Feature Article

November 20, 2013

Does Spectrum "Quality" Matter for Upcoming Auctions?

Does spectrum frequency matter? Some would argue that 700 MHz or 800 MHz spectrum is qualitatively different from spectrum at 2 GHz or 2.5 GHz, and that those differences are important enough to be kept in mind when constructing bidding rules for new 600 MHz spectrum.

It is hard to argue with the physics. Cell signal coverage is inversely proportional to frequency. What that means in practice is that higher frequency networks require more cells to get the same coverage as lower frequency networks. That means higher capital investment.

Consider a single mobile cell tower, using a frequency in the 700 MHz to 900 MHz band. That single tower might have a coverage area with a radius of 10 kilometers.

At 1.8 GHz to 2.1 GHz, the same coverage area requires six to eight separate cell sites. At 2.4 GHz to 2.6 GHz, coverage of the same area as a single 800-MHz cell would require between nine to 12 cell sites, according to the National Broadcasting and Telecommunications Commission of Thailand, for example. At 3.5 GHz, the same coverage as gotten from a single 800-MHz cell site requires 15 to 19 cell sites.

That leads some proponents to argue that spectrum amounts need to be balanced with the quality of spectrum. T-Mobile US, for example, thinks it does make sense to distinguish between lower frequency and higher frequency spectrum, in terms of its value.

That position, that lower frequencies are preferred because of signal propagation, is widely held within the industry.

Notably, the U.S. Department of Justice has argued that the difference between lower-frequency spectrum and higher-frequency spectrum is so important that the smaller U.S. national carriers (T-Mobile US and Sprint), which mostly use spectrum in the 2 GHz range, would benefit from preference in upcoming auctions of lower-frequency former TV broadcast spectrum

The Department of Justice has argued that since Verizon Wireless and AT&T have the majority of low-frequency spectrum, T-Mobile US and Sprint should have preference in auctions for additional lower-frequency spectrum.

“This results in the two smaller nationwide carriers having a somewhat diminished ability to compete, particularly in rural areas where the cost to build out coverage is higher with high-frequency spectrum,” the DoJ said.

For that reason, DoJ thinks the “quality” of spectrum needs to be considered, not simply the quantity of spectrum, when making assessments about the value and policies guiding allocation of new spectrum. 

Edited by Cassandra Tucker

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