10.9.2002EN Official Journal of the European Communities C 214/17

Notice pursuant to Article 19(3) of Council Regulation No 17

Case COMP/C1/N.38.370 —BT Cellnet & BT3G/One2One Personal Communications (United Kingdom Agreement) (2002/C 214/08)

(Text with EEA relevance)

1. INTRODUCTION through its subsidiaries, networks in the United Kingdom (BT Cellnet — renamed UK Limited and BT3G), 1. On 6 February 2002, BT-Cellnet Limited (‘BT Cellnet’) and Germany (VIAG — renamed O2 Germany), the BT3G Limited (‘BT3G’) (now renamed O2 UK Limited) and Netherlands ( — renamed O2 Netherlands), the One2One Personal Communications Limited (‘One2One’) Republic of Ireland (Digifone — renamed O2 Ireland) (now renamed T-Mobile (UK) Limited) notified to the and the (Manx Telecom). In the financial Commission an agreement of 20 September 2001 year ending 31 March 2002, mmO2 group had a concerning infrastructure sharing and national roaming turnover of GBP 4.3 billion (about EUR 6,7 billion). on the United Kingdom market for the third generation of GSM mobile (‘3G’). In their notifi- cation BT Cellnet, BT3G and One2One (‘The Parties’) have requested either negative clearance under Article 81(1) or an exemption under Article 81(3) of the EC Treaty (1).

4. One2One is a licensed mobile telecommunications operator of 2G and 3G networks in the United Kingdom and is a wholly owned subsidiary of Deutsche Telekom Mobile Holdings Limited, a wholly owned subsidiary of T-Mobile International AG. T-Mobile International AG owns interests in mobile telecommunications operators 2. In February 2002 the Commission published a first notice in the United Kingdom (One2One — rebranded as summarising the notified agreement and inviting third T-Mobile (UK) Limited, T-Motion, Virgin Mobile), Austria 2 party comments ( ). The Commission has now finished (max.mobil.), the Czech Republic (Radiomobil) and the its examination of the notified agreement and has come United States of America (VoiceStream). T-Mobile Inter- to a preliminary position. The present notice is published national AG also has subsidiaries active in the Netherlands pursuant to Article 19(3) of Regulation 17/62 in order to (BEN, CMobil), Russia (MTS) and Poland (PTC). In the enable third parties to provide their comments on the 2001 financial year, DTAG had a worldwide turnover of Commission's proposed approach. Third parties may EUR 48,3 billion and T-Mobile International AG had a submit their comments to the Commission within a worldwide turnover of EUR 14,6 billion. deadline of one month from publication of this notice in the Official Journal of the European Communities.

3. PRODUCTS/SERVICES

5. 3G services are mobile communications systems capable of 2. THE PARTIES supporting in particular innovative multimedia services, beyond the capability of second generation systems such 3. BT Cellnet is a licensed mobile telecommunications as GSM, and capable of combining the use of terrestrial operator of a 2G network and BT3G is licensed to and satellite components. These services are characterised operate a 3G network (3) in the United Kingdom and by their: (i) multimedia capabilities, full mobility and low both are wholly owned subsidiaries of mmO2 plc, the mobility applications in different geographical mobile telecommunications business previously controlled environments beyond 2G capabilities; (ii) efficient access by British Telecommunications plc. mmO2 operates, to Internet, Intranets and other Internet protocol based services; (iii) high quality speech transmission commen- (1) The Commission has also received a related notification from surate with that of fixed networks; (v) service portability T-Mobile Deutschland GmbH and VIAG Interkom GmbH dated 1 across 3G environments; (v) operation in one seamless February 2002 relating to a 3G Network Deployment and 3G environment including full roaming with GSM as well as Bilateral Roaming Agreement in Germany. This agreement is being dealt with separately (Case COMP/N.38.369 — Rahmen- between the terrestrial and satellite components of UMTS vertrag). networks. With this agreement, the Parties aim to enter the (2) OJ C 53, 28.2.2002, p. 18. United Kingdom national market or markets for 3G infra- structure and wholesale roaming services. Although the (3) In May 2000, the United Kingdom Government awarded five 3G licences following a frequency auction procedure worth EUR 38,5 agreement promotes their individual entry into the billion. The companies awarded the licences were Orange, BT3G, market or markets for 3G retail services the agreement Vodafone, One2One and H3G. does not directly relate to retail markets. C 214/18EN Official Journal of the European Communities 10.9.2002

6. The products/services that are directly concerned by this 9. Finally, in March 2001 the Commission published a notification are (a) access to and use of 2G, 2,5 G and 3G Communication setting out the state of play and the infrastructure, and (b) wholesale access to 3G national way forward for the introduction of third generation roaming. Actual or potential competitors in these mobile communications in the EU (7). This Communi- markets are the other three licencees for 3G networks cation takes note of the combination of the difficult and services in the United Kingdom, and potential financial situation of telecommunications operators competitors may be third parties reselling access to and throughout the EU and of the high infrastructure wholesale roaming services on the network of these other investment costs involved that lead operators to engage operators or on the Parties' networks. As 3G networks and in infrastructure sharing arrangements. It concludes that services have not yet been rolled out no conclusive economically beneficial sharing of network infrastructure estimate of market shares or assessment of the substituta- should in principle be encouraged, provided the bility between 2G and 3G services can at present be competition rules and other relevant Community law are provided. respected (8). In its recent follow up Communication (9), the Commission emphasised that it would continue to work with national administrations towards establishing a best practice approach for network sharing.

4. LEGAL AND FACTUAL BACKGROUND 4.1. The development of third generation mobile communications in the EU 4.2. Network sharing

7. So far digital mobile communications networks and 10. The basic distinction that is relevant in the context of the services in the EU have been based on the GSM family Parties' network sharing agreement is that between the of standards. European companies are Radio Access Network (‘RAN’) and the core or backbone at present developing and rolling out mobile communi- network. cation networks and services using the third generation (‘3G’) of the GSM family of standards (4) 3G will combine wireless mobile technology with high data trans- mission capacities and facilitate consumer access to Internet services through their mobile handsets. Its devel- 11. RAN: this includes mast/antenna sites, site support opment in the EU is based on a common technological cabinets (‘SSC’) and power supply, as well as antennas, platform — Universal Mobile Telecommunications System combiners and transmission links, Nodes B, i.e. the base (‘UMTS’), on the harmonisation of the radio spectrum and stations that receive and send data across frequencies and on the definition of a harmonised regulatory environment. control a particular network cell, and the radio network controllers (‘RNCs’) that each control a number of such nodes B and that are linked to the core network.

8. To meet these harmonisation objectives, the European Parliament and the Council have in 1997 adopted a directive on a common framework for general authoris- 12. Core netwerk: this is the intelligent part of the network ations and individual licences in the field of telecommuni- that consists of mobile switching centres (‘MSCs’), various cations services (5). This was followed at the end of 1998 support nodes, services platforms, client home location by a decision on the coordinated introduction of a third- registers and operation and maintenance centres. It is generation mobile and wireless communication system linked to the fixed ISDN (integrated services digital (UMTS) in the Community (6). It required Member States network) and Internet networks. to enable the introduction of UMTS services on their territory by 1 January 2002 and emphasised the role of technical bodies such as the European Conference of Postal and Telecommunications Administrations (‘CEPT’) and Europe Telecommunications Standard Institute (‘ETSI’) in harmonising frequency use and promoting a common and open standard for the provision of compatible UMTS services throughout Europe.

(4) The first generation was GSM 900, the second generation DCS 1800 (now referred to as GSM 1800), GPRS is often regarded as an intermediate step (or ‘2,5 G’) between 2G and 3G. (5) Directive 97/13/EC of the European Parliament and of the Council 7 of 10 April 1997 (OJ L 117, 7.5.1997, p. 15). This directive sets ( ) The introduction of third generation mobile communications in the out the procedures associated with the granting of authorisations European Union: state of play and the way forward, COM(2001) for the purpose of providing telecommunications services and the 141 final, 20.3.2001. conditions attached to such authorisations. (8) Ibid. paragraph 4.3. (6) Decision No 128/1999/EC of the European Parliament and of the (9) ‘Towards the full roll-out of third generation mobile communi- Council of 14 December 1998 (OJ L 17, 22.1.1999, p. 1). cations’COM(2002) 301 final, 11.6.2002. 10.9.2002EN Official Journal of the European Communities C 214/19

13. 3G Network sharing can take place at a number of — network roll-out requirements in terms of effective different levels and involve varying degrees of cooperation. coverage related to a specific timetable, notably a The degree of independence retained by an operator requirement to cover 80 % of the population by the depends on which network elements are being shared end of 2007, and their remaining ability to install separate elements (planning freedom). Ranked by the increasing degree to which the network is shared it is possible to distinguish between shared use of: — general obligations as regards e.g. site and antenna sharing relating to planning restrictions and environ- — sites, which range from sharing individual mast mental concerns, sites (10) up to grid sharing (requiring a uniform layout of networks), and may include site support infrastructure, such as site support cabinets (SSC),

— base stations (Nodes B) and antennas, — the possibility to impose facility sharing, including network sharing, on a case by case basis,

— radio network controllers (‘RNCs’),

— core networks, including mobile switching centres — limitations as regards the extent of network sharing (‘MSCs’) and various databases, allowed related to e.g. sharing network intelligence and sensitive customer data.

— frequencies.

National roaming concerns a situation where the operators 16. Oftel is the national telecommunications regulatory concerned do not share any network elements as such but authority (‘NRA’) in the United Kingdom that is simply use each other's network to provide services to responsible for the notified agreement. In May 2001 their own customers. Oftel published general guidance in which it encouraged infrastructure sharing subject to a case by case assessment of individual proposals (12). 14. In their notification the Parties use the term ‘site sharing’ for shared use of infrastructure up to the level of, but not including, Nodes B and RNCs (i.e. the first point above). The Parties do not envisage sharing their core networks, but their agreement does cover national roaming. 17. The national regulatory framework and the EU competition rules are of parallel and cumulative 4.3. The National Regulatory Framework application. National rules may neither conflict with the EU competition rules nor can compatibility with national 15. Subject to the principle of the primacy of Community law, rules and regulations prejudice the outcome of an the applicable national licensing and regulatory assessment under the competition rules. Hence a full requirements must be taken into account in the context assessment of the notified Agreement under the of network infrastructure sharing (11). Both the general competition rules is required. national regulatory framework in the United Kingdom and the terms of the Parties' 3G licences set out parameters for network sharing. These include:

(10) It should be noted that in the United Kingdom independent 5. THE AGREEMENT companies exist that specialise in the acquisition, operation and management of mast/antenna sites, who provide their services to 18. BT Cellnet and BT3G and One2One entered into an network operators and promote site sharing. agreement (‘the Agreement’) on 20 September 2001 to (11) A number of national regulatory authorities (NRAs) in the EU cooperate by way of 3G site sharing and national issued guidance on the conditions on which infrastructure roaming. It also covers certain 2G and 2,5G infrastructure. sharing would be consistent with national licensing and regulatory The Parties will maintain separate networks and service requirements. In the United Kingdom Oftel published a position in provision. The Agreement also includes specific provisions May 2001, available at http://www.oftel.gov.uk/publications/ mobile/infrashare0501.htm. In Germany, RegTP issued its Interpre- to ensure that no more information than strictly necessary tation of the UMTS Award Conditions in light of more recent is exchanged. The Parties differentiate in the Agreement technological advance, RegTP (6 June 2001), available at between three areas: (i) the initial build area (‘IBA’); (ii) www.regtp.de. The Dutch and French NRAs have published the divided area (‘DA’); and (iii) the remaining area. similar documents, available at http://www.opta.nl/download/ concept_notitie_nma_vw_opta_umts_netwerken_190701.pdf and at http://www.art-telecom.fr/dossiers/umts/partage-infras.htm (12) See footnote 11. C 214/20EN Official Journal of the European Communities 10.9.2002

5.1. Site sharing and national roaming in the initial build roaming services to the other Party on a ‘retail minus area (‘IBA’) minus’price formula (clause 22.1), and cannot enter into similar agreements with third parties in order to provide 19. The IBA represents an area covering around [20 to 50 %] this service to the other Party (clause 2.5). The agreement of the United Kingdom population and more than [50 to in its clause 9.2 also provides that a Party shall not deploy 80 %] of United Kingdom businesses (i.e. the main urban 3G in the designated area of the other Party, although this areas). In this area the Parties' cooperation will focus on is subject to a number of exceptions without requiring site sharing rather than national roaming, although the prior consent of the other Party, set out in clause 11 latter is not excluded. Within this area, the Parties agree to: (e.g. for special events, to meet market demand and/or for special needs of important customers).

(i) pursuant to clause 2.3 of the Agreement, cooperate in the planning, acquiring (not on the basis of joint ownership), building and deploying and sharing of 21. The Parties also agree that all new sites in the DA will be 2G, 2,5G and 3G sites. This site sharing involves built with sufficient accommodation and mast space to fit shared housing, i.e. structures including mast, a minimum of two operators, with space reserved by the materials and equipment (power supply, racking and designated Party for later occupation by the other Party. cooling) for 3G, 2,5G and/or 2G equipment, i.e. trans- The Parties have an option to share, exercisable for (an ceivers and base station racks or Node B base station option period of between four and six years), followed by cabinets but not transmission and antennae; a right of first refusal of indefinite duration (Agreed Document 8). However, after the expiry of the option right, if one Party operating a site receives an offer from a third party at an equal or higher site sharing fee (13), the (ii) disclose and if practical revise respective radio plans to ‘site operating party’shall notify the other Party of such a make best use of possible common locations for indi- request. The other Party then has 14 days to confirm its vidual cell sites (clauses 6.2.1-6.2.4 and 6.7 of the entering into a site sharing agreement with the site share Agreement); operator.

(iii) grant the other Party an option over sites identified as 22. Pursuant to clause 14.7, each Party is able to conclude 3G suitable for site sharing exercisable for (an option national roaming agreements with third party national 3G period of between one and three years) (Agreed operators (for its own built and operated network), but the Document 8), third party operator would not have access to the network of the other Party to the Agreement unless it gave its approval. However, nothing in the agreement prevents (iv) grant the other Party first refusal in the event that a either Party from reselling its 3G telecommunications third party wishes to share the same site (Agreed wholesale services to non-operator third parties (for Document 8), example service providers and/or MVNOs), whether carried on its own network equipment or via roaming in the other Party's designated area. Clause 14.7 does not affect arrangements concerning international roaming. (v) offer the other Party roaming within the IBA for such time as it does not have 3G radio coverage in a particular part of the IBA (Agreed Document 1). 5.3. Site sharing and national roaming in the remaining area (‘RA’) The degree of site-sharing that is envisaged by the Parties 23. In the remaining area, which covers the least densely does not involve the entire RAN (notably Nodes B and populated areas of the United Kingdom, the Parties RNCs are not included), nor does it involve sharing of agree, when market conditions permit, to extend their frequencies or the core network. respective 3G networks into the remaining area, using the same principles applied in the DA.

5.2. Site sharing and national roaming in the divided area (‘DA’) 5.4. Duration 20. In the DA (an area covering about a further [40-70 %] of the population), the Parties adopt a common radio and 24. The agreement is for an unlimited duration but can be roll-out plan for 3G that is based on the principle of a terminated after 31 December 2007 by either Party separate territory for each Party. Each Party has been giving two years notice. allocated a ‘designated (separate geographical) area’of the DA to build and operate its 3G network in accordance (13) The fee (i.e. a price list) for owned sites or sites under the control with the unitary radio and roll-out plans. Within the has been agreed and commercially negotiated between the Parties respective designated area, each Party will provide based on fair market rates. 10.9.2002EN Official Journal of the European Communities C 214/21

6. ARGUMENTS OF THE PARTIES marketing. Hence they conclude that as a result of the Agreement competition will not merely be preserved but 25. The Parties justify the agreement in terms of the financial will be increased in the United Kingdom markets for 3G difficulties experienced by 3G operators, the regulatory networks and services. timeframe (the United Kingdom requirement of 80 % population coverage by the end of 2007) and the need to meet environmental concerns. 7. CONCLUSION

26. Article 81(1): The Parties argue that the agreement does 28. The Commission intends to take a favourable view in not have the object of effect of appreciably restricting respect of the notified agreement. Before doing so, the competition within the common market contrary to Commission invites third parties to submit their Article 81(1) as they claim the agreement will increase comments within one month of the publication of this competition rather than reduce it. This claim is based on notice, to the address or fax number given below, the fact that the parties will compete with each other at quoting the reference Case COMP/N.38.370 — BT network level in the IBA, whereas cooperation in the DA Cellnet & BT3G and One2One (Network sharing UK). will enable the Parties to compete at services level with other 3G operators nationwide at an earlier stage than if European Commission they did not cooperate. Directorate-General for Competition Directorate C 27. Article 81(3): If the agreement is considered to restrict B-1049 Brussels competition, the Parties argue in the alternative, that it is Fax (32-2) 296 70 81 exemptable under Article 81(3). They argue the agreement e-mail: [email protected] will speed up the provision of 3G services by enabling the Parties to reduce 3G network deployment costs, making 3G services available earlier to end users. The Parties argue 29. If a Party submitting comments considers that these that consumers will benefit through the delivery of faster, contain business secrets, it must indicate the passages more innovative 3G services at lower prices. Finally, the which, in its opinion, ought not to be disclosed on the parties will as a result of their cooperation not produce grounds that they contain business secrets or other confi- standardised services to end users but will continue to dential material, and state the reasons. If the Commission compete directly on content applications, retail pricing, does not receive a request with reasons, it will assume that wholesale pricing, terms and conditions of service, the comments do not contain any confidential channel to market and customer care services and information.

INFORMATION NOTICE FROM THE COMMISSION

(2002/C 214/09)

The Commission adopted on 28 June 2002 THE NINETEENTH REPORT ON MONITORING THE APPLICATION OF COMMUNITY LAW (COM(2002) 324 final of 28.6.2002).

The European Commission yearly draws up a report on monitoring of the application of Community law, in response to requests made by the European Parliament (Resolution of 9 February 1983) and the Member States (point 2 of Declaration No 19 annexed to the Treaty signed at Maastricht on 7 February 1992). The report also responds to the requests expressed by the European Council or the Council of Ministers in relation to specific sectors.

The report relates the action of the Commission in monitoring the application of Community law in year 2001. It illustrates the evolving infringement proceedings initiated or managed by the Commission in 2001 under Article 226 of the Treaty (or Article 141 of the Euratom Treaty) by emphasising the policy of the Commission in this matter, detailed by sector.

This report is available on

Europa: http://www.europa.eu.int/comm/secretariat_general/sgb/droit_com/index_en.htm#infringements

Eur-Lex: http://www.europa.eu.int/eur-lex/