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Assignment of Chile’s Radio Spectrum: An Opportunity for Innovation

“The participants were required to submit a national and international transport offer of wholesale access to the Internet in each region of the country. The values obtained are truly impressive. The national mega dropped by US$1, and the international price at the NAP of the Americas decreased by US$8 per symmetrical mega…”.

 Jorge Atton* /Chile, March 2015

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Chile’s radio spectrum assignment model is a “beauty contest” with a tender if there is a technical stalemate between the applicants. The winning companies are assigned a spectrum band and the respective concession with all of its rights and responsibilities.

Between 2010 and 2014, 190 MHz were assigned in a context of rapid technological evolution towards a new generation of mobile digital services through the 2.6 GHz band and 700 MHz band. Both processes introduced conditions of mandatory counter-services for minimum coverage locations for the first time and the provision of benefits for third parties meant to increase the sector’s competitiveness.

 The 700 MHz band currently has the best characteristics for fourth generation mobile broadband services due to its low placement among the radio spectrum frequencies, which allows for broad coverage, especially in rural areas. Due to its technical characteristics, it presents opportunities for cost savings in relation to the required investment, which is reflected in an increase in the penetration of related services. This is very important for the different operators, as it will allow for the provision of high speed Internet services in rural and less populated areas, helping to reduce the current digital divide.

The increase in traffic has created a need for increased capacity, which involves exploiting the amount of the spectrum available in those same sites with greater capacity, more carriers or antennae and, finally, the installation of new sites and capacities that allow for the reuse of the available spectrum and/or acquisition of more space on the spectrum. In the current scenario, there will be an explosive need for new sites and antennae with the resulting social and urban impact.

The calls for tender for high speed mobile data transmission services (4G) posed significant challenges for the companies that participated such as more requirements in regard to the quality of service, measuring real coverage within homes and buildings in the country’s main urban centers, and favoring shared infrastructure in order to facilitate the use of networks by third parties as virtual mobile operators.

The terms established the mandate to provide connectivity to 543 extreme and/or isolated locations that do not currently have telecommunications services within two years from the publication of the decrees that award the respective concessions.

In the 700 MHz band competition, which was held for 4G Internet services under the Asia-Pacific channeling model, providers were required to offer mobile telephony services online in 1,281 isolated low population density towns, which would benefit 186,000 inhabitants. The plan also included counter-provision to provide connectivity to 13 areas in which the roads or routes have none.  This obligation covers over one thousand kilometers.

At the same time, the terms identified as mandatory the provision of the public data transmission service with Internet access free of charge for two years to over 500 public and/or subsidized schools, mainly in rural and very difficult to access areas, which benefitted over 15,000 students.

Participants also were required to submit a national and international transport offer for wholesale access to the Internet in each region of the country. The values obtained are truly impressive. The national mega dropped by $1, and the international price at the NAP of the Americas decreased by US$8 per symmetric mega.

These advances in coverage and greater connectivity at the national level will represent savings for the state in the order of US$250 million compared to the old model.

 * Jorge Atton served as Vice Minister of Telecommunications of Chile from 2010 to 2014. He is an electronics engineer with an undergraduate degree from Universidad Austral de Chile and a graduate degree in Administration and Project Evaluation from Universidad de Chile.

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