Citigroup Questions Whether US Spectrum Shortage Exists

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."

Comments

Re:120x, 24x?

[Culture20]

In bribes.

Spectrum sale by Market

[MatthiasF]

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.

Re:Spectrum sale by Market

[ScrewMaster]

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.

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 ... 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.

Re:Spectrum sale by Market

[Miamicanes]

> They should have sold the frequencies by market area (city, zip-codes, etc.) and not nation-wide.

Great. So then we could have a situation like we did prior to the arrival of Sprint around 1999, when every city had different cellular carriers, and sometimes you couldn't go 50 miles away from home without paying extra to roam. In case anybody has forgotten, roaming charges in the US were still common AND punishingly expensive less than 10 (hell, 5 or 6!) years ago unless you were a Sprint customer. Sprint's network might have sucked in most places, but if you lived in a real city and 99% of your travel was to other real cities and the major highways between them, it was rare to end up someplace that literally had no service unless it was totally out in BFE. You might have had to go outside, or even climb up on a roof to get a usable signal, but at least you weren't getting charged $5 plus a dollar per minute the way people with Verizon or AT&T did. There's a reason Sprint achieved early popularity in Florida and Texas -- both states were horribly fractured between hostile, rent-seeking regional carriers, and Sprint was literally the only way to travel around the state without getting raped by roaming charges.

A Patchwork Of Spectrum Is Not Usable Spectrum

[rsmith-mac]

Citi's report is not wrong, but how they go about counting things is naive at best. The crux of the matter is that there's a lot of crap spectrum that carriers basically got for free or close to it. But before we get too far ahead, let's answer an easier question: what is good spectrum.

1. 1) The ideal spectrum is below 1GHz, as these frequencies have the best building and tree penetration. 1GHz-2GHz is usable, but it's not ideal because you start taking notable losses indoors and customers who've given up on landlines can't reliably use their phones indoors everywhere. Anything over 2GHz is effectively useless for mobile wireless because it's so poor at penetrating obstacles. It's best used for fixed point wireless where obstacles can be planned around and/or removed.
2. 2) The ideal spectrum is nationwide. A patchwork of spectrum is not usable spectrum because it means you can only use narrow (lower bandwidth) channels, and requires a great deal more effort to plan, operate, and maintain a wireless network.
3. 2b) Local spectrum is only useful when it abuts nationwide spectrum so that carriers can use it by simply activating more channels in high population areas.

Case in point, 194MHz of the spectrum Citi says is available is above 2GHz: "Citigroup's description of 194 MHz available in the Broadband Radio Service (BRS) and Educational Broadband Service (EBS) bands between 2.4 and 2.7 GHz". This also goes hand-in-hand with Citi's weird method of counting spectrum in use: they're multiplying it by the percent of the population that the spectrum covers. "The two used averages to come up with spectrum use estimates; if a carrier has a 10 MHz nationwide block, but is only delivering service to half the U.S. population, the report considers that 5 MHz of used spectrum, Rollins said."

Ultimately the carriers are being wasteful at times, but not nearly to the degree that Citi says they are. The carriers need more national allocations if they're to run a 3rd network simultaneously, and those allocations need to be at least 40MHz wide so that they can operate two sets of wideband (10MHz) LTE channels. Smaller allocations mean that they're going to have to use smaller channels, and that's going to greatly limit network performance.

Re:A Patchwork Of Spectrum Is Not Usable Spectrum

[Solandri]

Ultimately the carriers are being wasteful at times, but not nearly to the degree that Citi says they are.

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:Wrong hands or wrong spectrum?

[Nethead]

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.

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.