Expert opinion on the Indian spectrum auction

Technology insight: The 2300MHz band has matured into a key LTE band

With about 2355MHz of downlink spectrum being available across 22 circles that make up the country's telecoms map, this year's Indian auction was branded as a super auction — indeed, initial forecasts predicted auction proceeds in the range of INR1.5 - 5 trillion (the equivalent of up to EUR67 billion).

However, after just five days and 31 rounds of bidding, the auction ended with total prices summing to 'only' INR658 billion (about EUR8.8 billion). Over the coming days, we will discuss some of the insights from this auction outcome — with today's article focusing on the growing importance of the 2300MHz band.

Figure 1 provides an overview of the share of spectrum that was sold in each of the bands available in the auction. Whilst it stands out that close to no spectrum sold in the bands below 1GHz, the only band in which all available spectrum sold is the 2300MHz band.

Figure 1:
Share of the available spectrum that was sold in the Indian auction
Share of spectrum sold

The main purpose of the 2300MHz band is to provide additional LTE capacity. To date, the band has not seen wide take-up globally (according to the GSA, only ~6% of LTE networks use the band). However, as the Indian market is shifting quickly from (GSM) voice towards (LTE) data services, the need for additional LTE spectrum increases.

One of the key constraints for the take-up of a spectrum band is the availability of handsets that support it. The 2300MHz band is already widely supported by high-end devices (e.g. Samsung, Apple). At the same time, Chinese operators and manufacturers as well as Indian new entrant Reliance Jio are both developing affordable handsets to make use of their existing spectrum hodlings. As a result, the 2300MHz band may become one of the best-supported bands, also in the low-price smartphone segment.

Another concern with the band is its limited propagation compared to lower-frequency bands. However, given the very high grid-density of mobile networks in India (especially in urban areas), the relative propagation disadvantage of the 2300MHz band versus the lower frequency bands is more limited. Thereby, a large share of traffic can be addressed with this band. Also, it appears that there are now much fewer concerns about the possible issues of an integration of FDD and TDD bands into the same network.

In addition to these factors, the fact that prices for the band were 2-3 times lower than for the alternative mid-frequency bands (e.g. 1800MHz & 2100MHz) will have contributed to all of the 2300MHz spectrum as well as large parts of the 2500MHz band (for which similar positive factors can be listed) selling in the auction.

With the spectrum in this band now being owned by Bharti, Idea and Reliance Jio, we should see a significant LTE2300 roll-out over the course of the coming year and we expect that it will develop into one of the key bands for LTE in India. From there, it would not be surprising to see the band be taken up more widely on a global level, especially as it is starting to appear on the roadmap of spectrum managers across the world.

Posted: 11 October 2016

More on the Indian auction

All information provided in this article is based on Aetha's detailed analysis of the Indian spectrum auction (Aetha Indian Auction Analysis) and our extensive in-house database of spectrum fees. If you are interested in purchasing the underlying spreadsheets and supporting information or would like to discuss any other issues with respect to the management or valuation of spectrum, please do get in touch with us.

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