Should Government Auction 700 MHz For LTE Rollout?
In order to make broadband access more affordable and to have better pan India coverage, Government of India is planning for auction of 700 MHz band for LTE at the end of the financial year 2012.
This will be possible once Prasar Bharati completes digitization for Doordarshan and Air and Defence forces and vacate spectrum in 700 Mhz band following the roll out of optic fibre cable (OFC) made by BSNL.
In this article, I will discuss the advantages & disadvantages of 700 MHz band for LTE roll out. My views on expected socio economic benefits and opinions of all Telecos, who would like to participate in this auction.
6 Reasons Why 700 MHz Band Is In Hot Demand For Mobile Communication?
1. The UHF frequency band from 470 MHz to 862 MHz, often referred to as the 700 MHz band, has lower propagation losses than the 2500 MHz or 3500 MHz bands.
2. 700 MHz spectrum is a more efficient spectrum than 2.3 GHz and hence would require lower capex/opex to cover a similar footprint.
3. It has better in-building penetration and lower Doppler shift
4. The ecosystem on 700 MHz FD-LTE is much more mature than 2.3 GHz TD-LTE
5. It requires less complicated equipment. It would require less power to run a mobile phone/Internet cell on the 700 MHz band than on the other common bands, which are at higher frequencies.
6. Infotel Broadband Services said as the duration of the spectrum holding is of 20 years, the reduced Capex has a multiplier effect. In addition, the reduced base stations would mean reduced Opex. Therefore, the economic value of the spectrum in 700MHz band is not only higher than 2100MHz band, but is also higher than the 900/800MHz band.
Thus, LTE on 700 Mhz band can revolutionize growth of internet in India.
5 challenges with 700 MHz band
1. Dealing with 700 MHz antennas is a much greater challenge than 2.4 GHz antennas (and even more than 900 MHz antennas) because 700 MHz antennas are physically much bigger (and therefore heavier and harder to mount on towers and buildings and thus expensive).
2. It's also a challenge to "constrain" 700 MHz system's coverage to only the geographic area that your license covers; that calls for careful, expensive system design at the edge of your coverage area.
3. It has lower spectral efficiency. Therefore this extremely valuable spectrum resource needs to be used in the most efficient way to allow for mass usage where it is needed the most.
4. It's looking like we could face a situation where different service provider providing 4G services in different bands, which ruin the handset compatibility amongst the operators. Because 4g works on various frequency bands like 700 MHz, 1500 MHz, 2300 MHz along with various modulation technology.
5. Operator might adopt restrictive device practices on carrier‐specific band plans designed after the 700 MHz auction. Handsets should be interoperable.
Not everything is good with 4g Network
1. 4g Roaming is not completely tested technology.
2. In my opinion, the two biggest hurdles that will be faced in delivering on the promise of 4G are managing channel quality and individual user throughput expectations. Here are critical challenges of 4g .
Opinions of various Telcos for the auction of 700 MHz band
Largest private telco, Bharti Airtel (got BWA license in just 4 circles) is lobbying for auction of this band. It has stated openly that its 4G strategy will rest mainly on future allocations in 700MHz and FDD 2.5GHz along with experimenting with these four circles.
It is expected that Tata Tele, Vodafone, Idea Cellular (aims to be a pan India ISP) and Telenor/Uninor (who did not take part in 3G auction), Sistema/MTS (given they prioritize data services) along with Mukesh Amabani controlled Infotel is expected to participate it.
How operators are using multiple frequency bands in LTE roll out?
4G network can work at 700 MHz, 1500 Mhz and 2300 MHz band. But, worldwide operators prefer to use higher band like 2.3GHz band, LTE deployment in urban areas where data demand is high and 700 MHz is for rural connectivity.
1.5 GHz has a problem because it interferes with GPS frequency.
Is the auction good for Indian economy?
In 2008, the US government raised close to $20 billion by auctioning three blocks of spectrum in the 700 MHz band.
Indian government got a whopping 106336 crore rupees ($22.7 billion) from the sale of airwaves (3G and 4G combined). Of this 67,715 crore rupees( $14.48 billion) is from 3G auction and 38,570 crores($8.25 billion) is from the sale of broadband wireless or 4G airwaves.
Finance ministry planned to raise Rs 40,000 crore or more through the auction of telecom spectrum in 20012-13 (FY13). There are going to be deep pockets bidding for 700 MHz, most purely as a speculative investment without having to build out actual communication systems. This is good for the Government to manage fiscal deficit of budget.
Is Auction best way?
I personally do not think auction is a good way to give away spectrum. It would be better that the Government give away spectrum to eligible companies at a cost which ensures affordable data & voice services to end users.
Take the example of 3G, operator bought at a huge cost, they are in debt and after 2 years of roll out 3G is yet to take off. If Government likes to earn money from spectrum, it would be a wise decision to insist on annual revenue sharing model with the operators.
This will ensure better quality and coverage. This will enable the Government to spend money in a much more planned way and there will be less chances of new scams to arise.
This should leave enough money on the table for the operators to use 4G to enable the bigger change, which is essentially around bridging the digital divide in India and making sure that there is higher broadband penetration.
All of that said, this year's 700 MHz auctions are going to be very interesting to observe. There are many, many factions (some who have yet to "uncloak") that will be competing for 700 MHz spectrum.
Benefit to common man from the auction
The significant socio-economic benefit are that millions of people will get low-cost mobile services essential for their needs, with internet connectivity, especially in rural areas and the much needed access to educational, financial and health services.
Positive economic impact driving job creation, innovation, productivity, egovernance, telemedicine, e-agriculture competitiveness; a 10% increase in broadband penetration delivers 0.1-1.4% GDP increase.
The impact India will have includes a 21 percent rise in rural internet subscriptions; or an additional 14 million rural internet household by 2020, apart from a cumulative $68 billion rise in GDP till 2020.
The report also expects about 0.2 percent and 0.4 percent additional uplift in manufacturing and service firms’ productivity due to greater rural adoption and about $15 billion incremental tax revenues to government. It also expects creation of 327,000 new jobs.
Who will be the possible gainer of 4G auction?
RIL will benefit the most, as it has an all-4G strategy and definitely more cash than the other players. It has a more advantageous position than the other players and since other players have already invested in 3G also.
With cash flow from other businesses, Infotel may change the broadband scenario forever with the cheapest entry point.
If NTP 2011 guidelines allow opening up of the IP telephony in India, one of the biggest beneficiaries will be Reliance Industries' LTE business. At present, LTE technologies enable service providers to offer data. LTE with data and voice will become a compelling combination for bandwidth hungry customers in India.
In order to make broadband access more affordable and to have better pan India coverage, Government of India is planning for auction of 700 MHz band for LTE at the end of the financial year 2012.
This will be possible once Prasar Bharati completes digitization for Doordarshan and Air and Defence forces and vacate spectrum in 700 Mhz band following the roll out of optic fibre cable (OFC) made by BSNL.
In this article, I will discuss the advantages & disadvantages of 700 MHz band for LTE roll out. My views on expected socio economic benefits and opinions of all Telecos, who would like to participate in this auction.
6 Reasons Why 700 MHz Band Is In Hot Demand For Mobile Communication?
1. The UHF frequency band from 470 MHz to 862 MHz, often referred to as the 700 MHz band, has lower propagation losses than the 2500 MHz or 3500 MHz bands.
2. 700 MHz spectrum is a more efficient spectrum than 2.3 GHz and hence would require lower capex/opex to cover a similar footprint.
3. It has better in-building penetration and lower Doppler shift
4. The ecosystem on 700 MHz FD-LTE is much more mature than 2.3 GHz TD-LTE
5. It requires less complicated equipment. It would require less power to run a mobile phone/Internet cell on the 700 MHz band than on the other common bands, which are at higher frequencies.
6. Infotel Broadband Services said as the duration of the spectrum holding is of 20 years, the reduced Capex has a multiplier effect. In addition, the reduced base stations would mean reduced Opex. Therefore, the economic value of the spectrum in 700MHz band is not only higher than 2100MHz band, but is also higher than the 900/800MHz band.
Thus, LTE on 700 Mhz band can revolutionize growth of internet in India.
5 challenges with 700 MHz band
1. Dealing with 700 MHz antennas is a much greater challenge than 2.4 GHz antennas (and even more than 900 MHz antennas) because 700 MHz antennas are physically much bigger (and therefore heavier and harder to mount on towers and buildings and thus expensive).
2. It's also a challenge to "constrain" 700 MHz system's coverage to only the geographic area that your license covers; that calls for careful, expensive system design at the edge of your coverage area.
3. It has lower spectral efficiency. Therefore this extremely valuable spectrum resource needs to be used in the most efficient way to allow for mass usage where it is needed the most.
4. It's looking like we could face a situation where different service provider providing 4G services in different bands, which ruin the handset compatibility amongst the operators. Because 4g works on various frequency bands like 700 MHz, 1500 MHz, 2300 MHz along with various modulation technology.
5. Operator might adopt restrictive device practices on carrier‐specific band plans designed after the 700 MHz auction. Handsets should be interoperable.
Not everything is good with 4g Network
1. 4g Roaming is not completely tested technology.
2. In my opinion, the two biggest hurdles that will be faced in delivering on the promise of 4G are managing channel quality and individual user throughput expectations. Here are critical challenges of 4g .
Opinions of various Telcos for the auction of 700 MHz band
Largest private telco, Bharti Airtel (got BWA license in just 4 circles) is lobbying for auction of this band. It has stated openly that its 4G strategy will rest mainly on future allocations in 700MHz and FDD 2.5GHz along with experimenting with these four circles.
It is expected that Tata Tele, Vodafone, Idea Cellular (aims to be a pan India ISP) and Telenor/Uninor (who did not take part in 3G auction), Sistema/MTS (given they prioritize data services) along with Mukesh Amabani controlled Infotel is expected to participate it.
How operators are using multiple frequency bands in LTE roll out?
4G network can work at 700 MHz, 1500 Mhz and 2300 MHz band. But, worldwide operators prefer to use higher band like 2.3GHz band, LTE deployment in urban areas where data demand is high and 700 MHz is for rural connectivity.
1.5 GHz has a problem because it interferes with GPS frequency.
Is the auction good for Indian economy?
In 2008, the US government raised close to $20 billion by auctioning three blocks of spectrum in the 700 MHz band.
Indian government got a whopping 106336 crore rupees ($22.7 billion) from the sale of airwaves (3G and 4G combined). Of this 67,715 crore rupees( $14.48 billion) is from 3G auction and 38,570 crores($8.25 billion) is from the sale of broadband wireless or 4G airwaves.
Finance ministry planned to raise Rs 40,000 crore or more through the auction of telecom spectrum in 20012-13 (FY13). There are going to be deep pockets bidding for 700 MHz, most purely as a speculative investment without having to build out actual communication systems. This is good for the Government to manage fiscal deficit of budget.
Is Auction best way?
I personally do not think auction is a good way to give away spectrum. It would be better that the Government give away spectrum to eligible companies at a cost which ensures affordable data & voice services to end users.
Take the example of 3G, operator bought at a huge cost, they are in debt and after 2 years of roll out 3G is yet to take off. If Government likes to earn money from spectrum, it would be a wise decision to insist on annual revenue sharing model with the operators.
This will ensure better quality and coverage. This will enable the Government to spend money in a much more planned way and there will be less chances of new scams to arise.
This should leave enough money on the table for the operators to use 4G to enable the bigger change, which is essentially around bridging the digital divide in India and making sure that there is higher broadband penetration.
All of that said, this year's 700 MHz auctions are going to be very interesting to observe. There are many, many factions (some who have yet to "uncloak") that will be competing for 700 MHz spectrum.
Benefit to common man from the auction
The significant socio-economic benefit are that millions of people will get low-cost mobile services essential for their needs, with internet connectivity, especially in rural areas and the much needed access to educational, financial and health services.
Positive economic impact driving job creation, innovation, productivity, egovernance, telemedicine, e-agriculture competitiveness; a 10% increase in broadband penetration delivers 0.1-1.4% GDP increase.
The impact India will have includes a 21 percent rise in rural internet subscriptions; or an additional 14 million rural internet household by 2020, apart from a cumulative $68 billion rise in GDP till 2020.
The report also expects about 0.2 percent and 0.4 percent additional uplift in manufacturing and service firms’ productivity due to greater rural adoption and about $15 billion incremental tax revenues to government. It also expects creation of 327,000 new jobs.
Who will be the possible gainer of 4G auction?
RIL will benefit the most, as it has an all-4G strategy and definitely more cash than the other players. It has a more advantageous position than the other players and since other players have already invested in 3G also.
With cash flow from other businesses, Infotel may change the broadband scenario forever with the cheapest entry point.
If NTP 2011 guidelines allow opening up of the IP telephony in India, one of the biggest beneficiaries will be Reliance Industries' LTE business. At present, LTE technologies enable service providers to offer data. LTE with data and voice will become a compelling combination for bandwidth hungry customers in India.
