Sweden has had a liberalised telecommunications market for many years, as alternative operators to the incumbent, Telia (now TeliaSonera, following the merger of the Swedish and Finnish incumbents at the end of 2002), were not required to hold licences until the Telecommunications Act was passed in 1993. Subsequently, a number of companies were licensed, the most prominent being Tele2, which was established as a small-scale international carrier in 1991 and has grown into a pan-European broadband carrier. Comvik - an affiliate of Tele2 - became Sweden's first competitive mobile operator, offering analogue cellular services in competition with Telia in 1981. The passage of new legislation in July 2003 - in line with new European Union (EU) directives - now means that licences are no longer required for new entrants to compete with the incumbent in the fixed-line telephony market.

The Swedish mobile communications market is the most competitive, with third-generation (3G) services set to be launched before the end of 2003. There are currently four cellular operators in the Swedish market, although the most recent entrant SweFour only launched services in August 2003. SweFour competes with the well-established GSM 900/1800 operators TeliaSonera Mobile, Vodafone Sverige, and Comvik and may therefore struggle to find its place in a market that is fast becoming over-saturated.

Controversially, TeliaSonera Mobile was not awarded a third-generation (3G) licence when these were made available at the end of 2000, losing out to established operators Vodafone Sverige and NetCom (a Comvik affiliate) and new entrants Hi3G Access and Orange Sverige, whose applications were deemed to have been technologically and financially more viable than that submitted by TeliaSonera. However, all four 3G licensees petitioned the Swedish regulator to reconsider the end-2003 deadline for the launch of services, citing equipment supply problems as well as delays in obtaining authorisations to build network facilities. Vodafone Sverige and Orange Sverige set out formal proposals to redefine the terms of their licence conditions, but the Swedish regulator has refused to accede to these requests, saying that if these problems had been identified as early as the licensing process, then it should have been made aware of the need to defer launch at the time of the licence auction. The National Post and Telecom Agency (PTS) is therefore one of the few national regulatory authorities in the world not to have permitted a delay in launching 3G services, as similar technology and equipment supply problems are commonplace in other markets. The PTS' refusal to back down has already forced Orange Sverige into withdrawing from the 3G market in Sweden, although it is not known whether the regulator will attempt to re-auction Orange's unused 3G licence. If it does, TeliaSonera might pursue that licence.

In the meantime, TeliaSonera is partnering NetCom (the Comvik affiliate owned by Tele2) in building a jointly-owned 3G network throughout Sweden, although TeliaSonera does not share ownership of NetCom's 3G licence, which could insulate it from any fines the regulator imposes on NetCom if it fails to provide sufficient coverage of Sweden with 3G services by the 2003 deadline. A similar network sharing agreement has been struck by Hi3G, Vodafone Sverige, and Orange Sverige, although it is not known whether Orange will be able to access the Swedish 3G market indirectly through its relationship with the remaining 3G players.