By the Maravedis-Rethink RAN Service team
Amid a tortured process which almost led to Pakistan's 3G auction being cancelled, the spectrum sale has gone ahead, with China Mobile emerging as the country's first 4G carrier. This reveals two important trends – China Mobile's slow but interesting emergence as an international player; and the fact that, in countries where 3G has been late to develop, successful operators will be those which can leapfrog directly to 4G.
This is what China Mobile's Pakistani subsidiary, Zong, will be able to do, having had the deep pockets to acquire spectrum in both 3G and 4G bands in the recent auction, while rivals were left making do with 2.1GHz W-CDMA frequencies only. However, there will be LTE competition, notably from Warid, which is also adopting a 4G-first policy, eschewing the auction altogether and planning to build out LTE in its 1.8GHz GSM spectrum. That has the advantage of a growing global device and roaming ecosystem, and Warid could also add assets from its WiMAX unit, Wateen Telecom, to create a common TD-LTE platform with neighboring India, riding on the huge expansion expected in wireless data in that country.
In the just-concluded auction, four of Pakistan's existing cellcos - Zong, Ufone, Mobilink and Telenor - gained a 3G licence while China Mobile's local subsidiary, Zong, also purchased national spectrum in the 1.8GHz band – anointed this week by the GSA as the world's most popular for LTE. It promptly proclaimed itself "Pakistan's first and only 4G operator", adding: "Zong is committed to providing the fastest mobile internet and best 3G/4G network in Pakistan."
The Pakistan Telecommunication Authority (PTA) sold 3G frequencies in 2.1GHz and gave the winners the option of also buying 1.8GHz licences, but only Zong took up that offer, despite speculation that Pakistan would be one of the countries, slow to 3G, which would choose to leapfrog straight to 4G. That leaves Zong and Warid in the cat seat in true wireless broadband.
Warid plans to deploy LTE in five cities this year, saving outlay on 3G licences and build-out. Warid is reported to be planning LTE launches in Islamabad, Lahore, Faisalabad, Multan and Karachi. It could also potentially migrate WiMAX spectrum in 2.5GHz to TD-LTE in future.
The main reason for the other cellcos saving their money and sticking to 3G at this stage is the cost of LTE handsets. A PTA official commented: "Launching LTE services is a difficult proposition as LTE handsets are very expensive; 3G handsets are more common in Pakistan as well as the rest of the world." Of course, Zong will be able to tap into the massive buying power of its parent to secure lower cost devices, particularly from the Chinese ecosystem, which is moving towards low cost LTE smartphones during this year.
In the latest auction, four blocks if 2.1GHz spectrum raised US$902.8m in total. According to the PTA website, two operators agreed to pay over $300m each for 10MHz of spectrum and two paid $147.5million each for 5MHz. The PTA had originally said the minimum lot would be 10MHz, but changed the rules during the process, presumably to keep smaller or poorer players in the game. The regulator has not yet announced which operator won which frequencies, or the details of the 1.8GHz sale, but if Zong paid the reserve price of $210m, the state probably raised a total of $1.1bn from the whole auction.