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Warnings of Spectrum Shortages Resurface

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. {complink 5831|T-Mobile USA} is trying to block {complink 5926|Verizon Communications Inc.}'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.

What do you think?

15 comments on “Warnings of Spectrum Shortages Resurface

  1. bolaji ojo
    April 19, 2012

    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.

  2. prabhakar_deosthali
    April 20, 2012

    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.

     

  3. Jay_Bond
    April 20, 2012

    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.

  4. Barbara Jorgensen
    April 20, 2012

    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.

  5. elctrnx_lyf
    April 20, 2012

    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.

  6. Cryptoman
    April 20, 2012

    There are digital modulation, multiplexing and spread spectrum techniques to increase what is called the 'spectral efficiency' of communication systems. This is a popular research and development area and advances are made on this every year mainly on the theoretical part. As a referee of an international journal in communications, I have read quite a few articles on this topic in the last year alone. There are very creative ideas and proposals out there to be honest. However, until such research becomes fruitful as practical applications, a lot of time and investment is needed. I think the problem is the operators are not patient enough to wait for that long. The competition in mobile communications is fierce and there is a lot of money to be made for those who act fast.

    Yes, WiFi networks are already out there and are fully functional. Yes, the mobile networks can interface to the WiFi networks via gateways thereby making much more efficient use of the available bandwidth. However, getting such gateways to run as efficiently as required is not a very simple task. Also, there are problems related to 'handovers between base stations' as the mobile users change locations whilst talking. There are other complications related to traffic loads and reliability matters that I am not going to get into. All in all, such integration and testing is a serious undertaking and can be costly.

    Also, each trial of a new concept has many risks associated with it and therefore investors like to take the path that has been successfully walked before in order to save costs associated with unknown and known risks. For this reason, paying the cash to buy more bandwidth is technically the most straightforward and the least risky way of expanding an existing network using the same equipment that has been tried and tested many times before. When there is more bandwidth available, it does not take long before new subscribers are added and more money starts coming in. It's that simple.

    Maybe buying extra bandwidth will cost more than developing new technologies to make better use of the available spectral bandwidth but getting this new technology to work as required can take time which will escalate the expected costs besides delaying the time to get the returns on investment.

     

     

  7. William K.
    April 20, 2012

    The carriers don't need more spectrum, they need to limit what is sent. We simply do not need cell-phone TV! Get rid of that incredibly stupid idea, no matter how much they could make selling it. Then raise the rates for sending digital data until the amount sent does not overload things any more. Have the courage to charge enough to keep the demand down. The resulting profits will be obscenely huge and the shareholders will be rich and how will that be a problem, and best of all, it won't take any more spectrum.

    Of course some will yell and scream about raising prices, but that is OK. Raising the price will solve the spectrum shortage, folks.

  8. bolaji ojo
    April 21, 2012

    Rich, That would bring us to a “Season of Anomie.”

  9. bolaji ojo
    April 21, 2012

    William K., The shortage is a figment of somebody's imagination. I don't believe there's a shortage. If you've watched TV recently, you've probably found out that telephone companies are getting into the security and cable TV businesses. Cable TV companies are also getting into the telephone and home security businesses. Competition is increasing but while this is likely good for the consumer, it means these companies have realized there are many more ventures they can launch in future, hence their need for more spectrum and thence the “shortage.”

  10. William K.
    April 21, 2012

    I just read a posting about “thge next big thing” which is 4K HDTV. That would need 4 times the bandwidth to send it out . Sorry folks, but that Idea is STUPID beyond words. It does not matter how good the resolution is, we simply do not need it and it will not add any value to entertainment on TV. We do not need to be able to see the dots on the golfball and the blades of grass on the putting green. It adds no value. So just because somebody can design and build it does not make it a smart idea. Not all of the things that we can make will benefit society. 

    The very best way to kill the supid concept of 4K tv is to not allow the specrum for the required bandwidth. 

  11. _hm
    April 22, 2012

    @Williams: 4K TV will need 4 time more bandwidth? Is it 4 times or much more?

     

  12. William K.
    April 22, 2012

    The article that I read described 4K HDTV at the same frame rate but 4 times as many pixlels, which looks like 4 times the data rate, hence, 4 times the bandwidth.  Of course there could also be a different mode that would need a lot more bandwidth than that. 

    My point is that the whole excercise is a waste of time and resources, since the bandwidth can certainly be better used for almost anything else. Some ideas are just plain poor choices, no matter what, and the 4K HDTV format is certainly one of those poor choices.

  13. Barbara Jorgensen
    April 23, 2012

    Good points about the amount of data that is being sent over existing spectrum. It does seem like some of these things are a waste of perfectly good spectrum. Like other readers, I'm skeptical about phone TV.

  14. syedzunair
    April 24, 2012

    @WilliamK: 

    I agree, 4K HDTV does seem to be the brightest of ideas. I cannot see much utility for it. 

  15. Barbara Jorgensen
    April 25, 2012

    Really, TV is at the point where improvments are so incremental the only people noticing them are the developers and the service providers. You can buy a TV with better definition; you can use the correct cables to attach it to the box; you can even get faster wireless connections and guess what? They look a lot better than anything you saw two years ago. If service providers want to use the badwidth for services such as security and other useful things, more power to them. But stop improving the “TV experience” I can get on a cell phone. Seriously, is it really worth it?

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