McAdams On: Evidence to the Contrary
11/19/2010 1:39:24 PM
The purported justification for reallocating TV spectrum for broadband is
predicated in large part on anticipated growth in wireless data traffic. The
latest spectrum-demand white paper from the Federal Communications Commission
states that “mobile data demand is expected to grow between 25 and 50 times
current levels within five years,” or between 480 and 980 percent annually.
Which leads one to wonder... who will be driving? Just about every man, woman
and child over the age of six in the United States has a cell phone now, and those
aged 12 to 29 use them like an appendage. Actually, 93 percent of the U.S.
population subscribes to a wireless service, according to The Wireless Association.
Another two percent are expected sign up over the next three years, then
penetration will more or less flatten out.
So whence is the explosive demand to come? Not businesses, the assumed
driver of an assumed gargantuan economic injection to come from nationally
available wireless broadband. In-Stat says growth in wireless data spending by U.S.
businesses is slowing. The annual growth rate is expected to decline from 5.2
percent from 2009-10, when business are expected to spend $27 billion on wireless
data, to around 2.5 percent during 2013-14.
And despite the amazing ability of young women to text in their sleep,
businesses pump more data through the air. Businesses accounted for around 63
percent of wireless data spending, based on the overall tally from the
Telecommunications Industry Association. TIA said overall wireless data
spending in 2009 reached $43 billion, thus if In-Stat’s numbers are on,
businesses spent the majority.
Overall spending is projected to hit $93 billion by 2013, for an annual growth
rate of 23 percent over five years, or not quite 480 to 980 percent.
Which brings us to smartphones. Smartphones generate approximately a lot more
data traffic than stupid phones. The FCC’s white paper says penetration is 42
percent. Nielsen says 28 percent. Nielsen even has a line graph to prove it. But
what’s a 14 percent discrepancy when you’re trying to wrench 120 MHz of
spectrum out of the sticky fingers of the broadcast industry? Nay, it is but a pesky
Another pesky fact is that video consumption is expected to contribute greatly
to the projected increase in wireless data traffic. Because the same service
for free from broadcasters does not add enough ARPU to please the
investor/regulators now in charge of the spectrum.
-- from the Nov. 17 issue of