Aggregating Bandwidth For Faster Mobile Networks, Explosive Growth In 2010
A new study published in the Int. J. Management and Network Economics reveals that the value of mobile spectrum, the capacity to transfer data across mobile networks, is only likely to increase as the demand for data transfer increases. However, it is only those telecommunications companies that bought up in government auctions the inexpensive licences to operate at particularly frequencies of the spectrum that will be in strong position to dominate in the consumer and enterprise markets as well as being in a position to lease bandwidth to their competitors at a high profit.
Jan Markendahl of the Royal Institute of Technology and Bengt G. Mölleryd of the Swedish Post and Telecom Agency in Stockholm have demonstrated that operators that are able to obtain more spectrum than their competitors, and pursue network sharing and spectrum aggregation have a competitive advantage as they have the lowest production cost, highest margin and highest capacity when usage takes off. Spectrum is much cheaper than the construction of new base stations, network towers, power, and site leases.
With the emergence of new radio technology that allows otherwise separate blocks of frequencies to be used as if they were a single block of bandwidth means will allow those operators who enable the so-called 3GPP standard to profit from the separate chunks of bandwidth they own. Similarly, the evolution of 4G technology and devices will also allow aggregation. Indeed, the mobile equipment manufacturers have already launched flexible radio equipment capable of handling all relevant frequencies and access technologies.
Data traffic across mobile networks in Sweden alone increased by more than 90% during 2010 compared to 2009, from 27,800 to 53,100 terabytes (TB). Similar increases are being experienced elsewhere. The figures are likely to rise even faster in coming years as more people opt for smartphones and the use of tablet computers becomes more widespread. Such operators are likely to benefit considerably from this growth.
The researchers point out that the level of data rates a company can offer will be pivotal for its marketing success in mobile broadband services. Even minor differences will be exploited to gain brand advantage and those operators who can best use the entire spectrum available to them will be able to beat their competitors on data speeds. As the technology evolves, the companies that bought up lots of separate chunks of spectrum in the cheap government sell-offs of bandwidth could gain the upper hand.
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Citation: “Mobile broadband expansion calls for more spectrum or more base stations: analysis of the value of spectrum and the role of spectrum aggregation” in Int. J. Management and Network Economics, 2011, 2, 115-134
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