Jeff Kagan: Verizon Slowing Wireless Data Speeds

Jeff Kagan |

Verizon slowing data speeds, wiresless data, AT&T Mobility, C-Spire, T-Mobile

Verizon Wireless (VZ) is going to start slowing data speeds to the heaviest wireless data users. I have been warning about this for years. It’s the price we may all have to start paying as the spectrum shortage really starts to impact the marketplace. So what is the real problem and what solutions are there?

In the good ole days, wireless was all about making a phone call from a cell phone. However ever since the first Apple (AAPL) iPhone and Google Android hit the marketplace a few years ago, wireless is increasingly all about wireless data.

Wireless data is all the apps we use on smartphones. Everything from email, text messages, surfing the web, using Facebook (FB), LinkedIn (LNKD), and Twitter (TWTR) and a thousand other apps.

Actually it’s more like a million other apps. That’s right, the app marketplace has exploded in the last few years, from a few hundred to roughly a million in just the last few years. And there is no sign of that growth stopping.

Using these apps requires spectrum. Wireless bandwidth. Spectrum is the on and off ramps of the wireless information superhighway.

It’s what the carrier owns and users interact with you so you can use these wireless data services.

The big problem these days is we have a limit on the wireless data spectrum and usages continues to grow.

This is not new. We have had this shortage problem over the last several years. It potentially impacts every wireless carrier including AT&T Mobility (T) , Verizon Wireless, Sprint (S), T-Mobile ($TMUS), C Spire, US Cellular and more.

And that means it impacts every wireless customer as well. Anyone who uses apps may be affected.

What Verizon is doing is limiting the amount of wireless data their largest customers use at high speeds. They are doing this to make sure all their other customers don’t get degraded service.

This is not new. Verizon has been doing this for awhile already. I guess they are just making everyone aware of this latest move so there are no big surprises when the door shuts.

This makes sense. Their heaviest users won’t like it much since they will get their usage limited. But that’s the real world problems we must deal with.

Large national carriers and smaller regional carriers all face the same potential problem. They need spectrum. This is vital for their survival and growth going forward.

However, there simply is not enough spectrum to satisfy every carrier. So it’s time carriers learned to start working together. To share spectrum. Because without spectrum, carriers cannot stay in business.

Without carriers working together, I am sure the government will step in and start to direct. That overkill is something that every player wants to avoid.

I have read where larger, national carriers like AT&T are working with regional carriers, providing them access to spectrum so they can also continue to grow and be competitive.

That’s exactly what has to happen to keep all competitors healthy.

However the next question is simple… is that enough?

The simple answer is, no. As we go through the years, more customers sign up and use more wireless data. That means the limited spectrum will start to pinch everyone.

One answer is, as the technology advances, we will be able to use more wireless data services over existing spectrum.

Another answer is carriers getting their hands on more spectrum wherever they can find it.

However, there is no real long-term answer today. That means working together is the only way forward. Either carriers work together and share spectrum voluntarily, or wait for the government to step in.

And when the government steps in, they usually create more problems than they solve.

So we have no real long-term solutions. All we are doing today is just buying more to find a real, long-term answer.

The spectrum shortage is an industry wide problem that is growing. To date each carrier is trying to get their hands on as much spectrum as they can.

Companies who do get spectrum will have the ability to service customers. Those who don’t won’t. So for now, sharing spectrum is the only real answer.

 

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
FB Facebook Inc. 115.40 0.30 0.26 25,048,974
AAPL Apple Inc. 109.90 0.41 0.37 26,474,394
S Sprint Corporation 7.98 0.04 0.50 8,772,876
TWTR Twitter Inc. 17.93 -0.10 -0.55 12,175,426
TMUS T-Mobile US Inc. 54.44 0.18 0.33 3,087,878
VZ Verizon Communications Inc. 49.81 -0.06 -0.12 10,650,396
LNKD LinkedIn Corporation Class A 195.20 -0.11 -0.06 1,519,668
GOOG Alphabet Inc. 750.50 2.58 0.34 1,452,170
T AT&T Inc. 38.61 -0.27 -0.69 16,101,250
HKFIQ Hancock Fabrics Inc. 0.00 0.00 0.00 10

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