BandwidthX Blog

Underutilization of Mobile Networks: The Tragedy of the Anticommons

Dan Zagursky

VP, Strategy & Business Development

This blog post is the second in a series covering:

  • Network impacts and operator actions resulting from COVID-19
  • The long-term impacts on networks as our work-from-home culture grows
  • Operators financial health and need to focus on network resiliency
  • The advantages of network sharing as operators adapt to these changes
  • New techniques in network sharing to better address challenges

The graph below shows a network usage phenomenon with which mobile network operators (MNOs) are very familiar. It shows the load percentage (utilization rate) of mobile base station cells in a typical network in an urban area. The ideal load level is 30% to 40%; however, most of the cells have a much lower load. The utilization numbers are not from low load areas in which MNOs only deploy a thin coverage layer. They are from the denser urban areas. In these locations, MNOs regularly add chunks of capacity in a round robin manner. This graph represents a typical average load distribution for well-run mobile networks during the busiest hour during the week. Some cells are loaded over 30% and are, therefore, candidates for a network capacity upgrade in the coming months.

When these upgrades are made, MNOs will increase the capacity more than is needed to get to the ideal utilization. One reason for this excessive expansion is that these sectors cannot expect a new upgrade for quite some time. Hence, most get reserve capacity for future growth. The reserves are why the utilization percentages are so low in the majority of the cells.

It also means that the vast majority of elements of an MNO radio access network (RAN), including spectrum and equipment, lay lightly used. This is the case for all MNOs. The utilization distribution is similar to the graph above within each separately owned and operated network – and this is during the busiest hour. Verizon recently shared just how underutilized their network is – especially during the other hours of the day.

In the left side of the above chart, there is a huge source of untapped value. One possible way to unlock it is that every cell in need of a capacity upgrade covers an area that is served by several poorly utilized cells in other MNOs’ networks. The mobile devices in the overloaded cell could use the other networks’ existing capacity reserves. However today, all the planning, operations, and managing of reserves happens separately within the boundaries of each separately owned network.

With MNO financial challenges (even before the global COVID-19 crisis started putting undue strain on their networks by shifting usage patterns), why wouldn’t MNOs look to capture some of that dormant value to relieve some of their economic pressure?

The answer may lie in the anthropological and economic concept of “tragedy of the commons”. This is when individuals collectively consume a shared resource contrary to the common good. This applies, for example, to natural resources like an open field on which cattle can graze, but where cattle owners have no incentive to cooperate, so the grass on the field eventually gets depleted. Another, often used example is overfishing in the unregulated open seas.

In this case the explanation for the locked-up, dormant value in mobile networks is better explained by the inverse of this “tragedy of the commons” concept. Coined as the “tragedy of the anticommons” by Columbia University law professor, Michael Heller. The concept refers to a resource controlled by many owners that is tragically underutilized. It is usually used to explain a fragmented resource that is owned by many entities like spectrum, pharmaceutical patents, or land parcels. The owners are not incentivized to put their resources to use, but rather consider them important reserves, and this leads to a Gridlocked Economy.

The current COVID-19 crisis is also demonstrating the tragedy of the anticommons in two distinct ways:

  • To some extent, we might be seeing it with the current panic-induced toilet paper shortages. While not a public or shared resource, individuals have been acting irrationally by collectively buying (borderline hoarding) too much toilet paper and other supplies to the detriment of the vast majority of the population. The stockpiles sit unused in people homes while those who did not act to get reserves are suffering shortages.
  • On a much more serious note, the same is seen in hospitals purchasing behaviors with ventilators, personal protective equipment (PPE) and testing kits. Though there are several factors (costs and incentives) at play, some hospitals (and states) competed for supplies in the open market and acquired large quantities to serve massive forecasted peak demand. When demand was late to materialize, a significant portion of the amassed quantities of equipment sat unutilized. When demand spiked for other hospitals, those facilities experienced shortages because of misallocated supply.
    As a response, states and public health experts are actively suggesting national redistribution between hospitals in states with different COVID-19 caseloads. In an USA Today OpEd, Yale University doctors and professors outline possible approaches without needing more drastic actions from governors to ensure shortages are addressed. "What if there was a nation-wide system that allowed hospitals that have equipment but have lower present and predicted demand to lend some reusable (ventilator) and non-reusable equipment (PPE, testing kits) to hospitals that are currently being overwhelmed? Then, as demand in one area rises and the other falls, freed up ventilators could be re-distributed, and manufacturers will have had more time to generate non-reusable equipment for hospitals that lent their equipment. By taking from stockpiles of less stressed hospitals and sharing it with currently overwhelmed ones, we could maximize the use of our national inventory of equipment and save more lives.”

These and other similar solutions draw upon a system that balances demand/supply, manages incentives and allocation using sophisticated algorithms from the economics discipline of market design. This includes life-changing kidney transplant matching systems designed by Nobel Prize recipient and Stanford University professor, Alvin Roth, who has been on the BandwidthX board of advisors since 2013 and has been involved in developing our solutions.

In the case of mobile networks, just as in the examples given by Heller, the severe underutilization involves a number of owners separately controlling parts of key resources like spectrum and network equipment deployed in a city. However, in this case, the number of owners in any city is small. This is a special case that we call the “tragedy of concentrated anticommons”. Enabling only a few, even just two, MNOs to utilize their reserve capacity across ownership boundaries, would unlock tremendous value. Unfortunately, current barriers to and lack of cooperation perpetuates the status quo of wasted resources.

Much of the language that Heller uses to explain his concept in one of his seminal essays accurately describes the underutilization of mobile networks.

Private owners tend to avoid overuse because they benefit directly from conserving the resources they control...If cooperation fails, nobody can use the resource. Everybody loses in a hidden tragedy of the anticommons. I say ‘hidden’ because underuse is often hard to spot.

“Hard to spot” applies here, too, since MNOs do not typically publish network loads. The extent of this “tragedy” remains hidden for other wireless stakeholders. Once others in the industry identify the underutilization that is rampant, the next step will be to find ways to alleviate it and create value from it.

The problem is likely a result of the combination of private ownership of spectrum, separately rational strategies of competing MNOs, and the effective regulatory actions in each country and region to relentlessly maximize competition to benefit consumers.

In recent years, MNOs have been increasingly turning to RAN sharing to reduce the costs of deploying and operating networks (LTE coverage in less populated areas and new 5G networks). However, this is not common in denser areas where the majority of usage and investment occur. Separately, there are also several instances of spectrum sharing paradigms such as CBRS in the US, and, of course, Wi-Fi spectrum is unlicensed and therefore shared. However, sharing only spectrum requires the deployment of redundant wireless equipment.

Since both the spectrum and equipment are underutilized in mobile networks, it would make rational sense for both to be made available to others. With the correct commercial mindset, economic incentives, controlled structure and tools, mobile networks in dense urban areas could be much better utilized. This calls for mutually beneficial cooperation between competitors. Therefore, MNOs must know that they are not losing control or eroding their competitive differentiation. In addition, the process will also need to keep participants from acting in anti-competitive ways contrary to regulatory norms.

We believe that current spectrum licensing and private network ownership provides a valid and effective incentive for operators to continue investing in building out networks. However, without additional tools, it does not provide enough incentives to monetize the underutilized capacity on the left side of the network load graph above. To create an adequate environment that maintains the benefits of competition without creating a tragedy of underutilization, commercial structures and tools for operational controls must be present. Perhaps the common and shared tragedy of the virus pandemic will act as an additional incentive to MNOs and regulators to find ways to end the waste of underutilization that is evident from the shown network load data.

As the pandemic-induced economic crisis deepens, there will be even more urgency in all industries to curb waste and improve the utilization of the resources that have already been deployed. As Heller says, doing so requires tools and structure to find the optimum balance between the commons and anticommons. For mobile networks, we at BandwidthX are committed to continuing our work to create solutions like Xpacity to aid and accelerate this crucial process.

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