Thomas SugrueChief, Wireless Telecommunications Bureau

Federal Communications Commission

Developments in FCC Wireless Policy

December 11, 2000

1) Spectrum Management Principles

2) Status Report: Mobile Services in the U.S.

3) M-Commerce: Market Potential and Regulatory Issues

Spectrum Management Principles

Some Basic Concepts

Frequency

• Frequency is the number of times that a wave's peak passes a fixed point in a specific period of time

Point A

10 Cycles / 1 Second = 10 Hertz

1 Second

Frequency (cont.)

• Frequency is measured in cycles per second, or Hertz (Hz)

• For example:– Cellular phones produce radio waves with

frequencies around 800 million Hz (800 MHz)

– PCS phones produce radio waves with frequencies around 1,900 million Hz (1900 MHz)

1,000 Hz = 1 KiloHertz (kHz)1,000,000 Hz = 1 MegaHertz (MHz)

1,000,000,000 Hz = 1 GigaHertz (GHz)

•The set of all possible frequencies (an infinite number) is called the "electromagnetic spectrum"

•The subset of frequencies from 3,000 cycles per second to 300 billion cycles per second (3 KHz to 300 GHz) is known as the "radio spectrum"

Electromagnetic Spectrum

Electromagnetic Spectrum

FCC Responsibilities

• Allocations - What Services in What Bands?

• Assignments - Who Gets the Licenses?

• Service Rules - How Can Licensee Operate?

Importance of Spectrum Management

• Demand for wireless services exploding.

• Wireless data and internet services will put even greater demands on spectrum.

• Available spectrum below 3 GHz very scarce.

• Regulatory Reform

– Competition

– Flexibility

– Licensing Reform - Auctions

– Economic Deregulation

Spectrum Licensing Policy in the U.S.

Spectrum Licensing Policy in the U.S.

• As a result of these developments– New providers have entered and flourished.– Prices have decreased dramatically– Subscribership has increased substantially– Multiple new digital technologies have

proliferated.

Status Report:

Mobile Services in the U.S.

BTAs with MobileTelephone Competition

BTAs with > 2 OperatorsBTAs with < 2 Operators

MTAs and BTAs are based on Material Copyright (c) 1992 Rand McNally & Company.Rights granted pursuant to a license from Rand McNally & Company through anarrangement with the Personal Communications Industry Association. There are 51MTAs and 493 BTAs.

Source: Federal Communications Commission estimatesbased on publicly available information.

Estimated Nextel Communications Inc. Digital SMR Network Coverage Using iDEN Technology

Markets with More Than Two Mobile Telephone Providers: September 1995

BTAs with > 2 OperatorsBTAs with <= 2 Operators

BTAs with MobileTelephone Competition

Markets with More Than Two Mobile Telephone Providers: September 2000

Mobile Telephone Operatorswith Coverage in a BTA

7 Operators6 Operators5 Operators4 Oeprators3 Operators2 Operators

Estimated Mobile Telephone Service Deployment: Number of Operatorsin Each BTA with Some Level of Coverage

Mobile Telephone Competition:September 2000

Source: FCC

88.2%80.4%

69.4%

35.8%

6.7%

0%

20%

40%

60%

80%

100%

3 or more 4 or more 5 or more 6 or more 7

Number of Competitors in a Market

Per

cent

of U

.S. P

opul

atio

n

Spectrum Cap

• Applies to current allocation of 180 MHz of spectrum for mobile telephony service.

• Prohibits any entity from holding more than 45 MHz of such spectrum in a geographic area.

• Effect is that there must be at least four licensees in each geographic area.

• FCC will initiate new rulemaking to examine spectrum cap policies by end of this year.

National Carrier Subscribers

3.10

6.16

8.61

12.60

19.15

26.28

- 5.00 10.00 15.00 20.00 25.00 30.00

VoiceStream

Nextel

Sprint PCS

AT&T

Cingular

Verizon Wireless

Million

Historical and Projected Average Price Per Minute for Mobile Telephone Service

$0.53$0.58 $0.57 $0.56

$0.54

$0.43

$0.35

$0.28

$0.24$0.22

$0.20 $0.19 $0.18 $0.17

$0.45

$0.10

$0.20

$0.30

$0.40

$0.50

$0.60

Ave

rage

Pri

ce P

er M

inut

e

Source: The Strategis Group, 2000

Entry Level Pricing for DOR-Type Plans (1998 vs 2000)

$89.99

$39.99

$59.99

$29.99

$35

$19.99

0 20 40 60 80 100

Sprint - 2000

Sprint - 2000

Verizon - 2000

Voicetream - 2000

AT&T - 2000

AT&T - 1998

Price Per Month

20 minutes

180 minutes

150 minutes

300 minutes

450 minutes

600 minutes

Source: Company Web sites.

Mobile Telephone Operator Coverage in Minnesota Estimated by County

Mobile Competition in Minnesota

Number of Competitors in a Market

82.1%

61.6% 59.8%

73.8%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

3 or more 4 or more 5 or more 6 or more

Perc

ent o

f Min

n. P

opul

atio

n

Wireless Carriers in the Minneapolis/St. Paul Area

• Cellular Carriers

– AT&T Wireless and Verizon Wireless

• PCS Carriers– Qwest, Sprint PCS, and VoiceStream

• SMR Carriers– Nextel

International Comparisons:Wireless Penetration: 2000-1Q

Source: RCR’s Top 20 International Markets, RCR Wireless, June 19, 2000, at 18.

60%

52%

43% 43%36% 34%

30%

22%

4%

0%

10%

20%

30%

40%

50%

60%

70%

Swed

en

Ital

y

U.K

.

Japa

n

Fra

nce

U.S

.

Ger

man

y

Can

ada

Chi

na

International Comparisons:Total Subscribers: 2000-1Q

93.6

57.946.5

31.125.5 25 21.1

7 5.3

0

20

40

60

80

100U

.S.

Japa

n

Chi

na

Ital

y

U.K

.

Ger

man

y

Fran

ce

Can

ada

Swed

en

Mill

ion

s

Source: RCR Top 20 International Markets, RCR Wireless, June 19, 2000, at18.

International Comparisons:Average Minutes of Use Per Month - 2000E

221204

186 182

145132 132 123

0

50

100

150

200

250

U.S

.

Sw

eden

U.K

.

Fra

nce

Eur

o A

vg.

Ital

y

Fin

land

Ger

man

y

Ave

rage

MO

U P

er M

onth

Source: Michael I. Rollins, The Wireless EDGE, Salomon Smith Barney, May 23, 2000, at 5.

$447 $480

$658 $684$765

$837 $886 $912

$1,081

$0

$200

$400

$600

$800

$1,000

$1,200

Fin

land

U.S

.

U.K

.

Ave

rage

Fra

nce

Sw

eden

Ger

man

y

Japa

n

Ital

y

Source: OECD, Cellular Mobile Pricing Structure and Trends, May 2000, at 79.

International Comparisons:Average Annual Price for Basket of Digital

Mobile Service for Personal Use

M-Commerce:

Market Potential and Regulatory Issues

M-Commerce: Market Potential

M-Commerce: Market Potential

M-Commerce: Market Potential

M-Commerce: Market Potential

Source: Perry Walter and Jason Bell, The Mobile Internet, Robinson-Humphrey, September 8, 2000, at 15.

U.S. Mobile Internet Subscriber Growth

0.88.0

29.0

52.0

69.5

91.8

0102030405060708090

100

2000

E

2001

E

2002

E

2003

E

2004

E

2005

E

Mil

lion

s

Source: Perry Walter and Jason Bell, The Mobile Internet, Robinson-Humphrey, September 8, 2000, at 16.

Worldwide Growth of M-Commerce

0.2 1.3 5.011.5

24.0

50.0

0.5 3.011.0

27.0

58.0

120.0

0.0

20.0

40.0

60.0

80.0

100.0

120.0

2000

E

2001

E

2002

E

2003

E

2004

E

2005

E

$ B

illio

n

USA World

FCC Policies and Programs Regarding M-Commerce

1) Spectrum Availability

2) Location Information - Rollout of Service

3) Privacy and Location Information

4) Open Access

1) Spectrum Availability

• C & F Block PCS - 1900 MHz– Includes many major markets (e.g. New York,

Los Angeles, Chicago)– Start Date: December 12, 2000

• 700 MHz– Occupied by TV channels 60-69– Start Date: March 6th, 2001

1) Spectrum Availability

• International 3G Spectrum Process:• World Radio Conference (WRC) in Istanbul, May-June, 2000

– United States sought identification of multiple bands for additional IMT 2000 (3G) spectrum

• U.S. Domestic 3G Spectrum Allocation Process:• FCC to study 2500-2690 MHz Band

– currently used for Multipoint Distribution Service (MDS) and Instructional Television Fixed Service (ITFS)

• NTIA to study 1755-1850 MHz Band

– U.S. government users, primarily DOD

2) Location Information

• Public Safety Driven

• Wireless carriers to begin providing location-specific information by October 1, 2001 for E911 purposes.– Will enable 911 operators to locate and provide

assistance to wireless callers more quickly.– Requires upgrades to both carrier and public

safety systems.

Wireless Location -- U.S. Policy Issues

Technologies in Development to Provide Location Information

• Network-based – e.g. Time Difference of Arrival (TDOA)

• Handset-based – e.g. Assisted Global Positioning System

(A-GPS)

• “Hybrid”– e.g. Enhanced Observed Time Differential

(E-OTD)

2) Location Information

Potential Commercial Applications for Location Information

• Provide location-specific information– Merchants– Banks– Restaurants

• Notify users of sales and promotions

• Provide driving directions and traffic information

2) Location Information

• “Wireless Communications and Public Safety Act of 1999”– Limits disclosure of location information

(principally to public safety personnel).– Carriers must obtain their customers’ express

prior consent to use or disclose location information for other purposes.

• FCC rulemaking on location-based privacy rules will begin in First Quarter, 2001.

3) Privacy and Location Information

4) Open Access

• Telephone: open access applies

• Cable: open access? - a major issue currently being debated

• Mobile wireless: open access - will it become a big issue?

Major Modes of Accessing Internet

Mobile Wireless Is Different...

• Competitive Market– Nearly 70% of U.S. population can now choose from

among 5 different mobile telephone providers.

• Mobile Internet access still in its infancy– Carriers just began offering service this year in U.S.

– Only a handful of sites can be accessed through Web-enabled mobile phones

• Technological Factors– small screen, keypad, and memory capacity

– content providers must alter sites and applications

Conclusion

Spectrum Management - An Ongoing Challenge

Mobile Telephony - Going Strong and Getting Stronger

M-Commerce - Big Potential, But Lots of Questions