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European Commission weighs in on 3G
Wednesday, June 12 2002
by Matthew Clark


The European Commission may have offered Europe's mobile telecoms a chance to
escape from their crushing debt, by advocating renegotiation of 3G licences. 

The European Commission adopted on Wednesday a Communication entitled "Towards
the Full Roll-Out of Third Generation Mobile Communications" as a report to the
forthcoming Seville Council. In the report, the EC claimed that the roll-out of
3G technologies was progressing but suggested that Member States may want to
consider alterations in how 3G operators are regulated, as well as changes to the
licences themselves. 



In its report, the Commission said "In principle, 3G licensing conditions
should not be changed, in order to ensure a predictable environment and legal
certainty favourable to long-term investments." The EC continued, "flexibility
is recommended in case of unpredictable changes of circumstances requiring
adaptations." 



"These [changes] should remain proportional and transparent. For that
purpose, the Commission is ready to examine solutions for a harmonised approach
with the Member States... as it did for conditions applying to network
infrastructure sharing."



The move appears to be an unspoken recognition that Europe's operators paid too
much for the licences during the telecoms heyday of 1999 and 2000. It is
estimated that EU mobile phone operators paid over EUR100 billion for the
licences, which were allocated through auctions and beauty contests. 



In Ireland, the licences have not yet been awarded, but three operators are
presently bidding in a beauty contest for the licences here. Originally, four
licences were available to bid on, (one costing EUR27 million and three costing
EUR74 million) but only three operators presented proposals. 



The Commission was quick to emphasise that the terms of the licences are already
a matter for the Member States to deal with and that Wednesday's move was more of
a blessing than anything else. But the move seems to indicate that the normally
proactive EU Competition Commission will not challenge changes to 3G licences
that benefit cash-strapped telecoms.  



Other suggestions from the European Commission for short-term cost savings
included the sharing of network infrastructure so that telecoms could roll-out 3G
faster and at lower costs. Some telecoms are already doing this. 



Interestingly, the EC also said that in order to increase demand for 3G content,
the Commission may give support through seeding research activities (e.g.
validating multilingual content development) and by fostering the implementation
of e-government services over 3G. It encouraged Member States to do the same. 



But in the longer term, the Commission said that harmonisation in licensing
conditions across the European Union may be the solution to some of the EU's 3G
troubles, especially with EU expansion still looming on the horizon.



Yet the move may have come too late for Germany's 3G licence holder Mobilcom, who
said on Tuesday that it was likely to close if new funding could not be found.
France Telecom, which owns a 28.5 percent stake in the mobile phone group, had
been involved in a row with German partners over funding and said it was ending
its collaboration agreement.