fish auctionfish auctionHigh reserve protected against giveaway pricing. The telcos got the spectrum they can put to use for $10B, about all they could spend. In two to four years, the government likely can re-auction the unsold spectrum for a much higher price.  Normally, it's a good thing to put spectrum to use. In this case, most would have gone unused if transferred to the carriers.

 Manoj Gairola echoed other reporters in Spectrum auction fiasco: DoT should come out of denial mode and introspectI disagree that "The latest Spectrum auction has failed." Nearly all analysts agree that companies like Bharti and Idea are facing serious issues with their balance sheets. Vodafone had to pump $7B in Vodafone India. They didn't have the cash to bid much more. They couldn't have afforded to spend more. The Indian telcos are struggling to finance the buildout on the spectrum they have bought; it would be impractical for them to buy and then build the 700 MHz band. Goldman Sachs had predicted the companies wouldn't spend more than $7B. "Higher debt levels following the auction and lower profitability from pricing pressure will likely raise industrywide leverage,” Annalisa Di Chiara of Moody's concluded.

Sunil Bharti Mittal, head of India's largest phone company, agrees the companies got what they needed. “Spectrum was one of the biggest issues that has been resolved to a very large degree. Lots of spectrum was put up on the table. Most has been picked up and more will be picked up. I think the rollout is now accelerating.“ Minister Sinha adds,  “I totally disagree with the statement that this spectrum auction was a `failure' (according to newspapers) ... I think Digital India will get momentum after this spectrum auction.“ 

The financially stretched companies would have had to spend $biliions for spectrum they would barely use for years. They can spend their limited funds on building today's networks.

In two to four years, the companies should be ready to put the spectrum to use. The government can look forward to a much better return. The shortfall is an issue for this year's budget, but a tax amnesty raised more than expected and will cover most of the extra deficit. The revenue foregone will be more than made up in a few years.

Reliance Jio signed up 16M 4G customers in 26 days, a kickstart to India's broadband. 

Quote from Moody's added 10/13

dave askOn Oct 1, Verizon turned on the first $20B 5G mmWave network. It will soon offer a gigabit or close to 30M homes. Thousands of sites are live in Korea; AT&T is going live with mobile, even lacking phones. The hype is unreal. Time for reporting closer to the truth.

The estimates you hear about 5G costs are wildly exaggerated. Verizon is building the most advanced wireless network while reducing capex. Deutsche Telekom and Orange/France Telecom also confirm they won't raise capex.

Massive MIMO in either 4G or "5G" can increase capacity 4X to 7X, including putting 2.3 GHz to 4.2 GHz to use. Carrier Aggregation, 256 QAM, and other tools double and triple that. Verizon sees cost/bit dropping 40% per year.

Cisco & others see traffic growth slowing to 30%/year or less.  I infer overcapacity almost everywhere.  

Believe it or not, 80% of 5G (mid-band) for several years will be slower than good 4G, which is more developed.


5G Why Verizon thinks differently and what to do about it is a new report I wrote for STL Partners and their clients.

STL Partners, a British consulting outfit I respect, commissioned me to ask why. That report is now out. If you're a client, download it here. If not, and corporate priced research is interesting to you, ask me to introduce you to one of the principals.

It was fascinating work because the answers aren't obvious. Lowell McAdam's company is spending $20B to cover 30M+ homes in the first stage. The progress in low & mid-band, both "4G" and "5G," has been remarkable. In most territories, millimeter wave will not be necessary to meet expected demand.

McAdam sees a little further. mmWave has 3-4X the capacity of low and mid-band. He sees an enormous marketing advantage: unlimited services, even less congestion, reputation as the best network. Verizon testing found mmWave rate/reach was twice what had been estimated. All prior cost estimates need revision.

My take: even if mmWave doesn't fit in your current budget, telcos should expand trials and training to be ready as things change. The new cost estimates may be low enough to change your mind.