Latin America’s second largest mobile market has adopted the Asia-Pacific plan for opening its 700MHz digital dividend band up for mobile services. We see this as a significant decision, not just for the progress of LTE in Mexico, but for the prospects of global harmonization in the band.
Many regions of the world are opening up former TV spectrum between 698MHz and 805MHz for mobile services, mainly LTE. However, there are several band plans available, and the more fragmented the global picture, the fewer opportunities there will be to support roaming and create a mass device ecosystem. The main choices are between the US plan, as seen in the 700MHz spectrum auctioned in 2008; and the APT (Asia-Pacific Telecom) alternative.
By choosing the latter, despite its close proximity and trade ties to the US, Mexico’s regulator Cofetel is sending a strong and valuable signal that the world should unite around the Asian approach. Mexico is the second largest mobile market in Latin America (after Brazil), with close to 100m connections, and this and its close trading ties to the US make it highly influential in regional policies.
The problem with the US plan is that it is very complex and is fragmented even within itself. There are historic and commercial reasons for this, but as the Irish saying goes, ‘you wouldn’t start from here’. Although Verizon Wireless, AT&T and several smaller carriers have already rolled out LTE in the band, they cannot all support the same devices. Regional operators are lobbying the FCC to mandate roaming across all 700MHz frequencies as there is currently no interoperability between Verizon’s and AT&T’s national networks, with one another or with the regional carriers’ deployments, which are mainly in the Lower A and B Blocks of the spectrum.
It is vital that other territories avoid this situation, as analyzed by Maravedis-Rethink’s spectrum and regulatory expert, Lester Garcia, in a recent report entitled The Digital Dividend and Refarming Policy: Comparative Study.” (http://www.maravedis-bwa.com/en/reports). This calculates that a non-harmonized approach in 700MHz, outside north America, could remove more than 10% of the capex investment in LTE equipment for that band in the 2012-2016 period as operators hesitate over the potential returns.
The risks remain high, despite the impact of the Mexican decision. "Regional focus will continue to be a priority over global coordination in spectrum management. This will require additional efforts from regulators for a successful digital transition and digital dividend utilization," said Garcia.
By contrast, harmonized spectrum policy in this important band could have huge economic benefits as well as lowering the cost of handsets, and accelerating 4G roll-outs.
The GSM Association says that, if the whole Asia-Pacific region adopts the proposed framework, the region could generate up to $1 trillion in GDP growth between 2014 and 2020. The new spectrum could support 2.7m new jobs, 1.4m new businesses and also boost government coffers by $171bn in spectrum fees and new taxes, says the GSMA’s study. And if operators in other regions, such as Latin America and even, in future, Europe, also back the APT plan, the benefits will be even larger.
Mexico’s regulator, Cofetel, voted last week in favor of the APT (Asia Pacific Telecommunity) band plan for mobile services in 700MHz (698MHz-806MHz). The agency said the decision to use the APT model was based on its “high efficiency” of spectrum usage which would enable broad population coverage at the lowest prices. It estimates that, using the APT plan, the band could support seven operators instead of four under the US arrangement and reach 10 times more users – a potential 4bn instead of 400m under US rules.
Under the APT plan, the 700MHz band is segmented in two portions of 45MHz, with 10MHz sub-bands split between transmission and reception, and guard bands to protect adjacent TV services below, and cellular ones above. The regulator says this approach provides “greater flexibility in spectrum use and caters to the future demands of mobile broadband services”.
If, as many expect, most Latin American regulators emulate Mexico’s policy to harmonize with Asia-Pacific, that will leave north America as an island in the band. Sebastian Cabello, director of GSMA Latin America, commented: “The GSMA encourages countries in Latin America to work together to implement a harmonized 700MHz band plan for mobile services. Spectrum harmonization is essential to generate cost efficiencies in both network technology and devices.” Chile, Colombia and Costa Rica are also opening up the 700MHz band.
European countries – where the digital dividend is in 800MHz – are now also considering how they might open the lower frequencies too in future. This is already under review at UK regulator Ofcom, for instance, and such jurisdictions would also likely support the Asian approach in the interests of global consistency.
The greater the weight of international opinion behind the APT, the more chance there is that a scheme devised just for Asia could become a global one. It has already been adopted by the 3GPP and there is a Joint Study Group looking into the possible globalization of spectrum between 689MHz and 862MHz. Although the EMEA region has its digital dividend in 800MHz, in 2012 the ITU World Radiocommunication Conference agreed to create a 700MHz mobile allocation in that region, largely under pressure from African and Middle Eastern carriers, which expect to gain better pricing and economies of scale by adopting 700MHz and the APT plan.
Despite real hopes of a truly global low frequency band in the fragmented world of LTE roaming, there are still obstacles in practice. Notably, the US has already deployed and will remain a major exception to the global rule, and Canada follows suit, while China has yet to declare its hand firmly. Interference issues could make it hard for central American countries to ignore the US plan, while it is hard to consolidate regional uses of spectrum in the 700MHz, 800MHz and 900MHz areas into a single harmonized band – areas of this spectrum are already in commercial use, with region-specific plans, for instance the European digital dividend overlaps with APT, and 850MHz is often used for existing mobile services in Asia and the Americas.
The need for a global band has never been more urgent, as operators and standards bodies calculate the cost of LTE remaining deeply fragmented – in terms of device costs, and therefore uptake levels, and of operator willingness to build out in the low frequency bands, which are essential for universal coverage. The awareness of the issues is high and many global discussions are under way. It will be a difficult path, but Mexico’s decisions is an important signal that regulators are prepared to embark on that route.