«

»

Feb 22

CNN Money Tech: Sorry, America: Your Wireless Airwaves are Full.

The U.S. mobile phone industry is running out of the airwaves necessary to provide voice, text and Internet services to its customers.

The problem, known as the “spectrum crunch,” threatens to increase the number of dropped calls, slow down data speeds and raise customers’ prices for cell phone service. It will also whittle down the nation’s number of wireless carriers and create a deeper financial schism between those companies that have capacity and those that don’t.

There are potential solutions, but none are inexpensive, easy to implement, or catch-all. And no major fixes are on the horizon.

The U.S. still has a slight spectrum surplus at the moment. But at our current growth rate, that surplus turns into a deficit as early as next year, according to the Federal Communications Commission’s estimates.

“Network traffic is increasing, driving up demand for mobile broadband,” says an official at the FCC’s wireless bureau. “Carriers are doing things to offset the increase in demand. They can manage it for the next couple years, but demand is inevitably going to exceed the available spectrum.”

As smartphone and tablet sales soar, customers’ consumption of wireless Internet services is skyrocketing. The issue is that wireless spectrum — the invisible infrastructure over which all wireless transmissions travel — is a finite resource. When, exactly, we’ll hit the wall is the subject of intense debate, but almost everyone in the industry agrees that a crunch is coming.

0:00 / 3:17 US says smartphones are data-hogs

How did we get here?

One catalyst is the way in which the U.S. government allocated spectrum. The bands that wireless companies hold were broken up into small chunks across various markets, which was helpful in increasing competition in the 1990s.

But the patchwork nature of wireless carriers’ spectrum has proven problematic when it comes to delivering new technologies like high-speed 4G broadband, which requires more bandwidth to deliver faster speeds. Bigger swaths of uninterrupted spectrum provide larger amounts of bandwidth.

Another contributing factor is that TV broadcasters and government agencies like NASA and the Department of Defense hold some of the best spectrum — relatively low-frequency radio waves that can travel long distances and penetrate buildings.

There are also a batch of businesses, such as Dish Network (DISH, Fortune 500), that have large spectrum allotments but aren’t currently using them. (Dish is exploring its options for either using or selling its spectrum. A group of cable companies with unused spectrum recently struck a $3.6 billion pact to sell their holdings to Verizon in a deal that’s facing heavy regulatory scrutiny.)

But the number-one biggest driver of the spectrum crunch is consumers’ insatiable thirst for e-mail, apps and particularly video on their mobile devices — anywhere, anytime. Global mobile data traffic is just about doubling every year, and will continue to do so through at least 2016, according to Cisco’s (CSCO, Fortune 500) Mobile Visual Networking Index, the industry’s most comprehensive annual study.

The iPhone, for instance, uses 24 times as much spectrum as an old-fashioned cell phone, and the iPad uses 122 times as much, according to the Federal FCC. AT&T says wireless data traffic on its network has grown 20,000% since the iPhone debuted in 2007.

Video and mobile are breaking the Internet

“We got into this principally because technology and demand exploded at a rate that nobody had anticipated,” says Rory Altman, director of technology consultancy Altman & Vilandrie.

The spectrum crunch is not an inherently American problem, but its effects are magnified here, since the United States has an enormous population of connected users. This country serves more than twice as many customers per megahertz of spectrum as the next nearest spectrum-constrained nations, Japan and Mexico.

When spectrum runs short, service degrades sharply: calls get dropped and data speeds slow down.

That’s a nightmare scenario for the wireless carriers. To stave it off, they’re turning over rocks and searching the couch cushions for excess spectrum.

They have tried to limit customers’ data usage by putting caps in place, throttling speeds and raising prices. Carriers such as Verizon (VZ, Fortune 500), AT&T (T, Fortune 500), Sprint (S, Fortune 500), T-Mobile, MetroPCS (PCS) and Leap (LEAP) have been spending billions to make more efficient use of the spectrum they do hold and billions more in getting their hands on new spectrum. And they have tried to merge with one another to consolidate resources.

The FCC has also been working to free up more spectrum for wireless operators. Congress reached a tentative deal last week, approving voluntary auctions that would let TV broadcasters’ spectrum licenses be repurposed for wireless broadband use.

But freeing up more spectrum won’t be enough, on its own, to solve the problem.

“There is no one solution that will address all the needs of the wireless industry,” says Dan Hays, a partner at PricewaterhouseCoopers who specializes in telecom issues.

The good news is that there are ways to buy time. Several innovative approaches are in the works, and there’s a decent amount of spectrum out there that could be turned over to the carriers’ possession.

The bad news is that none of the fixes are quick, and all are expensive. For the situation to improve, carriers — and, therefore, their customers — will have to pay more.

Meanwhile, things are likely to get worse for cell phone users before they get better.

“For a while we won’t notice the quality of service changes, but over time as devices get better and use more data, we’ll start to take notice,” Altman says. “Consumers will notice it, and the burden will fall on the carriers to fix it.”

#lista1 #latinohit

Coming Wednesday: Why the capacity crunch means there will soon be fewer wireless players.

http://money.cnn.com/2012/02/21/technology/spectrum_crunch/index.htm

1 comment

  1. JAM

    CNN has presented a well-known but hard truth: Wireless carriers need more spectrum if they are to meet customer demand, and without that, a crunch is inevitable. While there may be some short-term options and partial solutions for various carriers to explore, the real answer is open and competitive spectrum auctions, in which all carriers can compete fairly for this much-needed resource. Consumer demand for better service and faster speeds certainly won’t decrease, so underutilized spectrum should be auctioned off to those carriers that can quickly and effectively use it.

Leave a Reply