ComReg 'failed to clarify its position'

Communications regulator ComReg withdrew its offer of a mobile licence to Smart Telcom before giving the company a chance to hear its final position on differences both parties were trying to resolve, it was claimed in the High Court yesterday.

Last November, Smart successfully tendered for a third-generation (3G) mobile licence. ComReg withdrew the offer on February 13th because it says Smart failed to provide it with performance guarantees by an agreed deadline of January 30th.

Smart had to supply guarantees obliging it to pay up to €100 million in financial penalties if it failed to meet certain targets when it was building its network. The company provided ComReg with draft bonds, but these stated that the money would not be paid if the licence were revoked or Smart became insolvent.

ComReg rejected these terms and withdrew the licence offer. Smart then went to the High Court to force the regulator to issue the licence. Summing up Smart's case yesterday, senior counsel Michael Cush said that after the deadline had passed, ComReg's commissioners and executives decided to give Smart a chance to indicate when it could supply acceptable bonds.

However, he said that ComReg had no definite position on whether or not it could accept the revocation and insolvency terms. He also said it had not made its position on these issues clear before January 27th, when the commision first received the draft bonds. Mr Cush also argued that at a meeting on February 2nd, ComReg indicated its position on these issues was not definitive. He said by the time it withdrew the licence 11 days later, the commission had still not made its position on the insolvency and revocation terms clear to Smart.

Paul Gallagher, senior counsel for Eircom, said the evidence showed Smart was never in a position to offer acceptable bonds to ComReg. He said Smart's approach was to "bluff it out" and threaten legal action when ComReg failed to issue the licence. Eircom is a party to the case as it unsuccessfully tendered for the licence last year.