Mobile Phones - The Next Generation: Competition the key to the future

DTI Press release - 6 May 1999

Competition in the UK mobile telecommunications market is set to increase as a decision to auction five third generation mobile telephone licences, with a larger licence reserved for a new entrant, was confirmed by DTI Telecoms Minister, Michael Wills today.

In paving the way for at least one new network operator, the Government also confirmed preparations to provide new entrants with the right to roam onto at least one second generation network.

Increased competition in the mobile telecommunications market is expected to lead to significant benefits for consumers, including lower prices and the faster rollout of more innovative services. Third generation mobiles will allow users to surf the internet, rapidly download e-mails, music and high quality pictures, and even hold videoconferences on the move.

Michael Wills said:

"Customer demands for ever more sophisticated mobile communications are increasing at a rapid pace. Home shopping, high speed internet access and video-conferencing on the move are just a small sample of the entertainment and information services that could be provided by the next generation of mobile phones.

" The UK must continue to play a leading role in this fast moving and rapidly developing mobile telecommunications market. Government, mobile phone operators and manufacturers must all look to the future now to ensure that we have a flourishing and competitive market for the next century."

"As Secretary of State for Trade and Industry Stephen Byers made clear in his post budget statement, competition is a key driver of innovation and enterprise and the best way to bring real rewards for consumers.

"This is why, following extensive consultation and careful consideration, we have decided to offer five third generation licences by means of auction. The prospect of one or more new operators and the increased competition and innovation that this will bring is good news both for the economy and consumers in the UK."

 Notes For Editors

1. The announcement of the decision was made in response to a Parliamentary Question from Ian Pearson MP (Dudley South). A copy of the Parliamentary Answer is attached.

2. The announcement by Michael Wills that following careful consideration of the industry’s responses to consultation the Government has decided to offer five licences and to proceed with preparations for roaming makes the entry of one or more new operators into the UK mobile telecommunications market almost a certainty.

3. In February 1999, Michael Wills, announced that plans for a UK 3G licence auction were well advanced, but that further consultation with industry was needed on two measures to allow new entrants to compete:

the offering of five licences (one more than the existing number of mobile operators) with a larger licence reserved for a new entrant; and

the terms and conditions of roaming agreements to allow the customers of new entrants to use the second generation networks of existing operators until new entrants’ networks are established. Roaming is the use by a customer of one mobile operator of another mobile operator’s network to make or receive a call – usually because the customer is out of range of his home network.

4. Consultation papers on alternative ways of packaging the radio spectrum for five licences and on draft terms and conditions for roaming were issued to the UMTS Auction Consultative Group (UACG), the Government’s consultative group for the auction, in March. Two options for spectrum packaging were proposed. Following consideration of consultation responses the Government will offer three licences for 2x10 MHz paired spectrum plus 5 MHz unpaired spectrum, one licence for 2x15 MHz paired spectrum, and one licence of 2x15 MHz paired spectrum plus 5 MHz of unpaired spectrum which will be reserved for a new entrant.

5. Set up in March 1998, the UACG has over 70 organisations as members, including the key industry players and others who will play a direct role in establishing 3G services. UACG papers and further information about the auction and third generation mobile telecommunications are available on the RA’s website which is at:

www.radio.gov.uk

6. Existing operators will need to accept an amendment to their Telecoms Act licences to incorporate a roaming condition as a precondition of being able to bid in the auction for a third generation licence. The Director General of Telecommunications will shortly commence the necessary statutory consultation on the amendments.

7. The consultation document, "Multimedia Communications on the Move" published on 31 July 1997, set out detailed proposals for licensing third generation mobile networks. One of the main proposals was that licences for third generations spectrum should be awarded by auction.

8. In May 1998, taking account of industry responses, Barbara Roche, the then Telecoms Minister, announced the Government will allocate licences by auction. (ref. PN/393/98). The auction is expected to take place in the second half of the 1999/2000 financial year.

9. First generation networks provided simple analogue voice telephony; whilst second (current) generation adding some data services like fax and email to basic voice service, with higher rate data capabilities expected over the next few years. Third generation services will provide high speed, high quality, interactive services on the move.

A. (Mr Wills) Following extensive consultation and careful consideration the Government has decided to offer five third generation licences by means of auction. The licences will comprise three of (2x10)+5MHz, one of 2x15MHz and one of (2x15)+5 MHz. The largest will be reserved for a new entrant. It believes that this will most effectively allow the benefits of third generation to the UK economy and consumers to be realised. In particular, it is convinced that these benefits are most likely to be maximised by encouraging market entry and competition.

The Director General of Telecommunications will shortly issue for statutory consultation draft amendments to existing public mobile operators’ Telecommunications Act licences which are intended to provide any new entrants with the right to roam onto at least one second generation mobile network.

The Government continues to expect that, subject to market and other developments, and to final decisions nearer the time, the auction will take place in the second half of the financial year 1999-2000.

  Top