Brazil 5G roadmap: What’s at stake?

Brazilian telecom regulator Anatel’s board voted to put out to public consultation the draft of the 5G auction, which is expected to be held in the first quarter of 2020. The consultation is due to be launched by July.

The agency published in the federal gazette the resolution stating that the 2.3GHz and 3.5GHz bands will be awarded for mobile services.

If all goes well, the tender will be “the biggest in Brazil’s history,” Anatel’s president Leonardo de Morais said at the Painel Telebrasil summit in Brasília.

Overall, a record 3.6GHz of spectrum in the 2.3GHz and 2.5GHz, in addition to the 700Mhz and 26GHz frequency bands, will be awarded.

WHAT’S ON OFFER?

To date, Brazil has made available 979MHz for personal mobile services, which is more than any other country in Latin America.

Industry association 5G Americas’ regional director José Otero, who held a webinar on Brazil this week, said the country reached 74.4% of the spectrum recommended by the International Telecommunication Union (ITU) to be allocated for mobile services by 2020.

Under the tender format outlined by Anatel – and which is still subject to change depending on the public consultation – leftover frequencies from the 2014 700MHz auction will be grouped in a 10+10MHz lot in FDD, with spectrum cap unchanged to avoid market concentration.

If there is no winner in the first round, companies that already own bands on the frequency – namely the winners of the 2014 auction – will be allowed to bid in a second round for 5+5MHz.

Moving on to the 2.3GHz band, a total 90MHz of spectrum will be granted, with a national lot of 50MHz and regional lots of 40MHz.

In the 3.5GHz band, there will be another 300MHz in three lots of 80MHz plus a fourth lot of 60MHz. Provided the 60Mhz lot is not snapped up in a first round, a second round will split it into three lots of 20MHz.

Finally, in the 26GHz millimeter waveband (mMwave), 3.2GHz of spectrum will be divided into eight lots of 400MHz. It will be the biggest chunk.

Provided not all the lots are awarded in the first round, the remainder will be divided into smaller lots of 200MHz. The spectrum cap – the maximum each operator can take – in this band will be 1GHz.

OPERATORS RESPOND

In general, the telecom industry received the preliminary auction terms well.

Gathered in Brasília for their annual summit, most of them praised the proposed format for the tender, even though telcos are not overly excited about taking part in a new auction when they are still dealing with costs associated with the 2014 tender.

Below are some of the industry’s requests and concerns.

– Low Price

First and foremost, carriers want the government not to put a high price on spectrum and instead set coverage and quality goals. The request comes from carriers across the board.

They argue that the roll-out of the technology will require much more investment than what was necessary for 4G networks, especially regarding antennas.

Carriers like to cite the example of Italy, where the government priced high and now the deployment of 5G is at risk.

José Gonçalves Neto, director of regulatory relations at Telefónica Brasil, said the goals must also be in proportion to the final value charged for the spectrum.

Tiago Machado, director of government and industry relations at Ericsson, said that the price of the spectrum is a worry and that in 2014 Brazil had “the most expensive auction of spectrum.”

Anatel sides with telcos on the price request, but a potential obstacle is the economy ministry and treasure authorities, which could see the tender as an opportunity to alleviate the country’s financial woes and fiscal deficit.

Speaking in Brasília, the undersecretary of regulation and markets at the development for infrastructure department (SDI), part of the economy ministry, Gabriel Fiuza, said the auction should be based on " maximization of economic wellbeing together with the development of infrastructure."

"We believe that the design of the auction will have a profound long-term impact and that this discussion will be very well conducted by Anatel. At SDI in particular, our vision is to foster regulatory designs that discourage problems such as low competition or slow industry development.”

– Immediate availability

Another key request by telcos is spectrum availability.

Monique Barros, Claro Brasil’s regulatory manager, said at a panel at the Telebrasil event that it is important that spectrum be ready for “immediate use, contrary to what happened in the 700Mhz frequency auction.”

In the 700Mhz tender, winning carriers had to foot the costs of the spectrum clean-up through a TV digitization program – one of the reasons why that tender ended up being so expensive for telcos.

The band was not immediately available for mobile services because in many places it was being occupied by analog TV channels. Only digital TV did the channels move to other spectrum and cleared the band for use.

The total budget of the TV digitization process was 3.6bn reais (about US$900mn) and the process is still ongoing.

Although analog TV has already been switched off in the main towns and cities, smaller areas are still waiting for it. By February, around 2,800 of Brazil's 5,700 municipalities had gone through the switch, according to Anatel. A further 976 localities should be have completed the change by this December.

Of the bands that will be tendered next year, only 3.5Ghz is partially occupied by free-to-air satellite TV.

– Interference

The issue of satellite-mobile interference divides operators.

Anatel's head of licenses, Vinicius Caram, said the watchdog is still studying whether carriers will have to bear any costs to avoid interference with satellite services in the 3.5GHz band.

Marco di Constanzo, network engineering director at TIM, which is conducting 3.5GHz tests with Huawei, said no major interference issues have been detected. The same goes for Telefónica.

But Carlos Alberto Camardella, engineering and technological evolution consultant at Claro Brasil, which also conducted interference tests, said it is still not possible to be sure that filters will work 100% for domestic free-to-air satellite TV dishes. "Filters still need to evolve," he said.

According to Camardella, Brazil has almost 6mn such satellite dishes that are susceptible to interference.

– Other requests

Many operators also expect a call for the sharing of infrastructure, particularly spectrum, in order to lower individual deployment costs.

According to Caram, Anatel supports that position. He recalled that Brazilian regulation already allows RAN and network sharing between telcos and the future 5G tender will reinforce that.

Caram added that white space and sharing studies are being carried out to fine-tune the matter.

Currently, there exists the possibility of sharing in different frequencies.

Other aspects to be observed in the tender include consolidation, spectrum use efficiency and facilitation in the use of small cells, with tax exemptions for the cells.

FIRST USE CASES

Most of the telecom industry believes that the first use cases for 5G will be as last-mile fixed broadband connectivity, or fixed-wireless access (FWA).

Mauro Fukuda, director of technology and service platforms at Oi, said the company expects the first services for 5G will be FWA in connected cars, among other IoT applications.

He said Oi has been working on some fronts to prepare the network for the 5G, such as upgrading part of its fiber network of more than 350,000km.

5G Americas’ Otero recalled in the webinar that Brazil became in 2012 the first country in Latin America to launch an FWA network in 4G and said it could also become the first one in 5G.

Qualcomm Technologies' CEO Cristiano Amon said the great benefit of 5G is that it is not a technology just for certain bands.

"5G is being designed to work on all bands, even simultaneously. It needs to have both mid and millimeter wavebands working at the same time. We’ll see this as the 5G standardization process quickly moves forward. In 2020, with the industry’s release 16 paper, we'll have other features and uses of 5G defined."

CHALLENGES

Perhaps the greatest hurdle for 5G in Brazil will be regulatory infrastructure aspects.

This is because 5G will require even more antennas and sites than other technologies for signal densification.

Alejandro Adamowicz, director of technology for Latin America at the GSMA, told BNamericas that the maximum coverage of 5G considering the 3.5Ghz frequency will be 300ms.

According to Anatel’s Caram, the maximum reach of each antenna in 3.5Ghz is about 150-380m in a "dense" urban environment and 330-580m in a "not dense" urban environment.

At 26GHz, it's 200-400m. "At 26GHz it’s even worse, so small cells will be needed."

In general, Anatel calculates that 50-70% more sites will be needed with 5G compared to 4G.

Because of that, telcos urge municipalities to align their regulations to Brazil’s federal antennas law, which eased the licensing process for the installation of mobile sites. Otherwise, they say, 5G won’t happen.

Currently, in some cases, a license is taking as long as two years to be approved.

But the licensing problem is not limited to antennas. The passage of fiber is also bureaucratic.

According to Rafael Steinhauser, Qualcomm’s Latin American president, “without fiber, 5G does not work.”

The industry is asking the government to lift barriers and offer incentives. Marcos Aguiar, senior leader of BCG South America, said that past investments of Brazilian operators would need to be increased by 139% to expand broadband and implement 5G.

"Without incentives, carriers would not even invest the historical levels, not to mention the additional ones that will be required. In any case, initiatives to make 5G feasible will need to come from different stakeholders."

Aguiar said the sector accounts for 4% of GDP, or 240bn reais per year, and that each 1 real invested generates 1.45 reais in added value.

In a presentation on Thursday in Rio de Janeiro, as reported by Teletime, BNDES president Joaquim Levy said that the telecommunications sector in Brazil invests in telecom infrastructure the equivalent to 0.8% of the country’s GDP.

According to the bank, this figure would be proportionally higher than what is invested in telecommunication infrastructure in the US (0.7% of GDP), China (0.7% of GDP), the European Union (0.5% of GDP) and the rest of Latin America (0.4% of GDP).

Furthermore, telecoms would also be the only sector in Brazil which invests in infrastructure at levels higher than other countries as a proportion to GDP.