Opinion of the Economic and Social Committee on: - the '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', and - the 'Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions: Strategy and policy orientations with regard to the further development of mobile and wireless communications (UMTS) - Outcome of the public consultation and proposals for creating a favourable environment'
Date: 1997-12-11
Institutions: European Economic and Social Committee
Subjects: EU policy, information technology, new technology, radio telecommunications, telecommunications industry

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Opinion of the Economic and Social Committee on:

— the ‘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’, and

— the ‘Communication from the Commission to the Council, the European Parliament, the
Economic and Social Committee and the Committee of the Regions: Strategy and
policy orientations with regard to the further development of mobile and wireless
communications (UMTS) — Outcome of the public consultation and proposals for
creating a favourable environment’

(98/C 73/27)

On 3 June 1997 and 23 October 1997, the Commission decided to consult the Economic and
Social Committee, under Article 198 of the Treaty establishing the European Community, on
the above-mentioned communications.

The Section for Transport and Communications was instructed to prepare the Committee’s
work on the subject; it set up a study group and appointed Mr Mobbs as rapporteur.

At its 350th plenary session (meeting of 11 December 1997), the Economic and Social
Committee appointed Mr Mobbs as rapporteur-general and adopted unanimously the
following opinion.

1.

Introduction

1.1.
The growth of mobile communications in the
last ten years has been phenomenal and enabled users,
both business and private, to make and receive phone
calls, send and receive faxes, use the e-mail or the
Internet without having to depend on a fixed terminal
connection. This growth has resulted in the expansion
of the whole telecommunications market. The avail-
ability of mobile roaming services in both advanced
and many developing regions has made a significant
contribution to the wider utilisation of all forms of
telecommunications throughout virtually every econ-
omic sector. Widespread personal accessibility has also
helped overcome time zone and other obstacles to
international trade and activity. Whilst the growth of
mobile communications is forecast to continue its rapid
expansion, the demand for fixed wire installations will
still continue in view of the ever increasing demands for
higher data transmission speeds and capacity at very
economic prices. As costs of mobile equipment and
services decrease, growth in new mobile connections is
expected to overtake growth in fixed connections,
especially after full
the European
telecommunications sector in most Member States from
1 January 1998. Further stimulus to the use of telecom-
munications in every sphere of business and social
life will occur if users retain their telephone number
regardless of the use of mobile or fixed telephones.

liberalization of

paging systems and 3 million users of data systems (1).
In addition Europe has seen the exceptional success
of the digital GSM (2), considered second generation
technology, (analogue technologies were the first) emer-
ge as a world standard for mobile communications.
Through its establishment as a single system, it allows
roaming throughout most of Europe, thus creating a
truly pan-European services network and the bringing
down of national barriers and increasing competition
and user choice. All this, together with the related
DCS-1800 and PCS-1900 technologies (known globally
as GSM1800 and GSM1900), has also made it possible
to introduce effective competition and market dynamics
into the local loop.

1.3.
To date nearly 200 mobile communications
networks based on GSM serving more than 55 million
users, demonstrate the success and acceptance of the
system as a world-wide standard. However, there is
no room for complacency since as the commercial
positioning of the industry develops in Europe and
World-wide new GSM standards face fierce competition
from different standards in the USA and variations in
Japan.

UMTS (3) can be described as a mobile communi-
1.4.
cations system that, through a converged network of

1.2.
In Europe, this extent of mobile phone growth
is demonstrated by the numbers involved — 37 million
users of mobile communications, 4,5 million users of

(1) See paragraph 2.1 of Commission Communication.
(2) Global System for Mobile (GSM).
(3) Universal Mobile Telecommunications System (UMTS).

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fixed, cellular and satellite components, can ensure to
all users in a competitive market universal access to
mobile personalized communications, including high
quality multimedia services regardless of location, net-
work or terminal used. This is a European concept
promoted by ETSI(1), CEPT (2), the UMTS Forum (3)
and the Commission which aims at permitting roaming
on a truly world-wide basis for the first time. It has the
support of the major European fixed and mobile
network operators and the manufacturing community.
The development of new technologies that become
increasingly available will allow a more efficient and
effective use of terrestrial and satellite communication
systems so that users benefit. In particular, UMTS aims
at facilitating increased access to the Internet.

1.7.
UMTS will operate in both terrestrial and satellite
environments. This will be important for the operation
of UMTS in sparsely populated areas. Earlier this year,
the Commission published a Communication on ‘An
EU action plan — satellite communications in the
information society’ (6) containing a more consistent
approach in satellite communications. A generally
favourable opinion was adopted by the Committee (7).

1.8.
Such has been the success of mobile telecommuni-
cations and such is the speed of the development of the
associated technology, that the Commission believes
that certain policy and strategic decisions need to be
taken to ensure their continued growth.

1.5.
UMTS is intended to form part of the Inter-
national Mobile Telecommunications 2000 (IMT-2000)
family of global third generation standards. Under
the IMT-2000 programme, the ITU (4) is developing
recommendations to assist the relevant administrations
with regard to third generation systems and is currently
addressing the development of third generation mobile
systems within the Radiocommunications (ITU-R) and
Telecommunications (ITU-T) sectors. The work of the
ITU is expected to be completed in 1999.

1.6.
The development of UMTS presents Europe with
both a challenge and an opportunity to exploit its
leading position in this market and reap full benefits
from the emergence of full liberalization in most Member
States and the opening up of world markets for basic
telecommunications by the WTO (5).
In particular,
UMTS may provide mobile access to a range of
video-based communications, information and enter-
tainment services, increasing the synergy between broad-
casting and telecommunication markets. The IT industry
will also have a major role to play in ensuring the success
of UMTS in view of the importance of on-line content
for interactive multimedia services.

(1) European Telecommunicatioons

Standards

Institute

(ETSI).

(2) European Conference of Postal and Telecommunications

Administrations (CEPT).

(3) The UMTS Forum is a body inaugurated in December
1996 which, building on the existing work of the UMTS
Task Force, brings together regulators, operators, manu-
facturers, satellite operators and other interested parties
and associations such as ETSI, ERO and ETO. It is financed
by its 70 members and has a budget of ECU 500 000.

(4) International Telecommunications Union (ITU).
(5) World Trade Organization (WTO).

2. Commission communications

2.1.
The first Commission communication (May
1997) is in response to requests from the Council
and the Parliament respectively for a report on the
development of mobile communications.

The Commission communication summarizes
2.2.
the present situation and sees a need for details of future
service concepts and of future user requirements to be
addressed in order to formulate regulatory, frequency
and standardization responses at a European and
national level.

2.3.
The Commission comments in detail and summa-
rizes its views in five key questions, and elaborates
comments upon them — prior to the replies of interested
parties.

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

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

— 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’?

(6) Communication from the Commission to the Council, the
European Parliament, the Economic and Social Committee
and the Committee of the Regions — EU Action Plan:
Satellite communications in the Information Society —
COM(97) 91 final.
(7) OJ C 355, 21.11.1997.

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2.4.
The Commission requested all interested parties
to submit their views by 15 July 1997 but this date was
deferred to September at the request of the Telecommuni-
cations Council.

— Adoption of UMTS Decision early: 1999;

— Mandate to ERC (1) on further spectrum allocation:

February 1999;

The

second Commission

communication
2.5.
(October 1997) provides a synthesis of the comments
and contributions that were received. In particular,
clarification of the licensing regime that will be used
for granting UMTS licences and certainty that radio
frequency spectrum will be available in good time were
seen as critical areas where action by authorities is
required as a matter of urgency. There was an almost
unanimous view of Member States and industry that
this would create favourable conditions for the develop-
ment of UMTS and thus help preserve the competi-
tiveness of European industry. At the same time, Member
States and operators felt it would be necessary to secure
basic customer interests such as Europe-wide roaming
for mobile multi-media services on the basis of a
common, open and internationally competitive air
interface standard in order that the European citizens
can benefit from the ‘wireless Information Society’
without frontiers as they can do today with voice using
GSM.

The Commission communication addresses the

2.6.
following key issues:

— Industry and administration views on core and

regulatory issues.

— Commission assessment of areas of consensus and

issues for further discussion.

— Orientations for public policy objectives, recommen-
dations for further action and proposed targets,
action plans and timing.

The Commission proposes the following Action

2.7.
Plan and timetable:

— WRC-97: preparation of agenda WRC-99 (to include

UMTS spectrum allocation): October 1997;

— Council Resolution on present Communication set-
ting out the political priorities: December 1997;

— MRA (2) negotiations: continuous;

— WRC-99: extension of UMTS spectrum allocation:

October 1999;

— Review of telecommunication regulatory environ-

ment: end 1999.

3. General comments

The Committee welcomes the Commission com-
3.1.
munications as a necessary step paving the way towards
a European policy for the establishment of UMTS. The
Committee is pleased that the second communication
was issued in time for the Committee to be asked and
able to comment.

3.2.
The Committee agrees with the Commission’s
position (stated in its first communication) that a clear
and stable picture of UMTS is needed before it will be
possible to define fully what actions may be required at
a European level to make a positive contribution to the
future development of mobile and wireless technologies.

3.3.
The second Commission communication is a
welcome contribution towards two essential objectives,
namely the identification of the industry’s position and
the setting out of a timetable and the actions creating ‘a
favourable environment’ for UMTS. The Committee
endorses the main areas of consensus identified by
the Commission in this communication. The detailed
comments in Section 4 expand on certain of those areas
of consensus.

3.4.
The communications acquire increasing import-
ance in the light of the technological developments
which make the transition to the environment of personal
communication services possible to forecast. In its Green
Paper on Mobile and personal communications (3) the
Commission defined personal communication services
(‘PCS’) as ‘person-to-person calling independent of
location and the terminal used, the means of transmission
(wired or wireless) and/or the choice of technology’.

3.5.
Europe’s success in launching and establishing
the GSM system can be ascribed to the timely and
adequate coordination and cooperation between the
industry and the EU public authorities. The Committee

— Proposal of a UMTS Decision on spectrum and

licensing conditions: January 1998;

— Implementation of 5th Framework Programme for

Research and Development: 1998;

(1) European Radiocommunications Committee (ERC).
(2) Mutual Recognition Agreement (MRA).
(3) Towards the Personal Communications Environment:
Green Paper on a common approach in the field of mobile
and personal communications in the European Union —
COM(94) 145 final, III, 1.7., p. 15. ESC Opinion: OJ C 393,
31.12.1994, p. 64.

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urges the adoption of an equivalent approach to the
issues attached to the transition to UMTS. The success
of GSM is also due to the fact that it was an open standard
and provided full cross-border roaming functionality.
GSM has become the de-facto world standard for mobile
communications with now more than 200 operators
running or building a network, the majority of them
outside Europe.

3.6.
The importance of the mobile communications
manufacturing industry to the European economy,
competitiveness and employment must not be over-
looked. European GSM equipment manufacturers enjoy
a leading position world-wide and it is imperative
Europe’s lead in this industry should be maintained with
UMTS.

3.7.
The Committee is also aware that Europe’s
success with GSM has alerted the rest of the world
to the size of the market for mobile and wireless
telecommunications and that those who ‘missed out last
time’ will be making every effort to ensure that this does
not happen again. Thus it is highly likely that aside from
the resolution of technical issues, the market strategy
and international alliances of the major European mobile
equipment companies will play as big a part in the global
development of UMTS. A strong home market would
seem to provide the best conditions for European
industry to compete in other parts of the world.

3.8.
As the wireless information society market
becomes increasingly global, R&D, development manu-
facture and other investment decisions will be made,
more and more, on the basis of worldwide business
strategies. Since the market, especially in Asia and the
Pacific area is expected to grow even faster than in
Europe, European manufacturers must take all of this
into account.

3.9.
In response to the second communication, the
Committee considers that EU policy must support the
competitiveness of European-owned industry but also
will need to guarantee the continuation of the European
single market by ensuring the benefits of European-wide
roaming provided by the GSM technology will continue
in the wireless information society.

4. Specific comments

The following expand on the main areas of

4.1.
consensus identified by the Commission.

4.1.1.
Frequency spectrum. A decisive factor in the
successful introduction of UMTS is the allocation of
adequate frequency spectrum. The Committee agrees
with the Commission that sufficient radio spectrum, to
be pursued in the context of the CEPT and within the

WRC (1) mechanism, must be made available to enable
UMTS to develop as the market demand grows. In
addition it is essential to ensure that sufficient spectrum
remains available during the transition from GSM,
DCS-1800 and PCS-1900 second generation systems.

Frequency bands allocation. There is a need to
4.1.2.
study what
is the appropriate mechanism for the
allocation of frequency spectrum. Should this be done
by auction? If so,
is there any risk of outcomes
which might adversely impact on the public interest, in
particular the competitive structure of the market?

Licences. The Committee considers that action
4.1.3.
in this context must respect the industry expectations
that the first UMTS services should enter service around
2002, with widespread global availability anticipated
around 2005. To meet this timetable, an EU framework
should be established to ensure that the NRAs grant
licences
transparent and non-
discriminatory licensing procedures with sufficient lead
time starting as early as end of 1998. The Community
must ensure also that radio frequencies are allocated in
adequate time to operators.

through objective,

Regulation. Member States will have to take
4.1.4.
necessary measures to complete the implementation and
application of EU legislation and the decisions on
frequency issues reached within the European Radio-
communications Committee. There is no doubt that the
current EU telecommunications framework applies to
UMTS. For example, legislation and policy on issues
such as licensing, interconnection and roaming cover
UMTS just as other fixed and mobile telecommuni-
cations activities. However, the question of roaming
between UMTS and the existing second generation
systems (e.g. GSM, DCS-1800, PCS-1900) needs to be
addressed in detail.

4.1.5.
UMTS Decision. The proposed EU decision on
UMTS should help to clarify the legal framework (e.g.
licensing and interconnection) for UMTS but it must
also extend that framework to include roaming and
certainty of radio frequency spectrum availability.

4.1.6.
Standards. Open standardization will be para-
mount for the success of UMTS on a global basis.
Cooperation between Commission and EU Member
States, and with the relevant organizations both at
European and international level, should aim to ensure
that the EU adopts a single approach to UMTS,

(1) World Radio Conference.

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thereby promoting the prospects for the widest possible
acceptance of that approach on the global market (1).
The standardization process must involve full partici-
pation of all major industry players representing the
manufacturing and operator interests to minimize intel-
lectual property problems.

ETSI bears the responsibility for establishing
4.1.6.1.
the UMTS standard as a member of the ITU IMT2000
family and must resolve European needs in a global
context. Therefore ETSI must adopt a common, open
and internationally competitive air interface with a view
to its global application. Whilst flexibility of the UMTS
standard, as defined by ETSI, would be an advantage,
it will need to be tempered by the requirement that the
standard is well enough defined to give UMTS operators
confidence that it will be available from a wide variety
of manufacturers and that all equipment will be inter-
operable. ETSI open standards will minimize the risk of
multiple standards fragmenting the European market.
This approach will also minimize the risk of market
fragmentation involved in the use of multi-mode hand-
sets with multiple air interfaces — not a preferred idea
(due to possible technical difficulties and high costs).

4.1.6.2.
It is difficult to see how competition amongst
standards (within the UMTS spectrum bands) could
work without de-stabilising the European market. The
experience of the US and its competing standards would
seem to bear this out. It has been generally accepted that
one of the key factors in the success of GSM has been
the stability of the standard and the large number of
manufacturers supporting what is to a large extent an
open standard. Competition between standards would
invariably mean proprietary standards, which have the
major draw-back (as perceived by an operator and
his financial backers) of locking an operator to one
manufacturer for many years.

4.1.6.3.
UMTS is expected to bring about a much
greater convergence of the telecommunications and IT
industries. In this respect, greater participation of the
IT industry in the standardization process is highly
desirable.

4.2.
R&D. The Committee supports the proposal to
pursue R&D support on technical solutions needed for
UMTS within the Fifth Framework Programme for
Research and Technological Development
(1998-
2002) (2).

4.3.
Competitiveness. The development of UMTS
should be led by industry. R&D objectives for an
EU policy for UMTS ought to be set through close
cooperation between the Commission and industry. The
nature of UMTS is expected to facilitate the development
of small service providers, hence promoting competition.
However, EU competition law must be applied to
prevent incumbent fixed and mobile operators from
creating barriers to entry in the emerging UMTS markets.

Societal

4.4.
issues. UMTS should increase avail-
ability of choice and lower priced services, making the
advantages of advanced telecommunications facilities
available to the mass market. But beyond the traditional
areas, UMTS will stimulate and make possible new
economic activity including tele-working, telematics and
electronic commerce. These should assist the raising of
economic activity in rural areas, as well as facilitating
the implementation of environmental policies. The
development, construction, and operation of UMTS will
create enormous job opportunities throughout Europe
and provide substantial export opportunities. Other
societal issues will include those relevant in the telecom-
munications sector generally, and mobile in particular:
data protection, encryption, fraud and other criminal
activities, universal service obligations, physical, and
human environmental concerns (including health). In
particular, when introducing new technologies, pro-
ducers should give careful consideration to their suit-
ability, wherever possible, for use by those with disabili-
ties, such as hearing difficulties. Early solution to such
issues will contribute to the creation of a favourable
environment for market growth.

4.5.
The future. The second Commission communi-
cation contains an overview of recommended actions and
time-frame: The Committee agrees with and supports the
plan for Community action (see paragraph 2.6) and
awaits the Commission’s concrete legislative proposals.

(1) Already the top four European suppliers of mobile equip-
ment (Ericsson, Nokia, Siemens and Alcatel) have given
public support for a new common European platform for
UMTS to be standardized by ETSI.

(2) Fifth Framework Programme for Research and Technologi-
cal Development (1998-2002) — Commission Working
Paper on the Specific Programmes: Starting Points for
Discussion (COM(97) 553 final).

Brussels, 11 December 1997.

The President

of the Economic and Social Committee

Tom JENKINS