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JAPAN, EUROPE FORGE AHEAD ON 3G LICENSES

Though the International Telecommunication Union is months away from reaching a consensus on third-generation standards, European and Japanese governments are revealing plans to auction third-generation spectrum next year.

The race is on to deploy 3G services. Some key European countries and Japan see 3G services as an opportunity to become world leaders in mobile-phone technology. The European Union has required member countries to deploy European Telecommunications Standards Institute-chosen technology by 2001.

Third-generation technology will allow operators to offer high-speed data rates of 384 kilobits per second, paving the way for the introduction of sophisticated multimedia services such as Internet access and full-motion video.

The Radiocommunications Authority in the United Kingdom recently disclosed it will auction four licenses for 3G services by mid-1999 and has indicated a number of companies are interested in participating in the auction and forming consortia to bid.

“Many of the operators are very keen about 3G for one reason: It would help them maintain revenue-generating potential,” said Jake Saunders, an analyst with The Strategis Group in London. “Tariff prices are down. If you offer a very feature-rich service, you can justify a higher-price margin. We’ll see many operators going after this.”

The United Kingdom has four mobile phone operators with 9.1 million subscribers and a penetration rate of 16 percent. Vodafone Group plc, Cellnet, Orange plc and One-2-One are expected to be strong contenders for the 2 GHz spectrum because they are running out of capacity on their networks.

Saunders said Germany also aggressively is moving ahead on licensing 3G spectrum, while France, Spain and Italy have some concern about meeting the EU’s 2001 deadline.

In Japan, the Ministry of Posts and Telecommunications has set the stage to offer three next-generation licenses in each operating area by the end of 1999, causing many Japanese companies to begin looking for partners.

Industry experts believe Japan’s six mobile phone operators will form three consortia to go after the licenses. Licensees will be allowed to operate nationwide or inter-region services in addition to region-specific operations.

Japanese newspapers indicate NTT DoCoMo, Japan’s largest wireless operator, along with DDI Corp., Nippon Idou Tsushin Corp., Kokusai Denshin Denwa Co., Japan Telecom Co. and Nissan Motor Co. want licenses.

Analysts say the success of 3G is vital for Japan, which desperately wants to establish a dominant position in the worldwide wireless marketplace. The country was one of the first in the world to introduce digital service, but ended up stranded in the worldwide market as other countries pushed ahead with digital protocols different from Personal Digital Cellular technology.

“Japan has been out of the protocol running for some time,” said Saunders. “They don’t want to miss the boat, so they will aggressively develop the market for handsets, a market currently dominated by U.S. and European handset makers.”

What third-generation family of standards will emerge from the ITU in March remains to be seen. The majority of proposals submitted by the world’s standards bodies and other groups are based on wideband Code Division Multiple Access technology, but a strong division remains between W-CDMA technology based on Global System for Mobile communications technology and cdma2000, based on the Interim Standard-95 protocol.

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