NEW ANALYSIS: Regulatory bodies in Asian countries are aiming to tackle the lack of digital dividend spectrum to boost 4G LTE adoption. At present, none of the LTE network launches in Asia-Pacific are based on the 700 MHz band but the level of momentum behind the adoption of the APT700 (Asia Pacific Telecommunity 700 MHz) band plan – within and outside of Asia – is hinting at a brighter 4G LTE future.
According to Wireless Intelligence, half of global LTE connections will come from Asia in five years. To date, 38 operators in the region have launched LTE commercial services across 20 countries, representing 42% of global connections as of Q2 2013. Wireless intelligence predicts that the Asian 4G LTE connections market will increase almost tenfold between 2013 and 2017 to reach around half a billion connections.
However, almost nine out of ten commercial LTE networks in Asia are running on capacity bands (high frequencies, above 1 GHz), ranging from 1700 MHz to 2600 MHz. Almost half of those networks (48%) are supported by spectrum in the 1800 MHz band while just above 30% are supported by IMT-extension spectrum in the 2600 MHz band.
In contrast, coverage bands (lower frequencies, below 1 GHz) are more prevalent in LTE deployments in South Korea where operators have rolled out the technology in a variety of frequencies including the 800 MHz band. As of Q2 2013, South Korea is the most advanced LTE market worldwide with 40% of the country’s connections base already migrated to 4G LTE.
Higher frequencies typically allow mobile operators to cover urban and suburban areas where data traffic is dense and substantial network capacity is required, but operators also need spectrum in the 700 MHz and 900 MHz bands to deliver cost-efficient indoor city coverage and rural coverage. Lower frequencies require fewer base stations than capacity bands to produce greater geographic coverage and tend to be more cost-efficient. For example, Verizon Wireless has stated that its 4G LTE network, which operates in the 700 MHz band, is five times more efficient than its 3G network.
According to the Ericsson Mobility Report (November 2012), LTE networks are expected to cover 60% of the population in Asia Pacific by 2017, up from an estimated 1.5% in 2011. However, this coverage forecast and the connection growth forecasts discussed above are based on the assumption that coverage bands will be assigned to mobile operators to foster 4G LTE adoption in Asia.
A first step towards achieving this goal has been recently taken by the representatives of the South Asian Telecom Regulatory Council (SATRC) who announced on May 16th the joint adoption of the APT 700 MHz frequency band plan.
SATRC members include regulatory bodies from Afghanistan, Bangladesh, Bhutan, India, Iran, Maldives, Nepal, Pakistan and Sri Lanka – representing close to 2 billion people and just over 1 billion mobile connections as of Q2 2013 estimates.
During their 14th council meeting (SATRC-14), representatives of the nine member countries (with the exception of Iran and Sri Lanka) announced their commitment “to working as equal partners in order to fulfill the tremendous potential of the APT700 MHz Band Plan and to accelerate transition from analog to digital broadcast TV services in 700 MHz band (where applicable) which will free up this spectrum for its highest value use, which is mobile broadband”. The announcement also made clear that members will ensure “interference free cross-border spectrum usage” while stressing “the importance of actions at the national level to provide a roadmap with clear timelines for 700 MHz spectrum availability so that interested stakeholders have the certainty needed to plan networks and investments, and practical co-operation based on their shared interests”.
Reaching this level of spectrum harmonisation agreement helps to ensure global economies of scale which would bring down the cost of mobile devices and network equipment production, and will reduce interference issues along borders and promote international roaming. The Asia-Pacific Telecommunity (APT) also hinted in its October 2012 report that adopting its 700 MHz band plan would result in faster network coverage than the US 700 band plan. Under the latter, it would take a minimum of 2.5 years to deploy a network covering the entire population of Mexico City, against only 1.5 years under the APT700 band plan.
Outside of the SATRC scope, other countries in Asia are committed to the APT700 band plan, including Indonesia, Malaysia, Singapore, Japan, Taiwan, Brunei, Papua New Guinea and Tonga. In addition, shortly before the SATRC announcement, Australia concluded its 700 MHz spectrum auction which resulted in Optus Mobile and Telstra together spending almost $2 billion on acquiring digital dividend spectrum. Meanwhile, a similar auction is planned next quarter in New Zealand.
Interestingly, the APT700 band plan is also likely to be adopted outside of Asia, notably in Latin American markets such as Brazil, Mexico, Colombia, Ecuador, Chile, Costa Rica, Panama and Uruguay. In addition, the African Telecommunication Union (ATU) members are reportedly interested in adopting the APT700 plan once this band is allocated to mobile in the region.
Furthermore, according to a GSMA/BCG report published in late 2010, allocating the 700 MHz band to mobile broadband would add an estimated $729 billion to the GDP of Asia Pacific nations by 2020, while generating an additional 2.2 million jobs and some 4.7 times more in tax revenues.
Spectrum frequency prevalence within Asian commercial LTE networks, as of May 2013 Source: Wireless Intelligence