ACM 2000 partner country seminar in Kuala Lumpur, Malaysia, 1 November 2000
“Wireless Future in Finland”Professor Erkki Pulliainen, MP
Licensing 3G Mobile Networks in Finland
It is a great pleasure to have this opportunity to speak here today. The title of my speech  concerns the most topical 3G Mobile Network licensing policy. International and national newspapers and magazines  deal with this hot theme practically every day.  Debates and speculations  run high after the slightest event in this field. Stock markets react accordingly. Economists, politicians and all kind of gurus assess each from their personal angles the effects of different licensing policies on individual companies, the whole telecommunications sector and on national, regional and even global economies and societies.  This demonstrates very clearly how central a role digital communications play in our economic and social lifes today.
That’s why I would now like to profit this occasion to give you  a slightly wider picture on the policies and markets on which we in Finland are building up our eEconomy . I think that the objectives and logic of the Finnish 3G licensing policy will also become clearer against this more general framework.

Communications technology creates enormous opportunities for the industry, users and societies. We could say that especially eCommerce is a spur towards greater investment in innovative new technology, because it opens up the possibilities of entirely new ways of trading and doing business. It also creates global markets with very high potential for those companies that are efficient and are able to compete in this new dynamic business environment.
New tools exploiting digital communications offer the users revolutionary access possibilities to the Information Society services anywhere anytime. The next big steps beyond eCommerce and eSociety will be mCommerce and mSociety. In Finland, we are already successfully practising a multiplicity of fast developing mobile services both in public and private sectors thus continuing our classic role as pioneers in mobile communications.
However, besides opportunities there are also some threats. Because the communications markets and technologies advance  at very high speed, the Governments are challenged to react and adjust the legislation framework timely to the rapidly changing environment. They also have to able to respond to the growing importance of convergence of the telecommunications, media and information technology sectors and to encourage the development of technologies and applications that convert the Internet and mobile communications. Furthermore, as the global electronic market place does not recognise any borders,  all national or regional approaches are insufficient. The challenges are truly global.
The Finnish Telecommunications Markets
The early start  of liberalisation in the late 1980s made the Finnish telecom market open and competitive. Efficient competition has led to a competitive, wide selection of high-quality services at affordable prices that, in most telecom segments, rank among the lowest in OECD countries. We expect that this will be true in the future, too.
The Finns are sophisticated users of telecommunications services and it is very common to use electronic equipment. Providing services over the Internet and exploiting its possibilities is everyday life in all sectors and all levels of education in the Finnish society.
During the first half of this year, 1.7 million Finns (of the total population of 5 million) used the Internet at least once a week. Today, Finland has one of the highest Internet penetration rates in the world, with 123 host computer connections to the Internet per one thousand people.
Due to the world’s highest penetration rate in mobile phones, now over 70 per cent, the wireless communication is becoming the standard way of communication between people in Finland. The penetration of mobile phones exceeded the subscriptions of fixed telephones already more than a year ago.
One good example of advanced use of ICT is the Finnish banking sector. Finnish banks have been providing secure computer-based services for their customers for nearly 25 years. Today, Finland is the world leader (in relation to population) in the use of electronic banking services. More than 80 per cent of all payment transactions are made electronically. The customers  are used to utilising  a PC, telephone, InternetTV, GSM and even WAP (Wireless Application Protocol) for their banking services. So there is an active demand from the customers also for numerous other sophisticated  e- and mCommerce applications and services. In the highly competitive  Finnish market, this in turn, encourages the companies to rapidly roll-out new services and the operators to develop their different wireless and wirelined infrastructures. For example, GSM networks are now being upgraded fast (GPRS - General Packet Radio Service) to offer an easier and a more efficient use of mobile Internet already before the roll-out of 3G networks. So, the Finnish telecommunications market is now mature for the real convergence of mobile communications and Internet.

The Finnish 3G licensing procedure
Having learnt from the success story of GSM, which was a remarkable result of early actions of the industry and timely decisions made by the Finnish Government, the Government wanted to act rapidly also in the 3G licensing issue. Already more than a year ago, on 18 March 1999,  it granted four national licences for third generation mobile networks as the first in the world. The licensing procedure lasted only three months altogether. The Finnish Government granted the licences for Oy Radiolinja Ab, Sonera Oy, Suomen Kolmegee Oy and Telia Mobile Ab's Finnish arm. The licences are valid for 20 years.They were granted on the basis of the applicant’s financial resources, reliability and safety of operation, quality and technological development of services and competitive framework.
There were altogether 15 applicants for the four nationwide licences. There were no limitations concerning such matters as the nationality or ownership of the applicants and it was not compulsory for the applicants to already have existing mobile network operations in Finland at that time. However, big international players were not interested  in trying to enter the Finnish market and afterwards we heard some explanations from different actors. The hard competition and advanced demands from the customers combined  with the global dynamism and competitiveness of the Finnish operators were considered to be a too difficult combination  against the potential of  the Finnish market.
 
3G standards and technological neutrality

The Finnish Government pursuits sustainability in its digital communications policy and that is why the Finnish licensing decision did not include a final position on the 3G technology. The process of international standardisation by ITU (IMT-2000) was not yet finalised at that time. According to the EU’s UMTS (Universal Mobile Communications System) decision, however, Finland is liable to make sure that at least one third-generation mobile network, which is in accordance with European UMTS standards will be built in our country. Finland strongly encourages global cooperation and agreements in standardisation and frequency allocation issues, which we see as a necessity to ensure further global development of mobile services. The four successful companies applied for a licence for the construction of a mobile network in accordance with the UMTS standard.

Comparative bidding
The Finnish telecom licensing regime is simple, fast and transparent. The rights and obligations are defined in the regulation, not in the licences. A licence  mere two sheets of paper - is currently required only for building mobile telephone networks. Licenses are granted by comparative bidding taking care of the long-term interests of the users and promoting efficient competition also in the future. In Finland, there are no fees for licences or frequencies, only fees to cover the administrative costs.
Finland does not favour auctioning or other ways of extra “taxation” when granting licences, because these increase pressure towards end user prices and hamper the fast development of future markets and services in the Information Society. I  would like to add here that in Finland we do not grant state subventions either to any types of infrastructures (e.g. broadband networks) because we see that this kind of state interventions would severely disturb the sound competition between different infrastructures to be offered as the service platforms for users.
Roaming
In Finland, conditions on national roaming between third generation mobile and GSM networks were carefully discussed with the actors after the licensing process. A legislative proposal on the roaming conditions was then designed by the Government and the proposal is now being discussed at the Finnish Parliament right now. The aim of the rules is to promote a fast building of 3G infrastructures through an efficient competition. Commercial negotiations are encouraged in the first hand.

Early Finnish decisions gave clear signals to the industry and to the users

The early Finnish 3G licensing decision was a clear signal to the industry and to the users that services based on new technologies will begin by the beginning of 2002 in Finland. The telecommunications companies holding the licence could already at early stages commit themselves to the design of networks and new services responding to the emerging demand in the market for new type of mobile multimedia and Internet services. Only innovation capability sets the limits to the application possibilities. Gaining early experiences from the “Telecommunications Laboratory Finland” the companies can timely develop their competencies and offerings for the global market. The Finnish Government trusts that the early Finnish start will also speed up the start of operations elsewhere in the world.

IT sector and its role in the Finnish Economy
Finland was facing a severe economic recession at the turn of the 1980s and 1990s. One of the key factors driving the following recovery was the building up of Finnish electronic and telecom businesses.
In Finland, the manufacture of products related to information and communications technology  the so called information society products  has increased much more rapidly in the last few years than other forms of industrial production. The total value of the Finnish ICT market was approximately USD 3.0 billion in 1998. It is not much compared to the global ICT market. But in terms of the GDP per capita, however, spending on ICT services amounts to 1.3 % in Finland compared to, for example, only 0.9% in Western Europe.
The Finnish economy, earlier dependent mainly on forest and metal industries, has got a new pillar to hold its balance  the ICT pillar. Exports of industrial products that are typical for the information society have also increased rapidly. In 1998, they covered over 20%of Finland´s total exports which is more than a 6-fold increase from 1990 and equivalent to 25% a year. During this period, Finland´s total exports increased by an average of 11% a year.

Finland ranks high in global rankings
At the heart of the growth of the IT industry in Finland there are the investments on Research and Development, both by companies and the state. Currently, the R&D investments represent over 3% of the Finnish gross national product, of which the enterprises make up over 60%. Finland holds currently the second position in OECD ranking for R&D investments.
The World Economy Forum published recently a report called “Global Competitiveness 2000”, where Finland was ranked as number one in the Current Competitiveness , number six in the Growth Competitiveness  and number two in Economic Creativity. In a recent ranking of eBusiness readiness, Finland occupied the third position among 60 countries.
The list of success factors used to explain why Finland has developed so far as an eSociety is long. To summarise, I can identify five major factors : first, the liberalisation of the telecommunications market, second, high level of national education, third, heavy investments in R&D activities by enterprises and the government, fourth, well-functioning regulative environment and fifth, good national dialogue and co-operation among different actors of the society  the regulator, universities, operators, service and content providers, manufacturers etc. All these five points combined form an environment where innovative actions taken by one are being supported and encouraged by all.
Finland emphasizes global co-operation
While technological development is leading to convergence of the different information and communication sectors and, at the same time, globalisation and digital economy are proceeding, we must acknowledge the need to create global rules for economy in general.
Finland is actively working in various international forums in order to promote global co-operation in the emerging segments by exploiting digital communication. Examples of topical issues are, still, opening up the markets, standardisation, trade policy issues and global codes of conduct concerning  the eCommerce, mCommerce and Internet. For the balanced development of world trade, developing countries must also be given a chance to benefit from the promising prospects of the ICT. In the international perspective we must aim towards a fair global market place bearing the social objectives of the Information Society clear in our mind.

Takaisin

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