*Pages 1--67 from  *
 Federal  Communications  Commission  Office  of  Strategic  Planning  and  Policy  Analysis 
 445  12  th  Street,  SW  Washington,  DC  20554 

 OSP  Working  Paper  Series 
 Unlicensed  and  Unshackled:  A  Joint  OSP-  OET  White 
 Paper  on  Unlicensed  Devices  and  Their  Regulatory  Issues 

 May  2003 
 Kenneth  R.  Carter  Ahmed  Lahjouji 
 Neal  McNeil 

 39 
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 The  FCC  Office  of  Strategic  Planning  and  Policy  Analysis  Working  Paper  Series  presents  staff  analysis  and  research  in  various  states.  This  working  paper  series  is  a  successor  to  and  builds  on  the 
 Office  of  Plans  and  Policys  working  paper  series.  These  papers  are  intended  to  stimulate  discussion  and  critical  comment  within  the  FCC,  as  well  as  outside  the  agency,  on  issues  in 
 communications  policy.  Titles  may  include  preliminary  work  and  progress  reports,  as  well  as  completed  research.  The  analyses  and  conclusions  in  the  Working  Paper  Series  are  those  of  the 
 authors  and  do  not  necessarily  reflect  the  view  of  other  members  of  the  Office  of  Strategic  Planning  and  Policy  Analysis,  other  Commission  Staff,  or  any  Commissioner.  Given  the  preliminary 
 character  of  some  titles,  it  is  advisable  to  check  with  authors  before  quoting  or  referencing  these  working  papers  in  other  publications.  This  document  is  available  on  the  FCCs  World  Wide  Web 

 site  at  www.  fcc.  gov/  osp/  workingp.  html. 
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 Federal  Communications  Commission 
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 Unlicensed  and  Unshackled:  A  Joint  OSP-  OET  White  Paper  on  Unlicensed  Devices  and  Their  Regulatory  Issues 
 Kenneth  R.  Carter  *  Office  of  Strategic  Planning  and  Policy  Analysis 
 Ahmed  Lahjouji 
 Neal  McNeil  Office  of  Engineering  Technology 

 Federal  Communications  Commission  Washington,  D.  C.  20554 
 May  2003  OSP  Working  Paper  No.  39 
 Abstract 
 In  this  paper,  we  present  a  survey  of  the  origins  of  unlicensed  wireless  devices,  their  governing  regulation,  the  current  technological  state  of  the  art,  an  overview  of  the  market  with  information  from  publicly  available  sources, 
 and  an  analysis  of  the  potential  regulatory  issues.  Unlicensed  wireless  devices  are  permitted  to  emit  radio  frequency 
 energy,  without  specific  authorization,  registration,  or  grant  of  a  license.  Today,  millions  of  unlicensed  devices  are  already  in  operation  in  a  multitude  of  important  uses  for  industry,  medicine,  government,  national  defense,  and  in 

 the  homes.  The  market  for  unlicensed  wireless  communications  devices  is  experiencing  unprecedented  growth  into 
 a  multi-  billion  dollar  industry    quite  striking  in  light  of  the  severe  downturn  in  the  U.  S.  telecommunications  and  technology  sectors.  Unlicensed  devices  advance  the  public  interest,  necessity,  and  convenience  for  the  American 

 people  by  enabling  applications  not  possible  with  wires  or  that  do  not  require  the  acquisition  of  spectrum  rights 
 through  the  licensing  process.  However,  without  a  forward-  looking  approach  to  policy  reform  addressing  the  fundamental  problem  of  interference  and  maintaining  these  low  entry  barriers  to  spectrum,  much  of  the  benefit  and 

 promise  of  unlicensed  devices  may  be  delayed,  or  unrealized.  We  conclude  that  the  effective  policy  reform  includes 
 enabling  more  unlicensed  spectrum  and  promulgating  rules  to  encourage  technological  and  market-  based  solutions  to  optimize  efficient  use  and  sharing  of  spectrum. 

 *  The  authors  are  grateful  to  John  Williams  and  Evan  Kwerel  for  their  helpful  suggestions  and  comments.  We 
 would  like  to  thank  Jared  Cornfeld  and  Sean  Wang  who  assisted  in  gathering  market  information,  as  well  as  several  others  from  the  industry  and  the  investment  analysis  community,  who  gave  generously  of  their  time  and  expertise  to 

 help  us.  The  authors  alone  are  responsible  for  the  analysis  and  conclusions  herein. 

 The  FCC  Office  of  Strategic  Planning  and  Policy  Analysis  Working  Paper  Series  presents  staff  analysis  and  research  in  various  states.  This  working  paper  series  is  a  successor  to  and  builds  on  the  Office  of  Plans  and 
 Policys  working  paper  series.  These  papers  are  intended  to  stimulate  discussion  and  critical  comment  within  the  FCC,  as  well  as  outside  the  agency,  on  issues  in  communications  policy.  Titles  may  include  preliminary 
 work  and  progress  reports,  as  well  as  completed  research.  The  analyses  and  conclusions  in  the  Working  Paper  Series  are  those  of  the  authors  and  do  not  necessarily  reflect  the  view  of  other  members  of  the  Office  of 
 Strategic  Planning  and  Policy  Analysis,  other  Commission  Staff,  or  any  Commissioner.  Given  the  preliminary  character  of  some  titles,  it  is  advisable  to  check  with  authors  before  quoting  or  referenc  ing  these 
 working  papers  in  other  publications.  This  document  is  available  on  the  FCCs  World  Wide  Web  site  at  www.  fcc.  gov/  osp/  workingp.  html. 
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 Table  of  Contents 
 Table  of  Contents............................................................................................................................  ii  Tables.............................................................................................................................................  iii 
 Figures............................................................................................................................................  iii  Executive  Summary........................................................................................................................  iv 
 I.  Introduction.............................................................................................................................  1  II.  What  are  Unlicensed  Devices?    A  Taxonomy  of  Wireless  Devices.....................................  4 
 A.  Overview.............................................................................................................................  4  B.  Rules  Governing  Unlicensed  Devices  ................................................................................  6 
 C.  Uses  and  Applications  .......................................................................................................  13  III.  The  Market  for  Unlicensed  Wireless  Devices  ..................................................................  22 
 A.  Trends  in  Authorizations  of  Part  15  Devices  ....................................................................  22  B.  Cordless  Phones  ................................................................................................................  25 
 C.  Wireless  LAN  and  Computer  Devices..............................................................................  27  D.  Radio  Freque  ncy  IDs  (RFID)............................................................................................  41 
 IV.  Potential  Regulatory  Issues  ...............................................................................................  45  A.  Overview...........................................................................................................................  45 
 B.  Interference  Concerns  for  Unlicensed  Devices.................................................................  45  C.  Avoiding  Interference  .......................................................................................................  46 
 V.  Summary...............................................................................................................................  50  Appendix  A.  The  Technology  of  Unlicensed  Wireless  Devices  ..................................................  51 
 Appendix  B.  Glossary  of  Unlicensed  Spectrum  Terms  ................................................................  53 
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 Tables  Table  1.  Current  Installed  Base  of  Part  15  Devices  ......................................................................  22 
 Table  2  Part  15  Intentional  Radiator  Authorizations  1993    2002  ...............................................  23  Table  3.  Average  Sales  of  Price  and  Penetration  of  Cordless  Phones  1997-  2001........................  26 
 Table  4.  Performance  Metrics  for  Selected  Wireless  Networking  Standards...............................  29  Table  5.  Performance  Metrics  for  802.16  and  802.20  Standards..................................................  32 
 Table  6.  Wireless  LAN  semiconductor  Market  Share  ..................................................................  36 

 Figures  Figure  1.  Wireless  Ethernet  Bridge..............................................................................................  16 
 Figure  2.  The  M2A  Pill.................................................................................................................  21  Figure  3.  Grill  Alert  Talking  Remote  Thermometer.....................................................................  21 
 Figure  4.  Annual  Part  15  Spread  Spectrum  Device  Authorizations  (1990  -  2002)  ......................  24  Figure  5.  Annual  U-  NII  and  U-  PCS  Authorizations  (1996-  2002)................................................  24 
 Figure  6.  Sales  of  Cordless  Phones  1997-  2004  ............................................................................  27  Figure  7.  Speed  vs.  Power  Consumption  for  Wireless  Networking  Protocols  .............................  31 
 Figure  8.  Wi-  Fi  Equipment  revenue  forecast  by  business  segment  (in  billions)  ..........................  33  Figure  9.  W-  LAN  Chipset  Sales  by  Percentage  ............................................................................  36 
 Figure  10.  Global  Shipments  of  RFID  Systems  in  2000  (in  millions)..........................................  43 
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 Executive  Summary  In  this  paper,  we  present  a  survey  of  the  origins  of  unlicensed  wireless  devices,  their  governing 
 regulation,  the  current  technological  state  of  the  art,  and  an  overview  of  the  market,  using  information  gathered  from  publicly  available  sources.  We  close  with  an  analysis  of  the  potential 
 regulatory  issues  associated  with  this  dynamic  and  growing  area  of  communications.  Applications  spawned  by  unlicensed  technology  hold  great  promise  for  the  American  people,  but 
 the  FCC  must  continue  to  review,  reconsider,  and  evolve  its  regulatory  treatment  of  unlicensed  devices. 

 Unlicensed  wireless  devices  are  permitted  to  emit  radio  frequency  energy,  without  specific  authorization,  registration,  or  grant  of  a  license.  Unlicensed  devices  trace  their  origins  back  to 
 1938  when  the  FCC  first  authorized  radio  devices  on  a  sufferance  basis.  Today,  millions  of  unlicensed  devices  are  already  in  operation.  Driven  by  rapid  advances  in  technology, 
 entrepreneurship,  and  policy  liberalization,  this  once  sleepy  area  of  communications,  relegated  to  the  province  of  technophiles,  has  diversified  into  a  multitude  of  important  uses  for  industry, 
 medicine,  government,  national  defense,  and  in  the  homes. 
 The  market  for  unlicensed  wireless  communications  devices  is  experiencing  unprecedented  growth    quite  striking  in  light  of  the  severe  downturn  in  the  U.  S.  telecommunications  and 
 technology  sectors.  In  our  review  of  this  market,  we  look  first  at  cordless  phones  which  have  historically  been  the  most  important  segment  of  the  market.  Surpassing  corded  phone  sales  in 
 1997,  sales  of  cordless  phones  constituted  $1.653  billion  in  2002.  They  have  proven  to  be  a  leading  indicator  of  advances  in  technology  and  overcrowding  in  the  unlicensed  bands,  but  are 
 now  giving  away  that  position  to  wireless  computer  networking  devices    an  almost  unheard  of  technology  three  years  ago.  Sales  of  wireless  computer  networking  devices  have  experienced 
 double-  digit  annual  growth  since  2000  and  are  likely  to  top  $2.3  billion  in  2003.  These  numbers  are  exclusive  of  commercial  wireless  networks  and  services.  We  also  look  at  other  important 
 segments  of  unlicensed  devices  such  as  radio  frequency  identification  (RFID),  which  will  constitute  another  $1.2  billion  market  in  2003. 

 Unlicensed  devices  continue  to  advance  the  public  interest,  necessity,  and  convenience,  enabling  applications  not  possible  with  wires  or  that  do  not  require  the  acquisition  of  spectrum  rights 
 through  the  licensing  process.  However,  without  a  well-  considered  and  forward-  looking  approach  to  policy  reform,  much  the  benefit  and  promise  of  unlicensed  devices  may  be  delayed, 
 or  unrealized.  Considering  the  complexity  of  issues  involved,  the  FCC  should  promulgate  rules  which  are  as  clear  as  practicable,  strictly  enforced,  and  maximize  utility  to  address  the 
 fundamental  problem  of  interference.  We  conclude  that  effective  policy  reform  includes  enabling  more  unlicensed  spectrum  and  promulgating  rules  to  encourage  technological  and 
 market-  based  solutions  to  optimize  efficient  use  and  sharing  of  spectrum.  The  FCC  must  be  mindful  of  balancing  competing  interests  and  retain  the  low  entry  barriers  that  have  proven  so 
 successful  for  unlicensed  spectrum. 
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 I.  Introduction  Driven  by  rapid  advances  in 
 technolo  gy,  entrepreneurship,  and  policy  liberalization,  the  market  for 
 wireless  communications  devices  that  operate  on  an  unlicensed  basis 
 is  experiencing  unprecedented  growth.  This  growth  is  even  more 
 remarkable  when  viewed  in  light  of  the  current  downturn  in  the  U.  S. 
 economy  where  both  the  telecommunications  and  technology 
 sectors  are  experiencing  financial  stress. 

 Unlicensed  wireless  devices  are  products  that  are  permitted  to  emit 
 radio  frequency  (RF)  energy,  but  require  no  specific  device  or  user 
 authorization,  either  through  registration  or  grant  of  a  license. 
 This  area  of  communications  has  become  a  province  of  continuous 
 change.  In  recent  years,  these  devices  have  diversified  into  a 
 variety  of  different  uses  in  daily  life  and  are  finding  application  in  all 
 areas  of  industry,  government,  and  in  private  homes. 

 In  this  paper,  we  present  a  survey  of  the  origins  of  unlicensed  technology 
 and  its  governing  regulations,  describe  the  current  state  of  the  art, 
 and  review  the  market  for  these  devices.  1  The  purpose  of  this 
 exercise  is  to  help  policymakers  understand  significant  implications 
 of  Part  15  and  help  plan  for  future  actions  and  regulations. 

 1  For  the  market  survey,  we  gathered  information  from  publicly  available  sources,  but  no  effort  was  made  to  verify 
 the  actual  information  or  the  underlying  methodology  with  which  it  was  assembled.  However,  we  believe  this  market  information  is  sufficiently  accurate,  in  its  current  form,  to  be  used  as  a  fair  indication  of  market  size  and 

 trends 

 A  Day  in  the  Life  of  Unlicensed  Devices  By  Neal  McNeil 
 It  is  difficult  to  convey  the  impact  that  unlicensed  operation  has  on  the  life  of  every  day  citizens.  Attempting  to  provide  a  list  of  available 
 unlicensed  devices  will  prove  inadequate  in  so  far  as  there  are  new 
 devices  continually  introduced  to  the  market.  In  order  to  demonstrate  the  ubiquity  of  unlicensed  operation,  it  is  more  useful  to  describe  the 

 morning  commute  of  a  fictional  Mr.  and  Mrs.  Smith  from  their 
 home  in  the  suburbs  to  their  workplace  in  Any  City,  USA.  (Unless  otherwise  indicated,  all  of  the  wireless  devices  they  use  operate  on  an 

 unlicensed  basis. 
 The  morning  begins  with  our  couple  eating  breakfast.  The  sound  of  an  infants  crying  emanates  from  a  baby  monitor.  As  Mrs.  Smith 
 leaves  the  room  to  attend  to  the  baby,  Mr.  Smith  uses  a  cordless  telephone  to  call  their  respective  offices  to  inform  co-  workers  that 
 they  will  both  be  arriving  late  today.  After  attending  to  their  child, 
 Mrs.  Smith  activates  a  wireless  connection  to  the  Internet  to  check  her  email. 

 The  doorbell  rings.  Mr.  Smith  smiles.  Two  years  ago,  the  wiring  for  the  Smiths  original  doorbell  was  accidentally  cut  in  several  places 
 during  a  self-  help  re  modeling  project.  Had  Mr.  Smith  employed  a 
 stud-  finder,  which  uses  wireless  ultra-  wideband  technology,  he  could  have  avoided  severing  the  original  wires.  Instead  of  running 

 replacement  wiring  all  over  the  house,  Mr.  Smith  disconnected  power 
 to  the  old  doorbell  and  installed  a  new  wireless  doorbell  on  all  three  entries.  It  works  perfectly. 

 Before  answering  the  door,  Mrs.  Smith  deactivates  the  wireless  home  security  system  and  proceeds  to  greet  the  nanny.  Meanwhile,  Mr. 
 Smith  checks  the  settings  on  the  nanny-  cam  in  the  babys  room. 
 The  camera  uses  a  wireless  video  transmitter  to  send  images  to  a  neatly  tucked  away  VCR. 

 At  departure  time,  Mrs.  Smith  picks  up  the  TV  remote  control,  flips  the  channel  from  the  morning  news  to  Sesame  Street,  and  our  couple 
 bustles  into  the  garage.  It  will  be  early  evening  by  the  time  they 
 return,  but  there  will  be  no  need  to  activate  an  outside  light.  Thanks  to  a  motion-  activated  exterior  lighting  fixture,  their  return  path  will 

 brighten  automatically.  Mr.  Smith  opens  the  garage  door  with  a 
 wireless  transmitter,  and  then  uses  keyless  entry  transmitter  to  unlock  the  doors  to  the  family  mini-  van  in  preparation  for  departure. 

 Continued  on  page  3. 
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 This  paper  proceeds  as  follows:  Section  II  provides  a  description  of  the  rules  governing  unlicensed  devices  and  outlines  a  number  of  different  unlicensed  applications.  Section  III  offers 
 our  analysis  of  the  market  and  the  relative  economic  value  of  these  devices.  In  Section  IV,  we  call  attention  to  some  regulatory  issues  that  emerge  from  the  dynamic  growth  of  these  ne  w 
 markets.  And  finally,  Section  V  offers  a  summary  of  the  paper.  The  Appendices  contain  information  about  the  technologies  that  underlie  unlicensed  devices  and  a  discussion  of  another 
 category  of  device  that  may  be  operated  without  the  need  for  an  individual  license. 
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 As  they  leave  their  driveway  and  remotely  close  their  garage  door,  they  notice  a  utility  truck  from  the  local  electric  company 
 driving  slowly  along  their  street.  The  driver  is  taking  meter  readings  in  the  neighborhood  with  no  need  for  physical  access  to  any  of  the  meters.  That  makes  the  driver  one  happy  fellow  because  the  Smiths  meter  is  next  to  a  doghouse.  The  dogs 

 name,  Mangler,  is  emblazoned  on  the  roof,  and  the  utility  worker  is  terrified  of  dogs.  His  wireless  meter-  reading  device 
 allows  him  to  collect  usage  information  from  all  the  meters  in  the  neighborhood  without  ever  leaving  the  safety  of  his  truck. 

 As  he  passes  by,  the  utility  worker  wonders  why  a  dog  with  such  an  appropriate  name  is  not  locked  behind  a  tall  fence. 
 However,  Mangler  does  indeed  have  a  fence;  an  invisible  one  made  of  a  license-  free  transmitter  attached  to  an  antenna  buried  around  the  perimeter  of  the  Smiths  yard.  If  Mangler  were  to  stray  too  near  that  boundary,  a  receiver  on  his  collar 

 would  give  him  a  gentle  shock  to  let  him  know  not  to  go  any  further 
 The  ride  time  from  the  Smith  home  to  the  freeway  is  much  abbreviated  and  is  far  more  predictable  than  it  was  several  months  ago.  Mr.  Smith  speculates  that  there  must  just  be  fewer  cars  on  the  road.  Actually,  he  has  overlooked  the  fact  that 
 his  local  government  has  installed  an  automatic  traffic  light  system  using  radiofrequency  devices  to  improve  the  flow  of  traffic  by  synchronizing  traffic  signals.  Because  the  system  is  active,  the  mini-  van  reaches  the  freeway  in  record  time  and 
 after  merging  into  traffic,  Mr.  Smith  activates  the  vehicles  intelligent  cruise  control  system.  This  system  uses  radar 
 technology  to  control  the  vans  speed  and  the  distance  between  other  cars  on  the  freeway.  The  trip  is  thus  less  stressful  and  much  safer  than  in  years  past. 

 Along  the  way,  Mr.  Smiths  cellular  phone  rings.  Being  safety  conscious,  he  answers  the  call  using  his  hands-  free  wireless  headset.  Just  then,  the  mini-  van  zips  through  a  toll  booth  without  slowing,  while  another  unlicensed  transceiver  identifies 
 the  vehicle  and  charges  the  Smiths  EZ  Pass  account  for  the  passage.  Murphy,  a  highway  patrol  officer  is  sitting  in  his 
 cruiser  by  the  side  of  the  toll  plaza.  The  gun  in  his  holster  is  a  Colt  RF  controlled  smart  gun.  It  has  a  trigger  lock  which  keeps  the  gun  from  being  fired  when  it  is  not  in  proximity  to  a  transponder,  which  is  contained  in  Murphys  wrist  watch. 

 This  authentication  system  will  prevent  the  gun  from  being  used  against  him,  or  other  members  of  the  public,  should 
 someone  be  able  to  wrestle  the  gun  away  from  him. 

 As  he  finishes  his  telephone  conversation,  Mr.  Smith  notices  that  the  min  i-  van  is  low  on  gas.  Fortunately,  he  will  be  able  to 
 re-  fuel  quickly  and  continue,  thanks  to  the  pen-  shaped  transponder  on  his  key  ring.  Pulling  into  a  gas  station,  he  hops  out  of  the  vehicle  and  waves  the  small  wand  in  front  of  the  closest  pump.  Like  magic,  the  metering  device  reads  his  Speed  Pass, 

 activates  the  pump,  allows  him  to  fill  his  tank,  and  debits  his  associated  credit  card,  all  automatically.  Then,  he  is  on  the 
 road  again  with  almost  no  time  lost. 

 The  mini-  van  arrives  on  the  campus  of  City  U  where  Mrs.  Smith  is  a  professor  of  literature.  She  hops  out  of  the  van  as  Mr. 
 Smith  drives  off  and  immediately  notices  a  construction  crew  operating  next  to  the  building  in  which  she  is  about  to  lecture.  One  of  the  construction  workers  seems  to  be  pushing  a  lawn-  mower  like  machine  along  the  ground,  marking  his  path  as  he 

 proceeds.  She  can  see  that  the  crew  is  about  to  begin  digging.  What  she  does  not  realize  is  that  the  machine  she  is  looking 
 at  is  a  ground  penetrating  radar  device  that  the  crew  is  using  to  locate  existing  underground  cables  and  pipes. 

 Because  Mrs.  Smith  does  not  wish  to  be  disturbed  by  the  digging  that  is  about  to  take  place,  and  since  its  a  nice  sunny  day, 
 she  decides  that  to  hold  her  class  under  a  tree  in  the  Quad  as  she  occas  ionally  does.  She  leaves  a  note  on  the  classroom  door  instructing  her  students  to  bring  their  laptop  computers,  each  equipped  with  a  wireless  LAN  card,  to  the  usual  meeting  place 

 outside. 

 Continued  on  page  5. 
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 Federal  Communications  Commission 
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 II.  What  are  Unlicensed  Devices?    A  Taxonomy  of 
 Wireless  Devices 
 A.  Overview 
 It  is  generally  easier  to  explain  unlicensed  devices  in  terms  of  what  they  are  not,  rather 

 than  what  they  are.  To  that  end,  lets  first  explore  the  primary  characteristics  of 
 licensed  devices  and  services.  A  prime  example  of  such  a  licensed  service  is 
 broadcast  television.  In  order  to  prevent  harmful  interference,  the  Federal 
 Communications  Commission  (FCC)  grants  licenses  to  operators  permitting  them 
 to  broadcast  at  a  particular  power  level,  at  a  specified  location,  and  in  an  assigned 
 frequency  band.  These  licenses  are  normally  exclusive  with  respect  to  all  of 
 these  dimensions,  and  they  last  for  a  finite  period  of  time.  The  licensee  can  expect  to 
 be  free  from  harmful  interference  which  will  disrupt  the  normal  operation  within  the 
 licensed  service  area.  The  amount  of  protection  granted  to  licensees  varies  from 
 service  to  service. 
 In  contrast,  unlicensed  devices  have  no  exclusivity  even  in  the  bands  within  which 
 they  are  authorized  to  operate.  Part  15  of  the  FCC  rules  permits  the  operation  of 
 authorized  low  power  radio  frequency  (RF)  devices  without  a  license  from  the 
 Commission.  2  The  technical  standards  contained  in  Part  15  are  designed  to  ensure 
 that  there  is  a  low  probability  that  these  unlicensed  devices  will  cause  harmful 
 interference  to  other  users  of  the  radio  spectrum.  3  Part  15  intentional  radiators, 

 2  Devices  are  permitted  to  operate  after  they  have  been  verified  to  comply  with  existing  operational  restrictions.  See 
 47  C.  F.  R.  Chapter  2,  Subpart  J  and  47  C.  F.  R.    15.1  et  seq. 
 3  In  addition  to  limiting  the  technical  constraints,  one  of  the  primary  operating  conditions  under  Part  15  is  that  the 

 operator  must  accept  whatever  interference  is  received  and  must  correct  whatever  interference  is  caused.  Should 

 Types  of  Part  15  Intentional  Radiators 
 General  Low  Power  Devices  Low  power  devices  are  permitted  to  operate  in  a  variety  of 

 specific  bands  and  they  emit  only  minimal  levels  of  RF  energy. 
 Products  such  as  baby  monitors,  garage  door  openers,  and  toy  wireless  microphones  fall  into  this  category. 

 Spread  Spectrum  and  Digitally  Modulated  Devices  Spread  spectrum  transmitters  generally  use  a  code  sequence  to 
 spread  a  normally  narrow  band  information  signal  over  a  wider  band  of  frequencies.  This  allows  for  more  devices  to  operate  in 
 a  given  frequency  band  and  thus  promotes  spectrum  effic  iency. 
 Many  new  cordless  phones  use  spread  spectrum  techniques.  Systems  that  use  new  forms  of  digital  modulation  techniques 

 that  have  spectral  occupancy  characteristics  similar  to  spread 
 spectrum  devices  are  also  permitted  to  operate  under  the  same  rules  as  spread  spectrum  devices. 

 Unlicensed  PCS  Devices  Unlicensed  Personal  Communications  Services  devices  use 
 digital  modulation  techniques  for  transmission.  Service  requirements  reserve  some  frequencies  for  voice 
 communication  while  the  remaining  spectrum  is  allocated  for 
 high-  speed  data  transfer  applications.  U-  PCS  is  widely  used  for  wireless  intra-  office  telephone  systems  like  wireless  PBX 

 systems. 
 Unlicensed  NII  Devices 
 Unlicensed  National  Information  Infrastructure  devices  also  use  digital  modulation  techniques  similar  to  spread  spectrum 

 devices.  They  are  intended  to  provide  short-  range,  high-  speed 
 wireless  digital  communications  such  as  wireless  local  area  networks  (  W-  LANs),  and  to  facilitate  wireless  access  to  the 

 National  Information  Infrastructure. 
 Ultra-  Wideband  (UWB)  Devices  -  Ultra-  Wideband  (  UWB), 
 a  technology  recently  approved  (February,  2002)  by  the  FCC  for  a  number  of  communications  and  sensing  applications,  is  a 

 signaling  method  which  relies  on  extremely  short  pulses  that 
 generate  signals  with  very  wide  bandwidths,  sometimes  up  to  several  gigahertz.  UWB  signals  go  undetected  by  most 

 conventional  receivers,  minimizing  their  threat  as  harmful 
 interferers.  UWB  technologies  are  currently  being  used  in  a  variety  of  applications  such  as  ground  penetrating  radar  and  are 

 likely  to  be  used  in  a  variety  of  emerging  applications  such  as 
 through-  wall  imaging  and  high-  speed  data  transmission. 
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 i.  e.,  radio  transmitters,  are  permitted  to  operate  under  a  set  of  general 
 emission  limits  4  or  under  provisions  that  allow  higher  emission  levels  in 
 certain  frequency  bands.  5  Part  15  radio  transmitters  generally  are  not 
 permitted  to  operate  in  certain  sensitive  6  or  safety-  related  frequency 
 bands  that  are  designated  as  restricted  bands.  7  Only  out-  of-  band  or  spurious 
 emissions  from  Part  15  transmitters  are  permitted  in  these  restricted 
 bands.  In  exchange  for  operating  on  an  interference  sufferance  basis, 
 unlicensed  devices  are  free  from  the  burden  of  the  normal  delays 
 associated  with  the  licensing  process  and,  as  a  bonus,  spectrum  use  is  free 
 of  charge. 
 In  the  end,  consumers  reap  the  benefit  of  lower  costs,  less  hassle  (no  need 
 for  a  license  to  operate  the  device),  and  more  rapid  development  cycles. 
 Because  they  are  free  from  the  delays  inherent  in  the  licensing  process, 
 unlicensed  devices  can  frequently  be  designed  to  fill  a  unique  need  and  be 
 introduced  into  the  marketplace  rather  quickly.  The  availability  of  spectrum 
 for  use  by  unlicensed  devices  has  spawned  a  variety  of  new 
 applications.  This  huge  and  growing  market  now  includes  devices  ranging 

 harmful  interference  occur,  the  operator  is  required  to  immediately  correct  the  interference  problem,  even  if  correction  of  the  problem  requires  ceasing  operation  of  the  Part  15  system  causing  the  interference.  See  47  C.  F.  R.   
 15.5. 
 4  See  47  C.  F.  R.    15.209. 

 5  See  47  C.  F.  R.    15.215-  15.407.  In  some  cases,  operation  at  the  higher  emission  levels  within  these  designated 
 frequency  band  is  limited  to  specific  applications. 
 6  The  sensitive  bands  referenced  here  are  bands  employed  by  radio  services  that  must  function,  as  a  nature  of  their 
 operation,  using  extremely  low  received  signal  levels.  These  systems  may  be  passive,  such  as  radio  astronomy,  or 
 active,  such  as  satellite  down  links  and  wildlife  tracking  systems. 

 7  See  47  C.  F.  R.    15.205. 

 City  Us  students  all  enjoy  Professor  Smiths  outdoor  lectures.  Via 
 the  campus-  wide  wireless  network,  they  are  able  to  download  homework  assignments,  visit  relevant  Internet  sites,  and  share  the 

 professors  lecture  notes  with  the  click  of  a  button,  all  while  relaxing 
 in  the  shade  of  their  favorite  tree. 

 Meanwhile,  back  in  the  van,  Mr.  Smith  arrives  at  his  office.  He  backs 
 the  mini-  van  into  the  first  available  parking  space  as  a  sensor  on  the  bumper  lets  him  know  exactly  when  he  nears  the  vehicle  behind  him. 

 As  he  makes  his  way  through  the  front  entrance  of  his  office  building, 
 the  doors  open  automatically  triggered  by  sensors  mounted  above.  As  Mr.  Smith  places  his  identification  badge  near  a  small  plastic  window 

 on  the  entry  turnstile,  a  tag  reader  in  the  turnstile  emits  an  electronic 
 beep  that  notifies  the  building  security  officer  standing  nearby  that  the  Mr.  Smith  has  clearance  to  continue. 

 Mr.  Smith  is  almost  ready  to  begin  his  workday.  But  first,  he  finds  a  restroom  to  wash  his  hands  before  grabbing  a  breakfast  sandwich  from 
 the  deli  shop  in  the  lobby.  Water  pours  from  a  faucet  as  he  waves  his 
 hands  beneath  the  spout  and  the  hand  drier  activates  in  response  to  a  similar  motion.  Both  of  these  devices  are  activated  by  motion  sensor 

 transmitters.  Now,  it  is  time  to  grab  a  cup  of  coffee  and  begin  the  day. 
 The  commute  was  its  own  usual  nuisance,  but  license-  free  devices  made  it  far  more  enjoyable  than  it  otherwise  might  have  been.  For 
 certain,  neither  Mr.  nor  Mrs.  Smith  has  given  a  single  thought  to  the  number  of  license-  free  wireless  devices  they  have  come  into  contact 
 with  in  just  this  one  brief  period  during  the  day.  In  fact,  Mr.  Smith 
 will  learn  later  in  the  morning  that  he  has  to  make  an  appointment  to  see  a  gastroenterologist  tomorrow.  Once  more,  license-  free  devices 

 will  make  his  tomorrow  more  pleasant  than  he  will  ever  know.  But 
 thats  another  story. 

 The  Smith  story  shows  how  our  lives  may  be  affected  on  a  daily  basis 
 by  unlicensed  devices.  However,  unlicensed  devices  are  not  relegated  to  consumer  convenience  applications.  They  are  also  being  used  in 

 hospitals  and  businesses  and  by  government  agencies  to  provide 
 important  communication,  tracking,  or  other  services.  -NM 
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 from  remote  control  toys  and  cordless  telephones  to  wireless  computer  networks  and  inventory  control  systems. 
 B.  Rules  Governing  Unlicensed  Devices 
 1.  History 
 Chaos  in  the  1920s.  During  the  1920s,  radio  communication  was  a  veritable  free-  for-  all;  anyone  possessing  radio  equipment  was  allowed  to  broadcast  signals  over  the  air.  The  result  was 

 chaos.  Because  interference  resulted  any  time  several  transmitters  operated  in  near  proximity,  no  one  could  be  assured  of  reliable  communications.  By  the  early  1930s,  radio  sales  and  usage 
 plummeted,  and  the  market  failure  created  by  this  chaos  predestined  todays  regulatory  environment.  Accordingly,  with  the  passage  of  the  Communications  Act  of  1934,  Congress 
 created  the  Federal  Communications  Commission  to  regulate  radio  communications  in  the  United  States,  the  District  of  Columbia,  and  all  U.  S.  possessions.  8  The  FCC  has  historically 
 controlled  access  to  radio  spectrum  by  allocating  specific  frequency  bands  for  use  by  licensed  service  providers. 

 Unlicensed  Precedent  Set  in  1938.  In  1938  the  FCC  first  allowed  unlicensed  devices,  expected  to  operate  without  causing  harmful  interference,  to  be  sold  and  operated.  Conditions  were  set  to 
 ensure  that  the  devices  would  not  generate  emissions  or  field  strength  levels  greater  than  a  specified  maximum.  9  At  that  time,  typical  qualifying  devices  included  wireless  record  players, 
 carrier  current  communication  systems,  and  control  devices. 
 When  these  rules  were  first  adopted,  most  unlicensed  devices  were  designed  to  operate  in  the  medium  frequency  (0.3-  3  MHz)  and  high  frequency  (3-  30  MHz)  frequency  bands,  and 
 compliance  with  FCC  regulations  was  relatively  easy  to  achieve.  However,  as  the  industry  designed  new  products  intended  for  operation  on  higher  frequencies,  it  became  more  difficult  for 
 manufacturers  to  design  useful  devices  that  complied  with  the  maximum  field  strength  limit  imposed  in  this  early  standard  since  the  signal  propagation  distance  decreases  as  the  operating 
 frequency  increases.  Accordingly,  over  the  years  the  FCC  amended  and  expanded  the  Part  15  rules  to  permit  the  use  of  higher  power  for  unlicensed  operation  in  higher  frequenc  y  bands  where 
 it  deemed  that  the  mass-  marketing  of  such  products  wo  uld  not  result  in  harmful  interference  to  authorized  radio  services. 

 Expanding  the  Applications  Base.  In  the  period  from  1960s  through  the  1970s,  provisions  were  made  under  Part  15  to  permit  the  operation  of  many  new  devices  including  wireless 
 microphones,  telemetry  systems,  garage  door  openers,  TV  interface  devices  (e.  g.,  video  cassette 

 8  While  the  FCC  administers  spectrum  allocated  for  use  by  non-  federal  government  entities,  the  National 
 Telecommunications  and  Information  Administration  (NTIA)  performs  the  same  function  for  spectrum  allocated  for 
 use  by  the  Federal  Government.  More  information  regarding  NTIA  can  be  found  at  http://  www.  ntia.  doc.  gov/. 

 9  The  limit  applied  to  these  early  devices  was  15  microvolts  per  meter  (uV/  m)  at  a  distance  equivalent  to  the 

 wavelength  of  the  operating  frequency  divided  by  2  Pi.  See  In  The  matter  of  Revision  of  Part  15  of  the  Rules  Regarding  the  Operation  of  Radio  Frequency  Devices  Without  An  Individual  License,  First  Report  and  Order,  Gen. 

 Docket  87-  389,  4  FCC  Rcd.  3493  at  3554  (1989)  (adopted  Mar.  30,  1989). 
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 recorders),  field  disturbance  sensors  (e.  g.,  anti-  pilferage  systems  for  retail  stores),  auditory  assistance  devices,  control  and  security  alarm  apparatus,  and  cordless  telephones. 
 Spread  Spectrum  and  Other  Changes.  In  1985,  the  FCC  expanded  its  Part  15  rules  to  encompass  the  operation  of  low  power,  unlicensed  spread  spectrum  systems  in  the  900    928  MHz,  2400   
 2483.5  MHz,  and  5725    5850  MHz  bands.  10  Spread  spectrum  techniques,  developed  in  the  1940s  for  military  applications,  are  characterized  by  high  immunity  to  interference  and  low 
 probability  of  intercept.  These  qualities,  coupled  with  their  low  potential  for  causing  interference  to  other  devices,  make  spread  spectrum  systems  an  attractive  technology  for 
 consumer  use.  11 
 In  the  late  1980s,  as  technology  made  possible  the  introduction  of  devices  designed  to  operate  at  higher  frequencies  than  the  rules  had  to  date  contemplated,  the  general  field  strength  limit  was 
 again  becoming  too  restrictive.  In  response  to  petitions  for  rule  making,  the  FCC  completed  an  omnibus  revision  of  its  technical  and  administrative  provisions  for  the  operation  of  Part  15 
 devices.  12  In  this  rulemaking,  the  FCC  standardized  the  emission  limits  in  various  bands  and  established  a  number  of  general  usage  frequency  bands  placing  limits  on  peak  emissions. 

 This  revision  also  gave  structure  to  the  Part  15  rules  which,  until  that  time,  had  been  revised  on  an  ad  hoc  basis  each  time  a  new  device  was  introduced.  First,  the  revision  re-  classified 
 unlicensed  devices  into  three  broad  categories: 
   Unintentional  Radiators  are  devices  that  generate  RF  energy  internally,  or  sends  RF  signals  to  associated  equipment  via  connecting  wiring,  but  which  are  not  intended  to 
 radiate  RF  energy  through  the  air.  Examples  include  computer  CPU  boards  and  power  supplies.  The  components  and  enclosures  of  these  devices  must  be  shielded  sufficiently 
 to  limit  the  amount  of  RF  energy  that  escapes. 
   Incidental  Radiators  are  devices,  like  electric  motors,  that  generate  radio  frequency  energy  during  the  course  of  operation  although  the  devices  are  not  intentionally  designed 
 to  generate  or  emit  RF  energy. 
   Intentional  Radiators  are  devices  that  intentionally  generate  and  emit  RF  energy  by  radiation  or  induction. 

 Second,  the  revision  created  general  categories  that  allow  intentional  radiators  to  operate  at  very  low  powers  in  any  band  except  where  expressly  prohibited.  Greater  emissions  were  permitted  in 
 certain  bands  where  the  FCC  deemed  such  operation  would  not  result  in  production  of  harmful 

 10  See  Authorization  of  Spread  Spectrum  systems  Under  Parts  15  and  90,  First  Report  and  Order,  Gen.  Docket  No. 
 81-  413,  50  Fed.  Reg.  25234  (June  18,  1985),  (adopted  May  9,  1985). 
 11  See  Appendix  A.  The  Technology  of  Unlicensed  Wireless  Devices. 

 12  See  In  The  matter  of  Revision  of  Part  15  of  the  Rules  Regarding  the  Operation  of  Radio  Frequency  Devices 
 Without  An  Individual  License,  First  Report  and  Order,  Gen.  Docket  87-  389,  4  FCC  Rcd.  3493  (1989)  (adopted  Mar.  30,  1989). 
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 interference.  After  this  re-  write,  the  FCC  continued  to  modify  the  Part  15  rules  in  a  more  orderly  fashion  as  advances  in  technology  dictated. 
 Unlicensed  Personal  Communications  Services  (U-  PCS).  In  1993,  the  FCC  first  permitted  U-PCS  devices  operate  in  the  1910-  1920,  1920-  1930  and  2390-  2400  MHz  bands.  13  The  devices 
 must  use  digital  modulation  techniques  to  transmit  information.  The  operating  conditions  established  for  the  1920    1930  MHz  portion  of  the  allocated  spectrum  are  reserved  for  voice 
 communication  while  the  remaining  spectrum  is  allocated  for  high-  speed  data  transfer  applications.  The  1920-  1930  MHz  spectrum  is  used  for  wireless  intra-  office  telephone  systems 
 like  wireless  PBX  systems.  14 
 Millimeter  Wave  Technology.  In  1995,  the  FCC  made  the  59-  64  GHz  band,  commonly  referred  to  as  the  millimeter  wave  band,  available  for  use  by  unlicensed  devices.  An  additional  two 
 gigahertz  of  spectrum  was  later  made  available,  widening  the  band  to  57-  64  GHz.  The  FCC  noted  that  the  spectrum  would  be  appropriate  for  novel  broadband  applications  such  as  wireless 
 computer-  to-  computer  communications.  The  Commission  noted  that  interference  potential  to  licensed  services  would  also  be  limited  by  both  high  propagation  loss  at  these  frequencies  and 
 the  narrow  beamwidth  of  point-  to-  point  antennas  normally  operating  in  this  range. 
 Introduction  of  U-  NII.  In  1997,  the  FCC  again  amended  the  Part  15  rules,  this  time  to  provide  for  operation  of  Unlicensed  National  Information  Infrastructure  (U-  NII)  15  devices  in  the  5  GHz 
 Frequency  Range  (5.15-  5.35  GHz  and  5.725-  5.825  GHz).  16  Once  more,  the  FCC  recognized  that 
 13  See  Amendment  of  the  Commissions  Rules  to  Establish  New  Narrowband  Personal  Communications  Services, 
 First  Report  and  Order,  Gen.  Docket  90-  314,  8  FCC  Rcd.  7162  (1993)  (adopted  June  24,  1993). 
 14  At  the  time  of  this  writing,  the  FCC  was  considering  proposals  that  would  change  the  allocation  of  unlicensed 

 PCS  devices  in  the  1910-  1920  MHz  band.  In  The  Matter  of  Amendment  of  Part  2  of  the  Commissions  Rules  to  Allocate  Below  3  GHz  for  Mobile  and  Fixed  Services  to  Support  the  Introduction  of  New  Advanced  Wireless 

 Services,  Including  Third  Generation  Wireless,  Third  Report  and  Order,  Third  Notice  of  Proposed  Rulemaking  and 
 Second  Memorandum  Opinion  and  Order,  ET  Docket  00-  258,  18  FCC  Rcd  2223  (2003)  (adopted  Jan.  29,  2003),  the  FCC  is  considering  a  proposal  by  the  Wireless  Communications  Association  International  (  WCA)  to  relocate 

 channels  assigned  to  the  MDS  service  to  the  1910-  1916  MHz  and  1990-  1996  MHz  bands.  The  relocation  would 
 clear  spectrum  at  higher  frequencies  for  use  by  third  generation  mobile  services  (  3G).  Under  the  WCA  proposal,  the  service  rules  for  the  1916-  1920  MHz  band  would  be  modified  to  accommodate  isochronous  unlicensed  PCS 

 service  suitable  for  voice  communications,  the  same  as  in  the  1920-  1930  MHz  band.  Also  in  Docket  00-  258,  Nextel 
 Communications,  Inc.  (  Nextel)  has  requested  that  it  relinquish  spectrum  at  800  MHz  and  900  MHz  to  provide  a  more  interference-  free  environment  for  public  safety  licensees.  In  exchange,  Nextel  would  seek  to  relocate 

 operations  in  the  1910-  1915  MHz  unlicensed  PCS  and  1990-  1995  MHz  bands. 
 15  The  National  Information  Infrastructure,  or  NII,  is  a  group  of  networks,  including  the  public  switched 
 telecommunications  network,  radio  and  television  networks,  private  communications  networks,  and  other  networks 
 not  yet  built,  which  together  will  serve  the  communications  and  information  processing  needs  of  the  people  of  the  United  States  in  the  future.  See  In  the  Matter  of  Amendment  of  the  Commissions  Rules  to  Provide  for  Operation  of 

 Unlicensed  NII  Devices  in  the  5  GHz  Range,  Report  and  Order,  ET  Docket  96-  102,  12  FCC  Rcd.  1576  (1997) 
 (adopted  Jan.  9,  1997). 

 16  See  In  the  Matter  of  Amendment  of  the  Commissions  Rules  to  Provide  for  Operation  of  Unlicensed  NII  Devices 

 in  the  5  GHz  Range,  Report  and  Order,  ET  Docket  96-  102,  12  FCC  Rcd  1576  (1997)  (adopted  Jan.  9,  1997).  See  also  47  C.  F.  R.    15.401.  It  is  important  to  note  that  the  5  GHz  band  is  also  used  on  an  unlicensed  basis  in  Europe. 

 However,  the  available  spectrum,  referred  to  as  the  HiperLAN2  bands,  is  slightly  different  than  the  US  U-  NII  bands. 
 While  the  two  share  the  5.  15    5.25  GHz  portion,  the  HiperLAN2  upper  band  is  5.470    5.725  GHz.  In  view  of  this 
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 developments  in  a  number  of  different  digital  technologies  greatly  increased  the  need  to  transfer  large  amounts  of  data  from  one  network  or  system  to  another.  In  making  this  spectrum  available, 
 the  FCC  concluded  that  providing  additional  spectrum  for  unlicensed  wideband  operation  would  benefit  a  vast  number  of  medical,  educational,  business,  and  industrial  users.  U-  NII  devices  use 
 digital  modulation  techniques  similar  to  spread  spectrum  devices.  They  are  intended  to  provide  short-  range,  high-  speed  wireless  digital  communications  such  as  wireless  local  area  networks 
 (  W-  LANs),  and  to  facilitate  wireless  access  to  the  National  Information  Infrastructure.  With  the  use  of  a  high-  gain  directional  antenna,  these  devices  may  be  used  to  complete  point-  to-  point 
 links  of  over  1  kilometer. 
 Making  Way  for  Ultra-  Wideband.  In  February  2002,  the  FCC  adopted  an  Order  allowing  use  of  devices  that  incorporate  ultra-  wideband  (  UWB)  technology.  17  UWB  devices  operate  by 
 employing  very  narrow  pulses  that  spread  energy  over  a  broad  swath  of  spectrum,  sometimes  as  much  as  several  gigahertz  wide.  Because,  UWB  devices  operate  across  such  wide  reaches  of 
 spectrum,  they  must  share  spectrum  with  an  extensive  variety  of  licensed  and  Federal  Government  services.  The  UWB  Order  defined  workable  technical  standards  and  emissions 
 restrictions  in  order  to  permit  UWB  devices  to  operate  without  causing  interference  to  primary  users  of  the  spectrum.  To  achieve  this  objective,  the  FCC  adopted  very  conservative  standards 
 based  in  large  measure  on  limits  that  the  National  Telecommunications  and  Information  Administration  (NTIA)  deemed  necessary  to  protect  against  interference  to  existing  Federal 
 Government  uses  such  as  global  positioning  systems  (  GPS).  The  FCC  established  differing  technical  standards  and  operating  restrictions  for  three  distinct  UWB  applications  : 

   imaging  systems  including  Ground  Penetrating  Radars  (GPRs),  through-  wall,  medical  imaging,  and  surveillance  devices, 
   vehicular  radar  systems,  and 
   communications  and  measurement  systems. 

 2.  Current  Issues 
 70-  80-  90  GHz.  In  an  effort  to  anticipate  future  needs,  the  FCC  has  underway  a  proceeding  in  which  it  seeks  to  promote  the  commercial  development  of  spectrum  in  the  71-  76  GHz,  81-  86 

 GHz  and  92-  95  GHz  bands.  18  Specifically,  the  Notice  proposed  to  make  the  92-  95  GHz  band  available  for  unlicensed  use  and  suggested  rules  for  unlicensed  operation  in  that  band.  While  not 
 proposing  specific  rules  in  the  71-  76  GHz  and  81-  86  GHz  bands,  the  Notice  sought  comment  on  providing  for  operation  of  unlicensed  devices  at  those  frequencies.  These  bands  have  never 

 difference,  the  Wi-  Fi  Alliance  (formerly  known  as  WECA)  has  petitioned  the  FCC  to  modify  its  rules  to  permit  operation  in  the  5.470    5.725  GHz  band.  The  FCC  has  not  yet  acted  on  that  request.  A  recent  agreement  between 
 the  Department  of  Defense,  NTIA,  and  the  FCC  to  promote  co-  existence  of  unlicensed  devices  and  government 
 radar  may  help  to  speed  action  on  the  Wi-  Fi  alliance  petition.  The  Commission  has  initiated  a  rulemaking  proceeding  (RM-  10371)  to  determine  the  best  method  to  implement  proposals  contained  in  the  Wi-  Fi  Alliance 

 petition  and  the  agency  agreement. 
 17  Revision  of  Part  15  of  the  Commissions  Rules  Regarding  Ultra-  Wideband  Transmission  Systems,  First  Report 
 and  Order,  ET  Docket  No.  98-  153,  17  FCC  Rcd.  7435  (2002)  (adopted  Feb.  24,  2002). 
 18  See  In  the  Matter  of  Allocations  of  Services  Rules  for  the  71-  76  GHz,  81-  86  GHz,  92-  95  GHz  Bands,  Notice  of 
 Proposed  Rulemaking,  WT  Docket  No.  02-  146,  17  FCC  Rcd.  12182  (2002)  (adopted  June  132002). 
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 before  been  occupied  by  non-  government  users  and  they  may  prove  particularly  attractive  to  entities  seeking  to  establish  new  high-  speed  links  because  they  are  essentially  devoid  of 
 incumbents.  The  FCC  is  reviewing  comments  filed  in  response  to  its  proposal.  Potential  uses  of  this  spectrum  may  include  high-  speed  wireless  local  area  networks,  broadband  access  systems 
 for  the  Internet,  and  point-  to-  point  or  point-  to-  multipoint  communications  systems.  These  applications  are  especially  well  suited  for  higher  frequencies  primarily  because,  as  noted  earlier, 
 transmissions  on  frequencies  this  high  travel  for  shorter  distances,  making  it  possible  to  locate  several  transmitters  in  close  proximity  with  less  risk  of  receiving  or  producing  harmful 
 interference. 
 The  FCC  seeks  to  develop  a  flexible  and  streamlined  regulatory  framework  that  will  encourage  innovative  uses  of  these  three  new  bands  and  further  promote  competition  in  communications 
 services,  equipment,  and  related  markets.  Use  of  these  bands  may  also  make  it  possible  to  advance  the  potent  ial  sharing  between  non-  Federal  Government  and  Federal  Government  users 
 and  further  stimulate  the  use  of  technologies  developed  in  military  and  scientific  applications  in  a  broad  range  of  new  commercial  products  and  services. 

 Spectrum  Policy  Task  Force.  In  a  more  recent  effort  to  address  spectrum  access  issues,  the  FCC  established  a  Spectrum  Policy  Task  Force  in  June  2002.  The  Task  Force  was  composed  of 
 senior  staff  members  from  several  FCC  Bureaus  and  Offices  who  were  asked  to  assist  the  FCC  in  identifying  and  evaluating  changes  in  spectrum  policy  necessary  to  reflect  advances  in 
 technology  that  were  likely  to  increase  the  public  benefits  from  spectrum  use.  In  November  2002,  the  Task  Force  released  its  findings.  Its  report  noted  that,  while  certain  frequency  bands 
 are  heavily  used,  many  bands  either  are  not  in  use  in  all  geographic  areas  or  are  only  heavily  used  part  of  the  time.  Furthermore,  the  Task  Force  determined,  that  these  characteristics  served 
 to  limit  access  to  available  spectrum  and  that  such  limitations  are  a  more  significant  problem  than  the  physical  scarcity  of  spectrum  itself.  The  report  identified  three  unique  approaches  to 
 spectrum  policy  based  on  the  establishment  of  a  set  of  legal  rights:  1)  an  exclusive  use  approach;  2)  a  commons  approach;  and  3)  a  command-  and-  control  approach.  19 

 The  Task  Force  urged  that  the  FCC  evolve  its  spectrum  policy  from  its  traditional  command  and  control  model  to  a  more  market-  oriented  approach  to  achieve  spectral  efficiency.  The  Task 
 Force  set  out  four  key  recommendations  to  accomplish  this  policy  reform.  Recommendations  include: 

 19  The  Task  Force  report  defined  these  three  legal  rights  approaches  as: 
 Exclusive  use  model.  A  licensing  model  in  which  a  licensee  has  exclusive  and  transferable  flexible  use  rights  for  specified  spectrum  within  a  defined  geographic  area,  with  flexible  use  rights  that  are  governed 
 primarily  by  technical  rules  to  protect  spectrum  users  against  interference.  Commons  model.  Allows  unlimited  numbers  of  unlicensed  users  to  share  frequencies,  with  usage  rights 
 that  are  governed  by  technical  standards  or  etiquettes  but  with  no  right  to  protection  from  interference. 
 Command-  and-  control  model.  The  traditional  process  of  spectrum  management  in  the  United  States,  currently  used  for  most  spectrum  within  the  Commissions  jurisdiction,  in  which  allowable  spectrum  uses 

 are  limited  based  on  regulatory  judgments. 
 See  generally  Spectrum  Policy  Task  Force  Report  at  5,  __  FCC  Rcd  __  (November  2002)  (Spectrum  PolicyTtask  Force). 
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 1.  Migrate  toward  more  flexible,  consumer-  oriented  policies.  The  Task  Force  recommended  that  the  Commission  evolve  its  spectrum  policy  toward  more  flexible  and  market-  oriented 
 spectrum  policies  that  will  provide  incentives  for  users  to  migrate  to  more  technologically  innovative  and  economically  efficient  uses  of  spectrum. 

 2.  Adopt  quantitative  standards  to  provide  interference  protection:  interference  temperature.  The  Task  Force  recommended  the  creation  of  a  quantitative  standard  for  acceptable 
 interference  that  provides  both  greater  certainty  for  licensees  and  greater  access  to  unused  spectrum  for  unlicensed  operators. 

 3.  Improve  access  through  the  time  dimension.  The  Task  Force  found  that  new  technological  developments  now  permit  the  Commission  to  increasingly  consider  the  use  of  time,  in 
 addition  to  frequency,  power  and  space,  as  an  added  dimension  permitting  more  dynamic  allocation  and  assignment  of  spectrum  usage  rights.  This  would  provide  access  to  unused  or 
 underused  spectrum  through  time-  sharing  of  spectrum  between  multiple  users  and  lead  to  more  efficient  use  of  the  spectrum  resource. 

 4.  Shift  from  command  and  control  model  to  exclusive  and  commons  models.  The  Task  Force  recommended  that  the  Commission  base  its  spectrum  policy  on  a  balance  of  three 
 spectrum  rights  models:  an  exclusive  use  approach,  a  commons  approach  and,  to  a  more  limited  degree,  a  command-  and-  control  approach.  While  the  command-  and-  control  model 
 currently  dominates  todays  policy,  the  Task  Force  recommended  altering  the  balance  to  provide  greater  use  of  both  the  exclusive  use  and  commons  models  throughout  the  radio 
 spectrum  and  limiting  the  use  of  the  command-  and-  control  model  to  those  instances  where  there  are  compelling  public  policy  reasons,  such  as  some  public  safety  applications.  To  the 
 extent  feasible,  more  spectrum  should  be  identified  for  both  licensed  and  unlicensed  uses  under  flexible  rules  and  existing  spectrum  that  is  subject  to  more  restrictive  command-  and-control 
 regulation  should  over  time  be  transitioned  to  these  models. 
 On  of  the  most  notable  of  the  Task  Forces  recommendations,  from  an  unlicensed  device  perspective,  is  that  it  urges  the  adoption  of  an  interference  temperature.  The  new  metric  would 
 allow  the  FCC  to  quantify  and  manage  interference  on  a  band-  by-  band  basis,  by  establishing  limits  on  the  noise  environment  in  which  receivers  would  be  required  to  operate.  To  the  extent, 
 however,  that  the  interference  temperature  in  a  particular  band  is  not  reached,  the  report  argues,  users  who  emit  energy  below  that  temperature  could  operate  more  flexibly    with  the 
 interference  temperature  serving  as  the  maximum  cap  on  the  potential  RF  energy  any  device  could  introduce  into  the  band. 

 Unlicensed  NOI.  In  a  further  attempt  to  seek  opportunities  for  shared-  spectrum  unlicensed  operation,  the  FCC  has  initiated  a  proceeding  to  explore  the  possibility  of  permitting  unlicensed 
 devices  to  operate  in  the  bands  reserved  for  television  broadcasting  and  also  in  newly  available  spectrum  at  3650    3700  MHz.  20  In  December  2002,  the  Commission  released  a  Notice  of 

 20  The  3600  -3700  MHz  band  was  previously  allocated  for  use  by  the  Federal  Government  on  a  primary  basis  for 
 radiolocation  services,  and  for  non-  government  use  in  the  Fixed  Satellite  Service.  In  1993,  the  National 
 Telecommunications  and  Information  Administration  identified  the  3650    3700  MHz  portion  of  the  band  for 
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 Inquiry  (  NOI)  seeking  comment  on  the  feasibility  of  such  a  proposal.  21  The  NOI  observed  that,  there  are  many  broadcast  channels  that  remain  unavailable  for  TV  use  in  specific  areas  to 
 avoid  co-  channel  interference  problems.  One  example  is  that  Channel  4  is  a  broadcast  channel  in  New  York  City  and  Channel  3  is  a  broadcast  channel  in  Philadelphia.  As  a  result,  Channel  3  is 
 vacant  in  New  York  City  and  Channel  4  is  unused  in  Philadelphia.  While  high  power  TV  stations  in  close  proximity  using  the  same  frequencies  would  almost  certainly  interfere  with  each 
 other  (co-  channel  interference),  low-  power,  unlicensed  devices  may  be  able  to  operate  in  those  vacancies  without  the  risk  of  producing  harmful  interference  to  TV  broadcast  stations  many 
 miles  away.  When  considering  the  3650    3700  MHz  band,  the  FCC  suggested  that  allowing  unlicensed  operation  with  minimal  technical  requirements  could  permit  the  development  of 
 innovative  types  of  unlicensed  devices,  for  instance  with  power  levels  exceeding  1  Watt,  that  would  not  be  allowed  to  operate  under  the  current  rules  elsewhere.  Provided  this  proceeding 
 leads  to  manageable  implementation  strategies,  the  spectrum  available  for  unlicensed  operation  will  once  again  increase. 

 Spectrum  Management  Reform.  The  Federal  Government  through  the  NTIA  is  also  continuing  to  reform  and  modernize  its  role  in  managing  spectrum.  The  FCC  and  the  NTIA  have  been 
 exercising  joint  jurisdiction  over  the  radio  frequency  spectrum  since  the  1940s,  and  in  January  2003,  FCC  Chairman  Michael  K.  Powell  and  Nancy  J.  Victory,  head  of  NTIA,  executed  a  new 
 Memorandum  of  Understanding  to  reflect  changes  necessitated  by  advances  in  technology  and  market  structure.  22  This  represents  the  first  time  the  Memorandum  of  Understanding  has  been 
 updated  since  it  was  originally  signed  six  decades  ago.  Under  the  agreement,  the  two  agencies  will  regularly  review  issues  surrounding  the  coordination  of  government  and  commercial  use  of 
 the  spectrum  as  well  as  the  efficacy  of  the  unlicensed  model  in  promoting  innovation. 
 3.  Authorization  Procedures  for  Unlicensed  Devices 
 All  intentional  radiators  must  be  pre-  approved  for  use  and  sale  through  an  authorization  procedure  under  the  auspices  of  the  FCC.  The  authorization  process  ensures  that  devices  will  not 

 be  marketed  and  available  to  the  public  unless  they  comply  with  the  Commissions  technical  standards.  Authorization  can  take  either  of  two  forms,  verification  or  certification.  Verification 
 is  a  statement  made  by  the  manufacturer  or  importer,  attesting  that  the  device  complies  with  FCC  rules.  This  form  of  authorization  is  generally  employed  for  well  understood  devices.  Device 
 certification,  on  the  other  hand,  is  a  more  formal  process.  Certification  requires  a  written  application  to  the  FCC  stating  that  the  device  complies  with  the  FCC  rules  along  with  specific 
 information,  including  technical  specifications  for  the  device.  Under  this  procedure,  the  Commission  reviews  documentation  regarding  such  characteristics  as  transmitter  frequency, 
 occupied  bandwidth,  and  output  power.  In  addition,  where  required,  manufacturers  will  supply 

 transfer  from  a  Government/  non-  Government  shared  use  statue  to  a  mixed-  use  status.  The  3650    3700  MHz  band  is  currently  not  available  for  unlicensed  use.  The  band  falls  within  one  of  the  restricted  bands  identified  in  47  C.  F.  R. 
   15.205(  a).  However,  the  change  in  allocation  status  provides  an  opportunity  to  re-  examine  its  use. 
 21  See  In  the  Matter  of  Additional  spectrum  for  Unlicensed  Devices  Below  900  MHz  and  in  the  3  GHz  Band,  Notice 
 of  Inquiry  in  ET  Docket  No.  02-  380,  17  FCC  Rcd  25632  (2002),  (adopted  Dec.  11,  2002). 
 22  The  text  of  the  Memorandum  of  Understanding  may  be  viewed  at 
 http://  hraunfoss.  fcc.  gov/  edocs_  public/  attachmatch/  DOC-  230835A2.  pdf. 
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 supplementary  measurements  to  show  that  users  of  a  device  will  not  be  exposed  to  excessive  amounts  of  RF  radiation.  The  FCC  may  then  certify  the  devices  based  on  an  engineering  review, 
 or  may  request  samples  and  actually  test  the  device.  To  help  expedite  the  certification  process,  the  FCC  has  authorized  private  organizations  kno  wn  as  Telecommunication  Certification  Bodies 
 (TCBs)  to  perform  equipment  authorizations  on  behalf  of  the  FCC. 
 C.  Uses  and  Applications 
 Devices  employing  unlicensed  technology  have  diffused  into  a  plethora  of  rich  and  diverse  uses.  23  These  uses  range  from  diagnostic  and  monitoring  applications  in  medicine  and 

 productivity-  enhancing  corporate  applications  to  whimsical  applications  in  toys  and  consumer  gadgets.  The  following  is  a  partial  list  of  applications  for  which  we  employ  unlicensed  devices: 

   Cordless  phones 
   Networking  Computers 
   Linking  Computer  Peripherals    Consumer  Electronics 

   Sensors  and  controller  devices    Toys 

   Radiofrequency  Identification  (RFID) 
   Ground  Penetrating  Radar 
   Security  Systems  for  homes  and  businesses    Keyless  entry 

   Cordless  PBXs 

 Our  general  observation  is  that  unlicensed  applications  are  flexible  enough  to  span  the  range  from  fixed  to  mobile  use.  In  the  past,  because  of  their  limited  range,  many  devices  were  useful 
 only  in  a  specific,  although  not  necessarily  fixed,  location.  These  were  typified  by  applications  like  walking  around  with  cordless  phones  and  or  observing  children  remotely  using  a  baby 
 monitor.  We  now  see  an  emerging  trend  where  the  devices  are  more  frequently  considered  portable,  i.  e.,  moving  to  another  place  where  they  may  be  used  once  again,  like  wireless 
 networking  devices  used  in  airports  or  coffee  shops.  With  increasingly  better  hand-  off  techniques  some  unlicensed  devices  are  becoming  more  like  cellular  applications,  truly  mobile. 
 Nonetheless,  these  devices  are  useful  only  over  short  distances  due  to  their  limited  field  strength.  However,  some  visionaries  foresee  the  marriage  of  todays  short  range  networks  with  3G 
 cellular  technology  affording  users  the  true  ability  to  roam. 
 Since  there  are  so  many  overlapping  uses  for  unlicensed  technology,  for  purposes  of  this  discussion  we  have  classified  them  into  six  types:  1)  person  to  person;  2)  computer  networking; 
 3)  fixed  wireless;  4)  monitoring  and  identification;  5)  detection  and  imaging;  and  6)  remote  sensing  and  telemetry.  Each,  in  turn,  is  discussed  below.  While  the  discussion  will  focus 
 primarily  on  intentional  radiators,  we  will  also  briefly  discuss  an  unintentional  radiator  application  known  as  broadband  over  power  line  (BPL). 

 1.  Person  to  Person  Communications 
 Unlicensed  devices  are  commonly  used  to  provide  voice  communications  over  a  short  range.  These  include  devices  such  as  cordless  phones,  paging  devices,  baby  monitors,  wireless 

 microphones,  wireless  headsets,  and  walkie-  talkies. 

 23  See  Appendix  A  for  an  overview. 
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 Cordless  phones,  one  of  the  most  prevalent  of  unlicensed  devices,  can  be  found  in  over  80%  of  US  households.  The  first  commercially  available  cordless  phones  emerged  as  high-  end 
 consumer  products  in  the  very  early  1980s.  24  These  early  cordless  phones  operated  in  the  27  MHz  band  and  suffered  from  poor  sound  quality,  interference,  and  a  lack  of  security.  In  1986, 
 the  FCC  allowed  cordless  phones  to  use  spectrum  in  the  47-  49  MHz  band,  affording  the  devices  an  increase  in  spectrum  to  reduce  interference.  Further  improving  reception  and  security,  phones 
 using  digital  spread  spectrum  in  the  900  MHz  and  2.4  GHz  bands  began  to  appear  in  1994  and  1995. 

 Several  manufacturers  produce  walkie-  talkies  under  the  Part  15  rules.  These  devices,  generally  low  in  power  and  limited  in  range,  are  typically  sold  as  toys.  The  Consumer  Electronics 
 Association  estimates  that  there  is  an  installed  base  of  nearly  30  million  Part  15  walkie-  talkies  in  the  US.  Surprisingly,  despite  the  widespread  adoption  of  these  devices,  the  FCC  authors  found 
 only  10  approvals  listed  in  the  FCCs  authorization  database.  The  companies  holding  these  authorizations  are: 

 Company  Approvals 
 Hing  Yip  Electronic  Co.  Ltd.  4  Fisher-  Price  Brands  2 

 GMT  Industrial  Ltd.  1  Ka  Wah  Manufacturing  Limited  1 
 Playtech  Ltd.  1  Tung  Wei  Electronics  Co.  Ltd.  1 

 Since  most  of  these  companies  are  privately  held  foreign  entities,  we  were  not  able  to  obtain  revenue  figures  associated  with  walkie-  talkie  sales. 
 Beyond  home  use,  businesses,  schools,  and  hospitals  are  using  unlicensed  devices  to  better  communicate  with  each  other  in  a  busy  work  environment.  One  example  is  a  wireless  PBX  used 
 by  healthcare  professionals  at  Guys  and  St.  Thomas  Hospital  in  London.  This  wireless  telephone  system  operates  solely  within  the  hospital  and  improves  productivity  and  response 
 time.  25  The  nurses  carry  portable  telephones  linked  to  the  hospitals  wireless  network.  With  these  telephones  doctors  are  able  to  contact  each  nurse  directly  instead  of  paging  and  waiting  for 
 a  return  call.  The  wireless  system  also  allows  nurses  to  remain  at  a  patients  bedside  while  responding  to  inquiries  about  the  patients  health  or  requesting  help.  The  network  also  supports 
 data,  and  that  feature  will  eventually  enable  wireless  transfer  of  patient  records.  Eighty-  five 

 24  We  note  that  the  idea  of  a  wireless  telephone  has  existed  for  some  time  longer.  In  1959,  Thomas  Carter  (no 
 relation  to  the  author)  introduced  a  device  which  allowed  mobile  radio  systems  to  be  interconnected  with  the  Bell  System  landline  telephone  network.  AT&  T  attempted  to  stop  Mr.  Carter  from  connecting  his  radio-  wireline 

 equipment.  In  the  ensuing  litigation,  the  FCC  opened  the  telephone  network  to  the  interconnection  of  non-  telephone 
 company  equipment.  This  was  later  codified  as  Part  68  of  its  rules. 

 25  See  http://  www.  spectralink.  com/  solutions/  pdfs/  Case_  Guys.  pdf. 
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 percent  of  the  nurses  using  the  system  felt  that  the  wireless  network  helps  to  improve  patient  care.  26 
 2.  Computer  Networking  and  Peripherals 
 The  growing  popularity  of  computer  networking  has  stimulated  a  feverish  interest  in  unlicensed  technology.  Computers  can  be  networked  by  newly  standardized  unlicensed  devices  that  employ 

 digital  spread  spectrum  techniques,  similar  to  the  technology  found  in  2.4  GHz  cordless  telephones. 

 Because  many  families  and  businesses  now  have  several  computers  operating  at  the  same  location,  users  often  find  it  both  desirable  and  necessary  to  install  a  local  area  network  (LAN)  to 
 share  resources  like  printers,  scanners,  or  a  common  broadband  internet  connection.  27  While  many  new  office  buildings  may  be  pre-  wired  with  an  Ethernet  network  to  link  its  computers,  this 
 is  seldom  the  case  with  older  offices  or  homes.  In  buildings  lacking  a  ready-  made  network  infrastructure,  unlicensed  networking  may  provide  a  cost  effective  solution.  Wireless  LANs  (W-LANs) 
 are  attractive  in  that  the  set-  up  costs  can  be  many  times  smaller  than  the  cost  to  set  up  a  wired  network,  and  installing  wires  usually  requires  cutting  into  sections  of  walls  and  floors. 
 Wireless  technology  also  offers  the  added  advantage  of  reducing  set-  up  time  over  a  traditional  wired  Ethernet  network.  Studies  show  that  a  W-  LAN  can  be  installed  in  a  small  office  in  a  few 
 hours  at  a  cost  of  less  than  $200  per  networked  computer.  And,  once  installed,  rearrangement  costs  are  minor  when  compared  to  those  of  wired  networks. 

 Unlicensed  devices  may  soon  provide  a  networking  solution  for  homes  containing  multiple  broadcast  television,  cable,  or  satellite  receivers;  broadcast  or  satellite  radio  receivers;  and  video 
 and  audio  recording  and/  or  playback  equipment.  In  order  to  share  content  across  these  devices,  generally,  users  must  manually  save  the  content  on  some  media  (DVD,  CD,  etc.)  and  transport 
 that  media  from  one  room  to  the  next.  It  would  be  more  convenient  if  all  of  these  devices  could  be  connected  in  some  manner  to  allow  them  to  share  any  available  content.  Companies  such  as 
 Intel,  Sony,  and  XtremeSpectrum  are  developing  total  home  network  systems  that  employ  spread  spectrum  and  ultra-  wideband  technology  in  anticipation  of  this  need.  The  idea  is  to  give 
 consumers  the  ability  to  distribute  data  or  media  programming  to  any  room  or  device.  These  systems  may  make  it  possible  to  use  a  stereo  in  one  part  of  a  home  to  listen  to  MP3s  saved  on  a 
 computer  hard  drive  in  another  part  of  the  home.  Furthermore,  a  single  video  source  (DVD,  VHS,  cable,  etc.)  may  distributed  to  any  computer  or  television,  eliminating  the  need  for  multiple 
 players  or  set-  top  boxes. 
 Outside  the  home  or  office,  unlicensed  wireless  computer  networking  offers  the  advantage  of  portability  and  inexpensive  connectivity.  For  example,  a  business  traveler  may  wish  to  have 
 broadband  internet  connectivity  for  his  laptop  computer  while  on  the  road.  Many  airports,  restaurants,  and  hotels  now  offer  services  which  allow  the  traveler  to  open  his  laptop  and  find  a 
 connection  while  he  is  at  the  airport  waiting  for  his  luggage  or  having  a  cup  of  coffee. 

 26  Id. 
 27  Remarks  of  Chairman  Michael  K.  Powell  at  the  Broadband  Technology  Summit,  U.  S.  Chamber  of  Commerce, 
 Washington  DC  (April  30,  2002). 
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 Actually,  unlicensed  devices  need  not  use  the  airwaves  to  provide  connectivity.  For  example,  a  technology  known  as  Broadband  over  Power  Line  (BPL)  is  now  being  used  in  some  households. 
 BPL  devices  use  the  homes  internal  electrical  power  wiring  as  a  communications  link  to  connect  computers  and  peripheral  equipment  located  in  different  areas  of  a  house.  Because  most  homes 
 have  several  power  outlets  in  each  room,  it  is  easy  to  connect  devices  almost  anywhere.  Although  the  concept  of  power  line  networking  has  been  around  for  many  years,  new  entrants 
 into  the  market,  fostered  by  such  industry  associations  as  HomePlug,  have  spawned  renewed  interest  in  the  technology.  In  the  case  of  PLC,  the  devices  must  comply  with  Part  15  rules  for 
 unintentional  radiators. 
 3.  Fixed  Wireless  Communications 
 In  fixed  applications,  unlicensed  radio  equipment  is  a  pure  substitute  for  wires.  Multiple  fixed  wireless  links  can  be  implemented  as  an  economical  solution  for  completing  a  communications 

 bridge  over  large  distances.  Here,  unlicensed  technology  offers  the  convenience  of  avoiding  the  time  and  expense  of  obtaining  a  license.  Of  course,  the  downside  is  that  if  the  system  causes 
 interference,  it  must  cease  operation,  and  any  interference  must  be  tolerated.  It  has  no  status,  and  therefore  no  protection. 

 Unlicensed  devices  in  the  2.4  GHz  band  are  often  used  in  this  manner.  In  congested  city  environments,  users  are  able  to  quickly  set  up  links  to  transfer  data  between  structures  (buildings, 
 towers,  etc.)  located  across  a  street  or  several  blocks  away  from  each  other.  In  rural  or  unpopulated  areas,  where  the  likelihood  of  encountering  interference  form  other  users  is  low, 
 devices  in  the  2.4  GHz  band  are  used  over  greater  distances. 
 Figure  1.  Wireless  Ethernet  Bridge 
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 Proxim  Corporation  markets  a  family  of  wireless  Ethernet  bridges  under  the  name  Tsunami.  Most  of  the  bridges  operate  in  the  unlicensed  2.4  GHz  and  5  GHz  bands.  However,  a  23  GHz 
 licensed  option  is  also  available.  Designed  to  provide  a  network  connection  between  switches  or  routers  located  up  to  about  40  miles  apart,  Tsunamis  customer  base  consists  of  medical  centers, 
 school  districts,  government  agencies,  and  other  entities  needing  to  quickly  share  data  among  widely  dispersed  locations.  Tsunami  operates  at  aggregate  throughput  rates  ranging  from  16 
 Mbps  to  872  Mbps.  28 
 Fixed  unlicensed  links  operating  in  the  57-  64  GHz  band  (millimeter  wave  band)  are  also  being  used  for  transferring  large  volumes  of  data  over  relatively  short  distances.  At  the  time  of  this 
 writing,  the  FCC  had  only  approved  four  devices  for  unlicensed  operation  in  the  57-  64  GHz  range.  However,  production  of  these  devices  continues  and  more  are  being  introduced  into  the 
 marketplace.  For  example,  Harmonix  Corporation  recently  introduced  its  GigaLink  system.  29  This  radio  system  is  capable  of  transmitting  up  to  622  Mbps  using  a  compact  antenna  with  a 
 focused  beam  and  can  be  used  to  link  existing  fiber  optic  networks  as  an  affordable  alternative  to  the  expensive  and  time  consuming  process  of  installing  new  fiber. 

 4.  Monitoring  and  Identification 
 The  combination  of  low  power  and  localized  range  offered  by  unlicensed  devices  makes  them  particularly  well  suited  for  a  variety  of  uses  in  monitoring  and  tracking  objects  that  either  cannot 

 be  physically  touched  or  are  impossible  to  count  individually.  These  characteristics  prove  to  be  even  more  effective  when  there  are  numerous  objects  or  when  the  objects  are  in  motio  n. 

 28  See  What  is  Tsunami  TM  ?,  http://  www.  proxim.  com/  products/  all/  tsunami_  bridge/  TsunamiAtAGlance.  pdf. 
 29  See  Harmonix  Corporation,  GigaLink  Overview  at  http://  www.  hxi.  com/  overview.  html. 

 Source:  Proxim 
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 Unlicensed  equipment  in  this  class,  referred  to  as  radio  frequency  identification  (RFID)  technology,  has  its  origins  in  radar  technology  developed  during  World  War  II  and  uses  low-power 
 RF  emissions  in  the  125  kHz,  13.56  MHz,  800-  1000  MHz,  2.4  GHz,  and  5.8  GHz  bands.  The  basic  structure  of  an  RFID  system  includes  a  small  transponder  encoded  with  some  relevant 
 information  (i.  e.,  personal  identification  or  account  information),  an  antenna,  and  a  transceiver  equipped  with  a  decoder.  The  antenna  emits  a  radio  signal  to  read  or  write  data  from  or  to  the 
 tags  attached  to  items  to  be  tracked.  The  tags  may  contain  information  about  an  item  in  manufacture;  goods  in  transit;  the  identity  of  an  animal,  person,  or  vehicle  ;  or  a  means  of 
 payment  for  a  transactio  n.  Some  tags  are  passive  and  simply  re-  radiate  information  to  an  appropriate  transceiver,  which  then  decodes  the  data  and  performs  some  pre-  determined  action 
 depending  on  the  data  received.  Other  tags  can  contain  internal  power  sources,  are  therefore  considered  active,  and  are  able  to  independently  transmit  the  information  contained  within  them 
 to  an  appropriate  transceiver. 
 The  first  uses  of  RFID  systems  were  in  identifying  cattle  and  railroad  cars.  30  Over  the  past  10  years,  these  systems  have  become  commonplace  around  the  world  for  uses  as  varied  as  payment, 
 inventory  control,  and  secure  entry  systems  for  buildings.  These  uses  yield  direct  bottom-  line  savings  for  many  firms.  For  instance,  many  stores  attach  RFID  tags  to  prevent  the  theft  of 
 merchandise,  saving  billions  of  dollars  in  product  loss.  RFID  technology  has  also  been  introduced  by  state  municipalities  for  use  with  tollbooths.  The  success  of  Exxon/  Mobil 
 Corporations  Speedpass  is  yet  another  example  of  RFID  technology.  Introduced  in  1997,  the  Exxon/  Mobil  Speedpass  allows  drivers  to  pay  for  gasoline  at  Mobil  and  Exxon  stations,  among 
 others,  simply  by  waving  a  small  transponder  near  the  gas  pump.  The  transponder  automatically  transmits  a  unique,  secure  ID  number  that  is  recognized  by  an  electronic  system  located  in  the 
 pump,  providing  quick  and  simple  access  to  gasoline  and  automatically  charging  fuel  purchases  to  a  designated  credit  or  checking  account.  Exxon/  Mobil  announced  that  three  million  customers 
 had  signed  up  for  Speedpass  within  two  years  of  the  introduction  of  the  system.  31 
 In  a  more  novel  implementation,  Federal  Express  (FedEx),  the  world  s  largest  express  parcel  delivery  company,  is  currently  testing  an  RFID  based  automatic  keyless  entry  and  ignition 
 system  on  200  of  its  delivery  vehicles.  This  system  uses  readers  mounted  on  each  of  the  delivery  vehicle  doors  and  one  near  the  ignition  switch.  The  FedEx  courier  is  equipped  with  an  RF 
 transponder  embedded  in  a  Velcro  wristband.  When  the  courier  places  his  transponder  wristband  within  6  inches  of  any  reader,  the  transponders  code  is  compared  to  the  systems  memory.  If 
 the  codes  match,  the  appropriate  door  unlocks  for  five  seconds.  To  start  his  vehicle,  the  couriers  wristband  signals  a  similar  decoder  with  the  proper  digital  key  sequence. 

 When  fully  implemented,  FedEx  believes  that  this  system  has  the  potential  to  save  the  company  and  its  drivers  both  time  and  money.  The  companys  couriers  drive  millions  of  miles  annually 
 and  each  time  a  courier  makes  a  delivery,  he  must  spend  time  searching  for  keys  and  then  use  them  to  lock/  unlock  multiple  doors  to  the  vehicle.  Furthermore,  if  a  courier  misplaces  his  keys, 

 30  Gene  Bylinsky,  Hot  New  Technologies  For  American  Factories  Isnt  it  obvious  by  now?,  Fortune  June  26,  2000. 
 31  See,  Mobil  Speedpass  Surpasses  Three  Million  Users,  http://  www.  ti.  com/  snc/  docs/  news/  rel108.  htm. 
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 he  must  wait  for  someone  from  a  FedEx  station  to  locate  and  deliver  a  spare  set,  and,  after  each  such  incident,  the  vehicle  must  then  be  re-  keyed  at  a  cost  of  more  than  $200.  The  new  RFID 
 system  would  negate  much  of  this  burden.  A  similar  system  could  conceivably  find  its  way  into  our  personal  automobiles  in  the  not  too  distant  future. 

 Two  emerging  technologies  hold  the  promise  of  being  able  to  make  almost  any  object  remotely  trackable.  Soon,  even  documents  like  this  one  may  contain  RFIDs.  RFID  tags  have  become  so 
 advanced  that  one  company,  KSW-  Microtec,  has  developed  a  tag  that  can  be  ironed  on  to  or  sewn  directly  into  the  fabric  of  a  garment.  32  The  clothing  company  Benetton  has  plans  to  put 
 RFIDs  in  every  article  of  clothing  it  makes.  Another  company,  Parelec  Inc.,  claims  it  has  developed  an  ink  which  can  be  used  as  an  antenna  for  RFID  tags.  This  would  allow  RFIDs  to  be 
 printed  on  paper  and  polyester,  potentially  making  them  part  of  a  products  packaging.  33  The  printable  antennae  also  have  lower  cost  and  produce  less  hazardous  waste  from  the 
 manufacturing  process  than  do  traditional  antennae  made  from  metal.  Another  technology  can  be  used  to  create  RF  antennae  and  electronic  circuits  on  virtually  any  object  by  spraying  on  a 
 thin  film  of  metal.  This  technology  was  developed  by  NASA  which  developed  a  portable  vacuum  device  that  could  apply  the  metal  film.  In  September  2002,  NASA  announced  that  it 
 was  able  to  apply  a  metal  film  using  a  stencil  to  create  a  data  matrix  containing  dark  and  light  squares  to  make  an  antenna  or  a  circuit.  A  company  called  Vacuum  Arc  Technology  Inc.  is 
 planning  to  commercialize  this  technology.  34 
 5.  Detection  and  Imaging 
 Unlicensed  spectrum  can  be  used  as  a  form  of  miniature  radar  for  detection  and  imaging.  Such  systems  emit  RF  energy  in  an  unlicensed  band  and  receives  the  reflected  waves  to  sense  distance, 

 motion,  or  even  the  composition  of  the  material  causing  the  reflection. 
 One  emerging  use  is  UWB  ground  penetrating  radar  (GPR).  Just  recently,  the  Texas  Department  of  Transportation  (DOT)  used  GPR  to  determine  whether  the  integrity  of  Interstate  35  through 
 downtown  Austin  was  compromised  as  a  result  of  a  major  underground  water  main  leak.  DOT  closed  a  portion  of  the  highway  when  GPR  identified  a  section  of  unstable  roadway.  Hours  later, 
 a  large  sink  hole  developed  in  that  same  section.  Law  enforcement  and  other  public  service  agencies  are  also  expected  to  utilize  another  UWB  technology,  through  wall  imaging,  to  aid  in 
 the  capture  of  suspected  criminals  or  locate  firemen  and  victims  in  burning  buildings,  for  instance. 

 6.  Remote  Sensing  and  Telemetry 
 Unlicensed  devices  can  also  be  used  to  provide  communications  to  remote  measuring  systems  via  telemetry.  Such  wireless  telemetry  technology  is  finding  applications  in  modern  medicine. 

 For  several  years  now,  hospitals  have  been  equipped  with  devices  like  wireless  heart  monitors.  In  fact,  some  applications  for  unlicensed  technology  in  medicine  are  beginning  to  seem  more  like 

 32  New  Direct-  To-  Textile  Washable  Tag,  RFID  Journal,  November  11,  2002.  http://  216.121.131.129/  article/  view/  111 
 33  New  Ink  for  Printed  RFID  Antennas,  RFID  Journal,  February  5,  2003.  http://  216.121.131.129/  article/  view/  296 
 34  NASA  Unveils  Spray-  On  Circuits,  RFID  Journal,  September  26,  2002.  http://  216.121.131.129/  article/  view/  77 
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 what  we  once  regarded  as  science  fiction.  In  the  movie  Fantastic  Voyage,  scientists  shrunk  a  submarine  and  its  crew  to  microscopic  proportions  and  injected  it  into  a  human  body  in  order  to 
 perform  a  medical  procedure.  Now,  using  a  marriage  of  microscopic  optics,  robotics,  and  radio  technology,  doctors  actually  can  use  such  a  device  as  part  of  the  practice  of  internal  medicine. 
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 Source:  Given  Imaging 
 Source:  Brookstone 

 Figure  2.  The  M2A  Pill  Given  Imaging  has  developed  a  set  of  optics  and 
 electronics  that  fit  into  a  tiny  package,  roughly  the  size  of  a  large  cold  capsule,  that  can  be  swallowed.  This 
 device,  sold  under  the  name  M2A  Pill  (see  Figure  2),  after  being  swallowed  makes  its  way  through  the 
 patients  digestive  system  naturally.  The  pill  uses  an  FCC-  approved  unlicensed  transmitter  to  send  images 
 to  a  digital  recorder  about  the  size  of  a  Walkman  worn  around  the  patients  waist.  The  images  record 
 the  capsules  journey,  and  the  data  captured  can  be  downloaded  onto  a  standard  computer  for  review  and  aid  in  the  patients  diagnosis.  The  pill  is  inexpensive  enough,  only  $450  each,  to  be 
 disposable,  after  a  single-  use.  35 
 Also  in  hospital  settings,  unlicensed  medical  telemetry  devices  are  used  to  transmit  patient  measurement  data  to  a  nearby  receiver,  permitting  patient  mobility  and  improved  comfort. 
 Medical  telemetry  devices  operate  on  TV  channels  7  -  13  (174    216  MHz)  and  TV  channels  14    46  (470    668  MHz).  Presently,  they  are  the  only  unlicensed  devices  permitted  to  operate  in 
 the  TV  broadcast  spectrum.  Typical  applications  include  heart,  blood  pressure  and  respiration  monitors.  The  use  of  these  devices  allows  increased  mobility  for  patients  early  in  their  recovery, 
 while  they  are  still  being  monitored  for  adverse  symptoms.  With  such  devices,  one  health  care  worker  can  monitor  several  patients  remotely,  thus  decreasing  health  care  costs.  Providing 
 patients  the  freedom  to  move  about  in  a  limited  area  while  being  continually  monitored  also  speeds  patient  recovery  times  and  shortens  lengths  of  stay. 

 Figure  3.  Grill  Alert  Talking  Remote  Thermometer 
 Not  all  unlicensed  wireless  telemetric  devices  are  for  scientific  and  medical  purposes,  though.  For  example,  a 

 wireless  thermometer  (see  Figure  3)  can  permit  a  barbeque  enthusiast  to  monitor  the  progress  of  his  roasting  meat  while 
 he  is  away  from  the  grill.  The  device  incorporates  two  parts,  a  transmitter  with  a  stainless  steel  probe  and  a  remote 
 monitor.  The  chef  inserts  the  probe  into  the  center  of  the  roast,  identifies  the  kind  of  meat,  and  indicates  how  he 
 wants  it  cooked.  When  the  temperature  in  the  probe  reaches  a  predetermined  level,  it  sends  a  signal  to  its  wireless 
 monitor  up  to  300  feet  away,  with  voice  prompts  reporting,  Almost  ready,  and,  Ready. 

 35  Rob  Stein,  Patients  Find  Technology  Easy  to  Swallow,  Washington  Post,  December  30,  2002,  at  A1. 
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 III.  The  Market  for  Unlicensed  Wireless  Devices  The  market  for  wireless  devices  (both  licensed  and  unlicensed)  straddles  several  broad 
 industries.  Because  the  uses  of  spectrum  are  so  varied,  one  must  look  at  a  diverse  set  of  manufacturers  and  distribution  channels. 

 One  thing  is  certain,  unlicensed  wireless  devices  have  become  pervasive,  reaching  nearly  every  household  in  the  US.  The  Consumer  Electronics  Association  estimates  that  there  is  an  installed 
 base  of  more  than  348.23  million  Part  15  consumer  electronics  devices;  that  is,  more  than  one  for  every  US  citizen. 

 Table  1.  Current  Installed  Base  of  Part  15  Devices 

 In  the  previous  section,  we  provided  a  general  overview  of  how  some  specific  unlicensed  devices  are  used.  This  section  offers  more  detail  by  looking  at  devices  by  submarket  or  product  type  in 
 an  effort  to  depict  relative  demand. 
 A.  Trends  in  Authorizations  of  Part  15  Devices 
 The  number  of  unlicensed  device  authorizations  issued  by  the  FCC  and  its  TCBs  can  be  an  indicator  of  market  trends.  36  Since  filing  an  application  represents  a  fair-  sized  commitment  of 

 time  and  financial  resources,  a  manufacturer  will  only  file  when  it  believes  that  it  can  successfully  market  a  new  device  or  make  improvements  on  an  existing  product.  The  greater  the 
 number  of  applications  filed  and  authorizations  granted,  the  greater  the  number  of  devices  likely  to  be  on  their  way  to  the  marketplace.  Though  not  a  pure  indication  of  success,  this  measure 
 seems  to  be  directionally  correct. 

 36  See  Section  II.  B.  2  for  our  discussion  on  how  Part  15  devices  are  authorized  under  the  FCCs  Rules. 

 Product  Penetration 
 Number  per 
 Households 
 Using 

 Total  Installed 
 Base 
 (in  millions) 
 Cordless  Phones  81.00%  1.5  130.01 

 Garage  Door  Openers  40.80%  1.29  56.26 
 Keyless  entry  systems  for  cars  26.50%  1.4  39.71 
 Remote  control  toys  19.50%  2.61  54.57 
 Home  security  systems  18.00%  1.1  21.21 
 Toy  walkie-  talkies  (not  FRS)  15.10%  1.85  29.81 
 Baby  monitors  10.50%  1.38  15.52 
 Wireless  Routers  N/  A  N/  A  1.14 

 Number  of  US  Households:  107  million 
 Source:  Consumer  Electronics  Association 
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 By  this  measure,  an  analysis  of  Part  15  authorizations  tells  a  story  of  continual  increase  in  unlicensed  operations.  As  demonstrated  in  Table  2,  general  low  power  devices  (including  spread 
 spectrum  devices)  represents  the  lions  share  of  authorizations,  while  U-  PCS  and  U-  NII  represent  a  much  smaller  percentage  of  authorizations.  Finally,  UWB,  which  was  authorized 
 only  last  year,  is  off  to  a  fast  start  with  9  devices  authorized. 
 In  the  five-  year  period  between  1998  and  2002,  the  FCC  issued  7,954  authorizations  for  unlicensed  devices.  The  number  of  authorizations  represents  an  increase  of  over  150% 
 compared  to  the  number  of  authorizations  granted  during  the  five  year  period  from  1993  to  1997,  when  only  4,998  authorizations  were  granted. 

 Table  2  Part  15  Intentional  Radiator  Authorizations  1993    2002 

 YEAR 
 General  Unlicensed 

 Devices  (Part  15C) 
 Unlicensed  PCS 

 (Part  15D) 
 U-  NII  (Part  15E)  UWB  (15F)  Total  Authorizations 

 1993  706  706  1994  914  914 
 1995  967  967  1996  1,  149  7  1,  156 
 1997  1,  244  10  1  1,  255  1998  1,  128  7  4  1,  139 
 1999  1,  188  8  9  1,  205  2000  1,  477  13  11  1,  501 
 2001  1,  664  2  45  1,  711  2002  2,  286  0  103  9  2,  398 
 Cumulative  Totals  12,  723  47  173  9  12,  952 
 Note  that  these  numbers  include  both  authorizations  for  new  devices  and  authorizations  for  changes  to 
 existing  devices.  The  vast  majority  is  original  equipment. 

 At  first  look,  U-  PCS  and  U-  NIIs  combined  total  of  220  authorizations  appears  rather  uninteresting  when  compared  to  the  general  low  power  and  spread  spectrum  device  total  of 
 12,723.  Yet  this  does  not  tell  complete  story.  While  the  major  growth  component  of  the  general  unlicensed  devices  categoryhas  been  spread  spectrum  devices,  the  demand  for  them  was  initially 
 slow  to  develop.  The  FCC  first  authorized  spread  spectrum  technology  for  use  in  Part  15  devices  in  1985,  yet  by  1990  it  was  only  authorizing  12  devices  per  year.  But,  as  the  need  to  deliver 
 more  data  economically  without  wires  increased,  manufacturers  saw  spread  spectrum  as  a  solution.  Inspired  largely  by  computer  networking  applications,  more  and  more  spread  spectrum 
 devices  were  developed.  As  we  see  in  Figure  4,  the  number  of  spread  spectrum  had  climbed  slowly  to  236  by  1998,  and  jumped  to  537  in  2001.  In  2002,  the  FCC  issued  928  such 
 authorizations. 
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 0 
 100 
 200 
 300 
 400 
 500 
 600 
 700 
 800 
 900 
 1,000 

 1990  1991  1992  1993  1994  1995  1996  1997  1998  1999  2000  2001  2002  Year 
 Annual 
 Authorizations 

 Spread  Spectrum  Source:  FCC 

 Figure  4.  Annual  Part  15  Spread  Spectrum  Device  Authorizations  (1990  -  2002) 

 Similarly,  U-  NII  authorizations  are  growing  and  are  likely  to  increase  in  importance.  As  shown  in  Figure  5,  U-  NII  device  authorizations  have  grown  from  7  to  103  per  year,  since  their 
 introduction  in  1996.  Between  1997  and  2002  the  average  annual  growth  rate  for  these  approvals  was  17%.  This  rate  is  comparable  to  the  current  growth  of  spread  spectrum  and,  in 
 fact,  greatly  exceeds  the  growth  rate  of  those  devices  in  their  first  5  years. 
 Figure  5.  Annual  U-  NII  and  U-  PCS  Authorizations  (1996-  2002) 

 U-  PCS 
 U-  NII 

 0 
 15 
 30 
 45 
 60 
 75 

 90 
 105 

 1996  1997  1998  1999  2000  2001  2002 
 Year 

 Annual 
 Authorizations 

 U-  PCS  U-  NII 
 Source:  FCC 
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 The  growth  of  U-  PCS  authorizations  has  been  characterized  by  fits  and  starts.  Many  observers  expected  that  U-  PCS  devices  would  consist  of  new  cordless  telephones,  local  area  networks,  and 
 other  kinds  of  short-  range  communications.  Authorizations  for  U-  PCS  devices  peaked  in  2000  and  plummeted  thereafter  (see  Figure  5).  This  trend  illustrates  the  cross  elasticity  of  unlicensed 
 spectrum.  The  lack  of  U-  PCS-  approved  devices  on  the  market  today  may  be  due  to  a  combination  of  the  service  limitations  placed  on  the  U-  PCS  bands  and  the  limited  amount  of 
 spectrum  available  in  the  band  to  support  voice  communications.  Many  of  the  applications  foreseen  for  the  U-  PCS  bands  are  now  being  supplied  using  the  spread  spectrum  and  U-  NII 
 bands.  The  2002  downturn  in  U-  PCS  authorizations  directly  corresponds  to  a  rise  in  spread  spectrum  and  U-  NII  devices  the  same  year.  We  observe  that  this  cross  elasticity  may  work  in 
 both  directions.  As  the  U-  NII  bands  become  more  heavily  used  and  congested,  it  was  inevitable  that  manufacturers  and  service  providers  would  file  petitions  to  relieve  the  current  restrictions  in 
 the  U-  PCS  bands.  37 
 Finally,  since  UWB  devices  were  only  permitted  under  the  rules  in  2002,  it  is  too  early  to  make  any  certain 
 conclusions  about  the  success  of  their  adoption.  However,  the  fact  that  9  authorizations  were  issued  (ground 
 penetrating  radar  and  through-  wall  viewing  applications)  in  the  first  11  months  is  an  encouraging  sign  of  growth. 
 By  comparison,  to  reach  this  level  of  annual  authorizations,  it  took  spread  spectrum  devices  5  years,  U-PCS 
 devices  5  years,  and  U-  NII  devices  4  years  from  the  time  when  each  was  initially  introduced.  These  early  UWB  authorizations  signal  a  strong  interest  by  manufacturers  in  the 
 technology.  Given  the  fact  that  UWB  voice  and  data  communication  devices  are  in  the  developmental  pipeline,  but  not  yet  authorized  by  the  Commission,  one  can  expect  that  the 
 number  of  authorizations  will  continue  to  rise  dramatically. 
 B.  Cordless  Phones 
 Cordless  phones  have  become  one  of  the  most  pervasive  uses  of  unlicensed  technology.  Cordless  phones  have  captured  the  lions  share  of  revenue  of  the  consumer  telecommunications 

 equipment  market.  Along  with  Wi-Fi,  they  are  among  the  most  important  segments  of  that  market.  38  As  such,  they  have  proven  to  be  both  a  leading  indicator  of  advances  in  technology 
 and  a  poster  child  for  overcrowding  in  the  bands  available  for  unlicensed  operation. 
 Major  manufacturers  of  cordless  phones  include: 
   Advance  American  Telephones 
   AT&  T 
   Sony 
   Southwestern  Bell 

 37  For  example,  refer  to  Footnote  14  supra.  Also,  see  petitions  for  rulemaking  filed  at  the  FCC  by  the  Wireless 
 Network  Information  Forum,  Inc.  (  WINforum),  (RM-  9498);  and  UTStarcom,  Inc.  (RM  -10024).  The  FCC  has  not  yet  acted  on  these  petitions. 

 38  2001  MultiMedia  Telecommunications  Review  and  Forecast,  Telecommunications  Industry  Association,  2001,.  at 
 127. 

 Time  to  reach  the  same  level  of  Ultra 
 Wide  Band  authorizations: 

 Spread  spectrum  5  years 
 U-  PCS  devices  5  years  U-  NII  devices  4  years 
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   Conair 
   GE    Northwestern  Bell 

   Siemens 

   Thompson  Consumer  Electronics 
   Uniden    Vtech 

   Panasonic 
 Sales  of  cordless  phones  now  exceed  those  of  their  corded  equivalents  both  in  the  number  of  units  sold  and  in  total  dollar  sales.  Surpassing  corded  phone  sales  in  1997,  cordless  phones  are 
 expected  to  tally  $1.653  billion  in  sales  in  2002.  39  Two  organizations,  Telecommunications  Industry  Association  (TIA)  and  the  Consumer  Electronic  Association  (CEA),  provide  estimates 
 of  the  sales  of  cordless  phones  in  the  US.  Though  their  individual  estimates  of  cordless  sales  vary,  they  both  indicate  strong  growth  over  the  past  decade  and  statistics  from  both  suggest  that 
 the  absolute  growth  rate  is  leveling  off  as  adoption  surpasses  80%. 
 Table  3.  Average  Sales  of  Price  and  Penetration  of  Cordless  Phones  1997-  2001 

 Sales  estimates  from  both  TIA  and  CEA  are  plotted  in  Figure  6.  The  TIA  forecasts  include  the  years  1997  through  2004,  while  the  CEA  statistics  cover  the  period  through  2001.  As  seen  in 
 Table  2,  the  Consumer  Electronics  Association  estimates  that  cordless  telephone  penetration  grew  from  68%  of  households  in  1997  to  81%  in  2001. 

 39  Letter  from  Michael  Petricone,  Vice  President,  Technology  Policy,  Consumer  Electronics  Association,  to  Alan 
 Scrime,  Chief,  Policy  and  Rules  Division,  Office  of  Engineering  and  Technology,  FCC,  ET  Docket  No.  82-  135,  September  30,  2002. 

 1997  1998  1999  2000  2001 
 Avg.  Price  $59.38  $55.82  $45.59  $37.25  $37.79 
 HH%  68.00%  73.00%  78.00%  80.00%  81.00% 

 Source:  Consumer  Electronics  Association  eBrain  Market  Research 
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 Figure  6.  Sales  of  Cordless  Phones  1997-  2004 
 These  estimates  vary  by  roughly  25%,  historically,  but  estimates  for  recent  years  vary  as  much  as  83%.  One  potential  source  of  the  variance  may  be  because  TIA  measures  sales  of  answering 
 machines  separately;  therefore  cordless  phones  with  integrated  telephone  answering  machines  may  be  tallied  differently. 

 C.  Wireless  LAN  and  Computer  Devices 
 One  widely  adopted  application  of  unlicensed  spectrum  involves  linking  computers  to  create  wireless  local  area  networks  (Wireless  LANs  or  W-  LANs).  Wireless  networking  has  been 

 described  not  as  the  killer  application,  but  as  the  killer  platform.  This  means  of  connectivity  supports  two  primary  applications:  1)  the  integration  of  computers  into  a  common  resource  pool 
 where  they  can  share  information  and  resources  and  2)  the  linking  of  peripheral  devices  such  as  printers,  wireless  mice,  PDAs,  and  other  consumer  electronics  such  as  audio  video  equipment  to 
 one  or  more  computers.  The  sales  of  W-  LAN  equipment  have  experienced  double-  digit  growth  since  2000,  representing  a  total  growth  of  over  150%,  40  and  W-  LAN  sales  are  expected  to  top  $2 
 billion  in  2002.  At  this  rate,  wireless  LAN  sales  will  eclipse  cordless  telephones  as  the  leading  revenue  generator  sometime  between  2002  and  2004. 

 40  See  generally  Spectrum  Policy  Task  Force  Report  at  54,  __  FCC  Rcd  __,  (November  2002)  (Spectrum  Policy 
 Task  Force  Report). 

 $2,099 
 $2,204 

 $2,384  $2,400  $2,418  $2,435 
 $2,450 

 $1,672 
 $1,307  $1,358 

 $2,181 
 $1,808  $1,745 

 28.2 
 31.3 

 40.1 
 43.3 
 45.3 

 47.4 
 49.5 
 51.6 

 35.1  35.9 
 31.3 
 28.2 

 39.7 

 $1,250 
 $1,450 
 $1,650 
 $1,850 
 $2,050 
 $2,250 
 $2,450 

 1997  1998  1999  2000  2001E  2002E  2003E  2004E 
 Sales 
 in 
 millions 

 25 
 30 
 35 
 40 
 45 
 50 
 55 

 Units 
 in 
 millions 

 Sales  (TIA)  Sales  (CEA)  Units  (TIA)  Units  (CEA)  Source:  CEA  &  TIA 
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 Because  they  are  more  like  consumer  electronics  and  other  computer  peripherals  than  telecommunications  devices,  wireless  networking  products  for  the  home  are  generally  sold 
 through  traditional  computer  and  consumer  electronics  distribution  channels.  And,  although  most  W-  LAN  equipment  is  currently  sold  as  an  aftermarket  addition,  W-  LAN  cards  are  forecast 
 to  be  integrated  as  components  in  about  30%  of  laptop  computers  by  2003.  41 
 Competition  between  W-  LAN  standards  to  obtain  dominance  in  use  in  commercial  products  has  been  fierce.  Among  the  more  popular  of  the  standards  is  the  Institute  of  Electrical  and  Electronic 
 Engineers  (IEEE)  suite  of  protocols  known  as  wireless  fidelity  or  Wi-  Fi.  42  Wi-  Fi  is  emerging  as  the  leader,  but,  as  explained  below,  not  all  unlicensed  wireless  networking  is  Wi-Fi-  based. 

 1.  Wi-  Fi,  Bluetooth,  and  Home  RF  Distinguished 
 Several  industry  standards  have  been  developed  by  manufacturers  of  devices  that  use  the  2.4  and 

 5.7  GHz  bands.  The  Wi-  Fi  suite  of  protocols  includes  IEEE  802.11b  and  802.11g  in  the  2.4  GHz 
 band,  and  IEEE  802.11a  in  the  5.7  GHz  band.  43  In  addition  to  Wi-  Fi,  there  are  several  widely  adopted 
 standards  including  Bluetooth  and  HomeRF.  While  Wi-  Fi  (with  the  exception  of  802.11a),  Bluetooth, 
 and  HomeRF  operate  in  2.4  GHz  band,  they  are  not  interoperable.  Each  has  strengths  and  weakness,  several  of  which  are  listed  below  in  Table  4,  best  suited  for  particular  applications.  44 
 Recently,  however,  the  consortium  that  promotes  HomeRF  ceased  operations.  45  Therefore,  it  is  unlikely  that  the  HomeRF  standard  will  continue  to  be  a  prime  choice  for  new  products,  leaving 
 this  segment  almost  exclusively  to  the  Wi-  Fi  family.  Sky  Dayton,  the  founder  of  Earthlink,  was  recently  quoted,  Wi-  Fi  will  be  built  into  everything.  Its  like  trying  to  imagine  all  the  uses  for 
 electricity  before  it  was  invented.  46 

 41  ARCchart,  73  percent  WLAN  Growth  in  2002,  Blueprint  Wi-  Fi,  September  26,  2002,  at  7. 
 42  The  IEEE  is  a  non-  profit  technical  professional  organization.  Among  other  activities,  the  organization  develops 
 operating  standards  for  communication  equipment.  The  IEEE  802.11  Working  Group,  in  particular,  develops  standards  for  wireless  local  area  networking  devices.  Wi-  Fi  is  a  trademark  owned  by  the  Wi-  Fi  Alliance,  formerly 

 the  Wireless  Ethernet  Compatibility  Alliance. 
 43  Formerly,  the  term  Wi-  Fi  referred  only  to  802.11b.  The  802.11a  standard  was  referred  to  as  Wi-  Fi5. 

 44  Several  semiconductor  companies  are  planning  to  introduce  802.11a  and  b  dual-  band  chipsets.  Matt  Lewis,  Two 
 Bands  or  just  one  band    that  is  the  question,  BluePrint  Wi-  Fi,  August  29,  2002,  at  1. 
 45  Richard  Shim,  HomeRF  Working  Group  Disbands,  CNET  News.  com,  January  7,  2003. 

 46  Sky  Dayton,  Wi-  Fi?  Why  Not?,  Wired,  September  10,  2002. 

 Wi-  Fi  will  be  built  into  everything.  Its  like  trying  to  imagine  all  the  uses 
 for  electricity  before  it  was  invented. 
 Sky  Dayton 
 Founder  of  Earthlink 
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 Table  4.  Performance  Metrics  for  SelectedWireless  Networking  Standards 
 System  Type  Channel  Bandwidth  Channel  Capacity  Typical  Data  Rate  to  Customer  Range 

 802.11b  22  MHz  (2.4  GHz  band)  11  Mbps  5.5  Mbps**  250 
 802.11a  40  MHz  (5.7  GHz  band)  54  Mbps  32  Mbps**  75 
 802.11g  40  MHz  (2.4  GHz  band)  54  Mbps  32  Mbps**  150 
 Bluetooth  1  MHz  (2.4  GHz  band)  1  Mbps  721  kbs**  30 
 HomeRF  1-  5  MHz  (2.4  GHz  band)  10  Mbps  ***  150 

 HomePlug  (802.11b)  4.  3    20.9  MHz  (power  line)  (2.4  GHz  band 
 wireless) 
 14  Mbps  11  Mbps  250  (wireless  link) 

 **  If  WEP  (Wireless  Equivalent  Privacy)  security  protocol  is  activated,  it  may  use  an  additional  10%  of  the  channel  capacity. 
 a.  Wi-  Fi 
 Adopted  in  1999,  the  802.11b  standard  provides  short-  range  (800  to  1200  feet  in  open  space  or  250  to  400  feet  in  an  enclosed  space)  47  wireless  connectivity.  48  It  is  by  far  the  most  widely 

 adopted  standard.  The  802.11a  (formerly  Wi-  Fi5)  specification,  offering  better  speed  but  more  limited  range,  was  adopted  in  1997  by  the  IEEE.  49  The  performance  and  speed  these  standards 
 can  provide  rivals  that  of10BaseT  wired  Ethernet  networks,  used  in  many  offices.  50 
 b.  Bluetooth 
 Bluetooth  is  a  short-  range  wireless  technology  that  allows  devices  to  interact  at  a  range  of  up  to  30  feet  with  a  maximum  transmission  speed  of  1  Mbps.  Bluetooth  is  named  for  10  th  Century 

 47  The  Spectrum  Analyzer  Volume  1,  Issue  1,  Federal  Communications  Commissions  Office  of  Engineering  and 
 Technology,  Summer  2001,  at  8. 
 48  John  Breedem,  II  and  Carlos  A.  Soto,  Detecting  a  Wireless  Network  Hub  is  only  Half  the  Battle,  Washington  Post, 
 October  10,  2002,  at  E8. 
 49  The  Spectrum  Analyzer,  Volume  1,  Issue  1,  Federal  Communications  Commissions  Office  of  Engineering  and 
 Technology,  Summer  2001,  at  7-  8. 
 50  Claims  of  802.11as  being  able  to  deliver  54  Mbps  and  consistent  performance  are  disputed  within  the  industry, 
 Communications  Daily,  December  9,  2002  at  4. 
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 Danish  King  who  united  the  nation  and  is  a  trademark  for  the  standard  promulgated  by  a  trade  association  called  the  Bluetooth  Special  Interest  Group  (SIG).  51  Bluetooth  was  initially 
 envisioned  as  a  cable  replacement  technology  and  is  primarily  used  to  connect  computer  devices  and  peripherals.  For  example,  a  mobile  phone  equipped  with  a  Bluetooth  chipset  can  be  used  to 
 exchange  information  such  as  telephone  number  lists  with  a  Bluetooth  enabled  laptop.  Similarly,  Bluetooth  can  be  used  to  link  a  desktop  PC  to  a  nearby  printer  without  need  for  unsightly  wires.  52 

 Bluetooth  is  now  gaining  acceptance  for  applications  other  than  cable  replacement.  For  instance,  Delphi  Corporation  recently  displayed  Bluetooth  technology  in  a  new  Saab  9-  3.  With  Bluetooth, 
 drivers  can  connect  a  wireless  headset  to  a  mobile  telephone  and  operate  more  safely  in  a  hands  free  mode,  or  connect  to  a  PDA  right  from  the  vehicle.  Bluetooth,  coupled  with  other  wireless 
 technologies,  is  also  expected  to  permit  a  driver  to  communicate  from  an  automobile  to  an  external  computer  or  even  a  home  networking  systems.  Accordingly,  a  driver  will  eventually  be 
 able  to  download  music,  for  instance,  from  a  home  network  and  enjoy  the  music  during  his  commute  to  work. 

 c.  HomeRF 
 HomeRF  was  designed  as  an  open  standard  to  enable  a  variety  of  devices  to  communicate  via  voice,  data,  or  streaming  media  within  the  confines  of  a  home  or  small  office.  HomeRF  delivers 

 performance  comparable  to  that  of  IEEE  802.11b  products;  a  range  of  approximately  150  feet  with  a  peak  bit  rate  of  10  Mbps.  Prior  to  the  demise  of  the  HomeRF  association,  announced  in 
 January  2003,  advancements  were  expected  to  improve  the  bit  rates  to  reach  20  Mbps  in  2003,  and  potentially  reach  100  Mbps  eventually. 

 d.  HomePlug 
 Broadband  over  Power  Line  (BPL)  is  now  being  used  in  some  households  to  connect  computers.  BPL  devices  function  by  using  a  houses  electrical  power  lines  as  a  transmission  medium  to 

 provide  high  speed  communications  capabilities  by  coupling  RF  energy  onto  the  power  line.  Because  most  homes  have  multiple  power  outlets  in  every  room,  it  is  easy  to  connect  multiple 
 devices  at  almost  any  location.  The  concept  of  powerline  networking  has  been  around  for  many  years.  However,  new  entrants  into  the  market  such  as  HomePlug  and  Current  Technologies  are 
 expected  to  spur  renewed  interest  in  the  technology. 

 51  The  Bluetooth  Special  Interest  Group  (Bluetooth  SIG)  is  a  trade  organization  which  promotes  the  development 
 and  marketing  of  Bluetooth  products.  Members  of  the  Bluetooth  SIG  include  3Com,  Agere,  Ericsson,  IBM,  Intel,  Microsoft,  Motorola,  Nokia,  Toshiba  and  hundreds  of  others.  Members  are  granted  a  royalty-  free  license  to  use 

 Bluetooth  wireless  technology  in  certain  products  listed  on  the  Bluetooth  qualified  products  list  (QPL).  Bluetooth  Qualification  Bodies  (BQBs)  authorize  products  to  be  on  the  list.  The  QPL  currently  contains  756  licensed  end 
 products,  subsystems,  components,  and  development  tools. 
 52  Gillian  Law,  Microsoft  takes  Bluetooth  to  the  desktop,  InfoWorld,  October  15,  2002, 
 http://  www.  infoworld.  com/  articles/  hn/  xml/  02/  10/  15/  021015hnmsblue.  xml?  s=  IDGNS  last  visited  October  15,  2002. 
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 e.  Contrasting  the  Standards  53 
 Each  standard  offers  unique  advantages  and  limitations.  One  tradeoff,  for  example,  is  power  consumption  versus  transmission  speed.  These  differences  are  displayed  in  Figure  7.  Two  other 

 significant  differences  are  cost  and  range. 
 Bluetooth  requires  little  power  but  offers  peak  speeds  of  1  Mbps.  In  contrast,  Wi-  Fi  offers  speeds  of  11  Mbps  but  needs  more  power,  and  802.11a  offers  speeds  of  54  Mbps  but  requires  a 
 significant  increase  in  power.  Power  consumption  is  a  key  factor  in  the  design  of  portable  devices  like  laptop  computers,  but  so  are  range  and  network  speed.  Bluetooth,  given  its  limited 
 range  and  speed  but  low  cost  and  frugal  power  consumption,  is  ideal  for  use  in  a  peripheral  device  like  a  wireless  mouse.  Wireless  mice  would  require  long  battery  life  but  would  not  need 
 to  communicate  large  amo  unts  of  data  to  function.  Looking  ahead,  Ultra-  WideBand  communication  devices  promise  speeds  up  to  100  Mbps  and  are  expected  to  subsist  on  very  low 
 power. 
 Figure  7.  Speed  vs.  Power  Consumption  for  Wireless  Networking  Protocols 

 Each  of  these  protocols  offers  different  trade  offs  in  terms  of  speed  versus  effective  range  as  well.  Table  4  shows  the  varying  performance  in  this  dimension  for  the  major  protocols.  Speed, 
 as  measured  by  the  effective  part  of  a  channels  capacity,  is  optimized  for  802.11g.  By  comparison,  802.11b  offers  much  greater  range,  but  at  a  lower  throughput  speed. 

 In  the  future,  the  choice  of  protocol  might  not  necessarily  be  an  either/  or  decision.  Increasing  flexibility  will  be  afforded  by  equipment  with  dual-  band  and  multi-  mode  capabilities,  having  the 
 built-  in  ability  to  change  depending  on  the  conditions.  Recently,  Netgear  and  Linksys  announced  that  they  will  start  to  ship  PC  network  interface  cards  that  support  both  2.4GHz 
 operation  for  802.11g  and  5GHz  operation  for  802.11a.  A  tri-  mode  802.11a/  b/  g  card  will  also  soon  be  available  from  Netgear  for  around  $157.  Netgears  802.11g  card  is  $79  and  its  dual-band 
 card  is  about  $109.  The  company  claims  the  card  will  support  64,  128,  and  152-  bit  WEP 
 53  Homeplug  is  not  included  in  this  analysis  because  its  networked  devices  are  plugged  into  power  outlets,  therefore 
 power  consumption  is  not  an  issue. 

 HomeRF 
 Speed 
 Power 
 Consumption  BlueTooth  802.11b  UWB  802.11a 

 Source:  FCC 
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 encryption  and  can  provide  up  to  108  Mbps  in  its  802.11a  Turbo.  Linksys  dual-  mode  card  is  around  $99  and  offers  regular  speeds  of  54Mbps  in  802.11a/  g,  or  11Mbps  fallback  in  802.11b. 
 These  products  have  yet  to  be  ratified  by  the  IEEE  for  802.11g  support  and  have  not  yet  received  FCC  approval.  These  technologies  would  select  protocols  which  are  the  best  for  a  given  use  in 
 any  given  moment. 

 f.  Emerging  Standards:  802.16  and  802.20 
 In  January  2003  the  IEEE  released  802.16a,  a  new  computer  ne  tworking  standard  which  it  claims  has  significant  improvements  over  current  generations  of  Wi-  Fi.  The  new  standard  will  offer  an 

 effective  range  of  several  miles,  compared  to  Wi-  Fis  roughly  300  feet.  In  addition,  802.16a  offers  greater  security,  has  the  ability  to  penetrate  walls,  and  can  carry  voice-  grade  telephone 
 calls.  This  new  standard  is  being  called  Wi-  Max  and  Wider-  Fi.  The  IEEE  is  also  working  another  standard  called  802.20  which  can  provide  a  connection  a  devices  in  a  car  or  a  trains 
 trave  ling  at  speeds  that  can  exceed  120  miles  an  hour.  Since  802.20  promises  mobile  connectivity  similar  to  a  cellular  network,  some  are  calling  it  Mobile-  Fi.  54  Nokia,  Proxim,  and 
 Ensemble  Communications  are  developing  802.16  devices.  Flarion  is  selling  equipment  using  the  802.20  standard.  It  is  clear  to  us  that  in  the  coming  months  and  years  wireless  networking 
 protocols  will  offer  ever-  increasing  speed  and  effective  range.  These  protocols  using  unlicensed  bands  are  likely  to  catch  up  with  and  may  eclipse  the  speeds,  ranges,  and  handoffs  of  cell  phone 
 networks. 
 Table  5.  Performance  Metrics  for  802.16  and  802.20  Standards 

 System  Type  Channel  Bandwidth  Channel  Capacity  Typical  Data  Rate  to  Customer  Range 
 802.16  (Wider-Fi)  20    50  MHz  100  Mbps  10  Mbps  Miles 

 802.20  (Mobile-  Fi)  N/  A  16  Mbps  6-  8  Mbps  Miles 

 2.  Wireless  Networking  Product  Sales 
 Estimates  of  wireless  network  products  sales  vary;  however,  they  all  indicate  rapid  growth  over  the  past  two  years  and  project  increasing 

 future  sale  volumes.  The  consensus  seems  to  be  that  worldwide  W-  LAN  sales,  including  Wi-  Fi  and  all  others,  range  between  $1.7  and 
 $2.0  billion  in  2002.  Of  that  market,  Goldman  Sachs  reports  that  sales  of  Wi-  Fi  alone  are  likely  to  top  $1.3  billion,  or  roughly  65-  76% 
 of  2002  sales.  The  Synergy  Research  Group  reported  that  the  Wireless  LAN  market  posted  its  eighth  consecutive  quarter  of  double-digit 
 growth  and  grew  over  150  percent  from  2000  on.  Synergy 

 54  Scott  Woolley,  Wider-  Fi,  Forbes,  April  14,  2003,  at  200.  http://  www.  forbes.  com/  forbes/  2003/  0414/  201.  html 

 In  2003,  sales  of  Wi-  Fi  are  likely  to  top  $1.3 
 billion.  At  this  of  growth 
 rate,  Wi-  Fi  sales  will  eclipse  cordless 

 telephones  in  revenue 
 between  2003  and  2004. 
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 33 
 estimates  that  5  million  Wireless  LAN  adapters  were  shipped  in  2001.  According  to  IDC  Frost  and  Sullivan,  2.4  million  units  of  either  HomeRF  or  Wi-  Fi  systems  were  sold  in  2000,  and 
 another  3.7  million  systems  were  sold  in  2001.  Cahners-  InStat/  MDR  expects  that  HomePlug  will  help  to  increase  sales  in  the  power  line  networking  market  from  under  $18  million  in  2001 
 to  nearly  $190  million  in  2002. 
 The  US  market  represents  more  than  half  the  estimated  world  market,  about  63%  of  2002  shipments.  Gartner  Dataquest  reports  that  worldwide  2002  W-  LAN  shipments  were  15.5  million 
 units,  a  73%  growth  over  2001.  Also  in  2002,  revenues  from  W-  LAN  shipments  will  increase  26%  to  $2.1  billion,  projected  to  rise  to  $2.8  billion  in  2003.  This  growth  rate  is  not  expected  to 
 taper  off  until  2007.  55  The  sale  of  W-  LAN  equipment  is  expected  to  grow  from  $1.1  billion  in  2000  to  $5.2  billion  in  2005.  56  Estimates  vary  as  to  which  market  segments  will  be  the  most 
 important  for  W-  LAN  sales.  As  can  be  seen  in  Figure  8,  IDC  is  projecting  the  enterprise  segment  to  comprise  the  lions  share  of  Wi-  Fi  sales.  This  contrasts  with  estimates  from  the 
 Synergy  Research  Group.  Although  the  two  sources  project  total  sales  which  are  very  similar  in  total  volume,  Synergy  expects  that  sales  in  the  SOHO/  residential  segment  will  represent  the 
 majority.  This  view  comports  with  what  is  happening  in  the  market  currently. 
 Figure  8.  Wi-  Fi  Equipment  revenue  forecast  by  business  segment  (in  billions) 

 While  sales  figures  can  illustrate  successful  marketing  strategies,  in  order  to  truly  understand  how  widely  the  technology  is  being  adopted,  it  is  also  helpful  to  look  at  the  actual  number  of 
 people  using  the  devices.  By  2003,  more  than  5.4  million  people  worldwide  are  expected  to  use  the  technology  regularly,  according  to  Gartner  Research.  Gartner  also  believes  that  more  than 
 560  million  Bluetooth-  enabled  devices  will  be  purchased  worldwide  by  2005.  57  The  number  of 
 55  ARCchart,  73  percent  WLAN  Growth  in  2002,  Blueprint  Wi-  Fi,  September  26,  2002  ,  at  6. 
 56  Jeff  Abramowitz,  Wireless  LANs    Poised  for  Untethered  Growth,  Mimeo,  2001.  Available  at 
 http://  www.  wlana.  org/  pdf/  wlana_  industry.  pdf,  last  visited  November  26,  2002. 
 57  Communications  Daily,  Telecom,  September  5,  2002. 

 $0.0 
 $0.5 
 $1.0 
 $1.5 
 $2.0 
 $2.5 
 $3.0 
 $3.5 
 $4.0 

 2000  2001  2002E  2003E  2004E  2005E  2006E 
 Enterprise  Home  Public  Access  Source:  IDC 
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 unlicensed  wireless  networks  is  expected  to  top  15,000  by  the  end  of  2003,  up  from  1,100  in  2001.  58  It  has  also  been  predicted  that  21  million  Americans  will  be  using  W-  LANs  by  2007. 
 IDC  Frost  and  Sullivan  predicts  an  installed  base  of  25  million  HomeRF  and  Wi-  Fi  systems  by  2004. 

 Given  the  foregoing  data,  it  is  evident  that  Wi-  Fi,  and  W-  LAN  equipment  sales  in  general,  are  experiencing  steady  increase.  In  the  end,  the  market  for  these  devices  may  be  limited  only  by  the 
 number  of  applications  that  are  developed  and  technical  problems  that  need  to  be  overcome. 
 There  are,  to  be  sure,  certain  issues  that  have  the  potential  to  keep  wireless  networking  from  reaching  its  full  potential  as  a  mass  market  product.  Most  notable  is  security.  The  sharpest 
 criticism  of  Wi-  Fi  and  Bluetooth  is  that  both  lack  sufficient  levels  of  encryption  to  prevent  the  eavesdropping  on  data  and  that  each  employs  only  rudimentary  means  to  block  access  by  would-be 
 hackers.  Implementing  security  features  adds  support  and  configuration  costs  for  both  end  users  and  product  developers.  Similarly,  it  makes  it  more  difficult  for  wireless  products  to 
 interoperate.  Gartner  Research  estimates  that  the  added  support  and  usage  costs  for  businesses  and  consumers  could  reach  $5.6  billion  per  year  (above  the  device  costs)  for  Bluetooth 
 technology  alone  by  2005.  59 
 Another  market  challenge  for  wireless  networks  is  whether  equipment  manufactures  can  produce  a  turn-  key  product  acceptable  for  the  mass  market.  60  At  present,  most  home  networks  require 
 both  a  significant  level  of  technical  sophistication  and  more  than  a  modest  amount  of  time  to  set-up  and  install.  Windows  XP,  the  next  generation  of  the  Microsoft  Windows  operating  system, 
 has  expanded  plug  and  play  support  for  Wi-  Fi  and  other  wireless  devices.  61  One  such  device  Microsoft  is  promoting  is  remote,  touch-  screen  monitors  called  Smart  Screens  which  allow  the 
 computer  to  be  used  from  remote  rooms  in  ones  home.  Ease  of  configuration  and  use,  however,  is  diametrically  opposed  to  the  trend  toward  greater  security.  The  easier  it  is  to  set  up,  the  easier 
 it  is  to  break  into. 
 Despite  early  successes,  a  major  shakeout  of  Wi-  Fi  equipment  manufacturers  is  possible  in  the  future.  Projections  suggest  that  there  may  be  room  for  as  many  as  6  or  7  manufacturers  of 
 wireless  computer  networking  equipment.  62  While  overall  revenue  projections  seem  impressive,  a  significant  share  of  this  revenue  will  be  directed  to  large,  public  companies,  for  which  revenues 
 from  Wi-  Fi  will  account  for  only  a  small  percentage  of  their  overall  total.  63  Since  this  may  be  a 
 58  Roger  O.  Crockett,  Heather  Green,  Andy  Reinhardt  and  Jay  Greene,  SPECIAL  REPORT  --  WIRELESS 
 INTERNET,  All  Net,  All  the  Time  High-  speed  connections,  just  about  anywhere:  Wi-  Fi  looks  like  a  communications 
 breakthrough,  Business  Week,  April  29,  2002  at  100. 

 59  Communications  Daily,  Telecom,  September  5,  2002. 

 60  Interview  with  Christopher  Fine,  Vice  President  and  Chief  Technology  Strategist,  High  Technology  Investment 
 Banking  Group,  Goldman,  Sachs  &  Company,  New  York,  Oct.  21,  2002. 
 61  ARCchart,  Microsoft  launches  802.11b  hardware,  BluePrint  Wi-  Fi,  September  26,  2002,  at  4. 

 62  ARCchart,  73  percent  WLAN  Growth  in  2002,  BluePrint  Wi-  Fi,  September  26,  2002,  at  7. 
 63  Christopher  Fine,  Watch  out  for  Wi-  F,  Goldman  Sachs,  September  26,  2002,  at  2. 
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 relatively  small  revenue  line,  these  companies  many  not  emphasize  W-  LAN  products  unless  they  expect  that  Wi-  Fi  products  will  provide  an  advantage  or  pull-  through  in  the  sales  of  other 
 products. 
 The  overall  economic  impact  the  expanding  market  for  unlicensed  devices  is  creating  as  a  pull-through  effect  both  upstream  and  downstream  in  the  supply  chain.  Upstream  impacts  are  being 
 felt  by  semiconductor  manufacturers  in  the  form  of  demand  for  chipsets.  Gartner  expects  the  market  for  wireless  RF  semiconductors  to  reach  $17.6  billion  in  2004,  based  on  an  average 
 annual  growth  rate  of  15.4  percent  from  $8.6  billion  since  1999.  Mobile  communications  devices  dominate  this  market  with  cellular/  PCS  handsets  representing  the  bulk  of  the  total 
 revenue  for  these  chipsets;  however,  the  W-  LAN  semiconductor  market  is  growing  and  will  be  strong  for  a  select  few  manufacturers.  64 

 64  Gartner,  Inc  Wireless  Applications  RF  Semiconductor  Forecast:  1999  through  2004:  January  29,  2001: 
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 2000  2001  %  growth 
 Intersil  132.9  122.4  -8% 
 %  of  total  73%  58% 
 Agere  14.6  33.2  127% 
 %  of  total  8%  16% 
 Philips  7.5  17.1  128% 
 %  of  total  4%  8% 
 Cisco  9.0  12.0  33% 
 %  of  total  5%  6% 
 Proxim  13.4  10.5  -22% 
 %  of  total  7%  5% 
 Other  5.1  16.0  214% 
 %  of  total  3%  8% 
 Total  182.5  211.2  16%  Source:  International  Data  Corportion. 

 Figure  9.  W-  LAN  Chipset  Sales  by  Percentage  Revenues  for  W-  LAN 
 chipsets  are  expected  to  explode  from  $331  million 
 in  2001  to  $1.16  billion  in  2006.  65  Of  this,  the  Wi-  Fi 
 chipset  segment  alone  will  grow  five  fold,  from  $199 
 million  in  2001  to  $960  million  in  2006.  66  In  fact, 
 unit  sales  of  Wi-  Fi  chipsets  nearly  doubled  from  8.5 
 million  in  2001  to  approximately  15  million  in 
 2002.  67  IDC  estimates  the  current  market  more  conservatively  at  $211  million,  with  Wi-  Fi  chips  representing  more  than  90%  of  sales. 

 Table  6.  Wireless  LAN  semiconductor  Market  Share 
 Intersil  and  Agere  remain  the  dominant  suppliers  of  semiconductors  with  embedded 
 RF  capabilities.  Intersil  led  with  58%  of  market  for  specialized  Wi-  Fi  and  HomeRF 
 chips  in  2001  68  and  W-  LAN  sales  represent  one  third  of  Intersils  revenues.  Agere  is  the 
 second  player  with  approximately  30%  of  the  market.  69 

 Driven  by  decreasing  power,  size,  and  cost,  prices  are  likely  to  continue  to  fall.  As  a 
 result  50%  of  laptop  computers  are  expected  to  be  equipped  with  wireless  networking  by 
 2003,  with  a  projection  of  90%  by  2007.  70  Intel  is  currently  incorporating  Wi-  Fi 
 capabilities  directly  into  its  next  generation 

 65  ARCchart,  73  percent  WLAN  Growth  in  2002,  Blueprint  Wi-  Fi,  September  26,  2002,  at  10. 
 66  Christopher  Fine,  Watch  out  for  Wi-  Fi,  Goldman  Sachs,  September  26,  2002,  at  13. 
 67  ARCchart,  73  percent  WLAN  Growth  in  2002,  Blueprint  Wi-  Fi,  September  26,  2002,  at  10. 
 68  Christopher  Fine,  Watch  out  for  Wi-  Fi,  Goldman  Sachs,  September  26,  2002,  at  13. 
 69  ARCchart,  73  percent  WLAN  Growth  in  2002,  Blueprint  Wi-  Fi,  September  26,  2002,  at  10. 
 70  ARCchart,  73  percent  WLAN  Growth  in  2002,  Blueprint  Wi-  Fi,  September  26,  2002,  at  7. 

 Source:  International  Data  Corporation. 
 2000 
 Other 
 8% 

 802.11x 
 92% 

 2001 
 Other 
 6% 

 802.11x 
 94% 
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 computer  processors.  However,  a  delay  in  the  introduction  of  its  dual-  mode  chipsets  will  give  other  manufacturers  time  to  get  their  products  to  market.  71 
 Growth  in  the  sales  of  W-  LAN  equipment  is  likely  to  have  positive  downstream  implications  on  the  demand  for  complimentary  products  and  services  like  laptop  computers  and  broadband 
 connectivity,  wireless  devices,  operating  systems,  and  content.  72  Wi-  Fi  coupled  with  broadband  is  generating  a  pro-  cyclical  adoption  pattern.  Both  cable  and  DSL  modems  are  being  sold 
 already  equipped  for  Wi-  Fi.  In  fact,  Goldman  Sachs  estimates  that  a  10%  penetration  rate  of  Wi-Fi  in  residential  and  SOHO  broadband  connections  will  yield  an  equipment  market  of  between 
 $3  to  $4  billion,  by  2005.  According  to  its  analysis,  the  effect  of  the  penetration  rate  rising  to  15%  will  produce  an  equipment  market  of  $5  to  $6  billion.  73  Given  the  recent  trends  Goldman 
 Sachs  believes  that  a  penetration  rate  of  15%  is  certainly  achievable  within  this  time  horizon.  The  5%  change  in  penetration  represents  is  a  huge  increase  in  market  size.  This  will  of  course 
 have  added  impact  on  chipset  manufactures  and  other  supply  chain  participants. 
 3.  Hotspot  Service  Providers 
 One  of  the  most  prevalent  uses  of  wireless  networking  equipment  is  to  provide  connectivity  to  the  internet.  In  response  to  this  need,  new  service  providers  are  beginning  to  offer  portable 

 internet  access  for  laptops  and  handheld  computers  in  airports,  hotels,  cafes  and  other  public  places.  Five  different  hotspot  strategies  have  been  identified: 

 1.  Individuals  or  companies  who  install  in  commercial  places  (e.  g.,  Cometa  and  WiSE  Technologies) 
 2.  Aggregators  who  combine  local  installations  to  provide  a  national  foot  print  (e.  g.,  Boingo) 
 3.  Major  wireless  service  provider  offerings  (e.  g.,  Cingular,  T-  Mobile,  and  Verizon)  4.  Computer  and  electronic  manufacturer  consortia  (e.  g.,  Cisco,  Intel,  and  IBM) 
 5.  Grass  roots  individuals  offering  free  or  low-  cost  access  (e.  g.,  hobbyists  and  enthusiasts).  74 

 We  have  not  observed  many  pure-  play  Wi-  Fi  companies;  rather  companies  are  pursuing  a  combination  of  these  strategies  are  generally  being  used  in.  We  discuss  these  companies  in  this 
 Section. 
 When  a  network  operator  chooses  to  install  hotpots  in  partnership  with  another  commercial  entity,  the  offering  takes  advantage  of  the  special  expertise  derived  from  each  provider  in  the 
 partnership.  One  of  the  early  movers  in  this  arena  is  T-  Mobile,  a  wireless  service  provider.  T- 
 71  ARCchart,  Wi-  Fi  Predictions  for  2003,  Blueprint  Wi-  Fi, 
 http://  www.  arcchart.  com/  mailing/  newsletter/  mo_  130203.  htm  (February  13,  2003). 
 72  Christopher  Fine,  Watch  out  for  Wi-  Fi,  Goldman  Sachs,  September  26,  2002,  at  4. 

 73  Christopher  Fine,  Watch  out  for  Wi-  Fi,  Goldman  Sachs,  September  26,  2002,  at  9.  Even  a  10%  penetration  could 
 be  considered  low,  easily  achieving  as  high  as  30    50%.  Equipment  sales  included  only  one  access  point  per 
 connection,  and  does  not  include  public  hotspots  or  enterprise  networks.  Id. 

 74  Wiley  Rein  &  Fielding,  Wi-  Fi    802.11:  The  Shape  of  Things  to  Come,  Mimeo,  July  2002,  at  7-  16. 
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 Mobile  made  headlines  when  it  purchased  a  company  with  contracts  to  place  wireless  hotspots  in  Starbucks  coffee  shops.  Starbucks  is  offering  three  subscription  plans:  a  $29.99  per  month 
 unlimited  plan  with  a  12  month  commitment  ;  a  month  to  month  unlimited  plan  for  $39.99;  and  metered  plan  for  $0.10  per  minute  with  a  60  minute  per  connection  minimum.  An  organization 
 like  Starbucks,  clearly  not  a  network  operator,  finds  it  more  cost  effective  to  outsource  Internet  access  to  an  organization  that  specializes  in  that  providing  network  services.  Starbucks 
 anticipates  that  having  the  internet  access  available  for  its  customers  will  help  sell  a  greater  number  of  $3  cups  of  coffee.  As  a  PCS  operator,  T-  Mobile  can  take  advantage  of  its  existing 
 mobile  service  infrastructure  to  leverage  the  build-  out  of  more  geographically  dispersed  Wi-  Fi  services.  While  T-  Mobile  does  not  actually  sell  access  to  unlicensed  spectrum,  as  it  does  with  its 
 cellular  service,  it  can  offer  connectivity  to  the  internet  on  a  subscription  basis  using  unlicensed  spectrum  as  its  springboard. 

 Another  new  carrier,  Boingo,  founded  by  Sky  Dayton  of  Earthlink  with  funding  from  Sprint  PCS,  is  acting  as  an  aggregator,  creating  an  affiliate  program  for  local  commercial  hotspot 
 providers.  Offering  economies  of  scale  by  providing  a  franchise  arrangement,  content,  and  centralized  billing,  Boingo  is  a  subscriptio  n  service  with  three  pricing  plans:  1)  single  use:  pay-per- 
 use  priced  at  $7.95  per  connection  for  up  to  24  hours  in  a  single  venue;  2)  medium  use:  $24.95  per  month  for  10  connections  with  an  added  charge  of  $4.95  per  additional  connection,; 
 and  3)  unlimited  use:  for  $74.95  per  month. 
 AT&  T,  IBM,  and  Intel  have  also  recently  announced  the  formation  of  a  joint  venture,  Cometa  Networks,  promising  to  create  a  nationwide  network  of  more  than  20,000  Wi-  Fi  access  points  by 
 the  end  of  2004.  Cometa  will  avoid  the  retail  market  and  offer  private  and  corporate  internet  connectivity  on  a  wholesale  basis.  The  companys  business  plan  is  to  contract  with  various  types 
 of  locations  such  as  hotels,  stores,  and  restaurants  to  set  up  hotspots  on  their  premises.  Cometa  will  handle  issues  such  as  end  user  billing,  security,  and  connectivity.  Cometas  target  customers 
 include  companies  that  are  already  ISPs  and  those  that  provide  cellular  service,  wireline  telephone  facilities,  DSL  access,  or  cable  modem  service  in  the  top  50-  100  U.  S.  metropolitan 
 markets.  These  companies  will  retail  Cometas  Wi-  Fi  service  to  their  exisiting  customers.  Cometa  will  collect  subscription  fees  and  in  return  will  compensate  each  company  where  it 
 installs  a  Wi-  Fi  hotspot  for  the  internet  traffic  ge  nerated  at  its  location. 
 McDonalds  Restaurants  announced  it  has  selected  Cometa  Networks  to  provide  Wi-  Fi  service  as  it  begins  to  test  market  wireless  internet  service  in  three  U.  S.  cities.  McDonalds  recently  began 
 offering  one  hour  of  free  Wi-Fi  access  to  anyone  who  buys  a  combination  meal  in  one  of  ten  stores  in  Manhattan.  The  company  claims  that  it  will  extend  the  service  to  300  stores  in  New 
 York,  Chicago,  and  a  to-  be-  determined  California  town  before  the  years  end. 
 The  McDonalds-  style  model  of  complementary  Wi-  Fi  is  proliferating  and  may  present  a  serious  competitive  threat  to  cellular 
 carriers  efforts  to  enter  this  market.  However,  complementary  Wi-  Fi  may,  in  fact,  prove  antithetical  to  McDonalds  fast  food 
 business.  McDonalds  service  operations  are  engineered  to  get  customers  in  and  out  of  the  door;  the  more  and  faster,  the  better.  McDonalds  stores  are  also  designed  with  hard  plastic  seats  and 
 other  fixtures  aimed  at  getting  the  customer  out  of  the  door  in  less  than  20  minutes.  And  while 

 Would  you  like  Wi-  Fries 
 with  that? 
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 most  of  the  McDonalds-  going-  public  is  unlikely  to  bring  a  laptop  to  the  drive-  thru,  those  who  frequent  cybercafs  might.  A  store  like  Starbucks  is  very  different  from  McDonalds  in  that  it 
 wants  the  customer  to  linger  and  make  repeat  purchases. 
 Wi-  Fi  is  not  just  going  to  be  in  airports.  In  fact,  it  may  be  in  the  airplanes.  Boeing  has  announced  a  new  venture  called  Connexion,  which  will  provide 
 Wi-  Fi  access  on  major  long-  haul  airline  routes.  Connexion  is  launching  trials  with  Lufthansa,  British  Airways,  and  SAS.  The 
 backhaul  connection  to  the  plane  will  be  as  fast  as  5Mbps  downstream  and  750Mbps  upstream.  Despite  your  Captains  admonition  not  to  use  wireless 
 devices  in  flight,  you  may  still  be  able  to  check  your  email  on  your  way  to  Europe.  75 
 To  compete  effectively,  these  providers  must  find  ways  to  differentiate  their  products.  By  allowing  just  any  device  to  attach  to  its  network,  a  provider  can  attract  more  users  but 
 simultaneously  runs  the  risk  of  turning  wireless  internet  into  a  free-  for-  all.  Unlike  the  cellular  network  paradigm  in  which  only  approved  phones  are  allowed  to  connect  to  a  network,  Wi-  Fi 
 service  currently  have  far  less  control  over  the  terminal  equipment  they  hope  to  support.  In  an  open,  competitive  environment,  there  are  virtually  no  impediments  to  the  user  switching  to 
 another  provider  since  his  device  can  also  be  used  on  other  (presumably  competing  or  free)  76  networks.  To  attempt  to  differentiate  themselves,  carriers  may  find  some  means  of  offering 
 terminal  equipment  that  is  not  completely  interoperable  with  the  networks  and  features  of  other  carriers,  or  at  the  very  least,  equipment  designed  to  attach  to  its  primary  providers  network 
 first.  77 
 4.  Wireless  Internet  Service  Providers 
 Wireless  access  to  the  Internet  is  no  longer  limited  to  hotspots.  A  growing  number  of  wireless  Internet  service  providers  (WISPs)  are  emerging  with  the  intention  of  providing  an  alternative 

 high-  speed  connection  into  the  home  or  office.  The  unlicensed  spectrum  is  ideally  suited  to  bridge  the  gap  especially  in  rural  areas  where  cable  or  DSL  services  have  been  slow  to  arrive. 

 Similar  to  Cometa  is  WiSE  Technologies.  WiSE  is  a  Washington,  DC  area  firm  which  bills  itself  as  a  wireless  ISP  (WISP).  The  company  installs  and  operates  hotspots  for  third  parties 
 such  as  stores,  offices,  public  locations,  and  multi-  tenant  residential  housing.  WiSE  bills  the  subscriber  directly  then  pays  the  third  party  (i.  e.,  the  coffee  shop  owner  or  landlord)  a 
 commission  from  the  revenue  generated  by  its  subscribers  using  that  particular  hotspot. 

 75  ARCchart,  Wi-  Fi  Predictions  for  2003,  Blueprint  Wi-  Fi. 
 http://  www.  arcchart.  com/  mailing/  newsletter/  mo_  130203.  htm  (February  13,  2003). 
 76  Homebrew  Wi-  Fi  enthusiasts  search  for  hotspot  access  points  in  a  particular  neighborhood  using  a  laptop  and 
 mobile  detection  gear.  This  is  called  war-  sniffing  allows  them  to  create  a  map  of  where  they  might  gain  free 
 internet  access  using  other  peoples  W-  LAN  and  connections. 

 77  See  generally,  Eli  M.  Noam,  The  Next  Frontier  for  Openness:  Wireless  Communications,  Proceedings  of  the  2001 

 Telecom  Policy  Research  Conference,  Alexandria,  VA.  See  also,  Eli  M.  Noam,  Opening  the  Walled  Airwave,  in  R.  Entman,  ed.,  TELECOMMUNICATIONS  COMPETITION  IN  A  CONSOLIDATING  MARKETPLACE,  35-  55,  (The  Aspen 

 Institute  2002). 

 Coffee,  Tea,  or  Wi-  Fi?  Hotspots  are  not  just  for 
 airports  anymore... 
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 SkyPilot  Network,  Inc.  is  yet  another  company  organized  to  provide  fixed  wireless  broadband  access  for  residential  use.  The  networks  backbone  operates  in  the  5  GHz  U-  NII  band  and  the 
 companys  product  SkyPilot  NeighborNet  is  a  mesh  network  mounted  on  rooftops.  The  network  employs  the  802.11a  protocol  as  a  backbone  to  connect  its  roof-  mounted  nodes  and  802.11b  to 
 provide  connectivity  to  network  devices.  The  company,  still  in  its  development  stage,  has  not  deployed  commercially  but  intends  to  sell  its  service  through  existing  ISPs.  SkyPilot, 
 headquartered  in  Belmont,  California  and  founded  in  2000,  received  its  second  round  of  $24.4  million  financing  in  December  2001  from  Mobius  Venture  Capital  (the  lead  investor),  AOL 
 Time  Warner  Ventures,  Softbank  Asia  Infrastructure  Fund,  L.  P.,  Invesco  Private  Capital,  Selby  Venture  Partners,  Palo  Alto  Investors  and  Nexit  Ventures. 

 WISPs  even  have  a  trade  organization,  Part-  15.  org,  formed  in  2002.  The  organization  acts  as  an  educational  and  support  resource  for  emerging  and  established  WISPs.  The  organization  offers 
 certification  courses  for  WISP  professionals  designed  to  provide  technical  background  and  hands-  on  experience.  Part-  15.  org  conducts  conferences  twice  a  year  to  provide  WISPs  with 
 learning  and  networking  opportunities.  Part-  15.  org  maintains  a  WISP  locator  on  its  website.  78 
 5.  Carrier  Class  Equipment  Providers 
 Although  W-  LAN  equipment  for  residential  use  has  garnered  much  attention  in  the  press,  the  emerging  market  for  carrier  class  equipment  will  be  equally,  if  not  more  important.  The  carrier 

 class  equipment  necessary  to  provide  retail  service  to  multiple  customers  in  locations  such  as  airports,  Starbucks  and  McDonalds  will  be  very  different  from  the  equipment  used  by  private 
 individuals  in  their  homes.  Many  of  the  companies  developing  and  marketing  unlicensed  equipment  for  carriers  are  startups.  As  such,  they  may  be  subject  to  the  woes  of  the  dotcom 
 collapse  such  as  limited  access  to  capital  and  lack  of  financially  viable  customers  for  their  middleware.  We  highlight  a  few  of  these  firms  below. 

 ArrayComm,  Inc.  is  developing  technology  that  employs  adaptive  spatial  processing  antennas.  Its  division,  IntelliCell  Products  Group  is  developing  and  licensing  these  technologies  to  wirele  ss 
 system  OEMs.  The  companys  antenna  is  designed  to  focus  RF  emissions  directly  to  each  active  user  in  an  effort  to  avoid  interference  with  other  users.  This  innovative  technique  should  permit 
 efficiency  of  spectrum  use  and  re-  use  by  creating  unique  spatial  channels. 
 Flarion,  another  fledgling  company,  offers  both  a  wide  area  network  product  and  a  device-  based  technology  intended  to  permit  connectivity  to  other  Wi-  Fi  equipped  local  area  networks. 
 Flarions  main  infrastructure  product,  a  base  station  called  RadioRouter,  can  be  installed  as  an  overlay  to  a  major  carriers  existing  cell  sites  and  offers  an  interface  to  a  standard  router  in  an  IP 
 network.  Using  PCMIA  modems,  also  provided  by  Flarion  for  use  in  laptops  and  PDAs,  users  can  be  connected  to  an  IP  network  through  the  Flarion  base  station.  Flarion  also  plans  to  sell  its 
 chipsets  and  license  its  technology  to  OEMs. 
 Malibu  Networks  is  organized  to  offer  wireless  broadband  systems  to  service  providers.  It  recently  introduced  a  product  called  the  Malibu  AirMAX  System  to  provide  point-  to-  multipoint 
 operation  in  the  2.4  GHz  and  5  GHz  bands.  Malibu  distributes  AirMAX  through  a  variety  of 
 78  http://  www.  part  -15.  org/  maps/  WISPSearch.  asp 
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 value  added  resellers,  stocking  distributors,  and  network  system  integrators  generally  focused  on  developing  world  markets  in  regions  such  as  Asia,  India,  South  America,  and  Africa.  Malibu  has 
 also  engaged  a  number  of  distributors  in  North  America  to  market  and  distribute  the  AirMAX  product  family  in  rural  areas  where  wire-  line  technology  for  broadband  access  might  be  cost 
 prohibitive 
 MeshNetworks  offers  technologies  for  W-  LAN,  fixed  and  mobile  broadband  wireless  networks,  and  telemetry.  One  advantage  MeshNetworks  touts  is  that  its  network  infrastructure  is  towerless 
 and  can  be  deployed  on  streetlights,  billboards,  and  buildings.  These  systems  are  IP-  based,  peer-to-  peer,  ad  hoc  networks.  The  companys  MeshLAN  product  employs  the  802.11b  protocol. 
 MeshNetworks  claims  that  its  routing  technologies  can  be  used  with  802.11a,  802.11g,  Ultra  Wideband,  WCDMA,  and  OFDM.  MeshNetworks,  founded  in  January  2000  and  supported  by 
 more  than  $27  million  in  funding  from  private  investors,  plans  to  market  its  chipsets,  software,  and  product  reference  designs  to  OEMs,  system  integrators,  and  network  operators. 

 Vivato  is  an  infrastructure  manufacturer  which  offers  a  line  of  products  it  calls  Wi-  Fi  switches  geared  for  enterprises  and  network  service  providers,  marketed  under  the  brand  name 
 PacketSteering.  Its  Wi-  Fi  switch  is  similar  to  the  switch  architecture  for  Ethernet,  allowing  it  to  be  scaled  through  a  bus  network  architecture.  Vivatos  switches  use  phased-  array  radio  antennas 
 to  create  highly  directed,  narrow  beams  of  Wi-  Fi  transmissions.  These  beams  can  be  pointed  at  the  desired  client  device,  reducing  interference  and  enabling  simultaneous  Wi-  Fi  transmissions. 
 Vivato  was  founded  in  December  2000  with  $2.5  million  in  seed  funding  from  Leapfrog  Ventures,  and  in  March  2002  completed  a  $20  million  Series  B  funding  round  led  by  U.  S. 
 Venture  Partners  and  Walden  International.  In  June  2002,  the  company  completed  a  $3  million  debt-  funding  round  led  by  Silicon  Valley  Bank  and  GATX. 

 D.  Radio  Frequency  IDs  (RFID) 
 Radio  frequency  identification  systems,  used  for  a  variety  of  monitoring  and  tracking  applications  in  logistics,  provide  significant  benefits  to  the  companies  that  use  them.  Global 

 shipments  of  RFID  products  reached  nearly  $900  million  in  2000. 
 1.  Standards 
 The  lack  of  standards  has,  to  date,  inhibited  the  growth  potential  for  RFID  systems,  but,  in  May  2000,  the  International  Standards  Organization  (ISO)  created  the  ISO/  IEC  15693-  2  standard  for 

 contactless  cards  and  RFID  smart  labels  that  operate  in  the  13.56  MHz  band.  This  standard,  sponsored  by  Texas  Instruments  and  Philips  Semiconductor,  governs  the  way  data  is  exchanged 
 between  an  RFID  tag  and  its  reader.  There  are  several  other  existing  and  evolving  RFID  standards  including  the  following: 

   ISO  11784/  11785  (Animal  Identification  RFID  Standard); 
   ISO  ANSI/  NCITS  T6  256  -  1999  (Item  Management  RFID  Standard);    ISO/  IEC  15693-  2  (13.56  MHz  Vicinity  Cards  and  Smart  Labels  RFID  Standard); 

   ISO  18000  series  of  standards  (air  interface  protocol); 
   GTAG  (On-  going  RFID  Global  Tag  Initiative);    Consumer  Products  Manufacturers  Association  (CPMA)  Consumer  Good  ID  Proposal 

 (Ongoing  RFID  Standard  Initiative);  and 
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   The  MIT  Auto-  ID  Centers  on-  going  RFID  standards  initiatives. 
 Since  radio  spectrum  is  allocated  and  regulated  by  numerous  different  agencies  around  the  world,  organizations  like  the  International  Standards  Organization  (ISO)  promulgate  standards 
 for  RFID  applications.  These  standards  help  to  harmonize  technologies  to  operate  on  the  same  frequencies  and  ensure  that  information  such  as  secure  identifications  can  be  read  across  devices 
 by  different  manufacturers.  The  standards  bodies  also  wo  rk  with  RFID  manufacturers  and  others  to  choose  specific  frequenc  ies  on  which  to  standardize  due  to  the  properties  such  as  range  and 
 robustness  the  specific  application  must  have.  79  For  example,  the  Auto-  ID  Center  is  a  non-  profit  collaboration  between  industry  and  academia  to  develop  an  internet-  like  infrastructure  for 
 tracking  goods  globally  through  the  use  of  RFID  tags.  Firms  that  utilize  less  popular  standards  may  face  short-  term  problems,  but  with  the  widespread  adoption  of  more  recent  standards,  the 
 industry  is  poised  to  grow. 
 2.  Products  and  Sales 
 RFID  systems,  now  becoming  commonplace  in  retail  markets  around  the  world,  are  supplied  by  market  leaders  such  as  HID  Corporation  (formerly  a  subsidiary  of  Siemens),  Texas  Instruments, 

 and  Philips.  Venture  Development  Corporation  estimates  shipments  of  RFID  systems  have  increased  from  $900  million  in  2000  80  at  a  rate  of  approximately  16%  annually  reaching  $1.2 
 billion  by  the  end  of  the  year  2002  and  will  reach  $2.7  billion  in  2005.  81  Of  the  world  market  in  2000,  the  Americas  accounted  for  approximately  48%,  or  $426.6  million.  Much  of  this  growth  is 
 derived  from  traditional,  established  product  lines.  82 
 Typical  RFID  Applications  include: 

   Access  Control 
   Air  transport  baggage  control    Animal  Tracking 

   Asset  Management    Point-  of-  Sale  Applications 
   Replacing  Barcodes  on  Products 
   Payment  Method    Supply  Chain  Management 

   Transportation  Applications    Vehicle  Immobilizers 
   Currency  Counterfeit  Prevention 

   Document  Protection 
   Brand  Protection  for  Luxury  Goods    Tires 

   Sports  Timing    Customer  identification  and  marketing. 
   Prepaid  metering 
   Id  cards    Vending  Phone  Cards 

   Toll  Roads    Medical  Information 

 79  Josef  Schuermann,  Information  technology    Radio  frequency  identification  (RFID)  and  the  world  of  radio 
 regulations,  ISO  BULLETIN,  May  2000.  http://  www.  iso.  org/  iso/  en/  commcentre/  pdf/  Radio0005.  pdf 
 80  David  Krebs  and  Michael  J.  Liard,  An  Executive  White  Paper  on:  Global  Markets  in  Radio  Frequency 

 Identification,  Venture  Development  Corporation,  May  2001,  at  1. 
 81  Communications  Daily,  Telecom,  September  5,  2002. 

 82  David  Krebs  and  Michael  J.  Liard,  An  Executive  White  Paper  on:  Global  Markets  in  Radio  Frequency 
 Identification,  Venture  Development  Corporation,  May  2001,  at  2. 
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 Figure  10.  Global  Shipments  of  RFID  Systems  in  2000  (in  millions) 
 In  many  stores,  RFID  tags  are  attached  to  merchandise  and  used  as  part  of  a  theft  prevention 

 system.  This  can  help  retailers  combat  the  growing  amount  of  inventory  lost  each  year.  This  lost 
 amounted  to  $31.3  billion  in  2002.  83  Tags  provide  cost  savings  that  are  immediately  recognizable  to 
 retailers  and,  because  the  tags  are  becoming  increasingly  disposable,  they  generate  a  stable 
 revenue  stream  for  RFID  manufacturers.  RFID  provides  distinct  advantages  over  laser-  read  bar 
 codes.  Bar  code  labels  are  not  as  durable  and  weatherproof  as  RFID  chip  tags.  In  addition,  an 
 RFID  can  hold  up  to  64  times  more  information  and  tags  can  also  be  read/  write  capable.  84  In  contrast,  bar  codes  contain  little  more  than  an  identification  number,  must  be  positioned  properly 
 under  a  scanner  to  be  read,  and  any  further  critical  information  must  then  be  retrieved  from  an  external  database  or  a  server.  85 

 3.  Applications  and  Uses 
 The  range  of  RFID  systems  is  limited,  roughly  a  couple  of  feet;  however,  in  certain  applications  such  as  those  within  a  factory,  the  range  can  extend  to  several  feet.  Since  there  is  no  contact 

 between  the  RFID  tag  and  reader  there  is  less  wear  and  tear,  lowering  maintenance  and  replacement  costs.  RFID  tags  are  still  comparatively  costly  at  just  less  than  30  cents  each  (still 
 more  than  bar  codes  which  are  about  a  penny).  86  However,  RFID  tags  which  cost  a  nickel  are  on  the  horizon  and  may  eventually  fall  below  a  penny  in  cost.  87 

 In  one  of  the  more  interesting  applications  of  RFID  technology,  shaving  product  manufacturer  Gillette,  retailer  Wal-  Mart,  and  the  British  supermarket  chain,  Tesco,  plan  to  experiment  with 
 specially  designed  shelves  equipped  with  RFID  readers  for  the  purpose  of  tracking  inventory.  Gillette  products  on  these  shelves  will  contain  inexpensive  RFID  chips  costing  about  15  cents 
 each.  As  supplies  diminish,  the  shelf  scanner  will  automatically  alert  the  manager  responsible  for  re-  stocking.  Eventually,  this  system  may  be  enhanced  to  automatically  re-  order  supplies, 
 ensuring  continuously  available  shelf  stock.  Procter  &  Gamble  is  expected  to  conduct  a  similar  test  with  some  of  its  products.  Given  the  success  of  such  endeavors,  its  not  hard  to  foresee  the 
 day  when  a  shopper  will  be  able  to  simply  place  all  desired  products  in  a  shopping  cart  and  walk 
 83  Claudia  H.  Deutsch  and  Barnaby  J.  Feder,  A  Radio  Chip  in  Every  Consumer  Product,  New  York  Times,  February 
 25,  2003,  at  C1. 
 84  Gene  Bylinsky,  Hot  New  Technologies  For  American  Factories  Isnt  it  obvious  by  now?,  Fortune,  June  26,  2000 

 85  Gene  Bylinsky,  Hot  New  Technologies  For  American  Factories  Isnt  it  obvious  by  now?,  Fortune,  June  26,  2000. 
 86  Gene  Bylinsky,  Hot  New  Technologies  For  American  Factories  Isnt  it  obvious  by  now?,  Fortune,  June  26,  2000. 
 87  Breakthrough  on  1-  Cent  RFID  Tag,  RFID  Journal,  December  2,  2002.  http://  216.121.131.129/  article/  view/  273 

 Software 
 $44.6 
 5% 

 Services 
 $190.0 
 21% 

 Readers 
 $206.5 
 23% 

 Transponders 
 $456.8  51% 

 Source:  VDC 
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 directly  out  of  the  store  without  stopping  at  a  cash  register.  An  RFID  reader-  enabled  shopping  cart  will  track  all  of  the  purchases,  read  the  shoppers  credit  card,  and  complete  the  transaction, 
 all  without  human  intervention. 
 4.  Manufacturers 
 One  of  the  leading  manufacturers  of  RFID  systems  is  the  HID  Corporation.  HIDs  wide  ranging  product  lines  include  systems  for  applications  such  as  electronic  locks,  biometric  readers,  alarms, 

 time  &  attendance,  special  application  haza  rdous  location  &  keypad  readers,  secure  PC  log-  on  and  network  security,  and  access  control  for  off-  line  systems.  Philips  Semiconductors, 
 headquartered  in  Eindhoven,  The  Netherlands,  is  also  a  leading  manufacture  of  chips  used  in  RFIDs  and  other  unlicensed  wireless  devices.  In  the  third  quarter  2001,  Philips  semiconductor 
 segment  revenues  were  8%  higher  than  the  same  quarter  in  2000,  but  12%  lower  sequentially. 
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 IV.  Potential  Regulatory  Issues  In  this  section,  we  discuss  the  FCCs  efforts  to  modernize  its  spectrum  policy  and  examine  the 
 implications  for  unlicensed  devices.  In  doing  so,  we  identify  some  of  the  potential  regulatory  issues  unlicensed  devices  face  and  assess  some  possible  applications  of  the  Spectrum  Policy 
 Task  Forces  recommendations  to  unlicensed  spectrum.  We  also  suggest  some  of  the  unintended  consequences  of  proposed  regulatory  changes.  Based  on  our  observations  and  projections  in  the 
 foregoing  sections  we  consider  the  impact  of  new  technologies  on  the  existing  policy  and  ways  to  provide  incentives  to  encourage  more  efficient  uses  of  spectrum.  It  is  beyond  the  scope  of  this 
 paper  to  resolve  any  of  the  issues  raised  here.  Many  could  be  subject  for  proposed  future  studies.  We  welcome  comments  on  the  value  of  such  studies. 

 A.  Overview 
 In  Section  II.  B.  2,  we  reviewed  the  FCCs  current  initiative  to  review,  improve,  and  modernize  policy  for  the  spectrum  under  its  jurisdiction.  The  FCCs  Spectrum  Policy  Task  Force,  formed 

 in  June  2002,  undertook  a  critical  review  and  its  central  recommendation  for  modernization  is  that  the  Commission  make  a  transition  from  the  current  command-  and-  control  approach  of 
 spectrum  regulation  to  a  more  flexible,  market-  based  approach.  While  this  review  focused  primarily  on  licensed  services,  which  represent  the  majority  of  spectrum  use,  the  report  also 
 provided  an  analysis  of  the  regulation  of  unlicensed  devices.  Unlicensed  devices  have  gained  a  foothold  as  an  important  use  for  spectrum  and,  as  we  have  shown  above,  the  market  for  these 
 devices,  particularly  those  which  are  related  to  computer  networking,  is  prospering. 
 There  is  the  ever-  growing  need  to  better  accommodate  new  technical  solutions  and  to  better  allocate  frequencies.  Some  experts  foresee  a  need  to  migrate  to  unused  or  even  occupied 
 portions  of  the  spectrum  in  order  to  accommodate  the  broadening  need  for  wireless  connectivity.  The  future  success  of  unlicensed  operation  will  hinge  in  part  on  how  the  FCC  manages  such 
 future  migration.  Potential  solutions  include  modifying  current  service  rules  to  promote  more  efficient  use,  allowing  unlicensed  devices  to  operate  as  an  underlay  in  bands  that  are  currently 
 allocated  to  existing  licensed  services,  and  allocating  more  spectrum  for  unlicensed  operation.  88 
 The  Task  Force  recognized  that  unlicensed  devices  will  continue  to  provide  great  benefit  both  to  their  users  and  the  world  economy.  Yet,  this  burgeoning  growth  raises  questions  concerning 
 how  to  regulate  these  devices  to  ensure  that  they  reach  their  full  potential.  Competing  demands  will  require  careful  planning  and  management  to  maximize  value  for  all  services,  licensed  and 
 unlicensed. 
 B.  Interference  Concerns  for  Unlicensed  Devices 
 At  the  heart  of  all  spectrum  concerns  lies  the  question  of  interference.  A  certain  amount  of  interference  between  devices  is  acceptable;  however,  beyond  a  certain  limit  interference  can  be 

 88  An  argument  can  be  made  that  the  FCCs  exclusive  use  licensing  structure  represents  an  inefficient  use  of 
 available  spectrum.  It  is  important  to  point  out  that  even  though  bands  are  reserved  for  a  specific  use,  all  channels  within  that  band  may  not  be  licensed  or  in  use  in  a  given  geographic  area.  For  example,  all  of  the  available 

 televis  ion  and  radio  broadcast  frequencies  will  never  be  occupied  at  the  same  time. 
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 considered  harmful  and,  unless  locally  correctable,  may  require  some  form  of  external  intervention.  The  Task  Force  recognized  that  a  better  construct  for  this  limit  would  prove 
 advantageous  for  unlicensed  devices. 
 Interference  which  may  be  intolerable  in  one  service  might  be  perfectly  acceptable  in  another.  In  essence,  interference  imposes  a  cost  for  the  user  who  must  protect  himself,  but  for  certain  low- 
 cost  unlicensed  devices,  the  burden  imposed  by  interference  may  be  considered  trivial.  For  example,  while  interference  that  causes  excessive  break-  ups  or  dropped  calls  would  be 
 considered  unacceptable  by  the  average  cell  phone  user,  a  walkie-  talkie  user,  who  pays  only  a  pittance  for  the  device  and  pays  no  monthly  fees,  may  be  willing  to  accept  that  interference. 

 Another  analogy  is  that  of  the  automobile.  The  system  of  roads  in  the  United  States  is  open  to  common  access  by  all.  However,  since  not  every  driver  can  use  the  road  at  once,  some  drivers 
 may  be  required  to  wait  in  line  sometimes.  In  densely  populated  areas  such  as  cities  and  at  times  like  rush  hour,  the  road  system  becomes  so  congested  that  users  experience  delays.  In  contrast, 
 in  more  rural  areas  there  are  fewer  cars  and  thus  less  congestion.  All  drivers  intuitively  understand  that  when  traveling  in  a  city  at  rush  hour,  one  is  likely  to  experience  traffic. 
 Similarly,  users  of  unlicensed  spectrum  may  grudgingly  be  willing  to  tolerate  rush  hour  congestion  in  densely  populated  areas  or  times  when  usage  is  high. 

 This  congestion  is  one  economic  means  of  rationing  the  resource  when  it  becomes  scare.  In  the  wireless  systems  that  existed  prior  to  the  formal  regulation/  licensing,  radio  systems  could  not 
 tolerate  such  interference  and  congestion.  Entry  restrictions  and  other  technical  regulations  were  required  for  rationing  the  spectrum.  An  ever-  increasing  fraction  of  todays  radio  applications 
 have  ranges  measured  in  yards  rather  than  miles.  As  radio  ranges  become  smaller,  more  devices  can  be  used  in  any  given  area  without  ill-  effect.  As  usage  patterns  evolve,  a  better  definition  of 
 what  constitutes  interference  may  be  necessary.  In  refining  such  a  definition,  a  compromise  may  not  fit  all  users  in  all  areas.  In  more  densely  populated  areas,  spectrum  users  may  be  expected  to 
 tolerate  some  congestion  before  it  is  considered  harmful  interference.  At  the  same  time,  because  congestion  may  not  be  a  problem  in  rural  areas,  it  would  be  unfair  to  impose  the  same 
 restrictions  for  rural  users  that  city  users  incur. 
 This  may  temporarily  lessen  the  justification  for  technical  regulation.  Eventually,  however,  users  will  inevitably  place  rival  demands  on  the  network  requiring  a  novel  technical  resolution,  a 
 pricing  system,  or  some  other  means  to  meter  competing  uses  of  the  network.  In  the  long-  run,  we  would  still  like  to  maximize  spectrum  use  efficiency  and  find  new  ways  to  distribute 
 competing  uses.  In  the  automobile  analogy,  this  might  translate  to  smaller  cars,  carpooling,  or  toll  roads. 

 C.  Avoiding  Interference 
 1.  Receiver  Solution 
 Currently,  licensees  in  many  services  are  granted  the  right  to  operate  free  from  harmful  interference.  Therefore,  there  is  little  incentive  for  these  users  to  require  that  their  receivers  be 
 any  more  sophisticated  than  required  in  order  to  tolerate  the  amount  of  interference  present  in  the 
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 desired  band.  Theoretically,  receivers  of  this  sort  are  cheaper  to  manufacture  and  thus  more  economical  for  the  licensee  to  purchase.  The  hidden  cost  in  this  scenario  is  that  few,  if  any, 
 others  can  make  simultaneous  use  of  this  valuable  commodity  known  as  spectrum. 
 Recognizing  this  phenomenon,  the  Spectrum  Policy  Task  Force  sought  comment  on  development  of  an  interference  temperature  89  metric  which  would  permit  the  management  of 
 spectrum  by  establishing  a  threshold  on  the  noise  environment  in  which  receivers  would  be  required  to  operate.  With  interference  temperature  as  the  cap  on  potential  interfering  emissions, 
 presumably  more  devices  could  share  a  given  band.  In  newer  receivers  we  can  expect  that  these  thresholds  wo  uld  be  raised.  By  raising  the  minimum  level  of  tolerance  of  incumbent  receivers, 
 the  interference-  temperature  metric  actually  encourages  manufacturers  to  permit  more  efficient  use  of  associated  bands. 

 The  interference  temperature,  if  implemented  by  the  Commission,  can  be  complemented  by  the  use  of  radio  devices  that  have  a  certain  amount  of  built-  in  smarts.    For  example,  unlicensed 
 devices  could  employ  frequency  agile,  intelligent  radios  capable  of  identifying  unused  or  underused  spectrum,  adjust  their  power  level,  or  in  real  time  bid  for  the  exclusive  right  to 
 broadcast  before  emitting  any  RF  energy  into  the  band.  In  this  way,  the  interference  temperature  in  any  particular  geographical  area  emission  band  could  be  dynamically  self-  regulated  by  the 
 spectrum  users.  However,  this  concept  has  its  detractors.  Because  unlicensed  devices  derive  much  of  their  benefit  from  being  inexpensive,  small,  and  designed  for  a  particular  use,  one  could 
 argue  that  including  such  smart  technology  will  add  significant  cost,  thereby  reducing  the  attractiveness  to  consumers.  Another  perceived  weakness  of  the  smart  radio  model  is  that,  in  the 
 time  such  a  devices  electronics  spend  looking  for  so-  called  whitespace,    it  may  have  to  reduce  its  power  so  much  or  change  frequencies  so  often,  that  its  signal  may  not  be  detected  by  another 
 nearby  smart  receiver. 
 The  above  makes  the  point  that  the  introduction  of  interference  temperature  as  a  concept  must  be  handled  carefully.  The  Spectrum  Policy  Task  Force  concedes  that  studying  the  feasibility  of 
 implementing  interference  temperature  would  be  time-  consuming  and  expensive.  However,  it  believes  that  the  benefits  of  undertaking  the  task  would  be  well  worth  the  effort  expended. 

 89  The  interference-  temperature  or  noise-  temperature  concept  can  be  considered  as  the  background  emissions  in 
 a  particular  band.  It  is  effectively  a  measure  of  the  pollution  of  the  electromagnetic  spectrum  by  all  devices  operating  in  that  band.  Once  a  certain  threshold  has  been  reached,  interference  will  begin  to  occur  to  licensed  users. 
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 2.  Spectrum  Solution 
 There  is  concern  that,  with  increased  interest  in  and  competing  use  of  spectrum,  the  ability  for  unlicensed  devices  to  effectively  share  spectrum  may  eventually  be  exhausted.  In  the  end,  the 
 question  whether  to  make  more  unlicensed  spectrum  available  will  depend  on  its  marginal  social  benefit  when  compared  to  the  benefit  of  allocating  the  spectrum  to  licensed  uses. 

 The  FCC  has  already  started  to  address  this  question.  A  subcommittee  of  the  Spectrum  Policy  Task  Force,  the  Unlicensed  Devices  and  Experimental  Licensing  Working  Group  (UEWG), 
 found  that  it  is  not  at  present  practical  to  develop  estimates  of  the  optimal  amount  of  spectrum  that  should  be  provided  for  unlicensed  operations;  however,  it  appears  that  additional  spectrum  is 
 needed. 
 The  Spectrum  Policy  Task  Force  sought  comment  from  the  industry  about  whether  additional  spectrum  should  be  set  aside  for  unlicensed  use.  In  response  to  its  July  2002  Public  Notice 
 seeking  comments  on  a  number  of  issues  regarding  spectrum  regulation,  90  more  than  200  comments  were  filed.  Commenters  generally  expressed  support  for  the  allocation  of  additional 
 unlicensed  spectrum.  For  example,  Microsoft  urged  the  FCC  to  allocate  additional  spectrum  below  2  GHz  and  at  5  GHz  for  unlicensed  broadband  uses.  It  argued  that  such  spectrum  could 
 be  used  to  supplement  cable  and  DSL  services  and  could  jump-  start  the  creation  of  competitive  wireless  broadband  networks  in  the  U.  S.  Similar  support  for  additional  unlicensed  spectrum  was 
 expressed  by  Cingular,  Cisco  Systems,  Inc.,  the  Consumer  Federation  of  America,  Ericsson,  Information  Technology  Industry  Council,  Motorola,  Proxim,  Rural  Telecommunications  Group, 
 Wireless  Ethernet  Compatibility  Alliance  and  others.  In  their  joint  reply  comments,  the  New  America  Foundation,  Consumers  Union,  et  al,  state  that  there  is  tremendous  support  in  the  record 
 for  the  allocation  of  additional  frequency  bands  of  spectrum  for  unlicensed  use,  particularly  to  facilitate  broadband  wireless  networking. 

 Based  on  the  comments  filed  in  response  to  the  Public  Notice,  it  is  generally  perceived  that  unlicensed  operation  has  been  very  successful  in  allowing  the  rapid  introduction  of  new 
 technologies  and  that  adding  bands  in  which  devices  may  operate  without  a  license  would  create  more  such  opportunities.  However,  there  was  a  general  lack  of  specific  recommendations  on 
 how  the  FCC  should  create  such  unlicensed  bands  and  what  priority  they  should  be  given  relative  to  other  spectrum  requests. 

 The  relocation  of  existing  users  may  be  essential  to  increasing  the  amount  of  spectrum  available  for  unlicensed  use.  What  is  often  said  of  real  estate  is  also  true  for  spectrum  -  they  are  not 
 making  any  more  of  it.  In  order  for  the  FCC  to  make  more  spectrum  available  for  unlicensed  use,  it  may  have  to  resolve  such  scarcity  by  requiring  additional  relocation  of  incumbents  of 

 90  See  Spectrum  Policy  Task  Force  Seeks  Public  Comment  on  Issues  Related  to  Commissions  Spectrum  Policies, 
 ET  Docket  No.  02-  135,  DA  02-  1311  (seeking,  among  other  issues,  public  comment  regarding  policy  changes  that  would  useful  in  resolving  anticipated  congestion  in  the  bands  available  for  unlicensed  operation)  (released  June  6, 

 2002). 
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 currently  used  bands.  The  FCC  would  then  need  to  set  operating  parameters  for  the  newly  cleared  bands.  Such  parameters  could  be  as  simple  as  setting  maximum  permissible  bandwidth 
 and  power  limits.  Alternatively,  the  FCC,  or  an  FCC-  appointed  spectrum  coordinator  could  develop  a  more  complex  spectrum  sharing  etiquette  to  ensure  equitable  access  to  the  spectrum. 

 The  Spectrum  Policy  Task  Force  drew  similar  conclusions  in  its  November  15,  2002  final  report.  91  Specifically,  the  report  suggests  that  the  FCC  create  more  spectrum  opportunities  for 
 unlicensed  devices  by:  (1)  permitting  unlicensed  use  of  spectrum  occupied  by  existing  services,  (2)  use  the  interference  temperature  concept  to  permit  unlicensed  devices  to  underlay  the  signals 
 of  existing  services,  and  (3)  create  new  unlicensed  bands  by  band  clearing.  However,  relocation  does  not  necessarily  require  wholesale  clearing  of  the  new  band.  Perhaps  the  FCC 
 could  allocate  additional  spectrum  for  unlicensed  use  through  an  overlay  authorization.  Under  this  scheme,  the  FCC  could  issue  technical  rules  to  accommodate  spectrum  sharing  between 
 incumbent  users  and  unlicensed  devices.  Alternatively,  licensees  could  be  allowed  to  charge  an  interested  party,  including  unlicensed  operators,  an  access  charge  for  use  of  a  portion  of  its 
 allotted  spectrum. 
 In  the  end,  it  may  be  an  act  of  Congress  that  makes  more  unlicensed  spectrum  available.  On  January  14  2003,  Senators  George  Allen  and  Barbara  Boxer  introduced  a  bill  entitled  the 
 Jumpstart  Broadband  Act.  92  This  proposed  legislation,  if  signed  into  law,  would  direct  the  FCC  to  allocate  no  less  than  an  additional  255  MHz  of  contiguous  spectrum  in  the  5  GHz  band  to 
 unlicensed  devices  for  use  in  broadband  connections.  It  would  also  direct  the  FCC  to  establish  rules  to  minimize  interference  among  unlicensed  devices  and  with  Department  of  Defense 
 systems  operating  in  those  bands.  Under  the  bill,  the  NTIA  would  be  required  to  establish  interference  protection  such  unlicensed  uses  could  underlay  incumbent  Federal  government 
 agency  users  allowing  them  to  continue  to  use  those  bands. 

 91  See  http://  hraunfoss.  fcc.  gov/  edocs_  public/  attachmatch/  DOC-  228542A1.  pdf 
 92  A  Bill  to  Require  the  Federal  Communication  Commission  to  Allocate  Additional  Spectrum  for  Unlicensed  Use 
 by  Wireless  Broadband  Devices,  and  for  other  purposes,  S.  159,  108  th  Cong.,  (2003). 
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 V.  Summary  Applications  spawned  by  unlicensed  technology  hold  great  promise  for  the  American  people. 
 Today,  millions  of  unlicensed  devices  are  in  operation.  They  have  grown  to  fill  a  role  as  an  enabler  of  important  business  and  personal  communication  needs.  Ironically,  this  explosion  of 
 services  and  providers  was  largely  unanticipated  when  the  devices  were  first  authorized.  For  example,  the  FCC  realized  that  that  the  band  in  which  industrial,  scientific,  and  medical  (  ISM) 
 equipment  operated  represented  prime  real  estate  for  unlicensed  operation.  93  Because  ISM  equipment  is  permitted  to  operate  in  these  bands  with  no  limits  on  radiated  emission,  the  bands 
 may  be  considered  hostile  territory  for  any  non-  ISM  equipment.  However,  one  need  only  look  at  Wi-  Fi  to  appreciate  how  even  this  junk  spectrum  can  be  utilized  with  great  success  on  an 
 unlicensed  basis. 
 It  is  flexibility  which  gives  unlicensed  devices  continuing  promise.  We  believe  that  technologies  versatile  enough  to  be  used  in  devices  ranging  from  lifesaving  heart  monitors  to  steak  monitors 
 for  a  barbeque  will  continue  to  permeate  our  markets  and  spur  growing  sales  volumes.  Unlicensed  devices  will  continue  to  offer  benefits  where  they  can  provide  applications  that  are 
 not  achievable  with  wires  or  where  such  devices  can  tolerate  operating  in  an  unprotected  environment.  In  supervising  existing  unlicensed  operation  or  designating  new  bands  for  such 
 devices,  the  FCCs  rules  should  be  as  clear  as  practicable,  strictly  enforced,  and  maximize  utility.  One  driver  of  unlicensed  spectrums  success  has  been  its  comparatively  low  barriers  to  entry.  In 
 promulgating  rules  to  encourage  more  efficient  use  of  spectrum  or  to  allocate  spectrum  for  unlicensed  use  the  FCC  must  be  mindful  of  balancing  competing  interests,  and  protecting  against 
 harmful  interference  while  it  retains  the  low  entry  barriers  that  have  proven  so  successful. 
 Given  this  growth,  unlicensed  wireless  devices  present  a  challenge  to  the  current  system  of  communications  networks,  their  economics,  and  regulation.  However,  without  a  well-  considered 
 and  forward-  looking  approach  to  policy  reform,  much  the  benefit  and  promise  of  unlicensed  devices  may  be  delayed,  or  unrealized.  Therefore,  the  FCC  must  continue  to  review,  reconsider 
 and  evolve  its  regulatory  treatment  of  unlicensed  devices. 
 Considering  the  complexity  of  issues  involved  (technological,  financial,  political,  economic,  and  social)  and  the  need  to  advance  technologies  in  the  public  interest,  necessity,  and  convenience, 
 this  paper  has  only  begun  to  address  these  issues.  We  believe  that  in  addition  to  advancing  effective  policy  reform,  the  FCC  should  encourage  the  industries  involved  to  find  technologies 
 and  to  market  solutions  for  problems  such  as  interference. 
 93  Equipment  such  as  industrial  driers,  microwave  ovens,  and  magnetic  resonance  (MRI)  and  ultrasonic  medical 
 equipment  are  classified  as  Industrial,  Scientific,  and  Medical  (ISM)  equipment  under  Part  18  of  the  FCC  rules.  These  devices  produce  rf  energy  to  perform  diagnostic,  imaging,  heating,  or  other  work  with  the  exception  of 

 communications. 
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 Appendix  A.  The  Technology  of  Unlicensed  Wireless  Devices 
 Initially,  radio  transmitters  were  designed  to  broadcast  at  a  reasonably  high  power  over  a  relatively  narrow  band.  With  these  higher  power  levels,  only  a  limited  number  of  devices  could 
 use  the  available  spectrum  because  nearby  devices  operating  on  the  same  frequency  alternately  amplify  and  cancel  nearby  transmissions.  The  net  result  is  sporadic  or  unreliable 
 communications  for  all  users. 
 Today,  unlicensed  devices  use  conventional  methods  of  modulation  of  carrier  waves  such  as  AM  or  FM  or  simple  digital  techniques  to  convey  information.  Beyond  these  conventional 
 techniques,  devices  also  utilize  sophisticated  multiple  xing  arrangements  to  effectively  increase  the  efficient  use  of  available  bandwidth  and  permit  more  users  to  communicate  simultaneously  in 
 a  particular  band.  The  multiplexing  technique  used  in  a  transmitter  must  be  duplicated  in  the  receiver  to  enable  detection  and  decoding  of  the  appropriate  signal.  Advances  in 
 communications  technology  have  continuously  improved  these  techniques  making  it  possible  to  support  more  and  more  simultaneous  users.  Today,  the  Part  15  rules  accommodate  a  wide 
 variety  of  unlicensed  intentional  radiators  using  a  number  of  different  technologies  in  various  bands.  95  A  few  of  the  more  interesting  modulation  techniques  permitted  under  Part  15  are  listed 
 below 
 Spread  Spectrum:  Direct  sequence  spread  spectrum  is  the  most  widely  used  type  of  spread  spectrum  system.  It  is  a  digital  modulation  technique  achieved  by  modulating  a  narrow  band 
 radio  frequency  carrier  with  a  high  speed  spreading  code  sequence.  The  spreading  code  spreads  the  narrow  band  signal  over  a  wider  band  of  spectrum.  Because  the  total  power  of  the  original 
 signal  is  now  spread  over  a  much  broader  bandwidth,  the  power  level  at  any  given  frequency  is  very  low.  This  feature  allows  direct  sequence  spread  spectrum  systems  to  operate  in  the 
 presence  of  narrow  band  systems  without  interfering.  Conversely,  interference  from  a  narrow  band  waveform  has  a  limited  effect  on  a  spread  spectrum  signal. 

 Frequency  hopping  spread  spectrum  is  a  form  of  signal  spreading  in  which  the  frequency  of  the  transmitted  signal  "hops"  from  channel  to  channel.  This  occurs  many  times  a  second  in 
 accordance  with  a  pseudo-  random  list  of  channels.  The  receiver  hops  in  strict  conjunction  with  the  transmitter,  thereby  collecting  all  data  transmitted.  The  amount  of  time  the  signal  is  present 
 on  any  channel,  called  the  dwell  time,  is  usually  very  short,  commonly  less  than  10  milliseconds.  This  avoids  interference  both  to  and  from  conventional  users.  If  interference  is  being  received 
 on  a  particular  hopping  channel  the  effect  is  minimized  because  the  channel  is  only  in  service  for  a  very  short  period  before  the  transmitter  hops  to  a  different  channel. 

 New  Digital  Transmission  Systems:  New  digital  transmission  technologies  have  been  developed  that  have  spectrum  occupancy  characteristics  similar  to  direct  sequence  spread 
 spectrum  systems.  The  Commission  permits  devices  using  this  technology  to  operate  under  the 
 95  We  note  that  although  these  are  regulatory  classifications  within  the  scope  of  Part  15,  the  underlying  principles 
 and  technologies  are  sometimes  used  in  both  licensed  and  unlicensed  applications.  For  example,  spread  spectrum  technologies  are  used  widely  in  cellular  communications. 
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 same  rules  formerly  reserved  for  spread  spectrum  operation.  One  such  digital  technology  is  orthogonal  frequency  division  multiplexing  (OFDM).  OFDM  offers  several  access  and  signal 
 processing  benefits  not  available  in  other  modulation  schemes,  and  allows  wireless  networks  to  gain  high  efficiency  from  relatively  small  bandwidths.  OFDM  is  a  modulation  scheme  that 
 divides  the  information  data  in  a  digital  signal  between  large  numbers  of  closely  spaced  RF  carriers.  The  frequencies  of  the  transmitted  carriers  are  arranged  in  a  precise  mathematical 
 relationship  such  that  the  sidebands  of  the  individual  carriers  overlap  and  the  signals  are  received  without  adjacent  channel  interference.  The  802.11a  and  802.11g  protocols  incorporate  OFDM  in 
 order  to  achieve  data  rates  more  than  twice  those  of  wireless  computer  networks  using  the  802.11b  protocol.  96 

 Ultra-  Wide  Band:  UWB,  a  technology  which  was  just  recently  approved  by  the  FCC  for  a  number  of  communications  and  sensing  applications,  97  is  a  signaling  method  which  relies  on 
 short  pulses  that  create  extremely  wide  bandwidths,  2  GHz  or  more  depending  on  system  design.  UWB  is  similar  to  spread  spectrum  in  that  the  signal  is  spread  across  such  a  wide  bandwidth  that 
 the  power  falling  across  any  given  ordinary  communication  channel  is  low.  This  makes  it  possible  for  UWB  device  to  operate  on  spectrum  occupied  by  existing  services  without  causing 
 interference.  In  addition  to  their  potential  for  communications  systems,  UWB  technology  can  also  support  the  operation  of  new  low  power  radar  products  that  can  provide  precise 
 measurement  of  distances  or  detection  of  objects  underground  or  behind  walls  or  other  structures. 

 The  qualities  of  spread  spectrum,  digital  modulation,  and  ultra-  wideband  systems  contribute  to  both  increased  security  of  these  devices  and  lower  likelihood  for  the  devices  to  cause 
 interference  to  other  systems.  This  allows  for  more  devices  to  operate  in  a  given  portion  of  the  spectrum  and  thus  promotes  spectrum  efficiency. 

 96  Theodore  S.  Rappaport,  et  al,  Wireless  Communications:  Past  Events  and  a  Future  Perspective,  IEEE 
 Communications  Magazine,  May  2002. 
 97  See  Section  II.  A  for  a  discussion  about  the  rulemaking  proceeding. 
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 Appendix  B.  Glossary  of  Unlicensed  Spectrum  Terms 
 A 
 Amplitude  Modulation  (AM)  A  type  of  radio  transmission  which  uses  the  amplitude  of  the  carrier  wave  to  transmit  information.  Amplitude  Modulation  is  used  in  either  the 
 standard  radio  broadcast  band  at  535-  1705  kilohertz,  shortwave  broadcasting,  and  in  some  private  radio  services  such  as  citizens  band  (CB)  and  aviation. 

 Analog  Signal  A  signaling  method  that  uses  continuous  changes  in  the  amplitude  or  frequency  of  a  radio  transmission  to  convey  information. 

 B 
 Bandwidth  Generally,  the  term  refers  to  the  capacity  of  a  channel  to  carry  signals.  More  technically,  bandwidth  refers  to  the  width  of  the  range  of  frequencies  that  a  signal 
 occupies.  The  necessary  bandwidth  is  the  amount  of  spectrum  required  to  transmit  the  signal  without  distortion  or  loss  of  information. 

 Base  Station  A  land  station  in  the  land  mobile  service  and  is  interconnected  with  other  base  stations  via  a  land-  line  switched  network. 
 Biomedical  Telemetry  Devices  An  intentional  radiator  used  to  transmit  measurements  of  either  human  or  animal  biomedical  phenomena  to  a  receiver. 
 Binary  Information  Unit  (Bit)  The  smallest  unit  of  digital  info  rmation.  It  is  equivalent  to  a  yes  or  a  no. 
 Bits  Per  Second  (bps)  A  unit  used  to  express  the  number  of  bits  passing  a  designated  point  per  second. 
 Bluetooth  A  short-  range  wireless  protocol  envisioned  as  a  cable  replacement  technology  that  is  used  to  connect  computer  devices  and  peripherals  devices  at  a  range  of  up  to  30  feet 
 with  a  maximum  transmission  speed  of  1  Mbps.  Bluetooth  is  named  for  10  th  Century  Danish  King  and  is  a  trademark  for  the  standard  promulgated  by  a  trade  association 
 called  the  Bluetooth  Special  Interest  Group  (SIG). 
 Broadband  Broadband  is  a  descriptive  term  for  evolving  digital  technologies  that  provide  consumers  a  signal  switched  facility  offering  integrated  access  to  voice,  high-  speed  data 
 service,  video-  demand  services,  and  interactive  delivery  services.  The  FCC  defines  broadband  as  transmission  speeds  greater  than  200kbps. 

 Byte  A  set  of  bits  that  represent  a  single  character.  Eight  bits  comprise  a  Byte. 
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 C 
 Cellular  Mobile  Radio  Telephone  System  A  land  mobile  telephone  system  in  which  channels  assigned  to  the  system  are  divided  among  several  geographical  cells  covering  a  defined 
 service  area.  These  cells  encompass  localized,  low  power  base  stations  to  cover  a  specific  area.  The  base  stations  are  sited  to  give  overlapping  coverage,  fitting  together 
 like  cells  in  a  tissue,  allowing  frequencies  to  be  reutilized  in  adjacent  clusters. 
 Co-  channel  Interference  or  Crosstalk  A  form  of  interference  which  occurs  when  a  receiver  on  one  communications  channel  inadvertently  receives  information  being 
 transmitted  on  a  neighboring  communications  channel. 
 Code  Division  Multiple  Access  (CDMA)  A  multiple  access  systems  using  a  method  of  spreading  spectrum  transmission  for  digital  wireless  personal  communications  networks 
 that  allows  a  large  number  of  users  simultaneously  to  access  a  single  radio  frequency  band  without  interference. 

 D 
 Declaration  of  Conformity  (DoC)  An  FCC  approval  procedure  for  computers  and  computer  peripherals  which  allows  digital  devices  to  be  authorized  based  on  a  ma  nufacturers 
 declaration  that  the  device  complies  with  the  FCC  requirements  for  controlling  radio  frequency  interference. 

 Device  Authorization  An  approval  is  a  process  required  by  the  FCC  for  all  intentional  radiators  before  they  can  be  used  or  sold.  The  authorization  procedure  ensures  that 
 devices  they  comply  with  the  Commissions  technical  standards. 
 Device  Certification  Certification  requires  a  written  application  stating  that  the  device  complies  with  the  FCC  rules  along  with  specific  information,  including  technical  specifications  for 
 the  device  such  as  transmitter  frequency,  occupied  bandwidth,  and  output  power. 
 Device  Verification  A  statement  made  by  the  manufacturer  or  importer  of  an  unlicensed  device,  attesting  that  the  device  complies  with  FCC  rules.  This  form  of  authorization  is 
 generally  employed  for  well  understood  devices. 
 Direct  Sequence  Spread  Spectrum  The  most  widely  used  type  of  spread  spectrum  system.  It  is  a  digital  modulation  technique  achieved  by  modulating  a  narrow  band  radio  frequency 
 carrier  with  a  high  speed  spreading  code  sequence.  The  spreading  code  spreads  the  narrow  band  signal  over  a  wider  band  of  spectrum.  Because  the  total  power  of  the 
 original  signal  is  now  spread  over  a  much  broader  bandwidth,  the  power  level  at  any  given  frequency  is  very  low.  This  feature  allows  direct  sequence  spread  spectrum 
 systems  to  operate  in  the  presence  of  narrow  band  systems  without  interfering.  (See  Spread  Spectrum). 
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 F 
 Frequency  The  number  of  cycles  occurring  per  second  of  an  electrical  or  electromagnetic  wave;  a  number  representing  a  specific  point  in  the  electromagnetic  spectrum. 

 Frequency  Hopping  Spread  Spectrum  A  form  of  signal  spreading  in  which  the  frequency  of  the  transmitted  signal  hops  from  channel  to  channel  many  times,  commonly  less 
 than  10  milliseconds,  in  accordance  with  a  pseudo-  random  list  of  channels.  The  receiver  hops  in  strict  conjunction  with  the  transmitter,  thereby  collecting  all  data  transmitted  in 
 order  to  avoid  interference  both  to  and  from  conventional  users.  (See  Spread  Spectrum). 
 Frequency  Modulation  (FM)  A  signaling  method  that  varies  the  instantaneous  frequency  of  a  carrier  wave  in  accordance  with  the  signal  to  be  transmitted. 

 Further  Notice  of  Proposed  Rule  Making  (FNPRM)  An  FCC  proceeding  to  further  clarify  and  seek  more  information  and  public  comment  on  its  proposed  rule  changes.  (See  Notice 
 of  Proposed  Rulemaking) 

 G 
 Gigahertz  (GHz)  The  oscillation  of  a  wave  at  1,000,000,000  Hz  or  cycles  per  second. 
 Global  Positioning  System  (GPS)  A  satellite  radio  system  maintained  by  the  U.  S.  Government  which  allows  receiver  sets  to  determine  their  geographic  position  with 
 extreme  accuracy. 
 Ground  Penetrating  Radar  (GPR)  A  radar  system,  operating  below  960  MHz  or  in  the  3.1-10.6  GHz  band,  designed  to  operate  in  close  proximity  to  the  ground  for  the  purpose  of 
 detecting  or  obtaining  the  images  of  buried  objects.  Operation  is  restricted  to  law  enforcement,  fire  and  rescue  organizations,  scientific  research  institutions,  commercial 
 mining  companies,  and  construction  companies. 
 General  Low  Power  Devices  (See  Low  Power  Devices) 

 H 
 Hertz  (Hz)  A  frequency  measurement  unit  which  is  equivalent  to  one  cycle  per  second. 
 HiperLAN  A  European  wireless  data  networking  standard  operating  in  two  bands  within  the  5  GHz  range  on  an  unlicensed  basis.  However,  the  HiperLAN2  bands,  is  slightly 
 different  than  the  US  U-  NII  bands.  While  the  two  share  the  5.15    5.25  GHz  portion,  the  HiperLAN2  upper  band  is  5.470    5.725  GHz. 
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 Hotspot  A  wireless  data  network  access  point.  Service  providers  are  beginning  to  offer  portable  internet  hotspot  access  for  laptops  and  handheld  computers  in  airports,  hotels, 
 cafes  and  other  public  places. 

 I 
 Incidental  Radiators  Devices,  like  electric  motors,  that  generate  radio  frequency  energy  as  a  by  product  of  their  operation  although  the  devices  are  not  intentionally  designed  to 
 generate  or  emit  RF  energy. 
 Intentional  Radiators  Devices  that  intentionally  generate  and  emit  RF  energy  by  radiation  or  induction. 

 Interference  A  radio  emission  from  another  transmitter  at  approximately  the  same  frequency,  or  having  a  harmonic  frequency  approximately  the  same  as,  another  emission  of  interest 
 to  a  given  recipient,  and  which  impedes  reception  of  the  desired  signal  by  the  intended  recipient. 

 Interference-  Temperature  A  proposed  metric,  also  called  the  noise-  temperature  concept,  referring  to  the  background  emissions  in  a  particular  band.  It  is  effectively  threshold  a 
 measure  of  the  pollution  of  the  electromagnetic  spectrum  by  all  devices  operating  in  that  band,  beyond  which  interference  is  said  to  begin  to  occur  to  licensed  users. 

 K 
 Kilohertz  (KHz)  The  oscillation  of  a  wave  at  1,000  Hz  or  cycles  per  second. 

 L 
 Local  Area  Network  (LAN)  A  local  data  network  that  is  used  to  interconnect  the  computers  and  computer  equipment. 

 Low  Power  Devices  Devices  which  are  permitted  under  Part  15  the  FCCs  rules  to  operate  in  various  specific  bands  since  they  emit  only  small  levels  of  RF  energy  and  their 
 operation  is  not  likely  to  cause  interference.  Devices  such  as  baby  monitors,  garage  door  openers,  toy  wireless  microphones,  and  certain  kinds  of  walkie-  talkies  fall  into  this 
 category. 

 M 
 Megahertz  (MHz)  The  oscillation  of  a  wave  at  1,000,000  Hz  or  cycles  per  second. 
 Millimeter  Wave  Band  The  57-  64  GHz  band  available  for  use  by  unlicensed  devices  for  novel  broadband  applications  such  as  wireless  computer-  to-  computer  communications. 
 The  potential  of  interference  to  licensed  services  is  limited  by  both  high  propagation  loss 
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 at  these  frequencies  and  the  narrow  beamwidth  of  point-  to-  point  antennas  normally  operating  in  this  range. 
 N 
 Narrowband  A  term  commonly  referring  to  analog  facilities  and  to  digital  facilities  operating  at  speeds  less  than  1.544  Mbps  which  are  capable  of  carrying  only  voice,  facsimile  images, 
 slow-  scan  video  images,  and  data  transmissions. 
 National  Information  Infrastructure  (NII)  A  group  of  networks,  including  the  public  switched  telecommunications  network,  radio  and  television  networks,  private 
 communications  networks,  and  other  networks  not  yet  built,  which  together  will  serve  the  communications  and  information  processing  needs  of  the  people  of  the  United  States  in 
 the  future. 
 Notice  of  Inquiry  (NOI)  An  announcement  of  an  FCC  proceeding  for  fact  gathering,  by  seeking  comments  from  the  public  or  industry  on  a  specific  issue.  After  reviewing 
 comments,  the  FCC  may  issue  a  Notice  of  Proposed  Rulemaking  or  it  may  release  a  Report  &  Order  (R&  O)  explaining  what  action  or  non-  action  should  be  taken. 

 Notice  of  Proposed  Rule  Making  (NPRM)  An  FCC  document  detailing  a  proceeding  to  publicly  review  proposed  changes  to  FCC  rules  and  to  seek  public  comment  on  these 
 proposals.  After  reviewing  the  comments  to  the  NPRM,  the  FCC  may  issue  a  Further  NPRM  to  provide  an  opportunity  for  the  public  to  comment  further  on  a  related  proposal 
 or  issue  a  Report  &  Order 
 O 

 Orthogonal  Frequency  Division  Multiplexing  (OFDM)  A  modulation  scheme  that  divides  a  single  digital  signal  across  1,000  or  more  signal  carriers  simultaneously  (FDM).  The 
 signals  spaced  at  precise  freque  ncies  which  prevents  the  demodulators  from  seeing  frequencies  other  than  their  own  (hence,  orthogonal)  so  they  do  not  interfere  with  each 
 other  OFDM  offers  multiple  access  and  signal  processing  and  allows  wireless  networks  to  pack  high  efficiencies  into  relatively  small  bandwidths. 

 P 
 Paging  System  A  one-  way  mobile  radio  service  where  a  user  carries  a  small,  lightweight  miniature  radio  receiver  capable  of  responding  to  coded  signals. 

 Part  15  The  section  of  the  FCCs  rules  governing  the  operation  of  authorized  low  power  radio  frequency  devices  without  the  need  for  a  license  or  frequency  coordination, 
 contained  in  the  Code  of  Federal  Regulations  at  47  C.  F.  R.    15.1,  et  seq. 
 Personal  Communications  Service  (PCS)  Any  of  several  types  of  wireless,  voice  or  data  communications  systems,  typically  incorporating  digital  technology.  PCS  encompasses 
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 cordless  phones,  cellular  mobile  phone,  paging  systems,  personal  communications  networks,  wireless  office  phone  systems  and  any  other  wireless  telecommunications 
 systems. 
 Power  Line  Communications  (PLC)  A  technology  using  electrical  power  wiring  to  deliver  telecommunications  services  and  computer  network  connectivity.  PLC  devices 
 use  both  the  homes  internal  electrical  power  wiring  to  create  a  LAN  as  well  as  the  national  electrical  grid  to  provide  broadband  internet  connectivity. 

 Public  Notice  (PN)  A  document  issued  by  the  FCC  to  notify  the  public  of  an  action  taken  or  an  upcoming  event. 

 R 
 Radar  A  radio  determination  system  based  on  the  comparison  of  reference  signals  with  radio  signals  reflected,  or  retransmitted,  from  the  position  to  be  determined. 

 Radio  Frequency  (RF)  See  Spectrum. 
 Radio  Frequency  Identification  (RFID)  A  wireless  remote  tracking  system  comprising  a  small  transponder  with  encoded  information,  an  antenna,  and  a  transceiver  equipped  with 
 a  decoder.  The  antenna  emits  a  radio  signal  to  read  or  write  data  from  or  to  the  tags  attached  to  the  items  to  be  tracked. 

 Roaming  The  use  of  a  wireless  device  outside  of  the  home  service  area  defined  by  a  service  provider. 

 S 
 Software  Defined  Radio  (SDR)  A  radio  using  programmable  software  for  digital  signal  processing  that  allows  the  radios  fundamental  characteristics  such  as  modulation  types, 
 operating  frequencies,  and  access  schemes  to  be  easily  changed. 
 Specialized  Mobile  Radio  Services  (SMR)  A  private,  two-  way  radio  system  providing  land  mobile  communications  service  to  eligible  persons  on  a  commercial  basis  for  such  uses 
 as  dispatch  communications  or  multi-  site  construction  jobs. 
 Spectrum  The  range  of  electromagnetic  radio  frequencies,  ranging  from  9  kHz  to  3,000  GHz,  used  in  the  transmission  of  sound,  data,  and  television. 

 Spectrum  Allocation  and  Spectrum  Management  The  coordination  and  assignment  of  available  spectrum  use  to  maximize  efficiency  and  to  prevent  interference. 
 Spectrum  Auction  A  public  sale  of  spectrum  access  in  which  the  price  is  increased  by  bids  until  the  highest  bidder  becomes  the  purchaser.  The  U.  S.  Treasury  receives  all  proceeds 
 from  the  FCC  spectrum  auctions. 
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 Spectrum  Policy  Task  Force  An  FCC  effort  to  address  spectrum  access  issues  composed  of  senior  staff  members  from  several  FCC  Bureaus  and  Offices  who  were  asked  to  assist 
 the  FCC  in  identifying  and  evaluating  changes  in  spectrum  policy  necessary  to  reflect  advances  in  technology  that  were  likely  to  increase  the  public  benefits  from  spectrum  use. 

 Spread  Spectrum  A  wireless  communication  system  using  special  modulation  techniques  that  spread  the  energy  of  the  signal  being  transmitted  over  a  very  wide  bandwidth.  This 
 increases  the  number  of  users  that  can  share  a  particular  band  of  frequencies,  rather  than  assigning  a  discrete  frequency  to  each  user.  Devices  currently  marketed  in  the  United 
 States  primarily  use  one  of  two  forms  of  spread  spectrum  signal:  direct  sequence  spread  spectrum  and  frequency  hopping  spread  spectrum. 

 Spurious  Emission  Any  radio  emission  or  part  of  it  which  appears  outside  of  the  authorized  bandwidth. 
 Surveillance  Systems  A  system  which  operate  as  a  security  fence  by  establishing  a  stationary  RF  perimeter  field  and  detecting  the  intrusion  of  persons  or  objects  in  that 
 field.  Their  operation,  in  the  1.99-  10.6  GHz  band,  is  limited  to  law  enforcement,  fire  and  rescue  organizations,  public  utilities  and  industrial  entities. 

 T 
 Through-  wall  Imaging  Systems  Systems  designed  to  detect  the  location  or  movement  of  persons  or  objects  that  are  located  on  the  other  side  of  a  structure  such  as  a  wall.  Their 
 operation,  in  the  1.99-  10.6  GHz  band  ,is  limited  to  law  enforcement,  fire,  and  rescue  organizations. 

 Time  Division  Multiple  Access  (TDMA)  A  method  of  digital  transmission  for  wireless  communications  systems  that  allows  a  large  number  of  users  simultaneously  to  access  a 
 single  radio  frequency  band  without  interference  by  dividing  use  of  a  set  of  frequencies  by  time. 

 U 
 Ultra  High  Frequency  (UHF)  The  part  of  the  radio  spectrum  from  300  to  3000  megahertz  that  includes  TV  channels  14-  83,  as  well  as  many  land  mobile  and  satellite  services. 

 Ultra-  Wideband  Devices  (UWB)  A  recently  approved  technology  which  relies  on  extremely  short  pulses  that  generate  signals  with  very  wide  bandwidths,  sometimes  up  to  several 
 gigahertz.  UWB  signals  go  undetected  by  most  conventional  receivers,  minimizing  their  threat  as  harmful  interferers.  UWB  technologies  are  currently  being  used  in  a  variety  of 
 applications  such  as  ground  penetrating  radar  and  are  likely  to  be  used  in  a  variety  of  emerging  applications  such  as  through-  wall  imaging  and  high-  speed  data  transmission. 
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 Unlicensed  PCS  Devices  (U-  PCS)  A  type  of  radio  devices  enabled  under  Part  15  subject  to  service  requirements  which  reserve  some  frequencies  for  voice  communication  while  the 
 remaining  spectrum  is  allocated  for  high-  speed  data  transfer  applications.  U-  PCS  is  widely  used  for  wireless  intra-  office  telephone  systems  like  wireless  PBX  (Private 
 Branch  Exchange)  systems. 
 Unlicensed  NII  Devices  (U-  NII)  A  type  of  radio  devices  enabled  under  Part  15  intended  to  provide  short-  range,  high-  speed  wireless  digital  communications  such  as  W-  LANs  and  to 
 facilitate  wireless  access  to  the  National  Information  Infrastructure. 
 Unlicensed  NOI  A  December  2002  FCC  proceeding  seeking  comment  on  the  feasibility  of  permitting  unlicensed  devices  to  operate  in  the  bands  reserved  for  television  broadcasting 
 and  also  in  newly  available  spectrum  at  3650    3700  MHz  of  such  a  proposal. 
 Unlicensed  Wireless  Devices  Radios  that  are  permitted  by  Part  15  of  the  FCCs  rules  to  emit  RF  energy,  but  require  no  specific  device  or  user  authorization,  either  through 
 registration  or  grant  of  a  license. 
 Unintentional  Radiators  Devices  that  generate  RF  energy  internally  or  send  RF  signals  to  associated  equipment  via  connecting  wiring,  but  which  is  not  intended  to  radiate  RF 
 energy  through  the  air  because  the  enclosures  of  these  devices  must  be  shielded  sufficiently  to  limit  the  amount  of  RF  energy  that  escapes.  Examples  include  computer 
 CPU  boards  and  power  supplies. 

 V 
 Vehicular  Radar  Systems  Devices  able  to  detect  the  location  and  movement  of  objects  near  a  vehicle,  enabling  features  such  as  near  collision  avoidance,  improved  airbag  activation, 
 and  suspension  systems  that  better  respond  to  road  conditions. 
 Very  High  Frequency  (VHF)  The  part  of  the  radio  spectrum  from  30  to  300  megahertz,  which  includes  TV  Channels  2-  13,  the  FM  broadcast  band  and  some  marine,  aviation 
 and  land  mobile  services. 

 W 
 Wide  Area  Network  (WAN)  A  data  network  used  to  interconnect  remote  sites  or  widely-dispersed  computer  equipment. 

 Wi-  Fi  (Wireless  Fidelity)  An  IEEE  standard  adopted  in  1999,  for  short-  range  wireless  digital  connectivity.  It  is  by  far  the  most  widely  adopted  WLAN  standard  and  includes  the 
 802.11b,  802.11a,  802.11g  standards.  The  performance  and  speed  these  standards  can  provide  rivals  that  of  10BaseT  wired  Ethernet  networks,  used  in  many  offices. 

 Wireless  Local  Area  Networks  (W-  LANs)  LANs  which  use  wireless  data  connections  to  provide  short-  range,  high-  speed  wireless  digital  communications. 
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 Working  Papers  Series  Office  of  Strategic  Planning  and  Policy  Analysis   
 Federal  Communications  Commission 
 A  Proposal  for  a  Rapid  Transition  to  Market  Allocation  of  Spectrum,  by  Evan  Kwerel  and  John  Williams,  Office  of  Plans  and  Policy;  Working  Paper  #38,  November  2002;  pp.  54 

 Broadcast  Television:  Survivor  in  a  Sea  of  Competition,  by  Jonathan  Levy,  Deputy  Chief  Economist  Marcelino  Ford-Livene,  Office  of  Plans  and  Policy  and  Anne  Levine,  Media  Bureau;  Working  Paper  #37,  September  2002;  pp.  139 
 The  Potential  Relevance  to  the  United  States  of  the  European  Unions  Newly  Adopted  Regulatory  Framework  for  Telecommunications,  by  J.  Scott  Marcus,  Office  of  Plans  and  Policy;  Working  Paper  #36,  July  2002;  pp. 
 32 
 Horizontal  Concentration  in  the  Cable  Television  Industry:  An  Experimental  Analysis,  by  Mark  M.  Bykowsky,  William  W.  Sharkey;  Office  of  Plans  and  Policy,  and  Anthony  M.  Kwasnica;  Pennsylvania  State 
 University,  Smeal  College  of  Business  Administration;  Working  Paper  #35,  June  2002;  (Revised  July  2002);  pp.  115 

 A  Competitively  Neutral  Approach  to  Network  Interconnection,  by  Jay  M.  Atkinson,  Christopher  C.  Barnekov;  Economists  in  the  Competitive  Pricing  Division,  Common  Carrier  Bureau;  Working  Paper  #34,  December  6,  2000;  pp. 
 36 
 Bill  and  Keep  at  the  Central  Office  As  the  Efficient  Interconnection  Regime,  by  Patrick  DeGraba,  Deputy  Chief  Economist;  Working  Paper  #33,  December  2000.  pp.  43 

 The  Digital  Handshake:  Connecting  Internet  Backbones,  Michael  Kende,  Director  of  Internet  Policy  Analysis;  Working  Paper  #32,  September  2000.  pp.  50 
 The  FCC  and  the  Unregulation  of  the  Internet,  by  Jason  Oxman,  Counsel  for  Advanced  Communications;  Working  Paper  #31,  July  1999.  pp.  29 
 Internet  Over  Cable:  Defining  the  Future  In  Terms  of  the  Past,  by  Barbara  Esbin,  Associate  Bureau  Chief,  Cable  Service  Bureau;  Working  Paper  #30,  August  1998.  pp.  130 
 Digital  Tornado:  The  Internet  and  Telecommunications  Policy,  by  Kevin  Werbach;  Working  Paper  #29,  March  1997.  pp.  98 
 Putting  It  All  Together:  The  Cost  Structure  of  Personal  Communications  Services,  by  David  P.  Reed;  Working  Paper  #28,  November  1992.  NTIS  PB93  114882  pp.  86 
 Changing  Channels:  Voluntary  Reallocation  of  UHF  Television  Spectrum,  by  Evan  R.  Kwerel  and  John  R.  Williams;  Working  Paper  #27,  November  1992.  NTIS  PB93  114874  pp.  146 
 Broadcast  Television  in  a  Multichannel  Marketplace,  by  Florence  Setzer  and  Jonathan  Levy;  Working  Paper  #26,  June  1991.  NTIS  #PB91  201749;  $23.00;  pp.  180 
 What  Makes  the  Dominant  Firm  Dominant?,  by  John  Haring  and  Kathy  Levitz;  Working  Paper  #25,  April  1989.  NTIS  PB89  190425;  pp.  29 
 Through  the  Looking  Glass:  Integrated  Broadband  Networks,  Regulatory  Policy,  and  Institutional  Change,  by  Robert  Pepper;  Working  Paper  #24,  November  1988.  NTIS  #PB89  136923;  pp.  106 

   This  working  paper  series  is  a  successor  to  and  builds  on  the  Office  of  Plans  and  Policys  working  paper  series. 
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