In Business Model, Internet Access, Spectrum

Some would argue that any business based on use of spectrum “must” entail either exclusive rights to use, or at least quality of service guarantees,  to create a sustainable business case, and to underpin network investment. Shared access systems might, or might not, clearly prove or disprove that contention. Some would argue that unlicensed spectrum poses precisely that problem–no sustainable business model and therefore no investment.

Historically, that argument has made sense to nearly everyone. Satellite, TV, radio, fixed wireless and mobile businesses have been built on the assumption that either exclusive use of some spectrum, with quality of service therefore possible, justify investment.

Wi-Fi is the first big challenge to such thinking. Indeed, some would argue that the Wi-Fi business model is nearly always based on something aside from the ability to charge a fee to use Wi-Fi. Wi-Fi as an amenity for buying a particular internet service provider’s fixed or mobile service is one example. Sales of food and beverage provide the business model for amenity Wi-Fi. Lodging provides the model for hotels.

Convenience provides the value for consumer appliances (no dongles, cables, adapters when connecting to the internet). In some cases, exclusivity (on airplanes, for business grade connections, at some venues) does provide the scarcity that creates a subscription or pay-per-use model for Wi-Fi.

So the big issue raised by huge new allocations of shared or unlicensed spectrum is whether the old rules can change. Some will insist that investment logic will remain intact: some form of QoS or exclusivity will be required to drive big investments in public networks. The key issue, some will say, is that the ability to maintain QoS, or provide access on an exclusive basis, still will matter.

If so, spectrum abundance might help or harm incumbent spectrum users, depending on how the QoS issue is resolved, and how exclusivity is affected.

The big issue is whether new ways to use and share spectrum, plus such huge increases in available spectrum for commercial purposes, will so vastly affect the scarcity assumption–replacing it with an assumption of abundance–that some forms of distortion (spectrum hoarding or squatting) will make less sense.

It might be possible to speculate that spectrum will become a smaller part of the spending any service provider has to anticipate to build a business, so long as quality of service can be provided. 




Spectrum still will be important. It just not be as important, or as costly, as in the past era of scarcity.

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