Make no mistake: There's an impending shortage of wireless spectrum, the lifeblood of the mobile market.
The trick--and it's a doozy--is getting that technology into the hands of wireless operators and their customers. It's a tech issue as well as a public policy and business model issue. In other words, it's daunting, but not an impossible problem to solve.
"There is a crisis in the sense that people who need access to wireless capacity in order to deploy new services can't get it," said Kevin Werbach, assistant professor of legal studies at the Wharton School, University of Pennsylvania. "In that sense, demand is exceeding supply. But it's not a crisis in the sense that there is a fundamental limit on wireless capacity. The problem is that the existing landscape is embedded in a historical series of regulatory choices and business model choices that have limited access to spectrum."
If more wireless spectrum is not made available soon, the mobile industry will not have enough capacity to keep up with demand from customers, and growth will grind to a halt.
Studies suggest that demand for mobile broadband--driven by devices such as smartphones, like the iPhone and Google's Android, as well as by new connected devices, like the iPad and Amazon's Kindle--will surpass the amount of wireless spectrum that's available by as soon as 2013.
Federal Communications Commission chairman Julius Genachowski has warned that if more wireless spectrum is not made available soon, the mobile industry will not have enough capacity to keep up with demand from customers, and growth will grind to a halt.
"I believe that the biggest threat to the future of mobile in America is the looming spectrum crisis," Genachowski said during a speech at the CTIA trade show last year. "It takes years to reallocate spectrum and put it to use. But we have no choice. We must identify spectrum that can best be reinvested in mobile broadband."
Wireless spectrum is often referred to as a natural resource. But unlike a tangible commodity like oil or even land, wireless spectrum is not something you can touch or see. Wireless spectrum is simply a range of electromagnetic radiation that is all around us. The range includes everything from visible light to radio waves. Commercially, viable wireless spectrum, which is used to provide TV broadcasts, AM and FM radio transmission, satellite communications, and cell phone services, lies somewhere between the lower radio frequency areas.
What makes it valuable is that the FCC has established policies whereby companies or other entities own licenses to slivers of radio frequencies. Business models have been built around these licenses, and technology has been developed to maximize the profitability of these licenses.
In the early days of radio, allocating spectrum licenses made sense because the technology was not good at mitigating interference. The government stepped in and granted exclusive access to certain frequencies to make sure operators broadcasting signals over a particular frequency didn't interfere with one another.
Today's broadcast TV and cellular phone networks are still built with this same simple notion of allocating slivers of spectrum that use specific frequencies. Devices used for these services are optimized to receive signals broadcast in those frequencies. This is why some cell phones, which support only one or two frequencies, may not work on other carrier networks using the same technology in other parts of the world.
The benefit of using simple, static technology is that it keeps costs down. But the downside is that this approach is inefficient. Huge chunks of spectrum are off limits to other users even when license holders aren't using those frequencies.
"If I get granted an exclusive license, and the FCC grants me broad protection, my incentive is to make the cheapest, dumbest equipment possible, because if anyone interferes with my service, the government will step in and protect my rights."
of Legal Studies,
University of Pennsylvania
Take broadcast TV as an example. TV broadcasters use high-powered antennas to blanket an area with TV broadcast signals so thousands or even millions of viewers can tune in to the same channel to receive the TV broadcast. To ensure that broadcasters from other markets didn't interfere with these transmissions, the TV stations were allocated spectrum buffers--or sets of adjacent frequencies that are never used and that ensure the absence of any such interference.
In 2005, the National Science Foundation published results of a study about spectrum usage in New York City over several months, which included the summer of 2004, when the Republican National Convention was in town. In this study, researchers noted that on average only about 5.2 percent of the available spectrum from 30MHz to 3,000MHz was being used at any given time. And at peak times, the total spectrum usage in New York City was just 13 percent.
"Clearly this suggests that the majority of spectrum even at peak times is not being used," said Jeff Thompson, CEO of TowerStream, a provider of fixed wireless broadband. "I don't think you could ever make all of this spectrum available to anyone at any given period of time, but certainly we can do better."
Indeed, technology exists today that would allow underutilized spectrum to be used. Several companies, including Microsoft, Dell, Philips Electronics and Motorola have been testing technologies that sense unused wireless frequencies. The way these devices work is that they can dynamically detect when certain frequencies aren't being used and then use those frequencies. The devices sending signals find the unused spectrum, and devices receiving the signals are smart enough and sensitive enough to be able to accept signals transmitted over a range of different frequencies.
A good analogy is to think of people having a conversation at a crowded party. The speaker is able to modulate the volume of her voice to make sure she can be heard, and the listener is able to tune in to the speaker's voice and tune others out to understand what she's saying.
Composing with white space
The FCC tested several prototype devicesas part of a push to open up what's known as "white space" spectrum for unlicensed use. White spaces are those buffers of unused frequency that sit between TV channels. When TV broadcasters switched to transmitting signals in digital, which is spectrally more efficient than analog transmission, the FCC determined that some of this spectrum could be freed up for commercial use.
Despite opposition from TV broadcasters and others who said there would be interference issues, the FCC's tests suggested that interference could be mitigated, and it unanimously voted in 2008 to open up white space spectrum for unlicensed use. The agency put specific conditions on the devices that would be used, to ensure they wouldn't interfere with other devices using the spectrum. Several laboratory tests have been conducted, as well as a live test earlier this year. Devices are still not commercially available. Testing continues, and the industry is carefully watching what happens with white spaces.
"If companies can continue to get success with white space technology, then that creates a crack in the dam," said TowerStream's Thompson. "I think it would show that spectrum can be shared."
In terms of unlicensed wireless spectrum, Wi-Fi, the cheap local area network technology designed to replace Ethernet, has offered a perfect example of how spectrum can be shared and improved to become more efficient. New advances in Wi-Fi, such as beam-forming technology and multiple radio technologies like MIMO, have increased transmission ranges and boosted capacity of these networks. Increasingly, the technology is being used by wireless carriers, which own their own spectrum licenses, to offload some of their broadband traffic from smartphonesand other bandwidth intensive devices.
It's unlikely the FCC will force wireless spectrum license holders to share spectrum with new entrants or competitors, but it can establish policies to provide an incentive for these deals to be made.
The FCC sees unlicensed spectrum as an important piece of the puzzle in making more spectrum available to wireless providers. And it has made such spectrum a priority in its National Broadband Plan. In this 10-year blueprint, presented to Congress earlier this year, the agency suggests that 500MHz of wireless spectrum be made available for wireless broadband services by 2020.
The plan outlines suggestions for freeing 300MHz of that spectrum within five years. Some of this spectrum is expected to come from government agencies that are not using allocated spectrum. A portion of the spectrum could be made available for unlicensed use.
But the agency also believes more licensed spectrum needs to be made available. Even though technology could make it possible for most, if not all, newly freed spectrum to be shared, current business models built around licensed spectrum dictate that more licenses need to be granted to help fuel the demand for new spectrum.
"Unlicensed spectrum may be the most efficient way to allocate wireless resources," Werbach said. "But there are still many reasons why some exclusive spectrum still has value. Wireless operators need to have some certainty to invest in building these networks. The reality is that the goal of the public policies should be to remain open to all of these different mechanisms."
Werbach said historically the FCC has focused its policy on protecting license holders and preventing interference. But he said the current FCC has signaled it is shifting its priorities toward demanding more efficient use of spectrum. This is a key policy change that could help turn the tide in averting a spectrum "crisis."
"If I get granted an exclusive license, and the FCC grants me broad protection, my incentive is to make the cheapest, dumbest equipment possible, because if anyone interferes with my service, the government will step in and protect my rights," Werbach said. "But if the FCC demands more efficient use of the spectrum, then license holders have the incentive to use more intelligent devices that use the spectrum more efficiently."
Werbach said it's unlikely the FCC will force wireless spectrum license holders to share spectrum with new entrants or competitors, but it can establish policies to provide an incentive for these deals to be made.
Some deals may already be in the works, Verizon Wireless said earlier this month that it is talking to rural wireless operators about leasing some of its 700MHz spectrum in sparsely populated regions of the country. The rural operators would lease the spectrum and build their networks, which could potentially be tied in with the new 4G wireless service Verizon is building. Clearwire, another company building 4G wireless service, also said it's talking to local officials in certain regions about similar deals.
"It's in everyone's interest to have the most efficient use of wireless spectrum" Werbach said. "And where one company has exclusive rights to spectrum, it might make sense to lease that resource. With the new technologies that are being made available, devices can be smarter and more adaptive, so there are a whole range of options that will be available."