Take a look at your iPhone. Let’s think about what radio frequency devices are inside of it.
- GPS (1.57542 GHz, 1.2276 GHz)
- GLONASS – Russian GPS-like service (1602 Mhz +/- 4Mhz)
- WiFi (2.4Ghz)
- Voice & Data (800, 850, 900, 1800, 1900, 2100 Mhz)
- Bluetooth –(2400-24800 MHz)
That’s an impressive collection for such a small gadget. Now let’s think about what else is in your apartment.
- WiFi router b/g/n (2.4 GHz)
- WiFi router y (3.6GHz)
- WiFi router a/h/n/j (5GHz)
- Digital Broadcast Television
- Analog Radio (AM)
- Analog Radio (FM)
- XM Radio
- Satellite television
- Baby Monitor
- Cordless phones
- Family Radio Service (462.5 MHz)
But why stop at that list? There are tons more things streaming though your house even if you don’t use them. For example
- GOES satellite communications
- Police/Fire/Ambulance radios
- Microwave radio
- Military communications
- HAM radio
I spent 5 minutes writing this list and I am probably missing 90% of the wireless spectrum in use. If you notice that I stopped listing frequencies it is because some of these use large swaths of spectrum and operate on hundreds of channels (digital television).
Okay, so what is the point of this? Well, I believe it is inevitable that we will have to start investing in alternative forms of wireless communication. If you don’t believe me, consider this example:
AT&T was willing to pay $39 Billion for T Mobile. Sure, the customers were part of the value but AT&T really wanted T Mobile’s spectrum. In other words, AT&T was willing to pay $39 Billion to enable it to expand its wireless data offering. Since the deal has fallen though, AT&T has stated that it is competitively disadvantaged and will look for spectrum licenses from other sources.
Right now, few people hit their 2 or GB data cap from their wireless provider. But that will change and it will change quickly. Pandora’s major growth is from wireless subscribers. (Source: Pandora’s S-1 ) Do you think that Netflix will have similar trends? Probably. What about older sources of data use – has your email box gotten smaller in the last 5 years? Have you started browsing the web less? Have you cut back on your YouTube use?
So what’s the solution? There are two large and under-loved areas of investment.
Radio Technology – When I say radio technology it usually conjures up sepia toned images of Marconi in his lab surrounded by large loops of wire in a crude setup. Of course, that is only tangentially what I mean. Specifically, I am talking about devices like software-defined radios.
Software-defined radios are devices that have minimal hardware requirements and replace much of the signal processing with software. (Wikipedia Overview) This means that you can switch frequencies, modulation techniques or even offer improved radio capabilities with a simple software update. Imagine a device that intelligently selects a slice of spectrum with minimal interference based on its physical location.
Another area of radio technology that needs more attention are, what I will call, precision radios. These are devices that intelligently filter out noise and can operate within a strict slice of the spectrum and are not subject to interference from neighboring broadcasts. Right now, the spectrum is allocated and buffers are built between frequency ranges to prevent one device from interfering with other devices. In practice, this means a huge percentage of usable bandwidth is just discarded because manufacturers want to use cheaper radios and poorer quality designs.
A great example of this is the whitespace debate. The National Association of Broadcasters hired world-renowned physicists like Dolly Parton and the Dixie Chicks to talk about how allowing unused frequencies will ruin live performances. The NAB lost, the frequency was reallocated, and concerts and theatrical shows everywhere continued on without problems.
Optical Networking is one more area that needs more attention. More specifically, I mean cable-less optical networking. The proliferation of LED lighting has enabled manufacturers to introduce data transmission capabilities in to overhead lighting. They operate at a modulation frequency too high for humans to see but provide enormous bandwidth potential. For a great overview, see this MIT Technology Review article.
The basic principle is that your laptop may have a few LED’s and receives on it. They would likely be infrared and invisible to you. In fact, they can be hidden behind a layer of black glass (think about your MacBook bezel) and completely hidden. The receiver/transmitter would be the overhead lighting in your office and the communication would be largely local. In other words, you would not be broadcasting to everyone in a 1,000m radius – only devices nearby could receive the signal. Not only does this increase security but it enables bandwidth optimization. You are no longer competing for 50Mbps WiFi bandwidth with 100 other co-workers. You are now just competing for a slice of 1,600Mbps of bandwidth among 10 users.
Alternatively, companies like LightPointe are building optical data bridges between buildings. Imagine a University campus or a company with multiple buildings nearby using devices that look like small microwave transmitters to connect across campus at multi-gigabit speeds. You would no longer need to acquire the spectrum license and you would not need to dear up any ground to lay optical networking cable.
Neither of these optical technologies are new but they have not been positioned to reach consumer and small/medium businesses.
I am not in a position to develop an investment theme (I’m currently a student) but it strikes me that alternative data communications and radio technology could be a fruitful technology given both the bandwidth superiority and the impending bandwidth crunch. If I were starting a new fund, this is an area I would seriously consider investing in.