When the wireless industry gathered in San Diego this month for the 2011 CTIA ENTERPRISE & APPLICATIONS™ show, the overarching theme from the keynotes to the show floor was unmistakable: American citizens and American businesses are increasingly harnessing the transformative nature of mobile broadband. This growing demand results directly from what we’ve termed the “virtuous cycle” of the wireless ecosystem, in which innovation in mobile broadband networks, services, devices and applications drives further growth, which begets more innovation. Yet, as the FCC noted in a recent release, “While demand for spectrum is exploding, the amount available for mobile broadband is relatively static.” The message from San Diego to Washington was clear-cut: we need to find more spectrum to fuel the mobile industry’s innovation and continued investment – $27.5 billion in network and infrastructure alone over the past year. But, amidst the buzz in San Diego, on several occasions I found myself responding to a number of questions that went something like this: “So…Citigroup, what were they thinking?”
Of course, these raised eyebrow remarks relate to a Citigroup Global Markets report released last month asserting, “We do not believe the US faces a spectrum shortage.” We’ve already responded, but I wanted to call your attention to Peter Rysavy’s recent report that explains from an engineering perspective how Citigroup’s findings went so horribly wrong.
Basically, Rysavy explains that Citigroup’s conclusion is invalid because it relies on “the incorrect analysis that 4G technologies have six times more capacity than they really do.” As a result, “Citi’s estimations of the amount of spectrum needed to support deployment of 4G LTE technologies are also incorrect” – anticipating just one sixth the amount of spectrum than actually is needed. Here’s some of the analysis from Rysavy’s report:
- “Spectral efficiency is the value by which amounts of spectrum measured in Hertz (Hz) can be equated to bits per second (bps) of data throughput. Given exploding mobile‐broadband data growth, understanding the real capacity of cellular networks is of huge importance.”
- “[T]he Citi report presents HSPA+ downlink spectral efficiency as 2.1 bps/Hz and LTE spectral efficiency as 8.6 bps/Hz…It is unusual that the Citi report does not provide any external references for its spectral‐efficiency values.”
- “In contrast, my analysis…presents HSPA+ spectral efficiency for current deployment configurations as 1.05 bps/Hz and LTE as 1.4 bps/Hz.”
- But the Rysavy analysis is not alone. In fact, numerous organizations have published very similar efficiency numbers. According to the Peter Rysavy, “the spectral‐efficiency values used in my analysis above are consistent with common industry values,” citing technical reports from 3GPP, Qualcomm, the FCC, WiMAX Forum and the ITU.
- “These are huge and dramatic differences. Relative to my analysis, the Citi report overstates HSPA+ spectral efficiency by 100% and LTE spectral efficiency by 614%.”
- “The Citi conclusion of the industry currently having ‘lots of spectrum’ is not credible because again it assumes the industry can extract far more capacity than it really can from current allocations using available technologies.”
These serious technical errors are not the only flaws in the Citigroup report. For example, Citigroup relies on 2010 data to conclude that only a portion of licensed spectrum is being used, and so fails to capture significant network deployments in 2011, including AT&T’s launch of LTE and Verizon Wireless’s expansion of its LTE network to nearly 150 cities. Further, Citigroup contends that 194 MHz of EBS/BRS spectrum is commercially available for mobile deployment, but that number is significantly above what currently is in the market for commercial mobile broadband.
Ultimately, Citigroup’s missteps are eclipsed by the marketplace data released in San Diego as part of CTIA’s Semi-Annual Survey. Most significantly:
- Wireless network data traffic has increased 111% from mid-year 2010 to mid-year 2011, from 161.5 billion megabytes to 341.2 billion megabytes.
- Data traffic for the first six months of 2011 is 88% of all of 2010, suggesting that the 111% percent increase identified above will be dramatically eclipsed when the full-year 2011 numbers are released. The rate of growth actually seems to be increasing.
- For the first time in history, the number of wireless subscriber connections (322.9 million) has surpassed the population (315.5 million) in the United States and its territories, creating a wireless penetration rate in the U.S. of 102.4%. From mid-year 2010, wireless subscriber connections were up from 300.5 million (a 7% increase).
- The number of active smartphones and wireless-enabled PDAs has skyrocketed from 61.2 million in mid-year 2010 to 95.8 million a year later (a 57% increase).
Overall, the wireless industry invested $27.5 billion in networks and infrastructure from June 2010-June 2011, an increase of 28 percent over the previous year. And, the industry is willing to spend tens of billions of dollars more to purchase spectrum at auction. Such massive investment is in direct response to the ever-increasing consumer and business demand for more and faster mobile broadband.
So thanks to Peter Rysavy for helping to lay the Citigroup report to rest. With growth numbers like the ones cited above, let’s stop questioning whether more spectrum is needed and instead bring it to market to support this amazing ecosystem!