Michael D.Gallagher
Deputy Assistant Secretary for Communications and Information
National Telecommunications
and Information Administration
United States Department of Commerce
Special Address: Spectrum Allocation and Other Issues
The Eighth Annual
Telecommunications Law Conference
Law Seminars International
Seattle, Washington
April 24, 2003
(As Prepared for Delivery)
Introduction
Good morning and thank you for inviting me here today to share the views of the Bush Administration on radio spectrum policy. It's great to be home again in Washington State. This Washington, and the Northwest as a whole, are home to many great companies, leaders in business, and, of course, universities, and its contributions to telecommunications and technology are clear. It is the "Best of both Washingtons." I see in this room and also on the agenda for today and tomorrow Washington State folks I know well, including Art Butler, Brooks Harlow, and Dan Wagoner. You'll also be hearing from many familiar, and distinguished, names from that other Washington - - Michelle Farquhar, Bryan Tramont from FCC Chairman Powell's office, Mike Senkowski, Dan Brenner, and others like Dale Hatfield, who lives the perfect balance between Washington, DC and life in the West.
I'm going to talk this morning on a topic that has commanded much of my energy and focus since going to Washington - - spectrum - - by which I mean the grand policies and the many decisions who, what, where, when, and why of spectrum access. We address the very difficult spectrum challenges way that this Administration is handles other challenges, with vision, judgment, and conviction. Each of those three elements is essential to success. With a complex subject such as this, which is based on advanced technology but part of the economic and political landscape, it is necessary to have a clear vision of goals, in this case ultimately national objectives of economic growth, development of innovative services, and strong national defense and homeland security. The issues must be addressed with not only good judgment, but with the conviction to persevere and stay on course in the face of obstacles to reach a successful conclusion.
I'm especially pleased to be here at this conference today, because you, as attorneys, can play a meaningful role in the development of new radio technologies. The advice you give your clients helps them turn great ideas into products and services and communicate those opportunities to policy makers and in that way carry out our national objectives.
To get started, I should explain a little about who we are and what we're about at the National Telecommunications and Information Administration, or "NTIA." NTIA is a 291 person agency that covers a lot of ground. We're part of the U.S. Department of Commerce under Secretary Don Evans. By statute, we serve as the President's principal adviser on telecommunications and information policy matters - - but we're not the regulator of telecommunications. The Federal Communications Commission has that regulatory authority under the Communications Act of 1934. Our policy role derives from the independence of the FCC from the executive branch of government. It is a technical and yet meaningful difference. Notwithstanding the finer points of Constitutional Law, the American people expect this Administration to work closely with the FCC and other agencies as one team to solve problems.
Our second major function is as management of the radio spectrum used by Federal Government departments and agencies, including the military. The FCC allocates spectrum and licenses use by everyone else -- companies and states and local governments. We thus share jurisdiction with the FCC over spectrum. Last year NTIA issued over 92,000 frequency assignments to Federal agencies. Within our spectrum management office, we have programs devoted to public safety spectrum use and to critical infrastructure issues, which leads us into important homeland security matters. Secretary of Commerce Don Evans has given us a simple rule: when we are given a choice between preserving national defense and homeland security on the one hand, and strengthening economic security on the other, DO BOTH.
Spectrum Issues
Our work on spectrum starts with the basic laws of physics and lead us into questions of technical possibilities, broad economic theory, and political reality. It is easy to overlook how pervasive spectrum use is. The radio spectrum is a part of everyone's daily lives, whether they think about it or not. If you've got a cell phone in your pocket right now it uses radio frequencies identified at an international conference, allocated to the service, and licensed to a carrier by the FCC. If you're on Wi-Fi here in this room or at the more than 2100 Starbucks, you are sending signals on spectrum the FCC has allocated for unlicensed use. More broadly, spectrum is the basis for over-the-air television and radio, satellite communications, and other commercial and business applications. It is crucial to the work of police and fire departments, it is essential to air and ground transportation systems, and, as important as any of these, it is used by the military for everything from two-way radios, to precision guided weapons to radars. Recently, the Wall Street Journal called the military's use of GPS - - Global Positioning System - - the "core of its might." In military terms, spectrum is a force multiplier that ensures when we send our men and women into harm's way: it is not a fair fight.
While the wireless industry, along with the entire telecommunications industry, has been hurt badly by the bursting of the technology bubble and high-profile corporate fraud, in wireless the lines are still pointing up though perhaps not as steeply as once expected. A recent report, for example, found that worldwide mobile phone sales totaled over 423 million units last year, a 6 percent increase over 2001. More encouraging, the report said, was that fourth quarter 2002 mobile phone sales totaled over 122 million units, an increase of 14 percent versus the same period the prior year. In a relatively short period of time, we've grown the US mobile wireless industry: 140 million customers and 76 billion revenues and 120 billion capital investment and over 200,000 employees.
There are also encouraging signs elsewhere in the wireless arena. Wi-Fi, unknown to most people just a few years ago, took off and is not looking back. It's not just for geeks anymore either - about 18 million Wi-Fi chipsets were shipped in 2002, a number that the research firm Gartner-Dataquest reports will hit almost 50 million by 2006 . Plus, Wi-Fi and other technologies on the horizon give users broadband speeds. The fastest 802.11 technology today, 802.11(a), operates at peak speeds of 54 mbps, well above what is currently available in other mobile devices. Another wireless standard, 802.16, which is becoming known as "Wider-Fi," offers not just high capacity but also the potential to provide connections over relatively long distances. Preliminary estimates include a range of over 20 miles and data rates up to 70 Mb/s. This technology is of great interest to wireless internet service providers (WISPs), and it could potentially be an alternative means of providing high speed service to areas outside the well-served cities and suburbs. Other upcoming technologies are also in the mix. Ultrawideband is a wireless technology that will operate at 100 mbps. All this shows that wireless is swiftly shedding its image as the capacity-restricted second cousin of wired services, and moving toward preeminence in providing voice and data connections for all users. NTIA and the Department of Commerce are going to shed a spotlight on some of these technologies at a conference on May 12 and 13 in "the other" Washington (DC) that we are organizing along with the FCC and the State Department. The first day will be a showcase of new technologies, and the second a series of roundtables on what this means for policymakers.
By definition, all wireless services need access to spectrum in order to operate. Ensuring progress and growth in the wireless industry presents major challenges for those of us in government. Unlike other important resources, spectrum has historically been "managed" by the United States Government. While leading economists often question the need for the heavy hand of government to be involved in spectrum, national consistency and current law require a government allocation of frequencies and, for most private sector users, an FCC license. Moreover, the United States Government, including the military and law enforcement agencies, will occupy a significant portion of the spectrum to accomplish their missions. The challenge to Federal regulators and policymakers is to develop forward looking spectrum policies that ensure efficient and effective spectrum access and use.
For the next few minutes, I'd like to talk about how this Administration views the challenge of spectrum policy, after which I will address some of the successes we have had so far in this Administration in working out specific issues.
Spectrum Policy
Spectrum is among the most technical and least understood areas in telecommunications, yet as new technologies move from science fiction to the shelves of Circuit City and cockpits of F-22 fighter jets, they hold the greatest promise for increased consumer use of wireless devices and further waves of innovation in the future. And it is the one area where NTIA's broad policy role and its role as spectrum manager intersect.
The use of radio has been regulated by the Federal Government since the beginning of the 20th Century - - with its roots in the sinking of the Titantic. The legal framework still used today started with the Radio Act of 1927, which itself was influenced by the Interstate Commerce Commission act. The provisions were carried forward in the Communications Act of 1934 and have survived essentially unchanged since then. As an independent Commission, the FCC, exercises quasi-legislative, executive, and judicial functions within its grant of authority, using a "public interest standard." The FCC awards limited term licenses to operate, although since 1938 it has allowed some unlicensed operation. The Communications Act, however, retained the authority to authorize Federal Government use of spectrum with the President - - which is the source of NTIA's responsibilities today. International decisions on the allocation of blocks of spectrum to types of services are generally adopted by the United States.
Although this system has served the United States well, there is a strong sense by virtually all stakeholders, government and private sector alike, that the system is in need of an overhaul. It's not that our current systems are unsuccessful. In a way we are the victims of our own success, because in the United States more than anywhere else we have a wealth of radio services, from television to cell phones to military radars and smart bombs, all working pretty well on the limited number of frequencies that nature provides.
The problem is there just hasn't been enough spectrum available to meet the needs of existing consumer services, to satisfy the explosive growth in some services, such as mobile phones, and to provide a home for innovative new services like Wi-Fi and ultrawideband. Commercial services, like your cell phone, are becoming more important in our everyday lives, and several competing factions of industry are working to make wireless a true competitor to wired broadband.
We also live in a time when we need to devote more resources to protecting America here and abroad, and spectrum is one of those resources. Public safety agencies, for example, are clamoring for more spectrum to become interoperable and to accomplish their critical first responder missions. The Department of Defense has predicted that its spectrum usage will grow by more than 90 percent by 2005. The armed forces have used spectrum extensively in the war on terror, to the point of even using real time video links to command centers in the United States directly from drone aircraft in place over Afghanistan.
After all I just shared about spectrum and its role as the rocket fuel for innovation and as the cutting edge of national defense, you may be wondering how do we meet the challenge of new technology and augment our national defense. In fact, this is a new challenge.
A presidential policy board examining spectrum management summed up the urgent issues in stating:
"The development of so valuable a resource as the radio spectrum is a matter of paramount importance. Despite technical and operational improvements the demand for frequencies has steadily crowded the supply within the usable spectrum. The use of this resource should have the most careful planning and administration within the United States and in cooperation with other countries. Unfortunately, guidance and administration have often been inadequate."
This statement sums up today's situation pretty well. Except it was written in 1951 by President TRUMAN'S policy board. There have been similar examinations and reports on what is almost a circadian cycle - - about every 17 years. A Johnson Administration report in late 1968 observed the "remarkable" growth in spectrum use and resulting problems and inefficiencies caused by an inflexible block allocation system among other things. It called for greater use of economic factors, and, echoing a Commerce Department advisory board report called "The Silent Crisis," cautiously raised the idea of a market system and possibly license fees related to the amount of spectrum used. The General Accounting Office has visited spectrum issues more than once, including in 1974 when it reviewed proposals of economists who advocated the use of market forces for spectrum management. And, seventeen years later, in 1991, NTIA released its own comprehensive review of spectrum management, which among other things called for greater use of market forces. That report contained a sentence that began: "Those familiar with the history of spectrum management may find that the issues - - crowded spectrum, excess demand, technology placing pressure on the system any way to make - - seem familiar." These are the same problems we continue to grapple with today.
The written reports have been invaluable to spotting issues and offering solutions, but despite some reform and dramatically improved technology, real long term reform hasn't been achieved. Each report rediscovers the same issues and is then destined for a bookshelf, a coffee table, or these days, a URL on a website. NTIA's goal is not to add to this country's collection of coffee table books, but rather to harness the power of today's technology and the laws of economics - with a dash of politics - to deliver tangible policy results.
Recent Successes
Each new spectrum challenge arrives tangled like the proverbial Gordian knot. One after another we are faced with competing claims to use spectrum bands, with issues with so many complex layers that people say there is no way that they can be solved. I'm pleased to report as I stand here that in the last 18 months NTIA and the FCC teamed up successfully not only to address the larger issues but also to find answers to several spectrum challenges, rendering the "impossible" - possible.
One year ago NTIA hosted a two-day Spectrum Summit that brought together leaders in the spectrum management community with those from industry to try to figure out how to improve U.S. Spectrum processes and increase transparency. FCC Chairman Michael Powell, his FCC colleagues, Federal agency representatives, private sector wireless service providers and manufacturers, technologists, economists and analysts participated in the event. The purpose of the Summit was to explore new and innovative ideas to develop and implement spectrum management approaches that would encourage spectrum efficiency; provide spectrum for new technologies; and improve the effectiveness of the domestic and international spectrum management processes.
Last year's Spectrum Summit was a success. But it was only the start. Since the summit, NTIA has made significant progress in achieving its goals for more efficient and effective spectrum management policies that we hope will provide more opportunities and certainty about the path ahead.
Ultrawideband (UWB) Early last year, Ultrawideband (or "UWB") was the first challenge that required action. UWB is another example of a truly remarkable technology. Who would ever have guessed ten years ago that a technology would be developed that allows devices to operate over 7 GHz of spectrum at power levels so low that it effectively underlays some of the most congested frequencies? Yet, this technology holds much promise to support advances in automobile safety, homeland defense, law enforcement, in addition to high-speed communications. The FCC proposed in 2000 to amend its rules to accommodate UWB devices without causing harmful interference to government operations (including national defense systems) or commercial systems. NTIA tested and analyzed UWB effects and worked closely with the affected government agencies. The result of this collaborative effort between the government and the private sector resulted in another successful accommodation of a new service. Our challenge had a profound international dynamic as well. Either we figured out how to accommodate UWB in the U.S. on our own or other countries would have started the UWB market with little consideration to our congested spectrum chart. We expect that UWB devices will now be proliferating not only within the United States, but elsewhere in the world.
Third Generation Advanced Services (3G) next up was Third Generation, or 3G, the generic name for advanced mobile telecommunications services that we expect will form the basis for high speed, mobile, commercial wireless services. Working together with the FCC, Industry, and the Department of Defense, we directed 90 new MHZ of spectrum for 3G. It has been called "broadband to the hand," with speeds of up to 2 Mb/s. Proponents of these services say 3G is to wireless mobile communications what DSL or cable modems are to dial-up. Moreover, additional spectrum will especially be required to serve the 50 percent of U.S. citizens who do not have cell phones and to support the ever increasing billions of minutes of use in the United States (billable minutes of use for 2002 reached 619 billion -- up 35 percent from 456 billion for 2001). This Administration was called upon to answer the decade-long question on specifically how the federal government could make frequencies available for Third Generation services in the United States. Conventional wisdom in Washington said that such specifics would evade the grasp of this Administration in the face of defense spectrum needs framed by terrorism and war. The result disproved the myth that the Department of Defense always says no when asked to make spectrum available for commercial use. With leadership from the White House, the Department of Defense, the FCC, NTIA, and the private sector engaged in a technical, committed, and trustworthy process over a period of several months. As a result of these candid discussions, last July NTIA and the FCC announced that the additional 90 MHZ of spectrum would be made available to accommodate (3G) services and articulated a plan for delivering the spectrum on terms and timing that made economic sense. The FCC has opened two dockets related to the issue and is faithfully keeping the 3G train on track and on time.
5 GHz And early this year, the U.S. Government and the private sector also reached an agreement on how to make an additional 255 MHZ of spectrum available for shared unlicensed use in the 5 GHz band - resolving another complex spectrum management issue that posed a potential barrier to deployment of devices using the 802.11(a) Wi-Fi technology. In between UWB and 3G, we set our sights on bridging another gap between the Department of Defense and U.S. wireless pioneers. As a general matter, the issue was whether broadband communications could share spectral space with high-powered radars - and more specifically, with classified DoD systems. Again, with the leadership of the White House and the Secretary, and the acumen of committed FCC, DoD, NTIA, private sector engineers, we found consensus around a technical solutions known as "DFS" - dynamic frequency selection. The government and industry were able to find a solution, which will facilitate further deployment of this technology. More work remains domestically and internationally, but we're well on our way.
The common denominator for successful results in all three of these examples was leadership. That leadership was characterized by the three elements I mentioned earlier - a clear vision, sound judgment, and connection.
Broad Spectrum Management Reform
What we have accomplished so far seems simple compared to the overarching challenges that face spectrum policy as a whole. Aside from addressing immediate demands for spectrum, we need to consider larger changes to the way we do "the business of spectrum management."
There are many initiatives underway to reexamine spectrum use. Some of these are by private sector groups, such as the examination of the issue by the Center for Strategic and International Studies (CSIS) and others. At the FCC, Chairman Powell established the Spectrum Policy Task Force, which delivered an ambitious, groundbreaking report in November.
The report is a marker for ambitious reform. It laid out important issues, especially in the knotty area of how to move from a command-and-control system to a more market oriented system while also understanding the needs of incumbents. Given that most of the spectrum is occupied already, albeit more heavily in some geographical areas than others, a large part of the problem is figuring out how to make spectrum use more efficient and whether and how to make encumbered spectrum available to new uses.
While the U.S. telecommunications industry has made some great strides over the last year, there is still much work to be done. There are many pending issues regarding spectrum, such as the transition to digital television, questions about realigning frequency bands to make them interoperable among public safety agencies, and passage of legislation to create a trust fund from auction proceeds. There will also be many important issues at this year's World Radio Conference in Geneva in June. This conference, under the auspices of the International Telecommunication Union, leads to treaty-level agreements worldwide. One hundred forty nations come together to decide specific spectrum allocation issues that will drive our spectrum use and policy. This conference required a three-year preparation process to address the 44 issues identified for decision.
NTIA is active in all of these particular issues and undertakings, yet we also intend to make recommendations to improve overall spectrum management.
Among other things, NTIA plans to address and enhance spectrum efficiency among government users. The first part of this initiative is to specifically examine just how government agencies are using their spectrum today. In this regard, NTIA will be conducting a study of the current and future use of the Federal land mobile spectrum in the Washington/Baltimore area - and that's significant, because 40 percent of the government's frequency assignments today are land mobile. Based on this use, NTIA will identify the technical improvements or changes via technology, spectrum management practices, and/or standards to increase effectiveness of spectrum use and spectral efficiency. Assuming this approach bears fruit, NTIA's efforts would be expanded to the remainder of the land mobile radio services and other radio services as well.
NTIA will also be examining whether certain market-based spectrum policies successful on the private sector side can be applied to the federal government to encourage efficient spectrum use. This Administration has stated its support for so-called "secondary markets" to the FCC. Could options be made available to government spectrum to permit them to set up the equivalent of a "lease" of a portion of their spectrum in non-emergency situations and recover it in the event of an emergency? This concept is based on a market-based approach to spectrum, rather than the traditional command-and-control approach.
NTIA also hopes to address spectrum rights relative to interference protection. Today, there is no standard formula or methodology for determining levels of acceptable interference. "Interference" is the most challenging of policy terms: a word truly understood only by engineers, but manipulated by lawyers engaged in an adversarial process driven by politics. That's one of the reasons why negotiating new sharing situations takes so long and is so contentious. This year, NTIA plans to begin identifying the interference protection criteria for various radio services. Assuming, again, that this effort is successful, NTIA will consider adopting the derived interference protection criteria standards into its rules and regulations. We will also share the results of our work with the FCC and encourage it to adopt these new standards where applicable.
We also plan to examine receiver standards. To the extent that a receiver is more robust, it has the potential to reduce interference and increase sharing. Here again we will be considering inclusion of these standards in NTIA's rules and regulations if doing so will mitigate interference, be practical, and be cost effective.
Conclusion
The Bush Administration has and will continue to advance policies that promote efficiency of spectrum use. These policies will be based on the vision of leading the world technology economy and providing unparalleled national defense. The policies will be tempered and implemented with sound judgment. And when the ever-predictable obstacles put the objective in doubt, we will have the strength of conviction to finish the job. I believe our recent achievements demonstrate what can be done when those competing for spectrum are given the opportunity to work together to develop innovative solutions to complex spectrum management issues and responsibilities. This type of honest coordination, coupled with the spectrum management initiatives proposed by NTIA, will go a long way in helping to bring new and advanced wireless technologies to market.
Let me conclude by saying that I am proud to be working within this Administration to make a difference in how telecommunications and Internet services develop, and therefore can improve our economy and the lives of the American people. I'm sure by next year the issues will move beyond the challenges of today to perhaps involve the effects of using VOIP, accommodating 802.16, challenges of mergers and acquisitions and digital television transition. Whatever the issues, your experience as lawyers and business people working in this field, in this Washington, will provide you an opportunity for you to serve as well. Combined with the leadership of our President and Secretary Evans, I am very optimistic about the progress we are going to make in the coming months and years.