Responding to a letter sent in December from the US administration, the EU Telecommunications Commissioner, Mr Martin Bangemann, said earlier this week he firmly rejected US claims of potential European access barriers for third generation (3G) mobile communications.
The US letter, signed by the Secretary of State, Ms Madeleine Albright, US trade representative Ms Charlene Barshefsky, the US Secretary of Commerce, Mr William Daley and the chairman of the Federal Communications Commission, Mr William Kennard, had expressed concern at "the unfortunate precedents the EU and its member-states could set by adopting a single, mandatory standard for wireless equipment and services". Ms Barshefsky's office on Wednesday said Mr Bangemann's response "fell short of addressing several specific US concerns".
However, the US did welcome what it saw as EU support for the efforts of the UN's International Telecommunications Union (ITU) to agree new standards for the next generation of mobile networks.
Nevertheless, Ms Barshefsky said: "In accordance with Europe's WTO commitments, EU member-states should now license and assign radio spectrum to the maximum number of service providers without regard to technology, based on standards that emerge from the ITU negotiations."'
The ITU is due to select a third-generation standard - or set of standards - by March 31st. However, the British government last November announced its intention to auction licences later this year.
The European Technical Standards Institute (ETSI), based in Nice, France, last year chose a single third-generation mobile standard, called Universal Mobile Telecommunications System (UMTS). A European Parliament and Council of Telecommunications decision on December 14th requires member-states to prepare national licensing regimes by January 1st, 2000, to allow the co-ordinated introduction of UMTS service by January 1st, 2002. Mr Bangemann rejected US concerns that a single standard was chosen which would prevent American firms with technology based on other standards selling equipment in Europe. He said the EU's decision "does not define any technological content nor does it establish UMTS as an exclusive standard". Third-generation mobile telephony promises many improvements over the current generation of cellular telephony. Faster data channels will allow Internet access from mobile phones, as well as multimedia capabilities, such as video conferencing.
One of the primary aims is to achieve global roaming, which will require agreement on standards. Currently the GSM system developed in Europe is used in more than 100 countries, but is not widespread in the US. This means users of GSM phones can make and receive calls while travelling around Europe and Asia, for example, but not in the US.
The adoption of different standards in the US has contributed to a feeling that US firms missed out in GSM technology. Finnish manufacturer Nokia recently overtook Chicago-based Motorola as the world's biggest mobile equipment supplier (largest revenues from sales of handsets and network equipment), while Sweden's Ericsson has also fared well since the introduction of GSM.
Japanese firms are also concerned about getting a share of 3G technology. Japan has both GSM and US-type second-generation cellular networks, but is involved in the UMTS standardisation. NTT DoCoMo, the largest cellular operator in the world prior to the Vodafone-AirTouch takeover, plans to be the first to start a UMTS network, in 2001.
The extent of US concerns is highlighted by the unprecedented signing of the letter to Mr Bangemann by four high-ranking officials, and by another letter sent to US President Bill Clinton by Republican opposition leaders.
However, attempting to sidestep the issue, Mr Bangemann said it was up to industry, not policy-makers to decide, saying the EU did not, and would not, interfere in such an industry-led process. He expressed "surprise that the US government seems to be asking for regulatory intervention in an industry-led process" and said the real issue seemed to be about intellectual property rights.
One of the central issues in the US-EU dispute has been disagreement over patent royalties between San Diego-based Qualcomm and Ericsson of Sweden. Qualcomm holds several patents on what it claims is the core technology used in UMTS, but Ericsson feels the current standard is based on wider work and does not infringe Qualcomm's intellectual property rights.
Another central issue is the need for third-generation mobile networks to be compatible with existing networks, so that third-generation phones will still work where there is no third-generation network coverage.
While UMTS will achieve this with current GSM networks, the mix of second-generation networks in the US means UMTS could not achieve so-called "backward compatibility" there. Hence the US is pushing for either multiple standards, or for a harmonisation of UMTS with US third-generation standards.
Nevertheless, while Mr Bangemann has not precluded multiple third-generation standards being used in Europe, Mr Bold said early European support for UMTS would have a "tipping effect on other markets". He said Qualcomm's patents could block the process until the impasse over radio standards is resolved.
