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Verizon's Great LTE Network a Terrible Spectrum Waster
Written by Dave Burstein   
Friday, 23 September 2011 18:04
Tony_meloneVerizon is the great dissenter on the business advantage of offloading wireless data to WiFi, femtos and small cells. From China Mobile to AT&T to France Telecom, nearly every major carrier in the world is rushing to offload 50% of traffic and more from macro cell towers. Small cells closer to the user are thought to be much cheaper. "The faster we get the bit to ground, the less it costs." It's simple physics: signals get weaker with distance.
    Tony Melone of Verizon is the one voice disagreeing on the move to bottoms-up networks. While Verizon will use WiFi in the home and crowded areas like sports stadiums, they are not going hard to a general deployment.“In my mind it’s much more effective to invest in your 3G and 4G environments than rely on Wi-Fi.” I respect Melone so take his opinion seriously. In a briefing on small cells the day I'm writing this, I presented the Bottoms-Up approach as the common wisdom but added his disagreement.
     Melone may or may not be right that the company is more profitable not offloading so heavily. But it's clearly wrong from the public point of view. Spectrum isn't as scarce as the fearmongers have it but does have limits. It's a commons we need to share and protect. Melone's boss Lowell McAdam at Goldman Sachs urged the government to "get spectrum in the hands of people" who need it. McAdam sensibly spoke of transferring spectrum that's underused but also of auctioning more, which means enclosing more spectrum.
       The tech people around policy understand that the last thing we want to do is fence out spectrum blocks. Every band auctioned is one more that will be hard to free to share more efficiency. The answer to spectrum issues is efficiency, not lock-ups. McAdam spoke of allowing other spectrum holders to lease him rights. FCC Commissioner Adelstein recommended a "use it or lose it policy."
      I'd go further and require a "use it efficiently" policy. It may or may not be cheaper for the company to use lots of WiFi and other efficiency tools. It may be cheaper for the company to "buy" more spectrum instead. But that "externalizes" the cost, by limiting the spectrum available for others to use. Tech guys get this right away, but it's far from understood in policy circles.
      "Verizon eviscerates competition with lightening LTE speeds," Matt Lewis summarizes testing by ARCCHART. "Verizon is delivering download speeds in excess of 11Mbps... AT&T supports average download speeds of around 2.3Mbps over its HSPA+ network, while Sprint delivers just 1.8Mbps over EV-DO. T-Mobile's HSPA+ network achieves a more respectable average download performance of 3.2Mbps. The smaller carriers - Leap, MetroPCS and US Cellular - fall well-behind the majors, with data throughput above 1Mbps uncommon in most parts of the country." Verizon's pioneering LTE network is the best in the Western world today. Ivan Seidenberg won a big gamble the technology would work when promised. They are right on schedule. CTO Melone confirmed how wide the buildout will be. "We’ll blanket virtually the whole country, including all of the places where Verizon provides 3G service today…and then some." About 98% of the U.S. is covered by cell towers and essentially all of them will be upgraded to LTE over time because it's a fraction of the cost of the older technologies. Unlike others, Verizon committed to do the wide build as fast as possible. 92% in 2013, 96%-98% a few years later. It's doing so well AT&T now is scrambling to catch up, about a year behind. (80% in 2013.) Ignore the noise in D.C. on AT&T's plans. Because it's needed to compete with Verizon and is cheaper, T will get to 95-97% no matter what happens to the merger. But they will almost certainly be much later than VZ.
    Tech writer William van Winkle has a good perspective on wasting spectrum. In an extraordinary review of highend WiFi, van Winkle notes "We’re facing a bandwidth dilemma. As demand and usage continue to climb, our ability to effectively and efficiently use those resources will continue to diminish. ... Buy smart and, when possible, demand better from wireless."
     The same is true for LTE or any other spectrum use. The public pays a high price if maximum efficiency isn't required.