# Presentation: 774989

## Law Seminars InternationalTop Priorities for 2005: Insights from the Department of Commerce and the FCC

**Michael D. Gallagher****Assistant Secretary for Communications and Information**
**U.S. Department of Commerce**_[www.ntia.doc.gov](http://www.ntia.doc.gov/)__ _
- Seattle, Washington
- May 20, 2005

## Since the Enactment of the Telecom Act in 1996 America Has Embraced the Future

| Wireless Revenues
$23.6 billion |
| --- |
| Wireless Subscribers
44 million |
| Wireline Households
101 million |
| E-Commerce Revenue (not measured by DOC prior to 1999)  |
| U.S. Broadband Lines
0 |

- Then...

- Now

| Wireless Revenues
$102.1 billion (2004)  |
| --- |
| Wireless
Subscribers
182.1 million (5/05) |
| Wireline Households
106.5 million (7/04) |
| E-Commerce Revenue $21.4 billion (4Q04) |
| U.S. Broadband Lines
35.8 million (LRG, 5/05) |

## Spectrum Policy

## Slide 4

## President’s Spectrum Policy Initiative 

- “The existing legal and policy framework for spectrum management has not kept pace with the dramatic changes in technology and spectrum use.”
- - President George W. Bush, Presidential Memorandum, May 29, 2003
**President’s Executive Memorandum **(June 2003)
**Two Reports from the Secretary of Commerce to the President **(June 2004)
**President’s Direction **(November 2004)
**Secretary of Commerce Implementation Plan **(May 2005)
**Changing Spectrum Management **(May 2005 – November 2011)

## The President’s Broadband Goal and New Technologies

## New Technologies Enabling Broadband Deployment

_**Wi-Fi**__ _(802.11) – Wi-Fi NICs (network interface connectors) are readily available for less than $50, and InStat/MDR predicts that 95% of laptops will have Wi-Fi as a standard feature by 2005.
_**WiMAX**_ (802.16) – is designed to provide wireless broadband access in a Metropolitan Area Network (MAN). Intel plans to build WiMax into its Centrino chip platforms, which power 80% of all PCs, by 2006.
_**Wireless Mesh Networks**_ – flexible network structures linking nodes on an ad hoc basis; adaptable to many different applications and markets.
_**Broadband Over Power Lines**_ – BPL has the potential to emerge as a “third wire” competitor to cable and DSL broadband services.

## Video Phones: Becoming a Reality

- AT&T first introduced the Picturephone at the 1964 World’s Fair, but price and quality prevented the Picturephone from taking off.
- IP platform, TV-quality images and lower costs may finally make videophone service commercially viable.
- More VoIP providers are offering videophone service.
- Sales of video-calling equipment reached $40 million in 2004, up 23% from 2003.

- Bell System (AT&T/Western Electric) Picturephone Model I version - From the 1965 "The Telephone Story" poster (Source: Bell Labs “Record” magazine, May/June 1969)

- Then...

- Now

## U.S. Population Online

**Source:  PFF, The Digital Economy Fact Book, Sixth Edition 2004**

## Largest Broadband Markets in the World

**By Number of Lines **

- Source: Point Topic, March 31, 2005 (**Jun. 30, 2004 – Dec. 31, 2004)**.

- Mobile Ad Hoc Networks or MANETs provide “multi-hop” communication among autonomous nodes (such as PDAs, cellphones), creating a low-power network at a disaster site.
- Each node acts as a source, relay point or destination, and can extend the range of radios in large buildings – when users arrive on the scene and activate a communications device, the network self-organizes and establishes a stream of communication.
- Using wireless technology developed by Seattle-based CoCo Communications, Franklin High School (Seattle school district) is the first installation in the nation of the National School Protection Network.
- A voice, video and data connection is established between the school, law enforcement and other aid to provide greater on-scene visibility and allow first responders to make more informed decisions in the event of an emergency.
- CoCo’s software seamlessly connects COTS equipment such as PDAs, laptops, radios and cameras via wireless nodes.

## Clearwire, based in Kirkland, WA, provides wireless broadband Internet access through a state-of-the-art wireless modem that can be plugged into a desktop computer, a laptop, or a local network. 
Clearwire operates by transmitting signals to and from nearby cellular towers instead of using a traditional phone line. 
Current connection speeds are 1.5 Mbps – 25 times faster than dial-up. 
Service currently offered in:	
Daytona Beach, FL
Jacksonville, FL
St. Cloud, MN
Abilene, TX
Coming soon to:
Medford, OR
Modesto, CA 
Stockton, CA

- Clearwire, based in Kirkland, WA, provides wireless broadband Internet access through a state-of-the-art wireless modem that can be plugged into a desktop computer, a laptop, or a local network.
- Clearwire operates by transmitting signals to and from nearby cellular towers instead of using a traditional phone line.
- Current connection speeds are 1.5 Mbps – _25 times faster_ than dial-up.
- Service currently offered in:
- Daytona Beach, FL
- Jacksonville, FL
- St. Cloud, MN
- Abilene, TX
- Coming soon to:
- Medford, OR
- Modesto, CA
- Stockton, CA

- BitTorrent is a free peer-to-peer program that allows users to quickly upload and download large amounts of data, such as video games and movie.
- CacheLogic estimates that 1/3 of data sent across the Internet is BitTorrent traffic.
- To date, more than 20 million have downloaded BitTorrent – an estimated 40 million will have downloaded BitTorrent by 2006.*
- In contrast to traditional peer-to-peer networks (ie. KaZaA), each user uploads and downloads pieces of data until users have shared all of the pieces, creating their own complete source.  Traditional peer-to-peer allow only one user at a time to upload/download a file, even when multiple users have the same file.

- * Source: “The BitTorrent Effect”, *Wired Magazine*, January 2005

- Source: www.bittorrent.com

## The Global Market

## Opportunities for International Trade and U.S. Job Growth

*“**In the last ten years, 3 billion people have joined the world economy.”*
- 						       - Craig Barrett, CEO Intel Corporation
- The number of international calling minutes in the U.S. has grown from 1.6 billion in 1980 to 36 billion in 2002.*
- Wireless broadband expansion married to VoIP creates great opportunity to reach vast markets in China, India, and other emerging markets.
- Mobile subscribers are 51 percent of all telephone subscribers worldwide (ITU 2003).
- 1.34 billion GSM subscribers worldwide (GSM Ass’n 5/05)
- Over 240 million CDMA subscribers worldwide (CDG 12/04)
- Commerce supports adoption of the ATSC Digital Television Standard as the hemispheric standard for DTV.
- The governments of the United States, Canada, Mexico have all adopted the standard.
- Adoption of ATSC standard as the common standard in the Western Hemisphere is projected to generate $8 billion worth of U.S. exports and the creation of up to 156,000 new domestic jobs by 2014.
- HSPDA, a faster version of 3G (WCDMA) is expected to reach the mass market in 2006 → launching first in the United States, followed by Japan, then Europe.

- *Source: FCC, “Trends in the International Telecommunications Industry”, July 2004.

## America’s Telecom Trade with China

- China has the world’s largest landline and mobile telecom networks.
- China plans to inject $500 billion between 2001-2005 into its telecom infrastructure.
- China’s telecom equipment market,  ($20 billion estimated worth) is among the world’s largest. U.S. exports comprise only $630 million of that total, leaving ample room for expansion.
- MII expects the number of fixed line telephone users to reach 361 million (27.6% penetration) by the end of 2005 and the number of cellular users to reach 392 million (30% penetration).  With such an investment, Chinese telecom carriers expect to generate revenues of $76.5 billion, 10.4% more than that in 2004.

- Source: MII, TIA, USITO

## India:  Market Expansion

-  1.08 billion people = world’s largest democracy 1    300 million people = world’s largest middle class 2
-  Currently over 75,000 Indian students educated in U.S., most in  masters or PhD programs 3
-  Long-standing history and partnership - High Technology Cooperation Group
-  Strong growth in the mobile sector - India recorded the highest annual mobile subscriber  growth (over 100%) from the 2nd quarter 2003 onwards 4
-  Broadband and internet growth a priority for government - Government of India has set a minimum goal of 20 million broadband subscribers and 40 million Internet subscribers by 2010
-   Policy changes signal new telecoms investment climate:
-  Access Deficit Charge (ADC) reduced 23-53%
-  Foreign Direct Investment (FDI) limit raised from 49% to 74%

- 1 The World Factbook 2004 (updated Feb. 10, 2005)2  UC Santa Cruz, http://humwww.ucsc.edu3  Business-Standard.com , June 28, 20044 Telecom Regulatory Authority of India press release, November, 8, 2004

## Russia and Eastern Europe:Shifting Investment Landscapes

-   _**Russia**_
-  $33 billion in investment needed in next ten years
-  Market for IP Telephony expected to reach $200 million in 2004
-  Mobile penetration almost twice that of fixed-line telephony, and growing at 104% annually
-  Internet and broadband growth limited by inadequate infrastructure
-   _**Eastern Europe**_
-  35% mobile penetration in Eastern Europe, but varies greatly country-by-county
-  Economic growth in Eastern Europe is around 6% - more than double the rate of Western Europe