12 Mobile broadband services
| (25791)
11124/04
COM(04) 447
| Commission Communication: Mobile Broadband Services
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| Legal base | — |
| Document originated | 30 June 2004
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| Deposited in Parliament | 5 July 2004
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| Department | Trade and Industry
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| Basis of consideration | EM of 31 August 2004
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| Previous Committee Report | None
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| To be discussed in Council | No date fixed
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| Committee's assessment | Politically important
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| Committee's decision | Cleared, but relevant to the debate on the future of eEurope[22]
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Background
12.1 The Lisbon European Council in 2000 emphasised the importance
to Europe of maintaining its lead in key technologies such as
mobile communications. Since then successive European Councils
have called on Member States to remove barriers to the introduction
of mobile services. At the Spring European Council, the Presidency
Conclusions recalled that "the Union must develop timely
responses to new challenges: in the [vital area of] electronic
communications, for example, new EU mobile and broadband strategies
must keep the Union at the cutting edge".
12.2 The Communication follows Commission consultation
with industry via the Mobile Communications and Technology Platform[23]
and through a workshop on the mobile sector held in June 2004.
It notes that while some of the issues raised have been addressed,
others have yet to be resolved. Its main purpose is to outline
how the remaining challenges can be addressed, notably those from
developing countries investing heavily in R&D to develop industrial
potential at very competitive cost. In examining the broader
policy and regulatory environment, the Communication identifies
a need for concerted action at EU level on a number of fronts,
including Research and Development, policy, regulation and management
of the radio spectrum. The key considerations, set out in the
Introduction, are:
- " The mobile phone is now pervasive
and is used in virtually every sphere of human activity, private,
business and governmental."
- " Anywhere, anytime availability will
be essential requirements in an environment where mobility of
people, goods and services is growing."
Mobile phone standards
12.3 The following brief description may be helpful:
- 2G — also known as GSM
(General System for Mobiles); the current "world" standard;
over 1 billion subscribers; European developed; a digital system
allowing 9.6 kilobits per second (kbps) of downloads; predominantly
used for voice and SMS (text messages).
- 2.5G — also known as GPRS (General Packet
Radio Service); an enhancement of GSM, capable of higher download
data rates (114kbps); allows picture messaging and some (slow)
internet access.
- 2G and 2.5G are the technologies used in the
UK by O2, Orange, Vodafone and T-mobile. 98% of all mobiles in
the UK use either GSM or GPRS.
- Third generation (3G) technology is the newest
global standard for mobile phones. The most common of the five
defined 3G standards are UMTS (European) and CDMA 2000 (USA).
In the UK, "3" is the only mobile phone operator currently
offering such phones, but the other four UK operators will follow
suit later this year. 3G can provide downloads of up to 384kbps
of data now with enhanced rates of 2mkbps shortly. The most obvious
development of 3G over 2.5G is that 3G supports video calls and
video streaming as well as offering mobile broadband access to
the internet. It is also a more efficient technology for voice
calls.
Commission Communication
12.4 In his very helpful Explanatory Memorandum of
31 August, the Minister for Energy, e-Commerce and Postal Services
at the Department of Trade and Industry (Mr Stephen Timms) summarises
the Communication in detail:
Trends in European electronic communication services
"The Communication identifies that the most
significant future development in electronic communications will
be the growth of mobile broadband services, as the potential of
third generation mobile (3G) and other wireless technologies,
including satellite, becomes a reality. Dissemination of these
technologies will lead to the emergence of new data services,
combining the benefits of broadband with mobility. These services
could have not only a major social impact but also, in terms of
economic effects, potentially transform the way business works.
"The Communication refers to two significant
trends within the sector. First, broadband growth of more than
80% in 2003 means that Europe is well placed to achieve even greater
productivity benefits. Second, revenues from mobile phones have
increased to the point where they have overtaken those of fixed
telephony. It suggests that personal mobile broadband services
can therefore be used to deliver significant social and productivity
gains for the whole economy. For example, the ability to link
a mobile workforce with a business and its data resources plus
the ability to exchange large amounts of data will improve firms'
efficiency through their effect on working processes and organisational
change. Consequently, the Communication says that companies will
invest in changing business and working practices as long as managers
are forced to innovate in the face of strong competition.
Developments in the mobile communications sector
"The Communication notes that the mobile sector
is showing signs of recovery after slower growth in recent years.
In particular, the past year has seen European 3G mobile operators
launch commercial services in ten Member States and more 3 G networks
are expected to follow.
"3G networks allow users to access voice and
data services at high-speed whilst on the move. This is significant
because it will support the development of new services, both
for business and the consumer. As such it has potential to support
competitiveness across Europe as well as providing strong sectoral
growth.
"The communications sector as a whole is now
converging. The high data rates offered by broadband allow multimedia
services to be received through a variety of technologies. It
is now possible for users to switch between different platforms
(eg 2.5G, 3G, 'wi-fi' wireless access)[24]
depending on availability in order to get the best data rates
in any given location.
"We will see an even wider variety of access
methods as so called 'post 3G' services emerge.[25]
This will give a number of regulatory challenges and an increasing
need for operators and manufacturers and operators to present
products and services in a coherent manner to the public.
Forward-Looking Policy Issues
"The Commission recognises that this very rapid
rate of change in electronic and mobile communications does raise
a number of policy issues which it considers need to be addressed
in order to allow the Community to ensure success in 3G and to
prepare for the future at a time when some developing countries
are investing in mobile & wireless research and development.
The Commission identifies these issues and makes a series of recommendations
as a set of conclusions."
The Government's view
12.5 The Minister goes on to say:
"The UK welcomes the Commission's Communication
as it helps highlight the importance of the sector in helping
maintain the Community's competitive position. It also rightly
draws attention to the extent to which the growth of the sector
can be adversely affected by unnecessary regulation.
"Some of the recommendations are for industry
to take forward, which reflects the role that self-regulation
has to play in development of the market, as underlined in the
New Approach Directives. Member states do, of course, have a role
to play in encouraging and supporting this industry effort.
"The Government's reaction to each of the Commission's
recommendations is as follows:
"On interoperability while we agree with
the conclusion that the industry should be encouraged to take
steps towards interoperability, we would be very wary of seeking
to take regulatory action in this area. 3G is a new technology
which is developing through innovation and regulation could channel
this development and thereby restrict innovation and stifle growth.
"We agree that technical challenges in
relation to content which might hinder the fast take up of services
do need to be identified and that where these are the result of
existing regulations that Member States need to take appropriate
action.
"The important role played by content and applications
in stimulating the demand for new services and mobile communications
is rightly explicitly recognised by the Communication. The emphasis
is on facilitating industry dialogue and together with the Commission
monitoring developments we consider this is the right approach.
"Digital Rights Management (DRM), and its application
in areas where levies are collected to compensate rightsholders
for a degree of private copying, are issues that need serious
consideration. DRM is not a panacea, and we will seek to ensure
that their limitations, as well as their potential, are considered.
DRM represents an opportunity for rightsholders, but this must
be taken in the context of the legitimate expectations of consumers
and other stakeholders. The conclusions in this area appear to
be proportionate and reasonable.
"The Government agrees that spectrum policy
issues should be addressed, and that innovative means to managing
spectrum as well as greater flexibility as regards spectrum use
are desirable goals. Ofcom has already brought forward proposals
to introduce trading in spectrum licences. However, we believe
that it is too early to mandate any Europe-wide approach on spectrum.
A pan-European approach may prove advantageous but any move towards
increased harmonisation of spectrum strategies generally must
take account of the proposed work programme for a co ordinated
EU spectrum policy approach currently under consideration within
the Radio Spectrum Policy Group.
"A trusted and secure environment, including
secure authentification, would help underpin the development of
the sector and we agree the industry should be encouraged to develop
the appropriate mechanisms for identification/
authentication. As regards protection of minors from illegal or
inappropriate content, the UK mobile industry has already taken
a lead in launching a Code of Practice with the support of the
Children's Charities. We commend this self-regulatory approach.
"So far as the recommendations relating to M-Payments
are concerned the UK has noted the real problems caused by the
uncertainty surrounding the application of the e-money
directive to mobile payment services. Until this has been clarified
it can only hamper the development of new innovative services
and hamper the roll-out of the new technologies. We have welcomed,
and responded to, the recent Commission consultation into the
application of e-money rules on the mobile sector.
"We therefore endorse the call for clarification
and for a speedy solution which provides the legal certainty to
allow the development of the sector. The opportunity is significant.[26]
It is important however that such a solution is proportionate
and reflects the low risk of money laundering or other criminal
financial activity, through mobile payment services.
"The UK agrees that in some parts of the Community,
there can be barriers to the roll-out of networks caused
by the local planning regime. While planning rests with the relevant
local authority in the UK, Government has issued a planning policy
guidance note to help ensure that there is a consistent approach
across England (similar notes exist for Scotland, Wales and Northern
Ireland). This guidance note was updated in 2001 to reflect the
best scientific advice on health. The UK Government already supports
and complies with the Commission's recommendation to base planning
restrictions on generally accepted assessment of health risks
— our guidelines incorporate the International Commission
on Non-Ionising Radiation Protection (ICNIRP) guidelines on exposure.
We similarly agree that member states should seek to foster greater
public awareness of risks and protections against these.
"The proposals for Research and Development
do cause concern.
"The Commission argues that the demands of R&D
across the whole of the mobile communications supply chain are
such that it can only be conducted at an EU level. It proposes
that the Seventh Framework Programme would provide an opportunity
to do so.
"Although the UK agrees there is a need for
substantial funding of research in the mobile/wireless broadband
arena, we have argued against the need for increased funding at
a European level where significant sums have been allocated under
Framework over the last 10 years. The mid term evaluation of Framework
6 by Dr Marimon showed significant drawbacks, particularly in
respect of SME participation. Our view is that the proposed technology
platform will continue the large company domination of the research
agenda, to the detriment of innovation in this area, particularly
if the identified weaknesses in Framework 6 are not rectified.
It will also consolidate a restricted view of the technology agenda,
which may not be borne out by future events, and would be subject
to the higher research overheads of the main players. The technology
platform process will be too slow and cumbersome and is not suited
for a highly competitive, rapidly changing business-services and
consumer market. We would be particularly unhappy if the proposed
technology platform took a greater proportion of a reduced collaborative
research budget in Framework 7.
"At the European level, within a similar budget
to that of recent years, the UK would support greater investment
in the science and industry base with an agenda that has a strong
industry bias. This should not be limited to a "traditional
view" of mobile broadband. We would also support a simplified
administrative process that encouraged SME's to participate in
the innovation process in this technology area. The UK will continue
to support successful national initiatives, which are geared towards
the science base, industry and innovation.
"Finally we, like the Commission, recognise
the global nature of the mobile industry. The UK is committed
to continuing and strengthening the already strong international
co-operation and dialogue in this industry. The need for clear,
predictable and proportionate regulatory frameworks along with
open and global standards is vital for the future development
of the sector."
12.6 The Minister concludes by saying that, while
there are no plans to consult on this specific document, its content
will form part of Government's ongoing dialogue with industry
on electronic communications.
Conclusion
12.7 There is no doubting the importance of this
matter. The opportunities and challenges, external as well as
internal, are clearly identified. There is much work to be done
if they are to be seized and resolved. As for the remedies, we
endorse the approach taken by the Minister, especially regarding
the importance of development being industry-led, of continuing
dialogue, of self-regulation and of facilitating participation
by small and medium-sized enterprises.
12.8 In clearing the Communication, we draw it
to the attention of the House. We consider it relevant to the
debate that we have already recommended on the future of eEurope.
22 (25683) 9675/04; see HC 42-xxv (2003-04), para 1
(30 June 2004). Back
23
At the request of Commissioner Liikanen, the CEOs of 14 major
companies involved in the mobile communications sector together
identified key issues and major steps to be taken by both industry
and government in order to assure the future success of 3G mobile
broadband communications in the EU.
Back
24
"wi-fi" is a brand name applied to products that conform
to a particular technical standard (IEEE802.11b) and are therefore
compatible. It allows devices to connect to each other wirelessly
and is typically used to provide internet access in offices, hotels,
transportation hubs etc. "wi-fi" has become a generic
name for all such technologies although there are others. The
more correct name is W-LAN (wireless local area networks). Wi-fi
allows 2mbps downloads within a range of up to 100 metres of a
"hot-spot" (i.e. an access point). It is therefore not
a fully mobile technology. Back
25
Some countries (e.g. Japan and Korea) are pushing for the development
of 4G. As yet there is no definition of what is meant by 4G (the
term needs to be defined before technical standards can be developed)
and it is therefore not yet clear exactly what form these services
might take. Back
26
A report made available by the Department of Culture Media and
Sport, produced by Spectrum Strategy in March 2004 (http:/www.paidcontent.org/pc/arch/cat_bbc),
states that revenues from mobile content and applications in the
UK are already nearly £500m and are forecast to increase
to around £2bn by 2007. Back
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