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Can the Wireless Industry Change Its Mindset Before It's Too Late?

Can the Wireless Industry Change Its Mindset Before It's Too Late?

I know, I know, carriers prefer to own bands of spectrum rather than share. Tough. That desire is understandable; however, because we have a shortage of spectrum and a growing demand, that solution simply will no longer work. Get over it. To keep competition alive, every carrier, large and small, needs the same access to spectrum. We must be responsible and do the right thing.

By Jeff Kagan E-Commerce Times ECT News Network
07/18/13 5:00 AM PT

We have a problem. We don't have enough wireless spectrum to satisfy America's rapidly growing appetite. That means we'll increasingly have problems connecting with our smartphones and tablets. This spectrum shortage means we must decide the best way to use what we do have. So now is the time to draw a line in the sand and do what we must do -- prepare to share spectrum.

Wireless carriers like AT&T and Verizon know about the growing problem. That's why they have spent years trying to acquire as much spectrum as they can get their hands on, but they still don't have enough. However, they are better prepared than smaller carriers like Sprint, T-Mobile, C Spire, U.S. Cellular and many others.

On one hand, the AT&T and Verizon approach makes sense, since they cover roughly 70 percent of the market. On the other hand, this is not fair to smaller carriers who also need the same access to grow and compete. After all, we don't want the marketplace to consist of just two players.

Even if AT&T and Verizon controlled 100 percent of spectrum, there still would not be enough for the long term. It's got to do with how many users want access and how much they use -- not how many carriers provide it. So it seems to me that auctioning off the remaining spectrum no longer works for this industry.

All for One and One for All

Sharing spectrum would allow each competitor to have equal access. That means all customers and all carriers would be satisfied. That means competition would thrive. That would keep innovation high and prices low. Shouldn't that be part of what we are working toward?

Today smartphone users are not paying attention to this growing problem, but limited wireless spectrum is threatening to clog our wireless Internet.

Carriers spent years acquiring as much spectrum as they could from wherever they could find it. That's why AT&T wanted to merge with T-Mobile. That's why Verizon acquired the cable television industry spectrum.

The U.S. government has always auctioned off spectrum bands to the highest bidder. However, the process of auctions no longer works for the industry since there is simply not enough spectrum to go around. So what's the solution?

As more users buy smartphones like the iPhone and Samsung Galaxy, and use more wireless data, we are getting closer to clogging the networks. Once we start to reach that point, customers will start to have problems with speed and connections. So must we wait till there is a real problem to wrestle with -- or can we handle the problem beforehand?

The Easy Way or the Hard Way?

I know, I know, carriers prefer to own bands of spectrum rather than share. Tough. That desire is understandable; however, because we have a shortage of spectrum and a growing demand, that solution simply will no longer work. Get over it.

To keep competition alive, every carrier, large and small, needs the same access to spectrum. We must be responsible and do the right thing -- meaning make sure there is sufficient spectrum available to every competitor for every customer.

Sharing spectrum is not even in the vocabulary of carriers today, but it should be. Otherwise, we may watch small carriers wither away, and that would not be good for a competitive industry. If that happened, regulation would increase -- and carriers don't want that.

That's why now is the time to come up with a long-term solution to this real and growing problem.

The simple idea to pool all wireless data spectrum into one place seems to be the best long-term solution to the growing problem. Then let every competitor pay for access to whatever it needs. This would mean all competitors would have the same access to the same spectrum. That way the winners would be chosen based on brand, performance and price. Doesn't that make good sense?

Carriers would be compensated for the spectrum they added to the mix. That way it wouldn't cost them anything -- it could actually be profitable.

As much sense as this solution makes, carriers today would still rather own spectrum. We just have to get past that sticking point in the argument. It would be great if we could get there BEFORE we start running out of capacity and customers and carriers start experiencing problems.

With all that said, I have watched this industry over nearly 30 years, and my guess is we will likely wait until the problems begin and the pain is excruciating before making this move. The big question is will the industry do this on it's own -- or will the government have to step in to make it happen? It's always better without the government, but at this point, who knows?


E-Commerce Times columnist Jeff Kagan is a technology industry 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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