Order 31/2005 Consultation for the award of further spectrum for public digital cellular mobile communications below 1.9 GHz (GSM concept)

After clearance of the so-called E-GSM bands (880 – 890/925 – 935 MHz) recently agreed with the Federal Ministry of Defence a further spectrum block of 2 x 10 MHz will be made available to the telecoms market for use by services.

The Regulatory Authority (RegTP) intends not to consider the regulatory award issues associated with the new block of 2 x 10 MHz in the 900 MHz band in isolation, but from the perspective of an overall strategy in light of current GSM mobile issues. In this context the matter of ensuring fair and sustainable competition as set out in section 2(2) para 2 of the Telecommunications Act (TKG) is just as important as the different periods currently limiting the use of GSM licences in time and the technological change in the mobile market. With this overall strategy in mind, RegTP has drafted a concept for the award of further spectrum for public digital cellular mobile communications below 1.9 GHz (GSM concept), which will serve as a basis for various regulatory decisions to be taken in the near future.

The concept is based on the "Strategic Aspects of Spectrum Management" paper (cf RegTP's paper which can be downloaded at http://www.regtp.de/reg_tele/start/fs_05.html). The GSM concept is one of a number of concepts on current issues of regulation which will eventually be part of an overall frequency management strategy covering all forms of access and taking account of the foreseeable convergence of the telecoms markets. The overall strategy will consider all frequency bands of public mobile communications and those bands of the fixed service which can be used for portable or nomadic applications. This future overall strategy for wireless access to telecommunications services will be drawn up on the basis of the frequency regulation criteria as described in the "Strategic Aspects of Spectrum Management" paper (loc cit, p 10). Among these regulatory criteria are in particular more flexible frequency usage conditions which should give due regard to existing usages (keywords are convergence, the principle of technological neutrality and efficient use of ). Alongside technical and regulatory aspects relating to frequency requirements, competitive aspects must be taken into consideration because they may be of particular importance to the award of frequencies. The amount of spectrum which is or can be provided for a particular use will, among other things, be relevant to the issue of scarce frequency resources (section 55(9) and section 61 of the TKG) and thus to the kind of award procedure chosen and not least to the costs of acquiring spectrum as a resource. On the other hand, applications (such as GSM and UMTS/IMT- 2000) will only be competitive if they have sufficient spectrum and optimum technical conditions available. Accordingly, the GSM and UMTS concepts which are currently being prepared and the future overall strategy on wireless access will have to be developed with a view to avoiding scarcity scenarios as far as possible and allow quick, transparent and unbureaucratic frequency award procedures to be applied.

So as to give the market a most comprehensive overview and provide the transparency needed for future spectrum award, RegTP decided to open a consultation on the availability of UMTS spectrum at the same time and in the same Official Gazette as the following consultation on the award of further spectrum for public digital cellular mobile communications below 1.9 GHz (GSM concept) (cf Order 33/2005). By opening simultaneous consultations on award procedures in different public mobile bands, RegTP is seeking to avoid, if possible, artificial frequency shortages which may occur when frequencies are awarded in parts.

C:\WINNT\Profiles\124-1a\Local Settings\Temporary Files\OLKA\E-GSM public consultation.doc Seite 1 Concept for the award of further spectrum for public digital cellular mobile communications below 1.9 GHz (GSM concept)

I. Situation

In Germany the digital cellular market was opened step by step by competitive bidding early in the nineties (section 2 of Installations Act (FAG) and sections 10 and 11 of the 1996 TKG). The mobile market was the first to be released from Deutsche Bundespost's monopoly of the time (voice telephony and telecommunication installations monopoly), a step which aimed at opening competition with Deutsche Bundespost Telekom in this market segment for the first time (known as "marginal competition within the monopoly").

At the beginning of the nineties Deutsche Telekom Mobilfunk GmbH (D1 network) and D2 Mobilfunk GmbH (D2 network) were granted the right under section 2 of the FAG to operate mobile networks (cf Official Gazette of the Federal Ministry of Posts and Telecommunications (BMPT) of 5 December 1994, p 866ff). Both companies were assigned frequencies from the 900 MHz band.

In 1994 E-Plus Mobilfunk GmbH (E1 network) was licensed under section 2 of the FAG (cf BMPT's Official Gazette of 5 December 1994, p 880ff). The company was assigned frequencies from the 1800 MHz band.

In 1997 Viag Intercom – called O2 today – was granted a licence under the 1996 TKG (E2 network) as the fourth GSM mobile operator and was assigned frequencies from the 1800 MHz band (cf BMPT's Official Gazette of 21 May 1997, p 679ff).

The D network licences will expire on 31 December 2009, the licence of E-Plus Mobilfunk GmbH is limited to 31 December 2012 and the O2 licence will end on 31 December 2016. In accordance with the different market entry dates the licences are thus valid for different periods of time and based on different legal frameworks applicable at the respective time.

There are however differences other than those referred to above in the GSM mobile networks, which are also due to successive licensing.

In particular the spectrum blocks allocated to the individual licences varied considerably:

When the mobile communications market was opened, spectrum from the 900 MHz band was initially made available in accordance with European harmonisation. The spectrum blocks allocated to the two D network operators were 2 x 12.4 MHZ each from this band.

The E network operators licensed at a later date were granted spectrum blocks – meanwhile harmonised - of 2 x 22.4 MHz each from the 1800 MHz band since 900 MHz spectrum was no longer available at that time.

In 1999 the GSM network operators were allocated further spectrum blocks, which had been cleared in the 1800 MHz spectrum, as extension spectrum (complementary spectrum) for existing networks (cf Ruling by the President's Chamber of 21 June 1999 on the conditions governing the award of further spectrum for mobile applications according to the GSM 1800 standard, RegTP's Official Gazette of 30 June 1999, p 1751ff). At an auction held in October 1999 D network operaters bought approximately equal shares of these frequencies; they have blocks of 2 x 17.4 MHz each now, allowing them to use both the 900 MHz and the 1800 MHz band.

C:\WINNT\Profiles\124-1a\Local Settings\Temporary Internet Files\OLKA\E-GSM public consultation.doc Seite 2 II. Re GSM concept:

The frequency bands 880 – 890/925 – 935 MHz which are designated as E-GSM bands (GSM extension bands) and comprise spectrum of 2 x 10 MHz are the subject of frequency usage subplans 226 and 227. The plans which are the basis for frequency assignments under section 55(1) sentence 3 of the TKG are dedicated to the E-GSM bands which can be used for military applications.

After RegTP had specifically pointed out to the Federal Ministry of Defence that there was an urgent demand for E-GSM bands in the market, the Ministry relinquished its right to use these bands for military applications in March this year and gave its agreement to clearance as required by section 52(3) of the TKG.

The E-GSM bands can thus be made available to the telecoms market in line with market requirements as soon as the relevant subplans regulating frequency usage have been modified, and military use has been replaced by civil use under the Frequency Usage Plan.

So as to accelerate the process of providing this spectrum as far this is possible, RegTP has revised draft subplans 226 and 227 which contain the E-GSM frequencies. The two subplans are presented for consultation in Order 32/2005 of this Official Gazette at the same time as this concept. The revision of the two subplans - a prerequisite for frequency assignments in these frequency bands - will be completed by the autumn of 2005.

Following completion of the formal drafting process, a further block of 2 x 10 MHz from the 880 – 890 /925 – 935 MHz bands will be available for award initially. However, the following concept will not only deal with the frequencies 880 – 890 /925 – 935 MHz, but with all GSM mobile uses below 1.9 GHz ranging to the UMTS band limit.

The draft subplans dedicate E-GSM frequencies to "digital cellular mobile communications".

Accordingly, the concept presented for consultation here also provides for E-GSM frequencies to be made available to GSM mobile communications.

The E-GSM frequencies available now allow the different spectrum blocks allocated to GSM due to successive licensing to be distributed equally among the existing GSM networks and thus create more favourable regulatory prerequisites for fair and sustainable competition in the GSM mobile market within the meaning of section 2(2) para 2 of the TKG. E-GSM frequencies are therefore intended to be shared equally among the E networks which – contrary to D networks – have only had frequencies in the 1800 MHz band so far.

However, as an increase in frequency capacities is not necessary to adjust the regulatory framework in light of fair competition, it is not intended to grant 900 MHz frequencies to the E networks in addition to their previous spectrum. E network operators will therefore be required to transfer part of their existing uses from the 1800 MHz band to the E-GSM bands. Due to this transfer 2 x 10 MHz will eventually be cleared and available in the 1800 MHz frequency band after a migration period of a few months.

The 1800 MHz frequencies of the E networks cleared by transfer of existing uses to the E- GSM band must be returned to RegTP as coherent spectrum and will be made available to the market at a later stage not yet considered in the concept.

Additionally, the GSM concept provides for legal conditions which are the same for all GSM service offerings insofar as the former E network frequency usage conditions governing GSM services apply to offers both in the 1800 MHz and in the 900 MHz spectrum, and the use of all assignments will expire on 31 December 2016, ie the expiry date of the E2 usages. However, due to technological developments and converging GSM and UMTS markets,

C:\WINNT\Profiles\124-1a\Local Settings\Temporary Internet Files\OLKA\E-GSM public consultation.doc Seite 3 revisions and, if appropriate, more flexible frequency usage conditions will certainly already be required in the years to come rather than from 2016 onwards.

In order to adjust, parallel to the spectrum blocks allocated, the market situation of all GSM networks in regulatory terms in light of periods of use and in light of the framework for converging GSM and UMTS markets, GSM network operators will be granted an option to extend the periods of use in future. The concept thus includes a framework for the extensions of assignments in use, which will apply to all GSM network operators alike in case that applications for extensions are submitted under section 55(8) of the TKG.

Following consultation and evaluation of the comments by the President's Chamber the concept will be adopted and then implemented by administrative acts regulating frequency migration and options for extensions or the extensions of frequency usage themselves.

The concept (GSM concept) will be based on the following key elements:

III. Key elements

1. In frequency usage subplans 226 (entries 226007 and 226009) and 227 (entries 227004 and 227006) the frequency use "military radio applications" will be replaced by "digital cellular mobile communications".

The frequency bands 880 – 890/925 – 935 MHz which are designated as E-GSM bands (GSM extension bands) and comprise spectrum of 2 x 10 MHz are the subject of frequency usage subplans 226 and 227. The plans which are the basis for frequency assignments under section 55(1) sentence 3 of the TKG are dedicated to E-GSM bands which can be used for military applications.

After RegTP had pointed out that there was an urgent demand for E-GSM bands in the market and had started negotiations with the Federal Ministry of Defence, the Ministry relinquished its right to use these bands for military applications in March this year and gave its agreement to clearance as required by section 52(3) of the TKG.

Following the agreement reached with the Federal Ministry of Defence under section 52(3) of the TKG, the E-GSM bands can now also be made available to the telecoms market in Germany in line with requirements – as has already been done in many other European countries. Civil use, and the relevant frequency assignments respectively, are however subject to a formal procedure prescribed in the Frequency Usage Plan Ordinance according to which subplans 226 and 227 must be modified first and military use replaced by civil use under the Frequency Usage Plan.

So as to accelerate the process of providing this spectrum as far this is possible, RegTP has already revised draft subplans 226 and 227 which contain the E-GSM frequencies and has reached agreement with the Ministries and federal states as required by section 5(1) of the Frequency Usage Plan Ordinance. In accordance with section 4(2) sentence 2 of the Frequency Usage Plan Ordinance the Advisory Council was consulted on the modifications to the draft subplans in its meeting on 18 April 2005. The two subplans are presented for consultation in accordance with section 6(1) of the Frequency Usage Plan Ordinance in Order 32/2005 of this Official Gazette at the same time as this concept. The revision of the two subplans - a prerequisite for frequency assignments in these frequency bands - will be completed by the autumn of 2005.

The draft subplans presented for consultation in Order 32/2005 dedicate E-GSM frequencies to "digital cellular mobile communications".

C:\WINNT\Profiles\124-1a\Local Settings\Temporary Internet Files\OLKA\E-GSM public consultation.doc Seite 4 The frequency bands 880 – 890 /925 – 935 MHz still include a general assignment for "Cordless Telecommunications CT1+" (cf entries 226008 and 227005). This use cannot however claim protection from other uses in this frequency band and may not cause interference to other uses. An appropriate note to this effect has been included in the draft subplans 226 and 227 (cf Order 32/2005, entries 226009 and 227004).

2. Refarmed frequencies of the extension band (E-GSM: 880-890/925-935 MHz) are intended for use by GSM services.

Under the "digital cellular mobile communications" dedication the E-GSM frequencies will be made available to GSM mobile communications.

It should be pointed out that the mere designation as E-GSM band, ie as GSM extension band, and its use for GSM mobile communications already suggest that GSM services should also be made available in the countries adjacent to Germany and in other European countries. It may be added that there is a demand for GSM spectrum in the 900 MHz band in the German GSM mobile market which – if it can be satisfied – will be a precedent for the future development of the GSM and the UMTS market (cf key elements 3 and 3.2).

With the E-GSM band being dedicated to "digital cellular mobile communications" in the Frequency Usage Plan, the GSM frequency usage conditions and hence the channel and radio frequency pattern will be set at 200 kHz.

3. RegTP intends to make E-GSM frequencies available to existing GSM network operators to ensure fair and sustainable competition in the GSM mobile market.

According to the TKG regulations spectrum available must be provided to the market on a non-discriminatory basis. Due regard must be given here to the regulatory aims of securing fair competition and efficient and interference-free use of frequencies, and promoting markets with sustainable competition as laid down in section 2(2) of the TKG.

Cleared E-GSM spectrum offers a good chance to take account in particular of the promotion of markets with sustainable competition by making spectrum available to the operators of public GSM networks already active in the market.

RegTP therefore intends to provide the frequencies 880 – 890/925 – 935 MHz to the GSM mobile market.

Under the "digital cellular mobile communications" dedication this spectrum is in demand both in the existing public GSM mobile radio networks and possibly for other applications. But especially the E network operators have repeatedly and for a long time already submitted their requirements based on the technical properties of the 900 MHz spectrum to the regulator – officially in 2003 for the last time during the consultation process for the award of the former C network frequencies (eg oral consultation on the refarming of the former C network frequencies of 18 March 2003).

The 900 MHz frequencies are suitable in particular for the nationwide rollout of GSM networks in structurally weak areas. Due to their propagation properties these frequencies may cover larger areas with a low volume of traffic at low cost. The demand of E network operators is evident in particular since they have only had 1800 MHz frequencies available so far. As opposed to this, D network operators are and have been able for a long time already to use their frequencies economically and efficiently for rural coverage because they can use spectrum from both ranges (900 MHz and 1800 MHz) in line with their requirements in the Federal Republic of Germany. By means of the transfer to the 900 MHz band

C:\WINNT\Profiles\124-1a\Local Settings\Temporary Internet Files\OLKA\E-GSM public consultation.doc Seite 5 E network operators are now given the opportunity to ensure a similarly competitive and efficient coverage of structurally weak areas as D network operators.

So as to ensure fair competition and promote markets with sustainable competition (section 2(2) para 2 of the TKG) it is therefore reasonable to provide the spectrum available for use by E network operators.

Due to the emerging change of technology the regulator will moreover be required to reverse the general regulatory conditions distorting competition as far as possible with regard to network operators in order to secure fair competition in the GSM and the UMTS mobile market (section 2(2) para 2 of the TKG).

Although the markets for GSM and UMTS services are (still) deemed to be separate today (cf Ruling by the President's Chamber of 21 June 1999 on the conditions governing the award of further spectrum for mobile applications according to the GSM 1800 standard, RegTP's Official Gazette of 30 June 1999, p 1751, key element 2.1; Ruling by the President's Chamber of 26 May 1999 on award proceedings for licences of the Universal Mobile Telecommunications System (UMTS); RegTP's Official Gazette of 26 May 1999, p 1519, key element 1), E network operators will in future require 900 MHz spectrum even against the background of converging GSM and UMTS markets. The reason is that preparations have been made at national and international level already for some time now to deploy frequency bands still allocated to GSM at present as extension bands for mobile services of the third and later generations in order to allow such frequencies to be used – in one single market – for IMT-2000 technologies such as UMTS in future (cf for instance the Table of Frequency Allocations, Note D 384 A).

In the present market situation the regulatory aims of securing fair competition among the existing market players, promoting markets with sustainable competition and the evident convergence of the markets have priority over potential interests in newcomers as network operators. Currently there seems to be no serious interest in rolling out another GSM mobile network. Additionally, only a block of 2 x 10 MHz would be available as E-GSM frequencies. This would be substantially less spectrum than that of existing mobile operators, and it would not be possible to ensure, in terms of spectrum available, the prerequisites for fair competition for newcomers as compared to existing GSM operators. The additional frequency capacities available after clearance by the Federal Ministry of Defence are to be made available to the market as free 1800 MHz spectrum on an open, transparent and non- discriminatory basis after existing GSM frequency uses have been transferred to the 900 MHz bands. Reference is made to the availability of further mobile spectrum in the UMTS core and the extension band (cf Order 33/2005).

3.1 RegTP intends to make E-GSM frequencies available in subblocks of 2 x 5 MHz.

RegTP intends to provide a total of 2 x 10 MHz so as to allow reasonable use from the technical, regulatory and competitive perspective. It has to be ensured that, in particular in view of the foreseeable future convergence of GSM and UMTS services (cf the Table of Frequency Allocations, usage provision D 384A) and the principle of technological neutrality, GSM frequency bands will in future also be used on the basis of wideband technologies such as UMTS/IMT-2000. To our knowledge, future wideband technology usages will be subject to 5 MHz blocks.

It is therefore advisable to divide the frequency range 880-890/925-935 MHz into 2 x 5 MHz blocks each (upper and lower band) and to provide spectrum in 5 MHz blocks accordingly.

C:\WINNT\Profiles\124-1a\Local Settings\Temporary Internet Files\OLKA\E-GSM public consultation.doc Seite 6

3.2 RegTP intends to distribute E-GSM frequencies equally among E networks

Spectrum in the 900 MHz band is to be provided to E network operators in the GSM market to secure fair competition and promote markets with sustainable competition within the meaning of section 2(2) para 2 of the TKG. Although securing fair and workable competition does not, in principle, justify different treatment of individual network operators active in the market, the availability of E-GSM bands offers the opportunity to adjust – in light of the regulatory aims of promoting markets with sustainable competition (section 2(2) para 2 of the TKG) and ensuring efficient use of frequencies (section 2(2) para 7 of the TKG) - part of the conditions which led to different spectrum blocks allocated to GSM network operators due to successive licensing and hence part of the differences in E network spectrum block allocation as compared to D networks, also due to successive licensing, and thus to promote sustainable competitiveness in the GSM market.

D network operators have frequencies both from the 900 MHz and the 1800 MHz band. Even if large network utilisation is assumed, no demand for further GSM frequencies is noticeable at present. As opposed to this, E network operators are currently restricted to the use of 1800 MHz spectrum. Frequencies from the 900 MHz band are however more appropriate to cover larger areas with low traffic volume at low cost. It is therefore intended also to give E network operators the opportunity to ensure a more competitive and more efficient coverage of structurally weak areas and to roll out their networks accordingly.

There are also international aspects, notably the discussions held at CEPT level about including GSM bands in spectrum harmonisation for mobile applications of the third and later generations, which suggest that a regulatory framework should be created on the basis of non-discrimination and fair competition, which is largely the same for all GSM network operators.

4. E network operators will be required to transfer part of the existing GSM uses to the 900 MHz band (migration).

E network operators will be required ex officio to clear part of the 1800 MHz frequencies and transfer the existing uses to the 900 MHz band.

Given the regulatory aims of securing fair and workable competition (section 2(2) para 2 of the TKG) and achieving efficient use of frequencies (section 2(2) para 7 of the TKG), the frequency blocks of the E network operators which, as compared to D network operators, are larger anyway should not be further increased. It must therefore be ensured that E network operators will not be granted more frequencies in the process of adjusting the regulatory framework of the GSM market. It would run counter to the aims referred to above if E network operators were granted spectrum in addition to the 22.4 MHz available to them. Therefore it is only planned to offer operators the opportunity to transfer existing E network uses from the 1800 MHz band to the 900 MHz band (migration) and to return cleared 1800 MHz spectrum to the regulator.

RegTP will transfer the frequency uses to the 900 MHz band ex officio.

This transfer of existing uses (while maintaining the other applicable frequency usage conditions at the same time) to other frequency bands (known as migration) is a common instrument of frequency regulation and frequency usage planning which is used regularly in other frequency bands ex officio, but also upon application to allow for more efficient frequency usage (cf eg frequency transfers in public trunked and private mobile radio or radio relay). The TKG regulations according to which no applicant or user is entitled to particular frequencies or channels (cf section 55(5) sentence 2 of the TKG, section 55(10) sentence 1

C:\WINNT\Profiles\124-1a\Local Settings\Temporary Internet Files\OLKA\E-GSM public consultation.doc Seite 7 of the TKG, section 63 (2) para 3 of the TKG) have among other things been laid down to enable ex-officio frequency management.

The allocation of 2 x 5 MHz each from the 880 – 890 /925 – 935 MHz band to E network operators is therefore linked to the return of the relevant – also coherent – spectrum from the 1800 MHz band.

So as to safeguard user interests (section 2(2) para 1 of the TKG), a so-called migration concept enabling network operators to keep up uninterrupted coverage must be developed for the transfer of existing uses from the 1800 MHz to the 900 MHz band.

Migration will be effected as soon as possible after clearance in order to be able to make the cleared spectrum available to the market as fast as possible (cf key element 8).

RegTP currently assumes that a period of 5 to 6 months will be sufficient and adequate for migration.

5. Frequencies will be transferred under the licensing and frequency usage rights granted (cf section 150(4) of the TKG).

Frequencies from the 880 – 890 /925 – 935 MHz bands will be assigned in conformity with the licensing and frequency usage rights usually applicable. For digital cellular mobile communications this will be done according to the existing GSM standard and its further developments while the previous regulations of the relevant GSM licence will continue to be valid in accordance with section 150(4) of the TKG. The rights and obligations ensuing from the relevant GSM licences will thus also apply to frequency assignments from the 880 – 890 /925 – 935 MHz range.

Although previous rights of use as referred to above are updated within the scope of existing frequency usage rights, future developments, notably the already evident convergence of mobile markets of the second and third generations, must be taken into account. Especially in view of the ever accelerating change of technology and the ever increasing flexibility of frequency regulation it may be advisable for RegTP to revise and, if necessary, rearrange the existing dedications and frequency assignments as early as in the years to come.

6. The use of E-GSM frequency assignments will be limited to 31 December 2016.

The use of frequency assignments from the 880 – 890 /925 – 935 MHz bands will initially be limited to 31 December 2016 in connection with the adjustment of the regulatory framework for GSM usages.

According to section 55(8) of the TKG frequency assignments are typically assigned for a limited period. Limiting frequency assignments to 31 December 2016 appears to be appropriate from the perspective of adjusting the GSM regulatory framework and does not unnecessarily anticipate future developments in the GSM market. 31 December 2016 is the expiry date of the last GSM frequency assignments (E-2 licence). By determining the same expiry date for the new frequency assignments of the GSM services, there will be the same regulatory basis for all E network operators not only in respect of spectrum allocated, but also with regard to periods of limitation.

C:\WINNT\Profiles\124-1a\Local Settings\Temporary Internet Files\OLKA\E-GSM public consultation.doc Seite 8

7. GSM network operators will be offered an option to extend use of their previous assignments, allowing them to exercise their frequency usage rights until 31 December 2016.

One and the same expiry date for the use of assignments in coherent frequency bands appears useful in regulation in light of possible expiry dates of uses and potential refarming processes. More recently, identical expiry dates have already been determined in other frequency bands such as public trunked radio or UMTS. This idea is of special relevance to the GSM market. Given the change of technology and the resulting requirements for frequency regulation it seems to be reasonable in particular in this sector to adjust the conditions which distort competition overall. This applies not only to the spectrum available for the 900 MHz and 1800 MHz bands, but also to the individual expiry dates of the frequency assignments which will continue to exist. The first GSM frequency assignments (D networks) are limited to the end of 2009. RegTP assumes that there will still be a significant demand for GSM services beyond 2009 as UMTS services cannot meet the nationwide demand for mobile services for the time being. Therefore, it appears advisable to create, already today, a framework for extensions which is the same for all. In this way it will also be possible to adjust the rights of use for GSM in terms of time.

The new TKG provides for the extension of limited frequency usage rights (section 55(8) of the TKG). If there is still a demand for such services in the market, the network operator will be able to contact RegTP and submit an appropriate application for extension. GSM network operators could therefore apply for extension prior to the expiry dates of their assignments. RegTP will therefore make proactive efforts to determine the framework for extensions of assignments now. This will create a regulatory environment allowing RegTP to decide on the future use of the whole spectrum at one and the same date, ie a reasonable time ahead of the expiry of the first assignments. Against this background it does not seem advisable for RegTP as the regulator to wait until applications for extensions are submitted successively.

The use of all the frequencies allocated in the GSM range will – parallel to other frequency bands – be limited to 31 December 2016. This is the expiry date under the E2 licence as the last licensed mobile network. By providing the framework RegTP will adjust the GSM licence/frequency assignments in terms of time. Even if the period of validity of the licence is adjusted, the other licensing/frequency usage conditions will not be changed. The rights and obligations of mobile network operators remain unaffected. In this respect the periods of use will be extended for all operators while the previous licensing/frequency usage conditions will continue to be in effect. As provided for by section 150(4) of the TKG the previous licensing conditions will thus continue to apply with adjusted periods of use for frequency assignments.

With this in mind, RegTP plans to offer GSM network operators active in the market an option to extend their assignments to no later than 31 December 2016. This will give GSM operators appropriate planning certainty. The individual GSM operators may exercise this option by submitting an application under section 55(8) of the TKG in accordance with their business planning.

C:\WINNT\Profiles\124-1a\Local Settings\Temporary Internet Files\OLKA\E-GSM public consultation.doc Seite 9

8. The spectrum cleared by the transfer of GSM uses to the E-GSM band must be made available to the market in line with demand and on a non-discriminatory basis.

Following the transfer of frequency usages as described in key element 4 1800 MHz spectrum will be available again. The spectrum is to be provided to the market in line with demand and on a non-discriminatory basis. RegTP will prepare an appropriate concept after the spectrum has been returned.

Given the future convergence of the still separate GSM and UMTS markets (cf Ruling by the President's Chamber of 21 June 1999 on the conditions governing the award of further frequencies for mobile applications according to the GSM 1800 standard (RegTP's Official Gazette of 30 June 1999, p 1751, key element 2.1; Ruling by the President's Chamber of 26 May 1999 on award proceedings for licences of the Universal Mobile Telecommunications System (UMTS); RegTP's Official Gazette of 26 May 1999, p 1519, key element 1) another (sub)concept considering several separate markets together might be required. In this respect it should be pointed out that UMTS frequencies are currently also available for award. With this future (sub)concept for mobile usages in mind, RegTP has developed first considerations on UMTS spectrum award proceedings in the 2 and 2.5 GHz frequency bands and presented them for consultation in this Official Gazette, Order 33/2005, too.

IV. Further action

The above key elements are hereby presented for consultation. Following the evaluation of the comments submitted, the President's Chamber will issue a decision, based on the key elements, on the provision of further spectrum below 1.9 GHz (GSM concept) – in particular the 880 – 890 /925 – 935 MHz frequency bands.

Responses are requested in German by 4 July 2005 at the latest. The office responsible is

Regulierungsbehörde für Telekommunikation und Post Referat 212 Tulpenfeld 4 53113 Bonn

Please send your comments by e-mail as a Word file (or a pdf file, if appropriate) to hans- [email protected] . A version in which confidential parts have been blacked out should also be attached.

212c

C:\WINNT\Profiles\124-1a\Local Settings\Temporary Internet Files\OLKA\E-GSM public consultation.doc Seite 10