Analysts are divided on the issue of whether a shortage of spectrum is threatening the development of mobile services in the US. A Deutsche Bank analyst report published on Thursday claimed that “the biggest structural challenge facing the wireless…
Analysts are divided on the issue of whether a shortage of spectrum is threatening the development of mobile services in the US.
A Deutsche Bank analyst report published on Thursday claimed that “the biggest structural challenge facing the wireless industry is a need for more spectrum depth in order to handle rapid growth in mobile data usage”.
The authors of the report said that “traditional” wireless carriers (the four national operators and regional operators) support 95% of subscribers with just 53% of the licensed mobile spectrum.
They said that only two mobile operators (AT&T and Verizon Wireless) hold at least 20MHz of spectrum “that is free and clear across all/most of their footprints to support LTE, which is necessary to deliver true broadband speeds”.
The four national operators in the US are AT&T, Sprint Nextel, T-Mobile and Verizon Wireless.
The Deutsche Bank conclusions chimed with earlier views expressed by the FCC. The regulator’s chairman, Julius Genachowski, warned in March that the US was facing a “spectrum crunch” and that more spectrum needed to be made available for mobile broadband services.
Yet a very different argument was advanced in a report by Citigroup analysts, published on 22 September.
“We do not believe the US faces a spectrum shortage,” said the Citigroup analysts.
“However, unless incumbent carriers accelerate their 4G migration plans, or acquire more underutilized spectrum, upstart networks – like Clearwire, LightSquared and Dish – could have a material speed advantage over incumbent carriers provided they can clear meaningful hurdles for funding and distribution.
The Citigroup analysts said that US wireless carriers currently have 538MHz and another 300MHz of additional spectrum “waiting in the wings”. But they are currently only using 192MHz of this spectrum.
They argued that too much spectrum is controlled by companies that are not planning to roll out services or that face business/financial challenges.
They also said that larger carriers could not readily convert a substantial portion of their spectrum to 4G services, as most existing spectrum was already being used to provide 2G-3.5G services.
The Citigroup research named the top eight carriers by spectrum holding.
According to the Citigroup list, the leading spectrum-holder is Clearwire, the WiMAX wholesaler in which Sprint Nextel holds a majority stake, with 133MHz.
After Clearwire came the two largest US mobile operators: Verizon Wireless (83MHz) and AT&T (77MHz).
Sprint itself has 51MHz and T-Mobile, AT&T’s acquisition target, has just 48MHz.
AT&T has argued that its proposed US$39bn acquisition of T-Mobile would provide “a fast, efficient and certain solution to the impending exhaustion of wireless spectrum in some markets”.
Yet a spokesman for Sprint Nextel claimed that AT&T “has more spectrum … and more unused spectrum” than any carrier.
“AT&T wants the public to believe it has more spectrum pressure than any other carrier – it does not.”
CTIA, a trade association that represents the US wireless industry, said that “there is a need to bring additional spectrum to market to fuel what is one of the country’s key industries”.
It added: “Our member companies would not be lining up to spend billions of dollars at auctions for the right to use this spectrum if there was not explosive consumer demandfor mobile broadband services.”
The CTIA’s members include the four national mobile operators.
