Mobile Broadband in the Americas
Thursday, March 18, 2010
Mobile Broadband in the Americas:
Momentum Building in the AWS Band
Report Prepared for the GSM Association
May 2009
Scott Fox Chairman & CEO
Jeffrey Walkenhorst Vice President – Research
Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 2 of 40
Acknowledgements
The many people and companies that contributed to this report are too numerous to mention or
highlight individually. However, we wish to specifically acknowledge the following companies
and individuals for their significant contributions to this research and report:
- BandRich
- Ericsson
- GSM Association
- KB Enterprises, LLC
- Mark McDiarmid – T-Mobile USA
- Marvel Semiconductor
- Neville Ray – T-Mobile USA
- Nokia Siemens Networks
- Qualcomm
- Research In Motion Ltd.
- Ricardo Tavares – GSM Association
- Sandra Gillian – GSM Association
- Sebastian Cabello – GSM
Association
- Sony Ericsson
- T-Mobile USA
San Diego, CA U.S.A.
www.GlobalViewPartners.com
Notice
The contents of this paper reflect the research, analysis and conclusions of Global View Partners, Inc and may not necessarily
represent the opinions and view points of the GSM Association. Global View Partners provides this document and the information
contained herein for informational purposes only. Although Global View Partners has exercised reasonable care in researching and
providing this information, Global View Partners does not warrant this information to be error-free. Global View Partners disclaims
and, in no event, shall be liable for any losses or damages of any kind, whether direct, indirect, incidental, consequential, or punitive
arising out of or in any way related to the use of this information.
Momentum Building in the AWS Band May 2009
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Table of Contents
Acknowledgements………………………………………………………….02
Table of Contents …………………………………………………………....03
I. Executive Summary…..……………………………………………………..04
II. AWS and the Economic and Social Benefits of Mobile:
A. Spectrum Policy and the Public Good ……………………………....05
B. Growing Spectrum Demand and Role of AWS Band ……………..08
III. AWS Overview and Importance…………………………………………...10
IV. AWS Licensing To-Date and Expectations for the Americas………..12
A. United States……………………………………………………………...12
B. Canada……………………………………………………………………..15
C. Latin America……………………………………………………………..17
V. Insights from Carriers and Vendors……………………………………...20
VI. Sample of Commercially Available Devices…………………………….23
VII. AWS Total Addressable Market Forecast…………………………….....24
VIII. Alternate Spectrum Bands and Issues That May Impact AWS
Band……………………………………………………………………...........28
IX. Conclusions…………………………………………………………………..30
Glossary…………………………………………………………………………….....31
Appendix……………………………………………………………………………....33 Momentum Building in the AWS Band May 2009
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I. Executive Summary
Due to dramatically increasing global demand, a number of new spectrum bands are being
licensed to add capacity and/or foster new services and competition in mobile markets. In the
Americas, the Advanced Wireless Services (AWS) band (90 MHz of spectrum in the 1.7-2.1
GHz range) has already added significant capacity and coverage to the US and Canadian
markets, with many Latin American countries also expected to license this spectrum soon.
However, some operators and regulators are concerned that devices to enable the full utilization
of this new band may come to market too slowly. This concern may affect operator business
plans as well as regulator willingness to license the AWS band in new markets. The primary
objective of this paper is to assess and present factually the commercial viability and service
launches of the GSM family of technologies (GSM, HSPA, LTE) in the AWS band in all relevant
markets in the world, with a special emphasis on the Americas.
Analysis of spectrum policy, industry traffic trends, AWS auctions to-date, and the total
addressable market across the Americas, as well as discussions with AWS industry participants
and regulators, point to a number of key findings:
Public policy that supports the AWS band also benefits economic growth.
Regulators understand that rapidly growing wireless traffic will require incremental
spectrum over time, and ample research now supports the positive correlation between
wireless penetration and economic growth. Since the sizable AWS band represents an
immediate opportunity throughout the Americas to allocate additional airwaves, licensing
remains a priority.
Prices paid for AWS spectrum in the United States and Canada reveals high
market demand. For the US AWS auction, net bids totaled $13.7 billion or $0.53 per
MHz-POP. In Canada, the AWS spectrum auctions produced net bids of $4.2 billion, or
$1.55 per MHz-POP, higher than prices realized from PCS auctions.
The AWS band is sufficiently similar to other frequency bands and HSPA gear is
ready today. Given close frequency proximity to the IMT-20001
core band (1920-1980
MHz paired with 2110-2170 MHz) and PCS bands (1800 MHz and 1900 MHz),
development and production of HSPA infrastructure equipment and handsets is not a
technical challenge. T-Mobile USA reports no problems with equipment procurement
and expects to cover more than 200 million POPs by year-end 2009, up from 107 million
POPs covered at year-end 2008.
Production cost curves are comfortable and improving. According to several
vendors, cost curves are not all that different from mainstream products today and are
not a deal breaker in terms of bringing AWS products to market. The component supply
chain appears ready and excited to support AWS hardware in scale.
Small addressable market is poised for rapid growth. With equipment readily
available and cost curves comparable to existing products, operators can drive AWS
market growth depending upon specific market share and deployment plans. So, while
1
International Mobile Telecommunications-2000 (IMT-2000) is the global standard for third-generation (3G) wireless
communications, defined by a set of interdependent ITU recommendations. Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 5 of 40
the initial market opportunity started small for potential suppliers, the addressable market
is quickly expanding. T-Mobile USA expects to rapidly drive device and subscriber
penetration over the next several years, with approximately one-half of the operator’s
subscriber base—or an estimated 20 million subscribers—expected to be on HSPA in
the AWS band in two years and more than 90% in five years.
Meaningful growth in AWS subscribers and device volumes is projected for the
Americas. The continued push of T-Mobile USA and additional licensing across the
Americas should bring total subscribers with AWS-enabled devices to an estimated
177.8 million at year-end 2013, a compound annual growth rate of 94% from an
estimated 12.4 million at year-end 2009. As the subscriber base grows, estimated
handset/device unit sales are also expected to increase rapidly, reaching an estimated
114.5 million in 2013, an annual compound growth rate of 80% from an estimated 10.9
million in 2009. Importantly, during this period, the licensed AWS population (POPs) is
projected to increase to an estimated 732 million from an estimated 328 million at year-
end 2008.
Operators’ desire accelerated licensing in Latin America. Current North American
license holders are very interested in additional AWS licensing to occur soon across the
Americas to further accelerate new device/handset introduction and enable
inbound/outbound roaming in the band. Several Latin American operators are also very
interested in accessing AWS spectrum to enable new mobile broadband services and
provide additional coverage and capacity.
Conclusions. In summary, regulators can be confident that infrastructure equipment
and devices are increasingly available for the AWS band and, therefore, support
accelerated licensing plans. Vendors can be confident that the addressable market
justifies further product development and that the associated costs are comparable to
other, similar bands such as PCS 1900 MHz and 2.1 GHz. Finally, operators can feel
secure that they can obtain licenses and develop their business plans.
II. AWS and the Economic and Social Benefits of Mobile
A. Spectrum Policy and the Public Good
Anecdotal evidence of the economic and social benefits of mobile telecommunications is
increasingly widespread and undeniable. Specific examples over the past decade include:
Sales forces both small and large gained a new ability to increase productivity by having
readily available communications on the go via cell phones.
Parents improved their ability to juggle family and work commitments, coordinating who
is in the best position to pick up kids from school.
Taxi drivers added new paid rides thanks to carrying cell phones, allowing customers to
contact them while they are on the road.
Fishermen increased their income by knowing ahead of time in which port they can get a
better price for their product.
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Farmers maximized their profits by following real-time price changes for their crops.
In developing countries, many users made their first phone call on a mobile phone,
which now is approaching 100% penetration in several emerging markets.
Quantifying the benefits. Despite compelling evidence through the years, economic and
social benefits have been hard to quantify and largely missing from economic and
telecommunications policy. In recent years, however, academic scholars and industry analysts
have built a body of research that quantifies the benefits.
2
Professor Waverman (2005) of the London Business School concluded that each
additional 10% in mobile penetration increases Gross Domestic Product (GDP) by an
average of 0.59% per year.
McKinsey (2006) performed field work in China, measuring increases in productivity and
improvements in social life thanks to the mobile phone, concluding that mobile
telecommunications had an impact in 2005 that was equivalent to 4.9% of China’s total
GDP. In the Philippines, McKinsey concluded that improvements in mobile penetration
drove the mobile industry’s share of total GDP to 7.5% in 2005 alone.
Deloitte (2008) expanded the analysis of indirect impacts of mobile industry growth to
estimate that a 10% increase in mobile penetration can lead to a 1.2% increase in long-
term growth per annum. Also, Deloitte estimated that the mobile industry contributed
between 3.7% and 6.2% of GDP in 2007 in a six-country study of Serbia, Ukraine,
Malaysia, Thailand, Bangladesh and Pakistan.
The surprisingly high numbers—sometimes two to four times above the usual estimates of
mobile representing approximately 2.5% of a country’s total GDP—are a result of modeling not
only direct effects of mobile telecommunications (network build out and service provision), but
also indirect effects, such as foreign direct investment, productivity increases, and human
capital formation. The indirect effects promote economic activity across sectors because of
more reliable communications infrastructure and connectivity, thereby enabling increased
knowledge, skills, and economic growth. Thus, evidence now implies that a higher mobile
penetration most likely drives maximum economic and social benefits that accelerate GDP
growth.
Rational conclusion: minimize costs to expand mobile penetration. Based on the
evidence, operators and regulators are highly incentivized to lower the minimum cost of
ownership (MCO)—the upfront and ongoing minimum payments that consumers must make to
stay connected—in order to expand mobile penetration. Figure 1 illustrates the positive
relationship between mobile penetration and GDP per capita for selected countries around the
world.
2
See Ovum, ―The economic contribution of mobile services in the European Union before its 2004 expansion,‖ December 2004;
Leonard Waverman, ―The Impact of Telecoms on Economic Growth in Developing Countries,‖ Vodafone Policy Paper Series, no. 2,
March 2005; Ovum, ―The economic benefits of mobile services in India,‖ January 2005; Ovum, ―The Economics and Social Benefits
of Mobile in Bangladesh,‖ April 2006; McKinsey & Co., ―Wireless Unbound—The Surprising Economic Value and Untapped
Potential of the Mobile Phone,‖ September 2006; Deloitte, ―Economic Impact of Mobile Communications in Serbia, Ukraine,
Malaysia, Thailand, Bangladesh and Pakistan,‖ January 2008; LECG, ―3G mobile networks in emerging markets‖ The importance of
timely investment and adoption,‖ January 2009; McKinsey & Co., ―Mobile broadband for the masses: Regulatory levers to make it
happen,‖ February 2009. Momentum Building in the AWS Band May 2009
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Figure 1 - World Mobile Penetration & GDP per Capita in USD
Argentina
Chile
Brazil
Colombia
Peru Mexico
South Africa
Algeria
Egypt
United States
Canada
Germany
Italy
United Kingdom
France
China
India
Indonesia
Japan
Australia
Thailand
Russia
Poland
Czech Republic
Venezuela
Israel
New Zealand
Saudi Arabia
Greece
Oman
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000
GDP p/c (PPP, 2008 est.)
Mobile Penetration (Q408)
Bubble size: Mobile subscribers as of Q4 2008
Sources: Wireless Intelligence, IMF and World Bank.
Focus now shifting to mobile data/broadband. The initial analyses of the economic and
social impact of mobile were primarily focused on GSM networks that provided voice and SMS.
As the GSM family of standards moved into GPRS, EDGE, and—more importantly –to HSPA,
HSPA+, and LTE the debate has shifted greatly to mobile’s role as a supplier of broadband via
mobile broadband. A forecast by Ovum and Ericsson in 2007 found that by 2012 the world will
have 2 billion broadband connections, 65% of which will be mobile broadband.
Mobile broadband critical to growth in developed and emerging markets. In developed
countries, broadband had a major impact in increasing economic productivity and driving
economic growth. More recently, mobile broadband contributed to driving new applications and
content. In emerging markets, the impact is even more pronounced, as limited existing copper
infrastructure and low penetration of cable TV leave mobile broadband as the only feasible
option to cost-effectively increase broadband penetration.
Potential benefits for emerging markets. McKinsey (2009) concluded that bringing
broadband penetration levels in emerging markets to today’s Western European levels (54%)
could potentially add $300 billion to $400 billion in global GDP and generate 10 million to14
million new jobs across emerging economies. The study also concludes that only mobile
broadband can achieve this goal. Today, broadband penetration in most developing countries
is below 5%.
Economic conditions should spur further action. In the face of significant global economic
challenges in 2009, mobile industry leaders believe increasing the availability of spectrum is the Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 8 of 40
single most important contribution that governments can make to help drive economic recovery.
In a letter to the G-20 meeting in London last April, they wrote:
“We ask the G20 leaders to consider the vital contribution that mobile technology can make to
global economic recovery and recognize the importance of these key enabling actions by
government. The mobile industry stands ready to support the efforts of governments to stimulate
sustainable economic recovery, through its unique ability to invest in long-term productivity
enhancing technology that is also a powerful catalyst for entrepreneurial initiative, social capital,
low carbon development, and digital inclusion.
3
‖
B. Growing Spectrum Demand and Role of AWS Band
The high economic and social benefits of mobile broadband can only be realized when
adequate radio spectrum is available, making the issue of spectrum licensing increasingly
paramount. A broad range of new services, such as Internet access via mobile broadband,
Web browsing on mobile phones, social networking, video calling, and a steady flow of new
applications are dramatically increasing network data traffic and, therefore, spectrum usage. As
a finite resource, spectrum—how much and in which bands—is the single most critical input to
the economic viability of mobile broadband.
Sizing additional spectrum needs. Based on current trends, the International
Telecommunications Union (ITU) predicted that in the next 12 years the mobile industry will
utilize three times more spectrum than in the last 20 years. A key challenge will be recovering
additional spectrum to license, which is scarce. ITU scenario results are included in Figure 2.
Figure 2 – Future Spectrum Needs
Demand Scenario
Total Spectrum Requirement (MHz)
2010 2015 2020 2025
High Demand Setting – ITU(1)
840 1300 1720 N/A
Low Demand Setting – ITU(1)
760 1300 1280(3)
N/A
High Urban Demand – U.K.
(2)
430 1270 1200(3)
1310
Low Urban Demand – U.K.
(2)
200 210 520 550
Source: Arthur D. Little, ―Mobile Broadband, Competition and Spectrum Caps‖ ADL 2009, January 2009.
Notes: 1. ITU-R Report M.2078 (2006); 2. Analysis Mason, ―Spectrum demand for non-government services 2005–2025,‖ report to
the U.K. Independent Audit of Spectrum Holdings, http://www.spectrumaudit.org.uk - total capacity for mobile use in 900 MHz, 1800
MHz, 1.9/2.1GHz and 2.6 GHz bands in the United Kingdom is assumed to be 540 MHz; 3. Decrease due to deployment of more
efficient systems beyond current and near-term IMT-2000 systems.
Optimal network provisioning. Mobile operators will require additional spectrum in order to
increase economic efficiency in provisioning broadband via mobile. Advanced wireless
networks utilizing HSPA, HSPA+ and LTE will allow for increases of data transmission speeds
in the range of 1 to 50 Mb/s with theoretical peak rates of 172 Mb/s. While the economics of
providing mobile broadband are still evolving—the cost per capacity is higher than for voice and
SMS—certain technologies such as LTE operate more efficiently with channels of 2x20 MHz,
leading to skyrocketing demand for spectrum.
4
3
Mobile industry leaders’ letter to the G-20 meeting in London, April 2009.
4
See McKinsey 2009. Momentum Building in the AWS Band May 2009
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Current licensed spectrum around world and AWS. Providing additional capacity for
broadband was one of the key motives behind the licensing of the AWS band in the United
States and Canada. This is equally important for Latin American countries that also use the
PCS 1900 MHz band. In Latin America, the spectrum currently licensed for mobile services is
well below US and European market levels.
5
Figure 3 – Currently Licensed Spectrum for Mobile Services in Selected Countries
589
358
400
360
100
250
140
593
265
170
200
170
120 120
0
100
200
300
400
500
600
Norway
Spain
U.K.
France
India
Indonesia
Pakistan
U.S.
Canada
Argentina
Brazil
Chile
Colombia
Mexico
Total Licensed Spectrum, MHz
Source: GSMA based on Arthur D. Little (2009), Plum, KB Enterprises LLC.
Notes: * India’s value is the average per circle 2G. Pakistan’s value is only for 2G services.
Recent 3G licensing and AWS plans in Latin America. In Asia, China and Vietnam licensed
3G in early 2009 to accelerate economic growth and overcome the recessionary trends in their
domestic markets. In Latin America, Chile launched a ―beauty contest‖ on April 16, 2009 to be
completed by August 2009, while Argentina and Mexico are considering licensing the AWS
band as an important measure to accelerate mobile broadband. In the next five years, most
South and Central American countries are expected to make the AWS band available.
AWS licensing should positively impact many constituents. As a core 3G band in the
Americas, the AWS 1.7-2.1 GHz band is crucial for mobile broadband. For mobile carriers, it
will enhance the launch of new services that utilize USB dongles and new mobile broadband
handsets and applications. For infrastructure vendors, it represents a unique opportunity to put
the Americas on par with developed Asia and Europe in terms of 3G expansion and reach. For
handset and device makers, the AWS band brings new opportunities in markets with pent-up
demand for broadband services. For society in general, the band will unleash a critical new
range of spectrum that will enhance mobile broadband’s ability to benefit consumers and
increase economic productivity.
5
See Arthur D. Little (2009), p. 20. Momentum Building in the AWS Band May 2009
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III. AWS Overview and Importance
In 2002, the United States allocated 90 MHz of spectrum for AWS at 1710-1755 MHz
(transmit/uplink) and 2110-2155 MHz (receive/downlink), referred to as the AWS-1 band. The
uplink AWS-1 spectrum was reclaimed from the Department of Defense and auctioned to
qualified bidders in 2006 with incumbent relocation costs paid for by auction revenues. Canada
followed the United States and conducted a spectrum auction in 2008 that included 90 MHz of
AWS spectrum, 10 MHz of expansion PCS licenses and one block of 5 MHz at 1670-1676 in the
AWS auction. There are two (2) different Band plans designated for AWS. Band 10 has an
extra 15 MHz in the uplink and downlink compared to Band 4 allocations.
- FDD reference frequencies for Operating Band 4: UL 1712.6 MHz - 1752.4 MHz DL
2112.6 MHz - 2152.4 MHz Paired bands are of interest in region 2 and Japan. (This is
being used by T-Mobile in USA.)
- FDD reference frequencies for Operating Band 10: UL 1712.6 MHz - 1767.4 MHz DL
2112.6 MHz - 2167.4 MHz
Frequency location relative to other bands. The AWS downlink channel is largely consistent
with that of the IMT-2000 core band (2110-2170 MHz), while the uplink channel falls
approximately 100-250 MHz below both the IMT-2000 (1920-1980 MHz) and PCS transmit
channels. The downlink band aligns well with the global downlink but is smaller. The uplink
band in the US, though, is less than what CITEL agreed to (1710-1770 MHz). Operators and
vendors alike indicate that the propagation characteristics of the AWS band are sufficiently
similar to the 3G core, 1800 MHz and 1900 MHz bands and, therefore, facilitate availability of
network equipment and devices. Figure 4 below illustrates the AWS bands relative to IMT-2000
and PCS bands.
Figure 4 - Band Plans: IMT-2000, AWS (US & Canada), PCS (US)
Source: ITU, FCC, Industry Canada.
AWS represents a large portion of total mobile wireless airwaves. For the United States
and Canada, the additional 90 MHz of AWS spectrum for commercial mobile wireless services Momentum Building in the AWS Band May 2009
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represents an estimated 15% and 34%, respectively, of total licensed spectrum through 2008.
6
For other countries in the Americas, the percentage may range from 30% to 40%. Figure 5
below shows expected AWS spectrum as a percentage of total licensed mobile spectrum across
the Americas.
Figure 5 – AWS Spectrum as % of Total Mobile Spectrum*
2009E 2010E 2011E 2012E 2013E
United States 15% 18% 18% 21% 21%
Canada 34% 34% 34% 34% 34%
Mexico 0% 37% 37% 37% 37%
Argentina 35% 35% 35% 35% 35%
Chile 35% 35% 35% 35% 35%
Colombia 0% 43% 43% 43% 43%
Peru 0% 0% 41% 41% 41%
Venezuela 0% 0% 47% 47% 47%
Source: GVP estimates; Ricardo Raineri, ―Análisis del Mercado de Telefonía Móvil e Incentivo de Operadores Preexistentes ante
elConcurso de la Banda 3G en Chile,‖ 2008, http://www.tdlc.cl/DocumentosMultiples/Informe_Ricardo_Raineri_Nextel.pdf.
* United States assumes issuance of additional AWS spectrum in 2010 and 2012; all other countries assume total licensed
spectrum as of 2008 held constant through forecast period.
AWS meets pent-up demand. The AWS spectrum auction in the United States was especially
significant because it marked the first auction of a large block of mobile spectrum with
nationwide coverage to be auctioned since the PCS auctions in the early 1990s.
7
The
opportunity for operators to obtain wide bands of spectrum, along with growing capacity needs
and uncertainty over potential 700 MHz band auctions (known as the ―digital dividend‖), created
large, pent-up demand for additional wireless spectrum. Accordingly, there were over 250
auction applicants, 168 of which became qualified bidders.
Auction proceeds to-date. For the US AWS auction, gross bids totaled $13.9 billion while net
bids amounted to $13.7 billion or $0.53 per MHz-POP (net of bidding credits offered to small
businesses). As shown in Figure 6 below, the proceeds were lower than the $20.3 billion raised
from the PCS auctions, yet still represent a very significant outlay.
Figure 6 - US AWS and PCS Auction Prices
Auction Date Spectrum Revenue
Price/
MHz-POP
PCS A and B Block 1994 40 MHz $7,721,103,797 $0.76
PCS C Block 1995 30 MHz $10,071,708,841 $1.33
PCS D, E and F Blocks 1996 30 MHz $2,517,439,565 $0.33
AWS Auction 2006 90 MHz $13,700,267,150 $0.53
Source: FCC, KB Enterprises LLC.
6
Includes 700 MHz and 2.5 GHz spectrum for United States.
7
The PCS auctions in the United States were held in the early 1990s and the Wireless Communications Services auction (30 MHz
in the 2300 MHz band) was held in 1997 with few auctions of mobile spectrum over 5 MHz covering the entire United States after
that until the AWS auction. A list of all FCC spectrum auctions can be found at:
http://wireless.fcc.gov/auctions/default.htm?job=auctions_all. Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 12 of 40
In Canada, the AWS spectrum auctions of 90 MHz produced net bids of $4.2 billion, or $1.55
per MHz-POP, higher than price per MHz-POP amounts realized from combined PCS auctions
of 50 MHz. [Figure 7]
Figure 7 - Canadian AWS and PCS Auction Prices
Auction Date Spectrum Revenue
Price/
MHz-Pop
PCS 2001 40 MHz $1,481,920,000 $1.23
AWS 2008 90 MHz $4,177,503,000 $1.55
PCS Expansion 2008 10 MHz $74,681,077 $0.13
Source: Industry Canada, KB Enterprises LLC.
In Latin America, while no AWS spectrum has been licensed as yet, Chile recently moved
forward with a beauty contest and Argentina is expected to hold an auction this year, with
Mexico and other countries following in 2010.
IV. AWS Licensing To-Date and Expectations for the Americas
A. United States
AWS market participants. The AWS auction in 2006 garnered wide interest and participation
from incumbent operators as well as new entrants into the wireless market. Of the incumbents,
T-Mobile USA was the most aggressive given the operator’s desire to establish a nationwide
footprint suitable for 3G services. On the new entrant side, SpectrumCo–a consortium of cable
operators including Comcast, Time Warner, Cox, and Advance Newhouse, and satellite
operator, EchoStar—made a large push with the goal of offering new wireless services to their
existing customer bases. It was reported that SpectrumCo hoped that other potential new
entrants, including technology companies such as Google, eBay, and Skype, would wait for the
700 MHz auction and not compete for the AWS spectrum. All bidders were encouraged by T-
Mobile’s participation and believed that the operator would be a leader in the relocation of
incumbent private and public licensees in the band. Bidders further believed that T-Mobile’s
global breadth would lead the way in encouraging chip and handset manufacturers to deliver
compatible equipment for the band.
AWS license terms and conditions. Relative to prior licenses, the FCC structured AWS
licenses with a longer term and relaxed ―substantial service‖ requirements to give licensees
more time to build out service in a spectrum band where equipment did not yet exist. In addition
to the prediction of slow availability of type-accepted equipment for the AWS band, some
relocation of government and private incumbent licensees also needed to occur. As a result,
the term length was set at 15 years—compared to ten years for all other commercial radio
licenses previously issued—and the FCC implemented vague ―substantial service‖ requirements
that allowed bidders to hold spectrum until equipment was manufactured and incumbents were
relocated. Notably, the FCC did not specify exact coverage benchmarks for building and
deploying the AWS service.
8
Rather, substantial coverage was defined as service that is ―sound,
8
Found in section 27.14(a) of the FCC’s rules, substantial service is vaguely defined as ―service which is sound, favorable, and
substantially above a level of mediocre service which just might minimally warrant renewal.‖ 47 C.F.R. § 27.14(a). Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 13 of 40
favorable, and substantially above a level of mediocre service….‖
9
Finally, no spectrum was
set-aside for any designated entities (i.e., new entrants), but small businesses (based on
average annual revenues over the previous three years) were given bidding credits that reduced
the bidder’s final amount due.
Auction mechanics. The auction was conducted as a single simultaneous multiple round
auction that included 1,122 licenses. The FCC imposed an aggregate reserve price of $2.06
billion in order to ensure the recovery of the estimated relocation costs for government licensees
at 1710 – 1755 MHz10
.
Bidding and winners. The auction commenced August 9, 2006 and ended September 18,
2006, with 161 rounds conducted over 28 bidding days. There were 168 qualified bidders in the
auction and 104 different bidders won 1,087 licenses. The gross bids totaled $13,879,110,200
(bids net of the bidding credits offered to small businesses totaled $13,700,267,150). As shown
in Figure 8, T-Mobile USA, Verizon Wireless, SpectrumCo LLC, MetroPCS, Leap Wireless, and
Denali Spectrum were the large winners.
Figure 8 - United States AWS Auction Winners
Top Ten License Winners Winning Bids
Price/
MHz-pop
Licenses
Population*
T-Mobile License LLC $4,182,312,000.00 $.63 120 474,718,308
Cellco Partnership d/b/a Verizon Wireless $2,808,599,000.00 $.73 13 192,047,611
SpectrumCo LLC $2,377,609,000.00 $.45 137 267,387,437
MetroPCS AWS, LLC $1,391,410,000.00 $.97 8 144,544,402
AT&T (Cingular AWS, LLC) $1,334,610,000.00 $.55 48 198,768,198
Leap (Cricket Licensee) $710,214,000.00 $.44 99 117,802,839
Denali Spectrum License, LLC $365,445,000.00 $.63 1 58,178,304
Barat Wireless, L.P. $169,520,000.00 $.33 17 41,601,174
AWS Wireless Inc. $115,503,000.00 $.12 154 60,498,394
Atlantic Wireless, L.P. $100,392,000.00 $.27 15 35,803,110
Source: FCC, KB Enterprises LLC.
Note: * Represents the sum of the population covered by each license won by the bidder and may include overlap as
multiple blocks cover the same population.
AWS license transfers. Since the AWS spectrum auction, a number of licenses have
transferred ownership. Recent AWS spectrum trades are notable because they signal a viable
secondary market for license assets and also move spectrum to operators with definitive near-
term build-out plans. Figure 9 below summarizes the major changes in ownership of AWS
licenses.
9
For a discussion of the details of substantial service as compared to specific population coverage benchmarks in build-out
requirements, see Jennifer Prime, ―Finding Substance in the FCC’s Policy of ―Substantial Service‖ Federal Communications Law
Journal Vol. 56 No. 2, 2004.
10
If the price of all 1,122 licenses did not meet the aggregate reserve price, the results of the auction would be nullified. Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 14 of 40
Figure 9 - US AWS Major Spectrum Trades
Winning Bidder Assignee Number of Licenses Type of Transfer
SpectrumCo Cox Communications
15
15
Full Transfer
Market Partition11
NextWave T-Mobile 57 Full Transfer
NextWave Flat Wireless 5 Full Transfer
NextWave MetroPCS 9 Full Transfer
Daredevil Flat Wireless 2 Full Transfer
Source: KB Enterprises LLC.
Network launches to-date. Of AWS license winners, T-Mobile, Leap Wireless, and MetroPCS
have been most aggressive deploying networks in the AWS band. Large incumbents such as
Verizon Wireless and AT&T seem to be taking more time, possibly saving the spectrum for
future capacity needs or LTE. While Leap Wireless and MetroPCS are CDMA operators, their
success in rapidly rolling out new markets and adding new customers reveals the viability of the
AWS band and points to potential future deployments of LTE in the AWS band.
T-Mobile USA. T-Mobile is the fourth-largest US wireless carrier covering more than
268 million POPs and serving nearly 33 million subscribers as of year-end 2008. The
operator aggressively deployed 3G UMTS/HSPA network coverage in the AWS band
during 2008 to cover 27 markets and 107 million POPs at year-end. The operator
launched its first HSPA handset in September 2008 and, according to Wireless
Intelligence, had approximately 1.8 million HSPA subscribers at the end of 1Q09. T-
Mobile plans to cover more than 200 million POPs by year-end 2009 and is quickly
introducing new 3G devices. In March 2009, the operator announced the availability of
the ―T-Mobile webConnect USB Laptop Stick‖ from Huawei Technologies Co., which
supports HSPA and WiFi (802.11 b/g) network access.
MetroPCS. MetroPCS is a large regional CDMA carrier covering 64 million POPs and
serving 5.4 million subscribers as of year-end 2008. The operator pursues a strategy of
offering flat-rate unlimited wireless service plans and is using AWS spectrum for capacity
and footprint expansion in certain markets. Including AWS spectrum, MetroPCS plans
to launch services in several major metropolitan markets in 2009 and 2010, bringing
coverage to an additional 40 million POPs.
Leap Wireless. Leap Wireless is a large regional CDMA carrier covering 67 million
POPs and serving 3.8 million subscribers as of year-end 2008. Like MetroPCS, Leap
offers flat-rate unlimited wireless service plans. In addition, Leap offers an unlimited
mobile broadband service using CDMA technology across all POPs. Leap and its
spectrum partner, Denali Spectrum, collaborated in the AWS auctions to spend
approximately $1 billion and announced that the new licenses will enable the carrier to
bring covered POPs to 182 million. During 2008, Leap launched AWS networks
covering 11 million POPs and is targeting an additional 25 million POPs in 2009,
11
The FCC allows licensees to partition or disaggregate licenses, thereby breaking them into smaller areas either geographically or
in terms of radio frequencies. In this case, SpectrumCo fully assigned 15 licenses and assigned a portion of the geographic area in
15 other markets. Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 15 of 40
bringing total covered POPs to more than 90 million. For AWS markets, Leap expects to
launch a ―broader product family‖ this year, including voice/data, broadband, and pre-
paid services.
Stelera Wireless. Stelera Wireless is a new entrant that acquired 42 AWS licenses and
currently deploys high-speed broadband services in rural areas covering almost 6 million
POPs. Stelera began offering services in February 2008 under a flat, all-IP Internet High
Speed Packet Access (I-HSPA) architecture solution provided by Nokia Siemens
Networks.
Cox Communications. Cox Communications is a multi-service broadband
communications and entertainment company with more than 6 million total residential
and commercial customers. To offer the ―quadruple play‖ of cable, Internet, voice and
wireless services, Cox is planning to build and launch a wireless network this year
across the company’s cable markets using CDMA technology.
B. Canada
Market participants. Three major nationwide telecommunications carriers—Rogers, Bell and
TELUS—hold the entire cellular and PCS license allocation in Canada. The following chart
(Figure 10) summarizes the spectrum holdings of each carrier in each of the Canadian regions
prior to the recent Canadian AWS spectrum auction. As in the United States, pent-up demand
for additional spectrum and an uncertain timetable for digital dividend spectrum availability (in
the 700 MHz band) created a situation in which incumbents desired spectrum in the AWS band.
Figure 10 - Canadian Spectrum Holdings in Cellular, PCS and ESMR services
Market Population Rogers MHz Bell MHz TELUS MHz
Toronto 4,883,800 75 55 50
Montreal 3,507,400 85 45 50
Vancouver 2,076,100 85 40 55
Ottawa-Gatineau 1,102,900 85 45 50
Calgary 976,800 85 40 55
Edmonton 961,500 85 40 55
Source: Lamay-Yates Associates, Inc. Canadian and US Mobile Spectrum Holdings Prepared for Mobilexchange Ltd.
May 25, 2007; KB Enterprises LLC.
AWS license terms and conditions. Canada’s regulatory body, Industry Canada, closely
followed the United States in implementing its AWS band plan and auction rules. However,
unlike the United States, Industry Canada implemented a set-aside in the AWS spectrum band
for new entrants, specific roaming requirements, and a 10-year license term.
Set-aside for new entrants. For new entrants, 40 of the 90 MHz available in the AWS
band were set aside in frequency blocks B, C, and D. To be eligible for the set-aside, a Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 16 of 40
new entrant was defined as an entity, including affiliates and associated entities, which
hold less than 10 percent of the national wireless market based on revenue.
12
Automatic roaming. In order to facilitate the entry of new companies into the market,
Industry Canada also required licensees to offer automatic digital roaming on their
networks in conjunction with the AWS spectrum auction. Roaming arrangements were
required to be offered wherever technically feasible, negotiated expeditiously and in
good faith. Negotiations between carriers were to be time-limited, and if the parties were
unable to come to an agreement within the established time frame, they were required to
undertake binding arbitration.
13
10-year term. Canada implemented a 10-year initial license term and employed a
population-based build-out requirement at a five-year roll-out target.
Auction mechanics. After the US success in the PCS spectrum auctions, Canada developed
a similar auction system that employed simultaneous multiple round auction rules to allow
bidders to aggregate spectrum across spectrum blocks and geographic areas. On May 27,
2008, Industry Canada conducted a spectrum auction that included 90 MHz AWS spectrum, 10
MHz of expansion PCS licenses and one block of 5 MHz at 1670-1676 in the AWS auction.
Bidding and winners. The policy choices by the government, along with the demand for
spectrum bandwidth, paved the way for a robust competitive auction. The set-aside and
roaming requirements reduced the risk for new entrants to enter the auction and significantly
increased the spectrum auction competition for the incumbent carriers in the open eligibility
blocks. In addition, the set-aside blocks created greater opportunity for at least one additional
national wireless carrier. The resulting auction prices are included in Figure 11 below.
Figure 11 - The Winners of the 2008 Canadian Spectrum Auction (in US Dollars)
Top Ten License Winners Winning Bids
Price/
MHz-pop Licenses
Population*
Rogers $999,367,000 $1.67 59 30,007,094
TELUS $879,889,000 $1.82 59 30,007,094
Bell Mobility Inc. $740,928,000 $1.75 54 27,245,106
Québecor Inc $554,549,000 $1.46 17 14,687,045
Globalive Wireless $442,099,000 $1.24 30 23,265,134
Data & Audio-Visual $243,159,000 $1.39 10 16,121,864
Shaw Communications $189,519,000 $1.01 18 9,351,375
SaskTel $65,690,000 $1.35 3 975,717
6934579 Canada Inc. $52,385,077 $0.15 4 17,675,254
MTS/Allstream $40,773,750 $0.61 3 1,118,283
Source: Industry Canada, KB Enterprises LLC.
Notes: Represents the sum of the population covered by each license won by the bidder and may include overlap as
multiple blocks cover the same population.
12
http://www.ic.gc.ca/eic/site/smt-gst.nsf/eng/sf08833.html#fig1 Policy Framework for the Auction for Spectrum Licenses for
Advanced Wireless Services and other Spectrum in the 2 GHz Range. November 2007.
13
Id. Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 17 of 40
Network launches by new entrants expected by year-end 2009. Conversations with industry
participants imply that new entrants may launch selected markets towards the end of 2009.
Incumbent players appear to be taking a slower approach toward utilizing the band. Wireless
Intelligence estimates that there were 584,765 HSPA subscribers in Canada at the end of 1Q09,
all belonging to Rogers Wireless and in legacy spectrum bands.
C. Latin America
Many Latin American countries implemented US PCS 1900 services and structured their
national band plans attributing the 1.7-2.1GHz band for IMT-2000 services, following ITU and
CITEL (Inter-American Commission on Telecommunications) recommendations for Region 2.
Although many countries could allocate 2x60 MHz (1710-1770 / 2110-2170MHz) for mobile
services and reserve 2x15 MHz for future expansions (e.g., 1755 -1770 MHz paired with 2155 -
2170 MHz), regulators tend to follow the US licensing program structure to create some level of
geographic spectrum consistency. As a result, most plans call for the initial allocation of 90
MHz (2x45 MHz) and leave 25 MHz in the 2155-2180 MHz frequency band (known as AWS-3)
for some time in the future.
To-date, based on Wireless Intelligence estimates, Latin America has more than 2 million 3G
HSPA subscribers in frequency originally licensed for 2G use, totaling 41 HSPA networks in
services in the region. Flexible licensing regimes in most of the countries allowed the ―re-
farming‖ of 2G frequencies within an existing license for 3G deployment. Only a few countries,
such as Brazil and Uruguay, are following the 1.9-2.1 GHz IMT-2000 core band specifically for
3G services. All other countries in ITU Region 2 are expected to follow the United States in
allocating 1.7-2.1 GHz band for 3G services.
Chile. The country telecom regulator, Subsecretaria de Telecomunicaciones (SubTel),
launched a beauty contest for licensing the AWS (1.7-2.1 GHz) band spectrum. Three blocks of
30 MHz (2x15 MHz) nationwide spectrum (for a total of 90 MHz) will be offered exclusively for
new entrants. The process officially started as of April 16, 2009 and is predicted to end in
August 2009. In January 2009, a Supreme Court decision maintained a 60 MHz spectrum cap
per operator for this particular AWS licensing, thereby excluding incumbents from participating
in the new licensing program. The decision concluded a long controversy between incumbent
mobile network operators and SubTel over the AWS band.
At least one new operator may begin offering services based in the AWS band by spring 2010.
Fixed broadband penetration stands at 9% and growth is decelerating, placing increased
importance on wireless broadband services to sustain increases in broadband penetration.
Next-generation services launched to-date by three incumbent operators—Movistar, Entel PCS
and Claro, using 850 MHz and 1900 MHz—have produced approximately 400,000 3G HSPA
connections as of March 31, 2009.
SubTel is also planning to allocate frequencies in the 2.5-2.69 GHz and 700 MHz bands in the
near future, as both bands are seemingly cleared and ready to be licensed. The exact timing
awaits clarity on international harmonization options and technology and equipment availability.
However, addressing the spectrum cap issue remains critical to allow incumbent mobile
operators access to these spectrum bands.
Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 18 of 40
Mexico. The AWS licensing process in Mexico, together with other frequencies to be allocated,
started approximately two years ago and is moving forward sporadically. The policy maker,
Secretaria de Comunicaciones y Transporte (SCT), and the regulator, Comision Federal de
Telecomunicaciones (CoFeTel), are still trying to agree on the general basis for the bidding of
250 MHz in five bands (1.9 GHz, 1.7-2.1 GHz, 3.4-3.7 GHz, 71-81 GHz, and 410-430 MHz).
According to a March 2008 joint statement made by both SCT and CoFeTel
14
, they plan to
auction a total of 90 MHz (2x45 MHz) for AWS services in Mexico’s nine cellular regions.
Recent news reports indicate plans to reserve a block for one or more new entrants. Finally, a
spectrum cap of 65 MHz currently applies to mobile network operators (MNOs) in Mexico, which
could potentially prevent incumbent operators such as Telcel (America Movil) and Movistar
(Telefonica) from applying for new spectrum. This is one of the key issues requiring resolution
prior to proceeding with licensing.
Figure 12 - Mexican Band Plan Defined on March 2008
Block Frequency Paired MHz Paired Total MHz
A 1710-1720 MHz 2110-2120 MHz 2x10 MHz 20 MHz
B1 1720-1725 MHz 2120-2125 MHz 2x5 MHz 10 MHz
B2 1725-1730 MHz 2125-2130 MHz 2x5 MHz 10 MHz
C 1730-1735 MHz 2130-2135 MHz 2x5 MHz 10 MHz
D 1735-1740 MHz 2135-2140 MHz 2x5 MHz 10 MHz
E 1740-1745 MHz 2140-2145 MHz 2x5 MHz 10 MHz
F 1745-1755 MHz 2145-2155 MHz 2x10 MHz 20 MHz
Source: SCT, CoFeTel.
The licensing process could reasonably be expected to happen towards the end of 2009 or
beginning of 2010 given operator needs for additional spectrum. Existing operators are
increasingly seeking to compete by offering 3G in some regions within current spectrum
assignments. The government is aware of the importance of allocating new spectrum as soon
as possible to facilitate broadband penetration and economic growth. President Calderon’s
government objective, as set out in the National Program of Infrastructure 2007-2012, aims to
achieve 22% broadband penetration by 2012, compared to current fixed broadband penetration
of around 6%. Wireless broadband appears integral to achieving the 2012 target.
Argentina. The telecom regulator SeCom (Secretaría de Comunicaciones), which is part of the
Ministry of Infrastructure and Federal Planning, is planning to launch a 3G auction in the 1.7-2.1
GHz band in July 2009. In September 2008, SeCom and its counterpart telecom control entity,
the Comision Nacional de Comunicaciones (CNC), set up a technical working group to address
future spectrum licensing processes that began launching a TDD auction in the 3.5 GHz band
by the end of 2008. This group also has the mandate to further allocate vacant chunks of
spectrum in 850 MHz and 1900 MHz and is evaluating the potential allocation of the 700 MHz
band, which could become available after the digitalization of television15
.
SeCom seems to have everything ready to auction the AWS (1.7-2.1 GHz) band this year and is
hoping to attract a new entrant. Since 1998, a combined 50 MHz spectrum cap per operator in
14
SCT document ―Nuevo Programa de Licitacion de Frecuencias‖ March 31st, 2008.
15
The decision of a digital terrestrial TV standard has been consistently postponed by Argentine authorities.
However, unofficially it seems the country has already chosen the ISDV-T Japanese standard. Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 19 of 40
each region has been effective in the country. This is an issue the regulator will have to address
if it wants incumbent operators to access this spectrum. The Argentine mobile market is very
competitive and ranks first in the region in terms of mobile penetration, reaching 115% as of
March 31, 2009. In addition, Argentina has a vibrant broadband market with fixed penetration
now approaching 9%. Demand for mobile broadband is expected to increase significantly in the
near future, and more spectrum availability will certainly facilitate growth. If the AWS auction
occurs as scheduled in July 2009, operators might launch operations in this band as early as
the second quarter of 2010.
Colombia. The 1.7-2.1 GHz band is reserved for IMT-2000 services by the Ministry of
Communications, which is the national authority in charge of spectrum management. Although
no license timing has been announced, the Ministry is believed to be working to publish a
proposal to structure the AWS band shortly. The Ministry is very interested in promoting mobile
broadband and the provision of new data services, including tourism, geo-location, logistics, and
mobile banking and, on April 17th 2009, launched a licensing program for 90 MHz in the 2.5-
2.69 GHz band. In addition, it has been reported by different news sources that the Ministry
plans to grant an additional 15 MHz in the 1900 MHz band for the two largest incumbent mobile
operators, Comcel (America Movil) and Movistar (Telefonica Moviles). These two operators,
together with the third market player, Tigo (Millicom), have all reached to the top of the 40 MHz
spectrum cap that is allowed for mobile operators, the most restrictive spectrum cap per
operator in Latin America. The 2.6 GHz band licensing proposal would allow moving this cap
from the existing 40 MHz to 60 MHz.
Other Latin American Countries. Most other Latin American countries also attribute the 1.7-
2.1 GHz band for IMT-2000 services in their respective national frequency plans. Still,
according to discussions with regulators responsible for allocating spectrum, many are holding
off on developing a licensing program until major MNOs specifically request additional
spectrum. However, based on increasing mobile penetration rates, larger countries such as
Venezuela—with greater than 100% penetration—Peru and Ecuador are likely candidates to
launch licensing programs soon after Chile, Mexico, Argentina and Colombia. By contrast,
Central American countries—where in many cases the AWS band is not yet on the minds of
regulators—are further off, with licensing perhaps not until 2012.
Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 20 of 40
V. Insights from Carriers and Vendors
Discussions with leading wireless equipment vendors and AWS-band wireless operators
produced a number of findings, many of which were surprisingly consistent. At a high level,
vendors and operators concurred that (1) the AWS band is very similar to existing mobile
wireless bands, (2) no technical roadblocks prevent delivery of equipment/handsets in scale,
and (3) AWS product demand is accelerating on the back of T-Mobile USA’s deployment.
However, a commonly noted challenge relates to mobile baseband chipsets supporting a limited
number of frequency bands. The good news is that newly announced products are expected to
support more simultaneous bands in 2010, enabling full voice and data roaming across all
regional and global bands such as 850 MHz, 900 MHz, 1800 MHz, 1900 MHz and 2.1GHz, in
addition to AWS 1.7-2.1 GHz.
Key findings are outlined below and suggest that a healthy AWS ecosystem is developing to
support HSPA deployment and additional licensing throughout the Americas.
The AWS band is sufficiently similar to other frequency bands and has similar
propagation characteristics. Close frequency proximity to IMT-2000 and PCS bands
is enabling rapid product development and network deployment. With relatively minor
engineering adjustments, vendors already offering 1800/1900 MHz band products can
readily support AWS-band products. On the operator side, network planning and
deployment in the AWS band is largely comparable to deploying in the 1900 MHz band
across various morphologies (urban, suburban, and rural).
"For Operators around the world, nothing is more central to reliably serving
customers, than having access to high quality radio spectrum. We know from
experience at T-Mobile, that each band has its merits; the lower UHF bands
provide excellent propagation characteristics yet typically have limited
availability and smaller spectrum allocations. The higher bands, above 2.6GHz,
usually have larger spectrum allocations, yet they do not provide the same
valuable propagation benefits of the lower bands. For operators wishing to
balance both capacity and propagation characteristics, the "sweet spot" lies
between 1GHz and 2GHz on the spectrum chart. Consequently, the AWS band is
ideal for delivering great voice and mobile broadband services to customers.”
Neville Ray, Senior Vice President, Engineering Operations – T-Mobile USA
AWS infrastructure equipment and devices are ready today. Given the close
relationship to the other bands, AWS infrastructure equipment and devices are available
in scale today, with increased volumes forthcoming.
“At T-Mobile USA, we are working with our suppliers to deliver a broad range of
innovative AWS-banded devices to market. Our suppliers share our vision of the
value the AWS band enables. Consistently, we observe suppliers leveraging
investments made previously for the 1.9/2.1 band, and delivering high performing
and price competitive AWS-banded devices. The AWS device eco-system is
broadening each day and is tied to the burgeoning growth of 3G globally.”
Neville Ray, Senior Vice President, Engineering Operations – T-Mobile USA
Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 21 of 40
o Production cost curves are comfortable and improving. According to several
vendors, cost curves are not all that different from mainstream products today
and are not slowing the introduction of AWS products. Moreover, the component
supply chain—particularly semiconductor players—appears ready and excited to
support AWS hardware in scale.
“Qualcomm has long recognized the value of the AWS spectrum in the
Americas as a logical extension of the existing 3G bands. Therefore, we
have designed and implemented virtually across all of our chipset
solutions to support our customers and operators with this capability.”
Alex Katouzian, Vice President, Qualcomm CDMA Technologies
o Infrastructure ramping. T-Mobile USA reports no problems with HSPA
equipment procurement and expects to cover more than 200 million POPs by
year-end 2009, up from 107 million POPs covered at year-end 2008. New
entrant Stelera Wireless is also progressing with HSPA market expansion,
aiming to cover 55 cities across the Midwestern United States by June 2009 and
110 cities by year-end 2010.
“Ericsson is a leader in AWS build outs, having provided infrastructure to
T-Mobile USA to support its deployment of HSPA in the band. We look
forward to further expanding AWS coverage bringing the benefits of high
capacity, mobile broadband networks to consumers throughout the
Americas”
Barbara Baffer, VP Public Affairs and Regulations, Ericsson Inc
o Devices growing more plentiful. According to T-Mobile USA, Motorola, Nokia,
Samsung, Huawei, HTC and Sony Ericsson all have products in the AWS band
today. Importantly, T-Mobile USA is ―seeing a healthy supply of AWS-banded
handset products from all major suppliers.‖ Further, of the operator’s 48 total
devices currently offered, nine support the AWS band, and management expects
approximately 50% of the portfolio will support AWS within one year,
approximately 80% within two years, and more than 90% in five years.
o Innovative Broadband devices. In addition to handsets, AWS banded data
cards, modems and routers are also becoming more available. BandRich, Huawei
and Option, for example, have all either launched or are planning to launch AWS-
banded data devices in 2009.
o Field test tools. To speed up network deployment, field test tool for AWS band
network performance measurement and tuning is of critical importance. ASCOM,
Anite and BandRich are coming out with AWS banded field test tools to support
the network deployment ramp up.
Device caveat and roaming – devices currently support only two simultaneous
“high” bands. At present, devices can handle a maximum of two simultaneous high
bands only (e.g., 1900 MHz and 2100 MHz), and third-generation mobile devices
typically support three frequency bands total. The operator can specify two low (e.g.,
800 MHz/900 MHz) and one high (e.g., 1900 MHz), or the opposite (one low, two high). Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 22 of 40
As a result, in the short-term 3G roaming service in certain countries may be limited
depending upon band selection by the operator. Fortunately, multiple vendors are
introducing handsets capable of supporting three (or more) simultaneous high bands
with volume shipments available in 2010. T-Mobile USA is currently prioritizing high
bands over lower bands due to the operator’s spectrum asset portfolio in the United
States and abroad.
AWS spectrum clearing not a roadblock in the United States. Based on the rapid
deployments of T-Mobile USA, MetroPCS, and Leap Wireless, relocation of incumbent
users has not materially obstructed AWS network deployment. Specifically, T-Mobile
indicated that ―relocation of incumbents is progressing well and T-Mobile USA now sees
a clear path to serving the majority of US POPs this year.‖ Early on, working with the
various US Government agencies to clear the AWS spectrum was reportedly challenging
for T-Mobile. That said, once they established the right kind of relationships,
demonstrated their commitment and built mutual trust; they found the US Government
agencies quite easy to deal with.
T-Mobile USA is trailblazing to achieve rapid AWS subscriber penetration. While
the initial market opportunity was small for potential suppliers, the addressable market is
quickly expanding. T-Mobile USA expects to drive device and subscriber penetration
rapidly over the next several years, with approximately one-half of the operator’s
subscriber base—or an estimated 20 million subscribers—expected to be on HSPA in
the AWS band in two years and more than 90% in five years. Further, the operator
foresees AWS inclusion in all network devices as soon as the latter part of 2010, when
chipsets support three high bands. The success of MetroPCS and Leap Wireless on the
CDMA side also spurs HSPA operators to move rapidly in the AWS band.
Areas for industry-wide collaboration. The emerging AWS ecosystem points to
several important areas to drive AWS forward:
o Allocate and license AWS spectrum where available, while emphasizing global
harmonization of spectrum bands and technology neutrality.
o Promote the compatibility of the band in relation to the 1.9/2.1 GHz core band
and also PCS 1900 MHz, which have similar propagation characteristics and
operate well on similar cell site grid spacing.
o Highlight the growing portfolio of available AWS devices and demonstrate that
the band exhibits attractive propagation characteristics suitable for 2G, 3G and
future 4G systems. Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 23 of 40
VI. Sample of Commercially Available Devices
As highlighted elsewhere in this report, many AWS-enabled devices have been commercially
launched in the marketplace and many more are in the pipeline and in the development or
testing phases now. Following is just a sample of some of the devices which have already been
commercially launched.
Handsets
Samsung -
Memoir
Samsung -
t639
Samsung -
Android I7500
Samsung -
Behold
Samsung -
t819
Pharos -
Traveler 137
Sony Ericsson -
TM-506
Sony Ericsson -
XPERIA X1
Sony Ericsson -
TM506
Sidekick -
LX
Nokia -
3555
Nokia -
6263
HTC -
G1
USB
Modems
webConnect -
USB Stick
Franklin W. -
CGU-720
BandRich -
C105
BandRich -
C105
FLYCARD -
FLY-H1
Wireless
Routers/
Data
Cards
FLYBOX -
FLY-HR2
Lightspeed -
ROUTER-240T
Lightspeed -
HSDPA-110V
Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 24 of 40
VII. AWS Total Addressable Market Forecast
The track record of AWS licensing in the United States and Canada, expectations for Latin
America, and interviews with regulators and industry participants all provide a basis for
establishing a five-year AWS subscriber and handset/device forecast model for the Americas.
Including network launches of T-Mobile, Leap Wireless, and MetroPCS last year, the United
States ended 2008 with an estimated 2.2 million customers in the band (perhaps two-thirds
HSPA and one-third CDMA). The continued push of these carriers and additional licensing
across the Americas brings total subscribers with AWS enabled devices to an estimated 177.8
million at year-end 2013, a compound annual growth rate of 94% from an estimated 12.4 million
at year-end 2009. As the subscriber base grows, estimated handset/device unit sales are also
expected to increase rapidly, reaching an estimated 114.5 million in 2013, an annual compound
growth rate of 80% from an estimated 10.9 million in 2009. Importantly, during this period, the
licensed AWS population (POPs) is projected to increase to an estimated 732 million from an
estimated 328 million at year-end 2008. Summary results are included in Figure 13 below.
Figure 13 – Forecast AWS Subscribers and Handsets for the Americas
-
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
180.0
200.0
2008 2009E 2010E 2011E 2012E 2013E
Estimated AWS Subscribers in Millions
-
20.0
40.0
60.0
80.0
100.0
120.0
140.0
Estimated Annual Device Units in Millions
EOP Subs
Implied AWS Device Unit Sales/Year
Source: GVP estimates, company and country reports.
Market launch assumptions. Based on insights for each country, the model assumes the
following for AWS network launches:
US: since mid-2008 (fact)
Canada: end 2009 (assumption)
Chile: early 2010 (assumption) Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 25 of 40
Argentina: mid-2010 (assumption)
Mexico: end 2010 (assumption)
Colombia: end 2010 (assumption)
Rest of South America: assume 2011-2012, especially for large countries such as
Venezuela, Peru, Ecuador, and Paraguay
Central America: assume licensing in 2012-2014
As noted previously, Brazil and Uruguay are following the 1.9-2.1 GHz IMT-2000 core band plan
and, accordingly, are excluded from our model.
Methodology. The model produces country-level forecasts that are rolled up into the Americas
forecast. For each country, the methodology incorporates the following:
Wireless market penetration and implied covered POPs, total end-of-period (EOP)
wireless subscribers, gross additions, disconnects (churn), and net additions.
Three scenarios—low, base case, and high—for AWS subscriber penetration of total
market subscribers in each year.
Assumed AWS churn rates, handset/device upgrade rates, and handset/device discount
rates drive total estimated AWS handset units in each year. The handset/device
discount is applied to capture refurbished and gray market handsets, as well as multiple
SIM cards that are included in calculated gross subscriber additions.
AWS penetration assumptions. Penetration assumptions in each market are the most critical
variable. For all of the Americas, the model assumes gradual AWS penetration in the early
years and acceleration in 2011-2013 as additional licensing is completed. The percentage of
total market subscribers is estimated at 23% in 2013, up from an estimated 2% in 2009.
Notably, forecast penetration is still below the approximate 30% of total licensed spectrum in
each market that AWS spectrum will likely represent.
Figure 14 – Forecast Subscribers with AWS-Enabled Devices
Sub Figures in Millions 2008 2009E 2010E 2011E 2012E 2013E
Assumed % EOP Subs with AWS Capable Devices
% Non-AWS Devices 99.6% 98.0% 96.0% 89.9% 84.1% 77.4%
% AWS 1.7/2.1 GHz 0.4% 2.0% 4.0% 10.1% 15.9% 22.6%
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Implied EOP Subscribers
Non-AWS 574.7 619.7 653.1 649.5 637.6 609.2
AWS 1.7/2.1 GHz 2.2 12.4 27.4 73.0 120.1 177.8
Total 576.9 632.1 680.5 722.4 757.7 787.0
Source: GVP estimates, company and country reports.
Detailed forecast results and scenario analysis. The model output summary for the
Americas is included in Figure 15 below, highlighting certain of the key subscriber and
handset/device assumptions from a global level.
Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 26 of 40
Figure 15 – AWS Subscriber and Handset/Device Forecast for the Americas – Base Case
Sub/Device Figures in Millions 2008 2009E 2010E 2011E 2012E 2013E
AWS Band Sub/Device Assumptions
BOP Subs - 2.2 12.4 27.4 73.0 120.1
Gross Additions 2.2 11.2 19.6 60.3 75.5 102.0
Disconnects - (0.9) (4.7) (14.7) (28.3) (44.3)
Net Additions 2.2 10.3 15.0 45.6 47.2 57.7
EOP Subs 2.2 12.4 27.4 73.0 120.1 177.8
% Change Y/Y 476% 120% 166% 65% 48%
Average Subs 1.1 7.3 19.9 50.2 96.5 148.9
Monthy Churn Rate 0.0% 1.0% 2.0% 2.4% 2.4% 2.5%
Annual Upgrade Rate as % BOP Subs 0% 2% 5% 10% 15% 17%
Estimated Upgrade Units - 0.0 0.6 2.7 10.6 20.9
SIM/Refurbished Discount as % of GAs 0% 3% 5% 6% 7% 8%
SIM/Refurbished Discount Units - 0.3 1.0 3.5 5.2 8.3
Implied AWS Device Unit Sales/Year 2.2 10.9 19.3 59.4 80.9 114.5
% Change Y/Y 388% 78% 208% 36% 42%
Cumulative AWS Device Unit Sales 2.2 13.1 32.4 91.8 172.8 287.3
Source: GVP estimates, company and country reports.
AWS networks in the United States are expected to represent the lion’s share of all Americas
subscribers and handsets/device in the AWS band. The model assumes that LTE networks
and/or incremental AWS capacity radios are introduced in 2010-11, leading to a step function in
US AWS subscribers and device sales. Estimates by country are included in Figures 16 and
17 below.
Figure 16 – Estimated EOP AWS Subscribers by Market – Base Case
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
180.0
200.0
2009E 2010E 2011E 2012E 2013E
Subscribers in Millions
All Other LatAm
Venezuela
Peru
Colombia
Chile
Argentina
Mexico
Canada
United States
Source: GVP estimates, company and country reports.
Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 27 of 40
Figure 17 - Estimated AWS Device Unit Sales per Year by Market – Base Case
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
2009E 2010E 2011E 2012E 2013E
Handset Units in Millions
All Other LatAm
Venezuela
Peru
Colombia
Chile
Argentina
Mexico
Canada
United States
Source: GVP estimates, company and country reports.
An approximate 5% swing in 2013 penetration increases/decreases subscribers by
approximately 36 million customers and device sales by approximately 27 million units. Results
for the three different penetration scenarios included in the model are illustrated in Figure 18
below.
Figure 18 – Scenario Analysis: Results from Low Case, Base Case, and High Case
Sub/Device Figures in Millions 2008 2009E 2010E 2011E 2012E 2013E
Scenarios:
Penetration of EOP Subs with AWS Devices
1 Low 0.2% 1.7% 3.4% 7.9% 13.4% 18.0%
2 Base Case 0.4% 2.0% 4.0% 10.1% 15.9% 22.6%
3 High 0.5% 2.2% 4.6% 12.3% 18.3% 27.2%
AWS Subscribers
1 Low 1.4 10.7 23.4 57.0 101.8 141.6
2 Base Case 2.2 12.4 27.4 73.0 120.1 177.8
3 High 3.0 14.2 31.4 88.9 138.4 214.0
AWS Devices
1 Low 1.4 9.8 16.4 45.1 71.7 87.6
2 Base Case 2.2 10.9 19.3 59.4 80.9 114.5
3 High 3.1 12.0 22.1 73.8 90.1 141.5
Source: GVP estimates, company and country reports.
Forecast caveats. The model depends on a number of assumptions, including timing and
operator application of spectrum—for new advanced services or for fill-in capacity/coverage to
complement existing voice/data services. In addition, each operator has different needs and
objectives depending upon existing spectrum portfolios and footprints.
Momentum Building in the AWS Band May 2009
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VIII. Alternate Spectrum Bands and Issues That May Impact AWS
Band
700 MHz Band. The migration to digital terrestrial television from analog TV is freeing part of
the UHF band to mobile services. This band is known as the ―digital dividend.‖ The United
States was the first country to license this band at 700 MHz in 2008. In the Americas—and
more broadly in the world today—no other country has licensed the band except the United
States. Canada and Chile are in the early stages of planning this band for wireless services,
while most other countries are likely to do so only after 2015, as migration from analog to digital
TV will likely take longer in these countries. In fact, only a few Latin American countries have
begun the introduction of digital TV signals (notably Brazil). In Europe, most countries are
currently beginning to plan the band for licensing in the next three to five years.
AWS versus 700 MHz in the United States. The 700 MHz auction was important in the US
market because of the prime location of the band for mobile services and because it was the
last large parcel of spectrum identified for auction in the foreseeable future. The auction raised
over $19 billion and 101 bidders won 1,090 licenses. While T-Mobile did not participate in the
auction, other major AWS winners also won licenses in the 700 MHz auction, including Verizon,
members of SpectrumCo and AT&T. Given very favorable propagation characteristics at the
lower frequency and more stringent build-out requirements, companies that hold spectrum in
both bands may give priority to 700 MHz holdings over AWS. However, as described earlier,
growing voice/data network traffic will necessitate deployment in all available bands over time.
Moreover, network equipment and handsets are available for the AWS band today, whereas
more time is needed to bring commercial hardware to market for the 700 MHz band.
2.6 GHz. The 2500-2690 MHz band is aligned across all ITU regions. This harmonization can
have a significant impact on equipment availability due to global economies of scale. There are
distinct internal band designs, though, with the central issue being the separation between
frequency division duplex (FDD) and time division duplex (TDD) within the band to prevent
technical interference. The most common band design is the International Telecommunications
Union’s option 1 (2x70 MHz for FDD with 50 MHz for TDD at the center of the band). In the
Americas, many countries have used the band for MMDS cable-TV and are now converting the
band for mobile broadband. In the United States, a consortium between Sprint and Clearwire is
using the band for TDD only technologies (WiMax). In Canada, the regulator is discussing how
to set up the band for both FDD and TDD. In Latin America, most regulators are discussing the
utilization of ITU’s option 1 to introduce both FDD and TDD technologies, which would allow the
band to be utilized in a more technology neutral way for both LTE and WiMax. Chile has
already planned 2.6 GHz according to ITU’s option 1. In Europe, the 2.6 GHz band has begun
to be licensed for mobile according to ITU’s option 1. Norway and Sweden have licensed it, and
most other European countries are planning to license it in the next three years. Hong Kong has
also successfully licensed the 2.6 GHz band.
AWS-2 and AWS-3 spectrum. Since carving out AWS-1 spectrum in 2002, the United States
identified an additional 20 MHz of spectrum in the bands 1915-1920 MHz paired with 1995-2000
MHz, 2020-2025 MHz paired with 2175-2180 MHz, collectively referred to as AWS-2, and 20
MHz of spectrum in the bands 2155-2175 MHz (adjacent to the 2110-2155 MHz band of AWS-1
and the 2175-2180 MHz band of AWS-2), known as AWS-3.
16
If AWS-2 and AWS-3 are made
16
Both the AWS-2 and AWS-3 bands are the subject of further rulemaking proceedings at the FCC involving technical standards
and interference issues and no final service rules have been released. No auction dates will be set until the rules are released, and Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 29 of 40
available for mobile terrestrial services as expected, they will bring the total spectrum allocated
to AWS services to 130 MHz. The FCC has not yet released rules for AWS-2 or AWS-3, but is
expected to do so in the coming year with a possible auction in 2010.
AWS-3 technical issues. FCC proceedings related to the AWS-3 service rules could have an
impact on the value of T-Mobile’s AWS-1 spectrum holdings. In developing network plans, T-
Mobile seemingly assumed that the AWS-3 licensee would use FDD technology. However,
M2Z—one of the most vocal potential AWS-3 new entrants—is interested in deploying a TDD
network. T-Mobile argues that a two-way operation in the adjacent AWS-3 spectrum would
require technical rules that specify stringent guard bands. Therefore, if the AWS-3 rules are not
structured to require the AWS-3 licensee to implement guard bands, its AWS-1 spectrum would
be impacted. The debate over the AWS-3 service rules is the subject of a continuing
rulemaking at the FCC fueled mainly by the M2Z petition to the FCC.
Potential for incremental US spectrum licensing. In response to growing wireless demand,
the new US administration has pledged to assess current governmental spectrum allocations
and consider more government to commercial reallocations in the future. On March 19, 2009,
Senators John Kerry (D-Massachusetts) and Olympia Snowe (R-Maine) introduced legislation
that would require the FCC and the National Telecommunications and Information
Administration (NTIA)
17
to conduct an inventory of radio spectrum within 180 days of enactment.
While no specific bands have yet been identified for reallocation from government to commercial
use, a CTIA report supports the conclusion that there isn’t a near-term solution to the spectrum
drought, ―Given the long timeframes involved in going from planning to auction to deployment,
as experienced with the AWS and 700 MHz bands, planning for new spectrum should begin as
soon as possible.‖
18
With no concrete plans for making more spectrum available, and with the
process of identifying, reallocating and then auctioning spectrum optimistically taking at least
several years to complete, the large AWS and 700 MHz bands remain especially important to
commercial mobile providers.
an auction will not likely occur until at least six months after release of final rules, putting the earliest AWS-2 and AWS-3 auction
sometime in 2010. In June 2008, the FCC sought comment on whether to include the 2175-2180 MHz band in AWS-3 as opposed
to AWS-2, which would reduce AWS-2 to 15 MHz and increase AWS-3 to 25 MHz. The FCC has not yet reached a decision on the
matter. (Further Notice of Proposed Rulemaking, FCC 08-158, released June 20, 2008.)
17
The NTIA is part of the US Department of Commerce and, among other things, regulates the spectrum held by the US
Government.
18
CTIA report at 24. Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 30 of 40
IX. Conclusions
Analysis of spectrum policy, industry traffic trends, AWS auctions to-date, and the total
addressable market across the Americas, as well as discussions with AWS industry participants
and regulators, point to a number of key findings:
AWS spectrum was identified by ITU for IMT2000 standards and is regionally
harmonized by CITEL.
Public policy that supports IMT-2000 technologies in the AWS band benefits economic
growth.
Prices paid for AWS spectrum in US and Canada reveals high market demand.
AWS band is sufficiently similar to other frequency bands and HSPA ecosystem is ready
today.
Production cost curves are comfortable and improving.
Addressable market is rapidly expanding.
Meaningful growth in AWS subscribers and handset volumes is projected for the
Americas.
Operators are interested in accelerated licensing in Latin America.
In Conclusion:
The AWS spectrum band is very well-suited to add significant and valuable
bandwidth effectively and efficiently for wireless operators and consumers
throughout the Americas
AWS-capable devices and handsets are available and gaining critical mass
with no visible limitations that might inhibit a strong and robust device
ecosystem.
Infrastructure is readily available and operator interest is high.
Regulators throughout Latin America should promptly and rationally make this
valuable spectrum available to meet the rapidly growing needs of the
consumers in their hungry marketplaces
Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 31 of 40
Glossary
CDMA. Code Division Multiple Access (CDMA) assigns unique codes to each communication
transmission to differentiate it from others in the same spectrum. 2G CDMA standards are
branded cdmaOne and include IS-95A and IS-95B. The two primary IMT-2000 third-generation
(3G) standards, CDMA2000 and WCDMA, are based on CDMA.
EOP. End of Period (EOP) typically refers to the value or amount as reported at the end of a
measurement period.
FDD. Frequency Division Duplex (FDD), used in cellular communication systems such as GSM,
is a radio technology using a paired spectrum.
HSPA. HSPA is the set of technologies that defines the migration path for 3G/WCDMA
operators worldwide. HSPA, which uses the FDD transmission scheme, includes HSDPA (High
Speed Downlink Packet Access), HSUPA (High Speed Uplink Packet Access) and HSPA
Evolved.
GSM. GSM (Global System for Mobile communications: originally from Groupe Spécial Mobile)
is an open, digital cellular technology used for transmitting mobile voice and data services. GSM
is used by over 4 billion customers across more than 219 countries and territories.
LTE. Long Term Evolution (LTE) is the next step from 3G/WCDMA and HSPA for operators
already on the GSM technology platform, as well as other operators seeking an alternate
evolution path. LTE is a new radio access technology and will be optimized to deliver very fast
data speeds of up to 100 Mb/s downlink and 50 Mb/s uplink (peak rates).
TDD. Time Division Duplexing (TDD) refers to a transmission scheme that allows an
asymmetric flow for uplink and downlink transmission that is more suited to data transmission.
In a Time Division Duplex system, a common carrier is shared between the uplink and downlink,
the resource being switched in time. Users are allocated one or more timeslots for uplink and
downlink transmission.
UMTS. Universal Mobile Telecommunications System (UMTS) is a 3G mobile wireless
standard that is also being developed into a 4G technology. UMTS uses wideband CDMA
(WCDMA) as the underlying air interface and is standardized by the 3rd
Generation Partnership
Project (3GPP).
Momentum Building in the AWS Band May 2009
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Appendix
Forecast Model – Americas Summary
Year 1 Year 2 Year 3 Year 4 Year 5
Sub/Device Figures in Millions 2004 2005 2006 2007 2008 2009E 2010E 2011E 2012E 2013E
SUMMARY - US, Canada, Mexico, Argentina, Chile, Colombia, Peru, Venezuela, All Other LatAm
Covered POPs 662.5 670.7 677.8 685.7 692.8 698.2 705.5 714.0 723.0 732.0
% Change Y/Y 1.2% 1.1% 1.2% 1.0% 0.8% 1.1% 1.2% 1.3% 1.3%
Market Penetration - Cov'd POPs 45% 56% 66% 75% 83% 91% 96% 101% 105% 108%
Penetration Lift 10.8% 9.5% 9.5% 8.0% 7.3% 5.9% 4.7% 3.6% 2.7%
BOP Subs 218.0 301.2 377.2 445.7 515.8 576.9 632.1 680.5 722.4 757.7
Gross Additions 165.9 168.3 181.1 206.8 220.2 228.9 235.0 238.4 241.1 244.8
Disconnects (82.7) (92.3) (112.7) (136.7) (159.1) (173.7) (186.7) (196.5) (205.8) (215.5)
Net Additions 83.2 76.0 68.5 70.1 61.1 55.2 48.3 41.9 35.3 29.3
EOP Subs 301.2 377.2 445.7 515.8 576.9 632.1 680.5 722.4 757.7 787.0
% Change Y/Y 38% 25% 18% 16% 12% 10% 8% 6% 5% 4%
Average Subs 259.6 339.2 411.4 480.7 546.4 604.5 656.3 701.4 740.1 772.4
Monthy Churn Rate 2.7% 2.3% 2.3% 2.4% 2.4% 2.4% 2.4% 2.3% 2.3% 2.3%
Sub Figures in Millions 2004 2005 2006 2007 2008 2009E 2010E 2011E 2012E 2013E
Assumed % EOP Subs with AWS Capable Devices
% Non-AWS Devices 100.0% 100.0% 100.0% 100.0% 99.6% 98.0% 96.0% 89.9% 84.1% 77.4%
% AWS 1.7/2.1 GHz 0.0% 0.0% 0.0% 0.0% 0.4% 2.0% 4.0% 10.1% 15.9% 22.6%
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Implied EOP Subscribers
Non-AWS 301.2 377.2 445.7 515.8 574.7 619.7 653.1 649.5 637.6 609.2
AWS 1.7/2.1 GHz - - - - 2.2 12.4 27.4 73.0 120.1 177.8
Total 301.2 377.2 445.7 515.8 576.9 632.1 680.5 722.4 757.7 787.0
Scenarios:
Penetration of EOP Subs with AWS Devices
1 Low 0.2% 1.7% 3.4% 7.9% 13.4% 18.0%
2 Base Case 0.4% 2.0% 4.0% 10.1% 15.9% 22.6%
3 High 0.5% 2.2% 4.6% 12.3% 18.3% 27.2%
AWS Subscribers
1 Low 1.4 10.7 23.4 57.0 101.8 141.6
2 Base Case 2.2 12.4 27.4 73.0 120.1 177.8
3 High 3.0 14.2 31.4 88.9 138.4 214.0
AWS Devices
1 Low 1.4 9.8 16.4 45.1 71.7 87.6
2 Base Case 2.2 10.9 19.3 59.4 80.9 114.5
3 High 3.1 12.0 22.1 73.8 90.1 141.5
Sub/Device Figures in Millions 2004 2005 2006 2007 2008 2009E 2010E 2011E 2012E 2013E
AWS Band Sub/Device Assumptions - Base Case Scenario -
BOP Subs - - - - - 2.2 12.4 27.4 73.0 120.1
Gross Additions - - - - 2.2 11.2 19.6 60.3 75.5 102.0
Disconnects - - - - - (0.9) (4.7) (14.7) (28.3) (44.3)
Net Additions - - - - 2.2 10.3 15.0 45.6 47.2 57.7
EOP Subs - - - - 2.2 12.4 27.4 73.0 120.1 177.8
% Change Y/Y 476% 120% 166% 65% 48%
Average Subs - - - - 1.1 7.3 19.9 50.2 96.5 148.9
Monthy Churn Rate - - - - 0.0% 1.0% 2.0% 2.4% 2.4% 2.5%
Annual Upgrade Rate as % BOP Subs - - - - 0% 2% 5% 10% 15% 17%
Estimated Upgrade Units - - - - - 0.0 0.6 2.7 10.6 20.9
SIM/Refurbished Discount as % of GAs - - - - 0% 3% 5% 6% 7% 8%
SIM/Refurbished Discount Units - - - - - 0.3 1.0 3.5 5.2 8.3
- Base Case Scenario -
Implied AWS Device Unit Sales/Year - - - - 2.2 10.9 19.3 59.4 80.9 114.5
% Change Y/Y 388% 78% 208% 36% 42%
Cumulative AWS Device Unit Sales 2.2 13.1 32.4 91.8 172.8 287.3
Source: GVP estimates, company and country reports. Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 33 of 40
Forecast Model – Americas Summary: Covered POPs and AWS Licensing Assumptions
Year 1 Year 2 Year 3 Year 4 Year 5
Sub/Device Figures in Millions 2004 2005 2006 2007 2008 2009E 2010E 2011E 2012E 2013E
Total Covered POPs (All Mobile Wireless Networks)
United States 285.4 287.7 290.1 292.4 294.7 297.1 299.5 301.9 304.3 306.8
Canada 32.0 32.3 32.7 33.1 33.3 33.7 33.9 34.3 34.6 34.9
Mexico 104.9 106.3 107.8 109.6 110.6 109.7 111.0 113.3 115.9 118.5
Argentina 37.6 37.9 38.3 38.6 38.9 39.2 39.5 39.9 40.3 40.7
Chile 16.1 16.8 16.4 16.6 16.7 17.0 17.1 17.3 17.5 17.7
Colombia 44.9 45.6 46.3 47.0 47.6 48.3 49.0 49.6 50.3 50.9
Peru 27.6 28.0 28.4 28.8 29.2 29.6 30.0 30.4 30.8 31.2
Venezuela 26.2 26.6 27.1 27.6 28.0 28.5 29.0 29.4 29.9 30.3
All Other LatAm (Excl Brazil & Uruguay) 87.8 89.3 90.7 92.2 93.7 95.1 96.6 98.0 99.4 100.9
Total Covered POPs 662.5 670.7 677.8 685.7 692.8 698.2 705.5 714.0 723.0 732.0
% Change Y/Y 1% 1% 1% 1% 1% 1% 1% 1% 1%
Total Mobile Wireless Spectrum Licensed
United States 144.0 144.0 234.0 234.0 294.0 294.0 314.0 314.0 334.0 334.0
Canada 175.0 175.0 175.0 175.0 265.0 265.0 265.0 265.0 265.0 265.0
Mexico 120.0 120.0 120.0 120.0 120.0 120.0 245.0 245.0 245.0 245.0
Argentina 170.0 170.0 170.0 170.0 170.0 260.0 260.0 260.0 260.0 260.0
Chile 140.0 140.0 140.0 170.0 170.0 260.0 260.0 260.0 260.0 260.0
Colombia - - - - 120.0 120.0 210.0 210.0 210.0 210.0
Peru - - - - 130.0 130.0 130.0 220.0 220.0 220.0
Venezuela - - - - 102.0 102.0 102.0 192.0 192.0 192.0
AWS Mobile Wireless Spectrum Licensed
United States - - 90.0 90.0 90.0 90.0 110.0 110.0 130.0 130.0
Canada - - - - 90.0 90.0 90.0 90.0 90.0 90.0
Mexico - - - - - - 90.0 90.0 90.0 90.0
Argentina - - - - - 90.0 90.0 90.0 90.0 90.0
Chile - - - - - 90.0 90.0 90.0 90.0 90.0
Colombia - - - - - - 90.0 90.0 90.0 90.0
Peru - - - - - - - 90.0 90.0 90.0
Venezuela - - - - - - - 90.0 90.0 90.0
Total AWS Licensed POPs
United States - - 290.1 292.4 294.7 297.1 299.5 301.9 304.3 306.8
Canada - - - - 33.3 33.7 33.9 34.3 34.6 34.9
Mexico - - - - - - 111.0 113.3 115.9 118.5
Argentina - - - - - 39.2 39.5 39.9 40.3 40.7
Chile - - - - - 17.0 17.1 17.3 17.5 17.7
Colombia - - - - - - 49.0 49.6 50.3 50.9
Peru - - - - - - - 30.4 30.8 31.2
Venezuela - - - - - - - 29.4 29.9 30.3
All Other LatAm (Excl Brazil & Uruguay) 49.0 99.4 100.9
Total AWS Licensed POPs - - 290.1 292.4 328.1 387.0 550.0 665.0 723.0 732.0
AWS Spectrum as % of Total Mobile Wireless Spectrum
United States 0% 0% 38% 38% 31% 31% 35% 35% 39% 39%
Canada 0% 0% 0% 0% 34% 34% 34% 34% 34% 34%
Mexico 0% 0% 0% 0% 0% 0% 37% 37% 37% 37%
Argentina 0% 0% 0% 0% 0% 35% 35% 35% 35% 35%
Chile 0% 0% 0% 0% 0% 35% 35% 35% 35% 35%
Colombia 0% 0% 0% 0% 0% 0% 43% 43% 43% 43%
Peru 0% 0% 0% 0% 0% 0% 0% 41% 41% 41%
Venezuela 0% 0% 0% 0% 0% 0% 0% 47% 47% 47%
Source: GVP estimates, company and country reports, Raineri.
Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 34 of 40
Forecast Model – Americas “Base Case” Summary: EOP Total Subscribers, AWS Subscribers
and Handsets/Devices
Year 1 Year 2 Year 3 Year 4 Year 5
Sub/Device Figures in Millions 2004 2005 2006 2007 2008 2009E 2010E 2011E 2012E 2013E
Total EOP Subs (All Mobile Wireless Networks)
United States 184.7 214.3 232.1 252.1 266.9 284.0 298.7 310.7 320.4 329.1
Canada 15.6 17.5 19.3 20.9 22.5 23.9 25.0 26.1 27.0 27.3
Mexico 37.8 46.6 56.8 68.9 78.9 88.0 98.0 108.0 117.4 126.0
Argentina 13.0 21.4 30.2 38.6 43.6 47.5 50.6 53.0 54.8 55.5
Chile 9.6 11.7 13.1 14.6 15.9 17.3 18.3 19.2 19.8 20.4
Colombia 10.4 21.9 30.1 33.5 40.7 46.0 50.6 54.6 57.8 60.6
Peru 4.1 5.6 8.8 14.0 18.5 21.6 24.6 27.6 30.6 32.8
Venezuela 8.5 12.7 18.8 23.8 29.1 33.3 36.6 39.2 41.3 42.8
All Other LatAm (Excl Brazil & Uruguay) 17.5 25.5 36.5 49.5 60.9 70.6 78.1 84.0 88.7 92.5
Total EOP Subs 301.2 377.2 445.7 515.8 576.9 632.1 680.5 722.4 757.7 787.0
% Change Y/Y 25% 18% 16% 12% 10% 8% 6% 5% 4%
Estimated EOP AWS Subs
United States - - - - 2.2 12.4 26.5 68.6 107.3 149.2
Canada - - - - - 0.1 0.4 1.0 3.2 6.8
Mexico - - - - - - 0.2 1.6 4.1 10.1
Argentina - - - - - - 0.3 1.1 2.2 3.9
Chile - - - - - - 0.1 0.4 1.0 1.6
Colombia - - - - - - - 0.3 0.9 1.5
Peru - - - - - - - - 0.3 1.0
Venezuela - - - - - - - - 0.2 0.9
All Other LatAm (Excl Brazil & Uruguay) - - - - - - - - 0.9 2.8
Total EOP AWS Subs - - - - 2.2 12.4 27.4 73.0 120.1 177.8
% Change Y/Y - - - - - 476% 120% 166% 65% 48%
AWS Subs as % of Total EOP Subs
United States 0.0% 0.0% 0.0% 0.0% 0.8% 4.4% 8.9% 22.1% 33.5% 45.3%
Canada 0.0% 0.0% 0.0% 0.0% 0.0% 0.3% 1.5% 4.0% 12.0% 25.0%
Mexico 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.2% 1.5% 3.5% 8.0%
Argentina 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.5% 2.0% 4.0% 7.0%
Chile 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.5% 2.0% 5.0% 8.0%
Colombia 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.5% 1.5% 2.5%
Peru 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 1.0% 3.0%
Venezuela 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.5% 2.0%
All Other LatAm (Excl Brazil & Uruguay) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 1.0% 3.0%
Total 0.0% 0.0% 0.0% 0.0% 0.4% 2.0% 4.0% 10.1% 15.9% 22.6%
Estimated AWS Devices (Unit Sales/Year)
United States - - - - 2.2 10.8 18.4 55.6 70.8 93.3
Canada - - - - - 0.1 0.3 0.7 2.4 4.5
Mexico - - - - - - 0.2 1.6 3.3 8.1
Argentina - - - - - - 0.3 0.9 1.6 2.9
Chile - - - - - - 0.1 0.3 0.7 1.0
Colombia - - - - - - - 0.3 0.7 1.0
Peru - - - - - - - - 0.3 0.8
Venezuela - - - - - - - - 0.2 0.7
All Other LatAm (Excl Brazil & Uruguay) - - - - - - - - 0.9 2.3
Total AWS Devices - - - - 2.2 10.9 19.3 59.4 80.9 114.5
% Change Y/Y - - - - - 388% 78% 208% 36% 42%
Source: GVP estimates, company and country reports.
Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 35 of 40
Operator Data – Part One
Country Mobile Subs
Q408
Mobile
Penetration
Q408
MNO Subs per
operator
Q408
ARPU per
operator
Q408 (USD)
Churn
(monthly)
Q408
Total
Spectrum
licensed for
Mobile Ops
Broadband
Penetration
Q408
United States 266,891,975 90.50% Alltel 14,094,559 52.9 2.02%*
AT&T 77,009,000 50.8 1.60%
Centennial 661,100 65 2.50%
Leap 3,844,660 42.4 3.80%
Qwest 873,438 n/a
Sprint 48,338,000 54.3 2.25%
T-Mobile 32,758,000 49 3.30%
US Cellular 6,196,000 52.7
Verizon 72,056,000 51.9 1.35%
Other 11,061,218 n/a
Canada 22,505,066 67.50% Aliant 967,914 n/a
Bell 6,497,000 44.9 1.70%
FIRST Networks 3,450 n/a
Ice Wireless 19,840 n/a
MTS Allstream 434,776 47.6 1.47%
Rogers Wireless 7,942,000 52.8 1.48%
SaskTel 511,086 n/a
Telus 6,129,000 51.5 1.62%
Argentina 43,369,814 111.30% Claro 15,229,331 n/a
Movistar 14,829,600 11.7 1.80%
Personal 12,339,829 12.7
Nextel 971,054 43 1.90%
Chile 15,903,040 95% Claro 3,002,000 10.8 3.70%
Entel PCS 6,001,000 16.1 1.59%
Movistar 6,875,000 15.4 1.80%
Nextel 25,040 n/a
Mexico 78,941,658 71.40% Iusacell 4,483,369 n/a
Movistar 15,330,600 10.8 2.70%
Nextel 2,756,689 68 2.30%
Telcel 56,371,000 13.5 3.40%
Colombia 40,666,951 85.40% Comcel 27,390,000 7.5 2.30%
Movistar 9,963,100 8.2 3.70%
Tigo 3,313,851 n/a
593 MHz (ADL)
265MHz (ADL)
170 MHz (ADL)
140 MHz (ADL)
170 MHz
(Raineri)
120 MHz (ADL)
155MHz
(Raineri)
25.30%
8.30%
8.80%
26.90%
3.80% 120 MHz
(ADL)
5.90%
Source: Wireless Intelligence, Raineri, Hazlett.
Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 36 of 40
Operator Data – Part Two
Country Mobile Subs
Q408
Mobile
Penetration
Q408
MNO Subs per
operator
Q408
ARPU per
operator Q408
(USD)
Total
Spectrum
licensed for
Mobile Ops
Broadband
Penetration
Q408
18,442,869 63.20% Claro 7,178,000 7.6*
Movistar 10,612,700 7.8*
Nextel 652,169 30*
29,090,487 103.70% Digitel 6,902,958 n/a
Movilnet 11,603,529 19**
Movistar 10,584,000 26.77**
11,921,190 85.65% Alegro 494,690 n/a
Movistar 3,122,500 9.8
Porta 8,304,000 10
6,276,420 89.90% Claro 1,963,471 n/a
Digicel 458,129 n/a
Movistar 1,326,764 n/a
Tigo 2,528,056 n/a
Costa Rica 1,475,157 32.40% ICE 1,475,157 n/a 93 MHz
(Hazlet)
3.90%
5,928,214 76.80% Claro 1,468,538 n/a
Digicel 220,000 n/a
Hondutel 50,000 n/a
Tigo 4,239,676 n/a
11,612,993 83.30% Claro 4,205,044 n/a 1.20%
Movistar 2,994,430 n/a
Tigo 4,413,519 n/a
2,931,465 47.90% Claro 2,000,396 n/a 0.80%
Movistar 931,069 n/a
7,467,777 79.80% Claro 3,943,380 n/a 2.30%
Orange 2,401,000 n/a
Tricom 638,404 n/a
Viva 484,993 n/a
2,991,265 87.80% Mas Movil 1,887,849 n/a 4.20%
Movistar 1,103,416 n/a
49.56 MHz
(Hazlet)
n/a
84.84 MHz
(Hazlet)
140 MHz
(Hazlet)
1.90%
0.80%
137.87 MHz
(Hazlet)
65 MHz
(Hazlet)
1.30% 80 MHz
(Hazlet)
2.60% 80 MHz
(Hazlet) 130.3
MHz (Raineri)
4.10% 57 MHz
(Hazlet) 101.8
MHz (raineri)
Dominican
Republic
Peru
Venezuela
Ecuador
El Salvador
Honduras
Guatemala
Nicaragua
Panama
Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 37 of 40
Source: Wireless Intelligence, Raineri, Hazlett.
United States AWS Auction Blocks
Block
Frequency Bands
(MHz)
Total Bandwidth
Geographic
Area Type
No. of
Licenses
A 1710-1720 / 2110-2120 20 MHz CMA19
734
B 1720-1730 / 2120-2130 20 MHz EA20
176
C 1730-1735 / 2130-2135 10 MHz EA 176
D 1735-1740 / 2135-2140 10 MHz REAG21
12
E 1740-1745 / 2140-2145 10 MHz REAG 12
F 1745-1755 / 2145-2155 20 MHz REAG 12
Source: FCC, KB Enterprises LLC.
United States AWS Prices by Block
Block Band Revenue Price/MHz-Pop
A 1710-1720, 2110-2120 MHz $999,267,000 $.42
B 1720-1730, 2120-2130 MHz $727,470,000 $.45
C 1730-1735, 2130-2135 MHz $405,790,000 $.59
D 1735-1740, 2135-2140 MHz $380,549,000 $.65
E 1740-1745, 2140-2145 MHz $517,063,000 $.64
F 1745-1755, 2145-2155 MHz $1,147,364,000 $.77
Source: FCC, KB Enterprises LLC.
19
Cellular Market Areas (CMAs) were originally developed by the Federal Communications Commission for cellular mobile radio
service and include a total of 306 metropolitan statistical area (MSA) licenses and 428 rural service areas (RSA) license for a total of
734 license areas that cover the United States and its territories.
20
EAs (Economic Areas) refer to the market areas delineated by the Regional Economic Analysis Division, Bureau of Economic
Analysis, U.S. Department of Commerce in February 1995. There are a total of 176 EAs that cover the United States and its
territories.
21
REAGs refer to the twelve Regional Economic Area Groupings that were developed by the Office of Engineering and Technology
at the Federal Communications Commission. Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 38 of 40
Canada AWS Auction Blocks
Block
Frequency Bands (MHz)
Total
Bandwidth
Geographic
Tier
22
No. of
Licenses
A 1710-1720 MHz / 2110-2120 MHz 20 MHz 3 59
B 1720-1730 MHz / 2120-2130 MHz 20 MHz 2 14
C 1730-1735 MHz / 2130-2135 MHz 10 MHz 2 14
D 1735-1740 MHz / 2135-2140 MHz 10 MHz 3 59
E 1740-1745 MHz / 2140-2145 MHz 10 MHz 3 59
F 1745-1755 MHz / 2145-2155 MHz 20 MHz 3 59
Source: Industry Canada, KB Enterprises LLC.
Figure 19 - Auction Prices for the Canadian AWS Spectrum by Block in US Dollars
Block Eligibility Band Revenue Price/MHz-Pop
A Open 1710-1720, 2110-2120 MHz $999,267,000 $1.67
B Set-aside 1720-1730, 2120-2130 MHz $727,470,000 $1.21
C Set-aside 1730-1735, 2130-2135 MHz $405,790,000 $1.35
D Set-aside 1735-1740, 2135-2140 MHz $380,549,000 $1.27
E Open 1740-1745, 2140-2145 MHz $517,063,000 $1.72
F Open 1745-1755, 2145-2155 MHz $1,147,364,000 $1.91
Source: Industry Canada, KB Enterprises LLC.
22
For spectrum auctions, Industry Canada divides Canada into geographic service areas called "tiers," based on the geographic
areas of Statistics Canada 1996 census subdivisions as follows: Tier 1 is a single national service area; Tier 2 consists of eight
provincial and six large regional service areas; Tier 3 consists of 59 regional service areas; and Tier 4 comprises 172 localized
service areas. For the AWS spectrum, the department adopted a range of Tier 2 and 3 service areas. Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 39 of 40
Canadian AWS Spectrum Auction by Region
Region A Block
20 MHz
B Block*
10 MHz
C Block*
10 MHz
D Block*
20 MHz
E Block
10 MHz
F Block
20 MHz
Newfoundland
Labrador
Rogers Bragg Bragg Globalive TELUS Bell
Nova Scotia Rogers Bragg Bragg Globalive TELUS Bell
New Brunswick Rogers Bragg Globalive Bragg TELUS Bell
Eastern Quebec Rogers Quebecor Quebecor Quebecor Bell TELUS
Southern Quebec Rogers Quebecor Quebecor Quebecor Bell TELUS
Northern Quebec Rogers Quebecor Quebecor Quebecor TELUS Bell
Eastern Ontario Rogers Quebecor Dave Globalive TELUS Bell
Southern Ontario Rogers Globalive Dave Dave/Bragg TELUS Bell
Northern Ontario Rogers Bragg Globalive Bragg/Shaw TELUS Bell
Manitoba Rogers MTS Shaw Globalive Shaw TELUS
Saskatchewan Rogers SaskTel SaskTel Shaw Globalive TELUS
Alberta Rogers Shaw Globalive Dave/Shaw Bell TELUS
British Columbia Roger Shaw Globalive Shaw/Dave Bell TELUS
Yukon, NWT &
Nunavut
Rogers Globalive Globalive Globalive TELUS Bell
* New entrant set-aside block. Source: Industry Canada, KB Enterprises LLC.
Canadian AWS Spectrum Holdings Compared to Overall Wireless Spectrum Holdings by Market
Licensee Service MHz Geography % of Total
Rogers AWS 20 National 29%
TELUS Communications AWS 10-20 National 25%
Bell Mobility AWS 10-20 National 23%
Quebecor AWS 50 Quebec 100%*
Shaw Communications AWS 10 Alberta 100%*
Bragg AWS 10 See above Markets 100%*
Dave AWS 10 Eastern and Southern Ontario 100%*
Globalive AWS 10-20 National 100%*
*As a new entrant, this entity holds only AWS spectrum. Source: Estimates based on Industry Canada data, KB Enterprises LLC.
Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 40 of 40
Scott Fox
Chairman & CEO
Global View Partners
San Diego, CA USA
www.GlobalViewPartners.com
Momentum Building in the AWS Band
Report Prepared for the GSM Association
May 2009
Scott Fox Chairman & CEO
Jeffrey Walkenhorst Vice President – Research
Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 2 of 40
Acknowledgements
The many people and companies that contributed to this report are too numerous to mention or
highlight individually. However, we wish to specifically acknowledge the following companies
and individuals for their significant contributions to this research and report:
- BandRich
- Ericsson
- GSM Association
- KB Enterprises, LLC
- Mark McDiarmid – T-Mobile USA
- Marvel Semiconductor
- Neville Ray – T-Mobile USA
- Nokia Siemens Networks
- Qualcomm
- Research In Motion Ltd.
- Ricardo Tavares – GSM Association
- Sandra Gillian – GSM Association
- Sebastian Cabello – GSM
Association
- Sony Ericsson
- T-Mobile USA
San Diego, CA U.S.A.
www.GlobalViewPartners.com
Notice
The contents of this paper reflect the research, analysis and conclusions of Global View Partners, Inc and may not necessarily
represent the opinions and view points of the GSM Association. Global View Partners provides this document and the information
contained herein for informational purposes only. Although Global View Partners has exercised reasonable care in researching and
providing this information, Global View Partners does not warrant this information to be error-free. Global View Partners disclaims
and, in no event, shall be liable for any losses or damages of any kind, whether direct, indirect, incidental, consequential, or punitive
arising out of or in any way related to the use of this information.
Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 3 of 40
Table of Contents
Acknowledgements………………………………………………………….02
Table of Contents …………………………………………………………....03
I. Executive Summary…..……………………………………………………..04
II. AWS and the Economic and Social Benefits of Mobile:
A. Spectrum Policy and the Public Good ……………………………....05
B. Growing Spectrum Demand and Role of AWS Band ……………..08
III. AWS Overview and Importance…………………………………………...10
IV. AWS Licensing To-Date and Expectations for the Americas………..12
A. United States……………………………………………………………...12
B. Canada……………………………………………………………………..15
C. Latin America……………………………………………………………..17
V. Insights from Carriers and Vendors……………………………………...20
VI. Sample of Commercially Available Devices…………………………….23
VII. AWS Total Addressable Market Forecast…………………………….....24
VIII. Alternate Spectrum Bands and Issues That May Impact AWS
Band……………………………………………………………………...........28
IX. Conclusions…………………………………………………………………..30
Glossary…………………………………………………………………………….....31
Appendix……………………………………………………………………………....33 Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 4 of 40
I. Executive Summary
Due to dramatically increasing global demand, a number of new spectrum bands are being
licensed to add capacity and/or foster new services and competition in mobile markets. In the
Americas, the Advanced Wireless Services (AWS) band (90 MHz of spectrum in the 1.7-2.1
GHz range) has already added significant capacity and coverage to the US and Canadian
markets, with many Latin American countries also expected to license this spectrum soon.
However, some operators and regulators are concerned that devices to enable the full utilization
of this new band may come to market too slowly. This concern may affect operator business
plans as well as regulator willingness to license the AWS band in new markets. The primary
objective of this paper is to assess and present factually the commercial viability and service
launches of the GSM family of technologies (GSM, HSPA, LTE) in the AWS band in all relevant
markets in the world, with a special emphasis on the Americas.
Analysis of spectrum policy, industry traffic trends, AWS auctions to-date, and the total
addressable market across the Americas, as well as discussions with AWS industry participants
and regulators, point to a number of key findings:
Public policy that supports the AWS band also benefits economic growth.
Regulators understand that rapidly growing wireless traffic will require incremental
spectrum over time, and ample research now supports the positive correlation between
wireless penetration and economic growth. Since the sizable AWS band represents an
immediate opportunity throughout the Americas to allocate additional airwaves, licensing
remains a priority.
Prices paid for AWS spectrum in the United States and Canada reveals high
market demand. For the US AWS auction, net bids totaled $13.7 billion or $0.53 per
MHz-POP. In Canada, the AWS spectrum auctions produced net bids of $4.2 billion, or
$1.55 per MHz-POP, higher than prices realized from PCS auctions.
The AWS band is sufficiently similar to other frequency bands and HSPA gear is
ready today. Given close frequency proximity to the IMT-20001
core band (1920-1980
MHz paired with 2110-2170 MHz) and PCS bands (1800 MHz and 1900 MHz),
development and production of HSPA infrastructure equipment and handsets is not a
technical challenge. T-Mobile USA reports no problems with equipment procurement
and expects to cover more than 200 million POPs by year-end 2009, up from 107 million
POPs covered at year-end 2008.
Production cost curves are comfortable and improving. According to several
vendors, cost curves are not all that different from mainstream products today and are
not a deal breaker in terms of bringing AWS products to market. The component supply
chain appears ready and excited to support AWS hardware in scale.
Small addressable market is poised for rapid growth. With equipment readily
available and cost curves comparable to existing products, operators can drive AWS
market growth depending upon specific market share and deployment plans. So, while
1
International Mobile Telecommunications-2000 (IMT-2000) is the global standard for third-generation (3G) wireless
communications, defined by a set of interdependent ITU recommendations. Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 5 of 40
the initial market opportunity started small for potential suppliers, the addressable market
is quickly expanding. T-Mobile USA expects to rapidly drive device and subscriber
penetration over the next several years, with approximately one-half of the operator’s
subscriber base—or an estimated 20 million subscribers—expected to be on HSPA in
the AWS band in two years and more than 90% in five years.
Meaningful growth in AWS subscribers and device volumes is projected for the
Americas. The continued push of T-Mobile USA and additional licensing across the
Americas should bring total subscribers with AWS-enabled devices to an estimated
177.8 million at year-end 2013, a compound annual growth rate of 94% from an
estimated 12.4 million at year-end 2009. As the subscriber base grows, estimated
handset/device unit sales are also expected to increase rapidly, reaching an estimated
114.5 million in 2013, an annual compound growth rate of 80% from an estimated 10.9
million in 2009. Importantly, during this period, the licensed AWS population (POPs) is
projected to increase to an estimated 732 million from an estimated 328 million at year-
end 2008.
Operators’ desire accelerated licensing in Latin America. Current North American
license holders are very interested in additional AWS licensing to occur soon across the
Americas to further accelerate new device/handset introduction and enable
inbound/outbound roaming in the band. Several Latin American operators are also very
interested in accessing AWS spectrum to enable new mobile broadband services and
provide additional coverage and capacity.
Conclusions. In summary, regulators can be confident that infrastructure equipment
and devices are increasingly available for the AWS band and, therefore, support
accelerated licensing plans. Vendors can be confident that the addressable market
justifies further product development and that the associated costs are comparable to
other, similar bands such as PCS 1900 MHz and 2.1 GHz. Finally, operators can feel
secure that they can obtain licenses and develop their business plans.
II. AWS and the Economic and Social Benefits of Mobile
A. Spectrum Policy and the Public Good
Anecdotal evidence of the economic and social benefits of mobile telecommunications is
increasingly widespread and undeniable. Specific examples over the past decade include:
Sales forces both small and large gained a new ability to increase productivity by having
readily available communications on the go via cell phones.
Parents improved their ability to juggle family and work commitments, coordinating who
is in the best position to pick up kids from school.
Taxi drivers added new paid rides thanks to carrying cell phones, allowing customers to
contact them while they are on the road.
Fishermen increased their income by knowing ahead of time in which port they can get a
better price for their product.
Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 6 of 40
Farmers maximized their profits by following real-time price changes for their crops.
In developing countries, many users made their first phone call on a mobile phone,
which now is approaching 100% penetration in several emerging markets.
Quantifying the benefits. Despite compelling evidence through the years, economic and
social benefits have been hard to quantify and largely missing from economic and
telecommunications policy. In recent years, however, academic scholars and industry analysts
have built a body of research that quantifies the benefits.
2
Professor Waverman (2005) of the London Business School concluded that each
additional 10% in mobile penetration increases Gross Domestic Product (GDP) by an
average of 0.59% per year.
McKinsey (2006) performed field work in China, measuring increases in productivity and
improvements in social life thanks to the mobile phone, concluding that mobile
telecommunications had an impact in 2005 that was equivalent to 4.9% of China’s total
GDP. In the Philippines, McKinsey concluded that improvements in mobile penetration
drove the mobile industry’s share of total GDP to 7.5% in 2005 alone.
Deloitte (2008) expanded the analysis of indirect impacts of mobile industry growth to
estimate that a 10% increase in mobile penetration can lead to a 1.2% increase in long-
term growth per annum. Also, Deloitte estimated that the mobile industry contributed
between 3.7% and 6.2% of GDP in 2007 in a six-country study of Serbia, Ukraine,
Malaysia, Thailand, Bangladesh and Pakistan.
The surprisingly high numbers—sometimes two to four times above the usual estimates of
mobile representing approximately 2.5% of a country’s total GDP—are a result of modeling not
only direct effects of mobile telecommunications (network build out and service provision), but
also indirect effects, such as foreign direct investment, productivity increases, and human
capital formation. The indirect effects promote economic activity across sectors because of
more reliable communications infrastructure and connectivity, thereby enabling increased
knowledge, skills, and economic growth. Thus, evidence now implies that a higher mobile
penetration most likely drives maximum economic and social benefits that accelerate GDP
growth.
Rational conclusion: minimize costs to expand mobile penetration. Based on the
evidence, operators and regulators are highly incentivized to lower the minimum cost of
ownership (MCO)—the upfront and ongoing minimum payments that consumers must make to
stay connected—in order to expand mobile penetration. Figure 1 illustrates the positive
relationship between mobile penetration and GDP per capita for selected countries around the
world.
2
See Ovum, ―The economic contribution of mobile services in the European Union before its 2004 expansion,‖ December 2004;
Leonard Waverman, ―The Impact of Telecoms on Economic Growth in Developing Countries,‖ Vodafone Policy Paper Series, no. 2,
March 2005; Ovum, ―The economic benefits of mobile services in India,‖ January 2005; Ovum, ―The Economics and Social Benefits
of Mobile in Bangladesh,‖ April 2006; McKinsey & Co., ―Wireless Unbound—The Surprising Economic Value and Untapped
Potential of the Mobile Phone,‖ September 2006; Deloitte, ―Economic Impact of Mobile Communications in Serbia, Ukraine,
Malaysia, Thailand, Bangladesh and Pakistan,‖ January 2008; LECG, ―3G mobile networks in emerging markets‖ The importance of
timely investment and adoption,‖ January 2009; McKinsey & Co., ―Mobile broadband for the masses: Regulatory levers to make it
happen,‖ February 2009. Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 7 of 40
Figure 1 - World Mobile Penetration & GDP per Capita in USD
Argentina
Chile
Brazil
Colombia
Peru Mexico
South Africa
Algeria
Egypt
United States
Canada
Germany
Italy
United Kingdom
France
China
India
Indonesia
Japan
Australia
Thailand
Russia
Poland
Czech Republic
Venezuela
Israel
New Zealand
Saudi Arabia
Greece
Oman
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000
GDP p/c (PPP, 2008 est.)
Mobile Penetration (Q408)
Bubble size: Mobile subscribers as of Q4 2008
Sources: Wireless Intelligence, IMF and World Bank.
Focus now shifting to mobile data/broadband. The initial analyses of the economic and
social impact of mobile were primarily focused on GSM networks that provided voice and SMS.
As the GSM family of standards moved into GPRS, EDGE, and—more importantly –to HSPA,
HSPA+, and LTE the debate has shifted greatly to mobile’s role as a supplier of broadband via
mobile broadband. A forecast by Ovum and Ericsson in 2007 found that by 2012 the world will
have 2 billion broadband connections, 65% of which will be mobile broadband.
Mobile broadband critical to growth in developed and emerging markets. In developed
countries, broadband had a major impact in increasing economic productivity and driving
economic growth. More recently, mobile broadband contributed to driving new applications and
content. In emerging markets, the impact is even more pronounced, as limited existing copper
infrastructure and low penetration of cable TV leave mobile broadband as the only feasible
option to cost-effectively increase broadband penetration.
Potential benefits for emerging markets. McKinsey (2009) concluded that bringing
broadband penetration levels in emerging markets to today’s Western European levels (54%)
could potentially add $300 billion to $400 billion in global GDP and generate 10 million to14
million new jobs across emerging economies. The study also concludes that only mobile
broadband can achieve this goal. Today, broadband penetration in most developing countries
is below 5%.
Economic conditions should spur further action. In the face of significant global economic
challenges in 2009, mobile industry leaders believe increasing the availability of spectrum is the Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 8 of 40
single most important contribution that governments can make to help drive economic recovery.
In a letter to the G-20 meeting in London last April, they wrote:
“We ask the G20 leaders to consider the vital contribution that mobile technology can make to
global economic recovery and recognize the importance of these key enabling actions by
government. The mobile industry stands ready to support the efforts of governments to stimulate
sustainable economic recovery, through its unique ability to invest in long-term productivity
enhancing technology that is also a powerful catalyst for entrepreneurial initiative, social capital,
low carbon development, and digital inclusion.
3
‖
B. Growing Spectrum Demand and Role of AWS Band
The high economic and social benefits of mobile broadband can only be realized when
adequate radio spectrum is available, making the issue of spectrum licensing increasingly
paramount. A broad range of new services, such as Internet access via mobile broadband,
Web browsing on mobile phones, social networking, video calling, and a steady flow of new
applications are dramatically increasing network data traffic and, therefore, spectrum usage. As
a finite resource, spectrum—how much and in which bands—is the single most critical input to
the economic viability of mobile broadband.
Sizing additional spectrum needs. Based on current trends, the International
Telecommunications Union (ITU) predicted that in the next 12 years the mobile industry will
utilize three times more spectrum than in the last 20 years. A key challenge will be recovering
additional spectrum to license, which is scarce. ITU scenario results are included in Figure 2.
Figure 2 – Future Spectrum Needs
Demand Scenario
Total Spectrum Requirement (MHz)
2010 2015 2020 2025
High Demand Setting – ITU(1)
840 1300 1720 N/A
Low Demand Setting – ITU(1)
760 1300 1280(3)
N/A
High Urban Demand – U.K.
(2)
430 1270 1200(3)
1310
Low Urban Demand – U.K.
(2)
200 210 520 550
Source: Arthur D. Little, ―Mobile Broadband, Competition and Spectrum Caps‖ ADL 2009, January 2009.
Notes: 1. ITU-R Report M.2078 (2006); 2. Analysis Mason, ―Spectrum demand for non-government services 2005–2025,‖ report to
the U.K. Independent Audit of Spectrum Holdings, http://www.spectrumaudit.org.uk - total capacity for mobile use in 900 MHz, 1800
MHz, 1.9/2.1GHz and 2.6 GHz bands in the United Kingdom is assumed to be 540 MHz; 3. Decrease due to deployment of more
efficient systems beyond current and near-term IMT-2000 systems.
Optimal network provisioning. Mobile operators will require additional spectrum in order to
increase economic efficiency in provisioning broadband via mobile. Advanced wireless
networks utilizing HSPA, HSPA+ and LTE will allow for increases of data transmission speeds
in the range of 1 to 50 Mb/s with theoretical peak rates of 172 Mb/s. While the economics of
providing mobile broadband are still evolving—the cost per capacity is higher than for voice and
SMS—certain technologies such as LTE operate more efficiently with channels of 2x20 MHz,
leading to skyrocketing demand for spectrum.
4
3
Mobile industry leaders’ letter to the G-20 meeting in London, April 2009.
4
See McKinsey 2009. Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 9 of 40
Current licensed spectrum around world and AWS. Providing additional capacity for
broadband was one of the key motives behind the licensing of the AWS band in the United
States and Canada. This is equally important for Latin American countries that also use the
PCS 1900 MHz band. In Latin America, the spectrum currently licensed for mobile services is
well below US and European market levels.
5
Figure 3 – Currently Licensed Spectrum for Mobile Services in Selected Countries
589
358
400
360
100
250
140
593
265
170
200
170
120 120
0
100
200
300
400
500
600
Norway
Spain
U.K.
France
India
Indonesia
Pakistan
U.S.
Canada
Argentina
Brazil
Chile
Colombia
Mexico
Total Licensed Spectrum, MHz
Source: GSMA based on Arthur D. Little (2009), Plum, KB Enterprises LLC.
Notes: * India’s value is the average per circle 2G. Pakistan’s value is only for 2G services.
Recent 3G licensing and AWS plans in Latin America. In Asia, China and Vietnam licensed
3G in early 2009 to accelerate economic growth and overcome the recessionary trends in their
domestic markets. In Latin America, Chile launched a ―beauty contest‖ on April 16, 2009 to be
completed by August 2009, while Argentina and Mexico are considering licensing the AWS
band as an important measure to accelerate mobile broadband. In the next five years, most
South and Central American countries are expected to make the AWS band available.
AWS licensing should positively impact many constituents. As a core 3G band in the
Americas, the AWS 1.7-2.1 GHz band is crucial for mobile broadband. For mobile carriers, it
will enhance the launch of new services that utilize USB dongles and new mobile broadband
handsets and applications. For infrastructure vendors, it represents a unique opportunity to put
the Americas on par with developed Asia and Europe in terms of 3G expansion and reach. For
handset and device makers, the AWS band brings new opportunities in markets with pent-up
demand for broadband services. For society in general, the band will unleash a critical new
range of spectrum that will enhance mobile broadband’s ability to benefit consumers and
increase economic productivity.
5
See Arthur D. Little (2009), p. 20. Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 10 of 40
III. AWS Overview and Importance
In 2002, the United States allocated 90 MHz of spectrum for AWS at 1710-1755 MHz
(transmit/uplink) and 2110-2155 MHz (receive/downlink), referred to as the AWS-1 band. The
uplink AWS-1 spectrum was reclaimed from the Department of Defense and auctioned to
qualified bidders in 2006 with incumbent relocation costs paid for by auction revenues. Canada
followed the United States and conducted a spectrum auction in 2008 that included 90 MHz of
AWS spectrum, 10 MHz of expansion PCS licenses and one block of 5 MHz at 1670-1676 in the
AWS auction. There are two (2) different Band plans designated for AWS. Band 10 has an
extra 15 MHz in the uplink and downlink compared to Band 4 allocations.
- FDD reference frequencies for Operating Band 4: UL 1712.6 MHz - 1752.4 MHz DL
2112.6 MHz - 2152.4 MHz Paired bands are of interest in region 2 and Japan. (This is
being used by T-Mobile in USA.)
- FDD reference frequencies for Operating Band 10: UL 1712.6 MHz - 1767.4 MHz DL
2112.6 MHz - 2167.4 MHz
Frequency location relative to other bands. The AWS downlink channel is largely consistent
with that of the IMT-2000 core band (2110-2170 MHz), while the uplink channel falls
approximately 100-250 MHz below both the IMT-2000 (1920-1980 MHz) and PCS transmit
channels. The downlink band aligns well with the global downlink but is smaller. The uplink
band in the US, though, is less than what CITEL agreed to (1710-1770 MHz). Operators and
vendors alike indicate that the propagation characteristics of the AWS band are sufficiently
similar to the 3G core, 1800 MHz and 1900 MHz bands and, therefore, facilitate availability of
network equipment and devices. Figure 4 below illustrates the AWS bands relative to IMT-2000
and PCS bands.
Figure 4 - Band Plans: IMT-2000, AWS (US & Canada), PCS (US)
Source: ITU, FCC, Industry Canada.
AWS represents a large portion of total mobile wireless airwaves. For the United States
and Canada, the additional 90 MHz of AWS spectrum for commercial mobile wireless services Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 11 of 40
represents an estimated 15% and 34%, respectively, of total licensed spectrum through 2008.
6
For other countries in the Americas, the percentage may range from 30% to 40%. Figure 5
below shows expected AWS spectrum as a percentage of total licensed mobile spectrum across
the Americas.
Figure 5 – AWS Spectrum as % of Total Mobile Spectrum*
2009E 2010E 2011E 2012E 2013E
United States 15% 18% 18% 21% 21%
Canada 34% 34% 34% 34% 34%
Mexico 0% 37% 37% 37% 37%
Argentina 35% 35% 35% 35% 35%
Chile 35% 35% 35% 35% 35%
Colombia 0% 43% 43% 43% 43%
Peru 0% 0% 41% 41% 41%
Venezuela 0% 0% 47% 47% 47%
Source: GVP estimates; Ricardo Raineri, ―Análisis del Mercado de Telefonía Móvil e Incentivo de Operadores Preexistentes ante
elConcurso de la Banda 3G en Chile,‖ 2008, http://www.tdlc.cl/DocumentosMultiples/Informe_Ricardo_Raineri_Nextel.pdf.
* United States assumes issuance of additional AWS spectrum in 2010 and 2012; all other countries assume total licensed
spectrum as of 2008 held constant through forecast period.
AWS meets pent-up demand. The AWS spectrum auction in the United States was especially
significant because it marked the first auction of a large block of mobile spectrum with
nationwide coverage to be auctioned since the PCS auctions in the early 1990s.
7
The
opportunity for operators to obtain wide bands of spectrum, along with growing capacity needs
and uncertainty over potential 700 MHz band auctions (known as the ―digital dividend‖), created
large, pent-up demand for additional wireless spectrum. Accordingly, there were over 250
auction applicants, 168 of which became qualified bidders.
Auction proceeds to-date. For the US AWS auction, gross bids totaled $13.9 billion while net
bids amounted to $13.7 billion or $0.53 per MHz-POP (net of bidding credits offered to small
businesses). As shown in Figure 6 below, the proceeds were lower than the $20.3 billion raised
from the PCS auctions, yet still represent a very significant outlay.
Figure 6 - US AWS and PCS Auction Prices
Auction Date Spectrum Revenue
Price/
MHz-POP
PCS A and B Block 1994 40 MHz $7,721,103,797 $0.76
PCS C Block 1995 30 MHz $10,071,708,841 $1.33
PCS D, E and F Blocks 1996 30 MHz $2,517,439,565 $0.33
AWS Auction 2006 90 MHz $13,700,267,150 $0.53
Source: FCC, KB Enterprises LLC.
6
Includes 700 MHz and 2.5 GHz spectrum for United States.
7
The PCS auctions in the United States were held in the early 1990s and the Wireless Communications Services auction (30 MHz
in the 2300 MHz band) was held in 1997 with few auctions of mobile spectrum over 5 MHz covering the entire United States after
that until the AWS auction. A list of all FCC spectrum auctions can be found at:
http://wireless.fcc.gov/auctions/default.htm?job=auctions_all. Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 12 of 40
In Canada, the AWS spectrum auctions of 90 MHz produced net bids of $4.2 billion, or $1.55
per MHz-POP, higher than price per MHz-POP amounts realized from combined PCS auctions
of 50 MHz. [Figure 7]
Figure 7 - Canadian AWS and PCS Auction Prices
Auction Date Spectrum Revenue
Price/
MHz-Pop
PCS 2001 40 MHz $1,481,920,000 $1.23
AWS 2008 90 MHz $4,177,503,000 $1.55
PCS Expansion 2008 10 MHz $74,681,077 $0.13
Source: Industry Canada, KB Enterprises LLC.
In Latin America, while no AWS spectrum has been licensed as yet, Chile recently moved
forward with a beauty contest and Argentina is expected to hold an auction this year, with
Mexico and other countries following in 2010.
IV. AWS Licensing To-Date and Expectations for the Americas
A. United States
AWS market participants. The AWS auction in 2006 garnered wide interest and participation
from incumbent operators as well as new entrants into the wireless market. Of the incumbents,
T-Mobile USA was the most aggressive given the operator’s desire to establish a nationwide
footprint suitable for 3G services. On the new entrant side, SpectrumCo–a consortium of cable
operators including Comcast, Time Warner, Cox, and Advance Newhouse, and satellite
operator, EchoStar—made a large push with the goal of offering new wireless services to their
existing customer bases. It was reported that SpectrumCo hoped that other potential new
entrants, including technology companies such as Google, eBay, and Skype, would wait for the
700 MHz auction and not compete for the AWS spectrum. All bidders were encouraged by T-
Mobile’s participation and believed that the operator would be a leader in the relocation of
incumbent private and public licensees in the band. Bidders further believed that T-Mobile’s
global breadth would lead the way in encouraging chip and handset manufacturers to deliver
compatible equipment for the band.
AWS license terms and conditions. Relative to prior licenses, the FCC structured AWS
licenses with a longer term and relaxed ―substantial service‖ requirements to give licensees
more time to build out service in a spectrum band where equipment did not yet exist. In addition
to the prediction of slow availability of type-accepted equipment for the AWS band, some
relocation of government and private incumbent licensees also needed to occur. As a result,
the term length was set at 15 years—compared to ten years for all other commercial radio
licenses previously issued—and the FCC implemented vague ―substantial service‖ requirements
that allowed bidders to hold spectrum until equipment was manufactured and incumbents were
relocated. Notably, the FCC did not specify exact coverage benchmarks for building and
deploying the AWS service.
8
Rather, substantial coverage was defined as service that is ―sound,
8
Found in section 27.14(a) of the FCC’s rules, substantial service is vaguely defined as ―service which is sound, favorable, and
substantially above a level of mediocre service which just might minimally warrant renewal.‖ 47 C.F.R. § 27.14(a). Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 13 of 40
favorable, and substantially above a level of mediocre service….‖
9
Finally, no spectrum was
set-aside for any designated entities (i.e., new entrants), but small businesses (based on
average annual revenues over the previous three years) were given bidding credits that reduced
the bidder’s final amount due.
Auction mechanics. The auction was conducted as a single simultaneous multiple round
auction that included 1,122 licenses. The FCC imposed an aggregate reserve price of $2.06
billion in order to ensure the recovery of the estimated relocation costs for government licensees
at 1710 – 1755 MHz10
.
Bidding and winners. The auction commenced August 9, 2006 and ended September 18,
2006, with 161 rounds conducted over 28 bidding days. There were 168 qualified bidders in the
auction and 104 different bidders won 1,087 licenses. The gross bids totaled $13,879,110,200
(bids net of the bidding credits offered to small businesses totaled $13,700,267,150). As shown
in Figure 8, T-Mobile USA, Verizon Wireless, SpectrumCo LLC, MetroPCS, Leap Wireless, and
Denali Spectrum were the large winners.
Figure 8 - United States AWS Auction Winners
Top Ten License Winners Winning Bids
Price/
MHz-pop
Licenses
Population*
T-Mobile License LLC $4,182,312,000.00 $.63 120 474,718,308
Cellco Partnership d/b/a Verizon Wireless $2,808,599,000.00 $.73 13 192,047,611
SpectrumCo LLC $2,377,609,000.00 $.45 137 267,387,437
MetroPCS AWS, LLC $1,391,410,000.00 $.97 8 144,544,402
AT&T (Cingular AWS, LLC) $1,334,610,000.00 $.55 48 198,768,198
Leap (Cricket Licensee) $710,214,000.00 $.44 99 117,802,839
Denali Spectrum License, LLC $365,445,000.00 $.63 1 58,178,304
Barat Wireless, L.P. $169,520,000.00 $.33 17 41,601,174
AWS Wireless Inc. $115,503,000.00 $.12 154 60,498,394
Atlantic Wireless, L.P. $100,392,000.00 $.27 15 35,803,110
Source: FCC, KB Enterprises LLC.
Note: * Represents the sum of the population covered by each license won by the bidder and may include overlap as
multiple blocks cover the same population.
AWS license transfers. Since the AWS spectrum auction, a number of licenses have
transferred ownership. Recent AWS spectrum trades are notable because they signal a viable
secondary market for license assets and also move spectrum to operators with definitive near-
term build-out plans. Figure 9 below summarizes the major changes in ownership of AWS
licenses.
9
For a discussion of the details of substantial service as compared to specific population coverage benchmarks in build-out
requirements, see Jennifer Prime, ―Finding Substance in the FCC’s Policy of ―Substantial Service‖ Federal Communications Law
Journal Vol. 56 No. 2, 2004.
10
If the price of all 1,122 licenses did not meet the aggregate reserve price, the results of the auction would be nullified. Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 14 of 40
Figure 9 - US AWS Major Spectrum Trades
Winning Bidder Assignee Number of Licenses Type of Transfer
SpectrumCo Cox Communications
15
15
Full Transfer
Market Partition11
NextWave T-Mobile 57 Full Transfer
NextWave Flat Wireless 5 Full Transfer
NextWave MetroPCS 9 Full Transfer
Daredevil Flat Wireless 2 Full Transfer
Source: KB Enterprises LLC.
Network launches to-date. Of AWS license winners, T-Mobile, Leap Wireless, and MetroPCS
have been most aggressive deploying networks in the AWS band. Large incumbents such as
Verizon Wireless and AT&T seem to be taking more time, possibly saving the spectrum for
future capacity needs or LTE. While Leap Wireless and MetroPCS are CDMA operators, their
success in rapidly rolling out new markets and adding new customers reveals the viability of the
AWS band and points to potential future deployments of LTE in the AWS band.
T-Mobile USA. T-Mobile is the fourth-largest US wireless carrier covering more than
268 million POPs and serving nearly 33 million subscribers as of year-end 2008. The
operator aggressively deployed 3G UMTS/HSPA network coverage in the AWS band
during 2008 to cover 27 markets and 107 million POPs at year-end. The operator
launched its first HSPA handset in September 2008 and, according to Wireless
Intelligence, had approximately 1.8 million HSPA subscribers at the end of 1Q09. T-
Mobile plans to cover more than 200 million POPs by year-end 2009 and is quickly
introducing new 3G devices. In March 2009, the operator announced the availability of
the ―T-Mobile webConnect USB Laptop Stick‖ from Huawei Technologies Co., which
supports HSPA and WiFi (802.11 b/g) network access.
MetroPCS. MetroPCS is a large regional CDMA carrier covering 64 million POPs and
serving 5.4 million subscribers as of year-end 2008. The operator pursues a strategy of
offering flat-rate unlimited wireless service plans and is using AWS spectrum for capacity
and footprint expansion in certain markets. Including AWS spectrum, MetroPCS plans
to launch services in several major metropolitan markets in 2009 and 2010, bringing
coverage to an additional 40 million POPs.
Leap Wireless. Leap Wireless is a large regional CDMA carrier covering 67 million
POPs and serving 3.8 million subscribers as of year-end 2008. Like MetroPCS, Leap
offers flat-rate unlimited wireless service plans. In addition, Leap offers an unlimited
mobile broadband service using CDMA technology across all POPs. Leap and its
spectrum partner, Denali Spectrum, collaborated in the AWS auctions to spend
approximately $1 billion and announced that the new licenses will enable the carrier to
bring covered POPs to 182 million. During 2008, Leap launched AWS networks
covering 11 million POPs and is targeting an additional 25 million POPs in 2009,
11
The FCC allows licensees to partition or disaggregate licenses, thereby breaking them into smaller areas either geographically or
in terms of radio frequencies. In this case, SpectrumCo fully assigned 15 licenses and assigned a portion of the geographic area in
15 other markets. Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 15 of 40
bringing total covered POPs to more than 90 million. For AWS markets, Leap expects to
launch a ―broader product family‖ this year, including voice/data, broadband, and pre-
paid services.
Stelera Wireless. Stelera Wireless is a new entrant that acquired 42 AWS licenses and
currently deploys high-speed broadband services in rural areas covering almost 6 million
POPs. Stelera began offering services in February 2008 under a flat, all-IP Internet High
Speed Packet Access (I-HSPA) architecture solution provided by Nokia Siemens
Networks.
Cox Communications. Cox Communications is a multi-service broadband
communications and entertainment company with more than 6 million total residential
and commercial customers. To offer the ―quadruple play‖ of cable, Internet, voice and
wireless services, Cox is planning to build and launch a wireless network this year
across the company’s cable markets using CDMA technology.
B. Canada
Market participants. Three major nationwide telecommunications carriers—Rogers, Bell and
TELUS—hold the entire cellular and PCS license allocation in Canada. The following chart
(Figure 10) summarizes the spectrum holdings of each carrier in each of the Canadian regions
prior to the recent Canadian AWS spectrum auction. As in the United States, pent-up demand
for additional spectrum and an uncertain timetable for digital dividend spectrum availability (in
the 700 MHz band) created a situation in which incumbents desired spectrum in the AWS band.
Figure 10 - Canadian Spectrum Holdings in Cellular, PCS and ESMR services
Market Population Rogers MHz Bell MHz TELUS MHz
Toronto 4,883,800 75 55 50
Montreal 3,507,400 85 45 50
Vancouver 2,076,100 85 40 55
Ottawa-Gatineau 1,102,900 85 45 50
Calgary 976,800 85 40 55
Edmonton 961,500 85 40 55
Source: Lamay-Yates Associates, Inc. Canadian and US Mobile Spectrum Holdings Prepared for Mobilexchange Ltd.
May 25, 2007; KB Enterprises LLC.
AWS license terms and conditions. Canada’s regulatory body, Industry Canada, closely
followed the United States in implementing its AWS band plan and auction rules. However,
unlike the United States, Industry Canada implemented a set-aside in the AWS spectrum band
for new entrants, specific roaming requirements, and a 10-year license term.
Set-aside for new entrants. For new entrants, 40 of the 90 MHz available in the AWS
band were set aside in frequency blocks B, C, and D. To be eligible for the set-aside, a Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 16 of 40
new entrant was defined as an entity, including affiliates and associated entities, which
hold less than 10 percent of the national wireless market based on revenue.
12
Automatic roaming. In order to facilitate the entry of new companies into the market,
Industry Canada also required licensees to offer automatic digital roaming on their
networks in conjunction with the AWS spectrum auction. Roaming arrangements were
required to be offered wherever technically feasible, negotiated expeditiously and in
good faith. Negotiations between carriers were to be time-limited, and if the parties were
unable to come to an agreement within the established time frame, they were required to
undertake binding arbitration.
13
10-year term. Canada implemented a 10-year initial license term and employed a
population-based build-out requirement at a five-year roll-out target.
Auction mechanics. After the US success in the PCS spectrum auctions, Canada developed
a similar auction system that employed simultaneous multiple round auction rules to allow
bidders to aggregate spectrum across spectrum blocks and geographic areas. On May 27,
2008, Industry Canada conducted a spectrum auction that included 90 MHz AWS spectrum, 10
MHz of expansion PCS licenses and one block of 5 MHz at 1670-1676 in the AWS auction.
Bidding and winners. The policy choices by the government, along with the demand for
spectrum bandwidth, paved the way for a robust competitive auction. The set-aside and
roaming requirements reduced the risk for new entrants to enter the auction and significantly
increased the spectrum auction competition for the incumbent carriers in the open eligibility
blocks. In addition, the set-aside blocks created greater opportunity for at least one additional
national wireless carrier. The resulting auction prices are included in Figure 11 below.
Figure 11 - The Winners of the 2008 Canadian Spectrum Auction (in US Dollars)
Top Ten License Winners Winning Bids
Price/
MHz-pop Licenses
Population*
Rogers $999,367,000 $1.67 59 30,007,094
TELUS $879,889,000 $1.82 59 30,007,094
Bell Mobility Inc. $740,928,000 $1.75 54 27,245,106
Québecor Inc $554,549,000 $1.46 17 14,687,045
Globalive Wireless $442,099,000 $1.24 30 23,265,134
Data & Audio-Visual $243,159,000 $1.39 10 16,121,864
Shaw Communications $189,519,000 $1.01 18 9,351,375
SaskTel $65,690,000 $1.35 3 975,717
6934579 Canada Inc. $52,385,077 $0.15 4 17,675,254
MTS/Allstream $40,773,750 $0.61 3 1,118,283
Source: Industry Canada, KB Enterprises LLC.
Notes: Represents the sum of the population covered by each license won by the bidder and may include overlap as
multiple blocks cover the same population.
12
http://www.ic.gc.ca/eic/site/smt-gst.nsf/eng/sf08833.html#fig1 Policy Framework for the Auction for Spectrum Licenses for
Advanced Wireless Services and other Spectrum in the 2 GHz Range. November 2007.
13
Id. Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 17 of 40
Network launches by new entrants expected by year-end 2009. Conversations with industry
participants imply that new entrants may launch selected markets towards the end of 2009.
Incumbent players appear to be taking a slower approach toward utilizing the band. Wireless
Intelligence estimates that there were 584,765 HSPA subscribers in Canada at the end of 1Q09,
all belonging to Rogers Wireless and in legacy spectrum bands.
C. Latin America
Many Latin American countries implemented US PCS 1900 services and structured their
national band plans attributing the 1.7-2.1GHz band for IMT-2000 services, following ITU and
CITEL (Inter-American Commission on Telecommunications) recommendations for Region 2.
Although many countries could allocate 2x60 MHz (1710-1770 / 2110-2170MHz) for mobile
services and reserve 2x15 MHz for future expansions (e.g., 1755 -1770 MHz paired with 2155 -
2170 MHz), regulators tend to follow the US licensing program structure to create some level of
geographic spectrum consistency. As a result, most plans call for the initial allocation of 90
MHz (2x45 MHz) and leave 25 MHz in the 2155-2180 MHz frequency band (known as AWS-3)
for some time in the future.
To-date, based on Wireless Intelligence estimates, Latin America has more than 2 million 3G
HSPA subscribers in frequency originally licensed for 2G use, totaling 41 HSPA networks in
services in the region. Flexible licensing regimes in most of the countries allowed the ―re-
farming‖ of 2G frequencies within an existing license for 3G deployment. Only a few countries,
such as Brazil and Uruguay, are following the 1.9-2.1 GHz IMT-2000 core band specifically for
3G services. All other countries in ITU Region 2 are expected to follow the United States in
allocating 1.7-2.1 GHz band for 3G services.
Chile. The country telecom regulator, Subsecretaria de Telecomunicaciones (SubTel),
launched a beauty contest for licensing the AWS (1.7-2.1 GHz) band spectrum. Three blocks of
30 MHz (2x15 MHz) nationwide spectrum (for a total of 90 MHz) will be offered exclusively for
new entrants. The process officially started as of April 16, 2009 and is predicted to end in
August 2009. In January 2009, a Supreme Court decision maintained a 60 MHz spectrum cap
per operator for this particular AWS licensing, thereby excluding incumbents from participating
in the new licensing program. The decision concluded a long controversy between incumbent
mobile network operators and SubTel over the AWS band.
At least one new operator may begin offering services based in the AWS band by spring 2010.
Fixed broadband penetration stands at 9% and growth is decelerating, placing increased
importance on wireless broadband services to sustain increases in broadband penetration.
Next-generation services launched to-date by three incumbent operators—Movistar, Entel PCS
and Claro, using 850 MHz and 1900 MHz—have produced approximately 400,000 3G HSPA
connections as of March 31, 2009.
SubTel is also planning to allocate frequencies in the 2.5-2.69 GHz and 700 MHz bands in the
near future, as both bands are seemingly cleared and ready to be licensed. The exact timing
awaits clarity on international harmonization options and technology and equipment availability.
However, addressing the spectrum cap issue remains critical to allow incumbent mobile
operators access to these spectrum bands.
Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 18 of 40
Mexico. The AWS licensing process in Mexico, together with other frequencies to be allocated,
started approximately two years ago and is moving forward sporadically. The policy maker,
Secretaria de Comunicaciones y Transporte (SCT), and the regulator, Comision Federal de
Telecomunicaciones (CoFeTel), are still trying to agree on the general basis for the bidding of
250 MHz in five bands (1.9 GHz, 1.7-2.1 GHz, 3.4-3.7 GHz, 71-81 GHz, and 410-430 MHz).
According to a March 2008 joint statement made by both SCT and CoFeTel
14
, they plan to
auction a total of 90 MHz (2x45 MHz) for AWS services in Mexico’s nine cellular regions.
Recent news reports indicate plans to reserve a block for one or more new entrants. Finally, a
spectrum cap of 65 MHz currently applies to mobile network operators (MNOs) in Mexico, which
could potentially prevent incumbent operators such as Telcel (America Movil) and Movistar
(Telefonica) from applying for new spectrum. This is one of the key issues requiring resolution
prior to proceeding with licensing.
Figure 12 - Mexican Band Plan Defined on March 2008
Block Frequency Paired MHz Paired Total MHz
A 1710-1720 MHz 2110-2120 MHz 2x10 MHz 20 MHz
B1 1720-1725 MHz 2120-2125 MHz 2x5 MHz 10 MHz
B2 1725-1730 MHz 2125-2130 MHz 2x5 MHz 10 MHz
C 1730-1735 MHz 2130-2135 MHz 2x5 MHz 10 MHz
D 1735-1740 MHz 2135-2140 MHz 2x5 MHz 10 MHz
E 1740-1745 MHz 2140-2145 MHz 2x5 MHz 10 MHz
F 1745-1755 MHz 2145-2155 MHz 2x10 MHz 20 MHz
Source: SCT, CoFeTel.
The licensing process could reasonably be expected to happen towards the end of 2009 or
beginning of 2010 given operator needs for additional spectrum. Existing operators are
increasingly seeking to compete by offering 3G in some regions within current spectrum
assignments. The government is aware of the importance of allocating new spectrum as soon
as possible to facilitate broadband penetration and economic growth. President Calderon’s
government objective, as set out in the National Program of Infrastructure 2007-2012, aims to
achieve 22% broadband penetration by 2012, compared to current fixed broadband penetration
of around 6%. Wireless broadband appears integral to achieving the 2012 target.
Argentina. The telecom regulator SeCom (Secretaría de Comunicaciones), which is part of the
Ministry of Infrastructure and Federal Planning, is planning to launch a 3G auction in the 1.7-2.1
GHz band in July 2009. In September 2008, SeCom and its counterpart telecom control entity,
the Comision Nacional de Comunicaciones (CNC), set up a technical working group to address
future spectrum licensing processes that began launching a TDD auction in the 3.5 GHz band
by the end of 2008. This group also has the mandate to further allocate vacant chunks of
spectrum in 850 MHz and 1900 MHz and is evaluating the potential allocation of the 700 MHz
band, which could become available after the digitalization of television15
.
SeCom seems to have everything ready to auction the AWS (1.7-2.1 GHz) band this year and is
hoping to attract a new entrant. Since 1998, a combined 50 MHz spectrum cap per operator in
14
SCT document ―Nuevo Programa de Licitacion de Frecuencias‖ March 31st, 2008.
15
The decision of a digital terrestrial TV standard has been consistently postponed by Argentine authorities.
However, unofficially it seems the country has already chosen the ISDV-T Japanese standard. Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 19 of 40
each region has been effective in the country. This is an issue the regulator will have to address
if it wants incumbent operators to access this spectrum. The Argentine mobile market is very
competitive and ranks first in the region in terms of mobile penetration, reaching 115% as of
March 31, 2009. In addition, Argentina has a vibrant broadband market with fixed penetration
now approaching 9%. Demand for mobile broadband is expected to increase significantly in the
near future, and more spectrum availability will certainly facilitate growth. If the AWS auction
occurs as scheduled in July 2009, operators might launch operations in this band as early as
the second quarter of 2010.
Colombia. The 1.7-2.1 GHz band is reserved for IMT-2000 services by the Ministry of
Communications, which is the national authority in charge of spectrum management. Although
no license timing has been announced, the Ministry is believed to be working to publish a
proposal to structure the AWS band shortly. The Ministry is very interested in promoting mobile
broadband and the provision of new data services, including tourism, geo-location, logistics, and
mobile banking and, on April 17th 2009, launched a licensing program for 90 MHz in the 2.5-
2.69 GHz band. In addition, it has been reported by different news sources that the Ministry
plans to grant an additional 15 MHz in the 1900 MHz band for the two largest incumbent mobile
operators, Comcel (America Movil) and Movistar (Telefonica Moviles). These two operators,
together with the third market player, Tigo (Millicom), have all reached to the top of the 40 MHz
spectrum cap that is allowed for mobile operators, the most restrictive spectrum cap per
operator in Latin America. The 2.6 GHz band licensing proposal would allow moving this cap
from the existing 40 MHz to 60 MHz.
Other Latin American Countries. Most other Latin American countries also attribute the 1.7-
2.1 GHz band for IMT-2000 services in their respective national frequency plans. Still,
according to discussions with regulators responsible for allocating spectrum, many are holding
off on developing a licensing program until major MNOs specifically request additional
spectrum. However, based on increasing mobile penetration rates, larger countries such as
Venezuela—with greater than 100% penetration—Peru and Ecuador are likely candidates to
launch licensing programs soon after Chile, Mexico, Argentina and Colombia. By contrast,
Central American countries—where in many cases the AWS band is not yet on the minds of
regulators—are further off, with licensing perhaps not until 2012.
Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 20 of 40
V. Insights from Carriers and Vendors
Discussions with leading wireless equipment vendors and AWS-band wireless operators
produced a number of findings, many of which were surprisingly consistent. At a high level,
vendors and operators concurred that (1) the AWS band is very similar to existing mobile
wireless bands, (2) no technical roadblocks prevent delivery of equipment/handsets in scale,
and (3) AWS product demand is accelerating on the back of T-Mobile USA’s deployment.
However, a commonly noted challenge relates to mobile baseband chipsets supporting a limited
number of frequency bands. The good news is that newly announced products are expected to
support more simultaneous bands in 2010, enabling full voice and data roaming across all
regional and global bands such as 850 MHz, 900 MHz, 1800 MHz, 1900 MHz and 2.1GHz, in
addition to AWS 1.7-2.1 GHz.
Key findings are outlined below and suggest that a healthy AWS ecosystem is developing to
support HSPA deployment and additional licensing throughout the Americas.
The AWS band is sufficiently similar to other frequency bands and has similar
propagation characteristics. Close frequency proximity to IMT-2000 and PCS bands
is enabling rapid product development and network deployment. With relatively minor
engineering adjustments, vendors already offering 1800/1900 MHz band products can
readily support AWS-band products. On the operator side, network planning and
deployment in the AWS band is largely comparable to deploying in the 1900 MHz band
across various morphologies (urban, suburban, and rural).
"For Operators around the world, nothing is more central to reliably serving
customers, than having access to high quality radio spectrum. We know from
experience at T-Mobile, that each band has its merits; the lower UHF bands
provide excellent propagation characteristics yet typically have limited
availability and smaller spectrum allocations. The higher bands, above 2.6GHz,
usually have larger spectrum allocations, yet they do not provide the same
valuable propagation benefits of the lower bands. For operators wishing to
balance both capacity and propagation characteristics, the "sweet spot" lies
between 1GHz and 2GHz on the spectrum chart. Consequently, the AWS band is
ideal for delivering great voice and mobile broadband services to customers.”
Neville Ray, Senior Vice President, Engineering Operations – T-Mobile USA
AWS infrastructure equipment and devices are ready today. Given the close
relationship to the other bands, AWS infrastructure equipment and devices are available
in scale today, with increased volumes forthcoming.
“At T-Mobile USA, we are working with our suppliers to deliver a broad range of
innovative AWS-banded devices to market. Our suppliers share our vision of the
value the AWS band enables. Consistently, we observe suppliers leveraging
investments made previously for the 1.9/2.1 band, and delivering high performing
and price competitive AWS-banded devices. The AWS device eco-system is
broadening each day and is tied to the burgeoning growth of 3G globally.”
Neville Ray, Senior Vice President, Engineering Operations – T-Mobile USA
Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 21 of 40
o Production cost curves are comfortable and improving. According to several
vendors, cost curves are not all that different from mainstream products today
and are not slowing the introduction of AWS products. Moreover, the component
supply chain—particularly semiconductor players—appears ready and excited to
support AWS hardware in scale.
“Qualcomm has long recognized the value of the AWS spectrum in the
Americas as a logical extension of the existing 3G bands. Therefore, we
have designed and implemented virtually across all of our chipset
solutions to support our customers and operators with this capability.”
Alex Katouzian, Vice President, Qualcomm CDMA Technologies
o Infrastructure ramping. T-Mobile USA reports no problems with HSPA
equipment procurement and expects to cover more than 200 million POPs by
year-end 2009, up from 107 million POPs covered at year-end 2008. New
entrant Stelera Wireless is also progressing with HSPA market expansion,
aiming to cover 55 cities across the Midwestern United States by June 2009 and
110 cities by year-end 2010.
“Ericsson is a leader in AWS build outs, having provided infrastructure to
T-Mobile USA to support its deployment of HSPA in the band. We look
forward to further expanding AWS coverage bringing the benefits of high
capacity, mobile broadband networks to consumers throughout the
Americas”
Barbara Baffer, VP Public Affairs and Regulations, Ericsson Inc
o Devices growing more plentiful. According to T-Mobile USA, Motorola, Nokia,
Samsung, Huawei, HTC and Sony Ericsson all have products in the AWS band
today. Importantly, T-Mobile USA is ―seeing a healthy supply of AWS-banded
handset products from all major suppliers.‖ Further, of the operator’s 48 total
devices currently offered, nine support the AWS band, and management expects
approximately 50% of the portfolio will support AWS within one year,
approximately 80% within two years, and more than 90% in five years.
o Innovative Broadband devices. In addition to handsets, AWS banded data
cards, modems and routers are also becoming more available. BandRich, Huawei
and Option, for example, have all either launched or are planning to launch AWS-
banded data devices in 2009.
o Field test tools. To speed up network deployment, field test tool for AWS band
network performance measurement and tuning is of critical importance. ASCOM,
Anite and BandRich are coming out with AWS banded field test tools to support
the network deployment ramp up.
Device caveat and roaming – devices currently support only two simultaneous
“high” bands. At present, devices can handle a maximum of two simultaneous high
bands only (e.g., 1900 MHz and 2100 MHz), and third-generation mobile devices
typically support three frequency bands total. The operator can specify two low (e.g.,
800 MHz/900 MHz) and one high (e.g., 1900 MHz), or the opposite (one low, two high). Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 22 of 40
As a result, in the short-term 3G roaming service in certain countries may be limited
depending upon band selection by the operator. Fortunately, multiple vendors are
introducing handsets capable of supporting three (or more) simultaneous high bands
with volume shipments available in 2010. T-Mobile USA is currently prioritizing high
bands over lower bands due to the operator’s spectrum asset portfolio in the United
States and abroad.
AWS spectrum clearing not a roadblock in the United States. Based on the rapid
deployments of T-Mobile USA, MetroPCS, and Leap Wireless, relocation of incumbent
users has not materially obstructed AWS network deployment. Specifically, T-Mobile
indicated that ―relocation of incumbents is progressing well and T-Mobile USA now sees
a clear path to serving the majority of US POPs this year.‖ Early on, working with the
various US Government agencies to clear the AWS spectrum was reportedly challenging
for T-Mobile. That said, once they established the right kind of relationships,
demonstrated their commitment and built mutual trust; they found the US Government
agencies quite easy to deal with.
T-Mobile USA is trailblazing to achieve rapid AWS subscriber penetration. While
the initial market opportunity was small for potential suppliers, the addressable market is
quickly expanding. T-Mobile USA expects to drive device and subscriber penetration
rapidly over the next several years, with approximately one-half of the operator’s
subscriber base—or an estimated 20 million subscribers—expected to be on HSPA in
the AWS band in two years and more than 90% in five years. Further, the operator
foresees AWS inclusion in all network devices as soon as the latter part of 2010, when
chipsets support three high bands. The success of MetroPCS and Leap Wireless on the
CDMA side also spurs HSPA operators to move rapidly in the AWS band.
Areas for industry-wide collaboration. The emerging AWS ecosystem points to
several important areas to drive AWS forward:
o Allocate and license AWS spectrum where available, while emphasizing global
harmonization of spectrum bands and technology neutrality.
o Promote the compatibility of the band in relation to the 1.9/2.1 GHz core band
and also PCS 1900 MHz, which have similar propagation characteristics and
operate well on similar cell site grid spacing.
o Highlight the growing portfolio of available AWS devices and demonstrate that
the band exhibits attractive propagation characteristics suitable for 2G, 3G and
future 4G systems. Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 23 of 40
VI. Sample of Commercially Available Devices
As highlighted elsewhere in this report, many AWS-enabled devices have been commercially
launched in the marketplace and many more are in the pipeline and in the development or
testing phases now. Following is just a sample of some of the devices which have already been
commercially launched.
Handsets
Samsung -
Memoir
Samsung -
t639
Samsung -
Android I7500
Samsung -
Behold
Samsung -
t819
Pharos -
Traveler 137
Sony Ericsson -
TM-506
Sony Ericsson -
XPERIA X1
Sony Ericsson -
TM506
Sidekick -
LX
Nokia -
3555
Nokia -
6263
HTC -
G1
USB
Modems
webConnect -
USB Stick
Franklin W. -
CGU-720
BandRich -
C105
BandRich -
C105
FLYCARD -
FLY-H1
Wireless
Routers/
Data
Cards
FLYBOX -
FLY-HR2
Lightspeed -
ROUTER-240T
Lightspeed -
HSDPA-110V
Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 24 of 40
VII. AWS Total Addressable Market Forecast
The track record of AWS licensing in the United States and Canada, expectations for Latin
America, and interviews with regulators and industry participants all provide a basis for
establishing a five-year AWS subscriber and handset/device forecast model for the Americas.
Including network launches of T-Mobile, Leap Wireless, and MetroPCS last year, the United
States ended 2008 with an estimated 2.2 million customers in the band (perhaps two-thirds
HSPA and one-third CDMA). The continued push of these carriers and additional licensing
across the Americas brings total subscribers with AWS enabled devices to an estimated 177.8
million at year-end 2013, a compound annual growth rate of 94% from an estimated 12.4 million
at year-end 2009. As the subscriber base grows, estimated handset/device unit sales are also
expected to increase rapidly, reaching an estimated 114.5 million in 2013, an annual compound
growth rate of 80% from an estimated 10.9 million in 2009. Importantly, during this period, the
licensed AWS population (POPs) is projected to increase to an estimated 732 million from an
estimated 328 million at year-end 2008. Summary results are included in Figure 13 below.
Figure 13 – Forecast AWS Subscribers and Handsets for the Americas
-
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
180.0
200.0
2008 2009E 2010E 2011E 2012E 2013E
Estimated AWS Subscribers in Millions
-
20.0
40.0
60.0
80.0
100.0
120.0
140.0
Estimated Annual Device Units in Millions
EOP Subs
Implied AWS Device Unit Sales/Year
Source: GVP estimates, company and country reports.
Market launch assumptions. Based on insights for each country, the model assumes the
following for AWS network launches:
US: since mid-2008 (fact)
Canada: end 2009 (assumption)
Chile: early 2010 (assumption) Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 25 of 40
Argentina: mid-2010 (assumption)
Mexico: end 2010 (assumption)
Colombia: end 2010 (assumption)
Rest of South America: assume 2011-2012, especially for large countries such as
Venezuela, Peru, Ecuador, and Paraguay
Central America: assume licensing in 2012-2014
As noted previously, Brazil and Uruguay are following the 1.9-2.1 GHz IMT-2000 core band plan
and, accordingly, are excluded from our model.
Methodology. The model produces country-level forecasts that are rolled up into the Americas
forecast. For each country, the methodology incorporates the following:
Wireless market penetration and implied covered POPs, total end-of-period (EOP)
wireless subscribers, gross additions, disconnects (churn), and net additions.
Three scenarios—low, base case, and high—for AWS subscriber penetration of total
market subscribers in each year.
Assumed AWS churn rates, handset/device upgrade rates, and handset/device discount
rates drive total estimated AWS handset units in each year. The handset/device
discount is applied to capture refurbished and gray market handsets, as well as multiple
SIM cards that are included in calculated gross subscriber additions.
AWS penetration assumptions. Penetration assumptions in each market are the most critical
variable. For all of the Americas, the model assumes gradual AWS penetration in the early
years and acceleration in 2011-2013 as additional licensing is completed. The percentage of
total market subscribers is estimated at 23% in 2013, up from an estimated 2% in 2009.
Notably, forecast penetration is still below the approximate 30% of total licensed spectrum in
each market that AWS spectrum will likely represent.
Figure 14 – Forecast Subscribers with AWS-Enabled Devices
Sub Figures in Millions 2008 2009E 2010E 2011E 2012E 2013E
Assumed % EOP Subs with AWS Capable Devices
% Non-AWS Devices 99.6% 98.0% 96.0% 89.9% 84.1% 77.4%
% AWS 1.7/2.1 GHz 0.4% 2.0% 4.0% 10.1% 15.9% 22.6%
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Implied EOP Subscribers
Non-AWS 574.7 619.7 653.1 649.5 637.6 609.2
AWS 1.7/2.1 GHz 2.2 12.4 27.4 73.0 120.1 177.8
Total 576.9 632.1 680.5 722.4 757.7 787.0
Source: GVP estimates, company and country reports.
Detailed forecast results and scenario analysis. The model output summary for the
Americas is included in Figure 15 below, highlighting certain of the key subscriber and
handset/device assumptions from a global level.
Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 26 of 40
Figure 15 – AWS Subscriber and Handset/Device Forecast for the Americas – Base Case
Sub/Device Figures in Millions 2008 2009E 2010E 2011E 2012E 2013E
AWS Band Sub/Device Assumptions
BOP Subs - 2.2 12.4 27.4 73.0 120.1
Gross Additions 2.2 11.2 19.6 60.3 75.5 102.0
Disconnects - (0.9) (4.7) (14.7) (28.3) (44.3)
Net Additions 2.2 10.3 15.0 45.6 47.2 57.7
EOP Subs 2.2 12.4 27.4 73.0 120.1 177.8
% Change Y/Y 476% 120% 166% 65% 48%
Average Subs 1.1 7.3 19.9 50.2 96.5 148.9
Monthy Churn Rate 0.0% 1.0% 2.0% 2.4% 2.4% 2.5%
Annual Upgrade Rate as % BOP Subs 0% 2% 5% 10% 15% 17%
Estimated Upgrade Units - 0.0 0.6 2.7 10.6 20.9
SIM/Refurbished Discount as % of GAs 0% 3% 5% 6% 7% 8%
SIM/Refurbished Discount Units - 0.3 1.0 3.5 5.2 8.3
Implied AWS Device Unit Sales/Year 2.2 10.9 19.3 59.4 80.9 114.5
% Change Y/Y 388% 78% 208% 36% 42%
Cumulative AWS Device Unit Sales 2.2 13.1 32.4 91.8 172.8 287.3
Source: GVP estimates, company and country reports.
AWS networks in the United States are expected to represent the lion’s share of all Americas
subscribers and handsets/device in the AWS band. The model assumes that LTE networks
and/or incremental AWS capacity radios are introduced in 2010-11, leading to a step function in
US AWS subscribers and device sales. Estimates by country are included in Figures 16 and
17 below.
Figure 16 – Estimated EOP AWS Subscribers by Market – Base Case
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
180.0
200.0
2009E 2010E 2011E 2012E 2013E
Subscribers in Millions
All Other LatAm
Venezuela
Peru
Colombia
Chile
Argentina
Mexico
Canada
United States
Source: GVP estimates, company and country reports.
Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 27 of 40
Figure 17 - Estimated AWS Device Unit Sales per Year by Market – Base Case
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
2009E 2010E 2011E 2012E 2013E
Handset Units in Millions
All Other LatAm
Venezuela
Peru
Colombia
Chile
Argentina
Mexico
Canada
United States
Source: GVP estimates, company and country reports.
An approximate 5% swing in 2013 penetration increases/decreases subscribers by
approximately 36 million customers and device sales by approximately 27 million units. Results
for the three different penetration scenarios included in the model are illustrated in Figure 18
below.
Figure 18 – Scenario Analysis: Results from Low Case, Base Case, and High Case
Sub/Device Figures in Millions 2008 2009E 2010E 2011E 2012E 2013E
Scenarios:
Penetration of EOP Subs with AWS Devices
1 Low 0.2% 1.7% 3.4% 7.9% 13.4% 18.0%
2 Base Case 0.4% 2.0% 4.0% 10.1% 15.9% 22.6%
3 High 0.5% 2.2% 4.6% 12.3% 18.3% 27.2%
AWS Subscribers
1 Low 1.4 10.7 23.4 57.0 101.8 141.6
2 Base Case 2.2 12.4 27.4 73.0 120.1 177.8
3 High 3.0 14.2 31.4 88.9 138.4 214.0
AWS Devices
1 Low 1.4 9.8 16.4 45.1 71.7 87.6
2 Base Case 2.2 10.9 19.3 59.4 80.9 114.5
3 High 3.1 12.0 22.1 73.8 90.1 141.5
Source: GVP estimates, company and country reports.
Forecast caveats. The model depends on a number of assumptions, including timing and
operator application of spectrum—for new advanced services or for fill-in capacity/coverage to
complement existing voice/data services. In addition, each operator has different needs and
objectives depending upon existing spectrum portfolios and footprints.
Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 28 of 40
VIII. Alternate Spectrum Bands and Issues That May Impact AWS
Band
700 MHz Band. The migration to digital terrestrial television from analog TV is freeing part of
the UHF band to mobile services. This band is known as the ―digital dividend.‖ The United
States was the first country to license this band at 700 MHz in 2008. In the Americas—and
more broadly in the world today—no other country has licensed the band except the United
States. Canada and Chile are in the early stages of planning this band for wireless services,
while most other countries are likely to do so only after 2015, as migration from analog to digital
TV will likely take longer in these countries. In fact, only a few Latin American countries have
begun the introduction of digital TV signals (notably Brazil). In Europe, most countries are
currently beginning to plan the band for licensing in the next three to five years.
AWS versus 700 MHz in the United States. The 700 MHz auction was important in the US
market because of the prime location of the band for mobile services and because it was the
last large parcel of spectrum identified for auction in the foreseeable future. The auction raised
over $19 billion and 101 bidders won 1,090 licenses. While T-Mobile did not participate in the
auction, other major AWS winners also won licenses in the 700 MHz auction, including Verizon,
members of SpectrumCo and AT&T. Given very favorable propagation characteristics at the
lower frequency and more stringent build-out requirements, companies that hold spectrum in
both bands may give priority to 700 MHz holdings over AWS. However, as described earlier,
growing voice/data network traffic will necessitate deployment in all available bands over time.
Moreover, network equipment and handsets are available for the AWS band today, whereas
more time is needed to bring commercial hardware to market for the 700 MHz band.
2.6 GHz. The 2500-2690 MHz band is aligned across all ITU regions. This harmonization can
have a significant impact on equipment availability due to global economies of scale. There are
distinct internal band designs, though, with the central issue being the separation between
frequency division duplex (FDD) and time division duplex (TDD) within the band to prevent
technical interference. The most common band design is the International Telecommunications
Union’s option 1 (2x70 MHz for FDD with 50 MHz for TDD at the center of the band). In the
Americas, many countries have used the band for MMDS cable-TV and are now converting the
band for mobile broadband. In the United States, a consortium between Sprint and Clearwire is
using the band for TDD only technologies (WiMax). In Canada, the regulator is discussing how
to set up the band for both FDD and TDD. In Latin America, most regulators are discussing the
utilization of ITU’s option 1 to introduce both FDD and TDD technologies, which would allow the
band to be utilized in a more technology neutral way for both LTE and WiMax. Chile has
already planned 2.6 GHz according to ITU’s option 1. In Europe, the 2.6 GHz band has begun
to be licensed for mobile according to ITU’s option 1. Norway and Sweden have licensed it, and
most other European countries are planning to license it in the next three years. Hong Kong has
also successfully licensed the 2.6 GHz band.
AWS-2 and AWS-3 spectrum. Since carving out AWS-1 spectrum in 2002, the United States
identified an additional 20 MHz of spectrum in the bands 1915-1920 MHz paired with 1995-2000
MHz, 2020-2025 MHz paired with 2175-2180 MHz, collectively referred to as AWS-2, and 20
MHz of spectrum in the bands 2155-2175 MHz (adjacent to the 2110-2155 MHz band of AWS-1
and the 2175-2180 MHz band of AWS-2), known as AWS-3.
16
If AWS-2 and AWS-3 are made
16
Both the AWS-2 and AWS-3 bands are the subject of further rulemaking proceedings at the FCC involving technical standards
and interference issues and no final service rules have been released. No auction dates will be set until the rules are released, and Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 29 of 40
available for mobile terrestrial services as expected, they will bring the total spectrum allocated
to AWS services to 130 MHz. The FCC has not yet released rules for AWS-2 or AWS-3, but is
expected to do so in the coming year with a possible auction in 2010.
AWS-3 technical issues. FCC proceedings related to the AWS-3 service rules could have an
impact on the value of T-Mobile’s AWS-1 spectrum holdings. In developing network plans, T-
Mobile seemingly assumed that the AWS-3 licensee would use FDD technology. However,
M2Z—one of the most vocal potential AWS-3 new entrants—is interested in deploying a TDD
network. T-Mobile argues that a two-way operation in the adjacent AWS-3 spectrum would
require technical rules that specify stringent guard bands. Therefore, if the AWS-3 rules are not
structured to require the AWS-3 licensee to implement guard bands, its AWS-1 spectrum would
be impacted. The debate over the AWS-3 service rules is the subject of a continuing
rulemaking at the FCC fueled mainly by the M2Z petition to the FCC.
Potential for incremental US spectrum licensing. In response to growing wireless demand,
the new US administration has pledged to assess current governmental spectrum allocations
and consider more government to commercial reallocations in the future. On March 19, 2009,
Senators John Kerry (D-Massachusetts) and Olympia Snowe (R-Maine) introduced legislation
that would require the FCC and the National Telecommunications and Information
Administration (NTIA)
17
to conduct an inventory of radio spectrum within 180 days of enactment.
While no specific bands have yet been identified for reallocation from government to commercial
use, a CTIA report supports the conclusion that there isn’t a near-term solution to the spectrum
drought, ―Given the long timeframes involved in going from planning to auction to deployment,
as experienced with the AWS and 700 MHz bands, planning for new spectrum should begin as
soon as possible.‖
18
With no concrete plans for making more spectrum available, and with the
process of identifying, reallocating and then auctioning spectrum optimistically taking at least
several years to complete, the large AWS and 700 MHz bands remain especially important to
commercial mobile providers.
an auction will not likely occur until at least six months after release of final rules, putting the earliest AWS-2 and AWS-3 auction
sometime in 2010. In June 2008, the FCC sought comment on whether to include the 2175-2180 MHz band in AWS-3 as opposed
to AWS-2, which would reduce AWS-2 to 15 MHz and increase AWS-3 to 25 MHz. The FCC has not yet reached a decision on the
matter. (Further Notice of Proposed Rulemaking, FCC 08-158, released June 20, 2008.)
17
The NTIA is part of the US Department of Commerce and, among other things, regulates the spectrum held by the US
Government.
18
CTIA report at 24. Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 30 of 40
IX. Conclusions
Analysis of spectrum policy, industry traffic trends, AWS auctions to-date, and the total
addressable market across the Americas, as well as discussions with AWS industry participants
and regulators, point to a number of key findings:
AWS spectrum was identified by ITU for IMT2000 standards and is regionally
harmonized by CITEL.
Public policy that supports IMT-2000 technologies in the AWS band benefits economic
growth.
Prices paid for AWS spectrum in US and Canada reveals high market demand.
AWS band is sufficiently similar to other frequency bands and HSPA ecosystem is ready
today.
Production cost curves are comfortable and improving.
Addressable market is rapidly expanding.
Meaningful growth in AWS subscribers and handset volumes is projected for the
Americas.
Operators are interested in accelerated licensing in Latin America.
In Conclusion:
The AWS spectrum band is very well-suited to add significant and valuable
bandwidth effectively and efficiently for wireless operators and consumers
throughout the Americas
AWS-capable devices and handsets are available and gaining critical mass
with no visible limitations that might inhibit a strong and robust device
ecosystem.
Infrastructure is readily available and operator interest is high.
Regulators throughout Latin America should promptly and rationally make this
valuable spectrum available to meet the rapidly growing needs of the
consumers in their hungry marketplaces
Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 31 of 40
Glossary
CDMA. Code Division Multiple Access (CDMA) assigns unique codes to each communication
transmission to differentiate it from others in the same spectrum. 2G CDMA standards are
branded cdmaOne and include IS-95A and IS-95B. The two primary IMT-2000 third-generation
(3G) standards, CDMA2000 and WCDMA, are based on CDMA.
EOP. End of Period (EOP) typically refers to the value or amount as reported at the end of a
measurement period.
FDD. Frequency Division Duplex (FDD), used in cellular communication systems such as GSM,
is a radio technology using a paired spectrum.
HSPA. HSPA is the set of technologies that defines the migration path for 3G/WCDMA
operators worldwide. HSPA, which uses the FDD transmission scheme, includes HSDPA (High
Speed Downlink Packet Access), HSUPA (High Speed Uplink Packet Access) and HSPA
Evolved.
GSM. GSM (Global System for Mobile communications: originally from Groupe Spécial Mobile)
is an open, digital cellular technology used for transmitting mobile voice and data services. GSM
is used by over 4 billion customers across more than 219 countries and territories.
LTE. Long Term Evolution (LTE) is the next step from 3G/WCDMA and HSPA for operators
already on the GSM technology platform, as well as other operators seeking an alternate
evolution path. LTE is a new radio access technology and will be optimized to deliver very fast
data speeds of up to 100 Mb/s downlink and 50 Mb/s uplink (peak rates).
TDD. Time Division Duplexing (TDD) refers to a transmission scheme that allows an
asymmetric flow for uplink and downlink transmission that is more suited to data transmission.
In a Time Division Duplex system, a common carrier is shared between the uplink and downlink,
the resource being switched in time. Users are allocated one or more timeslots for uplink and
downlink transmission.
UMTS. Universal Mobile Telecommunications System (UMTS) is a 3G mobile wireless
standard that is also being developed into a 4G technology. UMTS uses wideband CDMA
(WCDMA) as the underlying air interface and is standardized by the 3rd
Generation Partnership
Project (3GPP).
Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 32 of 40
Appendix
Forecast Model – Americas Summary
Year 1 Year 2 Year 3 Year 4 Year 5
Sub/Device Figures in Millions 2004 2005 2006 2007 2008 2009E 2010E 2011E 2012E 2013E
SUMMARY - US, Canada, Mexico, Argentina, Chile, Colombia, Peru, Venezuela, All Other LatAm
Covered POPs 662.5 670.7 677.8 685.7 692.8 698.2 705.5 714.0 723.0 732.0
% Change Y/Y 1.2% 1.1% 1.2% 1.0% 0.8% 1.1% 1.2% 1.3% 1.3%
Market Penetration - Cov'd POPs 45% 56% 66% 75% 83% 91% 96% 101% 105% 108%
Penetration Lift 10.8% 9.5% 9.5% 8.0% 7.3% 5.9% 4.7% 3.6% 2.7%
BOP Subs 218.0 301.2 377.2 445.7 515.8 576.9 632.1 680.5 722.4 757.7
Gross Additions 165.9 168.3 181.1 206.8 220.2 228.9 235.0 238.4 241.1 244.8
Disconnects (82.7) (92.3) (112.7) (136.7) (159.1) (173.7) (186.7) (196.5) (205.8) (215.5)
Net Additions 83.2 76.0 68.5 70.1 61.1 55.2 48.3 41.9 35.3 29.3
EOP Subs 301.2 377.2 445.7 515.8 576.9 632.1 680.5 722.4 757.7 787.0
% Change Y/Y 38% 25% 18% 16% 12% 10% 8% 6% 5% 4%
Average Subs 259.6 339.2 411.4 480.7 546.4 604.5 656.3 701.4 740.1 772.4
Monthy Churn Rate 2.7% 2.3% 2.3% 2.4% 2.4% 2.4% 2.4% 2.3% 2.3% 2.3%
Sub Figures in Millions 2004 2005 2006 2007 2008 2009E 2010E 2011E 2012E 2013E
Assumed % EOP Subs with AWS Capable Devices
% Non-AWS Devices 100.0% 100.0% 100.0% 100.0% 99.6% 98.0% 96.0% 89.9% 84.1% 77.4%
% AWS 1.7/2.1 GHz 0.0% 0.0% 0.0% 0.0% 0.4% 2.0% 4.0% 10.1% 15.9% 22.6%
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Implied EOP Subscribers
Non-AWS 301.2 377.2 445.7 515.8 574.7 619.7 653.1 649.5 637.6 609.2
AWS 1.7/2.1 GHz - - - - 2.2 12.4 27.4 73.0 120.1 177.8
Total 301.2 377.2 445.7 515.8 576.9 632.1 680.5 722.4 757.7 787.0
Scenarios:
Penetration of EOP Subs with AWS Devices
1 Low 0.2% 1.7% 3.4% 7.9% 13.4% 18.0%
2 Base Case 0.4% 2.0% 4.0% 10.1% 15.9% 22.6%
3 High 0.5% 2.2% 4.6% 12.3% 18.3% 27.2%
AWS Subscribers
1 Low 1.4 10.7 23.4 57.0 101.8 141.6
2 Base Case 2.2 12.4 27.4 73.0 120.1 177.8
3 High 3.0 14.2 31.4 88.9 138.4 214.0
AWS Devices
1 Low 1.4 9.8 16.4 45.1 71.7 87.6
2 Base Case 2.2 10.9 19.3 59.4 80.9 114.5
3 High 3.1 12.0 22.1 73.8 90.1 141.5
Sub/Device Figures in Millions 2004 2005 2006 2007 2008 2009E 2010E 2011E 2012E 2013E
AWS Band Sub/Device Assumptions - Base Case Scenario -
BOP Subs - - - - - 2.2 12.4 27.4 73.0 120.1
Gross Additions - - - - 2.2 11.2 19.6 60.3 75.5 102.0
Disconnects - - - - - (0.9) (4.7) (14.7) (28.3) (44.3)
Net Additions - - - - 2.2 10.3 15.0 45.6 47.2 57.7
EOP Subs - - - - 2.2 12.4 27.4 73.0 120.1 177.8
% Change Y/Y 476% 120% 166% 65% 48%
Average Subs - - - - 1.1 7.3 19.9 50.2 96.5 148.9
Monthy Churn Rate - - - - 0.0% 1.0% 2.0% 2.4% 2.4% 2.5%
Annual Upgrade Rate as % BOP Subs - - - - 0% 2% 5% 10% 15% 17%
Estimated Upgrade Units - - - - - 0.0 0.6 2.7 10.6 20.9
SIM/Refurbished Discount as % of GAs - - - - 0% 3% 5% 6% 7% 8%
SIM/Refurbished Discount Units - - - - - 0.3 1.0 3.5 5.2 8.3
- Base Case Scenario -
Implied AWS Device Unit Sales/Year - - - - 2.2 10.9 19.3 59.4 80.9 114.5
% Change Y/Y 388% 78% 208% 36% 42%
Cumulative AWS Device Unit Sales 2.2 13.1 32.4 91.8 172.8 287.3
Source: GVP estimates, company and country reports. Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 33 of 40
Forecast Model – Americas Summary: Covered POPs and AWS Licensing Assumptions
Year 1 Year 2 Year 3 Year 4 Year 5
Sub/Device Figures in Millions 2004 2005 2006 2007 2008 2009E 2010E 2011E 2012E 2013E
Total Covered POPs (All Mobile Wireless Networks)
United States 285.4 287.7 290.1 292.4 294.7 297.1 299.5 301.9 304.3 306.8
Canada 32.0 32.3 32.7 33.1 33.3 33.7 33.9 34.3 34.6 34.9
Mexico 104.9 106.3 107.8 109.6 110.6 109.7 111.0 113.3 115.9 118.5
Argentina 37.6 37.9 38.3 38.6 38.9 39.2 39.5 39.9 40.3 40.7
Chile 16.1 16.8 16.4 16.6 16.7 17.0 17.1 17.3 17.5 17.7
Colombia 44.9 45.6 46.3 47.0 47.6 48.3 49.0 49.6 50.3 50.9
Peru 27.6 28.0 28.4 28.8 29.2 29.6 30.0 30.4 30.8 31.2
Venezuela 26.2 26.6 27.1 27.6 28.0 28.5 29.0 29.4 29.9 30.3
All Other LatAm (Excl Brazil & Uruguay) 87.8 89.3 90.7 92.2 93.7 95.1 96.6 98.0 99.4 100.9
Total Covered POPs 662.5 670.7 677.8 685.7 692.8 698.2 705.5 714.0 723.0 732.0
% Change Y/Y 1% 1% 1% 1% 1% 1% 1% 1% 1%
Total Mobile Wireless Spectrum Licensed
United States 144.0 144.0 234.0 234.0 294.0 294.0 314.0 314.0 334.0 334.0
Canada 175.0 175.0 175.0 175.0 265.0 265.0 265.0 265.0 265.0 265.0
Mexico 120.0 120.0 120.0 120.0 120.0 120.0 245.0 245.0 245.0 245.0
Argentina 170.0 170.0 170.0 170.0 170.0 260.0 260.0 260.0 260.0 260.0
Chile 140.0 140.0 140.0 170.0 170.0 260.0 260.0 260.0 260.0 260.0
Colombia - - - - 120.0 120.0 210.0 210.0 210.0 210.0
Peru - - - - 130.0 130.0 130.0 220.0 220.0 220.0
Venezuela - - - - 102.0 102.0 102.0 192.0 192.0 192.0
AWS Mobile Wireless Spectrum Licensed
United States - - 90.0 90.0 90.0 90.0 110.0 110.0 130.0 130.0
Canada - - - - 90.0 90.0 90.0 90.0 90.0 90.0
Mexico - - - - - - 90.0 90.0 90.0 90.0
Argentina - - - - - 90.0 90.0 90.0 90.0 90.0
Chile - - - - - 90.0 90.0 90.0 90.0 90.0
Colombia - - - - - - 90.0 90.0 90.0 90.0
Peru - - - - - - - 90.0 90.0 90.0
Venezuela - - - - - - - 90.0 90.0 90.0
Total AWS Licensed POPs
United States - - 290.1 292.4 294.7 297.1 299.5 301.9 304.3 306.8
Canada - - - - 33.3 33.7 33.9 34.3 34.6 34.9
Mexico - - - - - - 111.0 113.3 115.9 118.5
Argentina - - - - - 39.2 39.5 39.9 40.3 40.7
Chile - - - - - 17.0 17.1 17.3 17.5 17.7
Colombia - - - - - - 49.0 49.6 50.3 50.9
Peru - - - - - - - 30.4 30.8 31.2
Venezuela - - - - - - - 29.4 29.9 30.3
All Other LatAm (Excl Brazil & Uruguay) 49.0 99.4 100.9
Total AWS Licensed POPs - - 290.1 292.4 328.1 387.0 550.0 665.0 723.0 732.0
AWS Spectrum as % of Total Mobile Wireless Spectrum
United States 0% 0% 38% 38% 31% 31% 35% 35% 39% 39%
Canada 0% 0% 0% 0% 34% 34% 34% 34% 34% 34%
Mexico 0% 0% 0% 0% 0% 0% 37% 37% 37% 37%
Argentina 0% 0% 0% 0% 0% 35% 35% 35% 35% 35%
Chile 0% 0% 0% 0% 0% 35% 35% 35% 35% 35%
Colombia 0% 0% 0% 0% 0% 0% 43% 43% 43% 43%
Peru 0% 0% 0% 0% 0% 0% 0% 41% 41% 41%
Venezuela 0% 0% 0% 0% 0% 0% 0% 47% 47% 47%
Source: GVP estimates, company and country reports, Raineri.
Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 34 of 40
Forecast Model – Americas “Base Case” Summary: EOP Total Subscribers, AWS Subscribers
and Handsets/Devices
Year 1 Year 2 Year 3 Year 4 Year 5
Sub/Device Figures in Millions 2004 2005 2006 2007 2008 2009E 2010E 2011E 2012E 2013E
Total EOP Subs (All Mobile Wireless Networks)
United States 184.7 214.3 232.1 252.1 266.9 284.0 298.7 310.7 320.4 329.1
Canada 15.6 17.5 19.3 20.9 22.5 23.9 25.0 26.1 27.0 27.3
Mexico 37.8 46.6 56.8 68.9 78.9 88.0 98.0 108.0 117.4 126.0
Argentina 13.0 21.4 30.2 38.6 43.6 47.5 50.6 53.0 54.8 55.5
Chile 9.6 11.7 13.1 14.6 15.9 17.3 18.3 19.2 19.8 20.4
Colombia 10.4 21.9 30.1 33.5 40.7 46.0 50.6 54.6 57.8 60.6
Peru 4.1 5.6 8.8 14.0 18.5 21.6 24.6 27.6 30.6 32.8
Venezuela 8.5 12.7 18.8 23.8 29.1 33.3 36.6 39.2 41.3 42.8
All Other LatAm (Excl Brazil & Uruguay) 17.5 25.5 36.5 49.5 60.9 70.6 78.1 84.0 88.7 92.5
Total EOP Subs 301.2 377.2 445.7 515.8 576.9 632.1 680.5 722.4 757.7 787.0
% Change Y/Y 25% 18% 16% 12% 10% 8% 6% 5% 4%
Estimated EOP AWS Subs
United States - - - - 2.2 12.4 26.5 68.6 107.3 149.2
Canada - - - - - 0.1 0.4 1.0 3.2 6.8
Mexico - - - - - - 0.2 1.6 4.1 10.1
Argentina - - - - - - 0.3 1.1 2.2 3.9
Chile - - - - - - 0.1 0.4 1.0 1.6
Colombia - - - - - - - 0.3 0.9 1.5
Peru - - - - - - - - 0.3 1.0
Venezuela - - - - - - - - 0.2 0.9
All Other LatAm (Excl Brazil & Uruguay) - - - - - - - - 0.9 2.8
Total EOP AWS Subs - - - - 2.2 12.4 27.4 73.0 120.1 177.8
% Change Y/Y - - - - - 476% 120% 166% 65% 48%
AWS Subs as % of Total EOP Subs
United States 0.0% 0.0% 0.0% 0.0% 0.8% 4.4% 8.9% 22.1% 33.5% 45.3%
Canada 0.0% 0.0% 0.0% 0.0% 0.0% 0.3% 1.5% 4.0% 12.0% 25.0%
Mexico 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.2% 1.5% 3.5% 8.0%
Argentina 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.5% 2.0% 4.0% 7.0%
Chile 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.5% 2.0% 5.0% 8.0%
Colombia 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.5% 1.5% 2.5%
Peru 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 1.0% 3.0%
Venezuela 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.5% 2.0%
All Other LatAm (Excl Brazil & Uruguay) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 1.0% 3.0%
Total 0.0% 0.0% 0.0% 0.0% 0.4% 2.0% 4.0% 10.1% 15.9% 22.6%
Estimated AWS Devices (Unit Sales/Year)
United States - - - - 2.2 10.8 18.4 55.6 70.8 93.3
Canada - - - - - 0.1 0.3 0.7 2.4 4.5
Mexico - - - - - - 0.2 1.6 3.3 8.1
Argentina - - - - - - 0.3 0.9 1.6 2.9
Chile - - - - - - 0.1 0.3 0.7 1.0
Colombia - - - - - - - 0.3 0.7 1.0
Peru - - - - - - - - 0.3 0.8
Venezuela - - - - - - - - 0.2 0.7
All Other LatAm (Excl Brazil & Uruguay) - - - - - - - - 0.9 2.3
Total AWS Devices - - - - 2.2 10.9 19.3 59.4 80.9 114.5
% Change Y/Y - - - - - 388% 78% 208% 36% 42%
Source: GVP estimates, company and country reports.
Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 35 of 40
Operator Data – Part One
Country Mobile Subs
Q408
Mobile
Penetration
Q408
MNO Subs per
operator
Q408
ARPU per
operator
Q408 (USD)
Churn
(monthly)
Q408
Total
Spectrum
licensed for
Mobile Ops
Broadband
Penetration
Q408
United States 266,891,975 90.50% Alltel 14,094,559 52.9 2.02%*
AT&T 77,009,000 50.8 1.60%
Centennial 661,100 65 2.50%
Leap 3,844,660 42.4 3.80%
Qwest 873,438 n/a
Sprint 48,338,000 54.3 2.25%
T-Mobile 32,758,000 49 3.30%
US Cellular 6,196,000 52.7
Verizon 72,056,000 51.9 1.35%
Other 11,061,218 n/a
Canada 22,505,066 67.50% Aliant 967,914 n/a
Bell 6,497,000 44.9 1.70%
FIRST Networks 3,450 n/a
Ice Wireless 19,840 n/a
MTS Allstream 434,776 47.6 1.47%
Rogers Wireless 7,942,000 52.8 1.48%
SaskTel 511,086 n/a
Telus 6,129,000 51.5 1.62%
Argentina 43,369,814 111.30% Claro 15,229,331 n/a
Movistar 14,829,600 11.7 1.80%
Personal 12,339,829 12.7
Nextel 971,054 43 1.90%
Chile 15,903,040 95% Claro 3,002,000 10.8 3.70%
Entel PCS 6,001,000 16.1 1.59%
Movistar 6,875,000 15.4 1.80%
Nextel 25,040 n/a
Mexico 78,941,658 71.40% Iusacell 4,483,369 n/a
Movistar 15,330,600 10.8 2.70%
Nextel 2,756,689 68 2.30%
Telcel 56,371,000 13.5 3.40%
Colombia 40,666,951 85.40% Comcel 27,390,000 7.5 2.30%
Movistar 9,963,100 8.2 3.70%
Tigo 3,313,851 n/a
593 MHz (ADL)
265MHz (ADL)
170 MHz (ADL)
140 MHz (ADL)
170 MHz
(Raineri)
120 MHz (ADL)
155MHz
(Raineri)
25.30%
8.30%
8.80%
26.90%
3.80% 120 MHz
(ADL)
5.90%
Source: Wireless Intelligence, Raineri, Hazlett.
Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 36 of 40
Operator Data – Part Two
Country Mobile Subs
Q408
Mobile
Penetration
Q408
MNO Subs per
operator
Q408
ARPU per
operator Q408
(USD)
Total
Spectrum
licensed for
Mobile Ops
Broadband
Penetration
Q408
18,442,869 63.20% Claro 7,178,000 7.6*
Movistar 10,612,700 7.8*
Nextel 652,169 30*
29,090,487 103.70% Digitel 6,902,958 n/a
Movilnet 11,603,529 19**
Movistar 10,584,000 26.77**
11,921,190 85.65% Alegro 494,690 n/a
Movistar 3,122,500 9.8
Porta 8,304,000 10
6,276,420 89.90% Claro 1,963,471 n/a
Digicel 458,129 n/a
Movistar 1,326,764 n/a
Tigo 2,528,056 n/a
Costa Rica 1,475,157 32.40% ICE 1,475,157 n/a 93 MHz
(Hazlet)
3.90%
5,928,214 76.80% Claro 1,468,538 n/a
Digicel 220,000 n/a
Hondutel 50,000 n/a
Tigo 4,239,676 n/a
11,612,993 83.30% Claro 4,205,044 n/a 1.20%
Movistar 2,994,430 n/a
Tigo 4,413,519 n/a
2,931,465 47.90% Claro 2,000,396 n/a 0.80%
Movistar 931,069 n/a
7,467,777 79.80% Claro 3,943,380 n/a 2.30%
Orange 2,401,000 n/a
Tricom 638,404 n/a
Viva 484,993 n/a
2,991,265 87.80% Mas Movil 1,887,849 n/a 4.20%
Movistar 1,103,416 n/a
49.56 MHz
(Hazlet)
n/a
84.84 MHz
(Hazlet)
140 MHz
(Hazlet)
1.90%
0.80%
137.87 MHz
(Hazlet)
65 MHz
(Hazlet)
1.30% 80 MHz
(Hazlet)
2.60% 80 MHz
(Hazlet) 130.3
MHz (Raineri)
4.10% 57 MHz
(Hazlet) 101.8
MHz (raineri)
Dominican
Republic
Peru
Venezuela
Ecuador
El Salvador
Honduras
Guatemala
Nicaragua
Panama
Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 37 of 40
Source: Wireless Intelligence, Raineri, Hazlett.
United States AWS Auction Blocks
Block
Frequency Bands
(MHz)
Total Bandwidth
Geographic
Area Type
No. of
Licenses
A 1710-1720 / 2110-2120 20 MHz CMA19
734
B 1720-1730 / 2120-2130 20 MHz EA20
176
C 1730-1735 / 2130-2135 10 MHz EA 176
D 1735-1740 / 2135-2140 10 MHz REAG21
12
E 1740-1745 / 2140-2145 10 MHz REAG 12
F 1745-1755 / 2145-2155 20 MHz REAG 12
Source: FCC, KB Enterprises LLC.
United States AWS Prices by Block
Block Band Revenue Price/MHz-Pop
A 1710-1720, 2110-2120 MHz $999,267,000 $.42
B 1720-1730, 2120-2130 MHz $727,470,000 $.45
C 1730-1735, 2130-2135 MHz $405,790,000 $.59
D 1735-1740, 2135-2140 MHz $380,549,000 $.65
E 1740-1745, 2140-2145 MHz $517,063,000 $.64
F 1745-1755, 2145-2155 MHz $1,147,364,000 $.77
Source: FCC, KB Enterprises LLC.
19
Cellular Market Areas (CMAs) were originally developed by the Federal Communications Commission for cellular mobile radio
service and include a total of 306 metropolitan statistical area (MSA) licenses and 428 rural service areas (RSA) license for a total of
734 license areas that cover the United States and its territories.
20
EAs (Economic Areas) refer to the market areas delineated by the Regional Economic Analysis Division, Bureau of Economic
Analysis, U.S. Department of Commerce in February 1995. There are a total of 176 EAs that cover the United States and its
territories.
21
REAGs refer to the twelve Regional Economic Area Groupings that were developed by the Office of Engineering and Technology
at the Federal Communications Commission. Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 38 of 40
Canada AWS Auction Blocks
Block
Frequency Bands (MHz)
Total
Bandwidth
Geographic
Tier
22
No. of
Licenses
A 1710-1720 MHz / 2110-2120 MHz 20 MHz 3 59
B 1720-1730 MHz / 2120-2130 MHz 20 MHz 2 14
C 1730-1735 MHz / 2130-2135 MHz 10 MHz 2 14
D 1735-1740 MHz / 2135-2140 MHz 10 MHz 3 59
E 1740-1745 MHz / 2140-2145 MHz 10 MHz 3 59
F 1745-1755 MHz / 2145-2155 MHz 20 MHz 3 59
Source: Industry Canada, KB Enterprises LLC.
Figure 19 - Auction Prices for the Canadian AWS Spectrum by Block in US Dollars
Block Eligibility Band Revenue Price/MHz-Pop
A Open 1710-1720, 2110-2120 MHz $999,267,000 $1.67
B Set-aside 1720-1730, 2120-2130 MHz $727,470,000 $1.21
C Set-aside 1730-1735, 2130-2135 MHz $405,790,000 $1.35
D Set-aside 1735-1740, 2135-2140 MHz $380,549,000 $1.27
E Open 1740-1745, 2140-2145 MHz $517,063,000 $1.72
F Open 1745-1755, 2145-2155 MHz $1,147,364,000 $1.91
Source: Industry Canada, KB Enterprises LLC.
22
For spectrum auctions, Industry Canada divides Canada into geographic service areas called "tiers," based on the geographic
areas of Statistics Canada 1996 census subdivisions as follows: Tier 1 is a single national service area; Tier 2 consists of eight
provincial and six large regional service areas; Tier 3 consists of 59 regional service areas; and Tier 4 comprises 172 localized
service areas. For the AWS spectrum, the department adopted a range of Tier 2 and 3 service areas. Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 39 of 40
Canadian AWS Spectrum Auction by Region
Region A Block
20 MHz
B Block*
10 MHz
C Block*
10 MHz
D Block*
20 MHz
E Block
10 MHz
F Block
20 MHz
Newfoundland
Labrador
Rogers Bragg Bragg Globalive TELUS Bell
Nova Scotia Rogers Bragg Bragg Globalive TELUS Bell
New Brunswick Rogers Bragg Globalive Bragg TELUS Bell
Eastern Quebec Rogers Quebecor Quebecor Quebecor Bell TELUS
Southern Quebec Rogers Quebecor Quebecor Quebecor Bell TELUS
Northern Quebec Rogers Quebecor Quebecor Quebecor TELUS Bell
Eastern Ontario Rogers Quebecor Dave Globalive TELUS Bell
Southern Ontario Rogers Globalive Dave Dave/Bragg TELUS Bell
Northern Ontario Rogers Bragg Globalive Bragg/Shaw TELUS Bell
Manitoba Rogers MTS Shaw Globalive Shaw TELUS
Saskatchewan Rogers SaskTel SaskTel Shaw Globalive TELUS
Alberta Rogers Shaw Globalive Dave/Shaw Bell TELUS
British Columbia Roger Shaw Globalive Shaw/Dave Bell TELUS
Yukon, NWT &
Nunavut
Rogers Globalive Globalive Globalive TELUS Bell
* New entrant set-aside block. Source: Industry Canada, KB Enterprises LLC.
Canadian AWS Spectrum Holdings Compared to Overall Wireless Spectrum Holdings by Market
Licensee Service MHz Geography % of Total
Rogers AWS 20 National 29%
TELUS Communications AWS 10-20 National 25%
Bell Mobility AWS 10-20 National 23%
Quebecor AWS 50 Quebec 100%*
Shaw Communications AWS 10 Alberta 100%*
Bragg AWS 10 See above Markets 100%*
Dave AWS 10 Eastern and Southern Ontario 100%*
Globalive AWS 10-20 National 100%*
*As a new entrant, this entity holds only AWS spectrum. Source: Estimates based on Industry Canada data, KB Enterprises LLC.
Momentum Building in the AWS Band May 2009
Global View Partners, Inc. Copyright ©2009 All rights reserved. Page 40 of 40
Scott Fox
Chairman & CEO
Global View Partners
San Diego, CA USA
www.GlobalViewPartners.com
