A Deeper Look into Wireless Spectrum Capacity and Its Effect on Device Performance and Consumers: A Response to CNNMoney Tech’s Spectrum Series

by Latoya Livingston on February 28, 2012

Last week, David Goldman of CNNMoney Tech gave readers a week-long series on the spectrum crunch and its effect on cell phone capacity and performance.  These articles gave the readers a nicely woven view of what the spectrum crunch is, why it is important, why there is a problem, and what has been and can be done to solve the problem.  However, this response series will delve deeper into many of the major issues that Goldman wrote about and relate it to consumer, especially minority, interests.

As we exceed our current 80 percent spectrum capacity level and rush toward a time when demand will outstrip supply, the nation continues to surge through 2012 in not much better of a technological situation than we were in last year.  We’ve been aware of the problem for a while now but it’s the solutions that have proven to be elusive.  Competing interests, coupled with an ever-approaching spectrum shortfall deadline, mean that something drastic has to be done immediately.  As we look to our government and the major players in the telecom market for a saving grace, we put our hope and trust in a system where businesses will have to balance the interests of their shareholders with the needs and desires of consumers.

The fact is that this spectrum crunch is going to decimate minority adoption if prices increase and service worsens.  Minority home broadband adoption is already at abysmal levels.  Are the service providers thinking about that when they are figuring out their solutions to the spectrum crunch?  Unfortunately, many times minority interests aren’t even taken into account.

With the U.S. to become a minority-majority country by 2050, and possibly even earlier by some estimates, will the U.S. be able to continue to play a major role in the world economy if a majority of its population is lagging behind the rest of the world?  Wireless is what is driving adoption in minority communities; however, with spotty service and high service plans, that surge will be stymied.  People just aren’t going to pay more money for a lesser service.  For proof, just look at last summer’s massive backlash against Netflix.

How will the U.S. compete when the majority of its population isn’t internet literate enough to compete?

Where’s the Issue?

Goldman’s article was heavy on its criticism of consumers’ dependence on their smartphones and tablets, much to the chagrin of service providers who want to reel in excessive wireless use.  The insatiable thirst for having the Internet at one’s fingertips won’t be quenched unless some new and much better technology arrives.  But the drastic rise in smartphone and tablet adoption has created a crisis for the telecom industry.  Spectrum is a very finite resource, whose infrastructure makes everything wireless work.  Unfortunately, we’re using spectrum as if it’s a resource that we can just create or drill for.  Goldman, like many others, pointed out that we must break, or at least lessen, our dependency on spectrum.  Methods like adjusting price and bandwidth or capping data users are some of the methods that service providers are using to wean its customers off of their addiction.

But is it too little, too late?

As Goldman pointed out in his article, capping the heaviest data users, those who are in the top five percent of network users, seems to be a good method to address out-of-control data usage, especially for those grandfathered into “unlimited” data plans.  I agree.  Heavier users should have to pay more if they are using data at levels many times greater than the average user.  And it seems to be working, a little.  Although capping hasn’t stopped the excessive practice, “data hogs” have been rightfully given some impetus to cut their overburdening usage.  As Goldman pointed out, “[t]he top 1% of mobile users – the ‘data hogs’ who consume almost a quarter of all mobile bandwidth – are still increasing their usage, but at a much slower rate than in previous years.”  They are moving toward using free or low-cost WiFi hotspots to get their data fix.

Unfortunately, some have not seen the issue as we have.  Recently, a Ventura, California, Superior Court found in favor of an iPhone user who sued AT&T for intentional data-throttling, a practice that makes Web browsing very slow and eliminates streaming capabilities.  According to Matt Spaccarelli, his phone was throttled after he used 1.5 to 2 gigabytes of data within a billing cycle.  Pro-tem Judge Russell Nadel agreed with Spaccarelli’s argument that it was unfair that AT&T slowed down his data speed, even though Spaccarelli was on an unlimited data plan.  Coincidentally, AT&T offers subscribers plans to use up to 3 gigabytes per billing cycle for $30 per month, the same amount that Spaccarelli pays for his unlimited data plan.  Spaccerelli was awarded $850 in the case.  AT&T shortly thereafter announced its plan to appeal the decision, which could have major implications for wireless providers’ ability to regulate data usage on unlimited plans.

Though excessive data usage is a hindrance on the nation’s existing spectrum level, smartphones are a major plus for minority adoption.  The National Telecommunications and Information Administration reported that minority wired adoption rates in 2011 were an abysmal 55 percent for black households and 57 percent for Hispanic households.

But the converse is true for wireless access to the Internet.  FCC research shows that blacks and Hispanics are more likely than whites to use their smart phone as their primary, or only, means of accessing the Internet.  This is very important.  Since minorities will soon be the majority in the U.S., we must ensure that they are able to steer the nation into digital growth and prosperity for all.  So, if minorities are using mobile devices to achieve that goal, then I’m glad that mobile devices are so popular.

What are the Consequences of the Spectrum Crunch?

Goldman suggested that the four major carriers will most likely implement new “pay for what you consume” approaches, where customers could pay for the individual services that they use, such as for unlimited Facebook or Twitter.  This new approach would likely be a financial, but workable, burden for most consumers who have reasonable access to Wi-Fi at home or on public Wi-Fi networks.  However, this will prove disastrous for low-income and minority consumers who have yet to adopt broadband at home and thus would be subject to data fees the majority of the time that they use their smartphones.

While minority adoption of wireless Internet via their smartphones is above the national average, the converse is starkly true when it comes to adoption of broadband at home.  A new pay-for-what-you-consume approach, and the resulting higher mobile service bills, will slowly erode all the positive strides that have been made to bridge the digital divide.

The alternative approach, already in use by Amazon and Barnes & Noble for Kindle and Nook 3G e-reader users, would have the product providers arranging the carriage agreements with the wireless companies for data services while the customer pays a subscription service to Netflix, Amazon, or Barnes & Noble.  This seems like a more customer-friendly approach.  No one wants to have to worry about monitoring their data usage while streaming a movie on their smartphone or tablet.  However, it is very unlikely that data heavy data-usage product providers, like Netflix, HuluPlus, or YouTube, would take on the burden of paying for their customers’ mobile streaming habits in lieu of the “pay what you consume” alternative.

With the carriers nickeling and diming customers with increased early termination and upgrade fees and the two biggest carriers getting rid of their low-cost option, subscribers are feeling a massive strain on their wallets.  Since the carriers are raising their service fees, it’s ever more important that state and local governments don’t use mobile service taxes to supplant their coffers.  Customers, especially low-income customers, can carry only so much of the financial burdens of mobile access.

Carriers and government agencies have a social responsibility to all Americans not to push the increased costs that they face on consumers.  Increasing costs can have a detrimental effect on consumers, especially low-income and minority consumers.  They must not look at America’s dependency on their mobile devices as a conduit to personal wealth for their executives and shareholders.

  • Latoya LivingstonLatoya Livingston is a Washington, D.C.-based attorney with years of experience working in the public and private sector. Attorney Livingston joins MMTC after performing pro bono work for the organization last year.
  • Follow Us on Facebook
  • Follow Us on Twitter
  • Subscribe to Newsletter
  • http://www.altondrew.com/ Alton Drew

    I agree with Ms. Livingston that the last thing consumers need on top of higher prices brought about by a spectrum crunch is a state and local tax crunch.  There is no sense in asking wireless carriers to deploy facilities in urban and rural areas when consumers are being forced off networks due to increasing taxes and fees.

Previous post:

Next post: