The question of infrastructure sharing in networks for mobile communication has been brought to the forefront in recent years partially as a consequence of the entry of new mobile operators with 3G licenses. These new operators have met difficulties when trying to erect numerous masts in an environment many people regard as already saturated with unsightly constructions.
On 12 May 2000, the Swedish National Post and Telecom Agency (PTS) announced an invitation for applications for licences to provide network capacity for mobile telecommunication services in Sweden in accordance with the UMTS/IMT-2000 standard (UMTS licences). The licences were to be granted in a beauty contest where points were awarded on the basis of the reach and speed of the operator’s promised network rollout. The proposed reach was measured against percentage of population covered, percentage of the national territory covered and geographic distribution of coverage.
The PTS decided, on 16 December 2000, to grant UMTS licences to four of the ten applicants to: Vodafone, Hi3G (a joint venture between Hutchison Whampoa and Swedish company Investor AB), Orange and Tele2. All four applicants had pledged their networks would reach 99.98 percent of the Swedish population by the end of 2003. According to reports in March 2004 from the operators to the PTS, actual coverage by that date varied between the networks from 66 to 74 percent of the population.
The extensive coverage pledged is estimated to have required the construction of some 8,000 to 10,000 new masts for radio transmitters. The UMTS licence conditions permit sharing up to 70 percent of the radio infrastructure necessary, but a great many new masts will still be required. A survey of Swedish municipalities has shown that the responding municipalities had received approximately 6,000 requests for building permits regarding masts for radio transmission during 2001 and 2002.
As a consequence of a groundswell in public opinion, municipal planning authorities have sought to encourage operators to share mast facilities whenever feasible. The opportunities for sharing the network infrastructure have further increased through the forming of two consortia. A licence and network sharing agreement has been entered into between Tele2 and the incumbent TeliaSonera (who unexpectedly failed to gain a licence) and a joint venture network operator, 3GIS, was set up by Hi3G, Vodafone and Orange. Orange has however since withdrawn from the Swedish market and has sought regulatory clearance to transfer its licence to the Tele2/TeliaSonera joint venture.
In spite of the incentives for mutual infrastructure sharing agreements such as mast sharing, there are many reports of difficulties in reaching such agreements. The PTS has agreed one request to impose an obligation to share a radio mast, and has since received nine further requests. This article will look at the regulatory requirements for such a request to be granted.
Article 12 Section 2 of the Framework Directive (2002/21/EC) sets out that where undertakings are deprived of viable alternatives because of the need to protect the environment, public health, public security or to meet town and country planning objectives, Member States may impose the sharing of facilities or property (including physical co-location) on an undertaking operating an electronic communications network only after an appropriate period of public consultation. It is further provided that the national regulator shall encourage the sharing of facilities or properties.
Article 12 of the Access Directive (2002/19/EC) sets out that a national regulator may impose obligations on operators with SMP status, i.e. an operator with power to act independent of its competitors and customers on a specific market, to meet reasonable requests for access to, and use of, specific network elements and associated facilities where the regulator considers that denial of access or unreasonable terms and conditions having a similar effect would hinder the emergence of a sustainable competitive market at the retail level, or would not be in the end-user’s interest. Operators with SMP status may, under this Article, sub-section (f), be required to provide co-location or other forms of facility sharing including duct, building or mast sharing. It follows from this that an operator may become obliged not to withdraw access to facilities already granted.
On 24 July 2003 a new Act on Electronic Communications entered into force in Sweden implementing the new regulatory framework. It is provided in Chapter 4 Section 14 of the Act that an operator, regardless of SMP status, may be ordered to provide, in return for commercial reward, co-location or other opportunities for shared use of property or other resources. If an operator cannot reach a voluntary agreement on commercial terms for mast sharing, it may request the NRA to impose an obligation. A precondition for such an obligation is that it is required in order to protect the environment, public health or public security, or to achieve the objectives of public planning.
The definition of an operator, who may be required to provide co-location, is quite wide: a party that possesses or in other way controls a public communications network or associated installation.
The PTS has indicated that a rejected application for a construction permit shall be sufficient in order to prove that co-location or access is required for environmental reasons. The Authority has also stated that, referring to statements made in Parliament when deliberating the proposed Act, it would not require an appeal of an already denied construction permit to have run its course before deciding a request. It is not for the Authority to second-guess whether a court will overturn denial of a construction permit.
Presumably the operator requesting a co-location decision from the PTS must at least claim that access to the particular mast is necessary with regard to the operator’s network planning. The situation in Sweden has been that several operators have planned their UMTS networks on the basis that mast sharing agreements would be forthcoming, as was the case in earlier mobile network roll-outs. This time such agreements appear to have been more difficult to obtain.
The Täby Mast
Hi3G, having failed to reach an agreement with Tele2 to place a transmitter in a mast situated in the municipality of Täby outside Stockholm, requested that the PTS impose a co-location obligation regarding this mast. In the first mast sharing decision so far the PTS denied the motion on the grounds that the mast in question was shown to be already operating at capacity. The calculation of the mast load in the case included an estimate of a reasonable future increase of demand for capacity from the owner of the mast.
Hi3G had further requested that Tele2 be required to have the mast strengthened or replaced in order to provide the necessary capacity. Hi3G stipulated it would bear reasonable and necessary costs for such a so-called site adjustment.
The PTS found that the relevant legislation, in its opinion, could be interpreted as granting it the authority to order the imposition of a site adjustment. It went on to observe that the Swedish legislator, as a rule, has confined itself to impose obligations in the area of telecommunications to situations where excess capacity is deemed to exist. The PTS quoted an earlier preparatory work regarding an obligation to offer capacity in mobile networks. The legislator had stated, (commenting on a proposal from the PTS) that it did not follow from the right to require access to excess capacity that an operator could be required to plan its network so as to provide such excess capacity.
The PTS drew the conclusion that an obligation (in the telecoms area) to provide access does not encompass an obligation to carry out expansion or adjustment as might be required to grant access. If the legislator had intended to deviate from this view when drafting the new Electronic Communications Act, then this ought to have been expressed in the legislation or at least in its consultation paper. This is especially important as an obligation to provide access curtails the protection of property expressed in the Constitution and other co-location obligations set out in the Act can only be imposed with a view to available capacity.
The PTS rejected Tele2’s demand for compensation for costs incurred in this regulatory procedure.
The Täby decision has been appealed to the Stockholm Administrative Court.
Pending requests for mast sharing
The network operator 3GIS has nine requests for mast sharing pending with the PTS. If these applications actually lead to a decision (they may be settled between the parties) the rulings may clarify whether a denied construction permit needs to be appealed at all before the operator can turn to the PTS for assistance.
The PTS is in the midst of carrying out the market analysis procedure set out in Article 16 of the Framework Directive. Conceivably this process could lead to the imposition of co-location obligations. However, in a preliminary assessment only one mobile network operator, TeliaSonera, has been deemed to hold significant market power in the market for access and call origination on public mobile telephone networks. There is not yet any preliminary decision regarding obligations for this market at the time of writing.
Imposing a mast sharing obligation requires a pre-existing mast to share. In Sweden, it is likely that such a mast will belong to an established mobile network operator, who will have little incentive to facilitate the market entry of a new competitor. The mast of an established network operator will further already be heavily utilised, perhaps to a point near its planned capacity. Regulatory regimes regarding co-location that do not include opportunity for site adjustment requirements are thus likely not to achieve their purpose of promoting competition and restraining environmental impact.
Important - The information in this article is provided subject to the disclaimer. The law may have changed since first publication and the reader is cautioned accordingly.