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Saturday, November 21, 2009

The Wireless Bandwidth Crunch: Where Will We Find More Spectrum?
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It's truly amazing how fast mobile broadband demand is expanding. A couple of things caught my eye yesterday that really drove that home. First, I was reading Bernstein Research's weekly (subscription-only) newsletter and Craig Moffett, one of America's top media and communications analysts, summarized the growing mobile bandwidth crunch as follows:

To fully grasp the challenge facing wireless providers as we make the transition from wireless voice to wireless data, it is helpful to put some ballpark numbers around current usage levels. Today, the average voice-only customer consumes something like 50 megabytes of data every month. For that, they pay about $40, or about $0.80 per megabyte. That's 70% of wireless industry revenues. Text messaging generates another $10 per month for a minuscule amount of data (in fact, arguably no throughput at all, since text messaging travels in a signaling band rather than in the carrier band itself). Let's call it $1,000 per megabyte. That's another 15% of industry revenues. On a blended basis, then, that's $1.00 per megabyte for 85% of industry revenues.

And then there's the iPhone. By some estimates, the average iPhone user consumes as much as 800 megabytes per month. Take out their 50 Mb for voice and you're looking at 750 Mb of data... for an additional $30. For the mathematically challenged, that's a princely sum of... wait for it... four cents per megabyte. Worse, we noted that the FCC's wireless net neutrality policies posed the risk of "bandwidth arbitrage," where low bandwidth services (at $1.00 per megabyte) would be replaced with free or almost free applications that ride on $0.04 per megabyte data plans, and where carriers' hands would be tied to prevent it. Taking a business that is currently getting $1.00 per megabyte down to just $0.04 per megabyte is, well, hard. And lest anyone think that this threat is idle fear-mongering, Google's acquisition last week of Gizmo5, a wireless VoIP specialist, should give one pause.

Those are stunning numbers. And then I saw this new filing by CTIA listing some other statistics about growing mobile broadband demand:

  • According to the FCC's most recent data, there were over 59 million mobile wireless high speed lines.
  • In addition, mobile wireless broadband growth continues to outpace every other broadband platform, with net additions between December 2007 and June 2008 greater than those of DSL and cable modem combined.
  • Mobile data and Internet traffic will increase 66 times between 2008 and 2013;
  • By 2010, "mobile broadband penetration will surpass fixed penetration globally."
  • The simple task of watching a YouTube video consumes 100 times the bandwidth of a voice call.
  • The mobile data traffic footprint of a single mobile subscriber in 2015 could very well be 450 times what it was in 2005.
  • These projections are consistent with mobile broadband providers' experiences to date. For example, AT&T noted that its wireless data traffic has increased nearly 5,000 percent in the past quarters and other carriers have likewise reported dramatic increases. Similarly, since T-Mobile began offering its G1 smartphone, customers of that device use, on average, 50 times the data of the average T-Mobile customer.
For these reasons, CTIA and others are calling on the federal government to find more spectrum to meet these growing mobile broadband needs. The question is: Where to find it? The military is one answer, but good luck getting them to budge and return any of their current spectrum holdings for reallocation. Thus, as Barbara Esbin and I noted in a recent PFF paper, a lot of people are turning to the broadcast TV sector and hoping to find a way to make a cash-for-spectrum deal with them to get some (or all) of their spectrum back. But it may be unlikely many broadcasters will be willing to hand back their spectrum for alternative uses, even if the cash offer was generous. Plus, Congress would have to bless any such deal, which raises another set of sticky political issues.

PFF will be hosting a debate about these issues on Tuesday, December 1st at 9am at the National Press Club in Washington, D.C. The event is called, "Let's Make a Deal: Broadcasters, Mobile Broadband, and a Market in Spectrum." Seating is limited, so reserve your spot now by RSVPing here. We've got a terrific lineup for the event, including:

  • Blair Levin, Executive Director, Omnibus Broadband Initiative, Federal Communications Commission

  • Coleman Bazelon, Principal, The Brattle Group

  • David Donovan, President, Association for Maximum Service Television, Inc.

  • Paul Gallant, Senior Vice President, Washington Research Group

  • John Hane, Counsel, Communications Practice Group, Pillsbury Winthrop Shaw Pittman LLP

  • Kostas Liopiros, Principal, The Sun Fire Group

posted by Adam Thierer @ 5:48 PM | Broadband , Spectrum

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