The European Commission is pushing telecoms companies to share the radio frequencies they use for mobile and broadband services as space runs out for rapidly increasing Web use.
European economies must squeeze more out of the radio waves that carry mobile and Internet technologies if they are to cope with the huge growth in demand for data services on smartphones and tablet computers.
More than 50% of all smartphone traffic is routed over Wi-Fi networks and this type of traffic is growing four to six times faster than that on mobile networks, the commission said.
Companies that own parts of the radio wave spectrum after liberalisation in the 1990s consider this capacity to be among their most valuable assets and many have been reluctant to share.
Spectrum is a finite resource so it can carry only a certain amount of traffic. If you have licences for adjacent blocks of spectrum, then you can carry more traffic. If your blocks are separated by a slice owned by someone else, you can't carry as much traffic.
"What we see with spectrum right now is it's broken up in incredibly tiny parts spread across 27 different member states," European Commission spokesman Ryan Heath told a briefing on Monday. "That is obviously not the best way to exploit the resource."
A commission proposal, which is non-binding for now, says that companies that do not own spectrum could negotiate sharing deals with those that do and ask national regulators to approve the agreements.
Such deals could also help operators to recoup some of their network-building costs by sharing spectrum in specific areas or at times of the day when it is vacant, the commission said.
Telecoms companies may be reluctant to share such resources unless they are persuaded of the potential for worthwhile returns, having had to pay high prices at auction for their slices of spectrum.
In some countries steps have already been taken to ensure that companies that do not own spectrum can still market mobile services.
National spectrum-sharing decisions
A spectrum auction for very fast fourth-generation mobile licences in France required the three companies that won spectrum in the 800 MHz band to sell wholesale access to mobile virtual network operators (MVNOs). The MVNOs can then sell mobile service to consumers without owning their own networks or spectrum.
The 800 MHz band is considered the most valuable because it offers an ideal balance between the ability to carry data, travel long distances and penetrate buildings.
In Austria, Hutchison agreed to a similar accord in an effort to win approval for its acquisition of Orange Austria, which is now under antitrust review.
The European Commission said that it wants to loosen the grip of companies on parts of the spectrum to make room for innovations such as smart meters to record electricity use in buildings.
EU competition authorities forced Everything Everywhere, Britain's largest mobile operator and owner of the Orange and T-Mobile networks, to transfer some of its spectrum to rival Three.
Heath said that the European Commission's proposal would not reduce the quality of service, adding that the hope is for it to spur a secondary market for trading spectrum rights.
As new digital technology replaces traditional analogue to meet the 2012 European deadline for the so-called 'digital switchover', the same services can be provided with less spectrum, opening up new opportunities for other operators.
The 'digital dividend' - spectrum that is freed as a result of the switchover - has been hailed in Brussels as a way to boost growth in a highly profitable digital market and bring broadband to remote areas that may not have terrestrial networks.
Brussels proposed to allocate the 790-862 MHz sub-band to telecoms operators to allow them to exploit the digital dividend. The 800 MHz band ranks among the most valuable freed frequencies, since it travels long distances and through buildings.
In November 2009, the European Parliament and the Council agreed to modify EU telecoms rules and called on the European Commission to propose a multi-annual Radio Spectrum Policy Programme.
The objective of the programme is to "set out the policy orientations and objectives for the strategic planning and harmonisation of the use of radio spectrum".
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