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               FEDERAL COMMUNICATIONS COMMISSION 

                   PRESENTS EN BANC MEETING

                         ON PCS ISSUES

                     TUESDAY, APRIL 12, 1994 

                        







 




























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   PRESTENT:

   TASK FORCE MEMBERS:

   RALPH A. HALLER, Chief, Private Radio Bureau

   DONALD GIPS, Deputy Chief, Office of Plans and Policy

   THOMAS P. STANLEY, Chief Engineer, Office of Plans and
       Policy

   GERALD P. VAUGHAN, Deputy Chief, Common Carrier Bureau

   ROBERT M. PEPPER, Chief, Office of Plans and Policy


   MR. LIMOND GRINDSTAFF, Airtouch Communications
   MR. ALEX D. FELKER, Time Warner
   MR. GEORGE MURRAY
   DR. CHARLES L. JACKSON, Strategic Policy Research
   MR. JOHN BATTIN, Motorola
   DR. IRWIN JACOBS, Qualcomm
   DR. DAVID C. NAGEL, Apple Computer
   MS. SANDY ABRAMSON, UTAM
   MR. JEFFERY ROSENBLATT, Comsearch



                            - 0 -



                    P-R-O-C-E-E-D-I-N-G-S



          MR. HALLER:  Good morning.  I'm glad to see

   that we have a packed house again today because I

   think we're going to have a better session this

   morning.  It's going to be at least as interesting










                                                  3




   as yesterday's and perhaps, in some respects, more

   interesting.

          Today's panel is primarily a technical

   inspector panel, and we have a number of experts

   in those areas here.

          Today each panelist will be given seven

   minutes to make a presentation and then we will

   have a discussion.  We will also be taking a break

   somewhere around 10:30 so that we won't have to

   sit here three hours without moving.

          Once again, these round-table discussions

   are being held by the Commission's PCS Task Force,

   and our goal is to move the reconsideration of the

   wideband PCS item along as quickly as possible.

   And we're holding these round-table discussions so

   we can get the experts together, hopefully get

   some lively debate.  We certainly did yesterday.

   Hopefully we'll get more lively debate today among

   the experts.

          And so with that I'm going to go ahead and

   turn the panel over to Dr. Tom Stanley, who will

   be the moderator of today's session.  Tom?










                                                  4




          MR. STANLEY:  Thank you very much, Ralph.

   By way of introduction, let me say a little bit

   about where we come from in this area.

          Late in the 1970s and 1980s, cellular came

   forth after a decade of deliberation, mostly

   wrangling.  The FCC at the time allocated a

   limited amount of spectrum to 40 megahertz and the

   800 megahertz reserved to what was viewed at the

   time as largely a vehicular service.  More

   spectrum was left in reserve or allocated to other

   services than was actually allocated to cellular.

          The spectrum was equally divided into 20

   megahertz to each of two providers as a duopally

   with a set aside for the wireline carrier.  This

   was supplemented to 25 megahertz in the mid '80s.

   Initially the Commission created over 700 cellular

   service areas, originally based on metropolitan

   areas, and actually mandated a detailed technical

   standard developed by industry along fairly stable

   workable lines.  Cordless telephones, personal

   computers were virtually nonexistent, certainly as

   they are viewed today.










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          Last fall in a very different era the

   Commission developed its decisions on the new

   Personal Communication Services after a little

   over three years of deliberations.  The Commission

   allocated 160 megahertz at 2 gigahertz with very

   little left in reserve.  This is in contrast to

   the spectrum for cellular which was largely --

   which was almost exclusively vacant; the spectrum

   at 2 gigahertz was very much occupied with voice

   technology efficiencies ranging from

   conservatively three times to optimally ten or

   better times the existing cellular; voice

   efficiencies blocks of 10, 20 and 30 megahertz

   were allocated to a service that was not just

   voice but was largely voice driven.

          The division was one of a large variety --

   a variety of large and small players, especially

   new entrepreneurs and special consideration was to

   be given to small businesses, rural telephone

   companies, women- and minority-owned businesses.

   The Commission even made room for cellular and

   local exchange carrier interests.  A half a










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   spectrum was identified in large major trading

   areas, half of it in basic trading areas.

          In addition with the auction process,

   tailored, larger service areas, perhaps even

   nationwide, could be achieved.  Although the

   Commission encouraged interoperability and

   roaming, standards were largely left to the

   community to develop.

          In stark contrast to prior approaches, a

   large 40 megahertz block was identified for

   devices that required no licensing, for voice-like

   and computerlike devices generally to be used

   directly by the people at large.

          Today the Commission is reviewing its

   decisions on reconsideration and in attempt an

   expeditious a manner as possible to get the best

   decision to get personal communications moving.

          Now yesterday we heard of what I'll call

   upward projections of demand for personal

   communications and varyingly optimistic and

   pessimistic recounts from economists and financial

   experts.  Today the focus is on the technology and










                                                  7




   the spectrum issues.

          To help us with our deliberations, we have

   asked a panel of nine experts to, I guess, give us

   their thoughts in this area.  And let me introduce

   them and then ask them to begin their comments.

          First, Mr. Limond Grindstaff, who is the

   executive director for PCS Technology, Airtouch

   Communications; Mr. Alex Felker, Vice President of

   Technology with Time Warner Telecommunications;

   Mr. George Murray, an independent businessman who

   has participated in the development of cellular,

   MMDS and paging companies.  We have Dr. Charles

   Jackson, cofounder of the Strategic Policy

   Research, Incorporated; Mr. John W. Battin, Senior

   Vice President/General Manager of Personal

   Communications, General Systems Section of

   Motorola; Dr. Irwin Jacobs, founder, chairman and

   CEO of Qualcomm; Dr. David Nagel, Senior Vice

   President and General Manager of Apple Company;

   and Sandy Abramson, President of UTAM and manager

   of Wireless Regulatory and Standard Affairs AT&T;

   and Mr. Jeffrey Rosenblatt, Vice President of










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   Wireless Communications Comsearch.

          We'll start with Mr. Grindstaff.

          MR. GRINDSTAFF:  Good morning.  It's a

   pleasure to be here.  My name is Larry Grindstaff

   and I'm the executive director of PCS Technologies

   for Airtouch Communications.  I would like to

   thank Dr. Stanley and members of the PCS Task

   Force for allowing me to speak today.

          Airtouch Communications was formerly known

   as PacTel Corporation, a Pacific Telesis Company.

   On April 1st, Pacific Telesis funded PacTel

   Corporation off as an independent company to

   Airtouch Communications.

          Airtouch is one of the world's leading

   wireless telecommunication companies with domestic

   and international cellular and paging operations

   to over 1.2 million cellular subscribers

   worldwide.  We're a leader in wireless

   technologies and have designed, built and operated

   both analog and digital networks around the

   world.

          And what's most important to realize is










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   that Airtouch Communications is a future PCS

   operator.  In the area of PCS activity, Airtouch

   has been actively involved in the development of

   PCS over the last four years.  In 1989 we were

   awarded the PCN license in the United Kingdom, and

   in 1991 we received five experimental licenses

   from the FCC to investigate and develop PCS

   services.

          With those five experimental licenses, over

   the last three years we've done extensive research

   in the development of PCS.  We've conducted

   scientific studies of PCS spectrum, including

   propagation, spectrum usage with NTIA, cooperative

   research agreements, and spectrum sharing and

   testing and feasibility studies.

          We've also conducted extensive PCS

   technology trials in the areas of the consumer

   PCS, in-building PCS and full-service PCS

   technologies.  Each of these areas require

   different technologies and different network

   architectures.

          We've also conducted one of the country's










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   largest PCS marketing trials with over 1,500 PCS

   subscribers who were recruited and allowed to

   select and purchase different PCS services and use

   them during trial.  Some of these services ranged

   from pedestrian services that were priced at a

   little over $8 a month and 10 cents a minute to

   full cellular type of services including Advanced

   Intelligent Network Services as personal memory.

          What I heard yesterday on the panel was

   that PCS seemed to be going towards a cellular

   look alike.  And I would like to make a point that

   if a PCS provider looks to providing a cellular

   type of service, that is not PCS; and I also

   believe the operator will miss the opportunity

   that PCS will provide.

          There are few areas that we would like to

   point out as the Commission develops the final

   rules on PCS, and one of them is spectrum

   allocations.  We believe that the 1800 and 2100

   megahertz spectrum band is well suited for PCS

   services.  We also believe that the 2100 megahertz

   is viable for PCS services and strongly support










                                                  11




   that.

          We disagree with the Commission on the size

   of the serving areas.  We believe that the smaller

   BTA serving areas will best serve PCS operators

   and the FCC's objectives.  The smaller -- or the

   smaller BTA serving areas will provide a building

   block approach and allow the market to consolidate

   as required.

          We also believe that the unlicensed

   spectrum will allow innovation and is well located

   in the 1800 megahertz spectrum frequency range.

          In the area of technical standards, we

   believe that PCS is a family of services that will

   provide a range of services and applications.  We

   also believe that PCS standards will aid in the

   development of PCS's technologies and services.

   But we're realistic and believe and understand

   that one technology's standards may not provide

   the solution for all PCS services.

          We strongly support the industries' efforts

   that are currently driving the development of

   multiple PCS standards.  And we strongly recommend










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   that the FCC approach minimal technical

   requirements for PCS licenses and/or standard

   bodies.  Some of these minimal technical

   requirements could be just the mere fact that

   emergency services, roaming capabilities and that

   interference between PCS systems would not be

   tolerated.

          There are a few technical issues that I

   would like to point out.  One is that the

   inneroperability of PCS services will require some

   type of technical standard.  And we also would

   like to raise the issue of the base station power

   to the Commission and propose that PCS base

   station power should be increased to allow PCS

   operators greater flexibility in providing

   services and take advantage of new future PCS

   technologies.

          We also feel that PCS operators will

   require clean spectrums to become fully

   operational and require that microwave users be

   relocated.  And we also applaud in Commission's

   efforts in putting deadlines on the relocation of










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   PCS microwave users.

          And finally, we believe the 1800 megahertz

   licensed band is well placed and will provide

   easier interoperability with licensed PCS bands

   and will allow a new innovation for PCS Services

   in the future.

          From our studies, we've done extensive

   trials in PCS services and looked at PCS, I feel

   that Airtouch Communications has probably done

   more in the area, if not as much as anybody else

   in the area of PCS, in trying to understand what

   PCS is.

          PCS is not just another wireless service

   and is focused directly on cellular type of

   services, but PCS would be, from the customer's

   point of view, the intergradation of all

   telecommunications systems both wireline and

   wireless.

          I thank you for your attention.  I look

   forward to the question/answer period.

          MR. STANLEY:  Thank you very much.

   Mr. Felker?










                                                  14




          MR. FELKER:  Good morning.  I'm with Time

   Warner Telecommunication, which is a division of

   Time Warner Entertainment, the world's largest

   media company.  My division was established in

   1991, to among other things, pursue various

   wireless telecommunications ventures.

          Time Warner has been a significant

   participant in the FCC's development of PCS.

   Besides being an active commentator in the various

   regulatory proceedings, the company has engaged in

   a continuing program of experimentation and

   research into PCS technology and applications,

   with particular attention to means by which

   wireless and cable television networks can be

   shared efficiently and economically.

          Time Warner foresees PCS as a fully

   integrated communications platform that will spawn

   a wide range of new wireless mobile and fixed

   telecommunications offerings, to be affordable to

   average Americans and bring needed competition to

   cellular and wireline operators.

          While PCS operators initially will focus on










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   voice applications, Time Warner anticipates that

   within a relatively short period of time the

   digital friendly nature of the new PCS networks

   will lead to the introduction of an array of

   un-tethered and data and imaging applications

   which consumers and businesses will soon find

   indispensable.

          New PCS operators will find themselves in a

   very competitive environment, however.  In

   addition to the rivalry they will face from other

   new entrants, PCS operators will also be matched

   against the two incumbent cellular operators and,

   in many areas, at least one existing digital SMR

   operator.  To be successful, the new licensees

   must operate and price efficiently and develop new

   services and new applications; traits that will

   obviously benefit consumers.

          But efficiency and creativity will be

   useless without a regulatory regime which

   encourages strong new entry, facilitates early

   deployment and promotes the development of network

   infrastructure which minimizes consumer prices and










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   maximizes quality.

          An essential ingredient of an effective PCS

   regulatory structure is the assignment of ample

   spectrum to licensees.  For several reasons I

   consider a 40-megahertz assignment plan as

   optimal.  First, 40 meg assignments would

   facilitate the prompt initiation of service

   through spectrum sharing with existing microwave

   users.

          PCS licensees' success will be influenced

   greatly by how quickly they initiate service.  PCS

   operators cannot afford the luxury of waiting

   until microwave relocation is completed to launch

   service.  Consequently, to begin operation even

   reasonably soon, PCS operators will have to share

   the spectrum with incumbent microwave facilities.

   Because microwave systems, at least in the lower

   sub-bands, typically operate with 10 megahertz

   channels, 40 megahertz PCS assignments would

   provide operators the flexibility to use channels

   adjacent to existing OFS systems.

          In contrast, 20 megahertz assignments could










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   be rendered useless for PCS by a single microwave

   limit.  The 40 megahertz assignment plan also

   would help compensate for the technical

   differences which exist between 1800 megahertz and

   2 gigahertz thereby helping to place the coverage,

   capacity and cost of PCS systems on par with their

   cellular competitors.

          In addition by increasing the trucking

   efficiency and lowering the number of cell sites

   needed to meet capacity demands, 40 megahertz

   assignments promote lower infrastructure costs and

   narrower allotments.

          And finally, over the longer term, wider

   bandwidth assignments would simplify the

   introduction of higher speed nonvoice services and

   applications.

          Because 40-meg assignments are essential to

   the successful launch and operation of a large

   scale effectively competitive PCS, Time Warner

   believes that the FCC should assign these

   bandwidths directly rather than relying on an

   aggregation of the market.  As compared to










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   licensing 40 megahertz directly, an aggregation

   scheme could at worst result in an inefficient

   resource allocation which could cripple the

   service, and even under a best case scenario an

   aggregation policy would propose substantial

   transaction costs, delay the introduction of the

   initiation of service and lower the proceeds of

   the public auction.

          A second crucial PCS regulatory parameter

   is assignment area.  As is evident from the trench

   to consolidate cellular and SMR industries,

   wireless markets encompass large geographic areas.

   And this fact should be recognized by the FCC in

   the assignment of PCS licenses.

          Time Warner, along with many others,

   believes that a licensed area should encompass at

   least MTA-size regions.

          The third essential ingredient of PCS

   regulations concerns cellular eligibility.  To

   ensure that consumers enjoy the low prices and

   innovation associated with competition, parties

   with significant cellular interest should not be










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   permitted to hold PCS licenses in the same area.

   In establishing a new Personal Communications

   Service, the Commission holds a golden opportunity

   to break the stranglehold the cellular industry

   has over the mobile phone user and make wireless

   service more affordable and more accessible to the

   average American.  The FCC should not squander the

   opportunity to inject real competition into this

   marketplace.

          Based on economic projections that Time

   Warner and others have conducted, time-to-market

   is a key indicator of success for PCS.  Because an

   operator must realize the significant level of

   penetration to achieve profitability, and inasmuch

   as cellular penetration is growing at a phenomenal

   rate, as we heard time and time again yesterday,

   operators who initiate service too late may find

   no market left to penetrate.  Thus, even with wide

   bandwidth large area assignments, if PCS operators

   are unable to enter the market soon, they may find

   it virtually impossible to build a successful

   business.










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          Furthermore, based on internal Time Warner

   estimates, every year that PCS licensing is

   delayed reduces auction proceeds by at least

   one billion dollars.  Consequently, the viability

   of the entire PCS industry, consumer benefits of

   cellular competition, and the net proceeds of the

   PCS auction are all contingent upon expeditious

   licensing.

          Thank you.

          MR. STANLEY:  Thank you very much.

          MR. HALLER:  Let me -- I should have done

   this earlier on.  I think most of the panelists

   were here yesterday and so I didn't explain the

   light system that we have, and let me do that for

   any of you who don't know.

          The rule, I think, is six minutes.  The red

   light comes on at seven minutes and also you'll

   hear a bell ring.  If that happens, you'll be

   allowed to finish the thought that you have at

   that point and then we'll move on to the next

   panelist.

          So for the few that weren't here yesterday,










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   I thought I should go ahead and explain that.

          MR. STANLEY:  Thank you.  Mr. Murray?

          MR. MURRAY:  Good morning.  My name is

   George Murray, and I would like to thank you,

   Dr. Stanley, and the FCC for inviting me to

   participate on this panel.

          I submitted a prepared text which addresses

   several issues with regards to the technical

   aspects, but I would like to say that I am not an

   engineer at all.  I'm on this panel but I am not

   an engineer.  I'm a businessman and I have

   utilized engineers as one would utilize lawyers,

   and et cetera.

          MR. STANLEY:  That sounds pretty

   devastating.

          MR. MURRAY:  But, you know, I saw some of

   the other panels but what I did not see was some

   other small businesses and minorities

   participating on some of the other panels.

          Those people who I believe to be the real

   risk takers are the people who put their

   children's college tuition on the line, mortgage










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   their home in order to take advantage of or

   participate in some of this new exciting

   technology.

          But I think it's important to hear from a

   minority businessman who has owned and currently

   owns communications property.

          I have talked to several women-owned firms

   and other minority-owned firms, and I believe that

   my comments will fairly represent their and my

   views.

          As a businessman, I know that there is a

   certain amount of risk in all ventures.  There

   will be risks and hopefully a chance for a success

   in the PCS, but I want to make sure that the

   process that brings this risk and possible success

   together encourages and facilities broad-based

   participation.  That depends on whether the FCC

   carries out the Congressional mandate to

   incorporate minorities and small businesses into

   the process.  If it does, then we can look to the

   spectrum allocation and see if one can operate a

   successful business given a 10- or a 20-megahertz










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   license.  My answer to that question is yes.  But

   can I operate it better under conditions that are

   more competitive; and the answer to that question

   is a resounding yes.

          So how can minorities best be incorporated

   into this process to achieve better and more

   profitable conditions?  The best way is to

   establish a more competitive environment.  And I

   share the concern by Commissioner Barrett

   regarding the 30 MTAs dominating the marketplace.

          My first suggestion would be to eliminate

   the 30 megahertz MTAs and create three 20s.  I

   think that that would definitely add to the

   building-block approach.

          I believe that the experience in the

   cellular industry indicates that cellular carriers

   compete principally on the basis of average --

   coverage area, service quality and price.  In all

   of these critical areas, a 30 megahertz MTA

   license allows significant inherent advantage over

   its 20 and 10 megahertz BTA competitors.

          And also there is a problem on the price










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   issue of how much it will cost a minority firm or

   small business to clear the microwave interference

   problems since if it's cleared early in the

   process, I'm sure that the incumbent microwave

   person will certainly ask a much higher price to

   get out early rather than later.

          I also believe that the FCC must keep the

   designated entities, and also I believe that you

   must maintain to set aside for bidding by minority

   and women on the firms of no less than

   30 megahertz of spectrum.  If the set asides are

   in jeopardy, I urge the FCC to hold meetings with

   minority- and women-owned firms to discuss any

   alternatives that might arise.

          The Commission should remember that radio

   spectrum is a public resource and should not be

   divided in a manner that suddenly or

   systematically excludes others, especially

   minorities.

          Also I believe we must have a preferred

   payment plan on the bids.  10 percent of the

   auction price in three months, the remainder over










                                                  25




   time allowing for construction.  I think the

   powers should be increased to 1,000 watts, and

   that there be some consideration for the

   relocation of the 40 megahertz unlicensed

   PCS spectrum to the upper band.

          With respect to the financing, I believe

   that all the minority- and women-owned firms and

   small businesses would want to make every effort

   to maintain control over their business.  I think

   it would be extremely difficult.  I think there

   should be some flexibility given to the equity

   ownership structure.  When you go to the

   marketplace for long-term financing, I think that

   you will mostly be in a position -- the minority

   firms would be in a position that they might have

   to give up more than 50 percent initially of their

   business, but I think they could get buy-back

   opportunities to get back to the 51 percent

   level.

          I thank you for your time.

          MR. STANLEY:  Thank you very much,

   Mr.  Murray.  Dr. Jackson?










                                                  26




          DR. JACKSON:  Thank you.  Thank you to the

   PCS Task Force for the opportunity to appear here

   today and share my thoughts with you.

          I'm a consultant.  I have several clients

   in the mobile industry.  Studies that I prepared

   and co-authored were filed in a PCS proceeding by

   Bell Atlantic.  Nevertheless, I'm speaking here

   today for myself and not for either my firm,

   Strategic Policy Research, or any of my clients.

   In fact, I think some of my clients disagree with

   what I am about to say.

          MR. STANLEY:  We're counting on it.

          MR. JACKSON:  I just assume you suppress

   that part of the transcript.

          I think that there are many important

   issues in telecommunications today but there are

   few where the FCC is so completely in control.

   You know, state regulators can't do anything,

   innovation by technologists working on cable

   systems can't do anything.  The stakes for our

   nation are very large in PCS and the FCC is really

   in the driver's seat.  It's a very important task










                                                  27




   that you undertake.

          In the time I have available today, I'm

   going to comment briefly on several of the larger

   policy issues that were on the list that you were

   provided with.

          But first on the issue of geographic

   extent, I think that the Commission has made a

   healthy move in picking the relatively large BTAs

   and MTAs to define the geographic scope of PCS

   license regions.  Personally, I don't think the

   Commission has gone far enough.  I think that the

   recent consolidation and in the SMRS industry

   illustrates, as did cellular consolidation before

   it, that that efficient scale of mobile operations

   is more likely to be continentwide than statewide,

   and I think you should take that into account,

   perhaps all MTA licenses, opportunities for

   nationwide licenses and the bidding.

          The second issue is one that has already

   been discussed by the preceding panelists is the

   issue of license bandwidth.

          I believe that the commissions seven-block










                                                  28




   channel plan for PCS wastes many tens of megahertz

   of spectrum and will provide consumers with a far

   less competitive market than would many other

   channel plans.

          My own view is with those who support

   20 megahertz-wide licenses.  I believe that with

   the current technology there are significant

   reduction in operating costs if a PCS operator has

   20 megahertz of spectrum rather than 10.  I think

   the cost reductions in moving from 20 megahertz to

   30 megahertz or less and the cost reductions in

   moving from 30 to 40 megahertz are almost nil.

          And I would suggest that if you find the

   case of the advocates for 40 megahertz-wide PCS

   licenses persuasive, interesting but ultimately

   unproven, then you should put out a channel plan

   such as six 20 megahertz licenses which permits

   consolidation to 40 megahertz operations inside

   the upper and lower PCS sub-bands, should that be

   the market choice, and permits multiple operators

   for 20 megahertz licenses should that be the

   market choice.










                                                  29




          If there are enormous gains in going from

   20 to 40 megahertz, which some allege, then the

   auction of the postauction market should reveal

   it.  But if those gains aren't there, if really 20

   is enough but you make available only

   40 megahertz blocks, you'll never know you made

   the mistake, but consumers will know because

   they'll see a less competitive, a less responsive

   PCS market.

          With regard to this split between the upper

   and lower band, as you're all aware, the PCS

   spectrum was divided into two sub-bands which was

   significantly separated.  I believe this band

   split will have important economic implications

   for many years to come.  Manufacturers will find

   it significantly easier to provide equipment that

   operates in the lower band than to provide

   equipment which operates in the upper band or

   across both bands.

          Furthermore, I think that developing

   products for the lower band will be more

   profitable.  It's twice as big and has fewer










                                                  30




   microwave incumbents.  So we should expect radio

   sales take off faster there.  Consequently, I

   expect manufacturers to focus first on the lower

   band and only later make products available for

   the upper band.  In the long run, this penalty

   will go away but in the short run it does affect

   how PCS will develop.

          With regard to standardization, I think we

   can all recognize that some form of common

   air-interface would be valuable.  It would allow

   for the easy provision of roaming service.  But

   I'm deeply concerned that if the Commission became

   involved in the standardization process, consumers

   would be harmed and jobs would be lost.  Because

   of the time limitations, I won't say more than

   that.

          Another issue that was -- on two of the

   questions posed for me in preparation of this

   session was the possibility of relocating

   unlicensed PCS, I guess, above 2130 megahertz.  I

   think such relocation has the attractive

   simplicity, perhaps, of putting all the unlicensed










                                                  31




   PCS -- the licensed PCS in the low band and

   placing all the unlicensed PCS in the high band.

   But briefly put I think that such a move would

   destroy unlicensed PCS.  If you want to destroy

   it, just do that and they'll do it through some

   cosmetic form that let them linger a low, slow

   death over a number of years.

          I think that unlicensed PCS is very

   important to our nation and consumers, and I think

   that relocating it would be very unfortunate.

          One last topic, given the FCC's recent --

   that's the impact of the microwave incumbents.  I

   think given the FCC's recent decision regarding

   public safety incumbents, the incumbents no longer

   pose a long-run problem for PCS.

          I also would ask you to observe that, at

   least to a first approximation, it doesn't cost

   the PCS operator anything to remove the microwave

   incumbents.  They come out for free.  Now, you say

   why is that.  Well, consider a PCS license region

   that has, say, some incumbents that they're going

   to take a million dollars to remove, and then once










                                                  32




   removed, that licenced region will be worth ten

   million dollars, and the FCC is going to auction

   it off tomorrow.  How much are you going to bid?

   What's the most you'll bid?  Well, it's worth ten

   million; it's going to take you a million to get

   the incumbents out; you won't bid more than nine

   million.  If the incumbents went away magically,

   you would be willing to bid ten million.  If all

   bidders see this same common posture in removing

   incumbents, which for the first approximation they

   probably will do, then they'll all subtract that

   cost from the bids and the bids will be lowered by

   the amount of the cost of removing the

   incumbents.

          So anybody who tells you not only do we

   have to pay for the spectrum, we have to pay for

   removing the incumbents, is engaged in a form of

   double counting.

          Thank you.

          MR. STANLEY:  Thank you very much.  John

   Battin.

          MR. BATTIN:  Thank you.  It's a pleasure to










                                                  33




   be here today.  My name is John Battin, and very

   simply my job for Motorola is to see that PCS

   becomes a very healthy business.  I was involved

   in cellular at about the same stage of development

   and even though I granted it, PCS is much more

   complicated than cellular.  It didn't seem that

   way 15 years ago when we were developing the

   cellular business.

          In our presentation we commented on three

   main issues.  One, I think that Motorola probably

   has more of an opinion on the standard's issue

   than most, and I would like to talk to that

   briefly.

          Also, we're very sensitive to the satellite

   issue where the current PCS allocation removes 20

   megahertz of satellite spectrum that was allocated

   at the World Radio Conference.  And we're

   concerned about that not only because of the 20

   megahertz but because of what that might do to the

   U.S. credibility of it on an international basis.

          And then on an overall basis we think that

   the microwave clearing issue is sort of










                                                  34




   underplayed in its importance, and I would like to

   make a couple of comments on that.

          Speaking to microwave -- and this also

   plays on the idea of maybe we would move the

   unlicensed band and I -- you know, I second that

   position; that the 1910 to 1930 band is very

   relatively -- it's very clear as compared to the

   rest of the PCS spectrum and makes it ideal for

   unlicensed.

          I think in most of our comments we have

   leaned pretty heavy on the fact that an

   80-megahertz spread between transmit and receive

   is very important because that's the way microwave

   systems are set up.  Further in looking at that we

   find that maybe only about 50 percent of current

   microwave systems are paired at 50 megahertz.  And

   also we're -- we look at microwaves and we say,

   hey, these are 10 megahertz licenses.  When you

   look at the equipment, their bandwidth is about 18

   megahertz.  So when you put that all into the

   equation that says there's probably more

   flexibility here than we originally thought to do










                                                  35




   with -- carry between transmit and receive.

          Since we're fundamentally a manufacturer,

   we're really interested in the healthy market,

   sell a lot of infrastructure, sell a lot of

   subscriber equipment.  We don't talk too much

   about the size of licenses, et cetera, but I was

   pressed to say, hey, what do you really think

   about 40, 20s, 30s.  And I said, well, I'm just

   going to grade these, as if I went away and got

   some spectrums, how would I feel about this when I

   brought my license back to corporate.  And so I

   made this chart.  And I think one of the more

   interesting things about this chart -- and you'll

   find that in our filing -- is the massive

   difference between the grades before clearing and

   after clearing that points out very significantly

   that 40 and 30 have a big advantage up front

   before the microwave gets cleared.  And so I think

   the big issue is microwave.

          MR. STANLEY:  Excuse me.  Is E the same as

   F?

          MR. BATTIN:  Is B the same as what?










                                                  36




          MR. STANLEY:  No, E.  You give 10 megahertz

   a grade of E.

          MR. BATTIN:  I think with a 10 megahertz

   license you have a good chance of coming home with

   this big piece of spectrum in use for three or

   four years until you get the microwave up.

          In order to try to explain our position on

   standards, I tried to pose it in two different

   ways.  One would say let's look at it the way

   cellular was.  There's going to be one standard.

   Let's look at it another way, the way that FCC

   currently looks at it, that there would be no

   standards required, and then show our middle of

   the road.  And if, in fact, we have one standard,

   like we have in cellular, the disadvantages are

   that we restrict -- you know, we really restrict

   the service diversity.  There's a lot of services

   planned for PCS that would not be allowed to

   happen.  We're liable to just see a roll ahead of

   current technology, and I don't think the industry

   would be able to make a decision.  I mean, we

   would get locked up between TDMAs and CDMAs and










                                                  37




   big cells and small cells.  You probably -- you

   could take -- for sure that would delay the

   process.

          The advantages, of course, is we get

   roaming, the users can take their choice of

   operators, we get volume manufacturing and the

   U.S. would have a standard that we could take

   around the world which is an advantage.

          The current path where the FCC does not

   require standards has no assurances are going to

   be in the interoperability.  It means that

   probably -- you may not have roaming from system

   to system.  There's a potential that a subscriber

   may sign up with a system that doesn't exist in

   the future so that a group of subscriber units

   could be made obsolete by an operator going out of

   business and abandoning them.  That tends to

   defuse our efforts internationally to be a trend

   setter.

          It's far more complex to work out microwave

   sharing where, in fact, there is multiple kinds of

   technologies that you're working with because










                                                  38




   different technologies interfere were microwave in

   different ways.  And, of course, there's

   confusion.

          Of course the advantage of those standards

   is that there's the ultimate in flexibility and,

   of course, you get fast in the market.

          And I see my light came on so I'm going to

   go --

          MR. STANLEY:  I think you have another

   minute.

          MR. BATTIN:  What we are proposing is that

   the FCC not get into the standards process any

   more than to say that all protocols -- I lost out

   on my last --

          MR. STANLEY:  That's okay.  Please complete

   your thought about the standards.

          MR. BATTIN:  Our position is that the way

   we're currently -- the way we're currently going

   with no required standards, for sure there's going

   to be a lot of flexibility, but our position that

   the FCC should require at least systems that go on

   the air to operate with standards are really going










                                                  39




   to promote multiple vendors with high volumes and

   competitive products.  We're going to minimize the

   varieties of products.  Whereas without standards,

   there may not just be TDMAs and CDMAs; there may

   be a Qualcomm version of CDMA, a Motorola version,

   an AT&T version, an Erickson version.  It will

   establish credibility of our systems on a

   worldwide basis, and we think it's going to speed

   the standardization process because we can take --

   and the way it's happening now is that the various

   systems will set up into groups with -- you know,

   with the charter to make standards on each one of

   these technologies that the industry requires.

        Thank you.

          MR. STANLEY:  Thank you very much.

   Dr. Jacobs, please.

          DR. JACOBS:  Good morning.  My name is

   Irwin Jacobs.  I'm chairman and chief executive

   officer of Qualcomm.  I would like to thank the

   Commission for giving me this opportunity to

   participate on the panel of discussion of the

   PCS's spectrum technical issues.










                                                  40




          I'll focus my initial comments on technical

   issues including system capacity, service quality,

   cost implications and standards.

          As the Commission is aware, Qualcomm has

   developed a complete digital PCS system allowing a

   single technology portable phone to deliver a full

   range of PCS services equally well and large macro

   cells with high speed handsoff and also

   distributed in-building microcells with dense

   usage and heavy frequency reuse.

          The system is based on Qualcomm's work in

   the application of code division multiple access,

   CDMA, technology to the mobile communications

   channel.

          The fundamental concept of a CDMA system is

   that all users of a communications channel use

   common spectrum at the same time with

   channelization provided by the assignment of a

   unique code to each user.  In our system we

   divided the channels into one-and-a-quarter

   megahertz and have extensions to two-and-a-half

   megahertz and 5 megahertz-wide signals.










                                                  41




          The receiver applies advance digital signal

   processing techniques to separate the desired

   users from others being simultaneously received.

   The use of a common frequency by a large number of

   users allows all cells in a multicell system to

   share the same slice of spectrum.

          Other technical features of the CDMA

   system, some of which are unique to CDMA, support

   demonstrated capacity gains of 10 to 20 times that

   of the existing analog cellular systems.  Qualcomm

   has demonstrated such capacity in extensive

   testing of its PCS system that is carried out now

   over the past several years.

          It should be noted that the existing

   cellular systems service perhaps 6 percent of the

   United States population, and that the CDMA

   capacity improvement would support an increase to

   nearly 100 percent of the population without

   additional spectrum but at the current level of

   usage.  However, with the new PCS services and the

   enhanced competitive environment fostered by the

   auction of additional spectrum, one can expect










                                                  42




   usage to go up and approach or exceed, perhaps,

   that of the wired access network.

          To maximize system capacity, the Qualcomm

   PCS system uses precise closed loop power control,

   which causes each mobile to transmit the minimum

   power at each instant required to provide a

   desired quality of service.  This feature

   increases mobile talktime, facilities spectrum

   sharing and reduces safety and EMI concerns.  It

   also operates with a lower radiated power from

   base stations such that a limit such as that

   proposed by the Commission is feasible except that

   it should be modified to specify a power density

   scaling the effective power radiated from an

   antenna to signal bandwidths or to the number of

   users.

          Let me now address some of the specific

   questions raised by the FCC.  First, the size of

   the section block.   As noted above, Qualcomm has

   demonstrated that its system provides ten times

   greater the capacity of AMPS.  This means that a

   20 megahertz block, which is 80 percent of the










                                                  43




   existing 800 megahertz cellular authorization,

   could provide more than eight times the capacity

   of a current cellular system.

          Similarly, a 10 megahertz allocation will

   support more than 4 times the capacity of an

   existing cellular system, assuming the same number

   of base stations and 3-sectored cells and

   compatible adjacent systems.

          The capacity could further be increased by

   increasing the number of sectors and/or reducing

   the average vocoder rate.  This, of course,

   assumes clear spectrum.  The number of existing

   microwave users, incidentally, can limit the

   capacity in the short term.  For these reasons I

   believe that a PCS licensing could use any of the

   proposed block sizes -- 10, 20, 30 or even 40

   megahertz -- to provide a viable PCS service.  The

   Commission, therefore, must look to other

   nontechnical issues such as the number of

   competitors and the need to provide spectrum for

   designated entities to determine the block size.

          I also believe that any of the proposed










                                                  44




   block sizes could be used to support a highly

   attractive set of new digital data services to

   meet anticipated market demand, although a 10

   megahertz licensee certainly would have less

   flexibility in meeting such market demands.

          Regarding the road of usefulness of the

   upper and lower bands, although Qualcomm has not

   yet produced equipment in the upper bands, there

   is no technical impediment if there is sufficient

   demand for such equipment and, therefore, for

   quantities of required new RF components.

          Our system which uses a 1.25 megahertz

   bandwidth with extensions to 5 is compatible with

   a 10 megahertz and larger allocations.  We are

   pursuing dual mode/dual band equipment that will

   operate in both the 800 megahertz cellular band

   and one or both PCS bands.  However, the dual 1.8

   and 2.1 equipment; that is the one covering both

   the lower and the upper PCS bands, that would

   result in we estimate now about a 20 to 25 percent

   increase in cost and weight over 1.8 megahertz

   only.  And, in fact, the dual mode -- dual










                                                  45




   frequency band AMPS and 1.8 would only be,

   perhaps, a 15 to 20 percent increase; a little bit

   less expensive.

          I'll conclude my remarks with a few

   observations on standards.

          I believe the Commission does have a role

   to play in the process.  It should not, however,

   set standards.  It should ensure that the

   equipment used to provide service conforms to an

   industry approved standard.  It can do this by,

   for example, requiring as a condition for type

   acceptance that all mobile and base station

   equipment conform to a standard issued by an

   ANSI-approved standards setting organization such

   as the Telecommunications Industry Association.

   Such an action by the Commission would allow the

   industry to develop multiple standards and would

   encourage equipment vendors to develop conforming

   equipment.

          Thank you very much.

          MR. HALLER:  Dr. Nagel, please continue.

          DR. NAGEL:  Thank you.  I appreciate the










                                                  46




   opportunity to appear before the PCS Tack Force

   today.

          The PCS is a new technology that will

   enable users of personal computers to communicate

   data of high rates among groups people of over

   distances of up to 50 meters without wires or

   other fixed connections.

          There is no technology or service available

   that today provides the benefits of Data-PCS to

   students, educators, researchers, workers, health

   care professionals, scientists and others.

          At present, however, Commission's PCS rules

   fail as yet to provide for the deployment of

   Data-PCS.  I would like, therefore, to address the

   additional steps that must be taken to make

   Data-PCS a reality.

          The Commission should recognize two basic

   differences between most unlicensed voice PCS and

   most unlicensed Data-PCS.  Data-PCS is the only

   emerging PCS proposed unlicensed voice services

   such as wireless PBXs, are primarily modifications

   to or extension of existing and planned voice










                                                  47




   services such as cordless residential phones,

   cellular telephones and licensed PCS systems or

   current wire services.  They provide few new

   benefits to the public other than convenience.

          In contrast Data-PCS is not a modification

   of an existing service.  Data-PCS, for example,

   would be the primary, and in some cases the only

   practical means of providing Internet access

   throughout schools; the only practical means to

   enable doctors to connect to medical resources in

   hospitals, to allow persons attending meetings to

   benefit from a copious and immediate exchange of

   information.  These and other important needs

   could not otherwise be met unless frequencies are

   made available specifically for Data-PCS.

          Most unlicensed voice products including

   all wireless PBXs will operate in conjunction with

   a fixed base station.  As a result they can be

   frequency coordinated; that is they could be

   deployed at specific sites or even in a particular

   metropolitan area starting right now without the

   need for the spectrum to be cleared of microwave










                                                  48




   waive incumbents.

          In contrast, Data-PCS services are

   nomadic.  They are not tied to any fixed base

   stations.  The users will take them wherever they

   need to exchange or access information.  Moreover,

   users will not know in advance when or where

   they'll use the device and they can not be limited

   to operating in a predetermined clear site.

   Anything less than anytime, anywhere

   communications simply does not recognize the

   reality of the Data-PCS customers' requirements.

          Data-PCS devices can not be frequency

   coordinated.  To deploy even the very first

   Data-PCS-equipped laptop or personal digital

   assistant, we have to remove the last microwave

   link, both the co-channel and the adjacent channel

   from harm's way, which we call the last link

   problem.

          If Data-PCS is to become a realty, the

   Commission must correct two problems, which

   together increase the delay and uncertainty

   associated with the band clearing process, and










                                                  49




   thus may make it impossible to raise the capital

   necessary to clear the unlicensed data band.

          First, in an effort to impose equal pain on

   voice and data services, the Commission gave only

   a half of the relatively lightly loaded 1910 to

   1930 megahertz band to each of the two unlicensed

   applications-isochronous and asynchronous devices

   or in other words, devices that generally can be

   frequency coordinated and those that cannot.

          This decision is fair only as both data and

   voice services have an equal opportunity to occupy

   their respective bands.  They do not.

          While most voice services can begin

   operations by applying frequency coordination and

   postpone or avoid relocating microwave incumbents,

   Data-PCS faces the link problem and cannot deploy

   without band clearing.

          For the voice services it's a difference

   that can be measured in some additional dollars

   and must be sent to deploy, but for the

   nomadicated services it's the difference between

   being online and not being online.










                                                  50




          The present allocation does not provide

   sufficient usable bandwidth for Data-PCS even if

   we were to incur the cost of delay of band

   clearing.  The problem with the current allocation

   is especially severe when one considers the

   problem of adjacent-channel microwave stations

   which in reality must be treated as co-channel or

   be modified in order to avoid interference to

   them.

          Due to the large number of microwave links

   in the 1900 to 1910 megahertz sub-band, it is cost

   effective to clear only the more lightly loaded

   line 1910 to 1920 megahertz portion of data

   sub-band, at least initially, before we can

   finance further band clearing out of the sale of

   Data-PCS devices.  Even if the sub-band were

   cleared, however, it would be squeezed between a

   heavily loaded microwave band on one side, the

   1900 to 1910 band, and an unlicensed voice band on

   the other side, whose attended occupants have no

   motivation to clear the last link because wireless

   PBXs cannot operate through frequency










                                                  51




   coordination.

          Therefore, after spending years of efforts

   and tens of millions of dollars to remove the

   co-channel microwave stations from half of the

   band, the computer industry could have as little

   as 2 megahertz of usable bandwidth due to adjacent

   channel interference concerns, as opposed to its

   absolute minimum starting point of 10 megahertz,

   which will not actually last us very long in the

   age of mixed data, images of full-motion computer

   communication.

          Turning the clearing process itself, the

   Commission should take additional steps to ensure

   that an adequate amount of the unlicensed data

   band will be cleared promptly on a nationwide

   basis.

          The Commission has tentatively designated

   UTAM as the entity responsible for clearing the

   entire unlicensed band.  While UTAM says it's

   committed to relocating all incumbents from the

   unlicensed band as mandated by the Commission, in

   practice UTAM's primary focus is clearly the early










                                                  52




   deployment of coordinatable voice systems in

   advance of band clearing.

          What Apple has become aware of from

   attending UTAM meetings and from reviewing its

   public statements is apparent from UTAM's

   statements before this PCS Task Force.  All of

   UTAM's financing is key to the early deployment of

   coordinatable devices, seed money from the

   manufacturers of voice equipment and money through

   clearing fees.  This inevitably places Data-PCF at

   the end of the line since there can be no Data-PCS

   clearing revenues until the last link problem is

   completely solved.

          The Commission must take steps to ensure

   that UTAM becomes and remains focused on its

   primary band clearing obligation, which explicitly

   includes clearing the unlicensed asynchronous band

   for nomadic Data-PCS devices as promptly as

   possible and otherwise fairly represents the

   interest of all users of the unlicensed band.

          Nomadic computing is the driving,

   unlicensed PCS application for data users.  If the










                                                  53




   Commission provides voice PCS 140 megahertz of

   usable spectrum, but grants the computer industry

   only a fatally incumbered 20 megahertz, it will

   have failed to provide for the needs of the U.S.

   education community and other customers of the

   U.S. computer industry who needed high speed

   Data-PCS services, and it will have lost the

   opportunity to create a truly new PCS technology.

          MR. STANLEY:  Thank you very much.

   Ms. Abramson, please continue.

          MS. ABRAMSON:  Good morning.  My name is

   Sandy Abramson, and I'm manager of Wireless

   Regulatory and Standards Affairs for AT&T NCR, as

   well as president of UTAM, Inc.

          Before I begin I would like to take this

   time to publicly thank the 30 to 40 small

   companies, PCS, computer and telecommunications

   industry associations, the microwave industry

   associations, as well as the incumbents in what

   seems thousands of work hours spent in building

   the industry consensus positions on the UTAM plan

   for funding and deploying unlicensed PCS.










                                                  54




          I also want to applaud the Commission's

   treatment of unlicensed PCS in the second report

   and Order as well as its recognition of the

   importance of the unlicensed PCS industry.

          UTAM strongly supports the decision to

   provide unlicensed PCS with a full 40 megahertz

   allocation necessary to meet the enormous demands

   for unlicensed products.  UTAM also agrees with

   the Commission that the allocation of the more

   lightly loaded spectrum of 1890 to 1930 megahertz

   is absolutely critical to the potential success of

   unlicensed PCS.  UTAM further endorses the FCC's

   evenhanded approach in deciding that lightly

   loaded spectrum one half to asynchronous, mostly

   voice products, and one half to asynchronous which

   are mostly data products.  This is imperative for

   securing financing for band clearing and ensuring

   that all segments of the unlicensed PCS industry

   have the opportunity to successfully market their

   products.  Any changes in these fundamental

   decisions will at least delay and likely preclude

   the deployment of unlicensed PCS systems and










                                                  55




   devices.

          Before I address these points in greater

   detail, I want to tell you a little bit about UTAM

   itself.

          UTAM is a nonprofit corporation formed by

   unlicensed PCS manufacturers.  Membership in UTAM

   is open to all the parties with an interest in

   unlicensed PCS, including representatives of the

   microwave licensees and other potentially affected

   industries.

          UTAM's current members represent the full

   range of small too large future providers of data

   and voice unlicensed PCS products.  The FCC has

   conditionally designated UTAM as frequency

   coordinator for the unlicensed spectrum and has

   charged UTAM with the responsibility for preparing

   a plan for funding and managing the relocation of

   incumbent microwave licensees from those

   frequencies.  This is a daunting task even under

   the current rules.  Almost 2,000 microwave links

   will have to be relocated at a cost of some 300 to

   500 million dollars, but the task cannot be










                                                  56




   avoided because unlicensed PCS products are

   expected to be freely available and very portable

   and, therefore, require clear spectrum in which to

   operate.

          The absence of exclusive spectrum rights

   means that an entity such as UTAM, which can

   spread the cost burden across the entire industry,

   is essential to accomplishing band clearing.  I

   strongly believe that the expense and effort will

   be worth it.  Unlicensed PCS promises to bring a

   wealth of benefits to consumers and businesses.

   Products such as wireless PBXs and LANS, advance

   cordless phones and personal digital assistance

   will be available to anyone anywhere without

   burdensome licensing procedures or the expense of

   air time charges.

          As flexible and cost effective extension

   for the information super highway, the

   capabilities and efficiencies that unlicensed PCS

   products bring will have a broad range of

   important business, consumer, education and health

   applications for the office, home and classroom










                                                  57




   and hospitals.  They will also result in job

   creation for both the unlicensed industry and

   businesses making use of unlicensed products, as

   well as to maintain the U.S. global leadership

   role in telecommunications technologies.

          But these benefits cannot be enjoyed unless

   UTAM is successful in meeting the serious

   challenges now before it.  Foremost among them is

   the need to raise hundreds of millions of dollars

   to clear the entire unlicensed bands right down to

   that the very last link.  The principal source of

   revenue for funding the band clearing process will

   be fees assessed on sales of coordinatable,

   unlicensed PCS systems and devices.  These

   revenues simply will be insufficient if the

   current frequencies are relocated in a manner

   there -- where the total relocation costs or

   reduces the opportunities for coordinated

   deployment by increasing the number of incumbent

   microwave systems.

          In sum, to make unlicensed PCS a reality,

   existing regulatory uncertainties must be resolved










                                                  58




   as quickly as possible.

          First, the current allocation of at least

   40 megahertz of spectrum should be reaffirmed

   because it is essential to meet consumers' needs

   for unlicensed PCS.  The record before the

   Commission confirms the enormous demand for these

   products.

          Second, the current allocation of the

   frequency at 1890 to 1930 megahertz must be

   retained because it is critical to the economic

   feasibility of the industry.  Other potential

   frequency bands such as 2.1 gigahertz simply

   contain too many microwave links and would

   increase the cost of band clearing from 500

   million to 2 billion dollars, which is far beyond

   the ability of the industry to afford.

          Third, request to allocate the lightly

   populated frequencies at 1910 to 1930 solely to

   data products should be denied.  Data has already

   been favored by an allocation of contiguous 20

   megahertz block.  The current equal division is

   necessary to afford meaningful opportunities for










                                                  59




   both voice and data products and to permit the

   deployment of sufficient numbers of coordinatable

   systems and devices in order to generate the fees

   required to the band clearing process.

          And finally, the Commission should proceed

   promptly to resolve all other outstanding issues

   involving unlicensed PCS and to establish

   expedited procedures for reviewing an approval of

   the UTAM's Financing and Relocation Plan so UTAM

   and the industry can move forward.

          These four simple steps can resolve

   uncertainties and facilitate the fastest possible

   deployment of a broad family of new unlicensed PCS

   systems and devices.  In contrast I want to

   emphasize that any material change in the

   unlicensed PCS allocation at this late date will

   place at risk to tens to hundreds of millions of

   dollars and hundreds of thousands of industry

   resources that have already been devoted to the

   development of unlicensed PCS based on reliance to

   the current rules and likely will jeopardize the

   future of unlicensed PCS itself.  Thank you.










                                                  60




          MR. STANLEY:  I thank you very much.

   Mr. Rosenblatt, please.

          MR. ROSENBLATT:  I would like to thank the

   Commission for allowing me the opportunity to

   represent some of our thoughts and experiences

   that we've had over the last several years.  I'm

   the vice president of the wireless group of

   Comsearch, and Comsearch, as many of you know, has

   been involved in wireless telecommunications via

   satellite, microwave, cellular and now PCS issues

   over the last 15 years.  And one of the more

   significant aspects of the PCS allocation has to

   do with microwave, and the coexistence of

   microwave with PCS.

          We've been involved with that particular

   area since the beginning; since the early stages

   of broadening CDMA and the coexistence

   capabilities of that technology with microwave.

   And based upon those experiences, we would like to

   offer some -- what we feel is some technical

   insight into the microwave issue.

          Now, I will caveat that by saying that with










                                                  61




   every technical issue there's a related economic

   and political issue that we won't necessarily

   comment on and they have probably been addressed

   in the previous panels that have been presented.

          The success of PCS systems coexisting with

   microwave incumbent operators depends critically

   upon the outcome of many complex issues.  Perhaps

   the most prevalent among these is the spectral

   bandwidth of the microwave filters themselves.  In

   virtually all instances in the 1.9 gigahertz band

   the receive bandwidths are equal, and in some

   cases greater, than 20 megahertz allocation that

   is described at least in Block C of the current

   channel plan.

          Therefore, considering the proposed PCS

   allocation of four 20 megahertz allocations, a

   single microwave receiver could impact the use of

   PCS spectrum within a complete PCS block.

          We have looked at some situations where a

   single microwave receiver could effectively block

   out the capability of providing service in a large

   portion of a particular market.










                                                  62




          The best way to avoid interference into

   incumbent microwave is to relocate all the

   microwave paths in the market.  Of course this is

   impractical in day one, thus the best way to avoid

   interference is to engineer around them.  And this

   is a means that Comsearch has been involved in

   over the last 15 years of engineering around other

   microwave receivers, satellite receivers and other

   kinds of technology.

          In order to engineer around a particular

   microwave receiver, there needs to be enough

   spectrum room to do that. PCS spectrum allocations

   that are as wide as the occupied microwave

   bandwidth leave no room to work around a

   particular microwave receiver.  Instead, a PCS

   operator with these allocations would be faced

   with the predicament on day one of more than

   likely relocating all or a large percentage of all

   the microwave paths within a market.

          Larger PCS spectrum allocations will allow

   some spectral space to permit deployment and allow

   for the PCS operator to become viable before being










                                                  63




   forced to contend with the immediate relocation of

   all microwave incumbents.  A larger spectrum

   allocation will allow for interference avoidance,

   thus permitting less costly systems to be deployed

   in the early stages of PCS.

          Another aspect of with regard to the

   microwave issue is that of negotiations, a

   necessary evil, if you will, in order to relocate

   all the microwave paths.  Comsearch has been

   involved within the technical realm of mobile

   engineering, and we feel well-qualified to comment

   on the technical aspects of this perceived

   process.  Our experience, especially with private

   microwave indicates that the problems associated

   with negotiation and relocation are very

   complicated and they tend to be exacerbated by FCC

   rules.

          The 80 megahertz separation of the

   frequency blocks were conceived to be coincident

   with the 80 megahertz transmit/receive separation

   of the existing microwave frequency band.

   Unfortunately, the problems born by this attempt










                                                  64




   to provide the PCS operator some flexibility in

   designing their systems are many.  The 80

   megahertz separation is only -- is not in use by

   100 percent of the microwave paths in existence.

   So a PCS operator may have to pay to relocate the

   microwave path that is only one half in his area;

   the other half having to be relocated by somebody

   whose block that microwave path occupies.

          This could create some inequity in terms of

   who pays for what and also exasperates and

   complicates the particular negotiation of that

   microwave path.

          In addition, due to the wide nature of the

   microwave receive filters, adjacent channel

   interference may tend to play a substantial role

   in the spectral availability within a particular

   market.  Comsearch has done some analysis in a few

   markets and has determined at least on the limited

   basis that we've analyzed it, that an adjacent

   channel could cause up to 50 percent of the

   relocations required for a particular block.

          All the industry segments will be -- within










                                                  65




   the microwave industry will be inundated with the

   demand to relocate microwave paths.  Within the

   band allocated to PCS, there are approximately

   12,000 licensed microwave paths.  To relocate this

   magnitude of microwave paths within a reasonable

   amount of time will tax the resources of

   practically every segment of the industry.

          By comparison there were fewer than 350 new

   microwave paths licensed in the 6.7 gigahertz band

   during all of 1993, and this particular microwave

   band is looked at as a relief band for the

   currently occupied 1.9 gigahertz band.  We're

   optimistic that the industry can meet this

   challenge.  However, the critical aspect in

   meeting that will be the additional time

   constraint.  Thank you.

          MR. STANLEY:  Thank you very much.  Well,

   we've certainly heard a variety of opinions on, I

   guess, some of the more complicated issues that

   we're facing.  I would like to take a 15-minute

   break, but before we do, I'm going to poll the

   panel on, I guess, one of the principal questions










                                                  66




   that was aired widely yesterday and that's the--

   I'll call it the technical and economic viability

   of the smaller lots of spectrum.

          So if I could sort of start with you

   Limond, just to comment on the technical economic

   viability of the spectrum in terms of say 10 and

   20 megahertz blocks?  Are they feasible?

          MR. GRINDSTAFF:  Yeah, they are feasible.

   With the new digital technologies capacity is not

   the constraint, and I think with -- when you look

   at a PCS operator, you have to -- as a being a PCS

   operator you have to ask yourself what your

   service is going to be, and not all PCS operators

   are going to do the same thing.  And I don't think

   that's what the Commission is looking for.  No one

   is looking for a whole new seven more entries, PCS

   entries that look just like cellular.

          In providing the different scopes of

   blocks, different size blocks, you can stimulate

   difference service concepts and different services

   in each of those blocks.  A 10 megahertz block, a

   20 megahertz block, a 30 megahertz, a 40 megahertz










                                                  67




   block all can do the same type of -- technically

   can all do the same type of services.  They can

   also do different types of service depending on

   the PCS operators business plans.  And I think

   that's a key critical issue that PCS the operator

   have a business plan or a scope of business that

   he'll tailor his business to.

          MR. STANLEY:  Thank you.  Lex.

          MR. FELKER:  I think -- I tend to agree

   that PCS isn't going to be a clone of what

   cellular is today.  However, on a going forward

   basis I tend to agree with some of the other

   comments I heard this morning.  PCS is going to

   embrace a wide range of wireless applications and

   will compete with today's cellular, compete with

   today's wireline services, offer a variety of

   nonvoice services and whatnot.

          I think given the difficulty or the

   importance of entering the market as soon as

   possible and the difficulties posed by the

   microwave-sharing issue and the importance of

   maintaining infrastructure costs, at least on par










                                                  68




   with other wireless competitors, suggests to me

   that the 10 megahertz is probably going to be a

   disaster.  20 megahertz is likewise potentially

   unusable and that at a minimum we've got to have

   at least 30 megahertz and hopefully 40 megahertz

   assigned to them.

          MR. STANLEY:  So technically feasible;

   economically infeasible?

          MR. FELKER:  Certainly economically

   infeasible.

          MR. STANLEY:  Mr. Murray.

          MR. MURRAY:  I think that the 10s and 20s

   are technically and economically feasible, but I

   think they're more economically and technically

   feasible if there are no 30s and they're all 20s

   and 10s.

          MR. STANLEY:  Chuck.

          MR. JACKSON:  I guess there's the

   distinction between technical and economic

   feasibility and there's -- that very term

   "feasible" has to be defined.

          I look at those 10s in the higher band










                                                  69




   where I think the technology is going to develop

   slower and where there are more microwave

   incumbents per license to remove, although they're

   narrower band incumbents, and I guess I now try

   them to channel 50 or something like that at the

   time of the sixth report in order in television,

   UHF television was technically feasible but its

   economic feasibility grew over time.  And I think

   that the same thing would be true for those upper

   licenses.  With the current scheme I think that

   they wouldn't be big money makers the first year

   and they might not go for very much in the

   auction.

          MR. STANLEY:  John Battin.

          MR. BATTIN:  Well, we believe that there

   are many technologies that can used on the 10

   megahertz band that have a viable business.  The

   biggest problem is the microwave clearing issue

   and the timing issuing.

          Also the way it looks now is that there

   will be many requests for dual mode -- most of any

   one operator may get a 20 megahertz license, a










                                                  70




   20 -- a 30 megahertz license and also a 10

   megahertz license of a two dot one.  And so,

   therefore, we will be building subscriber units

   that try to span all of those frequencies.  And I

   agree with Irwin; that that's a 20 or 25 percent

   premium.

          So it's not just an issue of, hey, I have a

   10 megahertz license.  If you're in this business

   on a pretty wide scale basis, you may have a 30, a

   20, a 10, and so you have to build both those

   subscriber units that can cover all of those

   frequencies.

          MR. STANLEY:  Irwin?

          DR. JACOBS:  Yes.  I think an interesting

   business could be carried out in a clear 10 or 20

   megahertz band.  I think there's enough capacity,

   et cetera, to pull some interesting

   possibilities.

          The separation is a problem.  If you're

   limited at the upper end and then many of the

   users, particularly the larger bands at the lower

   end.  So there's a cost implication that I think










                                                  71




   will -- can hurt you.

          It's interesting, however, that initially

   when you start to watch these services your main

   concern is going to be coverage and not capacity;

   thus, you're going to have to build up subscribers

   slowly, and then no matter what bandwidth you

   have, you're probably going to be using less than

   10 megahertz when you -- for quite a period of

   time.

          MR. STANLEY:  David.

          DR. NAGEL:  For the -- the Data-PCS

   application, of course, the question of operating

   efficiency is not really a relevant issue.  The

   main issue for us is one of band clearing.

          All the studies that we've done show that

   the absolute minimum of 10 megahertz would be

   required to provide Data-PCS services that would

   be useful to the customers that we've studied so

   10 megahertz would certainly be a minimum band; 20

   megahertz begins to get services that are --

   provide adequate levels of performance.

          MR. STANLEY:  Sandy?










                                                  72




          MS. ABRAMSON:  As far as UTAM is concerned,

   the way that we see this as relevant to us is the

   issue of microwave clearing, and as I said

   earlier, the number of links in the 2.1 gigahertz

   band is about 7,000 links, and that would up the

   cost of our relocation from the 1890 to 1930 band

   from 300 to 500 million dollars to upwards of 2

   billion dollars, and that would also be

   overlooking the hundreds of millions -- and let's

   say 100 to 200 million that we have in some cost

   on products based on the second report Order.

          As far as UTAM is concerned, those are the

   major issues.

          MR. STANLEY:  Okay, thank you.  Jeff.

          MR. ROSENBLATT:  I would tend to agree with

   a lot of the other panelists in that if you had 10

   megahertz of cleared spectrum with today's digital

   technology that would provide enough capacity to

   serve all kinds of niche and, actually, fairly

   broad-based traffic requirements.

          However, with the incumbent microwaves

   occupying that spectrum, the smaller bandwidths










                                                  73




   are going to be at a significant disadvantage in

   cases over the broader allocations of spectrum.

          Though I might add that in the 2.1

   megahertz band it's a slightly different issue.

   In the 2.1 gigahertz band there is less spectrum

   available.  40 megahertz has been allocated.

   However -- and there's more microwave paths,

   also.  There's, let's say, two to one number of

   microwave paths relative to the 1.9 gigahertz

   band.  However, the microwave filters occupy

   almost an order of magnitude less spectrum.

   They're generally 800 kilohertz to 1.6 megahertz

   in bandwidth.

          So coexistence is better.  When you flip

   side them, you've got more microwave paths to move

   out so it's going to be -- the relocation is going

   to be more costly; sharing is a little more

   effective.

          MR. STANLEY:  Okay.  Well, thank you very

   much.  I guess -- Ralph, did you have any comments

   before we broke?

          MR. HALLER:  No.  Let's take about a










                                                  74




   15-minute break and be back here at twenty minutes

   of eleven for the discussion.

          (Thereupon, a recess was taken and then the

           proceedings continued as follows at

           approximately 10:40 a.m.:)

          MR. HALLER:  I think almost everyone is

   back and we'll go ahead and get started to the

   interesting part of today's panel and that will

   be, hopefully, a spirited debate that we have

   between all the experts that sitting here before

   us.  Tom.

          MR. STANLEY:  Let me start off with a

   softball question to Limond.  Someone from the

   audience had asked how can a 12-day old company

   like Airtouch have such extensive PCS experience.

   Would you respond to that, please.

          MR. GRINDSTAFF:  It was all inherited from

   our old days of being PacTel.

          MR. STANLEY:  Let me start the questions in

   the area of microwave relocation.  Jeff had

   mentioned, I guess, at least -- I guess John

   Battin had mentioned the statistic that it's










                                                  75




   approximately half or perhaps more than half of

   the pairings were nonstandard in the microwave.

          So let me start off with Jeff and ask

   really what are the implications, for example, for

   blocking the PCS?  Why is that kind of a, say, 80

   megahertz or 50 important in terms of our own

   allocation decisions?

          MR. ROSENBLATT:  Well, what happens is it

   all ends up relating to negotiations, and as it

   exists in the rules, you're required to have an 80

   megahertz separation between your transmit and

   receive.  That coincides very nicely with the

   allocation that the FCC has recently made in the

   NPRM.

          When there are violations to that, as they

   currently exist, and the market and microwave

   paths are separated by anywhere from 40 to 120

   megahertz, then what happens is you've got one end

   in your block and one end in someone else's block,

   and then it just comes to a matter of who pays,

   who negotiates and that increases the complexity,

   which increases the time of the whole relocation










                                                  76




   process.

          So that is one instance of how the

   negotiations becomes more complicated and then

   extends out the timing of that relocation.

          MR. HALLER:  Does that mean that the

   Commission then need not consider that factor in

   terms -- you know, if there is so many variables

   out there, then should our discussions be based on

   other parameters as opposed to the relocation

   issue?  In terms of blocks --

          MR. PEPPER:  Or alternatively does that

   become such a major issue that that should be

   driving all our other decisions?  In other words,

   where does this fit in in terms of how we should

   be thinking about the band plan?

          MR. ROSENBLATT:  Well, again as Comsearch's

   role in this is to identify and evaluate some of

   the technical issues that are involved with this.

   In terms of how we choose to weigh all of the

   different factors, I think will in large part be

   due to the timing that particular PCS operators

   want to go online and other areas.  In terms of










                                                  77




   the technical aspect of it, you know, it's fine

   with us any way you cut it.

          MR. PEPPER:  That actually wasn't -- the

   question I think -- you, for example, had

   mentioned that there is 12,000 paths at the end of

   the day that might need to be moved but maybe

   not.  Have you done any work that would estimate

   how many would need to be moved initially so that

   service could begin as rapidly as possible, A; and

   B, what that timing would be, because you said

   last year we licensed 350, and I assume that meant

   there were a certain number of engineers in the

   industry that were preparing applications for 350

   licenses.

          You know, to what extent is the industry

   geared up and ready to do the engineering, make

   the applications for how many thousands?  And I

   think Sandy wants to say something about that as

   well but I would be interested to first hear your

   response, Jeff.

          MR. ROSENBLATT:  Sure.  With regard to

   that, that particular question, the answer to that










                                                  78




   actually is very dependent on the block

   allocation.  And as I indicated earlier, broader

   spectrum allocations require less movement

   immediately as opposed to a narrower band

   allocation will require everything to move in a

   much more rapid fashion.

          However, the ability for the industry to

   handle that could be very significant.  And that

   example that I indicated earlier is that while the

   6.7 gigahertz band is not the only band that was

   putting in microwave and certainly not the only

   equipment that the microwave community was

   manufacturing, it does illustrate that this

   particular industry that was -- and all the

   associated parties with that industry, whether

   you're talking about coordinate, manufacturers,

   negotiators and so on, set up to handle something

   in the order of 350 or some microwave paths per

   year.

          Now if you're going to ask for somewhere

   between 4 and 12,000 microwave paths to relocate

   in a very rapid fashion, at this point, leaving










                                                  79




   aside the negotiation process, the industry

   gearing up for that is going to be very extensive

   and somewhat time consuming for all of that to

   happen.

          Did that answer your question?

          MR. PEPPER:  It begins to.  Sandy.

          MS. ABRAMSON:  I just wanted to point out

   that the band plan where we see the 80 megahertz

   offset, UTAM has done a lot of analysis to see

   where the transceivers and receivers that are in

   the band that's allocated for unlicensed where

   they're paired, and we see that as just the 80

   megahertz rule of thumb really doesn't work here,

   and then the band pairings are really all over the

   place.  But we see that as an advantage to UTAM

   because what that means is that the links that are

   in the unlicensed bands are paired with the links

   that are in the licensed band.

          So what that means is that when the

   licensees are out there and they have to move

   their links, what they'll be doing is they'll be

   moving links that are in the licensed band as well










                                                  80




   as the unlicensed band.  And we see this is as one

   way to expedite movement of the links in the

   unlicensed band.

          MR. PEPPER:  If I could just go back for

   one second to a point that Jeff raised, I think --

   is it correct to interpret what you're saying as

   timing is important because of the number of links

   that ultimately have to be moved and that the

   extent to which service can begin with moving

   fewer links and, therefore, the ability to spread

   the time of the move over a longer period will

   make the move easier; is that what you're saying?

          MR. ROSENBLATT:  That's correct.  That's

   correct.  Having a broader bandwidth for initial

   allocation will require less movements in the

   preinitiation of service, which would allow you to

   get some spectrum to get started to provide some

   service.  And maybe you would have to relocate

   some but not all of your microwave paths, which

   you could probably do.

          If you force everybody to relocate everyone

   at one time, it's going to be a significant










                                                  81




   challenge for everybody to get everybody moved in

   a timely fashion.  And then your service -- you're

   ability to provide service may be very dependent

   on that particular issue.

          MR. STANLEY:  Lex, did you want to

   comment?  You had your hand up.

          MR. FELKER:  Yes.  Just a couple of

   comments.  First of all, I can't emphasize too

   strongly this kind of market issue in terms of the

   viability of new PCS operators.  It's very

   important to get up and running as soon as

   possible.  The windows closing, at least that's

   our view, and things that start pushing off

   initiation of service three, four, five years make

   the business a lot less attractive.

          I think -- correct me if I'm wrong, Jeff --

   the 80 megahertz spacing, while it's not adhered

   to exclusively is nevertheless the predominant

   spacing in the lower band and, therefore, if

   you're looking for sort of techniques to minimize

   the microwave problem, at least marginally,

   perhaps staying with an 80-meg spacing makes a lot










                                                  82




   of sense.

          One other issue in terms of things the

   Commission might want to think about to sort of

   assist in the microwave process, beyond those

   things that you've already done, is to consider

   the possibility of relocating or coordinating on

   paper all of the links right now, or in short

   order, and so that they have a reservation at the

   6-gig band that they can take advantage of in the

   future.  Because if you try to sort of do these

   things piecemeal, the likelihood that you're going

   to optimally coordinate all these links is less

   than if you do it all at once.

          So that might require some rule change to

   allow for coordinative links to sort of stay in

   effect for some period of time rather than the six

   months or whatever is typical now.

          MR. STANLEY:  Again, not to pick on Jeff

   again but I guess one statistic you cited was a

   little on the depressing side, and I guess that's

   the very wide bandwidth of the receivers.  I think

   that's been -- to compare this to what was










                                                  83




   considered in prior studies, APC study for

   example, it's quite a bit different.  You know,

   the direct implication of the report says that

   there might not be a lot of spectrum, just in the

   time frame that Lex just referred to.  That really

   suggests the strong possibility of delayed

   service.

          MR. ROSENBLATT:  That's correct, and

   certainly the impact would be much more

   significant in some markets than others, and

   additionally in some blocks as opposed to other

   blocks which, you know, just is kind of a random

   nature almost.

          But I think that most of the studies that I

   have seen have been fairly consistent that the

   filter bandwidths are very viable in 1.9 gigahertz

   and do impact significantly on the ability to

   share.

          MR. STANLEY:  Particularly in the

   allocations?

          MR. ROSENBLATT:  Yeah.

          MR. STANLEY:  Limond, please.










                                                  84




          MR. GRINDSTAFF:  I would like to comment on

   that.  We have done extensive work for the last

   three years and the feasibility of spectrum

   sharing -- computer modeling and spectrum sharing,

   and nationally deploying a PCS full-service

   system, a PCS 1900 system, in downtown

   San Francisco in the spectrum sharing environment,

   and I concur with Jeff that the bandwidth filters

   are extremely wide.  Some going 20 megahertz.

   Even some higher than that.

          There's three issues that confront spectrum

   sharing.  One is if you look at the number of

   links and you look at their split, that they're

   not evenly or equally split.  They've done a

   hodgepodge of duplexing throughout the

   bandwidths.

          The other one -- and this chart kind of

   shows it -- is that if I'm a PCS provider No. 1

   and this is my link, I remove that link and I'm

   clear to operate.  If there's a microlink that

   spans over two PCS bands, then that link affects

   both PCS operators.  And then you would have the










                                                  85




   wideband PCS or microwave filter that sits in PCS

   operators 2 but bleeds over into PCS operator 1.

   So is issue of spectrum sharing gets more

   complicated.

          The reality of the situation is spectrum

   sharing is not an issue; that from our studies in

   deploying the system in San Francisco we took 140

   megahertz and we were able to get 12 channels to

   operate the system.  And the other thing that has

   to be considered when you look at microwave links

   and spectrum sharing is that so for I've seen all

   the studies, including ours; we've always looked

   at the street level plane.

          In our August 1991 FCC progress report we

   did measurements in a multistory building that

   showed the effects of a microwave link when the

   user goes from the ground floor to the 10th floor

   and there's up to a 30 DB gain an hour from the

   microwave receive filter, or receive power.  What

   this means is that when you deploy a PCS system,

   if you can control your users and keep them where

   you want them, it's great.  But once the users










                                                  86




   start roaming and start moving around, sharing

   spectrum does not work.

          So when the issues come up about 40

   megahertz, 20 megahertz and 10 megahertz, it's

   irrelevant.  You need to move the microwave users

   out, and the FCC has taken steps to do that.

   Putting the limits on how long a microwave user

   can be in service puts those limits on that.

          The last obstacle was the unlicensed band

   or the public safety users, and in my opinion

   those are probably the easiest people to move out

   because they could use new equipment.  From our

   discussions with them and our practical experience

   with them, they have approached us in

   San Francisco wanting to sell their links to us,

   and we keep telling them wait until we buy a

   license and -- (inaudible)

          MR. STANLEY:  Okay, Chuck, you wanted to

   comment.

          MR. JACKSON:  Well, just an observation on

   this thing.  One of the issues on the kind of

   service is the speed with which you can move out










                                                  87




   the incumbents, and it strikes me as sort of a

   tentative idea and I just got to thinking here.

   Maybe there are things that the Commission can do

   in its rules that will speed the process of

   agreement between the new PCS licensees and the

   microwave incumbent.

          One idea that comes to mind is to set a

   sealing on any excessive payment over the cost of

   relocation; a sealing which would not come into

   effect until, say, 12 months have gone by.

          One of the well-known things about

   negotiation is that what determines a position's

   behavior is their best alternative to a negotiated

   agreement.  And if you had a rule that said after

   12 months the excess payment can only be 50

   percent of the cost of the microwave system, it

   might focus the parties, particularly the

   part -- the incumbent who might be -- who is

   reluctant to relocate since it's sort of a status

   quo situation and they might get more later.  It

   might focus them on agreement in the short run.

          It's just a tentative idea I throw out.  I










                                                  88




   haven't really thought it around.  But it seems to

   me it's one way the Commission could act to speed

   things up.

          MR. STANLEY:  We certainly picked up the

   spirit of that in our tax certificate session.

          Again, let me ask Jeff to respond on the

   following area:  Although you painted somewhat of

   a pessimistic picture in terms of bandwidth, you

   actually suggested that the situation above 2110

   may not be so negative with regard to, say, either

   relocation and/or coexistence because of the, say,

   the bandwidths and relative, say, age or class of

   the equipment.  Could you elaborate?

          MR. ROSENBLATT:  I would -- I agree with

   half that statement.  What I said was that in

   terms of coexistence -- and in this area I tend to

   agree somewhat with what Limond mentioned; that

   we're not really talking about sharing in kind of

   the early senses of that analysis or that -- early

   to PCS where everybody was thinking that we could

   just coexist within the same market without any

   problems.  And I think right now we're talking










                                                  89




   about frequency avoidance in having to avoid

   particular microwave receivers.

          In that case, that 2.1 gigahertz, you'll be

   better off in that the microwave filters are much

   narrower.  And just in general a particular

   microwave receiver might take up 2 megahertz, plus

   or minus 2 megahertz -- well, 2 megahertz high, 2

   megahertz low, out of your 10 megahertz allocation

   as opposed to a 20 megahertz allocation of 1.9

   where one microwave receiver tends to occupy the

   whole thing.

          However, in terms of relocation, you've got

   a worse situation, because you've got more

   microwave receivers and less bandwidth so you've

   got more links to move out, more time involved,

   more complexity negotiations and so on and so

   forth.

          So half of that is true.

          MR. GRINDSTAFF:  Let me add one more

   comment to that.

          MR. STANLEY:  Sure.

          MR. GRINDSTAFF:  When you look at -- when










                                                  90




   you talk about relocating the microwave users and

   moving up the 6 gig, not all of them have to move

   to 6 gig.  We have instances in San Francisco

   where there are links that are less than two miles

   long and they're using 2 gig.  We take film

   measurements of it, and one of the comments is

   wondering why haven't their front end receivers

   burnt out on their microwave links because they're

   so hot.

          So there are multiple spectrums that can be

   used to relocate these links.  And I think also

   the PCS operator, when you talked about trying to

   market it, and he builds his network out, will be

   negotiating and moving these links out.  And it's

   to the advantage of the microwave user eventually

   to get out of the way because I won't be able to

   control my PCS users and the band will get so

   cluttered that the interference between the PCS

   user and microwave will become more and more

   prevalent.

          And so I think it will work in the initial

   stages, working to clear the spectrum out.  And as










                                                  91




   the PCS service rolls out into the suburban and

   rural areas, then those links will be knocked

   out.  You don't have to go out and clear

   everything in the band day one.

          MR. HALLER:  Okay.  Jeff, can I ask you one

   other question about the upper band?

          It's my understanding that there's another

   factor, and that is the antenna game, and in the

   lower band that the links have very broad beam

   widths and, therefore, a particular link may cover

   a huge portion of a city, whereas we have more

   beams in the upper band and, therefore, it would

   be easier to avoid those links not only because of

   bandwidth but because the energy is simply not

   spread over as much of the geographical area.  Do

   you agree with that as a premise?

          MR. ROSENBLATT:  Well, I would agree with

   that in terms of the 1.9 gigahertz band versus the

   6 gigahertz band.  But between 1.9 and 2.1 I would

   think that there's a negligible difference.

          MR. HALLER:  Well, it's my understanding

   that our antenna requirements are much more










                                                  92




   stringent in the 2.3 gigahertz band than in the

   1.8, and that in itself would be a mitigating

   factor.

          MR. ROSENBLATT:  I don't think that they're

   that much different.  Between 1.9 gigahertz and

   2.1 gigahertz, the designation for Standard A, it

   might be a few DB different here and there but I

   don't think it's really that much.

          MR. FELKER:  And actually, Ralph, there may

   be more grandfathered periscope antennas in the

   lower sub-band which I think might account for,

   you know, where you're coming from but in terms of

   standards, I think you're --

          MR. ROSENBLATT:  In fact, you know, you're

   probably going to see more of a high-performance

   antenna -- you know, in the category of

   high-performance or ultra high-performance

   antennas at 1.9 gigahertz because it's more

   congested in terms of the bandwidth that they

   occupy.  There's not that many channels available

   than the 2.1 where there's -- even though there's

   less spectrum, there are more channels to choose










                                                  93




   from.

          MR. HALLER:  Well, then let me go ahead and

   ask the question I really wanted to ask.

          MR. ROSENBLATT:  Okay, go ahead.

          MR. HALLER:  And that is in your analysis

   of what it would take to clear these, has the

   actual antenna game in being considered -- or have

   you considered this frequency is in use in this

   town and, therefore, it's going to be cleared?

          MR. ROSENBLATT:  Yeah, we have done fairly

   extensive modeling, and I think that Limond has

   also done some fairly extensive modeling in terms

   of the spectrum utilization in cities which takes

   into account in some cases measured data in

   addition to the antennas and microwave filters.

          So all of those factors taken into account

   show that you can coexist, although as Limond

   points out, in some major markets like

   San Francisco in the downtown area that he was

   looking in, you're only going to find a few

   megahertz available.  But he was able to find a

   few megahertz.  In other cities that aren't










                                                  94




   necessarily as concentrated or as occupied, that

   number tends to increase.

          And I believe, also, that the several

   megahertz wasn't necessarily in a 30 megahertz

   block.  I think that was over the whole 1.9

   gigahertz band, in that case.  That would be an

   extreme case.  However, it does indicate that

   there can be some form of coexistence.

          MR. STANLEY:  Thank you.  Let me bring up a

   separate subject now of standards.  Yesterday

   the -- and let's call it the views of the

   economists were fairly strong on what I'll the

   rising tide of the demand, pushing very strongly

   for the development of PCS, and in this kind of

   arena something like standards may not be exactly

   the first thing you specify.

          What's your general reaction to that?  I

   guess you've all addressed that in a way in your

   own words, but let me, I guess, start with you

   John, in the area of standards that you had

   dwelled on.  You had one standard, no standards, I

   guess pretty much the flexibility.  Could you










                                                  95




   respond.

          MR. BATTIN:  Well, part of our proposal was

   that the Commission required that the industry

   operate the systems according to standardized

   protocol.  We think that will help in a number of

   different ways.

          MR. STANLEY:  Let me make sure I understand

   what that means.  Is that an air-interface

   standard or is it something stronger?

          MR. BATTIN:  I think it's multiple

   air-interface standards.  You know, we believe

   that the PCS requirements are too broad to be

   served by one air-interface but yet if the FCC

   requires that all systems that go on the air and

   PCS frequencies operate according to a

   standardized air-interface, that would be a very

   reasonable middle of the road that will force

   industry -- it can force industry to very quickly

   come up with standards.

          I mean, the thing that will drive standards

   is the fact that we know as Motorola and all of

   our competitors know that if there are no










                                                  96




   standards, we can't sell anything.  As long as we

   don't need a standard, then if we're in a

   committee, we're negotiating with AT&T or Erickson

   or something and we know that if we don't come to

   an agreement, you know, too bad; we have our six

   customers, they have their six, we'll go off and

   do our own thing.  But if, in fact, we know that

   we have to come to an agreement before we can sell

   anything, you know, guess what, we come to an

   agreement.

          And so I think when the FCC says, hey,

   industry, you have to make up your mind; we don't

   care whether it's two, three, four, five, six

   standards, but you'd better make up your mind and

   have standardized air-interfaces or we won't type

   or group your equipment, we'll go get that job

   done.  And I think that we've proven in the past

   that we will.

          MR. STANLEY:  As I recall there were, what,

   something like 17 candidates air-interface

   standards initially in some of the community

   groups.  That's been dwindled down to eight and










                                                  97




   now I hear four.  I mean, isn't that enough --

   isn't the process working without the good offices

   of the FCC?

          MR. BATTIN:  There is a contention that

   says that this process may have a sign wave to it,

   you know, to where you get it dwindled down to

   four or five and you think you can get along with

   your neighbor, but then when you finally get down

   to debate the last microbolt, then they diverge

   again.

          MR. STANLEY:  What are the benefits of

   really the Commission suggesting that it would

   only approve equipment that goes -- is in a sense,

   passed through ANSI equivalency?  I guess ANSI

   approves standard-setting processes.  What's

   really the advantage to the public of that

   particular requirement?

          MR. BATTIN:  I think, first of all, it

   assures that there are going to be multiple

   vendors.  It assures that some of the

   characteristics that have made cellular successful

   will happen on PCS.  You know, that Motorola can










                                                  98




   make a subscriber unit and pretty much garner to

   the user that it will work in Boston, it will work

   in Seattle, it will work in Dallas; that there's

   not a lot of hidden standards underneath.  We're

   involved in a couple of systems on a worldwide

   basis that, yes, we beat the rudiments of the

   air-interface, but if you push button No. 1 on an

   Erickson phone, it means different things in the

   system than No. 1 on a Motorola or a No. 1 on a

   Nokia or No. 1 on a Mashoosta.

          So even though it may look like you all

   have TDMA or it may look like you all have CDMA,

   when it gets down to it, you still don't have the

   ability for the user to shop end product with some

   kind of assurance that all the product is going to

   work.

          MR. FELKER:  Well, I just -- as you may

   know, Tom, when I worked on the Commission, I was

   the enemy of form-line standards setting, by the

   agency anyway.

          MR. STANLEY:  Let the record show that Lex

   is the enemy and --










                                                  99




          MR. FELKER:  I'm speaking past tense.  And,

   you know, for all the reasons that John and others

   have cited, you know, delay and retarding

   innovation and giving incumbents a leg up over

   newcomers, and things like that.  But now as a

   perspective operator, you know, clearly we're

   interested in things as mundane as

   interoperability.  We're clearly interested in

   achieving whatever scale economies may be

   possible.

          In a competitive market obviously those

   economies will flow to the subscribers, and it

   strikes me that the proposal that Motorola has

   offered where the Commission doesn't bless a

   particular standard but rather a process which

   produces, perhaps, multiple standards, is not a

   bad one and it probably is deserving of some

   thought.

          I guess, again, the only issue that I would

   raise is what does -- does this process adequately

   address the delay issue.  John, in the example he

   just presented, suggests that, yeah, this is the










                                                  100




   kind of thing that would encourage manufacturers

   to stop their bickering and start producing

   equipment.  And so if, in fact, that's the case,

   it sounds like maybe this is not a -- maybe it's

   sort of a very efficient type of regulatory

   structure.

          MR. HALLER:  Lex, can I ask a question.

   That would be a modification on that just for your

   comment.  In a wonderfully written decision by the

   Commission on TV/stereo, which I wrote, we decided

   that any stereo technology could basically be

   marketed, but if it was going to light a light on

   a standard TV -- the consumer TV, that it had to

   comply with certain standards.  And, therefore, we

   did not limit the technology in any way; anything

   that could be put on the air was okay providing it

   didn't cause interference to other TV operators.

          But on the other hand, the consumers had

   some knowledge as to whether they were listening

   to a standard TV/stereo signal.  Now that -- as

   far as I can tell, TV/stereo, in fact, all kidding

   aside, has been a big success.  With that kind of










                                                  101




   approach, would that be appropriate here?

          MR. FELKER:  Well, let me offer this

   commentary.  My recollection -- and correct me if

   I'm wrong about this, Ralph, in the TV/stereo

   decision there was a standard in industry.  There

   were other sorts of things boiling around.  I

   remember there were two or three others that were

   competing to be a standard but ultimately EIA

   signed off on one, I believe, and what the

   Commission did was sort of endorse that as sort of

   a de facto meeting the requirements but allowed

   others to go forward.

          And so in that particular case that may

   have been a good way to proceed.  And, you know,

   the results seem to indicate it was a good way to

   proceed.  But for PCS, it's a little bit

   different.  We don't have the sort of consensus on

   a particular standard.  In fact, there are, you

   know, four -- I don't know what the number is.

   There's a number of ones that, you know, look

   pretty interesting depending on what kind of

   application you're interested in and where it is










                                                  102




   on the development curb and whatnot.  So it's not

   clear to me that particular approach would work.

          And let me just add one little extra spin

   on this, and this goes to, I think, the point that

   John just raised about, you know, the No. 1 button

   on the handset doing X on some manufacturer's

   systems and Y on another.  I mean, that's the

   level of detail that really has to occur, I think,

   on these new digital systems, because you want to

   have uniformity.  You want to be able to -- you

   know, you're going to a mass market now, sort of

   like a consumer market for TV/stereo.  And so you

   want to be in a position that, you know, all the

   handsets operate in a common fashion.  And I think

   that's what we're getting at.  We're not saying

   it's 1.25 megahertz with a particular chip rate.

   It's a much more sort of implementation level

   standard that we're trying to get at.

          MR. STANLEY:  That's real -- that is not

   guaranteed by a common area or a standard.  That's

   goes beyond that.  Generally the view point is

   that -- Irwin.










                                                  103




          DR. JACOBS:  That would be beyond the area

   of air-interface standard.  It maybe on subscriber

   equipment but it also gets very difficult because

   the air-interface -- or the human-interface is

   going to be one of the interesting things.  I

   would hope that, in fact, we're moving in the

   direction of simplifying it sufficiently; that all

   of these complications that we've seen in the past

   very much get minimized.

          There is one other aspect, though, on the

   air-interface and that's -- and I can't -- I

   guess I wouldn't have imagined myself arguing in

   favor of some type of standard for requirements

   after having gone through all the effort over the

   last few years but there is a great use to it.

          And another one -- another area that could

   be coming up is the fact that as you get a number

   of systems, a number of different bandwidths, a

   number of regions of various sizes, this

   interference issue between the technologies needs

   to be looked at much more carefully than it has

   been in the past, and I think this the FCC can










                                                  104




   easily do.  And so as part of the standards

   process, this issue, I think, needs to be examined

   more carefully.

          And so I think there is, again, an argument

   not for specifying a system or a particular

   standard but that they'll be one or more such

   standards that are used.

          MR. STANLEY:  Since the principal standards

   in the cellular arena -- and I don't know the full

   standard development at one point of 1.9 -- since

   they're already fairly well into what I'll call

   some standard setting, isn't this -- couldn't this

   be construed as an approach that would penalize

   those late comers?  For example, those who could

   be held hostage in the standard setting arena by

   manufacturers who are already fairly well into

   it?

          MR. BATTIN:  I think what we see happening

   is that it's been heating differently than

   cellular.  We got into a lot of trouble on digital

   with cellular primarily because we were trying to

   develop one standard.  So we had the CDMA people










                                                  105




   and the TDMA people in the same group and that

   made a deadlock, you know, for some period of

   time.

          Now, you know, I see that we can have a

   group of people that are -- or a group of industry

   that is working on a CDMA standard, we're going to

   have someone doing a TDMA standard, people will be

   doing a GSM standard, we have a microcell

   standard, and so within those groups I think it

   will move very efficiently.

          One thing that I wanted to put in here is

   that maybe the most key thing to remember about a

   standard is documentation; that if there is no

   standard, there is no benchmark for

   documentation.

          You know, as Motorola I could put a system

   on the air in Boston, sell it to a customer -- not

   that I have one, at least this point today -- and

   no one would know anything about that system

   outside of the fact of FCC's requirements on ERP

   and a couple of other things.

          So I think a key thing in having a standard










                                                  106




   is to force a level of documentation so that other

   manufacturers and other systems can pick up that

   technology and come promote it across the

   industry.

          MR. STANLEY:  Okay, thank you.  Don, you

   wanted to ask a question?

          MR. GRINDSTAFF:  Tom, can I make one

   comment?

          MR. STANLEY:  I'm sorry.  A brief one,

   please.

          MR. GRINDSTAFF:  We believe that the

   process is in place, the multiple standards, but I

   also believe or I agree with what Irwin was

   saying; that when you have these different

   technologies coming off from the standard bodies,

   there needs to be something or some guidelines

   that assures that the interoperability between

   systems can happen and that there's no

   interference between systems.

          If you look at cellular today -- a good

   example is our system in Los Angeles and

   San Diego, two different MSAs, and there is










                                                  107




   interference, because we use the same frequency

   and they have to be coordinated.  When you have

   multiple standards and multiple PCS operators,

   there needs to be some assurance that these

   technologies are put in place, aren't interfering

   with each other, and also that if a user in

   Chicago goes to New York, that the consumer wins

   out; that the handset will work on that type of

   system.  And I think possibly that the license

   literature or the writing on the license when you

   give them out requires some minimal, technical

   requirements of standards of interoperability or

   911 type of services.  Just these minimal

   requirements to enforce the industry to make sure

   that they have addressed these issues.  I think if

   we don't do that, that there's a possibility that

   some operators and some manufacturers may go off

   on a different track.

          MR. STANLEY:  That may be desirable but

   somehow I guess even addressing the technical

   standards goes fairly far towards

   interoperability.










                                                  108




          MR. GRINDSTAFF:  Right.  Right.  And I

   think what guarantees it is if you require the

   licensee to -- if they're going to have PCS

   systems across the country, a similar type of PCS

   system, it doesn't mean everybody has to use that

   PCS system; that they require some

   interoperability capabilities.

          MR. STANLEY:  In terms of Irwin's point

   about interference, say, between technologies, who

   really should be pounding out that kind of a

   requirement in terms of specifications?  It's

   certainly not us.

          MR. GRINDSTAFF:  I understand everybody

   should be addressing that, but I think it may be

   more convenient to have the Commission specify to

   the industry that they to have that in there.

   This is similar to what happened in AMPs in '79.

   There were minimal requirements put down for AMPs

   operators that they had to meet, and these same

   minimal requirements should be put into PCS

   licenses.

          MR. STANLEY:  Okay, thank you.  Donald.










                                                  109




          MR. GIPS:  I'm trying to struggle with the

   role that designated entities are going to play in

   the PCS, and in Lex's presentation he said that to

   compete with existing cellular providers, new PCS

   providers are going to need significant spectrum,

   and yesterday we heard that new PCS providers are

   going to need deep pockets to be able to do that

   and preferably an existing communications

   infrastructure.

          Given that, I'm curious, Mr. Murray,

   whether you think designated entities will be able

   to compete in that application of PCS or do you

   see them completing in different applications of

   PCS?

          MR. MURRAY:  Competing in what again now?

   I didn't understand the question.

          MR. GIPS:  Do you see designated entities

   competing in the cellularlike arena with the

   cellular incumbents in PCS, or do you see them

   offering different types of services in PCS?

          MR. MURPHY:  Well, I think there are some

   niche markets that are clearly available for the










                                                  110




   designated entities to participate in.  I think

   they can do either or, actually.  I think they can

   compete against or they can satisfy a niche

   market.

          MR. GIPS:  Here is where I'm struggling

   with the question.  We heard yesterday that 30

   megahertz is probably -- there's disagreement but

   the new PCS provider had believed that 30

   megahertz is necessary to compete with cellular.

          How can the DEs compete with cellular with

   less than 30 megahertz if that's true?

          MR. MURRAY:  Compete with cellular with

   less than 30 megahertz?  Well, I'm not sure.

          MR. GIPS:  Let me phrase the question a

   little differently.

          What can we do to make them more viable yet

   still allow for competition with cellular the way

   that Lex has said that we have to provide it?

          MR. MURRAY:  Well, to make them more viable

   I think that with the 30s in place, the MTAs, I

   think that is a detriment to any -- if you put the

   designated entities in the 20s and the 10s, then I










                                                  111




   think by the 30s MTAs gaining early entry into the

   market place and the 20s and 10s having to deal

   with the microwave issue, I think they're clearly

   at a disadvantage at that point.

          But if you take the two 30s and make three

   20s, then I think the playing field -- I mean, for

   lack of a better -- the competition aspect of

   allowing a designated entity to then be able to

   buy a 20 or utilize the 10s, the competition is

   much greater at that point.  And I as an investor

   in a 20 or a 10 believe that I have a much better

   chance of having a successful business than I

   would if I were to try to go up against a 30.

          MR. GIPS:  And you don't see the incumbent

   cellular providers as stiff competition for you at

   your 20?

          MR. MURRAY:  Well, I think it increases the

   price in order to get them out of the -- to

   eliminate the interference.

          MR. GIPS:  No, I'm sorry.  The incumbent

   cellular providers, you don't see those as

   competition?










                                                  112




          MR. MURRAY:  No.  I mean, if they pick up

   another 10 and I can aggregate up to a 30, then I

   think I'm just on equal footing as well as they

   are.

          MR. GIPS:  Does anybody else want to

   comment on DEs?

          MR. GRINDSTAFF:  Yeah.  I sat through

   yesterday's session.  I think what a PCS operator

   needs is really a good business plan.  And if he

   has a good business plan and if he knows what his

   business is and he has a market segment, he's

   going to go for it; it's regardless of the amount

   of the spectrum.

          For example, we were in the UK.  We had

   three licenses and we were going to be given up to

   50 megahertz.  It actually started out to

   15 megahertz.  We pulled out of that.  Three of

   the licenses went down to two licenses and they

   have struggled.

          So it's not a matter of how large the

   spectrum is.  I think it's the market economies.

   And when you look at the different markets across










                                                  113




   either MTAs or BTAs, each one is going to be

   uniquely different.  So there are some cellular

   markets today that can't support two cellular

   operators.

          MR. HALLER:  Are there -- along the same

   lines, are there advantages or disadvantages to a

   geographical area of licensing?  I'm asking that,

   I guess, from a technical standpoint.  Is it, in a

   sense, cheaper per square mile to build out an MTA

   than a BTA, or how should we view the geographical

   licensing area with regard to, one, the ease, and

   two, generally?  Because yesterday that was

   covered a lot, though a couple of you touched on

   that on this panel so I would be interested in any

   comments you have.

          MR. GRINDSTAFF:  From our studies we

   support the BTAs, and the economics for the BTAs

   are much better than the MTAs.  The cost of the

   license for the MTAs really puts your business on

   the negative for a lot longer than the BTAs where

   the license we believe will be less expensive and

   that you can concentrate your business for the










                                                  114




   servicing area you want.

          We also believe that MTAs do not promote or

   use -- or promote the service to rural areas

   because if MTA providers are going to be so

   strapped because they spent so much for the

   licenses, they're going to concentrate on the

   metropolitan areas and basically write the rural

   areas off that need probably some support of

   economics to build out there.

          MR. PEPPER:  If I could just follow-up on

   that for one second.  If under a current plan -- I

   assume what you're arguing is that in order to

   provide the service to rural areas, they should

   all be BTAs.  If that were the case and we didn't

   change the plan, we would have seven licenses in

   rural areas.  Do you really think that there would

   be seven licenses built out in rural areas?

          MR. GRINDSTAFF:  No.  I also don't think

   there are even seven licenses and even MTA areas.

   You might not see that either.  I think PCS is

   going to be very competitive.  I think all the

   wireless businesses are going to be very










                                                  115




   competitive.  So that when you're looking at two

   incumbent cellular and the SMR and seven new

   operators come in, the PCS operator has to make

   sure he knows what he's doing before he goes out

   there and deals with a slightly --

          MR. PEPPER:  Let's say there's two more.

   Do you see there being five full-service

   competitors in rural areas?

          MR. GRINDSTAFF:  I think it depends on the

   rural area and what the market segment is and what

   the PCS operator is going to do.  I mean, if

   you're looking at PCS as just being cellular and

   looking at PCS as local loop or wireless access,

   those are different market segments they can

   support -- that can be supported by the market.

   But if everybody is going for the same thing, it's

   just like any business; if you're getting a lot of

   services, the prices go down and some businesses

   don't make it.

          MR. FELKER:  To sort of respond to your

   question, Bob, I think sort of on average you

   would expect in rural areas that, you know, an MTA










                                                  116




   provider at least has a better shot of being

   viable than a stand-alone BTA operator simply

   because it's a question of marginal versus fixed

   cost.  I mean, you're sticking the cover -- you

   know, a small rural BTA, you're talking about a

   relative -- you know, a handful of base stations,

   maybe only one, with all the back office

   functions, all the network infrastructure and

   everything else, sort of trumped over to, you

   know, the major metropolitan areas.  So you have a

   chance to share a lot of your facilities that are

   being paid for -- the average cost which is being

   paid for by the higher usage area.

          So I think -- you know, in looking at this,

   there just are scale economies which come into

   play when you're talking about wire areas.  And,

   you know, the only way to capture that is to issue

   licenses across broader areas.

          MR. PEPPER:  So your answer to Ralph's

   question is that there are, maybe not technical

   reasons, but economic reasons --

          MR. FELKER:  Yeah.










                                                  117




          MR. PEPPER:  -- to the geography as it

   affects the economics?

          MR. FELKER:  Yeah.  Yeah.  I guess I sort

   of disagree with what Limond says.  If the license

   costs more for an MTA than it does to try to build

   it up over BTAs, then that means it's worth more,

   and why is it worth more; because their scale

   economy is.

          MR. PEPPER:  Chuck?

          MR. JACKSON:  I was just nodding in

   agreement with Lex, but I want the record to show

   that I disagree with them on almost everything.

          DR. JACOBS:  Just again on this question of

   the bandwidth, again, initially the main issue is

   not going to be using all your bandwidths.  You're

   not going to have enough customers to do that.  So

   you're going to have to clear out a small amount

   of bandwidth.  You're probably not going to use

   even 10 megahertz; you're going to use the smaller

   part to get started.

          The issues that come up on rural and urban,

   there is an economy of scale but there are various










                                                  118




   ways of getting that economy scale.  I would guess

   that there might also be some services that would

   spring up that would provide for a variety of

   these capabilities and network interconnections,

   et cetera, for a number of these small areas if

   you want the licenses to the BTAs, so that one can

   see different types of companies coming into being

   as a result of this effort.

          MR. STANLEY:  I guess another way to ask

   the same set of questions is along the following

   lines:  It's the Commission's allocation from last

   year, the block plan, was fairly heterogeneous in

   terms of 30s, 20s and 10s and MTAs and BTAs.

   Would you argue, I guess, for more or less

   homogeneity in this?  For example, it's been

   certainly recommended that an ideal cut would be,

   say, three MTAs, three 30s at the MTA level.

   Others feel, say, six 20s at the MTA level.  Some

   go down to six 20s at the BTA level.

          Considering what we did was largely

   homogeneous, how would you suggest -- how would we

   improve the decision?  Lex.










                                                  119




          MR. FELKER:  Well, I think certainly based

   on what we heard yesterday, and which many of the

   comments today are sort of not inconsistent with

   that, I think there's a question as to how many

   additional PCS operators are going to be viable.

   And if that's the case and one doesn't want to

   waste spectrum, or other resources for that

   matter, in trying to arrive at whatever the right

   answer is, certainly my recommendation would be to

   consolidate the lower band into a smaller number

   of larger bandwidth assignments and licensing on a

   very wide-area basis.

          MR. HALLER:  Can I ask you a question which

   is kind of related but it gets to a slightly

   different issue as well?  We heard a lot yesterday

   from some, but not all, that people with an

   existing infrastructure, whether it be cellular or

   whether it be cable or whether it be wireline, had

   an advantage to getting off the ground on PCS, and

   I'm wondering if you could address that issue

   specifically with regards to cable.  Most cable in

   this country I believe today are still one-way










                                                  120




   cable.

          Given that that's the case, do the cable

   television companies, in fact, have any kind of

   particular advantage in getting into PCS with that

   kind of infrastructure in place?

          MR. FELKER:  Well, since you narrowed the

   assumptions going into that question --

          MR. HALLER:  Well, I'm asking if they're

   right.

          MR. FELKER:  Yeah.  I think -- certainly

   our company and other large MSS are rapidly

   rebuilding their cable infrastructure to support,

   you know, a more robust video business, and these

   wire bandwidths, fiberoptic systems are much more

   reliable than the frequently two way -- certainly

   two-way ready.  So I think those systems are --

   will be capable, and probably in the time frame

   that licensing, equipment and microwave moveout

   occurs, to support PCS in some sort of transporter

   or back-all application.

          That having been said, the analysis that

   we've done suggests that cable and other existing










                                                  121




   facilities provide -- certainly provided an

   advantage on an ongoing basis in terms of the

   expense and perhaps some advantage on Cam X, but

   it's not the kind of thing that makes or breaks

   the business.  It makes it more attractive, and in

   some cases makes it much more attractive, but it's

   not a sort of a make or break kind of deal.

          MR. HALLER:  Yes.

          MS. ABRAMSON:  I would like to address

   Dr. Stanley's question about the homogeneous

   nature of the spectrum allocation.

          From UTAM's perspective we would like to

   note some caution here.  We would not like the

   unlicensed band to become the sacrificial lamb

   where some of the spectrum is removed for the

   licensed operators.  I commented on our forecast

   for the unlicensed band and we feel that we do

   need at least those 40 megahertz.

          So in considering what you do for us, for

   license, our comments are don't take it out of the

   unlicensed band.

          MR. GRINDSTAFF:  I would like to make one










                                                  122




   comment on that, also, and I would like to agree

   with Lex, at least on one word, and that's

   consolidation.  And where we're coming at is that

   the BTAs would allow the industry to consolidate

   as opposed to giving out MTAs and forcing

   consolidation of the areas; that BTAs would allow

   PCS operators to get up and operate and

   consolidate where it makes sense.  And it's a

   building-block approach which allows more

   flexibility of the PCS operator.

          On the various spectrum allocations, we see

   that as being very positive for innovation, and if

   you vary the spectrum blocks such as in the 2100

   megahertz range, you can do the same services as

   the other blocks but you can also do other

   services, and by having varying spectrum blocks

   you may -- I hate to use the word "force," but

   maybe make PCS operators think about other things

   and provide new PCS services that we haven't

   thought of yet.

          And I agree that the unlicensed band where

   its located has tremendous possibilities and










                                                  123




   opportunities of providing new innovation that can

   be very easily interoperable with the 1800 license

   spectrum band.

          MR. STANLEY:  Let --

          MR. GIPS:  Can I ask a follow-up on that?

   Won't it take two radios and any phone to work

   between the unlicensed and the licensed band given

   the different etiquettes and power ranges?

          MR. GRINDSTAFF:  Right, but when you go

   from one frequency band to the other frequency

   band, it takes two physical radios, RF.  When

   you're down in the 1800 and the unlicensed band is

   right next to you, you only have one RF section so

   you just -- you're basically just stepping over to

   the unlicensed band, and then you go to a TDD or a

   nonduplex operation, which is much easier and much

   simpler to intergrade into a dual mode type of

   phone.

          MR. GIPS:  Can any of you address the

   difference in cost penalties between a handset

   that works from the current unlicensed band to the

   1800 band and a handset that works from the










                                                  124




   current unlicensed band to the 2100 band?  What's

   the difference in cost to produce those two

   different handsets?

          MR. BATTIN:  I think this somewhat depends

   on the technology that you use, but I think in

   most of the technologies it's relatively

   inexpensive.  Maybe it's 5 or 10 percent to have a

   subscriber unit that can interoperate in

   unlicensed band, you know, let's say within the

   one dot eight range.  But shifting up to two dot

   one, you know, it's probably in that 20 to 25

   percent range.

          If you want to think about this, when we

   have a transmit band maybe below 1.9 gigahertz and

   a receive band above -- or the other way, the way

   we separate that is with frequency select

   developments and we transmit and receive on the

   same antennas.  So you separate those signals with

   some frequency selective developments.  The moment

   you say, okay, now I'm going up to 2.1, it's not

   just a matter that you have to go RF devices to

   operate 200 megahertz higher.  That's not the










                                                  125




   problem.  It's a problem that all of the circuitry

   that you put in there to separate the transmit and

   receive frequencies don't work and so you have to

   put in new diflexors.

          So the cost penalty is much higher toward

   operating a two dot one than it is doing license

   and unlicensed in the one dot eight range.

          MR. STANLEY:  Irwin, did you want to say

   anything about that?

          DR. JACOBS:  Right.  The only -- well,

   changing the frequency means two radios and you

   can't have as much comment on technology so it

   doesn't cost you more money.

          The ability to use TDD in the unlicensed

   band, that is a less expensive approach for

   certain kinds of services and so that would reduce

   the cost difference, but you would still have a

   larger delta in going between the bands than you

   would within the same band.

          MR. PEPPER:  Just one other question on

   equipment.  You were talking about equipment

   costs.  That is where -- looking again, actually,










                                                  126




   at John and Irwin, you've been actually involved

   in making equipment.  What kinds of equipment do

   you see available, over what period of time, for

   the different bands?  I mean, how close are you

   to, you know, rolling out consumer equipment, the

   base station equipment, transmitting equipment?

          And also since PCS has been, you know,

   talked about over the last two years, especially

   the last day and a half, of the mass market

   consumer item, which is usually characterized by

   very low prices, or very competitive prices in the

   consumer end of the market and the handsets, I

   mean, how close are we to that kind of mass market

   product?

          DR. JACOBS:  The 1.8 gigahertz equipment

   is, I would say, closer because there's been a lot

   of focus on it internationally as well as out here

   in the U.S.  And so some of the componentry is

   available, et cetera.  And many of us have been

   building such a first-generation equipment for

   doing some of the initial testing of the 1.8

   band.  It just so happens we have a prototype of










                                                  127




   such a telephone and that can be used at 1.8

   here.

          I think one of the key aspects of this PCS

   area that is important -- and by the way, I think

   of PCS as being something that may, in fact, be

   offered at this frequency but ultimately also with

   cellular.  But one of the key issues is going to

   be much longer talk time.  And so I think that

   you'll see this next generation coming out about

   the time of the availability of the spectrum as

   having, for example, five-hour talk time, so you

   can support these services and have more usage as

   compared to the existing types of equipment.

   Those will be available in --

          MR. PEPPER:  At price points competitive to

   cellular, below cellular equipment today?

          DR. JACOBS:  They will be competitive with

   the digital cellular equipments, maybe very --

   somewhat slightly higher initially depending on

   volumes providing break outs and the amount the

   people want to control the price.

          MR. PEPPER:  John and Sandy, did you want










                                                  128




   to --

          MR. BATTIN:  I wanted to comment on the

   timing issue.  First of all, go back to

   standards.  If the Commission says industry, you'd

   better have a standard, so we do have a standard

   so we know exactly what to design to.  There's no

   doubt in my mind when you issue licenses we will

   have equipment ready to sell.

          Pricewise I agree exactly with what Irwin

   says except that there is some microcell systems

   that offer the opportunity in major metropolitan

   areas where there's a lot of population density to

   drive the cost of this kind of service and do more

   consumer levels than what we have seen in cellular

   now.

          MR. HALLER:  Was that a challenge, by the

   way?

          MR. BATTIN:  What?

          MR. HALLER:  Was that a challenge; that you

   were going to have equipment out before we had

   licenses out?  Well, I hope you're wrong.  I hope

   we get the licenses out first.  That's what I










                                                  129




   hope.

          MS. ABRAMSON:  I would like to address both

   those questions on the timing and the price.

          As far as the unlicensed band is concerned,

   you know UTAM is made up of a number of

   companies.  And, in fact, this week we are going

   to be looking at a full-spectrum setting of where

   all the microwave links are.  And if the band was

   allocated today and we had the final rules today,

   you would have equipment out in a very short

   amount of time.  So I would just like to state

   that.

          Also in terms of price, as you know,

   unlicensed equipment is largely a consumer market,

   which is very price sensitive.  We've hired BIS to

   do market workouts for us.  In fact, they've

   reported on it a little bit yesterday.  But we've

   noticed that the market is extremely price

   sensitive.  This is, again, another reason for us

   to remain in a band where there is fewer microwave

   links so that the fees that we put on the

   unlicensed equipment to pay for microwave










                                                  130




   relocation is smaller so that we can keep the

   prices less.

          If the prices have to be driven up to pay

   for more microwave relocation, we're going to

   price ourselves right out of the market.

          MR. STANLEY:  Thank you.  Don, you wanted

   to ask a question?

          MR. GIPS:  John, this is for you and it

   relates to MSS.

          You've asked that we return the 2180 to

   2200 megahertz band allocated for the PCS to

   reserve for MSS.

          It is our understanding that the band

   paired with that band per MSS is unusable in the

   U.S. because of the Broadcast Auxiliary Service.

   Would returning this to the reserve be useful to

   MSS at this point?

          MR. BATTIN:  Well, I guess you would have

   to buy into the premise that says the broadcast

   use is never, never, never moveable.  I don't

   think the satellite issue is a 1995 problem.

   That's a reserved issue.  It's 2,000 plus before










                                                  131




   that's an issue.  And, you know, I might suggest

   that maybe at that time frame we can figure out a

   way to move those services maybe within the same

   band, 5 or 10 megahertz one way or the other, but

   I don't have an answer right now.  But I think in

   the long term those options have to be looked at.

          MR. GAPS:  May I ask one more follow-up to

   that?  In terms of clearing the incumbents for

   MSS, is it your view -- sort of given the wide

   area of service you almost have to clear them

   nationwide to begin service.  Have you done any

   estimates on what the costs of that might be, or

   any plans or thinking about how that might occur?

          MR. BATTIN:  I think the cost is going to

   be similar as it is for PCS.  You know, it's 150

   to 300,000 dollars per link.  You know, count up

   the links and multiply it out and that's about it,

   and it doesn't make -- it does have the

   disadvantage -- you know, a lot of commits to

   unlicensed, that most of those -- well, all of

   those systems really have to be moved before you

   can go into operation on this spectrum.  And, you










                                                  132




   know, that's a problem.

          MR. PEPPER:  Sandy estimated earlier that

   it was about a billion dollars to move those -- to

   clear that band.

          MS. ABRAMSON:  Well, I estimated for

   2.1 megahertz that it would be a move upward to

   two billion dollars.

          MR. PEPPER:  Two billion.  But that would

   be for all 40 unlicensed -- if the unlicensed 40

   megahertz were moved there, and John is talking

   about the 2180 to 2200, so half of the two is one.

   So it would be a minimum of a billion clear just

   based upon -- if you're correct about the --

          MR. BATTIN:  That sounds about right.

          MS. ABRAMSON:  I was thinking of the lower

   MSS spectrum.

          MR. STANLEY:  Let's switch the topic to

   unlicensed personal communication devices.

          David, I guess your comment sparked several

   questions about the nature of the Data-PCS and

   coordinatable and nomadic/nonnomadic devices.

          Taking away all these labels, most of the










                                                  133




   descriptions of service that you've described are

   largely to a base station, which if you pick your

   words, you know, to choose to describe it, which

   you're in a sense largely coordinatable, and as

   such they fall well within the classification of

   other kinds -- similar devices.  What is your

   general reaction to that?

          DR. NAGEL:  Well, Tom, I think there are

   some applications that one can think of.  We've

   been working on this for probably five years now

   looking at the benefits that a service like

   Data-PCS would provide, particularly in

   education.  I must admit we focused a great deal

   on that.  And I think that one of the things that

   we have found is that the educational process,

   first of all, can be an enhancement to the use of

   technology, computers.  That seems to be catechism

   at this point, I guess, in modern society.

          But the surprising result was that when you

   allow children to collaborate, to communicate with

   one another, in talking about the educational

   learning process, that the process itself can










                                                  134




   become more effective.  And I think that's what

   has led us to focus on what we refer to as nomadic

   applications.

          It is true that there are access to

   Internet and other services of that sort which

   would require some sort of a base station, some

   sort of ability to get in the wireline system, but

   that is, at best, a coequal requirement.  I think

   that the initial studies which inspired our

   application for this entire proposition was the

   studies that showed that the nomadic applications

   were, in fact, the driving applications for this

   kind of service.

          MR. STANLEY:  To use the term, say, purely

   nomadic as opposed to those that are occasionally

   nomadic and, say, use a base station, your vision

   really sees two different classes of devices that

   are distinct enough to require different

   treatment?

          DR. NAGEL:  Of all the market studies that

   we have -- certainly, I mean, you can think of all

   sorts of applications once you have the










                                                  135




   technology.  But all the studies that we've shown

   suggests that the market growth would be much --

   the most rapid by far if nomadic capabilities were

   provided.

          MR. STANLEY:  Again, by that you mean

   purely nomadic.

          DR. NAGEL:  Yes.

          MR. STANLEY:  Sandy.

          MS. ABRAMSON:  I think I would like to

   clarify.  I believe what David is talking about is

   pure peer-to-peer communications.  Many of the

   UTAM companies right now are in education and

   hospital-like markets, and in these markets

   there's a lot of -- you see in the forecast for

   connecting to an Internet -- connecting to an

   infrastructure, connecting to a different telepole

   like Bill's house does right now with

   (inaudible).  And we do imagine there is some

   peer-to-peer communications but we do see a fast

   interest in connecting to, let's say, a library

   network.  Or instead of dragging all your

   textbooks home, your engineering textbooks, or










                                                  136




   your law textbooks, you can just dial up into your

   library to access that.

          And for peer-to-peer repair we do see some

   use.  We see some comical use.  For example, hey,

   Tom, what answer did you get on question No. 3.

          MR. STANLEY:  Like the electronic cuff;

   writing the answers on your cuff link.

          MS. ABRAMSON:  Yes.

          MR. STANLEY:  Again, David, I guess part of

   the vice presidents and other people's visions as

   to the information highway literally brings the

   fiber to the school so there's great conductivity

   there in the notion of radio interfaces with that;

   that's a very, very natural thing.  Isn't the

   purely nomadic in a sense, at one, removed from

   that concept?

          DR. NAGEL:  Well, I think it's never mute.

   I think it's compatible with a -- I think it

   enhances it.  Again, this proposition of bringing

   Internet to every school, first of all, it's not

   realized yet.  It's a great goal.

          MR. STANLEY:  It says it barely got it here










                                                  137




   a few weeks ago.

          DR. NAGEL:  Yeah, I know.  These things

   come and go.  But I think that, again -- you know,

   I'll just repeat what I said.  In all of the

   studies that we've done, both applied the research

   studies and the educational setting itself, it

   suggested what you referred to as purely nomadic,

   and nomadic applications are, in fact, the ones

   that seem to provide the greatest quantitative

   improvement in the educational process.

          Certainly access electronic libraries,

   certainly access to other services which could be

   done with a base station providing that the

   schools could afford them.

          Another advantage of the purely nomadic

   approach is that the overall system costs can be

   maintained at a much more lower cost per student.

   And, again, we think that for that reason the

   deployment -- the rate of deployment of these

   systems would be much more ramped if you could

   provide those kind of services.  And unfortunately

   that leads to last link problems.










                                                  138




          MR. STANLEY:  Ralph, you wanted to ask a

   question?

          MR. HALLER:  Yes.  I would like to turn, if

   I could, to the question of increased base station

   power.

          I am trying to decide why that is an

   advantage because several people suggest that and

   if we leave the portable unit power where it is

   and we increase the base station power, it doesn't

   seem to me that we increase range unless that

   increased power comes from an antenna gain, in

   which case you get the appropriate gain on both

   receive and transmit.  Am I correct in that; that

   we're really talking antenna gain increase of

   10 DB as opposed to transmitter power increase?

   And I don't care who wants to take that.

          MR. GRINDSTAFF:  You're correct.  And what

   a PCS operator will do in an environment is that

   you have your portable unit, your mobile unit out

   there and you always want to balance your link

   with the transmit/receive back to the base

   station.  And by putting the restrictions on the










                                                  139




   handset, it sets a limit of what your range is.

          By doing things in the base station and

   increasing receiver sensitivity, increasing

   antenna gain, we can push out more power to that

   handset.  And by having higher gain received and

   better received sensitivity at the base station

   where you can increase the cost of the base

   station and not the cost of the handset, you can

   increase the range of the mobile unit and the base

   station.

          DR. JACOBS:  One of the problems is the way

   that you specified it.  You essentially said, as I

   recall, per PRP per channel.  What is a channel?

   Well, in some cases it can be a 30 kilohertz-wide

   signal; another case with carrying just a small

   number of users; and other cases it could be a

   wider bandwidth signal.  And in the case of CDMA

   it can be handling many such users.  And so it

   needs some scaling factor in that to make it a

   reasonable kind of number.  I don't think you want

   to work against the ability to use wider band

   signals more efficiently in putting that kind of










                                                  140




   requirement in.

          As you do go to the higher gain antennas,

   you look to get higher range.  But I think your

   numbers, again, would -- under what would allow

   that, again, if you scaled it up, however, as you

   went to a wider bandwidth with more users.

          MR. STANLEY:  I thank you very much.  I

   guess at this point there's just too many issues

   to recap and go into in any depth.  What I would

   like to do is kind of ask each individual to

   identify what they would call the principal point

   they would like to leave us with; the one issue.

   And I guess there's several so let me limit you to

   one -- no complex sentences -- as to things you

   would like to keep us -- keep it for our -- before

   us in our deliberations.

          Again, we'll start with Limond.

          MR. GRINDSTAFF:  Only one, huh.

          MR. STANLEY:  Only one.

          MR. GRINDSTAFF:  We feel strongly that 2100

   megahertz is a viable spectrum allocation for

   detailed services and strongly recommend that they










                                                  141




   not be -- be not moved or eliminated.

          MR. FELKER:  I think the crucial element,

   or at least one crucial element is assigning PCS

   operators ample spectrum, and I think 40 megahertz

   is sort of the optimal amount.

          MR. STANLEY:  Mr. Murray.

          MR. MURRAY:  I would like to urge you that

   if the set asides for the designated entities are

   in jeopardy or you're not considering them

   seriously, I urge the FCC to hold some meetings

   with minority groups to discuss the alternatives.

          MR. STANLEY:  Chuck.

          MR. JACKSON:  One quick historical

   observation.  When I worked at the FCC, AT&T told

   us that 40 megahertz was the minimum that would

   work for cellular.  When I worked on spectrum

   issues in New Zealand, Telecom New Zealand

   maintained that there was such strong economies of

   scale that they should get access to 40 megahertz,

   and I'm glad to see that as we work here today

   that same trade off between efficiency and the

   benefits of competition is still before you.










                                                  142




          MR. PEPPER:  Those were incumbents, weren't

   they?

          MR. JACKSON:  One was unlicensed.  I mean,

   the cellular hadn't been licensed in this country

   at all when AT&T maintained first that 60 was

   needed and then later they backed down to 40.  And

   in New Zealand some of the cellular spectrum was

   licensed otherwise and ultimately it wasn't

   licensed quite that way.  It was auctioned off.

          MR. STANLEY:  John Battin.

          MR. BATTIN:  Hurry up, hurry up, hurry up.

   You're not far from having a very workable

   system.  Let' be on with it.

          DR. JACOBS:  And I would just like to

   reiterate this idea of having some requirements

   for a standard.

          DR. NAGEL:  Clearly the most important

   issue for us is the band clearing issue for

   unlicensed systems, and I think the one thing I

   would urge is that as we develop a plan for

   clearing the spectrum that you keep in mind the

   importance of getting complete clearing for these










                                                  143




   nomadic services because otherwise we have no

   wire.

          MR. STANLEY:  Thank you.  Sandy.

          MS. ABRAMSON:  You guys did a bang up job

   in September for unlicensed.  Don't change it.

          MR. ROSENBLATT:  The most significant issue

   relative to relocation is time, and that being the

   case, whatever the FCC can do to facilitate

   whether it's well-qualified rules or broader

   spectrum allocation would help the process.

          MR. STANLEY:  Thank you.  Ralph?

          MR. HALLER:  Well, thank you.  Let me,

   first of all, give you some information that may

   be of interest to you.

          As we mentioned yesterday, the videotapes

   of this session are going to be available from our

   contractor.  Information on that is available

   either outside the door or with Gail Brown sitting

   over here.

          I also would like to mention without Gail

   Brown none of this would have happened.  She's

   been putting in long hours on the weekends.










                                                  144




          Also transcripts of this session -- of

   yesterday's session are available through

   International Transcription Service.  The

   transcripts of yesterday's panels will be

   available this afternoon, and the transcripts of

   all panels will be available tomorrow afternoon.

   So if you want those, they are available through

   the International Transcription Service.

          And now, of course, it's my distinct

   pleasure to announce to you the conclusions that

   the panel has reached.  Having drawn consensus

   among all elements of the industry we now know

   exactly what we're going to do.  Don't take your

   pad and pencil out because that's not quite the

   case.

          At the risk of repaying myself a little bit

   for what I said last night, the issues here are

   exceedingly complex and we now will take the

   additional information we have learned here plus

   what's in the record and other pertinent comments

   that you may want to put in the record between now

   and April 22nd, we will look at those and we will










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   try to make some very informed decisions in very

   short order.

          I continue to believe that the answers are

   ranges of right and wrong but not totally right

   and wrong.  Everyone has different plans for how

   this band can be used, what services can be made

   available, who can use the band and the particular

   value to the American consumer.

          There's no question there's a great deal of

   interest in this.  We've had a packed room here

   and into the overflow rooms for both days.  I

   think that says a great deal.

          The fact that we put this panel together

   about a week ago and all of these panelists were

   anxious to come and present their presentations as

   quickly as this, indicates to me a great deal of

   interest.  Certainly with that short time frame,

   it's taken a great deal of effort on the part of

   all the panelists in order to even be here today

   to get the arrangements from airlines and such to

   be here, let alone prepare the many, many

   documents that they have submitted.










                                                  146




          Those documents by the way, are also

   available through ITS if you want them.  Each

   panelist has submitted their own presentation.

          We have a lot of people behind the scenes

   here at the Commission that have helped make this

   possible:  Greg Rosten; Rene Lickt (phonetic

   spelling); Dan Oliver back running the cameras

   with his crew; Gail Brown; Susan Salad.  And I'm

   sure I've missed a number of people in this, and I

   apologize to them for that.  But the FCC staff

   gave us a tremendous amount of support in putting

   this together, also, so I would be negligent in

   not mentioning them.

          We are now going to take this information

   and we are going to try to reach a very speedy

   solution on it.  The one thing that we have heard

   is don't delay and we're not going to.  We will be

   working to get our recommendations to the

   Commission absolutely as quickly as possible.  All

   of us are dedicated to do this and if we need

   additional resources in the Commission to help

   make it faster, we'll get those resources and put










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   it on this project.

          This is one of the most important decisions

   that the Commission is probably going to make in

   this decade.  The decisions here are going to

   affect people's lives, the way they actually

   communicate with each other.  It's going to change

   a paradine of device-to-device communication to a

   paradine of person-to-person communication, not

   just with voice but with data and enhanced video

   services.  That is very significant.  Perhaps as

   significant as the original invention of the

   telephone.

          We have a very, very important job to do

   now in the next few days and we're going to do

   that...in the next few days.

          I think that we will, in fact, be able to

   come out with a very reasonable recommendation to

   the Commission.  When we do that, we certainly

   will have had the benefit of a great deal of

   debate, a great deal of input from very

   knowledgeable people and we'll do our best to put

   all that together and try to make the pieces fit










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   together in a puzzle that ultimately proves to be

   helpful in the creation of jobs in this country,

   expansion of the economy, provisions of universal

   service.  All of those are very, very important

   goals that we have to deal with at this point.

          And so with that I thank all of you for

   your participation here, for coming to these

   meetings.  I would encourage any of you with new

   thoughts to put those on the record so that we can

   have the benefit of those.

          And with that, thank you very much again,

   and I now close this meeting.

       (Thereupon, at approximately 12:00 o'clock, p.m.,

        the above proceedings were concluded.)

                    *   *   *   *   *
























                                                  149




             CERTIFICATE OF COURT REPORTER

             I, DONNA L. LINTON, Registered

   Professional Reporter and Certificate of Merit

   holder hereby certify that the hearing was

   recorded by me in shorthand and electronically at

   the time and place mentioned in the caption hereof

   and thereafter transcribed by me; that said

   hearing is a true record of the testimony given by

   said participants; that I am neither counsel for,

   related to, nor employed by any of the parties to

   the action in which this hearing was taken; and

   further, that I am not a relative or employee of

   any counsel or attorney employed by the parties

   hereto, nor financially or otherwise interested in

   the outcome of this action.



                       ______________________________
                          DONNA L. LINTON, RPR, CM