The European Commission will intervene on Thursday in the growing crisis over the roll out of high-speed mobile services.
The high price paid for third generation mobile spectrum has left telcos with huge debts and the current despondent tech market has meant many of them will have to delay roll out of services. Experts have questioned whether they can afford to pay for infrastructure costs given the huge bill for licenses and there has been calls for governments to pay back some of the money they have claimed from the auction of spectrum.
In response, the EC has adopted a policy document entitled "The Introduction of Third Generation Mobile Communication in the European Union: State of Play and the Way Forward". In it the Commission reviews the current situation regarding 3G in Europe and seeks to reassure critics. "As with any transition, there is some uncertainty," said Erkki Liikanen, European Commissioner for the Information Society, on the move from GSM to 3G. "We have to remember that 3G is built on very strong foundations -- in the foreseeable future it is the only viable, widely-supported common platform for all wireless applications." He pointed out that "new content and new services" will be key to the success of 3G.
The Commission is calling for the rapid introduction of regulatory frameworks for e-communications and radio spectrum policy in member states, and also calling for greater co-ordination between countries on how spectrum is allocated. It promises to continue work towards creating an environment conducive to the success of wireless applications and content. Finally, the Commission intends to set up a dialogue with telecoms operators and equipment manufacturers to explore the issues surrounding 3G roll out.
Some Brussels commentators believe the Commission will have to get tough on governments, persuading them to defer the payback of license fees and forcing operators to share infrastructure costs if it wants to prevent delays in the roll out of 3G services.
Declan Lonergan, an analyst at Yankee Group, believes the Commission has embarked on a damage-limitation exercise but is not convinced about its power over governments. "The EC's primary concern is to ensure there isn't a crisis in the wireless market," he said. "They are looking at ways that operators can protect their investments and trying to influence governments to defer payments. I am quite sceptical about whether governments will comply."
According to Lonergan, Europe is divided over whether telcos should be allowed to share infrastructure costs. "Some regulators -- certainly Germany -- seem to stamp on it saying it contravenes license agreements," he said. "Scandinavian countries are more open to the idea." Lonergan believes a sharing of costs is technically feasible but he "would be very surprised" to see such a solution introduced in the UK.
Although delays in rolling out networks are inevitable, Lonergan remains optimistic about the future of 3G operators. "They are quite realistic about payback and are looking at between six and ten years to make a profit," he said.
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