6 ms·

why is spectrum so expensive? only Goliath size corps can afford it.

Someone1234 11y ago
Because physics doesn't like startups I guess... Or to phase that another way: There is a lot of spectrum. But very little spectrum that is suitable for mobile phone usage. When a resource is finite and valuable, it gets expensive. If you want a "real" solution that would allow startups to play in the ballpit? Pass new national laws which split the cellular companies into two organisations, one that offers consumer services, and another which exists to maintain/install/upgrade the physical cellular network (and who then resells access). It actually makes little sense to have competing and exclusive cellular infrastructure. The infrastructure should just be like a public resource, like a road, and the cellphone companies should be like shipping companies, utilising a public resource (the road) to sell a service (shipping stuff). I'd be all for the government using eminent domain to seize every single cellphone tower in the country, and then reselling access to them to every cell phone company equally. But it isn't very capitalist...
- rayiner 11y ago
  So there is a lot of theoretical economic work on how to allocate limited rival resources like spectrum (and water). The consensus is that the efficient way to do it is auctions. I have quibbles with certain assumptions in that research,[1] but for stuff like cellular spectrum (where the owner can achieve extremely high utilization), auctioning to private companies is probably quite close to efficient. It would be more efficient if we got rid of restrictions on use and transfer. Yes, that does mean that you end up with mega-corps providing your cellular service. But the same is true for say retail. Amazon will eat the whole industry. Physics as well as economics strongly favor mega-corps. Startups have advantages, but specific and narrow ones. [1] See https://www.scribd.com/doc/292530059/Spectrum-Allocation-Local-Area-Wireless https://www.scribd.com/doc/292530059/Spectrum-Allocation-Loc...
  - gst 11y ago
    An alternative would be to split wireless companies into 1) infrastructure companies and 2) companies that sell actual products to end users. The infrastructure companies would be allowed to bid on limited shared resources (= the spectrum), but a requirement for this would be that they would need to provide fair, reasonable and non-discriminatory access to the resources to other companies. This is similar to the approach that some countries used when privatizing railroad companies: Instead of creating a new private company that's effectively a monopoly, they created one company that provides the infrastructure and another company that runs the trains. This allowed new private companies to enter the market, as they were allowed to use the resources under the same conditions as the former monopoly.
  - barrkel 11y ago
    Are we happy with mega-corps providing our wifi service? Our bluetooth service? These are also using limited rival resources. Under an auction system, we'd be paying rent on this spectrum (through expensive closed devices, or time-limited licensed systems) to guarantee non-interference. I personally would be less than pleased to have to pay extra on an ongoing basis just to have a wifi router in my home, or a wifi radio on my laptop. Extending private property rights into what is currently a commons would seem to imply that though.
- sitharus 11y ago
  One infrastructure company wouldn't work so well. You'd need at least two, preferably 3, with the ability for the resellers to quickly and easily switch. Here in New Zealand we have three providers, but we have national number portability. This means I can switch networks with no fees (unless I have a contract with a termination clause) and no number downtime. It helps competition a lot.
  - X-Istence 11y ago
    If it was a single infrastructure company, all cell companies could use the same towers. This would remove the competition of when/where you have cellular access due to location. Number portability is already possible here in the US, and so long as I am not on a contract I can switch without fees.
- deleted 11y ago
  [deleted]
- cobaltblue 11y ago
  How do you see the consumer services competing on anything but price, speed, and usage without breaking net neutrality? How do you see a "shipping" future for cell phone companies any different than the FedEx/UPS duopoly?
  - Someone1234 11y ago
    How do they compete now where they exist markets with good coverage? Most major US cities have complete coverage from the big three, so they must be competing on things other than coverage. Sure, this will even the playing field for coverage, but it won't even it for anything else (customer services, device financing, cost, et al). Plus actual network costs have little relation to what companies can charge, since all cellular companies over-sell their network. I'm sure with this there will be companies that offer terrible customer service, and price their offering dirt cheap. That's fine. But most consumers will want to find a happy medium between the quality of service Vs. the cost.
- timthorn 11y ago
  > Pass new national laws which split the cellular companies into two organisations, one that offers consumer services, and another which exists to maintain/install/upgrade the physical cellular network (and who then resells access). That was the shape of the cellular networks in the UK in the early days of mobile telephony, IIRC.
ljk 11y ago
you answered your own question! it's to keep the bar high so only the Goliath can play
- rfrank 11y ago
  you can't exactly go make more spectrum.
pyvpx 11y ago
because there is only one and certain parts of it can be monetized to great affect? you can get licensed spectrum in a point to point fashion for the cost of a modest used car, in some places.
thrownaway2424 11y ago
Most of the usable spectrum is being wasted on stupid junk like navigation, military and police who are using ancient, inefficient technologies. The bandwidth-specific value we're getting from the ISM bands dwarf nearly all other uses. There would suddenly appear to be huge amounts of available spectrum if the authorities would just yank bands from the most useless legacy allocations and auction them off.
- ianlevesque 11y ago
  Or better yet add them to the unlicensed pool.
- Aloha 11y ago
  While some of the spectrum held by the military would be useful, most of it wouldn't be, same goes for whats currently used for police too. The issue with lower frequency spectrum (say, sub 550 mhz) is it starts to interact with the atmosphere and can result in some off propagation patterns (like tropospheric ducting). I also suspect that the users of that spectrum (save for the military which has a huge amount of lightly used spectrum) might disagree with you as to how useless their technology is, I mean would you take the spectrum currently held for ham radio operators and sell it off? Navigation (GPS) is pretty spectrum efficient, so I'm not really sure what you're getting at there.
  - thrownaway2424 11y ago
    I wasn't referring to GPS, but to things like 4.3GHz +/- 100MHz for radio altimetry.
  - revelation 11y ago
    I think theres plenty of useful spectrum to go around between 2.4GHz and 5.8 All the legacy nonsense needs to be ruthlessly eliminated. People claim frequency auctions are efficient but that's clearly not the case if you are only auctioning .1% of whats useful and allocate the remainder to waste on a free cost basis.
    - 11y ago
deleted 11y ago
[deleted]

Because physics doesn't like startups I guess... Or to phase that another way: There is a lot of spectrum. But very little spectrum that is suitable for mobile phone usage. When a resource is finite and valuable, it gets expensive. If you want a "real" solution that would allow startups to play in the ballpit? Pass new national laws which split the cellular companies into two organisations, one that offers consumer services, and another which exists to maintain/install/upgrade the physical cellular network (and who then resells access). It actually makes little sense to have competing and exclusive cellular infrastructure. The infrastructure should just be like a public resource, like a road, and the cellphone companies should be like shipping companies, utilising a public resource (the road) to sell a service (shipping stuff). I'd be all for the government using eminent domain to seize every single cellphone tower in the country, and then reselling access to them to every cell phone company equally. But it isn't very capitalist...

rayiner 11y ago
So there is a lot of theoretical economic work on how to allocate limited rival resources like spectrum (and water). The consensus is that the efficient way to do it is auctions. I have quibbles with certain assumptions in that research,[1] but for stuff like cellular spectrum (where the owner can achieve extremely high utilization), auctioning to private companies is probably quite close to efficient. It would be more efficient if we got rid of restrictions on use and transfer. Yes, that does mean that you end up with mega-corps providing your cellular service. But the same is true for say retail. Amazon will eat the whole industry. Physics as well as economics strongly favor mega-corps. Startups have advantages, but specific and narrow ones. [1] See https://www.scribd.com/doc/292530059/Spectrum-Allocation-Local-Area-Wireless https://www.scribd.com/doc/292530059/Spectrum-Allocation-Loc...
- gst 11y ago
  An alternative would be to split wireless companies into 1) infrastructure companies and 2) companies that sell actual products to end users. The infrastructure companies would be allowed to bid on limited shared resources (= the spectrum), but a requirement for this would be that they would need to provide fair, reasonable and non-discriminatory access to the resources to other companies. This is similar to the approach that some countries used when privatizing railroad companies: Instead of creating a new private company that's effectively a monopoly, they created one company that provides the infrastructure and another company that runs the trains. This allowed new private companies to enter the market, as they were allowed to use the resources under the same conditions as the former monopoly.
- barrkel 11y ago
  Are we happy with mega-corps providing our wifi service? Our bluetooth service? These are also using limited rival resources. Under an auction system, we'd be paying rent on this spectrum (through expensive closed devices, or time-limited licensed systems) to guarantee non-interference. I personally would be less than pleased to have to pay extra on an ongoing basis just to have a wifi router in my home, or a wifi radio on my laptop. Extending private property rights into what is currently a commons would seem to imply that though.
sitharus 11y ago
One infrastructure company wouldn't work so well. You'd need at least two, preferably 3, with the ability for the resellers to quickly and easily switch. Here in New Zealand we have three providers, but we have national number portability. This means I can switch networks with no fees (unless I have a contract with a termination clause) and no number downtime. It helps competition a lot.
- X-Istence 11y ago
  If it was a single infrastructure company, all cell companies could use the same towers. This would remove the competition of when/where you have cellular access due to location. Number portability is already possible here in the US, and so long as I am not on a contract I can switch without fees.
deleted 11y ago
[deleted]
cobaltblue 11y ago
How do you see the consumer services competing on anything but price, speed, and usage without breaking net neutrality? How do you see a "shipping" future for cell phone companies any different than the FedEx/UPS duopoly?
- Someone1234 11y ago
  How do they compete now where they exist markets with good coverage? Most major US cities have complete coverage from the big three, so they must be competing on things other than coverage. Sure, this will even the playing field for coverage, but it won't even it for anything else (customer services, device financing, cost, et al). Plus actual network costs have little relation to what companies can charge, since all cellular companies over-sell their network. I'm sure with this there will be companies that offer terrible customer service, and price their offering dirt cheap. That's fine. But most consumers will want to find a happy medium between the quality of service Vs. the cost.
timthorn 11y ago
> Pass new national laws which split the cellular companies into two organisations, one that offers consumer services, and another which exists to maintain/install/upgrade the physical cellular network (and who then resells access). That was the shape of the cellular networks in the UK in the early days of mobile telephony, IIRC.

ljk 11y ago

you answered your own question! it's to keep the bar high so only the Goliath can play

rfrank 11y ago
you can't exactly go make more spectrum.

pyvpx 11y ago

because there is only one and certain parts of it can be monetized to great affect? you can get licensed spectrum in a point to point fashion for the cost of a modest used car, in some places.

thrownaway2424 11y ago

Most of the usable spectrum is being wasted on stupid junk like navigation, military and police who are using ancient, inefficient technologies. The bandwidth-specific value we're getting from the ISM bands dwarf nearly all other uses. There would suddenly appear to be huge amounts of available spectrum if the authorities would just yank bands from the most useless legacy allocations and auction them off.

ianlevesque 11y ago
Or better yet add them to the unlicensed pool.
Aloha 11y ago
While some of the spectrum held by the military would be useful, most of it wouldn't be, same goes for whats currently used for police too. The issue with lower frequency spectrum (say, sub 550 mhz) is it starts to interact with the atmosphere and can result in some off propagation patterns (like tropospheric ducting). I also suspect that the users of that spectrum (save for the military which has a huge amount of lightly used spectrum) might disagree with you as to how useless their technology is, I mean would you take the spectrum currently held for ham radio operators and sell it off? Navigation (GPS) is pretty spectrum efficient, so I'm not really sure what you're getting at there.
- thrownaway2424 11y ago
  I wasn't referring to GPS, but to things like 4.3GHz +/- 100MHz for radio altimetry.
- revelation 11y ago
  I think theres plenty of useful spectrum to go around between 2.4GHz and 5.8 All the legacy nonsense needs to be ruthlessly eliminated. People claim frequency auctions are efficient but that's clearly not the case if you are only auctioning .1% of whats useful and allocate the remainder to waste on a free cost basis.
  - 11y ago

deleted 11y ago

[deleted]