Trends in spectrum valuation

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Transcript Trends in spectrum valuation

How much of a game-changer is LTE?

Technology developments and regulatory implications

Presentation for the Latin America Spectrum Conference 2012 Amit Nagpal

25 October 2012

How do we resolve the “capacity crunch”?

Global mobile data traffic forecast Decoupling of traffic from revenues 2

Source: Cisco, 2012 Source: Light Reading

Spectrum is part of (but not the only) answer

• Deployment of next generation more spectrally efficient technologies (e.g. HSPA+/LTE) • Acquisition of new frequencies and re-farming of existing bands • Off-loading of traffic onto fixed networks (WiFi and femtocells) • Deployment of new sites

Source: Vodafone

LTE provides significant performance improvements

LTE/HSPA+ carrier performance Channel bandwidth

LTE-Advanced (5 2x20MHz) LTE 2x20MHz LTE 2x15MHz LTE 2x10MHz DC-HSPA+ 2x10MHz LTE 2x5MHz HSPA+ 2x5MHz

Peak data rate (downlink)

3000Mbps 150Mbps 112.5Mbps

75Mbps 42Mbps 37Mbps 21Mbps

Source: Huawei

LTE makes more efficient use of available spectrum

Theoretical increase in spectral efficiency 5 Real-world estimate

(taking account of network configurations, technology take-up by consumers etc)

Source: Real Wireless

Three-fold improvement between 2011 and 2016 (CAGR of 25%)

Wider channels present a challenge for regulators

• • The amounts of low frequency spectrum available for award are limited (e.g. 2x30MHz of spectrum in European digital dividend band) Is it better to have more competing network infrastructures each making less efficient use of the spectrum (smaller channel widths) or to have fewer competing infrastructures but with each operator making more efficient use of the spectrum?

20MHz channel 10MHz channel 15MHz channel 15MHz channel 10MHz channel 10MHz channel 10MHz channel 5MHz channel 5MHz channel 10MHz channel 10MHz channel

Alternative options for assignment of 60MHz of spectrum (examples)

Frequency sharing between operators is one possibility

• • ARCEP in France is allowing operators to share frequencies in order to provide high speed services to rural communities Maintains the benefit of three competing infrastructure players in urban areas

Country

Denmark France Ireland

Frequency sharing information

• Not mandated but allowed if negotiated commercially (providing approval is granted by the regulatory authority) • Operators holding the lower 20MHz of the 800MHz band are mandated to share frequencies when approached under reasonable commercial terms. • Frequency sharing is only permitted to cover priority roll out zones – sparsely populated areas (18% pop. in 63% area) • Considered by the regulator and competition authority on a case by case basis

Carrier Aggregation Technology provides a solution

• •

What is carrier aggregation?

With the development of LTE towards LTE-Advanced, operators will be able to virtually aggregate their spectrum holdings in order to deploy a larger LTE carrier This will allow operators to deploy LTE at higher peak rates, without having to own contiguous spectrum

LTE carrier aggregation

700MHz 2x10MHz Actual carrier 850MHz 2x10MHz Actual carrier • • •

AT&T to aggregate acquired spectrum

In 2011, AT&T acquired Qualcomm’s unpaired 700MHz spectrum holdings AT&T is planning on aggregating the spectrum with its existing AWS (1700/2100MHz) band in order to increase the speed offered over its current LTE network AT&T is pushing for carrier aggregation utilising LTE rather than waiting for LTE-Advanced technologies and is aiming to deploy compatible networks from 2014 2x20MHz Virtual carrier Note: Carrier aggregation technologies can also be used to aggregate non-contiguous spectrum blocks within the

same

frequency band

8 Carrier Aggregation Technology (CAT) is a central

•

component of LTE Advanced (Release 10)

CAT will allow up to 5 2x20MHz channels to be combined to offer data rates of up to 3Gbps

Combining frequency sharing and CAT may be required

• • The European Union has a target to provide minimum 30Mbps broadband to 100% of households by 2020 A recent presentation by Nokia Siemens Networks suggested this could be achieved using LTE-Advanced with carrier aggregation of all the spectrum in the 700MHz and 800MHz bands

Source: ‘Bringing Mobile Broadband to Rural Areas’, presentation by Ulrich Rehfuess, Head of Spectrum Policy and Regulation, Nokia Siemens Networks, presented at WIK Mobile broadband – Competitive dynamics and policy implications conference, 11-12 September 2012

Final question ….

Is the provision of telecoms network

infrastructure

heading back to being a monopoly business?

Annex

A.1

Introduction to Aetha Consulting

Aetha Consulting

Trusted advisor to the telecoms industry, undertaking data-driven and quantitative assessments to support strategic and regulatory decisions

Aetha Consulting helps players in the telecommunications industry to develop creative and sustainable solutions to the challenges facing them in a constantly changing environment We specialise in undertaking rigorous, data-driven and quantitative assessments to support major strategic and regulatory decisions. We work with our clients to develop the tools and methodologies appropriate to solve each new business problem as it arises Our staff have been contracted to advise on key industry issues , including: market strategy development, radio spectrum policy, spectrum valuation and auction support We are committed to quality and exceeding our client's expectations. We have a strong track record of successful assignments with operators , regulators , and manufacturers , as well as financial and legal institutions

Spectrum management experience

We help operators and regulators to analyse the opportunities and threats arising out of changes in their radio spectrum holdings

• • Our staff have supported operators in over 25 spectrum auctions worldwide in the last 10 years including: • 800MHz and 2.6GHz (4G) auctions in Europe including Austria, Germany, Italy, the Netherlands and Switzerland 2.1GHz (3G) auctions in Asia including India, Hong Kong, Singapore and Taiwan New entrant licence acquisition opportunities in countries such as the AWS auction in Canada and 2G/3G auctions in Egypt, Iran, Kuwait, Libya and Qatar.

Our consultants have assisted regulators to award spectrum including supporting the UK and Danish Governments with awards of 420MHz, 800MHz, 1.5GHz, 2.1GHz and 2.6GHz spectrum

Recent company track record

Since Aetha was founded in July 2011 we have worked for over 20 clients The topics covered have included a wide range of topics across our service portfolio

* The client and project lists are in different orders, so each line on the right hand list does not necessarily correspond with the same line on the left hand list

Clients *

• • • • • • • • • • • • • • • • • • • • ComReg (Ireland) Eircom (Ireland) GSM Association IBPT (Belgium) KPN Millicom Ofcom (UK) Oger Telecommunications Orange P4 (Poland) QinetiQ Sky SUTEL (Costa Rica) Talk Talk Group TDC (Denmark) Telecom Italia Telefónica Telenor Tigo (Colombia, Paraguay) Türk Telekom • • • • • • • • • • • • • • • • •

Projects *

900MHz and 1800MHz auction support Appeal against wholesale price decision Competitor spectrum valuations Cost model for mobile services (various models and review projects) Digital dividend case studies Independent valuation of GSM spectrum Independent valuation review for 800MHz auction IPTV business plan for broadband operator NGA access pricing advice Number portability Premium TV content valuation advice Reserve price analysis Spectrum auction support (numerous projects for operators and regulators) Spectrum policy advice Spectrum re-farming paper Strategy review for fixed operator Support to operator on regulatory consultation document (various projects) • Target and budget setting

Contact details

Amit Nagpal Partner

[email protected]

Tel: +44 7546 912355

Graham Johnson Partner