4.4.1.1.3 

Using AIP to promote coverage in rural areas 

On a purely commercial basis, Service Providers may find it uneconomic to 

extend coverage substantially into rural areas if the additional revenue that 

would be generated as a result is likely to be less than the costs that would be 

incurred.  There are two ways in which the price mechanism could be used to 

promote coverage in rural areas.  

i)  

A discount could be applied based on the proportion of the total 

network infrastructure (base stations) that is located in rural areas, as defined 

by the census authorities.  This would involve the total fee being reduced by a 

factor F, where F = no. of rural base stations / total base stations.  The 

example in section 4.4.1.1.2.2 demonstrates the methodology.  

ii) 

Another option could be to reduce the number of sectors used in the 

calculation of the urban fees by an amount equivalent to the number of base 

stations serving areas of population density less than a specified value per sq. 

km.  It may be reasonable to apply this reduction only to the minimum 

2 x 2.4 MHz spectrum that is required to provide basic coverage, since this is 

all that would be required in rural areas and this would ensure that additional 

spectrum continued to be subject to AIP whilst also providing a worthwhile 

incentive to promote rural rollout. 

4.4.1.1.4 Phased 

implementation 

It is important that any regime that is planned has a smooth implementation 

path. A transition mechanism could be worked out for AIP. One option could 

be to begin with application of AIP only beyond 2 X 10 MHz. Thereafter, over 

a period of time AIP is made applicable to the entire spectrum. 

4.4.1.2 Auctions 

A well designed auction should treat all potential bidders fairly and 

transparently and should achieve a realistic market price for the spectrum and 

encourage efficient use of the spectrum.  Efficient use of the spectrum in this 

context means maximising the economic value of the spectrum, providing 

good grade of service at an economic cost but with the minimum of spectrum 

and ensuring that the number of Service Providers who are accommodated in 

the spectrum maximise competition. 

4.4.1.2.1 

Types of auctions 

There is no single auction design that can be used in all cases of spectrum 

allocation because the amount of spectrum, number of potential bidders, 

geographic coverage (regional or national) and policy objectives are all likely 

to differ.  The main types of auctions are: 

Ascending price 

Sealed bid 

Anglo Dutch  

49