What exactly is a spectrum shortage?

Posted on December 20, 2011 / 2 Comments

When I was in government, I heard complaints of shortages of scarce resources and ability to earn adequate revenue all the time. I paid attention, but always verified. Specifically, with regard to claims of spectrum “shortage,” there is a problem. It is true that without a minimum allotment (say 2.5 MHz for CDMA and 5 MHz coupled on GSM), it’s next to impossible to properly design a network. But it is a fact that more base stations can be substituted for spectrum.

The logic for substituting spectrum for civil works and vice versa depends on the price of spectrum. This is sort of like the perennial debate about energy scarcity. One group says we’re running out of oil. But other points out we will never run out of energy because as oil prices increase, more reserves will become visible, more energy sources will become viable. This is the story of shale, the new, new thing in energy. So it’s very difficult to define scarcity independently of price.

The alternative approach was tried by a consulting firm in India few years back. They changed their name a few years back and thus obliterated both names that were stored in my neurons. Their approach was to work some fancy benchmarks based on user numbers, terrain, etc. According to that study, India had a spectrum shortage. But the story is of course different in Lutyens Delhi (most likely there is a shortage) and remote Himachal (most likely not). So the unit of analysis is key to this approach.

So that is why I am skeptical about the statement below:

In a statement, AT&T said that the actions of the Federal Communications Commission and the Department of Justice harmed customers. The cellular giant explained that the American wireless industry is suffering a spectrum shortage, which the merger would have mitigated.

“The AT&T and T-Mobile USA combination would have offered an interim solution to this spectrum shortage. In the absence of such steps, customers will be harmed and needed investment will be stifled,” the company said.

Irrespective of the fate of T Mobile, it would be good to find an answer to the question “what is spectrum shortage”?

2 Comments

Aslam Hayat
December 21, 2011, 11:13 am
I agree, beyond minimum spectrum allocation it is essentially capital cost saving argument but still I would prefer spectrum in the hands of operators rather than in the hands of Regulators.

There are challenges with minimum spectrum allocation: QoS is linked with spectrum, more BTSs cause more environmental issues and health risks. I believe the amount spent in narrowing cell size, should be spent on service provisioning.
Aslam Hayat
December 30, 2011, 3:10 am
Here is an interesting article talking about spectrum scarcity and spectrum commons : “FCC scrambles to cope with data avalanche”
http://money.cnn.com/2011/12/29/technology/white_space_spectrum/