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The FCC's Wireless Spectrum Band-Aid

The FCC's Wireless Spectrum Band-Aid

Smaller carriers want special status in any spectrum auction. This makes sense, because we always need more, not less, competition. However, both AT&T and Verizon also need more spectrum for their hungry and growing customer bases. This makes just as much sense. So what's the solution? There is limited spectrum, and in the game of musical chairs, there are always losers.

By Jeff Kagan E-Commerce Times ECT News Network
10/04/12 5:00 AM PT

The FCC has weighed in on the looming wireless spectrum shortage. The good news is it looks like it is going to step in with a plan for auctioning off unused television spectrum to various wireless carriers in the United States. The bad news is that even though it's only a bandage, it will take years to accomplish.

My Pick of the Week is Apple CEO Tim Cook doing the right thing and apologizing for the Maps screw-up.

Musical Chairs

There are short-term solutions and long-term solutions. This FCC idea is a good short-term fix -- but we really need a long-term solution.

Remember the LightSquared saga over the last couple years? If that had worked, it would have been a long-term solution. The company intended to offer wireless spectrum to carriers. However, here we are -- once again playing the childhood game of musical chairs.

You remember musical chairs, right? That's the game where six kids walk around five chairs until the music stops and they all rush to sit down. There is always one who is left out. One by one, players are eliminated.

This is the same game being played today in the wireless industry. The question here is which wireless carriers will get more spectrum, and which will be left out?

Those who are left out will have quality problems, then lose customers, and eventually fold.

We cannot let that happen. If a company offers bad service or high prices, that's one thing. Not enough spectrum is quite another. Remember, more competitors mean lower prices and better customer service. In fact, more competitors are even better for AT&T and Verizon since it means they'll be subject to less regulatory scrutiny.

Against the desires of the television industry, the FCC wants to re-allocate its spectrum because the wireless industry now has a greater need.

This does not solve the long-term problem, but it is an effective bandage for a while -- a short-term solution.

Spectrum used by wireless carriers like AT&T, Verizon, Sprint, T-Mobile, C Spire, U.S. Cellular, and many others is limited, and the demand is growing rapidly.

If we don't develop real solutions, then every carrier and every customer will face shortages and quality problems. It's just a matter of time before the wireless roads slow down and get clogged.

First Things First

In just the next two to three years, the U.S. government expects wireless data usage will increase thirty-fold. Thirty! Question: Is the way we use spectrum today in 2012 going to work in 2015? No.

We either solve this problem now or face horrendous service problems with wireless data and calls tomorrow. It's our choice. Unless we fix this problem, every wireless carrier and customer will be impacted.

Auctioning off spectrum seemed to make sense years ago. However, the iPhone, Android phones, and tablets like the iPad are gobbling up record amounts of wireless data. This is rapidly squeezing the wireless spectrum the carriers use.

So in the first step, the U.S. government will ask broadcasters to volunteer and sell their spectrum. The FCC will then prepare that spectrum for auction.

The auctions themselves won't take place until 2014, but that's the process. If we need more, there will be additional steps, but let's focus on first things first.

Many smaller carriers have asked for special status in this auction to keep them alive and to keep the industry competitive. This makes sense, because we always need more, not less, competition.

However, both AT&T and Verizon also need more spectrum for their hungry and growing customer bases. This makes just as much sense.

So what's the solution? Even though there is limited spectrum, we have to make sure we keep all the wireless carriers healthy and in business.

However, in the game of musical chairs, there are always losers.

A Spectrum Pool

So what is the solution? It's easy actually.

Equal access. Sharing spectrum. This is the best solution to keep all the competitors, keep all the quality, and keep the focus on the customer.

If carriers would pool all their spectrum, there would be plenty in every area around the U.S. No shortages would exist, at least for the foreseeable future.

So all carriers could pool their spectrum and have it managed by a third party -- makes sense, and carriers could continue to own their spectrum. All the spectrum would then be available to every carrier to use. Sounds a lot like that LightSquared idea -- but on a much larger scale.

That would keep all companies healthy and in business. The carriers who own the spectrum would be compensated for usage, making it fair financially to carriers, users and owners.

It would give every carrier equal access to spectrum, keeping all in a strong competitive position. Carriers would not compete on spectrum. Instead, they would compete on customer care, pricing, and things beyond connectivity.

That would be healthy for the industry. Customers would be happy, and competitors would stay in business.

Of course, major carriers would rather own. I don't blame them. In a perfect world, owning makes more sense. Unfortunately, this is not a perfect world. So, whichever solution we choose, we must recognize that every carrier, large and small, is in desperate need of more spectrum. It's a question of survival.

We want to keep many competitors in the marketplace as well. Competition keeps pricing low, innovation high and customer service good.

Television companies could buy into this program as well. They could use this same spectrum along with the wireless industry, making everyone happy. So, whether we auction off the cable television spectrum or decide to share, we must do something -- and quickly. And we must make sure all industry competitors survive.

Let's keep our eyes on the right ball to make sure the industry continues to hum along rather than get stuck in the largest wireless data traffic jam we have ever seen.

We're getting perilously close to the wireless spectrum cliff, and there is no time to waste.
Jeff Kagan's Pick of the Week

My Pick of the Week is Apple CEO Tim Cook's apology for the Maps screw-up. He did the right thing, and I want to say congratulations.

His apology does not solve the Maps disaster, but it does show Apple seems to understand users' extreme frustration.

You never heard an apology from Steve Jobs. Remember the iPhone antenna screw-up? This first-time admission from Apple that it is only human and makes mistakes is refreshing. I like it.

The question is, will it be helpful or harmful to Apple going forward? The answer to that question depends on whom you ask. Everyone seems to think this is a sign of growing maturity. What does a more mature Apple look like anyway? That is the question we are all interested in.


E-Commerce Times columnist Jeff Kagan is a tech analyst and consultant who enjoys sharing his colorful perspectives on the changing industry he's been watching for 25 years. Email him at jeff@jeffKAGAN.com.


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