1 31 May 2001 Autorité de régulation des télécommunications UMTS Results of the application procedure

2 UMTS - 31 May 2001 publication of the results by Autorité de régulation des télécommunications (ART) Outline of the presentation - UMTS and the development of the mobile telecommunications market - The introduction of UMTS in Europe - The introduction of UMTS in metropolitan France - The results

3 I - UMTS and the development of the mobile telecommunications market

4 1 - The mobile telephone market today Strong and consistent growth:

5 A move towards a rich and diversified service offering: the SMS market takes off (SMS : Short Message Service) the hesitant first steps of mobile Internet services (Wireless Application Protocol – WAP, i-mode) a developing offer for data transmission services through the move from GSM to GPRS (General Packet Radio Service)

6 2 – The third generation (3G) concept G: analogue systems 2G: GSM then GPRS 3G: UMTS ~10 kbps ~30-40 kbps 384 kbps - 2Mbps High-speed voice and multimedia Voice Low-speed data Voice Data in packet mode Permanent connection Voice WAP Type of services Speeds Standards

7 high speed and generalised data transmission mobile payment location-related services multimedia: video telephony and multimedia messages personalisation international mobility 3 – Expected contribution of 3G to the mobile telephone market

8 On the global level, ITU (International Telecommunications Union) began preparing for the introduction of 3G in 2000, 10 years ago already, under the generic name "International Mobile Telecommunications 2000" or IMT 2000 The long time required to standardise a wireless interface shows that it is impossible to reach total agreement on a single global standard: so 3G is designed as a family of standards (5 in all), called IMT 2000 UMTS (Universal Mobile Telecommunications System) is, within IMT 2000, the 3G standard developed by standardisation bodies and industry, primarily from Europe, Japan, Korea and (in part) the United States 4 - UMTS and the third generation

9 II The introduction of UMTS in Europe

10 1- Political commitment to coordinated introduction of UMTS in Europe The decision of the European Parliament and Council of Ministers dated 14 December 1998: –requires that Member States take all necessary measures to allow the coordinated and progressive introduction of UMTS services by 1st January 2002 at the latest –while leaving it up to each State to determine the means it will use to do so (number of operators, selection process, etc.)

11 2- Current status of the introduction of UMTS in Europe (1) Italy: one GSM operator not chosen (Blu) (2) Sweden: one GSM operator (Telia) joined forces with a UMTS operator (Tele 2) following the licensing process

12 3- Payments –total amounts paid for licenses: (1) Spain: evaluation of amount depends in part on the sums initially set and on the share of additional payments put in place –payment schedule: immediate payment (Germany, United Kingdom, etc.) staggered payments (France, etc.)

13 III The introduction of UMTS in metropolitan France

14 January-September 1998: Commission consultative des radiocommunications UMTS working group February-May1999: ART public consultation on UMTS – over 30 contributions 3 March 2000: ART decision proposing the publication of an application procedure notice June 2000: transmission to ART by the Government of the amounts and payment schedule for 3G operators; this notice requires that ART formally adopt a new decision 28 July 2000: new ART decision proposing the publication of an application procedure notice 18 August 2000: publication of the application procedure notice 31 January 2001: deadline for the submission of applications to ART 31 May 2001: publication of the results of the procedure by ART 1- Timetable for the introduction of UMTS in metropolitan France

15 Technical constraints inherent to the availability of frequencies: the progressive freeing by the Armed Forces of UMTS frequencies will initially make available 40 MHz duplex and eventually 60 MHz duplex for FDD technologies 10 MHz duplex seems to be the minimum technically required for true commercial opening, initially limiting the number of technically possible authorisations to four the provision of true high-speed services requires that the operator have enough frequencies: it is preferable to eventually allocate 15 MHz duplex per operator rather than 10 MHz duplex which seems to be too restrictive technically All European Member States are committed to ensuring that the introduction of UMTS allow at least one new player enter the mobile telephone market with respect to those already present with the GSM technology; on the other hand, the economic conditions required to develop mobile networks seem to make it difficult to allow more new players to profitably enter the market, as the European market currently seems to confirm. 2- Why four authorisations in metropolitan France?

16 3- The selection method: beauty contest How it works: Selection is based on a comparison of the applications presented by candidates. Each application is rated according selection criteria defined in the application procedure notice. Chosen candidates are those whose applications receive the highest overall ratings. The result is explained in a public report. The primary selection criteria to which the chosen candidates agree become obligations in the authorisations they are granted.

17 IV The results

18 Two candidates: - France Télécom Mobiles S.A. (FTM) - Société Française du Radiotéléphone (SFR)

19 CriterionScale Date of commercial rollout and coverage at this date 15 Service offering50 Relations with service providers 30 Relations with subscribers and service users 15 Price offering15 Network size 15 Scope and speed of network deployment100 Quality of service15 Aptitude of the project to optimise the use of frequency resources15 Capability to provide users with international mobility 15 Action planned to protect the environment 15 Employment 25 Coherence and credibility of the business plan 75 Coherence and credibility of the project 100 TOTAL500 Fourteen criteria with a pre-defined rating scale

20 Coverage: rapid and large-scale deployment, greater than the minimum requirement

21 Service offer Offers which include: telephone service innovative services available progressively high speed: 144 kbps and 384 kbps multimedia: video telephony / multimedia messaging / Internet access mobile payment location-related services personalisation and virtual domestic environment

22 Commercial launch date CandidateAnnounced commercial launch date SFRMarch-02 FTMJune-02 Naturally, the commercial launch at these dates will depend on the availability of terminals. The commercial launch dates as announced in the applications are:

23 Relations with service providers partnership strategy with content and service providers in accordance with the openness principles described in ART's recommendation on the development of mobile Internet in SFR's case, possibility of opening the network to mobile virtual network operators (MVNO)

24 Environment and health commitments to share with other operators and the reuse of second generation sites: 90% of existing GSM sites will be reused commitments to camouflage antennae the candidates' suggestions go beyond the planned measures regarding exposure to radio frequencies by the European Council's recommendation dated 12 July 1999 information with regard to radio frequencies financial contribution to, and active participation in, scientific research into the impact on health of exposure to radio frequencies

25 Employment Direct and indirect job creation forecast by the FTM and SFR projects in France (FTM group, SFR group and suppliers): approx jobs Does not include new jobs created in other economic sectors thanks to the development of 3G, estimated by candidates at several thousand positions Almost half of FTM and SFR employees dedicated to 3G will be located outside the Paris region

26 Selection criteriaFTM ratingSFR ratingScale Ratings assigned the candidates for each criterion Date of commercial rollout and coverage at this date Service offering Relations with service providers Relations with subscribers and service users Price offering Network size Scope and speed of network deployment Quality of service Aptitude of the project to optimise the use of frequency resources Capability to provide users with international mobility Action planned to protect the environment Employment Coherence and credibility of the business plan Coherence and credibility of the project

27 Result of the procedure for the introduction of third generation mobile communications systems (UMTS) Given the analysis of the qualification and selection criteria, both candidates have been accepted: SFR (410 points) FTM (379 points)

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