Citigroup Questions Whether US Spectrum Shortage Exists 131
alphadogg writes "For more than two years, the U.S. mobile industry has warned of an upcoming spectrum shortage, but two analysts at Citigroup don't buy it. AT&T, trade group CTIA and even officials with the U.S. Federal Communications Commission have talked frequently about a coming spectrum crunch, as mobile customers move to data-sucking smartphones and tablets. Smartphones use 24 times the spectrum compared to standard mobile phones, and tablets use 120 times the spectrum, FCC Chairman Julius Genachowski said in a speech on Tuesday. But Citigroup analysts Jason Bazinet and Michael Rollins questioned what has become the conventional wisdom in the mobile industry. The U.S. has plenty of spectrum for mobile broadband, but much of it is in the wrong hands, they said."
Re:Spectrum sale by Market (Score:5, Interesting)
They should have sold the frequencies by market area (city, zip-codes, etc.) and not nation-wide.
That's the real crux of the problem.
Now we have large nation-wide companies holding up frequencies in large swathes of the country because they're dedicating their efforts in specific markets where they can charge more.
Had the FCC sold the frequency on a market basis and required it to be used within a reasonable time frame, we wouldn't have these issues.
It's similar to the way telephone numbers were allocated: in huge blocks, with no particular guarantee that any significant percentage of them would ever be assigned. That led to the explosion in area codes we've experienced in the past couple decades. The phone companies first claimed that "it's all the fax machines and modems that are in use now" but the reality was just an inefficient allocation scheme.
... they know exactly what they're doing: generating yet-another artificial scarcity so that their corporate sponsors can continue to make large sums of money from us.
Large chunks of IPV4 address space were assigned early on to corporations, universities, government bodies and others who had absolutely no use for so much space, simply because nobody even considered that 32-bits just wouldn't be enough. Not nearly enough.
The FCC isn't showing much better judgment when it comes to wireless spectrum, or the Internet in general for that matter. Well, okay
Re:Wrong hands or wrong spectrum? (Score:5, Interesting)
Hi Bill:
A good amount of that Clearwire spectrum is used for tower-to-tower communications. One unique thing about Clearwire's system is they really don't like to pay for dedicated lines to towers. The normal setup is a few AggPOPs per market which feed, normally 10Gb fiber, to the market's TransPOP which often is colocated with the RDC (Regional Data Center). Each AggPOP will service one to several RF tower rings of three to eight towers, mostly via Dragonwave radios. Of course with tens of thousands of RF sites, there will be some one-offs, but the goal is to have as many tower sites serviced via the AggPOPs as feasible. The system from RF tower to TransPOP is PPB-TE Ethernet [wikipedia.org].
This allows them, as they are doing now, to lease some of that bandwidth to the towers to other carriers. Clearwire was always envisioned as a wholesaler.
Re:A Patchwork Of Spectrum Is Not Usable Spectrum (Score:5, Interesting)
The government shouldn't have sold spectrum, it should have leased it, with lease renewal fees gradually increasing over time like we do with property taxes. One of the purposes of commercial property taxes is to encourage efficient use of land. If you own land in a major city's downtown area, the temptation is to sit on that land as it appreciates in value. After all, it costs you no more to hold onto that land than it does to hold onto land in the middle of the desert. That's good for you, but bad for society overall. By charging you high property tax on that valuable piece of land, it gives you two choices: Develop the land into something useful for society which generates enough revenue for you to offset the high property tax, or sell the land to someone who will develop it.
That's what the government should have done with spectrum. Recurring and increasing annual lease fees would've forced spectrum owners to use it, or sell it off to someone who would use it. By selling the spectrum instead of leasing it, we've got a bunch of companies now suspected of wastefully sitting on spectrum simply because they can.
Re:Spectrum sale by Market (Score:4, Interesting)
Actually, I'd do things differently:
1. Forbid anybody selling cell phones or cell phone service from owning any spectrum anywhere.
2. Forbid anybody from owning cell phone spectrum in more than one state.
3. Forbid anybody from owning cell phone spectrum in areas totaling more than 10000 mi^2.
4. Forbid anybody from owning more than 33% of the spectrum supporting any particular protocol in any particular location.
5. Assign a particular protocol to any particular frequency at the time of assignment and make this assignment national in scope.
6. Anybody owning spectrum has to publish their price-per-packet (or channel*time for analog) and charge the same price to all their customers and provide service to anybody (common carrier).
7. Anybody providing spectrum has to give access at a government-designed colo facility - there will be a moderate number of these.
In this model cell phone services can't vertically integrate - they HAVE to buy it from local utilities. Any area will have at least 3 local utilities running, which means pricing competition. Cell phone companies don't need to solve the last mile problem, and anybody with some capital can start a new cell phone company at any time and gets the same pricing as AT&T for spectrum use.
And yet, since protocols are assigned to frequency bands nationwide (NOT TO COMPANIES) you get full interoperability of the network nation wide.
Areas that are in the middle of nowhere that have no service today might have their local governments kick in some funding or incentives to get the network built out - or the municipality could buy up to 33% of the spectrum to run its own access, so this also helps areas that would otherwise lack coverage.
Local rent-seeking behavior goes away since nobody can corner any market entirely, and there is no way they can charge discriminatory pricing. The local utilities just accept packets at a colo and send them out over the air or whatever model works best for the techology.
And, spectrum could be re-designated for new protocols over time as technology marches on.