France is the only Western European country to date that has made legal provisions for the deployment of UMTS technologies in the 900MHz band spectrum, currently used by everyone else for GSM mobile communications.

 It is, by default therefore, the driving force behind the standardisation of UMTS900 and thus development of W-CDMA in this band in Western Europe.

 In other Western European countries 900MHz spectrum is strictly tied to the use of GSM services but as these GSM licences come up for renewal it is anticipated that more regulators will follow the example of France and permit the deployment of different technologies in the GSM spectrum.

As was widely expected there has been resistance regarding in-band migration to W-CDMA at 900MHz, unsurprisingly from W-CDMA-only operators who do not have licences for spectrum in this band and also from GSM players who operate only in the 1800MHz band. The latter is a situation likely to lead to greater regulatory sensitivity in certain Western European countries (eg the UK, Italy, Sweden and Denmark).

To understand why some operators have been hostile, one need look no further than Hutchison Whampoa's 3G subsidiaries in Europe.

Hutchison 3G UK paid around $6.9bn for its 3G licence in the UK and has invested billions more in rolling out a network to over 80per cent of the population. It's understandable why the operator would raise objections to its fellow 3G operators having the opportunity to extend and consolidate their networks using a more cost-effective solution in the 900MHz band. Similarly, Hi3G Access in Sweden underwent a lengthy but ultimately fruitless process to attempt to use 'alternative technologies' (CDMA-450) to fulfil its severe licence conditions. The possibility of Swedish operators using alternative frequencies to extend their networks is unlikely to pass without serious objections from Hi3G Access.

The move towards the deployment UMTS in the 900MHz band has gained further momentum following the official completion in December 2005 of the standardisation work item relating to UMTS-900. The standardisation process began in December 2004 and involved the amendment of around ten different specifications concerning the radio access network. According to Cesar Gutierrez, secretary of the 3GPP's RAN team examining this work item, the standardisation work involved relatively straightforward scenario-building exercises in order to test specifications such as power levels, size of guard bands and channel interference. The standardisation work also defined the spectrum to be allocated for UMTS in the 900MHz band as between 880-915MHz in the uplink and 925-960MHz in the downlink.

The in-band migration of networks using 900MHz spectrum is also dependent on the harmonisation of spectrum in the 900MHz and 1800MHz bands on a 5MHz basis. At present these spectrum bands are optimised for GSM which requires a minimum channel bandwidth of just 200KHz. As a result, current spectrum allocations in individual European countries do not necessarily give operators the minimum amount of harmonised spectrum required to deploy W-CDMA (2 x 5MHz). To permit the deployment of W-CDMA (the FDD variant of UMTS), spectrum in these bands will need to be divided into blocks of a minimum of 5MHz. The issue of spectrum harmonisation is being examined by a committee (PT1) of the European Council of Post and Telecommunications Agencies (CEPT) and it is anticipated that agreement will be reached on spectrum harmonisation of these bands at the CEPT Assembly held in Germany on 13-14 June 2006.

Before operators can begin the process of in-band migration their plans will hinge upon their ability to successfully migrate large parts of their subscriber bases from GSM to W-CDMA-2100 in order to 'free up' congested spectrum in the 900MHz band for the deployment of W-CDMA in this spectrum. According to the latest forecasts from Informa Telecoms & Media, W-CDMA subscriptions are not expected to overtake GSM subscriptions until the middle of 2009.

Even in the most advanced markets in terms of W-CDMA adoption, such as Italy and the UK, W-CDMA is still not forecast to overtake GSM in terms of subscriptions until 2008. GSM spectrum will, therefore, remain of major importance for Western European operators for a number of years. Ergo it is likely that mobile operators who enjoy large packages of GSM spectrum (for example more than 2 x 15MHz) will be in the strongest position to take an early position on UMTS-900 should they receive the regulatory green light. This is due to the fact that those operators that own large tracts of GSM spectrum would in theory be able to run WCDMA  at 900MHz using a re-farmed 2 x 5MHz channel and at the same time use remaining spectrum for GSM, keeping existing GSM infrastructure in deployment for those subscribers that have yet to be migrated to WCDMA.

Deploying W-CDMA at 900MHz - compared to the 2.1GHz band ubiquitous in Western Europe - presents a number of benefits to the operator. Firstly, it delivers a reduction in the number of cell sites needed to fulfil coverage targets (particularly in rural areas) because of the better propagation properties of frequencies in this spectrum range.

According to Nortel, UMTS-900 (specifically W-CDMA-900) can lead to a 60per cent reduction in the number of required cell sites compared with W-CDMA in the 2100MHz band. It is, however, necessary to caveat the Nortel figure, as the actual propagation benefits will vary significantly according to different deployment scenarios (eg. urban versus rural coverage).

W-CDMA-900 should improve network quality in urban areas via the enhancement of in-building penetration. Nortel states that a UMTS-900 (W-CDMA-900) cell site shows a 25per cent improvement in indoor coverage against a W-CDMA cell site operating in the 2100MHz band. Again, the figure suggested by Nortel is largely dependent on the assumptions used in its comparative modelling. As with the cell size, the degree of in-building penetration will vary according to the scenario, although an overall increase in penetration is undisputed. Nevertheless, the fact that around two-thirds of mobile usage is indoors means that any indoor coverage improvements will be viewed very positively by operators.

Finally, while not able to support the same levels of capacity as WCDMA at 2.1GHz, W-CDMA in the 900MHz band will have significant capacity benefits over GSM. Clearly, of course, migrating users from GSM to W-CDMA will also bring the usual benefits of the technology migration path, such as lower costs of production per voice and data unit, higher throughput for the user and the ability to deliver W-CDMAdriven advanced multimedia services such as mobile TV and mobile music with a level of speed and quality that GSM/GPRS/EDGE cannot deliver.

The deployment of UMTS technologies (and future developments of the IMT2000 family) in the 900MHz band is likely to be on the longer-term radar of all UMTS licence holders also in possession of licences for 900MHz spectrum. This is borne out by the fact that three of the major pan-European players (Orange, Vodafone and T-Mobile) have all expressed firm interest in the possibility of in-band migration from GSM to WCDMA in the 900MHz band.

Unsurprisingly, UMTS-900 has also found support from the major mobile network infrastructure vendors, with Nortel, Nokia and Ericsson so far all having stated that the range of frequencies that existing W-CDMA solutions support will be extended to include deployment in the 900MHz band in due course. Despite operator and vendor consensus on the future importance of UMTS at 900MHz, the regulatory environment in the EU remains largely unclear, with just France having made definite arrangements to permit UMTS in this frequency range. Furthermore, operators wishing to migrate in-band will need to address the level of congestion in the 900MHz band by GSM subscriptions before realising any plans to move to W-CDMA.

France

The licences of two GSM operators (Orange and SFR) were due to expire on 25 March 2006 and following the decision taken in 2004 to renew these licences for a further 15 years, both now have the possibility to apply to use part or all of their 2G spectrum for the deployment of technologies in the UMTS family. The condition has also been applied to the licence of the third GSM operator, Bouygues Telecom, although this licence is not due to expire until 2009 and, as such, has not yet been renewed.

France's position at the forefront of the recognition of UMTS-900 in Western Europe was confirmed by the January 2006 announcement that Nortel, Qualcomm and France Telecom had collaborated to complete the first calls using W-CDMA in the 900MHz band.

Germany

Licence holders of spectrum in the 900MHz (and 1800MHz) band are currently legally tied to the use of GSM only. Nevertheless, Germany is undergoing a strategic review of spectrum management at present with a view to adopting a more flexible approach going forward. Indeed, the German regulatory authorities have already begun to issue spectrum licences on a technology-neutral basis (eg in the 3.5GHz band) for the purposes of creating a more flexible assignment procedure.

In terms of the 900MHz band, the regulatory authorities have already begun discussions at an abstract legal level to begin the step-by-step process of opening up this spectrum for the use of alternative technologies. According to the Bundesnetzagentur, the legal and technical changes necessary to revise and, if need be, rearrange existing dedications and frequency assignments to allow the deployment of UMTS technologies in the 900MHz band in Germany are not expected to be completed until 2007.

At present only T-Mobile and Vodafone hold licences to operate in the 900MHz band, although E-Plus and O2 will be allocated spectrum from the E-GSM band (2 x 10MHz paired in the range 880-890MHz and 925-935MHz) before the end of February 2006. There has so far been no application by any operator to be allowed to use the 900MHz band for UMTS technologies, although this is due to the present regulatory situation rather than a lack of operator-driven demand. Given that operators know they are tied to the use of GSM until the Bundesnetzagentur has finalised work on making 900MHz licences technology-neutral, there is a reluctance on the operator side to open discussions with the regulatory authorities, according to Peter Scheele of the Bundesnetzagentur.

Italy

In Italy the first GSM licence using 900MHz spectrum will expire in February 2010. At present GSM-900 licences do not provide operators with the option to roll out W-CDMA networks within the 900MHz band and none of the existing operators has openly made a request to the Italian Ministry of Telecommunication to be permitted to use its 900MHz licence for UMTS technologies.

At the end of December 2005 TIM freed some spectrum in 900MHz band that was previously used to supply analogue telecommunications on a

nationwide basis using TACS technology. The freed spectrum, which equates to 2 x 11.8MHz (880.0-891.8/925.0-936.8MHz) to is due to be auctioned during the course of 2006.

Spain

Spectrum in the 900MHz band in Spain is currently reserved for the use of GSM technology. Vodafone, Spain's second largest operator and the market leader in terms of W-CDMA subscriptions, has publicly declared that it is strongly interested in 900MHz spectrum being authorised for UMTS in Spain. Vodafone's view on the liberalisation of licences to permit UMTS does not find consensus in the market, with the France Telecom-owned Amena believed to be strongly opposed to such a move. Such opposition is grounded in the fact that Amena operates its GSM network in the 1800MHz band only and therefore would not benefit from any such move involving the 900MHz band.

Sweden

Licence holders of 900MHz spectrum, whose licences are due to expire on 31 December 2010, are currently strictly limited to the use of GSM technology. The Swedish regulatory authority (PTS) currently has no plans to change existing licence conditions to allow the use of alternative technologies in the bands currently used for GSM services, although it is likely that a decision on this issue could be made in 2008 or 2009, according to Sally Ibrahim, a member the spectrum department at the PTS. Operators in Sweden have expressed an interest in the use of the 900MHz band for W-CDMA, with Vodafone Sweden seen as the strongest proponent of such a move. The high level of interest in Sweden stems from the strict licence conditions imposed on operators at the time of the original 3G licence awards in December 2000, which obliged 3G licence-holders to cover over 99per cent of the population with WCDMA. Operators in Sweden have already tried and failed to lobby the PTS to allow the use of CDMA-450 as an alternative technology to fulfil these licence obligations.

UK

In the UK GSM licences are valid indefinitely and so do not automatically come to an end. Currently the licences only authorise the use of GSM, although the UK regulator Ofcom's Spectrum Framework Review: Implementation Plan, published in January 2005, considered issues raised by the possible extension of spectrum liberalisation to the existing 2G bands (900MHz and 1800MHz). None of the existing operators has specifically approached Ofcom on the 900MHz subject, although some of the respondents to Ofcom's 2004 consultation raised this issue.

Ofcom is also conducting further economic and technical analysis of the issues raised by the possible extension of spectrum liberalisation to the existing 2G bands with the assistance of external consultants. Ofcom has yet to publish a final decision on the issue, but there is evidence that the Ofcom approach will be based on economic grounds, ie should the economics of a liberalised regime for the use of spectrum prove to be beneficial for the market, Ofcom would allow operators to decide on how they used 2G spectrum.

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