The Spectrum Spectacle
FCC Auction Creates Wireless Broadband Buzz
Bradley Kramer — Apr 01, 2008
Ideas and pictures and sounds seem to float about the ethereal plane we call the Internet. Never is that truer than when we talk about radio spectrum, the medium that transmits wireless broadband services through the air.
However, there is a limit to the amount of data (or capacity) that spectrum can reliably deliver. That limit — called Shannon’s Law after Claude Shannon who discovered the principle in 1948 — prevents more than 6 bits per second per hertz of error-free data transmission, given current technology.
Let’s take a trip in the Wayback Machine to high school physics. As Shannon’s Law dictates, lower radio frequencies offer lower throughput capacity, but at the same time the propagation properties of those radio waves allow for wider coverage and better indoor penetration. Higher frequencies, conversely, offer higher throughput, but less penetration.
Nevertheless, the more spectrum a network provider has, the more capacity and, therefore, more services it can provide. But there also is a limit to the amount of spectrum available. It’s no wonder that broadband industry leaders like AT&T, Google, Verizon and Qualcomm were set a frenzy when the spectrum for analog broadcast TV went to auction.
The Federal Communications Commission sparked a bidding war in March for spectrum that has been described as beachfront property — the 700 MHz band. This spectrum has long been limited to TV signals. But not for long.
The FCC mandates that all TV signals must switch to digital broadcast by February 2009. When that happens a whole new swath of spectrum will be available for wireless broadband use. That’s akin to the beachfront property in eastern California that will be in demand after the Big One hits.
Other than being untouched in the broadband market, the 700 MHz band is attractive to service providers because the spectrum’s physical properties make it well-suited for widespread service coverage. As a relatively low frequency, the 700 MHz band also has the ability to penetrate buildings better than other spectrum used for wireless Internet services.
But a drawback is that the spectrum will have lower capacity for transmitting applications like video, voice and data.
The 700 MHz auction sent rumblings throughout the broadband industry. However, looking at the results, it didn’t open the door for many new companies, says Nadine Manjaro, senior analyst at ABI Research. The auction promoted more competition in the market, but she says the immediate impact of the auction was primarily political. The impact on technology and services will not be felt until next year and beyond.
“The auction was labeled as huge, and there is some validity to that,” Manjaro says. “It created a lot of excitement, but I’m not sure that much of the emphasis was marketing hype.”
When the
final gavel sounded, the FCC earned more than $19 billion from the auction and
that figure does not even include the D-Block, which was a large contiguous
block of spectrum reserved for public safety as well as commercial use. The FCC
put a reserve price of $1.3 billion on the D-Block expecting high interest.
However, the block only received one bid of $472 million. The FCC is expected
to re-auction the D-Block later this year. Even still, the 700 MHz auction was
the biggest auction in FCC history.
Part of the auction’s success can be attributed to Google getting involved, Manjaro says.
Google pledged to bid $4.6 billion during the auction if the FCC agreed to four standards that would ensure that any network deployed over the spectrum would be kept open access. (Visit our archives for the July/August 2007 story “FCC Revises 700 MHz Rules” at www.lastmileonline.com for more on this subject.)
The FCC agreed to two of Google’s requests, for open applications and devices. In turn Google ponied up its dollars. However, the company did not win any spectrum. According to the Google Public Policy Blog (googlepublicpolicy.blogspot.com), the company was primarily interested in the C-Block, but was outbid by Verizon.
“We vowed to bid at least $4.6 billion in the auction if the Commission adopted all four rules,” wrote Richard Whitt and Joseph Faber in an April 3 post on the Google blog. Even though the FCC ultimately agreed to only two of the conditions, which nullified our original pledge, we still believed it was important to demonstrate through action our commitment to a more open wireless world.”
Manjaro says Google’s involvement helped drive demand for the spectrum. However, even though the company did not win anything, it still got what it wanted because of those requests the FCC granted. No matter what company owns the spectrum, Google will remain a force in online advertising where the company dominates the market. “Ultimately, the auction was better for Google than anybody else,” she says.
Tropos Networks CTO and cofounder Narasimha Chari agrees that Google got what it wanted, noting that AT&T and Verizon were the biggest spectrum winners. But Chari tempers the enthusiasm about the 700 MHz band.
“Spectrum is very valuable, but all spectrum is not created equal,” he says. “Some spectrum is more valuable than others. For instance, 700 MHz is probably more valuable than unlicensed 2.4 GHz, because of its superior propagation characteristics. The 700 MHz band is less attenuated by trees and obstructions. It can get inside buildings. It doesn’t need line of sight.”
However, because of the limited amount of spectrum available, the 700 MHz band does not offer as much total capacity for high-bandwidth services. Chari says that most wireless technology offers in the range of 5 bits per second per hertz — just shy of the limit, according to Shannon’s Law. Just to show the math, that translates to 50 megabits per second (Mbps) of throughput if a provider has a 10 MHz channel.
“The expectation is that a company can have very large cell sites and offer very wide coverage,” Chari says. “The problem with very large cell sites is that you’re spreading that capacity over a very large area. So the capacity per capita, if you will, is diminished because you’re covering such a large area.
“If you have 10 megabits capacity and it’s covering 10 square miles, it’s only 1 Mbps per square mile. I think some people are thinking of using 700 MHz as an underlay layer, using it in conjunction with other higher capacity techniques and using 700 MHz as a fallback.”
Both the type and amount of spectrum is important in determining throughput capacity, Chari says. The FCC auction was so enticing because it opened up a fair amount of spectrum with great propagation characteristics.
“The 700 MHz band is kind of a sweet spot for a lot of companies,” Chari says.
Putting Spectrum to Use
The majority of the 700 MHz spectrum was snapped up in the March auction, but what those winning bidders will do with their shares remains to be seen.
Verizon won a nearly nationwide portion of the C-Block. AT&T won most of its licenses in the B-Block to pair with licenses it already owned. Qualcomm got licenses in the E-Block that cover such cities as Boston, Los Angeles, New York and Philadelphia. The rest of the licenses went to a variety of smaller providers. (You can view a 70-page PDF of all the auction winners online at www.lastmileonline.com.)
Many of those companies are expected to upgrade current services or deploy next-generation networks over the spectrum, using long-term evolution (LTE) or WiMAX networks. The WiMAX Forum released a white paper that argues that WiMAX is a technology that is well-positioned to be deployed over 700 MHz and help close the digital divide.
“[WiMAX] is in fact, potentially, the only available technology that has the necessary performance, economic structure and global support to provide for high-quality, cost-effective broadband access in rural regions with low subscriber density,” the WiMAX Forum document says. “Complementing WiMAX in the 700 MHz band with deployment of WiMAX networks in the higher frequency bands in higher population density regions, operators will have the opportunity to offer the best balance between cost and system capacity.”
The D-Block, which was not sold, is designated for public safety use, but Chari expects that some of the providers that won spectrum will deploy public safety networks with the licenses that were sold. Intelligent transportation systems (ITS) are also a possibility. Those licenses sold could also be used for network backhaul or resiliency.
Some of the smaller companies may try to leverage the licenses as a different kind of moneymaker, Manjaro says. Companies like Cavalier Wireless and King Street Wireless that won significant amounts of spectrum may speculate on the licenses like stock market shares and resell them at a higher price in the future.
However, Manjaro says those companies have to be careful not to wait too long. The FCC can revoke licenses if a network is not deployed within four years of the sale.
Broader Spectrum
The 700 MHz
band is not the only spectrum topic that has generated excitement in the
industry. Two other areas have become hot issues: “white spaces” and “dynamic
spectrum.”
White spaces refer to the unlicensed spectrum within the 700 MHz, which were left vacant to avoid interference between TV channels. If the FCC frees up those frequencies, then that will translate to the possibility of more capacity for networks.
One of the drawbacks of mobile broadband in general is the ability to provide symmetrical uplink and downlink, Chari says. Now, download speeds are much faster than upload speeds on mobile networks.
“A fallback option to an unlicensed TV band would be very useful in closing that coverage gap with mobile devices,” Chari says.
However, with unlicensed white spaces, interference can be a problem. Dynamic spectrum is a technology that allows a service provider to scan multiple frequencies for unused spectrum, Manjaro says. In addition, not all spectrum is in use at all times. Dynamic spectrum technology senses when spectrum is unused and can switch to another frequency if another user accesses the current spectrum.
Dynamic spectrum technology could revolutionize communications, Chari says, because it could make spectrum a less scarce commodity. It could allow other competitors access to bandwidth while protecting incumbent users of the spectrum.
The availability of spectrum relates directly to the amount of services that providers can offer consumers, and those consumers will have more access to the sights and sounds found within the Internet world.
Bradley Kramer is associate editor of Last Mile and can be contacted at bkramer@benjaminmedia.com.
