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Solving the Snowballing Wireless Data Problem

Solving the Snowballing Wireless Data Problem

The right hand doesn't know what the left hand is doing. Carriers and handset makers are advertising and marketing their new smartphones and apps and attracting users. On the other hand, they are throttling back the amount customers can actually use and the speed at which they can use it. It's time to fix this problem before we are all choked with slow connections, poor service and high prices.

By Jeff Kagan
02/02/12 5:00 AM PT

Every day we hear about how AT&T Mobility and Verizon Wireless are running around like chickens with their heads cut off trying to grab as much wireless spectrum as they can. We all remember the quality problems AT&T smartphone customers suffered. That same future is in store for every carrier and every customer unless we come up with a solution.

My Pick of the Week topic is how Google is about to invade your privacy -- and a solution for that.

The Spectrum Rush

Houston, we have a problem. The wireless industry faces a real and growing concern over wireless data bandwidth. In fact, there is both a short-term and a long-term problem.

In the short term, carriers like AT&T and Verizon are rushing to acquire as much wireless data spectrum as they can. They see this as a way to protect their future. Fair enough. But this is only solving the problem for a short while, and only for them.

There is also an industry-wide, long-term problem, which is growing and which we are not preparing for. We need a solution for this wireless bandwidth issue, or we will all be paying more, and the speed and amount of wireless data we can use will be throttled back.

It's like the right hand doesn't know what the left hand is doing. Carriers and handset makers are advertising and marketing their new smartphones and apps and attracting users. On the other hand, they are throttling back the amount customers can actually use and the speed at which they can use it.

One example: I heard Netflix lets users download movies to their phones, and that accounts for roughly one third of all Internet traffic, which is an amazing figure. I expect Verizon to move into Netflix's space this year. As we go forward, more wireless data will be used, not less.

To solve this problem, AT&T tried to acquire T-Mobile to get its spectrum. That failed. Next it grabbed Qualcomm wireless data spectrum that was going to be used for FloTV. At the same time, Verizon is acquiring cable television wireless spectrum.

There is a mad dash for every available band. These two wireless carriers are grabbing as much spectrum as they can find. What about the other companies and their customers? What about Sprint Nextel, T-Mobile, C Spire, U.S. Cellular and the others?

Can't Get Enough

Every carrier needs spectrum, not just AT&T and Verizon. The wireless data industry is going through a revolution right now. When it started out, the majority of usage was voice. Now the majority of usage is wireless data. And that is growing so quickly that over the next few years, wireless data is projected to account for roughly 97 percent of the usage. Voice will only account for 3 percent.

That is a complete reversal of the entire industry. As AT&T and Verizon see this, they are struggling to grab as much wireless data spectrum as they can get their hands on. Great short-term solution, but what about a long-term solution for them and the entire industry?

How will AT&T and Verizon solve the growing hunger for wireless data spectrum?

And what about the other carriers? Currently they have spectrum, but without more capacity, they may not be able to provide what the customer wants in years to come.

That means we may be looking at a potential future where only the big guys compete for our wireless data needs. The other carriers may only have a limited role in that growth.

That is the serious problem we need to solve today. We need competition. Two competitors are not enough. Two competitors mean prices will increase, innovation will slow, and customer service will go down the drain. Why should they care? Where else are we going to go? Think of the cable television industry as an example.

We have to make some decisions, now, as an industry and as a nation to solve this problem.

Pot O' Spectrum

A decade ago, before this wireless data explosion, the U.S. government held a spectrum auction and raised billions of dollars. However, as usage surges, that model no longer works.

I suggest pooling the spectrum together into one big pot. Let every competitor buy access to this spectrum. That way, the owners would be compensated, the carriers would have equal access, and the marketplace would be served and satisfied.

That would turn this current problem into a solution, and that's what we need. What about other ideas?

LightSquared is a company that had a good idea. It wanted to offer wireless data capacity to smaller carriers. Sounds great, except it is having serious problems with its spectrum interfering with the GPS navigation industry. So that solution may not come to pass. That is a shame.

What about other ideas? Now is the time to hear them. Now is the time to debate and decide on a solution and move forward. Whatever we decide will take years to implement, and time is something we don't have in abundance.

So, before we are all choked with slow connections, poor service and high prices, now is the time to debate and decide. It's time to fix this before it affects every company and every customer.
Jeff Kagan's Pick of the Week

My Pick of the Week is the coming Google privacy problem -- and a solution.

First of all, Google has every right to change. This is America, after all. Even if it does mean it will change everything and suddenly invade its users' privacy against their will. Even if it does mean this behavior would have kept the company from becoming the Google it is today.

However, user resentment will grow. Not what Google wants. It is not bulletproof. So I have a solution.

Instead of forcing all of its users to do something they don't like, Google should offer an opt-in or opt-out program instead.

The number of users who opt in will be plenty for Google to work with. Users who want no part of this can opt out and protect their privacy. Simple solution.

While this does not answer all the questions for the future, it does protect users in the short term, doesn't it?

So what will Google do? Will it force users into this new box and risk ticking them off? Or will it do this the right way?

We'll have to watch and see.


E-Commerce Times columnist Jeff Kagan is a tech 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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