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Tellabs Inspire Magazine: Spectrum of Opportunities

Tellabs Inspire Magazine: Spectrum of Opportunities

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Published by mchaidez
Freedom isn’t free. Just ask the bidders in the U.S. 700 MHz
spectrum auction. The band is widely considered the last of the
beach-front property, partly because of its favorable propagation
characteristics: Signals travel farther at 700 MHz than at higher
frequencies such as 1900 MHz, so operators need fewer base
stations to cover an area. That translates into lower overhead
costs — a major asset for any operator, but particularly for
newcomers who want to be price competitive with incumbents.

Such optimism is reflected in the bidding. At press time, the auction
had garnered more than $19 billion in bids, significantly more than
the $10 billion to $15 billion the FCC had originally projected.
Freedom isn’t free. Just ask the bidders in the U.S. 700 MHz
spectrum auction. The band is widely considered the last of the
beach-front property, partly because of its favorable propagation
characteristics: Signals travel farther at 700 MHz than at higher
frequencies such as 1900 MHz, so operators need fewer base
stations to cover an area. That translates into lower overhead
costs — a major asset for any operator, but particularly for
newcomers who want to be price competitive with incumbents.

Such optimism is reflected in the bidding. At press time, the auction
had garnered more than $19 billion in bids, significantly more than
the $10 billion to $15 billion the FCC had originally projected.

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Published by: mchaidez on Nov 15, 2008
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06/16/2009

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Spectrum of Opportunities
F Asa  Ee  he Aeas, 2008 s he yea f he se a. Hee’s wha  wah.
By Lynnette Luna
article reprint — tellaBS inSpire april 2008
Freedom isn’t free. Just ask the bidders in the U.S. 700 MHzspectrum auction. The band is widely considered the last of thebeach-front property, partly because of its favorable propagationcharacteristics: Signals travel farther at 700 MHz than at higherfrequencies such as 1900 MHz, so operators need fewer basestations to cover an area. That translates into lower overheadcosts — a major asset for any operator, but particularly fornewcomers who want to be price competitive with incumbents.Such optimism is reflected in the bidding. At press time, the auctionhad garnered more than $19 billion in bids, significantly more thanthe $10 billion to $15 billion the FCC had originally projected.“Adding a new swath of spectrum gives new entrants an opportunityto enter the service provider mobile market and/or provides currentservice operators an opportunity to enhance their current position,”said Emmy Johnson, founder and principal analyst at Sky LightResearch. “It is not often that a large portion of spectrum comes upfor bid, and it is seen as a key strategic move to take advantage ofit when it occurs, especially if this is one tool lacking in the serviceprovider’s tool kit.”The 700 MHz auction has also attracted attention because of thelarge number of bidders involved (214), particularly those companieswith little or no association with traditional wireless operators ortechnology, including Chevron, and MSOs such as Cablevision andCox. But perhaps the biggest focus is on Google, which pledged tobid at least $4.6 billion. Why $4.6 billion? Google and a coalition ofother Silicon Valley companies and consumer groups lobbied theFCC to require the winning bidder of some of the spectrum to allowopen access — in which devices aren’t locked to a single carrier —and $4.6 billion was the minimum amount necessary to trigger theopen-access provisions.With the $4.6 billion reserve met, many industry experts believeGoogle dropped out of the auction after securing the open-accessprovisions for which it had lobbied. If so, Google has still had asignificant impact on the U.S. mobile industry because AT&T andVerizon Wireless both have committed toopening their existing networks to new devicesand applications beyond those they offer.“Having won its point, Google is expected to stayout of the auction,” said Ken Hyers, an analystwith Technology Business Research. “However,other new players, such as cable companies,may be actively participating in the auctions.Regardless of who wins the auction, the outcomefor consumers looks bright since the choice ofdevices and handsets that can be brought ontonetworks will expand — something that theoperators will have to respond to with morecompetitive pricing and more attractive productsand services.”
WiMAX at 700 MHz
Another wild card is the technology that will be deployed at 700MHz. Most industry pundits believe it will be an all-IP, OFDMA-based technology such as mobile WiMAX or LTE, the 4G path forGSM operators. CDMA operator Verizon, which was expected to gobig in the 700 MHz auction, has plans to align itself with partnerVodafone to deploy LTE, which requires a significant amount ofnew spectrum.Until recently, not much of the 700 MHz band was able to supportmobile WiMAX because the technology uses TDD. Much of the700 MHz band’s spectrum, including the coveted C block, isconfigured for FDD. That changed in January, when the WiMAXForum announced that it is adding the 700 MHz frequency to itstechnology roadmap. The specs will be unveiled soon and willsupport both TDD and FDD certification profiles.“The 700 MHz spectrum is set to become a key spectrum bandglobally and many administrations are now considering spectrumarrangements in the band,” said Ron Resnick, president of theWiMAX Forum. “Interest in WiMAX deployments is also reinforcednow that 802.16e is part of the IMT-2000 family of standards andcertified products are becoming available.”WiMAX or not, few companies have revealed device or serviceplans for 700 MHz. One exception is Qualcomm, which announced inNovember that it had added support for WCDMA and CDMA2000to its transceiver product roadmap. Qualcomm’s MediaFlo mobileTV service already uses 700 MHz, and it is among the bidders.AT&T, meanwhile, has purchased Aloha Networks’ 700 MHzspectrum but hasn’t indicated its plans.“What are these devices going to look like? Is it a phone? Is it goingto be used for radio broadcast?” pondered Rick Segil, vice presidentof marketing at antenna-maker Ethertronics. “We just don’t know ifthe initial applications are going to be data or voice.”
Spectrumof Opportunities
 
ArticlE rEprint — SpEctrum oF opportunitiES
2
3G Spreads Across Latin America
The rapid deployment of 3G across the globe largely missed LatinAmerica during the past three years, but the region is finally becominga hotbed for next-generation deployments. Plans for 3G networks saton the back burner during 2006 and 2007 as Latin American operatorsrecovered from the massive capital expenditures they incurredmigrating from TDMA to GSM or CDMA.But 3G has gained importance now that mobile data services aremaking inroads into the region and 3G handset prices are falling.As a result, Latin American regulators are auctioning off spectrum,although some operators have already launched 3G services intheir existing spectrum.According to Tarcisio Ribeiro, Tellabs vice president and generalmanager of Latin America and the Caribbean, the new 3G spectrumcoming into the region will enable operators to extend servicesbeyond voice and compete with both cable and wireline telephonecompanies.“The spectrum they are acquiring will allow them to offer broadbandservices, with the added advantage of gaining mobility,” Ribeiro said.Here’s a rundown of what has already happened and what is ahead:
n
Brazil
— Regulators auctioned off 3G spectrum in the 1900MHz band. All of the country’s existing operators won spectrumat prices that reached up to a 104 percent premium over theminimum bid determined by the government. In the first twoyears of offering 3G services, the operators are required to offercoverage of at least 50 percent of the urban area in Brazil’scapital cities, in the Brasilia Federal District and in cities withmore than 500,000 inhabitants. WiMAX spectrum will beauctioned this year in the 3.5 GHz band.
n
Mexico
— About 90 MHz is expected to be released this year,according to Erasmo Rojas, director of Latin America and theCaribbean with 3G Americas. Regulators plan to sell spectrum at1900 MHz, 2100 MHz and 1700 MHz, which aligns with the U.S.AWS bands. WiMAX spectrum in the 3.5 GHz band is expectedto be offered this year.
n
coloMBia
— The 1700 MHz AWS band has been reserved for3G services, and the government appears ready to auction it thisspring, Rojas said.
n
Venezuela
— Sixty MHz in the 1900 MHz band was auctioned inDecember 2007.
n
chile
— Operators have launched 3G in existing spectrum, butChile plans to auction 700 MHz spectrum for 3G in 2009, aligningitself with the United States. WiMAX will be auctioned in the 2.5GHz band in the second half of 2008.Rojas said the initial steps for those operators that have launched3G is to offer Internet access through laptop data cards, but ashandset prices fall they can begin to target enterprises, as well asconsumers with e-mail, music and streaming video.
Europe Opens Up 2.6 GHz
The United Kingdom, Norway and Sweden are expected to becomethe first European markets to auction spectrum in the 2.6 GHz band,which will be used for mobile broadband on a technology-neutralbasis. These auctions will set a baseline for how much 2.6 GHzspectrum will be reserved for operators that want to deploy OFDMA-based systems, such WiMAX and LTE, rather than 3G technologiessuch as UMTS.One question is how much of the spectrum will be allocated to TDDto enable WiMAX. CEPT says that regulators should allocate 50 MHzfor TDD and two 70 MHz blocks for FDD. But U.K. regulators don’tbelieve those guidelines match the potential operators are lookingfor and are prepared to take another approach. Sources close to theWiMAX Forum say it plans an FDD version of WiMAX at 2.6 GHz,although it’s unclear when that might be released.Also in Europe:
n
united KingdoM
— Ofcom plans to auction spectrum in the2010–2025 MHz and 2500–2690 MHz bands this summer.That spectrum will be offered on a technology-neutral basis,a boon for operators considering LTE and WiMAX.Amid objections from the country’s operators, Ofcom plans tobuck the European Commission’s decision to allocate FDD/TDDspectrum within the 2600 MHz band by allowing greater flexibilityin allocating unpaired spectrum to accommodate WiMAX. Operatorobjections include the perceived potential for interference.
Bridging the Digital Divide
At its November 2007 meeting in Geneva, the WRC adoptedan international treaty to increase available spectrum formobile broadband services. The ITU adopted a proposal,promoted by African governments, to identify a chunk ofUHF spectrum for mobile broadband services in developingcountries and rural areas of developed countries.Europe, the Middle East and Asia all backed the proposal,agreeing to allocate the same 790–862 MHz band; theAmericas identified 108 MHz in the 698–862 MHz bandfor mobile broadband services. The WRC also identified200 MHz of contiguous spectrum in the 3.4–3.6 GHz bandfor high-capacity, next-generation mobile networks.“This decision by the WRC is an important step towardsenabling hundreds of millions of people in the developingworld and rural parts of the developed world to gainaffordable access to broadband services,” said Tom Phillips,chief government & regulatory affairs officer of the GSMAssociation. “Radio signals in the UHF spectrum will travelfurther than signals in the higher bands, enabling futuremobile broadband networks to reach as far as 2G networksdo today.”
 
ArticlE rEprint — SpEctrum oF opportunitiES
3
n
norway
 
— Regulators auctioned 2.6 GHz spectrum in Novemberand didn’t follow CEPT’s recommendations because of demandfrom potential WiMAX operators. The Norwegian plan for the2500–2690 MHz band called for two 40 MHz blocks allocatedto FDD and 100 MHz for TDD.Craig Wireless won 50 MHz and is planning a nationwide WiMAXnetwork. It’s not immediately known if the other winners willdeploy WiMAX, but the probability is high, say industry watchers.
n
Sweden
 
— Two auctions are scheduled: one for 1900–1905 MHzand the other for 2.6 GHz. Both bands will be service-neutral and,within certain limitations, technology-neutral. For example, the win-ning licensees could use the spectrum for mobile communicationsor wireless broadband services. The 1900–1905 MHz auction willbe for a single national license, while the 2.6 GHz auction will befor 15 frequency blocks: 14 for FDD and one for TDD.
Asia: Mobile WiMAX Hotbed
Analysts say Asia will become a hotbed for mobile broadbandservices, with more than 40 million mobile WiMAX subscribers by2013, according to Jupiter Research. That’s more than half of allmobile WiMAX subscribers worldwide. Jupiter expects countriessuch as Australia, India, South Korea and Taiwan to drive growthof mobile WiMAX technology because they’re ideally suited forquick deployment in underserved areas.“Licenses in countries such as India, Japan and Thailand, as wellas in more countries in other regions, will be auctioned over thenext year,” said Howard Wilcox, a Jupiter analyst. “Timely awardof these licenses will accelerate market development.”In December, Japan granted two 2.5 GHz licenses to WirelessBroadband Planning, a WiMAX joint venture headed by KDDI,and Willcom, which is planning an advanced PHS network. KDDIand its investors, which include Intel, Kyocera and a number ofJapanese companies, plan to spend about $1.3 billion on theWiMAX network with the hope of covering about 90 percent ofthe population in 2013. Trials are due to start this spring, withcommercial launch by summer 2009. The service will cost$47/month for unlimited data, mainly accessed via PC orlaptop data cards.
Free for All?
Regardless of what’s being auctioned or awarded and where, thenew spectrum is likely to shake up telecom markets worldwide. Oneexample is the push for open access, where operators no longersell contracts and subsidized devices but instead offer a broadbandexperience for many types of consumer devices.Open access is becoming a mantra of sorts, particularly for theU.S. 700 MHz auction. Accenture, a consultant to the world’slargest operators, has been advocating this open-access businessmodel for several months.“The writing is on the wall,” said Shahid Ahmed, partner withAccenture’s Technology Consulting Group and the lead for thefirm’s Network Technologies Wireless practice. “Regulatory-wiseand policy-wise, everyone is endorsing open access. Times havechanged since the Internet debacle in the early 2000s. The costof IT is now significantly less than it was then. All of this bodeswell for a wireless world. It’s the next frontier.”Ahmed says operators can monetize open access by encouragingthird-party developers to use their APIs and SDKs, which enhancethe value chain and add stickiness because applications can onlybe used on that carrier’s particular network. QoS will also play alarge role as operators can now offer tiers of service, offering limitedthroughput to lower-spending customers and wide-open pipes tohigher-paying customers.“If you look at the investments happening in the Web 2.0 world,there is no place in the world like California, where investmentsin Web 2.0 companies are greater than any other sector,” Ahmedsaid. “Look at companies like Flickr and Facebook. There istremendous movement and transformation happening in theInternet. The wireless industry has a golden opportunity to takeadvantage of all of these things happening on the Web andtranslate them into new services.”For those operators embarking on the open-access route, thereare examples to follow in the United States. Mobile WiMAXoperators Sprint Nextel and Clearwire are both pushing a newbusiness model that dismantles the traditional walled-gardencontent approach, ends traditional wireless device subsidiesand doesn’t require long-term contracts. Both operators areencouraging their device partners to come into the market undertheir own brands. This enables customers to buy devices at majorretail outlets and activate and program services without Sprint’sor Clearwire’s help before they make their first run on the mobileWiMAX networks. The upshot: Freedom for carriers, for devicevendors and for end users.Ben Wood, Clearwire CEO, noted during the company’s recentanalyst day event, “In 2009, we’ll start seeing WiMAX chipsetsin consumer electronics services, opening up a wide variety ofrevenue streams and allowing consumers to do the same thingsthey do on the tethered Internet.”

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