DIGITAL DIVIDEND

By T.R. Dua, Senior Director

March 13, 2009 @ New Delhi

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CONTENTS

INDIAN MOBILE INDUSTRY

REQUIREMENT OF DIGITAL DIVIDEND SPECTRUM

FOR MOBILE SERVICES IN INDIA

STATUS OF DIGITAL DIVIDEND SPECTRUM IN INDIA

STATUS IN INDIA

COAI’s VIEWS

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INDIAN MOBILE INDUSTRY

4

SECOND LARGEST WIRELESS NETWORK IN THE WORLD

Growing @ > 10 million per monthSource: Wireless Intelligence

0

100

200

300

400

500

600

700

Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08

China India USA Russia Brazil

Sub

s in

mill

ion

5

144 operational networks, 101 on GSM

Mobile subscriber base ~ 360 mn 268 mn (~75%) on GSM

Monthly additions @ 10 million every month > 8 mn GSM additions; > 75% of the new subs choose GSM

Rural subscriber base served by private GSM operators > 73 million by Nov’08,

- Growing @ around 3 million every month, i.e. nearly 40% of the GSM subscriber adds are from the rural areas

Lowest tariffs in the world – USD 0.01

Indian Mobile : Sustained Stupendous Growth

INDIAN MOBILE – CURRENT STATUS

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GSM CONTINUES TO PLAY A DOMINANT ROLE

0

50

100

150

200

250

300

2000 2001 2002 2003 2004 2005 2006 2007 2008 Dec'08

CDMA GSM

Year ended March

Sub

s (m

illio

ns)

GSM is the prime engine for growth of mobile services in India

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THE INDIAN MOBILE : CAUSE & EFFECT

Forward Looking Policies, Enabling Regulatory Framework & Strong Industry Actions have Yielded Continuing Customer Benefits

Source: TRAI and COAI

0.13

0.010.020.020.030.030.050.06

0.08

0.31 0.31

0.88 1.2 1.88 3.58 6.5 1333.31

51.53

96.63

261

157.58

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Year ended March

Effe

ctiv

e C

harg

e (U

SD

/min

)

0

50

100

150

200

250

300

Sub

scrib

er F

igur

es (i

n m

n)

NTP-99

3rd & 4th Cellular Operator

Reduction in License Fee

CPP Introduced Lowering of ADC

Revenue Share ADC Regime

Lowering of ADC

Introduction of CDMA

USO 1st Phase

Enhanced Competition

Infrastructure Sharing

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IMPACT OF TELECOMMUNICATIONS ON ECONOMIC GROWTH IN INDIA

According to a recently published ICRIER (Indian Council for Research on International Economic Relations) Report:

Telecommunications is a critical building block for the country’s economic development.

Indian states with higher mobile penetration can be expected to grow faster, and by 1.2% points for every 10% increase in mobile penetration rate.

Access to communications needs to be seen as a foundation on which other initiatives can be built.

Information via mobile, such as weather reports and market prices, has begun to have an impact on productivity for the agricultural sector.

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Small and medium sized enterprises (SMEs) and urban slums gain maximum benefits in enhancing their businesses through the use of mobile services.

In under served areas, mobile phones can help to widen markets, create better information flows, lower transaction costs and substitute for costly physical transport

Real benefits of telecommunications only start when a region passes a threshold penetration rate of about 25%.

Many areas have still not attained that level, which indicates the importance of increasing teledensity as soon as possible.

IMPACT OF TELECOMMUNICATIONS ON ECONOMIC GROWTH IN INDIA

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FUTURE GROWTH OF GSM

0

50

100

150

200

250

300

350

400

450

2004 2005 2006 2007 2008 2009 2010

Mill

ion

Year Ended December

2004 2005 2006 2007 2008 2009 2010

GSM (Projected) 48 60 98 150 260 335 410

GSM (Actual) 48 59 105 171 258

Even at this level, there will be a scope for 100% growth

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REQUIREMENT OF DIGITAL DIVIDEND SPECTRUM FOR MOBILE SERVICES IN INDIA

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INDIAN SPECTRUM ALLOCATIONS FAR BELOW INTERNATIONAL BEST PRACTICES

0

5

10

15

20

25

30B

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um

Den

mar

k

Est

onia

Fran

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Ger

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Hun

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Irela

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Italy

Net

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Spa

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Sw

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Sw

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land UK

Chi

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Hon

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Mal

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Thai

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Indi

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Average- 22 MHz

Shortage of Spectrum also in 2.1 GHz and 2.5-2.69 GHz band Due to legacy reasons (Portions of bands being utilized by

Defence and Department of Space)

2G Spectrum Allocations

Source: Vodafone Study

MH

z

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India has diverse geography ~ 70% of the population in rural and remote areas.

Despite explosive growth of mobile services in the country, only 30% penetration achieved so far. Urban teledensity ~ 60% whereas rural only about 10%

Vast population yet to be covered

Huge funds required to reach the un-served areas Biggest challenge for operators to maintain lowest tariffs along

with these investments

CHALLENGES FOR INDIAN OPERATORS

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This band especially relevant for India, as majority of future growth expected from rural India.

Because of its good signal propagation characteristics, less infrastructure is required to provide wider coverage Communication services can be provided in rural areas at lower

cost( savings in capex) Will help to bridge the ‘digital divide’ in India

ADVANTAGES OF 470- 862 MHZ BAND FOR INDIA

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STATUS OF DIGITAL DIVIDEND SPECTRUM IN INDIA

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NFAP forms basis for development, manufacturing and spectrum utilization activities in the country among all users.

Subsequent to liberalization in telecom sector, NFAP was revised and NFAP 2000 was brought as a public document.

NFAP 2000 was revised as NFAP 2002 which is presently in force.

NFAP 2002 is presently under review in consultation with all stakeholders taking into account the growing needs of services, emerging new technologies and WRC outcomes.

NATIONAL FREQUENCY ALLOCATION PLAN

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PROVISIONS OF NFAP

Band Spectrum Number of TV Channels available in analogue mode

TV Channel Number

UHF Band IV 470-582 MHz 14 21 to 34

UHF Band V 582-806 MHz 806-960 MHz

28 ---

35 to 62 ----

As per, NFAP 2002- 470 – 960 MHz band is allocated for terrestrial broadcasting &

mobile services on primary basis. 700 MHz Band spectrum, which is from 698-806 MHz, is part of

the terrestrial broadcasting band. The following spectrum in 470 – 806 MHz band is available for terrestrial TV broadcasting in the country.

As per NFAP-2002:

Source: TRAI

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Doordarshan, the public TV broadcaster in India, is using all the channels in the band 174-230 Mhz for analogue operations.

UHF Band IV

There are 14 TV channels available in the UHF Band-IV (470 -582 MHz) with 8 MHz channel bandwidth.

Doordarshan is operating about 330 transmitters in this band.

Doordarshan’s three digital TV transmitters at Kolkata, Chennai and Mumbai are also operating on an experimental basis in this band.

Recently Doordarshan has started its Mobile TV service in Delhi (using DVB-H technology) in this band at channel 26.

ASSIGNMENT IN INDIA

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UHF Band V

In this frequency band, there are 28 channels available with 8 MHz bandwidth in the sub-band from 582 to 806 MHz.

Doordarshan has not been assigned any channel in this sub-band for analogue TV transmission.

However, frequency earmarking has been made in favor of Doordarshan to operate Digital Transmitters in four Metros.

ASSIGNMENT IN INDIA

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In UHF band V, Defence and BSNL are operating point to point microwave links in 610 – 806 MHz,

PPDR has some spots earmarked in 750 – 806 MHz

The UHF Band V above 806 MHz is also shared with other users of spectrum such as fixed and mobile services for transmission of data/voice and video. Spectrum beyond 806 MHz has been extensively assigned to

cellular mobile services etc.

ASSIGNMENT IN INDIA

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Doordarshan is in the process of planning for up gradation of its 14 analog TV Channels transmission to digital TV transmission.

The requirement for additional spectrum for digital terrestrial transmission can be met within the broadcasting bands.

As projected by Doordarshan and TRAI, during transition period from analog to digital terrestrial transmission, spectrum requirements will increase and will have to be accommodated in 585 – 698 MHz band.

Accordingly, TRAI has recommended that spectrum for Mobile Broadcast TV be allocated in 585 – 806 MHz band.

FUTURE PLANS

Commercial launch of digital transmission is expected around the forthcoming Commonwealth Games in 2010

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COAI’S VIEWS

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The NFAP 2002 in India is under revision and the draft revised document states:

“In the context of frequency band 585-806MHz, bearing in mind that broadcasting services include mobile TV, requirements of IMT and Broadband Wireless Access (BWA) in the frequency band 698-806 MHz may be considered for coordination on case by case basis, as appropriate.”

However, in line with the WRC-07 outcomes, COAI had suggested the following band segmentation to be incorporated in the revised NFAP:

585-698 MHz be earmarked for Mobile TV698–806 MHz be earmarked for IMT applications

ALLOCATION FOR MOBILE SERVICES IN UHF BAND

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Mobile industry needs only 25% (100 MHz out of around 400 MHz) of digital dividend spectrum. Sufficient spectrum would be available for broadcasters

This spectrum can be used for enhanced coverage, especially in rural areas for affordable mobile broadband to help develop a knowledge based economy.

In future, mobile broadband channel will also be needed & used by TV industry to deliver content.

For better economics: economic output per MHz is estimated at USD 87 mn for mobile compared to USD 35 mn for digital TV.

ALLOCATION FOR MOBILE SERVICES IN UHF BAND

Thus, there is a need to allocate 100 MHz of digital dividend band to mobile services

Source: SCF Associates Study

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The industry is broadly aware of the earmarking in 700 MHz band, However, exact position is not known Leads to difficulty in future planning

Timelines for digital switchover & the exact availability of spectrum after that is not defined.

There is no channeling plan available to the industry

ISSUES FOR CONSIDERATION

The above issues make it difficult for the industry to make any future plans

We request the Government to transparently share the exact usage of this band as well as the planned

channeling plans.

THANK YOU FOR YOUR KIND ATTENTION !!!