Thursday, July 14, 2016

The Age of Scarcity is Ending, the Era of Abundance is Beginning

The end of the age of scarcity, and the start of the era of abundance, is coming, for the telecommunications business. The implications could not be more profound. For more than a century, “scarcity” has been the fundamental reality of the industry and the business.

Networks were expensive, time-consuming and bandwidth limited.

In some ways, scarcity still drives the equity value of fixed and mobile networks. Fixed access networks are terribly expensive to build and operate, which is why there are so few of them in any market.

Advances are happening, but the “rule of a few” still holds, as what is scarce are enough customers to support the building and operation of a ubiquitous fixed access network in the face of two or more other providers.

But scarcity and abundance are starting to coexist. Moore’s Law helps. Better signal processing and antenna arrays help. Unlicensed spectrum and Wi-Fi also help. Optical fiber helps. Fixed wireless helps.

But much more is coming. The U.S. Federal Communications Commission is moving to make  available an extraordinary amount of new spectrum--including seven gigaHertz (7 GHz)  worth of unlicensed spectrum, in the millimeter wave bands, and a total of 11 GHz, including 3.85 GHz of licensed spectrum, in a first wave.

Nor is that all. The Commission also adopted a Further Notice of Proposed Rulemaking, which seeks comment on  rules adding another 18 GHz of spectrum encompassing eight additional high-frequency bands, as well as spectrum sharing for the 37 GHz to 37.6 GHz band.

Keep in mind that the new allocations represent many times more spectrum than all other existing spectrum now available for mobile and wireless communications in the U.S. market. Just how much more depends on one’s assumptions about coding techniques and modulation.

But it is possible the new spectrum will represent an order of magnitude or two orders of magnitude more communications spectrum than presently is available for mobile and wireless communications purposes.

Abundance will transform business models. Incumbents who built their businesses on scarcity will have to rework those models. App providers whose businesses are built on the assumption of abundance will flourish, at least potentially.

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