway operator said the ruling was a 'huge blow' to the mobile giants. 'This could lead to lots of claims from firms whose customers were cut off,' he said.

T-Mobile said that the technical nature of the argument did not mean that gateways would be coming back. 'The tribunal specifically rejected Floe's main arguments,' said a spokesman.

The case also appeared to raise the question that the description given for gateways was the same as that for a mobile phone and if so, whether the watchdog had also made mobile phones illegal without a licence.

'The judgment does not affect the legality of public GSM gateways: they remain unlawful,' said the spokesman. 'The question as to whether the definition of a GSM Gateway could mean that mobile phone handsets were also unlawful stemmed from an argument made by Floe during the appeal. This argument was specifically rejected by the Tribunal. We cannot comment further on the specifics of this case as it remains active.'