Consider this: Spectrum--the airwaves licensed by carriers to transmit wireless data--is finite, yet every new wireless device and application eats away at how much of it is available. Already, the nation's 121 million mobile phone users spoke a total of 200 billion minutes, or 4 centuries worth of time, in the first six months of this year alone.
That's an increase of 77 percent from the same period last year. Every two seconds another person starts using a cell phone, according to the Cellular Telephone and Internet Association (CTIA).
"Every day we struggle to put more callers on less spectrum," said CTIA spokesman Travis Larson.
The answer is to more efficiently use the spectrum that is available--a problem many companies are already tackling. Mobile operators can only use three separate areas of radio spectrum, with the rest for use by the military or other agencies.
"You can't be rich enough, you can't be thin enough," said Shiv Bhakshi, a wireless analyst with IDC. "After that, you can never have enough spectrum."
A glimpse of a spectrum-starved future was evident on Sept. 11 in New York, when so many people used their cell phones in the wake of the attack that the airwaves came to a standstill. Within hours all the major carriers--Verizon, Sprint and Cingular--said their networks were overloaded and that calls weren't getting through.
In the past few weeks, however, spectrum seemed to be everywhere.
The settlement Friday between the government, several carriers and NextWave Telecom, which filed for bankruptcy protection in 1998, freed up enough spectrum to cover 60 percent of the major markets in the United States.
Just two weeks before that, the Federal Communications Commission voted to first loosen the cap it has on the amount of spectrum a company can use in any one city, then eliminate those caps altogether in two years.
In the next few weeks, the radio spectrum that bankrupt carrier Metricom once owned, which it values at $50 million, goes on the auction block. Sometime next year, the FCC will auction spectrum needed for carriers to unleash the next generation of telephone service in the United States.
The latest spectrum thunderstorm will have immediate short-term impacts.
"This is a huge impact on the wireless industry because this is spectrum that has laid fallow for years...that nobody could use," said analyst Rudy Baca of The Precursor Group.
Many thought that carriers who want to increase their spectrum will likely start buying smaller companies in their markets. That move won't happen for some time, and some analysts think that the NextWave deal takes the urgency out of acquisition fever.
"The urge to merge is still there, but if this settlement did not go through, we would certainly see mergers more quickly," said Blair Levin, an analyst at Legg Mason and a former chief of staff at the FCC.
But mergers or not, people like George Calhoun, CEO of Isco International, which makes products that help increase a carrier's voice capacity, warn the amount of spectrum available for many mobile operators may run out in 18 months.
Carriers are already working on what to do once that happens. Sprint Wireless, Verizon Wireless and KT Freetel in Korea are already using a more powerful version of code division multiple access (CDMA), a cell phone technology championed by Qualcomm. CDMA's main virtue is it can quadruple the number of calls that could normally be pushed through a particular piece of spectrum.
AT&T Wireless and others that back a competing phone technology known as GSM (Global System for Mobile Communications) are beginning to experiment with another technology that would double the number of calls going over a GSM network.
"There are constant efforts on the part of equipment manufacturers and wireless infrastructure providers to develop solutions," said Peter Friedland, a wireless analyst with WR Hambrecht. "It's always been the case that there is a finite amount of spectrum, and carriers will do whatever they can."
Tole Hart, an analyst with Gartner Dataquest, said Verizon is among the carriers starting to use "smart antennas." Wireless networks rely on antennas to send and receive calls, but can get inundated with traffic and then slow down. Smart antennas can sense that, and then shift some of the traffic to other antennas that are not as busy.
The software equivalent to traffic police is also in the works.
Most phone networks were built to handle just voice calls. But now carriers are pushing data, like e-mails or instant messages, over the same lines. This takes up huge amounts of available space. Installing software that can separate data from voice will make the available bandwidth less congested. Companies working on this include Flarion and Arraycom.