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Spectrum management in Niue

In some remote Pacific Islands where there is little opportunity, or in the past there has been little need for spectrum management the associated issues of using spectrum has been left to the regulator or the telecoms operators as many Islands have no regulators.

As Niue has no GSM mobile communications and was not a member of the International Telecommunication Union (ITU), there are no spectrum management regulations per se, spectrum is locally allocated by Telecom Niue, the incumbent operator.

In 2010 the existing WiFi service in Niue was clashing with the frequency being used in the installation of a Voice over Internet Protocol (VoIP) based radio gateway that will allow GSM mobiles to be used in the island. Spectrum was managed locally and the Island wide WiFi service resumed and testing of a mobile service, a possible replacement to the existing analogue Advanced Mobile Phone Service (AMPS) continued.

For more information on telecommunications in Niue, see separate report: Niue – Telecoms, Mobile and Broadband.

The new government minister responsible for Digital Britain, Ed Vaizey, has prodded Ofcom to get on with the long-awaited and much delayed auction for spectrum in the 2.6GHz and 800MHz bands. This is to be applauded, but it does not amount to much more than was already, albeit slowly, in train.

Unbelievably, Ofcom initially announced its plan to auction this radio spectrum as early as December 2006. The plan called for 20-year licences for 215MHz in three spectrum bands (2500-2690MHz, 2010-2025MHz and 2290-2300MHz), which would form part of a wider program to release around 400MHz of spectrum including spectrum freed up by the switchover to digital TV. Licences were initially to be capped at 80MHz each (or up to 90MHz in the case of a split, unpaired assignment that contains two restricted lots). The initial auction date of mid-2008 was put on hold following legal challenges by O2 and T-Mobile, which both claimed that without knowing whether re-farming of the 900MHz spectrum band would be allowed they could not calculate how much of the 2.6GHz and 2010MHz expansion band they would need.

Progress was made in June 2009 when T-Mobile withdrew its legal challenge, leaving O2 to contest alone. Soon afterwards, Ofcom pushed the auction to 2010, in the wake of the government’s Digital Britain report recommendation to bundle the 2.6GHz and digital dividend spectrum in the 800MHz band into a single auction. Ofcom also proposed a temporary cap on spectrum holdings, at 2x60MHz for overall mobile FDD spectrum. Existing holders of sub-1GHz frequencies would also face a cap, so in order to obtain 800MHz frequencies they must give up 900MHz holdings. The caps would expire a year after the combined spectrum auction. The latter cap applies to Vodafone and O2, who each hold 2×17.2MHz in the 900MHz band. Orange and T-Mobile each have 2x30MHz at 1800MHz. While they could bid for 800MHz or 900MHz given up by the other two operators, to remain under the cap they could only bid for 2x10MHz of the 2.6GHz frequencies. 3 and any new entrants can bid for any of the spectrum, within the limits of the auctions.

Tying 2.6GHz with 800MHz spectrum only made things more difficult for Ofcom. The 800MHz spectrum is part of the digital dividend. In 2003 the government envisaged releasing 112MHz when digital switchover was complete, in two distinct bands: an upper band of 48MHz and a lower band of 64MHz. Since then, two further channels were cleared, providing a total of 128MHz of spectrum. However, much of Europe intends to release 72MHz at 790-862MHz (channels 61-69, also known as the 800MHz band). Thus far, Finland, Sweden, France and Switzerland have released the whole 800MHz band as their digital dividend, largely to be used for mobile broadband services. To follow suit (releasing the whole 800MHz band) the UK had to clear channels 61, 62 and 69, which had originally been allocated for digital terrestrial TV, program-making and special events. The cost of providing different spectrum for the services is expected to be met either by licensees in the 800MHz band or by the government.

In February 2010 the regulator again deferred making decisions on the auction until the end of the year, pending discussions by the Electronic Communications Committee (ECC), the European Conference of Postal and Telecommunications Administrations (CEPT) and the European Telecommunications Standards Institute (ETSI) regarding co-channel sharing between GSM-R, short-range devices (SRDs) and radio-frequency identification (RFID).

So the government has finally put an end to this silly prevarication, by tasking Ofcom to get on with the job and proceed with the combined 2.6GHz and 800MHz auction and the refarming of 900GHz spectrum Yet despite the government’s intervention, the auction will still not take place before the end of 2011 at the earliest. Given that operators would not have access to the bands before 2012, this would leave the UK behind many other parts of Europe: Denmark, Finland, Germany, Norway, the Netherlands and Sweden have already awarded 2.6GHz spectrum, and some countries now use it commercially.

One significant policy change is that 3G licences would be tradable and essentially indefinite (in a bid to encourage investment in networks and technologies): after the initial licence term ends in 2021 there will be an annual fee set according to the current market value of the licences.

By 2012, the UK would be one of the last in Europe to have released digital dividend spectrum. True, it would be (just) within the time limit set by the EU for regional ASO, but the frustration for operators is palpable, particularly since the government is also talking long and hard about its commitment to Digital Britain and to the wonderful broadband future for all.

The experience of one mobile operator speaks volumes: Clear Mobitel, which this month began trialling LTE technology in the 800MHz band in eastern Cornwall, took a full 12 months to secure its trial licence. This is despite the fact that it is testing broadband connectivity in an existing ‘not spot’ zone, where the spectrum was released in the region following the switch to digital broadcasting as early as April 2009.

Although Ofcom has been prodded to get a move on with the auction, the likely date has not been brought forward. In the meantime, the UK remains the laggard in Europe, slowing moving in the wake of other countries which long ago viewed mobile broadband as a pressing concern, and so provided spectrum for it quickly.

For more information on the UK’s mobile market, see:

United Kingdom – Mobile Market – 3G, Mobile Data & Forecasts;

United Kingdom – Mobile Market – Overview, Statistics & Forecasts.

India without a doubt continues to be one of the most dynamic and fastest growing major telecom markets in the world. Although there had not been any signs that the 2008/09 global financial crisis had dampened growth in any significant way, by early 2010 the government was having to closely manage the country’s national debt as well as the prospect of high rates of inflation. The mobile sector in particular was continuing its strong march forward. The country’s mobile subscriber base has already grown from around 10 million subscribers in 2002 to reach 350 million by the start of 2009. By March 2010 it had reached 584 million and based on its then growth rate it was likely to pass 750 million by year-end.

A number of factors have been responsible for this amazing growth, including low tariffs, low handset prices and most notably a highly competitive market created by the government and the regulator. The government has continued to open the market up to more and more competition. In late 2009 another two mobile operators – S Tel and Videocon – launched services in the country. While GSM technology has continued to be dominant, by early 2009 CDMA was still managing to hang on to a 20% market share. The total mobile market was expanding at an annual rate of around 40% coming into 2010. All things considered the mobile industry should continue to grow for the time being.

Growth into the future will be boosted in some ways, no doubt, by the roll out of 3G mobile services following the assignment of 3G licences in May 2010. After multiple delays the government finally held its 3G auction, an event that was to significantly boost the government coffers. The seven winners of the auction were required to pay a combined amount of around US11.0 billion to the government. When the amount payable by BSNL and MTNL was included, the 3G spectrum auction earned revenue of US$14.6 billion for the government, an amount that far exceeded expectations. In fact it was more than double the US$7.6 billion the government had initially projected. In the meantime the two state-owned operators BSNL and MTNL had already started rolling out their 3G networks. The private operators were to be granted their frequency spectrum and start their 3G rollouts later in 2010.

With fixed-line subscribers at around 37 million in early 2010, the market was witnessing a modest decline in that segment of the market. Growth having stalled in 2006, fixed-line numbers were not expected to pick up again for some time. (It should be noted that in 2005 India’s telecom regulator began counting fixed WLL services as ‘wireless’ services and not as ‘wireline’ meaning that they were absorbed into the mobile statistics and were not able to be separated out any longer as fixed services. This has caused some confusion in the reporting data.) India’s total telephone subscriber base (mobile and fixed) had passed the 620 million subscriber milestone by March 2010, with all the growth being provided by the mobile market.

Regulatory reform has been central to the development of India’s telecoms market. Sweeping reforms by successive governments over the last decade have dramatically changed the nature of telecommunications in the country. In the meantime, the Telecom Regulatory Authority of India remains committed to further regulatory and structural reforms. The adoption of Unified Licensing, a change in the Access Deficit Charge regime, and the encouragement of increased infrastructure sharing, especially the towers for mobile networks, were all contributing to ongoing growth. Another important initiative has been the Indian government’s revised Foreign Direct Investment policy which increased the foreign ownership cap from 49% to 74%.

If anything it could be said that the regulation of the market has been overly enthusiastic; there were some signs that the market was starting to suffer from the complexity of the regulatory regime. In parallel with the regulatory change process, there has been a continuing evolution of the market through a series of mergers and takeovers among the mobile operators that has initially resulted in a welcome and productive consolidation. Although the policy had initially been considered complex and unwieldy, the so-called ‘licensing by circles’ policy was eventually credited with establishing a highly competitive and healthy telecoms market. With the assistance of a comparatively well regulated commercial environment, with plenty of growth potential and an increasingly open market, India has proven to be an attractive telecoms destination for foreign investment with a clear way forward to further growth. The complex regulatory environment was again causing concerns in early 2010. The government’s 3G auctions held at that time had been structured in what many regarded as an overly complex fashion. As a result, the auctions produced outcomes that may not necessarily favour the mobile industry in the longer term. One significant consequence was that the massive revenue earned by the government meant in turn that many of the operators now have huge debt burdens to manage. This was an issue for both the local telecom industry and the Indian economy in general.

A market segment that has continued to puzzle the observer – and the government – is broadband Internet. Despite the obvious enthusiasm for Internet access to be found across the country, India’s move into high-speed broadband Internet has so far been noticeably sluggish. The Telecom Regulatory Authority of India in describing the situation in mid-2010 noted that ‘… the performance so far has not been up to the expectations’. The regulator’s reference point was the targets set in the government’s National Broadband Policy issued in 2004, with growth falling well short of these targets. The number of dial-up Internet subscribers had been increasing in a healthy fashion over the years, with the total Internet subscriber base increased fourfold over a five-year period between 2003 and 2008. The question remained, however: what was happening with broadband? By early 2010 broadband Internet penetration in India was a low 0.7%, with these broadband services accounting for about a half of the total Internet subscriber base. In other words, coming into 2010 there were only around 8 million broadband subscribers in a country of 1.2 billion people. In the meantime, somewhat paradoxically, the overall level of Internet usage seems to be growing strongly, perhaps boosted by the widespread use of Internet cafes and other points of public online access. There were in excess of an estimated 60 million Internet users throughout the country by January 2010, this representing a penetration of almost 5%.

Market highlights:

• Growth in India’s mobile market was continuing in its boom mode;
• By March 2010 the country had 584 million mobile subscribers, up from 350 million just 15 months earlier;
• The mobile market was continuing to expand at an annual rate in excess of 40% coming into 2010;
• GSM was comfortably maintaining its position as the dominant mobile technology with 80% of the mobile subscriber market, but CDMA seemed to have stabilised its market share at 20% for the time being.
• The number of broadband Internet subscribers in India has started to become more significant, having more than doubled in the two-year period to end-2009;
• However, broadband subscriber numbers still only comprised 0.7% of the population at the start of 2009;
• DSL, whilst holding slightly more than 75% of the local broadband market, was steadily losing market share to other non-DSL broadband platforms, especially to wireless broadband platforms;
• After experiencing a series of frustrating administrative delays, India finally held its auction to assign 3G licences in the first half of 2010. The auction was certainly successful in terms of the unexpectedly high revenue earned by the government. There was some debate as to whether the outcome was good for the local telecom industry;
• The 3G auction was followed by an equally high profile auction of WiMAX spectrum that set the scene for a competitive and invigorated wireless broadband market.

For detailed information, table of contents and pricing of the new BuddeComm report see: India – Telecoms, Mobile, Broadband and Forecasts

Argentina’s two major associations of telecom cooperatives, Cooperativas de Telecomunicaciones (Fecotel) and Federación de Cooperativas del Sur (Fecosur) have decided to enter the mobile telephone market as Mobile Virtual Network Operators (MVNO), although Fecotel may still be interested in bidding for spectrum at the coming auction in the second half of 2010.

In May 2009, Fecosur signed a Mobile Virtual Network Operator (MVNO) agreement with Telecom Personal to offer services over the latter’s infrastructure. Pilot tests began in September 2009. That same month, Fecosur launched a new brand name, Nuestro, to market mobile services.

Under the MVNO agreement, Fecosur is in charge of managing the MVNO licence and the wholesale agreement with Personal. It also coordinates general affairs such as pricing, marketing, and the purchase of handsets and SIM cards. The local cooperatives serve as distribution channels.

Fecotel also undertook to sign an MVNO agreement with Personal, but negotiations took longer and have yet to be finalised.

Fecotel and Fecosur have been endeavouring to enter the mobile market since early 2004. For this purpose, they created a joint company in March 2004, Argentina Comunicaciones SA (ArcomSA), which received a mobile licence in November 2004 to take over Movistar’s excess spectrum as soon as it became available.

In March 2005, ArcomSA had its name changed to Comarcoop, after Fecosur and Fecotel learnt that the Arcom name had been registered by competitors. SeCom’s initial plan was to transfer Movistar’s returned frequencies directly to Comarcoop, free of charge. This idea met with objections from Claro, which pointed out that it had had to pay for its own licence, and that in any case Argentinean regulations required spectrum to be won through competitive auctions.

In accordance with government requirements, technical plans were submitted separately by Fecotel and Fecosur and were approved in July 2007. The regulator awarded Fecotel a mobile telephone licence, and Fecosur an all-inclusive licence, whereby it can offer any kind of telecom service. Since the government awarded the licences separately, the Comarcoop joint venture was abandoned.

To operate a mobile network, however, the cooperatives require at least 10MHz of spectrum, which they hoped to win when Movistar’s returned spectrum becomes available. Fecotel said it would deploy a nationwide backbone, after which each associated cooperative would be responsible for installing the infrastructure necessary to offer mobile telephony in its own area of operation. Fecotel would ensure interconnection and roaming among cooperatives and between the cooperatives and the country’s major mobile operators.

In 2009, tired of waiting for the delayed spectrum auction, Fecosur chose to take another avenue: rather than build its own network, it opted to become an MVNO.

See also:

Argentina – Mobile Market – Overview, Statistics & Forecasts

Argentina – Fixed-Line Market & Infrastructure – Overview, Statistics & Forecasts

Argentina has one of the most solid state-of-the-art telecom infrastructures in Latin America. In 2009, despite the economic downturn, telecom revenues were up by 11% year on year. Broadband revenues enjoyed the highest growth rate, followed by mobile telephony.

Argentina’s telecom market in 2010 is unlikely to behave very differently from 2009. The fixed-line market will doubtless continue to stagnate. The mobile market will probably continue to expand at a slightly lower rate than in 2009. Broadband will be Argentina’s fastest growing telecom sector. Demand for fixed broadband should remain strong – this market has much potential for growth, as has mobile broadband.

Argentina’s fixed-line teledensity is higher than in neighbouring Brazil and Chile – in fact, it is one of the highest in Latin America. Two regional incumbents, Telefónica de Argentina and Telecom Argentina, dominate the local fixed-line market despite liberalisation, but the long distance market is highly competitive and VoIP is well developed.

With penetration rates upward of 120%, Argentina is, together with Uruguay, the leader in South and Central America. And yet the Argentine mobile market continues to grow, as more and more users sign up for multiple mobile accounts. Three operators, Movistar, Claro, and Telecom Personal, run a close competition for market share.

All three mobile companies offer 3G services nationwide. Mobile broadband is becoming increasingly popular, driven by the shortage of fixed broadband accesses outside of the main urban centres and the expansion of 3G networks.

In terms of Internet user penetration, Argentina is the regional leader, with a rate more than twice as high as the world average. The broadband market is one of the most developed in Latin America, only second to Chile’s. ADSL is the main broadband technology, but cable modem occupies a significant place with about one-fourth of the subscriber base.

The market is divided fairly equally between Telefónica de Argentina, Telecom Argentina, and Grupo Clarín. All three companies offer broadband wholesale services, but continue to dominate the market. Argentina’s telecom law establishes that dominant operators must provide access to the local loop, but Local Loop Unbundling was never properly regulated and implemented.

Argentina’s pay television market is the most mature in Latin America. In fact, Argentina is a world leader in terms of cable TV penetration, with more than one home out of two being subscribed to cable TV services.

Market highlights

• Argentina’s economy is showing higher growth rates than originally forecast thanks to increased government spending ahead of the 2011 elections, robust consumer activity, bumper crops, and a strong rebound in neighbouring Brazil.
• The country’s regulatory framework encourages competition and the rise of smaller telecom players. However, Number Portability has been delayed for many years, with implementation now expected either before the end of 2010 or in 2011.
• Telecom Argentina has been under cross-holding scrutiny since rival operator Telefónica acquired a stake in its parent Telecom Italia. The government ordered Telecom Italia to sell its stake in Telecom Argentina, but this order was overturned by an Argentinean Court. The Italian telco remains locked in a legal battle with the Argentinean government.
• Mobile spectrum auctions are expected to take place in the second half of 2010 to reallocate Movistar’s 42.5MHz of returned spectrum.
• Together with the returned spectrum, the regulator reportedly plans to offer 90MHz of radio spectrum in the 1710MHz-1755MHz and 2110MHz-2155MHz frequency bands for the provision of 3G and 4G services such as Long Term Evolution (LTE).
• Both Telefónica de Argentina and Telecom Argentina undertook LTE tests in the first half of 2010, in partnership respectively with NEC Corporation and Ericsson.
• Argentinean telecom cooperative Fecosur has signed a Mobile Virtual Network Operator agreement with Telecom Personal to offer services over the latter’s infrastructure under the brand name Nuestro.
• A controversial new Audio-Visual Communications Law limits the number of television licences one company can own and allows telephone cooperatives into the pay TV sector.
• The Argentinean government has adopted the Brazilian version of the ISDB-T standard for the launch of digital terrestrial TV in Argentina.

Argentina Internet, broadband and telecoms statistics – 2007 – 2010

(Source: BuddeComm based on industry data)

For those needing an objective and high-level strategic analysis on Argentina, this report is essential reading and gives further information on:

• Telecom Argentina’s shareholder structure and cross-ownership issues.
• Mobile market outlook and developments, including company performance, ARPU, spectrum awards, and mobile data services.
• The development of 3G and mobile broadband services in Argentina.
• An analysis of Argentina’s broadband market, including ADSL, cable modem, WiFi, WiMAX, and Broadband Powerline (BPL).
• Regulatory issues surrounding the pay TV market and the repercussions of the new media law.
• How different scenarios are likely to affect the fixed-line, mobile, and broadband markets in the ten years to 2020.

For detailed information, table of contents and pricing for this new BuddeComm report see: Argentina – Telecoms, Mobile, Broadband and Forecasts