Mixed picture for 4G in Asia Pacific as lack of low-frequency spectrum limits coverage

NEW ANALYSIS: Less than 10 per cent of the population in Asia Pacific was covered by a 4G-LTE network at the end of last year, according to GSMA Intelligence research.

In many markets in the region this is due to operators not yet being at a stage to invest in 4G, as they still see room for future growth in 2G/3G networks. However, in more mature markets, the relatively slow rollout of 4G networks beyond urban centres is due to APAC operators being allocated less harmonised spectrum over the last three years than has occurred in other parts of the world.

Some APAC countries have only recently assigned 3G licences, notably Pakistan (2014), Bangladesh (2013) and Thailand (2012); while others have been running 4G networks for several years, including Hong Kong (2010), Japan (2010), Australia (2011), Singapore (2011) and South Korea (2011).

Our research shows that the vast majority of spectrum assigned to APAC operators since 2010 has been in higher frequency ‘capacity’ bands (above 1 GHz), which are not ideal for providing 4G coverage into rural areas. In order for more citizens in the region to be covered by 4G there is therefore a need for more balanced assignments of spectrum bands in the region, meaning that more lower frequency ‘coverage’ spectrum (below 1 GHz) is required.

Spectrum assignments: an uneven picture
Since January 2010, licencing authorities around the world have assigned spectrum to about 280 operators across 85 countries. Out of these, almost half were located in Europe, while only a quarter related to operations in APAC. Furthermore, of these 280 operators, 167 acquired spectrum that has been specifically earmarked for 4G, while 90 operators have been assigned technology neutral licences. As the majority of neutral licences are in 4G-compatible bands, we estimate that four out of every five operators that acquired spectrum since January 2010 have been assigned frequencies that would enable them to launch 4G networks.

In APAC, over the same period almost 70 operators were assigned spectrum across 19 countries; of these only 51 acquired spectrum for 4G. This means that of the total number of operators in the region, only one in four acquired 4G-suitable spectrum. In contrast, two out of three operators in Europe have picked up 4G spectrum since January 2010.

Balancing capacity and coverage
The type of frequencies allocated for 4G deployment directly influence both network coverage and network capacity, representing a dual challenge for mobile operators to balance. Our research shows that over 78 per cent of the spectrum assigned to operators in APAC countries since January 2010 is in capacity bands, which partly explains why only 10 per cent of the population in APAC was covered by a 4G network in 2013.

Higher frequencies (above 1 GHz) are typically used in priority by mobile operators to cover urban and suburban areas where data traffic is dense and substantial network capacity is required. However, based on their propagation characteristics, lower frequencies (below 1 GHz) provide extended coverage at lower cost as fewer base stations are required to achieve greater geographic coverage. This makes these ‘coverage’ bands ideal for use in rural areas, while they also help to improve indoor coverage in urban areas.

Therefore, there is a need for more spectrum to be allocated in coverage bands in the region to trigger wider adoption of mobile broadband services. Notably, as demonstrated in a recent GSMA report, the allocation of the 700 MHz band for mobile in APAC will carry substantial socioeconomic benefits while enabling operators to reduce capital and network costs, thereby accelerating rollout and lowering prices for end users. According to the research, the network infrastructure investment required for operating in the 700 MHz band can be up to 70 per cent lower compared to the 2100 MHz band.

The APT700 band plan: greater coverage at less cost
The Asia-Pacific Telecommunity (APT) band plan was developed by the APT between 2008-2010. It refers to the harmonised frequency arrangement for the 698-806 MHz band, also known as the 700 MHz band.

Eighteen countries in the region have committed to the APT700 band plan: Australia, Bangladesh, Bhutan, Brunei, Fiji, India, Indonesia, Japan, Malaysia, Maldives, Nepal, New Zealand, Pakistan, Papua New Guinea, Singapore, Sri Lanka, Taiwan and Tonga. However, only seven of these have assigned the spectrum to mobile operators to date.

The APT700 band plan allows maximum utilisation of spectrum of 90 MHz in frequency division duplexing mode (FDD). The adoption of the harmonised APT700 MHz band plan would create several benefits: from economies of scale for the manufacturers of mobile devices (leading to lower prices), to seamless international roaming and reduced interference along borders.

Regarding the availability of 4G devices compatible with the APT700 band, recent developments show that the device ecosystem is evolving rapidly: two handsets that support the full APT700 band plan are already on the market (the HTC M8 and Samsung Galaxy S5), while Australia’s Telstra is testing more handsets to make available at the launch of their network on the 700 MHz band in 2015.

The GSMA Mobile Economy APAC report notes that “the allocation of the 700 MHz band to mobile will have significant incremental economic benefits […]. It could translate to nearly US$1 trillion in incremental GDP between 2015 and 2020, one million new business activities by 2020, incremental government revenues of over US $100 billion and 2.1 million additional jobs created by 2020.” Momentum around the adoption of this band, together with the significant economic benefits that allocation would bring, should prompt regulatory bodies in the region to make the adoption, release and assignment of this band a priority.

Planning through spectrum roadmaps
Of the 50 countries that form the Asia Pacific region, 62 per cent have allocated neither any new or refarmed spectrum since 2010. Within this group of countries, only ten have announced plans to release more spectrum over the next four years.

In their search for the ‘right recipe’ for planning and managing spectrum demands, licencing authorities need to analyse the existing spectrum allocations and challenges, study technology trends and future spectrum needs, and consequently set out medium to long-term goals.

For instance, Australia and New Zealand are two APAC countries that last year published five-year spectrum outlooks. These publications stimulated discussions around the use of spectrum and outlined the assessments of the regulatory authorities on the demand for different spectrum bands. More countries are looking at implementing spectrum roadmaps, including Bangladesh, Myanmar, Pakistan and Thailand. It is hoped that by using these roadmaps to provide more clarity and confidence, mobile operators will be incentivised to invest in new network infrastructure and services.

Regional share of spectrum assigned since 2010; coverage (<1 GHz) and capacity (>1 GHz) bands
Source: GSMA Intelligence

Article written by Dennisa Nichiforov-Chuang, Mobile Spectrum Analyst, GSMA Intelligence.