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Cellcos ally to keep their hands on beach front spectrum for 4G

Lobbying regulators to avoid paying huge license fees

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Comment Six of the world's largest mobile operators have formed the Next Generation Mobile Network (NGMN) Forum, aiming to use their collective lobbying might to ensure they can run fourth generation mobile broadband networks in their existing spectrum without significant additional licensing fees.

Vodafone, T-Mobile, Orange, KPN, NTT DoCoMo and China Mobile are the founder members of the forum, which was initiated at an invitation-only meeting in Germany in April and is now to be incorporated in London.

Its favoured approach – which would be closer to that already in place in the US – would not only save the cellcos from potentially having to pay out multibillion dollar sums as they did, in Europe at least, for 3G licenses, but even more significantly, would keep the most attractive areas of the spectrum out of the hands of new challengers.

The forum wants regulators to be prepared to renegotiate the cellcos' current GSM and 3G licenses so that, as technologies become obsolete, the spectrum owners can implement new advanced networks in the same bands.

Many countries, apart from North America, have followed the European norm in banning implementation of new networks in existing spectrum. Instead, when a network is phased out or a license expires, the spectrum is reallocated under new terms and conditions, and may be acquired by entirely different players.

This is happening in some countries as the 450MHz analog cellphone service dies and the licenses are reallocated – and this has foreshadowed the 4G debate in that some regulators have veered towards technology neutrality for these frequencies.

In general, the system of returning old licenses to the central pool, rather than renegotiating them with existing holders, places intense pressure on the cellcos, since they have to achieve healthy return on their investment in the spectrum, and its associated network, within the period of the franchise, usually 10 or 15 years. After that, they may have to spend another massive sum to retain the frequencies to support a future network, or may even see those frequencies fall into the hands of others.

And even while the license is still alive, their hands are tied in terms of implementing new technologies within the band to enhance performance and ROI (although the GSM community has been creative in the number of software upgrades it has rolled out to enhance its operators' case, from GPRS to EDGE).

The cellcos’ predicament

This was not a serious situation until this decade. Operators generally paid next to nothing for their GSM licenses, as governments sought to kickstart the nascent mobile market, and their competitive landscape was simple – other GSM voice operators.

Then mobile broadband – the ability to deliver high speed data, video and full IP services over the wireless network – emerged as the great hope for expanding the cellcos' ARPU and their share of the total communications market. This caused them to invest huge sums, in western Europe at least, in 3G licenses, only to see their cosy world invaded by wireline and alternative operators, using new technologies from Wi-Fi to broadband wireless to fixed-mobile convergence to eat into the "mobilised triple play".

An operator with only a 3G and no wireline network was suddenly in position of an expensive asset that might never generate real value. Now the cellcos have been moving aggressively to ensure they too can play in fixed-mobile broadband, initially by partnering with, or buying, fixed providers (as O2 did last week with its Be purchase), and also by looking forward to a time, around the turn of the decade, when they hope next generation wireless networks will match wireline in performance, thus allowing for a mobile triple play based entirely on one technology – whether this will be WiMAX, the HSxPA/LTE extensions to UMTS, Qualcomm platforms, or a convergence of all these elements to create the mythical "4G".

T-Mobile chief technology officer, Hamid Akhavan, said last week that wireless broadband will reach "parity" with its fixed line counterpart in terms of speed by the end of the decade.

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Next page: European policy

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