May 2001, V. 1.1 www.re-think.

com

I Want My Wi-Fi!
The Opportunity for Public Access WLANs in Europe

Executive Summary
Re:Think!’s conclusions:
Public access Wireless Local Area Network (WLAN) services offer broadband
access speeds and wireless mobility today for consumers and business users. 1. Mobile operators need to em-
Service providers do not have to pay spectrum licence fees, equipment is in- brace WLAN technology and
expensive and network deployment is relatively straightforward and cost-ef- develop hybrid WLAN/3G or
fective. WLANs pose a disruptive threat to 3G mobile operators and challenge WLAN/GPRS service offers,
DSL, cable modem and fixed wireless access providers in last mile bandwidth which meet customer demand
provisioning. for nomadic and mobile data ac-
cess.
The market opportunity is excellent for public access WLAN services in Eu-
rope in the 2.4 GHz and 5 GHz bands. In comparison to 3G systems, WLAN 2. ISPs have an opportunity to chal-
technology is simpler, cheaper, easier to deploy and available today. It offers lenge mobile operators in the
wireless data rates that 3G operators cannot match. provision of wireless services to
urban areas and rural communi-
The successful development of this market is dependent on innovation by serv- ties, using low cost and readily
ice providers, underpinned by a light regulatory regime at a country level with available WLAN equipment.
respect to licensing of commercial services and frequency management.
3. WLAN Vendors need to address
The objectives of this white paper are: the proliferation of standards in
1. to analyse the development of public access WLAN services in Eu- the 2.4 GHz and 5 GHz bands
rope, and the differing regulatory re-
2. to identify the opportunities for this market’s growth, and gimes in many European coun-
3. to propose solutions for the future development of WLAN services as tries.
a broadband wireless access medium.
4. National regulators need to
WLAN applications in the licence-exempt 2.4 GHz band today are at a similar amend legislation, which is cur-
stage of development as the Internet circa. 1994. They provide an opportunity rently harming the development
for new and low-cost on-line solutions to be marketed. However, new markets of the public access WLAN mar-
need the commercial and regulatory freedom to grow organically in terms of ket in the 2.4 GHz band and
service provision. The focus of regulation in this area must therefore be to should implement a very ‘light’
facilitate the growth of broadband access and data services, rather than be regulatory regime for next gen-
hamstrung by traditional concerns of frequency allocation and public service eration WLANs in the 5 GHz
telecoms regulation. band.

Through a comparative analysis of the current market and regulatory environ- 5. Standards bodies should allow
ment in several European countries, notably Finland, France and the UK, we the co-existence of WLAN stand-
argue that it is essential for service providers, vendors, regulators and stand- ards and let the market decide
ards bodies to rethink their approach to the commercialisation of public WLAN which technology wins customer
access in the 2.4 GHz and 5 GHz bands. acceptance. They should also
ensure that the 5 GHz band is
only used for broadband WLAN
Contact: applications.
Ivan Croxford, croxford@re-think.com, +33 6 0884 9831

Additional research:
Chris Marsden, marsden@re-think.com, +44 7779 260 376

Re:Think!, info@re-think.com, 0870 112 0202, www.re-think.com

 Re:Think!, 2001
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Public Access WLAN Services

Market Overview

This subject of this paper is the European public access WLAN market. By public
access, we mean wireless networks operating in the 2.4 GHz or 5 GHz bands and
providing Internet access via:
The business case
1. Indoor wireless ‘hot spots’ connected to wired public data networks. Typi-
for public access
cal locations are hotels, airports, shopping centres and train stations.
WLAN services is
2. Outdoor ‘last mile’ broadband access solutions. compelling...

The public access market is still in a very early stage of development. Cahner’s ... WLANs are not a
Instat Group have estimated that the public access broadband market in the US
technology in search
will grow to 1.2 billion USD in 2004. In comparison, the total WLAN market, includ-
ing public access, is estimated at 2.2 billion USD in 2004. of a market

The market potential in Europe for public access WLAN solutions is great. Al-
though a quantification of this market is not the purpose of this paper, Re:Think!’s
view is that the public access WLAN market will play as significant a role for the
mobile Internet and broadband sectors as the hotel and community reception mar-
kets have played in the sustained growth of the satellite and cable broadcast indus-
tries.

The business case for commercial public access WLAN services is compelling.
Unlike 3G or fixed wireless access services, spectrum licences are not required. In
addition, there is a competitive market for Access Point and Network Interface Equip-
ment. Equipment based on the 802.11b standard is technologically proven and
already inexpensive. Today a typical ‘business class’ Access Point costs 1000 euro,
with PC cards retailing as low as 150 euro. Consumer equipment, such as Apple’s
AirPort, retails at 100 euro for a PC card and 300 euro for a base station. More
sophisticated outdoor WLAN equipment has a unit cost below 5000 euro. Moreo-
ver, WLAN chipset prices will continue to fall as production volumes increase. As
WLAN technology in the 2.4 GHz band does not have line-of-site limitations, net-
work deployment, while still a major issue for ISPs, is a manageable proposition.

Public access WLANs are not a technology in search of a market. Nomadic access
to corporate information is a fundamental requirement for business travellers and
teleworkers. ISPs providing public access WLAN services tailored to the needs of
corporate customers, including support for virtual private networks, will exploit con-
siderable pent-up demand. Nomadic Internet access is also becoming an impor-
tant feature of leisure travel. The wireless consumer market will become a signifi-
cant revenue generator within the next three years as WLAN-enabled laptop PCs
and handheld devices proliferate.

Slow and partial deployment of DSL and cable modem networks in many European
countries offers a market opportunity for public access WLANs as a ‘last mile’
broadband access solution. Extended outdoor WLAN coverage also poses a threat
to 3G operators mobile networks, particularly if hybrid WLAN/GPRS solutions are
deployed.

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Technology Briefing

The WLAN market is dominated today by equipment based on the IEEE 802.11b
standard. This international standard defines wireless local area networking in the
2.4 GHz band between a client NIC (network interface card) and an access point
connected to a wired LAN or Internet access gateway. The Wi-Fi certification has
been introduced by WECA, an industry group of leading WLAN equipment suppli-
ers to promote compatibility between different 802.11b products.
Wi-Fi equipment
Efforts are underway to boost the performance of 802.11b standard to speeds of dominates the
22 mbit/s or even up to 54 mbit/s. Called 802.11g, this new WLAN specification will WLAN market...
help sustain the momentum of the WLAN market until true next generation equip-
ment is introduced. The specification is currently uder review by the IEEE and
FCC. ... Standards wars
likely for next gen-
HomeRF is another wireless technology in the 2.4 GHz band. HomeRF is backed eration WLAN appli-
by a large consortium, including Motorola, Siemens and Proxim. The technology cations
targets both PC and other consumer equipment. The success of HomeRF as a
WLAN platform is doubtful due to the already extensive and growing installed base
of 802.11b equipment. The standard has also suffered some serious set backs
such as Microsoft’s decision to build native support for 802.11b devices into the XP
operating system.

Next generation WLAN products will be deployed in the 5 GHz band1 . Applications
in this band will have much higher data rates (up to 54 mbit/s) and be more robust
against sources of interference. In Europe, the frequency bands 5.150-5.350 GHz
and 5.470-5.725 GHz are being allocated for WLAN applications.

Two standards vie for the future dominance of this market: the European-originated
and ETSI-approved HiperLan/2 standard and the successor to 802.11b, the US-
backed international standard IEEE 802.11a.

WLAN products based on these standards should begin to be released towards the
end of 2002. 802.11a products will be first to market in the United States. The
simpler design2 and large domestic demand should ensure a lower price point and
earlier release date for 802.11a equipment compared to Hiperlan/2. The regulatory
implications of this standards war are discussed later in this white paper.

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The maximum receive/transmit ranges for 802.11b equipment is approximately

50 metres indoors and 400 metres outdoors with an omni-directional antenna.
In comparison, lower-power Bluetooth applications have a maximum range of
10 metres.

Standard Frequency Band Maximum Maximu m Data

Physical Rate Rate 3
Bluetooth 2.4 GHz 1 mbit/s Asymmetric 721
(2400 MHz —2483.5 MHz) kbit/s
downstream, 57.6
kbit/s upstream
and symmetric
432.6 kbit/s
802.11b (Wi-Fi) 2.4 GHz 11 mbit/s 5 - 6 mbit/s
4
(2400 MHz —2483.5 MHz )
802.11a 5 GHz 54 mbit/s 32 - 38 mbit/s
(5150 MHz —5350 MHz5 )
H iperLan/2 5 GHz 54 mbit/s 32 - 38 mbit/s
(5150 MHz — 5350 MHz,
5470 MHz —5725 MHz)
Source: Re:Think!

WI-Fi is the most mature short-range wireless technology and equipment

based on the standard is low cost.

Digital satellite Wi-Fi

High
MATURITY

GPRS
Bluetooth
802.11a

HiperLan/2
HiperLan/2
Low

3G

High COST Low

Source:Re:Think!

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WI-Fi is far superior to 3G in terms of supported data rate. In conjunction with

GPRS technology, it also threatens 3G’s claim to be the solution for mobile high
speed data access.

Applications
e-mail, Voice over IP Video
SMS web access file download streaming Video e-mail

cable
replacement
Bluetooth

802.11a
Home, office or HiperLan/2
public access zone
Range

Wi-Fi

City/suburb
3G

GPRS

Country-wide GSM

9.6 kbit/s 40 kbit/s 128 kbit/s 1 mbit/s 11 mbit/s 54 mbit/s

Source:Re:Think! Bandwith

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Regulatory Overview

Wireless Local Area Networks are most commonly deployed in the 2.4 GHz band
(2400 MHz – 2483.5 MHz). In Europe, this band largely benefits from a licence-
exempt status, meaning that radio applications in this band do not require a licence
from the national regulator or spectrum management agency.
Light regulation in 2.4
All WLAN equipment to be used in this band must comply with the European Com- GHz band spurs
mission’s Radio and Telecommunications Terminal Equipment Directive, 1999/5/
EC (R&TTE) governing radio equipment self-certification and conformity in accord- WLAN growth...
ance with the applicable standards (ETS 300 – 328 for WLANs).
Nordic countries lead
National regulators are responsible for controlling the use of the 2.4 GHz band in public access WLAN
their respective jurisdictions. As a result, regulation varies across different Euro- market...
pean countries, with dramatic results on the development of the WLAN market
place. The status of national regulation governing the use of the 2.4 GHz band is
summarised below.

The European WLAN Market: The Role Models

With some exceptions, the whole 2.4 GHz band has been allocated for licence-
exempt use in Europe. This liberal regulatory environment has encouraged the
growth of commercial public access WLAN services. The most advanced markets
are in the Nordic region.

Finland: ISP Jippii has recently spun off its WLAN unit into a separate wholly owned
company, Wireless Network Services WNS Oy. This company is setting up wide
area public access networks using 802.11b equipment across Finland, and particu-
larly in the Espoo region. The service offers per user data rates between 200 kbit/
s – 1 mbit/s and is currently 50% cheaper than an ADSL connection. WNS aims by
end 2001 to have deployed 400 base stations in Finland and 900 by end of 2003.
WNS is also launching a hybrid WLAN/GPRS service in the autumn to offer roam-
ing between WLANs and more extended GPRS networks.

WNS has plans to extend its service to Germany, where it has obtained authorisa-
tion to set up a public access network, and eventually to the UK.

Telco Sonera has also launched a commercial WLAN service called wGate provid-
ing ‘hot spot’ nomadic Internet access. Customers include Finn Air and hotel chains,
such as Holiday Inn.

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Norway: Telenor Mobile in collaboration with Nokia is offering commercial WLAN

services for public access zones. The operator is also working on a 4G project
with Ericsson called H2U to test an integrated Hiperlan/2 – 3G solution for mobile
and nomadic Internet access.

Sweden: Public access WLANs have moved beyond the pilot phase and are be-
ing deployed on a commercial basis. Telia, in collaboration with partners Service
Factory and Symbol, offers a public access WLAN service called Homerun.
Homerun networks have already been deployed in several hotels, train stations
and airports. Airline SAS intends to introduce in-flight 802.11b networks on-board The French WLAN
its aircraft in collaboration with Telia and Tenzing Communications.
market is at risk from
Competitor ISP, Wirelessbolaget has also launched a public access WLAN serv- limited frequency
ice in Sweden. The Scandic hotels group is currently piloting the service. resources...

Other countries: Other European markets, in particular Germany, are largely

undeveloped and present excellent opportunities for ISPs to introduce commer-
cial services with very few if any regulatory barriers to clear.

The Exceptions

France imposes severe restrictions on the amount of frequency available for WLAN
applications. Only the frequency range 2.4465 GHz – 2.4835 GHz is available. In
addition, some WLANs applications require authorization from the Ministry of De-
fence under certain conditions6 .

France has recently relaxed its regulations to allow low-power WLAN applications
to operate in the whole 2.4 GHz band both indoor (10 mW maximum radiated power)
and outdoor at reduced power (2.5 mW)7 . The purpose of this rule change by the
Agence Nationale des Fréquences (ANFR) was to permit the use of Bluetooth
applications. Wi-Fi equipment that operates at higher power (100 mW) will not benefit
from this liberalisation. These applications remain limited to indoor use only in the
narrow frequency range.

Under current regulations, Internet Service Providers (ISP) can offer commercial
public access WLAN services in both countries. These markets are only just begin-
ning. One early mover is US service provider, Wayport, which is deploying WLANs
in 4 and 5 star hotels in France.

The major impediment to the growth of the WLAN market in France is the limited
amount of frequency available and the associated potential problems of frequency
saturation, interference and service degradation. This could be a serious problem
in large public access zones, such as airports where more than one service pro-
vider may operate a WLAN service.

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The solution is to make more frequency available. In France, the intended policy
changes to allow from January 2004, Wi-Fi equipment to operate in the whole band
will help ease the problem of spectrum congestion and interference. As will migra-
tion of WLAN applications to the 5 GHz band.

Vendors need to ensure their products are able to operate legally in countries, such
Vendors must adapt
as France, with more restrictive spectrum management policies. Cisco, in its 350
product series, offers a PC card setting called world mode. This setting enables to regulatory realities
the PC card to automatically inherit channel configuration properties, such as re- of the WLAN mar-
duced transmit power levels, directly from the Aironet Access Point. ket...

UK WLAN market in
United Kingdom: The UK applies highly restrictive regulations governing public
access WLANs in the 2.4 GHz band. The very existence of this market is in doubt. danger of being still
The independent spectrum management review instigated by the Government in born...
March 2001, and due to report by the end of the year, offers an occasion to recom-
mend amendments to existing legislation8 .

Private (home and in-company) WLAN applications in the 2.4 GHz band enjoy
licence-exempt status in the UK under the Wireless Telegraphy Act9.

However, an ISP must obtain a Telecommunications Act licence if it intends to offer

Third Party WLAN services. The Catch 22 facing ISPs is that the Government
does not have a formal process in place to issue licences for commercial WLAN
applications. Neither has it any plans to issue any licences to new market entrants.
As a result, any ISP establishing WLAN-based Internet services for third parties on
a pay basis is acting illegally.

The effect of the regulatory regime has been deadening on the public access WLAN
market.

Under current legislation, loopholes exist which have enabled some companies
and organisations to introduce WLAN services. ISPs can provide managed WLAN
services to companies provided these are not resold to third parties. Finnish ISP
Jippii offers business WLAN services in the UK, providing installation, equipment
leasing and customer support. Similarly, it would appear legal for a hotel or restau-
rant chain to offer WLAN services to its customers provided that wireless access
was not charged for directly.

In the next section, we examine some of the reasons for the current WLAN policy
and propose solutions to overcome the UK’s regulatory bottleneck that allows ho-
tels to charge for laundry, but not for wireless Internet access, and companies to
provide wireless access to their employees in their own offices, but not whilst on
business travel in the UK.

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Wi-Fi, Why Not?

The UK is a good case study for the concerns of regulators and private companies
regarding the operation of public access WLANs in the 2.4 GHz band (see Case
Study for more detailed discussion). The issues raised in the UK are also directly
relevant to the on-going consideration in other European countries of the use of
the 5 GHz band for next generation WLAN applications.
WLAN applications
don’t need QoS
Frequency Management guarantees...

The traditional role of spectrum management agencies is keeping spectrum clean10. ...Congestion and
By defining appropriate regulation and effective policing, governments ensure that interference will be
the spectrum under its control is used to best effect and for the authorised pur- self-correcting
poses.

The 2.4 GHz band is inherently ‘polluted’. It is used by applications as diverse as

microwave ovens, cordless phones and licence-exempt WLAN equipment. In the
UK, the band is also used by the Military and for licensed applications such as
outside broadcasting and electronic newsgathering. The proliferation of WLAN
services, along with other applications, in this band could therefore lead to con-
gestion particularly in some areas, e.g. business centres, likely to attract ISPs
deploying public access WLAN services. ISPs would not be able to provide guar-
antees regarding quality of service, or protection from interference for their com-
mercial services. From the perspective of good frequency management, this is
reason enough to not allow commercial deployment of public access WLANs.

These concerns, whilst highly relevant to most radio applications, are seriously
flawed in the case of public access WLAN data services. First, notions of ‘quality of
service’ (QoS) principally relate to public services telecoms (voice) regulation. ISPs
are not required to meet exacting QoS criteria when providing wireline data serv-
ices. There is no compelling reason to apply QoS criteria to wireless data services,
given that customer expectations of the wireless Internet will be formed by their
experience of the largely QoS-free Internet.

Second, spectrum congestion is likely to be self-correcting. As WLAN usage be-

comes more widespread in the 2.4 GHz band, business users and ISPs will move
to the 5 GHz band to achieve higher performance and more resilience to interfer-
ence. This upband migration will ease congestion in the 2.4 GHz band and free
frequency for use by home users and Bluetooth applications.

Competition with other Wireless Operators

A second argument against commercial WLAN applications is that unlicensed use

of the 2.4 GHz band will give ISPs an unfair competitive advantage in the provision
of wireless data services. Providers of 3G networks, as well as fixed wireless
access networks, have spent enormous sums to secure licences for their wireless
services. In the UK, Kingston Communications and Atlantic Telecom have also
been awarded licences to provide public telecoms services on a regional basis in
the 2.4 GHz band.

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In the case of 3G, concerns over unfair competition would have more resonance if
the services provided were comparable. Public access WLANs target the nomadic
Internet access market not addressed by operators of 3G or GPRS services. Public
access WLANs offering ‘hot spots’ of high bandwidth wireless connectivity comple-
ment and enhance mobile Internet offers. WLAN technology is seeding the market
for mobile data applications by growing a customer base accustomed to wireless
data services. The challenge for mobile operators is to develop hybrid wireless serv-
ices that meet customer needs for nomadic and mobile data access. In defining their
Service providers
offers 3G operators will need to take into account the threat of hybrid WLAN/GPRS must develop hybrid
services. WLAN/mobile and
WLAN/FWA serv-
Preventing the growth of the public access WLAN market will not enable 3G opera- ices...
tors to improve the return on their investment in licence fees and network deploy-
ment. Rather this action will kill an alternative wireless data market and the innova-
tion and valuable services which would result from it. ...Public access
WLANs help to solve
‘Outdoor’ WLAN systems, such as Finland’s WNS, provide an alternative ‘last mile’ the ‘digital divide’
broadband access medium. Grass roots initiatives such as Consume in the UK and
Elektrosmog in Sweden also aim to establish WLAN community networks.

Fixed Wireless Access operators providing services in licensed spectrum may feel
that unlicensed systems offer unfair competition. The case is stronger here than for
3G. However, bandwidth constraints and lack of QoS guarantees, are unlikely to
satisfy the requirements of corporate customers – FWA operators’ principal targets.

In addition, the opportunity exists for operators to deploy innovative hybrid FWA/
WLAN systems for wireless community access. An example of this approach is the
Modalen project in Norway. On behalf of the Modalen municipality, Norwegian ac-
cess provider Nera established a public wireless network using equipment in the
licence-exempt 2.4GHz and licensed 3.5 GHz bands. All 150 families and 400 in-
habitants have been provided with wireless access at 2 mbit/s and broadband cover-
age has been extended to the local media, public services, local businesses and
schools.

Outdoor public access WLANs will serve to increase competition in ‘last mile’
broadband provisioning. Licence-exemption will also encourage new market en-
trants and is consistent with the use of the 2.4 GHz band for commercial use (see
Case Study for further discussion of this issue).

WLAN networks can provide an innovative means for, often isolated, communities to
be provided with broadband access and act as a tool to tackle the so-called ‘digital
divide’.

In the UK, the Government’s e-envoy11 has estimated that by 2003 between 15% –
20% of the population will not be covered by any form of broadband access (DSL,
cable modem or FWA). In areas such as the South West of England and South
Wales this figure will reach 45%. The British government is also commissioning new
research on how to advance the deployment of broadband to rural areas, which will
be released in September 2001.

Public access WLANs should be considered as a means of providing broadband

connectivity and wireless access to remote communities.

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Next Generation WLANs

The future development of WLAN applications is assured. The 5 GHz band (5.150-
5.350 GHz and 5.470-5.725 GHz) in Europe provides an elegant upgrade path for
WLAN applications, which will benefit from higher bit rates, cleaner spectrum and
higher QoS due to advanced interference mitigation techniques.
Next generation
The use of the 5 GHz band for WLAN applications is still very open in terms of WLAN applications
standards setting and frequency allocation. Care must be taken by regulators to promise higher
ensure that WLAN market growth is nurtured and innovation by service providers is speeds and better
encouraged. QoS...

Frequency Allocation & Licensing Conditions ...new markets need

commerical and regu-
At a national level, spectrum managers are considering how to regulate the 455
latory freedom to
MHz of frequency available in the 5 GHz band for WLANs. Regulations will vary
considerably between countries: grow

1. In Germany, according to draft regulations, WLAN applications will be limited to

indoor use. Connections to other networks outside the local area network, in-
cluding public networks will require approval from the regulator, RegTP.
2. France intends to restrict WLAN applications to the 5.15 – 5.25 GHz frequency
range. This frequency range will be licence-exempt.
3. Current UK policy is to limit the band to private applications only on a licence-
exempt basis and apply licensing conditions for third party data services as per
the 2.4 GHz band.

Regulators must ensure that the management of the 5 GHz band encourages the
further development of the public access WLAN market. Cumbersome licensing
conditions or severe restrictions on available frequency will damage the growth of
the market. If there is insufficient spectrum or little commercial freedom in the 5
GHz band, the 2.4 GHz band may become overdeveloped by WLAN operators with
an associated impact on service quality.

Re:Think!’s view is that a ‘light’ regulatory regime will allow the market to develop
quickly and efficiently and will be in the best interests of operators, businesses,
consumers and governments. Consideration should be given to:

1. allowing licence-exempt usage for both public and private WLAN applications –
the financial outcome of previous spectrum auctions are not relevant to this
market. Licensing public access WLANs will favour incumbents, not new mar-
ket entrants and risk stifling competition and innovation (see Case Study on the
problems of previous spectrum auctions).

2. no partitioning of the 5 GHz band between public and private applications –

there will be adequate capacity available in the 5 GHz band to enable public
and private systems to co-exist in dense configurations without significant serv-
ice degradation. Band partitioning could result in inefficient frequency alloca-
tion and prejudge market growth.

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How much is enough?

Segmenting public from private applica-

tions makes critical assumptions about
demand for services, which are likely to Private
be wrong.
applications
Band partitioning will be inefficient and
waste scarce spectrum.
License-
exempt

Public
Services

Licensed

Allowing public services and private appli-

cations to co-exist in the same frequency
range will allow service provision to grow
organically in line with consumer demand.

Licence-exemption encourages innovation

Private
and new market entrants. applications
But measures must be taken to ensure that
the scarce spectrum resources in the 5 Public
GHz band are only used for broadband ap-
plications.
Services
License-
exempt

All applications
and services
are broadband

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Standardisation Issues

Of the two next generation WLAN standards, HiperLan/2 has received the most
backing in Europe. HiperLan/2 is the second European attempt to define a high
bandwidth wireless LAN standard for the 5 GHz band and to overcome the techni-
The market should
cal limitations and market irrelevance of HiperLan/1.
decide which WLAN
HiperLan/2 has been touted as a key element of 4G data systems, as it is designed standard will domi-
to interoperate with ATM, IP and UMTS networks. The specification also meets the nate. ..
requirements set down by the European Radiocommunications Office for co-exist-
ence with the satellite and terrestrial services that already use the 5 GHz band. The
...the 5GHz band
standard therefore includes advanced interference mitigation techniques in the MAC
layer: Dynamic Frequency Selection (DFS) and Transmitter Power Control (TPC). should be reserved
DFS is also intended to provide higher quality of service for HiperLan/2 applications for broadband appli-
by ensuring a uniform spread of HiperLan applications across the band. cations only
The international standard, IEEE 802.11a, has built upon the market success of
wireless Ethernet applications. The standard has the same MAC features as 802.11b
but defines a new radio layer for the 5 GHz band. 802.11a and HiperLan/2 already
co-exist to a large degree as they share the same modulation and channel band-
width in the 5.15 GHz – 5.35 GHz frequency range. However, 802.11a was not
specified to support either DFS or TPC. The introduction of 802.11a WLAN appli-
cations in Europe may be delayed by the need to amend the standard for European
requirements.

Re:Think!’s view is that unless the technical argument is compelling, allowing stand-
ards to co-exist is always preferable. The market can then decide which technol-
ogy offers better value to the consumer. This approach has already been very
successful in the 2.4 GHz band, where 802.11b has won market acceptance over
the HomeRF standard.

In framing the co-existence of the two standards efforts should be made to ensure
that the 5 GHz band is reserved for broadband WLAN applications and that low bit
rate, narrow band applications do not use these frequencies. This will ensure that
the scarce bandwidth available for broadband WLAN applications is used to best
effect.

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I Want My Wi-Fi!

The white paper has shown there is a tremendous market opportunity for public
access WLANs in Europe. The successful development of this market is depend-
ent on innovation by service providers, underpinned by a light regulatory regime
at a country level with respect to licensing of commercial services and frequency
management. ...The successful devel-
opment of this market is
The Challenge for Service Providers dependent on innova-
tion by service provid-
1. 3G operators need to embrace WLAN technology and develop hybrid WLAN/
3G service offers, which meet customer demand for nomadic and mobile
ers, underpinned by a
data access. They also need to consider the threat posed by hybrid WLAN/ light regulatory regime
GPRS services, which may benefit from earlier time to market.

2. Outdoor public access networks provide an alternative broadband access

medium and will increase competition in ‘last mile’ broadband provisioning.
Public access WLANs provide a means for ISPs to challenge mobile opera-
tors in the provision of wireless sata services. The technology also offers
innovative possibilities for wireless community-wide networks and can play a
role in bringing broadband connectivity to rural areas (the so-called ‘digital
divide’).

3. WLANs provide an opportunity for all service providers to develop new and
innovative products for consumers and business users, which will enable
them to diversify and enhance their service offers beyond access provision.

The Challenge for Vendors

4. WLAN equipment vendors must ensure that their product lines match not
only customer needs, but also the requirements of different regulatory re-
gimes in European countries. Multiple standards add to the complexity this
market. Vendors will need to consider support for more than one technology,
such as Bluetooth/Wi-Fi and 802.11b/802.11a.

The Challenge for Regulators

5. The opportunity for commercial WLAN services is excellent in Europe as the

whole 2.4 GHz band is licence-exempt. In those countries where frequency
is limited (e.g. France), or licensing rules have stifled market development
(e.g. the UK) legislation should be amended to promote market growth.

6. Frequency congestion and interference in the 2.4 GHz band will be largely
self-correcting. As WLAN density increases, business users and ISPs will
migrate to the 5 GHz band to obtain higher performance, cleaner spectrum
and better quality of service from next generation WLAN standards (HiperLan/
2 and 802.11a). This will free spectrum in the 2.4 GHz for consumers and
Bluetooth applications.

7. A light regulatory regime will allow the WLAN market in the 5 GHz band to
grow quickly and efficiently and will be in the best interests of operators, busi-
nesses, consumers and governments. Licence-exemption for public WLAN
services and not partitioning the 5 GHz band between public and private
applications should be considered.

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The Challenge for Standards Setters

8. The objective of the standardisation process for next generation WLAN appli-
cations should be co-existence of the International standard 802.11a and the
ETSI-approved HiperLan/2 standard. This approach will enable the market to
decide which standard wins customer acceptance.

9. Bandwidth for broadband WLAN applications is finite. Standardisation bodies

should ensure that the 5 GHz band is used for ‘broadband’ applications only
and that spectrum is not wasted on inappropriate, low data rate applications.

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Case Study – Issues for WLANs in the UK

The Ugly Face of Beauty Contests and Spectrum Auctions

Monopoly national licence awards that failed to deliver commercial benefits domi-
nate the history of broadband fixed wireless in the UK. Ionica’s collapse in 1998 led
to the return of the 3.5GHz and 10GHz frequency bands to government, which it
now intends to auction again in 2001/2. British Telecom failed to take advantage of
2-2.1GHz band and handed its licence back. 28GHz spectrum auctions in Novem-
ber 2000 failed to return reserve prices on the majority of regional licences awarded.

Licensing policy in 3G led former FCC Chief Economist and editor of

Telecommunications Policy Bill Melody to state that:
“In essence, the market structure has been artificially tilted away from
competition and toward concentrated oligopoly, and competition policy
objectives have been compromised”.12

Allowing commercial exploitation of license-exempt spectrum is an innovative

solution to the limitations of licensing.

Defending the UK 3G decision, Patricia Hewitt, Minister for E-commerce argues

that:
“In principle, the ‘right’ winners are those companies which will be able to
offer the best use of the spectrum, in terms of quality of service, innovative
and popular new services, size of investment in the new network and
technology, and speed of building it”.13

Hewitt stresses that 3G auctions were not solely concerned with government revenue
raising, but consumer benefit in market roll-out and adoption of new services. For
these same reasons, we believe that it is essential to avoid the pit falls of licensing
in the 2.4 GHz and 5 GHZ bands.

The chair of the government Spectrum Management Review announced in the

2001 Budget, Professor Martin Cave, argues in favour of market entry in spectrum
licensing:
“Licenses can also be set aside for new entrants to the market, to
compensate for network-building costs and other benefits enjoyed by
incumbent operators”.14

Based on the US and European experience, our view is that the 2.4 GHz and 5
GHz bands provide the ideal opportunity for market innovation using ‘unregulated’
spectrum for commercial purposes. In line with ‘Internet self-regulation’, quality of
service and non-interference issues become the responsibility of manufacturers
and operators acting in voluntary self-interest.

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Bridging the Digital Divide

The failure of the UK government to complete the auction of all 28 GHz and 40 GHz
spectra caused alarm amongst rural agencies. These bodies saw potential licensing
of 3.4GHz and 10GHz for exclusive use in each region as unnecessarily complex
and bureaucratic:
“A rural area is already incurring higher costs to establish such networks
and cannot afford to pay the additional costs associated with auctioned
licenses…licenses should be awarded on a “first come first served
basis”…We understand that each “hop” requires licensing…We consider
that a review is needed on payment for spectra to ensure affordability to
assist the roll out of microwave networks in rural areas”15 .

The 2.4 GHz band presents an ideal opportunity to allow public access WLANs to
fill the gaps in broadband coverage. It also has the advantage that while de facto
monopoly may develop, at least de jure monopoly by licensing will be avoided. If de
facto monopoly develops this can be regulated by OfCom under concurrent powers
to be introduced under the Communications Act expected in 2002.

Broadband Britain

The upcoming Communications Act provides the opportunity for the Government to
prove that it is serious about ‘Broadband Britain’. It needs to show more conviction
than it has to date with local loop unbundling, cable broadband roll-out and the
limited take-up of digital terrestrial TV. Often, governments pay lip service to dynamic
market-led technology innovation. In the case of public access WLAN applications
in the 2.4 GHz and 5 GHz bands, the British government has the chance to actually
step back and watch the market develop organically and on the basis of genuine
consumer demand.

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Supporting Notes

1. Following the ERC Decision of 29 November 1999 on the harmonised fre-

quency bands to be designated for the introduction of High Performance Radio
Local Area Networks (HIPERLANs) (ERC/DEC(99)23).

2. The 802.11a shares the same Medium Access Control (MAC) layer as the
802.11b standard. A new Physical (PHY) layer has been defined to meet the radio
requirements of the 5.15 GHz – 5.35 GHz band in the US. In comparison, HiperLan/
2 standard specifies new PHY and MAC layers.

3. In common configurations, actual data rates are lower than the physical maxi-
mums due to 802.11b wireless device transmitting the preamble and a portion of
the packet header at 1 Mbit/s in order to maintain backward compatibility with
802.11 devices. Use of encryption techniques, such as Wired Equivalent Privacy
(WEP) also add additional overhead and reduce useful bit rate.

4 . 2446.5 MHz to 2483.5 MHz in France.

5. Also 5725 MHz – 5825 MHz in the US.

6. See http://www.art-telecom.fr/licences/rlrref.htm.

7. See http://www.anfr.fr/gb/actualite/SRD.html

8. The Spectrum Management Review’s issues paper is likely to be published in

early June and after the UK General Election on 7 June 2001.

9. See http://www.radio.gov.uk/publication/ra_info/ra294.htm.

10. See http://www.radio.gov.uk/topics/enforcement/enforce-index.htm

11. See http://www.e-envoy.gov.uk/publications/reports/broadband/.

12. Melody, William H. A fighting chance: learning from the 3G experience in

Europe, info, Vol 3, No 1, February 2001.

13. Hewitt, Patricia 3G licence allocation: why an auction was best for the UK,
info, Vol 2, No 4, August 2000.

14. Cave, Martin and Tommaso Valletti, Are spectrum auctions ruining our grand-
children’s future? info, Vol 2, No 4, August 2000.

15. Mid Wales Partnership (25 January 2001) - Response to the Consultation

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Annex 1 - Companies and Organizations mentioned in this white paper

Company/Organization Web Site

Agence Nationale des Fréquences http://www.anfr.fr

Atlantic Telecom http://www.atlantic-telecom.com/
BT http://www.bt.com
Consume http://www.consume.net
Cisco http://www.cisco.com
E Envoy (UK Government) http://www.e-envoy.gov.uk
Elektrosmog http://www.elektrosmog.nu
Ericsson http://www.ericsson.com
ETSI http://www.etsi.org
European Radiocommunications Office http://www.ero.dk
Federal Communications Committee http://www.fcc.gov/
HiperLan/2 http://www.hiperlan2.com
HomeRF Consortium http://www.homerf.org
IEEE http://www.ieee802.org
Jippii http://www.jippiigroup.com
Kingston Communications http://www.kingston-comms.com/
Microsoft http://www.microsoft.com
Modalen Project http://www.modalen.com
Motorola http://www.motorola.com
Nera http://www.nera.no
Nokia http://www.nokia.com
OfCom http://www.ofcom.gov.uk/
Proxim http://www.proxim.com
Radiocommunications Agency http://www.radio.gov.uk
RegTP http://www.regtp.de/
Siemens http://www.siemens.com
Service Factory http://www.servicefactory.se
Sonera http://www.sonera.com
Symbol http://www.symbol.com
Telenor Mobile http://www.tmc.telenor.com
Telia Homerun http://www.homerun.telia.com
Tenzing Communications http://www.tenzing.com
Wayport http://www.wayport.com
Wirelessbolaget http://www.wirelessbolaget.com
Wi-Fi http://www.wi-fi.org
Wireless Network Services Oy http://www.wnsonline.net

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