Bandwidth allocation

Bandwidth allocation is the process of assigning radio frequencies to different applications. The radio spectrum is a finite resource, which means there is great need for an effective allocation process. In the United States, the Federal Communications Commission or FCC has the responsibility of allocating discrete portions of the spectrum, or bands, to various industries. The FCC did this recently, when it shifted the location of television broadcasting on the spectrum in order to open up more space for mobile data. Different bands of spectrum are able to transmit more data than others, and some bands of the spectrum transmit a clearer signal than others. Bands that are particularly fast or that have long range are of critical importance for companies that intend to operate a business involving wireless communications. The FCC generally uses auctions to allocate bandwidth between companies. Some economists believe based on Auction Theory, auctions are the most efficient method of allocating resources. Due to the differences in the amount of data each band can transmit and the clarity of the signal, auctions allow the more desirable bands to sell for more. The United States currently auctions off bands that then become the property of purchaser. The FCC spectrum auctions have multiple rounds of bidding, as opposed to each party submitting one sealed bid. The FCC, when auctioning multiple bands, auctions them simultaneously. This allows for a more efficient bidding process, and keeps bands being auctioned at the end of the auction from being over or under valued. An example of this practice was the 700 MHz auction in 2008. While this method raises billions of dollars for the government, there is concern that smaller companies may be priced out of the market and therefore rendered unable to compete with large firms. This would reduce the number of points of view in the communications industry, which would violate one of the principles of the FCC, to protect the public interest. To help mitigate this concern, the FCC often sets aside a portion of the spectrum being auctioned so that it can only be bid on by smaller industry players. Another method used to allocate bands of frequencies was lotteries. Lotteries were used by the FCC in the 1980s. A benefit of lotteries was that it gave all parties a chance at winning, unlike auctions which favor parties with more money. By giving all parties a chance it was believed that it served the public interest better. Some disadvantages of the lottery method was that some firm would engage in rent-seeking behavior, and try to get multiple licenses that they did not intend to use, but only intend to sell to another firm. In this situation not only were firms using rent-seeking behavior on a public resource, but the negotiations between firms could go on for years, meaning that frequencies were not being used and the public interest was not being served. A third method used to allocate bands is the administrative process, also called comparative hearings. This method was used primarily before 1982. In this method all interested firms would make a presentation about why they should receive the license for that band of frequencies. Some advantages of this method are that they are flexible, meaning that FCC can use different criteria for different bands. This would allow the FCC to ensure that the public interest was acknowledged. There are also disadvantages to this method. A primary disadvantage is that the government does not raise revenue from hearing, as they would under other methods such as auctions. Along with the flexibility that the method allows for, it also can cause a lack of transparency because the criteria the decision is based on can differ from case to case. Another disadvantage is that the hearings process can take a long time to come to a conclusion. The FCC is also responsible for reallocating bands of frequencies to different allocations. As new technologies develop the demand for frequency bands changes and makes some bands more desirable than previously. When this occurs, the FCC may make a decision to move an application to a different band of spectrum to make room for something else. In this case the FCC gives the existing application several years to prepare for the transition. An example of this transition when the FCC reallocated the 700mhz band from broadcast television to mobile phone applications. The FCC first voted to reallocate the band in 2002, however the broadcast television firms were not required to stop broadcasting until February 2009. The exponential increase in mobile data traffic during the decades of the 1990s and 2000s has led to the massive deployment of wireless systems. As a consequence, the limited available RF spectrum is subject to an aggressive spatial reuse and co-channel interference has become a major capacity limiting factor. Therefore, there have been many independent warningsof a looming 'RF spectrum crisis'as the mobile data demands continue to increase while the network spectral efficiency saturates despite newly introduced standards and great technological advancements in the field. It is estimated that by 2017, more than 11 exabytes of data traffic will have to be transferred through mobile networksevery month. A possible solution is the replacement of some RF-technologies, like Wi-Fi, by others that do not use RF, like Li-Fi, as proposed by the Li-Fi Consortium.