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Impact of Spectrum Management Policy . Convergence or Competition Radio Spectrum Management in Guatemala and Latin America UFM Guatemala David Salant Principal, ERS Group, Adjunct Senior Research Scholar, Columbia University And Research Professor, Clemson University June 2005.
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Impact of Spectrum Management Policy Convergence or Competition Radio Spectrum Management in Guatemala and Latin America UFM Guatemala David Salant Principal, ERS Group, Adjunct Senior Research Scholar, Columbia University And Research Professor, Clemson University June 2005
Spectrum Allocation Policy Options • Form of license, and license restrictions • Service concession • Technology/standards restrictions • Ability to trade and disaggregate • Band width • Number of licenses • Spectrum caps • Licensing process – Auction, administrative process, lottery or first-come, first-served
Mobile Penetration vs. GDP/POP Source: www.itu.org
Auction Experience • First spectrum auctions in New Zealand in early 90’s • US introduced SMR auction format in 1994. • US has conducted over 40 SMR auctions • Other countries which have adopted the SMR format include Australia, Austria, Canada, Guatemala, Italy, Mexico, the Netherlands, the United Kingdom
EU 3G Auctions Revenues per POP (US$) Price/MHz/ POP (US$) Revenues (US$) UK 35.0 bn 588 4.90 Netherlands 2.5 bn 159 1.33 Germany* 46.7 bn 569 4.74 Italy 12.8 bn 221 1.84 Austria* 0.596 bn 74 0.62 0.115 bn 16 0.13 Switzerland* Note: * includes only paired spectrum
Nextel Started with trunk radio (SMR - iDEN) at 800 and 900 MHz 250M POPs coverage As of 2005 Over 12M subs $30B + market cap US did not impose standards, and allowed redeployment for 2G Dolphin Started with trunk radio (TETRA) service at 450 MHz Uniform EU standard, no redeployment for 2G Over 220 M POPs coverage in 1998 in EU. Financing by TIW, then QUALCOMM, and Saudi Oger. 0 EU subs Zero market cap Impact of Spectrum Regulation
Impact of Limited Liberalization in India • In 1996, India had less than 500K mobile subscribers, 2M mobile subscribers. In 1998 there were 22M wireline subscribers. • About three years, India licensed new mobile and WLL operators, a total of 7 or 8 operators in each “Circle”. TRAI and WPC provided minimal spectrum to each operator based on need. • One WLL deployed CDMA, the other wireless operators were GSM, and persuaded the TRAI to allow full mobility. • Rates in India now approach US $0.01/minute. • Mobile subscription reached 26.2 M subs by 2003 and as of last month reached 55M subs.
Identification of Spectrum Liberalization Experience suggests that releasing some additional spectrum can have great impact. • India – • about half of Cellular/PCS spectrum was allocated • Aggressive competition policy and limited spectrum per operator. • China – only two operators, but mobile subscriptions have gone from 7M in 1996, to 24M in 1998 to 270M in 2003! • US vs EU – US late to allocate 2G spectrum. EU had higher 2G penetration.
How Can Latin America Benefit from Spectrum Liberalization • Regulatory reform that can only help • Reduce restrictions on use/service offerings. • Liberalize trade, disaggregation. • Impact of additional spectrum for 2G/3G unclear • Guatemala had four operators, but one was absorbed. • In Mexico, there are three independent entities and four operators. Mexico too has had some consolidation. • 4th operators in most markets have not fared well, and even 3rd operators have no always fared well. • Permit standards competition.
