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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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RE: This is how capitalism works
By Solandri on 1/13/2011 1:42:38 PM , Rating: 2
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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