The 'Traffic Jam' You Can't See

12/06/2013 06:51 pm ET | Updated Feb 05, 2014

A recent New York Times headline cautioned, "Wireless carriers warn of crisis in mobile spectrum." Is spectrum -- the essential building block of cell phone service -- really in short supply? What is causing the shortage? How would a shortage affect the typical smartphone and wireless tablet user?

It's hard to visualize spectrum, how it works and why the U.S. needs more. Some experts describe wireless spectrum as an invisible super highway in the sky that allows radio signals to stream back and forth between smartphones or tablets. The comparison to highways is a good one, except the wireless capacity is more like a two-lane state road than a four-lane divided interstate highway. The Wall Street Journal CIO Journal elaborates, "For users, a spectrum shortage is like a traffic jam. They can expect wireless 'rush hours' to be characterized by failed attempts to connect, and more instances of dropped calls or frozen Web browsing."

The comparison with the construction of the interstate highway system in the 1950s and 1960s can provide some insights into what is likely to happen to wireless broadband capacity in the next 10 years.

In 1950 there were 40 million vehicles in the U.S., a number that was projected to more than double by 1970. In addition, the annual average mileage per car was expected to significantly increase. If you combined both these factors, the total number of highway miles traveled in that 20-year window was expected to triple. Yet the number of two-lane highways had changed little since World War II. Gridlock loomed.

In 1956 the Eisenhower Administration moved to address the imminent crisis, passing the Federal Highway Act which would fund the construction of over 40,000 miles of four-lane interstate highway. By 1960, 10,000 miles of interstate highway were operational and by 1970, half of the project was completed. However, it would take another 20 years for the entire 40,000 miles to be constructed.

The U.S. faces a similar situation today with wireless broadband. There were 60 million smartphone users in 2010. That number is expected to triple by 2015 and reach over 200 million by 2020. To make matters worse, the average smartphone user is likely to use 24 times more data than the traditional cell phone customer. The combination of these two changes means that wireless networks will see their phone and data traffic increase more than tenfold by 2020. However, the amount of new spectrum available for wireless use has changed little in the past five years.

In 2010 the Federal Communications Commission (FCC) released a National Broadband Plan which was a wakeup call to Congress and the wireless industry. The FCC concluded that the amount of wireless spectrum would need to double by 2020, or the speed of wireless transmissions would slow to a snail's pace.

Starting in 1983, the FCC began converting unused UHF TV licenses to cellular phone use. Each cellular carrier received four TV channels. Today the average wireless carrier uses the equivalent of 15 TV channels. The FCC estimates that each wireless carrier will need the equivalent of 35 TV channels by 2020 in order to keep pace with the wireless demand of consumers.

However, to reach that goal the FCC faces a monumental task of relocating television stations and government agencies to new frequencies. The biggest challenge for the FCC will be relocating over 1,700 full power television stations, and then auctioning the old TV spectrum to the wireless companies. Many industry experts think it will take five to seven years for the FCC to accomplish this TV relocation... in the best case. However, a 10-year timeline is more likely.

So, what is likely to happen?

1) A spectrum shortage is likely to occur, because of the dramatic increase in the number of smartphones and the use of smartphones to access the web and view videos.

2) There is not a spectrum shortage yet, but there is likely to be one in several years, unless the FCC is able to repurpose some of the existing TV channels, and Department of Defense ("DoD") frequencies quickly and effectively.

3) If the FCC does not repurpose spectrum quickly enough, the speed at which you access the internet wirelessly will be very frustrating or the wireless carriers will start charging you more for heavy data use during peak times.

Ultimately, the FCC is likely to be successful at repurposing some existing TV and DoD spectrum. However, like the interstate highway system, it is likely to take a lot longer than the U.S. government expects and be more frustrating for consumers than people realize. The best guess is that consumers won't start to be really affected until 2015 and that only the really heavy users will notice a big difference -- at first. By 2017, however, most consumers will want higher speeds: a demand the wireless carriers won't be able to satisfy until around 2020.

Like the interstate highway system, the U.S. will eventually provide a good wireless super highway network in the sky. But like the interstate highway system, it will take longer to complete, have many inconveniences along the way and will cost more than anyone planned.

Charles Townsend, an early advocate for the need for additional wireless spectrum to accommodate the needs of wireless data, is President of Aloha Partners II, the 8th largest wireless spectrum owner in the United States. After reviewing the FCC's National Broadband Plan in 2010, Aloha Partners concluded that it would need significantly more spectrum to be competitive and has explored purchasing additional spectrum and doing joint ventures or spectrum sharing arrangements with other carriers.