The Spectrum Crisis and You

by Matt Klassen on August 15, 2012

As wireless carriers clamour to get their hands on as much spectrum as possible, the end result is quickly becoming one of the spectrum ‘haves,’ and the spectrum ‘have-nots.’ In fact, for many smaller wireless carriers, even if they have the spectrum available to support the development of a next gen 4G LTE network, the spectrum ‘haves’ are still finding a way to keep the bandwidth from being deployed.

Take the situation of C Spire Wireless for example, a small wireless carrier serving a portion of the American South. C Spire has an ambitious plan to develop a powerful 4G LTE network that would serve approximately 900,000 customers, and spent $192 million to purchase a chunk of 700MHz spectrum, considered by many to the beachfront property of the spectrum still available because it can travel considerable distance and penetrate obstacles.

The problem for C Spire Wireless, and ultimately for you the consumer, is that the larger players in the wireless game, companies like Verizon and AT&T, are making sure C Spire can’t use its spectrum by using their market clout to pressure chip designers and device makers to favour their own spectrum technology, leaving carriers like C Spire unable to deploy its spectrum and ultimately leaving consumers with less market choice, higher prices, and woefully slow wireless innovation.

In a mobile world where consumers are crying out for faster, stronger wireless networks, C Spire’s complaint points to a systemic problem within the mobile market itself, the two largest players (AT&T and Verizon) all but monopolize the market.

While it should come as no surprise that both Verizon and AT&T want as many subscribers as possible, the fact of the matter is that both companies are nearing (or have reached) their customer saturation point, the point after which they can no longer reliably meet their customers wireless needs. Of course the two companies clamour about needing more spectrum, but as C Spire can certainly attest too, there exists another option, open the market up to a little healthy competition.

More to the point, my guess is that the large companies like Verizon and AT&T simply won’t ever be able to meet the growing insatiable desire for data consumption, with the answer to the spectrum crisis likely to be found in smaller regional carriers like C Spire, who have sufficient spectrum resources to meet the needs of their relatively small clientele.

The problem, as mentioned, is that AT&T and Verizon simply have too much market power, meaning that despite the fact that they know they’re reaching their subscriber saturation point, they continue to want to get bigger, control more, and, of course, make more money (it’s the capitalist’s dream, is it not?), but in doing so the big two carriers will end up destroying any market balance.

While C Spire Wireless continues to promise its customers that a powerful 4G LTE network will soon be arriving, the reality is that the company cannot employ its 700 MHz spectrum, simply because AT&T has the monopoly on the production of the equipment needed to deploy said 700MHz spectrum.

In the end, while the validity of C Spires’ complaints may be up for debate, the fact of the matter is that should companies like Verizon and AT&T further solidify their hold on the mobile market it’ll mean less regional carriers, less competition, less innovation, and higher prices…and that’s something that affects us all.

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Written by: Matt Klassen. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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