Opinion of the Economic and Social Committee on: - the 'Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions on the further development of mobile and wireless communications - Challenges and choices for the European Union', and - the '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'
9. 3. 98 EN Official Journal of the European Communities C 73/109 Opinion of the Economic and Social Committee on: — the ‘Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions on the further development of mobile and wireless communications — Challenges and choices for the European Union’, and — the ‘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’ (98/C 73/27) On 3 June 1997 and 23 October 1997, the Commission decided to consult the Economic and Social Committee, under Article 198 of the Treaty establishing the European Community, on the above-mentioned communications. The Section for Transport and Communications was instructed to prepare the Committee’s work on the subject; it set up a study group and appointed Mr Mobbs as rapporteur. At its 350th plenary session (meeting of 11 December 1997), the Economic and Social Committee appointed Mr Mobbs as rapporteur-general and adopted unanimously the following opinion. 1. Introduction 1. 1. The growth of mobile communications in the last ten years has been phenomenal and enabled users, both business and private, to make and receive phone calls, send and receive faxes, use the e-mail or the Internet without having to depend on a fixed terminal connection. This growth has resulted in the expansion of the whole telecommunications market. The avail- ability of mobile roaming services in both advanced and many developing regions has made a significant contribution to the wider utilisation of all forms of telecommunications throughout virtually every econ- omic sector. Widespread personal accessibility has also helped overcome time zone and other obstacles to international trade and activity. Whilst the growth of mobile communications is forecast to continue its rapid expansion, the demand for fixed wire installations will still continue in view of the ever increasing demands for higher data transmission speeds and capacity at very economic prices. As costs of mobile equipment and services decrease, growth in new mobile connections is expected to overtake growth in fixed connections, especially after full the European telecommunications sector in most Member States from 1 January 1998. Further stimulus to the use of telecom- munications in every sphere of business and social life will occur if users retain their telephone number regardless of the use of mobile or fixed telephones. liberalization of paging systems and 3 million users of data systems (1). In addition Europe has seen the exceptional success of the digital GSM (2), considered second generation technology, (analogue technologies were the first) emer- ge as a world standard for mobile communications. Through its establishment as a single system, it allows roaming throughout most of Europe, thus creating a truly pan-European services network and the bringing down of national barriers and increasing competition and user choice. All this, together with the related DCS-1800 and PCS-1900 technologies (known globally as GSM1800 and GSM1900), has also made it possible to introduce effective competition and market dynamics into the local loop. 1. 3. To date nearly 200 mobile communications networks based on GSM serving more than 55 million users, demonstrate the success and acceptance of the system as a world-wide standard. However, there is no room for complacency since as the commercial positioning of the industry develops in Europe and World-wide new GSM standards face fierce competition from different standards in the USA and variations in Japan. UMTS (3) can be described as a mobile communi- 1. 4. cations system that, through a converged network of 1. 2. In Europe, this extent of mobile phone growth is demonstrated by the numbers involved — 37 million users of mobile communications, 4,5 million users of (1) See paragraph 2. 1 of Commission Communication. (2) Global System for Mobile (GSM). (3) Universal Mobile Telecommunications System (UMTS). C 73/110 EN Official Journal of the European Communities 9. 3. 98 fixed, cellular and satellite components, can ensure to all users in a competitive market universal access to mobile personalized communications, including high quality multimedia services regardless of location, net- work or terminal used. This is a European concept promoted by ETSI(1), CEPT (2), the UMTS Forum (3) and the Commission which aims at permitting roaming on a truly world-wide basis for the first time. It has the support of the major European fixed and mobile network operators and the manufacturing community. The development of new technologies that become increasingly available will allow a more efficient and effective use of terrestrial and satellite communication systems so that users benefit. In particular, UMTS aims at facilitating increased access to the Internet. 1. 7. UMTS will operate in both terrestrial and satellite environments. This will be important for the operation of UMTS in sparsely populated areas. Earlier this year, the Commission published a Communication on ‘An EU action plan — satellite communications in the information society’ (6) containing a more consistent approach in satellite communications. A generally favourable opinion was adopted by the Committee (7). 1. 8. Such has been the success of mobile telecommuni- cations and such is the speed of the development of the associated technology, that the Commission believes that certain policy and strategic decisions need to be taken to ensure their continued growth. 1. 5. UMTS is intended to form part of the Inter- national Mobile Telecommunications 2000 (IMT-2000) family of global third generation standards. Under the IMT-2000 programme, the ITU (4) is developing recommendations to assist the relevant administrations with regard to third generation systems and is currently addressing the development of third generation mobile systems within the Radiocommunications (ITU-R) and Telecommunications (ITU-T) sectors. The work of the ITU is expected to be completed in 1999. 1. 6. The development of UMTS presents Europe with both a challenge and an opportunity to exploit its leading position in this market and reap full benefits from the emergence of full liberalization in most Member States and the opening up of world markets for basic telecommunications by the WTO (5). In particular, UMTS may provide mobile access to a range of video-based communications, information and enter- tainment services, increasing the synergy between broad- casting and telecommunication markets. The IT industry will also have a major role to play in ensuring the success of UMTS in view of the importance of on-line content for interactive multimedia services. (1) European Telecommunicatioons Standards Institute (ETSI). (2) European Conference of Postal and Telecommunications Administrations (CEPT). (3) The UMTS Forum is a body inaugurated in December 1996 which, building on the existing work of the UMTS Task Force, brings together regulators, operators, manu- facturers, satellite operators and other interested parties and associations such as ETSI, ERO and ETO. It is financed by its 70 members and has a budget of ECU 500 000. (4) International Telecommunications Union (ITU). (5) World Trade Organization (WTO). 2. Commission communications 2. 1. The first Commission communication (May 1997) is in response to requests from the Council and the Parliament respectively for a report on the development of mobile communications. The Commission communication summarizes 2. 2. the present situation and sees a need for details of future service concepts and of future user requirements to be addressed in order to formulate regulatory, frequency and standardization responses at a European and national level. 2. 3. The Commission comments in detail and summa- rizes its views in five key questions, and elaborates comments upon them — prior to the replies of interested parties. — Is this the right moment to define a strategy for the introduction of UMTS or would regulatory action today be premature? — Is there a consensus in Europe on the notion of UMTS or third generation mobile communications? it be a single technology, or a number of Will interoperable solutions based on different tech- nologies? — 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’? (6) Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions — EU Action Plan: Satellite communications in the Information Society — COM(97) 91 final. (7) OJ C 355, 21. 11. 1997. 9. 3. 98 EN Official Journal of the European Communities C 73/111 2. 4. The Commission requested all interested parties to submit their views by 15 July 1997 but this date was deferred to September at the request of the Telecommuni- cations Council. — Adoption of UMTS Decision early: 1999; — Mandate to ERC (1) on further spectrum allocation: February 1999; The second Commission communication 2. 5. (October 1997) 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 licences and certainty that radio frequency spectrum will be 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 develop- ment of UMTS and thus help preserve the competi- tiveness of European industry. At the same time, Member States and operators felt 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. The Commission communication addresses the 2. 6. following key issues: — Industry and administration views on core and regulatory issues. — Commission assessment of areas of consensus and issues for further discussion. — Orientations for public policy objectives, recommen- dations for further action and proposed targets, action plans and timing. The Commission proposes the following Action 2. 7. Plan and timetable: — WRC-97: preparation of agenda WRC-99 (to include UMTS spectrum allocation): October 1997; — Council Resolution on present Communication set- ting out the political priorities: December 1997; — MRA (2) negotiations: continuous; — WRC-99: extension of UMTS spectrum allocation: October 1999; — Review of telecommunication regulatory environ- ment: end 1999. 3. General comments The Committee welcomes the Commission com- 3. 1. munications as a necessary step paving the way towards a European policy for the establishment of UMTS. The Committee is pleased that the second communication was issued in time for the Committee to be asked and able to comment. 3. 2. The Committee agrees with the Commission’s position (stated in its first communication) that a clear and stable picture of UMTS is needed before it will be possible to define fully what actions may be required at a European level to make a positive contribution to the future development of mobile and wireless technologies. 3. 3. The second Commission communication is a welcome contribution towards two essential objectives, namely the identification of the industry’s position and the setting out of a timetable and the actions creating ‘a favourable environment’ for UMTS. The Committee endorses the main areas of consensus identified by the Commission in this communication. The detailed comments in Section 4 expand on certain of those areas of consensus. 3. 4. The communications acquire increasing import- ance in the light of the technological developments which make the transition to the environment of personal communication services possible to forecast. In its Green Paper on Mobile and personal communications (3) the Commission defined personal communication services (‘PCS’) as ‘person-to-person calling independent of location and the terminal used, the means of transmission (wired or wireless) and/or the choice of technology’. 3. 5. Europe’s success in launching and establishing the GSM system can be ascribed to the timely and adequate coordination and cooperation between the industry and the EU public authorities. The Committee — Proposal of a UMTS Decision on spectrum and licensing conditions: January 1998; — Implementation of 5th Framework Programme for Research and Development: 1998; (1) European Radiocommunications Committee (ERC). (2) Mutual Recognition Agreement (MRA). (3) Towards the Personal Communications Environment: Green Paper on a common approach in the field of mobile and personal communications in the European Union — COM(94) 145 final, III, 1. 7. , p. 15. ESC Opinion: OJ C 393, 31. 12. 1994, p. 64. C 73/112 EN Official Journal of the European Communities 9. 3. 98 urges the adoption of an equivalent approach to the issues attached to the transition to UMTS. The success of GSM is also due 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 more than 200 operators running or building a network, the majority of them outside Europe. 3. 6. The importance of the mobile communications manufacturing industry to the European economy, competitiveness and employment must not be over- looked. European GSM equipment manufacturers enjoy a leading position world-wide and it is imperative Europe’s lead in this industry should be maintained with UMTS. 3. 7. The Committee is also aware that Europe’s success with GSM has alerted the rest of the world to the size of the market for mobile and wireless telecommunications and that those who ‘missed out last time’ will be making every effort to ensure that this does not happen again. Thus it is highly likely that aside from the resolution of technical issues, the market strategy and international alliances of the major European mobile equipment companies will play as big a part in the global development of UMTS. A strong home market would seem to provide the best conditions for European industry to compete in other parts of the world. 3. 8. As the wireless information society market becomes increasingly global, R&D, development manu- facture and other investment decisions will be made, more and more, on the basis of worldwide business strategies. Since the market, especially in Asia and the Pacific area is expected to grow even faster than in Europe, European manufacturers must take all of this into account. 3. 9. In response to the second communication, the Committee considers that EU policy must support the competitiveness of European-owned industry but also will need to guarantee the continuation of the European single market by ensuring the benefits of European-wide roaming provided by the GSM technology will continue in the wireless information society. 4. Specific comments The following expand on the main areas of 4. 1. consensus identified by the Commission. 4. 1. 1. Frequency spectrum. A decisive factor in the successful introduction of UMTS is the allocation of adequate frequency spectrum. The Committee agrees with the Commission that sufficient radio spectrum, to be pursued in the context of the CEPT and within the WRC (1) mechanism, must be made available to enable UMTS to develop as the market demand grows. In addition it is essential to ensure that sufficient spectrum remains available during the transition from GSM, DCS-1800 and PCS-1900 second generation systems. Frequency bands allocation. There is a need to 4. 1. 2. study what is the appropriate mechanism for the allocation of frequency spectrum. Should this be done by auction? If so, is there any risk of outcomes which might adversely impact on the public interest, in particular the competitive structure of the market? Licences. The Committee considers that action 4. 1. 3. in this context must respect the industry expectations that the first UMTS services should enter service around 2002, with widespread global availability anticipated around 2005. To meet this timetable, an EU framework should be established to ensure that the NRAs grant licences transparent and non- discriminatory licensing procedures with sufficient lead time starting as early as end of 1998. The Community must ensure also that radio frequencies are allocated in adequate time to operators. through objective, Regulation. Member States will have to take 4. 1. 4. necessary measures to complete the implementation and application of EU legislation and the decisions on frequency issues reached within the European Radio- communications Committee. There is no doubt that the current EU telecommunications framework applies to UMTS. For example, legislation and policy on issues such as licensing, interconnection and roaming cover UMTS just as other fixed and mobile telecommuni- cations activities. However, the question of roaming between UMTS and the existing second generation systems (e. g. GSM, DCS-1800, PCS-1900) needs to be addressed in detail. 4. 1. 5. UMTS Decision. The proposed EU decision on UMTS should help to clarify the legal framework (e. g. licensing and interconnection) for UMTS but it must also extend that framework to include roaming and certainty of radio frequency spectrum availability. 4. 1. 6. Standards. Open standardization will be para- mount for the success of UMTS on a global basis. Cooperation between Commission and EU Member States, and with the relevant organizations both at European and international level, should aim to ensure that the EU adopts a single approach to UMTS, (1) World Radio Conference. 9. 3. 98 EN Official Journal of the European Communities C 73/113 thereby promoting the prospects for the widest possible acceptance of that approach on the global market (1). The standardization process must involve full partici- pation of all major industry players representing the manufacturing and operator interests to minimize intel- lectual property problems. ETSI bears the responsibility for establishing 4. 1. 6. 1. the UMTS standard as a member of the ITU IMT2000 family and must resolve European needs in a global context. Therefore ETSI must adopt a common, open and internationally competitive air interface with a view to its global application. Whilst flexibility of the UMTS standard, as defined by ETSI, would be an advantage, it will need to be tempered by the requirement that the standard is well enough defined to give UMTS operators confidence that it will be available from a wide variety of manufacturers and that all equipment will be inter- operable. ETSI open standards will minimize the risk of multiple standards fragmenting the European market. This approach will also minimize the risk of market fragmentation involved in the use of multi-mode hand- sets with multiple air interfaces — not a preferred idea (due to possible technical difficulties and high costs). 4. 1. 6. 2. It is difficult to see how competition amongst standards (within the UMTS spectrum bands) could work without de-stabilising the European market. The experience of the US and its competing standards would seem to bear this out. It has been generally accepted that one of the key factors in the success of GSM has been the stability of the standard and the large number of manufacturers supporting what is to a large extent an open standard. Competition between standards would invariably mean proprietary standards, which have the major draw-back (as perceived by an operator and his financial backers) of locking an operator to one manufacturer for many years. 4. 1. 6. 3. UMTS is expected to bring about a much greater convergence of the telecommunications and IT industries. In this respect, greater participation of the IT industry in the standardization process is highly desirable. 4. 2. R&D. The Committee supports the proposal to pursue R&D support on technical solutions needed for UMTS within the Fifth Framework Programme for Research and Technological Development (1998- 2002) (2). 4. 3. Competitiveness. The development of UMTS should be led by industry. R&D objectives for an EU policy for UMTS ought to be set through close cooperation between the Commission and industry. The nature of UMTS is expected to facilitate the development of small service providers, hence promoting competition. However, EU competition law must be applied to prevent incumbent fixed and mobile operators from creating barriers to entry in the emerging UMTS markets. Societal 4. 4. issues. UMTS should increase avail- ability of choice and lower priced services, making the advantages of advanced telecommunications facilities available to the mass market. But beyond the traditional areas, UMTS will stimulate and make possible new economic activity including tele-working, telematics and electronic commerce. These should assist the raising of economic activity in rural areas, as well as facilitating the implementation of environmental policies. The development, construction, and operation of UMTS will create enormous job opportunities throughout Europe and provide substantial export opportunities. Other societal issues will include those relevant in the telecom- munications sector generally, and mobile in particular: data protection, encryption, fraud and other criminal activities, universal service obligations, physical, and human environmental concerns (including health). In particular, when introducing new technologies, pro- ducers should give careful consideration to their suit- ability, wherever possible, for use by those with disabili- ties, such as hearing difficulties. Early solution to such issues will contribute to the creation of a favourable environment for market growth. 4. 5. The future. The second Commission communi- cation contains an overview of recommended actions and time-frame: The Committee agrees with and supports the plan for Community action (see paragraph 2. 6) and awaits the Commission’s concrete legislative proposals. (1) Already the top four European suppliers of mobile equip- ment (Ericsson, Nokia, Siemens and Alcatel) have given public support for a new common European platform for UMTS to be standardized by ETSI. (2) Fifth Framework Programme for Research and Technologi- cal Development (1998-2002) — Commission Working Paper on the Specific Programmes: Starting Points for Discussion (COM(97) 553 final). Brussels, 11 December 1997. The President of the Economic and Social Committee Tom JENKINS