اپریل 20, 2014

3G, 4G spectrum auction to help raise GDP growth: PTA chief

 

ISLAMABAD (APP): Pakistan Telecommunication Authority (PTA) Chairman Dr Syed Ismail Shah on Saturday said 3G and 4G spectrum auction was a landmark event in the country's telecom history as would help raise GDP growth.

The auction would also bring more than $ 1 billion investment in the country, he said at a well-attended briefing. Dr Ismail Shah said a total of 50 MHz was being offered in the auction, with 30 MHz in 2100 band and 20 MHz in 1800 band.

He said the base price for 10 MHz in 2100 band was $ 295 million and 10 MHz in 1800 band was $ 210 million. These prices were calculated after extensive market assessment and spectrum valuation by the PTA consultant and value partners, he added.

There were two phases of the auction. The first was the sealed bid stage for demand exploration, while in the second phase there would be final auction on April 23, provided demand received were greater than supply, he said.

Dr Ismail said as per sealed bids received on April 14, the demand was greater than supply, therefore, the final auction would be held on April 23 as planned.

He said the PTA had chosen Simultaneous Multiple Round Ascending (SMRA) mechanism, which was the most preferred auctioning mechanism and widely used in modern day auctions worldwide.

He said SMRA was also preferred over the traditional open cry-out auctioning model as it allowed both auctioneer and bidder flexibility to simultaneously bid on lots of their choice, privacy and time to make educated decisions during the auction process.

Some of the recent auctions conducted in the United States, Sweden, Norway, Hong Kong and Canada were all SMRA-based ones, the PTA chief said.

With regard to spectrum auction process, he said,"All lots are auctioned simultaneously over a series of rounds and in each round, bids will be submitted on individual lots at the announced prices.

"At the end of each round, a standing high bidder is identified for each lot. Once the standing high bidder is committed to the lot, it cannot withdraw," he added.

Dr Shah said the standing high bidder was released from its commitment when outbid by another one.

He said, "When a lot receives at least one bid, the price for the lot increases in the next round. The bid increments will be upto a maximum of 3% of the last bid price, which will be decided by the PTA after each round in consultation with the consultant."

He also highlighted some salient features of the auction which included that each bidder must show interest in a minimum of 10 MHz and a maximum of 15 MHz in the 2100 band.

In order to be eligible for 10 MHz in the 1800 band, a bidder must win at least 10 MHz in the 2100. Exact lot configurations are being designed with maximization of overall benefit in view.

He said a successful bidder must pay either 100 per cent upfront or 50 per cent of the winning bid amount within 30 days and remaining 50% with markup at the rate of Libor + 3 per cent would be paid in equal annual installments in five years.



Licenses to successful bidders will be issued for a period of 15 years, he added.

The PTA Chairman said offering both 2100 and 1800 bands allowed telecom operators flexibility to deploy both 3G and 4G networks and offer the most advanced mobile services to their customers.

He said for the consumers, availability of high speed mobile broadband services in both urban and rural areas would encourage a more connected community and promote e-commerce related activities. The next generation mobile services will introduce more innovative e-services such as e-medicine and e-education to facilitate population in rural and remote areas, he hoped.

He said the deployment of 4G technologies would also provide the engineers and technicians to acquire the latest skills and thus become competitive in the international market.

The successful auction of spectrum is expected to create more than 9,00,000 jobs in the telecom sector and will have multiple benefits for the economy, he added.

He said the authority had ensured a transparent and fair process. It had hired a reputed international consultancy firm, value partners, to assist in the entire auction process and the auction mechanism was designed based on the best international practices and in accordance with the PPRA rules and regulations.

Dr Shah said some demands of operators were met in the revised IM, with no change in base prices, licence duration (of 15 years), licence type and others.

There are three 3G (in 2100 Mhz) and two 4G (in 1800 Mhz) licences to be auctioned through two-stage bidding. One 15Mhz spectrum from 850 MHz band will be allotted if any new operator gets the licence, he added.

According to IM, operators can deploy technology-neutral network for the spectrum and can only offer next-gen services that are mandated with the licences. The assigned spectrum must not be used to provide fixed services or any services not explicitly authorized by the licence conditions.

He said infrastructure sharing and mandatory national roaming terms were also relaxed in the revised IM.

The PTA chief said Pakistan's telecom industry was several years behind the rest of the world where 3G networks had already matured and operators were in the process of launching 4G networks since 2010.

He said due to unavailability of 3G/4G services in Pakistan till now, consumers were deprived of these offerings. Therefore, auctioning spectrum for next generation mobile services was initiated and the authority held detailed consultations with all the stakeholders during the entire process to ensure that everyone was on-board for this important event.

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