I am having a hard time figuring out why wireless communications carriers are raising a red flag on the availability of spectrum in the US. Warnings that the market will run out of bandwidth will only serve to increase the price of spectrum when it comes up for bid.
A similar situation happened the first time spectrum went on the market in the mid-1990s and again in 2000. In the US, the Federal Communications Commission controls the frequencies on which TV, radio, and cellular communications are carried. Much of this spectrum has been set aside for military and aircraft communications use. But when there is a change in the air -- such as cutbacks in military spending or when the US government needs money -- spectrum sales come up again. Spectrum is usually bid on among carriers, with a lot of deal-making going on behind the scenes.
There's already some haggling underway within the carrier community. T-Mobile USA is trying to block Verizon Communications Inc. (NYSE: VZ)'s acquisition of spectrum from other carriers, arguing Verizon would have an unfair competitive advantage. In the meantime, all carriers are warning that the proliferation of cellphones, smart phones, tablets, and other devices will overload existing spectrum, causing voice and data communication to slow down.
A New York Times article suggests there is no crisis and it's unlikely one will ever occur:
Not even the inventor of the cellphone, Martin Cooper, is convinced that the wireless industry faces a serious challenge that cannot be overcome with technology. Mr. Cooper, a former vice president of Motorola and chairman of Dyna L.L.C., an incubator for new companies, says that claims of a so-called spectrum crisis are largely exaggerated.
“Somehow in the last 100 years, every time there is a problem of getting more spectrum, there is a technology that comes along that solves that problem,” he said in an interview. Mr. Cooper also sits on the technical advisory committee of the Federal Communications Commission, and he previously founded ArrayComm, a company that develops software for mobile antenna technologies, which with he said he is no longer associated.
He explained that for carriers, buying spectrum is the easiest way for them to expand their network, but newer technologies, like improved antennas and techniques for offloading mobile traffic to Wi-Fi networks, could multiply the number of mobile devices that carriers can serve by at least tenfold.
The NYT report suggests that carriers' motivation for buying spectrum has more to do with blocking competitors from ever having it. When the FCC releases spectrum, the license for a particular bandwidth -- such as 101.5 FM -- is given to a carrier, and no other carrier can use it. Rather than adopt new technologies to better use bandwidth, experts quoted in the NYT suggest it's just easier for carriers to buy more spectrum.
I tend to agree with this argument for the simple reason that carriers can keep service prices high as long as they can demonstrate they are spending money to improve service. Many of the services carriers provide do not cost a lot of money to implement. Some services require a flick of a switch and a lot of billing and contract work. If carriers used spectrum more efficiently, prices would come down. I suspect that is the last thing that carriers want. So maybe carriers are more willing to increase spending on the front end by buying spectrum than they are interested in using spectrum more efficiently.
As for the electronics supply chain, vendors will continue to turn out smartphones and other mobile devices regardless of the service costs. The opportunity to improve efficiency may pave the way for telecommunications infrastructure companies to sell more equipment to carriers. The hardware supply chain doesn't stand to lose much regardless of which way the spectrum sale goes. But I suspect users will continue to see service prices increase as carriers expand.
Ingeneral I believe carriers in USA charge very high cost for the offered services. This is particularly because of difficulties in migration of contract from one carrier to other and another main reason is there isn't many service providers like in India. The situation can only be made better if the telecom authority gives more power to consumers.
Using un-used spectrum makes sense, and I don't oppose carriers buying more. But I'd also like to see prices decline on some of the standard services as carreirs enter new markets. Yes, expansion costs money. But for users that don't want every bell and whistle on their phone or in their service package, there should be some economies of scale. I've seen cost analysis of what it costs carriers to provide some of their services and it is pennies on the dollar. Yet, we are charged by the megabyte on some plans. If I want to pay for security services, I will plan on paying a premium. But when my standard services keeps going up, there's a problem somewhere.
For starters we are definitely going to continue to see prices rise. Even with the 4 major companies out there competing, prices still go up. It is much easier for these companies to spend their money on existing bandwith to expand than to develop a better more efficient technology. There is no shortage and never will be, the companies want us to think that as a justification for rising costs.
In my opinion,as the spectrum availability becomes scarce there will be new multiplexing techniques to fit more traffic over the available frequency bands. These techniques will effectively doubel or treble the currently available spectrum. Also new innovations will make it possible to use alternate communications technologies for local ( say within a cell) and roaming services.
I think they should get all of the TV allocation, and broadcast radio, too. And then maybe the frequency that EZPass uses. Followed by the frequency that traffic radar uses.
Barbara, They want more. That's the simple reason why the telecom carriers are complaining they don't have enough wireless spectrum. They want spectrum currently held by the government or which were granted TV stations that don't need them anymore because everything's gone digital. The telecom carriers are entrying new markets, anything from TV to security services. They want to be ready for more.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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