If you're part of the growing legions of wireless users, you might be interested to learn that the number of wireless subscribers in the past three years has grown by 40 percent, while minutes of use has grown exponentially into the billions of minutes. So what's being done to handle the increase in wireless traffic?
While current cellular and data networks operate on the 800MHz or 1900MHz spectrum, the growth of wireless use has government and industry working together to make more spectrum available. Under a plan passed last July, the U.S. Department of Defense is expected to transfer part of the military spectrum for commercial use over the next few years. The spectrum being transferred--1710-1755MHz--will be sold at auction on a timetable set by the FCC.
So what does that mean for entrepreneurs? While past spectrum auctions specifically set aside blocks of the spectrum for purchase by entrepreneurs, that probably won't be the case this time around, according to Tole Hart, an analyst with Gartner Group. The spectrum is expected to sell at a premium, though perhaps not quite as high as past spectrum auctions. Entrepreneurs will benefit, however, from the additional services that will be enabled by using future wireless equipment on a clean spectrum.
"This spectrum is going to improve call quality for consumers, improve the likelihood that consumers' calls will get through, and make room for new wireless data services," asserts Travis Larson of the Cellular Telecommunications Industry Association, an industry trade group in Washington, DC. "[It] is absolutely necessary in order to keep up with demand for wireless minutes by consumers and businesses in the U.S."
The timetable for transfer of the spectrum has not been set by the FCC but will probably take place sometime in 2004. In the meantime, a bill currently in the House (H.R.1320) would create a Spectrum Relocation Fund, which would require that those bidding on spectrum at auction reimburse the government for 110 percent of the relocation costs, in addition to the actual cost of the spectrum. The funds would be used by the Department of Defense to purchase new equipment for relocating military systems to comparable spectrum bands as well as for training.
"Loss of needed spectrum access may yield a degradation of military readiness while alternative capabilities are developed and compensatory training requirements are generated," stated Stephen Price, Deputy Assistant Secretary for Spectrum, Space, Sensors and C3 Policy with the Department of Defense in prepared testimony to the Subcommittee on Telecommunications and the Internet. "Each time we are forced to move, we throw into turmoil interoperability with coalition partners, many of whom have purchased equipment designed specifically to interoperate with ours." The Relocation Fund would cover the costs associated with turning over the spectrum. The Department of Defense has also asked that they be given adequate time to implement and test equipment on the new spectrum, to ensure that systems are reliable.
Once a date for the action is set, manufacturers should be able to develop product for the spectrum fairly quickly, according to Hart, though he believes demand for the spectrum is likely to be five to 10 years off. "The spectrum that's being offered probably would be of most interest to a larger carrier just because they'll need the capacity at some point," says Hart, adding that depending on the price of the spectrum, second-tier, niche service providers in rural areas might also be interested in purchasing spectrum.
The development of technology for the spectrum is also likely to spur some growth in the technology sector, since phones, towers and computer elements that conform to the spectrum will need to be developed as networks are rolled out and demand for the products that use the spectrum grows.