Mallinson: Doubling spectrum capacity is not enough


If mobile broadband growth is to continue at current triple-digit percentage rates, there will need to be much more than the doubling of current spectrum allocations, as, for example, slated for the upcoming UK auctions. With mobile broadband network traffic doubling every year and already dwarfing voice traffic, capacity growth must increase at a corresponding rate amounting to a 30-fold increase over five years. Improving radio technology, increasing cell site density (including small cells and Wi-Fi offload) and substantial amounts of additional spectrum are the three compounding supply factors that must all contribute to the required increase in network capacity.

Displacing incumbent spectrum holders

Cellular is a latecomer to the world of radio spectrum usage. It is in the arduous position of needing other users to become much more spectrum-efficient and relinquish most of their spectrum holdings. For example, despite demand for many more broadcast TV channels, increasingly in HD, exponential growth in mobile broadband requires that mobile operators obtain access to additional spectrum including some from broadcast and other frequency bands.

Modest progress is being made. For example, the original 850 MHz ("cellular") and 1900 MHz ("PCS") bands in the United States are being supplemented with the gradual commissioning of spectrum in the 1700 MHz ("AWS") and 700 MHz ("digital dividend") bands since 2008 and 2010, respectively. The Federal Communication Commission's national broadband plan sets goals for the United States to free up an additional 500MHz within 10 years and 300 MHz within 5 years.  Whereas that will fall short of satisfying the world's leader in LTE, smartphones and tablet usage, the spectrum positions for UK operators are similarly constrained. These currently hold licensed spectrum in only three bands with a total of 300 MHz, as illustrated below. AT&T, for example, with a total of 82 MHz pled that it was significantly spectrum-constrained in justification of its proposed acquisition of T-Mobile USA.

UK Mobile Operator Spectrum Holdings

 

MHz

 

Spectrum band

Vodafone

O2

Everything Everywhere

Three

Totals

900 MHz

2x17.4

2x17.4

0

0

69.6

1800 MHz

2x5.8

2x5.8

2x45

0

113.2

2100 MHz

2x14.8

2x10

2x20

2x14.6

118.8

Totals

76

66.4

130

29.2

301.6

Cellular represents only approximately 4 percent of a total of 7,500 MHz assigned in the UK, including allocations stipulated at an international level for maritime and aviation use. The majority of spectrum is assigned to defence, fixed/satellite, aeronautical/maritime and broadcasting, as shown in the next chart. Most of these allocations predate cellular's relatively brief 30-year history with highly-efficient geographic spectrum reuse, and before widespread exploitation of Information Theory according to Shannon's theorem, with digital communications since the 1990s, and massively increased and maximised information flows per Hz of radio spectrum occupied.

Overall UK Spectrum Allocations

Source: UK Parliament's Culture, Media and Sport Committee





 












In the UK and elsewhere in Europe, the 800 MHz spectrum (with excellent propagation that can provide wide network coverage), is being supplemented with 2.6 GHz band spectrum. The combined UK auction will deliver an additional 250 MHz of spectrum. The 800 MHz band "digital dividend" spectrum has been freed up as a result of the UK digital switchover of television broadcasting.

Spectrum crunch

Network capacity must at least keep pace with traffic growth if adequate service levels are to be maintained. If data traffic, doubling or more every year, as observed by Cisco and others, continues for the next five years, this will correspond to over 30 times more traffic over five years.

There are diminishing returns on what can be achieved in the radio link with so many sophisticated technologies such as advanced modulation schemes, interference cancellation and MIMO already being implemented. Substantially increasing the number of cell sites and connecting them with broadband backhaul is no mean feat either, with planning approval challenges and major costs in civil works.

That means that several times more spectrum than is currently licensed will be required in service within the next five years, and several times more than that by 2020 if demand growth rates can continue to be satiated. Increasing unlicensed spectrum for short-range access and offload, including Wi-Fi, will help relieve congestion in hotpots, but mobile users want ubiquitous connectivity that can only be provided by full-coverage mobile networks.

The spectrum shortage puts into question whether or not current data growth rates can be sustained beyond the next few years at most. Mobile operators are still in the process of deploying existing allocations such as AWS and 700 MHz in the United States, and refarming 900 MHz bands from 2G to 3G technology to increase data capacity in Europe. New allocations will also soon be used up at current growth rates.

Pricing to throttle growth

In the absence of sufficient spectrum, user demand will be curtailed through pricing. In disagreement with the FCC, AT&T believes its inability to complete the proposed acquisition of T-Mobile USA (due to resistance by the FCC and Department of Justice) is forcing it to set prices at levels that will limit demand growth below the levels it could have accommodated had been able to combine the spectrum assets of both companies.

Last year Cisco forecast a 26-fold increase in global mobile traffic growth between 2010 and 2015.  After reporting that global mobile data traffic grew 133 per cent in 2011, Cisco expects annual growth rates to taper off to 90 per cent in 2013 and 78 percent in 2014, with a total 18-fold increase from 2011 to 2016. Ericsson expects only a 10-fold mobile data traffic increase between 2011 and 2016.

With sufficient supply of data network capacity I see no reason why demand growth should slow so soon. The smartphone revolution only began in earnest with introduction of the iPhone 3G in 2008.  Following the heady days of fixed broadband Internet growth with fibre, DSL and cable modem deployments around the millennium, annual traffic increases of 100 per cent persisted throughout the tech sector collapse and ensuing economic slowdown in the early 2000s. User demand was driven by plummeting prices per megabyte consumed. Insufficient spectrum is a major bottleneck to cellular broadband growth. Its scarcity will result in high spectrum costs that will be passed onto end-users and moderate their consumption.

Keith Mallinson is a leading industry expert, analyst and consultant. Solving business problems in wireless and mobile communications, he founded consulting firm WiseHarbor in 2007. WiseHarbor is publishing an annual update to its Extended Mobile Broadband Forecast in May 2011. The new forecast will include network equipment, devices and carrier services to 2025. Further details are available at: http://www.wiseharbor.com/forecast.htmlFind WiseHarbor on Twitter @WiseWarbor.

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