Bakers fights to reverse Ofcom’s 3 verdict

Baker & McKenzie is challenging plans by UK regulators to force mobile phone operators to charge less for connecting calls to its network because of concerns that the changes threaten its path to profitability.

Bakers has lodged an appeal with the Competition Appeal Tribunal (CAT) against a decision by telecommunications watchdog Ofcom that would require the UK’s fifth-largest mobile operator 3 UK to cut its charges by 45 per cent.

Kevin Russell, chief executive of 3 UK, accused Ofcom of making an “absurd” and anti-competitive decision that he said would result in it subsidising Britain’s established big four mobile operators – O2, Vodafone, Orange and T-Mobile.

Russell described 3 as a “net outpayer” to the leading operators because it pays more to rivals than it receives for connecting calls to its network. Last year, he said, 3 paid £50m to incumbent operators.

The charges that mobile operators levy for connecting calls to their networks represent 15 per cent of their revenue in the UK market, which is worth £2.5bn to the sector per year.

Hutchison Whampoa, 3’s parent company, was poised to break even in the first half of this year but Ofcom’s decision in March could jeopardise its road to profitability.

Antitrust partner Keith Jones and litigation partner Tom Cassels from Bakers have instructed lead counsel Dinah Rose QC of Blackstone Chambers.