Vodafone India, Reliance Communications, Telenor and Tata Teleservices want the Indian government to auction 700 MHz spectrum for LTE in bigger quantities, while Idea Cellular, Reliance Jio and Bharti Airtel want India to postpone the sale of 700 MHz band.
The division in the demand for 700 MHz spectrum auction indicates the poor demand for the LTE bandwidth.
The following is based on the suggestions of Bharti Airtel, Idea Cellular, Vodafone India, Reliance Communications, Reliance Jio Infocomm, Telenor and Tata Teleservices (Tata Docomo) to the Telecom Regulatory Authority of India (TRAI) for finalizing spectrum price for the auction in 2016.
Idea Cellular
Idea Cellular says the 700 MHz band should be put to auction after at least 3-4 years. TRAI is aware that telecom operators have made huge investments in acquiring spectrum in last 2-3 years for rolling out 3G / 4G networks. The spectrum acquired in these past auctions have yet to be put to complete use and operators are rolling out massive Capex and infrastructure in next 1-2 years.
In such a scenario, when existing spectrum is still in process of being fully utilized/ operators are planning roll-outs in the recently acquired spectrum, any new auction in 700 MHz, would clearly divert crucial Capex towards acquiring 700 MHz band.
Whenever 700 MHz is auctioned for the first time it should be ensured that each operator is allowed to bid for only one carrier of 5MHz, as was done in case of 2100 MHz when it was first auctioned in year 2010, to ensure level playing field among all operators, provide for larger participation and prevent spectrum concentration in the hands of few operators.
While the 700 MHz is efficient in spectrum propagation characteristics than 1800 MHz spectrum, the ecosystem towards 700 MHz is still at its infancy stage. Hence, 700 MHz will remain largely un/underutilized for next few years and accordingly value of 700 MHz should be not be higher than 1800 MHz.
In case the Government chooses to auction immediately, despite the ecosystem constrains, and demand is high, the Government will be able to discover the true price in any case. However if the demand for 700 MHz remains low, the ecosystem issues would lead to holding costs for 4 to 5 years, and hence it would be ideal to keep the prices not higher than 1800 MHz price.
Bharti Airtel
Airtel says the spectrum in 700 MHz band due to its excellent propagation characteristics has been designated as digital dividend band and will play a crucial role in the expansion of broadband in the rural parts of the country.
However, the development of ecosystem i.e. supporting network and devices plays an important role in the adoption of any band, and they should be considered while deciding the timing of auction of any spectrum band. Ignoring the development of ecosystem results in underutilization of spectrum and blocking of funds. In India, we have already witnessed the sale of 2300 MHz band ahead of its time, which has resulted in delay in the network rollout by nearly five years and has also resulted in blocking of enormous quantum of funds. Had these funds been directed towards the acquisition of the spectrum in other mature bands such as 800/900/1800/2100 MHz, it would have helped the operators to contribute more in the expansion of mobile broadband services.
Out of 442 LTE/ LTE-A commercial networks launched in 147 countries, only 12 commercial LTE networks have been deployed in the APT 700 band (band 28) in five countries viz. Taiwan, Australia, New Zealand, and Panama and Papua New Guinea.
Out of 3745 LTE user-devices only 214 supports APT 700 (Band 28) i.e. 5.7 percent of the total LTE user devices. Immediate auction of the spectrum in 700 MHz band will lead to underutilization of the spectrum for several years and will block industry’s funds, which are critically required for network rollout.
Vodafone
Vodafone says 2x5MHz will be the preferable block size for 700MHz.
Tata Teleservices
The block size in the 700 MHz band should be 2×5 MHz for FDD. Given the under penetration of broadband in India, a minimum block size of 2×5 MHz for FDD in 700 MHz should be auctioned to achieve better efficiency and throughput and ensuring competition. This is the most suitable proposition as the entire spectrum in this band can be put to auction and accommodate 7 bidders with equal amount of spectrum.
Reliance Jio Infocomm
Reliance Jio Infocomm cited the lack of strong device eco-system as one of the reasons for holding the spectrum auction for 700 MHz later.
Reliance Communications
Reliance Communications says 700 MHz band should be auctioned in block size of 5 MHz for provisioning LTE services.
Telenor
Telenor says the device ecosystem for APT700 Band 28 is developing at a good pace. Currently, 214 devices are available in this band globally, assuming that the auctions are concluded in Q1 / Q2 2016 and the allocations of spectrum happen by Q3 / Q4 2016, Indian telecoms will be ready with their 700 MHz networks by mid 2017 and there will be big momentum in APT700 eco system by that time.
We recommend 2×45 MHz in 700 MHz band for auction. India being a competitive market having 6-12 TSPs across 22 LSA, given the utility of 700 band for both rural and dense urban coverage, it is valuable for all TSPs. We recommend block size of 2x5MHz with a ceiling of 2 blocks per TSP so that maximum 4-5 TSPs can acquire spectrum in this coverage band.
Decision regarding the auction of 700 MHz spectrum will be in the hands of TRAI and DoT. The current suggestions indicate that serious telecom network operators in the 4G space are not looking for 700 MHz auction for the next 1-2 years.
Baburajan K
editor@telecomlead.com
