Radio frequency spectrum is a finite resource. It cannot be created; it can only be parceled out. That's what gives struggling wireless telecom carriers value even in the midst of financial woe. Their spectrum licenses keep gaining in worth in this world that craves instant access to the Internet almost as much as it thirsts for oil.
Here's a look at the listed wireless license values of the major carriers:
Wireless License Value
|Sprint Nextel||$20.5 billion|
Source: Latest available balance-sheet data from SEC filings.
Look what I found!
I didn't lie when I said spectrum is a finite resource. What I didn't say is that there still is some spectrum not being used. It's called "white space" spectrum, and it refers to the up-till-now idle frequencies between television channels. This television white space, which took up a large amount of the TV spectrum, was kept in place to prevent signal intrusion between analogue television channels. But over-the-air TV is now digital, which is much less prone to adjacent channel interference. Hence, those white spaces may no longer be needed.
It's a bird, it's a plane. No, it's Super Wi-Fi! That's what some are calling a technology that regulators in Europe and the U.S. are cooking up to make use of this newly found spectrum. They see it as a way of bringing broadband to sparsely populated areas without the high capital costs of cabling.
The availability of more spectrum has also not been lost on the government. The recently created deficit supercommittee is even considering "incentive auctions" of the television white space as a new source of revenue.
But suppose ...
What if wireless carriers didn't need "licensed" spectrum anymore? That would certainly drain the value away from those scarce but worthless licenses. This is not a far-fetched supposition. Remember when the iPhone's sudden popularity brought down AT&T's mobile broadband network? How did AT&T recover? It didn't buy more spectrum; the iPhones switched over to Wi-Fi to get their data.
According to Harvard Law Professor Yochai Benkler:
"In the past year, Wi-Fi traffic on AT&T's hotspots has tripled. Today, about half of iPhone and 90% of iPad page views are carried over Wi-Fi. Indeed, almost two-thirds of all smartphone and tablet data traffic is carried over Wi-Fi rather than over the carriers' networks."
Unlicensed wireless is everywhere. It's used at the E-Z Pass toll booths. It's used every time you fill 'er up and pay with one of those quick-pay fobs. Companies like Wal-Mart use unlicensed wireless to manage inventory. According to Benkler, 70% of U.S. smart-grid communications and 80% of health-care wireless needs are met by unlicensed wireless technologies. And the second-largest mobile broadband carrier in Japan will be going with a next-generation network that will be centered on unlicensed wireless hotspots.
What would this mean?
The first thing this could mean is that once-invaluable spectrum could lose its value. SpectrumCo, a partnership made up of cable companies Cox, Comcast
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