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Citigroup questions if US spectrum shortage exists

Grant Gross | Oct. 3, 2011
For more than two years, the U.S. mobile industry has warned of an upcoming spectrum shortage, but two analysts at Citigroup don't buy it.

For more than two years, the U.S. mobile industry has warned of an upcoming spectrum shortage, but two analysts at Citigroup don't buy it.

AT&T, trade group CTIA and even officials with the U.S. Federal Communications Commission have talked frequently about a coming spectrum crunch, as mobile customers move to data-sucking smartphones and tablets. Smartphones use 24 times the spectrum compared to standard mobile phones, and tablets use 120 times the spectrum, FCC Chairman Julius Genachowski said in a speech on Tuesday.

"The spectrum crunch is the single biggest threat to one of the most promising parts of our economy," Genachowski said.

But Citigroup analysts Jason Bazinet and Michael Rollins questioned what has become the convention wisdom in the mobile industry. The U.S. has plenty of spectrum for mobile broadband, but much of it is in the wrong hands, they said.

U.S. carriers have 538 MHz of spectrum dedicated to mobile data and voice and are only using 192 MHz, the two analysts said in a report released Sept. 22. Major carriers control 422 MHz of spectrum, Bazinet and Rollins estimated.

"Too much spectrum is controlled by companies that are not planning on rolling out services or face business and financial challenges," the report said. "And, larger carriers cannot readily convert a substantial portion of their spectrum to 4G services, because most existing spectrum provides 2G-3.5G services to current users."

Some large U.S. carriers may face a spectrum shortage down the road, but much of the U.S. spectrum available for mobile broadband is in the hands of companies slow to move forward with business plans, Rollins said. "It's the control of spectrum, not the availability, that's the real constraint," he said.

Cash-strapped Clearwire has 133 MHz of spectrum, but provides 4G service to markets covering only about 42 percent of the U.S. population. Startup LightSquared controls 59 MHz of spectrum, but its plans to build a nationwide 4G and satellite network are stalled because of interference concerns raised by GPS users.

Dish Network controls 47 MHz of undeveloped spectrum, with the company asking the FCC in August if they can use it to offer LTE (Long Term Evolution) service. The Citigroup report counts the Dish holdings as spectrum available in the future, not currently available spectrum.

In addition, some U.S. carriers have significant amounts of spectrum tied up in 2G and 3G services, Rollins said. He and Bazinet estimated that 147 MHz of the 192 MHz of spectrum now in use for mobile services is currently dedicated to 2G and 3G services.

"Their pace to 4G is dampened by the needs of converting spectrum over to 4G," Rollins said. "Because there's so many [2G and 3G] users on that, they need extra space, they need extra room, to be able to manage this conversion. That's where some specific players could use more spectrum, but there's a lot already licensed in the industry, so it's a question of how they get it."


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