Remarks of Assistant Secretary Irving at RAWCON '98, the 1998 IEEE Radio and Wireless Conference
I want to thank the Institute of Electrical and Electronics Engineers for inviting me here this evening. I particularly want to thank Roger Marks and Michael Heutmaker, who coordinated this event.
It's an honor to be speaking at RAWCON '98. This is an impressive collection of wireless pioneers, from Barclay Jones of WNP Communications, Inc. to Andrew Kreig, President of the Wireless Communications Association International. Admittedly, given the title of the conference, I was hoping for Mick Jagger or Carlos Santana.
The title is appropriate because wireless industries are the "movers and shakers" in the telecommunications arena. Wireless voice communications have expanded significantly in the last five years. There is no doubt that wireless is now a viable competitor to wired telephone service. Wireless technologies also hold the promise for the future of data transfer. As we are rapidly becoming an Information Society, wireless has significant potential to serve our information needs - the subject I'd like to explore this evening.
First, think about the potential for mobile phones to provide information services. Two of the fastest growing markets today, and two of the drivers of our economy, are mobile wireless devices and the Internet. One economist noted that we "have a huge revolution that has been taking place in mobile phones. For the past two years, more than one-half of the world's new telephone subscriptions have been to mobile phones." The number of cellular users worldwide is expected to reach 550 million by 2001. Some analysts suggest that 50 million will use wireless data services by 2001; others project that there will be 400 million using wireless data services by that date.
In America today, one in five, or 60 million, now use a wireless phone. One in six uses a wireless pager. Wireless Week reported this month that, in the top ten markets in the U.S., 36.4 % - over one in three people -- owns a cellular phone. And a report just released by the Strategis Group predicted that wireless minutes of use in the U.S. will grow at a compound rate of 35% over the next five years.
My wife and I probably help skew these averages: between the two of us, we now use 7 wireless devices. We each have a personal PCS, an office cellular phone, a pager, and I often use Ricochet to access Internet.
The growth of wireless services is even more striking in some foreign markets. In Hong Kong, for example, one-half the country is expected to have a cell phone by year 2000, up from 34% today. Every day in China, some 16,000 people buy mobile handsets. In Latin America, where wired services still have not reached more remote locations, cellular and PCS are the most dynamic industries in the telecommunications sector. According to a new strategic research report, the current $7.1 billion market is expected to triple by 2004.
Clearly, we have embraced the concept of voice communication "any time, anywhere." At the same time, we have become a society requiring ever-greater access to data services. Witness the exponential growth of Internet. In five years, the Internet has changed from a communications vehicle for academics and government agencies to a vast network of communications and trade used by over 120 million people. In June 1993, there were only 130 websites globally; as of December 1997, there were 650,000 sites. According to a Department of Commerce report issued in April, traffic on Internet is doubling every 100 days. Goods and services sold online to US and European consumers this year will top $5.1 billion, more than double the 1997 figure. And 2.7 trillion e-mails were sent globally last year. Cisco Systems, which is making Internet growth possible through its technology, now benefits greatly from Internet access and sells up to $20 million of its products on-line in any given day.
These figures are daunting. On a practical level, it means that many Americans now also want widespread and fast access to data services. Real estate agents want to pull up information on a house when they are in the field. Police officers need ready access to data on a suspect they may be pursuing. Many of us would like to pull up stock quotations while we are in transit and e-mail the home office or, simply, those at home.
Mobile wireless devices are an obvious medium to provide access to Internet in the future. They represent the convergence of two of the fastest growing markets and developing technologies in the telecommunications field. And there is a built-in demand for mobile data services. Almost 80% of all mobile phone users also use Internet. These users place a premium on flexibility, and will likely seize the opportunity to access data through a mobile device. This next generation of services (called the "third generation") is still being developed, but it won't be long before Internet, e-mail, and video are all available over a mobile phone.
Businesses already have shown the potential uses for wireless data services.
CVS Drug Store is now proving each employee a hand-held mobile computer with a bar code laser scanner and a radio for every day store operations. These devices can pull up the store's inventory, the history of the item, and its price just by scanning the item.
Wireless data transmission can be especially useful to customers with mobile work forces. When I flew out here, for example, I sat next to an employee of Sysco Foods (not to be confused with Cisco Systems). Sysco's truck drivers use a radio modem to ensure that, when a restaurant orders food supplies, those supplies can be delivered the following day. The same technology helps Sysco track its inventory so that it can determine whether it can fill incoming orders. This technology, he assured me, has resulted in invaluable savings in money and time through increased efficiencies.
As another example, an auto insurance provider in Ohio reported that it is using two-way wireless data transmission to process claims on-site. The claims representatives can drive over to the accident site and call up a policy-holder's coverage, claim history, and other data right at the scene of the accident. As a result, these claims representatives no longer need to drive back to the office to deal with time-consuming paperwork.
These examples demonstrate that mobile wireless devices can transform the way we work, as well as the way we live.
I am equally excited about the prospects of fixed broadband wireless, such as MMDS and LMDS. Take LMDS, for example. As you know, the FCC allocated a bandwidth of 1300 MHz in the 28-31 GHz range for LMDS, which it auctioned this past spring. This bandwidth is by far the largest ever auctioned. To put it in perspective, it is 43 times the bandwidth obtained by winning bidders in the first broadband PCS auctions.
The LMDS bandwidth has great potential for offering a vast array of wireless services, far beyond one-way, multichannel video programming. LMDS offers a possible conduit for high speed data and Internet access, as well as local telephone service. In fact, Pioneer Consulting predicted last week that the LMDS market will earn $6.5 billion by year 2000 in the high speed data service market.
I hope that these technologies will not only be used by the high-end business market, but also in homes, schools, hospitals, and in rural communities. Broadband wireless may be the solution we need to fix the "last mile" problem. As more of us are using fax lines, Internet, and second phone lines at home, we will need a bigger pipeline to connect these services to our houses. According to the Strategis Group, in the next 5 years, the number of businesses using broadband services will triple and number of households will increase ninefold. Fixed wireless has the potential to handle high quantities of data and provide that last connection to the home or office.
Wireless will also change the way we work at home or in the office. Take, for example, my alma mater Stanford University. Stanford, as with a number of other universities, has built a wireless network on the campus that enables students to access data services from any point on the campus. A student can now sit under a tree with a laptop and research an assignment on Internet. No longer is there a need to find that kiosk with torn posters; you can find campus events on intranet at any time. I look forward to the day when I won't need to search for that seat on Amtrak with a plug for my laptop or find that airport phone with a dataport. I'll merely be able to sit down and start working.
As with mobile wireless, there are numerous applications for data access using fixed wireless. Utility companies will be able to get readings from meters. Vendors can monitor when vending machines run low. A petroleum company is now using a cellular-based system to check the corrosion of gas and oil pipelines in remote areas.
And, of course, wireless technologies offer the promise of providing basic telephone service through the "wireless local loop." This service is now deployed in other countries such as China, India, and the United Kingdom. At a Wireless Local Loop Forum that NTIA held last December , we heard how "wireless local loops" are providing the only connection in certain foreign regions, particularly in remote and rural areas that are too costly to wire. In sub-Saharan Africa, for example, only one in three hundred people has a telephone. Wireless will allow less developed countries to leapfrog traditional poles and wires as they connect their citizens.
We hope that wireless operators will soon provide the same service in the United States. The "wireless local loop" would serve two important goals of the Clinton Administration: competition and universal service. We expect that, with the ever-rising use of mobile communications, the wireless loop can provide a real alternative to traditional telephone service. The "wireless local loop" could also provide the solution we need to reach our underserved and rural communities, many of which still lack traditional phone service. Only fifty percent of the households in the Oglala Sioux Tribe in South Dakota, for example, have traditional telephone service. These households, like many others in Indian communities, would benefit from a wireless local loop connection.
We know that wireless may be far more cost efficient than wired telephone service in providing local loop connections. We also know that wireless technologies promise connectivity that is forty times faster than today's computer modems. The main obstacle to wider use of wireless data is bringing the wireless Net experience up to the level of Net access by telephone, which in itself falls short of consumer expectations.
I also realize that certain costs, such as the cost of terminal equipment, may still prevent some wireless services from being used on a broad scale. We need to figure out how to lower these costs to make wireless technology more widely available. That is why I think the work of N-WEST (the National Wireless Electronics Systems Testbed) is so important.
N-WEST is a collaborative effort of the Department of Commerce's NTIA and National Institute of Standards and Technology (NIST) that just got off the ground. In fact, its kickoff meeting was held downstairs yesterday and, I believe, some members may be here tonight. N-WEST is providing technical expertise to assist standardization efforts by the LMDS industry.
Let me clarify that the Department of Commerce is not mandating standards for LMDS. In the third-generation wireless context, for example, the International Telecommunication Union (ITU) is studying potential standards for 3-G technologies. For third generation standards, the U.S. is recommending several standards that reflect the multiple technologies now in place for cellular and PCS in the United States. Our general position is that government mandates in this area can only interfere with progress and innovation.
N-WEST is playing a different role, however, by assisting and evaluating industry efforts to reach a consensus on standards. The theory is that, if there is greater standardization of customer equipment, that equipment is more likely to be sold on a mass market basis. Collaboration within the industry could help lower the cost of user terminals and, I hope, make broadband wireless an accessible alternative for more Americans.
I encourage you to look into the work of N-WEST. Another thing I hope you'll explore is the "Year 2000" problem -- that is, we need to be sure that our computers will be able to process the double zeros when we reach January 1, 2000 so that our systems can continue to function. There are estimates that it may take $600 billion nationally, and $1.3 trillion globally, to prepare our computer systems for the new millennium. This cost would be dwarfed, however, by the amount incurred if there were system malfunctions. Despite the immensity of this problem, a recent survey reported that only 80% of small businesses are aware of the problem and only 50% intend to do something about it. We need to reverse these trends. I encourage you to talk to your vendors, your sellers, your partners, and your collaborators about this issue.
As we prepare for the new millennium, we must consider all steps to provide broadband services to homes and public facilities on a far-reaching basis. You will help make the next century the "wireless century." And, when you look at the news reports about the American economic miracle, think of the role that each of you is playing in keeping that miracle alive.