The India BWA Auction: the LTE vs WiMAX game and some observations

The BWA auctions in India have ended and have netted the government another 38500 crores.

The aim of this post is primarily twofold:

1. form a picture on how the BWA spectrum allocation affects the LTE vs WiMAX business.

2. observe some peculiar features among the winners of the BWA auction and use this to postulate on their business plans/strategy.

As we know, 2 blocks of BWA spectrum of 20Mhz each were available across all the 22 telecom service areas. In addition BSNL+MTNL had another block of 20Mhz. The following table lists the winners and the breakdown of bids over all the telecom circles. There are only 2 operators here, Bharti and Aircel, who also won spectrum in the 3G auction. For them, both 3G and BWA (4G) spectrum allocations are specified. There is also an operator, Augere, that won spectrum only in Madhya-Pradesh. I have left it out of the table for sake of compactness.

	Infotel	Qual comm	Bharti		Tikona	Aircel
			4G	3G		4G	3G
Delhi	2241	2241	N	3317			N
Mumbai	2292	2292	N	3247			N
Maharashtra	915		915	N			N
Gujarat	613		N	N	613		N
Andhra Pradesh	1059		N	1373		1059	1373
Karnataka	1543		1543	1580			1580
Tamil Nadu	2069		N	1465		2069	1465
Kolkata	523		523	N			545
Kerala	258	258	N	N			312
Punjab	332		332	N			322
Haryana	119	119		N			N
Uttar Pradesh (E)	142			N	142		365
Uttar Pradesh (W)	183			514	183		N
Rajasthan	97			321	97		N
Madhya Pradesh	124						N
West Bengal	70			124		70	124
Himachal Pradesh	20			37	20		N
Bihar	99			203		99	203
Orissa	63			N		63	97
Assam	33			41		33	41
North East	21			42		21	42
Jammu & Kashmir	21			30		21	30
Rs Crore	12847	4912	3314	12300	1058	3438	6499
US Dollar	2.74bn	1.05bn	706mn	2.62bn	225mn	732mn	1.39bn

Observations:

1. Infotel/RIL has obtained a pan-India spectrum.

2. Qualcomm has obtained the other slot of spectrum for the top circles of Delhi & Mumbai.

What does this mean for the choice of BWA technology?

**RIL has already indicated a preference for LTE in its press statement “A single 20 MHz TDD spectrum when used with LTE has the potential of providing greater capacity when compared to existing communication infrastructure in the country.”

**Qualcomm had entered the auctions solely to use the winning slots for LTE.

3. If RIL selects LTE, then given the fact that most other BWA operators (that only have scattered spectrum) may need roaming agreements with RIL, this sort of forces LTE on the other operators too. There is a possible tenuous workaround to this roaming strategy, which I will come to later.

4. RIL+Qualcomm blocking both the spectrum slots for Delhi & Mumbai for LTE removes the scope for WiMAX in the two lucrative circles.

5. Qualcomm emerged as a very strategic player by winning the spectrum in Delhi & Mumbai. It blocked access to WiMAX for these important circles.

**Strategically, it selected regions where the 3G spectrum is expected to hit capacity constraints the earliest and would have the earliest business need to move mobile data users to 4G.

6. One can argue that BSNL+MTNL also have a pan-India spectrum and have shown preference for WiMAX. These operators selecting WiMAX can be the best case scenario for the technology. However BSNL+MTNL do not seem to have the money or the inclination to roll-out BWA in a hurry. Given that they are losing money in their existing businesses and their 3G spectrum is significantly underutilized. They are already making noises that they were forced to buy pan-India 3G+BWA spectrum that they did not need in all circles and want back their share of the auction money.

In conclusion, the India BWA spectrum, which until a few months back, seemed to have the potential to become the poster boy for WiMAX deployments, looks to have gone the TD-LTE way too. Personally I feel it is better to have competing technologies, so that vendors and operators have the advantage of making an informed choice based on their preferences...as in 2G (GSM or CDMA). However 4G seems to be fast becoming a 1 horse race. In this context, I encourage interested readers to go through a nice article by Dr. Shiv Bakshi (http://www.rcrwireless.com/ARTICLE/20100505/SPECTRUM_AUCTION/100509967/analyst-angle-bwa-in-india-wimax-td-lte-and-things-in-the-rearview).

Let us now look at a discerning pattern in how Bharti and Aircel have won their BWA spectrum. These are the only operators to have also won 3G spectrum.

1. If one observes the spectrum allocation table given above, Bharti has won BWA spectrum in 4 circles. It has not won the corresponding 3G spectrum in 3 out of these 4 circles: Maharashtra, West Bengal and Punjab. It is only in Karnataka, where Bharti has got both the BWA and 3G spectrum. Given that

a) Bharti could not win pan-India spectrum in either 3G or 4G

b) Future mobile devices would support both 3G and 4G (BWA)

**the bid pattern shows a defensive effort by Bharti to plug the "holes" in its 3G spectrum with 4G and stitch together a high-data-rate mobile coverage area comprising both 3G & 4G. Its plan would be even more productive if the government allows the operators to use 3G & 4G in the same manner with the same set of services. For example, if regulations permit, voice based services can be used over both technologies, via VoIP.

2. On the contrary, Aircel's bid pattern is driven less by pan-India ambitions and more by a consolidation strategy. It has won 4G spectrum only in circles where it also has 3G spectrum. It has concentrated and consolidated resources on circles where it is or aspires to be a market leader. For example it has won both 3G and 4G bids for Tamil Nadu at a total cost of Rs 3500 crores. It has also won 3G and 4G in Andhra Pradesh for Rs 2500 crores.

3. Given that the cost of 3G and 4G spectrum was so steep that getting pan-India slots was unaffordable, both Bharti and Aircel have been able to party secure their respective business strategies: one as a pan-India operator (Bharti) and one to consolidate its hold on its biggest and best circles (Aircel). Their part success contrasts to the forced withdrawal of the other major 3G players: Reliance, Vodafone, Idea and Tata.

4. Let us look at another interesting point regarding the "high cost" circles of Tamil Nadu, Karnataka, Kolkata and Andhra Pradesh.

**The cost of 4G spectrum in Tamil Nadu (2069 crores) exceeds the cost of 3G spectrum (1465 crores).

**For Karnataka, the cost of 4G spectrum (1543 crores) is almost the same as the cost of 3G spectrum (1580 crores). Same is the case for Kolkata, 4G: 523 crores, 3G: 545 crores.

**For Andhra Pradesh (4G: 1059 crores, 3G: 1373 crores) the 4G and 3G costs are in the same ballpark.

For other "high cost" circles, in general the 4G cost was significantly lower than 3G. So what happened for these 4 circles? An interesting observation is that in all of these 4 circles, both Bharti and Aircel won either the 3G or 4G spectrum. But neither could win both 3G and 4G in all 4 circles. Looking at this I can only speculate that Bharti and Aircel bid each other fiercely in all these 4 circles. While Bharti won the 4G in Karnataka and Kolkata, it lost out Tamil Nadu and Andhra to Aircel. The bid must have been especially challenging in Tamil Nadu, were both Bharti and Aircel have the 3G spectrum and where the 4G spectrum ultimately sold 40% higher than 3G. This is a telling example of what can happen when the government creates artificial scarcity by providing only 2 slots for auction among 11 bidders. If we further consider that one of the bidders (RIL) that has other major businesses and has a rich cash flow, was fully committed to winning a pan-India slot no matter what the cost, this really leaves out only 1 slot open among 10 bidders. Such demand-supply gap is not healthy for any industry.

I would end this post with another observation. The spectrum cost for the entire North-East (including Assam) came to about 50 crores. This is about 1/40 of the spectrum cost of Tamil-Nadu (which has about twice the population of North-East and the highest bid among states). It is also about 1/12 the cost in Gujarat which has a lower population. North-East, Tamil-Nadu and Gujarat have comparable land area. Similarly telecom service areas that have much larger population and area such as Bihar, Madhya-Pradesh (includes Chattisgarh) and West Bengal were sold at a fraction of the cost of Delhi, Mumbai, Tamil-Nadu, Karnataka, Maharashtra and Gujarat. The huge difference in spectrum costs is an evaluation by private industry on how it views business opportunities in these regions. It is also a stark reminder of the failure to ensure regional balances in India's economic growth. Had there been more granularity in the telecom service areas, we would have seen significant regional differences in the spectrum costs of even the most lucrative regions. Many of the separatist and militant movements that scar India today justify their stance in the denial of opportunities to the local populace and the imbalances in economic growth. The hands down to the North-East/East/Central-India in the BWA auction indicates/reinforces the notion of this failure.

So much for the business and governance issues in the BWA and 3G auctions in India. In the next article, I would detail the technical aspects of these technologies. What are the minimum/average/maximum performance benchmarks for 3G and 4G (for example in terms of data-rate and number of subscribers)? How are they distinguished from each other and from the presently available wireless technologies (2G/2.5G)? These are topics that I am more comfortable with and are my bread and butter. I also do not find these discussed widely, in either print or digital media. So I hope to cover this soon.

The FY-2010 Indian Telecom Industry survey by Voice&Data

Salient points from the Voice&Data 2010 Telecom Survey. Do refer to their link at http://voicendata.ciol.com/content/vnd100_2010vol-I/110060827.asp for the details from their end.

Observations for FY 2010:

1. Total telecom sales: 137 000 crores. It grew by about 19% YoY.

The revenue comprises of:

a) Carrier Equipment: 90 000 crores. This category includes wireless infrastructure hardware and software.

b) Phones: 27 300 crores. Note here that mobile handset sales are 27000 crores and fixed handset sales are only 300 crores! In other words, fixed handset sales are only 1% of total handset sales. I expected fixed sales to be much lower than mobiles, but a miniscule 1 % is a surprise to me.

c) Enterprise Equipment: 20 000 crores.

The top 10 companies by revenue are:

Rank	Company	Revenue in Rs crore		Growth %	Rank in 2008-09
		FY '08-09	FY '09-10
1	Nokia	16,567	14,100	-14.9	1
2	Huawei	6,240	11,000	76.3	5
3	Nokia Siemens Networks	9,848	10,824	9.9	3
4	Ericsson	10,310	10,820	4.9	2
5	Alcatel-Lucent	8,050	8,930	10.9	4
6	ZTE	4,800	7,200	50	7
7	Wipro	5,692	6,353	11.6	6
8	Cisco	4,693	5,400	15.1	8
9	ITI	1,741	4,732	171.8	New
10	Tech Mahindra	4,116	4,400	6.9	New

1. The Nokia companies: Nokia and Nokia-Siemens did a combined business of 26 500 crores in FY-10.

2. The top infrastructure vendors: Nokia-Siemens, Ericsson, Huawei, Alcatel-Lucent, ZTE all had solid sales between 11 000 crores and 7200 crores in India.

3. Cisco has 50% share in Switches (total market: 4500 crores) and Routers (total market: 3300 crores). It also has good share in WLan and Audio-Video-Conferencing solutions; but these are much smaller markets by value.

4. In mobile handsets, Nokia lost market-share from 64% in '09 to 52% in '10. I was surprised at this too. I had expected the market share to dip much further due to competition from Indian vendors (Micromax, Karbonn, Spice Mobile etc). This was based on information gleaned elsewhere. So I somewhat suspect this data-point.

5. The public sector ITI (which is incidentally India's 1st PSU) sold 4700 crores in '10. Who is it selling all this gear to? Need to find this out.

The Mobile Innovation Grand Prix

The Mobile Innovation Grand Prix was an event co-located with the Mobile World Congress, held in Barcelona in Feb'2010. The Innovation 'Grand Prix' is a competition designed to showcase start-ups, small and medium sized organisations that are developing innovative mobile products and seek industry (operator/vendor/Venture Capital) support in order to achieve or sustain market deployment. It is a year long event, where winning solutions are chosen from several regions (Asia-Pac, EMEA, Americas etc) through a multi-level judging process. The selected finalists then get an opportunity to showcase their solutions in the MWC; where the eventual winner is announced.

The finalists in this year's event were the following:

Altobridge – Asia Pacific Tournament Winner

Electro Power Systems – EMEA Tournament Winner

fring – Israel Tournament Winner

IDENT Technology AG – EMEA Tournament Winner

Sentry Wireless – Asia Pacific Tournament Winner

Siklu Wireless – Israel Tournament Winner

Ubidyne – Americas Tournament Winner

WellDoc – Americas Tournament Winner

Panoramic Power - winner of the Qualcomm Ventures' QPrize

DevelopIQ** - winner of the RIM's BlackBerry Developer Challenge


The final winner was Ubidyne, for its Antenna Embedded Radio technology. I had followed the event closely and had made brief notes on some of the companies and their solutions. I encourage the reader to look-up the websites and presentations of each of the above companies. Theirinnovative solutions and proposals are eye-openers for many of us that struggle to find simple, effective and efficient solutions to everyday industrial problems.

The following is a writeup on some of them. Hopefully they would stimulate the reader to search more

1. The Winner: Ubidyne (Germany): Antenna Embedded Radio for Wireless Communication





The diagram above shows a conventional BTS (Base-Transceiver-Station) and one using Ubidyne's Antenna Embedded Radio Solution. The advantages are obvious:

1. No co-ax loss/noise/LNA. So receiver sensitivity is naturally higher.
2. More compact design due to miniaturization.
3. Reduced size and energy consumption.

**The above 3 lead to considerable capex savings.

4. Technology is used in NSNs Flexi-BTS which has the lowest CAPEX in industry. The Flexi-BTS won the GSMA –MWC “Best Network Technology Advance” award in 2009

Let us look more closely at their design:

Antenna Embedded Radio: Diagram 1



Antenna Embedded Radio: Diagram 2



The details of the design are self-explanatory. Note that since each “logical” antenna is made up of several miniature “physical” antennas, the nature of the antenna array is software configurable. This can be a major advantage while installing MIMO antenna configurations for LTE or WiMAX.

2. Siklu Wireless, Israel (http://siklu.com/technology.aspx)

They call their product EtherHaul™ - which is a "Gigabit Ethernet Wireless Solutions. Offering the industry’s lowest total cost of ownership. EtherHaul solutions feature carrier grade, high capacity Ethernet operating at the 71-76 / 81-86 GHz regulated E-band. Targeted for mobile backhaul".

Advantages of E-band backhaul:
1. No expensive fiber
2. Licensed (USA/Europe) with “low” licensing fee
3. Availability of large (10Ghz) bandwidth, 50x larger than the entire cellular spectrum (in USA)
4. Larger antenna gain at higher frequencies for the same antenna dimension. Transmit energy can be better focused at higher frequencies.
5. Higher transmit power. For eg FCC allows upto 3W transmit power.

Disadvantages:
1. Pathloss increases rapidly with frequency.
2. Atmospheric loss increases with frequency

Competitors : BridgeWave, E-Band Communications

Let us look more closely at the propagation loss characteristics of the E-band. It would give us an insight into the operation at the E band i.e frequencies between 71-76 Ghz and 81-86 Ghz.

Propagation Loss Due to Atmospheric and Molecular Absorption



Observe that a clear atmospheric window can be seen in the spectrum from around 70 GHz to 100 GHz. In this area, low atmospheric attenuation around 0.5 dB/km occurs, close to that of the popular microwave frequencies, favorable for radio transmission.

As as aside note that the small peak at 23 Ghz and the large peak at 60 Ghz occur due to signal absorption by water vapor and oxygen molecules respectively.

There is another atmospheric factor: absorption due to rain. This is known as rain-loss and can be significant at microwave and higher transmission frequencies.

Propagation Loss Due to Rainfall



Rain Attenuation: Above 10 GHz, rain attenuation places limits on link distances. “Heavy” rainfall at 25 mm/hr yields ~10 dB/km attenuation at E-band. This increases to 30 dB/km for 100 mm/hr “tropical” rain. These values of attenuation are used in link planning to determine the maximum Link length allowed to overcome rain events with a given degree of probability.

Note that Rain-attenuation is insignificant in the cellular band.


3. Panoramic Power, Israel (http://www.panpwr.com)

Energy consumption is one of the main causes for the Greenhouse Effect. Improving the world’s energy efficiency is the first item to address. Many energy studies have shown that if we measure our consumption to the right granularity, we will be able to become more efficient.

Enterprises, as well as homes have very limited visibility into the flow and usage of their consumed electrical power.

“We give complete online visibility into the power consumption of every circuit or device. We have developed a miniature, self powered, wireless sensor that is the key hardware element in our system. We can address any existing circuit or closet configuration, and can scale up to large facilities.”

"By enabling full transparency of electricity flow throughout an organization our technology platform opens a vast opportunity for energy management applications.”

Panoramic Power: Business Model

In response to energy costs, environmental concerns, and government directives, there is an increased need for sustainable and "green" business operations. Methods to measure power consumption and control energy output are now the focus of businesses worldwide, with customers looking for a method to reduce energy costs and implement increased efficient operation. Energy management is critical to this. As supplies and costs continue to rise, achieving a greener network and greener buildings is expected to become even more imperative.

Competitors

Cisco: Cisco EnergyWise converges disparate networks, services, and network-attached devices into a common view and set of policies for measuring and optimizing organizational power consumption. EnergyWise is designed to integrate future devices, network applications, and management tools to accommodate evolving organizational requirements. Working on protocols to regulate electric devices via the Internet

IBM: IBM Tivoli Monitoring for Energy Management is a software solution that monitors and helps manage energy usage of facility resources for efficient infrastructure operations. It will help optimize your energy consumption for higher efficiency of resources, lower operating cost, and reduced carbon emissions.

Incidentally Panoramic Power has now (Dec’2009) been bought over by Qualcomm


4. Ident Technology, Germany. Contact-less user interface

Products

GestIC: Due to the ability of the human body to conduct electricity, it can influence a minor electric field surrounding an appliance which is equipped with GestIC sensors. The approach of a hand is detected by four sensors which then transmit the coordinates to the electronics. Random functions can be designated to the coordinates.

This is a “core” technology which enables a variety of UI design.

Advantages:
1. Intelligent human-machine interaction: switches and buttons on the operating panel can be either just printed onto the panel or they are dummy switches which give the impression of pushing a button. No mechanical and less electrical parts.
2. Any material can be used for the UI since it would be only a dummy board with mapped functionality
3. Cost savings on Wiring/electronic parts. Multiple UI screens can be mapped into the same UI surface in a more cost effective manner
4. UI functionality can be updated via software only.
5. Functionality can be enabled via gesture and without actually touching. The following is an illustrative video (http://www.youtube.com/watch?v=ieolCZBvKPQ).
6. Same UI surface can be customized for different users in a natural manner

Technical solution/Usecase for automobiles

1. Transmitter electrodes integrated in seats of driver and passenger
2. Individual distinguishable signals applied to driver and passenger through electrodes embedded in the seat.
3. Signal is transmitted through body to particular switch or UI of interest and decoded.
4. The “touched” UI can distinguish between the driver and passenger based on the transmitted signal and accordingly customize its functionality.

This is a low cost solution to making the automobile UI sensitive to the passenger context.

This is all that I have for this post. Let us strive to be innovative!

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