Editor’s note: The following is an excerpt from our latest free report, Clearwire’s Spectrum: The 4G Advantage, which takes an in-depth look at the wireless spectrum holdings of national WiMAX provider Clearwire Corp. (Nasdaq: CLWR), and how those holdings give Clearwire a market advantage in the race to build “4G” wireless networks. In this excerpt we explain the meaning of spectrum “depth,” and compare Clearwire’s depth of holdings to those of major telcos. To download our report for free, click on this link.
SPECTRUM DEPTH: WHAT IT MEANS, WHY IT MATTERS
When it comes to talking about spectrum holdings, the most-often overlooked or misunderstood element of the discussion is the idea of spectrum “depth.” The “depth” of a provider’s spectrum holdings comes from the fact that the shorthand used to describe the different “bands” — as in 700 MHz or 2.5 GHz — doesn’t fully explain that each “band” contains many different frequency channels of varying size; the 2.5 GHz band, for example, actually includes frequencies from 2496 MHz to 2690 MHz, while the recently auctioned bandwidth in the 700 MHz band includes frequencies from 696 MHz to 806 MHz.
Depending on how the spectrum was sliced for distribution, in each band there is only a certain amount of spectrum “depth” — as in chunks of those frequencies — available for their delivery portfolio. The spectrum depth matters most when it comes time to bring bandwidth to users — simply put, the more spectrum you have, the bigger “pipes” you can provide.
For the historic cellular bands, the amount of spectrum depth provided by the government was sufficient for the technical needs of the time — providing voice phone calls. The advent of “digital” voice technology made cellular systems more efficient, allowing for more calls to be made over the same amount of cellular bandwidth.
As technology advanced rapidly, more types of digital communications started leaping onto cellular networks, from text messages to email to full Internet access, albeit originally at transmission speeds reminiscent of the earliest dial-up modems. But by the end of the decade, wireless data services were reaching mainstream at the so-called third generation or “3G” level, where the major providers were promising speeds of a megabit per second or more, good enough even for limited forays into streaming video as long as your connection stayed solid.
The big problem was — as technology advanced rapidly, producing such wildly accepted phenomena as YouTube and the iPhone, spectrum assets in use remained largely the same, leading to some predictable dropoffs in service as the available airwaves all got snapped up.
While some of the woes plaguing AT&T and its iPhone dilemma were due to network infrastructure issues — such as the lack of robust “backhaul” connections from the wired Internet to many of AT&T’s cellular towers — spectrum shortages undoubtedly contributed to some of the dropped calls and interrupted web surfing, as AT&T tried to handle its “unprecedented” wireless-data growth with the same spectrum depth it used for cellular voice calls.
In a recent report released publicly to the Internet, Morgan Stanley and analyst Mary Meeker assembled what many observers believe to be a fairly accurate tally of the spectrum depth for each of the country’s major wireless providers: In the original (~800 MHz) cellular bands, Meeker said Verizon and AT&T each had 25 MHz of spectrum “depth.” At the PCS or higher-frequency cellular band, AT&T has an additional 34 MHz of spectrum depth, while Verizon has another 21 MHz, Meeker said. Most of this spectrum, however, is being used for the telcos’ cellular voice and 3G data services.
For future networks, AT&T and Verizon have assets in the AWS spectrum band as well as at 700 MHz — but in total, the AWS and 700 MHz assets, when combined with historic cellular spectrum, give the two phone giants each roughly only 91 MHz of total spectrum depth in most markets. That is the total split up amongst the four different frequency ranges, and with more than half of each carrier’s portfolio already in use.
Clearwire, by comparison, has an average of 150 MHz of contiguous spectrum depth in most major markets across the U.S., at the 2.5 GHz band, all available for 4G — a spectrum position that will theoretically allow Clearwire to more easily and more cheaply offer high-speed broadband services to a far greater number of customers than its spectrum-constrained competitors.
The Sidecut Reports Clearwire’s Spectrum: The 4G Advantage takes a deep-dive look into the wireless spectrum holdings of the provider of the nation’s nascent WiMAX network, examining its historical roots, how Clearwire came to control the spectrum, and how its depth and breadth gives Clearwire a U.S. market advantage in the race to build 4G wireless networks. To read the full report, download your free copy today!