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Results of the public consultation on future use of NMT-450 spectrum in Iceland

January 2nd 2006

On October 24th 2005 Post- and Telecom Administration (PTA) published a document for discussion ot the future use of NMT-450 spectrum in Iceland.

The purpose was to investigate market interest and the viewpoints of interested parties. Comments and pointers were requested. The deadline for submissions was 8 December 2005. Altogether 9 statements were received from the following parties: Ericsson Danmark A/S, Federation of Icelandic Vessel Owners, 112 Emergency Alert Iceland, Nordisk Mobiltelefon AB, Nortel, Og Vodafone, National Energy Authority, The Icelandic Travel Industry Association and Iceland Telecom.

Three of the above-specified parties plan to build up a new telecommunications network; two are manufacturers of equipment , and four are other interested parties.The discussion document specifically requested statements regarding the following points. Summaries of the replies received appear in blue:

a) Number of operators

As the frequency band in question is only 2 x 4.5 MHz, it could be argued that this is not suitable for division. The first paragraph of Article 9 of the Electronic Communications Act authorises PTA to limit the number of allocations to ensure effective use of frequencies. Market actors are asked whether they consider that there would be a demand for the allocation of only part of the frequency band, e.g. 2 x 1.5 MHz.

  • Should one party be authorised to use the entire frequency band or should it be divided up between several operators?

Most of the commenters deemed it clear that the most sensible course would be to assign the entire frequency range to one party. It nevertheless emerged that dividing the frequency range in two would be conceivable, with one party getting a 2/3 share and being subject to the most stringent requirements for distribution and service, while the other would get 1/3 and not be subject to the same distribution requirements.

  • Should a geographical division be considered?

The agreed view is that geographic division is not an option.

 

b) Development of the electronic communications network and sale of consumer services

No position has been taken in advance as to whether the party to whom this frequency band is allocated should construct and operate its own network and have exclusive right to sell services to the public, or whether other parties should be allowed access to the network and to sell services to the public.

The following questions are thus asked:

  • Does the party expressing an opinion intend to apply for allocation of the frequency band to construct its own network and sell services to the public?

Three parties announced that they planned to use the frequency spectrum involved to build up their own network and sell service to the public.

  • Does the party expressing an opinion anticipate granting other electronic communications enterprises access to the network in order to sell services to the public?

This question was directed only to those planning to build up their own network. One of them answered the question with a yes, while one thought that this would be a possibility, and the third took no position

  • Is the party expressing an opinion solely interested in gaining access to an electronic communications network owned and operated by another party, in order to provide services to the public?

None of the commenters declared having any such interest.

 
c) Service on the NMT-450 MHz frequency band

Reference is made to the previously mentioned government policy in the Telecom Policy Statement, and its specific objectives concerning mobile communications and high-speed connections.

  • How can the NMT-450 MHz frequency band be optimally utilised to achieve as many as possible of the specific objectives defined in the Telecom Policy Statement?

Those answering this question emphasised that the proper technology should be used. A majority of the commenters thought that CDMA-450 would best ensure achievement of the goals, while others thought that the right technology would be GSM-450.

  • How can a suitable balance be achieved between mobile communications, on the one hand, and high-speed connections, on the other?

Those answering this question believed that technology would be the most important factor here, as in the preceding question about the best utilisation of the frequency spectrum. 

d) Coverage required of a new system

The Telecom Policy Statement also discusses objectives on minimum coverage requirements.

  • How should these requirements be put into practice?

The general view was that the current coverage of the NMT system would be the natural standard. More stringent requirements could conceivably be made, but it would not be realistic to require service "everywhere in Iceland", i.e., anywhere at all in Iceland, as it is worded in the Telecom Policy Statement.

  • Are they realistic or too limited in scope?

The Telecom Policy Statement states in several places that certain services shall be provided "everywhere in Iceland".

It can be concluded from the statements that a better definition is required as to what this precisely entails. Here, the following locations are presumably meant:

  • Where there is permanent residence and summer cottage communities
  • Popular tourist sites and trails (must be better defined)
  • The main highways (must be better defined)

It emerges in the statements that a sensible balance must be found between coverage requirements, on one hand, and return on the investment, on the other.

  • Should the same requirements be set in urban and non-urban areas?

A majority of those taking a stand believed that the same requirements should be made in urban and rural areas.

 

e) Speed of development of a new system

  • How quickly is it fair to expect a new system to be developed?

It could be concluded from the answers that marketing parties think that the build-up will take 12-18 months after the authorisation for the frequency range has been issued.

  • When should it commence?

Those answering this think that it is realistic to aim at closing the current NMT service in the period September-December 2007.

For this to work, build-up of a new system must start 12 months before, i.e., in the latter part of 2006.

o       Should the NMT system, perhaps, be operated temporarily on part of the frequency band, parallel to a new digital system?

All commenters deemed it obvious that both systems would have to be operated in parallel for a certain period.

It nevertheless emerged that this period must not be too long.

It could be concluded from the answers that an appropritate period would be 6-12 months.

f) Charges

  • Should a fee be charged for the frequencies?

Emphasis was placed on setting possible fees at a moderate level.

Stringent coverage requirements would actually be the equivalent of charging a fee.

  • If so, how high should this be, e.g. as a percentage of the frequency band fee for a traditional 3G system (UMTS)?

Commenters avoided answering this question.

g) Impact on other electronic communications systems

  • Can service on the NMT-450 MHz frequency band be expected to compete with, complement or replace other services, or to make development in other areas unnecessary/unprofitable?

Commenters' answers varied.

It was not thought that there would be much competition in mobile phone services in urban areas; on the other hand, a new service would solve many problems in rural areas, regarding both mobile phone service and high-speed connections.

It was pointed out that a new 450-MHz system would probably impede launching the build-up of third-generation systems on higher frequencies, at least in rural areas. This would be an option since build-up of such systems in the 2-GHz frequency range would be much more expensive since they were initially designed for areas with much greater population density  than can be found in Iceland.

It was finally pointed out that the build-up of a new system might jeopardise the further build-up of the TETRA system.

  •  Should this be considered in allocating frequencies?

The commenters thought that the above points must be taken into account in allocating the frequency spectrum, without specifying how this should be done regarding particular points.

  • Should the use of the NMT-450 MHz frequency band be authorised for the development of mobile phone services in urban areas, i.e. in direct competition with the anticipated introduction of traditional 3G mobile phone systems?

Two of the three commenters planning to build up a new 450-MHz telecommunications network answered the question with a decided "yes".

The third did not state his position.

 
h) Miscellaneous

  • Are there other aspects which should be considered in deciding how to utilise the NMT-450 frequency band in Iceland?

Most of the commenters thought that the above-specified questions covered all aspects of the matter that were important.

One commenter, however, heavily emphasised that the build-up of a new 450-MHz might have a negative effect on the build-up and operation of an emergency and security system like TETRA.

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