MTS India has sent its comments to TRAI on 800 MHz spectrum auction, further clarifying its demand for participating in the auction.
TelecomLead.com is publishing highlights of the comments which were sent by T Narasimhan, deputy CEO of MTS India.
In the spectrum auction held in March 2013, one bidder acquired 3 blocks of spectrum of 800 MHz in 8 LSAs. Now, if spectrum is put up for sale in the 8 LSAs in which one of the TSPs (SSTL) was successful in acquiring 3 blocks of spectrum in the March 2013 auction, and the same TSP is able to acquire even a single block of spectrum (1.25 MHz) in any one of these LSAs, it will have a total holding of 5 MHz of spectrum in that LSA enabling it to provide all the services possible on truly liberalized spectrum.
It may be noted further that the same TSP (SSTL) that reaches a holding of 5 MHz in 8 LSAs in the forthcoming auction in the manner described above, would have acquired 3.75 MHz spectrum in the previous auction, at a price that was 50 percent of the recommended reserve price for a sub-5 MHz sale.
Suitable ways may have to be devised to deal with this anomaly; for example, restrictions may have to be placed on participation in the 8 LSAs where the spectrum was sold in the auction held in March 2013.
At the time of participation in March 2013 auction, it was not perceived/conveyed that there could be restrictions on SSTL on the future growth on spectrum in 800 MHz bands. It is pertinent to note that even during the March 2013 auctions, only 3 carriers were made available for auction and putting any kind of restrictions on SSTL would be anti-competitive and discriminatory. The participation in the March 2013 was based upon the understanding that 800 MHz would be treated fairly and all opportunities for future growth would be made available.
Further, restriction on SSTL for participation in coming 800 MHz auction was not part of previous NIA and thus it tantamount to improving Notice for Inviting Application dated 30th January, 2013. The spectrum bought in the previous 800 MHz auction is bound by conditions given in the NIA which does not impose any limitation on expansion or growth of services by acquiring additional 800 MHz spectrum.
The NIA clearly specifies that 800 MHz spectrum auctioned in March 2013 can be used to deploy any technology. As Cabinet and EGoM have approved reduction of reserve price for 800 MHz as well as 1800 MHz it would not be correct at this stage to impose new restrictions for further participation in subsequent auction. This would amount to retrospective amendment of NIA dated 30 January, 2013 and we believe with such restrictions major uncertainties would be created in our business.
Next generation technologies like LTE need a minimum channel bandwidth of a contiguous 5 MHz for efficient spectrum utilization. Non-contiguous spectrum causes significant inefficiencies in the delivery of LTE services, leading to slower service speeds and increased service delivery costs for both network operators and consumers.
The spectrum available with SSTL is non-contiguous spectrum and allocated frequencies are spread across the 800 MHz spectrum band which cannot be used to deploy LTE networks efficiently. The spectrum allocated to SSTL is given in the following chart for reference.
Thus 900 MHz and 1800 MHz spectrum bands which are contiguous command a premium over 800 MHz spectrum band. The Empowered Group of Ministers and the Cabinet have fully justified in their decision to reduce reserve price for 800 MHz spectrum band in March 2013. The most cost effective and efficient way to deploy LTE services in any band is via a contiguous block of spectrum. The smaller and non-contiguous spectrum blocks increase deployment costs.
The existing frequency spots allocated to SSTL are not adjacent to each other and in some LSAs separated by more than 10 MHz leading to inefficient usage even for EVDO services. Carrier Aggregation beyond 5MHz is not possible as per the existing algorithms & chipset available in the market. To use the entire spectrum, additional radio amplifiers need to be put in each base station.
Radio amplifiers are the most expensive element of a base station and therefore disaggregated or non-contiguous spectrum allocated to SSTL does not help to deliver efficient EVDO services across all carriers. This will impact cost of delivery and peak data speed throughput.
Besides fragmented spectrum availability in 800 MHz, it may also be noted that 1800 MHz is the most widely used band for LTE deployments globally and is greatly assisting international roaming. User device eco-system for LTE1800 has matured with an excellent choice of user devices available now. Out of total 1,240 LTE user devices that have been announced, one third i.e. 412 devices are in 1800 MHz band. These devices are mostly handsets, tablets, and dongles.
Within period of 2 months between September, 2013 and November, 2013, more than 50 new LTE1800 smartphones have been launched. LTE1800 networks have already been commercially launched in 58 countries. Having regard to the scale of network deployments and maturity of the user devices ecosystem, LTE1800 is now considered to be the mainstream systems technology.
However, on the other hand there are almost insignificant launches of 850 LTE smartphones. The 850 LTE (band 5) commercial networks are less than 5. It is evident from the chart given in the consultation paper and reproduced below that 44 percent of commercial LTE networks are in 1800 MHz band. The economies of scale for infrastructure and devices are available only for LTE1800. Thus valuation of 800 MHz would also have to take this issue into consideration.
SSTL requests TRAI to consider fixing a reduced reserve price for 800 Mhz. The Authority has carried out fresh valuation for 900 and 1800 Mhz bands while taking note of following:
There was lack of interest by bidders due to high reserve price. Changed economic situation and sector specific conditions required fresh valuation of 1800/900 MHz bands;
1800 MHz is contiguous and the most widely used band for LTE deployments globally and is greatly assisting international roaming. The reserve price for 1800 MHz has been reduced by 25 percent;
Like 900/1800 MHz bands, there was no participation in 800 MHz band in most circles.
As the experience shows that the due to high reserve price, there was total lack of interest in the auction and the participation was almost nil. There is need to look afresh at 800 MHz reserve price and reduce it significantly so that there is larger participation in auction.
The Authority in its recommendations over years has brought down valuation of 1800 MHz spectrum band. The valuation was Rs 4571 crore per MHz in Feb 2011 and now reduced to Rs 1872 crore. The reduction of 1800 MHz valuation was 58 percent in two consecutive exercises carried out in 2012 and 2013.
Thus, TRAI/DoT have been recommending/reducing the valuation/reserve price of 1800 MHz spectrum band time after time to increase demand and participation in 1800 MHz auction. There was no participation for 800 MHz in 13 circles in previous auction. Thus there is a strong case to reduce 800 MHz reserve price and revive operator’s interest in 800 MHz band. Any attempt to increase reserve price would again see no participants in 800 MHz band and it would also be inconsistent with valuation methodology for 900/1800 MHz which resulted in significant decrease in reserve price.
900/1800 MHz bands are contiguous and ready for deployment of advanced technology deployment like LTE. The spectrum being auctioned in 800 MHz is non-contiguous and at present can only be used for CDMA services. Further eco-system of LTE850 is not as developed as LTE1800.
Therefore, there should be major reduction in 800 MHz pricing compared to 900/1800 MHz bands. MTS India said.
