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In order to keep pace with other Latin American countries in 4G deployment, Subtel, Chile’s telecom regulator announced its plan to auction 4G spectrum reusing the 700 MHz radio spectrum.

Subtel declared that spectrum will be awarded via public tender and the successful telecom operators will get license across entire Chile. Nearly 703-748 MHz frequencies will be used for transmission stations while 758-803 MHz frequencies will be used for transmission base stations.

Higher proliferation of smartphones and tablets has increased the demand for online games and HD movie downloads, which in turn has fueled the demand for spectrum. Brazil, the largest country in Latin America has already auctioned 4G airwaves in several regions and has garnered $1.4 billion. Carriers like Telefonica SA (TEF - Analyst Report), America Movil S.A.B de C.V. (AMX - Analyst Report) and Telecom Italia SPA (TI - Snapshot Report) have acquired 4G airwaves in the 2.5 MHz frequencies, which will allow them to transmit increased data at faster Internet speeds.

Last year, the Argentine government announced its plan to auction 4G spectrum in 2013, but is now planning to withhold a significant portion of spectrum to distribute it to Arsat, which is planning to build its own network. In March 2012, the Columbian government announced its plan to auction 4G spectrum for mobile broadband, but recently suspended its plan based on the potential merger deal between two participating carriers.

According to market intelligence firm Maravedis-Rethink, Latin America will have 51 million 4G subscriber by the end of 2017. Chile’s telecom market is highly competitive and is one of the most highly penetrated countries in Latin America. Apart from the big South American carriers the auction provides a significant opportunity to comparatively smaller operators like NII Holdings Inc. (NIHD - Analyst Report) to enter into the Chilean market.

The 4G auction will be beneficial for the government as 4G spectrum is more expensive and will fetch more money for them. However, lower band spectrum increases coverage but carries fewer data than the higher band, which signifies that it will increase operators LTE reach but would hamper their data transmission requirement.

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