The auction of frequencies for the installation of the 5G network in Brazil is already in public consultation. If confirmed, the bid will be the world’s largest 5G spectrum auction to date and a decisive step for the technology’s provision in Latin America.
Only at the frequency of 3.5 GHz, the most chosen band for 5G globally, 400 MHz will be sold, the largest block destined at one time for the new technology. In total, the the bid will make available 3.7 GHz in spectral capacity for 5G’s implementation: 400 MHz at 3.5 GHz, 20 MHz at 700 MHz, 90 MHz at 2.3 GHz, 3.26 GHz at 26 GHz.
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Although the cybersecurity decree published this week brings some rules that may impact the performance of companies like Huawei, Brazil remains officially open to everyone interested in participating in the event. According to the Brazilian telecoms regulator Anatel, the country’s biggest interest is in guaranteeing investment commitments, and not exactly in the auction’s potential revenue.
The public consultation of the public notice began on February 17th and should last 45 days, but the deadline is expected to be extended. This is the proposal that was presented to Anatel’s Board of Directors in early February, after many discussions and analysis. The document includes the bidding modeling for the 700 MHz, 2.3 GHz, 3.5 GHz and 26 GHz bands and the list of locations and cities eligible for 5G commitments in the country, among other rules.
5G technology needs a mixed spectrum of low, medium and high bands to serve a variety of uses (connections and services), ranging from improved mobile broadband (eMBB) to Internet of Things (IoT) applications in the industry and the management of cities, for example. The higher bands usually perform better in terms of speed, but the sub-6GHz bands are more appropriate for expanding coverage–something crucial in a country with more than 5,000 cities.
“We had the expectation of holding the auction this quarter, the document stayed 150 days with a reporting advisor, Vicente Aquino, who later presented a proposal that led to requests for views,” explained Leonardo Euler de Morais, president of Anatel, to LABS.
After the public consultation, each contribution will be analyzed individually. In the sequence, a new document will be proposed to be forwarded once again to the Attorney General of the Union, who returns to the technical area to make the adjustments, and a new rapporteur is chosen. After the approval of the new bidding notice, the business plan for pricing is still sent to the Federal Audit Court (TCU), which has 150 days to respond. With all these steps, the Brazilian 5G’s auction must be effectively held at the end of the year.
We will favor more investment commitments than the auction’s potential revenue. And any information about the amount to be collected is mere speculation
Leonardo Euler de Morais, president of Anatel.
In response to international pressure, mainly from the United States, for Huawei to be banned from 5G networks worldwide, Morais said that Anatel will not impose limitations on the participation of suppliers in future networks. “This discussion should not permeate the bidding for the auction of frequency bands because it is not the purpose for which it is intended,” Morais told LABS.
The Brazilian carriers say that more options are fundamental to ensure the best quality for the 5G network in the country. They use a combination of Nokia, Ericsson and Huawei hardware in their current networks.
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How the auction will be (so far)
In the 3.5GHz band, three national blocks will be offered, two of which are 100 MHz and one of 80 MHz, and two regional blocks of 60 MHz, combining prime areas with less profitable areas. If there is no demand for the 60 MHz blocks, a new round will offer 40 MHz and 20 MHz blocks, open to any player, but there is a maximum spectrum limit of 140 MHz for the 3.5 GHz band.
The obligations for the national blocks include the installation of fiber backhaul (metropolitan access network) in cities without this infrastructure. And in the block for small providers, the commitment is to serve cities with less than 30 thousand inhabitants and without a 4G network.
In the 26 GHz band, a total of 3.2 GHz will be offered, divided into three regional and five national 400 MHz blocks. In the second round, there will be ten 200 MHz blocks (six national and four regional). For this range, there will be no coverage commitments. The bands of 2.3 GHz (one block of 50 MHz and one of 40 MHz regionalized) and 700 MHz (two blocks of 10 MHz), already have an ecosystem in 4G and will have coverage commitments in this technology.
“I would not rule out the entry of new players, whether private equity funds or other economic groups, with an interest in acting as network infrastructure providers for other operators. If Brazil holds this auction until this year, it will be at the forefront in Latin America,” says Morais.
Uruguay is the 5G pioneer in Latin America
According to data from the Ovum consultancy, at the end of 2019, 5G technology had 5 million subscriptions worldwide, and is expected to reach 1.9 billion by 2024. In the same period, the number of IoT connections should quadruple , from 1 billion to 4 billion connections. In Latin America, data from the company 5G Americas indicate that, during 2019, five commercial networks were launched and 30 tests with 5G were carried out.
Among the five countries in the region that launched 5G networks in 2019, the pioneer was Uruguay. In April last year, the state operator Antel launched the region’s first 5G network, with 800 MHz in the 28 GHz band. As it is a state-owned carrier, an auction was not necessary, but if the Unidad Reguladora de Servicios de Comunicaciones (URSEC) decide to open the network for other operators, those carriers should pay the price yet to be fixed for Claro and Telefonica in the country. But there is still no deadline for that. The network was launched in the cities of Punta Del Leste and Maldonado and is expected to be expanded to another 12 cities in 2020, with Nokia technology.
Also in the region, Puerto Rico, the US Virgin Islands, Trinidad and Tobago and Suriname launched their networks in December last year. In Aruba, state-owned Setar started offering 5G as an evolution of a 4.5G network provided by Nokia.
The 5G kick off in Latin America
In the next 18 months, at least four countries, in addition to Brazil, intend to allocate a spectrum focused on 5G: Chile, Ecuador, Mexico and Peru. The 3.5 GHz band will be offered at all these auctions.
In Chile, where the carriers Claro, Entel, Wom and Telefonica operate, the Secretariat of Communications (Subtel) placed the public bidding notice for the 3.5 GHz and 28 GHz frequencies in public consultation. The auction date will still be defined.
In Peru, where Entel, Claro, Telefonica and Vietel operate, the Organismo Supervisor de Inversión Privada en Telecomunicaciones has already defined the 3.5 GHz band as the focus of the auction, and there are discussions around the 39 GHz band, the same adopted by AT&T in the United States. The next step is to launch the public consultation of the model for 5G.
In Paraguay, the 3.5GHz band was also chosen to enable 5G in the country, but there will be no need for an auction there. Carriers already have an obligation to provide coverage, and anyone interested is only required to request the spectrum. The expectation is that the first networks will be launched by Tigo, Claro, Personal and the state-owned Copaco.
In Mexico, the country that hosts America Movil, which holds 80% of the market, the regulation is ready and carriers already have a frequency of 3.5 GHz to use, inherited from the fixed wireless networks Wimax. In addition to 3.5GHz, the 600 MHz and 26GHz bands were also used for 5G. The public consultation for these frequencies will come out this year. In addition to Claro and AT&T, it is still being discussed if Altan, which owns the entire 700MHz band in the country, but which operates in wholesale, offering capacity for virtual MVNO operators, will also offer 5G.
In Colombia, the 600 MHz, 3.5 GHz and 26 GHz bands were chosen. But there is no expectation regarding the auction. Is that the 700 MHz band, destined to the mobile band technology four years ago, was only effectively bid for 4G technology last year.
Finally, in Argentina, where Telecom, Claro and Telefonica operate, there is no forecast for short-term frequency auctions by Ente Nacional de Comunicaciones (Enacom). Alberto Fernández‘s government has yet to address the issue.
Ericsson versus Nokia versus Huawei
The main suppliers of 5G technology and that already operate in some way in the Latin American market are all looking at the auction in Brazil. The dispute to win the carriers in the country is fierce.
“We conducted tests in all countries in the region, and in Brazil we did experiments with all carriers. With Claro, we made a holographic exhibition of Lucas Lima remotely playing with the band at Allianz Parque stadium to demonstrate low latency (better connection quality). One of the biggest applications (of this type of 5G usage) is with telemedicine and education. With Vivo, we did a remote ultrasound and a remote surgery class test”, lists Eduardo Ricotta, president of Ericsson. The company has 85 contracts and about 30 commercial networks worldwide.
“In Latin America we do not have contracts because there is no frequency available or spectrum left to share with 5G”, justifies Ricotta.
On the other hand, he highlights the spectrum sharing project developed for Claro, using Ericsson Spectrum Sharing technology. With it, it is no longer necessary to have a dedicated spectrum for technology. “As nobody has a 4G frequency left over, you have to wait for the 5G frequencies. I believe that the first equipment will be installed this year and the networks will start operating in the beginning of 2021,” projects Ricotta.
In January, Nokia announced it had won 63 commercial contracts of 5G worldwide, with 18 active networks and more than 100 agreements. Wilson Cardoso, Nokia’s CTO, points out that almost all Latin American countries have adopted the 3.5 GHz, 26 GHz and 28 GHz bands as a base, which guarantees an ecosystem and scale of terminals for the region.
“The broadband service is more of the same with greater speed. The big impact will come with the countries’ increased competitiveness in verticals such as oil and gas, mining and agribusiness. In 2019, we had the first mines connected in Chile and Peru; in Colombia, EcoPetro also adopted LTE networks. All of them should migrate to 5G when the networks are available,” lists Cardoso.
In its Global Industry Vision report, Huawei highlights that by 2025, 58% of the world’s population will have 5G coverage. The Chinese manufacturer has already signed 60 commercial 5G contracts and sent 150,000 base stations to markets around the world. In Brazil, the company already conducted tests with Vivo in July 2018; Claro, in October 2018; Oi in March 2019; and TIM in May 2019.
According to the company, the arrival of 5G in the country has the potential to affect businesses related mainly to mobile broadband on smartphones, residential internet and B2B applications in general.
