Steering Clear of the Perfect Spectrum Storm
Jun 14, 2012 5:00 AM PT
We all followed AT&T's attempt to acquire T-Mobile last year. That should have been our wake-up call to a growing industry problem: spectrum shortage. Yet it wasn't.
AT&T CEO Randall Stephenson says regulators need to quickly figure out how to get more spectrum into the hands of wireless operators or the industry will run out. That is true, and it is a dire warning. We need to act before it's too late.
My Pick of the Week is Verizon's new Uppernet. What the heck is an Uppernet anyway?
A Screaming Problem
AT&T Mobility needs more spectrum. Verizon Wireless needs more spectrum. So do Sprint Nextel and T-Mobile. C Spire Wireless, U.S. Cellular, and all the smaller carriers need it as well.
Stephenson wrote an opinion piece that appeared in Monday's edition of The Wall Street Journal. He also spoke at the Telecommunications Industry Association last week. He is making a clear case that this is an urgent problem -- an industry-wide problem. He is right.
It's a potential disaster that is building, and it will impact every carrier and every smartphone and tablet computer customer in the next few years.
AT&T says demand will surpass supply by next year. That's what the FCC says too. So what do you think? This problem must be solved -- and before next year.
Just look at the numbers. Wireless data use is doubling every year, driven by all the amazing new smartphones and tablet computers, like the iPhone, the Android phones and the iPad.
This is a real screaming problem the wireless industry is suddenly facing. We cannot solve this problem slowly over the next few years. We need a solution immediately.
I agree with Stephenson. I have been talking about this continually over the last couple years.
When I say disaster, let me make myself clear. I am not talking about wireless phones shutting down and not being able to make phone calls. Actually, making phone calls may be one of the things you will still be able to do.
It's all the rest that this shortage will affect. All the apps will slow way down and many times simply not work. The wireless data portion of the network will experience significant problems.
Unfortunately, that is where all the growth in the industry is coming from. What a dilemma.
Think about this being like a growing city. Growing cities continually widen their superhighways so traffic will continue to flow.
As smartphones grow in popularity, and as we use more wireless data services, we need to widen the wireless information highways. That means wireless carriers need more spectrum. The problem here is that spectrum is limited.
So where do we find more spectrum so we can pave new lanes on the nation's wireless information highways?
This is the problem.
And Spectrum and Access for All
As a temporary solution, we can look at the spectrum owned by other industries. Cable television is one example. Another solution is to improve the technology so we can send more data over existing networks.
However those two solutions will only buy us some time -- and only for the carriers involved. Then they will be back in the same traffic jam. Other carriers won't have that break at all.
In addition, these solutions will take years to implement. That is much too long. We need solutions today.
Are there are other solutions? Now is the time to hear them all and make some decisions going forward.
I have suggested a solution: Use the carriers' own spectrum. When they acquired the spectrum years ago, we didn't have a shortage. Now we do -- so we have to handle things differently today.
One solution is to pool together the spectrum from all carriers. Then let all carriers buy access to it. The owners will be compensated, and every carrier will have equal access to the spectrum.
This would restore a good balance. Every carrier could continue to thrive. Owners of the spectrum would profit from this as well. They may not want to do this, because it gives competitors equal access, but as a country, isn't that best?
This would ensure that all competitors would have equal access and continue to compete.
The term "equal access" worked once in the industry, back in the 1990s, and it can work again. When the squeeze is on, ideas that may not have been considered are all of a sudden real solutions -- and this can be achieved quickly too.
Regulators have weighed in. They don't like mergers between larger wireless carriers because there have been too many mergers and there are few large carriers at this point.
We can point the finger of blame at Apple. It created this bottleneck exactly five years ago when the first iPhone was launched. It's all about the apps, and features that use spectrum as wireless information highways.
Next, Google Android and all the other smartphones and tablet computers jumped in as well, including the iPad. Over the last few years, this device explosion has rapidly grown into a real problem.
Carriers had been trying for years to make this dream come true. Yet they were not prepared for the levels of usage that would result. So perhaps there is enough blame to go around. The industry just never really understood the problems that would occur once it became successful.
Well, here we are -- in the midst of a self-made problem. Fine -- scream. Go ahead. Get it out of your system.
Feel better? Now let's get back to solving this real problem right now, OK?
Sharing spectrum may not the perfect solution, but it is a good solution. It doesn't have to be forever, but it will buy us several more years.
The rules of this game have been spelled out by regulators: no more mega-mergers.
There are solutions that will work if carriers will finally realize they and we all have a brewing emergency. Shared spectrum is a real solution -- equal access.
We don't have the years it would typically take to go through this process. We need to clear the deck and all pitch in together to solve this problem before zero hour, which is coming quickly.
Randall Stephenson is right. If we look back generations, we had some fast builds for railroads and highways. Congress made those projects a national priority.
We need that kind of commitment now. Today is the day to make solving the spectrum crunch a national priority.
We can't wait until we are all crashing and burning, complaining we can't get email or surf the Web, or use navigation or GPS, or watch TV or movies, or listen to music, or use any of the hundreds of thousands of apps we Americans are growing to love.
Let's act now -- before it's too late.
My Pick of the Week is Verizon's new Uppernet. Never heard of the Uppernet? I'll tell you a secret. Come here. Closer. I'll whisper in your ear: It's Verizon's cloud. Yes -- that's it.
Does this sound like what Verizon did with the Droid brand?
Verizon and Verizon Wireless like to compete, but what they really like to do is lead. What's the best way to lead? Is it to compete head-to-head in a fierce battle against AT&T Mobility, Sprint Nextel, T-Mobile, C Spire and others?
Nope -- not to Verizon. That's too many competitors. What it chooses to do is create, then lead, in its own subcategory.
Remember when Google's Android hit the streets? Android phones were available from every carrier. There was nothing special from one carrier to another. It was very difficult for any carrier to stand out as the best. It was not about the carrier -- it was about Google.
So what did Verizon Wireless do? It changed the rules of the game. It created a new brand called "Droid." Get it? Android, Droid -- and this worked for them.
Its Droid runs Android. It's just the brand name Verizon created that gives it a marketing advantage. Verizon likes these marketing advantages.
Verizon liked the success its wireless company had with the Droid, so it decided to brand its cloud business, and it's calling it the "Uppernet."
You got it. The Uppernet is Verizon's cloud business. Going forward, instead of Verizon talking about the cloud, it will be talking about the Uppernet -- but it's all the same thing.
As for the cloud, it's not really new -- it just sounds new. It's the network being used and sold in new ways. Companies store their information on the carrier's network rather than on their own network or on their own devices.
So congratulations Verizon, on once again creating your own segment to be king in. Will it work? Probably. Droid works, doesn't it?
This is not different from other cloud businesses established by competitors in the space. It's just Verizon's sizzle on top of its steak.
The cloud continues to transform the communications and information business. Every company is getting into this new version of the cloud business. In Verizon's case, it just happens to be called "the Uppernet."