1 FEDERAL COMMUNICATIONS COMMISSION PRESENTS EN BANC MEETING ON PCS ISSUES TUESDAY, APRIL 12, 1994 2 PRESTENT: TASK FORCE MEMBERS: RALPH A. HALLER, Chief, Private Radio Bureau DONALD GIPS, Deputy Chief, Office of Plans and Policy THOMAS P. STANLEY, Chief Engineer, Office of Plans and Policy GERALD P. VAUGHAN, Deputy Chief, Common Carrier Bureau ROBERT M. PEPPER, Chief, Office of Plans and Policy MR. LIMOND GRINDSTAFF, Airtouch Communications MR. ALEX D. FELKER, Time Warner MR. GEORGE MURRAY DR. CHARLES L. JACKSON, Strategic Policy Research MR. JOHN BATTIN, Motorola DR. IRWIN JACOBS, Qualcomm DR. DAVID C. NAGEL, Apple Computer MS. SANDY ABRAMSON, UTAM MR. JEFFERY ROSENBLATT, Comsearch - 0 - P-R-O-C-E-E-D-I-N-G-S MR. HALLER: Good morning. I'm glad to see that we have a packed house again today because I think we're going to have a better session this morning. It's going to be at least as interesting 3 as yesterday's and perhaps, in some respects, more interesting. Today's panel is primarily a technical inspector panel, and we have a number of experts in those areas here. Today each panelist will be given seven minutes to make a presentation and then we will have a discussion. We will also be taking a break somewhere around 10:30 so that we won't have to sit here three hours without moving. Once again, these round-table discussions are being held by the Commission's PCS Task Force, and our goal is to move the reconsideration of the wideband PCS item along as quickly as possible. And we're holding these round-table discussions so we can get the experts together, hopefully get some lively debate. We certainly did yesterday. Hopefully we'll get more lively debate today among the experts. And so with that I'm going to go ahead and turn the panel over to Dr. Tom Stanley, who will be the moderator of today's session. Tom? 4 MR. STANLEY: Thank you very much, Ralph. By way of introduction, let me say a little bit about where we come from in this area. Late in the 1970s and 1980s, cellular came forth after a decade of deliberation, mostly wrangling. The FCC at the time allocated a limited amount of spectrum to 40 megahertz and the 800 megahertz reserved to what was viewed at the time as largely a vehicular service. More spectrum was left in reserve or allocated to other services than was actually allocated to cellular. The spectrum was equally divided into 20 megahertz to each of two providers as a duopally with a set aside for the wireline carrier. This was supplemented to 25 megahertz in the mid '80s. Initially the Commission created over 700 cellular service areas, originally based on metropolitan areas, and actually mandated a detailed technical standard developed by industry along fairly stable workable lines. Cordless telephones, personal computers were virtually nonexistent, certainly as they are viewed today. 5 Last fall in a very different era the Commission developed its decisions on the new Personal Communication Services after a little over three years of deliberations. The Commission allocated 160 megahertz at 2 gigahertz with very little left in reserve. This is in contrast to the spectrum for cellular which was largely -- which was almost exclusively vacant; the spectrum at 2 gigahertz was very much occupied with voice technology efficiencies ranging from conservatively three times to optimally ten or better times the existing cellular; voice efficiencies blocks of 10, 20 and 30 megahertz were allocated to a service that was not just voice but was largely voice driven. The division was one of a large variety -- a variety of large and small players, especially new entrepreneurs and special consideration was to be given to small businesses, rural telephone companies, women- and minority-owned businesses. The Commission even made room for cellular and local exchange carrier interests. A half a 6 spectrum was identified in large major trading areas, half of it in basic trading areas. In addition with the auction process, tailored, larger service areas, perhaps even nationwide, could be achieved. Although the Commission encouraged interoperability and roaming, standards were largely left to the community to develop. In stark contrast to prior approaches, a large 40 megahertz block was identified for devices that required no licensing, for voice-like and computerlike devices generally to be used directly by the people at large. Today the Commission is reviewing its decisions on reconsideration and in attempt an expeditious a manner as possible to get the best decision to get personal communications moving. Now yesterday we heard of what I'll call upward projections of demand for personal communications and varyingly optimistic and pessimistic recounts from economists and financial experts. Today the focus is on the technology and 7 the spectrum issues. To help us with our deliberations, we have asked a panel of nine experts to, I guess, give us their thoughts in this area. And let me introduce them and then ask them to begin their comments. First, Mr. Limond Grindstaff, who is the executive director for PCS Technology, Airtouch Communications; Mr. Alex Felker, Vice President of Technology with Time Warner Telecommunications; Mr. George Murray, an independent businessman who has participated in the development of cellular, MMDS and paging companies. We have Dr. Charles Jackson, cofounder of the Strategic Policy Research, Incorporated; Mr. John W. Battin, Senior Vice President/General Manager of Personal Communications, General Systems Section of Motorola; Dr. Irwin Jacobs, founder, chairman and CEO of Qualcomm; Dr. David Nagel, Senior Vice President and General Manager of Apple Company; and Sandy Abramson, President of UTAM and manager of Wireless Regulatory and Standard Affairs AT&T; and Mr. Jeffrey Rosenblatt, Vice President of 8 Wireless Communications Comsearch. We'll start with Mr. Grindstaff. MR. GRINDSTAFF: Good morning. It's a pleasure to be here. My name is Larry Grindstaff and I'm the executive director of PCS Technologies for Airtouch Communications. I would like to thank Dr. Stanley and members of the PCS Task Force for allowing me to speak today. Airtouch Communications was formerly known as PacTel Corporation, a Pacific Telesis Company. On April 1st, Pacific Telesis funded PacTel Corporation off as an independent company to Airtouch Communications. Airtouch is one of the world's leading wireless telecommunication companies with domestic and international cellular and paging operations to over 1.2 million cellular subscribers worldwide. We're a leader in wireless technologies and have designed, built and operated both analog and digital networks around the world. And what's most important to realize is 9 that Airtouch Communications is a future PCS operator. In the area of PCS activity, Airtouch has been actively involved in the development of PCS over the last four years. In 1989 we were awarded the PCN license in the United Kingdom, and in 1991 we received five experimental licenses from the FCC to investigate and develop PCS services. With those five experimental licenses, over the last three years we've done extensive research in the development of PCS. We've conducted scientific studies of PCS spectrum, including propagation, spectrum usage with NTIA, cooperative research agreements, and spectrum sharing and testing and feasibility studies. We've also conducted extensive PCS technology trials in the areas of the consumer PCS, in-building PCS and full-service PCS technologies. Each of these areas require different technologies and different network architectures. We've also conducted one of the country's 10 largest PCS marketing trials with over 1,500 PCS subscribers who were recruited and allowed to select and purchase different PCS services and use them during trial. Some of these services ranged from pedestrian services that were priced at a little over $8 a month and 10 cents a minute to full cellular type of services including Advanced Intelligent Network Services as personal memory. What I heard yesterday on the panel was that PCS seemed to be going towards a cellular look alike. And I would like to make a point that if a PCS provider looks to providing a cellular type of service, that is not PCS; and I also believe the operator will miss the opportunity that PCS will provide. There are few areas that we would like to point out as the Commission develops the final rules on PCS, and one of them is spectrum allocations. We believe that the 1800 and 2100 megahertz spectrum band is well suited for PCS services. We also believe that the 2100 megahertz is viable for PCS services and strongly support 11 that. We disagree with the Commission on the size of the serving areas. We believe that the smaller BTA serving areas will best serve PCS operators and the FCC's objectives. The smaller -- or the smaller BTA serving areas will provide a building block approach and allow the market to consolidate as required. We also believe that the unlicensed spectrum will allow innovation and is well located in the 1800 megahertz spectrum frequency range. In the area of technical standards, we believe that PCS is a family of services that will provide a range of services and applications. We also believe that PCS standards will aid in the development of PCS's technologies and services. But we're realistic and believe and understand that one technology's standards may not provide the solution for all PCS services. We strongly support the industries' efforts that are currently driving the development of multiple PCS standards. And we strongly recommend 12 that the FCC approach minimal technical requirements for PCS licenses and/or standard bodies. Some of these minimal technical requirements could be just the mere fact that emergency services, roaming capabilities and that interference between PCS systems would not be tolerated. There are a few technical issues that I would like to point out. One is that the inneroperability of PCS services will require some type of technical standard. And we also would like to raise the issue of the base station power to the Commission and propose that PCS base station power should be increased to allow PCS operators greater flexibility in providing services and take advantage of new future PCS technologies. We also feel that PCS operators will require clean spectrums to become fully operational and require that microwave users be relocated. And we also applaud in Commission's efforts in putting deadlines on the relocation of 13 PCS microwave users. And finally, we believe the 1800 megahertz licensed band is well placed and will provide easier interoperability with licensed PCS bands and will allow a new innovation for PCS Services in the future. From our studies, we've done extensive trials in PCS services and looked at PCS, I feel that Airtouch Communications has probably done more in the area, if not as much as anybody else in the area of PCS, in trying to understand what PCS is. PCS is not just another wireless service and is focused directly on cellular type of services, but PCS would be, from the customer's point of view, the intergradation of all telecommunications systems both wireline and wireless. I thank you for your attention. I look forward to the question/answer period. MR. STANLEY: Thank you very much. Mr. Felker? 14 MR. FELKER: Good morning. I'm with Time Warner Telecommunication, which is a division of Time Warner Entertainment, the world's largest media company. My division was established in 1991, to among other things, pursue various wireless telecommunications ventures. Time Warner has been a significant participant in the FCC's development of PCS. Besides being an active commentator in the various regulatory proceedings, the company has engaged in a continuing program of experimentation and research into PCS technology and applications, with particular attention to means by which wireless and cable television networks can be shared efficiently and economically. Time Warner foresees PCS as a fully integrated communications platform that will spawn a wide range of new wireless mobile and fixed telecommunications offerings, to be affordable to average Americans and bring needed competition to cellular and wireline operators. While PCS operators initially will focus on 15 voice applications, Time Warner anticipates that within a relatively short period of time the digital friendly nature of the new PCS networks will lead to the introduction of an array of un-tethered and data and imaging applications which consumers and businesses will soon find indispensable. New PCS operators will find themselves in a very competitive environment, however. In addition to the rivalry they will face from other new entrants, PCS operators will also be matched against the two incumbent cellular operators and, in many areas, at least one existing digital SMR operator. To be successful, the new licensees must operate and price efficiently and develop new services and new applications; traits that will obviously benefit consumers. But efficiency and creativity will be useless without a regulatory regime which encourages strong new entry, facilitates early deployment and promotes the development of network infrastructure which minimizes consumer prices and 16 maximizes quality. An essential ingredient of an effective PCS regulatory structure is the assignment of ample spectrum to licensees. For several reasons I consider a 40-megahertz assignment plan as optimal. First, 40 meg assignments would facilitate the prompt initiation of service through spectrum sharing with existing microwave users. PCS licensees' success will be influenced greatly by how quickly they initiate service. PCS operators cannot afford the luxury of waiting until microwave relocation is completed to launch service. Consequently, to begin operation even reasonably soon, PCS operators will have to share the spectrum with incumbent microwave facilities. Because microwave systems, at least in the lower sub-bands, typically operate with 10 megahertz channels, 40 megahertz PCS assignments would provide operators the flexibility to use channels adjacent to existing OFS systems. In contrast, 20 megahertz assignments could 17 be rendered useless for PCS by a single microwave limit. The 40 megahertz assignment plan also would help compensate for the technical differences which exist between 1800 megahertz and 2 gigahertz thereby helping to place the coverage, capacity and cost of PCS systems on par with their cellular competitors. In addition by increasing the trucking efficiency and lowering the number of cell sites needed to meet capacity demands, 40 megahertz assignments promote lower infrastructure costs and narrower allotments. And finally, over the longer term, wider bandwidth assignments would simplify the introduction of higher speed nonvoice services and applications. Because 40-meg assignments are essential to the successful launch and operation of a large scale effectively competitive PCS, Time Warner believes that the FCC should assign these bandwidths directly rather than relying on an aggregation of the market. As compared to 18 licensing 40 megahertz directly, an aggregation scheme could at worst result in an inefficient resource allocation which could cripple the service, and even under a best case scenario an aggregation policy would propose substantial transaction costs, delay the introduction of the initiation of service and lower the proceeds of the public auction. A second crucial PCS regulatory parameter is assignment area. As is evident from the trench to consolidate cellular and SMR industries, wireless markets encompass large geographic areas. And this fact should be recognized by the FCC in the assignment of PCS licenses. Time Warner, along with many others, believes that a licensed area should encompass at least MTA-size regions. The third essential ingredient of PCS regulations concerns cellular eligibility. To ensure that consumers enjoy the low prices and innovation associated with competition, parties with significant cellular interest should not be 19 permitted to hold PCS licenses in the same area. In establishing a new Personal Communications Service, the Commission holds a golden opportunity to break the stranglehold the cellular industry has over the mobile phone user and make wireless service more affordable and more accessible to the average American. The FCC should not squander the opportunity to inject real competition into this marketplace. Based on economic projections that Time Warner and others have conducted, time-to-market is a key indicator of success for PCS. Because an operator must realize the significant level of penetration to achieve profitability, and inasmuch as cellular penetration is growing at a phenomenal rate, as we heard time and time again yesterday, operators who initiate service too late may find no market left to penetrate. Thus, even with wide bandwidth large area assignments, if PCS operators are unable to enter the market soon, they may find it virtually impossible to build a successful business. 20 Furthermore, based on internal Time Warner estimates, every year that PCS licensing is delayed reduces auction proceeds by at least one billion dollars. Consequently, the viability of the entire PCS industry, consumer benefits of cellular competition, and the net proceeds of the PCS auction are all contingent upon expeditious licensing. Thank you. MR. STANLEY: Thank you very much. MR. HALLER: Let me -- I should have done this earlier on. I think most of the panelists were here yesterday and so I didn't explain the light system that we have, and let me do that for any of you who don't know. The rule, I think, is six minutes. The red light comes on at seven minutes and also you'll hear a bell ring. If that happens, you'll be allowed to finish the thought that you have at that point and then we'll move on to the next panelist. So for the few that weren't here yesterday, 21 I thought I should go ahead and explain that. MR. STANLEY: Thank you. Mr. Murray? MR. MURRAY: Good morning. My name is George Murray, and I would like to thank you, Dr. Stanley, and the FCC for inviting me to participate on this panel. I submitted a prepared text which addresses several issues with regards to the technical aspects, but I would like to say that I am not an engineer at all. I'm on this panel but I am not an engineer. I'm a businessman and I have utilized engineers as one would utilize lawyers, and et cetera. MR. STANLEY: That sounds pretty devastating. MR. MURRAY: But, you know, I saw some of the other panels but what I did not see was some other small businesses and minorities participating on some of the other panels. Those people who I believe to be the real risk takers are the people who put their children's college tuition on the line, mortgage 22 their home in order to take advantage of or participate in some of this new exciting technology. But I think it's important to hear from a minority businessman who has owned and currently owns communications property. I have talked to several women-owned firms and other minority-owned firms, and I believe that my comments will fairly represent their and my views. As a businessman, I know that there is a certain amount of risk in all ventures. There will be risks and hopefully a chance for a success in the PCS, but I want to make sure that the process that brings this risk and possible success together encourages and facilities broad-based participation. That depends on whether the FCC carries out the Congressional mandate to incorporate minorities and small businesses into the process. If it does, then we can look to the spectrum allocation and see if one can operate a successful business given a 10- or a 20-megahertz 23 license. My answer to that question is yes. But can I operate it better under conditions that are more competitive; and the answer to that question is a resounding yes. So how can minorities best be incorporated into this process to achieve better and more profitable conditions? The best way is to establish a more competitive environment. And I share the concern by Commissioner Barrett regarding the 30 MTAs dominating the marketplace. My first suggestion would be to eliminate the 30 megahertz MTAs and create three 20s. I think that that would definitely add to the building-block approach. I believe that the experience in the cellular industry indicates that cellular carriers compete principally on the basis of average -- coverage area, service quality and price. In all of these critical areas, a 30 megahertz MTA license allows significant inherent advantage over its 20 and 10 megahertz BTA competitors. And also there is a problem on the price 24 issue of how much it will cost a minority firm or small business to clear the microwave interference problems since if it's cleared early in the process, I'm sure that the incumbent microwave person will certainly ask a much higher price to get out early rather than later. I also believe that the FCC must keep the designated entities, and also I believe that you must maintain to set aside for bidding by minority and women on the firms of no less than 30 megahertz of spectrum. If the set asides are in jeopardy, I urge the FCC to hold meetings with minority- and women-owned firms to discuss any alternatives that might arise. The Commission should remember that radio spectrum is a public resource and should not be divided in a manner that suddenly or systematically excludes others, especially minorities. Also I believe we must have a preferred payment plan on the bids. 10 percent of the auction price in three months, the remainder over 25 time allowing for construction. I think the powers should be increased to 1,000 watts, and that there be some consideration for the relocation of the 40 megahertz unlicensed PCS spectrum to the upper band. With respect to the financing, I believe that all the minority- and women-owned firms and small businesses would want to make every effort to maintain control over their business. I think it would be extremely difficult. I think there should be some flexibility given to the equity ownership structure. When you go to the marketplace for long-term financing, I think that you will mostly be in a position -- the minority firms would be in a position that they might have to give up more than 50 percent initially of their business, but I think they could get buy-back opportunities to get back to the 51 percent level. I thank you for your time. MR. STANLEY: Thank you very much, Mr. Murray. Dr. Jackson? 26 DR. JACKSON: Thank you. Thank you to the PCS Task Force for the opportunity to appear here today and share my thoughts with you. I'm a consultant. I have several clients in the mobile industry. Studies that I prepared and co-authored were filed in a PCS proceeding by Bell Atlantic. Nevertheless, I'm speaking here today for myself and not for either my firm, Strategic Policy Research, or any of my clients. In fact, I think some of my clients disagree with what I am about to say. MR. STANLEY: We're counting on it. MR. JACKSON: I just assume you suppress that part of the transcript. I think that there are many important issues in telecommunications today but there are few where the FCC is so completely in control. You know, state regulators can't do anything, innovation by technologists working on cable systems can't do anything. The stakes for our nation are very large in PCS and the FCC is really in the driver's seat. It's a very important task 27 that you undertake. In the time I have available today, I'm going to comment briefly on several of the larger policy issues that were on the list that you were provided with. But first on the issue of geographic extent, I think that the Commission has made a healthy move in picking the relatively large BTAs and MTAs to define the geographic scope of PCS license regions. Personally, I don't think the Commission has gone far enough. I think that the recent consolidation and in the SMRS industry illustrates, as did cellular consolidation before it, that that efficient scale of mobile operations is more likely to be continentwide than statewide, and I think you should take that into account, perhaps all MTA licenses, opportunities for nationwide licenses and the bidding. The second issue is one that has already been discussed by the preceding panelists is the issue of license bandwidth. I believe that the commissions seven-block 28 channel plan for PCS wastes many tens of megahertz of spectrum and will provide consumers with a far less competitive market than would many other channel plans. My own view is with those who support 20 megahertz-wide licenses. I believe that with the current technology there are significant reduction in operating costs if a PCS operator has 20 megahertz of spectrum rather than 10. I think the cost reductions in moving from 20 megahertz to 30 megahertz or less and the cost reductions in moving from 30 to 40 megahertz are almost nil. And I would suggest that if you find the case of the advocates for 40 megahertz-wide PCS licenses persuasive, interesting but ultimately unproven, then you should put out a channel plan such as six 20 megahertz licenses which permits consolidation to 40 megahertz operations inside the upper and lower PCS sub-bands, should that be the market choice, and permits multiple operators for 20 megahertz licenses should that be the market choice. 29 If there are enormous gains in going from 20 to 40 megahertz, which some allege, then the auction of the postauction market should reveal it. But if those gains aren't there, if really 20 is enough but you make available only 40 megahertz blocks, you'll never know you made the mistake, but consumers will know because they'll see a less competitive, a less responsive PCS market. With regard to this split between the upper and lower band, as you're all aware, the PCS spectrum was divided into two sub-bands which was significantly separated. I believe this band split will have important economic implications for many years to come. Manufacturers will find it significantly easier to provide equipment that operates in the lower band than to provide equipment which operates in the upper band or across both bands. Furthermore, I think that developing products for the lower band will be more profitable. It's twice as big and has fewer 30 microwave incumbents. So we should expect radio sales take off faster there. Consequently, I expect manufacturers to focus first on the lower band and only later make products available for the upper band. In the long run, this penalty will go away but in the short run it does affect how PCS will develop. With regard to standardization, I think we can all recognize that some form of common air-interface would be valuable. It would allow for the easy provision of roaming service. But I'm deeply concerned that if the Commission became involved in the standardization process, consumers would be harmed and jobs would be lost. Because of the time limitations, I won't say more than that. Another issue that was -- on two of the questions posed for me in preparation of this session was the possibility of relocating unlicensed PCS, I guess, above 2130 megahertz. I think such relocation has the attractive simplicity, perhaps, of putting all the unlicensed 31 PCS -- the licensed PCS in the low band and placing all the unlicensed PCS in the high band. But briefly put I think that such a move would destroy unlicensed PCS. If you want to destroy it, just do that and they'll do it through some cosmetic form that let them linger a low, slow death over a number of years. I think that unlicensed PCS is very important to our nation and consumers, and I think that relocating it would be very unfortunate. One last topic, given the FCC's recent -- that's the impact of the microwave incumbents. I think given the FCC's recent decision regarding public safety incumbents, the incumbents no longer pose a long-run problem for PCS. I also would ask you to observe that, at least to a first approximation, it doesn't cost the PCS operator anything to remove the microwave incumbents. They come out for free. Now, you say why is that. Well, consider a PCS license region that has, say, some incumbents that they're going to take a million dollars to remove, and then once 32 removed, that licenced region will be worth ten million dollars, and the FCC is going to auction it off tomorrow. How much are you going to bid? What's the most you'll bid? Well, it's worth ten million; it's going to take you a million to get the incumbents out; you won't bid more than nine million. If the incumbents went away magically, you would be willing to bid ten million. If all bidders see this same common posture in removing incumbents, which for the first approximation they probably will do, then they'll all subtract that cost from the bids and the bids will be lowered by the amount of the cost of removing the incumbents. So anybody who tells you not only do we have to pay for the spectrum, we have to pay for removing the incumbents, is engaged in a form of double counting. Thank you. MR. STANLEY: Thank you very much. John Battin. MR. BATTIN: Thank you. It's a pleasure to 33 be here today. My name is John Battin, and very simply my job for Motorola is to see that PCS becomes a very healthy business. I was involved in cellular at about the same stage of development and even though I granted it, PCS is much more complicated than cellular. It didn't seem that way 15 years ago when we were developing the cellular business. In our presentation we commented on three main issues. One, I think that Motorola probably has more of an opinion on the standard's issue than most, and I would like to talk to that briefly. Also, we're very sensitive to the satellite issue where the current PCS allocation removes 20 megahertz of satellite spectrum that was allocated at the World Radio Conference. And we're concerned about that not only because of the 20 megahertz but because of what that might do to the U.S. credibility of it on an international basis. And then on an overall basis we think that the microwave clearing issue is sort of 34 underplayed in its importance, and I would like to make a couple of comments on that. Speaking to microwave -- and this also plays on the idea of maybe we would move the unlicensed band and I -- you know, I second that position; that the 1910 to 1930 band is very relatively -- it's very clear as compared to the rest of the PCS spectrum and makes it ideal for unlicensed. I think in most of our comments we have leaned pretty heavy on the fact that an 80-megahertz spread between transmit and receive is very important because that's the way microwave systems are set up. Further in looking at that we find that maybe only about 50 percent of current microwave systems are paired at 50 megahertz. And also we're -- we look at microwaves and we say, hey, these are 10 megahertz licenses. When you look at the equipment, their bandwidth is about 18 megahertz. So when you put that all into the equation that says there's probably more flexibility here than we originally thought to do 35 with -- carry between transmit and receive. Since we're fundamentally a manufacturer, we're really interested in the healthy market, sell a lot of infrastructure, sell a lot of subscriber equipment. We don't talk too much about the size of licenses, et cetera, but I was pressed to say, hey, what do you really think about 40, 20s, 30s. And I said, well, I'm just going to grade these, as if I went away and got some spectrums, how would I feel about this when I brought my license back to corporate. And so I made this chart. And I think one of the more interesting things about this chart -- and you'll find that in our filing -- is the massive difference between the grades before clearing and after clearing that points out very significantly that 40 and 30 have a big advantage up front before the microwave gets cleared. And so I think the big issue is microwave. MR. STANLEY: Excuse me. Is E the same as F? MR. BATTIN: Is B the same as what? 36 MR. STANLEY: No, E. You give 10 megahertz a grade of E. MR. BATTIN: I think with a 10 megahertz license you have a good chance of coming home with this big piece of spectrum in use for three or four years until you get the microwave up. In order to try to explain our position on standards, I tried to pose it in two different ways. One would say let's look at it the way cellular was. There's going to be one standard. Let's look at it another way, the way that FCC currently looks at it, that there would be no standards required, and then show our middle of the road. And if, in fact, we have one standard, like we have in cellular, the disadvantages are that we restrict -- you know, we really restrict the service diversity. There's a lot of services planned for PCS that would not be allowed to happen. We're liable to just see a roll ahead of current technology, and I don't think the industry would be able to make a decision. I mean, we would get locked up between TDMAs and CDMAs and 37 big cells and small cells. You probably -- you could take -- for sure that would delay the process. The advantages, of course, is we get roaming, the users can take their choice of operators, we get volume manufacturing and the U.S. would have a standard that we could take around the world which is an advantage. The current path where the FCC does not require standards has no assurances are going to be in the interoperability. It means that probably -- you may not have roaming from system to system. There's a potential that a subscriber may sign up with a system that doesn't exist in the future so that a group of subscriber units could be made obsolete by an operator going out of business and abandoning them. That tends to defuse our efforts internationally to be a trend setter. It's far more complex to work out microwave sharing where, in fact, there is multiple kinds of technologies that you're working with because 38 different technologies interfere were microwave in different ways. And, of course, there's confusion. Of course the advantage of those standards is that there's the ultimate in flexibility and, of course, you get fast in the market. And I see my light came on so I'm going to go -- MR. STANLEY: I think you have another minute. MR. BATTIN: What we are proposing is that the FCC not get into the standards process any more than to say that all protocols -- I lost out on my last -- MR. STANLEY: That's okay. Please complete your thought about the standards. MR. BATTIN: Our position is that the way we're currently -- the way we're currently going with no required standards, for sure there's going to be a lot of flexibility, but our position that the FCC should require at least systems that go on the air to operate with standards are really going 39 to promote multiple vendors with high volumes and competitive products. We're going to minimize the varieties of products. Whereas without standards, there may not just be TDMAs and CDMAs; there may be a Qualcomm version of CDMA, a Motorola version, an AT&T version, an Erickson version. It will establish credibility of our systems on a worldwide basis, and we think it's going to speed the standardization process because we can take -- and the way it's happening now is that the various systems will set up into groups with -- you know, with the charter to make standards on each one of these technologies that the industry requires. Thank you. MR. STANLEY: Thank you very much. Dr. Jacobs, please. DR. JACOBS: Good morning. My name is Irwin Jacobs. I'm chairman and chief executive officer of Qualcomm. I would like to thank the Commission for giving me this opportunity to participate on the panel of discussion of the PCS's spectrum technical issues. 40 I'll focus my initial comments on technical issues including system capacity, service quality, cost implications and standards. As the Commission is aware, Qualcomm has developed a complete digital PCS system allowing a single technology portable phone to deliver a full range of PCS services equally well and large macro cells with high speed handsoff and also distributed in-building microcells with dense usage and heavy frequency reuse. The system is based on Qualcomm's work in the application of code division multiple access, CDMA, technology to the mobile communications channel. The fundamental concept of a CDMA system is that all users of a communications channel use common spectrum at the same time with channelization provided by the assignment of a unique code to each user. In our system we divided the channels into one-and-a-quarter megahertz and have extensions to two-and-a-half megahertz and 5 megahertz-wide signals. 41 The receiver applies advance digital signal processing techniques to separate the desired users from others being simultaneously received. The use of a common frequency by a large number of users allows all cells in a multicell system to share the same slice of spectrum. Other technical features of the CDMA system, some of which are unique to CDMA, support demonstrated capacity gains of 10 to 20 times that of the existing analog cellular systems. Qualcomm has demonstrated such capacity in extensive testing of its PCS system that is carried out now over the past several years. It should be noted that the existing cellular systems service perhaps 6 percent of the United States population, and that the CDMA capacity improvement would support an increase to nearly 100 percent of the population without additional spectrum but at the current level of usage. However, with the new PCS services and the enhanced competitive environment fostered by the auction of additional spectrum, one can expect 42 usage to go up and approach or exceed, perhaps, that of the wired access network. To maximize system capacity, the Qualcomm PCS system uses precise closed loop power control, which causes each mobile to transmit the minimum power at each instant required to provide a desired quality of service. This feature increases mobile talktime, facilities spectrum sharing and reduces safety and EMI concerns. It also operates with a lower radiated power from base stations such that a limit such as that proposed by the Commission is feasible except that it should be modified to specify a power density scaling the effective power radiated from an antenna to signal bandwidths or to the number of users. Let me now address some of the specific questions raised by the FCC. First, the size of the section block. As noted above, Qualcomm has demonstrated that its system provides ten times greater the capacity of AMPS. This means that a 20 megahertz block, which is 80 percent of the 43 existing 800 megahertz cellular authorization, could provide more than eight times the capacity of a current cellular system. Similarly, a 10 megahertz allocation will support more than 4 times the capacity of an existing cellular system, assuming the same number of base stations and 3-sectored cells and compatible adjacent systems. The capacity could further be increased by increasing the number of sectors and/or reducing the average vocoder rate. This, of course, assumes clear spectrum. The number of existing microwave users, incidentally, can limit the capacity in the short term. For these reasons I believe that a PCS licensing could use any of the proposed block sizes -- 10, 20, 30 or even 40 megahertz -- to provide a viable PCS service. The Commission, therefore, must look to other nontechnical issues such as the number of competitors and the need to provide spectrum for designated entities to determine the block size. I also believe that any of the proposed 44 block sizes could be used to support a highly attractive set of new digital data services to meet anticipated market demand, although a 10 megahertz licensee certainly would have less flexibility in meeting such market demands. Regarding the road of usefulness of the upper and lower bands, although Qualcomm has not yet produced equipment in the upper bands, there is no technical impediment if there is sufficient demand for such equipment and, therefore, for quantities of required new RF components. Our system which uses a 1.25 megahertz bandwidth with extensions to 5 is compatible with a 10 megahertz and larger allocations. We are pursuing dual mode/dual band equipment that will operate in both the 800 megahertz cellular band and one or both PCS bands. However, the dual 1.8 and 2.1 equipment; that is the one covering both the lower and the upper PCS bands, that would result in we estimate now about a 20 to 25 percent increase in cost and weight over 1.8 megahertz only. And, in fact, the dual mode -- dual 45 frequency band AMPS and 1.8 would only be, perhaps, a 15 to 20 percent increase; a little bit less expensive. I'll conclude my remarks with a few observations on standards. I believe the Commission does have a role to play in the process. It should not, however, set standards. It should ensure that the equipment used to provide service conforms to an industry approved standard. It can do this by, for example, requiring as a condition for type acceptance that all mobile and base station equipment conform to a standard issued by an ANSI-approved standards setting organization such as the Telecommunications Industry Association. Such an action by the Commission would allow the industry to develop multiple standards and would encourage equipment vendors to develop conforming equipment. Thank you very much. MR. HALLER: Dr. Nagel, please continue. DR. NAGEL: Thank you. I appreciate the 46 opportunity to appear before the PCS Tack Force today. The PCS is a new technology that will enable users of personal computers to communicate data of high rates among groups people of over distances of up to 50 meters without wires or other fixed connections. There is no technology or service available that today provides the benefits of Data-PCS to students, educators, researchers, workers, health care professionals, scientists and others. At present, however, Commission's PCS rules fail as yet to provide for the deployment of Data-PCS. I would like, therefore, to address the additional steps that must be taken to make Data-PCS a reality. The Commission should recognize two basic differences between most unlicensed voice PCS and most unlicensed Data-PCS. Data-PCS is the only emerging PCS proposed unlicensed voice services such as wireless PBXs, are primarily modifications to or extension of existing and planned voice 47 services such as cordless residential phones, cellular telephones and licensed PCS systems or current wire services. They provide few new benefits to the public other than convenience. In contrast Data-PCS is not a modification of an existing service. Data-PCS, for example, would be the primary, and in some cases the only practical means of providing Internet access throughout schools; the only practical means to enable doctors to connect to medical resources in hospitals, to allow persons attending meetings to benefit from a copious and immediate exchange of information. These and other important needs could not otherwise be met unless frequencies are made available specifically for Data-PCS. Most unlicensed voice products including all wireless PBXs will operate in conjunction with a fixed base station. As a result they can be frequency coordinated; that is they could be deployed at specific sites or even in a particular metropolitan area starting right now without the need for the spectrum to be cleared of microwave 48 waive incumbents. In contrast, Data-PCS services are nomadic. They are not tied to any fixed base stations. The users will take them wherever they need to exchange or access information. Moreover, users will not know in advance when or where they'll use the device and they can not be limited to operating in a predetermined clear site. Anything less than anytime, anywhere communications simply does not recognize the reality of the Data-PCS customers' requirements. Data-PCS devices can not be frequency coordinated. To deploy even the very first Data-PCS-equipped laptop or personal digital assistant, we have to remove the last microwave link, both the co-channel and the adjacent channel from harm's way, which we call the last link problem. If Data-PCS is to become a realty, the Commission must correct two problems, which together increase the delay and uncertainty associated with the band clearing process, and 49 thus may make it impossible to raise the capital necessary to clear the unlicensed data band. First, in an effort to impose equal pain on voice and data services, the Commission gave only a half of the relatively lightly loaded 1910 to 1930 megahertz band to each of the two unlicensed applications-isochronous and asynchronous devices or in other words, devices that generally can be frequency coordinated and those that cannot. This decision is fair only as both data and voice services have an equal opportunity to occupy their respective bands. They do not. While most voice services can begin operations by applying frequency coordination and postpone or avoid relocating microwave incumbents, Data-PCS faces the link problem and cannot deploy without band clearing. For the voice services it's a difference that can be measured in some additional dollars and must be sent to deploy, but for the nomadicated services it's the difference between being online and not being online. 50 The present allocation does not provide sufficient usable bandwidth for Data-PCS even if we were to incur the cost of delay of band clearing. The problem with the current allocation is especially severe when one considers the problem of adjacent-channel microwave stations which in reality must be treated as co-channel or be modified in order to avoid interference to them. Due to the large number of microwave links in the 1900 to 1910 megahertz sub-band, it is cost effective to clear only the more lightly loaded line 1910 to 1920 megahertz portion of data sub-band, at least initially, before we can finance further band clearing out of the sale of Data-PCS devices. Even if the sub-band were cleared, however, it would be squeezed between a heavily loaded microwave band on one side, the 1900 to 1910 band, and an unlicensed voice band on the other side, whose attended occupants have no motivation to clear the last link because wireless PBXs cannot operate through frequency 51 coordination. Therefore, after spending years of efforts and tens of millions of dollars to remove the co-channel microwave stations from half of the band, the computer industry could have as little as 2 megahertz of usable bandwidth due to adjacent channel interference concerns, as opposed to its absolute minimum starting point of 10 megahertz, which will not actually last us very long in the age of mixed data, images of full-motion computer communication. Turning the clearing process itself, the Commission should take additional steps to ensure that an adequate amount of the unlicensed data band will be cleared promptly on a nationwide basis. The Commission has tentatively designated UTAM as the entity responsible for clearing the entire unlicensed band. While UTAM says it's committed to relocating all incumbents from the unlicensed band as mandated by the Commission, in practice UTAM's primary focus is clearly the early 52 deployment of coordinatable voice systems in advance of band clearing. What Apple has become aware of from attending UTAM meetings and from reviewing its public statements is apparent from UTAM's statements before this PCS Task Force. All of UTAM's financing is key to the early deployment of coordinatable devices, seed money from the manufacturers of voice equipment and money through clearing fees. This inevitably places Data-PCF at the end of the line since there can be no Data-PCS clearing revenues until the last link problem is completely solved. The Commission must take steps to ensure that UTAM becomes and remains focused on its primary band clearing obligation, which explicitly includes clearing the unlicensed asynchronous band for nomadic Data-PCS devices as promptly as possible and otherwise fairly represents the interest of all users of the unlicensed band. Nomadic computing is the driving, unlicensed PCS application for data users. If the 53 Commission provides voice PCS 140 megahertz of usable spectrum, but grants the computer industry only a fatally incumbered 20 megahertz, it will have failed to provide for the needs of the U.S. education community and other customers of the U.S. computer industry who needed high speed Data-PCS services, and it will have lost the opportunity to create a truly new PCS technology. MR. STANLEY: Thank you very much. Ms. Abramson, please continue. MS. ABRAMSON: Good morning. My name is Sandy Abramson, and I'm manager of Wireless Regulatory and Standards Affairs for AT&T NCR, as well as president of UTAM, Inc. Before I begin I would like to take this time to publicly thank the 30 to 40 small companies, PCS, computer and telecommunications industry associations, the microwave industry associations, as well as the incumbents in what seems thousands of work hours spent in building the industry consensus positions on the UTAM plan for funding and deploying unlicensed PCS. 54 I also want to applaud the Commission's treatment of unlicensed PCS in the second report and Order as well as its recognition of the importance of the unlicensed PCS industry. UTAM strongly supports the decision to provide unlicensed PCS with a full 40 megahertz allocation necessary to meet the enormous demands for unlicensed products. UTAM also agrees with the Commission that the allocation of the more lightly loaded spectrum of 1890 to 1930 megahertz is absolutely critical to the potential success of unlicensed PCS. UTAM further endorses the FCC's evenhanded approach in deciding that lightly loaded spectrum one half to asynchronous, mostly voice products, and one half to asynchronous which are mostly data products. This is imperative for securing financing for band clearing and ensuring that all segments of the unlicensed PCS industry have the opportunity to successfully market their products. Any changes in these fundamental decisions will at least delay and likely preclude the deployment of unlicensed PCS systems and 55 devices. Before I address these points in greater detail, I want to tell you a little bit about UTAM itself. UTAM is a nonprofit corporation formed by unlicensed PCS manufacturers. Membership in UTAM is open to all the parties with an interest in unlicensed PCS, including representatives of the microwave licensees and other potentially affected industries. UTAM's current members represent the full range of small too large future providers of data and voice unlicensed PCS products. The FCC has conditionally designated UTAM as frequency coordinator for the unlicensed spectrum and has charged UTAM with the responsibility for preparing a plan for funding and managing the relocation of incumbent microwave licensees from those frequencies. This is a daunting task even under the current rules. Almost 2,000 microwave links will have to be relocated at a cost of some 300 to 500 million dollars, but the task cannot be 56 avoided because unlicensed PCS products are expected to be freely available and very portable and, therefore, require clear spectrum in which to operate. The absence of exclusive spectrum rights means that an entity such as UTAM, which can spread the cost burden across the entire industry, is essential to accomplishing band clearing. I strongly believe that the expense and effort will be worth it. Unlicensed PCS promises to bring a wealth of benefits to consumers and businesses. Products such as wireless PBXs and LANS, advance cordless phones and personal digital assistance will be available to anyone anywhere without burdensome licensing procedures or the expense of air time charges. As flexible and cost effective extension for the information super highway, the capabilities and efficiencies that unlicensed PCS products bring will have a broad range of important business, consumer, education and health applications for the office, home and classroom 57 and hospitals. They will also result in job creation for both the unlicensed industry and businesses making use of unlicensed products, as well as to maintain the U.S. global leadership role in telecommunications technologies. But these benefits cannot be enjoyed unless UTAM is successful in meeting the serious challenges now before it. Foremost among them is the need to raise hundreds of millions of dollars to clear the entire unlicensed bands right down to that the very last link. The principal source of revenue for funding the band clearing process will be fees assessed on sales of coordinatable, unlicensed PCS systems and devices. These revenues simply will be insufficient if the current frequencies are relocated in a manner there -- where the total relocation costs or reduces the opportunities for coordinated deployment by increasing the number of incumbent microwave systems. In sum, to make unlicensed PCS a reality, existing regulatory uncertainties must be resolved 58 as quickly as possible. First, the current allocation of at least 40 megahertz of spectrum should be reaffirmed because it is essential to meet consumers' needs for unlicensed PCS. The record before the Commission confirms the enormous demand for these products. Second, the current allocation of the frequency at 1890 to 1930 megahertz must be retained because it is critical to the economic feasibility of the industry. Other potential frequency bands such as 2.1 gigahertz simply contain too many microwave links and would increase the cost of band clearing from 500 million to 2 billion dollars, which is far beyond the ability of the industry to afford. Third, request to allocate the lightly populated frequencies at 1910 to 1930 solely to data products should be denied. Data has already been favored by an allocation of contiguous 20 megahertz block. The current equal division is necessary to afford meaningful opportunities for 59 both voice and data products and to permit the deployment of sufficient numbers of coordinatable systems and devices in order to generate the fees required to the band clearing process. And finally, the Commission should proceed promptly to resolve all other outstanding issues involving unlicensed PCS and to establish expedited procedures for reviewing an approval of the UTAM's Financing and Relocation Plan so UTAM and the industry can move forward. These four simple steps can resolve uncertainties and facilitate the fastest possible deployment of a broad family of new unlicensed PCS systems and devices. In contrast I want to emphasize that any material change in the unlicensed PCS allocation at this late date will place at risk to tens to hundreds of millions of dollars and hundreds of thousands of industry resources that have already been devoted to the development of unlicensed PCS based on reliance to the current rules and likely will jeopardize the future of unlicensed PCS itself. Thank you. 60 MR. STANLEY: I thank you very much. Mr. Rosenblatt, please. MR. ROSENBLATT: I would like to thank the Commission for allowing me the opportunity to represent some of our thoughts and experiences that we've had over the last several years. I'm the vice president of the wireless group of Comsearch, and Comsearch, as many of you know, has been involved in wireless telecommunications via satellite, microwave, cellular and now PCS issues over the last 15 years. And one of the more significant aspects of the PCS allocation has to do with microwave, and the coexistence of microwave with PCS. We've been involved with that particular area since the beginning; since the early stages of broadening CDMA and the coexistence capabilities of that technology with microwave. And based upon those experiences, we would like to offer some -- what we feel is some technical insight into the microwave issue. Now, I will caveat that by saying that with 61 every technical issue there's a related economic and political issue that we won't necessarily comment on and they have probably been addressed in the previous panels that have been presented. The success of PCS systems coexisting with microwave incumbent operators depends critically upon the outcome of many complex issues. Perhaps the most prevalent among these is the spectral bandwidth of the microwave filters themselves. In virtually all instances in the 1.9 gigahertz band the receive bandwidths are equal, and in some cases greater, than 20 megahertz allocation that is described at least in Block C of the current channel plan. Therefore, considering the proposed PCS allocation of four 20 megahertz allocations, a single microwave receiver could impact the use of PCS spectrum within a complete PCS block. We have looked at some situations where a single microwave receiver could effectively block out the capability of providing service in a large portion of a particular market. 62 The best way to avoid interference into incumbent microwave is to relocate all the microwave paths in the market. Of course this is impractical in day one, thus the best way to avoid interference is to engineer around them. And this is a means that Comsearch has been involved in over the last 15 years of engineering around other microwave receivers, satellite receivers and other kinds of technology. In order to engineer around a particular microwave receiver, there needs to be enough spectrum room to do that. PCS spectrum allocations that are as wide as the occupied microwave bandwidth leave no room to work around a particular microwave receiver. Instead, a PCS operator with these allocations would be faced with the predicament on day one of more than likely relocating all or a large percentage of all the microwave paths within a market. Larger PCS spectrum allocations will allow some spectral space to permit deployment and allow for the PCS operator to become viable before being 63 forced to contend with the immediate relocation of all microwave incumbents. A larger spectrum allocation will allow for interference avoidance, thus permitting less costly systems to be deployed in the early stages of PCS. Another aspect of with regard to the microwave issue is that of negotiations, a necessary evil, if you will, in order to relocate all the microwave paths. Comsearch has been involved within the technical realm of mobile engineering, and we feel well-qualified to comment on the technical aspects of this perceived process. Our experience, especially with private microwave indicates that the problems associated with negotiation and relocation are very complicated and they tend to be exacerbated by FCC rules. The 80 megahertz separation of the frequency blocks were conceived to be coincident with the 80 megahertz transmit/receive separation of the existing microwave frequency band. Unfortunately, the problems born by this attempt 64 to provide the PCS operator some flexibility in designing their systems are many. The 80 megahertz separation is only -- is not in use by 100 percent of the microwave paths in existence. So a PCS operator may have to pay to relocate the microwave path that is only one half in his area; the other half having to be relocated by somebody whose block that microwave path occupies. This could create some inequity in terms of who pays for what and also exasperates and complicates the particular negotiation of that microwave path. In addition, due to the wide nature of the microwave receive filters, adjacent channel interference may tend to play a substantial role in the spectral availability within a particular market. Comsearch has done some analysis in a few markets and has determined at least on the limited basis that we've analyzed it, that an adjacent channel could cause up to 50 percent of the relocations required for a particular block. All the industry segments will be -- within 65 the microwave industry will be inundated with the demand to relocate microwave paths. Within the band allocated to PCS, there are approximately 12,000 licensed microwave paths. To relocate this magnitude of microwave paths within a reasonable amount of time will tax the resources of practically every segment of the industry. By comparison there were fewer than 350 new microwave paths licensed in the 6.7 gigahertz band during all of 1993, and this particular microwave band is looked at as a relief band for the currently occupied 1.9 gigahertz band. We're optimistic that the industry can meet this challenge. However, the critical aspect in meeting that will be the additional time constraint. Thank you. MR. STANLEY: Thank you very much. Well, we've certainly heard a variety of opinions on, I guess, some of the more complicated issues that we're facing. I would like to take a 15-minute break, but before we do, I'm going to poll the panel on, I guess, one of the principal questions 66 that was aired widely yesterday and that's the-- I'll call it the technical and economic viability of the smaller lots of spectrum. So if I could sort of start with you Limond, just to comment on the technical economic viability of the spectrum in terms of say 10 and 20 megahertz blocks? Are they feasible? MR. GRINDSTAFF: Yeah, they are feasible. With the new digital technologies capacity is not the constraint, and I think with -- when you look at a PCS operator, you have to -- as a being a PCS operator you have to ask yourself what your service is going to be, and not all PCS operators are going to do the same thing. And I don't think that's what the Commission is looking for. No one is looking for a whole new seven more entries, PCS entries that look just like cellular. In providing the different scopes of blocks, different size blocks, you can stimulate difference service concepts and different services in each of those blocks. A 10 megahertz block, a 20 megahertz block, a 30 megahertz, a 40 megahertz 67 block all can do the same type of -- technically can all do the same type of services. They can also do different types of service depending on the PCS operators business plans. And I think that's a key critical issue that PCS the operator have a business plan or a scope of business that he'll tailor his business to. MR. STANLEY: Thank you. Lex. MR. FELKER: I think -- I tend to agree that PCS isn't going to be a clone of what cellular is today. However, on a going forward basis I tend to agree with some of the other comments I heard this morning. PCS is going to embrace a wide range of wireless applications and will compete with today's cellular, compete with today's wireline services, offer a variety of nonvoice services and whatnot. I think given the difficulty or the importance of entering the market as soon as possible and the difficulties posed by the microwave-sharing issue and the importance of maintaining infrastructure costs, at least on par 68 with other wireless competitors, suggests to me that the 10 megahertz is probably going to be a disaster. 20 megahertz is likewise potentially unusable and that at a minimum we've got to have at least 30 megahertz and hopefully 40 megahertz assigned to them. MR. STANLEY: So technically feasible; economically infeasible? MR. FELKER: Certainly economically infeasible. MR. STANLEY: Mr. Murray. MR. MURRAY: I think that the 10s and 20s are technically and economically feasible, but I think they're more economically and technically feasible if there are no 30s and they're all 20s and 10s. MR. STANLEY: Chuck. MR. JACKSON: I guess there's the distinction between technical and economic feasibility and there's -- that very term "feasible" has to be defined. I look at those 10s in the higher band 69 where I think the technology is going to develop slower and where there are more microwave incumbents per license to remove, although they're narrower band incumbents, and I guess I now try them to channel 50 or something like that at the time of the sixth report in order in television, UHF television was technically feasible but its economic feasibility grew over time. And I think that the same thing would be true for those upper licenses. With the current scheme I think that they wouldn't be big money makers the first year and they might not go for very much in the auction. MR. STANLEY: John Battin. MR. BATTIN: Well, we believe that there are many technologies that can used on the 10 megahertz band that have a viable business. The biggest problem is the microwave clearing issue and the timing issuing. Also the way it looks now is that there will be many requests for dual mode -- most of any one operator may get a 20 megahertz license, a 70 20 -- a 30 megahertz license and also a 10 megahertz license of a two dot one. And so, therefore, we will be building subscriber units that try to span all of those frequencies. And I agree with Irwin; that that's a 20 or 25 percent premium. So it's not just an issue of, hey, I have a 10 megahertz license. If you're in this business on a pretty wide scale basis, you may have a 30, a 20, a 10, and so you have to build both those subscriber units that can cover all of those frequencies. MR. STANLEY: Irwin? DR. JACOBS: Yes. I think an interesting business could be carried out in a clear 10 or 20 megahertz band. I think there's enough capacity, et cetera, to pull some interesting possibilities. The separation is a problem. If you're limited at the upper end and then many of the users, particularly the larger bands at the lower end. So there's a cost implication that I think 71 will -- can hurt you. It's interesting, however, that initially when you start to watch these services your main concern is going to be coverage and not capacity; thus, you're going to have to build up subscribers slowly, and then no matter what bandwidth you have, you're probably going to be using less than 10 megahertz when you -- for quite a period of time. MR. STANLEY: David. DR. NAGEL: For the -- the Data-PCS application, of course, the question of operating efficiency is not really a relevant issue. The main issue for us is one of band clearing. All the studies that we've done show that the absolute minimum of 10 megahertz would be required to provide Data-PCS services that would be useful to the customers that we've studied so 10 megahertz would certainly be a minimum band; 20 megahertz begins to get services that are -- provide adequate levels of performance. MR. STANLEY: Sandy? 72 MS. ABRAMSON: As far as UTAM is concerned, the way that we see this as relevant to us is the issue of microwave clearing, and as I said earlier, the number of links in the 2.1 gigahertz band is about 7,000 links, and that would up the cost of our relocation from the 1890 to 1930 band from 300 to 500 million dollars to upwards of 2 billion dollars, and that would also be overlooking the hundreds of millions -- and let's say 100 to 200 million that we have in some cost on products based on the second report Order. As far as UTAM is concerned, those are the major issues. MR. STANLEY: Okay, thank you. Jeff. MR. ROSENBLATT: I would tend to agree with a lot of the other panelists in that if you had 10 megahertz of cleared spectrum with today's digital technology that would provide enough capacity to serve all kinds of niche and, actually, fairly broad-based traffic requirements. However, with the incumbent microwaves occupying that spectrum, the smaller bandwidths 73 are going to be at a significant disadvantage in cases over the broader allocations of spectrum. Though I might add that in the 2.1 megahertz band it's a slightly different issue. In the 2.1 gigahertz band there is less spectrum available. 40 megahertz has been allocated. However -- and there's more microwave paths, also. There's, let's say, two to one number of microwave paths relative to the 1.9 gigahertz band. However, the microwave filters occupy almost an order of magnitude less spectrum. They're generally 800 kilohertz to 1.6 megahertz in bandwidth. So coexistence is better. When you flip side them, you've got more microwave paths to move out so it's going to be -- the relocation is going to be more costly; sharing is a little more effective. MR. STANLEY: Okay. Well, thank you very much. I guess -- Ralph, did you have any comments before we broke? MR. HALLER: No. Let's take about a 74 15-minute break and be back here at twenty minutes of eleven for the discussion. (Thereupon, a recess was taken and then the proceedings continued as follows at approximately 10:40 a.m.:) MR. HALLER: I think almost everyone is back and we'll go ahead and get started to the interesting part of today's panel and that will be, hopefully, a spirited debate that we have between all the experts that sitting here before us. Tom. MR. STANLEY: Let me start off with a softball question to Limond. Someone from the audience had asked how can a 12-day old company like Airtouch have such extensive PCS experience. Would you respond to that, please. MR. GRINDSTAFF: It was all inherited from our old days of being PacTel. MR. STANLEY: Let me start the questions in the area of microwave relocation. Jeff had mentioned, I guess, at least -- I guess John Battin had mentioned the statistic that it's 75 approximately half or perhaps more than half of the pairings were nonstandard in the microwave. So let me start off with Jeff and ask really what are the implications, for example, for blocking the PCS? Why is that kind of a, say, 80 megahertz or 50 important in terms of our own allocation decisions? MR. ROSENBLATT: Well, what happens is it all ends up relating to negotiations, and as it exists in the rules, you're required to have an 80 megahertz separation between your transmit and receive. That coincides very nicely with the allocation that the FCC has recently made in the NPRM. When there are violations to that, as they currently exist, and the market and microwave paths are separated by anywhere from 40 to 120 megahertz, then what happens is you've got one end in your block and one end in someone else's block, and then it just comes to a matter of who pays, who negotiates and that increases the complexity, which increases the time of the whole relocation 76 process. So that is one instance of how the negotiations becomes more complicated and then extends out the timing of that relocation. MR. HALLER: Does that mean that the Commission then need not consider that factor in terms -- you know, if there is so many variables out there, then should our discussions be based on other parameters as opposed to the relocation issue? In terms of blocks -- MR. PEPPER: Or alternatively does that become such a major issue that that should be driving all our other decisions? In other words, where does this fit in in terms of how we should be thinking about the band plan? MR. ROSENBLATT: Well, again as Comsearch's role in this is to identify and evaluate some of the technical issues that are involved with this. In terms of how we choose to weigh all of the different factors, I think will in large part be due to the timing that particular PCS operators want to go online and other areas. In terms of 77 the technical aspect of it, you know, it's fine with us any way you cut it. MR. PEPPER: That actually wasn't -- the question I think -- you, for example, had mentioned that there is 12,000 paths at the end of the day that might need to be moved but maybe not. Have you done any work that would estimate how many would need to be moved initially so that service could begin as rapidly as possible, A; and B, what that timing would be, because you said last year we licensed 350, and I assume that meant there were a certain number of engineers in the industry that were preparing applications for 350 licenses. You know, to what extent is the industry geared up and ready to do the engineering, make the applications for how many thousands? And I think Sandy wants to say something about that as well but I would be interested to first hear your response, Jeff. MR. ROSENBLATT: Sure. With regard to that, that particular question, the answer to that 78 actually is very dependent on the block allocation. And as I indicated earlier, broader spectrum allocations require less movement immediately as opposed to a narrower band allocation will require everything to move in a much more rapid fashion. However, the ability for the industry to handle that could be very significant. And that example that I indicated earlier is that while the 6.7 gigahertz band is not the only band that was putting in microwave and certainly not the only equipment that the microwave community was manufacturing, it does illustrate that this particular industry that was -- and all the associated parties with that industry, whether you're talking about coordinate, manufacturers, negotiators and so on, set up to handle something in the order of 350 or some microwave paths per year. Now if you're going to ask for somewhere between 4 and 12,000 microwave paths to relocate in a very rapid fashion, at this point, leaving 79 aside the negotiation process, the industry gearing up for that is going to be very extensive and somewhat time consuming for all of that to happen. Did that answer your question? MR. PEPPER: It begins to. Sandy. MS. ABRAMSON: I just wanted to point out that the band plan where we see the 80 megahertz offset, UTAM has done a lot of analysis to see where the transceivers and receivers that are in the band that's allocated for unlicensed where they're paired, and we see that as just the 80 megahertz rule of thumb really doesn't work here, and then the band pairings are really all over the place. But we see that as an advantage to UTAM because what that means is that the links that are in the unlicensed bands are paired with the links that are in the licensed band. So what that means is that when the licensees are out there and they have to move their links, what they'll be doing is they'll be moving links that are in the licensed band as well 80 as the unlicensed band. And we see this is as one way to expedite movement of the links in the unlicensed band. MR. PEPPER: If I could just go back for one second to a point that Jeff raised, I think -- is it correct to interpret what you're saying as timing is important because of the number of links that ultimately have to be moved and that the extent to which service can begin with moving fewer links and, therefore, the ability to spread the time of the move over a longer period will make the move easier; is that what you're saying? MR. ROSENBLATT: That's correct. That's correct. Having a broader bandwidth for initial allocation will require less movements in the preinitiation of service, which would allow you to get some spectrum to get started to provide some service. And maybe you would have to relocate some but not all of your microwave paths, which you could probably do. If you force everybody to relocate everyone at one time, it's going to be a significant 81 challenge for everybody to get everybody moved in a timely fashion. And then your service -- you're ability to provide service may be very dependent on that particular issue. MR. STANLEY: Lex, did you want to comment? You had your hand up. MR. FELKER: Yes. Just a couple of comments. First of all, I can't emphasize too strongly this kind of market issue in terms of the viability of new PCS operators. It's very important to get up and running as soon as possible. The windows closing, at least that's our view, and things that start pushing off initiation of service three, four, five years make the business a lot less attractive. I think -- correct me if I'm wrong, Jeff -- the 80 megahertz spacing, while it's not adhered to exclusively is nevertheless the predominant spacing in the lower band and, therefore, if you're looking for sort of techniques to minimize the microwave problem, at least marginally, perhaps staying with an 80-meg spacing makes a lot 82 of sense. One other issue in terms of things the Commission might want to think about to sort of assist in the microwave process, beyond those things that you've already done, is to consider the possibility of relocating or coordinating on paper all of the links right now, or in short order, and so that they have a reservation at the 6-gig band that they can take advantage of in the future. Because if you try to sort of do these things piecemeal, the likelihood that you're going to optimally coordinate all these links is less than if you do it all at once. So that might require some rule change to allow for coordinative links to sort of stay in effect for some period of time rather than the six months or whatever is typical now. MR. STANLEY: Again, not to pick on Jeff again but I guess one statistic you cited was a little on the depressing side, and I guess that's the very wide bandwidth of the receivers. I think that's been -- to compare this to what was 83 considered in prior studies, APC study for example, it's quite a bit different. You know, the direct implication of the report says that there might not be a lot of spectrum, just in the time frame that Lex just referred to. That really suggests the strong possibility of delayed service. MR. ROSENBLATT: That's correct, and certainly the impact would be much more significant in some markets than others, and additionally in some blocks as opposed to other blocks which, you know, just is kind of a random nature almost. But I think that most of the studies that I have seen have been fairly consistent that the filter bandwidths are very viable in 1.9 gigahertz and do impact significantly on the ability to share. MR. STANLEY: Particularly in the allocations? MR. ROSENBLATT: Yeah. MR. STANLEY: Limond, please. 84 MR. GRINDSTAFF: I would like to comment on that. We have done extensive work for the last three years and the feasibility of spectrum sharing -- computer modeling and spectrum sharing, and nationally deploying a PCS full-service system, a PCS 1900 system, in downtown San Francisco in the spectrum sharing environment, and I concur with Jeff that the bandwidth filters are extremely wide. Some going 20 megahertz. Even some higher than that. There's three issues that confront spectrum sharing. One is if you look at the number of links and you look at their split, that they're not evenly or equally split. They've done a hodgepodge of duplexing throughout the bandwidths. The other one -- and this chart kind of shows it -- is that if I'm a PCS provider No. 1 and this is my link, I remove that link and I'm clear to operate. If there's a microlink that spans over two PCS bands, then that link affects both PCS operators. And then you would have the 85 wideband PCS or microwave filter that sits in PCS operators 2 but bleeds over into PCS operator 1. So is issue of spectrum sharing gets more complicated. The reality of the situation is spectrum sharing is not an issue; that from our studies in deploying the system in San Francisco we took 140 megahertz and we were able to get 12 channels to operate the system. And the other thing that has to be considered when you look at microwave links and spectrum sharing is that so for I've seen all the studies, including ours; we've always looked at the street level plane. In our August 1991 FCC progress report we did measurements in a multistory building that showed the effects of a microwave link when the user goes from the ground floor to the 10th floor and there's up to a 30 DB gain an hour from the microwave receive filter, or receive power. What this means is that when you deploy a PCS system, if you can control your users and keep them where you want them, it's great. But once the users 86 start roaming and start moving around, sharing spectrum does not work. So when the issues come up about 40 megahertz, 20 megahertz and 10 megahertz, it's irrelevant. You need to move the microwave users out, and the FCC has taken steps to do that. Putting the limits on how long a microwave user can be in service puts those limits on that. The last obstacle was the unlicensed band or the public safety users, and in my opinion those are probably the easiest people to move out because they could use new equipment. From our discussions with them and our practical experience with them, they have approached us in San Francisco wanting to sell their links to us, and we keep telling them wait until we buy a license and -- (inaudible) MR. STANLEY: Okay, Chuck, you wanted to comment. MR. JACKSON: Well, just an observation on this thing. One of the issues on the kind of service is the speed with which you can move out 87 the incumbents, and it strikes me as sort of a tentative idea and I just got to thinking here. Maybe there are things that the Commission can do in its rules that will speed the process of agreement between the new PCS licensees and the microwave incumbent. One idea that comes to mind is to set a sealing on any excessive payment over the cost of relocation; a sealing which would not come into effect until, say, 12 months have gone by. One of the well-known things about negotiation is that what determines a position's behavior is their best alternative to a negotiated agreement. And if you had a rule that said after 12 months the excess payment can only be 50 percent of the cost of the microwave system, it might focus the parties, particularly the part -- the incumbent who might be -- who is reluctant to relocate since it's sort of a status quo situation and they might get more later. It might focus them on agreement in the short run. It's just a tentative idea I throw out. I 88 haven't really thought it around. But it seems to me it's one way the Commission could act to speed things up. MR. STANLEY: We certainly picked up the spirit of that in our tax certificate session. Again, let me ask Jeff to respond on the following area: Although you painted somewhat of a pessimistic picture in terms of bandwidth, you actually suggested that the situation above 2110 may not be so negative with regard to, say, either relocation and/or coexistence because of the, say, the bandwidths and relative, say, age or class of the equipment. Could you elaborate? MR. ROSENBLATT: I would -- I agree with half that statement. What I said was that in terms of coexistence -- and in this area I tend to agree somewhat with what Limond mentioned; that we're not really talking about sharing in kind of the early senses of that analysis or that -- early to PCS where everybody was thinking that we could just coexist within the same market without any problems. And I think right now we're talking 89 about frequency avoidance in having to avoid particular microwave receivers. In that case, that 2.1 gigahertz, you'll be better off in that the microwave filters are much narrower. And just in general a particular microwave receiver might take up 2 megahertz, plus or minus 2 megahertz -- well, 2 megahertz high, 2 megahertz low, out of your 10 megahertz allocation as opposed to a 20 megahertz allocation of 1.9 where one microwave receiver tends to occupy the whole thing. However, in terms of relocation, you've got a worse situation, because you've got more microwave receivers and less bandwidth so you've got more links to move out, more time involved, more complexity negotiations and so on and so forth. So half of that is true. MR. GRINDSTAFF: Let me add one more comment to that. MR. STANLEY: Sure. MR. GRINDSTAFF: When you look at -- when 90 you talk about relocating the microwave users and moving up the 6 gig, not all of them have to move to 6 gig. We have instances in San Francisco where there are links that are less than two miles long and they're using 2 gig. We take film measurements of it, and one of the comments is wondering why haven't their front end receivers burnt out on their microwave links because they're so hot. So there are multiple spectrums that can be used to relocate these links. And I think also the PCS operator, when you talked about trying to market it, and he builds his network out, will be negotiating and moving these links out. And it's to the advantage of the microwave user eventually to get out of the way because I won't be able to control my PCS users and the band will get so cluttered that the interference between the PCS user and microwave will become more and more prevalent. And so I think it will work in the initial stages, working to clear the spectrum out. And as 91 the PCS service rolls out into the suburban and rural areas, then those links will be knocked out. You don't have to go out and clear everything in the band day one. MR. HALLER: Okay. Jeff, can I ask you one other question about the upper band? It's my understanding that there's another factor, and that is the antenna game, and in the lower band that the links have very broad beam widths and, therefore, a particular link may cover a huge portion of a city, whereas we have more beams in the upper band and, therefore, it would be easier to avoid those links not only because of bandwidth but because the energy is simply not spread over as much of the geographical area. Do you agree with that as a premise? MR. ROSENBLATT: Well, I would agree with that in terms of the 1.9 gigahertz band versus the 6 gigahertz band. But between 1.9 and 2.1 I would think that there's a negligible difference. MR. HALLER: Well, it's my understanding that our antenna requirements are much more 92 stringent in the 2.3 gigahertz band than in the 1.8, and that in itself would be a mitigating factor. MR. ROSENBLATT: I don't think that they're that much different. Between 1.9 gigahertz and 2.1 gigahertz, the designation for Standard A, it might be a few DB different here and there but I don't think it's really that much. MR. FELKER: And actually, Ralph, there may be more grandfathered periscope antennas in the lower sub-band which I think might account for, you know, where you're coming from but in terms of standards, I think you're -- MR. ROSENBLATT: In fact, you know, you're probably going to see more of a high-performance antenna -- you know, in the category of high-performance or ultra high-performance antennas at 1.9 gigahertz because it's more congested in terms of the bandwidth that they occupy. There's not that many channels available than the 2.1 where there's -- even though there's less spectrum, there are more channels to choose 93 from. MR. HALLER: Well, then let me go ahead and ask the question I really wanted to ask. MR. ROSENBLATT: Okay, go ahead. MR. HALLER: And that is in your analysis of what it would take to clear these, has the actual antenna game in being considered -- or have you considered this frequency is in use in this town and, therefore, it's going to be cleared? MR. ROSENBLATT: Yeah, we have done fairly extensive modeling, and I think that Limond has also done some fairly extensive modeling in terms of the spectrum utilization in cities which takes into account in some cases measured data in addition to the antennas and microwave filters. So all of those factors taken into account show that you can coexist, although as Limond points out, in some major markets like San Francisco in the downtown area that he was looking in, you're only going to find a few megahertz available. But he was able to find a few megahertz. In other cities that aren't 94 necessarily as concentrated or as occupied, that number tends to increase. And I believe, also, that the several megahertz wasn't necessarily in a 30 megahertz block. I think that was over the whole 1.9 gigahertz band, in that case. That would be an extreme case. However, it does indicate that there can be some form of coexistence. MR. STANLEY: Thank you. Let me bring up a separate subject now of standards. Yesterday the -- and let's call it the views of the economists were fairly strong on what I'll the rising tide of the demand, pushing very strongly for the development of PCS, and in this kind of arena something like standards may not be exactly the first thing you specify. What's your general reaction to that? I guess you've all addressed that in a way in your own words, but let me, I guess, start with you John, in the area of standards that you had dwelled on. You had one standard, no standards, I guess pretty much the flexibility. Could you 95 respond. MR. BATTIN: Well, part of our proposal was that the Commission required that the industry operate the systems according to standardized protocol. We think that will help in a number of different ways. MR. STANLEY: Let me make sure I understand what that means. Is that an air-interface standard or is it something stronger? MR. BATTIN: I think it's multiple air-interface standards. You know, we believe that the PCS requirements are too broad to be served by one air-interface but yet if the FCC requires that all systems that go on the air and PCS frequencies operate according to a standardized air-interface, that would be a very reasonable middle of the road that will force industry -- it can force industry to very quickly come up with standards. I mean, the thing that will drive standards is the fact that we know as Motorola and all of our competitors know that if there are no 96 standards, we can't sell anything. As long as we don't need a standard, then if we're in a committee, we're negotiating with AT&T or Erickson or something and we know that if we don't come to an agreement, you know, too bad; we have our six customers, they have their six, we'll go off and do our own thing. But if, in fact, we know that we have to come to an agreement before we can sell anything, you know, guess what, we come to an agreement. And so I think when the FCC says, hey, industry, you have to make up your mind; we don't care whether it's two, three, four, five, six standards, but you'd better make up your mind and have standardized air-interfaces or we won't type or group your equipment, we'll go get that job done. And I think that we've proven in the past that we will. MR. STANLEY: As I recall there were, what, something like 17 candidates air-interface standards initially in some of the community groups. That's been dwindled down to eight and 97 now I hear four. I mean, isn't that enough -- isn't the process working without the good offices of the FCC? MR. BATTIN: There is a contention that says that this process may have a sign wave to it, you know, to where you get it dwindled down to four or five and you think you can get along with your neighbor, but then when you finally get down to debate the last microbolt, then they diverge again. MR. STANLEY: What are the benefits of really the Commission suggesting that it would only approve equipment that goes -- is in a sense, passed through ANSI equivalency? I guess ANSI approves standard-setting processes. What's really the advantage to the public of that particular requirement? MR. BATTIN: I think, first of all, it assures that there are going to be multiple vendors. It assures that some of the characteristics that have made cellular successful will happen on PCS. You know, that Motorola can 98 make a subscriber unit and pretty much garner to the user that it will work in Boston, it will work in Seattle, it will work in Dallas; that there's not a lot of hidden standards underneath. We're involved in a couple of systems on a worldwide basis that, yes, we beat the rudiments of the air-interface, but if you push button No. 1 on an Erickson phone, it means different things in the system than No. 1 on a Motorola or a No. 1 on a Nokia or No. 1 on a Mashoosta. So even though it may look like you all have TDMA or it may look like you all have CDMA, when it gets down to it, you still don't have the ability for the user to shop end product with some kind of assurance that all the product is going to work. MR. FELKER: Well, I just -- as you may know, Tom, when I worked on the Commission, I was the enemy of form-line standards setting, by the agency anyway. MR. STANLEY: Let the record show that Lex is the enemy and -- 99 MR. FELKER: I'm speaking past tense. And, you know, for all the reasons that John and others have cited, you know, delay and retarding innovation and giving incumbents a leg up over newcomers, and things like that. But now as a perspective operator, you know, clearly we're interested in things as mundane as interoperability. We're clearly interested in achieving whatever scale economies may be possible. In a competitive market obviously those economies will flow to the subscribers, and it strikes me that the proposal that Motorola has offered where the Commission doesn't bless a particular standard but rather a process which produces, perhaps, multiple standards, is not a bad one and it probably is deserving of some thought. I guess, again, the only issue that I would raise is what does -- does this process adequately address the delay issue. John, in the example he just presented, suggests that, yeah, this is the 100 kind of thing that would encourage manufacturers to stop their bickering and start producing equipment. And so if, in fact, that's the case, it sounds like maybe this is not a -- maybe it's sort of a very efficient type of regulatory structure. MR. HALLER: Lex, can I ask a question. That would be a modification on that just for your comment. In a wonderfully written decision by the Commission on TV/stereo, which I wrote, we decided that any stereo technology could basically be marketed, but if it was going to light a light on a standard TV -- the consumer TV, that it had to comply with certain standards. And, therefore, we did not limit the technology in any way; anything that could be put on the air was okay providing it didn't cause interference to other TV operators. But on the other hand, the consumers had some knowledge as to whether they were listening to a standard TV/stereo signal. Now that -- as far as I can tell, TV/stereo, in fact, all kidding aside, has been a big success. With that kind of 101 approach, would that be appropriate here? MR. FELKER: Well, let me offer this commentary. My recollection -- and correct me if I'm wrong about this, Ralph, in the TV/stereo decision there was a standard in industry. There were other sorts of things boiling around. I remember there were two or three others that were competing to be a standard but ultimately EIA signed off on one, I believe, and what the Commission did was sort of endorse that as sort of a de facto meeting the requirements but allowed others to go forward. And so in that particular case that may have been a good way to proceed. And, you know, the results seem to indicate it was a good way to proceed. But for PCS, it's a little bit different. We don't have the sort of consensus on a particular standard. In fact, there are, you know, four -- I don't know what the number is. There's a number of ones that, you know, look pretty interesting depending on what kind of application you're interested in and where it is 102 on the development curb and whatnot. So it's not clear to me that particular approach would work. And let me just add one little extra spin on this, and this goes to, I think, the point that John just raised about, you know, the No. 1 button on the handset doing X on some manufacturer's systems and Y on another. I mean, that's the level of detail that really has to occur, I think, on these new digital systems, because you want to have uniformity. You want to be able to -- you know, you're going to a mass market now, sort of like a consumer market for TV/stereo. And so you want to be in a position that, you know, all the handsets operate in a common fashion. And I think that's what we're getting at. We're not saying it's 1.25 megahertz with a particular chip rate. It's a much more sort of implementation level standard that we're trying to get at. MR. STANLEY: That's real -- that is not guaranteed by a common area or a standard. That's goes beyond that. Generally the view point is that -- Irwin. 103 DR. JACOBS: That would be beyond the area of air-interface standard. It maybe on subscriber equipment but it also gets very difficult because the air-interface -- or the human-interface is going to be one of the interesting things. I would hope that, in fact, we're moving in the direction of simplifying it sufficiently; that all of these complications that we've seen in the past very much get minimized. There is one other aspect, though, on the air-interface and that's -- and I can't -- I guess I wouldn't have imagined myself arguing in favor of some type of standard for requirements after having gone through all the effort over the last few years but there is a great use to it. And another one -- another area that could be coming up is the fact that as you get a number of systems, a number of different bandwidths, a number of regions of various sizes, this interference issue between the technologies needs to be looked at much more carefully than it has been in the past, and I think this the FCC can 104 easily do. And so as part of the standards process, this issue, I think, needs to be examined more carefully. And so I think there is, again, an argument not for specifying a system or a particular standard but that they'll be one or more such standards that are used. MR. STANLEY: Since the principal standards in the cellular arena -- and I don't know the full standard development at one point of 1.9 -- since they're already fairly well into what I'll call some standard setting, isn't this -- couldn't this be construed as an approach that would penalize those late comers? For example, those who could be held hostage in the standard setting arena by manufacturers who are already fairly well into it? MR. BATTIN: I think what we see happening is that it's been heating differently than cellular. We got into a lot of trouble on digital with cellular primarily because we were trying to develop one standard. So we had the CDMA people 105 and the TDMA people in the same group and that made a deadlock, you know, for some period of time. Now, you know, I see that we can have a group of people that are -- or a group of industry that is working on a CDMA standard, we're going to have someone doing a TDMA standard, people will be doing a GSM standard, we have a microcell standard, and so within those groups I think it will move very efficiently. One thing that I wanted to put in here is that maybe the most key thing to remember about a standard is documentation; that if there is no standard, there is no benchmark for documentation. You know, as Motorola I could put a system on the air in Boston, sell it to a customer -- not that I have one, at least this point today -- and no one would know anything about that system outside of the fact of FCC's requirements on ERP and a couple of other things. So I think a key thing in having a standard 106 is to force a level of documentation so that other manufacturers and other systems can pick up that technology and come promote it across the industry. MR. STANLEY: Okay, thank you. Don, you wanted to ask a question? MR. GRINDSTAFF: Tom, can I make one comment? MR. STANLEY: I'm sorry. A brief one, please. MR. GRINDSTAFF: We believe that the process is in place, the multiple standards, but I also believe or I agree with what Irwin was saying; that when you have these different technologies coming off from the standard bodies, there needs to be something or some guidelines that assures that the interoperability between systems can happen and that there's no interference between systems. If you look at cellular today -- a good example is our system in Los Angeles and San Diego, two different MSAs, and there is 107 interference, because we use the same frequency and they have to be coordinated. When you have multiple standards and multiple PCS operators, there needs to be some assurance that these technologies are put in place, aren't interfering with each other, and also that if a user in Chicago goes to New York, that the consumer wins out; that the handset will work on that type of system. And I think possibly that the license literature or the writing on the license when you give them out requires some minimal, technical requirements of standards of interoperability or 911 type of services. Just these minimal requirements to enforce the industry to make sure that they have addressed these issues. I think if we don't do that, that there's a possibility that some operators and some manufacturers may go off on a different track. MR. STANLEY: That may be desirable but somehow I guess even addressing the technical standards goes fairly far towards interoperability. 108 MR. GRINDSTAFF: Right. Right. And I think what guarantees it is if you require the licensee to -- if they're going to have PCS systems across the country, a similar type of PCS system, it doesn't mean everybody has to use that PCS system; that they require some interoperability capabilities. MR. STANLEY: In terms of Irwin's point about interference, say, between technologies, who really should be pounding out that kind of a requirement in terms of specifications? It's certainly not us. MR. GRINDSTAFF: I understand everybody should be addressing that, but I think it may be more convenient to have the Commission specify to the industry that they to have that in there. This is similar to what happened in AMPs in '79. There were minimal requirements put down for AMPs operators that they had to meet, and these same minimal requirements should be put into PCS licenses. MR. STANLEY: Okay, thank you. Donald. 109 MR. GIPS: I'm trying to struggle with the role that designated entities are going to play in the PCS, and in Lex's presentation he said that to compete with existing cellular providers, new PCS providers are going to need significant spectrum, and yesterday we heard that new PCS providers are going to need deep pockets to be able to do that and preferably an existing communications infrastructure. Given that, I'm curious, Mr. Murray, whether you think designated entities will be able to compete in that application of PCS or do you see them completing in different applications of PCS? MR. MURRAY: Competing in what again now? I didn't understand the question. MR. GIPS: Do you see designated entities competing in the cellularlike arena with the cellular incumbents in PCS, or do you see them offering different types of services in PCS? MR. MURPHY: Well, I think there are some niche markets that are clearly available for the 110 designated entities to participate in. I think they can do either or, actually. I think they can compete against or they can satisfy a niche market. MR. GIPS: Here is where I'm struggling with the question. We heard yesterday that 30 megahertz is probably -- there's disagreement but the new PCS provider had believed that 30 megahertz is necessary to compete with cellular. How can the DEs compete with cellular with less than 30 megahertz if that's true? MR. MURRAY: Compete with cellular with less than 30 megahertz? Well, I'm not sure. MR. GIPS: Let me phrase the question a little differently. What can we do to make them more viable yet still allow for competition with cellular the way that Lex has said that we have to provide it? MR. MURRAY: Well, to make them more viable I think that with the 30s in place, the MTAs, I think that is a detriment to any -- if you put the designated entities in the 20s and the 10s, then I 111 think by the 30s MTAs gaining early entry into the market place and the 20s and 10s having to deal with the microwave issue, I think they're clearly at a disadvantage at that point. But if you take the two 30s and make three 20s, then I think the playing field -- I mean, for lack of a better -- the competition aspect of allowing a designated entity to then be able to buy a 20 or utilize the 10s, the competition is much greater at that point. And I as an investor in a 20 or a 10 believe that I have a much better chance of having a successful business than I would if I were to try to go up against a 30. MR. GIPS: And you don't see the incumbent cellular providers as stiff competition for you at your 20? MR. MURRAY: Well, I think it increases the price in order to get them out of the -- to eliminate the interference. MR. GIPS: No, I'm sorry. The incumbent cellular providers, you don't see those as competition? 112 MR. MURRAY: No. I mean, if they pick up another 10 and I can aggregate up to a 30, then I think I'm just on equal footing as well as they are. MR. GIPS: Does anybody else want to comment on DEs? MR. GRINDSTAFF: Yeah. I sat through yesterday's session. I think what a PCS operator needs is really a good business plan. And if he has a good business plan and if he knows what his business is and he has a market segment, he's going to go for it; it's regardless of the amount of the spectrum. For example, we were in the UK. We had three licenses and we were going to be given up to 50 megahertz. It actually started out to 15 megahertz. We pulled out of that. Three of the licenses went down to two licenses and they have struggled. So it's not a matter of how large the spectrum is. I think it's the market economies. And when you look at the different markets across 113 either MTAs or BTAs, each one is going to be uniquely different. So there are some cellular markets today that can't support two cellular operators. MR. HALLER: Are there -- along the same lines, are there advantages or disadvantages to a geographical area of licensing? I'm asking that, I guess, from a technical standpoint. Is it, in a sense, cheaper per square mile to build out an MTA than a BTA, or how should we view the geographical licensing area with regard to, one, the ease, and two, generally? Because yesterday that was covered a lot, though a couple of you touched on that on this panel so I would be interested in any comments you have. MR. GRINDSTAFF: From our studies we support the BTAs, and the economics for the BTAs are much better than the MTAs. The cost of the license for the MTAs really puts your business on the negative for a lot longer than the BTAs where the license we believe will be less expensive and that you can concentrate your business for the 114 servicing area you want. We also believe that MTAs do not promote or use -- or promote the service to rural areas because if MTA providers are going to be so strapped because they spent so much for the licenses, they're going to concentrate on the metropolitan areas and basically write the rural areas off that need probably some support of economics to build out there. MR. PEPPER: If I could just follow-up on that for one second. If under a current plan -- I assume what you're arguing is that in order to provide the service to rural areas, they should all be BTAs. If that were the case and we didn't change the plan, we would have seven licenses in rural areas. Do you really think that there would be seven licenses built out in rural areas? MR. GRINDSTAFF: No. I also don't think there are even seven licenses and even MTA areas. You might not see that either. I think PCS is going to be very competitive. I think all the wireless businesses are going to be very 115 competitive. So that when you're looking at two incumbent cellular and the SMR and seven new operators come in, the PCS operator has to make sure he knows what he's doing before he goes out there and deals with a slightly -- MR. PEPPER: Let's say there's two more. Do you see there being five full-service competitors in rural areas? MR. GRINDSTAFF: I think it depends on the rural area and what the market segment is and what the PCS operator is going to do. I mean, if you're looking at PCS as just being cellular and looking at PCS as local loop or wireless access, those are different market segments they can support -- that can be supported by the market. But if everybody is going for the same thing, it's just like any business; if you're getting a lot of services, the prices go down and some businesses don't make it. MR. FELKER: To sort of respond to your question, Bob, I think sort of on average you would expect in rural areas that, you know, an MTA 116 provider at least has a better shot of being viable than a stand-alone BTA operator simply because it's a question of marginal versus fixed cost. I mean, you're sticking the cover -- you know, a small rural BTA, you're talking about a relative -- you know, a handful of base stations, maybe only one, with all the back office functions, all the network infrastructure and everything else, sort of trumped over to, you know, the major metropolitan areas. So you have a chance to share a lot of your facilities that are being paid for -- the average cost which is being paid for by the higher usage area. So I think -- you know, in looking at this, there just are scale economies which come into play when you're talking about wire areas. And, you know, the only way to capture that is to issue licenses across broader areas. MR. PEPPER: So your answer to Ralph's question is that there are, maybe not technical reasons, but economic reasons -- MR. FELKER: Yeah. 117 MR. PEPPER: -- to the geography as it affects the economics? MR. FELKER: Yeah. Yeah. I guess I sort of disagree with what Limond says. If the license costs more for an MTA than it does to try to build it up over BTAs, then that means it's worth more, and why is it worth more; because their scale economy is. MR. PEPPER: Chuck? MR. JACKSON: I was just nodding in agreement with Lex, but I want the record to show that I disagree with them on almost everything. DR. JACOBS: Just again on this question of the bandwidth, again, initially the main issue is not going to be using all your bandwidths. You're not going to have enough customers to do that. So you're going to have to clear out a small amount of bandwidth. You're probably not going to use even 10 megahertz; you're going to use the smaller part to get started. The issues that come up on rural and urban, there is an economy of scale but there are various 118 ways of getting that economy scale. I would guess that there might also be some services that would spring up that would provide for a variety of these capabilities and network interconnections, et cetera, for a number of these small areas if you want the licenses to the BTAs, so that one can see different types of companies coming into being as a result of this effort. MR. STANLEY: I guess another way to ask the same set of questions is along the following lines: It's the Commission's allocation from last year, the block plan, was fairly heterogeneous in terms of 30s, 20s and 10s and MTAs and BTAs. Would you argue, I guess, for more or less homogeneity in this? For example, it's been certainly recommended that an ideal cut would be, say, three MTAs, three 30s at the MTA level. Others feel, say, six 20s at the MTA level. Some go down to six 20s at the BTA level. Considering what we did was largely homogeneous, how would you suggest -- how would we improve the decision? Lex. 119 MR. FELKER: Well, I think certainly based on what we heard yesterday, and which many of the comments today are sort of not inconsistent with that, I think there's a question as to how many additional PCS operators are going to be viable. And if that's the case and one doesn't want to waste spectrum, or other resources for that matter, in trying to arrive at whatever the right answer is, certainly my recommendation would be to consolidate the lower band into a smaller number of larger bandwidth assignments and licensing on a very wide-area basis. MR. HALLER: Can I ask you a question which is kind of related but it gets to a slightly different issue as well? We heard a lot yesterday from some, but not all, that people with an existing infrastructure, whether it be cellular or whether it be cable or whether it be wireline, had an advantage to getting off the ground on PCS, and I'm wondering if you could address that issue specifically with regards to cable. Most cable in this country I believe today are still one-way 120 cable. Given that that's the case, do the cable television companies, in fact, have any kind of particular advantage in getting into PCS with that kind of infrastructure in place? MR. FELKER: Well, since you narrowed the assumptions going into that question -- MR. HALLER: Well, I'm asking if they're right. MR. FELKER: Yeah. I think -- certainly our company and other large MSS are rapidly rebuilding their cable infrastructure to support, you know, a more robust video business, and these wire bandwidths, fiberoptic systems are much more reliable than the frequently two way -- certainly two-way ready. So I think those systems are -- will be capable, and probably in the time frame that licensing, equipment and microwave moveout occurs, to support PCS in some sort of transporter or back-all application. That having been said, the analysis that we've done suggests that cable and other existing 121 facilities provide -- certainly provided an advantage on an ongoing basis in terms of the expense and perhaps some advantage on Cam X, but it's not the kind of thing that makes or breaks the business. It makes it more attractive, and in some cases makes it much more attractive, but it's not a sort of a make or break kind of deal. MR. HALLER: Yes. MS. ABRAMSON: I would like to address Dr. Stanley's question about the homogeneous nature of the spectrum allocation. From UTAM's perspective we would like to note some caution here. We would not like the unlicensed band to become the sacrificial lamb where some of the spectrum is removed for the licensed operators. I commented on our forecast for the unlicensed band and we feel that we do need at least those 40 megahertz. So in considering what you do for us, for license, our comments are don't take it out of the unlicensed band. MR. GRINDSTAFF: I would like to make one 122 comment on that, also, and I would like to agree with Lex, at least on one word, and that's consolidation. And where we're coming at is that the BTAs would allow the industry to consolidate as opposed to giving out MTAs and forcing consolidation of the areas; that BTAs would allow PCS operators to get up and operate and consolidate where it makes sense. And it's a building-block approach which allows more flexibility of the PCS operator. On the various spectrum allocations, we see that as being very positive for innovation, and if you vary the spectrum blocks such as in the 2100 megahertz range, you can do the same services as the other blocks but you can also do other services, and by having varying spectrum blocks you may -- I hate to use the word "force," but maybe make PCS operators think about other things and provide new PCS services that we haven't thought of yet. And I agree that the unlicensed band where its located has tremendous possibilities and 123 opportunities of providing new innovation that can be very easily interoperable with the 1800 license spectrum band. MR. STANLEY: Let -- MR. GIPS: Can I ask a follow-up on that? Won't it take two radios and any phone to work between the unlicensed and the licensed band given the different etiquettes and power ranges? MR. GRINDSTAFF: Right, but when you go from one frequency band to the other frequency band, it takes two physical radios, RF. When you're down in the 1800 and the unlicensed band is right next to you, you only have one RF section so you just -- you're basically just stepping over to the unlicensed band, and then you go to a TDD or a nonduplex operation, which is much easier and much simpler to intergrade into a dual mode type of phone. MR. GIPS: Can any of you address the difference in cost penalties between a handset that works from the current unlicensed band to the 1800 band and a handset that works from the 124 current unlicensed band to the 2100 band? What's the difference in cost to produce those two different handsets? MR. BATTIN: I think this somewhat depends on the technology that you use, but I think in most of the technologies it's relatively inexpensive. Maybe it's 5 or 10 percent to have a subscriber unit that can interoperate in unlicensed band, you know, let's say within the one dot eight range. But shifting up to two dot one, you know, it's probably in that 20 to 25 percent range. If you want to think about this, when we have a transmit band maybe below 1.9 gigahertz and a receive band above -- or the other way, the way we separate that is with frequency select developments and we transmit and receive on the same antennas. So you separate those signals with some frequency selective developments. The moment you say, okay, now I'm going up to 2.1, it's not just a matter that you have to go RF devices to operate 200 megahertz higher. That's not the 125 problem. It's a problem that all of the circuitry that you put in there to separate the transmit and receive frequencies don't work and so you have to put in new diflexors. So the cost penalty is much higher toward operating a two dot one than it is doing license and unlicensed in the one dot eight range. MR. STANLEY: Irwin, did you want to say anything about that? DR. JACOBS: Right. The only -- well, changing the frequency means two radios and you can't have as much comment on technology so it doesn't cost you more money. The ability to use TDD in the unlicensed band, that is a less expensive approach for certain kinds of services and so that would reduce the cost difference, but you would still have a larger delta in going between the bands than you would within the same band. MR. PEPPER: Just one other question on equipment. You were talking about equipment costs. That is where -- looking again, actually, 126 at John and Irwin, you've been actually involved in making equipment. What kinds of equipment do you see available, over what period of time, for the different bands? I mean, how close are you to, you know, rolling out consumer equipment, the base station equipment, transmitting equipment? And also since PCS has been, you know, talked about over the last two years, especially the last day and a half, of the mass market consumer item, which is usually characterized by very low prices, or very competitive prices in the consumer end of the market and the handsets, I mean, how close are we to that kind of mass market product? DR. JACOBS: The 1.8 gigahertz equipment is, I would say, closer because there's been a lot of focus on it internationally as well as out here in the U.S. And so some of the componentry is available, et cetera. And many of us have been building such a first-generation equipment for doing some of the initial testing of the 1.8 band. It just so happens we have a prototype of 127 such a telephone and that can be used at 1.8 here. I think one of the key aspects of this PCS area that is important -- and by the way, I think of PCS as being something that may, in fact, be offered at this frequency but ultimately also with cellular. But one of the key issues is going to be much longer talk time. And so I think that you'll see this next generation coming out about the time of the availability of the spectrum as having, for example, five-hour talk time, so you can support these services and have more usage as compared to the existing types of equipment. Those will be available in -- MR. PEPPER: At price points competitive to cellular, below cellular equipment today? DR. JACOBS: They will be competitive with the digital cellular equipments, maybe very -- somewhat slightly higher initially depending on volumes providing break outs and the amount the people want to control the price. MR. PEPPER: John and Sandy, did you want 128 to -- MR. BATTIN: I wanted to comment on the timing issue. First of all, go back to standards. If the Commission says industry, you'd better have a standard, so we do have a standard so we know exactly what to design to. There's no doubt in my mind when you issue licenses we will have equipment ready to sell. Pricewise I agree exactly with what Irwin says except that there is some microcell systems that offer the opportunity in major metropolitan areas where there's a lot of population density to drive the cost of this kind of service and do more consumer levels than what we have seen in cellular now. MR. HALLER: Was that a challenge, by the way? MR. BATTIN: What? MR. HALLER: Was that a challenge; that you were going to have equipment out before we had licenses out? Well, I hope you're wrong. I hope we get the licenses out first. That's what I 129 hope. MS. ABRAMSON: I would like to address both those questions on the timing and the price. As far as the unlicensed band is concerned, you know UTAM is made up of a number of companies. And, in fact, this week we are going to be looking at a full-spectrum setting of where all the microwave links are. And if the band was allocated today and we had the final rules today, you would have equipment out in a very short amount of time. So I would just like to state that. Also in terms of price, as you know, unlicensed equipment is largely a consumer market, which is very price sensitive. We've hired BIS to do market workouts for us. In fact, they've reported on it a little bit yesterday. But we've noticed that the market is extremely price sensitive. This is, again, another reason for us to remain in a band where there is fewer microwave links so that the fees that we put on the unlicensed equipment to pay for microwave 130 relocation is smaller so that we can keep the prices less. If the prices have to be driven up to pay for more microwave relocation, we're going to price ourselves right out of the market. MR. STANLEY: Thank you. Don, you wanted to ask a question? MR. GIPS: John, this is for you and it relates to MSS. You've asked that we return the 2180 to 2200 megahertz band allocated for the PCS to reserve for MSS. It is our understanding that the band paired with that band per MSS is unusable in the U.S. because of the Broadcast Auxiliary Service. Would returning this to the reserve be useful to MSS at this point? MR. BATTIN: Well, I guess you would have to buy into the premise that says the broadcast use is never, never, never moveable. I don't think the satellite issue is a 1995 problem. That's a reserved issue. It's 2,000 plus before 131 that's an issue. And, you know, I might suggest that maybe at that time frame we can figure out a way to move those services maybe within the same band, 5 or 10 megahertz one way or the other, but I don't have an answer right now. But I think in the long term those options have to be looked at. MR. GAPS: May I ask one more follow-up to that? In terms of clearing the incumbents for MSS, is it your view -- sort of given the wide area of service you almost have to clear them nationwide to begin service. Have you done any estimates on what the costs of that might be, or any plans or thinking about how that might occur? MR. BATTIN: I think the cost is going to be similar as it is for PCS. You know, it's 150 to 300,000 dollars per link. You know, count up the links and multiply it out and that's about it, and it doesn't make -- it does have the disadvantage -- you know, a lot of commits to unlicensed, that most of those -- well, all of those systems really have to be moved before you can go into operation on this spectrum. And, you 132 know, that's a problem. MR. PEPPER: Sandy estimated earlier that it was about a billion dollars to move those -- to clear that band. MS. ABRAMSON: Well, I estimated for 2.1 megahertz that it would be a move upward to two billion dollars. MR. PEPPER: Two billion. But that would be for all 40 unlicensed -- if the unlicensed 40 megahertz were moved there, and John is talking about the 2180 to 2200, so half of the two is one. So it would be a minimum of a billion clear just based upon -- if you're correct about the -- MR. BATTIN: That sounds about right. MS. ABRAMSON: I was thinking of the lower MSS spectrum. MR. STANLEY: Let's switch the topic to unlicensed personal communication devices. David, I guess your comment sparked several questions about the nature of the Data-PCS and coordinatable and nomadic/nonnomadic devices. Taking away all these labels, most of the 133 descriptions of service that you've described are largely to a base station, which if you pick your words, you know, to choose to describe it, which you're in a sense largely coordinatable, and as such they fall well within the classification of other kinds -- similar devices. What is your general reaction to that? DR. NAGEL: Well, Tom, I think there are some applications that one can think of. We've been working on this for probably five years now looking at the benefits that a service like Data-PCS would provide, particularly in education. I must admit we focused a great deal on that. And I think that one of the things that we have found is that the educational process, first of all, can be an enhancement to the use of technology, computers. That seems to be catechism at this point, I guess, in modern society. But the surprising result was that when you allow children to collaborate, to communicate with one another, in talking about the educational learning process, that the process itself can 134 become more effective. And I think that's what has led us to focus on what we refer to as nomadic applications. It is true that there are access to Internet and other services of that sort which would require some sort of a base station, some sort of ability to get in the wireline system, but that is, at best, a coequal requirement. I think that the initial studies which inspired our application for this entire proposition was the studies that showed that the nomadic applications were, in fact, the driving applications for this kind of service. MR. STANLEY: To use the term, say, purely nomadic as opposed to those that are occasionally nomadic and, say, use a base station, your vision really sees two different classes of devices that are distinct enough to require different treatment? DR. NAGEL: Of all the market studies that we have -- certainly, I mean, you can think of all sorts of applications once you have the 135 technology. But all the studies that we've shown suggests that the market growth would be much -- the most rapid by far if nomadic capabilities were provided. MR. STANLEY: Again, by that you mean purely nomadic. DR. NAGEL: Yes. MR. STANLEY: Sandy. MS. ABRAMSON: I think I would like to clarify. I believe what David is talking about is pure peer-to-peer communications. Many of the UTAM companies right now are in education and hospital-like markets, and in these markets there's a lot of -- you see in the forecast for connecting to an Internet -- connecting to an infrastructure, connecting to a different telepole like Bill's house does right now with (inaudible). And we do imagine there is some peer-to-peer communications but we do see a fast interest in connecting to, let's say, a library network. Or instead of dragging all your textbooks home, your engineering textbooks, or 136 your law textbooks, you can just dial up into your library to access that. And for peer-to-peer repair we do see some use. We see some comical use. For example, hey, Tom, what answer did you get on question No. 3. MR. STANLEY: Like the electronic cuff; writing the answers on your cuff link. MS. ABRAMSON: Yes. MR. STANLEY: Again, David, I guess part of the vice presidents and other people's visions as to the information highway literally brings the fiber to the school so there's great conductivity there in the notion of radio interfaces with that; that's a very, very natural thing. Isn't the purely nomadic in a sense, at one, removed from that concept? DR. NAGEL: Well, I think it's never mute. I think it's compatible with a -- I think it enhances it. Again, this proposition of bringing Internet to every school, first of all, it's not realized yet. It's a great goal. MR. STANLEY: It says it barely got it here 137 a few weeks ago. DR. NAGEL: Yeah, I know. These things come and go. But I think that, again -- you know, I'll just repeat what I said. In all of the studies that we've done, both applied the research studies and the educational setting itself, it suggested what you referred to as purely nomadic, and nomadic applications are, in fact, the ones that seem to provide the greatest quantitative improvement in the educational process. Certainly access electronic libraries, certainly access to other services which could be done with a base station providing that the schools could afford them. Another advantage of the purely nomadic approach is that the overall system costs can be maintained at a much more lower cost per student. And, again, we think that for that reason the deployment -- the rate of deployment of these systems would be much more ramped if you could provide those kind of services. And unfortunately that leads to last link problems. 138 MR. STANLEY: Ralph, you wanted to ask a question? MR. HALLER: Yes. I would like to turn, if I could, to the question of increased base station power. I am trying to decide why that is an advantage because several people suggest that and if we leave the portable unit power where it is and we increase the base station power, it doesn't seem to me that we increase range unless that increased power comes from an antenna gain, in which case you get the appropriate gain on both receive and transmit. Am I correct in that; that we're really talking antenna gain increase of 10 DB as opposed to transmitter power increase? And I don't care who wants to take that. MR. GRINDSTAFF: You're correct. And what a PCS operator will do in an environment is that you have your portable unit, your mobile unit out there and you always want to balance your link with the transmit/receive back to the base station. And by putting the restrictions on the 139 handset, it sets a limit of what your range is. By doing things in the base station and increasing receiver sensitivity, increasing antenna gain, we can push out more power to that handset. And by having higher gain received and better received sensitivity at the base station where you can increase the cost of the base station and not the cost of the handset, you can increase the range of the mobile unit and the base station. DR. JACOBS: One of the problems is the way that you specified it. You essentially said, as I recall, per PRP per channel. What is a channel? Well, in some cases it can be a 30 kilohertz-wide signal; another case with carrying just a small number of users; and other cases it could be a wider bandwidth signal. And in the case of CDMA it can be handling many such users. And so it needs some scaling factor in that to make it a reasonable kind of number. I don't think you want to work against the ability to use wider band signals more efficiently in putting that kind of 140 requirement in. As you do go to the higher gain antennas, you look to get higher range. But I think your numbers, again, would -- under what would allow that, again, if you scaled it up, however, as you went to a wider bandwidth with more users. MR. STANLEY: I thank you very much. I guess at this point there's just too many issues to recap and go into in any depth. What I would like to do is kind of ask each individual to identify what they would call the principal point they would like to leave us with; the one issue. And I guess there's several so let me limit you to one -- no complex sentences -- as to things you would like to keep us -- keep it for our -- before us in our deliberations. Again, we'll start with Limond. MR. GRINDSTAFF: Only one, huh. MR. STANLEY: Only one. MR. GRINDSTAFF: We feel strongly that 2100 megahertz is a viable spectrum allocation for detailed services and strongly recommend that they 141 not be -- be not moved or eliminated. MR. FELKER: I think the crucial element, or at least one crucial element is assigning PCS operators ample spectrum, and I think 40 megahertz is sort of the optimal amount. MR. STANLEY: Mr. Murray. MR. MURRAY: I would like to urge you that if the set asides for the designated entities are in jeopardy or you're not considering them seriously, I urge the FCC to hold some meetings with minority groups to discuss the alternatives. MR. STANLEY: Chuck. MR. JACKSON: One quick historical observation. When I worked at the FCC, AT&T told us that 40 megahertz was the minimum that would work for cellular. When I worked on spectrum issues in New Zealand, Telecom New Zealand maintained that there was such strong economies of scale that they should get access to 40 megahertz, and I'm glad to see that as we work here today that same trade off between efficiency and the benefits of competition is still before you. 142 MR. PEPPER: Those were incumbents, weren't they? MR. JACKSON: One was unlicensed. I mean, the cellular hadn't been licensed in this country at all when AT&T maintained first that 60 was needed and then later they backed down to 40. And in New Zealand some of the cellular spectrum was licensed otherwise and ultimately it wasn't licensed quite that way. It was auctioned off. MR. STANLEY: John Battin. MR. BATTIN: Hurry up, hurry up, hurry up. You're not far from having a very workable system. Let' be on with it. DR. JACOBS: And I would just like to reiterate this idea of having some requirements for a standard. DR. NAGEL: Clearly the most important issue for us is the band clearing issue for unlicensed systems, and I think the one thing I would urge is that as we develop a plan for clearing the spectrum that you keep in mind the importance of getting complete clearing for these 143 nomadic services because otherwise we have no wire. MR. STANLEY: Thank you. Sandy. MS. ABRAMSON: You guys did a bang up job in September for unlicensed. Don't change it. MR. ROSENBLATT: The most significant issue relative to relocation is time, and that being the case, whatever the FCC can do to facilitate whether it's well-qualified rules or broader spectrum allocation would help the process. MR. STANLEY: Thank you. Ralph? MR. HALLER: Well, thank you. Let me, first of all, give you some information that may be of interest to you. As we mentioned yesterday, the videotapes of this session are going to be available from our contractor. Information on that is available either outside the door or with Gail Brown sitting over here. I also would like to mention without Gail Brown none of this would have happened. She's been putting in long hours on the weekends. 144 Also transcripts of this session -- of yesterday's session are available through International Transcription Service. The transcripts of yesterday's panels will be available this afternoon, and the transcripts of all panels will be available tomorrow afternoon. So if you want those, they are available through the International Transcription Service. And now, of course, it's my distinct pleasure to announce to you the conclusions that the panel has reached. Having drawn consensus among all elements of the industry we now know exactly what we're going to do. Don't take your pad and pencil out because that's not quite the case. At the risk of repaying myself a little bit for what I said last night, the issues here are exceedingly complex and we now will take the additional information we have learned here plus what's in the record and other pertinent comments that you may want to put in the record between now and April 22nd, we will look at those and we will 145 try to make some very informed decisions in very short order. I continue to believe that the answers are ranges of right and wrong but not totally right and wrong. Everyone has different plans for how this band can be used, what services can be made available, who can use the band and the particular value to the American consumer. There's no question there's a great deal of interest in this. We've had a packed room here and into the overflow rooms for both days. I think that says a great deal. The fact that we put this panel together about a week ago and all of these panelists were anxious to come and present their presentations as quickly as this, indicates to me a great deal of interest. Certainly with that short time frame, it's taken a great deal of effort on the part of all the panelists in order to even be here today to get the arrangements from airlines and such to be here, let alone prepare the many, many documents that they have submitted. 146 Those documents by the way, are also available through ITS if you want them. Each panelist has submitted their own presentation. We have a lot of people behind the scenes here at the Commission that have helped make this possible: Greg Rosten; Rene Lickt (phonetic spelling); Dan Oliver back running the cameras with his crew; Gail Brown; Susan Salad. And I'm sure I've missed a number of people in this, and I apologize to them for that. But the FCC staff gave us a tremendous amount of support in putting this together, also, so I would be negligent in not mentioning them. We are now going to take this information and we are going to try to reach a very speedy solution on it. The one thing that we have heard is don't delay and we're not going to. We will be working to get our recommendations to the Commission absolutely as quickly as possible. All of us are dedicated to do this and if we need additional resources in the Commission to help make it faster, we'll get those resources and put 147 it on this project. This is one of the most important decisions that the Commission is probably going to make in this decade. The decisions here are going to affect people's lives, the way they actually communicate with each other. It's going to change a paradine of device-to-device communication to a paradine of person-to-person communication, not just with voice but with data and enhanced video services. That is very significant. Perhaps as significant as the original invention of the telephone. We have a very, very important job to do now in the next few days and we're going to do that...in the next few days. I think that we will, in fact, be able to come out with a very reasonable recommendation to the Commission. When we do that, we certainly will have had the benefit of a great deal of debate, a great deal of input from very knowledgeable people and we'll do our best to put all that together and try to make the pieces fit 148 together in a puzzle that ultimately proves to be helpful in the creation of jobs in this country, expansion of the economy, provisions of universal service. All of those are very, very important goals that we have to deal with at this point. And so with that I thank all of you for your participation here, for coming to these meetings. I would encourage any of you with new thoughts to put those on the record so that we can have the benefit of those. And with that, thank you very much again, and I now close this meeting. (Thereupon, at approximately 12:00 o'clock, p.m., the above proceedings were concluded.) * * * * * 149 CERTIFICATE OF COURT REPORTER I, DONNA L. LINTON, Registered Professional Reporter and Certificate of Merit holder hereby certify that the hearing was recorded by me in shorthand and electronically at the time and place mentioned in the caption hereof and thereafter transcribed by me; that said hearing is a true record of the testimony given by said participants; that I am neither counsel for, related to, nor employed by any of the parties to the action in which this hearing was taken; and further, that I am not a relative or employee of any counsel or attorney employed by the parties hereto, nor financially or otherwise interested in the outcome of this action. ______________________________ DONNA L. LINTON, RPR, CM