Wireless Communications: Still Alive and Kicking

By Smith, Robert E. | Public Management, April 2009 | Go to article overview

Wireless Communications: Still Alive and Kicking


Smith, Robert E., Public Management


Despite the cloudy economy, we can still make predictions about wireless infrastructure siting and deployment--and the implications might surprise you.

MY TOP THREE PREDICTIONS

1. More cell sites and towers are coming.

* Congress will pass a Broadband Stimulus Bill this year that will include grant monies for industry to field wireless projects.

* Recent Federal Communications Commission (FCC) auctions have reallocated frequencies and have positioned service providers so they can deploy new services.

* The emergence of WiMax by Clearwire will generate equipment deployment and new sites across the United States.

* The general status of infrastructure (cell sites) versus service subscribers has been trending in the wrong direction--infrastructure has been lagging. More sites are needed to serve the growing number of subscribers.

* Services are becoming more bandwidth intensive, and minutes of use are still rising. Site saturation and capacity issues are driving the need for additional sites.

Congress and the FCC's recent actions will create available grant monies for wireless projects and a need for additional equipment in the field. Part of the focus will be to shuffle service providers across existing markets to accommodate recent mergers, but the lions share of this work will be to provide wireless connectivity to rural areas.

Funding levels currently riding within House and Senate versions of the bill are in the $1 billion range for wireless-only projects. The two bills also contain between $5 and $8 billion in additional funds for landline. hybrid, and other types of projects.

The business side of the wireless infrastructure industry points toward more infrastructure in the field and the creation of new sites to support services. New service offerings such as Clearwire's WiMax, bandwidth-intensive user services (streaming video, for example), and changes to providers' markets and frequencies have a nationwide impact and will generate demand for new infrastructure sites.

Further, the recent creation of new infrastructure sites has not kept up with the growth in subscribers. As the nation approaches 100 percent market penetration and then exceeds it (as Germany and Japan have), the gap in infrastructure sites will affect service delivery. New sites must be created to support the services offered.

Data from CTIA (the association for the country's wireless telecommunications industry) show that about 262 million customers are using some 220,000 cell sites across the United States. The history of the number of subscribers per cell site is shown in Figure 1.

[FIGURE 1 OMITTED]

Since January of 2006 there have been increases in the numbers of subscribers per cell site. Although this is not a specific growth indicator and it is not tied to any specific market, it does reflect a national trend indicating that infrastructure sites are having to, on average, support more users at a lime when bandwidth usage and minutes of use are rapidly increasing. This kind of loading was last seen during 1993-1997, when the industry was attempting to keep pace with the rapid demand for services across the nation and towers and cell sites couldn't be built fast enough.

In the current economy, with its decreases in consumer spending and confidence, consumers are nonetheless electing to retain their wireless devices and cell service. More consumers are eliminating their land-lines and are becoming wireless-only households. The most recent market research indicates that 18 percent of U.S. households are wireless only. The year 2008 also marked a watershed moment when more consumers preferred the Internet, not a newspaper, as their source of news.

One might surmise that the current economic winter will have average consumers tightening their belts, eliminating landline phones, and possibly cancelling newspaper subscriptions. …

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