The BRIC Wall

Evidence of the heavyweights of these countries involved in world events is no
longer in question; they now regularly participate in G20 summits, Rio will host
the 2016 Olympics as did China last year, and Brazil and India may become
permanent members of the UN Security Council within the next decade.

The potential is there?

As indicated in the table below, the BRIC countries represent almost half of the
world’s population and this will only increase in time.  However their
respective shares in t mobile and broadband penetration are lower than their
population weight should warrant, which indicates that there is still room for
growth.  The case of India is rather striking, as the country failed to
achieve its modest broadband policy objectives because of repeated delays in
modernizing a spectrum policy from a by gone era. 

Even if mobile penetration has made huge progress in the past 5 years, this
country, which is positioned as a world exporter of IT knowledge, has a shameful
1.5% of the world total broadband penetration share compared to its 17.6% of the
world population.  The actual country broadband penetration relative to its
own population is even lower, at less than 1%! China, Russia and Brazil have
done relatively better both in terms of mobile and broadband share of the world
total penetration relative to their population size, but these countries still
have a long way to go in terms of actual country broadband penetration.

Behind spectrum is a political battle

While it is clear that these countries represent a huge market opportunity, they
are also characterized by a rather messy regulatory environment that does not
foster confidence and discourages foreign investments.  In particular, I am
referring to the spectrum policy for broadband wireless access in these
countries.  With the exception of China, which has had a clear political
agenda to promote its homegrown TD-SCDMA technology, the other three countries
have followed a messy spectrum road for BWA in the recent years.

China has decided to allocate spectrum for 3G while essentially ignoring WiMAX
as a potential mobile technology, limiting it to the fixed arena in the 3.5GHz. 
There are no signs that the MIIT, the country’s Ministry of Industry and
Information Technology, is going to reverse that position.  On the
contrary, China, unlike many other countries, did not auction off its 3G
spectrum, nor did it allow its elected 3G operators to select the technology of
their choice, with the aim of building a strong home-installed base for TD-SCDMA. 
China continues to dictate its own agenda at its own pace for both 3G and the
expected LTE-TDD.

China’s refusal to release 2.3GH, 2.5GHz or more 3.5GHz spectrum for BWA and
WiMAX differs from the situation in the other BRIC countries, Brazil, Russia and
India, where regulators have been lacking a clear vision and a stance regarding
which technology can best help materialize that vision.  Instead, these
countries have been the battleground for lobbyists from the 2 opposing camps of
3G and WiMAX.  As a result of this political battle and influence on
regulators, spectrum availability has been repeatedly delayed and the rules for
services remained blurred, thus creating a climate of uncertainty for service
providers, equipment vendors and financiers about investing in broadband
networks and reviving sluggish broadband penetration.

The 3GPP camp champions 3G mobile standards (W-CDMA and CDMA 2000) as well as
LTE, while the WIMAX camp represented by the WIMAX Forum is essentially
championing 802.16e.  All countries have allocated 3G licenses, except for
India, which is scheduled to license both WiMAX and 3G spectrum in Q1 2010. 
The auction was originally scheduled to commence almost a year ago, but has been
subject to numerous delays including the Indian general elections last May. 
India aims to sell around four 3G licenses and three mobile broadband licenses
in 20 of the 22 telecom zones in the country. 

In the case of the 3G auction, the government has decided to auction up to 20
MHz of paired spectrum in the 2.1GHz band in the telecom service areas where 25
MHz or more paired spectrum is available.  In such cases, four blocks of
2×5 MHz will be auctioned, in addition to one block being reserved for BSNL and
MTNL (the two state-owned operators that have already been allocated spectrum). 
Not more than 1 block of 3G spectrum, 1 block of 800MHz spectrum or 1 block of
BWA spectrum is to be allocated to any single bidder within a service area.

In the case of Brazil and Russia, it is still not clear whether mobile services
can be provided with WiMAX.  Brazil still restricts the usage of 3.5GHz to
fixed only services, while in Russia mobile WIMAX operators are working in a
grey area as the country’s spectrum committee has yet to make clear rules
regarding what services will be allowed in the 2.5GHz frequency band.

The 3GPP camp’s PR and lobbying muscle is partly responsible for the delay and
messy spectrum situation in Brazil, Russia and India.  WiMAX supporters
feel they are denied access to huge markets for which WIMAX is well-suited
technology for fixed, portable and mobile applications.  In the meantime,
consumers and businesses in these countries can only wait and watch until a
winner emerges who will make broadband affordable and more widely available.

Adlane Fellah, Eng.  MBA is CEO and founder of
Maravedis Inc.  a world-leader
and pioneer in Broadband Wireless and WiMAX market research and analysis. 
He is a leading industry analyst and authored various landmark reports on WiMAX,
Broadband Wireless and Voice over IP (VoIP).  Mr.  Fellah is regularly
asked to speak at leading wireless events and to contribute to various
influential portals and magazines such as Telephony Magazine, WiMAX Trends,
WiMAX.com, to name a few.

Fellah is a member of the Program Advisory Board for the WiMAX World conference
since 2004 and an active member of the World Communications Association
International and the European Broadband Wireless Association.  Prior to
founding Maravedis, Fellah held various positions at Harris Corporation in
charge of market intelligence and business development for several product
lines.