Wireless execs point to spectrum woes
By Ben Charny
Special to CNET News.com
March 21, 2001, 1:15 p.m. PT
LAS VEGAS--The heads of two of the world's top wireless-technology providers made pleas
Wednesday to government regulators in Europe and the United States to change the way
wireless spectrum is being sold.
Regulators have been auctioning only a small number of the available radio frequencies needed for
the high-speed, mobile Internet-access services that network operators want to offer and on which
companies such as Nokia, Ericsson and Motorola are predicating new handset technology.
Motorola's chief executive, Chris Galvin, told an audience Wednesday at the Cellular
Telecommunications and Internet Association (CTIA) annual wireless convention that
telecommunications companies have already spent what they thought it would take to launch a
third-generation phone system on the spectrum rights alone.
"We have to find a new set of
rules," Galvin said. "Often in
history, regulation has helped
determine the success of
industry."
Nokia CEO Jorma Olilla was
more blunt. "There has to be a
rethinking," he said.
For example, in Europe,
telecommunications
companies have spent an
estimated $100 billion to buy
the spectrum. In the United
States, an untapped market
being coveted by most of the
world's carriers, government
regulators have continued to
delay the auctions, hoping to
drive up prices. One recent
auction garnered $18 billion in
fees from carriers such as
Verizon Wireless.
The result has been a chaotic financial situation for the carriers hoping to offer third-generation, or
3G, phone services. The more money spent on auctions by telecommunications companies means
the less they will have to launch a 3G network, a predicament that often requires them to solicit
loans. At the same time, banks are more reluctant to issue those types of loans in the current
economic climate.
Further complicating the issue is that the U.S. military also uses some of the same spectrum for its
operations. Even U.S. President George W. Bush has weighed in on the issue. In his recent budget
sent to the U.S. Congress, he opened a window for the Federal Communications Commission to
delay the U.S. spectrum auction again and garner more funds.
A plea to share the risks
Ericsson's president, Kurt Hellstrom, was also to have spoken on the issue at the CTIA show;
instead he appeared via a tape replay of comments. Nokia's Olilla appeared live via satellite.
Hellstrom said that as a result of the changing telecommunications climate, equipment providers
and the network operators they serve have to adjust the manner in which they do business. "We have
to share the risks and benefits together," he said.
While long on complaints, the wireless executives offered just a few alternatives for the predicament
facing their industry. Galvin said companies buying the spectrum should be allowed to enter into a
payment plan. Perhaps regulators should make the spectrums available for free, he said. He drew
an analogy to the railroad build outs of the mid-1800s, during which land was given to the railway
companies for free.
"Imagine what would have happened to the building of the United States if railways would have had
to pay for the land," he said. "The United States would have stopped at Chicago."
Olilla and Galvin are not alone in their views. A day earlier, Michael Powell, the head of the FCC,
called for a national policy for managing airwaves used by government agencies.
The problem will only get worse, if the predictions Olilla and Galvin made Wednesday about the
growth of the wireless Web come true.
Galvin said he expects that half of all voice mails will be accessed using a wireless device, a huge
jump from present levels of 10 to 12 percent. Nearly 70 percent of all cars will be wired as well, he
said. "We need huge amounts of new spectrum."
Spectrum woes make up just some of the latest bad news for handset makers, who started the year
with predictions of glory only to experience dropping sales, missed financial projections and layoffs.
Motorola has missed earnings estimates and laid off thousands of workers to try and right its
struggling ship. Ericsson announced a quarterly loss last week.
Only Nokia, the market share leader, seems to have fared any better. The company hit its financial
numbers for the last quarter, but lowered its own cell phone sales projections. |
