Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions - Towards the Full Roll-Out of Third Generation Mobile Communications
Date: 2002-06-11
Institutions: European Commission
Subjects: communications policy, financial situation, harmonisation of standards, information network, innovation, radio telecommunications, services contract, telephone, transmission network

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 11.6.2002
COM(2002) 301 final

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

Towards the Full Roll-Out of Third Generation Mobile Communications

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

Towards the Full Roll-Out of Third Generation Mobile Communications

Table of Contents

Executive Summary ................................................................................................................... 3

1.

2.

2.1.

2.2.

2.3.

2.4.

3.

3.1.

3.2.

3.3.

4.

Introduction.................................................................................................................. 4

Recent Developments and Current State of Play of Third Generation Mobile
Communications .......................................................................................................... 5

Financial Environment ................................................................................................. 5

Technology................................................................................................................... 7

3G Services Market...................................................................................................... 8

Regulatory Environment .............................................................................................. 9

Towards Full Roll-out of Third Generation Mobile Communications: .........................
Challenges and Responses ......................................................................................... 10

Stability of the Regulatory Environment ................................................................... 12

Measures to Support the Roll-out of 3G .................................................................... 14

A Longer-Term Approach.......................................................................................... 16

Conclusions................................................................................................................ 19

Annex 1: 3G – a schematic overview

Annex 2: Glossary

2

EXECUTIVE SUMMARY

At  a  moment  when  most  Member  States  have  issued  3G  licences,  the  great  expectations
associated  with  the  introduction  of  a  new  mobile  communications  generation  contrast
significantly  with  the  perceived  difficulties  of  the  sector  to  become  a  commercial  reality  in
Europe.

Advanced wireless platforms such as 3G are an essential building block to achieve the goals
of the Information Society in terms of  consumer demand,  productivity,  competitiveness  and
job creation. This was recalled by the Barcelona European Council in March 2002 that asked
the  Commission  to  present  at  the  Seville  European  Council  “a  comprehensive  analysis  of
remaining barriers to the full roll-out of 3G mobile communications”.

The  document  provides  an  overview  of  the  situation  of  the  3G  sector  today,  analyses  the
major  financial,  technical  and  regulatory  challenges  associated  with  the  roll-out  of  3G
services and identifies options to support this process.

The  sector  is  best  served  by  letting  the  market  drive  the  process  ahead,  though  public
authorities  can  contribute  to  confidence  by  ensuring  a  predictable  and  stable  regulatory
environment  conducive  to  a  competitive  market  serving  the  consumers’  interests.  In  the
immediate future, they can facilitate the physical deployment of networks by harmonising the
conditions  and  accelerating  the  procedures.  In  the  longer  run,  harmonisation  in  licensing
conditions and  assignment across the EU  would avoid market distortions and uncertainty in
the sector.

The  take-up  of  3G  is  a  continuous  process  which  requires  continued  attention  by  public
authorities.  There  are  no  simple  answers  to  the  challenges  ahead  but  3G  has  developed
sufficient  momentum  to  overcome  the  present  difficulties.  The  Commission  remains
confident in this respect.

3

1.

INTRODUCTION

In  March  2001,  the  European  Commission  issued  a  Communication  on  Third
Generation  (3G)  Mobile  Communications1.  In  this  document  the  Commission
identified  some  factors  that  may  critically  impact  the  successful  uptake  and
development of 3G services in the EU and proposed action lines in this respect.

One year later and at a moment when nearly all Member States have issued their 3G
licences,  the  great  expectations  associated  with  the  introduction  of  a  new  mobile
service generation – further fuelled by the popularity and continued growth of mobile
penetration over the last year - contrast significantly with the perceived difficulties of
the sector and the fact that, with few exceptions, 3G is not yet a commercial reality in
Europe.

On  the  other  hand,  the  European  Union  committed  to  an  ambitious  target  for
economic  and  social  renewal  at  the  Lisbon  European  Council2.  The  Commission’s
eEurope  2002  Action  Plan  was  part  of  the  response  to  this  challenge3.  Advanced
wireless access platforms such as 3G are  an essential  building block  to achieve the
goals of the Information Society, in terms of satisfying consumer demand, increasing
productivity, ensuring competitiveness and creating jobs.

In  this  perspective,  the  roll-out  of  3G  networks  and  services  is  an  important  target
and is now high on the agenda of all involved players. Many actors are involved in
this process and challenges associated with the next steps are the result of a complex
interaction of influencing factors, not all of which are directly related to the mobile
sector  itself.  Furthermore,  the  introduction  of  3G  services  constitutes  a  major  step
that requires time in order to settle the many changes it brings about. These include
the  technical  implementation,  the  development  of  a  new  service  market,  the
adaptation of business structures to a new value chain, and new patterns of consumer
behaviour.

In  March  2002,  the  Barcelona  European  Council  reasserted,  in  its  conclusions,  the
importance  of  third  generation  mobile  communications  for  the  progress  of  the
Information  Society  in  Europe  and  called  upon  the  Commission  “to  present  at  the
Seville European Council a comprehensive analysis of remaining barriers to the full
roll-out of 3G mobile communications” 4.

In an attempt to offer a realistic and objective assessment of the current situation and
to identify, where appropriate, priorities for action, this Communication provides an

1

2

3

4

“The Introduction of Third Generation Mobile Communications in the European Union:  State of Play
and the Way Forward”, COM(2001)141 final, 20.3.2001.
The  Lisbon  European  Council  in  March  2000  set  out  the  strategic  goal  of  making  Europe  the  most
competitive and dynamic  knowledge-based economy by 2010 (Presidency Conclusions, paragraph  5).
For the full text see http://ue.eu.int/en/Info/eurocouncil/index.htm.
The eEurope 2002 Action Plan was proposed by the Commission in the context of the Lisbon strategy
and endorsed by the Feira European Council in June 2000. The Commission has recently adopted a new
eEurope2005 Action Plan (COM(2002)263 final), to be considered by the Seville European Council in
June 2002. Information on eEurope can be found at
http://europa.eu.int/information_society/eeurope/action_plan/index_en.htm.
Barcelona European Council of March 2002, Presidency Conclusions, paragraph 41. The full text can
be found at http://ue.eu.int/en/Info/eurocouncil/index.htm

4

                                                
overview  of  the  recent  evolution  and  the  situation  of  the  3G  sector  today  from  the
financial,  technical,  market  and  regulatory  perspective  (chapter  2).  It  then  analyses
the  major  challenges  associated  with  the  roll-out  of  3G  services  and  identifies
options  at  EU  level  to  support  this  process  (chapter  3).  This  analysis  recalls  and
assesses  actions  undertaken  since  the  last  Communication,  identifies  measures
required  to  address  short  or  medium-term  needs  and  proposes  some  future  action
lines based on the assessment of the roll-out of 3G so far.

2.

RECENT  DEVELOPMENTS  AND  CURRENT  STATE  OF  PLAY  OF  THIRD  GENERATION
MOBILE COMMUNICATIONS

The  roll-out  of  3G  services  entails  a  complex  interaction  between  different  players
(ref.  scheme  in  Annex  1).  Obviously,  when  considering  the  benefits  of  3G,  the
consumer – i.e. the individual, business and the society as a whole – is to be placed
in the centre. In order to offer 3G services, market players must roll out networks and
operate them, provide attractive applications, content and services, and make suitable
terminals  available.  In  a  simplified  scheme,  the  major  players  involved  are  the
manufacturers, the operators and the software/content providers, but the value chain
is in fact developing towards a much more complex structure with partly overlapping
interests  of  the  players.  All  the  parties  involved  need  financial  resources  that  are
available  through  different  channels.  Finally,  the  framework  is  set  by  regulation  at
different levels (local/regional, national, and Community level) as well as standards
development organisations or radio spectrum management bodies. All players do not
only pursue different interests, but also act along different timetables as far  as their
contribution to the 3G roll-out is concerned.

In  addition  to  its  inherent  complexity,  this  web  of  interests  does  not  evolve  in  a
vacuum but is highly dependent on the general economic, technological and service
trend,  because  of  the  wide  range  of  activities  resulting  from  the  anticipated  broad
service range on offer. In this respect, 3G roll-out is by  far more complex than the
deployment of the second generation (2G) of mobile communications.

When reviewing the developments since last year, one observation is that the role of
some of the involved players  and the impact of their relationship have significantly
evolved.

2.1.

Financial Environment

During  the  year  2001,  the  global  economy  has  contracted  although  a  gradual
recovery is shaping up in Europe and even more in the US. The telecommunications
sector has been no exception to the slowdown.

However,  the  EU  telecommunications  market  still  over-performed  the  general
economy, with a turnover of €224bn and a ma rket growth of some 10% in 2001, with
the  mobile  sector  contributing  by  some  40%5.  Also,  penetration  of  mobile  in  the
Community now stands at over 75% (an increase of over 10% with respect to 2001)
with a total of some 125 million handsets sold in 2001. After a decrease over the past
years, the average revenue per user (ARPU) has stabilised at about €30 per month.

5

European IT Observatory (EITO) report 2002.

5

                                                
Nevertheless, in spite of these comparatively good performance, the sector has been
faced  with  an  increased  pressure  from  the  financial  markets.  During  the  previous
period,  characterised  by  an  above  average  growth,  the  sector  decided  to  invest
considerably,  notably  in  acquiring  market  shares  (mergers  &  acquisitions)  and  in
future  businesses  such  as  3G,  with  some  €110bn  spent  on  licences.  This  has
generated a sharp increase of the debt level of telecom operators and consequently a
downgrading  of  their  credit  ratings.  3G  licensing  has  certainly  contributed  to  this
situation  but  is  only  one  among  several  factors  affecting  the  telecommunications
sector overall.

Over the past year, the downgrading of credit ratings has continued and a significant
erosion  of  the  market  capitalisation  of  both  operators  and  manufacturers  could  be
observed.  Today,  the  availability  of  investment  funds  is  significantly  reduced,
especially for alternative carriers and new  entrants. This comes  at a  moment  when,
after  years  of  preparation,  the  physical  roll-out  of  networks  and  the  preparation  of
service offers require significant financial resources on the side of network operators.

This  trend  has  contributed  to  an  erosion  of  the  business  perspective  of  the  telecom
sector overall, including mobile operators. The increase in competition in the sector
resulting from liberalisation coincides today with a difficult technological and market
transition.  In particular,  those  players  that  cannot  leverage  their  2G  experience  and
customer  base  are  exposed  to  heavy  financial  commitments  before  being  able  to
generate any revenues from mobile services.

The  difficult  financial  environment  has  obliged  all  telecom  operators,  including
mobile  operators,  to  revise  their  strategies  and  give  priority  to  re-balancing  their
sheets, by selling non-core business, exploring new revenue sources and identifying
ways to reduce capital expenditure. This overall trend of the sector has also affected
the plans for 3G roll-out in different ways. For instance, some operators have given
higher priority to  explore  alternative  means  to  increase  their  ARPU  by  considering
offering  new  services  in  2G,  such  as  GPRS6-based  services.  Reducing  investment
expenditures  is  another  priority  for  operators,  as  indicated  by  the  several  cases  of
network infrastructure sharing, through which operators expect to lower considerably
their initial capital expenditures.

The overall difficult financial situation for operators has led to a reassessment of the
sustainability  of  3G  in  markets  with  a  high  number  of  licensed  3G  operators.  A
discussion  has  also  started  on  how  to  deal  with  this  situation  in  case  consolidation
becomes inevitable.

For the manufacturers, the financial strain resulted not only in an increased pressure
by  operators  on  network  equipment  prices,  but  also  in  growing  recourse  to  vendor
financing  of  equipment,  which  burden  the  manufacturers’  business  results.  In
addition,  handset  sales  diminished  due  to  market  saturation  and  the  operators’
reduced  investment  in  subsidised  terminals.  A  further  trend  is  the  entering  into
alliances  or  even  outsourcing  agreements  with  respect  to  the  development  and
manufacturing of 3G handsets.

6

General  Packet  Radio  Service:  an  evolution  of  the  GSM  platform  allowing  for  ‘packet  switched’
transmission over GSM networks.

6

                                                
Overall, the financial  environment  is  still  challenging and  has  affected  the  3G  roll-
out.  However,  the  extremely  pessimistic  predictions  of  last  year  have  not
materialised and industry has started tackling the issue.

2.2.

Technology

As  the  announced  deployment  of  3G  services  gets  closer,  the  availability  of
functioning  network  and  terminal  equipment  becomes  crucial.  The  reports  –  both
success  stories  and  news  about  failures  –  are  often  taken  out  of  context  and
interpreted in different and contradictory ways.

Today,  there  seems  to  be  confidence  that  network  equipment  is  available  and
manufacturers  are  committed  to  guarantee  inter-operability  of  equipment.  To  date,
terminals  are  not  readily  available  for  consumers.  However,  the  capability  of
producing large batches of terminals is evidenced by the reports of delivery contracts
to some operators and by the announcement of 3G handset models before the end of
the year.

Over the past year, the standardisation work carried out in the context of 3GPP7 has
continued  to  be  successful.  A  major  milestone  was  achieved  with  the  release  of  a
new  sets  of  specifications  (the  adopted  Release  4  and  Release  5,  pending  for
adoption)  which  gradually  pave  the  way  for  3G  networks  to  ultimately  be
consistently based on internet protocols. This is a decisive development for operators
as  it  preludes  to  a  fully  integrated  network  approach  (e.g.  mobile  and  fixed)  thus
providing  for  a  future-proven  network  concept.  In  this  context,  the  strong  push  for
preparing the introduction of the IPv6 protocol by the  Commission,  supported  by  a
recent Council Resolution8, is complementary.

Compared  to  last  year,  significant  progress  has  been  achieved  on  the  handset  side,
with the transition from prototypes to the development of first 3G models ready to be
commercialised on the European market. In Japan, where 3G was launched last year,
there  are  now  over  100,000  3G  terminals  in  use  from  a  limited  number  of
manufacturers,  with  a  variety  of  basic  models  available  (e.g.  handset  with  video
camera,  PDA-type  of  terminal,  plug-in  interface  for  PCs).  Several  manufacturers
have announced the  launch  on the  European market for the second  half  of  2002  of
3G  terminals  with  a  “dual-mode”  capability  (2G  +  3G),  a  decisive  feature  for  the
European  consumer  accustomed  to  a  full  coverage  2G  service  environment,
especially  when  considering  that  3G  coverage  is  expected  to  grow  only  gradually.
Additional  new  features  for  European  3G  terminals  are  already  available  today  or
can  be  expected  in  the  near  future:  high-resolution  high-contrast  colour  screens,
better  energy  efficiency  to  boost  battery  capacity,  and  integration  of  multimedia
functions (e.g. MP3 player, radio, games, recording function, sophisticated organiser
functions such as calendars, micro browsers and Java-enabled handsets).

7

8

Third Generation Partnership Project.
COM(2002)96,  “Next  Generation  Internet  –  priorities  for  action  in  migrating  to  the  new  Internet
Protocol IPv6”. This Communication has induced the preparation of an IPv6 Action Plan which is now
in place and which will bring significant benefits to 3G, once the market picks up and as 3G services
diversify  (e.g.  man/machine  or  machine/  machine  interaction;  quality  of  service  to  be  adapted  to
requirements of applications and ensured using features if IPv6).

7

                                                
The  past  year  has  also  witnessed  the  completion  of  the  upgrade  of  existing  2G
networks to GPRS. This upgrade paves the way towards the so called 2.5G services,
offering both higher data transmission rates than GSM and “always-on” capability by
introducing the packet-switched operation mode in GSM networks. Services making
use  of  these  features  will  obviously  play  an  important  role  to  test  and  prepare  the
future  3G  market.  GSM  handsets  with  GPRS  capability  are  today  already  on  the
market.

In  conclusion,  3G  technology  seems  to  be  stable  today,  despite  reported  technical
difficulties  (such  as  dropped  calls,  glitches  in  the  terminal  software,  and  reported
insufficient  battery  capacity)  that  must  be  seen  as  normal  difficulties  encountered
when introducing new products of considerable technological  innovation.  The  need
to  ensure  interoperability  of  terminals  has  been  recognised  as  a  key  issue  by
manufacturers  and  operators,  who  are  acting  jointly  to  iron  out  problems  resulting
from options left open under 3GPP standards.

2.3.

3G Services Market

In Europe,  commercial 3G  services  are  to  date  not  available,  apart  from  the  small-
scale pilot service trials on the Isle of Man and in Monaco. This has been interpreted
as an overall “delay” and taken as an alarming signal for Europe failing to progress
with  the  transition  towards  data-centred  services  in  mobile  communications.
However, EU legislation9 called on national administrations to set in place licensing
modalities that  would allow  for  operators to be in a position, at the latest as  of  the
beginning of 2002, to  launch  commercial  3G  services  should  they  decide  to  do  so.
The legislation has not set out specific dates for the start of 3G services.

In the rest of the world, 3G services have only been launched on a commercial basis
in  Japan  with  the  provision  of  commercial  3G  services  in  the  Tokyo  area  since
October  2001.  By  the  end  of  April  2002,  3G  had  attracted  some  106,000  paying
customers.  However,  consolidated  conclusions  can  only  be  drawn  once  all  major
urban areas are covered and once 3G users experience the roaming capability of the
new service offer. It is also noteworthy that in Japan data service offers using 2.5G
access  networks,  e.g.  for  advanced  messaging  including  the  transmission  of  still
pictures  using  camera-equipped  terminals, seem to be  remarkably  well  accepted  by
consumers, as the rapid growth of the number of users of these services demonstrate.

There  are  several  encouraging  signs  that  the  shift  towards  a  data  focused  service
environment  is  about  to  start.  3G  services  are  likely  to  be  faced  with  a  growing
market demand once they become a commercial reality, as announced by several 3G
licensees for the second half of 2002.

Firstly,  the  increase  of  SMS  traffic  growth  remains  steady  and  operators  have
consolidated the revenue share they draw  from this service10. SMS is the only  data
service which today is available in Europe on a large scale with the current  mobile
generation. Its wide acceptance as “normal” part of the 2G service package suggests
a  strong  demand  for  more  sophisticated  messaging  services  that  3G  will  serve.  All

9

10

Decision 128/1999/EC. Text available at
http://europa.eu.int/information_society/topics/telecoms/radiospec/mobile/legislation/index_en.htm
Monthly figures of SMS traffic in Europe have increased from around 4 billion in January 2000 to 30
billion in December 2001. Current projections indicate a steady increase.

8

                                                
operators are busy exploring the next generation of messaging services that will offer
the  possibility  to  attach  multimedia  objects,  such  as  pictures,  audio  clips  and  ring
tones.

Secondly,  the  number  of  European  GSM  operators  capable  of  offering  GPRS
services has jumped to over 50 by January 2002, although a full-scale advertising of
the new service option and outright support has been cautious so far. Together with
the  availability  of  GPRS  terminals,  it  is  expected  that  valuable  feedback  on  the
acceptance of new services offered via GPRS will be available soon.

Thirdly,  “i-mode”  services  (data  based  services  using  GPRS-enhanced  GSM
networks) are now available on a commercial basis in two Member States (Germany
and the Netherlands) and have been announced in another one (Belgium). This is a
strong indication of confidence in the 2.5G services offered by operators, if one takes
into  account  that  they  take  the  risk  of  marketing  services  requiring  dedicated
terminals.

Finally,  services  and  applications  demonstrations,  such  as  booking  of  tickets,
download  of  audio  or  even  video  clips,  banking  transactions,  location-based
services11  and  often  a  combination  of  these  capabilities,  witness  the  continuous
efforts to develop sophisticated applications.

Significant  progress towards the  development  of  3G  has  become  visible  during  the
last year and a confirmation of this trend is expected for the second half of this year.
A random  screening of  public  announcements  made  by  European  3G  licensees  has
revealed that a significant number of them expect or intend to launch 3G commercial
services  before  the  end  of  2002,  while  the  others  expects  to  proceed  in  2003  or
beyond. Meanwhile, 2.5G access networks is available, although commercial service
offers  are  still  limited.  It  is  too  early  to  assess  to  what  extent  2.5G  is  a  necessary
intermediate  generation,  as  anticipated  by  many  observers,  for  developing  a  mass
market  for  data  services.  Strategies  of  operators  vary,  with  some  of  them  possibly
targeting an early start of 3G service offering to tap a demand, mainly from business
users, for comparatively high-speed data access on the move.

2.4.

Regulatory Environment

At  the  beginning  of  2002,  all  Member  States  had  finalised  or  at  least  started  3G
licensing  procedures,  as  foreseen  under  the  EU  regulatory  framework.  With  the
exception of two countries (France and  Ireland) where the procedure  for attributing
3G licensing is still under way, all countries have by now issued 3G licences. By the
3rd quarter of 2002, sixty-one 3G licences will have been issued in the EU12.

The licensing procedures over the last year revealed several trends:

Among  the  five  Member  States  issuing  licences  since  the  last  3G  Communication,
four  (France,  Belgium,  Greece  and  Luxembourg)  did  not  succeed  in  attracting  a
sufficient number of interested parties to issue all offered licences, and this trend is
likely to be confirmed by the outstanding licensing processes in France and Ireland.

11

12

These services will be based on the location information of the user, obtained either by using the mobile
network itself or from satellite navigation systems, such as the future European system “Galileo”.
In addition, several accession countries have completed or started their 3G licensing process.

9

                                                
This  will  lead  to  a  situation  where  in  five  Member  States  part  of  the  amount  of
spectrum made available for 3G will remain unused for the time being.

Concerning the conditions attached  to  3G  licences,  roll-out  obligations  came  under
scrutiny  in  those  countries  where  early  coverage  obligations  proved  to  be
incompatible  with  the  availability  of  equipment  or  the  realistic  possibility  for
operators to roll out networks. In the case of Spain, Portugal and Belgium this led to
postponements of the roll-out deadlines, coupled in certain cases with a procedure to
reassess  the  situation  in  view  of  confirming  new  deployment  target  dates.  In  other
Member States (Sweden and Finland), operators complied with roll-out obligations,
albeit  by  setting  up  minimal  network  configurations  used  for  experimental,  rather
than  for  commercial  service,  purposes.  In  the  majority  of  Member  States,  roll-out
obligations specified later deadlines, hence the verification of such obligations does
not come up at this stage.

In France, after a partial completion of the licensing procedure, the licence price was
considerably lowered and the payment modality changed in order to couple payments
stronger  to  the  turnover  of  the  future  business  case.  Italy  is  considering  to  readjust
the  licence  duration  (from  15  to  20  years).  Spain  proceeded  with  two  annual
adjustments  of  spectrum  reservation  fees  that  considerably  impacted  on  the
operators’ business case.

In conclusion, and at the end of the licensing process in the Community, the number
of  3G  licensees  in  each  Member  State  seems  to  be  sufficient  to  allow  for  the
development  of  a  competitive  environment.  However,  a  certain  number  of
adjustments  have  been  made  in  some  Member  States  in  respect  of  the  licensing
conditions as set out originally.

3.

TOWARDS  FULL  ROLL-OUT  OF  THIRD  GENERATION  MOBILE  COMMUNICATIONS:
CHALLENGES AND RESPONSES

The  Commission  has  conducted  a  continued  and  diversified  dialogue  with  all
stakeholders in view of monitoring 3G roll-out and has launched a certain number of
actions as identified in the Communication published last year.

The  general  consensus  that  seems  to  emerge  through  this  dialogue  can  be
summarised as follows:

(cid:1)  In this critical phase of rolling out 3G, it is crucial to let the market operate and
the  actors  deal  with  the  normal  technological  challenges  ahead.  Regulatory
intervention  is  neither  expected  nor  necessary.  Market  players  are  ready  to
assume  their  responsibility,  and  have  done  so  until  now.  Intervention  in  the
financial environment is not a task for public administrations which can, however,
through their action contribute to increase the confidence in the sector13.

(cid:1)  The  long-term  goal  to  anchor  3G  as  one  of  the  service  platforms  in  a
ubiquitous information society is  shared  and  supported.  Recalling  this  target

13

Support  through  institutional  banks  such  as  the  EIB  are  limited  but  take  place.  The  value  of  such  a
support  lies  less  in  its  direct  contribution  to  the  overall  investment  volume  than  in  the  signal  of
confidence for the sector.

10

                                                
and confirming Europe’s commitment to it will help to restore confidence in the
sector.

(cid:1)  There  are  no  short-term  solutions,  but  rolling  out  3G  is  an  evolving  process
which,  besides  efforts  by  the  actors  directly  involved,  requires  from  the  public
authorities  both  continuity  of  support  and  an  open-minded  approach  to
tackle challenges.

Based  on  this  consensus,  the  Commission  has  identified  three  lines  of  action  that
will  contribute  to  assisting  the  sector  and  also  demonstrate  commitment  and
continued support towards achieving the goal of a full roll-out of 3G:

(cid:1)  There  is  a  demand  for  stability  of  the  regulatory  environment.  Regulation
should  provide  for  a  harmonised  and  transparent  environment,  supportive  to
consumers’ interests. The mechanisms of the new EU regulatory framework are
adapted  to  evolving  markets  and  technology,  and  should  be  used  to  support  the
roll-out of 3G at this sensitive stage.

(cid:1)  A certain number of difficulties have been identified in the short or mid-term, in
respect  of  which  a  proactive,  supporting  or  stimulating  role  at  Community
level is seen as beneficial.

(cid:1)  The  experience  with  3G  points  to  the  need  for  drawing  lessons  and  starting
longer-term  initiatives  which  will  benefit  ultimately  3G  as  well  as  similar
projects.  This  is  particularly  relevant  in  the  perspective  of  the  forthcoming  EU
enlargement.

Enhanced  co-ordination  across  Europe  and  further  co-ordination  of  policy
approaches might be necessary to overcome the present challenges for 3G today, as
well  as  to  deal  with  spectrum-based  technologies  and  services  in  future.  Under  the
current  regulatory  framework,  the  Member  States  have  used  various  methods  to
assign radio spectrum to 3G operators (auctions, comparative selections or a mix of
the two) and imposed a variety of conditions. Close control of the present situation
where operators are faced with 15 different regulatory regimes needs to be ensured in
order  to  avoid  that  the  concept  of  an  Internal  Market  for  mobile  communications
services is undermined. A study on this subject is presently being carried out for the
Commission14.

The adoption of the new EU regulatory framework for electronic communications,
including  the  Radio  Spectrum  Decision15,  is  a  significant  step  forward  in  ensuring
consistency  in  the  EU  with  regard  to  wireless  communication  services.  The
the  new
transparency  and  co-ordination  mechanism  provided  for  under 
Framework Directive will have an important role to play in this respect.

14

15

Study on “Comparative assessment of the licensing regimes for 3G mobile communications in the EU
and their impact on the mobile communications sector”.
The  new  regulatory  framework  for  electronic  communications  and  the  Radio  Spectrum  Decision
entered into force on 24 April 2002, see OJ L108, 24.4.02. The new framework will become applicable
after  a  15-month  implementation  period  by  the  Member  States.  The  Radio  Spectrum  Decision  is
applicable immediately.

11

                                                
The  Radio  Spectrum  Decision  establishes  a  general  policy  and  procedural
framework  for  discussing  spectrum  issues  at  EU  level,  for  all  Community  policies
relying  on  the  use  of  radio  spectrum  (notably  telecommunications,  transport,
broadcasting,  space  and  research).  The  creation,  in  the  context  of  this  Decision,  of
two  new  bodies  (the  Radio  Spectrum  Policy  Group  and  the  Radio  Spectrum
Committee)  is  intended  to  ensure  that  the  Member  States’  approaches  are  co-
ordinated at an early stage.

3.1.

Stability of the Regulatory Environment

When balancing the benefits and drawbacks of a rigid application of the conditions
determined  by  the  issued  3G  licences,  the  Commission  is  of  the  opinion  that  in
principle the licensing conditions should not be changed because the sector is best
served  by  a  predictable  environment.  Predictability  allows  business  cases  to  be
established  in  a  reliable  manner  and  to  be  credibly  defended  when  accessing
investment funds.

Changes  to  licence  conditions  should  be  envisaged  only  when  circumstances  have
changed  unpredictably  and  in  these  cases  any  modification  should  be  proportional,
transparent  and non-discriminatory.  Furthermore, in cases  changes  are  envisaged,  a
harmonised  approach  should  be  worked  out  by  Member  States,  using  the  new
regulatory framework as a basis.

The  analysis  of  the  3G  regulatory  environment  outlined  in  the  previous  chapter
shows  that  several  issues  need  to  be  considered  if  a  predictable  environment,
though with the necessary flexibility, is to be preserved:

(cid:1)  Concerning  roll-out  obligations,  the  Commission  acknowledges  that  adaptation
of deployment modalities may become necessary. However, such changes need to
be  undertaken  under  transparent  and  objective  conditions.  This  would  imply  a
public consultation on the basis of a reasoned and justified proposal for changing
deployment  obligations,  as  these  can  have  different  origins  (e.g.  such  as  non-
availability  of  equipment  and  procedural  difficulties  to  obtain  authorisations  for
deploying  base  stations).  It  would  also  seem  recommendable  that  in  case  such
changes are proposed, they are discussed with other national administrations in an
appropriate form so as to rapidly exchange information and best practices and to
work towards a harmonised approach throughout the EU.

(cid:1)  Changes to licence duration are not assessed by the Commission as a priority to
meet  short-term  challenges  because  they  rather  impact  on  the  long-term
development of the business case, which is today not clearly predictable. While a
harmonised  licence  duration  at  Community  level  is  desirable  in  principle,  this
represents a very  complex  process that is not in the view  of the  Commission an
urgent action in the 3G context.

(cid:1)  Changes in licence fees and charges or other payments associated to the 3G
licences once the licensing procedure is closed can be clearly counter-productive
viewed  from  a  business  perspective.  In  general,  the  perspective  of  a  changing
payment level makes a business case unpredictable, while increases of payments
would obviously further burden the sector.

12

(cid:1)  Besides the licensing  conditions as spelled  out  in the 3G  licences, the need  may
arise  for  clarification  of  the  regulation  in  cases  not  foreseen  by  the  original
licences. This was the case for network infrastructure sharing (NIS), where the
potential was originally not considered by operators but which is by now seen as
an  option  to  address  environmental  concerns,  to  ease  the  acquisition  of  base
station sites and to lower capital expenditure when rolling out networks.

(cid:1)  The 3G Communication of last year invited a broad discussion on the potential of
NIS.  Subsequently,  the  Commission  launched  a  dialogue  with  industry  and  the
Member States in existing institutional fora as well as in high-level round tables
with  industry  representatives16.  This  dialogue  contributed  to  the  clarification  of
the  regulatory  conditions  applicable  at  national  level  to  network  infrastructure
sharing17, an issue that was  not explicitly envisaged at  the time  of 3G  licensing.
The result is a general convergence of views on how to handle NIS, albeit some
differences across Member States remain. Also, negotiations among operators on
NIS agreements, pursued on commercial basis, are still limited and it is too early
to assess how  the full potential of NIS  can  be  exploited  by  all  interested  parties
equally  and  on  fair  terms.  It  is  therefore  envisaged  to  continue  to  work  with
national  administrations  towards  establishing  a  best  practice  approach  on  NIS.
Specific  considerations  relating  to  the  compliance  with  competition  rules  in
individual markets are relevant in this context.

Unavoidable  adaptation  of  licensing  conditions  (such  as  roll-out)  as  well  as  the
clarification  of  regulatory  aspects  relevant  to  new  trends  (such  as  NIS),  are  the
responsibility  of  the  Member  States.  However,  the  Commission  will  use  the
mechanisms foreseen in the new regulatory framework, which will be implemented
by  the  Member States in July 2003. The  Communication of  last  year  identified  the
adoption  of  this package as  a key  milestone to  create a supportive  environment for
the roll-out of 3G. The provisions of the texts adopted early in 2002 emphasise the
need  for  national  regulators  and  the  Commission  to  co-operate  in  order  to  ensure
consistency  of  measures  taken.  Matters  relevant  to  3G  licensing  will  be  discussed
within  the  various  bodies  set  up  under  the  new  framework  and  the  Spectrum
Decision.

Discussions  with  industry  have  given  rise  to  concerns  that  the  powers  attributed  to
national  regulators  under  the  new  EU  regulatory  framework  could  lead  to  undue
regulation  of  3G.  However,  these  concerns  need  to  take  into  consideration  that  the
new  regulatory  framework  is  based  on  an  approach  limiting  regulation  to  specific
cases  of  market  failure.  Markets  which  are  assessed  are  defined  according  to
competition  law  principles  and  must  have  characteristics  that  may  justify  ex  ante
regulation.  Recital  27  of  the  Framework  Directive  notes  that  newly  emerging
markets, where de facto the market leader is likely to have a substantial market share,
should  not  be  subject  to  inappropriate  ex-ante  regulation.  This  is  because  the
imposition  of  ex-ante  obligations  could  unduly  and  unnecessarily  influence  the

16

17

Discussions were held in the context of the groups and committees under the current telecom regulatory
framework (National Regulatory Authorities, Licensing Committee, ONP Committee). In addition, two
Roundtables on 3G  were organised  with the participation of CEOs of  mobile operators in April 2001
and May 2002.
Information  on  national  rules  applicable  to  network  infrastructure  sharing  is  available  on  the
Commission website at:
http://europa.eu.int/information_society/topics/telecoms/radiospec/mobile/index_en.htm.

13

                                                
competitive conditions taking shape within a new and emerging market. It is difficult
at this stage to foresee how services will develop in the context of 3G networks or
the  way  in  which  they  will  be  deployed  and  3G  services  offered.  Many  of  the
services provided over 3G are likely to constitute new or emerging markets.

3.2.

Measures to Support the Roll-out of 3G

Obstacles to the Physical Deployment of Networks

Operators  face  considerable  difficulties  when  deploying  the  physical  networks,
which at this point in time is a priority.  Obtaining  the authorisation for  installing
base  stations  has  become  a  real  challenge  in  a  number  of  Member  States,  which
risks to impact on the schedule of roll-out envisaged and increase costs unexpectedly.

The  background  to  these  difficulties  lies  in  the  alleged  health  impact  resulting
from  the  electromagnetic  emissions  by  base  stations  as  well  as  environmental
concerns, as many new 3G masts are going to be erected. In most Member States the
relevant  decision  processes  are  taking  place  at  regional  or  even  local  level,  and
applicable  procedures  and  rules  vary  considerably  (e.g.  construction  permit  from
local  authorities).  Another  difficulty  faced  by  operators  is  the  proof  of  compliance
with emission regulation issued at national level which is not harmonised throughout
the EU. These difficulties call for action at several levels.

The planning procedures at national and local level are not dealt with as such by
the  EU  telecom  regulatory  framework.  However,  the  new  regulatory  framework
encourages  public  authorities  to  adopt  measures  that  facilitate  deployment,  such  as
co-location  and  facility  sharing.  Regulators  can  thereby  impose  mast/site  sharing
under certain conditions. The exchange of existing practices among local authorities
should  be  encouraged  in  order  to  find  solutions  that  serve  both  environmental  and
Information  Society  objectives.  On  the  other  hand,  the  Commission  notes  and
the
encourages  the  significant  efforts  undertaken  by  operators 
transparency  of  the  planning  of  their  physical  networks  and  proactively  seek  a
dialogue with local decision-makers.

increase 

to 

Longstanding efforts at EU level have been taken to ensure health protection and to
harmonise  the  levels  of  emissions  considered  safe.  In  1999,  the  Council  adopted  a
Recommendation  on  limits  of  exposure  to  non-ionising  radiation18,  in  line  with
international health recommendations. . In the absence of harmonisation, the Member
States retain discretion to set the limits they consider appropriate, taking into account
the  ‘precautionary  principle’.  This  has  led  to  very  constraining  rules  in  certain
Member States. The Commission has recently published a report19 summarising the
practises in the Member States and has concluded not only that industry is hampered
by the lack of harmonisation, but also that the citizen is confused about what is safe
and what is not in light of differing approaches. There is an urgent need to initiate a

18

19

Council  Recommendation  of  12  July  1999,  1999/519/EC.  The  SAR  values  of  this  Recommendation
have  been  confirmed  in  October  2001  by  the  Scientific  Committee  on  Toxicity,  Ecotoxicity  and  the
Environment.
Implementation report on the Council recommendation limiting the public exposure to electromagnetic
fields (0Hz to 300GHz) available at
http://europa.eu.int/comm/health/ph/programmes/pollution/implement_rep_en.pdf.

14

                                                
dialogue  among national administrations with a view to harmonising the applicable
rules.

In  parallel,  the  Commission  has  pursuant  to  the  R&TTE  Directive20  undertaken  to
develop  technical  specifications  for  safe  mobile  equipment.  These  specifications
are  ready  in  form  of  Harmonised  Standards  for  mobile  terminals  and  are  in  the
process of being finalised for base stations, with reference to the limits set out by the
1999  Council  Recommendation21.  They  will  therefore  play  an  important  role  in
promoting  regulatory  consistency  across  the  EU.  In  addition,  the  Joint  Research
Centre  of  the  European  Commission  has  developed  activities  and  competencies  in
the  domain  of  electromagnetic  field  measurements  that  might  be  used  in  the
development  of  harmonised  measurement  methods  to  assess  the  emission  of
mobile base stations.

The  Commission  views  it  a  priority  to  contribute  to  a  general  awareness  and
understanding of the objective risks associated with the use of mobile terminals and
base  stations and to involve users  associations in the  debate. Considerable  research
work  has  been  undertaken  to  investigate  a  possible  impact  on  health.  Current
knowledge  from  a  large  body  of  scientific  research22  does  not  suggest  that  adverse
health effects can be attributed to the normal use of mobile equipment which adhere
to  the  existing  safety  exposure  limits.  This  was  confirmed  by  the  recent  updated
opinion  requested  from  the  EC  scientific  committee  and  is  also  reflected  by  other
international  and  national  scientific  committees  and  the  WHO.  However,  further
studies are necessary on how to decrease public exposure to the long term effects of
EMF and keep total body exposure to radio-frequency fields within safe limits. The
Commission is currently preparing a public  communication  campaign in  order to
contribute to better awareness of the matter by the general public and will seek  the
co-operation by Member States in this respect.

Overall, improved legal and technical clarity will increase protection and confidence
of the citizens and facilitate network deployment.

R&D Activities and eEurope: a Focus on New Wireless Services

As  stated in  last  year’s  Communication, the Commission attaches  great  importance
to a continuous effort on the research side to accompany the present development of
3G  and  its  future  evolution.  The  Commission’s  proposal  for  the  6th  Framework
Programme23  contains  relevant  activities  in  this  respect.  Meanwhile,  under  the  5th
Framework Programme useful results have been achieved.

Users  will  be  interested  in  a  new  mobile  service  generation  that  adds  value  to  the
present  service  offers.  Consequently,  the  Commission  launched  in  October  2001  a
Mobile  applications  initiative  with  the  aim  of  testing  innovative  2.5-3G  services

20

21

22

23

Directive  1999/5/EC  of  the  European  Parliament  and  of  the  Council  of  9  March  1999  on  radio
equipment and telecommunications terminal equipment and the mutual recognition of their conformity,
OJ L 091, 07.04.1999, p. 10.
Technical standard EN 50360 for handsets.
Refer for instance to the activities of the COST Programme (COST 244, 244bis, 281) as well as specific
research programmes under the current 5th Framework Programme.
Information on the 6th Research Framework programme is available at
http://europa.eu.int/comm/research/fp6/index_en.html.

15

                                                
and applications and supporting trials at a pan-European level24. This initiative gives
industry the opportunity to jointly develop and test a number of  innovative 2.5 and
3G  mobile  services  and  applications,  to  validate  key  interoperability  issues  and  to
consider  the  transition  to  the  new  version  of  the  Internet  Protocol  (IPv6)  thereby
complementing  the  Action  Plan  mentioned  earlier.  The  projects  that  have  been
launched  are  seed  actions  to  promote  collaborative  research  in  selected  areas
including radio broadcasting, transport and emergencies, health, tourism, content and
business applications and cover key generic aspect relevant to the early phase of 2.5
and 3G services. It is foreseen that results of these project be made available through
a visible mechanism of continuous reporting.

Acceptance of the new mobile service generation will critically depend on content. In
this respect, public sector information constitutes an invaluable asset for the citizen.
It  is  therefore  important  to  ensure  the  availability  of  this  information  as  input  for
added-value  and  cross-border  information  services,  as  set  out  in  the  recent
Communication on Public Sector Information and the proposed Directive on the re-
use and commercial exploitation of public sector documents25. This goal is pursued
also  in  the  context  of  the  eContent  Programme,  which  aims  at  encouraging  the
production  of  multilingual  and  culturally  diversified  content  and  stimulating  the
dynamics  of  the digital content market  in Europe26. The new  eEurope  2005  Action
Plan reaffirms the importance of 3G services and content and provides action lines in
this respect.

Detecting New Regulatory Obstacles

As 3G applications take shape, new regulatory issues arise because the wide range of
areas  3G  services  are  likely  to  address  touches  on  many  regulatory  aspects.  The
Commission will pursue these issues as they arise.

As  an  example,  the  anticipated  use  of  mobile  terminals  and  in  particular  3G
services for micro payments has brought up the question to what extent regulation
applicable  to  the  banking  sector  is  relevant  to  the  mobile  sector.  Such  regulation,
which was  not  designed with  mobile  communication service packages in  mind  - in
particular applications providing for payment transactions - may constitute a serious
burden  and  discourage  innovative  services.  Commission  services  are  presently
examining the issue with a view to adapt, where necessary, existing rules.

3.3.

A Longer-Term Approach

Although  the  roll-out  of  3G  at  the  present  juncture  faces  immediate  and  important
challenges, longer-term commitments need also to be considered at an early stage.

Long-Term Availability of Radio Spectrum

A major, often overlooked achievement of Community harmonisation, is the timely
and effective availability of harmonised spectrum bands for 3G operations. Without
this Community approach, it would have been very difficult to ensure that the same

24

25

26

This initiative was launched in 2001 in the context of the IST Programme.
COM (2001)607 fin; COM(2002)207, 5 June 2002.
The  Programme  has  a  budget  of  €100  million  over  a  period  of  5  years.  It  is  scheduled  to  run  until
January 2005. Information can be found at http://www.cordis.lu/econtent/.

16

                                                
3G  frequencies  be  available  across  Europe  to  support  pan-European  roaming  and
economies of scale, two essential factors which in the case of GSM contributed to its
success.

The  radio  spectrum  available  in  Europe  for  3G  today  is  the  result  of  a  planning
process  that  started  about  10  years  earlier.  In  view  of  the  future  availability  of  this
scarce  resource,  it  is  therefore  not  premature  to  start  the  planning  process  at  this
juncture,  although  the  3G  market  is  only  about  to  start.  The  Commission  has
launched the process of planning ahead, as a follow-up of the WRC2000 conference
which  identified certain  radio  frequency  bands  for  the  different  regions  to  consider
for  the  allocation  of  radio  spectrum  in  addition  to  the  bands  already  available.
Pursuant  to  the  UMTS  Decision,  the  Commission  has  mandated  CEPT27  to  do  the
necessary technical consultation with a view to determine which spectrum bands are
the preferred choice by Europe and what timing for the effective availability of these
bands  should  be  considered.  A  consensus  on  the  first  two  aspects  is  likely  to  be
reached  before  the  end  of  the  year,  underlining  the  long-term  commitment  by
administrations to make sufficient radio spectrum resources available.

Towards a Flexible Use of Spectrum

There is today a growing perception about the benefits of a more flexible frame for
handling rights of use of spectrum, leading to more liquidity in investments made
in the radio sector. This issue has recently come up in the context of the debate about
a possible consolidation on the 3G market. Up to now, the right  to use  spectrum is
coupled  to  services  licences  the  transferability  of  which  is  constrained  under  the
present EU legislation, where the number of licences is limited. For example, in the
telecommunications  sector,  the  only  way  today  to  transfer  the  rights  to  use  radio
spectrum is indirectly through mergers and acquisitions (subject to competition rules)
or through handing back to the administration the licence, which would subsequently
be  offered  as  a  new  licence  pursuant  to  the  necessary  public  and  open  selection
procedures.  In  July  2003, the new regulatory  package  will  allow  Member  States  to
introduce spectrum trading subject to certain procedural conditions28.

Using  the  mechanisms  provided  for  by  the  Spectrum  Decision,  the  Commission
intends  to  establish  a  dialogue  with  industry  and  national  regulators  on  secondary
trading  of  radio  spectrum  and  its  implications.  This  will  include  a  discussion  of
harmonised  spectrum  trading  conditions  and  the  debate  on  introduction  timing  in
different Member States which would avoid distortions in the assignment process for
services of Community coverage or interest.

Spectrum  trading  potentially  changes  the  fundamental  paradigm  of  future  spectrum
policy in the EU. In this respect, it has an important role to play in shaping also the
future  3G  sector,  though  it  should  not  be  expected  to  be  a  solution  to  short-term
problems. While the ability of trading could be envisaged in respect of new licences,
for  instance  in  the  context  of  3G  extension  bands,  its  applicability  to  existing  3G
licences is limited under existing regulation.

27

28

This mandate was given to CEPT on 9 March 2001, after consultation with the Licensing Committee,
ref. LC/01/02 rev2.
Article 9.3 Framework Directive, 2002/21/EC.

17

                                                
3G as an Open Service Environment

3G service provision is likely to depart radically from the model prevailing presently
with a one-to-one relationship between mobile operators and their customers. In 3G,
the origin of large parts of the service profile accessible by a customer is no longer
necessarily  or  fully  controlled  by  the  operator.  Innovative  applications  or  specific
content  will  need  to  be  accessible  even  when  originating  outside  of  the  network
controlled  by  an  operator  and  across  different  networks.  This  raises  the  issue  of
ensuring that the 3G platform accommodates an open mobile services environment.
Experts  expect  significant  difficulties  if  closed  proprietary  terminal  and  network
configurations  prevail.  The  notion  of  openness  goes  beyond  3G  in  the  light  of
converging service environments (e.g. PC applications running on mobile handsets).
Openness in this context will be a key factor facilitating convergence.

For  3G,  openness  needs  to  be  ensured  at  different  levels.  For  instance,  application
developers need to take into account  the capability of  individual  handsets  designed
by  a  variety  of  manufacturers.  Varying  operating  systems  used  by  terminals,  the
choice of browsers and the lack of standardisation of Java-enabled terminals are inter
alia  potential  obstacles  to  the  design  of  applications  which  run  on  a  large  handset
population  or  for  the  possibility  of  processing  specific  content.  It  is  of  key
importance that  interface specifications are  made  open  and  transparent  to  minimise
these obstacles. At network level, the difficulty arises from  the fact  that  part  of  the
intelligence  needed  to  support  sophisticated  applications  is  network  resident.  This
bears  a  risk  that  proprietary  network  architectures  become  stumbling  blocks  for
application developers.

The  Commission  could  observe  that  the  issue  has  been  recognised  by  industry  and
that efforts are under way to find solutions. The Commission is also encouraged by
the standardisation activities currently undertaken in 3GPP towards establishing the
basis  for  an  open  service  access.  Several  initiatives,  such  as  the  Open  Mobile
Architecture  (OMA),  have  been  launched  by  the  manufacturing  industry,  and  their
impact will depend on the support of the vendor community at large and in particular
of  operators.  In  this  context,  the  Commission  also  noted  the  M-Service  initiative
launched by the GSM Association. Both efforts bear a great potential of synergy.

The  move  of  3G  towards  an  internet-based  network  approach  will  facilitate
maintaining the open service characteristic, also in view of 3G integrating the family
of  alternative  wireless  or  fixed  access  platforms  which  should  characterise  the  full
deployment of the  Information Society. This will be subject to a separate report  by
the Commission, as requested by the Barcelona European Council.

The  Commission will closely monitor the  evolution of the  value  chain  surrounding
3G  services,  and  consider  action  if  the  evolution  of  3G  towards  an  open  and
competitive  service  environment  would  be  threatened  by  proprietary  solutions
chosen by individual players. In this context, the Commission will consider the role
of all involved parties, including those feeding into the mobile sector through content
or application offers.

18

4.

CONCLUSIONS

The  Commission  believes  that  commercially-viable  advanced  wireless  systems,
including  3G,  are  indispensable  for  Europe  to  attain  the  goals  set  in  Lisbon  with
respect  to  a  competitive  knowledge-based  economy  and  the  realisation  of  the
Information Society.

After a continuous effort to develop 3G and to prepare for the deployment of a new
wireless  service  generation,  the  roll-out  of  networks  is  finally  under  way  while
growing evidence for a significant market potential is emerging, albeit uncertainty as
to its detailed evolution persists.

Besides a general economic recovery, to which the mobile sector including 3G could
considerably  contribute,  the  sector  is  best  served  by  letting  the  market  drive  the
process ahead, and by allowing healthy competition to generate new products which
consumers  will  want  to  buy.  Administrations,  including  the  Commission,  can
however  contribute to confidence in the sector by ensuring  a predictable  and  stable
regulatory  environment  conducive  to  a  competitive  market  serving  the  consumers’
interests.

For  the  immediate  future,  administrations  can  act  to  help  overcome  the  difficulties
encountered in the physical deployment of networks by harmonising the  conditions
and speeding up the procedures applicable for the acquisition of base stations sites.
In  addition,  they  can  foster  efforts  to  improve  public  awareness  on  safe  usage  of
mobile equipment.

In the longer run, the lack of harmonisation in  licensing conditions and assignment
across  the  European  Union  for  3G  may  represent  a  hindrance  to  integration  in  the
Internal  Market  for  telecommunications  and  may  cause  market  distortions  and
uncertainty  in  the  sector.  This  must  be  avoided  as  much  as  possible  in  the  future,
especially taking into account that new countries will shortly join the EU.

The  Commission  intends  to  use  the  new  regulatory  framework  in  electronic
communications to work together with  the national  administrations  to  develop  new
harmonised  approaches  to  licensing  and  attribution  of  rights  to  use  radio  spectrum
for new 3G licences and for other wireless applications.

Until  the  market  reaches  cruising  speed,  the  take-up  of  3G  is  a  continuous  process
which requires and deserves  continued attention by  public authorities. There are no
simple answers to the challenges ahead, but 3G has developed sufficient momentum
to  overcome  the  present  difficulties.  The  Commission  remains  confident  in  this
respect.

19

ANNEX 1

3G – a schematic overview

Standardisation
bodies

Equity & bond
markets

Software/service
providers

Content

Operators

Regulatory
Authorities

Customer

European
Commission

Handset

Network

Equipment
vendors

Banks

Venture
Capitalists

Local authorities

20

ARPU

CEPT

EMF

GPRS

GSM

IP

IST

MP3

NIS

OMA

PDA

RTD

SMS

TMT

UMTS

WRC

2G

2.5G

3G

3GPP

ANNEX 2

GLOSSARY

Average Revenue Per User

Conférence Européenne des Postes et Télécommunications

Electro Magnetic Fields

General Packet Radio Service

Global System for Mobile communications

Internet Protocol

The  Information  Society  Technologies  programme  in  the  European
Union

Compression standard for audio

Network Infrastructure Sharing

Open Mobile Architecture

Personal Digital Assistant

Research and Technological Development

Short Messaging Service

Telecoms, Media, Technology

Universal Mobile Telecommunications System

World Radiocommunications Conference

GSM (in Europe)

GPRS and EDGE (in Europe)

Systems  and  services  based  on  the  ITU  IMT-2000  family  of
standards

Standardisation  initiative  called  the  3rd  Generation  Partnership
Project

21