Spectrum Logjam Loosens
The gridlock over spectrum for next-generation wireless data is easing, with changes likely to satiate the wireless industrys thirst for more airwaves and ultimately bring more and better services to users.
While a few doors have likely closed to using some spectrum for souped-up wireless services, including video and audio, others may be swinging open.
The Federal Communications Commission decided last week not to seize spectrum from fixed broadband wireless players, including Sprint and WorldCom, to auction it off for next-generation wireless networks. The Cellular Telecommunications and Internet Association criticized the move. "This action does not help to address the continuing need for additional spectrum for the most spectrum-constrained carriers," said Tom Wheeler, CEO of the CTIA.
However, the FCC also approved flexible use of that same Multichannel Multipoint Distribution Service spectrum so owners can introduce next-generation networks using the frequencies. Both moves were widely lauded by current owners of the spectrum: They no longer feel that their fixed broadband businesses could be disrupted, and they now have the freedom to build advanced mobile networks.
Some license holders are expected to view the rulings as an opportunity to sell their spectrum - which most owners acquired on the cheap - to mobile operators. "Im sure everybody will relook at what their spectrum holdings are, and the best opportunity for realizing value out of it," said Leo Cyr, president and chief operating officer of Clearwire Technologies, a company that leases spectrum with plans to deliver broadband wireless services.
However, a number of formidable technical hurdles must be cleared before operators can use the spectrum for mobile services. "Practically and economically, it will depend on the rules the FCC has yet to write, but there would be significant technical challenges," said Russ Wiseman, senior vice president of Internet operations of wireless broadband provider Nucentrix Broadband Networks.
Meanwhile, other airwaves for next-generation uses will become available if NextWave Telecom agrees to sell its disputed spectrum, as it is reportedly close to doing. NextWave, the bankrupt license winner that has been embroiled in lawsuits with the FCC since 1996, is apparently close to a settlement calling for it to sell its licenses to winners of a recent re-auction. If a settlement is reached, some of the largest operators, including AT&T Wireless, Cingular Wireless and Verizon Wireless, will acquire significant chunks of spectrum.
In addition, many experts believe that the FCC will soon lift the spectrum cap that limits the amount of spectrum operators can own. "That will let consolidation take place, so all available sources of spectrum will be made available," said Rudy Baca, The Precursor Groups wireless and global analyst.
Many of these changes are positive for carriers. "Its good news for the big players and the industry in general, but it still involves a whole series of discussions and deals," said Eric Kintz, associate partner of Roland Berger Strategy Consultants.
With more spectrum, operators can deliver more reliable service - especially in urban areas - and introduce additional applications. "One of the reasons wireless is not picking up as much as it could is the poor quality in the U.S.," Kintz said.
But the wireless industry probably wont gain access to ideal third-generation network spectrum that is currently used by the Department of Defense. In light of the recent terrorist attacks, few industry experts believe that Defense will give up its airwaves for private use, because it argues that doing so could weaken national security. "Theres no chance," Baca said.