Report argues for interoperability in broadband spectrum bands

Interoperability among wireless carriers in the sub-1 GHz spectrum band could enable the U.S. government to earn as much as $3.5 billion more in upcoming spectrum auctions than if interoperability is not mandated, argues a report issued late last week by Information Age Economics.

The report, titled “Non-Interoperability at 700 MHz: Lower Revenues & Higher Prices,” was sponsored by the Rural Cellular Association. It offers harsh criticism for AT&T and Verizon, arguing that those companies have introduced 700 MHz services based on non-interoperability that “increase their market power in the U.S. at the expense of all other service providers and stakeholders.”

Without an interoperability mandate, the report authors argue that many potential bidders will not bid in future 700 MHz auctions because they will be “discouraged by the prospect that they may not be able to acquire competitive devices, in terms of cost and performance, in a timely manner because component and device vendors will understandably focus their limited development resources on the larger business opportunities and profits offered by the Big Two.”

Already device manufacturers focus on the Big Two in designing 700 MHz devices--and the report authors note that 700 MHz spectrum won by operators other than the Big Two in recent auctions has been “forced to remain unused for a much longer period than is desirable to the detriment of the U.S. economy, small and medium sized wireless operators and their customers.”

The report authors argue that the Big Two are using potential interference concerns as an excuse for not supporting an interoperable approach to the 700 MHz band but that those concerns are unjustified.

Interoperability could help boost broadband speeds, authors argue
The FCC has proposed to make as much as 120 MHz of additional sub-1 GHz spectrum available for mobile broadband within five years, but the Congressional Budget Office estimates that spectrum auctions over the next 10 years will generate only $3 billion, the Information Age Economics report states. But the sub-1 GHz band is particularly desirable because it has excellent propagation characteristics, and the report authors argue that service providers in the U.S. may well be prepared to pay high prices for sub-1 GHz spectrum if the spectrum is offered in an “unequivocally interoperable structure.”

The report also argues that non-interoperable spectrum would entail lower peak and average speeds for customers. “If a spectrum is non-interoperable the implementation of carrier aggregation to boost both these elements of performance, as is foreseen in future LTE and even hybrid LTE/HSPA network deployments, will be more difficult to implement and therefore less widespread,” the authors argue.