Spectrum demand to hit “crisis” level by 2015

The wireless industry’s need for additional spectrum to support the growing demand of consumers is set to skyrocket, according to a recent report from investment firm Canaccord Adams entitled: “A bandwidth crisis on the horizon?”
Citing a number of recent reports and wireless carrier comments, Canaccord Adams forecasts that the industry’s two largest operators, Verizon Wireless and AT&T Mobility, could require 720 megahertz and 640 megahertz of spectrum respectively by 2015. These operators currently control on average less than 80 megahertz of spectrum with little additional spectrum support expected in the near term.
The claim is based on a report from Cisco Systems Inc. that said mobile data traffic in North America will double every year and reach 66 times the levels seen in 2008 by 2013, with a doubling in growth year-after-year into 2015.
The Canaccord Adams claim follows a recent report from industry trade association CTIA that said the wireless industry would need an additional 800 megahertz of spectrum to support continued consumer demand for mobile services.
The Federal Communications Commission has about 50 megahertz of spectrum currently set aside for distribution to the wireless industry to add to the 534 megahertz currently controlled by wireless operators.
Canaccord Adams notes that following the 700 MHz auction in 2008, Verizon Wireless has an estimated average of 80 megahertz of spectrum across its markets spread through the 700 MHz, 850 MHz, 1.7/2.1 GHz and 1.9 GHz bands. The firm said that approximately 50 megahertz of this total has been deployed in support of the carrier’s CDMA network, and that going on previous statements from the Verizon Wireless its move to LTE will increase throughput seven times relative to its CDMA network. Canaccord Adams then notes that if assuming Verizon Wireless was currently at 85% network capacity with CDMA and upgraded its full network to LTE it would cut spectrum consumption to only 6 megahertz.
However, with the assumption that data traffic will increase 30 times by 2013, the spectrum demand would skyrocket to 180 megahertz. Then adding Cisco’s forecast of a doubling of demand between 2013 and 2015 that spectrum demand would further increase to 720 megahertz. Canaccord Adams added that if Verizon Wireless was able to offload 50% of that forecast traffic onto Wi-Fi or picocell networks, it would still require 280 megahertz of spectrum by 2015, or 200 megahertz more than the carrier controls today.
Similar expectations were forecast for AT&T Mobility, which Canaccord Adams said was one of the reasons the carrier decided to ditch plans to upgrade its current HSPA network beyond the 7.2 specification and bump its LTE deployment plans to 2011.
Canaccord Adams claims AT&T Mobility has an average of 59 megahertz of spectrum across its network with an average of 77 megahertz in its top markets. The firm then assumes that AT&T Mobility is currently running at 90% of network capacity and that with the upgrade to HSPA 7.2 and then onto LTE that is expected to provide a 10 times increase in data throughput, network requirements would fall to just over 5 megahertz of spectrum running on an LTE network. Punching in similar math requirements as in the Verizon Wireless example, AT&T Mobility’s spectrum needs would jump to 640 megahertz by 2015, or around 245 megahertz if it were to offload 50% of that traffic to Wi-Fi or picocells.
Canaccod Adams added that while these calculations provide a simple view of potential spectrum requirements, they do not take into account the time needed to deploy networks nor the time and effort needed to transition customers to the preferred LTE networks. In addition, LTE technology is seen as gaining its greatest efficiency when deployed in significant spectrum blocks of at least 20 megahertz for both the uplink and downlink, further complicating the migration of both customers and network resources.