Operators get creative due to spectrum crunch

New pricing models, technologies and partners should help with an impending spectrum shortage, operators say

The spectrum shortage is forcing mobile operators to experiment more with pricing models, new technologies and partnerships, executives speaking at the Mobile Future Forward event in Seattle said Wednesday.

"There is a spectrum shortage, and demand will exceed supply, and something has to be done," said Mike Sievert, chief commercial officer for Clearwire.

At the same time, demand for wireless data services is growing fast. The mean average data usage is 0.5GB per month, per user in the U.S., he said. Users of Clearwire's USB data sticks, however, consume a mean average of 7GB of data per month, he said. Clearwire's smartphone users consume less, but "way above the average," he said.

"It means that when you give people 4G, they use it," he said. "If the industry average grows to even 1GB or 2.5GB, most carriers in the U.S. are in big, big trouble."

While Clearwire is in a particularly good spectrum position, it doesn't feel immune to the pressure, he said. "Even we live in a finite world," Sievert said.

Operators and vendors are looking at different ways to solve the problem. "As wireless operators, we have to attack those challenges and opportunities on many fronts," said Neville Ray, chief network officer for T-Mobile. The air interface technology is a key piece, as are opportunities to access more spectrum, he said.

Software-defined radios (SDRs), which can change frequencies based on availability, as well as multimode technology, which lets the radios operate over a variety of air interfaces, will help, said Lixin Cheng, CEO of ZTE USA.

Operators will also have to get better at combining networks so they can transport data over the one that makes the most sense at a given time and location, and based on the application being used, said Bob Azzi, senior vice president at Sprint. "We have three different spectrum positions and two to three technologies to wrestle with, and we want to make use of all of them. And that's not even counting Wi-Fi," he said.

Currently, most operators simply default to using whatever network has the fastest connection, he said. "But I don't think that's sustainable," he said.

Operators are likely to experiment with different pricing models as they try to better manage the use of their networks. They already are, with AT&T -- often criticized for struggling to keep up with the demands of iPhone users -- becoming one of the first to do away with an unlimited data plan.

"Bandwidth as an end-user service is hard to sell; it's hard to monetize," said Wim Sweldens, president of Alcatel-Lucent's wireless division. "If you go to a person and say, 'I'll sell you a megabyte of mobile bandwidth, how much are you willing to pay?' nobody can answer that."

Instead, if users are asked to buy a book or game or sporting experience on their mobile phone, they understand the value, he said. "It's up to us to build the business model and the value chain," he said. That will involve figuring out how operators can best partner with content providers and application developers and figure out how each partner is paid.

The operators said they'll be trying out different ways of pricing access for the many new kinds of devices that people want to use on mobile networks. People won't want separate subscriptions for their tablet computers, in-car mobile content system, phones and USB broadband wireless modems, Sievert said.

Instead, people may choose an operator that they trust will have the best choice of devices in the future, he said. The operator will provide service to a variety of devices for a set amount of money per month, he said.

Alternatively, "while the world debates what kind of technology wins, the debate becomes unnecessary due to things like SDR and Wi-Fi," he said. With SDRs and flexible radios, a device could work on a variety of networks. Plus, Wi-Fi could continue to make it easier for users to connect through things like portable hotspots, which connect to a device via Wi-Fi and to the Internet over any number of network technologies.

Nancy Gohring covers mobile phones and cloud computing for The IDG News Service. Follow Nancy on Twitter at @idgnancy. Nancy's e-mail address is Nancy_Gohring@idg.com

Tags telecommunicationNetworkingZTEPhoneswirelesssprint nextelT-Mobile USAClearwiremobileWiMaxconsumer electronicsalcatel-lucentsmartphones

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Nancy Gohring

IDG News Service

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