700MHz 700MHz awards awards and approaches in and approaches in the r the region egion 2nd Annual Latin America Spectrum Management Conference Richard Marsden Senior Vice President, NERA Economic Consulting
APT 700MHz - a “beautiful” band plan 2x45 MHz configuration with only 10 MHz duplex gap Efficient World’s largest low frequency mobile band with 9 paired lots Global New European 700 MHz band is compatible 700 710 720 730 740 750 760 770 780 790 800 Guard Uplink (45 MHz) Downlink (45 MHz) APT 700MHz Band Lower Duplexer Upper Duplexer Uplink (30MHz) Guard band Downlink (30 MHz) CEPT 700MHz Compare to the “ugly” 700 MHz band plan in USA and Canada Lower Band Upper Band USA A B C D E A B C C D Public safety C D Public safety CAN A B C D E A B C C1 C2 C1 C2 698 704 710 716 722 728 734 740 746 756 757 763 776 777 787 793 806 30 MHz duplex gap 31 MHz duplex gap between uplink & downlink between uplink & downlink 1
East Asia / Pacific region has led the way FDD band already in use in Japan (2012) - pioneer countries, including 2x30MHz split by administrative allocation Australia, Japan, New Zealand between three operators & Taiwan Taiwan (2013) – Many other leading East Asian Competitive auction split spectrum between 3 of economies will follow: the 5 incumbent operators – South Korea - Auction scheduled for 2015 Papua New Guinea (2013) – Digicel has – Singapore – Auction scheduled for launched LTE using 700MHz 2016 – India – Auctioned proposed for New Zealand (2013) – 2016 but may be pushed back Australia (2013) – All 2x45 MHz sold in Allocated by auction. auction shared amongst – Upper 2x15MHz went Brunei, Indonesia and Malaysia the three incumbent unsold. Telstra and operators also committed to APT band plan in Optus have both June 2013 launched LTE networks – Thailand, Vietnam expected to follow = APT 700MHz commercially = Committed launched However, China plans to use = APT 700MHz allocated = US 700MHz band plan TDD configuration of APT plan 2
Current state of 700MHz in Latin America & Caribbean Mexico - Single Brazil (2014) – Wholesale Controversy over costs Network planned Almost all countries in Latin America imposed on bidders for reallocation of spectrum have either allocated or committed to from broadcasters. Oi did not participate, with the allocating APT 700MHz spectrum result that a 2x10 MHz national lot went unsold In Latin America & Caribbean, LTE Panama (2013/2014) – Administrative has been licensed in 6 countries: process with licenses issued to 2 operators – Argentina, Brazil, Chile, Ecuador, Mexico, Panama Ecuador (2012/2015) – State owned CNC – Bahamas, Jamaica received the spectrum more than 2 years ahead of private Amongst these, commercial network MNOs launches in at least four countries to date: Argentina (2015) – Chile (2014) – First 2x35 sold to ‘competitive’ (beauty – Panama, Ecuador, Jamaica and Bahamas incumbents and 2x10 contest) process for new entrant set aside 700MHz with low but successfully sold Amongst the others, Colombia and asymmetric prices Peru both planning auctions = APT 700MHz commercially = APT 700MHz committed launched = APT 700MHz allocated = US 700MHz band plan 3
Diversity in approaches across the region To date, Latin America countries have adopted very different approaches to challenge of allocating 700MHz spectrum Example: Brazil – auction Mexico – 700 MHz wholesaler Clear market leader – Four major MNOs with Telcel – with c.70% substantial market shares market share Opted for auction process Entire 2x45MHz band to to allocate 700MHz spectrum be allocated to new national wholesaler Three largest operators Tender to establish each secured 2x10 MHz, wholesaler not yet raising 5.85 billion real scheduled However, Oi did not participate, resulting in 2x10 Government hopes that new wholesaler will make MHz national lot going unsold it easier for smaller networks and new operators to compete with Telcel (but downside is use of spectrum may be delayed) 4
Beach front property selling “cheaply”? *Auction prices converted to USD using current market exchange rates and adjusted for inflation Prices outside Canada and USA not very high Australia and Brazil sold at reserve price with spectrum going unsold Does bigger, better band mean lower prices owing to reduced scarcity? Has 700 MHz release sated demand for low frequency spectrum? Is this temporary or are operators shifting focus to mid-band and other frequencies (focus on capacity rather than coverage)? 5
Other issues for discussion How quickly will the 700MHz ecosystem emerge? – Handset availability is currently relatively low – 76 smartphones are compatible with LTE 700 (compared to ~900 smartphones for LTE1800) Is the lower duplexer more valuable than upper duplexer, owing to alignment with Europe? Will this affect handset availability? Should governments prioritize: access to large bandwidths e.g. 2x20 MHz to maximize broadband speed?; or ensuring 3 or more operators have access to the spectrum? How should governments price the 700 MHz band? Should some 700 MHz spectrum be reserved for PPDR? 6
Contact Us Richard Marsden Senior Vice President NERA New York City +1 212 345 2981 richard.marsden@nera.com
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