FCC says "small cells" are solution to the spectrum shortage
It is a rare thing when wireless carriers across the United States agree they want the same thing. This happens to be the case when it comes to spectrum.
No, we are not talking about a fictional semi-secret organization dedicated to world domination (although judging by their business practices, some of them probably wouldn’t be opposed to this). By spectrum we mean the government-assigned radio waves that these carriers -- including Sprint, Verizon, T-Mobile and AT&T - use for transmitting data and phone calls.
More specifically, we are talking about your data and phone calls.
It seems, according to these wireless carriers, that the ongoing exponential sales of mobile devices -- including tablets and iPads -- will eventually lead to service interruptions, thus reducing the efficiency of their networks, slowing down transmission speeds and increasing dropped calls (which, ironically, is something they never quite worked out anyway). Because of this, carriers have petitioned the United States government via the Federal Communications Commission (FCC) for the rights to purchase additional spectrum.
At the CTIA Wireless conference in New Orleans, Steve Largent, the president of CTIA (a wireless trade group) said in a keynote speech that “We simply need more spectrum in a marketplace with more consumer demand. More spectrum means more opportunity for you.” This, in turn, he says, will stimulate the economy and create jobs.
If you listen to the wireless companies, the case sounds pretty open-and-shut. The government sells the spectrum to wireless companies, the consumer doesn't experience the negative side-effects when spectrum runs out, and the sale benefits the economy and the job market. Everyone wins.
Unfortunately, former monopoly spin-offs like Verizon are not exactly unbiased stakeholders in this heated debate, or paragons of social responsibility for that matter. Telecommunication companies -- landline, wireless or otherwise -- have a long tradition of using situations such as this to lock potential competitors out of the market, and the FCC is worried that this could easily happen again in the current situation. They accomplish this by acquiring entry points into the infrastructure and then restricting access to these entry points. In business terms, this is a tactic called “creating barriers of scale” and is one of the principal reasons that the Department of Justice divested AT&T into seven Regional Holding Companies (RBOCs) or “Baby Bells” in 1984. Monopolistic tactics, like creating barriers to entry based on scale, are also viewed by many as factors that stifle innovation, as competing technological ideas (and even new business models) with merit cannot be brought to market without the permission of the organization creating the barrier. Which, of course, they will not provide, thus limiting disruption -- another critical component of innovation.
Not surprisingly, because of this history, the FCC is encouraging a technology-based solution prior to selling additional spectrum to the carriers. At the CTIA conference, Julius Genachowski, the chairman of the FCC said that even if the government sells additional spectrum, it may not be enough to handle the growth that has been and will continue happening in wireless communications. Because of this, the FCC is interested in developing a technology called “small cells.” Small cells, also known as "femtocells," are a relatively straightforward. The technology permits users to transmit data through nearby broadband connections. A relevant analogy with a similar outcome would be a person who uses Skype via WiFi to make a “free” long distance or international call. However, unlike this analogy, small cells would require users to install the technology in close proximity (at home or the office) so functionality can be enabled and used in a seamless fashion.
The FCC hopes that as time passes and more individuals utilize the technology, growing networks of small cells will begin to link to each other, creating “towers” by aggregating all the small cells within a geographical area. In a way, this is very similar to how peer-to-peer file sharing environments operate today.
The view of the FCC is difficult to refute as it enjoys the support of numerous hardware organizations like Cisco. Neither the telephone nor hardware companies have entirely altruistic motives, though. Cisco and other hardware providers support the FCC because they sell the hardware needed for small cells to work and need a new market, having saturated their own.
The FCC isn't the only skeptic when it comes to the issue of spectrum. The inventor of the cell phone himself, Martin Cooper, says that “somehow in the last 100 years, every time there is a problem of getting more spectrum, there is a technology that comes along that solves that problem.” He explains that buying spectrum is a quick fix for companies to expand their networks, but by using other technologies we could increase the number of devices that a wireless carrier can support tenfold. Advocates for the use of small cells also point out that they are relatively low-cost. A study done by The Small Cell Forum showed that one small cell was able to offload traffic by 20 percent and four small cells by 56 percent.
Of course, not everyone believes that small cells are the ideal solution to the spectrum problem as they come with a few complication of their own. Critics say that even though they are low-cost, small cells require additional costs when it comes to things like installation, equipment and zoning. Also, in the future, companies who sell small cells will most likely be competing for space on which to mount them, just like the wireless companies are competing for spectrum today.
The ongoing spectrum debate is about more than dealing with the implications around customers having dropped calls or now being able to rapidly access data. On some level it lacks a responsibility to maximize the existing infrastructure by using technology. On another level it deals with control of national assets -- which should be used to the benefit of all -- by corporate entities who have an assumed fiduciary responsibility to the bottom line, but not to the lines that create social responsibility.
Once, a long time ago, telecommunication companies, through organizations they owned like Bell Labs, created immense value by investing in technology and by isolating their researchers from politics so they could own innovations that represented the convergence of business, technology and social responsibility. While those days are gone, the fundamental need to innovate continues. While many are weary of decisions made by bureaucrats, in a role reversal, the FCC is forcing the market to explore options which not only make good business sense, but which contribute to the greater good in general.