YOU ARE AT:PolicyPCIA 2012: Policy indecision stunts wireless growth

PCIA 2012: Policy indecision stunts wireless growth

ORLANDO, Fla. – Echoing sentiment from last week’s Competitive Carriers Association event in Las Vegas, infrastructure players are looking for clarity and certainty when it comes to policy decisions from government regulators.

During an educational session at this week’s PCIA Wireless Infrastructure Show in Orlando, Fla., representatives from tower companies, wanna-be carriers and the capital markets all noted that mixed messages and convoluted policy decisions are hampering the build out of much needed wireless network infrastructure to support surging demand from consumers.

Ed Roach, associate general for regulatory compliance at SBA, noted that President Obama’s executive order stipulating the need for the government to free up 500 megahertz of new spectrum to serve the wireless market was being held up by a more recent executive order that questions the need and source of that new spectrum.

Roach did note that the two things needed to satiate a nearly unsatiable appetite for mobile broadband is spectrum and infrastructure. “We are going to need more of both,” Roach said.

Too many LTE networks?

The most controversial comment from the session came from the capital markets side where J.P. Morgan Managing Director Phil Cusick claimed that there were currently too many operators trying to do too much of the same thing and that it would be beneficial if some would “just go away.”

Cusick explained that while there was indeed a need for more capacity and more efficient use of spectrum assets, the current model of various carriers trying to build out similar network footprints using similar network technology did not make fiscal sense. Cusick added that this was an inefficient use of capital and that the challenge for the financial side was to get carriers to think of more efficient uses of their investments.

“There is a need for some of these carriers to go away,” Cusick noted, adding that there are probably three too many LTE networks being deployed.

As an example, LightSquared noted it would spend approximately $7 billion to build out its nationwide network plans with partner Nokia Siemens, which would just be the starting point for a needed footprint. Factor in densiying that network as well as the necessary support services, marketing and device support, and you could easily be looking at around $15 billion just to rollout a nationwide service before attracting any paying customers. All of this in an environment where the current wireless landscape is dominated by a pair of well-funded and established nationwide operators and dozens of smaller rivals.

Kneuer concurred, adding that the issue is being exacerbated by ill-defined rules by the government, citing the recent inability for AT&T to acquire T-Mobile USA due to fears of spectrum consolidation and weakening of competition. A recent decision by the Federal Communications Commission regarding potential for future spectrum screens or possible spectrum caps has further muddied the waters, with Kneuer noting said will continue to be a challenge until rules are defined.

Cusick seemed to think the capital market could help accelerate that decision making process, explaining that those companies that can’t be acquired could simply run out of money and be forced to liquidate their assets, or at least force some difficult mergers.

Overall, Cusick said that the current regulatory environment just moved too slowly for the financial community and that recent success in regards to tower siting and the famed “shot clock” had very little real impact on the capital market’s view of the wireless space.

Solving the problem

One company looking to fill in the spectrum void is Dish Networks, which is in the process of trying to attain government approval to use approximately 40 megahertz of spectrum in the 2 GHz band to launch LTE-based services. Alison Minea, corporate counsel at Dish, explained that the company’s plans would put into use spectrum that has not been utilized for at least 10 years.

Minea also attempted to counter the fiscal question by noting that unlike current carriers, Dish was not beholden to legacy network technologies that drain precious capital nor to current pricing models that require some carriers to protect certain service offerings at the expense of tapping into niche services. Minea said the company

As for what the tower industry could see going forward, Roach forecast that the issue of tower siting will only become more difficult and that rather than trying to install new towers, many companies will look to update their current assets or completely replace those towers with more advanced models that allow for more tenants or better technology use.

Bored? Why not follow me on Twitter?

ABOUT AUTHOR