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ITU 03: Regulation more critical than ever to 3G's success
Who's been to Brussels then?

By Tony Hallett

Published: Thursday 16 October 2003

Renegotiating 3G licensing terms would appear to be a way of making sure the technology doesn't cripple the telecoms sector. But the process has to be done well and that means sophisticated regulation, as Tony Hallett finds out...

It is no surprise that a number of mobile operators want their licensing senses commuted. silicon.com and others predicted that much over a year ago and now we hear leading telco bosses have been to Brussels hoping to find sympathetic ears.

No one is going to get any money back, we can assume that. Instead operators are looking for more favourable licensing terms. At the big quadrennial telecoms shindig in Geneva this week, the benefits and challenges of deregulating and regulating markets was a hot topic

For their part, operators and even most equipment giants - prone to vendor financing deals as they were - are not trying to blame the telecoms bubble on others.

Craig Ehrlich, chairman of the GSM Association, said: "I'd like to offer a mea culpa. Operators failed to set the agenda."

He notes - speaking for many operators - that bankers, manufacturers and policy-makers all sensed an opportunity but added: "We didn't have a single voice."

Bosco Eduardo Fernandes, a VP the UMTS Forum, put it simply: "We're all to blame for the dilemma we're in right now."

But of course the pressing question is what to do now? The main response seems to be calling for regulators to be more flexible and more sophisticated.

Professor Christian Bovet, from the University of Geneva, said: "The market is not always immediately clever or wise. Regulators must be pragmatic not dogmatic. They should have the opportunity to adapt the licences over time."

And that seems like exactly what most will do. There is need for harmony internationally - cue the involvement of the EC - because regulators in certain countries helping certain players more than their equivalents elsewhere would lead to all types of accusations about unfair competition.

Equipment providers are also aware the right regulatory framework will lead to more competition and - their goal - more sales. That's why we hear top brass such as Nortel CEO Frank Dunn placing at the heart of his strategy one key point - "regulators have to change quickly". Or Sean Maloney, executive VP and GM for Intel's Communications Group, talk about the importance of properly regulating the use of spectrum.

The good news is that regulators do seem to be showing flexibility and that flexibility isn't likely to be at the expense of what users can ultimately expect, services-wise.

A lot of eyes right now are on the creation of Ofcom in the UK. (It's the reason Ofcom CEO Stephen Carter was recently voted a silicon.com Agenda Setter.) Lord Currie of Marylebone will serve as that body's chairman and he this week said that in his organisation - which brings together telecoms, radiocommunication and television agencies - we "will not find silos".

Clearly when there is talk about more flexible regulation it must take into account one sector's affect on another. It's no good cutting the mobile world some slack if fixed line operators turn up, cap in hand, three years down the line.

Still ahead of Ofcom officially taking the reins, Currie said: "We have a converged regulatory [body] even though convergence is not yet completely on us."

And though Ofcom is in the spotlight it isn't the first regime of its type in the world. Malaysia has operated a regulatory regime segmented horizontally (by facilities, services and applications) rather than vertically (by telecoms, TV, internet and so on) since 1999. The results have been good and include the recent allocating of 3G mobile licences.

So the signs are encouraging. The UK's Minister for Ecommerce and Competitiveness Stephen Timms spoke this week about the benefits deregulation has brought around the world, driving down prices and raising teledensity while trying to keep markets fair. The challenge now is taking that to the next level. For the success of a Malaysia or the promise of an Ofcom there are failed regimes in some countries.

Specifically on 3G it would seem everyone is realising that if the operators lose, everyone loses. The last word goes to the professor who was among those with the least distance to travel to the Geneva show. Bovet said of licence renegotiations: "We are reaching this situation. But I must emphasise it is 'when necessary'."