© Copyright Ovum Consulting 2009 Wireless China Industry Summit (2-3 September): Spectrum Policy...

© Copyright Ovum Consulting 2009

Wireless China Industry Summit (2-3 September):Spectrum Policy for Convergence


About Ovum Consulting

Ovum is one of the largest European-based ICT Research and Consulting Company. Ovum Consulting is the Consulting arm of Ovum providing premier ICT and telecom-focused advisory and consulting services with global coverage. Ovum is a company of the USD2 Billion Informa Group

Ovum Consulting (www.ovumconsulting.com) telecommunications, content, high-tech, software and IT services industries – and their customers.

We differentiate ourselves through our focus on these industries and the access that we have to our extensive research base, analyst experts, developed methodologies and models, and deep relationships with the industry. provides specialist consulting services in the

We have eleven offices across the globe and more through our associates. Our 250 experts worked in more than 50 countries in EMEA (Europe, Middle East and Africa), the Americas, and Asia Pacific.

Strategy & Analysis & Insights


Ovum’s key differentiators

Broadband@Ovum

BroadbandContent@Ovum

WirelineStrategy@Ovum

WirelessMultimedia@Ovum

IP-Enterprise@Ovum

Mobile@Ovum

Regulation@Ovum

Wholesale@Ovum

Enterprise Mobility@Ovum

Global Capex

Ovum has a USD15 MM annual research program via which we keep abreast of the latest technical, commercial and regulatory developments in all major country markets.

Advisory Programs: Telecom Focus (10)

Advisory Programs: Software, Hardware and IT Focus (13)

We are able to draw on specialised expertise in specific areas, including information and forecasting databases and expert researchers

WirelessSoftware@Ovum

Broadband Network Strategies

Communications Semiconductors

Holway@Ovum

IP Service Infrastructure

Optical Components

Optical Networks: Asia-Pacific, EMEA, North America, Global

Service Platforms

Vendor Intelligence

Software@Ovum

IT Services in Telecoms

PublicSector@Ovum

Outsourcing@Ovum

23 specialty areas


Fixed mobile convergence

Impact of IP and NGN

licensing feasibility studies and procedures, particularly 3G and WBA

regulatory policy and frameworks

mobile regulation, MVNOs

retail price control, regulation of interconnect services

access network regulation

cost modelling (TDM, IP, pre-NGN, NGN)

universal service and consumer issues

numbering plans and administration including number portability and carrier selection

spectrum policy and regulatory pricing

spectrum liberalisation, auction pricing and auction design

License bids, particularly 3G and WBA

Due diligence, valuation and business planning (and review)

Market forecasts and demand/revenue modelling

Fixed Mobile Convergence

Pricing strategies

Optimising return on marketing spent, revenue maximisation

IPTV, triple/quadruple play and content strategies

Impact of IP / NGN on fixed and mobile, including VoIP

Telecoms services for enterprises

Mobile data strategies, including Mobile TV

Regulation Commercial & Strategy

Key Areas of Expertise and Focus


Agenda

Telecoms landscape for Convergence

Regulation and spectrum policy issues

Spectrum liberalisation: International development

A spectrum policy framework for convergence

Summary on key issues in a spectrum policy framework for convergence

1

2

3

4

5


Level 3

© Copyright Ovum 2009 www.ovum.com

Telecoms landscape for Convergence


Market Development Trend: Global broadband connections

Ovum forecasts that the total number of mobile broadband connections will

grow by at least 37% YoY till 2012 overtake fixed broadband by 2010


Total connections forecast by technology: 2007–14

For total connections (6,417M) in 2014, HSPA (1,809M or 28.2%) will be the second largest mainstream technology after 2G GSM (3,356M or 52.3%) ….

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

2007 2008 2009 2010 2011 2012 2013 2014

Other

Mobile WIMAX

CDMA 1XEV-DO

CDMA2000 1XRTT

cdmaOne

TD-SCDMA

LTE

HSPA

WCDMA

2G GSM

Source: Ovum


New mobile data apps need more speed and bandwidthNew mobile data apps need more speed and bandwidth

50 – 500 kbps 700 kbps 3.6 – 7.2 Mbps

HSDPAEDGEEVDO revA

GPRS1xRTT

LTE

50 - 250 Mbps

Mobile internet

Streaming video

Podcasts, RSS feeds

Video downloads

Music downloads

Mobile email

UMTSHSPA+(?)


Data rates are orders of magnitude larger

Data rates of mobile technology

1

10

100

1000

10000

100000

Voice SMS 3G 4G

kb

ps

3G = 2.5 Mbps

4G = 70 Mbps

Source: Ovum

Though actual user rate much less than standards, new mobile internet services stimulate much higher traffic volume


Technology and market developments

Market developments - fixed / mobile / broadcast

Broadcasting digital switchover to release “golden” spectrum Digital Dividend

HDTV and mobile TV place additional demands on spectrum released

Cross delivery platforms competition (e.g. satellite and cable for HDTV) and other frequency bands (e.g. VHF around L band for mobile TV)

Converging technologies – fixed / mobile / broadcast

e.g. WiMax, DVB-H/DMB

New approaches to co-existence

e.g. UWB, CR (Cognitive Radio)

Standardisation issues International harmonisation, compatibility

Fourth generation mobile services (e.g. LTE Advanced, WiMAX .16m, etc.)


Level 3Regulation and spectrum policy issues



Policy objectives and regulatory framework

Competitive Safeguards

Consumer Protection

Investment Standards

Pro-consumer, pro-competition, pro-investment spectrum allocation and management to promote service innovations, fair cross-platform competition, investment incentive by removing uncertainty

Technical standardisation, inter-operability, interference management

Socialuniversal service, social welfare, promote cultural diversity, etc.


Existing spectrum management issues

Lack of transparency concerning future spectrum supply and regulatory controls inhibiting investment

Competing demands for “desirable” bands (i.e. congestion)

Few incentives for efficient use

Convergence – sustainability of existing allocations

Decision on spectrum use of existing and new frequency bands (e.g. 2G renewal)

Refarming – speed, incentives on incumbents

Access for licence exempt use

Underlay and overlay use – impact on incumbents

Others …….


Spectrum availability issues in Convergence

174 - 230 MHz 470 - 862 MHz ~1.4 – 1.5GHz

1900 - 2170 MHz

2170 –2200 MHz

VHF band III

UHF band L band 3G MSS

2500 - 2690 MHzTDD

FDD

3G extension band

3G spectrum that is currently available

Few spectrum resources available as of today due to current usage by broadcasters (TV and radio).Additional resources to be allocated in the next 5-6 years, especially in UHF with the digital switchover.In some countries, more resources are available on the short term in the L or III bands rather than in UHF.

Spectrum that is expected to be allocated in the next 2-3 years, and that could be used for mobile broadcast, but not necessarily dedicated to it.

DVB-HMediaFLO

ISDB-TDMB-T/H

T-DMBDAB-IPDVB-H

MediaFLO

T-DMBDAB-IPISDB-T

DMB-T/H

MBMS(in FDD)

Satellite DVB-HTDtv

(in TDD)MBMS

FDD

Convergence services compete for various spectrum bands, e.g. Mobile TV


Level 3


Spectrum liberalisation: International developments


Why a shift from C&C is necessary?

Spectrum policy has increasing need to cover a wider set of policy objectives other than technical and efficiency:

technical, economical, competition (market), social, political, commercial

Spectrum allocation based on vertically-organised technology (network or platform) dependent approach becomes more and more difficult and restrictive:

over reliance on knowledge and justifications by regulator

fail to cope with changes in technology, market and regulatory

IP-based service blurs the boundary of spectrum allocation across networks and platforms

Emergence of Convergence networks/platforms (e.g. broadcasting and telecoms)

Increasing expectation on government from the industry and public on the cost-benefit or social-economical justifications for spectrum allocation

Can regulator restrict or stop new applications or services, enabled by new technologies?

e.g. share use of the same allocated spectrum band, e.g. over-lay, under-lay, cognitive (software) radio


International policy developments

Many regulators (e.g. in North America, Europe, Australasia and some of Asia) moving from command-and-control system of spectrum management to the use of market based mechanisms.

Market based mechanisms include different flavours of:

Auctions

Various designs / widely used

Trading

Change of ownership without recourse to the regulator / divisible in frequency and geography

Liberalisation (potentially the highest net economic benefit)

Technology (and service) neutrality Change of use without recourse to the regulator

Spectrum rights that allow flexibility and control interference environment accommodation of underlay and overlay applications

Different levels of involvement by the regulator – ranging from approval to solely enforcement or light registration

The focus moves from decisions based largely on technical efficiency to ones including economic factors

Regulator has difficulty to make an informed decision in terms of allocation for specific technology, number of licences, spectrum price, etc.

The balance between technical and economic efficiency can best decided in the market where commercial interests will trade-off one against the other


Approaches to spectrum allocation

Command & Control: Regulator to dictate

For frequency bands where market based mechanism alone is inadequate

e.g., defense, academic, public essential service (e.g. emergency service, traffic surveillance and control)

Market based mechanisms for competing or congested frequency bands:

Beauty contest

Sealed bid

Auction

Trading

Administrative incentive pricing (AIP) to encourage efficient use of spectrum by government or utilities

Spectrum liberalisation: refarming, spectrum trading, etc.


High level policy choices

Command &Control (C&C)

Market Mechanisms

Spectrum policy

Communications sector and other service policy

Many policy constraints

Few policy constraints

Increasing congestion


Level 3


A spectrum policy framework for convergence


Spectrum policy considerations for convergence

Transparency, consistency and predictability

Allocations

Assignments

Licensing policy

Strategy for spectrum release or supply

Ensure timely supply of spectrum for continuity and quality of service

Fair and effective means to allocate spectrum resource of competing demand

Allow flexibility in spectrum use (e.g. refarming, trading) for coping market development and service innovations

Encourage efficient use of scarce spectrum resource

Commercial, government, utilities, academics, public service, citizens

Interference management to protect licensed spectrum use

spectrum right in transmission

spectrum right in reception (e.g. satellite downlink versus transmission in the same bands)

Availability of unlicensed spectrum bands, e.g. amateur use


Hong Kong spectrum policy objectives

Spectrum policy is intended to

facilitate economically efficient spectrum use for maximum community benefit (i.e. for economics and social benefit)

facilitate technically efficient spectrum use to support innovative services and support position as a communications hub

strengthen Hong Kong’s strategic position by facilitating services (service & market “test bed”) deployed globally or in Mainland China

ensure the availability of sufficient spectrum for essential public services while fulfilling Hong Kong’s regional and international spectrum obligations

But spectrum policy is only a support to other government policies

spectrum policy is part of the Hong Kong ICT Policy - Digital 21 Policy

to promote China Gateway – economical and social interchange between Hong Kong and Mainland China, e.g. allocation of CDMA2000 spectrum in 2007

Example


Summary on key policy issues in a spectrum policy framework for convergence

Demand & Supply

•Usage and new services•Competing demand of spectrum•Availability (supply) of spectrum

Radiocom-munications (technical)

•Spectrum management (ITU, 3GPP, 3GPP2)•Radiocommunications technologies (e.g. underlay, overlay, MIMO)•Spectrum efficiency•Interference mgt

National ICT policy &

economic

•ICT Policy and Spectrum Policy•Social and economic welfare • Cost benefit analysis to spectrum, allocation (e.g. reserve price, spectrum right)

Pro-competition

•Facility and Service based competition•Open access•Liberalisation vs Deregulation

Pro-investment

•Transparency •Consistency•Predictability•Low entry/exit barriers•Investment incentive

Pro-consumer

•Equal access to new convergent services•Quality, prices

Policy study and analysis

•ICT policy and regulation: principles, goals, objectives•Determination of domestic spectrum policy objectives (standards, competition, investment and consumer)•Enhanced C&C and selected use of marketing mechanisms•Technology and Service Neutrality (Net neutrality)•Spectrum licensing regimes for Convergence and NGN

Spectrum Licensing for Convergence development

Spectrum Policy(principles, goals,

objectives, settings)

Interaction with other policies and

regulatory/legal frameworks

Spectrum Allocation and Mgt

(C&C to market based approach)

Policy study(parameters, perspectives)

Key study processes(perspectives)

Output of policy study(indicative only)

Spectrum Regulation Objectives

Ovum’s Spectrum Policy Framework


Level 3


The End!

© Copyright Ovum Consulting 2009 Wireless China Industry Summit (2-3 September): Spectrum Policy...

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