2015 Prediction Update: We predicted that new and refarmed spectrum would enable innovation in urban areas. 2015 has turned into an important year for operators to develop spectrum strategies to meet the growing capacity demands in these areas. In the US, there has been expanded efforts to repurpose spectrum for LTE, the completion of the largest FCC spectrum auction yet, and a growing emphasis on using higher-frequency spectrum for their high capacity limits.

By Anne Gillard and Ryan Greenwell 

- Industry Prediction Update

Rapidly Increasing Data Demand Puts Pressure On Operators

Urban markets are demanding additional network capacity at a rate that is increasingly difficult for operators to meet. Cisco VNI’s 2015 report expects data usage per smartphone to more than quadruple from 800 MB/month in 2014 to almost 4 GB/month in 2019. When paired with rising smartphone, tablet, and wearable device penetration rates in already densely populated areas, operators have identified capacity as a primary network challenge (see Figure 1).

Figure 1: Estimated Smartphone Data Demand

Figure 1: Estimated Smarphone Data Demand

Source: Experian, Cisco VNI, Ovum

Given the magnitude of projected demand growth, operators have thought carefully about the spectrum assets that will be required to remain competitive.

Capacity is Key

Mobile operators have actively pursued all routes to meet the growing demand for capacity this year. In the US, the largest mobile network operators (MNOs) have all refarmed spectrum for LTE, including AT&T’s and T-Mobile’s shutdown of legacy CDMA networks. By taking spectrum already in use and transitioning it to more efficient technologies, the refarming process boosts network capacity. Verizon and T-Mobile have additionally pursued less common methods to improve their network by arranging a spectrum swap to reap the service quality benefits of more contiguous spectrum ownership.

But one of the largest shifts in the US this year was the FCC’s AWS-3 auction, which grossed over $45B in bids for 1700MHz and 2100MHz spectrum in the largest FCC auction to date. The success of the AWS-3 auction is a stark contrast, however, to the lukewarm response to the upcoming 600MHz auction. Sprint has already announced that it will not participate in the 600MHz auction, and Verizon has reiterated its focus on higher-frequency spectrum, which provides more capacity in smaller areas relative to lower frequencies. These mobile operators have already made vital decisions in determining their spectrum needs for the future.

In the UK, Ofcom’s proposed 2016 auction of the 2.3GHz and 3.4GHz bands has led to similar behavior among mobile operators. Given Ofcom’s announcement that there will be no caps imposed on the amount of spectrum purchased, similar shifts in spectrum competitiveness can be substantial.

The Beginnings of the Modern Mobile Network

The modern mobile network aspires to be a fundamental part of daily life. This goal can be readily seen in the competition among the US’s largest MNOs to provide LTE throughout New York City’s subway system. In Brazil, we see this in TIM’s carrier aggregation deployments in Rio de Janeiro as a part of a larger solution to handle demand during the Olympics.

2015 Industry Prediction: New and refarmed spectrum enables innovation

Given the potential impact mobile connectivity can play in city life, urban planners also view a robust mobile network as an important factor in a city’s ability to provide for its residents. Civic projects such as New York’s BigApps competition and Jaipur’s smart city project are just two among many initiatives that include challenges to connect cities through cutting-edge technology.

> For more on smart cities, read Cartesian’s Insight on “Smart Cities: Opportunities for Service Providers”

The full range of innovations to meet urban needs has yet to be seen, but the factors necessary for it – investments in high-capacity networks, government support for the application of those networks, increased adoption of technologies – are all in play.

In our 2015 Year End Review, we will take a closer look at plans to turn our urban areas into smart cities.  In the ten weeks leading up to our Year End Review, read about the ten events and themes we believed would shape the technology, media and communications industry in 2015. Which ones are leading the transformation?

Read about:

Coming soon:

  • Soft SIM
  • OTT and the cable industry
  • 4K OTT
  • Cloud services
  • Wearables
  • The sharing economy
  • Apply Pay

> Read our industry predictions for 2015 in our December 2014 Coordinates Newsletter