3g Spectrum

Fair Pricing of 3G Spectrum for Bangladesh
Mustafa Hussain, Telcom Consultant and Assistant Professor, Department of Electronics & Communications Engineering, East West University, Dhaka, Bangladesh. [email protected]
Third generation (3G) systems represent the next step in the evolution of mobile cellular communication. 2G systems focus on voice communication, while 3G systems support increased data communication. It allows high speed data for mobile Internet access; entertainment and triple-play converge communications services and has greater capacity and spectrum efficiency than 2G systems. The goal of Regulator is setting out a path for the current and future availability of spectrum and with the main principles of encouraging competition and growth and a level-playing field and maintaining a technology neutral stance. Around the world, operators have paid significant sums of money for 3G spectrum allocations. There is a wide variation in national allocations; Germany's auction raised $45.85 billion for six 3G licenses. Country U.K. Germany Italy Korea India Norway Singapore Bangladesh Total License fee in (US$) 35.39 Billion 45.87 Billion 10.07 Billion 3.08 Billion 14.6 Billion 89.6 Million 165.6 Million ? Population In 60 Million 82 Million 57 Million 46 Million 1000 Million 4 Million 4 Million 160 Million Date of Licensing April 2000 August 2000 October 2000 Q4 2000 May 2010 Nov 2000 April 2001 2011
There are four options for allocation mechanisms in a price-setting environment: an auction or bidding process, a beauty contest, or a fixed fee or a hybrid approach. 1. Auctioning: Auctions are transparent, and are an efficient means to allocate spectrum when demand is greater than supply; they allocate the resource to the party that values it the most. 2. Beauty contest: In a beauty contest, participants are scored based on parameters set by a judge, in this case the licensor. The winner is the participant with the highest score. Spectrum allocation through a beauty contest can be used when demand exceeds supply. However, the process might not be transparent and could be contentious. 3. A fixed fee: In this approach, spectrum is allocated to anyone who pays the pre-determined price. However, given the Bangladeshi situation and the existence of a competitive market, this may not reflect the real market price. Fixed fees also do not protect against non-serious players acquiring and hoarding spectrum. 4. A hybrid of Auctioning to a Fixed Fee. Will the operators buy the Spectrum at high price in Bangladesh ? They have no choice but the get the spectrum. There will be many serious bidders for license and there will only 3 slots available. The cost of not getting the 3G spectrum is high due to the following reason: 1. High congestion: In most of the urban area , the networks of the leading operators are choked due to spectrum constraints. The operators are likely to use the 3G spectrum for voice thereby reducing congestion on 2G airways. The availability of higher amount of spectrum would also help the operators reduce their capital expenditure (CAPEX). In my opinion, the operators are not bidding to launch high speed networks but are bidding to get as much spectrum as possible. 2. Service Differentiation: Currently, there is very little differentiation amongst the operators and with the mobile number portability (MNP) round the corner, no operator can miss the opportunity of becoming a differentiated player using 3G. 3. Higher Data Usage: Operators are hoping that better experience on mobile internet is likely to drive the data revenues. With the 2G network becoming less congested, even the GPRS experience is likely to be much better. I believe that there is a potential to increase the data revenues to 15% of total revenues in the near term but not to the levels that some of the analysts are projecting. What Is the fair price for 3G license in Bangladesh ? It is difficult to say what is the fair price or is the 3G license in Bangladesh. It would all depend on the data take up by consumers and the operators ability to price the service in a way that they are able to maximize the 3G subscribers on a base station. This means it would be in the interest of operators to keep the tariff low to gain consumer traction and limit the geographic expansion till there is a strong business case to do so. This would help bring down the CAPEX. The analysts have been talking to the operators on the possible license cost and have been spinning the business case around the $1- 2 billion mark by playing with assumptions around data uptake and ARPU/wireless revenues. I am sure the Bangladeshi operator would not be looking at data as
the only driver but would apply the Voice is the King model to 3G as well. This would ensure mass adoption of 3G in the country as it happened in case of 2G.
About The author:
Mustafa Hussain Mustafa has considerable experience of the telecommunications industry including its market, standards and regulations. Amongst the recent engagements that Mustafa has carried out are: The Implementation of Technology Integration Solutions, Telecom Technology & Regulatory Strategy Management, Network. Management, Operations and Rollout, Project Management, Marketing and Sales for a Telecommunications company, Tasks related to Product Road map, Product Proposals, Product Presentations, Solution write-ups, Technical Pre-sales, Concept papers, New Venture Roll out, New initiative and business opportunity, Design of Telecom Business models and innovative strategies. Mustafa operates effectively at technical, marketing and strategic management levels and is a competent and practical engineer in both academic and commercial environments. He is also a PR/Communication specialist. Mustafa holds MSc Engineering Degree in Telecommunications from Kings College London. He is an Assistant Professor of East West University. The author can be contacted at [email protected]

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Fair Pricing of 3G Spectrum for Bangladesh

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