Public Consultation on Resolution no.

343/07/CONS

Rome, October 8, 2007

Authority for Guarantees in Communications Department of Networks and Electronic Communication Services Centro Direzionale, Isola B/5, Torre Francesco 80143 Naples

For the attention of Ing. Mauro Martino, Procedure Supervisor

Communication anticipated by email

Subject: Position of Ericsson Telecomunicazioni S.p.A. on the Public Consultation on the use of 900, 1800 and 2100 MHz frequency bands by mobile radio systems This company, taking note of the Public Consultation announced in the Official Gazette of the Italian Republic, issue 185 dated August 10, 2007, is responding to the Authoritys invitation to express some considerations regarding in particular the matters set forth in Annex B to the Consultation text. For the world of mobile communications, this year was the 20th anniversary of the agreement signed in Copenhagen by 15 mobile operators that led to the development of the Global System for Mobile Communications (GSM). In its 20 years of life, GSM has unquestionably become the mobile digital communication standard most widely used around the world. At present it is used by more than 700 mobile operators, and helps to notably improve the quality of life of around 2.5 million people. To understand the reasons for this huge technological success, it is necessary to look at its origins. The standardization process began in 1982 a time when operators were still using incompatible analog standards with the formation of the Groupe Spciale Mobile, whose assignment was to create a standard for a pan-European public cellular system.

The purpose of the project was to develop a common system that would make it possible to operate under a system of free competition, and at the same time, thanks to standardization, would enable all interested manufacturers to enter the market. The number of competitors using a shared standard, the economies of scale that made it possible to lower the prices of mobile phones, and the high quality of the equipment the fruit of years of research were the main factors that contributed to the widespread adoption of the technology and to the fast penetration of GSM service among users. GSM then engendered a whole family of technologies that kept pace with users expectations and needs, such as GPRS, EDGE, WCDMA and HSPA, which now account for more than 85% of the worldwide mobile market. The European Commissions proposal to repeal Council Directive 87/372/EEC dated June 25, 1987, on the frequency bands to be assigned for the coordinated introduction of the pan-European public digital cellular system of terrestrial mobile radiotelephony in the Community, was prompted by the need expressed by the marketplace, which saw these technologies as the natural evolution of the GSM service. Moreover, the growing demand in the market, and in particular among users, to be able to use a wider range of services through UMTS technology, also translated into the possibility of optimizing use of the frequency bands that up till now have been subject to the GSM directive, thereby enabling whoever so requests to develop WCDMA systems while maintaining service coordination and assuring operational continuity of the GSM systems. This company, welcoming with satisfaction and interest the analysis undertaken by the Authority, thinks it important to emphasize that the conditions for using the 900 MHz band should in any case be open and harmonized at the EU level so as to facilitate the introduction of pan-European services and guarantee to consumers maximum freedom in using the service in mobility and continuity even outside their own countries. The new plan would benefit the whole sector of electronic communications and their users. The 900 MHz frequency band: Redefinition of the regulatory framework 1.1 Do you agree with the proposals for assigning and refarming the 900 MHz band for mobile radio systems according to the two scenarios envisaged? At present, the GSM directive requires Member States to reserve the 890-915 and 935-960 MHz bands entirely for GSM. This constraint prevents the bands in question from being used by non-GSM pan-European systems that make it possible to deliver the advanced interoperable services of broadband voice, data and multimedia content transmission that are increasingly demanded by users.

Expected growth in usage: example from a representative European country Repeal of the GSM directive would provide a way out of the present situation, where the use of certain radio frequencies is limited to GSM. Moreover, the process of rationalizing the frequencies in question would enable more efficient use of the band, and as a result would make further frequencies available for assigning new licenses for the pan-European UMTS system. This company hopes that in Italy too, consistently with the European Community scenario, it would be advisable to define a legal framework to govern the technical conditions capable enabling coexistence between the GMS systems and the UMTS systems that will be allowed to use the 900 MHz band. However, this measure should be supplemented with adequate technical steps to preserve the current harmonization of the spectrum and guarantee protection of the GSM services that currently use the band. This company, while agreeing with the proposals to assign and refarm the 900 MHz band for mobile radio systems, believes that if the operators do not reach a valid compromise as envisaged in the Authoritys scenario A, then scenario B improved as a whole could satisfy the technical, economic, competitive and regulatory aspects that concern the market in question.. In fact, in scenario B, besides assigning the available spectrum to operators who have no frequencies in the 900 MHz band in which to develop UMTS systems, the benefits from repeal of the GSM

directive should be extended to the current licensees of 900 MHz frequencies, instead of subjecting them to the constraint of the expiration of their respective licenses. This condition would enable operators to implement technological choices in advance in a freecompetition framework, and not necessarily have to wait for dates imposed by the bureaucratic system. Moreover, thanks to this condition alone, end users would be able to benefit from competitive logics regarding services and rates, and from economies of scale that would encourage purchases of multiband terminals. It is useful to consider, though, that for GSM and UMTS systems to coexist in the band in question, each operator has to have the use of at least two 5-MHz blocks (one for 2G and the other for 3G). In the process of spectrum assignment and rationalization, the Regulator will need to take account of this technological constraint in assuring equal opportunity and competitive position in the 900 MHz spectrum to current operators and new entrants. This would fully satisfy the criteria of objectivity, transparency, nondiscrimination and proportionality established by the Authority and the Communications Ministry as the key criteria for the assignment of frequencies, and more in general for all measures that significantly affect the System. From the technological standpoint, the propagation characteristics of the higher frequency bands are less favorable than those of the 900 MHz band. Moreover, it is a well-known fact that the lower bands are more suitable for penetrating buildings. An operator that has no 900 MHz frequencies at present might be interested in developing WCDMA (UMTS) systems in this band, because it could offer new users services that are already much appreciated in the mass market. A decision of this kind would strike a balance among existing operators, making the competitive pressure of new entrants that respect the incumbent operators coverage obligations immediately more effective. On the other hand, operators that have deployed GSM technologies in the frequencies in question will have to safeguard a large user pool that continues to prefer and use GSM networks and terminals. Accordingly, besides innovating their GSM networks (e.g., with GPRS and EDGE technology), these operators can adopt technological-replacement plans, compatibly with the gradual transition that their own customer base will decide to make toward new and innovative technologies. Given the need to manage a gradual technological transition over time, these operators may find that the best solution for them the technological availability offered by the Long Term Evolution systems that are now appearing in the world communications market.

Evolution of IMT-2000/WCDMA technology This technology, an evolution of UMTS access, is not only an innovation capable of meeting user needs; it also offers the operator a possibility for easier network planning that can guarantee proper service quality for all customers. In fact, if the UMTS system typically requires 5-MHz channels of the scarce resource, the LTE system can be implemented on channels that are submultiples of 5 MHz (1.25 MHz, 2.50 MHz). This will enable operators that deploy GSM technology in the 900 MHz frequency to use the frequencies they have in the best possible way, and thereby ease end users gradual transition to the new technology. 1.2 Do you think the conditions envisaged for assigning these frequencies are adequate? Repeal of the GSM directive by a Community measure, adoption of the conditions for coexistence of GSM and UMTS, and the abrogation of timing constraints (related to the expiration of the GSM licenses) on the use of UMTS technology in the 900 MHz band are necessary to ensure prompt and harmonized introduction of the new conditions for using the radio spectrum in Italy and in all the Member States of the European Union, which are intended to benefit its citizens. 1.3 What should the timeframe be for implementing the new assignment plan in scenarios A and B? Based on the matters outlined in our answer to question 1.1, we hope the frequencies available in the 900 MHz band for the development of the pan-European UMTS system, for which equipment is already available, will be assigned rapidly. At the same time, as we prefer a market based on free competition, we hope that in both scenario A and scenario B the benefits of the repeal of the GSM directive will be extended to the current licensees of 900 MHz frequencies. They should not be subjected to the constraint of the expiry of

their respective licenses (2015-2018), but should be permitted to refarm in advance on a voluntary basis. The 1800 MHz frequency band: Redefinition of the regulatory framework 2.1 Do you agree with the proposals for assigning the 1800 MHz band for mobile radio systems? As the Authority has fully explained, the frequencies available in the 1800 MHz band can be assigned after market demand has been verified. As we prefer a market based on free competition, we hope the assignment will be made through instruments of free competition among all interested operators. 2.2 Do you think the conditions envisaged for assigning these frequencies are adequate? Band assignment should be examined on the basis of the market needs expressed by telecommunications operators, and taking account of the needs of GSM users. 2.3 In particular, what should the timeframe be for the assignment of further bands? How long would it take for 3G equipment to be available? The timeframe depends on market demand, if any. It should be noted that the spectrum in question could be used both by GSM systems any by their evolution (MCDMA, HSPA, LTE). 2.4 How might a refarming plan be organized for the assigned band? The refarming plan for this band can be judged only downstream from the market needs expressed by telecommunications operators. Technical conditions for refarming the 900 and 1800 MHz bands 3.1 Do you agree with the technical proposal for refarming in the 900 and 1800 MHz bands? We agree with the technical refarming proposal, but wish to point out that the fundamental prerequisite for the coexistence of contiguous GSM and UMTS channels remains facilitation of the principle of negotiation among operators for possible deployment of the network. While we think guard bands are necessary to enable the two technologies to coexist, it might be useful, in pursuing optimal use of the frequencies, to prepare a refarming plan that gives preference to contiguous frequencies for UMTS systems. Moreover, it should be noted that solutions for further optimizing the efficiency of GSM at 900 MHz and 1800 MHz such as the use of advanced frequency-planning techniques and more flexible modulation methods (e.g., AMR, which is already widely available on terminals) are already available.

3.2 Under what conditions could existing GSM operators be authorized to change their technology? In particular, how should user protection be verified? The prerequisite for switching from 2G to 3G in the 900 MHz band is not to cause congestion during radio access to network resources. Considering the channel bandwidths required for the two systems (5 MHz for UMTS, 200 KHz for GSM), a switch from 2G to 3G in the 900 MHz would subtract 25 GSM radio channels, at least in the first phase. Considering both the 3GPP and the ECC Report 82, this value is equal to 2.7 MHz and 2.8 MHz, respectively, between the two frequency-centers of the two adjacent radio carriers; that is, approximately one radio carrier. If a 3G channel is introduced, the total band subtracted from the GSM system would in the worst case be equal to 29 radio carriers. Given these data, and in the case of a normal average user traffic profile, it can be reasonably said that in both scenario A and scenario B, the conditions under which existing GSM operators could be authorized to change their technology without causing congestion during access to network radio resources would be prior harmonization among the operators. As noted in our reply to question 3.1, more effective use of the 1800 MHz band and possibly its upgrading could give operators valid support in the transition phase, as part of the user pool migrates to this band. At the same time, it would be wise to ensure a significant penetration of 3G terminals operating on the 900 MHz band, so as to make use of the resources freed for users effective immediately. User protection could also be verified by having appropriate preventive measures monitored by the relevant agencies. 3.3 The draft Community decision now being adopted provides for flexible use of the 900 and 1800 bands for compatible pan-European electronic communication systems, including (in the current text) UMTS. Do you intend to propose introducing other technologies? How? This company hopes that the Authority, in harmony with the Community directives, will introduce new regulatory conditions for use of the 900 MHz band, while continuing to assure the functioning of the GSM services, and limiting the effect of the measures to pan-European application of UMTS electronic communication services. In our opinion, radio spectrum policy should take account of the growing and continually evolving diversity of radio access platforms for wireless public communications. At the same time, the policy should assure a regulatory framework that encourages the innovation of technologies according to a harmonized European standard, so as to guarantee conformity with the overall political goal of developing the internal EU market and strengthening Europes competitiveness. Achievement of this overall goal is furthered by the introduction, based on EU accords, of shared solutions such as GSM and its evolutions (WCDMA, HSPA, LTE).

The fact that GSM systems (like UMTS in Europe and the world) are used much more widely than other technologies is a tangible example of how a shared standard, economies of scale, and equipment innovation resulting from years of research are essential factors for the diffusion of a technology that represents primarily a benefit for consumers.

Expected growth of mobile subscriptions through 2012 It should be kept in mind that use of the frequency bands under less restrictive technical conditions, based on a policy of giving non-pan-European systems wireless access to electronic communication services, would not encourage rational and efficient use of the scarce resource, high-quality service, technological evolution or the necessary economies of scale; to the contrary, it would have negative effects on end users and on the Country System in general. Reassignment of frequency blocks in the 2.1 GHz band 4.1 Do you agree with the proposal to assign the band from 2x15 MHz to 2.1 GHz ex IPSE2000 in blocks of 2x5 MHz, reserving two for a new entrant for the offering of third-generation mobile services, and allowing existing operators to bid for the third? This company thinks it useful to point out that before hypothesizing the entry of a new operator for the offering of third-generation mobile services, it would be wise to make a careful analysis of the regulatory and competitive impact it would have on existing operators. The difficulty of sustaining investments due to the entry of a new operator might violate the principle of efficient use of the spectrum.

To avoid violating the conditions on which the UMTS bidding is based, and to avoid discriminating against new entrants, this company hopes that bidding for the three available blocks will be open only to existing mobile operators. A decision of this kind by the Authority would guarantee nondiscrimination and proportionality among companies operating in the mobile telephony sector in Italy, and would avoid an inefficient allocation of resources to a different company which in all probability would repeat the well-known negative experiences of some new entrants. 4.2 Do you agree with the proposed conditions for assignment? In light of the matters discussed in our answer to question 4.1, we hope that these new assignments will establish coverage requirements for users of the new spectrum comparable to those established in the previous selection. 4.3 If your company can be considered a new entrant in the market for public mobile services, please attach a nonbinding letter (maximum two pages) expressing your interest, complete with indications as to your plans and the financial resources you would activate to carry them out. Not applicable. 4.4 Do you agree with the proposal to exchange the 5-MHz TDD block as described above? No comment. The foregoing is not of a confidential or secret nature such as would justify barring access thereto, and is cleared for publication.