A NEW POWER IN NORDIC COMMUNICATIONS - Post- og teletilsynet ...

Application for 3G14.08.00

Summary

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Content

1. INTRODUCTION.........................................................................................................................3

2. MAIN ISSUES IN OUR UMTS APPLICATION:.....................................................................6

3. EXPERIENCE AND EXPERTISE (SECTION II)....................................................................8

3.1. ENITEL AND SONERA – A COMPLEMENTARY NORDIC PARTNERSHIP...........................................83.2. ENITEL – A COMPLETE TELECOMMUNICATIONS PROVIDER IN NORWAY.....................................93.3. SONERA – ONE OF THE WORLD’S LEADING MOBILE OPERATORS..............................................11

4. TECHNICAL DESCRIPTION OF THE PLANNED NETWORK (SECTION III)............13

5. GEOGRAPHIC AND DEMOGRAPHIC COVERAGE AND ROLLOUT RATE (SECTION IV).......................................................................................................................................16

6. COMMERCIAL CONDITIONS (SECTION V)......................................................................21

7. OTHER CONDITIONS – ENVIRONMENT AND CO-LOCATION (SECTION VI)........29

8. THE APPLICANT.......................................................................................................................31

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ENITEL AND SONERA –A NEW POWER IN NORDIC COMMUNICATIONS

1. Introduction

Enitel and Sonera have joined forces to establish the Norwegian company “Broadband Mobile”. The Company is applying for one of four available licenses for the establishment and operation of a third generation mobile telecommunications network (UMTS) in Norway.

Enitel and Sonera have backgrounds and experience complementing each other. Broadband Mobile constitutes a powerful Nordic partnership based on unique expertise and knowledge in the field of telecommunications.

Enitel is Telenor’s foremost competitor in the provision of fixed network services in the Norwegian telecommunications industry today and a significant contributor to real competition, high quality of service and a broad service offering to the market.

Enitel has a solid regional connection. Approximately 50 local and regional utility companies hold ownership interests in Enitel, and through these, more than 200 of Norway’s 435 municipalities can claim shareholding interests in Enitel.

Figure 1. Utility Companies with ownership interests in Enitel

This deep-rooted foundation in the tradition of utility companies and Norway’s outlying districts, has contributed significantly towards enabling Enitel to unite Norway, from North to South, by way of our nation’s most

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advanced, and second largest, broadband fibre optic network. Enitel’s solid Norwegian roots have laid the foundation for a long-term, national perspective in the development of a telecommunications network.

Figure 2. Enitel’s Broadband Network

Sonera is a major international mobile telecommunications company. Based in Finland, the company has over 10 million subscribers in 10 countries. Sonera is a world leader in the development of mobile services. With their concerted focus on research and development, Sonera is recognised as one of the most innovative mobile companies in the world today.

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Figure 3. Sonera’s activities worldwideThe combination of Enitel’s solid regional Norwegian foundation, together with Sonera’s international experience in the area of mobile communications, merges to produce a new, strong, competitive power in the Norwegian telecommunications market. This partnership between Enitel and Sonera will be apparent in progressive, innovative and user-friendly services, at reasonable costs, to business, individuals and the public sector.

UMTS provides a whole new spectrum of opportunities within communications. It is vital that users – residential customers, businesses and institutions – are given full access to the new technology. At the same time, UMTS developers must fully consider the fundamental values of the Norwegian people; maintaining the highest degree of equality with regard to urban versus rural, small businesses versus large, and between all peoples of the nation, independent of who they are or where they live.

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2. Main issues in our UMTS application:

THE POWER TO DELIVER

Enitel and Sonera have the power, the experience and the expertise to quickly and comprehensively establish an UMTS network in Norway. The new company will be an important competitive power, offering a new dimension to the spectrum and quality of mobile services at affordable prices.

AN AGGRESSIVE COVERAGE AND ROLLOUT STRATEGY

Broadband Mobile has a UMTS coverage and rollout strategy that far exceeds the minimum requirements of the Norwegian Authorities, with regard to both extent of coverage and rollout rate. The network rollout will begin as soon as possible after the license award, with implementation planned in Ørsta/Volda and the greater Oslo area. The rollout will be completed within 4 years of licence award. The total coverage area described in this document will be completed within four years of the license award, at which stage almost 3.6 million, (80 percent) of Norwegians will be able to enjoy the benefits of UMTS.

Enitel and Sonera are open to co-operation with other UMTS licensees. Such co-operation may contribute to an increased collective coverage area and thereby provide almost the entire Norwegian population with UMTS in a socio-economically feasible manner.

A CONSCIOUS FOCUS ON RURAL DISTRICTS

Broadband Mobile has a conscious focus on Norway’s outlying districts. This is illustrated in the Company’s rollout commitments and plans, which are based on both commercial and social considerations. We intend to maintain a strong districts profile, with regard to both coverage and rollout in cooperation with local utility companies. Local cooperation and co-location of infrastructure will be an important focus area in our 3G development.

The company intends to contribute as far as possible towards a collective nationwide UMTS coverage and for this reason will erect 200 base stations in areas where no other operators commit to coverage.

RESEARCH AND DEVELOPMENT

As an integral part of our commitment to education, all universities and many other institutions of higher education, will be offered dedicated antennae in our 3G network. To stimulate research and development in the area of third generation mobile technology, we have taken the initiative towards cooperation with NTNU/SINTEF and also made initial contact with other research institutions.

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A FOCUS ON INDUSTRY AND COMMERCE

Businesses, both centrally located and based in Norway’s outlying districts, will be provided with coverage as far as possible, in order to utilise the benefits offered by UMTS. Enitel has long been aware of the requirements of the Norwegian Oil & Gas Industry. For this reason, we have a well-established broadband network covering this area, and intend to supplement this with UMTS services.

PROMOTE INDUSTRIAL DEVELOPMENT IN NORWAY

Our business model for 3G emphasises the importance of open interfaces to service providers operating within the market. This enables and encourages the innovate cultivation of new services. We believe that this will have a major impact on the Norwegian knowledge industry and its ability to compete.

WELL PRICED, USER-FRIENDLY PRODUCTS

Broadband Mobile will provide advanced, customer-oriented products and services which are well priced and meet the needs of all market segments. Maintaining a competitive price structure, whilst providing services which are tailored to the requirements of the individual user or business, will be a high priority focus area.

Sonera is recognised as one of the most innovative mobile companies in the world. For more than two years the company has indulged in product development which is directly related to third generation mobile communication. This includes a test laboratory specifically for 3G services.

AN ENVIRONMENTAL FOCUS

Modern telecommunications contribute to reducing the need for transportation, and hence to a more sustainable development of society. Throughout rollout projects and choice of materials, Broadband Mobile will strive to maintain a clear environmental profile, far exceeding the environmental requirements imposed by the Authorities. Sonera has invested in mobile operations in 10 countries, where the climate, topography and nature are extremely different, and has therefore extensive experience in meeting new environmental challenges in their mobile activities.

CO-LOCATION

The rollout of Enitel’s broadband network has utilised infrastructure belonging to local utility companies for co-location purposes and Enitel and Sonera intend to continue this practice of co-location in the implementation of a 3G network. The Company will maintain this

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offensive co-location strategy with other 3G developers based on a cost share basis.

EMERGENCY PREPAREDNESS

Broadband Mobile will contribute to strengthening the overall civil emergency situation in Norway, by basing its UMTS network in Enitel’s comprehensive broadband network, and thereby reducing vulnerability that could be caused by disruptions in Telenor’s network or other potential crisis situations.

A summary of each section in the application will be given in the next chapters.

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3. Experience and expertise (Section II)

3.1. Enitel and Sonera – a complementary nordic partnership

Sonera and Enitel have telecommunications experience and expertise, which fully complement one another.

Experience from fixed broadband network and customer base in Norway combined with innovative mobile expertise

During the last 3-4 years Enitel has effectively developed a broadband network in Norway and now has an established nationwide backbone network, stretching from Kristiansand in the South, to Tromsø in the North. The Company’s broadband network is the newest and most modern in Norway, second only to Telenor’s fixed network in size. Enitel has a rapidly growing customer base which presently includes 250 000 registered residential customers and more than 20 000 business customers. The number of active residential fixed line voice customers has increased with almost 31 % from approximately 65 000 at the turn of the year to approximately 85 000 as per 31 July. The total number of active fixed line customers in the business segment has increased from just under 5 000 to almost 8 000 during the same period, an increase of 60 %.

Sonera is one of the world’s leading mobile communications companies and a leader in the development of new mobile services. The Company is internationally recognised as an innovator among telecommunications providers, due to its concerted efforts in the area of research and development.

This combination of Enitel as an effective fixed network operator with local market knowledge, and Sonera as a leading mobile operator, makes for a powerful telecommunications union. Through Broadband Mobile, Enitel and Sonera can fully utilise the opportunities made available through the integration of fixed network and mobile services.

Norwegian foundation combined with international experience

Enitel has a solid Norwegian foundation. The Company’s broadband development strategy has maintained a clear, regional profile. Ownership interests include approximately 50 utility companies, spread throughout the regions of Norway. Enitel’s broadband network has to a high degree been developed based on the existing infrastructure of utility companies throughout Norway.

Sonera is a major international telecommunications operator. Based in Finland, the company is involved in activities throughout both Europe and the USA. Russia, and many Eastern European countries in particular, can

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now enjoy modern telecommunications services made available by Sonera, a vital contribution towards enabling commercial and social systems to reach Western standards.

The combination of Enitel’s Norwegian foundations and regional profile, and Sonera’s solid international experience, makes a joint investment for 3G development in Norway particularly interesting. It is a partnership planted in Nordic values that has at its fingertips the best service offerings available in the world today.

Experience from two of the most sophisticated telecommunications markets in the world

Enitel and Sonera are two companies that thrive on servicing a demanding home market. Finland and Norway top the world for use of mobile services. Finland has the world’s highest mobile penetration rate, followed by Norway. Experience shows that high quality combined with the continual introduction of new services are crucial if a mobile operator is to survive in these two countries that lead the world in the area of mobile communications.

A partnership with a solid financial foundation

In addition to documented results with regard to network rollout and the development of new, value-added mobile services illustrated by Enitel and Sonera, Broadband Mobile is a partnership with a strong financial character. There is no doubt that Enitel and Sonera together will have a solid economic foundation, which will ensure a comprehensive, quick and well planned rollout of a 3G network in Norway.

3.2. Enitel – a complete telecommunications provider in Norway

Norway’s most modern and second largest broadband network

Enitel is a company with the power to deliver. As per August 2000 Enitel has laid 5 500 kilometres of broadband network throughout most parts of Norway. This includes 7 Metropolitan Area Networks and almost 50 smaller city networks. Enitel’s network forms an excellent basis for our mobile investment.

Development of the fixed broadband network via the infrastructure of utility companies has made it possible to develop a top quality network in an environmentally friendly and cost effective manner. The network has a high level of capacity and operational reliability. The nationwide coverage of Enitel’s network offers vast opportunities for connection to the outer districts. Enitel’s European connection through its North Sea Ring from London via Amsterdam, Hamburg, Copenhagen and Malmö, and from this

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autumn also Gothenburg and Stockholm, places Enitel in an optimal position for an international focus.

Fully integrated telecoms operator

Enitel has the commercial and technical experience that is necessary to fulfil constantly changing customer requirements and to be a considerable competitive force within the Norwegian telecommunications industry.

In December 1999, Enitel entered into an agreement with Telia AB to purchase Telia’s operations in Norway. During first quarter, 2000, Telia Norge was incorporated into Enitel. Through the purchase of Telia’s operations in Norway, Enitel has progressed from being a telecommunications network provider to becoming a fully integrated telecommunications operator of fixed network services in the Norwegian telecommunications sector.

Enitel currently supplies a broad spectrum of services within fixed line voice, PBX, data communication, Internet and transmission, and is collectively the second largest supplier of fixed network services in the Norwegian telecoms industry.

Through the purchase of ID ComNet AS in June this year Enitel has secured access to valuable expertise within integrated communications solutions.

A comprehensive and rapidly growing customer base

Enitel has approximately 250 000 registered residential customers and more than 20 000 registered business customers. The number of active residential fixed line voice customers has increased with almost 31 % from approximately 65 000 at the turn of the year to approximately 85 000 as per 31 July. The total number of active fixed line customers in the business segment has increased from just under 5 000 to almost 8 000 during the same period, an increase of 60 %. Nine of the ten largest companies in Norway are included in Enitel’s customer portfolio. Enitel also has a considerable share of the small and medium business market, not least in the outer districts of Norway. The building up, maintenance and further development of this customer base has provided Enitel with considerable expertise within the Norwegian telecommunications industry.

The telecommunications operator for the North Sea

In 1998 Enitel and Telia AB established the company NorSea Com, which now operates the undersea cable NorSea Com-1 between Kårstø in Norway and Lowestoft in Great Britain. Through a strategic agreement with Statoil on behalf of Statoil and Norsk Hydro, which was entered into this spring, Enitel has consolidated its position as the telecommunications operator for the North Sea. The agreement entails the connection of a number of North Sea platforms by a fibre optic cable network stretching

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approximately 200 kilometres in length. This has enabled Enitel to develop competence both with regard to communications in the North Sea and technical expertise acquired in the development of the network.

Financial competence Enitel is traded on the Oslo Stock Exchange main list, and is currently one of the 25 most valuable traded companies in Norway. Enitel has been able to finance its growth, herein major investments into infrastructure. This has given the Company considerable financial competence.

Mobile strategy

Enitel’s mobile strategy is based on experience from Telia Norge’s planned mobile activities (DCS 1800). Through its work with the mobile project, Enitel has developed substantial mobile expertise, and the foundation has been laid for our entrance strategy and long term positioning in the mobile sector. In April this year, a Service Provider Agreement was signed with NetCom, making it possible for Enitel to offer its own mobile services from this Autumn.

Enitel has invested in 250 contracts for base stations sites in Oslo, Bergen, Trondheim and Stavanger. The planned UMTS network will use these as a starting point for development.

The considerable mobile expertise that Enitel has established within a relatively short timeframe, combined with comprehensive technical, commercial and financial experience in fixed networks; our existing customer base, our broadband network and our mobile investment, based on a Mobile Service Provider agreement with NetCom, provides us with the solid expertise necessary to become a 3G-operator in Norway.

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3.3. Sonera – one of the world’s leading mobile operators

The leading telecoms operator in Finland and a pioneer in mobile communications

Sonera is the leading provider of mobile telecommunications services in Finland, one of the most sophisticated telecommunications markets in the world. Sonera has significant strategic investments in mobile operations in nine other countries. The Company is a forerunner in the development and commercialisation of new data and media services in Finland, and is the leading provider of fixed network telephony to the Finnish market.

Sonera is organised into three business areas:- Mobile communications- Fixed network voice and data communication- Media and other services

Growing mobile subscriber base and traffic volume in Finland

Sonera’s GSM subscriber base has increased rapidly since 1995. In June 2000, Sonera had approximately 2.1 million GSM subscribers in Finland, representing a share of over 60% of the total Finnish GSM market. This growth is attributable to the increased penetration rate of mobile telephone services in Finland, active marketing of Sonera’s GSM services, introduction of targeted tariff packages and the increased number of subscribers who have migrated from NMT to GSM services.

Sonera expects the GSM subscriber growth to continue, due in part to the development of new applications for mobile handsets, including wireless data applications and wireless transaction based services.

International investments through mobile joint ventures

Sonera has made significant international investments. Principal investments have been made in providers of mobile communications services in rapidly growing markets: Turkey, the United States, the Baltic States, Russia, Lebanon, Hungary and Spain. In these markets Sonera has been able to capitalise on its expertise in the establishment and operation of technologically advanced GSM networks, as well as its strength in sales, marketing and customer service. The customer volumes of associated companies in the mobile communications totalled almost 10 million by the end of June.

In March 1999 Sonera was awarded one of the four national UMTS licenses by the Finnish government. This license was the first one granted anywhere in the world. Sonera is also a member of the Xfera consortium, which won a UMTS license in Spain in February 2000.

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Sonera engages in close cooperation with its associated companies in order to contribute and develop technical and commercial expertise obtained in Finland’s sophisticated market.

At no stage has Sonera been affected by, nor is in a process of, a withdrawal of a telecommunications license, an imposition of restrictions due to non-compliance with the obligations deriving from a telecommunications license or charges for infringement of the legislation in force on telecommunications, competition or employment, or for violation for data protection provision.

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Innovative focus and development of new mobile services

Sonera is at the forefront in the development of new value-added services based on SMS technology. Sonera is a pioneer in the development of information services and wireless telebanking services for its customers. Introducing a variety of new SMS based value added services during the second half of 1999, Sonera was one of the first companies in the world to launch commercial services utilising WAP.

Sonera’s strategy is to develop into a communications operator that offers mobile transaction and content services worldwide. The Company’s Mobile & Media business area concentrates on mobile communications networks and their associated services, as well as on Internet services that are offered via various distribution channels world-wide.

In 1999, Sonera introduced SmartTrust, enabling subscribers to conduct a variety of banking and other financial transactions in a secure way through their handsets. Another successful service is Sonera Zed, a global personal mobile portal, which can be used anywhere, at anytime, combining the best features of the Internet and mobile communications.

Focus on Research and Development

Sonera intends to maintain its position of leadership in advancing the state of the art and fostering innovations. Sonera currently employs more than 500 engineers and researchers in its research and development activities. Research and development activities are carried out within Sonera and in cooperation with equipment manufacturers, research institutions and other operations.

Sonera has a number of ongoing research and development projects, focusing on the development of UMTS networks and their associated services. These activities include “Mobile city Oulu”, a joint research project with Finnish municipality of Oulu, Oulu University, the Technical Research Center of Finland and number of telecommunications equipment manufacturers, computer companies and retailers to develop new mobile communications services and applications for UMTS technology. In addition, in 1997 Sonera entered a joint research project with NTT DoCoMo, for the development and testing of UMTS networks. The project has provided Sonera the opportunity to test Ultra-UMTS radio technology in DoCoMo’s pilot third-generation network in Japan and an opportunity to participate in the development and commercialisation of new service applications for high speed mobile networks, prior to development of its own pilot.

Active participation in mobile standardisation organisations

Sonera participates actively in standardisation organisations and international mobile forums and contributes to the development of new worldwide generation mobile communications standards.

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4. Technical description of the planned network (Section III)

Quality

Network and service quality forms an integral part of Broadband Mobile’s network strategy. Enitel’s existing infrastructure will also be further developed during the rollout of our 3G network.

Broadband Mobile will provide 384 kbps indoor coverage at launch in urban coverage areas and a minimum capacity of 144 kbps indoor coverage in all areas covered by Broadband Mobile. As a comparison, the present GSM network has a transmission capacity of 9.6 Kbps.

Standards and interfaces

Broadband Mobile’s network planning is based on existing UMTS standards. We have emphasised the support of open service interfaces, and will both support and invite the different providers within the industry to make their services and applications available via Broadband Mobile’s UMTS network. Broadband Mobile considers an open service interface to be of utmost importance, as 3G enables a completely new business model in the 3G environment, where telecommunications, IT-industry and media industry are converging.

Services

Our 3G network will support all relevant services that are currently being standardised from 3G Partnership Project, including telecommunications services, bearer services, supplementary services and multimedia services, with the quality recommended in 3G specifications. Broadband Mobile has prioritised developing a network plan that satisfies all official regulations. Emergency calls will be forwarded in accordance with specified standards and functionality will not be reliant upon a SIM card in the mobile device. Broadband Mobile will support positioning of emergency calls to facilitate efforts in a crisis situation. Furthermore, we have prepared the network for a civil emergency situation, and Broadband Mobile’s network will have the ability to function as an alternative network in a public emergency.

By use of mandated GSM National Roaming, Broadband Mobile will ensure its customers have seamless usage for all basic and low speed data and voice services when out of range of the UMTS Network.

Security

The security aspect will also be addressed with regard to our customers. We emphasise the importance of supporting the laws regarding protection of privacy, including protection against unauthorised monitoring of calls.

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Roll-out

Broadband Mobile has already invested in approximately 250 contracts for the placement of base stations for a mobile network. These will be used in the rollout of our UMTS network. Additionally, Broadband Mobile will, as far as possible, make use of Enitel’s existing fixed network infrastructure for the development of the mobile network, herein the infrastructure belonging to utility companies, which has formed the basis for Enitel’s broadband network development up until now. One of the main principles is to maximise the use of existing infrastructure and sites in order to minimise environmental impact.The rollout of the network is described in detail in section 4 of this application and briefly later in this summary section.

Network Architecture

Broadband Mobile’s strategy for network development is to evolve the network into an all IP network to continue to meet the requirements of the next generation of mobile communication services. Broadband Mobile intends to maximise the use of innovative technologies such as smart antennae within the UMTS architecture, to minimise the environmental impact of network elements and to provide the best coverage solutions while minimising capital expenditure on base station sites.

Both Enitel and Sonera are familiar with the issues related to the interconnection of several operators. When IP is to be used instead of traditional transmission at the interconnection points, issues such as inter-operator accounting for clearing have already been taken into account.

Figure 4. Network Architecture in our 3G network

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Broadband Mobile’s rollout utilises high class RBS capacity, which maximises coverage, thereby keeping number of sites required to a minimum, and reducing environmental impact.

Broadband Mobile will use Network Management Systems to provide centralised network supervision, allowing full management of the network via a single screen in any of the geographical locations and facilitating high operational efficiency to improve co-operation and co-ordination between the different operational areas.

The solution will allow for automated UMTS Radio Access Network with radio planning tools to reduce the need for manual handling of the vast number of various network parameters.

Broadband Mobile’s policy is to utilise the latest technology in radio planning tools and equipment from turnkey providers. In this way, Broadband Mobile will deliver a service based on optimal utilisation of available spectrum whilst minimising environmental impact through less hardware overheads. Sonera will bring its experience from 10 other mobile networks to optimise the available spectrum.

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5. Geographic and demographic coverage and rollout rate (Section IV)

An ambitious programme for UMTS network rollout has been prepared. The following will be characteristic of our 3G investment:

- A good geographic and demographic coverage of network and services

- High speed rollout

Geographic and demographic coverage

Our development programme has a clear rural profile. Through Enitel’s close cooperation with local utility companies, Broadband Mobile will also have a solid foundation in Norway’s districts. Local cooperation and co-location of infrastructure will be the basis for the implementation of our 3G network. This, combined with Enitel’s fixed broadband network, contributes to the realisation of the Parliamentary directive of “Broadband to the People” (Bredbånd til folket).

Through Broadband Mobile, Enitel and Sonera will commit to a coverage that is far greater than the minimum requirements of the Ministry of Transport and Communication for coverage in 12 cities and densely populated areas.

It is our goal to contribute towards a collective UMTS coverage that is as extensive as possible, and we hope to be a major factor in ensuring that all built up areas with a population exceeding 1 000 receive UMTS coverage. We intend to achieve this through a three-part strategy:

- We will provide coverage to 106 specified cities and built up areas, including the 12 mandatory. We will do this with the help of 1 117 base stations and 100 base stations with micro cells.

- In addition to this, we will, ased on our regional focus, commit to bulid up to 200 base stations in populated areas that other operators will not cover.

- We will commit to erecting a further 615 base stations, to be sited based on market demands.

The total number of base stations that Broadband Mobile commits to build will therefore be 2032.

Our calculations show that through this rollout plan, coverage will be provided to almost 3.6 million people. This represents 80 percent of the population and far exceeds the requirements of the Authorities, as illustrated in the diagram below.

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Figure 5. Comparison between minimum requirements and Broadband Mobile’s planned coverage

We expect that all applicants will, like us, cover the most densely populated areas in Norway. To which degree smaller built up areas will be offered coverage is, however, uncertain. This is particularly applicable to built up areas in outlying districts. We have established a coverage strategy which facilitates a coverage whereby as few of these areas as possible are without UMTS coverage. At the same time, this will contribute towards increasing the collective UMTS coverage in Norway.

Furthermore, Enitel and Sonera, via Broadband Mobile, are open to various forms of cooperation with other developers of UMTS networks. It is a prerequisite that such a cooperation is structured in a way that it contributes towards an increased total UMTS coverage, collectively speaking, while also encouraging active competition between mobile operators.

Other Prioritised Areas

Industry and Commerce

In addition to reaching as many households as possible, our priority is that businesses will be able to make use of the new technology and the opportunities it provides. Even businesses located outside of built up areas will, wherever possible, be included in our mobile network. This is not just important for local businesses, but is of vital importance to the future development of Norway’s outlying districts. To achieve this, we have utilised maps from the Statistisk Sentralbyrå, which indicate where businesses are located. When deciding which areas should be covered, we have to a large degree considered the locations of these businesses. To illustrate this, we refer to the map indicating where businesses are located in Ørsta and Volda as well as coverage map for the same area. By

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comparing the two maps on the next page, one can see that all local businesses are included within the coverage area.

Figure 6. Businesses located in Ørsta and Volda

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Figure 7. Coverage map of Ørsta and VoldaResearch and Development

Another prioritised area in Enitel’s coverage strategy is research and development. All universities and most technical colleges will be covered. As transmission capacity and thereby also service offerings are influenced by proximity to base stations, we have taken the initiative towards a cooperation with higher educational institutions for the placement of antennas.

As a step in our strategy to develop expertise related to UMTS, we have initiated a cooperation agreement with the technical research institutions in Trondheim and have also contacted other research institutions in Norway. We believe that providing the next generation of students with immediate access to the new technology will be a vital initiative in the continued development of the knowledge industry in Norway.

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Figure 8. Universities and technical collages which are offered Base Stations

Oil and Gas Industry

In our coverage strategy, we have prioritised coverage for oil and gas activities as much as possible. Enitel has co-operated with the petroleum industry during the establishment of their broadband network and are now the chosen telecommunications provider to the North Sea. This focus will be continued in the development of our UMTS network. Due to high security requirements, it may take some time before UMTS technology can be used on North Sea Platforms. Enitel and Sonera will, however, follow this development extremely closely, and Enitel’s existing and planned fibre network in the North Sea constitutes an excellent basis for such an investment. We are also considering the possibility of providing supply vessels in the North Sea with mobile communications.

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Figure 9. Map over Present Fibre (yellow line) Network in the North Sea

Roads and Airports

Our development plan includes the most important arterial routes. In addition to this, many airports are included as part of a continuous coverage area.

Rollout Rate

We are planning a rapid rollout of the 3G network. The 2 032 base stations we commit to, will be rolled out within 4 years of licence award. All 2 032 base stations that we commit to will be rolled out within three years of the commercial launch. Our rollout strategy emphasises a well-balanced rollout between Norway’s outlying districts and urban areas. Our rapid rollout of the 3G system will contribute towards maintaining Norway’s position as a pioneer nation within information and communications technology.

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6. Commercial conditions (section V)

Broadband Mobile’s vision of the 3G future

Third generation mobile communications represents major changes in the way we do business and live our lives throughout the 21st century. The effect of these changes will be profound. A new industry will be created, going far beyond the traditional confines of mobile telecommunications

Broadband Mobile believes that the sophisticated Norwegian telecom market, and economic and regulatory climate, present an exceptional opportunity, both for Norway and for Broadband Mobile to be at the forefront of the development of this new industry. Broadband Mobile is committed to utilising UMTS, together with a wide range of related skills and technologies, to create new markets, new products and new services, accelerating the Norwegian digital revolution and ensuring in turn that Norway continues to be at the forefront of the European and global Information society.

Broadband Mobile’s mission

Broadband Mobile will be the most innovative third generation mobile company in the Norwegian market developing and launching new personalised service solutions to Norwegian consumers, business society and institutions. We will use new technological developments and opportunities emerging from the integration of communications, information technology and media industry. We will adapt new business models, implement new revenue stream models, and use new partnering strategies.

Strategic Goal

The mission emphasises Broadband Mobile’s development of new personalised and targeted service solutions, and focus the strong commitment to this mission will enable the achievement of the strategic goal for the coming years:

Broadband Mobile will be the fastest growing third generation mobile operator in the Norwegian market

Critical success factors

The success of Broadband Mobile’s mission and strategic goal will be dependent on the following critical success factors:

- Extensive coverage and fast rollout of the UMTS network- Close co-operation with content/3G service providers and other partners- Industry leading product development organisation and processes- 3G IT architecture and systems supporting all operations- Maximisation of customer satisfaction

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Broadband Mobile’s market approach

Broadband Mobile will approach the market as a Full Service Provider at the launch of its 3G services and is considering expanding its operations into the wholesale service provider/reseller market. Full service provision will have two dimensions. Broadband Mobile together with partners, content and 3G service providers will cover the whole 3G value chain, and also focus on the mobile and fixed service bundling/integration dimension.

Broadband Mobile has based its development commitments and ambitions on commercial evaluations and broader social considerations, including consideration of private citizens and regional companies. Broadband Mobile will have a strong regional focus in the form of co-operation with local utility companies, contributing to industrial development within the regions. A special emphasis is to provide services for educational institutions and selected industries including knowledge–based industries

Figure 10. Broadband Mobile’s 3G model

Key marketing initiatives

Deliver the highest quality and most robust network 80 % population coverage within 4-years after licence award Create customised value propositions which deliver business and

lifestyle benefits to customers Position Broadband Mobile as the company which together its partners

will create the most attractive range of content, information and entertainment services to Norwegian society

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Start 2G (GSM) service provider operations immediately as an initial mobile market approach and an entry strategy for launch of 3G (UMTS) services

Industrial convergence will create new opportunities

Broadband Mobile’s product and service offering is based on the convergence of the industry sectors Information Technology (IT) Services, Telecommunication Services, and Media/Entertainment as shown in the figure above. Broadband Mobile lays special emphasis on the convergence of telecom and media/entertainment services for the residential market and convergence of telecom and IT-services for the business.

Figure 11. The convergence in the industry

Products and Services

The increased bandwidth with packet data and IP connectivity will allow the delivery of a wide variety of applications and services through Broadband Mobile’s UMTS network. In GSM networks, services are largely standardised person-to-person services, produced on telecom platforms owned by a network operator. In UMTS networks services are typically not standardised and services include multimedia content and use delivery techniques such as multicast or broadcast. Most new services will be IP-based and can be produced on any server supporting this protocol.

Broadband Mobile understands the opportunities UMTS presents and is committed to leading edge service offerings by developing advanced services in-house as well as in collaboration with a number of partners.

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In Broadband Mobile’s mind UMTS is not about technology: It is about services.

Main design and quality objectives to Broadband Mobile’s services are personalisation and easy-to use.

2002 2003 2004 2005 2006

Business Services

Portal

Full Internet Access

Multi-Media Messaging

E- Banking,E-commerce

News, Sport, traffic, stocksWeather, Educational,Find my nearest,...

Games download,Music/Video clips

Communications Services

Commerce Services

Information Services

Edu’tainment Services

Speech Recognition

Diary, Address bookTask Manager

Intranet AccessMobile LAN

CUG

Navigational Services

Fixed-mobile IntegrationVideo Phone

On-line TVOn-line gamesOn-line music

Broadcast Services

Home ZoneBilling

Video Conferencing

Multi-Media TelephonyChat Room

Service/Terminal Evolution

Vertical Information

Educational Services

Voice Conferencing

Ticket Ordering

E-cash solution

Virtual Intranet

Customised Information

Figure 12. Service/Terminal Evolution

Sales and distribution

Broadband Mobile’s distribution strategy is designed to maximise the exposure of the market to our products. We will use innovative channels to bring products and services to the market place. In order to reach all customer segments, we will distribute services through a combination of traditional channels, as well as developing new and innovative ways of selling its mobile communications by using 3G service and content providers as channels to market. We will also ensure a high quality of pre and post sales to meet the higher demands, which UMTS will require to meet our market leading customer satisfaction standards.

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Organisation and company culture

Human resources (HR) will be key to the success of Broadband Mobile. Recruiting and retaining staff will be challenging in the face of hard competition not to mention the availability of high level personnel in 3G environment. Broadband Mobile will have an attractive human resource policy and a company culture that supports recruiting and retaining the best resources.

Broadband Mobile will aim to have a company culture that clearly penetrates the daily working environment and will be built on the following values:

- Customer satisfaction- Innovative creativity- Creating partner and shareholder value- Respect for the individual- Profitability and result-orientation

Organisational Structure

The planned organisation of Broadband Mobile has the following structure.

Figure 13. Organisation of Broadband Mobile

The planned total headcount by the launch of 3G services end of 2001, is approximately 160.

Key Processes and Systems

Streamlined processes and the most modern systems are other key success factors. They are the prerequisite for short time-to-market for innovative and integrated services. They are part of Broadband Mobile’s approach to focusing on the specific needs of customer segments in the Norwegian society such as students, online families, small and medium

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enterprises (SME) and the public sector, with a flexible offering of bundled value added services. In particular, the system infrastructure has to be state of the art in order to implement and bill new IP-based services. Furthermore, the system infrastructure has to be scalable and support ambitious coverage and rollout goals.

Broadband Mobile will design and implement an IT architecture, which enables flexibility for new product offerings and service roll-outs, and supports customer interaction and third party integration.

In general, 3G IT systems will represent far more complicated architecture than that available in a 2G environment. The integration between all operations and processes is of utmost importance. The convergence of telecommunications, IT and media industry will require flexible, open and robust systems, which can support various players who are continuously changing their position in the value space and creating new business models and earning logic. In order to implement 3G IT-systems, Broadband Mobile will invest more 20 % of total network capital expenditure in the build out period in IT systems.

IT Architecture’s Key ComponentsResponding to customer requirementspromptly

ElectronicCommunications

Entertainment

Games,Audio, Video

ElectronicInformation

CorporateITsystems

MOBILITY

ElectronicCommerce

EnablingTechnologies

EnablingTechnologies

Segment xzTime a-e

ObjectLibraries

ObjectLibraries

KnowledgeManagementKnowledgeManagement

OpenInterfaces &Tools

OpenInterfaces &Tools

3G ITSystems

3G ITSystems

BestPlatforms

BestPlatforms Segment x

Time a-b

Segment yTime d-e

Segment xyzTime c

“Time andSegmentdependentKillerSolutions”

Feedback

Best PeopleBest People

SmartPartnering

SmartPartnering

Tools forUsers todevelop ownsolutions

Tools forUsers todevelop ownsolutions

Figure 14. Key components in IT architecture

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Financial projections

Revenues

The UMTS case shows significant growth in revenues for the period until 2008. Broadband Mobile will have a rapid revenue growth in the beginning of the forecast period both due to the very fast network rollout and the totally new products portfolio entering the Norwegian market.

Revenues from value-added services and data traffic will have the greatest relative growth throughout the whole period, but Broadband Mobil’s revenue streams will still have a substantial portion of voice and termination throughout the period.

Business subscribers will initially dominate the Broadband Mobile customer base but throughout the period the relative share of residential customers will grow. Broadband Mobile have chosen a conservative approach to customer development in the period from 2008 and onwards. With the development of new services Broadband Mobile expect to increase machine subscriptions in particular.

Projected revenues

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1 000 000

2 000 000

3 000 000

4 000 000

5 000 000

6 000 000

7 000 000

8 000 000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

NO

K 1

.000

Figure 15. Projected revenues

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Broadband Mobile subscribers and mobile market share

0

200

400

600

800

1 000

1 200

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Su

bsc

rib

ers

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40,0 %

50,0 %

60,0 %

70,0 %

80,0 %

90,0 %

100,0 %

M2M

Residential

Business

Share of total mobile market

Figure 16. Broadband Mobile subscribers and mobile market share

Operating expenditure (OpEx)

Broadband Mobile aims to run its network and supporting organisation in a service-oriented and cost-effective matter. This will be achieved through highly trained staff and state of the art infrastructure.

Apart from network operating costs, customer care and billing as well as sales, marketing and distribution will be the main OpEx components.

Capital expenditure (CapEx)

Network capital expenditure is based on the rollout plan of Broadband Mobil and input from relevant vendors and Sonera’s other UMTS projects. The investments are calculated as turnkey. The roll out and associated investments are shown below.

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Accumulated CapEx

0

1000000

2000000

3000000

4000000

5000000

6000000

7000000

8000000

9000000

10000000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

NO

K 1

000

Acc. other CapEx

Acc. default inv. NW/IT/Platforms

Acc. IT and platform CapEx

Acc. network CapEx

Figure 17. Total CapEx

Financing

Broadband Mobile has the necessary financial backing to finance their UMTS venture. Documentation is provided in the application.

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7. Other conditions – environment and co-location (Section VI)

A commitment to the environment

A rapid and comprehensive 3G network rollout will be carried out in a manner that protects the environment. Both Enitel and Sonera have a documented history in protecting the environment.

The rollout of Enitel’s comprehensive broadband network has taken place without notable negative environmental effects. The Company has, to a large degree, based its previous rollout strategy on the use of existing infrastructure and co-location will also be a key approach in the new Company’s activities.

Sonera has long held environmental protection as an important area of focus within its mobile activities. The Company operates in many countries in various parts of the world where they are constantly meeting new challenges with regard to the natural habitat, topography and climate. Sonera maintains a strict focus on fulfilling the most stringent environmental requirements by using the best available technology and maintaining good environmental planning.

Our overall environmental goal is that telecommunications should not just make it possible to communicate quickly and effectively, but also provide added value in the form of reduced strain on the environment, in particular due to a reduced need for transportation in society. In this way we will contribute to a more sustainable development.

Environmental considerations will be an integral part of Broadband Mobile’s 3G development in Norway. This will be achieved by focusing on:

Co-location of antennae to avoid visible defacement of surroundings

Environmentally friendly design and camouflage of antennae

Materials to be chosen based on environmental standards

Requirement to subcontractors for product selection based on environmental criteria

Vigilance with regard to the effects of electromagnetic radiation

Abide by all laws, regulations and directives pertaining to the environment as instructed by Norwegian Authorities

Concrete steps have been taken to make use of utility company buildings and other infrastructure for the erection of antennae. It is our clear intention that the localisation of antennae shall cause the minimum of

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visual annoyance to people and that they should blend in to the existing structure and the natural environment as much as possible.

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Figure 18. Environmentally-friendly antennae

This picture shows the environmentally-friendly design of three antennae (can be glimpsed as three lines in the middle of the building façade)

Co-location

We are preparing an offensive co-location strategy. The reason for this strategy is twofold,to protect the environment and to ensure that the total national coverage is as expansive as possible. We will actively offer other 3G developers the use of our base stations and during the rollout period, and will pursue a close cooperation with other network operators in the practical implementation.

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8. The applicant

Applicant: Broadband Mobile ASA Postaladdress: Postboks 464, 1327 LysakerOffice address: Lysaker Torg 5, BærumCompanyregistration number:

982 232 015

Contact person: Torbjørn MælandPhone: 21 00 00 00Mobile: 98 21 19 02Fax: 21 01 00 01E-mail: [email protected]

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