Telecommunication Policy

1. AMERICAN INTERNATIONAL UNIVERSITY-BANGLADESH
Submitted to:
Dr MD SOHEL RANA
Deputy Director .Spectrum Division
Bangladesh Telecommunication
Regulatory Comision(BRTC)
Submitted By
Rahman, MD.Mustafizur
B.Sc &M.sc in EEE
American International University –Bangladesh(AIUB)
Id:19-91474-3

2. Welcome to my presentation
My presentation topic
is “Telecommunication
Policy”

3. Opportunity cost of spectrum
for Mobile Communication

4. Abstract
A key objective of this slide is to develop a model for estimating the opportunity cost of
spectrum, appropriate pricing of spectrum and to examine how the estimated opportunity cost
relates to the reserve price fixed in various spectrum auctions in Bangladesh. The appropriate
pricing of spectrum acquires special significance in developing economies like Bangladesh
where fixed line services are underdeveloped. The mobile broadband represents the lion’s
share of broadband subscribers. This paper focuses on the discovery of the optimal price of
spectrums and to focus attention on the choice of the reserve price made by the telecom
regulator to explain the under-performance of spectrum auctions in Bangladesh. The auction
mechanism is widely accepted the world over for the assignment of spectrum. The appropriate
design of the auction has evolved over time to reach its present level of robustness and
sophistication. The overestimation of the reserve prices for several auctions in Bangladesh
including the auction of the 3G – 2100 MHz band in 2013, the 2G - 1800 MHz band in 2015,
and the 4G – 1800 and 2100 MHz bands in 2018 is established.

5. 1.Introduction
Spectrum relates to the radio frequencies allocated to the mobile industry and other sectors for
communication over the airwaves. Additional frequencies, including both coverage and capacity
bands, means mobile operators can connect more people and offer faster speeds. Spectrum is an
essential input in the provision of mobile services. The auction mechanism is widely accepted the
world over for the assignment of spectrum. governments have generally been slow you accept this
advice of theory on account of a number of reasons. These include the threat of collusion, the desire
to maximize revenue, and the difficulties of keeping pace with fast changing technological
characteristics of spectrum which change the willingness to pay of the operators. . In order to
validate the results obtained from our proposed model, two variants of the opportunity cost method
are used
 The Engineering valuation method
 The production function method.

6. 2. An overview of the Bangladesh telecom industry
Bangladesh entered the era of cellular mobile communications in 1993. The mobile
communications market of Bangladesh has observed booming growth. The mobile
subscriptions base has become the fifth largest in Asia and has been ranked ninth in
the world. This development points out the promising growth of the usage of mobile
devices to access the internet. The potential escalation in demand for voice and
mobile broadband data services is expected to set strain on the mobile
communication networks and spectrum which is a valuable and scarce resource.
Thus, examining its economic value is essential to manage it efficiently. The mobile
telephony operators of Bangladesh are providing voice and mobile broadband data
services through their cellular networks that are operated by insufficient spectrum
resources.
Year band
2018 900 MHz and 1800 MHz -2G & 3G-2100 MHZ
2013 3G-2100 MHz
2014 2G-1800 MHz
2015 2G-1800 MHz
2018 4G-900 &1800 MH

7. Fig. 1. Price paid per
MHz/pop in auctions in
different countries
Fig. 2. Mobile subscriptions in Bangladesh as o

8. 3. The engineering valuation model and its estimates
A portfolio of econometric and techno-economic models for the valuation of
spectrum has been employed by contemporary studies. The most commonly used
models are the opportunity cost approach and the cash flow method. The
engineering valuation method, framed by Nera and Smith (1996), is a simple
technique for estimating the opportunity cost of spectrum, first used for estimating
the administrative incentive price (AIP) of spectrum in the United Kingdom. Doyle
(2007) suggested that the opportunity cost of spectrum can be estimated from
current and other potential usages.
Fig. 3. Assigned spectrum to the
operators as of 2018
Fig. 4. Spectrum assignment in
MHz/million subscriptions

9. Model
The opportunity cost of spectrum in the engineering valuation method is
estimated from the cost savings enabled by obtaining additional spectrum
rather than installing additional BTS sites. The design of our model proposes to:
(1) Compute the number of BTS sites for coverage
(2) Find the relationship between spectrum and BTS sites
(3) Estimate opportunity cost
Fig. 5. The analysis workflow

10. Analysis and estimate
• The estimation results of the opportunity cost of 2G and 3G spectrum.
• The estimates of the opportunity cost of 4G spectrum.
• Cell radius & Network coverage.
• Number of BTS sites required.
• Estimated spectrum relative to the baseline BTS sites.
• Price of additional spectrum
• Estimated engineering value.
• Geographical areas coverage with spectrum.
• Spectrum relationship E-GS.

11. Fig. 6. Cell radius of different spectrum bands for
indoor coverage. Source: Authors’ calculation
Fig. 7. Number of BTS sites required to achieve 100%
population coverage.

12. Fig. 8. Estimated spectrum relative to the baseline BTS sites.

13. Estimated spectrum relative to the baseline BTS sites.

14. Fig. 9. Spectrum vs baseline BTS sites of GP. Fig. 10. Spectrum vs baseline BTS sites
Fig. 11. Spectrum vs baseline BTS sites of BL.

15. Engineering value estimate of 4G spectrum
In order to estimate the engineering value of spectrum from 4G networks, an
analysis is carried out based on spectrum and the number of macro BTS sites
required to meet the capacity demand for two different network deployment
options and they are
1.A base network 2. A common network.
The spectrum is to be used in three-sectored BTS sites where the capacity per
site is estimated as: Capacity ​per ​site =​ ¼ ​Channel ​bandwidth ​(MHz) ​x
number ​of ​sectors site ​x ​spectral ​efficiency .
The base network is based on 20 MHz of spectrum, which is the maximum
channel size for 4G technology, and the number of baseline BTS sites is
estimated based on the forecasted mobile .

16. Engineering value estimates
Fig. 12. Ratio of price between 900 MHz and 1800 MHz
Fig. 13. Opportunity cost per operator for both 900
and 1800 MHz bands for 15 years.

17. The production function method and its estimates:

18. Estimation of the opportunity cost. Source: Authors’ calculation.

19. Fig. 15. Relation between price and the amount of
spectrum assignment.

20. Sensitivity Analysis:

21. Discussion
There is clear evidence that wireless broadband is helping to bridge the digital divide in Bangladesh as
minority and lower income communities are increasingly turning to mobile services as their primary mean of
accessing the Internet. However, the price of spectrum has become a major bottleneck for the development of
4G wireless networks. Finally, when determining the reserve price, the regulator needs to balance the greater
spectral efficiency of new technologies with the much higher quantities of spectrum required to process the
much larger volumes of data. In the newly emerging 5G technology, higher spectrum bands such as 2500–
2690 MHz, 3300–3800 MHz, 24.25–29.50 GHz and 31.8–43.5 GHz are expected to be used. They will need
to be assigned in much larger quantities extending to hundreds of MHz. The net effect of the higher
efficiency, and diminishing marginal productivity associated with the higher amounts of spectrum is likely to
be a lower value per MHz. The regulator needs to be sensitive to this aspect. In countries like Japan, 5G
spectrum has been assigned free of charge. In Bangladesh and other emerging economies, if the national
regulator fails to take cognizance of these issues, there could be significant delays in the rollout of 5G.

22. Conclusion:
The telecom industry is going through a paradigm shift with new technologies, new competitive
pressures, and significant uncertainties. The blurring boundary between telecom operators and
‘over the top (OTT)’ internet companies has created an integrated sphere of competition
between telcos and OTTs.
Regulators certainly need to use objective methods like the opportunity cost methods outlined
in this paper to determine the reserve price. Of course, these methods have to be tailored to the
specific needs of each market and technology. For instance, in larger jurisdictions where
licenses are given over areas that are very heterogeneous in terms of density and ability to pay,
the production function method needs to be used with care. Prasad (2014) adjusts the actual
number of MHz of spectrum holding to derive a ‘number of units of effective spectrum’ in order
to account for the additional load carrying capacity of every MHz beyond 3 MHz with the use of
2G technology. Such adjustments are a necessary part of the process of tailoring the use of the
opportunity cost method to different jurisdictions.
Opportunity cost/MHz spectrum for the 2G networks (million
US$)