Clark, All... FCC Chief of Staff gives a strong endorsement of backward compatibility as a requirement for 3G in the following speech. Also, a nice little sharp stick in the eye for ETSI. -Jim
-U.S. FCC: John Nakahata, Chief of Staff FCC speech at
PCS Latin America '98
Presswire - September 25, 1998 13:51
M2 PRESSWIRE-25 September 1998-U.S. FCC: John Nakahata, Chief of Staff FCC speech at
PCS Latin America '98 (C)1994-98 M2 COMMUNICATIONS LTD
Good morning. It is a real pleasure and an honor to join you this morning to kick off the second day
of "PCS Latin America."
In a very real sense, Latin America is the birthplace of the Global Information Infrastructure. It was
four and a half years ago that Vice President Al Gore, in Buenos Aires, asked the world to help
create a GII. The Vice President began his remarks that day quoting Nathaniel Hawthorne saying:
"By means of electricity, the world of matter has become a great nerve, vibrating thousands of miles
in a breathless point of time.... The round globe is a vast... brain, instinct with intelligence!"
In Buenos Aires, drawing upon experience and plans in the United States, the Vice President set
forth five basic principles to guide development of the GII. Those principles are:
* Encourage private investment,
* promote competition,
* create a flexible regulatory framework that can keep pace with rapid technological change,
* provide open access to the network for all information providers,
* ensure universal service.
It is in large part because the United States and many countries in Latin America implemented these
principles that we are here today to celebrate and discuss PCS in the Americas. Four and a half
years ago, PCS in the United States was little more than a concept. We had not yet held the first
round of PCS auctions. In most parts of the United States, mobile telephone service was provided
by two cellular carriers.
Just a few weeks ago, we hit another major milestone in mobile telephony. Jacksonville, FL,
became the first city in the United States to be served by seven facilities-based mobile telephony
providers. With PCS rolling out service across the country, over 80% of people in the United States
have at least 3 mobile telephony providers, and well over half have at least four choices for mobile
telephone services.
As competition has increased with PCS coming on-line and SMR licensees moving into commercial
markets, we have seen exactly what the economists predicted: prices are dropping and service
options multiplying. Between December 1997 and August 1998, the average price for mobile phone
service in the U.S. dropped 6.1%. That's 6.1% in just nine months.
Mobile phone prices in the U.S. are the lowest they have ever been -- and falling.
The result -- at the end of 1997 total wireless telephone subscribers in the U.S. reached 55 million,
jumping 25% in 1997 alone. Prices have fallen far enough that cellular and PCS may well become
real substitutes, not just complements, to wireline telephone service. This is particularly true for rural
areas, where cellular and PCS may ultimately prove to be the lowest cost means to provide voice
telephone service.
In the United States, we have come as far as we have with PCS largely by following Vice President
Gore's principles. These networks have been built privately. Competition is the cornerstone of
wireless policy, and implementation of the Telecommunications Act of 1996 lowered some of the
barriers, such as high interconnection charges, that previously limited the growth of wireless. We
developed and used spectrum auctions, combined with flexible license terms and broad regulatory
forbearance, in order to create an open and flexible regulatory scheme. These are open,
interconnected networks. We are transitioning to a system that will ensure universal service on a
technologically and competitively neutral basis.
Of course, we are not prepared just to rest on our laurels. We will continue to examine our
regulatory rules, to keep those that are required to ensure competition and a well-functioning
market, and to scrap those rules that no longer serve the public interest. We will continue to make
the raw material of wireless service -- spectrum -- available. The Commission will begin a
proceeding this fall to allocate 50 MHZ from 3.65 to 3.7 GHz, which by internationally has been set
aside for wireless local loop applications. We will also reauction the returned C-block licenses
beginning in March 1999.
In looking across the Latin America, the experience is similar -- when markets have been open to
private, competitive development, and where regulators have followed open and flexible policies,
wireless is taking off.
As we say to all the regulators that visit the FCC for advice, the key is getting the fundamentals
right. What is most encouraging is that many countries in the Americas have many, if not all, of the
fundamentals right.
Building networks by encouraging private investment requires capital. A growing number of
countries have eliminated foreign investment restrictions for wireless service. Argentina, Ecuador,
Mexico, El Salvador, Guatemala, Jamaica, Peru, the Dominican Republic and Venezuela Next year,
in 1999, Brazil will remove its 49% restriction on foreign investment in wireless services.
Governments and regulators in the Americas have also been more innovative and willing to
experiment to create a flexible regulatory framework. Chile, Mexico, Brazil and Guatemala have
allocated PCS licenses, and Argentina, Paraguay, Venezuela and Colombia have indicated they will
soon do so. And experience in Latin America shows the advantages, both in speed and in accuracy,
of simultaneous multiple round auctions. Countries such as Mexico, Guatemala and El Salvador
used multiple round auctions to get licenses out in a timely manner to those who can best use them,
and avoided some of the delays and inaccuracies that occurred with earlier, sealed bid auctions
(such as in Brazil, where the winner ended up paying more than twice the bid of the second placed
bidder).
The other key fundamental for wireless networks is competition. To state the obvious, competition
works only if there are sufficient competitors to the incumbent. Competition best develops when a
sufficient number of licenses get into the hands of companies that will create viable competition with
the incumbent. In some cases, the incumbent has all the advantages -- a well-known name,
established infrastructure, and access to plenty of spectrum. In these cases, mechanisms such as
spectrum caps may be needed to limit the power of incumbent carriers so the new competitors have
a fair chance to compete.
In Latin America, as in the United States, interconnection -- both physical interconnection and
interconnection charges -- require continued attention. In Bolivia, for example, since receiving its
PCS license in 1994, TELECEL has been completely denied its right to interconnect to the public
switched telephone network. This type of barrier frustrates growth.
The results of getting the fundamentals right can also clearly be seen in Latin America. By virtually
every estimate, wireless subscriber growth in Latin America has been, and will continue to be,
astronomical. The International Institute of Wireless Communications reports that Latin America has
registered the highest growth rate in cellular subscribers of any region of the work since 1990, with
a compound annual growth rate of 105 percent! According to Global Mobile, the number of cellular
subscribers in Argentina grew by 200% in 1997. And Chile's Minister of Transport and
Communications, Claudio Hoffman, said in July that cellular subscribers would grow by over 70%
in 1998 and 90% in 1999. Global Mobile also forecasts that, between 1995 and 2007, Latin
America's cellular service revenues will grow 18 times -- from US$2.6 billion to US$45.9 billion.
And the projected growth is not just for mobile applications. A recently released study by the
Strategis Group predicts that fixed wireless local loop, which currently reaches over a million
subscribers, will serve 47 million subscribers by 2005. Over 20% of these subscribers are
projected to be in Latin America, with the bulk served through cellular and PCS.
To fully realize this rosy future, we all must address some significant challenges. Three that I want to
address in more depth are cost-based interconnection, year 2000 compliance and third generation
wireless (or IMT-2000) standards.
First, cost-based interconnection. Interconnection -- and its price -- is critical to competition. The
WTO Agreement recognized this fundamental truth. A core regulatory principle adopted by the
WTO was interconnection at fair and reasonable prices. Over 50 countries agreed to abide by
these principles. These countries must follow through, and we will make sure that carriers in the
U.S. abide by these commitments as well.
Second, Year 2000. There are only 464 days left until January 1, 2000. At the FCC, we have been
working with industry to make sure companies are aware of, and working to address, Year 2000
conversion issues. Commissioner Michael Powell is leading the Commission's work. As you know,
virtually all sectors of the global economy depend upon reliable telecommunications networks. A
failure to avert significant network failures could potentially be calamitous. It is, therefore, critical
that the international telecommunications industry take prompt, comprehensive, and effective action
to address the Y2K problem.
The international dimensions of the Y2K problem are especially significant because global
telecommunications rely upon the seamless interconnection of networks. Consequently, as much as
we are aware that many international telecommunications companies have already acted to address
this situation, we remain concerned that some telecommunications carriers may not yet have taken
the steps necessary to prevent system failures.
We are further concerned that international economic challenges may prevent foreign carriers and
users from addressing the Year 2000 problem. For example, in Asia we are concerned that the
current recession and economic difficulties could prevent carriers and users from satisfactorily
meeting the Y2K challenge.
The FCC takes very seriously its responsibility to work closely with the communications industry to
ensure that the Y2K challenge is addressed. We are working with all segments of the
communications industry to ensure that everyone involved understands the seriousness of the Y2K
problem and devotes adequate resources to addressing it.
The FCC supports the work of the ITU's Year 2000 Task Force, headed by British Telecom's Ron
Balls, which has taken a leadership role in increasing international awareness.
Government agencies cannot solve the Y2K problem by administrative fiat. Companies alone are
the ones who can take the necessary steps. It's up to you. The world is counting on you to step up
to the challenge of maintaining critical network reliability.
Third, third generation wireless. The development of third generation wireless is a key to the
continued growth of wireless as a substitute, rather than a complement, for traditional wireline-based
telephony service, especially in the United States and other more developed countries where basic
voice telecommunications is already provided. Increasingly in the U.S., data carrying capacity is a
critical factor. Not too many people want to settle for using a 9600 baud modem at home over
second generation PCS, when they can get 33-56 kilobits per second just from the ordinary
telephone line. As ADSL technology and cable modems arrive on wire- based networks, wireless
will have a long way to catch up. Third generation wireless can help close that "bandwidth" gap.
The International Telecommunications Union is currently developing its recommendations regarding
third generation wireless systems, something they call "IMT-2000". The U.S., Canada, and Brazil
have been active in the development of the ITU recommendations, trying to make sure that the
needs of the Americas for third generation wireless systems are adequately addressed.
A number of countries in the Americas have begun to deploy PCS systems in the 2 GHz frequency
band. Yet this is also where the frequency band in which most countries are looking to deploy third
generation wireless. For many countries outside our region, there will be no existing use of the band
to consider or worry about. However, in the Americas many PCS systems are just beginning to
operate, and it's clear that there will be significant market demand for continuing these services for
some time. It will be important to us in the Americas that the new third generation wireless system
standards developed by the ITU provide the flexibility to allow evolution from the existing second
generation technologies. This would allow a smooth transition from the present to the future, and will
at the same time protect to the maximum extent possible the investment in existing technologies.
In the U.S., and throughout Latin America, three different PCS standards have emerged and are
being installed: CDMA, digital AMPS, and PCS 1900. And for third generation wireless, the U.S.
has put forward four different radio transmission technology proposals (two of which are merging)
that are based on these existing standards. The ITU will be receiving reports evaluating each of the
proposed technologies at the end of this month, and they will then begin a consensus building and
decision making process that should be completed next year.
I was pleased to hear that just last week, the Radiocommunications Committee of CITEL, the
Inter-American Telecommunication Commission, adopted a set of principles that will be sent to the
ITU regarding the important need within the Americas for third generation wireless to provide a
smooth path of evolution from today's systems.
While we are pleased with the agreements that have been reached in the Americas, we are
somewhat concerned that Europe seems to be bypassing the ITU process. In January, the
European Telecommunication Standards Institute -- ETSI -- announced that it had selected the
radio technology it intends to use of its implementation of third generation wireless, over a year
before the ITU was to make its selection. Europe seems to have made its decision outside the ITU
process, outside a process that allows full participation by industry and administrations from around
the world.
We believe further discussion is needed at the ITU, among industry, and with Europe in order to
ensure that the ITU's third generation wireless recommendation meet the global needs, not just those
of a single region.
A review of the past, present and future of wireless and in particular PCS in Latin America leaves
me with great hope. In Latin America, as elsewhere in the world, wireless is a key route in the
development of the Global Information Infrastructure. Wireless networks, whether terrestrial or
satellite, can be extended more quickly than wired networks. Wireless telephone networks will help
meet the huge unmet global demand for basic telecommunications services.
In the end, though, it is important to remember why we build any infrastructure, whether global or
local, industrial or information. It's about people. It's about helping people improve their lives.
A story I read in this month's National Geographic sums it all up. It's not from the Americas, but
from Bangladesh. In a small village in Bangladesh lives a widow named Anowara Begum. With the
help of a small loan from the Grameen Bank, she bought a Nokia cellular phone. It's the only phone
in the village, and she charges her neighbors about 10 cents a minute. With her phone she makes
about $6.50 per week, about have of which goes to repay her loan. In three years, she will pay the
loan off. After that, she will be able to earn about $700 per year, nearly three times the average per
capita income.
Anowara Begum is, in her own way, a pioneer of new economic opportunities. But she also helps
tie her family and her neighbors to the rest of the world.
It's about people, about creating opportunities, about creating a better world. That's what all of you
do, that's what we strive for at the FCC, and that's the true promise of our PCS in the Americas. |
