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Carriers Take Heart From EC

Light Reading
LR Mobile News Analysis
Light Reading
6/21/2002

Europe's 3G license-holders, desperate for any crumb of comfort they can get, believe the clearly stated backing of the European Commission (EC) can help them in their quest to make the most of their UMTS licenses.

Unfortunately for the carriers, exactly what support the EC is offering is about clear as the calls on their overloaded wireless networks.

In a recent statement, the Commission, while stating that "in principle" license conditions should not be changed, recommended that national regulators and legislators should be flexible "in case of unpredictable changes of circumstances requiring adaptations" (see EC Takes Stock of 3G).

This, apparently, would "ensure a predictable environment and legal certainty favourable to long-term investments." As with almost anything that comes out of the sanitized information portals of the EC, you could interpret those statements in any number of ways.

Up to now the national authorities have not offered too many olive branches to the operators. However, having had time to take stock of the EC's show of faith in all things 3G (and watch the World Cup on TV), the operators' collective voice, GSM Europe, part of the GSM Association, believes the backing of Brussels could help overcome local, national and regional issues. "We welcome the fact that the EC is not rigid in its thinking, and that it hasn't adopted the hype or doomsday thinking that has typified the sector in recent years," Robert Mourik, chair of GSM Europe's regulatory working group and senior manager of public policy at Vodafone Group PLC (NYSE: VOD), tells Unstrung. "The EC has obviously learned a lot about the sector," he adds.

And so it should have. Just a month ago GSM Europe members, including CEOs and board directors from the operators, met at a round table discussion with EC representatives, which no doubt would have helped the EC to recognize some of the issues faced by the carriers.

What the operators couldn't agree on, however, was in which areas they would like the national watchdogs and government bodies to be most "flexible." "There are certain members who think a license extension would be most helpful," according to Mourik. "KPN Mobile, for example, would like an extension to its license, which currently runs for 15 years. For others, which have 20-year licenses, other issues are more pressing."

For Vodafone, spectrum trading is the key issue it would like to see addressed. "The whole sector is in turmoil and we need as much freedom as possible to sort ourselves out. Allowing license holders to trade the 3G spectrum would help the sector to consolidate and reorganize, and would help the operators make more efficient use of the spectrum they have been allocated," says Mourik.

"Let's say there was a country where there were six licenses, and one of the companies was in a tight spot," he continues. Unstrung would like to call this country Germany. "Current rules regarding spectrum trading mean that the company in trouble could not sell off part of its spectrum or even sell it all to one of the other license holders. The European countries created a primary market for spectrum, but did not create a secondary market."

But is there any hope that such trading would be allowed? "Some countries are considering it," says Mourik. "The Netherlands, Germany, and the U.K. in particular. But they are having problems with the detail. They should be more bold -- there are fewer problems than they think. It should be treated as just another asset."

Mourik also hopes that the EC's words might encourage national and local authorities to harmonize their views on building out mobile networks. "On a national level there are license obligations attached to network buildout, but on a local level some authorities and councils make it very difficult for us to meet those obligations. We have to comply with the law, but there must be an obligation from the authorities to allow us to make this work," he states.

— Ray Le Maistre, European Editor, Unstrung
http://www.unstrung.com

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