Image Image Image Image Image Image Image Image Image Image
Scroll to top

Top




Understanding 3G / 4G and the Auction Process [Complete Guide]

By  | 16, Apr 2014 | 35 Comments



Night Packages Understanding 3G / 4G and the Auction Process [Complete Guide]

Pakistan’s Telecom industry is undergoing its most crucial time since the deregulation of the telecom industry back in 2004. Amid spectrum auction of 3G and 4G licenses, there have been serious confusions – particularly amongst the media – which is not only causing serious damage to the people of Pakistan but to our economy as well.

Through this post we will try to help you understand 3G, 4G and the whole auction process, in plain simple language.

What is 3G / 4G?

For an easy understanding, 3G and 4G are wireless technologies that enable mobile phone users to get high-speed internet on their cellular devices.

Practically speaking, 3G technology allows operators to offer wireless broadband speeds of 512Kbps to 2Mbps, while with 4G technology, operators can offer from 2Mbps to 10-15Mbps internet speeds. (P.S. Theoretical speeds for 3G and 4G are different to what are mentioned here)

Internet’s speed with 3G and 4G depends on your distance from the cell site and number of users connected with the particular cell site. The nearer you are from the cell site, the higher the speed and vice versa. Similarly lesser number of users on a cell site means higher speeds and vice versa.

There is nothing more, nothing less.

So basically its just the addition of wireless broadband services that we will get with 3G and 4G. However, with this broadband on mobile phones the entire echo system is going to get reshaped.

For example, you will be able to enjoy Video calling through Skype or other similar apps, browse websites on the go, make financial transactions online, collaborate with colleagues, and so on.

A practical example is about shooting a video with your smartphone and then sending it to your news-room instantly. The whole process will require just a phone and a 3G/4G connection and you are all set to report for virtually anything – that too without the high-tech TV Van with VSAT connectivity and all.

Basic Information

In order to offer 3G and 4G services operator needs a spectrum. The Government of Pakistan decided to auction this required spectrum from 2100Mhz and 1800Mhz bands for 3G and 4G services respectively.

If you aren’t familiar with the term spectrum then please click on this link to know what spectrum means and how it is used for telecom services.

Spectrum is a limited resource, i.e. its not unlimited and hence it is considered a valuable national asset. Spectrum is always auctioned through bidding, unlike LDI or Local Loop licenses, just because a government can sell any number of LL licenses (because you don’t need any limited resource for LDI or LL);  however this is not the case with spectrum.

Therefore, we will have this auction for spectrum taking place for 2100 and 1800Mhz bands.

Operators were invited to bid for the said spectrum through which they will be able to offer wireless broadband services.

Available Lots

Government of Pakistan allocated 30Mhz from 2100Mhz band for 3G licenses while 20Mhz from 1800Mhz for 4G licenses. This allocated spectrum from both bands is then divided into Lots that are put on sale through auction.

Lot details are as following:

  • Lot A:
    • One 3G spectrum of 10 MHz from 2100Mhz
    • One 4G spectrum of 10 MHz from 1800Mhz
  • Lot B:
    • One 3G spectrum of 10 MHz from 2100Mhz
    • One 4G spectrum of 10 MHz from 1800Mhz
  • Lot C:
    • One 3G spectrum of 5MHz from 2100Mhz Band
  • Lot D:
    • One 3G spectrum of 5MHz from 2100Mhz Band

Base Price

  • Base price for 10Mhz block from 2100Mhz is US 295 million
  • Base price for 10Mhz block from 1800Mhz is US 210 million

Auction Process

Above mentioned lots will be auctioned separately, hence, operators were asked to show their interests for the Lots mentioned above.

Here are the rules for bidding:

  • Operators must show interest in at least 10Mhz for both 3G and 4G spectrum
  • Operators can not show interest in more than 15Mhz for 3G spectrum and 10Mhz for 4G spectrum
  • All lots are to be bought in a bundle. For example Lot A comprises of 10Mhz for 3G and 10Mhz for 4G spectrum, and hence the base price for Lot A would be US 505 Millions (base price of 10Mhz of 3G plus the base price of 10Mhz of 4G spectrum).

With these rules in place, let’s assume few possible bids that operators might have placed:

Not to forget, there would be two rounds of auction. In first round – on April 14th, 2014 – operators showed their interest in the blocks they are desiring to buy. Now, since the demand for spectrum is more than the supply hence there will be a second round of bidding on April 23rd where operator will bid for their desired Lots to win the spectrum.

Possible Scenarios

During first round operators submitted bids for their desired Lots. While at this point in time we don’t know the amount and kind of lots that operators have shown interest in, so we are just assuming few possible scenarios to help you understand the process.

(P.S. PTA will publicly announce the bidders and their interest on April 17th, 2014, i.e. tomorrow)

Let’s assume that Operator A has shown interest in Lot A and Lot C. While Operator B has submitted its bid for Lot A. Operator C has shown interest in Lot B, C and D. Operator D has shown interest in Lot C and D.

Check below table for understanding:

Lot A Lot B Lot C Lot D
Operator A X x
Operator B x
Operator C x x x
Operator D x x

 

If you notice, in this assumption no operator has exceeded the cap of 15Mhz in 3G and 10Mhz of 4G spectrum. Similarly, every operator in this example has shown interest for at least 10Mhz of 3G spectrum.

In this scenario,

  • Lot B will be granted to Operator C without bidding since no one has showed interest in Lot B.
  • For Lot A there will be a bidding between operator A and Operator B
  • For Lot C there will be a bidding amongst Operator A, Operator C and Operator D
  • For Lot D there will be a bidding between Operator C and Operator D

After first round, bidding will proceed with the second round with below possible situations:

During second round of bidding, operators will bid against the Lots they have shown interest (given the demand is more than the supply). Operators can only bid with 3% increment in value or more. Highest bidder will be assigned the spectrum.

Let’s assume following situation:

  • Operator C secures Lot B – since there was no competition.
  • Operator A submits highest bid for Lot C and wins it, while it withdraws from other lots
  • Operator B submits highest bid for Lot B and wins it
  • Operator D submits highest bid for Lot D and wins it.

Outcome:

  • Operator A Wins 5Mhz for 3G
  • Operator B Wins 10Mhz for 3G and 10Mhz for 4G
  • Operator C Wins 10Mhz for 3G and 10Mhz for 4G
  • Operator D wins 5Mhz for 3G

Just to note, operators can not bid for less than 10Mhz block for 3G, however, after biding they might win just 5Mhz block.

Check below another possible Scenario:

Lot A Lot B Lot C Lot D
Operator A X x
Operator B x x
operator C x x x
Operator D x x x

 

In this scenario, almost every Lot has competition and hence every lot will be sold through bidding.

Another Possible Scenario in First Round can be as following:

Lot A Lot B Lot C Lot D
Operator A X x
Operator B x x
operator C x x
Operator D x x

 

In this scenario, Lot B will remain unsold since no one has shown interest in it. However, Lot C and Lot D have a lot of competition and may generate significantly higher value of money than the base price.

Please note: This illustration was for understanding only and has been kept very simple without involving any technical terms. For complete understanding you may consult Information Memorandum for 3G and 4G licenses available on PTA’s website.

Any questions — strictly on the auction process — are welcome in the comments section.

Related Stories:

  • Muhammad Sulman Danish

    Very Nice Information….!
    But there will be nomore 3G..
    So please keep Silent.

    • Ali Khan

      I mean wtf u mean bro?

    • Abbas

      The Supreme Court on Wednesday directed that the process of auctioning 3G and 4G spectrum licences should continue uninterrupted. The three-member bench headed by Justice Jawwad S. Khawaja resumed the hearing of a petition filed by Khurram Shehzad Chughtai, an information technology expert, who had sought a court order for the government to complete the process of auctioning 3G spectrum licences on an urgent basis and in a transparent manner, and to ensure early availability of the service

    • Muhammad Khan

      3 G will be in Pakistan very soon Insha ALLAH.

  • Abu Khuzaima

    instead of assuming the interest of CMOs, you better have written the article on 17th when the things would get clearer. Anyhow, good piece of knowledge. thanks

    • Ryzvonusef

      I think when more info comes, he can write a new article with exact info, and refer back to this for detailed explanation.

  • http://twitter.com/sajjadkhan84 Sajjad Khan

    Many thanks for nice information….

  • Mani

    there is 100 MHZ spectrum pretty much unused by SUNTV/DWN … why doesnt PTA get that released … with 10 MHz block it will be tough to offer services to the entire country … it will again be patchy coverage and frustrating for Operators and customers

  • laraib butt

    Without any telecom policy and regulations, all this is shit only. First you need to set some benchmarks for compliance.

    • Shayan Ali

      Benchmarks hav been set…read the KPI part of the IM :) this is a job well done by PTA nd PmlN az contrary to 5yrz of PPP..Fingers Crossed :)

  • tungi

    i stil didnt get the lots! happy auctioning:)

  • umer daraz

    ya be koi batay ke 3G keliye kon sa set acha hai, koi company k cell ka be detail se bata dye ga.

    • Mustafa

      3G k liye Android set with front camera and 2100Hz 3G supported wale set ache hain..
      Baqi me full 3G service ka faida nai le sakte..

    • Mustafa

      Me khud ”Motorola Moto G 16gb” lene ka soch rha hun bas 3G aa jai us k bad..

  • Fahd

    it is a long way ahead when people can really enjoy 4G/LTE service.. with poor Mobile backhaul transmission capacity it would be even very hard for operators in Pakistan to provide a decent data throughput to the customers under 3G or 3G plus in major cities .. Country where mobile TX is mainly on microwave links , it would be a joke to talk about 3G or 4G ..

    • Niazi

      Well i per my knowledge even zong is adding fiber cables and changing old mw systems with new one. Most of the new equipment is 23ghz bandwidth. I think its enough for a country where 20% have 3g mobile. But if users increse they ll improve thier system too, because its too easy for a subscribers to change network.

  • Observer

    This articl is ful of mistakes or it’s just me ?’

    • Kiani

      Yes it is.

  • guestub

    Your understanding of the auction process is incorrect

  • Ryzvonusef

    Can you please different letters for operators and lots?

    Like if you are using ABCD for lots, kindly use WXYZ for operators, otherwise the info gets confusing .

    Thank you.

  • Shahid

    Great info…… Thanks Admin

  • Abbas

    3G is coming thts for sure

  • Peer

    4 operators submitting bid will be joining the 3G club while the 5th operator failing to bid going to devoid its customers from enjoying and entering the new era of cellular in PAK. doesn’t it refer that customers of the 5th operator must start switching to other operators having the new technology/

  • Uziah Bhatti

    Already using 3G on my Telenor no.

    • nadeem

      woh kaise yaar mujhe bhi batao

  • Romeo

    I live in KSA and here 3 companies offers 3G ang 4G services and believe me that these services are available all over the country without any exception.

  • Sadam Waqas Khan

    informative one. well done.

  • Imraan Hassan

    Nice information about the bidding process. Each mobile operator is interested in a specific lot only so things will go smoothly

  • rimsha khan

    Grt news…yar…PTA is doing a great job….we are in dire need of technological advancement.

  • sana

    3g is coming and so 4g also..and auctions are going to be on 23 of this month

  • abs

    dears, Is not a high price in term of a teleco. operators ? btw a good injection of cash flows for economy of Pakistan.

    • Hassam Tahir

      but the money is not coming from outside so its not an injection but only circulation

  • Bilal

    Well defined strategic plan by PTA…. it means they are sticking to launch 3G well on time.good job

  • rimsha khan

    I think we should remain optimistic. PTA and cellular companies seems very much serious to accomplish the task…..

  • MSK

    Hi,
    Very informative….but there’s a little confusion.

    What’s the difference between two similar lots…e.g. Lot A and Lot B.

    Suppose Company X getting Lot A and Company Y getting Lot B.

    Thank you