Transcript KK Spectrum
Basics of Spectrum
Workshop on
Spectrum Management
India International Centre, New Delhi
29.4.2013
Discussion Points
What is ‘Spectrum’?
Characteristics of Radio Spectrum.
Is Radio Spectrum a ‘scarce resource’?
Uses of Radio Spectrum.
Value of Radio Spectrum
Factors affecting value of spectrum
Upper and Lower Bounds of spectrum value
Valuation Approaches
What is ‘Spectrum’?
A rainbow spans a continuous spectrum of light
(visible electromagnetic waves).
The electromagnetic spectrum is the collection of
all possible frequencies of electromagnetic
radiation.
All Use Some
Part of
Spectrum
What is ‘Spectrum’?
EM radiation is classified by wavelength into:
Radio wave, Microwave, Infrared, Visible region (Light)
Ultraviolet, X-rays, Gamma rays
What is ‘Radio Spectrum’?
Radio spectrum is classified by wavelength into:
VLF, Long wave, Medium wave, Short wave
VHF, UHF, EHF
Characteristics of Radio Spectrum
Radio frequency spectrum does not respect
geographical boundaries.
Use of radio spectrum is susceptible to overlapping
interference.
Radio spectrum is not consumed upon its usage.
This requires the application of complex engineering
tools to ensure interference free operation of various
wireless networks.
Radio spectrum can be re-used.
Different waves have different characteristics.
GSM Network
MSC
BSC
n BTS
BSC
BSC
n BTS
Frequency Re-use
Is spectrum a ‘scarce resource’?
Theoretically, spectrum is not scarce.
Spectrum available for telecommunications depends on
state of technology.
Earlier mobile communications used VHF now they use UHF.
Practically, spectrum is ‘scarce’.
Radio waves have different properties and not all waves
are suitable for communications.
Availability of technology for different applications.
Users of Radio Spectrum
Defense Communications.
Commercial Radio.
Television.
Mobile Telephony: GSM & CDMA.
Satellite Telephony.
Maritime Communications.
Others: Police, Civil Aviation, HAM, etc.
Importance of Spectrum
For Government:
Allocating spectrum to different users.
Source of revenue.
US auctioned 3G spectrum (62 MHz) for about $ 20 billion in
2006.
India auctioned 3G spectrum for Rs. 67718.95 cr.
Fostering competition.
Economic development.
Importance of Spectrum
For Telecom Companies:
Roll-out of mobile services.
Quality of service
Providing more value added services.
‘Spectrum Hoarding’ for subsequent sale.
Significance of Spectrum Valuation
For Public Policy:
Configuring licenses to be efficient and value maximizing.
Determining when to reallocate spectrum.
Designing revenue maximizing auctions.
Estimating auction receipts.
For Users:
Deciding whether to buy or build.
Negotiating fair price.
Value of Spectrum
Radio spectrum has no inherent value.
The economic value of the radio spectrum lies in
its capacity to carry information thus enabling
provisioning of services.
Mobile communications (wireless broadband, satellite)
Fixed communications (broadcasting, microwave
backhaul)
Detection applications (Radar)
Location applications (GPS)
Value of Spectrum
Factors affecting value of spectrum:
Regulatory restrictions
Spectrum band location
Geographic location
Competitive situation
Size of spectrum band
Cost of alternates
Value of Spectrum
Upper and Lower bounds of spectrum value:
Upper Bound
The value of a spectrum license to the user is the present
value of future profits earned from the services deployed.
Lower Bound
A users’ willingness to pay for a spectrum license is
determined by the relative value of alternative assets to
provide the same services.
Value of Spectrum
Valuation Approaches:
Market Comparables:
The spectrum valuation is based on comparable assets traded in
the market.
Bottoms-up Approaches:
Discounted Cash Flow: Present value (PV) of future cash flows
is estimated by applying an appropriate discount rate.
Cost-savings Approach: PV of cost savings achieved by using
the asset, as compared to the next best alternative is estimated.
Econometric Approach: Statistical estimate of relationship
between number of explanatory factors and a sample of assets.
Thank You