Digital Dividend : Central and Eastern Europe - ITU Seminar Digital Dividend the New Digital Era Belgrade - 27th and 29th April 2009 Roberto Ercole Director of Spectrum Regulation GSM Association http://www.gsmworld.com/digital_dividend/

Brief History of the GSMA Founded in 1987 by 15 operators committed to the joint development of a cross border digital system for mobile communications. Became the global trade group for the mobile industry, representing the vast majority of mobile phone networks across the world Now encompassing commercial, public policy and technical initiatives, ensuring mobile services work globally The Association’s members now serve more than 3.5 billion customers More than 750 operator Members across 218 countries Over 200 Associate Members (manufacturers and suppliers)

Digital Dividend : The need for Harmonised spectrum for mobile broadband Too boost broadband penetration, for: Jobs Economic growth International competitiveness Social/National cohesion At a small cost to terrestrial broadcasting Channels 61 to 69

outline Why mobile broadband needs UHF – rural coverage Why does mobile broadband matter – knowledge based economy How do we quantify this benefit – cost benefit analysis What are other countries in Europe doing – gathering momentum What the mobile industry could do with this spectrum - LTE Impact on broadcasting and social welfare – law of diminishing returns on spectrum The time to consider this band for mobile is now Conclude that the time to plan 790 – 862 MHz for mobile is now, and international momentum in Europe will make it hard not to follow this route latter on

Why do operators need UHF from analogue TV bands? A/ Because it can be harmonised – lower terminal costs; and B/ Because the propagation characteristics make it ideal for rural cells (and in-building coverage)

Why not wait? Source: RATEL

What is the benefit of mobile broadband at UHF Coverage of rural areas at about 30% of the cost of 2100 MHz

Jobs and knowledge economy needs Broadband Broadband has been targeted by China “golden projects” to allow them to “jump-start” by deploying nationwide fibre-optic network India – fibre optic core to kick start the international access required to be in the knowledge economy However fibre network will not help without last mile broadband access (DSL or wireless) Knowledge economy encourages more people to move from low paid industries (mining, lumber, fishing etc) to high paid professional jobs (engineer etc) Creates clusters of expertise that help reinforce themselves (Silicon Valley) Allow citizens to take part in the “knowledge economy”

Serbia 7.8% (2007)* * Source RATEL http://ec.europa.eu/information_society/newsroom/cf/itemdetail.cfm?item_id=3963 * Source RATEL

Potential impact of increased Broadband penetration – source McKinsey http://gsmworld.com/our-work/public-policy/spectrum/digital-dividend/links_to_useful_documents.htm#nav-6

Source : McKinsey

What is happening with other countries Momentum building for mobile broadband in UHF

What other countries are planning with 790 – 862 MHz Make available for non-broadcasting: Germany UK, France, Sweden,Finland Considering: CZ, HU, Ireland, Luxbg. Latvia, Slovakia Undecided : Aust. Belgium, Bulgaria, Estonia, Italy, NL, Poland, Romania, Slovenia, Decided against any non-broadcasting : Spain, Lithuania, Malta Commission work ongoing looking at the issue of a harmonised sub-band EU Report on Digital Dividend sub-band due August 2009 Momentum is building – strong trend to clearing 790 – 862 MHz http://www.analysysmason.com/PageFiles/11072/Introductory%20slides%20for%20Member%20States%20workshop%20on%2015%20April%202009.pdf Source- EU study questionnaire :

Mobile Broadband – Long Tem Evolution : offering mobile “ADSL” – EU view. “With LTE, there is strong potential to generate vast economies of scale unmatched by any previous generation of broadband access technology. LTE could extend the high speed Internet access enjoyed by urban and suburban users today to isolated and rural areas. “ “The European industry foresees around 2 billion broadband users by 2012, of which two-thirds will be using mobile broadband. “ INFSO-FUTURE-NETWORKS@ec.europa.eu http://cordis.europa.eu/fp7/ict/future-networks Feb. 2009

Commission Study http://www. analysysmason

Quantifying the benefit on mobile broadband Cost benefit analysis

Results of CBA’s on Digital Dividend Analysis Masons : March 08 commissioned by ARCEP (France) http://www.analysysmason.com/PageFiles/4324/Valuation%20of%20the%20digital%20dividend%20in%20France%20(English%20Version).pdf   Key findings of the report include: Allocating a proportion of the released spectrum for mobile broadband services adds greater value to the economy than if this band were allocated exclusively to digital TV services. Over €25 billion more between the years 2012 and 2024. Spectrum Value Partners March 08, Getting the Most out of the Digital Dividend http://www.spectrumstrategy.com/Pages/GB/perspectives/Spectrum-Getting-the-most-out-of-the-digita-dividend-2008.pdf   Key findings are: Allocating at least some UHF spectrum to mobile operators would generate between €63 billion and €165 billion in net present value (NPV). This is in addition to the estimated €2.5-5 trillion in NPV that mobile generates for the European economy without any UHF spectrum. SCF The Mobile Provide: Economic Impacts of Alternative Uses of the Digital Dividend May – September 2007 www.digitaldividend.eu   could boost Europe’s GDP by as much as 0.6% per year by 2020 generating thousands of jobs throughout the EU. European Commission sponsored study ongoing http://www.analysysmason.com/Materials-from-the-Commission-stakeholders-hearings-on-6-March-2009

Example CBA report for the Irish Regulator 1) Europe Economics: How can Ireland best benefit from DD http://www.comreg.ie/_fileupload/publications/CP50e.pdf The analysis shows the maximum combined value (broadcasting and mobile) is between 80 and 120 MHz in Ireland. 60% increase in economic benefits if 80 MHz assigned to mobile €300 million benefit In Serbia? Ireland has population of 4.5 m, Serbia 7.5m. About same size country. Serbian GDP @ 20% that of Ireland? multiply Irish figures by: 0.2 x1.7 = 0.34 (rough guess/first approximation)

What the mobile industry could do with those bands Deployment of HSPA now and by the year 2011 deploy LTE (offering 100 Mb/s and more per rf carrier)

Mobile Broadband developments HSPA and Long Term Evolution High Speed packet Access : and enhancement of UMTS/3G Can offer data rates comparable to DSL (7 Mbps+ per carrier) Real alternative to ADSL from consumer’s view point With access to UHF mobile broadband can help provide coverage in rural areas there is little ADSL or where houses are to far from the exchange to access broadband Can help foster competition where fixed (ADSL) is not as widely available (Eastern/Central Europe) LTE will offer even higher data rates than HSPA and will deliver data more efficiently and cost effectively (100 Mb/s possible) Remove 3.5 and 4G references

LTE uptake projections Ditto check with hspa campaign

Impact on Broadcasting What is the marginal benefit of spectrum

What’s happening to the broadcasting market Terrestrial one amongst many (cable, satellite, IPTV) Terrestrial cannot offer content and choice of cable and satellite (100 HD channels?) Money is moving towards cable and satellite for subscriptions Business case for [5]+ multiplexes needs to be considered Could organise channels 61-69 into separate multiplex and see what happens to others? Some central/eastern Europe countries have had problems filling multiplexes Broadband is now major consumers of advertising revenue as well as another delivery platform of content

Spectrum needed is 790 to 862 MHz Harmonised by ITU and CEPT Administrations needs to make this band available for mobile broadband to boost broadband penetration in rural areas

Social welfare of broadband Help combat the digital divide – participate in the knowledge based economy (jobs) Help participate in E-government and tele-medicine Promote rural sustainability Offers another platform for delivering local language content (i-player/u tube etc) Promote sustainable cycle for people to move from low paid jobs to more specialised higher paid ones (eg farming to engineering) – encourage further education

Conclusions Central and Eastern Europe’s international competitiveness and citizens stand to benefit greatly from encouraging mobile broadband Important for rural sustainability and economic growth and jobs Offers another platform for locally provided content (U Tube) Broadband is a social commodity or right – lack of it will lead to social exclusion The time to plan this is now, the longer you wait the more expensive it will become to do The growing international momentum behind 790-862 will make it hard not to follow this

Thank you for your attention Rercole@gsm.org

Supporting slides

Spectrum vs. GDP per Capita – Adding 700 MHz (52 MHz without D) in 2008 USA with 700MHz USA with AWS

US 700 MHz Auction Results – March 08 Winner Blocks Price Reported Plans Verizon A, B and C $9.4 Billion Launch of an already announced Long Term Evolution (LTE) network in the 2010 timeframe. AT&T Mobility B $6.6 Billion Deploy LTE technology Frontier Wireless (Echostar) E $711 million Perhaps a MediaFlo-like portable or mobile video system or a terrestrial mechanism for providing standard definition local-into-local programming. Qualcomm B and E $558 million Deploy MediaFLO mobile TV technology across its E block winnings and will use its B block winnings for research and development?

Broadband users by technology – 3G is already important, and this will grow Source: RATEL

Economies of scale is the driving force Administrations are realising that without a mass market to develop terminals, they will be much more expensive (100’s of millions terminals sold per year required) Large markets will offer choice and improve RF performance However adding bands to handsets poses engineering challenges so that the number of bands should be minimised if possible This means we need a common European band, or else we will use another band or not have as much access to broadband in rural areas CEPT developing band plan [2 x 30 MHz] after Commission mandate

Mobile has too much spectrum already (UK example) ?                                                                                                      = 50% of the economic benefits of spectrum use! Source: Ofcom UK Note: This has been weighted such that a 1MHz allocation at 100MHz is given equal weighting to a 10MHz allocation at 1GHz.

Coverage costs by band (SCF study) Source : BBC