Analysis: Not for the first time, a dispute over the fate of a potentially lucrative mobile network licence has ended up in the courts. On this occasion, it's the fourth third-generation (3G) licence.

3G is the latest wave of mobile technology, and one that the Republic has been slow to develop. Three licences have been issued so far, one each to Vodafone, O2 and Hutchison Whampoa, trading as 3. Smart Telecom and the communications regulator, ComReg, are at loggerheads over the fourth, which is also the last.

High Court judge Peter Kelly has the job of disentangling the row. Since the beginning of the month, he has been hearing the case taken by Smart against ComReg, the result of a dispute that blew up in February.

ComReg offered Smart the Republic's fourth 3G licence last November. The company came first in a public bidding process ahead of Eircom and its mobile subsidiary, Meteor.

But ComReg withdrew the licence offer on February 13th. It says that the company failed to provide it with acceptable performance bonds for €100 million by an agreed deadline of January 30th.

The bonds were meant as financial guarantees that the company would meet certain milestones in building its network and providing a serviceand were part of the conditions under which ComReg was to issue the licence. Smart says it provided ComReg with draft bonds, which should have been acceptable, on January 27th.

So it argues that it fulfilled this condition and has a contract with ComReg. On this basis, the company wants the court to order ComReg to issue the licence. The case turns on whether or not Smart provided ComReg with acceptable bonds, and whether or not the regulator should have accepted them and issued the licence.

Smart gave ComReg two draft bonds from its suppliers. One was from Chinese multinational Huawei, which was to supply the technology for the network, the other was from BT, which was contracted to build the network.

Royal Bank of Scotland was to underwrite BT's bond and Independent Commerce Bank of China (ICBC) was to underwrite Huawei's. The banks' role was to make the cash available if any of the financial penalties were called in. But the institutions had not finally approved the bonds.

The drafts also contained a number of conditions. These declared that the money would not be payable if Smart's licence were revoked while the network was being built; or, if the company became insolvent during that time; or, if there there were a dispute between the parties involved over whether or not the milestones had been met.

ComReg objected to these conditions, as Smart had not included them in its original tender. It was at this stage that Smart had to specify what type of bonds it was willing to supply. The regulator's in-house lawyer, Mark Hughes, told the company of these objections on January 27th.

Smart argues that these issues could have been dealt with had it been given more time. Its chief operations officer, Ciarán Casey, told the court that the condition relating to disputes would have been eliminated once the company and ComReg had agreed a suitable measuring and monitoring programme.

The two parties had begun working on that, and Smart had hired Masons as consultants to deal with this. It's head of regulation, Iarla Flynn, was also working on it.

The company says that it could also have dealt with the insolvency and revocation issues. But in the case of Huawei, it would not have been able to do this before the deadline expired, because China was celebrating its new year a public holiday during which the banks are closed.

ComReg has rejected all of these claims. Its case largely rests on the fact that Smart was not in a position to provide it with acceptable bonds by the time the deadline expired, and thus automatically lost the right to its licence.

It also argues that Smart made no effort to discuss the conditions to which the regulator objected and simply initiated legal action as soon as the deadline had expired and the licence had not materialised.

ComReg commissioners Isolde Goggin and John Doherty met with Smart chief executive Oisín Fanning, Mr Casey and Mr Flynn on February 2nd. Smart left this meeting with the feeling that door was still open and was waiting for clarification on the regulator's position in relation to insolvency and revocation. However, Smart says this clarification never came.

ComReg says that it organised the meeting as this was the prudent thing to do, in light of the fact that Smart had sent it a letter initiating legal action on the night of the 30th. The regulator also argues that Smart has displayed a "lack of candour" since January 27th and throughout the subsequent legal proceedings.

No matter who wins this in the end, the real losers are the consumers who, had things gone to plan, would be seeing the initial benefits of having an extra player in the mobile market.