Techno-economics behind provisioning 4g lte mobile services over sub 1 ghz frequency bands: A case study for indian telecom circles

Abstract

The fourth generation (4G) mobile cellular networks are being deployed rapidly across both the developed and the developing world. The choice of Long-Term Evolution (LTE) for 4G deployment is driven primarily by its technical superiority in catering to the rising consumer demand for high-speed mobile broadband services. The total cost of ownership (TCO) for deploying 4G LTE services, however, involve massive investments in spectrum acquisition and radio network infrastructure provisioning. Since spectrum bands in different frequencies have different wave propagation characteristics, their individual valuations also differ, leading to varying implications on an operator’s TCO and profitability. To clearly establish these financial and technical implications, this paper performs a comparative evaluation of 4G LTE deployment over sub 1 GHz, 1–2 GHz, and 2–3 GHz cohorts of frequency bands. With the help of a suitable techno-economic model, we forecast the number of 4G LTE subscribers, determine the achievable coverage and capacity, and analyze their comparative profitability through a discounted cash flow approach over a 20-year horizon across 22 telecom circles in India. Our results indicate that sub 1 GHz bands result in lower TCO and higher profitability for operators across all the 22 telecom circles when compared to other two cohorts. Interestingly, we also note that, among the four types of telecom circles, Category C circles, which are crucial to ensure the mandated last-mile coverage for rural Indian villages, come next to only Metro circles in terms of profitability, thereby increasing their attractiveness further in future spectrum auctions in India. © Springer International Publishing AG 2017.