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[Click to Enlarge] A semi-current look at the spectrum allocations in the U.S.  (Source: U.S. FCC)
Spectrum demands are rapidly rising, but its as hard as ever to find free spectrum

While it's easy to put the blame regarding slower than expected progress in the realm of wireless communications on the telecoms, they aren't the only problem.  Next generation 4G networks are incredibly spectrum hungry, and even the biggest players like Verizon and AT&T are racing to find spectrum 

As a result, their 4G efforts (LTE, WiMAX) are falling far short of promised speeds -- or worse yet, some are giving up and billing even slower HSPA+ networks as "4G" (testing has shown HSPA+ to be nearly twice as slow as current LTE, despite T-Mobile's claims and "demos").

The U.S. Federal Communications Commission, the organization tasked with regulating our nation's communications under the federal Communications Act of 1934 (amended by Telecom Act of 1996) [PDF], is struggling to dig up spectrum to sell to the big carriers -- Verizon, AT&T, Sprint, and T-Mobile -- in order to allow them to better deliver on the their smartphone data speed promises.

AT&T Inc Chief Executive Randall Stephenson in a Reuters report says that is vitally needed as where 10 MHz of spectrum would have lasted four to five years in the old days, "Today, we'll burn through that in about 10 months."  

The great hope for grabbing more spectrum is to repurpose a couple hundred MHz of unused spectrum and gain another 120 MHz of spectrum by approach television providers like ABC, NBC, CBS, and Fox and offering to auction their unused spectrum.

Under the scheme, the networks would pocket part of the proceeds and the government would keep a chunk too.  And the telecoms would be the biggest winners, as they could finally give customers faster 3G and 4G data speeds.

However, the proposal for these "voluntary incentive auctions" must navigate its way through a partisan Congress, which is divided with a Republican-controlled House of Representatives [homepage] and a Democratic-controlled Senate [homepage].  Still, there is hope that both sides of the political spectrum will see the value of this proposal.  States FCC Chairman Julius Genachowski, an appointee of U.S. President Barack Obama, "Every month that goes by without tackling this is a month that hurts us from a global competitiveness perspective."

Despite initial hesitance, the National Association of Broadcasters has endorsed the idea, assuming the auction is "truly voluntary".

Even if the auction succeeds, it does not solve the underlying fact that we are running out of usable spectrum.  That means that dreams of wirelessly connected vehicles, appliances, and more may see slower adoption.  It also prohibitively raises the barrier to entry into the U.S. telecommunications market, virtually guaranteeing it to be an oligarchy composed of the big four -- Verizon, AT&T, Sprint, and T-Mobile (ranked from first to fourth, respectively, in number of subscribers).  The only solutions here will be to find new ways to use spectrum more efficiently and perhaps find ways to make the use of previously "junk" spectrum financially and technically feasible.



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This is how capitalism works
By mcnabney on 1/13/2011 10:00:49 AM , Rating: 5
I really don't think this is a crisis. Businesses understand the spectrum market and certainly can't claim they are being victimized.

For example, Verizon spent big (and outbid Google) for a nice 20mhz block of prime of ~700mhz spectrum. It cost them over $9B, so now you know why they have to charge so much. AT&T just bought a patchwork of unused spectrum from Qualcomm to help reinforce their deficiencies. Also, for many billions of dollars. Sprint is still riding-high on that free 1.5ghz spectrum that the government gave them in exchange for the crappy Nextel spectrum that was previously used to dispatch taxi cabs (and still interfered with the adjacent EMS spectrum). T-mobile has so few customers, I don't know if their spectrum portfolio is even being stressed yet.

Anyway, there is still a ton of available spectrum being held by speculating companies. Qualcomm was one of them and when the price was right, they sold. This is how it is supposed to work. Forcing a sale of spectrum by the government is just an act of 'picking winners'. Maybe AT&T is the only one that absolutely needs more now and they are lobbying congress for some help. Apparently it didn't help them fast enough, because they had to buy from Qualcomm.

What I don't like is the TV stations getting paid for this. TV stations got their VERY valuable spectrum for FREE. If they aren't using it they should politely return it.




RE: This is how capitalism works
By DanNeely on 1/13/2011 10:49:22 AM , Rating: 2
Qualcom operated a streaming mobile TV service on the spectrum they sold to ATT. They shut the service down and sold to ATT because it wasn't a money maker.

The TV stations didn't pay for their new digital channels because it was a zero sum game. They simply swapped their old spectrum for new, at most they were granted a temporary loan of extra spectrum to maintain both digital and analog service during the transition. Before the start of it, each station had 1 6mhz block of spectrum which they licensed when they started broadcasting, and the end they also had 1 6mhz block.


RE: This is how capitalism works
By DanNeely on 1/13/2011 10:49:29 AM , Rating: 2
Qualcom operated a streaming mobile TV service on the spectrum they sold to ATT. They shut the service down and sold to ATT because it wasn't a money maker.

The TV stations didn't pay for their new digital channels because it was a zero sum game. They simply swapped their old spectrum for new, at most they were granted a temporary loan of extra spectrum to maintain both digital and analog service during the transition. Before the start of it, each station had 1 6mhz block of spectrum which they licensed when they started broadcasting, and the end they also had 1 6mhz block.


RE: This is how capitalism works
By DanNeely on 1/13/2011 10:54:16 AM , Rating: 2
Oooops. Is there any way I can clean the double post up?


RE: This is how capitalism works
By omnicronx on 1/13/2011 1:18:56 PM , Rating: 3
quote:
Anyway, there is still a ton of available spectrum being held by speculating companies.
Judging by the picture above, I don't agree. There is NOT enough wireless spectrum even if those with unused spectrum were to give it up to support a new carrier (let alone enough for existing carriers to expand). If thats not a problem I don't know what is..

You are essentially making the argument to let the free market work itself out when the US telco industry does not abide by those rules.

Non action could lead to something even worse, one of these big companies acquiring another. We could easily end up with a duopoly in the mobile space if we are not careful with no new players having the ability to enter the market, whether they want to or not.

It seems to me that either way you are picking winners.. so it all comes down to which way will have the best impact for the consumer.


RE: This is how capitalism works
By DanNeely on 1/13/2011 1:34:24 PM , Rating: 2
Mergers between major telecoms wouldn't help much in the most congested areas. If ATT ate VZW (or vice versa) the new company would have double the spectrum; but also double the customers trying to use it; a zero sum situation. It might help a bit in rural areas where double the number of customers would make upgrades to new generations pay for themselves sooner; but probably not much. Assuming VZW rolls out LTE everywhere so they can repeat their largest network claim with 4g ATT could just as easily buy roaming access for their users.

The only way a major telecom merger could free spectrum up usefully would be to buy a rival with a different legacy platform and phase it out. That would be a very long term option though, Sprint still hasn't been able to shut down the iDen network despite merging with Nextel 6 years ago. part of the problem is regulatory in that they had to agree to keep it up for several years to avoid screwing existing customers; from then it was cheaper in the short term to keep both running than to have part of their spectrum much more heavily loaded then the rest, and there'd be a major backlash from customers who bought new iDen phones as well.


RE: This is how capitalism works
By mcnabney on 1/14/2011 11:16:36 AM , Rating: 2
Actually, there is an additional complication in there.

Carriers are actually LIMITED by how much spectrum they can legally own in a market. So if AT&T and Verizon merged, they would have to sell a ton of their spectrum to stay under the market caps.


RE: This is how capitalism works
By Solandri on 1/13/2011 1:42:38 PM , Rating: 2
quote:
quote:
Anyway, there is still a ton of available spectrum being held by speculating companies.

You are essentially making the argument to let the free market work itself out when the US telco industry does not abide by those rules.

Non action could lead to something even worse, one of these big companies acquiring another. We could easily end up with a duopoly in the mobile space if we are not careful with no new players having the ability to enter the market, whether they want to or not.

This is always a risk when dealing with a naturally very-limited resource like radio spectrum. The government did it wrong. Instead of auctioning the spectrum for a fixed fee, they should've auctioned it for an annual rent with a certain base minimum which can rise slightly every year.

The analogy I'm thinking of here is property taxes. Property taxes (when not abused) exist to insure that a limited resource (land) is utilized in an effective manner, and to make it difficult to squat on. If you owned an acre of unused land in downtown Manhattan, the high property taxes on it would force you to do something useful with it to generate some revenue, or sell it to someone who could. Squatting on it would be a money-losing proposition since the annual property taxes on it would (should) far exceed the annual appreciation.

Domain names failed to follow this model. They used a flat $x/year pricing model regardless of value of the domain name. As a result, the domain name market is rife with squatters. (Technically, domain names are an unlimited resource, but the number of good, short names is very limited.)


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