Spectrum - Insights from a neutral platform

Udhay Mathialagan,

Director Strategic Development

Who

is C

row

n C

astle

?

Who is Crown Castle?

> More than 1350 sites across Australia

> Greater than 85% Population coverage for our mobile customers

> Highly skilled professional team

> Subsidiary of the US$8.5 Billion Crown Castle International (CCI)

> CCI owns, operates and manages approximately 12,000 tower sites across the USA and Australia

More than $450M invested in infrastructure to provide deep national coverage. Crown Castle towers are located in CBD’s metropolitan, rural, and major highway sites

Nationwide Network

308 sites

406 sites

334 sites

144 sites

150 sites

,

More sharing of infrastructure taking place.

Two JV’s formed for 3G networks Crown Castle sites have experienced

a 22% CAGR between 2000 and 2005

0

5,000

10,000

2000 2005

No. of installations on Crown Castle sites

* Internal estimates of a typical wireless network

Crown Castle lowers the capital barrier.

Owned vs Shared Site Costs

Estimated 50% savings from owned versus shared sites

0

50,000

100,000

$ pe

r an

num

Operating costsAllocated capital

Owned

Shared

Obs

erva

tions

fr

om th

e A

ustr

alia

n

Mar

ket

New Global 3G networks

As at December 2005 there were 100 WCDMA deployments in 42 countries

Spectrum demand drivers - new and emerging wireless technologies

Significant growth in wireless sites:• 3,000+ 3G installations• Est. 300 wireless broadband

installations• Both expanding rapidly

Future growth from:• DVB-H• Digital Radio• WiMax

Spectrum demand drivers - increasing capacity demands of technology

Fixed Local Area

Wide Area

Bro

adba

ndN

arro

wb

and 2G

2.5G

3G

W-LAN

Bluetooth

Dialup

LMDS

MMDS

Cable/DSL

Satellite

256 kbit/s

Broadband

Freedom

Emerging technologies – iBurst, Navini, HSPDA,

DVB-H

Spectrum demand drivers –Wireless economics are compelling …

# Source: Deutsche Bank “Wireless World” 19 September 2005

However estimated economic cost of spectrum ranges from $0 to $19 per sub per month

Comparing economic costs per subscriber #

$ per month

DSL cost for 500 lines @ 1.5MpbsCost of capital 13.5% pre-tax 6.0Operating cost per line (pre-retail costs) 33.0Total cost per line 39.0

$ per month

WBA cost for 500 lines @ 1.5MpbsCost of capital 13.5% pre-tax 18.6Operating cost per line (pre-retail costs) 9.2Total cost per line (excl. spectrum) 27.8

Impact of wireless growth on spectrum demand

Drivers:• Capacity requirements ;• Emerging technologies

The Market needs the ACMA to:• Maximize the availability of

spectrum;• Maintain technology neutrality (let

the market decide); and• Recognize that regional /remote

areas may require different solutions

Regional Australia – a special case

The market is responding to HiBIS:• Approximately 40 wireless

providers registered for HiBIS;• Estimated demand of between 500

to 2,000 base-station sites;• Broadband Connect should

increase this demand;• Fragmented geographic markets

Spectrum drivers are:• Marginal wireless operators require

lower cost spectrum to achieve sustainability;

• Dynamic frequency adaptation may resolve conflict

New

te

chno

logy

in

vest

men

t – a

ca

se s

tudy

of

DVB

-H

Modeo – A case study in innovation.

Secured Nationwide spectrum in US for $US15M (frequency range 1670-75Mhz)

DVB-H Trial in Pittsburgh in 2004/05 Proposed launch for NY and a number of other US cities during 2006

In summary:

Cost and scarcity of spectrum continue to limit wireless innovation and new entrants;

However the ACMA’s approach is moving in the right direction.

The market requires:• ACMA to focus on maximising the

availability of spectrum; and• Continued support for Regional &

rural areas – Connect Australia