FEDERAL COMMUNICATIONS COMMISSION
                                    
                                   * * *
                                    
                     SPECTRUM AGREEMENT EN BANC HEARING
                                    
                        Commission Meeting Room
                         Federal Communications
                                Commission
                         445 Twelfth Street, S.W.
                            Washington, D. C.




















Volume:   1

Pages:    1 through 187

Place:    Washington, D. C.

Date:     April 6, 1999              FEDERAL COMMUNICATIONS COMMISSION
                           * * *
             SPECTRUM AGREEMENT EN BANC HEARING
         
                            Commission Meeting Room
                                           Federal Communications
                                           Commission
                                           445 Twelfth Street, S.W.
                                           Washington, D. C.
         
                                           Tuesday, April 6, 1999
                                           9:10 a.m.
         
         BEFORE COMMISSIONERS:
                            WILLIAM E. KENNARD, Chairman
                            HAROLD FURCHGOTT-ROTH, Commissioner
                            GLORIA TRISTANI, Commissioner
                            SUSAN NESS, Commissioner
                            MICHAEL POWELL, Commissioner
         
         
         
         
         
                             SPECTRUM MANAGEMENT EN BANC HEARING  
                                April 6, 1999 
                                             (9:10 a.m.) 
                    CHAIRMAN KENNARD (Presiding):  Good morning, 
         welcome to this Spectrum Management En Banc. 
                    In March of 1996, just over three years ago, the 
         Commission held an en banc hearing to examine policy issues 
         associated with our management of the radio spectrum 
         resource. 
                    Since that time, much has happened in terms of 
         spectrum options, technological developments, the demand for 
         additional spectrum and expanding globalization of the 
         telecommunications marketplace. 
                    Moreover, as currently composed, this Commission 
         has only limited opportunities to review our approach to 
         spectrum management on a broader basis outside the context 
         of specific proceedings. 
                    Last September, Commissioner Ness proposed that 
         the Commission hold another en banc hearing on the subject 
         of spectrum management in order to gain information to 
         better assess how we are doing in terms of our stewardship 
         of the spectrum resource and to gather suggestions from the 
         public users, providers, manufacturers, academics, and other 
         government agencies on how we might improve the overall 
         process.                     I resoundingly seconded the idea so under the 
         able leadership of Commissioner Ness, and with the 
         concurrence of all the Commissioners, we've organized this 
         hearing to provide insight on current spectrum management 
         policies and practices from the viewpoint of users, and to 
         identify options for developing future spectrum management 
         policies. 
                    I wish to take this opportunity to state, 
         however, that the focus of today's hearing is on our overall 
         spectrum management responsibilities, and we don't intend to 
         focus today on specific proceedings. 
                    This is an opportunity for us to sit back and 
         look at our spectrum management obligations in sort of the 
         broader focus so that we can take a little bit of time and 
         reflect on where we should be going from a broader policy 
         perspective. 
                    So today we're going to have three panels. 
                    Panel 1 is composed of our government experts who 
         will discuss spectrum management fundamentals. 
                    I'll briefly introduce the panelists at the 
         beginning of each panel. 
                    Panel 2 will consist of representatives of 
         current users who will discuss what is working well with the 
         Commission's current spectrum management process, and what 
         is not working.                     Panel 3 will discuss potential new approaches to 
         spectrum management, including addressing alternative, 
         perhaps revolutionary and out-of-the-box approaches. 
                    Unfortunately, we have a very tight time schedule 
         today, a lot of witnesses that we've packed into this 
         morning's panel, so we will not have time for questions for 
         Panel 1. 
                    Following brief presentations by each of the 
         panelists on Panels 2 and 3, we will pose questions to the 
         panelists aimed at eliciting information on some of the 
         fundamental issues that we face in spectrum management and 
         focusing the panelists' attention on the challenges we face 
         in trying to accommodate more and more uses and users in a 
         limited amount of spectrum. 
                    By keeping the panelists focused on a broad view 
         of spectrum management, we hope that by the end of the day, 
         we will have a better understanding of the policy options 
         available to us as we had into the next millennium. 
                    I'm pleased to have a very distinguished group of 
         government panelists who are well-known to this Commission.  
         They should be.  Most of them work here. 
                    (Laughter.) 
                    CHAIRMAN KENNARD:  We have our own Dale Hatfield, 
         who is Chief of the Commission's Office of Engineering and 
         Technology and a mentor to all of us on engineering and          technology matters to all the Commissioners. 
                    We also have Bruce Franca, who is Deputy Chief of 
         OET here at the Commission. 
                    We have our Wireless Bureau Chief, Tom Sugrue, 
         who came to us not long ago, and has had a very 
         distinguished career in government, having been a deputy 
         administrator at NTIA. 
                    Tom Tycz, who is Chief of our Satellite and Radio 
         Telecommunications Bureau.  Tom has been described by this 
         Commission as an national treasure and he's been invaluable 
         to the FCC on a range of important satellite issues. 
                    Or as Commissioner Powell likes to point out, 
         when Tom is referred to as a national treasure, Commissioner 
         Powell likes to point out that the Corn Palace is also a 
         national treasure. 
                    (Laughter.) 
                    CHAIRMAN KENNARD:  The Corn Palace, that's right, 
         somewhere in the midwest. 
                    Tom has been invaluable to the FCC on a number of 
         important issues. 
                    I'm also pleased to announce that Tom will be 
         receiving an important award this year from the Personal 
         Communications Industries Association.  They give an award 
         every year to someone who has been key to the wireless 
         industry in advancing telecommunications policy.  It's          called the Bohler Award, and Tom will be receiving that next 
         month. 
                    (Applause.) 
                    CHAIRMAN KENNARD:  Also on this panel is Bob 
         Pepper, Chief of the Office of Plans and Policy, who has 
         been a key planner and visionary for the FCC on spectrum 
         policy for many years. 
                    And finally, we're pleased to welcome our 
         distinguished colleague from the NTIA, William Hatch, Acting 
         Associate Administrator in the Office of Spectrum 
         Management. 
                    Before we proceed with the panelists, though, I 
         would like to invite my colleagues to make any opening 
         remarks that they'd like. 
                    Commissioner Ness? 
                    COMMISSIONER NESS:  Thank you, Mr. Chairman. 
                    I also want to thank my colleagues for agreeing 
         to dedicate this morning to what I hope will be an 
         informative and provocative examination of our radio 
         spectrum management policies. 
                    The idea for the spectrum en banc originated 
         actually in 1996 from my concern that the Commission was 
         forming spectrum policy based on a record that was focused 
         narrowly on one spectrum band at a time. 
                    Yet, these decisions have precedential value for          other bands.  We need to be thinking about where our 
         spectrum policy would be leading us. 
                    We've made enormous progress revamping our 
         spectrum management policies over prior decades, as 
         evidenced by a multitude of FCC decisions. 
                    We've established very flexible service rules for 
         PCS so that licensees would not have to come back to the FCC 
         for approval to adapt to a changing marketplace. 
                    We instituted auctions to assign licenses.  We 
         privatized laborious coordination tasks.  We streamlined the 
         application process.  We have declined to adopt specific 
         technical standards, preferring instead to let the 
         marketplace dictate design. 
                    We established an Interagency Spectrum 
         Coordinating Committee to ensure that a consistent policy 
         would be derived among all of the bureaus and offices 
         dealing with spectrum. 
                    Were we headed in the right direction? 
                    What was working?  What was not? 
                    The 1996 Spectrum En Banc provided Commissioners 
         and Staff, as well as the public, with a much better 
         understanding of spectrum policy issues. 
                    But we are today at the epicenter of a technology 
         revolution and much has transpired in the three years since 
         we last held that forum, including an entire -- well, almost          entire change in the composition of the Commission. 
                    Moreover, global markets for wireless and 
         satellite communications have erupted with lightening speed. 
                    The WTO Basic Telecom Services Agreement, which 
         went into force just over a year ago, has unleashed 
         competition for wireless services and with it, newly-minted 
         spectrum licensing policies. 
                    Spectrum management has also clearly caught the 
         attention of the international community.  The dynamics of 
         the 1995 World Radio Conference were vastly different from 
         the dynamics of the 1997 Conference. 
                    VU is also assessing its spectrum policies 
         through the issuance of green paper, so spectrum, once the 
         backwater of government agencies, has finally taken its 
         rightful place as an essential ingredient in national and 
         international products and services.  The stakes are 
         enormous. 
                    How do our policies benefit the public and 
         businesses that are competing globally? 
                    So let's luxuriate for just a moment, away from 
         the daily press of business, and focus on cross spectrum 
         bands and into the technology of the future. 
                    Are spectrum policies adaptable for the new 
         millennium. 
                    I have certain precepts in this debate.                     First, spectrum is an amazing national resource, 
         unlike mineral deposits or natural resources, rather unlike 
         mineral deposits which are depleted when they're used, 
         spectrum can be consumed all day long without diminishing 
         the amount left for tomorrow. 
                    And unlike mineral deposits again, failure to use 
         spectrum is to waste it. 
                    Second, spectrum is a national resource and the 
         FCC is its steward, charged with assuring the efficient use 
         of spectrum for the benefit of the American public. 
                    Third, misguided allocation policies can impair 
         efforts to develop flexible service rules for the use of the 
         spectrum.  Poorly designed or overly-restrictive service 
         rules can render spectrum valueless. 
                    Fourth, it is possible to have flexibility 
         without efficiency, efficiency without flexibility, and both 
         without serving the public interest. 
                    Fifth, we should not have a one-policy-fits-all 
         approach to spectrum management.  While auctions are 
         particularly well-suited for rapid deployment of spectrum 
         for commercial use, I remain a very big fan of auctions, 
         ample spectrum must be made available for unlicensed uses.  
         These bands are test beds for innovative technologies and 
         services, and there must be adequate spectrum for public 
         safety and for private use, providing that the public is          adequately compensated. 
                    Sixth, we must more readily embrace experimental 
         licenses and streamline our procedures, so that the 
         excruciatingly long lag time between concept and deployment 
         is considerably reduced. 
                    Finally, we've got to recognize the relationship 
         of our domestic policies to international spectrum policies, 
         acknowledge the very real differences between one spectrum 
         band and another, understand the consequences of our actions 
         on real world inventors and investors, and appreciate the 
         differences between deregulation and disorder. 
                    So I look forward to today's very engaging 
         discussion and I want to thank all those participating for 
         their willingness to come out and participate today. 
                    Thank you, Mr. Chairman. 
                    CHAIRMAN KENNARD:  Thank you, Commissioner Ness. 
                    Commissioner Furchtgott-Roth? 
                    COMMISSIONER FURCHTGOTT-ROTH:  Thank you, Mr. 
         Chairman. 
                    I particularly want to thank Commissioner Ness 
         for her guiding leadership in arranging this hearing today. 
                    I think I speak for all my colleagues in thanking 
         you for having shown the determination and the energy that's 
         been necessary to put this together. 
                    We are all very thankful for it.                     I view this as spectrum management 101 and we are 
         the students, and you, Professor Ness, have assembled the 
         leading experts to educate us and I will try to be a good 
         student today and learn a lot. 
                    Thank you, Mr. Chairman. 
                    CHAIRMAN KENNARD:  Thank you. 
                    Commissioner Powell? 
                    COMMISSIONER POWELL:  I have nothing to add, only 
         that I'll also offer my personal thanks to Commissioner Ness 
         and others who have taken a leadership role in expanding our 
         horizons and understanding the spectrum, national treasures, 
         people in the backwaters, everybody. 
                    (Laughter.) 
                    COMMISSIONER POWELL:  With particular thanks to 
         all those people assembled at the table. 
                    I'd also like to single out Dan Connor whom I 
         know, working with Commissioner Ness, has done a lot of work 
         to organize this hearing as well. 
                    CHAIRMAN KENNARD:  Ditto. 
                    Commissioner Tristani? 
                    COMMISSIONER TRISTANI:  Thank you, Mr. Chairman. 
                    I'd first like to thank all of our panelists for 
         sharing their time and expertise, and I appreciate 
         Commissioner Ness' foresight in calling for and planning for 
         this en banc.  Thank you.                     This is a rare opportunity, it is an opportunity 
         to step back and consider the broader implications of the 
         decisions we make on a daily basis to follow or diverge from 
         allocations pursued internationally, to segment one 
         particular band and to impose sharing on another, to adopt 
         more flexible or more stringent technical rules. 
                    Each of these decisions is a marker charting us 
         on a course of what we hope is effective and efficient 
         spectrum management. 
                    So I look forward to the insights that you can 
         lend. 
                    Our starting point is Section 1 of the 
         Communications Act.  Section 1 reminds us that our core 
         function is to make available, to all Americans, a rapid, 
         efficient, and worldwide radio and wire communications 
         service. 
                    In recent years, before I arrived here, the 
         Commission committed itself to a largely market-based 
         approach in the management of the spectrum. 
                    Auctions have helped us to quickly and 
         efficiently get the spectrum in the hands of those who will 
         provide services that the public desires, and flexible 
         technical and service rules have freed service providers to 
         determine how best to meet their customers' needs. 
                    This market-based approach clearly has benefitted          the American consumer. 
                    However, I remain concerned that some needs may 
         go unmet.  I am particularly eager to hear any thoughts on 
         this issue. 
                    For example, recently my fellow Commissioners and 
         I attended hearings in New Mexico and Arizona on the dearth 
         of telephone service on Indian Reservations. 
                    I would ask whether there are policies or 
         principles we might incorporate to promote service to 
         unserved areas. 
                    Another example, public safety services are a 
         public good that may be under produced by market forces. 
                    How can we ensure that we provide sufficient 
         spectrum for these critical services? 
                    With these questions raised, I am eager to hear 
         our panelists. 
                    CHAIRMAN KENNARD:  Thank you very much, 
         Commissioner Tristani. 
                    Our first panel will be led by Dale Hatfield, 
         head of our Office of Engineering and Technology. 
                    And as I look at this panel of distinguished 
         experts, I feel very confident that the spectrum management 
         at this Commission at this time is in very good hands. 
                    So I'm delighted that we can showcase some of our 
         own talent at one of our en bancs.                     Dale? 
                    STATEMENT OF DALE HATFIELD, CHIEF, OFFICE 
                    OF ENGINEERING AND TECHNOLOGY, FCC 
                    MR. HATFIELD:  Thank you, Mr. Chairman, 
         Commissioners. 
                    I will begin this panel with a short overview of 
         spectrum fundamentals. 
                    The thought was that spectrum management is a 
         fairly technical topic, and it might be therefore useful to 
         those attending if we began with some fundamental notions 
         and definitions, and that's what I would like to do. 
                    If I could have the next slide, please? 
                    (Slide.) 
                    This just provides an overview of what we 
         provided in this first panel, so I'll skip over it, and go 
         to the next slide, if I could. 
                    (Slide.) 
                    Let's start out by talking about what is 
         spectrum.  We use the term everyday but let's be a little 
         bit more formal about it. 
                    Spectrum is a conceptual tool used to organize 
         and map a set of physical phenomena.  Electric and magnetic 
         fields produce electromagnetic waves that move through space 
         at different frequencies, and the set of all possible 
         frequencies is called the electromagnetic spectrum.                     Next slide. 
                    (Slide.) 
                    The subset of frequencies between 3000 hertz and 
         300 gigahertz is what we refer to as the radio spectrum.  
         Note that the radio waves do not require a medium, per se.  
         That is, radio waves can travel through a vacuum, for 
         example, outer space. 
                    As we'll hear in a little bit more detail in a 
         moment of course, the radio spectrum can be shared in 
         frequency time and the space dimensions, and in theory at 
         least, additional users can always be accommodated.   
                    But of course, there are practical considerations 
         including cost and complexity that tend to limit the number 
         of users that can be accommodated in a given geographic 
         area. 
                    (Slide.) 
                    In that sense, the spectrum is a scarce resource.  
         On this next slide, I've just shown a very simple radio 
         system consisting of a radio transmitter and receiver and of 
         course radio transmitters are what generate the 
         electromagnetic waves that I spoke of a moment ago. 
                    It's somewhat similar to what happens of course 
         when you drop a stone in a pond.  It generates waves that 
         propagate outward from the place where you dropped the stone 
         in the water.                     The same way here.  The electromagnetic waves are 
         generated at the transmitter, or radio waves, as we call 
         them, and when they strike a receiving antenna, a small 
         amount of electric current is caused to flow, and that is 
         what's picked up by the receiver. 
                    And of course, by changing the amplitude or 
         frequency or phase of the transmitted wave, we're able to 
         convey information from one location to another on a 
         wireless basis. 
                    (Slide.) 
                    One of the fundamental characteristics of a radio 
         wave, of course, is its frequency, and I've already used 
         that term.  And on this next slide, I've just illustrated 
         two waves. 
                    And of course when we talk about frequency, it's 
         just a measure of the number of times that the wave goes 
         through one complete variation per unit of time or per 
         second.  Therefore, we call the frequency the number of 
         complete variations that we get in a unit of time. 
                    The frequency, or we measure it in hertz where 
         one hertz is equal to one cycle per second.  It's sometimes 
         confusing because us engineers talk about frequency and 
         wavelength, and we sort of do it interchangeably. 
                    The reason we do so is that there is a direct 
         relationship between frequency and wavelength.                     The best way to think about that is if you were 
         observing the ocean with its waves, you can measure the 
         distance between the crests of the waves, and that would be 
         the wavelength, the difference from one crest to another. 
                    Now imagine that you were sitting in a small boat 
         on the ocean itself, if the crests are close together, in 
         other words, the water is choppy, you would bob up and down 
         very fast.  In other words, the frequency of your motion 
         would be very high. 
                    On the other hand, if the distance between the 
         crests are very large, it would be relatively smooth, and of 
         course you would move up and down in the boat relatively 
         slowly. 
                    So you can see there's a direct relationship, if 
         you will, between the frequency and wavelength, so that's 
         the reason we engineers sort of interchangeably talk about 
         frequency and wavelength, because there's a one-to-one 
         correspondence between the two. 
                    If I could have the next slide. 
                    (Slide.) 
                    I'm not sure how legible this slide is, but what 
         I've tried to do here is show the characteristics of 
         different frequency range, and particularly that different 
         frequencies propagate differently. 
                    Because of the difference in propagation          characteristics, different frequency ranges are better 
         suited for certain purposes. 
                    I don't have time to go into details, but 
         generally speaking, as we go higher in frequency, or as I 
         talked about a moment ago, as the wavelength becomes 
         shorter, the radio waves behave more and more like light 
         waves, so they tend to be obstructed by buildings or natural 
         barriers. 
                    On the other hand, as the frequencies go higher 
         and the wavelengths get shorter, antennas can more easily 
         focus the energy.  We can direct the energy in particular 
         directions much easier. 
                    Just like the headlights on your car.  What do 
         they do?  They just beam the light towards the highway in 
         front of you, rather than scatter it all over in different 
         directions. 
                    So we can use the antennas to direct the energy 
         in a particular direction. 
                    Next slide. 
                    (Slide.) 
                    Here, all I've done in this next slide is, since 
         we're talking about spectrum management, I have more 
         formally defined it as all the activities associated with 
         regulating the use of the radio spectrum.   
                    It includes the structure and processes for          allocating, assigning, and licensing this scarce resource, 
         as well as enforcing the associated rules and regulations. 
                    Commissioner Ness already spoke to some of the 
         unique characteristics of the radio spectrum.  I won't say 
         any more about that.  But it goes almost without saying, of 
         course, that the management of a scarce resource has an 
         enormous impact on our economic and social well being. 
                    Next slide. 
                    (Slide.) 
                    The basic steps in spectrum management, and here 
         this morning you'll hear us talking about the different 
         steps, but there are four fundamental steps when you sort of 
         break it down. 
                    There's the allocation process, developing the 
         service rules, the assignment process, and then enforcement, 
         and of course, by allocation, we're referring to the type of 
         use that is allowed on a particular block or band, and of 
         course it's a critical component of spectrum management. 
                    Service rules define the regulatory parameters 
         within the broad allocation, for example, a maximum 
         transmitter power that can be employed. 
                    Assignment then refers to the process of granting 
         authority, a license, for a specific party or individual to 
         operate a transmitter on a particular channel or set of 
         channels and its specific locations under the conditions          specified in the service rules. 
                    Enforcement refers to making sure that licensees 
         and other users of spectrum obey the rules, and it reflects 
         our need to protect the radio environment from harmful 
         interference and pollution. 
                    I might just add parenthetically, sometimes I 
         think we forget that the enforcement activities are a very 
         critical part of the overall spectrum management process. 
                    (Slide.) 
                    Here of course I go to the point.  Radio waves 
         don't respect international boundaries so our domestic 
         decisions must be made within the context of international 
         allocations made under the auspices of the International 
         Telecommunications Union. 
                    Tom Tycz, to my left, will speak to these 
         international dimensions, so I won't say any more. 
                    Domestically, of course, the spectrum is divided 
         between what we regulate on the non-federal government side, 
         and what NTIA administers on behalf of the federal 
         government on the federal government side. 
                    Bill Hatch is going to talk, in a few moments, 
         about spectrum management on the federal government side, 
         and of course, a lot of the spectrum we share. 
                    (Slide.) 
                    The next slide just mentions a couple of terms of          art.  We talk about service definitions in terms of things 
         like fixed and mobile services, broadcast services, and so 
         forth, and we also talk of course about the status of 
         services within allocations. 
                    We talk about primary where the service should 
         not receive interference from other services in the same 
         range. 
                    And of course, secondary means that you can 
         operate in the band, but you cannot cause interference to 
         primary users, and you must accept interference from other 
         primary users. 
                    (Slide.) 
                    The next slide here just talks about the things 
         that in the past, if you look traditionally at how the 
         Commission allocated spectrum, traditionally, we've taken 
         into account public need and benefits, technical 
         characteristics -- that's the things like the differences in 
         spectrum that I referred to before -- and apparatus 
         limitations. 
                    This is the fact that receivers in fact are not 
         perfect and you need to take that into consideration when 
         you develop your service regulations. 
                    (Slide.) 
                    Let me conclude by just offering a personal 
         opinion that between auctions and the automated licensing          proceedings, I think we're doing a pretty good job of 
         handling the assignment process. 
                    Our challenge, I think, as a Commission is in the 
         allocation area; namely, continuing to accommodate 
         additional users and users in the scarce spectrum resource. 
                    With that, I'll turn the microphone over to my 
         colleague and deputy, Bruce Franca, who will address 
         techniques for finding spectrum for new uses. 
                    Bruce? 
                    STATEMENT OF BRUCE FRANCA, DEPUTY CHIEF, OFFICE 
                    OF ENGINEERING AND TECHNOLOGY, FCC 
                    MR. FRANCA:  Good morning, Mr. Chairman, 
         Commissioners. 
                    I've been asked to explain briefly how spectrum 
         can be provided for new services, and a little bit about 
         Part 15, Unlicensed Operations. 
                    (Slide.) 
                    Finding spectrum so that new uses can be made 
         available to the American public is one of our most 
         important and fundamental spectrum management tasks. 
                    The radio spectrum is an important resource and 
         under the Communications Act, the Commission is tasked to 
         make sure that it is used efficiently and effectively. 
                    One of the ways that spectrum can be made 
         available for a new service is through spectrum sharing,          that is, the new service can use the same spectrum that is 
         already being used by other existing services. 
                    This can be done when the use of the spectrum by 
         the new service is compatible with the existing service.  
         The risk of interference between uses is minimal or the uses 
         can be coordinated with one another. 
                    (Slide.) 
                    A simple example of spectrum sharing is the use 
         of the same marine VHF channels by ships and trains.  Here, 
         the same spectrum can be used because both operations are 
         geographically separated. 
                    (Slide.) 
                    Another example of sharing is where the uses can 
         be coordinated through technical means such as antenna 
         discrimination. 
                    Today, thousands of fixed satellite uplink 
         facilities and point-to-point microwave operations share the 
         spectrum in this manner. 
                    Tom Tycz is going to show how this gets a little 
         bit more complicated when satellites are non-geostationary. 
                    (Slide.) 
                    Another way in which spectrum can be made 
         available is through improvements in technology.  
         Advancements in technology can make more efficient use of 
         the spectrum so that less spectrum is needed to provide a          specific level of service or serve the same number of 
         people. 
                    Improvements in technology can also make use of 
         higher frequency bands practical.  For example, recent 
         developments in digital technology and digital processing 
         and gallium arsenide integrated circuits have made mobile 
         operations above 1 gigahertz possible. 
                    The Land Mobile Service provides a good example 
         where technology has been used to find new spectrum. 
                    (Slide.) 
                    Since the 1970s, there has been significant 
         improvements in spectrum capacity and efficiency in this 
         service.  For example, the amount of spectrum needed to 
         support a single voice communication has been reduced by 
         almost a factor of ten over this time period. 
                    (Slide.) 
                    Trunking and cellular architecture have also 
         provided spectrum efficiencies.  Trunking technology allows 
         less spectrum to be assigned to a service.  Not every user 
         needs a dedicated channel. 
                    Cellular architecture permits more frequency 
         reuse and allows more spectrum to be dedicated to higher use 
         areas. 
                    (Slide.) 
                    Another way spectrum can be freed up for new          services is through band clearing.  Under this approach, 
         spectrum that is lightly used, perhaps because the service 
         was unsuccessful or has been replaced by newer technologies, 
         is reallocated to other new, higher value uses. 
                    The existing services are required to move to 
         other bands, generally over a sufficient period of time so 
         that they can amortize any recent investments. 
                    (Slide.) 
                    This approach was used very successfully to 
         create the cellular and SMR and other radio services from TV 
         channels 70 to 83 in the 1970s, and in the 1980s to create 
         the direct broadcast satellite service in the 12.2 to 12.7 
         gigahertz band. 
                    (Slide.) 
                    Digital television is an example of both 
         implementing a major technological improvement through a 
         much more spectrum-efficient DTV transmission system and a 
         band clearing approach with regard to channels 60 to 69. 
                    (Slide.) 
                    Today, however, there is very little of the 
         spectrum that is lightly used.  At the same time, the 
         Commission is seeing ever-increasing demand for new services 
         and spectrum to support them. 
                    This means that the spectrum that needs to be 
         freed up for a new service.  To do that, we're required to          relocate a substantial number of existing operations. 
                    (Slide.) 
                    In order to minimize the impact of this type of 
         relocation, the Commission, in 1992, established its 
         Emerging Technologies Policy. 
                    Under this policy, the new service provider who 
         is given access to the spectrum is responsible for the 
         relocation of existing users on that spectrum. 
                    Parties are permitted to negotiate financial 
         arrangements and the new service provider must either move 
         existing operations or protect them from interference.  This 
         policy was used in the relocation of spectrum for fixed 
         microwave to PCS. 
                    (Slide.) 
                    One of the areas that's often overlooked in any 
         spectrum discussion is Part 15, Unlicensed Operations. 
                    Part 15 devices make use of spectrum that is 
         primarily not used or allocated for communication purposes, 
         such as the microwave oven frequencies or these devices 
         operate throughout the spectrum at such very low power 
         levels that they do not cause interference to licensed 
         operations. 
                    (Slide.) 
                    No FCC license is required to operate a Part 15 
         device, and only minimal technical regulations apply.                     The basic premise of Part 15 is that these low- 
         powered devices cannot cause interference and must accept 
         any interference they receive. 
                    Despite these limitations, millions and millions 
         of Part 15 devices are in use today in the home and in 
         businesses.  Cordless telephones, wireless speakers, home 
         security systems, wireless LANs, inventory control systems, 
         utility use monitoring, traffic light controls, and back 
         haul links for licensed services such as cellular and PCS, 
         all successfully operate using Part 15 devices and with a 
         minimal impact on other users of the spectrum. 
                    Thank you for your attention.  That ends my part 
         of the presentation. 
                    CHAIRMAN KENNARD:  Thank you, Bruce. 
                    Tom? 
                    STATEMENT OF TOM SUGRUE, CHIEF, WTB 
                    MR. SUGRUE:  Thank you, Bruce. 
                    Good morning, Mr. Chairman, Commissioners. 
                    It's a pleasure to be here today.  When Dale 
         Hatfield was organizing this panel, he described the goal as 
         providing a primer on spectrum basics. 
                    I said, you mean sort of a spectrum management 
         for dummies, and Dale said, Tom, in your case, that's just 
         about right.  So I appreciate the endorsement from my 
         friends in OET, as usual.                     (Slide.) 
                    But I am pleased to be here today on this panel 
         of distinguished experts, not to mention national treasures, 
         so that's a particular thrill of mine. 
                    (Laughter.) 
                    MR. SUGRUE:  In one sense, you know, you need 
         experts to understand spectrum management, because in one 
         sense, you can't begin to answer these questions without 
         understanding a lot of technical details about propagation 
         characteristics and bandwidth and interference contours and 
         modulation techniques, not to mention economic concepts and 
         game theories that underlie our auction process. 
                    But on another level, spectrum management really 
         isn't all that different from managing any other scarce 
         resource, a situation we all encounter frequently in 
         everyday life. 
                    I thought a simple parable could illustrate this 
         point.  Let's call it the parable of Portals parking. 
                    By the way, any resemblance between this parable 
         and actual events or people is strictly intentional. 
                    But our story begins a long time ago in a galaxy 
         far, far away. 
                    (Slide.) 
                    There's a small, yet elite federal agency that 
         moved to a new home across town called The Portals.  And          despite some initial trepidations, the agency liked most 
         things about its new home, especially those who drove 
         because there was plenty of free parking and the agency 
         allowed open entry at no charge to anyone who had a permit 
         verifying employment at the agency. 
                    (Slide.) 
                    But then as more people started moving down, the 
         lot started getting crowded.  Soon it appeared demand would 
         outweigh supply.  The agency did a number of things to 
         address this problem. 
                    First it focused on the demand side.  It started 
         charging $100 a month to park.  And some people who wanted 
         to park, when it was free, decided it really wasn't worth 
         the price when there was a charge. 
                    Second, it provided a $45 a month subsidy to 
         employees who would take public transportation.  So an 
         alternative to using this scarce resource became more 
         attractive. 
                    Third, the agency sought better to manage supply.  
         First, it made more spots available by using those that were 
         formally used as staging areas by some contractors.  And 
         second, it used the existing space more efficiently by 
         hiring car jockeys who would increase the capacity by stack 
         parking in areas so that, in effect, two or three cars could 
         share the space where only a single car was parking before.                     (Slide.) 
                    Well, the good news was demand no longer exceeded 
         supply and peace ruled throughout the Portals. 
                    (Slide.) 
                    But the bad news was that the month of April came 
         and more people came and with more cars, 500 employees 
         applied for the 300 spots.   
                    How did the agency handle these competing 
         applications? 
                    One might call them mutually exclusive 
         applications. 
                    (Slide.) 
                    Well, in the short run, the agency set forth an 
         administrative assignment system that reflected certain 
         values.  Parking spots were set aside for people with 
         disabilities, car poolers and senior executives, a noble 
         class certainly, in that order. 
                    (Laughter.) 
                    MR. SUGRUE:  The remaining slots were assigned on 
         the basis of seniority.  The agency also announced a new 
         sharing policy that allowed all employees working over time 
         to park in the garage during non-busy hours, that's after 
         6:00 p.m. and during the weekends. 
                    (Slide.) 
                    In the long run, the agency is looking at          measures to increase and more efficiently manage supply once 
         again. 
                    For example, the number of spots will increase as 
         more contractor spots become available and they move out, a 
         sort of spot-clearing approach. 
                    The agency may also repaint the lines making the 
         parking spots closer together, thereby squeezing out up to 
         15 percent more spaces, a sort of narrow band parking 
         solution. 
                    (Laughter.) 
                    MR. SUGRUE:  But if, despite these adjustments to 
         supply, the demand continues to outweigh the number of 
         spots, what additional steps could be taken? 
                    Those who are not favored in the current 
         administrative assignment system are bandying about 
         alternative mechanisms for mutually exclusive applications. 
                    Why not allow the Commission to charge the market 
         clearing price, which apparently is somewhat higher than 
         $100 a month, based on nearby alternatives, or why not 
         auction the spots. maybe with bidding credits for certain GS 
         levels. 
                    Or perhaps we should hold comparative hearings to 
         take into account each individual circumstance. 
                    Or maybe we could hold lotteries so that all 
         interested employees have an equal chance at getting these          spots.  Or perhaps we can privatize the parking function and 
         let an entrepreneur decide how best to balance the supply 
         and demand. 
                    (Slide.) 
                    Now that I've spent almost all my allotted time 
         on this parable, what does this have to do with spectrum 
         assignment? 
                    Well, I guess it's obvious, but it turns out that 
         fundamentally the Commission uses the very same types of 
         tools for spectrum management as this mythical agency does 
         to assign parking spots. 
                    If we are going to meet all our needs to manage 
         spectrum, we're going to have to do it efficiently and 
         wisely, and consider all the tools at our disposal. 
                    For example, we can make more spectrum available 
         by moving existing operations, and Bruce made some mention 
         of those examples. 
                    We can promote efficiency through car jockey 
         solutions and line-painting engineering approaches that 
         encourage sharing, multiplexing, and narrow band techniques 
         that allow multiple users to operate in common frequencies. 
                    We can allow sharing or other uses during non- 
         busy times or in non-busy areas. 
                    (Slide.) 
                    Where we cannot avoid mutually exclusive          applications, we need to focus on the demand side.  We can 
         do that by assigning spectrum as efficiently as possible, 
         taking into account any special values Congress has 
         identified, such as promoting opportunities for small 
         businesses. 
                    For example, we have found that auctions do a 
         better job than comparative hearings in assigning spectrum 
         to those who value it most and who use it most efficiently. 
                    So many issues in parking and spectrum management 
         are similar. 
                    For example, whether there should be greater 
         reliance on pricing mechanisms in shortage situations and 
         the efficiency versus equity concerns that those approaches 
         raise, or the use of administrative mechanisms to assign 
         scarce resources or how much sharing can be done without 
         degrading the use of the resource and at what cost. 
                    Later today, and already today you've heard about 
         all kinds of exciting new technologies and sophisticated 
         economic and legal theories. 
                    Despite all this sophistication, those interested 
         in spectrum can learn something from the Portals parking 
         problem. 
                    And perhaps those who are trying to solve the 
         parking problem can learn something by attending this en 
         banc.                      I hope Andy Fisher is out there somewhere. 
                    Thank you. 
                    CHAIRMAN KENNARD:  That's great, Tom.  Thank you 
         very much. 
                    Tom? 
                    STATEMENT OF TOM TYCZ, CHIEF, SATELLITE AND 
                    RADIOCOMMUNICATIONS DIVISION, IB, FCC 
                    MR. TYCZ:  Good morning, Mr. Chairman, and 
         Commissioners. 
                    I don't know what to say about the national 
         treasure, but I hope my remarks live up to at least the Corn 
         Palace. 
                    CHAIRMAN KENNARD:  Just be thankful you have a 
         parking space. 
                    (Laughter.) 
                    MR. TYCZ:  That I am.  Thank you very much. 
                    This morning I would like to do three things. 
                    First, address briefly assignment methods used 
         for satellite services, second, show a series of videos to 
         illustrate different types of satellite constellations, and 
         third, address tensions that affect many spectrum decisions. 
                    (Slide.) 
                    Let me first turn to assigment methods.  We have 
         conducted successful auctions in two different satellite 
         services: direct broadcast satellite service, DBS, and          digital audio radio service, DARS.  Both services involve 
         spectrums that could be uniquely identified as U.S. spectrum 
         by the I.Q. Radio Regulations. 
                    In other satellite services, we have taken a 
         different approach in light of international concerns.  As 
         the Commission has recognized, auctions for international 
         global satellite systems may be present unique problems, 
         such as sequential auctions. 
                    Consequently, satellite authorizations here in 
         the U.S. are typically issued as a result of processing 
         rounds in which the applications for particular frequency 
         bands are considered simultaneously. 
                    We undertake substantial efforts through 
         engineering solutions, et cetera, to resolve any potential, 
         mutual exclusivity among these systems. 
                    Once licensed, each licensee is given a fixed 
         amount of time in which to construct, launch, and operate 
         the system. 
                    Let's go to the video. 
                    (Slide.) 
                    In the first video you will see represented a 
         geostationary fixed satellite system, as viewed from above 
         the orbit.  Geostationary means that the satellite remains 
         fixed relative to the earth, approximately 36,000 kilometers 
         above the equator.                     Fixed satellite service means that the location 
         of the earth station is fixed on the earth. And in this 
         video, you can see that the earth stations are in the four 
         corners of the contiguous United States. 
                    The satellites are separated by five degrees of 
         longitude.  It's also possible to have the earth stations, 
         or in this case, handsets or mobile terminals, move in the 
         geostationary system, either along the earth, or in the case 
         of the aircraft, through the air. 
                    Until recently, domestic U.S. commercial 
         providers exclusively used this type of satellite system. 
                    Second video. 
                    (Slide.) 
                    In this video, we see a non-geostationary fixed 
         satellite service constellation.  The earth station is again 
         fixed on the earth, but as you can see, the satellites are 
         no longer stationary with respect to the earth. 
                    The altitude of this particular constellation is 
         about 1500 kilometers or four percent the size of the 
         geostationary altitude in the previous video. 
                    (Slide.) 
                    In the third video, the satellites are again in 
         motion, illustrating the sweeping movement of the beams 
         across the surface of the earth and across national 
         boundaries.                     We also show the satellites communication with 
         fixed and mobile earth stations.  In this video, you can see 
         the communications links from the mobile terminals to the 
         fixed stations through the satellites. 
                    (Slide.) 
                    While the first three videos illustrated the 
         various components of the current spectrum management 
         situation, this last video puts the components together, 
         adding in the complexity of sharing between geostationary 
         and non-geostationary constellations. 
                    We see the beams from the geostationary 
         constellations with fixed stations and beams from the non- 
         geostationary one with fixed and mobile stations. 
                    At this point, if you can envision, as well, the 
         situation that Bruce Franca mentioned about threshold 
         services underlying all of those beams in these frequency 
         bands, then you'll get an idea of what the spectrum 
         management situation we are really dealing with in shared 
         frequency bands. 
                    I'll leave this video up through the rest of my 
         presentation. 
                    (Laughter.) 
                    MR. TYCZ:  Bearing in mind its complexity, I 
         would like to turn next to the tensions that affect our 
         spectrum management decisions.                     As we turn to the tensions, I wish to emphasize 
         the goal to act as quickly as possible, to get spectrum in 
         the hands of users to allow market forces to decide what 
         business models survive, and to allow innovation to thrive. 
                    The first layer of tension is international 
         spectrum policy versus domestic spectrum policy. 
                    While there is some commonality of use from 
         nation to nation, there are often substantial differences, 
         even where service allocations are compatible across 
         national borders.  There can be conflicts due to competing 
         national assignment requirements. 
                    As a result, our ability to meet domestic policy 
         goals may be constrained. 
                    Further, because of the World Trade Organization 
         Treaty and other market-opening initiatives, such as some of 
         the protocols we've entered into, it is no longer possible 
         to make spectrum decisions solely based on domestic factors. 
                    These international agreements have increased the 
         tension involved in providing spectrum to satisfy, for 
         example, foreign licensed satellite requests to access the 
         U.S. market. 
                    The second layer of tension is government and 
         non-government use of spectrum.  The goals of government and 
         non-government frequency users will not always be the same. 
                    A non-government user's objective to have maximum          spectrum flexibility to meet changing market demands may not 
         coincide with government user's objective to protect 
         national security or safety or life. 
                    These sometimes conflicting objectives make 
         coordination between the two groups difficult, both for 
         domestic decisions and when developing U.S. positions for 
         international conferences. 
                    The third layer of tension is at the allocation 
         layer.  Here, the questions are focused on how to allocate 
         terrestrial, wireless, and broadcast and satellite services, 
         and whether spectrum should be allocated on an exclusive 
         basis or a shared basis. 
                    Mr. Hatfield and Mr. Franca have discussed this 
         to a much greater extent.  However, these are also issues we 
         face in the international arena. 
                    World radio conferences are held every two to 
         three years to discuss allocations and procedures for 
         coordination, sharing methods and criteria, et cetera to 
         respond to new requirements for spectrum. 
                    The fourth layer of tension is the assignment 
         layer.  Here the basic questions are who should get 
         frequency assignments and what should be the conditions of 
         licensing. 
                    Are there constraints that should be adopted, for 
         example, to facilitate sharing and allow market forces to          operate, but yet do not constrain innovation. 
                    Internationally, satellite and terrestrial 
         coordination and notifications are used to protect existing 
         services and are also a critical component of these 
         assignment decisions. 
                    In conclusion, with progressive market opening 
         decisions of the recent past, including the WTO and the 
         protocols, the days of making spectrum decisions mainly 
         based on domestic considerations are over. 
                    We are committed to timely action in making 
         spectrum management decisions but our spectrum management 
         tasks must evolve to reflect the new requirements of a more 
         open global economy. 
                    Thank you. 
                    That's the end of my presentation. 
                    CHAIRMAN KENNARD:  Thank you, Tom. 
                    Bill? 
                    STATEMENT OF WILLIAM T. HATCH, ACTING ASSOCIATE 
                    ADMINISTRATOR, OFFICE OF SPECTRUM MANAGEMENT, 
                    NTIA 
                    MR. HATCH:  Mr. Chairman, Commissioners, it's a 
         pleasure to be here today to participate in the discussions 
         of one of the most important topics associated with radio 
         communications, the management of the spectrum. 
                    (Slide.)                     This is an issue that has both national and 
         international implications, as you've heard, both of which 
         must be addressed by NTIA and the FCC in a coordinated and 
         cooperative manner. 
                    Through various Executive Orders and Department 
         of Commerce Orders, the Office of Spectrum Management within 
         NTIA has been delegated the responsibility for managing the 
         government use of the radio frequency spectrum. 
                    Today, I would like to briefly address the 
         spectrum management functions of NTIA, the very important 
         coordination process between NTIA and FCC, as well as some 
         of these spectrum issues that we face today. 
                    If I could have the second slide, please. 
                    (Slide.) 
                    NTIA draws upon the advice of the Interdepartment 
         Radio Advisory Committee to perform its spectrum management 
         functions.  The IRAC provides advice in all aspects of 
         government use of the spectrum, assigning frequencies, 
         developing and executing policies and procedures, developing 
         technical criteria on the allocation, management, and use of 
         the spectrum. 
                    There are currently, as shown on this slide, the 
         membership consists of 20 of the most active federal users 
         of the spectrum. 
                    It's covered up by the captioning, but one of the          important points that I'd like to make on this slide is that 
         the FCC also is a liaison representative on the 
         Interdepartmental Radio Advisory Committee. 
                    It is through this FCC liaison representative, 
         presently within the Office of Engineering Technology, that 
         we initiate our coordination process with the FCC on joint 
         spectrum management issues. 
                    This coordination, then, is extremely important 
         when you consider that approximately 90 percent of the 
         spectrum that Dale was referring to is shared between 
         government and non-government uses. 
                    The majority of that sharing is in the higher 
         frequency bands where we are seeing now the newer systems 
         being developed.   
                    However, in the spectrum below 3 gigahertz, we 
         have approximately 20 percent of the spectrum is government 
         exclusive, 40 percent is non-government exclusive, and 40 
         percent of the spectrum is used on a shared basis. 
                    So again, I think that points out the importance 
         of this coordination process between NTIA and the FCC. 
                    If I could have the next slide, please. 
                    (Slide.) 
                    I'd like to just briefly describe two of the 
         subcommittees we have in the NTIA because these are the 
         committees that do most of the coordination between the NTIA          and the FCC and the private sector. 
                    The first is our Frequency Assignment 
         Subcommittee assists in assigning or coordinating the 
         frequency chosen by the government radio station, and also 
         coordinating the non-government requests for frequency 
         assignments in the shared spectrum. 
                    The next one is the Radio Conference 
         Subcommittee. 
                    (Slide.) 
                    That assists in preparing for ITU conferences and 
         developing U.S. proposals and positions.  These are 
         coordinated with the FCC and provided to the FCC Advisory 
         Committee for consideration, similar to the proposals from 
         the FCC Advisory Committee coordinated through the FCC, 
         IRAC, and to the RCS. 
                    If I could have the next slide, please. 
                    (Slide.) 
                    Let me talk about some of the spectrum issues, 
         and in particular sharing between government and non- 
         government systems. 
                    As we've alluded, we have a lot of sharing 
         between our systems.  We still run into some difficulties, 
         especially when we try to do sharing between our high- 
         powered government systems, such as radio location, radio 
         navigation systems, and sharing with the private sector.                     We have difficulty both in our co-channeling with 
         our adjacent band channel sharing, and later on, I will talk 
         about steps that we're taking to try to improve that 
         process. 
                    The difficulty with sharing in these high powered 
         systems, whether they are terrestrial, airborne and 
         shipborne, they use large geographical areas that are denied 
         to other services, including government services.   
                    And we need to maintain the flexibility to 
         address new threats and develop systems, especially in the 
         military, for these new low observable targets. 
                    Military systems are always difficult to share 
         with.  They are tactical systems, they invoke national 
         security, so in those instances, it's been very difficult to 
         effect any sharing. 
                    Let me talk a little bit about public safety.  We 
         have recently had a Memorandum of Understanding between the 
         Department of Defense and the State of Wisconsin to 
         cosponsor a joint pilot trunking system near Madison, 
         Wisconsin, that will be shared between the state and local 
         and all federal public safety agencies. 
                    This should provide valuable information on the 
         interoperability of these agencies and the joint use of this 
         spectrum. 
                    And I think that this information will be very          useful to both NTIA and the FCC in addressing future joint 
         systems for the public safety service. 
                    We look forward to working with the FCC, the 
         state and local government, to develop procedures for these 
         interoperability and joint use systems for the public safety 
         service. 
                    Another issue that we have is the government 
         agencies are beginning to use non-government fixed satellite 
         services in an increasing manner. 
                    At the present time, the spectrum for that is 
         non-government exclusive spectrum, and the government's 
         first stations are operating on an unprotected basis. 
                    We're working with the FCC to develop a set of 
         procedures that the government earth stations are taking 
         into account in the coordination process to try to avoid 
         interference to government earth stations from the new 
         terrestrial services. 
                    The space science services seem to be working 
         very well in our coordination process with the FCC and in 
         the work preparatory process.  It's a complex but seems to 
         be a very manageable problem at this time. 
                    Let me address very briefly the co-channel and 
         adjacent channel interference and the steps we're taking to 
         try and enhance this sharing. 
                    To address potential interference between the          government systems and the non-government systems and 
         adjacent bands, we're working with the Commission to 
         identify technical characteristics of the government 
         systems, and their out-of-band emissions. 
                    The intent is to provide this information to the 
         private sector for their consideration in the development of 
         their systems and their operational deployment of these 
         systems. 
                    We hope that that will help eliminate and either 
         reduce and/or eliminate potential interference problems. 
                    Where practical, we're also trying to provide the 
         areas of operation of our government systems, again to try 
         to avoid potential interference problems and to enhance 
         sharing. 
                    Let me just briefly now, if I could have the next 
         slide -- 
                    (Slide.) 
         -- talk about our coordination process between NTIA and the 
         FCC. 
                    There's increasing demands for spectrum and the 
         pressure to satisfy these demands has reduced the time 
         that's available for us to coordinate these shared bands 
         between the government and non-government users.  
                    In some instances, this has resulted in some 
         proceedings from the FCC being released without prior          coordination or completion between NTIA and the Commission. 
                    This is something that we need to address. 
                    An exclusive spectrum government coordination 
         between the NTIA and the FCC must be completed before any 
         action is taken.  Although very rare, this has occurred, and 
         this is an issue again that will need further discussion 
         between our agencies. 
                    We need these further discussions for a number of 
         reasons, to try to improve the process, to improve the 
         efficiency of the process, and to assure that the 
         requirements of both the private sector and the federal 
         government are satisfied in a timely and efficient manner. 
                    Where the government has new or expanded spectrum 
         initiatives, such as in our navigation systems for the air 
         traffic control, our military systems, and as I say, 
         developing new radar systems for these low detectable 
         targets and public safety or increased protection for our 
         systems. 
                    I think we, on the government side, need to do a 
         better job briefing the Commission and the Commission Staff 
         on those requirements so that you have the opportunity to 
         understand and appreciate these requirements. 
                    We will work with you and your staff to bring 
         this about. 
                    We look forward to working closely with the          Commission to improve this spectrum management process and 
         to provide spectrum to satisfy both the government and non- 
         government present and long-term spectrum requirements. 
                    I thank you for the opportunity to speak at the 
         en banc hearing on spectrum management issues. 
                    CHAIRMAN KENNARD:  Thank you very much.  You 
         certainly have our commitment to continue working closely 
         with you to resolve any of these issues. 
                    Dr. Pepper? 
                    STATEMENT OF DR. ROBERT PEPPER, CHIEF, OPP, FCC 
                    DR. PEPPER:  Good morning, Mr. Chairman, 
         Commissioners.  I've been asked this morning to wrap up the 
         first panel and summarize what you've heard. 
                    I think it can be characterized, as Commissioner 
         Ness pointed out in her opening remarks, that we've been 
         engaged in an experiment for the last decade, or a little 
         bit more than a decade, moving from a traditional command 
         and control approach to spectrum management to one that's 
         much more based on market forces. 
                    Economists predicted that relying more on market- 
         based approaches would be more compatible with the world of 
         dynamically changing technology and markets, and would 
         enable the expansion of supply of usable spectrum, as 
         opposed to an old system in which government decisions, 
         often at the request of incumbents, created and maintained          artificial scarcity. 
                    The new approach is characterized by changes, 
         sometimes people though at the time, fairly radical in 
         virtually every aspect of spectrum management. 
                    So, for example, as Commissioner Ness pointed 
         out, in the allocation and allotment approach, we moved from 
         site licenses to geographic licenses.   
                    We moved from very narrow channelization and 
         definitions of what people could do to more block 
         allocations. 
                    On service rules, we moved from narrow, specific 
         service rules, to more general and flexible service rules. 
                    For example, the old Part 22 Cellular Licenses, 
         we defined cellular as a mobile service.  We used to joke 
         that since we didn't foresee miniaturization, longer-life 
         batteries, digital technologies that allowed people to use 
         pocket phones, everybody thought this was going to be in 
         cars, and so we used to joke that when you got your pocket 
         phone, because it was a mobile service, if you wanted to use 
         it in your office, you had to walk around and not sit down. 
                    (Laughter.) 
                    DR. PEPPER:  We actually had rules that said you 
         couldn't use it as a fixed service. 
                    Well, along comes PCS, along comes market demand, 
         along comes the fact that we now have close to 70 million          commercial wireless users, much more than the 900,000 
         predicted in the early days, and everything's changed. 
                    So we changed our rules so that now PCS and 
         cellular essentially have the same rules and, in fact, you 
         can sit in your chair and talk on your cell phone. 
                    PCS and cellular now are not only mobile, but 
         it's also being used for portable services as well as fixed 
         operations. 
                    On the technology side, we moved from specific 
         inputs, in defining what we used to joke as tower and power 
         requirements, to more functional outputs, interference 
         protections, in-band and out-of-band protections, and 
         allowing the operators to figure out how to determine how 
         they're going to protect against interference, as opposed to 
         our telling them. 
                    On the assignment side, we moved from beauty 
         contests that we used to call comparative hearings, to 
         random lotteries to auctions.  But we also have brand new 
         technologies and new unlicensed operations. 
                    We have, using some of the new shared 
         technologies and some of the things you'll hear about later 
         this morning with the ultra wide band technologies, so 
         there's some questions about how do we, in the future, 
         provide service to these operators who don't need exclusive 
         licenses, even in terms of moving incumbents from old          spectrum, so that we could use the old spectrum for new 
         services with higher values. 
                    In the old days, we used to have a forced march 
         with the fixed microwave users that we cleared out for DBS.  
         That didn't happen for another six to eight years, but with 
         a great deal of cost and dislocation imposed on the users. 
                    We just said, move, right.   
                    We've changed that.  We are beginning to use more 
         market-oriented approaches such as the ones we developed in 
         the emerging technologies band for PCS in which we're 
         allowing negotiations, payment, and compensation for 
         incumbents, when they move, and they are compensated by the 
         new entrants based upon how soon the new entrants need them 
         to move. 
                    So we're using more market forces there.  So if 
         you take a look across the changes that we've put in place 
         over a decade, and we're now saying today, how have we done, 
         and that's in part what we're looking at in terms of the 
         next several panels. 
                    I think we can say that the policies that we've 
         instituted have been, frankly, to a very large extent, 
         enormous successes.  Faster buildouts, faster licensing, 
         better services for users/consumers, lower prices.  The 
         bottom line is competition works, but we still have 
         challenges.                     Most of the questions relating to these 
         challenges relate to the questions of allocation allotments, 
         requests for more spectrum, the things that Dale talked 
         about. 
                    Demand is increasing, but we're not creating more 
         spectrum at the most desirable lower band frequencies.  New 
         entrants want to come in and incumbents say, well, gee, 
         we're not sure we want to move.  And in fact, some 
         incumbents historically argued, we don't need more 
         competition. 
                    But we know better than that now. 
                    So issues, most of these go to the question for 
         spectrum for new services.  There's government versus non- 
         government users that Bill talked about.  Government 
         reallocation versus voluntary reallocation with service 
         flexibility.  A good example is MMDS. 
                    MMDS was designed initially as a one-way analog 
         service for television.  It would be a wireless cable. 
                    We then went from analog to digital and we've now 
         allowed it to be two-way, and we're now beginning to see 
         MMDS operators convert themselves into, if you believe the 
         trade press, two-way wireless internet access providers, and 
         they're essentially voluntarily reallocating themselves 
         because we're giving them the flexibility. 
                    There are other tensions having to do with          government standards versus industry standards, satellite 
         versus terrestrial allocations, domestic versus 
         international, commercial, and private licenses to exclusive 
         licenses versus unlicensed shared spectrum. 
                    So the key question here is how do we meet the 
         increasing demand and while the market-based approaches and 
         policies have worked as predicted, the question is, how do 
         we capitalize on those and move forward, at the same time 
         taking into account, users who traditionally have not 
         benefitted by pure market approaches, such as public safety 
         users, amateurs, radio astronomy, radio location, and so on. 
                    I think Tom Sugrue got it exactly right.  And 
         that is, we need to address both the demand as well as the 
         supply side questions as we go forward in formulating 
         spectrum policies for the future. 
                    And as we go forward, I think it's important to 
         keep in mind that the primary lesson from the last decade's 
         experiment is that, as a general matter, relying more on 
         market forces, while not perfect, have actually served us 
         and the country very, very well. 
                    Thank you. 
                    CHAIRMAN KENNARD:  Thank you very much, Dr. 
         Pepper. 
                    That concludes our first panel. 
                    I had stated initially that I didn't think we'd          have time for questions, but I can't let this distinguished 
         panel leave without at least inviting questions from my 
         colleagues. 
                    Any questions from the bench? 
                    COMMISSIONER TRISTANI:  I do have one question, 
         Mr. Chairman. 
                    I liked your parable.  I'm sure Andy Fisher or 
         someone here has a list of who is using every parking space 
         that's available.   
                    I'm not sure, I really don't know whether the 
         Commission has an adequate inventory of current spectrum 
         usage. 
                    If that's the case, is it something that would be 
         useful in the discussions that we're having today? 
                    MR. HATFIELD:  I might start by saying that I 
         have been uncomfortable on exactly that topic.  I think the 
         Commission very wisely has moved in a more deregulatory 
         market approach. 
                    But we get to some of these allocation decisions, 
         it is sort of necessary to find out what actually exists out 
         there, what is really being used. 
                    I'm a little uncomfortable, I admit myself, that 
         we may have gone a little bit too far and don't have as much 
         information as we might be able to usefully use in 
         considering reallocation proposals.                     MR. FRANCA:  I think just adding to what Dale 
         said, when we looked at the emerging technologies band 
         effort, and we did about a two-year spectrum study of 
         spectrum below three gigahertz, most of our databases were 
         fairly inadequate to do the kind of relocation work we 
         needed to do. 
                    And we really had spent a lot of that time 
         building that from private coordinating databases and other 
         places outside of the Commission. 
                    There is a tension of collecting information from 
         licensees and making sure it's valid, and the deregulatory 
         approach where we basically ask for less information from 
         the licensees right now. 
                    DR. PEPPER:  Commissioner, one of the things 
         that's important in order for the market to work is that the 
         participants need to know, have information about what in 
         fact is in these bands, so you are absolutely correct. 
                    In fact, there's an effort, a couple of efforts 
         in different bureaus, trying to put on-line our spectrum 
         databases. 
                    And as part of the universal licensing efforts in 
         the Wireless Bureau, people who want to apply for licenses 
         now can actually see who else is there.  And maybe one of 
         the next steps is to integrate the databases across the 
         bureaus, some of the work that's been done over the last          couple of years, really good work on computerizing the OET 
         databases so that these then become available not only to us 
         but to potential licensees or people who want to work 
         together and negotiate with one another to provide better 
         services. 
                    MR. HATFIELD:  The problem is, in some bands we 
         just don't collect the basic information. 
                    MR. SUGRUE:  If I could add, just follow up on 
         what Bob said.  In the Wireless Bureau, we do try to keep 
         track of all our licensees. 
                    One problem is though they're in, I believe, it's 
         eleven different databases at the universal licensing 
         system.  We're sort of in midstream right now implementing 
         that.  It's supposed to help solve, because the information 
         isn't always as retrievable as one would like. 
                    I'm surprised to find sometimes that even though 
         these are automated systems, the amount of manual work 
         sometimes that has to be done to generate information along 
         the lines you're suggesting right now. 
                    If we have an en banc like this a year from now, 
         I hope we'll be able to have a better story to tell. 
                    MR. TYCZ:  I would just like to add on the 
         satellite side, because the population of satellite system 
         is rather small in the U.S.  We have a good sense on the 
         commercial side of the satellite systems, themselves, but          when you start going to the earth stations, and particularly 
         for VSETs and mobile earth stations, we blanket license 
         those at 100,000 at a whack, and we don't really know who 
         all the subscribers are.  We just have to go to a service 
         provider and we're hoping that he has an idea associated 
         with everyone of those. 
                    But we don't have that database to give us some 
         counts periodically. 
                    With respect to the international systems, it 
         gets even more complicated.  Other countries coming into the 
         U.S. market is going to make that issue even more 
         problematic, I think, as we go forward. 
                    CHAIRMAN KENNARD:  Thank you. 
                    Any further questions? 
                    Commissioner Ness? 
                    COMMISSIONER NESS:  I think everyone can see from 
         the quality of the presentations today that we have an 
         extraordinary group of individuals who are helping us to 
         discern how to best make a spectrum available for the 
         public. 
                    Each bureau, for different reasons, has different 
         methodologies for licensing spectrum. 
                    For example, in the satellite arena, we go about 
         it quite differently from the methodologies that are used in 
         the wireless.  Usually we have an allocation, and then we go          ahead and set up service rules, and then we go ahead and 
         often times auction the spectrum.  We even auction the 
         spectrum that's shared. 
                    In the satellite arena, we have applications for 
         new technologies and new uses, and we go about it slightly 
         backward from the methodology that was just described, 
         typically not engaging in an auction process. 
                    How best do we address the issue of shared 
         spectrum?  When you have the very long time horizons for 
         getting the satellite systems up and operating, versus 
         terrestrial systems that have a much shorter time horizon, 
         and where we're talking about shared spectrum, particularly 
         in an auction context. 
                    Tom? 
                    MR. TYCZ:  I think you've hit on a good point, 
         Commissioner Ness.  The satellite systems have longer build 
         out times.  They usually have. 
                    What we're finding is that many of the systems 
         have to get a license first before they can get investors, 
         and a lot of it is very futuristic, and there is a tension 
         between trying to get allocations for satellite services and 
         competing against terrestrial or wireless services, 
         particularly when the immediate use of the satellite system, 
         actually you have more immediate use of the threshold 
         services than you do of the satellite services, which are a          few years out. 
                    So in the decisions between the bureaus, you have 
         basically pleadings before us that we have to analyze to try 
         to figure out whether or not they can share or not, and 
         based upon technology, that they're saying they have now, 
         and may not be what they actually implement several years 
         from now. 
                    So we are put in a position of trying to almost 
         divine what some of the new technology is going to be to 
         make this sharing possible in the future. 
                    MR. SUGRUE:  It is one area that I'd have to say 
         I don't think we've been fully successful using economic 
         concepts that we use when it's strictly a terrestrial 
         service.  Part of that is because there's a lot of 
         legitimate concerns about using things like auctions in a 
         satellite environment, although we have auctioned a couple 
         slots off. 
                    But given the international characteristic of 
         many satellite systems, but one thing that does is it puts 
         pressure then on the Commission to really start making 
         decisions on how sharing will take place, as opposed to sort 
         of letting the marketplace decide how much you're going to 
         use the satellite and what the interference rules would be. 
                    I'd still like to look at, as we go forward, 
         trying to create something like more property rights in the          use of that spectrum in both space and terrestrial uses 
         which would get us a little bit out, at least on an 
         experimental basis, would get us out of having to decide all 
         those rules as a regulatory matter. 
                    COMMISSIONER NESS:  When we license through 
         auctions, what are we licensing precisely, especially if 
         it's shared spectrum? 
                    MR. SUGRUE:  You're licensing the right to use 
         the spectrum according to the service rules we've adopted 
         which may limit the right to use the spectrum in certain 
         ways that inhibit the value of it.  
                    That is, you do have to, in order to make a 
         useful, meaningful judgment as to the value, to construct a 
         bidding strategy to sort of focus it on auctions.   
                    You have to know what the rules are, the same way 
         if one bids on a piece of land, you need to know if someone 
         has an easement across it, if it's zoned for particular uses 
         that you don't want to use it for, or that someone else has 
         a right to. 
                    COMMISSIONER NESS:  Does that mean that the 
         Commission cannot change its rules at a later point in time? 
                    MR. SUGRUE:  I would never say that. 
                    (Laughter.) 
                    MR. SUGRUE:  As a matter of law, I think you take 
         them subject to the on-going regulatory oversight of the          Commission the same way most land use decisions you take 
         subject to the on-going oversight of the Zoning Commission 
         or whatever the regulatory authority is. 
                    COMMISSIONER NESS:  Thank you. 
                    CHAIRMAN KENNARD:  Any other questions from the 
         bench? 
                    (No response.) 
                    CHAIRMAN KENNARD:  We know where to find you all. 
                    (Laughter.) 
                    CHAIRMAN KENNARD:  So if we have others, we'll 
         find you.   
                    Thank you all very much.  That was very well 
         done. 
                    We'll ask our second panel to begin assembling up 
         here, please. 
                    (Pause.) 
                    CHAIRMAN KENNARD:  If I could ask everyone to 
         come to order for the second panel, please, I'd appreciate 
         it. 
                    Thank you. 
                    Our second panel will focus on spectrum 
         management today.  We want to hear a candid assessment from 
         our panelists of what you think works and doesn't work. 
                    I was talking to our staff as we were putting 
         this together and I wanted to be sure that we had some          panelists who would feel free to be completely candid with 
         the Commission on this particular panel. 
                    And seeing the group assembled and having worked 
         with most of you, I don't think that's going to be a problem 
         because I know that you have been candid with us in the 
         past, and I appreciate that. 
                    Dale Hatfield will also be a part of this panel, 
         as sort of our panelist emeritus moderator, and will be 
         jumping in with questions and comments as we go along. 
                    We have one little housekeeping matter that I 
         wanted to raise. 
                    John Stanton has a conflicting engagement this 
         morning and unfortunately will not be able to stay for the 
         entire panel, so I'm going to ask him to begin with his 
         presentation.  And then, if the Commissioners have any 
         questions for him, I will invite those questions after his 
         presentation. 
                    Then we'll go into the rest of the panelists. 
                    With that, John, would you like to begin? 
                    STATEMENT OF JOHN STANTON, CEO, WESTERN WIRELESS 
                    CORPORATION 
                    MR. STANTON:  Thank you, Mr. Chairman.  Thank you 
         for indulging my schedule. 
                    I am the Chairman and Chief Executive Officer of 
         Western Wireless Corporation.                     I'm also privileged to currently be the Chairman 
         of the CTIA. 
                    Although I speak primarily for myself and my 
         company today, I think my views also reflect those of many 
         of the others within the wireless industry. 
                    I thought it might be helpful to just begin by 
         giving a very brief introduction to our company, although I 
         have had the privilege of spending time with each of you. 
                    Western Wireless was really founded as an 
         organization during this Administration in 1992.  Basically 
         from scratch, we passed one million subscribers on December 
         31st of 1998.   
                    And have, I think, managed to provide terrific 
         service to our customers and opportunities to 4300 people 
         who work for us in the seven years we've built our business. 
                    We built that business initially by involving 
         ourselves in the rural wireless business.  We own 92 
         different licenses, almost entirely in rural areas, unless 
         you think of Lubbock and Fargo as big cities. 
                    We have participated in a total of 12 of the 
         FCC's auctions, including all of the A, B, C, the D and the 
         E, the F.  The C and F, I should note, are through a 
         partnership with Cook Inlet, and both of the C re-auctions, 
         including a re-auction that's ongoing right now. 
                    We've also participated in two ESMR auctions and          have participated in the LMDS auction process as well. 
                    We have purchased over $300 million worth of 
         spectrum.  Our company was the first to turn on an auction- 
         awarded PCS license. 
                    And we have also participated internationally.  
         We've involved ourselves in a dozen different countries.  We 
         have licenses either issued or pending in seven countries, 
         and have had the opportunity to participate in different 
         auctions as well as other licensing awarding processes in 
         other countries. 
                    And so I've had an opportunity to get a broad 
         perspective on the kinds of opportunities there are to issue 
         spectrum. 
                    I'd like to make a couple of comments this 
         morning directly responsive to the questions that were asked 
         of the panelists and really speak to what works. 
                    I think in my perspective, having participated 
         initially in my involvement at McCaw in the original license 
         awarding process in cellular through the lottery process and 
         now the auction, there has been frankly consistent progress 
         made in the way auctions are awarded. 
                    I would say that the mechanics for awarding 
         licenses through the auction process have been very 
         efficient.   
                    The process of allocating spectrum and the          greater freedom with which carriers have to utilize that 
         spectrum are clear improvements in the process during the 
         last 15 years in which I've been directly involved. 
                    I think that the further allocation, based on 
         market demand, anything that can advance the premise that 
         the market will determine the best use of the spectrum, I 
         think much of which is embodied in the current policies and 
         the current thinking of the Commission is very positive. 
                    I would tell you that some of the things that 
         don't work, frankly, well spectrum caps may have been 
         appropriate at the original outset of the PCS licensing 
         process, we are now the seventh operator in the last two 
         systems that we have turned on in the last four months in 
         Phoenix and Seattle, and I would tell you that spectrum caps 
         or limits on the amount of spectrum that carriers can own is 
         not only not necessary in order to promote competition, it's 
         actually damaging in terms of the ability of carriers to 
         efficiently operate their systems. 
                    We, for example, own 20 megahertz in Phoenix and 
         would like to have the opportunity to buy 30 megahertz more 
         because we think we can more effectively deliver the kinds 
         of service opportunities that we would like. 
                    That's the only spectrum that we see readily 
         available to enhance our offering and be necessary to give 
         back some spectrum under the current rules, unnecessary in          our view. 
                    I would like to speak, very briefly, to the 
         notion of what I call forgotten spectrum. 
                    We have participated and talked mostly about PCS, 
         but there are a number of cases that are interesting in the 
         cellular arena.  We currently, as all the Commissioners and 
         Chairman know, have been very active in promoting rural 
         wireless with the wireless residential service offering that 
         we've done in North Dakota. 
                    We are trying to get ETC status in South Dakota 
         as a part of our effort to continue to build our business.  
         The irony is that the Staff is currently recommending 
         against issuance of an ETC permit to our company, in part 
         because we are not proposing to serve a certain part of 
         South Dakota. 
                    That certain area in northwest South Dakota was 
         originally licensed to, issued via lottery.  That lottery 
         winner did not -- actually, it's part of the Rapid City MSA.  
         Before we purchased the license, that lottery winner did not 
         serve the entire territory. 
                    The consequence was that they returned the 
         spectrum.  For five years now, we have been waiting for an 
         opportunity to buy, or even to serve, based on interim 
         operating authority, that area of South Dakota. 
                    We're not allowed to under the Commission's          current licensing process because there's been a five-year 
         delay in that. 
                    My time is up.  There is another instance I could 
         speak of where there's been an over ten-year delay in North 
         Dakota in issuing licenses and five-year delays in paging. 
                    All these are cases where they are a bit off the 
         beaten track, they're not New York City PCS licenses but 
         they are still very important to the people who live in 
         those communities. 
                    And anything that the Commission can do to 
         expedite the licensing of those areas that are, as I call 
         them, forgotten, I think would be a terrific help. 
                    I'll end with that. 
                    CHAIRMAN KENNARD:  Thank you very much, Mr. 
         Stanton.   
                    I'll invite questions from the floor before Mr. 
         Stanton has to leave. 
                    Commissioner Ness? 
                    COMMISSIONER NESS:  Have you seen much use of 
         disaggregation and partitioning in the opportunity to get 
         additional spectrum? 
                    We tried, to some extent, to privatize the 
         availability of spectrum by creating secondary market. 
                    Has that happened and is that a useful tool to 
         avoid the issue of spectrum caps?                     MR. STANTON:  Commissioner, I think it is a very 
         useful tool.  Frankly, we have had an overlap issue that the 
         Commission has been very patient with in the Wyoming area. 
                    It came with the Denver MTA, but frankly our 
         problem has been that we've had a very difficult time 
         finding people who would even take disaggregated spectrum in 
         rural areas. 
                    Some of that has to do with the way the licensing 
         process, meaning the very large geographic area, but I would 
         say in general that disag, particularly if we could get down 
         to the BTA or conceivably even the county level, in some 
         cases would be very helpful. 
                    The challenge for us is having bought seven MTAs, 
         we really need all 30 megahertz in places like downtown 
         Denver and downtown Portland. 
                    We clearly can get by with substantially less 
         spectrum in the rural areas. 
                    COMMISSIONER NESS:  What about partitioning to, 
         for example, rural telephone companies or indigenous 
         companies?  Is that an opportunity waiting to be used? 
                    MR. STANTON:  We've had discussions, in the 
         Wyoming case, with both an independent telephone company in 
         western Wyoming, as well as a cable TV company that serves 
         both South Dakota and Wyoming. 
                    And I think it would be useful.  We would like to          try to do something.  There are companies frankly who've had 
         difficulties in resources, not in buying the spectrum, 
         because, as I said, we basically give it to them, but in 
         having the wherewithal to get the moneys to build out the 
         system. 
                    I think we've had an experience where it clearly 
         is something that can be accomplished.  We just haven't 
         managed to get it done yet. 
                    CHAIRMAN KENNARD:  Any other questions from the 
         bench? 
                    Commissioner Furchtgott-Roth? 
                    COMMISSIONER FURCHTGOTT-ROTH:  Thank you, Mr. 
         Chairman. 
                    Mr. Stanton, you mentioned some questions with 
         ETC designation, eligible telecommunications carriers, and 
         you referred to problems with the Commission. 
                    Is that the Commission the FCC or the South 
         Dakota Public Utility Commission? 
                    MR. STANTON:  We've had challenges at the states, 
         and that's primarily what I'm focused on. 
                    This instance that I think is terribly ironic in 
         South Dakota actually is a problem in this Commission or its 
         Staff not having resolved the award of licensing or even 
         interim operating authority to provide service in northwest 
         South Dakota in this part of the Rapid City MSA that I          referred to. 
                    So in this case, it is the FCC. 
                    But most of the challenges we have had, frankly, 
         have been the states and the staffs, in my view, not being 
         as pro-competition as this Commission. 
                    COMMISSIONER FURCHTGOTT-ROTH:  I'm still having a 
         little trouble following this. 
                    Is the concern because I thought it was the state 
         commissions that designate eligible telecommunications 
         carriers, and not the FCC. 
                    Is the South Dakota Public Utility Commission 
         saying they will not designate you as an ETC unless the FCC 
         does something? 
                    MR. STANTON:  I'm sorry, let me be clear. 
                    We are at the staff level in South Dakota.  We 
         have not gone to the full Commission level.  The staff is 
         currently recommending against granting of an ETC status for 
         us. 
                    The reason for their current view is that there 
         is a part of South Dakota that they would like us to serve, 
         as part of our universal service or wireless residential 
         service program, that we would be delighted to serve, that 
         we have had pending applications to serve with our 800 
         megahertz spectrum for over five years. 
                    We can't get licensed here.  If we can break the          logjam on the unserved areas. 
                    It's the same in the North Dakota Three RSA, for 
         example, is a similar situation.  It caused us problems 
         where we wanted to provide relief services and subsequent 
         essentially replacement services in North Dakota, after the 
         Red River Valley flooding disasters. 
                    But literally, the North Dakota Three RSA, I 
         believe, was originally lotteried in 1989.  The original 
         lottery winner never was issued a license. 
                    In 1996, I believe, there was an effort to issue 
         a new license, either by lottery or auction, but literally 
         no license has been issued on the non-wire line side, the B 
         side. 
                    There we've been able to get into an operating 
         authority but that has a chilling effect on investment.  
         It's hard for me to justify the millions of dollars to build 
         out that territory when in fact the Commission could make a 
         decision to issue a license to someone else.  And I had to 
         pull my investment out. 
                    COMMISSIONER FURCHTGOTT-ROTH:  Thank you. 
                    CHAIRMAN KENNARD:  Are you confident that if you 
         were able to secure authority for that one part of the 
         State, that you would be able to convince the North Dakota 
         Commission to grant you ETC authority? 
                    In other words, is that the only issue that's          being raised in North Dakota? 
                    MR. STANTON:  We have our norths and our souths 
         confused in this case because I used an example from both, 
         Mr. Chairman. 
                    To be blunt, we have great reservations in a 
         number of the states.  We have had problems in Kansas with 
         ETC status.  I'm not sure that's the purpose of the hearing 
         today, but I'd be delighted to use this as an opportunity to 
         talk about it, if you'd like. 
                    The specific instance in South Dakota, the only 
         serious issue being raised is that we, unlike the 
         independent telephone companies who do have universal 
         service obligations, we are not going to be able, in their 
         view, to serve the entire territory, the entire state, and 
         therefore they are hesitant, they have told us, to issue ETC 
         status to us. 
                    I can't tell you that if we overcome that 
         obstacle that we won't find another obstacle, because we 
         perceive that there is a bit of protectionism going on for 
         the independent telephone companies in South Dakota. 
                    But we are fully prepared to fight that issue.  
         We are fully prepared to make the investment. 
                    The one thing I can't do is I can't invest in the 
         territory where I'm not licensed to serve. 
                    CHAIRMAN KENNARD:  Thank you.                     Any other questions for Mr. Stanton? 
                    (No response.) 
                    CHAIRMAN KENNARD:  Thank you very much for 
         appearing here today. 
                    MR. STANTON:  I apologize for the schedule 
         conflict.  I'll hopefully have an opportunity to see each of 
         you later today or tomorrow. 
                    CHAIRMAN KENNARD:  Thank you. 
                    Mr. Claudy? 
                    STATEMENT OF LYNN CLAUDY, SENIOR VICE PRESIDENT 
                    OF THE SCIENCE AND TECHNOLOGY DEPARTMENT, NAB 
                    MR. CLAUDY:  Thank you, Mr. Chairman, and 
         Commissioners. 
                    I'm pleased to offer broadcasters' views on the 
         Commission's role in respect for management. 
                    As a history reminder, the primary reason for the 
         passage of the Radio Act, which was the predecessor to 
         today's Communications Act, was managing the spectrum to 
         ensure interference-free broadcast service. 
                    By 1927, chaos reigned on the nation's airwaves, 
         and one of the Commission's greatest successes in its 70 
         years has been keeping radio and TV service free of 
         destructive interference. 
                    One need only to travel to countries such as 
         Italy, among others, to find conditions that are similar to          the U.S. in the 1920s, where radio stations operate without 
         regard to limits on power, frequency or location. 
                    The result of course is not radio for everyone, 
         it's radio for no one. 
                    The principles that the Commission has followed 
         have recently come under attack by hundreds of unlicensed 
         operators who have wrongly claimed a constitutional right to 
         broadcast in the radio band. 
                    We'd like here to commend the Commission for its 
         dedicated efforts in fighting broadcast piracy. 
                    Broadcasters believe that the FCC should work to 
         ensure that spectrum can be made more useful if new 
         technologies appear. 
                    In many cases, advances in technology will permit 
         existing services to use less spectrum to provide the same 
         or greater level of service. 
                    A good example are the pending proposals for in- 
         band on-channel digital radio service which will permit 
         radio broadcasters to provide much higher quality audio and 
         new forms of data services. 
                    Nonetheless, as the Commission weighs requests 
         for spectrum for new services, it needs to be careful that 
         it does not do unintentional damage to existing services. 
                    In recent years, we've seen repeated efforts to 
         displace broadcasters from frequencies that they use to          provide electronic news gathering or other operations 
         essential to providing a modern broadcast service. 
                    We believe the Commission should follow several 
         principles in this area.  
                    First, it should recognize that many systems 
         proposed to it are different ways of providing the same or 
         similar services and it's unlikely that all of them can be 
         successful. 
                    Thus, the Commission should weigh carefully 
         whether it is appropriate to displace several existing 
         services where the actual market need might only require 
         movement of one. 
                    Second, the Commission needs to be careful when 
         it accepts assurances from new services that they can share 
         spectrum with existing users. 
                    In theory, sharing is an ideal solution.  No one 
         loses spectrum and spectrum is used more efficiently. 
                    All too often, however, such assurances turn out 
         to be wishful thinking and the new user may call for the 
         incumbent service to be made secondary or otherwise 
         responsible in itself for preventing interference. 
                    If the FCC is going to rely on sharing, it should 
         make clear that new entrants will bear the responsibility, 
         if sharing proves to be unworkable. 
                    Third, the Commission must ensure that adequate          replacement spectrum is available for any displaced 
         incumbents, and in that context, adequate means not only 
         that there is spectrum, but that there is equipment 
         available that will permit all existing uses to be 
         replicated in the new band without a loss of service 
         quality. 
                    And finally, the Commission must continue to 
         insist that new users compensate incumbents for the cost of 
         buying and installing new equipment as your New Emerging 
         Technology decision provides. 
                    While the FCC has been following these 
         principles, increasingly you are under pressure to cut short 
         these protections for vital existing uses. 
                    We note that a number of new satellite services 
         have been proposed that would operate in bands where other 
         necessary broadcast station support services now operate. 
                    Finally, you've asked under what circumstances 
         the FCC should adopt technical standards and when it should 
         allow marketplace forces to determine technology. 
                    Broadcasters, unlike many providers of wireless 
         telephony and similar services, do not control the equipment 
         consumers use to receive their service.  Instead, consumers 
         buy equipment in the open market, and they expect  that it 
         will work anywhere in the country. 
                    In order to provide consumers with the assurance          that the investment in new equipment will not be lost, the 
         Commission needs to adopt rules to ensure compatibility 
         between broadcast signals and receivers and because 
         broadcast signals are distributed by cable systems and other 
         multichannel video providers, in that area as well, it's 
         essential that the FCC work to ensure that new technologies 
         are not lost through technical disagreements between 
         industries. 
                    Congress' direction to the Commission, both in 
         the 1992 Cable and the 1996 Telecommunications Acts to 
         provide standards for cable set top boxes is a good example 
         of that policy at work. 
                    Thank you very much. 
                    I'll be happy to answer any questions. 
                    CHAIRMAN KENNARD:  Thank you very much. 
                    Next, we'll hear from Mark Crosby. 
                    STATEMENT OF MARK CROSBY, PRESIDENT, INDUSTRIAL 
                    TELECOMMUNICATIONS ASSOCIATION 
                    MR. CROSBY:  Good morning, Mr. Chairman, 
         Commissioners. 
                    The third question that you submitted to this 
         panel particularly piqued my interest because it was 
         concerned with non-economic factors and a couple of services 
         were mentioned, that being radio astronomy, public safety, 
         and the amateur community.                     Mr. Sugrue used a parable.  I'd like to use a 
         parable as well, because I'm somewhat sensitive when private 
         wireless isn't mentioned. 
                    If there were a meteor crashing to earth, the 
         radio astronomers would of course find it, the amateurs 
         would tell us where to go hide, public safety would keep 
         order, and private wireless would keep things running before 
         the meteor hit, and probably keep things running when it did 
         hit, and put the pieces back together afterwards. 
                    So I guess that leads into my answer to question 
         three.  All spectrum management regulatory and allocation 
         decisions cannot be reduced simply to defining market areas, 
         population coverage and per pop evaluations. 
                    If it were that simple, we would just need 
         computer programmers, and I guess we wouldn't be here this 
         morning. 
                    Non-economic factors, such as contributions to 
         business productivity, the safety of the public, employee 
         safety, and the competitiveness of America's economy, 
         supported and enhanced through the use of the nation's 
         spectrum resources, are also factors that must be integrated 
         within spectrum management policy determinations. 
                    If we support America's domestic corporate 
         competitiveness and vitality through responsible spectrum 
         management, where the Commission leads through decisiveness,          international competitiveness will certainly follow. 
                    It is obviously difficult to determine the needs 
         of services that do not automatically provide economic 
         counters that may be statistically quantified. 
                    There are no easy solutions and no matter how the 
         Commission may attempt to modify its spectrum management 
         models based on competitive bidding to achieve anticipated 
         results, that effort will leave valuable spectrum uses 
         behind. 
                    The Commission is the world's spectrum management 
         leader.  If there are certain classes of spectrum users 
         whose contributions are difficult to comprehend, I suggest 
         that through normal comment cycles and open sessions, such 
         as this morning's, clarity may be achieved that will assist 
         the Commission in its spectrum management decisionmaking 
         process, particularly for those classes of spectrum users 
         that are perhaps more difficult to understand. 
                    The private wireless industry, for one, certainly 
         would look forward to such communication opportunities.  
         Such an approach worked well in the past, and I'm sure it'll 
         work well in the future. 
                    Question one had to do with advantages and 
         disadvantages of providing spectrum for new services by 
         several approaches.   
                    As I discussed in my written statement, spectrum          sharing is an appropriate management approach to foster 
         efficient use of the spectrum, particularly for 
         communication industries like private wireless, that employ 
         engineering-based license assignment mechanisms that are 
         specifically designed to maximize the efficient use of the 
         radio spectrum. 
                    In fact, I would encourage a closer look, closer 
         examination of the potential for sharing among compatible 
         users such as government and non-government systems where 
         spectrum use is similar and where technology and spectrum 
         engineering may serve to significantly reduce the potential 
         for interference. 
                    It is also my experience that users in shared 
         spectrum environments eventually demand, and manufacturers 
         will eventually introduce innovative products that adapt to 
         the shared spectrum environment, thereby promoting more 
         intensive use of the spectrum. 
                    A perfect example is the proliferation of 
         innovative trunking technologies in the private wireless 
         bands below 800 megahertz that have adapted to these shared 
         frequency bands that are the subject of the Commission's 
         ongoing requirements proceedings. 
                    When it comes to reducing channel bandwith, 
         private wireless is the model student, having experienced 
         such a requirement four times in its history.                     At least for the foreseeable future, I believe we 
         have pushed the technical envelope, however, with 6.25 
         kilohertz channel bandwidths by the year 2005 as our 
         industry's new hurdle. 
                    Date certain transitions however need to 
         accommodate normal procurement cycles of the licensees and 
         are probably best utilized in major metropolitan areas where 
         prospective demand is of course greater. 
                    It is critical to remember, however, that when 
         you split channel bandwidths in half, it's not simple math.  
         You do not receive a two-to-one improvement in spectrum 
         availability, as incumbent systems and concurrent 
         interference protection requirements limit the effect of the 
         technology spectrum that has been created. 
                    The targeted industry eventually achieves the 
         two-to-one gain, but the transition take a while. 
                    We also need to take into account the fact that 
         spectrum narrowbanding creates technology opportunities, but 
         it also simultaneously reduces the potential for the 
         development of broadband technologies that can serve the 
         same purpose of promoting spectrum efficiency. 
                    My time is up.  I will submit this for the 
         record. 
                    CHAIRMAN KENNARD:  If you'd like to sum up, we'll 
         give you a few minutes.                     MR. CROSBY:  The other one I want to do is band 
         clearing.  Band clearing at 2 gigahertz worked extremely 
         well because there was a spectrum that the incumbents could 
         go to.   
                    You made a wise decision and put some financial 
         ground rules in place. 
                    And I think the other reason why it worked well 
         is because the relocators for the obligation were not in the 
         same business as the incumbents and things have worked out. 
                    As a clearinghouse, we have had no financial 
         disputes to resolve.  We have one other one that's right 
         before you, and that is the 800 megahertz.  It's a little 
         too early to tell, but I have a sneaking suspicion that 
         that's going to be a little bit more difficult because I 
         don't think there is really good alternative spectrum. 
                    The financial ground rules are a little bit less 
         clear, and the predominant relocator is in, often times, the 
         same business as the incumbent, but it's still hard to tell, 
         and we'll see. 
                    But thanks very much for your time. 
                    CHAIRMAN KENNARD:  Thank you very much. 
                    Mike Kennedy, welcome. 
                    STATEMENT OF MIKE KENNEDY, CORPORATE VICE 
                    PRESIDENT AND DIRECTOR, MOTOROLA INC. 
                    MR. KENNEDY:  Thank you, Mr. Chairman, and          Commissioners. 
                    First, let me start by expressing my appreciation 
         to all five of you for spending the morning here on a 
         subject that certainly Motorola regards as fundamental to 
         the FCC's purpose.  That of course is spectrum management. 
                    And secondly, let me also thank you personally 
         for the opportunity to testify. 
                    While I don't consider myself a national 
         treasure, I certainly am the only person in the room that 
         has spectrum in his title, I'll bet.   
                    I've submitted a written statement for the 
         record, and I am aware that you'd like us to address the 
         three questions that you asked. 
                    I went through the questions, and I found myself 
         saying, the answer depends, the answer depends on what 
         services, what bands, what technologies, et cetera. 
                    So I thought what I would do is make some remarks 
         this morning about the process of spectrum management and 
         try to tie in the questions at some appropriate points. 
                    I haven't spent enough time at the Commission 
         over the last few years.  Those that know me know that I 
         spend most of my time dedicated to Motorola's satellite 
         startup projects. 
                    But I have spent a lot of time, I've spent a lot 
         of time overseas, meeting with your counterparts in other          countries, attending radio conferences, going to regional 
         meetings. 
                    The comments I'll make I think reflect heavily on 
         my experiences there, and I think they are applicable to 
         both terrestrial and also to the satellite businesses. 
                    I'd like to make three main points this morning. 
                    The first point I would make is that you, and 
         indeed we must start globally.   
                    The second point I would make is spectrum 
         management is hard work. 
                    And the third point I would make is that spectrum 
         auctions aren't the answer. 
                    And I'll conclude finally with a recommendation. 
                    Let me elaborate. 
                    We have to start globally.  I remember the time 
         at the Commission when international was border coordination 
         with Mexico and Canada. 
                    Then I remember in 1979, and I guess I'm giving 
         away my age here, I remember in 1979 when the Commission 
         made a landmark decision in 800 and 900 megahertz for new 
         mobile allocations. 
                    The Commission was very successful.  The U.S. 
         Government was very successful in taking that decision 
         outside of the United States. 
                    The industry supported that.  We had a very good          working relationship, and we ended up with a successful 
         mobile radio service globally that I think was earmarked by 
         the United States leadership very successful time. 
                    Now we have the International Bureau in 
         recognition of the importance of international to the 
         Commission and of course, as already been mentioned this 
         morning, we have WTO commitments that are equally important 
                    We've had some great satellite decisions.  I've 
         been personally involved in some of those. 
                    We've done very well, I think, in satellites in 
         the international community, but what have we done with 
         mobile. 
                    You asked for controversy, Mr. Chairman, I'll put 
         some controversy on the table. 
                    We did PCS.  I was personally involved.  Motorola 
         played a major role in that proceeding.  We achieved lots of 
         terrific outcomes.  We got more competition in the United 
         States, we got more spectrum from mobile.  We have something 
         like 70 million users at this point in combined and cellular 
         and PCS bands. 
                    We have a very successful auction, very 
         successful for the United States for the Treasury and a very 
         successful test of the process, I think. 
                    Where did we not do so well? 
                    We didn't do so well in looking globally.  We          ended up adopting a plan that really put us out of sync with 
         the rest of the world, and now we are in the position where 
         I believe we're trying to figure out how to redress that 
         problem. 
                    It has ramifications for manufacturers, I think 
         for operators, and I think for importantly the public and 
         the end users in the United States. 
                    I'd better move on. 
                    Secondly, spectrum management is hard work.  The 
         questions that you asked on sharing, reduced channel 
         bandwidths, et cetera, will take a focus to really arrive at 
         reasonable answers. 
                    The answer I would give you today is that 
         spectrum management is dynamic, allocations will change and 
         users will have to move up in the spectrum, and they'll have 
         to be treated fairly. 
                    Emergency technology rules are a good process 
         there. 
                    Finally, spectrum auctions.  Let me be clear.  
         Allocate the spectrum, auction the licenses for competitive 
         bidding.  That's what I mean when I say spectrum auctions 
         aren't the answer.  Manufacturers need certainty, I think 
         consumers need some certainty, and I think that the global 
         marketplace demands some certainty that a true spectrum 
         auction might really not allow us to achieve in the          marketplace. 
                    Finally, let me conclude with a recommendation on 
         the process. 
                    I think that we need to formalize the process 
         within the Commission and I think we need to elevate the 
         attention. 
                    That why I started by congratulating you for 
         dedicating what I know is a time from very busy schedules 
         for all of you. 
                    Let's create a spectrum management board within 
         the Commission.  We've done some of this within Motorola 
         where we have different businesses. 
                    In the Commission, you have different offices and 
         bureaus. 
                    Let's put together a team of senior leaders in 
         the Commission who actually sit down and deal with the issue 
         of spectrum management so we can get the kind of complex 
         problems solved that I think we face. 
                    I looked at your first panel, and I said that 
         looks like a spectrum management board to me. 
                    Thank you. 
                    CHAIRMAN KENNARD:  Thank you, very much. 
                    Next, it's always nice to welcome back a former 
         Commissioner, Henry Rivera, now an attorney with the law 
         firm of Shook, Hardy & Bacon.                     Henry, welcome. 
                    STATEMENT OF HENRY M. RIVERA, ESQUIRE, LAW FIRM 
                    OF SHOOK, HARDY & BACON 
                    MR. RIVERA:  Thank you, Mr. Chairman.  It's nice 
         to be here.  Commissioners, it's nice to see you all again 
         this morning.  Let me compliment you on this beautiful 
         facility, Mr. Chairman, Commissioners, it's certainly not 
         like the old days. 
                    CHAIRMAN KENNARD:  The parking's great too. 
                    (Laughter.) 
                    MR. RIVERA:  I'm here on behalf of my client, 
         Metricom, Inc., which provides a wireless internet access 
         using primarily the unlicensed band.  Few realize the extent 
         of unlicensed operations because obviously there is no 
         license process.  The industry is not cohesive and it's 
         difficult to assemble meaningful statistics about this 
         industry. 
                    Furthermore, the industry typically has a very 
         low profile here at the Commission. 
                    Nevertheless, the Commission has recognized 
         unlicensed operations and the significant public benefits 
         that it can provide by offering competitive equipment and 
         services, lower costs, and mass consumer-off-the-shelf use. 
                    Recent examples of the Commission's recognition 
         of the many benefits of unlicensed operations appear in the          UNII and above 40 gigahertz proceedings. 
                    In order for unlicensed operations to be 
         successful, the Commission must internalize the fact that 
         creation of unlicensed operations was also the adoption of a 
         significant spectrum allocation policy. 
                    From this follows two principles, significant 
         principles. 
                    First, unlicensed operations cannot be merely an 
         afterthought in the policymaking process. 
                    Secondly, the regulatory environment must exist 
         for unlicensed operations.  That is conducive to the 
         accomplishment of the business plan, and provides stable and 
         adequate spectrum that has reasonable shares in the band. 
                    These principles should be embraced by the 
         Commission because unlicensed spectrum operations, one) 
         promote efficient utilization through sharing, and two) 
         encourage technological innovation. 
                    I was asked to articulate the advantages and 
         disadvantages of providing new services by tried and true 
         methods that the FCC has always used; sharing technical 
         improvements, band clearing and reallocation. 
                    The problem with all but one of these approaches 
         is the premise that providing spectrum for new services must 
         take, as a starting point, that interference will occur 
         among users of the same spectrum and that interference is a          bad thing. 
                    This is based on the immutable truth that the 
         license spectrum is generally entitled to exclusive use. 
                    Most sophisticated users of the unlicensed 
         spectrum have no problem with reasonable anticipated 
         interference.  These users have engineered their systems 
         with sharing and interference in mind. 
                    Unlicensed systems that are not robust enough to 
         withstand interference from other users, and at the same 
         time not cause interference to others in the band, will not 
         survive and will not be commercially viable. 
                    By promoting simple, flexible, and fair rules for 
         sharing, such as those very brief rules for spread spectrum 
         operations, Section 15,247, the Commission can encourage 
         technology and marketplace forces to replace existing 
         regulation and allow the engineers to invent the best 
         solutions for managing the spectrum. 
                    Which leads me to the second question the panel 
         is supposed to deal with, which is when should the FCC 
         promote more flexible use of the spectrum, and when should 
         it adopt more detailed technical operational regulations. 
                    This question indicates a failure to fully 
         appreciate the Part 15 paradigm.  With Part 15 spectrum 
         rules, the Commission created an entirely new industry that 
         is robust and economically viable.                     Systems and services have been created and 
         products are in the hands of consumers.  And some Part 15 
         works and it works well. 
                    By any measure, the Part 15 rules are very brief.  
         There are very few detailed, technical and operational 
         specifications. 
                    Furthermore, there are no complicated etiquettes 
         at all.  To get into the Part 15 business, one just needs to 
         follow the simple, technical rules.  The market will decide 
         the winner and losers and the Commission is spared the 
         needless expenditure of resources to license and manage this 
         spectrum. 
                    Two final thoughts before my time is up. 
                    First, the Commission should recognize that the 
         Part 15 industry is one of the few remaining places where 
         someone with little capital can enter the telecommunications 
         business and make a positive contribution in terms of new 
         services and devices. 
                    One does not need to participate in an auction 
         and the Part 15 rules reward technical achievement. 
                    Second, in my estimation, the largest single 
         problem that the Part 15 has faced has been that when the 
         Commission is making spectrum policy decisions, it tends to 
         forget the Part 15 industry exists. 
                    This failure on the part of the FCC makes it          harder than it ought to be to convince potential investors 
         to invest in the Part 15 industry and potential customers to 
         do business with Part 15 suppliers. 
                    The notion that Part 15 has to accept 
         interference from all and may not cause interference to 
         anyone has caused some to believe that this means the FCC 
         can make spectrum policy, completely ignoring the existence 
         of the Part 15 industry. 
                    Nothing could be completely further from the 
         truth. 
                    The Commission has not conducted itself in this 
         manner.  Once reminded of Part 15 interests, the Commission 
         needs to keep the Part 15 industry in mind when it launches 
         a proceeding related to unlicensed band. 
                    The Part 15 industry cannot be an afterthought in 
         the spectrum policymaking process.  The inclusion of a 
         representative of that industry in today's proceedings is an 
         indication that the Commission is taking the unlicensed 
         industry seriously. 
                    Thank you again for inviting me.  I really 
         appreciate your attention. 
                    CHAIRMAN KENNARD:  Thank you very much, Henry. 
                    The next witness is Phil Salas from Alcatel. 
                    STATEMENT OF PHIL SALAS, DIRECTOR OF RADIO 
                    TECHNOLOGY, ALCATEL, USA                     MR. SALAS:  Thank you very much, Mr. Chairman and 
         Commissioners.  I very much appreciate the opportunity to 
         come and speak to you here today. 
                    If I could have my first slide, please? 
                    (Slide.) 
                    As you can see from the above, I've had the 
         opportunity and privilege of being involved with being 
         involved with many industry organizations all dealing with 
         spectrum issues. 
                    It seems like just a few years ago, people were 
         saying radio was dead.  Today, you can hardly find an 
         available hertz.  We are seeing all these new technologies 
         and services coming forth that are emerging, and one of the 
         ways we are addressing these is through spectrum band 
         sharing and band sharing. 
                    Next slide, please. 
                    (Slide.) 
                    Increased sharing obviously has the advantages 
         that new services can be added to our existing limited 
         spectrum, but we have to keep in mind the potential 
         disadvantages, which include frequency coordination issues, 
         especially with significantly differing services. 
                    We have a concern for the ability of existing 
         services to grow due to additional congestion. 
                    Sharing can also be dangerous to both the new          entrants and the incumbent unless advance technical studies 
         are not done first. 
                    Sharing generally is found not to be suitable for 
         mass market or ubiquitous type service, and sharing can be 
         inefficient leading to spectrum warehousing if the new 
         services don't follow through with their promised capacity 
         needs, as we saw in DBS originally. 
                    Next slide, please. 
                    (Slide.) 
                    Required technical improvements may not be 
         necessary for some of the new bands.  However, I believe we 
         should push technology to make more spectrum available in 
         shared bands. 
                    However, I believe technical quality should be 
         observed at the very least. 
                    As an example, Part 101 fixed service users have 
         high spectrum efficiency requirements both for radios and 
         antennas.  By antennas, I mean Category A Shrouded Antennas. 
                    The fixed service also has minimal loading 
         requirements, growth requirements and may only occupy the 
         bandwith and azimuths actually needed. 
                    New entrants for sharing the band have few if any 
         of these requirements. 
                    Next slide, please. 
                    (Slide.)                     Band clearing causes the least problem for new 
         services.  It allows for very wide licenses and flexible 
         deployment.  However, where can the existing services go 
         when they're cleared out of a band? 
                    Most of the existing services today are growing.  
         Currently over 6,000 frequencies per year are being 
         coordinated for Part 101 users. 
                    So when bands are cleared, the incumbents must 
         move to frequencies that are being used for growth. 
                    Next slide, please. 
                    (Slide.) 
                    When band clearing is required, relocation costs 
         must be borne by the new entrants.  This is obviously costly 
         to the entrants, but the existing users have considerable 
         costs buried in their existing networks, and these are 
         revenue-generating competitive public service or public 
         safety networks. 
                    And again, most of these networks are growing. 
                    Next slide, please. 
                    (Slide.) 
                    Sharing between dissimilar services has a very 
         poor track record.  The recent 28 gigahertz negotiated 
         rulemaking determined that FS sharing with ubiquitous FSS is 
         not feasible. 
                    Thirty-eight gigahertz studies have shown the          same. 
                    The reason 18 gigahertz NPRM is due to the fact 
         that some technology is not sharable technologies.  After 
         two years of effort to determine PCS and FS sharing criteria 
         in the 1850 and 1990 megahertz band, over two-thirds of the 
         FS incumbents were relocated by the PCS entrants. 
                    The FSS has effectively lost the 3.7 to 4.2 
         gigahertz band, due to its inability to share with licensed 
         GSO downlinks. 
                    The FS currently has difficulty coordinating 5.9 
         to 6.4 gigahertz links in many parts of the U.S. due to the 
         large number of satellite uplinks. 
                    Just recently, Virginia Power had to get a waiver 
         to go to upper 6 for their high capacity needs because they 
         were blocked by earth stations here in the D.C. area. 
                    The FS successfully been able to coordinate 
         around 11 gigahertz satellite gateways through frequency 
         segregation. 
                    Next slide, please. 
                    If sharing between dissimilar services was truly 
         viable, would the FS have lost 1850 to 1990, 2100, 2200, and 
         half of the 18 gigahertz band? 
                    And of course, 4 gigahertz, as I mentioned 
         before. 
                    Next slide.                     (Slide.) 
                    Sharing has the highest ability to succeed when 
         similar services share the band.  Dissimilar service 
         sharing, however, is much, much more difficult because 
         coordination requirements differ, allowable performance 
         degradations differ, and technologies involved can differ 
         significantly. 
                    When sharing must occur between dissimilar 
         services, I believe band segmentation to be the best 
         opportunity for success. 
                    Next slide. 
                    (Slide.) 
                    In order for sharing to be successful, spectrum 
         studies need to be done prior to filing the petition for 
         rulemaking. 
                    These studies need to include complete 
         identification of the incumbent, a thorough sharing and 
         relocation plan, identification of destination bands, and 
         any rule changes necessary in those destination bands. 
                    We've had problems in the past where the bands 
         were available but the rules did not support them, and an 
         economic impact study on the incumbents. 
                    It's also very important for the Commission to 
         ensure that existing users have time to study and comment on 
         important sharing issues.                     New allocations leading to sharing must be done 
         by NPRM, not by waiver. 
                    The highly contentious earth station on board 
         vessel issue has never had the benefit of the administrative 
         procedures and public comments associated with an NPRM. 
                    Last slide. 
                    (Slide.) 
                    Finally, no new spectrum is being created.  
         Therefore, we must make efficient use of the spectrum.  A 
         lot of volunteer organizations and industry organizations 
         are out there which have accomplished extremely high 
         utilization of our spectrum. 
                    I believe the Commission should take advantage of 
         these types of organizations prior to an NPRM in order to 
         minimize the pain of the NPRM in subsequent rulemakings. 
                    Thank you very much. 
                    CHAIRMAN KENNARD:  Thank you very much. 
                    Leslie Taylor of Leslie Taylor Associates. 
                    STATEMENT OF LESLIE TAYLOR, PRESIDENT, LESLIE 
                    TAYLOR ASSOCIATES 
                    MS. TAYLOR:  Thank you very much, Mr. Chairman, 
         Commissioners.  I'm very pleased and honored to be here 
         today to speak on spectrum management. 
                    It's a particular honor for me, as a former 
         Commission employee for almost ten years.  I also worked at          NTIA, so I had the opportunity to see spectrum management 
         from a couple of different perspectives in the federal 
         government. 
                    Since leaving the government, I've primarily 
         focused on international and satellite spectrum management. 
                    (Slide.) 
                    As many of the people who know me in this room, 
         my favorite kind of case is the most difficult one, 
         primarily those looking at new services that require new 
         spectrum and innovative spectrum-sharing solutions. 
                    Next slide. 
                    (Slide.) 
                    First, I want to express appreciation to 
         Commissioner Ness for her involvement in global spectrum 
         management activities.  This kind of participation really 
         helps the United States express to other countries that it 
         does have a commitment to the international process. 
                    And I would encourage other Commissioners to 
         participate as well.  I think the more, the better.  And 
         this process should go forward. 
                    The communications marketplace is a global one.  
         Today, U.S. manufacturers and service providers serve a 
         global marketplace.  U.S. consumers use products and 
         services made in the U.S. and outside the U.S. 
                    U.S. consumers travel extensively and expect and          need high quality communications wherever they go. 
                    Now I like to do a little show and tell.  I 
         didn't leave my cell phone on but I wanted to ask the 
         Commissioners how many people have a cell phone. 
                    You don't have to take them out. 
                    (Show of hands.) 
                    MS. TAYLOR:  How many of you can take your cell 
         phone anywhere in the world that you want to go? 
                    CHAIRMAN KENNARD:  It's a painful subject to 
         bring up right now. 
                    (Laughter.) 
                    MS. TAYLOR:  Do any of you not use the Internet? 
                    (No response.) 
                    MS. TAYLOR:  Okay, everyone uses the Internet.  
         Everyone have connectivity at the bandwidth speeds that you 
         want everywhere, even here, even at your own home. 
                    I just tried to get the ADSL in my home in 
         Bethesda, Maryland, which is about ten miles from the White 
         House.  I can't a cable modem, I can't get ADSL.  I have a 
         dial-up so I think the problem you've recognized is what I'm 
         going to ask you to focus on as you go forward in the 
         spectrum management area. 
                    The two driving forces in communications today 
         are mobility and broadband, and if you keep those objectives 
         in mind, as you are involved in spectrum allocation          proceedings, I think that will take you to the right 
         solution. 
                    Some lessons from the past. 
                    Next slide. 
                    (Slide.) 
                    I can put up some of these lessons because I 
         don't think any of you on the current Commission were 
         involved in these decisions. 
                    Some of the early cellular decisions, while I do 
         commend the Commission of the early 1980s for getting 
         cellular going in the United States, it essentially 
         bulkanizes cellular business in the U.S. and we had a 
         standard situation which I realize was not the Commission's 
         responsibility. 
                    We had a standard situation that set us apart 
         from the rest of the world. 
                    However, we have a situation where Europe took a 
         different approach.  They adopted a common standard called 
         GSM.  They can take this phone -- not this phone but a phone 
         -- and they can roam through a hundred countries.  There are 
         120 million GSM users in the world today.  By 2003, there 
         will be 700 million cellular users. 
                    Now what else would we like to do with the cell 
         phone?  Wouldn't we like to combine this mobile phone with 
         broadband?  Yes.  I think that's something that you are all          thinking about, talking about, dreaming about. 
                    That's something that we would all like to see 
         happen, and make happen. 
                    Third generation wireless will be a critical 
         component for new technology and this has got to be 
         facilitated.  However, we've got a lot of hurdles to 
         overcome before that. 
                    We have different standards in the U.S.  We have 
         different frequency bands.   
                    On to satellites, next slide. 
                    (Slide.) 
                    Okay.  Similarly in the satellite field, the U.S. 
         has had something of a go-it-alone approach at times and at 
         some points has taken critical allocations that were 
         different from global allocations. 
                    Sometimes this has worked out all right in the 
         case of DBS and DARS, but in the case of MSS, where we need 
         critical spectrum to move forward so the MSS can be a part 
         of third-generation wireless, some of the MSS allocation was 
         taken and reallocated to PCS. 
                    At WRC-95, the U.S. did a very wonderful thing, 
         that is, they went to a conference and they said, we think 
         global broadband systems are extremely important. 
                    We got the support of the international community 
         and they got allocations for those types of systems.                     However, in 1997, when other countries came back 
         and wanted to have more allocations for global broadband, 
         the U.S. was a little more hesitant. 
                    So to sum up, I think that if we look at global 
         broadband, they provide the best opportunity for universal 
         service, for getting that high bandwidth service to every 
         point. 
                    We can't expect buildout of cable, we can expect 
         buildout of terrestrial systems, no matter how good, and we 
         need to work with the international community to make sure 
         we are in harmony. 
                    Thank you. 
                    CHAIRMAN KENNARD:  Thank you very much. 
                    Now we have a little bit of time left for 
         questioning of this panel. 
                    I'd like to start by going back to the issue that 
         Michael Kennedy raised about a spectrum management board.  
         I'm sort of intrigued by that idea. 
                    But I think we need to know in a little greater 
         detail, Mike, what, if we were to create this board 
         tomorrow, what issues would you expect to be at the top of 
         the agenda of that board, and if you could give us your 
         candid assessment of why those issues aren't being handled 
         adequately or can't be handled adequately given our current 
         structure?                     I think that would be helpful. 
                    MR. KENNEDY:  Certainly. 
                    First of all, I understand that you do have a 
         spectrum coordinating committee where representatives get 
         together between bureaus and discuss issues. 
                    My proposal would be, in a sense, to elevate the 
         level of that to bureau and office chiefs.  I think I see, 
         and again I'm looking of course as a former Commission 
         employee but an outsider really looking in, but I think I 
         still see what we in Motorola call silos. 
                    I see an international bureau here and I see a 
         wireless bureau there.  And I'm not sure that the 
         connections are made between the international dimension of 
         spectrum management and the domestic issues that the 
         wireless bureau is facing. 
                    So I see a management board being a mechanism 
         where those connections can be made, where all the bureaus 
         will be able to sort of understand the issues that each 
         individual bureau faces as it goes about its work. 
                    Secondly, I think Bill Hatch talked about the 
         linkages with NTIA.  I think they're good but I think they 
         need to be strengthened. 
                    Bill also mentioned that 90 percent of the 
         spectrum, I'll say, quote, that people are interested in, is 
         really shared-government/non-government at this point.                     Somehow we have to do a better coordination 
         between the government users and your constituents, the 
         public. 
                    So, again, my recommendation would be to elevate 
         to a bureau and office chief issue, the level, and actually 
         have some focus on the generic issue of spectrum management. 
                    Finally, what would be the issue? 
                    I think one of the biggest issues facing the U.S. 
         right now, and I think the Commission has a major role in 
         it, is I'll call the legacy issues from our PCS decision. 
                    How do we view the world, given that we do have 
         different allocations here and indeed in much of Region 2. 
                    Secondly, how do we look at efforts for looking 
         at expansion spectra.  Should we make the assumption that 
         there will be no more expansion spectrum, or should we be 
         looking at expansion bands? 
                    I would see this largely as preparatory to 
         domestic actions and also radio conference preparations. 
                    CHAIRMAN KENNARD:  Thank you.  That's very 
         useful. 
                    I wanted to echo the comments of Commissioner 
         Tristani, which she made in her opening today, when she 
         talked about how important it is to bring telephone service 
         to under served areas, particularly Indian populations in 
         the United States.                     We have spent a fair amount of time focusing on 
         that issue.  We've had two field hearings now.  We've heard 
         a lot of testimony on the issue. 
                    Since we have this group of very distinguished 
         panelists from the wireless industry assembled, I'd like to 
         pose the question to you. 
                    How can we promote the use of wireless 
         technology, not only to bring service to under served 
         populations, but also as an even more effective competitor 
         against the incumbent wireline network. 
                    It seems to me that wireless offers tremendous 
         advantages in both of those areas as a new competitor. 
                    And Leslie Taylor, you mentioned the difficulty 
         in getting ADSL and cable modems in your home in Bethesda.   
                    We ought to have a wireless solution that 
         provides broadband access to residences around the world. 
                    How can we change our policies here at the FCC to 
         make that a reality sooner rather than later? 
                    Mike? 
                    MR. KENNEDY:  Let me offer a response. 
                    I think -- I'm not expert enough to know -- there 
         are probably many state and local regulatory issues that 
         operators would face. 
                    Looking at it from a manufacturer's perspective, 
         we have spent a lot of time looking at what we call wireless          local loop systems. 
                    Commissioner Tristani just recently made a visit 
         and we had some discussions with her over those. 
                    There's an issue of how big is the market, and it 
         turns out when you travel the world, you find out that many 
         countries are interested in an analogous requirement that 
         you're looking at for rural and Indian Reservation 
         populations. 
                    Each country, though, tends to have a different 
         vision.  It's a different spectrum band, it's a different 
         technology, it's a different standard, and when you fragment 
         the market that way from a manufacturer's perspective, it 
         makes it very difficult to envision a product that is cost- 
         effective. 
                    So I think there are two choices.  One is sort of 
         look for a common solution with other countries.  The other 
         is to try to bridge off of the existing major services like 
         cellular or PCS, where you have large economies of scale. 
                    CHAIRMAN KENNARD:  Thank you. 
                    Leslie? 
                    MS. TAYLOR:  I'd just like to comment on it.  I 
         don't get involved really in the inner exchange issues and 
         those kind of competition issues. 
                    But I did have occasion yesterday to review order 
         which the Commission recently released or Notice of Proposed          Rulemaking, where you propose certain rules to facilitate 
         the introduction of competitive local exchange carriers. 
                    And I really saw a lot of good things in that 
         proposal.  Because introducing competition will help to 
         bring broadband into the local loop, I believe, because the 
         competitors will want to use whatever kind of technology is 
         most cost-effective and enables them to get into service 
         most rapidly. 
                    So I want to commend the Commission for moving 
         that proceeding forward. 
                    As Mike said, I think that we need to focus, and 
         perhaps a focus could be a little smaller scale than a 
         spectrum board, but something that really focuses on the 
         immediate future of the next ten years. 
                    How are we going to facilitate broadband, 
         wirelessly and non-wirelessly.  I think that's something 
         that the Commission is uniquely positioned to address, both 
         in its policies on competition as well as in its spectrum 
         management role. 
                    CHAIRMAN KENNARD:  Thank you. 
                    Mr. Salas? 
                    MR. SALAS:  Several years ago, specifically 
         talking about the Indian problem, we became involved in the 
         BETRS program, Basic Exchange Telephone and Radio Service. 
                    We determined there was enough market there to          make it viable for the manufacturer to get into that 
         business.  However, it turns out that there were technology 
         problems associated with it. 
                    First of all, the bandwidth was shared with high 
         powered paging and mobile services. 
                    Secondly, the extremely high out-of-band 
         emissions of radars would blow away these kinds of systems. 
                    Again, here's another case where a technical 
         study, ahead of time, could have helped determine some of 
         the issues involved prior to setting up this band for that 
         particular service. 
                    CHAIRMAN KENNARD:  That was helpful.  Thank you. 
                    Henry? 
                    MR. RIVERA:  I don't have an answer to this 
         problem.  I simply wanted to commend you and Commissioner 
         Tristani and the other Commissioners for your interest in 
         this problem. 
                    Being from New Mexico, I certainly can appreciate 
         the isolation of the Native American population and the 
         poverty of the Native American population. 
                    Something certainly needs to be done in this 
         area, and I'm very grateful that you all are looking into 
         this. 
                    CHAIRMAN KENNARD:  Thank you for saying that.  I 
         appreciate that.                     Commissioner Ness, did you have questions? 
                    COMMISSIONER NESS:  The third panel is going to 
         be looking at some new approaches to spectrum management, 
         and I would assume that some of the panelists will be 
         talking a little bit more about privatizing spectrum. 
                    In other words, you would be able to get a 
         trenche of spectrum.  I'm not quite sure how it will be 
         divided geographically, but assume that it would be parceled 
         out in some fashion, and you could do anything you want with 
         it. 
                    Can the various panelists comment as to how, 
         whether that would be efficient use of the spectrum and how 
         you would go about using the spectrum under a privatized 
         approach? 
                    MR. CROSBY:  If I may.  I've heard the term 
         lately regarding privatization, particularly as it affects 
         private wireless band managers. 
                    Perhaps that's a new term for certified frequency 
         advisory committees in the next century. 
                    I think band managers for private wireless would 
         be extremely effective, given the responsibility to ensure 
         that the spectrum is used efficiently and perhaps with some 
         other tools, I think it would be a boon for private 
         wireless, and existing bands or new allocations for private 
         wireless.                     I think it's a great idea. 
                    COMMISSIONER NESS:  Mr. Kennedy? 
                    MR. KENNEDY:  I would just comment that I said 
         spectrum management was hard.  It's all about balance.   
                    I don't think, when Bob Pepper sort of summed up 
         the first panel, I sort of liked his summary because he kind 
         of struck a note of balance, I thought. 
                    As much markets' techniques as you can get, and I 
         think at the same time, the Commission's always going to 
         have a role, certainly at the allocation level, so I think a 
         process like that can be made to work. 
                    Again, I would stress let's try to look globally, 
         let's try to look beyond the issues in the United States and 
         see what issues we might create when we move in that 
         direction with other countries. 
                    MR. SALAS:  I certainly see advantages and 
         disadvantages to privatization. 
                    I know today in a lot of the frequency bands, we 
         get tremendous frequency re-use between competitors by 
         proper sector management. 
                    However, the proper utilization of privatization 
         in area-wide licenses and so forth can also be effective if 
         the frequencies are properly used and the buildouts occur as 
         everybody expects them to. 
                    MS. TAYLOR:  I'd just like to make a comment          about having spectrum available on a undefined basis. 
                    I think the Commission's experience thus far has 
         not borne out the theory that that works very effectively, 
         at least in the near term. 
                    Maybe over a long term, it may work effectively.  
         However, if you take the wireless communications service as 
         an example, you had a very unfortunate situation where the 
         Commission, under requirement of Congress, had to take 
         certain spectrum and auction it in a very short time frame, 
         which really did not have the leisure or the opportunity to 
         get public comment on how to define that service. 
                    As a result, a fairly nice piece of spectrum was 
         auctioned for a very small amount of money, and I don't 
         think that was something that the Commission wanted to 
         happen anymore than anyone else. 
                    Generally speaking, when things aren't defined, 
         people can't assess their value or their utility or even 
         their interference characteristics of sharing within that 
         band or adjacent bands, so I guess maybe I'm a little bit of 
         a regulator, left over from my days of being at the 
         Commission. 
                    And I think you have a very important role to 
         play here. 
                    COMMISSIONER NESS:  Mr. Rivera? 
                    MR. RIVERA:  Well, Commissioner, I think if you          allocated a block of spectrum exclusively for unlicensed 
         use, and not allowed other licensed users in there, I think 
         you would get a tremendous expansion of Part 15 operations, 
         lots of new services and a lot of new investment in that 
         spectrum. 
                    I think it would work quite well. 
                    COMMISSIONER NESS:  Mr. Claudy, did you have any 
         thoughts on that? 
                    MR. CLAUDY:  No, I don't. 
                    COMMISSIONER NESS:  The issue was raised by Mr. 
         Kennedy about having a more centralized approach within the 
         Commission to spectrum issues, in particular, setting 
         spectrum policy. 
                    Does anyone else have any thoughts on that? 
                    And perhaps if Dale could respond to Mr. 
         Kennedy's comment as to what we are doing to try to elevate 
         spectrum within the Commission itself. 
                    MR. HATFIELD:  Yes.  Mike did mention that we did 
         have the Spectrum Coordinating Committee that meets on a 
         regular basis where we try to do some of what you're talking 
         about. 
                    To raise it further I think is probably more of a 
         decision of you all to make, but I would say that I think it 
         has merit. 
                    The only thing that worries me sitting here, sort          of in the back of my mind, is that sort of reorganizing 
         mustn't be a substitute to coming to grips with the very, 
         very difficult problem, that is, that this increased sharing 
         we're talking about here is extremely difficult. 
                    A number of people have talked about it.  The 
         engineering resources that you have to put into it.  It gets 
         very, very difficult. 
                    And unfortunately, when we're moving at this sort 
         of Internet speed now, the time that it takes to work out 
         these sharing arrangements and so forth, you may have passed 
         a couple of generations of technology. 
                    So I'm concerned.  I have this ultimate concern 
         that just the organization inside the Commission, as 
         important as that is, may not solve this fundamental problem 
         that this rapid growth is making it very difficult. 
                    The satellites move, I thought the videos were 
         very good showing the complexity of some of the sharing 
         problems we've got.  That does bother me.       We just need 
         to focus on doing that. 
                    Perhaps in the third panel, we'll hear we even 
         need to step back a little bit further.  Maybe that road's 
         going to run out at some point. 
                    The inherent risk gets so high, the difficulties, 
         the delay it takes you to reach the decision gets so long 
         that maybe we have to begin to think of some fundamentally          different ways of going about it. 
                    CHAIRMAN KENNARD:  Commissioner Furchtgott-Roth?  
                    COMMISSIONER FURCHTGOTT-ROTH:  Thank you, Mr. 
         Chairman. 
                    Mr. Claudy, we've heard a lot this morning about 
         spectrum management. 
                    We have before the Commission a very important 
         spectrum management issue, microradio. 
                    I'd be very interested in your thoughts on how 
         this Commission should approach spectrum management in the 
         context of microradio. 
                    MR. CLAUDY:  The low power FM proposal in 
         microradio is troublesome to broadcasters for many aspects. 
                    I think from the spectrum management point of 
         view, there is a feeling that the spectrum management cart 
         has gotten in front of the spectrum management horse, 
         perhaps.   
                    The proceeding makes an assumption that radios 
         that are in the world today will not be bothered by the 
         introduction of more energy in the FM Band, so there's an 
         assumption that radios have gotten better and are more 
         interference-immune. 
                    The evidence that exists on that point is scant, 
         but it doesn't really support that notion. 
                    So moving forward into a rulemaking, where the          burden has been placed on the broadcasters to prove that 
         radios are in fact still susceptible to interference that 
         might be introduced by LPFM seems at least a premature 
         notion, perhaps an unfair burden on the radio industry. 
                    Secondly, the enduring principle that the FCC has 
         operated by with radio service certainly has been to protect 
         its future.  And in communications services, the future 
         means moving to a digital technology platform and that's 
         certainly where the in-band on-channel digital-audio 
         broadcasting movement is headed. 
                    It's certainly not too soon to do that.  We have 
         the satellite digital radio service launching perhaps as 
         early as next year. 
                    IBAC, as it's called, is needed as a competitive 
         response, but that is another example of a service which 
         adds more energy into the FM Band and essentially is 
         competing for that space with the lower power FM proposal or 
         the extent to which those two services can share is very 
         speculative. 
                    So from the broadcast point of view, it would 
         have made much more sense and been more comfortable to have 
         moved forward with the proceeding on digital-audio 
         broadcasting, at least simultaneously, if not before the 
         introduction of a new service of the lower power and 
         microradio proposal.                     So from the spectrum management side, those are 
         the troublesome aspects that are in tension with our goals 
         and what the Commission's goals are. 
                    COMMISSIONER FURCHTGOTT-ROTH:  Thank you. 
                    CHAIRMAN KENNARD:  Commissioner Powell? 
                    COMMISSIONER POWELL:  Thank you, Mr. Chairman. 
                    I have three questions.  Two of them are related, 
         and I'll ask them at once, and they are open to anyone. 
                    This industry seems to be one of the most 
         competitive and fastest changing of all of those that we 
         regulate, and we increasing discuss innovation policy. 
                    The concept of trying to identify the incentives 
         and disincentives for innovation in a technology-information 
         driven market, I'd be interested folks succinctly trying to 
         identify aspects or variables of spectrum management policy 
         that they believe to have been either facilitators of 
         innovation or significant inhibitors in innovation, and 
         perhaps some opining about ways that that can be improved. 
                    And related, and I'll throw it out at the same 
         time, in the interests of time, Mr. Kennedy talked about the 
         need to have some sort of coordination across some of our 
         traditional operations that deal with the management of 
         wireless spectrum. 
                    But it occurs to me, and we are having a debate 
         about this increasingly, that convergence, the ability of          industries that have not historically been competitors and 
         operate on very different assumptions, both technical and 
         regulatory, et cetera, are increasingly exploring providing 
         goods and services in areas that they might not have 
         previously. 
                    Using I think wireless technology will prove to 
         be one of the most flexible uses of being able to invade new 
         turf. 
                    And I'm curious about the strains you see in our 
         organization and our approaches that are starting to emerge, 
         not just between the satellite terrestrial wireless and 
         broadcasting, but perhaps the arrival of broadcasting to 
         internet space or wireless technologies to traditional 
         common carrier space, et cetera. 
                    And then I'll ask my third question after that. 
                    Anyone? 
                    MS. TAYLOR:  Well, if I can take a shot at it 
         first?  Despite my concerns about the U.S. sometimes being 
         out of sync with the rest of the world on wireless 
         allocations, I think the communication, the FCC 
         traditionally has gone in the right direction of making a 
         lot of wireless allocations, getting systems licensed, 
         getting service to the public. 
                    This was absolutely the right thing to do.  Every 
         aspect of it isn't right, but you can't guess every aspect.           You can't know in advance exactly how to do it. 
                    A lot of things are going to change within the 
         marketplace.  This has spurred a lot of innovation.  We've 
         seen just a tremendous evolution in the technology and this 
         has happened because the spectrum was there, because people 
         were able to get licenses, because they were able to go out 
         there, get money, and go into service. 
                    So I really would commend the Commission for 
         that. 
                    In addition, in the satellite area, by and large, 
         traditionally the Commission has been very supportive of new 
         satellite technologies of mobile satellite service, big 
         LEOs, little LEOs, DARS, DBS.       They first allocated 
         spectrum for DBS in the early eighties.  
                    We finally saw DBS go into service in the 
         nineties.  It's now really taking off.  Sometimes you have 
         to be patient. 
                    So a lot of it is doing your best to try to 
         determine what the future communications environment is 
         going to be in terms of needs, broadband, et cetera, 
         mobility, which I've cited. 
                    There are other needs.  Public service.  I think 
         the Public Safety Advisory Committee was a very good action 
         along that line. 
                    And the Commission followed up on allocations for          that. 
                    So it's just making sure you keep doing what 
         you're doing. 
                    And I'm sorry I have to disagree with some of my 
         fellow panelists who have doom and gloom about sharing.  
         I've seen sharing work.  I think if you create the 
         incentives for the applicants and for the services to share, 
         that many if not most of them can find a way. 
                    Thank you. 
                    MR. CROSBY:  If I could just add to that, to 
         Leslie. 
                    Again, as I said, private wireless is the epitome 
         of sharing, at least in our bands.  When you try to 
         introduce some new technologies that are heavily encumbered, 
         I think interference, there needs to be some analysis on the 
         potential interference of the incumbents. 
                    For example, the little LEOs and perhaps have an 
         interest in some of the private wireless bands and this is 
         extremely difficult.  I don't know if there's enough 
         evidence there to say that that works, so I think there 
         always needs to be a component of the analysis when there's 
         still sharing on the table to ensure that the incumbents and 
         interference doesn't become a worse problem than it may 
         appear, at least initially. 
                    MR. KENNEDY:  If I might just comment also,          Commissioner, I think I would again echo the comments on 
         satellites. 
                    I think the Commission's done a terrific job of 
         sort of fostering the growth of that industry globally, and 
         I think you deserve a lot of credit for that. 
                    I think on the issue of convergence, that's a 
         very interesting one.  You know, applications are 
         converging, and I think one of the great challenges were 
         going to face is with the growth of the Internet, how do we 
         take the Internet wireless? 
                    Where and how are we going to do that? 
                    Are we going to do it in the new spectrum or 
         existing spectrum? 
                    My answer is probably both, so I think you're 
         going to face a major challenge in identifying that spectrum 
         as we move forward. 
                    I saw a statistic the other day that cellular and 
         PCS services globally are adding 100 million new users a 
         year.  There's no way that's going to be able to be totally 
         accommodated in the existing bands forever, if they continue 
         to grow at that rate. 
                    And many of those new users are really using 
         applications that are starting to mirror Internet kind of 
         applications in the wireless domain. 
                    MR. RIVERA:  Commissioner, I have to say that, in          my opinion, one of the greatest innovators or facilitators 
         of innovation has been the Part 15 rule. 
                    Part 15.247 is simple.  You have created an 
         extraordinary industry with a variety of applications from 
         garage door openers to cordless phones to Internet access, 
         on and on and on. 
                    And I think the Commission would do well to look 
         at the Part 15 paradigm, again in terms of future spectrum 
         management. 
                    With regard to your second question on 
         convergence, I think the Commission is going to have to 
         rethink itself and its organization and pay attention more 
         to what is being offered as opposed to who's offering it in 
         terms of structuring a regulatory model. 
                    It's a very difficult question on very difficult 
         issues. 
                    COMMISSIONER POWELL:  I had another question, but 
         in the interest of time, I'll yield.  But at some point, I'd 
         like to hear people talk about the quality of our 
         enforcement. 
                    Because whether you're in a property rights 
         regime, or a licensing of use regime, it's only as good as 
         your ability to enforce and protect those rights. 
                    CHAIRMAN KENNARD:  Good point. 
                    Commissioner Tristani?                     COMMISSIONER TRISTANI:  Mr. Chairman, I'd like to 
         ask this panel the question I asked our first panel. 
                    Mr. Salas, I think you touched on it. 
                    How important or useful would it be to have an 
         adequate inventory of spectrum usage? 
                    If you want to start? 
                    MR. SALAS:  Sure.  Obviously that would be great.  
         There is no -- is spectrum available?  The Commission has 
         been I think very helpful and cooperative in helping us 
         maximize the spectrum we have available to us. 
                    For example, as the fixed service areas became 
         more and more congested, representatives of the service 
         would approach the Commission for rechannelization in higher 
         spectrum efficiencies.  You all worked with us to actually 
         accomplish that. 
                    So we have the ability to use technology to make 
         more spectrum available. 
                    Right now, to my knowledge, the only spectrum 
         that I think is unknown to us is a lot of spectrum that's 
         owned by the government and I'm not sure how much of that is 
         properly used compared to the way it's used in the private 
         industries today. 
                    COMMISSIONER POWELL:  And you won't get to know. 
                    (Laughter.) 
                    MR. SALAS:  I know, I've tried.                     COMMISSIONER TRISTANI:  Does anybody else care to 
         comment on that? 
                    MR. KENNEDY:  Commissioner, I would comment also. 
                    I think it would be very useful to have a better 
         idea of how the bands are actually utilized.  I think one 
         issue we will have is the legacy of services that have been 
         there for a long time and haven't necessary lived up to 
         their promise. 
                    And I think it's clear from the first two panels 
         that there will no doubt be more sharing and there will also 
         no doubt be more reallocation. 
                    And to do that, you really have to have some 
         data.  I think additionally it fits with your question, 
         Commissioner, and that is to enforce, you have to have data 
         also, and I think we probably could use a little more 
         enforcement outside the Commission. 
                    MR. CROSBY:  I think Commissioner Tristani's 
         suggestion on having an inventory is an excellent idea.  I 
         too would be happy to contribute, and I think if you had not 
         only the users but the types of users, the technology that's 
         in place, the technology that's being deployed, and future 
         requirements for the incumbents of certain spectrum. I think 
         it helps the spectrum management process select the 
         inventory. 
                    Enforcement is -- I'd love to see the pendulum          coming back.  It wasn't there for a while.  ITA is a big fan 
         of enforcement. 
                    In fact, we executed an MOU with the Compliance 
         of Information Bureau to assist the FCC in its enforcement 
         endeavors, and it takes a lot of assistance. 
                    CHAIRMAN KENNARD:  And we appreciate that.  Thank 
         you. 
                    I think we'd better wrap up.  We will be 
         reconvening in about ten minutes, but before we adjourn, I 
         did want to thank this excellent group of panelists.  I 
         really appreciate your taking the time out to do this and it 
         helped us immensely. 
                    Thank you very much. 
                    (Recess.) 
                    CHAIRMAN KENNARD:  Our third and final panel will 
         consider some innovative ways to think about spectrum 
         management. 
                    We like to this of this as the sort of panel of 
         visionaries who will help us think outside the box, and give 
         us a sense of what is next, what we should be thinking about 
         as we anticipate the future. 
                    I've been remiss in not reminding our panelists 
         to please state their name and affiliation for the record, 
         so I'll do that now. 
                    We'll begin with Professor Hazlett.                     STATEMENT OF THOMAS W. HAZLETT, RESIDENT SCHOLAR, 
                    AMERICAN ENTERPRISE INSTITUTE FOR PUBLIC POLICY 
                    RESEARCH; AND PROFESSOR, UNIVERSITY OF 
                    CALIFORNIA, DAVIS (INVITED) 
                    MR. HAZLETT:  Thank you, Mr. Chairman. 
                    My name is Tom Hazlett, Professor at the 
         University of California at Davis, and Resident Scholar at 
         the American Enterprise Institute. 
                    It's a pleasure to talk about spectrum 
         allocation, and of course, there has to be some sort of 
         regulation of spectrum access to avoid a tragedy of the 
         commons. 
                    This sort of regulation is fundamentally provided 
         by an owner, a party who asserts control to maximize the 
         value of the resource. 
                    Since 1927 and the Radio Act, the U.S. Government 
         declared that there could be no private owner of radio 
         waves, and so a federal agency has stepped in to act as sort 
         of a quasi-owner. 
                    It's important to look at this problem as a two- 
         sided problem.  Regulating use of the spectrum can be too 
         lax or too conservative.   
                    If regulation is too lax, interference results 
         and transmissions are wasted. 
                    If it's too conservative, communications services          are suppressed and bandwidth is wasted. 
                    The goal of public policy should be to minimize 
         the cost of both sources of social loss, thereby maximizing 
         the value of the spectrum resource. 
                    Looking back at decades of history, however, we 
         can see that the government has continually erred on the 
         side of conservatism. 
                    Since the earliest days of Commission regulation, 
         entry requirements for providing wireless services have been 
         overly strict, and the administrative process unnecessarily 
         cumbersome. 
                    The result has been that upstart rivals 
         attempting to challenge incumbents by providing services on 
         under-utilized bands have had great difficulty obtaining 
         permission to compete in the marketplace. 
                    The system has effectively protected the status 
         quo at the expense of dynamic change.  This overly 
         conservative regulation of spectrum-based services stifles 
         competitive forces in several dimensions. 
                    First it blocks new entrants, secondly it blocks 
         incumbents from entering markets served by others, sort of a 
         cross-media competition which would be served by greater 
         flexibility.  
                    Finally, it discourages innovation protecting old 
         technologies at the expense of the new by making it more          difficult for the new technologies to get spectrum allocated 
         and to get licenses issued for use. 
                    Now, I think the hopeful sign is that if we look 
         back over the past many years, we can see that there is a 
         gradual liberalization taking place.  
                    It would be wrong to call this a revolution that 
         has shaken the spectrum allocation system, but there is a 
         gradual drift towards a more liberal system. 
                    We can compare the cellular telephone allocation 
         licensing process, beginning officially in 1968, with the 
         personal communications services proceeding a generation 
         later. 
                    The former delineated exactly what bandwidth was 
         to be used, what technical standards phones would have, and 
         the size of territories served by licensees. 
                    Licenses were issued by lottery of course, and 
         the allocation and licensing process together took 21 years 
         to complete using the most generous accounting. 
                    PCS, by contrast, may be completed in less than a 
         decade.  Most importantly, it allows licensees to engage in 
         voluntary reallocation of radio spectrum by bargaining with 
         incumbent spectrum users to vacate wavelengths. 
                    It also allows the licensees to set technical 
         standards in the competitive marketplace and to aggregate 
         service territories so as to create efficient national and          regional networks. 
                    The robust competition unleashed has driven down 
         prices dramatically for customers which is the payoff from 
         liberalization. 
                    Other successes have flowed from the relaxation 
         of old rules.  The competitive entry of Nextel, formerly 
         Fleetcall, into wireless telephony was a classic example of 
         how market forces create efficient use of spectrum despite 
         bureaucratic prohibitions. 
                    Today companies like Windstar and Telegen are 
         creating competitive opportunities by reinventing old 
         administrative paradigms. 
                    But other firms wait for progress and may perish 
         in the queue.  The recent near death experience of the 
         wireless cable industry, waiting permission to deliver 
         Internet access over its allocated airspace is one case in 
         point. 
                    Many new technologies are today lined up at the 
         Commission awaiting the opportunity to compete.  That the 
         system is geared to delay such progressive social activity 
         is testimony to the magnitude of the structural problem. 
                    I would call the solution, the liberal solution, 
         one that could be fairly characterized by defining licensed 
         contours and overlay rights. 
                    To get a hold of this liberal solution, probably          the easiest entry is to start with the PCS success story.  
         The approach has not been in PCS and the overlay right was 
         potentially quite profound, allowing private licensees to 
         become band managers in PCS meant that they were granted 
         flexibility to develop wireless services, so long as they 
         did not disturb existing incumbents. 
                    Then the overlay rights, which were issued in 
         PCS, could be issued in other bands already allocated by the 
         Commission as we found. 
                    Given the shift in incentives, new services and 
         technologies will be propelled by new momentum.  Such 
         overlay rights could be issued at auction, wherever demand 
         exists. 
                    The issue of interference would remain the 
         Commission's concern and better definition of the contours 
         of licenses would focus attention on the necessary 
         regulation, avoiding the tragedy of the commons. 
                    Expedited methods can and should be developed for 
         adjudicating border disputes including arbitration conducted 
         privately or under the auspices of the FCC. 
                    By allowing a number of competing information 
         superhighways in the wireless world, band managers with 
         incentives to maximize traffic will bring new sources of 
         competition and innovation to the market. 
                    Service prices for existing operators will fall,          and the telecommunications infrastructure will increasingly 
         bring efficiency to the business sector. 
                    In addition, the freedom to use spectrum flexibly 
         will allow manufacturers to contract with band managers for 
         what is now called unlicensed spectrum use.   
                    Indeed, given a more liberal system, incentives 
         to invest in R&D so as to discover dynamic new technologies, 
         will reliably increase. 
                    That is perhaps the biggest payoff of 
         liberalization, ending the attacks of delay and red tape 
         which now discourages deployment and therefore development 
         of new wireless services. 
                    Thank you. 
                    CHAIRMAN KENNARD:  Thank you, Mr. Hazlett. 
                    Mr. Hendricks? 
                    STATEMENT OF DEWAYNE HENDRICKS, GENERAL MANAGER, 
                    WIRELESS BUSINESS UNIT, COM 21, INC. 
                    MR. HENDRICKS:  Good morning Mr. Chairman, 
         Commissioners.  I'm Dewayne Hendricks with Com 21 in the San 
         Francisco Bay Area. 
                    I believe today's communications technology is 
         moving towards a world of all-digital transmitters and 
         receivers. 
                    These advances in technology, combined with the 
         swift evolution of cell-based transmission and switching          protocols is opening up a set of possibilities for unique 
         new services utilizing intelligent networks. 
                    These will contain smart transmitters, receivers, 
         and switches.  Today's Internet is perhaps the best example 
         of a self-regulating structure that embodies these new 
         technological approaches through the communications and the 
         networking domain. 
                    However, many of these innovations have not moved 
         into the wireless networking arena. 
                    I feel that the radio networks of the future will 
         involve a mixture of links and switches of different 
         ownership which terminate at the end user by a relatively 
         short distance link. 
                    What will then be required is a built-in 
         distributed self-governing set of protocols to cause the 
         networks' behavior to make more efficient use of a limited 
         common shared resource, the radio spectrum. 
                    Creating such a self-regulating structure for the 
         optimal sharing of spectrum will require much effort. 
                    One of the major problems which stands in the way 
         of these approaches today is the current FCC regulatory 
         environment and the manner in which spectrum is managed and 
         allocated under its rules. 
                    One of the major hurdles the wireless 
         entrepreneur encounters who wishes to develop new,          innovative communications products which involve radio is 
         access to the requisite amount of spectrum. 
                    This process makes the involvement of the 
         wireless entrepreneur with the government mandatory, which 
         immediately puts the entrepreneur at a disadvantage, when 
         compared to entrepreneurs in the computer sector where 
         government involvement is minimal. 
                    As a result, innovation has occurred at a much 
         slower pace since the use of technologies such as spread 
         spectrum require the use of more spectrum and not less in 
         order for their advantages to become apparent when it is 
         used for high speed data transmission. 
                    Historically, the current regulatory approach to 
         radio has been based upon the technology that was in use at 
         the time the Communications Act of 1934 was framed, 
         basically, what we would call today dumb transmitters 
         speaking to dumb receivers.   
                    The technology that, at the time, reserved 
         bandwidths to be set aside for each licensed service so that 
         spectrum would be available when needed. 
                    Given this regulatory approach, many new 
         applications cannot be accommodated since there's no 
         available allocated spectrum to park new services. 
                    However, given the new set of tools available to 
         the entrepreneur with the advent of digital technology, what          were once dumb transmitters and receivers can now be smart 
         devices which are capable of exercising greater judgment in 
         the effective use and sharing of spectrum. 
                    The more flexible are the tools that we 
         incorporate in these devices, the greater the number of uses 
         that can be accommodated in a fixed amount of shared 
         spectrum. 
                    One of the most promising regulatory actions by 
         Commission in recent times was the move in 1981 to permit 
         the use of spread spectrum technology in unlicensed devices 
         with release of the landmark Notice of Inquiry. 
                    This NOI eventually resulted in a new type of 
         device that operates under Part 15 regulations, and are 
         deployed in what are now known as the ISM bands. 
                    Moreover, these devices are forbidden to operate 
         at transmissions greater than one watt, and they must be 
         transmitted over a minimum amount of assigned spectrum. 
                    These strains notwithstanding, the 1981 Part 15 
         ruling, and later additions and changes to those rules have 
         already spawned the development, manufacture, and marketing 
         of a wide range of no-license-required products. 
                    Because mass manufacturing on the consumer market 
         has yet to occur, spread spectrum products for data 
         transmission from the 60 or so current vendors carrier 
         premium price tags and have limited the technology mainly to          large organizations such as businesses, schools, and 
         libraries. 
                    There is every reason to believe that these 
         prices will drop as manufacturing volumes increase to meet 
         the growing market demand for higher bandwidth and secure 
         wireless connections from PCs to the Internet. 
                    In the future, people may, for example, routinely 
         rely on wireless transmission to reach a central system that 
         would then connect to a traditional network of ground-based 
         lines. 
                    We predict that reliable, secure, unlicensed data 
         radios operating at T1 or higher speeds to a range of more 
         than 30 kilometers will soon cost less than $500 each. 
                    The Internet today represents the best example of 
         the self-regulating mechanism that will be necessary in the 
         new radio environment that we envision. 
                    The creation of a similar decentralized structure 
         for the optimal sharing of the radio spectrum will require a 
         substantial effort by a combination of telecommunications 
         experts and entrepreneurs working with the various 
         regulatory bodies around the world. 
                    We believe the deployment and growth of such a 
         system is achievable through increasingly smart electronics 
         and we envision a self-governing set of protocols that are 
         built into these intelligent devices.                     Packet radio operations as currently deployed in 
         the amateur radio service in this country is a good 
         existence proof of what is possible today. 
                    As advance radios are deployed, society must 
         tackle the crucial issue of incorporating the most positive 
         and negative incentives within the network infrastructure 
         itself to make the best use of a shared common resource, the 
         radio spectrum. 
                    Thank you. 
                    CHAIRMAN KENNARD:  Thank you very much, Mr. 
         Hendricks. 
                    Dr. Chuck Jackson. 
                    STATEMENT OF CHARLES L. JACKSON, JACKSON 
                    ASSOCIATES 
                    MR. JACKSON:  Thank you, Mr. Chairman, thank you, 
         Commissioners, for permitting me to be here today and share 
         my thoughts with you. 
                    First, an introduction.  By training I'm an 
         engineer.  I've worked as a programmer and digital designer 
         communications system engineer, and I've also worked at the 
         FCC and the House Commerce Committee. 
                    I am currently a principal, for at least almost a 
         month now, with the consulting firm of LECG, Law & Economics 
         Consulting Group, and I'm an adjunct professor at George 
         Washington University where I've taught a graduate course in          mobile communications. 
                    One thing I'd like to emphasize at the beginning 
         is that as electronics get cheaper, better, smaller, more 
         powerful, they make more valuable the complementary spectrum 
         resource. 
                    If you couldn't build a radio for less than ten 
         million dollars, there wouldn't be very many radios for you 
         folks to be worrying about allocating the spectrum to. 
                    But as radios get cheaper, there are more ways 
         consumers can use them. 
                    Secondly, the FCC has a unique role here.  The 
         Department of Justice, the state attorney general, the state 
         regulatory commissions can't substitute in whole or in part 
         for the fundamental decisions you make over regulating the 
         spectrum, so it's one of your most important 
         responsibilities.  And it will become, I believe, more 
         important to our society. 
                    We participants in this panel have been asked to 
         suggest approaches the Commission should take to manage the 
         spectrum in the future. 
                    I think the first place to look for rules to 
         govern the future is what's worked in the past. 
                    What have characterized the Commission's big 
         successes? 
                    What practices have been associated with, shall          we say, less successful outcomes? 
                    And I identified, just sort of as a thinking 
         tool, three areas where I'd say the Commission had great 
         success.   
                    One would be cellular flexibility, another would 
         be the competitive cellular industry, and a third would be 
         something that I think we've heard in all the panels here 
         this morning, the unlicensed Part 15 devices operating in 
         the ISM bands. 
                    In the case of cellular flexibility, my 
         recollection is that this was primarily at the Commission's 
         own motion that the staffers, I guess in what's now the 
         wireless bureau, said, gee, we can control interference by 
         relatively broad constraints on out-of-band energy and 
         interference at the boundaries of these cellular license 
         regions, and we should give the cellular operators some 
         flexibility when they don't create interference. 
                    And my recollection is there was industry 
         opposition.  The Chairman is nodding, and probably was 
         involved in that back then. 
                    Yet, today, we heard John Stanton's strong 
         support for that flexibility and how important it had been 
         to them. 
                    We also, if you look at the ITU standardization 
         for third generation cellular, we see that the key proposals          are around the CDMA technology. 
                    But if we had not had digital cellular 
         flexibility in the cellular industry, I believe the industry 
         would have coalesced around the first digital technology 
         developed, the standard regulatory scheme would have 
         coalesced around that, and the world would be denied the 
         proven CDMA technology at this time, which seems to be 
         carrying the day. 
                    There are also examples where the policy adopted 
         by the FCC was less successful.  I list those in my prepared 
         comments. 
                    I think in each of those particular examples of 
         less successful elements, it was a situation where the FCC 
         substituted its judgment for judgments that could have been 
         left to the marketplace. 
                    Certainly in one case, in the SMR industry, the 
         FCC was able to respond to the pressures from the industry 
         to permit the transition to a more efficient industry 
         structure and more efficient licensing regime, but it did 
         delay service. 
                    So I guess my first observation is that 
         unleashing markets works. 
                    The successful cases were examples where the 
         Commission put in place rules that let a market work.  But 
         markets need rules.  They don't happen automatically.                     In some cases, such as the auctions, he market's 
         rules have to be carefully designed to make sure they'll 
         work well. 
                    In other cases, Part 15 is the one that comes to 
         mind.  The FCC set rules that permitted a market to work and 
         then got out of the way. 
                    I think we just heard from Mr. Hendricks here, if 
         you didn't have rules on things like the maximum power in 
         the ISM band, probably everybody would be saying, well, ours 
         will work a little bit better.  We'll just make it a little 
         bit stronger and pretty soon you'd have a power war, and 
         you'd be able not only to use your wireless phone for 
         calling, but you could just put it in a box and heat your 
         meatloaf with it. 
                    (Laughter.) 
                    MR. JACKSON:  So I've been observing spectrum 
         management now for the better part of the last three 
         decades. 
                    When I started, I didn't have much grey hair, and 
         neither did Dale. 
                    I think one of the biggest changes is that 
         there's a greater recognition today than there was 30 years 
         ago, that spectrum management is fundamentally an economic 
         problem, but an economic problem with unique technical 
         constraints.                     I think Tom Sugrue's parable this morning is 
         something you wouldn't have heard in the Commission meeting 
         room 20 years ago, as an explanation of what we're doing 
         today. 
                    It might have been offered by some academic 
         economist as a lesson to what the Commission should be 
         doing. 
                    And I think also it's not the case that the 
         Commission or our society always had this understanding.  I 
         think part of it is, if you look at the history of how the 
         Communications Act came into being, the first concerns about 
         radio regulation regarded military use, safety of life at 
         sea, broadcasting. 
                    There were only a few megahertz of spectrum that 
         could be used at the time of the '27 Act or the '34 Act, and 
         the radio waves in that area had very long propagation, 
         hundreds of miles, tens of thousands of miles in that 
         situation, and again, as I said, dumb radios and dumb 
         receivers. 
                    The regulatory regime was quite different than it 
         is today. 
                    So considering that both the technology, the area 
         of the spectrum that's being used have changed, let me just 
         make some specific recommendations. 
                    My first recommendation would be to continue on          the path that the Commission has followed; combine the 
         practical experience of your staff with theoretical insights 
         from academics and others. 
                    And if you find a proposed reform supported both 
         by your academic theorists and you experienced spectrum 
         managers, it's pretty likely to be a good bet. 
                    If they disagree, you should step back and see if 
         you can understand why there's a disagreement and maybe 
         force them to sit in long meetings until they can resolve 
         it. 
                    (Laughter.) 
                    MR. JACKSON:  Second, consider using 
         combinatorial auctions.  Combinatorial auctions are auctions 
         at which the bidder and bid for a package of units being 
         auctioned rather than merely posting bids for each 
         individual package. 
                    Combinatorial auctions offer a good opportunity 
         to create efficient initial markets, for example, for 
         defining the geographic extent of licenses, so that a person 
         who wants to, say, offer service in both North and South 
         Dakota doesn't enter an auction where they might win one or 
         the other, but not both, but they have to bid against people 
         who may want one or the other. 
                    And finally, I guess this recommendation is more 
         likely to be controversial.  I think the Commission should          follow the process it has followed for decades, of making 
         radio licenses more like property rights. 
                    Section 301 of the Communication Act explicitly 
         prohibits the ownership of radio frequencies or the creation 
         of any right beyond those explicitly granted in the license. 
                    That section also speaks of expectation of 
         renewal, whatever that means. 
                    Over decades of practice, the Commission, 
         licensees and Congress have reinvented many of the 
         efficiency-serving aspects of traditional real property law. 
                    I think the clearest example of that is that 
         people can buy and sell radio licenses.  You don't envision 
         somebody buying and selling their driver's license.  That 
         doesn't make sense. 
                    But a radio license is more like real property 
         and it makes sense to allow it to be exchanged. 
                    Renewal expectancy or cellular flexibility, the 
         process of microwave coordination, those are all other 
         examples of where the Commission and its licensees and 
         sometimes Congress will work together to put in place rules 
         more like commonlaw property law, and I think the Commission 
         should systematically consider how to extend this process, 
         even to the extent of asking Congress to amend Section 301 
         to explicitly permit the creation of rights with an 
         indefinite term.                     Finally, we were also asked to address new 
         technologies and I'd just like to echo what Mr. Hendricks 
         said about smart radios, radios that have the ability to 
         incorporate inside them some of the rules for frequency 
         management, like automatically searching out vacant 
         channels, retransmitting when a packet is received in error. 
                    And I think that that's a fairly profound new 
         technology which we're just beginning to exploit, and it 
         will become more important in the future. 
                    I'm also much less optimistic than some about the 
         ability of new or improved modulation schemes, such as 
         spread spectrum to reduce the need for traditional spectrum 
         management or the appeal of such things as property rights 
         and exclusive licenses for the efficient use of that 
         service. 
                    Again, thank you for the opportunity to appear 
         here today. 
                    CHAIRMAN KENNARD:  Thank you, Chuck. 
                    Mr. Kontson? 
                    STATEMENT OF KALLE KONTSON, VICE PRESIDENT AND 
                    DIVISION MANAGER, IIT RESEARCH INSTITUTE 
                    MR. KONTSON:  Good afternoon.  Thank you for the 
         opportunity to address the Commission. 
                    I'm Kalle Kontson with the IIT Research 
         Institute.                     I've had the privilege of working in spectrum 
         management with both the Department of Defense and the 
         commercial sectors, during some very recent, exciting and 
         interesting times. 
                    While I'm not here to represent the DoD, I would 
         like to describe the DoD's pursuits to illustrate new 
         approaches to spectrum management. 
                    Next slide. 
                    (Slide.) 
                    To begin, I propose that a new approach to 
         spectrum management is necessitated by three dominant 
         trends.  One is an explosive demand for spectrum in both the 
         Department of Defense and the commercial sector. 
                    Second, wireless technology advances that bring 
         vast power and flexibility, as we've heard described here, 
         but also stress the existing rules. 
                    Third, a regulatory structure that can't change 
         fast enough and thereby threatens to become an obstacle to 
         new technologies. 
                    A key thrust in the DoD vision of the future is 
         leveraging information age technological advances, 
         especially commercial off-the-shelf products and services to 
         achieve what they call information dominance. 
                    The goal is seamless interoperable and instantly 
         responsive information grids for the war fighters.                     To support this goal, access to the RF spectrum 
         resource must become more agile and adaptive and efficient 
         than it is today. 
                    Unfortunately, current spectrum management 
         regulations cannot support the adaptive, agile, emerging 
         systems without constraining their time to market or their 
         performance. 
                    To bridge this gap, new approaches are needed to 
         address the market forces, the technology and the regulation 
         of the spectrum. 
                    Next slide, please. 
                    (Slide.) 
                    To begin, we should seek opportunities to 
         leverage the evolving worldwide information grid for the 
         advantage of all users, including the DoD. 
                    There is already a push towards commercial off- 
         the-shelf systems and services in the DoD.  But spectrum 
         management policy should also approach the federal 
         government as a valuable customer.  As a key player in the 
         high tech research and development arena, the DoD can play a 
         significant role in expanding spectrum access technology. 
                    The development of a universal spectrum access 
         technology can help achieve interoperability, and that is a 
         key goal for all of us. 
                    Next slide, please?                     (Slide.) 
                    I think it's the promise of new technology that's 
         really driving this train, the new generation of advanced, 
         smart radio technologies in both the DoD and wireless market 
         will be software reprogrammable and frequency agile, demand 
         adaptive to meet growing information transfer requirements. 
                    The efficiency and spectrum access for these 
         bandwidth intensive wireless systems can be optimized to 
         adaptive shared access in all domains, the time domains, 
         space domains, and frequency domains. 
                    The multi-mode, multifunctional radio will 
         contain the rule sets that will allow the radio to 
         sufficiently manage access to broad ranges of spectrum. 
                    I believe what we are facing here is the 
         evolution of a new frequency management discipline.  Simply 
         put, it is the art of teaching smart radios how to be behave 
         in their operating environments so that they can be demand 
         adaptive and still coexist with their wireless brethren. 
                    In this spectrum management world, the emphasis 
         on licensing will and should diminish, but the role of type 
         acceptance or certification in military parlance will expand 
         to cover quality assurance of embedded algorithms, embedded 
         software, and embedded databases. 
                    Next slide, please. 
                    (Slide.)                     What I am suggesting here is to allow the 
         technology to have sufficient free play to realize maximum 
         efficiency in spectrum use.  To do this, the current 
         regulatory policy notions of exclusive spectrum ownership, 
         I'm sorry to disagree, must be replaced by a view of open 
         shared access managed by embedded technology accountability 
         for spectrum use based on information capacity utilized, not 
         fixed assignments, and an access protocol that we need to 
         trust and develop to access by digitized access codes 
         internal to the radio, rather than long-term licensing. 
                    And I know this concept departs from the band- 
         delineated allocations and licenses that are right now the 
         cornerstone of our current regulatory framework, but we 
         should step back and take a critical view of that framework. 
                    Next slide, please. 
                    (Slide.) 
                    So how do we get there from here? 
                    The changes I've described are pretty radical.  
         It is going to be hard to do.  But I do have a suggestion. 
                    To start, we should first adopt a guiding 
         principle, the United States regulators should address RF 
         spectrum access issues in the role of a leader and an 
         innovator, not just a broker of RF spectrum property rights. 
                    Next slide, please. 
                    (Slide.)                     Once we've adopted that guiding principle, we 
         should also work on developing a national spectrum strategy. 
                    Within the DoD and industry, as well, changes 
         have already begun to accommodate the advanced 
         communications systems.  
                    We've heard those described.  The FCC has taken 
         some significant steps to streamline regulations, to adapt 
         new technologies in response to very sound opportunities. 
                    But there's much more to do if the policy and 
         regulatory decisionmakers do not want to become an 
         impediment to the newest wireless technology. 
                    I believe the FCC, the NTIA and the DoD should 
         assume a leadership role by pressing for and supporting the 
         development of a national spectrum strategy. 
                    The national spectrum strategy must recognize a 
         regulatory technological public interest and market forces 
         driving changes in the use of the RF spectrum. 
                    We should promote the development of win/win 
         strategies and policies where shared access to the RF 
         spectrum will benefit industry from a national and 
         international interoperability and assure efficient economy 
         in the wireless grid. 
                    Thank you. 
                    CHAIRMAN KENNARD:  Thank you. 
                    Mr. Mitola?                     STATEMENT OF JOSEPH MITOLA III, CONSULTING 
                    SCIENTIST, THE MITRE CORPORATION 
                    MR. MITOLA III:  I'm Joe Mitola from the MITRE 
         Corporation on loan to the Defense Department. 
                    I guess Kalle and I have the same attorney 
         because I'm not going to be speaking on behalf of the DoD 
         either. 
                    I do have a unique background in a rapidly 
         emerging global wireless technology, though, called software 
         radios. 
                    In 1991, I coined this term to signal what I 
         foresaw as a shift between digital radios, which have about 
         80 percent of the capability really embedded in the 
         hardware, and 20 percent in the software, maybe in the audio 
         voice channel vocoder or something like that, to what is 
         becoming now an 80 percent software defined radio. 
                    I don't have any final solutions or even many 
         insightful ideas about how to use this new technology for 
         innovative spectrum management, but I do think it's 
         relevant. 
                    And what I'll try to do is to spend my few 
         minutes just giving you sort of highlights of capabilities 
         and limitations of the technology. 
                    Software radio technology makes it not only 
         possible but also affordable for not just audio but also for          really the radio function of the RF modulation band, is it 
         TDMA or CDMA?   
                    This can all be under software control. 
                    In addition, the software radio is a multiband, 
         multimode radio and one designed to operate at a gigahertz, 
         and can also operate pretty well at 500 megahertz, and a 2 
         gigahertz, just under software control. 
                    This is a significant new technology.  The way 
         that this happens is that wide band analog-to-digital and 
         digital-to-analog converters are increasing in data rates so 
         their function can move towards the antenna. 
                    As a result, the functions can be embedded in 
         digital signal processing.  This includes application- 
         specific integrated circuits, ESP chips, and even pentium 
         computer chips used in your laptops also have a role to play 
         in software radios. 
                    This technology is applicable to most aspects of 
         wireless but it's not a panacea.  I teach a radio 
         engineering course, and I'd like to say that I am not a 
         software radio salesman. 
                    If you were trying to build a pager, the analog- 
         to-digital converter and the ESP chip will wipe your battery 
         out in a few hours. 
                    So software radio technology may not be 
         appropriate there.  But in handsets, and particularly in          infrastructure, it's a technology that's moving out very 
         rapidly on a global scale. 
                    We're in the midst of this transition toward the 
         software radio.  Now during this transition, mobile radios 
         are becoming more aware and have more data in them, in the 
         radios about where they are.  They're becoming what the 
         Europeans call location aware. 
                    So there are location aware services and location 
         aware radios that are being developed in the U.S. and in 
         Europe, and there is also research in Europe to extend the 
         awareness of the radio to other things including radio 
         etiquettes which are algorithms that raise the radio's 
         competence to autonomously adapt to the local circumstances. 
                    This is a lot like playing chess and in fact, 
         software now is competent at playing chess.  And so if you 
         take that basic technology and put it into a radio, what you 
         get is a radio that has an embedded model of its own user of 
         the network of radio propagation and a little bit about the 
         world around them. 
                    And these radios are called cognitive radios.  
         Cognitive radios would use these internal models to 
         dynamically adapt their etiquettes to the local conditions. 
                    So the use of the radio spectrum then could be 
         gracefully adapted to the time, place, and context of use. 
                    Let me give you an example.  According to CNN, on          7 March of '98, at Baylor University Medical Center in 
         Dallas, they lost their heart monitors because Channel 9 
         initiated its new, high-definition TV service and it jammed 
         the heart monitor telemetry system. 
                    This could have actually been pay-pause, I don't 
         know, but CNN blamed it on the HDTV. 
                    A cognitive heart monitor would have recognized 
         the presence of this high powered jamming signal and probed 
         the band within backup modes, many different layers of 
         backup modes for clear channels in the local radio spectrum.  
                    And after the few milliseconds needed to 
         reestablish the communications to protect the patients, 
         these future cognitive heart monitors could have also 
         advised the medical establishment that there was a spectrum 
         problem and also even sent an order wire on the order wire 
         channel to the FCC telling you guys that there was this 
         issue or updating your dynamic database if you should come 
         to have a spectrum use database. 
                    Other cognitive radios would recognize these 
         temporarily usurped frequencies, again advising the spectrum 
         managers of local conditions. 
                    Now since these are medical priorities, there 
         would be sort of a deference or priority relationship.  This 
         is new technology and there could be a domino effect which 
         would have what mathematicians call a combinatoric explosion          and it can create problems.  It's a research area, but it's 
         an emerging technology. 
                    Software radios also have the problems, just to 
         cover the downside, of viruses and of crashing, like any 
         other software, which means that this Commission will get to 
         engage more and more in that kind of thing in the future. 
                    But the software radios would have the 
         flexibility to adapt and the cognitive radios would have 
         actually the data built into them to know how to adapt in a 
         polite way. 
                    Cognitive radio may not become practical. 
                    In conclusion, let me just say that cognitive 
         radio may not become practical for another few years, maybe 
         even ten years, but that's the direction that I think we're 
         headed. 
                    And as software radios transition to cognitive 
         radios, there's a lot of room and innovation in spectrum 
         management, polite backoff, autonomous reporting to spectrum 
         management authorities, data rate agility, secure downloads 
         of radio personalities. 
                    This is just the tip of the iceberg.  I think 
         there are a lot of risks involved, of course, but the 
         possibilities are really exciting. 
                    And I thank you again for the opportunity to 
         speak to you.                     CHAIRMAN KENNARD:  Thank you for being here. 
                    Professor Noam? 
                    STATEMENT OF ELI NOAM, PROFESSOR OF FINANCE AND 
                    ECONOMICS, COLUMBIA UNIVERSITY 
                    MR. NOAM:  Thank you very much, Mr. Chairman.  
         Thank you for the opportunity to be here.  I'm a professor 
         at the Columbia Business School.  I'm also the Director of 
         the Columbia Institute for Teleinformation and I do not 
         represent the official views of Columbia University. 
                    I'm very happy for the opportunity to talk to you 
         about the future you said of the spectrum to the FCC. 
                    The FCC is an important agency.  It's even got a 
         real grownup building now.  Hundreds of lawyers and 
         consultants owe their living to the FCC, billions of 
         business dollars are invested in pieces of paper issued by 
         the FCC, and therefore it's perhaps useful to understand the 
         very shaky foundation on which this whole edifice rests and 
         how fragile it is. 
                    Simply put, the FCC exists largely only because 
         of a relatively straightforward problem of physics and 
         engineering.   
                    The physics problem is that two electromagnetic 
         waves of the same number of oscillations that are harmonic 
         multiples of each other can cancel or magnify each other. 
                    The engineering problem was that we could not do          anything about it. 
                    Therefore, we created, after some experimentation 
         with self-regulation, a governmental frequency traffic cop, 
         the FCC. 
                    I'd like to venture and say that without the 
         engineers failing to solve this problem, there would be no 
         FCC in existence today. 
                    Most people in this room might have a different 
         job. 
                    The telecoms issue -- no offense, I speak as a 
         former public service commissioner for New York -- could 
         have been just as well or more or less just as well dealt 
         with by a combination of state commissions, federal courts, 
         antitrust agencies, and federal legislation. 
                    Nobody is indispensable. 
                    It seems like MCI, Execunet, the ATT divestiture 
         of local competition and the Internet were not exactly 
         initiatives of the FCC. 
                    I leave it to the White House Press Office to 
         find those deserving credit. 
                    (Laughter.) 
                    MR. NOAM:  Without the frequency issue, there 
         would be no reason for licensing, policing, mandating, and 
         defining anything. 
                    Now at first the FCC proceeded in its frequency          function by an administrative process of allocation, that 
         is, through lawyers and lobbyists. 
                    When this bogged down with the increasing value 
         of the slices of the spectrum rainbow, the initiative 
         shifted to economists and to simulations of market 
         mechanisms. 
                    They conceived the notion of spectrum allocation 
         which was, at first, a heresy, then it was embraced as a 
         revenue bonanza, and which has then advanced to the status 
         of a religious belief with its own high priests like the 
         Ayatollah, Tom Hazlett over there. 
                    (Laughter.) 
                    MR. NOAM:  I'm very glad to hear over this 
         proceeding here a real change in Tom with the passing of the 
         self-congratulatory tome, there is now a willingness, and I 
         hear this with the other witnesses and with you and the 
         questions to go forward to the next step, which is very 
         good. 
                    Auctions are -- don't get me wrong -- a much 
         better system than its wasteful predecessors, but they're 
         not the end of history. 
                    Suppose the engineers would solve their little 
         problem of keeping frequencies from colliding by designing 
         ways in which numerous users could coexist on a spectrum 
         band without anyone needing exclusivity on a specific          frequency. 
                    What then would be the need for an FCC? 
                    Or to take it still one important step further, 
         what would then be the legal right for an FCC to regulate 
         spectrum at all? 
                    Ask the question, by what right does the FCC 
         allocate frequencies if there's no interference? 
                    The argument is simple; I've made it for years.  
         Electronic speech is speech protected by the First 
         Amendment.  The state my abridge it only in pursuance of a 
         compelling state interest and through the least restrictive 
         means. 
                    A license is a serious restriction on the speech 
         of those who get the license.  It is one thing to be a 
         traffic cop, but it's quite another to assert ownership 
         rights that can then be sold to private parties. 
                    Could the government sell the rights to the color 
         red?  To the frequency high A flat? 
                    The fact that allocating something is good public 
         policy -- and in this case it is -- doesn't mean that you 
         can do it. 
                    Suppose the government auctioned off the right to 
         print books in order to protect natural forests, trees? 
                    Imagine that this would also partly be driven by 
         the revenue needs of the state?                     Now part of the problem that I see is that many 
         people are prisoners of the analogy of spectrum for real 
         estate.  Once you accept that analogy, you inevitably are 
         pushed to a form of exclusivity. 
                    A much better analogy in my mind would be the 
         high seas, ships navigate and avoid colliding into each 
         other even if they're insured, they'll find various ways to 
         their destinations, pay tolls at lochs and canals, all 
         without a real need for exclusive shipping licenses for a 
         route or a lane. 
                    Suppose, as I said, we could design a technology 
         to keep transmission from interfering with each other, 
         spread spectrum technology. 
                    We've heard this now several times.  CDMAs, 
         software-defined radio, electronic antennas provided early 
         generation of tools that make it possible for many users to 
         share bands.   
                    In such a system, no licenses would be required. 
                    Now I should mention that if everybody were to do 
         that, there might emerge another problem, that of excess 
         demand or congestion.  That would be similar to the 
         congestion problem on the Internet and could be solved in a 
         similar way as recommended for the Internet, namely, by 
         congestion prices on the users. 
                    In the future, we can imagine many users sending          out packets of information that get transmitted on an ultra- 
         wide CD MA-type band, not an exclusive slice of the 
         frequency. 
                    Those packets would perhaps also carry their own 
         tokens of electronic money with them, paying tolls with 
         those E-money tokens in order to use the band or be carried 
         on a network, and the prices for these tokens may depend on 
         traffic congestion. 
                    Now what are the policy implications?  
         Experimentation of spectrum usage should be encouraged.  The 
         FCC's ISM, UPSC, and UNII bands are steps in the right 
         directions, but these are fairly little slices with big 
         restrictions on power and usage. 
                    A more significant step would be in fact to 
         encourage much more spectrum mining by users.   The FCC 
         should help establish technical standards directly or 
         through industry groups to access the many other spectrum 
         bands by users who do not interfere with each other and with 
         preexisting primary and secondary users. 
                    In other words, permit a third category of users 
         who can skip around the bands, listen, find a frequency that 
         isn't actively used at that moment, transmit briefly, listen 
         again, transmit again, until another user shows up, 
         including the license holder or the secondary licensee who 
         have priority.                     Now you can start with a few bands to see how it 
         works, encourage the technology to experiment with methods 
         of self-management by the band users themselves. 
                    These bands need to be big enough and the 
         transmission power strong enough to make them commercially 
         viable. 
                    To conclude, such a system would encourage 
         innovation and technology and efficiency in usage.  It would 
         lower the entry barriers to new entrants and encourage 
         competition. 
                    It would benefit especially rural areas because 
         there are likely to be large stretches of fallow spectrum in 
         those regions. 
                    It would end the absurd restrictions against 
         foreign entry into spectrum usage. 
                    And most importantly, it would constitutionally 
         be more defensible for if you keep prohibiting people from 
         using spectrum, even where they do not interfere with each 
         other, sooner or later, one of them will make the 
         constitutional free speech least-restrictive-means argument 
         and may well win. 
                    And when that happens, the entire foundation for 
         an FCC will start to crumble. 
                    Thank you. 
                    CHAIRMAN KENNARD:  Thank you, Eli.  Appreciate          that. 
                    Mr. Petroff? 
         
         
                    STATEMENT OF RALPH PETROFF, PRESIDENT & CHIEF 
                    EXECUTIVE OFFICER, TIME DOMAIN CORPORATION 
                    MR. PETROFF:  Thank you for inviting me, Mr. 
         Chairman and Commissioners. 
                    My name is Ralph Petroff, President and Chief 
         Executive Officer of Time Domain. 
                    I would like to take my five minutes to discuss 
         how spectrum and its policy needs to be more responsive to 
         important new technologies, especially new technologies that 
         were never anticipated when the rules were written. 
                    Our small business, like Dwayne's and many 
         others, are companies that have invested tens of millions of 
         dollars in developing all sorts of novel wireless 
         technologies. 
                    I'd like to describe one of these technologies 
         that you've heard a little bit about today.  It's called 
         ultra wide band, or increasingly ultra broadband wireless. 
                    This is a very, very different type of radio.  
         This morning, Dale Hatfield showed us how radio has all 
         these continuous waves.  This is a technology without 
         continuous waves.  It sends out a little pop about the          height of this pencil and then the signal evaporates, and 
         right about where that Exit sign is, the next pop comes out. 
                    Now if that next pop comes out a few trillionths 
         of a second earlier, it's a one, a few trillionths of a 
         second later, it's a zero. 
                    Right now, we have got this technology popping 
         along at 40 million of these little pops per second, so 
         that's a lot of megabits to be sending a lot of zeros and 
         ones. 
                    We believe in the near future, we'll be able to 
         push that past a hundred megabits and our engineers are even 
         challenging themselves to try and reach that gigabit level. 
                    You've heard a lot of talk today. 
                    Let me give you, I think, the best news of the 
         day.  The best news of the day is that this can all be 
         accomplished on an ultra low power basis.  Instead of 
         sending out all these pops and pulses at half a watt, 
         instead we can do this at 50 millionths of a watt.  And 50 
         millionths of a watt fits into well under Part 15. 
                    As the name ultra broadband or ultra wide band 
         connotes, you have a tiny bit of energy spread out over 
         several gigahertz of spectrum so it's a little bit of power 
         and at any particular point on the spectrum, you are looking 
         at only a few quadrillionths of a watt of energy. 
                    So it is like ultra spread spectrum and it can          share spectrum with other users to an unprecedented degree. 
                    It offers potentially several orders of magnitude 
         improvement on things like not just wireless communication 
         but also radar and positioning as well.  And in volume, we 
         believe it can be unusually inexpensive. 
                    And rather than consuming spectrum, this is a 
         device that can effectively create new spectrum in the sense 
         of being able to use that Part 15 for high speed wireless 
         connections. 
                    Sort of like talking about the Portals this 
         morning, this is like finding another five basement decks 
         below the Portals so you have plenty more room to park cars. 
                    These entire capabilities can greatly increase 
         the quality of life for American consumers and especially in 
         the area of public safety and for the disadvantaged. 
                    Let me just give you a few examples.   
                    See-through walls radar that police can use 
         before they knock down a door so they can know who is on the 
         other side. 
                    Covert communicators that cannot be detected. 
                    Devices that can be detected in rubble from 
         earthquakes or bombings. 
                    Smarter airbags that can have variable 
         deployment. 
                    Seeing-eye wireless for the visually impaired.                     And radar that can see underground to find cracks 
         in bridges or buried conduits, or even plastic land mines. 
                    And especially ultra high band width and ultra 
         high capacity short-range wireless networks for schools, 
         homes, and rural areas. 
                    These are just a few of the many benefits that 
         can potentially exist. 
                    Let me give you sort of maybe the worst news of 
         the day.  That is that none of these applications can be 
         brought to the public under the present regulatory 
         framework. 
                    Although this technology clearly meets the intent 
         of the rules and the intent of Part 15, it doesn't meet the 
         absolute letter. 
                    Telecom product lifecycles are getting shorter 
         and shorter.  Everything is getting developed at Internet 
         time. 
                    If the regulatory process cannot move at Internet 
         time, the new technology will wither and die, and a multi- 
         year rulemaking process becomes a de facto kiss of death for 
         innovation and for small companies. 
                    There are two dozen small companies now trying to 
         bring the products that I've described to market, and they 
         increasingly face three choices. 
                    First, to abandon their efforts and some have.                     Second, to ignore the rules, and some have done 
         that. 
                    And third, they will go overseas. 
                    I don't think any of these serve the public 
         interest so what specific constructive steps can we take 
         first to give two new technologies that were not anticipated 
         a way to be test-driven in the real world? 
                    Second, the great and appropriate vehicle for 
         this is to use Part 15 where billions of device already 
         cohabitate with each other. 
                    And third, empower the technical experts at the 
         FCC to be the final say on spectrum issues.  They've got the 
         expertise, instincts and market knowledge to make wise 
         decisions as we go forward in these uncharted waters. 
                    The genie is out of the bottle on this ultra wide 
         band, and worldwide attention is now being paid to this 
         technology. 
                    EPSI has started the standards process already 
         and soon somewhere, someone is going to be deploying this 
         remarkable new technology. 
                    Let that be here where it belongs, and by those 
         who invented it. 
                    Thank you. 
                    CHAIRMAN KENNARD:  Thank you very much. 
                    In the interests of time, I'm going to limit my          questioning to just really one question and a couple 
         comments. 
                    First of all, I really enjoyed Professor Noam's 
         presentation today.  I've been told by our enforcement 
         people and our Compliance and Information Bureau that there 
         is a pirate radio station operating somewhere in and around 
         New York City, and after your presentation, Professor Noam, 
         I was wondering if you know something about that? 
                    (Laughter.) 
                    CHAIRMAN KENNARD:  Don't answer that question. 
                    (Laughter.) 
                    CHAIRMAN KENNARD:  I'll ask my question, and then 
         I have a comment for Mr. Hazlett. 
                    This has been a great panel and I really think 
         that we've achieved our goal of really doing some forward- 
         looking thinking and trying to anticipate what is ahead. 
                    I, for one, feel very confident that we are 
         moving into a future where more intelligence is going to 
         migrate into the receivers, into the transmitters, to the 
         edge of the network, if you will, and that will solve some 
         of our shared use problems. 
                    The question that I have though is a very 
         practical one.  How do we make the transition. 
                    I'm going to ask you, whoever would like to 
         volunteer to answer this question, can you give us some very          sort of practical steps in how we can migrate our processes 
         and our rules to accommodate this technology? 
                    Obviously we can't flash cut this overnight, 
         we've got to do this over a period of time, hopefully a 
         short period of time.  But I'd like your thoughts on that. 
                    And while you're thinking about that, I did want 
         to quibble with one thing, not that Professor Hazlett but 
         what he wrote.   
                    Last week, there was a very interesting editorial 
         that Professor Hazlett wrote in the Wall Street Journal.  
         And it was about cable television regulations and it was 
         really sort of an obituary to cable television regulation or 
         at least a portion of it. 
                    I read it and I actually found myself agreeing 
         with some of what you said, until I got to the very end when 
         you called for the end of the FCC's high definition 
         television mandate to allow broadcasters to provide 
         unlimited digital TV signals, thus permitting U.S. 
         households to enjoy 50 or more over-the-air TV channels. 
                    When I read that I thought about perhaps writing 
         a little letter of correction to the Wall Street Journal, 
         but since I knew you were going to be here this week, I just 
         wanted to point out to you that the FCC does not have a 
         mandate for HDTV and never has. 
                    And so broadcasters today are free to do          multicasting on their digital spectrum. 
                    Would anybody like to address the question that I 
         posed about the transition period? 
                    Eli? 
                    MR. NOAM:  I think you should open up 
         considerably more spectrum bands to unlicensed usage, and at 
         the same time, convene or help the industry help some 
         standards for the users of those unlicensed uses on 
         conditions that they do not interfere with the primary and 
         secondary users that are present. 
                    MR. HENDRICKS:  I think the approach should be 
         that the new players in the technology should bear the 
         burden of dealing with the incumbents.   
                    What I would like to see you do is to take a wide 
         swath of spectrum, say below 3 gigahertz, and sort of like 
         reform it by letting the smart radios run around in there, 
         sort of think about it like an open range, okay.   
                    That means operating over existing services so 
         essentially come up with a definition of what you're going 
         to allow to go into the open range, and then let them go out 
         and do it. 
                    And if it works, then expand upon that. 
                    MR. KONTSON:  I actually have two suggestions.  
         One is building on what was suggested I think by Mr. Kennedy 
         earlier, and that is this board, the spectrum management          board idea. 
                    But I would expand that idea to include all the 
         user communities including the government and maybe 
         international community and then telecommunications lawyers 
         and regulators and engineers, I mean, the real hard core 
         engineers. 
                    Put them in a room, lock them up, and if they do 
         come out, see what they come out with, with a charter of 
         addressing the transition period. 
                    The other thing I think we ought to seriously 
         consider doing is viewing ourselves in that leadership and 
         innovator role by leveraging some of the resources we have 
         combined with the DoD and other parts of the federal 
         government as well as industry and conduct what the DoD 
         calls advanced technology demonstrations. 
                    There's nothing better to make people comfortable 
         with being able to tolerate levels of interference that must 
         be tolerated with this sort of wide open, freewheeling 
         environment, nothing better than showing it works. 
                    And I think the U.S. ought to look at themselves, 
         as perhaps taking some of the money we've earned off of 
         auctions, and starting an IR&D program. 
                    I think that's what industry does, and I don't 
         think it's a bad idea for us to do that too. 
                    CHAIRMAN KENNARD:  Thank you.                     Chuck? 
                    MR. JACKSON:  I'd just like to raise a caveat.  
         You know, the kind of model posited by Professor Noam may 
         not work all the time. 
                    Certainly on the high seas, we have rules of the 
         road.  If two oil tankers ram into each other, they both 
         sink, but obviously a wooden yacht doesn't hold up very well 
         when one has to collide with a modern supercarrier.  
                    There are applications, such as broadcasting, 
         where the transmitter's on 24 hours a day on a single 
         channel, and it doesn't make sense to say, well, we'll let 
         channel 5, when it goes on, search around for a vacant 
         channel.  It's there all the time. 
                    For things like local area data networks, 
         Internet access, maybe some kind of voice communications, 
         garage door openers, car door openers, that model does make 
         sense.  So I think we have to be careful before we get too 
         carried away with any single approach. 
                    I also observe that there is a moderate amount of 
         spectrum available for unlicensed use, 902 to 928, 2400 to 
         something like 2450, and the new NII band which I think, as 
         I recall it's about 300 megahertz, which is a fair amount of 
         spectrum. 
                    And so until we start seeing crowding in those 
         bands, maybe it's a little premature to start asking these          questions of how do we make even more spectrum available.  
         Three hundred megahertz is a lot. 
                    I think there is a problem with the ultra wide 
         band technologies, which don't even fit well into the 300 
         megahertz, and I think there's an area where one must think 
         about transition policies in a different fashion than for 
         some of the more traditional things. 
                    I also observe that, you know, we have CDMA 
         working today in wireless telephony, but it wasn't easy to 
         get it working that way.  It had all kinds of weird 
         problems, some of which were not widely publicized by the 
         participants in the industry. 
                    And I think you will find those kinds of 
         complicated problems with instability and system crashes 
         will occur with a lot of these distributed control systems 
         that Professor Noam is advocating. 
                    So we might want to go slowly. 
                    MR. MITOLA III:  I'd like to add to that.  I 
         support Mr. Hendricks' idea of trying to find a band to open 
         up in which to use innovative spectrum management.   
                    I think if you had a public process that 
         solicited inputs from developers and suppliers and people 
         with novel radios like Time Domain, that you'd get some 
         interesting inputs and also that would help the steps to be 
         better advised.                     But in addition, I'd say that you've got to have 
         some scientific and technical underpinnings for such an 
         enterprise because, you know, one chess game has 64 squares 
         on the board and a couple of dozen pieces, and there are ten 
         to the 120th moves in a chess game. 
                    So if you started when time began, you still 
         wouldn't have finished evaluating all the possible moves on 
         a chessboard.   
                    Well, the game that we're talking about here is 
         much more complicated than a chessboard.  So in order to 
         avoid system crashes and instabilities, you're going to have 
         to have, I think, a measurement and analysis campaign along 
         the way so that your decisions are based on some good 
         science. 
                    That would be my input. 
                    CHAIRMAN KENNARD:  Thank you very much. 
                    Commissioner Ness? 
                    COMMISSIONER NESS:  Mr. Hazlett, you talked about 
         the tragedy of the commons.  How many others on the panel 
         believe that there is a tragedy of the commons present 
         today? 
                    Anybody want to comment on that? 
                    Mr. Hendricks? 
                    MR. HENDRICKS:  What I find is that people throw 
         that up, but there isn't the science necessarily around to          back it up. 
                    People haven't really gone out and made 
         measurements to determine whether or not that's really true.  
         I know I've made measurements in the San Francisco Bay Area 
         on the unlicensed bands, and I found it to be quite 
         reasonable to be able to go out and deploy new systems. 
                    In fact, I've been able to deploy unlicensed 
         systems in the 902-928 band where Metrocom is predominant 
         and deployed them within a quarter of a mile grid, and still 
         I'm able to deploy unlicensed systems that cover like 20- 
         mile ranges in the Bay Area, which is a pretty dense 
         environment there, in terms of having a lot of intentional 
         radiators in those bands. 
                    COMMISSIONER NESS:  If we were to look at 
         providing greater property rights for licensed spectrum, 
         would that preclude the ability to later overlay sharing 
         opportunities or overlay, for example, some of the new 
         technologies that we're talking about here, the pops that 
         are going across many gigahertz of spectrum? 
                    Or would that cause problems for satellite 
         delivery of telecommunications? 
                    Mr. Hazlett, would you like to respond to that? 
                    MR. HAZLETT:  Sure, thank you. 
                    I would say just the reverse.  It would encourage 
         sharing.  That is, as soon as the flexibility is granted the          licensee, that licensee is going to become a dedicated 
         missionary with respect to seeing how to increase traffic 
         over the allocated bandwidth, and so you're going to get a 
         lot of innovations in terms of what kinds of services can be 
         provided. 
                    You know, thinking about this transition which 
         obviously is where it comes down to, I mean, you can start 
         with flexibility for current licensees but I think you want 
         to move quickly, as quickly as possible towards opening up a 
         process in which new overlay rights can in fact be created. 
                    And so that would promote the sharing to allow 
         that flexibility. 
                    COMMISSIONER NESS:  In other words, if you're 
         using a spectrum for a particular purpose, would Mr. Petroff 
         have to enter into an agreement with you in order to be able 
         to have, I forget the pops going all over the place, in 
         order to be able to use those types of services? 
                    MR. HAZLETT:  There would have to be coordination 
         of some sort.  The fact that we've avoided a tragedy of the 
         commons is testimony to the fact that we have coordinated 
         well, so that is not a huge problem, as long as there are 
         clearly-delineated rules as to who should be primary and who 
         subordinate. 
                    COMMISSIONER NESS:  But you would not be entitled 
         to receive compensation for those pops traversing your          spectrum? 
                    MR. HAZLETT:  It depends on what the rule is.  
         Certainly if there's a broad right established for the first 
         or primary user of the radio wave, then in fact there would 
         be compensation.  That's the way that contract would work. 
                    If in fact, it's carved out differently, you 
         know, and some low-powered use goes to some other licensee, 
         then in fact the money would flow the other way. 
                    COMMISSIONER NESS:  Would anyone else like to 
         comment on that? 
                    MR. NOAM:  I think you should let licensees 
         resell quite flexibly their spectrum for lots of uses, but I 
         would warn against kind of an absolute fee simple all the 
         way up into the sky. 
                    I mean, just imagine real estate rights, real 
         property rights that would go out to 25 miles high up, and 
         every airline would have to contract with a landowner about 
         overflight rights. 
                    I think this is the situation that some of these 
         companies would face. 
                    MR. PETROFF:  And let's remember one other thing 
         too.  If you're talking about operating in the Part 15 
         range, there are right now billions of devices like this 
         little timer I'm holding here that is a Part 15 device that 
         gives off emissions.                     These folks aren't being charged right now, and I 
         think it would stifle innovation if they were. 
                    To follow up on a point that you were asking 
         about, Mr. Chairman, the most important thing I think we can 
         do in Part 15 is to reevaluate the interference criteria. 
                    Right now the interference criteria, part of it 
         is a judgment of how much power you emit at what levels at 
         what distance, which makes a lot of sense.  But there's 
         another component to it.  That is the intent clause. 
                    Right now, signals are governed by intent.  You 
         have intentional signals and unintentional signals, and I 
         think the rule should be, if it interferes, it interferes, 
         and if it doesn't, it doesn't. 
                    Intent may be important in a murder trial but I 
         think that the signal should be graded on interference, and 
         that would do a whole lot to stimulate innovation in this 
         area. 
                    COMMISSIONER NESS:  We also have heard from the 
         previous panels about the importance of trying to achieve 
         some global unanimity as far as spectrum use is concerned. 
                    Would anyone like to comment on the advisability 
         of doing that or the inadvisability of doing that? 
                    MR. HATFIELD:  Could I just add here, we've heard 
         almost conflicting advise that we need to align with the 
         rest of the world, and yet we're hearing from this panel,          with these sort of software defined radios, it may in fact 
         be possible for the radio to reconfigure itself, depending 
         upon its location. 
                    That seems a little bit in conflict and I would 
         be curious to get a reaction to that. 
                    MR. JACKSON:  I'll expand a little on that if I 
         can. 
                    One, we have seen the development, at some 
         additional cost, of radios that can operate on multiple 
         bands.  I believe today you can buy a GSM phone that will 
         work here in Washington, D.C. on the Sprint Spectrum system, 
         and then you take it to Europe, and it'll work on the GSM- 
         900 over there. 
                    If we'd had to wait in this country until Europe 
         had standardized on a single cellular band, cellular would 
         have been delayed another ten years. 
                    They developed a standard, digital standard for 
         their second generation cellular, which was different from 
         our cellular and was in a different band and became 
         commercially available just about a decade later than our 
         cellular system. 
                    And if we had waited for harmonization, it would 
         have been terribly expensive for our society. 
                    Conversely, if we know in advance that we can get 
         harmonization, it's very, very beneficial.                     I think that we will be able to have radios that 
         operate over wider ranges and with more flexibility, whether 
         quite as much as suggested earlier, I'm a little 
         pessimistic. 
                    But I think, as a general principle, that will be 
         the case, so that the lack of international harmonization 
         may be less damaging in the future than it is today. 
                    MR. MITOLA III:  Can I just add, it's not a 
         question of doability as much as it is affordability.  The 
         military had a technology pathfinder program called Speak 
         Easy, a multi-band, multi-mode software radio for the 
         military, and we demonstrated coverage from 2 megahertz to 2 
         gigahertz in just three RF bands. 
                    The middle band was something like 400 -- excuse 
         me, 30 megahertz to 400 megahertz.  So you can't operate 
         over these bands.  It's not as effective at the band edges 
         and it's more expensive. 
                    So these phones that do multiple bands, a dual 
         band cellphone at the cost level, not what you pay for it, 
         but it costs about 25 to 35 percent more for the additional 
         RF chips and other changes than a single band phone. 
                    Once you get to three or four, however, it 
         becomes more cost-effective to have one wide band RF front 
         end, and then do the rest in software than the other way 
         around.                     And in fact there are products by companies 
         represented in this room that'll be announced over the next 
         18 months or so that will be showing this technology in an 
         affordable commercial type form factor. 
                    COMMISSIONER NESS:  Have these technologies been 
         vetted with our global partners such as in Europe?  They're 
         also looking at the spectrum management issues. 
                    I'm just wondering if anyone has had an 
         opportunity to chat with folks over there and what their 
         reaction is. 
                    MR. MITOLA III:  I was the keynote speaker of the 
         first European Workshop on Software Radios in Brussels in 
         '97, and then also a panelist at the First International 
         Conference on Software Radios which was held last year in 
         conjunction with the European Mobile Summit. 
                    And the Europeans, I think, have engaged with and 
         are investing more heavily, just from my kind of informal 
         straw vote, than we are in the U.S. 
                    The big U.S. telcos are looking at the rollout of 
         third generation wireless and saying, for example, Steven 
         Blust of Bell South says maybe this will be around 2003.  
         The Europeans are looking at that happening a couple of 
         years sooner, and it won't be affordable without software 
         radio and technology, so they're much more highly motivated 
         than U.S. manufacturers right now.                     But of course, most big U.S. manufacturers are 
         global as well, so they have their global perspectives.   
                    I wouldn't pretend to speak for them, but those 
         are just my data points. 
                    MR. KONTSON:  I'd like to make a point about the 
         regulatory aspects of these wide band multi-mode radios. 
                    At first blush, introducing some of these 
         concepts like Speak Easy, I guess you could call it Son of 
         JTRS, which is the joint tactical radio system, from 2 
         megahertz to 2 gigahertz radio concept. 
                    When you go to introduce it initially in foreign 
         countries, you get this rather shocked reaction, but then, 
         as he points out, you do recognize that it's software 
         reprogrammable and it can be whatever you want it to be. 
                    Therefore it promotes harmonization provided that 
         you know the standards where you're going and you can 
         quality assure that the software that you load into the 
         radio will allow it to behave properly. 
                    So the onus is going to be in the future not so 
         much on frequency licensing and all that negotiating that 
         goes before you're allowed to bring a radio into a country, 
         for instance.  The onus is going to be on quality assuring 
         and assuring the host nations, if you will, and the host 
         environments that how you have loaded that radio with its 
         smarts is going to allow it to obey their rules and obey          their standards. 
                    That's the way it's going and I think that's 
         where the regulatory emphasis needs to be. 
                    COMMISSIONER NESS:  Thank you, Mr. Chairman. 
                    CHAIRMAN KENNARD:  Thank you, Commissioner Ness. 
                    Commissioner Furchtgott-Roth? 
                    COMMISSIONER FURCHTGOTT-ROTH:  Thank you, Mr. 
         Chairman.   
                    This has certainly been a very stimulating panel.  
         I've learned a lot. 
                    Professor Noam, it's so delightful to have people 
         come here from outside of the beltway and inform us poor 
         Washingtonians of things such as the only reason the FCC 
         exists is because of physicists. 
                    This is such a revolutionary idea in this town in 
         which physicists and other academics are a very distinct 
         minority. 
                    But a lot of what we are talking about on this 
         panel is considered to be futuristic, things that don't 
         exist, but I'm struck and Professor Noam, I think I would 
         have to take exception with the notion that the analogy is 
         either kind of black and white, either land or the seaways. 
                    I think if you look out at the history of 
         mankind, certainly the history of law, and how different 
         societies have developed laws, whether they are laws that          apply to the use of land, to the use of the sea, to the use 
         of rivers, to the use of intellectual property, to air 
         rights, to mineral rights, to the intricate discussion of 
         livestock rights in the Bible, these are all issues that 
         have been heavily debated over time, and in which societies 
         have often developed a set of codes, a set of rules that are 
         not uniform. 
                    A set of rules that allow for different types of 
         rights to apply to different types of lands or different 
         areas of the sea, or to different rivers within the same 
         country. 
                    The discussions that are going on here today are 
         a repetition of discussions that have gone on for millennia 
         about how different societies should treat different types 
         of property. 
                    And they have in the past and they will in the 
         future lead to different types of rules that will change 
         over time. 
                    And we are here at this point in a sort of medias 
         res.  At this point in time, we have the benefit of knowing 
         what has gone on in the past, and not quite knowing what is 
         going to go on in the future. 
                    We are here to think about what type of rules 
         would be best on a going-forward basis. 
                    I think Chairman Kennard, I think you have hit          precisely on the right issue we should be asking these 
         folks. 
                    They have come to us, and we have I think on this 
         panel, I could reduce it to two general types of ideas.  One 
         is a highly property-rights oriented that's advocated by 
         Professor Hazlett and Dr. Jackson. 
                    And others that are more of an economic common 
         that's been advocated by some of the other presenters. 
                    I have no doubt that this panel, as illustrious 
         as it is, is not entirely designed to exhaust the many 
         possible options that are out there. 
                    The issue is what can we, as a Commission, do, 
         based on the legal authority we have, to work in and 
         consider other options. 
                    And a lot of this will depend very critically on 
         how we get to where people want to be, given the laws we 
         have, given the rules that this agency has to operate under. 
                    To go outside the laws, folks would have to go 
         ultimately to Congress. 
                    We are bound by the laws that we have under Title 
         III of the Communications Act. 
                    But all of this has been very stimulating and I 
         would urge the panelists to give some very serious thought 
         to the question that Chairman Kennard raised, to get back to 
         us with ideas for transition policies or experiments, if you          will, based on the policies that you're advocating, 
         consistent with what we at this Commission can do. 
                    Thank you, Mr. Chairman. 
                    CHAIRMAN KENNARD:  Thank you, Commissioner. 
                    Commissioner Tristani? 
                    COMMISSIONER TRISTANI:  Mr. Chairman, in the 
         interests of time, I just want to thank the panelists for 
         their very insightful comments, but I will echo what 
         Commissioner Furchtgott-Roth said, and the Chairman.  We 
         need help, and we need to create concrete ideas. 
                    We can talk a lot about theory but that doesn't 
         help us in our task. 
                    Thank you. 
                    CHAIRMAN KENNARD:  Thank you very much, 
         Commissioner Tristani. 
                    In the interests of time, I also am going to 
         defer my closing statement, but I did want to thank this 
         panel of presenters and also thank Commissioner Ness once 
         again for getting us collectively focused on this issue, and 
         raising some really, really important issues that need more 
         attention at the Agency. 
                    So I commend you for your leadership and your 
         hard work and the work of your Staff in pulling this 
         together.   
                    I also wanted to thank other members of the Staff          who were instrumental in pulling this together, in 
         particular, Dale Hatfield, and his fine Staff of folks over 
         there including Julie Knap, Rebecca Doytsch, Bruce Franca, 
         Fred Thomas and Jack Linthicum. 
                    Also OPP was very much involved in this session 
         today, Bob Pepper and of course Evan Corell, the father of 
         option theory at the FCC, the Wireless Bureau, Tom Sugrue, 
         Diane Cornell, the International Bureau, Tom Tycz, Carl 
         Kensinger, and Joe Heaps, and of course, a special note to 
         Dan Connors in Commissioner Ness' office for doing really a 
         lot of the hard work of pulling this together. 
                    Thank you all very much. 
                    Commissioner Ness? 
                    COMMISSIONER NESS:  I can also add my thanks to 
         all of the aforementioned players, and just to note that the 
         representatives of OET, the International Bureau, the 
         Wireless Bureau, the Mass Media Bureau and the Office of 
         Plans and Policy have really pulled this together with 
         unprecedented harmony. 
                    And while this has been a delicious opportunity 
         to talk through many of these issues, both past problems and 
         future challenges, the nice thing about these panels is it's 
         raised more questions than it's provided answers, which 
         means that we've got to continually think about where we are 
         going with spectrum policy as we work with our global          partners to come up with the most vibrant services for 
         consumers everywhere. 
                    Thank you all very, very much for the 
         participation. 
                    CHAIRMAN KENNARD:  Thank you again. 
                    (Whereupon, at 1:25 p.m., Tuesday, April 6, 1999, 
         the hearing was concluded.) 
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
         
                                 REPORTER'S CERTIFICATE
     
     
     FCC DOCKET NO.:      N/A
     
     CASE TITLE:   SPECTRUM AGREEMENT EN BANC HEARING
     
     HEARING DATE: APRIL 6, 1999
     
     LOCATION:            WASHINGTON, DC
     
         I hereby certify that the proceedings and evidence
     are contained fully and accurately on the tapes and notes
     reported by me at the hearing in the above case before the
     Federal Communications Commission.
     
     
     Date:   __________           __David Hoffman______________
                                   Official Reporter
                                   Heritage Reporting Corporation
                                   1220 "L" Street, N.W.
                                   Washington, D.C. 20005
     
     
                       TRANSCRIBER'S CERTIFICATE
     
     
         I hereby certify that the proceedings and evidence
     were fully and accurately transcribed from the tapes and
     notes provided by the above named reporter in the above case
     before the Federal Communications Commission.
     
     
     Date:   __________            __Alice Macey_________________
                                   Official Transcriber 
                                   Heritage Reporting Corporation
     
     
                       PROOFREADER'S CERTIFICATE
     
         I hereby certify that the transcript of the
     proceedings and evidence in the above referenced case that
     was held before the Federal Communications Commission was
     proofread on the date specified below.
     
     
     Date:   __________            __Alice Macey_________________
                                   Official Proofreader
                                   Heritage Reporting Corporation