Mobile Computing

Controversy

With such high stakes it is not surprising that the last 2 years has been plagued with arguments, counter arguments, disputes and even legal suites:

OFTEL promises sweeping reforms (January 2000)
UK government accuses German government of blocking Vodafone's bid for Mannesmann (November 1999)
Mobile number changes confuse customers (October 1999)
Are pre-pay customers being fleeced? (October 1999)
Do mobile phones cause cancer? (Ongoing)
How to allocate the UMTS bandwidth? (August 1999)
What are the practical coverage rates? (February 1999)
What UMTS standards to adopt? (December 1998)
Former industry regulator joins potential bidder for UMTS license (November 1998)

Details

OFTEL promises sweeping reforms (January 2000)
- Next month OFTEL with commence its next bi-annual review and has promised 'sweeping changes' to telecoms regulations which it says will help users get a better deal. The review includes mobile and internet services. It intends to benchmark against overseas services.
UK government accuses German government of blocking Vodafone's bid for Mannesmann (November 1999)
- Vodafone's hostile £77bn (Ecu 120bn) bid for Mannesmann quickly became embroiled in European politics when Tony Blair, the UK's prime minister, accused Gerhard Schroder, the German chancellor, of blocking the bid. Hr Schrõder had expressed alarm about the impact on German corporate culture and there not being hostile takeovers. In Germany workers occupy nearly 50% of the seats on Supervisory Boards and are concerned that mergers lead to job losses. Blair thought this a bit rich given that two German companies had recently acquired UK telecommunication companies: Mannesmann had acquired Orange and Deutsche Telekom had acquired One2One. Vodafone would almost certainly sell off Mannesmann's engineering operations for which Bosch has already expressed an interest. However, Mannesmann's German customers like BMW are known to prefer ownership to remain in Germany. Vodafone could also spin of Mannesmann's fixed line networks and would have to spin of the Orange operation because of UK licensing regulations.
- Brussels then moved in to put its views when Erkki Liikanen, the European Commissioner for Enterprise, warned that the EC would only approve the takeover if the wider benefits to the consumer could be demonstrated. This statement went far beyond any made by the EC's Competition Commissioner. On the other hand, the EC is trying to encourage mergers where the companies concerned would be a stronger force in those world makers where size is important.
- Under German takeover rules, statements made by either party can be much more flexible than in the UK which opens the bidding to all sorts of mis-information and economically truthful statements. For example, in the UK a "final bid" really has to be final and if rejected the bidder must wait a specific time before making a new bid. Neither of these conditions apply in Germany. To make matters worse, German companies can restrict, to quite limited amounts, the information they need to give to a bidder. This may make it difficult for Vodafone to convince its own and Mannesmann's shareholders of the financial case.
- Since the bid Mannesmann has been taking full page ads in the UK broadsheets to highlight what it sees as the negative aspects of the bid and the real cost should the takeover proceed. Both parties have been waging war through the media with statements and counter statements by the day.
Mobile number changes confuse customers
- Like the fixed line numbering system, the popularity of mobile phones means the UK would eventually run out of spare numbers. According to Oftel, there were only 30m numbers on the old scheme yet the UK had already reached 24m mobile phones. However, the conversion to the new numbering scheme is not straight forward. In many cases customers will simply insert an additional digit 7 - for example, an 0956 prefix will become 07956 - but in many other cases the prefix will be completely different. However, all mobile phones will in future begin with the digits 07 and this system should keep us going until there are over 300m mobiles - enough for 5 devices each. Old and new number can both be used until April 2001. For details see the Big Number.
Are pre-pay customers being fleeced? (October 1999)
- Hans Snook, Chief Executive of Orange, was reported as accusing the rest of the industry of "knowingly fleecing customers" with net-work service charges unrelated to usage and in selling vouchers with expiry dates. He put the total charging at over £500m per year.
- Mobile operators are increasingly addressing the mass market and first time users who are buying off the page and through non-specialist retail outlets such as supermarkets. Low cost headline figures are used to attract customers and so there is temptation to recoup costs by other means. The result is that many people stop using their phones after some months. Operators will need to take a longer term view if they wish to instill new users with new habits and should look to added value services for additional revenue.
Do mobile phones cause cancer? (Ongoing)
- This is an issue that just rumbles on and on. The assertion is that the microwaves emitted by mobile phones can lead to memory loss and cancers but the various studies have produced conflicting results. The amount of radiation does vary between makes of phones. Meanwhile, for those that are concerned, the recommendation is to use an external headset and microphone.
- In May 1999, the National Radiological Protection Board (NRPB) rejected suggestions that there was a link and in doing so refuted the Swedish study. The NRPB said: "It lacks statistical precision to draw conclusions on specific aspects of phone use and tumor location." Neither has the US Food and Drug Administration found any evidence of inducing cancer though it did find that reaction times were improved slightly, especially with the older analogue phones which emit more powerful microwaves than digital phones. For example, a Nokia 2110 user absorbed 22 times more radiation than a Motorola Star TAC 70 user, though the Nokia was well below the considered safe limits (just 1/23rd).
- In January 2000 the National Radiological Protection Board was asked by the Health Minister to set up an advisory group to look at the issue from the consumers perspective.
How to allocate the UMTS bandwidth? (August 1999)
- The next generation of Universal Mobile Telephone Service (UMTS) phones is due to begin in 2002 but before then the government has to first decide how to allocate the bandwidth. The current proposal is to auction the bandwidth in varying amounts but Vodafone, the largest of the UK operators, believes the bandwidth should be split equally amongst the UK's 4 operators. Bids for the UMTS licenses were due in by mid January 2000 with the auction set for March. The auction could raise over £1.5bn, a figure which concerns the Mobile Data Association (MDA), the industry body. It believes this to be excessive and to undermine the viability of UMTS achieving a break-even figure of 8m subscribers.
- Just to make things worse, the government told existing operators that they had to open their expensive network to new entrants if they wanted to be able to bid for the new licenses. The government argued that if new entrants didn't have the opportunity to build up a customer base then they would not bid for the new licenses and this would mean less competition. However, One2One the smallest operator took the DTI to the High Court which ruled that the government's action was illegal. Nether-the-less, the Vodafone and BT Cellnet have backed down and will allow the new entrants access to their network. Presumably, as the 2 largest operators, they felt they would not be able to argue, like One2One, that they were a special case. The situation with Orange is unknown, but also being small it may be treated the same as One2One.
What are the practical coverage rates? (February 1999)
- The 4 major operators all say their coverage rates are very close to 100% of the population (which invariably means some remote rural areas have poor or non existent reception). However, in practice users find the signal strength to be variable and for pockets of non reception to exist. Train journeys are particularly prone to dropping calls.
- A study by Oftel, the telecommunications regulator, in February 1999 showed city coverage in the 3 major capitals of the UK (London, Cardiff and Edinburgh) was a 94% to 97% for successful calls, depending on the operator, whilst calls on rail journeys between these places were only 73% to 89%. Oftel wants the industry itself to provide independent comparative information.
What UMTS standard to adopt? (December 1998)
- Ideally the next generation should all conform to a single standard, thus avoiding the situation with the current GSM phones where there are 3 standards in the world. There were 2 contenders for the next standard: W-CDMA from Ericsson which has been adopted by the European Telecommunications Standards Institute (ETSI) and CDMA2000 from Qualcomm, the USA preferred choice. However, the issue was more than a technical decision, and had the making of a Trade War between the US and Europe. The US had threaten to invoke the World Trade Organisation if Europe adopted a different standard, on the basis that this was protectionism. There was also an issue as to whether Ericsson had infringe Qualcomm's patents. UMTS is due for roll-out in 2002.
- In March 1999 the Ericsson - Qualcomm dispute was resolved, much to the relief of the mobile network operators. Under the deal, Ericsson acquired the wireless infrastructure business of Qualcomm, each will license the others technology and both were to abandon their lawsuits. They also agreed to develop a new common standard based on CDMA but with 3 slight variations that mobile phone manufacturers should find easy to adopt within one phone.
Former industry regulator joins potential bidder for UMTS license (November 1998)
- Vodaphone's Chief Executive Chris Gent said he thought it inappropriate that Don Cruickshank, the former director of OFTEL, the telecommunications regulator, was advising United News on making a bid for a license to run one of the third generation mobile networks.

Back Up to The Players Contents

External Resources

Blitz, James, Atkins, Ralph, & Cane, Alan, 1999, Blair enters telecoms battle, Financial Times, 22 November 1999.
Connor, Steve, 1999, Cellphones cancer scare 'not proven', The Independent, 25 May 1999.
Fried, Ian, 1998, A new era will dawn on mobile communications, The Independent, 23 November 1998.
Garner, Clare, 1999, Mobile phone number changes leave users at sixes and sevens, The Independent, 2 October 1999.
Harrison, Michael, 1999, Hostile bid leads Gent into uncharted waters, The Independent, 25 November 1999.
Larsen, Peter Thal, 1999, Mobile phones set to go global, The Independent, 26 March 1999.
McIntosh, Bill, 1999, Orange to spend £20m on raising market share, The Independent, 28 October 1999.
See the full list of resources for this web site for other related resources.