AT&T: T-Mobile’s Spectrum Needed to Future-Proof 4G Networks

March 22, 2011

ORLANDO, Fla. — In his numerous panel appearances Tuesday here at the CTIA Wireless show, AT&T Chief Technology Officer John Donovan had a simple, one-word answer for the reason behind the proposed purchase of wireless competitor T-Mobile: “Spectrum.”

Specifically, Donovan said in a brief interview with Sidecut Reports following one of his panel appearances, T-Mobile’s big swath of AWS (Advanced Wireless Services) spectrum and the role it might play in AT&T’s 4G network of the future is a big reason why it makes sense for AT&T to offer the big bucks — $39 billion of them — to buy T-Mobile outright.

“It’s all about the future,” said Donovan in the interview, explaining both his and AT&T Mobility CEO Ralph de la Vega’s insistence that Ma Bell is facing a potential “exhaustion” of its existing licensed spectrum assets. While some industry observers have accused AT&T of hoarding a big patch of unused spectrum while crying wolf, Donovan said AT&T already has plans for all the spectrum under its current ownership, including plans to use both its own AWS spectrum and its 700 MHz spectrum for its forthcoming LTE network rollout.

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Why You Will Pay More for Wireless: The Reverse Economy of Spectrum

January 18, 2011

A little bit of reality hit the wireless world today when Sprint announced it was going to charge smartphone users of all kinds another $10 for the convenience of having an “unlimited” data plan. While the debate about the merits of unlimited plans vs. metered plans like those recently introduced by AT&T can rage on, there is one undisputable fact: As more people discover the joy of mobile computing, we will all pay more for the privilege — mainly because there is only simply so much spectrum to use, and like Manhattan real estate that spectrum is starting to price itself at a premium.

For technology consumers any price increase for wireless services may seem like some type of system error since we are used to paying less for more as time goes on — PCs get more powerful, yet cost less or give you more bells and whistles for the same dollar spent. Moore’s law and all that. While we are seeing some of those economies of scale help to reduce the up-front price for smartphone and other mobile devices, the scarcity of spectrum — the wireless channels that your mobile signals run over from handset to tower — means that as more people start using wireless services, prices for service are going to go up simply because you can’t create new spectrum. To cram more people onto the same amount of ether involves big costs, like building more antenna towers, stringing more backhaul wires or putting in more gear to manage services more closely. And those costs won’t be passed on to carrier shareholders or taken out of executives’ princely paychecks. Instead, they will be paid for by you, the always-on, Facebooking and Twittering mobile professional.

And even if the FCC and Congress somehow manage to get off their hourly-fee posteriors and pass laws to free up spectrum that’s being hoarded or poorly used right now, most data-use predictions show demand far outstripping supply for the foreseeable future, perhaps until new technologies like white-spaces devices arrive. So like any other market item that is scarce and in demand — diamonds, fresh water, crude oil — wireless bandwidth is going to increase in price, not decrease, for the foreseeable future.

Sprint’s price increase today will be just the first and not the last move by major carriers to pass on the cost of managing scarce spectrum to its user base. Unfortunately for your communications budget, you can probably expect similar more-expensive plans from Verizon and AT&T when their 4G pricing emerges later this year. It stinks, but until we either free up a lot more airwaves and/or invent new ways to use them more efficiently, physics and market dynamics mean your new freedoms will cost more as more people join the mobile lifestyle.

The Great Spectrum Hunt: Why it’s Harder Than You Think

January 7, 2011

LAS VEGAS — Just some quick thoughts on a bunch of wireless spectrum talk that surfaced today at CES; while I will try to formulate some longer thought pieces on this subject I know that if I let it sit over the weekend it might never get done. So before Virgin whisks me back home some thoughts, reactions and instant-analysis from some policy panels I attended today at CES.

EVERYONE WANTS MORE SPECTRUM. BUT WHERE YA GONNA GET IT?. It would be hard to find anyone to disagree with FCC chairman Julius Genachowski, who reiterated his earlier claims of a “looming spectrum crisis” in this country’s wireless broadband marketplace. But even as Genachowski and CEA CEO Gary Shapiro talk about “bipartisan support” for a pending bill that would authorize the FCC to conduct an auction of spare broadcasters’ spectrum, don’t hold your breath for it to happen anytime soon.

In the back of the room at Genachowski’s speech some telecom insiders were talking about the chances of such a bill passing in the upcoming Congress — “the chances are zero,” said one large telephone carrier representative. Why? A lot of the broadcaster spectrum sits in the hands of rural providers, whose Congressional representatives rely primarily on over-the-air TV to contact consituents (and run re-election campaigns). City dwellers on both coasts may want to give up the “unused” airwaves so they can have more connectivity for their iPads — but the power and numbers right now are still with the rural opposition.
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