Wireless bandwidth is like land in Manhattan -- it's extremely valuable because they're not making more of it.
But we sure are using more of it. The wireless-industry association CTIA reported in October 2011 that the number of wireless devices in the U.S. had, for the first time, exceeded the number of people.
And Mobile Future, a coalition of vendors and consumers, estimated in a March 2011 report that by 2014, voice traffic will comprise only 2% of the total wireless traffic in the United States -- a worrisome statistic because, as the report noted, smartphones consume 24 times more data than old-school cell phones, and tablets consume 120 times more data than smartphones. (See Data needs bandwidth, but how much? for details.)
The result: Wireless networks are edging near capacity, not just in the United States, but all over the world. Credit Suisse conducted a survey last year that revealed mobile networks in North America were running at 80% of capacity, with 36% of base stations facing capacity constraints. The average globally for base station capacity utilization, the report said, was 65%.
The problem is going to get worse before it gets better. With advancements in connected cars, smart grids, machine-to-machine (M2M) communication, and domestic installations such as at-home health monitoring systems, wireless demands will only increase.
As with all things mobile, there are no simple answers, if only because potential solutions rely on agreement among a sizable and incompatible array of players -- from spectrum owners (both telcos and broadcasters) and regulators to government agencies and, of course, consumers demanding the latest in cool devices and applications.
With all this sturm und drang, what happens to businesses that are increasingly relying on the productivity that mobile devices deliver? Their numbers aren't inconsiderable: According to a recent IDC report, 75% of the North American workforce was mobile in 2010, and iPass reports that 91% of mobile workers use their smartphones for work.
Most carriers have already imposed data caps, and industry watchers say the laws of supply and demand indicate that wireless-plan prices can only go up. When AT&T switched on its 4G access in 11 areas in December of 2011, AT&T Business Solutions chief John Stankey warned that if the spectrum situation remains unchanged, pricing will rise, a prediction borne out by AT&T's announcement last week of new pricing structures for its smartphone and tablet customers.
Some experts fear there could be dire consequences. Richard Bennett, senior research fellow for the Information Technology and Innovation Foundation (ITIF), says, "If we can't get spectrum bandwidth for more mobile devices in the next five years, prices will rise, performance will suffer, and innovation will be impaired."
Adds Scott Bergmann, the CTIA's assistant vice president for regulatory affairs, "Companies will have to make some hard choices, including limiting the amount of data employees can use based on job function."