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'Last' Big Mobile Spectrum Auction is Coming

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'Last' Big Mobile Spectrum Auction is Coming
February 21, 2012
By Gary Kim, Contributing Editor


U.S. wireless service providers (and potentially others) soon will have the chance to bid on new wireless spectrum in the 700 MHz frequency range, which they are expected to use to support new Long Term Evolution mobile networks. The allocation is important for a number of reasons.

First, it might be the last big block of new wireless spectrum to be allocated for some time. “This is going to be the largest block of spectrum made available to the public for mobile broadband purposes in the next few decades,” said Harold Furchtgott-Roth, a former member of the Federal Communications Commission.  “Don’t see what else that is out there after this auction.”

Second, firms that do not win spectrum in the auction will have incentives to buy spectrum from other potential suppliers, especially Clearwire. Also, holders of some satellite spectrum that could be “re-purposed” for such purposes, notwithstanding the recent failure of LightSquared (News - Alert) to win approval of its plan to re-use mobile satellite spectrum for a terrestrial Long Term Evolution network.

Third, the spectrum is needed. Though some will argue about the rate of bandwidth consumption growth, nobody argues consumption will not grow, continually, in the years to come.

According to the latest Cisco Visual Networking Index, worldwide mobile data traffic will increase 18-fold over the next five years.

This mobile data traffic increase represents a compound annual growth rate of 78 percent. And though few might argue for growth rates as high as 100 percent a year, almost nobody would object to a forecast of 40 percent annual growth in consumption. At such rates of growth, consumption doubles about every 2.5 years.

Cisco (News - Alert) also anticipates that global mobile data traffic will outgrow global fixed data traffic by three times in the 2011 to 2016 period.

The point is that you would have a hard time finding anyone who would argue global consumers will not need a lot more mobile bandwidth in the coming years.

The expected 120 MHz of spectrum has been authorized for release by the U.S. Congress, but the Federal Communications Commission still has to craft the bidding rules.

That means it is not immediately clear how soon auction rules could be approved, or how long it will take to clear broadcast television users out of the spectrum. Though broadcasters received use of that spectrum for free, they will be compensated to vacate the spectrum. Some think the broadcasters will try to hold on as long as possible to drive up the buy-out prices.

The point, though, is that it is virtually impossible to argue against the proposition that, in the aggregate, users will need access to more mobile spectrum. Some might argue that a particular carrier, here or there, doesn’t “need” such spectrum “right now,” but that is another matter.

Likewise, some will argue about whether spectrum auctions, or even use of licensed spectrum, are the “best” way to accommodate more users who need more bandwidth. But that also is a different question.

In the long term, every supplier will need more bandwidth, because every user will consume more.

Gary Kim (News - Alert) is a contributing editor for TMCnet. To read more of Gary’s articles, please visit his columnist page.

Edited by Rich Steeves

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