UPDATE: EU Wants Wider Use Of Low-Frequency Radio Spectrum
BRUSSELS -(Dow Jones)- A 1987 European Union decree which reserves cheap, low-frequency radio spectrum exclusively for GSM mobile phone services should be abolished, the European Commission said Wednesday.
Instead, telecoms companies should be able to use these cheaper frequencies for "next-generation" services such as voice, music, video and data streaming and high-speed WiMax Internet access on mobile devices.
Brussels' proposal Wednesday illustrates the larger global push to liberalize the use and distribution of radio spectrum. With new mobile technologies - also known as "next generation" services - breaking onto the market and onto consumers' shopping lists more and more quickly, permission to use the lower frequencies would help operators offer these services sooner and more cheaply.
"Radio spectrum is a crucial economic resource," said Viviane Reding, the E.U.'s Telecoms Commissioner. "We must therefore remove regulatory barriers and facilitate the deployment of mobile communications by allowing new technologies to share spectrum with existing ones."
The low frequencies in question - between 900 and 1,800 megahertz - can carry signals across greater distances using less infrastructure than higher frequencies, making them ideal for mobile operators looking to cover more ground without dramatically increasing their capital expenditures.
Granting access to these frequencies for any and all mobile services will cut the costs of running a wireless network by 40% in the next five years for the telecom industry, the commission predicts.
E-Plus, the mobile unit of Dutch Royal KPN in Germany, has estimated that if it runs its 3G network over 900 MHz it could save up to EUR300 million in operating costs.
"Generally, this is a favorable development for the industry - lower frequency spectrum is very valuable in that it allows you to propagate wireless signal over greater distances with less infrastructure," said JP Morgan telecom analyst Hannes Wittig. He said the move should eventually lower the costs of new multimedia telecom services, especially in rural areas, which typically aren't yet covered by the latest wireless infrastructure.
Limiting these key frequencies to GSM services back in 1987 helped the E.U. roll out mobile phone services cheaply and quickly, the commission said. However, the rule is now "out-of-date as it prevents more advanced, next-generation wireless technologies from using the spectrum," the commission said in a statement.
After Wednesday's proposal, the move will have to be approved by national telecom ministers and by the European Parliament. The commission expects the measure to be passed into law by the end of the year.
The proposal is part of the E.U.'s greater push to free up the market radio frequencies so that telecom operators can respond to booming demand for high-tech, multimedia mobile services.
"That is the general trend - to make the way we deal with spectrum much more flexible," said Amsterdam-based ABN Amro portfolio manager Philippe Kiewiet de Jonge. "Consumers want to be able to buy a device where any functionality can work on any spectrum that's available."
In October the commission is expected to call for radio spectrum to be auctioned on the free market. Currently, most E.U. countries' spectrum is controlled by national regulators who decide which agencies may use them, and what they may use them for.
The liberalization will increase competition and help speed the rollout of these "next generation" services, which are expected to make up a quarter of Western European operators' revenue for 2007 - double their share in 2006, according to London-based Strategy Analytics telecom analyst Phil Kendall.
"It's moving pretty fast, it's definitely the most dynamic part of the market," Kendall said.
Prying open the European spectrum market is still a challenge in the E.U., however. Tight control of spectrum by national regulators has created uneven access to spectrum in most E.U. countries, where not all mobile network operators can access the low-frequency spectrum. National regulators are already considering ways to reallocate access to spectrum so that all operators could benefit from the E.U.'s liberalization push, sector analysts said.
-By Anne Jolis, Dow Jones Newswires; +32 2 741 1488; anne.jolis@dowjones.com
(Joon Knapen in Berlin contributed to this report.)
(END) Dow Jones Newswires"
Posted to the site on 25th July 2007