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SpectrumPolicyandRecommendations

Director, Latin America & Caribbean

. .

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LatinAmericachallen es

broadandservices

spectrumcaps

Nospectrumauctionfor4G;likelybandsare2,5

,

. .

Lowbroadbandpenetration(lessthan10%)

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Mobilit MattersMobileCommunications=ReachandCostEffectiveness

,

economicimpact

BroadbandCommunications=GameChangingCapability

[high

speed

services

facilitates

education,

health

care,

, ,productivity]

MobileBroadband=TheNextIconicTechnology[maybehuge,combiningbestofbothmobileand

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TheBenefitsofMobileBroadband

oremerg ngeconom es: to on

and10to14millionjobs

For

Latin

America:

$US

50

to

$70

billion

and

an

. .

o n

e or

o

e

pr va e

sec or

an

governmen

neededtoincreasebroadbandpenetration

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GlobalTrends:

,

15minuteswatchingYouTube=1,000minutesvoice

communications bothconsume100MB (Rysavy2009)

Monthlyuse,includingsmartphonesandlaptops,couldrisefrom(Cisco2009)

Anaveragesubscribercouldconsume:

55MBwithemail ermonth

200MBwithwebbrowsing

2.7GBwithInternetradio

9GBwithvideo 27GBwithHDmoviedownloads(Rysavy2008)

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SpectrumisaCriticalInput:

s ma eso pec rum ee s

1720 MHz

y : e ween an z

1280 MHz760-840

MHz

Thesenumbersdonotaccountformultipleproviders.Ifthreeproviders,theestimatedneedin2020increasesby280MHz

TheconservativeestimatefornextyearsneedisthreetimesgreaterthantheaverageallocationinLatinAmerica

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* ITU-R M.2078 report

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O tionsforNetworkO erators

Chargemoreforpeakhourtransmission

Encourageuseoffemtocellsbysubscribers

Buildmorecellsites

Employnewtechnologies(HSPA+,LTE)

Usemorespectrum(however.)

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WhyNotHaveGeneralSpectrum

ggrega on m s

players

in

a

market

and

they

may

promote

inefficient

entry

Limitingspectrumheldbyincumbentsmeanstheymusttradeoffbetween2G/3Gandadvancedservices

Ifvoiceserviceisdiminished,operatorsrisklosingamainsourceofbusinessandtheirabilitytoinvestinfuture

Ifadvancedserviceisdiminished,lessadoptionand

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oppor un es o mprove verage evenue er ser

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M a rin th Eff ct : Th M l

Abottomupcostmodelforahypotheticalplayerthatis

spec rumcons ra ne an n eres e nprov ngan

advancedservice(LTE)

Estimatesthecostofprovidingthisserviceunderdifferent

, ,

.

,highcosttoprovideservice=highpricetoconsumer

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Parameters

of

the

Model

Interestratepaidbythefirm(basedonUSFcases)

Geographicarea(largestmetroareas) Datasubscribers basedon o ulation marketshare

wirelesspenetration,datapenetration)

Cellsitecosts(construction,installation,maintenance)

Userspersitefordifferentspectrumallocations

Ca italex ensesin ears01and ears45

Operatorhitsbreakevenbyendofyear8

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A lication

and

Results

Themodelisappliedtothreecountries:

,

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MinimumMonthlyCostofLTEServiceUnder

D erentSpectrumA ocat ons

2x20

MHz

2x15

MHz

2x10

MHz

2x5

MHz$X $1.3X $2X $4X

Ingeneral,acrossallmarketsstudied,adecreaseinspectrumavailablefrom2x20MHzto2x10MHzresultsinadoublingofthecost.

Afurtherdecreaseintheamountofspectrumfrom2x10

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.

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Alternatives

to

S ectrum

LimitsI. SetAsides

Oftenaccompaniedbyseriousproblems,suchas pricedistortions(winnerspayinglessthanmarketvalue)

collusion

IntheU.S.,the1995PCSCBlockfailure

n ana a, e auc on,w nonewen ran na onw ean w

seriouspricedistortions

InPeru,25MHzweresetasideinthe1900MHzbandforanew

providerinSeptember2008;ithasbeenauctionedtwicesincewithno

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Alternatives

to

S ectrum

LimitsII.AntitrustPolicy

Should

be

market

specific.

The

FCC

approach:considerhowatransactionwillaffectcompetition

bydefiningrelevantmarket,lookingatmarket

power

of

incumbents,

analyze

barriers

to

entry

and

po en a compe ors,ana yzee c enc es

o cyma ers

must

a ance

potent a

or

mar et

poweragainstpotentialforefficiencygains

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Alternatives

to

S ectrum

LimitsIII.AuctionSpecificRules

Itiscriticalthatpolicymakersrecognizetheneedsoflikelybidders.Forex.,spectrumblocksizesneedtosufficientlylargeornewserv ces.

bidder,keepinginmindtheabovepoint.

DigitalBritainReportprovidesamodel:combine2.6GHzand800MHz(TheBigAuction),witha2x65auctioncap.

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SelectedSpectrumCapsinLatinAmerica

Country

Cap,MHzComments

Ar entina 50Secomhasannounceditwilllicense1.7/2.1GHzbandin

Brazil 85Increasedfrom50to85fortheendof2007 3Gspectrum

auction. Planningauctionstructureof2.6GHzbandbased

Chile 60

Twooperatorsgot90MHz;Nextel(60MHz)andVTR(30

MHz).

Planning

structure

of

700

MHz

and/or

2.6

GHz

band

Incumbents excludedfrom2.5GHz60MHzauctionthat

Twosimultaneousauctions:30MHzin1900MHzand90

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. .

Source: Telefonica, National Regulators Websites, Comision Federal de Competencia (Mexico) ; Arthur D Little Spectrum Report, April 2010

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Updateon2.6GHzbandinLatinAmerica

CountryEstimated

auctionComments

Brazil 2012/13

Anatelproposed to allocate 140MHz(2x70MHz)for mobile services.2x60MHz

would be assigned towards the

end of

2012

and

2x10MHz

in

2015.

Local

operadoresplanto launch LTEbefore 2013.

Subtelsuggested to auction this bandin2010.Subtelhasalready channelized

e t e2.6GHz an ase on ITUOption 1 2paire oc so 76MHzan one oc of 42MHzTDD).

Mxico 2010/11

CofetelandSCTevaluate therenewal ofthelicense ofMultivision MMDS

operator asthewhole bandhasbeen underutilized.Regulators estimate thatey w ge a g c un o s an ree o auc on n o ow ng

Option 1recommendation.

Colombia 2010

MINTICis auctioning 60MHzinthis bandBUT haschosen option 3ofITU

recommendation andhasestablished anewcap of60MHzto preclude

.

Chileanplanfor2.6GHzband

(Resolutions479/05and733/07):

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2.496MHz 2690MHz

: : :

2572MHz 2614MHz

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Summary

Spectrumisacriticalinputformobileservices;demand

faroutstripscurrentsupply.

Lackofspectrumhindersnewadvancedservices.

Spectrumaggregationlimitsimposeseriouscostson

existing

providers,

which

are

paid

by

consumers.

Inmarketswithconstrainedproviders,consumersmay

paytwiceasmuchforLTEifspectrumislimitedtoonly

2x5MHzascomparedto2x10MHz,andfourtimesas

muchascomparedto2x20MHz.

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Obrigado!

Erasmo RojasDirector, Latin America & CaribbeanErasmo.rojas@3gamericas.org

1#Mobile Broadband Outlook for the Americas, Rio de Janeiro, 26 April 2010