One of the commissioners who regulates communications in the Republic said yesterday they allowed Vodafone more favourable terms on its third-generation mobile licence than it was prepared to give Smart Telecom because it was necessary to bring new players into the market.
John Doherty, one of three members of the State communications commission, ComReg, told the High Court that the regulator allowed Vodafone to include conditions on the financial guarantees that were part of its licence, but would not accept similar conditions from Smart, because the two licences were offered in "different times".
The commission issued a third-generation (3G) licence to Vodafone in 2002.
Mr Doherty said it was keen to attract players into the market, as the Republic was falling behind in the development of this technology.
"Ireland was already three years behind the rest of the world and we were in a situation where we had two people applying for three licences," Mr Doherty told the court.
In contrast, he pointed out that when Smart, Eircom and Meteor competed for the final 3G licence last year, they were seeking entry to a mature and potentially profitable market.
Smart Telecom emerged as the winner last November, and ComReg offered it the licence.
However, it withdrew the offer in February because it says Smart failed to provide it with performance guarantees by an agreed deadline of January 30th.
The guarantees, or bonds, required Smart to pay penalties of up to €100 million if it failed to meet agreed milestones in building the network. The company says that it provided ComReg with draft bonds by January 30th and wants the High Court to order the regulator to issue the licence.
It emerged this week that when ComReg granted Vodafone a 3G licence in 2002, it accepted a bond from that company declaring that penalties would not be paid if the licence was terminated.
Smart included a similar term in its bonds, but the regulator told the company that this condition was unacceptable.
Mr Doherty told Smart's senior counsel, Michael Cush, that the commission met the company three days after the deadline to establish if it could provide acceptable bonds within a reasonable period of time.
