A long time ago I wrote an article for the print version of OSP dealing with spectrum. I said that there had been an auction for wireless spectrum -- and electronic auction -- and that the several bidding companies had bid more than 13 billion dollars. My exact words were: "T-Mobile was the highest spending bidder. It paid more than 4 billion dollars for some 120 licenses. Verizon paid more than 2 billion dollars. Cingular more than 1 billion."

I checked and re-checked those numbers; it was going to take a lot of cellphone calls to pay for that spectrum, I concluded!

It was even more perplexing when I realized what that spectrum was for. Everybody said "the wireless network" but there was little more said. In fact, the wireless network consists of the links connecting the subscriber's cellphones to the cellphone tower. A couple of miles, in most cases. From the tower to the Mobile Telephone Switching Office is, in most cases, landline. Fiber or copper. So why, I wondered, would any company spend billions of dollars to be able to beef up that short link?

Why? Because someone had enough foresight (or luck) to realize that that link would eventually be pretty well filled up. And it is today! Not only with voice, the original intent for the cellphone, but also with data. That's why a number of cellphone providers have experienced dropped calls. Not enough capacity in that "wireless network." They need more spectrum! Some would complain, or brag, that it all because of Apple's iPhone. It, and all its look-alike smart phones, are just so successful that voice is almost a give-away; data is where the future is, and data requires spectrum.

Fast forward. It is now 2011, and the various cellphone providers are scrambling for spectrum. AT&T, in particular, is in need. And to help solve the problem the company has agreed to purchase T-Mobile -- the fourth largest cellphone provider in the country -- for $39 billion. If this works AT&T will gain 34 million subscribers to add to its own 96 million; and importantly increase its spectrum capacity by up to 30% in key major markets. It will also add to its cellphone tower assets.

But others aren't too sure. The CEO of a large independent owner and operator of cell sites says that AT&T could double the amount of capacity it supplies with current spectrum by investing more in new wireless equipment on existing cell towers. Others say that the situation could be eased if the federal government freed up under-utilized spectrum. And still another group points out that there are many companies that are sitting on swaths of spectrum that they aren't using. Shouldn't arrangements be made to take advantage of this, they ask? AT&T responds by saying most of these approaches would simply take too much time.

Perhaps there is yet another reason that AT&T and T-Mobile be joined, and that has to do with their transmission scheme. Both use LTE -- Long Term Evolution -- for their 4G operation. Sprint, on the other hand (and there has long been talk of some sort of combination of T-Mobile and Sprint) use WiMAX, an entirely different system. There are, of course, political reasons to challenge the merger -- but we won't go into them here.

The bottom line remains: We need more spectrum. And, let's face it, spectrum cannot be created. Re-allocated, yes, but not created.

So it looks like those people who bid for spectrum lo those many years ago knew what they were talking about. The situation ultimately boiled down to a simple statement: More spectrum, please.

What’s your take on this subject? Leave a comment and get the conversation going.