Access to mobile networks is just a matter of time - Industry Trend or Event

Whatever the mobile networks may show us about increasing competition in retail mobile services, one thing remains clear: the networks are currently closed to those companies that wish to construct their own mobile services using network services from the mobile network operators (MNOs).

The discussion is raging across Europe as to whether the MNOs should be forced to open up their networks. The MNOs are fighting tooth and nail to keep their bottleneck advantage and exclude anyone else from the market. And there is a significant incentive for them to do so--with the market growing at the current rates, mobiles are set to outstrip land lines by the middle of the next decade.

"Reduced incentives to invest in infrastructure," we hear them cry, as they lobby the European Parliament to effectively neuter many of the provisions in the Interconnect Directive that applied to fixed operators. These protestations about infrastructure investment are naturally seized upon by national regulatory authorities (NRAs) with a bias towards vertically integrated competition, and used as an excuse to foreclose the services markets because of the "risk" that the MNOs will refuse to invest any more money in the network infrastructure, or in UMTS.

But the issue has been diverted: the real matter at stake is the power balance between those who exert bottleneck control of a facility and those who wish to be independent of such controls. The MNOs are naturally reluctant to stop the bottlenecking until they are forced to do so. But in an ideal world, they will see the writing on the wall, understand they cannot legitimately monopolize the services markets, and regulate themselves, before they are regulated. They must ensure they do not succumb to the temptation to perpetrate the same type of margin squeeze that has seen the demise of the airtime resellers. As a new entrant operator, we at IMNS would far rather conclude a robust commercial negotiation with an MNO than force the matter through the regulatory system.

We can all debate the finer points of EC Law. But when you cut away all the recitals, articles, and clauses, and get right down to it, there is a fundamental issue at stake, and that is the essential social contract between a Member State and an MNO when granting access to a limited and scarce national resource (radio spectrum), essential for the delivery of services. Should the MNOs be allowed to do just as they please and lock everyone else out, or should they only have custodianship of the limited resource if they do not disadvantage anyone else from offering the same type of service?

This is a question of principle and justice, and one that the Commission must address. Special rights are supposed to have been abolished. In the United Kingdom for example, the NRA's policies have blocked new entrants from getting a slice of an estimated $50 billion of shareholder value in the last 18 months alone. Formal complaints are with the Commission.

One thing is certain. The current situation has to change, or the fixed-mobile converged services of the future will all be delivered by between two and five vertically integrated companies in each country. In the case of UMTS, infrastructure investors must realize that access to mobile networks is coming. They must make their investment decision on this basis--we do not want to hear in two years time major organizations wailing to NRAs they did not expect the mobile networks to be opened up. Whatever any regulator may say to the contrary, be advised that this is coming. It's just a question of when.

David Stanfield is director of regulatory affairs at operator INMS (UK) Ltd.

COPYRIGHT 1999 EMAP Media Ltd.
COPYRIGHT 2000 Gale Group