3. Current utilisation of spectrum

3.1 Introduction

In general, an operator is likely to use all the spectrum that it has available because using more spectrum than would otherwise be necessary means that the operator can plan and design a lower cost network. Vodafone mentions this point when it discusses spectrum requirements in its cross submission13:

… there is only an increase or reduction in costs associated with having access to less or more cellular spectrum rather than some “required” or “optimal” amount of spectrum.

However both Telecom and Vodafone have seen changes to their operations that may affect how much spectrum they substantially use. For example, Telecom has changed the technology it uses in the 800MHz band from AMPS/D-AMPS to the significantly more efficient CDMA, and Vodafone has purchased more spectrum in the 900MHz band, and has rolled out a WCDMA network in its 2.1GHz spectrum.

Below we determine how much spectrum is substantially used by the operators. Our analysis is based entirely on publicly available information, and the submissions and cross submissions to the spectrum renewal process.

3.2 Telecom

Telecom’s 800MHz spectrum consists of two 10MHz bands, traditionally referred to as the AMPS-A and AMPS-B bands.

Currently the AMPS-A band is used for Telecom’s CDMA network and the AMPS-B band is used for its AMPS/D-AMPS14 network15.

AMPS-A (CDMA)

The 10 MHz band supports seven CDMA carriers of 1.25MHz each (a small inter-technology guard band is required at the boundary of the spectrum).

Telecom states that it currently uses three carriers for voice and data based on its 1X technology, and one further carrier for EV-DO16.

It also temporarily expands some base stations to six carriers17 during periods of higher traffic (such as during holiday season or for special events). This is a cheaper solution for expanding capacity than deploying extra sites.

We assume that these temporary capacity expansions do not count as substantial use of the spectrum by Telecom.

AMPS-B (AMPS/D-AMPS)Top

The 10MHz band supports 333 30kHz carriers.

Telecom currently has less than 65 000 customers on its AMPS/D-AMPS network18 . We can roughly determine the amount of spectrum Telecom requires for those customers based on the network when it was at its peak:

• The maximum number of customers on the AMPS/D-AMPS network was nearly 1.3 million customers, at the time the migration to the CDMA network commenced in mid 2001. The spectrum used by the AMPS/D-AMPS network would have been the entire 20MHz less the spectrum required for one CDMA carrier (1.25MHz) plus an inter-technology guard band (0.625MHz19) – a total of 18.125MHz. At 30kHz per channel, this provides a total of 604 channels.
• Assuming no (or few) sites have been decommissioned, and assuming the AMPS/D-AMPS customers today generate a similar level of traffic to customers in 2001, the traffic per site will have decreased by a similar proportion as the number of customers: there are now 5% of the 2001 number of customers; the corresponding number of carriers is 5% of 604, or 30. This number of channels uses about 1MHz of spectrum.
• In 2001, there would have been significantly more analogue customers than today. There is only one circuit on an analogue channel, whereas there are three circuits on a digital channel. Therefore as few as one-third the number of channels is required to deploy the network today (for a given level of traffic per site); consequently the spectrum requirement today (per customer) is less than in 2001.
• The average traffic generated per customer (Erlangs) is likely to be far lower in 2006 than in 2001, because the remaining AMPS/D-AMPS customers today are prepaid customers who use their phones infrequently20.
• On the other hand, the non-linearity of the Erlang formula at low levels of traffic means that the number of channels for a certain level of carriers is likely to be underestimated.

These last three points work to cancel each other out, so if Telecom were to design an efficient frequency plan for today’s traffic levels, 1MHz may be a reasonable estimate of the level of spectrum required by Telecom in its AMPS-B band.

In addition, we note that the last time Telecom had 65 000 customers on its AMPS/D-AMPS network was likely to be in the early 1990s (our records show it had 132 000 AMPS customers on 31 December 1993). We assume that Telecom was using its full quota of spectrum in 1993 where needed. However, there are a number of differences between the network of today and of 1993:

• In 1993, the network was only analogue (AMPS), whereas most (if not all) customers today will be digital (D-AMPS). Therefore the spectrum requirement today is less than in 1993.
• In 1993, the network was still being rolled out, and many sites were deployed to meet coverage requirements. However today’s network was designed to meet the network’s peak capacity – nearly 1.3 million customers in mid 2001, prior to the start of migration to the new CDMA network. Therefore, assuming no (or few) sites have been removed from service, sites are on average smaller and therefore carry fewer customers per site. Therefore the spectrum requirement today is less than in 1993.
• In 1993, most mobile users were early adopters and were likely to be frequent users. Today, the remaining AMPS/D-AMPS customers have old phones (Telecom has not sold AMPS/D-AMPS phones for many years); which are used infrequently. Therefore the traffic carried is much less and consequently the spectrum requirement today is considerably less than in 1993.

Summary

Telecom is using three 1X carriers and one EVDO carrier in its CDMA network utilizing the AMPS-A band. It occasionally expands some sites to six 1X carriers due to short term demand. We conclude that the spectrum substantially used is between 5MHz (four carriers) and 8MHz (seven carriers) (excluding guard bands).

Telecom’s D-AMPS network, using the AMPS-B band, has decreased to about 5% of the customers it had at its peak. Assuming Telecom has not decommissioned any (or many) sites and the current frequency plan is efficient, the spectrum substantially used would have correspondingly dropped from about 18MHz to about 1MHz. We therefore conclude that the spectrum substantially used is at least 1MHz.

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3.3 Vodafone

Vodafone declares that it uses all its spectrum in the 900MHz band21 22 . While we have found no evidence suggesting otherwise, we wish to highlight a number of factors that could influence the amount of spectrum substantially being used:

• Prior to the spectrum auction in July/August 2002, Vodafone had 14MHz of spectrum in the 900MHz band (it is this spectrum that is the subject of this spectrum renewal study). Potentially the additional spectrum purchased in this auction allowed it to free up some spectrum, but we note that the number of customers has just about doubled in this time (from 1.1 million on 30 September 200223 to 2.1 on 30 June 200624), meaning that any gains from the additional spectrum are likely to be exhausted. (This is compounded because it appears network traffic – the real driver for network rollout – is rising faster than the number of customers25).
• We are not aware of any traffic (in particular voice) being carried using Vodafone’s 1800MHz spectrum. Vodafone states that the 1800MHz spectrum auction occurred too late for it to be as useful as it might have otherwise been26 .
• Vodafone introduced its UMTS 3G network, operating in the 2100MHz band, in mid 200527 . While 3G phones use the 3G network by default28 – which will free up capacity in GSM base stations and hence spectrum – 3G coverage is still restricted to the high-traffic urban areas of the main centres29 and hence the effect is not likely to be great at this stage.
• Vodafone has been reported as having offered a block of spectrum in the 900MHz band to Econet for ‘a cost-based price’30 . While this could be interpreted as meaning Vodafone has spectrum to spare, it is more likely that the network would need a redesign with additional sites to compensate for lower spectrum, and that the price is set by Vodafone based on the cost of such a network redesign.
• Of most interest is []
• Finally we compare the spectral efficiency of Vodafone’s and Telecom’s networks (GSM and CDMA respectively). An efficient reuse number for GSM is 9 (3 sites×3 sectors per site); one GSM transceiver (TRX) in each sector in a reuse pattern requires a total of 1.8MHz (0.2MHz per TRX×9). At an average of 7.5 traffic channels per TRX34 this corresponds to 240kHz required for one traffic channel in each sector in the whole reuse pattern. On the other hand, CDMA has a reuse pattern of 1; 1.25MHz is required to cover the same 9 sectors covered by 1.8MHz in GSM. At a capacity of 34.5 Erlangs per site (11.5 per sector)35 , the number of traffic channels per sector is 19 (at 2% blocking probability). This corresponds to 66kHz required to provide one traffic channel per sector – about 27.5% of the bandwidth required for GSM, or (using Telecom’s words), three to four times more capacity36 . Extending this calculation to Telecom’s reported requirement of 5MHz of spectrum (4 carriers), Vodafone would need around 18MHz to support the same traffic demand in a site.

Summary

We conclude that while Vodafone may be currently using its entire allocation of 21MHz, it is possible it may not actually all be needed, because:

• Vodafone has offered Econet a portion of its spectrum
• []
• comparing spectral efficiency with CDMA indicates about 18MHz would be needed to support the same traffic that Telecom supports on 4 carriers.

Thus, the amount of spectrum substantially used could be as low as 14 to 16MHz (5 to 7MHz less than its full allocation of 21MHz).