RF Spectrum Management Policy. KISDI Consulting Group Nov. 2013

Transcription

1 Consultation on RF Spectrum Management Policy in Mongolia KISDI Consulting Group Nov. 2013

2 Classification 1 st (April) 2 nd (May) 3 rd (Jul) 4 th (Nov) I. Korean Spectrum industry O II. Korean Radio Waves Act and Organization III. Mongolian Telecom Market IV. Environmental Changes and Trends in Spectrum Management V. Special Issues 1. Digitalization of Broadcasting Terrestrial O 2. T-DMB Implementation O O O O 3. Roadmap for future spectrum supply O VI. Main Issues of Spectrum Management 1. Spectrum Management Regime O 2. Spectrum Licensing & Reassignment O 3. Spectrum Refarming O 4. Spectrum Pricing O VII. Recommendation 1. MN Status t O 2. Recommendation O KISDI Consulting Group

3 Contents I. MN Telecom Market II. KR Auction III. KR Roadmap for future spectrum supply IV. Recommendation KISDI Consulting Group

4 I. MN Telecom Market

5 1. Telecom Market (MN) Penetration rate of Mobile and Fixed 140% 120% 116.4% 100% 80% 60% 65.7% 82.2% 90.0% 103.8% 40% 45.3% 20% 0% 6.5% 6.8% 6.8% 6.9% 6.6% 6.4% Mobile Subscriber Fixed line Subscriber Source: KISDI Consulting Group 5

6 1. Telecom Market (MN) Subscriber No. 4,000,000 3,500,000 Mobile Market 3,000,000 2,500,000 2,000,000 2,249,023 2,510,470 2,942,313 3,409,005 1,500,000 1,763,178 1,000, ,000-1,194, он 2008 он 2009 он 2010 он 2011 он Company Mobicom 79.24% 61.88% 53.39% 39% 45.65% 44.23% 42.92% 38.35% 35% SkyTel 15.87% 20.52% 21.62% 22.25% 21.92% 19.66% 17.94% Unitel 4.89% 16.12% 19.64% 18.03% 18.50% 21.21% 30.54% Gimobile 1.48% 5.35% 14.07% 15.35% 16.21% 13.17% Total 100,0% 100,0% 100,0 % 100,0 % 100,0 % 100,0 % 100,0% KISDI Consulting Group Source: CRC 6

7 1. Telecom Market (MN) Mobile Market Growing rapidly in recent years : mobile penetration rate exceeds over 100% (116.4%), whereas fixed line penetration rate is low (6.4%) Competition is relatively intense with 4 operators - GSM including 3G providers : 69% mobile subscribers - CDMA including 3G providers: 31% mobile subscribers Voice and SMS are main applications and revenues for operators - but content t applications are growing recent years Data applications increase rapidly thanks to Smart phone - evidence of consumer demand for next generation networks - all operators are upgrading from 2G to 3G network in nationwide All operators intend to upgrade from 3G network to 4G network in UB KISDI Consulting Group 7

8 1. Telecom Market (MN) Fixed Internet Subscribers 700, , % 61% 657,009 70% 56% 60% 500,000 47% 457,642 50% 400,000 40% 300,000 30% 30% 200, , ,849 20% 106,048 10% 41,835 17,329 0% Internet Subscriber 2010 growth rate Source: KISDI Consulting Group 8

9 1. Telecom Market (MN) Broadband market High growth in recent years Demand for higher h and higher h broadband d access Fixed broadband is growing fast & the key player in market - Internet penetration: 25% in 2009, 50% in Fiber Optic lengths Network company :7,876 km MobiCom : 5,063 km ReilCom :1,406 km GemNet : 1,199 km SkyNetworks : 2,800 km Total : 18,124 km KISDI Consulting Group 9

10 2. International Comparison Mobile penetration Dec % 180% 160% 140% 120% 100% 153% 152% 142% 122% 116% 114% 107% 96% 80% 60% 40% 20% 0% Vietnam Cambodia Malaysia Thailand Mongolia Indonesia Philippines Sri Lanka KISDI Consulting Group Source : Mongolian data from CRC and others from BMI Ltd. 10

11 2. International Comparison Fixed Line penetration Dec % 16.40% 16.30% 15% 13.20% 10% 9.30% 8.10% 6.40% 5% 4.40% 4.30% 0% Indonesia Sri Lanka Malaysia Thailand Vietnam Mongolia Cambodia Philippines Source : Mongolian data from CRC and others from BMI Ltd. KISDI Consulting Group 11

12 2. International Comparison Mobile Penetration vs. Fixed Line Penetration vs. GDP per Capita (2012) GDP per Capita (2012) 250% 60% Korea Hong Kong Taiw an 200% 50% Hong Kong Australia Vietnam 40% 150% Laos Singapore Malaysia Australia Singapore Thailand Taiw an 30% Japan Indonesiaa Mopngolia Philiphine Korea Japan 100% Sri Lanka China 20% China Pakistan Indonesia India Sri Lanka 50% Bangladesh Malaysia Vietnam 10% Thailand bile Penetration n Mo Mongolia Pakistan Philippinesi 0% 0% Laos India Bangladesh 0 20,000 40,000 60,000 80, ,000 40,000 60,000 80,000 TN Penetration PS KISDI Consulting Group GDP* per Capita (USD/ Year) GDP* per Capita (USD/ Year) Source : GDP from IMF, Penetration from BMI Ltd. * : GDP per capita based on PPP 12

13 II. KR Auction

14 1. Legislation introducing spectrum auction revised Radio Waves Act went into effect on Jan KISDI Consulting Group - guarantee fairness in selecting gp providers - calculate spectrum value based on market-oriented approach 14

15 2. First Spectrum Auction (Aug. 2011) First auction held in Korea to improve fairness transparency of spectrum allocation To ensure fair competition, 2 service providers who already have 2.1GHz band were not allowed to participate the auction in that spectrum band Auction type: Simultaneous Multi Round Auction Band Bandwidth Duration 800 MHz 10 MHz up : 819~824, down : 864~869 Minimum Price (beginning price) 261 m USD 1.8 GHz 20 MHZ 10 years up : 1775~1765, 1765 down : 1850~ m USD 2.1 GHz 20 MHz up : 1920~1930, down : 2110~ m USD KISDI Consulting Group 15

16 2. First Spectrum Auction: Results The auction is concluded in 83 rounds (9 days) Assigned frequency bands are now used to provide LTE Service Limited competition - bidding competition only occurs in 1.8GHz band, whose winning price is about twice of its beginning price - the other bands(800mhz, 2.1GHz) were sold at the minimum price respectively Band Bandwidth Assigned company (winner) Spectrum Fee 800MHz 10MHz KT 261 m USD 1.8GHz 20MHz SKT 995 m USD 2.1GHz 20MHz LG U+ 446 m USD Total 50MHz 1,702 musd KISDI Consulting Group 16

17 3. Second Spectrum Auction (Aug. 2013) The objective is to provide broadband spectrum suitable for LTE-Advanced Debate over whether to include D block which is adjacent to KT s LTE band Concern on limited competition (3~4 blocks auctioned, 3 MNOs + α participants) Solution: Construct 2 band plans, and auction them to determine the winning band plan, winning blocks, winning price, and winners at the same time Auction type: hybrid (Simultaneous Multi Round + Sealed Bid) 2500(MHz) (MHz) A1 block (20MHz) B1 block (20MHz) C1(15MHz) A1 block (20MHz) B1 block (20MHz) C1 block (20MHz) 2620(MHz) (MHz) (MHz) (MHz) A2 block (20MHz) B2 block (20MHz) C2(15MHz) D2 A2 block (20MHz) B2 block (20MHz) C2 block (20MHz) D2(10MHz) 2620(MHz) (MHz) KISDI Consulting Group 17

18 3. Second Spectrum Auction: Results The auction is concluded in 50 rounds of ascending rounds and 1 sealed bid round (10 days) Assigned bands are now used / being prepared to provide LTE-A Service Positive Evaluation of Auction Design - We believe that bidders search for prices in ascending rounds and reveal their true value on each block in sealed bid round Band Bandwidth Assigned company (winner) Spectrum Fee 1.8GHz (C2) 35MHz SKT 1,050 m USD 1.8GHz (D2) 15MHz KT 900 m USD 2.6GHz (A2) 40MHz LG U+ 479 m USD Total 90MHz 2,429 musd KISDI Consulting Group 18

19 4. Comparison Both auctions worked well to achieve its goals The annual spectrum price per MHz is about 3.4 million USD - similar in 2011 and 2013 auctions Auction Total Spectrum Fee (A) Assigned Frequency bandwidth (B) Duration (C) Annual price per MHz (A/B/C) ,702 m USD 50MHz 10 years m USD ,429 m USD 90MHz 8 years m USD KISDI Consulting Group 19

20 III. KR Roadmap for p future spectrum supply

21 1. Upgrading future spectrum roadmap The actual mobile data traffic exceeds the forecast Therefore, new forecast based on current traffic data should be carried out With new traffic forecast, the required spectrum bandwidth by 2020 is over 1GHz, which is greater than previous plan (600MHz) To secure spectrum bandwidth, countries try to develop new bands, such as 6GHz, and suggest candidate bands internationally Major topics of WRC-15, WRC-18 are to determine the band to be used for mobile telecommunication KISDI Consulting Group 21 21

22 2. Actual Traffic vs. Forecast ITU report(nov 2011) shows that actual traffic is five times greater than the forecast in 2010 New forecast exceeds the upper range of the previous forecast In Korea, monthly average mobile data traffic is forecasted as 50,816~59,810 TB in 2013 The actual traffic is 60,670TB (1 st half), and increasing by months Therefore, new forecast based on current traffic data is needed KISDI Consulting Group 22 22

23 3. Spectrum estimate With new traffic forecast, the required spectrum bandwidth by 2020 is approximately 1.3GHz Hence, 1GHz should be supplied to the market, which is greater than previous plan (600MHz) Internationally, spectrum requirement estimate is 1,960MHz(maximum) Developed countries (USA, UK) and developing countries (China, India) are setting up the plan to secure long term spectrum bandwidth National Broadband Plan KISDI Consulting Group 23 23

24 4. 5G / International cooperation With 5G mobile technology, everything is connected (M2M, D2D, etc.) and data traffic will continue to explode To realize hyperconnectivity new bands(6ghz+) and utilizing technologies(small cell) should be developed accordingly In WRC-15 and WRC-18, candidate bands will be determined KISDI Consulting Group 24 24

25 IV. Recommendation

26 1. MN status Industry & Regulation Wireless Industry Growing rapidly in recent years: More than 3.3 million mobile users representing almost 116% of the penetration (fixed market : 6.4%) - competition is relatively intense with 4 operators - voice and SMS are main applications and revenues for operators but content applications are growing recent years Law on Communications (approved in 1995 and amended in 2001 and 2008) Law on Radio Wave (approved in 1999) Law on Post (approved in 2003 and amended in 2007) Regulation Law on Licensing Business Activities (approved in 2001) Law on Government s Special Fund (approved in 2006) Guideline for setting fees for radio frequency operating and usage (approved in 2003) KISDI Consulting Group 26

27 1. MN status Spectrum Licensing & Refarming Type Legislation Remark Types of License The Law on Communications Article 12. License RADIO WAVE LAW Article 9. License Article 13. Certificate Spectrum use currently Categorized into public service and private use - License : needed to use spectrum to provide public service - Certificate : needed d for private use of radio frequency KISDI Consulting Group 27

28 1. MN status Spectrum Licensing & Refarming Type Legislation Remark The Law on Communications Article 12.2 Duration and RADIO WAVE LAW prolongation Article 12. Duration and prolongation of a license (The Law on Communications Refarming Article 15. Revocation of license) KISDI Consulting Group 12.2 A term of licenses shall not exceed 20 years CRC shall issue a license with a term up to 15 years within 5 business days after the payment for the first year of a license is proceeded by an applicant fil fails to comply with its obligations not started its business conducts illegal activities 28

29 1. MN status Spectrum Pricing Type Legislation Remark Spectrum Pricing RADIO WAVE LAW Guideline for setting fees for radio frequency operating and usage Article 5. Full powers of the state organizations on radio waves To issue the integrated registration of frequency allocation, to approve procedures to exploit, plan and assign frequency bandwidths and to determine frequency usage and service fees; Special license fee: Tt = 0.2*(Z+P+Y) Certificate fee: Te = Z+P+Y Temporary certificate fee: Ty= (Z+P+Y)*0.25*0.2 + (Z+P+Y)*0.25 Z = Bandwidth fee P = Power / coverage of transmitter fee Y = Type of transmitter fee KISDI Consulting Group 29

30 2. Recommendation Spectrum Reassignment &Licensing Spectrum Refarming Competitive & Efficient Mobile Sector Spectrum Pricing KISDI Consulting 3 Nov 2008 Group 30

31 2. Recommendation Spectrum Licensing A country should manage spectrum to ensure that it obtains maximum benefit from the use of its spectrum resources In this perspective, spectrum rights should be assigned to the services and the operators who can generate the greatest benefits to society from the use of that spectrum, i.e. to achieve the efficient use of spectrum To achieve the goal, market-based approaches are increasingly but carefully had adopted in many developed countries - however, to adopt market-based approaches like spectrum auction, accompanying legal and regulatory frameworks should modified in advance or simultaneously KISDI Consulting Group 31

32 2. Recommendation Spectrum Licensing Overall licensing framework offers stability and transparency to reduce regulatory risk and promote investment 1) announcing in advance a long term plan for reforming the spectrum licensing framework 2) facilitating international harmonization to ease device supply and support international a roaming, etc. 3) publicly setting out the criteria and process for transparent licensing procedures 4) taking a holistic approach to ensure that the overall licensing package enables the ongoing development of the mobile industry (including a process for the renewal of licenses at their expiry) KISDI Consulting Group 32

33 2. Recommendation Spectrum Reassignment Renewal Expectancy - to encourage long-term investment and minimize the risk of service disruption to customers, there should be a presumption in favor of license renewal for operating spectrum licenses Reasons for not renewing - should be limited to spectrum re-planning, or where there has been a serious breach of license conditions before the renewal time - exceptionally, a license may not be renewed in relation to the whole or part of the relevant spectrum so as to promote competition through reassignment of spectrum KISDI Consulting Group 33

34 2. Recommendation Spectrum Reassignment Licensing authorities should clearly set out their approach to license renewal in advance (a range between 2 to 4 years as a minimum should be adequate) of the expiry of the license so as to avoid network investment being postponed The authorities should publish the criteria that they will use to assess renewal as well as the terms and conditions that will apply to the renewed license KISDI Consulting Group 34

35 2. Recommendation Spectrum Refarming Spectrum bands that are currently idle or being poorly utilized should be considered for re-allocation to other services Authorities should publish a road map of the planned release of additional spectrum bands to maximize benefits from the use of spectrum Service and technology restrictions should progressively removed to enable operators to choose when to deploy mobile technologies - operators determine the speed of migration, for example 2G termination, considering market environments New spectrum usage rights should be issued on a service and technology neutral basis subject to the use of technologies which can technically co-exist without intolerable interference KISDI Consulting Group 35

36 2. Recommendation Spectrum Refarming Improve the details of Withdrawal or Relocation of Spectrum - based on regulatory investigation of spectrum use status - setting detailed compensation rules under considerations: promoting refarming program with establishing refarming fund based on spectrum usage fee, so that processes going on - trending to refarming frequencies for public & broadcasting use into mobile KISDI Consulting Group 36

37 2. Recommendation Spectrum Pricing In terms of license allocation methods, two have thus far been amongst the more prominent: auctions and beauty contests; Auctions have been supported for the full transparency they bring to the allocation procedure - based on market mechanism that whoever values more for the good will bid more, therefore an efficient outcome is achieved Beauty contests, on the other hand, are more useful in terms of being used as tools toward the implementation of special regulation (social or regional policy) goals - beauty contests grant more control for regulatory guidance to the regulator of the process and its result, and also give a more discretionary power to setting licensing object KISDI Consulting Group 37

38 2. Recommendation Spectrum Pricing: Beauty contest Scandinavian countries(finland, Sweden) and Japan implemented Beauty Contest in 3G spectrum assignment - administrative costs charged ; only a minimal burden on operators - aim is to reduce the burden of the consumer and promote 3G services -it was a kind of subsidy which gave advantages to domestic operators to enter foreign market As a result, Sonora(Finland) acquired IMT-2000 licenses in Spain & Germany - NTT-DoCoMo(Japan) also, had been aggressively seeking to enter European market KISDI Consulting Group 38

39 2. Recommendation Spectrum Pricing By comparing the pros and cons of two systems, determine optimal timing of adopting market-based approach, considering Mongolian market situation - beauty contest has an advantage for granting special regulation like nationwide coverage obligation as license condition but it is difficult for regulatory body to determine proper value of the spectrum because of information asymmetry - in case of adopting spectrum auction, utilizing auction revenue as a financial resources for R&D promotion and universal service fund is possible KISDI Consulting Group 39

40 Thank you! KISDI Consulting Group