Microsoft And Nokia Now Partners: Will They Step Into White Space Together?

Jun. 1.12 | About: Microsoft Corporation (MSFT)

Wouldn't it be nice to fast rewind to the start of the Internet's boom and make lots of money?

But investing in technology stocks is not that easy, because you never really know which company will succeed and which will fail, especially when it comes to consumer products, and even getting in at the IPO never guarantees investment success as the recent Facebook debacle shows.

So you might do better to look at the established companies that invest in designing the technology that makes the future work and see what they have in the works.

If you are old enough to remember the days before cable and satellite TV--or even maybe the days before TV--you may know that on the old VHF (Very High Frequency) and UHF (Ultra High Frequency) TV channels, depending on which country you were in, as much as 70% of the total bandwidth was left unused to make sure that analog TV signals didn't mess with each other.

This empty bandwidth goes by the sexy and evocative name of White Space, which sounds like the name of a detergent or deodorant.

In 2008 the Federal Communications Commission voted to reallocate that bandwidth covered by channels 2 to 69 which TV no longer needed after the switch over to digital broadcasting.

Digital channels are much skinnier and do not interfere with each other, so they can be packed closely together, with the result that broadcasters need less bandwidth than ever before, creating even more White Space.

The most valuable frequencies of all, channels 52-69 have been auctioned off to mobile-phone operators. Between them, Verizon (NYSE:VZ), AT&T (NYSE:T) and others paid nearly $20 billion for these prime frequencies with signals that, like Superman, can fly long distances, are weatherproof, and can go through solid walls.

The White Space freed up in the lower numbered channels is to be made available for unlicensed use by the public. By doing this, the FCC hopes to trigger a new wireless revolution that will make Wi-Fi look like steam radio.

These new frequencies will allow much higher data rates. The latest version of Wi-Fi, called 802.11n, moves data at 160-300 megabits a second (Mbps). White Space devices will reach speeds of 400-800Mbps. And whereas Wi-Fi signals wimp out after 100 yards or less, the White Space signals could travel for miles.

Who is going to profit from White Space transmissions?

The White Spaces Coalition consists of a group of large technology companies that plan to deliver high speed internet access. The original group included Microsoft (NASDAQ:MSFT), Google (NASDAQ:GOOG), Dell (NASDAQ:DELL), Intel (NASDAQ:INTC), Philips, Earthlink (NASDAQ:ELNK), and Samsung (OTC:SSNLF).

Microsoft's corporate campus already has a wireless network using the technology, so we can be sure they are in, and Google, the owner of Motorola, is working with white-space equipment ­maker Spectrum Bridge on a pilot project at a hospital in Ohio, as well as a "smart grid" system for wirelessly managing electricity consumption in some California communities.

Let's take a look at recent stock prices of these companies:

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Image courtesy of Yahoo! portfolios.

What we call cell phones are really two-way radios, and the most important technologies in White Space include what are known as cognitive radios. Again the naming is odd, but presumably if they were called smart radios, this might cause confusion as smart phones would contain even smarter radios, which would not work as the devices might be smarter than the people using them.

The main functions of cognitive radios are to detect unused spectrum, detect the presence of other signals on a given spectrum, and to capture the best available spectrum.

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The practical implementation of spectrum-management functions is a complex and multifaceted issue, since it must address a variety of technical and legal requirements which may differ in different countries that have different laws regarding use of spectrum. has produced an excellent document showing the results of patent searches of the United States Patents Office in various areas of 4th generation long term evolution patents, including one shown in the graphic here on White Space cognitive radio patents.

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Image courtesy of

The technologies for the cognitive radios over TV white space are under standardization by IEEE 802.11af and 802.22. A total of 701 cognitive radio over TV White Space related patents (158 issued patents and 543 published applications) in the US were identified.

Samsung Electronics was the leader in the cognitive radio over TV White Space technology innovations followed by Motorola, and Qualcomm (NASDAQ:QCOM).

Worth noting is that although Microsoft Corporation only has 20 patents and Nokia (NYSE:NOK) Corporation 19, these two companies have formed a collaboration, so with 39 patents combined, the partnership has a position equal to Motorola (Google), though some way behind Samsung.

Nokia has been running trials of an indoor White Space system that could be used by businesses like shopping malls to provide customers with free wi-fi and target them with coupons or offers pushed to their phones, depending on their location. It has been trialled in a museum to send information about exhibits.

Although the system works, it has not yet been installed on a chip, so roll out is not by any means immediately imminent.

Chip maker Qualcomm is patent rich and is also known to have been granted experimental licenses to use the spectrum within a limited area.

Here is stock information on 4 more of the significant players in the field.

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Image courtesy of Yahoo! portfolios.

Note: STM goes ex-dividend on June 4th, 2012 with a dividend of 10 cents, which is about 2%, so the information shown here by Yahoo! Finance is obsolete.

It would be premature to make investment recommendations at this stage of the White Space game, but I think it is important to know which companies are investing in the research necessary for the broadband of the future.

As I pointed out in an earlier article, when Henry Ford first offered the Tin Lizzie that changed the landscape of America, the Interstate Highway System was still almost 50 years in the future.

The information superhighway is developing much more quickly, but we are still on the cusp of a worldwide communications revolution, and the companies mentioned here that are doing the technical research and development certainly look like they potentially have growth opportunities in their futures.

Disclosure: I am long MSFT, NOK.