Spectrum of Solutions for Network Exhaust
The wireless industry is clamoring for more spectrum. AT&T (NYSE:T) even cites limited spectrum availability in its justification for purchasing T-Mobile. Even current plans by the FCC to re-auction 700MHz spectrum that either was not purchased or is in default are not satisfying the spectrum hawks.
Yet adding more spectrum for wireless telecommunications is only one of many solutions to network capacity problems. Furthermore, it is probably not the most efficient.
The typical case for having the FCC auction off more spectrum – even if it has to force current users to vacate their use of spectrum – goes as follows: Cooper’s Law predicts that spectral efficiency doubles every 30 months. However, the demand for capacity is moving several times faster than this as smartphones become the norm and smartphone users seek to do more things from more places.
The argument further expands to compare the cost of cell splitting (building more cell sites to handle capacity needs) to the cost of new spectrum and declares new spectrum to be the less expensive choice. Yet adding more spectrum and adding more cell towers are not the only choices.
The whole new generation of “small cell” technologies by Alcatel-Lucent (NYSE:ALU), Huawei, Ericsson (NASDAQ:VOD), and others will provide a much less expensive way for wireless carriers to meet growing demand than building more towers. Furthermore, the small cells can be installed in the precise areas where the network is approaching capacity. In contrast, more spectrum adds network capacity everywhere. The reality is that only the most urban settings are even close to reaching network exhaust. Small cells are perfectly suited for these environments.
Let’s not make the mistake of implementing a one size fits all solution to what is currently a very localized problem. At the very least, let’s wait for AT&T and Verizon (NYSE:VZ) to fully deploy LTE in their new 700MHz spectrum before making a decision on new spectrum.