A breeze and darkening clouds tend to signal a coming storm. The fishing boats start looking for safe harbor when they encounter the winds. This event may be playing out in the world of wireless technology, as a looming shortage of spectrum causes analysts and community activists alike to ponder a safe harbor for consumers and content creators in general, and minority consumers and content providers in particular.
Spectrum refers to the electromagnetic frequencies necessary for carrying signals from your cell phone to your carrier’s tower and eventually to the person you are calling. Think of the communication pathway between your phone and the cell towers that transfer your call as containing a two lane road, with one lane sending your voice to a friend while the other lane sends your friend’s voice to you. The crunch occurs as more conversations try to get on these roads and the roads can’t be widened anymore, hence the pending storm.
The Minority Media and Telecommunications Council (MMTC), the nation’s leading advocate for people of color in the media and telecom industries, is stepping up to play harbormaster. Tomorrow the MMTC will sponsor a forum entitled, “The Looming Spectrum Crunch: How We Can Prevent a Crisis for the Underserved and Why Communities of Color Should Care.” The speakers will include futurists from the Aspen Institute and Mobile Future, as well as the wireless advisors for each of the three FCC commissioners.
According to David Honig, president of MMTC, there are a few reasons why minority consumers and entrepreneurs in particular should be concerned about the spectrum crunch. According to Mr. Honig, spectrum is a finite resource. Over a hundred years ago when broadcasting began, there was plenty of spectrum available. As we moved into the 1940s we started to see the demand for broadcast licenses exceed the supply of spectrum that would accommodate those licenses.
The demand has continued to grow to the point where entering the broadcast market means purchasing an existing station versus applying for your own license and building your own station. This change in the broadcast market structure has made it hard for minorities to enter the broadcast market and we may be seeing the same thing now in the wireless communications market, says Mr. Honig.
“By the end of 2013 in very large, dense markets, we will face a wall”, says Mr. Honig. According to the Federal Communications Commission (FCC), the country needs an additional 500 MHz of spectrum by 2015 in order to meet our growing wireless needs. AT&T estimated that demand for its wireless data services grew by 8,000% between 2007 and 2010 and that the first seven weeks of 2015 data demand will equal to that in all of 2010.
Mr. Honig identified two options that could help relieve the pain of heading into a crash in 2013. One of those options would be to allow the top four or five carriers to buy spectrum held by other companies that can’t build out nationwide networks – an example being Verizon’s application to purchase spectrum held by a number of cable companies, including Comcast and Time Warner.
The second option involves incentive auctions for spectrum held by broadcast stations. These auctions, recently approved in the payroll tax cut extension legislation, would allow broadcasters to voluntarily tender some of their digital television spectrum to the FCC to be auctioned to wireless carriers, with bid proceeds being split between the U.S. Treasury and the broadcasters.
The problem with both options is that they will not provide enough spectrum in time to avoid the spectrum crunch, at least in large markets.
And what are the consequences? Reduced quality of service or “QoS”, for starters, could decline. An insufficient amount of spectrum relative to demand would naturally result in an increased number of dropped calls or a slowdown in data traffic.
Another consequence would be an expansion of the digital divide. Mr. Honig raised the point that partly due to the wealth gap between minorities and whites in the U.S., minority consumers may not be able to absorb the increase in the rates for wireless services that would have to be imposed by carriers in order to reduce demand to match the limits of the supply of spectrum.
“Minorities over-index on wireless”, Mr. Honig pointed out. Given that a disproportionate number of African and Hispanic Americans use wireless to access broadband services, price increases that keep Blacks and Latinos from using broadband expands that gap.
Finally, you have to look at connectedness as an issue of democracy, Mr. Honig said. “Having everybody connected is a public good of enormous value” because it means that in a digital society, everyone would have an equal opportunity to avail themselves of the jobs, educational opportunities, health care choices, entrepreneurial options and public services that increasingly are only available online.