Xxv meeting of permanent consultative committee II: radiocommunications




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ORGANIZACION DE LOS ESTADOS AMERICANOS

ORGANIZATION OF AMERICAN STATES
Comisión Interamericana de Telecomunicaciones

Inter-American Telecommunication Commission







XXV MEETING OF PERMANENT

CONSULTATIVE COMMITTEE II:

RADIOCOMMUNICATIONS

INCLUDING BROADCASTING

February 23 to 27, 2015

Medellin, Colombia.

OEA/Ser.L/XVII.4.2

CCP.II-RADIO/doc. 3775/15

12 February 2015

Original: English






AUCTION OF THE 700 MHZ IN BRAZIL







(Item on the Agenda: 3.2)







(Document submitted by the delegation of Brazil)










  1. INTRODUCTION

In 2008, ANATEL, the National Telecommunications Regulator in Brazil, established the regulatory actions planned for the next ten years1. These actions aimed on reaching some strategic goals: (i) increase the access of the population to broadband services; (ii) improve the quality of the telecommunications services provided to consumers; (iii) provide telecommunication services in the rural areas with accessible prices; and (iv) ensure appropriate levels of competition on telecommunication services.


Alongside with that, in 2013, the Ministry of Communications established the guidelines for the 700 MHz auction: (i) improve de access of the population to Digital Broadcast Television; (ii) provide spectrum to improve the mobile broadband with high speeds; (iii) expand the optical fiber networks in the whole country; and (iv) improve the national technology development and national industry.
These were the main goals for the whole processes that was carried out and resulted in the 700 MHz Auction, and which were considered in several decisions regarding the construction of the auction process.
Alongside with the 700MHz Auction process, the transition from analogue to digital television is being carried out by broadcasters in Brazil following the public policies formulated by the government. One of those policy instruments is the Decree no. 5.820/2006, which established the year of 2016 as the limit to switch off the analogue transmissions of broadcast TV.
However, with the discussions of the 700MHz Auction, in 2013, the government issued the Decree no. 8061 and changed the logic by which the switch-off would happen in Brazil. First, it was planned a single switch-off for the whole country (“one-shot”) that would happen in 2016. With the change promoted by the Decree no. 8061/2013, the switch-off will now happen from 2015 until 2018.
The main objective of this change was to anticipate the switch-off in some regions, in order to allow the implementation of 4G services using 700MHz band. This is one of the aspects which were impacted by the 700MHz Auction. This contribution aims on detailing the process that was carried out with the abovementioned auction and the important implications to the transition from analogue to digital television in Brazil.


  1. ALLOCATION OF THE 700 MHZ BAND AND THE AUCTION SCOPE

In 2013, ANATEL approved the allocation of the 700 MHz band to fixed and mobile services in order to provide voice and data communications2. The band allocation was established to comply with Frequency Division Duplexing – FDD, and the band was divided in nine 5 + 5 MHz sub-bands. Alongside with that, ANATEL could authorize the use of Time Division Duplexing – TDD on these sub-bands if technically feasible. Finally, it was defined that the first 5 + 5 MHz sub-band would not be used for 4G services, so it was consequently allocated for public safety applications. The allocation of the band is detailed in the figure below.

FIGURE 1

Frequency allocation of 700MHz Band in Brazil


A spectrum cap of 10 + 10 MHz was also established for the first round of the auction. The cap could be increased to 20 + 20 MHz for the second round of the auction, if spectrum remained untaken. For small cities, the spectrum cap could be also increased to optimize investments, for example with the usage of shared infrastructure between all companies that bought the rights for the spectrum in those cities.
The auction established three national bands of 10 + 10 MHz and one band of the same size for certain regions. For the second round, the remaining spectrum needed to be sold in smaller chunks of 5 + 5 MHz. Figures 2 and 3 illustrate the auction method.

FIGURE 2


700MHz Band auction rounds

First round



Second round




FIGURE 3

700MHz Band auction areas




  1. THE 700MHz AUCTION AND PROCESS OF REFARMING THE 700 MHZ BAND

ANATEL is the entity responsible for planning of the spectrum usage in Brazil. For television broadcasting services, ANATEL constantly updates the Basic Digital Television Channel Assignment Plan (PBTVD) and Basic Television and Retransmission of Television Channel Assignment Plans (PBTV and PBRTV). These plans contain all channels that can be used in each municipality, and the technical conditions for their usage, for example, maximum power, geographic coordinates, frequency assignment, technology (digital and analog), among others. .


In order to allow for the usage of the 700MHz band after the auction, ANATEL developed studies to reorganize the allocation of television channels in the abovementioned plans to free all the channels residing in the 700 MHz band. After a lot of debate between broadcasters, Ministry of Communications3, and ANATEL, it was defined new channels in lower UHF Band for the broadcasters that operate in the 700MHz band.
The planning was an important part of the process and allowed ANATEL to assess the number of channels that would need to be reallocated after the 700MHz auction. A total number of 1050 channels in 1096 municipalities (Brazil has 5565 municipalities in total), which accounts for around 43% of the total population (Brazil has around 203 million people).
In order to guarantee the execution of all the changes necessary to allow for the usage of the 700MHz band, the auction proceedings established that all costs involved in the migration of those 1050 television stations to other frequency channels would be paid by the winners of the 700 MHz band auction. Alongside all those costs, the auction proceedings also established that the costs involved in interference mitigation and the communication of the analogue switch-off to the population would also be covered.
To accomplish this task, the auction proceedings established thatthe winners would have to constitute a third party entity, named EAD – Managing Entity of the Process of Redistribution and Digitalization of Television and Retransmission of Television Channels4. This company would then manage all the process, which involves planning, acquisition of the necessary equipment and implementation of the entire infrastructure to enable the television broadcasters to operate in the new channels. Furthermore, the company would be responsible to undertake actions for interference mitigation between the incomers and the TV broadcasting, and also develop strategies to properly communicate the analogue switch-off to the population, as said before.
This third party entity (EAD) will be a facilitator of the whole process with the specific responsibility of fulfilling the task of making the spectrum available, which, in some cases and specific municipalities, can involve switching off analogue transmissions to allow the reallocation of channels. For example, at cities like Brasília, São Paulo and Rio de Janeiro, which are surrounded by a multitude of other smaller cities forming dense metropolitan areas, the spectrum is today very crowded in the UHF band with several analogue and digital channels. Those metropolitan areas will need to switch-off analogue transmissions prior to the reallocation of channels to free up the 700MHz band.
Bearing that in mind, it was established that the reallocation of those television stations residing on the 700MHz band will start after the analogue switch-off schedule5 for each region. Moreover, the incomers only can start operating new services in the band one year after the TV switch-off of each region. Among other reasons, this obligation will allow the alignment of both tasks and will incentivize coordinated work to facilitate the transition to digital broadcasting. It is important to note that EAD can conduct studies to anticipate the entrance of 4G services in 700 MHz Band in identified areas where switching-off television channels is not a requirement to reallocate TV Channels or where the band is already freed up. In this scenario, coexistence between new services and TV broadcasting must be guaranteed.
The main objective of following similar schedules for the reallocation of channels and the analogue switch-off is having EAD support during the whole process. The EAD will ultimately perform important tasks to a successful analogue switch-off: (i) communicate the population of the analogue switch-off date for any specific region, (ii) clarify doubts such as which equipment is necessary for receiving digital television transmissions by means of a Call Center, (iii) acquire and install equipment for the reallocation of several television stations, and (iv) acquire and distribute to the low income population digital television receivers, antennas and other equipment necessary for the reception of digital television transmissions, among other involved tasks.
The budget of this third party entity (EAD) will come from a discount on the public price to be paid for the spectrum by the auction winners, which was established to be of at least 1.5 billion USD. As stated above, this budget should also finance digital television reception for families with low income and mitigate interference between the television transmissions and 4G transmissions in the 700MHz band, as further detailed in the next sections.
The activities of this third party entity (EAD) will be supervised by a group chaired by Anatel, with participation of the Ministry of Communications, the winners of the 700MHz auction and the television broadcasters, namely the Digitalization and Redistribution of TV and Retransmission TV Channels Implementation Group (GIRED)6.
Among other duties, GIRED will be responsible for the approval of: (i) communication plans to inform the population regarding the analogue switch-off, (ii) specification of digital receivers, antennas and other equipment to be handled to low income families, (iii) specification of equipment necessary for the mitigation of interferences between television transmissions and 4G services, (iv) guidelines for the transmission equipment to be used in the reallocation of television channels residing in the 700MHz band, and other.
Below, the duties and responsibilities of GIRED are presented in more detail:


  1. Supervision of the activities of the EAD;

  2. Definition of the form and other aspects of the provision, by the EAD of a website and advertising campaigns, including broadcast television, to inform the population about the process of redistribution of channels and switch-off of analog TV signals, and also on the ways to mitigate possible harmful interference with the implementation of the mobile networks in the 700 MHz band;

  3. Monitoring of operational procedures related to the activities of the EAD for meeting the established objectives and timetables;

  4. Coordination of the negotiation process and collection of information to allow conflict resolution by Anatel´s Board of Commissioners on the activities of the EAD;




  1. Approval of the operating schedule of the EAD, which should meet the deadlines set by the Ministry of Communications through Ordinance No. 477 of June 20, 2014 and No. 481 of July 9, 2014 , issued pursuant to article 10 of Decree No. 5,820, of 29/06/2006, as amended by Decree No. 8061, of 07/29/2013;

  2. Definition of methods for the treatment of collected equipment by EAD;

  3. Proposition of criteria for use of the balance of remaining funds from the auction;

  4. Establishment of the criteria for setting the start-up or investments;

  5. Technical feasibility assessment to advance the deadline for commencement of the 4G transmissions using the 700MHz band;

  6. Validation under Ordinance No. 481 of July 9, 2014, established by the Ministry of Communications, and based on the data measured by the EAD, of the achievement of the condition for the termination of analogue TV transmissions (93% of households that receive free to air television ready for receiving digital signals);

  7. Preventive action, if necessary, to resolve any technical problems in the process of redistribution of TV and Retransmission TV channels and mitigation of harmful interference in radio communication systems.




  1. INTERFERENCE SOLUTIONS

Another important matter that is tackled by the Auction Proceedings is interference mitigation. The winners of the 700 MHz band auction were commanded to ensure the correct operation of 4G (Long Term Evolution – LTE) and digital television networks, without interference.
In 2013 and 2014, ANATEL coordinated laboratorial and field tests to establish the technical parameters to ensure the correct operation of these networks. As the result of these tests, some mitigation techniques were recommended, for example, reception and transmission filters for LTE and digital television, changing the antennas position and power reduction.
These techniques must be applied by the third party entity (EAD) created by the auction winners, and the costs involved in preventing interference will need to be covered by the budget of the EAD.
The guidelines for the mitigation of harmful interference include several steps. Firstly, when a consumer complains about harmful interference, the EAD will supply the consumer with a television reception filter. If the problem remains, other techniques can be used, including technical visits to solve the issues and the installation of an UHF external antenna, for instance.
ANATEL estimates that only five percent of Brazilian households will need television reception filters and that these filters should solve the interference problems in the most cases. EAD will need to clarify doubts from consumers by means of a Call Center and Internet Homepages. Among the topics that will be addressed by EAD is informing the consumers regarding how to deal with harmful interference.



  1. COVERAGE AND LOCAL CONTENT OBLIGATIONS

Unlike other spectrum auctions made by ANATEL previously, the 700MHz band did not include mandatory coverage obligations using the 700 MHz band. The main purpose of the auction was to achieve the strategic goals stated in the section 1 above, which included the digitalization of television networks and the usage of the 700MHz band for other services.
However, the 700 MHz band auction proceedings established other important undertakings. The auction winners could opt to use any frequency bands they already owned to implement the coverage obligations for LTE using the 2.5 GHz band auctioned previously. In other words, the winners could be allowed to use freely other frequency bands that they already owned, for example, the 1.8 GHz band, to provide mobile services using 4G technologies and/or more advanced ones.
As 700 MHz band provides better propagation conditions, the auction business and financial plan, used by ANATEL to establish the minimum prices for the spectrum, considered that this provision would allow for cost savings, which, in turn, needed to be applied to increase mobile broadband coverage in rural and suburban areas and applied to improve the backhaul of LTE base stations to at least 1 Gbps.
Additionally, the auction proceedings established that investments to build 4G networks need to include a minimal percentage of technology developed in Brazil (15% until 2016 and 20% until 2022) and a minimal percentage of equipment produced by Brazilian companies (50%).



  1. THE RESULTS OF 700 MHZ BAND AUCTION

The 700 MHz band auction occurred September 30th, 2014. There were winners for the three national 10 + 10 MHz bands: TELEFONICA (Vivo), TELMEX (Claro) e TELECOM ITALIA (TIM) and a winner for one regional 10 + 10 MHz band in the central area of the country: ALGAR (CTBC), a Brazilian Corporation.
The total values of the auction were 2,2 billion USD, excluding the money that will be used by the Third Party Entity (EAD) to fulfill its responsibilities. In other words, the winners must also pay the costs of the 700 MHz band refarming and interference solutions. These activities will cost additional 1,5 billion USD.

See below the total values of the 700MHz auction by company and the specific bands bought by each of the groups.

FIGURE 4

Results of the 700 MHz Auction in Brazil


The Board of Commissioners of Anatel confirmed the results of the auction and signed the contracts with the winners at December 5th, 2014. Alongside with that, GIRED, the group defined to coordinate all the process of 700 MHz band refarming and interference mitigation was also created and had its first meeting at December 19th, 2014. The EAD, the third party entity that will implement all the decisions of GIRED, was also created by the winners and already initiated its work.





1 PGR – Plano de Atualização da Regulamentação de Telecomunicações (Telecommunications Regulations Update Plan), approved by Anatel Resolution nº 516/2008. Available at http://legislacao.anatel.gov.br/resolucoes/2008/11-resolucao-516.

2 Anatel Resolution nº 625/2013. Available at http://legislacao.anatel.gov.br/resolucoes/2013/644-resolucao-625

3 In Brazil, the Ministry of Communications is the entity responsible for licensing broadcasting services, all other telecommunication services are licensed by Anatel.

4 Translation from the Portuguese Term: “Entidade Administradora do Processo de Redistribuição e Digitalização de Canais de TV e RTV – EAD“.

5 Analogue Switch-off schedule was established by Decree no. 5820/2006 and further detailed by Ordinance no. 477/2014, available at http://pesquisa.in.gov.br/imprensa/jsp/visualiza/index.jsp?jornal=1&pagina=42&data=23/06/2014.

6 Translation from the Portuguese Term: “Grupo de Implantação do Processo de Redistribuição e Digitalização de Canais de TV e RTV – GIRED”.

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