Inside telecommunications Issue 11
Regulators take new steps on spectrum sharing
Regulators and mobile operators continue to explore policy and technology solutions to manage the finite supply of spectrum in many markets, spurred to action by the perpetually accelerating demands on mobile data networks.
Efforts to reallocate spectrum are under way in several markets as regulators contend with a patchwork of spectrum allocated to several uses. While operators favor spectrum reallocation, this is not a quick fix, and in many cases it presents a challenge politically, technically and financially.
There is a limit to the amount of spectrum that can be repurposed for mobile operators. The sharing of frequencies — for single or multiple use cases — is becoming an increasingly important tool in managing demand for spectrum and reducing barriers to entry in new technologies.
Spectrum sharing involves a variety of geographical and frequency elements, and regulators across the globe are considering frameworks that enable a range of flexible arrangements.
Given the diverse drivers that are prompting regulators to focus on spectrum sharing, it is vital that all industry stakeholders articulate shared viewpoints on its benefits where possible.
Looking ahead, there is scope for industry and government to work more closely together on developing positive outcomes.
For regulators themselves, spectrum sharing approaches may differ markedly depending on geography or the range of industry actors currently or prospectively using spectrum in a particular band. As such, balancing a holistic view of national spectrum needs against more urgent and industry-specific priorities will be vital.
India, South Korea lift foreign investment caps
In many markets the question of foreign sector participation in telecommunications is becoming more important. In recent months, both India and South Korea have been making moves to relax restrictions on foreign ownership in their respective telecommunications sectors.
- The government increased the FDI limit in telecoms to 100% from the current limit of 74%.
- The move is likely to attract investment to the tune of US$10b in the near-to-long term
- The removal of the FDI cap is likely to help reduce the debt burden on Indian telecoms operators.
- It could attract overseas investors at a time when operators are struggling to accommodate rising capex burdens involved in 3G and LTE rollouts.
- Foreign investors are likely to seek greater regulatory certainty in areas such as M&A given the expectation that large-scale consolidation is required in the mobile sector.
- The government is taking steps to lift foreign ownership restrictions on telecoms operators – raising the cap from 49% to 100%.
- The move comes on condition that foreign investors set up an investment vehicle to own the stake in question.
- The change in regulation is designed to reflect the country’s free trade agreements with the US and the European Union.
- The country’s leading carriers – SK Telecom, KT Corp and LG Uplus remain – are not affected by the new rules.
- The change in FDI limits is likely to apply only to a few small entities involved in the provision of fixed-line and mobile services.