Wireless Technologies and the National

Information Infrastructure

September 1995

OTA-ITC-622

GPO stock #052-003-01421-1
Recommended Citation: U.S. Congress, Office of Technology Assessment, Wireless

Technologies and the National Information Infrastructure, OTA-ITC-622 (Washington,

DC: U.S. Government Printing Office, July 1995).
iii

oreword

he United States is in the midst of a fundamental restructuring of its

communications and information technology infrastructure. Congress, the executive branch, and the states all are attempting to determine how to combine the country’s many different networks—telephone, computer, cable television, cellular telephone, satellite, and

broadcasting—into a broader National Information Infrastructure (NII). The

private sector is spending billions of dollars developing systems to bring a wide

variety of improved services to businesses and consumers. Wireless technologies, including radio and television broadcasting, satellites, cellular and other

mobile telephones, and a variety of data communication systems, make up one

of the most vibrant elements of this new telecommunications order, and will

offer the American people new and more flexible ways to communicate with

each other, access information resources, and receive entertainment. However,

realizing the benefits of wireless technologies while avoiding potential obstacles and adverse consequences will require a long-term commitment to

overseeing the changes now being set in motion. Government and private sector representatives must cooperate to ensure that wireless and NII goals and

policies work together.

This report examines the role wireless technologies will play in the emerging NII and identifies the challenges that policymakers, regulators, and wireless service providers will face as they begin to more closely integrate wireless

systems with existing wireline networks. The report provides Congress with a

broad overview of the wireless technologies being developed and discusses the

technical, economic, and public policy issues associated with deploying them.

Potential policy options are presented to help ensure a smooth transition to an

integrated wireline/wireless NII. The report also discusses some of the technical and social implications of the widespread use of wireless technologies—

paying particular attention to the profound changes that wireless systems may

cause in patterns of mobility.

OTA appreciates the assistance of the project advisory panelists, workshop

participants, and contractors who contributed to the study. OTA also thanks the

many representatives of industry; federal, state, and local government officials; and members of the public who were so generous with their attention and

advice. OTA values their perspectives and comments; the report is, however,

solely the responsibility of OTA.

ROGER C. HERDMAN

Director
iv

dvisory Panel

Alfred F. Boschulte

President and Chairman

NYNEX Mobile

Communications Co.

Timothy J. Brennan

Resources for the Future

Steven D. Dorfman

President

Hughes Telecommunications

and Space Co.

Francis J. Erbrick

Senior Vice President

United Parcel Service

Susan Hadden1

Professor

LBJ School of Public Affairs

The University of Texas at Austin

Ellwood R. Kerkeslager

Vice President

AT&T

Rob Kling (Chairman)

Professor

University of California, Irvine

Jim Lovette

Principal Scientist

Apple Computer, Inc.

John Major

Senior Vice President

Motorola, Inc.

Howard Miller

Senior Vice President, Broadcast

Public Broadcasting Service

Alex Netchvolodoff

Vice President, Public Policy

Cox Enterprises, Inc.

Stewart D. Personick

Assistant Vice President

Bellcore

William W. Redman, Jr.

Commissioner

North Carolina Utilities

Commission

W. Scott Schelle

Chief Executive Officer

American Personal

Communications

Jim Strand

President

Lincoln Telecommunications

William F. Sullivan

General Manager

KPAX-TV

Laurel L. Thomas

Telecommunications Consultant

Marilyn B. Ward

Division Commander

Orlando Police Department

Daniel Weitzner

Deputy Director

Center for Democracy and

Technology

________________

1Deceased.
v

roject Staff

Peter D. Blair

Assistant Director, OTA

Industry, Commerce, and

International Security Division

James W. Curlin

Program Director*

Industry, Telecommunications,

and Commerce Program

Andrew W. Wyckoff

Program Director

Industry, Telecommunications,

and Commerce Program

PRINCIPAL STAFF

David Wye

Project Director

Todd La Porte

Analyst

Alan Buzacott

Analyst

Greg Wallace

Research Analyst

Jean Smith

Editor

ADMINISTRATIVE STAFF

Liz Emanuel

Office Administrator

Karolyn St. Clair

PC Specialist

Diane Jackson

Administrative Secretary

Karry Fornshill

Secretary

CONTRACTORS

Bruce Egan

Consultant

Glenn Woroch

University of California, Berkeley

Philip Aspden and James Katz

Bellcore

George Morgan

Center for Wireless

Telecommunications

Virginia Polytechnic Institute and

State University

________________

*Until September 1994
vi

EXECUTIVE SUMMARY 1

Part A: Overview 5

1 Introduction and Policy Issues 5

Request for the Study 6

Scope of the Study 7

Background: The NII 8

Why Wireless? 13

Policy Environment 25

Findings and Policy Options 29

2 Mobility and the Implications of Wireless

Technologies 47

Findings 48

Selected Examples of Mobile Wireless Services 48

Characteristics of Mobility 52

Jobs and Mobility 53

Implications of Increased Mobility 55

Part B: Wireless Technologies and

Applications 65

3 Voice Technologies and Applications 67

Findings 68

Mobile Voice Services 69

Fixed Wireless Technologies 95

4 Wireless Data 99

Findings 99

Wireless Data Services 101

Wireless Data Systems 104

Issues and Implications 124

ontents
vii

5 Broadcast and High-Bandwidth

Services 133

Findings 133

Background 137

Radio Broadcasting 137

Video Programming Services 144

Emerging High-Bandwidth Services 162

Part C: Issues and Implications 167

6 Standards and Interoperability 169

Findings 169

The Wireless Standards-Setting Process 171

Cellular and Personal Communications Service

Standards 175

Interoperability of Wireless and Wireline

Networks 181

7 Regulation of Interconnection 185

Findings 185

LEC Interconnection Obligations 187

Interconnection Obligations of Wireless Carriers 194

8 Zoning Regulations and Antenna Siting 201

Finding 202

Background 203

General Court Guidelines on Federal Preemption 206

The Case for Federal Preemption 207

The Case Against Federal Preemption 209

9 Wireless Technologies and Universal

Service 213

Findings 214

The Role of Wireless Technologies in Universal

Service 215

Policy Issues 220

10 Privacy, Security, and Fraud 223

Findings 224

Confidentiality and Privacy 225

Cellular and Other Wireless Fraud 233
viii

11 Health Issues 239

Findings 239

The Controversy Surrounding Health Effects 241

Biological and Health Effects of Wireless

Telecommunications 243

12 Electromagnetic Interference and 

Wireless Devices 251

Finding 251

Background 252

Interference With Medical Devices 252

Interference With Aircraft Control Systems 255

Unanticipated Interactions Among Large, Complex

Systems 257

APPENDIXES

A Radio Communications Basics 259

B Federal Government Roles 269

C Acronyms and Glossary of Terms 275

D Reviewers and Contributors 279

E Workshop Participants 283

INDEX 285
xecutive

Summary

ver the next five to 10 years, wireless technologies will

dramatically reshape the communications and information infrastructure of the United States. New radio–based

systems now being developed will use advanced digital

technologies to bring a wide array of services to both residential

and business users, including ubiquitous mobile telephone and

data services and many new forms of video programming. Existing wireless systems, including radio and television broadcasting, cellular telephony, and various satellite and data networks,

will also convert to digital technology. This will allow them to

improve the quality of their services, expand the number of users

they can serve, and offer new information and entertainment applications. Before the benefits of these wireless systems can be

realized, however, technical, regulatory, and economic uncertainties must be resolved. This report examines the role wireless communication technologies will play in the evolving National

Information Infrastructure (NII), examines the challenges facing

policymakers and regulators as wireless becomes a more integral

part of the telecommunications and information infrastructure,

and identifies some of the longer term implications of the widespread use of wireless systems and services.

BACKGROUND

The public’s imagination has been captured by notions of an “information superhighway.” Newspaper articles, television advertisements, and technical journals are filled with visions of

communication services that allow people to transmit and receive

phone calls, computer files, images, and even movies; people

working anywhere—at the beach, in their homes, or in their cars;

and hundreds of channels of entertainment programming, includ- | 1
2 | Wireless Technologies and the National Information Infrastructure

ing movies on demand. The foundation for these

visions, the technologies that will make them possible, is formally known as the National Information Infrastructure. The NII is conceived as a

ubiquitous, interconnected series of telecommunications networks and computer–based services

that will allow every home and business in the nation to access a never–before–seen array of advanced communication, information, and entertainment services and applications. Some also see

the NII as part of a larger Global Information Infrastructure (GII) that would link the countries of

the world in an even wider network.

Wireless technologies will play an important

role in realizing these visions. In the past several

years, wireless technologies and services have become one of the fastest growing segments of the

telecommunications industry. U.S. cellular phone

companies add 28,000 customers each day, and in

recent years have achieved annual growth rates

that, in some cases, surpass 40 percent. The Federal Communications Commission (FCC) recently

raised almost $10 billion for the U.S. Treasury

from auctions of radio frequencies that will be

used to deliver next–generation mobile telephone

and data services. Sales of small dishes to receive

television programming directly from satellites

have been brisk, and large businesses have been

installing computer networks connected by satellites to keep track of sales and to deliver interactive employee training.

ADVANTAGES OF WIRELESS

TECHNOLOGY

Consumers and businesses have found that wireless technologies have unique capabilities that allow them to do things they either cannot do with

wire–based systems, or cannot do efficiently and/

or cost–effectively. First and foremost, wireless

technologies make mobile communication possible. People can use cellular telephones to make

and receive phone calls while they are walking,

driving, flying, in a boat, or on a train. They can

use computers equipped with radio modems to

send and receive data and electronic mail. They

can stay connected wherever they are.

Second, radio–based systems can offer more

flexible and affordable access to the nation’s information/communication resources—not only

for mobile users, but also for those who may be

tied to a particular location. Wireless technology

can extend wire–based (telephone, cable television, and computer network) systems and provide

services to people who could not receive them before. Satellites already deliver video—television

programs, movies, and special events—directly to

homes, and many new systems and services are

being developed that could make portable phones

and computers as ubiquitous as today’s wired

phones. Broadcasting technology will continue to

be one of the easiest methods for delivering information to large numbers of people over a wide

area.

WIRELESS TECHNOLOGIES AND THE NII

In order to realize the benefits these technologies

offer, many technical, economic, regulatory, and

social issues will have to be addressed as new

wireless technologies and systems are integrated

into the nation’s communication and information

infrastructure. For residential and business users,

the influx of wireless service alternatives will

magnify and intensify the changes brought about

by the breakup of the Bell Telephone System in

1984. New entrants will challenge the historical

monopolies in local phone and cable television

service, offering comparable packages of services

at similar or lower prices using satellites or land–

based radio towers. In the near future, users will

have a dizzying range of services to choose from,

but not all systems will be compatible, and moving information between networks may be difficult. Standards that will allow this diverse mix of

networks to interoperate are still several years

away. As a result, however, confusion may be

common as users are confronted with choices unknown in the past.

Rapid technological change, uncertainty about

what customers really want and will pay for, and

an outdated regulatory structure that is in the process of being overhauled all contribute to a dynamic, but chaotic, marketplace. Despite the “hype”
Executive Summary | 3

surrounding new services, many of the systems

that get the most attention—personal communications services (PCS) and low–Earth orbiting satellites (LEOs), for example—are not yet operational, although some experiments have been conducted. Technical challenges still exist in deploying new wireless systems, and, as one executive

put it: “Much of the Buck Rogers stuff is going to

take awhile.”1 Customer demand continues to be

unfocused. Service providers believe there is a

great untapped demand for wireless—and especially mobile—services, but no one knows exactly what customers want and will be willing to pay

for. From a regulatory and economic standpoint,

the role of wireless in the NII is similarly unclear.

Companies will compete in some markets while

cooperating in others, and the structure of the industry and its relation to the wireline network and

companies will likely change in response to market forces.

The evolution to a competitive environment

will be challenging for the different segments of

the wireless industry. Competition for customers

in the future NII is expected to be fierce—profit

margins are likely to be low, many service providers may not survive, and industry consolidation is

likely. Some analysts have questioned whether

existing populations can support a plethora of mobile service providers that includes cellular, specialized mobile radio (SMR), paging, PCS, and

satellite–delivered communications. The economics (cost structure and demand) of some of

these services are poorly understood, and researchers are just beginning to explore systems

and services that have not even begun operating.

In part because of these underlying uncertainties, the structure of the industry is likely to be remarkably fluid. Over the next several years, many

new companies will enter the various wireless

markets—some will fail, some will succeed, and

some will be bought up by larger concerns or

merge with competitors. This dynamism will be

fueled by changing economic conditions, changes

in regulation, and technical opportunities for integrating systems and services. Administration policies, legislation now being debated in Congress,

and evolving state and local regulations will have

an important impact on how competition will develop and the role of wireless technologies in the

NII.

IMPLICATIONS AND POLICY ISSUES

As the United States becomes a more mobile and

information–intensive society, policymakers and

regulators will face a number of challenges in

bringing the benefits of wireless and the NII to all

potential users. This report identifies a number of

issue areas that policymakers should be aware of

as the NII develops and wireless technologies become a more integral part of it. In general, given

the recent successes of some wireless industry

segments, and the nascent state of development in

other segments, government action currently is indicated in only a limited number of areas.

 Universal service. Wireless technologies can

extend service to those who do not have it.

Through competition with established providers, they may lower prices for many different

applications, making a wider range of services

affordable to many people. The evolving definition of universal service, however, is critical

for wireless providers. If universal service

comes to be defined as ubiquitous two–way

broadband access, as some groups propose, almost all wireless systems will be disadvantaged because they currently are unable to

provide this level of service.

 Interconnection and standards. To realize

the vision of the NII, the various systems and

networks that comprise today’s communications infrastructure—telephone, cable television, satellites, broadcasters, and cellular

telephony—will have to connect with each other and with the new wireless communications

systems now being developed. While this may

1Comments of John Clendenin, Radio Communications Report, vol. 13, No. 7, Apr. 11, 1994, p. 27.
4 | Wireless Technologies and the National Information Infrastructure

not be technically difficult, the process of developing the standards that will govern these

interconnections and allow different networks

to work together is becoming increasingly difficult. The result may be a patchwork of systems that do not work together or that makes it

difficult for users to exchange information

across multiple networks.

 Wireless and NII policymaking. Early plans

for the NII were dominated by visions of fiberoptic networks crossing the nation and linking

every home and business; as a result, the unique

contributions of wireless technologies went

largely unnoticed. On the other hand, policies

guiding the development of wireless systems

were actively formulated, but generally were

not placed in an NII context. Today, policymakers in Congress, the FCC, and the executive

branch are more actively promoting wireless as

an integral part of the NII.

 Spectrum policymaking. The rush to wireless

technologies and systems has created congestion in many popular bands of radio frequencies. Given the potential demand for wireless

—especially mobile—services, it is likely that

spectrum will continue to be in short supply for

some applications. Policymakers are having

difficulty balancing the needs of existing services with emerging applications. New ways of

managing the spectrum may be needed.

 Research. The uncertainties surrounding almost all aspects of wireless development and

use are exacerbated by the lack of research on

fundamental issues, including the characteristics of mobility, the economics of the wireless

industries, and the possible health effects of

wireless devices and systems. The longer term

implications of the use of wireless services on

personal lives and business productivity and

organization are unknown. Especially important are questions relating to scale—as more

people and businesses use wireless services,

new and unexpected effects are likely to

emerge. For example, interference between different wireless devices could become a more

serious problem.

 Federal/state/local jurisdiction. As wireless

systems have become more common, questions relating to regulation and jurisdiction

have grown more controversial. The federal

government has a long–standing responsibility

to promote nationwide communications systems that benefit the public. This goal, however, is increasingly coming into conflict with

the historic rights of states to govern communications services within their borders and the

efforts of local governments to maintain control over how local lands are used. Finding

locations for the antennas required to provide

cellular or future personal communication services, for example, is becoming more difficult

as communities seek to exert control over

where the towers can be built.
Introduction

and

Policy

Issues

Wireless communications technologies are poised to

bring dramatic changes to the nation’s telecommunications and information infrastructure, reshaping how

people communicate, access information, and are entertained. These technologies, which use radio waves instead of

wires to transmit information, already play an important part in

the daily lives of almost all Americans. For more than 70 years,

radio and television broadcasters have entertained and informed

millions of people each day. Satellites connect the countries of the

world, allowing people to converse, share information, and transact business. Most recently, cellular telephones have extended the

reach of the public telephone system to people who are on the

move or beyond the reach of traditional telephones.

Over the next several years, use of wireless technologies is expected to grow dramatically as a wide range of new radio-based

communication, information, and entertainment services and applications is introduced, and the prices of both equipment and services fall. Some of the wireless systems now being developed

include: 1) terrestrial and satellite-based telephone systems that

will allow people to make and receive calls from almost any point

on Earth, 2) digital television that promises clearer images and

better sound, 3) digital radio broadcasting that will offer crystal

clear sound as well as a range of information services, and 4) a

wide range of data communications systems that expand the reach

of computer and information services. These emerging wireless

technologies, along with existing wireless services, will become

an integral part of the nation’s evolving telecommunications and

information infrastructure—more formally known as the National Information Infrastructure (NII). | 5
6 | Wireless Technologies and the National Information Infrastructure

Wireless systems offer many benefits for individuals and businesses, but a number of challenges must be overcome before wireless

technologies can be effectively integrated into the

NII. Residential and business users, for example,

will have a wider range of communication, information, and entertainment services to choose

from, but systems may not work together and

switching between service providers could be difficult. Wireless companies will offer a range of

technologies and services, but competition is likely to be intense in many markets and the long-term

outcome of current policy initiatives—on interconnection of networks, universal service, and industry structure—remains uncertain. Some

wireless technologies will complement existing

services and networks, but many will also compete with the traditional communications and information providers—telephone companies,

computer networks, broadcasters, and cable television companies. The economics of wireless systems are not yet well understood. In this uncertain

and rapidly changing environment, policymakers

and regulators will have to be vigilant in monitoring the effects of policies and rules already put in

place.

Finally, the deeper implications of the widespread use of wireless technologies and services

are not well understood. With the exception of

television and radio broadcasting (and perhaps

cellular telephony), radio-based systems have not

yet penetrated deeply into the social and organizational fabric of American society and business.

This is expected to change rapidly as technologies

come into more widespread use as true mass-market products. Once large-scale use begins, the hidden impacts—both positive and negative—of

wireless access and mobility will become clearer.

While the benefits of ubiquitous communications

and a wider range of services are important, potential problems remain regarding security, privacy,

health effects, and social/organizational upheaval—including widening the gap between information and communication “haves” and “have-nots.”

Technical, regulatory, and economic policy decisions will be required to ensure that the benefits of

wireless are realized to the fullest extent possible,

while minimizing the potential disadvantages for

individuals, business, and society as a whole.

REQUEST FOR THE STUDY

The initial focus of NII initiatives was primarily

on wireline technologies. Some visions of the NII

seemed to ignore wireless technologies completely, failing to recognize the unique benefits that

wireless systems offer. Other views of the NII—

declared “technology neutral”—addressed wireless technologies as just another delivery method,

but generally failed to take into account the special

challenges that wireless solutions will pose for a

national communications infrastructure. Most NII

plans concentrated on developing the necessary

infrastructure primarily through the expansion of

the existing telephone network, cable television

systems, and national computer networks (such as

the Internet and the National Research and Education Network). Even today, most observers and

telecommunications analysts believe that the

backbone of the NII—the high-capacity links that

will bind together the disparate networks that will

make up the NII—will be primarily based on fiberoptic technology.1

The role of wireless technologies in the NII,

however, has never been fully developed by either

the Administration or Congress. Wireless proponents, especially in the broadcasting and satellite

communities, have attempted to have their systems more directly included in NII discussions,

and their efforts have been somewhat successful.

Wireless technologies are generally recognized by

most policymakers as an important way to access

the NII, but the general bias toward wire-based

NII systems remains. To broaden understanding

of these issues, the Committee on Science, Space,

and Technology (now the Committee on Science)

1 Joseph N. Pelton, “CEO Survey on the National Information Infrastructure,” Telecommunications, vol. 28, No. 11, November 1994.
Chapter 1 Introduction and Policy Issues 17

Scenarios scattered throughout this chapter sketch some possible visions of what wireless technologies and systems can and cannot do, discuss some of the implications of their widespread use, and

provide some of the potential downsides. These scenarios are set in the not-too-distant future, and, in

fact, many of the applications described below are already being tested or deployed.

Ellen, a nurse in a big city hospital, does her rounds with an electronic clipboard. After checking her

patient’s temperature, pulse, glucose levels, and breathing, she enters the data directly on her clipboard. The information is immediately transmitted to the hospital’s patient data network via a wireless

link between her clipboard and the hospital’s computer network,

A doctor wanting to talk to Ellen about dosages for a patient undergoing chemotherapy reaches her

on her handheld phone. She is reminded how much easier the phone makes it to stay in touch. Only

last year she had to listen for pages on the building loudspeaker, and often had to wait to get to a

phone to call back. She calculate once that she spent two hours per week, on average, just waiting to

be called back or trying to get in contact with the doctors on duty.

As she is checking on another patient, Ellen’s pager signals that a staff meeting is beginning. Work

schedules and patient loads are going to be reorganized and Ellen is opposed to one of the changes

being proposed. She wants to canvas her colleagues and mobilize the opposition, but prefers to do this

face to face, because it is a delicate matter. She calls up the personnel locator program on her electronic clipboard, which indicates that three of the 14 day shift staff are in the nurses’ lounge One of

them is new—she can’t recall the face, so she asks the hospital’s computer for a photo.

Midway through the meeting, Ellen’s pager signals that she is wanted in the emergency room receiving area :a gunshot victim and multiple automobile accident victims are being brought in simultaneously. Preliminary information on the patients is being sent in from the ambulance, so Ellen calls the emergency room receiving program. As she is running to the receiving area, she is informed that the gunshot

victim is a white male, 23 to 26 years old, his blood pressure is dropping rapidly, his blood type is B

negative, he is likely to be a diabetic, and he has been taking antidepressant medication, Quickly, she

grabs the appropriate IV units on the way down the hall, and is not surprised to see the other medical

staff who will attend to this patient already there. In the emergency room, instant communication is crucial—a quick response and good information saves lives,

SOURCE: Office of Technology Assessment, 1995.

of the House of Representatives and Representa- signed to serve as a general introduction to wiretive Michael Oxley asked the Office of Technology Assessment (OTA) to study the role of wireless

technologies in the emerging NH.

SCOPE OF THE STUDY

This report considers how wireless systems and

services can contribute to the development of a national information infrastructure and what specific impacts the NII, as presently conceived, may

have on the development and deployment of new

and existing radio services. Because of the breadth

of the subject, not all technologies and issues can

be analyzed in detail. Rather, this report is deless technologies and services and the

opportunities and problems they may give rise to

in the context of the NII. It surveys most of the major wireless applications now being developed

and identifies the most important issues arising

from their implementation and use. Issues needing further study are identified. Some policy options for Congress are identified, but are limited

primarily to broad issues that could affect the

evolution or impacts of wireless technologies.

The study does not discuss generic NII issues--copyright, investment, or information content, for example—nor does it address several
8 | Wireless Technologies and the National Information Infrastructure

aspects of wireless communication that, while

critical, are outside the scope of present work.

First, the report does not address the special needs

and contributions of private radio systems—including those systems used for public safety. Only

those systems available for use by the general public or businesses are included. Private radio systems, while often used to meet important public

safety and emergency preparedness needs, cannot

be used by the public. However, during the course

of this study, OTA has noted the challenges facing

the public safety community in the use of radio

communications to fulfill its various missions, including severe shortages of capacity, incompatible radio systems that hamper cooperation in

emergency relief efforts, and rising communication needs in a period of budget cutbacks. These

problems deserve much greater attention than

they could be given in this report, and should be

the focus of a separate inquiry.

The report also does not directly address the international aspects of wireless technologies or the

NII. Prior OTA reports on the international aspects of both wireline and wireless communications found that domestic and international

telecommunications policy need to be more closely coordinated.2 OTA continues to believe in the

importance of viewing domestic telecommunications policy in an international context, but chose

to limit the scope of the present report to domestic

issues for purposes of clarity and length. The report uses examples from other countries to illustrate technology advances or policy choices where

appropriate. Likewise, OTA recognizes the importance of foreign markets for U.S. wireless

equipment manufacturers and service providers.

Promoting the competitiveness of U.S. firms in

international wireless products and services

should be an integral part of domestic policymaking.3

BACKGROUND: THE NII

The U.S. telecommunications infrastructure is already among the best in the world, providing

high-quality communication, information, and

entertainment services to over 90 percent of the

population:4

 telephone service is available to 93.8 percent of

American households;

 cable television service is available to almost

95 percent of U.S. households, 63 percent of

whom subscribe;

 94 percent of U.S. households can receive at

least five broadcast television stations;

 radio broadcasting is ubiquitous, with 99 percent of American homes having an average of

five radios;

 cellular telephone service is available to about

95 percent of the population, covering 50 percent of the geographic area of the United States

(including Alaska, which has large unserved

areas);

2 U.S. Congress, Office of Technology Assessment, The 1992 World Administrative Radio Conference: Issues for U.S. International Spectrum Policy, OTA-BP-TCT-76 (Washington, DC: U.S. Government Printing Office, November 1991); U.S. Congress, Office of Technology

Assessment, The 1992 World Administrative Radio Conference: Technology and Policy Implications, OTA-TCT-549 (Washington, DC: U.S.

Government Printing Office, May 1993); U.S. Congress, Office of Technology Assessment, U.S. Telecommunications Services in European

Markets, OTA-TCT-548 (Washington, DC: U.S. Government Printing Office, August 1993); U.S. Congress, Office of Technology Assessment,

Global Communications (in progress).

3 Office of Technology Assessment, Global Communications, ibid.

4 Telephone statistics are from A. Bellinfonte, Federal Communications Commission, Telephone Subscribership in the United States, April

1995; cable figures from National Cable Television Association, Cable Television Developments, spring 1995, and U.S. Bureau of the Census,

Current Population Survey, March 1994; television broadcast figure from Federal Communications Commission, Broadcast Television in a

Multichannel Marketplace, June 1991; radio broadcasting figures from Radio Advertising Bureau, Radio Marketing Guide and Fact Book for

Advertisers, 1994; cellular figures from Tim Rich, Cellular Telecommunications Industry Association, personal communication, May 4, 1995;

and computer figures from Times Mirror Center for the People and the Press, Technology in the American Household: The Role of Technology in

American Life, May 1994.
Chapter 1 lntroduction and Policy Issues 9

■ 31 percent of American households have a personal computer, 12 percent have a computer

with a modem, and about 50 percent of all

workers use computers on the job.

It is this base of technology-the existing communications infrastructure---from which the NII

will evolve. Technology advances are already improving these systems, especially in terms of capacity, quality, and flexibility. New wireless

technologies will extend and expand the use of existing networks, and will create new links to information, allow more flexible communication,

and provide connections to new sources of entertainment.

❚ History and Purpose of the Nll

The concept of a national information infrastructure originally focused on the development of a

national computer network, the NREN, that the

federal government played a key role in financing

and developing.5 The idea of the information infrastructure broadened, however, as telephone and

cable companies--driven by advances in fiberoptic, digital signal processing, and data compression-began to promote their ability to provide a

more diverse range of services using their networks.

To make the most of the existing information

and telecommunication infrastructure, and to

bring the benefits of advanced telecommunications, information, and entertainment services to

all U.S. consumers and businesses, government

policymakers formally advanced the idea of the

NIL In September 1993, the Clinton Administrasatellites carry voice, data, and video communications all

around the world, linking far-flung business locations, allowing researchers to keep in touch, and bringing television

images of far off events to millions of American living rooms.

tion released its Agenda for Action.6 That report

established, in broad outline, goals for the development of telecommunications and information

resources in the United States, and identified

a concept of how the U.S. communications and

information infrastructure should evolve. The

purpose of the NII, as described by the Administration, is to enable all Americans to access the information they need; when they want it, where

they want it—at an affordable price.7

To serve this purpose, the Administration has

stated that many different technologies and systems will be used where appropriate.8 In fact,

5 High-Perf ormance Computing Act of 1991 (HPCA), Public LaW 102-194.

6

Department of Commerce, Information InfrastructureTask Force, The National Information Infrastructure: Agenda for Action, Sept. 15,

1993.

7

See, for example, co mments of Mike Nelson, Office of Science and Technology Policy, at theWorkshop on Advanced Digital Video in the

National Information Infrastructure, Georgetown University, Washington, DC, May l0-11, 1994.

8 As explained in the Agenda for Action, the NII is really more than just an interconnected series of telecommunications or computer networks. It encompasses:l) a wide and ever-expanding range of equiprnent; 2)the information itself, which may be in the form of video programming, scientific or business databases, images, sound recordings, library archives, and other media; 3) applications and software that allow

users to access, manipulate, organize and digest [information]; 4)the network standards and transmission codes that facilitate interconnection

and interoperation between network; and 5) the people--largely in the private sector—who create the information, develop applications and

services, construct facilities, and train others to tap its potential. Department of Commerce, op. cit., footnote 6, pp. 5-6.
10 I Wireless Technologies and the National Information Infrastructure

in discussing the integration of wireless technologies into the emerging communications infrastructure, OTA adopts a broad definition of the National Information Infrastructure (Nil). It includes all the

systems and applications necessary for the public to communicate with whomever they want and access the information they desire. The Nll will be one-way and two-way, point-to-point and broadcast,

and narrowband and broadband. It will be an amalgam of existing systems and services and completely new technologies and applications, Different parts of the Nll will serve different functions depending

on technology and need, and some systems may serve a multitude of needs, The Nll will include satellite systems, fiberoptic cable, terrestrial radio systems, broadcasting, and the telephone and cable television networks, among others.

What will the Nil not be? Despite the singular way in which the term is used—the “NII” is not, and will

not be, one “thing, ” Rather, it will be more accurate to think of the Nil as a unifying concept or overarching idea that brings together all the different systems, technologies, and applications that are necessary

for people to communicate, access information, and be entertained. Just as the transportation infrastructure of this country is more than just the interstate highway system—it consists of roads, railroads,

aircraft, passenger cars, trucks, and ships—so, too, will the Nll consist of more than just an “information

superhighway. ” It will also include all the different, lower speed “on and off ramps’’—the many local

connections that provide access to the network.

Nor will the Nll be, as some have suggested, a huge collection of completely interconnected networks capable of transmitting interactive voice, data, and video among all businesses and citizens.

Rather, the Nll will be a collection of many different kinds of systems. Some general-purpose systems

may indeed be capable of carrying two-way, high-bandwidth, multimedia communications, but many

other systems will carry only certain kinds of information (voice/data, but not video) or will carry it only

one-way (broadcasters),

In addition, not all of these different subsystems will be completely or directly interconnected. Rather,

the interconnections will be based on practical and/or economic considerations. It may not make

sense, for example, to connect a phone system to a television broadcast station. The existing public

switched telephone network may serve as a “core” network that serves as a common point of interconnection for many smaller networks, Finally, the Nll will not evolve out of the Internet—the name given to

a worldwide network of interconnected computers. The Internet will be only one of the many parts comprising the larger concept that is the NII.

SOURCE: Office of Technology Assessment, 1995,

most analysts today think of the NII not as a single formation superhighway.” This may connote, insystem, but as a “system of systems” or “network correctly, a separate system that is to be built in

of networks” that will carry voice, data, and video addition to existing cable, telephone, and computcommunications to homes, businesses, schools— er networks. For purposes of this report, OTA deto people wherever they are. It is unclear, how- fines the NII quite broadly (box 1-2).

ever, just what the public thinks the NII is. In the To bring the NII into being, the Administration

popular press, it is often referred to as the “in- has identified five overarching policy guidelines
Chapter 1 Introduction and Policy Issues | 11

that will serve as the framework for developing

not only wireline NII services, but wireless systems and applications as well.9

1. Competition is seen as the engine that will drive

private sector investment in the NII, allowing

companies to compete on fair and equal terms,

while stimulating efficiency and innovation.

Competition is also believed to lower costs for

consumers, increase choices and diversity in

information sources and entertainment, and

protect quality and reliability.

2. A commitment to universal service seeks to ensure that NII services will be available to all

who want them, regardless of income, location,

or ethnicity. This commitment has been the

foundation of the telephone system for more

than 90 years; as a result, almost everyone in

the country is able to have a telephone.

3. Private investment will be the source of almost

all funding for the NII; the government will not

build or operate the systems that comprise the

NII. Government agencies, however, will operate publicly accessible databases and their own

telecommunications and information networks. 

4. Open access means the networks that will carry

the information and entertainment will be open

to all users—distributors of programming as

well as residential and business consumers.

5. Flexible government regulation is recognized

as vital to promoting the goals outlined above.

Regulations must seek to promote fair competition and private investment in rapidly changing

technology and market conditions; they must

also protect consumers’ interests by ensuring

low-cost services, high reliability, and personal

privacy and security.

❚ Information Infrastructure Task Force

To guide its development of policies for the NII,

the Administration formed the Information Infrastructure Task Force (IITF) in 1993. It is composed of high-level representatives of the federal

agencies that play a major role in the development

and application of communication and information technologies and those that rely on communication and information technologies to deliver

their services. To gather private sector input and

assist the IITF, President Clinton established an

Advisory Council on the NII.10 The IITF operates

under the aegis of the Office of Science and

Technology Policy and the National Economic

Council, but is chaired by the Secretary of Commerce. Much of the staff work and administrative

support for the IITF is done through the National

Telecommunications and Information Administration (NTIA) of the Department of Commerce.

Functionally, IITF’s work is divided among

three main committees: telecommunications

policy, information policy, and applications.

These committees have delegated specific tasks or

responsibilities for certain issue areas, such as privacy, reliability, universal service, health, etc., to

individual working groups.11 Although several of

the working groups may cover wireless technologies in the context of their broader work, none

deals specifically with wireless as a separate area.

Given this lack of focus, it is unclear to what extent wireless technologies play a role in the com9 The Agenda for Action originally identified nine principles that would guide the NII initiative: 1) promote private sector investment; 2)

extend universal service—ensure that information is available to all at affordable prices; 3) promote technological innovation and new applications; 4) promote seamless, interactive, user-driven operation; 5) ensure information security and network reliability; 6) improve management

of spectrum; 7) protect intellectual property rights; 8) coordinate with other levels of government and other nations; and 9) provide access to

government information and improve procurement. These nine principles were collapsed into five over time. See, for example, remarks by Vice

President Gore at the Federal-State-Local Telecomm Summit, Washington, DC, Jan. 9, 1995.

10 Clinton, W. J., President, United States, “Executive Order 12864—United States Advisory Council on the National Information Infrastructure,” Weekly Compilation of Presidential Documents vol. 29, No. 37, Sept. 20, 1993, p. 1771.

11 For more indepth information on the structure and accomplishments of the Information Infrastructure Task Force, see U.S. Department of

Commerce, National Information Infrastructure: Progress Report September 1993-1994, September 1994, especially appendix B.
12 | Wireless Technologies and the National Information Infrastructure

mittees’ deliberations, and how well the specific

benefits and problems associated with wireless

are being considered. Another IITF working

group, the Technology Policy Working Group has

addressed wireless technology in some of its discussions as part of its mandate to examine crosscutting technology issues. Government activities

and policy initiatives relating to the NII and wireless systems are discussed in more detail in appendix B.

❚ Industry Initiatives

Industry, as the primary builder and operator of

the evolving NII, has been an active participant in

the policy development process since before the

moniker, “NII,” was attached to the effort. Innumerable industry groups and consortia have produced vision statements and proposals, lobbied

Congress, and testified at federal, state, and local

hearings on all aspects of the NII. At the same

time, all segments of the telecommunications industry, wireline and wireless, have been moving

ahead to build their systems. A complete overview of industry activities regarding the NII

would be impossible, given the scope and depth of

their work and the fact that almost everything industries do could be considered NII-related in one

way or another. Such a review is beyond the scope

of this report.

❚ The NII Today

The main challenge in building the NII will not be

technical—the basic technologies that will form

its foundation are already in place or being developed, and standards are being written that will permit different devices and networks to interoperate.

The biggest obstacle to moving the NII forward is

the lack of consensus on what it should encompass

and, as a result, what policies, administrative procedures, and regulations are needed to deploy it.

Beyond the broad concepts outlined by the Administration, the vision of the NII has remained

vague and somewhat ill-defined. Different interest groups, government leaders, and industry observers have offered their own visions of what it

should be and what needs it should serve. However, no real agreement has been reached, and, in

many cases, it has even been difficult to agree on

common terms of reference. Some have pointed

out that the NII is all things to all people—that definitions are as varied as those who create them.

In the past eight months, the concept of “the

NII” has become even more amorphous, eclipsed

by broader efforts to overhaul regulation of the nation’s telecommunications industries. Some even

call the NII “quaint.” A subtle shift has occurred

that places competition at the center of the telecommunications policy framework rather than the

NII. As a result, the NII now seems to be defined

as whatever a competitive marketplace creates as a

result of deregulated telecommunications and media competition—it has been reduced to a byproduct rather than the result of a specific vision or

plan. Policy efforts seem directed more toward

meeting NII goals—access, diversity, low prices,

and interconnection—through the engine of competition as opposed to creating “an NII.” Wireless

and wireline policies are still rarely linked explicitly, but they are being developed under the same

set of unifying principles—a dedication to competition. Despite this coalescence, however, no

long-term vision of how wireless systems will fit

into the NII exists or is being developed, and the

marketplace is being relied on to sort out the details.

Despite the continued vagueness of the overall

NII concept, however, intensive research, experimentation, and other development work is being

done on its various parts. Technology vendors and

service providers continue to develop and refine

technologies and applications they believe will

become part of the NII. The federal government

has sponsored or organized many discussions—

with both public and private sector input—on the

issues of universal service, interconnection, and

privacy, among others. Many people—in both

government and the private sector—have invested

considerable time and effort to advance the ideas

of the NII, but questions still remain about what it
is, what it will do, how much it will cost to develop, and when its benefits will be available.12

Some analysts and citizens question the wisdom of pushing ahead with such a massive under-

-taking while fundamental questions-about the

real need for the NII, what its functions will be,

and what negative effects it might have-remain

unanswered. 13 Many of these same questions also

apply to the deployment of wireless in the NH.

OTA has argued that deploying technology solutions before assessing the needs of the users is not

likely to lead to the best solutions. 14 While such

questions are important and valid-and should be

carefully considered-events appear to have overtaken this type of carefully planned approach. The

NII is already being built, and it would be virtually

impossible to stop it. Further, even if one could

start over, the rapid pace of technology development has made the concept of “needs’ ’highly individualistic and subject to rapid change-making

them difficult to rationally identify and plan for on

abroad system level. This report examines some

of the important issues surrounding the deployment of wireless systems in the NII, while acknowledging that some of the most fundamental

questions about the NII have become moot.

The NII concept has served to focus more attention on telecommunications in general. It has also

given added impetus to wireless development efforts, but industry analysts and stakeholders believe that wireless would be just about where it is

today even without the NII. Perhaps more importantly, there is a widespread belief that development and use of radio-based systems and

technologies will continue to expand dramatiChapter 1 Introduction and Policy lssues 13

cally---with or without the NII---as users become

more familiar with them and as applications that

meet real needs are developed.

WHY WIRELESS?

While estimates of demand and future subscriber

rates vary considerably, most analysts believe that

wireless telecommunications will become widely

available over the next decade. Demand for mobile access to telecommunications networks and

services is growing, and many companies--old

and new—are rushing to get into the wireless

business. But what is driving the trend toward

wireless technologies?

Portable computing devices allow users to send and receive

electronic mail, access online services and exchange files

with other users. The combination of portability and connectivity is driving many new applications of wireless technology

12Pelton, op. cit., footnote l,pp. 27-34. Despite a wealth of conferences, papers, and public hearings, for example, the debate over universal

service continues. Different segments of the service provider community remain split over how best to deliver an evolving “universal service”

“Universal Service Consensus Eludes NTIA...” Telecommunications Reports, vol. 60, No. 52, Dec. 26, 1994.

1 3 In comnents on this report, one reviewer noted: “In essence,what we are doing is that we are building a system’s structure without knowing what its function is or ought to be.When one would design most other systems or for that matter, e.g., a building, one typically would first

start with function from which structure follows. With the NII, and with wireless infrastructures as well, I believe we ignore this thinking and we

start first with structure....shouldwe not raise the basic question as itwill probably be inevitable that many dysfunctions are the result of building

a structure, i.e., happily paving the NII?” Rolf T. Wigand, personal communication, Apr. 28, 1995.

14U.S. Congress, Office of Technology Assessment, Linking for Learning:A New Course for Education, OTA-SET-430 (Washington,DC:

U.S. Government Printing Office, November 1989).
14 I Wireless Technologies and the National Information Infrastructure

Cellular telephone Cellular telephone Pagers in use Pager growth rate

subscribers (millions) growth rate (percent) ( millions) (percent)

1984 0.09

1985 0.34 278 4.5

1986 0.68 100 5.4 20

1987 1,23 81 6.5 20

1988 2.07 68 7.8 20

1989 3.51 70 9.4 21

1990 5.28 50 11.2 19

1991 7,56 43 13.4 20

1992 11.03 46 15.3 14

1993 16,01 45 19.3 26

1994 19,28* 20

● Through June 1994. All others at year end.

SOURCES: Cellular Telecommunications Industry Association, Personal Communications Industry Association, Telephone Industry

Association, and National Cable Television Association, 1995.

To understand the role radio-based technologies will play in the NII, it is necessary to understand the factors driving the demand for wireless

services, as well as the technological capabilities

and advances that are making new applications

possible. Each of these factors—technology push

and demand pull—is working independently to

fuel the rush to wireless, but they also sustain and

reinforce each other. This section describes the

technical and sociological context in which wireless technologies and services are evolving and

that simultaneously underlies the transition to the

NII.

❚ Wireless Growth Estimates

Much of the excitement that surrounds wireless

communications is based on assumptions analysts

and companies make about what people and businesses want, but there is little agreement on how

big the potential market for wireless might be.

Most analysts base their estimates of future wireless growth on the diffusion of cellular telephone

service and, to a lesser extent, on sales of portable

computers. The growth rate of cellular telephone

service is high, running about 45 percent per year

in the United States until 1994, with comparable

rates in other developed countries. 15 Paging,

another widely used service, has experienced

growth rates of about 20 percent per year for nearly a decade (table l-l). In another measure of potential demand, NTIA recently completed a study

of future spectrum requirements that indicated

that more than 400 MHz of additional spectrum

was needed to support a growing range of wireless

services.16

As a result of such findings, there is growing

consensus that the demand for some kinds of wireless services is likely to be very high. Some analysts believe that as many as 100 million people

will use some type of wireless telecommunications device by the year 2010. The following table

of projected demand demonstrates both the trends

and the variations in demand, but do not necessarily reflect OTA’s assessment of the extent of the

market (table 1-2).

All data or forecasts relating to future demand

for wireless services must be regarded cautiously.

Projections vary widely, reflecting different in15 Compound annual growth rates (1990-92) in other countries range from 16 percent in the United Kingdom to 54 percent in Australia to

115 percent in Taiwan. Statistics cited in “ITU Deems Cellular Telephone Growth ‘Truly Explosive,’” Mobile Phone News, June 20, 1994

16 U.S. Department of Commerce, National Telecommunications and Information Administration, U.S. National Spectrum Requirements:

Projections and Trends, Special Publication 94-31 (Washington, DC: U.S. Government Printing Office, March 1995).
Chapter l introduction and Policy issues 15

1994 2000 2005

Subscribers Penetration Subscribers Penetration Subscribers Penetration

Service (millions) (percent) (millions) (percent) (millions) (percent)

New PCS 14.8 5.4 39.4 13.1

Satellite 0.1 0.0 1.3 0.5 4,1 1.4

Narrowband/Paging 24.5 9.6 56.2 20.4 92.2 30.7

Dedicated data 0.5 0.2 3.4 1.2 5.7 1.9

Cellular 23.0 9.0 46,9 17.0 65.4 21.8

SMR/ESMR* 1.5 0.6 5.2 1.9 9.0 3.0

Total 34.1 13.4 79.7 28.9 136.3 45.4

Total voice services 14,6 5.7 48.2 17.5 96.5 32.1

Note: The following U.S. population figures were used: 1994-255 million, 2000--275.8 million, 2005-300.3 million.

Note: Total subscriptions include individuals with multiple subscriptions across services (i.e., there are more subscriptions than subscribers).

 *SMR/ESMR = Specialized Mobile Radio/ Enhanced Specialized Mobile Radio

SOURCES: Personal Communications Industry Association, “1994 PCS Market Demand Forecast,” (Washington, DC: Personal Communications Industry Association, January, 1995); Personal Communications Industry Association, "lPCIA 1995 PCS Technologies

Market Demand Forecast Update, 1994 -2005,” (Washington, DC: Personal Communications Industry Association, January, 1995).

dustry definitions, assumptions, and biases. The

data are highly uncertain and projection methods

themselves crude and imprecise. Great uncertainty underlies all these numbers.

❚ Technology Trends and Drivers

Rapid advances in technology are the most visible, and one of the most important, drivers in the

development of the NII and wireless services.

Over the past five years, advances in information

and communications technology have greatly expanded the capabilities and flexibility of existing

services, while also making possible a whole

range of new services, including wireless. Cellular, PCS, and Enhanced Specialized Mobile Radio

(ESMR) services, for example, are the result of

improvements in computer processing, battery

technology, miniaturization, and new digital signal processing and transmission techniques (box

1-3). New satellite services are the result of advances in digital compression technologies and

improved computer processing-in both the provider’s network and in consumer equipment. Current development efforts promise to bring users

even more features and advantages in the future.

Technology advances have a two-fold, somewhat paradoxical, impact on the development of

wireless technologies. First, as noted above, advances make new applications and services possible. As new services are introduced and existing

services are improved, however, more people use

them, sometimes resulting in congestion and

“crowding” of the most popular frequency bands.

Cellular telephones are now so popular that, in

some areas, it can be difficult to place a call during

rush hour because the cellular system is full.

Technology advances, however, can also help

solve these capacity and congestion problems.

New technologies enable more efficient use of the

spectrum by squeezing more users into existing

bands, and by allowing radio frequencies to be

shared more easily among different kinds of services. 17 Cellular service providers are now installing digital technology to add capacity to their

systems and provide clearer calls.

17 For a discussion of the range of solutions to spectrum crowding, see U.S. Department of Commerce, National Telecommunications and

Information Administration, U.S. Spectrum Management Policy: Agenda for the Future, NTIA Special Publication91 -23 (Washington, DC:

U.S. Government Printing Office, February 1991), p. 13; and Richard Gould, “Allocation of the Radio Frequency Spectrum,” contractor report

prepared for the Office of Technology Assessment, Aug. 10, 1990.
16 Wireless Technologies and the National Information Infrastructure

Miniaturization

A key technical factor pushing the development of wireless technologies is the rapidly shrinking size

of radio components. Advanced technology has enabled increasing numbers of functions to be performed by a single chip and at higher speeds. This allows manufacturers to produce telephones, pagers, and computers that are smaller, lighter, and consume less power. The limiting factor to the size of

some of today’s products is no longer the chips needed to make them operate, but the physical characteristics of the people who use them—keys that are too small to easily type on or dial are not very useful,

Battery Technology

The problems associated with powering today’s portable devices continue to frustrate and annoy

many wireless users. The batteries required to run portable cellular phones and computers are usually

heavy and/or provide limited hours of operation, and they can be expensive. A number of developments in battery technology may remedy this situation. Some involve new technologies, such as nickel

metal hydride (NiMH) and lithium ion (Lion) batteries. Another solution being developed is a zinc-air

battery that draws oxygen from the atmosphere to extend its life to 15 continuous hours. Power-saving

solutions that make smarter use of battery power by the devices themselves hold promise for extending

battery life further. More power-efficient displays and more efficient sleep modes are examples of ways

in which small improvements could yield significant benefits in battery life.1

Frequency Reuse

Capacity is a major problem with many mobile communication systems. In any given area, when a

specific frequency is in use it cannot be used for other purposes or by other users.2 Radio waves, however, travel limited distances (see appendix A) before they fade out; beyond that point, a specific frequency can be reused without interfering with the other signal. This is the principle that underlies cellular telephony. Within a geographic area encompassing many cells, the same frequencies might be

used up to six times. Shrinking cell sizes and lower transmitter powers, however, are not a permanent

solution for increasing capacity. There are limits on how small a cell can be and how low power can go

while still maintaining adequate quality.

Use of Higher Frequencies

As the lower frequency bands have become increasingly crowded, engineers have begun to develop technologies that would use higher, less crowded frequencies.3 As was the case in extending terrestrial frontiers, developing higher frequencies is difficult and expensive. In addition to the cost of developing new devices that will operate at the higher frequencies, transmission problems typically worsen

at higher frequencies. Some of those problems, such as increased attenuation due to rain, appear to be

surmountable only by brute force-by increasing transmitter power. In satellite systems, power must be

increased at both the original transmission (uplink) site on Earth and on the satellite itself. Increased

satellite power greatly increases costs.

(continued)

1Clive Cookson, “Battery Technology: Still an Achilles Heel, ” Financial Times Review, Information Technology, May 3,

1995, p.7.

2

This is, of course, an oversimplification. Different radio services can be designed in many ways to share spectrum

3

For a recent discussion of the upward expansion of usable radio frequencies, see Edmund L. Andrew “Seeking TO

Use More of the Radio Spectrum, ” New York Times, Sept. 11, 1991, p. D7.
Chapter 1 Introduction and Policy Issues 117

Satellite Antennas

Advanced satellite antennas permit the use of smaller, less expensive Earth stations by making more

efficient use of available satellite power. Such antennas direct the signal toward, and concentrate it in,

areas where the intended users are located. Systems with such antennas, called spot beams, also

make more efficient use of spectrum than those with large, circular beams which waste satellite power

by transmitting beyond the limits of the desired service area. The reduction of signal levels outside the

service area permits the same frequencies to be reused by other systems serving nearby areas, in the

same way that cellular technology operates. The National Aeronautics and Space Administration’s

(NASA) Advanced Communications Technology Satellite (ACTS) system uses spot beam techniques,

and Motorola’s Iridium and the Teledesic system also plan to use them.

Spread Spectrum

Spread spectrum is a modulation technique first developed to hide military communications amid

natural noise and other signals. More recently, spread spectrum has been used to permit low-power

signals to share spectrum with other services. As the name implies, the original modulating signal is

spread over a wide range of frequencies (bandwidth) for transmission. Interference from conventional

signals or other spread spectrum signals appear as noise to the system, and can be eliminated.

There are several types of spread spectrum systems. One type, known as direct-sequence spread

spectrum, divides a radio signal’s energy over a wide range of frequencies so that a little part of the

signal appears on each frequency in the band. Frequency-hopping spread spectrum techniques

spread a signal out over many frequencies by hopping from frequency to frequency in a sequence synchronized with the receiver. One frequency is not dedicated to one user, and all frequencies can be

used more efficiently. As more user/signals are added, however, the noise may eventually become too

great for good communications. New adaptations of spread spectrum techniques, including advanced

forms of CDMA may help solve some of these problems.4

Advanced radio transmission technologies that spread radio signals over extremely wide bandwidths may also provide solutions to transmission and capacity problems. Several companies are working on radios that send and receive over an extremely wide range (up to several GHz) of frequencies,

providing greater capacity than today’s channel-oriented approach, However, little is known about the

operational aspects of these devices, especially the potential interference they could cause to other

systems—and spectrum managers believe that implementing such radios, especially in already-assigned bands, could be extremely difficult.

4Synchronous CDMA, e.g., is being developed for use in future personal communications systems. Jack Taylor, CyIink, personal communication, Mar. 14, 1991.

SOURCE: Office of Technology Assessment, 1995.

Digital Technology voice, data, and video are much easier to combine

Many recent communications technology im- into a wide range of multimedia applications.

provements are the result of the rapid diffusion These advances are fundamentally altering the

and deployment of digital technologies in all as- relationships between previously separate syspects of communications and information proc- tems and services.

essing. Digital information is easier to compress, For wireless communication systems, digitally

transmit, manipulate, and store; and digitized encoded and transmitted information offers sev-
18 I WirelessTechnologies and the National Information Infrastructure

With just a personal computer, a radio scanner, and some

software, criminals can reprogram cellular phones to steal

service from unsuspecting consumers.

eral advantages over analog systems. The greatest

benefit of digitizing radio communications is the

ability to compress and combine multiple signals.

This allows more information to be transmitted in

a given time and more users to share a given

amount of spectrum, thereby increasing speed and

capacity. 18 Applications using digital compression techniques are spreading rapidly in many radiocommunication services. In cellular telephony,

for example, digital signal processing and transmission techniques promise capacity up to 10

times that of existing analog cellular systems. Satellite companies are reportedly working on

technologies that will combine up to 16 video signals on a single transponder.

Combined with compression, digital transmission techniques allow wireless system operators

to exploit the spectrum more efficiently and

deploy a wider range of applications serving more

users. Digital transmission technologies, including spread spectrum, are a crucial piece of the

solution to the spectrum congestion some radio

frequency bands are now experiencing. Time Division Multiple Access (TDMA) and Code Division Multiple Access (CDMA), for example, are

digital transmission schemes that allow more telephone conversations to be transmitted over a given bandwidth than analog technology allows (see

chapter 3). Such schemes will allow Commercial

Mobile Radio Service (CMRS) providers to dramatically increase the capacity of their systems

and offer a wider range of services. Broadcasters

believe that digital compression and transmission

technologies will allow them to use their existing

spectrum-which currently can carry only one

analog channel-to transmit six or more channels

of digital television programming (at today’s

quality), one high-definition television (HDTV)

channel, or new information services.19 Digitized

information can also be more easily and effectively encrypted, making conversations and other

communications more private, and preventing unauthorized pirating of pay services.

Uncertainty

Despite the benefits that new technologies bring,

rapid technology advances also cause a great deal

of uncertainty among users, manufacturers, service providers, and policymakers. Which technology is best? What is coming next? With

technology life spans now measured in months

not years, it has become harder for consumers and

businesses to decide what services and equipment

to buy and when.20 For policymakers and regulators, rapid change makes policymaking and standards-setting more complex. Several factors

underlie the uncertainty that now characterizes

wireless technology development.

Much of the uncertainty can be traced to the fact

that, despite significant research and development, and a great deal of industry “hype,” few of

18Digital compression works by removing redundant or unnecessary information from the signal. In video transmission, for example, individual elements of the picture that do not change from frame to frame (when the background of a scene remains the same, for example) are not

resent for each frame--just a code that tells the receiver/decoder that no change has taken place. This allows less information to be sent, requires

less bandwidth, and allows more channels to be transmitted.

19 Advanced Television (ATV) or Digital Television (DTV) increasingly are being used in place of high-definition television (HDTV).

20The recent delay in Bell Atlantic’s planned system upgrade is evidence of the uncertainties facing today’s service providers.
Chapter 1 Introduction and Policy Issues | 19

the new wireless systems are widely available.

PCS frequencies have just been auctioned, and

services are not expected to be available until late

1995 or 1996; ESMR technology has been

plagued by technical problems; only one of the

LEOs systems has launched satellites21 (although

experimental satellites have been used for some

little LEO-like services), and many of the data services being developed are hampered by slow

transmission speeds, incompatible systems and

protocols, and a limited selection of applications.

As a result, potential users do not know what the

new systems will really offer, and technical details

remain to be finalized. Lack of real-world operational experience also makes it hard to realistically determine the most efficient wireless access

system—and thus to identify potential winners

and losers.

In addition, the pace of technology deployment

is also uncertain. Although, strictly speaking, the

development of core radio-based technologies

will not be a barrier to the development of new

wireless systems and services, the pace of development and implementation is likely to be slower

than most analysts predict, and, in combination

with slow standards-setting processes and regulatory change, could slow the deployment of many

new systems by at least months and possibly

years. Finally, in some newly reallocated bands—

the PCS bands, for example—new users are being

required to pay to move incumbent users to other

frequencies. This process will also be time-consuming and slow the deployment of wireless services.

❚ Demand: Why Do Users Want Wireless?

In addition to the push provided by rapidly advancing technologies, users—consumers, businesses, and government—have an expanding set

of needs and demands that are pulling the development of wireless applications. Although each user

group has its own specific needs, there are also

general factors that are increasing demand. These

include the need for mobility and/or portability,

easy access, ubiquity, and low cost.

Advantages of Wireless Technology

Wireless technologies have several unique characteristics that make them valuable to both individual users and companies wishing to distribute

information. First, radio-based systems can be

used to broadcast voice, data, and video programming and information to large groups of people

over wide areas at relatively low cost. Broadcasting is point-to-multipoint and generally one-way.

Radio and television broadcasters have served the

American people for decades with news, entertainment, sports, public interest, and emergency

programming. Satellite broadcasting promises to

extend the reach of local audio and video programming to national, or even international audiences.

Second, wireless systems can serve needs that

are not practically or efficiently served by wirebased networks. Both satellite and terrestrial

technology, for example, can be used to create a

wireless local loop to serve extremely remote telephone customers (see chapter 3).22 Radio technologies can also be used to deliver communications

services faster and less expensively than building

or extending a wire-based network. Cellular

technologies, for example, are being used in many

developed and developing countries to bring telephone service to areas that have been unserved.

Wireless Local Area Networks (LANs) connect

computers where it is too expensive or impractical

to install a wire—for example, in a building where

asbestos creates construction hazards or an historic site. Many of the nation’s schools reportedly

have this problem. Wireless systems also allow

flexible deployment of people and devices quickly and easily—e.g., to reconfigure a computer net21 Orbcomm launched two satellites in March 1995. Both developed technical problems, but were later reported to be operational.

22 Basic Exchange Telecommunications Radio Service, or BETRS, has been in use for many years to provide telephone service to remote

rural residents. US West has also been testing the use of satellites to provide telephone service to remote areas of Wyoming.
20 I Wireless Technologies and the National Information Infrastructure

Sandra has operated her own plumbing business for the past three years in sprawling Phoenix, Arizona. It is a demanding business—lots of competition, small margins, and customers who can’t wait

long for service.

Sandra decided early on to minimize her overhead and run her business entirely out of her van, so

she bought a portable telephone, a pager, and a laptop computer with a wireless modem. Sandra figures she can be on the job and be able to respond to calls for service, thus keeping business flowing

in. Her response time is often very rapid, which customers appreciate. She handles all the estimates,

ordering, invoices, and accounts on her laptop, including ordering parts for delivery either to her house,

or directly to the jobsite. This means she doesn’t have to hire a secretary or maintain an office, keeping

her costs down.

Setting all this up was quite a chore for Sandra. She tried to do it on her own, but assembling the

right hardware, software, service providers, and actual services proved too difficult. She ended up using a systems integrator, a national franchise operation that could get better deals on components than

she could, and even handles the various telecommunications service billings for her. Even though she

pays a premium for the service, she figures she will come out ahead because the technologies are just

changing too fast for her to keep up.

Because the city is so big and growing so rapidly, Sandra also decided to invest in satellite navigation and route-planning equipment. Traffic can be difficult and time spent on the road is time lost on the

job, so the payoff is obvious. She also hopes to expand her business to two vans, and hire her friend

Wayne. The navigation gear she has will allow her to keep tabs on him, and coordinate their responses

to emergency calls.

Sandra is also the mother of two young school-age children. Because she needs to spend so much

time on the road, she stays in touch with them via pocket telephones and pagers. She likes the sense of

security it gives them all because she can locate them whenever she needs to, and they can call her

(and have twice) or911 if they feel in any way in danger. But she also worries that they will never know

the feeling of really being free and independent, like she was at their age, when the whole neighborhood was her playground.

SOURCE: Office of Technology Assessment, 1995.

work without having to move wires, or deploy mobile repair person, for example, may not know

emergency personnel in times of natural or man- in advance where his or her services will be needmade disasters. ed, and will likely need to stay on-site for only a

Finally, wireless can serve quite well when short period of time. This capability allows people

communication needs are unpredictable or transi- to be connected wherever they are, and serves the

tory. Radio-based technologies are ideally suited need to get information or communicate immedito providing ubiquitous access in a specific geo- ately. Different types of systems will serve differgraphic area where a user will be traveling.23 A ent areas-a building or mall, an office park or

23 In reality, many of the benefits of radio technologies for access and mobility are based on the concept of broadcasting. Broadcasting>

in fact, is the mode of communication that allows mobility to take place—no matter where one travels within the range of the signal, the signal

is always present. Cellular telephony, although not a broadcasting service like radio or television, uses a broadcast signal to contact the desired

person. Similarly, in cases where many users in an area need access or where users will be at different locations-some known, some not—the

broadcast radio signal, because it blankets a given area, is what makes ubiquitous access possible.
Chapter 1 Introduction and Policy Issues 121

Jose is a migrant farmworker in West Virginia with strong ties to Miami where his family lives. His job

is tough—he spends many hours in the orchards battling poison ivy, insects, and the residue of pesticides sprayed on the trees. He worries about his wife and children—particularly how his eldest daughter is doing in school—and his sister, who has had a series of medical difficulties that have left her

unable to work. Jose has always been the responsible family member. Because he speaks English, he

often negotiates appointments, visits to the health clinic, and so on for family members. Being able to

contact and be contacted by them is essential for his family’s survival. Jose gets little time off during his

workday; even when he does, he is unable to find a payphone because he is often miles from the nearest town.

But recently, Jose bought a pocket telephone that he takes into the fields with him. Several years

ago, this would have been too expensive, but a price war among the mobile telephone companies has

put both telephone handset and service charges within his grasp. He uses the phone to call his family

in Florida nearly every day. Occasionally he even contacts his widowed mother back home in Mexico,

despite the very high international telephone charges (he typically pays about $40 for a four- to fiveminute call), Jose also finds it convenient to make appointments for himself and his coworkers at the

local clinic in rural West Virginia, to contact the school his daughter attends in Miami, and to call the

hospital where his sister’s doctors work. It used to be difficult to get a return call because he was not

near a telephone, the payphone was busy, it was after business hours, or he had followed the migrant

work stream to a different community. Now he feels much more connected to the people and services

he needs to live a better life.

SOURCE: Office of Technology Assessment, 1995.

downtown area, a metropolitan area, a region of All wire-based services are inherently limited in

the country, the whole country, and even the whole

world. Users will be able to pick and choose the

technologies that best meet their needs.

Mobility anti Access

The unique advantage that wireless technologies

bring to the NII is mobility. Increasingly, users

want to communicate wherever they are-while

walking, driving, or traveling on a plane, train, or

ship.

[E]very human, even the most committed

landlubber, is a sailor of sorts, or else a driver, or

a flyer, or at least a pedestrian. After almost a

full century of development, the telephone still

had a very fundamental shortcoming: telephone

wires don’t move. People do.24

one important way: they can go only as far as the

wire extends. For applications that require mobility, wireless is the only way communications services can be provided, and thus mobility is the

most important characteristic and benefit that

wireless technologies bring to the NII. Most radio-based services in the NH will function as tetherless, mobile, portable extensions of the

wire-based network.

Clearly, mobility is an integral aspect of human

activity, but telecommunications services that enable or accommodate mobility are still in their infancy. Strong demand for such services has

existed in the past, and business interest in new

wireless technologies suggest that future demand

is anticipated by many others. However, little is

24 Peter W. Huber, Michael K. Kellogg, and John Thome, The Geodesic Network II: 1993 Report on Competition in the Telephone Industry,

(Washington, DC: The Geodesic Co., 1992), p. 1.5.
22 | Wireless Technologies and the National Information Infrastructure

"Who can we call?”

known about the scope or scale of that demand.

Few data are available to predict how people will

actually use mobile systems, and thus which wireless services are most needed. Better data about

mobility and its characteristics would help anticipate the future direction of these technologies as

they are brought into the marketplace and the society in greater numbers. Chapter 2 discusses mobility in greater detail.

Wireless technologies can provide more than

just mobile services, however. Radio-based systems can provide information, entertainment, and

communication services to homes and businesses

as well. In this context, wireless technologies are

expected to make their greatest contribution as an

access point to the resources of the NII, either extending services where wires cannot go-to remote customers, for example-or competing with

wireline networks in the provision of traditional

communications and entertainment services such

as telephone, data communications, and video

programming. Satellite systems, for example, can

provide end-to-end voice, data, and video services

that bypass, and could compete with, the wireline

infrastructure entirely.25 Cellular, PCS, and direct

broadcast satellite (DBS) services will compete

with wireline alternatives such as the telephone

and cable television networks to provide the last

mile connection to the resources of the NII.

Unlicensed wireless technologies (see chapter 4)

25 Satellite systems are technically capable of offering two-way broadband services, but the limited capacity of satellites has meant that such services

were largely restricted to large business or government users who could pay for the equipment and satellite time. Such services have not been

intended for general commercial (public) use. This may change with the advent of such satellite-based systems as Spaceway and Teledesic (see

ch. 5). In combination with the existing telephone network, satellite systems also can deliver interactive services to the home, but with only

limited return channel capabilities,
Chapter 1 Introduction and Policy Issues 23

Mike is a major drug distributor in southeast Los Angeles. He moves thousands of kilograms of cocaine worth millions of dollars through his neighborhoods every year. He knows the Drug Enforcement

Administration and the police are investigating him. Though Mike is 24 years old, he has never been

caught, mostly, he thinks, because he is smart, protects himself, and stays ahead of the cops. He

keeps his records (encrypted) on a laptop. He keeps in touch with his information and distribution networks through pagers and stolen and cloned cellular phones. Associates tell him what the cops and

other dealers are up to through frequent calls, and he makes each call short so that even if they find

him they won’t be able to tap him as he moves from cell to cell.

Mike is always on the move in his car because he believes that this makes it harder for the cops to

find him and listen in. He has his car searched daily for vehicle location devices, which he thinks might

be planted by the police to keep tabs on his movements. He hears that new phone encryption devices

cannot be broken even by the government, but he still needs to think about getting one. So far, it’s

easier just to clone a phone and change the number,

SOURCE: Office of Technology Assessment, 1995.

will allow users to create spontaneous, direct con- annual productivity gains for broad job catego

nections between their computers or PDAs—allowing them to share data or communicate in

limited areas such as a classroom or office---all

without connecting to a wired network.

Productivity and Efficiency

For businesses, the bottom line on wireless

technology is its contribution to productivity. Although research on the productivity impacts of

wireless communication technologies is limited

and largely anecdotal, some analyses attribute

large productivity gains to the use of wireless, mobile technologies. One analysis estimates the economic contribution of mobile services at five to

eight times the cost of ownership.26

Another study assessed employees’ ability to

“recapture” time spent away from the office by using cellular telephones.27 Table 1-3 shows the

ries, and assumes conservatively that at least 14

minutes or 10 percent of time away from the office

per day is recaptured using cellular telephones.28

If a sales representative recaptured 20 percent of

time away from the office, the productivity gain

Occupation Annual productivity gains

President or chief executive officer $2,200

Sales or other revenue-generating 1,200

employee

Middle management/director/ 780

supervisor

Field service person/technician 680

SOURCE: Pactel Cellular, “Cellular Use and Cost Management in Business, ” study prepared for Pactel Cellular by Yankelovich Partners,

Newport Beach, CA, 1993.

26 “Mobile Commmications: Europe Lags Behind America,” Intug News, October 1994, p. 20.

27 PacTel Cellular, “Cellular Use and Cost Management in Business,” study prepared for PacTel Cellular by Yankelovich Partners, Newport

Beach, CA, 1993.

28 Senior executives in the survey reported they were away from their offices 149 minutes per day, and that they used cellular telephones

about 10 percent of this time. The study then calculated the annual productivity gain by multiplying time recaptured by the average wage rates

for various job classifications.
24 | Wireless Technologies and the National Information Infrastructure

study also notes that increased accessibility and

faster customer response time play an important

role in decisions about providing cellular telephone service to employees.

These figures should be viewed with caution.

Employees may do many productive things during the time they spend away from the office while

not on the telephone. On the other hand, time

spent talking on the phone is not necessarily productive. Alternatives to having a cellular telephone, such as using pay phones, are not

addressed in the study. Calling the home office too

often may reduce an employee’s autonomy and incur increased coordination costs for the whole

firm, and could reduce productivity overall. Variations in job structure and performance may occur

as well; as a result, measuring recaptured time

away from the office may not accurately describe

the benefits and disadvantages of cellular phones.

For example, in addition to improvements in productivity, the increased sense of company control

over employees’ activities is often a significant

element in decisions to adopt wireless technologies.

Evaluating the contributions of wireless

technologies to national productivity is even more

difficult. Extrapolating from figures like those

presented above to make estimates of national

productivity enhancements is problematic because the job classifications given are too aggregated to know what they actually contain and how

different groups actually use wireless telecommunications. As a result, attributing and separating

direct and indirect contributions of wireless and

mobile systems and services to gross domestic

product are difficult.29

Likewise, the contribution of wireless telecommunications to employment levels is likely to be

positive, but its magnitude is unclear. Rough estimates by the Cellular Telecommunications Industry Association based on the U.S. experience with

cellular telephony suggest that the introduction of

PCS and the extension of cellular telephony,

SMR, and paging will result in the creation of

280,000 new jobs in these industries over the next

decade and approximately 700,000 in related industries, such as manufacturing, retailing, and ancillary services.30 Estimates of the contribution of

wireless telecommunications to economic growth

have not been made.

Uncertainty

Beyond the basic characteristics of demand, the

fundamental question surrounding the evolution

of the NII and new wireless services is: What do

users really want? What will they be willing to pay

for? Many companies have done marketing studies and some have conducted field trials to determine the answers to these questions. So far, no

“killer applications” have emerged. In communications services, quality, reliability, coverage,

and low price seems to be most important. In entertainment and data services, there is little consensus about consumer and business demands

beyond, possibly, electronic mail. Interactive services have continued to disappoint both users and

providers. Nevertheless, proponents point to the

success of cellular telephony as evidence of widespread demand for wireless, especially mobile,

products and continue to develop services and

equipment based on the belief that eventually they

will discover what customers really want.

The uncertainties of demand are some of the

most important considerations underlying many

of the NII policy debates now taking place. Specifying NII services, setting minimum service

29 Estimates range from 2 to 3 percent of GDP to 33 percent, according to a study conducted by MITI (Japan) and reported in “Mobile

Communications,” op. cit., footnote 26.

30 These are rough estimates based on proprietary information from firms in the industry, projections of wireless service subscriber rates,

extrapolations from the growth and penetration rates of cellular telephony, and estimates of the ratio of direct jobs in cellular service provider

companies to indirect jobs in manufacturing, retailing, etc. No effort was made to determine the number of jobs lost, if any, due to substitution of

wireless communications for other communications services. These estimates should be considered very tentative; further research is needed.
Chapter 1 Introduction and Policy Issues | 25

“None of this seems to be doing me any good at all”

standards, and defining universal service all hinge

on an implicit understanding of what people want

and need. Without this understanding, setting specific, long-term policies for NII services is likely

to be premature. Because most policymakers and

industry representatives believe it would be inappropriate for the federal government to pick

technology “winners and losers,” regulators also

must avoid enacting policies that inadvertently

have the same effect. At this early and uncertain

stage of wireless development, putting constraints

on the industry could stifle valuable development

efforts. Open entry and competition-subject to

some safeguards for basic consumer protection—

may be the best solution, at least in the near term.

As the market matures, new regulations and safeguards may be needed based on the experiences of

the industry and the users.

POLICY ENVIRONMENT

Over the past several years, technology advances

have fundamentally changed the nature of communication, information, and entertainment services and the industries associated with them.

These changes have put increasing pressure on

lawmakers to reform telecommunications regulation, a process in which they are now deeply engaged. The ideological concepts dominating the

current public policy debate about telecommunications reform will significantly affect how

wireless systems will fit into the NII, determining

how and where they can compete with wireline

carriers and what rights and responsibilities they

will have. Considered together, these two elements, technology and ideology, constitute the policy context for wireless technologies in the NII.

■ Concepts Guiding Policy

Competion

The many networks and systems that make up the

current U.S. communications and information infrastructure are widely deployed and access to services is usually physically available even if the
26 | Wireless Technologies and the National Information Infrastructure

services are not taken. Thus, as the development

and deployment of the NII moves forward, the

challenge for policymakers is to ensure that the

benefits of the new services and applications will

be available to all those who need or want them,

including those who cannot access them now. To

accomplish these goals, most policymakers have

come to view competition in an open and deregulated (as far as possible) market as the most socially and economically efficient solution for

promoting diversity in information sources, keeping quality high and innovation moving, and controlling prices. 

However, the form (or level) of competition is

being bitterly disputed—what is a “level playing

field?” And perhaps more importantly, there

seems to be little public policy consideration of

the long-term effects of competition and market

reliance.31 There is little doubt that private companies and their consultants have done such analyses, but the information is closely guarded and is

not generally available to policymakers and analysts. As a consequence, it is impossible to judge

the extent to which these analyses consider longterm (10 years and longer) effects. Policies that

promote competition now may ultimately lead to

a market structure that consists of a small number

of large corporations controlling end-to-end communications of all kinds. Again, little or no research has been done that bears directly on

wireless economics and long-term industry structure.32

It is also unclear whether a one-shot approach

to changing regulatory structures will work. The

history of cable television regulation reflects the

need to adapt rules to the different stages of industry growth and external (competitive) conditions.

What is clear is that industries and technologies

are changing rapidly, suggesting that any new

laws/regulations will need to be similarly flexible

and allowed to evolve over time. Expectations

that a new “Communications Act” can be written

that will last another 60 years—as the current one

has—may be unrealistic, given the pace of technological, social, and economic change.

Finally, many analysts and public interest

groups are concerned that social goals and needs

may get lost in a competition-driven policy framework. What safeguards might be needed to promote continued diversity of services and protect

consumers from high prices or poor quality? Does

the imposition of universal service requirements

on wireless businesses threaten their ability to operate? Some analysts believe that complete reliance on the market and competition—where

economic and business decisions are paramount—could lead to a situation in which services will not be rolled out evenly, users will not

be protected from poor service or confusing service plans, and that service will be available only

to those who can afford it. On the other hand, overly aggressive requirements by the federal and state

governments could threaten the vitality and even

the existence of new competitive services. The

private sector’s research, development, and investment activities could be stifled if the federal,

state, or local governments adopt rules and regulations that inhibit the flexibility to develop new

products and services.

Competition, Diversity, and Interconnectivity

Diversity and competition are closely related.

Competition is premised on many diverse companies producing goods and/or services. In the current technological climate, the wide range of new

services being developed is largely due to the

31 See, for example, Eli Noam, “From the Network of Networks to the System of Systems,” Regulation, No. 2, 1993. Some commenters

argue this statement is too strong. In its policies regarding PCS licensing, the FCC did set limits on cellular participation to address concerns

about competition and industry concentration.

32 Some initial research has been completed. See, for example, Bruce L. Egan, ”Economics of Wireless Communications Systems in the

National Information Infrastructure (NII),” unpublished contractor report prepared for the Office of Technology Assessment, U.S. Congress,

Washington, DC, November 1994; Glenn A. Woroch, ”The Evolving Structure of the U.S. Wireless Communications Industry,” unpublished

contractor report prepared for the Office of Technology Assessment, U.S. Congress, Washington, DC, December 1994.
Chapter 1 Introduction and Policy Issues | 27

introduction of new digital technologies. These

technologies make it easier to produce, transmit,

and store information and data, allowing businesses to combine voice, data, and video on networks that were previously dedicated to only one

type of service. This digital convergence has made

it easier for companies to invade each other’s turf.

So, for example, telephone companies want to use

their telephone lines to deliver information and

video services, and cable companies want to provide telephone service. The rapid development of

new technologies has also led new companies to

enter the field—utility companies, for example,

want to enter the telecommunications business—

further increasing the diversity of companies involved. Wireless companies are an increasingly

important part of this competitive mix.

The diversity of service providers and users reinforces the importance of connectivity and interconnection. The more different sources of

information and entertainment there are, and the

more users follow their individual tastes, the

greater the need for interconnectivity. In the history of telephony, this is referred to as the externality

of networks—the value of the network (to an individual or business) rises as more and more users

are connected to it. Today, the value of interconnectivity is higher than ever. Computers, for example, started out primarily as stand-alone

devices, but increasingly they are part of networks

that allow them to access almost any type of information around the world. Allowing users to access rich and diverse forms of information from a

variety of suppliers is at the heart of most views of

the NII, and moves issues surrounding interconnection to the forefront of many current policy debates.

❚ Technology’s Impact on the Policy

Environment

Technology and “Convergence”

As noted above, the U.S. communications infrastructure consists of many different technologies

and systems. Over the past 100 years, each of

these developed independently from the others,

and different regulatory structures were developed to manage the distinct characteristics of each

industry. For example, the telephone system,

which was designed to provide two-way voice

communications, has operated as a virtual monopoly for almost a century based on the principles of

common carriage and universal service. The

broadcasting industry, both radio and television,

has concentrated on delivering one-way information and entertainment to a wide local audience,

and has been regulated as a user of a scarce resource, the radiofrequency spectrum. Satellites

have been providing national and international

connections for voice, data, and television signals

for many years. And finally, the cellular industry

uses radio waves to extend the reach of the telephone network to mobile users. Each of these industries provided a different service based on

different technologies, and consequently was subjected to different rules and regulations.

As a result of digitization and the increasing use

of computer processing power in more and more

telecommunications applications, however, systems and services that once were separate have

now begun to overlap. This convergence is not

merely the result of combining computers with

communications, but of combining many services

and applications that historically had been separate. Thus, convergence can be separated into

three distinct phenomena:

1. convergence of technology, where computer

power and communications technologies are

integrated to improve functionality and offer

new applications. For example, the marriage of

computer power to radio technology was crucial in enabling cellular radio to be developed.

Computers route calls to the correct cells and

handle hand-offs as mobile users move from

one cell to another. The networks that allow cellular users to roam are actually interconnected

computer databases.

2. convergence of applications, where voice,

data, and video services can be offered over the

same network. Today, networks of all kinds—

whether originally developed to transmit voice,

data, or video—are being improved in order to
28 | Wireless Technologies and the National Information Infrastructure

carry all kinds of information in many different

combinations. By far the most common convergence is between voice and data services.

The most obvious example is the use of the telephone network to send data by fax, using a modem, or via new digital transmission

technologies such as integrated services digital

network (ISDN). Cellular service providers

have begun to offer a wider range of data services (see chapter 4), and some of the new LEO

systems are designed to carry both voice and

data. Because of its high bandwidth requirements, video is less often combined with other

services; however, some cable companies offer

data services, and satellites are capable of transmitting voice, data, and/or video signals.

3. convergence of networks and companies

through mergers, acquisitions, and joint ventures. The most obvious example is the recent

acquisition of McCaw Cellular by AT&T. This

type of convergence is not between similar

technologies and providers— a merger of cellular companies, for example—but a combination of systems: AT&T’s long-distance (mostly

fiberoptic) network with McCaw’s local (cellular) systems. In addition to the economic rationale behind the merger—AT&T’s desire to

avoid paying access charges to local telephone

companies—this type of merger indicates that

there may be technical and economic efficiencies that make previously distinct communication systems interdependent.

Wireless technologies and companies are playing a central role in much of the convergence activity. In the past several years, wireline service

providers of all types—cable, local telephone, and

long-distance companies—have shown increasing interest in using wireless technologies to provide new services. The big winners in the recent

PCS auctions, for example, were various groups

of telephone and cable companies. Wireline companies are also investing in many different kinds

of wireless companies and technologies. The Primestar DBS system is owned by a consortium of

cable companies, and several telephone companies recently announced large investments in

wireless cable companies. Most analysts expect

such mergers to continue as the benefits of wireless become more apparent.

Convergence and Policy

The convergence of technologies and services has

serious implications for U.S. policymakers at all

levels of government who are already engaged in

efforts to redefine how telecommunications is

treated in this country. As the technological differences that have characterized different modes of

communication disappear, new regulations and

policies will be needed that are focused more on

services and industry/market structure than on

technology. This idea was explicitly recognized

by Congress when it created CMRS based on the

principle of “treating like services alike.” Federal

and state governments continue to struggle with

how to update regulations in order to bring the

benefits of new technologies to the widest range

of people, while simultaneously promoting fair

and open competition among the many different

companies that want to provide services. Economic concerns are becoming more important as

various segments of the wireless industry mature.

Mergers and acquisitions have been going on for

several years in the cellular, SMR, and paging industries, and horizontal concentration has already

become a concern to regulators.33 Over the longer

term, the effects of market concentration and vertical integration of the sort promised by

AT&T/McCaw are uncertain; economists have

just begun to sort out the economics of wireless

services and how they may interact with wireline

services. Trying to anticipate the long-term competitive effects of current deregulatory policies

will be difficult.

33 Nextel, for example, was required by the Department of Justice to divest some of its radio licenses in specific cities before it completed

acquisitions of its major competitors. This was due to a concern that Nextel would control too much of the SMR market.
Chapter 1 Introduction and Policy Issues | 29

FINDINGS AND POLICY OPTIONS

Overall, OTA found that—apart from current regulatory reform efforts—federal government action or assistance is currently needed in a

relatively few, but important, areas regarding

wireless technologies and their effective integration into the NII. Several factors led to this conclusion. First, the outcomes of current policy

initiatives are unclear. The FCC is in the middle

of a number of critical proceedings regarding

wireless technologies, and Congress is in the

midst of completely reshaping the nation’s telecommunication industry. Before proceeding with

even more far-reaching changes, it may be wise to

evaluate the effectiveness of changes already put

in motion.

Policy analysis is complicated by the dynamic

nature of the industry itself. The structure of most

segments of the overall wireless industry is about

to change in fundamental and radical ways. Some

services are only at a nascent stage. Services such

as DBS, for example, have only just begun operating. For others, such as PCS or LEOs, initial regulations have been set, but the systems are still

being built and are not yet operational. A final

group of services, including Local Multipoint

Distribution Service (LMDS) and some satellite

services, does not even have final spectrum allocations or operating rules; widespread commercial service is years away. 

In addition, even the wireless services that have

been in existence for many years—radio and television broadcasting, cellular telephone, and satellite television—are facing radically new

environments as digital technology and new competitors reshape their traditional ways of doing

business. This fact—along with the uncertainties

associated with technology development, the regulatory climate, and, most importantly, customer

demand for wireless services—puts policymakers

and analysts into the difficult position of waiting

to see how consumers and markets will react to

what has been done so far. Policies designed and

implemented based on past assumptions and models of industry structure—monopoly-based or

limited competition—are likely to be inadequate

to address future models in which the structure

will be quite fluid and unpredictable.

The second factor indicating a limited government role is the large amount of innovation and

development now occurring in the wireless industry without benefit of direct government support.

Over the last several years, hundreds of companies have begun developing wireless products and

services, and most large telecommunications

firms have initiated wireless projects as well. Few

areas appear to need government financial assistance to develop new technologies or services—

with some important exceptions noted below.

This represents a change from several years ago,

when financial markets were not eager to invest in

wireless companies because of their often speculative nature and regulatory uncertainties. Money

is now flowing to most segments of the industry,

and, in fact, a number of analysts have commented

that ”wireless is hot” on Wall Street.

Finally, a political commitment to competition

is the foundation of current economic and regulatory policy. Many policymakers view competition

as a more effective “regulator” of industry than the

government rules of the past, and are reluctant to

put additional regulatory burdens, however well

motivated, on industry. This approach, however,

limits government involvement, and the development of the wireless industry needs to be closely

monitored to ensure that the public interest is

served.

Given these circumstances, determining the appropriate role and level of involvement of the federal government in the wireless industry is

difficult. A strong government role could help

promote industry growth, encourage diversity and

innovation, and protect consumers. Low prices,

quality, and security all are important concerns

that may or may not be ensured by the market. Forward-looking policy also could anticipate and

help diminish any potential future problems.

However, a government approach that is too

strong could overburden industry and reduce investment.

On the other hand, an approach that is too

“hands off,” relying too much on private sector
30 Wireless Technologies and the National Information lnfrastructure

initiatives, could actually contribute to uncertainties (in this case primarily regulatory) that slow innovation and development. In the short term,

companies may not invest if uncertainties are too

great or development resources could be wasted

on efforts that are later superseded by new

technologies, regulations, or economic conditions. Benefits may take longer to appear. Given

that the market has not even begun to operate in

significant portions of the wireless industry, it is

premature to identify market failures that could

indicate policy problems. In the future, government intervention-through changes in regulation or other incentives-may be needed if

market failures develop.

Despite the uncertainties, it is possible to indicate some specific social and public interest needs

that competition and the market are not likely to

address effectively, and for which some form of

government intervention will be needed. Spectrum management, for example, is one important

area requiring government action. Because public

uses of the spectrum-public safety, national defense, amateur radio, and education, for example-are not subject to auction provisions (and do

not operate as commercial or fee-producing services), there will continue to be an important federal government role in managing the spectrum to

accommodate the largest number of services and

users while avoiding interference and congestion.

Wireless technologies can also contribute to the

achievement of other social and public policy

goals where the market may not provide adequate

incentives. Two specific examples are: 1) education, which may not have the resources to take

advantage of wireless technologies where appropriate, and 2) underserved users and areas---

the so-called “information poor,” people whose

economic status or remote locations may cause

them to be underserved by profit-maximizing

firms. Proposed legislation now under consideration by Congress addresses the need for connectivity through universal service requirements and

provisions for educational institutions.34 These

issues are discussed throughout the report.

Given this environment, the federal government can perform three important functions over

the next several years:

■

■

■

monitor the growth of the industry and competition, and identify any potential market failures or social concerns that arise;

continue to pursue policies that promote open

access to all networks, including goal-setting

and encouragement of industry standardization

efforts; and

promote development of new technologies, including ensuring the availability of adequate

spectrum for existing and emerging wireless

technologies.

The following sections discuss OTA’s specific

findings and identify several areas of interest and

concern for policymakers. Although not every issue requires a policy response, the discussion will

provide policymakers with a context for their deliberations and identify possible options for consideration as NII development advances.

Schools can use wireless technologies such as satellites to

connect students and teachers to educational resources and

peers around the world.

3 4See, for example, U.S. Congress, Senate 652,“TheTeleco mmunications Competition and Deregulation Act of 1995,” (Washington,DC:

U.S. Government Printing Office, June 15, 1995) sections 103,104, and 310.
Chapter 1 Introduction and Policy Issues | 31

❚ Uncertainty Pervades Wireless

Technology Diffusion

Rapid technology advances, unfocused user

needs, regulatory reorganization, and the nascent

state of the wireless industry all combine to make

predicting the future of wireless technologies and

services highly speculative.35 These same uncertainties make long-term social and economic implications even more difficult to forecast. In the

case of wireless and the NII, the level of uncertainty is much higher and more pervasive than

usual; all aspects of the wireless industry—

technologies, markets, and rules—are changing almost constantly. Defining social and public

policy goals in such an environment becomes

quite a challenge as the current telecommunication debate in Congress attests. Consumer advocates believe that legislation currently

proposed—S. 652 and H.R. 1555—will lead to

concentration in various communications and media industries that will reduce diversity and raise

prices. Industry proponents and many lawmakers,

however, believe that allowing companies to compete and merge will produce lower prices and a

wider range of programming. At this time, there

is no way to determine conclusively what will

happen. The issues will only become clearer once

final legislation is passed and companies and consumers begin to react. Many issues are actively

being addressed, but many more—some of the

most difficult ones involving social and public

policy—remain to be identified and resolved.

The uncertainty of demand is particularly important for legislators and policymakers charged

with the task of defining rules to regulate various

competing services. Overestimating demand for

new services, and making such a judgment part of

a definition of universal service, could subject

companies to higher costs for upgrades or system

construction that may not be recoverable through

revenues. In addition, the technological limitations of some wireless systems may mean that

they cannot—using today’s technology—deliver

some of the most advanced services, potentially

disqualifying them from receiving universal service funding. Conversely, underestimating demand and matching policies to lower expectations

may lead to inequities as companies roll out advanced services only to certain users—based on

where they live and what they can pay. This could

widen the gap between information “haves” and

“have nots.”

Uncertainty is not unusual in the development

and deployment of new technologies, nor is it necessarily a bad thing. Some uncertainty is always

involved in developing and marketing new products as manufacturers and service providers

struggle to discover what works, what customers

will buy, and what they will not. Uncertainty is

characteristic of the early stages of innovation as

different approaches are tried to solve problems

and meet ill-defined demand.

❚ Wireless Technologies Extend and

Compete in the NII

Wireless technologies will serve two critical functions as the NII develops: radio-based technologies will extend the reach of the NII to places that

wire-based technologies do not reach, and wireless systems will provide valuable competition to

emerging NII service providers. These two functions are not mutually exclusive; in many cases,

wireless technologies will provide both. DBS systems, for example, compete locally with cable

television suppliers, but they also provide services

almost anywhere in the country to those who cannot get cable. Mobile (cellular and PCS) telephone systems extend the NII by providing

communications services to people on the move,

but are also expected to compete in the provision

of telephone service to homes and businesses in

the future.

35 This uncertainty is not limited just to wireless. Many aspects of the NII, such as the future of interactive and multimedia services, are

similarly unclear. “Demand for Interactive, Multimedia Services Is Unclear...” Telecommunications Reports, vol. 60, No. 48, Nov. 28, 1994.
32 | Wireless Technologies and the National Information Infrastructure

Wireless technologies can extend the NII in two

important ways. First, they allow users to tap into

communication and information networks as they

move about. Mobility is a key driver for wireless

(see chapter 2). Second, as noted earlier, wireless

technologies can extend NII services to places

where wire is too costly or difficult to install. This

may prove to be especially important as links need

upgrading. In this role, wireless systems will help

ensure that future universal service goals are met

(see chapter 9).

Wireless technologies and systems will also

compete in the delivery of NII-related services,

both among themselves and against wire-based

services. Competition is a key principle underlying the NII, and different wireless services have

advantages that will allow them to compete effectively in a number of markets. Wireless systems

already compete with wire-based services on a

small scale, but over the next five to 10 years,

wireless technologies will emerge as significant

competitors in most communication, information, and entertainment markets. The ultimate outcome of a more wide-open competitive

marketplace—which technologies and companies

will “win” and which will “lose” and what the

structure of the various industries will be—cannot

be determined at this time. The uncertainties that

pervade the development and implementation of

wireless technologies, including rapid changes in

technology, unfocused consumer/business demand, and regulatory upheaval, all combine to

make analysis exceedingly difficult. Some general observations about the competitive potential of

wireless systems can be made, however.

Wireless systems—broadcast, DBS, and Multichannel Multipoint Distribution Service

(MMDS)—already compete with cable television

systems (and each other) across the country, and

competition is expected to increase as companies

convert to digital and new competitors enter the

market for video services. Wireless technologies

are also expected to make a substantial impact in

the market for voice and data communications, especially where mobility is desired. A good deal of

spectrum has recently been allocated for wireless

voice and data services and companies have been

working on systems for a number of years. Many

analysts believe that wireless could become the

voice communications technology of choice for

many people—eventually becoming a substitute

for existing telephone service—because it offers

the added advantage of mobility.36

The one area in which wireless is not expected

to become a significant competitor in the near future is in the provision to the general public of

two-way, broadband, multimedia communications, including integrated voice, data, and video

services.37 These are the types of high-end applications often discussed as the ultimate objective of NII policymaking and technology

development. Wireless technologies are technically capable of providing such services and there

is nothing that inherently prevents it, but most existing systems are limited based on past technical

and regulatory choices. Two-way voice and data

systems, for example, operate with a limited

amount of spectrum that was originally allocated

before high-bandwidth applications were widely

accepted. As a result, most of them cannot be economically upgraded to provide two-way broadband services including multimedia, video

telephony, or any other applications requiring

high-speed connections.38 Broadcast and satellites services potentially have enough spectrum,

but generally only work one-way—to the con36 Egan, op. cit., footnote 32.

37 This discussion is based on Egan, ibid.

38 Some current and planned systems provide integrated broadband services, but their limited capacities will limit them primarily to business or high-end users in the near term. For example, a few systems currently provide such services, notably satellite systems based on very

small aperture terminal (VSAT) technology. However, these systems are not designed for the mass market, and current system capacities could

not support a consumer/mass market type of service that would accommodate millions of individual users.
Chapter 1 Introduction and Policy Issues | 33

sumer. Some of these systems have limited interactive capabilities—provided either with a small

return radio channel or telephone lines—that may

make them competitive with wire-based systems

and could serve important market demand.

In general, however, to upgrade existing systems for interactive high-bandwidth services, either new spectrum will have to be allocated or new

compression techniques developed, or both. New

wireless systems that could provide these “bandwidth-on-demand” services on a mass-market

level are now being conceived, but are not expected to be available in the near term (see chapter

5). As a result:

[u]nless there is radical, and, as yet, unanticipated, advances in both wireless access technology and the FCC’s spectrum allocations, the

future vision of integrated broadband access offering end-user bandwidth-on-demand type service will likely be reserved to the province of

wireline technology.39

❚ Universal Service Definitions Could

Disadvantage Wireless Systems

The debate over the future of universal service—

what it should include, how much it should cost,

how it will be paid for—exposes some of the most

difficult questions facing NII policymakers, private sector developers, and public interest groups.

Many analysts and consumer advocates strongly

believe that interactive, broadband services

should be a key component of any future definition of universal service. They maintain that such

communications capabilities will be necessary if

Americans of all socioeconomic levels are to participate in the social, economic, and political life

of the country. However, if such a definition were

immediately adopted, there is a potential for overbuilding the NII based on projected needs (broadband and interactive) that the majority of users

currently do not have, and likely will not have for

many years.

Depending on how universal service and the

NII are defined in the short term—what functions and conditions policymakers impose—

and how new requirements are implemented,

wireless technologies could become an integral

part of the NII or be seriously disadvantaged.

The outcome of current universal service debates

will affect the role wireless technologies and services can play in the NII in several important

ways. According to one researcher:

The important message for public policy is

that, until the service requirements of the universal NII have been specified, the question as to

which is preferred, wireline or wireless access

service, cannot be answered. If, as many believe, the NII only contemplates socially efficient access to narrowband digital voice and

data services, then digital wireless technology is

preferred for dedicated subscriber connections

to the wireline intercity PSTN. The fact that

wireless access costs are lower notwithstanding,

the real bonus for the consuming public from

this scenario is portability.

If, however, access to broadband service, especially bandwidth-on-demand type access service, must be added to the narrowband service

mix for the NII, then wireline access technology

is likely to be the winner in the race for preeminence in the NII.40

Wireless technologies offer several advantages

over wire-based telecommunications systems, but

wireline systems also have advantages in delivering some services. On an economic basis, the ability of wireless systems to deliver narrowband

voice and data and one-way video (broadcast) services puts them at least on par with wire-based

systems, and, in fact, will likely allow wireless to

compete directly with wireline in the future.41 In

the delivery of two-way broadband data, video, or

39 Egan, op. cit., footnote 32, pp. 11-12.

40 Ibid.

41 Ibid.
34 | Wireless Technologies and the National Information Infrastructure

multimedia applications, however, wire-based

media are still the most cost-effective. In large

part, this is a result of the amount of spectrum that

has been allocated to radio services historically,

the technical limitations of wireless systems, and

the phenomenal advances in fiberoptic and digital

technologies. Current technical and regulatory

constraints simply do not allow two-way broadband wireless services to compete with wirebased systems in the general consumer market.

Thus, at this time, a minimum definition of universal service in the NII as interactive, twoway, and broadband could disqualify wireless

systems where they would otherwise be most

appropriate or efficient.

In addition, if universal service expectations

and definitions are set too high, simpler, lower

cost solutions that might profitably stand by themselves may be lost. As a result, those businesses

and consumers who have more basic needs could

be forced to pay for more than they really want. It

is not clear that all information and all communications need to be broadband, interactive, and/

or multimedia—particularly in the presence of

“cheaper non-integrated alternatives.”42 Some users may not want or need these advanced features.

From an economic standpoint, mandating such a

high level of service begs economic efficiency

questions. Why should companies be forced to

build to such a standard? Will customers have to

pay for a level of service they do not need and may

not use? Do the potential benefits justify the expense?

In the long term, there can be little doubt that

advanced interactive broadband services will play

a critical role in the NII, and probably will eventually be included as elements of a future definition

of universal service. In the near- and medium-term

(five to seven years), however, OTA believes that

interactive, broadband capabilities are not likely

to be needed by the majority of citizens and should

be allowed to evolve as demand warrants. A flexible approach to NII universal service policy

would allow the different parts of the NII—interconnected or not—to grow to meet varying levels

of need, while simultaneously ensuring a smoother upgrade path. In fact, many policymakers favor

defining universal service in an evolutionary fashion, updating it as services become more ubiquitous and necessary.43

Aside from these broader issues, the definition

and implementation of new universal service requirements could have a substantial impact on

wireless systems and services. The potentially

lower cost structures of both terrestrial and satellite-based (and combinations of the two) wireless

systems make them an efficient alternative to

wire-based media for reaching unserved users in

both rural and urban settings (see chapter 3).44

The current move to deregulate pricing may encourage wireless alternatives because of the increasing emphasis on least-cost technology

options, which allow a company to cut its costs

through use of more efficient technologies and

lower its prices to compete more effectively. However, current subsidy flows and rate-of-return regulations may actually serve as a disincentive to

wireless technologies. In addition, “essential telecommunications” (carrier of last resort) obligations, which have been proposed to bring service

to areas where no carrier is operating, could harm

wireless start-ups that are unable to meet the requirements and, therefore, could not qualify for

universal service funds.45 A much closer examination of these issues is necessary.

Options

Congress has proposed legislation directing the

FCC, in consultation with the states, to develop a

new (evolving) definition of universal service.

42 Ibid.

43 See, for example, S. 652, op. cit., footnote 34, sec. 103.

44 Ibid.

45 S. 652 would designate carriers as “essential telecommunications carriers” in specific service areas for purposes of providing universal

service. Wireless companies are eligible for this designation. Ibid.
Chapter 1 Introduction and Policy Issues | 35

NTIA has held several hearings on universal service. Nothing has yet been decided. In order to

protect business and enhance access to NII services for all Americans, Congress could:

 Enact proposed legislation directing the FCC

and the states to work out a definition of universal service and enforce deadlines for this effort.

Before such definition(s) are put in place, Congress may first wish to consider the business

impacts and prospects for providing service to

the unserved.

 Review proposed legislation to ensure that it is

fair and competitively neutral. The structure,

funding levels, and participation in a new universal service fund will need to be carefully

considered to ensure that startup and/or wireless carriers are not unfairly disadvantaged.

 Develop its own policies or guidelines for NII

development based on hearings held to determine: 1) what services should be available, and

2) what technical capabilities are needed to enable these services to develop. Alternatively,

Congress could establish a working group or

outside commission to develop recommendations.

❚ Interconnection and Standards are

Increasingly Important

As a consequence of the boom in wireless

technologies and systems, the importance and

complexity of interconnection arrangements,

standards, and interoperability are about to

grow dramatically.

As the National Information Infrastructure

develops, policymakers must recognize the importance of wireless access to information and

communications services because wireless may

become “the first mile on and the last mile off”

the information superhighway. Interconnectivity and interoperability are important determinants of whether a product or service can be

offered in such an environment. The adoption of

standards that make it difficult for wireless

technologies to connect with the superhighway

will be detrimental to the now well-documented

consumer demand for mobile, wireless service.46

In thinking about the NII and wireless technologies’ role in it, it is important to carefully define

some of the major assumptions that underlie the

vision. It will be necessary to specify exactly what

the “network of networks” means and what implications it has for policies regarding interconnection. The notion of the NII as a seamlessly

integrated network of networks is at best simplistic and at worst misleading. The NII initiative

does not call for all networks to be directly connected to each other, which would be virtually impossible. Some companies and networks will

connect directly, based on business needs. In

many cases, however, different networks will interconnect indirectly through separate links to existing core networks—the public switched

telephone network (PSTN), cable networks, and

computer networks—and direct interconnection

will not be necessary to enable different systems

to interoperate (figure 1-1). The interconnection

policies now being debated in Congress and at the

FCC are vital in allowing all service providers to

connect to other networks (see chapters 6 and 7).

Determining which companies should be required

to open their networks to interconnection by other

carriers is already a hotly contested issue. As new

wireless networks and services are deployed and

usage increases, more direct interconnections

may occur.47

Until recently, very few systems, services, or

companies connected at all. Cellular telephony is

the most visible exception. Over the next several

years, however, as a multitude of PCS, ESMR,

46 Center for Wireless Telecommunications, Virginia Polytechnic Institute and State University, “A Survey of Emerging Applications of

Wireless Technology,” unpublished contractor report prepared for the Office of Technology Assessment, Sept. 15, 1994, p. 4.

47 For more discussion of changing interconnection arrangements and their implications, see Rob Frieden, “Universal Personal Communications in the New Telecommunications World Order,” Telecommunications Policy, vol. 19, No. 1, January/February 1995, pp. 43-49.
36 I Wireless Technologies and the National Information Infrastructure

Local exchange Interexchange

carrier carriers

Satellite system

sateway

PCS

Antenna

SOURCE: Office of Technology Assessment, 1995.

and satellite communication providers begin offering services, interconnection issues will become critical. In the past, wireless systems have

been conceived primarily as adjuncts to the

PSTN, and wireless technologies were employed

only in special (mobile) circumstances.

In the future, wireless systems and technologies will become an integral part of the overall

communications infrastructure, providing not

only mobile communications and broadcasting,

but a wide range of mobile and fixed services for

both businesses and consumers. Interconnection

and interoperability arrangements premised on

older, asymmetrical relations—where cellular

companies pay access charges to local telephone

companies, but not vice versa—will give way to

technical and contractual arrangements based on

treating wireless carriers as equals. A number of

factors will impact the ability of wireless companies to interconnect with the PSTN (and other

wireline systems, such as cable television or computer networks), including the different cost structures of radio-based services, rising consumer

demand for wireless services, increasing business

demands for more integrated communications

solutions, and technical advances that may help or

hinder greater interconnection and interoperability.

Interconnection and interoperability are widely

viewed as the keys to realizing the vision of the
Chapter 1 Introduction and Policy Issues | 37

NII—allowing users to easily send voice/data/

video across many different types of networks.

Today, system interconnection is usually accomplished through the PSTN for voice, and increasingly through the Internet for data. New systems

and services are already putting a strain on this arrangement. Many wireline systems, especially

data communication systems, operate according

to protocols that often do not work well for wireless communication—which is affected by a number of factors not present in wireline systems,

including interference from other radio services

and propagation losses from rain or even trees. In

addition, as new companies have entered the field,

the number of proprietary applications and standards has grown. For individual users, sending information across different networks can be

difficult, and using software on different systems

can be almost impossible. It is unclear what will

happen when additional services are developed

and different kinds of companies begin to link up.

Developing new standards that accommodate

the needs of wireless technologies and that operate across multiple systems will be critical to

ensure that the benefits of an interconnected

NII are realized. Most analysts expect that

technical solutions will be developed, but OTA

believes it will take longer than expected to

work out many interoperability issues.

Standards are the critical link that will allow

different parts of the NII to work together. One

kind of standard describes the connection between

consumer devices—radios, televisions, and cellular telephones—and the networks that provide

services. These standards benefit consumers by

ensuring that their devices will work across different companies’ networks. They also enable

manufacturers to build one device rather than

many different types of equipment for many incompatible systems. Standards also make it easier

for the industry to plan and deploy upgrades, allowing consumers and businesses to revise, customize, and improve their systems as their needs

dictate.

Other standards govern the connections between networks. While general rules are now well

known, a whole range of new companies and interconnection agreements will have to be addressed in the near future, putting pressure on

existing interconnection arrangements. For example, the rules that govern the transmission and reception of digital video services are only

beginning to be considered. Multiple standards

are being developed for transmission of video services in the broadcast, cable, and satellite industries, and there are a number of complex issues,

and a range of vested interests, that will have to be

addressed before such services are widely available and interoperable. The economic consequences of these decisions are enormous, and will

have a vital affect on the broadcast and consumer

electronics industries.

A lack of standards, or the proliferation of multiple standards, may undermine the NII goal of interconnectivity. For example, the current analog

cellular telephone standard specifies how a cellular phone can “talk” to the cellular network. The

fact that the United States settled on one standard

for analog cellular telephones many years ago ensures that any phone will work with any cellular

network. Today, however, two digital cellular

standards are being deployed and up to seven standards are being considered for PCS systems. As a

result, it is likely that all phones will not work with

all networks (see chapter 6).

The current situation is different from the past

because the process of setting standards has become very difficult. Historical standards-setting

processes have undergone tremendous change

since the breakup of AT&T in 1984. The FCC has

largely backed away from aggressive standardssetting, preferring to let industry and/or the marketplace set standards; however, the intense

competition that is expected to characterize NII

services puts the process of cooperative standardssetting in question. The FCC approach to HDTV

is an exception to current practice (see chapter 5).

The federal government could play a stronger role

in setting standards for interconnection and interoperability, but it is unclear what that role should

be. Individual circumstances call for different

government responses—there is no well-defined

set of procedures that will work in all cases. Some

companies prefer a “hands-off” approach by gov-
38 | Wireless Technologies and the National Information Infrastructure

ernment, while others would like the government

to at least set goals or even deadlines for standards. This idiosyncratic, flexible approach to

standards-setting is likely to continue.

Options

The tension between fair competition and the NII

goals for a widely interconnected series of networks is felt most acutely in relation to interconnection, standards, and deregulation issues. The

FCC has established a number of different wireless license areas, which do not necessarily coincide, and that do not match the boundaries and

regulations set up to govern local and long-distance communication services. To ensure the

benefits of NII interconnections, while preserving

competitive incentives, Congress could:

 review the regulatory and structural underpinnings of the long-distance industry. Possible

congressional actions include: 1) eliminating

the Local Access and Transport Area (LATA)

boundaries that currently define long-distance

service, and/or 2) harmonizing CMRS license

areas. These options are not mutually exclusive,

and could be pursued as part of a larger redefinition of local/long-distance communications.

 establish guidelines to direct the FCC’s standards-setting activities or mandate the FCC to

do so. Guidelines could help the FCC determine when to get involved in standards-setting

and what its actions should be. In this way, the

benefits of early standards-setting could be

combined with the flexibility of industry or

market-based solutions.

 explicitly allow the FCC greater latitude in preempting state regulations that may slow wireless startup interconnection to the public

network and each other. Potential areas for congressional action include: 1) establishment of

co-carrier status, rights and obligations; 2)

mutual compensation for competing local communications companies; and 3) consistent interconnection arrangements ensured through

tariffs or publicly-filed contracts.

❚ Integration of Wireless and NII

Policymaking is Improving, But...

Integrating NII and wireless communications has

been and will continue to be a challenge. Early

thinking and policy development regarding the

NII focused primarily on wire-based technologies, especially fiberoptic networks. Policies for

wireless technologies and systems, meanwhile,

developed largely independently of NII initiatives. There has been little formal coordination between government NII efforts and wireless

efforts—the two have proceeded along parallel,

but seemingly separate, tracks. As a result, many

of the issues surrounding wireless technologies,

especially broadcasting and satellites, were

delayed until long after NII planning efforts got

under way, and no comprehensive vision exists for

integrating the wide range of wireless technologies into the NII.

Wireless technologies were only lightly treated

in early legislative and executive branch NII planning. The Administration’s Agenda for Action, for

example, mentions wireless technologies in its

nine principles; however, the treatment of wireless is limited, concentrating on spectrum reallocation, use of market principles in assigning

spectrum (auctions), and ensuring that small, rural, minority- and women-owned businesses can

participate in the auctions—all concepts proposed

or required by Congress in previous legislation.

One specific effort to combine NII policy development with a wireless focus, the Untethered Networking Group, met with no success (see

appendix B).

Several factors contributed to this situation.

First, no common vision exists for the development and implementation of radio services in the

United States. Wireless policy development is divided between the FCC, which manages private

sector and state/local government spectrum use,

the federal government. This division of responsibilities historically has hampered the development of a clearly defined, comprehensive
Chapter 1 Introduction and Policy Issues | 39

framework to guide U.S. radiocommunication

policy development (see next section). The lack of

a unified vision for wireless makes it correspondingly difficult to develop a more comprehensive

strategy for the integrating wireless systems into

the NII. At a practical level, wireless policy development has been more successful. See appendix B

for a discussion of the efforts of the Federal Wireless User’s Forum and The Federal Wireless

Policy Committee.

The second factor making the integration of NII

and wireless policies difficult is that policymaking regarding radio technologies and services has

historically been separate from wireline policymaking. Radio and television broadcasting networks, amateur radio, and even early satellite

systems were developed and operated largely as

stand-alone systems, capable of communicating

information separately from the wireline networks—there was little need to coordinate wireless and wireline policies.

In addition, the philosophy underlying radiocommunications policy was substantially different from the models applied to wireline services.

Unlike the tightly controlled, monopoly-based

regulation that characterized the telephone system, wireless systems of all kinds have been much

less closely regulated on an economic basis. Companies have been able to set rates, merge, and compete much more freely than most wireline

companies. Today, the federal government continues—as part of this long-standing practice—to let

market forces play the primary role in deciding

how radio frequencies should be used. As wireless

technologies become a more integral part of the

NII, however, a purely market-based approach to

wireless policymaking may prove inadequate. As

wireless and wireline systems increasingly connect and the services they offer overlap, the need

for integrated policymaking will correspondingly

increase.

Finally, the separation of wireless and wireline

policymaking is a matter of timing and historical

accident. The issues of cable/telephone competition have occupied center stage of the telecommunications debate in this country for almost a

decade. It is, therefore, no surprise that the NII has

centered around these industries. Additionally,

some wireless supporters charge, policymakers

were slow to recognize the potential of wireless

systems. Others concede that some wireless industries entered the policy development process

late, and their potential contributions were not recognized by government officials.

In the latter part of 1994, however, wireless

technologies began to receive more attention as an

important, even integral, part of the NII. Officials

at the FCC, for example, now refer to wireless as

one lane on the information superhighway. NTIA

is in the process of reallocating at least 200 MHz

of spectrum as mandated by the Omnibus Budget

Reconciliation Act of 1993, and has recently completed a study of the nation’s radio spectrum needs

for the future. The FCC has proceedings under

way in many areas of wireless communication,

many of which overlap. It is still unclear, however,

how all these initiatives will contribute to the establishment of an interconnected NII.

Options

To maximize the benefits of the NII and minimize

inefficiencies and potential adverse effects, wireline and NII policymaking must explicitly recognize and address the unique capabilities and

limitations of wireless technologies. Wireless and

wireline policymaking need to be more closely

coordinated by establishing goals for wireless

technologies in the context of the NII, and needs

must be prioritized. This does not imply that all

NII and telecommunications-related planning—

each individual decision—should be centralized

and bound together in one master plan. It only suggests that a focused vision of the future could help

guide private sector development and implementation efforts. To bring wireless technologies

and policy development more directly into the

mainstream of NII policymaking, Congress

could:

 direct the FCC and NTIA to develop policies

and plans—or justify/amend existing plans—

for integrating the wide range of wireless systems into the NII. Specific plans could be

developed for specific industry segments.
40 | Wireless Technologies and the National Information Infrastructure

 hold hearings to determine if NII policies or

FCC rules currently discourage wireless systems from playing a larger role in NII development. Hearings could also help determine how

wireless technologies could more directly contribute to the goals of the NII—universal service, for example.

 mandate more direct coordination of NII and

wireless policy development, both within the

executive branch and with the FCC. Reporting

requirements could be established.

❚ Spectrum Policymaking Faces

Significant Challenges

Government policymakers and regulators will

face an increasingly difficult task in meeting

expanding spectrum needs while accommodating existing users. No coordinated framework

for making spectrum policy exists, although

some long-range planning is taking place.

Technology advances and increasing demand for

mobile services have led to the development of a

wide range of new and improved wireless services. As a result, however, many portions of the

radio frequency spectrum are becoming increasingly congested, leading to what one analyst has

called spectrum “pollution.”48 To alleviate overcrowding, and expand the number and variety of

wireless applications even further, there has been

a sharp increase in demand for radio frequencies.49 The most valuable frequency bands, however, have already been allocated, and many are

heavily used.

Several trends are pushing the increasing demand for spectrum: 1) existing wireless service

providers—including broadcasters, satellite companies, and data communication companies—

want additional spectrum to expand capacity and

services; 2) new applications now being developed—including digital radio and television

broadcasting, terrestrial- and satellite-based communications systems, and data and information

messaging systems for mobile and fixed users—

will need new frequencies; and 3) communication

and entertainment applications will increasingly

combine voice, data, and video, requiring large

amounts of spectrum to meet the bandwidth-intensive nature of such applications. Complicating

the situation is that portions of the spectrum have

characteristics that make them particularly well

suited for specific types of applications. The frequencies that most engineers consider ideal for

mobile communications, for example, are located

between about 0.5 and 3 GHz—frequencies that

are rapidly becoming congested.

The radiofrequency spectrum is a finite, but reusable, resource (see appendix A). Technology

advances are expanding usable capacity, but it is

unclear if such advances will be able to keep up

with rising demand for services in the longer

term.50 Unlike wireline systems, which can add

capacity or serve more users by laying more wires,

the capacity of the spectrum is limited by current

technology. For any given set of frequencies, the

spectrum can only serve a limited number of users

and cannot be expanded. Technology advances

such as more efficient modulation, cellular architectures, narrower channels, digital compression,

and use of higher frequencies can reduce overcrowding—by extending the usable spectrum and

increasing efficiency and capacity—but demand

for radio frequencies has historically outstripped

supply.

Faced with rapidly rising demands, Congress,

the executive branch, and the FCC all have taken

important steps to ensure that the wireless indus48 Andrew M. Seybold, Using Wireless Communications in Business (New York, NY: Van Nostrand Reinhold, 1994).

49 For a more complete discussion of the spectrum needs of various radio services, see U.S. Department of Commerce, U.S. National Spectrum Requirements, op. cit., footnote 16.

50 For a more optimistic assessment of the ability of technology advances to stay ahead of demand, see Robert J. Matheson, “Spectrum

Stretching: Adjusting to an Age of Plenty,” National Telecommunications and Information Administration, April 1995. The author argues that

technologies such as digital compression and frequency reuse can increase spectrum efficiency—and capacity—dramatically.
Chapter 1 Introduction and Policy Issues | 41

try has access to adequate spectrum. In 1993, for

example, Congress required NTIA to identify and

transfer 200 MHz of spectrum to private use.51 In

response, NTIA released a preliminary report in

February 1994 identifying 50 MHz that could be

transferred immediately and a final report in

March 1995 that identified an additional 185 MHz

for transfer.52 The FCC, in cooperation with

NTIA, recently proposed making 18 GHz in 12

bands available for the development of new commercial technologies. These would include licensed and unlicensed applications such as

vehicle radar systems and extremely high-bandwidth applications, including two-way video and

multimedia computer communications.53 The

FCC has also recently began auctioning frequencies for new mobile telephone services (PCS—see

chapter 3) and has completed or launched a number of proceedings specifically aimed at bringing

more spectrum resources to wireless data applications (see chapter 4). Although sufficient for the

short term, it is too soon to tell if more spectrum

will be needed for these applications in the long

term.

Such actions, however, treat only parts of the

problem, and policymakers will continue to

struggle to match the supply of spectrum with demand. The ways in which spectrum is allocated

and managed in the United States may need to be

changed to respond to a new, more mobile world.

To plan for the future and avoid piecemeal, reactionary decisionmaking, a national vision for

long-term spectrum use is needed. More coordinated and focused spectrum planning—combining the efforts of both NTIA and the FCC—has

been legislated several times (most recently in the

Omnibus Budget Reconciliation Act of 1993), but

has never been accomplished. The FCC and NTIA

have not worked cooperatively to build a comprehensive framework for radiocommunications

policy, although the FCC does have a liaison who

coordinates policy at the staff level with NTIA.

The lack of a unified vision of future spectrum

use could undermine long-term planning efforts and development of spectrum policy (including priority-setting), and may hamper

development of innovative wireless technologies.

The federal government has not maintained an

aggressive approach to long-range spectrum planning—for practical as well as ideological reasons.

Practically, allocating spectrum for needs that

have not been identified is difficult, and ideologically, such a planned approach was seen as too

closely resembling “industrial policy,” which past

Administrations have tried to avoid. Furthermore,

management of private sector spectrum in the

United States has long relied on petitions by prospective users to determine uses rather than a priori planning. As a result, policymaking has tended

to concentrate on specific portions of the radio

spectrum without always addressing how individual decisions might interact. However, as the

number and kind of wireless systems and users

have grown and the technologies and services

have begun to merge, the need for a more integrated policymaking framework has become necessary because multiple systems can now deliver

essentially the same service.

Developing a practical and effective approach

to long-term spectrum planning will be challenging. Planning for needs and technologies that do

51 “The Omnibus Budget Reconciliation Act of 1993,” Public Law 103-66, Aug. 10, 1993. Title VI deals with telecommunications issues.

52 U.S. Department of Commerce, National Telecommunications and Information Administration, Preliminary Spectrum Reallocation Report, NTIA Special Publication 94-27, February 1994; U.S. Department of Commerce, National Telecommunications and Information Administration, Spectrum Reallocation Final Report, NTIA Special Publication 95-32, February 1995.

53 The bands are located between 47 and 153 Ghz. These frequencies historically have been limited primarily to military and scientific

purposes, and are generally only lightly used. Sixteen of the 18 GHz specified will be shared with government users. General Motors, Ford, and

Chrysler have submitted comments to the FCC on vehicle radar systems they have already begun to develop. “Notes on the FCC 40 GHz Plus

Proposal,” Telcom Highlights International, vol. 16, No. 47, Nov. 23, 1994. “FCC Identifies Spectrum Above 40 GHz for Commercial Use, New

Technologies,” Telecommunications Reports Wireless News, vol. 4, No. 22, Nov. 3, 1994.
42 | Wireless Technologies and the National Information Infrastructure

not yet exist is nearly impossible, and would not

necessarily lead to efficient use of the spectrum.

The tradeoffs between encouraging efficiency and

promoting development of new technologies

must be carefully weighed as a part of determining

future radiocommunication policy. It may be possible to craft policies and regulatory efforts that

encourage both, but it will be necessary to carefully balance the needs for efficiency with the demand for new technologies and services.

In any case, even better spectrum planning will

not guarantee that a market for the planned service

will actually develop or that the services/systems

planned will become economically viable. The

12-GHz band of frequencies, for example, was

planned more than a decade ago to provide television programming services directly from satellites to homes. Initial efforts to launch a service

failed, however, and DBS systems are only now

beginning commercial service. The history of

DBS shows both the difficulties and ultimate success of one government planning effort. DBS frequencies went unused for many years as

proponents struggled to launch operating systems, but without that early allocation, companies

might not have developed new technologies so

quickly. In addition, without early government action, companies might still be fighting for spectrum and customers might still be waiting for

service. This case clearly illustrates the inherent

uncertainties in planning for future, undefined

spectrum applications.

In 1991, NTIA issued a report on improving

spectrum management, and implemented some of

the recommendations. However, some of its most

fundamental conclusions for improving U.S.

spectrum allocation and assignment processes

were never put into practice.54 It may be time to

revisit some of these options. NTIA recently completed a major study that identifies the spectrum

requirements of most radio services for the next 10

years—an important first step in improving spectrum planning.55

The process of allocating spectrum, however, is

only part of the problem. Until recently, spectrum

was assigned to individual entities by the FCC on

the basis of comparative hearings or lottery. In

1993, Congress authorized the FCC to use competitive bidding—auctions—to distribute some

licenses.56 Auctions are believed to be the most

economically efficient way to assign licenses,

while also raising money for the federal government. Given the financial success of the PCS auctions, which raised more than $7 billion, some

analysts and policymakers have now begun to

consider auctions as a way to assign spectrum for

other services in the future. Despite their financial

success, however, the longer term operational and

economic effects of the auctions are still unknown.57

In any case, auctions may not be applicable to

all radio service users. Federal, state, and local

governments, for example, have a wide range of

operations that support vital public interests such

as national defense, air traffic control, public safety, and emergency preparedness functions. These

types of services are not currently affected by auctions, and there would likely be a great deal of resistance to auctioning such spectrum. There are

also a number of economic and public policy issues, in addition to administrative and practical

questions, that would have to be addressed before

such an approach could even be seriously considered.

Options

To ensure that adequate spectrum continues to be

made available in the future, Congress could:

54 U.S. Department of Commerce, U.S. National Spectrum Requirements, op. cit., footnote 16.

55 Ibid.

56 Omnibus Budget Reconciliation Act, op. cit., footnote 51.

57 Many of the winners in the Interactive Video Data Service auction, for example, defaulted on their bids. This will slow the development

and deployment of the service.
Chapter 1 Introduction and Policy Issues | 43

 mandate the transfer of additional spectrum

from the federal government to the private sector. This effort would build on already-conducted NTIA studies of spectrum needs and

reallocation.

 build on existing efforts to determine spectrum

needs and existing planning, and enforce previous mandates for the FCC and NTIA to engage in cooperative long-term spectrum

planning.

 establish research funds for development of

high frequency (40 GHz and up) radio communication service, through the federal government and/or private sector initiatives.

 evaluate new methods for allocating and assigning spectrum, including the recommendations in earlier NTIA reports and the possibility

of auctioning all future radio licenses. This may

entail developing new rules for auctions.

❚ Research is Needed

Research on the social, economic, and public

policy implications of widespread use of wireless technologies is very limited, and research

on the longer term effects and implications of

wireless devices and systems is only at the conceptual stage. This situation is directly tied to the

nascent state of the various segments of the wireless industry as a whole. Many of the technologies

that will make the biggest impacts are not yet operating, and evaluating their social and economic

effects is impossible. Even in the more mature

wireless industries, research is sparse.58

One of the most important, and underappreciated, aspects of the development of wireless

technologies is the problem of scale. Problems

that seem trivial with only a relatively small number of users become magnified as the number of

users grows. Some have commented that “society

is not ready” for the many changes that ubiquitous

wireless communications will bring. One study

estimates that 45 percent of the population will be

using mobile communications devices (phones

and/or laptop computers) by 2005.59 And although some information and statistics have been

collected on various aspects of mobility, there is

little hard data that allow a good understanding of

the characteristics of personal and professional

mobility, and what implications they may have for

the implementation and use of wireless services

and for society. One example is 911 service. Despite the fact that only about 10 percent of urban

customers have cellular phones, 911 operators receive, on average, eight reports for each traffic accident. As subscriber and penetration levels rise,

911 system administrators may be inundated with

calls.

The most controversial area of research, and the

one most in need of additional study, concerns the

possible impacts radio communication systems

could have on public health (see chapter 11).

Some members of the public and a few scientists

believe that radio waves can damage human cells.

Research to date, however, has been inconclusive.

No direct link has been found that radio waves are

harmful, but it is still not possible to say with certainty whether the devices or antennas pose a risk

to human health or how serious any risk may be.

This issue is extremely emotional and polarized.

Some people are convinced that wireless systems

are dangerous and should be banned or severely

limited. The wireless industry, however, believes

that development of wireless technologies should

continue because there is no conclusive evidence

that either phones or antennas are harmful. Research is now being conducted, but much of it is

sponsored by industry, either directly or indirectly, and it is unclear whether the public will be satisfied with the results. The federal government

has played only a minor role in research on this

58 The exception is broadcasting. There is a long history of economic, public policy, and social science research into all areas of radio and

television broadcasting.

59 Personal Communications Industry Association, “PCIA 1995 PCS Technologies Market Demand Forecast Update, 1994-2005,” (Washington, DC: Personal Communications Industry Association, January 1995).
44 | Wireless Technologies and the National Information Infrastructure

topic. Representatives from several government

agencies, however, are involved in oversight and

review of industry research.

Research on the economic structure of the various wireless industries and long-term outcomes of

competition is even more limited.60 In wireless

voice and data services, for example, many new

companies will enter the market over the next five

years. Gathering accurate data on cost structures,

revenues, and customer demand is only just beginning, and many companies will not divulge

such information. Even industries that have been

around for decades, such as broadcasting, will be

affected. Both radio and television broadcasters

are preparing for radical change as digital technologies replace analog, and as new competitors—

some wireless (DBS, wireless cable, and cellular

television) and some wireline (telephone companies)—enter the market for audio and video programming and services. The ultimate outcome of

all these changes cannot yet be predicted, and the

economic studies and modeling of such competition are just beginning.

Likewise, wireless telecommunications’ contribution to productivity, economic growth, and

employment is unclear. Industry studies indicate

that wireless telecommunications account for significant productivity increases through better use

of time, particularly for higher paid employees

who spend time away from their offices. There are

no credible data on additions to the gross domestic

product or on future employment (either in the industry or in the economy generally) due to wireless telecommunications, though the cellular

industry has experienced significant economic

and job growth over the past decade.

Finally, the implications of wireless technologies for individuals, organizations, and society are

only now emerging; they are likely to involve increased personal and business efficiency, but also

increased stress and concern about health effects,

monitoring, and privacy. Wireless technologies

are likely to play a role in the continuing evolution

of new organizational and social forms, including

their geographic dispersion and functional disaggregation. The widespread deployment of mobile

communication technologies also portends a

change in the average wireless user—from mobile

professional/field service representative to mass

market consumer.61 Again, the effects of this

change are unknown.

Technical research and development is the exception to OTA’s finding on the state of research.

Research and development of new radio technologies and services is moving quickly. Some industry representatives, especially those representing

larger companies, see no need for government

support of technology research. Whether this

position is shared by all technology developers is

uncertain. The satellite industry has put together a

list of topics they would like the federal government to help them in exploring.

Options

To increase understanding of the many economic,

social, and regulatory issues surrounding the integration of wireless technologies into the NII,

and establish a basis for informed policymaking,

Congress could:

 monitor the development of various industry

segments and social issues, including privacy,

security, and especially health effects to determine if future congressional action may be necessary.

 establish funds to promote research into these

issues. Congress already funds research in a

60 OTA contracted for two studies—one to examine the basic economics and one to analyze the evolving structure—of the wireless industry.

Both authors noted the lack of empirical data available on the various segments of the wireless industry, and the lack of appropriate models for

studying wireless economics. Egan, for example, notes that “...based on publicly available data (including that from investment houses in their

efforts to calculate prospective market penetration rates and net cash flows to establish valuation benchmarks for the investor community) indications are that the state of the art in engineering economics and financial modeling of network systems is not very far along.” See Egan, op.

cit., footnote 32, p. 43, and Woroch, op. cit., footnote 32.

61 Frieden, op. cit., footnote 47.
Chapter 1 Introduction and Policy Issues | 45

number of related fields, such as transportation,

labor statistics, and public health that could be

expanded to cover wireless topics. Alternatively, a portion of the funds received from spectrum auctions could be designated for this

purpose.

❚ State and Local Government Roles are

Unclear

States have a significant interest and role in protecting their residents from services that are priced

too high or that offer poor quality. Municipalities

have an important, historically-defined role in local zoning matters and protection of public rightsof-way. However, the federal government,

primarily the FCC, also has a legal role to play in

advancing the communications systems of the

country. Since the Communications Act of 1934

was passed, state, local, and federal authorities

have been struggling among themselves and in

court to define the boundaries of their rights

and responsibilities.

Current proposed legislation will not end

the debate. Bills under consideration in Congress

generally prohibit states from enacting laws that

“may prohibit or have the effect of prohibiting the

ability of any entity to provide any interstate or intrastate telecommunications services.”62 The

bills, however, also permit states and local governments to impose requirements for universal

service, protect the public safety, and manage public rights-of-way. Specific cases will no doubt

arise where the two policies will clash. In the case

of wireless technologies and systems, there are

several potential areas of conflict between federal

and local policy goals.

State and local governments currently regulate

wireless services only lightly. Broadcasting is

mostly free of local regulation. Half the states

once regulated cellular in one form or another, and

another 20 had laws stipulating that the state regulatory commission must forebear from regulation.63 As a result of new regulations governing

CMRS, however, no state will be allowed to regulate wireless rates or enact laws that stifle entry by

new providers.64 Satellite providers have been

struggling against local ordinances and taxes for

many years (see chapter 8).

In the future, however, state regulation of telecommunications services in general may have significant, if indirect, effects on new wireless

services, especially those used as a substitute for

local wired telephone service. Importantly, the

states will retain regulatory jurisdiction over the

terms and conditions regarding wireless companies interconnection with local telephone companies. States are also likely to have a significant

role in helping to define universal service obligations and subsidy schemes, both of which could

significantly affect new wireless carriers.

Currently, the most controversial battle between federal and local policies involves zoning

and land use. Wireless companies need to erect antennas and towers to provide their services. Some

municipalities, however, in response to citizen

concerns about public health and property values,

have enacted zoning laws or other prohibitions

that can make it difficult to put up a tower. Such

regulations have delayed or halted construction of

radio towers already licensed by the FCC. More

local governments are expected to enact similar

prohibitions as the number of antennas and towers

proliferates with the spread of cellular and the

introduction of PCS and ESMR services (see

chapter 8).65 Industry associations have asked the

FCC to preempt such regulations, maintaining

62 S. 652, op. cit., footnote 34.

63 Woroch, op. cit. footnote 32.

64 Eight states applied under the law to continue to regulate cellular/wireless rates, but the FCC denied all the petitions.

65 Some rules set height limits, while others ban towers altogether in residential areas. See “City Zoning Rule Limits Radio Tower Height,”

Telecommunications Reports, vol. 61, No. 3, Jan. 23, 1995.
46 | Wireless Technologies and the National Information Infrastructure

that new services will be slowed or even precluded.66 The FCC has not yet ruled on this issue,

and the question of which should take precedence—federal laws that encourage the development of public communications systems or

local control over land—remains unanswered.

Options

Aside from specific issues relating to preemption,

Congress may wish to establish an overarching

framework to guide future policymaking. Establishing a cooperative relationship between federal

and state regulators will be critical if the NII is to

develop as quickly as possible. To determine the

proper relationship between federal and state regulatory authority in a new competitive era, Congress could:

 make explicit its views on federal preemption

regarding NII and wireless issues, indicating

which authority should take precedence.

 hold a series of hearings in Washington and

around the country or form a commission to

gather input from all parties involved in federal-state telecommunications issues. As part of

this broader effort, Congress could also establish more formal mechanisms for resolving

federal/state/local disputes in telecommunications policymaking.

66 The Electromagnetic Energy Association and the Cellular Telecommunications Industry Association have filed petitions for rulemaking

on the issues. “FCC Asked To Preempt States’ RF, Radio Tower Rules,” Telecommunications Reports, vol. 61, No. 1, Jan. 9, 1995.
Mobility and

the Implications

of Wireless

Technologies

he need for mobility underlies many applications of wireless technology.1 It is the single feature of wireless systems

that other telecommunications technologies cannot replicate. Wireless technologies permit users to access communications networks while they are “on the go,” and also make it

easier for individuals to stay connected as they move around.

However, the concept of “mobility” and its implications for the

deployment of wireless technologies are poorly understood. 

Individuals and businesses already use a number of wireless

technologies, including cellular telephones, pagers, and various

wireless data services, but over the next five to 10 years, a variety

of new mobile communication systems—personal communications service (PCS), enhanced specialized mobile radio (ESMR),

satellite-based telephony, and higher-bandwidth wireless data

communications systems—will begin operation (see chapters 3,

4, and 5). To consider the potential success or failure of these new

technologies and the implications of their widespread use, it is

critical to understand the underlying forces that might motivate

people and businesses to use them. Is society becoming more mobile? How does a technology deployed at scale challenge policymaking in this area? What are the potential social implications of

widespread deployment of wireless telecommunications? An

analytic framework used to address these issues places mobility,

1 Some of the material in this chapter is based on Philip Aspden and James Katz, Bell

Communications Research, Morristown, NJ, “Mobility and Communications: Analytical

Trends and Conceptual Models,” contractor report prepared for the Office of Technology

Assessment, U.S. Congress, Washington, DC, Jan. 20, 1995.

| 47
48 | Wireless Technologies and the National Information Infrastructure

the unique property of wireless, at the center. This

chapter attempts to anticipate the answers to some

of these questions.

FINDINGS

 The concept of mobility is rudimentary and

unfocused. Although some information and

statistics have been collected, there is little

hard data that allow a thorough understanding of the various characteristics of

personal and professional mobility and

their implications for the implementation

and use of wireless services. Mobility is an enduring social quality that affects people in both

their personal and business lives. People move

about in their private lives every day to shop,

visit friends or relatives, or run errands. Understanding the patterns of what they do, how they

do it, and what information they could use in

the process will be crucial to understanding

how wireless technologies may play a role in

peoples’ lives. 

 Worker mobility is particularly significant because businesses tend to lead the way in the use

of telecommunications technologies, and are

expected to be the earliest and heaviest users of

wireless technologies as well. Considering the

ways in which a job can be “mobile,” OTA

conservatively estimates that nearly 50 million workers (44 percent of the workforce)

are mobile in some way today and the percentage of the workforce that can be classified as mobile is increasing.

 From the technology side, research on how

people use or would use wireless devices is

sketchy. Some marketing surveys have been

conducted, but they do not offer a very compelling or complete picture of how the average

consumer might use communication or information resources in a mobile or portable setting. Prospectively, it is difficult to ask people

to evaluate a technology or service they have

never used and may not completely understand.

A better grasp of mobility will improve product

development and inform policymaking regarding new wireless technologies and systems.

 Academic researchers have been studying “mobility” for years, but they tend to concentrate on

one particular element only—work patterns,

time spent commuting, or time management,

for example. Researchers in different disciplines do not generally collaborate or communicate, and it appears difficult for them to

conceptualize how their work may fit together.

Little work has been done to bring together the

disparate elements that define mobility, and no

theoretical framework exists for studying mobility as a unified concept. More research on

all aspects of mobility—and their relation to

telecommunications technologies, including

wireless—is needed.

 Because mobility is so poorly understood and

the wireless technologies that will enhance the

mobility of both people and machines are not

yet widely used—even the penetration rate for

cellular telephones is less than 10 percent—

assessing the implications of this widespread

use is difficult. The impacts of wireless

technologies on individuals, organizations,

and society are only now emerging; they are

likely to involve increased personal and

business efficiency, as well as increased

stress and concern about monitoring and

privacy. Wireless technologies are likely to

play a role in the continuing evolution of

new organizational and social forms, potentially reinforcing geographic dispersion and

functional dissolution.

SELECTED EXAMPLES OF MOBILE

WIRELESS SERVICES

Other than using wireless telecommunications for

traditional telephony, what might people do with

wireless? People or organizations often use new

technologies to perform old functions. Over time,

however, a technology deployed for one purpose

may be used for something quite different than its

designers intended. Many new applications of

wireless technologies are still only at the developmental stage, and have yet to pervade the public’s

consciousness. A brief description of some of the

current and projected uses of mobile communica-
Chapter 2 Mobility and the Implications of Wireless Technologies | 49

tions may provide an idea of the broad scope and

scale of their potential applications. The following examples are drawn from existing commercial

or demonstration projects.2

❚ Inventory Management

The emphasis on lowering costs and increasing efficiency in business operations has focused on improving inventory management, total quality

management, and just-in-time manufacturing.

Wireless technologies can help where mobility is

a key feature of the process. For example, in warehouses, knowing more about the location of specific items can greatly reduce costs. Equipment to

track inventory is becoming more popular. For example, Rexham, a box manufacturer in Charlotte,

North Carolina, has revamped its quality control

function with a wireless bar code system that provides up-to-the-minute information about job status and product information. Sensors can be

attached to items so they can be tracked and found

when needed. Using such a system, one chemical

company experienced a 100 percent payback in

six months and reduced its accounting personnel

for this function from 12 to one.

❚ Electronic Newspapers

Newspapers have been one of the most transportable sources of information. A few companies are

now developing the capability to deliver newspapers via wireless systems directly to customer’s

laptop computers. One publisher has developed a

prototype electronic newspaper whose screen resembles the front page of a newspaper. The user

can touch a picture or headline to receive additional information in any form: video, sound, or text.

Designed to overcome some of the shortcomings

of traditional print newspapers—bulkiness and

limited circulation—newspapers distributed using wireless could use digital cellular networks or

new PCS systems to reach readers efficiently,

wherever they are. Prospective users might include travelers who want to read hometown newspapers or business executives who want to

purchase electronic publications while aboard

trains or airplanes.

❚ Classroom Networking

Duke University recently participated in an experiment using a wireless local area network

(LAN) to connect engineering students’ laptop

computers to one another and to the instructor’s

computer.3 The system consists of an infrared

transceiver attached to each student’s computer

that sends and receives messages to and from every other computer. Transmitting at 230 kbps, the

infrared system is completely transportable, and

an ad hoc network can be established in about 20

minutes in the library, lab, or dormitory.

Tying together the computers allowed the

comparing of notes, facilitated collaboration on

group projects, and allowed the professor to project one student’s computer screen onto a large

screen in front of the entire class for discussion. In

addition to allowing students to work easily with

one another, the system also sends the instructor’s

comments directly to every student’s computer,

perhaps communicating ideas more effectively.

Based on this experiment, Duke University is considering implementing similar systems in other

classes.

❚ Real Estate Marketing

In the last few decades, real estate agents have

come to rely heavily on computerized databases

such as the Multiple Listing Service. However,

while on the road, agents are out of touch with

these databases, and must make frequent trips

back to their offices to use them. To help agents

save time and eliminate unproductive travel, sev2 For a broader set of examples, and an analysis of the emerging uses of wireless technology, see Virginia Polytechnic Institute and State

University, Center for Wireless Telecommunications, Blacksburg, VA, “A Survey of Emerging Applications of Wireless Technologies,” contractor report prepared for the Office of Technology Assessment, U.S. Congress, Washington, DC, Sept. 15, 1994.

3 Gary Hughes, “Wireless Network Goes to School,” Wireless for the Corporate User, vol. 3, No. 3, 1994.
50 | Wireless Technologies and the National Information Infrastructure

eral wireless services have been developed. For

example, a low-power FM transmitter can be

placed on a property for sale which will broadcast

messages that identify key characteristics of the

property. An agent driving past the house can tune

in to hear the details. Another system uses a personal digital assistant (PDA) and a cellular digital

packet data (CDPD) radio modem to provide real

estate agents access to a multimedia database of

homes. The data consist of pictures of houses,

maps of residential areas, and detailed statistics

that can be searched by price, location, number of

rooms, etc. Rather than having to return to the office to search the listings again, a revised list of appropriate offerings could be accessed from any

location.

❚ Field Service

To handle more calls, provide faster and more accurate inventory control, and reduce the time

spent sending dispatch instructions, Coast Plumbing of Solana Beach, CA, implemented a data

communications system that integrated dispatch,

billing, and inventory functions.4 The system connects a portable computer in each of the company’s 20 trucks to a host computer in the office. The

system delivers text dispatches to the plumber’s

portable computer, which displays the customer’s

name, address, and the reason for the call. The system also allows the technicians to check on part

availability, access prior service history, and look

up prices. Once a job is finished, the system automatically transmits billing and inventory information back to the host computer, which then

updates parts lists and customer accounts. Coast

also uses specialized mobile radio for voice and

data communications.

After implementing the system, Coast Plumbing increased the number of calls per day handled

by each plumber, dramatically reduced the

amount of time spent on physical inventory, improved customer satisfaction, and streamlined administrative processes. The company estimates

that the system saves it more than $10,000 per

month in total costs.

❚ Disaster Recovery and Assistance

The success of emergency relief and recovery efforts relies on the ability of workers to communicate effectively, efficiently, and securely. Wireless

is uniquely suited to these applications because: 1)

disasters typically do not affect wireless communications links, especially satellite links, and 2)

the rapid deployment of a communications system for mobile field workers is more efficacious

with a wireless system. The users of these systems

include insurance companies; emergency relief

workers; federal, state and municipal disaster

agencies; emergency medical personnel; and other suppliers of necessary services. They will typically need communications in the field to report

assessments of damage, call for reallocation of resources, predict additional consequences, and file

insurance claims or pay such claims electronically. For example, one company provided Iowa’s 99

counties with backup protection during the flood

of 1993 with a portable 18 GHz digital microwave

system. The system was engineered, manufactured, delivered, and installed in just four days.

❚ Intelligent Transportation Systems

Intelligent Transportation Systems (ITSs)5 apply

information and communication technologies to

surface transportation systems to reduce traffic

4 Deborah Kirtland, Wireless for the Corporate User, vol. 3, No. 2, 1994, p. 53.

5 ITS was formerly called Intelligent Vehicle Highway Systems (IVHS), but was changed to ITS to include public transit and other transportation modes.
Chapter 2 Mobility and the Implications of Wireless Technologies | 51

congestion, improve safety, make public transit

options more attractive to commuters, and decrease transportation-related environmental impacts.6 Interest in ITS stems from the realization

on the part of transportation experts that building

more roads and/or expanding existing ones is

often too costly and only marginally effective in

reducing congestion, and does little to alleviate

safety and environmental problems. ITS could

make more efficient use of the current transportation infrastructure, improve safety, and allow public transportation to be more responsive to

passenger demands. To transmit information to

mobile units (automobiles, buses, and trains, etc.)

from a fixed location, and vice versa, wireless

technology of some kind is necessary.

In 1991, Congress passed the Intermodal Surface Transportation Efficiency Act (ISTEA7),

which committed $659 million over six years for

ITS projects. ISTEA also mandated the U.S. Department of Transportation (DOT) to establish the

ITS Architecture Development Program. This program brings together DOT, a public/private consortium called ITS America, and various private

transportation and communication companies for

the purpose of forming a framework to develop an

integrated, interoperable ITS in the United

States.8 More recently, the Federal Communications Commission (FCC) has allocated 26 MHz in

the 902-928 MHz band for what it terms Transportation Infrastructure Radio Service, or TIRS.

Among the areas being developed are advanced

traveler information systems that will inform

people on the best way to get to their destinations;

advanced traffic management systems that will

gather and distribute data on traffic congestion

and alter the timing of control signals to move

traffic more efficiently; automatic toll collection;

parking and security applications; and automated

vehicle control. To date, most ITS efforts have focused on providing route guidance to travelers and

fleet monitoring and control to transportation

companies. Systems in Japan, Europe, and the

United States rely on the Global Positioning System (GPS) for vehicle location, often used in conjunction with dead reckoning.9 Some systems

also employ terrestrial-based wireless data systems to relay traffic conditions to travelers in their

cars. Both scenarios involve sophisticated mobile

units for the users that can cost as much as

$8,000.10 One system marketed by Oldsmobile

offers drivers stored information about local

points of interest, such as restaurants, with the option to receive updated traffic, weather, and special event information via a wireless link.

More complex ITS proposals will require more

sophisticated technology, both in-vehicle and in

the public transportation infrastructure, than existing systems now offer. For example, some plans

call for a radar-equipped vehicle that will sense the

distance between it and the car in front and automatically apply the brakes if the gap is too small.

Some plans for these Advanced Vehicle Control

Systems (AVCS) may also incorporate sophisticated sensing equipment in the roadway, which

would work in conjunction with systems in the ve6 National Research Council, “Primer on Intelligent Vehicle Highway Systems,” Transportation Research Circular 412, Washington, DC,

August 1994. See also U.S. Congress, Office of Technology Assessment, Intelligent Transportation Systems for Metropolitan America—Background Paper, background paper for OTA’s Project on the Technological Shaping of Metropolitan America (in progress).

7 Public Law 102-240; Dec. 18, 1991.

8 U.S. Department of Transportation and ITS America, ITS Architecture Development Program; Phase I, Summary Report, Washington,

DC, November 1994.

9 Dead reckoning is a technique by which vehicle location can be calculated and matched to on-board maps by calculating the distance

traveled from a specific starting point.

10 W. Clay Collier and Richard J. Weiland, “Smart Cars, Smart Highways,” IEEE Spectrum, Apr. 4, 1994, pp. 27-33.
52 | Wireless Technologies and the National Information Infrastructure

hicles to automatically track the vehicle down the

road at a constant speed toward the driver’s destination.

CHARACTERISTICS OF MOBILITY

At the root of interest in wireless telecommunications is its ability to accommodate the physical

mobility of people and things. However, our understanding of mobility is intuitive and poorly

characterized analytically.11 Some of the broad

outlines of mobility are sketched here to provide a

sounder basis for analyzing mobility and its implications. Key questions are: Why are people mobile? What are the features and forces that have

shaped people’s mobility patterns? What are the

key trends in mobility? How do wireless technologies fit with mobile activities? What are the consequences of mobility?

Mobility has a number of dimensions that give

it different meanings for different people. For example, some mobility is local, as in a hospital

where nurses and doctors are constantly on the

move, but within well-defined boundaries. Some

mobility is long-distance, as with cross-country

trucking or cellular roaming to cities outside the

home service area. Some people are mobile but do

not communicate en route, such as executives

travelling to meetings in distant cities. Others

communicate en route over long distances, such as

salesmen who need to get up-to-date information

before meeting their next prospect. While each is

mobile, the wireless telecommunications technologies each would likely use may be quite different. Using the single term “mobility” masks its

multiple dimensions and deprives it of analytic

precision. Data on mobility characteristics, as described below, do not exist at present.

From the examples of applications given above

and data on past and projected demand, the following characteristics or drivers of mobile access

can be inferred:

 People want to be mobile because they can

increase their control and reduce uncertainty in the conduct of their business or personal

affairs. People move to see and do things remotely so that they can control their activities

or gather information that reduces their uncertainty.

 People want to communicate while moving,

or while in transit. They want flexibility in deploying and redeploying assets, services, etc.

In many situations, people cannot predict their

communications requirements, either for type

of service or its location. All of these needs are

met by a variety of wireless technologies, at a

low cost, depending on the application, the data

rate, and security requirements.

 People want to communicate and get information immediately. When they are traveling or away from wired telecommunications

links, the urge to be connected is strong. Although one can usually travel to a place that has

communications resources, the time pressures

of today’s society and business world dictate

that those who have easiest access to communications resources have a competitive advantage.

Typologies like those in table 2-1 could be used

to develop research programs and data sources on

mobility and communications that could assist

both policymakers and business planners. In particular, this framework could help determine the

potential scale of wireless communications. Decisionmakers would then know whether particular

public wireless communications systems are likely to be confined to small populations of workers

or users, or are likely to be applicable to large segments of society. They could also provide information on the impact these technologies may

have on individuals, organizations, and society at

large.

11 One attempt is that of the Cross-Industry Working Team, Corporation for National Research Initiatives, “Nomadicity: Characteristics,

Issues and Applications,” March 1995.
Chapter 2 Mobility and the Implications of Wireless Technologies 53

Mobility characteristics:

mobility extensiveness (how far: global, national, regional, local, or home/office)

mobility intensiveness (how much mobility is required for an activity)

mode of transport

self-propulsion (walking or biking)

limited occupancy vehicle (private automobile, truck, small boat, or small airplane)

public transport (bus, airplane, or ship)

variety of routes undertaken

standardized

externally directed (defined by third party)

spontaneous

Activities or information might be categorized by:

● function

data-gathering and entry

data analysis

execution or control of activity or function

● time factors

real time

asynchronous

■ information type

symbols

audio

text images

still picture images

moving picture images

■ delivery paths

point-to-point

point-to-multipoint

dispatch

■ location

information obtained while in transit

information obtained by visiting many locations

information unrelated to location

SOURCE: Office of Technology Assessment, 1995.

JOBS AND MOBILITY

Although the use of wireless technologies is likely

to be pervasive, their greatest impacts may be in

working environments and on jobs. Jobs previously fixed may become mobile with new

technologies, altering a wide range of business

practices. Unfortunately, no government or private agency collects data on mobility in employment, nor are there measures on the degree of

mobility typically associated with particular job

classifications. Private studies tend to focus on

particular market segments, such as white-collar

office workers and executives on the road.

OTA made a preliminary estimate of high and

low degrees of mobility in the work force to illustrate the argument made here. Based on Bureau of

Labor Statistics data, and using rough estimates of

the mobility requirements of jobs across the whole

U.S. economy, OTA estimates that 34 million

people are somewhat mobile and 15 million are

highly mobile for significant parts of their working day, for a total of about 44 percent of the U.S.
54 Wireless Technologies and the National Information Infrastructure

Total High Moderate

employed mobility mobility Percent

Occupation (millions) workers workers mobile

Executive, administrative, and managerial

Service deliverers

Engineers, architects, surveyors

Social, recreation, religious workers

Sales representatives, financial and business services

Sales representatives, except retail

Adjusters and investigators

Protective services

Mechanics, appliances, equipment

Campus/building-wide workers

Health diagnosing occupations

Health assessment and treating occupations

Teachers, college and university

Health technologists and technicians

Cleaning/building service occupations

Workers who move people or goods

Mail and message distributing

Transportation, material moving occupations

Outdoor workers

Construction trades

Farming, forestry and fishing

Others

Total

15.4

12.2

1.9

1.1

2,3

1.5

1.4

2.2

1.8

8.8

0.9

2.6

0.8

1.5

3.0

6.0

1.0

5.0

8.3

5.0

3.3

68.7

0.8

5.7

0.5

1.2

0.8

0.7

1.6

0.9

0.0

4.2

0.5

3.8

4.2

2,5

1.7

0.4

3.8 25.8

5.5 51.3

0.9

0.5

1.2

0.8

0.7

0.5

0.9

8.0 91.3

0.9

2.6

0.8

0.8

3.0

1.7 33.2

0.5

1.3

4.2 54.2

2,5

1.7

11.0 16.4

. -—. 119.3 15.2 34.3 44.0

SOURCE: U.S. Department of Labor, Bureau of Labor Statistics, “Employment and Earnings,” January 1994. and Office of Technoloov

Assessment, 1995.

work force (see table 2-2). Workers may be

grouped in five clusters, as indicated in the table.

Because the criteria used in arriving at these estimates were extremely conservative, it seems likely this is an under- rather than over-estimate of the

true amount of mobility in the work force.12

There is also some evidence that the number of

mobile workers is increasing as a proportion of total workers. Using the classifications above-and

past, current, and projected employment levels in

each subcomponent—the pool from which the future mobile workforce will be drawn can be illustrated (see table 2-3). Such estimates show that

these job clusters will increase 51 percent over the

1983-2005 period, somewhat faster than the projected growth rate for all jobs, which is 42 percent.

Executive and managerial jobs are projected to increase fastest (73 percent), followed by campus/

building-wide workers (60 percent), and service

deliverers to homes and businesses (54 percent).

Finally, recent projections of occupational employment levels suggest that many of the fastestgrowing job categories are mobile, further

supporting the argument that mobility is likely to

12 DYG, Inc., “The Growing Emergence of Mobile Workers,” report prepared for Cowles Business Media, 1994, p. 2.
Chapter 2 Mobility and the Implications of Wireless Technologies 55

Occupations 1983 1994 2005

Executive, administrative 10.8 15.4 18.6

and managerial workers

Service deliverers to 9.9 12.2 15,1

homes and businesses

Campus/building-wide 7.1 8.8 11.4

workers

Workers who move people 5.0 6.0 6.9

or goods

Outdoor workers 8.0 8.3 9.4

Total 40.8 50.7 61.4

SOURCE: Office of Technology Assessment and Bureau of Labor Statistics, 1995.

be more important in the future.13 Several other

more limited studies have come to similar conclusions.14

IMPLICATIONS OF INCREASED MOBILITY

Having established that wireless telecommunications are here to stay, though still not ubiquitous

in business and society, what are the implications

of increased mobility for individuals, organizations, and society? How will wireless telecommunications affect peoples’ personal and business

lives? Much remains unknown, and issues are just

beginning to be identified.

❚ Implications for Individuals

Increasingly, communication will be made to a

person, not a place. The potential for more complete integration of people with each other and information sources may be increased considerably

with widespread deployment of wireless telecommunications. Networks may center on people

rather than on physical connections, which could

have both positive and negative effects on individuals.

Increased Contactability

The most striking impact of wireless communications systems may be the ability to make and receive phone calls from any location at any time,

enabling users to be constantly “in touch.” A recent Bellcore survey on telephone use asked

people their opinions on their need to be reachable

(see table 2-4). Nearly 50 percent agreed with

the statement that “my responsibilities require me

to be ‘easily reachable,’” even on holidays. About

20 percent of those surveyed disagreed with the

idea that they need to be readily contactable.

Strongly Strongly No

agree Agree Neutral Disagree disagree answer

My responsibilities require me to be 13.4 35.4 26 18.9 2.9 3.5

“easily” reachable

People need to contact me about 12.5 35.9 27,7 17,5 3.3 3.1

important matters

There are often times when I urgently 8.3 36,5 29,7 20.0 2.2 3.3

need to get through to another person

I “stay in touch” even when I am on 8.9 40 21,3 20.8 5.9 3.1

holiday

SOURCE: Bell Communications Research, “The Telephone: Making It Work Better For You,” Bellcore national postal survey, 1993.

13 Bureau of Labor Statistics, Monthly Labor Review, November 1993, cited in Peter Francese, “Cellular Customers,” American Demographics, vol. 16, No. 8, August 1994, p. 56.

14William F. Ablondi and Thomas R. Elliott, “Mobile Professional Market Segmentation Study,” BIS Strategic Decisions, Norwell, MA, pp.

1-3, and Alison L. Sprout, “Moving Into the Virtual Office,’’Forfune, May 2, 1994, p. 103.
56 I Wireless Technologies and the National Information Infrastructure

Percent of cellular

telephone users agreeing

strongly or agreeing

somewhat in:

Cellular telephones have: 1991 1993

Increased your flexibility 86 94

Increased your efficiency 79 75

Helped you make the most 76 81

of your personal time

Added a significant amount 68 62

of time to your day

Interviewing for the Motorola survey was conducted by telephone between December 1990 and January 1991, and between March and April 1993. In 1991, the nationally representative sample size was 650, and in 1993 it was 660 people. In the

1993 survey, 63 percent of the sample was male, 37 percent

was female.

SOURCE: The Gallup Organization, “The Motorola Cellular Impact Survey: Evaluating 10 Years of Cellular Ownership in America, ” Princeton,

NJ, 1993.

Thus, wireless may enable people to remain in

continuous contact. In some cases, this higher level of connectedness could reduce the sense of

alienation that plagues many people who are out

of physical contact with others. People may feel

secure in dense networks of communications with

people they can rely on, and be able to conduct

many activities with considerable remote control.

Survey research on current cellular users shows

that cellular telephone users feel positive about

the technology with respect to its ability to help

them maintain contacts in both business and private life. A survey of users in 1991 and 1993

yielded the results in table 2-5.

In general, this survey reports that users believe

that cellular phones help them make better use of

their personal time. About half of respondents

said they feel better connected to their families because of their cellular telephones. A significant

fraction said they couldn’t do without their cellular telephone (46 percent), and most believe that

the phone has been a good value for the money (85

percent). Clearly, this data should be viewed with

some skepticism. Respondents were all paying

cellular customers who may justify their purchase

of cellular services by alleging benefits. People

who had tried and ultimately rejected cellular services were not polled as to their attitudes.

Although many users clearly value the ability

to communicate more easily, there are drawbacks.

The same device that allows users to call out enables other people to call in—potentially reducing

privacy and control over one’s time.15

is

Paradoxically, the most important aspect of

the mobile telephone may be the ability to reach

others with it and to be reachable anywhere,

which implies both absolute mobility and the

opposite of mobility as traditionally understood!

The owner of a mobile telephone maybe highly

mobile, but is always “at home,” always “there,”

as long as he or she carries a [personal phone],

thus making simultaneously possible a freely

floating, highly mobile society and a very traditional, immobile social and spatial structure.16

The tension between accessibility and privacy

easy to underestimate, because people may

choose to use communications technologies that

help them perform certain tasks, but that may also

bind them in unwanted ways. People generally

seek wide communications access to others, and

they want to be able to receive messages quickly

and reliably. Yet people seldom want to be universally accessible to others; they want to limit access

by certain people, they want control over when

they receive calls, and they want to choose with

15 It should be noted that the same concerns were also raised when telephones were first introduced almost 100 years ago. It may take some

years before new social/business protocols regarding mobile telephone use are internalized by society. For users who are bothered by this prospect, the phone can always be turned off-unless an employer expects it to be on.

16J.P. Roos, “300,000 Yuppies? Mobile Telephones in Finland,” Telecommunications Policy, August 1993, p. 458.
Chapter 2 Mobility and the Implications of Wireless Technologies | 57

whom they communicate.17 There also may be

disadvantages of greater accessibility to others.

While it may be possible to reach a specific person, wherever he or she is, that person may be

reached in an unexpected context. Thus, a call to

an office worker may reach him or her away from

desk and files—in the company cafeteria or in the

bathroom, for example. The physical context of

communication is important to the business that

can be conducted, a context that previously was

provided by the knowledge that calls reach people

in fixed places.

The inability to control incoming calls, which

may come at inconvenient times, may also be resented.18 There may be no easy way to avoid such

demands: if wireless telecommunications use becomes the norm, then turning a phone off completely may signal to a caller “This person is

purposefully limiting availability.” For some

people, increased personal psychological stress

could result from loss of control over when and

where people can contact you.19

Personal Monitoring and Privacy

Another implication of increased contactability—

when coupled with remote sensing equipment and

databases—is the potential for personal passive

monitoring. Both benefits and threats to personal

freedoms could occur. The benefits include systems that offer remote monitoring of health care

delivery devices and those that protect personal

security. Large firms and government agencies

have used such dedicated systems for years; however, due to their expense and size, they have been

unavailable to private users or small firms until

relatively recently. The Advanced Research Projects Agency (ARPA), for example, has been funding wireless telecommunications research for

several years; one of its main interests is in equipping soldiers with battlefield personal monitors to

relay vital signs and injury information to medical

centers to provide timely and accurate responses

to the wounded.20 Similar systems are now being

developed for consumer use. “Electronic house

arrest” has been enforced with electronic monitoring devices that signal when a convict leaves his or

her home.21 Marathons runners have recently

been issued shoelaces with wireless microchips

embedded in them to prevent them from deviating

from the prescribed course.22

Information about movement and activities

also could be obtained and used in ways that violate privacy. Relations between employers and

employees could deteriorate if some employees

feel burdened or controlled by employer or job requirements. Their supervisors, however, may

welcome the ability to monitor activities even during off hours. People may feel that there is no way

to escape the control of others if they have no

choice but to be equipped with wireless technologies as part of their jobs.23 Chapter 10 discusses

the privacy of location information in more detail.

17 James E. Katz, “Caller ID, Privacy and Social Processes,” Telecommunications Policy, vol. 14, No. 5, October 1990, pp. 372-411, and

James E. Katz, “Controlling Access: Demographic Characteristics of Unlisted/Nonpublished Subscribers,” Bellcore Technical Memorandum,

Morristown, NJ, 1993.

18 Ibid.

19 Michael Ventura, “Trapped In the Time Machine,” The Washington Post, Feb. 12, 1995, pp. C1, C4, excerpted from “The Age of Interruption,” The Family Therapy Networker, vol. 19, No. 1, Jan. 1, 1995, pp. 18-25, 28-31.

20 Randy Katz, wireless project manager, Advanced Research Projects Agency, interview, June 9, 1994.

21 Joseph Hoshen, Jim Sennott, and Max Winkler, “Keeping Tabs on Criminals,” IEEE Spectrum, February 1995, pp. 26-32, details location

monitoring technologies in use and under development for nonincarceration alternatives to imprisonment. All the techniques use wireless systems, and newer systems provide highly accurate and continuous monitoring of location. Future systems are envisioned that will be able to

actively restrain people who violate their conditions of parole, such as sounding an alarm or causing an electric shock or other restraining action.

22 Shiv Sharma, “Sports Diary,” Manchester Guardian Weekly, Mar. 5, 1995, p. 31.

23 For literary treatment of these ideas, see George Orwell’s 1984 (San Diego: Harcourt, Brace, Jovanovich, 1984), and Jerzy Kosinski’s The

Painted Bird (Boston: Houghton Mifflin, 1976).
58 | Wireless Technologies and the National Information Infrastructure

The specter of gradually ceding the right to be

left alone is of great concern to many. The time

people spend alone in their automobiles is increasingly a thing of the past as commuters now conduct business with cellular telephones, car faxes,

laptop computers, and books, journals and office

materials on tape.24 The feeling of personal solitude may well be eroded when a person can make a

cellular or satellite phone call from every area of

the planet, or know where someone is located to

within 10 meters.

William Safire, the New York Times columnist

and former speechwriter for President Richard

Nixon, has commented:

I have fended off the threat of intrusive wireless communication almost from its inception.

At the Moscow Summit in 1972, President Nixon’s chief of staff, H. R. Haldeman, introduced

us to the new “beeperphone.” Through this

amazing paging device, worn on the hip, the nation’s chief executive could instantly track down

any of his score of assistants anywhere in the

capital of the rival superpower at any moment.

Being on the end of an electronic leash did

not appeal to me; indeed, its big-brother aspect

struck me as more representative of the Soviet

society than our own...

Think again about the rush to total intouchedness. The telecommunications that produced

telemarketing can produce telefugitives. No

slack can be cut in the wireless wire; a society

with no place to hide produces people with no

secrets worth keeping and individuals with no

minds of their own.25

Personal Safety

Widespread deployment of wireless telecommunications systems may also lead to an increased

sense of personal safety and security, because

people can call for help regardless of where they

are, and can report accidents and other incidents in

situations where assistance may be required. In a

Gallup survey, a total of 91 percent of respondents

believed that having a cellular telephone made

them safer and more secure, and 90 percent said

they would be more willing to lend a helping hand

to a stranger because they can call for help (table

2-6).26 Accidents along major roadways in big cities result in an average of eight calls to 911.27

Using communications technology for safety

purposes may be a double-edged sword, however.

Mobile communications are extensively used by

criminals as well as law-abiding citizens, and mobility can make criminals more effective and

threatening.28 Indeed, the demand for altered

phones is fueled in large part by people who want

to use cellular telephones to commit crimes.

❚ Implications for Organizations

Wireless telecommunications technologies will

find a significant role in the workplace and in organizations. Strategies to deal with the new possibilities of wireless work are being experimented

24 Rajiv Chadrasekaran, “For Some Area Commuters, Work Begins Behind the Wheel,” The Washington Post, Aug. 9, 1994, pp. 1, 10.

25William Safire, “Stay Out of Touch,” The New York Times, Nov. 1, 1993, p. A1.

26 The Gallup Organization, “The Motorola Cellular Impact Survey: Evaluating 10 Years of Cellular Ownership in America,” Princeton, NJ,

1993, p. 11.

27 This common use of cellular telephones has driven much of the secondary growth in cellular subscriptions. Cellular companies have

recognized this and offer payment plans targeted to this segment of the market. However, easy accident reporting sometimes creates problems,

because police must decide which of the calls gives the correct information, location, etc. People vary widely in the accuracy of their reporting.

28 “Chicago Council Considers Measure Limiting Pay Phones,” Telecommunications Reports, Sept. 19, 1994, pp. 7-8.
Chapter 2 Mobility and the lmplications of Wireless Technologies 59

Have you ever used your cellular telephone to call: Percent responding “yes”

1991 1993

For roadside assistance for your own disabled vehicle 31 38

For roadside assistance for someone else’s disabled vehicle 7 13

For assistance for your own medical or health emergency 7 13

For assistance for someone else’s medical or health emergency 23 28

The police to warn of hazardous road conditions (e.g., collapsed 24 28

roadway, downed trees, weaving driver, or icy road)

SOURCE: The Gallup Organization, “The Motorola Cellular lmpact Survey: Evaluating 10 Years of Cellular Ownership in America, ”

Princeton, NJ, 1993,p.11.

with by a small number of early adopters .29 Interest is growing among policymakers as well; the

National Research Council recently released areport addressing some of these issues.30

New telecommunications technologies, principally computer networks, but also mobile computing and wireless telecommunications systems,

make it easier to decentralize or reconcentrate

central office operations and introduce new spatial

relationships among workers. These changes are

still not widespread, but there is some evidence

that new organizational relationships-such as

subcontracting, teaming and contingent organizational forms, and greater demands for flexible response to changing market conditions—are

facilitated by use of new telecommunications

technologies. 31 These are not solely due to wireless telecommunications technologies, but it

seems certain that these technologies will play a

role in such restructuring.

Another force driving the restructuring of

physical organizations is the cost of space and facilities. Firms with large numbers of mobile employees see the cost of a private office as a drain on

company revenues and some are experimenting

with alternative arrangements that take advantage

of mobile technologies. In occupations where

workers spend a lot of time out of the office, such

29Early adopters were different from later adopters. Researchers are careful not to extrapolate protected usage Patterns too far from this

early adopter group. See DYG, Inc., op. cit., footnote 12, p. 5.

30 National Research Council, Research Recommend.aliens To Facilitate Distributed Work (Washington, DC: National Academy Press,

1994), p. 37. The study was requested by the Department of Energy in 1993.

31 There is a growing literature in this area. Aspects of this development were addressed in U.S. Congress, Office of Technology Assessment, Electronic Enterprises: Looking to the Future, TCT-600 (Washington, DC: U.S. Government Printing Office, May 1994). See also Robert

G. Eccles and Richard L. Nolan, “A Framework for the Design of the Emerging Global Organizational Structure,” in Globalization, Technology,

and Competition: The Fusion of Computers and Telecommunications in the 1990s, Stephen P. Bradley, Jerry A. Hausman and Richard L. Nolan

(eds.) (Boston, MA: Harvard Business School Press, 1993), pp. 57-80; Tom Malone, J. Yates, and R. I. Benjamin, “Electronic Markets and Electronic Hierarchies: Effects of Information Technology on Market Structure and Corporate Strategies,” Communications of the ACM, vol. 30,

No. 6, June 1987, pp. 484-497; Ajit Kambil, “Information Technology and Vertical Integration: Evidence from the Manufacturing Sector,” in

Steve S. Wildman and Margaret Guerin-Calvert, Electronic Services Networks:A Business and Public Policy Challenge (New York, NY: Praeger, 1991); Stuart Smith, David Transfield, Hohn Gbessant, Paul Levy, and Clive Ley, “Factory 2000: Design for the Factory of the Future,”

International Studies of Management and Organization, vol. 22, No. 4, pp. 61-68. Examples focusing on wireless include: Mel Mandell, “Office of the Future?’’ Across the Board, October 1994, pp. 45-47; Alison L. Sprout, “Moving into the Virtual Office,’’Fortune, May 2, 1994, p.

103; Kirk Johnson, “Evolution of the Workplace Alters Office Relationships,” New York Times, Oct. 5, 1994, pp. Bl, B3.
60 | Wireless Technologies and the National Information Infrastructure

as insurance adjusters or management consultants, alternatives could produce cost savings.32

Nonterritorial or just-in-time offices are organized

as shared facilities; work stations are allocated on

a first-come, first-served basis or are shared with

specific people. Moving to these newer organizational forms reduces the importance of place and

increases the importance of communications links

and networks. Further deconcentration may be facilitated by the widespread availability of wireless

telecommunications. Long-term productivity

benefits are as yet unknown because the shortterm real estate savings, which can be significant,33 may mask the effect of mobile office

designs on work performance and employee development.34

Mobile work may result in more individual autonomy for workers because they will increasingly be able to work outside of traditional office

settings.35 Managers will have less visual assurance of job performance, and will have to rely

more on other, perhaps performance-based, measures of job fulfillment.36 Many supervisors ask

how they can be sure their employees are working

when they are not in the office.

On the other hand, such wireless-facilitated

mobile work may also increase workers’ isolation. They may have less face-to-face contact with

co-workers and spend significant amounts of time

away from their families.37 Employee stress and

burnout may increase in companies that adopt mobile office concepts. In some cases, employees are

responsible for some of the costs associated with

working on the road and for their home base; having to pay these costs themselves could undermine

morale. Mobile workers typically work longer

and harder than their office-located counterparts.

Reconciling the desire to get more work out of employees with the need to keep morale high poses

some dilemmas for firms.

Productivity and Efficiency

In business, the ability to be in touch with others

through wireless telecommunications may be a

real benefit to those who spend time away from

telecommunications systems unwillingly, such as

road-bound sales representatives, nurses on the

move, or soldiers in the field. There is growing evidence that wireless devices drastically cut the

time required to locate people in offices and hospitals.38 Stockbrokers find it increasingly difficult

to be out of touch with the global securities and financial markets because a gap in their trading day

can mean large shifts in market positions and

32 IBM has cut real estate costs by 50 percent for its marketing and sales costs in the New York-New Jersey area by moving to a converted

warehouse in Cranford, New Jersey. Office space decreased by 75 percent, and only 200 of the 700 employees have permanent desks. Ira Sager,

“The Few, the True, the Blue,” Business Week, May 30, 1994, pp. 124-126. In one comparative study of such new office facilities, consulting

firms Anderson Consulting in San Francisco and Ernst & Young in London reduced their need for space by 68 and 32 percent, respectively,

saving $137,000 and $383,000 per year in gross space costs for 70 and 96 people. Franklin Becker, Bethany Davis, and William Sims, “Using

the Performance Profile To Assess Shared Offices,” Facilities Management Journal, May/June, 1991, pp. 13-29.

33 Mel Mandell, “Office of the Future?” Across the Board, October 1994, pp. 45-47.

34 Sue Shellenbarger, “Overwork, Low Morale Vex the Mobile Office,” The Wall Street Journal, Aug. 19, 1994, pp. B-1, B-4.

35 DYG, Inc., op. cit., footnote 12, lays out many of the characteristics of this type of worker, often called the untethered worker, the mobile

worker or the self-contained worker. See also Mark Weiser, citation in National Research Council, op. cit., footnote 30.

36 For example, see National Research Council, op., cit., footnote 30, pp. 12-13. This point is echoed frequently in the business press and

wireless telecommunications trade press.

37 Kirk Johnson, “New Breed of High-Tech Nomads: Mobile Computer Carrying Workers Transform Companies,” The New York Times,

Feb. 8, 1994, pp. B1, B5.

38 One study found that the time: 1) required to locate a nurse fell from 28 minutes to 20 seconds with a wireless, office-based telephone

system, 2) a nurse waited by a phone for a returned page fell from 52 minutes to less than 2 minutes, and 3) callers were put on hold fell from 62

minutes to 36 minutes. “Effects of Communication Delays on Hospitals: SpectraLink Workflow Study Results, August 1993,” SpectraLink

Company document, n.d.
Chapter 2 Mobility and the Implications of Wireless Technologies 161

Percent of cellular telephone

users agreeing strongly or

agreeing somewhat in:

Cellular telephones have:

Increased your flexibility

Increased your efficiency

Enhanced communications which has made your life less stressful

Made you more productive at work

Made you more competitive

Added a significant amount of time to your day

Made you more successful in business

1991

91

87

83

81

67

78

70

1993

97

91

82

84

73

80

74

SOURCE: The Gallup Organization, “The Motorola Cellular Impact Survey: Evaluating 10 Years of Cellular Ownership in America,”

Princeton, NJ, 1993,

values. Stock quote devices such as QuoTrek,

Quotam, and Metriplex deliver up-to-date information via digital broadcasting facilities or FM

side bands generated by radio stations .39 Users, at

least, believe that wireless technologies improve

their performance (table 2-7).

Wireless telecommunications may increase

productivity for workers who can perform parts of

their jobs in the “dead time” while in transit between places, as noted above. One study assessed

employees’ ability to recapture time spent away

from the office by using cellular telephones.40

Table 2-8 gives the annual productivity gains for

broad job categories.41

Larger amounts of time recaptured in this model yield greater productivity gains. Thus, if a sales

Average Time spent Annual

hours lost making productivity

Annual per week cellular calls, gains per

income away from hours per employee,*

Occupation (dollars) office week (dollars per year)

President or chief executive officer 100,000 12.4 1.2 2,220

Sales or other revenue-generating employee 65,000 18.8 1.6 1,200

Middle management/director/ supervisor 65,000 9.6 1.2 780

Field service person/technician 60,000 15,5 1,3 680

Technical/R&D 45,000 7.4 1,1 -60

Administrative/secretarial 30,000 3.3 0.7 -550

Entry level 25,000 3.7 0.7 -680

SOURCE: “Cellular Use and Cost Management in Business,” study prepared for PacTel Cellular by Yankelovich Partners, Newport

Beach, CA, 1993, pp. 15-18,

39 Jay Mathews, “Getting a Grip on the Markets,” Washington Post, May 20, 1994, pp. Fl, F3.

40 “Cellular Use and Cost Management in Business,” study prepared for PacTel Cellular by Yankelovich Partners, Newport Beach, CA,

1993.

41 Senior executives in the large-sample survey reported they were away from their offices 149 minutes per day, and that they used cellular

telephones about 10 percent of this time. The study then calculated the annual productivity gain by multiplying time recaptured by the average

wage rates for various job classifications.
62 I Wireless Technologies and the National Information Infrastructure

1991 1993

Time added per day (percent) (percent)

A half-hour or less 31 38

Between a half-hour and an hour 16 17

1 hour 23 24

2 hours 17 11

3 hours 4 3

4 hours or more 3 1

Don’t know/not sure 6 3

Lost time/very little NA 3

Mean average (hours) 1,06 0.92

SOURCE: The Gallup Organization, “The Motorola Cellular Impact Survey: Evaluating 10 Years of Cellular Ownership in America,” Princeton, NJ, 1993.

representative recaptured 20 percent of time away

from the office, the productivity gain would be

about $3,540. The negative figures for technical,

R&D, administrative, and entry level categories

indicate that the productivity gain due to recaptured time does not cover the cost of wireless service and equipment.

Another survey reported on the time added to a

person’s day, which averages about one hour, and

on productivity, which averages about 35 percent

(tables 2-9 and 2-10).42

Although these numbers are suggestive of the

positive effects mobile wireless technologies

could have on productivity and efficiency, few

studies of the deployment of these technologies

have been undertaken. The National Research

Council report on distributed work notes that such

work can enhance productivity, but it also suggests that sociological and organizational studies

of distributed work will be needed to ensure that

distributed work can be carried out to serve the

needs of individuals and organizations effectiveProductivity 1991 1993

improvement (percent) (percent)

Zero 9 16

10 17 11

20 15 18

30 15 12

40 6 6

50 10 11

60 4 3

70 6 6

80 6 9

90 2 3

100 4 1

Don’t know/not sure 6 4

Mean (percent) 36 34

SOURCE: The Gallup Organization, “The Motorola Cellular Impact Survey devaluating 10 Years of Cellular Ownership in America, ” Princeton, NJ, 1993.

ly.43 In addition, productivity improvements due

to communications and computing technologies

are difficult to measure.44 Quantitative research is

needed to determine the effects of wireless telecommunications on productivity.

❚ Implications for Society

Universal Service

One of the promises of wireless systems is that

they can provide communication and information

services to citizens who cannot access them via

wireline models or who cannot afford them. While

about 94 percent (240 million) of the U.S. population currently have telephone service, 6 percent

(15.3 million) do not. A number of underserved

populations could benefit from the use of wireless

technologies (see chapter 9).

For example, there are four to five million migrant farmworkers without a permanent residence

42 The Gallup Organization, op. cit., footnote 26. These figures have declined from 1991 to 1993, probably because more cost-conscious

users, the so-called “second-tier” users, have subscribed.

43 National Research Council, op. cit, footnote 30, p. 37.

44U.S. Congress, op. cit., footnote 31, pp. 51-52. See also, Richard A. Kuehn, “Enhanced Technology Doesn’t Always Enhance Productivity,” Business Communications Review, vol. 24, No. 4, April 1994, p. 83.
Chapter 2 Mobility and the Implications of Wireless Technologies | 63

living and working in the United States,45 and

possibly two million homeless people living in

shelters or on the street.46 These people are inherently mobile, and thus have the most difficult

time gaining access to reliable and affordable

communications services.47 There is currently no

effort at the federal level to address their need for

telecommunications access.

Recently, social agencies have begun to provide homeless people with voicemail boxes to facilitate their efforts to find employment, and to

stay in touch with support services, families, and

others.48 Advocates for the homeless say that optimally, people should have access to immediate

communications, such as might be provided by

wireless, which would help assure better safety,

services and employment prospects, all key concerns for the homeless. Failing personal telephone

service, voicemail is an attractive alternative.

Land Use and Transportation Effects

Regional sprawl may also be associated with wireless telecommunications—easier mobile communications together with easy transportation may

exacerbate travel patterns already in place due in

part to earlier development of transportation and

communications infrastructures.49 Past telecommunications development facilitated (though

probably did not cause) the growth and power of

major cities and urban cores, while at the same

time enabling production to be coordinated in factories located outside the cities. In many cases, the

dispersal of production into outlying areas promoted the relocation of people to those areas as

well. While this migration was not caused directly

by either telecommunications or transportation

system improvements, it is unlikely that such

changes would have been so great without them.

The effect of wireless telecommunications on

travel behavior and land use has not been widely

studied, but preliminary work suggests that it may

contribute to urban and suburban sprawl.50 Already there is evidence that car offices are used increasingly by mobile professionals and

services.51 This minimizes the need for costly office overhead, but presumably increases the time

45 U.S. Department of Health and Human Services, Public Health Service, Health Resources and Services Administration, An Atlas of State

Profiles Which Estimate Number of Migrant and Seasonal Farmworkers and Members of Their Families (Washington, DC: U.S. Government

Printing Office, March 1990); National Advisory Council on Migrant Health, 1993 Recommendations of the National Advisory Council on

Migrant Health, (Rockville, MD: National Advisory Council on Migrant Health, May 1993). Migrant workers are difficult to identify, because

of their mobility and language differences from the majority population. Various federal agencies have different definitions and counting methods. See Valerie A. Wilk, The Occupational Health of Migrant and Seasonal Farmworkers in the United States, (Washington, DC: Farmworker

Justice Fund, Inc., 1986), pp. 11-12.

46 National Coalition for the Homeless, “How Many People Are Homeless in the U.S. and Recent Increases in Homelessness,” information

sheet, issue no. 5 (Washington, DC: Homelessness Information Exchange, National Coalition for the Homeless, January 1994). The Census

Bureau estimates, conservatively, that there are about 250,000 homeless people in the United States. U.S. Department of Commerce, Bureau of

the Census, Statistical Abstract of the United States, 1994 (Washington, DC: U.S. Government Printing Office, September 1994), table 84, p. 69.

47 See Chantal de Gounay, “L’âge du citoyen nomade,” Esprit Paris, France, no. 11, November 1992, pp. 113-126, for a discussion of contemporary nomadism and culture in advanced industrial societies.

48 N.R. Kleinfield, “For Homeless, Free Voice Mail Can Be a Key to a Normal Life,” The New York Times, Jan. 30, 1995, pp. B1, B6; “Hold

My Calls,” Newsweek, Mar. 30, 1992, p. 9; “No Home: Please Hold,” The Economist, Dec. 18, 1993, p. 29.

49 Ithiel de Sola Pool et al., “Foresight and Hindsight: The Case of the Telephone,” in The Social Impact of the Telephone, Ithiel de Sola Pool

(ed.), (Cambridge, MA: The MIT Press, 1977), pp. 127-158.

50 Youngbin Yim, Institute of Transportation Studies, University of California, Berkeley, interview, Jan. 24, 1995. See also Youngbin Yim,

Adib Kanafani, and Jean-Luc Ygnace, “Expanding Usage of Cellular Phones: User Profile and Transportation Issues,” PATH Research Report,

UCB-ITS-PRR-91-19, (Berkeley, CA: University of California, Institute of Transportation Studies, Program on Advanced Technology for the

Highway, December 1991).

51 See, for example, Sue Ellen Christian, “It’s Not a Car, It’s a Mobile Office,” The Washington Post, Aug. 8, 1994, pp. 17, 21.
64 | Wireless Technologies and the National Information Infrastructure

spent on the road, and enables greater deconcentration from central facilities. Much more

work will be required to determine what factors

account for urban form and land use, including

sprawl, and what role wireless telecommunications technologies may play.52

52 An ongoing OTA study is examining questions of information and other technologies and urban form. See U. S. Congress, Office of

Technology Assessment, Technological Reshaping of Metropolitan America, (in progress).
| 65

art B:

Wireless

Technologies

and Applications

Developing a framework for discussing and

analyzing wireless technologies in the context of

the National Information Infrastructure (NII)

poses many challenges. Historically, systems and

services were classified and regulated in terms of

the technologies used to transmit or deliver

them—broadcast, telephone, cable, satellite, cellular, microwave, and so on. Such distinctions,

however, are less meaningful now because the diffusion of digital technology and the convergence

of services have blurred the categories. Other categorization schemes have been suggested based

on: 1) technology drivers, 2) differences in the

type of service delivered (mobile or fixed access),

3) broadband or narrowband, and 4) level of interactivity.

To present the technologies and their applications in the most intuitive and understandable

way, the Office of Technology Assessment uses a

scheme that divides wireless technologies and applications along functional, service-oriented

lines: voice, data, and broadcast and high-bandwidth applications. This scheme is not perfect;

there will be overlap among categories and between systems, particularly as technology continues to advance. Some, but not all, distinctions

between the categories, for example, will likely

disappear as different systems begin delivering

similar services and information. However, many

systems are likely to remain much the same well

into the future. Different consumer and business

needs and costs will drive users to make many

tradeoffs—between cost and coverage and speed

and cost, for example—allowing many different

types of systems and services to survive and prosper. Chapters 3, 4, and 5 discuss the technologies

being developed to provide wireless voice, data,

and video/broadband services, respectively.

 Voice Technologies and Applications

 Wireless Data

 Broadcast and High-Bandwidth Services
Voice

Technologies

and

Applications

uch of the media attention surrounding wireless

technologies has focused on mobile telephone services,

primarily cellular telephony and new Personal Communication Services (PCS). Industry representatives and

analysts have pointed to the high growth rates of cellular service

as evidence of pent-up demand for mobile voice services. In response to this perceived demand, existing wireless carriers and

new companies are planning to greatly expand the capacity and

variety of wireless voice services they provide. The first part of

this chapter examines the systems—both existing and under development—that will offer mobile voice communication services. Mobile data services, often provided by the same physical

systems, are discussed in the following chapter.

In addition to providing mobile services, wireless technologies

can also be used in fixed applications—to provide telephone (and

data) service to homes and businesses.1 Radio-based technologies may serve some households more efficiently or easily than

traditional wireline technologies, and, in particular, wireless may

be less expensive than wireline in remote areas, where long copper loops are expensive to install and maintain. However, wireless may play a role even in urban areas because it may allow new

competitors to enter the market for local telephone services. With

a few transmitters, new entrants can provide local exchange service to a neighborhood, avoiding the expense of re-creating the

incumbent local exchange carrier’s extensive copper network.

1 “Fixed” refers to the fact that the user’s equipment is physically connected to a specific location.

| 67
68 | Wireless Technologies and the National Information Infrastructure

Fixed wireless services are discussed in the second half of this chapter. Many of the issues and implications of deploying wireless voice services in

the National Information Infrastructure (NII)—

such as interconnection, health concerns, and

standards—are discussed more extensively in

later chapters.

FINDINGS

 The regulatory distinction between mobile

and fixed wireless services, while based on

valid historical, technical, and regulatory

reasoning, is becoming increasingly unclear

and should be revisited. The wireless technologies that will be used to provide mobile telephone services and fixed services are very

similar. In fact, it is possible to serve both fixed

and mobile users with the same network. Current regulations, however, continue to treat

fixed and mobile voice services differently,

based on technical limitations that no longer

exist and the protection from competition that

regulators afforded the local telephone companies. Under current rules, the treatment of various mobile service providers—including

cellular and PCS—regarding services provided

to fixed locations remains inconsistent and unclear. The Federal Communications Commission (FCC) may need to clarify the conditions

under which wireless providers can provide

fixed service. Without action on this issue,

wireless will be unable to compete effectively

in the market for local telephone service.

 OTA finds that the amount of spectrum dedicated to terrestrial mobile voice services is

currently adequate, but additional allocations may be required over the long term.

Over the last three years, the FCC has allocated

a large amount of spectrum for terrestrial mobile services. This should provide adequate capacity for current mobile voice services until

after the turn of the century. However, if current

voice systems plan to upgrade their services to

provide high-speed data, video, and multimedia applications, current spectrum allocations

may be inadequate in the long term. If highbandwidth services take off, additional spectrum may be needed.

The need for additional spectrum for commercial mobile satellite services, however, is

less clear. U.S. satellite companies have long

maintained that international and domestic frequency allocations are inadequate—limiting

the services that can be provided and the number of companies that can compete in the market. The U.S. government has vigorously

pursued additional spectrum allocations in international fora for a number of years, an effort

that will continue at the 1995 World Radiocommunications Conference. However, at least five

companies are poised to enter the satellite voice

communications market over the next five

years, and more firms may try to join in. Given

the number of companies planning to offer satellite-delivered voice communications services and the uncertainty of the demand for

such services, it is far from certain that the market will be able to support these firms.2 Such

spectrum needs should be carefully evaluated

against other uses of the spectrum.

Public safety users have long fought for

more spectrum, but their needs continue to

be unmet. Congestion of public safety radio

spectrum is common, and users report that it

can seriously impact the usefulness of public

safety radio systems. The growing use of data,

images, and even video in law enforcement will

severely tax public safety radio frequencies. A

recent congressionally mandated FCC study of

public safety spectrum needs has been criticized by the public safety community for seriously underestimating their needs. A more

2 For a more complete discussion of the marketing and technical challenges facing mobile satellite companies, see U.S. Congress, Office of

Technology Assessment, The 1992 World Administrative Radio Conference: Technology and Policy Implications, OTA-TCT-549 (Washington, DC: U.S. Government Printing Office, May 1993).
Chapter 3 Voice Technologies and Applications | 69

indepth evaluation of these needs is required,

including an analysis of technology trends that

could either alleviate the problems or exacerbate them.

 The emergence of competition in the market for

mobile voice communications is likely to benefit consumers by lowering prices, encouraging

higher quality and reliability, and promoting

innovation that could lead to a wide range of

new services. However, new competitors to

the incumbent cellular service providers will

face technical and economic challenges that

may ultimately result in the benefits of competition being less than proponents predict.

For example, although a given geographic area

could potentially have up to 10 competing mobile telephone providers, it is unlikely that the

more sparsely populated, rural areas of the nation will see this level of competition. These

areas will not have enough prospective customers to support a large number of service providers. The long-term effect may be that in some

areas, competition will not be sustainable and

the benefits promised do not materialize. Although such shakeouts are a normal byproduct

of competition, their longer term effects on

prices and the diversity of services remain uncertain. If and when wireless communications

systems become carriers of last resort, the effects of these long-term market structure concerns will be magnified.

MOBILE VOICE SERVICES

For most of the history of telecommunications,

users have only been able to communicate to and

from fixed locations—wherever the copper wires

could reach. In the past few years, however, advances in wireless technologies have made it possible to imagine a future in which communication

can take place anytime and anywhere. Mobile

phone services, which allow users on the move to

make and receive calls much as they would with

an ordinary wireline phone, will play an increasingly important role in the NII. Within a decade,

according to some projections, there could be almost 100 million mobile phones in use.3 New

wireless technologies may lead to a shift in the nature of communications, away from today’s model of place-to-place communications to one based

on person-to-person communications.

❚ The Evolution of Mobile Telephone

Service

Mobile telephone service began in 1946,4 but subscribership grew very slowly. Because the FCC allocated only a small amount of spectrum to mobile

telephony, systems were limited in the number of

users they could support. Demand for service

quickly outstripped capacity, leading to poor service at busy times of the day. Users often would

have to try several times before their call went

through. In some cities, carriers had to restrict the

number of subscribers in order to maintain a reasonable level of service. For example, in 1978, the

mobile telephone system in New York served only

525 customers, and there were 3,700 customers on

the waiting list.5 Even with restrictions on the

number of subscribers, over half of the calls attempted did not go through.6

Wireless telephone service entered a new era

when the first cellular telephone system began operating in Chicago in 1983. The FCC allocated

much more spectrum to the cellular operators than

it had previously allocated to mobile telephone

3 Personal Communications Industry Association, ”1994 PCS Market Demand Forecast” (Washington, DC: Personal Communications Industry Association, January 1995); Personal Communications Industry Association, “PCIA 1995 PCS Technologies Market Demand Forecast

Update, 1994-2005,” (Washington, DC: Personal Communications Industry Association, January 1995).

4 The first system was in St. Louis. In less than a year, mobile telephone service was being offered in more than 25 cities. For a discussion of

the early history of mobile communications, see George Calhoun, Digital Cellular Radio (Norwood, MA: Artech House, 1988).

5 William C.Y. Lee, Mobile Cellular Telecommunications (New York, NY: McGraw Hill, 1995), p. 2.

6 Ibid., p. 3.
70 Wireless Technologies and the National Information Infrastructure

.

I

1984 85 86 87 88 89 90 91 92 93 94

SOURCE: Office of Technology Assessment, 1995.

gy allowed system operators to use their spectrum

more efficiently. Subscribership grew steadily in

the 1980s, as businesses and professionals recognized the advantages of being able to stay in touch

at all times (see figure 3-l); in the early 1990s,

subscriber growth reached 40 per cent per year.7

As prices have decreased, however, the profile of

the typical cellular user has changed. Cellular carriers have begun to tap the broader consumer market and attract customers who use their phones for

personal, rather than business, calling. There are

now over 24 million users of cellular service.8

Many believe that the high rate of growth in

mobile telephony will continue for the foreseeable

future. In part, these projections are based on the

fact that cellular penetration is still only 10 percent of the potential market.9 However, future

growth will also be driven by technological advances that enable a more functional, lower cost

service. Handsets are becoming smaller, lighter,

and less expensive, continuing their evolution

from bulky car phones to small portables. In addition, the transition from today’s analog wireless

technology to digital technology will allow wireless systems to support many more users at a lower cost per user. The combination of affordable

service and small handsets has allowed service

providers to envision a future in which tens of millions of users take pocket phones with them everywhere they go.

The projected growth in demand for mobile

telephone service led the FCC to allocate a large

amount of additional spectrum to mobile telephony in 1994. This new spectrum will be shared by

up to six additional wireless operators in each

market. The FCC refers to these new licensees as

Personal Communications Service providers, reflecting the new vision of mobile communications

systems targeted to users with pocket phones rather than car phones. PCS providers will compete

with the existing cellular operators, driving the

cost of mobile telephony down even further, and

also will explore new niche services. Some PCS

providers plan to offer service by the end of 1995,

but most of the new operators will not begin service until the end of 1996 or early 1997. Additional competition will be provided by the Specialized

Mobile Radio (SMR) operators, who are beginning to transform their dispatch systems into true

mobile phone services by deploying a new generation of technology.

New technologies are also expanding the reach

of mobile communications services. For example,

network operators are increasingly providing inbuilding coverage in arenas, train stations, and

public buildings. In addition, the deployment of a

new generation of satellite systems will allow users to communicate wherever they are in the

world-on ships, on airplanes, and in remote

areas that could never support a terrestrial wireless

service such as cellular. In the future, a single

phone may be able to act as a cordless phone in the

7 Cellular Telecommunications Industry Association, Indusrry Data Survey, December 1994-

8 Ibid.

9 Ibid.
Chapter 3 Voice Technologies and Applications 71

SOURCE: Office of Technology Assessment, 1995.

home, a cellular phone in the city, and a satellite

phone when traveling in remote areas. Seamless

systems that integrate all of these functions will

help realize the vision of “anytime” and “anywhere” personal communications services.

❚ Services and Users

Three mobile phone services--cellular, PCS, and

SMR---use terrestrial wireless technologies, relying on antennas mounted on buildings and towers

to provide radio coverage in cities and along highways (see figure 3-2 ). These terrestrial systems

will be complemented by mobile satellite services, which can provide mobile telephone service

in areas where terrestrial systems are not viable. It

is difficult to draw distinctions between the three

terrestrial mobile telephone services because the

technology they use and the services they provide

are similar. However, they differ to some extent in

their history, industry structure, and target market.

CeIlular Telephony

Cellular is the best known and most established

mobile telephone service, drawing its name from a

system design concept that allows for efficient use

of the spectrum. At first, cellular operators designed their networks to provide a car phone service. Over the past decade, however, technological advances have allowed the manufacture of

small portable phones that weigh only a few

ounces. As a result, cellular systems increasingly

are being designed to provide good coverage for

pedestrian users as well, both indoors and on city

streets. Cellular systems are operational in most

cities and larger towns, and along most major

highways as well.

The cost of becoming a cellular user has declined substantially over the past decade, due primarily to the impact of economies of scale on the

cost of the phone. The apparent cost of the handsets is further reduced by subsidies that the cellu-
7 2 Wireless Technologies and the National Information Infrastructure

lar carriers use to attract new customers.

Customers then pay a basic monthly rate, as well

as a per-minute airtime charge. Airtime charges

vary by company and by time of day, but typical

rates during the day range from 30 to 40 cents per

minute, with lower rates in the evening and on

weekends. Carriers also offer a range of calling

plans, targeted at different users, that include

some “free” minutes. As lower volume customers

As cellular telephone technology has advanced, phones have

become progressively smaller and Iighter, as seen here with a

car-mounted cellular phone (top left), a transportable phone

(bottom Ieft), and a pocket-sized phone (above).

who use their phones primarily for personal calling or in case of emergencies have signed up, the

average monthly bill for cellular service has declined from $96.83 in 1987 to $56.21 in 1994.10

Cellular users can choose between two providers in each market. One of the carriers, the B-side

or wireline carrier, is a subsidiary of the local telephone company; the other carrier, the A-side or

nonwireline carrier, is independent-although

many A-side carriers have been acquired by or entered into agreements with telephone companies

operating out of their home territories. In creating

the cellular industry, the FCC divided the country

into 734 markets and assigned licenses separately

for each market. As a result, ownership in the industry has been highly fragmented. Over the past

several years, however, there has been considerable consolidation as carriers have acquired or

merged with other carriers. 11 In part, industry consolidation has been driven by the need to assemble

capital for the PCS auctions, but it also allows car-
Chapter 3 Voice Technologies and Applications 73

When the Federal Communications Commission created the cellular industry, it divided the nation

into many small license areas. Because users did not want to be restricted to using their home system,

the cellular ’industry has worked to make it possible for users to make and receive calls while traveling

outside the home area. This is called roaming.

One basic requirement for roaming—that a user’s phone be compatible with all cellular systems—

was met when the FCC instructed all cellular carriers to use the same technology, the Advanced Mobile

Phone System (AMPS). In the future, however, compatibility may not be guaranteed. The FCC has not

specified a standard technology that all carriers have to deploy as they upgrade to digital, the next

generation of cellular technology. These standards issues are discussed in detail in chapter 6.

Roaming also requires that the home and visited systems be able to exchange messages about the

roamers. Before it allows a roamer to make a call, the visited system checks with the roamer’s home

system to determine if they are a valid user or a fraud risk. The visited system also tells the roamer’s

home system where its customer is located. The home system is then able to forward any incoming

calls to the visited system, allowing users to receive calls wherever they are located. To exchange messages about roamers, the cellular industry has set up roaming networks using leased lines and special

computer communications systems.

Roaming has become easier over the past five years, but can still be problematic. Not all carriers

have deployed the most advanced roaming technology. In some cases, roamers have to give a credit

card number before they can make a call or have to dial a special code in order to activate call delivery

every time they enter a different service area. In addition, carriers often impose a daily fee on roamers,

as well as per-minute charges much higher than their home airtime rates, although carriers have begun

to compete with each other on roaming charges. Roaming is generally easiest among properties owned

by the same carrier, or among carriers that have agreed to an alliance that includes a common brand

name.

SOURCE: Office of Technology Assessment, 1995.

riers to offer a larger service area than their com- ships that allow users to make and receive calls

petitor, an important selling point.

The recent consolidation is the latest effort by

the cellular industry to overcome the fragmented

licensing structure imposed by the FCC. In the

early years of cellular, subscribers were limited to

service within their home market. But users soon

demanded the ability to make calls when they

traveled in other cities or to continue calls when

they drove into a neighboring license area. Users

needed to be able to temporarily use another operator’s system, which is known as roaming (see

box 3-l). Cellular carriers have worked together

to develop the technologies and business relationoutside their home service area, but roaming is

still not always seamless. Users may have difficulty placing calls, and calls to them may require callers to know where they are and dial access codes.

Moreover, users incur substantially higher airtime

charges when roaming, often $1 per minute or

more.

Personal Communications Services

In 1993, the FCC reallocated 120 megahertz

(MHz) of spectrum for PCS.12 This spectrum is

between 1850 and 1990 MHz, often referred to as

the 2 gigahertz band (cellular, on the other hand, is

12 Federal Communications Commission, Second Report and Order, Amendment of the Commission’s Rules TO Establish New Personal

Communications Services, GEN Docket No. 90-314,8 FCC Rcd 7700 (1993).
74 I Wireless Technologies and the National Information Infrastructure

I I

1850 1990

SOURCE: Office of Technology Assessment, 1995.

in the 800 megahertz band). The 120 MHz will be

divided among six licensees in each market—three will get 30 MHz and three will get 10

MHz (see figure 3-3). The 30 MHz blocks are

comparable in size to the 25 MHz blocks assigned

to the cellular carriers, while the 10 MHz blocks

could either be used for niche services or aggregated with other PCS or cellular spectrum. Depending on whether the 10 MHz blocks are used

for a stand-alone service or aggregated with other

spectrum, there will be between three and six PCS

carriers in each market.

The FCC has defined PCS broadly as a “family

of services” that will serve a variety of communications needs.13 In practice, the term PCS is

used less to define a particular wireless service

and more as a label for the operators that will be

using the new 2 GHz allocation. At frost, it was believed that PCS providers would offer a service

somewhat distinct from that offered by the cellular

operators. According to this concept, PCS would

be a lower cost service than cellular, but would not

offer the same functionality. It would be an enhanced cordless phone or low-tier service that

would not support vehicular-speed mobility, but

would still allow pedestrian users to make and receive calls. Because the system would not be required to support vehicular-speed mobility, the

handsets could be simpler and therefore smaller,

lighter, and less expensive.

Over the last several years, however, proposed

PCS services have begun to look more like those

offered by the cellular carriers. One reason is that

potential licensees have come to believe that there

is greater demand for a service that can be used in

both the pedestrian and vehicular environments.

Moreover, even high tier cellular-type handsets

are becoming smaller and less expensive. As a result, it now appears that the main impact of the

new PCS spectrum will be in providing competition to the two existing cellular carriers.

In 1994, the FCC granted pioneer’s preference

status to three companies that the Commission believed had done significant work in experimenting

with new PCS technologies.14 These licensees—

in Los Angeles, New York, and Washington—

have already begun constructing their networks

and may be offering service by the end of 1995.

The other PCS licenses are being assigned this

year by auction. The first round of auctions, for

two of the 30 MHz licenses, ended in March, and

the remaining licenses will be auctioned later in

1995. The first of the systems built by an auction

winner is not expected to be operational until the

end of 1996.

13 Ibid., p. 7713.

14 Federal Communications Commission, Tentative Decision and Memorandum Opinion and Order, Amendment of the Commission’s Rules

to Establish New Personal Communications Services, GEN Docket No. 90-314, Nov. 6, 1992. ‘he FCC granted pioneer’s preference licenses to

American Personal Communications (AX) (for the Washington market), Cox Enterprises (LOS Angeles), and Omnipoint Communications

(New York).
Chapter 3 Voice Technologies and Applications | 75

In the first round of auctions, three entities acquired many of the licenses. One consortium that

acquired a large number of licenses consisted of

Sprint and three major cable companies, Cox,

TCI, and Comcast; they hope to attract customers

with a package of long distance, local wireline,

and local wireless service. AT&T, which also acquired many of the PCS licenses, hopes to use

PCS spectrum to fill in the gaps between its cellular licenses, creating a nationwide wireless network. The third active participant in the auctions,

a consortium of four cellular companies, Bell Atlantic Mobile, NYNEX Mobile, AirTouch, and

US West New Vector, is pursuing the same strategy. They will offer their customers “dual-band”

phones that work at the cellular frequencies where

the carrier has cellular licenses and at the PCS frequencies where the carrier has PCS licenses.

Specialized Mobile Radio

Until the early 1980s, the primary use of wireless

systems was for business and public safety dispatch communications. In dispatch communications, brief messages with a duration of less than a

minute are exchanged between a control center

and mobile users in the field. Dispatch systems are

widely used by police and fire departments, taxicabs, delivery services, and construction companies. Because dispatch systems are used primarily

for the internal communications needs of an organization, and are generally not interconnected

with the landline public switched network, the

FCC classifies them as private mobile radio services.

In some cases, organizations operate their own

dispatch system. In others, they obtain service

from a third party, known as a Specialized Mobile

Radio (SMR) provider. Instead of each business

operating its own dispatch radio system, the SMR

carrier operates the system and sells dispatch service to several different businesses. Taxicabs,

plumbing companies, and limousine services are

good examples of customers that use SMR dispatch service. The SMR service was established

by the FCC in 1974.

Although dispatch service is the traditional

mainstay of SMR carriers, some SMR systems,

especially those in rural areas, provide interconnected mobile telephone service. The spectrum inefficiency of SMR technology is not as critical in

rural areas, allowing it to compete with cellular. In

addition, cellular service came last to rural areas,

many years after the cellular networks in the cities

began operating; the last of the cellular Rural Service Areas licensed by the FCC did not get service

until 1992. As of December 1993, about 425,000

of 1.5 million SMR handsets could be used for interconnected service.15

In the future, mobile telephone service may become an even more important part of SMR service. Driving this development is Nextel, a

company that began buying many small- and medium-sized SMR operators in the late 1980s. With

these acquisitions, Nextel has been able to acquire

licenses and systems throughout the nation. While

it still has less spectrum than a PCS or cellular licensee, Nextel believes that it has enough to

deploy a digital technology known as Enhanced

Specialized Mobile Radio (ESMR), which replaces the traditional single SMR antenna with a

cellular architecture—allowing ESMR systems to

use the spectrum more efficiently than traditional

SMR technology, and potentially allowing Nextel

to provide a true mobile telephone service.

The deployment of ESMR technology was expected to transform Nextel into a competitor to the

cellular carriers for mass market mobile phone

service. However, there have been reports that

ESMR sacrifices voice quality to achieve reasonable capacity in the limited SMR spectrum.16

15 Federal Communications Commission, Second Report and Order, Implementation of Sections 3(n) and 332 of the Communications Act,

GN Docket 93-252, Mar. 7, 1994, p. 59, at footnote 294.

16 For a discussion of this issue, see Judith S. Lockwood, “Considering Nextel? What Wireless Users Need To Know,” Wireless, March/

April 1995, vol. 4, No. 2, p. 30.
Wireless technologies and the National Information Infrastructure

service in other large markets throughout 1995

and 1996.

Nextel's Fully lntegrated Digital Portable Flip Phone allows

subscribers to place and receive voice calls, as well as receive messages, numeric pages, voice mail alerts. and text

messages.

Nextel recently announced that it plans to scale

back its plans to compete broadly with cellular in

order to target business users, providing them

with an integrated unit that combines telephone,

paging, and dispatch capability in a single handset. Nextel will also try to capitalize on the fact

that it owns licenses throughout the nation, allowing it to provide seauless roaming more readily

than the cellular operators. There are currently

about 10,000 ESMR customers17 in Los Angeles

and San Francisco, but Nextel plans to activate

Mobile Satellite Services

Terrestrial wireless services such as cellular are

not economical in sparsely populated areas because there are not enough users to justify the cost

of building a tower every few miles. Although

there is at least one cellular licensee in each of the

734 license areas defined by the FCC, the licensees typically do not provide coverage to every

square mile. In rural areas, especially west of the

Mississippi, there are large areas where the only

cellular coverage is along interstate highways.

Satellite services can fill in the gaps in areas where

terrestrial systems are not viable and help realize

the vision of communications services available

everywhere in the nation.

Geostationary satellite systems18

Limited satellite telephone service has been available for several years through the International

Maritime Satellite Organization (Inmarsat). The

Inmarsat system was originally established to provide communications to ships, but now also provides land mobile communication. The phones

are bulky, briefcase-sized units that weigh about

25 pounds and cost between $15,000 and $20,000.

The service is expensive at $4.95 per minute. But

Inmarsat provides telephone service almost everywhere in the world and has been widely used

for disaster relief, news-gathering, and businesses

such as oil exploration and mining. There are

about 10,000 land mobile terminals operational in

the Inmarsat system worldwide, accounting for

about one-third of Inmarsat’s customers.19

Later this year, American Mobile Satellite

Corp. (AMSC) is expected to begin providing a

more advanced mobile satellite service in the

17 Because an ESMR customer is typically a business, each customer averages about 10 phones. Ibid.

18 Geostationary satellites orbit the Earth 22,300 miles above the equator. At this altitude, they orbit the Earth at the same speed that the

planet rotates. As a result, they appear fixed at a specific point in the sky, allowing satellite dishes on the ground to easily communicate with

them.1 9 Jack Oslund, Director, External Affairs, Comsat Mobile Communications, letter to the Office of Technology Assessment, U.S. Congress,

Washington, DC, Aug. 2,1994.
Chapter 3 Voice Technologies and Applications | 77

United States. AMSC, a consortium of large telecommunications firms, was formed in 1987, and

is currently the only company in the United States

authorized to provide mobile satellite services.20

AMSC plans to market its service as an extension

of terrestrial cellular telephone systems, primarily

targeting the mobile user market, although offering some fixed services as well. AMSC will offer

a car phone service with the transmitter installed

in the trunk of the car, but because of the large

amount of power needed for the signal to reach the

satellite, handheld portable phones cannot be developed for the system. The car phones will have

dual-mode capability—connecting users to the

cellular network in areas where there is coverage,

and switching to AMSC’s satellite in remote areas

beyond the reach of cellular. A total of 140 cellular

carriers have signed on to market AMSC phones

and service to their customers. In addition to traditional cellular phone users, such as business travelers, AMSC’s service is expected to appeal to

trucking companies, owners of corporate or general aviation aircraft, as well as remote populations currently without phone service. AMSC

expects to offer its service for $25 a month, plus

about $1 per minute of usage.21

Low-Earth orbiting (LEO) satellite systems

A new generation of mobile satellite services is

expected to become operational in the late 1990s.

Instead of using a small number of geostationary

satellites like those employed in the Inmarsat and

AMSC systems, these new systems will consist of

a constellation of many smaller satellites in lowEarth orbit (LEO). Because the satellites orbit

close to the Earth, LEO systems permit the use of a

low-power handheld device about the same size as

a portable cellular phone. There are two types of

LEO systems. The so-called little LEOs are designed for low-speed data services only (see chapter 4), while the big LEOs are designed to provide

both voice and data services.

Several companies have proposed big LEO

systems (see box 3-2). Like the AMSC system,

they will use a dual-mode phone that switches between cellular and satellite coverage as necessary.

Handset costs will range from $500 to $3,000, and

service costs are projected to range between $0.40

and $3.00 per minute. Unlike AMSC, big LEOs

will offer global coverage, providing users with

the convenience of service from a single provider

anywhere in the world. Potential markets include

international tourists, business travelers, relief organizations, and government agencies.

LEO proponents have overcome many hurdles.

The first step was to obtain an international spectrum allocation at the 1992 World Administrative

Radio Conference (WARC-92).22 The five U.S.

applicants who had sought approval to deploy big

LEO mobile systems then had to work out a plan

for sharing the small amount of available spectrum. Finally, in January 1995, the FCC granted

licenses to three of the five applicants to begin

construction of their systems.23 The licensees still

must obtain licenses to operate in other countries

and assemble enough capital to deploy their systems, which will cost between $1.5 billion and $4

20 LEO systems have been given authority to construct, but not yet to operate their services. AMSC’s singular status, and its consortium

composition, is the result of an FCC decision to grant only one license for geostationary mobile satellite service due the limited amount of spectrum available at the time. Public investors now control roughly 34.6 percent of AMSC followed by Hughes Communications (27.2 percent),

Singapore Telecommunications (13.6 percent), McCaw (now AT&T) (12.5 percent), Mobile Telecommunications Technologies Corp. (7 percent), and others (5.1 percent). American Mobile Satellite Corp., 1993 Annual Report.

21 AMSC is already offering commercial service to trucking companies with a leased satellite.

22 See Office of Technology Assessment, op. cit., footnote 2.

23 FCC licenses were issued to Iridium, Inc., TRW, and Loral Qualcomm. Systems proposed by Mobile Communications Holdings, Inc. and

Constellation Communications did not receive licenses. Action on these applications was deferred until January 1996 to allow the firms to show

their financial qualifications. “FCC Clears Global Satellite Projects of Motorola, TRW, Loral, Qualcomm,” The Wall Street Journal, Feb. 1,

1995, p. A4.
78 I Wireless Technologies and the National Information Infrastructure

In late 1990 and early 1991, five companies applied to the FCC to provide mobile communications

services using low-Earth orbiting (LEO) satellites. Three systems—lridium, Globalstar, and Odyssey—

were later granted permission to construct, although final operating authority was withheld until international allocations for the links between the satellites and the gateways (“feeder” links) are agreed to and

sufficient spectrum is available. The systems are now being built. Ellipso and Constellation were denied

construction licenses until they could provide better financial qualifications, and have until January

1996 to do so. A sixth system, lnmarsat-P, has applied for a license in the United Kingdom.

Iridium (Motorola Satellite Communications, Inc.)

The Iridium system will consist of a constellation of 66 LEO satellites and 15 to 20 Earth-based gateways that connect users to the public switched telephone network. Iridium investors will own and operate the gateways and be responsible for obtaining national licenses for operation of subscriber handsets, spectrum utilization, transborder agreements, PSTN interconnection, service provision

arrangements, and distribution agreements. The networked satellites will orbit the Earth on six different

planes of 11 satellites each. They will travel longitudinally, ringing the planet from pole to pole, at an

altitude of 770 kilometers and completing a full orbit in 100 minutes. The Iridium satellites will be capable of passing a telephone call directly from satellite to satellite--the only big LEO system to do somaking each satellite a small orbiting switch, and making the Iridium system the most technically complex.

Iridium plans to use dual-mode satellite/cellular handsets that will allow subscribers to use the terrestrial cellular infrastructure when available or the satellite network when the user is in an area not

served by cellular. Handsets will cost up to $3,000 and calls will average $3 per minute. The system will

use a combination of time division multiple access (TDMA) and frequency division multiple access

(FDMA) schemes. Commercial service is expected to become available in 1998 with the company projecting a market of 1.5 million users by the year 2000,

The system is expected to cost $3.37 billion for design, production, and launch, plus $2.8 billion for

operation and maintenance over the first five years of operation. Investments in Iridium totaled $1,57

billion as of February 1995, with Motorola, Inc. committed to meeting the construction costs and operating expenses necessary for system deployment. Motorola, Inc. is the largest investor with 27 percent of

Iridium Inc.’s stock. Iridium’s second largest investor is a consortium of 17 Japanese companies that

invested about $235 million, led by DDI Corp., Japan’s second-largest telecommunications company.

Other investors include Vebacom GmbH, the telecommunications arm of German energy conglomerate

Veba AG; Korea Mobile; Sprint; STET, Italy’s PIT; Bell Canada; Raytheon; Lockheed and others.

Globalstar (Loral/Qualcomm L. P.)

The Globalstar system design calls for a network of 48 satellites located 750 nautical miles above

the Earth that will relay global digital voice and data traffic from fixed and mobile handsets to a terrestrial gateway—there are no intersatellite links. Satellites have a 1,500-mile-wide footprint, and will be

organized in eight planes with six satellites in each plane and provide “global” coverage between 70

degrees latitude north and south. The system will use code division multiple access (CDMA) transmission modulation. Globalstar predicts a handset priced initially at $700, and services will cost 30 cents

per minute plus 10 cents per minute for interconnection. Monthly service charges will be $8 to $10.

Service is scheduled to begin in 1998 with a company-projected market of 2,7 million users by the year

2002.

(continued)
Chapter 3 Voice Technologies and Applications 79

Loral/Qualcomm estimates the cost of the system at $1.554 billion, including system deployment

and first-year operating costs. Globalstar, L. P., an international partnership founded by Loral Corp. and

Qualcomm, Inc., invested $275 million in an initial financing round in March 1994. Funds totaling $492

million had been raised as of February 1995, including commitments from AirTouch Communications,

Inc.; Alcatel N.V. and France Telecom of France; Vodafone plc of the United Kingdom; DACOM Corp.

and Hyundai Electronics Industries Co. Ltd. of South Korea; Daimler Benz Aerospace AG of Germany;

Finmeccanica of Italy; and the international Space Systems/Loral aerospace consortium.

Odyssey (’TRW, Inc. and Teleglobe)

Unlike the Iridium or Globalstar systems, the Odyssey system is technically a medium-Earth orbiting

system. Twelve satellites, equally divided into three orbital planes at an altitude of 10,354 kilometers, will

provide global digital voice and data communications by linking mobile handsets with ground-based

cellular and terrestrial networks via 10 or 11 earth stations, using CDMA/FDMA modulation schemes.

No inter-satellite communications are planned. Handsets are expected to be priced at less than $500,

and service will cost approximately 65 cents per minute, plus 10 cents per minute interconnection fees

and a monthly charge of $24.

Odyssey will be established as a limited partnership, with TRW and Teleglobe serving as the founding general partners and jointly managing the project. TRW, Inc. estimates $1.8 billion to construct,

launch, and operate the system for one year. Teleglobe and TRW will provide 5 percent and 10 percent

of the equity, respectively. They are seeking financing for the remaining 85 percent, most of which is

expected to be in equity and the balance a combination of debt and vendor financing. TRW said it has

sufficient current assets and operating income to finance the project, and submitted a declaration during the licensing process committing TRW to expend the funds necessary to construct, launch, and

operate the Odyssey system.

Ellipso (Ellipsat/Mobile Communications Holding, inc.)

Ellipso plans to provide global digital voice and data services to mobile or handheld terminals

through two constellations of medium-Earth elliptical orbit satellites designed to maximize service to the

Earth’s populated land masses. The Borealis subconstellation of 10 satellites would service northern

latitudes and operate in two elliptical orbits of five satellites each with apogees of 7,846 kilometers. The

six-satellite Concordia subconstellation would cover tropical and southern latitudes and operate in a

single circular equatorial orbit at 8,068 kilometers. Like Globalstar and Odyssey, the satellite will serve

as relays between users and gateways on Earth---no intersatellite links are planned. User terminals are

expected to cost approximately $1,000 within one to two years of service initiation and 50 cents a minute for usage. They will use CDMA technology.

The system will cost $564 million to construct, launch, and operate for the initial year. MCHI said in

its statement of financial qualifications that it would rely on internal support from its shareholders, vendor financing (including committed funds from Ariansespace in the form of convertible debentures),

equity investments, and other committed funds to cover the expected system costs. MCHI shareholders

include Barclays de Zoete Wedd Ltd. of London, Westinghouse Electric Corp., and Fairchild Space and

Defense Co. Cable & Wireless plc of the United Kingdom recently acquired 50,000 shares or 2 percent

of its stock with an option to acquire an additional 600,000 shares.

(continued)
80 Wireless Technologies and the National Information Infrastructure

ECCO (Equatorial Constellation Communications)

Initially, 12 satellites will orbit in a single ring around the equator. The complete constellation would

add seven planes of six satellites each (five operational and one spare) for a total of 54 satellites in orbit

(46 operational, eight spares). The system is designed to provide mobile and fixed-site voice, data,

facsimile, and position location services in more than 100 countries in Central and South America,

Southeast Asia, India, Africa and the Middle East.

Constellation Communications, Inc. filed the original license at the FCC, but recently, Constellation,

Bell Atlantic Enterprises International, and Telecommunicacoes Brasileiras S.A. (“Telebras”) signed a

Memorandum of Understanding as a framework for discussing the creation of a joint venture to own and

operate a LEO satellite system. Constellation Communications, Inc. submitted commitment letters and

balance sheets for its newly disclosed equity investors, Bell Atlantic and E-Systems, Inc. Constellation

also said that Telecommunicacoes Brasilerias S.A. (Telebras) of Brazil intends to take an equity stake in

the project later. Constellation estimates that constructing and launching the total system will cost

$1.695 billion and that $26.4 million will be required to cover the first year’s operating costs.

lnmarsat-P (ICO Global Communications Limited-a consortium including Inmarsat and 38 lnmarsat signatories)

lnmarsat-P, sometimes referred to as Project-21, would employ 10 or 12 satellites in intermediate

circular orbits (10,355 km). Each satellite would have the capacity for 4,000 circuits and an expected

lifetime of 10 years. Inmarsat handsets are expected to cost between $1,000 to $1,500 and calls will

cost $2 per minute. Inmarsat has started the licensing process in the United Kingdom and hopes to

begin offering service in 1999, with the system fully operational by the year 2000.

The cost to construct, launch, and operate the system for one year is expected to be $2.8 billion.

$1.4 billion in initial financing was committed by 39 signatories to Inmarsat including a commitment of

$150 million by Inmarsat as an organization. The Inmarsat Council has indicated that Inmarsat and its

affiliates will maintain at least 70 percent ownership. Additional pledges of $900 million were turned

away and the remaining $1.4 billion will be financed through equity and debt. The U.S. investor is Comsat Corp., the US. government’s signatory to Inmarsat. In Europe, the biggest investors are Deutsche

Telekom AG’s mobile-phone unit and the Swiss, Spanish and Dutch state phone companies. Other major investors are: the Beijing Maritime & Shipping Co., an arm of the Chinese Ministry of Transport; Japan’s main international phone carrier, KDD, Ltd.; India’s international phone company; and Singapore

Telecom.

SOURCE: Office of Technology Assessment, 1995

billion. Many analysts do not believe that there are service. Developments in semiconductor and mienough customers to support all of the proposed coprocessor technology allow the functionality

systems.24 of a mobile phone to be squeezed into a small

❚ Technology

package. New technologies also permit power-efficient systems that can use a smaller battery, usuAdvances in technology underlie the vision of ally the heaviest part of the handset. But the most

small and light handsets and low-cost wireless important development in wireless telephony is

24 For a more complete discussion of the challenges facing the LEOs, see OTA, op. cit., footnote 2.
Chapter 3 VoiceTechnologies and Applications 81

Dual-mode portable telephones, such as this prototype from

Iridium, will first attempt to connect to a Iocal cellular system.

If no system can be accessed, the telephone will then use the

satellite system to complete the call.

the evolution to digital transmission, which will

allow network operators to serve three to 10 times

as many users as today’s analog systems with the

same amount of network equipment. This capacity increase will translate into a substantially reduced cost to serve each user.

Terrestrial Wireless Technology

Terrestrial wireless systems provide radio coverage to their service area with antennas mounted on

towers or on buildings. Until the early 1980s, terrestrial mobile telephone systems used a single,

high-power transmitter on a tall tower or skyscraper to cover a metropolitan area. Any user

within the signal’s range, usually up to about 40

miles away, could get service. This single-tower

architecture is still used for most SMR systems

today (see figure 3-4), and is adequate when the

predominant type of communication is short dispatch messages.

SOURCE: Office of Technology Assessment, 1995.

The cellular concept

Modem terrestrial systems use a cellular architecture that provides coverage with many low-power

transmitters. Cellular technology provides the

foundation for amass market service by allowing

a large number of users to share the limited spectrum more efficiently than the single-tower approach. Because it has now been proven over a

decade of service, cellular technology will no

longer be used only by the cellular carriers. In

1991, the FCC allowed Fleet Call (now Nextel) to

deploy its ESMR technology by shifting from one

high-power broadcast tower to a cellular architecture in six of the largest U.S. markets. New PCS

providers will also use a cellular architecture.

Each of the low-power transmitters in a cellular

system provides coverage to an area a few miles

across, known as a cell (see figure 3-5). Cells are

often drawn as circles or hexagons, but real-world

cells are irregular in shape because buildings and

trees obstruct the radio waves. By deploying

enough transmitters or base stations, cellular operators provide continuous coverage wherever

their customers are likely to be. Because users

often pass through several cells as they travel
82 Wireless Technologies and the National Information Infrastructure

Wireless antennas come in manyshapes and sizes, from Iarge, conspicuous monopole designs, to practically invisible building

mounted panel antennas.

through a city, a cellular system has to automatically hand off the call from base station to base

station. As the user nears the edge of a cell, the system reassigns the user to anew cell by determining

which of the other base stations in the area can provide the strongest signal.

The cellular architecture makes efficient use of

the spectrum and increases system capacity. In a

conventional single-tower system, each channel

can only be used by one customer at anyone time.

By contrast, a cellular system allows a channel

used in one cell to be reused by a different user in

PCS antennas (left) and roof top base stations (right) are smaller than their cellular counterparts.
Chapter 3 Voice Technologies and Applications 83

Local telephone

company 1

Base station

with an antenna

Mobile

cellular

telephone

SOURCE: Office of Technology Assessment, 1995.

another cell, as long as there is enough separation

between the cells to minimize interference (see

figure 3-6). Network operators can further increase system capacity by splitting large cells into

several smaller ones. The greater the number of

cells, the greater the number of users who can use a

channel at the same time. In typical systems, cells

at highway interchanges or in downtown areas are

less than a mile in diameter, while in areas where

the traffic is light they may be up to 20 miles

across (see figure 3-7).

The heart of a cellular system is the Mobile

Telephone Switching Office (MTSO), which is

connected by microwave or landline links to all of

the base stations. It is also connected via a high

speed digital link to the public switched telephone

network. The user’s voice signal is transmitted

from the phone through the air to a base station,

back to the MTSO, and then through the landline

 Frequency group A

 Frequency group B

 Frequency group C

SOURCE: Office of Technology Assessment, 1995.
84 I Wireless Technologies and the National Information Infrastructure

centers

Large cells

for suburban

areas

SOURCE: George Calhoun, Digital Cellular Radio (Norwood, MA: Artech House, Inc., 1988), p. 43.

network to its destination. The MTSO is responsible for managing the assignment of radio channels

to users. When the user dials a number and presses

the “send” button on their phone, the MTSO

checks to see if there is a channel available and

then assigns the channel. During the call, the

MTSO monitors the signal strength to see if it

should initiate a handoff to a nearby cell.

Digital transmission

Although the cellular concept is the foundation of

terrestrial wireless technology, it is the transition

to digital transmission that is most responsible for

the vision of low-cost personal wireless services.

Today’s cellular technology, known as the Advanced Mobile Phone Service (AMPS) system, is

based on an analog frequency modulation (FM)

transmission scheme and dates from the mid1970s. AMPS systems in large cities are starting

to reach capacity limits that cannot be overcome

by further cell-splitting. Digital systems are being

deployed to provide higher capacity.

One way that digital systems increase capacity

is by making extensive use of voice compression

technologies. Once a voice signal has been transformed into digital form, complex mathematical

manipulations can be used to reduce the amount of

information that needs to be sent for good-quality

speech. Reducing the amount of information that

needs to be sent also reduces the amount of spectrum needed for each user, allowing more users to

share the spectrum. For voice quality that is comparable to an AMPS system, at least three times as

many users can be accommodated by a digital cellular network with the same number of base stations. Because voice compression technology will

continue to improve, future systems will be able to

achieve even greater increases in capacity.

The deployment of digital systems in the

United States has been slowed by battles over

standards. For the first generation of cellular

technology, the FCC selected AMPS as a national

standard and required all operators to use it. But

with digital cellular, the FCC has left technology
Chapter 3 Voice Technologies and Applications 85

In a cellular system, many users make calls at the same time in each cell. Clearly, it is necessary that

these users’ transmissions not interfere with each other. One solution to this “multiple access” problem

is to ensure that each user transmits on a separate frequency or “channel. ” When a user initiates a call,

the system tells the user’s phone which frequency to tune to, much as a radio listener tunes to a particular station. This approach, known as Frequency Division Multiple Access (FDMA), is used in today’s

analog cellular systems.

Digital cellular systems could also use FDMA; the only difference would be that the information sent

through the channel would be in digital, not analog form. However, it is more likely that digital cellular

systems will use one of two alternate schemes, either Time Division Multiple Access (TDMA) or Code

Division Multiple Access (CDMA). The TDMA and CDMA approaches differ from FDMA in that several

users may share the same channel.

In a TDMA system, several users are assigned to a single channel, and they take turns. Each user’s

phone transmits a short burst of data, waits as the other users assigned to the channel transmit their

data, sends another burst, and so on. At the receiver, the bursts are reassembled into a continuous

signal and turned back into speech. In the U.S. TDMA system, three users share the same channel that

the analog Advanced Mobile Phone Service (AMPS) system uses for a single user. Digital compression

technology allows a user to send a good-quality speech signal even when using the channel only onethird of the time, tripling the capacity of the system.

CDMA systems use a much wider channel than TDMA or FDMA systems, and share it among a larger number of users. The users can all use the channel at the same time, but each user’s transmission is

uniquely coded. If the receiver knows the code, it can pick out a particular user’s transmission from the

combined signal. There is no strict limit to the number of users in each channel, but it becomes more

difficult to pick out individual users’ transmissions as the channel becomes crowded. Because CDMA

uses a wider channel than FDMA or TDMA, it is sometimes referred to as a “spread spectrum” technology.

Both CDMA- and TDMA-based systems have been proposed for use as a replacement to AMPS.

Over the past several years, there has been a debate about which approach is better. TDMA proponents have argued that TDMA is a more proven technology, whereas CDMA proponents have argued

that their system will offer higher capacity-not just three times more users than AMPS, but 10 or 20

times more. TDMA-based digital cellular systems entered commercial service in 1992, and have several

hundred thousand users. No CDMA systems are expected to be operational until late 1995 or early

1996.

The capacity estimates for CDMA are higher because it appears to overcome a fundamental challenge that faces designers of TDMA systems. In a TDMA system, the same channel cannot be used in

adjacent cells because of excessive interference. A channel can only be safely “reused” in cells some

distance away. As a result, only a fraction of the operator’s spectrum can be used in each cell: typically

one-seventh or less. CDMA systems, on the other hand, allow all of the spectrum to be used in each

cell, increasing system capacity.

SOURCE: Office of Technology Assessment, 1995.

selection to the industry. Cellular industry and the other based on Code Division Multiple

standards committees have been unable to choose Access (CDMA) (see box 3-3). Similarly, seven

between two systems, one based on a technology different technologies have been proposed for use

called Time Division Multiple Access (TDMA) in the new PCS band. There are more PCS than
86 Wireless Technologies and the National Information Infrastructure

Satellites in geosynchronous orbit 22,300 miles above Earth

are being used to provide a variety of mobile communication

services to aircraft, ships, and vehicles.

cellular technologies under consideration because

the PCS band may be used for a wider variety of

services. See chapter 6.

While ESMR and PCS operators will use digital technology from the beginning, cellular operators will have to deploy digital technology while

also continuing to provide service to the millions

of users who still have analog phones. Because it

will take several years to convert every base station to digital, the new digital phones now being

sold are also capable of analog transmission. The

user can “fall back” to analog in areas where there

is no digital service or where a different digital

system has been deployed. Over time, network

operators will add digital capability to more and

more cell sites and continue to expand the amount

of spectrum dedicated to digital service, while

continuing to reserve some channels for users who

still have analog-only phones. The transition to

digital has only just begun and is expected to take

about a decade.

Mobile Satellite Technology

In a satellite telephone system, instead of sending

the radio signal to abase station, the mobile phone

beams the radio signal up to a satellite. In many

ways, satellite systems are benefiting from the

same technological advances as terrestrial systems. By using multiple ’’spot beams” in place of a

single beam, satellite systems can exploit the

same concept of frequency reuse that terrestrial

systems use. They will also use digital voice compression to dramatically increase the number of

users that can be served from each satellite, reducing the cost per user considerably. But the most

significant new concept in satellite system design

has been the development of nongeostationary

LEO or Medium Earth Orbit (MEO) systems.

The Inmarsat and AMSC systems use satellites

in geostationary orbit, 22,300 miles above the

equator. At this altitude, the satellite appears to remain at a freed point above the Earth. This simplifies system operation, but has several drawbacks.

First, it takes a considerable amount of time for the

signals to travel up to the satellite and back down

to Earth, resulting in a noticeable and annoying

delay. Second, because the satellite is so far above

the Earth, considerable power is needed to transmit the signal up to the satellite, requiring bulky

transmitters. Therefore, the AMSC system can

only be used with car phones, not portables.

With a nongeostationary LEO or MEO system,

on the other hand, the satellites orbit much closer

to the Earth at altitudes between 500 and 7,000

miles. This reduces power requirements, allowing

the use of handheld portables. Moreover, the delay

incurred in sending the signal up to the satellite

and back down to Earth is significantly reduced.

But LEO systems are also more complex. While a

geostationary system can provide global coverage

with a small number of satellites, LEO systems

plan to use constellations of 10 to 66 satellites

(figure 3-8). The satellites move relative to the

surface of the Earth, complicating system coor-
Chapter 3 VoiceTechnologies and Applications 87

SOURCE: Office of Technology Assessment, 1995.

dination. Moreover, satellite lifetimes are significantly reduced, requiring replacement satellites to

be launched continuously.

❚ Regulatory Framework

The FCC is responsible for managing the spectrum used by commercial wireless services, and

‘ sets the rules regarding their licensing and operation. Historically, the FCC has regulated wireless

services less than wireline services, believing that

the wireless market is more competitive than the

traditional monopoly wireline market. The FCC

has relied on market forces to determine the prices

of wireless services, within the regulatory framework it established for each service.

As technology has advanced, the distinctions

between different mobile telephone services have

become less clear. Cellular, PCS, and ESMR will

provide similar services. To streamline regulation

of these existing and emerging services, Congress

directed the FCC in the Omnibus Budget Reconciliation Act of 1993 (Public Law 103-66) to set

up a new regulatory classification-commercial

Mobile Radio Services (CMRS)--that would allow the FCC to “treat like services alike,” forbear

from imposing some elements of common carrier
88 | Wireless Technologies and the National Information Infrastructure

regulation, and preempt state regulation of CMRS

rates.

Spectrum Allocation, Licensing, and Market

Structure

FCC spectrum allocation decisions play a key role

in determining the degree of competition in the

wireless industry. To a certain extent, the number

of competitors can be increased by dividing the

available spectrum among more carriers. When it

created the cellular service, for example, the FCC

first thought that it would only license one carrier,

but then determined that competitive benefits

would result from splitting the spectrum among

two carriers. But because a mobile telephone network needs a minimum amount of spectrum to operate economically, additional competition

usually requires that more spectrum be allocated.

For example, by allocating 120 MHz to PCS, the

FCC was able to create up to six new competitors

in each market.

The FCC also influences market structure by

specifying the size of the license areas. In most

countries, wireless licenses are assigned on a nationwide basis. But the FCC chose to divide the

United States into many small license areas, allowing a larger number of companies to take part

in the industry. For cellular, the FCC divided the

nation into 734 separate market areas—306 Metropolitan Statistical Areas (MSAs) and 428 Rural

Service Areas (RSAs). PCS licenses, on the other

hand, are being allocated on the basis of either 493

Basic Trading Areas (BTAs) or 51 Major Trading

Areas (MTAs). Two of the 30 MHz PCS licenses

are being allocated on the basis of MTAs, while

the other PCS licenses will be allocated on the basis of BTAs. SMR service areas are defined by the

propagation distance of signals transmitted from

the operator’s tower, but there are proposals to establish standardized service areas such as BTAs or

MTAs.

Other FCC rules seek to maintain competition

by limiting concentration of ownership. To ensure

that the new PCS spectrum would be used to provide competition to the incumbent cellular carriers, the FCC did not permit cellular carriers to

obtain more than 10 MHz of PCS spectrum in

markets where they already owned cellular licenses. Similarly, local exchange carriers were

also restricted to bidding on 10 MHz blocks of

spectrum in their service areas, not the larger 30

MHz blocks. Finally, no carrier may have more

than 45 MHz of cellular, PCS, and SMR spectrum

in any given market.

The FCC’s choice of a mechanism for assigning licenses also affects the structure of the industry. The first cellular licenses were assigned by

comparative hearings where the Commission selected among applicants based on detailed proposals. But the task of allocating hundreds of licenses

by this method overwhelmed the FCC. For the later cellular licenses, the Commission assigned the

licenses by lottery. Most of these licenses were

quickly sold to larger carriers.25 To reduce the

speculation on licenses and raise funds for the

Treasury, Congress authorized the FCC to use

auctions to assign licenses.26 The first round of

PCS auctions raised $7.7 billion.

Commercial Mobile Radio Services

PCS, cellular, and most SMR and mobile satellite

services are regulated as CMRS carriers. The creation of the CMRS classification was a response

to disparities in the regulation of SMR and cellular

carriers, which became increasingly significant as

the deployment of new technologies allowed

SMR carriers to compete with cellular carriers.

Beginning in August 1996, PCS and SMR carriers

that provide mobile telephone service will be subject to the same rules as cellular carriers. The FCC

has launched a series of proceedings to define the

25 ”Stanley Says 70% of Lottery Cellular Licenses Transferred,” Telecommunications Reports, Apr. 26, 1993, p. 16.

26 Public Law 103-66, section 309(j).
Chapter 3 Voice Technologies and Applications 89

In the Second Report and Order that was issued in the proceeding that defined the rules governing

CMRS carriers, docket No. 93-252, the FCC identified several issues that required further study:

■ The interconnection obligations of CMRS licensees

The FCC issued a Notice of Inquiry as part of docket number 94-54 in June, 1994. In April, 1995, the

Commission issued a Notice of Proposed Rule Making (NPRM) in which it tentatively concluded that it

was premature to impose rules requiring CMRS carriers to interconnect with other CMRS carriers.

● The imposition of equal access obligations on CMRS licensees

The FCC issued an NPRM, in docket number 94-54, in which it tentatively concluded that cellular carriers should be required to give their customers a choice of long distance carriers. It also asked for comment on whether equal access rules should be imposed on other CMRS carriers. No order has been

issued in this docket.

■ The reclassification of private radio licensees as CMRS

The FCC has completed work on the technical and licensing rules that will apply to CMRS carriers,

issuing a Third Report and Order and Fourth Report and Order in docket number 93-252 in early 1995.

Among the issues addressed in this proceeding was the spectrum cap limiting CMRS carriers to 45

MHz of cellular, PCS, and SMR spectrum in any market.

■ Tariffing of local exchange carrier(LEC)/wireless interconnection

The FCC issued an NPRM as part of docket number 94-54 in which it requested comment on whether

LECs should be required to file tariffs specifying the rates charged for interconnection, or whether interconnection rates should be negotiated. No order has been issued in this docket.

■ Monitoring of competition in the cellular marketplace

In the second report and order in docket 93-252, the FCC concluded that the cellular marketplace was

not fully competitive and proposed collecting more information about competition in the cellular industry. The FCC has not acted on this issue.

● Further forbearance from regulating certain types of CMRS carriers

In the Second Report and Order in docket number 93-252, the FCC decided to forbear from applying

some aspects of common carrier regulation to CMRS carriers. In docket number 94-33, the FCC issued

an NPRM asking whether the regulation of some CMRS services should be relaxed further. No order

has been issued in this docket.

● Provision of dispatch service by CMRS carriers

In March, 1995 the FCC issued an order permitting CMRS carriers to provide dispatch service.

SOURCE: Office of Technology Assessment, 1995.

regulations that will apply to CMRS providers, of additional competition from SMR and PCS

described in box 3-4. providers. In developing the new CMRS regulatoCMRS carriers are less regulated than the wire- ry regime, Congress and the FCC determined that

line local exchange carriers because the local ex- competition would, inmost cases, be sufficient to

change carriers have a near-monopoly, while the protect consumers and keep prices reasonable. Alwireless industry is competitive. There are two though CMRS providers will be regulated as comcellular carriers in every market, with the prospect mon carriers, subject to Title II of the Communica4
90 | Wireless Technologies and the National Information Infrastructure

tions Act, Congress allowed the FCC to “forbear”

from regulating interstate rates and requiring the

filing of tariffs.27

More importantly, Congress preempted state

regulation of intrastate rates.28 While many states

had already concluded that the cellular industry

was sufficiently competitive that rate regulation

was unnecessary, a few states still regulated cellular. Under the new law, states will only be able to

regulate the price of cellular or any other CMRS

service if they can demonstrate to the FCC that

market conditions have failed to guarantee just

and reasonable rates.29 Eight states petitioned the

FCC for the right to continue regulating cellular

service, arguing that the industry would not become truly competitive until the PCS and ESMR

providers were operational.30 However, the FCC

rejected these petitions in May 1995, freeing all

wireless carriers of rate regulation by states.31

❚ Issues and Implications

By allocating a large amount of additional spectrum for wireless telephony and creating the new

CMRS framework, Congress and the FCC have

established the foundations for a successful industry. Given the growth rates in cellular subscribership and the continuing development of low-cost

wireless technology, the future of the wireless industry appears bright. However, there are several

issues that will have an impact on the cost, utility,

and availability of wireless services.

Spectrum Allocation for Commercial Services

The recent allocation of 120 MHz to PCS more

than triples the amount of spectrum allocated to

terrestrial commercial mobile telephone services.

Combined with new, more efficient digital

technologies, the current spectrum allocation

should be sufficient to meet the demand for the

next several years, even if subscribership continues to grow at a high rate.32 However, if data,

image, or video applications become important

components of the service mix of commercial mobile radio services, additional spectrum may have

to be found sooner than expected.

Mobile satellite systems may have more pressing spectrum needs. Currently, the five proposed

U.S. LEO systems are required to share 33 MHz in

the 1610 to 1626.5 MHz and 2483.5 to 2500 MHz

frequency bands. If demand for mobile satellite

service matches the expectations of its proponents, this allocation will be insufficient. The National Telecommunications and Information

Administration (NTIA) has estimated that an

additional 60 MHz of spectrum may be required

for mobile satellite services over the next decade.33 However, it is particularly hard to judge

how much spectrum should be allocated to mobile

satellite services. As yet, no mobile satellite services are operating on a wide scale, and demand

remains unproven. Because these systems will

generally not compete in the same markets as terrestrial services, demand estimates for these in27 FCC, op. cit., footnote 15, pp. 68-70.

28 Public Law 103-66, section 6002(c)(2)(A).

29 Communications Act of 1934, 47 U.S.C., Section 332(c)(3)(B).

30 Arizona, California, Connecticut, Hawaii, Louisiana, New York, Ohio, and Wyoming. Wyoming subsequently withdrew its petition.

31 Each state’s petition was handled in a separate proceeding. See, for example, Federal Communications Commission, Report and Order,

Petition of the Connecticut Department Public Utility Control to Retain Regulatory Control of the Rates of Wholesale Cellular Service Providers in the State of Connecticut, PR Docket 94-106, May 19, 1995.

32 NTIA has forecast that only 33 MHz of additional spectrum will be required for two-way commercial mobile radio services over the next

decade. National Telecommunications and Information Administration, U.S. National Spectrum Requirements (Washington, DC: 1995), p. 33.

33 Ibid., p. 57.
Chapter 3 Voice Technologies and Applications | 91

dustries provide only a rough guide to the

potential for satellite-delivered services.

With current technology, the most desirable

frequency bands for most mobile services are

those below 3 GHz. At higher frequencies, radio

waves are more subject to scattering by buildings,

trees, and other obstructions. In addition, radios

that operate above 3 GHz are more expensive to

build. Unfortunately, there is very little unused

spectrum below 3 GHz. Any future expansion in

mobile services will require either technological

advances that permit the economical use of higher

frequency bands, or the reallocation of spectrum

from other services.

Reallocating spectrum can be time-consuming

and costly. Potential new users need frequencies

for their proposed services, but incumbent users

usually resist being forced to move to other frequency bands. Policymakers and regulators often

have a hard time balancing the two competing sets

of interests. Much of the spectrum now allocated

to terrestrial mobile services—PCS, cellular, and

SMR, for example—was once used for other purposes. PCS will operate in a band that is now being

used by fixed microwave services (who will have

to move their operations to higher frequencies),

while the cellular and SMR services were allocated spectrum that had been previously been used

for broadcast television’s channels 70 to 83. To

meet potential future needs for even more mobile

spectrum, one plan being considered is reallocation of television frequencies as part of the transition to Advanced Television (ATV). In the case of

mobile satellite services, a complicating factor is

that they require global coordination and approval. At the WARC-92 conference, for example,

additional spectrum was allocated to mobile satellite service in the 1970 to 2010 Mhz and 2160 to

2200 MHz frequency bands. However, in the

United States, part of this spectrum is allocated to

broadcast auxiliary services, and in the rest of the

world it will not be available until 2005.34

Spectrum Allocation for Public Safety

Federal, state, and local public safety agencies,

such as police and fire departments, may also have

significant near-term spectrum needs. In the

Budget Reconciliation Act of 1993, Congress

mandated that the FCC submit to Congress a

study of current and future needs of state and local

government public safety agencies through the

year 2010, and develop a plan to ensure that adequate frequencies are made available to public

safety licensees. In its report, the Commission declined to allocate additional spectrum, but outlined the steps it would take to gather additional

information and procedures to respond to emergency needs. 35 The report has been criticized by

the public safety community for underestimating

the urgency of their needs.36

The demand for public safety wireless communications has grown considerably in recent years.

Part of the growth in demand is due to an increase

in the number of public safety personnel. But a

more significant factor is that future public safety

communications systems will not only be used for

voice communications, but will also have to accommodate increased use of imaging for mobile

transmission of fingerprints, warrants, and mug

shots. Image communications requires much

more spectrum than ordinary voice communications. In comments submitted to the FCC, the

Association of Public Safety Communications

Officials (APCO) estimated that between 6 and 18

MHz of additional spectrum would be needed for

public safety voice communications by 2010, but

that 75 MHz would be needed for the new “wideband” applications.37

34 OTA, op. cit., footnote 2.

35 Federal Communications Commission, Meeting State and Local Government Public Safety Agency Spectrum Needs Through the Year

2010, Feb. 9, 1995.

36 ”Public Safety Officials Pan FCC’s Spectrum Report,” Telecommunications Reports, vol. 61, No. 7, Feb. 20, 1995.

37 FCC, op. cit., footnote 35.
92 | Wireless Technologies and the National Information Infrastructure

In allocating spectrum for public safety, several

other issues have to be considered. First, public

safety users are concerned that the use of auctions

to assign commercial licenses will cause regulators to allocate any available spectrum to commercial services because an allocation to public safety

would not provide revenues for the Treasury. Second, even if more spectrum is made available,

there will be a continuing need for greater coordination of the radio systems operated by different

public safety agencies. Currently, different public

safety agencies use different frequency bands,

preventing them from talking to each other in an

emergency. A single frequency band, or a limited

number of bands, could improve coordination of

public safety activities.

The Development of Competition

Congress and the FCC are relying on competition,

not regulation, to ensure that the price of mobile

telephone service will be reasonable. The new

PCS allocation will provide three to six new competitors to the cellular carriers, and the deployment of ESMR technology will provide additional

competition. In the larger cities, there is the potential for robust competition on the basis of price

and coverage. Most observers foresee four or five

major competitors in the larger markets, with

some niche players as well. However, many analysts believe that smaller cities and rural areas,

where customers are fewer, will not be able to support as many competitors.

It should also be emphasized that most of the

new PCS competitors will not have operational

networks before the end of 1996. They will have

to acquire hundreds of sites for base stations in

each market and build their networks a time-consuming and expensive process. More importantly,

they are unable to use some of the spectrum they

have acquired at the auctions until its current occupants, fixed microwave users, are relocated to

another band. Under the procedures established

by the FCC, the PCS licensees will have to negotiate with the microwave licensees and pay the cost

of their relocation. However, microwave licensees

are not required to negotiate until 1997, and PCS

licensees will not be able to request that the FCC

involuntarily relocate a microwave user until

1998.

Finally, it is unclear how many competitors can

be supported in the long term. The major players

in the industry will have to spend billions of dollars to build out the new PCS networks. While the

pioneers of cellular service had the luxury of

building out their networks one cell site at a time,

the PCS-band networks will have to enter the market with broad coverage and compete against established providers. The new PCS carriers,

especially the licensees who qualified as small

businesses or businesses headed by women or minorities, face a difficult challenge. Even the deeppocketed cellular carriers, long distance carriers,

and cable companies that are acquiring PCS licenses are risking large amounts of money on the

assumption that demand will continue to grow

and that they will survive potential price wars.

E-911 from Mobile Telephones

Emergency assistance available through 911 has

been a significant driver of recent cellular telephone sales, and the industry promotes this with

advertisements touting the benefits of mobile

communications for personal safety and security.

As a result, demand for 911 services from wireless

users is growing with the rise in cellular subscribership. It has been estimated that 10 percent of 911

calls are from mobile users. The California Highway patrol reported that in January 1993 it fielded

80,000 emergency calls, of which 25,076 were

from cellular telephones.38

However, while many wireless users can get access to 911 operators, they may not be able to fully

38 Federal Communications Commission, Notice of Proposed Rule Making, in the Matter of Revision of the Commission’s Rule to Ensure

Compatibility with Enhanced 911 Emergency Calling Systems, FCC No. 94-237, CC Docket No. 94-102, RM- 8143, proposed rules, Sept. 19,

1994, para 9.
Chapter 3 Voice Technologies and Applications | 93

benefit from the Enhanced 911 or E-911 services

available to wireline users. Systems equipped

with special equipment providing E-911 services

identify the location of the caller, even if he or she

cannot speak. An Automatic Number Information

database together with an Automatic Location Information database provide precise location information to the 911 public safety answering point

(PSAP), from which the appropriate emergency

service (police, fire, medical) is dispatched.

About 90 percent of all wireline telephones have

911 services available, and of these about 76 percent also have E-911 capabilities.

The location of a cellular telephone user, however, currently cannot be automatically determined because cellular phones—unlike their

wireline counterparts—are not linked to a specific

location; they are designed to move around. As a

result, unless the caller can provide clear and exact

information or directions—which is often not the

case—emergency assistance workers often do not

know where to go when receiving a call from a

mobile handset. It is unclear how many people understand that mobile phones do not offer the exact

same services available from a wireline telephone.

Some public safety officials believe that failing to

integrate wireless systems into the E-911 framework undermines the $2 to $3 billion invested in

911 service since it was established as a nationwide goal 30 years ago.

To address this problem, the FCC has initiated

a rulemaking to guide development of E-911 services and to ensure that location information will

be available from all phones.39 There are a number

of technologies that may be useful in providing

better location information, such as use of triangulation; Global Positioning Satellite (GPS) or

LORAN systems; signal strength, angle and/or

time delay measurements; antenna and cell site

sectorization; and time synchronization.40 Each

system has its strengths and weaknesses, and the

FCC has invited comments on the technical, performance, and cost considerations of each of the

candidate technologies, but appears inclined to set

performance rather than technology standards for

achieving accurate location identification. This

proceeding has resulted in substantial debate

about the importance of accurate location information technologies for wireless systems.

Other Issues

In addition to the issues discussed above, there are

a number of critical issues that will affect how new

and existing wireless voice technologies will be

integrated into the NII and what effects and implications ubiquitous mobile services may have

for individuals and businesses. These issues are

only briefly discussed here, but are analyzed in

more detail in later chapters.

Standards

For the first generation of cellular technology, the

FCC specified a standard technology (AMPS)

that had to be used by all carriers. This guaranteed

that every cellular phone would work anywhere in

the nation. But for digital cellular and PCS, the

FCC has refrained from picking a standard. Industry standards committees have been unable to

agree on a single standard, in part because

manufacturers have an incentive to promote their

own technology as a standard. Because there is no

standard, each network operator will have to

choose from among the contending digital

technologies. There is considerable concern that

different technologies will be deployed, making

roaming impossible. These issues are discussed in

detail in chapter 6.

Interconnection to local exchange carriers

The interconnection of wireless and wireline networks allows their users to call each other. FCC

39 Ibid.

40 These technologies were reviewed in C. J. Driscoll & Associates, “Survey of Location Technologies to Support Mobile 9-1-1,” report

prepared for California Department of General Services, Telecommunications Division and the Association of Public Safety Communications

Officials, ed. 1.0, July 1994.
94 | Wireless Technologies and the National Information Infrastructure

rules require that local exchange carriers (LECs)

allow wireless carriers to interconnect with their

network. But wireless carriers have to pay LECs a

fee for every minute of traffic. In the past, state

regulators have allowed these interconnection

charges to be significantly above cost to provide

additional revenues that support the LEC’s low

residential rates. The high cost of interconnection

is becoming an increasingly important issue because it raises the price of wireless service. These

issues are discussed in more detail in chapter 7.

Interconnection obligations of wireless

carriers

Because LECs have a monopoly in their market,

they are required to interconnect with wireless

carriers, long distance carriers, and, increasingly,

wireline local exchange competitors. Wireless

carriers, on the other hand, do not control a bottleneck—there are at least two competitors in each

market, with more to come. Therefore, they have

not been required to interconnect with other wireless carriers or with all long distance carriers. For

example, the FCC does not require wireless carriers to give their customers a choice of long distance carrier. An issue of growing importance is

whether the interconnection obligations of wireless carriers should continue to be minimal, or if

they should be modeled on those of the LECs. For

further discussion, see chapter 7.

Local restrictions on antenna siting

A cell site consists of base station equipment and

an antenna mounted on a building or tower. The

cellular carriers have deployed about 18,000 cell

sites to date, and it is expected that the wireless industry will have to deploy an additional 100,000

cell sites over the next decade. Some communities, however, are becoming concerned about possible health effects from electromagnetic

radiation and the aesthetics of the towers. Increasingly, zoning regulations and other ordinances are

being used to limit or halt the construction of new

towers. The wireless industry contends that such

restrictions will hamper their efforts to provide

ubiquitous wireless service, and has petitioned the

FCC to preempt all local restrictions on antenna

siting. Zoning issues are discussed in more detail

in chapter 8.

Privacy and security

The issues surrounding the confidentiality and security of wireless communications will become a

more important issue as more consumers and

businesses begin to use mobile/portable devices.

Already, eavesdropping is a concern to many individuals and businesses who fear that important or

sensitive personal or business information may

fall into the wrong hands. Fraudulent use of wireless telephones is a particularly difficult problem,

costing the industry and consumers an estimated

$480 million a year. Finally, the use of wireless

devices also raises questions related to the location of the user. Wireless technologies can be used

to track people and things, but may also be used to

hide ones’ location. These issues are discussed in

chapter 10.

Health effects

One of the most controversial issues surrounding

the widespread use of wireless technologies involves any possible health effects caused by either

the devices (cellular telephones, for example) or

the transmitting antennas. Although research has

been conducted, it has not been conclusive—it is

not yet possible to say with certainty whether the

devices/antennas do or do not pose a risk to human

health or how serious any risk may be. In the face

of this uncertainty, some researchers and members

of the public believe that the safest course is to redesign, restrict, or even ban the use of wireless

systems, while the industry believes it should be

allowed to pursue its plans until there is convincing evidence that health problems are likely. This

issue is intensely polarized and is already being

played out in battles over cellular/PCS antenna

siting and local zoning (see above). It is likely to

become a more important political issue as citizens raise the issue with state and federal policymakers and regulators. This controversy is

discussed in chapter 11.
Chapter 3 Voice Technologies and Applications | 95

Interference between devices

As the number of wireless devices used by consumers and businesses increases, there is a likelihood that interference will increase. Radio

devices can cause interference to other wireless

communication systems or to some electronic devices, giving rise to poor quality communications

or malfunctions. Cellular phones, for example,

may interfere with aircraft navigation systems and

some medical equipment, including monitoring

devices, pacemakers, and hearing aids. Electronic

equipment, such as a computer, can also interfere

with wireless communications unless it is properly shielded. These issues are discussed in chapter

12.

FIXED WIRELESS TECHNOLOGIES

In the United States, telephone service to houses

and other fixed locations is generally provided

over copper loops that run between the telephone

company’s central office and the customer’s

premises. But fixed service can also be provided

with wireless technologies (see figure 3-2).

Instead of being transmitted through copper

wires, voice signals are transmitted from a radio

tower or satellite to an antenna on the outside of

the home. In the past, wireless was more expensive than copper, and would have required a prohibitive amount of spectrum to serve a large

number of households. However, today’s wireless

technologies may be able to serve fixed users

more efficiently. Spectrum allocations and current

regulatory uncertainty, however, present obstacles to the widespread use of fixed wireless.

❚ Services and Users

One reason for the growing interest in “wireless

local loops” is that they may now be comparable

in cost to copper loops, due to the development of

new spectrum-efficient technologies. In addition,

wireless local loops allow telephone service to be

rolled out quickly. Service can be provided to

thousands of users as soon as the base stations are

in place, without the need to install copper loops

to each household. For this reason, wireless is now

the technology of choice in developing countries

that have little or no telephone service.41

Reducing the Cost of Telephone Service

In the United States, fixed wireless systems may

be able to provide lower cost telephone service in

some, especially rural, areas. One of the characteristics of wireline technology is that the cost to

serve a household depends on its distance from the

central office. It is much more expensive to provide telephone service in sparsely populated rural

areas—where homes are typically far from the

central office—than in cities. Wireless, on the other hand, has a cost structure that is largely distance-independent. The cost to serve a household

is much the same whether it is close to the transmitter or far away.42 In addition, radio waves can

cross canyons or other difficult terrain that rule out

wireline telephone service or make it extremely

expensive.

Recognizing that wireless could reduce the cost

of rural telephone service or provide it to unserved

households, the FCC created a service called Basic Exchange Telecommunications Radio Service

(BETRS) in 1988.43 BETRS allows telephone

companies to use a limited number of frequencies

in the 450 MHz band to provide fixed wireless services in rural areas. Currently, no more than a few

thousand households are served by wireless due to

the small amount of available spectrum and the

high cost of early BETRS equipment. However,

with advances in technology, wireless may soon

play a key role in delivering service to rural areas.

Wireless could also be used in suburban or urban areas. Carriers would like to take advantage of

41 Terry Sweeney, “Lenders Backing Wireless Loops,” CommunicationsWeek International, Dec. 12, 1994, p. 3.

42 In the most extreme cases, even terrestrial wireless may be too expensive and satellite services may be used.

43 Federal Communications Commission, Report and Order, Basic Exchange Telecommunications Radio Service, CC Docket No. 86-495, 3

FCC Rcd 215 (1988).
96 | Wireless Technologies and the National Information Infrastructure

lower installation costs, reduced maintenance

costs, and faster deployment of service in new

housing developments.44 In some cases, suburban

areas are growing so quickly that the demands

cannot be met with the existing network.45 Even

where wireline facilities exist, wireless may provide a less expensive solution if the copper loop is

deteriorating and is affecting the reliability of telephone service. Furthermore, by using wireless

loop technology, telephone companies would no

longer have to dig up established yards and streets

to replace facilities.

Local Exchange Competition

For many years, the expense of duplicating the incumbent’s copper loop was seen as evidence that

the local exchange market was a natural monopoly. Today, regulators who are trying to facilitate

competitive entry have had to require the LEC to

unbundle its network, allowing competitors to

connect their switch to the existing loops. Only

the cable companies, who already have a wire to

many homes, can easily contemplate entering the

local exchange market with wireline technologies.

Wireless technology may provide an alternative that will allow new local exchange competitors to enter the market. With wireless, a new

entrant does not have to install a copper wire to

each customer. Instead, it can deploy enough base

stations to provide telephone service to every

household in a city. This strategy would be especially attractive for long distance carriers, cellular

carriers, and other companies that already have

switches or other infrastructure in place. Cable

companies, for example, could install base stations at various points on their network in order to

provide local telephone service to a neighborhood. The cable network would be used to connect

the base stations to a switch at the cable headend.

❚ Technologies

In most of the world, the equipment used in wireless local loop applications is much the same as

that used for mobile services. In some cases, mobile network operators use excess capacity to provide service to fixed users as well. In other cases, a

modified version of mobile network equipment is

deployed specifically for use in fixed applications. The major difference between fixed and mobile systems is that a fixed system does not require

handoff capabilities. These modified cellular systems have been successfully deployed in local

loop applications throughout Central Europe, in

developing countries, and in other parts of the

world where there is little or no wireline infrastructure.

In the United States, most of the wireless local

loops are based on a technology specifically developed for use in the BETRS service in the 450

MHz band. However, newer wireless local loop

technologies are being developed for use in the

new 2 GHz PCS band. These “low-tier” wireless

systems would provide service to fixed users, and

would also allow limited mobility in the neighborhood around the user’s home. Hand-offs between

cells would be supported at walking speeds, but

not at vehicular speeds. These low-mobility systems generally offer voice quality and data transmission capabilities that match or surpass those of

a copper loop.

In suburban or urban areas, wireless local loop

systems would consist of many “radio ports” or

base stations mounted on telephone poles or street

lights. Each radio port would serve an area with a

radius of about 1,000 feet, which would allow

each port to serve 35 to 40 homes.46 Because it is

difficult for radio waves to penetrate the walls of

buildings, antennas would be mounted on the outside of customers’ homes. The antennas are then

connected by a wire to a phone inside the house. In

44 See comments of Southwestern Bell (now SBC) in Federal Communications Commission, First Report and Order, Allocation of Spectrum Below 5 GHz Transferred From Federal Government Use, ET Docket 94-32 (1995).

45 See comments of US West, ibid.

46Southwestern Bell comments, op. cit., footnote 44.
Chapter 3 Voice Technologies and Applications | 97

rural areas, where homes are further apart, more

powerful transmitters are used and the antenna is

mounted higher, allowing the signal to travel several miles to the customer’s home.

❚ Regulation

In most states, fixed wireless service can only be

provided by the incumbent, monopoly, local exchange carrier. The reason is that most state regulators have only allowed the monopoly telephone

company to provide local exchange service. When

the FCC created the BETRS service, it was careful

to state that only the incumbent LEC or another

carrier that had been certified by state regulators

would be permitted to provide BETRS. The FCC

also does not allow cellular, SMR, and PCS licensees to provide service to fixed users, except

on an “incidental” or “ancillary” basis. If the

FCC’s rules had permitted these licensees to provide fixed service, this might have been seen as

sanctioning local exchange competition.

❚ Issues and Implications

Limited Spectrum

Despite the promise of wireless local loops, almost no spectrum has been allocated for this application. The only spectrum used for fixed

wireless is the 26 frequencies assigned to BETRS

in the 450 MHz band. These are allocated on a coprimary basis, and are only available in rural

areas. The FCC rules allow cellular spectrum to be

used for BETRS, under certain circumstances,

but, in practice, only the 450 MHz band has been

used. LECs have been asking the FCC to allocate

additional spectrum for fixed wireless, claiming

that the small amount of spectrum available has

limited wireless local loops to niche applications

and prevented their use on a wider scale.47

Because of the limited amount of spectrum allocated specifically to fixed wireless applications,

the FCC needs to clarify whether PCS or other

mobile telephone spectrum can be used for wireless local loops. During the proceeding that

created PCS, the FCC emphasized that the new

spectrum was to be used for mobile services.48

The FCC has since indicated that, in certain cases,

it would be open to waiver requests from operators

seeking to offer a fixed service with PCS spectrum.49 However, this position was stated only in

passing in an unrelated proceeding, and may only

apply to rural areas.

Local Loop Competition

Many of the state rules limiting local exchange

competition are gradually being dismantled.

Moreover, legislation currently being debated in

Congress would preempt state restrictions on

entry by local exchange competitors. Many of

these competitors are considering wireless as a vehicle to enter the market. However, because the

FCC’s rules on fixed PCS are unclear, it is uncertain whether a cable company could use a PCS license to compete with the LEC. This is another

reason why FCC policies regarding the provision

of fixed service by PCS, cellular, and SMR carriers need to be revisited.

Universal Service

Fixed wireless service may be able to advance the

goal of universal service in the emerging NII. For

many years, telephone penetration rates in rural

areas lagged behind those in the cities. To promote

universal service, regulators established a variety

of mechanisms to direct billions of dollars in subsidies from low-cost urban users to high-cost rural

users. This subsidy flow is now being threatened

by the transition to a more competitive industry in

47 United States Telephone Association comments, op. cit., footnote 44.

48 ”In ... allowing fixed use of PCS spectrum only on ancillary basis to the mobile service, we note that there is only a limited amount of

spectrum available to meet the primary purpose of serving people on the move.” FCC, op. cit., footnote 12, at 7712.

49 FCC, op. cit., footnote 44, para. 20.
98 | Wireless Technologies and the National Information Infrastructure

which prices are expected to move closer to cost.

Wireless may provide a way to lower the cost of

providing rural telephone service, making it affordable even if subsidies are reduced. The relationship between wireless and universal service isdiscussed further in chapter 9.
Wireless

Data

he term wireless data describes a wide array of radiobased systems and services centered around pagers, portable computers, personal digital assistants (PDAs), and

specialized applications for business. These wireless

technologies enable users, who range from mobile professionals,

to delivery drivers, and to factory and office workers to exchange

electronic mail, send and retrieve documents, and query databases—all without plugging into a wire-based network. To date,

however, growth in wireless data services has been low. Applications have been slow to develop, current speeds and capabilities

cannot match those of wired services, and prices have been high.

Like developments in other wireless technologies, there is great

uncertainty regarding what applications the mass market wants,

what it is willing to pay for, and what types of devices will match

user needs.1 Before the potential for wireless data services can be

realized, service providers and manufacturers will have to overcome a number of technical, economic, and consumer-knowledge

obstacles.

FINDINGS

 The wireless data industry is at a nascent stage. Wireless

data applications and systems will continue to grow, but at

a slower pace than most analysts predict. The acceptance

1Ken Dulaney, “Mobile Computing—Mobilizing the Organization,” materials provided at Gartner Group presentation at the World Bank, Washington, DC, Feb. 10, 1994.

Dulaney cites the example of Apple’s Newton as a product that did not have a clear market

or purpose, hence its low sales. He also notes that questions surrounding the ergonomics

of portable computing devices—keypad and screen size, interface technologies, and capabilities—will only become clearer as users actually start to buy machines.

| 99
100 | Wireless Technologies and the National Information Infrastructure

of wireless data by consumers and the general

business market may be much lower than expected, especially in the short term. To date, use

of wireless data technologies and systems remains concentrated in a small subset of business users—primarily in the fields of trucking,

public safety, field service, and (taxi and courier) dispatch services. Current estimates of the

total number of mobile data users range from

275,000 to 600,000.2 Residential consumers,

however, make little use of most wireless data

communication technologies, and the prospects for significant growth in the consumer

market are highly speculative and long term.

Users have just begun to see the benefits wireless data can offer.

Despite this slow start, most industry analysts still expect wireless data to be one of the

fastest growing sectors of the wireless industry.

Applications and services are improving, and a

host of new wireless data systems are expected

to be introduced within the next five years.

Some analysts predict the use of wireless data

will grow as much as 30 percent per year, and

many expect this growth to accelerate over the

next decade.3 OTA believes, however, that actual growth rates will be lower due to uncertain

demand and technical difficulties in integrating

wireless and wireline data networks and applications.

 Technical challenges will continue to slow

industry growth, but most analysts believe

the problems will be solved as the technologies and the industry naturally mature.

Wireless data services lag those offered on

wire-based networks, including the public telephone network and public/private computer

networks, in many respects. Current speeds offered over wireless networks, for example, are

usually substantially less than those available

using wireline technologies, and it is unclear

how advanced networking applications and

protocols, such as Asynchronous Transfer

Mode (ATM), will be adapted for use in a wireless environment.

Interoperability between wireline and wireless networks and services is a continuing problem. Services and applications designed for

wired media work less well (and sometimes not

at all) using the often-noisy and congested airwaves. Interoperability problems also result

from wireline data communication standards

and protocols that generally have not incorporated wireless features and requirements. Finally, the multitude of new wireless data companies that has sprung up has also led to many

companies selling proprietary products and

services that do not work together. Companies

have been started that integrate wireless services, and software is being developed that attempts to mask as many of the differences as

possible.

Fundamentally, these problems exist because the development of wireless data

technology is still in its early stages, but they

also reflect frequency allocations that were

made based on past applications—when needs

and spectrum requirements were lower. The

federal government has recently allocated more

spectrum to wireless data services, and private

companies are working to improve their products by making them easier to use and more interoperable with existing wireline networks

and services.

2 For individual services, estimates of subscribership vary, and, in most cases, are closely guarded. Some analysts suggest, for example, that

RadioMail has only 1,000 paying customers, Ram Mobile Data between 3,000 and 15,000, and Ardis some 50,000, but with flat growth. “RadioMail Slashes Mobidems to $199,” Mobile Data Report, vol. 6, No. 7, Apr. 11, 1994, p. 4. David Strom, consultant, presentation to OTA, Oct.

10, 1994.

3 BellSouth, for example, predicts that 33 percent of its wireless revenues will be from data and that 25 million Americans will use wireless

data services. BIS Strategic Decisions predicts wireless data revenues will be $10 billion/year by 2000. Andrew Kupfer, “Look, Ma! No Wires!”

Fortune, Dec. 13, 1993, p. 147. Datacomm Research predicts the value of mobile hardware, software, and services will grow from $450 million

in 1992 to $3.7 billion by the year 2002. Datacomm Research, Portable Computers and Wireless Communications (Wilmette, Illinois, 1993).
Chapter 4 Wireless Data | 101

WIRELESS DATA SERVICES

❚ Applications

Wireless data services use a mix of terrestrial and

satellite-based technologies to meet a wide variety

of local (in-building or campus settings), metropolitan, regional, national, and international communication needs. Most often, wireless data

systems are designed to serve user needs for mobility or portability—mobile data is a widely used

term—but many mobile systems and applications

can also serve the data communication needs of

users who do not move about (fixed users).4 A

number of wireless data applications, in fact, are

being designed with fixed users in mind.

Traditionally, wireless data applications and

services have been concentrated primarily in a few

narrowly defined, vertical, business markets, including:

 Field service (dispatch, sales, repair, parts ordering, work order processing). Field technicians rely on wireless communication systems

to get their next assignment, order parts, and

check customer histories and accounts.

 Fleet management (dispatch, parcel tracking,

vehicle location, and security). Wireless services are heavily targeted to trucking and other

transportation industries. Wireless systems allow companies to dispatch trucks faster and

more efficiently, track cargo, locate trucks, plan

routes, and find stolen vehicles and merchandise.

 Messaging (paging, e-mail, short messages).

Wireless systems also allow remote workers to

stay in touch. A regional manager can be contacted at any store, sales personnel can be sent

updated product information, and doctors can

be paged for emergencies.

For the past decade, the use of these services

has been limited to a small group of business users

with high mobility and connectivity needs—those

who could afford the high prices of equipment and

service. Package delivery companies such as UPS

and Federal Express, for example, rely on wireless

data to keep up-to-the-minute track of parcels and

for dispatch services (see box 4-1).

Today, however, the kinds of people and companies who use wireless data products are changing and expanding. As the United States has

moved into a more competitive international environment and a more service- and informationbased economy, the use of computers in the

workplace has increased. In addition, more workers are getting out of the office—but even within

the office or factory setting, the value of being mobile (but in touch) is being recognized (see box

4-2). These changes are beginning to affect the

consumer mass market and the more general, horizontal, business market for wireless data products and services.

Moving from specific (and specialized) applications to products designed for the general

user, however, is proving difficult. Services designed for one company often do not translate well

to another with different needs and expectations.

However, some general applications have been

identified, including computer network extension, Internet access, wireline replacement (pointof-sale terminals, alarm monitoring), personal

services (computer services, online services, and

other information services), and other data applications, such as medical monitoring equip4As noted in chapter 1, fixed use can be thought of as a subset of mobile use. Cellular phones, for example, work just as well (sometimes

better) when one is standing still as when one is driving or walking. Intuitively, if a system can serve mobile users it can usually serve fixed users

as well. Although some engineering concerns (power level, building penetration) may be different, in many cases the same system can serve

both types of users.
102 Wireless Technologies and the National Information Infrastructure

In 1992 United Parcel Service (UPS) began developing a nationwide, real-time, package tracking

system, combining UPSnet—UPS’s existing wire-based network-with cellular technology. To provide

this service, UPS had to stitch together a network of over 70 large and small cellular carriers, including

GTE Mobile Communications, AirTouch (formerly PacTel Cellular), McCaw Cellular, and SouthWestern

Bell Mobile Systems. These companies also arranged to provide UPS with a single point of billing for air

time. The project involved technical as well as logistical challenges for UPS, the cellular industry, and

equipment manufacturers, In February 1993 UPS initiated the new service it calls TotalTrack.

When delivering a package, UPS drivers use a device called a DIAD (Delivery Information Acquisition Device) to scan the bar codes on the package’s label. When the driver returns to the truck, he

inserts the DIAD into the DIAD Vehicle Adapter (DVA). The DVA transfers the package information from

the DIAD and transmits it to a cellular telephone tower via an in-vehicle cellular modem. The data are

then routed through the cellular system to the wireline UPSnet, and on to the UPS Data Center in New

Jersey. Here, package information is stored in a database where it can be accessed by a UPS customer service representative.

By implementing the TotalTrack system using the U.S. cellular infrastructure, UPS has been able to

keep pace with Federal Express, which in the 1970s and 1980s built their own private wireless data

network to provide real-time package tracking. On an average day, UPS will track roughly 6.3 million

packages with TotalTrack, moving about 290 million bytes of data over the cellular network. This utilization of the current U.S. wireless infrastructure enabled UPS to meet the growing demands of its clients.

SOURCE: Office of Technology Assessment, 1995.

ment. At the leading edge, videoconferencing and ment manufacturers have entered a period of invideo telephony products are being developed for

laptop computers.5

Finally, an increasing number of wireless data

applications will not involve people at all. Systems are being developed to locate stolen cars,

track individual pieces of cargo on trucks and

trains, and remotely monitor environmental

conditions (tides, wind, snowfall) and industrial

operations such as natural gas/oil wells or pipelines. These systems give companies more immediate information and closer control over their

operations in locations where wireline technologies either will not work or are impractical.

As the needs of wireless data users become better defined, new technologies and applications

will be deployed. Service providers and equipnovation and uncertainty as they seek to

(re)design products and applications to appeal to a

wider audience. The next several years are likely

to be characterized by rapid product turnover, slim

margins, and consumer confusion. The technologies and services that succeed and those that do

not will only be determined as users buy, and the

market reacts.

❚ Factors Driving Demand

The most important factors fueling the demand for

wireless, especially mobile, data communications

services are: 1) the dramatic increase in sales of

portable computers; 2) a growing familiarity and

use of computer networks; and 3) a rising expectation of being able to access information anywhere,

5Current systems use telephone lines and V.34 (28.8 kbps) modems to deliver video at 7 to 10 frames per second (normal video runs at 30

fps), and cost from $1,000 to $1,500. The Personal Conferencing Specification now being developed will offer a standard for videoconferencing.
Chapter 4 Wireless Data 103

To speed order processing and improve customer service, some restaurants are implementing wireless technologies that allow wait staff to send customer orders directly from the table to the kitchen or

the bar. One such system, the Squirrel Restaurant Management System, uses Fujitsu palmtop computers with PC card radio modems, and allows wait staff to transmit orders, call up drink and menu inventory, and process credit cards—all from the customer’s table.

This system uses frequencies in the unlicensed 902 to 928 Mhz band to transmit signals from the

hand-held unit to a system base station. The system achieves a burst data rate of up to 242 kilobits per

second and has a range of 300 feet indoors and 800 feet outdoors. The Fujitsu PoqetPad sells for

$2,285, including the radio modem. Additional costs include the Squirrel Restaurant Management software package and the restaurant base stations, each of which can accommodate five hand-held units.

In addition to speeding the delivery of the customer’s order, such systems have enhanced accounting processes in many restaurants. Prior to implementing such a system, restaurant management would

have to go through every order slip to track the number of salads, bottles of wine, etc. they had sold in

a day/week/year. With the automated system, restaurants can have the wireless device send one copy

of the order to a printer in the kitchen, and one to a main computer which keeps records of the sales.

This makes tracking inventory and checking employee theft much simpler for restaurant accounting offices.

Although increasingly popular, these systems have encountered some problems. For example, one

restaurant which implemented a wireless ordering system found that, without extensive training, wait

staff spent too much time looking at the hand-held device while at the customer’s table, and not enough

time talking with the customer.

SOURCE: Jeff Tingley, “Wireless Pen Computing Serves Restaurant Industry,” Wireless for the Corporate User, vol. 3 No. 1, 1994,

p. 52.

anytime. 6 Today, worldwide notebook computer crease in the demand for wireless connectivity

sales total almost 8 million units, accounting for

17 percent of the market for personal computers

(see figure 4-1).7 By 1998, at least one company

predicts that sales of notebook computers will

capture 22 percent of the total market. These figures suggest that workers in many jobs and who

exhibit varying levels of mobility are using portable computers—no longer will they be confined to

traveling professionals and executives. Most industry observers believe that the latent demand for

mobile/portable computing is enormous, and that

the development of mobile computing applications and software will lead to a corresponding in-

(see box 4-3). This may be a reflection of the same

trend that is fueling increasing cellular phone subscriptions by small businesses and even mass market consumers—the increasing desire and/or need

to be connected to family, friends, the office, customers, or suppliers.

At the broadest level, wireless data applications

are being driven by the increasing demands for

mobility and by a need to access information immediately from any location. Almost 50 million

workers have jobs that can be classified as mobile

in some way (see chapter 2). For some, mobility is

an inherent part of the job---a supervisor on a fac6Decision Resources, "Wireless Data Communications: Scenarios for Success,” written by Clifford Bean of Arthur D. Little, Inc., cited in

Mobile Sate/life News, vol. 5, No. 18, Sept. 15,1993, p. 4. For a discussion of the trends affecting the mobile computing industry, see Dulaney,

op. cit., footnote 1.

7

Paul Taylor, “Small, Light—and Powerful,” Financial Times, May 3.1995, p. 5.
104 WirelessTechnologies and the National Information Infrastructure

Personal digital assistants (PDAs) allow users to take many of --- — --

the functions of their office with them when they travel. This

unit combines pen based computing with wireless electronic

mail and fax capabilities.

tory floor, a sales representative with a large multistate territory, or a repair technician working in a

metropolitan area. These people need to be in

touch with colleagues, customers, and suppliers;

access company files; and transmit status reports

and updated information. Wired networks may

not always be easily accessible or convenient.

For other workers, mobility is only an occasional part of the job. Professionals and white-collar workers often use computers and computer

networks in their offices, but when they travel-to

visit clients, attend a conference, or take a vacation-these resources stay behind. Increasingly,

however, users are demanding access to the same

capabilities when they travel as they have in their

offices, including electronic mail (one of the most

common uses of mobile data services), remote file

access, and fax.

WIRELESS DATA SYSTEMS

The following sections describe the various wireless data systems according to the character of the

information sent (one-way or two-way) as well as

the distinctions created by past regulatory and

Worldwide notebook PC market (millions of units)

20

18

1 6

1 4

1 2

10

8

6

4

2

0

Notebook sham of total PC market

1994

1

1994 9 5 96 97 9 8

SOURCE:Ostaquest.
Chapter 4 Wireless Data 105

Persona/ Digital Assistants. In the last two years, products have been introduced that combine many

of the functions of a personal computer with wireless communication capabilities, including e-mail, paging, faxing, and remote data access. Some also enable users to place and receive phone calls. These

personal digital assistants, PDAs, include Apple’s Newton, Tandy’s Zoomer, Motorola’s Envoy, and IBM/

BellSouth’s Simon. Prices range from $200 to 1,500, depending on features. Some of these devices now

use cellular or private data networks to allow users to communicate.

By most estimates, the introduction of PDAs has been a disappointment. Although experts disagree

on which factor was most important in their low sales (poor handwriting recognition, slow processing

speeds, etc.), nearly all agree that lack (and/or the high price) of communications software was an important contributing factor. Apple’s Newton, for example, could communicate with other Newtons, but

adding the capability to communicate with the “outside world” cost more. The fact that communications

is viewed as so important in their demise, however, may mean that future PDAs (now sometimes called

personal communicators) with standardized (and affordable) communications capabilities for messaging, faxing, e-mail, and perhaps even voice will be more successful.

Other factors contributing to the slow start of PDAs include unreliable (due to poor quality of links)

transmission, and high prices both for the units themselves and transmission and data services. The

machines also use competing operating systems: Apple and Sharp use Newton, Tandy/Casio use

Zoomer (software by Geoworks), Microsoft (with Compaq) has developed Winpad , and General Magic,

whose backers include Sony, Motorola, ATT and Apple, and Phillips, has developed software called

Magic Cap,

Pen-based computing. In contrast to the disappointing sales of PDAs, pen-based computers serving

specific business uses—field technicians, delivery personnel, insurance caseworkers—have been relatively successful. Each of these vertical applications, however, usually will not work with the others, Special software is customized for each user; with different capabilities and ways of entering information.

Many applications require the individual user to fill an electronic “form” that is designed to capture specific kinds of information---census data for example—that would not transfer to other businesses.

PCMCIA cads. Personal Computer Memory Card International Association (PCMCIA) cards, also

known as PC cards, are credit card-size devices that plug into a special slot in a (laptop) computer and

perform a range of functions—modem, LAN access, hard drive, even GPS capabilities. In modem and

LAN access applications, PC cards can use cables to connector radio waves. PC cards have had their

share of problems—software incompatibilities, excessive memory and power requirements, and hardware connectivity-, but these problems seem to be subsiding as manufacturers and developers refine

their designs and products.1 However, wireless PC card adapters are still expensive; costing from $600

to $800 each.

SOURCE: Office of Technology Assessment, 1995.

1 For an overview, see PC Magazine, Jan. 24, 1995, which has a series of articles on PCMCIA cards.
106 Wireless Technologiesand the National Information Infrastructure

technological differences. Many of these systems

can or will offer essentially the same service(s),

but at different costs and with slightly different

features and coverage areas.8 Six types of systems

are discussed: broadcast, two-way messaging,

cellular data, wireless computing, unlicensed services, and satellite data services.

❚ Broadcast Systems

Broadcast technologies are well suited to distributing data from one central location to many users

(point-to-multipoint) in a given area, or to reach

a user whose location is unknown or who is moving about. Although these technologies are oneway only, they often provide the lowest cost

alternative for keeping in touch with family, business associates, and employees, and are increasingly being used by residential consumers as well

as businesses.

Paging

Paging services represent the most basic form of

w&l&s data delivery. Use of pagers has boomed

in the past five years as prices have dropped 50

percent-to below $100 for basic models.9 About

600 paging companies operate in the United

States today, providing services to over 19 million

people--making paging one of the most widely

used wireless services. Paging systems provide

service at all levels-local, regional, and national,

and equipment and usage are usually quite inexpensive. Customers pay between $50 and $500 for

a pager and between $15 and $100 per month for

service.10

Paging companies provide a range of services.

With tone-only pagers, the paging company transmits a signal to the user’s pager, alerting them to

call in for a message. With more advanced tone/

Pagers, such as this alphanumeric unit, have become one of

the most popular means for people to stay in touch via wireIess.

voice or numeric pagers, the user receives a voice

message or phone number on their pager. The

most advanced units, alphanumeric pagers, can

receive short text messages, e-mail (even from the

Internet), voice mail notification, and information

services such as traffic alerts or stock quotes. In

1993, numeric pagers accounted for 87 percent of

the pagers in use, alphanumeric 7 percent, toneonly 4 percent, and tone/voice 2 percent (see figure 4-2).11

Paging companies are expanding their services

to provide more sophisticated communication

services. MobilComm, the country’s second largest paging company, began sending messages to

Newtons and other PDAs using a receiver that

costs $200. Mtel is building a $150 million network that will allow users to acknowledge received pages beginning in 1995, and its Skytel

service has already begun testing two-way

communications. Recent Federal Communications Commission (FCC) auctions of narrowband

personal communications service (narrowband

PCS-see below) frequencies made additional

spectrum available for advanced digital and twoway paging services. This new spectrum will en8

For an overview of current products and services, see various articles in Data Communications, vol. 24, No. 4, Mar. 21, 1995.

9

Lois Therrien, “Pagers Start to Deliver More than Phone Numbers,” Business Week, Nov. 15,1993. 1 0David Strom,"Reality Check on Wireless Data Services," Business Communications Review, May 1994, pp. 62-66. See also Data Communications, op. cit., footnote 8.

1 1EMCI, Inc., based on EMCI paging survey, January 1994.
Tone-only

4 %

Alphanumeric

7 %

Numeric

SOURCE: Office of Technology Assessment, 1995, based on data from

EMCI, Inc.

able paging companies to offer a wide array of

new information services, continuing the trend toward higher functionality.

By combining a computer or a PDA with a paging unit, users can receive data files, short messages, and other more advanced features. Some

analysts expect that alphanumeric paging will become an integral part of portable computers before

the end of the century, and that computer-based

services will represent an increasing portion of the

paging business. 12 In the future, paging devices

may be reduced to a single computer chip and integrated into a wide range of computing and information devices. One idea now being developed

Chapter4

would have the paging chip

Wireless Data 1107

be unprogrammed

when purchased, allowing the purchaser to call

their preferred service provider that would then

program the chip over the phone.13

Regardless of the type of service provided, all

paging systems use similar technologies and architectures to deliver service (see figure 4-3).14

When a caller wishes to send a message to a paging customer, he calls the paging company, which

then encodes the message with the paging customer’s “address,” called a cap code, and broadcasts

it 15 The subscriber’s pager receives the WUISIllk-

.

sion and alerts the user. To achieve the best possible coverage of an area, paging companies use a

technique called simulcasting that transmits the

same message from multiple transmitters at the

same time. To extend the coverage of services,

many companies establish agreements with other

paging companies that allows their customers to

use paging systems outside their home system. A

few service providers have assembled nationwide

networks using this approach. National paging

services also use satellites to relay messages between local systems.16 Because pagers are generally tuned to specific service providers, users

cannot easily change carriers-unlike cellular

phones, which can be easily reprogrammed.

Radio Broadcast

Traditional AM and FM radio broadcasters are exploring ways to deliver information services using

their broadcasting facilities. Some are experimenting with Radio Data System (RDS) technology that will transmit additional information—

such as song title and artist, the station’s call letters, and music format information-along with

12The Gartner Group, for example, predicts that 50 percent of all palmtop computers will have paging capabilities built in by 1998. See also

T. Garber, “Special Report,’ ’Radio Communications Report, vol. 13, No. 10, May 23, 1994.

13Andrew M. Seybold, Using Wireless Communications in Business (New York, NY: Van Nostrand Reinhold, 1994).

14 Paging companies are licensed in 25 kHz channels in four bands: Lowband, Highband, UHF, and 900 MHz. The recent Fcc Narrowband

PCS auction made available 1,300 KHz of additional spectrum in three bands between 900 and 941 MHz.

15Alphanumeric pagers are an exception. A Computer with paging software and a modem, rather than just a telephone, is required to initiate

an alphanumeric message. Telephone answering services (TAS) are available so that anyone with a telephone can call the TAS and leave a voice

message with a representative, who then inputs the message through a computer to the paging company’s encoding and controller station.

16D. Baker (ed.), Comprehensive Guide to Paging (Washington, DC: BIA Publications, Inc., 1992).
108 I Wireless Technologies and the National Information Infrastructure

SOURCE: Office of Technology Assessment, 1995.

the regular programming.

17 Such systems have

been used in Europe for many years, but the U.S.

Radio Broadcast Data Service (RBDS) was only

established in early 1993, and deployment of the

technology has been extremely slow. By early

1994, some 100 stations were said to be using

RBDS, but few RBDS-compatible radios are in

use.

18

Other radio data services being considered include travel advisories, local restaurant/hotel information, and advertising supplements. In FM

radio, for example, broadcasters would like to use

the FM subcarrier to transmit supplementary advertising information-school closings, stock

quotes, and other information services--directly

to personal computers.

19 Such systems have been

tested, but most efforts are only in the conceptual

stage. Standardized (receiving and processing)

technology for consumers has not been developed, and systems are not expected to be ready for

widespread deployment until late 1995 or 1996.

Speeds up to 19.2 kilobits per second (kbps) are

expected to be available, and, like other broadcasting applications, these types of services are expected to serve both mobile and fixed users.

Television Broadcast

Using their existing equipment, television broadcast systems are capable of transmitting data in

several ways. Over the years, a number of at17The system uses a subcarrier that is broadcast alongside the main radio signal and allows data to be sent at about 1.2 kbps. It does not

interfere with the main radio programming. Reportedly, a higher data-rate standard is being developed by the National Radio Systems Committee of the National Association of Broadcasters-perhaps ready by 1995— that would carry information at speeds up to 20 times the existing

standard. Bennett Z. Kobb, Spectrum Guide (Falls Church, VA: New Signals Press, 1994), p. 29.

18John Gatski, “RDS/RBDS Slowly Gains Acceptance,” Radio World, vol. 18, No. 4, Feb. 23, 1994.

19Paul Farhi, “EZ Communications Forms Unit to Develop Radio Technology,” The Washington Post, Dec. 4, 1994, p. D4.
Chapter 4 Wireless Data | 109

tempts have been made to develop videotext services that send data—including stock quotes,

newspapers, and other local information—in the

vertical blanking interval (VBI), the black stripe

at the top/bottom of a television picture. To decode the data, users had to have a set-top box that

would capture the information, store it, and display it. None of these experiments were commercially successful. The VBI can also, theoretically,

be used for applications such as paging and updating retail information (stolen credit card lists, for

example), but there has been little demand for

these services from businesses and most broadcasters are not providing them.

Other methods for transmitting data are also being developed. Recently, one company has developed a proprietary system that transmits

high-speed data using the whole broadcast signal

without interfering with the regular programming.20 Similar to the sideband broadcasting applications being developed for radio broadcasting,

other applications are being developed that use

television secondary audio (SA) channels.21 One

system currently being tested uses audio channels

transmitted via satellite to deliver current weather

information and emergency weather and environmental alerts to personal computers located

around the country.

The industry is also working with new companies to provide Interactive Video Data Services

(IVDS). These systems would allow viewers to respond to polls, order merchandise, and play along

with game shows by using a remote control and a

set-top box connected, via special IVDS frequencies, to a local control center. Frequencies for

IVDS were auctioned by the FCC in 1994, but services have not yet been deployed because of problems with the technology and availability of

equipment. In addition, a number of the IVDS

auction winners defaulted on their bidding commitments.

Two factors will seriously limit the implementation of data systems by broadcasters in the

short run. First, most of the services developed so

far are fairly low bandwidth, and demand has historically been low. Second, these systems are

based on the existing analog technology currently

used by television broadcasters. They will most

likely not work with the digital broadcasting systems now being developed (see chapter 5). Once

digital broadcasting technologies are implemented, broadcasters hope to use at least some of their

spectrum to provide various information services.

The terms under which such uses will be allowed

have been a contentious issue for policymakers.

Legislation now being debated in Congress generally allows broadcasters to provide “ancillary or

supplementary services,” subject to various licensing restrictions and payment of fees.22 The

definition of an “ancillary or supplementary” service remains unclear, however, and what services

will be allowed remains uncertain.

❚ Two-Way Messaging

Two-way messaging services provide a variety of

interactive low-speed data applications, and can

serve fixed, portable, or mobile users. Many individuals use two-way services to send and receive

electronic mail and access company data networks. Other services include remote meter reading, point-of-sale and credit card verification, and

alarm monitoring. Some of these applications

could be provided by wire-based systems, but the

20Presentation of Wave-Phore at the National Association of Broadcasters convention, Las Vegas, NV, April 1994.

21These channels are currently used to provide second-language translations for television programming, or, on some PBS stations, weather

reports.

22U.S. Congress, Senate, S. 652, Telecommunications Competition and Deregulation Act of 1995 (Washington, DC: U.S. Government Printing Office, 1995); U.S. Congress, House of Representatives, H.R. 1555, Communications Act of 1995 (Washington, DC: U.S. Government

Printing Office, 1995).
110 | Wireless Technologies and the National Information Infrastructure

high cost of laying wire would likely be prohibitive, and, in many cases, it is easier to install a

wireless system.

Packet Radio

The two-way data messaging industry is dominated by Ardis (backed by Motorola) and Ram

Mobile Data (a joint venture of Ram Broadcasting

and BellSouth Enterprises). These two providers

offer specialized communication services primarily to companies, but are now trying to expand

into more general markets (e.g., mobile professionals). Some analysts doubt that such a strategy

will work, citing potential competition from both

cellular carriers deploying cellular digital packet

data (CDPD) and future narrowband PCS companies (see below).

Commercial messaging services are provided

through terrestrial towers in each metropolitan

area. Digital packet technology is used to send information over channels in the 800 MHz SMR frequency band. The Ram service is currently

available in more than 250 metropolitan areas,

while Ardis serves the nation’s 400 largest metropolitan areas—coverage is not quite national.

Both services are designed to deliver short (200 to

300 bytes) text messages, generally using specialized equipment. Ram operates at 8 kbps and Ardis

is upgrading its network to offer speeds up to 19.2

kbps, but actual data throughput is usually about

half these speeds. Each offers a range of pricing

plans based on peak and off-peak times and different levels of use. Ram’s prices range from $25 to

$135 per month, and are based on the amount of

data sent, while Ardis’s range from $39 to $299

per month, and are based on the number of messages sent.23

Narrowband Personal Communications

Service

In 1993 the FCC established a new category of

wireless data services, narrowband PCS; allocated spectrum for it; and established the rules that

would govern the systems’ operations.24 Following congressional mandates, in 1994 the FCC began auctioning narrowband PCS licenses. To date,

10 national and 30 regional licenses have been

awarded; bringing in just over $1.1 billion.25 A total of 3,554 licenses will be issued to companies

that plan to offer new services as well as expand

and augment existing networks and services. The

first systems are expected to begin operation

sometime in 1995.

The FCC defines narrowband PCS as a family

of mobile and portable radio services that will provide a variety of advanced paging and messaging

applications to individuals and businesses.26 It

promises low-cost, two-way data communication

services that are expected to appeal initially to the

traditional mobile data markets, such as field sales

or (repair) service and fleet and courier dispatch.27

Narrowband PCS licensees plan services that include: credit-card verification, locator services

(for vehicle dispatch and tracking), voice paging,

acknowledgment paging, and two-way exchange

of short messages. These services will be delivered to user devices such as alphanumeric pagers,

23Joseph Palenchar, “Will Cellular Packets Lead the Way in Wireless?” Mobile Office, July 1994; Data Communications, op. cit., footnote 8.

24The service was allocated 3 MHz of spectrum at 901 to 902 MHz, 930 to 931 MHz, and 940 to 941 MHz, of which 1 MHz was held for

future uses. Federal Communications Commission, Amendment of the Commission’s Rules to Establish New Narrowband Personal Communications Services, First Report and Order, Gen. Docket 90-314, 8 FCC Rcd 7162 (1993).

25Licenses were divided among four types of service areas: 492 Basic Trading Areas and 51 Major Trading Areas (as defined by Rand

McNally), five regional licenses, and 11 national licenses. Six companies paid $617,006,674 for 10 national licenses: Airtouch Communications Inc., Bellsouth Wireless, Inc., Destineer Corp (MTel), McCaw Cellular Communications, Inc., Pagenet, and Pagemart. Six licenses were

auctioned for each of the five regions, with bids totaling $488,772,800. Robin Gareiss, “PCS: Making Sense of the New Services,” Data Communications, October 1994, p. 49.

26Federal Communication Commission, op. cit., footnote 24.

27Gareiss, op. cit., footnote 25.
Chapter 4 Wireless Data | 111

computers equipped with radio modems, portable

fax machines, and portable computers.

Like other new wireless systems and services,

the costs of building the systems and the prices

that will be charged are closely guarded by the

companies involved. One company, Pagemart, estimates the cost of building their system is about

$200 per subscriber—more than a traditional paging system, but significantly less than the $750

that cellular companies say they spend on building

their systems.28 Prices are still being determined,

but are expected to be higher than traditional paging services, but less than other wireless data services such as Ardis/Ram, CDPD, or cellular.

❚ Cellular Data

Cellular telephone systems can also be used to

send data, and represent an alternative to packet

radio networks and future narrowband PCS. Cellular data transmission allows users to do everything they can do with a regular wireline

modem— connect to office LANs, send and receive electronic mail or text files, access online

services, and browse the Internet. Speeds remain

slow; and operation is not as reliable as a wired

modem, but cellular systems are rolling out new

digital data services that should improve performance.

Circuit-Switched Cellular Data

The traditional method for sending data over a cellular system is much the same as sending data

from a computer using the telephone lines. A computer is connected to a radio modem that dials the

phone number and makes the connection using

regular cellular channels. Radio modems add features to compensate for the different transmission

characteristics of the airwaves, which are more

prone to noise and interference than the wireline

network.29

Alternatively, using a regular wireline modem,

a user can connect his or her computer directly to a

cellular phone through a data connection (RJ-11

jack) built into the phone (not all phones have

such connections). This method is often less reliable, however, because wireline modems are designed for landline use and may not be able handle

the differences in cellular phone networks and

calling procedures; the phone may disconnect

during cellular hand-offs, for example.30 Such

problems, combined with the interference and

noise common in cellular voice calls, make cellular data calls less reliable than those made through

the public telephone network.31 Maximum speed

is theoretically 9.6 kbps, but actual speeds are usually lower—2.4 or 4.8 kbps.

Current circuit-switched analog data applications, which currently account for about 3 percent

of total cellular traffic, may grow in the next several years, but in the longer term, they will be discontinued.32 Cellular providers are now

deploying digital data technologies that use their

existing networks (CDPD-see below), and eventually, they will completely replace their analog

service with new digital services (see chapter 3).

28Ibid.

29Specially designed cellular modems offer advantages over regular landline modems for cellular use, but they generally require the same

type of modem on both ends to work (a mobile worker with a cellular modem cannot just connect with anyone with a regular modem). To overcome this compatibility problem, some carriers have instituted modem pools that allow users with cellular modems to dial in to the pool and the

carrier will serve as a go-between, translating the cellular modem signals into signals the modem being called can understand.

30Common cellular-network impairments include frequent cellular base-station hand-offs, dropouts, call interference,

fading, echo, and other types of signal distortions. These problems require signal conditioning techniques not implemented in traditional

landline modems.

31Datacomm Research reports that “even with special ‘cellular modems,’ one can expect call attempts to fail anywhere from 20 to 50 percent of the time,” op. cit, footnote 3, p. 23.

32Palenchar, op. cit., footnote 23.
112 | Wireless Technologies and the National Information Infrastructure

Cellular Digital Packet Data

To overcome the limitations and high cost of circuit-switched cellular data, a group of cellular carriers began to develop an alternative data

transmission system called cellular digital packet

data (CDPD) in 1992. Standards were agreed to in

mid-1993. CDPD radio modems transmit data by

breaking the information into digital “packets”

and sending them over vacant channels on existing analog cellular systems—no one channel is

dedicated to one data “conversation” as in circuitswitched service.33 Although CDPD was originally envisioned as a dynamic system in which

vacant channels would be identified “on the fly,”

in practice, system operators have set aside a certain number of channels dedicated to CDPD use

in order to improve performance. CDPD systems

can transmit at speeds up to 19.2 kbps, but actual

throughput is closer to 9.6 kbps because of errorcorrection features added to increase reliability.

CDPD services are being designed to support a

wide range of data applications. In addition to the

mobile services used by professionals and field

technicians, CDPD is also being developed for

some fixed location applications, such as vending

machines and remote utility installations like natural gas wellheads. CDPD can be used like a regular wireline modem to remotely connect to LANs,

access databases, and exchange files, but it is especially useful for applications characterized by

short “bursty” data. CDPD systems have been designed to favor shorter transmissions (less than

600 words) and have been optimized for users

who send and receive many short messages (500

characters, or 50 to 75 words)—credit-card verification, real estate transactions, emergency services, dispatch, fleet management, package

delivery and tracking, telemetry, two-way paging,

Internet access, and electronic mail.34

Service packages currently range from $11 to

$139 per month, and, like Ram and Ardis, are usually based on varying levels of usage that allow users to match their usage to their budgets.

Following the technology, pricing structures favor shorter communications. Messages of up to

1,000 characters, for example, may cost as little as

$0.17.35 CDPD is expected to be more cost-effective than circuit-switched data services for short

communications, while circuit-switched may be

preferred for larger file transfers.

For cellular system operators, CDPD offers an

important benefit; it allows them to upgrade their

data capabilities without replacing their existing

analog cellular infrastructure (antennas, transmitters, frequencies), and with the addition of very

little additional equipment. This “overlay” approach may allow CDPD services to be rolled out

faster and at less cost than competing services that

have to be built from scratch like some of the new

narrowband PCS services.36 CDPD also offers

performance advantages over circuit-switched

cellular data applications, including better error

correction; improved reliability; faster speeds;

more flexible functions, including multicasting;

and potentially lower costs.

One important advantage that CDPD has over

most other wireless data technologies (except satellite services) is coverage. The potentially wide

availability of CDPD—cellular services are currently available to about 95 percent of the population—would give it a distinct edge over existing

wireless services such as Ardis and Ram, which

33Data are NOT sent in between pauses in conversations, but in the time between different conversations. When a voice conversation is

assigned to a channel currently being used for data, the system will automatically find another vacant channel and switch the data communication so that no interference occurs. This is called “channel hopping.” Research indicates that an average channel is unused as much as 30 percent

of the time. John Gallant, “The CDPD Network,” EDN, Oct. 13, 1994.

34Ibid.

35 “Sending the same message via circuit-switched cellular could cost more than four times that amount because carriers bill for air time in

one-minute increments, even if a transmission takes only a few seconds.” Palenchar, op. cit., footnote 23.

36Chris Pawlowski and Peter McConnell, “CDPD Air Interface Basics,” Telephony, Dec. 5, 1994.
Chapter 4 Wireless Data | 113

typically provide coverage only in metropolitan

areas. The relatively small number of potential users outside those coverage areas, however, may

mean that this advantage is important only for users who need very broad coverage, such as trucking or package delivery companies. The

interoperability of CDPD, however, has not yet

been proven. Only a few carriers have struck

CDPD roaming agreements, and the technical

ability to connect different CDPD systems is only

now being tested—true nationwide roaming may

be years away.

There is still a great deal of uncertainty over

CDPD’s role in data transmission and how successful it is likely to be. CDPD standards were set

in 1993, but deployment of CDPD capabilities has

fallen well behind initial expectations due to technical difficulties. By mid-1995, only 19 systems

were offering service, and another 22 were planning to begin operation by the end of the year.37

Some analysts see CDPD as little more than an interim service that few people or businesses will

use. Others, including the consortium of cellular

companies that developed CDPD, believe it is the

answer to publicly accessible wireless data services.38 At least one forecast estimates that there

will be 1.6 million CDPD users by 1998.39 Given

the slow deployment of CDPD, it is still unclear

how successful it will be, or whether it will be

quickly superseded by advanced digital cellular

data applications.

Digital Cellular Data

Once cellular carriers switch to digital formats—

time division multiple access (TDMA) and code

division multiple access (CDMA)—new data formats will also become available. The data portions of these overall standards are being

developed, but have not yet been finished, and no

commercial data services are being offered. Cellular digital data applications will be deployed after

the voice applications, which are already starting

to appear. In the first implementations of TDMA,

for example, existing analog channels continue to

be set aside for analog and CDPD modem communications.

By contrast, more than two dozen Global System for Mobile communications (GSM—see

chapter 3) systems around the world have already

begun to offer data services.40 However, only a

few vendors are making GSM data equipment,

and services are usually limited to the home system—roaming is not yet possible due to the lack

of roaming agreements for data applications. Individual networks also must be upgraded to provide

data services. Finally, compared to other wireless

services, such as the international affiliates of

Ram Mobile, GSM data communications can be

more expensive. Vendors and analysts expect

these initial problems to be solved quickly as more

GSM systems are deployed and more users subscribe.

❚ Wireless Computing

The use of wireless technologies by computer users is one of the areas projected for the strongest

growth over the next several years, and a good

number of companies have targeted mobile or

wireless computing as a potential market for various kinds of wireless information services. This

section will concentrate on the use of portable

computers for general computer tasks—word

37Robin Gareiss, “Wireless Data: More Than Wishful Thinking,” Data Communications, op. cit., footnote 8.

38Consortium members include: Ameritech Mobile Communications, Inc., Bell Atlantic Mobile Systems, Inc., GTE Mobilenet, Inc., Contel

Cellular, Inc., McCaw Cellular Communications, Inc., Nynex Mobile Communications, Pactel Cellular, and Southwestern Bell Mobile Systems. CDPD service and product providers have also formed the CDPD Forum, Inc., a trade association composed of more than 80 companies

involved in CDPD that will continue work on stardardization and interoperability.

39Report by BIS Strategic Decisions, cited in Pat Blake, “Wireless Data: The Silent Revolution,” Telephony, Dec. 5, 1994.

40The following material comes from Elke Gronert and Peter Heywood, “GSM: A Wireless Cure for Cross-Border Data Chaos,” Data Communications, op. cit., footnote 8.
114 Wireless Technologies and the National Information Infrastructure

processing, file transfer, and remote connection to

computer local area networks (LANs).

Device Connectivity

At the simplest end, products are being developed

that allow users to link tirelessly with their desktop computers while they are near, but not in, their

offices. These products respond to studies of mobility on the job that indicate that most of the time

people are out of their offices, they are still close

by. The machines have varying levels of intelligence and storage built in, but allow users to remotely access their desktop computer-to read

electronic mail or use any applications. The systems require modems at both ends and have a

range of about 500 feet. Remote devices cost

about $1,400, while radio modems for the desktop

range from $600 to $700.

In addition to these products, infrared technologies-like those used in television remote controls and other consumer electronics devices—are

also being developed that would allow portable

computers, printers, and PDAs to communicate

directly with one another. Infrared technology allows the ad hoc creation of low-speed networks

(maximum data rate is currently 115 kbps, but

speeds up to 10 Mbps are being developed)---at a

meeting, for example-and direct device-to-device communication. Most PDAs, for example,

already have infrared technology built in so they

can communicate with each other, and one analyst

estimates that 90 percent of all personal computers will have this capability by 1997.41 In the future, proponents expect many kinds of devices to

incorporate infrared communications capabilities, including public phones, computer printers,

cash registers, and fax machines.

The advantages to infrared technology is that it

is inexpensive (around $3 to $5 to equip a comput4 1Dulaney, op. cit., footnote 1..

Portable personal computer makers are beginning to

integrate wireless data communications capabilities,

including remote Iocal area networking, into their products.

Users will soon be able to wirelessly connect to their office

LAN from almost any where.

er with infrared, and $50 to $100 for an adapter,

with prices expected to fall with increased volume), and potentially ubiquitous-companies

from many countries have agreed to an international standard that will allow products to work

around the world.42 Computer hardware and software companies have already begun to build infrared communications capabilities into their

products, and adapters that will connect to existing computers, printers, and telephones are expected to be on the market by mid 1995.43 In the

future, proponents expect infrared technologies to

provide an inexpensive way to provide high-bandwidth communications over short distances---

another way to access the resources of the NII.

Wireless Local Area Networks

LANs connect computers in a small area (in an office, for example) and allow them to share

42The Infrared Data Association, which is composed of over 70 companies in the field, announced a set of infrared data standards in early

1994. John Romano, “Infrared Boosts the ‘Personal Area Network,’” CeBIT News, Mar. 21/22, 1994. 4 3Materials provided in a briefing to the Office of Technology Assessment by the Infrared Data Association, no date.
Personal computer PC

Printer

\ /

PC

Central computed – -

file server

Portable PC PC

SOURCE: Office of Technology Assessment, 1995.

memory, use a common printer, and exchange

files and electronic mail (see figure 4-4). Wireless

LANs substitute radio waves for the fiberoptic or

coaxial cables that connect most wire-based

LANs. A computer equipped with a radio modem

links to a central computer, called a server, which

is also equipped with a modem or modems. Most

wireless LAN radio modems also support direct

device-to-device communication separate from

the server.

Wireless LANs were originally designed to

substitute for wireline LANs; to be used where

wires were either too costly to install or where

Chapter 4 Wireless Data

added flexibility (to move computers easily

 115

and/

or quickly) was needed. For example, many older

buildings are difficult to wire for computers (or

even phone lines) because of their construction or

the presence of hazardous materials such as asbestos. In these cases, wireless LANs may provide a

cheaper solution. Box 4-4 compares wired and

wireless LANs in school applications.

However, the market for such applications has

not developed as expected. The primary problem,

most analysts agree, is that wireless networks are

significantly slower than wired LANs—1 to 2

Mbps on wireless versus 10 Mbps on most wired

LANs. Wireless speeds are adequate for some applications---electronic mail and database queries,

for example-but not for the higher-speed applications, such as image and graphics transfer,

that are becoming increasingly popular. In addition, wireless LANs are often more expensive

than their wired counterparts, with wireless modems costing up to $800 and access point equipment (that allows multiple computers to connect

to the LAN remotely) costing up to $2,500 each.44

As a result, wireless LANs have not proven popular simply as a replacement for wireline systems.

Currently, the wireless LAN industry is undergoing a transformation as vendors refine their

products and marketing. Some see the concept of

LAN extension—in-building mobility-or remote access to wired LANs as a more lucrative

market. In fact, the market for wireless LANs has

recently begun to improve. Commenters in a recent FCC proceeding provided sales figures demonstrating a rapidly expanding market for wireless

LAN equipment—sales of $200 million for 1994

and expected sales as high as $2.5 billion by

1998. 45

44By comparison, wired products cost from $150 to $500 for an adaptor and $500 to $1,500 for a multiple access hub. For a discussion of the

speeds and prices of select systems, see David Newman and Kevin Tony, “Wireless LANs: How Far? How Fast?” Data Communications, op.

cit., footnote 8.

45Federal Communications Commission, Allocation of Spectrum Below 5 GHz Transferred from Federal Use, First Report and Order and

Second Notice of Proposed Rulemaking, ET Docket 94-32, released Feb. 17, 1995, para 33.
116 I Wireless Technologies and the National Information Infrastructure

Schools and school districts nationwide have been struggling for years to upgrade their communication and computer networks to keep pace with the rest of society. Facing tight budgets, many have

found it difficult to afford the major capital investment of wiring classrooms, installing local area networks (LANs), and buying computers, let alone training teachers and administrators on the new

technology. ’ Nevertheless, some schools and school districts have made computer networking a priority.

Although wireless LANs have been considered for many school applications, these systems have

generally not been selected due to some combination of cost, reliability, and data-rate concerns.2 As a

result, wireless LANs are generally perceived as a second choice solution that is most appropriate for

buildings that are hard to wire- historic buildings, those with asbestos, and buildings with insufficient

room in the walls or ceilings for additional wiring---or for temporary school-building settings.3

As technology develops, however, wireless LANs may become a more competitive alternative to

traditional wire-based LANs for school applications. In recent years, for example, wireless LANs have

become more popular for business applications because of their enhanced security, higher throughput,

and more competitive pricing relative to first generation wireless LANs.4 However, as wireless technologies advance, so too do wire-based technologies. Some believe that 100 megabit/second wire-based

LANs will soon become standard, dwarfing the throughput of even the fastest wireless alternatives.

School officials may wish to complement their existing wire-based LAN with wireless LAN technology. Many wireless LANs offer the flexibility to have numerous interconnected computers in a classroom

one day and none the next. In addition, many wireless networks allow students to carry a portable PC

or other device from classroom to classroom without sacrificing connectivity to the network. Other characteristics of wireless networks include: 1) implementation can be gradual (a school can purchase five

transceivers for five computers, and increase the number as slowly or as quickly as demand warrants

and the budget allows); 2) changes to the school are unnecessary (e.g., no asbestos removal or rewiring); and 3) installation takes days or weeks instead of the months required for a wire-based IAN. The

table below provides a rough comparison of three wire-based LAN configurations for schools with three

wireless alternatives. Because the installation cost of any IAN is dependent on the specific needs and

circumstances of each user-which will vary greatly by site-the numbers presented below should only

be considered as a crude illustration of the relative costs and merits of each system.

(continued)

1 For an in-depth treatment of this subject, see U.S. Congress, Office of Technology Assessment, Teachers and Technology: Making the Connection, OTA-EHR-616 (Washington, DC: U.S. Government Printing Office, April 1995.

2Charles Orocter, Florida Department of Education, Bureau of Educational Technology, personal communication , Mar. 9, 1995.

3Marty Heavey, Windata, Inc., personal communication, Mar. 28, 1995.

4Susan D. Carlson, “Wireless LANs Take on New Tasks, ” Business Communications Review, February 1995, PP. 36-41.
Chapter 4 Wireless Data 117

Comparison of Wire-based Local Area Network Costs and Capabilities

With Wireless Alternatives

LAN Speed

Internet Expansion Per Drop

Wire-based LANs Internal Connection Potential LAN Cost Drops cost

MIT Model

Low cost estimate

High cost estimate

Central Kitsap, WA

Low cost estimate

High cost estimate

Acton-Boxborough, MA

Wireless Alternatives1

Windata FreePort2

High Mobility

Low Mobility

Proxim

10 mbps

<10 mbps

<10 mbps

<10 mbps

<10 Mbps

<5.7 mbps

<5.7 mbps

<1.6 mbps

Metricom310-40 kbps

56 kbps low $37,100 67 $554

56 kbps low 102,000 67 1,522

512 kbps high 357,500 350 650

512 kbps high 412,500 350 750

56 kbps medium 25,393 82 310

56 kbps medium 136,495 67 2,037

56 kbps medium 50,295 67 750

56 kbps medium 52,385 67 782

28.8 kbps high 13,400 67 200

NOTES: LAN Cost represents the one-time cost of installing the network (hardware costs and facility upgrades, including significant

electrical upgrades with the wire-based LANs), but excludes computers and ongoing costs such as maintenance, usage fees, and

personnel training. The wide discrepancy in the total LAN costs shown here represents different technology choices and also different-sized schools. For this reason, a better comparison can be drawn between the per-drop costs for the different LANs.

Per-Drop Cost is the cost of the IAN divided by the potential/intended number of users. This needs some qualifying in the case of

the wireless alternatives because there are no “drops” per se, but rather wireless transceivers.

Expansion Potential refers to the ease (both financial and physical) with which additional users can be added to the various LAN

architectures.

SOURCE: Russell I. Rothstein and Lee McKnight, MIT Research Program on Communications Policy, Technology and Cost Models

of K-72 Schools on the National Information Infrastructure, Feb. 10, 1995; Kent Quirk, Chairman, Citizen’s Technology Advisory Committee, Acton, MA, personal communication, Mar. 29, 1995; Gordon Mooers, Coordinator Information Systems, Central Kitsap School

District, Silverdale, WA, personal communication, Mar. 29, 1995; George Flammer, Metricom, personal communication, May 4, 1995;

Windata, Inc.; Max Sullivan, Proxim, personal communication, May 16, 1995.

5The Windata and the Proxim systems are intended to complement an existing wireline IAN, thus, in addition to the wireless LAN

components, a minimal wireline infrastructure is required, including a server ($4,000) and cabling to each wireless node ($520), These

cost figures are taken from the MIT model and the Acton-Boxborough model, respectively.

6The Windata FreePort transceivers (the transmitters that provide communication from the PC to the rest Of the wireless LAN) can

support up to eight PCS. In the low mobility model, it is assumed that every computer will share the transceiver with seven others, thus

reducing the amount of mobility realized for each user, and also reducing the cost dramatically. In the high mobility model, each computer has its own transceiver, thus increasing each user’s mobility and the cost. We assume a total of four wireless hubs, at a cost of

$7,450 per hub. Schools may require fewer, for example if all users are on one floor, then only one hub is needed.

7

The Metricom Ricochet Network uses pole-top radios to relay wireless data from sender to receiver. These radios, which cost

about $700 each, are owned and maintained by Metricom. Therefore, the only cost to the school is the $200 for the Metricom modem

for each computer,

SOURCE: Office of Technology Assessment, 1995.
118 | Wireless Technologies and the National Information Infrastructure

Several different kinds of wireless LANs are

used today, which can be divided into three categories: infrared, narrowband, and unlicensed

spread spectrum.46

Infrared

LANs using infrared signals are capable of transmitting data in fixed or portable LAN applications, although true mobility is hard to achieve.

Infrared systems transmit information using both

lasers (generally for point-to-point) and lightemitting diodes (LEDs—primarily for indoors).47

These systems can operate at speeds of up to 10

Mbps, although throughput is much lower, and

range is limited (60 to 150 feet). The technology

works best with a direct line of sight between

sender and receiver, but can also work by reflecting the signal off walls and ceilings—although not

very well. Infrared signals, however, will not pass

through walls or office partitions, limiting its usefulness for larger scale applications. Infrared data

systems do not require licensing by the FCC and

can be relatively inexpensive because they take

advantage of production economies for other consumer electronic uses. The Institute of Electrical

and Electronics Engineers (IEEE) is now developing standards for infrared LANs.

Licensed

A few companies have experimented with licensed spectrum to provide wireless LAN services. Motorola’s Altair, for example, first

introduced in 1992, operates at frequencies in the

18 GHz range and offers throughput at about 5.7

Mbps. One problem with licensed systems is that

they are limited in the amount of spectrum they

can use—only five channels in a 35-mile diameter

area—and licensing is required.48 In the case of

Altair, Motorola controls the licenses. To avoid licensing and coordination problems and delays,

most vendors have developed wireless LANs using unlicensed frequencies.

Unlicensed (Spread Spectrum)

Wireless LANs operate in the 900 MHz, 2.4 GHz,

and 5.7 GHz bands (see discussion below on unlicensed data services). They offer speeds up to 5.3

Mbps, although actual throughput is usually 1 to

2 Mbps.49 They use either direct sequence or frequency-hopping, spread spectrum transmission

techniques (see appendix A). A number of wireless LAN products operate in the unlicensed

bands, and the IEEE is currently developing industry standards for LANs as well as standards

that will allow users’ computers to communicate

with each other directly—“ad hoc” or “peer-to46For further discussion of these systems, see Datacomm Research, op. cit., footnote 3.

47These systems currently do not work like most other radio systems—by modulating a radio wave. Instead, they simply turn the LED or

laser on/off at high speeds to send digital streams of information—in the same fashion as digital fiber optic technology. Some companies, however, have begun to develop amplitude and frequency modulated systems. These systems could reduce interference and increase the range of

infrared systems. High costs make the timeline for deploying such systems uncertain.

48Seybold, op. cit., footnote 13.

49Nathan Silberman, presentation to OTA staff, Sept. 16, 1994. Because these bands have been designated for “unlicensed” use by the FCC,

neither manufacturers nor end users have to obtain a radio license from the FCC. The manufacturer is responsible only for ensuring that the

product conforms to FCC technical rules and regulations, to prevent interference to other products.
Chapter 4 Wireless Data | 119

peer” networking.50 Development of products for

the 2.4 GHz band has reportedly accelerated in anticipation of the IEEE standard for wireless LANs,

the increasing congestion (see below) of the 902

to 928 MHz band, and the greater amount of bandwidth available compared to the 900 MHz band.

❚ Unlicensed Data Services

One of the most rapidly developing and hotly contested areas of wireless data involves the use of

spectrum that does not require the user to be licensed.51 In 1985, the FCC opened up three bands

for unlicensed uses (data and other types of communications) based on a set of regulations designed to minimize interference and encourage the

development of new services.52 Since then 130

companies have developed more than 200 systems and products for use in these bands—the 900

MHz band being the most popular—and more

than 3 million devices are now in use by consumers and businesses.53

Unlicensed systems and devices are widely

known as Part 15 services because they operate

according to Part 15 of the FCC’s rules. Some of

the services that operate under Part 15 include: automated utility readers, wireless LANs (see

above), cordless phones, wireless audio speakers,

home security systems, and some medical monitoring devices. In addition to these services, which

are mostly self-contained or private, developers

are also looking at the bands to provide more public services similar to those that now require a license—advanced paging and two-way messaging,

for example—in order to avoid the expense (possibly exacerbated by auctions) and time (months or

years) required to obtain a license. Zenith, for example, recently announced CruisePad, essentially

a portable computer with a range of communication options, including remote LAN access operating in the 2.4 GHz band. Metricom uses a series

of small (toaster-size) radios mounted on telephone or utility poles to create a microcellular,

mesh network that provides metropolitan area

coverage, and allows computers with appropriate

modems to communicate with remote servers,

send and receive e-mail, or access the Internet.54 It

serves utility monitoring, credit card verification,

and personal communications functions.

In the past two years, the FCC has taken three

actions to allocate more spectrum for unlicensed

uses. First, as part of its broadband PCS proceeding, the FCC allocated the 1910-1930 MHz band

50The current standard for wireless LANs is 802.11, which specifies 1 Mbps or 2 Mbps. The European Telecommunications Standards Institute (ETSI) is developing a wireless LAN standard (expected to be completed in 1995) called Hiperlan that many in the United States feel is

superior to the U.S. 802.11 standard. It allows wireless LANs to operate at speeds up to 22 Mbps over a range of 50 meters, and is capable of

transmitting voice, data, and video in a user-to-user or broadcast mode. It does not require a license to operate. Hiperlan, however, is likely to be

expensive and quite power-hungry, making portable applications difficult initially. To support these applications, and minimize interference,

European countries have allocated a total of 350 MHz of frequencies at 5.2 and 17.1 GHz that will be dedicated to wireless LANs. Japan has also

established two standards for wireless LANs, one operating at speeds less than 2 Mbps in the 2.4 GHz band, and the other supporting higher

(greater than 10 Mbps) speeds operating near 18 GHz.

51In this case, unlicensed refers to the fact that neither the service provider, equipment manufacturer, nor the user must have a license. Cellular phone service, for example, is considered a licensed service because even though end-users do not need to be licensed, the company providing service does.

52The bands are 902 to 928 MHz, 2400 to 2483.5 MHz, and 5.725 to 5.875 GHz. See generally 47 CFR 15.247.

53“Review Could Lead to Auctions for Licenses in 902-928 MHz Bands,” Land Mobile Radio News, vol. 48, No. 49, Dec. 16, 1994.

54The system operates in the 902 to 928 MHz band at 100 kbps total for each radio, which can be shared by several users. Shared use, however, brings down the bit rate available for each user. The system provides connection to the public telephone network, but does not allow handoffs; therefore it supports portable, but not fully mobile, communications. Metricom presentation to OTA staff, Sept. 14, 1994.
120 | Wireless Technologies and the National Information Infrastructure

to unlicensed PCS—for both fixed and “nomadic”

uses.55 This allocation was designed to support a

range of new data services centering around portable phones and computers, including wireless

LANs. To reduce the potential of interference

among users, the FCC adopted a “spectrum etiquette” that defines the technical rules that unlicensed PCS devices must meet to operate in the

band. Systems cannot begin operating until the

existing users of the band are moved, although exceptions will be permitted in areas where the unlicensed PCS system or devices can be coordinated

with existing microwave system operators. It is

not known how long the spectrum will take to

clear or when such systems and devices will begin

operation. For these reasons, this band is seen by

industry as inadequate to meet short-term needs.

Second, in February 1995, fulfilling an earlier

pledge to find more spectrum for unlicensed uses,

the FCC reallocated 50 MHz of spectrum transferred from government uses by the National Telecommunications and Information Administration

(NTIA).56 Of that amount, 10 MHz is designated

specifically for use by unlicensed radio services

such as portable computers and wireless networks, and will be governed by Part 15 rules and

the rules that govern data PCS applications. Part

15 users were allowed to continue to operate in

another 15 MHz of the band already used for digital cordless telephones, wireless LANs, and inventory control systems. The FCC specifically

indicated the benefits of this allocation for serving

the needs of the NII: “The potential for open access to the information infrastructure offered by

unlicensed PCS devices will provide benefits, not

only to commercial users, but also to individuals

and private users.”57 This allocation will be available immediately for use by unlicensed wireless

data devices.

Finally, the FCC recently opened a proceeding

into the possible uses of various frequency bands

above 40 GHz by unlicensed (and licensed) services.58 These frequencies would allow highbandwidth communications to be transmitted, but

only over very short distances (several miles at

most). The FCC believes that data rates between

50 Mbps and 5,000 Mbps or more are possible, enabling systems to deliver extremely high-bandwidth services including high-speed data,

high-resolution video and image transfer, and vehicle radar systems. The possible uses of these frequencies to provide NII access for consumers and

backbone communications services for NII providers was explicitly recognized by the FCC.

❚ Satellite Data Systems and Services

All the of the systems previously described use

land-based towers to transmit information. Some

systems—paging networks, for example—use

satellites to connect local systems to form regional

or national coverage areas. Satellites, however,

have also been used by themselves for many years

to transmit data and other types of information,

primarily to fixed locations. The primary advantage of satellites is their ubiquitous coverage—the

beam of one satellite can cover the whole United

55Of these frequencies, the bottom 10 MHz are reserved for data PCS. Material in this paragraph comes from Federal Communications

Commission, Amendment of the Commission’s Rules to Establish New Personal Communications Services, Memorandum Opinion and Order,

GEN Docket 90-314, RM-7140, 7175, and 7618, released June 13, 1994; Federal Communications Commission, Amendment of the Commission’s Rules to Establish New Personal Communications Services, Second Report and Order, GEN Docket 90-314, RM-7140, 7175, and 7618,

released Oct. 22, 1993.

56Specifically, the bands allocated were 2390 to 2400 MHz, 2402 to 2417 MHz, and 4660 to 4685 MHz. These bands were the first transferred as part of a more general reallocation of government spectrum to private sector use mandated by the Omnibus Budget Reconciliation Act

of 1993, Public Law No. 103-66, Aug. 10, 1993.

57Federal Communications Commission, op. cit., footnote 45.

58All information in this paragraph comes from Federal Communications Commission, Amendment of Parts 2 and 15 of the Commission’s

Rules to Permit Use of Radio Frequencies Above 40 GHz for New Radio Applications, ET Docket 94-124, released Nov. 8, 1994.
Chapter 4 Wireless Data 121

States. This easy national coverage also makes

satellites uniquely suited to transmitting information to many sites that are far apart, and for transmitting to extremely remote areas that wire-based

or terrestrial radio services cannot reach.

Several companies are now developing products and services that will take advantage of satellites’ unique capabilities. Some of these systems

are designed primarily to serve mobile users,

while others will concentrate on fixed uses. In

general, these systems can be divided into two

types: geosynchronous and low-Earth orbiting

(LEO).

Geosynchronous Satellites

Geosynchronous satellites orbit the Earth 22,300

miles directly above the equator. At this height

and location, satellites move at the same speed the

Earth is rotating. Thus, the satellite appears to be

stationary in the sky. This is what enables geosynchronous satellite communications to work—

they are always able to communicate with the

satellite receivers on the ground.

Today, an increasing number of satellite data

transmission systems use very small aperture terminals (VSATs). VSATs, introduced in the early

1980s, are small satellite dishes (approximately

1.8 meters in diameter) that are connected in a network through a central hub, which broadcasts information to the VSATs in the network and can

connect individual VSATs directly (see figure

4-5). VSATs are capable of two-way voice, data,

and video communication, but are usually used to

send data to and from far-flung company locations. Networks of VSATs are commonly used to

connect car dealerships, gas stations, and grocery

stores, for example. Such a system enables a company headquarters to keep daily track of inventory

and speed up shipments and deliveries. An increasing number of VSATs are being used to deliver video (live and recorded) training materials

#’ .

SOURCE: Office of Technology Assessment, 1995

to remote sites, and to connect company LANs at

different sites.59

Using geosynchronous satellites, several companies are planning new services that will deliver

data to businesses and consumers. Hughes Communications has announced plans to construct a

bandwidth-on-demand system, Spaceway, that

would provide a range of communication services

to end-users (see chapter 5). Hughes Network

Systems plans to launch a service that would allow users to download large files, software, or

images from the Internet. The system is expected

to operate at speeds up to 400 kbps, use a 24-inch

satellite receive dish, and cost $16 per month plus

a $1,495 setup fee.60

In addition to these primarily fixed-location

systems, satellites also promise to make mobile

data more ubiquitous. Inmarsat currently offers

service to small satellite terminals that can be

packed in a suitcase, enabling them to be carried to

any location. Such services are designed to

59Over 6,000 VSATs are now being used to connect LANs. Dennis Conti,“ “LANs & VSATs,” Satellite Communications, August 1994.

60"Hughes Network To Offer Data Retrieval Via Satellite,” The Internet Letter, vol. 2, No. 4, Jan. 1, 1995.
122 Wireless Technologies and the National Information Infrastructure

Hand-held terminals will enable consumers and business

users to send and receive short messages around the world

and to determine their location anywhere on Earth within 100

meters.

support remote research locations and provide

communications in times of disaster or emergency. Commercial satellite mobile data services,

however, are very limited; only a few companies

offer services, and these are primarily aimed at

fleet management operations-messaging to

truck drivers. In the future, however, new satellite

systems promise to provide a full range of mobile

data applications.

Low-Earth Orbiting Satellites (LEOs)

In addition to the geosynchronous satellite systems, several companies plan to use satellites orbiting the Earth at lower altitudes to deliver data

services. There are three types of LEO services.

The “big” LEOs (discussed in chapter 3) will focus primarily on voice services, but will also offer

data services with capabilities similar to those offered by terrestrial PCS and cellular companies.

Such systems will greatly exceed the coverage offered by terrestrial systems such as cellular or

Ram/Ardis.

A second type of LEO satellite system has been

proposed that would provide a wide range of services-bandwidth on demand-including voice

and video telephony, interactive multimedia, as

well as high-speed data communications. The

Teledesic system, for example, will focus on providing high-bandwidth interactive applications to

fixed locations in the United States, and to both

mobile and freed users abroad (see chapter 5 for

more discussion of these multipurpose systems).

A third group of companies is developing socalled “little” LEO satellite systems that will provide ubiquitous (and eventually global) data-only

messaging, tracking, and monitoring services to

individuals and businesses.61 The first application

for a LEO system was filed at the FCC in 1988,

and currently eight companies have proposed to

launch little LEO systems. 62 To date, only one of

these, Orbcomm, has received an FCC license to

launch and begin offering service. It launched the

first two of 48 satellites in March 1995. VITA now

expects to launch in June 1995, with service beginning by the end of the year.

6 1The term "little" referes to the fact that all little LEo systems will use frequencies below 1 GHz, and that the service will be non-voice. The

satellites used for little LEO systems are also physically smaller than those used for "big" LEO operations (see below). The FCC refers to this

class of satellite services as non-voice, non-geostationary (NVNG). 6 2The eight are CTA Commercial Systems, Inc., E-Sat,Final Analysis Commun ication Services, Inc., GE American Communications, Inc.,

LEO One, Orbital Communi cations Corp. (Orbcomm), Starsys, and Volunteers in Technical Assistance (VITA), “Four New Applicants Join

Leo One in Reposing ‘little LEO’ Systems for Second Processing Round,” Telecommu nications Reports, Nov.28, 1994.
Chapter 4 Wireless Data 123

Initiated as a test program by the Department of Defense in the early 1970s, the Global Positioning

System (GPS) has provided position location service for military and civilian applications since 1992,

The system uses 24 satellites that orbit the Earth at an altitude of 10,900 nautical miles, Portable or

vehicle-mounted GPS devices receive signals from the satellites and calculate the user’s position to

within 100 yards for civilian purposes and even closer for the military.1 GPS operates 24 hours a day,

can serve an unlimited number of users, and operates in all weather conditions.2 The system may

eventually replace many ground-based navigation systems, such as the current U.S. air traffic control

system, helping to expand the capacity and improve the safety of the aviation system in the United

States and the world.3 Civilian GPS products are already used by boaters and trucking companies.

In the future, GPS services will form an integral part of many intelligent transportation system services, such as map and navigation programs for cars and portable computers. Many of the proposed

satellite communication systems, including some of the Low-Earth Orbiting (LEO) satellite proposals and

American Mobile Satellite Corp., plan to integrate the GPS location services into their service offerings.

SOURCE: Office of Technology Assessment, 1995.

1 For security reasons, the Defense Department scrambles the civilian GPS signal to limit its accuracy to approximately 100 yards.

2Keith D. McDonald, “Course 101: Fundamentals of GPS, ” presented at the Loews L’enfant Plaza Hotel, sponsored by Navtech

Seminars, Inc., Washington, DC, July 11, 1994.

3U.S. Congress, Office of Technology Assessment, Federal Research and Technology for Aviation, OTA-ETI-610 (Washington,

DC: U.S. Government Printing Office, September, 1994).

The little LEOs companies plan to offer ubiquitous, two-way messaging and data services, for either fixed or mobile users, potentially on a global

basis. 63 Initially, service providers plan to target

the transportation industry and remote monitoring

applications (oil or gas pipelines or wells, for

instance). In the longer term, proponents also perceive a market for emergency and personal communications; law enforcement, such as stolen

vehicle location; environmental monitoring; fleet

and cargo management for marine shipping companies and trucking companies; and other similar

services. Most little LEOs will also couple data

offerings with position location service, using the

Global Positioning System (see box 4-5). To serve

diverse customer needs, little LEO providers are

designing a variety of consumer equipment expected to cost between $100 and $400. Message

delivery is expected to cost about $0.25 per message.

64

Although technical differences exist between

the proposed little LEO systems, it is possible to

describe a generic little LEO system (see figure

4-6). 65 Each system will consist of between 25

and 50 satellites in low-Earth orbit, about 1,000

kilometers above the Earth’s surface. Each system

63 VITA, for example, planS to offer e-mail and short file transfers between remote sites. Orbcomm, however, while offering services in a

number of countries, will not transmit between countries. In addition, each little LEO system will have to obtain a license to provide service in

every country in which it plans to operate. Negotiating these contracts could slow the deployment of worldwide services.

64"Orbcomm Gets First ‘little LEO’ License for Satellite Data Service,” Telecommunications Reports International, Oct. 28, 1994.

65The exception is the VITA system, which will use only two satellites in fixed orbits serving about 1,000 stationary ground regional gateways. The system will be managed by a single control center near Washington, DC.
124 WirelessT echnologies and the NationaI Information lnfrastructure

data applications and services remains relatively

low. In many ways, the use of wireless technologies to serve mobile/portable computing needs is

a microcosm of the larger world of wireless communications. A wide range of technologies is being developed and deployed to meet the perceived

needs of wireless data users—traditional paging,

satellite, and cellular, as well as PCS, LEOs, and

public and private wireless data networks. But applications vary in their technical characteristics

(speed, throughput, etc.), ease of use, and capabilities, and it is still unclear which models of wireless data will be successful and when. For

equipment vendors, this makes it difficult to decide what systems and services to include with

their hardware, and for users, it may be difficult to

determine which product/service(s) best meet

their needs.68 Several issues will have to be addressed before mobile data reaches the levels

many analysts have predicted.

The U.S. Global Positioning System uses a network of satellites that allows users (in aircraft, on ships, in vehicles, or

equipped with hand-held devices) to determine their location

almost anywhere on Earth.

will also consist of at least one terrestrial control

center, and sometimes secondary and tertiary

“gateways” that will serve as the relay and control

point between the customer units, the satellites,

and public and private communications networks,

including the Internet.66

Depending on complexity, the systems are expected to cost between $100 and $200 million

each, with the exception of the VITA system,

which will be significantly less expensive since it

will use only two satellites.67

ISSUES AND IMPLICATIONS

Mobile data applications are quite promising and

the industry has much potential. However, despite

predictions for explosive growth, use of mobile

❚ Technical Issues

Fundamentally, using radio waves to send information is more difficult than using a wire because the environment-the atmosphere-is

much harsher. Noise, interference, and attenuation are much harder to anticipate and overcome

in the open air than in the more protected environment of an insulated wire. To overcome these

problems, radio engineers are working on a variety of improvements to radio technology, including better data compression, higher capacity

transmission and spectrum-sharing methods, improved error correction, and greater resistance to

natural and man-made interference.

Despite the great strides made in the use of radio for sending information, the wireless data industry must still overcome several technical

obstacles before wireless data applications become more widespread: 1) the speed and capacity

6 6All little LEG systems will use spectrum below 1 GHz. 6 7U.S. Congress, Office of Technology Assessment, The 1992 World Administrative Radio Conference: Technology and Policy Implications, OTA-TCI-549 (Washington, DC: U.S. Gov ernment Printing Office, May 1993). 6 8Seybold, op. cit., footnote 13.
Chapter 4 Wireless Data 125

SOURCE: Office of Technology Assessment, 1995.

of the radio link, 2) its susceptibility to environmental interference and signal loss, 3) interference from electronic devices and other radio

services, and 4) interoperability problems with

other wireless systems and wireline systems. Because of these factors, current wireless data communication technologies generally cannot offer

the same level of performance (measured by

speed, reliability, and/or capacity) as wireline

technology, although some individual wireless

systems may offer comparable service.

Spectrum Limitations

Many of the problems confronting the wireless

data industry come down to a limited number of

radio frequencies on which to operate systems.

Limited spectrum constrains the numbers of users

who can use or offer a service, limits the speed at

which information can be sent, and often creates

interference problems between users when they

have to share the same frequencies-furtherlimiting performance and capacity. In recent years, the

FCC has allocated more spectrum to wireless data

services, and more is being considered.

Speed is limited

The most serious drawback to wireless data applications today is the limited speeds at which

they operate. Winless LANs generally operate at

between 1 and 2 Mbps, compared with 10 Mbps

on most wired LANs. Most commercial two-way

wireless data services (packet radio, circuitswitched cellular) now achieve effective throughput of 300 to 4,800 bps, compared to wireline

modem speeds up to 28,800 bps. Commercial providers are working to upgrade speeds to 19,200

bps, and CDPD will operate at similar speeds, but

these technologies are not yet widely deployed,

and actual throughput is likely to be lower.

In part, slow speeds area function of technology, and in part they are due to the limited bandwidth that is currently available for wireless data

applications. Radio waves are limited in the

amount of information they can carry-often

measured in the number of digital bits per Hertz

transmitted. Current systems can transmit about 1

or 2 bits/Hertz, but researchers are working to expand this to 6 or even 10. Digital compression and

transmission technologies will help increase the
126 | Wireless Technologies and the National Information Infrastructure

carrying capacity of radio waves, but physical

limitations may continue to limit high speeds. As

a result, adequate spectrum allocations are critical—more spectrum is required to transmit more

information. Recent frequency allocations made

by the FCC in the 2390 to 2400 MHz band and

proposed in bands above 40 GHz have the potential for offering much higher bandwidths and

speeds, perhaps allowing some wireless applications to match wireline performance. Speed problems are also a matter of perception; customers

used to high speeds on wired LANs are likely to be

frustrated with the slow speeds available over

wireless.

Interference

Another consequence of limited spectrum is the

increasing likelihood of interference between different kinds of radio services sharing a band of frequencies, as well as between different systems

providing the same service. For example, manufacturers of medical telemetry devices—such as

electrocardiogram monitors—have asked the

FCC to allow them to expand their operations and

increase their power on vacant VHF and UHF

television channels in order to overcome severe

congestion and interference from other radio users. Sometimes interference is only a minor annoyance—static or voices on your cordless phone,

for example—but at other times, interference can

be severe enough to prevent transmissions from

being received at all. For data communication systems, which are sensitive to interference and

which depend on reliable transmissions to communicate information accurately, interference in

the wireless environment can be a significant

issue.

Interference problems are experienced by many

wireless data systems, but they are currently acute

in the unlicensed bands, which are home to a wide

variety of systems and radio devices. Data systems in the 902 to 928 MHz band must share the

spectrum with a number of other users—most of

whom have priority. In the past several years, a

number of companies have flocked to the unlicensed bands to develop various data transmission

technologies. The band has been a boon to designers of new services, just as the FCC intended.

Unfortunately, the low status of the unlicensed

data users in the band has become problematic.

Several companies providing Automatic Vehicle

Monitoring (AVM) services sought FCC authority to expand their operations and give them exclusive use of a major portion of the spectrum. The

unlicensed data community fought this proposal,

believing that it would essentially put them out of

business. The FCC recently set regulations for

AVM service and granted some new spectrum, but

also established protections for unlicensed users.69 A number of parties have filed petitions

with the FCC to reconsider parts of its ruling, and

it is still unclear how the issue will finally be resolved.

In addition to interference between different radio services sharing the same range of frequencies, there is concern that portable computing or

other devices may interfere with or be affected by

interference with the radio links. Electrical devices, like computers, often leak spurious radio

energy produced as a by-product of their normal

operation. This interference can affect nearby radio devices, including a radio modem/transmitter

connected to (or inside of) the computer itself,

causing serious performance problems for the radio device. Adequate shielding or redesigning the

computer’s internal layout can solve the problem.

Radio signals can also interfere with computers

and other electronic devices. Because several

ranges of frequencies are used for wireless data

applications, computers must be designed to limit

69Federal Communications Commission, Amendment of Part 90 of the Commission’s Rules to Adopt Regulations for Automatic Vehicle

Monitoring Systems, Report and Order, PR Docket 93-61, released Feb. 6, 1995.
Chapter 4 Wireless Data | 127

the effects of unwanted radio energy and shielded

from devices using these frequencies.70 There is,

as yet, no group or process in place to determine if

a portable computer is properly protected (“radio

ready”). Chapter 12 discusses interference issues

in greater detail.

Lack of Interoperability

One of the most serious problems facing wireless

data users is the lack of interoperability—both between different wireless systems and between

wireless systems and different wireline networks.

Connecting users on different wireless networks

and integrating an individual company’s use of

multiple wireless networks has been extremely

difficult. Different companies have developed a

variety of proprietary, incompatible wireless data

technologies, such as those for the Ram and Ardis

networks and CDPD, standards are almost nonexistent, and applications work differently on different systems (see below). Different wireless LAN

manufacturers, for example, make equipment that

is not compatible. And while the personal computer (PC) cards discussed in box 4-3 are standardized, there are reportedly so many different

implementations of the standard that true interchangeability is not possible—a user cannot necessarily switch cards between different

machines.71 Overall, the use of radio-based

technologies to support mobile data needs is often

slow and tricky—users must be willing to endure

complicated connections and poor quality to gain

the advantage of mobility and portability.

The main problem with multiple technologies

is that they complicate the development of applications software—word processing, electronic

mail, and spread sheets, for example. Software developers do not want to incur the additional cost of

writing a different version of their program for

each type of wireless data system, especially

when, as is the case today, the markets are small.

As a result, there are few off-the-shelf applications

designed for use with wireless data systems. Most

wireless data applications have been one-of-akind, written for a particular job by companies that

can afford to do their software development inhouse. However, even these companies are concerned about the lack of standards because they

will have to rewrite their software to change providers.

In addition to the problems of incompatible

wireless systems, one of the most serious concerns facing wireless data users is the transfer of

information—interoperability—between wireless and wireline networks. Standard interfaces do

not yet exist for sending data between cellular and

Integrated Services Digital Network and other

public switched telephone network (PSTN) services, for example. Speed is an important part of

the problem. Wireless networks, because of spectrum limitations and the current state-of-the-art

technology, cannot operate at the speeds now

common in wireline applications.

A similar incompatibility problem exists with

applications software designed to work on wireline and wireless networks. Most existing computer/data applications were written based on the

parameters and characteristics of wire-based systems, and developers have years of experience in

writing software that uses wireline protocols. This

software, however, often does not work well when

used over a wireless network. Software developers are now modifying some of their products to

work in a wireless environment; this would reduce

the cost of developing and adopting wireless data

services. However, this process is difficult for developers, who have to learn specialized protocols

in order to develop wireless data applications. It is

also unclear how extensive or difficult it is to redesign such programs, and how many applications

will have to be retrofitted to work well in a wireless setting.

70Data services are, or will be, offered on cellular frequencies, SMR systems, paging systems, PCS (licensed and unlicensed) frequencies,

several satellite frequency bands, and general unlicensed (e.g., 902 to 928 MHz) frequencies. See Seybold, op. cit., footnote 13.

71Strom, op. cit., footnote 2.
128 | Wireless Technologies and the National Information Infrastructure

Another solution is to develop a common interface for the software that could work in either a

wireline or wireless environment. This would allow users to move between wireless and wireline

networks more easily. For example, the same software could be used to access office computers

from home via wireline and from the road via

wireless.

Yet another solution to the problem of incompatible systems and standards is technological.

More than a dozen companies are developing

“middleware,” an extra layer of software that

translates information from the general application into the specialized wireless data protocol.72

Middleware saves developers from having to

learn the details of wireless data protocols: they

write their applications to work with the middleware, which then handles the details of sending

the data over any of a number of wireless networks. Middleware can also mask the differences

in wireless data systems because it is usually able

to translate into several different wireless data

protocols. For example, middleware allows a user

on the Ram network to communicate with a user

on the Ardis network. Once an application has

been written to work with the middleware, the

user could switch to a different wireless data provider without having to make extensive modifications. In many cases, middleware mimics the

behavior of a wireline network, allowing the large

number of applications written for the wireline environment to be used over a wireless network.73

Even middleware suffers from interoperability

problems, however;

Applications written to one vendor’s middleware package don’t necessarily work with middleware from a different vendor. The main reason

for this interoperability gap is that most makers

of wireless middleware products now use proprietary application program interfaces (APIs)

to connect to network applications and services.74

It is possible that not all of today’s wireless data

services will survive in the marketplace. Software

developers may write applications for some services, but not for others. Users would then tend to

choose the wireless data service for which there is

the widest choice of applications, enlarging that

service’s market share further and encouraging developers to write more software. Over time, the

market may converge on only one or two of the

systems available today. This is similar to personal computer operating systems, where a single operating system—DOS—came to dominate the

market.

The wireless data industry is at an early stage in

its development, and users and developers are

only beginning to sort out the options. As various

segments of the industry mature, better technology and increasing standardization is expected to

alleviate many of the interconnection and interoperability problems that are now common. The

speed with which this transition will take place,

however, is still uncertain—most analysts believe

it will take at least 3 to 5 years.

❚ Demand Issues and Applications

Development

Mobile computing is a reality and will become a

more dominant part of computing later in the

decade. Vendors are investing billions of dollars

into the creation of new types of devices, new

communications links and new software applications. There is a real danger that all this

technology will be developed and made available without the existence of any real demand.

Vendors must understand the segmentation of

the mobile market to build the right products.

72For additional discussion of middleware, see Johna Till Johnson, “Middleware Makes Wireless WAN Magic,” Data Communications, op.

cit. footnote 8.

73One example is the Winsock interface. See Mobeen Khan and John Kilpatrick, “MOBITEX and Mobile Data Standards,” IEEE Communications, vol. 33, No. 3, March 1995, p. 96.

74Johna Till Johnson, “The Wireless API Standards Watch,” Data Communications, op. cit., footnote 8, p. 72.
Chapter 4 Wireless Data | 129

Users have to understand the benefits, as well as

the pitfalls, of mobile computing to get excited

about using it.75

A substantial problem that has not yet been

solved is how to move mobile data services more

into the business and consumer mainstream. To

develop applications for today’s wireless data users: first, needs are identified; then, technology is

produced or adapted to fit needs; and finally, pilot

tests are conducted. Due to the nascent stage of

technology and applications, customization is

usually the first step. As a result, horizontal markets for mobile data applications may be difficult

to develop because of the specific nature of the

tasks vertical solutions are designed to serve.

Once concepts, products, and services have

been validated across a number of business applications, a broadening of software can be expected. This is, in fact, what companies like Ardis

and Ram are attempting to do—move from vertical to horizontal markets. Over the next few years,

more general wireless data products and services

are expected to come on the market. Developers

are already writing more software and applications for the mobile environment,76 and the expected explosion of mobile data users has

prompted a flurry of alliances between software

developers and wireless data companies. Microsoft and Mtel, for example, have teamed up to offer services on Mtel’s Nationwide Wireless

Network (NWN). GTE and IBM recently announced an agreement to allow GTE cellular customers to access IBM’s data network. Analysts

point to the availability of good applications as the

key to the future growth of the market.77

As a result, the market for wireless data services is becoming increasingly crowded, but

many analysts question whether the market can

support all the different levels and kinds of competition. Traditional paging companies face competition from new PCS providers, as well as

potential competition from little LEO systems.

The original two-way data service providers, Ram

and Ardis, will face increased competition from

CDPD, narrowband PCS, and perhaps a range of

satellite services. Some of these systems will provide competing services for some applications,

but may also offer different combinations and levels of service. Some analysts believe that the systems currently serving vertical markets are

unlikely to be able to broaden their customer base

significantly. Ardis and Ram, for example, may be

confined to vertical markets, while cellular data

services will become the technology of choice for

most business/mobile professional users due to

the integration of cellular systems with the public

telephone network.78

A final part of the problem of broadening the

use of wireless data involves users themselves.

Many businesses and consumers are less aware of

the uses and benefits of mobile data than they are

of a cellular phone or even a wireless LAN. As a

result, demand has been unfocused, and applications developers have not had a clear direction to

pursue. “If you think in terms of mobile data . . .

it’s far less obvious what the benefits of using mobile data are. It’s a matter of education and awareness.”79

75Dulaney, op. cit., footnote 1.

76Susan D. Carlson and Craig J. Mathias, “Big Guns Target Mobile Middleware,” Business Communications Review, November 1994.

77Some analysts point to the development of mobile data in the United Kingdom as an example of the importance of developing good applications the market wants. There, five licenses were made available, and four were actually developed. Of these, the most successful, Cognito,

has only 4,000 subscribers (compared to 3 million cellular users). Pat Blake, “Wireless Data: The Silent Revolution,” Telephony, Dec. 5, 1994.

78Ibid.

79Ibid., p. 32.
130 | Wireless Technologies and the National Information Infrastructure

In particular, the needs of residential consumers for such business-oriented services are likely

to remain unclear for several more years. Most of

the applications discussed in this chapter are designed to meet business needs. The benefits for individuals in their personal lives remain highly

speculative. “Educating” mass market consumers

about the benefits of new wireless data technologies has begun (e.g., Motorola pager television

advertisements), but will continue to be one of the

industry’s more difficult challenges. With the proliferation of portable computers and PDAs, this

awareness is expected to grow, user needs should

become clearer, and the use of wireless data services should grow.

Prices

One of the key issues of demand for wireless data

solutions is cost. The price of wireless data equipment is still high. Radio modems can cost up to

$800. Economies of scale and mass market economics have not yet driven the price of equipment

down to a level that is affordable to most companies or consumers. This relatively high up-front

cost, in addition to activation fees, per month

charges, and usage fees, may prevent some users

from signing up—especially residential consumers. As economies of scale are realized, equipment

prices are expected to drop.

In addition to high initial equipment costs, the

ongoing costs of service are also an issue. Some

mobile data service providers offer flat-rate payment plans that allow users unlimited use for a set

fee. Others will charge a combination of flat rate

plus additional charges for use over a set limit. In

the future, businesses will likely demand flat-rate

pricing based on large volumes of traffic. Individuals and small businesses, however, are more likely to want per-call charges because they will not

want to pay for anything they do not use. And like

cellular and PCS services, the question of who

pays any air time charges for calls to the user—the

user or the caller—will continue to be studied.

Coverage

Another important issue for users is coverage—

“where can I use it?” Users want ubiquitous coverage within the area in which they travel. This geographical range varies by user. Some businesses,

such as real estate companies, need primarily local/metropolitan coverage. Salespeople may need

a larger coverage area—statewide or even multistate regional coverage. Traveling executives may

need an even wider coverage area—national or

even global in scope. Different technologies can

provide different levels of coverage. Paging networks are generally local/regional in scope, but,

using satellite technology to connect local transmitters, some systems can offer nationwide or

global coverage. Cellular circuit-switched or

CDPD applications are also technically local, but,

with roaming capabilities and their connection to

the PSTN, can also achieve national or even international reach.

Defining “coverage” is not necessarily straightforward. Ram and Ardis, for example, are often referred to as “national” services; however, while

they cover many metropolitan areas, they do not

cover the whole country. In addition, a user’s specific location within a coverage area may determine whether or not service is available. Users tell

stories of having to switch hotel rooms from the

north to the south side of a building in order to use

their service.80 For some business users, these

may be minor inconveniences, but many will not

tolerate such performance.

Security Concerns

Some companies are afraid that moving data over

the airwaves, especially sensitive data about clients or products, might make them vulnerable to

potential eavesdroppers who could be listening in.

80While terrestrial data services are not technically line-of-sight, position within a building does matter. Often, users will congregate near a

window on a specific side of a buildin—gwhere the coverage is best.
Chapter 4 Wireless Data | 131

Users are also concerned about the possibility that

saboteurs could somehow use the systems to destroy computer files. New spread spectrum systems are relatively secure because of the way they

transmit information, but users are still wary. Encryption is thus an important issue for wireless

data users. Many large corporate and government

users will not send data without encrypting it, and

most wireless LAN providers offer some type of

encryption software. A more complete discussion

of the security issues associated with cellular and

PCS data applications is found in chapter 10.
Broadcast

and

High-Bandwidth

Services

ireless communication systems will play an increasingly important role in the delivery of a wide range of highbandwidth entertainment, information, and communication services. Radio-based technologies have been

used for decades to transmit one- and two-way communications

in support of a wide variety of applications. Radio and television

broadcasting, for example, have long been a staple of the nation’s

communication infrastructure, supplying information and entertainment to millions of Americans for over 50 years. Since the

early 1970s other wireless systems—microwave networks and

satellites, for example—have been providing high-capacity links

primarily for large corporate, industrial, and government users

(the only users with bandwidth requirements large enough, or

who could aggregate enough traffic to need a high-capacity system). Today, as the demand increases for high-speed data, multimedia, and video communications, wireless systems are

increasingly being designed to provide high-bandwidth capabilities directly to individual users and businesses. This chapter examines the role of new and existing wireless technologies in

delivering broadcast programming, video, and other high-bandwidth services as part of the evolving National Information Infrastructure (NII).

FINDINGS

 High-bandwidth radio technologies will play a somewhat paradoxical role in the NII. At the local level, wireless systems

will compete with established wireline and other wireless

service providers. From a national policy perspective, however, wireless technologies will complement wire-based systems in extending video-based NII services to more | 133
134 | Wireless Technologies and the National Information Infrastructure

American citizens and businesses, and could

be important in extending universal service

to underserved populations.

As a competitor, high-bandwidth wireless

systems are expected to bring substantial benefits to consumers and businesses, including

lower prices and more diverse services. Direct

broadcast satellite (DBS) services, for example, and several new terrestrial wireless systems will compete with cable companies and

broadcasters in the market for video programming. Satellite-based digital audio broadcasting (DAB) will compete with local

broadcasters for radio listeners in cars. Terrestrial and satellite-based “bandwidth on demand” systems will compete with local

telephone and cable companies to provide “last

mile” NII connections to businesses and consumers who need high-bandwidth communication services capable of handling video

communications, image transfer, high-speed

data, and multimedia applications.

As a complement to wire-based systems,

wireless systems have great potential for extending NII resources to rural or underserved

populations. In particular, satellite-based systems may bring the full range of NII services

and applications to more users because of their

ubiquitous nationwide coverage. This singlesource coverage also assures consistent services across different local areas for users with

national communication needs —multiple services, whether wireline or wireless, will not

have to be “stitched together.” The architecture

and cost structures of wireless technologies—

terrestrial and satellite-based—may allow

them to deliver NII services to some areas faster, and perhaps less expensively, than traditional wireline systems, especially in areas that are

remote or undergoing new construction. Highbandwidth technologies may even be used by

traditional wireline carriers to deliver services—at least one local telephone company

has invested in a wireless video provider, and

cable companies are actively involved in the

DBS industry.

 Although it is too early to assess the general effect of competition on price because the systems are too new, many analysts and

policymakers believe that competition will

drive prices down or at least hold them steady.1

Because some of these technologies, markets, and industries are still in their infancy,

it is difficult to determine how effective competition in new markets will be, which

technologies will survive, and which companies will prosper. Similarly, claims about the

benefits new wireless technologies can bring

to the national economy must be regarded

cautiously.2

Each system has advantages and benefits

that will be attractive to consumers and businesses, but that will also splinter markets and

frustrate analysis and policymaking. As

technology advances and demand sharpens,

systems will become increasingly differen1 Some anecdotal and statistical evidence does exist, for example, that a second cable company in a given franchise area will reduce cable

rates. See Federal Communications Commission, Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming, CS Docket 94-48, released Sept. 28, 1994, paragraphs 57-60 and 203. At least one MMDS provider claims similar reductions in

cable rates as a result of its entry into the local market. Letter from Todd Rowley, Peoples’ Choice TV to Andrew Kreig, Wireless Cable Association International, Jan. 16, 1995.

2 The Federal Communications Commission noted this problem explicitly in an ongoing proceeding:

“...it must be noted that the proposals before us are largely that. There is little evidence in the record regarding the likely public interest

benefits of the various proposals, including increased access to high-quality, affordable, and innovative services, and stimulation of economic

growth through increased competition for existing services and introduction of new services that may be expected to stimulate demand and

create jobs.” Federal Communications Commission, Rulemaking To Amend Part 1 and Part 21 of the Commission’s Rules to Redesignate the

27.5-29.5 GHz Frequency Band and To Establish Rules and Policies for Local Multipoint Distribution Service, CC Docket 92-297, released

Feb. 11, 1994, at para. 23.
Chapter 5 Broadcast and High-Bandwidth Services | 135

tiated—not only in the products and services

they offer, but in what they can actually deliver.

The unique capabilities and disadvantages of

wireless technologies, combined with changing consumer demand, will lead to markets that

overlap for some services, but diverge for others provided by the same systems. Consumers

will benefit from a wider range of services and

competition among many different types of

providers—both wireline and wireless. Assessments of the overall market will lose meaning

as many smaller submarkets form. In addition,

the uncertainties of technology advances,

consumer and business demand, and regulatory treatment make it difficult to judge

their overall effects on the wireline portions

of the NII.

 As technology advances and competition develops, the implementation of universal service (whatever its definition) and other

public interest obligations becomes more

problematic for both wireless and wireline

carriers.3 Historically, universal service has

been associated with the provision of basic telephone service (see chapter 9). Today, the development of new technologies, coupled with

changing societal needs, is forcing the concept

of universal service to evolve as well. In the future, universal service is likely to include a

wide range of advanced communication and information applications, such as voice, data, and

video services. Exactly what the new universal

service will encompass is unclear, but because

wireless providers are expected to be significant competitors in various markets, how these

issues are resolved will directly affect their operations and economics.

An evolving definition of universal service

will pose serious challenges for policymakers

regarding wireless services. First, if universal

service comes to include access to high-bandwidth information and entertainment services—such as those offered by the wireless

providers discussed below—new segments of

the wireless industry will be subject to new regulations. Additionally, if universal service

mandates two-way, broadband access to NII resources, the majority of wireless providers—

those who cannot technically offer such

services—could be put at a regulatory disadvantage. Mandating such a level of service for

all telecommunications providers fails to account for legitimate technology differences and

could penalize companies that made rational

technology and business decisions in the past.

A system of universal service based on designation of essential carriers—such as that envisioned in recent legislation—or a tiered

system of universal service obligations based

on technology and services delivered might

represent a more flexible, and hence long-term,

approach to setting universal service obligations and rights.4 Such an approach would be

consistent with current congressional initiatives for deregulation and belief in the market

as the most efficient and effective means of delivering services to consumers. However, until

decisions are made about what constitutes universal service, and what mechanism will be

used to move its subsidies, evaluating the effects on providers of all sorts would be guesswork at best. Even when these fundamental

decisions are made, more data will be needed

on wireless system costs, wireline upgrade costs,

and the extent of the universal service “problem” before these questions can be answered.

Second, identifying the companies that will

bear the cost of providing new levels of universal service, and those that will receive financial

3 For more discussion of these issues, see Leland L. Johnson, Toward Competition in Cable Television (Cambridge, MA: The MIT Press,

1994).

4 U.S. Congress, Senate, S. 652, The Telecommunications Competition and Deregulation Act of 1995 (Washington, DC: U.S. Government

Printing Office, June 15, 1995).
136 | Wireless Technologies and the National Information Infrastructure

help in meeting these obligations have already

become significant issues. Providers who have

traditionally borne public service obligations

will be increasingly subject to competition

from newer providers who use different

technologies and do not carry similar burdens.

For example, broadcasters—in return for their

free use of the public airwaves—have been subject to public service requirements, while Multichannel Multipoint Distribution System

(MMDS) and DBS are not.5 Cable television

systems have been subjected to many types of

franchising requirements in return for their use

of public rights-of-way; MMDS and DBS are

not because they do not use public rights-ofway per se.

From a competitive standpoint, such inequities may skew the ability of different firms to

compete, although the extent of such inequities

is unclear. For example, “[w]ere the wireless

systems taxed and the proceeds used to benefit

their wireline competitor in its high-cost area

also served by the wireless systems, competition from these wireless systems might be

weakened.”6 It may be possible to adopt a consistent set of regulations to guide competition.

However, if attempts to reduce technical and

regulatory inequities are too broad, they may

not work because the inherent capabilities of

the technologies are often quite different. Satellites, for example, inherently have national

reach, but does that mean they should be subject to franchise fees in every local jurisdiction

in the country? At least one analyst has proposed that extending license auctions to new

video service providers might be one method

for recovering value from the public use of

spectrum—eliminating the need for franchise

fees and public service obligations—while still

allowing different technology systems to compete.7

 In the emerging NII, the role and function of

television broadcasters will have to evolve to

fit new competitive models. Broadcasters

have played an important role in American life

for 50 years. They were long the sole providers

of video programming, and have had exclusive

access to what has become a very sought-after

portion of the radio frequency spectrum. Despite increasing competition from cable television and other smaller programming providers,

television broadcasting has remained relatively

strong. However, an uncertain regulatory future and new forms of competition from program distributors with far greater capacities

have made the outlook for the industry increasingly unclear.

Even with a conversion to digital technology

and the capability to broadcast multiple channels of video and perhaps other (data) services,

broadcasters’ ability to compete with interactive cable television, telephone company services, DBS, and other wireless broadcasters is

unknown. Broadcasters have several advantages in the emerging competitive environment—including programming resources,

prime spectrum, local community ties, advertiser-supported free (to consumers) programming, and a broad base of political support.

However, they also suffer some significant disadvantages, including a lack of channel capacity and an unfocused vision of what their new

role is likely to be. In considering the future of

broadcasters, a range of issues must be considered by both the industry and Congress that are

beyond the scope of this report. These include

national and local ownership rules, allowing

5 DBS providers were included in a 5 to 7 percent channel capacity public interest set-aside included in the 1992 Cable Act, but that requirement is not being enforced pending court review. The FCC does have a rulemaking examining whether and how DBS should be subjected to

programming obligations. Federal Communications Commission, Implementation of Section 25 of the Cable Television Consumer Protections

and Competition Act of 1992, Direct Broadcast Satellite Public Service Obligations, MM Docket 93-25, 8 FCC Rcd. 1589, para 1 (1993).

6 Ibid., p. 168.

7 Johnson, op. cit., footnote 3.
Chapter 5 Broadcast and High-Bandwidth Services | 137

broadcasters to provide nonbroadcast services,

and what the impacts would be on viewers if

broadcasters stopped broadcasting free overthe-air programming altogether.

BACKGROUND

The technologies and systems discussed below

share a number of important characteristics that

will shape their contributions to the NII. First and

foremost, the advent of digital technologies lies at

the heart of many of the changes now taking place

in radio communications. Each of the technologies discussed in this chapter is either in the process of converting to digital technology or is being

designed from the outset to work digitally. This

switch will fundamentally affect the services companies can offer and at what cost.

Second, many of the systems discussed below

were originally designed to be one-way. Although

two-way wireless systems are used—satellite networks, for example—and some wireless systems

are supplemented by return communications supplied by the telephone network, most use of radio

waves for high-bandwidth communications remains concentrated in a one-way broadcast or

point-to-multipoint format. It is only recently that

companies have begun to develop interactive,

broadband wireless networks for the consumer

and business markets.

Finally, many of these systems were designed

to serve users at fixed sites. The ability to broadcast radio waves over a wide area has proven to be

a remarkably efficient way to reach many people

quickly, easily, and at relatively low cost. In the

future, the low cost and ease of deployment of

broadcast technologies will enable them to compete with wire-based alternatives in many markets, especially one-way entertainment programming.

RADIO BROADCASTING

Radio broadcasting is one of most familiar wireless services. Commercial radio broadcasting began in 1921, and within 10 years, more than 50

percent of all American households had a radio receiver. In 20 years that figure climbed to 90 percent, and today, radio broadcasts blanket almost

the entire nation and radio receivers are almost everywhere. The average American home has 5.6 radios, and it is almost impossible to buy a car

without a radio—there are nearly 200 million radios in American cars and trucks.8 People listen,

on average, to a little more than three hours of radio per day, mostly while commuting or at work.

However, although there are more than 11,000 radio stations operating in the United States today—

almost evenly divided between AM and

FM—many of these are concentrated in and

around metropolitan areas, and the most rural

areas of the country may have access to only one

or two stations.

Radio broadcasters use a single high-powered

transmitter, operating in either the AM or FM frequency band, and a tall antenna to beam programming—including music, local news and

information, education, talk radio programs

(mostly on AM stations), and emergency information—to listeners in a radius of approximately 25

miles.9 Because of this relatively limited range,

radio broadcasting traditionally has been closely

linked to the communities in its broadcasting area.

National radio networks also use satellites to share

programming. For example, the 25 Native American radio stations use a satellite link provided by

8 Radio Advertising Bureau, Radio Marketing Guide and Fact Book for Advertisers 1993-1994, Dallas, TX, 1994.

9 Repeaters/translators are used to extend the broadcast signal and serve outlying areas. AM stations are capable of beaming programming

over far longer distances at night. The differences between AM and FM radio are significant (see app. A). Amplitude modulation (AM) uses

relatively little spectrum—each station needs only 10 kHz—but the signal is easily disrupted by noise and interference (the signal is lost under

bridges, for example). Due to poor quality, many listeners have shifted over to FM radio, making it the dominant radio format. Frequency modulation (FM) is more resistant to noise and signal loss, but each station needs a wider range of frequencies (200 kHz) to operate. Although both

formats are capable of carrying stereo signals, most FM stations broadcast in stereo and most AM stations do not, and the majority of existing

radios are not compatible with AM stereo.
138 WirelessTechnologies and the National Information Infrastructure

the National Public Radio satellite system toreceive programming through the American Indian

Radio on Satellite (AIROS) project. Broadcasters

are now trying to broaden their services to include

low-speed data transmission that could provide

local travel information, as well as supplementary

information for advertising and audio programming (see chapter 4). In the future, radio broadcasters will switch to digital technology, and

satellites may increasingly be used to deliver radio

progr amming over wider areas.

❚ Digital Audio Broadcasting (DAB)

The next generation of radio broadcasting will use

digital transmission technologies. While no such

services are operating yet, broadcasters and startup companies are developing systems that will replace traditional AM and FM modulation

techniques with digital signals that will allow

thereto broadcast compact disc (CD), or near CDquality, programming that is more resistant to

noise and interference. DAB may also enable new

types of information services to be delivered.

Consumers will have to replace their existing anaSatellite radio receivers similar to this prototype will have three

bands: AM, FM, and.satellite.

log radios with new digital ones to receive the better sound and new information services.

Two types of DAB systems are being developed in the United States. Existing AM and FM

radio broadcasters are planning to implement

DAB technology using existing radio channels.

The new digital signals will be sent simultaneously alongside the analog signals. Meanwhile, a

small number of startup companies is developing

satellite-based DAB systems that will use new frequencies recently allocated for this purpose.

This divided approach has slowed the development of DAB in the United States, as the two sides

have battled bitterly before the Federal Communications Commission (FCC). The result is that in

the United States-unlike in many other countries

where integrated systems are being planned-digital radio services will likely be delivered by two

different kinds of systems: existing broadcasters,

who will have to upgrade their facilities, and satellite-based providers, who are building their systems from scratch.10 The two systems will not be

directly compatible, although future radio receivers probably will be able to receive both terrestrial

and satellite-delivered DAB as well as existing

AM/FM broadcasts. The FCC is still in the process of developing the rules for future DAB services.

Satellite DAB

The idea of broadcasting radio programming directly from satellites dates back at least 45 years.ll

In the 1980s, a small number of companies around

the world proposed satellite-based (formally

known as Broadcast-Satellite Service-Sound, or

BSS-Sound) systems that would use frequencies

in the L-band (roughly 1.4-1.6 GHz) to transmit

their programming. Because these types of systems would use frequencies other than the tradi10 Some other countries are planning to use new internationally allocated frequencies in the L- or S-bands to deliver DAB services using

both terrestrial and satellite transmitters working ma single system. 11 The concept of using satellites to transmit programming was first described byArthur C. Clarke in 1945. Arthur C. Clarke,’’ExtfS-Tenestrial Relays:” Wireless World, October 1945. More recently, satellite broadcasting was considered at interna tional Conferences dating back to

1979.
Chapter 5 Broadcast and High-Bandwidth Services | 139

tional AM/FM broadcasting bands, they are often

referred to as “”out-of-band’’ or “new band” systems.12

The first U.S. out-of-band system was proposed by Satellite CD Radio, now CD Radio, in

1990, and in December 1992, five other companies submitted applications to the FCC to offer

satellite radio services.13 In January 1995, almost

exactly three years since the frequencies were allocated internationally, the FCC formally allocated radio frequencies for satellite DAB in the

United States.14 Now the FCC must develop licensing and operating rules to govern the provision of satellite DAB services. The FCC

anticipates that this process will last until the end

of 1995, and that licenses will be granted shortly

thereafter. Once applications are granted and licenses issued, proponents expect it will take about

three years to construct and launch the satellites,

making service available in roughly 1998-99. CD

Radio is currently testing its system using two

NASA satellites, and predicts a startup date of

1998.15

Services

Proponents of satellite DAB are planning a variety

of programming targeted to audiophiles, users

with specific musical tastes, and groups with differing ethnic and cultural backgrounds. These

small audiences may not be able to support a local

radio station, but when aggregated across the

country, make a national service possible. This

“narrowcasting” concept is analogous to the programming philosophy of cable television. Satellite DAB may be especially popular in rural areas

that lack access to the wide range of programming

available in most metropolitan areas. The inherently national nature of the satellite technology, however, means that no locally originated

programming—news, weather, or sports—can be

transmitted. In addition, for technical reasons discussed below, satellite DAB is being developed

primarily to serve radios in vehicles, although other markets are being considered. As currently

planned, the CD Radio system would broadcast

30 commercial-free music channels to subscribers

who would pay a $5 to $10 monthly fee. Other

companies plan to offer some channels on a subscription basis, and others as advertiser-supported

programming.

In addition to audio programming, the transmission of data services directly to users is also

being explored. Proponents envision broadcasting data services to support educational needs,

paging operations, and navigation and traffic

management systems for the nation’s cars and

highways. Up to 20 channels may be broadcast to

support these services.

12 Although out-of-band systems can technically be satellite or terrestrial, development of out-of-band systems has focused almost exclusively on satellite technologies in the United States. Other countries, including Mexico and Canada, are experimenting with out-of-band solutions using both terrestrial and satellite delivery.

13 In addition to Satellite CD Radio, American Mobile Radio Corp., Digital Satellite Broadcasting Corp., Loral Aerospace Holdings, Inc.,

Primosphere Limited Partnership, and Sky-Highway Radio Corp. petitioned the FCC in 1992 to offer satellite DAB. Since then, Loral and SkyHighway have merged with Satellite CD Radio, leaving a total of four applicants. Carol Horowitz, “DAB: Coming to a Car Near You?,” Satellite

Communications, October 1994, pp. 38-40.

14 The frequencies allocated were 2310-2360 MHz. This action was consistent with the position taken by the United States at the 1992 World

Administrative Radio Conference. The United States and India are the only two countries to use these frequencies. Other frequencies to be used

include 1452-1492 MHz (in Europe, South America, Africa, and, importantly, Canada and Mexico) and 2535-2655 MHz (including Russia,

China, and Japan, among others). This means that no common radio broadcasting system will exist across the world as the AM and FM systems

do now.

15 CD Radio has petitioned the FCC for a 319d waiver, which would allow them to begin construction at their own risk prior to receiving a

license from the FCC. This would allow CD Radio to begin operating sooner after receiving their license.
140 Wireless Technologies and the National Information Infrastructure

Satellite dishes such as these wiII beam digital quality radio

programming up to satellites that will then retransmit it across

the country

Technology

Satellite DAB systems are conceptually quite

simple (figure 5-l). On the ground, large satellite

dishes will beam programming up to one or two

geosynchronous satellites that will then rebroadcast these signals nationwide. CD Radio, for example, plans to construct and deploy two satellites

to be used to deliver its services. Other developers

of satellite DAB systems plan to augment the satellites with terrestrial transmitters (so-called “gap

fillers”) that would improve reception in urban

areas (e.g., between buildings and in tunnels). Satellite DAB systems will feature individually addressable radios that will require a signal from the

system’s operations center to be activated or deactivated. Receiving antennas are silver-dollar-sized

discs built into a car’s roof. Satellite DAB systems

are likely to have difficulty serving radios in

homes or offices because the frequencies involved

will not penetrate buildings very well. Antennas

could be mounted on roofs or windows, but additional wiring would be needed to connect to the radio.

Because satellite DAB will be a new service--

an additional choice for consumers rather than a

replacement for their existing radios-there are no

real transition problems to new satellite DAB

technology. For listeners, the important point is

that existing analog radios will not be able to receive the new programming; consumers will have

to buy new radios if they want digital sound. CD

Radio has demonstrated a new receiver that receives the AM, FM, and satellite bands, but this

receiver is not yet commercially available.

Terrestrial DAB

In response to local broadcasters’ concerns about

the transition to digital broadcasting technologies,

competition from new satellite services, and the

possible effects of these changes on smaller radio

stations, several companies began developing

digital technologies that would work “in-band”

—using the same frequencies currently used by

AM/FM stations. This approach would allow existing broadcasters to upgrade their facilities without bringing in new, unwanted competition.

Development of terrestrial DAB in the United

States is now focused primarily on in-band, onchannel (IBOC) solutions that will allow a broadcaster to transmit its present analog signal

simultaneously with a new digital signal without

the two interfering (figure 5-2). No new spectrum

is required. This development path indicates that

terrestrial DAB is most likely to be treated as an

extension or upgrade of existing radio servicesbetter quality, some additional radio-related services and maybe data broadcasts-rather than as a

new service like satellite DAB. IBOC will use existing broadcast facilities to a large extent, but will

require new digital transmitters and radio receivers. The cost for a radio station to upgrade its facilities is somewhat unclear, but will depend on how

advanced and up to date the station’s existing

equipment is. Estimates put the cost at approximately $50,000 to $150,000 per station; not prohibitive for large market stations, but potentially a
Chapter 5 Broadcast and High-Bandwidth Services 141

SOURCE: Office of Technology Assessment, 1995

problem for smaller ones.16 Consumer radios are Those with older radios will continue to receive

expected to be expensive initially, but fall into the the existing analog signal, while newer radios will

$50 to $350 range—about the price of current receive the new digital signal that is transmitted

high-end radios-once they are produced in quan- simultaneously. Past technical and institutional

tity. issues that divided the industry internally appear

Like satellite DAB, the transition to terrestrial to have been largely resolved, and development of

DAB should be relatively easy for consumers. a terrestrial DAB standard is progressing. 17 While

16 Bortz & Company, Digital Audio Broadcasting: Phase I, Mar. 4, 1993. Testimony of John R. Holmes, in Hearings before the Subcommittee on Telecommunications and Finance of the Committee on Energy and Commerce, House of Representatives, 102d Congress, Nov. 6, 1991,

p. 9.

17 The Electronic Industries Association (EIA) established a task group in August 1991 to develop a U.S. standard for terrestrial DAB. The

group-composed of specific system proponents, manufacturers, and broadcasters—received 11 proposed standards, which were reduced to

five by the end of 1992. Testing began in 1993, and EIA now expects to finish in mid-1995. The group will then forward its recommendation to

the FCC for consideration as the final DAB rules are developed. Demonstrations of both AM and FM IBOC systems were held at the National

Association of Broadcasters convention in April 1995.
142 Wireless Technologies and the National Information Infrastructure

Single AM or FM channel-----

Traditional

AM/FM signal

Frequency

DAB signal sent at reduced power

SOURCE: Office of Technology Assessment, 1995.

there may be some economic dislocation caused

by the switch to digital broadcasting technologies,

OTA believes disruption to the industry will be

minimal.

❚ Issues and Implications for the Nll

The radio broadcasting industry is now at the beginning of a transition to digital technologies. It

seems clear that two different DAB technologies

will be deployed: satellite-delivered, out-of-band

services and terrestrial systems using IBOC

technology. Several regulatory and institutional

issues remain unresolved, and competition from

alternative programming providers is possible.

Demand and Competition

The primary issue now consuming the DAB industry is the battle between traditional broadcasters and satellite DAB proponents. This conflict

has been bitterly fought for the past five years and

shows no signs of abating.18 The conflict is based

on different assessments of market demand-no

one is really sure how consumers will react to

these new services. Traditional broadcasters are

concerned that satellite DAB will harm local

broadcasters by taking significant audience

share-and, hence, advertising dollars-from

them and could cause some smaller (and more rural) stations to go out of business. Similar concerns have also been voiced by some FCC

commissioners. 19

Proponents of satellite DAB argue that the economic impacts of satellite systems will be minimal because the systems are expected to serve

largely niche markets (audiophiles, special interest groups, and underserved customers). One report states that satellite DAB providers will

achieve penetration rates of between 3 and 10 percent of the automobile market nationwide, while

others put the figure at between 5 and 15 percent

for all radios.20 Further, some proponents of satellite DAB contend that the health of traditional

broadcast radio stations should not be a factor in

the FCC’s consideration of satellite DAB service.21

This is not technically a “one or the other”

choice; consumers who subscribe to DAB services will continue to listen to their local stations—just as they switch between AM and FM

now. What is unclear is the extent to which consumers will treat satellite DAB as a substitute for

local programming-the time that they will spend

listening to satellite rather than local services. It is

this time, translated into market share, that local

broadcasters are afraid of losing because of the potential corresponding losses in advertising revenue. Comments filed before the FCC indicate that

national advertising makes up only a small portion of a station’s total advertising revenue, but it

18 The National Association of Broadcasted, for example, has promised a “tough fight” against satellite DAB in the licensing and operating

rules are developed at the FCC. “FCC Takes First Major Step Toward Satellite DAB Service, ’’Audio Week, vol. 7, No. 3, Jan. 16, 1995, p. 1.

19 Comments of Commissioners Ness and Barrett, reported in ibid.

20 First numbers are from InContext, Inc., Satellite Radio, August 1994; second numbers are from Bortz & Company, Op. cit., footnote 16.

21 “NAB Renews Attack on Satellite Digital Audio Radio,” Telecommunications Reports, Jan. 9, 1995.
Chapter 5 Broadcast and High-Bandwidth Services | 143

may be that the loss of even that small amount

could force some marginal broadcasters out of

business.22

In addition to satellite providers, traditional radio broadcasters also face competition from local

cable operators, many of whom now offer digital

music services using existing cable television facilities. 23 Digital Music Express (DMX) and Digital Cable Radio now offer digital audio services

to cable systems nationwide, and DMX is also being delivered via satellite as part of Hughes DirecTV programming (see below). Each offers

about 30 channels (to be expanded to about 120

channels) of commercial-free music programming on a subscription basis, but no local or informational programming. Programming packages

range from about $11 per month to $75 per month

for business users. Although rollout of the service

to providers has been relatively rapid, consumer

acceptance has been slow. Total penetration rates

are now expected to peak at between 5 and 10 percent of cable-served homes. Some analysts believe this may indicate low demand in general for

radio services listeners have to pay for.

No firm conclusions can be reached about demand and competition at this time. Doing a prospective analysis of the economic impacts of a

new technology is always difficult, and DAB is

complicated by current uncertainties in demand

and product/service acceptance. Using past

technology diffusion and interaction patterns to

determine future acceptance and demand—as

some industry studies do—is not sufficient for

policy purposes. The tradeoff for consumers will

be between free local programming with commercials and commercial-free programming that they

must pay for. Take-up of terrestrial DAB services

may exceed that of satellite services, if only because they are more familiar and can be positioned

as an extension of an existing service. Mass market data services may not do well in competition

with many other data services (see chapter 4), but

services narrowly tailored to radio listeners—auxiliary services like local travel information—may

find acceptance.

Policy Considerations

The deployment of terrestrial and satellite DAB

raises some difficult questions for policymakers at

the FCC. In the short term, the FCC is wrestling

with questions about operating rules. In the longer

term, more fundamental questions need to be considered. The most difficult long-term issue facing

policymakers is how satellite and terrestrial DAB

will affect the local, terrestrial broadcast industry.

How can the traditional strength of the U.S. local

broadcasting industry be complemented by the

new technologies of satellite delivery? How can

new forms of competition in radio services be promoted, while acknowledging (but not necessarily

protecting) the role and investments of local

broadcasters? What might the future structure of

the U.S. broadcasting industry look like?

Satellite broadcasting, because it injects new

competition into the whole radio industry (not just

local competition), could dramatically reshape the

broadcast industry in this country. Satellite services could complement local programming, be

limited to serving niche markets, or emerge as a

substantial competitor to local broadcasters. In

some countries—Canada, for example—terrestrial and satellite DAB may develop as complementary parts of one broadcasting system. In the

United States, however, it now seems likely that

the two industries will remain separate—the established broadcast industry controlling terrestrial

DAB, and the new startups controlling satellite

services.

Given this context, it appears that satellite and

terrestrial DAB will compete on the local level—

22 See, for example, various comments of CD Radio and the National Association of Broadcasters, before the Federal Communications

Commission, Amendment of the Commission’s Rules with Regard to the Establishment and Regulation of New Digital Audio Radio Services,

Docket 90-357.

23 The information in this section comes from Bortz & Co., op. cit., footnote 16.
144 | Wireless Technologies and the National Information Infrastructure

radio listening in vehicles—while complementing each other at a broader level—extending

coverage, meeting unserved needs. It should be

possible to set the rules for satellite and terrestrial

DAB such that both industries can thrive. A possible analogy may be the dual nature of cable television—local television stations and cable

channels exist alongside “superstations’’ and nationwide cable channels that cater to specific interests. Nationwide DAB services may be able to

supplement existing local services in the same

way and would also fill in gaps in coverage of various programming formats; not every person in

America can get the kind of radio station he or she

wants, and not every market has 10, 15, 20 or more

stations with a variety of formats available. For a

listener in a remote location who would like to

hear classical music, a satellite-delivered service

may be the only option.

The broadcast industry’s fears that nationwide

satellite audio programming will force some radio

stations out of business must be taken seriously.

When satellite services start up, some smaller radio stations may not survive. On the other hand,

satellite DAB proponents argue that development

of satellite DAB technology will help the United

States maintain its competitiveness in satellite and

related broadcasting technologies.

For policymakers the issue is relatively simple,

but difficult to solve: do the benefits of nationwide

satellite radio services outweigh the loss of a number of smaller, likely rural, local radio stations?

Relying on competitive forces is one way to approach the problem, but the social value of these

stations may override the workings of the market.

If a local station cannot compete, should it be allowed to go out of business, or do the benefits of

local information and entertainment call for some

kind of protection? Could other local stations

(where they exist) take up the slack? The industry

should be prepared to present a good case for preserving small stations based not on past history—

there can be little doubt of the historical

importance of local radio stations—but on the

prospects for future performance. Society in the

1990s and beyond is changing rapidly, and the nation’s radio listeners are entitled to a radio system

that best meets their needs. The public interest

may need to be redefined to include not only local,

but also national and international programming

and services. Congress should be prepared to address the social value of local broadcasters, and

whether that value may outweigh reliance on market-based outcomes alone.

VIDEO PROGRAMMING SERVICES

Video entertainment programming, which began

with broadcast television in the 1940s, has become a pervasive part of American life. In this industry, broadcast and cable television are the

dominant suppliers—broadcast television is

available to roughly 96 percent of the American

public, with cable television passing roughly the

same percentage of households, 63 percent of

which subscribe. Today, however, a number of

wireless systems, as well as telephone companies,

are poised to compete directly with cable and, to

a lesser extent, broadcasters.24 A full assessment

of the competitive market for video programming

services, including smaller local competitors such

24 FCC definitions specifically exclude current broadcast television companies from this market because they do not provide multichannel

service or use a fee-for-service model. The FCC notes, however, that “for at least some viewers, broadcast television service satisfies their demand for video programming.” FCC, Annual Assessment, op. cit., footnote 1, para. 98. For purposes of this discussion, OTA takes the view that

the aggregated channels provided by multiple local broadcasters essentially represent a multichannel service that does, in fact, compete with

basic cable service. The future of multichannel individual broadcasters, as discussed above, also argues for including broadcasters in a futureoriented assessment of video programming services. In addition, by strict antitrust and economic definitions, competition with each of the wireless services discussed will be different because different technology systems offer slightly different packages of services. Because DBS, for

example, cannot provide local broadcast programming, it is not a perfect substitute for local broadcast or cable service. DBS does, however,

compete directly with the enhanced or premium services offered by cable companies. It is in this sense that competition (although not complete

or perfect) is used throughout this section. This position is consistent with views taken by the Federal Communications Commission, Reexamination of the Effective Competition Standard for the Regulation of Cable Television Basic Service Rates, Report and Order and Second Notice of Proposed Rulemaking, 6 FCC Rcd 4552-53 (1991).
Chapter 5 Broadcast and High-Bandwidth Services | 145

as low-power television and satellite master antenna television systems (SMATV), is beyond the

scope of this report, but several analysts and the

FCC have already examined these issues in greater detail.25 Consequently, this section will focus

on the wireless entrants in the video programming

market, and assess the technical, economic, and

regulatory issues they will face in the coming

years.

❚ Broadcast Television

Broadcasting has been an important component of

the nation’s communications infrastructure for decades—bringing entertainment and information

to millions of people, and having an undeniable

impact on the nation’s culture. In a sense, television was the first broadband communications service. By using the airwaves, it was possible to

deliver hundreds of megahertz of video programming at a time when wired media could not.

Today, however, several different technologies—

including cable television, DBS, other wireless

systems, the local phone companies, and even video rentals—are putting competitive pressure on

broadcasters. Over the next decade, broadcasters

face the difficult task of managing the transition

to a new generation of digital technology.

Services

In one sense, broadcasting is a technology—the

use of the airwaves to distribute a high-powered

video signal over a metropolitan area. But broadcasters do not simply provide a conduit to the

home. Their real business is the selection of content for their channel and the sale of advertising

time. The more viewers that a station can attract

with its programming, the more advertisers will

be willing to pay. The content used to attract viewers includes news, sports, and entertainment.

A station’s programming can come from three

main sources. Some of it, such as much of the station’s news programming, is locally produced. If

the station is affiliated with a network, the network programming usually arrives at the station

over a satellite feed and is then rebroadcast. While

it would be possible to distribute programming to

stations over high-bandwidth fiber links, satellites

are more cost-effective, given the large number of

stations to which the programming is distributed

and the inherent point-to-multipoint nature of

satellite services. Finally, programming can be

distributed to the station by independent programmers, who provide programs either on tape or via

satellite.

The true value of broadcasting technology lies

in its ability to provide universal access to video.

Once the television station’s tower is in place, almost everyone within the station’s coverage area

can receive the signal. It costs the station nothing

to add additional viewers. By contrast, with wired

broadband media, each new subdivision or subscriber requires additional expense. Even after the

rapid build-out of cable systems over the past decades, over-the-air broadcasting is still the only

universally available source of video programming. Nearly all U.S. households can receive at

least one over-the-air broadcast television signal,

and nearly 95 percent can receive more than five

channels.26

The second hallmark of broadcast television is

that the service is “free,” once the viewer has purchased a television. This is not strictly a consequence of the use of wireless technology. Wireless

technology makes it possible for every viewer in a

city to receive a video signal; advertiser-supported

programming makes the service free. This business model emerged in part because it was considered too difficult or expensive for each station to

25 FCC, Annual Assessment, op. cit., footnote 1. Bruce L. Egan, “Economics of Wireless Communications Systems in the National Information Infrastructure (NII),” contractor report prepared for the Office of Technology Assessment, U.S. Congress, Washington, DC, November

1994. Johnson, op. cit., footnote 3, ch. 8.

26 Federal Communications Commission, Office of Plans and Policy, “Broadcast Television in a Multichannel Marketplace,” OPP Working

Paper Series 26, June 1991, p. 18.
146 | Wireless Technologies and the National Information Infrastructure

try to recover fees for the service directly from the

viewer.27 Whatever the origins of the business

model, however, policymakers in the United

States have long attached considerable value to

the availability of a video service that is both universally available and free.

Because broadcast television is so ubiquitous

and is perceived to have considerable influence on

U.S. cultural and political life, policymakers have

periodically tried to influence programming content. Efforts to influence what broadcasters show

have focused on violence, children’s programming, and balance in news reporting. The FCC has

the authority to impose standards on broadcasters

because the spectrum that broadcasters use is considered to belong to the public. The Commission,

acting on behalf of the public, requires broadcasters to meet programming standards as a condition

of licensing. The FCC has not imposed similar

conditions on programmers who distribute their

content through cable because they do not use the

public airwaves.

Licensing decisions also focus on the degree to

which broadcasters tailor their programming to

the community in which they operate, particularly

through news and public-affairs programming.

The natural coverage area of a broadcaster’s signal

matches a typical metropolitan area, and “localism” has long been cited as one of the hallmarks of

the U.S. broadcasting system. But in practice,

broadcasters distribute a mix of local and national

programming. Many stations are affiliated with

national networks, who pay their local affiliates a

fee to broadcast network programming in exchange for the right to sell some of the affiliates’

advertising time to national advertisers.

Technology

Current television technology

Over-the-air television broadcasting was first authorized more than 50 years ago. On July 1, 1941,

the FCC allocated spectrum for channels 1 to 13

in the so-called Very High Frequency (VHF)

band.28 Subsequently, a much larger band of frequencies, for channels 14 to 83,29 was allocated in

the Ultra High Frequency (UHF) band.30 Each of

these channels is 6 MHz wide.

Broadcasters transmit their signal from a single

antenna on a tower several hundred feet tall. The

power output necessary for good reception

throughout the city depends on the antenna height,

the terrain, and the frequency at which the broadcaster operates. The signal can usually be received

upwards of 50 miles from the tower, depending on

the type of antenna employed by the user. In part

of the coverage area, it may be necessary to use an

outdoor antenna to get good reception, but in other

areas simple “rabbit ears” are sufficient.

The basic format for transmitting television

signals in the United States is referred to as NTSC

(National Television Systems Committee),

named after the group that developed the system.31 It was chosen by the FCC as the U.S. national standard in 1941 and has proven

remarkably durable. In 1953, color was added to

NTSC in a compatible way—old black and white

receivers could still receive the new signal. Later,

27 Ibid., p. 4.

28 Channel 1 was later reassigned.

29 Channels 70 to 83 were later reassigned to cellular telephony and other land mobile radio services.

30 The “very high frequency” and “ultra high frequency” terminology reflects broadcasting’s long history. With advances in radio technology, television’s frequencies, the highest of which is 806 MHz, are now considered to be at the lower end of the usable spectrum. By contrast, the

new PCS services will operate at 2000 MHz (2 GHz), and many other services operate at still higher frequencies.

31 Two other formats are used for television transmission around the world: Phase Alternation Line (PAL), which is used in Germany and the

rest of Europe, and Systeme Electronique Couleur avec Memoire (SECAM), which is used in France, Africa, and Russia, among other countries.

The three standards are not compatible.
Chapter 5 Broadcast and High-Bandwidth Services 147

in 1984, a stereo sound capability was added to the

standard. In addition, “subcarriers” within the signal have been exploited for the transmission of

closed-captioning information and other services.

While the standard has remained much the same

for more than 50 years, better camera, production,

and receiver technologies have considerably improved the quality of the picture seen in most

households

As good as NTSC has been, however, it is highly inefficient in its use of the spectrum. Many of

the radio frequencies that are allocated to television cannot actually be used because there would

be unacceptable interference between channels. In

the UHF band, for example, only nine out of the 55

channels can be used in any given city.32 On several occasions, the FCC has tried to encourage development of a receiver that would allow use of

the unallocated channels, referred to as taboo

channels, but their efforts have been unsuccessful.33 Problems with interference also require that

channels not be reused in adjacent cities less than

150 miles away. Even if the station’s signal is not

strong enough to be received in the next city, it

may be strong enough to cause interference.

Advanced television systems and high-

-definition television

In the mid-1980s, technology advances made it

possible to develop a new television format that

would offer significant improvements over

NTSC. Japanese companies had begun to demonstrate a new high-definition television (HDTV)

system that offered better resolution, a wider

screen, and better sound. However, the Japanese

system was not compatible with NTSC, and

required more spectrum than a conventional television channel to deliver the extra information reHigh-definition television receivers will offer film-quality

images, digital sound, and a wider aspect ratio to enhance

the home theatre experience.

quired for a sharper picture. Nonetheless, it was

proposed for use in the United States, sparking a

vigorous debate that was partly about industrial

policy and partly about the future of over-the-air

broadcasting. 34

The FCC has played an active role in the development of HDTV technology. Fearing that the

limited spectrum available in the broadcast band

would make it impossible for them to compete

with other media in the delivery of HDTV, broadcasters petitioned the FCC in 1987 to investigate

the implications of HDTV. The FCC responded by

opening a Notice of Inquiry,35 and in November

1987 it established the Advisory Committee on

Advanced Television Service (ACATS), which

was charged with providing information to the

Commission.

ACATS established a testing process to

compare the candidate systems. Originally, the

systems being proposed were based on analog

technology; by 1990, however, new digital compression technologies allowed an HDTV signal to

3 2Federal Communications Commission, Advanced Television Systems and Their Impact Upon the Existing Television Broadcast Service,

Notice of Inquiry, 2 FCC Rcd 5125,5126,5133 (1987).

33 Ibid.

3 4 “Super Television,” Business Week, No. 3089, Jan. 30, 1989, pp. 56-63. 3 5Federal Communications Commission, Advanced Television Systems, op. cit., footnote 32.
148 | Wireless Technologies and the National Information Infrastructure

be squeezed into a standard 6 MHz NTSC channel, and also allowed use of the unused taboo

channels.36 The number of HDTV system candidates dwindled as proponents dropped out or

merged their efforts to develop digital systems. At

the end of the ACATS testing process in 1992,

there were few differences among the four remaining systems, and the proponents were encouraged

to combine their efforts. A “Grand Alliance” was

subsequently formed in May 1993, and testing of

the Grand Alliance system is scheduled to conclude in late 1995. Once the tests are completed,

ACATS will recommend the system to the FCC as

a U.S. national standard.

To smooth the transition to HDTV, the FCC has

proposed a transition plan that would move the industry and consumers to HDTV over the span of

several years.37 The transition will begin when the

FCC picks a standard and assigns HDTV channels

to each city in a new Table of Allotments. According to current proposals, all current high-power

television stations will be eligible for a second

channel to be used for HDTV (their original channel will be returned at the end of the transition period). Broadcasters will have three years to apply

for an HDTV channel, and by the end of the sixth

year are required to be broadcasting in HDTV. After nine years, broadcasters are expected to be simulcasting, showing the same programs on both

their NTSC and their HDTV channels. The purpose of the simulcasting provision is to prevent

NTSC viewers from being deprived of the opportunity to see the same programming as HDTV

viewers.38 The HDTV and NTSC channels are

currently not considered separate services. Before

the ninth year, however, broadcasters will be permitted to show different programs on HDTV in an

effort to experiment with the capabilities of the

new medium or to use specialized programming

to attract viewers to the new service. The FCC’s

preliminary decision is to require broadcasters to

return their NTSC channel 15 years from the date

that the transition to HDTV begins, but, as with

the dates of all of these milestones, this will be reviewed at regular intervals during the transition

process.

In part, the FCC schedule is designed to build

momentum for HDTV. By specifying a date on

which HDTV programming will begin, the Commission is hoping to encourage programmers and

equipment manufacturers to invest in the development of the programs and receivers that will be

needed for HDTV to be a success. The FCC is attempting to avoid a chicken-and-egg problem in

which broadcasters do not begin HDTV broadcasts until sufficient receivers are available and

manufacturers do not produce receivers until

broadcasts begin. The FCC is using its jurisdiction over the broadcasters to position them as market leaders, hoping that receiver manufacturers,

programmers, and other media will follow.39

In the past year, the debate over HDTV has

shifted. Broadcasters have been quite reluctant to

commit to HDTV in any meaningful way because

they believe that viewers may not want it—or be

willing to pay the thousands of dollars new HDTV

sets are expected to cost. Instead, broadcasters

have been pushing the more generic idea of digital

36 By transmitting the video signal in digital rather than analog form, it is possible to do complex mathematical manipulations of the signal in

order to reduce the bandwidth requirements. Federal Communications Commission, Advanced Television Systems, First Report and Order, 5

FCC Rcd 5627 (1990).

37 Federal Communications Commission, Advanced Television Systems, Second Report and Order and Further Notice of Proposed Rulemaking, 7 FCC Rcd 3340.

38 Federal Communications Commission, Advanced Television Systems, Memorandum Opinion and Order, Third Report and Order, and

Third Further Notice of Proposed Rule Making, MM Docket No. 87-268, Sept. 17, 1992.

39 “In addition, because over-the-air broadcasting reaches more than 98 percent of U.S. households, an ATV terrestrial broadcast system is

the medium most likely to bring this technological advance to virtually all Americans. Consequently, it is the medium most likely to result in

rapid penetration of ATV receivers and, hence, to contribute to higher sales volumes and eventually lower costs for these receivers.” Federal

Communications Commission, Advanced Television Systems, op. cit., footnote 37.
Chapter 5 Broadcast and High-Bandwidth Services | 149

television (DTV) or advanced television (ATV).

These concepts are designed to give broadcasters

more flexibility to deliver different kinds of television services—depending on what viewers actually want and will pay for. For example,

broadcasters could offer multiple channels of digital television at a level of quality that approximates the current NTSC system, or deliver one

HDTV channel, and/or provide advanced information and data services. These issues are currently being discussed at the FCC and in

Congress, where the terms and conditions of

broadcasters’ provision of data services is being

debated.

Issues and Implications

Technology, standards, and spectrum

The main issue facing broadcasters is the transition to next-generation digital technology.40 The

FCC has not issued any rulings on HDTV since

1992, apparently waiting for ACATS to report its

recommendation on the HDTV standard that has

taken longer than expected to develop. Although

the basic elements of a new digital television standard are in place, there are unresolved issues that

will have to be addressed by the Commission. One

issue is the question of interlace versus progressive scan. Traditionally, television receivers have

used interlace scan, in which alternate lines are

scanned in each frame, whereas computer monitors use progressive scan, in which all lines are

scanned every frame. Because they believe that

the distinctions between computers and televisions will blur, the computer industry has been

pressuring ACATS to use progressive scan for

HDTV. Currently, the Grand Alliance system offers both modes, but the FCC could impose policies that require broadcasters to transmit

progressive scan material, to encourage the sale of

computer-friendly progressive scan displays.

A second set of technology issues involves efficient use of the broadcast spectrum. From a spectrum management standpoint, there are good

reasons to develop policies that would result in the

adoption of modern technologies as soon as possible. As long as broadcasters are permitted to

continue using NTSC, the broadcast allocation

will be underutilized. But new digital television

technology, combined with the requirement that

NTSC broadcasting cease at some point in the future, would make it possible to use the spectrum

more efficiently. It is possible that at the end of the

transition process, the entire VHF band would be

freed for other uses, such as mobile or new inbuilding communications technologies.

Another spectrum/technology concern involves system architecture—whether to use the

traditional model of a single tower broadcasting a

high-powered signal, or several smaller transmitters broadcasting at lower power. This latter

scheme is sometimes referred to as “distributed

transmission” or “cellular television” because

each tower broadcasts to only part of the overall

coverage area. One advantage of these “single frequency networks” is that towers can be located

wherever necessary to tailor coverage; for example, filling in coverage in a valley.41 But the main

advantage of this approach is that it leads to more

efficient spectrum use because the same channel

can be used in adjacent cities.

Finally, the cost of upgrading to digital transmission technologies is an important issue for

broadcasters. Although costs will vary depending

on how much digital equipment a station already

has (digital film storage and tape playback machines, for example), costs could be high, especially for smaller stations that do not have the

40 HDTV was, until perhaps two years ago, the preferred acronym. Now, in trying to move toward a more flexible use of the new technologies, broadcasters coined the digital television (DTV) term. DTV is conceived to be broader and more inclusive than HDTV, which is being

portrayed as an overly narrow technology mandate.

41 One single frequency network technology is COFDM (coded orthogonal frequency division multiplexing). Its consideration was mentioned in the FCC’s last Report and Order, op. cit., footnote 38, but it is not currently part of the Grand Alliance system.
150 | Wireless Technologies and the National Information Infrastructure

advertising revenues of stations in larger markets.

Broadcasters will have to buy new antennas, towers, and production equipment.The cost of adding

basic HDTV capability—allowing a station to

“pass through” network programming and add local commercials, but not originate any local programming—has been estimated to be between

$1.3 million and $2.2 million per station.42 The

cost could be significantly higher for the estimated two-thirds of all stations that would need to

build a new tower for HDTV broadcasting.43 Stations will also incur higher costs to buy the production and studio equipment needed to originate

programming in an HDTV format. However, the

ability to pass through network programming will

meet the FCC requirements outlined in its transition plan.

Demand

In recent years, broadcasters have begun to question whether there is enough demand for HDTV

to warrant the expensive technology upgrades that

would be required to provide it. It is unclear how

many viewers will be willing to pay the (initially)

high cost of HDTV receivers to receive better pictures. The advantages of HDTV are most apparent

on large screen displays, which are inherently

more expensive. Because their service is not by

subscription, broadcasters will be unable charge

viewers extra for a premium HDTV service, as

would a cable company. Nor will they capture any

of the revenues from the sale of HDTV receivers.

In the 1950s and 1960s, NBC used the transition

to color in part to spur the sales of color receivers

produced by its parent, RCA.

Faced with what they perceive to be high costs

and low demand, many broadcasters are actively

resisting the mandated transition to HDTV.

Instead, they argue, they should be allowed to use

the spectrum more flexibly to offer multiple digital channels (instead of just one HDTV channel)

or even other services, such as data transmission.

Such uses, industry representatives point out,

could increase spectrum efficiency, enhance diversity, and provide a way to offset the cost of deploying any new technology the FCC requires.

The debate over what the FCC should require now

occupies center stage in the digital television/

HDTV debate. There is concern that broadcasters

are being forced by the FCC in a direction that

consumers will not want to go—HDTV.44

The viability of HDTV is, in part, a separate issue from the question of whether the FCC should

encourage broadcasters to adopt digital broadcast

technology. If HDTV is not considered to be viable, one option is “multicasting,” the use of the

digital channel to broadcast multiple standarddefinition channels (SDTV). The same technology that squeezes a high-definition signal into a

single channel can also be used to transmit four or

more standard-definition signals. Viewers could

continue to use their existing television sets, but

would need a set-top box to translate the digital

signal into the NTSC format understood by their

television. This box would be much less expensive than an HDTV receiver, most of whose cost is

in the display, not the decoder. The additional

channels could provide broadcasters with additional revenue sources (through subscriptions,

perhaps) and provide an incentive to move to more

42 National Association of Broadcasters, NAB Guide to HDTV Implementation Costs (Washington DC: NAB, 1993), p. 39.

43 Ibid., p. A-7.

44 “What also comes through in the industry’s comments, however, is trepidation—and understandably so. After all, the Commission is

mandating the development of this new technology in only one sector of the video marketplace: broadcast television. Other segments of the

industry—program producers, film studios, cable programmers, DBS providers— can elect to watch from the box seats as the broadcasters

enter the Colosseum. While shouldering only a fraction of the risk, they will have the luxury of awaiting the answers to the fundamental questions that broadcasters, and the Commission, must grapple with today: Will consumers rally around high-definition? Will compellingly crisp

pictures and sound make HDTV indispensable to America’s 90 million television households?” Statement of Commissioner Ervin S. Duggan,

federal Communications Commission, Advanced Television Systems, op. cit., footnote 38.
Chapter 5 Broadcast and High-Bandwidth Services | 151

efficient technology. This is, in fact, the strategy

now being pursued by cable, wireless cable, and

satellite companies (see below), that are converting to video distribution systems that use digital

transmission technologies and set-top decoders to

deliver services to current analog televisions.

However, manufacturers who have invested in the

development of HDTV receivers and production

equipment are opposed to standard-definition

multicasting. In addition, this strategy would perpetuate the use of NTSC’s interlaced display

technology, which is opposed by the computer industry.

In addition to multicasting more video programming, broadcasters are considering many

other services that could be delivered over a highbandwidth digital channel. These include data delivery or paging. As a wireless medium,

broadcasters can quickly deliver services to locations that do not have wireline facilities and to mobile users. But because these services are not seen

as being part of the broadcasters’ traditional service, the ability to use spectrum in this way is seen

by some as a windfall. The issue of “flexible use”

of broadcast spectrum was debated in the last Congress, and in the current Congress, proposed legislation would give broadcasters the freedom to

offer “ancillary and supplementary” data services,

subject to certain restrictions. The meaning of

“ancillary and supplementary services,” however,

will have to be defined by the FCC. Broadcasters

would have to pay a fee for spectrum used for

these services.

Competition and the role of over-the-air

broadcasting

Broadcasters’ main business—programming a

channel and selling advertising—is no longer

completely tied to broadcast technology as its sole

means of distribution. While over-the-air broadcasting made the television business possible,

today more than 60 percent of households now receive broadcasters’ programming over cable and

some rural viewers receive programming directly

from satellites.45 While new cable programming

competes with broadcasters for advertising dollars, cable technology is also an essential conduit

for broadcasters to reach viewers. For this reason,

the terms under which cable systems carry broadcast signals have been the subject of intense policy

debates and negotiations between networks and

cable providers.46

To some extent, the fate of broadcasters as programmers (creating and selling programming)

may be separate from their role as program distributors. Whether or not over-the-air broadcast

technology will continue to be a significant mode

of distributing entertainment programming depends on a variety of factors. While wireless

technology was a good way to deliver television

service quickly to all of the people in a metropolitan area, there is a limit to the amount of available

spectrum. By contrast, the cable and telephone

companies are rapidly upgrading their distribution plant to deliver an even wider range of programming; over the past decade, there has been

significant growth in the number of viewers preferring to receive programming using cable or other “multichannel” services such as DBS or

wireless cable. In addition, many of these companies are proposing new interactive services that

may attract even more subscribers. Even with digital compression and multicasting, it is unlikely

that broadcasters will be able to match the number

of channels or range of services these other providers will offer, unless more spectrum is made

available to individual stations—an unlikely

prospect.

Some have suggested that if other distribution

media were to provide programmers with satisfac45 Viewers can only receive network programming via satellite if they cannot get a broadcast signal or have not recently been a cable subscriber. For those viewers who qualify, packages of network programming are available to C-band system owners from NetLink and PrimeTime

24. DirecTV/USSB owners are subject to the same qualifications.

46 See, for example, Federal Communications Commission, Amendment of Part 76 of the Commission’s Rules Concerning Carriage of Television Broadcast Signals by Cable Television Systems, Report and Order, MM Docket No. 85-349, Nov. 28, 1986.
152 | Wireless Technologies and the National Information Infrastructure

tory access to the viewing audience, it is conceivable that broadcasters could choose to stop

distributing programming over the air altogether.

If this were to occur, there would be difficult questions about the fate of remaining viewers who still

relied on free over-the-air broadcasting. Currently, however, control over their own distribution

medium provides broadcasters with significant

advantages. They can sell advertisers access to the

40 percent of households that do not have cable, as

well as to a significant number of second televisions in cable households that are not connected to

cable. In addition, their status as broadcasters entitles them to carriage on cable systems by “must

carry” regulations. Other programmers have to

compete to be included as one of a cable system’s

channels.

❚ Alternative Video Service Providers

The market for video entertainment programming

is becoming increasingly crowded and competitive. Broadcasters face competition not only from

cable television providers, but also from a small—

but growing—number of companies that use radio-based technologies to provide similar

services. Recently launched DBS services bring

hundreds of channels of premium and pay-perview programming to subscribers, and terrestrial

wireless systems promise similar, if fewer, services. Telephone companies are preparing to enter

the video distribution market by upgrading their

own wire-based networks, but also through the

use of wireless.

The emergence of these new wireless distribution technologies is undercutting the traditional

preeminence of the television networks and local

broadcast stations, and could provide substantial

competition for cable television as well. Wireless

companies provide, or plan to provide, programming packages similar to those offered by cable

television, and each of the alternatives has brought

competition for viewers and advertising dollars.

Some analysts expect new wireless services to be

the main source of competition to cable television

and broadcasters in the market for alternative video programming—not the local telephone companies that have been planning and fighting for the

right to offer video programming for years.47

Multichannel Multipoint Distribution Service

(MMDS)

MMDS providers, commonly known as “wireless

cable,” offer entertainment programming services

in competition with traditional cable television

providers. To date, the industry has grown very

slowly in the United States, amassing only

750,000 users—served by 175 systems—across

the country.48 In recent years, however, growth

has picked up noticeably, and individual companies have been successful in some local markets.

Industry representatives predict that by the end of

1995, the number of subscribers will more than

double to 1.8 million viewers served by 200 systems, and by the year 2000 analysts expect wireless cable systems to be serving between 3.2

million and 4 million subscribers and earning between $1.5 billion and $2 billion in annual revenue.49 Other countries are installing wireless

cable systems instead of wired systems because of

its lower costs and faster installation times.

MMDS providers use low-power microwave

signals broadcast from a central tower to deliver

their services. No local franchise is required. Programming packages typically include movie

channels like HBO, premium programming (Disney channel), some local broadcast stations (and

national “superstations”), and pay-per-view.

Wireless cable providers, however, do not pro47 Johnson, op. cit., footnote 3.

48 Much of this paragraph is based on materials provided by the Wireless Cable Association International.

49 Andrew Kreig, Wireless Cable Association International, personal communication, March 20, 1995; Louise Lee, “Wireless Cable-Television Sector Is on Acquisition Binge,” The Wall Street Journal, June 8, 1994; Tom Kerver, “The Wild World of Wireless Video,” Cablevision,

May 23, 1994.
Chapter 5 Broadcast and High-Bandwidth Services 153

duce their own programming, such as local news

or sports. To receive the MMDS signal, subscribers must purchase about $200 worth of equipment, including a rooftop antenna, signal

converter, and a set-top box, and pay a monthly

service fee roughly between $17 (basic package)

and $25 (basic plus one premium channel).50 The

major advantage of MMDS over cable and DBS is

the low initial construction costs-$1 million to

$2 million for the tower and transmitting equipment—no expensive satellites to build and

launch, and no expensive cable to lay. This lower

cost structure is what allows MMDS providers to

charge less for their services (although usually for

fewer channels).

MMDS systems operate at 2.6 GHz, limiting

them to line-of-sight delivery, and use analog

transmission to deliver video to consumers.51 The

number of channels used (and offered to consumers) by individual MMDS providers varies. FCC

rules allow MMDS companies to use up to 33

channels, but only 10 of these channels are dedicated to MMDS. Twenty of these channels are allocated to the Instructional Television Fixed

Services (ITFS), and another three are allocated to

the Private Operational Fixed Service. ITFS license-holders will often lease some or all of their

capacity to a local MMDS provider, or the channels can be shared by time of day. Complex rules

govern sharing between the three services, resulting in a situation where not all 33 channels are

available to MMDS providers in all markets. 52

This is likely to hamper the ability of MMDS providers to compete effectively in some areas.

"Wireless cable” systems will provide consumes with another

choice in the increasingly competitive multi-channel video

distribution market.

Over the last several years, the MMDS industry

has grown considerably and is now preparing for

serious competition with other video service providers--- cable, DBS, and Local Multipoint Distribution System (LMDS) (see below). Rapid

consolidation has taken place as companies seek

to develop the economies of scale and cost advantages that will bolster the industry’s competitive

position. 53 Until three years ago, MMDS companies were often denied access to programming—

or charged exorbitant rates-by many video

programmers who were owned by or locked into

contracts with cable television companies. In

1992, Congress passed the Cable Act, which pro5 0 John Ramsey, "MMDS: The Advent of Latin American Pay TV," Satellite Communications, p. 17, August 1993; Kreig, op. cit., footnote

49. 51 Specific frequencies are 2500-2655 Mhz and 2655-2690 MHz. Line-of-sight restrictions, including blockages by trees and buildings,

may be overcome by technological advances that will allow the signals to be "bent" but to date they have limited MMDS to relatively flat topography. MMDS systems’ range is about 30 miles. 52Bennett Z. Kobb, Spectrum Guide:Radio Frequency Allocations in the United States, 30 MHz-330 GHz (Falls Church, VA: New Signals

Press, 1994), pp. 149-151.

53 Lee, op. cit., footnote 49.
154 | Wireless Technologies and the National Information Infrastructure

hibited video programmers from discriminating

against program distributors like MMDS and

DBS.54 The Cable Act opened up access to programming that had been held back for many years,

and allowed the wireless companies to compete

more effectively and evenly on product and price.

In addition, the MMDS industry is now developing digital compression schemes that are expected to increase the number and variety of

channel offerings, perhaps allowing providers to

offer as many as 200 channels. A digital upgrade

could also enable MMDS providers to offer interactive programming. Also, the ITFS service has

channels specifically identified as “return” or “response” channels, allowing voice and data communications to be sent back to the broadcaster.

As a result, wireless cable has become a more

attractive technology choice for both consumers

and suppliers. Pacific Telesis recently announced

plans to acquire a wireless cable company in

Southern California, and Bell Atlantic/NYNEX

will team up to invest in another MMDS provider.55 These companies see wireless cable as a way

to deliver advanced digital video services to their

customers until they can upgrade their existing

telephone systems to carry video signals. This allows them to enter the video programming distribution market significantly faster than waiting

for new fiber optic systems to be installed. This

strategy is a preemptive response to cable company provision of telephone services later in the decade.

Satellite Television Services

Satellites have been an integral part of the communications infrastructure since the first communications satellite, Hughes’ Early Bird, was

launched in 1965. Early satellites transmitted telephone calls across the Atlantic Ocean, and were

soon used to distribute television programming to

network affiliates across the country. Today, satellites deliver video programming directly to over

5 million people.

C-band and Ku-band satellites

C-band satellites have been carrying television

programming for more than 20 years. These satellite systems were primarily designed to distribute

programming from television networks to their

local broadcast affiliates, and premium cable

channels (HBO, Discovery, and Disney) and television “superstations” to cable television systems

across the country. However, in the early 1980s

consumers began putting up their own dishes—

so-called backyard dishes—to receive the programming directly.56 Today, satellite television

services provide video, data, and music services,

mostly to people in rural areas where broadcast

and/or cable do not reach. By 1994, there were

about 4.5 million backyard satellite dishes in use

in the United States, roughly 3 million of which

are in areas with access to cable television.57

C-band systems account for the bulk of consumer satellite TV systems.58 Consumers use 7-to

10-foot-diameter dishes, costing from $2,000 to

$3,000 installed, to receive analog video signals

from geostationary satellites in orbit 22,300 miles

above the Earth. C-band dish users can receive

approximately 150 free, unscrambled signals and

roughly another 100 scrambled channels, such as

HBO, can be ordered through various program

packagers for a monthly subscription fee. The

54 The Cable Television Consumer Protection and Competition Act of 1992, Public Law No. 102-385, 106 Stat. 1460 and codified at 47

U.S.C. section 151.

55 “PacTel To Buy Tiny Wireless-Cable Firm For $120 Million To Speed Video Project,” The Wall Street Journal, Apr. 18, 1995, p. A4.

56 These satellite receiving dishes are also referred to as “home satellite dishes” and “television receive-only dishes. At first, the programming transmitted over satellites was unscrambled and free to anyone with a receiving dish. Soon, however, programmers began scrambling

their services and charging for use.

57 Johnson, op. cit., footnote 3, pp. 115, 151.

58 Most cable programming services still use C-band for program delivery.
Chapter 5 Broadcast and High-Bandwidth Services 155

number and types of programming packages

available vary widely, but for about $25 a month, a

subscriber can receive approximately 25 basic

cable channels and eight movie channels, in addition to the 150 free channels. These systems also

use subcarrier frequencies to offer multiple channels of audio, such as music and talk radio stations. C-band services also provide data services

for an additional fee. By attaching a data terminal

to their home equipment, customers can receive a

host of information services, such as financial information, stock updates, and specialty services.59

Ku-band satellite services use higher frequencies that allow smaller dishes, and are used mostly

by businesses, broadcast and cable companies, the

government, and others to supply private communication networks. These networks often use very

small aperture terminals (VSATs) to link far-flung

company sites (see chapter 4). Ku-band satellites

also provide commercial radio and television distribution, teleconferencing, private data networks

(such as remote credit card verification), highspeed image transmission, distance learning, international and domestic long-distance telephone

transmission, and other services. In addition, Kuband satellites have helped establish telephone

service for remote and/or less developed countries.

Direct broadcast satellite (DBS)

DBS systems represent the next evolution of satellite-delivered television.60 DBS was originally

conceived to serve households not passed by

cable, but as that number shrank from 18 million

in 1984 to approximately 4 million in 1992, services were targeted more directly at existing cable

markets. 61

High-power DBS satellites allow receiving dishes, seen here

on the corner of the garage roof, to be quite small.

The FCC authorized DBS service in 1982, and

established rules for the service that regulate it not

as a broadcasting or common carrier service, but

according to its own rules. Despite support from

some large companies, all early attempts to establish a successful DBS venture failed. The satellites for the new service were very expensive to

build and launch, premium programmi ng was difficult for some providers to obtain, and consumer

demand was low—the systems could only transmit a half dozen channels.

In the past four years, however, two new DBS

systems have begun offering packages of video

programming , as well as pay-per-view events, directly to consumers’ homes. These new systems

use high-power and digital technology to provide

a wide selection of programs and CD-quality

sound, using smaller dishes than traditional large59 Hary Thibedeau, Satellite Broadcasting and Communications Association, personal communication, Jan. 20, 1995.

6 0Direct Broadcast Satellite (DBS) technically refers to a specific type of high-powered satellite operating in the 12.2-12.7 GHz(Ku)band.

This was the way that most analysts and policymakers thought video pro grammming would be delivered directly to consumers when the service

was established in 198l, and the name has gained widespread acceptance.Primestar, discussed below, is not technically a DBS system, because

it uses a lower powered Ku-band satellite that operates according to the FCC’s Fixed Satellite Service rules. For purposes of clarity, Primestar

will be discussed in this section because it provides the same services historically ascribed to DBS. 61 Johnson, op. cit., footnote 3.
156 | Wireless Technologies and the National Information Infrastructure

dish satellite TV. Although the systems should appeal most to users who cannot receive cable

television or have chosen not to subscribe, early

indications are that the market for such services

may be much broader. Initial sales of DBS services have exceeded expectations, with nearly

750,000 subscribers signing up in the first year of

operation. Some DBS proponents have interpreted these figures to indicate consumer discontent with cable television providers. Various types

of direct-to-home satellite services are being developed around the world.62

Conceptually, DBS systems are quite simple

(figure 6-3). Programmers send their material to a

central facility similar to a cable system’s headend, where the programming is compressed and

sent up to orbiting geosynchronous satellite(s).

The signals are then broadcast over the United

States for reception by the user’s receiving dish.

From the dish, a cable feeds the programming to

the set-top receiver, which decodes the compressed programming and records billing information for pay-per-view (PPV) events. One

system remotely polls the subscriber units each

month (via phone-line connection) to collect the

billing information.

Despite the advantages offered by DBS—including national coverage, high-quality sound,

and wide selection—the systems suffer some

competitive disadvantages as well. Perhaps the

biggest is that the receiving dish must have a clear

line-of-sight to the satellite in the southern sky

with no obstructions such as tall trees, mountains,

or buildings. Analysts estimate that 50 percent of

all U.S. households, including apartment buildings, have this capability, meaning that the other

50 percent cannot receive DBS programming at

all.63 The other significant disadvantage, which

some consumers are apparently still unaware of, is

that the systems cannot carry local programs, and

most DBS customers cannot get network programming (ABC, CBS, NBC, FOX, and PBS) at

all. The Satellite Home Viewers Act of 1994 allows subscribers to receive network programming

only if the consumer cannot receive it off the air,

and if they have not subscribed to cable in the last

30 days.64 Finally, the systems are not expected to

be able to offer true video-on-demand services (in

which the user can control “Stop,” “Review,” and

“Search” functions) in the near future, although

they do offer near video-on-demand in which

movies begin every 15 minutes or so. The nature

of the broadcast satellite beam combined with the

large number of subscribers makes it currently infeasible to dedicate a single channel to an individual subscriber.65

Two systems offer direct-to-home services

today—Primestar, owned by a consortia of cable

companies and GE American Communications,

Inc.; and Hughes’ Communications Galaxy DirecTV/United States Satellite Broadcasting

62 For an overview of these activities, see Michael S. Alpert and Marcia L. De Sonne, DBS: The Time is Now, (Washington, DC: National

Association of Broadcasters, 1994).

63 Satellite Broadcasting and Communications Association, presentation to OTA staff, Apr. 7, 1994. The number of single-family homes

affected is likely to be significantly lower.

64 Satellite Home Viewer Act of 1994, Public Law 103-369, Oct. 18, 1994. Dawn Stover, “Little Dish TV,” Popular Science, January 1995.

One company, Local DBS, Inc., has proposed to use spot beams to relay local programming to viewers. See Alpert, op. cit., footnote 62.

65 Johnson, op. cit., footnote 3.
Chapter 5 Broadcast and High-Bandwidth Services 157

SOURCE: Office of Technology Assessment, 1995.
158 | Wireless Technologies and the National Information Infrastructure

(USSB), which uses RCA’s Digital Satellite System (DSS).66 Other companies have received licenses for DBS, but are not yet operating.67

Although the two services differ in many respects,

each is digital and uses significantly smaller sized

dishes than C-band systems.68

Primestar initiated service in 1991 as an analog

system, but in 1994 converted to digital to expand

its channel offering and improve quality. The Primestar system uses a commercial Ku-band satellite, and operates under the FCC’s Fixed Satellite

Service (FSS) rules. This classification restricts

the Primestar system to medium-power broadcast, which requires the use of a receiving dish of

either 36 or 40 inches. The dishes cost about $900,

but most Primestar subscribers lease the equipment for a small monthly fee. Depending on distributor, subscribers pay between $21 and $54 a

month for 77 channels, plus an installation fee of

about $200. Users receive a number of pay-perview (PPV) channels, which cost about $4 per

movie or event.69 The Primestar system currently

serves about 400,000 customers.

DirecTV/USSB began offering service in October 1994. By March 1995, it had signed up

500,000 customers, and expects 3 million by 1996

and 10 million by 2000.70 The system uses two

satellites in geosynchronous orbit, compared with

Primestar’s one,71 and broadcasts at higher power,

resulting in a smaller (18 inches) receiving dish.72

DirecTV controls the majority of the capacity on

the Hughes satellites (27 of 32 transponders), and

therefore offers more channels and more diversity

than USSB. The full DirecTV package includes

150 channels of traditional cable programming, as

well as sports packages, and many PPV options.

The RCA dish73 sells for $699 for the basic model

and $899 for the model that allows two TVs to be

hooked up. However, if consumers want the option of watching different channels on the two

TVs simultaneously, they need to pay an additional $649 for another receiver. Professional installation costs $150 to $200, while a do-it-yourself

installation kit is $70. Programming packages

range from $17.95 to $34.95, plus PPV charges

for USSB, and from $21.95 to $29.95 for DirecTV.74 PPV movies are $3. Users who subscribe

to both services can pay upwards of $65 per month

plus any pay-per-view charges.

66 DirecTV and USSB are actually two separate programming services, but use the same Hughes Communications satellite. The two companies offer services that complement, rather than compete with, each other (with some overlap). Users need only one set of equipment to receive both services, and many subscribe to both.

67 Other potential DBS providers include: Echostar, Direct Broadcast Satellite Corp. (25 percent owned by Echostar), Advanced Communications Corp. (Tempo holds their license), Continental Satellite Corp., Dominion Video Satellite, and Tempo. Echostar is the furthest along—

satellites are built and programming alliances are in place. Alphastar is planning to offer service by the end of 1995 using an AT&T fixed service

satellite. Primestar was planning to transition to true DBS through Tempo’s control of Advanced Communications licenses, but Advanced was

turned down by the FCC for a license extension, putting Primestar’s DBS plans in jeopardy.

68 Stover, op. cit., footnote 64.

69 Ibid.

70 Eric Schine, “Digital TV: Advantage, Hughes,” Business Week, Mar. 13, 1995.

71 Due to differences in orbital spacing between these two classifications of satellites, BSS satellites are less susceptible to interference from

adjacent satellites. This difference, along with their higher power, allows DSS systems to use smaller dishes.

72 The Primestar system broadcasts at 45 watts, whereas the two DSS satellites broadcast at 120 watts.

73 RCA has an exclusive license to manufacture the equipment for 18 months after the launch date or until one million units are sold, whichever comes first. After this point, Sony will enter the market with its dishes.

74 In addition to the standard packages, DirecTV offers a $5.95-per-month package consisting of only one channel, but it allows subscribers

to select the full complement of specialty sports packages and pay-per-view options. Some of the specialty sports packages offered by DirecTV

are the Golf package, for $6.95 a month, the NFL season package for $119.95, and the NHL season package for $69.95.
Chapter 5 Broadcast and High-Bandwidth Services | 159

Issues and Implications

Competition

The historic context for video programming services, and for the emerging NII specifically, is

clearly based on competition. The video programming market is in its infancy, but already shows

signs of becoming quite competitive.

Any investigation of competition and public

policy in such a dynamic arena [video programming] is handicapped by uncertainties about future technological advances and social needs.

The only certainty is that surprises are in store.

Before the end of the decade, we must anticipate

achievements and disappointments going far beyond anything foreseeable in this monograph...

Fortunately, these developments do not critically depend on the widespread deployment of any

one technology or on the success of particular

firms. The possibilities are so numerous, in

terms of alternative technologies and the roles of

diverse firms, that the public will benefit almost

regardless of which path is taken through the

maze. The challenge for public policy is to facilitate and to guide this dynamic process in ways

that maximize these benefits.75

Congress demonstrated its commitment to

competition in the 1992 Cable Act, where it expressed its preference for competition over rate

regulation and its belief that the promotion of

competition through new distribution technologies was critical.76 The FCC has now taken over

the congressional mandate to encourage competition in video services.77 In September 1994, the

FCC concluded that, despite substantial growth in

alternative delivery systems, competition in multichannel video programming still did not exist for

most Americans. Competing cable systems are

still few in number, local telephone companies are

only operating experimental video-delivery systems, and wireless competitors still do not have

enough subscribers to make the market truly competitive.78 The FCC further concluded that lowered entry barriers—to let more competitors enter

the market—were likely to lead to significant

benefits for consumers. Even if competitors do

not actually enter the market, the threat of competition may provoke incumbents to improve services and cut costs.79

It now seems likely that, as the video programming market matures and technology continues to

advance, services and providers will become increasingly differentiated. In part, this will be due

to the different capacities and characteristics of the

systems noted above. Provision of video programming packages may continue as the “core” market, but ancillary markets will form as well.

Because the technology systems discussed above

are not perfect substitutes for each other—some

national, some local; some more interactive than

others—they are likely to compete in the core

market, but not necessarily in the splinter markets.

The result will be that consumers will have a wider

array of choices—that are more likely to match

their needs more closely—than in the previous era

of broadcast television’s “one size fits all.” It will

be difficult to generalize policy nationally when

competition will vary from location to location.

Much more research will be needed to determine

the nature and effectiveness of competition in

these highly diversified markets.

The transition to future services, such as HDTV

and interactive applications, will be a substantial

75 Johnson, op. cit., footnote 3, pp. 187, 179.

76 The Cable Television Consumer Protection and Competition Act of 1992, Public Law No. 102-385.

77 The Federal Communications Commission undertook several actions in response to congressional mandate in the act. See Federal Communications Commission, Implementation of Sections 12 & 19 of the 1992 Cable Act—Development of Competition and Diversity in Video

Programming Distribution and Carriage, First Report and Order, MM Docket 92-265, adopted Apr. 1, 1993; FCC, Annual Assessment, op. cit.,

footnote 1.

78 FCC, Annual Assessment, op. cit., footnote 1, at para 15.

79 Glenn A. Woroch, “The Evolving Structure of the U.S. Wireless Communications Industry,” contractor report prepared for the Office of

Technology Assessment, U.S. Congress, Washington, DC, December 1994. Johnson, op. cit., footnote 3.
160 | Wireless Technologies and the National Information Infrastructure

issue for alternative video providers. Satellite service providers have said they are capable of and

will provide HDTV if demand warrants it. Like

other video providers, however, they are not rushing to HDTV. From a consumer’s standpoint,

HDTV may be viewed not as revolutionary, but as

an upgrade—like color television. Because demand for HDTV is so uncertain, some analysts

have called on the FCC to rethink its policies toward it.80

Interactive services are also likely to pose a

competitive challenge for the video providers discussed in this section. Today’s companies are primarily one-way providers of entertainment

programming. Cable companies, however, are

rapidly positioning themselves as information

service providers as well. For example, several offer Internet access—something one-way services

cannot do. It seems likely that the market for

multichannel video programming will splinter as

different technology systems exploit their

technology and regulatory status, but it is still unclear which of these providers might begin to offer

interactive services and when.

Technical constraints

Today, the primary technical challenge facing video service providers is the conversion to digital

technology or the upgrading of digital capabilities

to improve capacity and service. Because most

systems are up and running (or are expected to be

soon), technical concerns are not expected to substantially slow or stop the development of new

services. Providers’ use of different technologies,

however, entail limitations or restrictions on what

the systems can do and the services they can offer.

Such differences are the basis of the competitive

diversity of the industry.

As the industry matures, technical and regulatory differences will become more important. Programming limitations—due to lack of capacity or

regulation—may hamper some providers’ competitive positions. Satellite TV providers, for example, cannot deliver local programming because

of technical limitations, are severely limited by

regulations in the number of customers they can

deliver network programming to, and will not

likely be able to offer true video-on-demand due

to capacity constraints. MMDS providers will

likely continue to have fewer channels compared

with their cable and satellite rivals. Individual

broadcasters, too, will only be able to offer a limited number of video channels—even the aggregate of all local television stations’ digital

channels will be unable to match the hundreds of

channels offered by cable and DBS.

Another technical constraint for MMDS,

LMDS, and most satellite providers is the limitations of line-of-sight transmission. The number of

people that can actually be served by wireless systems may be considerably less than first thought

due to these physical constraints. Technology advances and better engineering are expected to alleviate some, but not all, of the limitations of

line-of-sight systems.

Many alternative video programming providers are also affected by restrictions that have

been placed on receiving antennas and dishes. Despite FCC regulations preempting local zoning ordinances and rules, many localities and homeowners associations continue to enact local regulations in violation of FCC rules.81 Chapter 8 discusses these issues in more detail.

Integration and concentration issues

The economics of the wireless video programming industry will not be fully discussed here.

Rather, this section will identify some of the issues that may affect the industry as it matures. Policymakers are concerned about the extent to

which the competition and the diversity it implies

can be sustained over the long term. Because it is

still a young industry—many services are not operating yet—it is difficult to determine what it will

80 Johnson, op. cit., footnote 3.

81 FCC, Annual Assessment, op. cit., footnote 1, para. 76.
Chapter 5 Broadcast and High-Bandwidth Services | 161

look like in five or 10 years. Costs, revenues, and

future plans generally are closely guarded secrets.

As a result, even getting a baseline of data to work

from is difficult.

During the next five to 10 years, it is likely that

the industry will continue to grow, adding new entrants as new companies emerge. Beyond about

five years, it also seems likely that consolidations

and mergers among some industry players will increase. Consolidations already have been seen in

the MMDS market, and analysts expect other industries to follow suit as they mature.82 Mergers

also are likely between various wireline and wireless carriers, if regulations permit, and wireline

carriers are investing in MMDS providers.

Such combinations, however, may have both

short- and long-term negative effects. In the short

term, horizontal integration between directly

competing firms, such as in the DBS industry,

could reduce the level of competition in individual

markets—whether or not this is harmful would be

determined case-by-case. Because most markets

do not have multiple providers of the same service—currently each area tends to have one cable

service, one MMDS (if that), and several local

broadcasters—the more important potential problem is mergers between indirectly competing

firms, or firms that provide not the same service,

but a close substitute. For example, cable and

DBS, DBS and MMDS or LMDS, and telephone

companies with any of these. Because of these

concerns, cross-ownership restrictions currently

exist between cable and MMDS (and SMATV)

providers. However, no such restriction exists between cable and DBS, and the local telephone

companies are reportedly interested in LMDS

technology.

In the long term, the ultimate outcome and extent of this trend are unclear, as are the final impacts. It is conceivable that, if cross-ownership

became widespread across the various segments

of the video programming industry, both the diversity and quality of services could decline, and

overall prices could rise. Policies that are procompetitive now—to allow wide latitude in mergers

and acquisitions—could turn out to be anticompetitive in the long run. Again, the immature state of

the industry makes analysis highly speculative.

Firms will merge or not based on the economics of

individual situations that have not yet developed.

Interconnection issues

The extent to which the wireless video service

providers discussed in this section will interconnect or interoperate with other parts of the NII will

only be determined over time—absent government intervention to require specific levels and

kinds of interoperability. The systems now function primarily as the final delivery (one-way) link

to consumers and businesses. In this regard, their

connections to the NII may be quite limited. The

NII would serve as a resource base—or a backbone—for supplying the information or entertainment that is then sent on to customers. It seems

likely that the cable/telephone networks will serve

as an important way for video service providers to

get programming in addition to the satellite delivery systems that already exist. Very little information if any is likely to travel back through the NII

core from the users of these systems.

If these services become two-way or interactive, however, their integration with other networks is likely to be greater. One-way

broadcasting systems, for example, may be relatively isolated from other communications systems now, but may link up with interactive

programming provided by the Interactive Video

Data Service (IVDS). DirecTV/USSB is also primarily one-way, but gathers billing data over

phone lines. In the future, real-time interactive

services may also be provided through such combinations. The next generation of DBS could add

an element of interactivity by allowing users to

download large amounts of information—mov82 In the DBS industry, for example, one analyst believes that after four to five companies enter the market over the next three to five years,

they will begin to consolidate. Michael Alpert, Alpert and Associates, personal communication, Mar. 23, 1995.
162 | Wireless Technologies and the National Information Infrastructure

ies, for example—that they could then use as they

wish. Such developments depend on continuing

advances in memory technology (movies require

large amounts of storage) and declining costs.

It is also conceivable that wireless programmers could eventually concentrate more on programming, and become less involved in the

distribution side of the business. In the future,

what are now wireless companies ironically may

come to depend on the wire-based NII backbone

to deliver some or all of their programming. In addition to their broadcast operations, for example,

broadcasters could move their products over

many competing delivery systems including

cable, MMDS, and the public switched telephone

network (PSTN).

EMERGING HIGH-BANDWIDTH SERVICES

In addition to the services described above, a new

class of entertainment/information service provider is emerging—one that is capable of delivering a wider range of high-bandwidth, even

interactive, services. Only one of these services is

operational, and all, in fact, are still vying for

spectrum before the FCC. They represent a mix of

local and national services targeted at both businesses and individuals.

❚ Local Multipoint Distribution Service

(LMDS)

LMDS, also known as cellular television, is being

developed primarily as another alternative to

cable television, MMDS, and DBS services. In the

future, LMDS technology may be able to deliver

telephony and interactive data services as well.

Proponents believe that the high-bandwidth capabilities of the system, combined with its interactive potential, make it a natural extension of the

NII. Currently, only one provider, CellularVision

of New York, is offering commercial video programming service, serving about 200 customers,

but 12 other companies have received experimental licenses.83

LMDS proponents plan to use frequencies in

the 27.5-29.5 GHz band (line-of-sight is required)

and low-power transmitters in a cellular-like arrangement to deliver up to 50 channels of analog

one-way video programming (figure 6-4).84 For

about $30 a month, customers can receive local

broadcast stations, as well as popular enhanced

programming, such as ESPN, movie channels,

and pay-per-view channels.85A central tower uses

an omnidirectional antenna to transmit programming to each individual cell site—between three

and 12 miles in diameter—which then retransmits

it to subscribers’ homes. Thus, to cover a major

metropolitan area of 1,000 to 2,000 square miles

would take between 20 and 40 transmitter sites.86

This configuration allows the provider to tailor the

coverage areas of each transmitter to provide the

best possible service. At the subscriber’s home, a

small antenna (there are several designs, including

small dish antennas and 6.5-inch-square flat panels) on a windowsill or roof connects to the user’s

television.

83 In January 1991, the FCC granted Suite 12 Group (now CellularVision of New York) a license to provide LMDS service in the New York

City metropolitan area. Service began in June 1992. Since that time, the FCC has received over 971 applications to build similar systems across

the country.

84 Each channel is very wide—20 MHz. Using a special transmission technique (opposite polarization of signals), proponents and the FCC

believe that the number of channels can be doubled—each original channel matched by a new one. These new channels could be used to carry

more video programming or interactive services.

85 B.J. Catlin, ed., “Wireless Cable TV FAQ,” unpublished paper, Colorado State University, Department of Computer Science, May 3, 1994

(rev.).

86 Egan, op. cit. footnote 25, p. 37.
Chapter 5 Broadcast and High-Bandwidth Services 163

School

LMDS customers Head end/

video consolidation

Hospital

SOURCE: Office of Technology Assessment, 1995.

In the future, proponents plan an even wider

range of services, including more video channels,

telephone services, and various interactive services. 87 System capacity could be at least doubled

by using digital compression technology and different transmission schemes. This extra capacity

would then be used for new channels or services.

By combining the wide (20 MHz) LMDS

channels with interactive capabilities (LMDS systems can offer interactivity by inserting returnpath communication channels between the video

channels), 88 LMDS proponents envision delivering applications such as video-on-demand, videoconferencing, telephone service, and various data

services, including computer networking to

homes and businesses.89 These applications are

87 Except where noted, the services and applications discussed in this paragraph are from the Federal Communications Commission, op.

cit., footnote 2.

88 Return channels will use opposite polarity signals to avoid interfering with the video programming.

89 Texas Instruments presentation to OTA staff, Nov. 9, 1994.
164 | Wireless Technologies and the National Information Infrastructure

expected to serve distance education, telemedicine, and a number of business communication

needs. Providers of rural telephone and broadcasting services have also expressed an interest in

LMDS as a way of serving remote customers. Proponents claim that the systems will be able to accommodate future digital communications

advancements, including HDTV.

LMDS offers a number of potential advantages

over competing video delivery systems, primarily

stemming from its point-to-multipoint cellular architecture. First, construction costs are lower

compared with satellite systems, and savings can

be passed on to consumers in the form of lower

monthly bills.90 Costs can also be spread out over

time as the system increases its service area (this is

different from the PCS/cellular model where mobility requirements mean that broad coverage

areas are much more important at system startup).

Second, the cellular-like architecture allows the

system to be built quickly and implemented in

areas with the highest potential demand—sites

can be added as needed. Finally, the cellular design makes the system very spectrum efficient because frequencies are reused in each cell. This

reuse also increases the capacity of the systems,

which is greater than MMDS but less than DBS.

DBS, however, cannot match the interactive services provided by LMDS.

The rules and regulations that will govern

LMDS are currently being determined at the FCC.

The 28 GHz band being used by LMDS is currently allocated to FSS, and the satellite community

would like to use the spectrum for a number of applications. To resolve the conflict, the FCC began

a proceeding to consider redesignating the band

for shared use by LMDS and satellite providers.

As part of that process, the FCC convened a Negotiated Rulemaking Committee (NRMC), consisting of representatives from all interested parties,

to develop consensus on the technical rules for

sharing the 28 GHz band. The NRMC, after weeks

of difficult debate, was unable to agree on a sharing plan, and some participants believe that sharing is impossible. The FCC will now make its own

decision based on the information provided

through the NRMC and the normal rulemaking

process. A decision is expected sometime in late

1995.

❚ New Satellite Systems91

Spaceway

Hughes’ Spaceway system plans to offer highspeed, high-quality data, video-telephony, and

voice services to fixed sites, including homes with

personal computers, telecommuters, and businesses. Hughes predicts applications—including

medical image transfer; connecting to online services, such as America On-Line and Prodigy; as

well as personal video-telephony—will drive demand for their service. Spaceway will also be capable of providing basic voice service to remote

regions on a global basis.

The Spaceway system ultimately will employ

constellations of satellites in each of six orbital

locations.92 Its design will utilize intersatellite

links to provide global communications, much as

Iridium plans. Spaceway will use Ka-band frequencies to deliver these services, and Hughes

90 Alpert and De Sonne, op. cit., footnote 65. This is true, of course, only on a local basis; to achieve comparable national coverage to a

satellite system, costs would be substantially higher.

91 Loral Corp. announced in May 1995 that it would be providing services similar to the systems described. The CyberStar system would use

a single satellite to provide high-speed data communications to support video conferencing, computer networking, distance learning, and other

applications. The system is estimated to cost $500 million, and company officials plan to begin service to all 50 states in 1998. Jeff Cole, “Loral

Plans a Data Service Using Satellites,” The Wall Street Journal, May 3, 1995, p. B5.

92 Hughes plans to launch its Spaceway system in two phases. The initial phase will consist of nine satellites, two in each of the four orbital

planes and one interconnection satellite between North America and Asia-Pacific. Hughes anticipates operation of the first phase by the year

2000. The second phase will introduce two additional satellites in the four orbital planes and keep just one interconnectional satellite between

Asia-Pacific and North America.
Chapter 5 Broadcast and High-Bandwidth Services | 165

will offer interconnection to the PSTN through

terrestrial operations control centers. Users will

have to purchase their own sending and receiving

equipment.

Teledesic

Teledesic’s proposed system of low-Earth-orbit

(LEO) satellites is singled out because it differs

from the other “big” and “little” LEO systems in

both scale and the services it hopes to deliver. In

its original FCC application of March 21, 1994,

Teledesic applied to provide fixed satellite services in the United States and abroad; in late 1994

the company amended the application to include

mobile services provided outside the United

States.93 According to FCC regulations, Teledesic cannot provide mobile services in the United

States in the bands it is currently seeking.

Teledesic plans to offer telephone, high-speed

data, and video services in the United States to

fixed users, and these same services to both fixed

and mobile users outside of the United States. The

company also expects to offer full interconnection

to the PSTN with access to the various online services, such as Compuserve. Teledesic plans to

market its network to other service providers in

the United States, acting as a wholesaler of services rather than selling directly to the end-users.

The Teledesic system design calls for a constellation of 840 satellites in low earth orbit, roughly

621 miles above the earth. Satellites will use the

internationally allocated Ka FSS band. The network will feature intersatellite links using fast

packet switching technology, a ground component composed of end-user terminals, and gateway terminals serving groups of users. Teledesic

plans to offer a variety of end-user terminals to accommodate various user needs, with the upper end

allowing bit rates of 1.2 Gbps.94

Issues and Implications

The primary issue facing the industry is the allocation of spectrum for the various service providers.

Rules regarding what frequency bands the systems will use and how much bandwidth they will

get are yet to be determined, and the FCC has

delayed any decisions on operating rules until the

spectrum issues are resolved.95 LMDS proponents are fighting to gain full access to spectrum

in the 28 GHz band, while various U.S. satellite

service providers also want to use the band.96 The

National Aeronautics and Space Administration

(NASA), for example, is currently using this band

for its Advanced Communications Technology

Satellite (ACTS) experiments, which it launched

in 1993 at a reported cost of $1 billion. Other satellite providers, including Hughes and Teledesic,

are developing satellite systems that would also

use the band. Finally, several of the LEO satellite

systems are supposed to use this band to provide

mobile satellite services (see chapter 3). The technical, service, and other regulatory uncertainties

that flow from this unknown outcome have seriously slowed LMDS development.

The FCC has indicated that it intends to allocate spectrum to all these potential services as part

of its overall mission to encourage the development of competitive systems that will bring new

services to the public as quickly as possible. It

now appears, based on the conclusions of the

93 Teledesic Corp., Amendment of Application of Teledesic Corporation for Authority to Construct, Launch, and Operate a Low Earth Orbit

Satellite System in the Domestic and International Fixed Satellite Service, before the Federal Communications Commission, File No. 22-DSSP/LA-94, Dec. 30, 1994.

94 Teledesic Corp., Application of Teledesic Corporation for a Low Earth Orbit Satellite System in the Domestic and International Fixed

Satellite Service, before the Federal Communications Commission, Washington, DC, Mar. 21, 1994.

95 All other issues pertaining to establishment of LMDS will await development of frequency coordination and sharing criteria for space and

terrestrial services and technical parameters for the service. Federal Communications Commission, op. cit., footnote 2.

96 The band is currently allocated only to point-to-point services, but LMDS services have been operating in the band on a waiver of existing

rules. For a summary discussion of the various satellite proposals, see Federal Communications Commission, op. cit., footnote 2.
166 | Wireless Technologies and the National Information Infrastructure

NRMC, that sharing is not a viable option, given

today’s technology. LMDS systems would interfere with satellite systems and vice versa. Given

these factors, the FCC has essentially three options: 1) divide the spectrum between the various

systems; 2) move LMDS operators to another

band; or 3) move satellite operations to another

band. Existing use of the band by NASA’s ACTS,

and the varied uses of the band already proposed

by satellite interests, appears to make the third option the least likely. Dividing the spectrum between the proponents probably could be done

technically, but all future services likely would

suffer from spectrum shortages and capacity

constraints.97 Systems may have to be reengineered. In addition, since the LMDS spectrum is to

be auctioned, and the value of the licenses is closely tied to the amount to be offered, companies cannot plan auction strategies until such concerns are

worked out.

Because only one operator is currently using

the band—although there is more extensive experimental use—moving LMDS operations to

another band also seems to be a viable option, and

the 40 GHz band, which is now part of a reallocation proceeding at the FCC, is one possibility.98

Other countries are developing systems similar to

LMDS in these bands, although Latin American

countries reportedly are experimenting in the 28

GHz band. If either group of users is forced to relocate to other frequencies, systems will have to be

reengineered, increasing costs and time to market.99

Although these new systems have some way to

go before they begin full-scale operation, they

represent the best efforts to date to replicate the

full range of services proposed for the NII. If such

services eventually begin operation, they have the

potential to meet the bandwidth requirements of

many, if not most, users, and to extend the reach of

high-bandwidth services to all areas of the country, regardless of location. The technical and regulatory hurdles that must be overcome, however,

are substantial.

97 This conclusion is premised on today’s technology. Future developments in compression technology and spectrum-sharing methods

could make band segmentation and spectrum-sharing possible.

98 Federal Communications Commission, Amendment of Parts 2 and 15 of the Commission’s Rules To Permit Use of Radio Frequencies

Above 40 GHz for New Radio Applications, ET Docket 94-124, released Nov. 8, 1994.

99 Although the band is currently lightly used for satellite services, the time and costs of relocating satellite operators is unknown, because

many of the systems involved are still under development and costs are closely guarded. The record on whether such a move is feasible or

practical for LMDS is similarly unclear, but generally seems to indicate that such a move is possible, if potentially costly. “Commenters Like

FCC Proposals To Open Above-40 GHz Bands...” Telecommunications Reports, vol. 61, No. 5. pp.19-21, Feb. 6, 1995.
As wireless technologies and systems are

deployed, a host of technical, legal, and social issues will need to be addressed. Some will be amenable to marketplace solutions; others will not and

will require a policy response. The policymakers

task is complicated because the implications of

ubiquitous wireless information services are

poorly understood due to uncertainties in technology, user demand, and regulation. The greatest unknown in the rollout of the National Information

Infrastructure (NH) and wireless services is what

type of implications the NII generally, and wireless technologies specifically, will have for people

and businesses. In addition to the technical problems associated with the wide–scale use of radioPart C:

Issues

and

Implications

based communications, there are also likely to be

a host of administrative and social problems

associated with wireless that must be addressed.

Chapters 6 through 12 survey the various issues

and implications associated with the widespread

use of wireless technologies.

■ Standards and Interoperability

■ Regulation of Interconnection

■ Zoning Regulations and Antenna Siting

■ Wireless Technologies and Universal Service

■ Privacy, Security, and Fraud

■ Health Issues

● Electromagnetic Interference and Wireless

Devices
Standards

and

Interoperability

oday’s telecommunications and information infrastructure consists of many independently operated networks

and systems, including the telephone network, cellular

systems, cable television systems, broadcast radio and

television networks, and various satellite and data communications systems. Some of these can connect and exchange

information, while others cannot. The National Information Infrastructure (NII) initiative was designed to bring together these

various networks—and a variety of new services—into a seamless network of networks that would allow users to send information across systems easily and efficiently.1 In order for this to

happen, different networks must be interconnected and interoperable. Standardized interfaces and connections will be critical in

bringing this about and allowing the NII to develop. This chapter

describes the technological requirements for building a seamless

and integrated infrastructure that includes both wireless and wireline networks.

FINDINGS

 A proliferation of wireless voice technologies and standards is leading to a patchwork of potentially incompatible

systems that may make it more difficult for some mobile

telephone users to “roam” outside their home system, or to

easily switch service providers. Until the early 1980s, the

Federal Communications Commission (FCC) played an active

1 U.S. Department of Commerce, Information Infrastructure Task Force, “The National Information Infrastructure: Agenda for Action,” Sept. 15, 1993, p. 7.

| 169
170 | Wireless Technologies and the National Information Infrastructure

role in standards-setting, specifying the technologies that licensees were required to use.

For example, all cellular licensees were required to use a technology called Advanced

Mobile Phone Service (AMPS). During the

past decade, however, the FCC has largely

withdrawn from standards-setting for wireless

communications. Today, the FCC usually

leaves it to industry to decide whether there will

be a standard and which technology will be

chosen as the standard. The FCC is following

this approach for Personal Communications

Services (PCS) and digital cellular air interface

standards. 

Various industry groups tried to settle on a

single standard for PCS and digital cellular services, but were unable to reach agreement. Individual carriers are now choosing the

technology standard/system they will deploy

from among several contenders. Many cellular

carriers have announced their technology

choice, but most PCS carriers have not. Among

the carriers that have announced which

technology they will use, there is no consensus;

two different cellular technologies will be

deployed, and it appears that at least three different PCS technologies will be used. As a result, there is a danger that incompatible

systems will make it more difficult or impossible for some users to make and receive calls as

they travel from city to city.

The final impact on customers of the deployment of multiple standards is not yet

clear. To some extent, carriers are coordinating

their technology choices with carriers in other

regions. Carriers are also acquiring additional

licenses to enlarge their service areas, allowing

them to provide expanded roaming without the

need to coordinate technology choices with

other carriers. At least three carriers plan to provide near-nationwide service to their customers. Consumers and businesses will have to

shop carefully for the next generation of mobile

services.

 Technical challenges and incompatibilities

may slow the integration of wireless systems

into the NII, but pose no insurmountable obstacles. Wireless carriers have a clear incentive

to ensure that their networks are interoperable

with wireline networks because their customers want to be able to call users of the landline

network, access the Internet, and download information from online services. If wireless users were unable to communicate with the much

larger number of wireline users, wireless networks would not survive in the marketplace.

However, there are technical challenges that

must be overcome. Most of today’s networking

protocols were developed for wireline networks and do not work well in the more challenging radio environment. Because it is often

necessary to use specialized protocols in wireless networks, interoperability cannot be

achieved unless the wireless carrier makes provision for a translation between wireless and

wireline protocols to occur at the interface.

❚ Options

In order to encourage the more orderly integration

of wireless technologies into the NII, Congress

has several broad options. One is for Congress to

encourage the FCC to play a more active role in

ensuring that cellular and PCS carriers do not

deploy multiple technologies. However, the

FCC’s current approach allows considerable flexibility in the service offerings of carriers and spurs

a continuing competition among technologies. It

is consistent with the trend toward deregulation

and competition that individual carriers be allowed to choose the technology that they believe

will give them a competitive edge. Moreover, it

would be difficult for the FCC to reverse course at

this time. Manufacturers have invested in developing their systems and service providers have begun making their technology choices. 

Congress may still wish to hold hearings and

monitor the process closely. The technology

selection process for digital cellular and PCS can

be viewed as an experiment that will show whether interoperability can be achieved in the decentralized and competitive telecommunications

industry of the future. Moreover, the federal gov-
Chapter 6 Standards and Interoperability | 171

ernment, as a user, may want to ensure that seamless nationwide services are available to support

its activities. Through their procurement decisions, federal agencies may be able to encourage

carriers to coordinate their technology choices and

create a seamless network.

THE WIRELESS STANDARDS-SETTING

PROCESS

In wireless networks, as in all networks, there are

many pieces that must work together to ensure

seamless communications. From the user’s perspective, the most important connection is the radio link between the service provider’s transmitter

and the user. The user’s equipment must be able to

understand the radio signals transmitted by the

service provider’s network, and vice versa. For

example, televisions must be able to decode the

signals broadcast from television stations and cellular phones must be able to send signals through

the air in a format that the cellular network understands.

It is sometimes sufficient that user equipment

work with only one service provider’s network.

For example, wireless data users can obtain nationwide coverage from a single carrier—they

may have no need for a modem that works with

several carriers’ networks. For other services,

however, users may want to be able to access different networks with the same device. For example, cellular users can use cellular systems all over

the country because their phone is interoperable

with the visited carrier’s network. Television sets

can receive signals from different stations as well

as from cable and satellite services.

One way to guarantee that user equipment will

operate with several service providers’ systems is

to develop an industry standard—a common

technology that all service providers agree to

deploy. In the past, because of the value to consumers of interoperability, the FCC played a major role in ensuring that wireless network

operators deployed a standard technology for the

radio link between the network and the user.2

However, a new model has emerged in which government leaves it to “the market” to decide whether a standard technology is required and what it

will be.

❚ The FCC Standards Process

Until the early 1980s, it was generally accepted

that FCC involvement in wireless standards-setting was in the interest of the public and the industry.3 The alternative—the deployment of different

technologies by different service providers—was

considered too chaotic, and there was a fear that

technology development would be slowed if consumers were uncertain about which of many competing technologies to buy. Setting a standard was

also thought to create the certainty that the industry needed before it would make the potentially

large investment in manufacturing and deploying

a new technology.4 FCC-selected standard technologies are still used in many segments of the

wireless communications industry, including radio, broadcast television, and cellular telephony.

In setting a standard, manufacturers would propose different technologies for adoption, and the

FCC would compare them—often by means of a

competition. The FCC would then select the

“best” technology and designate it as the standard

that had to be used by all service providers. Much

of the actual work involved in testing and comparing the candidate systems was done by committees established by the FCC, but the ultimate

decision was made by the FCC itself.

2 U.S. Congress, Office of Technology Assessment, Global Standards: Building Blocks for the Future, OTA-TCT-512 (Washington, DC:

U.S. Government Printing Office, March 1992).

3 Mark J. Braun, AM Stereo and the FCC (Norwood, NJ: Ablex, 1994), p. 10.

4 In its proceeding on high definition television (HDTV), the FCC observed that “establishing a standard may overcome audiences’ and

broadcasters’ reluctance to invest in ATV technology by increasing the amount of programming available to audiences and ensuring that receivers will be compatible with broadcast signals.” Federal Communications Commission, Tentative Decision and Further Notice of Inquiry, Advanced Television Systems and Their Impact on the Existing Television Broadcast Service, 3 FCC Rcd 6535 (1988).
172 | Wireless Technologies and the National Information Infrastructure

An important benefit of FCC standards-setting

was that the chosen technology had to be licensed

on equitable terms to other manufacturers, allowing competition in the manufacture of equipment

to develop. Furthermore, the standard created a

large national market, attracted competitors, and

created manufacturing economies of scale. This

competition also led to significant innovations in

equipment and services. For example, competition among the many manufacturers building to

today’s AMPS standard has led to cellular phones

that are dramatically smaller and less expensive

than those available when cellular service began.

Beginning in the early 1980s, however, the

FCC has withdrawn from most standards-setting

activities. The Commission will not, for example,

select a standard for the next generation of cellular

telephones or for PCS. This change in direction is

part of the trend towards deregulation in the

1980s. One component of telecommunications

deregulation is giving service providers the freedom to select the technology that they believe will

attract the most customers. According to proponents of this approach, consumers benefit from

having a range of technology choices and also

benefit from service providers’ flexibility to

introduce new technologies as they become available.

But the FCC withdrawal from standards-setting is also the result of practical considerations.

In many cases, it was difficult for the Commission

to determine which of the contenders had developed the “best” technology. The process was often

long and contentious because the contending technologies were often quite similar in their performance, making it difficult to assemble a rationale

for the choice that was sufficiently solid to preempt lengthy litigation by the losing proponents.

With AM stereo, the first technology for which the

FCC left standards-setting to the market, the

Commission had first tried unsuccessfully to set

the standard itself.5

The notable exception to the FCC’s new policy

of leaving technology choices to the market is

High Definition Television (HDTV), for which

the FCC followed the old model of establishing an

advisory committee and organizing a competition

between proponent technologies. There are several reasons why the FCC may have decided to play

a more active role with HDTV. First, there was

great political pressure to develop a national

champion technology that could compete with

systems developed in Japan and Europe.6 Second,

there was no interest on the part of broadcasters in

deploying anything other than a standard technology. Third, there were severe constraints on the

freedom that designers could be allowed, given

the need to squeeze the HDTV signal into unused

channels. Fourth, pressure from Congress to

avoid multiple standards may have played a role

in preventing the FCC from leaving the choice to

the market.7 The HDTV standards process is described in more detail in chapter 5 and in box 6-1.

❚ The Marketplace Approach

If the government does not set a standard, then the

private sector decides whether there will be a standard and which technology will be chosen. The

telecommunications industry often uses standards

committees to determine a common technology.

Committee-developed standards have many of

the same advantages as a government-selected

standard. For example, network operators all

deploy the same technology, reducing confusion

for consumers. In addition, as with governmentselected standards, a committee-developed standard is not proprietary. All manufacturers are free

to build to the specification contained in publicly

available standards documents. Companies par5 Braun, op. cit., footnote 3.

6 See, for example, William D. Marbach et al., “Super Television,” BusinessWeek, No. 3089, Jan. 30, 1989, pp. 56- 63.

7 Braun, op. cit., footnote 3.
Chapter 6 Standards and Interoperability 173

One issue that has attracted considerable attention is the interoperability of video services. There is

growing recognition that video is no longer synonymous with broadcast television, but is an important component of many industries and can be delivered by a variety of media, both wired and wireless. lnteroperability, in this context, means the ability to use the same video equipment and standards for as many of

these applications and media as possible.1 This lowers the cost of equipment and makes it possible for

users to receive information from a variety of sources.

Government plays a special role in ensuring video interoperability because the FCC is leading the

selection of a High Definition Television (HDTV) standard. While the FCC will only mandate a standard for

broadcasters, the Commission has recognized that the selection of an HDTV standard will have significant

implications for other industries. Through the committee structure that was established by the FCC, computer, cable, and other industries have attempted to push the broadcasters toward a technology that takes

their needs into account. In fact, the HDTV system under development is compatible with the international

MPEG-2 framework,2 which has been adopted by the new DBS services, the LECs for their new video

dial-tone networks, and many players in the cable industry.

A remaining issue is whether the broadcast industry should be required to broadcast programming in

interlace mode or progressive mode. Current televisions display in interlace mode, in which alternate lines

of the screen are scanned in each frame. Progressive mode, in which each line is scanned every frame, is

considered by many to be more suitable for display on computer monitors. The computer industry has

campaigned for the inclusion of this capability in the terrestrial broadcast system for HDTV While it now

appears that the standard will permit progressive-scan broadcasts, the FCC still has to determine whether

broadcasters will be required to use this capability (see chapter 5).

1 For a discussion of video and the Nil, see Technology Policy Working Group, Committee on Applications and Technology, Information Infrastructure Task Force, “Advanced Digital Video and the National Information Infrastructure,” Feb. 15, 1995

2 MPEG is the Motion Picture Experts Group, an international standards committee that is developing standards for video compression,

SOURCE: Office of Technology Assessment, 1995.

ticipating in the activities of a standards commit- only technology that is deployed. In contrast to an

tee usually have to agree to license, on reasonable

and nondiscriminatory terms, any of their technology that is included in the standard.

However, the participants in industry standards

committees do not always agree on which

technology should be the standard. Manufacturers

work to promote the technologies that they have

developed, and campaign against those that other

companies have developed. There is no mechanism for ensuring that agreement will be reached

quickly or at all, and the process of developing and

agreeing to a standard can often take many years.

Moreover, the existence of a committee-developed standard does not guarantee that it will be the

FCC-selected standard, a committee-developed

standard is voluntary. Manufacturers may choose

to sell, and service providers may choose to

deploy, a different, proprietary technology. Finally, it is possible that different standards committees will produce contending standards.

If standards committees fail and multiple

technologies are manufactured, the market still

has an opportunity to create a de facto standard.

Service providers and others who are responsible

for choosing from among the contending technologies may eventually converge on a single

technology. This is what happened with videocassette recorders, as the VHS technology gradually
174 I Wireless Technologies and the National Information Infrastructure

In the cellular systems deployed in the United States, the interface between cellular switches and base

stations is proprietary. Switches only work with base stations built by the same manufacturer. If network

operators choose to change suppliers for one component of their network, either the switch or base stations, they have to rebuild the whole system. This tying was of concern to the Department of Justice (DOJ)

when it evaluated AT&T’s acquisition of McCaw. Because cellular companies that used AT&T equipment

were to a certain extent locked in, the DOJ felt there was a risk that AT&T could hurt a competing carrier by

delaying development or delivery of equipment or software, and imposed several safeguards. 1

By contrast, in the European cellular standard, GSM, the switch to base station interface is not proprietary-base stations and switches from different manufacturers can work together. In fact, the use of open

interfaces is a basic principle of GSM. The GSM standards committee unbundled all important network

functions and defined open interfaces between them. Because of the number of interfaces involved, the

GSM specification is over 5,000 pages long.

1 U.S. Department of Justice, “Proposed Final Judgment and Competitive Impact Statement; United States of America v. AT&T

Corp. and McCaw Cellular Communications, Inc. ,“ notice, Federal Register 59(165):44158, Aug. 26, 1994 at 44168, 44172.

SOURCE: Office of Technology Assessment, 1995.

took over the market.8 Although in the early switches made by the same manufacturer (see box

stages of the marketplace process, limited interoperability and customer confusion may slow the

convergence to a single standard; because interoperability is so valuable to users, situations in

which multiple incompatible technologies are

marketed are often transient.

In addition, it is possible that the de facto standard will be a proprietary technology, limiting

competition among manufacturers and keeping

equipment prices high. Proprietary interface standards enable manufacturers to lock in future sales

in an adjacent market: if an interface is proprietary, equipment can often connect only to other

equipment made by the same manufacturer. For

example, the subscriber equipment that works

with the new high-powered DBS service is currently only available from one manufacturer and

cellular base stations usually work only with

6-2).

Europe and Japan have not followed the new

U.S. model of standards-setting. They also rely on

standards committees, but their governments do

not permit the deployment of multiple technologies. This creates an incentive for committees to

come to agreement. In Europe, strong centralized

standards-setting is viewed as essential to knitting

together disparate national networks. In the first

generation of analog cellular service, different

technologies were deployed in different parts of

Europe, and some technologies were deployed in

only one country. It was impossible for a user to

roam outside their home country and difficult to

achieve economies of scale in the manufacture of

cellular phones. To avoid a recurrence of this

problem, the European Union launched a coordinated effort to develop a European standard for

8 For an economic analysis of this phenomenon, see Michael L. Katz and Carl Shapiro, “Technology Adoption in the Presence of Network

Externalities,’ ’Journal of Political Economy, vol. 94, No. 4, 1994, pp. 822-841.

9 After the first million units are sold, however, a second company will begin selling equipment.
Chapter 6 Standards and Interoperability | 175

next-generation digital cellular. This system, the

Global System for Mobile Communications

(GSM), is now being deployed across Europe and

in many other countries.

CELLULAR AND PERSONAL

COMMUNICATIONS SERVICE STANDARDS

The development of digital cellular and PCS

technologies is a prime example of how the marketplace tries to set standards. It shows the tension

between giving competing service providers the

freedom to choose their own technologies and the

desire for nationwide interoperability. The advantage of the marketplace approach is that it allows

carriers considerable flexibility in choosing the

services they offer. Moreover, by fostering a competition among technologies, the less rigid U.S.

standards-development process may ultimately

lead to a better technology choice than the European approach, which is now locked in to a single

technology, GSM. But there is a real danger that

different technologies will be deployed in different cities, limiting the possibilities for seamless

nationwide roaming. Users may find that they are

unable to use their phones when away from their

home city, contrary to the vision of “anytime, anywhere” mobile telephone service.

The problem is, in fact, a combination of “no

standards” and the FCC’s decision to divide the

nation into many license areas. In developing the

cellular licensing plan, for example, the FCC

created 734 cellular license areas—with two licensees per area. Although some cellular carriers

now operate across several areas, the wireless industry remains fragmented. With so many companies, establishing seamless nationwide service

requires that many carriers across the nation

deploy the same technology. When cellular service began in the early 1980s, the FCC solved this

coordination problem by requiring all carriers to

use the AMPS standard. For the next generation of

digital cellular, however, the FCC did not specify

a standard, preferring to let industry committees

settle the issue. They could not, and two standards—TDMA and CDMA—will be deployed

(see below).

In the PCS industry the situation is much the

same. The licensing plan for PCS established two

licenses in each of 51 Major Trading Areas

(MTAs) and four licenses in each of 493 Basic

Trading Areas (BTAs)—MTAs and BTAs overlap, meaning that each local area could have up to

six PCS carriers. PCS industry committees also

could not agree on a standard, and several technologies are being developed. In both digital cellular

and PCS, individual companies will have to decide which technology is best for them. Because

each carrier has different business priorities, different companies are likely to initially select different standards, making the coordination

problem potentially quite formidable.

❚ Multiple Air Interface Standards

Today’s cellular phones use AMPS for the air interface—the radio link between the phone and the

base station. Two incompatible digital air interface technologies have been proposed as a replacement for AMPS, one based on Time Division

Multiple Access (TDMA) and the other based on

Code Division Multiple Access (CDMA) (see box

3-3). In the late 1980s and early 1990s, the cellular

industry attempted to choose between the two

technologies but was unable to reach a consensus

(see box 6-3). As a result, some carriers are deploying the TDMA system, while others will

deploy the CDMA system.

PCS operators have also been unable to agree

on a standard. A standards committee established

to determine which air interface technology

would be used in the PCS band only managed to

reduce the number of contenders from 16 to seven

(see box 6-4). Two of the proposed PCS technologies are based on the cellular CDMA and TDMA

systems, but modified to work at the higher PCSband frequencies. A third PCS technology is

based on the European GSM cellular system, but

modified to work at the U.S. PCS frequencies and

renamed DCS-1900. The four other technologies

were developed specifically for the new PCS

band.

While the digital cellular and PCS standards

committees were unable to reach agreement, they
176 Wireless Technologies and the National Information Infrastructure

The development of digital cellular standards is the responsibility of a committee of the Telecommunications Industry Association (TIA) called TR45. In the late 1980s, it appeared that the industry would be able

to agree on a single digital cellular system, based on a technology called Time Division Multiple Access

(TDMA).1 But in 1990, Qualcomm, a company based in San Diego, CA, proposed that a second technology, called Code Division Multiple Access (CDMA), be used instead.2 This proposal was supported by

some cellular carriers, and, in 1992, the cellular industry’s trade association, the Cellular Telecommunications Industry Association, abandoned the idea of selecting a single technology as a U.S. standard and

asked that TR45 establish a new subcommittee to work on a CDMA system.3

TR45 has developed two U.S. “standards,” the TDMA-based system, referred to as IS-54, and the

CDMA-based system, referred to as IS-95. These are standards in the sense that TR45 has written publicly

available specifications that any manufacturer can use to build a conforming system. However, neither

IS-54 nor IS-95 is a national standard in the way that the current analog cellular system, the Advanced

Mobile Phone Service (AMPS), is a standard: a single specification that all manufacturers and cellular service providers have agreed to adhere to.

1 Steven Titch, “The Digital Dilemma,” Telephony, Oct. 14, 1991, pp. 33-36.

2 Steven Titch and Charles F. Mason, “Digital Cellular: What Now?” Telephony, Feb. 10, 1992, pp. 30-36

3 Charles F. Mason, “CTIA Approves CDMA Standards Setting,” Telephony June 15, 1992, p. 3.

SOURCE: Office of Technology Assessment, 1995.

will publish specifications for each of the pro- and small-scale tests. None of the proposed sysposed systems. Manufacturers will be able to use

these specifications to build any of the proposed

systems, although they may have to obtain licenses to any patented technology that the systems incorporate. It does not appear that

manufacturers will try to sell proprietary equipment that is not based on one of the published air

interface specifications. Carriers would be unlikely to choose a proprietary air interface technology

because they would not have as wide a choice of

manufacturers and the future development of their

technology would be in the hands of a single company.

In part, the wireless industry was unable to

agree on a single technology for either the cellular

or PCS bands because it was difficult to assess the

strengths and weaknesses of the newly developed

systems before large-scale deployment. System

proponents argued at length about the relative performance and technical feasibility of the proposed

technologies. But these arguments were based

largely on theoretical calculations, simulations,

terns had been tested with real world traffic at the

time that the standards committees were deliberating. There was no conclusive way to evaluate the

claims made by system proponents.

Another significant cause of the industry’s failure to agree on a single technology was the competitive nature of the wireless equipment industry.

Standards-setting requires compromise; however,

manufacturers who had invested in the development of prototype systems and owned intellectual

property rights to the technologies they had developed tried to prevent rival technologies from being chosen as a national standard. Although

cellular and PCS service providers played a less

active role in the standards committees, they also

differed in their perception of the features that they

thought their customers would value and in their

evaluation of the contending technologies.

Because the standards committees were unable

to reach consensus, some analysts have suggested

that the FCC should have acted as an arbiter and

selected a standard. However, it is doubtful that an
Chapter 6 Standards and Interoperability 177

The standards controversies in the 2 gigahertz PCS band are even more complex than those in the

cellular band. At first, two different committees, a new Telecommunications Industry Association (TIA) committee known as TR46, and T1P1, sponsored by the Alliance of Telecommunications Industry Solutions

(ATIS), were working on PCS standards. ATIS historically has worked on wireline standards for the public

switched telephone network (PSTN), not wireless standards. Its involvement in the development of PCS

standards reflects the fact that PCS was initially viewed as a low tier service that would be integrated to a

greater extent with the PSTN than had been the case for cellular. In 1992, the two committees recognized

the overlap in their work and formed a joint committee, the “Joint Technical Committee on Wireless Access”

(JTC).

A total of 16 technologies were proposed to the JTC for consideration as a U.S. PCS standard. The

committee was only able to reduce the number of contenders to seven; subcommittees are writing standards for each of these technologies. 1 One of the main reasons that there are so many more contenders in

the 2 GHz band is that there are different conceptions of what this band is to be used for. Originally, the

PCS band was thought to be for a new kind of wireless technology that would be different from cellular,

Compared to cellular, PCS was supposed to be simpler, use smaller cells and lower power handsets, and

be aimed more at pedestrian than vehicular use. However, many carriers have since come to believe that

the PCS band will be used in much the same way as the cellular band. The diversity of views has made it

even more difficult to agree on a single standard.2

1 Charles I. Cook, “Development of Air Interface Standards for PCS, ” IEEE Personal Communications, vol. 1, No. 4, Fourth Quarter

1994, p. 30.

2 “The ideal goal of the [committee] would be to arrive at a single air interface that meets the needs of everyone. However, the wide

diversity of potential service providers has caused this to become an unrealistic goal. ” Ibid., p. 31.

SOURCE: Office of Technology Assessment, 1995.

FCC-led competition between the proposed sys- cellular networks together into a continent-wide

terns could have resolved the issue sooner, if at all.

The same technological uncertainties and competitive factors that made it impossible for the industry standards committees to select a single system

would also have made it difficult for the FCC.

It is now too late for the FCC to take any action

that could force agreement on a single digital cellular or PCS standard. Manufacturers have begun

to build equipment, and service providers have begun to make their technology choices. If government is going to be involved in standards-setting,

it cannot easily step in at the last minute; instead, it

must act early in the process to establish the expectation that a single technology will be chosen.

In Europe, the development of GSM followed

from a clear objective to create a single standard

that would tie the formerly incompatible national

system. Furthermore, the GSM project began at an

early stage in the development of digital cellular,

before manufacturers had a vested interest in any

particular approach.

❚ Mobility Management Systems

In addition to the problem of incompatible air interfaces, a second standards problem—incompatible mobility management technology-maybe a

greater challenge. Cellular and PCS networks use

mobility management technology to connect systems and exchange information about roamers.

For example, a cellular system can send messages

to a roamer’s home system, informing it of its customer’s current location so that any incoming

calls can be forwarded. The switches and other
178 | Wireless Technologies and the National Information Infrastructure

network equipment that use a particular air interface also come with a particular mobility management technology—when carriers choose their air

interface technology, they are also choosing a mobility management technology.

Fortunately, all of the cellular air interface

technologies and most of the PCS-band air interface technologies are usually sold with switches

that use the same mobility management technology, known as IS-41. Users could roam between

IS-41-based systems as long as they had multimode phones to overcome any air interface

incompatibilities. However, the European

DCS-1900 system is sold with a mobility management system that is not compatible with IS-41.

Therefore, users could not roam between

DCS-1900 systems and IS-41-based systems,

even though it is possible to build a multimode

phone that incorporates both the DCS-1900 air interface and a second air interface. This may dissuade some carriers from choosing DCS-1900,

although some manufacturers are trying to make it

possible for the two mobility management systems to work together.

❚ Carrier Technology Choices

and Interoperability

Because the industry has failed to agree on an air

interface standard, carriers have been evaluating

the contending systems and trying to determine

which technology to deploy. There are significant

risks associated with their technology choice because the construction of a digital cellular or PCS

network requires the investment of millions of

dollars and the wrong choice could leave a carrier

at a competitive disadvantage. Among the factors

of concern to carriers are coverage, capacity, and

voice quality. The most important consideration is

the per-user cost of building and operating the network, because this factor most directly affects a

carrier’s ability to compete with its rivals.

Carriers are also concerned with the technological maturity of the contending systems. For example, some cellular carriers have chosen TDMA

because it is commercially available and they have

an immediate need for the greater system capacity

afforded by digital technology. Other carriers will

wait for CDMA, which is still being tested. The

maturity of the technology is given special weight

by the new PCS entrants because delays caused by

unforeseen problems with a new technology

would give cellular carriers even more of a head

start in the market. One of the selling points of the

DCS-1900 system is that its GSM and DCS-1800

cousins have been in commercial service in Europe for several years. American Personal Communications, one of the “pioneer’s preference”

winners, has selected DCS-1900 for this reason.

Because of uncertainties about the contending

systems’ capabilities and because of differences in

their business plans, different carriers are choosing different technologies. Most cellular carriers

have announced their technology choices; Bell

Atlantic Mobile, NYNEX Mobile, and AirTouch

plan to deploy CDMA, while AT&T (formerly

McCaw) and Southwestern Bell Mobile Systems

are deploying TDMA. Among the carriers with

PCS licenses, most have not yet announced their

technology choices. However, it appears that two

technologies, the U.S. CDMA system and the European DCS-1900 system, are attracting the most

interest.

Because there is no clear favorite among the

technologies at this time, there is a risk that a

patchwork of technologies will be deployed, making it difficult for users to roam in all cities. The

impact of multiple standards on roaming depends

not on how many technologies are deployed, but

the pattern in which they are deployed. Some major players in the wireless industry intend to build

networks with near-nationwide coverage through

acquisitions of other carriers, mergers, and alliances (see chapter 3). Other carriers are working

to coordinate their technology choice with carriers

in neighboring regions. These companies or alliances could then guarantee seamless roaming by

deploying a single technology throughout their license areas. In addition, the technology choices of

these major players will influence the choices of

smaller carriers and thereby determine which of

the contending technologies will survive in the

marketplace.
Chapter 6 Standards and Interoperability | 179

Technological Solutions to Interoperability

To a certain extent, there may be technological

solutions to the multiple-standard problem.10 It

may be possible to use multimode phones that

work with more than one type of air interface.

However, a multimode phone built with today’s

technology requires additional circuitry that increases the cost and weight of the phone. In the future, it may be possible to minimize this penalty

by implementing most of the phone’s functions in

software.11 This approach is the focus of research

sponsored by the Advanced Research Projects

Agency,12 but the required signal processing

technologies are still several years away from

commercialization.

Dual-mode phones will indirectly allow interoperability between cellular companies that

deploy different digital technologies. These

phones will not be TDMA/CDMA phones;

instead, they will incorporate AMPS and one of

the digital technologies. The AMPS capability is

being included with all digital phones mainly because it allows users to make calls in areas where

digital has not yet been deployed—all cellular carriers will continue to support AMPS until most of

their customers own digital phones. However, users who roam into an area that does not employ the

digital technology the user has will be able to fall

back on AMPS to complete their calls. Falling

back to analog incurs a significant performance

penalty; when operating in analog mode, phones

deplete their batteries at least twice as quickly. In

addition, the continued use of AMPS to support

roamers could slow the transition to more efficient

all-digital networks.

Because there is no existing common technology in the PCS band, PCS carriers would have to

either use phones that incorporate multiple PCS

technologies or dual-band phones that incorporate both a PCS air interface and an analog or digital cellular air interface. These dual- or multimode

phones would be more expensive to design and

build than a single-mode phone, and would take

longer to develop. The added cost would depend

in part on the degree of similarity between the air

interface technologies combined in the phone. It

would also depend on manufacturing volumes;

the price of a multimode phone would only be reasonable if it could be sold in large quantities.

Manufacturers are trying to determine which air

interface combinations the market will demand, if

any.

Coordinated Technology Choices

Although multimode technology may provide a

partial solution to the multiple-standard problem,

several carriers are taking more direct action to ensure that roaming is possible. They recognize that

nationwide roaming is of value to users and that

they will have a competitive advantage if they can

offer nationwide roaming. They are working to

coordinate their technology choices with carriers

in other regions. In several cases, a group of carriers has established an alliance whose members

agree to deploy a common technology.13 For example, US West New Vector, AirTouch, Bell Atlantic Mobile, and NYNEX Mobile have formed

an alliance that is committed to CDMA.

Carriers are also working to expand the area

that they are licensed to serve, reducing the need to

10 “On the other hand, the next generation of mobile radio may well be ‘computers with an RF front end’ with the capability of performing

many signal processing functions. Perhaps different format translations and emulations will be performed by the mobile unit itself so that it can

operate in different modes. Perhaps the mobile unit will be able to be updated to perform new capabilities in the same way that computers today

are updated with new software, expansion boards, and the like.” Federal Communications Commission, Notice of Inquiry, Advanced Technologies for the Public Radio Services, FCC Gen. Docket No. 88-441, Dec. 11, 1989.

11 Joe Mitola, “Software Radios,” IEEE Communications, vol. 33, No. 5, May 1995, p. 24.

12 Robert J. Bonometti, “Integration of Space and Terrestrial PCS in the Information Infrastructure,” Proceedings of the 1994 Third Annual

International Conference on Universal Personal Communications (Piscataway, NJ: IEEE, 1994), p. 455.

13 Gutam Naik, “Alliance Planned for National Wireless System,” The Wall Street Journal, Nov. 7, 1994, p. A3.
180 | Wireless Technologies and the National Information Infrastructure

coordinate with other carriers. One strategy is to

acquire other carriers; there is a clear trend toward

consolidation in the wireless industry. Another

strategy for building nationwide coverage was afforded by the FCC’s design of the PCS auctions.

The licenses in all regions are being auctioned simultaneously, allowing a carrier to bid for contiguous license areas. In theory, it would be possible

to assemble a nationwide system by winning all of

the available licenses. While this did not occur in

the first round of auctions, several companies assembled licenses covering very large areas. For

example, one consortium won licenses with a total

of 182.5 million potential customers.14

Some of the biggest winners in the first round

of PCS auctions were cellular companies who will

use their new PCS spectrum to fill in the gaps between their cellular properties.15 In order to knit

their cellular and PCS licenses together into a nationwide service, these companies’ customers

will have to use dual-band phones that work in

both the 800 MHz cellular band and the 2 GHz

PCS band. It is possible that these will be dualband, dual-mode phones that would use a different air interface technology depending on whether

they were operating in the PCS or cellular band.

But phones that used the same air interface

technology in both bands would be simpler and

less expensive. Two of the proposed PCS technologies are simply upbanded versions of the cellular

CDMA and TDMA systems, facilitating this

dual-band strategy. To some extent, the technologies deployed in the PCS band will be determined

by the technologies deployed in the cellular band.

For example, the alliance of US West New Vector,

AirTouch, Bell Atlantic Mobile, and NYNEX

Mobile plans to use CDMA in both its cellular and

PCS properties.

Alliances and consolidation represent the industry’s attempt to overcome the FCC’s decision

to divide the wireless service map into a large

number of license areas. Almost every other country grants licenses on a nationwide basis to begin

with, guaranteeing nationwide roaming. When

there are nationwide networks, the deployment of

multiple technologies would only be of concern to

users if they decided to switch carriers, in which

case they might have to buy a new phone. The lack

of a national standard would not limit roaming.

While the FCC has withdrawn from standards setting, it should be recognized that its decisions

about the structure of the wireless industry critically affect the pattern in which technologies are

deployed.

Narrowing the Choices

The technology choices of the larger PCS carriers

and alliances will begin the process of reducing

the number of contending PCS technologies from

seven to, most likely, two or three. The larger carriers will be looking for partners in the regions

where they do not have roaming agreements. As a

result, many mid-sized and smaller operators will

follow the lead of the larger carriers and alliances.

For example, if a high percentage of a small operator’s customers were roamers from a large city, it

would likely follow the lead of the larger operator.

The technologies that receive only limited initial

support may not survive long in the marketplace.

Manufacturers would be less likely to build to

these standards, and the price of the phones would

not benefit from economies of scale.

Over time, the number of incompatible air interface technologies in the market is likely to be

further reduced. Although it is costly to do so, carriers may switch technologies as more is learned

about the performance of the competing systems

or about the choices of competitors and alliance

partners. Carriers may choose to deploy a more

mature technology today, knowing that in a few

years they will exchange it for a better technology.

For example, some carriers believe that CDMA

may prove to be a better technology in the long

14 “Broadband PCS Auction Nets $7.7 Billion,” Telecommunications Reports, vol. 61, No. 11, Mar. 20, 1995, p. 3.

15 Ibid.
Chapter 6 Standards and Interoperability | 181

run, but that TDMA is the best technology for

solving immediate capacity problems. Some

manufacturers support this strategy by designing

their products so that much of the equipment purchased for a TDMA rollout can later be used for

CDMA.

❚ Effect of PCS and Cellular

Standards on Trade

One side effect of the U.S. approach to standardssetting is that it has left the United States without a

national champion technology to sell in other

countries. The worldwide market for cellular telephone equipment is large, especially when the

possibilities for wireless local loop applications

are considered. Because the battles over standards

in the United States have slowed the commercialization of U.S. digital cellular, more and more

countries are adopting GSM. GSM has a significant head start, with 1.8 million phones in service

worldwide in mid-1994 compared to 100,000

U.S. digital phones.16 It has been adopted by 78

network operators in 59 countries.17 Outside of

the European Union, GSM has been selected by

carriers in China, Australia, New Zealand, Russia,

and Hong Kong, for example.18

The openness of the U.S. technology selection

process creates other imbalances. Because Europe

and Japan have specified the technology that all licensees must use, these markets are closed to the

U.S.-developed technologies. For example, even

if the U.S. CDMA system does turn out to offer

significant advantages, service providers in Europe would not be able to adopt it in place of GSM.

At the same time, however, the technology-neutral U.S. licensing process allows PCS carriers to

adopt the European DCS-1900 technology. The

real effect on U.S. manufacturers is unclear, however. The largest suppliers of GSM equipment are

all European companies,19 but U.S. companies

build GSM and DCS-1900 equipment and are

selling it around the world.

INTEROPERABILITY OF WIRELESS

AND WIRELINE NETWORKS

The first section of this chapter discussed the radio

link standards that enable interoperability between a user’s phone or other wireless device and

a service provider’s network. But it is equally important that different networks be interoperable

with each other, allowing their users to exchange

information with users of other networks. The future NII is often envisioned as a network of networks—a diverse collection of networks that are

independently operated but still interoperable.

Therefore, it is necessary that the wide variety of

wireless networks currently being deployed—

PCS, cellular, wireless data networks, and others—be interoperable with wireline networks as

well as with each other.

Although there are technical challenges that

need to be overcome to ensure wireless-wireline

interoperability, it is unlikely that the infrastructure will be segmented into separate wireless and

wireline worlds. There are clear incentives for the

operators of wireless networks to ensure that there

is interoperability between wireless and wireline

networks. Wireless carriers know that their customers want to be able to talk to wireline users of

the public switched network, exchange e-mail

with users of the Internet, and retrieve information

from their companies’ computer networks. Wireless networks would not survive in the marketplace if their users were limited to isolated islands,

unable to communicate with the far larger number

of wireline-connected users.

16 Gail Edmondson, “Wireless Terriers,” BusinessWeek, May 23, 1994.

17 Mark Newman, “GSM Takes On the World,” CommunicationsWeek International, Issue 133, Oct. 24, 1994, p. 1.

18 “GSM Gold Mine,” table in CommunicationsWeek International, Issue 132, Oct. 10, 1994, p. 26.

19 Ibid. A table lists the four largest suppliers of GSM equipment as Ericsson, Siemens, Nokia, and Alcatel. Motorola and AT&T appear on

the list, but sales volumes are considerably smaller. For example, according to the table, AT&T has sold four GSM switches, Ericsson 33, Siemens 30, Nokia 15, and Alcatel 14.
182 | Wireless Technologies and the National Information Infrastructure

Wireless-wireline interoperability also allows

for communication between disparate wireless

networks. Because most wireless networks act as

an extension to a larger wireline network, the

wireline network can serve as a common core

through which incompatible wireless networks

exchange traffic. For voice or fax traffic, this common core would be the public switched telephone

network; for data, it might be the Internet. For example, the fact that both CDMA and TDMA cellular networks are designed to interoperate with the

public switched telephone network (PSTN) will

also allow them to interoperate with each other.

The wireline standards can act as a common language, allowing users of incompatible wireless

networks to communicate.

❚ Translation of Protocols

Despite the incentives for wireline-wireless interoperability, it is not always easily or inexpensively achieved. It would be easier to achieve if

wireless and wireline systems could use the same

protocols—the rules and formats that govern how

communication occurs. But many wireline protocols do not work well over wireless links, because

wireless links are noisier, have less bandwidth,

and may have a long transmission delay. Therefore, it is often necessary to use specialized wireless protocols.20 Because these protocols are

incompatible with their wireline counterparts, interoperability requires that there be some type of

translation or “gateway” at the interface between

wireless and wireline networks.

For example, interconnection of digital cellular

networks to the public switched network requires

that the voice signals be translated from the wireless to the wireline format—wireless networks

have to use a much lower bit rate because of the

limited bandwidth available. Cellular carriers also

need to install “modem pools” at their switches to

translate between ordinary wireline modem standards and special modem protocols that work better over a noisy wireless link. Operators of

wireless packet data networks need to translate the

specialized protocols that they use into the protocols used in the Internet or in corporate data networks. E-mail may have to be translated from a

wireline format into the format used by paging

networks, permitting instantaneous delivery of

e-mail from wireline users to alphanumeric pagers

or laptop computers equipped with paging receivers.

Because different types of services require separate translation schemes, it is often the case that

services that have the most commercial value are

supported first. For example, the new digital cellular services will support the interoperability of

voice services from the beginning because voice is

considered to be the core service. But interoperability of fax and data services will not be

supported until the appropriate interworking

equipment is installed. More specialized services,

such as secure voice services, which have only a

limited market, may have to wait even longer.

Where these services are essential to the mission

of a government agency, the agency will have to

get involved with industry groups and standards

committees to ensure that the services are available.

Most of the cost of ensuring interoperability

falls on wireless network operators because wireless networks are newer and have fewer users. For

the most part, wireline protocols have been developed without regard to the needs of wireless. Satellite operators, in particular, have complained

that wireline protocols were developed and standardized based on assumptions about short transmission delays that do not hold true for satellite

services.21 Many of the technical issues of integrating wireless access with Asynchronous Trans20 John A. Kilpatrick and Mobeen Khan, “MOBITEX and Mobile Data Standards,” IEEE Communications, vol. 33, No. 3, March 1995,

p. 96.

21 It takes about half a second for a signal transmitted to a geosynchronous satellite to reach its destination.
Chapter 6 Standards and Interoperability | 183

fer Mode (ATM) networks, which are expected to

play a key role in the future wireline infrastructure, still have to be addressed.22 In the future,

however, the increasing interest in wireless may

mean that network designers will use a more integrated approach that takes both wireless and wireline into account. Government can reinforce this

direction by supporting testbeds and demonstration projects that include both wireless and wireline components.

❚ Wireline Networks and Mobility

Another challenge to integrating wireless and

wireline networks is that existing wireline networks, such as the PSTN and the Internet, do not

recognize that users can be mobile. They associate

a telephone number, for example, with a fixed

location. As a result, wireless operators have had

to develop their own specialized call routing procedures. For example, the cellular industry’s

IS-41 mobility management system, used to forward calls to a user’s cellular phone as they travel,

operates separately from the wireline network’s

call-routing mechanism.

The lack of integration between wireless and

wireline call routing mechanisms causes inefficiencies.23 With IS-41, for example, calls are first

delivered to the user’s home system and then forwarded to the city where the user is currently located. In fact, the called user could be in the next

room, but the call would still be routed all the way

to the user’s home city and then back again, requiring two long distance calls and turning an inexpensive call into a very expensive call. More

efficient call routing would send the call directly

to the user’s current location. For this to be possible, however, the LEC or long distance carrier at

the originating end of the call would have to have

to be able to recognize that the number belonged

to a mobile user, look up the user’s current location in a database, and then route the call appropriately.

As more and more users become mobile, wireline networks will have to begin to recognize the

concept of mobility. The first step toward incorporating mobility concepts into the landline network

is now being taken with the assignment of special

“500” numbers. If this nongeographic prefix is

used in place of an area code (e.g., (500)

123-4567), it indicates to wireline switches that

the user could be mobile. Wireline carriers are currently using “500” numbers for an advanced callforwarding service. Customers use a touch-tone

phone to update a database that records the phone

number to which calls should be forwarded. However, with current technology, it is not possible for

a wireless network to automatically update this

location database as a customer moves from city

to city. True integration will require that the wireless industry’s mobility management technology

work with the wireline industry “Intelligent Network” call routing technology, which is only now

becoming possible.24 It will also require business

arrangements that permit wireline and wireless

carriers to have access to each other’s location databases (see chapter 7).

22 “News from JSAC,” IEEE Communications, vol. 33, No. 5, May 1995, p. 12.

23 See discussion in National Regulatory Research Institute (NRRI), Competition and Interconnection: The Case of Personal Communications Services, July 1994, Columbus, Ohio, pp. 20-24.

24 Brenda E. Edwards and Paul B. Passero, “Testing PCS in Pittsburgh,” Bellcore Exchange, September 1993, p. 14.
Regulation

 of

 Interconnection

he nation’s telecommunications industry consists of

many independently operated networks. In order to create

a seamless infrastructure, these networks must interconnect. The Federal Communications Commission (FCC)

has long required local exchange carriers (LECs—the local telephone companies) to interconnect with cellular carriers, making it

possible for cellular and wireline users to call each other. But as

new wireless carriers—Personal Communications Services

(PCS), Enhanced Specialized Mobile Radio (ESMR), and mobile

satellite—enter the market, and as the wireless industry evolves

from a niche player into a central component of the infrastructure,

the interconnection rules will also have to evolve.

FINDINGS

 Ensuring wireless carriers fair and affordable interconnection to the public switched telephone network (PSTN)

will be critical in determining what role they will play in

the National Information Infrastructure (NII). Wireless

carriers pay interconnection charges for every minute of traffic

they send to the LEC, and often these charges are above the

cost the LEC incurs in providing interconnection. Interconnection charges are an important component of wireless carriers’

cost structure. As new digital technology reduces the per-user

cost of operating a wireless network, interconnection charges

will assume even greater significance. Elevated interconnection charges would increase the price and reduce demand for

both mobile and fixed wireless services. Interconnection

charges priced too far above cost could keep mobile communication prices artificially high and stunt its potential growth.

The level of interconnection charges could even determine | 185
186 | Wireless Technologies and the National Information Infrastructure

whether wireless carriers will be able to effectively compete in the local telephone service

market, where bills have to remain affordable

even if customers use their phones for hundreds

of minutes per month.

Rethinking interconnection charges, however, is a complex problem. Under current law,

the states have primary jurisdiction over interconnection charges and the process by which

they are determined. State regulators have kept

the price of wireless interconnection above cost

in order to provide the LEC with additional revenues that support its universal service obligations. Before wireless interconnection charges

can be reduced, policymakers would have to

determine that universal service would not be

affected if the contribution from wireless carriers were reduced. Alternatively, they would

have to find a new mechanism to further universal service goals that did not disadvantage

wireless carriers or other new competitors to

the LECs.

 To ensure that wireless systems can achieve

their full potential as a mass-market service,

regulators and policymakers may need to

play a more active role in determining the

cost of wireless carriers’ interconnection to

the LEC. Congress has the option to establish

guidelines for the states to follow in setting interconnection charges. Both S. 652 and H.R.

1555, the telecommunications bills currently

being debated in Congress, provide a mechanism for carriers, including wireless, to ask

state regulators to intervene in interconnection

disputes. Congress could also expand the

FCC’s jurisdiction over mobile radio services

by giving it more power to determine interconnection charges.

Part of the problem in ensuring fair and

affordable rates is the way in which interconnection charges are set. In most states, the

cost of interconnection is based on contracts

negotiated between the wireless carrier and the

LEC. In negotiating these contracts, the LEC

has considerable bargaining power because it

has a near-monopoly in the provision of wireline telephone service. In addition, wireless

systems depend critically on the LEC to complete the vast majority of calls made to and

from wireless phones—wireless-to-wireless

calls on the same system account for less than

2 percent of all wireless traffic.1

The FCC does not permit LECs to discriminate among wireless carriers in the price of interconnection or other terms of interconnection

agreements. No wireless carrier should be disadvantaged because it is paying higher interconnection rates than its competitors.

However, the new entrants in the wireless marketplace, especially smaller PCS carriers, fear

that the established cellular carriers are more

familiar with the process of negotiating interconnection agreements and will be able to obtain better terms, despite the requirement that

the LECs not discriminate unreasonably. 

One barrier to determining whether there has

been discrimination is that not all states require

that interconnection agreements be made public. It is difficult to enforce the nondiscrimination requirement without knowing the terms

under which competing carriers are obtaining

interconnection. Regulators may have to require that interconnection agreements be

made available for public inspection. A public filing requirement would improve the bargaining position of new entrants by giving

them access to the agreements that cellular carriers have been able to negotiate. Both S. 652

and H.R. 1555 would require that interconnection agreements between the LECs and other

carriers, including wireless, be filed with state

regulators and made public.

1 80 percent of all mobile calls are wireless to land line, 18 percent are land line to wireless, and 2 percent are wireless to wireless. The 2

percent, however includes wireless to wireless calls on the same system as well as to other cellular systems. Tim Rich, CTIA, personal communication, June 5, 1995.
Chapter 7 Regulation of Interconnection | 187

 A key issue is whether wireless carriers should

be required to provide their customers with

equal access to long-distance services—allowing customers to choose a preferred long-distance carrier as they do now with their wireline

telephone. Different rules govern wireless carriers’ provision of long-distance service, depending on whether or not they are subject to

equal access requirements. As a result, some

wireless carriers may be at a competitive disadvantage not only in providing long-distance services, but also in providing a wider

variety of services and pricing plans. Currently, only the wireless affiliates of AT&T and

the Regional Bell Operating Companies

(RBOCs) are subject to equal access rules. All

other wireless carriers do not have to give their

customers a choice of long-distance carrier, and

are permitted to sell a bundled package of local

and long-distance service. However, the FCC

has recently launched a proceeding to determine if all wireless carriers should be subject to

equal access rules.

The entry of new competitors into the

wireless market calls into question the need

for equal access rules. These rules were first

developed in the wireline context because the

LEC could use its local monopoly to also dominate the long-distance market. The cellular affiliates of the RBOCs and AT&T are subject to

equal access rules in part because competition

in the cellular industry was also limited, with

only two carriers in each market. With the entry

of ESMR and PCS carriers, however, the market power of any one wireless carrier will be

substantially reduced. Both S. 652 and H.R.

1555 would allow wireless carriers to provide

a weaker form of equal access than the wireline

LECs.

LEC INTERCONNECTION OBLIGATIONS

In order to guarantee that wireless users are linked

to the PSTN, the FCC mandates that LECs interconnect with all wireless carriers (see box 7-1).

Until recently, regulators were concerned primarily with ensuring that the right of interconnection

was well defined and enforced. However, as wireless carriers become a more integral part of the NII

and develop into potential competitors to the

LECs, the cost of this interconnection is becoming

a more central issue.

❚ Regulation of Interconnection

The FCC began to develop the rules that govern

wireless interconnection in the proceeding that

created cellular telephone service.2 These regulations were later clarified and strengthened in a series of rulings in the 1980s.3 In 1993, Congress

created the Commercial Mobile Radio Service

(CMRS) regulatory classification, which brought

most Specialized Mobile Radio (SMR), PCS, and

mobile satellite carriers under the same regulatory

umbrella as cellular.4 All CMRS service providers

are entitled to interconnect with the LEC on the

same terms as cellular carriers.5

The FCC’s policy on wireless interconnection

has two main components. First, LECs must provide interconnection when it is requested by a

wireless carrier.6 Interconnection is critical because users of wireless services want to be able to

call anyone on the PSTN; they do not want to be

restricted to calling only other wireless users. A

2 Federal Communications Commission, An Inquiry Into the Use of the Bands 825-845 Mhz and 870-890 Mhz for Cellular Communications

Systems, Report and Order (Cellular Report and Order), 86 FCC 2d 469, 496 (1981).

3 Federal Communications Commission, The Need to Promote Competition and Efficient Use of Spectrum for Radio Common Carrier Services, Memorandum Opinion and Order, 59 RR 2d 1275 (1986); Declaratory Ruling, 63 RR 2d 7 (1987); Memorandum Opinion Order on Reconsideration, 66 RR 2d 105 (1989).

4 Omnibus Budget Reconciliation Act of 1993. Public Law 103-66.

5 Federal Communications Commission, Implementation of Sections 3(n) and 332 of the Communications Act, Second Report and Order,

GN Docket No. 93-252 (1994), pp. 87-88.

6 Federal Communications Commission, Cellular Report and Order, op. cit., footnote 2.
188 I Wireless Technologies and the National Information Infrastructure

Interconnection requires a connection between the cellular carrier’s switch and a nearby local exchange

carrier (LEC) switch. This connection, which can be a microwave link or a high-speed digital line leased

from the LEC, allows the cellular carrier to complete calls to the LEC’s customers and connect calls originated in the wireline telephone network to its customers. Over time, a standard set of interconnection arrangements has evolved, designated as Type 1, Type 2A, or Type 2B, depending on the sophistication of

the cellular switch and the type of LEC switch involved. These configurations are well known and described

in reference documents published by Bellcore, the LECs’ technical organization.

Similar interconnection arrangements will be used to connect other types of wireless services to the

public switched telephone network (PSTN), including Personal Communications Service, Enhanced Specialized Mobile Radio, and satellite, Satellite networks are interconnected to the PSTN at earth stations

known as gateways, User traffic is beamed down from the satellite to the earth station and routed through

the satellite network’s switch to the PSTN. While a cellular network may have several switches that are

interconnected to the PSTN, there may only be a single earth station that handles all of the traffic from the

satellite.

Interconnection also requires that the LEC provide wireless carriers with blocks of telephone numbers

that they can assign to their customers. Wireless carriers are part of the PSTN’s numbering plan, and, in

each area code, the LEC is the code administrator, responsible for assigning numbers. Cellular numbers

have the same 10 digit format as Iandline numbers, and, in most cases, they have the same area code as

a Iandline number in the same region. When cellular numbers are assigned, the LEC programs its switches

to recognize that calls to these numbers are to be routed to the wireless carrier.

SOURCE: Office of Technology Assessment, 1995

connection to the PSTN is necessary for wireless potential economies of scope in greater integracarriers to attract customers and survive in the

marketplace. If the LECs, who have a near-monopoly in the provision of wireline telephone service, were able to withhold interconnection,

wireless carriers would have no other way of connecting calls to wireline users and would likely go

out of business.

The second part of the FCC’s policy on wireless

interconnection requires the LECs to provide independent wireless carriers with interconnection

of the same quality and cost as they provide to

their own wireless affiliates.7 In order to police

this requirement, the FCC requires structural separation of most LECs’ wireline and cellular operations.8 While the FCC recognized that there were

tion of the LECs’ wireless and wireline operations, it also believed that integration could give

the LECs’ wireless affiliates an unfair competitive

advantage. As a result, the LECs have to build

their cellular networks independently of the wireline network, as would any other carrier. LEC and

independent cellular carriers have similar interconnection requirements, making it easier to determine if the LEC is discriminating against the

competing cellular carrier.

The Cost of lnterconnection

Wireless carriers are required to pay the LECs for

interconnection.9 The interconnection charges are

7 Ibid.

8 Ibid., p. 495.

9 Charles H. Kennedy, An Introduction to U.S. Telecommunications Law (Norwood, MA: Artech House, 1994), pp. 44-46.
Chapter 7 Regulation of Interconnection | 189

intended in part to cover the costs the LEC incurs

in handling its part of the call. The most important

charge is a per-minute fee paid by the wireless carrier for every call completed by the LEC. Typically, this charge is about three or four cents per

minute, but it can be over 10 cents per minute, depending on the state, the duration of the call, and

the distance of the call. In addition to the per-minute charge, the wireless carrier usually pays the

LEC for a leased line between its switch and the

LEC’s switch. To minimize the cost of this leased

line, some wireless carriers locate their switch

across the street from a LEC central office or at

another nearby location.

Currently, the states have primary jurisdiction

over the cost of interconnection.10 The FCC can

only step in if the cost of interconnection is so high

as to make wireless service prohibitively expensive.11 As a result, the interconnection charges

vary from state to state. In addition, the means by

which states exercise their jurisdiction over interconnection charges differ.12 In some states, such

as New York and Florida, interconnection charges

are specified by a tariff, a schedule of rates approved by state regulators. In most states, however, there is no formal tariff; instead, wireless

companies and LECs negotiate an agreement with

little or no involvement by state regulators. Some

states require that these negotiated agreements be

filed with state regulators, while others do not.

Some states then make the agreement public,

while others do not.

Regardless of whether interconnection charges

are tariffed or negotiated, state regulators have

generally allowed the LECs to impose interconnection charges that are above the cost they incur

in handling their part of the call. Moreover, the

compensation arrangements are usually one-way:

wireless carriers compensate LECs for completing their calls, while the reverse is not true.

Above-cost interconnection charges and unbalanced compensation arrangements reflect the fact

that most state regulators view interconnection

charges as a way to transfer revenues from a premium niche market service to the LEC in order to

subsidize residential telephone rates and support

universal service goals.13

Interconnection to Long-distance Carriers

Wireless users want to be able to make and receive

long-distance as well as local calls. Since the

breakup of the Bell System in 1984, the LECs

have been restricted to providing local service

within geographic regions known as Local Access

and Transport Areas (LATAs). Calls that cross a

LATA boundary are considered long distance and

must be handled by a long-distance carrier. In

most cases, a wireless carrier first hands long-distance calls to the LEC, which in turn hands them to

a long-distance carrier. Interconnection to the

LEC is all that is needed for wireless users to be

able to place calls to any telephone user across the

nation.

However, in recent years, long-distance carriers have begun to connect directly to wireless networks, bypassing the LEC (see box 7-2).14 Direct

connections permit long-distance carriers to avoid

paying access charges to the LEC. Access charges

are essentially interconnection charges paid by

10 The Communications Act of 1934 has been interpreted to require that regulators allocate the costs of providing telecommunications services among interstate and intrastate jurisdictions. The states, therefore, regulate the price of interconnection for intrastate calls, while the FCC

regulates the price of interconnection for interstate calls. Because most calls from wireless phones are intrastate, the states are largely responsible for determining the interconnection costs of wireless carriers.

11 Federal Communications Commission, Declaratory Ruling, op. cit., footnote 3, p. 15.

12 Harry E. Young, Wireless Basics (Chicago, IL: Intertec, 1992), p. 90.

13 Kennedy, op. cit., footnote 9, p. 46.

14 For example, in the Washington, DC market, both MCI and AT&T have direct connections to the Southwestern Bell Mobile Systems

(Cellular One) network.
190 I Wireless Technologies and the National Information Infrastructure

In most cases, wireless carriers hand off both local and long-distance calls to the local exchange carrier

(LEC). The LEC then routes the long distance calls to a long-distance carrier (see figure 7-l). Increasingly,

however, long-distance carriers are connecting directly to wireless carriers. The wireless carrier only routes

local calls to the LEC, while long-distance calls are routed directly to a long-distance carrier (see figure

7-2). Although the link between the wireless network and the long-distance network is usually leased from

the LEC, the LEC provides only simple transport and is not involved in setting up the call. In a few cities,

long-distance carriers have bypassed the LEC entirely, using leased lines provided by new competitors to

the LECs, called Competitive Access Providers.

FIGURE 7-1: Connection to Long-Distance Carrier Through Local Exchange Carrier

IXC

Switch

1

LEC Wireless

Switch Switch

FIGURE 7-2: Direct Connection to Long-Distance Carrier

IXC

Switch

SOURCE: Office of Technology Assessment, 1995.
Chapter 7 Regulation of Interconnection | 191

long-distance carriers whenever they receive traffic from a LEC, even when the calls originate on a

wireless network. Long-distance carriers can

avoid the access charges if they connect directly to

the wireless carrier. In some cases, long-distance

carriers pass on the access charge savings to wireless customers in the form of discounted long-distance calling.

Avoiding access charges, which can account

for 40 to 50 percent of the cost of a long-distance

call, is one reason for the recent interest shown by

long-distance carriers in wireless communications. If the long-distance carriers can reach their

customers without going through the LEC, they

can cut access costs or put pressure on LECs to reduce the rates. However, these efforts raise questions about both the structure of local telephone

rates and universal service. The access charge system was designed as a way to continue the Bell

System’s revenue transfer from long-distance to

local service in the post-divestiture environment.

If more long-distance carriers connect directly to

wireless carriers—reducing the LECs’ access

charge revenue—they may undercut the system of

subsidies that supports universal service.

❚ Wireless/Wireline

Interconnection Issues

Current rules for wireless interconnection focus

on ensuring that wireless carriers are able to interconnect to the LEC. Now, however, existing and,

especially, new wireless carriers are becoming

concerned about the terms of interconnection

agreements. First, new wireless entrants are worried that the present practice of negotiated interconnection agreements makes it possible for the

LECs to discriminate among wireless carriers.15

Second, as wireless technology becomes more efficient, interconnection charges will become a

more significant fraction of wireless carriers’

overall cost structure. There may have to be reductions in interconnection charges if wireless carriers are to provide a mass market service or

compete with the LEC in the market for local exchange service.

Nondiscriminatory Interconnection

In most states, interconnection charges are determined through negotiations between the LEC and

the wireless carrier. In the early years of cellular

service, several cellular carriers complained that

the LECs were not negotiating in good faith or had

not granted them the type of interconnection they

requested.16 However, in recent years the number

of disputes has declined substantially. This may

be due, in part, to the fact that the interconnection

rules have been clarified by the FCC and are now

well established. It may also be due to the fact that,

in most markets, the second cellular carrier is no

longer a small independent company, but is often

part of a large company that is better equipped to

negotiate with the LEC.

The cellular carriers have stated that they are

generally satisfied with the current system of negotiated interconnection. However, many of the

new PCS entrants are concerned that, despite the

requirement that the LECs not discriminate, the

established cellular carriers can obtain better

terms because they are more familiar with the negotiation process.17 The main problem for new

entrants is that the agreements between the LECs

and the cellular carriers are not made public in all

states. It is difficult to enforce the nondiscrimination requirement without knowing the terms under which competing wireless carriers are

obtaining interconnection.

One way to guarantee that all carriers obtain interconnection on the same terms is to require the

filing of interconnection tariffs, as is done in New

York and Florida. This protects new market en15 See discussion in Federal Communications Commission, Equal Access and Interconnection Obligations Pertaining to Commercial Mobile Radio Services (Equal Access NPRM), Notice of Proposed Rule Making and Notice of Inquiry, CC Docket No. 94-54 (1994), pp. 46-47.

16 U.S. Department of Justice, Antitrust Division, The Geodesic Network (Washington, DC: 1987), p. 4.13.

17 Federal Communications Commission, Equal Access NPRM, op. cit., footnote 15, p. 50.
192 | Wireless Technologies and the National Information Infrastructure

trants unfamiliar with the interconnection negotiation process because all competitors have to

obtain interconnection at the tariffed rate. The argument against tariffing is that it may not allow

sufficient flexibility in the terms of interconnection. Moreover, the tariffing process can cause

considerable delay before a new service can be offered by the LEC. Another option is to continue

the present system of negotiated contracts, but require that the contracts be made available for public inspection.

Under current law, the FCC has limited ability

to require states to use tariffs or require that contracts be made public. This is based on the division of jurisdiction in the 1934 Communications

Act, which gives states primary jurisdiction over

intrastate charges. If Congress decided that entry

of new wireless providers would be facilitated by

tariffing or public filing of the terms of interconnection agreements, it could provide guidelines

on this issue. A public filing requirement that applies to LEC interconnection with all carriers, including wireless, is included in both S. 652 and

H.R. 1555, the telecommunications bills currently being debated in Congress.

Local Exchange Competition

The cost of providing service, and the prices that

wireless carriers charge, will significantly affect

the role wireless technologies can play in the

NII—whether they will remain providers of a relatively high-cost niche service (mobile communications) or whether they can broaden their

appeal to compete in the market for local telecommunications services. The high cost of today’s

cellular service—and the correspondingly high

prices charged to consumers—is primarily the result of inefficient analog technology. Increasing

numbers of customers have been willing to pay

these prices because of the value being placed on

mobile communications.

New digital technology, however, will allow

wireless networks to serve many more users at a

lower cost per user (see chapter 3). As this happens, interconnection charges will become a larger fraction of the wireless carriers’ overall cost

structure and a more important determinant of the

prices carriers can charge. The lower the interconnection charges, the lower the price at which wireless carriers will be able to provide service. The

level of interconnection charges could even determine whether wireless carriers are limited to

serving the mobile telephone market, for which

consumers are willing to pay a higher price, or are

also able to compete in the local exchange market.

The cable companies, and others who view wireless local loop technologies as a way to compete

in the local telephone services market, are arguing most strongly for reduced interconnection

charges.

It is likely that some form of regulatory intervention would be required to reduce interconnection charges. Under the present system of

negotiated interconnection agreements, wireless

carriers could only obtain more favorable terms if

they had equal bargaining strength. For the foreseeable future, however, wireless carriers will

continue to be much more dependent on the LEC

than the reverse.18 Very few calls from LEC customers are to wireless users, while almost all wireless calls are to users of the landline network.

Because of this imbalance, the LEC would have

an incentive to maintain high interconnection

charges even if wireless carriers were allowed to

charge the LEC for completing calls.

As a result, regulators who want to bring interconnection charges down are faced with two difficult tasks. First, they may need to determine how

much it costs the LEC to provide interconnection—a notoriously difficult task. Prices could

then be set accordingly, allowing the LEC a reasonable margin of profit. Second, however, regu18 For more discussion of this issue, see Rob Frieden, “Wireline vs. Wireless: Can Network Parity Be Reached?” Satellite Communications,

July 1994, p. 20.
Chapter 7 Regulation of Interconnection | 193

lators and policymakers must also determine the

extent to which interconnection charges should

continue to subsidize universal service. As the

telecommunications industry has evolved from a

single monopoly carrier into one with many participants, above-cost interconnection charges

have been used to provide the LECs with revenues

that subsidize local residential service. To reduce

interconnection charges, regulators may need to

find alternative funding sources to make up for the

drop in revenues. The most common proposal for

replacing interconnection charges as a source of

subsidies is to create an expanded Universal Service Fund to which all carriers would contribute,

and from which eligible carriers could withdraw

funds to help them provide service.19

Regulators trying to encourage competition in

the local telephone market will also have to determine whether to designate wireless carriers as cocarriers with the LEC. Today, although cellular

carriers must pay the LEC to have wireless calls

delivered to PSTN users, the reverse is not true—

the LEC usually does not pay cellular carriers for

completing calls that come from the PSTN. The

FCC has stated several times that cellular carriers

should be compensated for completing calls from

the LEC, but most state regulators have chosen

not to follow this recommendation.20 In order to

redress this imbalance, wireless carriers are petitioning states to be formally recognized as co-carriers. Co-carriage involves mutual compensation,

in which each carrier compensates the other for

calls completed. Today, most LECs only recognize other LECs, such as those with neighboring

service areas, as co-carriers. Co-carrier status

would give wireless carriers greater bargaining

power in negotiating with the LECs.

Another issue that potentially could affect the

ability of wireless carriers to compete in local telecommunications markets involves the assignment

of telephone numbers. While there has been longstanding concern on the part of cellular carriers

that the LEC manages numbers in a way that disadvantages them, the issue is attracting more

attention as existing area codes start to run out of

numbers. When this happened in the past, area

code regions were split, assigning part of the old

area to a new number. But in recent years, LECs

have proposed relieving the pressure for numbers

by creating overlay area codes just for wireless

carriers. Wireless carriers have argued that assigning different area codes to the LEC’s potential

(wireless) competitors could lead to discrimination in how different carriers (and their customers)

are treated by the LEC.21 The FCC has recently

launched a proceeding to examine numbering issues in detail.22

In most respects, the interconnection issues

that concern wireless operators are similar to those

that concern new wireline competitors in the market for local telecommunications services. The

primary difference is that wireless carriers have

long had the right of interconnection, while state

regulators have only recently begun to certify

competitive local wireline carriers and grant them

the interconnection rights they need to enter the

market.23 Regulators granted wireless carriers the

right of interconnection more readily because they

were seen as serving a separate, niche market (mo19 The current version of S. 652, for example, specifies that only carriers designated as “essential telecommunications carriers” can withdraw from the fund. Section 104.

20 Kennedy, op. cit., footnote 9, p. 44.

21 See, for example, Reply Comments of the Personal Communications Industry Association, before the Federal Communications Commission, CC Docket No. 92-237, June 30, 1994, pp. 1-5.

22 Federal Communications Commission, Administration of the North American Numbering Plan, Notice of Inquiry, 7 FCC Rcd 6837

(1992).

23 See, for example, Richard L. Cimerman and Geoffrey J. Waldau, “Local Exchange Competition: Alternative Models in Maryland,” in

Proceedings of the 22nd Annual Telecommunications Policy Research Conference, Solomons, Maryland, Oct. 1-3, 1994, p. 221.
194 | Wireless Technologies and the National Information Infrastructure

bile telephony) that did not threaten the local monopoly.

Under current law, the level of interconnection

charges is primarily a state responsibility. Congress may choose to give more guidance to the

states on the terms under which interconnection

has to be provided. For example, both S. 652 and

H.R. 1555, the telecommunications bills currently being debated in Congress, would require the

LECs to treat all other carriers as co-carriers. In

addition, if Congress determined that state regulation of interconnection charges was slowing the

development of the wireless communications industry, it could either give the FCC a greater role

or preempt the states entirely. However, a reduction in interconnection charges is likely to require

coordinated action on the part of both state and

federal regulators because these charges are entangled in the larger question of universal service

subsidies.

INTERCONNECTION OBLIGATIONS OF

WIRELESS CARRIERS

The question of whether a carrier should be

obliged to interconnect with other carriers has

been one of the constant themes of telecommunications policy debates over the past two

decades.24 Today, only the LECs have interconnection obligations. As a result of their control of

the bottleneck local exchange, they are required to

interconnect with long-distance carriers and with

wireless carriers. A key issue is whether wireless

carriers should have interconnection obligations

of their own. In 1994, the FCC began examining

whether some or all wireless carriers have sufficient market power to justify the imposition of

interconnection obligations, or if, on a more fundamental level, interconnection obligations are

required of all carriers in order to hold today’s

more fragmented and competitive “network of

networks” together.25 The interconnection obligations of wireless carriers are also being debated in

Congress.

❚ Interconnection with Long-Distance

Carriers: Equal Access

As a result of the breakup of the Bell System in

1984, the relationship between wireline local and

long-distance service providers changed. Current

rules require LECs to provide “equal access” to all

long-distance carriers—allowing wireline users

to choose a preferred company to carry their longdistance calls. LATA boundaries define the limits

of local service—whenever a call crosses a LATA

boundary, it must be handed off by the LEC to the

user’s chosen long-distance carrier. The equal access rules were first applied by the Modified Final

Judgment (MFJ) to the RBOCs after the breakup

of the Bell System, and later extended by the FCC

to apply to all other LECs.26

There are no FCC rules that require wireless

carriers to provide equal access. However, the

wireless affiliates of AT&T and the RBOCs are

subject to consent decrees that require them to

provide equal access, regardless of the fact that

they are not required to do so under FCC rules.

The restrictions on the RBOCs’ cellular affiliates

were imposed by the court that oversees the MFJ.

The restrictions on AT&T were imposed as part of

the settlement to an antitrust action brought by the

Department of Justice (DOJ) when AT&T acquired McCaw.27 Wireless carriers not subject to

these consent decrees, such as GTE and Sprint, are

not required to allow their customers a choice of

long-distance carriers.

24 See, for example, Gerald W. Brock, Telecommunication Policy for the Information Age (Cambridge, MA: Harvard University Press,

1994).

25 Federal Communications Commission, Equal Access NPRM, op. cit., footnote 15.

26 Ibid., pp. 6-7.

27 U.S. Department of Justice, “Proposed Final Judgment and Competitive Impact Statement; United States of America v. AT&T Corp. and

McCaw Cellular Communications, Inc.,” notice, Federal Register 59 (165): 44158, Aug. 26, 1994.
Chapter 7 Regulation of Interconnection | 195

Over time, more cellular systems have been

converted to equal access. At first, all of the independent, or A-side, cellular carriers were free of

the equal access restrictions, as were the B-side affiliates of GTE and other non-RBOC LECs. But in

recent years, the RBOCs have begun buying Aside systems outside their home region. In Washington, DC, for example, the A-side system is

controlled by an RBOC cellular affiliate. The

court that oversees the MFJ has ruled that these

out-of-region systems must also be converted to

equal access. More recently, systems operated by

the largest A-side carrier, McCaw, were required

to convert to equal access after McCaw was acquired by AT&T. It has been estimated that over

60 percent of cellular customers are now served by

equal access carriers.28

Implications of Equal Access Restrictions

The nature of the equal access restrictions imposed on a wireless carrier affects several aspects

of its operations, including service packaging and

system design and construction.

Bundled local and long-distance service

Unlike the wireless affiliates of the RBOCs and

AT&T, carriers not subject to equal access rules do

not have to give their customers a choice of longdistance carrier. They can even set up their own

long-distance operation and funnel all of their customers’ traffic to it, selling their customers a

bundled package of local and long-distance service. Few wireless carriers have extensive longdistance networks of their own, but most resell

long-distance service purchased at “wholesale”

rates from one of the long-distance carriers.

Carriers that are allowed to sell bundled packages of local and long-distance service can market

their services very differently from equal access

carriers. They have the flexibility to create expanded “local” calling areas, much larger than a

LATA, because they do not have to distinguish between intra- and interLATA calls.29 They are able

to incorporate the cost of the interLATA part of the

call into the basic airtime charge, which applies to

all calls within the larger calling area. Some carriers have even eliminated the concept of “long distance” entirely, offering calls to any location in the

nation as part of the basic airtime charge.

On the other hand, equal access rules prevent

the wireless affiliates of AT&T and the RBOCs

from automatically funneling their wireless customers’ traffic to their own long-distance operation. They must give their customers a choice of

long-distance carrier. For many years, the

RBOCs’ cellular affiliates were, like their wireline telephone companies, prohibited from providing long-distance service at all. However, the

court that oversees the MFJ recently approved a

waiver request that allows the RBOCs’ cellular affiliates to resell long-distance service, as long as

they provide equal access and comply with several

other restrictions. Both S. 652 and H.R. 1555

would codify and somewhat liberalize this exemption.

In general, the wireless affiliates of AT&T and

the RBOCs may not offer wide-area “local” calling because the equal access rules require them to

hand off interLATA calls to the customer’s chosen

long-distance carrier. However, there are several

exceptions to this rule. The court that oversees the

MFJ has often waived the equal access rules when

it found that a “community of interest” crossed a

LATA boundary and the RBOC’s competitor was

able to offer regional calling. The DOJ exempted

AT&T from complying with equal access rules in

those areas where the RBOCs are exempt, and

also grandfathered 19 other systems operated by

McCaw that crossed a LATA boundary.

The nature of the equal access restrictions under which a wireless carrier operates affects the

configuration of the interconnection between it

28 McCaw Cellular Communications, comments before the Federal Communications Commission, Equal Access NPRM, op. cit., footnote

15, p. 34.

29 RBOCs can offer similar larger calling areas, but must get a waiver from the court to do so.
196 | Wireless Technologies and the National Information Infrastructure

and a long-distance carrier. Long-distance carriers, if selected to provide wholesale long-distance

service to a non-equal access carrier, nearly always arrange for a direct connection to the wireless carrier’s switch. The volume of traffic is

usually high enough to justify the cost of the

leased line, especially when the savings on access

charges are taken into account. When connecting

to an equal-access carrier, on the other hand, longdistance carriers are more likely to connect

through the LEC. Because the long-distance traffic is divided among several long-distance carriers, the volume of traffic is often insufficient to

justify a direct link.

Impact of equal access on

wireless system design

Equal access restrictions bring with them the requirement that wireless networks be designed to

operate within LATA boundaries.30 For example,

they prevent a wireless carrier from connecting its

switch to a cell site in a different LATA. Equal access rules would require that this link be open to

competition from other providers of interLATA

service. Because it is not technically feasible to

design a wireless network in such a way that these

internal operations are open to competition, wireless networks have to be contained within the

LATA boundary. Non-equal access systems, on

the other hand, can gain efficiencies by integrating

functions across a wider area that includes several

LATAs.

Because LATA boundaries were drawn with the

landline network in mind, it has often been difficult to design wireless networks in a way that conforms to the LATA boundaries. One problem was

that the FCC drew its cellular licensing map without regard to LATA boundaries. In many cases,

cellular licensing areas include parts of more than

one LATA, preventing an equal access carrier

from serving the entire licensing area from a

single switch, which may be the most efficient

configuration. The court that oversees the MFJ

has, on several occasions, granted waivers that

permit the RBOCs to build networks that cross a

LATA boundary.31

In addition, LATA boundaries and equal access

have not been easily reconciled with the requirements of a mobile service. It is possible, for example, that a call will change from local to

long-distance in mid-call if a user drives across a

LATA boundary. Because it is technically impossible to transfer the call to the user’s chosen longdistance carrier during this intersystem hand-off,

the MFJ court has granted a waiver that permits

RBOC wireless affiliates to continue these calls.

Finally, there may be significant advantages in

network construction and operation, as well as

other economies of scope, that may not be possible with continued segmentation of local and

long-distance services. The cellular industry argues that users value large local calling areas. In

addition, if a cellular carrier is reselling long-distance service, it can buy service at bulk rates that

are cheaper than the retail rates that most individual users could obtain on their own. This has particular implications for satellite providers because it

is likely that a call made by a mobile satellite system user will be headed outside the LATA in

which the gateway is located. For this reason, satellite carriers intend to purchase long-distance service in bulk and then bundle it with the their usage

charges at a flat per-minute rate, regardless of the

destination of the call.

Proposed Changes to Wireless

Equal Access Restrictions

In 1994, the FCC proposed requiring all cellular

carriers to observe the equal access rules. In part,

this proposal was intended to ensure that all companies in a competitive industry are subject to the

same rules.32 The FCC does not currently have the

30 Kennedy, op. cit., footnote 9, pp. 102-108.

31 Kennedy, op. cit., footnote 9, p. 106.

32 Federal Communications Commission, Equal Access NPRM, op. cit., footnote 15, p. 20.
Chapter 7 Regulation of Interconnection | 197

power to ensure competitive parity by removing

the equal access restrictions from AT&T or the

RBOCs because these conditions are a consequence of antitrust law and can only be modified

by the courts or Congress. The FCC is only able to

ensure competitive parity by imposing the equal

access restrictions on the remaining wireless carriers. While preferring that competitive parity be

achieved by removing their restrictions, the

RBOCs supported this effort. The FCC has not yet

acted on its equal access proposal.

Because of the problems associated with applying LATA boundaries to a mobile service, the FCC

suggested that the larger Major Trading Areas

(MTAs) be used instead of LATAs to distinguish

between local and long-distance calls.33 Longdistance carriers have opposed this proposal because it would reduce the amount of traffic

considered to be long distance. The use of MTAs

would also create competitive parity issues because the RBOCs’ wireless affiliates would still

be required to observe LATA boundaries, unless

Congress or the courts altered the terms of the

MFJ.

Wireless equal access has been an issue in recent congressional debates on revising the nation’s telecommunications laws. Both S. 652 and

H.R. 1555 would supersede the consent decree

provisions that impose equal access restrictions

on the wireless affiliates of AT&T and the

RBOCs. Both bills would also require wireless

carriers to allow their customers to reach all longdistance carriers. However, carriers could require

their users to dial five-digit access codes to reach

most long-distance carriers,34 while reserving the

more convenient “1+” access for calls routed

through their own long-distance network. In the

past, equal access has meant giving users the ability to presubscribe to their choice of 1+ carrier, as

they are able to do with their wireline telephone

service.

In discussions concerning equal access rules,

the key issue is whether wireless carriers have the

ability to restrict competition in the market for

long-distance service. Equal access rules were imposed on wireline LECs because their control over

the local exchange bottleneck allowed them to

also dominate the long-distance market. Wireless

carriers, by contrast, do not control a bottleneck.

The market for wireless communications has always been capable of supporting competition and

has never been viewed as a natural monopoly. If

there were several competing wireless carriers,

there would be competition in wireless long distance even if each carrier did not offer a choice of

other long-distance carriers.

To the extent that competition in the market for

mobile telephone service is limited, it is because

the FCC initially licensed only two cellular carriers. The DOJ imposed equal access restrictions on

AT&T’s cellular operations because it believed

that AT&T would have sufficient market power,

as one of only two cellular carriers in a market, to

reduce competition in the market for cellular longdistance service.35 The DOJ also required rigorous equal access restrictions as a condition of

RBOC entry into the cellular long-distance market.

Proponents of extending the equal access rules have

pointed to the DOJ’s actions to argue that these safeguards are required. However, the market for local

mobile telephone services is about to become significantly more competitive with the entry of an ESMR

carrier and three to six PCS carriers.

Conflicting Models

Although economic arguments may indicate that

equal access requirements should not be imposed

on wireless carriers, the sale of integrated local

33 Ibid., p. 32.

34 This is similar to the procedure by which users access long-distance carriers other than the one to which a payphone is presubscribed. The

codes are of the form “10XXX,” where the last three digits denote the carrier.

35 U.S. Department of Justice, op. cit., footnote 27, at 44169.
198 | Wireless Technologies and the National Information Infrastructure

and long-distance wireless service would be at

odds with the telecommunications industry model

that has been established over the past decade for

the much larger wireline market. From a functional perspective, wireless can be used to provide access to a long-distance network in much the same

manner as a wireline local exchange network.

There is considerable pressure to structure the

market so that long-distance carriers can sell service to wireless users in the same way that they

sell to wireline users.

Without equal access, long-distance carriers

cannot sell their service directly to end users, as in

the wireline model. Instead, they have sell to the

wireless carriers, who then resell the long-distance service to their customers as part of a

bundled package. From the long-distance carriers’ perspective, it is difficult to market services

that can be used with both wireless and wireline

access because there is no guarantee that their services would be accessible from all wireless carriers. In particular, virtual private networks that

include volume discounts and custom features

cannot necessarily be accessed from a corporate

customer’s chosen cellular carrier.

As the amount of wireless traffic grows, the

conflict between the two models of the telecommunications industry could become more significant. Long-distance carriers have been the main

supporters of the FCC’s equal access proposal,

preferring to sell directly to end users rather than

ceding control over the packaging of services to

the networks that originate the call. However, both

AT&T and Sprint have acquired wireless interests

of their own and may have an interest in permitting a greater degree of bundling. Long-distance

carriers that have wireless access networks of their

own would have a competitive advantage over

long-distance carriers that do not.

Aside from economic considerations, another

set of arguments in favor of equal access relies on

the general NII concept of a network of networks.

According to this argument, the future telecommunications infrastructure will be made up of

many different networks, and users should be able

to choose their telecommunications services from

many different providers, mixing and matching as

needed. They should not have to switch wireless

carriers in order to change their long-distance service, for example. For this to be possible, all networks would have to interconnect, regardless of

market power.

❚ Interconnection of Wireless Carriers

Today, calls between customers of different wireless carriers are almost always routed through the

local exchange network. Because the LEC is required to interconnect with all wireless carriers, it

provides a common link between them. However,

in the same way that a wireless carrier can circumvent the LEC and connect directly to a long-distance carrier, it can also choose to connect directly

to another wireless carrier. This configuration

avoids the interconnection charges that would

have to be paid if the traffic were routed through

the LEC. Direct connections are used only rarely,

however because the volume of wireless to wireless traffic is usually too small to justify the cost of

the leased line.

In 1994, the FCC proposed that wireless carriers be required to interconnect with other wireless

carriers. Most wireless carriers opposed this proposal, arguing that interconnection through the

LEC was sufficient to guarantee connectivity.

They also pointed to the fact that there are relatively few direct connections between wireless carriers today. Others, however, argued that the

amount of wireless to wireless traffic will soon increase, and that clear rules should be established

now. In part, the FCC appeared to be concerned

that purely voluntary interconnection arrangements would lead to a lack of connectivity or inef-
Chapter 7 Regulation of Interconnection | 199

ficiencies in network design.36 After studying

theissue, however, the Commission tentatively

concluded that it would be premature to require

wireless carriers to interconnect with other wireless carriers.37

A related question is whether roaming agreements (see chapter 3) should continue to be voluntary or if wireless carriers should be required to

negotiate them. Today, it is in the interest of cellular carriers to negotiate roaming agreements with

each other because all carriers benefit from being

able to advertise wide area service and from the increased use of their systems. The cellular industry

also voluntarily negotiated roaming agreements

with a new provider of mobile satellite services,

American Mobile Satellite Corp. (AMSC) allowing calls to be forwarded to users through

AMSC’s satellite network when they are outside

cellular coverage areas (see chapter 3).

However, new wireless entrants have expressed concern that the incumbent cellular carriers will choose not to negotiate roaming

agreements with them. Until there are PCS networks throughout the nation, new PCS providers

might want to offer their customers a dual-mode

phone that would use PCS-band service in their

home market and cellular service when roaming.

But it might be in the cellular industry’s interest to

refuse to negotiate roaming agreements, limiting

their new competitors to isolated islands of service that could not compete with nationwide cellular roaming.

The location information that wireless carriers

collect to facilitate roaming is also becoming increasingly valuable to other wireless and wireline

carriers. There are many possible services that can

be offered based on knowledge of a user’s current

location. For example, if LECs and long-distance

carriers had access to cellular carriers’ location information, they could deliver calls more efficiently and less expensively to roamers. Today, if a user

is visiting another city and someone in that city

wants to call them, the call is first sent to the user’s

home cellular system—incurring a long-distance

charge to the caller. The cellular carrier determines

that the user is roaming and then sends the call

back to the LEC in the same city it came from—incurring a long-distance charge for the cellular subscriber. Thus, even if the two individuals are

literally in the same building, the call must travel

to the cellular user’s home system and back

again—turning an inexpensive call into a very expensive one. Ideally, local telephone companies

and cellular companies could share information

about roamers that would allow the visited LEC to

deliver the call directly to the visited cellular carrier—eliminating all the unnecessary long-distance

transfers and charges. In comments on the FCC’s

interconnection proceeding, a major interexchange carrier argued that it should be guaranteed

access to information about its customers in the

cellular industry’s location databases.38 The cellular industry believes that location information is

proprietary and that it should not be required to

share the information with other carriers.39

36 “We ask commenters to focus on whether interconnection requirements would advance competition and encourage efficiencies and lower rates in the mobile services marketplace. We do not wish to encourage a situation where most traffic from one CMRS service subscriber must

pass through a LEC switch for its traffic to reach a subscriber to another CMRS service, if such routing would be inefficient or unduly costly.”

Federal Communications Commission, Equal Access NPRM, op. cit., footnote 15, p. 54.

37 Federal Communications Commission, Interconnection and Resale Obligations Pertaining to Commercial Mobile Radio Services, Second Notice of Proposed Rule Making, CC Docket No. 94-54, April 20, 1995.

38 Federal Communications Commission, Equal Access NPRM, op. cit., footnote 15, p. 58.

39 Ibid.
Zoning

Regulations

and

Antenna

Siting

ne of the most contentious issues facing the wireless industry today involves the location of transmitting antennas. The cellular and personal communications service

(PCS) industries estimate that they will have to build

100,000 new antennas by the year 2000 in order to provide adequate mobile telephone service to the public.1 Local communities, however, are increasingly opposed to the new antennas for

aesthetic, health, and safety reasons, and are applying local zoning rules and municipal ordinances to force carriers to locate the

antennas elsewhere or halt construction altogether.2 In response

to the increasing number and cost of these objections, two wireless industry trade associations petitioned the Federal Communications Commission (FCC) to nullify or preempt local regula1 Bob Roche, director of research, Cellular Telecommunications Industry Association, personal communication, May 31, 1995.

2 Examples of reporting on this issue from local communities include: James Rush,

“Towering Controversy: Expansion of Cellular Antenna Systems a Local, National Issue,” The Seattle Press, vol. 10, No. 3, Apr. 12-26, 1995, pp. 1ff; Sandi Coburn, “Cellular

One’s Call Waiting,” Suburban News (New Jersey), June 15, 1994, pp. 1, 14; Michelle DeBlase and Dina Masarani, “East Brunswick, Old Bridge Vote: Local Officials Urge Cellular Tower Limits,” Home News (New Jersey), Sept. 30, 1994, pp. B1, B6; Norman O’Donnell, “Phone Trouble: Everyone Wants Cellular Phones, but Many Don’t Want To Live

Near the Antennas That Make Them Work,” Gannett Suburban Newspapers (New

Jersey), Aug. 24, 1994, pp. 1A, 2A; “Cellular Phones: West Hollywood, Cal., Denies

Transmission Post,” EMF Litigation News, November 1993, p. 535.

| 201
202 | Wireless Technologies and the National Information Infrastructure

tions on antenna siting.3 The FCC has not yet

acted on these petitions. Local restrictions have

also been a serious concern to the satellite broadcast industry, which has been fighting local rules

on satellite receiving dishes for many years. At

their foundation, these issues revolve around the

question of which should take preeminence: federal policy or local law?

FINDING

The issue of federal preemption of local zoning

and other regulations represents a battle between

two valid, but conflicting, public policy goals. On

the one side, federal policymakers, as set forth in

the Communications Act of 1934, are trying to

bring advanced communications services to the

public. On the other side, communities and citizens are trying to preserve local control over their

land and affairs—a long-standing tenet of American political culture. In essence, the issues

surrounding federal preemption of local regulations affecting antenna siting derive from

ambiguous language contained in the Omnibus Budget Reconciliation Act of 1993—the

legislation that established the Commercial

Mobile Radio Service (CMRS).4 In that Act,

Congress stated in part “...no State or local government shall have any authority to regulate the

entry of or the rates charged by any commercial

mobile service or any private mobile service, except that this paragraph shall not prohibit a State

from regulating the other terms and conditions of

commercial mobile services.” Each side in the

preemption debate has interpreted this passage as

supporting its position.

Without additional information or clarification, congressional intent regarding preemption in the case of zoning and antenna siting

remains unknown. This ambiguity is likely to

cause continuing uncertainty until the FCC and

appeals processes run their course. The Congress

has not engaged in any debate or action on federal

preemption of local regulations of wireless operations, and there is no information that could clarify what the Congress might think on this issue. As

a result, attention is currently focused on the FCC,

where the petitions for rulemaking have been submitted and the process of evaluating them is under

way.

In responding to this issue, Congress has two

primary options. First, it could let the FCC process run its course. The existing petitions for rulemaking, if accepted by the FCC, could result in a

formal proceeding being established. This proceeding would doubtless receive considerable

attention in the industry and in state and local

communities, and there are indications that the

FCC is looking at this issue carefully. The process

would, however, take several years to wind its

way through the FCC rulemaking process and the

almost inevitable court challenges and appeals.

Secondly, Congress could make clear its intentions regarding the legislative language and offer a

specific interpretation regarding local zoning and

antenna siting—either by supporting it explicitly,5 or by requiring states and local governments

to resolve the antenna siting issues through negotiations with the wireless companies. A specific

finding from Congress—either for or against preemption—would at least remove the uncertainty

3 Cellular Telecommunications Industry Association, “Petition for Rulemaking,” before the Federal Communications Commission, In the

Matter of Amendment of the Commission’s Rule To Preempt State and Local Regulation of Tower Siting For Commercial Mobile Services Providers, RM-8577, Dec. 22, 1994, and Electromagnetic Energy Association, “Petition for Further Notice of Proposed Rulemaking,” before the

Federal Communications Commission, In the Matter of Guidelines for Evaluating the Environmental Effects of Radiofrequency Radiation, ET

Docket No. 93-62, Dec. 22, 1994.

4 47 U.S.C., sec. 332(c)(3)(A).

5 Some leaders in the House of Representatives have already signaled that they now support preemption. See remarks by Rep. Newt Gingrich to Wireless ‘95 conference, New Orleans, LA, Feb. 1, 1995.
Chapter 8 Zoning Regulations and Antenna Siting | 203

surrounding the issue, and allow the industry to

move ahead with existing plans or pursue alternatives. Congressional action could also help clarify

the issue of local restrictions on receive-only satellite dish placement, a matter that the FCC ruled

on in 1986 when it partially preempted local regulations. 6

BACKGROUND

The battle over antennas used to send and receive

radio signals is not new, but its character is changing. In the 1980s, the fight was over local restrictions on the “big ugly dishes” used for receiving

C-band satellite transmissions—pitting homeowner against homeowner or local zoning board.

Today, although restrictions on satellite dishes remain contentious, the dispute has broadened as

citizens and local governments have taken up

positions against unwanted transmission towers

used primarily to provide cellular telephone (and

future PCS) services.

Wireless telephone service providers—cellular, PCS, and ESMR—are now in the process of

establishing or expanding their networks. In order

to deliver services, they have to place antennas in

areas that will allow them to reach their customers. Sometimes these antennas can be located

away from residential areas, but in other cases, engineering, topographical, or capacity considerations mean that antennas have to be located close

to homes.

In the early days of cellular telephone system

construction, it was relatively easy for companies

to locate sites and build antennas. Property owners could be found who had little objection to antennas or base-station equipment, and many did

not understand that their locations had value to

carriers. Communities did not have ordinances

limiting antenna siting or other characteristics of

radio facilities. Furthermore, wireless carriers had

more latitude in placing antennas; objections

could usually be met by simply moving to another

suitable site close by.

Today, cellular and PCS companies are having

a much harder time siting antennas, both technically and politically. They are trying to erect new

antennas to cover areas that currently have poor

service, usually due to topography or cellular system congestion associated with high demand.

Changes in cell structure and system architecture,

however, are more difficult to make now because

adjacent cells are already established. To function

most effectively, antennas generally need to be located close to the center of their cells; as cells get

smaller, the latitude for placement shrinks as well

(see figure 8-1).7 In a typical high-density area,

where cells may be as small as one mile in diameter, this means that an antenna would ideally be located in a central four-city-block area.8

At the same time, despite the increasing reliance and value that many residents put on wireless communications, public opposition to these

antennas is growing rapidly. Ironically, it arises

most often, although not exclusively, in communities that have the highest per capita use of cellular telecommunications, notably wealthy

suburban neighborhoods close to major metropolitan centers. Citizens often object to the antennas

because they can be unsightly and bring down

property values, and because they fear the possible health hazards associated with the radio

waves the antennas emit (see chapter 11). Some

question the need for or appropriateness of these

new services. In a few cases, minor changes—

6 Federal Communications Commission, Preemption of Local Zoning or Other Regulation of Receive-Only Satellite Earth Stations, 59

R.R.2d 1073 (1986).

7 Ideally, the transmitter should be located at the center of the cell, but in any case should be located at a distance no more than one-fourth of

the cell radius from the center. Cellular Telecommunications Industry Association, “Local Zoning vs. Wireless Communication: A Case for

Federal Preemption?” briefing paper, (January 1995), p. 2.

8 Jaymes D. Littlejohn, “The Impact of Land Use Regulation on Cellular Communications: Is Federal Preemption Warranted?” Federal

Communications Law Journal, vol. 45, No. 2, April 1993, p. 250.
204 I Wireless Technologies and the National Information Infrastructure

Ideal siting area-@ 12.6 sq. miles Ideal siting area-@ 0.05 sq. miles

NOTE: Figure not drawn to scale.

SOURCE Office of Technology Assessment, 1995.

planting bushes around equipment shacks or

somehow disguising the antennas-are enough to

satisfy citizen objections. In other cases, however,

citizens want the antennas/towers moved so that

they are less obvious or further away from populated areas-to lessen any possible health risks.

And in some cases, citizens feel so strongly that no

changes are acceptable; they seek to prohibit the

tower/antenna altogether.

Citizen objections manifest themselves in restrictive zoning regulations or other municipal ordinances. This gives citizens’ groups the ability to

challenge the siting of each tower or antenna a

wireless company wants to put up. They maintain

that carriers can move their towers to other locations, but are usually unwilling to do so because it

will cost them more money. There is also resentment among some citizens and public interest

groups at the arrogant way they believe the carriers have treated their objections.

The process of challenging a particular antenna

site, which can work itself out in both local zoning

hearings and in court, is both time-consuming and

expensive. 9 As a result, the wireless industry

wants the federal government to preempt local and

state regulations on antenna siting, so that they

can move ahead with building their systems. They

maintain that it is often not just a matter of cost,

but of engineering requirements that dictates antenna placement. Early on, the industry received

some support from FCC chairman Reed Hundt,

who noted that local taxation, zoning, and other

local restrictions could slow the widespread deployment of wireless technologies. In speeches to

city and county organizations he encouraged them

“to find a way to tolerate the presence of the new

[PCS] equipment—relay stations and antennas—

that this service requires.”10 To date, no general

accommodations have been reached, and the issue

has become highly politicized in many communities.

The satellite industry, meanwhile, is still fighting the battles first joined in the 1980s, when local

restrictions on satellite dishes were put into place.

Today, public zoning restrictions on satellite dishes are limited, but private homeowners’ association rules or condominium covenants are

permitted by the FCC. In addition, some commu9 Estimates of the added costs to the wireless industry of local regulatory proceedings are not available.

10 "Hundt Says Local Government Regs Could Slow Competition,” Telecommunications Reports, Mar. 13, 1995, p. 24.
Chapter 8 Zoning Regulations and Antenna Siting | 205

nities do not follow the guidelines specified in the

FCC’s preemption order, and since the FCC has

limited enforcement resources, in these communities the law is ignored. The FCC has brokered discussions between the direct broadcast satellite

industry and local government representatives on

a blanket preemption of restrictions on direct

broadcast service antennas.11 As in the case of cellular and PCS antennas, the issue is not yet resolved.

❚ Antenna Siting for Cellular and PCS

Services

Antennas and base-station equipment for landbased wireless telecommunications systems vary

in size and appearance depending on factors such

as power output, frequency, topography, and expected usage. Engineering considerations determine both the number of radios needed per cell

site (based on number of customers served) and

the power levels of the radios—smaller cells use

lower power. PCS base-stations, for example,

may have a power output of up to 100 watts per

channel—a typical site might have up to 30 channels, so total output might reach 3,000 watts if all

channels were in use simultaneously.12

The equipment needed at each cellular or PCS

base station generally consists of an antenna, radio

transceivers, and the hardware needed to link to

other cell sites or switches in the system. Because

of differences in power levels and architectures,

the equipment needed for individual cellular and

PCS cell sites varies in size and configuration. For

cellular base stations, antennas can be a small (3 to

4 feet) rod, a panel (4 to 8 feet tall and 1 to 2 feet

wide), or a combination of rods and panels. In

high-use areas, a complete antenna installation

may consist of 12 to 16 panels, located on a freestanding pole (up to 150 feet), a tall building, or

another high structure (water towers, television

antennas, etc.). In lower use areas, antennas can be

mounted on smaller towers or even low-rise apartment buildings. The radio equipment for cellular

telephone systems is usually housed in large trailer-sized (20’ x 10’ x 7’) facilities equipped with air

conditioners for peak-use cooling. PCS cell-site

equipment consists of smaller whips and panels,

and the radio hardware can be housed in a metal

box about the size of a small refrigerator.

❚ Siting Satellite Dishes

In the case of satellite dishes, local restrictions are

aimed not at the large dishes used by companies

to transmit programming to a satellite—these are

usually located far from residential areas—but at

the smaller (18 inches to 10 feet) dishes consumers use to receive programming at their homes.

These antennas must be positioned so that they

can easily receive signals from satellites. Depending on the consumer’s exposure to the southern

sky, and the landscaping and other physical structures present in the area, a customer may be able

to put a dish in the backyard, on the roof, or in a

place out of sight of neighbors.13 Some customers, however, must put their dishes in their front

yards or elsewhere in view of others in the area.

Some communities have zoning ordinances, or

restrictive covenants, or other conditions that limit the type, placement, or appearance of these dishes, and some forbid their use altogether.

Restrictions exist because residents object to the

size or appearance of these dishes. In a few cases,

developers make arrangements with cable companies to pre-wire communities, at the cable compa11 Cellular Telecommunications Industry Association, “Reinventing Competition: The Wireless Paradigm and the Information Age,” (February 1995), p. 13.

12 Due to collocation of antennas, local effective radiated power levels may vary substantially.

13 There are three generally available types of satellite dishes that correspond to different satellite frequencies and services: 1) large 8- to

12-foot diameter dishes, known as C-band antennas; 2) smaller dishes, about 3 feet in diameter, known as Ku-band antennas, used, for example,

to receive broadcasts from Primestar; and 3) small dishes, about 18 inches across, known as direct satellite service (DSS) dishes, used to receive

broadcasts from DirecTV and United States Satellite Broadcasting (USSB).
206 | Wireless Technologies and the National Information Infrastructure

nies’ expense, in exchange for restrictive

covenants that are written into deeds or other community rules. Some communities restrict only satellite dishes of a certain size or those not

camouflaged (a typical disguise is a patio umbrella), while others make no distinction at all, prohibiting even traditional television antennas.

In response to growing concerns that restrictive

covenants would affect the health of the satellite

industry, in 1986, at industry’s urging, the FCC

ruled that the only permissible local restrictions

were those that were narrowly written; based on

health, safety, or aesthetic concerns; and that did

not discriminate against receive-only satellite antennas. All others restrictions would be preempted.14 With this ruling, the FCC attempted to

balance the interests of the industry and consumers in receiving satellite broadcasts with the interests of communities in local control of land-use

and enforcement of health, safety, and aesthetic

regulations.

In 1993, the satellite industry pressed the FCC

to modify the 1986 order to clarify the types of local restrictions that would be prohibited.15 The industry claimed that many communities were

imposing “noncompliant” regulations that the

FCC was powerless to oppose—in particular size

and height restrictions—which, by their nature,

single out satellite dishes, including lot size limitations, limits in commercial or industrial areas,

and other placement or screening requirements, or

any flat bans.16 The FCC is currently considering

modifications to the 1986 order.

GENERAL COURT GUIDELINES ON

FEDERAL PREEMPTION

Politically, there are few issues that raise the ire of

a small but vocal segment of the population more

than federal preemption of states’ rights and local

regulations. The recent Supreme Court decision

striking down federal restrictions on gun possession near public schools,17 that reversed decades

of Court rulings on use of the interstate commerce

clause of the Constitution to accomplish federal

goals, underlines the necessity of considering

carefully the appropriate and justifiable division

of regulatory responsibilities between the states

and the federal government. When coupled with

continuing concern about the health effects of

electromagnetic radiation, the local control of antennas could become a very divisive issue for policymakers.

The issues surrounding federal preemption of

local zoning laws regarding antenna siting are part

of a larger conflict between federal policy and

state laws. In general, the supremacy clause of the

Federal Constitution says that federal law overrides, or can prohibit, exercise of state laws. General rules on preemption are impossible to

formulate because of the diversity and complexity

of circumstances.18 As Supreme Court Justice

Black wrote for the majority in Hines v. Davidowitz, the test to be applied in such cases is whether

a state law “stands as an obstacle to the accomplishment and execution of the full purposes and

objectives of Congress.”19

14 Federal Communications Commission, “Preemption of Local Zoning or Other Regulation of Receive-Only Satellite Earth Stations,” report and order, 47 CFR Part 25, Federal Register 51(31):5519-5527, Mar. 14, 1986.

15 Satellite Broadcasting and Communications Association of America, “Reply Comments,” before the Federal Communications Commission, Preemption of Local Zoning Regulation of Satellite Antennas, Report No. DS-1311, July 12, 1993.

16 Ibid., pp. 9-12.

17 United States v. Lopez, No. 93-1260, decided Apr. 26, 1995.

18 Ronald D. Rotunda and John E. Nowak, Treatise on Constitutional Law: Substance and Procedure, 2nd ed., vol. 2, sec. 12.1, pp. 62-63. It

should be noted that there is no mention of preemption in the Constitution itself.

19 312 U.S. 52, at 67 (1941).
Chapter 8 Zoning Regulations and Antenna Siting | 207

Thus, congressional intent to preempt state law

is the principal element of a preemption claim, and

finding congressional intent when it is otherwise

not explicitly expressed has been the task of the

courts. Where no explicit congressional intent can

be found, the courts have labored to balance state

and federal interests to avoid conflicting regulation at the different levels of government. In general, the Court has given greater deference to state

and municipal regulations that concern traditionally local issues—such as zoning, health, and

safety measures—even while attending to the

facts of each case considered on its own.20 In other

cases, although federal preemption has been

granted by the courts with some ease, there seems

to be increasing reluctance to allow it. One indication of this reluctance was shown when, in 1987,

President Ronald Reagan issued an executive order directing that federal preemption should be

sought:

... only when a statute contains an express

preemption provision or there is some other firm

and palpable evidence compelling the conclusion that the Congress intended preemption of

the state law, or when the exercise of State authority directly conflicts with the exercise of

Federal authority under the Federal statute....

Any regulatory preemption of State law shall be

restricted to the minimum level necessary to

achieve the objectives of the statute pursuant to

which the regulations are promulgated.21

This order confirmed the trend evident in the

Supreme Court, that had, by that time, begun to

show increasing reluctance to usurp state and local

law.22

THE CASE FOR FEDERAL PREEMPTION

The legal issue of land-use regulation and wireless

telecommunications has been framed in terms of:

1) whether Congress’s intent that new wireless

services be quickly and comprehensively rolled

out means that it intended that state and local landuse regulations be preempted, and 2) whether the

FCC has the authority to preempt state and local

regulations that impede the development of commercial mobile radio services (CMRS).

In building its case for preemption, the industry

argues that Congress and the FCC have determined that development of nationwide wireless

telecommunications services is a policy objective

of the United States, citing language from the

FCC’s own rulings:

We [the FCC] expect cellular to become an

important communications tool, the extensive

use of which can be of significant benefit to the

American economy and to the more general

public interest, and we are accordingly anxious

to have it implemented as quickly as possible....

We believe that cellular is important enough to

the public interest to warrant special attention to

avoid delays.

23

In order to meet this goal, wireless carriers

maintain that they must be free to build towers

where they are needed and not be subject to long

local procedures that delay implementation. They

argue that preemption is needed if services are to

be deployed as quickly and widely as possible.

In the Omnibus Budget and Reconciliation Act

of 1993, which amended section 332 of the Communications Act,24 Congress said that “[n]o State

20 Rotunda and Nowak, op. cit., footnote 18, sec. 12.3, p. 73.

21 Reagan, R. R., President, United States, “Executive Order No. 12612—Federalism,” (Oct. 26, 1987), secs. 4(a), (c), reprinted in 52 FR

41685 (1987).

22 Rotunda and Nowak, op. cit., footnote 18, sec. 12.4, p. 76.

23 Federal Communications Commission, “Public Mobile Radio Services,” final rule, 47 FR 10,018, 10,033 (1982), cited in Littlejohn, op.

cit., footnote 8, p. 259.

24 This amendment streamlined all commercial mobile radio services into one regulatory framework. Public Law 103-66, Aug. 10, 1993.
208 | Wireless Technologies and the National Information Infrastructure

or local government shall have any authority to

regulate the entry of or the rates charged by any

commercial mobile service or any private mobile

service.” States may only regulate “other terms

and conditions.”25 The industry argues that only a

narrow reservation of authority was reserved for

state and local governments over telecommunications activities in order that “[s]tate and local governments may not lawfully bar entry, create

regulatory disparities or introduce significant inefficiencies in the production of CMRS through

zoning and other similar regulation.”26 By this,

the wireless industry asserts that: 1) Congress tacitly allowed federal preemption, because zoning

regulations introduce inefficiencies in the establishment of CMRS services, and 2) given the

FCC’s long-standing commitment to efficiency as

a major criterion in regulating radio services, the

FCC should preempt local zoning regulations.27

In carrying out congressional mandates, questions have arisen regarding the authority of the

FCC to preempt local regulation. Under the interstate commerce clause, as developed through various court cases dealing with telecommunications

regulation,28 the FCC has regulatory authority

over telecommunications that have interstate connections. This discretionary power generally

covers any system connected to the public

switched telephone network, including cellular

telephony and new PCS. Preemption proponents

argue further that the FCC has jurisdiction over

equipment that is used in providing wireless services, such as antenna siting where heights and

locations can affect service delivery. They note

that the Court of Appeals for the District of Columbia Circuit has held that:

If the [1934 Communication] Act’s goal of

providing uniform, efficient service is ever to be

realized, the Commission must be free to strike

down the costly and inefficient burdens on interstate communications which are sometimes imposed by state regulation.29

To date, however, the FCC has not decided

whether it should act on this issue. Although it can

strike down regulations that restrain interstate

telecommunications activities, it is not required to

do so, nor does it mean that sweeping national preemption is necessary. Until such a determination

is made by the FCC or Congress, each challenge to

local laws and regulations (each individual siting)

must be argued by the cellular carriers on an individual basis.30 Because each local proceeding

could take many months, this could slow service

deployment or upgrades, add significantly to the

network’s start-up costs, and slow earnings of

wireless operators.31

25 47 U.S.C., sec. 332(c)(3)(A). OTA found no legislative history in this regard.

26 Cellular Telecommunications Industry Association, op. cit., footnote 3, p. 7.

27 Littlejohn, op. cit., footnote 8, pp. 259-261.

28 Ibid., pp. 253-256, citing Puerto Rico Telephone Company v. FCC, 553 F.2d 694, 698 (1st Cir. 1977), which determined that the FCC

could prohibit the private branch exchange (PBX) rule as it, in effect, encroached on the FCC’s authority over interstate commerce, and relied on

Ambassador, Inc. v. United States, 325 U.S. 317 (1945), which affirmed that the FCC’s jurisdiction “extends to ‘interstate wire communication

from its inception to its completion.’”

29 National Association of Regulatory Utility Commissions v. FCC, 746 F.2d 1492, 1501 (D.C. Cir. 1984), cited in Littlejohn, op. cit., footnote 8, p. 256.

30 Littlejohn, op. cit., footnote 8, p. 256.

31 For examples of local opposition to cellular antennas that wireless companies say show significant added costs or other burdens, see

McCaw Cellular Communications, Inc., “Comments,” before the Federal Communications Commission, In the Matter of Amendment of the

Commission’s Rule To Preempt State and Local Regulation of Tower Siting For Commercial Mobile Services Providers, RM-8577, Feb. 17,

1995, pp. 10-19, and Southwestern Bell Mobile Systems, Inc., “Comments,” before the Federal Communications Commission, In the Matter of

Amendment of the Commission’s Rule To Preempt State and Local Regulation of Tower Siting For Commercial Mobile Services Providers,

RM-8577, Feb. 16, 1995, pp. 8-15.
Chapter 8 Zoning Regulations and Antenna Siting | 209

THE CASE AGAINST FEDERAL

PREEMPTION

Opponents of preemption argue that state and local rights, including regulating the power output

of facilities in their jurisdictions, must be preserved because they are the appropriate loci for

protecting public health, safety, and welfare.32

They object to antennas on several grounds: antennas can be obtrusive and may have unacceptable visual impacts on neighborhoods, which

lowers property values; there may be health hazards from electromagnetic radiation emitted from

antennas close to residences and schools; and

without local regulations tailored to local conditions, antennas may be poorly constructed or unsafe.

❚ Local Control

Preemption opponents argue that there is a limitation to the FCC’s power when matters pertain exclusively to local or intrastate matters.33 Under

sec. 332 (c) (3) of the Communications Act:

. . . no State or local government shall have

any authority to regulate the entry of or the rates

charged by any commercial mobile service or

any private mobile service, except that this paragraph shall not prohibit a State from regulating

the other terms and conditions of commercial

mobile services.

Opponents argue that this exception permits

them to continue to regulate antenna placements

under local zoning laws because zoning falls under “other terms and conditions,” and is not related to “entry of or the rates charged by” CMRS

providers. In their view, while it may be more

costly or difficult to establish service quickly,

CMRS providers can, nevertheless, establish service. The Cellular Telecommunications Industry

Association’s (CTIA) position that any regulation

is an obstacle to entry is overly narrow, opponents

argue.34 Opponents of preemption point to tests of

federal preemption involving amateur radio antenna regulations, as decided in Guschke v. City of

Oklahoma City.

35 This case determined that despite general federal encouragement of amateur

radio as socially important, that finding alone was

not sufficient to warrant federal preemption of local regulations.

Furthermore, where the relevant market for service is local, as it is with many wireless services,

communities argue that they have the right to decide what costs and benefits they are willing to

sustain, as long as there are no substantial impacts

on other areas. If local costs are raised by local restrictions, and these costs are not borne by other

communities, then it could be argued that preemption is an unnecessary intrusion.36

Communities feel that opening the door to federal preemption of local zoning and land-use restrictions may result in other intrusions:

This attempt at preemption by the cellular

phone industry with the cooperation of the FCC

is a blatant attack on our communities that is

more of a threat and at a lower level of morality

than any neighborhood drug dealer... If this preemption is allowed it will open the door for the

federal government to attack any and all zoning

32 “Local Groups Oppose Radio Tower Preemption Request,” Telecommunications Reports, Feb. 20, 1995, p. 45.

33 Louisiana Public Service Commission v. FCC, 476 U.S. 355 (1986), sec. 2(B), cited in Natural Resources Defense Council, “Comments,”

before the Federal Communications Commission, In the Matter of Amendment of the Commission’s Rule To Preempt State and Local Regulation

of Tower Siting For Commercial Mobile Services Providers, RM-8577, Feb. 16, 1995, p. 5.

34 Natural Resources Defense Council, op. cit., footnote 33, p. 3.

35 763 F.2d 379 (10th Cir. 1985), cited in Littlejohn, op. cit., footnote 8, p. 260.

36 According to the economic analysis of rights, as articulated by Ronald Coase, for an efficient economic outcome to be achieved, it matters

little which party bears the economic burden of ameliorating a noxious or objectionable condition. In the case of antenna siting, either the wireless company or the local residents pay for making antenna siting less objectionable, but in end the cost of service will be the same. The fact that

costs can be arbitrarily allocated means that some basis for deciding must be determined. For a discussion of Coase’s Theorem, see Charles

Fried, Right and Wrong (Cambridge, MA: Harvard University Press, 1978), pp. 81-107.
210 | Wireless Technologies and the National Information Infrastructure

regulations in all of our communities whenever

a wealthy and powerful industry group with an

influential lobby sees those regulations as an obstacle to increased profit... At a time when there

is so much talk in Washington, D.C. about taking back our neighborhoods there is a clear

example here of us losing those very neighborhoods to big business.37

❚ Health, Safety and Aesthetic Concerns

In addition to arguments concerning the legality

of preemption, opponents further argue that the

safety of radio emissions has not been fully established, and that local zoning and other regulations

are appropriate measures to take in order to protect

public safety (see chapter 11 for more discussion

of health issues). Aesthetic concerns undoubtedly

lie at the core of many objections to antennas, but

these are harder to argue for without running afoul

of charges of inconsistency, beauty being in the

eye of the beholder.38 As a practical matter, aesthetics is generally formally given as a reason for

restricting antenna siting in cases where obvious

historical or other design considerations are at

stake in a community.

The Natural Resources Defense Council notes

that section 332 (a) of the Communications Act39

directs the FCC to take action after considering

whether such action will “promote the safety of

life and property.” It argues that local zoning regulations are designed to protect public health, and

that preempting them could harm the public.

Communities claim that this language provides

them with legitimate grounds for regulating or

prohibiting the placement of antennas within their

boundaries. Until a consensus on the safety of

broadcast antennas is established, they will continue to have the right to limit placements.

The industry counters that health concerns are

used arbitrarily and capriciously by communities

to delay or prevent antenna installations:

Despite overwhelming and uncontroverted

evidence that the extremely low power emissions or radio frequencies from properly designed and constructed antenna sites fall well

below every state and federal exposure limitation, (usually by factors of 500 to 3000 percent),

the unfounded health and safety concerns of local citizens are most easily appeased by simply

rejecting applications and letting the courts

overturn the decision—at great expense and

costly delay for the commercial mobile service

provider.

Health and safety claims are also often a subterfuge for underlying and unreasonable “aesthetic” concerns. In most typical communities

telephone poles, water towers, broadcast towers

and microwave relay sites proliferate, yet zoning boards often find that mobile antennae poles

and towers violate vague “aesthetic” standards

included in local zoning codes. Were the same

standards to be applied to other forms of communications these communities would have no

telephone service, no radio service, no television service and no utilities.

40

Regarding the aesthetics of satellite dishes, the

FCC has held that local regulations do hold sway

in some cases:

State and local zoning regulation or other

regulations that differentiate between satellite

receive-only antennas and other types of antenna facilities are preempted unless such regulations (a) have a reasonable and clearly defined

37 See George Curtis of Seattle, WA, “Comments,” and R. James Pidduck, of Edmonds, WA, “Comments,” before the Federal Communications Commission, In the Matter of Amendment of the Commission’s Rule To Preempt State and Local Regulation of Tower Siting For Commercial Mobile Services Providers, RM-8577, Feb. 14, 1995 and Feb. 17, 1995.

38 See, for example, Town of Greenburgh, NY, “Local Law on Temporary Moratorium on the Establishment of New Commercial Antenna,”

1995, and Abby Gilbert of Washington, DC, “Comments,” before the Federal Communications Commission, In the Matter of Amendment of the

Commission’s Rule To Preempt State and Local Regulation of Tower Siting For Commercial Mobile Services Providers, RM-8577, Feb. 12,

1995.

39 47 U.S.C., sec. 332 (a).

40 Cellular Telecommunications Industry Association, op. cit., footnote 7, p. 5.
Chapter 8 Zoning Regulations and Antenna Siting | 211

health, safety, or aesthetic objective; and (b) do

not operate to impose unreasonable limitations

on, or prevent, reception of satellite delivered

signals by receive- only antennas or to impose

costs on the users of such antennas that are excessive in light of the purchase and installation

cost of the equipment.

Regulation of satellite transmitting antennas

is preempted in the same manner except that

state and local health and safety regulation is not

preempted.

41

These issues will likely continue to be contentious for the foreseeable future, given their pervasive scope, and because they pit national

objectives for quick and inexpensive service provision against deeply held beliefs, traditions and

laws concerning local land use regulation. Some

basis must be given for deciding who will bear the

costs of antenna siting; this would seem to be the

primary responsibility of the Congress.

41 47 CFR 25.104.
Wireless

Technologies

 and

Universal

 Service

ne of the most important contributions that wireless technologies can make to the emerging National Information

Infrastructure (NII) is to support and extend the provision

of communications services to all Americans. The main

purpose of the Communications Act of 1934 was:

to make available, so far as possible, to all the people of the

United States a rapid, efficient, Nationwide and worldwide wire

and radio communications service with adequate facilities at reasonable rates.1

The term “universal service” has come to mean widespread availability of basic telephone service at affordable rates. Today, 93.8

percent of U.S. households have telephone service, down somewhat from the all-time high of 94.2 percent, recorded in 1993.2

Policymakers are concerned with both providing telecommunications service to households that do not have it and with maintaining universal service during the transition to a more

competitive market. Wireless technologies can contribute to universal service goals by providing unserved users with access to

service and/or by allowing customers to be served at lower costs

than with wireline technology. However, policymakers also recognize that the definition of universal service will evolve to include more advanced communication and information services. If

wireless technologies are to play a continuing role in supporting

1 47 U.S.C. 151.

2 Federal Communications Commission, “Telephone Subscribership in the United

States,” April 1995, table 2.

| 213
214 | Wireless Technologies and the National Information Infrastructure

universal service, they will have to keep pace with

the capabilities of wireline systems.

FINDINGS

 Wireless technologies can provide access to

telecommunications services in areas where

wireline service is not available. The first

component of universal service is physical access—the availability of service regardless of

location. Although most households in the

United States have access to wireline telephone

service, in some parts of the nation it is difficult

or impossible to deliver service with wireline

technologies because of high cost, difficult terrain, or geographic barriers. But radio waves

can cross water, canyons, and other obstacles,

providing telephone service to homes that

would otherwise remain unserved. In addition,

broadcast and satellite technologies are the

only means available to deliver video programming and other advanced services to some parts

of the nation.

 Wireless technologies may be able to serve

some homes at lower cost than wireline

technologies. With wireline technology, the

cost to build a copper loop depends on the distance from the telephone company’s central office to the home. In sparsely populated rural

areas, where many homes are far from the central office, it can be very expensive to provide

wireline telephone service. Wireless local loop

systems, which connect homes to the telephone

network through a radio link, may be less expensive than long rural copper loops. With

wireless technology, the cost to serve a home is

less dependent on distance from the central office.

If wireless proves to be a lower cost alternative in rural areas, it would allow for a reduction

in the industry cross subsidies currently needed

to keep rural telephone service affordable. Federal policies have long supported the use of

these subsidies to extend universal service to

rural areas, and as a result, telephone penetration in rural areas no longer lags behind that of

the cities. However, the system of subsidies is

being threatened by the transition to a competitive telecommunications industry, in which

consumer prices are expected to be driven closer to the actual cost of providing service. Deploying a less expensive technology would

allow for a reduction in subsidies for rural telephone service while keeping prices affordable.

 Despite the potential cost advantage of wireless technology, it is premature to conclude

that it can eliminate the need for rural telephone subsidies. Few households currently

have wireless telephone service. The new digital technologies that will allow for low-cost

wireless local loops are only now being

introduced. Production economies have not

been achieved, and final prices are not yet set.

For this reason, determining the cost—both

system capital cost and subscriber equipment

cost—of different levels of wireless service

(basic voice through interactive broadband) is

difficult. Moreover, it is not clear whether wireless technology can maintain a cost advantage

while providing the high-speed two-way video

and data services that may be required as the

definition of universal service evolves.

Even if wireless systems can provide lower

cost alternative telephone service in rural

areas, a broader portfolio of policies will still

be required to support affordable telephone

service for low-income users in both urban

and rural areas. Wireless technology may

provide a way to keep rural telephone service
Chapter 9 Wireless Technologies and Universal Service | 215

affordable, while reducing the subsidies, but

there are still millions of users in both urban

and rural areas who cannot afford telephone

service even at current rates. If anything, cities

with a large low-income population have a

more acute universal service problem. The deployment of wireless technology is unlikely to

make telephone service significantly more affordable for these low-income households.

Special programs such as Lifeline and LinkUp

America, which subsidize users directly, will

likely have to be maintained.

In order to more fully explore the potential of

wireless technologies in helping meet evolving

NII and universal service goals, Congress could

support experimentation with wireless technologies by rural telephone companies. The use

of wireless to provide basic telephone service in

rural areas is unproven, and there are many uncertainties. Pilot projects or demonstration projects

could help to establish whether wireless is, in fact,

a viable option and also help determine the applications in which wireless can be used most effectively.

Congress could also direct the Federal Communications Commission (FCC) to determine

whether additional spectrum should be allocated to wireless loop service in rural areas. In

the seven years since the Commission last examined this issue, wireless technology has advanced considerably and interest in rural wireless

has grown. Some local exchange carriers believe

that the current allocation is insufficient and have

urged the Commission to allocate additional spectrum.

THE ROLE OF WIRELESS

TECHNOLOGIES IN UNIVERSAL SERVICE

The current concept of universal service entails

the provision of basic telephone service at affordable rates. Wireless systems, both terrestrial and

satellite-based, have certain advantages, including coverage and a different cost structure, that

may allow them to support universal service by

improving access in areas that have no telephone

service and/or by lowering the cost of service. Terrestrial “wireless local loop” systems broadcast

from a tower to the homes in the surrounding area;

the range can be up to 20 miles or more. The signals are received by an antenna mounted either on

a pole near the house or on the outside wall of the

house, and then connected by wire to a telephone

inside the house. Telephone service can also be delivered via satellite, although satellite service is

usually more expensive than terrestrial wireless

service.

❚ Extending Service to

Unserved Populations

The first component of universal service is physical access—the requirement that service be available. In the United States, there are very few areas

that have no telephone service. The long effort to

bring telephone service to rural America has been

largely successful. However, a small number of

households remain unserved because the wires

needed to provide service do not reach them.

Households without physical access are generally in areas where wireline technology is not viable, due to prohibitive cost, difficult terrain, or a

geographic barrier such as a river or mountain.

The data on unserved households is unreliable,

but one group estimated that there were approximately 150,000 households in areas where there

was no certified telephone company and about

330,000 households in areas where there was a

telephone company but no service was available.3

Another survey found about 500 to 2,000 unserved customers in Colorado, mainly in mountainous regions.4

There have been several estimates of the number of rural households that could be served with

3 Rural Radio Task Force, comments before the Federal Communications Commission, “Petition for Rulemaking to Establish Basic Exchange Telecommunications Radio Service,” CC Docket No. 86-495, May 9, 1986, pp. 14-16.

4 George Calhoun, Wireless Access and the Local Telephone Network (Boston, MA: Artech, 1992), p. 185.
216 | Wireless Technologies and the National Information Infrastructure

wireless technology, either because they have substandard telephone service or because they are

without telephone service. The last time the FCC

examined the issue of rural radio, in 1987, one survey found that 7,731 subscribers, scattered among

138 telephone companies, could be served or upgraded through radio loop technology.5 However,

the petitioners who initiated the FCC proceeding

estimated the nationwide total of eligible subscribers at approximately 900,000 by counting

households that were without telephone service or

had four- or eight-party-line service.6 Finally, a

study by Bellcore estimated that 213,000 to

246,000 households could be served by radio.7

There is a clear role for wireless technologies in

serving these remote and difficult locations. Bell

Atlantic, for example, serves a household on an island in the James River with terrestrial wireless

technology.8 In Nevada, in the Antelope and Reese Valleys, 50 residential customers who did not

have service will soon receive it from a cellular

company.9 Wireless technologies can also be used

for temporary installations that do not justify the

construction of a wireline network, for emergency

restoration of service, and to provide interim

service until wireline facilities have been

constructed.

Although most installations of wireless local

loops have relied on terrestrial technology, satellites may offer another option in especially remote

areas. Universal access is inherent in the use of

satellite technology—once the satellite has been

launched, any location within its footprint can get

service. In Alaska, satellites have played a key

role in delivering service to remote villages for

many years. US West has launched a trial in which

Very Small Aperture Terminal (VSAT) equipment

is used to provide telephone service to 43 Wyoming customers.10 New mobile satellite services

may offer telephone and more advanced services

to fixed users in isolated areas. (See chapters 3 and

5.)

Finally, wireless could provide service to those

who have no permanent home. For example, four

to five million migrant farmworkers, who usually

have limited acces to a telephone, could use wireless—if service was less expensive.11 Currently,

the Census Bureau’s statistics used to measure

telephone penetration do not count the use of mobile telephone service if it is used instead of wired

service to a home.12 But a small number of people

may already be using a mobile phone as their primary phone.

❚ Increasing Affordability

Physical availability is only one component of

universal service. Service must also be affordable.

In some applications, wireless technologies could

support universal service goals by delivering telephone service at a lower cost than wireline technologies. Until recently, this would have seemed

unlikely—there are no more than a few thousand

households in the United States that get their tele5 Federal Communications Commission, Basic Exchange Telecommunications Radio Service, Report and Order, CC Docket No. 86-495, 3

FCC Rcd 215 (1988).

6 Federal Communications Commission, Basic Exchange Telecommunications Radio Service, Notice of Inquiry, CC Docket No. 86-495, 2

FCC Rcd 326 (1987).

7 Federal Communications Commission, Basic Exchange Telecommunications Radio Service Report and Order, op. cit., footnote 5.

8 Personal Communication, Donald Brittingham, Bell Atlantic, Mar. 20, 1995.

9 “Nevada PSC OKs Programs for Service to Remote Areas,” Telecommunications Reports, vol. 61, No. 1, Jan. 9, 1995, p. 11.

10 “US West Deploys USATs for Rural U.S. Telephony,” Telecommunications, Americas Edition, vol. 28, No. 4, April 1994, p. 8.

11 Some of these workers already spend $40 or more per week on long distance calls to their families, but the added cost of wireless subscriptions put cellular out of their reach. Based on OTA interviews with migrant workers and migrant health professionals.

12 Jorge Schement, Alex Belinfante, and Larry Povich, “Telephone Penetration 1984-1994,” in Proceedings of the 22nd Annual Telecommunications Policy Research Conference, p 4.
Chapter 9 Wireless Technologies and Universal Service | 217

phone service over a wireless link, mainly in remote and hard-to-reach areas. According to some

published figures, however, the cost of a wireless

local loop has dropped to between $800 and

$1,200, which is comparable to the average cost of

a copper loop in the United States.13 And in areas

that are sparsely populated or have difficult terrain, the cost of a copper loop can easily reach as

high as $2,000 to $5,000, making wireless solutions much more attractive.14

New digital technologies are the primary driver

behind low-cost wireless loops. (See chapter 3.)

Reductions in the cost of wireless local loop systems are also being driven by the explosive

growth in demand for mobile telephone service.

Because the equipment used to provide fixed

wireless service is similar to that used for mobile

service, fixed users can piggyback on the technology advances and declining cost of mobile technology. As mobile service becomes more widely

used and the price of equipment drops due to economies of scale, fixed wireless services will also

become less expensive.15

Impact of Wireless Technology

on Rural Subsidies

Background

Wireless loops may play an important role in reducing the cost of providing telephone service in

rural areas. One of the characteristics of wireless

technology is that the cost to serve a home does

not depend on whether the home is close to the

transmitter or far away, as long as it is within

range. With wireline technology, on the other

hand, the cost to serve a home depends directly on

its distance from the central office. In sparsely

populated rural areas, homes are located further

apart, requiring long, expensive loops dedicated

to each customer. For the most remote customers,

even terrestrial wireless technologies may be too

expensive—if a cell site serves a very small number of households, for example. In such cases, satellite technology may be the only cost-effective

option.

Because of these high costs, telephone penetration rates in rural areas of the United States were

much lower than in the cities for the first half of

this century. To remedy this situation, federal and

state regulators developed policies designed to

make rural telephone service more affordable. The

Rural Electrification Administration (REA—now

the Rural Utilities Service) offered low interest

loans, provided technical support, and also helped

with the formation of cooperatives in areas where

commercial companies chose not to provide telephone service. But the more important policy tool

was the subsidization of rural telephone service

with revenues transferred from customers in lower

cost urban areas. It has been estimated that about

$5.5 billion flows from urban to rural users to

maintain rural telephone rates comparable to

those in urban areas.16

One subsidy mechanism that is used to keep rural telephone rates low is rate averaging, by which

regulators require that carriers charge both urban

and rural customers the same rate. As a result, rural users are charged less than it costs to serve

them, while urban users pay more in order to pro13 Terry Sweeney, “Lenders Backing Wireless Loops,” CommunicationsWeek International, Dec. 12, 1994, p. 3. See also, Bruce Egan,

“Economics of Wireless Communications Systems in the National Information Infrastructure,” unpublished contractor report prepared for the

Office of Technology Assessment, U.S. Congress, Washington, DC, November 1994.

14 A. Javed, P. O’Kelly, K. Dick, and M. Lucey, “Wireless Technology Evolution and Impact on the Access Network,” in Proceedings of the

1994 Conference on Personal Wireless Communications, p. 12.

15 In general, systems developed specifically for wireless loop applications provide a higher level of voice quality than those based on modified versions of mobile technologies. Many of today’s mobile technologies are designed to deliver voice quality lower than that of wireline

systems, trading off quality for the advantages of mobility and increased capacity. Achieving better voice quality adds to the cost of the system.

16 Telecommunications Industries Analysis Project, “Apples and Oranges: Differences Between Various Subsidy Studies,” Oct. 10, 1994,

p. 2.
218 | Wireless Technologies and the National Information Infrastructure

vide the necessary subsidies. Rate averaging is the

primary tool used by the larger local exchange carriers, the Bell Operating Companies, to provide

affordable service in their rural territories. These

companies serve a diverse customer base of rural

and urban customers and can successfully transfer

costs from one group of customers to another.

Most of rural America, however, is served by

small independent telephone companies—some

serving only a few hundred households—that operate only in high-cost areas and have few offsetting low-cost loops. The FCC tries to ensure that

these small companies can deliver affordable telephone service by subsidizing them with revenues

from a Universal Service Fund. The money paid

into this fund comes from the long distance carriers, who contribute about one cent of every dollar

of their revenues. All local telephone companies

with loop costs more than 15 percent above the national average are eligible to withdraw from the

Fund. The higher their loop costs, the more funds

they can withdraw. In 1993, about $750 million

was transferred from the long distance carriers to

high-cost local telephone companies.17

Proposed changes to the Universal Service

Fund could encourage small telephone companies

to look for lower cost loop technologies. Under

current rules, telephone companies withdraw

from the Universal Service Fund in proportion to

their loop costs. As a result, they make an adequate return on investment, regardless of whether

they have used the most efficient technology. The

FCC is currently examining whether it is possible

to base subsidies on a projected reasonable cost to

serve an area, based on proxy factors such as population density or terrain type.18 In the past, highcost assistance based on proxy factors was

rejected in part because the data was more difficult

to assemble or verify than simple loop cost.19

The system of subsidies has largely been successful; telephone penetration rates in rural areas

no longer lag behind those in urban areas. However, there is a concern that the subsidy flows will

be more difficult to maintain in a deregulated and

competitive environment. For example, a Bell

Operating Company that priced urban service

above cost in order to subsidize rural users could

find its rates undercut by a new competitor that

served only the urban market. As competition

drives prices closer to cost, those who have benefited from the existing system of cross-subsidies—primarily rural users—may see their rates

rise. One organization of rural telephone companies estimated that their subscribers’ monthly

bills would increase by about $12 per month.20

Although there is ongoing debate about the extent to which higher rural prices would cause users

to drop off the network, Congress has indicated a

desire to maintain a balance between urban and rural rates. Both S.652 and H.R. 1555, the telecommunications bills currently being debated in

Congress, state that consumers in rural and highcost areas should have access to telecommunications services at the same rates as urban

consumers. One way to achieve this objective

would be to find a subsidy scheme that is compatible with a competitive market. Mechanisms to

accomplish this have been the subject of much

discussion, but there is, as yet, no consensus on

the best solution.

The impact of wireless systems

17 Federal Communications Commission, Amendment of Part 36 of the Commission’s Rules and Establishment of a Joint Board, Report and

Order, CC Docket No. 80-286, note 4, Dec. 23, 1993.

18 Federal Communications Commission, Amendment of Part 36 of the Commission’s Rules and Establishment of a Joint Board, Notice of

Inquiry, CC Docket No. 80-286 (1994), p. 22.

19 Ibid., p. 23.

20 OPASTCO, “Keeping Rural America Connected,” p. ES-4, 1994.
Chapter 9 Wireless Technologies and Universal Service | 219

The promise of wireless technology is that it

would provide a way to keep rural rates affordable

while at the same time reducing the reliance on

subsidies from urban users. Because of its cost

structure and the advent of digital technology,

wireless technology may be able to serve some

sparsely populated rural areas at about the same

cost per household as a densely populated urban

area. The objective of equal urban and rural rates

could then be achieved without cross-subsidies.21

For those who see no simple way to continue the

rural subsidies in a competitive environment, or

view the continuing debate over universal service

as an impediment to the transition to a more competitive telecommunications industry, the prospect of a technological fix is attractive.

Even if wireless were found to be a lower cost

option, however, it would probably be deployed

on a piecemeal basis. Nearly all households, even

in rural areas, already have wireline telephone service. Wireless technology would be used initially

to bring service to the small number of households

that currently have none or to provide for new

growth in rural areas. It may also be used to upgrade substandard loops, but only about 3 percent

of the existing copper loops are rebuilt each year.

As a result, it will take some time before the cost

structure of the rural telephone network would

change enough to allow for a reduction in subsidy

requirements.

Most studies that show wireless making a dramatic impact on the cost of rural telephone service

assume that the network is being built from

scratch.22 In fact, in countries that are building

their telecommunications infrastructure for the

first time, wireless is often the technology of

choice. Fixed cellular access systems have been

deployed in over 40 countries,23 primarily in developing countries such as Indonesia, India, and

the Philippines, but also in Spain and in central

Europe. The market for wireless local loop equipment has been estimated at about $4 billion over

the next three years, and provides an important export opportunity for U.S. manufacturers.24

Low-Income Populations

Among the 6.2 million Americans who do not

have telephone service, low income is the primary

predictor. For example, of households on welfare,

27.9 percent lack telephones.25 Now that policymakers have succeeded in bringing telephone service to rural America and in equalizing urban and

rural rates, they are beginning to concentrate on

bringing telephone service to these low-income

populations. If anything, universal service concerns are at least as great in urban areas with significant low income populations as in rural

areas—the focus of universal service policy initiatives in the past.

Despite its potential cost advantages, however,

wireless technology is unlikely to lower the cost

of telephone service sufficiently to make it more

affordable for low-income populations. It may

help keep rural telephone rates close to urban rates

at lower subsidy levels, as noted above, but it will

not dramatically lower the average cost of telephone service in the United States. Although

wireless probably has a cost advantage over copper when used for rural or longer suburban loops,

it is, at best, comparable in cost to copper when

used for the much larger number of short urban

21 “. . . .the public interest is unquestionably served when basic telephone service can be provided in a more cost effective manner — particularly in rural areas which generally require universal service subsidies to keep rates for local service affordable.” US West comments before the

Federal Communications Commissison, Allocation of Spectrum Below 5 Ghz Transferred from Federal Government Use , ET Docket 94-32,

Dec. 19, 1994, p. 6.

22 See, for example, Hatfield Associates Inc., “The Cost of Basic Universal Service,” July 1994.

23 Jean-Philippe Haag, “Fixed Cellular Solutions for Wireless Access,” Telecommunications, vol. 28, No. 12, December 1994, p. 57.

24 Sweeney, op. cit., footnote 13.

25 Schement, op. cit., footnote 11.
220 | Wireless Technologies and the National Information Infrastructure

loops. In addition, any savings from a reduction in

rural subsidies paid by urban users would be

spread across a very large number of households

and reduce the average urban bill only slightly.

Because wireless technology will make telephone service more affordable only in a limited

number of applications, it cannot, by itself, dramatically increase current levels of penetration.

The lack of telephone service among low income

groups is a complex problem whose solution will

almost certainly require the continuation of federal and state programs that address the affordability

question more directly. One such program reduces

monthly subscriber charges (the Lifeline Service

program), while another provides for reduced

installation charges (the LinkUp America program). Over the past decade, states that have pursued aggressive federally supported assistance

policies have shown the greatest increase in penetration among households below the poverty

level.26

POLICY ISSUES

Wireless has considerable promise as a tool for

maintaining and expanding universal service, especially in rural areas. But the use of wireless

technologies in fixed applications is still rare;

OTA was unable to determine the number of

households whose telephone service is provided

with wireless technologies, but it is probably no

more than a few thousand. It is premature to assume that the deployment of wireless technology

can eliminate the need for a rural subsidy program. Moreover, it is uncertain whether wireless

technology can maintain a cost advantage while

providing the high-speed two-way video and data

services that may be required as the definition of

universal service evolves (see below). However,

federal policy should make available sufficient

spectrum for the potential of wireless in rural areas

to be explored.

❚ Wireless Technology and the Evolving

Definition of Universal Service

Wireless technology can provide today’s definition of universal service—“basic” voice telephone service. As technology advances and users’

needs change, however, the requirements for universal service are expected to broaden; perhaps to

include high-bandwidth services such as image

transfer and video. The telecommunications bills

currently being debated in Congress, for example,

define universal service as an evolving level of

services. Both S.652 and H.R. 1555 envision that

the FCC would periodically determine which services should be provided at affordable rates to all

Americans, including those in rural areas.

Wireless technology already plays an important role in providing one-way video services, although they are not part of the current definition of

universal service. For example, while 96 percent

of U.S. households currently have access to cable

television, 4 million households remain unserved.

Most of these are in areas where constructing

cable systems would be prohibitively expensive.27 By contrast, at least one or two channels of

broadcast television is available in 99.5 percent of

households, and over 1 million households in

areas without cable service get service from large

C-band satellite dishes. Most recently, high-powered direct broadcast satellites (DBS) have

brought multichannel video to unserved areas at a

price that is competitive with cable rates in urban

areas.28

In the future, the definition of universal service

is likely to include two-way data communications

capability that would allow subscribers to access

the Internet or online services. Most terrestrial

wireless access systems currently allow data to be

26 Schement, op. cit., footnote 11, p. 11.

27 Federal Communications Commission, “Broadcast Television in a Multichannel Marketplace,” June 1991, p. 71.

28 Beth Murphy, “Rural Americans Want Their DirectTV,” Satellite Communications, March 1995, p. 30.
Chapter 9 Wireless Technologies and Universal Service | 221

transmitted at 9,600 bits per second, the speed of a

moderately good wireline modem, to access online services and for other applications. Some of

the newer systems designed specifically for wireless local loop systems offer even higher fax and

data transmission rates. In some respects, wireless

may be better able to provide advanced services

than the existing wireline network. In rural areas,

deteriorating copper loops may not be able to support high-speed fax and data transmission, and it

may be less expensive to install a new wireless

loop than to rebuild an aging copper loop.

It is unclear, however, whether wireless will be

able to match all of the new services that will be

provided over advanced wireline networks and

still maintain its cost advantage in more than the

most difficult to reach locations. Both S.652 and

H.R.1555 would require that the services available to urban and rural users be reasonably comparable. In the cities, there is growing interest in a

wireline technology known as Integrated Services

Digital Network (ISDN) that offers a 128,000 bit

per second data stream to and from the home. Both

telephone companies and cable companies are

also beginning to upgrade urban networks with fiber and coaxial cable to provide high-bandwidth

services. No existing wireless access technology

can match these capabilities, although the proposed Spaceway and Teledesic satellite systems

would provide high-speed data communications

services. (See chapter 5.)

❚ Spectrum Availability

Spectrum allocations determine the viability of

wireless services—whether they can be offered at

all, their capabilities, and the cost of the service.

For example, the amount of spectrum allocated

determines whether fixed wireless service is limited to basic telephony, or can also carry highbandwidth information-age services such as

interactive multimedia or video. The band in

which the spectrum is allocated also affects the

economics of the service. Lower frequencies are

especially useful because the signal propagates

further, allowing more households to be covered

from the same tower and decreasing the cost per

household.

For wireless to provide the services that constitute the universal service package, sufficient spectrum must be made available. Today, only a

limited amount of spectrum is available for fixed

voice services—almost all of the spectrum that is

allocated for wireless telephony is restricted to

mobile applications. The only spectrum available

to serve fixed users is allocated to a service called

BETRS (Basic Exchange Telecommunications

Radio Service), which was established in 1987 by

the FCC. But because demand for the service was

uncertain, the FCC did not create an exclusive frequency allocation and allocated only a small number of channels.29 In addition, the FCC only

allows carriers with Personal Communications

Service (PCS), cellular, or Specialized Mobile

Radio (SMR) licenses to serve fixed users on an

“incidental” or “ancillary” basis.30 Their customers may choose to employ their mobile phones in a

fixed application, but the network has to be designed primarily to serve mobile users.

In large part, the restrictions on the provision of

fixed services by mobile service providers are due

to concerns about competition. Competition in the

provision of local telephone service has historically been limited by the belief that such service was

actually a natural monopoly most effectively pro29 The FCC allocated 26 frequencies in the 450 megahertz band to BETRS on a co-primary basis. In the cities, these frequencies are used for

a mobile telephone service, but the FCC reasoned that in rural areas, where BETRS would be more useful, they are often vacant. BETRS Report

and Order, op. cit., footnote 5. In 1988, the FCC also permitted the use of cellular frequencies for BETRS, but in practice only the 450 megahertz

band has been used.

30 “There is only a limited amount of spectrum for these new PCS services, and fixed service uses generally can be accommodated by other

means or in other frequency bands. Therefore, the primary focus of PCS will be to meet communications requirements of people on the move.”

Federal Communications Commission, Amendment of the Commission’s Rules to Establish New Personal Communications Services, Notice of

Proposed Rule Making and Tentative Decision, ,7 FCC Rcd 5689 1992.
222 | Wireless Technologies and the National Information Infrastructure

vided by only one carrier. Most states still limit

competition in the local telephone service market

(although this is changing), and a broad grant of

permission to cellular or PCS carriers to provide

fixed as well as mobile service might have been

seen as sanctioning competition in the local exchange market. In creating the BETRS service,

the FCC was careful to note that it would only

grant authority to provide BETRS to companies

that were either certified local exchange carriers or

had some other form of permission from the state

to provide local exchange service.31

As state barriers to local exchange competition

begin to come down, the FCC has the option to allow mobile services providers to provide fixed

service. In one survey of small telephone companies, 32 percent believed that wireless would be a

competitor.32 Noting that the PCS frequencies are

unlikely to be fully utilized for mobile services in

rural areas, the FCC recently indicated that it is

willing to consider waiver requests to use PCS frequencies to provide fixed services.33 However,

this position was stated in passing in an unrelated

proceeding, and there is still considerable uncertainty about which uses of the PCS spectrum are

permitted. The FCC will need to clarify its position regarding wireless fixed telephone services

before full competition can emerge in the local

telephone market.

The FCC also has the option to allocate additional spectrum specifically for wireless local

loop applications.34 Several local exchange carriers recently requested that the FCC allocate spectrum transferred from the federal government to

wireless local loops. However, under most of

these proposals, the wireless local loop spectrum

would only be available to the incumbent local exchange carrier. As the telecommunications industry becomes more competitive, it is unlikely that

the FCC could exclude other carriers from competing for this spectrum.

31 Federal Communications Commission, Basic Exchange Telecommunications Radio Service, Report and Order, op. cit., footnote 5, p.

217.

32 Western Alliance, Universal Service in the Nineties, p. 14.

33 Federal Communications Commission, Allocation of Spectrum Below 5 Ghz Transferred from Federal Government Use, First Report and

Order, op. cit., footnote 20.

34 United States Telephone Association comments before the Federal Communications Commission, ET Docket No. 94-32, Dec. 19, 1994,

p. 3.
Privacy,

Security, and

Fraud

s wireless technologies become more widely used and

more closely integrated into the National Information Infrastructure (NII), concerns about privacy, confidentiality, the security of communications, and protection from

fraud will become increasingly important (see box 10-1).1 Although laws that address such issues do exist, users of wireless

technologies generally have less assurance of confidentiality and

protection from fraud than do users of traditional wireline systems. This is due to the fact that most radio transmissions are

much easier to intercept than those transmitted over a wireline

system. The extent to which the public is aware of these problems

is unclear, but among radio enthusiasts the open nature of radio

signals has long been recognized, and is the basis of the popular

pursuit of scanning or recreational eavesdropping.2

Until recently, privacy violations and fraud affected a relatively small number of users and technologies. Today, as wireless

communications systems proliferate and the number of radio

communication devices expands, the problems are becoming

more severe—the worst of which is theft of service through fraud.

Concerns about the confidentiality and security of wireless data

transmission, for example, are rising as more companies turn to

1 OTA has done several studies of aspects of telecommunications privacy and security. See U.S. Congress, Office of Technology Assessment, Information Security and Privacy in Network Environments, OTA-TCT-606 (Washington, DC: U. S. Government

Printing Office, September 1994) and U.S. Congress, Office of Technology Assessment,

Protecting Privacy in Computerized Medical Information, OTA-TCT-576 (Washington,

DC: U. S. Government Printing Office, September 1993).

2 Scanners have their own magazine, Monitoring Times, which has a circulation of

30,000.

| 223
224 I Wireless Technologies and the National Information Infrastructure

Many of the terms used in this chapter to discuss privacy and security have ambiguous meanings, and

are used in various ways by different people. ’ In this report, OTA uses the following definitions:

■

■

●

■

Confidentiality refers to the nondisclosure of information beyond an authorized group of people.

Privacy is distinguished from confidentiality in that privacy refers to the balance struck between an individual’s right to keep information confidential, and society’s right to have access to that information for

the general welfare. Privacy laws codify this balance, and also provide for some level of individual control over information about themselves.

Security refers generally to the protection individuals desire against unauthorized disclosure, modification, or destruction of information they consider private or valuable. Security is maintained through the

use of safeguards, which can be implemented in hardware, software, physical controls, user or administrative procedures, and the like. In practice, security and safeguards are often used interchangeably.

Fraud refers to the use of deception to gain something of value, such as someone using another’s telephone account number or other identifier to steal telephone service.

1 For more detailed discussion of these definitional issues, see U.S. Congress, Office of Technology Assessment, /formation

Security and Privacy in Network Environments, OTA-TCT-606 (Washington, DC: U. S. Government Printing Office, September 1994),

pp. 26-29,82-83.

SOURCE: Office of Technology Assessment, 1995.

wireless technologies to meet their data commu- op ways to listen in and track wireless commu

nication needs. The use of radio technologies in

the context of the NII is especially problematic because the vulnerability of the radio link to eavesdropping also exposes the wireline portion of

public voice and data networks to privacy and security violations and fraud, and in ways that are

difficult to guard against. This chapter examines

the problems of privacy, security, and fraud in

today’s wireless networks, and discusses possible

technical, regulatory, and administrative solutions.

FINDINGS

Wireless technologies invite privacy and fraud

violations more easily than wireline technologies

due to their broadcast nature. The privacy implications of widespread use of mobile wireless

technologies are potentially serious for both individuals and businesses. There will be a continuing

need to guard against eavesdropping and breaches

of confidentiality, as hackers and scanners develnications devices.

■

■

It is unclear how successful efforts to address

privacy and security concerns regarding wireless telecommunications have been. Laws designed to protect wireless telephone users,

while potentially helpful, may not go far

enough, and enforcing them is difficult. Likewise, the success of the efforts of wireless service providers to combat fraud and provide

secure communications is hard to measure.

Technical changes may make systems more secure than they are today, but each time new security measures are implemented, criminals

find new ways to “beat the system.” For the

most part, industry implements technical

changes that frustrate fraud and prevent violations of personal privacy. However, it is unlikely that wireless fraud will ever be completely

eliminated.

The true extent of service theft through fraud in

the wireless (primarily cellular) industry is un4
Chapter 10 Privacy, Security, and Fraud | 225

known, but is estimated to directly cost the industry $482 million per year. Indirect costs may

range as high as $8 billion per year. Unfortunately, this cost is distributed across all paying

wireless customers in the form of higher bills.

Customers can help protect themselves from

fraud through vigilant scrutiny of their wireless

telephone bills, but it is unclear how well the

general public understands its vulnerability or

the extent and cost of wireless fraud. Greater

public awareness—through education and

warnings provided by wireless service providers and equipment manufacturers—could help

combat the problems.

 Wireless systems, coupled with improved location identification technologies, may make it

easier to track people’s movements. In the

course of listening in on a conversation or intercepting a data communication, an eavesdropper may be able to determine the location of the

user. Location information is a particular concern to individuals, especially when it can be

gathered in the normal course of wireless telecommunications operations.3 Businesses using wireless systems for voice and/or data

communications may be monitored for purposes of industrial espionage. Treatment of

location information in law is not yet consistent.

❚ Options

If Congress feels that wireless privacy, security,

and fraud are problems, it could consider three

principle options:

1. Congress could amend the U.S. Code to make

possession of scanning equipment and numberaltering software illegal.4 Currently, possession of specialized scanners and software is not

illegal—only its purchase and use with intent to

defraud.

2. Congress could require cellular carriers and

equipment manufacturers to give explicit

warnings about the possibility of fraud and

breaches of privacy in service agreements,

instruction manuals, bills, or other service

agreements; on handsets in the form of labels;

and elsewhere to help educate consumers.

3. Congress could consider authorizing increased

funding of the Electronic Crimes branch of the

Secret Service, and of the enforcement division

of the Federal Communications Commission,

to combat wireless crimes. The Secret Service

estimates that its electronic crimes enforcement effort would be at optimum staffing levels

with 50 more agents, which would cost an estimated $4.5 million.

CONFIDENTIALITY AND PRIVACY

People using wireless communication systems—

for either voice or data applications—may incorrectly assume that because their cellular telephone

or portable computer operates roughly like their

wireline counterparts that they are subject to the

same privacy laws and possess the same safeguards. But there have been numerous widely

publicized cases of eavesdropping on and recording of cellular telephone calls, including those of

prominent political or society figures, such as Virginia Governor Douglas Wilder, and Princess Diana of Wales. Both the mayor and police chief of

New York City reportedly have had their telephone calls monitored.Businesses routinely warn

their employees not to conduct sensitive business

on cellular telephones.5

Telecommunications privacy and security have

been the subject of gradually evolving law and

3 See Internet posting Subject: Does GSM track the physical location of a phone?, Date: 20 April 1995 08:32:19 +0200, From: mobilerg@dxm.ernet.in, To: cellular@dfv.rwth-aachen.de, Message-ID: <9504200632.AA02651@lorien.dfv>.

4 18 U.S.C., sec. 1029 (a).

5 Milo Geyelin, “Cellular Phone May Betray Client Confidences,” The Wall Street Journal, Sept. 1, 1994, p. B1.
226 | Wireless Technologies and the National Information Infrastructure

regulation since the early days of telephony (see

box 10-2).6 Telephone communications are generally protected against unauthorized listening or

recording under the Communications Act of 1934

and other privacy statutes, principally the Electronic Communications Privacy Act of 1986 and

the Communications Assistance to Law Enforcement Act of 1994. Fraudulent use of someone’s

telephone accounts is prohibited under the criminal code concerning access device fraud.7

There are two main types of information that

merit protection in the wireless context: 1) the

contents of a call or transmission and 2) the location of the sender or recipient. The privacy of call

contents is easily understood, and has generated

the most concern and regulation. Privacy of location information, however, is a relatively new concept, and may pose unusual management and

social challenges.8

❚ Privacy of Transmission Contents

As a practical matter, listening or scanning are

generally not prosecuted, particularly when the

contents of intercepted transmissions are kept

confidential and when not used for a commercial

purpose by the unauthorized recipients. This degree of privacy is sufficient for many people, such

as those who use cordless telephones, but is nevertheless troublesome for those who desire confidentiality comparable to that of traditional

wireline telephones. This relative insecurity of

wireless telecommunications is responsible in

part for interest in technological safeguards to protect confidentiality.

There are some security-protecting features of

mobile communications, however, that make

widespread and intrusive wireless monitoring less

likely. While scanners can pick up conversations

fairly easily, finding any particular one is difficult.

It is even harder in networks with many simultaneous conversations and where one or both of the

participants is mobile. Calls are handed off from

cell site to cell site, making it hard to track a specific conversation for very long. Despite large investments in technologies that could pick out

individual conversations from all those passing

through the public switched networks, even the

government, much less private individuals or organizations, still cannot do this well.9

Wireless data network providers, such as RAM

and Ardis, claim that their systems are inherently

more secure than analog cellular telephony, because of their digital formats, and error-checking

and correction protocols. Data are typically transmitted in digital packets, each containing an address instructing that packet where to go and in

what order. Eavesdropping would require intercepting the right packets, identifying the header

6 James E. Katz, “U.S. Telecommunications Privacy Policy,” Telecommunications Policy, vol. 12, December 1988, p. 354.

7 18 U.S.C., sec. 1029.

8 Because wireless telecommunications systems are typically interconnected to other telecommunications networks, privacy of wireless

signals can be compromised in either the wireless or the wireline portion of a transmission. Privacy also may be compromised by someone

scanning the frequencies used for the wireless portion of a cellular call; in this case, the wireline portion of the call will also be compromised. The

base station or the wireline system itself may be physically tapped as well. This section will focus only on attacks on the wireless portion of a call.

9 Unclassified information on government surveillance capabilities is difficult to obtain. Public statements by current and former intelligence officials can give some indication of these capabilities, as in this report of a presentation given by former National Security Agency head,

Adm. Bobby Inman: “Inman [pointed out to an MIT seminar] that current cellular phones are difficult to monitor because “there’s no technology

that can sweep up and sort out phone conversations” despite very large investments in this. He drew an analogy to a case where he had to inform

President Carter that an insecure dedicated private land line to the British Prime Minister had been compromised. Inman told Carter that the

nature of the public phone system, with its huge volume and unpredictable switching, would have made using a pay phone more secure.” Internet posting to Red Rock Eater listserver, Date: Wed, 23 Nov. 94 09:54:12 EST, From: lethin@ai.mit.edu (Rich Lethin), Subject: Admiral Inman

visits MIT.
Chapter 10 Privacy, Security, and Fraud 1227

The legal status of the privacy of wireless communications has evolved overtime. Since most wireless signals can be received by anyone with a radio or scanner tuned to the correct frequency, they are inherently less

secure than their wireline counterparts—undermining any reasonable expectation of privacy. Congress has,

however, established limitations on the right of people to receive or intercept wireless transmissions. These

limitations have grown more extensive and explicit as wireless telecommunications systems have become

more widely used.

Historically, the struggle over the privacy of communications has been a battle between an individual’s right

to privacy and the legitimate needs of law enforcement to conduct surveillance (wiretapping, interception) in

the investigation of crimes. Striking a balance in this area has proven difficult for the courts and Congress as

wired and wireless communication technologies have advanced—new technologies made old assumptions,

decisions, and regulations about privacy and surveillance obsolete. In fact, for the first 70 years of this century,

the specific implications of privacy and wiretapping laws for wireless services (and vice versa) generally were

not even considered because the public generally did not use radio systems to communicate with one another.

The first general set of communications privacy limitations are found in the Communications Act of 1934.1

The act made the intercepting or divulging of private communications, by whatever medium, illegal, except by

authorized communications company employees or on lawful demand by law enforcement officers.2 In 1967

the Supreme Court ruled in Katz v. United States and Berger v. New York3 that certain wiretapping operations

violated the Fourth Amendment protection against unreasonable search and seizure. Largely in response to

these cases and to law enforcement concerns about its ability to conduct wiretapping operations, Congress

passed the Omnibus Crime Control and Safe Streets Act of 1968.4 Title Ill of this act tried to strike a balance

between individual privacy rights and law enforcements’ needs, and set forth the conditions under which law

enforcement could intercept private communications. Subsequently, some courts found that the protections of

the Act against unauthorized interception generally did not apply to radio-based communications, while others

protected some radio communications.5

As wireless technology developed and came into more widespread use, the special problems of privacy

in a wireless environment became clearer-especially in the case of cordless and cellular phones. Early court

cases limited an individual’s reasonable expectation of privacy when using a wireless phone, holding that

such calls were exposed to many people who could easily listen in—intentionally or by accident.6 The Electronic Communications Privacy Act (EC PA) of 1986 extended the privacy provisions of Title Ill to cellular telephones, most pagers, and other electronic communications, including electronic mail, but specifically exempted cordless phones from privacy protections.7 The Act also made the disclosure of protected

communications illegal. In response to concerns about increased monitoring of cellular telephone calls, leg is1 Ch. 652, Title Vll, sec. 705, 48 Stat, 1064, 1103 (June 19, 1934), codified at 47 U.S.C. sec. 605 (a),

2 In Nardone v. United States, 302 U.S. 379,380-81 (1937), the Supreme Court ruled that Section 605 of the Communications Act

generally prohibited interception and subsequent disclosure of wire communications. In the middle third of this century, however, law

enforcement authorities continued to use wiretaps, and the number of court cases over wiretaps arising in the 1930s and 1940s makes

it clear that section 605 prohibitions did not end the practice of wiretapping.

3

389 U.S. 347 (1967), 389 U.S. 41 (1967).

4 See especially Title Ill, Pub. L. 90-351, June 19, 1968; 82 Stat. 197.

5 State v. Delaurier, 488A.2d 688 (R.I. 1985). In United States v. Hall, however, the court held that a transmission between a mobile

telephone and a Iandline telephone was protected, but a call between two mobile telephones was not. 488 F.2d 193 (9th Cir, 1973).

6 See United States v. Hoffa, 436 F2nd 1243 (7th Cir. 1970).

7 Pub, L. 99-508, Oct. 21, 1986, 100 Stat. 1848.

(continued)
228 I Wireless Technologies and the National Information Infrastructure

Iation banning the manufacture or import of scanning devices capable of receiving cellular frequencies was

passed in 1992.8

The Communications Assistance to Law Enforcement Act of 1994 (CALEA) finally extended to cordless telephones and wireless data communications systems—including wireless local area computer networks-the

same protections cellular telephones enjoyed.9 In several cases since 1986, the courts had found that users of

cordless phones had no objectively reasonable expectation of privacy—as cordless telephones operate in

readily accessible public spectrum used by a variety of unlicensed devices—and could be intercepted without

a wiretap authorization. 10 By 1994, however, the use of cordless phones had become ubiquitous, and lawmakers found that the public believed their cordless phone calls were as private as a wired telephone-when, in

fact, they were not. Responding to this sentiment, Congress made a legislative determination that such communications should be protected.

Conceptually, the limitations on intercepting wireless communications fall into two groups: those involving

possession of scanning or listening devices, and those involving the actual receiving, using or divulging the

contents of transmissions.

As noted above, the manufacture or import of cellular frequency scanning equipment is illegal. However,

legitimate scanners (used to monitor police, fire, emergency and other public radio services, and manufactured without the ability to monitor cellular frequencies) can easily be adapted to receive cellular frequencies;

information on how to make such adaptations is easy to acquire, and kits to make such adaptations are not

banned and may be purchased legally. Even prohibiting all scanners outright is not sufficient to prevent scanning: nearly any cellular telephone call can be picked up using another cellular telephone. 11 It is estimated that

there are over 5 million scanning units in the United States today; a unit typically costs $300 or less, Thus, possession of scanners or equivalent equipment capable of listening to cellular telephone calls is difficult to prevent; such devices are essentially available on the open market, and are widely used recreationally by some

radio enthusiasts.

Apart from possessing a scanner or receiver, unauthorized and intentional listening to cellular and cordless

telephone calls is also illegal, regardless of the frequencies monitored, as is divulging or making use of their

contents. 12 Inadvertently received transmissions, such as when someone is scanning the spectrum for some

legitimate purpose, may not be divulged or published either, and the person receiving such transmissions is

enjoined from benefiting in any way from the communication. Broadcasts intended for use by the general public, such as communications to ships, airplanes, amateur or citizens band radio are not prohibited.

8 Pub. L. 102-556, Title IV sec. 403(a), Oct. 28, 1992; 47 U. S. C., sec. 302a (d). The law denies authorization of equipment that can

receive transmissions in the cellular telephone frequencies, of equipment that is capable of being altered to receive such transmissions, or that can convert digital signals in those frequencies to analog voice audio. The U.S. manufacture or Importation of such devices is also illegal. In addition, under a different statute, 18 U. S. C., sec. 2512, the export, import, manufacture, assembly or possession of equipment whose primary function is the surreptitious interception of private electronic communications, including wireless

transmissions, is illegal, and violators are subject to fines and/or five year prison terms.

9 Pub.L. 103-414, Oct. 25, 1994; 108 Stat. 4279.

10 See, e.g., United States v. Smith, 978 F.2d 171 (5th Cir. 1992); United States v. Carr, 805 F. Supp. 1266 (E.D.N.C. 1992).

11 Some old television sets with UHF tuners can be tuned to cellular frequencies because these frequencies Were allocated from

the upper portion of the UHF band, channels 70 to 83.

12 Two statutes apply in this general area. Under 47 U.S.C., sec. 605 (a) violators are subject to fines and/or months imprisonment,

for the first conviction, and maybe subject to civil damages as well, unless the court finds that the person was unaware of the violation,

when damages may be reduced to a fine only. For violations involving commercial advantage, the penalties are fines and/or two years

imprisonment for a first offense, and fines and/or five years for subsequent offenses. Under 18 U. S. C., sec. 2511(1), violators are

subject to fines and/or a five-year prison term; first offenders are only fined.

SOURCE: Office of Technology Assessment, 1995.
Chapter 10 Privacy, Security, and Fraud | 229

codes, and then reassembling them, probably requiring weeks of work per message, and consequently the results in most cases would not be

available in real time.10

Several different methods are being used or developed to make wireless networks more secure.

Special modulation formats may be used. If signals are encoded in some way, an eavesdropper

must have decoding equipment as well. Numerous techniques for encoding are undergoing testing or already deployed. In the future, digital

transmission schemes, which were developed to

make more efficient use of limited radio spectrum,

may also make transmissions more secure. In

addition, signals can be encrypted. Both types of

technologies are discussed below.

Transmission Schemes

Analog cellular and other traditional radio systems typically transmit information over a single

channel in what is known as “circuit switched”

transmission. That channel is dedicated to the user

for the duration of the call. The technologies are

relatively simple and inexpensive, but they use radio spectrum inefficiently. They are also easy to

listen in on—once a call has been found, a scanner

can lock onto it until the conversation ends, or one

of the parties leaves the cell and drops the channel.

New digital communications systems, such as

time division multiple access (TDMA) or code division multiple access (CDMA) use spectrum

much more efficiently because they break conversations into digital bit streams in order to carry

more conversations simultaneously over the same

amount of spectrum (these systems are described

in more detail in chapter 3). These separate fragments are reassembled by the receiver and presented to the listener as a complete and intelligible

conversation. These techniques also make transmissions more difficult to intercept. Without

knowing what the disassembly scheme is, an

eavesdropper will hear only unintelligible noise.

Thus, digital transmission schemes are desirable

for reasons of both economy and security.

TDMA and CDMA differ considerably, however, in the degree of security and efficiency they

provide. With TDMA, conversations are broken

into segments based on a timing scheme. Each

user of a channel is “assigned” one of three time

slots by the cellular base station equipment. The

time sequences must be known in order to separate

out all the conversations occurring on that channel, and to reassemble any particular transmission. This is a straightforward technical task, but it

is more difficult and costly to do than monitoring a

comparable analog cellular conversation.

CDMA transmission schemes are based on a

different principle, known as “spread spectrum.”

Instead of assigning a time slot on a single channel, CDMA uses many different channels simultaneously, and the network assigns a code to each

fragment of a conversation like an identifying label. The receiver recognizes the specified code,

sent at the beginning of the transmission, selects

all transmissions with this code, and reassembles

them into a coherent whole. CDMA is also inherently more difficult to crack because the coding scheme changes with each conversation, and

is given only once at the beginning of the transmission. Receivers lacking the proper code to intercept will only hear digital noise.11 Keeping

track of codes is a demanding signal processing

task, and it is not likely that eavesdroppers will

have the technical or financial wherewithal to

monitor CDMA traffic in the near future. Thus,

monitoring transmissions on CDMA systems is

considerably more difficult than with TDMA and

far harder than with analog systems, providing a

greater degree of security. However, since the

technical standards for both TDMA and CDMA

are open and published, they are theoretically susceptible to attack.

10 Ellis Booker, “Is Wide-Area Wireless Secure?” Computerworld, vol. 26, No. 39, Sept. 28, 1992, p. 59.

11 The inherent properties of this scheme explain its attractiveness to and use in the military.
230 | Wireless Technologies and the National Information Infrastructure

Encryption

Additional security can be provided by a variety of

separate encryption schemes. Voice encryption

has been used since the 1920s for military use.12

Commercial products have been available since

the 1970s, and a few companies make such products today. Total sales of encryption products now

number only a few thousand a year. Some cellular

companies offer encryption services, but they are

not widely used.

Encryption systems can use either analog or

digital techniques. Analog systems manipulate

analog wave forms by splitting and inverting the

voice signals using ordinary filters. A harmonic

signal is injected into the output, resulting in harmonic distortions. These encrypted signals are

transmitted, and the reverse process is used to reconstruct the communication. Further encryption

can be achieved by varying some of the parameters of the signal-splitting and harmonic distortion, but voice quality may suffer as more

distortion is introduced. Companies manufacturing such systems claim that they cannot be decoded in real time, but they admit that they could

be recorded and broken later. Nevertheless, these

systems can provide a high level of security, but

cost from $300 to $1,000 per unit (two units are

needed—one for each end of a communication).

Digital encryption systems work by manipulating digitized voice signals. The data representing

voice speech are compressed and processed to

pass through only phonemes or speech elements

(which are reconstructed by the receiver using

special software). The digital bitstream is further

manipulated using bit substitution, permutation,

and other techniques. The encrypted data can be

further scrambled, as noted above, with the use of

digital transmission systems, which break the bitstream into packets and are coded and displaced in

time. Such manipulations incur little or no cost in

signal quality, because digital data can be accurately reproduced, and error-checking and correction techniques applied. Voice encryption

schemes based on RSA, an encryption algorithm

thought to be extremely secure, are on the horizon,

and promise a level of privacy protection that is

thought to be unassailable.13 The main constraint

with all encryption is the slow speed of processing

and the lag that occurs if signals take too long to

pass through the system. As signal-processing

hardware and software improve, greater levels of

security may become available, but the ability of

decrypters is also likely to improve as well. To

date, most voice encryption devices are bulky and

inconvenient, and do not enjoy much consumer or

carrier acceptance.

❚ Privacy of Location

A new aspect of wireless networks is uncertainty

about and concern for privacy of location, where a

caller’s location can be hidden to a certain extent

from the network and from the recipient of the

message. By the same token, location information

is necessary, at least to the level of a sector within a

cell, for the switching equipment to be able to successfully connect users.

This feature contrasts markedly with wireline

networks where location of the parties is unambiguous, especially to the system operator, but

also most likely to the correspondents. The ambiguity of wireless is likely to lead to a series of new

issues for wireless users. Much of our common

understanding of business, law, and social behavior is based on assumptions about the unchanging

nature of place and people. With widespread deployment of wireless technologies, this is less

likely to be the case. Assumptions about boundaries, jurisdictions, and proximity are challenged

by mobility and ambiguous location information.

People will likely develop strategies to uncover

the location of users and to hide themselves from

others.

12 Material on voice encryption drawn from Dan Sweeney, “The Wages of Fear: Marketing Cellular Encryption,” Cellular Business, vol. 9,

No. 13, December 1992, pp. 58-66.

13 Red Rock Eater listserver, op. cit., footnote 9.
Chapter 10 Privacy, Security, and Fraud | 231

Unlike wireline networks, wireless networks

typically do not know the precise location of the

parties to a transmission. This uncertainty varies

depending on the type of system: satellite systems

have the largest “granularity” of coverage because

they are typically broadcasting either to whole

continents or large regions. Cellular and other terrestrial networks have much smaller areas in

which signals can be received and transmitted,

with a maximum of about 20 miles for cellular

systems. Future personal communication services

(PCS) will use cells covering even smaller areas,

perhaps only a few hundred yards in diameter.

Location identifying techniques must confront the

fact that while it is simple to identify a particular

transmitter used by someone with a wireless device, the area that transmitter serves may be quite

large or difficult to search, thereby making precise

location difficult to determine.

A number of services already exist to address

location concerns, and there will be implications

associated with this inherent ability. Tracking

people and things may be easier in the future with

both Global Positioning Satellite (GPS) (see box

4-3) and non-GPS systems using lightweight and

inexpensive receivers and radios. In trucking logistics, for example, wireless technologies have

helped produce significant improvements in services for firms such as UPS and Federal Express,

which now depend on such technologies to conduct their business.14 Vehicle location services

such as Lo-jack and Teletrak are already well established or are under development.

Cellular telephones are actually in operation

more than most users think (if the phone is turned

on, but not actually being used). To monitor the

state of the network and be able to respond quickly

when calls are made, the main cellular controlling

switch periodically “pings” all cellular telephones. This pinging lets the switch know which

users are in the area and where in the network the

telephone is located. This information can be used

to give a rough idea of location, down to the level

of a cell, or cell sector, or even smaller areas, depending on the system used.

With the prospective launch of PCS systems,

with cell areas typically smaller than those of cellular telephone systems, it may be possible to

specify particular areas in which a PCS phone may

operate. Parents might use this to control the

movements of their children, or administrators the

movement of their employees. If a user strays

from the approved area, a message might be sent,

“Get back home now!” Such services would be inexpensive to provide, because they are a byproduct of the normal operation of this type of

technology.15 As yet, however, there has been no

demand for such services.

A wireless user’s location can also be calculated by using a combination of signal strength,

angle of return, time delay and synchronization, in

somewhat the same way that a person can infer

distance by seeing or hearing an object with two

eyes or ears. Technology developments in location identification for emergency 911 services

with wireless systems will undoubtedly improve

the ability of wireless service providers to locate

individual users. These methods can be fairly accurate, particularly when used together, and they

are likely to improve in the near future (see discussion of emergency 911 services in chapter 3). Law

enforcement services already can locate an emitter

to within six feet, if given sufficient time and resources, possibly in as little as a half hour.16 (This

level of detail would be the result of significant effort, for example, in serious fraud or drug investigations.)

Techniques are likely to be found that enable

people to hide themselves from wireless networks

and other people. Mobility allows users to contact

others from any location; if they move quickly

14 Frank Erbrick, UPS Vice President for Operations, OTA Advisory Panel meeting, May 12, 1994.

15 Scott Schelle, vice president for operations, American Personal Communications, Inc., OTA Advisory Panel meeting, May 12, 1994.

16 Interview with U. S. Secret Service officials, Dec. 12, 1994.
232 | Wireless Technologies and the National Information Infrastructure

enough, it will be difficult to trace them. Simply

turning off the handset will serve in many cases

(but will also make the phone unusable for receiving calls).

One area of growing concern is how information about personal location and behavior could be

gathered and used by a range of large information

systems, such as electronic payment systems,

credit card and other credit reporting, telecommunications transaction records, health record

systems and the like.17 The Communications Assistance to Law Enforcement Act forbids wireless

carriers from divulging location information to

anyone, except to law enforcement authorities

with a proper warrant.18

The issues of personal information-gathering

and disclosure are beyond the scope of this report.

They generally do not involve matters of wireless

telecommunications technologies, with one exception: the Intelligent Transportation System

(ITS), formerly known as the Intelligent Vehicle

Highway System (IVHS). The inherently mobile

nature of transportation, and the reliance of ITS

designers on wireless telecommunications for

some aspects of the system, raises the issue of privacy protections.19 Some analysts have argued

that:

Many of these technologies involve surveillance of the location and behavior of identified

vehicles and/or people, and the collation of such

data for further use. These and other aspects of

IVHS technologies raise concerns amongst the

community, and have delayed adoption of some

systems.20

[S]ome proposed designs require the system

to collect vast amounts of data on individuals’

travel patterns, thus raising the potential for severe invasions of privacy. To make social

choices about IVHS, it is necessary to reason

about potentials for authoritarian uses of an

IVHS infrastructure in the hypothetical future.21

The design of such systems or subsystems

needs to carefully considered with privacy concerns in mind.

❚ Location and legal jurisdiction

Many aspects of the law are predicated on geographic location. To a certain extent, wireless telecommunications confound such geography-based

distinctions, because with cellular telephones,

boundaries (local or state, and to a limited extent,

international) can be broached. With satellitebased communications, boundaries are essential17 GSM systems reportedly know the location of all phones within 10 meters, and that the three closest cell sites track the phone at all times,

to enable smooth hand-offs from one cell to another. Continuous location data could easily be recorded, even for many users, without posing an

undue data burden—one observer estimates that 1 million users, tracked every 10 minutes to one square meter, for one year, would generate

about 510 gigbits of uncompressed data, well within the data processing capability of most business and many personal computers. See Internet

post, Date: Thu, 20 Apr 1995 08:32:19 +0200, From: mobile-rg@dxm.ernet.in, To: cellular@dfv.rwth-aachen.de, Subject: Does GSM track the

physical location of a phone?, Message-ID: <9504200632.AA02651@lorien.dfv>.

18 Public Law 103-414, sec. 103 (a)(2), Oct. 25, 1994, 108 Stat. 4281.

19 For example, see Don Phillips, “Big Brother in the Back Seat? The Advent of the ‘Intelligent Highway’ Spurs a Debate Over Privacy,” The

Washington Post, Feb. 23, 1995, pp. D10-D11.

20 Marcus Wigan, “The Influence of Public Acceptance on the Reliability of the Potential Benefits of Intelligent Vehicle-Highway Systems,” Information Technology & People, special issue on “Identification Technologies and Their Implications for People,” vol. 7, No. 4, 1994,

pp. 48-62.

21 Philip E. Agre and Christine A. Harbs, “Social Choice About Privacy: Intelligent Vehicle-Highway Systems in the United States,” Information Technology & People, special issue on “Identification Technologies and Their Implications for People,” vol. 7, No. 4, 1994, pp.

63-90.
Chapter 10 Privacy, Security, and Fraud | 233

ly meaningless. Work on transborder data flows

has attempted to address this problem, but its resolution is unclear. The Internet also poses similar

problems of geographic location, jurisdiction, and

the law.22

CELLULAR AND OTHER

WIRELESS FRAUD

With widespread use of wireless telephony has

come widespread theft of service by fraudulent

means. The true extent of cellular telephone fraud

is unknown, but the number of attempted fraudulent calls may run as high as 3 million per

month.23 The Cellular Telephone Industry

Association (CTIA) estimates that fraud amounts

to about $482 million a year, based on estimates of

out-of-pocket costs to companies for customeridentified calls for which the company reimburses

customers.24 Other analysts believe the cost is

substantially higher. The government has no independent estimate of the extent of wireless telephone fraud.

For wireless technologies to enjoy the same

public acceptance as wireline telecommunications, they will probably need to provide similar

levels of security from fraud and misrepresentation. Fraud increases service costs for both businesses and consumers, and may make wireless

less competitive than wireline services. Cellular

customers ultimately pay for cellular phone fraud

in the form of higher costs because companies

pass these costs along to consumers.25 It is also

costly for law enforcement agencies to enforce

fraud statutes, and it fosters the expansion of criminal activities, both directly and indirectly.

Fraudulent phones are frequently used in the commission of other crimes, and hinder law enforcement efforts against those criminals.

This section will discuss cellular telephone

fraud and how it is committed. It will also describe

some of the technical and organizational costbenefit tradeoffs the industry has made that shape

the incidence of fraud. Finally, technical measures

that might be taken to limit fraud in the future will

be addressed briefly. The focus is on cellular telephones because currently experience widespread

fraud. Although the pirating of satellite television

signal is still a problem, it is not addressed here.

The heyday of pirating is long since passed, and

with the introduction of new digital transmission

and encryption systems, fraud is expected to drop

further.

❚ Tumbling and Cloning

Cellular telephone fraud is conducted through

what is known as “tumbling” and “cloning.” Understanding how these work requires a brief description of how a cellular telephone identifies

itself to the cellular network, and how billing is

managed.

Every cellular telephone has a unique electronic serial number (ESN), “burned in” on a chip by

the manufacturer. FCC regulations require that every phone have a unique ESN. In addition, every

cellular telephone subscriber is issued a mobile

identification number (MIN) when the phone is

assigned a telephone number and activated by the

service provider. For example, when a subscriber

buys a cellular telephone at a retail store, the service provider assigns a telephone number from a

batch of numbers provided by the local telephone

22 Dan L. Burk, “Transborder Intellectual Property Issues on the Electronic Frontier,” Arlington, forthcoming in vol. 5, Stanford Law &

Policy Review, available at URL gopher://gopher.gmu.edu:70/00/academic/colleges-depts-insts-schools/ law/working/dburk2.

23 Susan Kumpf and Nora Russell, “Getting the Jump on Fraud,” Cellular Business, vol. 9, No. 10, October, 1992, p. 24.

24 “Secret Service, CTIA Crack Down on Cellular Fraud,” Telecommunications Reports, vol. 61, No. 15, Apr. 17, 1995, p. 32. Cellular telephone firms are unwilling to give an accurate accounting of cellular telephone fraud to CTIA. Telephone toll fraud generally may be as much as

$8 billion per year, with international toll fraud comprising 65 to 80 percent of the total. Dan O’Shea, “Security Products Abound, But Is Toll

Fraud Too Tough?” Telephony, vol. 225, No. 9, Aug. 30, 1993, pp. 7, 13.

25 Because cellular companies are unregulated, there are no public ratepayer issues with cellular fraud.
234 | Wireless Technologies and the National Information Infrastructure

monopoly, and records both the MIN and the ESN

as an associated pair.

When a call is initiated, the phone transmits its

ESN and MIN to the cellular switch. This is done

over a signaling channel, reserved for setting up a

call between the handset and the switch. If the two

match, then the call is permitted to proceed and a

voice channel is opened. If a call is made outside

the regular service area, the remote cellular company relays the ESN/MIN pair to the home company or to a regional database to check whether the

number is valid (the negative number list), in accordance with an industry standard, IS-41. If it is

authenticated, the call is permitted to go through.

The air time and roaming charges are forwarded to

the home company at the end of the call, and the

two companies settle up periodically to clear outstanding balances.

With traditional analog cellular systems, “tumbling” is quite simple. A fraud perpetrator (or

“bandit,” the preferred term) randomly or sequentially changes the ESN and/or the MIN after each

call. Because the cellular switch takes some time

to verify each number, some proportion of calls

may get through the system before the system denies access. Tumbling is currently not very prevalent because cellular operators have installed

systems that can defeat it fairly easily. When GTE

installed its pre-call validation system in December 1991, 25 percent of attempted fraudulent calls

were denied connection. Other cellular carriers

have even higher levels—for example, up to 61

percent by Ameritech Mobile Systems in Detroit,

MI.26 Once the technology is deployed, bandits

typically move on to other forms of fraud.

“Cloning” works a bit differently. Cloners pick

up ESN/MINs on busy streets or highways with

scanning equipment that is legally available, although their use for this purpose is illegal.27 The

devices typically monitor cellular signaling channels, and display broadcasted ESN/MIN pairs.

Cloners record these number pairs, and send them

to other cities, whose carriers may be unable or unlikely to verify that the number is in use elsewhere

or was so recently used in another place as to be

fraudulent. In the remote city, a participant in the

fraud scam uses a standard personal computer or

laptop with legally available software to reprogram the ESN/MIN in a cellular telephone, which

can be done with existing external connectors to

the phone.28

This phone is then either sold or used by someone wanting to make free calls or who does not

want to be traced, either by law enforcement agencies who might have a wiretap order on a known

number or by the telephone company for billing

purposes.29 Because a fresh number has not yet

been identified as fraudulent in the negative number list, checking that database will not prevent

fraud the first time it is tried. Depending on whether the original owner of the stolen number notices

the charges on the bill, and how often the databases are updated, a cloner may be able to use the

cloned phone for some time and run up a substantial bill. Real-time access to subscriber lists and

activity records between companies handling

calls is available in some markets for the purpose

of defeating such scams. Industry officials esti26 Kumpf and Russell, op. cit., footnote 23, pp. 24-25.

27 These scanners are legitimately used by technicians in servicing cellular telephone equipment. They are designed to work within a very

short range, about 10 to 15 feet. However, it is a simple matter to make them receive over a larger area by boosting the power. These scanners are

readily available, including by mail-order.

28 Phones could be made unreprogrammable, but there are legitimate reasons to keep them reprogrammable. One is the ability to change the

number if the service provider changes, without having to change phones. Another is to allow changes in case the phone is compromised by a

cloner.

29 Some reports put the street price of a cloned phone at $300, with a guarantee to replace it if the number is turned off. Michael Meresman,

“The Phone Clone Threat,” Mobile Office, vol. 5, No. 11, November 1994, p. 62.
Chapter 10 Privacy, Security, and Fraud | 235

mate that, by the end of 1995, up to 70 percent of

the U.S. carriers will have this capability.30

Today, if the customer notices fraudulent

charges and notifies his or her company, the company will remove the charge, pay the long distance

charges, reimburse costs to the remote company if

roaming has occurred, and absorb the loss. Companies have done this since beginning operations

in the early 1980s, but are under no legal obligation to do so.

❚ Call Selling

Call selling is an illegal activity conducted with

cloned cellular telephones. In the view of CTIA,

this may be a greater revenue drain on firms than

simple cloning. In essence, in a call selling operation, perpetrators set up their operation in a hotel

room or an apartment with a number of cloned cellular telephones. They advertise informally to immigrant communities, among others, that they

will sell calling time to their home countries significantly below international rates. The defrauders not only do not pay for the use of the

telephones, but they also receive cash payments

for their use. Immigrant communities are willing

to spend a significant portion of their monthly income to call overseas, and are typically looking

for ways to reduce their calling costs.

Such fraud operations are highly profitable,

less risky and much less physically dangerous

than other types of organized crime, such as drug

trafficking. As a result, some law enforcement officials believe that cellular fraud will continue to

grow significantly in the future.31 Cloners move

quickly to break new protection schemes, often

succeeding within six months of their introduction.32 The switch to digital technologies will offer users some protection, but analog systems will

continue to operate and be susceptible to fraud for

many years.

❚ Law Enforcement

Altering the ESN/MIN pair of cellular telephones

by counterfeiting these numbers is covered by the

same statutes as credit card or currency counterfeiting, in that fraudulent means are used to gain

access to the telecommunications system.33 Thus,

identifying and arresting perpetrators of cellular

fraud is primarily the responsibility of the U.S.

Secret Service, which has primary federal jurisdiction over fraud. State and local law enforcement officials are also involved to some extent, as

well as the U.S. Drug Enforcement Administration, U.S. Customs Service, and the Federal Bureau of Investigation, depending on what other

crimes are perpetrated using a cellular telephone.

The Secret Service has recently put 20 of its 1,200

agents through the Electronic Crimes Special

Agent Program, which prepares them for all types

of electronic crimes, including wireless fraud.

Fraud investigation usually begins when a subscriber or carrier identifies some suspicious activity—for example, a rapid increase in traffic at a

particular cell site. The carrier will then locate the

source of activity using radio triangulation techniques, and will turn this information over to the

Secret Service, who will attempt to get a warrant

and make an arrest. The cities with the most cellular fraud are New York, Los Angeles, and Miami,

but some of the recent large cellular phone fraud

operations have been outside these three centers:

in late 1991 and early 1992, over 57,000 calls were

made in 19 days by Palestinians in the West Bank

and Gaza to other countries in the Middle East via

Phoenix, AZ, in a three-way calling scam.34 Because the most costly element of cellular tele30 Ibid, p. 64.

31 Ibid, pp. 60-69.

32 Tom McClure, CTIA Fraud Taskforce head, interview, July 5, 1994.

33 18 U.S.C., sec. 1029.

34 Anthony Ramirez, “Theft Through Cellular Clone Calls,” The New York Times, Apr. 7, 1992, p. D-1.
236 | Wireless Technologies and the National Information Infrastructure

phone fraud is international calling, companies

are beginning to offer international service only to

those customers who specifically request it, about

5 percent of all cellular subscribers.

A number of technical efforts are under way to

combat cellular (and by extension, other wireless

telephone) fraud. Handsets can be made more secure and difficult to clone,35 and cellular switches

can be equipped with database and signal processing equipment and software to detect fraud and

stop it there. Carriers are adopting personal identification numbers (PINS) that must be entered

manually by the subscriber before a call can be

completed, as is done with electronic bank

cards.36 The disadvantage of this method is that

customers have to key in additional numbers,

making calling less convenient.

Call screening systems with fast database and

call pattern-recognition software are also being

deployed. These systems work by monitoring the

past activity of a particular subscriber. If new activity does not fit the established pattern, the calls

are flagged and the owner of the phone is contacted to confirm unusual use. AirTouch, NYNEX, and Bell Atlantic Mobile have all begun to

use these services within the past two years, and

report reductions of up to 75 percent in stolen minutes.37

Experiments are also under way with systems

that would identify the particular electronic signature of individual phones (each phone has slightly

different electronic characteristics due to variation

in the electronic value of components, which

gives each phone a distinctive and identifiable

profile).38 Digital technologies will also make

cloning more difficult. However, digital encoding

schemes are known and can be broken, given

enough time and computing power, even though

the equipment to pick out numbers is more costly.

In fact, digital telephone standards IS-41 and

the Global System for Mobile Communications

(GSM) provide one such digital scheme. Cellular

telephones would be programmed with a secret

number that would never be transmitted. During

call setup, the handset would prompt the cellular

switch to transmit back to the handset a one-time

number. The handset would then generate a onetime response based on its own secret number and

the transmitted number to validate the call to the

cellular switch. Since one of the two numbers lies

in the carrier’s database and changes with each

call, and the other number is never transmitted,

each number is unique and impossible to reversecalculate.39 Next-generation digital cellular telephones could perform this validation function

easily, but existing analog telephones could not

without expensive retrofitting.

It appears that cellular telephone fraud could be

minimized by technical means, if the costs of

35 Originally, the ESN was to be unprogrammable, a permanent part of the phone. However, cellular handset resellers resisted marketing

such handsets, because the cellular carriers (in general unrelated to the resellers) charged the resellers for establishing service, making accounting changes, and the like. Resellers insisted on programmable cellular telephones, which the carriers ultimately did not oppose, primarily because the carriers depend heavily on the resellers to market their system and provide customer service. Some observers believe that this business

dynamic between resellers and carriers is responsible for the technical configuration of cellular phones, which is inherently less secure than an

ESN that is not reprogrammable. Internet posting to Telecom Digest, coyne@thing1.cc.utexas.edu, Subject: Re: Bell Atlantic Mobile Joins the

PIN Crowd, Date: 10 Jan 1995, 20:12:46 GMT, Organization: the University of Texas at Austin, Austin, Texas.

36 This service configuration was introduced in late 1994 by NYNEX Mobile Communications and Bell Atlantic Mobile. The ESN/MIN

pair is transmitted over the reverse signaling channel, while the PIN is sent over the voice channel. Cloners are unlikely to be listening to both

channels simultaneously or be able to associate the two numbers. If the PIN is compromised, the subscriber can simply get a new PIN by phone,

rather than a whole new ESN/MIN, which is much more costly. Other companies have used variations on the PIN concept.

37 Meresman, op. cit., footnote 29, p. 62.

38 Ellis Booker and James Daley, “Cellular Carriers Gain New Fraud-Detection Weapon,” Computerworld, vol. 27, No. 44, Nov. 1, 1993, p.

71.

39 Meresman, op. cit., footnote 29, p. 32.
Chapter 10 Privacy, Security, and Fraud | 237

stopping it were lower than the level of fraud, and

if users would be willing to forego the convenience of simple number dialing. Law enforcement officials and other industry observers agree

that the problem is tractable. With more competitors in the marketplace for PCS, the ability of carriers to pass along these fraud costs will be

limited. Carriers will likely have a greater incentive to limit costs by more vigorously limiting

fraud. They could press equipment manufacturers

for handsets that contain unclonable technologies,

to overcome the weakest link in the wireless security chain. As new technology is deployed the

problem will diminish. However, industry officials believe that analog phones will be used in

North America for a number of years, and will undoubtedly be targeted by bandits because they are

inherently less secure. It is likely that the fraud

problem will decrease, but it is unlikely that it will

disappear altogether. Bandits are notorious at

learning new techniques to defraud operators and

subscribers, and will likely continue their efforts

with new technologies.

The level of effort the Secret Service devotes to

wireless fraud is difficult to indicate in dollar

amounts. Agency officials told OTA that the Secret Service would only handle major fraud cases.

Because there are technical fixes to much of the

fraud activity, it appears industry will have to deal

with lower level criminal activities on its own.

The Secret Service sees its primary role as identifying new fraud techniques, and then working

with industry (which is itself conducting an extensive antifraud program) to develop countermeasures to combat those techniques. The agency is

satisfied that carriers have been cooperative in responding to suggestions by law enforcement;

changes suggested by the Secret Service usually

are made within three or four months.

The Secret Service and the industry agree that

easy availability of scanners capable of picking up

ESN/MIN pairs, and software used in altering

ESNs, contributes to law enforcement’s problem

in policing fraud. Although sales of scanners are

illegal40—other than to an employee, agent, or

contractor of a cellular carrier or government employee with specific need—their possession is

not. The FCC is formally responsible for enforcement of this provision in the law, but has few resources to do so. In fact, scanners are readily

available through retail electronics stores and

mail-order companies. These scanners are intended to be used for bench-testing only. They are

supposed to comply with FCC rules limiting their

range to 15 feet, but this limitation is easily defeated by extending the devices’ antennas. Under

current law, a scanner is only illegal if it is used

with intent to defraud,41 which is difficult to

prove. Possession of or sale of ESN-altering software is currently not illegal. Penalties for cellular

fraud include prison terms of up to 15 years, and

fines up to $250,000.

Law enforcement and the industry would like

to make the unauthorized possession of a scanner

illegal, thereby closing what they consider to be a

significant loophole in the current law. They

would also like to make illegal the production,

use, or trafficking in software used to alter ESNs.

They argue that such legislation would also spread

the burden of law enforcement to more agencies,

enabling better enforcement.

❚ Consumer Protection

Consumers are not well informed about cellular

fraud, its frequency, its methods of perpetration or

means of identifying it. Many consumers do not

receive itemized bills, and have no way of verifying billing accuracy.42 Service agreements, owners’ manuals, and bills themselves usually do not

warn users about the possibility of fraud. As noted

above, wireless companies will generally absorb

40 47 U.S.C., sec. 302(a).

41 18 U.S.C., sec. 1029(a).

42 Many companies charge a supplementary fee to provide itemized bills.
238 | Wireless Technologies and the National Information Infrastructure

the cost of fraud that consumers identify. But unidentified fraud costs are borne by the user, and all

fraud is reflected in higher costs to all customers.

While service providers are moving steadily to

combat fraud once it is found, they may not be

alerting their customers to its possibility. Despite

efforts to inform them, many users believe that

cellular telephones are as secure as, and operate in

the same manner as, traditional wireline telephones. Clearer warnings that this is not the case

may be in the public’s best interest.
Health

Issues

ver the past several years, concerns have been raised

about the potential health risks of portable cellular telephones and emissions from radio antennas. These concerns are rapidly becoming one of the most controversial

issues surrounding the widespread use of wireless technologies.

Although some research on possible adverse health effects has

been conducted, it has not been conclusive—government, industry, and academic researchers agree that it is not yet possible to say

with certainty whether the devices or the antennas do or do not

pose a risk to human health or how serious any risk may be. As a

result, the long-term issues surrounding the health and safety effects of cellular telephones and other wireless devices remain unresolved. In the face of this uncertainty, the debate over the safety

of wireless devices and systems is likely to become an important

public policy problem as concerned citizens take their concerns to

state and federal policymakers and regulators.

OTA did not conduct an indepth assessment of the possible

health effects associated with radio communication devices and

systems. Nor did it exhaustively review and critique the health effects research conducted to date. Such an endeavor is properly the

focus of an additional, more narrowly focused study. Rather, this

chapter presents only a general overview of the research performed to date, and discusses the controversy that surrounds these

issues.

FINDINGS

The debate over the safety of wireless systems is characterized by

high emotion and heated rhetoric—on all sides. Picking through

the rhetoric and separating fact from fiction will be extremely difficult for lawmakers and regulators as the controversy continues. | 241
242 | Wireless Technologies and the National Information Infrastructure

The findings presented below are based on the

general state of research as it exists in early 1995.

As more studies are completed, issues may become clearer; although evidence gathered to date

and the experiences of other public health-related

issues—including the controversies over electric

power lines and tobacco—indicate that resolution

of these issues could be years or even decades

away.

 Scientific research to date has found no conclusive evidence that low power microwave

radio communication signals adversely affect human health. However, currently

available scientific information is insufficient to conclude that there are no long-term

adverse health effects—either from handheld wireless communication devices or

from towers.

1 Because of the paucity of data

on biological and health effects, and the ambiguity in the results of research conducted so far,

neither public interest advocates nor industry

have made a clear and convincing argument

sufficient to prove their case. All parties agree

that more research is needed to determine

whether there could be any health effects from

long-term exposure to radio frequency (RF)

radiation at the power levels used by wireless

communications devices, what they might be,

and how serious a risk they could pose. Specifically, additional research will be required as

new technologies are developed that use different frequencies, power levels, and transmission

formats.

 Public concern persists over many forms of

radiation, including nonionizing electromagnetic radiation.2 The willingness of the public

to give credence to anecdotal reports of radiation-induced human health risks is an enduring phenomenon. Maintaining the public’s

trust and confidence in technologies associated

with radio waves demands extraordinarily high

levels of responsible scientific work and policy

development. Given the character of public

concern over many types of hazards in the environment, the technical complexity of new wireless systems, the difficulty the public has in

understanding the complex results of scientific

research, and the likelihood of many more radio devices working at new frequencies and

with new technologies, it may be prudent for

the federal government, including Congress, to

continue to monitor technology and industry

developments and the ongoing research into

wireless health issues.

Industry has taken some steps to address

public concerns, and is making substantial

funds available for research. However, especially in health-related areas, it may be difficult

for the public or policymakers to trust that

industry-funded research will always be conducted in an objective manner. Some continuing federal role—as an overseer of

1 U.S. Food and Drug Administration, “Talk Paper” on cellular telephone safety, 1993; U.S. Federal Communications Commission, Office

of Engineering and Technology, “Information on Human Exposure to RF Fields from Cellular Radio Transmitters,” 1994; Institute of Electrical

and Electronics Engineers, “Position Statement on RF from Portable and Mobile Phones and Other Devices,” 1992; U.S. Congress, General

Accounting Office, Status of Research on the Safety of Cellular Telephones, GAO/RCED-95-32 (Washington, DC: November 1994), pp. 3-4,

15; Mark Fischetti, “The Cellular Phone Scare,” IEEE Spectrum, vol. 30, No. 6, June 1993, pp. 43-47; “Cellular Phone Industry Research Group

Sees Need for ‘Basic Information in All Areas’; Proposals Under Review,” Microwave News, September/October 1994, pp. 9-10; Scientific

Advisory Group on Cellular Telephone Research, Interim Status Report: Potential Public Health Risks from Wireless Technology: The Development of Data for Science-based Risk Management Decisionmaking, Nov. 29, 1994, p. 4; “SAG Chairman Comments on Significance of Research Agenda; Proud of Group’s Track Record,” Cellular Telephone Update, vol. 2, No. 1, Fall 1994, p. 2.

2 Although “radiation” is the preferred technical term when discussing radio wave emissions from wireless transmitters, radio communication radiation should be clearly differentiated from the harmful ionizing and particulate (“hard”) radiation associated with nuclear energy. These

two types of radiation are not the same. Public concern about all forms of electromagnetic radiation may be fueled by a misunderstanding of the

technical terms involved.
Chapter 11 Health Issues | 243

industry-funded work, as a participant in

the research and testing process, or in

mounting its own research program—may

be desirable to assure research integrity and

to maintain high levels of public trust and

confidence in these technologies.

A vigorous federal government role is particularly important given the difficulties in

evaluating technologies that have not yet

reached large-scale deployments. As wireless

technologies become more ubiquitous, unanticipated interactions or consequences may appear. What appears to be a negligible or

unknown problem in the lab or at reduced scale

may turn out to have significant effects when

widely deployed, as was the case with lead

paint and asbestos.3Long-term monitoring of

the effects of radio frequency exposure on

humans may be necessary to avoid surprises

and persistent public uncertainty.

THE CONTROVERSY SURROUNDING

HEALTH EFFECTS

The debate over the possible health effects from

the radio waves used by cellular telephone and

other mobile communications systems is intensely polarized. On one side, some citizens and a few

researchers are firmly convinced that such radio

waves pose a substantial health risk to public

health. They believe that cellular phones should

be redesigned or banned and that construction of

new radio transmitters and antennas, especially

those needed for cellular and future personal communications services (PCS) systems, should be

restricted and perhaps even stopped. (Radio interference with medical devices such as pacemakers

is addressed in chapter 12.) On the other side,

equipment manufacturers and service providers

maintain that there is no credible evidence that

their products and services threaten human health.

Without clear and definitive proof of harm, they

argue that the development of new systems (and

expansion of existing systems) should continue.

Both sides have evidence—scientific studies, statistical records, and anecdotal reports—they believe supports their case. The result is a confusing

and often conflicting body of scientific and medical literature.

In disputes like this, identifying and evaluating

risk to the public is often difficult. Many elements

contribute to understanding risk, and often these

are confused, misinterpreted, or misrepresented.

In many cases, the elements become divisive public policy issues as different groups with different

perspectives battle over what is legitimate, acceptable, and “true,” and what is not. In situations

where individuals cannot avoid exposure—as in

the case of radio waves—it is the role of government through the regulatory and policy process to

decide what level of risk is acceptable and to enact

the necessary provisions to protect public health.

To focus government resources and policy efforts

most effectively, it is important for policymakers

and regulators to understand the different stages

involved in evaluating this risk.

The first step in assessing this type of risk is establishing causality—what effects are due to what

causes, and how certain is the relationship between them. Disputes can arise between different

parties claiming that effects are or are not

associated with particular causes, and disagreements frequently center on the adequacy of the

science that supports a particular position. This is

true with radio wave radiation and its effects on

animal tissues. High-power microwave radiation,

for example, is known to produce thermal effects

(heating), but the possible nonthermal effects of

radio waves, which include changes in cell membrane permeability, cell metabolism, or on genetic

material, are more contentious. A few researchers

have found some such effects, but results are still

considered tentative, and the mechanisms causing

them are not well understood.

3 George Brandon, “Pulling Together an Electromagnetic Field Defense: Defendants Need a Coordinated Strategy for the Mass Tort Some

Call the ‘Asbestos of the ‘90s,’” The National Law Journal, Aug. 1, 1994, p. B19.
244 | Wireless Technologies and the National Information Infrastructure

The second element in assessing risk is demonstrating harm from the effects. Even if a cause and

an effect can be positively linked, this does not

necessarily mean that harm results. Making this

connection is at the heart of current debates over

the safety of radio communication systems. In the

case of radio waves’ effects on animal tissues, this

means that any observed biological effects need to

be clearly linked to observed health problems.

Heating effects have been shown to cause adverse

health reactions, but not at the low power levels

used by today’s cellular telephones. Determining

harm is more difficult with nonthermal effects—

which might affect basic cell functions that are

only now beginning to be understood—and will

be the subject of long debate.

In any case, some people will view any biological effects as harmful, whether or not there are any

actual impacts on health. Fundamentally, an assessment of risk and one’s reaction to it is quite

subjective and personal. For example, many

people are afraid to fly, although airline fatalities

are rare. On the other hand, automobile safety receives far less public scrutiny, even though tens of

thousands die annually from highway accidents.

In trying to evaluate the possible harm from radio communication systems, different groups disagree over what standards of proof should be used

to determine safety or harm—that is, what proof is

adequate to prove or disprove potential adverse

health effects. One view requires proof of no harm

before a technology is deployed. This approach is

generally taken, for example, by the pharmaceutical industry and the U.S. Food and Drug Administration: firms must show, through extensive

self-funded testing, that a new drug has few significant known adverse effects when used as prescribed.

An alternative approach is to permit a technology to be deployed, under certain guidelines, until

it can be shown convincingly that negative effects

result, or no proof of harm (note word order difference from above). In this case, experimentation is

not limited to test groups in experimental settings,

but also takes place among the public where a

technology can be fully and vigorously evaluated

in real-world conditions. For example, software

producers expect bugs in early releases of their

products because they know they cannot completely test programs and applications on their

own beforehand.4

Most technologies fall somewhere between

these two positions: initial experimentation is extremely limited in scale and scope, often confined

solely to the laboratory. Next, the technology or

product is subjected to more rigorous evaluation

to see if hazards exist. After a period of controlled

testing and evaluation, standards may be issued by

the relevant technical body, such as the Institute of

Electric and Electronics Engineers (IEEE). These

standards may be accepted by government regulators, and become enshrined as substantial benchmarks guiding general and large-scale use and

deployment of the technology or product.

If new information about hazards or other negative effects later comes to light, the standard may

be changed with the agreement of the standards

bodies and regulators. Changes at this stage may

be difficult due to the institutional interests surrounding the status quo and the changing standard

of proof required to attend to problems. With

technologies or products such as asbestos, lead

paint, or tobacco that come to be seen as hazardous, the firms that manufacture them have, in

many cases, successfully resisted efforts to label

them as bad for health, despite steadily mounting

evidence to the contrary.

Another issue in determining harm is the integrity of the process by which research is conducted,

including that of the people performing the work.

If research is conducted in a way that raises questions of bias or poor quality, then such work will

fail to settle questions about cause and effect, as

well as potential hazards. Charges of bias, ignoring contrary evidence, or slipshod research meth4 This difficulty in testing before full-scale release poses particularly acute problems for systems that operate highly reliably the first time,

but cannot easily be subjected to real-world tests, such as antiballistic missile system software.
Chapter 11 Health Issues | 245

ods may be unfounded, but nevertheless must be

taken seriously. Failure to demonstrate good faith

or adherence to good scientific practice in the

process by which information is gathered and

evaluated may lead to continuing controversy.

The makeup of research teams, lack of financial or

other ties to firms with a stake in the outcome, fair

and open evaluation of research proposals and research results, open publication of results or other

public reporting requirements, participation by all

interested parties, regardless of their affiliation—

all these contribute to the integrity of the research

process. These factors are also essential to reducing public concerns about research bias, and to increasing public trust and confidence in the

technologies or products in question.

In the face of inconclusive and ambiguous evidence, different groups have different reactions.

Opponents of widespread deployment of cellular

and PCS facilities, and those claiming that cellular

telephones promote cancer, argue that the industry

should be held to the “proof of no harm” test.

Without convincing proof of their safety, some

people believe that antennas and towers should be

restricted or moved and phones should be redesigned or prohibited altogether, even those that

conform to current safety guidelines. The wireless

industry, on the other hand, argues that there has

been no proof of harm to date, and that changes in

standards and use of the technologies should occur only when substantial and persuasive proof of

harm is demonstrated. The industry also argues

that it is funding research into biological and

health effects, and that this research will help

settle disputes about the safety of microwave radio frequency technologies. Compromise between these two groups will be very difficult,

because their reactions to uncertainty are based on

diametrically opposed philosophies—stop until

safety is guaranteed or keep going until harm is

proven—and both hold up different standards of

proof.

Faced with a technical and policy controversy

such as this, policymakers have difficult choices

to make. If a technology is already being widely

used, as is the case with many wireless technologies, using a “proof of no harm” standard is unrealistic. Television broadcasting towers, public

safety radios, cellular towers and antennas, and

hand-held cellular telephones have been deployed

for years, and are used by tens of millions of

people. Stopping these systems until definitive

testing can be done is not realistic in today’s political climate. However, finding out about possible

harm through monitoring and active research is a

viable option. Identifying early indications of effects or harm is in the public interest, even if shortterm costs are high. Research to determine

cause-and-effect relationships, and to ascertain

the extent to which and under what circumstances

harm may ensue, is essential. Some researchers

also suggest that those concerned about possible

hazards from electromagnetic radiation practice

“prudent avoidance,” which is avoidance of emissions where it is economically, operationally or

physically easy to do so.5

BIOLOGICAL AND HEALTH EFFECTS OF

WIRELESS TELECOMMUNICATIONS

Cellular and other radio communications devices

should be distinguished from low frequency electromagnetic fields found around electric power

lines. Electric power systems in the United States

operate at a low frequency of 60 cycles or hertz

(Hz) and at high power, while cellular telephones

operate at much higher frequencies, 800 to 900

megahertz (MHz), and at extremely low power

levels. New PCS systems will operate at even

higher frequencies, 2 gigahertz (GHz) and still

lower power levels. Researchers have established

that the effects of electromagnetic radiation vary

greatly with frequency and power levels, and empirical work over the last several decades has been

5 See U.S. Congress, Office of Technology Assessment, Biological Effects of Power Frequency Electric and Magnetic Fields, OTA-BPE-53 (Washington, DC: U.S. Government Printing Office, May 1989), pp. 77-80 for a discussion of prudent avoidance in the context of electric

power line electromagnetic radiation and potential human health effects.
246 | Wireless Technologies and the National Information Infrastructure

conducted to determine safe levels at various combinations.6 Because of this variability, however,

effects found at one level are not generalizable to

other frequency/power combinations—independent research must be conducted.

❚ Research Is Inconclusive

While considerable research has been conducted

on the effects of electromagnetic fields generally,

very little work has yet been done on the possible

health effects of exposures in the specific frequency and intensity ranges generated by wireless

communications devices and systems. A particular weakness in the existing literature is the lack of

research on the impact of long-term exposures.

The data that does exist paints an ambiguous

picture. Some—but not all—research conducted

on cells and animals suggests that exposures to

fields with characteristics similar to those generated by cellular phones may cause behavioral and

biological effects, including abnormal cell growth

and increased incidence of malignancies.7 The results of other studies involving claimed links between radio waves and cancer are inconsistent and

difficult to interpret.

[GAO] has concluded that [no] research has

been completed on long-term human exposure

to low levels of radiation specifically from portable cellular telephones. Research findings on

exposure to other sources of low-level radio-frequency radiation are inconclusive. Some laboratory studies show that biological effects can

occur when animals and cells have undergone

extended exposure to low-level radio-frequency

radiation; others do not. Scientists at FDA and

EPA said that existing research does not provide

enough evidence to determine whether portable

cellular telephones pose a risk to human health.8

There are two fundamental issues concerning

radio-frequency electromagnetic radiation and

human exposure. The most obvious is the thermal

or heating effect of such radiation on tissue. It is

well known that high-power radio waves will generate heat in exposed tissues. Microwave ovens,

high-powered radars, and other high-power microwave devices, for example, radiate energy—a

small portion of which is absorbed by body tissues. The rate at which this energy is absorbed is

called the specific absorption rate (SAR). Absorbed energy raises the temperature of the tissues

through the excitation of water molecules (the

typical microwave oven operates at about 600

watts at 2450 MHz). The higher the power level

the more heat is generated at a given distance for a

given sample, and the higher the frequency, the

more of the incident energy is superficially absorbed.

The thermal effects of radio communication

devices are generally not considered harmful.

Wireless devices are required to comply with

well-established standards governing human exposure to electromagnetic radiation. These standards incorporates a substantial safety factor as a

cushion against unanticipated effects or exposure

in unusual situations. As a result, researchers have

been unable to measure heating of tissue at the low

power levels used by hand-held cellular telephones. Microwaves do not penetrate metal, so

shielding against them is fairly straightforward. In

addition, power densities decline rapidly with distance from the source, so exposure can be reduced

by lowering the power level and maintaining

proper distances from operating antennas.

The second, and more controversial, issue is

the possibility that RF radiation may cause nonthermal effects, including changes in genetic

6 For recent reporting on low-frequency power effects, see Tekla S. Perry, “Today’s View of Magnetic Fields,” IEEE Spectrum, vol. 31, No.

12, December 1994, pp. 14-23. High frequency standards are dealt with in Institute of Electrical and Electronics Engineers, IEEE Standard for

Safety Levels with Respect to Human Exposure to Radio Frequency Electromagnetic Fields, 3 kHz to 300 GHz, IEEE C95.1 1991, approved by

IEEE Sept. 26, 1991, approved by the American National Stardards Institute Nov. 18, 1992, (New York: Institute of Electrical and Electronics

Engineers, November 1994).

7 See U.S. Congress, General Accounting Office, op. cit., footnote 1, pp. 29-31, for a brief review of this literature.

8 Ibid, p. 3.
Chapter 11 Health Issues 1245

Public concern about low-power, high-frequency radio devices such as cellular telephones has its origins in a wrongful death lawsuit filed in April 1992, by David Reynard against his cellular telephone company, alleging that his wife’s frequent and prolonged use of her cellular telephone contributed to her death by

brain cancer. The story was first reported in the Ft. Lauderdale Sun-Sentinel, and received widespread

attention following an interview with Reynard by Larry King on the CNN television network in January 1993.

News of the suit led to a significant drop in the stock prices of cellular companies and led to efforts by

the companies to assure the public that cellular telephones are safe. While there was broad public concern

at the time about the safety of the devices, committed users apparently were unwilling to forego use of the

phones: cellular telephone subscription rates and usage did not significantly drop during this time. The

case was dismissed on May 17, 1995, for lack of evidence meeting Florida’s standards for admissibility. ’

There are currently seven other cases pending on the safety of cellular telephone use.

1 H. David Reynard, et al., v. NEC Corp., et al., “Order,” in United States District Court, Middle District of Florida, Tampa Div., case

no. 94-825-CIV-T-21 E. See also John Schwartz, “Court Call Favors Cellular: Judge Throws Out Claim of Link to Brain Cancer, ” The

Washington Post, May 20, 1995, p. A2.

SOURCE: Office of Technology Assessment, 1995.

structure, the changes in the permeability of cell of microwave effects on DNA has also been remembrances, and disturbances in cell metabolism.

These nonthermal effects theoretically could occur at lower power levels and under different modulation schemes than would be necessary to

generate thermal effects. Much research in this

area remains to be done, as government, industry

and the academic communities agree. While there

is no evidence that low-power, high-frequency radio signals cause cancer in cells, the possibility

has been raised that such low-power radio waves

could stimulate the growth of cancerous or precancerous cells, although early evidence is very

weak (see box 1 l-l). Some preliminary evidence

ported, but not yet confirmed.9

❚ Exposure Standards Are Still

Being Debated

To protect people from harmful exposure to high

levels of electromagnetic energy, the Institute of

Electric and Electronics Engineers (IEEE) developed standard IEEE C95.1, which was revised and

adopted by IEEE in September 1991 and approved by the American National Standards Institute (ANSI) in November 1992.10 Essentially, the

standard says that devices operating between 100

9 Henry Lai and Narenda Singh, “Acute Low-Intensity Microwave Exposure Increases DNA Strand Breaks in Rat Brain Cells,’’ Bioelectromagnetics, vol. 16, spring 1995, forthcoming. See report in “Microwaves Break DNA in Brain; Cellular Industry Skeptical,” Microwave News,

vol. 14, No. 6, November/December 1994, pp. 1, 11-13.

10 Institute of Electrical and Electronics Engineers, IEEE Standard for Safety Levels with Respect to Human Exposure to Radio Frequency

Electromagnetic Fields, 3 kHz to300GHz, IEEE C95.1 1991, approved by IEEE Sept. 26,1991, approved by the American National Standards

Institute Nov. 18, 1992 (New York: Institute of Electrical and Electronics Engineers, November 1994). These standards are based on several

decades of biological and radiological work, particularly on the question of electromagnetic radiation and cancer. For the most recent version of

the standard, promulgated in 1991 and 1992, the standards committee had 14 biological evaluation working groups, with 125 scientists, physicians, and engineers drawn from academia, the private sector, and government. Similar standards have been adopted by other organizations as

well.
248 | Wireless Technologies and the National Information Infrastructure

MHz and 450 MHz are within permissible limits if

they radiate less than 1.4 watts, and the radiating

structure is at least one inch from the body.11 At

higher frequencies, the permitted power levels

drop: for example, at 1500 MHz, the limit is 0.4

watts. Most hand-held telephones used in the

United States operate at no more than 0.6 watts.

Mobile telephones (installed in cars) are permitted

to emit up to 3 watts because car phone antennas

are installed outside vehicles away from close human contact. These levels are considerably below

the 4 watt per kilogram energy absorption threshold identified in the scientific literature as the lowest level at which adverse effects due to heating

had been noted and replicated. In a December

1992 report, IEEE concluded that “prolonged exposure at or below the levels recommended in

these guidelines is considered safe for human

health.”

The exposure limits in the standard were

derived from work done by the U.S. Navy and the

IEEE before 1960, and reviewed and revised every five years, according to ANSI policy. Because

of this historical foundation, the standard principally addresses concerns about the thermal effects

of microwave radiation. Nonthermal effects,

while reportedly discussed in the standards committee deliberations, are not directly addressed by

the ANSI/IEEE standard, in part because little research on them had been done when the standard

was last revised.12 Too little is known about the

mechanism(s) by which nonthermal effects operate to set standards for exposure, presuming harmful nonthermal effects exist. As the IEEE standard

document notes:

Biological effects data that are applicable to

humans for all possible combinations of frequency and modulation do not exist. Therefore,

this standard has been based on the best available interpretations of the extant literature and is

intended to prevent adverse effects on the functioning of the human body13....

Research on the effects of chronic exposure

and speculations on the biological significance

of nonthermal interactions have not yet resulted

in any meaningful basis for alteration of the

standard. It remains to be seen what future research may produce for consideration at the time

of the next revision of this standard.14

Disputes over biological and health effects revolve around the continued acceptability of this

standard as new research is performed.15 As of

spring 1995, the FCC was still considering whether to adopt the C95.1-1992 standard for all devices

operating at microwave radio frequencies. Analog

cellular telephones are presently exempt from

testing under FCC rules because of their low power levels. However, the FCC indicated in 1994 that

PCS phones would be subject to testing and SAR

level limitations unless their maximum power

11 This is a conventional way of stating the levels permitted under the standard, expressed in terms of what levels the emitting devices may

have. The standard actually says nothing about emitting devices, but specifies exposure levels for humans, and is considerably more complex

and detailed: it covers a wide range of frequencies (from 3 kHz to 300 Ghz), and power levels, measured as electric field or magnetic field

strength or power density, depending on the frequency range. Compliance with the IEEE/ANSI standard also requires that, at cellular phone

frequencies, actual exposure for the general public (measured by the specific absorption rate) not exceed 0.08 watts per kilogram whole-body

average or 1.6 milliwatts per kilogram peak exposure in any one gram of tissue over 30 minutes. The maximum power density level is 0.57

milliwatt per square centimeter of tissue for over the whole body. These levels are somewhat different for other radio devices, such as ESMR,

PCS or police radios. See Mark Fischetti, “The Cellular Phone Scare,” IEEE Spectrum, vol. 30, No. 6, June 1993, pp. 44, 46.

12 IEEE notes that most reports of biological effects have dealt with acute exposures at relatively few frequencies rather than with chronic

exposures, and its work reflects this data base. The cutoff date for the literature review on which the standard depends was December 1985, with

some carefully selected exceptions. See Institute of Electrical and Electronics Engineers, op. cit., footnote 6, p. 26-27.

13 Institute of Electrical and Electronics Engineers, op. cit., footnote 6, p. 21.

14 Ibid., p. 24.

15 Louis Slesin, publisher of Microwave News, is a careful exponent of those advocating increased attention to biological effects of high-frequency, low-power electromagnetic radiation on humans. See for example, “Cellular Phones: Why the Health Risk Can’t Be Dismissed,” Microwave News, vol. 13, No. 1, January/February 1993, pp. 1, 11-12.
Chapter 11 Health Issues 1247

In 1991, there were approximately 17,600 deaths caused by brain cancer in the United States and

about 514,300 cancer deaths overall. The cancer rate, between five and six deaths per 100,000, has not

changed significantly over the past decade. 1 In a population of 180 million adults 20 years old and above,

there are about 20 million cellular telephone users, or about 11 percent of the adult population. Mathematically, one would expect about 1,956 cellular telephone users to get brain cancer, independent of any specific cause. The National Cancer Institute, a part of the National Institutes of Health, estimated that there

would be 350 new cases of brain cancer among cellular telephone users in 1993.2 It is unknown how many

actual cases occurred, since data on cancer and cellular telephone use is not yet available.

The lesson in these numbers is that, just because someone uses a cellular telephone and gets cancer,

there is no reason to assume it is the phone that caused it. Because the numbers are so small, it would be

difficult to distinguish cancer due to cellular telephones from other possible causes. If it were scientifically

proven that cellular telephone users contract cancer at rates above the average, all other things being

equal, it might be concluded that cellular telephones had a role to play. But even this is difficult to say with

certainty because so many factors contribute to the incidence and growth of cancer.

1 Letter from Dr. F. Kristian Storm, Professor, Departments of Surgery and Human Oncology, University of Wisconsin, Comprehensive Cancer Center, to Rep. Edward Markey, Feb. 2, 1993.

2 Mark Fischetti, “The Cellular Phone Scare,” IEEE Spectrum, vol. 30, No. 6, June, 1993, pp. 43-47.

SOURCE: Office of Technology Assessment, 1995.

output was less than 0.1 watt and a 2.5 centimeter such work,18 but these concerns appear to have

separation was maintained between the user and

any radiating structures.

l6 The standard has been

endorsed by the cellular industry and the FDA’s

Center for Devices and Radiological Health, but

EPA, the National Institute for Occupational Safety and Health and others have objections.17

❚ Research Activities

Research into the possible health effects of radio

communication devices and systems is underway

in a variety of institutions, including work sponsored by the cellular telephone industry. Questions have been raised about the potential bias of

16 Microwave News, vol. 14, No. 5, September/October 1994, p. 8.

17 Microwave News, vol. 14, No. 3, May/June, 1994, p. 13.

been addressed.19 Planned research may provide

some answers to recently raised questions about

the health effects of wireless telecommunications.

Research is concentrated in epidemiology, dosimetry, toxicology, and clinical studies. Through

statistical studies of large populations, epidemiological studies seek to determine whether the occurrence of a disease can be associated with

characteristics of people or their environments

(see box 11-2). Dosimetry studies attempt to develop appropriate models of exposure relevant to

human use of cellular and other wireless telephone

use. Laboratory studies use controlled experi18U.S. Congress, General Accounting Office, Status of Research on the Safety of Cellular Telephones, GAO/RCED-95-32 (Washington,

DC: November 1994).

19 Letter from Dr. George Carlo, Chairman, Wireless Technology Research, to Mr. Keith O. Fultz, Assistant Comptroller General, Resources, Community and Economic Development Division, U.S. General Accounting Office, Apr. 10, 1995.
250 | Wireless Technologies and the National Information Infrastructure

ments with cell tissues or animals to ascertain the

biological effects of particular radio-frequency

emissions. These types of studies, epidemiological and laboratory, are necessary to assess whether

there is a health risk to the population.

Two major research programs are being conducted in the United States. In the first, Motorola,

a major manufacturer of cellular telephones and

switching equipment, is funding a number of studies, some of which are published in the peer-reviewed literature. The other major research

program is a three-to-five year effort, estimated to

cost upward of $25 million, funded by the cellular

telephone industry using an unrestricted depositonly escrow fund that may be increased as research questions are refined.20 This effort is

overseen by Wireless Technology Research

(WTR) (formerly the Scientific Advisory Group

(SAG)),21 and will support a number of multidisciplinary studies in epidemiology, cell cultures,

test models, and genetics.22 Both analog and digital transmission formats will be examined at power levels and frequencies used by current cellular

systems, as well as those of proposed PCS. The resulting scientific work is subjected to review

through an independent peer-review board coordinated by the Harvard University School of Public

Health’s Center for Risk Analysis.23 Results will

be submitted for publication in the scientific literature.

Research on cellular telephone health effects is

also being conducted in Europe, although differences in transmission frequencies, power levels,

and waveforms make it difficult to know the applicability of research findings in the United States.

In the United Kingdom, the National Radiological

Protection Board is developing computer models

to characterize the fields induced in the human

head by hand-held devices. Both German Telkom

and the Research Association for Radio Applications—a consortium of manufacturers and cellular providers—are sponsoring behavioral and

health effects research in Germany. The European

Commission commissioned a study of thermal

and nonthermal health effects from wireless device emissions in late 1994. The study is being

conducted at the Center for Personkommunikation at Aalborg University, Denmark.

The credibility of industry-funded research depends on an open process, extensive peer and government review, adherence to accounting and

auditing standards, no-strings-attached funding,

appropriate research questions and methods, and

timely disclosure of research results. For the

CTIA-sponsored effort, the peer-review panels

and the research itself are funded through an escrow account to provide for strict independence.

GAO (see below) questioned whether the research

efforts conducted under the cellular industry program could be considered truly objective and

credible; the WTR established a new nonprofit administrative structure to manage the research

funds and altered its funding and supervisory

structures to respond to GAO’s concerns.24 Government funds might be contributed to the effort,

20 Interview with Scientific Advisory Group (now Wireless Technology Research) staff members, March 29, 1995.

21 Membership of the Scientific Advisory Group consists of Dr. George L. Carlo, of the Health & Environmental Sciences Group, Ltd., and

George Washington University; Dr. Ian Munro, of CanTox, Inc.; and Dr. Arthur W. Guy, University of Washington, Seattle. On Mar. 31, 1995,

the SAG became Wireless Technology Research, LLC.

22 Scientific Advisory Group on Cellular Telephone Research, “Potential Public Health Risks From Wireless Technology: Research Agenda for the Development of Data for Science-Based Decisionmaking,” (Washington, DC: Scientific Advisory Group on Cellular Telephone Research, Aug. 25, 1994).

23 Details of Wireless Technology Research and associated activities can be found in Wireless Technology Update, its organization newsletter published in Washington, DC.

24 Letter from Dr. George Carlo, Chairman, Wireless Technology Research, to Mr. Keith O. Fultz, Assistant Comptroller General, Resources, Community and Economic Development Division, U.S. General Accounting Office, Apr. 10, 1995.
Chapter 11 Health Issues | 251

but the WTR believes that bureaucratic and budget constraints make this unlikely.

❚ Government Initiatives

The General Accounting Office (GAO) completed a short study of research performed on the

safety of analog cellular telephones in November,

1994. The report notes that no one federal regulatory agency in the United States has responsibility

for wireless communications device emissions;

EPA has overall responsibility for advising the

government on EMF exposures, the FDA establishes standards for devices that emit radiation,

and the FCC approves wireless communications

devices for use and assures that their emission levels meet safety standards.

The study also concluded that little research on

the health effects of wireless telecommunications

devices on humans is planned by the federal government, with the exception of an epidemiological

study by the National Cancer Institute to be completed in 1997 or 1998. In 1984, the Environmental Protection Agency convened an interagency

working group on electromagnetic frequency

radiation, composed of scientific specialists. The

Food and Drug Administration is establishing an

oversight group that includes policy specialists as

well.25

25 Members include the U.S. Food and Drug Administration, the U.S. Environmental Protection Agency, the National Telecommunications

and Information Administration, the National Institutes of Occupational Safety and Health, and the Occupational Safety and Health Administration.
Electromagnetic

 Interference

 and

 Wireless Devices

s new radio devices and wireless systems proliferate, particularly at low power levels and in nontraditional applications, and with the increasing numbers of other

passive electronic devices in society, radio frequency interference among them may become an increasing problem. As

devices become smaller, people are increasingly likely to carry

and use them in situations unanticipated by designers. Nonradio

electronic devices such as personal computers have not necessarily been designed to be immune from wireless telecommunications emissions, and can also cause interference to radio

receivers.1 This chapter discusses how wireless devices and systems may interfere with each other as well as with other electronic

equipment and identifies some possible solutions.

FINDING

Interference between different wireless systems and between

wireless systems and other electronic devices is potentially serious, but also is amenable to technical and regulatory solutions.

Wireless devices can cause interference to electrical components

and vice versa, and as new generations of digital radio equipment

become widely used, these problems may increase in the short

term. However, installation of lower power microcells, improved

shielding, and electrical design techniques can usually mitigate

most interference problems. In cases where other solutions are

not feasible, carefully targeted use restrictions may be required.

1 Causes of interference include high clock rate timing pulses used in computers, video games, etc., and their harmonics.

| 253
254 | Wireless Technologies and the National Information Infrastructure

BACKGROUND

Any short length of wire in an electronic circuit or

in an integrated chip can act as an antenna when

exposed to radio waves and give rise to electric

currents that may interfere with the normal operation of the circuit.2 This potential electromagnetic

interference (EMI) is an inherent property of radio

or television transmissions, electric motors, and

household switches, as well as natural phenomena

2 K. J. Clifford, et al., “Mobile Telephones Interfere with Medical Electrical Equipment,” Australian Physical & Engineering Sciences in

Medicine, vol. 17, No. 1, 1994, p. 23.
Chapter 12 Electromagnetic Interference and Wireless Devices | 255

such as lightning, aurora borealis, and sunspot activity.3 To protect against it, shielding—either in

a metal case or special shielded wire—or better

circuit design is necessary. Most of the time designers anticipate problems, and build devices not

subject to interference when used as directed.

However, there are cases in which devices are not

shielded adequately against EMI, many involving

medical devices.

While many of the reported EMI problems involve older analog radio transmitting devices, the

wireless industries are increasingly turning to digital transmission formats to improve quality and

increase capacity. This transition may pose new

EMI problems because digital equipment may interact with other devices in unpredictable ways.

For example, digital Global System for Mobile

Communications (GSM) handsets and Time Division Multiple Access (TDMA) telephones emit

higher strength peak electric fields than do analog

telephones, while maintaining the same average

power levels.4 This scheme results in better transmission and reception at a lower average power

output—extending battery life—but it may also

cause greater interference than analog phones.

The increasing use of spread spectrum, including

Code Division Multiple Access (CDMA) technologies, has also led some engineers to predict

that, with a large number of users, interference between competing devices may make the systems

unusable.

INTERFERENCE WITH MEDICAL DEVICES

Medical devices can be affected by interference

from radio devices, including cellular telephones,

and this has recently become a public issue.5 Pacemakers, apnea monitors, blood-gas pumps, hearing aids, wheelchairs, and electronic imaging

devices have reportedly been interrupted or interfered with in the presence of cellular telephones or

other radio devices.6 In some cases, deaths have

occurred, though none have been attributed to cellular telephones. In spring 1995, pacemaker wearers were warned not to use new digital cellular

phones because of interference problems.7

Specific problems have surfaced with new digital mobile telephones and hearing aids. Time division digital transmissions can produce loud audio

tones in some hearing aid models and other analog

3 EMI effects increase with power and decrease with distance.

4 Stewart Fist, “GSM and TDMA digital phones,” April, 1994, unpublished manuscript.

5 Jeffrey L. Silberberg, “Performance Degradation of Electronic Medical Devices Due to Electromagnetic Interference,” Compliance Engineering, fall 1993, pp. 25-39; “Cellular Telephones and Radio Transmitters: Interference with Clinical Equipment,” Technology for Respiratory

Therapy, vol. 14, No. 5, November 1993; Tom Knudson and William M. Bulkeley, “Stray Signals: Clutter on Airwaves Can Block Workings of

Medical Electronics,” The Wall Street Journal, vol. 223, No. 116, June 15, 1994, pp. A1, A12.

6 Some documented illustrative examples:

• A fetal heart beat detector picked up radio and CB broadcasts and static instead of heart beats.

• A ventilator malfunctioned due to interference from a guard’s walkie-talkie.

• A user of a powered wheelchair had moved to a new home and was showing his friends, also in powered wheelchairs, around the neighborhood. While moving up a hill, the user heard clicking noises and took his hand off the joystick. The wheelchair made a sudden about turn

and headed down hill at high speed. The wheelchair would not respond to further movement of the joystick. The wheelchair continued down

the hill for about 25 yards, veered left, and went over a cliff. The user suffered a broken hip and several other injuries. His friends’ wheelchairs

were from a different manufacturer and were not affected. The wheelchair user’s new home is several miles away from a radio station and three

blocks from a major interstate highway.

• An external defibrillator/pacemaker stopped pacing when an ambulance attendant used a hand-held transmitter too close to the patient.

The patient was not resuscitated.

These examples are taken from Jeffrey L. Silberberg, op. cit., footnote 5, pp. 25-39.

7 Mark Landler, “Cellular Phones May Affect Pacemakers,” The New York Times, Apr. 29, 1995, p. B1; John J. Keller, “Cellular Phones May

Affect Use of Pacemakers,” The Wall Street Journal, Apr. 29, 1995, p. B1. Medtronic, Inc., a major pacemaker supplier in the United States,

advises pacemaker users to turn off portable phones placed in breast pockets, hold phones ten inches away from the chest, and use the phone on

the opposite side of the body from where the pacemaker is implanted.
256 | Wireless Technologies and the National Information Infrastructure

audio devices from up to 100 feet away. The tones

can reach 130 dB—the sound of an airplane taking

off as heard by a person standing on the runway.8

The interference lasts as long as the hearing aid is

close to the digital phone, but returns to normal

when the phone is turned off or moves out of

range.

Shielding can reduce the amount of interference hearing aids encounter, but there are limits to

what shielding can be done. There are three types

of hearing aids, those worn in the ear, outside the

ear, and in a pocket and attached by wire. Hearing

aids worn in the ear, by far the most popular, are

least amenable to shielding, because they are already very small; hearing aids worn in the pocket

are most susceptible to EMI, but can be easily

shielded.

There are about six million hearing-aid users in

the United States today, and the number is projected to increase as the baby-boomer generation

ages. It is not known what types of hearing aids

(in-ear, on-ear, or pocket), or how many (one or

two ears) are used, nor is it known how many hearing-impaired people use cellular telephones. The

projected cost of retrofitting hearing aids to eliminate interference is unknown; this may not be feasible given their small size and life span.

The potential for EMI has long been studied

and understood by radio engineers and medical

technologists, and a substantial body of technical

work and engineering expertise exists. Like other

forms of electromagnetic interference, shielding

devices against electromagnetic radiation and

controlling the output levels of emitting devices

are the two main ways compatibility is attained.

Another is the proper installation and spacing of

medical equipment to minimize the potential for

interaction.

Standards have been set for both transmitting

devices and for shielding of computing and medical devices, based on both lab testing and field experience. Voluntary standards were promulgated

in 1979 by the Food and Drug Administration

(FDA) specifying that medical equipment should

be protected against interference up to seven volts

per meter between 450 and 1000 MHz.9 A more

recent standard issued by the International Electrotechnical Commission, one of the main standards’ bodies in this area, relaxes suggested

permitted exposure to three volts per meter in the

frequency range from 26 to 1000 MHz.10 The

Association for the Advancement of Medical

Instrumentation, a voluntary standards body in the

United States, has convened a committee to address EMI problems.11 Table 12-1 gives the

FDA’s 1994 draft suggestions on the minimum

distance that should be maintained between transmitters of various power outputs and medical devices with various amounts of shielding.

8 Michael Ruger, attorney, Baker & Hostetler, Washington, DC, personal communication, Feb. 17, 1995; “TDMA Mobile Phones Accused

of Interference,” Microwave Engineering Europe, March/April 1993, pp. 16-17.

9 U.S. Food and Drug Administration, Bureau of Medical Devices, “Electromagnetic Compatibility Standard for Medical Devices,” BMD

Publication No. MDS-201-0004, Oct. 1, 1979.

10 International Electrotechnical Commission, Medical Electrical Equipment, Part 1: General Requirements for Safety, 2. Collateral Standard: Electromagnetic Compatibility—Requirements and Tests, 1993.

11 Knudson and Bulkeley, op. cit., footnote 5, p. A12.
254 I Wireless Technologies and the National Information Infrastructure

Immunity level of medical device

Power rating of radio Unknown

source and example (assume 0.1 1 volt/ 3 volts/ 10 volts/ 20 volts/ 40 volts/

sources voltmeter) meter meter meter meter meter

0.07 watt

Microcell cellular phone

0.01 watt

0.1 watt

Wireless computer

equipment

0.6 watt

Portable cellular phone

1 watt

3 watts

Transportable cellular

phone

5 watts

10 watts

20 watts

50 watts

100 watts

State police radio

Amateur radio

1,500 watts

Amateur radio

100 kilowatts

FM broadcast

TV stations ch. 2-6

316 kilowatts

TV stations ch. 7-13

5 megawatts

TV stations ch. 14-69

4.6 meters 0.5 meter 0.3 meter 0.3 meter

0.3

0.3

0.4

0.6

0.8

1.2

1.7

2.5

3.9

5.5

21.3

173.9

309.2

1.2 km

0.3 meter 0.3 meter

0.3 0.3

0.3 0.3

5.5

17.4

42.6

55.0

77.8

123.0

173.9

246.0

388.9

550.0

2.1 km

17.4 km

31 km

123 km

0.6

1.7

0.3

0.6

4.3

5.5

1.4

1.8

0.3

0.3

0.3

0.3

7.8 2.6 0.4 0.3

0.3

0.4

0.6

1,0

12.3

17.4

24.6

38.9

4.1

5.8

8.2

13.0

0.6

0.9

1.2

1.9

55.0 18.3 2.8 1.4

213.0 71.0 10.7 5.3

87.0 43.5

154.6 77.3

614.9 307.5

1.7 km

3.1 km

12.3 km

579.8

1.0 km

4.1 km

To find the minimum recommended protection distance between a medical device and a transmitter from this table, first locate the value in the top row

that is closest to the RF immunity of the medical device. Then follow that column down to the row corresponding to the rated power of the transmitter

The entry in that cell of the table is the minimum recommended protection distance [in meters] between that medical device and that transmitter.

SOURCE: U.S. Food and Drug Administration, “EMI Protection Distance,” draft, Aug. 15, 1994.

However, with the growing number of both radio and medical devices and their shrinking size,

more interference is likely to occur. Because transmission equipment can rarely be altered to reduce

interference, regulators think the best solution is

for device manufacturers to pay close attention to

shielding, working in consultation with the designers and manufacturers of emitting devices.12

12U.S. Congress, General Accounting Office, Electromagnetic Interference with Medical Devices, GAO/RCED-95-96R (Washington, DC:

Mar. 17, 1995).
258 | Wireless Technologies and the National Information Infrastructure

Other measures by themselves may not be sufficient. For example, proposals have been made to

restrict the use of wireless devices in hospitals and

clinics, but the ubiquity and small size of such devices makes policing difficult. Moreover, health

care is becoming more decentralized with sensitive medical equipment increasingly housed in

homes and outpatient clinics. Mobile care-givers,

in turn, are becoming more reliant on wireless

communications to interact with doctors and

technicians at hospitals in other locations. This

evolution in care-giving requires that medical

equipment and wireless communications exist

side-by-side. Users of medical or radio devices are

generally unaware of field strengths, frequencies,

the position, or in some cases even the presence of

electromagnetic radiation. Warnings, when they

do exist, rarely tell users what to do beyond “avoid

electromagnetic interference.”

Clearly, incorporating shielding into medical

devices early in the development process is essential. Other measures may provide some help in

minimizing interference problems: promulgating

strong standards, limiting radio devices in wellidentified areas, and providing good consumer

education of the dimensions of EMI.

❚ Regulatory and Legislative Initiatives

In October 1994, the Subcommittee on Information, Justice, Transportation, and Agriculture of

the House Government Operations Committee

held hearings on medical device interference from

wireless and cellular devices.13 The Federal Communications Commission (FCC) and FDA have

primary oversight responsibilities for this area,

and have consulted frequently on design and standards issues. However, legislative interest in this

issue appears to have precipitated action in the industry to address EMI problems. For example, the

Cellular Telecommunications Industry Association (CTIA) and the Health Industry Manufacturers Association have jointly funded a Center for

the Study of Wireless Electromagnetic Compatibility at the University of Oklahoma to study medical device interference. This center convened a

Forum on Electromagnetic Compatibility in September 1994, which discussed these issues.

The Hearing Aid Compatibility Act of 1988 required that all telephones be made compatible

with hearing aids by 1991.14 However, in a concession to the cellular telephone industry, the act

excluded mobile phones. The act did permit the

FCC to revisit the issue at a later date, with the presumption that new technologies would be made

compatible with hearing aids. The FCC has determined that PCS equipment will be exempt from

compliance with the act, noting that U.S. operators who choose GSM will use a different frequency than their European cellular counterparts, that

few hearing-aid users will be affected, and that

cost-effective solutions to mitigate interference

are available.15 There is some concern in the hearing-aid users’ community that PCS operators will

choose GSM as their standard. The FCC has convened an advisory committee to examine this issue.

INTERFERENCE WITH AIRCRAFT

CONTROL SYSTEMS

Although there are no documented cases of civilian airline crashes caused by cellular telephone or

other interference, electronic devices may pose

13 U. S. Congress, House of Representatives, Committee on Government Operations, Subcommittee on Information, Justice, Transportation and Agriculture, 103d Congress, “Do Cellular and Other Wireless Devices Interfere with Sensitive Medical Equipment? Are Pacemakers,

Hearing Aids, Apnea Monitors, Blood Pumps and Other Sophisticated Medical Devices Affected by Outside Electromagnetic Interference

(EMI) from Cellular And Other Wireless Devices?” photocopied hearing statements, various witnesses, Oct. 5, 1994.

14 47 U.S.C., sec. 610. FCC regulations on hearing aid compatibility can be found in 47 CFR, sec. 68.4.

15 Letter from Hon. Reed Hundt, Chairman of the FCC, to Sen. Bob Packwood, Chairman, Committee on Commerce, Science, and Transportation, Subcommittee on Communications, Apr. 12, 1995.
Chapter 12 Electromagnetic Interference and Wireless Devices | 259

problems to airplane control systems.16 Of the

approximately 100 reported cases of alleged interference, about one-third appear to have some validity, according to technical experts.17 FAA

regulations hold the airline companies responsible for setting policies on the use of portable electronic devices; given the difficulty in assuring safe

operation under all operating conditions, all airlines have decided to prohibit the use of any electronic devices during take-offs and landings.18

Inside an aircraft, radio transmitters, such as

cellular telephones, can induce transient currents

in wires and even be amplified in the aluminum

airframe, because any unshielded metal can act as

an antenna. CTIA is currently testing cellular telephones in planes to certify their safe use on the

ground. (In addition, cellular telephone use on

commercial aircraft in flight is not allowed because a single cellular telephone at even moderate

altitudes would tie up many terrestrial cellular

base stations simultaneously, since many base stations could be “seen” simultaneously by an airborne cellular telephone.)

A potential problem with American Mobile

Satellite Corp.’s (AMSC’s) transportable telephone is that it will operate at a frequency adjacent

to that used by the Global Positioning Satellite

(GPS) system, which will serve as the basis of the

new generation of air traffic control systems in the

United States. Operating such a telephone in an

airplane may jam the GPS navigation system. The

FCC, the National Telecommunications and

Information Administration (NTIA), and the Federal Aviation Administration (FAA) have established a procedure with AMSC and other

interested parties to address this problem; a memorandum of understanding that was concluded in

November 1994 provides the means to prevent interference and allows AMSC to proceed with its

system’s deployment.19

Interference could be more serious between

portable electronic devices and digital flight

equipment, including navigation systems. These

systems work with digital bit streams, which can

be thought of as strings of ones and zeros. Interference might occur by inducing spurious currents

and thus introducing new data to the normal data

stream. Such data would probably be rejected by

error-correcting routines in current avionics, resulting in an interruption rather than a deviation of

normal aircraft control systems, but it is difficult

to know with certainty that this would always occur. Even devices that are not designed as radio

transmitters emit electromagnetic radiation. This

has led to concern that uncontrolled use of any

electronic device might cause interference. One

recently publicized case involved a pilot who believed that a CD player in use in the first-class

compartment interfered with the normal operation

of the aircraft during landing.20

Because analog avionics systems are not dependent on data streams, they are not susceptible

to such interference. Thus, where a digital cellular

telephone may affect new Airbuses or Boeing

planes, it is unlikely to affect an older Boeing 727.

On the other hand, newer aircraft use fiber optic

cabling for control systems and more fault-toler16 Jerry Hannifin, “Hazards Aloft,” Time, Feb. 22, 1993, p. 61.

17 For example, verifiable cases of interference might resemble the following: when the flight crew notices something unusual occurring to

the airplane, together with a passenger’s use of an electronic device, they ask the passenger to turn the device off, and note whether the problem

has disappeared. They then ask the passenger to turn the device back on to see if the interference occurs again. If it does, then this is an event to be

explained. However, efforts to duplicate such effects on the ground have all been unsuccessful. John Sheehan, Pfaneuf Associates, CTIA consultant, chair of RTCA Special Committee 177, personal communication.

18 The RTCA, an advisory body to the FAA on electronic matters, is meeting to set standards for electronic device emissions in aircraft in the

wake of concern about consumer electronic devices. It expects to issue its report on nonradio device interference in the spring of 1995.

19 Memorandum of Understanding between the FCC, NTIA, and the FAA, “Addressing Out-of-Band Emission Requirements for the Mobile-Satellite Service,” effective Nov. 19, 1994.

20 Jerry Hannifin, “Hazards Aloft,” Time, Feb. 22, 1993, p. 61.
260 | Wireless Technologies and the National Information Infrastructure

ant architectures, making them less susceptible to

radio interference.

It is extremely difficult and costly to model

these internal interference problems. Because

there are so many variables—the type of emitting

device; its power, frequency, and modulation

schemes; the effectiveness of its filters; its place in

the aircraft, the location of sensitive instruments,

the location of wire or airframe with respect to the

emitting device, and the activity the aircraft is performing (e.g. landing or cruising at altitude)—determining all the conditions for trouble-free

operation of portable devices is nearly impossible.

UNANTICIPATED INTERACTIONS AMONG

LARGE, COMPLEX SYSTEMS

A general issue in electromagnetic radiation is the

unintended effects of radio waves. These involve

compatibility problems that can, for the most part,

be solved either by shielding devices, keeping

radio waves away from people and sensitive

equipment, or changing the modulation scheme

emitting devices use. However, with widespread

deployment of small radio devices with complex

operating characteristics, it is possible that at

some point there will be interference leading to a

system failure. Because of the large number of devices, the variety of ways they are used, and the

complexity of the possible interactions, it is unlikely that every combination can be tested and

potential problems anticipated.

New technologies will continue to be introduced that cannot be tested in all real-world situations. A recent example: the operator’s manual for

European-model BMW automobiles advises

owners not to use a digital (GSM) cellular telephone while driving the car, because it may interfere with the car’s electrical system and lead to

premature deployment of the airbags. While this

particular problem is no doubt fixable, it is one indication of the kinds of surprises that may crop up

from time to time as wireless telecommunications

technologies play a larger role in a complex technological world. 
Appendix A:

Radio

Communication

Basics1

DEFINITIONS OF

RADIOCOMMUNICATION TERMS1

Amplitude: A measure of the value of a radio

wave, measured in volts (see figure A-1).

Analog: In analog radio communication, the message or information to be transmitted is impressed

onto (modulates) a radio carrier wave, causing

some property of the carrier—the amplitude, frequency, or phase—to vary in proportion to the information being sent. Amplitude modulation

(AM) and frequency modulation (FM) are two

common formats for analog transmission. In order

to send analog signals, such as voice and video,

over digital transmission media, such as fiber optics or digital radio, they must first be converted

into a digital format. See modulation.

Bandwidth: The process of modulating (see below) a radio wave to transmit information produces a radio signal, but also generates additional

frequencies called “sidebands” on either side of

the carrier (see figure A-2). The total width of frequencies, including the sidebands, occupied by a

radio signal is its bandwidth. In practical terms,

however, the bandwidth of a signal refers to the

amount of spectrum needed to transmit a signal

without excessive loss or distortion. It is measured

in hertz. In figure A-2, the bandwidth of the signal

is 4 kHz. The bandwidth of a radio signal is determined by the amount of information in the signal

being sent. More complex signals contain more

information, and hence require wider bandwidths.

An A radio broadcasting signal, for example,

takes 10 kHz, while an FM stereo signal requires

200 kHz, and a color television signal takes up 6

MHz. The bandwidth required by a television

channel is 600 times greater than that of an AM radio channel.

Carrier: A radio wave that is used to transmit information. Information to be sent is impressed

onto the carrier, which then carries the signal to its

destination. At the receiver the carrier is filtered

out, allowing the original message to be recovered.

1 Material in this appendix is derived from Harry Mileaf (ed.), Electronics One, revised 2d ed. (Rochelle Park, NJ: Hayden Book Co., Inc.,

1976); U.S. Congress, Office of Technology Assessment, The Big Picture: HDTV & High-Resolution Systems, OTA-BP-CIT-64 (Washington,

DC: U.S. Government Printing Office, 1990); William Stallings, Data and Computer Communications (New York, NY: MacMillan Publishing

Co., 1985).

| 261
260 I Wireless Technologies and the National Information Infrastructure

+ I 1 cycle ,

Amplitude 

(volts)

Time

-1 Period I

Each cycle of a pure radio wave is identical

to every other cycle.

SOURCE: Office of Technology Assessment, based on Harry Mileaf

(cd.), Electronics One, revised 2d ed. (Rochelle Park, NJ: Hayden Book

Co., 1976) p. 1-10.

Digital: Digital transmission formats can be used

to transmit images and voice as well as data. For

continuously varying signals such as voice or

images, an analog/digital converter changes the

analog signal into discrete numbers (represented

in binary form by O’s and 1‘s). These binary digits,

or bits, can then be sent as a series of “on’’ /’’off’

pulses or can be modulated onto a carrier wave by

varying the phase, frequency, or amplitude according to whether the signal is a”1” or a “O.” Data

is sent in a similar fashion although it does not

have to be converted into digital form first. (See

figure A-3.)

Frequency: The number of cycles a radio wave

completes in one second (see figure A-4). Frequency is measured in hertz (1 cycle per second

equals one hertz). Radio frequencies are described

as multiples of hertz:

kHz, kilohertz: thousand cycles per second;

MHz, megahertz: million cycles per second;

GHz, gigahertz: billion cycles per second.

The frequency of a radio wave is the inverse/reciprocal of its period. For example, if a wave had a

period of 0.1 seconds, its frequency would be 10

hertz.

Modulation: The process of encoding information onto a radio wave by varying one of its basic

characteristics-amplitude, frequency, or phase

—in relation to an input signal such as speech,

data, music, or television. The input signal, which

contains the information to be transmitted, is

called the modulating or baseband signal. The radio wave that carries the information is called the

carrier wave. The radio wave that results from the

combination of these two waves is called a modulated carrier. Two of the most common types of

modulation are amplitude modulation (AM) and

frequency modulation (FM) (see figure A-5).

Period: The length of time it takes a radio wave to

complete one full cycle (see figure A-l). The inverse of the period is a radio wave’s frequency.

Phase: A measure of the shift in position of a radio

wave in relation to time (see figure A-6). Phase is

often measured in degrees.

Spread Spectrum: Spread spectrum refers to various coding schemes used to modulate data information onto radio waves for transmission.

Spread spectrum was originally used by the military to hide its communications in background

“noise.” Direct sequence spread spectrum systems encode each bit of information with a special

code is known only to the transmitter and receiver.

The transmitter sends these encoded bits over a

Amplitude Carrier

Lower

side band

98 99 100 101 102

Frequency (kHz)

NOTE: This figure represents a 100-kHz earner wave modulated by 1-

and 2-kHz frequencies.

SOURCE: Harry Mileaf (cd.), Electronics One, revised 2d ed. (Rochelle

Park, NJ: Hayden Book Co., 1976) p. 1-31.
Appendix A Radio Communication Basics 1261

Amplitude-shift keying

001 1 01000 1 0

Frequency-shift keying

SOURCE: U.S. Congress, Office of Technology Assessment, The Big

Picture: HDTV & High-Resolution Systems, OTA-BP-CIT-64 (Washington, DC: U.S. Government Printing Office, June 1990), figure 3-3, p. 41.

wide range of frequencies assigned for the system.

The receiver looks for the special coded bits and

reassembles them in the proper order. In frequency-hopping spread spectrum systems, a wide

range of frequencies is also used, but the system

“hops” from frequency to frequency, transmitting

bits of information on each frequency. Only thereceiver knows the hopping pattern and how long

the transmitter will stay on each frequency (as

little as 100 milliseconds). This allows it to track

the data across frequencies and reassemble the

original signal.

Spectrum: Each radio signal is actually made up

of a number of different radio waves at different

frequencies. The spectrum of a radio signal refers

to the range of frequencies it contains. In figure

A-2, the spectrum of the signal extends from 98 to

102 kHz. The width of the spectrum is called the

bandwidth of the signal. More broadly, the radio

frequency spectrum consists of all the radio frequencies used for radio communications.

Wavelength: The distance between successive

peaks of a continuous radio wave.

SPECTRUM BASICS2

❚ Radio Waves

Radio waves are the basic unit of wireless communication. 3 By varying the characteristics of a radio

wave—frequency, amplitude, or phase—these

waves can be made to communicate information

of many types, including audio, video, and data.

Radio waves that carry information are called radio signals, and the process of encoding intelligence onto a radio wave so that it can be

transmitted over the air is called modulation.4 In

the process of modulation, the information or

message to be transmitted-a human voice, recorded music, or a television signal—is impressed

onto (modulates) a “carrier” radio wave that is

One second I

Frequency = 3 cycles per second

SOURCE: Harry Mileaf (cd.), Electronics One, revised 2d ed. (Rochelle

Park, NJ: Hayden Book Co., 1976) p. 1-10.

2 Much of the material in this section comes from Richard Gould, “Allocation of the Radio Frequency Spectrum,’’contractor report prepared

for the Office of Technology Assessment, Aug. 10, 1990.

3 Although the term "radio" is most commonly associated with commercial radio broadcasting services (AM and FM radio), the term also

properly encompasses the entire range of wireless communications technologies and services, including television, microwave, radar, shortwave radio, mobile, and satellite communications.

4 Two of the most familiar modulation techniques are amplitude modulation (AM) and frequency modulation (FM).
262 Wireless Technologies and the National Information Infrastructure

Amplitude-modulated wave

Frequency-modulated wave

SOURCE: U.S. Congress, Office of Technology Assessment, The Big

Picture: HDTV & High-Resolution Systems, OTA-BP-CIT-64 (Washington, DC: U.S. Government Printing Office, June 1990), figure 3-1, p. 41.

then transmitted over the air. When a radio signal

is received, the information is converted back into

its original form (demodulated) by a receiver and

output as sound, images, or data.

Radio waves are distinguished from each other

by their frequency or their wavelength. Frequency

represents the number of cycles a radio wave completes in one second, and is the most common description of a radiocommunication signal. The

international unit of frequency measurement is the

hertz (Hz), which represents one cycle per second.5 Radio signals can also be identified by their

wavelength. Signals with long wavelengths have

lower frequencies, while those at higher frequencies have shorter wavelengths. Commercial AM

radio signals, for example, consist of very long

waves (approximately 100 to 300 meters), that

may complete a million cycles per second (1

megahertz (MHz)). Microwave signals, on the

other hand, are very short (as little as 0.3 centimeters) and may complete hundreds of billions of

cycles per second (100 gigahertz (GHz)). The relative nature of radio wavelengths is the origin of

terms such as “shortwave,” which was given to radio frequencies around 2.8 MHz in the 1920s because the wavelengths in that frequency range

were shorter than the wavelengths that had previously been used.

The radio spectrum is divided into “bands” that

correspond to various groups of radio frequencies.

These bands are identified by their frequencies or

wavelengths (as above), or by descriptive terms

that have been adopted over time. Several types of

descriptive names have been attached to various

portions of the spectrum (see figure A-7). One

method denotes relative position in the spectrum:

very low frequency (VLF), high frequency (HF),

very high frequency (VHF), superhigh frequency

(SHF), etc. Another method derives from usage

developed in World War II to keep secret the actual

Difference between

Phases = same points on

different waves

SOURCE: Harry Mileaf (ed.), Electronics One, revised 2d ed. (Rochelle

Park, NJ: Hayden Book Co., 1976) p. 1-10.

5 Multiples of the hertz are indicated by prefixes (see box 2-A): “kilo” for one thousand, “mega” for one million, and “giga” for one billion.

Thus, a million hertz-a million cycles per second-is expressed as one megahertz (abbreviated “MHz”).
Appendix A Radio Communication Basics 1263

VLF LF MF HF VHF UHF SHF EHF

L s c x Ku K

3 kHz 30 kHz 300 kHz 3000 kHz 30 MHz 300 MHz 3000 MHz 30 GHz 300 GHz

(3 MHz) (3 GHz)

SOURCE: Off Ice of Technology Assessment, 1991, based on Richard G. Gould, “Allocation of the Radio Frequency Spectrum,” OTA contractor report,

Aug. 10, 1990.

frequencies employed by radar and other electronic devices: L-band, S-band, and K-band.6 The International Telecommunication Union (ITU)

classifies frequencies according to band numbers---Band 1, Band 2, etc. Frequency bands are

also known by the services that use them-the FM

radio broadcast band, for example, occupies the

range (band) of frequencies from 88 to 108 MHz.

❚ Transmission Characteristics

Several factors affect the transmission of radio

signals, and, at different frequencies, some factors

will affect radio waves more than others. Attenuation refers to the weakening of a radio signal as it

passes through the atmosphere. All radio signals

are attenuated as they pass through rain or any

kind of water in the air (clouds, snow, sleet), but

radio signals at higher frequencies will be attenuated more than those at lower frequencies. For

instance, the attenuation of a radio signal passing

through a rainstorm will be 10 times as great if the

frequency of the signal is doubled from 5 GHz to

10 GHz. This makes radiocommunication, especially over long distances, extremely difficult in

the upper (above 10 GHz) frequencies.

Radio waves are also bent and/or reflected as

they pass through the atmosphere. Because of

changes in the density of the atmosphere with

height, radio signals bend as they pass from one

atmospheric layer to the next. This bending is

called refraction. In addition to refraction, if atmospheric conditions are right, radio waves are

also reflected by the ionosphere, the top layer of

the Earth’s atmosphere. Ionospheric reflection enables some radio signals to travel thousands of

miles, and accounts for the long-distance communication that is possible in the frequency range between about 3 and 30 MHz (the HF band—see

below).

Although refraction and reflection are conceptually distinct, and refraction can occur without reflection, it is possible to think of reflection

as an extreme case of refraction in the ionosphere. 7 The amount of refraction, or bending, experienced by a radio signal is related to its

frequency. Lower frequencies bend (are refracted)

6 These letter designations are not precise measures of frequency because the band limits are defined differently by different segments of the

electronics and telecommunications industries.

7 All radio waves are bent as they pass from a region of the atmosphere having a certain number of free electrons to a region with a different

number of electrons. During the day, energy from the Sun splits the molecules of the gasses far above the surface of the Earth (in the troposphere

and the ionosphere), producing many free electrons and creating layers of ionized particles. A radio wave from Earth entering one of these

layers will be refracted, and if there are enough free electrons, the bending will be so great that the signal will be reflected back to Earth.
266 | Wireless Technologies and the National Information Infrastructure

easily and are readily reflected back to Earth.

Higher frequency signals experience less refraction than those at lower frequencies, and at progressively higher frequencies, there will be less

and less bending. At a certain frequency, atmospheric conditions will be such that there is so little

refraction that the signal will not be reflected back

to Earth. The point at which this occurs is called

the maximum usable frequency (MUF), and is

generally in the range of 10 to 15 MHz, although

it can be as high as 30 or 40 MHz or as low as 6

MHz, depending on time of day, season, and

atmospheric conditions. Below the MUF, radio

signals can be used for long-distance communication by reflecting the signal off the ionosphere.

Above the MUF, the signal travels straight

through the atmosphere and into space.

At higher frequencies, above the MUF, radio

signals travel in almost straight lines from the

transmitter to receiver, a transmission characteristic referred to as “line-of-sight.”8 Line-of-sight

conditions affect radiocommunication above the

MUF, but especially affect frequencies above one

GHz. The distance a line-of-sight signal can travel

is usually limited to the horizon or a little beyond.

However, because the Earth is curved, the transmission distance will also be limited depending

on the height of the transmitting antenna—the

higher the antenna, the farther the signal can travel. For example, if the transmitting antenna is

mounted on top of a mountain or a tall tower, the

line-of-sight distance will be greater. Satellites, in

simple terms, extend line-of-sight to the maximum distance (see figure A-8). Line-of-sight

transmission requires that there be no obstacles

between the transmitter and receiver—anything

standing between the transmitter and receiver,

e.g., a building or mountain will block the signal.

Atmospheric conditions have substantial impacts on line-of-sight radiocommunications. Differences in atmospheric temperature or the

amount of water vapor in the air, for example, can

cause radio signals to travel far beyond the “normal” line-of-sight distance. This condition is

called ducting or superrefraction. At such times,

signals travel for many miles beyond the horizon

as though the Earth were flat. This condition is

much more common over large bodies of water

than over land. Atmospheric conditions can also

bend the signal away from the Earth, shortening

the practical transmission distance. The occurrence of these rare conditions complicates radio

system design and spectrum management. For

line-of-sight systems, too large a radius cannot be

assumed for the service area because of the possibility that “subrefraction” or “negative” refraction

may keep the signal from reaching the periphery

of the service area. On the other hand, the same

frequency cannot be used again many miles beyond the horizon because of the possibility that

superrefraction may carry an interfering signal far

beyond its accustomed limits. One of the basic

functions of international spectrum management

is to prevent or reduce such interference.

CHARACTERISTICS OF

RADIO FREQUENCY BANDS

The physical properties of radio waves, combined

with the various transmission characteristics discussed above, determine how far and where radio

signals can travel, and make different radio frequencies better suited to certain kinds of communications services. The following is a brief

description of the various radio bands, some of

their uses, and the factors affecting transmission

of radio signals in them.

❚ Very Low, Low, and Medium

Frequencies: 3 to 3000 kHz

In this portion of the spectrum, encompassing the

bands denoted as VLF, low frequency (LF), and

medium frequency (MF), radio signals are transmitted in the form of “groundwaves” that travel

8 It is important to note that refraction does not cease to affect radio waves above the MUF. Even at frequencies in the VHF and UHF bands,

radio waves bend slightly as they move through the atmosphere.
Appendix A Radio Communication Basics 1265

I

(

,

,

L _ _ _ _ _ _ - _ _ - – . . - _ . . _ - . - - . . - - . _ . . . . . .,

11,200 miles

NOTE: This figure is not drawn to scale.

SOURCE: Office of Technology Assessment, 1991, based on Richard G. Gould, “Allocation of the Radio Frequency

Spectrum,” OTA contractor report, Aug. 10, 1990.

along the surface of the Earth, following its curvature. Groundwaves lose much of their energy to

the Earth as they travel along its surface, and high

power is required for long-distance communication throughout this portion of the spectrum.

Groundwaves travel farther over water than over

land.

At the lower end of this region, transmissions

are used for low data-rate communications with

submarines and for navigation. The maritime mobile service, for example, has allocations in this

band for communication with ships at sea. Conventional AM radio broadcasting stations also operate in a part of this band, at MF, typically

between 540 and 1605 kHz. Attenuation during

daylight hours limits the range of these AM stations, but at night, when attenuation is lower, AM

radio signals can travel very long distances, sometimes even hundreds of miles. To prevent interference at these times to distant radio stations using

the same frequency, some stations may be required to reduce the power of transmissions in the

direction of those distant stations.

❚ High Frequencies: 3 to 30 MHz

In this frequency range, denoted as HF, propagation of a “skywave” supplements the groundwave.

While the groundwave dies out at about 100

miles, the skywave can be bent back to Earth from

layers of ionized particles in the atmosphere (the

ionosphere). When the signal returns to Earth, it

may be reflected again, back toward the ionized

layers to be returned to Earth a second time. The

signal can make several “bounces” as it travels

around the Earth. It is this reflection that makes

long-distance communication possible. However,

there are occasional—and largely unpredictable-disturbances of the ionosphere, including

sunspots, that interfere with HF communications.
268 | Wireless Technologies and the National Information Infrastructure

Overall, the reliability of HF communications is

low, and the quality is often poor.

The HF “shortwave” bands are used primarily

by amateur radio operators, governmental agencies for international broadcasting (Voice of

America, Radio Moscow), citizens’ band radio

users, religious broadcasters, and for international

aviation and maritime communications. Overseas

telephone links using HF radio have, for the most

part, been replaced by satellites, and Inmarsat satellites have taken over a major portion of the maritime communications previously provided by HF

systems. Likewise, future aeronautical mobilesatellite service (AMSS) systems may also supplement or replace the HF channels now used by

airplanes when they are out of range of the VHF

stations they communicate with when over or near

land.

While little use is made of HF radio systems for

domestic communications in industrialized countries like the United States, developing countries

still find HF cost-effective for some of their domestic radiocommunication needs. This has led to

a conflict over allocating the HF band internationally: the developed world wants to use the band for

international broadcasting and long-distance mobile communication, while the developing countries want to retain it for their domestic

point-to-point systems.

❚ Very High, Ultrahigh, and Superhigh

Frequencies: 30 MHz to 30 GHz

The groundwave, which permits communication

beyond the horizon at lower frequencies (VLF,

LF, MF), dies out after a short distance in this frequency range. Moreover, the skywave—which is

reflected from the ionospheric layers at lower frequencies—tends to pass through the atmosphere

at these higher frequencies. Communication in

this band is thus limited to little more than line-ofsight distances. For short transmitting antennas,

the maximum distance a radio signal can travel

may be no more than 25 miles, but this distance

can be increased by raising the height of the

antenna.

This limitation can also be an advantage: the

same frequencies can be reused by stations beyond the normal transmission range. Unfortunately, the distances that these line-of-sight signals

can sometimes travel can be quite large, especially

if the path is over water. At times, atmospheric

conditions may establish a “duct” over a large

body of water (see above). As it travels down the

length of the duct a signal will be reflected back

and forth between the water and the top of the

duct, which can be hundreds of feet above the

Earth’s surface. These trapped signals can travel

hundreds of miles. To minimize interference from

a ducted signal, stations on the same frequency

must be spaced far apart. This requirement limits

the frequency reuse that can be achieved.

This part of the spectrum is used by many important communication and entertainment services, including television broadcast signals, FM

radio, and land mobile communications. These

frequencies are also used by the radiolocation service for long-range radars (1350 MHz to about

2900 MHz), aircraft landing radar (around 9000

MHz), and for point-to-point radio relay systems

(various bands between 2000 and 8000 MHz). In

recent years, communication satellites have made

increasing use of frequencies in this band.9

The portion of this band between approximately 1 and 10 GHz is particularly valuable. It is

bounded by increasing cosmic and other background noise at its lower end, and by precipitation

attenuation at its upper end, but in between, communications can be carried out very well. Today,

because of its favorable transmission characteristics, the 1 to 3 GHz band is especially sought after

for mobile communications, including personal

communication services (PCS), and for new

9 Satellites operating in the C-band, e.g., use frequencies around 4 and 6 GHz, and are heavily used for transmitting television programming

to cable television operators. Ku-band satellites, which generally operate at frequencies around 12 and 14 GHz, are increasingly being used for

private communication networks and the delivery of entertainment programming.
Appendix A Radio Communication Basics | 269

broadcasting technologies such as digital audio

broadcasting (DAB).

❚ Above 10 GHz

At 10 GHz and above, radio transmissions become increasingly difficult. Greater attenuation of

the radio signal takes place because of rain, snow,

fog, clouds, and other forms of water in the signal’s path. Nevertheless, crowding in the bands

below 10 GHz is forcing development of the region above 10 GHz. One desirable feature of the

frequencies above 10 GHz, beside the fact that

they are relatively unused, is the extremely wide

bandwidths that are available. The 3 to 30 MHz,

HF band, for example, is 27 MHz wide. That is

enough bandwidth for about 9,000 voice channels

(at 3 kHz each). However, the frequency range 3 to

30 GHz is 27,000 MHz wide. That bandwidth

could accommodate about 9 million voice channels.
Appendix B:

Federal

Government

Roles

n its attempts to address rapidly changing

technology, expanding user needs, and an outmoded regulatory structure, the federal government—including both the legislative and executive branches—will play three key roles in the

development of radio-based systems and the National

Information Infrastructure (NII): user, catalyst, and

policymaker/regulator.

GOVERNMENT AS USER

The federal government is a major user of all kinds of

wireless communication systems for defense, public

safety, emergency preparedness, and space communications. In some cases, these systems are built and

operated by the government. Increasingly, however,

government communication needs are being met by

private sector service providers.

The federal government has already taken steps to

define its special requirements and to see how they

may or may not be met by evolving NII systems and

services. In this sense, the federal government may actually be ahead of many in the private sector in positioning itself for the coming explosion in the availability of wireless services and systems. The lessons

learned by government policymakers may be important to Congress and others interested in ensuring that

wireless technologies benefit not only government users, but all users.

Most federal government activity regarding wireless technologies has been coordinated through the

Federal Wireless Users Forum (FWUF). Established

in 1992, the FWUF is composed of government agencies with interests in using wireless communications

as part of their missions. FWUF sponsors workshops

on wireless services that bring together industry representatives and federal users in order to enhance technical understanding and define the emerging needs of

the agencies, both civilian and defense, for wireless

systems and services.

Another group, the Federal Law Enforcement

Wireless Users Group (FLEWUG), is composed of

more than 60 representatives from federal agencies

with law enforcement responsibilities, and is open to

state, county, and local agencies as well. The FLEWUG, which was formalized under the auspices of the

National Performance Review (NPR), hopes to establish a National Law Enforcement and Public Safety

Network, which has been advocated by Vice President

Gore. The momentum to form this network came from

the lack of compatibility between different law enforcement radio systems. The group conceivably

could build its own system with pooled resources, but

more likely would develop specifications for a common procurement for equipment and/or services.

In January 1995, the Government Information

Technology Services (GITS) committee of the Information Infrastructure Task Force (IITF) approved

| 269
270 | Wireless Technologies and the National Information Infrastructure

the creation of a Joint Federal Wireless Review Office

(JFWRO), although its charter and mandate are not

formally set. One of the roles of this new office will be

to consolidate federal wireless programs by eliminating duplication and incompatible systems and promote more spectrum-efficient systems across government agencies. The use of commercial systems, where

possible, is one solution the office is likely to pursue.

The JFWRO’s activities could reach into areas traditionally within the jurisdiction of the National Telecommunications and Information Administration

(NTIA) and the Interdepartment Radio Advisory

Committee (IRAC, see below). As a result, opposition

to the creation of the office has developed. The division of authority and the interactions between NTIA,

IRAC, and JFWRO are currently uncertain.

GOVERNMENT AS CATALYST

Although the primary burden of developing and deploying NII technologies and services falls on the private sector, the federal government has initiated grant

programs that provide financial assistance for demonstration, planning, and even operation of telecommunications systems. NTIA has two programs that may

be used to fund the development of wireless systems.

First, the Public Telecommunications Facilities Program awards grants to noncommercial organizations

primarily for the expansion or upgrading of public

broadcasting (radio and television) facilities, and for

the establishment of distance-learning projects. For

FY 1994, funding was just over $21 million.1

The Telecommunications and Information Infrastructure Assistance Program (TIIAP) provides funds,

on a matching basis, for planning and demonstration

of technologies and applications that support the

broader goals of the NII. In FY 1994, the first year of

the program, grants totaled over $24 million. When

combined with the matching funds, the program is expected to generate almost $68 million toward the development of the NII in schools, health care institutions, libraries and museums, social service

organizations, and state and local governments.2

Based on a brief review of TIIAP grants awarded,

wireless appears to play a small role.3 Of the 57 demonstration grants, most plan to use traditional wireline

technologies to provide access to computer networks,

including the Internet. One project uses broadcast and

one uses microwave for backbone transmissions, etc.,

but none indicates a direct use of wireless technologies

for access purposes.

GOVERNMENT AS POLICYMAKER AND

REGULATOR

The third role the government plays is that of policyand rule-maker. Responsibility is shared among Congress, the executive branch, and the Federal Communications Commission (FCC), an independent regulatory agency. In international issues dealing with

spectrum and satellite services, the Department of

State also plays a role in policy development. Congress periodically passes legislation outlining both

broad policy directions and directing specific actions

on the part of the FCC and the executive branch. Responsibility for day-to-day regulation and management of the country’s radio spectrum is divided between the FCC, which regulates private sector and

1 The 1994 grants went to support 61 public television, 50 public radio, and 29 distance-learning grants in 42 states, American Samoa, the

Northern Marianas, and the District of Columbia. U.S. Department of Commerce, National Telecommunications and Information Administration, “NTIA Announces FY1994 PTFP Grant Awards,” news release, Sept. 19, 1994.

2 U.S. Department of Commerce, National Telecommunications and Information Administration, “Public Institutions Receive Millions to

Deploy Information Superhighway,” news release, Oct. 12, 1994.

3 This does not necessarily reflect a bias in the selection process. More likely it reflects applicants favoring traditional (wireline) solutions.

The source of this favoritism may lie in costs, which could be higher for wireless; lack of knowledge about wireless alternatives; or a need that

cannot be met by wireless applications. With over 1,000 applications received, no comprehensive data are available that reliably indicate which

specific technologies are to be used. In addition, for the planning grants, the result of the proposed planning activity is to select appropriate

technologies—in other words, no technology was necessarily selected in each application.
Appendix B Federal Government Roles | 271

state/local government use of the spectrum, and

NTIA, which oversees federal government spectrum

use.4

❚ Congressional Action

In the past several years, Congress has taken a more

aggressive role in telecommunications policymaking—recognizing the increased importance and visibility that telecommunications has achieved as a contributor to U.S. business, international competitiveness, and quality of life. Addressing radio communications specifically, Congress passed the Omnibus

Budget Reconciliation Act of 1993, which contained

three major wireless policy initiatives.5 The act:

1. directed the Secretary of Commerce to transfer at

least 200 MHz of spectrum from federal government uses to the private sector,6

2. laid out the principles for regulating commercial

mobile radio services (CMRS),

3. authorized the FCC to use competitive bidding

(auctions) as a method for assigning portions of the

radio frequency spectrum.

As a result of the act, NTIA transferred 50 MHz of

spectrum to the FCC for reallocation to private use,

and identified another 185 MHz of spectrum to be

transferred; the FCC laid the foundation of CMRS regulation (although some issues are still being considered); and auctions have been held in narrowband

(data/messaging) personal communications services

(PCS), voice PCS, and interactive video data services

(IVDS).

Congress is currently debating several bills that

would substantially change how various parts of the

nation’s telecommunications infrastructure are regulated.7 Generally, this legislation focuses on opening

up the various segments of the telecommunications industry to more competition—in the belief that increased competition will bring new services and low

costs. The treatment of wireless communications in

these bills is limited. Specific provisions relating to

broadcasters’ use of the spectrum are defined, but only

a few paragraphs relating to CMRS providers are included—mainly to clarify the new legislation’s relation to the Omnibus Budget Reconciliation Act of 1993.

❚ Federal Communications Commission

Proceedings

The FCC regulates all private sector and state/local

government use of the radiofrequency spectrum. It allocates specific blocks of spectrum for use by different

radio services, and it assigns to individual licensees

the right to use specific frequencies or channels. The

FCC has proceedings in progress that will affect almost every type of radio-based communication. Those

proceedings will not be detailed here; the following

represents only a summary of the wireless issues the

FCC is currently considering. More discussion on the

most important of these proceedings can be found in

the specific sections of the report that deal with those

issues:

 High-Definition Television (HDTV) proceeding

 Various PCS and CMRS proceedings

 Low-Earth orbit (LEO) satellite licensing

 Satellite digital audio broadcasting (DAB) licensing

 Enhanced-911

 zoning (petitions and comments have been filed;

not yet a formal proceeding)

 public safety spectrum needs

 spectrum “refarming.”

Until recently, the FCC has been unable or unwilling to tackle long-term spectrum planning issues. Critics have long accused the Commission of doing little

4 The Communications Act of 1934 established the Federal Communications Commission and divided responsibility for spectrum management between it and the President. 47 U.S.C., sections 151,152, 305 (1989). In 1978, Executive Order 12,046 transferred Presidential authority

for spectrum management to the Secretary of Commerce and established the National Telecommunications and Information Administration

(NTIA). Finally, in 1992, Congress passed the National Telecommunications and Information Administration Organization Act, formally delegating federal government spectrum assignment authority to the head of NTIA. Public Law 102-538, Oct. 27, 1992.

5 Public Law No. 103-66.

6 The 200 MHz was specified to be taken from government allocations below 5 GHz, and at least 100 MHz will come from below 3 GHz—

some of the most sought-after frequencies due to transmission characteristics (see app. A). Public Law 103-66, Aug. 10, 1993, Title VI.

7 S. 652, H.R. 1555, and H.R. 1528.
272 | Wireless Technologies and the National Information Infrastructure

more than reacting to technology developments, and

observers have commented that the FCC will not act

until someone forces it to by filing a petition for

change. In the past several years, the FCC has become

more willing to plan more aggressively. It initially

took an aggressive approach to developing standards

and an implementation schedule for HDTV, although

that schedule has slipped. The FCC’s Office of Plans

and Policies has written studies on the future of fiber

optics and the broadcasting industry. And in early

1992, the FCC proposed the creation of a “spectrum

reserve” in order to promote the development of new

radiocommunication technologies and services. Much

of that spectrum is now devoted to future PCS systems.

Most recently, the FCC has opened a proceeding to examine how to use radio frequencies above 40 GHz.8

❚ Executive Branch Efforts

NTIA is responsible for developing and promoting

executive branch telecommunications policy. It serves

as the President’s principal adviser on telecommunications policies and is also responsible for managing

the federal government’s use of the radio frequency

spectrum.9 In this role, it works closely with the FCC

to develop policies and procedures that are consistent

and that allow many portions of the spectrum to be

shared by both government and non-government wireless users. To help it carry out its responsibilities for

spectrum management, NTIA draws on the expertise

of the members of the IRAC, which is made up of 20

federal agencies that use wireless communications,

and the Spectrum Planning and Policy Advisory Committee, which consists of private sector and federal

government members who advise NTIA on radiocommunication issues.10

The executive branch has taken steps to revitalize

spectrum planning. NTIA established the Strategic

Spectrum Planning Program to develop a long-range

spectrum plan that will include both federal and nonfederal users. In 1992, as part of this initiative, NTIA

requested comments and information on “Current and

Future Requirements for the Use of Radio Frequencies

in the United States.” In this proceeding, NTIA clearly

notes the importance of improved planning of the

spectrum resource:

. . . planning helps ensure that adequate spectrum

will continue to be available for public safety needs,

other non-commercial uses such as amateur radio and

scientific research, and local, state, and federal government uses. Moreover, improved planning is essential

for the U.S. government to represent effectively the interests of all U.S. spectrum users in international spectrum negotiations.11

As a result of its inquiry, NTIA released a report,

U.S. National Spectrum Requirements: Projections

and Trends, and efforts to identify radio frequencies to

meet the needs identified in the report has begun.12

NTIA and IRAC have also completed analyses as part

of their mandate to transfer 200 MHz (235 MHz was

actually transferred) of federal government spectrum

to the FCC for private sector use.13

To develop policy specifically for wireless communications, the executive branch has established several

committees to address specific issue areas.

 Federal Wireless Policy Committee. Established

in 1993, the Federal Wireless Policy Committee

(FWPC) serves as a focal point for wireless policy

development, both for the federal government and

in relation to FCC activities. FWPC draws its mem8 Federal Communications Commission, Amendment of Parts 2 and 15 of the Commission’s Rules to Permit Use of Radio Frequencies

Above 40 GHz for New Radio Applications, Notice of Proposed Rulemaking, ET Docket 94-124, released Nov. 8, 1994.

9 The potential conflicts with this dual role are discussed in U.S. Congress, Office of Technology Assessment, The 1992 World Administrative Radio Conference: Issues for U.S. International Spectrum Policy—Background Paper, OTA-BP-TCT-76 (Washington, DC: U.S. Government Printing Office, November 1991).

10 For a more complete discussion of the IRAC and SPAC, see ibid.

11 U.S. Department of Commerce, National Telecommunications and Information Administration, Current and Future Requirements for

the Use of Radio Frequencies in the United States, Notice of Inquiry, Docket No. 920532-2132, released June 1, 1992.

12 U.S. Department of Commerce, National Telecommunications and Information Administration, U.S. National Spectrum Requirements:

Projections and Trends, Special Publication 94-31 (Washington, DC: U.S. Government Printing Office, March 1995).

13 U.S. Department of Commerce, National Telecommunications and Information Administration, Spectrum Reallocation Final Report,

Special Publication 95-32 (Washington, DC: U.S. Government Printing Office, February 1995).
Appendix B Federal Government Roles | 273

bers from a wide range of federal agencies that have

operational, procurement, or policy interests in

evolving wireless communications systems. Its

mandate is to further the deployment of a digital,

ubiquitous, interoperable, transparent, and secure

(DUITS) wireless communications network for the

federal government. It has, thus, become the focal

point of efforts to procure mobile services for the

federal government. A single procurement is envisioned—to be completed by the end of 1995— that

will give federal users access to a wide range of cellular, specialized mobile radio, PCS, satellite, and

emerging wireless communication services.

 In September 1994, FWPC produced a statement of

Current and Future Functional Requirements for

Federal Wireless Services in the United States. This

document was based on information gathered from

the various meetings and workshops sponsored by

FWUF and information provided by FWPC members. It describes both specific and generic needs

that the federal agencies think could be met with

commercial or special wireless systems, and is intended as a guide for future procurement efforts.

 Untethered Networking Working Group. The

National Science and Technology Council, in coordination with the Technology Policy Working

Group of the IITF, set up an Untethered Networking

Working Group to examine the impact of wireless

technologies (satellite and terrestrial) on the evolution of the NII and the Global Information Infrastructure. It is unclear if this group ever met or what

products it produced.
Appendix C:

Acronyms and

Glossary of

Terms

Allocation: The designation of a band of frequencies

for a specific radio service or services. Allocations

are made internationally at World Radio Conferences and are incorporated into the international

Table of Frequency Allocations. Domestic allocations are made by the Federal Communications

Commission (FCC) and the National Telecommunications and Information Administration (NTIA).

AMPS: Advanced Mobile Phone Service. AMPS is

the existing U.S. analog cellular telephone standard.

Analog: In analog radio communications, information is transmitted by continuously varying the

phase, amplitude, or frequency of a radio carrier

wave.

Assignment: The granting by a government of the

right to use a specific frequency (or group of frequencies) to a specific user or station. Each television station, for example, is assigned a small group

of frequencies that correspond to a specific channel or number on the television dial.

Attenuation: The loss of power of electromagnetic

signals between transmission and reception points.

Attenuation is exacerbated by physical barriers,

such as rain, buildings, and trees.

Bandwidth: The total range of frequencies required to

transmit a radio signal without undue distortion.

The required bandwidth of a radio signal is determined by the amount of information in the signal

being sent. More complex signals contain more information, and hence require wider bandwidths.

The bandwidth required by a television channel is

600 times greater than that of an AM radio channel.

BETRS: Basic Exchange Telecommunications Radio

Service. BETRS is used as a wireless substitute to

copper loops for providing basic telephone service.

Bps: Bits per second. The rate at which digital data are

transmitted over a communications path. Speeds

are usually designated kbps (thousands of bits per

second), Mbps (millions of bits per second), and

Gbps (billions of bits per second).

BSS: Broadcasting-Satellite Service. An ITU-defined

service that refers to the delivery of information or

programming directly from satellites to user receivers. The BSS includes new systems planned to

deliver high-definition television services (BSSHDTV) and audio services (BSS-Sound).

CAI: common air interface. Refers to the standard

(there are many) that allows a mobile unit such as a

cellular phone to communicate with a base station.

Cellular Telephony: A mobile radio service in which

a geographic area is divided into smaller areas

known as “cells.” A transmitter in each cell provides radio coverage to the users in the cell. Calls

| 275
276 | Wireless Technologies and the National Information Infrastructure

are handed off from one transmitter to the next as

the user moves between cells.

CDMA: Code division multiple access. CDMA is a

radio communication format that uses digital

technology and spread spectrum transmission to

send information. Each radio signal is assigned its

own unique code and is then spread over a range of

frequencies for transmission.

CDPD: Cellular Digital Packet Data. Announced in

1992 by McCaw Cellular, IBM, and a group of

eight other major cellular companies, CDPD uses

the idle time in the analog cellular telephone system to transmit packetized data at rates up to 19.2

kbps.

Cloning: Cloning is the practice of reprogramming a

phone with a MIN/ESN pair from another phone.

CMRS: Commercial Mobile Radio Service. A new

regulatory classification for mobile telephone service created by the FCC in response to the Omnibus Budget Reconciliation Act of 1993. Under the

new rules, cellular, SMR/ESMR, and PCS will be

brought under the same regulatory umbrella.

Common Carrier: A company that is recognized by

an appropriate regulatory agency as providing

communications service to the general public on a

nondiscriminatory basis. Common carriers cannot

exercise any control over content of the messages

they carry. 

DAB: Digital Audio Broadcasting. DAB refers to the

transmission of audio broadcasts in digital form as

opposed to today’s (AM and FM) analog form.

DAB promises compact disc quality sound over

the air. DAB systems may use terrestrial, satellite,

or hybrid transmission.

DBS: Direct Broadcast Satellite. Medium- to highpower satellites that are designed to transmit programming directly to small satellite receiver dishes at users’ homes.

Digital: In digital communication, information is sent

by modulating the carrier frequency in such a way

that there are discrete changes in the phase, frequency, or amplitude.

Downlink: In satellite communications, the signal

that travels from the satellite down to the receivers

on earth is called the downlink. The direction the

downlink signal travels is also called space-toEarth. See Uplink.

Encryption: The process of electronically altering or

“scrambling” a signal, usually for security purposes.

EPA: Environmental Protection Agency.

ESMR: Enhanced Specialized Mobile Radio. The

next generation of SMRs, ESMR systems take advantage of digital technology combined with a cellular system architecture to provide greater capacity than existing SMR systems. See Specialized

Mobile Radio.

ESN: Electronic serial number. A number encoded in

each cellular phone that uniquely identifies each

cellular telephone manufactured.

FCC: Federal Communications Commission. Established by the Communications Act of 1934, the

FCC is an independent federal agency that regulates all electronic interstate communications, including telephony, cable television, and broadcasting. The FCC is also responsible for assigning the

radio frequencies used by all non-federal users of

the spectrum.

FDA: Food and Drug Administration.

FDMA: Frequency Division Multiple Access. FDMA

allows multiple users to share a band of radio frequencies by dividing the spectrum into separate

channels. Analog cellular systems, for example,

use separate frequencies for each call in each cell.

GPS: Global Positioning System. GPS is a network of

satellites that provides precise location determination to receivers.

GSM: Global System for Mobile Communications,

formerly Groupe Special Mobile. GSM is a second-generation digital system adopted as a European standard in the mid-1980s and introduced in

1992. Now deployed across Europe, GSM is intended to replace existing analog cellular telephone services. GSM allows systems in different

countries to interoperate, permitting consumers to

use their cellular phones anywhere in Europe.

HDTV: High-definition television. Refers to future

generations of television that will have higher picture resolution, a wider aspect ratio, and digital

quality sound.

HIPERLAN: High-Performance Radio Local Area

Network. HIPERLAN is a European standard for a

short-range (50 meters) high-performance radio

local area network. The current specification is for
Appendix C Acronyms and Glossary of Terms | 277

operation in the 5.1 - 5.3 GHz band. Another band

from 17.1 - 17.3 has been designated for HIPERLAN use, but detailed specifications have not yet

been developed.

Hz: Hertz. Cycles per second. Radio frequencies are

described in multiples of Hertz:

kHz, kilohertz: thousand cycles per second;

MHz, megahertz: million cycles per second;

GHz, gigahertz: billion cycles per second.

IEEE: Institute of Electrical and Electronics Engineers. The IEEE is the professional society for

electrical engineers. It produces standards for a

range of communications technologies.

Internet: Refers to a large collection of interconnected computer networks that use a common

transmission protocol, allowing users to communicate across networks.

IRAC: Interdepartment Radio Advisory Committee.

Established in 1922 and now located in the Department of Commerce, the IRAC consists of 20 representatives from the various government agencies

involved in or using the radio frequencies.

ISDN: Integrated Services Digital Network. A new

digital service offered by local phone companies

that allows users to send digital data over copper

wires.

ITS: Intelligent Transportation System (formerly referred to as IVHS—see below).

ITU: International Telecommunication Union. The

ITU is a specialized agency of the United Nations

responsible for international regulation of telecommunications services of all kinds, including

telegraph, telephone, and radio.

IVHS: Intelligent Vehicle Highway System. IVHS

uses information technology and sensors to improve the management of traffic flow.

LAN: Local area network. Computers are connected

so that they can talk to each other and share a central file server and printer. A LAN is confined to a

limited area, usually a single office, or building, or

campus.

LATA: Local Access and Transport Area. Refers to

the local exchange areas developed in connection

with the divestiture of AT&T, within which the

Bell Operating Companies (BOCs) may provide

service. Pursuant to the Modified Final Judgment

(MFJ), BOCs are not permitted to transport calls

across LATA boundaries but rather must connect

these calls to interexchange carriers.

LEC: Local Exchange Carrier. The LEC is the local

telephone company. There are over a thousand

LECs, ranging in size from the very small independent telephone companies that serve rural areas to

the much larger Bell Operating Companies

(BOCs).

LEO: Low-Earth orbiting satellite. LEO satellites are

smaller and cheaper to design, build, and launch

than traditional geosynchronous satellites. Networks of these small satellites are being planned

that will provide data (“little” LEOS) and voice

(“big” LEOS) services to portable receivers all

over the world.

LMDS: Local Multipoint Distribution Service. An

experimental service using low-power transmitters, configured in a cellular-like arrangement, to

transmit video to receivers in homes and businesses.

Microwave: Radio frequency spectrum signals between 890 MHz and 20 GHz. Point-to-point microwave transmission is commonly used as a substitute for copper or fiber cable.

MIN: Mobile identification number. A number encoded in each cellular telephone that represents the

telephone number.

Modulation: The process of encoding information

onto a radio wave by varying one of its basic characteristics—amplitude, frequency, or phase—in

relation to an input signal such as speech, music, or

video. Two of the most common types of modulation are amplitude modulation (AM) and frequency modulation (FM).

MMDS: Multi-Channel, Multi-Point Distribution

Service. Also known as “wireless cable,” MMDS

uses high-power transmitters to broadcast up to 33

channels of subscription video programming to receiving equipment in homes and businesses. By

using digital technology, MMDS operators may be

able to transmit a much larger number of channels.

MSS: Mobile-Satellite Service. MSS is an ITU-defined service in which satellites are used to deliver

communications services (voice or data, one- or

two-way) to mobile users such as cars, trucks,

ships, and planes. It is a generic term that encompasses several types of mobile services delivered

by satellite, including Maritime MSS (MMSS),
278 | Wireless Technologies and the National Information Infrastructure

Aeronautical MSS (AMSS), and Land MSS

(LMSS).

NTIA: National Telecommunications and Information Administration. NTIA is the President’s adviser on communications and is responsible for administering all federal government use of the radio

frequency spectrum, including military communications. NTIA is located in the Department of

Commerce.

NTSC: National Television Systems Committee. A

committee composed of industry representatives

that established the NTSC standard for black-andwhite television in 1940, and color television in the

early 1950s.

Part 15: Part 15 refers to a section of the Rules enacted

and administered by the Federal Communications

Commission. Part 15 rules govern unlicensed radio communications in certain frequency bands.

Examples of Part 15 communications devices include: cordless telephones, spread spectrum ISM

band devices, low-power wireless microphones,

and baby monitors.

PBS: Public Broadcasting Service.

PCS: Personal Communications Service. A radio service broadly defined by the FCC to be a “family”

of communications services providing mobile and

incidental fixed services for voice and data applications.

PSTN: Public switched telephone network. The publicly accessible dial-up telephone network.

Roaming: Roaming is the practice of using a cellular

phone in cellular networks outside the user’s home

system.

SMR: Specialized Mobile Radio. The FCC established the SMR service in 1974 to provide dispatch

service to trucking, taxi and similar industries,

government entities, and to indivi- duals on a forprofit basis. SMR systems can also connect to the

PSTN. The FCC’s ongoing CMRS proceeding will

bring SMR under the same regulatory umbrella as

cellular and new PCS. See Commercial Mobile

Radio Service and Enhanced Specialized Mobile

Radio.

Spectrum: The spectrum consists of all the radio frequencies that are used for radio communication.

Spread Spectrum: Spread spectrum modulation uses

a wide band of frequencies to send radio signals.

Instead of transmitting a signal on one channel,

spread spectrum systems process the signal and

spread it across a wider range of frequencies.

TDMA: Time division multiple access. Refers to a

form of multiple access where a single communications channel is shared by segmenting it by

time. Each user is assigned a specific time slot.

Tumbling: Tumbling is the practice of programming a

phone with ESN/MIN pairs until a valid combination is found.

Uplink: In satellite communications, the signal that

travels from the Earth transmitting station up to the

satellite. The direction the uplink signal travels is

also known as Earth-to-space. See Downlink.

VBI: Vertical blanking interval. After a television

image has been displayed, it takes a certain amount

of time for the electron gun to be moved into position to scan the next image. No picture information

is sent during this time, allowing data for other

types of information services to be sent.

VSAT: Very small aperture terminal. Refers to small

(less than 6 feet in diameter) satellite receive dishes that can send and receive voice, data and video

communications. VSATs are usually deployed in

networks, allowing tens or even hundreds of sites

to be connected in one network.

Wireless Local Loop: Wireless systems can be used

instead of copper loops to provide basic telephone

service to households.
| 279

Appendix D:

Reviewers

and

Contributors

John Abel

National Association of Broadcasters

Michael Alpert

Alpert & Associates

Michael Altschul

Cellular Telecommunications Industry Association

Ray Barnett

U.S. Secret Service

Rich Barth

Motorola

Robert Bonometti

Charles Bostian

Center for Wireless Telecommunications

Virginia Polytechnic Institute 

and State University

Larry Bowman

Defense Information Systems Agency

Sandra Braman

Institute of Communications Research

University of Illinois

Robert Briskman

CD Radio, Inc.

Donald C. Brittingham

Bell Atlantic

Dale Brown

MCI

Charles Cape

Office of the Secretary

U.S. Department of Commerce

Russ Coffin

Northern Telecom

David Cohen

National Telecommunications and 

Information Administration

U.S. Department of Commerce

Richard Cotton

NBC

George Curtis
280 | Wireless Technologies and the National Information Infrastructure

W. Russell Daggatt

Teledesic Corporation

Richard Dean

National Security Agency

Robert Dilworth

Metricom, Inc.

Bert Dumpe

Ergotec, Inc.

Rick Ellinger

MFS Datanet, Inc.

Rob Euler

Ardis

Timothy Fain

Office of Management and Budget

Alex Felker

Time Warner Telecommunications

Douglas Fields

United Parcel Service

Russell Fox

Gardner, Carton, & Douglas

Howard Frank

Advanced Research Projects Agency

Rob Frieden

School of Communications

Pennsylvania State University

Jerry Fritz

Albritton Communications

David Furth

Wireless Telecommunications Bureau

Federal Communications Commission

Steve Garcia

Joseph Gattuso

National Telecommunications and

Information Administration

U.S. Department of Commerce

David Goodman

Wireless Information Network Labs

Rutgers University

Gary Green

Metricom, Inc.

Robert Gurss

Wilkes, Artis, Hedrick & Lane

Kerry Hanson

Texas Instruments

Larry Harris

MCI

Dale Hatfield

Hatfield Associates, Inc.

Kathy Hawk

Mark Jamison

Sprint

Douglas Johnson

EIA

Fred Karnas

National Coalition for the Homeless

Randy Katz

Kevin Kelley

Qualcomm, Inc.

Michael Keyes

Burson-Mirsteller

Brian Kidney

AirTouch Communications
Appendix D Reviewers and Contributors | 281

Brian Kovalsky

Mobile Solutions, Inc.

Lawrence Krevor

Nextel Communications, Inc.

John LaRoche

Infrared Data Association

Lon Levin

American Mobile Satellite Corporation

Theodore Litovitz

Catholic University of America

Jennifer Manner

Akin, Gump, Strauss, Hauer & Feld, LLP

John Marinho

AT&T Network Wireless Systems

Andrew Marino

School of Medicine

Louisiana State University

Sandi Martin

Cynthia Nila

National Telecommunications and 

Information Administration

U.S. Department of Commerce

Jack Oslund

COMSAT

Michael Papillo

Houston Associates, Inc.

Richard Parlow

National Telecommunications and

Information Administration

U.S. Department of Commerce

Jon Peha

Carnegie Mellon University

Robert Pepper

Office of Plans and Policy

Federal Communications Commission

Pamela Portin

US WEST NewVector Group, Inc.

Robert Rasor

Financial Crimes Division

U.S. Secret Service

Michael Rau

EZ Communication

Paul Robinson

Tansin A. Darcos & Co.

Bob Roche

Cellular Telecommunications Industry Association

Walda Roseman

CompassRose International, Inc.

Gregory Rosston

Office of Plans and Policy

Federal Communications Commission

Marco Rubin

Booz–Allen & Hamilton, Inc.

Michael Ruger

Baker and Hostetler

Eric Schimmel

Telecommunications Industry Association

Jennifer Schmidt

East Coast Migrant Health Project, Inc.

Richard Sclove

The Loka Institute

Joseph Sedlak

Volunteers In Technical Assistance

Lawrence Seidman

GM Hughes Electronics Corp.
282 | Wireless Technologies and the National Information Infrastructure

Katherine Sgroi

United Parcel Service

Thomas Stanley

Federal Communications Commission

Charles Steinfield

Michigan State University

Amy Stephan

Personal Communications Industry

Association

Raymond Strassburger

Northern Telecom

David Strom

Consultant

Harry Thibedeau

Satellite Broadcasting and Communications

Association

Maria Tilves–Aguilera

Northern Telecom

LaRene Tondro

Society of Satellite Professionals

 International

Linda Townsend Solheim

CompassRose International, Inc.

Philip Verveer

Willkie Farr & Gallagher

Thomas Wanley

Personal Communications Industry

 Association

Mark Weiser

Xerox PARC

Douglas Weiss

Corporation for Public Broadcasting

Rolf Wigand

School of Information Studies

Syracuse University

Kurt Wimmer

Covington & Burling

OTA REVIEWERS

Steven Bonorris

David Butler

Michael Callaham

Michael DeWinter

Wendell Fletcher

Kathleen Fulton

Betsy Gunn

Joan Winston

Fred Wood
| 283

Appendix E:

Workshop

Participants

Wireless Communications Technology Workshop - September 27, 1994

Russ Coffin

Northern Telecom

Richard Dean

National Security Agency

Mark Epstein

Qualcomm, Inc.

Mike D. Franklin

Bell Atlantic Mobile

William Garner

American Mobile Satellite Corporation

John (Nick) Gorham

Motorola, Inc.

David Johnson

School of Computer Science

Carnegie Mellon University

Randy Katz

ARPA

Brian Kovalsky

Mobile Solutions, Inc.

Arvind Krishna

IBM

John A. Marinho

AT&T Network Wireless Systems

R. Michael Schmalz

ARDIS
284 | Wireless Technologies and the National Information Infrastructure

Mobility and Wireless Telecommunication Technologies Workshop - October 31, 1994

Philip Aspden

Bellcore

Allen Batteau

Wizdom Systems, Inc.

Andrew Blau

Benton Foundation

Sandra Braman

Institute of Communications Research

University of Illinois

John Carey

Greystone Communications

James Katz

Bellcore

Sara Kiesler

Department of Social and Decision Sciences

Carnegie Mellon University

Patricia L. Mokhtarian

Department of Civil and Environmental Engineering

University of California, Davis

George Morgan

Pamplin College of Business

Virginia Polytechnic Institute

John Robinson

Department of Sociology

University of Maryland, College Park
| 285

ndex

A

A-side cellular carrier, 72, 195

Access charges, 189-191

Advanced Communications Technology Satellite

(ACTS), 165, 166

Advanced Mobile Phone Service (AMPS), 84, 175

Advanced Research Projects Agency (ARPA), 57

Advanced Vehicle Control System, 51-52

Advisory Committee on Advanced Television

Service (ACATS), 147-148

Advisory Council on the NII, 11

Agenda for Action, 9, 39

Airtouch, 75

American Indian Radio on Satellite (AIROS), 138

American Mobile Satellite Corp. (AMSC), 76-77,

86, 199, 256

American National Standards Institute, 245-246

Antenna siting, 201-211

background, 203-205

cellular and personal communications service

(PCS), 205

congressional options, 202-203

federal preemption, 207-211

health, safety and aesthetic concerns, 210-211

local control, 209

satellite dish antennas, 205-206

Ardis, 109, 129, 130, 226

Association for the Advancement of Medical

Instrumentation, 253

Asynchronous Transfer Mode (ATM), 100, 182-183

AT&T, 28, 178, 194-195, 197

Automatic Vehicle Monitoring (AVM), 126

B

B-side cellular carrier, 72, 195

Basic Exchange Telecommunications Radio Service

(BETRS), 95, 221-222

Bell Atlantic, 154, 216

Bell Atlantic Mobile, 75, 178, 179, 236

Bell Operating Companies,

equal access regulations, 194

BMW, 257

Broadcast-Satellite Service—Sound, 138

Broadcasting, 5, 19, 32, 33, 39, 45

radio, 137-144

television, 136-137, 145-152

C

Cable Act of 1992, 153-154, 159

Cable Radio, 143

C-band satellites, 154-155

CD Radio, Inc., 139, 140

Cellular architectures, 81, 149

Cellular Digital Packet Data, 50, 112-113, 130

Cellular Telecommunications Industry Association,

24, 209, 233, 255, 256

Cellular telephony, 5, 15, 31-32, 56, 80

antennas, 203-204, 205

analog, 37-38

criminal use of, 58, 233-235

data services, 111-113, 130

digital, 37-38, 84-85

growth, 14

history of, 70

law enforcement, 235-237

location information and, 230-232

personal safety and, 58

roaming, 73, 175, 177-178, 199

services, 71-73, 97

standards, 175-181

Cloning, 233-235

Coast Plumbing, Inc., 50

Code division multiple access (CDMA), 18, 85-86,

113, 175-176, 178, 229, 252

Comcast, 75
286 | Wireless Technologies and the National Information Infrastructure

Commercial Mobile Radio Service (CMRS), 18, 28,

38, 45, 87, 88-90, 187, 202, 208

Committee on Science, 6-7

Communications Act of 1934, 45, 89-90, 192, 202,

208, 209, 210, 226

Communications Assistance to Law Enforcement

Act of 1994, 226, 227-228

Competition, 11, 25-27, 29, 31-32, 92, 96, 97, 134,

142, 159-160

local exchange, 192-194

Confidentiality, 224-226

Congress of the United States, 28, 29, 31, 41, 42,

45, 89-90, 109, 140, 152, 255, 271

Options for, 35, 38, 40, 43, 45, 46, 70-71,

202-203, 214-215, 225

Convergence of technologies, 27-28

Cox, 75

D

Data services

applications, 101-102

broadcast, 106-109

competition in, 129

coverage, 130

demand for, 102-104, 128-131

interoperability of, 127-128

prices of, 130

satellite, 120-124, 139

security of, 130-131

spectrum limitations, 125-127

speed of, 125-126

technical issues, 124-128

wireless LANs, 114-119

DCS-1900, 178

Department of Justice, 194-195, 197

Department of Transportation, 51

Diana, Princess of Wales, 225

Digital audio broadcasting (DAB), 138-142

demand for, 142-143

satellite, 138-140

terrestrial, 140-142

Digital Music Express, 143

Digital satellite system (DSS), 158

Digital technology, 17-18, 137, 149-150, 217

Direct broadcast satellite (DBS), 22, 31, 32, 42, 134,

155-162

DirecTV, 156-158, 161

Dual-band telephones, 179

Dual-mode telephones, 179, 199

Duke University, 49

E

E-911, 92-93

Early Bird, 154

ECCO, 80

Electromagnetic interference (EMI), 251-257

background, 252

medical devices and, 252-255

hearing aids and, 253, 255

personal communications service and, 255

standards, 253-255

aircraft controls and, 256-257

and large complex systems, 257

Electronic Communications Privacy Act of 1986,

226, 227-228

Electronic serial number (ESN), 233-234, 237

Ellipso, 79

Encryption, 230

Enhanced Specialized Mobile Radio (ESMR), 19,

75

Equal access, 186-187, 194-198

Essential telecommunications carrier, 34

F

Federal Aviation Administration (FAA), 256

Federal Communications Commission (FCC), 29,

38, 39, 40, 41, 43, 46, 51, 204-206, 270, 271-272

big LEOs and, 77

cellular telephony and, 70, 72, 84-85

Commercial Mobile Radio Service and, 88-90

digital audio broadcasting and, 138

equal access and, 194, 196-197

exposure standards and, 246-247

interconnection and, 187-189, 192, 198-199

interference, 255

Local Multipoint Distribution Service, 164,

165-166

Personal Communications Service and, 73-75,

106, 110-111

preemption of local regulations and, 207-208,

210-211

Specialized Mobile Radio and, 81

standards-setting, 171-172

television broadcasting and, 147-149

unlicensed services and, 119-120

video programming and, 159-160

Federal Express, 101

Federal Law Enforcement Wireless Users’ Group

(FLEWUG), 269

Federal Wireless Policy Committee, 39, 272-273

Federal Wireless Users’ Forum, 39, 269

Field service applications, 101
Index | 287

“500” numbers, 183

Fixed services, 67, 95-98, 101, 137

Fleet management services, 101

Food and Drug Administration, 247, 253, 255

Fraud, 223-238

congressional options, 202-203

costs of, 233

tumbling, 233-234

call selling, 235

scanners and, 234-237

technologies to combat, 236-237

law enforcement, 235-237

consumer protection, 237-238

G

GE American Communications, 156

General Accounting Office (GAO), 244, 248-249

Global Positioning System (GPS), 51, 123, 231, 256

Global System for Mobile communications (GSM),

113, 174-175, 177, 181, 236, 252, 257

Globalstar, 78

Grand Alliance, 148-149

GTE, 129, 194, 195

H

“Hand-off,” 82

Health effects, 44, 94, 239-249

public controversy over, 241-243, 245

research on, 244-249

standards, 245-247

Hearing Aid Compatibility Act of 1988, 255

High-definition television, 18, 38, 147-149,

149-151, 159-160

costs, 150

demand for, 150-151

standards, 172

transition to, 148-149

H.R. 1555, 31, 186-187, 192, 194, 197, 220

Hughes Communications, 121, 156

Hughes Network Systems, 121

I

IBM, 129

In-band, on-channel (IBOC), 140

Information Infrastructure Task Force (IITF), 11-12,

269

Infrared systems, 114, 118

Inmarsat-P, 80

Institute of Electric and Electronics Engineers

(IEEE), 118, 242, 245-246

Instructional Television Fixed Service (ITFS), 153,

154

Integrated services digital network (ISDN), 28, 221

Intelligent Transportation System (ITS), 50-51, 232

Interactive Video Data Service (IVDS), 109, 161

Interconnection, 27, 35-38, 93-94

configurations, 188, 190

cost, 185-186, 188-189,192-193

discrimination, 186, 191-192

equal access and, 194-195

FCC rules, 187-188

long distance carriers and, 189-190

state regulation, 188-189

wireless-to-wireless, 198-199

Interference, 95, 126-127, 251-257

Intermodal Surface Transportation Efficiency Act,

51

International Maritime Satellite Organization

(Inmarsat), 76, 86, 121-122

Internet, 6, 37, 183

Interoperability, 169-183

wireless, 169-175

wireless-wireline, 181-183

Iridium, 78

IS-41, 178, 183, 236

ITS America, 51

IVHS, see Intelligent Transportation System

J

Joint Federal Wireless Review Office, 270

K

Ku-band satellites, 155

L

“Last mile,” 22

Local Access and Transport Areas (LATAs), 38,

189, 194, 196

Local area network (wireless LAN), 19, 49, 114-119

131

Local exchange carriers (LECs), 187-189, 191-194

Local Multipoint Distribution Service (LMDS), 29,

160, 162-164, 165-166

Long-distance carriers, 189-191

Low-Earth orbiting satellites (LEOs), 19

big LEOs, 77-80

little LEOs, 122-124
288 | Wireless Technologies and the National Information Infrastructure

M

McCaw Cellular, 28, 194-195

Messaging, 101, 109-111

Metricom, 119

Metriplex, 61

Microwave radiation, 244-247

MobilComm, 106

Mobile identification number (MIN), 233-234, 237

Mobile Satellite Service, 76-80

geostationary, 76-77, 86

low-Earth orbit, 77-80, 86-87

Mobile services, 67

Mobile telephone switching office (MTSO), 83-84

Mobility, 21-23

characteristics of, 52-53

jobs and, 53-55

implications of, 48, 55-64

research on, 48

Mobility management systems, 177-178

Modified Final Judgment, 194, 195

Mtel, 106, 129

Multichannel, Multipoint Distribution Service

(MMDS), 32, 152-154, 160-161

Multimode handsets, 179

Mutual compensation, 193

N

911 service, 43-44, 92-93

Narrowband PCS, see Personal Communications

Service

National Aeronautics and Space Administration

(NASA), 165

National Economic Council, 11

National Information Infrastructure (NII), 5, 8-13,

31, 36

background, 8-9

government initiatives, 9-12

industry, 12

OTA definition of, 10

policymaking, 38-40

purpose, 9-10

standards, 35, 37-38

universal service and, see Universal service

National Performance Review, 269

National Research and Education Network (NREN),

6, 9

National Research Council, 62

National Resources Defense Council, 210

National Telecommunications and Information

Administration (NTIA), 11, 14, 39, 41, 42-43, 90,

120, 256, 270-272

National Television Systems Committee (NTSC),

146-147

Nextel, 75-76, 81

Numbering, 188, 193

NYNEX, 154

NYNEX Mobile, 75, 178, 179, 236

O

Odyssey, 79

Office of Science and Technology Policy, 11

Oldsmobile, 51

Omnibus Budget Reconciliation Act of 1993, 39,

41, 87, 207

Orbcomm, 122

Oxley, Rep. Michael, 7

P

Pacific Telesis, 154

Pagemart, 111

Paging, 14, 106-107

Part 15, 119

Personal Communications Service (PCS), 19, 28,

31-32, 70

antennas, 203, 205

fixed services, 222

high-tier service, 74

licenses, 88

low-tier service, 74, 96

narrowband, 106, 110-111

pioneer’s preferences, 74

services, 73-75, 97

spectrum, 88

standards, 175-181

Personal Computer Memory Card International

Association (PCMCIA) cards, 105

Personal digital assistants, 50, 99, 105, 107, 114

Preemption, federal guidelines, 206-207

Primestar, 28, 156-158

Privacy, 57-58, 94, 223-238

legal protection for, 227-228

of transmission contents, 226-229

Congressional options, 202-203

technologies for protecting, 226-230

and encryption, 230

of location, 230-233

Private Operational Fixed Service, 153

Public safety radio services, 8, 30, 68, 91-92

Public switched telephone network (PSTN), 27, 35,

37, 185, 187-188

Q

Qualcomm, Inc., 176

Quotam, 61

QuoTrek, 61
Index | 289

R

Radio, see Broadcasting—radio

Radio Broadcast Data Service (RBDS), 108

Radio Data System, 107-108

Ram Mobile Data, 110, 130, 226

Rate-of-return regulation, 34

RCA, 150, 158

Reagan, Ronald, 207

Rexham, Inc., 49

Roaming, 73

agreements, 199

standards and, 175, 177-178

Rural benefits, 34, 95-98, 139, 215-219

S

S. 652, 31, 186-187, 192, 194, 197 220

Safire, William, 58

Satellite Home Viewers Act of 1994, 156

Satellites, 5, 33, 39, 45, 134

antennas, 204-205, 205-206

audio programming services, 138-140

C-band, 154-155

data services, 120-124, 139

Ku-band, 155

video services, 154-162

voice services, 76-81

Secret Service, 225, 235, 237

Security, 223-238

Congressional options, 202-203

Southwestern Bell Mobile Systems, 178

Spaceway, 164-166

Specialized Mobile Radio (SMR), 70, 75-76, 88-89,

97

Spectrum

auctions, 41, 42-43, 88, 110

demand for, 40

supply of, 68, 90-91, 221-222

policymaking, 40

Sprint, 194

Standards, 35-38, 93, 169-183

air interface, 175-180

cellular, 175-181

Federal Communications Commission and,

171-175, 176-177

mobility management, 177-178

Personal Communications Service, 175-181

trade and, 181

State government, 45-46

Subsidies, 217-218

Supreme Court, 206

T

TCI, 75

Technology Policy Working Group, 12

Telecommunications and Information Infrastructure

Assistance Program, 270

Telecommunications Industry Association, 176, 177

Teledesic, 122, 165-166

Telephone system, see Public switched telephone

network

Television, see Broadcasting—television

Time division multiple access (TDMA), 18, 85-86,

113, 175-176, 178, 229, 252

Transportation Infrastructure Radio Service, 51

U

United Parcel Service, 101-102

United States Satellite Broadcasting (USSB),

156-158, 161

Universal service, 11, 31, 33-35, 62-63, 97-98,

135-136, 213-222

definition of, 220-221

low-income populations, 219-220

rural populations, 215-219

unserved populations, 215-216

Unlicensed services, 23, 118-119, 119-120, 126

Unserved populations and wireless, 215-216

Untethered Networking Group, 39, 273

US West New Vector, 75

Utility companies, 27

V

Vertical Blanking Interval (VBI), 109

Very small aperture terminals (VSATs), 121, 155,

216

Video programming services, 144-162

interoperability of, 173

Volunteers in Technical Assistance (VITA), 122,

124

W

Wilder, Douglas, 225

Wireless cable, see Multichannel, Multipoint

Distribution Service

Wireless local loop, 19, 95-98, 214-215, 216-217,

219, 221-222

advantages, 214

cost, 216-217

developing countries, 219

spectrum availability, 221-222
290 | Wireless Technologies and the National Information Infrastructure

Wireless technologies

advantages of, 19-24

contributions to productivity, 23-24, 44, 60-62

demand for, 14, 19-25, 31

economic research, 6, 44

growth estimates, 14-15

infrared, 114, 118

international considerations, 8

local area networks, 114-119, 131

personal safety and, 58

policymaking, 38-40, 40-43

rural applications, 34, 95-98, 139, 215-219

social implications, 6, 44-45, 55-64

standards, see Standards

technology trends, 15-19, 40-41

Wireless Technology Research, 248

World Administrative Radio Conference-1992, 77,

91

Z

Zenith, 119

Zoning, 46, 94, 201-211