Europe Relaxes on 3G

Sweden’s Post and Telecom Agency (PTS) has become the latest European industry body to soften its stance on 3G deployment -- a sign that regulators are finally waking up to the fact that current deadlines for rollout are wildly unrealistic.

The PTS has relaxed rules dictating that the country’s four Universal Mobile Telecommunication System (UMTS) license holders -- Tele2 AB, Vodafone Group plc (NYSE: VOD), Orange Sverige AB, and Hutchison 3G Ltd. -- must ensure 99 percent coverage within the country by the end of this year.

All four operators are behind schedule, raising fears they are set to have their licenses reclaimed or incur massive fines. The PTS has now admitted it is prepared to allow the four players extra breathing space in order to deploy the new networks.

“If they don’t reach the conditions, according to new regulatory framework we have to give them reasonable time to correct this,” Hans Brändström [ed. note: in a teacüp?], head of mobile telecommunications, tells Unstrung. “The conditions for rollout remain the same, but we have a made a rough estimate of allowing them an extra six months.”

Analysts cite the move as a natural reaction to the financial and technical problems plaguing the rollout of 3G networks in Europe. “It is necessary -- this is reality sinking in,” comments Jeremy Green, principal analyst at Ovum Ltd. “The mobile industry has got itself into a terrible state, and these deadlines are a cruel and unusual punishment for what is really the failing of vendors to deliver.”

Green believes Sweden’s actions may encourage other regulators to follow suit. “It has been hinted by vendors that conditions are easing in Europe, and regulators will relax the conditions still further." IDC’s senior analyst Paolo Pescatore concurs, adding that regulators may have no choice but to extend deadlines in light of uncertain user demand for the new services. “No one at the moment really needs 3G from the consumer side of things other than for novelty value.”

The Swedish turnaround follows a number of high-profile efforts by Europe’s ruling bodies to relax stringent rules surrounding deployment of the technology. The European Commission has recently given the green light for network sharing in Germany and the U.K., a move expected to boost rollout in both countries (see EC OKs German 3G Net Sharing and EU OKs UK 3G Network Sharing).

Meanwhile, the Italian government has become the first in Europe to loosen restrictions on the sale of 3G spectrum, allowing carriers to trade UMTS frequency and pocket the financial return (see Spanish Grasp Italian Lifeline).

UMTS is the third-generation European standard upgrade for existing General System for Mobile Communications (GSM) networks that uses a Wideband CDMA (WCDMA) air interface to increase the data rate over the wide-area network to a theoretical maximum of 2 Mbit/s.

— Justin Springham, Senior Editor, Europe, Unstrung

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