The news is welcome, given the collapse of last year’s US spectrum auction. However, two years may not be enough time. If the spectrum dispute reaches the Supreme Court, a ruling could take until 2004 to come into effect – by which time Verizon will have run out of capacity in some markets. It may be forced into alliances with other carriers.
US mobile operator Verizon Wireless has said it has enough capacity to last for another two years.
Verizon Wireless, the US’ largest mobile operator in terms of subscriber numbers, said on Thursday that it has enough capacity to handle customer growth for the next 18 months to two years. The mobile operator, jointly owned by Verizon Communications and Vodafone, believes that the cancellation of last year’s auction of new wireless spectrum will not lead to bandwidth problems before then.
Part of the reason is the operator’s new CDMA2000 1X technology, implemented this week. There has been fierce debate over whether the new system is 3G or not, since it is comparable in speed to 2.5G technologies such as GPRS. But 3G or not, the system uses bandwidth more efficiently than its existing network. As a result, even in dense markets, Verizon Wireless says it is unlikely to run out of spectrum until late 2003.
Verizon bid $8.7 billion for extra wireless spectrum in an FCC auction last year. However, an appeals court annulled the auction last summer, ruling that the spectrum belonged to bankrupt carrier NextWave and that the FCC had no right to seize it. Worse still, a compromise deal between NextWave and the FCC fell apart at the end of 2001.
Even if NextWave and the FCC broker a new settlement, the bandwidth debacle is expected to take until the end of this year to resolve. If litigation continues, it could take until 2004. This will certainly hamper the US mobile industry, which is already behind Europe and Asia. Companies may have to delay the introduction of true 3G, to stop their networks being swamped.
So despite Verizon’s announcement, it is not immune either. There is a small – but real – chance that the extra spectrum will not be available in two years time. If so, the company will have to rethink its strategy. In some territories, it may find itself forced into alliances with rival carriers that have spare capacity and fewer subscribers.