http://www.ft.com/cms/s/0/c355e810-b378-11de-ae8d-00144feab49a.html

By Joseph Menn in San Francisco and Chris Nuttall in San Diego

Published: October 7 2009 20:53 | Last updated: October 7 2009 20:53

The head of the US Federal Communications Commission warned on Wednesday
that there is not enough room in the airwaves for the "explosion" in
wireless data traffic, setting the stage for a big realignment of
spectrum usage as the government tries to help mobile carriers keep up
with consumer demand.

"The biggest threat to the future of mobile in America is the looming
spectrum crisis," said Julius Genachowski, the Obama administration
appointee who took over as head of the five-member FCC in late June.

Mr Genachowski noted that what had been seen as a big auction of
spectrum last year helped cap a three-fold surge in the amount of
commercial spectrum available. "The problem is, many anticipate a
30-fold increase in wireless traffic," he said at the CTIA wireless
industry convention in San Diego.

The forum was designed to mend bridges with the industry, which was
upset by the FCC's recent declaration that carriers should be stopped
from favouring some types of internet traffic over others. On Tuesday,
that stance prompted AT&T to allow voice-over-internet calls from
iPhones.

"This is a clarion call to wake up the troops, to wake up the world and
get people to focus," said telecom policy analyst Rebecca Arbogast of
Stifel Nicolaus.

As an indicator of the bottleneck ahead, AT&T has been overwhelmed with
a 5,000 per cent increase in wireless data consumption in three years,
driven by the minority of customers who own Apple's iPhone. For now,
AT&T is the exclusive US carrier for that device.

"We're seeing a disproportionate number of users driving consumption,"
Ralph de la Vega, AT&T Mobility president, said at the conference. "If
we don't find a way to keep them from crowding out others, we're going
to have a very significant issue."

Mr de la Vega said the top 3 per cent of its smartphone customers were
responsible for 40 per cent of data usage, consuming 13 times more than
the average smartphone user. With new smartphones that have software
from Google and others coming, and the prospects of wider distribution
of broadband-enabled notebook PCs, the demands for connectivity will
continue to jump geometrically. "AT&T is the canary in the coal mine,"
Ms Arbogast said.

Mr Genachowski said the needed bandwidth must come from multiple places,
including promising new technologies like "smart antennas" and
femtocells.

The government itself will have to give up some of the spectrum it has
reserved for various agencies, which use those parts of the airwaves
sparingly.

In addition, the multi-year process of reallocation, in which spectrum
that has been given over to one commercial use gets reclaimed and resold
for other uses, must also get under way.

The FCC has said it is looking for ways to measure what spectrum usage
is serving the public best. The agency wants a system of incentives that
would induce spectrum owners to return what they are not using. "We must
identify spectrum that can best be reinvested in mobile broadband," Mr
Genachowski said.

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