February 22, 2001, 4:22 PM — In this newsletter I tend to avoid writing too much about activities that happen in the background of the wireless networking picture -- issues that first and foremost affect the wireless service providers that build the mobile networks that deliver the services you buy. After all, to a certain degree, who cares how all this stuff works as long as it does -and is available at a palatable price?
But you need to strike a healthy balance between unburdening yourself from back-end network intricacies (youre outsourcing to a service provider to do the worrying, right?) and how developments in areas such as spectrum allocation may affect the decisions you make now or in the near future.
Youve likely heard both sides of the debate as to whether the current 45 MHz spectrum cap imposed on wireless network operators within a given geographic market should be raised or lifted entirely. The Federal Communications Commission has recently decided to retain the 45 MHz spectrum cap, hoping to continue to promote wireless competition and protect consumers. Its thinking behind the decision is this: The average price per minute for mobile phone use dropped by about 50% between 1994 and 1999 (and subscriptions have more than tripled) due to increased competition. Allowing lots of industry players to participate, then, has helped make cellular phone use a common business and personal tool. Eliminating the spectrum cap could reduce the pool of providers and jeopardize the future of these benefits. However, now that there is a new FCC commissioner, Michael Powell, this issue is likely to be revisited.
Its a murky situation. Wireless spectrum is a finite source (unlike fiber optic or copper cabling). If you distribute it too thinly, giving more network operators each a smaller piece of the whole, each carrier is capacity-limited and potentially hindered from offering you rich, value-added services that require substantial bandwidth and must be accessible to roaming users from multiple cities. (The farther networks reach, and the more bandwidth they sustain, the more valuable they are to the subscribers. For example, witness the merging of multiple regional Bell operating companies -- SBC with PacTel and Ameritech, Bell Atlantic with Nynex and GTE -- because regional service breadth doesnt cut it for todays networking requirements.) Do you want to choose a provider who may be bandwidth- and reach-limited?
On the other hand, if you let any single, powerful entity have too much spectrum in a single market, were sort of back to the old RBOC-like dominance situation that crushes competition, which stalls innovation and user price benefits. Again, note the glaring lack of successful competition in the local loop.