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**COMMISSION OF THE EUROPEAN COMMUNITIES**

Brussels, 15.10.1997
COM(97) 513 final

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**

**SUMMARY**

The development of the telecommunications market is driven forward at a great speed, in
part by the liberalisation of the telecommunications sector in major parts of the world and
in part by the advances in technology in areas such as information processing and multimedia communications over the Internet Protocol.

Two main trends will prevail over the years ahead: the rapid Internet expansion and the
huge growth of mobile and cordless terminals. This development is not confined to
Europe but takes on a global dimension and will lay the foundation for a global
Information Society without frontiers where information is stored and communicated
electronically.

A great opportunity exists for the mobile communications industry to foster that
development by its ability to provide easy and ubiquitous access. Mobile
communications offers everyone the ability to make phone calls, receive faxes, check email or use the Internet whilst on the move.

The huge potential for expansion that this market holds explains the rapidly growing
interests of industries world-wide in the standardisation process for next generation
mobile communications in the ITU (under the name IMT-2000). In Europe, these
developments take place under the umbrella of UMTS (the Universal Mobile
Telecommunications System) and are driven forward by the UMTS Forum and ETSI.

But also other parts of the world have woken up after the success of GSM [1] . Japan is
preparing for a mass consumer market, a market where Japanese industry traditionally
has strength, and industry momentum is building up. In the USA, new satellite based
concepts are being developed (e.g. the Teledesic) whilst CDMA is heavily promoted by
its industry as an alternative and competitive radio access technology for terrestrial
mobile cellular communications.

The European market of the year 2005 is expected to represent over 100 BECU of annual
revenues and some 200 million subscribers. The global market is anticipated to grow even
faster, in particular in Asia. This means that any development in Europe in that area must
take into account the global nature of this market. To that end, a strong home market
would seem to provide the best conditions for European industry to compete in other parts
of the world.

In order to set out strategy and policy orientations for Europe in this important but also
very complex growth sector, the Commission issued a Communication [2] in which it

The success of GSM is generally attributed 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 close to 250 operators operating or building a network, the majority of
them outside Europe. It is estimated that the total investment in GSM infrastructure will exceed 100
B$ by the turn of the century. GSM has delivered a great net export result for Europe and created a lot
of new employment within the industry.

requested responses from Member States and sector players to a number of key questions
related to the further development of mobile and wireless communications in Europe.

This Communication 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 licenses and certainty that radio frequency spectrum will be made 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 development of UMTS and thus help preserve
the competitiveness of European industry. At the same time, Member States and operators
felt that 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.

On the basis of the responses received, the Commission sets out action lines for creating a
favourable environment for the further development of this sector. These action lines are
summarised in the table below:

_Action Plan for the Community:_

_action_ _by_

WRC-97: preparationôfagenda WRC-99 Oct.97
(to include UMTS spectrum allocation)

Council Resolution on present Communication Dec.97
setting out the political priorities

Proposal of a UMTS Decision on spectrum and Jan. 98
licensing conditions

Implementation of 5th Framework Programme for 98

Research and Development

Adoption of UMTS Decision early 99

Mandate to ERC on further spectrum allocation Feb. 99

MRA negotiations continuous

WRC-99: extension of UMTS spectrum allocation Oct.99

Review of telecommunication regulatory end 99
environment

I

This Communication is intended to present strategy and policy orientations for the
development of third generation mobile communications (UMTS) to the European
Parliament and the Council; the Economic and Social Committee and the Committee of
the Regions. It responds to the specific call from the Council and the European Parliament
following the Mobile Green Paper [3] for additional action to ensure a continuing support for
the evolution towards third generation mobile communications.

TABLE OF CONTENTS
**i m**

**SUMMARY** **2**

**TABLE OF CONTENTS** **4**

**1.** **INTRODUCTION** **5**

**2.** **INDUSTRY AND ADMINISTRATION VIEWS ON THE FURTHER**

**DEVELOPMENT OF MOBILE AND WIRELESS COMMUNICATIONS** **8**

**2.1.** **Main lines** **of** **comments** **on core issues** **8**

**2.2.** **Comments on key regulatory issues** **11**

**3. COMMISSION ASSESSMENT** **17**

**3.1.** **Areas** **of** **consensus** **17**

**3.2.** **Issues** **for** **further discussion** **18**

**4. ORIENTATIONS FOR PUBLIC POLICY** **19**

**4.1.** **Policy objectives** **19**

_**4.2.**_ _**Recommendations**_ **for** **further action** **20**

**4.3.** **Proposed targets, action plan** _**and**_ **timing** **26**

**5.** **CONCLUONS** **REMARKS** **27**

**ANNEX** **I:** **IIST** _**OF**_ _**CONTWBMTORS**_ **TO** _**THE**_ **CONSULTATION** **28**

**ANNEX** **SI:** **LIST OF** _**ACRONYMS**_ **29**

i. INTRODUCTION

The Commission's Communication on the further development of mobile and wireless
communications [2] was published on 29 May 1997. It presented an overview of
developments in mobile and wireless communications within the European Community
since the 1994 Green Paper on mobile and personal communications [3] and examined the
future direction of mobile and wireless communications. In particular, it invited
comments on a number of core issues linked to the further development of mobile and
wireless systems:

« Is this the right moment to define a strategy for the introduction of the Universal
Mobile Telecommunications System (UMTS) or would regulatory action today be
premature?

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

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

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

® How do we ensure that the broader social and societal interests are secured in the

development of the "wireless information society"?

Additionally, the Communication invited comments on the need, if any, for action by
governments, the European institutions or other regional or global bodies. The
Communication asked for responses by 15 July 1997. However, this period was extended
into September at the request of the Telecoms Council at its meeting of 27 June. More
than 50 written comments were received (see Annex I for list of contributors) [4] from
télécoms operators, equipment manufacturers and from Member States. Comments from
business and user interests were limited to a comment from a national user association

and from UNICE.

Since the publication of the Communication, a number of developments can be
highlighted which reveal a rapid evolution of the UMTS debate and confirm the
timeliness of the consultation launched by the Communication of last May:

**•** [In July] [ 1997,] [ the UMTS Forum] [5] [ produced its first report on a "Regulatory Framework ]
for UMTS" [6] . The report examines those political and regulatory actions which are

Communication to the European Parliament, the Council, the Social and Economic Committee and the
Committee of the Regions on the further development of mobile and wireless communications Challenges and choices for the European Union - COM(97) 217 final, 29.05.97
Green Paper on a common approach to mobile and personal communications in the European Union,
COM(94) 145 final, 27.04.94 "

Copies [of the comments are available on request (to be sent to umts@dgl3.cec.be or by fax to](mailto:umts@dgl3.cec.be)
Secretariat, DGXIII / AID, +32-2-2968395)
The UMTS Forum counts now about Î00 members. Memberships includes all major European
manufacturers and mobile communications operators. The Administrations of France, Germany and
the UK are also a member of the Forum.

**5**

considered essential for the successful development of UMTS, as well as the following
timetable for such actions.

**MAJOR** MILESTONES **FOR** **THE** **DEVELOPMENT** **AND** **INTRODUCTION** **OF** **UMTS**

**AS** **PROPOSED** **BY** **ETSI** **AND** **THE** **UMTS** **FORUM**

**1** **October 1997** ERC Decision on UMTS core **band** becomes effective; Member
States expected to sign up for its implementation.

31 December **1997** Plans for the licensing of UMTS and for the provision of adequate
frequency spectrum must be clear in order to reduce the risks and
uncertainties for industry

First quarter 1998 Operators identified; drafting of licences commences.

31 **December** 1999 Agreement by ETSI on UMTS Phase 1 standard.

Early 2002 Start of commercial UMTS service.

- The UK in a consultative document [7] has become the first Member State to announce a

timetable for granting several UMTS licences with a view to services starting in 2002.

- Within ETSI, intensive discussion is taking place to reach a common understanding
about the basic technical characteristics of UMTS, and a number of announcements
have recently been made by some of the major actors in the European mobile
manufacturing industry.

- Internationally, there have been a number of announcements from industry and
Governments concerning third generation systems, for example in the USA, Japan and
Korea. Work in ÎTUIMT-2000 [8] has provided a forum with wide global participation,
whilst contacts between regional standardisation bodies have been established and are
strengthening, particularly in areas related to the development of a single radio airinterface.

In preparing this Communication, the Commission has drawn conclusions from the
public comments received in response to the May Communication, and from the Report
of the UMTS Forum as well as other ongoing developments.

The objective of the present Communication is to establish policy objectives in the areas
of UMTS; to clarify how certain aspects of the current regulatory environment impact its

A Regulatory Framework for UMTS, Report No. 1 from the UMTS Forum, 25 June 1997. It can made
available by the secretariat of the Forum, Russell Square House, 1-12 Russell Square, London WC1B
5EE, UK, fax +44 171 331 2040, e-mail [umtsforum@fei.org.uk](mailto:umtsforum@fei.org.uk)
Multimedia communications on the move, a consultative document from the UK Department of Trade
and Industry, 31 July 1997.
IMT-2000 (International Mobile Telecommunications 2000) is the name designated by ITU-T (the
Telecommunications sector) to the standardisation efforts for third generation mobile communications.
The corresponding acronym FPLMTS (Future Public Land Mobile Telecommunications System) is up
till today still used by ITU-R (the radio frequency sector) to designate the radio frequency spectrum
allocated to third generation mobile communications.

**development and to propose** **further** **action in key areas, as well as a timetable for** **stfch**
**steps.**

**The Commusication proposes to** **confirm** **the commitment at Community level** **to**
**ensuring an environment conducive to a successful preparation and** **implementation** **of**
**UMTS.**

**jp.'!aiK^,ja^*a^.^vffiBi^j|^^** **l** **Tr,-wj**

2.      - INDUSTRY AND ADMINISTRATION VIEWS ON THE FURTHER

DEVELOPMENT OF MOBILE AND WIRELESS COMMUNICATIONS

The launching of a debate within the European Union on the future strategy for UMTS
was widely welcomed though it was clear that industry and Member States had different
expectations for the process. Section 2.1 below is structured along the main lines of the
comments that were received to the core issues identified in _section 3.3 of the May_
_Communication,_ whilst section 2.2 presents additional comments on the key regulatory
issues raised in _section_ _**3.4**_ _of the May_ _**Communication.**_

2,1, **Main** lines **of** **comments** **on core issues**

_**2,hl**_ _**An overall strategy is urgently needed to provide**_ _**regulatory**_ _**certainty for**_ _UMTS_

Industry looked for the rapid development of a clear regulatory framework in the key
areas, such as: the impact of competition rules on UMTS; the way licences would be
issued and the conditions to be attached to them, and the future frequency allocations
within the 2 GHz band. Lack of timely decisions on these issues will deter the sector
actors to take the required investment decisions without which the further development of
UMTS will be seriously compromised.

Industry believes that an approach at European level is essential to maximise the
opportunities for European players within the global market for third generation mobile
communications [9] . With other technologies on the horizon (e.g. the development by
Japanese and North American industry of new air interfaces), it was felt that Europe had a
narrow window of opportunity in which to develop a clear and winning strategy.

At the same time a number of comments pointed to the difficulty of taking decisions at a
stage where UMTS has not been clearly defined in system terms and users had yet to
indicate what level of demand there would be for the next generation of services.

The European market for third generation mobile communications is a small part of the potential global
market. The UMTS Forum forecast for the world-wide growth of mobile communications is shown in
the table below. The North American and European markets are expected to reach saturation first as
car. be seen in the table. But even in 2015, markets in Asia, Africa and South America are expected to
be far from saturation, even without taking population growth into account.

2015

300

230

1400

800

2730

2000

113

127

149

37

426

2010

260

220

850

400

1730

2005

200

190

400

150

940

Customers in millions

at year end
EU 15

North America

Asia Pacific

Rest of World

Total

1995

22

36

22

7

87

The key message from the Member States that responded to the consultation (see _Annex_
I) was that the development of UMTS should be market-led with industry playing a
predominant role. Regulators should not substitute themselves for market forces. As a
result some Member States (United Kingdom, Finland and Germany) suggested that the
combination of competition law and the Licensing Directive offered the necessary basic
regulatory framework within which UMTS could be introduced. Beyond this, Member
States generally supported industry in seeking further clarification with regard to the
impact of competition rules, and with regard to how the Licensing Directive would apply
to UMTS.

The UK indicated that whilst it saw the possible need for additional regulation for UMTS,
it questioned the need for those rules to be developed within a Community framework.
France highlighted in this context the 1999 Telecoms Review which would adapt the
télécoms regulatory framework, if required, in the light of two years of competition.

_**2Js2^Ajdmr**_ _**picture with**_ _**rezardJalreauencies**_ _**lies at the heart**_ _**of**_ _**the debate**_

Member States attached importance to the current work within the ERC which had led to
a Decision on UMTS bands [10] . At the same time, Finland and France both expressed
concerns that should the ERC mechanism fail to produce timely and binding results, the
European Community should consider adopting a Frequency Directive.

Industry and the UMTS Forum also attached importance to the ERC s work as the basis
for the management of the spectrum for UMTS/IMT-20Q0. Some industry comments,
however, preferred the use of a binding Community measure to allocate frequency,
together with a clear identification at a political level of Community priorities and
objectives in relation to UMTS.

Several respondents focused on how much fees companies would have to pay for
spectrum and whether it would be allocated by auctions, with some comments arguing
that high fees acted as a market barrier.

_**2JJ**_ _**The notion**_ _**of third**_ _**generation mobile communications**_

_A_ number of comments focused on the need for a migration strategy from existing second
generation systems, so that a degree of backward compatibility would be guaranteed. In
this regard, some comments highlighted the current evolution of the GSM standard, in
particular the development of the General Packet Radio System (GPRS, as part of the
GSM Phase 2 package, to support a limited form of mobile multimedia) as an important
test bed for future developments. Many commentators argued that UMTS should
constitute a multimedia evolution of GSM.

10 ERC Decision on the frequency bands for the introduction of Universal Mobile Telecommunications
Systems (UMTS), ERC/DEC/(97)07, 30 June 1997. CEPT Administrations had until 1 October 1997
to sign up for the Decision. On that date, the following EU Administrations had committed themselves
to implementing the Decision: Austria, Finland, Germany, the Netherlands, Portugal, Spain, UK.
Furthermore, the following non-EU countries had signed up: Lithuania, Norway, Turkey.

Several industry players and the Member States emphasised that ETSI provides the best
platform for translating the notion of UMTS into key open standards and that technology
choices should come from industry througrMie standardisation process in ETSI.

The issue of whether or not existing fixed or mobile operators should be able to operate
third generation systems was seen to raise competition issues. The UMTS Forum
suggested that existing operators should not be excluded from bidding for UMTS
licenses, because of the huge investment costs required for UMTS, whilst a number of
GSM operators staked a claim to the automatic grant of UMTS licences, in order to allow
users to benefit from their skills and experience. Member States considered that there
should be neither an automatic granting of licenses to, nor an a priori exclusion of
GSM/DCS operators.

_**2JA**_ _**The**_ _**broader impact of**_ _**UMTS**_ _**on Europe's society and global competitiveness**_

Industry presented UMTS as a test of Europe's ability to rise to the challenge of the
communications markets in the next century and the development of a "wireless
information society". Industry argued in this context that UMTS must offer nation-wide
coverage within Member States and be priced at a level (both services and equipment)
which reflected a mass consumer market rather than a premium business service. In this
respect, it was argued that high valuations placed on spectrum would lead operators to
focus on high profit business customers and could put European users and the industry at
a serious disadvantage vis-a-vis other global players.

To this end, UMTS was also perceived as having a direct impact on the competitiveness
of Europe's economy as part of the fabric of advanced communications which was
bringing down business costs. It could also play an important role in continuing the
success of Europe's mobile communications industry, offering manufacturers and
operators a strong home market from which to expand. This assessment was largely
shared by Member States. Stress was placed on the fact that by developing products
which responded to market demand and which competed successfully with other
technologies, systems were likely to emerge which could compete on a world stage.

In this respect, the UMTS Forum emphasised that the global potential of this market has
two major implications, firstly that it is even more necessary to set regulatory and
technological frameworks which will provide the greatest impetus to UMTS in Europe,
and secondly that UMTS developments need to take into account trends in other parts of
the world. Such trends include a greater use of wireless for all telecommunications
services, particularly in emerging market.

_**2.1.5**_ _**Other factors related to the take**_ _**UP**_ _**of UMTS**_

Strong support was found for a Community co-ordinated research programme into the
possible health effect of mobile phones.

There were no calls for extending current concepts of universal service to include UMTS
as a means of securing its wider deployment.

Other issues were identified in the comments as being important for the take up of UMTS
services, namely: security and encryption issues, the protection offered against fraudulent
use, the need for adequate levels of privacy and protection of personal data, the protection

**10**

of intellectual property, the integration of UMTS in teleworking and teleteaching
initiatives and access for the content industry.

A range of initiatives are underway at a Community level in relation to these areas,
therefore they are not considered further in this Communication.

**2.2.** **Comments on key regulatory issues** |

_2<2J_ _The_ _regulatory framework f&r UMT&_

_The development of UMTS should be_ _market-led_

There is broad recognition that the private sector must take the lead and should design,
build and deliver mobile and wireless multi-media services. Such action should be driven

by market demand. Comments suggested that the role of public authorities was one of
"political leadership", creating an appropriate regulatory environment through rales
which promote innovation and flexibility.

Many comments whilst emphasising the need for a predictable regulatory environment,
confined calls for regulatory action to the issue of grant of licences for UMTS and the
need for early frequency decisions, in order to avoid over-regulation. One manufacturer
stated that Member States must set a global example by committing to early spectrum
licenses. Emphasis was also placed on the need for rapid progress on a minimum degree
of standardisation i.e. only the critical interfaces. A number of comments stressed the
need for early decisions if Europe was not to be overtaken by developments _in_ other parts
of the World and if the current technological lead based on GSM was not to be
squandered.

_A unique solution or interoperability and interconnection for competing technologies?_

Some comments highlighted the risks of multiple wideband air-interfaces, allowing users
to be connected to a multi-media environment, undermining the objective of Europe-wide
roaming and connectivity. This led for calls for action to be focused on ETSI and the
UMTS Forum, in order to facilitate a single technological solution. Such a solution would
minimise the risk of multiple standards being adopted or implemented in Europe, The
importance of European standardisation efforts was stressed as a means of influencing
global developments.

Others stressed the need for competition, preferring work to focus on interoperability and
interconnectivity rather than a single technology. Stress was also placed on the need for
UMTS to allow operators to innovate and to use their technology of choice, reflecting a
concern that over-specified standards tend to make businesses less flexible, preventing
competition based on differences in products and sendees. In their view the current
agreement on key characteristics of third generation systems was adequate for investment
decisions and for the limited regulatory action required. Any-attempt to establish a
consensus around a more detailed concept of UMTS was unrealistic, particularly if the
aim was to develop a level of detail similar to that found within the GSM standard. This
view was supported in particular by the UK and France.

**11**

On the issue of whether UMTS should be service- or technology orientated, the UK
suggested that it should be technology based. The UMTS Forum report states that UMTS
spectrum should be reserved for systems using UMTS as defined in standards adopted by
ETSI. Flexibility of the UMTS standard as defined by ETSI would be an advantage.
Several Member States and operators felt that open standards were needed to ensure that a
variety of manufacturers will be able to supply equipment and that this equipment will be
inter-operable.

_Roaming is a key regulatory issue for UMTS_

Roaming is considered by most of Member States and operators as a key issue for the
successful take up of UMTS, particularly as it seeks to compete with current GSM
networks. Concerns were expressed about the uncertain regulatory position today as to
whether all aspects of roaming would be caught by the Community's Interconnection
Directive.

Some Member States take the view that third generation operators should be encouraged
to enter into roaming agreements with each other, whilst others went further suggesting
that legal measures to oblige UMTS operators to negotiate roaming arrangements where
required, where this was not covered by the Interconnection Directive.

The need for global as well as regional roaming was also highlighted in the context of
ITU work on IMT-2000.

_The need_ _for regulatory action to be co-ordinated at a European level_

The majority view supported the case for a clearer concept of UMTS to emerge as a prerequisite for action at the European level. Most Member States called for a co-ordinated
approach with regard to the introduction of UMTS, on the basis of discussion at
Community level and/or within the CEPT. This view is supported by several industry
players who argue that the piecemeal issuing of licenses will create instability and that
therefore licenses and spectrum should be made available in a co-ordinated manner.
Stress was also placed on the need to ensure a solution which was consistent with IMT2000, so that global roaming could be ensured. Given that the available spectrum is
limited, some Member States argued that UMTS should be constrained to a single
technology, with possible legal requirements to support roaming, perhaps through an
obligation established at a Community level.

_Role for public authorities to secure a broad competitive basis for UMTS_

Member States saw a clear role for action by public authorities in order to safeguard the
general public interest by ensuring that regulatory environment did not hold back the
development of a competitive environment offering a broad range of services.

_2.2.2_ _Frequency issues related to UMTS_

_The issue of spectrum pricing_

Several industry contributors argued that high pricing of spectrum would distort the
market and damage the uptake of UMTS services. Little support was expressed for the
use of market mechanisms, in particular, auctions, since these tend to overprice spectrum,
create uncertainty and undermine the development of a healthy industry. Some also felt

**12**

that auctions risked favouring the entry of non-European players into the European
market place. On the other hand, some Member States consider that spectrum pricing
should reflect its economic value.

_Estimates of how much spectrum is required_

Industry players argued that the 2 x 40 MHz currently designated by the ERC [11] will prove
to be insufficient for the needs of a competitive market place to start up. The UMTS
Forum identified a minimum requirement of 2 x 40 MHz to be released now, together
with another band of 20 MHz which will be needed for non-public, in-building, low
mobility systems. In the longer term, the Forum considered current market forecasts
justify a claim for the full 155 MHz identified for terrestrial mobile communications by
WARC-92 to be available by the year 2005, with a further 185 MHz required for
terrestrial services by the year 2010. It was suggested that steps should therefore be taken
by the CEPT to place the subject of additional spectrum for IMT-2000 on the WRC-99
agenda.

Additionally, the ITU has identified 60 MHz for the satellite component of IMT-2000,
with forecasts of a need for a further 30 MHz by the year 2010.

The idea of sharing a common pool of spectrum was rejected by industry who argued that
it would be a significant disincentive for operators, whilst others doubt whether it would
be technically possible or indicated that it would create monopoly structures.

In terms of the UMTS market, several comments stressed that the development of the
UMTS market makes it necessary that sufficient spectrum is available to cover the needs
of all operators seeking a license. This would also have an effect on the future
development/evolution of the UMTS standard.

_When_ _and how should decisions on spectrum be taken?_

The UMTS Forum called for a co-ordinated approach _by_ all relevant authorities in Europe
to ensure a timely approach to identifying, liberating and allocating UMTS spectrum.
Nevertheless, some argue that the detailed planning of the spectrum can only be done at a
later stage when a clearer picture of UMTS has emerged.

_2JJ_ _**Standardisation related**_ _questions_

_General characteristics for UMTS_

In general terms there was agreement on some of the key service characteristics of
UMTS. As a system it would have to represent an improvement over current mobile
systems, for example, by offering extended coverage (preferably global), higher bit rates
(to support multi-media), better spectral efficiency and greater flexibility for the
customer, both in service offering and price.

Some manufacturers suggest that UMTS is effectively mobile Internet. Other more
traditional operators viewed UMTS as a means of achieving ISDN type sendees on a

1 ' ERC Decision on the frequency bands for the introduction of Universal Mobile Telecommunications
Systems (UMTS), ERC/DEC/(97)07, 30 June 1997

**13**

mobile platform and facilitating fixed-mobile convergence. Furthermore, a few comments
drew links between UMTS and Digital Audio Broadcast (DAB) as well as TETRA.

_UMTS is likely to involve both an evolution of GSM and the development of_ _a_ _new air_
_interface_

Several comments stressed that the path to UMTS is likely to involve both an evolution
of the GSM backbone infrastructure for call control and mobility management and the
development of a new radio air-interface supporting data rates up to 2 Mbits/s and multimedia services [12] .

Industry is apparently prepared to accept, given the significant investments in current
mobile networks and the need for evolution, that at global level different regional systems
will be developed supporting different air-interfaces. Consequently multi-mode terminals
would be required for global roaming services. Some felt that that more complex
multimode terminals would slow down the development of the market.

Comments from current mobile operators stressed that GSM covers a spectrum of
narrow-band services and that UMTS would be the natural complement, offering
advanced high bandwidth services. Existing operators recognised that, if UMTS is
optimised for wideband services, it will be easier for them as providers of existing narrow
band systems to claim licenses in the UMTS band. Some operators question whether the
financial power in the market is sufficient to make third generation a success if it would
be a stand-alone technology and stress the need for a smooth migration from GSM by
adding modular components.

Finally, ETNO made the point that focusing the resources of many operators,
manufacturers and service providers on a single standard (i.e. GSM) leads to high-quality,
low-cost products and demonstrated market satisfaction. It stressed roaming as a key
issue to service delivery that has played a pivotal role in the development of the market
across Europe and many other countries of the world. Besides meeting an important
market demand, Europe-wide roaming was identified as an important factor that has
contributed to the global success of GSM. Technologies or standards (or any mix of
them) which inhibit or constrain such roaming may prove less attractive to the world's
operator community than those that facilitate roaming functionality through a single
standard.

_A central_ _role_ _for ETSI_

Standardisation is, and will remain, a key factor in providing quality services for a
reasonable price and in enabling roaming between systems. The success of UMTS
depends upon the flexibility of interfaces and the capacity to evolve in parallel with
technology. Continued close co-operation between operators, manufacturers and
regulators in the standardisation of UMTS is crucial for UMTS to be as successful as
GSM.

12 Where the UMTS Forum elaborated the UMTS vision in broader conceptual and market terms, ETSI
is working out the more detailed technical picture of UMTS. ETSI is expected to take a decision on
the air-interface standard for UMTS during the first half of 1998.

**14**

There was general support for ETSI playing a role in developing an open and transparent
approach to standardisation for UMTS and for it to carry out the task of UMTS
standardisation, with an aim of ensuring efficient use of the designated UMTS frequency
bands. Several Member States and industry players emphasised that technology choices
should come from industry through the standardisation process in ETSI where only
UMTS standards approved by ETSI should be used in those bands.

A close co-operation between ITU, ETSI, and other regional standardisation bodies is
essential to establish a framework for global compatibility. The Forum further places a
great deal of importance in identifying UMTS as a part of the IMT-2000 family.

The need for redirection of the standardisation from telecommunications per se towards
information technology is recognised in several contributions from Member States and
industry. It is mentioned that a much greater participation of the IT industry in the
standardisation process is highly desirable.

Several Member States had difficulty in seeing how competition amongst standards
within the UMTS spectrum band could work without de-stabilising the market. It was
recalled that one of the key factors in the success of GSM had been the stability of the
standard and the large number of manufacturers supporting what is to a large extent an
open standard. It was argued that competition between standards would invariably mean
proprietary standards, which have the major drawback (as perceived by the operator and
its financial backers) of locking an operator to one manufacturer for years.

_**2.2.4**_ _**Research and Development**_

The majority of the comments relating to R&D aim at improving the UMTS networks
that will be deployed in the future, in terms of performance, capacity, Quality of Service
(QoS) usability and cost.

The proposals for future R&D, in particular in the context of the 5th Framework
Programme, indicate the need for research into the so-called Enabling Technologies.
Under this term can be found technology concepts that have emerged during the last
years. Their incorporation into current and future mobile communications networks
promises considerable improvements of performance. Technologies such as Neural
Networks, High Temperature Superconductivity (HTS) and Space Division Multiple
Access (SDMA) fall under this category.

The need for further research on Software Radio Technologies (SRT) was highlighted in
all contributions, as one of the technologies that will enable the introduction of service
and content diversity and alleviate the problem of standards. The concept of software
radio is seen as the basic technology that will allow a mobile network to adapt and
reconfigure its radio interface and reallocate its resources, and to meet the characteristics
of a variety of terminals.

A number of proposals indicated the need to further investigate the incorporation of
Digital Audio Broadcasting (DAB) systems into the future generations of mobile
communications systems. The argument behind those comments is the ability of the DAB
standard to provide high capacity wireless links that in the context of mobile
communications systems can be used for downloading the code necessary for the
reconfiguration of the mobile terminals.

**15**

ïn light of the foreseeable penetration levels of UMTS, a number of contributions
indicated the need to provide information on the issue of health hazards caused by the use
of mobile terminals and base stations.

Also the ease of use of mobile terminals is considered as essential. Hence, issues such as
Man Machine Interface (MMI), voice recognition, hands free operation, etc. need further
research.

Research on tools for planning and allocation of resource, network management and
interconnection of networks (e.g. UMTS and broadband W-LAN's), considered from the
perspective of spectrum efficiency, network capacity as well as QoS, are a priority, given
the increased complexity of future networks.

Further, the development of pilot platforms that provide the base for implementing and
demonstrating new applications and services is considered as a valuable tool, in order to
demonstrate to the consumers the flexibility and benefits of UMTS.

Taking into account that UMTS will be deployed using the 2 GHz frequency band, it is
felt that research should also be oriented towards the utilisation of higher frequency
bands, providing further opportunities to meet the requirements for broadband
communications.

Comments were also expressed regarding the need to ensure that security and encryption
techniques adaptable on the nature of the transmitted information over mobile
communication channels (private or professional) are further researched.

_**2.2.5**_ _**International aspects**_

Comments stressed that the European market for UMTS will be a part of a global market.
This has a number of implications for UMTS. For example, UMTS developments need to
take into account trends in other parts of the world. But also the issue of access to the
global market was seen as an important success factor for UMTS.

Free circulation and roaming in a global context were mentioned by Member States, the
UMTS Forum and industry as main issues on which European Community action should
focus. Spectrum and standardisation issues must be progressed through the appropriate
international bodies and specifically with the ITU. To that end, it was felt that the
European participation in IMT-2000 standardisation work should be strengthened.

In particular, the UMTS Forum report recommended that the European Union can
undertake action to remove barriers to the use of UMTS beyond Europe. This includes an
assessment to what extent UMTS might be covered by the commitments made in the
Group on Basic Telecommunications of GATS/WTO. It is also recommended to take
steps to ensure that UMTS products are explicitly covered by the Information Technology
Agreement (ITA).

**16**

3. COMMISSION ASSESSMENT

**3.1** . **Areas of consensus**

In the light of the comments set out above, the Commission believes the following areas
of consensus or strong support can be identified:

_**Regulatory framework**_

1. Broad agreement is found that now is the time to set out the strategy for the
introduction of UMTS. The comments confirm the need to raise the UMTS to the

forefront of a policy debate at the level of the European Union.

2. The development of UMTS must be market-led and driven by the private sector. The
Government's role should be to ensure that the regulatory climate does not hold back
innovation and investment.

3. The view that the current regulatory framework is broadly sufficient for UMTS is
generally supported. Nevertheless, in order to enable investment decisions to be made,
confirmation was requested that key aspects of that framework (e.g. licensing and
interconnection rules) would apply to UMTS. Furthermore, clarification was sought
on how decisions on licensing, frequency or standards could be accommodated within
the existing rules.

4. There is agreement that existing GSM players should be allowed to migrate to UMTS,
while at the same time ensuring an open and competitive market for new players.

_**Frequencies**_

5. A majority of commentators consider the present ERC decision for 2 x 40 MHz to be
allocated by 2002 to UMTS out of the FPLMTS band identified by WARC-92 as
insufficient to establish a broad competitive service offering for UMTS. General
agreement was found that further radio frequency spectrum needs to be identified.

_**Standardisation**_

6. Member States and private sector players stress the need for industry co-operation in
ETSI to arrive at common and open standards for critical interfaces such as the airinterface. Limiting standardisation to key interfaces would allow for a mix and match
of vendors, without undermining the creation of a competitive market for equipment.

7. Ensuring roaming capability for future multi-media systems is regarded crucial. This
would be facilitated by a consensus on a common, open and internationally
competitive air-interface standard within Europe.

A solution where interoperability and roaming are provided through multi-mode
handsets in an environment with multiple air-interfaces, even if technically possible, is
not the preferred solution within Europe as it bears the risk of market fragmentation
and/or higher costs. At a global level it remains possible that emphasis will be placed

**17**

on interoperability of a number of regional air-interfaces. The lack of a common and
open air-interface in Europe would affect both the customer and the competitiveness of
any UMTS standard.

8. UMTS is viewed as a crucial test to Europe's competitiveness, both for the mobile
communications industry and because of the importance of mobile communications for
economic players at large. A strong home market would seem to provide the best
conditions for European industry to compete in other parts of the world.

_**Other issues**_

9. The contributions to the consultation resulted in a broad range of fringe factors that
need to be addressed to safeguard the general public interest. Views expressed were
largely complementary and included actions in such areas as research into possible
health effects as well as measures to ensure the protection of privacy and personal data
and against fraudulent use.

**3.2.** **Issues for further discussion**

From the comments, it is also clear that in a number of areas, either no clear consensus
emerged or further work is required:

1. The extent to which further decisions concerning UMTS frequencies should be a
matter for the European Community or for CEPT. Whilst many comments supported
the use of CEPT/ERC mechanisms, concerns arose about the risk of those procedures
failing to produce implemented results. Should that be the case a number of Member
States and industry players saw a clear role for binding legislation within the
Community.

2. There was a split between industry and Member States with regard to the issue of
spectrum pricing, with the industry reluctant to face spectrum fees which they argued
would put up their business costs. Member States, however, were more open to placing
a market valuation on a scarce natural resource to ensure its efficient use.

3. Whilst there is agreement on the general _notion_ of UMTS, the consultation has shown
that it is not yet possible to describe UMTS in terms of _system_ or _technology concepts_
For Member States and operators a definition of UMTS, in particular its air-interface
standard, is needed for regulatory action and indeed seems to be a pre-requisite for a
co-ordinated introduction.

**18**

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While addressing a wide range of issues, the comments received can be structured along
main challenges, allowing general principles and political priorities to be identified
(section 4.1). These findings are translated into recommendations for action by public
authorities to establish a suitable regulatory environment and to address certain flanking
issues (section 4.2).

**4.1.** **Policy objectives**

In the light of the comments received and the consensus established, three key policy
objectives can be identified which should underpin future action both by the Community
and by industry. These are set out below. In section 4.2 areas for Community actions to
further the attainment of these objectives is set out.

- _Fostering_ _the_ _development_ _of_ _a_ _market with_ _a_ _broad competitive offering_ _of_ _mobile_
_multi-media_ _services through competition_

This objective requires a legal and technical environment which will allow competing
providers of UMTS services and networks. This requires an open licensing procedure
and early decisions on the number of UMTS licenses. It requires sufficient spectrum to
allow such competition and it requires standards which ensure that users can
communicate with other users whilst not being so comprehensive as to prevent service
providers from offering different service elements or facilities.

- _Enabling industry to meet user and societal needs_

The success of UMTS in an environment in which second generation mobile
technologies are already well established is closely linked to ensuring it responds to
user's needs, for example, for mobile multimedia and mobile Internet functions or for
Europe-wide and global roaming of these services. The pricing of UMTS services and
equipment will also be crucial to whether it is seen as a mass-market product or a
niche premium service. From a regulatory perspective, it is essential that any
remaining artificial market barriers are removed and that a broader convergence
between telecommunications and audio-visual sectors is promoted. It is also important
to address the broader social and societal interests and secure access to the "wireless

information society" for all citizens.

 - _Creating_ _a_ _climate_ _for_ _investment_ _and_ _deployment_ _of_ _UMTS and fostering Europe's_
_competitiveness_

Investment and business planning requires early decisions as to the regulatory
framework of UMTS, the spectrum availability and as to the standards, together with
a longer term perspective on how further spectrum may be required. The application of
the current regulatory enviromnent to UMTS should be confirmed and, where
appropriate, further steps taken to adapt or clarify that framework. Finally, in order to
preserve the broader industrial interests, industry with, where appropriate, support

**19**

from the Member States and the Commission should aim at positioning UMTS in
global markets, both through ensuring a strong home base within the internal market
and by promoting the rapid development of mobile multimedia applications.

**4.2.** **Recommendations for further action**

Whilst industry and national Governments have a key role in achieving the policy
objectives set out section 4.1, the Commission believes that all appropriate actions must
be taken with particular attention being given at European level to the following five key
areas: regulatory framework, frequency related issues, standardisation and system
definition, research and development, and action at the international level.

_**4,2J**_ _**Regulatory Framework**_

The Commission considers to propose a European Parliament and Council Decision
("UMTS Decision") with respect to roaming, frequencies and standards.

_Licensing_

How, when and by whom licences for UMTS service providers and operators will be
granted, are questions of central importance. **The current framework for licensing is**
**fully applicable to UMTS.** UMTS does not therefore require a new approach to licensing
in order to respond to these questions. Nevertheless, three specific implications of the
current licensing framework should be highlighted :

- The number of UMTS licences should only be limited, in line with existing
Community law, by the spectrum [13] to be made available on the basis of the foreseeable
market requirements (see below: "frequency issues", section 4.2.2). However, given
the need for UMTS to be market-led, the Commission believes that planned demand
for UMTS should determine the amount of spectrum allocated [14] . Additionally, UMTS
service providers should be able to enter the market without unnecessary constraints to
allow a dynamic market and broad competitive service offering to develop general
authorisations or declaration procedures should be the rule, if an authorisation
procedure is considered necessary. Individual licences should be confined to the
operation of UMTS networks.

- UMTS licensing should seek to ensure the development of pan-European services
through a co-ordinated introduction. This implies that the systems licensed should
support roaming and operate in conformity with standards developed for UMTS by
ETSI where these are available (see below: "standardisation", section 4.2.3).

13 Whilst the Licensing Directive also foresees limitations " _for the time necessary to make available_
_sufficient numbers in accordance with Community_ law", shortage of numbers represents only a
temporary ground to limit licence numbers until a national numbering plans supporting competition
have been put in place. These are linked to the liberalisation of the télécoms market and so would not
be an acceptable basis to limit UMTS licences numbers, given the likely start date of 2002.
14 In general spectrum allocation decisions seek to ensure that spectrum is allocated to high value uses in
preference to lower value uses.

20

- Licensing procedures should not automatically exclude any organisation from the
bidding process, nor should they automatically reserve UMTS licences for one or more
existing players (e.g. GSM/DCS operators). Any assessment of applications should
take into account the benefits of allowing current GSM/DCS operators into the UMTS
market in terms of synergies and existing commercial experience.

_**Interconnection**_

With the adoption of the Interconnection Directive [15], a detailed harmonised framework
for interconnection between fixed, mobile and fixed and mobile networks is in place.
**This interconnection framework would be fully applicable to UMTS services.**

_**Roaming**_

The Commission attaches particular importance to the development of pan-European
UMTS services, as a key element in an internal market for telecommunications and
multimedia mobility services [16] . In this respect, but also to secure the attractiveness and
credibility of European technology to the world's operator community, demonstrated
Europe-wide roaming on the basis of a common, open and internationally competitive airinterface standard has its particular relevance for UMTS.

**The proposed UMTS Decision will provide for rights and obligations to negotiate**
**commercial roaming agreements with other UMTS service providers or network**
**operators on the basis of a common, open and internationally competitive air-**
**interface standard.**

_**4X2**_ _**Frequency issues**_

The timely availability and allocation of spectrum is fundamental to UMTS's launch.
The amount of spectrum made available will have a direct impact on how competitive the
market place will be. While the Commission welcomes the recent ERC decision on
UMTS spectrum allocation, it notes the concerns of industry that the amount of spectrum
reserved is too modest, if current demand forecasts are correct, and considers that the
allocation of further spectrum needs to be examined. On the basis of available
information, the Commission believes that an assessment of the value of alternative
spectrum allocations is required in order to assess whether UMTS service were being
uneconomically "shut out" due to allocation of spectrum to lower value alternative uses.
Spectrum must be allocated sufficient time before UMTS services are commercially
deployed (2002) and a clear strategy should be developed for the release of such spectrum
as demand for UMTS increases further. Spectrum could be drawn by exploiting the
FPLMTS band identified by WARC-92 as well as by refarming in the 900, 1800 and
1900 MHz band [17] . Spectrum needed beyond this would have to be allocated by future

**15**

Directive 97/33/EC of the European Parliament and of the Council of 30 June 1997 on interconnection
in telecommunications with regard to ensuring universal service and interoperability through the
application of the principles of Open Network Provision (ONP), OJ LI99, 26 July 97

**16** Council Directive 91/263/EEC addresses _inter alia_ the mutual recognition of conformity and free

circulation of terminals. A proposal for a European Parliament and Council Directive on connected
telecommunications equipment and the mutual recognition of conformity of equipment (COM(97)257
of 30.5.97) is currently under review.
17 In this respect, consideration should be given to Article 2(3) and (4) of Directive 96/2/EC

**16**

**21**

decisions within the WRC mechanism (see below: "UMTS in the international context",
see section 4.2.5).

The Commission recognises the value of the current activity of the CEPT and the
particularly relevant involvement of industry, through the UMTS Forum, in spectrum
discussions.

The Commission shares the views expressed that spectrum allocation should be pursued
in the context of the CEPT. Nevertheless, the Commission believes that action to support
the timely implementation of decisions at a Community level can make an important
contribution to the successful preparation and implementation of UMTS and that such
action must be taken when needed.

In relation to the valuation to be attached to spectrum, the Commission considers that any
fees charged must aim at ensuring efficient usage of a valuable resource. Where Member
States choose to allocate spectrum via auctions, it will be important that the mechanisms
put in place do not result in outcomes which adversely impact the public interest, in
particular in respect of the competitive structure of the market. Where assignments are
administered by officials, any fees beyond administrative costs will involve a subjective
valuation of the resource, given that a market valuation can only be obtained through
market mechanisms [18] .

**The proposed UMTS Decision will therefore set out a methodology, similar to the**
**one applicable through the S-PCS Decision** **[19]** **, for the timely implementation at**
**Community level of the results of the CEPT ERC work in UMTS spectrum**
**allocations.**

_wireless local loop_

Although wireless local loop is not the subject of this Communication, the Commission
considers it necessary to give its position on UMTS spectrum usage in relation to wireless
local loop.

The Commission recognises that wireless local loop is a promising technique to bridge
the gap between fixed and mobile cellular communications where strong interest is seen
from existing operators -fixed and mobile- as well as potential new entrants. Wireless
local loop could provide an economically attractive alternative to the wireline local loop
and indeed to mobile communications.

The Commission considers that wireless local loop may develop on the basis of different
technological solutions in national, metropolitan area or local markets. Although some

Where properly designed auctions are used to assign spectrum, the economic theory is that any fees
paid will reflect the discounted present value of the excess profits the second highest bidder expects to
receive. The bidding stops when the second highest bidder drops out. What the highest bidder would
have been prepared to pay, is never discovered. However, a properly designed auction makes public
much of the private information held by the bidders, thus reducing the margin between the second
highest and highest bids.

**19**

Decision 710/97/EC on a co-ordinated authorisation approach in the field of satellite personalcommimication services in the Community, 24 March 1997, OJ LI05/4

**22**

form of interoperability is desirable, the scope and need for harmonisation may not be as
for mobile systems where full roaming functionality requires global or regional standards.

The Commission recognises that some Member States have allocated different bands of
spectrum to wireless local loop services and supports the work of ERO to look into the
possibilities for further harmonisation.

The Commission considers that the scarcity of UMTS/FPLMTS spectrum and the special
value it has due to its Europe-wide (global) availability justify access restrictions to this
band and therefore that wireless local loop systems should be allowed in this band only if
a harmonised Europe-wide introduction can be agreed.

_**4.2.3 Standardisation**_

The Commission supports the UMTS standardisation efforts undertaken so far by ETSI,
calls for all interested parties to contribute to this process and welcomes the fact that
standards development is being led by the private sector and that a consensus seems to be
developing on the issue of the core network. It considers that the results to be delivered
by ETSI in time for the envisaged start up of UMTS should become an open technical
reference for the future UMTS environment.

In order to allow for effective service competition and innovation, the Commission
believes that the UMTS standardisation process should be limited to what is necessary to
permit systems to be developed, while allowing a differentiation at service provision.
Such an approach is consistent with the competitive telecommunications environment
today, in contrast to the largely monopoly environment which existed at the inception of
the GSM standard.

The Commission believes that the standardisation work should in particular aim at
ensuring the end to end interoperability which is needed by a pan-European UMTS
environment. This would strengthen the acceptance of UMTS by users (particularly, with
regard to choosing whether to migrate from current systems supporting global roaming),
as well as more rapidly securing a critical mass of UMTS equipment and services, within
and beyond Europe.

**The Commission therefore considers that work should aim at establishing a**
**common, open and internationally competitive UMTS air-interface standard. It calls**
**on manufacturers to work within the ETSI standardisation process towards this**
**goal. The proposed UMTS Decision will identify conditions which may be attached**
**to licenses in order to ensure pan-European services based on ETSI standards,**
**where available.**

_**4.2.4**_ _**Research and Development**_

Although the Community efforts under the RACE and ACTS Specific Research
Programmes have already made a significant contribution to preparing the technological
base for UMTS and in comparing the merits and disadvantages of competing technical
solutions the Commission believes that there is a continued need for research in relation
to UMTS. This effort will be pursued in the context of the forthcoming 5th Framework
Programme and should in particular address work relating to network planning and
management, realisation of intelligent networks (network agent techniques), network
integration, quality of service, usability, cost/performance, spectrum efficient techniques,

**23**

software radio, adaptive allocation of network resources. Aspects relating to manmachine interfaces, terminal usability and the safe and secure use of mobile and wireless
equipment [20] will also be considered.

Community and national research efforts should continue to support pre-competitive
work in the area of UMTS and its further evolution, with the spin off that such investment
ensures an expansion of the knowledge base for third generation systems and provides the
experts which a UMTS industry will need.

Besides this technological oriented research, the broader social and societal effects of
transitioning towards the "wireless information society" will need reflection and be
addressed as a matter of priority.

_**4*2*1**_ _**UMTS in the international**_ _**context**_

The Commission considers that the further development of UMTS should aim at
establishing a global standard, much like what was done for GSM. The Commission calls
on Member States and industry at large to join its efforts and take the following actions:

 - Proposing and promoting the UMTS standard (under development within ETSI) as a
key element of the IMT-2000 recommendation currently in preparation at the ITU.

 - Securing spectrum availability for UMTS for its longer term needs by seeking
adequate frequency allocations through the WRC process. In particular, the
Commission supports the CEPT and the UMTS Forum position to propose the
inclusion of the issue in the agenda of the WRC-99 conference, at the forthcoming
WRC-97. The Commission also fully supports the concerted efforts of the UMTS
Forum towards the world community to secure further spectrum for terrestrial mobile
communications.

- Encouraging contact between interested industry organisations, standardisation bodies
and administrations of Europe and those of our commercial partners in order to
promote the goal of a globally interoperable UMTS system and to help in establishing
co-operation and alliances among private partners at an early stage of UMTS
development.

_•_ Initiate at an early stage the discussion of market access and free circulation of UMTS
systems and terminals building on the experiences of the GM PCS MoU.

**20** A research programme into the possible health effects related to the use of mobile phones is under
preparation. This work will draw in particular on the recommendations of an independent multidisciplinary group of experts which prepared a report last year for the Commission in this field;
further, a Commission proposal for a Council Recommendation pursuant to Article 129 (public health)
is under consideration which will address health concerns as regards public exposure to radio
frequencies.

**24**

**OVERVŒWOF** **RECOMMENDED ACTIONS**

Note : The steps indicated in the regulatory area below are additional to the confirmation in this
Communication that the current rules on licensing and interconnection apply to UMTS activities, in
particular with regard to: (i) the limitation licence numbers; (ii) the need to support the take up of
ETSI standards, where they exist, and (iii) the need to ensure that current operators are not
automatically granted UMTS licences or excluded from bidding for such licences.

_domain_ _recommended actions_

_Regulatory Framework_ _•_ Proposal by the Commission of a UMTS Decision which will :

                  - define rights and obligations to negotiate roaming
arrangements, to the extent that these are not covered by the
Interconnection Directive

                  - identify conditions which may be attached to licences in
order to ensure pan-European services based on ETSI
standards, where available
« set out a methodology for ensuring the co-ordinated

allocation of frequencies in the Community for UMTS
_Frequency issues_ - Ensure co-ordinated and timely allocation of spectrum within the

Community by referring to CEPT mechanism or, where necessary,
through Community measures, in particular:

                  - Prepare the allocation of adequate spectrum to be made
available by 2002 (start of UMTS service provision)

                 - Consider freeing of 900,1800,1900 MHz bands for midterm UMTS usage (2005)

                - Expand spectrum availability beyond the WARC-92
FPLMTS band for mid to long-term UMTS usage (20052010)

                    - Encourage efficient use of UMTS spectrum through pricing
_Standardisation_ _•_ ETSI to work out critical interfaces for the UMTS environment to

support competitive provision of products and services, while
supporting interoperability and roaming

              - Key focus for standardisation should be the development of a
common, open and internationally competitive standard for the air
interface

_Research and_ - Pursue R&D support on technical solutions needed for UMTS (5th
_Development_ Framework Programme)

              - Dissemination of information and training on UMTS related
technologies (to ensure adequate skill base for UMTS realisation)

              - Support R&D on possible health impacts of electromagnetic
radiation

_UMTS in the_ _•_ Submission of ETSI developed UMTS standard as option for the
_international context_ IMT-2000 standard (ITU)

             - Explore within WRC the expansion of FPLMTS band allocated for
3rd generation mobile applications

              - encouraging global dialogue among industry actors,
standardisation bodies and administrations to promote
interoperability of UMTS at global level

             - ensuring world-wide free circulation of UMTS terminals (MRA
arrangements, MoU for multilateral rules)

**25**

**4.3.** **Proposed targets, action plan and timing**

The two tables below attempt to give an overview on targets, actors and timing as a
general frame of reference, as well as a summarised action plan which identifies the
concrete steps necessary to implement the actions proposed in the previous chapter.

_**Proposed targets:**_

_target '_ _main actor_ _by_
UMTS standardisation phase 1 ETSI end 1999
license award (first round) Member States end 1998

IMT-2000 standardisation ITU 1999

start commercialisation private sector 2002
extension spectrum allocation spectrum administrations 2004-2005

_**Action**_ _**Plan**_ _**for the Community:**_

_action_ _by_
WRC-97: preparation of agenda WRC-99 Oct.97
(to include UMTS spectrum allocation)
Adoption of Council Resolution on present Dec.97
Communication setting out political priorities
Proposal of a UMTS Decision on spectrum and Jan. 98
licensing conditions
Implementation of 5th Framework Programme 98
Adoption of UMTS Decision early 1999
Mandate to ERC on further spectrum allocation Feb. 99
MRA negotiations continuous
WRC-99: extension of UMTS spectrum allocation Oct.99
Review of telecommunication regulatory environment end 99

**5.** **CONCLUDING** **REMARKS**

The consultation has confirmed the need to actively pursue at this juncture the discussion
of the conditions to prepare and establish the future UMTS environment. Although the
development of UMTS must be market led and driven by the private sector, the
government's role in setting out the appropriate regulatory environment is important in
providing confidence which will generate further innovation and investments, taking into
account consumer interests.

UMTS is Europe's answer to global developments in the market for future mobile and
wireless communications. Its characteristics of supporting Europe-wide (and global)
services roaming, including a range of multimedia applications means that UMTS will
play a key role in extending the reach of the information society.

For UMTS to succeed, industry has indicated a need for certain aspects of the current
regulatory framework to be clarified, and for key resource decisions to be taken, so that
business plans can be finalised. A strong home market will help European companies
compete in other parts of the world and allow them to consolidate the leading position
that they hold today on the world market with GSM.

The rapid and broad deployment of UMTS will benefit European businesses and all users
and assist in the development of certain rural areas, by creating new pan-European
services, stimulating the growth in cross-border provision of goods and services. It will
help European businesses of all sizes and citizens to have access to a further route into the
electronic economy.

**Policy makers today have an exceptional chance to help shape a seamless mobile**
**multi-media communications environment for Europe by setting out the broader**
**policy lines that will create a common growth basis for the development and**
**introduction of** **UMTS.** **This will benefit European citizens and industry as a whole.**

This Communication of the Commission is intended to support political discussions with
the European Parliament, the Council of the European Union, the Economic and Social
Committee, and the Committee of the Regions.

**27**

**ANNEX** **I:** **LIST OF** **CONTRIBUTORS** **TO** **THE** **CONSULTATION**

as per 19/09/1997

**Member States or their representative offices**

ETO Italy, Ministry of Communications

Denmark, Research Ministry Portugal, Instituto das Comunicacoes

Finland, Ministry of Transport and Communications Sweden, Ministry of Transport and Communications

France, DPT UK

Germany, Bundesregierung UK Home Office

**Industry,** **industry associations** **and** **others**

Airtel Movil

Airtouch

Alcatel

Autel

Bayerische Rundfunk/Mueller-Roemer

Belgacom

BT

Cable & Wireless

Cegetel

Cellnet

CNPF

Deutsche Telekom

Diehl GmbH

e plus

ECTEL

Enertel

Ericsson

ETNO

Finmeccanica SPA

Finnet Group

France Telecom

INMARSAT

Mannesmann Mobilfunk

MATAV

Nokia

Olivetti

One-2-One

ONP-CCP/Joint industry group

Orange

Philips

Picienne Italia

Post and Telekom Austria

Proximus

Siemens

T-Mobil

Telecel

Telefonica

Telenor

Tescher Team

TIM

UMTS Forum Manufacturers Group

UNICE

Vodaphone

WDR

**28**

**ANNEX II:** **LIST** **OF ACRONYMS**

ACTS Advanced Communications Technologies and Services

CEPT European Conference of Postal and Telecommunications
Administrations

DAB Digital Audio Broadcast

EP European Parliament

ERC European Radiocommunications Committee

ETNO European Telecommunication Network Operators Association

ETSI European Telecommunications Standardisation Institute

FPLMTS Future Public Land Mobile Telecommunications System

GM-PCS Global Mobile Personal Communications by Satellite

GSM Global System for Mobile

HTS High Temperature Superconductivity

IMT-2000 International Mobile Telecommunications 2000

ISDN Integrated Services Digital Network

IT Information Technology

ITA Information Technology Agreement

ITU International Telecommunications Union

MBS Mobile Broadband Systems

MMI Man Machine Interface

MoU Memorandum of Understanding

MRA Mutual Recognition Agreement

RACE Research and technology development in Advanced
Communications in Europe

R&D Research and Development

QoS Quality of Service

SDMA Space Division Multiple Access

SMG Special Mobile Group

TETRA Trans-European Trunked RAdio

UMTS Universal Mobile Telecommunications System

UNICE Union of Industrial and Employers ' Confederations in Europe

WARC/WRC World (Administrative) Radio Conference

W-LAN Wireless Local Area Network

WLL Wireless Local Loop

**29**

###### **ISSN 0254-1475**

## **COM(97) 513 final**

# **DOCUMENTS**

#### **EN 15 16** **Catalogue number : CB-C0-97-543-EN-C** **ISBN 92-78-26010-X**

**Office for Official Publications of the European Communities**

**L-2985** **Luxembourg**

### **_26_**