Notice pursuant to Article 19(3) of Council Regulation No 17 — Case COMP/C1/N.38.370 — BT Cellnet ;& BT3G/One2One Personal Communications (United Kingdom Agreement) (Text with EEA relevance)
Date: 2002-09-10
Institutions: European Commission
Subjects: United Kingdom, cooperation agreement, dissemination of EU information, telecommunications, transmission network

10.9.2002

EN

Official Journal of the European Communities

C 214/17

Notice pursuant to Article 19(3) of Council Regulation No 17

Case COMP/C1/N.38.370 — BT Cellnet & BT3G/One2One Personal Communications (United
Kingdom Agreement)

(2002/C 214/08)

(Text with EEA relevance)

1. INTRODUCTION

1. On 6 February 2002, BT-Cellnet Limited (‘BT Cellnet’) and
BT3G Limited (‘BT3G’) (now renamed O2 UK Limited) and
One2One Personal Communications Limited (‘One2One’)
(now renamed T-Mobile (UK) Limited) notified to the
Commission an agreement of 20 September 2001
concerning infrastructure sharing and national roaming
on the United Kingdom market for the third generation
of GSM mobile telecommunications (‘3G’). In their notifi-
cation BT Cellnet, BT3G and One2One (‘The Parties’) have
requested either negative clearance under Article 81(1) or
an exemption under Article 81(3) of the EC Treaty (1).

through its subsidiaries, networks in the United Kingdom
(BT Cellnet — renamed O2 UK Limited and BT3G),
the
Germany
(VIAG — renamed O2 Germany),
Netherlands (Telfort — renamed O2 Netherlands),
the
Ireland (Digifone — renamed O2 Ireland)
Republic of
In the financial
and the Isle of Man (Manx Telecom).
year ending 31 March 2002, mmO2 group had a
turnover of GBP 4.3 billion (about EUR 6,7 billion).

2.

In February 2002 the Commission published a first notice
summarising the notified agreement and inviting third
party comments (2). The Commission has now finished
its examination of the notified agreement and has come
to a preliminary position. The present notice is published
pursuant to Article 19(3) of Regulation 17/62 in order to
enable third parties to provide their comments on the
Commission's proposed approach. Third parties may
their comments to the Commission within a
submit
deadline of one month from publication of this notice in
the Official Journal of the European Communities.

2. THE PARTIES

3. BT Cellnet

is a licensed mobile

telecommunications
operator of a 2G network and BT3G is licensed to
operate a 3G network (3)
in the United Kingdom and
both are wholly owned subsidiaries of mmO2 plc, the
mobile telecommunications business previously controlled
by British Telecommunications plc. mmO2 operates,

(1) The Commission has also received a related notification from
T-Mobile Deutschland GmbH and VIAG Interkom GmbH dated 1
February 2002 relating to a 3G Network Deployment and 3G
Bilateral Roaming Agreement
is
being dealt with separately (Case COMP/N.38.369 — Rahmen-
vertrag).

in Germany. This agreement

(2) OJ C 53, 28.2.2002, p. 18.
(3) In May 2000, the United Kingdom Government awarded five 3G
licences following a frequency auction procedure worth EUR 38,5
billion. The companies awarded the licences were Orange, BT3G,
Vodafone, One2One and H3G.

4. One2One

a

is

licensed mobile

telecommunications
operator of 2G and 3G networks in the United Kingdom
and is a wholly owned subsidiary of Deutsche Telekom
Mobile Holdings Limited, a wholly owned subsidiary of
T-Mobile International AG. T-Mobile International AG
owns interests in mobile telecommunications operators
in the United Kingdom (One2One — rebranded as
T-Mobile (UK) Limited, T-Motion, Virgin Mobile), Austria
(max.mobil.), the Czech Republic (Radiomobil) and the
United States of America (VoiceStream). T-Mobile Inter-
national AG also has subsidiaries active in the Netherlands
(BEN, CMobil), Russia (MTS) and Poland (PTC).
In the
2001 financial year, DTAG had a worldwide turnover of
EUR 48,3 billion and T-Mobile International AG had a
worldwide turnover of EUR 14,6 billion.

3. PRODUCTS/SERVICES

different

applications

5. 3G services are mobile communications systems capable of
supporting in particular innovative multimedia services,
beyond the capability of second generation systems such
as GSM, and capable of combining the use of terrestrial
and satellite components. These services are characterised
by their: (i) multimedia capabilities, full mobility and low
mobility
geographical
in
environments beyond 2G capabilities; (ii) efficient access
Intranets and other Internet protocol based
to Internet,
services;
(iii) high quality speech transmission commen-
surate with that of fixed networks; (v) service portability
across 3G environments;
(v) operation in one seamless
environment including full roaming with GSM as well as
between the terrestrial and satellite components of UMTS
networks. With this agreement, the Parties aim to enter the
United Kingdom national market or markets for 3G infra-
structure and wholesale roaming services. Although the
agreement promotes
entry into the
market or markets for 3G retail services the agreement
does not directly relate to retail markets.

individual

their

C 214/18

EN

Official Journal of the European Communities

10.9.2002

competitors

6. The products/services that are directly concerned by this
notification are (a) access to and use of 2G, 2,5 G and 3G
infrastructure, and (b) wholesale access to 3G national
roaming. Actual or potential
in these
markets are the other three licencees for 3G networks
and services
in the United Kingdom, and potential
competitors may be third parties reselling access to and
wholesale roaming services on the network of these other
operators or on the Parties' networks. As 3G networks and
services have not yet been rolled out no conclusive
estimate of market shares or assessment of the substituta-
bility between 2G and 3G services can at present be
provided.

4. LEGAL AND FACTUAL BACKGROUND

9. Finally,

situation

telecommunications

the combination of

of
the EU and of

in March 2001 the Commission published a
the state of play and the
Communication setting out
way forward for the introduction of
third generation
mobile communications in the EU (7). This Communi-
the difficult
cation takes note of
financial
operators
throughout
the high infrastructure
investment costs involved that lead operators to engage
in infrastructure sharing arrangements. It concludes that
economically beneficial sharing of network infrastructure
should
the
competition rules and other relevant Community law are
respected (8). In its recent follow up Communication (9),
the Commission emphasised that
it would continue to
work with national administrations towards establishing
a best practice approach for network sharing.

encouraged,

provided

principle

be

in

4.1. The

development
communications in the EU

of

third

generation mobile

4.2. Network sharing

the GSM family of

7. So far digital mobile communications networks and
services in the EU have been based on the GSM family
of standards. European telecommunication companies are
at present developing and rolling out mobile communi-
cation networks and services using the third generation
standards (4) 3G will
(‘3G’) of
combine wireless mobile technology with high data trans-
mission capacities and facilitate
to
Internet services through their mobile handsets. Its devel-
opment in the EU is based on a common technological
platform — Universal Mobile Telecommunications System
(‘UMTS’), on the harmonisation of the radio spectrum and
on the definition of a harmonised regulatory environment.

consumer access

8. To meet

these harmonisation objectives,

the European
Parliament and the Council have in 1997 adopted a
directive on a common framework for general authoris-
ations and individual licences in the field of telecommuni-
cations services (5). This was followed at the end of 1998
by a decision on the coordinated introduction of a third-
generation mobile and wireless communication system
(UMTS) in the Community (6). It required Member States
to enable the introduction of UMTS services on their
territory by 1 January 2002 and emphasised the role of
technical bodies such as the European Conference of Postal
(‘CEPT’) and
and Telecommunications Administrations
Europe Telecommunications Standard Institute (‘ETSI’) in
harmonising frequency use and promoting a common
and open standard for
the provision of compatible
UMTS services throughout Europe.

the

(4) The

first generation was GSM 900,

second generation
DCS 1800 (now referred to as GSM 1800), GPRS is often
regarded as an intermediate step (or ‘2,5 G’) between 2G and 3G.
(5) Directive 97/13/EC of the European Parliament and of the Council
of 10 April 1997 (OJ L 117, 7.5.1997, p. 15). This directive sets
out the procedures associated with the granting of authorisations
for the purpose of providing telecommunications services and the
conditions attached to such authorisations.

(6) Decision No 128/1999/EC of the European Parliament and of the

Council of 14 December 1998 (OJ L 17, 22.1.1999, p. 1).

10. The basic distinction that is relevant in the context of the
Parties' network sharing agreement is that between the
Radio Access Network (‘RAN’) and the core or backbone
network.

11. RAN:

site

this

sites,

includes mast/antenna

support
cabinets (‘SSC’) and power supply, as well as antennas,
combiners and transmission links, Nodes B, i.e. the base
stations that receive and send data across frequencies and
control a particular network cell, and the radio network
controllers (‘RNCs’) that each control a number of such
nodes B and that are linked to the core network.

12. Core netwerk: this is the intelligent part of the network
that consists of mobile switching centres (‘MSCs’), various
support nodes, services platforms, client home location
registers and operation and maintenance centres.
is
linked to the fixed ISDN (integrated services digital
network) and Internet networks.

It

(7) 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.

(8) Ibid. paragraph 4.3.
(9) ‘Towards the full roll-out of third generation mobile communi-

cations’ COM(2002) 301 final, 11.6.2002.

10.9.2002

EN

Official Journal of the European Communities

C 214/19

13. 3G Network sharing can take place at a number of
different levels and involve varying degrees of cooperation.
The degree of
independence retained by an operator
depends on which network elements are being shared
and their remaining ability to install separate elements
(planning freedom). Ranked by the increasing degree to
which the network is shared it is possible to distinguish
between shared use of:

— sites, which range

from sharing individual mast
sites (10) up to grid sharing (requiring a uniform
layout of networks), and may include site support
infrastructure, such as site support cabinets (SSC),

— base stations (Nodes B) and antennas,

— radio network controllers (‘RNCs’),

— network roll-out requirements in terms of effective
coverage related to a specific timetable, notably a
requirement to cover 80 % of the population by the
end of 2007,

— general obligations as regards e.g. site and antenna
sharing relating to planning restrictions and environ-
mental concerns,

— the possibility to impose facility sharing,
network sharing, on a case by case basis,

including

— core networks,

including mobile switching centres

(‘MSCs’) and various databases,

— limitations as regards the extent of network sharing
allowed related to e.g. sharing network intelligence
and sensitive customer data.

— frequencies.

National roaming concerns a situation where the operators
concerned do not share any network elements as such but
simply use each other's network to provide services to
their own customers.

14. In their notification the Parties use the term ‘site sharing’
for shared use of infrastructure up to the level of, but not
including, Nodes B and RNCs (i.e. the first point above).
The Parties do not envisage sharing their core networks,
but their agreement does cover national roaming.

4.3. The National Regulatory Framework

national

applicable

15. Subject to the principle of the primacy of Community law,
the
regulatory
requirements must be taken into account in the context
of network infrastructure sharing (11). Both the general
national regulatory framework in the United Kingdom
and the terms of
set out
the Parties' 3G licences
parameters for network sharing. These include:

licensing

and

(10) It should be noted that

in the United Kingdom independent
companies exist that specialise in the acquisition, operation and
management of mast/antenna sites, who provide their services to
network operators and promote site sharing.

(11) A number of national regulatory authorities (NRAs)

available

in the EU
issued guidance on the
conditions on which infrastructure
sharing would be consistent with national licensing and regulatory
requirements. In the United Kingdom Oftel published a position in
May 2001,
at http://www.oftel.gov.uk/publications/
mobile/infrashare0501.htm. In Germany, RegTP issued its Interpre-
tation of the UMTS Award Conditions in light of more recent
technological
at
advance, RegTP (6 June 2001),
www.regtp.de. The Dutch and French NRAs have published
at http://www.opta.nl/download/
similar documents,
concept_notitie_nma_vw_opta_umts_netwerken_190701.pdf
and
at http://www.art-telecom.fr/dossiers/umts/partage-infras.htm

available

available

16. Oftel

telecommunications

the national
(‘NRA’)

in the United Kingdom that

regulatory
is
is
authority
responsible for
In May 2001
the notified agreement.
Oftel published general guidance in which it encouraged
infrastructure sharing subject to a case by case assessment
of individual proposals (12).

17. The

the

and

rules

national

regulatory
are

framework
parallel

EU
competition
cumulative
of
application. National rules may neither conflict with the
EU competition rules nor can compatibility with national
rules and regulations prejudice
the outcome of an
the competition rules. Hence a full
assessment under
assessment
the
of
competition rules is required.

notified Agreement

under

and

the

5. THE AGREEMENT

18. BT Cellnet and BT3G and One2One entered into an
agreement (‘the Agreement’) on 20 September 2001 to
cooperate by way of 3G site sharing and national
roaming. It also covers certain 2G and 2,5G infrastructure.
The Parties will maintain separate networks and service
provision. The Agreement also includes specific provisions
to ensure that no more information than strictly necessary
is exchanged. The Parties differentiate in the Agreement
between three areas:
(ii)
the divided area (‘DA’); and (iii) the remaining area.

(i) the initial build area (‘IBA’);

(12) See footnote 11.

C 214/20

EN

Official Journal of the European Communities

10.9.2002

5.1. Site sharing and national roaming in the initial build

area (‘IBA’)

19. The IBA represents an area covering around [20 to 50 %]
of the United Kingdom population and more than [50 to
80 %] of United Kingdom businesses (i.e. the main urban
areas). In this area the Parties' cooperation will focus on
site sharing rather than national roaming, although the
latter is not excluded. Within this area, the Parties agree to:

roaming services to the other Party on a ‘retail minus
minus’ price formula (clause 22.1), and cannot enter into
similar agreements with third parties in order to provide
this service to the other Party (clause 2.5). The agreement
in its clause 9.2 also provides that a Party shall not deploy
3G in the designated area of the other Party, although this
is subject to a number of exceptions without requiring
prior consent of the other Party, set out in clause 11
(e.g. for special events, to meet market demand and/or
for special needs of important customers).

(i) pursuant to clause 2.3 of the Agreement, cooperate in
the planning, acquiring (not on the basis of
joint
ownership), building and deploying and sharing of
2G, 2,5G and 3G sites. This site sharing involves
shared
including mast,
materials and equipment (power supply, racking and
cooling) for 3G, 2,5G and/or 2G equipment, i.e. trans-
ceivers and base station racks or Node B base station
cabinets but not transmission and antennae;

structures

housing,

i.e.

(ii) disclose and if practical revise respective radio plans to
make best use of possible common locations for indi-
vidual cell sites (clauses 6.2.1-6.2.4 and 6.7 of the
Agreement);

(iii) grant the other Party an option over sites identified as
suitable for site sharing exercisable for (an option
(Agreed
period of between one and three years)
Document 8),

(iv) grant the other Party first refusal in the event that a
third party wishes to share the same site (Agreed
Document 8),

(v) offer the other Party roaming within the IBA for such
time as it does not have 3G radio coverage in a
particular part of the IBA (Agreed Document 1).

The degree of site-sharing that is envisaged by the Parties
does not involve the entire RAN (notably Nodes B and
RNCs are not included), nor does it involve sharing of
frequencies or the core network.

21. The Parties also agree that all new sites in the DA will be
built with sufficient accommodation and mast space to fit
a minimum of two operators, with space reserved by the
designated Party for later occupation by the other Party.
The Parties have an option to share, exercisable for (an
option period of between four and six years), followed by
a right of
indefinite duration (Agreed
Document 8). However, after the expiry of the option
right, if one Party operating a site receives an offer from
a third party at an equal or higher site sharing fee (13), the
‘site operating party’ shall notify the other Party of such a
request. The other Party then has 14 days to confirm its
entering into a site sharing agreement with the site share
operator.

refusal of

first

22. Pursuant to clause 14.7, each Party is able to conclude 3G
national roaming agreements with third party national 3G
operators (for its own built and operated network), but the
third party operator would not have access to the network
of the other Party to the Agreement unless it gave its
approval. However, nothing in the agreement prevents
either Party from reselling its 3G telecommunications
wholesale services
(for
to non-operator
example
and/or MVNOs), whether
carried on its own network equipment or via roaming in
the other Party's designated area. Clause 14.7 does not
affect arrangements concerning international roaming.

service providers

third parties

5.3. Site sharing and national roaming in the remaining

area (‘RA’)

23. In the remaining area, which covers the least densely
the Parties
populated areas of
to extend their
agree, when market conditions permit,
respective 3G networks into the remaining area, using
the same principles applied in the DA.

the United Kingdom,

5.2. Site sharing and national roaming in the divided area

(‘DA’)

20. In the DA (an area covering about a further [40-70 %] of
the population), the Parties adopt a common radio and
roll-out plan for 3G that is based on the principle of a
separate territory for each Party. Each Party has been
allocated a ‘designated (separate geographical) area’ of the
DA to build and operate its 3G network in accordance
with the unitary radio and roll-out plans. Within the
each Party will provide
respective designated area,

5.4. Duration

24. The agreement is for an unlimited duration but can be
terminated after 31 December 2007 by either Party
giving two years notice.

(13) The fee (i.e. a price list) for owned sites or sites under the control
has been agreed and commercially negotiated between the Parties
based on fair market rates.

10.9.2002

EN

Official Journal of the European Communities

C 214/21

6. ARGUMENTS OF THE PARTIES

25. The Parties justify the agreement in terms of the financial
difficulties experienced by 3G operators,
the regulatory
timeframe (the United Kingdom requirement of 80 %
population coverage by the end of 2007) and the need
to meet environmental concerns.

26. Article 81(1): The Parties argue that the agreement does
not have the object of effect of appreciably restricting
competition within the common market contrary to
Article 81(1) as they claim the agreement will
increase
competition rather than reduce it. This claim is based on
the fact that the parties will compete with each other at
network level in the IBA, whereas cooperation in the DA
will enable the Parties to compete at services level with
other 3G operators nationwide at an earlier stage than if
they did not cooperate.

27. Article 81(3): If the agreement is considered to restrict
competition, the Parties argue in the alternative, that it is
exemptable under Article 81(3). They argue the agreement
will speed up the provision of 3G services by enabling the
Parties to reduce 3G network deployment costs, making
3G services available earlier to end users. The Parties argue
that consumers will benefit through the delivery of faster,
more innovative 3G services at lower prices. Finally, the
parties will as a result of their cooperation not produce
standardised services to end users but will continue to
compete directly on content applications, retail pricing,
wholesale pricing,
service,
services and
channel

terms
to market and customer

and conditions of

care

marketing. Hence they conclude that as a result of the
Agreement competition will not merely be preserved but
will be increased in the United Kingdom markets for 3G
networks and services.

7. CONCLUSION

28. The Commission intends to take a favourable view in
respect of the notified agreement. Before doing so, the
Commission invites
their
comments within one month of the publication of this
notice,
fax number given below,
quoting the
reference Case COMP/N.38.370 — BT
Cellnet & BT3G and One2One (Network sharing UK).

to the address or

submit

parties

third

to

European Commission
Directorate-General for Competition
Directorate C
B-1049 Brussels
Fax (32-2) 296 70 81
e-mail: wolf.sauter@cec.eu.int

it must

29. If a Party submitting comments considers that

these
indicate the passages
contain business secrets,
which,
in its opinion, ought not to be disclosed on the
grounds that they contain business secrets or other confi-
dential material, and state the reasons. If the Commission
does not receive a request with reasons, it will assume that
the
confidential
information.

comments

contain

any

not

do

INFORMATION NOTICE FROM THE COMMISSION

(2002/C 214/09)

The Commission adopted on 28 June 2002 THE NINETEENTH REPORT ON MONITORING THE
APPLICATION OF COMMUNITY LAW (COM(2002) 324 final of 28.6.2002).

The European Commission yearly draws up a report on monitoring of the application of Community law,
in response to requests made by the European Parliament (Resolution of 9 February 1983) and the
Member States (point 2 of Declaration No 19 annexed to the Treaty signed at Maastricht on 7
February 1992). The report also responds to the requests expressed by the European Council or the
Council of Ministers in relation to specific sectors.

The report relates the action of the Commission in monitoring the application of Community law in year
2001. It illustrates the evolving infringement proceedings initiated or managed by the Commission in
2001 under Article 226 of the Treaty (or Article 141 of the Euratom Treaty) by emphasising the policy of
the Commission in this matter, detailed by sector.

This report is available on

Europa: http://www.europa.eu.int/comm/secretariat_general/sgb/droit_com/index_en.htm#infringements

Eur-Lex: http://www.europa.eu.int/eur-lex/