The spectrum refarming process is picking up speed in the US. The auction process will have three parts. In the first, the F.C.C.
If other countries have announced plans, please tell us. By region we mean South Asia, but even SE is fine. Of course, there’s the gap between cup and lip. Announcing is one thing. Actually getting the job done is another.
Finally, some good news from Dhaka. Four mobile operators have cooperatively started to swap frequencies to yield a more rational arrangement. Congratulations to the regulator, the industry body and the operators. After the rearrangement process, the quality of services of the mobile operators will be better than before with reduced call drops and more efficient network, said Abu Saeed Khan, secretary general of Association of Mobile Telecom Operators of Bangladesh (AMTOB). Explaining the matter, Khan said, if you have three pieces of land in different places, you will have to make more boundaries to separate your lands from others.
An international treaty document, the Reference Paper that is part of the Fourth Protocol to the General Agreement on Trade in Services, states that spectrum is a scarce resource. It is scarce only because (a) exclusive use of most frequencies is the norm (WiFi is an exception), and (b) the bands for which cheap equipment is manufactured are few. So the scarcity is not “natural,” it is human-created. Therefore Professor Read, as quoted in the NYT, is correct: Arguing that the nation could run out of spectrum is like saying it was going to run out of a color, says David P. Reed, one of the original architects of the Internet and a former professor of computer science and engineering at the Massachusetts Institute of Technology.
LIRNEasia organized a panel on Broadband Bottlenecks in Asia at the ITS India Conference. Here are the slides that were presented at the session, with apologies for the late posting. Helani Galpaya presentation on “Network bottlenecks in South Asian broadband?” Rohan Samarajiva and Abu Saeed Khan presentation on “Removing a broadband bottleneck: International connectivity” Payal Malik presentation on “How do we avoid the spectrum bottleneck?” Sriganesh Lokanathan presentation on “Teleuse@BOP4”
When I was in government, I heard complaints of shortages of scarce resources and ability to earn adequate revenue all the time. I paid attention, but always verified. Specifically, with regard to claims of spectrum “shortage,” there is a problem. It is true that without a minimum allotment (say 2.5 MHz for CDMA and 5 MHz coupled on GSM), it’s next to impossible to properly design a network.
The government has not backed off on the discriminatory and anti-poor “market competition factor” that was subject to a detailed critique when announced. Per Mhz spectrum charge has been set on the basis of their market share or ‘market contribution factor’ (MCF) which was previously known as ‘utilisation factor’ in the draft licensing guideline of the BTRC. According to the policy of the MCF prescribed by the telecom ministry, if an operator has more than 20 percent market share, it will have to pay additionally, while an operator with less than 20 percent share will pay at a reduced rate. The MCF for Grameenphone now stands at 1.48, Banglalink 1.
Market share is never the final determinant of market power. It is used as a screen for further investigation and/or to shift the burden of proof. So, for example, an HHI (Herfindahl Hirschman Index) greater than 1700 or 1800 is triggers anti-trust investigations by the US government in the case of mergers and acquisitions. In the case of determining significant market power in telecom regulation (LIRNEasia is quite skeptical about the value of this approach in developing countries), market shares of around 35-45 percent shift the burden on the operator to prove that it does not have market power (the ability to set and maintain prices in simple language). But in Bangladesh 20 percent market share is the magic number.
For those who think spectrum is a headache unique to Bangladesh, here’s relief from Greece: The auction has been discussed and planned for more than a year and predates the country’s financial crisis, said the official, a senior administrator at the Hellenic Telecommunications and Post Commission, the regulator holding the auction. He did not want to be identified, citing his agency’s policy. The auction’s goal, the official said, was to level the playing field in Greece among the three operators going forward as they introduce faster third- and fourth-generation mobile services. Vodafone and Wind already hold licenses for 900-megahertz spectrum, and Cosmote uses the 1.8-gigahertz band.
When I wrote the op ed that was published in Daily Star yesterday, I did not know the anti-competitive “Market Competition Factor” had been decided. Today’s Daily Star gives the numbers. Looks unusually good for Citycell that not only pays 1/5th the price per MHz that Grameenphone pays but can also make do with less frequencies because it is a CDMA operator. According to the definition of the MCF prescribed by the telecom ministry, if an operator has more than 20 percent market share, it will have to pay additionally, while an operator with less than 20 percent share will pay at a reduced rate. The MCF for Grameenphone now stands at 1.
Building on the previous blog post, I wrote up an op-ed on the latest developments of the Bangladesh license renewal drama that has been published in the Sunday Daily Star. What mistakes are made when incentives are not properly analyzed. More proof that the Bangladesh Ministry of Post and Telecom has a serious problem of capacity. The “market competition factor,” as presented, penalises operators with more customers. It creates a disincentive to add low-revenue customers and, indeed, an incentive to shed marginal customers.
The long dragged-out drama of license renewal in Bangladesh has taken one step toward closure, according to the Daily Star. The government yesterday finalised the process of how it will charge four mobile operators — Grameen-phone, Banglalink, Robi and Citycell — for renewing their licences for the next 15 years. A high-profile meeting presided over by Prime Minister Sheikh Hasina decided that the operators will pay at the rate of Tk 150 crore for per megahertz of airwave, which will be multiplied by the total allocated spectrum and a ‘market competition factor’. The meeting held at the Prime Minister’s Office also decided to give 3G (third generation) technology licences through auction. The per-MHz amount has been set arbitrarily.
LBO.lk has carried a report on the TRE results for Sri Lanka, in relation to comparators. I understand this will also come out on TV on Lanka Business Reports. The telecom survey was conducted in seven countries including Bangladesh, India, Pakistan, Philippines, Sri Lanka and Thailand. The survey systematically captures the perception of operators, vendors and public interest groups at top management level.
So AT&T is claiming that it can rollout 4G networks only if it is allowed to buy T Mobile (and combine the frequencies assigned to both). So what they really want is spectrum? As smartphones and tablets proliferate, so too have apps like one by Facebook that draw in ever-rising amounts of data. Monday’s letters cite AT&T’s contention that the T-Mobile deal will allow the carrier to expand its nascent 4G network to cover 97 percent of the country and an additional 55 million Americans. “The access aspect of this is so, so important,” Fred Humphries, Microsoft’s vice president for United States government affairs, said by telephone.
The Federal Communications Commission has a solution: reclaim airwaves from “inefficient“ users — specifically, television broadcasters — and auction them off to the highest bidder, sharing some of the proceeds with television stations that volunteer to give up airwaves, known in the trade as spectrum. It is easy to talk about spectrum refarming in the abstract. It’s quite something else to get it done. Having done it, I have the scars to prove it. President Obama said 500 MHz will be refarmed.
Auction design is hot. The Economist reports on 4G auction design in the UK: The government will want to squeeze as much revenue as it can from the sell-off, but it must also preserve competition in a consolidating industry. The recent merger of Orange and T-Mobile has left Britain with four mobile-phone operators: Everything Everywhere (the imperious name for the newly merged company), Vodafone, O2 and Three. That is a healthy number compared with some countries, such as America, where AT&T’s proposed acquisition of T-Mobile USA would create what some regard as, in effect, a duopoly. But Three warns that it would struggle in an unrestrained bidding war with its larger rivals for the new spectrum.