'Those carriers that don't take up this bandwidth will probably find that their competitors – and some newcomers – will'
According to Eric Schmidt, CEO of Google, human beings are now creating as much data every two days as the human race created from the dawn of civilisation to the end of 2003.
Think about that for a moment – it is pretty mind-blowing, and the pace of data creation is only getting faster. This explosion in internet use, data sharing, and online connectivity has revolutionised the way that humans interact with the world – and it's only just beginning.
This exponential increase in the demand for connectivity is rapidly turning radio spectrum and bandwidth into one of the most valuable commodities on the planet. For many people, bandwidth has become as much a staple as bread, or coffee.
Spectrum is a limited resource – there is but a fixed amount available to us. While we can squeeze greater efficiency from the finite amount of spectrum that exists, creating more radio spectrum is physically impossible.
Like the old saying about why to buy land – "they're not making any more of it" – the same rule applies to radio spectrum.
What's more, bandwidth cannot be stored – surplus capacity not being used at this moment, right now, can never be used again. This perishability means that the bandwidth we have is not being allocated efficiently – while it is not being used, the opportunity to use it has been lost forever.
Added to this is a continuing explosion in demand for bandwidth, powered by an exponential growth in networked wireless devices – watches, fridges, vehicles, running shoes, "smart" clothing, and nearly anything else you can conceive of. All of these devices will require access to a network to send and share data. Put all this together, and the commoditisation of bandwidth itself is inevitable.
The creation of a dynamic, real-time market for bandwidth has many obvious advantages for suppliers and consumers alike.
First, it will incentivise the most efficient use of a scarce resource as the market finds a price to fit demand on a second by second, minute by minute, hour by hour basis. If it is cheaper to send data between 3am and 3.05am than between 3pm and 3.05pm, it will in a relatively short time become possible to bid for a block of bandwidth at that time, and defer data transfers until the market can provide access to bandwidth at an acceptable rate.
Second, as bandwidth becomes a tradable commodity, the barriers to entry into the carrier market will tumble as the purchase of commoditised bandwidth in large and small blocks (which are likely to become more granular over time) becomes possible – allowing almost unlimited levels of specialisation amongst suppliers and almost unlimited choice for consumers.
Need extra bandwidth to download a large computer game? Well you can buy it from the online vendor, at a discounted rate, and set your game to download at 4am. Want premium access to stock market data just before the closing bell? A trader may well be happy to pay a premium price to guarantee a premium service.
The advantage of this approach for large-scale "store and forward" operations is obvious. Entities or individuals who require the space to transfer a large chunk of data can wait until a cheap block of spectrum becomes available, increasing the efficiency of the network and reducing costs. As the demand for bandwidth grows at an ever-quickening pace, this kind of efficient and dynamic allocation is not something we can postpone.
The first market of this kind could potentially emerge through America's Public Safety infrastructure, which was allocated the new "D-Block" of Spectrum by Congress in 2013.
Working with Public Safety officials to create a dedicated, high-quality, secure network for frontline Public Safety workers and first responders, Rivada Networks developed a technology that has the potential to utterly transform the way in which spectrum is prioritised, managed, shared, competitively priced, and used.
Dynamic Spectrum Arbitrage Tiered-Priority-Access (DSATPA) for the first time allows bandwidth to be allocated on the basis of priority use – meaning that in an emergency, police and firefighters are guaranteed access to what bandwidth is available. This ability to prioritise access to bandwidth for some users ahead of others will save lives in disaster situations – but it has another advantage.
Critically, it allows Public Safety to take a fixed asset and monetise it at all times – providing essential and marketable options for commercial carriers that allow them to reduce costs to consumers and relieve the stress on their own networks.
How the system works is easy to understand: while the spectrum allocated to Public Safety is not being used, it is not generating revenue for anybody. It is, in essence, being wasted.
By enabling commercial carriers and others to buy blocks of bandwidth during fallow periods when demand is low, Public Safety can both increase the efficiency of its spectrum and generate a significant stream of revenue to fund itself.
Dynamic Spectrum Arbitrage allows bandwidth to be auctioned on a constant dynamic basis, to the highest bidder, using priority access to guarantee the purchaser high-quality bandwidth as and when it is needed.
Interestingly, the grid which a bidder could access could be as small as a single sector of one base station – in layman's terms, that means a carrier could buy extra bandwidth to cover anticipated demand in a particular timeframe on a single street, or one stand in a sports stadium.
This ability to allocate and target the extra bandwidth at such a granular level is one of the components that make DSATPA so potentially revolutionary.
For Public Safety, and the D-Block of spectrum allocated to it by Congress, the implications of this are significant. Providing high-quality bandwidth during fallow periods can be a direct and sustainable source of revenue for network improvement and maintenance, ensuring that the network is working to deliver, rather than drain, revenue.
Furthermore, the bandwidth itself is only leased out and control is never surrendered – the DSATPA process takes place at the very edge of the network. In practical terms this means control over the bandwidth can be regained by Public Safety at the millisecond level, should it be required.
For commercial carriers, the option of purchasing excess/ surplus bandwidth on a 24-hour basis, with the price directly linked to demand, will allow them the opportunity to extend their existing service on a flexible and as-needed basis. Those carriers that don't take up such bandwidth are likely to find that their competitors, and newcomers, will.
Finally, for new entrants, particularly new entrants who wish to provide specialised services to entities or individuals who require access to significant amounts of bandwidth for store-and-forward type network interactions, the option of dynamically accessing spectrum from public safety, rather than constructing their own specialised network, will reduce barriers to entry and further revolutionise the market.
One way to think of this is as a sort of "eBay" for bandwidth – with access to the commodity available in real time, in a targeted location, on a constant basis, to the highest bidder at a given moment.
Over time, as DSATPA rolls out, the potential for the consumer market to be transformed by the ability for a service provider's customer to purchase his or her bandwidth on an as-needed supply and demand basis is an extraordinarily attractive prospect.
Consumers will eventually be able to time their larger data transfers – reducing the need for access to the highest-quality bandwidth at the most congested times, and affording the consumer a cost discount for using the network as efficiently as possible.
As the market in spectrum and bandwidth continues to grow, a mechanism for allocating it based on demand at a given time will be required in order to price it effectively and incentivise sustainable demand on a moment-to-moment basis.
It is logical for Public Safety to be the earliest adopter of this model given its possession of some of most prime real estate in terms of spectrum on the continent of North America, the world's most valuable wireless marketplace. Europe shouldn't be far behind.
Dynamic Spectrum Arbitrage is a game-changer that will aid the next phase of exponential growth in the provision and utilisation of bandwidth – roll on the revolution.