The phone in your pocket relies on airwaves to push bytes back and forth. The problem is, many say we're running out of airwaves. The FCC thinks so. Carriers do, too. If you've ever been unable to tweet from Times Square, you might have felt the pinch firsthand.
Carriers are constantly jockeying to control more of those airwaves, both for the capacity they provide and as an investment — spectrum is power. Today, the FCC announced that it approved the transfer of some 608 spectrum licenses to AT&T, covering roughly 82 percent of the population in the contiguous 48 United States. That's a lot of spectrum. But today, as an AT&T subscriber, it doesn't do you any good. You can't connect to it with your phone, tablet, or laptop. In fact, you won't be able to use it for several years to come... and that's assuming everything goes smoothly.
Carriers are constantly jockeying to control more spectrum
Why's that? Most of the spectrum is in the so-called WCS (Wireless Communications Service) band, which has been locked in a soap opera-like struggle for most of its existence since it was first auctioned off by the FCC in 1997. The problem is that WCS lies adjacent to spectrum used by Sirius XM for its satellite radio service, raising concerns of interference that have dogged it for over a decade. The spectrum is still out there owned by companies like Comcast, but it's just sitting there — it's never been put to use.
In a best-case scenario, WCS is still years away
But spectrum, of course, is in perpetually short supply. Pretty much everyone is anxious to find ways to put every sliver of it to use to deploy broadband services — services that can help offset the exponential growth in data usage driven by smartphones. Fifteen years after WCS went on the auction block, AT&T and Sirius XM finally hammered out a technical agreement earlier this year that they felt would allow LTE to be deployed in the spectrum without gumming up satellite radio. The FCC approved the deal quickly, signing off in October.
At the time, AT&T already owned a significant chunk of WCS nationwide, and the Sirius agreement helped get the ball rolling toward making it usable. But the carrier wanted more: it negotiated deals to buy additional WCS licenses from Comcast and Horizon Wi-Com, an early WiMAX provider. It also bought spectrum holding company NextWave outright to the tune of $600 million, giving it a trove of WCS and AWS licenses.
The next hurdle was FCC approval of the license transfers, and that's what just happened today.
Now, the real wait begins: AT&T needs to drum up support for WCS among its hardware suppliers, who in turn will drum up support with component suppliers. On the network side, equipment needs to be tested and deployed to cell sites. It's a marathon, not a sprint, and that's why AT&T has gone on record saying it can deploy WCS LTE in "approximately three years."
In the shorter term, the carrier — just like its competitors — will look to other tricks to boost capacity. It has started clearing out 2G to make way for more 3G, for instance, and will phase out 2G altogether in 2017. In many markets, it'll start launching LTE on the AWS band (currently best known for powering most of T-Mobile's HSPA+ network). And small cells are being touted as a way to alleviate crunches in the hardest-hit spots. Longer term, though, there's no sign of data usage tapering off, and that means that the long-overdue WCS network is going to be welcomed with open arms.
Data usage isn't tapering off
In 1997, WCS netted the government just $14.9 million. To put that in perspective, the highly-publicized 700MHz auction several years later — an auction that ultimately launched both AT&T's and Verizon's LTE networks — brought in an astounding $19.1 billion.
Needless to say, WCS is worth a little more than $14.9 million today — thanks in no small part to some MacGyvering from AT&T and Sirius.