Why Carriers Can’t Afford to Wait for New Spectrum

It’s no secret that the future of mobile data in the U.S. hinges on the release of new spectrum over the next few years, but that future is one that’s becoming more uncertain by the day. Network operators, it’s clear, must step up their efforts to find ways of handling the ever-increasing amount of traffic on the mobile highway themselves.

Spectrum has become a major focal point for the Federal Communications Commission, which aims to make 500 MHz of the stuff available to network operators over the next 10 years. That’s an ambitious goal (the FCC has only 50 MHz of spectrum currently available), and one that will require some television broadcasters to relinquish some of their spectrum in exchange for a cut of proceeds from the auction of those airwaves.

Unsurprisingly, broadcasters aren’t beating a path to the FCC’s door to unload that spectrum; many have already indicated they’ll decline the FCC’s offer. In fact, a dozen broadcasters last week said they have joined forces to create a new service for delivering mobile TV that will enable users to access both streaming video and on-demand content. The spectrum will be provided by Fox, NBC/Telemundo and ION, as well as by nine existing local broadcast groups — and those are exactly the kind of broadcast airwaves the FCC hopes to reclaim for mobile.

Last week, FCC Chairman Julius Genachowski addressed the National Association of Broadcasters at a convention in Las Vegas, telling them the surrender of spectrum will be strictly voluntary and that participation from “a relatively small number of broadcasters in a relatively small number of markets” might be sufficient. The chairman also minimized the amount of broadcast bandwidth the FCC is after, saying repurposed airwaves would account for 25 percent of the 500 MHz called for in the National Broadband Plan. While that’s true, broadcast spectrum represents the largest single chunk of the 300 MHz the FCC wants to free up by 2015, as this chart illustrates:

spectrum chart

While carriers would surely love to get their hands on those 300 MHz, that figure falls far short of the 800 MHz the International Telecommunications Union has said will be necessary to meet the growing demand for mobile data by the end of this year. Meanwhile, a recent (and highly publicized) study from Cisco predicts that worldwide mobile data traffic will see an astounding 39-fold increase from 2009 to 2014, marking a compound annual growth rate of 108 percent. So even if the FCC can somehow find a way to make 500 MHz available within 10 years, the new spectrum is unlikely to meet all of carriers’ needs.

So what does this all mean? The looming spectrum crunch will force carriers to step up their efforts to ease congestion and squeeze as much performance out of their networks as possible. As the National Broadband Plan recommends, carriers will need to employ policies and technologies that dynamically allocate bandwidth to devices in real-time depending on users’ needs and network resources. Network operators must increasingly embrace Wi-Fi instead of cellular as a way to deliver bandwidth-hogging content, such as video, whenever possible — even if it hurts the bottom line. And mobile players across the value chain should experiment with ways to bring content to handsets at off-peak hours, like GoldSpot Media is doing with in-app video ads.

The showdown with TV broadcasters is just the most glaring stumbling block for the FCC, which will also face significant headaches in allocating whatever spectrum it can lay its hands on. The Department of Justice earlier this year officially cautioned the FCC against placing reallocated spectrum in the hands of incumbents such as AT&T and Verizon Wireless, urging the agency instead to deliver it to smaller players. While such a move may spur innovation and competition — which is the DOJ’s goal — it would do nothing to help alleviate congestion problems of the nation’s two largest network operators. So while carriers will surely get access to more spectrum over the next several years, just how much they’ll get — and who will get it — is far from clear. Which means it will be up to the network operators and their partners to find ways to support all that mobile data traffic we’re sure to see.

Question of the week

How can carriers best handle ever-increasing mobile data traffic?
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Colin Gibbs

Colin Gibbs

Founder and Principal Peak Mobile Insights

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