Besieged by requests to issue fourth-generation (4G) licenses, the government finally set a timetable last month to auction a 4G spectrum by the end of next year, enabling local companies to deploy Long Term Evolution (LTE) networks after a number of twists and turns.
Based on the National Communications Commission’s blueprint, winning bidders will be able to begin offering high-speed 4G LTE services in 2014 at the earliest. The winning telecoms operators are required to offer wireless data transmission services at speeds of 100 megabits per second (Mbps), much faster than the 42 Mbps available over existing 3.75G networks.
However, this outcome and timeline may be overly optimistic. It might take longer for consumers to have their smartphones and tablets connected to 4G networks and there are many hurdles that need to be overcome first. Furthermore, Taiwan is an extremely complicated case, given the government’s regular policy swings.
Setting relatively fair rules for the market is the first challenge for commission officials as there will actually be two 4G networks in existence.
In 2007, the government boldly gambled on WiMAX — a rival technology to LTE — granting six WiMAX licenses to local telecoms operators. At the time, the government believed that WiMAX would be the dominant wireless communications technology because US chip giant Intel Corp had aggressively promoted it, coaxing its local partner electronics firms into creating a WiMAX ecosystem.
Five years later, Intel gave up promoting WiMAX and withdrew its investment in local WiMAX operators as many telecoms operators around the world embraced LTE. Based on a Global mobile Suppliers Association’s (GSA) forecast, before long there will be 150 commercial LTE networks operating in 64 countries.
So, here is the problem. As local WiMAX service providers struggle for survival because of a lack of applications and sufficient mobile devices to drive demand, should these companies be given a second chance to switch their networks to LTE without paying, or should they join the planned 4G spectrum auction scheduled for next year?
It is a tough call. Local WiMAX operators obtained their licenses at much lower prices, as the government wished to encourage more operators to participate. WiMAX license holders are required to pay about NT$200 million (US$6.88 million) in special allowances for the spectrum — 50 times less than the NT$10 billion local telecoms companies are expected to pay for a 4G license.
A further challenge is that as a result of the government’s policy shifts, the nation’s communications spectrum has become patchy and fragmented following previous auctions. The spectrum and bandwidth the commission plans to auction includes parts occupied by WiMAX service providers and by 2G service providers, whose licenses will not expire until mid-2014 and 2017 respectively, while 4G licenses will cover a 15-year period through 2030.
It will require careful thought from government officials to properly arrange the spectrum for auction.
Furthermore, telecoms operators have complained that the bandwidth ceiling of 35 megahertz set by the commission in next year’s 4G spectrum auction is not enough to boost Internet speeds to 100Mbps as requested by the commission. Telecoms companies have said that 45 megahertz would be a reasonable cap. Hong Kong did not set an upper limit at all when auctioning its 4G spectrum in April.