Presentation to The Expert Committee on Spectrum

Date: 26th Nov 2007

Presentation Flow

1. 2. 3. 4. 5. 6.

About RCOM What is the real issue? Spectrum Allocation Spectral Efficiency innovations & TEC Report Re-farming, Re-alignment of Spectrum & Capital Efficiency Measures Summary & Recommendations

2 of 57

confidential

Reliance Communications

Largest fully integrated private sector communications company in India

5th largest company with market cap of over Rs. 1,50,000 Cr

Second largest customer base serving 40 Mn customers. Only operator providing both CDMA & GSM services

CDMA Pan India GSM 8 circles mainly in Eastern India

Received approval for pan India GSM rollout services Paid an additional fee of Rs. 1650 Cr. for GSM services RCOM has paid the highest fee Rs 3100 crore for operating mobile services. Indias largest and only Next Generation & IP based network pan India

Fully committed to the Nations telecom growth in the entire value chain
confidential

3 of 57

RCOM Exponential Growth Plan

Parameter

UoM
% / Nos. Crs.

Last 4 years
50 % 55

Current Year March 08

40% 44

Aggregate
90% 99

Population Covered Towns Covered

Nos.

10,000

13,000

23,000

Sites

Nos.

14,000

26,000

40,000

Investment

Rs.Crs.

32,000

20,000

52,000

RCOMs Growth Plans Significant contributor to Indias GDP Growth

4 of 57

confidential

Widest Coverage Plan for 07-08

Coverage
Towns Villages Population Key Religious Sites Railway Track Largest USO Roll ou 7230 sites

UoM
Nos. Nos. % Nos. Kms % Kms % Kms %

Oct - 07
10,000 300,000 55 333 48,000 65 % 35,000 60 % 85,000 45 %

Mar-08
24,000 500,000 90 677 63,000 85 % 55,000 95 % 153,000 80 %

National Highways

Rs. 20,000 Crs Capex

State Highways

Worlds largest Wireless Network Rollout in a year Will cover all locations with over 1000 population with Voice & Data confidential
5 of 57

What is the real issue?

What is the real issue?

What GSM Operators got / want
1. 2. 3. 4. 5. Received spectrum above 4.4 MHz almost with out any policy guidelines till 2006. Received spectrum above contracted spectrum of 6.2 MHz Continued to enjoy spectrum free The March 06 WPC criteria was too low, necessitating revision Both TRAI & TEC criteria in 2007, based on scientific inputs, now being contested - for cornering & hoarding spectrum, & restricting competition. 6. Forcing the current framework to maintain oligopolistic interest.

What India needs

Adoption of spectrum allocation criteria which: 1. Promotes spectral efficiency 2. Maintains and ensures the quality of service
3. Increases competition leading to achieve government targets.

Need of the hour Scientific approach for Spectrum Allocation norms

7 of 57

confidential

Spectrum Allocation

Evolution of allocation criteria

February 2002

No SUBSCRIBER CRITERIA till Feb.02 Adhoc Approach Spectrum Charges Policy issued for 4.4 MHz and 6.2 MHz. Spectrum allocated up to 6.2 MHz without any policy framework almost free till Feb.02.

Spectrum Charges Policy issued for 8 MHz and 10 MHz.

Spectrum allocated up to 10 MHz without any policy framework almost free till Mar.06. Spectrum allocation linked to Subscriber Criteria based on Metro & Circle Category . Criteria abysmally low - Operators continue to serve 2-5 times more subscribers vis-a-vis the criteria, without difficulties. Over 50 Million subscribers added by the private dominant GSM players within 18 months, without any additional spectrum.

April 2002

March 2006

No policy and lenient criteria led to cornering of spectrum

9 of 57

confidential

Evolution of allocation criteria

First time Scientific approach

Aug.2007

Oct.2007

Allocation Criteria
Case for Refund@ Spectrum Availability
@ Across all Circles by all operators

Revised & tightened by TRAI

Further revised by TEC Report

To refund 32 MHz* excess spectrum

To refund 56 MHz** excess spectrum

Start-Up Spectrum available for 3-4 new operators.

*Based on TRAI Norms **Based on TEC Report

Adoption of TEC Criteria at the minimum Right way forward

10 of 57

confidential

Spectrum allocation without Policy

Operators allotted 6.2 MHz with out policy framework S.N.
1 2

Operators allotted 10 MHz with out policy framework S.N.

1 2 3

Operator
Aircel Aircel

Circle
Haryana Rajasthan

Date w.e.f
Jan-01 Jan-01

Operator
Aircel Bharti BPL Vodafone Vodafone Bharti Bharti Vodafone Idea

Circle
Tamilnadu Delhi Mumbai Delhi Mumbai Mumbai Karnataka Gujrat Maharastra

Date w.e.f
Dec-04 Jul-03 Sep-04 Oct-03 Oct-03 Jan-06 Jan-04 May-05 Apr-04

3
4 5 6 7 8 9 10 11

Aircel
Bharti Bharti Bharti Bharti BPL Aircel Spice Spice

UP(East)
AP Chennai Delhi Karnataka Mumbai Chennai Karnataka Punjab

Jan-01
Apr-00 Aug-99 Aug-99 Apr-00 Aug-99 Mar-00 Apr-00 9 Apr-00 4 5 6 7 8

Arbitrary & Adhoc approach allowed cornering & hoarding of spectrum beyond eligible & contracted 6.2 MHz
11 of 57

confidential

WPC Criteria v/s Actual Subs.

VLR:80% of subs

Key Circles Delhi Mumbai Chennai Kolkota UP (E) Maha.

Leading operator Airtel Vodafone Aircell Vodafone Vodafone Idea

Customers (Lakh) 36 30 16 16 38 38

Spectrum MHZ 10 10 8.6 9.8 8 10

VLR Criteria Subs (Lakh) / MHz 1 1 0.5 0.6 0.8 1.4

Actual vs WPC Criteria 2.9 2.4 3.0 2.2 5.0 2.2

Subscriber / MHz 2 to 5 times higher than WPC criteria

Leading Operator - Mumbai

35 4 40 35

Leading Operator - Delhi

30 36 3.6
4 3.5

30 25

3.5

Subs (mn) / MHz

3 20 2 1.5

2.5 2 1.5 1 0.5 0

25

2.5

20

20
20 15 10 5 0

15
15 10 5 0

2.1

16 1.6

2 1.5 1 0.5 0

Mar'05

Mar'06
Subs (Lakh) Subs (Lakh)/MHz

Oct'07

Mar'05

Mar'06
Subs (Lakh) Subs (Lakh)/MHz

Oct'07

WPC criteria outdated, to be replaced at least by TEC Report norms

12 of 57

confidential

Subs (mn) / MHz

30

Subs (mn)

Subs (mn)

Myths Propagated by GSM operators related to Spectrum

1. Poor network QoS due to paucity of Spectrum

2. Low ARPU and operators unable to afford additional capex

3. Indian operators require more spectrum as a) Have lesser spectrum relative to Global Operators b) Higher MOU per sub in India c) already deployed available spectral efficiency enhancing technologies,

All the above continue to lead to excess & ineligible allocation of Spectrum to private dominant GSM operators
13 of 57

confidential

Myth 1 - Propagated by GSM operators

Poor network QoS due to paucity of spectrum Reality

95% operators meet the benchmark In Metros, 100% of the private operators have met benchmarks QoS parameters needing attention are POI congestion & Help line, which are not related to spectrum On the Contrary, QoS showing improving trend over last 8 quarters Spectrum availability is only one of the many factors for QoS improvement

100

Accumulated down time (<24 hrs) CSSR (>95%)

90

80

Service access delay (<15 secs) SDCCH / Paging channel congestion (<1%) TCH congestion (<2%)

70

60 Call drop rate (<3%) 50 Jul- Oct- Jan- Apr- Jul- Oct- Jan- AprSep- Dec- Mar- Jun- Sep- Dec- Mar- Jun05 05 06 06 06 06 07 07 % connections with good voice quality (>95%)

QoS has improved over last 8 quarters due to availability of Spectrum

Source: Network QoS report by TRAI Sep 2007
14 of 57

confidential

Myth 1 - Propagated by GSM operators

Lowest 7 dimensions of QOS Site Database Audit & correction. Availability of spectrum
Spectrum is one of the low priority requirements to determine QoS

Priority

Implementation of new features to improve network quality and capacity Optimal Frequency Plan using Adhoc Technique Network Optimization Drive Testing/ Analysis & Corrective action Network Planning to meet Coverage & Capacity Objective

Highest

Availability of Skilled Man power for Planning & Optimization

Network Performance Requirements

Spectrum Availability is a low priority criteria for maintaining QOS.

15 of 57

confidential

Myth 2 - Propagated by GSM operators

Low ARPU and operators unable to afford additional capex Reality

EBIDTA Margin Comparison
40%

EBIDTA margin in India higher than any of the developed countries in the world e.g. UK, USA, Hong Kong, Brazil, Australia, Spain. Highest EBIDTA expansion in the world during 20032007. 17%-38% Analysts forecast future EBIDTA margin expansion in spite of falling ARPU Indian Telecom Companies highly valued with EV/EBIDTA multiple of ~15 by analysts - UBS, Macquarie, Lehman Bros, Merrill Lynch

35%

30%
EBITDA(%)

25%

20%

15%

10% 2003 Australia 2004 Hong Kong India 2005 UK US 2006 Brazil

Over Rs. 50000 crore committed capex spends by

EBIDTA Margins (Q2, FY07-08)

RCOM Airtel : 43% : 43%

Wireless industry this year as Outlooks are healthy

Indian TelCos valuations & EBIDTA margin among top 5 in the world
Source : ML wireless Matrix, Q 4 2006
16 of 57

confidential

Myth 3
Indian operators have relatively lesser spectrum, higher MOU per sub & have already deployed available spectral efficiency enhancing technologies, hence require more spectrum

Myth

In France, Netherlands, Germany, Spain, UK have 100 MHz amongst 3-4 operators China has 60 MHz among 2 operators

Reality

Timing of network rollout & innovation availability & outlook different for developed markets & India India needs to deploy spectrally efficient solutions more aggressively due to low teledensity and its unique demographic profile Indian telecom market is growing when technology is available for increasing spectral efficiency many folds. Operators in USA, Hong Kong with lesser spectrum serve markets with much higher traffic density Higher CAPEX can be easily afforded by operators.

GSM operators want to enrich themselves at the cost of national objectives by demanding more spectrum
Source : Interconnect associates, Telecordia
17 of 57

confidential

Bharti Case Study

Bharti
S Circle No. Subsribers as on Eligibility Current Spectrum date as per Spectrum issued WPC criteria held date for next tranche (Mn) 7.8 6.2 9.8 6.2 6.2 6.2 6.2 6.2 7.8 6.2 6.2 6.2 4.4 6.2 8.0 6.2 6.2 4.4 8.0 10.0 9.2 8.0 8.6 Average 7 MHZ Feb-04 Apr-02 Jan-04 Apr-02 Mar-02 Apr-02 Mar-02 Apr-02 Feb-04 Aug-00 Mar-05 Apr-02 Mar-04 Mar-05 Mar-06 Sep-03 Mar-06 Dec-04 Mar-06 Jul-03 Jan-06 Jan-05 Jan-06 1.8 1.0 2.6 1.0 1.0 0.8 0.8 0.8 1.3 0.8 0.8 0.8 0.4 0.5 0.9 0.5 0.5 0.3 0.8 2.0 2.0 0.8 0.8 23 Subscribers added without Spectrum Additional additional in excess Spectrum spectrum as beyond as per WPC per current 6.2 MHz criteria criteria (Mn) 3.16 1.6 7.2 1.06 3.8 3.33 3.6 5.2 2.47 8.8 2.16 6.2 0.08 1.8 0.56 3.8 1.48 6.2 1.65 1.6 7.2 2.11 8.8 1.61 6.2 0.55 3.8 1.11 5.6 0.21 1.8 2.45 1.8 7.0 0.20 1.8 0.24 1.8 0.10 1.8 0.56 1.8 4.4 1.60 3.8 5.0 0.15 3.0 3.2 0.72 1.8 4.4 0.62 28 2.4 21 3.8 110

Criteria TEC Refund* TRAI WPC Additional Allocation* Demand WPC+25% WPC+50%

MHz 21 11 110 78 58

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

AP Gujarat Karnatka Maharashtra Tamil Nadu Haryana Kerala MP Punjab Rajasthan U.P.(E) U.P.(W) WB Assam Bihar HP J&K North East Orissa Delhi Mumbai Kolkata

*Across all Circles

28 Mn subscribers added over a base of 23 Mn subscribers (120% of base) added without additional spectrum in last over 18 months

23 Chennai

Demand for additional Spectrum Invalid Fit case for refund of 21 Mhz
confidential

18 of 57

Vodafone Case Study

Vodafone
S Circle No. Subsribers as Subscribers Date of on Eligibility added without Spectrum Additional Current Spectrum Eligibility for date as per additional in excess Spectrum Spectrum issued next tranche current spectrum as beyond as per WPC held date as per current criteria for per current 6.2 MHz criteria criteria next tranche criteria (Mn) (Mn) 6.2 Mar-02 Jul-06 1.0 1.09 1.8 9.8 May-05 May-06 2.6 2.66 3.6 5.2 8.0 Jan-05 Apr-07 1.8 0.62 1.8 6.2 Dec-99 Oct-06 1.0 0.87 1.8 6.2 Dec-99 Mar-07 1.0 1.19 1.8 6.2 Jan-01 Mar-07 0.8 0.31 6.2 Dec-99 Nov-06 0.8 0.80 1.8 6.2 Jan-04 Jul-06 0.8 0.73 1.8 6.2 Jan-01 Jul-06 0.8 1.55 3.8 8.0 Jan-06 Feb-06 1.3 2.48 1.8 4.4 6.2 Mar-05 Jun-06 0.8 1.52 3.8 4.4 Mar-04 Jan-06 0.4 1.75 5.6 10.0 Oct-03 Aug-06 2.0 0.99 3.8 2.4 10.0 Oct-03 Mar-06 2.0 0.99 3.8 9.8 Jul-06 Mar-07 1.3 0.36 3.6 0.2 8.0 Average 7.35 MHZ Jun-06 May-07 0.8 19 0.21 18 1.8 20 34

Criteria TEC Refund TRAI WPC Additional Allocation* Demand WPC+25% WPC+50%

MHz 20 9 73 50 34

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

AP Gujarat Karnatka Maharashtra Tamil Nadu Haryana Kerala Punjab Rajasthan U.P.(E) U.P.(W) West Bengal Delhi Mumbai Kolkata

*Across all Circles

16 Chennai

18 Mn subscribers added over a base of 19 Mn (100% of base) added without additional spectrum in last over 18 months

Demand for additional Spectrum Invalid : Fit case for refund of 20 MHz
19 of 57

confidential

Idea Case Study

Idea
S Circle No. Date of Eligibility Current Spectrum for next Spectrum issued tranche as held date per current criteria 8.0 6.2 9.8 6.2 8.0 8.0 6.2 6.2 8.0 4.4 8.0 Average 7.2 MHZ Subscribers Subsribers as added without on Eligibility Spectrum Additional additional date as per in excess Spectrum spectrum as current criteria beyond as per WPC per current for next 6.2 MHz criteria criteria tranche (Mn) (Mn) Sep-04 Mar-07 1.8 0.83 1.8 4.4 Aug-00 Mar-06 1.0 1.15 3.8 Apr-05 Dec-06 2.6 1.25 3.6 5.2 Dec-99 Jan-07 0.8 0.08 1.8 Mar-05 Oct-06 1.3 0.99 1.8 4.4 Nov-06 Nov-06 1.3 1.11 1.8 4.4 Dec-05 Not Eligible Not Eligible Feb-06 Not Eligible Not Eligible Not Eligible Jan-06 Sep-06 1.3 0.69 1.8 4.4 Mar-02 Not Eligible Not Eligible Dec-05 Nov-06 1.3 11 0.52 7 1.8 13 2.0 30
Criteria TEC Refund TRAI Additional Allocation* Demand WPC WPC+25 % 11 30 14 12 MHz 13

1 2 3 4 5 6 7 8 9 10

AP Gujarat Maharashtra Haryana Kerala MP Rajasthan U.P.(E) U.P.(W) HP

WPC+50 %

*Across all Circles

11 Delhi

7 Mn subscribers added over base of 12 Mn (60% of base) added without additional spectrum in last over 18 months

Demand for additional Spectrum Invalid : Fit case for refund of 13 MHz
20 of 57

confidential

BPL Case Study

Criteria

MHz 3.8 3.8 0 0

BPL
S Circle No. Date of Eligibility for Current Spectrum next tranche Spectrum issued as per held date current criteria 10.0 Sep-04 Subscribers Subsribers as added without on Eligibility Spectrum Additional additional date as per in excess Spectrum spectrum as current criteria beyond as per WPC per current for next 6.2 MHz criteria criteria tranche (Mn) (Mn) Not Eligible Not Eligible 0.00 3.8 0.0
Refund

TEC TRAI WPC Additional Allocation* Demand WPC+25%

1 Mumbai

WPC+50%

Fit case for Refund of 3.8 MHz

21 of 57

confidential

Reliance GSM Case Study

RTL
S Circle No. Date of Eligibility for Current Spectrum next tranche Spectrum issued as per held date current criteria 6.2 6.2 6.2 8.0 6.2 6.2 6.2 6.2 Average 6.4 MHZ Jan-01 Feb-04 Oct-03 Oct-06 Aug-05 Jan-06 Sep-01 Mar-02 Oct-06 Dec-06 Jun-07 Oct-06 NE NE Jul-07 NE Subscribers Subsribers as added without on Eligibility Spectrum Additional additional date as per in excess Spectrum spectrum as current criteria beyond as per WPC per current for next 6.2 MHz criteria criteria tranche (Mn) (Mn) 0.8 0.44 1.8 NE 0.5 0.15 1.8 0.8 0.56 1.8 4.4 NE NE 0.5 0.12 1.8 NE Total 1.3

Criteria TEC Refund TRAI WPC Additional Allocation* Demand

MHz 1.8 1.8 9.8 7 3.8

1 2 3 4 5 6 7 8

MP West Bengal Assam Bihar HP North East Orissa Kolkata

WPC+25 %
WPC+50 %

*Across all Circles

1.8 2

10

1.3 Mn subscribers added over a base of 4 Mn (32% of base) added without additional spectrum in last over 18 months

Willing to return excess spectrum in Bihar in line with policy framework applicable to all
22 of 57

confidential

Reliance CDMA Case Study

RCOM Additional Spectrum Current Spectrum in excess Spectrum as per beyond 5 held (MHz) WPC MHz criteria 5.00 3.75 3.75 5.00 5.00 3.75 5.00 5.00 3.75 3.75 5.00 5.00 3.75 5.00 2.50 2.50 3.75 5.00 5.00 5.00 5.00 Average 4.35 MHz 1.25 1.25 1.25 1.25 1.25 0.00 0.00 0.00 0.00 1.25 1.25 0.00 0.00 2.50 0.00 0.00 0.00 0.00 1.25 0.00 1.25

S.N.

Service Area

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

Andhra Pradesh Gujarat Karnataka Maharashtra Tamil Nadu Haryana Kerala Madhya Pradesh Punjab Rajasthan U.P.(E) U.P.(W) West Bengal Bihar Himachal Pradesh Jammu & Kashmir Orissa Chennai Delhi Kolkata Mumbai

RCOM - CDMA Does not hold beyond 5 MHz contracted spectrum in any of the circles RCOM willing to consider its claim to forego 13.75 MHz of spectrum as per WPC criteria

13.8

No additional Spectrum granted

23 of 57

confidential

Tata CDMA Case Study

Tata Additional Spectrum Current Spectrum in excess Spectrum as per beyond 5 held (MHz) WPC MHz criteria 3.75 3.75 3.75 3.75 2.50 3.75 3.75 3.75 3.75 3.75 3.75 3.75 2.50 3.75 2.50 2.50 3.75 5.00 3.75 5.00 Average 3.63 MHz 1.25 0.00 0.00 1.25 1.25 0.00 0.00 0.00 0.00 1.25 0.00 0.00 1.25 1.25 0.00 1.25 0.00 2.50 1.25 0.00

S.N.

Service Area

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 17 18 19 20 21

Andhra Pradesh Gujarat Karnataka Maharashtra Tamil Nadu Haryana Kerala Madhya Pradesh Punjab Rajasthan U.P.(E) U.P.(W) West Bengal Bihar Himachal Pradesh Orissa Chennai Delhi Kolkata Mumbai

Tata - CDMA Does not hold beyond 5 MHz contracted spectrum in any of the circles Eligible for 12.5 MHz of spectrum as per WPC criteria

12.5

No additional Spectrum granted

24 of 57

confidential

Comparison: TRAI to WPC criteria Multiple : TRAI to WPC

Circle Metro( D/M) Metro (C/K) A 6.2 MHz 1.6 2.5 2.0 8 MHz 2.5 3.8 3.8 10 MHz 2.0 3.3 3.6

B
C

2.7
3.0

5.0
5.0

5.0
6.7

TRAI criteria is 1.6 times to 6.7 times of WPC March 06 Average 4 times of WPC criteria
25 of 57

confidential

Comparison: TEC to TRAI criteria Multiple : TEC to TRAI

Circle Category
Metro (DL/MU) Metro (CH/KOL) A B C 6.2 MHz Range 1.2 to 1.4 Average Range 1.3 to 1.5 8 MHz Average Range 1.7 to 2 10MHz Average

1.3

1.4

1.9

1.0 to 1.2

1.1

1.1 to 1.3

1.2

1.5 to 1.8

1.7

1.1 to 1.7 0.5 to1.6

1.5 1.2 1.2

1.0 to 1.4 0.4 to 1.4 0.3 to 2.0

1.3 1.0 1.2

1.0 to 1.5 0.4 to 1.5

1.3 1.0 1.2

0.3 to 2.0

0.3 to 2.8

TEC criteria lower than TRAI in 6 circles- HR, KL, PJ, HP, J&K, NE TEC criteria is Average 1.2 times of TRAI criteria
26 of 57

confidential

Global practices for excess spectrum

In October 2007 Ofcom has initiated the re-farming of 15 MHz to 20 MHz of spectrum in 900 MHz band from Vodafone & O2. This spectrum was

UK

allocated in 1985 Returned Spectrum will be allocated to new / other eligible operators Value of returned spectrum estimated at Rs. 50000 Cr ( 6 Bn) Re-farming of 10 MHz inter-se operators is practiced and implemented In 2004, Regulator directed spectrum re-farming between AT&T & TMobile in New York & California states

USA

Argentina / Chile / Peru

Excess Spectrum 20 to 35 MHz held by MovieStar was directed to be returned in 2005.

Internationally, Regulators have taken back / reallocated spectrum

confidential

27 of 57

Summary Spectrum Allocation

At the minimum, subscriber allocation criteria recommended by TEC be accepted or appropriately revised upwards based on further scientific inputs.

Existing dominant GSM operators have been allocated spectrum without a policy framework and are using excess spectrum which is also beyond contracted amount of 6.2 MHz. Should be directed to refund the spectrum.

All new licensees or licensees having paid the prescribed fee for the alternate technology should be allocated start up spectrum of 6.2 MHz.

28 of 57

confidential

Summary Spectrum Allocation

The available spectrum will allow commencement of services by minimum 4 operators/ licensees. This will yield for the Government of India Rs 6500 Cr as Entry Fee Upto Rs 20000 Cr as direct and Indirect taxes on full rollout of network by new operator

The increased competition will benefit the country and consumers. Accelerated growth in telecom penetration Lower tariffs Better coverage including rural coverage.

Better quality of services

29 of 57

confidential

Spectral Efficiency Innovations & TEC Report

TEC subscriber criteria

Justified ?
Liberal ? Stringent ?
Let us examine in light of available spectral efficiency technology innovations

31 of 57

confidential

Spectral Efficiency Basic Principle

Coopers Principle on Wireless Networks: Capacity enhancement is coming through reduction in Cell size

Shrinking Cell Size provides 2700 times more capacity as compared to additional spectrum which provides only 15 times capacity enhancement

Continuous increase in teledensity will require deployment of more BTS, leading to increase in network capacity, without additional spectrum
32 of 57

confidential

Spectral Efficiency Basic Principle

Shannons Principle:

There is a limit to capacity

Capacity increase can be achieved by reducing interference by using spectral efficiency enhancement techniques
33 of 57

confidential

Parameters for determining

Subscriber based spectrum allocation criteria

1. Morphology - Dense urban / urban / Sub-urban / Rural 2. Subscriber / traffic density distribution in different morphology 3. Spectrum allocated 4. Number of sites to cater specified traffic 5. BTS capacity utilization 6. Inter site distance 7. Spectral efficiency innovations

Quantum of Spectrum allocated is just one of the parameters

confidential

34 of 57

TEC work flow chart Subscriber Based Spectrum Criteria

Allocated Spectrum 4.4MHz 6.2MHz 8MHz 10MHz 12.4MHz
Estimated BTS configuration with Capacity Traffic Distribution
7 Key Technology Innovations

Metro / Circle Morphology Distribution as per Satellite Image (Km) U SU RU DU Sub Density Ratio DU U SU RU

Sync N/W DFCA 6 sector AMR SAIC Femto Cell IBS

BTS Utilization per Morphology

No

No. of subs per site

DU w % U x% SU y % RU z %

Required No. of sites & Estimated Subs per Morphology

Target Subs as per Recommendations Metro D & M Metro K & C Class A Circle Class B Circle Class C Circle

Yes

S332 S444 S566 S778

Excluded by TEC while framing Subscriber based Criteria policy

Inter-Site distance per morphology. Subs Density

Source: TEC Presentation on Spectrum Efficiency. Dtd 20.09.07

TEC Criteria can be further improved when gains due to spectral efficiency innovations are included
35 of 57

confidential

Spectral Efficiency Innovations

1. Synchronized Network 2. DFCA (Dynamic Frequency & Channel Allocation) 3. 6 Sector BTS 4. AMR (Adaptive Multi Rate) 5. SAIC (Single Antenna Interference Cancellation) 6. Femto cell solution

7. In Building Solution

India cant afford to ignore use of these innovations

confidential

36 of 57

Technology Innovation - 1 Synchronized Network

BTS 1

BTS are synchronized using GPS or software.

Asynchronous Network
BTS 2

TDMA Bit Offset of BTSs are aligned with each other.

Improvement of C/I by 3~5dB.

25
BTS 1

26

Synchronous Network
BTS 2

25

26

Source: Huawei ,Ericsson and Nokia-Siemens

Enhances Radio Network Capacity by 20%. Pre-requisite to use features like DFCA for further capacity gains.
37 of 57

confidential

Technology Innovation - 2
DFCA (Dynamic Frequency & Channel Allocation)
Conventional Frequency and Channel Allocation
0 0 1 2 3 4 5 6 7
F3 F2

Dynamic Frequency and Channel Allocation

0 1 2 3 4 5 6 7
F2 F1

F1

F1

1 2
F2

0 1 2 3 4 5 6 7
F3 F2

0 1 2 3 4 5 6 7

F1

0 1 2 3 4
F3

0 1 2 3 4 5 6 7

0 1 2 3
F3

3 4 5 6 7

4 5 6 7

5 6 7

Parameter Frequency Collision Possibilities Synchronization required Co and Adjacent frequencies reuse in Adjacent Cell Frequency Hopping

Conventional Yes No Not possible Fixed pattern

DFCA No Yes Possible Dyanacmic based on mobile location

Thru Software upgrade

Enhances Radio Network Capacity by 60 ~ 90%.

Source: Huawei and Nokia-Siemens
38 of 57

confidential

Technology Innovation 3
6 Sector BTS
1 5 9

4 8 12 1 5 9

3 7

11

2 6

6 sector BTS provides twice the capacity of 3 sector BTS at same spectrum. Improvement due to use of Asymmetric antenna which have more then 30dB front to back ratio for 1800 azimuth.
Spectrum (MHz) 3 Sector TRx (No) 3 4 7 8 Traffic (Erlang) 45 66 129 149 6 Sector TRx (No) 3 4 6 8 Traffic (Erlang) 89 131 245 298 Capacity incerase (%) 100% 100% 90% 100%

10

1 5

3 7

11

4 8

12

3 7

11

4 8

12

2 6

10

2 6

10

1 5

12

3 7

11

4 8

2 6

10

3 Sector BTS

4.4
1 1 9 1 51 5 9 3 11 73 7 11 4 12 84 8 12

6.2
1 1 9 1 51 5 9 4 12 84 8 12

2 10 62

10

1 1 9 1 51

3 11 73

11

8 10

3 11 73

11

4 12 84

12

2 10 62

10

2 10 62

10

1 1 9 1 51

3 11 73

11

4 12 84

12

2 10 62

10

6 Sector BTS

Reliance CDMA has over 200 six sector sites operational & in Reliance GSM network at Guwahati.
Vodafone has in Hyderabad.

Enhances Radio Network Capacity between 90% to 100%.

Source: Ten XC, Canada
39 of 57

confidential

Technology Innovation 4
Adaptive Modulation Rate (AMR)

AMR Penetration & Capacity Increase

TCH FER Based Capacity Gain
160 140
Capacity Gain [%]

All handsets manufactured since 2003 are AMR enabled.

AMR penetration level of 60% has resulted in 70% increase in capacity. Soon to increase to 100%
60-75% of current traffic is generated by AMR enabled handsets. Over 110 Mn AMR enabled handsets are in use

120 100 80 60 40 20 0 0 25 50 AMR Penetration [%] 75 100

100% AMR penetration will result in nearly 150% Radio Network capacity increase at zero cost expected by 2009
Source: GSM,GPRS AND EDGE PERFORMANCE by Halonen,Romero,Melero of Nokia (John Wiley & Sons)
40 of 57

confidential

Technology Innovation 5
Single Antenna Interference Cancellation (SAIC)
SAIC Penetration & Capacity Increase

SAIC Handsets are available in market from 2004 Majority of Nokia phones are SAIC compatible. Nokia market share is ~ 70%

SAIC is a software feature in the handset for increasing downlink spectrum efficiency of GSM networks. SAIC uses technique to cancel or suppress interference by means of signal processing without using multiple antenna. Source: Nokia-Siemens and 3GPP TR 45.903 V7.0.1 (2007-08)

Ultra Low end handset

Provides 50 ~ 60% additional capacity gain with 100% penetration of SAIC mobiles at no cost
41 of 57

confidential

Technology Innovation 6
Femto Cells

Small form factor and affordable price point will ensure mass deployment Size ~ 200 x 140 x 40 mm, 0.2kg

Small Form Factor Over 100 Million Femto cells are projected by 2011 GSM

Backhaul: ADSL, Ethernet

FEMTO cells improves spectral efficiency by release of BTS capacity for outdoor use.
Source: Ericsson & ABI-Research
42 of 57

confidential

Technology Innovation 7
In Building Solutions

Antenna

As per TRAI survey 70% calls in a cellular network are from In Building Seamless indoor and outdoor coverage In building coverage generates traffic and revenue

Splitter / Coupler

RF Feeder
Splitter / Coupler Base Station

In Building solutions help in offloading the traffic from outdoor base stations
43 of 57

confidential

Technology Innovation
Summary
1. Synchronized Network: Improves capacity by 20% 2. DFCA (Dynamic Frequency and Channel Allocation): Enhances Capacity by 60 ~ 90%. 3. 6 Sector*: Enhances capacity up to 100% 4. AMR: 100% AMR mobile penetration will improve the network capacity by 150%. * At Zero cost
SAIC/SN*

5. SAIC (Single Antenna Interference Cancellation): SAIC improves capacity by 50 ~ 60%.

6. Femto Cell*: Unlimited capacity for SOHO segment. 7. In Building Solutions*: Offloads traffic from outdoor BTS

DFCA

AMR*

Basic GSM
* 100 % SAIC and AMR considered with Synchronous network

Source: Nokia-Siemens and 3GPP TR 45.903 V7.0.1 (2007-08)

Capacity increases by 7 times by using 4 of the Technology innovation. Further improvements feasible on use of 6-sector, Femto & IBS.
44 of 57

confidential

Technology Innovation
Deployment Status in India Techniques

Used by

Conventional

Synthesized Frequency Hopping (SFH) Tighter Frequency Reuse Plan (TFR) Discontinuous Transmission (DTX) Dynamic Power Control IBS & Micro Cell Dynamic SDCCH

All OPERATORS

Advanced

Intelligent Directed Retry (IDR) AMR-HR Antenna Hopping - One Operator

Synchronized Network Dynamic Frequency and Channel Allocation (DFCA) 6 Sector BTS Single Antenna Interference Cancellation (SAIC) Interference Rejection Combining (IRC) Femto Cell

5 OPERATORS

Innovative

Under Trial Stage

Innovative techniques grossly under-deployed in Indian market.

Source: COAI submission to TRAI and from various GSM vendors.
45 of 57

confidential

Increase in TEC Subscriber criteria

Due to technology Innovations
Subs Capacity (in Mn)

GSM Case study for Delhi

20.0 15.0 10.0 5.0 0.0 4.4 6.2 8 10 Spectrum Allocation (in MHz) 12.4

TEC 30% AMR-HR Technology Innovations

Morphology & traffic distribution as outlined by TEC.

Technology innovations like Femto & IBS not considered in mathematical modeling.

Spectrum Allocation (MHz) 4.4 6.2 8 10 12.4

No. of Sites 1,500 2,000 2,400 2,509 2,560

Site to Site distance (in Mtr.) 538 466 426 416 412

No. of Times Subscriber Capacity w.r.t TEC

30% AMR-HR Technology innovation

1.40 1.36 1.37 1.36 1.34

3.0 3.0 2.8 2.6 2.6

TEC Criteria can be enhanced by over 3 times using Technology innovation

46 of 57

confidential

Technology Innovations - CDMA

New Techniques which will improve the spectral efficiency. 1. 2. 3. 4. 5. 6 Sector BTS 4 GV vocoder Pilot interference cancellation Femto cell solution In Building Solution

CDMA operators should accelerate deployment

47 of 57

confidential

Increase in TRAI Subscriber criteria (CDMA)

Due to technology Innovations Case study for Delhi

Subs Capacity (in Mn)

Capacity of CDMA for 2.5MHz spectrum is 6 times than that projected by TRAI Similar observation is for other allocations.

25.00 20.00 15.00 10.00 5.00 0.00 2.5 3.75 5 6.25 Spectrum Allocation (in MHz) RCOM Estimate 4GV Vocoder Innovation Techniques

Spectrum Allocation (MHz)

TRAI Criteria

Subscriber Nos. ( in Mn) 4GV Vocoder 1.6 7.1 9.5 11.8 Innovation Techniques 3.1 13.7 18.3 29.0

No. of times w.r.t TRAI Criteria 4GV Vocoder 3.2 3.6 3.2 2.4 Innovation Techniques 6.2 6.9 6.1 5.8

2.5 3.75 5 6.25

0.5 2.0 3.0 5.0

TRAI Criteria can be enhanced by more than 5 ~6 times using Technology innovation
48 of 57

confidential

Summary - TEC subscriber criteria

The TEC criteria is liberal

It can be further increased with gains by use of spectral efficiency technology innovations

TEC subscriber criteria to be revised upward by over 3 times leading to increased availability of spectrum

49 of 57

confidential

Re-farming, re-alignment of spectrum and Capital efficiency measures

900 MHz Vs1800 MHz Spectrum Anomaly & imbalances

Delhi Mumbai Chennai Kolkata AP Gujarat Karnataka Maharashtra TN Haryana Kerala MP Punjab Rajasthan UP (E) UP (W) WB Assam Bihar HP J&K NE Orissa Airtel 8 6.2 6.2 7.8 7.8 6.2 6.2 6.2 6.2 6.2 6.2 6.2 6.2 4.4 6.2 6.2 4.4 4.4 6.2 7.8 6.2 6.2 6.2

Spectrum in 900 MHz Hutch Idea 8 6.2 8 6.2 7.8 6.2 6.2

RTL

For a new operator, initial National Coverage with 900 MHz spectrum can be achieved with 30,000 BTS sites as against 60,000 BTS sites of 1800 MHz

Initial Capex saving of Rs. 15,000 Cr

Opex saving of Rs.1500 Cr per Year On ongoing basis a 900 Mhz network provides Capex advantage of Rs. 3,000 Cr & annual Opex savings of Rs. 300 Cr as compared to 1800 MHz network Spectrum beyond 4.4 MHz in 900 MHz band does not give any additional advantage Cap of 4.4 MHz to be introduced in 900 MHz band

6.2

6.2 6.2 6.2 4.4

6.2 6.2 6.2 6.2 4.4 4.4 6.2

Existing GSM Operators with up to 8 MHz spectrum in 900 MHz bad have an unfair advantage over new entrants

Spectrum in 900 MHz Band should be re-farmed & equally allocated to existing as well as new Operators
51 of 57

confidential

Re-farming spectrum
Inter-se 900 MHz 1800 MHz

Both existing and new operators as per policy are to be given level playing field in non-discriminatory manner

This necessitates correction of current anomaly and imbalance of allocated spectrum in 900 &1800 MHz
Need to cap allocation of spectrum in 900 MHz to each operator both existing and new entrants Internationally re-farming has been implemented

Policy framework to be implemented to achieve non discriminatory level playing field for all operators
52 of 57

confidential

Global practices of re-farming of spectrum

In October 2007 Ofcom has initiated the re-farming of 15 MHz to 20 MHz of spectrum in 900 MHz band from Vodafone & O2. This spectrum was

UK

allocated in 1985 Returned Spectrum will be allocated to new / other eligible operators Value of returned spectrum estimated at Rs. 50000 Cr ( 6 Bn)

USA

Re-farming inter-se operators is practiced and implemented . In 2004, Regulator directed spectrum re-farming between AT&T & TMobile in New York & California states

Internationally, Regulators have re-farmed spectrum to ensure non discriminatory level playing field & consumer benefits
confidential

53 of 57

Realignment of spectrum 880 890 MHz Band

Realignment of Spectrum 4 Carrier Scenario
870.03 871.26 872.26 873.99 875.22 876.45 877.95 879.18 880.41 881.64

883.67 MHz 890 MHz 1.4 MHz

BSNL 869 MHz

GB

TATA

GB

RCOM 879 MHz

GB

6.33 MHz 890 MHz

Realignment of Spectrum 3 Carrier Scenario

870.03 871.26 872.26 873.99 875.22 876.72 877.95 879.18

881.21 MHz 890 MHz 1.4 MHz

BSNL 869 MHz

GB

TATA

GB

RCOM 879 MHz

GB

8.80 MHz 890 MHz

Note: All the frequencies are in MHz

RCOM & TATAs to also offer GSM, Realignment will Improve availability of spectrum
confidential

Capital Efficiency Measures recommended

Mandate passive infrastructure sharing with price cap

TRAI recommendations of Apr 2007 on sharing of active infrastructure to be accepted & implemented
DOT to make reference to TRAI for sharing of spectrum
- Internationally active infrastructure sharing & spectrum sharing is done to deploy network in rural areas to reduce CAPEX,

DOT to make reference to TRAI Mandate Inter & Intra circle roaming in GSM and CDMA

These measures will be in further overall interest of consumers

55 of 57

confidential

Summary
Re-farming & Capital Efficiency measures

Inter-se re-farming of spectrum in 900 & 1800 MHz bands. Realignment within 800 MHz band To improve capital productivity, capital efficiency measure such as
- Sharing of passive and active infrastructure and spectrum sharing

Improves availability of spectrum Optimum utilization of spectrum Promotes quality Accelerates with increased competition Achieves capital productivity

Win-Win-Win for all stake holders Customers, Government & Operators

confidential

56 of 57

Summary - Recommendations

Reliance fully supports TEC criteria for spectrum allocation TEC criteria should be the base & further tightened Start up spectrum of 6.2 MHz to be allocated to all new GSM entrants Refund of excess spectrum by the existing operators as determined by TEC and beyond contracted 6.2 MHz Inter-se re-farming of spectrum in 900 & 1800 MHz bands Allocate maximum 4.4 MHz of spectrum in 900 MHz band to all existing operators & new entrants. Realign spectrum within 800 MHz band to increase the availability of spectrum for GSM for RCOM & TATAs Annual spectrum charges should be increased at least to the level recommended by TRAI to ensure efficient use of spectrum scarce resource. Mandate passive infrastructure sharing Accept TRAI recommendation on active infrastructure sharing. DOT to make reference to TRAI for sharing of spectrum and Mandate Inter & Intra circle roaming in GSM and CDMA
57 of 57

confidential

Thank You

Back Up Slides

RCOM estimation on TEC Subscriber Criterions Calculation Process - Delhi Case study
Area (in Km) 37.7 188.3 753.2 903.8 1883 Traffic Density (w.r.t. DU) 100% 40% 12% 12% Traffic Ratio Sites (Area * Traffic Distribution No. of Sites Density) (in %) 12% 24% 29% 35% 100% 10% 20% 40% 30% 100% 235 470 940 705 2,350 Subs Capacity (in Mn) 0.43 0.77 1.35 0.58 3.13 Resulting Subs Intersite cell range density (Per Distance (Km) (Km) Km) 0.29 0.45 0.64 0.81 0.55 0.430 0.680 0.962 1.216 0.823 11517 4095 1792 640 1664

Morphology

Dense Urban Urban Sub Urban Rural Total

Various deliverables as outlined in the workflow diagram of TEC recommendation

60 of 57

confidential

Spectral Efficiency in Cellular network

1. Address the capacity demand with available spectrum 4. Avoid site acquisition related delays for capacity built-up.

Spectral Efficiency Benefits

2. Maintain desirable QoS for the growing Network.

3. Optimized Capex & Opex due to addition of new sites.

Spectrum efficiency techniques should be implemented voluntarily by the operators rather then being enforced by Regulatory Authority .
61 of 57

confidential

Technology Innovation 2 (Cont.)

DFCA (Dynamic Frequency and Channel Allocation)

Commercial Deployment:
- Key operators who have implemented DFCA commercial network.

T-Mobile (USA), AT&T (USA) Conecell (Ecuador) China Mobile Telefonica (Columbia)

- Typical improvement statistics shown in table. (Huston)

KPI Effective Frequency Load Total max Traffic/sector Capacity Gain wrt Asynchronous Network Asynchronous 12% 68.5 -NASynchronous 16% 90.9 33% DFCA 21% 113 65%

In live commercial network capacity enhancement of 65% observed.

Source: Nokia-Siemens
62 of 57

confidential

Increase in TRAI Subscriber criteria (CDMA)

Due to technology Innovations Case study for Delhi

Subs Capacity (in Mn)

Capacity of CDMA for 2.5MHz spectrum is 6 times than that projected by TRAI Similar observation is for other allocations.

25.00 20.00 15.00 10.00 5.00 0.00 2.5 3.75 5 6.25 Spectrum Allocation (in MHz) RCOM Estimate 4GV Vocoder Innovation Techniques

Spectrum Allocation (MHz)

TRAI Criteria

Subscriber Nos. ( in Mn) 4GV Vocoder 1.6 7.1 9.5 11.8 Innovation Techniques 3.1 13.7 18.3 29.0

No. of times w.r.t TRAI Criteria 4GV Vocoder 3.2 3.6 3.2 2.4 Innovation Techniques 6.2 6.9 6.1 5.8

2.5 3.75 5 6.25

0.5 2.0 3.0 5.0

TRAI Criteria can be enhanced by more than 5 ~6 times using Technology innovation
63 of 57

confidential

Technology Innovation
Application on 4.4MHz
Standard 2001
Uplink/downlink DTX Uplink frequency scan Uplink interference band measurement Dynamic power control Frequency hopping

Advanced 2007

Innovative Q2 2008

Dynamic MAIO Tight BCCH Reuse AMR FR/HR

SAIC Synchronized Network DFCA AMR 100% Interference Counteract Combining Repeated FACCH /SACCH Advanced Power control

Antenna hopping

Peak Configuration: S2/2/2

25 Erlang /site

Peak configuration:S3/3/3
99 Erlang/site

Peak configuration:S4/4/4
143 Erlang/site

6times capacity improvement in 4.4MHz band.

64 of 57

confidential

International Case StudyRe-farming spectrum to reduce from 20MHz to 10MHz

No of Sites in 20MHz
2,000 1,800 1,600 1,400

No of Sites in 10MHz

No of Sites

1,200 1,000 800 600 400 200 0 2/2/2 4/4/4 6/6/6

BTS configuration not applicable for 10MHz.

T-Mobile (NY) was serving 3 million subs using 20 MHz .

10 MHz be surrendered owing to contractual obligations

8/8/8

10/10/10

12/12/12

BTS Configuration

Solutions Implemented : 100% AMR-HR introduction Introduction of Synchronized Network SAIC

T-Mobile had no option but to opt for innovative techniques to support the growing subscriber base.

Re-farming of the Spectrum can be implemented seamlessly

Source: T-Mobile, USA
65 of 57

confidential

900 band spectrum advantages over 1800 band Spectrum

Higher Range : (Better Coverage)

- Lower the radio frequency, higher the transmission range - Achievable by GSM 900 cell is double of GSM 900 cell1

Less no. of Sites: (Substantial reduction in Capex)

- For equivalent coverage, site requirement with GSM 1800 is 4 times of GSM 9002.

Better Indoor coverage: (Improve QoS)

- much better in 900 Mhz than 1800 Mhz , to provide equivalent levels of deep, dense urban coverage, more cells are required at 1800 MHz than at 900 MHz1

Better Operation at high speed1: (Improve QoS)

- The specifications for GSM 900 and GSM 1800 include an upper speed limit for the handset, above which the radio connection is not guaranteed. For GSM 900 this is 250km/h, and for GSM 1800, 125km/h.
1. 2. OFTEL Denmark Regulator 66 of 57

confidential

Spectrum charges

It is almost impossible for regulation to keep pace with technology advancement In addition to appropriate spectrum allocation criteria, there is need for mechanism to ensure efficient spectrum utilization on ongoing basis. Current recurring spectrum charges as well spectrum charges recommended by TRAI have lower per MHz charges beyond 8 MHz Spectrum charges for 900 MHz band spectrum should be 20% higher than charges for 1800 band spectrum
Spectrum in MHz Existing Charges Charge/MHz 4.4 2% 0.45% 6.2 3% 0.48% 3% 0.48% 3.0% 0.48% 8 4% 0.50% 4% 0.50% 8.0% 1.00% 10 4% 0.40% 5% 0.50% 10.0% 1.00% 12.4 5% 0.40% 6% 0.48% 12.4% 1.00% 15 6% 0.40% 7% 0.47% 15.0% 1.00%

TRAI Recommended 2% Charge/MHz 0.45% Proposed Charge/MHz 2.0% 0.45%

67 of 57

confidential