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AT&T (NYSE:T), Verizon (NYSE:VZ), T-Mobile, and Sprint (NYSE:S) want us to believe their radio spectrums — the government-rationed portions of radio waves that carry phone calls and wireless data — are filling up. Is this just another case of Chicken Little saying the sky is falling or will we really not have enough spectrum to meet growing demand for mobile data? The wireless carriers are ominously warning that if the capacity is met, wireless plan prices will surely soar.
The concept that wireless carriers will have to increase the prices of services if they cannot meet the rising demand for mobile data on a limited spectrum seems reasonable. However, some scientists and engineers are saying that there is not really a crisis. Companies could merely be playing a game that is more about protecting their business from competitors.
To put it simply, cellphones are radios and their calls are carried on the electromagnetic radio spectrum just like a radio or walkie-talkie signal. The Federal Communications Commission divides the spectrum by bands of frequency. The carriers and other entities do no want signals on certain frequencies interfering with one another. So the F.C.C. passes out licenses for each frequency band to various entities like TV stations, the military, astronomy researchers, and phone carriers. Carriers want a piece of the other groups’ spectrum, and are seeking approval from the F.C.C. to purchase it at government auction or to buy licenses for it.
The nation’s largest carrier Verizon has been on the look out to hoard as much wireless spectrum it possibly can. Recently, Verizon has tried to purchase spectrum licenses from cable companies, including Time Warner (NYSE:TWX) and Comcast (NASDAQ:CMCSA). However, T-Mobile and other smaller players in the wireless industry do not agree with these kinds of transactions. Even AT&T’s interest in buying T-Mobile stemmed from an attempt to get more spectrum.
One cannot help but think something is fishy when Martin Cooper himself — the inventor of the cellphone — is convinced that any challenges the wireless industry faces could be overcome with technology. Cooper is the former vice president of Motorola (NYSE:MMI), chairman of Dyna L.L.C., and sits on the technical advisory committee of the F.C.C. He asserts that the spectrum crisis is largely exaggerated and is confident that there is technology to solve the so-called problem.
According to Cooper, purchasing spectrum is the easiest way for carriers to expand their network, but newer technology could multiply the number of mobile devices that carriers can serve by at least tenfold. These technologies could include improved antennas and techniques for offloading mobile traffic to Wi-Fi networks. There are even current technologies for transmitting and receiving signals so that they do not interfere with one another.
Undoubtedly, everyone is aware of the popularity of data-guzzling smartphones and tablets that keep the wireless industry on its toes. Cisco (NASDAQ:CSCO) published a study that shows mobile data usage more than doubled in 2011.
While this may be true, many disagree with the statement that the nation will run out of spectrum. It is no different that the claim that the world is running out of color. Electromagnetic spectrum in not finite, and everyone could share spectrum without it running out. But the F.C.C. does believe that both new spectrum and technology will be needed to help the wireless industry evolve.
Wireless carriers are trying to hoard spectrum licenses in an attempt to gain exclusive rights for a band of radio waves. Once a carrier owns a spectrum, its competitors cannot. Carriers are making it sound as if the only solution to the so-called crisis is to make more spectrum available to them, when in fact, it already is.
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