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2nd Annual Latin America Spectrum Management Conference

Richard Marsden

Senior Vice President, NERA Economic Consulting

1

APT 700MHz

• a “beautiful” band plan
• Efficient
• Global

APT 700MHz

Lower Duplexer Upper Duplexer

CEPT 700MHz Guard band Guard Band 800 700 710 720 730 740 750 Uplink (45 MHz) Downlink (45 MHz) Uplink (30MHz) Downlink (30 MHz) 760 770 780 790

• Compare to the “ugly” 700 MHz band plan in USA and Canada

USA CAN

806 740 746 777 787 763 793 756 734

A B

757 698 704 710 716 722 728

A B C D E

Lower Band Upper Band

A B C D E A B C C1 C2 C1 Public safety C

776

C2 C D C D Public safety

30 MHz duplex gap between uplink & downlink 31 MHz duplex gap between uplink & downlink

• 2x45 MHz configuration with only 10 MHz duplex gap
• World’s largest low frequency mobile band with 9 paired lots
• New European 700 MHz band is compatible

2

East Asia / Pacific region has led the way

Australia (2013) – Allocated by auction. Upper 2x15MHz went

• unsold. Telstra and

Optus have both launched LTE networks Japan (2012) - 2x30MHz split by administrative allocation between three operators New Zealand (2013) – All 2x45 MHz sold in auction shared amongst the three incumbent

• perators

Papua New Guinea (2013) – Digicel has launched LTE using 700MHz

• FDD band already in use in

pioneer countries, including Australia, Japan, New Zealand & Taiwan

• Many other leading East Asian

economies will follow:

– South Korea - Auction scheduled for 2015 – Singapore – Auction scheduled for 2016 – India – Auctioned proposed for 2016 but may be pushed back – Brunei, Indonesia and Malaysia also committed to APT band plan in June 2013 – Thailand, Vietnam expected to follow

• However, China plans to use

TDD configuration of APT plan

= APT 700MHz commercially launched = APT 700MHz allocated = Committed = US 700MHz band plan

Taiwan (2013) – Competitive auction split spectrum between 3 of the 5 incumbent

• perators

3

Current state of 700MHz in Latin America & Caribbean

Brazil (2014) – Controversy over costs imposed on bidders for reallocation of spectrum from broadcasters. Oi did not participate, with the result that a 2x10 MHz national lot went unsold

= APT 700MHz commercially launched = APT 700MHz allocated

Chile (2014) – First ‘competitive’ (beauty contest) process for 700MHz with low but asymmetric prices Ecuador (2012/2015) – State owned CNC received the spectrum more than 2 years ahead of private MNOs Argentina (2015) – 2x35 sold to incumbents and 2x10 new entrant set aside successfully sold Panama (2013/2014) – Administrative process with licenses issued to 2 operators Mexico - Single Wholesale Network planned

• Almost all countries in Latin America

have either allocated or committed to allocating APT 700MHz spectrum

• In Latin America & Caribbean, LTE

has been licensed in 6 countries:

– Argentina, Brazil, Chile, Ecuador, Mexico, Panama – Bahamas, Jamaica

• Amongst these, commercial network

launches in at least four countries to date:

– Panama, Ecuador, Jamaica and Bahamas

• Amongst the others, Colombia and

Peru both planning auctions

= APT 700MHz committed = US 700MHz band plan

4

Diversity in approaches across the region

• Four major MNOs with

substantial market shares

• Opted for auction process

to allocate 700MHz spectrum

• Three largest operators

each secured 2x10 MHz, raising 5.85 billion real

Mexico – 700 MHz wholesaler Brazil – auction

• Clear market leader –

Telcel – with c.70% market share

• Entire 2x45MHz band to

be allocated to new national wholesaler

• Tender to establish

wholesaler not yet scheduled

• To date, Latin America countries have adopted very different

approaches to challenge of allocating 700MHz spectrum

• However, Oi did not participate, resulting in 2x10

MHz national lot going unsold

• Government hopes that new wholesaler will make

it easier for smaller networks and new operators to compete with Telcel (but downside is use of spectrum may be delayed)

Example:

5

Beach front property selling “cheaply”?

• Prices outside

Canada and USA not very high

• Australia and Brazil

sold at reserve price with spectrum going unsold

*Auction prices converted to USD using current market exchange rates and adjusted for inflation

• Does bigger, better band mean lower prices owing to reduced scarcity?
• Has 700 MHz release sated demand for low frequency spectrum?
• Is this temporary or are operators shifting focus to mid-band and other

frequencies (focus on capacity rather than coverage)?

6

Other issues for discussion

• How quickly will the 700MHz ecosystem emerge?

– Handset availability is currently relatively low – 76 smartphones are compatible with LTE 700 (compared to ~900 smartphones for LTE1800)

• Is the lower duplexer more valuable than upper duplexer, owing to

alignment with Europe? Will this affect handset availability?

• Should governments prioritize:
• access to large bandwidths e.g. 2x20 MHz to maximize broadband speed?; or
• ensuring 3 or more operators have access to the spectrum?
• How should governments price the 700 MHz band?
• Should some 700 MHz spectrum be reserved for PPDR?

Contact Us

Richard Marsden Senior Vice President NERA New York City +1 212 345 2981 richard.marsden@nera.com