How scarce is wireless spectrum, really?

The auction for 700 MHz spectrum — for years the focus of much anticipation within telecommunications circles — is almost upon us. In an age when wireless waves are a key part of the infrastructure that allows people to use the latest gadgets and services, spectrum has become an increasingly sought-after resource. The wireless airwaves are the oxygen of the wireless industry, but some believe a perceived scarcity exists because of the way governments have managed it. The Dynamic Spectrum Alliance, an international consortium that includes high-tech heavyweights such as Facebook Inc., Google Inc. and Microsoft Corp., says on its website that an “artificial spectrum scarcity” exists as a result of regulatory policy around the world. Gregory Taylor, a post-doctorate fellow at Ryerson University specializing in spectrum policy and founder of the group Canadian Spectrum Policy Research, an observer member in the Dynamic Spectrum Alliance, said the 20-year, exclusive licences to be sold in the upcoming Canadian auction are an example of that phenomenon. “The fact that we give out exclusive licences in these areas has the consequence of creating an artificial scarcity,” Taylor said in a phone interview. “The exclusive licences are not an efficient use of spectrum. Lots of times the spectrum sits there idle. … To me, that’s an exclusive lockdown that’s damaging to technological development in the country.” Kurt Eby, director of regulatory affairs with the Canadian Wireless Telecommunications Association, said most of CWTA’s membership, which includes companies such as BCE Inc., Rogers Communications Inc. and Telus Corp., favour the kind of long-term licences that are being made available in the 700 MHz auction, which starts Jan. 14. “It provides more certainty with access to that resource,” Eby said in a phone interview. “Wireless is a very capital-intensive business, and if your licence was shortened to 10 years or seven years, I don’t know if you’d see the capital intensity there, because people would be concerned about not being able to make a return on that investment and not having the certainty of what happens to their licence after it expires.” Canada’s largest wireless carriers did not provide comments for this article, with most citing the need to stay quiet on issues of government spectrum management so close to the Jan. 14 auction. An Industry Canada report called “Commercial Mobile Spectrum Outlook,” released in March and available on its website, says: “Spectrum is a limited resource, and the ‘usable’ spectrum range (given current technologies) is completely allocated to existing services. As a result … Canada must rely on a combination of demand-side and supply-side measures in order to meet the spectrum needs of new or growing services.” Industry Canada, which did not make any spokespeople available in time for the publication of this article, says in the report that licensees of spectrum have a responsibility to use it more efficiently. It adds that commercial mobile service operators spent more than $13 billion between 2003 and 2010 to make their usage of spectrum more efficient. This report adds that Industry Canada has a role to play in “reallocating limited spectrum resources” in order to “meet the growing demand for commercial mobile services.” Eby said government should move faster on making spectrum available, though he would not go as far as to say government is creating a false shortage of spectrum. “Spectrum is very necessary and needed, and should be made available in a timely fashion and should be made available in a predictable fashion, if possible,” he said. “I would say it’s not really as timely as possible. That would be our biggest concern, that the spectrum isn’t coming fast enough.” Eby noted that Canada’s auction for 700 MHz spectrum is happening six years after an auction for the same bandwidth took place in the United States. He added that Canada’s auction in 2008 for AWS spectrum happened about two years after the sale of similar airwaves in the U.S. “The common terminology used to be a three-year lag between the U.S. and Canada,” Eby said. “I don’t think that lag exists anymore; it’s certainly not three years, if at all. Canadians get iPhones at the same time as Americans.” Taylor said spectrum is a “finite resource,” over which some kind of government management is needed. “The earlier parts of radio had virtually no control over it and it was a disaster,” he said. “There were all kinds of radio stations using the same frequency and just making a big mess. And then there was concern over the safety issues. I mean the control of radio frequencies was seen as a contributing factor to the sinking of the Titanic.” In contrast to, say, oil or fish, spectrum is a non-depletable resource that will not go extinct, Taylor added. “It’s not going to be like fish on the banks of Newfoundland,” he said. A study done for Industry Canada by Red Mobile Consulting, released in June 2012, predicted growth in cellular data traffic would grow by 30 times between 2010 and 2015. The same study showed that demand for spectrum to be used for wireless service was expected to multiply about three times over that same period, with more efficient technology allowing less spectrum to be used for more services. Taylor said that LTE technology, which is becoming the standard for mobile phone services, is “approximately 10 times more efficient in its use of spectrum than previous technologies.” A type of technology that is still in development, Taylor noted, is cognitive radio, which can detect unused spectrum and use it. He said there is potential for this technology to work with mobile phones and other devices. On improvements in the way technology uses spectrum, Eby said: “The network demand explosion is so great that I think technology has really helped address that and probably made spectrum more efficient than ever thought possible. “But the demands on the network are just so much greater than anybody ever predicted that, again, you come into this problem where you need more spectrum.” Adrian Foster, a spectrum expert and partner with McLean Foster and Co., said one way carriers are making better use of their spectrum is by increasing usage of femtocells, which transmit signals to customers, operate on a low bandwidth and cover short distances, similar to the way WiFi works. That’s in contrast to larger base stations that need higher bandwidths to cover longer distances. “Instead of having a base station in downtown Ottawa that needs to cover a square mile or a radius of one kilometre and all of the users in that one kilometre, they can now create 100 femtocells — a low-powered, WiFi connection that just covers a radius of 100 feet. They can repeat the use of that spectrum,” he said in a phone interview. “That’s always been a solution; if you wanted more spectrum, just increase the number of cell sites.” Foster said it has become more economical for carriers to use femtocells to provide network service, with costs for such infrastructure falling to hundreds of thousands of dollars from millions of dollars a few years ago. He added there is no risk of running out spectrum, as economics and government have a track record of being able to make spectrum available for cutting-technology with economic value. “Broadcast had a huge swath of spectrum, and they had this spectrum for 100 years,” Foster said. “In fact that’s one of the first uses of spectrum, to have radio and television broadcasts. Well, over time it became obvious that television broadcast had so much spectrum, and it was not using it as efficiently .” The government’s message to broadcasters, Foster said, was: “You guys are going to have to find a new way of transmitting your signal because we’ve got to provide more spectrum to wireless.” Taylor said more access should be granted for use of unlicensed spectrum for research purposes, noting that such policies in the U.S. in the 1980s resulted in the advent of WiFi. “When they set it aside, they didn’t know what the technology was going to be and it became this incredibly significant development and one that’s had an incredible amount of success,” he said. Taylor added there’s much potential in TV white space, or spectrum designated for over-the-air television signals that is not fully used. Taylor said with the advent of more efficient digital signals to carry TV content through the air, this kind of spectrum exists throughout Canada. “Almost in every part of the country, there is spectrum sitting fallow in that television zone, and it should be used,” Taylor said. “We need to develop access to that that anybody can use.” Although the 700 MHz spectrum to be sold at January’s auction was used for TV broadcasting before the switch to over-the-air digital TV in 2011, Taylor said in a follow-up email this doesn’t qualify as TV white space, which is considered excess spectrum currently designated for TV. Eby said there is no reason for government to store away spectrum if it’s usable. In the event advancements in technology create a need for more spectrum, the market would sort itself out, he said, noting that many of Canada’s wireless companies also have a landline, fibre or cable network. “If spectrum became so scarce, you might see some traffic-management practices, so when people are in the house, you’re automatically rerouted onto WiFi and then onto the fibre network instead of the wireless network, and things like that,” he said. “I think we could address it from a market level if happened.” — With reporting by Derek Abma at dabma@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

How scarce is wireless spectrum, really?

News | December 17, 2013

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