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Analyst: Spectrum Control is Constraining Supply

Squatting is the main problem with spectrum, not a looming shortage.

NEW YORK: Squatting is the main problem with spectrum, not a looming shortage. That’s the conclusion of a pair of analysts at Citigroup.

“Too much spectrum is controlled by companies that are not planning on rolling out services or face business and financial challenges,” wrote Jason Bazinet and Michael Rollins. “We do not believe the U.S. faces a spectrum shortage.”

The Federal Communications Commission is using the specter of a looming shortage to push through the redesignation of 120 MHz of broadcast spectrum for wireless broadband. The commission cites the exploding growth of smartphone and table computer usage for crowding airwaves devoted to cellphone services. Even so, plenty of spectrum remains undeveloped, Bazinet and Rollins said.

“Today, U.S. carriers have 538 MHz of spectrum, and an additional 300 MHz of additional spectrum waiting in the wings. But only 192 MHz is in use today,” they said.

A majority of that spectrum is devoted to legacy service not likely to deliver more than 1 Mbps during usage peaks, compared to 5 Mbps for 4G, the latest data network technology. Bazinet and Rollins said if the full 538 MHz was converted to 4G, it could support 5 Mbps at 10 percent simultaneous usage. They noted, however, that the larger carriers couldn’t just sweep in with 4G because their networks are so occupied by legacy users. Consequently, incumbent carriers do need more spectrum to launch 4G services–both because of legacy occupancy and because 4G technology performs best in blocks of 20 MHz or more, the analysts said.

Verizon and AT&T, the nation’s two largest carriers, are most limited under those constraints, potentially giving an edge to new players such as Clearwire, LightSquared or Dish, particularly if they join forces.

Clearwire is short on cash and LightSquared is in political crosshairs for interfering with global positioning systems. But both control substantial swaths of spectrum. Clearwire has 133 MHz; LightSquared has 59 MHz, and a deal to use Sprint’s 51 MHz. Dish Network has 47 MHz of undeveloped spectrum, with which it could offer 3 to 5 Mbps to as much as one-fifth of the U.S. population using 4G technology, the analysts said. Dish Network, with its solid satellite TV revenue stream, is shopping for a wireless provider, and said to be looking at Sprint and Clearwire.

“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 that they can clear meaningful hurdles for funding and distribution,” Bazinet and Rollins wrote.

The National Association of Broadcasters has posted their analysis.

~ Deborah D. McAdams, Television Broadcast