Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions on the further development of mobile and wireless communications - Challenges and choices for the European Union
Date: 1997-05-29
Institutions: European Commission
Subjects: EU policy, new technology, radio telecommunications, standardisation, telecommunications industry

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels,  29.05.1997 
COM(97) 217 final 

COMMUNICATION FROM THE  COMMISSION 

TO THE COUNCIL,  THE EUROPEAN PARLIAMENT, 
THE ECONOMIC AND SOCIAL  COMMITTEE 
AND  THE COMMITTEE OF THE REGIONS 

ON THE FURTHER DEVELOPMENT OF MOBILE 

AND WTRELESS COMMUNICATIONS 

Challenges and choices for the European Union 

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E X E C U T I VE  S U M M A RY 

This Communication presents an overview of developments  in the mobile  and wireless 
communications market within the European Community since the  1994 Green Paper on 
mobile  and personal  communications1  and examines the  future  direction  of mobile and 
wireless communications.  It responds to the specific call following the Green Paper  from 
the  Council  and  from  the  European  Parliament  for  the  Commission  to  report  on  the 
development  of  mobile  communications2.  It  does  this  against  the  background  of  the 
market  success of GSM and related digital communications  services within the EC and 
world-wide; the increasing use of mobile communications  to connect  computers  and to 
access the Internet; the development of satellite-based personal communications systems; 
the  substantial  regulatory  progress  made  towards  the  full  opening  to  competition  of 
telecommunications  markets  in  most  Member  States  from  1  January  1998  and  the 
successful  conclusion of the WTO deal on basic telecommunications. 

Building  on  these  current  developments,  the  communications  industry  is  developing  a 
strategic vision of the next generation of digital mobile systems referred  to in Europe as 
the  Universal  Mobile  Telecommunications  System  (UMTS).  Details  of  future  service 
concepts  and  of  future  user  requirements  need  to  be  addressed  in  order  to  formulate 
regulatory, frequency and standardisation responses at a European and national level. 

Against  the  background  of  the  expected  high  growth  of  the  mobile  communications 
sector,  its convergence with intelligent  networking, multi-media  content provision,  and 
navigation and positioning and related value-added services, but also its future position in 
the  world-wide 
the  resulting  formidable  export 
landscape, 
opportunities, the impact on overall economic performances,  as well as the employment 
opportunities  and the broader  social  and  societal  impact,  the political  interests  in  the 
development  of  the  "wireless  information  society"  are  multi-faceted  and  of 
considerable importance. 

telecommunications 

This Communication  seeks to assist in the political  debate by inviting responses to key 
questions  touching  on  both  the  shape  of  future  third  generation  systems  and  on  the 
accompanying  environment  in which such systems should emerge. These key questions 
are summarised below : 

Is this the right moment to define  a strategy  for the introduction  of UMTS or would 
regulatory action today be premature? 

Green  Paper  on a common  approach  to mobile and personal  communications  in the  European  Union, 
COM(94)  145 final,  27.04.94 

European Parliament  Resolution  of  19 May  1995 (A4-0097/95; OJ C  151/473,  19.06.95)  and  Council 
Resolution  of  29  June  1995 on  the  further  development  of  the  mobile  and  personal  communications 
sector in the European Union (95/C  188/02; OJ C 188/3, 22.07.1995) 

/  C\ 

Is  there  a  consensus  in  Europe  on  the  notion  of  UMTS  or  third  generation  mobile 
communications?  Will  it  be  a  new  single  technology,  or  a  number  of  interoperable 
solutions based on different  technologies ? 

What  should  be  the  respective  roles  of  the  private  sector  and  of public  authorities  in 
the transition towards UMTS? 

How can UMTS impact on the competitiveness of Europe's  industry? 

How  do  we  ensure  that  the  broader  social  and  societal  interests  are  secured  in  the 
development of the "wireless information  society"? 

On  the  basis  of  the  response  to  this  Comniunication  and  other  relevant  factors,  the 
Commission  will  propose,  if  and  where  appropriate,  measures  for  adoption  by  the 
European Parliament  and the Council.  Comments  should be sent at the latest by  15 July 
1997 to the European  Commission,  DG XIII/A/1, rue de la Loi 200, B-1049 Brussels, to 
the  attention  of  Mr.  de  Cockborne  (fax  +  32  2  296  8391)  or  by  e-mail  to: 
umts@bxl.dgl3.cec.be. 

lb 

TABLE OF CONTENTS 

EXECUTIVE  SUMMARY 

TABLE OF  CONTENTS 

1.  INTRODUCTION 

2. WHERE  DO WE STAND TODAY? 

2.1. Mobile Communication  today in Europe  and  in the rest  of the world 

2.2. The regulatory  environment  and  the standardisation  framework  have been  key factors  in 

supporting  mobile market  developments 

2.3. Markets  and  technology  are rapidly  evolving 

2.4. Activities at global  and  regional level are supporting  this  evolution 

IV 

1 

5 

5 

3. THE FURTHER  DEVELOPMENT  OF MOBILE COMMUNICATIONS:  KEY 
CHALLENGES AND QUESTIONS 

13 

3.1. Major  challenges for  future  mobile  communications 

3.2. A new environment  for  UMTS 

3.3. Core issues for  future  decisions  : key  questions 

3.4. Creating  conditions  for  development:  key questions  relating  to the  role 

of public  authorities 

4.  CONCLUSIONS 

ANNEX  I: MOBILE COMMUNICATION  IN EUROPE  IN FIGURES 

ANNEX  II:  THE REGULATORY  FRAMEWORK  FOR  MOBILE 
COMMUNICATIONS 

ANNEX  III:  OVERVIEW  OF FREQUENCIES  FOR MOBILE 
COMMUNICATIONS 

ANNEX  IV:  LIST OF ACRONYMS 

13 

13 

14 

16 

21 

24 

27 

29 

33 

/  C 

1. 

INTRODUCTION 

Europe  today  has  created an  environment  within  which  mobile  communications  can 
flourish  and  has positioned  itself  at  the forefront  of  mobile  communications  world 
wide 

Mobile  Communications  has  been  one  of  the  fastest  growing  segments  of  the 
telecommunications  market over the last five years.  This is evidenced by the  spectacular 
growth in GSM3 subscribers and investment.  Since its commercial  launch in  1992, GSM, 
and its related technologies, DCS-1800 and PCS-1900, have emerged as a world  standard 
for mobile communications  with services provided  through nearly  200 networks to  more 
than  30  million  users  in  over  100  countries.  Asia  is  becoming  one  of  the  biggest 
customers for GSM systems whilst in the USA PCS-1900 is enjoying  early success. 

By  providing  pan-European  coverage  through  a  single  subscription,  GSM  is  a  concrete 
example  of  a  trans-European  network  in  action.  It  has  developed  through  industry-led 
efforts,  backed  up  by  an  appropriate  regulatory  framework  and  timely  standardisation 
decisions. 

GSM  growth  is  mirrored  by  the  continuing  uptake  of  other  mobile  and  wireless 
technologies  in Europe  and  in other parts of the World.  These  systems  include  cordless 
telephony, wireless networks  for phones  and computers within buildings, paging  and  the 
use of wireless technologies to compete with the fixed public network in the local loop. 

Satellite-based personal  communications  systems will offer  a further  stimulus to the take 
up  of  mobile  communications4.  Satellite  systems  allow  for  the  delivery  of  advanced 
communications  services,  often  requiring  high  capacity  transmission,  in  parts  of  the 
World where terrestrial networks are underdeveloped.  They may also offer  cost  effective 
coverage of more remote regions of Europe. 

European  citizens  are  feeling  the  benefits  of  mobile  systems  and  of  competition 
between mobile  networks 

Today  users  can  remain  in  contact  wherever  they  are.  Mobile  communications  is  no 
longer the privilege of the businessman or the traveller. They offer  everyone the ability to 
make  phone  calls,  receive  faxes,  check  e-mail  or  use  the  Internet  whilst  on  the  move. 
Mobile communications has become an essential tool for businesses of every size, but  are 
also  reaching  an  increasing  number  of  homes  and  as  such  has  now  an  important  social 

3 

4 

The term GSM is taken  in this Communication  to cover  a family  of technologies, namely  : GSM 900, 
DCS  1800 and PCS  1900, all of which support the same features  and services. 

In  order  to  promote  a  more  proactive  role  and  consistent  approach  in  satellite  communications,  the 
Commission  recently  adopted  an  EU  Action  Plan:  Satellite  communications  in  the  Information 
Society,  Communication  from  the  Commission  to  the  Council,  the  European  Parliament,  the 
Economic  and  Social  Committee  and  the  Committee  of  the  Regions,  COM(97)  91  final,  Brussels, 
05.03.1997 

O L 

economic  function5.  In  Scandinavia  more than one in  four  people has  a mobile phone, 
sometimes instead of having a fixed connection. 

Mobile  and  wireless  networks  are  also  providing  alternatives  to  the fixed network  for 
telephone  companies,  particularly  for  new  entrants  seeking  to  provide  a  cost-effective 
route  into  businesses  and  homes.  In  this  way  mobile  and  wireless  systems  can  carry 
competition right down to the local loop. 

Towards a "wireless information society"for every citizen and business 

The  potential  benefits  of  the  "wireless  information  society"  are  manifest6.  The 
Commission in its Communication  on universal service7 stressed tftat  "new  inter-active 
services should be accessible  to every citizen  in the Community so that the benefits  of 
new technologies and services  are felt  in areas,  such as education  and training,  health 
care and access to public information". UMTS can help to bring this vision about. 

UMTS  holds  potential  for  Europeans  both  as  citizens,  consumers  and  in  their  work, 
providing for greater choice, lower prices and full mobility. This will allow wider access 
to  entertainment  services,  support  to  the  elderly  and  the  disabled,  as  well  as  public 
information and transactional services such as home-shopping and banking. 

The use of mobile communications for teleworking will stimulate increased employment, 
mobility  and  development  in  rural  and  remote  areas,  as  well  as  increasing  the 
competitiveness  of  European  industry  more  generally.  This  should  have  an  important 
impact in further stimulating employment in all regions of the European Community. 

At the same time, UMTS, as a stepping stone towards the "wireless information  society", 
raises challenges of a social and societal nature which need to be addressed in parallel to 
the technological issues. 

The challenge of the third generation mobile systems. 

The convergence between  telecommunications,  information  technology  and publishing, 
evidenced  by  the  development  of  Internet,  is  accompanied  by  a  convergence  between 
fixed  and  mobile  services.  This  is  happening  at  the  same  time  as  an  increasing 
globalisation  of  telecommunications,  as  shown  by  the  almost  world-wide  roaming 
capability  of  GSM.  This  will  result  in  increasing  demand  for  services  covering  the 
transmission of data, sound and images both in the fixed and in the mobile networks. 

5  For example, mobile communications may facilitate  teleworking  or access to ones home base whilst 

on the move. 

See  Green  Paper  on  Living  and Working  in  the  Information  Society:  People  First,  COM(96) 389, 
24.07.96; and The  Information  Society:  the  role  of  the  European  Union,  Communication  from  the 
Commission to the Council, the European Perliament,  the Economic  and Social Committee  and the 
Committee of the Regions, COM(97)...to be adopted shortly 

Communication  from  the  Commission  to the Council, the  European  Parliament,  the  Economic  and 
Social Committee and the Committee of the Regions on Universal service for telecommunications in 
the perspective of a fully liberalised market, COM(96) 73 final,  13.03.1996 

The  telecommunications  industry  is  currently  developing  a  strategic  vision  of  third 
generation digital mobile systems8.  This reflection in Europe focuses both on the concept 
of Universal Mobile Telecommunications  Systems or UMTS and on the idea of Global 
Multimedia  Mobility  (GMM).  This  vision  is  central  to  the  further  development  of 
mobile  and  wireless  communications  in  Europe,  to  the  transition  from  mobile 
communications  to  mass  market  deployment  in  direct  competition  with  today's fixed 
network operators, and to the possible integration of fixed and wireless networks within a 
personal communications  environment.  Whilst much of the detail of UMTS remains to 
be worked  out, certain broad  objectives  for UMTS have been identified  by ETSI in its 
Report on a standardisation  framework  for GMM9.  ETSI describes UMTS as providing 
"personalised globally accessible high quality mobile communications services" meeting 
such  objectives  as  integration  of  fixed  and  mobile  services  allowing  use  of  a  single 
terminal, multimedia capability, low cost, and high frequency spectrum  efficiency10. 

While  the main thrust  for  the development  of UMTS must  come from the industry  in 
response to users' needs, a major challenge for the European Community and its Member 
States  is  ensuring  a favourable  environment  within which these  initiatives  can develop 
and extend the success of GSM in the third generation systems. This represents a major 
opportunity  for the European industry, given the globalisation  of the market  for mobile 
It  must  be  seen  against  the  general  evolution  of  the 
equipment  and  services. 
telecommunications  sector in Europe towards full  competition from 1 January  1998, as 
well as in the context of the successful  conclusion of WTO negotiations on the opening 
up of the world-wide market for basic telecommunications  services  and on the phasing 
out of custom duties for information technology products1 '. 

In  determining  the  appropriate  response  at  an EC  and  national  level  to  these  expected 
characteristics of UMTS, a number of factors need to be taken into account which reflect 
varying, and sometimes conflicting,  interests of the different  players concerned,  such as 
incumbent  mobile  operators  and  potential  new  entrants,  equipment  manufacturers  and 
users.  This  should  include  inter alia  the  broader  social  and  societal  aspects  of  the 
"wireless information society", and global standards developments. 

In this Communication, the Commission responds to the call from the Council and  from 
the European Parliament  following  the consultation  on the Green Paper  on Mobile and 
further  development  of  mobile 
Personal  Communications 

to  report  on 

the 

8  Analogue  mobile  systems  is considered  to  be  first  generation  technology,  whilst  digital  technologies 
such as GSM in Europe or D-AMPS and PCS  1900 in the USA represents the second  generation. 

9  Global  Multimedia  Mobility 
ETSLTA24(96)45, October  1996 

10  See below, part 2.4. 

(GMM) 

-  A  Standardisation  Framework,  ETSI  document 

11  WTO  GATS  GBT  (Basic  Telecommunications)  of  14  February  1997;  Information  Technology 
Agreement (ITA) on the basis of the Ministerial Declaration  (WTO Ministerial Meeting  Singapore,  13 
December  1996) endorsed by the ITA negotiating parties in Geneva on 26 March  1997. 

communications and the evolution towards the UMTS12. Section 2 presents an overview 
of market, regulatory and technological trends. Section 3 invites comments on a range of 
issues  which  will  help  to - identify  better  the  future  UMTS  concept  and  the  actions 
necessary to foster its development. 

12  European Parliament  Resolution  of  19 May  1995 (A4-0097/95; OJ C  151/473, 19.06.95)  and  Council 
Resolution  of  29 June  1995 on  the  further  development  of  the  mobile  and  personal  communications 
sector in the European Union (95/C  188/02; OJ C  188/3, 22.07.1995) 

2.  WHERE DO WE STAND TODAY? 

2.1.  Mobile Communication  today in Europe and in the rest of the world 

Today there  are more than 37  million users of mobile communications  in Europe  (figure 
1.1).  Of  these  25  million  use  digital  (GSM)  and  12  million  use  analogue  systems. 
Additionally  there  are  around  4.5  million  users  of  analogue  and  digital  paging  systems. 
The use  of mobile  data in Europe  is  growing  rapidly,  with  estimates  that  from  a base  of 
around  3 million  mobile  data users today  (around  1% of the population)  that  figure  will 
grow to 8 million by 2000. Currently mobile subscriber lines represent  around  14% of the 
total  number  of  lines  within  Europe.  Penetration  rates  of  cellular  mobile  services  have 
already  reached  30% in  some  EU  countries  (figure  1.2). Within  Europe,  it  is  anticipated 
that they will rise to 40-50% of the population by 200513. 

Today  there  are at  least  two  digital  mobile  systems  operating  in  each  EC  Member  State 
(except  Luxembourg  which will  soon issue a second  license), with  additional  DCS  1800 
systems  licensed  in 6 Member  States  and  a requirement  for  licences  for  DCS  1800 to be 
granted  on request  in  other Member  States  from  1 January  1998.  These  digital  systems 
are in addition to the 20 analogue networks which continue to operate in the  Community 
and which still retain almost one third of mobile telephony subscriptions. 

There  is  a  gradual  but  accelerating  shift  from  analogue  to  digital  based  services  for 
mobile  voice  and  data  communications,  as  well  as  for  paging.  Nevertheless,  in  a  few 
countries  analogue  networks  continue  to  grow  steadily,  taking  account  of  the  relatively 
limited  needs  for  roaming  of  residential  users  and  the  attraction  of  lower priced  service 
packages  for  analogue  systems.  However,  GSM  has  already  surpassed  analogue  as  a 
whole in terms of the number of users in Europe (figure 1.3). 

Since its commercial  launch in  1992, GSM has  emerged  as a World  standard  for  mobile 
communications.  GSM  and  its  related  technologies,  DCS-1800  and  PCS-1900,  provide 
coverage  through  187  networks  in  103  countries  and  have  a  subscriber  base  of  32.7 
million  users.  Asia  is  becoming  one  of  the  biggest  customers  for  GSM  systems  with 
China  on  top  in  size  of  market  and  contracts.  In  the  USA,  PCS-1900  is  enjoying  early 
success, with the licensed networks potentially offering  near  100 % population coverage. 

With the quasi-exception  of Europe where GSM stands as the single digital system today, 
the  situation  in  terms  of  cellular  systems  world-wide  is  characterised  by  a  diversity  of 
technologies, both  analogue  and  digital,  that  compete  for  customers.  As  a result  global 
roaming  outside  of  the  GSM  system  is  practically  impossible  and  sometimes  difficult 
even at national level. A user, when travelling, is obliged to rent a suitable terminal  at the 
destination,  but  he  or  she  may  find  it  difficult  to  remain  in  touch.  Such  competition 

13  Detailed  market  information  and  forecast  can  be  found  in  two  studies  realised  for  the  Commission: 
"Mobile  Market  Review",  KPMG, November  1996  and  "UMTS  Market  Forecast,  Analysys/Intercai, 
February  1997 

between systems, has lead to present efforts  in the areas of multi-mode and multi-band 
terminals, capable of "talking" the different  regional "languages". 

2.2.  The  regulatory  environment  and  the  standardisation  framework  have 

been key factors in supporting mobile market developments 

Fostering  the development  of mobile  services has been  a central  theme of  Community 
telecommunications  policy  since  its  inception.  The  agreement  in  the  1980s  on  the 
frequency allocation  for  GSM  services  and  on  the  timetable  for  its  co-ordinated 
introduction  into the Community14 were key to creating an appropriate  environment  for 
the take off of GSM and DCS-1800 services within Europe.  These decisions went hand 
in hand  with  the detailed  standardisation  work  completed  by ETSI  on the basis  of the 
work of the CEPT15 and the GSM Memorandum of Understanding Association. 

Furthermore, the Commission has been proactive in ensuring the competitive provision of 
digital  mobile  equipment  and  services  since  their  introduction  in  199216.  This  has 
involved ensuring that there are at least two operators of digital cellular systems in most 
Member  States;  that  licensing  procedures  have  been  open,  transparent  and  non 
discriminatory  and;  that  licences  have  created  fair  market  conditions  for  competitors, 
particularly, where they have entered the market later than the first licensee which in most 
Member States was granted automatically to the fixed network operator17 (see also Annex 
II). 

Most Governments now  favour  such competition.  Increasingly  they  are making  use of 
market-based mechanisms to ensure the best balance between service quality, promotion 
of the public interest and income for the State. Spectrum auctioning for  radio-frequency 
has been used notably in the USA to promote economically efficient  allocation of what is 

14  See  Council  Directive  on  the  frequency  bands  to  be  reserved  for  the  co-ordinated  introduction  of 
public pan-European  cellular digital land-based mobile communications  in the European  Community, 
25  June  1987, 87/372/EEC,  OJ L196/85,  17.07.87. This directive  was  adopted  in combination  with  a 
Council  Recommendation  on  the  co-ordinated  introduction  of  public  pan-European  cellular  digital 
land-based mobile communications in the Community,  87/371/EEC, OJ LI96/81,  17.07.87 

15  Conférence Européenne des Postes et Télécommunications 

16  A  further  factor  in  some  Member  States  has  been  the  sophisticated  structure  of  marketing  structures 
put  in  place.  The  existence  of  independent  service  providers  in  addition  to  network  operators  has 
contributed  to  high  levels  of  service  penetration  and  to  the  development  of  an  innovative  range  of 
pricing packages. 

17 

In a number  of  cases, the  Commission  has  intervened  to  ensure  that  where  licensing  conditions  were 
not  fair,  compensatory  mechanisms  were  put  in place  in  favour  of  the  competitor.  See  Commission 
Decision  of  18 December  1996  concerning  the  conditions  imposed  on  the  second  operator  of  GSM 
radiotelephony  services  in  Spain,  OJ  L76,  18.3.97  and  Commission  Decision  of  4  October  1995 
concerning  the  conditions  imposed  on  the  second  operator  of  GSM  radiotelephony  services  in  Italy, 
OJL280, 23.11.95 

recognised  to  be  a  valuable  resource18.  Community  law  recognises  the  possibility  of 
charges  within  national  licensing  regimes  (i.e. for  spectrum  allocation)  which  reflect  the 
need  to  ensure  the  optimal  use  of  these  resources,  as  far  as  these  changes  are  non 
discriminatory  and  take  into  account  the  need  to  foster  the  development  of  innovative 
services and competition19. 

2.3.  Markets and technology are rapidly evolving 

Cordless telephone systems overlap with mobile cellular systems for  key  applications 

In  addition  to  the  shift  towards  digital  mobile  communications  based  on  GSM,  cordless 
services  providing  limited  mobility  have  rapidly  taken  up  momentum.  As  a  result  the 
overlap  between  applications  of  cordless  systems  and  cellular  mobile  systems  is 
increasing. 

In Europe the Digital  Enhanced  Cordless Telephone  (DECT) system has been  developed 
and  is  now  commercially  available  (figure  1.4). These  systems  are  now  rapidly  gaining 
recognition  as  much  more  than  a  system  offering  limited  mobility  at  the  customer 
premises level (home cordless telephone, wireless PBX), since they can also be used as a 
key  component  within  the fixed network  as a wireless  local  loop  (WLL). Wireless  local 
loops  are coming  into their own  in Central  and  Eastern  Europe where they  are  seen  as a 
cost-effective  way  of  extending  the  fixed  network  service  in  urban  areas  to  shorten 
In  Hungary,  for  example,  more  than 
waiting  lists  from  years  to  months  and  weeks. 
200,000  homes  are  being  connected  via  WLL  systems.  Mobile  technologies  have  also 
been used in sparsely populated regions of the Community, for example in parts of Spain, 
to  complete  network  build  out  by  providing  a  fixed  telephone  link  via  a  wireless 
connection.  Moreover,  GSM-based  solutions  are being  considered  in certain  countries  of 
Central and Eastern Europe as an alternative to wired local loop. 

Furthermore,  digital  wireless  systems  such  as  DECT  can  also  provide  the  public  with 
limited  mobility  services  (e.g.  limited  range,  some  system  are  also  limited  in  their 
capability  to  hand  over  calls  between  network  cells)  as  a  low  cost  alternative  to  full-
fledged  cellular  mobile  systems.  This  may  be  attractive  in  densely  populated  areas.  In 
other  parts  of  the  World,  the  Public  Access  Cordless  System  (PACS)  and  the  Personal 
Handyphone  System  (PHS)  are  enjoying  considerable  success.  This  is  particularly 
noticeable for the PHS system in Japan which was introduced in  1995 and which now has 

18 

In  the  USA  auctioning  of  spectrum  for  personal  communications  services  did  not  link  the  frequency 
awarded  to  a  choice  of  a  specific  technology.  This  can  be  perceived  as  allowing  market  players 
greater  freedom  in  determining  the  use  of  allocated  spectrum.  The  result  is  that  at  least  three  digital 
technologies  (PCS  1800, D-AMPS  and  IS-95/IS-54  CDMA)  are being  deployed  in different  areas  but 
with no guarantee  for  solutions that offer  country-wide  roaming. 

19  See  Article  11(2)  of  Directive  97/13/EC  of  the  European  Parliament  and  the  Council  on  a  common 
framework  for  general  authorization  and  individual  licenses  in  the  field  of  telecommunications 
services,  10.04.1997, OJ LI 17, 7.5.97 

close  to  6  million  users.  It  is  principally  used  as  a  low  cost  public  limited  mobility 
service (figure 1.5). 

A combination  of mobile communications and wireless technologies offers the prospect 
of real competition in the local loop 

Beyond  a  role  in  extending  universal  service  in  both  remote  and  urban  areas,  the 
combination  of mobile services priced  to compete more directly  with  services  offered  on 
the public  fixed  network  and  the  use  of wireless  connections  into  homes  and  businesses 
provides a means of extending competition into the local loop. 

In several OECD countries, new subscriptions to mobile telephony  now  exceed those  for 
the  fixed  network,  reflecting  high  penetration  of  both  mobile  and  fixed  services. 
Increasingly,  users  can  be  expected  to  replace  their  fixed  connection  with  a  mobile 
phone.  In  the  near  future,  mobile  and  wireless-based  networks  alongside  cable  TV 
infrastructure,  where  it  exists,  could  therefore  offer  users  real  alternatives  to  using  the 
incumbent's network today. 

Satellite-based  mobile  systems  offer  the  prospect  of  world-wide  roaming  and  can 
complete the gaps in regions with less developed communications  networks 

The  prospect  of  global  mobility 
is  now  offered  by  Satellite-based  Personal 
Communications  Systems  (S-PCS)  which  will  be  launched  over  the  next  two  years,  in 
many cases using hybrid terminals, which support both the satellite service and  terrestrial 
mobile  services.  These  systems  not  only  provide  the  possibility  for  users  to  remain  in 
contact  whilst 
relatively  undeveloped 
telecommunications  networks,  but  also  offer  users  a  potential  means  of  accessing 
broadband  capacity. 

the  World  with 

in  parts  of 

travelling 

Digital Mobile Services are evolving in response to user needs 

The  GSM  family  of  technologies  is  continuing  to  evolve  to  meet  users  needs  for 
further  mobility and greater support for data and Internet based services20: 

•  The GSM Triband phone - a hybrid terminal that can operate on GSM-900, DCS-1800 
and PCS-1900 environments  - is currently  under  development.  It will  allow  users  to 
communicate  via  any  of  these  networks  providing  that  the  appropriate  roaming 
agreements are in place. 

•  Hybrid  GSM/PHS  and  GSM/CDMA  handsets  have  already  been  developed  and 
demonstrated.  Moreover,  Japanese  industry  is  developing  a  GSM/PHS  convergent 
approach on  infrastructure. 

•  New  multimedia  functionality  is  being  developed  for  GSM  beyond  the  present 
applications  of  voice  and  data  transmission  at  9.6  kbit/s21.  One  such  development  is 

20  See for  instance  "UMTS Market Forecast", Analysys / Intercai  Report, February  1997 

2 '  Higher  rates  are  possible  with  the  use  of  multiple  time  slots,  but  such  developments  would  require 

considerable  additional bandwidth. Multi-slot GSM is currently under  development. 

High  Speed  Circuit-Switched  Data  (HSCSD),  recently  standardised,  and  with 
equipment due in 1999. 

•  The  development  of "Mobile  Internet" is central  to  the  further  take up  of mobile  and 
wireless  services.  Work  is underway  to  extend  mobile  multimedia  capabilities22  and 
to  improve  the  support  for  Internet-based  services  within  the  Internet  Protocol23.  A 
merging  of  IP  technologies  into  wireless  services  is  foreseen  in  the  new  General 
Packet  Radio  Service  (GPRS)  due out  from  ETSI  in  1998, with  products  anticipated 
for 2000. 

Global  developments  serve  the  broad  strategic  interests  of  the  different parts  of  the 
World 

The  developments  around  the  World  in  mobile  and  wireless  communications  and 
satellite-PCS do not stand by themselves but must be seen in a wider strategic context. 

The anticipated  shift  of market paradigm from a mobile communications  market  focused 
on business  and niche  users  to a mass consumer  market  is already visible.  In Japan  this 
has  led  consumer  electronics  companies,  who  traditionally  have  strength  in  consumer 
markets,  to  embrace  mobile  and  wireless  communications.  They  are  now  engaged  in 
large  scale  production  of  new  communications  systems  (e.g.  PHS),  equipment  and 
handheld devices that will eventually be targeted at the World's mass markets. 

The US enjoys  a position of strength in satellite communications, mainly due to the large 
defence  spendings  in this area over the last decades. New  commercial  initiatives  such as 
Iridium  and Teledesic build  on this  strength  and  are already under construction  or are in 
the  planning  phase.  Where  Iridium,  planned  for  commercial  operation  by  1998,  aims 
mainly  at  the  mobile  user,  the  ambitions  of  Teledesic  reach  much  further  as  it  aims  to 
create  a  satellite-based  information  super  highway  around  the  globe  that  potentially 
makes terrestrial networks  superfluous. 

Europe must keep abreast of these global developments  and exploit its strengths, such  as 
the  near  global  reach  of  GSM  technology  and  its  traditional  capabilities  in  the  area  of 
communications system  integration. 

2.4.  Activities at global and regional level are supporting this evolution 

Action at global  level (ITU) 

22  The Mobile  Data Initiative (MDI) has been joined by many  manufacturers  and operators. Its aim  is to 
test  protocols  for  data  communications  between  PC's  including  hand-held  PC's  over  the  GSM 
infrastructure.-

23  There  seems  to  be  a consensus  emerging  among  industry  players  that  the  Internet  Protocol  (TCP/IP) 
on  which  Internet  services  are  based  already  today  could  become  the  leading  transport  protocol  for 
future  multimedia  services and applications. 

•  At the WARC  92, a range of 230 MHz of  spectrum  in the  1885-2025  and 2110-2200 
MHz  bands was identified  for FPLMTS24, including its satellite-based component. As 
a result, Europe and Japan today are considering  identical spectrum  allocations  for  the 
third generation terrestrial mobile services whereas the US allocation  differs  from  this 
choice. However, WARC 92 identified  spectrum  for mobile services in general  rather 
than linking specific frequencies to designated technologies. This has allowed some of 
that  spectrum  in  the  USA  to  be  awarded  to  second  generation  systems,  commonly 
referred  to  in  the  USA  as  PCS  systems.  This  evolution  is  likely  to  impact  on  the 
ability to designate  a common frequency band  for UMTS throughout  the World.  This 
may  lead to fragmentation of the World market, hindering  the development  of UMTS 
as a global system. 

•  Work  at  an  international  level  within  the  International  Telecommunications  Union 
(ITU)  is  underway  on  the  development  of  International  Mobile  Telecommunications 
2000  (IMT2000),  previously  designated  as  FPLMTS.  A  special  task  group  (TG8/1) 
has  been  constituted,  where  proposals  for  future  mobile  communications  systems, 
emanating from different  World regions are discussed. The European voice within this 
framework  suffers  however from a lack of coherence  and common perspective,  given 
some of the uncertainties surrounding the precise definition  of third generation  mobile 
communication systems. 

•  A regular dialogue on future  mobile systems between regulators and industry from the 
European  Community, the USA and Japan has continued within the framework of the 
FAMOUS25 meetings. 

Action  at European level 

•  In  the  context  of  the world-wide  growth  of  mobile  wireless  markets,  manufacturers, 
operators,  research  institutes  and  academia  have  carried  out  significant  research  and 
development  activities,  particularly  in  the  framework  of  the  European  Community 
Research  Programmes  such  as  RACE  (Research  and  Technology  Development  in 
Advanced  Communications  Technologies 
(Advanced 
Communications  Technologies  and  Services).  In  the  period  1991-1998,  some  180 
MECUs  of  Community  funding  will  be  devoted  R&D  on  mobile,  wireless  and 
personal communications including both terrestrial and satellite based systems. 

in  Europe)  and  ACTS 

•  Within  Europe,  building  on  broad  industry  support  and  with  the  assistance  of  the 
Commission,  the  UMTS  Forum  has  been  set  up  to  involve  a  wide  spectrum  of 
interested  parties  in  developing  strategies  for  UMTS26.  The  Forum  is  developing  a 

24  FPLMTS:  Future  Public  Land  Mobile  Telecommunications  System.  Within 

ITU  standardisation 
activities,  this  acronym  is  now  replaced  by  IMT2000  (International  Mobile  Telecommunications 
2000) 

25  FAMOUS: Future Advanced  Mobile Universal  System, established  in  1991 annual  meetings  between 
US,  Japan  and  the  EU  administration  representatives  to  exchange  about  future  mobile  systems  in 
particular in view of ensuring  interoperability. 

26  The UMTS  Forum  was  formally  inaugurated  on  16 December  1996 building  on  the  existing  work  of 
the  UMTS  Task  Force.  The  Forum  brings  together  regulators,  operators,  manufacturers,  satellite 
10 

common  vision  of  UMTS  and  seeking  to  identify  precise  industry  and  user 
requirements,  including  specific  needs  with  regard  to  frequency  spectrum.  A  first 
report is to be issued by June  1997. 

The  European  Radiocommunications  Committee  has  recently  published  a  draft 
decision  for  public  consultation  on  the  frequency  bands  for  the  introduction  of  the 
UMTS,  within  the  CEPT  countries.  The  draft  decision  proposes  to  designate  the 
1900-1980  MHz,  2010-2025  MHz  and  2110-2170  MHz  bands  to  terrestrial  UMTS 
applications.  It  also  proposes  that  at  least  two  blocks  of  30  MHz  of  spectrum  are 
made  available  by  1  January* 2002.  Requirements  to  make  additional  frequency 
available within those bands are made subject to market demand. 

The  consultation  period  on the  decision  closes  on  30 May  1997  and  a  final  decision, 
taking  account  of  comments  made,  is  expected  to  be  taken  in  June.  That  decision  is 
only binding on those countries which decide to sign up to it. 

ETSI  has  defined  certain  broad  characteristics  for  third  generation  terminals  and 
networks. Work on the definition  of UMTS has been carried out for a number of years. 
Recently  ETSI  published  its  Global  Multimedia  Mobility  (GMM)  concept.  That 
concept  makes  an  important  contribution  to  the  process  of  definition  of  UMTS.  A 
work  plan  has been proposed  that  calls  for  the development  of two phases  of  UMTS 
with  a  first  phase  leading  to  the  introduction  of  UMTS  services  by  2002.  Major 
decisions  are  expected  to be taken  early next  year  on the  air-interfaces  to be  adopted 
for UMTS. 

operators and other interested parties and associations such as ETSI, ERO and ETO.  It is financed via 
its 70 members and has an annual budget of about 500,000 ECU. 

11 

ETSI Objectives for UMTS 

1.  Integration of residential, office and cellular 
services  into  a  single  system  and  one  user 
equipment (terminal) 

9.  Radio  resource  flexibility  to  multiple 
networks  and 
types  within  a 
traffic 
frequency band 

2.  Speech  and  service  quality  at  least 
fixed  networks, 
comparable 
including 
be 
that 
compromised in mobile use 

to  current 

security 

cannot 

10. High frequency spectrum efficiency 

3.  Service capability up to multimedia 

11. Creation of direct satellite access for a 
mass user base 

Separation  of  service  provision  and 

4. 
network operation 

Use  of  WARC 

12. 
bands(1885-2025 and 2110-2200 MHz) 

frequency 

'92 

5.  UMTS  user  number 
network or service provider 

independent  of 

13. Low cost of services and terminals 

6.  Capacity  and  capability  to  service  the 
whole population 

14. Flexible personalization, ease of use 

7.  Seamless  and  global  radio  coverage 
achievable 

15.  Flexibility  for  the  introduction  of  new 
services and technical capabilities 

8.  Radio bearer capabilities up to 2 Mbit/s 

16. Applicability to different  needs; public, 
for  simple 
private,  basic 
broadband 
telecommunications; 
multimedia 
advanced 
telecommunications 

telephony 

for 

Source: ETSI TA 24, report on Global Multimedia Mobility (GMM) 

12 

3.  THE FURTHER DEVELOPMENT OF MOBILE COMMUNICATIONS: 

KEY CHALLENGES AND QUESTIONS 

3.1.  Major challenges for future mobile  communications 

The  information  and  communication  technologies  industries  are  a  critical  component  of 
the  European  economy  in  that  they  are  a major  and  growing  part  of  industrial  activity. 
They  are also  one of the keys to  future  competitiveness  of industrial  processes,  products 
and services and a platform  for the emerging Information  Society. If Europe is to build on 
the success of GSM, two challenges need to be addressed: 

Meeting the changing user needs for mobile services 

•  Further  developing  the  conditions  for  industrial  competitiveness  within  the  mobile 

communications  sector 

Achieving  these goals will be  important  not  only  for  the telecommunications  sector,  but 
also  for  the  broader  economy.  Improving  the  competitiveness  of  the  European  mobile 
industry  will  also  help  it  to  build  further  on  its  leading  position  in  global  markets  for 
mobile communications technology and services. 

3.2.  A new environment for UMTS 

Environment  when GSM was introduced 
(late 80ies) 

small market 

Environment  today 
(late 90ies) 

major market 

niche market for specific  users 

mass market, common  service 

mobile voice transmission only 

diversified  services (still  increasing) 

monopoly network operators 

mobile as stand-alone service 
(terrestrial  only) 

competition (two to three national 
networks in most Member States and 
increasing) 

integration of services 
(fixed,  terrestrial mobile, satellite) 

regional market 

globally competitive market 

limited technological innovation resulting 
in high cost and limited service  offering 

vast range of new technological 
possibilities (higher integration, 
compression technologies,  efficient 
frequency  usage, low energy  innovations) 
resulting in lower cost of services and 
equipment 

13 

In  attempting  to  chart  out  a  path  for  the  successful  transition  from  second  to  third 
generation  mobile  technologies,  lessons  can  be  learned  from  the  early  transition  from 
analogue  systems  to  GSM.  At  the  same  time,  it  is  essential  to  recognise  the  radical 
reshaping  of  the  environment  for  mobile  communications  over  the  last  5  years  against 
which any strategy for transition must be planned. 

The  changed  environment  means  that  there  are  a  range  of  possible  scenarios  for  the 
evolution 
third  generation  systems  which  may  present  alternative  or 
complementary routes to shape the future mobile sector. 

towards 

Timely  decisions  by  industry  (i.e.  what  investments  to  make,  which  services  to  offer, 
which  markets  to  target,  whether  to  focus  on  developing  existing  services  or  to  move 
towards  more  innovative  approaches?)  will  be  fundamental  in  determining  the  actual 
evolution  which  will  take  place.  Given  the  specificity  of  the  telecommunications  sector 
(e.g.  need  for  interoperability  of  networks,  allocation  of  scarce  resources)  public 
authorities have a particular responsibility to ensure that appropriate  decisions are taken in 
order  to  foster  the  development  of  those  services  and  help  establish  a  competitive 
European industry. 

A clear  and  relatively  detailed  picture  of future  developments  is needed  before  it  will  be 
possible to fully  define what action, if any, may be required  at a European  level to  make a 
positive contribution to the future  development of mobile and wireless technologies. 

3.3.  Core issues for future decisions : key questions 

Five  key  questions  underpin  the  decisions  on  an  appropriate  regulatory  response  to 
UMTS. They relate in particular to timing,  method  to be followed  and  consequences  that 
decisions might have on Europe's industrial  competitiveness. 

Is this the right moment  to  define  a  strategy  for  the  introduction  of UMTS  or  would 
regulatory action today be premature? 

//  seems  clear  that  changing  user  expectations,  particularly  in  areas  such  as 
multimedia services, will  add  a  new dimension to  the services  that will  be required. 
At the same time, the fact  that new technologies exist and can be demonstrated today, 
is no guarantee that new services will  be accepted  by  the market or  even needed  by 
users. This would suggest avoiding a regulatory action at too early a stage. However, 
the  evolution  towards  UMTS  and  potentially 
delaying  action  may  jeopardise 
endanger the leadership currently enjoyed by European industry. 

Is  there  a  consensus  in  Europe  on  the  notion  of  UMTS  or  third  generation  mobile 
communications  ?  Will  it  be  a  new  single  technology,  or  a  number  of  interoperable 
solutions based on different  technologies ? 

The  current GSM generation is still  evolving to offer users improved and  diversified 
technological  framework,  as  new  technological 
services  within  an  existing 
possibilities  are gradually  exploited  Will the transition towards  the next generation 
of mobile services  take place  through step  by step  improvements in GSM technology 
or  will  it  at  some  stage  require  a  shift from  GSM  to  a  new  system  offering more 
capacity  and data rates from  the start?  Could intermediate solutions develop, which 
would  combine  elements  of  the  two  approaches,  such  as  the  use  of  different  air 

14 

interfaces  within  a  common  integration platform?  Will  UMTS be  designed  as  a 
comprehensive system, with users picking  the service elements that they require, or as 
a  number  of  technical  solutions  which  whilst  interoperable  could  each  require 
specialised terminals? 

What  should be the respective  roles  of the private  sector  and of public  authorities in 
the transition towards UMTS? 

//  is  clear  that  the private  sector  must  take  the  lead  in  creating  a  new  mobile 
environment.  Nevertheless,  consideration  must  be  given  to  the  role  that  public 
authorities at  a national and  Community  level  can play  in creating  an environment 
which can foster  the market-led development of new systems and the offer of greater 
choice at lower prices for  users. What degree of consensus on the definition of UMTS 
is necessary in order to allow appropriate political  decisions to be taken  ? 

How can UMTS impact on the competitiveness of Europe's industry? 

Should spectrum management policy  give priority  to  the development of  UMTS over 
other mobile and wireless technologies ? In the affirmative, how would this impact on 
Europe's  ability  to  retain  a  competitive  telecommunications industry  at  the  global 
level? 

The market is developing at an extremely rapid pace  around the world  This includes 
developments in both mobile and wireless systems as well  as  developments  linked to 
"Mobile Internet". In  this respect,  what  would  be  the right  date  of  introduction of 
UMTS ? Are  the dates proposed  by ETSI (pilot introduction by 2002 and a full  scale 
deployment by 2005 of UMTS) appropriate ? 

• 

How  should we  ensure that the broader social  and societal  interests are secured  in the 
development of the "wireless information society"? 

Mobile  and  wireless  communications are  considered  to  be  an  important  means  of 
bringing  the  information  society  to  the  mass  market.  Are  any further  measures 
required  to guide  the sustaintable development of  the  "wireless information society" 
and,  if  so,  what  issues  should  be  addressed?  For  example,  are  further  measures 
required  to  ensure  that  all  European  citizens  can  access  these  new  services  and 
technologies?  How  should  pan-European  roaming,  which  is  one  of  the  great 
accomplishments of GSM, be extended into the future mobile multi-media age? 

The take up of the  "wireless information society"  will also  depend on the perception 
by  the general public  that  radio  communications equipment is  safe  to  use. Further 
research to collect additional data in this field  is planned.27 

27  The Commission is currenUy creating a research programme into the possible health effects  related to 
the use of mobile phones. This follows  the  recommendations  by an  independent  multi-disciplinary 
group of experts that reported last year that currently available studies and existing literature give no 
evidence  of  any  increased  health  risk,  but  also  that  data  is  sparse  and  insufficient  to  draw  firm 
conclusions at this stage and that further  research is necessary in particular into the a-thermal effects. 

15 

3.4.  Creating  conditions  for  development:  key questions  relating  to the  role 

of public  authorities 

The Regulatory  Framework: 

The European  Community  has put in place a comprehensive  framework  securing the  full 
liberalisation  of  the  telecommunications  sector  from  1 January  1998.  This  framework 
covers both fixed and mobile communications services.  The framework is designed to be 
technology  neutral  and  flexible  enough  to  accommodate  new  technological  and  market 
developments.  In the light of UMTS, that framework should nevertheless be examined to 
decide  whether  the  introduction  of  UMTS  necessitates  modifications  in  the  regulatory 
approaches in the medium term: 

Does  UMTS  require  further  changes  to  the  overall  regulatory  framework  for 
telecommunications? 

The  comprehensive  and  predictable  framework  for  competition  within  the  internal 
market  addresses  key  aspects  of  licensing, interconnection,  universal  service  as  well 
as the allocation  of numbers and frequencies.  It attempts to create a framework  which 
may  apply  to  undertakings  providing  services  via  fixed,  mobile  and  wireless 
connections.  A  first  priority  must  be  the  effective  transposition  of  current  EU 
legislation  and effective and timely implementation  of decisions  reached on  frequency 
issues with the European Radiocommunications  Committee. 

A key principle  within  this  framework  is the creation  of conditions for  the delivery  of 
innovative services.  The framework  also opens up the process  of awarding  frequency 
and/or  licences  by preventing  Member  States from  automatically granting  licences  to 
current  operators,  but  at  the  same  time  it prevents  the  automatic  exclusion  of  such 
operators from  getting  licenses for  new  or  additional  mobile  systems,  except  where 
excluding  them  can  be justified  to prevent  the  creation  or  extension  of  a  dominant 
position  in an existing market. In  the light of the developments  in the market,  aspects 
related to the provision  of universal service may need to be reconsidered in the future. 

Does  UMTS  present  particular  competition  issues  which  should  be  addressed  at  a 
European  level? 

One  of  the  major  issues  concerning fair  market  competition  relates  to  the  issue  of 
roaming.  At  least in the initial stages of deployment,  UMTS systems may have to seek 
roaming  arrangements  with  GSM networks  in order  to provide  a sufficient  degree  of 
national and international coverage.  Being based on commercial agreements  between 
operators,  the refusal  to enter  into roaming  agreements  with  UMTS operators  would 
be  a  major  deterrent  to  use  of  UMTS  systems. 
It  might  also  constitute  an  anti 
competitive practice  under the EC  Treaty competition  rules. At  a later stage,  roaming 
will  take  on  a  new  dimension  as  different  mobile  and/or  fixed  service  segments 
converge.  This will  require a careful monitoring of roaming arrangements. 

Frequency issues related to UMTS: 

16 

What  are  the  spectrum  requirements  for  UMTS?  What  decision  should  be  taken  in 
respect of spectrum reservation in view of UMTS ? 

Within the spectrum  designated at  WARC 92 for  mobile communications,  early  action 
to allocate precise frequency  bands for  UMTS  is likely to be of critical  importance  to 
its  development  within  Europe  and  World-wide. In  this  context  the  Commission  is 
watching  carefully  the  comments  and  reactions  to  the  proposed  ERC  decision 
mentioned above. 

Approaches  to frequency  allocation for  second  generation  systems  were  different  in 
the EC  and  the  USA. The timely decision concerning  GSM frequency  allocations  and 
the clearing  out of these frequencies  by Member  States  by a pre-determined  date  was 
In  the  USA,  on  the  other  hand,  a  number  of  digital 
central  to  GSM's  success. 
standards  remain  in  competition  and  the  licensing  of  PCS  spectrum  has  not  been 
linked to the use of a specific  technology.  What balance needs to be achieved  in view 
of  UMTS between  an  early  allocation  of  spectrum for  UMTS and  the  need  to  keep 
open  the  possibility  of  competition  between future  mobile  systems  in  view  of  the 
benefits  this  might  develop  in  terms  of  innovation,  service  quality  and  choice?  By 
when are decisions on frequency  allocation required?  Should frequency  allocation  be 
service  related  (e.g. for  multimedia  mobile  services)  or  technology  oriented  (i.e.  to 
allow for  one or several interoperable technologies) ? 

• 

What priorities can be identified  for Europe in relation to UMTS at forthcoming  WRC 
meetings? 

Whilst  important  decisions  were  taken  at  WARC  92  in  relation  to  spectrum  for 
FPLMTS,  consideration should  be given  in the light of the evolving concept  of  UMTS 
to ensuring  that a clear European perspective  is developed  in advance of  forthcoming 
WRC  meetings.  Clear  decisions  on  frequency  bands  will  be  essential  to  the 
development  of future  systems  and  to  show  a  clear  political  commitment  to  third 
generation  systems,  even  if  the  choice  of  technology(ies)  for  such  systems  is 
determined at a later stage. 

Standardisation  related questions: 

Does  UMTS  create  new  priorities  or  a  need  for  new  approaches  in  the  area  of 
standardisation? 

As  the basic shape of  UMTS or other third generation systems  emerges, ETSI  is  likely 
to  continue  to play  a  central  role,  in  close  co-operation  with  the  UMTS Forum  and 
other  interested parties  in  determining  the precise  requirements for  standardisation. 
How  can  it be ensured that  this process  remains sufficiently  open  to develop  a  broad 
consensus amongst interest parties  both within and outside the Community? 

How  can  it  be  ensured  that  the  development  of  UMTS  strikes  the  right  balance 
between formal,  open  standardisation,  where  this  is  appropriate  (and  which  implies 
certain  minimum  time  periods  for  adoption),  and  industry-developed  de  facto 
standards  of  a  more  proprietary  nature  which  may  often  develop  more  ai  a  pace 

17 

commensurate  with  the  rapid  life  cycle  of  the  information  technologies  and  services 
which  UMTS is likely to offer? 

GSM  is  a  comprehensive  and  open  standard  allowing  for  the  evolution  towards 
different  service forms  while maintaining  the  integrity  of the  GSM platform.  To  what 
extent can or should such an approach be applied to the  UMTS concept ? 

•  Does  UMTS  require  a  redirection  of  standardisation  from  telecommunication  per  se 

towards information  technology  ? 

the  standardisation  activity  be  sufficiently 

How  can 
a 
telecommunications  and network-centric approach to take into account  the very rapid 
developments  on  the  services  side,  e.g.  to  take  into  account  the  demand for  mobile 
access of internet /  intranet services  (in the TCP/IP world) and multimedia services  in 
general ? 

redirected 

from 

18 

Research and Development: 

Which  are  the  strategic  technological  R&D  goals  which  should  be  pursued  in  the 
framework of mobile and personal communications ? 

In  the  context  of  the  3rd  and  4th  Framework  Programmes  for  Research  and 
Development,  a significant  contribution has been made at European  level towards  the 
development  and  validation  of  the  essential  technologies,  components,  systems, 
networks,  services  and  applications for  mobile  and  wireless  communications.  Such 
efforts  have  contributed  to  maintaining  European  technological  leadership  in  this 
area. However  the fast  pace  of developmenst and  the  increasingly significant  role  to 
be played  by terrestrial  and space  based wireless communications points  to  the  need 
to  strenghten  the  research  and  development  efforts  in  this  sector  within  the  5th 
Framework  Programme.  The primary  objective of the work should be to ensure global 
connectivity  in future  integrated  telecommunications  networks,  enabling  access  to 
broadband  multimedia communications  by anyone from  anywhere, at any time,  using 
mobile  and  wireless  services  with  a capability  and  quality  comparable  to  that  of  the 
fixed  network services. 

What level of R&D efforts  are to be foreseen in the context of  preparing UMTS ? 

R&D  is  an  important  issue  in  that  it  creates  scientific  and  technological  excellence 
while  contributing  to  the  definition  of  an  early  consensus  on  the  most  significant 
technological  options.  That consensus feeds  the downstream standardisation  process 
and enhances the competitiveness of Europe.  To what extent have technologies  needed 
for  UMTS  been  sufficiently  examined  in  the  context  of  R&D  efforts  and  /  or  what 
further  R&D  is needed ? 

International  aspects: 

What  should  be  the  European  Community's  priorities  for  co-operation  in relation  to 
UMTS ? 

Third generation  systems  development must necessarily  take account  of proposals  for 
regional  and  global  service  concepts,  as  well  as  the  WTO  Telecoms  deal. 
Commitments  have  been  made  by  more  than  60  WTO members  in  relation  to  issues 
such  as  market  access  for  mobile  services  and  frequencies.  In  this  context,  the 
European  Community and the Member States,  operators,  manufacturers  and  services 
providers  must  actively  co-operate  with  bodies  and  companies  at  a  global  level  in 
order  to  ensure  that future  systems  meet  user  demands for  a  high  degree  of  global 
interoperability  and  are  compatible  with  the  WTO  commitments  taken.  Given  the 
development  of a concept for  UMTS in Europe,  where should  initiatives for  global  or 
regional co-operation be envisaged and on which objectives should it be focused  ? 

19 

How can a UMTS concept developed  within Europe be best promoted  in  international 
organisations ? 

The Commission supports  continuing co-operation in the area of frequency  allocations 
for  third generation  digital systems and wireless local loop systems  and in the area of 
standardisation.  How  can  Member  States  best  ensure  in  accordance  with  the  EC 
Treaty  the  co-ordination  of  their  positions  in  international  organisations  and  fora 
where  decisions  concerning frequencies  are taken  ? How  can global  Co-operation in 
the field of standardisation  be reinforced  ? 

How  can  existing  exchanges  by  the  Member  States  and  the  Commission  in  the 
framework  of regular  contacts  with third  countries  be best  used  to promote  European 
positions concerning the future mobile systems ? 

20 

4.  CONCLUSIONS 

After  the  successful  creation  of  an  environment  for  second  generation  digital  mobile 
cellular  communications  systems,  demand  for  further  evolution  in  mobile  and  wireless 
systems  is  now  emerging.  Users  place  emphasis  on  the  integration  of  mobile 
communication  applications,  higher  performance 
(in  particular  accommodating 
multimedia applications), global and seamless coverage of wired and wireless services  as 
well as greater customisation of services. 

At  this  stage,  many  uncertainties  remain  as  for  the  concrete  specification  of  the  next 
generation wireless system, but the process of discussion among market actors and within 
the  standardisation  bodies  has  been  launched.  Results,  in  particular  from  the  UMTS 
Forum  and ETSI, will be particularly  important  for  the definition  of a UMTS  concept(s). 
In this context, the legitimate  interests of the European manufacturers  and operators  must 
be balanced with the interests of the users. 

The  Commission  has  identified  several  areas  in  which  an  approach  at  a  European  level 
could  be  important,  namely,  regulation,  standardisation,  frequency  allocation,  R&D 
efforts  and  international  co-operation. The objective  is to create a framework which leads 
to  greater  choice,  improved  quality  and  lower  prices  for  all  users  of  mobile  services, 
while  ensuring  full  competition  within  an environment  which  foster  the  competitiveness 
that the sector achieved so far. 

The  recent  evolution  of  the  regulatory  environment  in  view  of  the  full  liberalisation  of 
telecommunications  has provided  a comprehensive  framework  for  both fixed  and  mobile 
telecommunications  systems.  It  will  be  important  to  assess  the  flexibility  of  that 
framework against the new demands which the emergence of a UMTS concept may place 
upon  it.  The  same  applies  for  the  decision  on  priorities  for  standardisation  and  choices 
concerning  the  most  suitable  allocation  of  frequency  bands  in  the  spectrum  so  far 
reserved  for  UMTS.  The  current  ERC  consultation  process  will  form  an  important 
contribution in this respect. 

At international  level, the Commission  supports the co-operation  in the area of  frequency 
allocation  and  of  standardisation  for  third  generation  digital  systems  through  the 
appropriate organisations on the basis of the UMTS concept currently under discussion. 

This  communication  is  intended  to  extend  to  all  interested  parties  the  discussion  on  the 
future  of  UMTS  which  has  already  been  initiated  within  the  industry.  Comments  and 
opinion  are  invited  on  all  questions  raised  in  the  Communication.  On  the  basis  of  the 
response to this communication  and other relevant  factors, the Commission  will propose, 
if  and  where  appropriate,  the  adoption  of  measures  by  the  European  Parliament  and 
Council. 

Comments28  should  be  sent  at  the  latest  by  15 July  1997 to  the  European  Commission, 
DG XIII/A/1,  rue  de  la Loi  200, B-1049  Brussels,  to  the  attention  of  Mr.  de  Cockborne 
(fax + 32 2 296 8391) or by e-mail to: umts@bxl.dgl3.cec.be. 

28  Comments will be made available to the public, unless a specific  request to the contrary  is received. 

21 

Annexes 

<fr 

TABLE OF CONTENTS OF ANNEXES 

ANNEX  I: MOBILE COMMUNICATION  IN EUROPE IN FIGURES 

ANNEX  II:  THE REGULATORY  FRAMEWORK  FOR  MOBILE 
COMMUNICATIONS 

ANNEX  III:  OVERVIEW  OF FREQUENCIES  FOR  MOBILE 
COMMUNICATIONS 

ANNEX  IV:  LIST OF ACRONYMS 

24 

27 

29 

33 

23 

ANNEX I:  MOBILE COMMUNICATION IN EUROPE IN FIGURES 

Sep-93 

Mar-94 

Aug-94 

Mar-95 

Sep-95 

Apr-96 

Sep-96 

Mar-97 

| A n a l o g ue 

^ iD ll ll t al 

—^—Penetration 

source: Mobile  Communications 

Figure 1.1 :  Growth of European Mobile Communication Subscribers 

,.  £ 

. -- 

„ • - . . , - «, 

*.*>,  M n * . - , *. 

- 

!•» 

\vfc>". 

•î  ••;  . \ * ' V"  ; 

. 

..  v.- 

. 

*!'.*<\^  ',&  , '." 
-,. 
- 

-

U.K. 

Switzerland 

Sweden 

Spain 

Portugal 

Norway 

Netherlands 

Luxemburg 

Italy 

Ireland 

Iceland 

Greece 

Germany 

France 

Finland 

Denmark 

Belgium 

Austria 

source: Mobile  Communications 

15 

20 

25 

%  of  population 

Figure 1.2:  Penetration rates for mobile communications per Member States 
(as of March 97) 

24 

Digital share of the  market -  53% 

- 5 -k 

E 4| 

*  3 

2  M 

i  -H 

D , n, n 

E 

T> 
CO 

a 

Source:  KPMG 

I Analogue subscribers  Q Digital subscribers 

Figure 1.3:  European Mobile Communication Subscribers: Analog vs Digital 

total DECT terminal  equipment estimates 

30.000.000 

25.000.000 

20.000.000 . 

15.000.000 . 

10.000.000 -

5.000.000 -

0 

source:  ETSI 

lIlïllPïiilB 

••'•••"  ' l i V:' - ', :^ ^ ^™  "7""  "1  '"' •  ^ ^ ^^ 
1995 

1996 

1994 

I 

•:' ^ ^ ": 
1997 

1998  1999 

2000 

Figure 1.4:  Deployment of DECT in Europe 

25 

source: MPT,  Japan 

Figure 1.5  Deployment of PHS in Japan 

26 

ANNEX II:  THE REGULATORY FRAMEWORK 
FOR  MOBILE COMMUNICATIONS 

Following the  1994 Green Paper on Mobile and Personal Communications, the European 
Community  has  progressed  a  vision  of  a  personal  communications  environment, 
reflecting the increasing convergence of wired and wireless, fixed and mobile solutions to 
meet user needs.  In particular,  the legal framework29 has established  key dates  for  the 
further opening of mobile Communications throughout the EC. 

KEY DATES FOR THE DEVELOPMENT OF MOBILE SERVICES IN THE  EC 

November 1996 

•  Notification  of  the  measures  taken  to  suppress  of  special  and  exclusive  rights  for 

mobile telephony ; 

•  Notification  of  the  measures  taken  to  lift  the  restrictions  on  mobile  operators  to 
construct  their  own  networks  /  microwave  links  and/or  use  third  party-owned 
infrastructure within their mobile networks ; 

•  Notification  of the measures taken to enable mobile operators to directly interconnect 

their networks with the fixed or mobile network in other EC Member States30 ; 

Before January 1998 

•  Applications must be considered by Member States for licences to operate DCS 1800 

services, subject to frequency availability. 

•  Current  fixed  or  mobile  operators  must  not  be  automatically  granted  new 

frequencies/licences  for new mobile services, particularly DCS 1800 services, nor may 
they be automatically  excluded from applying  for  such frequencies/licenses unless it 
can  be  shown  that  a  grant  to  the  operator  concerned  would  affect 
effective 
competition, by strenghtening the (joint) dominant position of the current operators. 
Restrictions should be removed, where they exist, which prevent the offering  and use 
of multi-mode equipment which allows the same handset to be used across a number 
of different  mobile systems, for example, a dual GSM-DECT telephone. 

Furthermore,  the  development  of  mobile  communications  is  being  fostered  by  key 
elements  of the general  liberalisation framework which  apply to both fixed and mobile 

29  See,  in  particular,  Commission  Directive  96/2/EC  of  16  January  1996  amending  Directive 
90/388/EEC  with regard  to mobile  and personal communications, OJ  L  20/59,  26.1.96. (the Mobile 
Directive); Commission Directive 96/19/EEC with regard to the implementation of full competition in 
telecommunications markets, OJ L74, 22.3.96; Directive 97/.../EC of the European Parliament and of 
the Council on a common framework  for general authorisations and individual licences in the field of 
telecommunications  services,  OJ  L....,  Directive  97/ 
/EC  of  the  European  Parliament  and  of  the 
Council  on  interconnection  in  telecommunications  with  regard  to  ensuring  universal  service  and 
interoperability through the application of the principles of open network provision (ONP), OJ .. 

30  Additional  .transitional  periods  delaying  direct  interconnection  until  1  January  1999  have  been 

accepted for Ireland and Portugal.  Decisions are still pending as for Greece  and Luxembourg. 

27 

network operators and service providers.  That framework is designed to be technology 
neutral.  At the same time it limits regulatory intervention to the minimum necessary to 
safeguard effective  competition and secure the general public interest. 

This means, for example, that mobile operators enjoy the right to : 

•  interconnect with the public fixed telecommunications networks in their Member State 

benefit  from  cost-oriented  prices  for  interconnection  with  the networks  of  operators 
with  significant  market power,  as well  as the right to  select  unbundled  interconnect 
offerings from a standard list, and 

•  receive  licences on the basis of open, transparent  and non-discriminatory  procedures 
within set time limits.  The ability of Member States to restrict the number of licences 
granted is limited to the scarcity of radio-spectrum or, on a temporary basis, the lack of 
available numbers. 

A key aim of the regulatory framework is to ensure a balance between regulation and the 
degree  of  competition  in particular  markets.  In placing  obligations  on market players, 
national regulatory  authorities must take account of the position of those players on the 
relevant  market  and  of  the  degree  of  competition  in  the  market  concerned.  So,  for 
example, mobile operators are not subject  at this stage to as much detailed regulation as 
to service quality or pricing supervision as that imposed on fixed network operators with 
significant  market  power.  Furthermore,  in  assessing  whether  mobile  networks  enjoy 
significant  market  power  the  relevant  market  will  often  be  the  whole  of  the 
telecommunications market rather than just the mobile sector. 

Nevertheless,  in  other  areas  mobile  operators  may  already  be  asked  to  assume 
responsibilities  associated  with  being  a provider  (often  on  a  national  basis)  of  public 
telecommunications networks and/or services. 

28 

ANNEX III:  OVERVIEW OF FREQUENCIES FOR MOBILE COMMUNICATIONS 

Table  III. 1  provides  an  overview  of  frequency  spectrum  used  for  different  mobile 
technologies across Europe. 

Table III.l:  Overview of spectrum use by different mobile services in Europe 

Frequency  range 

Systems 

47-88 MHz 

CT1, paging, PMR, MOBITEX 

138-174 MHz 

380-430 MHz 

420-470 MHz 

862-960 MHz 

first  PLMNs31,  RC2000,  PMR,  PAMR  (MPT  1327),  ERMES,  paging32, 
MOBITEX 

TETRA 

RC2000, NMT 450, System C, RTMS, PMR, paging 

TACS, ETACS, NMT 900, GSM, DSRR, CT2, PMR 

1670-1900 MHz 

TFTS3 3,  DCS  1800, DECT 

1885-2200 MHz 

FLMTS/UMTS 

Source:  KPMG 

Table III.2 shows the harmonised frequency bands allocated to selected mobile  systems 
in Europe. The basis for harmonised designation of frequency bands across Europe has to 
date  been  achieved  using  two  mechanisms:  European  Community  Directives  (i.e.  for 
GSM, DECT and ERMES) and ERC Decisions. 

Table III.2: Frequency bands designated to selected mobile systems in Europe 

System 

GSM 

Frequency  allocated 

Basis of allocation 

890-915 MHz and 935-960 MHz 

87/372/EEC 

DCS  1800 

1710-1785 MHz and  1805-1880 MHz 

ERC/DEC/(95)3 

DECT 

ERMES 

TFTS 

DSRR 

TETRA 

1880-1900 MHz 

169.4-169.8 MHz 

1670-1675 MHz 

91/281/EEC 

90/544/EEC 

ERC/DEC/(92)1 

888-890 MHz and 933-935 MHz 

ERC/DEC/(96)6 

380-400  MHz  for  emergency  services 
and 410-430 MHz for public services 

ERC/DEC/(96)4 

Source: European  Commission, ERC 

31  Most of them have already been de-activated or are to be de-activated in the short term. 

32  Mainly  POCSAG. 

33  Allocation by ITU/WARC92. 

29 

Figure III.l  provides an overview of frequency allocated to GSM and analogue services in the 
900 MHz band. 

Figure III.l: Frequency  allocated to  GSM and analogue cellular systems in the 870-960 
MHz band 

870-

111! 

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*  frequency  range not confirmed 

p lf 

frequency  used for GSM technology 

| 

1 frequency  used for analogue technology 

Source:  KPMG 

The  use  of  spectrum  in  this  band  is  relatively  uniform  between  the  various 
countries. Some countries have taken frequency harmonisation to its limit and fully 
co-ordinated  their  GSM frequencies. In  this  manner,  interference  problems  are 
minimised and both users and operators experience fewer problems. 

Although there is co-ordination in the use of spectrum, there are large differences in 
the  amount  of  spectrum  allocated  to  operators  in  different  countries  and  even  to 
different  operators  within  the  same  country.  In  some  cases,  differences  can  be 
justified  between  countries  due  to  different  market  conditions,  in  particular  as 
regards the use of analogue systems around 1990 when GSM was introduced. 

But  it  is harder  to justify  differences  within  countries. Very  often,  an  incumbent 
operator  with  a mobile  subsidiary  will  capitalise  on  access to both  analogue and 
digital frequency  bands. In this way, a private operator in the same country is at a 
significant disadvantage. 

30 

Figure III.2 shows the frequencies  in use for mobile communications in the 1800 MHz band. 

Source: ERO  1995 

Figure  III.2:  Frequency  allocation  and  use  for  mobile  cellular  systems  in  the  1800 MHz 
band 

The  implementation  of  DCS-1800  is  still  in  its  infancy  compared  to  GSM,  though  the 
regulatory  framework  now  requires  consideration  by  EC  Member  States  of requests  for 
licensing  of  such  systems  before  1  January  1998.  Outside  the  EC,  many  countries, 
particularly  the  eastern  European  and Baltic  States, do not have  any plans  to  implement 
this  technology  at  all.  One  of  the  main  reasons  for  this  is  that  frequencies  which  have 
been designated  for DCS-1800 clash with current frequency allocations for other  systems 
in many countries. 

The  1992  World  Administrative  Radio  Conference  (WARC)  of  the  ITU  targeted  230 
MHz in the 2 GHz band, on a world-wide basis, for FPLMTS/IMT-2000,  including  both 
terrestrial  and  satellite  components.  The  objective  was  identified  as that  of  establishing, 
through  the  appropriate  global  standards  and  the  coordinated  assignment  of  frequencies 
by National  and Regional  Authorities, truly ubiquitous  personal  communications  created 
be a seamless  infrastructure. 

The  whole  230  MHz  of  spectrum  identified  by  WARC-92  was  reserved  in  Europe  to 
Third  Generation, UMTS, technology. Elsewhere, and  especially  in the US, the  situation 
is  far  more  complicated,  and  little  hope  exists  of  ever  arriving  at  a  common  global 
standard with different  regional solutions already  subsumed. 

Figure  III.3  shows  the allocation  of spectrum  for  future  mobile  communications  and  the 
current situation in the various regions of the world. 

31 

1700  2 
-9 

4 
« 

6  8 
8—6j 

1800  2  4 
0—0 

1 

6  8 
9—8| 

1900  2  4 
1  8.—0i 

6 
8 
9,  8r—i 

20OQ  2 

4  6 
8.  8.—8i—8t 

8  2100 20  40  6  8  220020  40  6  8 
1  1  1  a—a 

1  a—Si 

1 

1 

M S S-  Mobile 

Satellite  System 

WARC 92 

F P L M TS 

MSS 

F P L M TS  MSS 

M  MHz 

190  MHz 

DCS1800 

•! 

DCS 1800 

UMTS 

MSS  UMTS 
Up 

Éùràpk 

UMTS 

MSS 
Dwn 

downlink 

liplihk 

USA 

19P MHiz 

UÂPÀN 

1

1

17 

Figure III.3: Frequency allocation for future mobile communications (FPLMTS) around 2 
GHz 

32 

ANNEX IV:  LIST OF ACRONYMS 

ACTS 

CDMA 

CEPT 
Administrations 

Advanced Communications Technologies and Services 

Code Division Multiple Access 

European  Conference 

of 

Postal 

and 

Telecommunications 

D-AMPS 

DCS-1800 

DECT 

ERC 

ETSI 

FAMOUS 

FPLMTS 

GMM 

GPRS 

GSM 

HSCSD 

IMT2000 

IP 

ITU 

OECD 

PACS 

PBX 

PHS 

PCS-1900 

RACE 

R&D 

PCS 

S-PCS 

TCP/IP 

UMTS 

Digital cellular communications from North America 

Digital Cellular communication  System, is like GSM but at  1800 MHz 

Digital Enhanced Cordless Telecommunications 

European Radiocommunications  Committee 

European Telecommunications  Standardisation  Institute 

Future Advanced Mobile Universal  System 

Future Public Land Mobile Telecommunications  System 

Global Mobile Multimedia, concept developed by ETSI 

General Packet Radio Service 

Global System for Mobile 

High-Speed Circuit Switched Data 

International Mobile Telecommunications  2000 

Internet Protocol 

International Telecommunications  Union 

Organisation for European Cooperation and Development 

Public Access Cordless System 

Private Branch Exchange 

Personal Handyphone System 

Personal Communication  System, essentially GSM at  1900 MHz 

Research  and technology  development  in Advanced  Communications  in 
Europe 

Research and Development 

Personal Communication  System 

Satellite-based Personal Communications  System 

Transmission Control Protocol/Internet  Protocol 

Universal Mobile Telecommunications  System 

WARC/WRC 

World (Administrative) Radio  Conference 

WLL 

WTO 

Wireless Local Loop 

World Trade Organisation 

33 

ISSN 0254-1475 

COM(97) 217 final 

DOCUMENTS 

EN 

15  16 

Catalogue  number  :  CB-CO-97-259-EN-C 

ISBN  92-78-20736-5 

Office  for Official  Publications of the European Communities 

L-2985 Luxembourg 

3"1