Public Consultation

on

the Introduction
of UMTS in France

February 1999

Public Consultation on the Introduction of UMTS in France

Introduction

	Universal Mobile Telecommunication Systems (UMTS) are third-generation mobile and wireless telecommunication systems capable of providing high-speed multimedia services to the general public.

The French telecommunications regulatory authority seeks views and comments from  all players in the IT&T industry, in order enhance its understanding of the implications of UMTS, and enable it to prepare for the introduction of UMTS in France.

	International Context

	UMTS will operate in the spectrum reserved by the 1992 World Administrative Radio Conference for International Mobile Telecommunications 2000 (IMT-2000).

	The European Parliament and the Council of the European Union adopted a decision on the introduction of UMTS in Europe, on 14 December 1998.  This decision lays down the following requirements:

“Member States shall take all actions necessary in order to allow, in accordance with Article 10 of Directive 97/13/EC, the co-ordinated and progressive introduction of the UMTS services on their territory by 1 January 2002 at the latest and in particular shall establish an authorisation system for UMTS no later than 1 January 2000.”

	Hence, preparations for the introduction of UMTS in France need to be made during 1999.

	Regulatory Landscape in France

	The French Telecommunications Act of 26 July 1996 states when the number of licences awarded may be limited.  It also sets out the powers of the respective telecommunications administrative bodies, should such a case arise.

	For instance, under article L.33-1 V of the posts and telecommunications code:

“ The number of licences may be limited owing to technical restrictions due to the scarcity of frequencies.
	In this case, the telecommunications minister publishes the arrangements and conditions for issuing licences, on the advice of the telecommunications regulatory authority (ART). ”

	The comments received during this public consultation will help ART to draft its advice to the telecommunications minister.

	This public consultation is also the opportunity to find out how many players may be interested in obtaining a UMTS operating licence in France.

	The comments received shall be used for informational purposes alone, and shall not commit the respondents in any way.   Only the number of players interested shall be disclosed, as ART is aware that at this stage, some respondents may wish to remain anonymous.

	Work under way within the Radiocommunications Consultative Commission

	This consultation is a continuation of the work undertaken within the French Radiocommunications Consultative Commission (CCR). The CCR presented a report on the introduction of UMTS in France to the telecommunications minister recently. The working group that drafted the report convened between March and September 1998, and was chaired by Mr Philippe Dupuis, the former chairman of ETSI's SMG committee.

	The CCR report recommends that the public authorities take a series of regulatory measures to prepare for the introduction of UMTS systems in France.  However, on several points, the CCR have chosen to simply present the pros and cons of the scenarios analysed, rather than to make recommendations.

	Indeed, CCR members felt that the debate should be widened to give all market parties the opportunity to voice their individual views on the subject.  Consulting the entire sector would be a means of studying the pending issues in greater depth.  One of the aims of this consultation is to fulfil that purpose.

	For the sake of brevity, the information provided in the CCR report, which is mentioned here, has not been repeated in this document.  ART invites those interested in this consultation to read the CCR report, which can be accessed on ART's web site:  http://www.art-telecom.fr/publications and also on the web site of the telecommunications ministry:  http://www.telecom.gouv.fr

	Organisation of the Public Consultation

	The public consultation document is divided into two parts. The first part deals with the overall implications of UMTS, and studies in depth the issues raised within the CCR/UMTS group - such as the types of services that will make UMTS a success, and the role of the various players concerned.

	The second part invites players’ views on issues directly associated with UMTS licensing.

	Comments on the introduction of UMTS in France should reach ART by midday on 28 May 1999.

	Players are invited to voice their views on points 1 to 37, and also to comment on any other issues concerning the introduction of UMTS in France.

	The responses received will be made publicly available, unless respondents explicitly inform ART that they wish all or part of the information supplied to remain confidential.

	For further information, please contact:  Gilles Crespin (Tel:  33 1 40 47 70 85, Fax:  33 1 40 47 72 06), Head of Mobile Operators, Licensing and Interconnection Division, Autorité de régulation des télécommunications.

PART I : WHAT ARE THE IMPLICATIONS OF UMTS?

I.1 Terrestrial Component and Satellite Component

	UMTS will comprise a terrestrial component and a satellite component.

Point 1 – The rest of this consultation only deals with the terrestrial component of UMTS.  However, ART would welcome comments on how to promote the introduction of UMTS satellite services.

I.2 Type of Services

	The CCR report mentions how difficult it is to pinpoint the services and applications that will guarantee the success of UMTS. It states however that the UMTS systems should distinguish themselves from the GSM, by providing advanced services, in addition to those offered over second-generation networks.

Point 2 - ART welcomes players views on the following questions:
•	Which services and applications will guarantee the success of UMTS networks?
•	What degree of asymmetry will there be in the traffic generated by these services?
•	Who will the users of UMTS services be?
•	What budgetary constraints will these users have with regard to the price of UMTS terminals and services?
•	Will the UMTS services market become a mass consumer market?  If so, over what period of time?
•	Which conditions will enable optimal access to these services throughout the territory?

	On this point, ART hopes to receive contributions from a wide range of players:  telecommunications operators, players from the IT and broadcasting sectors, and users.

	The introduction of UMTS is a fundamental factor in telecommunications/computing/broadcasting convergence and fixed/mobile convergence.

Point 3 - ART would like to receive players' views on the role that UMTS will play in  telecommunications/computing/broadcasting convergence and in fixed/mobile convergence.

I.3 Fragmented Deployment

	It is often assumed that UMTS network coverage will be patchy, at least during the first few years, in comparison with the coverage provided by GSM networks.  The associated standards have therefore been drafted in such a way as to define UMTS as an extension of GSM, enabling the integration of the second and third-generation networks.

	Some predict therefore that future subscribers will be equipped with dual-mode terminals allowing access to all UMTS services in a UMTS coverage area, and access to the same services with the speed and availability offered by GSM networks, in the rest of the territory.

Point 4 - ART invites comments on the difference in coverage in terms of services and data rate offered, and on the complementarity of the second and third-generation networks.

I.4 Technological Developments

	There is growing interest from society as a whole in mobile multimedia services.  ART welcomes comments on the technological developments presented below.

	Terrestrial RF Interface

	The GSM standard is evolving in order to support higher data rates and to introduce new High Speed Circuit Switched Data (HSCSD) and/or General Packet Radio Service (GPRS) technologies. A new RF interface has been developed for terrestrial UMTS, called UMTS Terrestrial Radio Access (UTRA), which is different from the interface used for GSM.

Point 5 - Apart from the considerations regarding fragmented deployment (see the previous point), ART invites players to comment on UTRA's potential in terms of services, new uses and spectrum efficiency compared with GSM developments in this field.

	With reduced mobility, UTRA will probably support a data rate close to 2 Mbit/s, which is similar to that of other subscriber access technologies.

Point 6 - Within the context of increasing fixed-mobile convergence, ART welcomes players views on a) how UMTS will be situated with regard to other terrestrial and satellite technologies used for high-speed subscriber access, and b) what impact this may have on competition and on the stability of certain markets.

	Telecommunications Network Architecture

	A reconfiguration of terrestrial and satellite telecommunications networks is needed, due to current trends and the more-or-less asymmetric, or even unilateral development of services. Internet protocol, both at access level and in the core of the network, is increasingly an integral part of terrestrial and satellite network architectures.  The latest version of the Internet protocol, IPV6, provides specifications on the formats and mechanisms to be used for managing mobility and security.

Point 7 - What would the consequences of introducing the Internet protocol in UMTS networks be, in terms of competition interconnection, addressing, naming, conditional access (etc.)?

	With these developments, non-voice services are increasingly offered over systems using Internet technology, such as the Internet Protocol (IP).  In all probability this trend will continue for the majority of multimedia services provided in the future. UMTS should therefore be capable of interworking with both traditional telecommunications networks and with IP-based networks. 

Point 8 - ART invites comments from sector players on the developments in network architecture that will be needed to support the efficient interworking of UMTS with   Internet, and more generally, with all IP-technology based networks.

	Current telecommunications networks increasingly integrate Intelligent Network (IN) and Customer Applications for Mobile Networks Enhanced Logic (CAMEL) functions. Distributed architectures may even be introduced in the long term.

Point 9 - What developments in network architecture can be expected ? What will the consequence of these be, in economic, competition and regulatory terms?  What impact will they have on the offerings provided by service providers ?

	Mobile Terminals and Operating Systems

	The integration of operating systems and applications within UMTS terminals is a sign of the growing convergence of IT and telecommunications.

	ETSI is currently focusing its standardisation work on network-related aspects (mobility, RF interface, etc.), rather than on external components (terminals, customer/server interfaces, etc.) or on components related to content and service interoperability (multimedia images, data transmission, etc.).

Point 10 – ART invites players' views on the integration of operating systems and applications within UMTS terminals.

How could end-to-end interworking of services be guaranteed between different terminals? How could universal access to data such as multimedia be guaranteed ? 

What steps could be taken in standardisation, both in terms of the user interface and the services provided, in order to support the emergence of UMTS services that meet user demand ?

What consequences could these solutions have, particularly in terms of subscribers’ freedom of choice, competition and market organisation?

	Access to On-line Services

There are specific requirements for access to on-line services from mobile terminals.  Progress is currently being made in the Wireless Application Protocol (WAP) for GSM with the introduction of a browser adapted to mobile systems.

Point 11 - ART invites players’ views on the requirements for access to on-line services and on the position of GSM in relation to UMTS in this field.

UMTS SIM Card

	UMTS will adopt the concept developed for GSM, with the UMTS Subscriber Identity Module (SIM) card.  This card enables independence between the user's terminal and service subscription.  In addition to the security aspects, the SIM card also enables the creation of new services.

Point 12 – With regard to SIM cards, are there any specific security, confidentiality or customer protection requirements for UMTS? How important will the SIM card be for the creation of new services? Will the various functions of the card be separate, enabling the same user to access offerings from several service providers ?

I.5 Role of the Various Players on the UMTS Market

	Network Operators

	From a regulatory viewpoint, it is necessary to distinguish between the network operators that will be granted UMTS frequencies, and the others.

	For the purposes of this consultation, "UMTS operators" means public network operators that will receive UMTS frequency allocations. These players will be subject to the provisions of article L.33 -1 V of the posts and telecommunications code, mentioned in the introduction.

	Service Providers and Content Providers

	At present, GSM operators' core business is the provision of the voice telephone service.  Hence, the content carried over these networks is created by the users themselves. 

	The development of advanced, multimedia-type services over UMTS networks implies the presence of content providers. The role of service providers will therefore be extended, as they will also be responsible for creating service offerings for their customers.

	Several UTMS business models have therefore been developed, including the one presented by the UMTS Forum, which figures in the CCR report.

Point 13 - ART invites views on the role that the various parties will play in the UMTS market (network operators, service providers, content providers) and on the relationships that will be forged between these players.  This consultation should be the opportunity to find out who will play a part in the development of the UMTS market.

	We generally draw the distinction between infrastructure competition and services competition.

Point 14 - What is the relevance, in economic terms, of this distinction in the case of UMTS? Should we try to support this type of competition?

	Points 13 and 14 should be examined, in particular, in relation to the migration of services and applications to Internet systems.

PART II - UMTS LICENSING TERMS AND CONDITIONS

	This part of the consultation deals with the practicalities of preparing to award UMTS licences.

II.1 Licensing Timetable

	ART has taken into consideration the details discussed in the CCR's report on the UMTS licensing timetable.  The issue is relatively independent from that of the commercial launch of UMTS services, which is unlikely before 1st January 2002.

	ART recognises that awarding UMTS operator licences in a timely fashion will boost the development of French players at international level.

	Furthermore, ART wishes to provide future UMTS operators with sufficient licensing certainty to enable them to plan for the commercial launch of their services and to enable users to effectively enjoy UMTS services from the year 2002.

	On the other hand, ART realises that if UMTS operator licences are awarded rapidly, operators will not have the opportunity to perform technical and commercial trials before the licensing process, as was done in France for the wireless local loop.  ART estimates that even if the awarding of licences is delayed, there still may not be enough time to carry out these trials within the timetable set by the Community decision.  ART will nevertheless attempt to allocate frequencies to actors that wish to carry out technical UMTS trials.

Point 15 - Given the provisions of the Community decision, the following timetable is envisaged:
•	July 1999: summary of the responses to this consultation;
•	September 1999:  presentation of ART's advice to the telecommunications minister;
•	launch of the licensing procedure during the year 2000.
ART invites players to comment on this timetable.

II.2 Spectrum Resources per UMTS Operator and the Number of Licences Issued

	Decision CEPT ERC/DEC/(97)07 of 30 June 1997 designates the core frequency bands for UMTS, these are 1900 - 2025 MHz and 2110 - 2200 MHz bands to the terrestrial applications. For the purposes of this document “UMTS spectrum ” means these frequency bands.

	Organisation of UMTS Spectrum

	Task Group 1 of the ERC is currently preparing a draft ERC decision on the organisation of UMTS frequency bands.

	In its current state, the draft decision plans to:

 identify the spectrum used for UMTS as “paired” and “unpaired” frequency bands:
- “paired” spectrum would be 1920 - 1980 MHz and 2110 - 2170 MHz bands, using Frequency Division Duplex (FDD) technology. The 1920 - 1980 MHz band could also use Time Division Duplex (TDD) technology to support the asymmetric traffic generated by UMTS services;
- “unpaired” spectrum would be 1900 - 1920 MHz and 2010 - 2025 MHz bands, using only TDD technology.

 divide “unpaired” spectrum (seven 5 MHz channels) between:
- “co-ordinated” applications, which require an individual licence and where appropriate, coordination between users;
- “uncoordinated” applications, for which co-ordination between users is not required, whether operated under an individual licence or not.

	At this stage, discussions are continuing within the TG1 on how many 5 MHz channels could be used for each type of application, and on the identification of the corresponding frequency bands. However, it is probable that at least four channels will be designated for “co-ordinated applications” and three channels, at the most, for “non-coordinated” applications.

	The next part of this consultation assumes that the above-mentioned scenario will be chosen.

Point 16 - ART invites players’ views on the draft ERC decision's provisions for organising UMTS RF spectrum. Would this organisation guarantee the sustained development of the new UMTS services?

	UMTS Spectrum Usage Priorities

Point 17 - ART agrees with the CCR report when it states that UMTS frequencies should be reserved, in priority, for operators of networks open to the public, without excluding other applications (see point 20).

	Number of Licences

	The proposal made in the next point has taken into account report n° 5 of the UMTS Forum and the recommendations formulated in the CCR's report on the minimum amount of frequencies to be allocated per operator.

Point 18 - So far, ART has estimated that each UMTS operator would initially require 2x15 MHz symmetrically coupled in bands 1920-1980 MHz / 2110-2170 MHz (paired bands) and a block of 5 MHz in bands 1900-1920 MHz and 2010-2025 MHz (unpaired bands).

Point 19 - Consequently, the number of UMTS operators licensed in a given geographic area would need to be limited to four.

	Other UMTS Spectrum

	If the four operators were allocated the resources mentioned in point 18, three 5 MHz blocks would be spare in the “unpaired” frequency bands.

	Depending on the organisation of the UMTS bands, which will be defined by ERC decision, these channels could be allocated or reserved for:
 “uncoordinated” applications, which could be governed by the provisions of:
- 5° of article L.33-3 of the code;
- article L. 33-2 of the code (private networks);
- article L. 33-1 of the code (public networks).
 “co-ordinated” applications, which could by covered by the provisions of:
- article L. 33-2 of the code (private networks);
- article L. 33-1 of the code (public networks).

Point 20 - ART invites players to comment on the type of applications that could be authorised in these frequency blocks.
For each type of application envisaged, what would be the perspectives for development and the corresponding spectrum requirements? According to what timetable?
What technical constraints would need to be taken into account?

	Geographic  Scope of Licences

	The CCR report underlines the drawbacks of issuing regional licences: reduced spectrum efficiency (geographic sharing of frequencies), risk of cream-skimming of the market to the detriment of regional planning.  ART is aware of the importance of these issues.

	Furthermore, ART has noted that the scheme chosen for GSM licensing in the overseas departments - national licences covering both the mainland and the overseas departments, has not enabled the development of effective competition in the overseas departments.

Point 21 - ART is considering proposing to the minister the implementation of a licensing procedure for UMTS operators, that would cover, on the one hand, mainland France, and on the other hand, the overseas departments.  ART is debating whether  the procedure would be applied within each DOM individually, or in groups.

	Special Cases

	If, in a given area, under four applicants meet the minimal conditions (eligibility criteria) required to obtain a UMTS licence, the Act requires a licence to be awarded to each of applicants.

Point 22 - If, in a given area, under four applicants fulfil the conditions required to obtain a UMTS licence, ART proposes that each operator be allocated 2x15 MHz symmetrically paired in bands 1920-1980 MHz / 2110-2170 MHz and 5 MHz in bands 1900-1920 MHz and 2010-2025 MHz.  It would then be possible, if there were other applicants later, to allocate one or several UMTS licences.

	Freeing up Frequencies

	Within the institutional framework involving the National Frequency Agency, ART is holding discussions with current users to attempt to free up the spectrum that will be needed to progressively allocate frequencies to future UMTS operators between 2001 and 2005.

Point 23 - ART plans to hold discussions on freeing up UMTS frequencies on the basis of the timetable proposed in the CCR's report.

	At this stage in the discussions, it will be necessary to choose between the two scenarios described below, for the first few years following the introduction of UMTS:
- Scenario 1 : free up all paired and unpaired bands, region by region; 
- Scenario 2: free up a 2 x 40 MHz band in the paired bands, region by region, and then, as soon as these frequency bands are available throughout mainland France, free up all of the paired and unpaired bands, region by region.

	The second scenario would make frequencies available in a greater number of towns from the first year that UMTS is introduced, but it assumes that the migration to the final frequency allocations would be coordinated later, area by area, to enable public network operators to have the use of contiguous frequency blocks.

Point 24 - Before reaching its final decision, ART would like to hear players' views on these two scenarios.

II.3 Selection of UMTS Operators

	ART has followed the European Telecommunications Office's work on the procedures for granting licences to mobile operators, with interest.

	In particular, the report drafted by ETO on behalf of the European Commission recommends distinguishing between eligibility criteria and selection criteria: at a minimum applicants would be required to fulfil the eligibility criteria, while the selection criteria would be used to choose between applicants.

Point 25 - ART is considering proposing a series of eligibility and selection criteria to the telecommunications minister.  The application file should show that the applicant is eligible and should describe the applicant's commitments relating to the selection criteria.

II.3.1 Qualification Criteria

	Applications from Groups

Point 26 - According to the CCR report, holding a second-generation licence should not restrict businesses from applying for a UMTS licence. ART invites players to give their opinion on this question.

	According to Community and national legislation, only spectrum scarcity can justify limiting the number of UMTS licences awarded.  Future UMTS operators will therefore be competitors, which justifies strict controls on cross share-holdings.

Point 27 - GSM operators currently have restrictions on their shareholdings. A company or group that has a 25% stake in a GSM operator cannot have a direct or indirect shareholding in another GSM operator. Would these provisions be adapted to  UMTS licence-holders?

Point 28 - If this type of restriction proved to be favourable, would it mean that two applicants with cross shareholdings above the authorised threshold would not meet the eligibility critera?  Or would they be warned and given the time to modify their situation?

	Minimum Conditions Laid Down by Law

	UMTS licence applicants must take into account the conditions laid down by law, and particularly the provisions set out in articles L. 33-1 I. and L. 33-1 III. of the posts and telecommunications code.

II.3.2 Selection Criteria
	Background

	ART has taken into consideration the arguments put forward in the CCR's report regarding the choice of the selection procedure for future UMTS operators.

	ART considers that it is essential that the criteria used to select the future UMTS operators should guarantee a transparent and objective selection process.

	Furthermore, the commitments made during the selection stage should be integrated in the operators' licences.

Point 29 - ART is considering proposing the use of a "beauty contest" to select UMTS operators, based on objective selection criteria and with commitments required from the operators.

	Possible Selection Criteria

	For points 31 and 32, ART proposes including coverage and service availability commitments in the eligibility criteria.  The selection procedure could take into account operators' commitments, over and above the obligations of territorial coverage that figure in the eligibility criteria mentioned in point 31. It could also take into account operators' commitments that are over and above the service availability obligation figuring in the eligibility criteria mentioned in point 32.

	The selection criteria could also integrate operators' fees for access to and use of UMTS RF spectrum. Such criteria would encourage operators to use the scarce UMTS RF resource efficiently.

	Furthermore, ART agrees with the CCR when it states in its report that the success of UMTS will depend to some extent on the existence of a large number of service providers.  But the current regulatory framework only requires the operators listed under 7° of article L.36-7 of the posts and telecommunications code to meet requests for access to their networks, and independent service providers could require access to other networks . One of the selection criteria could therefore concern the degree to which the network is open to service providers, both in financial and technical terms, and the commitments that the applicant would be willing to make in the matter.

	ART is concerned about the harm that new RF networks could cause to the environment.  Applications may therefore take into consideration the solutions that have been found in order to protect and preserve the environment (colocation, etc.).

	These criteria (territorial coverage, service availability, fees, opening of networks to service providers, environmental protection, etc.), will be applied in such a way as to guarantee that the selection procedure proposed is open and transparent.

Point 30 - ART invites players to make detailed proposals on the type and formulation of selection criteria, in line with the general comments given above. For instance, selection criteria could deal with:
•	territorial coverage;
•	service availability;
•	operators' fees for access to and use of UMTS frequencies;
•	opening of the network to service providers, both in technical and financial terms;
•	environmental protection efforts.

II.3.3 Other Eligibility and/or Selection Criteria

	ART esteems that access to a scarce resource such as UMTS RF spectrum justifies imposing a territorial coverage obligation.

	As there are uncertainties about the economy, future standard and market prospects of UMTS networks, ART proposes adopting a flexible approach to coverage obligations.

Point 31 - Several series of coverage obligations could be planned (over a period of time), relating to the services or data rates offered by operators over their UMTS RF networks. Also, coverage obligations could be lifted after a few years of operations, in set proportions and with a set minimum notice period.

	Similarly, ART believes that future UMTS operators should have the duty to provide high speed advanced services, to ensure that they roll out true third-generation networks.

Point 32 - ART believes that applicants should have to agree to offer services over UMTS networks that are complementary, over and above those provided over GSM networks. ART invites players to give their opinion on this requirement.

	In order to progressively introduce UMTS from 2002, administrations will have to free up their UMTS frequency bands faster than they had originally agreed.

Point 33 – Applicants will have to agree to meet the cost of restructuring the spectrum in order to free up UMTS radio frequencies.  ART invites players to comment on this point.

	Furthermore, applicants will have to accept the licensing terms and conditions, which are dealt with in part II.4 of this consultation document.

II.4 UMTS Licensing Terms and Conditions

	ART believes that the overall framework governing the rights and duties to which UMTS licence holders will be subjected, should be made known as soon as the licensing process begins.

II.4.1 Licensing Provisions in Terms of Standards

	ART fully supports the objective of the European decision, which is to enable the provision of seamless UMTS services throughout the European Union. This decision calls on Member States to ensure that their licensing regimes guarantee that UMTS services will be provided in accordance with UMTS standards drafted and approved by ETSI

Point 34 - ART invites players to give their views on the implementation of this provision. ART is debating how to deal, in UMTS operating licences, with the uncertainty that a UMTS standard will be approved by ETSI, within an appropriate timescale.

II.4.2 Relations between UMTS Operators

	Relations between UMTS operators may concern international roaming and national roaming.

Point 35 - ART invites players to give their views on what could be done to encourage international roaming between UMTS operators.

Point 36 - ART is considering proposing the authorisation of national roaming between operators.  ART should however be able to verify that the conclusion of a roaming agreement between two UMTS operators does not threaten the competitive environment on the UMTS market.

II.4.3 Relations between GSM (900 and 1800) and UMTS Operators

	Three types of players could exist after UMTS licensing:
•	operators with a GSM licence and a UMTS licence (GSM/UMTS operators);
•	operators with only a GSM licence;
•	operators with only a UMTS licence.

	The question of competition between GSM/UMTS and UMTS operators thus arises, and is complicated by fragmented network deployment, as discussed in part I. 

	Provisions could be set out to protect new entrants.  There are several possibilities, including:
•	allocating new entrants GSM frequencies (GSM 900 or GSM 1800 extension band) on condition that these frequencies can be made available;
•	imposing an obligation, where appropriate with a time limit, to provide national roaming for UMTS subscribers on the GSM networks of operators that also hold a UMTS licence, in a non-discriminatory manner. This would mean requiring applicants that hold a GSM licence to separate their accounts for their GSM and UMTS activities.

Point 37 – ART invites players to comment on these two approaches, which aim to guarantee fair competition between operators that only have a UMTS licence and operators that have both a GSM and a UMTS licence.  ART also invites contributors to send any other suggestions they may wish to make on this issue.