Page 12 - Mobile World Daily - Day 3

ANALYSIS | SPECTRUM
Dennisa Nichiforov-Chuang,
Mobile Spectrum Analyst, GSMA Intelligence
www.gsmaintelligence.com
Spectrum for new
entrants: lessons
learned
Regulators must be wary of the
conditions under which new entrants
can thrive before allocating valuable
spectrum, as reserving spectrum for
new entrants may not result in
effective competition or sustainable
market players, while leading to an
inefficient use of spectrum.
Regulators should ensure that operators
are assigned sufficient amount of
spectrum and the right bandwidth to
achieve the required quality of service. Each
new technology generation uses wider
channel bandwidths, as well as improved
spectrum efficiency to drive faster
connection speeds. This means that they use
increasing amounts of spectrum making the
need for new mobile frequency bands
essential. For example, a 2G channel is 0.2
MHz wide, a 3G channel is 5 MHz wide and a
4G-LTE channel can range from 1.4MHz to
20MHz wide – the fastest 4G-LTE services
are only possible with the wider channel
sizes. The most recent types of 3G and 4G-
LTE networks are capable of providing users
with especially fast speeds by combining
several channels together, making them even
more reliant on large amounts of spectrum.
In some cases, reserving spectrum for new
entrants led to inefficient use of spectrum.
For instance, in the AWS auction in 2009 in
Chile, the three incumbents have been
effectively excluded from participating in the 62 new players launched operations across 48
auction, leading to valuable spectrum being
awarded to two new entrants that reached a
limited market share of connections.
Spectrum allocation is often seen by
regulators as a way to facilitate the entry of ability to change the market landscape. Of
new players in a market with a view to
stimulate competition. However, our research
demonstrates that the majority of new
entrants that launched services since early
2010 did not impact the competitive structure
of their respective markets, in turn showing
that the success and lifespan of new entrants
depends on a number of factors that tend to
be excluded from the regulatory framework.
PAGE 12 Wednesday 4th March
REGULATORY MODELS USED TO
ENCOURAGE NEW ENTRANTS
Once a government or regulator decides to
encourage a new entrant into the market,
different models are usually employed to
ensure both access to spectrum as well as
facilitation of entry conditions. Examples of
these models include:
- the use of spectrum caps
- set-asides of spectrum for entrants
- different roll-out and coverage
requirements for the new entrant
- obligations imposed on incumbents or
established operators to provide facilities
sharing (such as access to infrastructure)
and roaming
NEW ENTRANTS – 2010 TO PRESENT
DAY
A number of factors impact the ability of new
entrants to successfully challenge established
operators. Recent data shows that most new
entrants tend to struggle to gain a foothold in
established markets. The number of existing
players in the marketplace at the time of
launch of a greenfield operator is a significant GSMA Intelligence is the definitive source of global mobile operator data,
indicator of its ability to grow market share
(see chart).
From Q1 2010 to the present day, a total of
markets worldwide. If we examine the
success of new entrants over this timeframe,
it is clear that the number of existing players
in a market at the time of launch has a large
bearing on its performance, in terms of its
the 62 launches, 24 entered markets with
three or less existing players, and 7 of these
broke hitherto monopolies. The remaining 38
launched in markets with 4 or more existing
operators.
Those entering markets with only one
existing operator performed best, recording
an average market share of connections of 21
per cent some 26 quarters (6.5 years)
following commercial launch. However, our
data shows that the marginal gains of new
entrants fall significantly as the number of
New entrants’ average connections market share by market
structure, quarters after launch
25%
Average market share of connections 20%
15%
10%
5%
0%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
Number of existing operators: 1 2 3 4 5 6+
Source: GSMA Intelligence
existing operators climbs. Those entering market share of 10 per cent. Finally, new
markets with two existing operators can entrants entering markets with four or more
expect a corresponding average market share existing players did not witness market share
of connections of 14 per cent in the same in excess of 5 per cent in the 6.5 years period
timeframe, while those entering markets with since their launch.
three existing operators achieved an average
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