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No room at the top? That won't stop 3G

It's anybody's guess when policymakers will free up spectrum for next-generation wireless services, but some providers aren't letting that stop them from moving forward.

WASHINGTON--It's anybody's guess when policymakers will free up spectrum for next-generation wireless services, but some providers aren't letting that stop them from moving forward.

Sprint PCS (NYSE: PCS) and Cingular Wireless both recently announced plans to provide third-generation, or 3G, services in the next several years, with construction beginning this year. So-called 3G services promise always-on, high-speed Internet access to mobile phones and wireless devices and could include everything from Web surfing to full-motion video.

On Friday, the Federal Communications Commission and the National Telecommunications and Information Administration issued reports that essentially said spectrum bands targeted for 3G are already too crowded with existing users and it would be prohibitively expensive to move those licensees to other bands. But some policymakers here are suggesting that wireless providers should make better use of the spectrum they already have if they want to offer 3G services.

"I have tried and will continue to (prompt wireless) companies to get more out of what spectrum exists," FCC Chairman Michael Powell told the House Commerce Telecommunications Subcommittee on Thursday. "Spectrum will always have a scarce dimension, and there should always be an effort to get better use out of existing spectrum."

That task isn't an easy one. U.S. wireless providers already squeeze more users into their spectrum than other countries do because less spectrum has been freed for mobile use in the United States. According to the Cellular Telecommunications Industry Association (CTIA), the United States only has allotted 210MHz for wireless use, vs. an average of 355MHz in Europe.

At the current number of wireless users per 1MHz in the U.S., that spectrum difference between the United States and Europe is the equivalent of about 77 million users.

Demand for wireless services, meanwhile, continues to rise, even without the added lure of 3G. Salomon Smith Barney predicts wireless usage will increase at a compound rate of 70 percent annually over the next 10 years, while Cahners In-Stat Group projects more than 25 million mobile data users in the United States by 2003.