You can’t live without your smartphone or tablet, can you?
Better hope technology, government regulation and old-fashioned American ingenuity can find a way to keep you happy.
The networks that run these high-speed smart devices are struggling to keep up with consumer demand and the prospects are daunting that they’ll be able to continue the pace in the future without radical changes.
Wireless company executives have stated for more than a year that they’ve seen data volume increases in the 8,000 percent range on a year-over-year basis as more technology adopters move their business and personal habits away from their desktops and into their laps and the palms of their hands.
The trend for smartphones and tablets is expected to grow as companies like Apple announce new upgrades to popular electronic devices such as the iPad.
Market research conducted last year by IHS iSuppli shows that 55% of current smart tablet users will buy or are considering buying an additional device for family members. A more recent survey taken in March by PriceGrabber.com revealed that 42% of current iPad owners will buy the next iPad when it is released.
The older electronics won’t be heading to the local dump, a recycle bin or laid to rest on a shelf. More than likely, they’ll be handed down to other family members or friends.
The foreseeable boom in these new and old smart devices has wireless executives scrambling for what they feel will be much more than 8,000 percent data growth on their networks.
“The handing down of devices is a result of people purchasing new and more powerful devices, and as companies come out with new devices, this will only continue to grow,” AT&T Arkansas President Eddie Drilling tells Talk Business. “This growth in the number of devices in service is one of the key reasons we are seeing exponential growth in the amount of data traffic on our wireless network. And as the number of devices able to stream video increases, the issue will accelerate even faster.”
Drilling’s firm folded its bid to acquire T-Mobile last year. While the merger would have allowed AT&T to tap T-Mobile’s unused spectrum to build out its 4G next generation wireless network, federal regulators felt it would stifle competition.
Now, the threat could be that customers may have plenty of choices, but the wireless carriers will be further strained to deliver their service. The public saw evidence of this growing constraint when AT&T announced last week new limitations to its unlimited data plans.
Spectrum is the airwave bandwidth that carries the wireless signals from towers to your phones and tablets and vice-versa. Spectrum is regulated by the Federal Communications Commission (FCC) and for decades has been auctioned off in swaths to allow wireless companies to stay ahead of the curve with consumer demand.
But the go-go years of late have demand growing faster than bandwidth capabilities, according to a variety of government and industry representatives.
Labeling the problem a “spectrum crunch,” President Obama’s Council of Economic Advisers released a report last month that suggested “mobile data traffic will increase by a factor of 20 between 2010 and 2015.” The report says that current spectrum could handle this increase, but opening up the airwaves will be critical to meeting longer-term needs.
“The only feasible way to realize the full potential of wireless broadband is to make new spectrum available for wireless services,” the report stated.
Larry Downes, a consultant and author who focuses on digital technology, recently wrote for the tech blog, CNET, that opening up new bandwidth won’t happen fast enough and the “spectrum crunch” referred to in the economic advisers report might lead to a more dire situation.
“At best, it will take upwards of 10 years before significant new spectrum for mobile broadband can be deployed from the incentive auctions. And we’re already two years into the FCC’s own doomsday clock toward spectrum exhaustion,” Downes wrote.
Downes and others have argued that the FCC’s process for auctioning new spectrum is antiquated and needs to be updated and accelerated to meet the looming crisis.
AT&T’s Drilling agrees with Downes’ dire assessment.
“The wireless spectrum crunch is a real problem for our country,” Drilling said. “AT&T has seen data traffic on our wireless network grow 20,000 percent in the past five years. Our wireless data traffic doubled from 2010 to 2011 alone. In fact, it has at least doubled in each of the past five years.”
Drilling and his rival wireless competitor, Verizon, have been investing hundreds of millions into Arkansas to upgrade networks to improve service and meet demand. But bandwidth, says Drilling, is the most crucial solution.
“We are doing what we can here in Arkansas — having just announced that in the past 3 years we have invested over half a billion dollars in our networks in the state — but dealing with the spectrum crunch is going to require significant action from policymakers in Washington to make sure the wireless industry can continue to provide consumers with the products and services they are demanding,” he says.
OTHER RELIEF VALVES
While bandwidth is critical, building more cell towers to handle data traffic can help to a degree.
The investments Drilling referred to were primarily network improvements, such as new towers to lower dropped calls and allow for denser distribution of traffic on AT&T’s system.
In oversimplified terms, once a user’s data hits a cell tower, it might be transferred to another tower or via underground fiber optics to another destination within the routing system.
An Arkansas firm that has been transforming its business model to build more “fiber-to-the-tower” is Little Rock-based Windstream. The traditional landline telecom has made acquisitions and investments to beef up its fiber optic network support for cell phone carriers, in essence building parts of the foundation to carry data traffic, while not necessarily being in the cell phone business.
In response to a request for this article, Windstream officials said they plan to invest more than $200 million in “fiber-to-the-tower” projects this year on top of nearly $125 million that it invested in 2011.
Also, telecoms like Windstream and AT&T have converted many of their landline users into high-speed Internet customers in their homes and businesses through wi-fi networks. Cable companies also offer the service.
These wi-fi networks, which use short-distance radio waves and routers to tap into the Internet, are a major relief valve for the data traffic pressure put on wireless systems by smartphones and tablets.
Tony Thomas, Windstream’s Chief Financial Officer, addressed the topic at a Deutsche Bank Media and Telecom Conference in Florida less than two weeks ago.
“The most utilized wireless network in Windstream’s footprint is the wi-fi network in the house,” Thomas said.
He noted that, for instance, an iPhone transitions from 3G service to a wi-fi network when you enter a home or building.
“They don’t do that just to be nice to Windstream. It solves fundamentally the single biggest issue in wireless: spectrum. As long as we have a spectrum-constrained nation, which apparently we’re going to have for some time now… the wi-fi network is that much more valuable,” said Thomas.
He added, “Until wireless carriers stop having their devices flip over to the wi-fi network when they walk into the house, we’re going to have a very complimentary relationship with our wireless partners.”