Reality Check: The mobile data tsunami meets the spectrum shortage

Editor’s Note: Welcome to our weekly Reality Check column. We’ve gathered a group of visionaries and veterans in the mobile industry to give their insights into the marketplace.
For mobile operators, vendors and their customers, these are the best of times and the worst of times. We all live and breathe in an always-on, wireless broadband connected world where fast is fine, more is good, faster is better – and best, faster, blazing, scorching and “smoking hot” is, well, you guessed it, paralleling the astronomic insatiable increase in demand for mobile broadband applications and services!
On the one hand, there’s never been a broader, deeper selection of devices, apps and services to take advantage of the multi-megabit speeds that technologies such as HSPA, HSPA+ and LTE can deliver. That’s why global wireless traffic increased an estimated 160% to 90 petabytes per month in just the past year, according to Cisco Systems Inc.’s 2010 Visual Networking Index forecast. Some pundits call this trend “a mobile data tsunami.”
On the other hand, it’s increasingly challenging for mobile operators to keep up with this tsunami. Granted, each generation of wireless technology is able to shoehorn far more bits through the same amount of hertz than its predecessors, and emerging offload techniques such as femtocells and Wi-Fi provide new options for distributing the traffic burden.
Yet technology can do only so much as operators are bound by the laws of physics. As outlined by Shannon’s Law, “The theorem establishes Shannon’s channel capacity for such a communication link, a bound on the maximum amount of error-free digital data (that is, information) that can be transmitted with a specified bandwidth in the presence of the noise interference … .” Ultimately there is no magic antenna – and never will be – that operators can wave like a wand to make congestion disappear and enable multi-gigabit connections for every subscriber, everywhere and at every time.
Lifeblood for wireless – and benefit to the economy
Instead, operators need access to more spectrum not only to keep up with customer demand and serve society, but also to help spur innovation and the economies in the countries they serve. In fact, governments throughout the Americas would be hard-pressed to find an industry that’s more ready, willing and able to spend tens of billions immediately on upgrading their networks. Imagine going to a country’s treasury department, whether Argentina, Australia, Colombia, Iceland, Japan or South Korea and saying, “I would like to give the country’s treasury billions of dollars, but more than that, I would like to improve the services to society, spur innovation, invest additional billions in new infrastructure and create thousands of good-paying jobs. Oh and by the way, all I need from you is to please put out some harmonized spectrum for auction.”
Recent history showcases the cycle of spectrum auction benefits. For example, in January, AT&T Mobility announced that it would spend an extra $2 billion this year to upgrade its wireless network because in 2009, data traffic increased 200%. Some perspective: First, the $2 billion is in addition to the $5 billion that AT&T Mobility had already budgeted for 2010 upgrades and in addition to the amount it spent to buy spectrum.
Second, although AT&T Mobility’s network investment is impressive, it’s also a fraction of what the Americas’ mobile industry has spent this year to keep up with customer demand. All of those investments create jobs and increase tax revenue for municipal and federal governments throughout the Americas. Regardless of your personal politics, think of wireless as the region’s largest shovel-ready stimulus project. Or maybe we should rephrase that, and replace the word “shovel” with “smart phone.” D