**Venable LLP Symposium on African Wireless Deployment Issues**

**By**

**John B. Muleta**

**Chief of the Wireless Telecommunications Bureau of the FCC**

**December 16, 2003**

Thank you for inviting me to speak this afternoon.

It is an honor for me to speak to a group that is dedicated to bringing
about wireless to Africa. As a person of Africa, I was born and raised
in Ethiopia, I have great hopes that wireless technologies will be one
of the critical ways of advancing the continent to a better status.

My talk today does not represent the views of the Commissioner. They
simply reflect mine and were developed over the past decade in my
capacity here at the Commission, as a consultant working for Coopers &
Lybrand (which did numerous privatization projects around the world),
and as an internet executive where I took the lead in opening
telecommunications market in order to promote "commercial" internet
services. Most of my "lessons" come from my experience as President of
PSINet's India, Middle East and Africa operations during 1999-2000
period.

Let me be clear from the outset that I am an ardent free marketer and
highly in favor of competitive markets. I am also in favor of speed as a
catalyst for change and believe that the worst mistake of policy makers
is when they favor analysis over action.

The policies I describe below reflect all these principles.

Wireless is clearly a "leapfrog" technology. It permits the ability to
easily transmit information across wide geographies with the least
amount of cost and capital expenditure. It can be built out according to
population densities instead of despite them.

Better information lets good things happen:

it removes distance as a barrier to communication and understanding

it allows for better planning and resource allocation

it permits for widespread education of the population in both academic
and practical matters

Overall, better information creates a smarter communities, societies,
people and countries.

With this context firmly grounded, one turns to the question of how do
we get wireless technologies to take root in Africa? What needs to be
done at the policy level to permit the growth of wireless technology and
the possibilities it brings for African countries to leapfrog years of
infrastructure developments...?

Policy Issue #1: Wireless Deployment can't take place if the underlying
society doesn't have freedom of speech and other democratic ideals.

Although this issue sounds galactic in nature, it is a real problem to
wireless deployment. Countries that have restrictions on speech can not
afford wireless technology to be deployed. Wireless is by its very
nature highly personalized service. As such it permits information flow
between individuals and therefore represents threat to any government or
system that wants to limit such communication. Without this very first
fundamental change, wireless deployment will always be marginal.

Policy Issue #2: Wireless Market Structure Needs to Favor Multiple
Entrants, Speed of Deployment, and Population Coverage

Countries planning to develop market entry strategies for wireless
should do so with multiple entrants competing with each other.
Credits/advantages should be given for entrants that provide for speedy
deployment of services to the largest population as soon as possible.

The license and spectrum allocation process should promote multiple
entries. There is a perception that starting with monopolies with
gradual deregulation is better for new market development. I disagree
vehemently with the gradualist approach. \[cite to Egypt as one country
that started out with a couple of new entrants and its reached a
penetration of 5 mm in 4 years whereas the wireline has only reached 10
mm after 60 years...only this year will the incumbent ILEC enter the
fray.\]

The gradualist approach only leads to scaring capital away and to
depriving the country's consumers from the benefit of wireless services.
For example, in the US market penetration for cellular was only up to 24
mm in 1993/1994 where it was only a duopoly. With the advent of price
deregulation and the availability of new PCS spectrum that permitted new
entrants, penetration rate has increased 6 fold to 150 mm subscribers
and prices have fallen by more than 80% during the same period.

Policy Issue #3: Attracting Investment Capital requires liberal
investment laws as well as transparent, technology neutral, and
consistent regulatory process

Wireless deployments are infrastructure deployments and will require, on
a relative scale, large amounts of equity and debt capital. Thus, a
liberal investment code that permits for global market based returns and
for "free and unfettered" repatriation of capital seems to critical to
the development of most infrastructure developments.

In addition, the policy making environment needs to provide for a high
degree of transparency so that investors are insured of due process. On
a more practical side, license terms should be long enough, at a minimum
10 years, in order for the investors to recoup their investment.
Build-out requirements and construction deadlines should be spelled out
at the licensing procedure stage and should be explicit, transparent and
equitable among the various service providers competing. Interim
requirements should not be provided as negative inducements but as
positive incentives (for example, one could get a pro-rata extension of
a license term for reaching end-goals ahead of the license term).

Policy Issue #4: Wireless Equipment Choices should be left to the
service provider

Along with having multiple carriers, governments that want a vibrant
wireless sector should allow the service providers to make the equipment
selection themselves. Alternative technology choices seem chaotic in the
first instance but they do let consumer choice drive value.

Service providers will make choices that permit them to benefit from
economies of scale available in this sector globally while meeting most
of the needs of the consumers.

Policy Issue #5: Policy makers need to make sure that there are no
bottleneck inputs into the wireless sector...they should make incumbent
regulations wireless friendly

International transport and access to the public switched transport
network are two key elements of the existing infrastructure that must be
modified before wireless can take root. Over time, wireless should drive
both elements but initially policy makers must make sure that these key
inputs do not become bottlenecks in the development of the wireless
services.

Policy Issue #6: Infrastructure Sharing in Wireless should be promoted

Infrastructure in terms of towers and other signal propagating devices
should be encouraged to be shared among service providers. Investments
by wireless carriers or service providers into constructing towers are
duplicative and wasteful. In addition, multiple investments in
infrastructure make it difficult to apply consistent zoning and other
necessary regulations without a cumbersome review process for each
individual towers. Based on our experience in the United States, it
would be ideal for the government to provide financial or regulatory
incentives that encourage the sharing of such infrastructure. Avoiding
duplicative investments in towers will free capital so carriers can
focus on technology choices and targeted consumer applications.

Policy Issue #6: Be prepared for successful wireless deployment to bring
new challenges other business sectors

As a personalized service, wireless will challenge policy makers in
other areas. Wireless deployments will enable new forms of commerce and
possibly create new methods of disbursing capital. Will the larger
society be ready to accept such changes? Will it be appropriate for the
wireless service provider to be the largest provider of credit
transactions? Challenges will also come in the form of new ways of
accessing the global information network. Will the broader society be
comfortable with such approaches?

Conclusion

Clearly, I am a believer in free markets and competition. I also favor a
big bang approach to creating new markets especially for wireless since
its fundamental makeup permits for a departure from the traditional
regulatory incrementalism that tends to reward incumbents and slows down
the benefits of such great technology.

Wireless represents a real political challenge to governments since it
is a highly personal service. It is this core challenge that is truly
been holding back wireless development in Africa. Until such challenge
is effectively dealt with, wireless deployment in most African countries
will lag that of other more developed nations.