Speaking to the mobile phone industry's annual trade conference in New Orleans, Federal Communications Commission chairman William Kennard suggested that the industry start trading bits and pieces of its unused wireless "spectrum," so that these scarce pieces don't go to waste.
The wireless spectrum is the "airwaves" that carry TV, radio and wireless phone signals. A limited amount is available in any given area for carrying digital signals strong enough to use for wireless Internet access.
The FCC has sold or given much of the available spectrum to private companies for their own use. But not every piece of these grants is being used at any given time, Kennard noted. The wireless industry should take a page from the fiber-optic industry's book and create a market to sell temporary access to whatever spectrum is not being used, he said.
"Today in America there is a spot market for (selling) wireline bandwidth," Kennard said. "Why can't we do this for wireless?"
The pressure on federal Regulators--and on the "airwaves" that carry wireless information from a cellular tower to a user's phone--is growing more intense as everyone from America Online to Amazon.com announces their intention to enter the wireless Internet world.
The number of people using the wireless networks has skyrocketed in recent years. According to Banc of America Securities, about 450 million subscribers had signed up for wireless phone accounts in 1999--with about 6.6 million wireless Net accounts. By 2003, 1.2 billion people will be using wireless phones worldwide, with 400 million of these using the mobile Web.
That's a lot of potential traffic for networks that are already getting clogged in high-use areas like New York or Los Angeles.
"The biggest challenge facing the industry today is the need for more spectrum," Kennard said. "The demand for spectrum is simply outstripping supply,"
The bandwidth exchange model is just kicking off in the fiber-optic world, where companies like Qwest and Level 3 have built huge networks over the past few years.
In that model, companies come to a neutral selling point run by a particular company, such as RateXchange or Arbinet, and anonymously offer temporary rights to use their networks. While still in the testing stages, the idea has caught the imagination of some analysts--CIBC World Markets recently estimated that the bandwidth exchange markets would handle $12 billion worth of orders inside of five years.
A wireless exchange could work similarly, Kennard said. Companies that needed a temporary boost in the amount of spectrum they use, such as for special events like the Super Bowl or trade shows, could buy temporary use of another company's spectrum on this market system.
The FCC will soon hold a hearing to explore rules and policies for a wireless commodity market, Kennard said.