Archive for 'telecom' Category
Why is TRAI Pushing for Spectrum Refarming ? What are the Implications ?
We have already seen what is Spectrum Refarming and How it can benefit and the drawbacks of doing the same. Now we’d like to analyze the scenario in the context of Indian Telecom Industry.
Why is the Regulator Pushing for Spectrum Refarming ? Apart from discovering the TRUE Value of Natural Resource after A. Raja engineered 2G Spectrum Scam in India, Regulator’s view are as follows,
- Proper distribution of spectrum between operators (over one or two operators owning a particular spectrum band);
- Enforces migration towards future technologies especially when operators are reluctant to refarm
- Efficiently allocate the available spectrum to right technologies
Regulator ensures that Refarming be carried very carefully to prevent any service degradation of existing 2G/3G offerings. The cost of refarming is mainly borne by operators (and usually passed on to consumers).
TRAI recommended that all 900MHz available with incumbents be auctioned at least 18 months in advance of renewal and stated that the spectrum available in the 900 MHz band should be replaced by spectrum in the 1800 MHz band. Furthermore the regulator intends to charge 2X Read the rest of this entry »
What is Spectrum Refarming ? Benefits + Drawbacks of Spectrum Refarming
Many have asked what is Spectrum Re-farming ? What is the Significance and benefits of the Same ? Today we’ll try to answer as much as possible in the context of Indian Wireless Industry.
In plain language, Spectrum refarming is nothing but reallocation of existing telecom spectrum. It is defined as a basic change in conditions of frequency usage, which may be driven by:
- Change of technical conditions for frequency assignments (sometimes to follow an international standard)
- Change of applications deployedo n wireless spetrum
- Change of allocation to a different service. Some regulators define refarming as allocation of spectrum from one operator to another.
What is the Significance of Spectrum Re-Farming ? With advances in the Telecom industry, 900MHz spectrum which was earlier used for 2G Voice is now ideal for 3G data Services. Operators/regulators are keen to use the band to rollout 3G (currently used for 2G) over the traditional 2.1 GHz band as it will help the operators reduce OPEX & CAPEX.
Benefits of Spectrum Refarming
By reusing its existing spectrum, the demand for new spectrum Read the rest of this entry »
What DoT clarifications from TRAI on 1800 / 800 MHz Spectrum Auction Mean ?
The DoT (Department of Telecommunication) appears to be moving in a clear direction with respect to spectrum auctions. TRAI should respond to the DoT’s request for clarifications on its recommendations within the next couple of weeks after which the Telecom Commission and the eGoM will take a decision on the pricing of the Spectrum.
What are the Key Issues that DoT has raised in TRAI Recommendations on Spectrum ?
- Clarification on the basis for recommending auction of one slot of 5 MHz in the initial auction, even when additional slots are available after making provision for re-farming and when there is demand for such spectrum.
- Rationale behind recommending a reserve price Read the rest of this entry »
1800MHz 2G Spectrum Auction Pricing Likely at $300 Mn – TRAI
We have already covered the proceedings of the TRAI Open House in Delhi on the issue of 700Mhz Spectrum auction and 900Mhz Spectrum Refarming. Today we’d like to share the most awaited piece of information the Reserve Price for 1800 MHz 2G Telecom Spectrum which is keenly awaited by new Operators and Incumbents.
2G Spectrum in 1800MHz Availability: It varies from 3.2MHz in Rajasthan to 47.4MHz in Tamil Nadu with an average of 24MHz per circle. If auction is restricted to new players and those holding only 4.4MHz, at best only 16MHz would find takers.
Led by Airtel, incumbents strongly argued for eligibility for bidding 1800MHz to facilitate true
market price discovery. Reduction in equipment count / increase in effective capacity is a key motivation. TRAI has also considered flat spectrum usage charges as opposed to the current escalating rev share (most telcos supported this idea, naturally).
Uninor and MTS Sistema are in favour of two-stage Read the rest of this entry »
700 MHz No Consesnsus + 900MHz re-farming complicated – TRAI Open House
TRAI Held an Open House on the Spectrum issues plaguing the Indian Telecom Sector. Here is a summary of the day long discussion on 700 MHz and 900 Mhz Spectrum Bands.
700MHz was discussed too briefly to provide a basis for TRAI to recommend modalities decisively in this round. Airtel, which had asked for a minimum of two slots of 700MHz per bidder in its response, did a volte-face and suddenly agreed with Idea on the ecosystem not being mature. Reliance Infotel Broadband was largely silent on this subject and on its mysterious $11bn (for 2x10MHz reserve price suggestion). Vodafone and Reliance supported a sub-1GHz limit for all types of spectrum.
As far as the 700 MHz Spectrum is concerned, it was impossible for TRAI to build consensus around 700MHz auctions and hold them in FY13. Having said that, we estimate six blocks of 5MHz to fetch ~US$12-15bn for the government, but this would be in FY14.
900 MHz Refarming – Voice of Operators
In the TRAI Open House Discussions, Reliance Communications argued for Read the rest of this entry »
Rural Mobile Telephony Saturating in India
Analysts met head of rural communication agency who holds over a decade of marketing experience across India. He is of the view that going forward it will be challenging for the Telecom companies to push services in rural areas mainly because
- penetration of voice services into rural buying power is already high,
- growth in disposable rural income is expected to taper over next 12-months, and
- monetization of data opportunities could take ~3-5 years to become meaningful
As per TRAI data, wireless tele-density in rural India is ~35% versus ~159% in urban India. However, the agency’s feedback indicates that 60-90% of the “buying power” in rural India has already been tapped in terms of mobile ownership. You are also aware that the behavior of rural consumer is towards seeking deals and this will continue to keep voice-ARPUs low. Revenue upside will also be capped by expected tapering of rural income growth over next 12-months due to likely lower farm prices and recent rise in input costs for farm services. Read the rest of this entry »
Voice to Grow 16% YoY + M&A for Mid Leve Operators not Leaders – Vodafone CEO Marten
Martin Peiters – CEO, Vodafone India gave some insight into the company’s strategy in India.
Is the Wireless Voice Business Saturated in India ?
The industry is reporting 15-16% YoY growth in total minutes (volume). Based on the active subscriber data at 660mn, wireless penetration is at 55%. With a growing youth population, demand for voice continues to remain high. With volume growth, operating leverage kicks in and hence margins would expand. Thus, voice business alone, would drive growth in the medium term.
On Tariff War
Operators realize that at the current level of tariffs, unless one has scale, it is difficult to make money. Thus, it is unlikely that tariff wars will return. But, at the same time, RPMs will remain stable and not rise since there is fair bit of competition in the market.
On M&A in Indian Telecom Read the rest of this entry »
Why Mobile Tariff Strategy Vary from Operator to Operator – Circle to Circle ?
It is well known fact that after Bharti airtel took the lead to bell the cat and suffered a higher churn out, no telco wants to be seen aggressively raising tariffs.
Now the focus of all operators focus is on revenue market share and subscriber net additions. An operator can increase revenue market share by raising tariffs, but in doing so may lose subscriber additions, thus has to strike a fair balance between the two. It is for this reason that Bharti may have achieved lower revenue growth than its peers. Other operators were less vocal than Bharti about implementing new tariffs in our view. The immediate challenge for Bharti would be to manage subscribers’
perception.
Varying Tariff Strategy Across Circles
Tariff strategies differ from operator to operator, and from market to market, because no single operator is dominant in all 23 circles Read the rest of this entry »