SPECTRUM EFFICIENCY and NEW TECHNOLOGY

Tuesday, December 9, 2003

United States Department of Commerce

Herbert C. Hoover Building, Room 4830

1401 Constitution Avenue, NW

Washington, D.C. 20230

Reported by: Rita Hemphill

PROCEEDINGS

(9:21 a.m.)

                     MR. GALLAGHER: Welcome and thank you for coming to the Department of Commerce today for our Spectrum Efficiency and New Technology Forum.

                     The reason we are here is straightforward. President George W. Bush signed a Presidential Memorandum directing the Department of Commerce to work with our fellow agencies, the FCC and the private sector to develop policy improvements leaving us with a spectrum policy for the 21st Century. In June 2002, President Bush stated, “The role of government is not to create wealth. The role of government is to create an environment in which the entrepreneur can flourish, in which minds can expand, and in which technologies can reach new frontiers.

                     Here at the Department of Commerce, the Secretary has made his direction clear as well. On multiple occasions he has instructed us when faced with policy choices that achieve either national security or economic security, do both.

                     We are privileged to have with us this morning the Chief Operating Officer of the Department of Commerce, Dr. Sam Bodman. He, singlehandedly, creates the environment for forward-looking, well-grounded policy. He also charts the course invisible to others that actually delivers on the instruction of the Secretary to satisfy both seemingly competing objectives of strong national security and unrivaled economic security. He is our leading engineer by constantly seeking the technical support for any recommended policy action.

                     He is our most challenging professor, asking the difficult question, why are you here? He is our conscious, constantly pressing us to do more for the American people with the fewest possible tax dollars taken from American working families. He also is the designated Chairman of the Department’s effort to fulfill the mandate of delivering a policy action plan for the 21st Century.

                     Ladies and gentlemen, please welcome my good friend and mentor, Dr. Sam Bodman.

                     DR. BODMAN: Thank you. Thanks, Mike. Ladies and gentlemen, I’m very happy to be here. I’m also happy to note that the seating arrangements seem to emulate those in churches and synagogues and other religious buildings throughout the country in that the front row is almost empty. I congratulate those who were brave enough to sit up in the front row, all four of you, and we’re pleased, at least, that we have that kind of consistency.

                     I do want to welcome all of you to the Commerce Department. This is a forum on Spectrum Efficiency and New Technology, as Mike has said. We have, in this room today, representatives of the wireless industry; we have representatives of the Federal Government; and other experts from across the country.

                     The goal of today’s session -- and it’s an important one both to Secretary Evans, as well as myself, the goal here is to discuss ideas for improving the efficiency and the quality of spectrum allocation and management across the Federal Government. We’re not here to talk about how important the spectrum is. That’s a given. We’re here to solicit specific recommendations and thoughts from the experts that are represented in this room.

                     Now, we’re fortunate to have with us today representatives of the FCC, our partner in spectrum management, as well as several Federal Agency members of the Interagency Spectrum Policy Task Force, which is an organization that I have the privilege to chair. We’ll actually be meeting later on this week in the third such session that the task force has had and this meeting today is a part of this overall program to develop a final report that is, at least at this point in time, geared to be delivered to the President next summer.

                     Today’s event is the first of what will be several public meetings that are called for in the President’s May 29 Executive Memorandum. With that directive, the President began an initiative to develop an effective and efficient radio spectrum policy for the century that is just beginning.

                     The objectives of this initiative are to, as Mike has said, to foster economic growth. We’ve spent a lot of time in this department worrying about that. It is to enhance homeland and national security, and to maintain this country’s high-tech leadership, and finally to address other important needs, such as public safety, scientific research and transportation effectiveness.

                     It is absolutely true, again, as Mike has said, that our national security and our economic security are linked. You can’t have one, in our judgment, without the other. So, as we review and improve our policies with respect to managing the spectrum, we must consider both the implications to commercial activity and economic growth, as well as to our national security.

                     We here at Commerce, I might say, often find ourselves in the middle where we have other agencies, frankly, that are much larger than we are, that have a very specific mission -- and well-founded mission oriented policies and programs that are in conflict. And so part of Mike’s job and the job of NTIA and others here at Commerce is to try to develop a middle ground that satisfies both economics, as well as national security.

                     We are all familiar with the explosion in wireless voice and data communication systems and the growing demand for spectrum based technology. Last year, for example, the wireless industry grew to having nearly 150 million cell phone subscribers in the United States.

                     WiFi Technology, unknown only a few years ago. It now provides wireless internet connections to about 28 million people in this country alone. This tremendous growth in WiFi deployment would not have been possible had frequencies not been available for its operation.

                     Recently we witnessed the success of the U.S. Delegation at the 2003 World Radio Conference in achieving a consensus regarding the use of the five gigahertz band, which could double the amount of spectrum available to the services. In fact, we just had a wonderful ceremony here in the Department yesterday recognizing Charles Glass of NTIA. He and one of his private sector partners were given an award and we were able to participate in that. It was a very moving experience.

                     As new technology, such as WiFi, offer new features and services, their introduction also puts pressure on our scarce spectrum resources. And so our policy and legal environment must keep up with the dramatic changes in technology. By modernizing our nation’s spectrum management system we will continue this administration’s accomplishment in promoting wireless communications through collaboration and specifically through collaboration between the public and the private sectors of our society.

                     Our commitment to this goal is evident in the great results that have already been achieved. Many of you know of the strides that we made in authorizing ultra wide band technology. The introduction of this technology was widely considered to be an impossible task. Longstanding and very bitter disputes among industry and government spectrum users concerned about -- concerned themselves with interference, with global positioning systems, among others that -- there was an enormous conflict and very strongly held views that threatened to doom this technology before it was even out of the starting gate.

                     Its potential to support homeland defense and law enforcement, however, required that we find a solution and we did find a solution. But it was only after a lot of work by a number of people and organizations represented in this room.

                     The FCC proposed amendments to its rules to accommodate ultra wide band devices and NTIA analyzed interference potential and worked closely with affected agencies to resolve this challenge. Now this technology is starting to bring tangible results to the citizens of this country and the world. These include improved vehicular radar to help avoid automobile accidents and ground penetrating radar to aid in disaster recovery. So, we’re quite -- frankly, quite proud and pleased with the results that are starting to be achieved because of some of the efforts of, again, people who are represented in this room.

                     The same cooperation among government and industry users will help to spur continued growth of the mobile communications industry. NTIA, the Department of Defense and the wireless -- all wireless providers cooperated in such a way that resulted in the 90 megahertz of -- resulted in 90 megahertz of additional spectrum for 3G wireless products. And just recently, the FCC adopted service rules for the commercial use of 70, 80 and 90 gigahertz spectrum for the deployment of new broadband technology.

                     So, it’s clear that we have a firm foundation of cooperation both within the government, as well as with industry, all of this focusing on a more effective use of spectrum and we are trying mightily to build on that foundation to enable future successes to be accomplished.

                     Our economy is on the rebound. Those of you who follow these matters will know that the GDP grew at an extraordinary rate of 8.2 percent in the third quarter. It was the largest quarterly advance in nearly 20 years. Productivity is remarkably strong. We’re beginning to see a turnaround in labor markets and have successfully seen the creation of 330,000 new jobs since the summer.

                     These are all the positive things that are going on. But we are going to do our very best not to be complacent. We are led very strongly by the President in that regard. Every time I see him he has questions about what we’re doing and how we’re doing it, and he continues to exemplify, in his discussions with us, his views that

efforts such as this one in this room today can help stimulate American innovation, and that will mean even greater economic growth, greater job growth in the future.

                     He has directed the Secretary of Commerce to chair the Administration’s spectrum policy initiative and within Washington, when the Secretary is asked to chair it, usually it ends up in my -- through the door and in my office, which is why I’m here. The Secretary has directed me to work with Mike and the folks at NTIA to see to it that we accomplish this goal.

                     Through an interagency group, the Commerce Department and our Federal partners, with input from the private sector, we’ll make the legislative and other policy recommendations that come out of this initiative directly to the President. These recommendations will focus on improving the current spectrum management system, creating incentives for more efficient and beneficial use of spectrum and increasing predictability and certainty for incumbent spectrum users. It will also address ways to streamline deployment of new services and technologies without jeopardizing national security and public safety.

                     Today’s forum is the first of several outreach events. These events will assist us in formulating our recommendations on these questions. We will be working with the Department -- the new Department of Homeland Security to convene a meeting in February for State and local members of the public safety community.

                     In addition, the National Academy of Sciences will conduct a workshop for NTIA, also, in February that will focus on obtaining views from the public at large. And finally, we will soon publish a Federal register notice requesting written comments and will post this notice on NTIA’s website.

                     Our discussions today will cover two very important and interrelated issues. The first panel will focus on incentives for more efficient and beneficial spectrum use, and it has been said that efficiency in the spectrum area can be measured in different ways. Some measure efficiency based on economics -- that is to say, looking at costs and value achieved. Others apply a technical definition based on the amount of spectrum, the amount of power, the amount of time required to accomplish a given task, and still others measure it by the quality and/or the functionality of the available resource.

                     The very definition of what we mean by efficiency and the application of that word to policy discussions is something that I hope this panel will examine very closely. As an amateur in this area, I found in discussing the matter with experts that there is -- that confusion seems to reign because different people hold in their minds different definitions of what efficiency means and I think it’s going to be very important to be as clear as possible as to just exactly what the definition of efficiency is and then to move on from there.

                     The second panel will focus on new technology. This discussion will examine the seeming paradox of technology. That is to say, new spectrum technologies often put pressure on our scarce spectrum resources, yet those very technologies, in many cases, may provide a means for more efficient spectrum use without disrupting existing services.

                     We are here to learn from our panelists and from our audience. We need and very much value your involvement. Your participation is vital to accomplishing our charge under the President’s spectrum policy initiative. Throughout today’s discussions I would encourage all of the participants to offer recommendations that are as specific as possible for improvement that can be incorporated into an action plan.

                     By helping us modernize spectrum management, to reflect the communication needs of this new century, we will all contribute to the robust expansion of the nation’s technological sector, the growth of our economy and to the creation of new high quality U.S. jobs.

                     I appreciate the participation of all the panelists and of all of you who have come here to join in this effort today, and I thank you for being a part of what we hope will be a very important event in this program. Thanks very much.

                     (Applause.)

                     MR. GALLAGHER: Now, at this time we would ask that the first panel come forward and we’ll excuse Dr. Bodman. Thank you for giving us our marching orders here this morning. And while the panel is assembling, I will go through a few matters of housekeeping.

                     First, there will hopefully be plenty of time for questions and answers for the panelists. So, please, hold your questions until we get towards the end of the segment. It should be about half an hour on each panel to take those.

                     Second, we would ask that you please approach the microphone to ask any questions and we would ask the panels to please use the microphones in front of them so the people that are listening on the internet will be able to hear the question and the answer, or suggested answers, and then, also, that you identify yourself as you ask the question, who you are and on whose behalf you’re speaking.

                     Restrooms are located on the hallway just past the elevators right here. For those of you that had a visitor’s pass, if you leave the building for lunch you’ll be signed in again and issued another pass when you return, and you may be asked to be escorted once again.

                     Lunch. We have a cafeteria in the basement -- down to the basement level on the elevator right outside the door here, and there’s also a tunnel that goes over to the Ronald Reagan Food Court. Lunch will be from 11:30 to 1:00 p.m.

                     Before we get started with the first panel I would also want to welcome Grace Washburn, who is here from the House Committee on Government Reform, and John Hunter, who is Counsel on the Committee. Thank you for joining us here.

                     And, also -- is Paul Martino here? This afternoon? Okay. He’ll be here this afternoon. From the Senate Commerce Committee and we look forward to working with Paul on a number of issues.

                     Before I come and sit down here with the rest of the panelists, all of you should have an agenda for today’s session, and as the Deputy Secretary said, we have a lot of work to do today. Before we get to the first question, I just thought the first panel is broader -- it’s meant to be focused on broader policies that will allow us as a country to get the most out of the spectrum on behalf of our people.

                     Time permitting, we will tackle the definition of efficiency, the role of spectrum fees, the place in our policy regimen for unlicensed spectrum, the transition to digital television, and the aspects of the FCC Spectrum Policy Task Force that drive us toward the goal of efficiency.

                     In the second panel, that focused on new services and technologies, that panel will draw at what’s next in spectrum technology and ask the question, what policies need to be in place for us to lead the world in deploying these technologies?

                     We are honored to have leaders from our partners in spectrum policy from FCC with us today.

                     Co-moderating the first panel with me is John Muleta, Chief of the FCC's Wireless Telecommunications Bureau. Welcome, John. This afternoon’s panel also promises to be lively. Our co-moderator on that panel will be the Chief of the FCC’s Office of Engineering and Technology, Ed Thomas.

                     Before I introduce the panelists and start with the first question, I want to underscore the purpose of our event today. Following the lead of the Deputy Secretary, we are focused on specific policy recommendations. The goal is to have -- at the end of this exercise, my personal goal is a tear-out card that policymakers can carry around with them that, if they do the tasks that are on the card, they’re improving policy for the 21st century with a time frame of deliverable objectives over a five or 10-year period.

                     And I would also like to just hold up here, and I’m happy to pass around a copy of Business Week’s cover and on it it says Airwave Wars, the Communications Spectrum is too crowded, so how do we make room for these new technologies? So, we can see this has been the subject of some attention. The interesting component of this particular cover is it’s from July 23rd, 1990. Okay. So, I’ll start that around the room just so we can frame our discussion.

                     And the purpose of using that is we know spectrum is important. We know it’s valuable. There’s been much written. There are many commentors that have guided our thinking over a long period of time. The questions are being asked. They’re asked every so often. There are times in history when spectrum comes to the floor. We’re in one of those times. Our task is to answer the question as best as we know how and position ourselves for the future as a country.

                     I would also ask the panelists to feel free to respond to the submissions of others and if you find something you agree with or disagree with, we appreciate hearing your thoughts on that. But, again, keep it very closely tightly focused on specific recommendations that we can take away from this event and start working on for, perhaps, inclusion in the initiative itself.

                     So -- let’s see. I’ll sit down before we get to the introductions. John, did you have anything you wanted to add at the outset?

                     MR. MULETA: No, other than thank you for having me and I look forward to that little card at the end of the day.

                     MR. GALLAGHER: Oh, no. That’s supposed to be at the end of the summer. Hopefully, we’ll have it in the summertime.

                     MR. MULETA: I thought it was today.

                     MR. GALLAGHER: With us here today, starting at my far right we have Rick Burke, who is the Director of Operations from Pegasus Telecommunications. Rick, thanks for coming.

                     MR. BURKE: Thank you.

                     MR. GALLAGHER: To his left is Michael Calabrese, a well-known face to those of us in spectrum policy. He is the Vice President of the New America Foundation. Welcome.

                     To his left is Bill Hogg, who is Vice President for Standards and network for Singular Wireless. Bill, thank you.

                     To his left and my right is John Lawson, President and CEO of the Association of Public Television Stations. Thanks for coming.

                     John -- we’ve already covered John. And to his left is Jim Miller, who is the Deputy Director of the Office of Navigation and Spectrum Policy for the U.S. Department of Transportation. Thanks for being here, Jim. A fellow -- a very, very dedicated participate in our interagency process.

                     And to his left is Adele Morris, another equally dedicated public servant from the Department of the Treasury, who is an economist at the Department of the Treasury. Thank you, Adele, for coming.

                     To her left is Dr. Greg Rosston, who is Deputy Director of Stanford Institute of Economic Policy and Research. Thank you for coming, Dr. Rosston.

                     And then finally down at the end of the table is Al Vincent, who is the Director of our ITS Labs in Boulder and who directs much of the technical work that is done to support spectrum policy positions from the Federal Government from NTIA.

                     So, thank you all for coming and for the first question -- this will surprise no one given the direction we have from the Deputy Secretary. First is how do you define efficiency in the spectrum context? Please be as specific as possible. And what is the role of efficiency in spectrum policy?

                     So, to start with that, I think we’ll start with somebody who I know has this at the tip of their fingers because I have it here with me, and Michael Calabrese, perhaps you can enlighten us with your definition of spectrum efficiency and its role in spectrum policy.

                     MR. CALABRESE: I wouldn’t say tip of my fingertips since it’s a very elusive concept as has been said here already today and, in fact, you know, I think we really do and should speak about it in at least a couple different ways, because when we talk about spectrum efficiency on an overall basis, we’re typically thinking about essentially the ability of citizens to communicate freely.

                     So, spectrum efficiency should be whatever enhances -- whatever facilitates communication and, you know, that may have economic components, but it also has First Amendment and democratic components as well. So, we can’t really just look at it only as an engineering concept or only as an economic concept.

                     That said, you can also look at it between services. For example, in terms of the efficient reuse of spectrum, for example, and, you know, that’s an important -- that’s an important concept because one of the great -- since I’m leading off I should mention that one of the, I think, great contributions of the spectrum policy task force report was that it pointed out that there really is not a scarcity of spectrum capacity. That what we have -- we have a scarcity only of access to the airwaves to use it more efficiently.

                     So, for example, this summer, with the help of a former senior DARPA engineer, from the roof of our building in Dupont Circle we measured the use of spectrum, you know, between Dupont Circle and toward the White House. And so this is in, you know, the center of Washington, which not only is the downtown area, but probably has additional spectrum use that is not found in many other cities. And we found, depending on how conservative you want to be, that below three gigahertz, in other words the prime spectrum that cuts through obstacles, between 60 and 80 percent is completely unused during peak business hours.

                     So, for example, you know, very little of the broadcast spectrum, for example, is in use particularly in the upper channels. So, that’s a notion of -- I think of both engineering and economic inefficiency that we’ve channelized the spectrum during the old analog world and now have left it, you know, as if we have taken the ocean and divided it into shipping lanes and then given exclusive rights to each shipping company to use a lane.

And so if the shipping company, you know, is kind of slowing down or isn’t keeping up with the times, you know, it’s not being used very well.

                     So, in that sense, there’s growth inefficiency. On the other hand, you know, as I said, I also wanted to help us keep our eye on the idea that it’s not just engineering or economic efficiency that matters, but also how well we’re giving all of our citizens, entrepreneurs, individuals access, you know, such as doing license with WiFi that matters.

                     MR. GALLAGHER: Thank you. Dr. Rosston, did you have anything you wanted to add from the academic perspective?

                     DR. ROSSTON: Sure. I think that as an economist I look at efficiency as -- usually you think of this as maximizing consumer benefits. What do consumers get? How can you best use spectrum decided by consumers?

                     Here at NTIA I think we have to think about this -- Adele has warned me in advance -- we think about how Federal Government spectrum users work, as well, and you don’t necessarily have direct consumer benefits from it. But I would -- so, I would modify my typical economist thing of consumer benefits to sort of public benefits that you get also from the Federal Government spectrum as well.

                     In spectrum there is always trade-offs. You might be able to, as Michael has said, maximize communication, but that may not be maximizing consumer benefits from it because you might have a lot of extremely low value communications going on that precludes some high value things. There are trade-offs in these things if you use -- if you, sort of, put everything at open access you might preclude things that need dedicated access, like television or like cellular communication, that need a dedicated channel in order to have a high power system. And if you have low power systems that preclude high power systems or high power systems that preclude low power systems, you have trade-offs and there should be ways to figure out how to have some sort of market test that provides the maximum consumer benefits from these different things.

                     In some sense, I like Michael’s shipping lane analogy. I think that’s the way our spectrum has been set up in some respects, which is that you have exclusive shipping lanes for people. But one of the problems is is that you have exclusive shipping lanes for a shipping lane that can carry a television broadcast and a shipping lane for something that can carry other broadcasts, but they can’t say, well, geez, I want to start carrying trains, or I want to start carrying something else on my ships.

                     So, the flexibility to figure out that my spectrum isn’t worth as much in what I’m using it for and I should be able to have the flexibility to change it, subdivide it, work with other people, is really important for getting the spectrum out into the public. So the fact that most of it is unused is partly a function of the fact that we’ve allocated this huge amount of spectrum to television and we can’t reallocate it without an incredibly detailed and problematic system. We need -- if we had real property rights in a real system to do it we could make much better access to this spectrum and increase spectrum efficiency.

                     MR. GALLAGHER: Bill, what’s the take from the commercial mobile wireless sector?

                     MR. HOGG: I guess the way we would look at it is we agree that you can’t look at any given dimension and say that’s the efficiency metric in which we use. I think of it as more of a triangle, if you will. On each one of the legs of the triangle are the quality value of the service that you provide. On the next leg of the triangle is the capacity or the spectral efficiency of that service. And on the last one is -- the leg of the triangle is the cost or the economic aspects of it.

                     So, really in order to make sure that you’re using the spectrum efficiently, you have to have a definition set that really balances all three of those aspects, and by doing so, you’re able to create innovation, create capabilities, create value and still have the flexibility inside of the allocations to -- as long as there is predictability, to be able to innovate inside of the various service needs and constraints that are available.

                     So, I think that we always look at each one of those dimensions because that’s what our customers demand of us, that, indeed, we provide a high quality service, that we provide it in a way that is economically beneficial to them and they see value, and then subsequently that we do it in a limited allocation of spectrum that is predictable and has certain characteristics that allow us to continue to innovate and get more out of our spectrum.

                     MR. GALLAGHER: Thank you. That’s a different graphical representation. We have shipping lanes, we have a triangle -- Adele, what’s your efforts brought us and your thoughts at this point?

                     DR. MORRIS: Well, I’ll be happy to provide the theory of everything.

                     My pick on economic efficiency is that it can incorporate all of these ideas. Economic efficiency you can think of as the allocation of resources that maximizes total net social benefit.

                     So, what that means for spectrum is you’re allocating a scarce resource across a wide variety of uses, each of which has some social benefit, and the idea is to get that allocation about right so that there’s no way to move the resource from one application to another and make society better off. Okay. It doesn’t mean that each individual is going to be the best off, but in some kind of aggregate sense the net social welfare is maximized.

                     So what that means for spectrum is you have social benefits that come from use by Federal users; you have social benefits that come from commercial applications; you have social benefits that come from, perhaps, public comments of spectrum for use in unlicensed environments; and then as policymakers the job is to figure out, well, what’s the right apportionment of spectrum across those applications?

                     Now, normally economists like to think that markets and prices do a very good job of efficiency allocating resources, and in general our economy proves that. Central planning has gone the way of the dinosaur in a lot of economies for good reason. Well, in the commercial side where we can establish a good and we can give it quality and quantity dimensions, prices and markets could be a very effective way to allocate a resource efficiently.

                     When you have Federal users it becomes more complicated. How do you set up an efficient allocation for something where a market may not work that well? And there the challenge becomes to construct the right incentives, to construct the right measures of social benefit that derives from a Federal use, and do our best job as stewards of a publicly -- a public good, just like we do in all manner of public policymaking -- of trying to get the balance right, and I think that’s what we’re talking about within our spectrum task force for Federal users. What constitutes the right balance and how do we get the incentives right for Federal users to reap the efficiencies that are cost effective?

                     As a fun note, I would like to talk about technical efficiency for a second. Technical efficiency is to some extent a component of economic efficiency, but up to a point. You know, it’s -- we talk about diminishing marginal returns.

                     If you have an extremely technical -- technically efficient system, but it’s enormously expensive or it introduces other undesirable properties, like it’s unreliable or what have you, then you have to question, well, is that the degree of technical efficiency economically efficient? Okay.

                     So, certainly a certain amount of technical efficiency, if you get the incentives right, will emerge. The goal is just to make sure you don’t pursue technical efficiency for its own sake. But more because it produces the optimal allocation of resources.

                     MR. GALLAGHER: Jim, I’ve been holding you to the end on this one because I know you have views. Based on what you’ve heard, you know, from the Department of Transportation’s perspective what is efficiency and should it be used or how do you use it in forming policy?

                     MR. MILLER: I’ll share the microphone of my friend, John Muleta from the FCC. Is this on? Okay.

                     I might have a different perspective on spectrum efficiency representing the Department of Transportation. And the primary reason for that is the FCC is a market facilitator and that’s a good thing. I come from the corporate world. The Department of Transportation is a safety regulator. So, we have different missions. And so part of what I liked about what Adele said is we need to find a balance.

                     I read the FCC Spectrum Policy Task Force once again over the weekend. I also read the New America Foundation report and I like a lot of what is in there. However, how that pertains to public safety bands is the real question. That is our primary interest.

                     When you talk about market incentives, from my perspective market driven means easy, cheap entrance, and cheapest is not necessarily the best in public safety bands. So, I’ll give you two examples of efficiency -- where I think the Department of Transportation, through our many modal administrations use spectrum very efficiently.

                     If you look at one navigation aide provided by the Federal Aviation Administration using one frequency in one particular geographic area, and there are hundreds of aircraft that use that one frequency, and who is in that -- who is in all those aircraft? There are thousands of passengers. And so we have a safety mission to make sure that they get where they want to get. And so I think that is one example of very efficient use of a spectrum.

                     A second greater example is the Department of Transportation, in partnership with the Department of Defense, helps manage the global positioning system. Now GPS provides position, velocity and timing information to the entire world. It’s a national asset and it’s become a global utility. It generates billions of dollars in revenues through countless services, applications, software and hardware. So, in my opinion, that is the ultimate example of spectrum efficiency.

                     We found some new economic incentives infringing or encroaching on the GPS spectrum. There is only one frequency that civilians use right now -- that’s 1575.42 megahertz -- and yet, in some cases we are not willing to protect that one frequency.

                     So if economic efficiency means that we’re going to have mobile satellite service, ancillary terrestrial component energy sandwiching, bracketing, out of band emissions in that one frequency, and we’re going to have ultra wide band overlays and underlays or however you want to visualize it on top of that, you’re thinking about squeezing a national asset that again the Department of Transportation and Department of Defense have a mission to provide.

                     So, I like the economic incentives. I’m for regulatory reform. But we need to do it in an incremental responsible fashion and it needs to be benefit driven with the best balance.

                     MR. GALLAGHER: John, did you have some thoughts to share based on what you’ve heard so far, and then I’ve got a follow-up on this subject that I want to press the panel on.

                     MR. MULETA: Yeah. Just more of an open question. I think this discussion about efficiency really begs a prior question, which is what are alternatives? Efficiency and objectiveness are all a function of what alternatives are available.

                     So, for example, I guess, you know, Jim, you pointed out in which somebody is encroaching or services are encroaching on a national good or whatever -- a national asset. I guess the question is, you know, why is that a problem if there is, you know, enough available substitutes.

                     And for both Michael and Greg, I guess the question I had is what is the role of a substitute due to the analysis of effectiveness?

                     So -- and anybody else who wants to go answer --

                     MR. MILLER: I guess the easiest way to answer that is to ask anyone in this room to name a substitute for the global positioning system at this point. It is not easy -- in fact, it’s impossible. We can’t turn up the power on those satellites right now. So, we have a national utility. It’s so good that the Europeans are building a counterpart called Galileo.

                     And so, in essence, the U.S. could lose technology -- a technology lead in satellite navigation, positioning and timing applications if, in fact, we allow this asset of the U.S. to be traded.

                     So, is there anyone in this room that can name for me a substitute for the GPS?

                     MR. GALLAGHER: I don’t see any hands. So, we can -- Mike Marcus from the FCC has his hand up and, Mike, if you’ll just speak slowly I’ll put your words in the microphone for you.

                     MR. MARCUS: When DTV gets implemented in urban areas there will be hyperbolic systems that are going to be derived in the urban terrestrial use.

                     MR. GALLAGHER: Mike was just saying for those on the internet is that when DTV is implemented that there will be hyperbolic -- was that the term? Hyperbolic.

                     MR. MARCUS: Location systems in urban areas.

                     MR. GALLAGHER: Location systems in urban areas that will be available. But we don’t have that today. What about the second part of John’s question? John, you had directed that to two specific folks on substitutes -- the role of substitutes and alternatives. Michael, why don’t we take you first.

                     MR. CALABRESE: Okay. There’s no question that there are certain public, you know, Federal uses that would -- that would need to be protected, but I think one of the things that probably needs improvement is some greater level of coordination in order to examine whether, in fact, there are substitutes, which would be one example.

                     For example, there could be, you know, with respect to -- you know, I don’t know technically whether what you said about GPS at this time is correct, but there could be, you know, many cases in which certain radio services could be done these days using cellular, using unlicensed, using things that either come from the commercial sector or which can be implemented in a different way. And I think that’s -- that’s something that needs to be looked at.

                     Over the longer term, I think it would be beneficial probably both for the efficiency of the use of Federal spectrum as well as for the economy if the government, you know, probably through the NTIA or some similar coordinating process, had an overall policy of promoting a technology such as DARPA’s XG sharing technology so that -- this is basically -- we had an event where basically DARPA released sort of an initial concept release, basically, for comment and they’re looking for comment.

                     But the XG technology -- essentially it’s a set of adaptable algorithms or protocols that would be embedded in the radio software -- software defined radio and would allow opportunistic sharing of frequencies. And the idea, you know, is that the military, in particular, will need this when they drop down into environments around the world.

                     I think if that was promoted domestically, as well, then many different Federal uses could have compatible radios based on this software defined adaptable frequency hopping technologies that would also service R&D, much as DARPA helped develop -- essentially develop the internet by promoting RFNET (phonetic), XG or a similar technology could promote, you know, great advances in commercial wireless technology, both for the economics but also for the sake of efficiency.

                     And that may get around a lot of these problems providing inherently substitutes as radios tend to switch from frequency to frequency or look before talk, et cetera.

                     MR. MULETA: I guess, Greg, what I wanted to inquire related to this is just to figure out if you’re outcome driven in a sense -- you know, you’re trying to provide a particular service or a particular functionality, isn’t that the question that you first need to answer and define clearly before then asking whether or not the spectrum is the most effective or efficient way of using -- of delivering that mechanism?

                     I’m trying to figure out what sort of the right -- the appropriate model for looking at these -- effectiveness in the questions.

                     DR. ROSSTON: I think what you’re trying --

I’m not sure I exactly understand the question but, I mean -- is that substitutes of spectrum versus non-spectrum uses or ideas that you can have different types of services using the spectrum. The substitutes are key, in my mind, to any kind of efficiency that -- if you have a service and I can develop a competitive alternative like the Europeans are doing to GPS, that’s probably -- it may not be good for the United States, but it’s probably good for consumers that there are alternatives and the fact that WiFi is competing with Cellular, but the fact more that Verizon is competing with Cingular is competing with AT&T, is really good for consumers, that there are different ways to provide these services and that -- the pay phone on the corner competes with wireless is also important.

                     So these things -- that is one compliment of substitutes. The other is in trying to increase that in terms of efficiency would be getting back to my idea of flexibility. The more we can increase the flexibility for spectrum users, the more efficient spectrum use will be, and it's important that we -- there’s been a move to try to limit special flexibility in order to raise revenue for the government, and in my mind that’s a hugely wrong-headed move in terms of trying to take a very shortsighted view of trying to raise a little bit of money in order to minimize the amount of flexibility on spectrum in order, simply, to raise revenue.

                     If we have such a valuable resource and it’s so constraint, we should try and do as much as we can to get flexibility out there and that will relieve a lot of the constraints both in the public uses spectrum, but also for the Federal Government use because the opportunity costs will be reduced.

                     So, the substitutes are the ability to use substitute spectrum for various different things and to provide more competitive provision and services is absolutely key to economic efficiency.

                     MR. HOGG: I’d also like to comment. I’d like to amplify a little bit on the flexibility piece because I think the wireless industry is a good example of what flexibility with a protected piece of spectrum and a good rule set brings you.

                     If any of you remember using your cell phone back in the early 80s, mid-80s and you look at what you’re using today and the technology that you were on, analog initially, then TDMA or CDMA, and then ultimately to 1X and to 3G technology, such as UMTS. What you see is constant innovation, constant substitution and that substitution is more spectrally efficient, but also brings new services to the marketplace in a way that are compelling to consumers, and you’ve seen the growth in the industry that is the result of that.

                     So, having the flexibility to be able to have substitutes that are more efficient, but in a predictable manner is very powerful and I think that you’ve seen, especially in the wireless industry, a drive to innovate and a drive to substitute for better technologies that can provide better services, faster data speeds, more robust graphics. I mean, all the things that consumers want to be able to do with their wireless devices in roughly the same amount of spectrum.

                     MR. MULETA: Let me ask a related question. I think all of the thread that I see here is that we’re all talking about some level of incentives for efficiency. So -- you know, Rick or Adele, if you want to jump in here and say what are the right types of incentives in the commercial sector, if you can give us an overview of that, as well as in the public sector, and then say, you know, can that be translated into a noncommercial environment? You know, what are the right sorts of incentives to work in a noncommercial sector?

                     MR. GALLAGHER: Before we leave the subject, though, I think moving to incentives -- we’ll have time for that. But I really want to nail down this one because the Deputy Secretary’s instructions were pretty clear. We’ve heard about -- and I would like to ask each panelist just starting down here with Rick.

                     Based on our discussion, we’ve heard about shipping lanes and triangles and we’ve talked about technical economic and social items of efficiency. I have a generalized comment, but I wanted to get your thoughts first.

                     Do you think the term “efficiency” has technical components, economic components and social components, or if you -- you can just answer yes and that will satisfy. If you think one of them should not be present, please explain why.

                     So, Rick, we’ll start with you.

                     MR. BURKE: Okay, Mike. Yeah. Absolutely. Efficiency comes in a variety of ways, as we’ve already -- as everyone has discussed, that it’s technical efficiency as well as economics.

                     And from an operator’s standpoint, you know, we have our technical efficiency, which involves our overall

implementation costs as well as -- versus the potential value of the service that we’re providing. And the economic efficiency to us becomes one of -- the potential of that service as it’s applied to the consumer. What are they willing to pay for what they’re getting?

                     So the view of efficiency actually is two views -- one from the service provider’s perspective and one from the consumer’s perspective. It’s achieving that balance of meeting the consumer’s need without driving our costs of investment of infrastructure through the roof in order to provide the services. In many cases limiting what that service is in order to achieve that balance is the best way to do that, so that we don’t try to be all for everyone.

                     MR. GALLAGHER: So, that’s a yes to technical -- to all three?

                     MR. BURKE: That’s a yes -- yes to the technical; yes to the economical.

                     MR. GALLAGHER: And yes to social?

                     MR. BURKE: And yes to the social.

                     MR. GALLAGHER: Michael.

                     MR. CALABRESE: Yes, all three. You know -- and I think for -- from the perspective of, you know, Federal coordination of its own use of spectrum, the social is going to have to be weighed even heavier than it would be by a commercial operator because, you know -- you know, I think it was said on here you simply can’t -- it may be, for example -- you may get more value added through a cellular architecture for certain purposes, or you may get, you know, more throughput through -- you know, per megahertz especially for a WiFi system and in other contacts. But the Federal Government has to, you know, I think consider, you know, other measures whether it’s public safety, homeland security and other things.

                     MR. GALLAGHER: Thank you.

                     MR. CALABRESE: But it has to balance all three.

                     MR. GALLAGHER: So another yes? Bill.

                     MR. HOGG: Yes on all three.

                     MR. GALLAGHER: Okay. John.

                     Mr. LAWSON: Let me use another special analogy. I’m from South Carolina and I went to the beach a lot. So, let’s talk about beachfront property.

                     The broadcast industry is becoming much more efficient through the temporary lending of a second six megahertz channel to complete the digital conversion. Certainly, two out of three apply here as far as public television is concerned. The technical efficiency is a Federal mandate and when this transition is complete it will free up huge blocks of analog television spectrum, beachfront property, which is a good thing for the public, for the government. It will also mean that with -- in the six megahertz that we retain we’ll be able to do a lot more.

                     So, we think there certainly is social efficiency here. We believe we’re going to be able to introduce a new generation of services, educational, cultural, public affairs to the American public and not just the televisions, but the PCs.

                     The economic efficiency remains to be seen. Right now for the broadcasters it has been all on the expense side of the ledger and we’re hopeful that we will be able to find economic uses of the digital spectrum, but the story is still out on that.

                     MR. GALLAGHER: So two question marks -- excuse me. Two yeses and a question mark from John. Okay. Jim.

                     MR. MILLER: Simple answer is yes, yes, yes. And I thank Adele Morris from the Treasury. She has done a very good job of getting all the Executive Branch agencies to take a look at this question as part of Mr. Gallagher’s efforts as part of the spectrum policy initiative.

                     However, I really need to ask the question, does spectrum efficiency translate into the substitution that we’re talking about? And a gentleman just raised the issue about TV. I’m not sure I understand this. TV taking the place of GPS.

                     The Department of Transportation has several programs that are in the interest of the public. We’re working with the FCC on dedicated short range communications for intelligent transportation systems. That’s a meshing of technologies -- GPS positioning and other types of communication applications.

                     Automatic identification systems for vessel traffic control on the seaways. The wide area augmentation system for precision aircraft guidance in the National Airspace system. And the FAA has an advanced communications system, it’s called VDL Mode 3, VHF Digital Link Mode 3, to transition from analog to digital communications.

                     So, the question is, do these new technologies need to be disruptive on our current infrastructure? I like competition. Again, I was a program manager for the largest airline in the world at the time. We invested in new technologies. The problem was these new technologies were coming under fire and the return on investment that we had put into this was such that it was being harmed, and we were forced to get into the spectrum debates.

                     We all know that a market environment requires a fight -- a competition. So, if WiFi and Blue Tooth and ultra wideband want to fight it out for a last man standing commercial market win, public safety cannot be the collateral damage.

                     So, we like experimental, we like competition, but perhaps we can find bands away from public safety frequencies in order to initiate these strategic experiments. That, to me, would be very efficient.

                     MR. GALLAGHER: So, I’ll take that as a yes, a yes and two votes for yes on social. Adele.

                     DR. MORRIS: Well, as I said, I really believe that economic efficiency incorporates the idea of social welfare and a degree of technical efficiency. So, I think -- I might even just say there’s one question and the answer to it is yes.

                     The question about substitutes I think -- the way economists think about substitutes is that if you have a market, the demand and supply for a good depends on the market availability and price of substitutes. Now, there may be instances where there are no substitutes. In spectrum there may be laws of physics that determine certain spectral lines that NASA needs to do some kind of special science or there might be international agreements that make it almost impossible to modify or change certain spectrum use for air traffic control or something like that.

                     In those cases there is no elasticities of demand. You need those to fulfill your mission. But in other areas where prices can work, you’ll take into account the prices of the substitutes when you choose what good you’re going to buy, and that, ideally, is the best way to allocate resources, at least through a market where markets can work.

                     I want to make one distinction, though, between efficiency and distributional effects. Okay. There’s efficiency and equity. Economists often separate these two notions because they’re very different conceptually.

                      If you have a good through which there is a robust and liquid secondary market -- you have a well defined good. It’s out there trading. There’s a price for it. You can exchange it and so on. It really doesn’t matter for efficiency sake how that good initially gets into the market. Whether the Federal Government auctions it or we give it to the Girl Scouts. As long as the Girl Scouts are in the secondary market it doesn’t matter for the ultimate economic efficiency of the allocation of that good.

                     Sometimes when people talk about public policy around spectrum they confuse their keen interest in the distributional outcome and who gets the resource with the efficiency of its ultimate allocation. Both are extremely policy matters.

                     We’re in Washington. We know distributional effects matter. But when we’re arguing over a policy or considering its effects, it’s very helpful to keep conceptually separate whether you really are talking about efficiency, meaning that those who value that resource greatest will be its ultimate recipients or are you really talking about who gets the quota rents or who gets the -- who gets the goodies?

                     So, I would just highlight that distinction as we go forward in our discussion of efficiency.

                     MR. GALLAGHER: So, I’ll take that as one big yes, but it’s kind of incorporating all of the elements into one. You think the economic measure really incorporates all three?

                     DR. MORRIS: I do believe that.

                     MR. GALLAGHER: Okay. Dr. Rosston.

                     DR. ROSSTON: I guess I would agree with everything Adele said, except I would call it a no, yes and maybe -- because I think there may be technical efficiency that’s incorporated in economic efficiency but, for example, the FCC, when I was there, mandated technical efficiency for 220 megahertz. They said you have to do specific technical efficiency.

                     Well, that has hamstrung the ability of operators to provide valuable services. It was technically efficient -- it was much more than people might have wanted to do and they could have provided much more valuable services, but they were required to have a certain amount of throughput, which precluded high quality voice. It was a problem and it may have caused a lack of competition.

                     So, I think the technical efficiency standing alone is not necessarily a good thing. It can be incorporated when you -- this is getting back to the idea, there are trade-offs in what you do.

                     So, I would say that technical efficiency, subject to cost considerations or subject to demand, is the important way to think about it. And then social efficiency, I think, is -- depends on what -- social efficiency and economic efficiency I, sort of, think of as the same thing rather than as two different goals.

                     You might say, well, in economic efficiency it doesn’t take account of police and fire services because they’re much more valuable than they’re willing to pay for. Well, as an economist I would say, well, you need to figure out how that fits in with the social value of those and that’s in economic efficiency.

                     I wanted to followup on what Adele and Jim both said. Jim was very concerned about interference from these market experiments or trials, and to me that says we need clear rules for what you can and can’t do. One of the big changes should be to focus on what outputs you’re allowed to do -- emissions -- so that there are clear rules about interference.

                     That way you move toward what Adele said about flexible secondary market. People know what they’re trading and Jim’s people are protected from interference and -- but not only the public guys are protected, but --the private guys are protected, but the public guys as well. So everybody knows what’s being traded and it can be incorporated in the efficiency standards.

                     MR. GALLAGHER: So that sounds like another -- sort of like Adele and you were talking down at that end of the table. So you have two votes together saying all three the same. Of course, if they’re all three wrapped into the same --

                     DR. ROSSTON: The economists at the far end of the table -- I would say left or right, but in Washington that’s connotations.

                     MR. GALLAGHER: Al, how about you?

                     MR. VINCENT: Well, actually -- I’m clean up here and I’m the technologist at the far end of the table.

                     The quick answer is, I vote yes on the three of them. The long answer is, I think that I’ve heard here from the discussion a number of different perspectives as to what the yeses and nos are about.

                     From my perspective, you know, purely from the work we do at Federal agencies and with private sector companies, it’s about, first, having an underpinning for any given piece of spectrum and any given technological choice, understanding how effectively or -- excuse me, how efficiently it’s being used in a technical sense. How much information can I use or can I push through it and is that the best choice for that piece of spectrum and that piece of technology?

                     And once you have those underpinnings, then you can start to build up questions about effectiveness for a mission, which is a different thing for public service, which is a different thing for commercial interests. And then on top of that, I believe, you can build an economic, you know, model that basically says okay, how much are we going to pay for this or how much are we going to sell it for, or how much value does the government put into the private sector by creating it?

                     I think if I was starting the tear-out card that you were talking about in the beginning, you know, having a set of unambiguous measurements, a technical efficiency for these various technical -- for these various spectrum choices would really be a first step because then we could play choices off against each other; we could understand when we use spectrum for something, is this the best of uses?

                     And similarly, the flip side of the comment that was made before about choices of technology or choices of spectrum utilization, to me what that’s really all about is the fact that at any given day a brand new wireless choice can appear. Some new technology can show up tomorrow and we have to basically work that in and decide how valuable that is. And once we have solid technical underpinnings and understanding about how the missions are evaluated -- and, again, we do some public safety work at ITS and we do some commercial work -- understanding, you know, the differences of those is something that may not be used to spectrum all that much. But when it does use it, it’s extremely valuable. It’s different from something that uses it consistently for whatever.

                     And so having the technical underpinnings to be able to do that and be able to make the choices in the long term that tells you then at that point you can add an economic valuation and go somewhere with it.

                     Similarly, it all boils down to interference because once you’re allocating a spectrum everybody has to either not interfere or interfere in a particularly predictable way with everybody else.

                     MR. GALLAGHER: Well, I would like to thank you all for that. Before I turn it over to John so we can explore incentives and their role in this process, I just thought I would offer you a comment and a question for the final exam for the panel.

                     The comment is that this discussion, I think, is relatively predictable in the sense that we’ve spent approximately an hour and the tools that you’ve given John and me say, go do what we want to do. Because we can manipulate these things, play them off on one another and justify them in a manner that suits the needs of a particular outcome and that’s what -- that’s the tool kit right now that I believe that John and I are left with to go make decisions. Because you can manipulate these concepts, you can play them off against one another to get to the objective you would like to achieve.

                     And so what I would ask, because clearly Adele and Dr. Rosston have some rigor right on the terms and what they believe is included, if for purposes of the response to the notice that we’ll put out for public comment, if you can think about how you would write it down on a piece of paper what the definition of efficiency we should be applying is, I would appreciate that personally. I know it would be very helpful to our process. It would also help me pass my exam with the Deputy Secretary.

                     In particular, if there are technical components, how do you define efficiency in a technical way? If there are economic components, how do we define those using the concept of substitute as appropriate? And then on the social waiting, how do we, perhaps, have some rigor around how we measure or value that component? Because if we can get as close as possible towards more rigor in isolating the unknowns it does leave more of these decisions in the hands of innovators in the marketplace and a little less discretion in the hands of arbitrary decisions that are made by policymakers. And I think that would be helpful for everybody.

                     So, thank you for the discussion on efficiency, everybody, and John, if you would guide us through the discussion on incentives. We look forward to that.

                     MR. MULETA: Let me start this by saying what I found interesting in the analysis was that -- the discussion that went on -- was that at the end of the day we were trying to judge behavior and so I think there’s two ways of managing behavior. One is to provide incentive, the other one is to, sort of, order people to provide mandates, although I tend to think mandates are a form of incentive. They just happen to be in the negative. So, you lose your license if you don’t do this if an incentive is to be effective.

                     So, I think what I’m trying to elicit from the panel is to say what incentives work for you from the technology side, what incentives work for you from the commercial side; and to the extent that you can transfer these from commercial and noncommercial sectors, how do you do it; what’s the form? For example, at FAA, how do you get one of the modal folks to -- you know, to have incentives, for example, to allow, let’s say, a market -- a potentially disruptive technology -- you know, create room for that. You know, is there a way to incentivize them because what we might actually be doing is promoting a much greater public good and so on.  

                     So, with that I’ll just open it up and maybe I’ll start with Rick again -- where you’re coming from and see what incentives work for you and how do you transfer them to the commercial sector?

                     MR. BURKE: Well, as a holder of spectrum, one of the things that I find most important to us is the ability to be flexible. As mentioned, technology changes quickly and things pop up that we haven’t even envisioned, and we would like to be able to implement those technologies in a manner that’s as least costly as possible.

                     Meaning, simplifying the rules for entry into a new technology for application into a spectrum, allowing for us to be able to utilize the spectrum in channelized chunks of narrow spaces or wide, however -- whatever it takes to meet that technology provided that we do meet a measurement of efficiency. That we’ve been provided with a spectrum holding that is, maybe, geographic in nature, as well as spectrally in nature. But as an incentive for us to utilize that as effectively as we can, we need to have that flexibility to adopt or adapt technology to meet our goals of service.

                     MR. MULETA: Is your ultimate measure for a private sector player, sort of, a dollar situation you could get out of it? I mean, is that -- when you talk about flexibility, it’s a flexibility to monetize or generate a return, right? Is that --

                     MR. BURKE: Flexibility to offer services that

-- yes, that will ultimately provide the greatest return of efficiency of services that we’re delivering to our end users because, after all, after we -- after the smoke clears, it’s the end recipient of the service, be they a commercial user or a public safety user. It’s their value of service that’s in their hand.

                     So, in order for us to be able to change with the tide, if you would, we would need to be able to offer changes or service offering. And, as Bill mentioned, being able to substitute technologies as our customer base grows and changes, to have that dynamics of scale to be able to bring something new to the parties without incurring a substantial cost due to meeting, you know, regulatory guidelines or reports, you know, and things that slow down that process.

                     MR. MULETA: Bill, if I -- maybe, as a commercial player, you can add to that --

                     MR. HOGG: Yes, I would. I would like to add to that. I think that the marketplace does, indeed, provide the ultimate incentive for us. As a private sector player, ultimately we need to provide goods and services that our customers want. We have to do it in an efficient way.

                     But I would like to touch on a point that Adele had brought up, and that is, we live in a global economy, and we need to think about how we create the right incentives in the marketplace that also allow us to take advantage of the economy use scale globally.

                     So, we need to think about the harmonization of our policy with what’s going on in the rest of the world, as well, and make sure that the incentives that we put in place be marketplace driven for private sector folks and that it provides the right amount of flexibility with a predictable role set that will allow us to also take advantage of the global economy use scales that are out there for technology. And I think that --

                     It just drives efficiency because of competition and the fact that in order to provide a service sufficiently, to provide it at a cost that customers are willing to pay at a value point that they’re willing to subscribe to a service -- you know, all the incentive that we need.

                     MR. MULETA: I guess, John, as a service provider, but yet a noncommercial one, how do incentives work for you? I think you described earlier a mandate as opposed to an incentive in the sense that you have to move from analog to digital. So what incentives would work for a noncommercial actors?

                     MR. LAWSON: Well, the incentive for the broadcasters was that -- is that ultimately will lose their licenses if we don’t complete -- if we don’t get on the air with a digital signal. I’m happy to say that 221 public stations have done that, almost two-thirds of our stations have -- are broadcasting in digital. So, the Federal mandate definitely stimulated that, but we also are beginning to see that we can provide some real services for people. New services that we’ve never been able to provide before and there’s a huge role for -- we are willing to put out bandwidth in play for public safety for emergency communications as well.

                     When you start talking about the incentives they begin to add up just purely from an operational standpoint. If we turned off analog broadcasting our stations would save $36 million a year in electricity costs. This is 20 percent of the entire funding that our stations get from the corporation for public broadcasting. That’s $36 million that’s not going into programming. It’s not going into educational content. So, we have a big incentive there.

                     We also have an incentive because, frankly, we think if we can -- if we can make this transition other things will fall into place, and for that reason our Board, the Board of the Association of Public Television Stations, last October directed us, the Staff, to develop a plan to embrace a date certain to turn off analog broadcasting. We’re, I think, considered heretics among some of our broadcaster colleagues and we have not settled on a date and we can’t do it alone. The government is going to have to be a partner with us and we need some commercial broadcasters to go with us.

                     But we would like to get this transition done and then you start looking at the major barrier. The major barrier to getting it done is taking care of those 14 or 15 million households that depend exclusively on over-the-air broadcasting for television. Then you’ve got another 30 to 40 million television sets in homes that may have cable, may have satellite that aren’t connected to either. The one in the kitchen; the one in the basement. How do we migrate these over-the-air consumers to digital.

                     We think that that’s where incentives come in. We think we have to put a very clear consumer proposition on the table as broadcasters. We’re going to introduce new services for you, new channels, higher quality for a one-time fee, which is to buy an expensive -- we hope an expensive set-top box.

                     I have to say that we’re encouraged by what we’ve seen in Europe. Berlin became the first market in the world to turn off analog broadcasting last August. The British Government, after a failed paid platform for digital terrestrial broadcasting, recalled the licenses, had a beauty contest competition and the BBC, BSkyB and Crown Castle commercial transition company, have launched a free over-the-air service called Free-View. And the last time I checked in the UK they were selling 100,000 set-top boxes a month for -- this is free. I mean, it’s “wireless” television. What a concept.

                     But I have to say in Berlin there was -- UK hasn’t turned off analog broadcasting, Berlin did. They had to migrate 160,000 households. Almost all of these people were incentivized to buy set-top boxes, but there was a stick with a carrot of these new services -- these free new services. The government -- the media -- specifically the media authority of Berlin, Brandenburg said guess what, folks. In 18 months we’re turning off analog broadcasting. So it gave the consumers a double incentive to make that transition.

                     MR. GALLAGHER: You know, John, I just want to take this opportunity to say -- congratulate you and your members for the aggressive nature that they’re looking into moving into digital and the digital realm. You’re to be commended for your bravery and your courage and we’ll be watching the progress of your decision as it goes forward, as well as paying attention to these international experiments.

                     But I wanted to thank you for sharing that with us because it certainly is a significant action out there in the world of spectrum and it certainly is a result of incentives, some of them negative coming from the government, and we’ll look forward to engaging with you and your group positively.

                     MR. LAWSON: Well, if I get too far out in front of my members I might have to come to you for a job, Mike.

                     MR. MULETA: Well, let me turn to another service provider, Jim, and the way I understand the DoT structure is you have, sort of, the office of the Secretary and then you have the modal transport. How do you create incentives for your various modal organizations to use spectrum efficiently? Are there incentives that you place in -- you know, how do you work it with your service providers?

                     MR. MILLER: Well, we are firmly in support of finding additional ways to use spectrum more efficiently. As I noted earlier, the FAA has a program to transition from analog to digital signals in their communication system. We’re using GPS to allow pilots to fly more efficiently.

                     So, it’s very important that we assist and work with the private sector to find more efficient ways to use radio energy because, quite frankly, we all know that there is not the real estate nor the money to pour additional concrete for more highways and more airports. It’s just not there. So we have to look for technology solutions.

                     The concern that I have being a regulatory agency and about safety is, does spectrum efficiency translate into making the most money as fast as you can? Now, the Department of Transportation doesn’t make money off of the spectrum that it uses. It provides a service to everyone in this room, to the nation as a whole, and to the world.

                     So, I would answer that we are looking for additional ways to use spectrum more efficiently. We support NTIA and FCC doing this. But we believe the transition needs to be benefit driven. I see a lot of stick, but very little carrot.

                     So, if we are talking about spectrum efficiency in terms of the Federal government agencies giving up more, what are they getting in return? And that is one of the questions that we are seeking answers to. Thank you.

                     MR. MULETA: Adele and Greg, I didn’t know if you had any thoughts about what incentives would work, either positive or negative.

                     DR. MORRIS: Yeah. Thanks, John. Speaking with regard to the management of Federal use of spectrum, to me there are kind of two categories of incentives. One is kind of administrative discipline. Much like we have a budget process; we have O&B; each agency gets a budget allocation; there are disciplines involved in that; there’s tracking and controlling of budgets; we know who’s got what budget. It’s a transparent rigorous process. It can be messy, but we do it and we do it with an eye to making as efficient as possible the running of the government and knowing that tax dollars are scarce resources. And there is an opportunity cost to the taxpayer of the money they send to the Federal government.

                     Similar to that, we have a spectrum resource. You could have administrative discipline, better analogous to the budget process when there are frequency assignments.

                     What’s the process for managing those assignments? Are we ground trooping the government master file? For an agency that says they thought X number of transmitters -- does anybody ever go out and see whether there are transmitters? Who is out there really looking into the actual fact of the resource needs of the agency? And there can be internal disciplines with any agency and disciplines across agencies and there also can be administrative functions to identify opportunities to gain efficiency across agencies.

                     We’re doing that, to some extent, in the land mobile arena. Where can we set up trunk systems where we don’t have to duplicate the same kind of system within a number of agencies? Where can we combine resources across agencies to get some technical efficiency and ultimately some economic efficiency? That’s the administrative category.

                     The other category is what you might think of as price signals. They come in, kind of, both the carrots and the sticks, if we want to think about that. There’s user fees, like what does it cost an agency to obtain a frequency assignment and what does that price depend on? Right now those user fees -- and there are user fees to Federal agencies, but they’re designed strictly to recover the costs of NTIA program administration.

                     Okay. The fees are not out there in any way related to the economic value of the resource. It’s just, you know, you slap kind of a flat fee on however many assignments you have on one day of the year. I mean, really the most, kind of, boneheaded thing you can do.

                     That works great for cost recovery. But if you want a price incentive you need to think about whether you can do it a different way without making it ungodly complicated.

                     Okay. So that’s one category of price incentive. Another category of price incentive is more in the carrot type idea, is the idea of secondary markets. We see this in the commercial sector. When you have a market driven -- a marketplace driven system, you know, my willingness to hold onto a resource depends on what I can get for it if I were to go to sell it.

                     Well, is it conceivable that Federal agencies could have something like a secondary market? Could they lease out the spectrum that they’re not actively using, and under what conditions and to whom, and if there is some kind of Federal emergency, could they preempt that lease? What could be the rules around something that might look something like a secondary market, and if it were the kind of a lease type thing, would there be a market for temporary spectrum use out there?

                     And this is something you folks would certainly know more about than we do. But I think those are some categories of spectrum incentives that we could certainly have a conversation about.

                     MR. MULETA: Let me -- for the non-economists at the table, let me, sort of, summarize what I thought I heard you say and I’ll ask Greg and Michael maybe to speak to this, and also the larger question.

                     One was I heard there’s this notion of administrative efficiency, which will create a measurement system and, you know, make it transparent. It’s numbers. It’s FTEs or something on that equivalent -- basis, and then we sort of -- but I think that notion requires that there be this uber (phonetic) administrator. You know, he who giveth and he who can taketh it away in a sense, right? Because O&B only works because he can -- they can take the budget away.

                     I think the other issue that I heard is that there are market mechanisms that are more incentive driven, like price signals, which is really -- again, you have to have some sort of a measuring system and some level of transparency and then allow people to maybe trade with these fundable things.

                     So, that’s what -- is that, sort of, a correct summarization?

                     DR. MORRIS: Yeah. Those would be kind of the categories of policies that you would put in the incentive camp.

                     MR. MULETA: Now, Greg, I would like to get your thoughts on this and maybe Michael, I’ll get you to speak.

                     DR. ROSSTON: It’s kind of hard to follow that, at least for me because there’s not a lot to -- well, there’s nothing to disagree with and not a lot to add, but I’ll try anyway.

                     One of the things that I was thinking about how -- for an economist the incentive is money or what Adele said, opportunity costs. What’s the spectrum worth in the next best alternative use? And so, that if you realized the opportunity costs of the spectrum, then you’re going to be wanting to use it more efficiently. If there’s a more efficient use, you’ll transition that use or sell it to someone else who can use it that way. That’s, sort of, on the commercial side.

                     On the noncommercial side, if you think about this uber administrator that John talked about, well, if I have spectrum and I’m the Department of Defense and I’ve got three different projects and I’ve got to figure out which one do I -- and I have a limited amount of spectrum, I have to figure out what do I use my spectrum in. I might actually have the incentives to actually allocate spectrum efficiently.

                     And I said might, because there are other alternatives. If I can say, well, I’ve got a certain amount of spectrum and if I don’t use it efficiently I can go get more or make it so that they’ll take less away from me, I might not have the incentives to use it as efficiently as possible because I might, in five years or 10 years, need more spectrum and if I -- if some of it gets taken away because I’ve used it efficiently, I might not have the incentive to use it efficiently today.

                     So, there is this trade-off for the Federal government of how do they use the spectrum efficiently and part of this would be, as Dr. Morris said, putting it in a way that they can lease it out temporarily somehow.

                     But, once again, if I were in charge of the Department of Defense and someone said to me you can have money for your spectrum, I would say forget it. I don’t want it because I know that on the back end Congress is going to take the money right away from me. So if I have more money it doesn’t do me any good except that my spectrum is locked up. I’m not going to go for that.

                     So, there is a real problem in trying to figure out you need this uber administrator or someone else who is making the trade-off within the government and within the budget. So that’s why it’s good that Congress realizes that auctions are a source of revenue and they can actually make money by getting spectrum out and make the trade-off between the public benefits from revenue and the public benefits from services and that they can -- they use the money that they get from auctions to pay for their services and make some of these substitutes and trade-offs.

                     MR. MULETA: I think inheriting this, I guess, is there a way of creating -- you know, you have to be able to count the assets or the, sort of, tradeable assets or components or whatever you want to call them, or the goods. Is there a way of creating it so that the uber administrator can start playing with these things? I mean, don’t you first have to measure what it is that we have?

                     So, I guess that was a question maybe for you, Al, before we get -- I think you mentioned that you first have to, on a technical level, count the things that you have, right?

                     MR. VINCENT: I think it’s very critical for any efficient allocation of a resource like this to be able to measure how people are using it and whether or not it’s the most efficient way of them accomplishing their mission with the asset that they’re given. And then once that happens, then decisions can be made about technology choices and other kinds of things.

                     But on the flip side, as someone who has had to implement a lot of these things, the incentives, I think, also have to encourage flexibility and creative use and allow people to move onto new technologies when they appear. And I think if you have both sides of the coin, meaning a straightforward and, to parrot what Adele said, a simple metric to be able to do this without a lot of burden, and then, also, incent people to be creative in how they use the technologies in the most efficient way, then I think you’re going down the road to being as efficient as possible and incenting them that way.

                     MR. MULETA: Michael or anybody else, is there any simple metrics that you can think of that would make these straight up possible? Is there -- do you have any thoughts about what we’ve been talking about in terms of putting the right level of incentives among the players, both commercial and noncommercial?

                     MR. CALABRESE: Right, right. I largely agree with Adele, but I would, you know, maybe put it in a larger frame. We basically support combining user fees and flexibility as a way to manage this public resource for both private users and public users.

                     So, today we have to ride the worst of our worlds. We have rigid zoning, very limited flexibility for users, free use of the resource except where we’ve had occasional one-off auctions that impose massive up front costs on just certain companies.

                     And so, what we have to do is give flexibility. I agree with that. We have to recognize, for example, John and PBS, his stations, for example, like most licensees today, what they have is not a license to the bandwidth. You know, PBS can’t use that bandwidth for a variety of purposes. Licensees just have a license to provide a service at a particular frequency.

                     And so if we give fully -- fully flexible licenses would be far more valuable, and so they should be assigned in exchange for modest lease payments. So rather than giving away spectrum rights or selling licenses at one-off auctions, the Commission should -- the FCC, I think, on the commercial side should re-spectrum for a set term of years allowing commercial users complete flexibility during the term of that lease.

                     And the advantages that has -- obviously we’ve talked about some internalized opportunity costs, promotes competition because it puts all commercial users on a level playing field, lowers barriers to entry by eliminating the one-off auctions. It gets a return to taxpayers, which has its own efficiency.

                     Remember for every three -- economists find for every $3 lost in income tax revenue -- I’m sorry. For every $3 extra in income tax it reduces productivity by $1. In other words, if we give away that revenue by not internalizing costs, we increase the deficit or we have to increase income tax revenue, which has an efficiency effect.

                     And, also, if we stay within this framework of licensing, we maximize the flexibility to accommodate spectrum sharing. You know, more technically efficient sharing as cognitive of radio and other technologies evolve.

                     So, on the public side let me just mention that -- and some of my agency friends might not like this -- but I think similarly what we want is we want fees, but not income for using the -- for access to the airways because fees -- in other words, several Federal agencies pen fees to access a certain amount of bandwidth, would internalize opportunity costs and encourage substitutes as it’s now described.

                     But you could do it in a different way. I mean, one option to think about is a sort of payer/player approach. In other words, you either pay the fee or you invest the equivalent amount of money in more advance communication technologies that use the spectrum more efficiently. And, in fact, even when the fees are paid in to the uber administrator or whoever is the coordinating entity, I think those, in turn, should be earmarked for investment in XG type sharing technologies.

                     So, either way, you know, the government should be on a, kind of, united approach towards encouraging not just -- not just to discourage wasteful use of spectrum, but to be investing in the next generation of sharing technologies.

                     The reason I say fees, not income, is I have a real big concern about turning the spectrum into a bake sale for the forest service and other agencies. In other words, I don’t think the agencies should have their spectrum and be able to go out and lease it, because what this would do is, it would encourage the Federal government, in particular, individual agencies, to horde spectrum and to oppose opening it to unlicensed sharing, if they have a financial incentive in addition to what Greg said.

                     I’ll stop there, but I have a couple other suggestions as well.

                     MR. GALLAGHER: If I could just interject here just for a second and -- not to put you on the spot, but put you on the spot because you said you feel comfortable.

                     Jim and Adele, as you’re working in a couple agencies that are spectrum users, what is your view of what Michael just had to put on the table about application of spectrum fees and how it might be a two-way street, Jim, because I think you had concerns in that regard?

                     MR. MILLER: Well, spectrum fees, if I understand what you said, would refer to the Department of Transportation through its modal administration, meaning the Federal Aviation Administration would pay money for the spectrum that it uses to provide you with service already that is paid for currently by the taxpayer. Is that correct?

                     MR. CALABRESE: Right.

                     MR. MILLER: Okay. I’m not sure how I feel about that. What --

                     MR. MULETA: This is a classic argument. They buy fuel for airplanes, don’t they?

                     MR. MILLER: Is John coming to my rescue?

                     MR. MULETA: Let me describe a scenario. I think maybe part of it is sort of having to think through how the system would work. The Department of Transportation gets a $100 million spectrum of credits, whatever that is. You know, whatever -- however you want to define the metrics. And so you spread it among your three or four, five modal administrations and, you know, that’s the amount of credit that you have available throughout the whole organization.

                     So, you have to split it among five so you can distribute it 20 among -- I mean, you know, 20 million credits per administration if there are five administrations or whatever. So I guess at the end of the day, though, if you need more than you have to get it from another organization.

                     So I think the question is, you know, does that create an incentive for one of your modal administrations to say okay, I’ve got this $20 million spectrum credit and I got to make use of it if I need to -- if I need more, I either get it from somebody within the family or I get it from somebody outside of the family. Would that create an incentive for your managers, I think, is the question. You know, would that change their mind-set or would they -- would that not change any of the behavior set?

                     MR. MILLER: Well, the immediate answer is I don’t know and that is because we use our spectrum very efficiently. What we’re talking about is being able to share and allow the private sector to gain access to some of that.

                     Now, again, my question is, what do the Federal agencies get in return for paying these fees, because spectrum in the aeronautical world is designated aeronautical radio navigation service or radio navigation satellite service so that airlines around the world could have the same equipment on their aircraft and it doesn’t matter where they go.

                     So, it’s protected spectrum. And to create a spectrum trading market in some cases in the private sector might be very appropriate. But when you’re talking about restricted bands, I’m not sure how that would translate.

                     I don’t want to say I don’t like the idea because it might very well have merit. But I think it’s worthy of further review and discussion and I’m sure Mr. Gallagher will have all of us do that as he has been prodding us with the hard questions in our spectrum policy initiative.

                     MR. GALLAGHER: Adele.

                     DR. MORRIS: Yes. Thanks. This is, I think, a very useful discussion. I think that from this discussion you can already see that it’s harder than you might think to get the incentives right, especially for Federal users where in some instances -- you know, even if you have a price signal they may have no price elasticity of demand.

                     You can’t -- regardless of what the price, is these guys need to keep our airplanes safe and they’re going to go to their appropriators and get whatever they need and that’s their job.

                     So, when you talk about price incentives you’re like, well, in what context do you really want to eek out those efficiencies? There may be applications where there are no sufficiencies to be gained because to do so would deteriorate a very important public service.

                     And so, I think where you put the incentives matters a lot. So, one of the first instances is to figure out where can prices -- where are they appropriate and -- go ahead.

                     MR. MULETA: Let me just ask. Isn’t the important part of this the analytics, much less the outcome? I mean, the fact that you make the determination that there is no price elasticity by itself is a great conclusion. And isn’t the problem that we don’t have any mechanisms today to, sort of, determine -- no framework for making those decisions?

                     DR. MORRIS: I would say absolutely and that would be, I think, in my view a key component of the strategic plan for Federal spectrum use would be to really look functionally at Federal spectrum use and think about, well, where is the most important or appropriate policy mechanism for different kinds of spectrum use. And it’s so much easier said than done, but I think it’s an exercise we really must engage in to responsibly manage this resource.

                     And just to amplify something Dr. Rosston said, getting the incentives right also is really hard because there are all these complex interactions with the budget process. You know, well, user fees are set a certain way. Well, what -- well, how do the appropriations respond or interact with a fee system?

                     If you have a secondary market system where there are some revenue opportunities, what happens to the revenue -- how do appropriators respond to possible revenue sources? Those interactions are really complicated. We don’t know what they might be and they will greatly effect the net result of the incentives on the Federal users.

                     I wanted to talk about the earmarking of revenue for a second.

                     MR. GALLAGHER: Can I just interrupt for a second?

                     DR. MORRIS: Please.

                     MR. GALLAGHER: But the last, I don’t know, four or five sentences that Adele just went through there about the complication uncertainty, you know, it just seems to me, Bill, that that happens within the wireless business within your company every day, doesn’t it?

                     MR. HOGG: It does.

                     MR. GALLAGHER: I mean, you have competing ideas. You’re saying, let’s sacrifice some of the spectrum, uncertain where it leads us, it can harm us here and there. Could you shed a little light on that and then we can come back to that -- and then we have to manage the last 30 minutes?

                     MR. HOGG: I think that you can’t have a strict measure of technical efficiency without taking into account services, the capability of the service that you’re going to offer as well.

                     MR. GALLAGHER: But when you’re talking about budget inside your company, and you’re talking about your Cap X, do you have similar discussions to what Adele’s last, you know, 30 seconds to a minute of comment was?

                     MR. HOGG: Absolutely. In essence, we make trade-offs every day in what we’re going to invest in new technologies, how much efficiency will it gain us, what are the capabilities of that efficiency?

                     So, you have an internal system probably for every carrier that essentially gets right down to the economics, the return on the investments that we’re making, how we utilize the spectrum, what next generation services. Will we carve off spectrum from an older technology and allocate it to a newer technology that has more capability, which comes with the quality of service perhaps impact, but also comes with a capital investment associated with -- you know, we need to make this investment because it’s going to, in the long run, be for the overall benefit of the customer and for the overall benefit of the shareholder.

                     So, I think that that micro economy happens every day in commercial services.

                     MR. GALLAGHER: So your budget process and the struggles that you face, are those easy or complex? How would you characterize those?

                     MR. HOGG: Very difficult. I would submit that we try to build models inside of our business that models what capital would be required, what investment and what efficiency come from that and what the capabilities or the services are. Even on a regional basis you look at it in some field that they’re not getting their fair share of the capital needed to provide a particular service and then others may get more of an allocation.

                     So, there’s -- based on that, though, you have to look at, kind of, this greater good, right. What are the key things, objectives that we want to accomplish as a business and allocate your capital, allocate your spectrum, allocate the funds regionally, market level, to be able to achieve those objections. And that same model, if you will, those same models have to be -- or a proxy for those, right, have to create the currency, if you will, for Federal spectrum as well because without that you have no relative comparison to be able to compare the value of experts as Y or the efficiency of experts as Y.

                     I mean, it’s essential to have some kind of -- I think you said analytics, if you will, around this in a way that it may not be the best model. It’s constantly being evolved. It’s based on a belief set of forecasting of what we think is going to be important to the future of our company, to the future of, you know, social policy, the future of, you know, Federal uses and those things are, you know -- based on that forecast get put into a model and adjusted because you can’t just bottle the model completely because there are some overarching objectives that you may want to accomplish and be dedicated to.

                     But at the end, I mean, there’s an allocation that’s made to each region, to each technology, to the spectrum, to the services that we’ll offer and a value put on those, and that’s how we get things done. That drives our decision-making.

                     MR. GALLAGHER: So, just on that piece, it sounds like you have a complex budget process, competing objectives -- those decisions seem to be made in a private sector. You’re able to get it done -- a model is a useful way of doing that in the private sector and, Adele, I just looked at that -- that would be an issue in light of discussion because as we -- we think we have it hard in the Federal government. The private sector has a very difficult time as well. They manage to get their -- at least certainly in this one context, those are the types of improvements we should look at for government thought processes as well.

                     MR. HOGG: I’ll just make one more point. Not go too far on this. But sometimes your forecast is wrong and so -- can you imagine that?

                     And so one of the things that you have to be willing to do is to go in and adjust to the changes in the forecast as they happen. They may be changes in policy. They may be changes in the marketplace. They may be changes in the technology. They may be changes in the cost to accomplish things. Right. The economics of what does it cost to invest to do this.

                     But at the end of the day you have to be willing to constantly feed that information back into your model and make adjustments accordingly so that there’s not a rigid structure that says okay, we’re going to set the budget at the beginning of the year, and this is how it is going to be allocated and there are going to be no changes. Go out and get it done.

                     And the reality is, things happen and you have to be willing to reallocate and you have to have the flexibility to reallocate based on changes in the marketplace, changes in your forecast, changes in technology. So all those things are things that are living documents, living things that may change within a year, may change in a course of five years, and you always have to be out looking and adjusting that forecast appropriately.

                     MR. GALLAGHER: Thanks, Bill. And, Adele, if you just want to finish your thought quickly and then what I suggest is that we’ll chart the course for the last 20/25 minutes that we’ll be here with this panel.

                     DR. MORRIS: Yeah. I just wanted to concur with Bill strongly that we are making policy in the environment of tremendous uncertainty and the uncertainty effects policymakers as well as private sector. We don’t have a choice but to make decisions, but under uncertainty.

                     So what would an economist say? An economist says develop a portfolio. Gather as much information as you can to cost effectively reduce the uncertainty and adopt a variety of approaches. Don’t put all your eggs in one basket. We might have some unlicensed; we might have some licensed; we might try different technologies; we might do some basic research. We need to look across the portfolio of policies in that uncertain environment and provide the analytics to do a reasonable job doing that.

                     And with that I’ll --

                     MR. GALLAGHER: Mike.

                     MR. CALABRESE: Can I clarify one thing?

                     MR. GALLAGHER: Sure.

                     MR. CALABRESE: I may have been misunderstood. I’m not sure. But based on what Adele said, I just want to say, you know, what I was saying, there’s a distinction to make between internalizing opportunity costs for Federal users and secondary markets. In other words, putting Federal agency spectrum on secondary markets.

                     I mean, you might do both of those things, but there are two -- to me they’re two entirely different things.

                     So, when I was talking about, you know, fees that, you know -- pay or play with spectrum fees, that’s strictly, in a sense, to create an internal market within the Federal sector for spectrum. Okay. And I would like to -- and then I would like to see that internal market allocate the fees to investment in spectral efficiency, particularly in a way that starts to bring all the Federal uses together into maybe a, you know, almost a single set of cognitive radio type technologies, such as XG.

                     And so that’s -- that’s to be distinguished from putting a Federal agency bandwidth on private secondary markets, which is an entirely different thing and has certain great risks as far as creating too many incentives for not opening it up to sharing as these technologies evolve.

                     MR. MULETA: I think if I could -- I think my understanding, at least what Dr. Morris was saying, was that the secondary markets could also be an internal mechanism, if I’m not mistaken --

                     MR. CALABRESE: Right.

                     DR. MORRIS: Yes.

                     MR. MULETA: -- for, you know, assessing opportunity costs. So, it could be -- you could have Federal users, sort of, trading off internally as well as externally. But in any place --

                     DR. MORRIS: It’s an open question how you would design that policy.

                     MR. GALLAGHER: John, thank you for guiding us for that last hour there of discussion. I think that was very productive.

                     At this point we have -- looking at about 20, 25 minutes left and what I would propose that we do is turn it over to you and take questions -- I’ll get to the ground rules in those for a second -- and see how that goes.

                     For the panelists, just a signal so as you’re sitting here I will reserve the last five minutes of our time for each of you to offer one policy that you would like to see on the tear-out card. Your submission for that card will be thinking in advance what they would be. You will have less than one minute to deliver that policy. So, think about it as a written item, what would it be.

                     So, we’ll do that. And if there are not enough questions from the floor to fill the time, which I doubt that will be the case, we’re going to touch on the spectrum policy task force and specific recommendations that the panel would recommend that we touch on.

                     So, I would ask for those that have questions, please step to the microphone so that you can be heard, identify yourself, and who you represent, and then please make sure you’re asking a question and not giving us an additional measure of input. And limit it to one minute so that we actually have time for people to respond to it.

                     We have a submission over here. The microphone is straight ahead.

                     MR. SNYDER: Jim Snyder from the New America Foundation. My question, is there going to be any attempt to make Federal uses of spectrum or transparent? The Federal uses are very hard for an independent organization like the New America Foundation to track. There is a culture of secrecy -- such a level of secrecy. I can’t imagine in any other public asset in America we would allow the level of secrecy we allow with spectrum.

                     And it’s not even just the most blatantly confidential uses like the CTI or the Defense Department. The theory is even the non-confidential uses, like the Transportation Department or the Department of Interior, that also has to be secret because if we knew what they were doing we might be able to infer what spectrum was being used by the secret agencies. And that theory of nonredaction has been, with other types of information, refuted repeatedly by the Courts.

                     So, my question to you, is there any attempt to make this -- you ask about efficiency. I can’t figure out if you’re using the spectrum efficiency because you’re not providing me any of the data that I need to figure that out. So, I just write off all Federal spectrum use because I can’t analyze it.

                     So, anyway, that’s my question.

                     MR. GALLAGHER: Jim, that was very colorfully done and you’ve done it under a minute. Thank you.

                     I think for the answer we should probably first turn to a couple of the agencies. I’m happy to give you my reflections on that subject as well, but, Adele, did you have any thoughts to share with Jim?

                     DR. MORRIS: Yeah. I mean, I think that we all want to be in the business of protecting national security and to the extent that there’s a legitimate concern there -- I mean, we classify large sections of the Federal budget for this very reason.

                     But that being said, I do think that transparency is key to shining a light on an important resource allocation policy and the public is well served to have as much transparency as is feasible given the security constraints. So, I think that’s certainly a valid point and I would like to think that there are ways to address it.

                     MR. MULETA: Can I --

                     MR. GALLAGHER: Certainly, John. You got something you’re not transparent about?

                     MR. MULETA: FCC is sort of a black box. I think one of the things that came out in the earlier discussion -- I, sort of, wrote down three things that I took away. One was the need for uniform metrics; the other one was for transparency.

                     Now, I don’t necessarily think that transparency has to be what the application is. It can’t be a uniform metric that sort of looks across all the applications that says it’s megahertz pop or it’s megahertz --

                     MR. SNYDER: I just want to know what people are doing with it.

                     MR. MULETA: Well, no, that’s a different question. That is a very different question as opposed to measuring efficiency. So -- I mean, do you actually care what the Department of Transportation is using with it -- what the application is or is it just a measure of its efficiency so that you’re able to make the comparison?

                     So, I think in order to do market discipline and things that do need uniform metrics transparency, and I think there is a question as to what do you do with incumbents when -- you know, even if you measure it and they’re transparent, how do you move them out?

                     I don’t necessarily think that the two issues are in opposite of each other.

                     MR. GALLAGHER: Jim, did you want to offer something here?

                     MR. MILLER: Well, I don’t have much to say, besides, I’m sure Treasury and Justice and the Department of Defense have classified spectrum. Aeronautical spectrum, spectrum that the Department of Transportation uses, I think, is out there for the public record. So, unless someone can correct me I don’t see that we have some super secret applications going.

                     MR. GALLAGHER: And, Jim, just so I give you a few thoughts just from a top level perspective looking across this over the last two years and dealing in many cases with the more difficult elements of the challenge you pose.

                     You know, first on this culture of secrecy -- well, let me just say the objective -- we will not compromise national security or homeland security for purposes of transparency. That will not happen, period.

                     What I can say is that we’ve been able to work accommodations specifically with the Defense Department, specifically around classified systems using the Department of Commerce as the intermediary between the commercial sector and the Department of Defense to understand the contours of their use without sacrificing either of the national security or homeland security missions and then working those arrangements with the private sector.

                     And the specific examples I point to are ultra wide band, 3G, the 70/80/90 gigahertz rules, which John's shop just put out the service rules for. Those are specific examples or we’ve been able to provide that interface. That, I would suggest, is a model on how we get to transparency because you will never have complete transparency from government as long as we need to protect these things. And we will not be making sacrifices in that area relative to transparency.

                     We can do a much better job -- and this is a positive message for those of you that are seeing gloom and doom in this. Is that -- one of the thoughts we’re mulling -- it was mentioned earlier, auditing frequency use. One way of doing it, how can we generally describe the things that are known in public? I mean, what Jim’s folks are using at FAA. Well, what are the capabilities of those systems to the extent that we don’t need to classify them? How do we make that available so that people know what we have to work with around those systems or how they need to be accommodated in innovative new ways? We can certainly do a better job as a government of providing that information.

                     MR. SNYDER: Since there’s no competition here, let me just ask one question --

                     MR. GALLAGHER: Well, let me ask, is there anybody else who would like to ask a question besides Jim at this point? We have one. We have Marcus -- Mr. Marcus from the FCC right behind you. If you would defer and let him go and then we’ll see if there’s anybody that lines up.

                     MR. MARCUS: Let me just say I represent myself at the moment. Radio systems use two basic inputs; technology, hardware and spectrum. For most private sector users or many private sector users, spectrum has been monetized and has a real value. For all Federal government users spectrum has no value. It’s a free good assigned through an administrative process, managed by NTIA.

                     An amusing trend over the past 10 years has been increased use by Federal agencies of nongovernment systems, most notably in the satellite area and cellular area.

                     As far as I know, no one in the Federal government tracks this use of governments -- by Federal government of nongovernment spectrum, and it demonstrates that its spectrum has cross elastic to some degree.

                     Should NTIA track this use of nongovernment spectrum and are there any lessons learned that the fact that these nongovernment resources with whom we have a cost spectrum weighed into it, seem to be marginally cheaper for Federal government use because presumably Federal government managers make a conscious decision by a nongovernment system rather than a government system.

                     MR. GALLAGHER: We were eagerly awaiting the question mark there, but it did show up at the end. Thank you for that. And it looks like Jim’s got something to offer. I think certainly we should -- I would like to hear from Michael on this and then Dr. Rosston, you know, just as kind of the outer -- on the overarching elements of the answer to that question. But, Jim, why don’t you go first?

                     MR. MILLER: Dr. Marcus, I presume. The question that I have is on your basic assumption that the Federal agencies consider the spectrum they use has no value. I’ve been involved in the President’s spectrum policy initiative since its inception and I’ve never heard a Federal agency make any such statement nor would I believe they would.

                     So, that underlying assumption, I think, might need to be corrected.

                     MR. GALLAGHER: Okay. Why don’t we talk to -- Michael, why don’t you give us your thoughts on that? A cross elasticity notion that we have government users buying nongovernment services specifically as mentioned by Mr. Marcus, the satellite and the CMRS environment.

                     Is it worthwhile to measure that cross elasticity to track it? Are there any lessons we would learn from the government buying services -- spectrum services from the private sector? I think that’s the question.

                     MR. CALABRESE: Well, it certainly would be worth studying, although -- you know, I would just assume it’s because of other value added. In other words, you know, as Mike said, the agencies have free access to comparable frequencies, but I think it’s the -- you know, the service itself, it’s a commercial value added, I assume, is the difference.

                     But on the other hand, it’s interesting that that’s happening despite the fact that we’re not internalizing any opportunity costs for public users. And so, you know, that whole discussion we just had about incentives and the possibility of an internal market that internalizes opportunity costs would seem to push us even -- would push even further in that direction.

                     MR. GALLAGHER: Ricky, you’re living in the middle of this one right now. What are your thoughts relative to that question?

                     MR. BURKE: I think a commercial service provider that’s very similar -- well, like what I operate is focused totally on supporting Federal government needs and we have --

                     MR. GALLAGHER: Just for the benefit of those in the room, Rick, could you just describe briefly what that service is you provide the Federal government? Kind of, you know, briefly how it works.

                     MR. BURKE: Very briefly, we’re an SMR provider that is operating in the Federal government spectrum providing exclusive service to Federal government users on a shared basis. So, what we’re seeing is that we can build a very efficient network utilizing resources, reutilizing, reusing resources as heavily as possible in order to maximize the efficiency of the spectrum used and provide a very high grade of service to the Federal government users.

                     The benefit to them is that there’s very low capital or infrastructure costs required by the government in order to get into the network. You know, buy some portable radios and sign onto the service.

                     We’re able to effectively provide a very high grade of service to fundamental users, fundamental needs. Our focus has not been on providing service in the public safety requirements, but on all of the other fundamental essential communications that are needed.

                     In Washington D.C., we have quite a good successful system implemented. We are currently in the process of phasing out the wide band 25 kilohertz channel system -- channelized system and bringing on line the narrow band 12.5 kilohertz system in such a manner that it’s transparent to the users and we’re able to build in such a way that we can focus on specific needs to the government. Without those agencies having to go into the pool, if you would, of Federal frequencies and put their hand in to justify a need -- a couple of pair to handle radio communications to support, you know, 60 radios. Instead, they’re able to join into a commercial provided network.

                     MR. GALLAGHER: Thanks, Rick, because you’re living, kind of, in the hybrid world that Mike’s talking about. Dr. Rosston, if you could provide a quick comment and then we’ll see if there’s time for another question before we go to close.

                     DR. ROSSTON: Okay. First, I have to agree with Jim’s initial response that I think that Federal government users probably do realize that this is a valuable resource and actually treat it that way. But there are lots of -- I don’t know. Lots of police officers out there who probably carry cellular or PCS phones with them on their beat because they provide alternative services, but also -- and it shows that there probably are lots of opportunities for commercial services to provide some of the services that government spectrum is currently used for and it’s possible -- but presumably the government people would say but, we need our spectrum for our critical needs at certain times.

                     So, there probably are trade-offs between the use of commercial services for some things, but maybe there are also trade-offs when you need critical services that need a certain amount of bandwidth and there may be able to be trade-offs of priority in-use or other systems that can free up some of this service for commercial services and provide more efficient cost effective services to the public safety agencies as well.

                     MR. GALLAGHER: Thanks for that. I think we have time for one more question. We have a hand up here in the back. If you could move to the microphone. And then we’ll move to these recommendations, which I’m sure everyone is eagerly awaiting.

                     MR. LOOSE: How are you doing? I’m Chris Loose. I’m with the Department of Interior. I hate to admit it I’m a real life spectrum manager and I just asked -- it’s kind of a thing.

                     When it’s all said and done, when the dust is cleared, when the rubber is hitting the road, myself and the people that do spectrum management are the ones that are going to have to do all the work after policy is decided. The question is, what are we, both in the non-Federal and the Federal worlds doing to grow spectrum managers? We’re the ones that handle all the frequency assignments. The engineering, getting them licensed. Reporting in Marset, Globalstar, Comset, all those things -- we do report that, by the way. What are you going to do to grow us?

                     The Department of Energy did a study two years ago -- we’re at 50 percent or less of the people available to form these actions. So I ask you, after all policy is done, where are we going to put somebody in that’s going to be able to do the job to make this work? Thank you.

                     MR. GALLAGHER: You know, Chris, you raised a very good question and it’s one that we’re very mindful at NTIA because we need to continue to grow our office of spectrum management and backfill the folks that are retiring or that leave government service. And it’s a significant challenge for the government to have the expertise to offer the technical inputs and the rigor that I’m asking for that we’re seeking as a panel here.

                     Where do we go to get those folks? I do know that -- I think it’s at Auburn University. There’s the Sam Ginn School of RF Engineering and that’s certainly something -- we have to look to educational -- the educational system to drive out and bring to us engineers who are capable of performing the service that you are right now for the Department of Interior.

                     Is there any particular thoughts or counsel or knowledge that anybody on the panel would like to share to answer Chris’ question?

                     DR. ROSSTON: As an economist, I look at this and I see -- having been at the FCC, I saw that we had a relatively small number of talented engineers. We had a lot of lawyers come through and cycle through because the value of coming through the FCC as a lawyer gives you a high mark of value on the outside.

                     I’m not sure that going through and being at NTIA or the FCC gives you as high a value at Motorola or Okia or other places so that people -- people respond to incentive. If there’s some way that we could make it so

that it’s more attractive for people to come in and work and learn these skills and be a manager or have it be an attractive career for these people.

                     Getting back to our responding new incentives. People respond to incentives just like companies do. In fact, more so. So, I think you need to make sure that this is an attractive place to attract the top quality engineers and keep, to replace the top quality people who are retiring.

                     MR. MULETA: I think, you know, my organization, as well as Ed Thomas’ also has, you know, sort of spectrum engineer or spectrum managers.

                     I actually think the answer is in two respects. One is we always need good people and that’s just a broader question that I don’t need to get into. But I think the other is technology because it’s, sort of, policy driven radio systems or the policy driven spectrum mechanism that Michael had mentioned, the XG program that DARPA is running, are all converting this into where a lot of the -- a lot of automation can be put into the actual management rule sets.

                     The FCC has the universal licensing database and that has captured a lot of this of what I call low hanging fruit in terms of analytical processes. In a way what that does is it creates a very attractive environment for new spectrum managers because they’ll be, sort of, in the thick of the policy debates.

                     So, I think there are -- that’s a way of making things attractive for new people to come into this because you’ll have a high level of automation and new tools to make the -- to lead you to better policymaking.

                     MR. GALLAGHER: John, thank you for that. And I just wanted to also, you know, recognize your dedication to use of technology in these areas. I mean, you are definitely a leader in government, and certainly at the FCC in seeking to constantly deploy information technology to assist us in doing our job faster and more accurately. So, thank you for your efforts in that regard.

                     Before we turn to the recommendations I want to start down here with Al on my left, just to change things up. I just wanted to add also, Chris, in response to your question that I think that if we had somebody here from Intel or somebody, they would say that much of these decisions are going to be made inside the chip center and you’re going to have the technology itself managing much of these spectrum challenges. I think that’s what Michael is talking about.

                     When we talk about cognitive radio, you have these devices to be able to be smart enough to sense their own presence, the presence of others, where they are relative to other services, and then to move around the spectrum accordingly.

                     Now, obviously, we can displace folks like you in the meantime. Your service is still critical to what we use today. But that’s, I think, the ultimate objective down the road.

                     Al, why don’t we start. You have less than one minute to please convey to us what you would want to see in writing on the tear-out card.

                     MR. VINCENT: Okay. Two things. One I’ve already mentioned; one I haven’t.

                     One is a mission neutral definition of spectrum efficiency so that we can measure it and people can make choices based on it by technology. And the second one is to finalize -- these are both -- to finalize the definition of interference that we can use, you know, in the future going forward starting with interference temperature that the FCC and the spectrum management task forces have started with. And basically using that to build up rights and responsibilities for transmitters and receivers.

                     MR. GALLAGHER: Very good. Thank you, Al. Now we go to Dr. Rosston.

                     DR. ROSSTON: I think the whole thing, as we’re looking at it, how to allocate scarce resources and the way to make it less scarce is to get it as much spectrum out there as possible, and the best way to do that is to increase flexibility for spectrum users, and probably given that, I would say to adopting something that gets flexibility out there as quickly and efficiently as possible would be the way to do it. Something along the lines of the Kwerel-Williams auction that looks at 400 megahertz of spectrum quickly as opposed to the spectrum policy task force that only targets 100 megahertz.

                     MR. GALLAGHER: Very good. Thank you for that. Adele.

                     DR. MORRIS: Well, as part of the President’s task force on spectrum, I’m going to have to just simply endorse this point, the process of constructing this card, Mike. We’re going to be at the Treasury looking very carefully at a wide variety of recommendations.

                     But at this point I just endorse very strongly the preparation of the card and having a bunch of good stuff on it. And, you know, we’ll be in the business of helping you do that.

                     MR. GALLAGHER: A very politically astute answer from the doctor.

                     MR. MILLER: You’ve forced me to put all of my thoughts into one quick sound bite. Regulations that promote a benefit driven transition based on practical science.

                     MR. GALLAGHER: We’re going to get John at the end as my co-moderator here and turn to John.

                     MR. LAWSON: I guess the payoff for the government here is to get that analog television spectrum back to beach front property. The ‘96 TeleCom Act established some broad guidelines to do that. Subsequently, budget legislation said you had to get to 85 percent market penetration for digital reception before you can turn it off.

                     There was a big lag between ‘96 and what’s been happening recently at the FCC. I have to commend Michael Powell, his leadership. We’ve got a tuner requirement now for new sets; plug and play for cable; broadcast flag. They are marching through and knocking down these barriers.

                     The last big one that we need to get to that 85 percent is cable carriage. We have to have guaranteed carriage of our free, over-the-air, unduplicated signals. That’s the only way that we’re going to get 85 percent. And if you look at the Supreme Court’s 1997 decision in the Turner case, which upheld cable must carry, they said you have to have cable carriage to preserve free over-the-air broadcasting because you don’t have the audience base, otherwise the economic base to do that.

                     MR. GALLAGHER: All right. Bill, your view.

                     MR. HOGG: I think what we would say is that we would like market driven allocation of spectrum that provides flexibility to the user. I think that comes in the form of not tying our hands and allowing us to innovate and not provide restrictions such as receiver, sensitivity specs, receiver specs, or interference noise temperature.

                     I think it should offer predictability in the form of license certainty and I think it should be dedicated to the user. I guess the last thing is that I think it’s important that we define what the rights and responsibilities of those users are.

                     So, I think if we do those things in policy development we’ll be successful and we’ll be able to make sure that people are executing on that policy.

                     MR. GALLAGHER: Thanks, Bill. Michael.

                     MR. CALABRESE: Annual user fees and flexibility for all spectrum users with respect to, you know, Federal use and, you know, the initiatives kind of mandate an internal market for Federal government spectrum use with three objectives to internalize opportunity costs so that -- so that commercial substitutes and equipment modernization is encouraged to motivate and finance R&D, particularly on technologies that promote dynamic sharing and spectrum efficiency.

                     And third, just -- and third, not to deter opening Federal spectrum to opportunistic sharing. In fact, on that last point it would be great if just as the FCC now has a proceeding, for example, that’s looking at how can we open the broadcast band to opportunistic sharing, particularly for wireless last mile access, that, you know, the President’s initiative might look at what is the band -- what is the Federal band we can target below 1 gigahertz to provide that low frequency spectrum that the equipment makers, chip makers and the software makers are begging for in order to provide an alternative platform for affordable wireless, last mile connections.

                     MR. GALLAGHER: Thank you. And, Rick?

                     MR. CALABRESE: As we go forward and begin to open up new spectrums, I would like to see the encouragement of regulations that will encourage entrance by small businesses in such a manner that if we’re -- one service is vacating a spectrum that we have, indeed, hard cut-off dates for that change and that the rules that we work under be relatively simple, and the application of spectrum technology be very flexible.

                     MR. GALLAGHER: Thank you. And the ever independent FCC, John.

                     MR. MULETA: I think for Federal users, I think the first thing is you got to measure it, you’ve got to do it transparently and then you got to do it consistently. So, if you can achieve those three things then your policy objectives then, I think -- and your policy development on your card, I think, will go a long way.

                     MR. GALLAGHER: Well, I want to thank you all for your patience and for your participation. I thank each of the panelists for helping us reach to the goal that the Deputy Secretary set for us at the outset, and we’ll be adjourned until 1:00 when we will have our second panel, which will be co-moderated by the ever lively Ed Thomas.

                     (Whereupon, at 11:41 a.m., a luncheon recess was taken.)

AFTERNOON SESSION

(1:12 p.m.)

                     MR. GALLAGHER: Since our last panelist has joined us, I think we’re ready to start the afternoon session.

                     Welcome everybody -- welcome back from the lunch break. We had a good morning session, which I will summarize in about two minutes for the benefit of our panelists that are here and did not have the ability to attend.

                     But this is the panel for deployment of new and expanded services and technologies. We’ll have -- and it’s co-moderated by my good friend, Ed Thomas, from the Federal Communications Commission, who is the Chief of the Office of Engineering and Technology. We’ll look forward to a great dialogue.

                     Before I introduce the panelists and ask Ed for his thoughts, I thought I would just summarize real quickly for the panel the Deputy Secretary started our morning with a very tall order of getting to solutions, getting to specific recommendations.

                     The way that I encapsulated that in the panel this morning is eventually it’s certainly my preference that this document that we’re going to produce for the President will have a sheet that you can tear out and ideally it’s foldable like this and then policymakers can carry this around with them and know what they’re supposed to be doing to make spectrum policy better administered by the Federal government.

                     It’s something you can put in your pocket; it’s something -- it’s a score card; it’s a performance agreement. However you want to look at it. It’s a document which has great utility, but it’s expressed in one three-fold card that would be torn out of the plan.

                     Just so you all know, you will be asked two questions, the same as every other panelist. The first one we’ll get to in a second. But the second will be at the very end. I’ll ask each of you in less than one minute to please put the words on the card that you would want to see. One suggestion, one policy that you would want to see on that tear-out card.

                     Now, remember, you have to share space with a variety of other objectives, so you must be thrifty on your use of words. So you can be thinking about that as we go through our discussion.

                     But the Deputy Secretary gave us -- this is not our conversation of how important spectrum is. That’s a given. That is why we are here. It is much more to solicit from you as experts in the technical arena in this case, how do we -- what should we be putting in this document to guide spectrum policy for the next five or 10 years. What are practical, achievable focal points for us to be including, not only for government users -- that’s certainly a welcome contribution. But also for private sector users in underscoring efforts that are, perhaps, ongoing at the FCC. Or not supporting those things, as the case may be.

                     Then -- but we had a good discussion focused -- for an hour on the notion of efficiency. What is spectrum -- what does efficiency mean in the spectrum workplace, in the marketplace, in the policy arena?

                     We spent another hour on incentives and we talked about what are the incentives both in the private sector and public sector for efficiency or for good spectrum use. And then we had questions from the audience and everybody submitted their recommendation.

                     So, it was a productive morning. It was much more focused on economic theory, on incentives and on the definition of economies.

                     If I had to, in my mind, just summarize what I would expect from this group at the end is, one, what is coming? What technologies are coming down the pike? I think that we know some of these that are already on the cusp and we’re aware of them.

                     Then the second question is, what are -- is the policy framework accommodating of those technologies? If not, what do we need to do to fix it because those are the things we need to be working on that are tangible and have an immediate impact to the American people.

                     And then finally, we are -- one, two, four, eight, nine, 10 -- people up here. There are numerous other things happening out there beyond the scope of our knowledge and awareness. How do we have a system which takes into account those technologies that don’t exist yet today? Or is happening in someone’s garage and we’re just not knowledgeable of it. How do we make sure that those technologies, those individuals, those services are represented in our decision-making?

                     So, if you can just keep those in mind. We’re looking for specific deliverables, looking at those types of subjects.

                     And before I introduce the panel I thought I would just ask -- welcome Ed. Thank you for coming back to the Department of Commerce. It’s been a wonderful partnership working with the Commission and with you. And if you had any remarks you wanted to share with the folks, please do.

                     MR. THOMAS: Just very briefly. First, thank you for inviting me, Mike. It’s a pleasure to be here.

                     You know, I think the timing of this is rather opportune. If you think back when the Commission issued its spectrum policy task force report, it was in October of last year, and time has gone. The Commission has taken some actions. The President has directed the NTIA to take a look again. So, this is a great time to sit back, take a look at what’s been going on over the last couple of years and asking what mid-course corrections, if any, are necessary either on the commercial side or the government side.

                     So, I look forward to hearing what the panel has to say and with that, Mike, back to you.

                     MR. GALLAGHER: Very good. And then just for purposes of housekeeping, bathrooms are out the door here by the elevators. When it comes time for questions, which we will reserve 30 minutes at the end for questions, if you would step to the microphone so that those on the internet can hear you, identify yourself and who you are representing, and then state your question in the form of a question. That would be helpful, as opposed to a speech.

                     So --

                     MR. THOMAS: It’s jeopardy.

                     MR. GALLAGHER: Yeah. It is kind of like jeopardy. We have a question. Please come to the microphone. So, be taking down notes and then we’ll look forward to hearing those.

                     Starting with the introductions. We have down at the far end of the table we have David Clap, who is the Principal Engineer at Qualcomm. Thank you, David, for coming today.

                     To his left is Mike Bamburak, who is the Vice President of Technology, Architecture & Standards at AT&T Wireless Services. You know, a constituent of my home state. Welcome.

                     To his left we have Dr. David Borth, who is Vice President and Director at Motorola. Thank you for coming, David.

                     And then to my right is Dr. John Chapin. You can see the theme of all the doctors. Chief Technology Officer of Vanu. Welcome. Vanu has been a frequent participant in a number of spectrum policy discussions in certainly my two years here.

                     We’ve already met Ed. And then to his left is Chris Douglass, who is the Advanced Infrastructure Leader for Wireless e-Business at IBM Global Services. So, you’ll let us know if there is really a magical mystery business machine.

                     MR. DOUGLASS: There is.

                     MR. GALLAGHER: There is. And then to his left is Dr. Marc Goldburg, who is the Chief Technology Officer of ArrayComm. Welcome.

                     And then to his left is another doctor, Dr. Paul Kolodzy, who is a personal friend of mine, a great spectrum advocate and co-author of the Spectrum Policy Task Force Report. Paul, welcome. It’s good to have you.

                     And then to his left, finally, is Dr. Carl Panasik, who is Director of Advanced Architecture at Texas Instruments, Inc. Welcome, Carl.

                     DR. PANASIK: Thank you.

                     MR. GALLAGHER: We look forward to hearing your contribution.

                     So, the first question that I have and I’m following the orders of the Deputy Secretary in asking this question, is if you could, please, define for us spectrum efficiency and its role in setting spectrum policy.

                     So, please, be as specific as possible and I would start with a doctor, but there are far too many of them here, so we’ll just start with Mike and then we’ll go to David and then we’ll work our way down this way.

                     So, Mike, why don’t you give us a definition?

                     MR. BAMBURAK: Okay. I’ll start off by asking you, can you repeat that question, please?

                     MR. GALLAGHER: What is your definition of spectrum efficiency? That is the first thing. Being as specific as possible. And some have -- just to give you an example, from this morning every panelist described this. We will spend a full hour on it. I wanted to take everybody’s temperature because the Deputy Secretary did ask. But we had everything from bytes per hertz per kilometer squared, which might be very useful for people at this panel, to notions of social policy or economic policy being woven into there.

                     But it’s your definition of spectrum efficiency and then, secondly, what is its role in setting spectrum policy?

                     MR. BAMBURAK: Okay. I guess the way I would answer that, being an engineer, you have to go with the engineering definition, bytes per hertz. But I’ve also worked out in the field many, many years. So I think I would tack on a factor to that related to whether or not it’s implementable, the overall cost, benefit/ratio kind of thing. So it’s not just bytes per hertz.

                     MR. GALLAGHER: Okay. Very good. Why don’t we go to David and then we’ll work our way back down this way.

                     MR. CLAPP: Well, over the weekend I was rereading the January 1979 Bell System Technical Journal where they introduced the amp system and one of their objectives --

                     MR. GALLAGHER: Now, what would have driven you to do that?

                     MR. CLAPP: Well, indeed, there is a very nice definition of efficiency there, which is, indeed, something approximating the number of call pairs per megahertz per square mile. And I would agree here that we need to add the is it implementable and the cost of -- you know, I looked there at the -- they were thinking bay station radius would start at eight miles and work its way down to one. And as we saw, the analog system was so successful that we outraced those, sort of, projections very quickly.

                     But I’ll stick with that 25 year old definition.

                     MR. GALLAGHER: Very good. Thank you. Now, working our way down this way, why don’t you tell us what you think, David?

                     DR. BORTH: Okay. I think it’s -- my definition in terms of bytes per second per hertz per kilometer squared -- and I say that rather than calls because the issue of calls begins to get a little fuzzy as we go from primary voice traffic to data traffic. And so, therefore, I go along those lines.

                     Now, as far as its input to spectrum policy, there is a very significant input to spectrum policy in making choices along those lines. I think one of the issues is you can choose things differently and they definitely have a different impact on the overall spectrum policies that apply here. That’s my concise definition.

                     MR. GALLAGHER: Thank you. By the way, you’re doing this much quicker than the earlier panel, which was filled with economists and lawyers. But, John, go ahead.

                     DR. CHAPIN: I agree with the technical definition and I also would just add that if we take a really long range view, our overall economic and public safety and social benefit is somehow, in some form, related to the total number of bytes per second that we’re able to move across our entire geographic area as a country.

                     So, the underlying technical definition has to be one strong component of whatever definition of efficiency we end up with.

                     MR. GALLAGHER: Very good. Ed, you’re free to chime in. You might want to hold it until the end.

                     MR. THOMAS: I can’t do that.

                     MR. GALLAGHER: Chris.

                     MR. DOUGLASS: I would add, also, from the technical side, also looking at the business side, the business case, trying to solve the digital divide and -- as customers, the end customer wants to increase and improve the bandwidth efficiencies. The more they’re given today the more they want for tomorrow.

                     So, to net it out I would say the business case is also as important as the technical side of it.

                     MR. GALLAGHER: So, you would increment it in a business context as well. So, like rate of return or uninvestment or some similar measures?

                     MR. DOUGLASS: Exactly.

                     MR. GALLAGHER: Okay. Very good. Dr. Goldburg.

                     DR. GOLDBURG: I think one of the challenges in trying to define spectral efficiency is that a given system doesn’t have a single spectral efficiency. So, if you look at a given or broadband data system or a wireless voice system, all these systems actually have a whole trade-off or range of trade-offs that can be made between spectral efficiency or throughput on the one hand and coverage on the other.

                     So it might be from an economic perspective more efficient to have very large cells with relatively less throughplay than to have very small cells with very high throughput.

                     So, I think, you know, bytes per second per hertz per square kilometer or bytes per second per hertz per cell are all good metrics, but it probably needs to be done within the context of a given service definition. So, maybe it really is users per hertz per square kilometer where a user is someone who is receiving 512 bytes per second -- and, just for example, for data, or 10 kilobyte streams per voice.

                     It does have to be done in the context of a service definition in order to be meaningful.

                     MR. GALLAGHER: Okay. Very good. Paul.

                     DR. KOLODZY: I’m going to take a little bit of a different tact. Number one is that some of the viewers already said there’s an economic aspect, there’s a technical aspect, and the idea there is you can be very, very spectrally efficient, but if it doesn’t cost you way too much, then it’s really not a viable possibility.

                     I also agree with John Chapin a bit in a sense that it’s really you should look at the overall usage of the spectrum, the overall resource and how you’re actually using it, which means it’s how you use it and how you access it. If you actually have very, very good bytes per second per hertz, if you want to say per square kilometer, but that you have no way of accessing that bytes per second per hertz per square kilometer or you are basically blocking out a lot of it, then obviously you’re not doing it very efficiently.

                     So, I’m looking at it from a global resource, not from a localized metric. So I think you need to take a look at the global aspects.

                     MR. GALLAGHER: Thank you, Paul, and finally we’re at the end.

                     DR. PANASIK: Yes. Let me add to what Paul said, that in this spectrum policy task force report they talked about you could take a spectrum analyzer and put an antennae on it and scan across the bands and find that there’s very little that’s been used -- in use at the present moment.

                     I think I would add the perimeter of time to that. That is, is it -- the question is not necessarily efficiency, but utilization. You know, is the spectrum being utilized at a given point in time and we find that very little of it is and that there is plenty of opportunities for sharing.

                     MR. GALLAGHER: Very good. Well, that went much quicker and there was much more agreement amongst this panel, which is not surprising, but you might all want to go back and listen to the internet conversation that we had this morning for the first hour to see the other aspects of that definition.

                     Adele Morris is here from the Department of Treasury and she’s been working very, very hard on trying to come up with a universal definition that’s useful to government policymakers. If it was as simple as this panel laid out it would be a very short chapter, right, Adele?

                     MR. THOMAS: But a good one.

                     MR. GALLAGHER: I’ll tell you what, I’ll leave you with the opportunity to chime in with your thoughts about that efficiency discussion and then, also, to introduce the next question.

                     MR. THOMAS: Well, I would just add another dimension to it and that would be customers served per square mile or square kilometer because there’s always the issue of broadcasting. And by one definition, bytes per hertz, it’s probably extremely inefficient. But by another definition, simultaneously serving a marketplace and customers and providing information, it’s a very efficient service.

                     So there’s a real question as I think you have to include the issue of customers served simultaneously per cubic parsnip.

                     MR. GALLAGHER: You get to roll the next one out.

                     MR. THOMAS: Let me just throw this out for anybody in the panel who would like to grab it and we’ll just play it out until we run out of gas. As I mentioned earlier, the spectrum policy task force issued this report a year ago October, and there were 39 recommendations in it and the Commission has been going forward and implementing some of those recommendations and, obviously, the NTIA, as part of the President’s initiative, is also evaluating that report to try to make some recommendations what, if any, of those recommendations should be implemented in that initiative.

                     So my question to the panel is, of those 39 recommendations, is there anything particularly the Commission hasn’t done that we should get onto fairly quickly or should the NTIA move rapidly with it, and are there -- or are there any recommendations, if you care to address it this way, that are particularly off the wall and infeasible and we shouldn’t waste our time with it?

                     MR. GALLAGHER: I’ll be real interested in Paul’s response to the last part of that question.

                     DR. KOLODZY: It’s a very short response.

                     MR. THOMAS: So, would anybody like to begin to kick that one off -- and not you, Paul. Yeah, Marc.

                     DR. GOLDBURG: I’ll answer a related question, which is I think the task force did a great job of outlining potential areas for improvement in spectrum policy and spectrum usage. But one thing that I found challenging in looking at the report is that some of the recommendations were based on technologies that were available probably today or within the very near term time frame and others were based on technologies that might not be available for another 20 or 25 years.

                     So, I think the Commission in that sense then is doing just the right thing of now opening up NOYs to explore the various recommendations that were made in the report to see which are feasible, which are not and in what timeframe they might actually become useful for a setting and passing spectrum policy.

                     MR. THOMAS: Marc, just the second part of the question I’m curious. Do you have any opinion on something that the NTIA may want to seriously consider that’s in the report as part of the President’s initiative?

                     DR. GOLDBURG: Well, I think -- and I’m not an expert on government uses of spectrum, by any means. But it seems to me that NTIA and its constituents, namely all the government spectrum users, have exactly the same set of issues facing them with respect to efficient use of spectrum as the commercial world does.

                     Their mission statements may be a little different. They may have higher performance requirements and so forth. But I would think that essentially all the technologies and practices identified there, appropriately modified, could be applied to NTIA’s spectrum management as well.

                     MR. GALLAGHER: Just to help clarify for purposes, initiative has two components. There’s the government, for lack of a better term, looking at itself and making sure that we’re doing everything we can organizationally within the government. There’s also the opportunity for us as administration, as the task force, to focus on specific recommendations for the private sector.

                     So, the manifestation of those in this report, for example, could be three or four or five, 10 of the recommendations that are in the report are supported by -- and the administration should take actions to -- you know, echo support to the Commission for doing those things or for deploying or implementing those concepts.

                     So, you don’t need to confine yourself to just the Federal government users, but application to the private sector as well.

                     MR. THOMAS: Anybody else care to address it?

                     DR. BORTH: Let me address one of them and that’s you mentioned some of the recommendations. One that we’ve looked at for some period of time since the task force came out -- report came out was the subject of, I guess, the temperature aspect -- the interference temperature. And this is one that’s particularly puzzling for us that’s been very difficult to get our hands around because it requires estimation of perimeters that tend to be very difficult to measure; they tend to be dependent on the particular locale depending on the number of users.

                     The real issue is for those that aren’t familiar with the topic, interference temperature has to do with the concept that you can characterize various users that may use the same spectrum as interference and, perhaps, make use of the spectrum again by having basically an overlay or underlay, as the case may be, provided the additional users operate a temperature below the interference -- temperature limit.

                     And we’ve struggled with this one and I think this is one that’s definitely a further out type of concept right now.

                     MR. THOMAS: Paul, would you like --

                     DR. KOLODZY: It always comes down. Actually I want to push -- answer the question in a sense as where the NTIA might be able to go and the Department of Commerce in executing some of it.

                     One of the basic recommendations that came out was in a sense of looking at what we call high data users or in the sense of high peak, low average users and learning how to share that spectrum more efficiently across the multiple city of users.

                     I think that that applies to not only the commercial users for public safety, but it applies to all the different types of users of the spectrum. And so I think that -- the President’s initiative, perhaps we should take a serious look at exactly how that actually applies across both the Department of Commerce’s domain, your domain, my sense and NTIA, as well as the commercial and find out where do these things apply and how to push or move them forward to actually, again, give more access to the spectrum for folks.

                     MR. THOMAS: Anybody else care to address it?

                     MR. CALABRESE: I’ll just throw in a comment from the technology perspective that the technologies related to highly frequency agile devices are not particularly affordable or miniaturized yet, speaking as a person whose company would dearly love to have these and has been scouring the earth for them.

                     So, some of the aspects of the things in the report that have to do with devices jumping around widely and finding white space, we should be looking at those with regard to less agile devices that operate only in one or two or a few bands in the near term and maybe we should be looking at ways of sharing those aspects of spectrum.

                     But maybe we don’t need to be quite as aggressive in trying to think about devices that smoothly tune anywhere from 500 megahertz to 2.5 gigahertz because those are not going to be commercially important, I think, in the near term just due to device limitations.

                     MR. THOMAS: John, just a follow-up on that. Right now, if you were to make an estimate, what is the bandwidth spread of agility that could be economically put on a chip right now? And when I say economically put on a chip, say under $50.

                     MR. CALABRESE: Oh, boy. That’s a tough question for me. I can’t speak to deep expertise there. I will talk about the -- you’re holding a chip here in your hand, Mike.

                     MR. GALLAGHER: But this is from Texas Instruments, so I’ll have to save it for Carl.

                     MALE VOICE: We’ll call in and see what you can do on a single chip because we’ve been looking --

                     MR. CALABRESE: No cheat sheets.

                     MR. THOMAS: We’ll mail this to the Japanese to reverse engineer.

                     MR. CALABRESE: We’ve been looking more at Board level solutions where you might have something that, say, could tune across a variety of public safety bands between, say, 150 and 450 megahertz or so on.

                     Those are still prototype small volume kinds of things that might be affordable for high end public safety, but certainly not for mass market commercial applications. Not yet, at least. And, of course, commercial applications you would like to see things that are much more tuneable than that.

                     So, I think it’s a little ways away. We also have problems with antennas because they don’t have good gain across wide bands like that. We’re really hoping to see some technology spinoff from the large DoD programs like the joint tactical radio system that are starting to invest heavily in components in this area. But that’s going to be three, four years, something like that, before we really see a significant spinoff, I would say.

                     Paul raises his hand.

                     DR. KOLODZY: Actually, Marc, do you want to --

                     MR. GOLDBURG: Self-regulating. Interference. Let me just make a quick comment on that. I think the issue of agile radios -- there are, sort of, two pieces to it and John very correctly brings up the hardware piece of it. So, can we build hardware that’s, you know, wide band frequency agile, has enough processing capabilities in it to be able to speak whatever protocol -- the infrastructure that it’s communicating with it at that moment speaks.

                     So there’s hardware use. But as importantly and somewhat less discussed there’s protocol issues. So, even once we had hardware that was capable of rapidly retuning, capable of supporting multiple modulation formats there’s -- no one really understands very well yet what a cognitive protocol would look like. So even if you had the hardware that could implement it, whatever it is, no one has really defined what are the messaging that would go back and forth between this very smart radio and the presumably smart infrastructure that it would have to speak with. And that’s an equally or -- that’s, at least, an equally difficult problem to be able to have the agile hardware.

                     I think another aspect of these cognitive radio systems -- which I believe in the long term, by the way.

So this is one of the longer term items I was referring to in the policy task force discussion was it’s much easier to build efficient low power devices that can be frequently agile than it is to build high power infrastructure devices. So it’s one thing to rapidly retune a half watt handset. It’s another thing to rapidly retune a 10 watt or 100 watt base station that has large mechanical cavity filters on the front of it to prevent emissions.

                     And so, again, I think this is a technology. Then the long term is going to be very useful, but it’s probably at least 10 years away before its -- in its, you know, grandest envisioned form before it’s commercially meaningful.

                     DR. KOLODZY: Well, that’s where I wanted it to head off in the sense that -- first of all, I agree with some of the statements, but I disagree at the same time. There are things that are going on today that show you some insight to some of these problems.

                     For bandwidth -- you know, how much bandwidth can you handle in the sense of getting a 30 percent bandwidth solution or whatever? You know, 30 percent tune-ability, center of frequency, is a doable system right now. You’ve already devices that are out there to be able to do it. Gain the wide range of jobs --

                     Actually the 150 to 450 is a new one on me. That’s actually very good. That’s actually excellent.

It actually pushes beyond that.

                     The issue -- so 200 megahertz was a goal that was set out a few years ago to be able to do tune-ability across -- an inexpensive device and that was actually in the -- that was supposed to go into 600 to 800 megahertz or from 1.8 gigahertz to 2 gigahertz. So those things are definitely impossible. Those are actually being pushed by the Defense Department and the reason is because there is limitations.

                     There is a fundamental limitation that’s still yet to be cracked in all of these -- I will make a comment on -- and that is even the devices are getting better, you can gang them up, antennas seem to be still a major, major issue that has to be addressed.

                     In fact, there was a meeting I was supposed to go yesterday on -- which was actually trying to get better insight as to new antenna technologies because no one has actually cracked that one. That’s actually a fund -- there’s some fundamental physical laws there that have to be challenged for us to get there.

                     But, again, 30 percent of bandwidth, 40 percent of bandwidth, that’s probably in the doable range. Beyond that that gets very, very difficult.

                     MR. THOMAS: Carl.

                     DR. PANASIK: Yeah. We were very encouraged that TI, when the spectrum policy task force put out their report because it kind of opened the door to us to try to build a device that someplace -- someplace between a cellular phone and a WiFi card.

                     You know, we think that there is something -- there’s an extension to the cell phone -- adjacent bands, using them in an ad hoc manner, using them in an unlicensed manner, that we think would be very valuable to consumers for data.

                     And so, in order to effect wide band data in a ubiquitous manner, we think that modifying the cell phone, making it more agile than it is already -- I mean, you know, this -- this phone here operates over two different modes, four different bands. It’s a very agile phone. Of course, it’s driven by the base station. That’s where the real intelligence is in the system.

                     But we think that we can put in the cell phone today, and many of the semiconductor manufacturers have the capability of putting phenomenal processing power into the cell phone so that it could learn its path, if you will. It could be cognitive.

                     MR. THOMAS: Yeah, David.

                     MR. GALLAGHER: Which David.

                     MR. THOMAS: No, Mike.

                     MR. BAMBURAK: Okay. My comment is to follow on to a lot of these doctors. There’s no doctor in front of my name so I can talk about, you know, practicalities, realities.

                     (Groans.)

                     Wait a minute. I applaud the efforts to look at these innovative techniques because, you know, in wireless we’re doing a lot of this stuff ourselves to try to be more spectrum efficient. So that’s great.

                     My team and I work on forward-looking work at AT&T Wireless and one of my favorite sayings when I give a presentation or whatever is -- but it’s easy for me. All I have to do is make it work on paper, on my laptop, the overhead projector kind of thing.

                     So what I wanted to say is, you know, things take a lot longer than you think. The example down there of that multi-mode, multi-band phone is -- you know, that’s the rudimentary SDRs, which is great and we’re going to have to live with all this technology.

                     But the point I really would like to make is, you know, harmonization in any form, spectrum, technology, whatever, it’s so much better than trying to solve problems with technology. So don’t lose sight of that in that all these technologies are going to solve all our problems. It would be better to address the root cause of things.

                     MR. THOMAS: David.

                     MR. CLAPP: Well, I just wanted to remind us that much of this we’ve made great progress and we started out the day with what -- that Business Week was from 1990, right? And, indeed, it took us about five years from there to get the digital, cellular, commercially deployed. And at that point we had already started to address some of the primary recommendations in the task force document.

                     The one I would highlight, I think, first would be transmit power control. So once we’ve pinpointed that we got the order of magnitude efficiency that we were looking for in the transition from the analog to the digital. The next five years we did -- we’re now to the CDMA 2000 air where we’re approaching another factor or two on top of that.

                     So, we’ve got significant spectral efficiency increases. Just, to my mind, kind of mind-boggling. You have to sort of see it to believe it.

                     It does mean that I struggle with this interference temperature issue because -- yes, I read the report. We have digital technology. We can tolerate interference. We will adapt to the interference. But it’s causing us capacity. It will drop calls at the edge of coverage. It will effect the economics because it’s going to significantly effect system capacity.

                     But we now are at the point where, yeah, we not only have the multiple band, we aren’t switching rapidly across wide frequencies, but we’re seeing carriers here who have taken pieces of 800 spectrum and now they’re doing 1900 spectrum and they have radios that transparent to the user, go between them. We’re finally starting to see hit the commercial market radios that make the technology underlying and transparent to the users.

                     So we’ve come a long way in these years since 1990.

                     You can go down now to your local store and do a data card that -- I have never used the cognitive word. I usually say it’s adaptive. And indeed we measure what’s going on and at a very rapid 10 millisecond rate we change not just the coding, but also the modulation technique. So we’re making small steps towards that goal.

                     I think we’ve come a long way and I think when I answer your final question here I’m going to say we have to be careful, I think, to match --

                     MR. GALLAGHER: Don’t jump ahead. Don't jump ahead.

                     MR. CLAPP: Okay. Then I’ll wait --

                     (Several individuals talking simultaneously.)

                     MR. THOMAS: We'll take about ways to change later. Anything more before we go to the next question?

                     MR. DOUGLASS: I would just add from IBM’s perspective, we have business customers out there that have all the respective gentlemen at the table here’s products. Some of the other considerations are interoperability with the devices themselves and then batteries. So if we move up and down the different frequencies we’re absorbing more and more battery consumption.

                     But being able to support different device platforms, being able to support different frequency spectrum and so forth is key for business customers out there. There’s no such thing anymore -- as I always say,

a black Model T Ford, everybody has their own little likes and dislikes. So, they all have their own customers that they deal with and so forth.

                     So, our goal is to try to get these products to all interoperate together no matter what frequency they’re on and so forth.

                     MR. THOMAS: Mike, shall we change the subject?

                     MR. GALLAGHER: Sure. The one thing that I would like to just leave the opportunity for all of you is that -- you know, there will be homework and there will be a final exam on this project that we’re embarking on right now. If you could think anew once you leave here today, after listening to your colleagues about what specific comments you would have relative to the spectrum task force report, we will be asking that question in our request for comment and I will welcome and expect to see input from each of you as to those items that you would like to see us accent and those that you would, perhaps, think that are not applicable because those will be very helpful to us as we form our judgment and go forward.

                     The other thing I just thought I would mention on antenna technology -- I know there was a brief discussion on that. NTIA/ITS Boulder Labs hosted the ISART (phonetic) conference in March, and for those that are interested in looking at some of these antenna technology -- I know they dedicate something like two or three days to these types of things and very technical discussions. And for those of you that are knowledgeable, you’re welcome; and those of you that don’t know about it, you can certainly inquire through NTIA and learn more about that conference and you’re invited to attend.

                     For the question that I have it’s in the next known period, reasonably known period, that I would suggest five years. I’m happy to accept a shorter time. I do not want to go beyond that because then we get into Buck Rogers discussions.

                     What other technologies that we are going to be seeing come into Ed’s shop, come into NTIA saying, find a place for me, find an accommodation for me. I mean, we have -- just in my brief time here we have had to answer the question relative to ultra wide band, relative to finding additional spectrum for CMRS, relative to finding an accommodation at 70, 80 and 90 gigahertz and the, of course, doubling the amount of spectrum for WiFi gigahertz.

                     One of the questions we are going to be seeing over the next term, no longer than five years. And I need to get an answer from each one of you because it counts.

                     We’ll start down at this end with Carl this time and we’ll be fascinated to hear what your thoughts are.

                     DR. PANASIK: I think that it’s clear that data is having a tough time in the take-up in the cellular world. And the problem is the data rate and bandwidth are linked together. The fact that spectrum was auctioned for cost -- spectrum cost is very high and it does support voice very well. Millions of people are satisfied with their voice service.

                     But in order to allow data to be had, we think that data has to be in an unlicensed band or a restricted band of some sort -- I’ve kind of alluded to that --

                     MR. THOMAS: Carl, could you just repeat that. I didn’t catch that.

                     DR. PANASIK: Yeah. We think the data part of it needs to be in an unlicensed band where there’s not the cost. For instance, today -- and please correct me if you think I’m off base on this, but for $50 a month for voice you’re paying $20 for infrastructure, you’re paying $20 for the business part of it and you’re paying $10 for the spectrum. Let’s just say.

                     But if you --

                     MR. GALLAGHER: Is that close, Mike?

                     MR. BAMBURAK: Let’s go with that for now.

                     MR. GALLAGHER: Okay.

                     DR. PANASIK: So, in my argument that’s 10 kilobytes per second. If I want to get 100 kilobytes per second I’m going to pay $100 a month for spectrum. So, it’s going to cost me $140 a month and there’s people not willing to pay for that.

                     So, we think that for data -- data needs to go to a different mode where, maybe, there’s a little bit more free play, if you will. Maybe there’s a different quality of service in an unlicensed band. That’s why I was showing you these two objects there earlier -- the cell phone and the WiFi card. Maybe there’s something in between that’s a cellular like unlicensed data network that allows you to overcome the cost that’s prohibiting people from using data.

                     MR. GALLAGHER: Cellular like unlicensed that we’re talking about more robustly deployed WiFi or ComMeta (phonetic) type of offering -- is that what you’re seeing on the horizon?

                     DR. PANASIK: Yes. In an unlicensed band that’s somewhat restricted to certain kinds of animals, if you will. You know, that we don’t allow just -- like the Isan (phonetic) band at 2.4. We don’t allow everything in there, but we allow like devices to cooperate with one another.

                     MR. THOMAS: Carl, just a follow-up to that. How do you fit satellite into that, because the economics are different?

                     DR. PANASIK: Yeah, yeah. We're mostly looking at the terrestrial cellular approach of modifying the cell phone is the best I can tell you on that.

                     MR. GALLAGHER: You’re welcome to listen to other -- you’re not limited to one. I want to make sure that we capture the thinking, but leave a few for the folks at the end of the table on my right.

                     Dr. PANASIK: I’ll just stick with that. Thanks.

                     MR. GALLAGHER: Okay. Paul.

                     DR. KOLODZY: I’ve got to leave some -- okay.

                     MR. GALLAGHER: Just for the benefit of the folks that are -- you know, Paul is the one that imbued this building with the excitement about -- I think it was like cognitive radio when he came over and made a presentation to the Deputy Secretary on XG -- you know the X Generation Spectrum, that DoD was working, DARVA is working on. And so he’s looked upon with some affection for stimulating that way of thinking around here.

                     DR. KOLODZY: Well, I’m going to give you four or five different things just to think about as a collage just to keep it near-term.

                     You’re going to see a lot more going on in RF tags in the next five years and their application throughout both commercial and private uses, and you’re going to see them as passive tags, you’re going to see them as active tags, and that’s going to change considerably in the sense of the amount of power, the range and type of spectrum that’s going to be needed for that.

                     You’re going to have indoor location base systems. Right now we have an outdoor called GPS, but we don’t have indoor, and there’s a big push going on right now as developing technology for indoor tracking of systems to combine with RF tags, NY (phonetic). That’s going to happen probably in the next five years.

                     This is not Buck Rogers stuff. This is stuff that’s been actually in the lab and looked at.

                     Pier to pier networks, which is people do know that they’re out there today, but they have not been implemented extensively, are going to have -- some people call them mesh networks. They don’t have to be meshes, but that is one application, one implementation.

                     A pier to pier network will actually cause a significant problem both with spectrum, but also we have liability issues. We’ll have some very interesting characteristics there that I’m sure the FCC -- I don’t know if NTIA -- but it’s something that will make an impact quite a bit.

                     RF over fiber is also -- and remoting of spectrum is going to be a big deal in the future. So, if you want to -- those are the things -- and lastly, I’ll say, is things that I’m doing right now in my academic life is security. The requirement for security overlays and ability to provide security for wireless devices is going to eat spectrum. It’s going to need extra resources. Right now your security systems for cyber use up quite a bit of overhead associated with those cyber base systems and that overhead is bytes and those bytes mean spectrum.

                     So when you try to translate from the digital demand, the wire demand to the wireless, you’re going to see some significant impacts associated with that.

                     Those, I think, are my laundry list for the next five years.

                     MR. GALLAGHER: Thanks, Paul. It’s helpful. Marc.

                     DR. GOLDBURG: Okay. It’s an interesting question. I think that while it’s certainly useful for NTIA and FCC and the other regulators to know about the technologies that are coming down the pike, I would caution them or encourage them not to regulate -- to continue not to regulate on technology to a large degree. I mean, in my view -- and we work with regulatory agencies throughout the world. One of the great strengths or the way that technology is allocated here in the U.S. is that it’s done on a fairly technology neutral basis. You know, the regulators start out with some general notion of the types of services they would like to see, but then the rules are written very generally and one is not constrained to typically -- at least in the wide area systems -- to deploy a particular type of technology.

                     So, I don’t know that the rules actually need to take or the thinking in the rules needs to take each new technology that might be coming down the pike into consideration.

                     I’d certainly list adaptive antennas -- I’m, sort of, forced to do that as the sole adaptive antenna person on the panel -- as the technology that can really help to improve spectral efficiency in the quantitative sense that we were talking about before.

                     But I think another technology that’s -- even today it’s becoming more and more important for the data applications -- I mentioned earlier a so-called time division duplex technology where the same frequency is used for uplink as it is for downlinks. So the base station and the terminal just, sort of, share round robin

in time, as opposed to frequency division duplex, where separate bands are reserved for both the uplink and the downlink. And that actually does have a bearing on allocation because TV systems require a single unpaired block of spectrum, FTD systems require paired blocks. So that’s an example.

                     I hope we will have a chance later to come back and discuss some of the points that Carl made about where broadband data systems or what broadband data systems need in terms of spectral allocations because I have some alternatives --

                     MR. GALLAGHER: If you would like to offer those thoughts while it’s fresh in your mind, that’s fine, and then we can -- if we have another round we can think about that. But if you just have a few concise thoughts, I think those would be appreciated now.

                     DR. GOLDBURG: Sure. So, I agree that the economics of cellular voice systems are not appropriate for data. I mean, those systems economics are designed to run 10 kilobyte services, not 500 kilobyte services, even if it’s technically possible to deliver those higher rate services.

                     But I’m a little -- I’m not sure exactly what you meant by unlicensed. I think in order to offer wide area services, the economics, sort of, only work if you have macro cellular, large based stations, which means higher powered transmissions. If you’re interested in quality of service, I think it also means exclusive use or somewhat exclusive use of the spectrum.

                     And so the way to make that spectrum affordable, assuming it’s going to be auctioned or cost money in some other way, is just to increase the efficiency, and I think it’s -- you know, at this point it’s not controversial to say that there are technologies out there that can improve the throughput over cellular voice today on a per hertz basis by factors of 10 or more.

                     So, it’s a combination of combining those -- with those technologies it may be possible for people to viably provide broadband services with less spectrum and at less cost.

                     You know, people talk about ComMeta as an example. ComMeta discussed plans to deploy maybe 20,000 wireless land access points in the U.S. The coverage area of all those put together is somewhere between five and 10 square kilometers. So, across the whole U.S.                                   So, that’s clearly -- you’re going to be able to service some new services and some -- and airports and coffee shops, but it’s not going to be a ubiquitously available service for the general populace if that’s the deployment model. And the economics of those small cells don’t work as you try to scale up to millions of them.

                     MR. THOMAS: Carl, just so I understood

because --

                     DR. PANASIK: Sure.

                     MR. THOMAS: It seems like you may not -- both of you may not be in the same place.

                     What I understood you saying was basically the price -- the current price of the result of an auction that’s necessary for data is so onerous that you’re talking about 100 megabyte services that might, at a minimum, be $100/$120 a shot.

                     DR. PANASIK: Right. A hundred kilobyte. Correct.

                     MR. THOMAS: Yeah. I didn’t take that to mean when you were talking about unlicensed that you necessarily meant unlicensed with the same set of rules that exist today. I read you to mean -- and this is a question -- to mean less barrier to -- financial barrier to entry.

                     DR. PANASIK: Yeah. What I meant is an unlicensed band adjacent to cellular that we could modify the phone and it would work in a more cognitive manner. Not needing the control of a base station to a great degree. In the urban areas, yes, there might be a base station; but in the rural areas, which are some areas that would be expensive to handle with some of the technology that Marc was talking about -- in a rural area you could have, maybe, your own -- at your farmhouse you could have your own base station that would hop to the interstate, if you will, where the cell site really is.

                     That kind of a mind-set. We wanted -- we’re trying to develop a system that covers the entire country.

                     MR. GALLAGHER: And then, Marc, before we move to Chris, I just wanted to respond to your point about technology and regulation of technology. You know, we’re in this room, which is immediately next door to the Technology Administration here at the Department of Commerce, which we share together, and there is absolutely no desire to regulate technology on the part of the folks that are working on this report.

                     This product is not going to be, okay, here are the six things that are coming and how we should regulate them. It’s much more to get an idea of what’s coming so to make sure that we’re putting policies in place that are at least accommodating those intimately, technologies. There may be others and we’re certainly not going to start prescribing, in my mind, certain forms of broadband communication that are preferred over others. That’s up to the genus of the American people and the marketplace to determine.

                     DR. GOLDBURG: Yeah. I didn’t mean to imply otherwise. All I was trying to say was that aspect of how spectrum is regulated today, I think, really is the best possible approach.

                     MR. GALLAGHER: Now, Chris, what’s coming next?

                     MR. DOUGLASS: I think from our perspective the convergence of voice and data is hot on the plate here. If you look at -- probably the first takers will be enterprise customers converting their voice networks to voice-over IT carrying that into a wireless environment. 802.11 wasn’t built from the ground up to support voice technologies.

                     Some of the new technologies that my group consistently works with are new emerging technologies and we moved several years ago from deploying Mobile Star, which today is T-Mobile and working with some of the ComMeta opportunities as well.

                     But also looking at what the next future is -- and that’s probably going to be in wireless broadband or what I would call cellular WiFi or last mile wireless technologies like 802.16 or 802.20.

                     Sixteen was ratified earlier this year. It takes about 12 months to two years for a product to start becoming general availability. But if you look at 802.16 being built up from the ground up to support voice and data, it’s triple security, it’s quality of service and so forth, it acts as a back hall for cellular providers between base stations. It can act as the last mile to the home or office in rural areas.

                     So, we can start to introduce broadband to the masses. There’s a digital divide going on right now. If you look at the top 100 markets in the United States, they all have broadband, DSL cable, fiber. If you look at the rural parts of the United States, those are some of the spectrum issues that I see.

                     Some of the interiors you’re looking at today from a spectrum standpoint -- do I go unlicensed in the two to 10 gigahertz frequency range; can I capture that or combine that with my cellular licenses in somehow/someway? Some of these carriers worldwide are, you know, sitting on some extra bandwidth.

                     Here in the States you’re looking at license frequency in the 2.5. There’s only a few players that own that frequency today. Worldwide, outside of the United States it’s generally 3.5.

                     I would agree with some of the comments about sensors and RFID tags. If you look at -- there’s about six billion people on the planet. So how many devices can each of us carry? So we look at it from people to machines and machines to machines, and now you’re talking about billions and billions of devices.

                     So passive repeaters and low sensor type devices and the transactions that occur over those is really the future. Not far out. Within the next couple years.

                     So, we’re pretty excited about the broadband side of 802.16, specifically today.

                     MR. GALLAGHER: Thanks a lot, and we’ll skip over Ed because then we’ll actually give away the end of the story, right, because you’re in charge of saying yes to these things.

                     MR. THOMAS: Just remember that.

                     MR. GALLAGHER: John.

                     DR. CHAPIN: Sure. I agree with a lot of what’s been said so far, so I’ll just add three additional things in there, sort of, different levels of abstraction.

                     First of all, we’re going to start seeing, perhaps, infrastructure that is shared between public safety and commercial applications. My company is bringing out a prototype of that in the near future with a demonstration that’s going to involve a Federal agency, a local public safety agency and a commercial wireless provider.

                     This is very important for bridging the digital divide that Chris was talking about a minute ago because of the high infrastructure costs in rural areas and so on.

                     So, thinking about what it’s going to take to certify, regulate, operate devices that cross these very different worlds of wireless system use. It’s going to be a very interesting problem for you all.

                     The second one just a little further out, but if you look at the different waveforms that are being done now -- sort of the 802.20, say the Flarion proposal for that or the NTT Docomo proposal, and a lot of other things, looking forward most of these waveforms share a common characteristic which is that a lot of the processing happens in the frequency domain, and right before you do transmission there’s an inverse FFT and the first thing you do on reception is an FFT.

                     What that means in non-technical terms is that you now have a lot of control in these waveforms over shaping where the energy goes within what could be a relatively wide frequency band. So you can be stitching together little sub-segments. So you might have -- you know, a 200 kilohertz slice here and a 400 kilohertz slice there and even a 20 kilohertz slice in a third place, and you can stitch those together into one wider channel and get exactly the same throughput that you would get if it was all completely contiguously allocated.

                     Now, they can’t be tremendously far apart or your front end starts -- your radio transmission problem starts getting very expensive. But this is something to be thinking about for a regulatory perspective, which is technologically we’re going to be getting beyond some of the traditional requirements for our spectrum slices to be completely contiguous to be effective.

                     And then finally, the furtherest out, Paul Kolodzy mentioned the peer to peer important ad hoc missions and David Clapp talked a little bit about some of their stuff going beyond EVDO to EVDP where they’re really doing dynamic change of the waveform. Those two are going to come together. They’re going to have ad hoc, maybe mesh networks where the devices are dynamically changing their physical layer characteristics, probably mostly to minimize battery power consumption, but also to optimize other behavior things.

                     How do you certify a system that has these much more dynamic distributed control characteristics that’s not a centralized system where you have all the algorithms in one place? It’s a very challenging problem, but one I think that is going to be faced by the certification agencies within the three to five-year time frame that you mentioned.

                     MR. GALLAGHER: That’s a great answer. Thank you for that. David.

                     DR. BORTH: Okay. In the five year out time period, which is where I think we’re focused for this --

                     MR. GALLAGHER: Five year in --

                     DR. BORTH: Okay. And in. I think I would place a number of areas. One is this area of broadband mobility and by broadband mobility I’m thinking along the lines of perhaps what 802.20 is maybe attempting to do. But, also, what a number of companies, including Motorola, that are looking at for 4G type systems. So these are fairly high bandwidth systems, but also fairly spectrally efficient because they make use of not only innovative modulation coding methods, but also antenna rays. So this plays into an answer given earlier.

                     So, I think that will definitely be on the scene. There are certainly demonstration vehicles today that exist for these types of systems and there’s a number of companies that are focused on this area. So, I think we’ll see this in the next five years.

                     The next area that’s related to this but is a different solution is this last mile solution, which has been around for some period of time. It maybe appeared originally for analog voice calls for wireless, but I think we’ll see this in terms of digital solutions providing high bandwidth to remote users and I definitely see a play here. A number of companies, again, are playing this space and 802.16 is focused on that very space today.

                     But the difference between this answer and the previous one is that the focus is not on mobility, but rather on a stationary user and that is an important aspect.

                     Paul brought up the issue of ad hoc mesh networks. I think we’ll see this in terms of both sensors, which are non-real time type applications, and we definitely have programs underway today at Motorola, but also real time applications. So we see real voice users, for example, or real multi-media users being applied over ad hoc networks. But I think they’ll be modified versions of this, not the pure form necessarily. But they’ll eventually go back to some ad hoc technique.

                     Sixty gigahertz wireless lands. It’s something that’s certainly been in discussion within Europe. We have programs -- I have programs within Europe focusing on that aspect. The advantage there is the spectrum is available. It’s not nice spectrum. It doesn’t go very far, but it is very useful for broadband applications. So, I think you will see that also come into play. It can be fairly simple solutions here, but it could be fairly sophisticated solutions where we put in adaptive antennas because of the wave length of that 60 gigahertz.

                     Hot zones, which weren’t mentioned before which basically add mobility to WiFi type of situations, I think, we’ll definitely see in the next several years. And then the whole issue of hybrid technologies. Some of these are under development today, either at cellular -- with wireless land, and there’s hand-off between the two types of systems, or if digital TV rolls out in a timely fashion, we’ll see applications between cellular or wireless land applications and DTV because you can broadcast more than just video over those type of networks.

                     Finally, I want to comment on something that Carl started off with at the very beginning. This is unlicensed systems. I think one of the issues there

is that you have to carefully apply band license spectrum to different types of services and, in particular, certain types of services such as multi-media, which require a high quality of service, low latency don’t fit very well in the unlicensed model without some modifications. So we have to take that into account as we go forward on that.

                     MR. GALLAGHER: That’s a very thorough answer. Thank you. Mike.

                     MR. BAMBURAK: Well, it’s kind of hard to mention anything that hasn’t been mentioned already, but let me put it in aspects of a roadmap for AT&T Wireless, for example.

                     We are looking forward to UMTS technology and it has elements in it of smart antennas. TX diversity is included in the interface now. Beamforming is also part of it. We’re looking at NEMO. All these are, you know, variations on smart antennas.

                     As far as the network goes -- oh, and then we have HSDPA, also, right after that that takes into account the advance modulation and coding you heard about a couple different times here now.

                     On the network side we’re going to see an integration of a lot of different networks. Because there are so many models out there they’re not going to have the wide area coverage. They’re going to, you know, be primed to be integrated in with cellular type technologies.

                     Some new stuff that is being looked at out there is broadcast. So, that’s coming. And mesh networks is one in particular that I like because it addresses the operational sides of things. We heard that there’s 10,000 to 20,000 WiFi access points out there and it’s only five to 10 kilometers. So, how are you to do a wide area network without bankrupting yourself just on back hall. So, I think mesh networks are going to come into play as far as the transport costs go.

                      MR. GALLAGHER: Thank you. And finally, David Clapp.

                     MR. CLAPP: Well, again, by the time it gets down to this end of the table there are so many things to talk about. Since I, in my efficiency definition, didn’t speak to data, I’ll zero in on data this time.

                     I was happy to mention the 60 gigahertz wireless land because I think that spectrum is a good fit that eases the certification issue. If your desired range of operation is limited and the propagation is going to limit you, then your certification problem just got much less sensitive. So, I think that’s a real good fit and I’m happy to hear that talked about.

                     Talking about the lots of sensors, reading the report we talk about filling the white space in the temporal domain, and if we go from the voice where we talked about busy hour and I looked at data curves, now I see that the -- it’s not the busy hour, it’s the busy six hours or the busy eight hours. We still have a lot of time in the wee hours of the morning where we have fairly lightly loaded networks.

                     Somebody mentioned broadcast and we have just about ready to come out of the standards process, broadcast enhancements. That will solve if the users are all on the list into the same watch, the same content. Sports, news, weather, whatever.

                     I should -- I’m going to turn to a little more economics here. I’ll say business, not economics. I usually then say multi-cast rather than broadcast because we expect there will be some sort of a subscription, hopefully at a fairly attractive rate, but we still have to make money out of this. So, that’s coming.

                     And then back to what we all started with here. I think that the -- some of the price estimates for going from 10 kilobytes to 100 kilobytes to 500 kilobytes. We are seeing successful business cases. South Korea. I listen to the quarterly conference calls. They went to 100 kilobyte data very successfully, very smoothly. They’re making money there. They led the way to the EV-DO. They’re coming up on four million subscribers there. They’re making money on that at rates that are nothing like the estimate we heard earlier.

                     We’re just over a week into the Japanese EV-DO. I was very pleasantly surprised -- what was that -- 4,200 Yen a month, about $40 a month flat rate for hundreds of kilobyte broadband data services covering 50 percent of the Japanese pops now; 70 percent by March; 90 percent by the end of a year.

                     So, I think we’re seeing very encouraging business cases come out of the -- if you pick an efficient technology your cost to moving bytes around is a lot lower. You can do useful things for lots of users and keep the price affordable.

                     MR. GALLAGHER: Well, I thank all of you for the list there because it’s the type of thing that keeps us focused on what we need to be making sure we’re accommodating or open to accommodating down the road. Ed, if you have any thoughts to offer on some of which you heard and then let’s kick off the next question, that would be great.

                     MR. THOMAS: Thanks, Mike. First of all, everything that I heard here I hear almost every day at the Commission. So certainly it’s not Buck Rogers.

                     There’s only one other thing I would add that I didn’t hear, rather, and it has to do with sensors, and it’s a type of sensor.

                     More and more we’re starting to hear about biological sensors and that’s everything from defibrillators to smart dust and the like, and people are starting to approach us. So there is a possibility in the next four or five years that more and more of us are going to have medical sensors permanently implanted in us, hopefully, and not a lot of people in this room, but it’s happening more and more for measuring blood sugar to heart rate to defibrillators, and it goes on and on and on.

                     And these are all being designed or a good portion of them are being designed to transmit at a very low RF under interrogation. And that’s something we’re going to have to look into more and more. So, that’s just another thing that takes the sensors, if you will, to one more step.

                     Let me change, if I may, the tempo for a moment and get a little in the area of procedure. The FCC and the NTIA basically have procedures in place, as we speak, for managing spectrum. The question that occurs to me, is there anything in those procedures that should be changed to motivate a technical innovation more than is presently being done?

                     So, is there anything -- and I’m not talking about specific role changes, though if anybody has some ideas on that, feel free. But in terms of the procedural aspects of either the Commission, the NTIA or the interaction between the NTIA and the Commission. Is there anything we should start addressing and do better than we’re doing now in order to encourage technical innovation?

                     Yeah, Mike.

                     MT. BAMBURAK: Okay. Let me try this one. I guess I can say that markets like certainty as far as licenses go and interference conditions or whatever. And that, you know, ideally means exclusive use. If that doesn’t happen, then next best thing is to allow sufficient time and resource for industry to participate in evaluation of technological ideas.

                     And I say that because some of the recent proceedings, I guess, I’ve heard were somewhat closed-door kind of things and it’s just not good for the industry to --

                     MR. THOMAS: Could you elaborate on that? I would like to know what you mean? What proceeding -- what do you mean by closed door?

                     MR. BAMBURAK: Okay. I hope I’m not -- well, the specific proceeding that I have been informed about is unlicensed -- or, excuse me, EWB. That the industry wanted to participate -- from everything I’ve heard for the years that it was going on or whatever that there were no devices for the operators, the incumbents to take a look at. Measurements were done, but the results possibly weren’t shared as openly as they could have been, and that just leaves an uncertainty out there that is not good for, you know, building support on the innovative techniques.

                     MR. THOMAS: Well, you know, at the risk of sounding defensive for a moment, I just can't -- I can’t resist it. I mean, that would have to be one of the most open proceedings in recent memory. There were over 2,000 contributions, if I remember right, in that proceeding. It took three-and-a-half years and it seems to me all quarters were heard from and heard from and heard from.

                     But if the point is it wasn’t technology available, that’s absolutely correct. And the whole intent of that proceeding was to start enabling new technology and hopefully looking out for the concerns of the incumbents. But --

                     MR. BAMBURAK: Whether I’m wrong or not about it being open, the thing that really needs to be done is to allow incumbents of the industry to become comfortable and confident with the licenses that they have bid money on or possibly will bid money on in the future.

                     So, you know, the proper procedure to allow the right amount of engineering to be put in -- and not just on paper. Like I say, I do that all the time. Things work on paper and on my laptop, no problem. But some people have to deal with the details and that’s where it becomes troubling.

                     MR. THOMAS: Okay. Thank you, Mike. Anybody else? Yeah, Marc.

                     Dr. GOLDBURG: Taking off my technologist hat for a moment, this is sort of an anecdotal experience we had with a band of spectrum that we were interested in. It was being transitioned from government use to commercial use.

                     So we were interested in the ultimate roles that would be written for that band. And what we found was that there was actually no single place that we could go to for coordination with respect to the incumbent users in the band or the people who were transitioning out. In fact, there was no sort of central spectrum registry so that --

                     We were able to talk with the FCC about its plans for the future for this band, but in terms of the status of the band -- existing status of the band, which at that point was, sort of, within NTIA’s bailiwick, we found that, you know, even NTIA themselves had some notion of who the users were, but not a complete notion. And so we had the experience of having to, you know, ourselves, talk to the weather service and NOAA, DoD, National Science Foundation and so forth to really try to understand what all the interests of the various constituencies were and to, sort of, work to craft -- at least from our perspective. We were the ones who were, sort of, crafting a solution that would be acceptable to all parties.

                     I know there are ways and mechanisms for FCC and NTIA to cooperate -- I mean, beyond just today’s meeting. There’s IRAQ and other interagency groups like that. But it would be useful if there was a one-stop shop, if you will, or at least some central repository of information that was available for, you know, potential commercial users or academic users to go to for an interface with the government on spectrum matters.

                     MR. THOMAS: Mike, do you have a comment on that?

                     MR. GALLAGHER: Yeah, just one thought and this has a pretty specific application for the CMRS licenses and advance wireless services is we have a spectrum relocation fund bill before Congress that we think goes a long way towards making those very clear about how things work. You know, where does it fit within our jurisdiction? When does it go to the Commission? When these things are due? And then how you could put together bid packages so people can make informed marketplace decisions about that spectrum or -- there’s pretty specific bands that applies to, but, you know, we’re looking down the road at those types of things.

                     DR. GOLDBURG: Is there a government agency, either existing or proposed, that’s going to serve as a coordination point or is it still the expectation that the people interested in this spectrum will, themselves, have to coordinate, if you will, these various government bodies themselves?

                     MR. GALLAGHER: It’s laid out pretty well in the Legislation and in the discussion that we’ve had around it, but the idea is that the Commission -- we identify for the Commission far enough out for a bid package together of who is where, what they got, what it’s going to take to move it. It’s all done -- OMB and NTIA work together to approve the move plans, that type of thing.

                     So as soon as the money actually gets into an account that that would start the process, which is -- is not going to be completely from the private sector’s perspective, self-executing, because you might have a preference.

                     AT&T Wireless, if they were the winner of one of these licenses and they market, you might say, you know, in this particular area we appreciate you moving this part first and that part later because if you move those we can start using it right away. We would like to be flexible enough to accommodate those types of things as opposed to just having a particular agency march through a list alphabetically or by frequency from low to high, that type of thing. But there would be a give-and-take in the communication process.

                     But it would be much more known than it is today.

                     MR. THOMAS: Any other comments on that question?

                     DR. CHAPIN: I have one.

                     MR. THOMAS: Yeah. Go ahead, John.

                     DR. CHAPIN: This is a slightly higher level -- more academic perspective, you might say. The traditional process of fielding these new technologies really looks at them in isolation. You look at them on paper and you work very hard to try and think about all their interactions with all the other things that might be out there before they get into the field.

                     I would submit that many of the new technologies we’re talking about here really have more the flavor of systems issued. They’re going to have systems interactions with lots of other pieces. The UWB, the issues -- some of the ones we were just hearing about have that feature.

                     If we look at a good example of trying to deploy new things into a complex system, I think, of the internet and getting new routing protocols and algorithms and so on out into the internet and assessing their interactions with all the things that are already there and making sure that it’s safe, and the internet engineering task force took this approach of saying we believe in running code, which is to say if you want to propose something to get it out there build a test bed demonstration, show how it interacts with all the other things, and that will give us the evidence that we know that it’s safe to bring out.  

                     So I might suggest that at a higher level academic perspective, perhaps, looking forward more of a test bed experimental kind of -- experiment with the system interactions approach as part of the rule-making proceeding might be a very possible way to go as opposed to trying to do it all –

                     MR. THOMAS: Just a follow-up question. I mean, we do have experimental licenses. Is there anything we should think about doing changing that procedure, or is it a matter of not being, shall we say, applied in the proper way or what?

                     DR. CHAPIN: Well, I’ve been pretty comfortable with what we’ve seen in our particular case. But I was thinking about the case from Mike Bamburak who said, well, my engineers didn’t have a device to play with to see how it interacted with my system during this proceeding. And I think we’re going to get responses like that much more strongly as we start seeing more and more complex interactions among the pieces as the spectrum gets more densely used.

                     MR. THOMAS: I understand. Any other comments on that?

                     DR. BORTH: Yeah. I would like to say something about the ultra wideband case because I think this is a different sort of circumstances -- there are a couple companies that are represented on this panel that are building ultra wideband devices. And this is an example of really a forward-looking approach that both NTIA and FCC took, and to that extent they should be applauded, because without the spectrum, without some basic idea of the way the rulings might go, there would be no business at all.

                     This is clearly a case where you can’t build it and then it will happen. You have to have some idea that something will actually happen that will allow this type of technology.

                     So, this is a bit of a different type of policy, but it’s to be applauded. I think it will introduce new technology. I think the issue of not having breadboards in advance -- I think that will have to be addressed as we go forward and those will become available, perhaps, after the fact, nonetheless, but will have to be taken into account as we go through the standardization process, for example.

                     But this is a different type of circumstance where you go in to isolate the individual piece of spectrum. You have to go forward differently.

                     DR. PANASIK: Yeah. I would like to make a comment on that, also, that that effort and that process was certainly refreshing compared to the case with 802.11 where you had the ISM band sitting out there for years and a lot of people think that 802.11 is only five years old when it is really 15 years old. It took 11 years to get through the standards process. The band was sitting out there waiting for it and it was like a carrot that caused businesses to say, you know, maybe we could do something with this.

                     EWB was a different view because it was a different domain, if you will, into the noise domain. But maybe there’s an opportunity for another ISM band that’s in this frequency range that battery operated devices can work on. You know, maybe there’s another place we need to open up.

                     MR. THOMAS: Do you have anything in mind? Okay. Mike, you got another question?

                     MR. GALLAGHER: Yeah. I think that we’ll do this question, then we’ll take it back to the floor, and then we can certainly fill out the panel with more questions if there’s not adequate volume coming to cover half an hour.

                     But my question, and I would like to hear from each of the panelists briefly, is how do we accommodate

--

                     Just looking at our list of presenters here today, AT&T Wireless didn’t exist 15, 20 years ago; Vanu certainly was in its infancy at some point; Qualcomm wasn’t doing commercial work up until recently. How do we make sure that there’s a room at the table for the future Qualcomms, Vanus, AT&T Wirelesses and other companies when we’re basically making these decisions as we form policy based on what we know?

                     How do we accommodate what we don’t know because that’s the exciting frontier. That’s what’s going to change productivity for American workers and redefine and enrich the consumer experience.

                     How do we accommodate them within our policy framework when we don’t know who they are, or where they are, or when they are? We’ll start down here.

                     DR. PANASIK: I think that when you -- I tend to look at communication as the transportation industry. You know, we’re transporting ideas from people-to-people or machines-to-machines. And when you’ve got a truck in the road that’s not making it up the hill, you’ve got to get around it somehow.

                     You know, if you’ve got a better idea that can supplant the old polluting truck that’s chugging up the hill then, you know, there ought to be some Federal mechanism that says, you know, the people in the truck need to -- they need to get off to the side of the road. You know, they need to involve themselves in some better technology.

                     I mean, the road is only so big. That’s the problem. It’s a finite size road and we need to share it somehow, and some technologies are going to fall off the edge, and then they need to be supplanted with better ones.

                     MR. GALLAGHER: Well, that’s a helpful analogy, but what are you specifically saying?

                     DR. PANASIK: I’m saying that there are some trucks that are invisible out there. You know, there are 40 year old technologies that are using spectrum today that really need to be updated. I think the age of the analog voice communication should be over. You know, if there are those kinds of equipment out there they really need to be supplanted with a digital, much more efficient manner of doing it. I’m going to leave hence to that.

                     MR. GALLAGHER: All right. Well, that’s directionally helpful.

                     MR. THOMAS: Can I just ask one more -- without being specific, though? Are you really talking about equipment standards, minimum standards of some sort that if something -- I mean, one of the task force -- I don’t remember if it was a recommendation, but, at least, it was addressed in there. I mean, there was a discussion about a simple thing.

                     If you don’t have law technology -- you make it lose its protection if it can’t operate in an environment and you make the environment more hostile as modern technology can deal within.

                     DR. PANASIK: Like I’m going to require to have good brakes on a vehicle.

                     MR. THOMAS: Yeah. Or air bags, you know.

                     DR. PANASIK: Or air bags or whatever.

                     MALE VOICE: The hill’s too high, they can’t climb it.

                     DR. PANASIK: Right. I’m going to -- I would like to see that since the spectrum is finite that we start -- we start encouraging the use of better technology, you know.

                     The comment was made earlier about OFD, you know, if that’s the path to go down, more intelligence in the silica, both from our algorithms and a modulation standpoint, from a policy standpoint, whatever. I mean, I think the tools are there. I think we need to push some of these old trucks off the side of the road and use the right techniques.

                     MR. GALLAGHER: Okay. So we got to move some trucks. What’s your suggestion on how do we accommodate the folks that we don’t even know about yet?

                     DR. KOLODZY: In fact, the task force, that’s what one of the jobs was, to do it to try to actually be forward-looking versus trying to be reactive, and to do that I think you need to do a couple different aspects. I’m reiterating a lot of what’s already in the task force, so I apologize for those who’ve already been reading it many, many times.

                     Number one is you need to be able to provide access for those people to spectrum. So, therefore, you need to get the mechanisms out there to allow access to the spectrum. That includes in the experimental bands in the sense of trying to make sure they can actually have ease and simple ways of getting availability into the spectrum to do their testing.

                     But other than that, they also need the availability of going out there and trying to find ways of taking where the trucks are going so slow and moving around them quite quickly. So, therefore, in the sense of access mechanisms the right rules that allow people if they’re not being used -- the spectrum is being used to be able to have somebody else to have access to it.

                     To have well defined rights and responsibilities is also an area that actually will help these users in the future because if they actually know what the rules of the road are -- because right now sometimes the rules of the road are a little murky in a sense.

                     The last area is that -- that I think that you need to take a serious look at is at the -- even though we talked about the limitations of frequency agile devices, frequency agile devices are here to stay in some way, shape or form. And so, therefore, the future is going to be trying to somehow find mechanisms that allow people that do invest in the technology and frequency agile and try to exploit areas of the spectrum that aren’t being used very much, to be able to have that ability to exploit them.

                     Now, I know there’s incumbents out there that are very, very worried about that and they should be because in the sense that you don’t want to cause interference. There’s a balancing act there that has to be accessed as well as having interference protection. And I think that we need to do that and we need to be forward-looking enough to understand what technologies are going to be out there versus reactive.

                     We can’t spend three years in ultra wideband -- if the technology pace is going to be that you can actually develop technology within a couple years. And if it takes three or five years to actually develop the policies, to actually allow those technologies to be out there and the commercial market sometimes only lasts five years, you’re now at the point where people have to actually make guesses as to what spectrum they may need to have to fit the technology that they may develop in the time that they don’t know if the market is going to exist.

                     And so, there’s a lot of uncertainty built into the process automatically. And so, what we need to be able to do is be forward enough looking to actually say, okay, if frequency agile devices are out there, how do we -- how do we allow them to operate? If we know that we’re going to go --

                     Somebody made a comment about going through the billions of devices and the like. How are you going to accommodate that? You can’t sit back and just assume that when it happens we’ll try to accommodate it at that point. That point is too late.

                     So, you need to be a little more forward-looking so that when people do come up with new ideas we don’t have to wait through a long process. That the regulators had thought about it far enough along the road to say okay, we know how to handle this. We’ve already thought about this problem.

                     There’s always going to be technology you haven’t thought about. I mean, there’s always those extremely disruptive technologies that people say, oh, oh. I never thought about that type of technology. But at least you should be able to do some of the things that are already out there that you’ve already seen in the labs to be able to start taking those into consideration.

                     MR. GALLAGHER: Thank you, Paul. Appreciate that. Marc.

                     DR. GOLDBURG: Okay. I’d like to echo some of the comments made earlier and maybe add a few new ones as well.

                     First off, while the Commission and NTIA should -- I don’t believe should be mandating technology, the rules, as others have mentioned, should be updated to reflect, sort of, current state-of-the-art so there’s general agreement on what the sensitivity and selectivity of, let’s say, cellular style radios are and what sorts of out-of-band missions are possible. The rules are less aggressive -- are not as aggressive as the generally accepted performance of current systems.

                     So by updating the rules in that regard I think you could remove some of the uncertainty for commercial carriers that Mike was discussing earlier. So, that’s one issue.

                     And then, of course, to the extent that there are systems out there that could conform to the rules or to, sort of, currently accepted practice, but don’t, there should be some policy, maybe, through receiver standards or something else, for causing those systems to upgrade their performance or possibly reclaiming spectrum from them if they’re not conforming to them. And I think that’s going on to an extent, maybe, in the television bands.

                     Another thing that was mentioned earlier was experimental licenses. As a technology and equipment provider, you know, two comments there. First off, they’re critical to the development of new technologies -- wireless technologies, and I think the Commission, throughout actually does a good job of that today through making them available.

                     So, I guess the two new things that I would add here is, one, there needs to be a continued balance in my mind between exclusive use or nearly exclusive use and shared or unlicensed spectrum. And the reason is is that exclusive use spectrum, I think, is going to generally be associated with long range or, sort of, ubiquitous coverage systems and, also, systems with quality of service. And it’s hard to do that without exclusive use or predictable interference environment, and shared, obviously, we're seeing is becoming more important with things like 802.11.

                     The final point is -- I referred to this earlier -- was increased allocation for unpaired spectrum blocks. If you look at most of the broadband data systems that are coming up, 802.11, 802.16, which was mentioned earlier by a couple of other people, there seems to be a natural affinity between broadband data systems and TDD or unpaired operation, and yet there’s really a dearth of exclusive use unpaired spectrum. So, that’s possibly an area that could change.

                     MR. GALLAGHER: Thanks, Marc. We appreciate that. Chris.

                     MR. DOUGLASS: As a system integrator, we’re constantly looking at new business plans and trying to take the agnostic approach. We’re looking for the next Qualcomms or Motorola, CISCOs of the world and --

                     So we see a lot of business plans and one of the things that we look for is interoperability based primarily on open standards versus proprietary techniques. So, we see a lot of different tweaks here and there, different gateways for security and so forth.

                     But at the end of the day, for our customers, we have to try to integrate these products into the customers’ legacy systems and how do we plug those in and can we fill the gaps between different technologies with software and things like that?

                     So, these are some of the -- taking the holistic approach, trying to converge different types of technologies is really the end of the day for we, at IBM, as a system integrator.

                     MR. GALLAGHER: Okay. Now, let’s see, we’re going to work both ends to the middle here and we’ll start with David Clapp and come in this direction here. And if you could just share with us, you know, what do we do to make sure that the Qualcomms of tomorrow are represented here as we’re making policy? The same question.

                     MR. CLAPP: Right. We’ve been through it and yes, we had many experimental licenses along the way and I think that part went well. We had a technology neutral environment and I don’t think we would have the success we’ve had if it weren’t for that.

                     I’m thinking about -- and we went and we had an idea and we took and we sold it to not just one, but several carriers and they supported us and it was a good idea, and so it prospered. I’m minimizing a little hard work along the way, but --

                     I’m looking for more recent ones and the one that comes to mind is turbo codes. And, again, I hold up my mobile wireless broadband device and there’s turbo codes in there, and that’s part of the efficiency wind.

                     When turbo codes were first broached nobody believed it. Too good to be true. And it turned out it was real. And it’s just like I’m trying to think of any kind of science, any kind of engineering. You’re going to be skeptical of the new idea until it’s proved out in more than one place.

                     I was going to try and avoid saying cold fusion here, but, you know, until you can replicate it in another lab I probably ought to go to the Bio-med. You know, lots of new ideas come along and sound good. Until you can replicate it in another lab you can’t trust it. Whatever percent of new ideas fail for good reason and every now and then there’s the gem out there we need to take it and run, and the way you do that is as quickly as possible you whittle out the good ones and the bad ones. And the way you do that is you try and get into the open, can other people replicate it? It’s that simple.

                     MR. GALLAGHER: Okay. Mike, how do we keep the world free of ultra wideband and free of any emissions in your spectrum, but yet still open for innovative new ideas?

                     MR. BAMBURAK: Well, obviously, you have to strike balance between unlicensed and licensed spectrum. No, seriously. I think it was Marc down there who had some real good points about -- that the license takes into account can be more associated with wide area, quality of service kinds of things, and unlicensed.

                     Although people think that’s where all the innovation goes, in unlicensed spectrum. You know, I beg to differ there. Dave pointed out some, you know, innovations that are going on in the cellular carriers. You know, we could go on and on with different things like that. The same techniques you’re talking about, just in a more controlled environment.

                     So, I think it’s striking the balance. Each model is good and you need to recognize that. And, you know, ideally, optimally, exclusive use for both types of systems in separate spectrum would be great.

                     MR. THOMAS: I’m sorry. What do you mean by exclusive use for both -- the both just confused me.

                     MR. BAMBURAK: Oh, licensed and unlicensed. I’m sorry.

                     MR. THOMAS: But you’re talking about exclusive use for licensed, too?

                     MR. BAMBURAK: And unlicensed. It would be any unlicensed technology. I’m sorry if I’m using improper terms. And in licensed spectrum it would be dedicated use, single honor kind of thing, and the flexibility, which is in the roles today, which allows that innovation I talked about. I mean, that’s great.

                     MR. THOMAS: Thanks, Mike. I understand that.

                     MR. GALLAGHER: David.

                     DR. BORTH: Okay. These are three things. One is long-term spectrum planning of all spectrum, both FCC and NTIA, and this is getting to the issue -- how do we allow the next Qualcomms to come along and play? I think you have to have a policy in place that says we’re going to create a long range of plans because without a long range of plans it’s hard to allow anything. So, I think that’s a necessary point of this process.

                     Second is we need to continue to permit innovation within classes of spectrum users. For example, in the cellular band we started off with amps, as mentioned earlier, and we’ve evolved within that same frequency band and the corresponding PCS band to CDMA, TD May, GSM and now it’s under 3G Services. I think this is quite good. I think we should continue to approach it that way where we can because not all the users fit neatly in these sorts of classes.

                     The third one is maybe this flexible policy of relocation of incumbents. Carl brought up the situation about getting the truck off the road and things of that nature, but in fact there is an issue that we do have to allow for the fact that we will have some incumbents there that we’ll need to allow to have access to the spectrum. We need to be able to have ways of moving them around, and clearly that is in a number of rule makings. That’s been an issue. It came up probably -- first big time application was in the -- for the PCS band when we had to move the incumbents there, which were point-to-point microwave systems.

                     But I think there are mechanisms in place. The current administration is supporting steps to permit, perhaps, the use of option funds to fund the -- or at least partially fund moving the incumbents in the spectrum. I think this is a good point to be taken. I think there are other approaches that use this sort of means, too.

                     MR. GALLAGHER: Very good. Finally, John.

                     DR. CHAPIN: Yes. I think there’s a wonderful synergy here with the secondary markets proceeding because what that offers is the opportunity for a new entrant with a new service to lease for hopefully relatively small amounts of money, some spectrum on a secondary basis. There’s a nice synergy between that and moderately frequency agile devices.

                     So, for example, if there was an opportunity to lease some spectrum somewhere in the 800 band for a while from some high peak to average user and then you had a device that could be frequency agile anywhere to within, say, 100 megahertz of the initial deployment, then there would be some hope that if you had a really good service and people started taking advantage of it, but it only worked between 6:00 p.m. and midnight and only when there was no fire in the neighborhood or something like that, but then after a while you got the critical mass there, then your system -- you could go out and bid for spectrum or take advantage of some spectrum that was within -- not too far away. And everybody’s service who has bought a device just, sort of, suddenly gets better the day that you turn onto the new frequency and tell all those devices to switch to the new place.

                     So, there’s a couple of things that would go into making that work; one of which is the long-term planning that was just mentioned. You would really want to know that there be some opportunity to get some exclusive spectrum within the tuneable range of the device that you’re building, within five years or something after starting your service on this secondary basis.

                     The other thing is that it’s very, very hard right now to imagine getting secondary access to spectrum. Anybody who is an incumbent is very, very worried about this. I’ve talked to a lot of them about this. And I think some kind of an early pilot program sponsored at the government level -- I think something that Paul Kolodzy alluded to.

                     Some kind of an early pilot program that would demonstrate out the technology for sharing on a secondary basis, maybe some model contracts that you might have, what the pricing might be, how do we certify and assure the devices that are using it on a secondary basis so the primary can be assured of no interference. All of these things need to come together to create a condition under which it’s relatively easy for a new entrant to lease some spectrum and try out a new service.

                     MR. GALLAGHER: Well, thank you for those questions and, Ed, I think, if you had something to add that would be terrific and then we can turn it over to the floor.

                     MR. THOMAS: Just a very minor philosophical point. The way the Commission tries to address the unknown is basically get away from specificity and just basically worry about harmful interference, and more and more getting away from, if you will, prescriptions of services and like. That’s another term for flexibility.

                     Where the argument occurs always is when the incumbent isn’t satisfied with the level of protection he or she are given or our definition of what harmful interference is or material interference is, and there’s a lot of work that needs to be done in that area, in my view, to minimize the food fights of the future because, I mean, one of the points that Mike made vis-a-vis ultra wideband is just one of a long list of saying that gee, it’s untried technology, it’s playing in my sandbox.

                     At a minimum I don’t understand it well enough because I don’t have any experience with it and it could be a major problem. And, oh, by the way, I won at auction for $2 billion the spectrum. How can you do this to me? And that becomes a difficult issue to deal with.

                     And to the extent that we can start making that process easier, I think we’ll all be better off for it.

                     MR. GALLAGHER: Okay. Well, do you have folks that after five hours plus a break, are willing to come up and brave the microphone? Over here. Come on up and if you could just share with us your name and who you’re with, that would be great.

                     MR. MARTIN: My name is Bob Martin. I’m from Alliance Science. And I’m concerned about your card a little bit in the sense that one of the things that has been conspicuous by its absence today was the discussion of radon determination systems. As you know, probably half the spectrum below six gigahertz is used by radars and radio navigation systems.

                     And there’s been no discussion of the definition of spectral efficiency that’s appropriate for that? We talked a lot about bytes per hertz and users, et cetera. That was not addressed. And I think if your card addresses all the users, somehow you need to address that issue both in terms of how you define it and then how does policy look at spectral efficiency per the radar system.

                     And then -- so can the panel offer any fruitful definitions in their eyes of spectrum efficiency in the context of radar systems, and are you aware of any technologies in that sense, like you talked about in communication systems, that would be worth knowing about for us and for yourselves?

                     MR. GALLAGHER: Yeah. So, I think we’ll deal with the panel in just a second. But just to let you know, Bob, that this is the beginning of our process over the period which will be taking an input. There will be a request for comment. People, like yourself, will be invited to bring that in. I apologize that the question didn’t come up specifically in the context of our discussion.

                     MR. MARTIN: Well, it’s appropriate, I think, given the -- what I think is the scope of this --

                     MR. GALLAGHER: Sure. Like I said, we’ll pass it up. I just want to let you know. Anybody have something to respond here about the efficiency of radar systems or how we measure those, that would be helpful.

                     DR. KOLODZY: Yes. I used to do radar a long time ago in my life. Getting a spectrum efficiency metric on a measurement system is a unique problem and the reason for that is because you have a requirement with respect to what kind of resolution you want and what kind of coverage you have. And so, therefore, the perimeter or the independent perimeters to adjust, okay, are limited.

                     And one of the areas that actually -- the XG program at DARPA tried to do is actually understand how to actually not get more efficient radars, was actually trying to figure out how to use the holes when the radars weren’t using the band at that exact same time.

                     You can start looking at in a sense of what your resolution is, what your sensitivity is and what kind of bandwidth you need for that and you could start doing those kind of calculations and try to actually enforce it. It’s actually a very intriguing problem. However, generally every time you go down the radar path the idea is you want to get further out of range and you want to detect things from lower RCS levels.

                     And so you got to bring all of those perimeters back into the calculation versus just saying I want to do a link and I just want to send so much information across that link.

                     MR. MARTIN: For this group in --

                     MR. GALLAGHER: If I could ask you to come to the microphone for our listeners on the internet. Thanks.

                     MR. MARTIN: For this group or whatever group it is to make a meaningful -- or have a meaningful picture at the end of all that, you’ve got to address both of those things. I mean, you have to do the communications and you have to do the radar.

                     DR. KOLODZY: Oh, yes.

                     MR. MARTIN: It’s just -- I realize how difficult the problem is, but somehow you initiate a discussion --

                     MR. THOMAS: Let me add something since I used to build these things most recently. There are two types of radar systems. And I don’t mean technologically. I mean philosophically. You have commercial radar systems where you’re trying to track targets that want to be tracked and actually provide transponders so that they’re visible. There’s a measure of efficiency there and those radars have to be a hell of lot more efficient, as opposed to a military radar when you’re trying to track a target that deliberately is trying to be stealth.

                     The efficiency characteristics of both those things are totally different. That’s -- I mean, all I’m saying is that has to be considered in the context of your question. It’s a hard, hard problem.

                     MR. MARTIN: I agree with that. There are others, as well as, you know, radar systems -- or that looks at weather. It’s not a -- it doesn't cooperate --

                     MR. THOMAS: Oh, yeah. I didn’t say that. I just --

                     MR. MARTIN: -- and it’s not a defense radar.

                     DR. KOLODZY: Well, I was going to add one little thing. That’s why when we did the task force report -- actually if you look at the efficiency we actually commented about how difficult it is to address those efficiency metrics exactly for some of the reasons you’re bringing up.

                     MR. GALLAGHER: Thank you. Next. Dianne.

                     MS. CORNELL: I would like to get to a theme that a number of you have touched on. Mike, originally, when you talked about ultra wideband and Ed, most recently, when you asked your question, and John, in talking about the test bed idea and how you introduced new technologies that would have an effect on systems.

                     I was wondering if others on the panel could comment on that whole issue, which I think is the interference temperature proceeding; it’s underlying a lot of the new technologies and just how you deal with this whole question of introducing new technologies when you don’t know what kind of effect they’re going to have on the incumbent systems. Is there a test bed type of approach or an experimental license type of approach that could get to this because it’s obviously going to be a key issue?

                     MR. THOMAS: Marc.

                     DR. GOLDBURG: Okay. I think there are a number of interesting economic and technical questions there. The technical ones sort of surround what is the measurement procedure, what duration of testing is required, what type of testing and so forth.

                     But then there’s also economic ones and, for example, to assess the -- I’ll use AT&T Wireless just as an example because they’re at the table here. But typically when a cellular operator is evaluating a new technology -- a new radio technology, they’re not -- they’ll require trials at network scale.

                     And, in fact, the same is true if you actually want to measure spectral efficiency. This is a little bit of a side, but it’s meaningless on a per base station perspective. It has to be measured in the network.

                     And so now suppose you’re a technology developer. You have a new system and the -- you know, the first hurdle you have to cross is to develop and deploy a 10-day station trial with 2,000 subscriber units. So, just to develop that equipment, even in prototype form, is -- you know, it’s probably a $20 to $50 million exercise.

                     You know, the question is whether or not it makes good business sense for the technology developer to invest that amount of money in a trial whose result is fairly uncertain. So, I think a lot of the questions surrounding national test bed issues or other test bed issues, if there are questions that need to be answered in a network perspective, the big question is just how are we going to fund it and who is going to do the funding?

                     MR. GALLAGHER: Another question? Just come on up to the microphone and identify yourself. That would be great.

                     MR. ROSENBERG: Yeah. I’m Eric Rosenberg from Meridian Satellite and we have some unique issues because our towers are in the sky and you can’t climb up and change the components and change technology very quickly and very easily.

                     We have a long gestation period from the development of a concept, what we’re going to do and then building satellites and launching them and deploying them and all that, and then they’re up there for a long period of time.

                     My issue is as the incumbent with regards to the test bed, it’s the requirement of the person doing the test to write the results land to present it from their perspective. But as the incumbent it effects me and I’m generally not involved in the process of these tests. And 10, 20 or 50 or 100 units somewhere isn’t really -- or subscribers or whatever the units are, is not really going to do anything for me. It’s the 10,000 or 20,000 or 2,000 that’s really going to make an impact.

                     And so that’s -- my issue is, sort of, how do we get the process going where everybody, incumbents and the people within the technology, are involved in the process? Yes, we’ll have different opinions. Yes, we will say, as has been stated -- sort of the knee-jerk reaction is to say it’s going to interfere with me and it’s going to effect my services, it’s going to degrade my economic performance.

                     But if we sit down and have the perimeters and have some guidelines set up in advance we can actually work out those issues and come to some common agreement for the -- you know, for everyone’s good. That’s one question. Sort of, how do we get there?

                     The other one is we are a worldwide system and many satellite systems are worldwide systems and how do we fit -- when you talk about mesh networks. How do we fit what we’re doing here in the United States with what’s going on overseas and sort of try to understand and reach some kind of a balance that is a different kind of balance -- a balance between what’s going on elsewhere and what’s going on here? And so how do we integrate that into our development of new technologies and testing new technologies and deploying new technologies?

                     MR. GALLAGHER: Thoughts from perhaps this side of the table here just in response to those two questions.

                     DR. BORTH: Well, in regard to the issue test beds, there are other mechanisms available. I have a group that we call our spectrum engineering center and what they focus on is the issue of introducing new technologies and their focus primarily is in the cellular arena. But introducing new technologies that may overlay partially or may be a totally new system in a given region.

                     So it’s a completely simulation based approach and that turns out to be fairly effective for first order results. There’s clearly a number of interactions. But it uses fairly sophisticated models of the complete system from -- in many cases that the same simulation model that was used to evolve the software and the hardware for the system. And towards that end they were able to simulate these thousands of users without actually building the test beds.

                     So, it is an initial approach. It’s maybe not the final approach, but it does give you a good indication as to what approach could be taken in that regard.

                     MR. GALLAGHER: Other thoughts over here?

                     MR. BAMBURAK: Maybe I started all this before with the comment I made, but the test bed concept is something that maybe I wasn’t really pushing. I know we do tests all the time, putting new technologies into play. And as was said, we look for nationwide kinds of networks, large scale tests. You know, they may not be appropriate here.

                     What I was trying to suggest is that there is enough time and enough access to information to allow as much comfort as possible if, in fact, the spectrum is not going to be separate for licensed and unlicensed.

                     So, I’m not saying you have to have absolute certainty, but the more comfort you can have with the players the better off you are. And maybe a national test bed is not the right answer.

                     MR. GALLAGHER: Another question? Ah, Bill. This is Bill Bailey from Senator McCain’s office, former NTIA Senior Advisor.

                     MR. BAILEY: Thanks very much. This has been a great discussion. I really appreciate the opportunity to be here.

                     I’m just curious. Ed and Mike asked questions about setting forth the goals and what FCC and NTIA procedures could change to effectuate those goals.

                     I’m curious if the panel would recommend any congressional or legislative changes that Congress should be considering. Things that lie beyond the FCC and NTIA current authorization.

                     MR. GALLAGHER: Thanks, Bill. Well, there’s a great one for you.

                     DR. PANASIK: Yeah, we like some of the conclusions of the CSI’s report that dealt with an overview of the Office of the President and Executive Branch. They had an advisory committee made up of people from the commercial realm and academia. They had a number of possibilities of research initiative. We thought that most of those suggestions were very well placed.

                     MR. GALLAGHER: Paul.

                     DR. KOLODZY: I think one of the areas is we still need to measure our environment. And so I think that any kind of legislation that could put funding forth for actually making a better understanding of how we actually use our spectrum and the interference environments associated out there would actually be of significant value, but reiterating something else that’s already been published.

                     MR. GALLAGHER: Other thoughts? You don’t need to go in any particular order. Others for Bill? So CSI’s report, Bill, and money is what it sounds like.

                     MR. THOMAS: Not necessarily in that order, Bill.

                     MR. GALLAGHER: At this point I’m going to -- I think it’s best that we can end on time. I would like to turn to our panelists and we’ll start down here with David for the one recommendation, if you could put it on the card, what would it be? What would be the policy focus or policy action we should be taking over the course of the next five years?

                     MR. CLAPP: Well, I think I’ll go back to what several people have said here, we have to be balanced and I think I’m going to say match the rate of any changes you make. We’re talking about some very substantial spectrum changes here and they should be matched to the development. Certainly the satellite system is probably worse case for how quickly you can change the rules on them, but just –-

                     Yes, I’m a proponent of innovation and certainly I think it’s a lot different to say I need this -- you know, it used to be I thought I was asking for a lot of spectrum when I said I needed a meg and a quarter of an experimental license to go demonstrate my new technology, you know. Here -- give me everything you got above -- that’s a totally different thing.

                     So, at any rate -- that’s all I’ll say.

                     MR. GALLAGHER: Thank you. Mike.

                     MR. BAMBURAK: Well, it’s real bad when the second speaker is going to repeat the first already because the table is a long table. So good luck, guys.

                     But my role is going to be the same kind of thing. Strike a balance between licensed and unlicensed and each is good, and optimally it would be great if they could live in separate spectrum.

                     MR. THOMAS: Mike, I just can’t let it go. Is the balance right now in your judgment, or there should be an adjustment?

                     MR. BAMBURAK: I think it’s great, some of the initiatives that have been taken. I think there are some things that, like opportunistic, whatever that ruling is -- that scares me quite a bit if it’s not in separate -- and it can’t be because that’s the whole purpose of that.

                     An example I’ll give you is, you know, we innovate in cellular, too. Five years ago we CDPD come out. Okay. CDPD was counted as it was not going to -- it was going to be for free. It was going to go between voice carriers coming up. We could never get that to work. We tried. We had many vendors involved and I think the vendors finally got it to the point where it would work if it was all integrated by one vendor and one system. But by that time we had deployed nationwide.

                     So, those kinds of things scare me when you talk about those without really thinking them out. On paper they work fine.

                     MR. GALLAGHER: All right. David.

                     DR. BORTH: I would say long-range and long-term spectrum planning of all the spectrum, both FCC and NTIA controlled would be number one on my card.

                     MR. GALLAGHER: Very good. Thank you. John.

                     DR. CHAPIN: I’ll be parochial here. Number one on my card, a lot of these things that we’ve been talking about today depend on successful deployment of SDR technologies, both wave form flexible and frequency agile.

                     So, I would say I’d like to see a consistent harmonized SDR device certification roles internationally so that this technology can take off.

                     MR. GALLAGHER: Very good. Chris.

                     MR. DOUGLASS: I would agree with the comments already made, but I would also agree with John’s comments before to figure out some way to lease some of this existing spectrum if that’s what is the middle ground here for those that have the spectrum and those that need the spectrum. I agree with that idea wholeheartedly.

                     MR. GALLAGHER: Marc.

                     DR. GOLDBURG: To take into account current performance or base admission rules on the current performance of the equipment as opposed to what was being done 30 or 40 years ago.

                     MR. GALLAGHER: So how would you phrase that more in a positive way?

                     DR. GOLDBURG: So, consider the capabilities of today’s equipment in formulating new admission rules.

                     MR. GALLAGHER: Very good. Paul. You only get to pick one of the 39 issues.

                     DR. KOLODZY: Only one of the 39. Wow. I would say -- actually, I’ll just make a comment, which is to make more is to go out there and understand the environment a lot better, make measurements associated with that and provide that as a service to the -- actually to the public, as well as to the commercial sector.

                     MR. GALLAGHER: Very good, Paul. And the last comment.

                     DR. PANASIK: You know, I think we need to -- we need something that’s like an ISM band for handhelds. Another ISM band -- and an unlicensed band. But I’m not looking for a toll road and I’m not looking for a freeway, like today’s ISM band would be a freeway. I’m, sort of, looking for an HOV lane. I’m looking for something that’s a little bit more defined than today’s ISM band. If you really want technology development because these things take a decade to develop.

                     MR. GALLAGHER: Ed, at this point I would ask if you had anything you wanted to share in closing and then I’ll offer a couple minutes of remarks at the end and we’ll conclude our work here today.

                     MR. THOMAS: First of all, I think it was a fantastic session. I really do. I’ve got some inputs that I’ll promise you aren’t going to die in my brain right after this panel.

                     The other thing is this. This is kind of an advertisement, but it’s very, very timely to most of the discussion that’s happened in this room today. Very, very shortly the Commission is going to begin a proceeding on cognitive radios. Please don’t be shy. Please weigh in because a lot of the issues that we’ve discussed today you have an opportunity, at least, to make -- start the public debate on, and that’s going to happen rather quickly.

                     With that, I would like to give the panelists my personal thanks for being here and thank you for inviting me.

                     MR. GALLAGHER: You bet. And, Ed, it’s always a pleasure to share the microphone. We’ve had a very productive relationship and I think today is an extension of that.

                     And I would like to also, along with Ed, thank our panelists for being here. I would also like to thank all of you for being here because as the Deputy Secretary indicated to us to start our day, we have a very significant task in front of us. We have an important document to create. It’s going to take the involvement of not just people like panelists here, but people like yourselves and those that are not able to be here today.

                     There will be future opportunities to offer input, both in writing through the request for public comment, which we’ll have out shortly, but also at the forum that will be organized on public safety that is coming up, the National Academy of Sciences will be holding a two-day forum on behalf of NTIA. We’re gathering further input. And then we’ll see what else we can add onto that as time permits.

                     But we greatly appreciate the technical know-how, the dedication to public service from everybody that’s willing to weather through this today, and we’ll look forward to getting down the road and satisfying to call the President. Thanks.

                     (Whereupon, at 3:06 p.m., the meeting was concluded.)

CERTIFICATE OF REPORTER

                     I, Rita Hemphill, do hereby certify that the foregoing proceedings were electronically recorded by me via audiotape and reduced to typewriting under my supervision; that I am neither counsel for, related to, nor employed by any of the parties to the action in which these proceedings were transcribed; that I am not a relative or employee of any attorney or counsel employed by the parties hereto, nor financially or otherwise interested in the outcome in the action.

RITA HEMPHILL,

Court Reporter/Notary Public