Mobile Spectrum: Analysis

Mobile Spectrum
Annual Market Size and Forecasts

Analysis
February 18, 2013

TABLE OF CONTENTS
TOP TAKEAWAYS: NEED FOR SPECTRUM NOT AS GREAT AS COMMONLY THOUGHT.................................. 1
ABOUT THIS NEW REPORT..................................................................................................................... 1
Spectrum is a scarce resource that no one can grow or produce ...................................................................2
There is no easy way to measure current spectrum usage and forecast future demand ..................................4
The ITU model was made simple, sound, and rigorous..................................................................................4
If the ITU forecast had materialized, no one would have spectrum today, and mobile broadband could not
even be supported! .......................................................................................................................................4
What's wrong has yet to be found..................................................................................................................5
WiFi may play a fundamental role .................................................................................................................5
Or maybe the lack of real mobile data is to blame..........................................................................................5
Therefore, we kept the same approach but simplified the model and used current anecdotal information to
better reflect today's reality ...........................................................................................................................6
With all of the above, we played with spectral efficiency and Shannons Law...........................................6
Collecting average mobile connection speeds (P) made the bulk of our work...........................................7
And finally, there is no direct linear relationship between traffic growth and spectrum requirement .................7
AVERAGE MOBILE CONNECTION SPEEDS REMAIN LOW ACROSS THE BOARD............................................. 8
However, average connection speeds are much higher on empty LTE networks ..........................................10
Average peak mobile connection speeds range from 3 to 21M.......................................................................11
Average peak speeds depict clusters of specific country profiles .............................................................12
CONSEQUENTLY, NEED FOR SPECTRUM VARIES ACROSS THE BOARD....................................................... 13
Due to their huge population, China and India have the highest need for spectrum by 2017...........................15
Next come the US, Japan, and South Korea..................................................................................................15
The rest of the countries are clustered in the 200400MHz range..................................................................15
But it looks like a matter of time before the lagging countries need 1,000MHz of new spectrum.....................15
And finally, some spectrum needs to be preserved for voice services .............................................................16
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Copyright 2013 by Infonetics Research, Inc. All rights reserved.

i
Mobile Spectrum

THE WORLD SCRAMBLES TO FIND NEW SPECTRUM................................................................................ 18
In the US, the FCC plans to add 300MHz of new spectrum ...........................................................................18
In 4Q12, the FCC opened up 30MHz of AT&T spectrum........................................................................18
Europe is freeing up 1.2GHz of spectrum by 2015 ........................................................................................19
The UK is freeing up 500MHz by 2020..................................................................................................19
Asia Pacific is also doing its part . . . .............................................................................................................19
. . . so is Latin America .................................................................................................................................20
FOR NOW, ALL SHORT-TERM ALTERNATIVES ARE EVALUATED ................................................................. 20
BOTTOM LINE ....................................................................................................................................... 21
REFERENCES ........................................................................................................................................ 23


ii
Mobile Spectrum



iii
LIST OF EXHIBITS
EXHIBIT 1 SPECTRUM BAND CATEGORIES .......................................................................................... 3
EXHIBIT 2 PREDICTED SPECTRUM REQUIREMENTS VS. CURRENT SPECTRUM IN USE........................... 5
EXHIBIT 3 AVERAGE MOBILE CONNECTION SPEEDS BY COUNTRY......................................................... 10
EXHIBIT 4 AVERAGE PEAK MOBILE CONNECTION SPEEDS BY COUNTRY................................................ 12
EXHIBIT 5 SPECTRUM FORECAST (MOBILE DATA) BY COUNTRY........................................................... 14
EXHIBIT 6 SPECTRUM FORECAST (VOICE) BY COUNTRY ...................................................................... 17
Mobile Spectrum

TOP TAKEAWAYS: NEED FOR SPECTRUM NOT AS GREAT AS COMMONLY THOUGHT
The world is nearing mobile saturation, and mobile connections are shifting from voice to mobile
broadband, putting the greatest pressure on cellular networks, and particularly on spectrum, its raw
material. Spectrum is a finite and regulated resource that cannot be produced. Therefore, its allocation
and usage need to be optimized and managed carefully. Moreover, there is no easy way to measure
spectrum usage and forecast future needs.
In 2006, the International Telecommunications Union (ITU) made the very first attempt to assess future
spectrum needs for 4G systems that deliver bit rates of 100M with high mobility and 1G with low mobility,
assuming a bandwidth channel of 100MHz. Although the ITU model, which we reviewed carefully, is
sound and rigorous, there are no mobile operators on this planet todayseven years laterwith the
luxury of owning contiguous 100MHz of spectrum. And this wont happen any time soon.
Even more striking is the fact that if this ITU forecast had held true, all mobile networks with significant
mobile broadband usage would have crashed by now. What went wrong with the forecast has yet to be
found, but possibly the lack of real mobile data at the time is to blame, as 3G usage really kicked off in
2007 with the advent of the iPhone.
For this report, we revisited the ITU model and fed it with actual anecdotal data such as average bit rates
given data consumption measured in and reported by the worlds 16 largest economies. The chief finding
is that the need for spectrum for data is almost half of what the ITU predicted for 2010!
However, countries with heavy mobile broadband usage such as the US, J apan, and South Korea are on
track to hit the 1,000MHz-bar of spectrum need by 2017. The rest will eventually follow when their
respective mobile broadband markets develop and mature.
Finally, we noticed that without HSPA/HSPA+, the need for spectrum increases significantly and easily
pass the 800MHz bar already in countries with high mobile data usage such as the US, J apan, and South
Korea. This scenario would match the ITU forecast, which in turn means that significant spectral
efficiencies have already been achieved with HSPA/HSPA+, and even more with LTE.
ABOUT THIS NEW REPORT
In this report, we analyze radio frequency spectrum allocations and needs of the worlds 16 largest
economies as listed in the most recent World Bank update (10/2012): 1) US, 2) China, 3) J apan, 4)
Germany, 5) France, 6) Brazil, 7) UK, 8) Italy, 9) Russia, 10) India, 11) Canada, 12) Spain, 13) Australia,
14) Mexico, 15) South Korea, and 16) Indonesia.


1
Mobile Spectrum

Spectrum is a scarce resource that no one can grow or produce
The radio frequency spectrum (which is simply referred to as spectrum) is only a comparatively small part
of the electromagnetic spectrum, covering the range from 3Hz to 300GHz. It includes a range of a certain
type of electromagnetic waves, called radio waves, generated by transmitters and received by antennas
or aerials.
The radio spectrum is the home of communication technologies such as mobile phones, radio and
television broadcasting, two-way radios, broadband services, radar, fixed links, satellite communications,
etc., due to its excellent ability to carry codified information (signals).
Depending on the frequency range, the radio spectrum is divided into frequency bands and sub-bands, as
illustrated in Exhibit 1 that lists all the radio frequency bands and their general uses.
In theory, different communication technologies could exist in any part of the radio spectrum, but the more
information a signal is to carry, the more bandwidth it needs. In simple terms, bandwidth is the range of
frequencies that a signal occupies in the spectrum. For example, an FM radio station might broadcast on
a frequency of 92.9MHz but requires a bandwidth of 0.3MHz (300kHz)the spectrum between 92.8 and
93.0MHz inclusive. Other stations cannot broadcast on these frequencies within the same area without
causing or receiving interference.


2
Mobile Spectrum

Exhibit 1 Spectrum Band Categories
Band Name Frequency Wavelength Use
Extremely low
frequency
330Hz 100,00010,000 km Submarine
communications
Super low
frequency
30300Hz 10,0001,000 km Submarine
communications
Ultra low
frequency
3003,000Hz 1,000100 km Communications in mines
Very low
frequency
330kHz 10010 km Submarine
communications,
avalanche beacons,
wireless heart monitors
Low frequency 30300kHz 101 km Navigation, time signals,
AM long wave
broadcasting
Medium frequency 3003,000kHz 1 km100 m AM medium-wave
broadcasting
High frequency 330MHz 10010 m Shortwave broadcasting
and amateur radio
Very high
frequency
30300MHz 101 m FM and TV broadcasting
Ultra high
frequency
3003,000MHz 1 m100 mm TV broadcast, mobile
phones, WLAN, ground-
to-air and air-to-air
communications
Super high
frequency
330GHz 10010 mm Microwave devices,
mobile phones, WLAN,
radars
Extremely high
frequency
30300GHz 101 mm Radio astronomy, high-
speed microwave radio
relay ('millimeter wave')
>300GHz <1 mm Night vision
Source: International Telecommunication Union (ITU)


3
Mobile Spectrum

There is no easy way to measure current spectrum usage and forecast future demand
The very first attempt was undertaken in 2006 by the International Telecommunication Union (ITU), which
at the time had required spectrum requirement estimations for next generation mobile communication
services. This major piece of work was commissioned to explore the implications of delivering a peak bit
rate of up to 100M with high mobility and up to 1G with low mobility in preparation for the World
Radiocommunication Conference 2007 (WRC-07). Also, the ITU produced new versions of reports on
market analysis and radio aspect analysis for the future development of IMT-2000 and IMT-Advanced,
now referred as to 4G technologies.
The ITU model was made simple, sound, and rigorous
The ITU model takes into account the consideration of spatial and temporal correlations among variable
telecommunication services, including the market requirements and network deployment scenarios.
Although the objective was to develop a simple but comprehensive model that uses as many relevant
parameters as possible, the final product relies on many algorithms derived from various theoretical
concepts such as queuing, propagation, and signal theories:
Service parameters such as provisioning of connectivity, data activity, services offered, content
type
Technology parameters such as frequency bands in operation, system standard (e.g., GSM, W-
CDMA, CDMA . . .), data bit rates supported, bidirectional and unidirectional delivery
mechanisms, degree of mobility, regulatory requirements
Radio access technique groups: pre-IMT, IMT-2000, IMT-Advanced . . .
Traffic types and classes
If the ITU forecast had materialized, no one would have spectrum today, and mobile
broadband could not even be supported!
Exhibit 2 depicts a stark contrast between the 7-year old predictions and where we stand today in typical
crowded and dense markets such as New York City, Seoul, and Tokyo. And we have yet to face a major
mobile data network outage! We typically hear form users trying to use their smartphones in congested
areas is that their experience is diminished, characterized by slow response and poor quality of service.
But still, no major breakdown has occurred.


4
Mobile Spectrum

Exhibit 2 Predicted Spectrum Requirements vs. Current Spectrum in Use
Market 2010 2015 2020
ITU-R-REP-M.2078-2006 Prediction
Higher demand 840MHz 1,300MHz 1,720MHz
Lower demand 760MHz 1,300MHz 1,280MHz
Typical Spectrum in Use or Allocated in our Top 16 Economies
High demand 200 to 300MHz 300 to 400MHz 600 to 1,100MHz
Source: International Telecommunication Union (ITU)
Meanwhile, finding 1,300MHz of spectrum by 2015 looked impossible in 2006 and remains unrealistic
today as well. However, the ITUs chief objective was to assess the implications of migrating to IMT-
Advanced technologies that are conceived to optimally work with a channel bandwidth of 100MHz, which
remains rarely available today.
What's wrong has yet to be found
We spent a fair amount of time reviewing the assumptions and the equations used to build the model and
found nothing significantly wrong. To the contrary, the research process and the collection of anecdotal
real data (e.g., bit rate, spectral efficiency, traffic, etc.) were well thought-out and thorough. Algorithms are
the only part we do not have access to.
WiFi may play a fundamental role
All the traffic going to WiFi may be a reason the spectrum crunch is not as intense as expected. Mobile
devices generate a ton of data, but an increasing proportion is on WiFi and knowing exactly the amount of
this traffic has proven to be impossible, although some mobile operators told us that up to 75% of the
traffic may be on WiFi.
Or maybe the lack of real mobile data is to blame
As said earlier, the ITU factored in the effect of heavy mobile bandwidth consumption by assuming the
implementation of the optimum spectrum framework: a minimum of 100MHz swath of spectrum. Well, the
reality six to seven years later is rather different, as no one on this planet owns a frequency channel or
carrier that has a bandwidth of 100MHz. Instead, LTE has been deployed in allocations of 1, 5, 10, and
20MHz so far, just a fragment of what the ITU said is required. However, when the ITU-R completed its
research, real mobile broadband data was scarce. Put another way, we did not have anecdotal
information monitoring consumer behavior on various devices running on iOS or Android. And now this
information makes a big difference, along with current network performance data such as average peak
rates and spectral efficiencies, which were also lacking when the forecast was built.


5
Mobile Spectrum

Therefore, we kept the same approach but simplified the model and used current
anecdotal information to better reflect today's reality
In todays world, an onslaught of bandwidth-hungry smartphones concentrated in crowed places is
negatively affecting mobile network radio access resources, so we collected the following key actual
parameters for each of the 16 economies covered in this report:
Spectrum allocation (current and future), bands in operation, system standard (e.g., GSM, W-
CDMA, CDMA, etc.)
Population, number of mobile subscribers, and subscriber per MHz equivalent
User mobile data consumption in Terabytes per month
Average or mean peak data bit rates supported by current live networks
Average spectral efficiencies currently achieved
With all of the above, we played with spectral efficiency and Shannons Law
The basic formula for spectral efficiency () is defined as:
= P Rav G / BW
Where is spectral efficiency in bps/Hz/Cell, P is the peak data rate in bps, Rav is the modulation and
coding scheme (MCS) average factor, G is other gain from advanced technologies such as HSPA+and
LTE, and BW is the channel bandwidth.
And the theoretical limit of the channel capacity C is given by Shannons law:
C =W log
2
(1 +CIR) with CIR =P/(I +N)
Where W is the system carrier bandwidth, P is the carrier power, I the interference power, and N the
noise power. Note that the CIR distributiontypically a Gaussian curvecan be obtained from channel
models considering different frequency bands, user mobility, frequency reuse factors, and cell radius,
assuming a uniform distribution of users in a cell, and can be provided by a numerical calculation or a
computer simulation.
The basic relations of different parameters are summarized as follows:
The available peak aggregate throughput of the radio interface is determined by the maximum
physical layer mode and is only available for high carrier/interference-ratios
Reduced cell cluster size reduces spectrum demand for a given carrier bandwidth BW, however
at the expense of average aggregate throughput
A requested peak aggregate throughput can basically be achieved with any spectrum efficiency
in combination with the modulation order


6
Mobile Spectrum

The available aggregate throughput is significantly decreasing versus the distance from the base
station
The cell edge aggregate throughput does not depend on the available peak throughput of the
radio interface. It does only depend on the available carrier/interference-ratio and the carrier
bandwidth
The aggregate average traffic that can be supported depends on the available aggregate average
cell throughput
The average aggregated throughput depends on the design of the radio interface (e.g., peak
aggregate throughput, degradation to Shannon bound, and flexibility of physical layer modes), the
propagation and deployment scenario, and the system bandwidth
Co-channel interference level depends on antenna concept
Collecting average mobile connection speeds (P) made the bulk of our work
Though BW was not an issue since every mobile operators spectrum and frequency portfolio is well
documented, average mobile connection speed data is sporadic and can vary widely among sources. As
a result, we spent most of our time triangulating data between field measurements, national regulatory
agency information, and the quarterly Akamai State of the Internet Report. In addition, we focused on
dense areas to obtain the best representation of peak/busy hours that put the most significant strain on
the mobile network.
Then, to use the two equations and ascertain the need for spectrum for each country, we:
Calculated by collecting actual values from various sources for P, and BW. Rav was obtained by
looking at typical modulation schemes such as 64QAM in HSPA+networks, which also provided
typical CIR values.
Took into account the substantial improvements in spectral efficiencies achieved through HSPA+,
LTE, and LTE-Advanced, as well as the implementation of small cells that densify networks.
Those improvements allow mobile operators to deliver more bits per Hz per subscriber. For
example, GSM and CDMA require 3-16MHz/M/sector; whereas HSPA and LTE only require 0.7-
1.0MHz/M/sector.
And finally, there is no direct linear relationship between traffic growth and spectrum
requirement
Spectrum allocation by swaths of 5, 10, and 20MHz channels or carriers is the first thing to consider. As
mentioned earlier, the aggregate average traffic that can be supported by a mobile network depends on
the available aggregate average cell throughput where this traffic needs to be carried. Consequently, the
higher the throughput or mobile connection speed, the higher aggregate traffic. And the closest to the
base station, the highest the speed. Thats the fundamental reason we focused on spectral efficiencies
and mobile connection speeds in this report.


7
Mobile Spectrum

To optimize their cellular resources without adding the spectrum the ITU predicted in 2006, mobile
operators implemented a mixture of various techniques including optimum distribution between coverage
and capacity bands, more cell sites whenever possible, small cells, remote radio heads, WiFi offload, and
software-based optimization tools such AT&Ts Intucell Systems self-organizing network (SON).
AVERAGE MOBILE CONNECTION SPEEDS REMAIN LOW ACROSS THE BOARD
Despite HSPA and EV-DO ubiquity, we found that average mobile connection speeds in our 16 countries
dont reach more than 4M (see Exhibit 3). With 4.1M on average, Russia stands out with the highest
average mobile connection, way ahead of a cluster of European countries (France, Italy, the UK, and
Spain), ranging from 2.9 for France down to 2.6M in Spain. At this tiny level of difference between the four
countries, the margin of error is significant enough to assume they have roughly the same average mobile
connection speed. The next cluster is three countries with significant LTE footprints, who are in the
process of moving heavy users to LTE as fast as they can: South Korea, Germany, and the US, all stuck
above the 2M bar. This finding reflects the level of general congestion on 3G networks in the US and
South Korea, despite the highest iteration of HSPA+and dual carrier. In Germany, the story is different:
LTE was deployed as DSL substitution to bring broadband in underserved areas and therefore does not
count as a mobile service per se.
Although at first the finding can be surprising, a close look at the specifics explain the storyplease keep
in mind that we only focused on congested or dense areas in each country, meaning capitals and large
cities such as New York City, Los Angeles, and So Paulo, for example:
Russia has been aggressive on 3G from day one, and as the country has been lacking wireline
infrastructure for some time, everything went mobile, ending up with one of the worlds best
mobile networks for coverage. However, 3G usage remains low and Russia does not even
appear among the worlds top 12 mobile broadband countries ranked by number of 3G
subscribers (the US, China, J apan, India, Brazil, Germany, Italy, the UK, Indonesia, France,
Spain, and South Korea).
France, Italy, the UK, and Spain are on the same boat, as they rolled out 3G at the same time,
started to see activity on 3G in 2008, rolled out HSPA and HSPA+between 2009 and 2012, but
are still on 3G HSPA+today with few or no live LTE networks. However, Italy and Spain have
been losing mobile subscribers over the past two years due to tough economic conditions,
releasing stress on mobile networks. For example, Spains CMT reported 2/12/13 that the number
of mobile subscribers in Spain fell by 2.77M in 2012, with the country's biggest operators
reporting declines in their customer bases. This decline may have pushed up download speeds a
notch, although we could not verify this assumption.
South Korea has been aggressive on shifting gears from CDMA to HSPA+first and then rolling
out LTE but 2012 was only the first year of subscriber migration to LTE and the density of
subscribers in Seoul is such that LTE is not showing up yet.


8
Mobile Spectrum

Germanys mobile broadband story so far remains on 3G HSPA+networks. As a matter of fact,
LTE rollouts that occurred in the second half of 2010 focused on rural areas as DSL replacement
to bring broadband to underserved areas, as mandated by the government. Therefore, LTE does
not come into play yet, and Germans in general have not been doing much more than web
browsing on smartphones.
The US is definitely leading the worlds mobile broadband race when it comes to number of LTE
subscribers52% of the worlds 64M LTE subscribers in 2012but patchy 3G networks and
coverage issues are affecting overall performances. Recent HSPA+rollouts and software-based
network optimization have improved performances notably on dropped call rates, data session
continuity, and average peak mobile connections that will be examined in the next section.
Australia is below the 2M bar despite its implementation of the highest iteration of HSPA+and
now its LTE rollout.
China is just beefing up its shiny 3G network deployed in one year three years ago and still has
few users on three different technologies: TD-SCDMA, W-CDMA, and CDMA2000. It looks like
the results are dragged by CDMA2000, and TD-SCDMA, respectively. Since 3G users only
account for only 21% of Chinas total mobile subscriber base as of 12/31/12, we expected to see
higher connection speeds.
Japan checks in at 1.5M, which is the 3G effect! The 3G to LTE subscriber migration has just
started last year, trailing the US by one year, and starting with Tokyo, the density of mobile
broadband users is so high that mobile networks are enormously congested, bringing down
speeds significantly at busy hours.
Canada is lagging behind its peers and this comes from a mix of circumstances such as lack of
competition, regulatory environment, and low mobile broadband consumption.
Indonesia has the third largest population on earth, and has the potential to be the "new China"
in terms of mobile growth opportunities. However, the country has been very slow to enable
mobile broadband, and now its auction to open up more 3G spectrum has been delayed for the
fourth time in the wake of the bankruptcy of lead telco Telkomsel.
Mexico is lagging behind other Latin American countries. 3G services havent taken off in Mexico
as they have elsewhere in Latin America because pricing remains an issue in the take-up of 3G
services.
India is trailing all countries due to unabated regulatory issues that delayed 3G license auctions,
and tough competition bringing ARPUs below $4/month and negatively impact investment in 3G.
As a result, only 6% of mobile subscribers are on 3G, and they are complaining about low
speeds.


9
Mobile Spectrum



10

Exhibit 3 Average Mobile Connection Speeds by Country
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5
Indi a
Mexi co
Indonesi a
Canada
Brazi l
Japan
Chi na
Austral i a
US
Germany
South Korea
Spai n
UK
Ital y
France
Russi a
4.0 4.5
Average mobi l e connecti on speed (Mbps)

However, average connection speeds are much higher on empty LTE networks
In our sample of 16 countries, only three have significant LTE footprints: the US, South Korea, and J apan,
respectively ranked by number of LTE subscribers. Meanwhile, only Verizon Wireless in the US is making
a significant impact on its network performance as it has been the front runner and the most aggressive
on shifting its subscribers to LTE. That being said, we have gathered interesting data points measured in
various locations in congested cities.
The US: Measured in 15 markets where both AT&T Mobility and Verizon Wireless have a
presence, LTE services average a download speed of 15 to 17.5M, and upload speeds stand
around 8M.
South Korea: In the best conditions, LTE downlink and uplink speeds can go as high as 25M and
17M, respectively. However, on average, they fluctuate between 17 and 25M for the downlink,
and 9 to 17M for the uplink.
Mobile Spectrum

Japan: LTE data rates at 45 locations in 9 cities nationwide showed average down link speeds of
24.51M at KDDI, 18.36M for Softbank Mobile, and 10.22M for NTT DOCOMO, which is 10 to 16
times higher than the value presented in Exhibit 3.
These three countries share another thing in common: they have a high number of mobile subscribers per
MHz available. This means that as long as a certain threshold of mobile subscriber is not reached on LTE
networks, speed will remain high. When this threshold is attained, speeds will start to fall.
Finally, before Softbank Mobile launched its TDD-LTE network in Tokyo in March 2012 last year, I had
the opportunity to test the network and enjoyed downlink speeds of up to 70M or 30M below the
theoretical peak rate, and this in Tokyos Ginza district while moving in a van. Of course, I was the only
one on a fully optimized shiny network!
Average peak mobile connection speeds range from 3 to 21M
Exhibit 4 shows that Russia has the highest average peak connection speed at 21M, India has the lowest
at 3M. Russian Internet usage remains low but is increasing rapidly, and a large increase there comes
from mobile devices. Russia is still behind the Western world in terms of mobile Internet usage, but it is
quickly catching up. According to the recent numbers from Mobtop.ru (a Russian directory of mobile sites
as well as mobile Internet statistics provider), reports Searchengines.ru, the Russian mobile Internet
audience increased by 2.5% during the first two months of 2012.
Meanwhile, this wide disparity comes from several facts and factors that we touched upon earlier in this report:
Number of subscribers per MHz available: In Spain for example, the ongoing recession is
forcing mobile subscribers to scrap their plans and mobile operators are facing unabated
subscriber decline, which in turn is freeing up capacity on their network. In addition, Spain has
100MHz of spectrum more than the US and 5.7 times less subscribers. Consequently, Spains
HSPA networks have now one of the most rapid peak rates in the world!
Type of handset: It became apparent that an iPhone 5 was much faster than its predecessor
and the same observation holds true for the Samsung Galaxy series. As a result, average peak
downlink speeds fluctuate accordingly.
Usage: What people actually do with their cellular devices has a great impact on cellular
resources. In the US, bandwidth hogs are users who are not shy to download a video from Netflix
or iTunes over the cellular network. J ust a few of them can drain the cellular resources and
significantly reduce the downlink speed.
Disparity between networks: There are typically between three and six major mobile operators
in each country, four being the norm, which may use different technologies and may also have
different coverage and capacity.
Distance from the BTS: The farther the user is, the slower the speed and vice versa. Also, being
at the cell edge or not has a significant impact.
Number of cell sites and BTS: The highest count of BTS provides the best coverage and capacity.
Spectrum: Low bands are good for coverage; high bands are better for capacity but require more BTS.


11
Mobile Spectrum



12

Exhibit 4 Average Peak Mobile Connection Speeds by Country
0 2 4 6 8 10 12 14 16 18
Indi a
Mexi co
Canada
Chi na
US
Japan
South Korea
Austral i a
Brazi l
France
Indonesi a
Ital y
Germany
UK
Spai n
Russi a
20 22
Average peak mobi l e connecti on speed (Mbps)

Average peak speeds depict clusters of specific country profiles
After Russia, characterized by low 3G usage and brand new underutilized LTE networks, the first cluster
is made of Western European countries led by Spain, which as we stated before has been losing mobile
subscribers, and therefore sees less constraints on its cellular infrastructure. In this same cluster come
the UK, Germany, and Italy (which is in the same situation as Spain).
Indonesia is stuck between Italy and France, followed by Brazil and Australia, all with average peak
connections above 9M. However, the next cluster is the most striking because it shows how heavy usage
affects cellular resources in the most dramatic way: South Korea, J apan, and the US. As we saw in the
preceding section about LTE speeds, South Korea is ahead of the pack due to higher LTE average
connection speeds, achieved through better LTE ubiquity than in J apan and the US.
Mobile Spectrum

CONSEQUENTLY, NEED FOR SPECTRUM VARIES ACROSS THE BOARD
As every country is different, spectrum needs vary from very low in Canada to very high in the US. This
major difference comes from several interrelated factors:
The spectrum currently available, including 2G and 3G refarming and newly allocated 4Gthe
UK for instance is just in the process of auctioning 4G licenses compared to Germany that did it
in 2012 and the US that completed its auction in 2008. We only included what we know about
spectrum allocation between now and 2017; J apan for instance, provided a clear agenda for
releasing 219.3MHz of new spectrum by 2015, bringing the current amount of 859.8MHz to
1,079.1MHz.
The optimization of spectrum resources through HSPA+dual and multi carrier implementations,
as well as dual-carrier across two different bands, e.g. 900MHz and 2.1GHz, and upcoming
carrier aggregation as the first iteration of LTE-Advanced.
Mobile operators real estate or the number of cell sites they operate. Their ability to acquire new
sites can greatly affect the need for spectrum. Adding new sites, including small cells, reduces
the need for new spectrum.
The number of subscribers per MHz or put another way, the available bandwidth available at a
busy hour in the most congested parts of the network.
The mobile broadband penetration and what users actually do on their respective devices.
Consumers willingness to pay for expensive data planshigh in the US and low in Europe; an
iPhone costs on average $100/month on AT&T and around 45/month across Europe for the
same package.
The competitive landscape or mobile operators aggressiveness to rollout LTE and push as many
subscribers as fast as possible on the new networka trend led by the US, J apan, and South
Korea.
Spectrum calculation is based on current actual data gathered for each country, which explains the
significant difference with earlier forecast that are higher by at least a factor of two due to a lack of real life
data. We noticed that without HSPA/HSPA+, the need for spectrum would increase significantly and
easily pass the 800MHz bar already in countries with high mobile data usage such as the US, J apan, and
South Korea.


13
Mobile Spectrum



14

Exhibit 5 Spectrum Forecast (Mobile Data) by Country
0
100
200
300
400
500
600
700
800
900
1,000
CY11 CY12 CY13 CY14 CY15 CY16
S
p
e
c
t
r
u
m

(
M
H
z
)
CY17
Australia Brazil Canada China
France Germany India Indonesia
Italy J apan Mexico Russia
South Korea Spain UK US

Mobile Spectrum

Due to their huge population, China and India have the highest need for spectrum by
2017
By 2017, both countries need more than 900MHz of new spectrum to accommodate mobile data. Those
two countries share a lot in common. Most importantly, they have more than 1B people and also at least
1B mobile subscribers with low 3G penetration and very low LTE activity.
Next come the US, Japan, and South Korea
The three LTE front runners with the worlds highest mobile data usage are the next countries with the
highest need for spectrum led by the US with 809MHz, followed by J apan (780MHz) and South Korea
(610MHz). The finding can be explained as follows: The US has 2.5 times more people than J apan and
5.8 times more than South Korea, but only 490MHz of spectrum currently allocated compared to J apan
with 860MHz and South Korea with 320MHz.
Its also interesting to note that J apan is leading the charge on releasing new spectrum with a plan to free
up 1,079MHz by 2017.
The rest of the countries are clustered in the 200400MHz range
This cluster is made of all the countries that do not have mobile data usage as high as in the US, J apan,
and South Korea, and are lagging with their LTE deployments.
But it looks like a matter of time before the lagging countries need 1,000MHz of new
spectrum
What we find here is a projection for each country that is based on using current mobile data statistics as
opposed to a planning of the most congested situation that can still deliver a high QoS with a channel of
100MHzthe ITU-R model. As a result, the finding all depends on current usage and shows the US,
South Korea, and J apan at the top with China as well due to its massive mobile subscriber base that has
yet to embrace mobile broadband.
Therefore, there is a good reason to believe that as each 3G market matures with increased mobile
broadband usage and requires a move to 4G, the need for more additional spectrum will eventually
materialize.
The question is: what happens when China, J apan, South Korea, and the US put their 1,000MHz to use?
Whats next?


15
Mobile Spectrum

And finally, some spectrum needs to be preserved for voice services
Exhibit 6 illustrates the spectrum that each country will need to keep voice services alive throughout
2017. This forecast is based on our discussions with the worlds largest mobile operators that led to the
consensus of keeping one carrier for voice and three carriers for data on 3G. We came to the conclusion
that at least 20MHz per operator will be needed for voice in each country except China, India, and
Indonesia that have the worlds largest population. Since there are on average three to five major mobile
operators per country, spectrum need for voice by 2017 ranges from 70MHz up to 245MHz in India.


16
Mobile Spectrum



17

Exhibit 6 Spectrum Forecast (Voice) by Country
0
50
100
150
200
250
300
CY11 CY12 CY13 CY14 CY15 CY16
S
p
e
c
t
r
u
m

(
M
H
z
)
CY17
Australia Brazil Canada China
France Germany India Indonesia
Italy J apan Mexico Russia
South Korea Spain UK US

Mobile Spectrum

THE WORLD SCRAMBLES TO FIND NEW SPECTRUM
Despite the wide variation between various spectrum forecasts, there is an undeniable need for more
spectrum to ensure a smooth migration of the worlds population to mobile broadband as well as more
and more connected devices. All countries have been looking at various ways of freeing up new
spectrum.
In the US, the FCC plans to add 300MHz of new spectrum
In October 2012, the US regulator, the FCC, said it was on track to add 300MHz of spectrum to the
mobile broadband pot by 2015, part of the latest step to deliver on the 2010 National Broadband Plan.
This sounds like a lot of additional bandwidth, but the CTIA, which represents the cellcos, says the
industry really needs 800MHz in 2015. However, Genachowski has supported several changes which the
operators have demanded, including holding an AWS auction by 2015.
This will see several blocks in this band opened up for mobile services, including a section between
1755MHz and 1780MHz, which would have to be shared with government agencies. T-Mobile is
particularly keen on that band, which adjoins its existing AWS spectrum, and has lobbied hard for the
government to support sharing in order to free up more frequencies more quickly.
Before that, the first sale is likely to be the AWS-2 H Block, whose proceeds would fund the long awaited
national public safety network. Sprint has had its eye on these frequencies to boost its already complex
LTE infrastructure.
These actions could reduce the spectrum available to Dish Network, which is petitioning to build an LTE-
Advanced system in its 40MHz of spectrum in the AWS band, confined in the past to mobile satellite. If
the FCC confirms the H Block auction, it will move Dish's spectrum up by 5MHz, which Dish argues will
make its task harder since it will be shifted into a frequency which does not align with current LTE
standards and mass market equipment. Dish chairman Charlie Ergen says it could take 1-2 years to get
that change through the 3GPP standards body, a further delay for his firm's plans to provide a new
competitor in the US market. Sprint argues that the changes would only take about six months.
In 4Q12, the FCC opened up 30MHz of AT&T spectrum
This was in the WCS band and, without giving a timescale, the FCC said the agency was "working with
stakeholders" on allowing LTE in the L-band mobile satellite band, where LightSquared sought to build a
4G networka plan that foundered on fears of interference with GPS services. LightSquared proposed a
new route of swapping spectrum with the government.


18
Mobile Spectrum

Europe is freeing up 1.2GHz of spectrum by 2015
Speaking at the Spectrum Management Conference in Brussels in J une 2012, the EU's Digital Agenda
commissioner, Neelie Kroes called for every citizen to have data speeds of at least 30M by 2020, a goal
which the release of new spectrum will boost. However, although the European Commission aims to
make at least 1,200MHz of spectrum available for mobile broadband by 2015, Kroes said many member
states are still far away from achieving the target, and a centralized approach to managing the digital
dividend spectrum could improve its impact on the European economy by 1B to 3B a year.
Kroes said the European Union would gain the maximum benefits from the spectrum being freed up by
transition to digital TV, if the region took a coordinated approach. That would boost economies of scale
for carriers, encouraging them to invest in networks which are regarded as important to boosting rural
broadband services in Europe. The centralized approach would also boost roaming and allow for
harmonized services and data rates. Kroes claims a central spectrum inventory would also boost
harmonization efforts, and simplify the process of freeing up new frequencies, or of reallocating unused or
underused blocks.
The UK is freeing up 500MHz by 2020
In December 2012, the UK government confirmed that it would proceed with the auction of Ministry of
Defence (MoD) spectrum, probably in the summer 2014, as part of its long term strategy to boost
broadband availability and capacity by opening up underused frequencies. The 2010 government
spending review recommended that 500MHz of public sector spectrum should be released by 2020 for
mobile communications, and the MoDwhich controls about 75% of these airwaveswill act on the
proposals first.
The spectrum on offer will be below 15GHz and much will be suited to mobile access or backhaul.
Chancellor George Osborne aimed to raise 3.5B from spectrum, to help reduce national debt. The first
test of whether his targets are realistic will come in the 1Q13 auction with the sale of 800MHz and 2.6GHz
4G licenses.
Asia Pacific is also doing its part . . .
Asia-Pacific has a largely coordinated and simpler structure for 700MHz, and European countrieswhere
the digital dividend is in 800MHzare 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.


19
Mobile Spectrum

. . . so is Latin America
Latin American regulators have been accused of slowness in getting LTE spectrum opened up, but a
string of them have announced plans for the 700MHz digital dividend band, and are taking a largely
harmonized approach in supporting the Asia-Pacific band plan, rather than the fragmented band plan in
the US.
This will greatly enhance roaming, interoperability and economies of scale for device makers in this key
LTE band. The latest country to make progress in 700MHz is Brazil, where communications minister
Paulo Bernardo expects an auction to take place about a year from now, although the frequencies will not
be vacated by analog TV broadcasters until at least J uly 2016. During the first week of February 2013,
Bernardo officially approved the use of the 700MHz band for mobile broadband services once analog
switch-off takes place. That enables regulator Anatel to go ahead and start deciding how to define and
auction the spectrum in 698MHz-806MHz, and how this process should fit with the Brazilian national
broadband plan (Plano Nacional de Banda Larga or PNBL). It is widely expected to follow Mexico and
other nearby countries in adopting the Asia-Pacific band plan.
Mexico's regulator, Cofetel, voted in September 2012 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 usersa potential 4B
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."
FOR NOW, ALL SHORT-TERM ALTERNATIVES ARE EVALUATED
Carriers are exploring all kinds of ways to harness even sub-optimal spectrum bands to add capacity to
their mobile broadband networks. One approach that is gaining credence is supplemental downlink, as
seen at AT&T, which is using unpaired 700MHz frequencies acquired from Qualcomm to add capacity to
its main paired 700MHz LTE airwaves. Now Orange France is testing the use of L-band mobile satellite
spectrum for the same purpose.


20
Mobile Spectrum

The French regulator, Arcep, has permitted the operator to test the technology in the city of Toulouse, in
collaboration with Ericsson and Qualcomm. The partners will evaluate the potential to use additional
frequencies to boost capacity of UMTS and LTE networks, in this case with L-band spectrum in the
1,4521,492MHz band. Supplemental downlink exploits the interband multicarrier technology now
standardized by the 3GPP. The trial will be carried out during the first quarter of 2013 and will harness
Ericsson base stations and devices running on Qualcomm chipsetsall of them using the supplementary
frequencies in the L-band for downlink operations, combined with a traditional paired carrier at 2.1GHz.
The rollout of the trial network will start toward the end of 2013
Of course, there is controversy about using the L-band for terrestrial services, as highlighted by the
LightSquared fiasco in the US. However, if there are no risks of interference with GPS or other nearby
services, the frequencies can be effective complements to more standard 3G and 4G networks
CEPT (European Conference of Postal and Telecommunications Administrations), the agency
responsible for the harmonized use of the L-band in Europe, has made positive noise about refarming
one DAB (digital audio broadcasting) spectrum for mobile broadband. Its eventual recommendations will
feed into a similar evaluation at global level, by the ITU-R, which will present its findings at the next World
Radio Conference (WRC) in 2015.
BOTTOM LINE
As Shannons law holds true, the need for spectrum is real. However, there is a good reason to believe
the amount of spectrum needed has been greatly exaggerated because whats currently allocated is half
of what the ITU-R and others predicted we would need by now, and no mobile network has crashed so
far. For example, the 490MHz currently allocated in the US, which may not be put totally to work, is
350MHz short of what the ITU-R predicted for 2010! Well were in 2013 and both AT&T Mobility and
Verizon Wireless continue to enjoy heavy mobile data usage and high mobile ARPU.
Meanwhile, countries with heavy mobile broadband usage such as the US, South Korea, and J apan are
on track to need 1,000MHz of spectrum by 2017, and the other countries will eventually reach that stage
later, depending on how each countrys respective mobile broadband market develops.
Lastly, although some traffic curves are looking like hockey sticks, there is no way a spectrum forecast
curve can follow the same pattern.


21
Mobile Spectrum

Analyst Contact

Stphane Tral
Principal Analyst, Mobile Infrastructure and Carrier Economics
408-583-3371
stephane@infonetics.com


22
Mobile Spectrum



23
REFERENCES
[1] Rep. ITU-R M.2072, World Mobile Telecommunication Market Forecast, ITU, J une 2006.
[2] Rep. ITU-R M.2074, Radio Aspects for the Terrestrial Component of IMT-2000 and Systems beyond
IMT-2000, ITU, J une 2006.
[3] Rec. ITU-R M.1768, Methodology for Calculation of Spectrum Requirements for the Future
Development of IMT-2000 and Systems beyond IMT-2000 from the Year 2010 Onwards, ITU, J une 2006.
[4] ITU-R 8F/TEMP/118r1, Questionnaire on the Services and Market for the Future Development of IMT-
2000 and Systems beyond IMT-2000, ITU, J une 2004.
[5] H. Takagi, H. Yoshino, N. Matoba, and M. Azuma, Methodology for Calculation of Spectrum
Requirements for the Next Generation Mobile Communication Systems, IEICE Trans. on
Communications, vol. J 89-B, no. 2, Feb. 2006, pp. 135-142
[6] Rep. ITU-R M.2078, Spectrum Requirements for the Future Development of IMT-2000 and Systems
beyond IMT-2000, ITU, J une 2006.

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