Wireless performance will collapse, prices rise: Deloitte

Deloitte is predicting a looming spectrum crunch that will result in higher prices and poor performance, even on LTE networks.

In its annual 2013 Technology, Media and Telecommunications predictions, the company says carriers worldwide can’t keep pace with device adoption – especially because “the average smartphone drives 35 times more traffic than a typical cellphone. It is expected that by 2016 wireless traffic will have increased 50 fold from 2012.”

As a result, it says, the US can expect a 275 MHz “deficit” of spectrum, and at busy periods, “download speeds may be under 1Mbit/s for lengthy periods of time”. While less severe, Australia can expect similar impacts as new devices ship faster than the networks roll out.

“Major metropolitan areas in some geographies should expect to see continued deterioration in end user experience,” the report states. “The other alternative is that carriers may want to increase what they charge for data and speeds: if spectrum truly is a scarce resource, then using price to signal its value is likely to reduce demand to the point where service standards do not fall.”

Even the upcoming LTE-Advance standard, which has spectral efficiency double that of LTE, would only provide additional capacity to support one year’s growth in demand, Deloitte claims.

The prediction would be music to the ears of Australia’s Communications Minister, Senator Stephen Conroy, who has been criticized for setting too high a floor price for this country’s upcoming spectrum auctions.

The Deloitte TMT report can be found here. ®