The 700 MHz auction won't change your life as much as you wish

A lot of people are very excited about the current 700 MHz auction. I’ve heard all kinds of nonsense like “nationwide WiFi” tossed about by people who should know better.

What are the real possibilities for the current 700 MHz auction and the 12MHz that AT&T recently bought?

In the previous 700 MHz auction none of the winners did anything with the spectrum space. To the auction winners it was just an investment that they never intended to use. Last year AT&T purchased 12 MHz of 700 MHz space from previous auction winner Aloha Spectrum Holdings and the FCC approved the purchase last week. (A few years ago I talked to Aloha about leasing some of the space for the company I worked for at the time. I was told by Aloha that they had no intention of doing anything with the space, they were just holding on to it as an investment.)

There are several things AT&T can do with it’s shiny new 700 MHz space.

They can sit on it.

• The investment theory: Spectrum is a somewhat limited resource, and while new technology allows you to do more with less all the time, the Shannon Limit is a hard cap on the amount of data you can shove through a given amount of bandwidth. Market forces, allowed to work, will guarantee an increase in price.

• The anti-competitive theory: They bought it to keep someone else from using it. AT&T has a huge investment in an existing cellular network. Spending $2.5 billion to protect the revenue stream of that network would make perfect sense.

They can add it to the existing cell network.

• And use it for a data service. Since 700 MHz has “better” propagation characteristics than existing cell frequencies AT&T wouldn’t have to add 700 MHz equipment to all of the existing cell towers. If someone will make the necessary equipment it could be a relatively inexpensive way to layer a data service onto their existing cell network and not have to rob voice channels for 3G data service.

• And use it for voice service. Coverage for cell networks is always a problem. AT&T could use the “better” propagation characteristics of 700 MHz to enhance the coverage of existing cellular voice service.

They can create a new service.

They can add it to what they win in the current 700 MHz auction for any of the above uses.

(The reason better is in quotes above is that propagation is a double edged sword. Yes, 700MHz goes through trees and houses very well. The problem is it goes through trees and houses very well. Current wireless broadband technologies rely on trees and houses to attenuate the RF signal to reduce interference between different towers. Take away that attenuation effect and you have to spread out your towers, reducing aggregate available bandwidth.)

In the GSM PCS band (1800MHz – 2000MHz), the C,D,E and F blocks are all 10 MHz, and 12 MHz of the 700MHz band could be used similarly. So the voice application would work.

EDGE uses the same channels as GSM either in the PCS band or the Cellular band (800MHz – 900MHz) but there is only one EDGE user per channel instead of 8 voice users per channel. (That’s one reason why cell carriers hate VoIP.) So you could theoretically use 700MHz for EDGE.

HSDPA builds on GSM channelization but can combine channels and codes to achieve a theoretical maximum throughput of 14.4 Mbps. Typically you could expect 1 to 3 Mbps down and a maximum of 384Mbps up. Unfortunately HSDPA is a channel pig and I don’t think AT&T deploys HSDPA where they only have block C – F PCS licenses. (Someone please correct me if I’m wrong about this. I’ve looked at AT&Ts licensing in the FCC database and compared it to acknowledged HSDPA deployments. It looks like they’re only deploying HSDPA where they have licenses in the A and B blocks of the Cellular (25MHz) and PCS (30MHz) bands. As usual though, I’m quite prepared to be wrong.)

I think it’s unlikely that AT&T will use it’s 700MHz space for HSDPA, unless it can pair it with one of the 700MHz blocks currently being auctioned. Either the A or B blocks, both 12 MHz, could be combined with the 12MHz from Aloha to make 24 MHz available, comparable to AT&T’s existing A & B blocks in 800MHZ and 1900MHz. If AT&T wins one of those blocks it would be reasonable expect AT&T to add 700MHz to their existing GSM system.

What about non-cellular uses of 700 MHz?

WiFi and WiMax both use a 20 MHz channel. In the 2.4 ISM band there’s enough room for three non-overlapping WiFi channels. WiMAX is used on licensed frequencies, currently 2.5 GHz in the US. AT&T’s 12MHz isn’t wide enough to use even one WiFi or WiMax channel, and even paired with something from the current auction they’d only have one channel. You can’t deploy a wide area broadband service on one channel. You can forget nationwide WiFi. There’s not even enough bandwidth available to act as back haul to traditional WiFi access points. This Wikipedia article on Spectral Efficiency has a great table comparing the available data throughput rates for different technologies.

So the most likely use for AT&T’s (Or anyone else’s) 700MHz spectrum would be to augment the existing cellular system. That doesn’t get us the high speed data nirvana some people seem to be expecting.

On the other hand, more 3G data with better coverage isn’t bad, especially if the Google influenced open access rules survive.

Let’s try to be a little more realistic in our expectations, OK?