3G UMTS Licenses To Be Auctioned

The Government has decided to ease the license conditions for establishing and operating the third generation mobile telephony, UMTS. I want more independent operators to enter the Norwegian mobile market. Increased competition will give consumers better and cheaper mobile telephony services, says Minister of Transport and Communications, Ms. Torild Skogsholm ( inset )

Today the Government in Council motioned a White Paper regarding mobile communications supplementary to a White Paper motioned in May 2002. The supplementary White Paper is issued primarily due to the international development in this area, such as delays regarding equipment and various difficulties concerning the roll out of the infrastructure. In Norway two of the original four licenses for the establishing and operating of UMTS are currently vacant.

- The Government wants to facilitate efficient and sustainable competition in the mobile telephony market. In order to obtain this the business conditions must be suited to attract more competing operators in the mobile market, says the Minister.

In order to obtain necessary interest for the available UMTS licenses the Government suggests that the minimum conditions for coverage and roll out frequency encompasses UMTS coverage to 30 per cent of the population within six years from granting the licenses. Last time the licenses were awarded in December 2000, the minimum conditions stipulated UMTS coverage for 12 defined urbanisations (approximately 40 per cent of the population) within five years from granting the licenses. The remaining conditions from the UMTS licenses awarded in the autumn of 2000 are upheld. This implies that new licensees shall pay a yearly frequency fee and that the minimum fee will be 200 mill. NOK per license.

The Government has decided to tender the two UMTS licenses as soon as possible, and for the licenses to be distributed by auction.

The Government suggests that the two remaining UMTS licensees Telenor Mobil AS and NetCom AS are given a 15 months’ postponement regarding the licenses’ obligation concerning roll out requirements. This implies a 15 months’ extention on all roll out time limits. Provided the licensees want to make use of this extention, a compensatory fee will have to be paid towards the State. The price of the compensation will be set by the telecommunications regulatory bodies.

In order to facilitate the development of competition in the mobile market the Government also considers the possibility of mandatory national roaming between UMTS networks. Roaming implies that mobile network operators agree to using each others’ networks. As stated in the White Paper, demanding national roaming between different UMTS networks will be considered when the roll out of the UMTS is accomplished according to the license conditions. A possible decree regarding national roaming will be issued according to regulations in the forthcoming regulatory framework for electronic communications.

Sustainable competition in the mobile market – resellers and the role of the State
The long term political aim is to facilitate sustainable competition in the mobile telecom market. Developing sustainable competition is a precondition to gradually wind up the sector specific regulation of the mobile market, in order to be replaced by the general competition regulatory system.

- The starting point to obtain such sustainable competition is better in the mobile market than in several other parts of the telecom market, says Minister of Transport and Communications, Ms. Torild Skogsholm.

Until sustainable competition is established, the sector specific telecom regulatory system will promote the development of operators not depending on particular arrangements provided by the State regarding so called “Significant Market Power operators”.

- The state’s role in the liberalised market must become more explicit. The primary responsibility is to help strengthening competition between mobile operators and survey the proper functioning of the competition. This will in turn result in a market developing, with real competition and new, better, and cheaper services. Resellers who wish to compete with mobile operators will represent a supplement to these operators. They will increase the consumers’ possibilities to choose between various mobile service providers, says Ms. Torild Skogsholm.

The Government is of the opinion that mobile operators with significant market power should have a duty to give other operators and resellers access to existing mobile networks. Such an obligation will still be an important means to increase competition in the market, and give consumers greater choice. However, the State through their intervention in the market must encourage enterprises which contribute to a more effective mobile market and make the state’s sector specific regulations superfluous.

- For a simple renting arrangement between a reseller and a mobile operator this implies that access conditions must compensate the operator in an economically justifiable way. This includes that basic demand, cost and risk factors in the sector must be reflected in conditions and prices, in order for both parties’ investment motives to be upheld. Provided the access regulations are executed in order to protect operators without the capacity or willingness to invest, the social costs will soon outweigh the benefits and lead to disadvantages for Norwegian consumers, says The Minister.

- Resellers who do not invest to become more independent of the network owners, will to a large extent depend on competing based on the State’s ruling of the market. The intention of the liberalisation process is not to create “managed competition” by making resellers permanently dependent on a regulated access to other operators’ investments, says Minister of Transport and Communications, Ms. Torild Skogsholm.

450 MHz frequencies to be tendered in 2003
The Ministry of Transport and Communications and the Norwegian Post and Telecommunications Authority will cooperate in order to tender the license to use the 450 MHz frequencies in 2003. The 450 MHz frequencies are currently used for operating the analogue mobile communications system NMT 450. The NMT 450 system has a large geographical coverage, including at sea. Telenor Mobil AS is granted a license to operate the NMT 450 system until December 31, 2004. In order to obtain continuity of the frequency usage of the 450 MHz band the frequencies will be tendered in 2003.

- Compared with the GSM and UMTS networks, the frequency resources in the 450 band are particularly well suited to obtain geographical coverage in sparsely populated rural areas. The Government is therefore concerned with obtaining a realistic way to exploit these frequencies, in order to reach the best possible geographical coverage. This is in accordance with the political aims for good quality services which also are reasonably priced, throughout the country, says Ms. Torild Skogsholm.