There has been a lot of debate lately around whether the spectrum crunch is real or not. Mobile operators say they need more spectrum. Spectrum is a major reason for AT&T's potential acquisition of T-Mobile USA as well. On the other hand, some say this is nonsense; that some mobile operators and cable companies are sitting on spectrum, and that they do not need more spectrum. What is the truth?
The truth is lies somewhere in between. It's a matter of engineering versus dollars. Mobile operators can use technology and engineering to easily meet their growing capacity needs. They can divide cells as much as they need to by multiplying macrocells and microcells, putting up more picocells and outdoor femtocells, and using more indoor DAS and femtocells. No problem . . . until you consider the costs and other issues involved.
This is why spectrum is so desirable. The cost of nationwide spectrum is a fraction - even a tiny fraction of what a mobile operator could spend on additional base stations nationwide, which inlcudes costs for towers, base stations, backhaul to these separate sites, etc. There are problems with getting new sites aside from the costs - the same people who complain about dead spots and calls dropping are sometimes the same people fighting a new cellular base station or tower being put up. When you take this into account, a mobile operator would much rather spend less on acquiring more spectrum than invest more heavily in the network.
In addition, the US is undergoing 4G (WiMAX and LTE) buildouts that are new technologies (OFDMA, hence the next 'generation') that are naturally built out on separate spectrum from that used for existing 2G and 3G technologies. Of course, that spectrum will be refarmed later once the 4G networks are more established.
Because of the financial aspect of subdividing cells, this can only be one of the ways mobile operators will add more capacity. The subdivision of cells will increasingly happen to meet traffic needs, but mobile operators will naturally go for the spectrum option first for the various reasons cited previously. As ABI stated as early as 2007, there will be a capacity crunch cause by the proliferation of WWAN-enabled devices and thier increasing power and capabilities, and mobile operators will use all options at their disposal to meet capacity needs. This includes the use of more spectrum, smaller macro/microcells, the use of small cells, offloading to wireline broadband networks via Wi-Fi and femtocells, changes in pricing including usage-based pricing, compression and video optimization techniques, and more.
