We know why new entrants such as Wind Mobile, Videotron and others want more spectrum. They need it to launch high-speed, high-bandwidth services comparable to that offered by the Big Three. We also know new entrants claim they are at a disadvantage because they have less spectrum and this makes difficult to compete on an equal footing.
So what can they do to level the playing field?
The first option will always be to get more spectrum. But since it’s a finite and highly regulated resource sold in auctions held once in a while, and even though the federal government has given new entrants some privileges in recent auctions allowing them to acquire more spectrum, this isn’t enough.
In essence, the new entrants have to build their network in such a way as to grant them additional “virtual capacity.” Basically they have to use their spectrum more efficiently.
To understand this, let’s look try to understand how a wireless network operates.
For example, there are two wireless carriers with the same network – same number of antennas deployed in similar locations resulting in similar coverage – in the same city but one has 20 MHz of spectrum (Carrier A) and the other 40 MHz (Carrier B). Now say 1,000 users on each carrier’s network in that same city are live streaming an NHL hockey game. This is in addition to thousands of other users in that same city that are texting, sending emails, using Facebook, video chatting and watching YouTube videos.
Carrier B, because of its 40 MHz pipe, will have an easier time providing a quality service to all of its customers than Carrier A whose narrower 20 MHz pipe could experience congestion resulting in a lower quality of service for its users. Now this is generally true, but of course it’s a little more complicated than that.
As we explained in a previous post, the speed and capacity of a network also depends on other factors such as the number of individual users on it at a certain time, in a particular location and what they are using the network for. Capacity can also be affected by the number of antennas the wireless company has deployed to cover a city. This latter element is generally referred to as network density.
So a wireless network resembles a net where each connecting point in the fabric represents an antenna. The “pocket” in the net is called a cell and it’s only capable of providing a high level of service to a maximum number of users. When there are too many users in one of these cells, the quality of service goes down. But by adding more antennas and therefore creating two or three cells, the new smaller cells serve a fewer number of users but with the same amount of spectrum. Hence, the term “virtual capacity.”
The result is that Carrier A with 20 MHz of spectrum but with more antennas in its network can in essence gain additional capacity and therefore minimize any congestion it might experience in the scenario described above.
But, as you may have guessed, this comes with added costs. In many cases, there are considerable investments required to fill in an urban network, and this is on top of the costs to purchase spectrum licences. So for new entrants such as Wind Mobile and Videotron, this is why getting more spectrum is an easier, and less expensive approach, to building out their networks.