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UMTS Forum attacks spectrum liberalization

From "UMTS Forum Attacks Spectrum Liberalisers" by Iain Morris, Telecom Magazine, 27 November:

"Liberalising European spectrum will stifle the growth of the region's mobile communications markets, says a new report commissioned by the UMTS Forum.

"According to report authors at Booz Allen Hamilton, the impact of scrapping the existing regime - whereby spectrum usage is 'harmonised' [for specified technologies] - could be the loss of up to €244 bn in revenue. With continued harmonisation, says Booz Allen Hamilton, overall user penetration by 2020 will be 37 percent more than it would be if liberalisation were adopted, and customers will also benefit from lower prices and better-quality services.

"The report is published as debate within the EC intensifies over the merits of liberalisation versus harmonisation. The current set-up is characterised chiefly by pro-active regulation that ensures particular spectrum bands are reserved for certain technology standards. Its critics in the liberalisation camp... say a [technology neutral] market-driven approach would open the playing field to innovative start-ups marketing new technologies.

"As an example, the 2.3GHz and 2.5GHz bands have been set aside for use by 3GPP technologies under spectrum harmonisation. Liberalisers would like to see those bands made 'technology agnostic', which would allow them to be used by future operators of mobile WiMax networks.

"The UMTS Forum takes the view that liberalisation would lead to interference, lower economies of scale and less focused investment in R&D.

" 'In a harmonised environment - as has already been demonstrated by the overwhelming success of GSM - end users benefit from an increased pace of innovation and a greater choice of feature-rich terminals and services,' says UMTS Forum chairman Jean-Pierre Bienaime. 'The net result is a larger market size, with scale effects that impact positively on subscribers and operators alike.'

"Booz Allen Hamilton's report claims that mobile penetration in the US lags behind that in Europe partly because the American market has moved increasingly towards liberalisation - allowing TDMA, GSM and CDMA to compete in the same spectrum bands - whereas European authorities have mandated the use of GSM only. At the time of writing, mobile penetration in the EU-15 countries is nearing saturation, while in the US it stands at around 70 percent.

"Over time, argue the report's authors, the introduction of liberalisation in Europe could drive up the price of handsets by around 30 percent as a result of reduced scale and interference management costs, while they estimate that radio infrastructure costs could rise by the same percentage in a liberalised environment.

"Despite the report's conclusions, it will not discourage the liberalisers from pushing for less regulatory involvement at the spectrum level. They continue to argue that harmonisation delays the introduction of new end-user services, erects barriers to market entry for smaller competitors and leads to the underutilisation of available spectrum."

[Spectrum - 1 December 2006]