The legal squabble over the value-added tax (VAT) rebate for 3G li...

of the U.K.’s Dept. for Constitutional Affairs -- referred to the European Court of Justice (ECJ) a claim by several U.K. 3G mobile operators for a refund that could amount to nearly $6 million. The case reportedly may be combined with similar claims filed by operators in Austria, Belgium, Germany and Spain. It could set a precedent on whether VAT must be paid in 3G license auctions. The questions referred to the ECJ “regard matters of European law [that] are relevant to the action being pursued by all 5 successful bidders in the 2000 3G spectrum auction for the recovery of the VAT component of their winning bids,” a Vodafone spokesman said. An ECJ decision isn’t expected for about 2 years, he said. Meantime, the action before the VAT tribunal has been stayed. U.K. and German spectrum auctions accounted for 76% of 3G license fees worldwide 1999-2002, the GSMA spokesman said. Cumulatively the licensing proceeds took more than $100 billion from operators. One consequence was that $700 billion was “wiped off the stock market valuations of European telcos,” he said. The need to rebuild balance sheets caused a “massive downturn” in capital spending, forcing a “significant contraction” of the telecom equipment industry and producing thousands of job losses -- and a slowdown in 3G rollout, he said. The claim raises the question whether auctions are the best way to allocate spectrum, the spokesman said. The issue is moot in some ways because the current licensing round is now finished. However he said that GSMA, which has members in 209 countries and territories, intends to be “more vociferous” than it has about spectrum allocation methods. There are “dozens” of consultations around the world on spectrum, the spokesman said, and GSMA is active in all of them. In its ongoing dialog with regulators, he said, GSMA tries to ensure “that similar situation do not repeat themselves in future by helping regulators look at the bigger picture.”