In 2010, the Obama administration mandated that the federal government consolidate wireless communications for government usage. Over the next 10 years, the US National Telecommunications and Information Administration (NTIA) and the Federal Communications Commission (FCC) must work to free up 500MHz of spectrum that is to be allocated for public wireless data consumption. This is great news since we all know that wireless spectrum is finite in nature and we should set forth to utilize it as efficiently as possible.
Two years after the mandate, the efforts of the NTIA and FCC are now coming to fruition as a recent proposal was put forth to free up 95MHz in the highly valuable 1755-1850MHz Advanced Wireless Services (AWS) band. These frequencies could be put to use for next generation wireless technologies. Many wireless providers are interested in acquiring the freed frequencies when they eventually go up for auction. But the question is, will they be used efficiently or simply as a chess piece in the battle for wireless telecommunications dominance?
The big carriers such as AT&T and Verizon are regularly talking about the lack of available spectrum, which contributes to nationwide rollout delays for current next-generation wireless. What is rarely discussed is the fact that the carriers with the biggest pockets will gobble up all the available frequencies at auctions, but have no way of utilizing it. Instead, the spectrum will be purchased simply so competitors can't use it.
This past February, T-Mobile filed a petition to the FCC to block Verizon
from purchasing another block of spectrum from a smaller company. Owning wireless spectrum is power and it seems like T-Mobile has a good point here as the other major carrier, AT&T, has been accused of hoarding spectrum in the past. While there are "buildout rules" defined by the FCC that are in place to prevent hoarding, many believe that they are not restrictive enough and are nearly impossible to enforce.
So perhaps wireless spectrum auctions that essentially go to the highest bidder aren't the best idea if we want to get the most out of our wireless spectrum. The current system is skewed toward larger companies. While frequencies will likely get used at some point by the big providers, it's the smaller carriers that are likely to use them first. After all, smaller companies often use the first-mover advantage in order to carve out a niche market. A perfect example of this is Clearwire, who was the first to build-out a 4G network far in advance of larger carriers.
If Americans want a truly free-market system in terms of wireless carriers, it's important that smaller companies are protected from being squeezed out. Wireless spectrum is an incredibly rare commodity and we have a responsibility to allocate frequencies to companies that truly have a use for it. Let's not forget that wireless spectrum is all around us and never owned by any one corporation. It's up to our elected officials to develop the best method for renting spectrum to private carriers. If we don't like how things are being handled, it's our obligation to let the government know.
@zerox203: I agree, this might not be the only case where the public thinks that things are being administrated unfairly. But in the future wireless technology will prove to be even more useful than it is today. And companies stopping innovation just because they don't want to play and hence will not allow others to play, does not portray a bright future.
So like I said we need an external force to help in making the right choices.
Since, stockpiling spectrum and other resources actually needs to no improvement. I believe we will require some external source (Government) to make sure that smaller firms get the chance to innovate. So probably we might see some sort of competition this way.
Yes, and Andrew's point about it being the elected officials' responsibility also really struck a chord with me. It shouldn't require a special intervention or a mass shortage to make a change - but we all know it does. To be blunt, the gov't tends not to give much heed to cries of foul in the tech space, so I see us being added to a long list of professionals in other fields that have a better idea for how to do things that will go years without ever being heard. This is far from the only issue on which the public has a sense that things are administrated unfairly, and I'd imagine it's far from the top of the list.
Maybe that's overly negative - I hope it is. Issues like this are becoming of great public concern this decade, so maybe there will be an appropriate fire lit. I wouldn't bet on it, though.
@sohaibmassood, I really like the idea of requiring a functioning "proof of concept" system being in place before a spectrum allotment is allowed. That would go a long way toward preventing companies from stockpiling spectrum that they can't use.
@Dave, thanks for the chart. I think it's worth pointing out that what we're really seeing is a potential deficit in the VHF/UHF spectrum portion that has qualities we find useful in mobile devices. There's plenty of spectrum out there, it just gets much trickier to try to use it as you move up in frequency, and the international concerns much greater if you move down in frequency. The FCC is already trying to convince more people to do spread-spectrum technology, which helps on a statistical basis, but I have a feeling they're going to end up forcing more fixed-location line-of-sight application farther up the spectrum chart to free up room for mobile in the "good" part of the spectrum.
It's up to our elected officials to develop the best method for renting spectrum to private carriers.
@Andrew: Firstly, I would say that it is indeed a very informative post.
One thing that I feel might help in effective renting of the sprectrum is to devise a new auction strategy. Instead of giving the spectrum to the highest bidder the Government could actually ask enterprises for a 'proof of concept' relating to the use of the spectrum. This way I believe the cost will not be the only deciding factor.
Andrew, great write up and quite a bit of insight in such a small space. What frustrates me here is what the carriers will do with any amount of the spectrum that they get and that everyone seems to understand what they are likely to do. We just saw LightSquared get hammered for trying to work inside what spectrum is available and we've heard nothing from the carriers but FUD when it comes to other wireless broadband options. I really wish we could get thing opened up enough that a real competitor could come along and change the landscape.
Dave, histogram shows that from next year onwards, there may be a chance for deficit in spectrum. This can affect the entire services and end up with a big traffic chaos. So, how FCC is going to handle this issue? any Idea.
The looming spectrum deficit in the US or commonly referred to as the "spectrum crunch" is rapidly approaching and will not be quick or easy to fix.There is spectrum out there, in which cable companies and satellite companies, such as DISH Network, have significant amounts of spectrum that are sitting on the shelf unused.These companies may offer to sell their available spectrum to the wireless carriers, which could help remedy the "crunch", but will most likely be help up due to regulatory concerns.
According to the Federal Communications Commission's (FCC) estimates, The US still has a slight spectrum surplus. But at the current growth rate, the surplus turns into a deficit as early as next year in 2013.
Nice coverage of a touchy issue Andrew, this issue of spectrum has gone astray because most people don't understand it - but as you say, spectrum ownership it just a chip used against the competition not intended to better the market.
And I agree spectrum is no more the ownership of a company than is air. Our only option is to make our voices heard through our representative and for those who like myself have hesitated to do so in the past - well I think the times require that we do so now.
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