Mobile Phones – The Next Generation

DTI press release - 23 June 1999

Michael Wills sets out vision for Third Generation Mobile Telecommunications

Mobile phones which will allow users to surf the internet, rapidly download e-mails, music and high quality pictures, and even hold videoconferences on the move, was brought one step closer today.

Telecoms Minister Michael Wills launched a Preliminary Information Memorandum outlining the Government’s plans to auction spectrum licences for Third Generation mobile network operators early next year.

In the Memorandum, Mr Wills set out the Government’s vision of the opportunities offered by a new generation of mobile technology, and challenged the industry to realise its full potential. He confirmed the Government’s commitment to increasing sustainable competition in the mobile market by encouraging prospective new entrants to participate in the auction.

Mr Wills said:

"Third Generation will enable data transfer rates up to 200 times faster than current mobile phones. It is a major leap in mobile communication technology. The UK must continue to play a leading role in this fast moving and rapidly developing mobile telecommunications market.

"Competition will deliver the benefits of Third Generation faster than Government intervention ever could to business, to the consumer, and to the economy. The Government is determined to increase sustainable competition in the mobile market by attracting at least one new entrant. New entrants will bring innovation and enterprise, fresh ideas and a new approach.

"If the industry introduces their Third Generation networks quickly, it will create opportunities for British companies to export the products and skills that will develop on the back of a vibrant and competitive home market.

"The challenge for the industry is to realise the vision – to use the capabilities of Third Generation technology to provide new and innovative services that bring real benefits and that people will want."

Notes For Editors

1. In early 2000, the Government plans to auction spectrum licences for operators of Third Generation networks. Although spectrum auctions have been used widely overseas this will be the first in the UK.

2. The Preliminary Information Memorandum published today by Michael Wills gives an overview of the auction process and the opportunities offered by Third Generation mobile technology. It contains details of how to register for a full Information Memorandum which will contain further background and describe the auction rules. The Information Memorandum is expected to be published in September.

3. The Government has committed to providing the right framework to enable one or more new entrants to compete in the mobile telecommunications market. Increased competition is expected to lead to significant benefits for consumers, including lower prices and the faster roll-out of more innovative services. Several companies have expressed an interest in bidding in the auction.

4. In offering the licences by auction the Government is opening the opportunities of Third Generation to the widest possible range of individual companies or consortia from all sectors including broadcasters, telecomms companies, multimedia content providers and retailers. Prequalification for the auction will be simple and will not involve a technical test.

5. Two measures to enable new entrants to compete were announced by Michael Wills on 6 May (ref: PN/99/378). First, the offering of five licences (one more than the existing number of mobile operators) with the largest licence reserved for a new entrant. Second, the mandating of roaming agreements if they cannot be reached through commercial negotiation. 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. The Government has made it clear that they expect roaming to take place on a commercial basis and that Second Generation operators should make a fair return from roamed traffic.

6. Existing Second Generation operators will need to agree to 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. This modification will not oblige Second Generation operators who do not win a Third Generation licence to offer roaming. Nor will Second Generation operators who do not bid for a licence be obliged to offer roaming. The Director General of Telecommunications has commenced the necessary statutory consultation process on the amendments. Judicial review proceedings, which challenge the validity of the Government’s decision to require such a precondition, have been initiated by One 2 One. The Government continues to believe that to include such a precondition would be lawful, and has confirmed its intention to seek an early ruling by the courts to avoid delaying the auction, should One 2 One continue with its action.

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 Generation 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).

9. The framework for auction was set after detailed consultations with the industry through a consultative group, the UACG. Set up in March 1998, the UACG has over 70 organisations as members, including the key industry players and others such as potential content providers, who will play a direct role in establishing 3G services. UACG papers and further information about the auction, Third Generation mobile telecommunications, and a copy of
the Preliminary Information Memorandum are available on an RA website which is at:
http://www.spectrumauctions.gov.uk

10. 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.

11. 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.

Preliminary Information Memorandum Full Document available from Spectrum Auctions.

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