NETWORK STRATEGIES LTE BUSINESS MODELS MIXED SIGNALS

Spectrum allocation will have a big impact on mobile operators’ LTE business models, and some believe they are not getting a fair crack at the whip. By Ken Wieland

technology and enjoy better operational and spectral efficiencies on increasingly overloaded networks. National regulatory authorities (NRAs)

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are also concerned: A lack of spectrum could lead to congested networks that adversely impact broadband performance for businesses and consumers; and it could lead to digital divides, with rural areas in large part underserved by new LTE broadband services. The upshot is that some operators are

going head to head with NRAs over restrictions on the allocation of spectrum and how it could impact their LTE busi- ness models, as well as over obligations being placed on how quickly and exten- sively services should be implemented. “The problem is that when regulators

start to tinker they have an impact on operators’ economic business models, and there is always the danger that regu- lators don’t get the outcome they hoped for,” says Terry Norman, a lead analyst at Analysys Mason. In Europe, spectrum from the so-called

digital dividend—occupying the 800-MHz frequency band vacated by broadcasters switching from analogue to

pectrum for high-speed mobile data services is in short supply, frustrat- ing operators eager to roll out LTE

digital television—is of particular value to operators and regulators. The 800-MHz band enables mobile network operators (MNOs) to cover suburban and rural areas more cost-effectively than higher frequencies which have shorter signal ranges. And for NRAs and governments aiming to extend access to broadband services nationwide—often placing obli- gations on spectrum winners as a result (see box p.13)—the digital dividend makes that goal much more achievable. The European Commission also sees

the value in the switchover and has set a target of the end of 2012 for auctions. According to analyst company Wireless Intelligence, 11 countries within the EU27 have already switched off analogue broadcast services and 10 plan to do so between 2011-12 (see table p.14). But a further six will not do so until 2013-15 and will therefore miss the EC deadline. An added bonus of 800-MHz spectrum

is that it can provide better indoor cover- age than higher frequency bands. “800 MHz is an essential part of the LTE success story,” says Walter Goldenits, CTO at A1 Telekom Austria. But one snag with 800-MHz spectrum

is its relative scarcity. NRAs in Europe, in discussions with broadcasters, typically are attempting to clear 60 MHz (2x30

‘When regulators start to tinker they have an impact on operators’ economic business models’

LTE connections forecast by region 2009 2010 2011

Africa Americas Asia Pacifi c

— — 9,030 — — 28,841

Europe: Eastern — 2012 2013 2014 2015

128,220 689,210 2,073,505 4,369,461 141,560 1,107,458 4,482,432 11,834,565

— 5,561 1,425,225 9,646,840 30,770,659 69,960,638 131,936,330 4,907 330,728 1,341,630 3,101,296 7,491,129 16,244,241

Europe: Western 2,000 58,225 715,806 4,254,921 19,297,314 41,515,154 70,436,094 Middle East US/Canada World

— — —

77,299 12 684,183 3,841,603 8,798,932 15,589,270

126,163 2,329,400 7,336,464 17,747,562 34,114,630 54,203,339 2,000 194,856 4,916,329 23,533,818 76,555,102 168,436,420 304,613,300

Source: Wireless Intelligence

MHz) of digital dividend spectrum. It is a small amount compared with the 190 MHz typically available in the 2.6-GHz band also suited to LTE services. Goldenits says contiguous 2x10 MHz

blocks are the minimum requirement to run efficient LTE services. If so, NRAs will have a hard time slicing and dicing 2x30 MHz if they want to attract more than three players to this frequency band and maintain effective national mobile broadband competition. In addition, Wireless Intelligence says

14 of the EU27 countries do not yet have targets to auction spectrum in the IMT-extension band—2.5 GHz–2.6 GHz . As a result the 900-MHz and 1800-MHz

frequency bands, initially limited to 2G services, are being liberalised across Europe for use for 3G and LTE services— so-called spectrum refarming. A growing number of MNOs can now use their 900-MHz assets to provide 3G services, and the EC is calling on all NRAs in the European Union to free up the spectrum for ‘4G’ LTE by the end of this year. Given the similar signal propagation

characteristics between 800-MHz and 900-MHz spectrum, and the growing prospect of allowing LTE at 900 MHz, NRAs increasingly are starting to see the two frequency bands in the same light. But that is causing some operators to show concern over the potential impact on their mobile broadband business models. Consultancy DotEcon published a

benchmarking report in September 2010 on the possible value of 800-MHz and 900-MHz spectrum in Ireland. One conclusion of the study, commissioned by Ireland’s regulator Comreg, was that there was no significant difference in the long-term worth of 800-MHz and 900-MHz spectrum. Meanwhile UK regulator Ofcom describes 800 MHz and 900 MHz as “broadly equivalent”. The concern for some operators that hold 900-MHz spectrum is that they may be capped on the amount of digital dividend

www.totaltele.com September 2011