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Analysis of Wireless Spectrum Auction in India and Pricing Benchmark _ Convergence Catalyst Blog

Analysis of Wireless Spectrum Auction in India and Pricing Benchmark _ Convergence Catalyst Blog

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Analysis of wireless spectrum in India
Analysis of wireless spectrum in India

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Analysis of Wireless Spectrum Auction in India and Pricing Benchmark | Convergence Catalyst Blog

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Analysis of Wireless Spectrum Auction in India and Pricing Benchmark
Posted on February 27, 2012 by Jayanth Kolla

Recently, the Indian Supreme Court has cancelled the 2G operations licenses in 122 circles (license areas) of multiple carriers. The government is planning to auction the spectrum obtained from these license cancellations.

Historically, in India, startup 2G spectrum was awarded along with the operating licenses and

additional spectrum was allocated basis the subscriber-linked criteria. Spectrum for 3G and BWA (Broadband Wireless Access, potentially using 4G technologies) operations was awarded through auction.

The early (incumbent) GSM carriers received startup spectrum in the 900 MHz band and over a

period of time their spectrum holding ranged from 6.2 MHz to 10 MHz per circle. The fourth carrier (and the subsequent entrants) received startup spectrum in the 1800 MHz band. The initial GSM four different categories – Metros, Categories A, B & C). When Category B&C circles were round was allocated 4.4 MHz in Metros (the 22 circles or license areas in India are classified into introduced, another 1.8 MHz was allocated, with each carrier having 6.2 MHz. Category A carriers were allocated another 1.8 MHz with total raising to 8 MHz. Incumbent carriers lobbied for more spectrum in metros and were allocated a total of10 MHz. For CDMA 800 MHz band (with limited spectrum of 20 MHz for disbursement), while the incumbents (Tata Teleservices and Reliance received only 2.5 MHz of spectrum in most circles.

Communication) received 3.75 MHz to 5 MHz of spectrum, the new entrant – MTS (Shyam Telelink)

The 3G and BWA spectrum auctions held in mid-2010 added approximately USD 22 Bn to the exchequer. As 3G spectrum price increased during the auction, none of the private carriers managed to procure pan-India spectrum. Carriers primarily focused on acquiring 3G spectrum in entrant Reliance-Infotel managed to acquire pan-India spectrum, the other private carriers circles where the average mobile data usage was high.

circles in which they had an existing market leadership. During BWA spectrum auction, while a new opportunistically acquired spectrum in various circles to compliment their 3G spectrum and/or in

Globally, wireless spectrum auction prices are measured using “$/MHz/Pop” benchmark. This is defined as “price paid in US Dollars ($) per Megahertz (MHz) of spectrum for providing wireless four key parameters: service to one person (Pop) in the license area”. This auction pricing benchmark is determined by

Spectrum Characteristics Spectrum Regulation Auction Structure License Area Characteristics and

Spectrum Characteristics: Spectrum characteristics, especially technology choice / mandate has a significant impact on the auction pricing benchmark

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applications & services). BWA spectrum auctioned globally (between 2000 to 2008 for WIMAX) had lower price ($0.4 GHz & 2. closely followed by Switzerland’s (3. Washington DC was sold at the highest price because of high revenue potential and lower cost of build-out − Similarly. and most importantly. there was no premium over the reserve price as the number of slots was equal to the number of incumbents − In Germany and UK.12).01 to $0.32). decided to close their operations. have significantly lower price realization − In Switzerland.6 GHz) auction price. Chicago CMA has a lower cost of build-out because of its flat terrain which drives its spectrum price Auction Structure: Spectrum auctions.For instance. the manner in www.03 $/MHz/Pop) than mobile 2G and 3G spectrum because of the lack of mobility as well as the higher cost of build-out for the license area Spectrum Regulation: Regulatory guidelines/restrictions on spectrum usage (such as public safety requirements) also result in a lower pricing − Lower price realization for C block spectrum in the US 700 MHz auction was due to open FCC access clauses (open devices. the price for BWA spectrum was one of the highest (at $0. the carriers need to evaluate the business viability of acquiring the spectrum and rolling out networks. new entrants such as Uninor and Videocon recommended a phased approach. While the incumbents favor the open auction route.com/blog/2012/02/27/analysis-of-the-wireless-spectrum-auction-in-india-and-pricing-benchmark/ 2/3 . one spectrum block was set aside for a new entrant (incumbents not allowed to bid for that block) which also resulted in a higher price point for the spectrum While the $/MHz/Pop for 3G spectrum auction in India was one of the lowest in the world (at $0. AWS-1 spectrum auction in 2006.2/10/13 Analysis of Wireless Spectrum Auction in India and Pricing Benchmark | Convergence Catalyst Blog . It is due to these issues that some of the carriers such as STel and Etisalat DB have India. It will be interesting to see how auction will be structured and the various strategies adopted by which (if at all) the premium will be passed on to the end consumers. In India.convergencecatalyst. both incumbent and new carriers in acquiring the spectrum. proposed by Google and mandated by − Lower than reserve price realization and no winning bid for D block spectrum in the US 700 MHz auction was due to public safety deployment clauses mandated by FCC License Area Characteristics: Markets with high revenue potential and lower build-out Capex can cost significantly higher relative to average price of auction − In US. another key parameter that could affect the 2G spectrum pricing is the ‘Return on Investment’. which are not structured to promote competition. carriers have given their recommendations regarding the auction structure to the regulator. With over 75% mobile penetration and the incremental ARPUs being in the range of $1. and their foreign investors (Batelco & Etisalat) are pulling out of As the government is in the process of drawing up guidelines and structure of 2G spectrum auction (along with the other M&A and spectrum sharing policies).

Auction. Etisalat. Carriers. 2G. Bookmark the permalink. Reply Follow Fo llo w C o nve rg e nce C atalyst Blo g Get every new post delivered to your Inbox Join other followers: Email Address Sign me up! www. Please feel free to look through my website like I have with your own and post a remark or two if you find anything interesting. Thanks again. View all posts by Jayanth Kolla → This entry was posted in Auction. analyst and a management consultant during his decade long career in the Indian Telecom Industry. 3G. Telenor. Rollout. 7 Responses to Analysis of Wireless Spectrum Auction in India and Pricing Benchmark Pingback: Analysis of the Wireless Spectrum Auction in India and Pricing … | Telecom Regulation Pingback: Analysis of the Wireless Spectrum Auction in India and Pricing … | Telecom Regulation Pingback: Analysis of the Wireless Spectrum Auction in India and Pricing … | Telecom Operator New s Pingback: Telecom Operator New s » Analysis of the Wireless Spectrum Auction in India and Pricing … Pingback: Analysis of the Wireless Spectrum Auction in India and Pricing … | Telecom Carriers Pingback: Analysis of the Wireless Spectrum Auction in India and Pricing … | Telecom Carriers 托福補習班 says: February 28. technology and business model trends in the telecom industry. 4G. Business Model. Jayanth comments upon the latest regulatory. Airtel.com/blog/2012/02/27/analysis-of-the-wireless-spectrum-auction-in-india-and-pricing-benchmark/ 3/3 . Network. product marketer. Idea. BWA. Telecom and tagged #India. Spectrum.2/10/13 Analysis of Wireless Spectrum Auction in India and Pricing Benchmark | Convergence Catalyst Blog Share this: Tw eet 0 Facebook 0 About Jayanth Kolla Jayanth has donned many hats including those of a technocrat. both for consumers and businesses. He is passionate about this industry and the vast potential of telecom in India.convergencecatalyst. 2012 at 5:44 PM I hope other folks consider your post listed here as helpful as I have. Spectrum. Vodafone. I manage a blog site myself and would be delighted for you or the visitors on your web site to visit. Profitability. Through this blog.

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