Spectrum Bridge Liberates Enterprises From Unlicensed Spectrum

The key to a successful marketplace is the free flow of goods. Important factors include not only the goods themselves, but also information about those goods and a means to exchange them....

April 8, 2008

5 Min Read
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The key to a successful marketplace is the free flow of goods. Important factors include not only the goods themselves, but also information about those goods and a means to exchange them. But to be called "successful," at least in the eyes of the consumer, there needs to be a bit more. If there's only one vendor offering those goods, it results in a monopoly that generally leads to higher prices than if there's competition. If goods are of a quantity that's unaffordable to most buyers, fewer items will be sold. For example, if a homeowner needs some topsoil to fill in a bare patch of grass on the yard and it was only sold by the truckload, it's unlikely he's would buy it. Instead, he might have to find a less-desirable substitute. Goods that are sold infrequently or irregularly may fluctuate wildly in price as there is no near-term comparison for the buyer (or seller) to identify its value.

One of the goods that has not flowed easily is licensed spectrum, but Florida-based Spectrum Bridge hopes to change that. According to the company's research and external sources, 80% to 94% of licensed spectrum goes unused. There are valid reasons why that spectrum goes unused. Some of it is allocated for a specific purpose, such as the AM or FM bands for commercial radio, but not every channel has a radio station in that market. Some spectrum is reserved by the government for its own occasional use. Spectrum owners don't always immediately deploy a product or solution in a market, or some of the band is set aside for future growth. And even if product is deployed in a market, transmission may not always be continuous (i.e. paging systems).

The 2.4- and 5-GHz bands serve well for Wi-Fi, but enterprises looking to avoid interference from other equipment in those bands or take advantage of the higher output power available in the licensed ranges have few viable options. Most spectrum has been licensed or allocated by the Federal Communications Commission in a range of geographical areas spanning hundreds to thousands of square miles. Some of those areas yielded tens of millions of dollars when licenses were auctioned off by the FCC. If the enterprise were required to lease the entire area for even a short amount of time, the costs would be prohibitive.

Fortunately, the FCC has a relatively permissive partitioning and disaggregation policy that allows spectrum owners to lease it to others, creating a secondary spectrum market. For example, a hospital with three clinics in the same city may not need multicounty coverage -- if it could lease the spectrum for just the city, that may be sufficient. Or perhaps there is an annual event that could benefit from licensed spectrum for a single week. As Spectrum Bridge describes it, the lease may vary in the portion of the licensed band, duration, time of day, and location, and it will be up to the parties to negotiate an equitable lease. The problem is that it's hard to know where to start. End-user organizations are typically not savvy enough to wade through the FCC databases, identify owners, verify if the spectrum is in use or not, and begin the tedious process of contacting each viable spectrum license holder to see if it's willing to carve a chunk of spectrum for them.

That's where Spectrum Bridge steps in. It's working with spectrum owners, equipment manufacturers, and system integrators and VARs to create a secondary market exchange for spectrum. By bringing the owners and buyers together, dynamic spectrum leases can be negotiated that allow the owner to recognize revenue on unused assets while providing the buyer with access to a good that was previously unaffordable. Spectrum Bridge hasn't yet done so, but it plans to work with system integrators and VARs that understand the benefits and workings of wireless technology to bring total solutions to their customers.Equipment vendors play a slightly different role. Spectrum Bridge is looking for vendors to work toward frequency-agile equipment that can operate on multiple bands. In order for this market exchange to work, the spectrum available needs to run on commercial gear. It's unlikely that enterprises can afford to commission manufacturers to build even 100 units at a certain frequency. But if the equipment can operate at multiple frequencies, there's a better chance that a match can be found.

Spectrum Bridge adds more value than just bringing the parties together. It will ensure that all the FCC paperwork is properly filed so that the transacting parties can avoid the regulatory complexity. It also will clear the financial transactions.

Spectrum Bridge faces several challenges. It must find licensed spectrum holders willing to lease spectrum. Some of that may require a little courting to make available what often slips by as an unadvertised asset. Spectrum Bridge must work with VARs and educate enterprises on the benefits of licensed spectrum. It must also find ways to incentivize equipment manufacturers to include multiband capabilities in products that try to keep their BOM as low as possible to remain competitive, especially residential CPE.

While Spectrum Bridge nurtures the concept, it's working on a project that may generate some near-term revenue: a spectrum management system. Large spectrum holders sometimes have difficulty keeping track of their own spectrum portfolio. This will be a product that allows owners to keep track of the spectrum they have and how it's deployed. Equipment vendors may want to perform market analysis on spectrum deployment, usage, and ownership. The spectrum management system forms an important component of its own spectrum exchange system, too.

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