By Samuel Weigley: Subscribe to Samuel's RSS feed
December 8, 2011 5:08 PM EST
With the millions of iPhones, BlackBerrys and Androids sold in the U.S., the massive demand for data use is far exceeding the supply of spectrum - the range of all possible frequencies through which signals can be transmitted.
The growing demand has seen wireless companies scrambling to gain an advantage over rivals by finding new and creative ways to acquire the spectrum, in order to provide the growing number of cellular customers the abilities to surf the web, instant-message friends and download full length movies... all from their fingertips.
"Spectrum is the lifeblood of wireless service," Piper Jaffray analyst Chris Larsen put it to the International Business Times. The challenge, however, is in acquiring enough of that lifeblood to keep the system going.
The use of data on a cellular plan is contingent on spectrum, which is owned by the public and controlled by the Federal Communications Commission. In order for a customer to receive the smartphone data, the wireless carrier must have licenses to a sufficient amount of spectrum channels to provide the service.
The Spectrum Hunt
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The most recent example of how a wireless company is trying to claim more spectrum is AT&T's proposed $39 billion merger with T-Moble USA.
Should that merger occur, AT&T would gain a significant amount of spectrum licenses from T-Mobile, further helping AT&T roll out its 4G wireless network. If the merger doesn't occur, which seems more likely because of opposition from the U.S. Department of Justice and the FCC, AT&T will be required to give $1 billion in spectrum to Deutsche Telekom, the German-based parent company of T-Mobile.
Smaller carriers may also benefit from the fight between the merging parties and the federal government. Many analysts suggest that AT&T would need to sell some of its assets in order to garner government support for the merger, and some of those assets can include spectrum.
Other carriers on the spectrum hunt include Verizon Wireless and Leap Wireless, who on Monday announced a spectrum swap, where Leap Wireless will acquire a block of spectrum in Chicago for $204 million, while Verizon will obtain spectrum in a variety of U.S. markets for $188 million.
Verizon isn't just looking at acquiring spectrum from other wireless carriers. Last week, Verizon announced plans to acquire wireless spectrum from U.S. cable company SpectrumCoLLC for $3.6 billion. SpectrumCo is a joint venture between cable giants Comcast, Time Warner Cable and Bright House.
The agreement will allow companies in the joint venture to provide wireless service on Verizon's network, while Verizon can sell cable company services in its stores.
The Spectrum Spread
Spectrum refers to frequencies on the electromagnetic spectrum. There are only so many frequencies on the electromagnetic spectrum -- therefore spectrum can't be created or destroyed.
Frequencies on the spectrum can be used for many functions and the FCC determines the best use of the frequencies when they are auctioned to companies, Forrester Research analyst Charles Golvin told the IBTimes. He said wireless companies are eager to get a hold of broadcasters' spectrum since it would allow the providers to build stronger networks in a more efficient and cost effective manner.
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