WIRELESS LOCAL LOOP FORUM TRANSCRIPT


                  UNTANGLING WIRELESS LOCAL LOOP:
                    TECHNOLOGY AND APPLICATIONS
        MODERATOR:  KENNETH ALLEN, CHIEF, SPECTRUM DIVISION
         INSTITUTION OF TELECOMMUNICATIONS SCIENCES, NTIA

25              MR. ALLEN:  Well, welcome  again to the wireless

                                                              23
 1    local loop forum.  We're going to have several panels
 2    today.  The first one, which I'm chairing, is the one on
 3    technology.
 4              All the speakers will be given only 10 minutes
 5    to speak, which is going to be timed, and we would like
 6    everyone to save their questions until all the speakers
 7    have had a chance to give their presentations, then we
 8    will have time for questions and discussions afterwards.
 9              Well, what is wireless local loop?  Assistant
10    Secretary Irving gave us a little bit of information about
11    that, but the term comes from the term wireless, or local
12    loop, comes from the term that is used to describe the
13    wire that comes from the telephone system to your home, so
14    we're talking about wireless local loop.
15              I think the core concept is telephone service to
16    the home wirelessly, but the concept is actually much
17    broader than that.  As we know, there are other services
18    now in the home besides telephone, such as cable TV, and
19    wireless local loop can incorporate a much broader concept
20    such as video on demand, interactive video, data services,
21    as well as telephony.
22              One of the most important aspects of wireless
23    local loop will be competition.  Right now, though, there
24    are a number of services available in the home that really
25    don't compete with each other, or only marginally.

                                                              24
 1              I think that one of the things that we will see
 2    wireless local loop do is introduce competition to the
 3    home telecommunication services for the first time.
 4              What then the consumer will see from their
 5    perspective is competition reducing prices but also a
 6    myriad of choices, and possibly confusing choices, because
 7    there's a number of different ways that wireless local
 8    loop can be provided, so there will be a number of
 9    different services.  Broadband services, as I mentioned,
10    video services perhaps, narrow band services, and also the
11    potential for a mix, where the same service provides you
12    mobile communications when you're away from home, but also
13    provides you with fixed communications when you're at
14    home.
15              So I'd like to get started by introducing our
16    first speaker today.  It's Dr. Arunas Slekys.  He's the
17    vice president, Wireless Networks Division, Hughes Network
18    Systems.  He is responsible for the worldwide marketing,
19    sales, and business development of HNS wireless network
20    products, including the company's family of GMH 2000 amps,
21    TDMA, ETDMA, CDPD, and Air Reach personal cordless
22    systems.
23              His long affiliation with the wireless industry
24    began at Novatel Communications.  There he served as
25    senior  vice  president   responsible  for  the  company's

                                                              25
 1    inception, for establishing product research and
 2    development, and spearheading the company's efforts in the
 3    small cellular systems marketplace.
 4              Dr. Slekys began his telecommunications career
 5    more than 20 years ago at Cal Tech's jet propulsion
 6    laboratory, where he worked as a digital communications
 7    research engineer developing deep space network and pulsar
 8    tracking systems.  He later joined Bell Canada and
 9    subsequently Bell Northern Software Research, managing
10    switched network-related systems development and advanced
11    technology programs.
12              He owns a bachelor of applied science degree in
13    electrical engineering from the University of Toronto, a
14    master's degree from the University of Illinois, and a
15    doctorate in computer systems engineering from UCLA.
16              He is a coauthor of a founding patent for CDPD,
17    cellular digital packet data systems, and is a frequently
18    published author on wireless communications.
19              Dr. Slekys.
20              (Applause.)
21             DR. ARUNAS SLEKYS, HUGHES NETWORK SYSTEMS
22              DR. SLEKYS:  Well, Larry set the stage, but I
23    just wanted to comment a little on his image of the person
24    in Rome driving the Vespa scooter with one hand on the
25    cellular  phone.   I think  there's nothing  worse than  a

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 1    Russian driving a Volga down the middle of the road, and
 2    with no hands on the wheel and holding two phones, and I
 3    was in the back seat, and we did get there, but it was a
 4    hair-raising ride.
 5              Anyway, dial tone is what this meeting is all
 6    about, and it's dial tone by wireless that we're all
 7    personally involved with, so setting the stage I thought
 8    in the 10 minutes of rigorous timekeeping that I'm faced
 9    with I'll at least spend a little bit of time talking
10    about the opportunity, and a little bit on the technology
11    and where it's going.
12              The opportunity, as I said, is basic dial tone,
13    and the future generations of it that we've evolved
14    through using cable and fiber in some cases, although not
15    as much as originally promised, and now wireless, and
16    expanding from wireless dial tone and simple fax into
17    broadband wireless, so we'll be talking a little bit here
18    about basic telephony and then the new universe of
19    broadband wireless, or voice data and video, interactive
20    video, et cetera.
21              On the wire line side, as Larry pointed out, 80
22    percent of the world is disadvantaged.  20 percent of us
23    in the so-called developed countries own all of these 800-
24    odd thousand phones, and the growth rate has been
25    painfully  slow, even though  everybody knows the economic

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 1    growth is tied inexorably to telephone density per capita.
 2              The reason is that most of the structures in
 3    delivering the service, the companies out there have been
 4    monopolies.  Monopolies are not usually very attractive
 5    places to put money in if you're an investor, so in fact
 6    the competitive element is as important as the technology 
 7    here in developing wireless worldwide.
 8              Every country Hughes is involved in -- I have
 9    been involved in all of them more than once -- generally
10    speaking are fundamental.  The first step is to establish
11    there will be ability to invest in a privatized entity. 
12    Nobody's interested in putting money into a monopoly. 
13    Plowing more into the ground isn't where it's at, so this
14    has been a slow growth rate because of that.
15              It's changing -- cellular taught us how -- and
16    now we're choking on its success.  The C block is an
17    example, choking, because we thought the opportunity was
18    unlimited.  Well, it isn't unlimited.  There are bounds to
19    any business, and we've learned a lot about the value of
20    spectrum, 10 years ago when we gave it away to now, when
21    we auctioned it at exorbitant prices because of the format
22    of the C blocks, but that's history, and we're learning.
23              But the net result in the marketplace is a very
24    substantial business, 20 percent as a conservative
25    estimate annually, and pushing at 200 million subscribers,

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 1    so a quarter of all dial tone worldwide now is on air
 2    waves.
 3              And projected over the next 5 years to get to
 4    about 1/2 billion, or put it another way, at $500 per
 5    subscriber network you can do the calculation.  The
 6    numbers are enormous in terms of the infrastructure and
 7    delivery opportunity, 200 billion today and 2-1/2 times
 8    factor increase over the next 5 years.
 9              Fixed wireless is a special case, sometimes
10    viewed as nonmobile, but as we know, if you've got a
11    wireless ability the opportunity is also there to create a
12    hybrid, so even though fixed is now viewed as a separate
13    market we see that the two merging mobile and fixed
14    together over time will be one opportunity, but there are
15    differences in different countries in terms of regulatory
16    constraints.
17              Some operators aren't allowed to deliver mobile
18    services, they can only deliver fixed, and vice versa, and
19    often technology sold by different countries and different
20    companies becomes the hammer.
21              (Applause.)
22              MR. ALLEN:  Could we ask you to speak into the
23    microphone, please?
24              DR. SLEKYS:  Well, I can walk around, because it
25    will be hard for me to keep pointing.

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 1              So the bottom line is fixed wireless and
 2    cellular are merging together, and even though this is a
 3    smaller number today, about 4 million estimated fixed
 4    wireless, I looked at the numbers put together by NTIA and
 5    it was somewhere around 1-1/2 of actually in commercial
 6    service.
 7              This is meant to say about 4 million contracted
 8    commercially to be put in service, because they're not all
 9    in service today, but they will be over the course of the
10    next year or two, and growing at a faster rate -- again
11    conservatively I've estimated a 40 percent rate.  Some
12    people are putting the 5-year number closer to 25 to 30 
13    million.
14              This business in and of itself is already about
15    $5 to $6 billion enterprise and growing, as shown, about
16    four to five times over the next 5 years, so the
17    opportunity is immense, and it's of enormous impact,
18    positive impact in a country's economic development.
19              Why wireless?  As engineers, we go to first
20    principles and try to solve the problem of basic telephony
21    .  It's faster than cable or any other physical means.  It
22    now is in fact lower capital cost.  People still question
23    whether it is in all cases.  Often it's viewed that in
24    high density urban  environments wireless is not  as cost-
25    effective as  wired.   Well, if  you've got  the cable  in

                                                              30
 1    there already, sure, you're right, but if you don't have
 2    the cable, it's no longer the case.
 3              So the paradigm that we started this country
 4    with when AT&T was formed is no longer valid, that
 5    paradigm being that the local loop can't sustain itself as
 6    a business, it needs to be subsidized with long distance,
 7    that's not true any more.
 8              And the other important element is the lower
 9    cost of unused capital compared to cable.  When you plow
10    cable or fiber in the ground it takes you about 8 to 10
11    years to recover the investment because those cables  have
12    to be filled with traffic before you start getting the
13    payback.  With wireless, you can match the demand in
14    smaller incremental steps and not lay out a lot of money
15    before you start to see the return.
16              So you can start with small, incremental growth,
17    and in fact in operating cost advantage, because a
18    customer could be, in the case of a large cell, as far as
19    20 or 30 kilometers from the center, and the cost to
20    service that person is no different than if they're right
21    in the center, because radio waves will travel equally
22    well for that distance as they will for a short distance.
23              So unlike fiber or cable, again, where the cost
24    is a function of distance, and labor is growing every year
25    in cost,  radio tends to  be distance insensitive,  and so

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 1    there is a lower operating cost.
 2              The switching and the backhaul and all that
 3    infrastructure is the same, and so it's in the fundamental
 4    access mechanism that the advantage is gained.
 5              Finally, the flexibility, because we can move
 6    cells around.  If we guess where the traffic is and we
 7    find that it's not quite the same as it ends up actually
 8    occurring, and we have to move some cells or add cells or
 9    add channels in one cell and reduce them in another, this
10    can be done readily.  Once the cables are in the ground,
11    they're there, and you just have to live with it.  You'd
12    better have guessed right in your market forecast.
13              And finally, the services.  Fundamentally we can
14    deliver on wireless anything that can be delivered on
15    wire, and now with the broadband wireless, including video
16    and high bandwidth demand systems, with the advantage of
17    mobility. 
18              So a simple chart here of the economics.  I've
19    left some handouts there.  I don't know if any of you saw
20    them, but feel free to grab one.  If you didn't get one,
21    just come to me after and I'll be glad to send you one. 
22    This is a simple snapshot of what I just commented on, the
23    cost of unused capital plowed in the ground and waiting
24    for a return, or try to match the demand and do so in a
25    very incrementally granular fashion with wireless and then

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 1    if you have to move it, you can move it.
 2              My charts include a summary of technologies and
 3    numbers of phones, so you can  have a look at those.  In
 4    10 minutes I obviously can't dwell on this subject. 
 5    Suffice it to say that about half of the opportunity today
 6    is still analogue, but it's shrinking, and the growth
 7    rates will be negative because people are no longer
 8    putting in analogue networks, but the installed base of
 9    200-odd million is about half analogue still, and that
10    change again occurring as digital occurs in a big way.
11              In digital the largest force is the European
12    force.  GSM is still the major technology, one reason
13    being that we were busy debating CDMA/TDMA here in the
14    States and we forgot about the market.  Well, we're coming
15    back into it, and CDMA and TDMA will be about equal in our
16    estimates.
17              There's also a new category evolving here, the
18    microcellular technology, low mobility as they're put
19    here, which include Japanese PHS, European DECT, and North
20    American PACS.
21              Just a snapshot of where Hughes has -- this is
22    the only compulsory propaganda I'm going to give you about
23    Hughes, but you're again welcome to ask me questions
24    afterwards.  We're in every continent, and we have over a
25    million  lines commercially  contracted, which  by pyramid

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 1    research estimates earlier this year puts us at what we
 2    think is the right point, about a 30-percent market share
 3    against our competition.
 4              A little bit, to explain the differences in
 5    wireless, analogue and how digital cellular, typically
 6    large cell structures covering 25 kilometers perhaps reach
 7    in a cell, and delivering pretty well basic services --
 8    speech, fax, you know, low-speed data, 9.6 kilobits on a
 9    typical cellular channel.  You know you can't send video
10    over a wireless cellular phone yet, but we're looking at
11    getting up to the T-1/E-1 rates, the high speed multiple
12    64 kilobit rates, with what I'll call broadband wireless,
13    and this is a technology emerging as a general technology.
14              Specific versions, LMDS/MMDS you may have heard
15    of, which are the cellular vision type home wireless video
16    broadcast technologies.  Broadband wireless is meant to
17    encompass that, and things like wireless fiber.  In other
18    words, alternatives to fiber, technologies that can carry
19    huge amounts of traffic 24, 38 GHz and so forth, companies
20    like Teligent, Teledesic and others that will be deploying
21    broadband wireless because fiber is no longer necessarily
22    the way to go.  Fiber again is stuck in the ground.
23              The beauty of the wireless technique, whether
24    it's a local access or a back phone, is that you can
25    deploy it on demand.  You can parcel out channels  to some

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 1    customers for some period of time, and then move it around
 2    to somebody else within that cell coverage.  It's not
 3    stuck in one physical medium.
 4              A little bit on the service requirements most
 5    operators face.  Again, I stress that as we evolve to
 6    broadband wireless, it's no longer a world of voice and
 7    data that we're with today in mobile cellular.  It's voice
 8    data video, and then the wide band services for other
 9    types of data applications, like frame relay and so forth.
10              So we are facing a technology issue as network
11    suppliers that we have got to deal with, not just access
12    technologies of today, 801.9 GHz, various flavors, but now
13    the broadband wireless technologies that are evolving that
14    companies that are new, Celex, WinStar and others, will be
15    deploying because it makes more sense than fiber.
16              Another kind of technology mixture we see around
17    the globe, where there's a wire line switch with regular
18    loops, and then we build out cell structures and provide
19    fixed wireless terminals.  This is very popular in
20    countries where, like in the Czech Republic, they could
21    not actually put in the cables in the ground in the
22    downtown and core area, such a beautiful old town, and if
23    you've seen it, you know it's virtually impossible to dig
24    up the cobblestones, so we put in 40,000 of those.
25              And  actually in that  country they install them

                                                              35
 1    now themselves, the single units about the size of a page,
 2    a little smaller, comes with a battery backup, plug it in
 3    to the power, connect an antenna, there it is on the
 4    glass.  It's got sticky tape on it.  It takes you about 10
 5    minutes, and if the little green lights go on we had
 6    better have done our RF planning right.  You've got dial
 7    tone.  Connect up to five extension phones, a fax machine,
 8    take it home with you, and the Czechs let you do that for
 9    about $250 today, and you have dial tone.
10              In MSU we design this actually up to 96
11    connections, because in Russia there were apartment blocks
12    that had up to 96 customers.  Believe it or not, it was
13    designed for the blocks that were built in the former
14    Soviet Union, and people now can have dial tone through a
15    shared box.  It lowers the cost to them.
16              Speaking about economics, typical end-to-end
17    price today is below $1,000.  That includes the switching,
18    the back call, the radio equipment, and the subscriber
19    equipment.  So when you look at a loop, a wire
20    alternative, it's typically $1,000 and up as the distance
21    increases from a cellular switch, or from a switch, so as
22    I mentioned earlier, economics are in favor of wireless
23    and will continue to be.
24              Another derivative of in-building from a mobile
25    world   wireless  office   systems,   this  has   enormous

                                                              36
 1    opportunity surrounding it, because this will allow us to
 2    get to the heart of productivity improvements of people
 3    that work in places like hospitals and factories, even
 4    ourselves in white collar jobs, although it's annoying to
 5    get phone calls in an office setting, particularly if
 6    you're in meetings all the time.
 7              But if you're working, like some folks out there
 8    that are on the floor, and they're taking measurements,
 9    and they've got to make a call, or the boss has to reach
10    you to send you some data, or you need to do a quick
11    inventory check, the in-building wireless system is an
12    extension of the macro so you can roam seamlessly.  It's
13    going to up new venues of opportunity.
14              So in conclusion, as the subject we're dealing
15    with overall is universal telephony, the conclusion is
16    only  that  high  capacity  wireless  is  the  most  cost-
17    effective way to go.
18              Thank you very much.  I made it.
19              (Applause.)
20              MR. ALLEN:  Thank you, Dr. Slekys.  Our next
21    speaker is Dr. Jeffrey Krauss.  He is a consultant in
22    radio spectrum management and telecommunications
23    technology policy.  Dr. Krauss' clients range from major
24    equipment manufacturers to small start-up companies. 
25    Clients have used  his expertise to obtain  new or changed

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 1    spectrum policies or standards, thereby creating important
 2    new business opportunities.  He is an active participant
 3    in telecommunications policy and standards activities of
 4    Government bodies and trade associations, including high
 5    definition television, personal communications service,
 6    and rural administrative conferences.
 7              He writes a monthly column for Communications
 8    Magazine and a design communication, engineering and
 9    design magazine entitled Capital Currents, which reviews
10    Federal Communications Commission and U.S. congressional
11    activities that influence telecommunications policy.
12              He has also contributed articles for Applied
13    Microwave and Wireless Magazine, Multichannel News
14    Broadcasting Magazine and Telecommunications Magazine.
15              Dr. Krauss has over 25 years of professional
16    experience, including employment at the Federal
17    Communications Commission, Bell Laboratories, American
18    Satellite Corporation, and MA/COM.
19              Dr. Krauss holds a Ph.D in theoretical physics
20    from Case Western Reserve University, Cleveland, Ohio.
21              Dr. Krauss.
22              (Applause.)
23                  DR. JEFFREY KRAUSS, CONSULTANT,
24             TELECOMMUNICATIONS AND TECHNOLOGY POLICY
25              DR. KRAUSS:  Thanks very  much.  It's a pleasure

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 1    to be here today to talk about some of the technical
 2    issues that are arising in the area of wireless local
 3    loops.
 4              If you would go to the next slide, I want to
 5    categorize wireless local loop into four groups, first
 6    that I would call  modified mobile communications
 7    products, then part 15 devices, then a small category -- I
 8    don't know how exactly it's going to develop -- wireless
 9    communication services and, too, LMDS, and then finally I
10    want to spend most of my time talking about broadband,
11    about 10 GHz.
12              I'm not going to talk about the modified mobile
13    communications products.  I think there are going to be
14    other panelists that focus on that.  But part 15, you've
15    already heard Larry Irving talk about Ricochet, which is
16    the Metricom product that operates at 902 to 928.  That's
17    oriented toward data communications.
18              In the 2400 MHz band Tadiran has a product that
19    I'm going to talk about in a little bit more detail, which
20    is truly a point-to-multipoint wireless local loop
21    product.
22              At the 5 GHz and 24 GHz product range the
23    products seem to be mostly point-to-point, rather than
24    point-to-multipoint, but there's a petition pending at the
25    FCC from  Sierra Digital asking  to increase the  power to

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 1    power limits there so that they can provide more
 2    flexibility.
 3              The Tadiran product, it potentially can operate
 4    in a variety of frequency bands.  In this country it's
 5    being  sold  in  the  2400 MHz  band.    It's  a point-to-
 6    multipoint frequency hopping spread spectrum product, can
 7    achieve, depending upon the attend at the base station,
 8    anywhere from a mile up to 6 mile range, and it's all
 9    digital.
10              Go ahead to the next slide and I will show you
11    some of the places it's being deployed in the United
12    States.  It's being deployed primarily by telephone
13    companies, not by competitive access providers, because
14    telephone companies are under a lot of pressure in some
15    areas with held orders, under pressure from their public
16    utility commissions, and they are using this product --
17    you don't need a license.  Part 15 devices are unlicensed.
18
19    Anybody can deploy them, but it is the telephone companies
20    that are the initial market, at least in this country.
21              This is the way the radio system operates in a
22    little bit of detail.  It's a frequency-hopping product,
23    which means that each base station has a series of hopping
24    frequencies.  Within each hop there is a time division
25    duplex, sharing  of the  frequency slot  by both  the base

                                                              40
 1    station and the subscriber station, so in that case it's
 2    similar to the personal handy phone in Japan, and then
 3    each -- so each frequency slot then is divided up into
 4    bursts.
 5              Let's move on to a category -- I don't know
 6    whether this is going to develop into a true wireless
 7    local loop category or not,  but around 2 GHz there are
 8    two services that could potentially develop.  Wireless
 9    communication services, WCS was auctioned by the FCC in
10    April of this year.
11              The technical restrictions that the FCC has
12    imposed make it difficult to use this band for mobile
13    communications, but -- and it is not clear -- it is not
14    clear what the licensees are going to do, what the auction
15    winners are going to do.  I think we will have to see. 
16    But this is potentially a band that could be used for
17    wireless local loops.
18              Another band is MMDS.  Now, MMDS today was
19    widely u sed for one-way video distribution, but there's a
20    petition that was submitted to the FCC, and the FCC just
21    recently issued a notice of proposed rulemaking to allow
22    two-way operations on these frequencies.
23              There's a challenge here.  It has to do with
24    interference -- technical challenge.  It's not clear that
25    you  can use  some of  these channels  for basically  high

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 1    power one-way broadcasting and then adjacent to them use
 2    other channels for two-way cellularized communications. 
 3    We will have to see what develops here, but this is a
 4    possibility.
 5              What I really want to talk about, though, is
 6    broadband.  That is, frequencies above about 10 GHz, and
 7    the potential to use those for wireless local loops. 
 8    There are really, I believe, five frequency bands that we
 9    ought to focus on, although some people say that even
10    below 18 GHz there are some frequencies that could be
11    used, but 18 and 23 are two of the bands.  They've been in
12    use for quite a while, and then the DEMS band and the LMDS
13    band, which are just starting to emerge, and then finally
14    38 GHz.
15              This table tells you precisely what frequencies
16    we're talking about.  It tells you a little bit about the
17    channel plans, the band channel  bandwidths, the transmit-
18    receive separation -- that's important for that plays a
19    big role in determining the equipment cost because of the
20    filtering requirements that it imposes, and then finally
21    whether the band is licensed on an individual link basis
22    for area-wide communications.
23              Now, I want to make one additional point here,
24    and that is regarding the LMDS frequencies.  It's very
25    complicated.    There  is  no  specified channel  plan  or

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 1    channel  bandwidth, and  there is  no specified  transmit-
 2    receive separation.  That's in the FCC rules.
 3              The FCC rules are very flexible.  That's an
 4    advantage.  The disadvantage is that equipment
 5    manufacturers don't know what product to develop.  There's
 6    a big chunk of spectrum for LMDS that first sub-band, 27.5
 7    to 28.35, that's 850 MHz.  That's probably well-suited for
 8    one-way video distribution, but maybe it could be divided
 9    in half and used for two-way operations.
10              The 29.1 to 29.25 band, that's shared with
11    satellite services, with the feeder-link earth stations
12    that are going to be used by -- are being used by
13    Motorola, Iridium, and by, I think it's TRW Odyssey, and
14    the 31 GHz piece, that's actually divided into two pieces
15    that are going to be auctioned separately.
16              The band is used a little bit right now by some
17    municipalities by point-to-point communications that
18    control traffic signals, and so some of those people are
19    going to have to be moved out, so LMDS faces the
20    challenge, it's not sort of the routine channel plan,
21    transmit-receive separation that these equipment
22    manufacturers are used to dealing with.
23              Okay.  One of the differences between these
24    frequency bands is that some of them are licensed on a
25    point-to-point  basis.    Individual links  are  licensed.

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 1    Whereas other bands are licensed on an area-wide basis,
 2    and area-wide licensing is a really important, tremendous
 3    advantage, because it allows links to be deployed quickly.
 4              You don't need to do frequency coordination
 5    against other users and get their approval on an
 6    individual link-by-link basis, and you don't need to go on
 7    public notice at the FCC.  It allows the licensee to
 8    decide how much spectrum reuse to achieve.  It allows the
 9    licensee to decide whether to use narrow beam antennas or
10    wide beam antennas.
11              Frequency coordination for the most part you do
12    against your own system rather than others, so it has
13    implications for network design.
14              I want to touch briefly on two additional issues
15    at these frequencies.  One is rain attenuation and
16    atmospheric absorption, and then secondly building
17    blockage.  While rain attenuation and atmosphere
18    absorption, the major impact that it has is on your path
19    link, it means that as you go up to higher frequencies you
20    need to deploy more cell sites.
21              This is an ITU graph.  I like to show it because
22    along the bottom the scale is in GHz, so it goes from zero
23    up to 1,000 GHz.  It's nice to know there are people who
24    are thinking about the radio spectrum up to 1,000 GHz. 
25    This is the same chart, but only in the region 1 GHz up to

                                                              44
 1    about 300.  The point here is that there are some specific
 2    frequencies where there is tremendous signal attenuation,
 3    and you need to minimize -- you will have minimum path
 4    links if you operate on those frequencies.
 5              Let's see how quickly I can go through the rest
 6    of these, since I've run out of time.  Rain attenuation is
 7    another important issue.  As you go up in frequency the
 8    rain attenuation increases substantially, and the result
 9    is that at the higher frequencies you need very short path
10    links in order to deploy a network.
11              Building blockage is an important issue.  Go
12    ahead quickly to the next chart now.  There are data bases
13    that you can use to determine whether there is actually a
14    line of sight path between your cell site and your
15    subscriber station.
16              This is a picture of -- this is Washington, D.C.
17
18    There's a cell site here.  This is 15th and M.  The
19    colored buildings are buildings that block line of site
20    paths.  The buildings that have brown dots on them are the
21    buildings where you can achieve a line of sight path.
22              Go to the next chart -- and you can do
23    calculations with data bases of this sort and it will turn
24    out that really there are a lot of line of sight paths. 
25    If  you  pick arbitrary  cell  sites a  lot  of paths  are

                                                              45
 1    blocked, so one of the challenges for all of these systems
 2    is going to be your network design in order to avoid path
 3    blockage.
 4              This is just a summary of what I think the major
 5    challenges are.  Building blockage is a major challenge
 6    for all of these, and I've talked about some of the other
 7    challenges as I've gone through.
 8              Finally, the policy issues, I think the major
 9    policy issue here is confusion.  Wireless local loop 
10    means different things to different people.  There are
11    different frequency bands involved.  They have different
12    advantages, different disadvantages.  You can use them for
13    different services.  But I think that's one of the major
14    barriers that's going to have to be overcome, is this
15    confusion in the marketplace.
16              Thank you.
17              (Applause.)
18              MR. ALLEN:  Thank you, Dr. Krauss.
19              Our next speaker is David Trinkwon.  David has
20    more than 30 years experience in the telecom industry. I
21    think all together we have well over 100 years experience
22    up here, both in North America and worldwide.  He is
23    currently directing Nortel's fixed wireless access
24    business development for the North American market, and
25    has  published  many  papers,  articles  on  the  subject,

                                                              46
 1    including Nortel's responses to various FCC proceedings on
 2    wireless local loop and universal service, and the recent
 3    FCC wireless local loop tutorial.
 4              Today, David will summarize the various wireless
 5    local loop technologies, which will help incumbent and
 6    competitive fixed operators to resolve some universal
 7    service and facilities-based competition issues for
 8    residential voice data and Internet access applications,
 9    and what regulatory actions are needed to enable these
10    technologies to be developed.
11              DAVID  TRINKWON, DIRECTOR OF MARKETING,
12           NORTH AMERICAN FIXED WIRELESS ACCESS, NORTEL
13              MR. TRINKWON:  Thank you very much.  good
14    morning, and I would like to thank the NTIA and the CTIA
15    for organizing today and giving us the opportunity to
16    share this information with you.
17              I'm going to summarize the different families of
18    technology, some of which you've already heard a lot
19    about, so I'm going to focus on the ones that you  haven't
20    heard a lot about so far, how they do and don't fit the
21    various applications, especially in relation to
22    facilities-based competition and universal service
23    solutions.
24              I'm going to touch on the regulatory issues in
25    terms of  the enablers needed, and I'm also going to point

                                                              47
 1    you to more detailed information that we've got available
 2    at our booth, and there are copies of the charts out at
 3    the front if you didn't pick them up already.
 4              One of the papers was some comments we filed
 5    last year on the DCS petition for spectrum. There's a lot
 6    of information in there.  It is a year or more old right
 7    now, so there is some updated information as well, but the
 8    first way to look at it is to look at it from the point of
 9    review of the end user market, which covers everything
10    from mobile voice and data users on the left and to
11    broadband users watching TV's or businesses taking
12    multiple T-1 feeds and so on.
13              That really is the whole range of the markets
14    for telecoms access, and in terms of technologies, on the
15    left in the red triangle are what we would loosely call
16    the mobile technologies which obviously so far have been
17    rooted in the mobile services, but they do have the
18    technical capability to offer fixed or hybrid fixed and
19    mobile services, especially for voice, especially for
20    lower speed data applications, and those technologies are
21    evolving to try and offer data speeds up to a few hundred
22    kilobits and potentially one or two megabits per second
23    over the next 4 or 5 years.
24              They do have some limitations.  They have
25    limited bandwidths available.  The types of air interfaces

                                                              48
 1    used limit some of the features and services they can
 2    offer, and they also have some capacity limitations in
 3    terms of voice traffic and data traffic for which
 4    increasing the number of cell sites is one way around it,
 5    but then that tends to push the cost up and upsets the
 6    economics, so there is a balancing act.
 7              So the dotted area shows that these technologies
 8    do have a limited ability to take over the whole of the
 9    telecoms' access business from the wire line operators,
10    but nonetheless the emerging fixed mobile integration
11    market that we have started to hear about, which isn't
12    quite here yet, could easily reach 50 million homes by the
13    year 2000.
14              There are already 30 or 40 million homes with
15    one or more mobile phones.  I think Larry Irving just
16    confuses the statistics.  We don't know if he has two
17    homes or not, but he's got lots of phones.
18              Out of 100 million households that means -- who
19    also have a wired line in the U.S. at the moment, that
20    means it's quite easy to think of that 50 million
21    households in a couple of years or so could redefine the
22    way in which they buy their voice service from a
23    combination of fixed and mobile operators, using various
24    combinations of technologies.
25              That is a  major market segment.   I'm not going

                                                              49
 1    to spend much time on it today, certainly not in 10
 2    minutes.
 3              At the other end the green triangle is the
 4    broadband technologies, which in the wired world is fiber,
 5    and some copper now with HDSL and so on, or the broadband
 6    fixed wireless technologies, traditionally point-to-point,
 7    but now point-to-multipoint, as we have seen with Teligent
 8    and the recent application by WinStar to change their
 9    licenses to point-to-multipoint, and obviously we expect
10    to see a lot more activity there when the LMDS auctions
11    are over and done with and we can see where those business
12    cases are going, and we have technologies in that area as
13    well.
14              These technologies have a limitation, however at
15    the bottom end in terms of supplying small amounts of
16    capacity economically to individual residences and small
17    business presences.  One reason why fiber to the home and
18    fiber to the curb hasn't quite happened yet, despite lots
19    of trying, is that they just can't get the economics right
20    to deliver small amounts of capacity to individual
21    premises.
22              So in the middle, the black triangle is the area
23    dominated up to now by copper and fiber and the incumbent
24    telephone networks, very, very specialized to serving
25    individual premises,  homes  and small  offices, with  T-1

                                                              50
 1    links and multiple T-1 links going up to the larger
 2    premises, and in there we have this category of wire line
 3    equivalent fixed wireless access, which is where I'm going
 4    to focus on today, because this is where we focus on
 5    facilities-based competition and universal service in the
 6    wire line area.
 7              And the main characteristic is that these
 8    technologies must be interchangeable from the operator and
 9    the customer service point of view with the wire line
10    technologies that they are used in conjunction with.
11              Thank you.
12              Just to show -- you know, these systems are
13    alive.  They are being deployed in many countries around
14    the world, not just third world and developing countries,
15    and not just in rural areas who can't get anything better.
16
17    We've heard Ionica mentioned in the U.K.  Ionica currently
18    has about 30,000 subs live after their first year of
19    service.
20              The interesting thing is that their whole
21    business case is based upon a minimum 5 percent
22    penetration of households in a geographic area.  You'll
23    see later on you could never achieve that business case
24    with any cable technology.  They actually break even at
25    about 2  or 3  percent, an  they've already  achieved that

                                                              51
 1    within 8 months in their first coverage areas, so this is
 2    the issue of variable rather than fixed cost that Arunas
 3    spoke about earlier.
 4              Bell Canada is deploying the same technology in
 5    a universal service application for four-party relief. 
 6    It's no longer a trial, it is a commercial deployment,
 7    under temporary licenses until Canada finalized their
 8    policy for the 3-1/2 gig spectrum, first quarter next
 9    year.
10              Telstra in Australia is doing the same thing,
11    both for rural areas and a second line in ISDN overlays
12    for urban areas.
13              There are major deployments going on in Sri
14    Lanka, Colombia and Bolivia was mentioned earlier, and the
15    next major markets to open up will be Mexico, Brazil, and
16    South Africa, and interestingly enough a number of the
17    operators that we're working with and investors in those
18    markets are U.S.-based investors and operators who are now
19    starting to ask the questions as to why can't they use
20    this stuff at home as well.
21              That was the subject of a paper I presented in
22    Miami about a month ago.  Copies are available at the
23    booth.
24              Thank you.
25              So where is  all this stuff going?   Well, voice

                                                              52
 1    is not a major differentiator any more.  It used to be,
 2    but all voice is pretty good now. In fact, there's a lot
 3    of copper-based voices, which is not as good as some of
 4    the mobile voice in some areas.
 5              Capacity is an issue, how many air lanes or CCS
 6    you can carry.
 7              Reliability and integrity of the service, call
 8    dropouts and so on, these are things that have to be
 9    traded off, and the big area for the future is data.
10              Residential Internet access, as I said earlier,
11    the mobile technologies are trying to get from 14.4
12    kilobits up to 1 or 2 megabits over the next few years,
13    and in a few technology jumps, and the wire line industry
14    is currently sitting at around sort of 2 to 5, moving to
15    10 megabits to residential access, so that's the
16    benchmarks for the marketplace.
17              Then you've got the broadband industry sitting
18    on top, which is already capable of achieving tens of
19    megabits to individual premises.
20              Now, the point of this chart here is to show our
21    view of how these technologies are all going to move. 
22    We've got the current mobile technologies here with their
23    14.4 heading towards 28.8 kilobit data rates, and fixed
24    versions of those technologies which in our case are in
25    the  proximity  series,  which  can  do nomadic  or  fixed

                                                              53
 1    applications, and we have our Ionica type systems doing
 2    fixed only, which are offering up to basic rate.
 3              ISDN, the Tadiran system will be offering ISDN
 4    next year.  Lucent and DSC and other people have got
 5    systems, so our ISDN fractional T-1 is about where those
 6    technologies go at the moment.
 7              There is the 5 gig NII band which is trying to
 8    offer 5 or 10 megabit in building campus-type wireless LAN
 9    solutions over the next few years, and the third
10    generation mobile has got this interesting trick of being
11    able to do 64 kilobit when you're moving in a car, or 2
12    megabits if you're standing still.  They haven't quite
13    gotten there yet, but that's the way they're heading.
14              And so from our point of view the fixed-only
15    technologies are trying to meet this wire line
16    characteristic here of how to deliver 5 to 10 megabits to
17    homes for Internet-type access, in addition to whatever
18    the mobile technologies will deliver at the below 1 or 2
19    megabit stages.
20              So a simple snapshot of what's actually a very
21    complicated technology and market picture, and some of
22    the -- I've got them mixed up with all the paperwork 
23    here.
24              So we come onto the economics of it, and it's
25    really in two areas.  I've got some junk on there.   Sorry

                                                              54
 1    about that.  The picture here basically represents an
 2    incumbent's position using copper, where copper loops on
 3    average, if you've got lots of them and have been doing it
 4    for 100 years you can tell yourself that they cost you
 5    about $6 or 700 a loop.  They actually cost anywhere from
 6    $200 to about $20,000, and wireless is sitting here at the
 7    moment somewhere between $500 and $3,000 per loop,
 8    depending on the variables.  Wireless is coming down,
 9    copper is going up.
10              If you're a competitive access provider or you
11    just want to overlay a service like ISDN on an area, then
12    you're never going to attract more than 5, 10, or 20
13    percent of the households, and you will never do it if
14    you're starting with copper.  This was the basis for the
15    Ionica business case, and that's the situation at Celex
16    when they're making their technology decisions, which is
17    why up to now they're only addressing business premises
18    delivering T-1's.
19              There was a paper on these economic issues that
20    we submitted to the universal service comments about a
21    month or two back, and now just quickly on the next one, a
22    year ago we did a major workshop with Columbia University.
23
24    Alex Wolfson is on the next panel, which went through all
25    of  the issues  of  universal service  and  the role  that

                                                              55
 1    wireless can play.  Again, the paper is available.
 2              It does change.  Somebody mentioned this
 3    earlier.  The fundamental basis of providing service in a
 4    rural area, and the nature of the subsidies that are
 5    needed, you equalize the situation rather than subsidize
 6    it forever, and you can offer people in that community
 7    multiple services for multiple operators from a single
 8    infrastructure, something you can't do very easily with
 9    copper.
10              The conclusions of that particular workshop were
11    that the regulators needed to do two things, one was make
12    sure that all of the reviews and redefinitions going on of
13    universal service and so on take proper account of the
14    role of wireless, and not be biased toward cable
15    solutions.
16              There has been a lot of progress made there, and
17    latest comments on the universal service reforms are aimed
18    at getting wireless technologies into the cost models that
19    are being used there, and then ensure that spectrum is
20    allocated, and I was pleased to hear Larry refer earlier
21    to the work we're doing with the NTIA and the Department
22    of Defense  to see if  there's a way to  bring the Ionica-
23    type systems into this market for the benefit of Native
24    communities, underserved and competitive communities using
25    what's currently Government spectrum.

                                                              56
 1              Thank you very much.  There are three or four of
 2    us in the room.  The contact list is on the back of the
 3    charts if you need any more information, and we will go
 4    through the panel thing after the next speaker.
 5              QUESTION:  (inaudible)
 6              MR. TRINKWON:  Wireless is somewhere between
 7    $500 and $3,000 per line.  $3,000 would be in a very low
 8    density rural area where the cost of the base station is
 9    more dominant.  You can get down to $200 or $300 with
10    multiline boxes and so on, as the gentleman from Hughes
11    mentioned earlier, but $500 would be a good number.
12              Copper, you can come up with numbers anywhere
13    from $200 to $20,000 depending upon the variables that
14    apply to copper.
15              MR. ALLEN:  Thank  you, Mr. Trinkwon.
16              Our last-but-not-least speaker today is Gerald
17    Vanderwel.  He is the director of services line planning
18    fixed wireless services AT&T wireless services.
19              Gerald is currently a member of the AT&T WS
20    fixed service initiative responsible for service product
21    planning and business development, addressing the emerging
22    needs of mobility, Internet, and high-speed access for the
23    residential consumers and small businesses and AT&T local
24    access initiative.
25              He graduated from college in 1974 and has worked

                                                              57
 1    with Bell Canada, Stentor, Microcell and AT&T Wireless,
 2    and called upon to do the strategic planning for emerging
 3    opportunities.  He has extensive system engineering and
 4    business development experience in data, integrated voice
 5    and data and office automation technologies.
 6              He was accountable to Stentor's Infotainment
 7    program, and positioned VCI to participate in the
 8    entertainment industry, leading to the launch of Canada's
 9    Express View digital satellite service, similar to direct
10    TV in the United States, and performed early ADSL trials
11    in campus and consumer trials.
12              He has been involved in t he PCS industry since
13    1992, assisting in the establishment of Canadian PCS
14    policy at 944 MHz and at 1.9 GHz.  He has participated in
15    addressing PCS opportunities from a mobile and fixed
16    perspective for Canada's incumbent telephone and PCS
17    cellular companies with significant focus on the threat
18    and opportunity of wireless local loop.
19              Mr. Vanderwel.
20                      GERALD VANDERWEL, AT&T
21              MR. VANDERWEL:  I would like to spend a few
22    minutes this morning talking about wireless, but I'm going
23    to take a little different perspective.
24              Working in the wireless group of AT&T, which is
25    formerly a part of McCaw Cellular, the largest cellular --

                                                              58
 1    I don't really represent Lucent.  We have decided that
 2    inside AT&T that we needed to bring this project in-house,
 3    and we needed to change the way that we think about
 4    wireless.
 5              We have heard a lot of technology push, and I
 6    think we need consumer pull.  I think the two have to come
 7    together in some sort of a time alignment to bring the
 8    success that we're all looking for, and I think we're
 9    going to have to change the way we think about wireless.
10              These are changing times.  We are seeing
11    tremendous pressure on copper to deliver higher speed
12    Internet services, and as a competitive service provider
13    you have to determine whether or not you can play.  The
14    decision is no longer simply going to be one of plain old
15    telephone service, but I think the contemporary household
16    leading to the information highway is going to expect an
17    awful lot, and the solution we're working on today are
18    really solutions that need to take us to tomorrow.
19              As a result, we formed an interesting team.  We
20    have 200-plus scientists and other specialists that I work
21    with quite extensively bringing concepts -- we do a lot of
22    evaluation of competitive technologies.  We've made a
23    determination that the technologies that exist today don't
24    offer the type of spectral efficiency that is needed to
25    deliver in this kind of a marketplace.

                                                              59
 1              When you look at air line load and you talk
 2    about the average consumer, you're talking about 1,400
 3    minutes of traffic, on average, per household.  If you
 4    look at the density of households that we're covering
 5    you're looking at 1,000 households, typically, per square
 6    kilometer.  That typically represents a reasonable
 7    suburban mix, and if you look at that air line load and
 8    you combine it with data loads and everything else, you
 9    understand that the challenges we're all facing, we as a
10    service provider are all facing, is to deliver a platform
11    that has the capability to address what's being asked of
12    it.
13              So we've gone out and tried to acquire the best
14    scientists from wherever we could, and we've picked them
15    up from all over the world.  We have established a leading
16    edge design and manufacturing facility in Redmond.  We
17    have broken ground.  The lines are being put in, power is
18    being put in, and the assembly equipment is being
19    positioned to allow us to start running product.
20              We're doing this because one of the things that
21    we expect to learn as we move forward is, we need to have
22    very rapid ability to change our designs as we move
23    forward and as we learn.  We have state-of-the-art testing
24    facilities in place.  We have in an installation test bed.
25

                                                              60
 1    A lot of this is going to be tied in to how effectively we
 2    can install in a consumer's premises.
 3              This is not just a piece of technology.  You
 4    could in many cases argue that you may be able to position
 5    it.  I think when you look at what we're trying to
 6    accomplish, we're trying to be better or equal to copper. 
 7    Copper set some very, very tough matrix that we need to
 8    meet, and radio needs to deal with them as effectively,
 9    and so we have done that, plus we have a Nation-wide
10    implementation team with AT&T.  We have called upon a lot
11    of subject matter experts to assist us.
12              So what are we really trying to deliver?  First
13    of all, we're trying to deliver high quality digital
14    telephony.  We've listened to it.  I don't want to be as
15    bold to say it sounds CD-like, but it has a certain
16    clarity that you don't get on copper.  At the same time,
17    trying to achieve that in an implementation, in a city
18    like Seattle, presents some formidable challenges.
19              We are constrained by link budgets.  We are
20    constrained by physical heights of towers, aesthetics.  We
21    have RF phenomenon we need to deal with, and at the same
22    time we do have consumers that expect this to be equal to
23    copper.  They will not tolerate dropouts of more than 50
24    calls in 1 million call attempts.  That's the wire line
25    model.   In fact,  one would  argue it's even  better than

                                                              61
 1    that, and the RF models that we're going to provide are
 2    going to have to be equal to that, so we set that as our
 3    benchmark, and our objective is to meet those metrics and
 4    exceed them.
 5              Additional phone lines without delay.  This is a
 6    computer on the side of the house.  This is a smart box. 
 7    We want to make it smart enough so that we can do most of
 8    our work over the air, downline load capability into the
 9    consumer, and enable without additional dispatches, and
10    there are obvious reasons from a business point of view
11    why we'd want to do that.
12              I'd like to spend a few minutes talking about
13    Internet access.  Currently we're capped at 56 on copper. 
14    People talk about XDSL taking us higher.  We're looking at
15    256 as kind of the stake in the ground that we think we
16    need to deliver over this particular service to support
17    our customer base, and we're looking further at the
18    integration.
19              The phenomenon or concept of PCS is an
20    interesting one, and we all imagine ourselves walking
21    seamlessly between these networks, and we do believe it's
22    a network of networks.  We do believe, if we look at the
23    spectral efficiency of GSM and other systems, that we
24    don't have the capacity in those systems to support all of
25    these services  we're looking  for, and  so we  do believe

                                                              62
 1    this will be a tiered approach.
 2              When you talk about tiered architectures,
 3    obviously the complexity goes up as you try to manage
 4    calls in progress and pass them off back-and-forth between
 5    systems, so we are looking at integration between our
 6    services and we see this potential video capability.
 7              Some people talk about real time.  Security
 8    cameras is potentially another application.  This is
 9    probably going to be longer term capability as we learn
10    how to do more sophisticated compression and encoding on
11    the air link to improve the Internet access performance.
12              One of the more formidable challenges we're all
13    going to be faced with is interfacing to the consumer. 
14    This is a very simple drawing of a very complex product.
15              Line of sight, as you saw in one of the
16    speaker's diagrams, suggests that there are little
17    pinpoints on some houses, a rooftop, a chimney, et cetera.
18
19    We are avoiding a line-of-site implementation.  We are
20    going to be mounted on the side of the home.  We're going
21    to be compatible with inside wiring.
22              We're not suggesting that we rewire the home. 
23    We are working towards plug-and-play architectures, and as
24    you see here, we do believe in a very short period of time
25    that  we  will have  some  sort of  integration capability

                                                              63
 1    inside the home.
 2              Now, we all want to do that over the existing
 3    twisted copper, and we want that air link to deliver a
 4    number of services.  Internet, traditional telephony, fax
 5    support, and high-speed modem support in an analogue
 6    portion as well as digital PCS.
 7              One of the interesting things about radio and
 8    the fact that when you start digitizing this bit stream
 9    leaving the home is that you can intercept it and you can
10    intercept it in the network, and when you intercept it in
11    the network you can divert it, so for the first time we
12    see ourselves offering the equivalent of a dedicated
13    digital network to our consumers.
14              We're not thinking of taking Internet service
15    through switched architectures.  We're thinking of taking
16    Internet services through dedicated customized backbone
17    architectures, picking up at our base station, feeding it
18    into new services platforms that we're currently
19    developing and offering a full-time connected data service
20    to the home, packet-based.
21              Now, just to give you some idea of where we are
22    right now, back in the early part of this year we said we
23    would do it.  We have done it.  We targeted December 2 as
24    our lab in Chicago.  We did go live in Chicago.  We did
25    install  a  base  station.    We  did  bring  all  of  the

                                                              64
 1    electronics that we produced together.  They were
 2    operational.  We managed to establish calls, RU-to-RU or
 3    home-to-home.
 4              The calls fundamentally sounded great.  They
 5    weren't perfect.  We still had many issues to deal with,
 6    obviously, because of the way -- the state of this
 7    development, this early prototype work, but for the people
 8    that experienced it, the homeowners, ex-AT&T employees
 9    that were part of this trial, the feedback we got was that
10    it was a new experience, and we will continue to build on
11    what we learned.
12              We're not stopping right now.  There's going to
13    be a lot of competitive alternatives in wireless.  We're
14    evaluating how well we stack up against the products that
15    other people are putting together, and as we learn more,
16    we and our engineering team determine whether or not and
17    when we can develop this product in its next iteration.
18              We are currently at the first release, and we do
19    expect it will involve releases year after year.
20              What drives us to do this?  First, we need to
21    break the local bottleneck.  AT&T has significant long
22    distance business that it wishes to protect.  We
23    understand with the new legislation that people are going
24    to be highly competitive.  We're going to see a lot of
25    bundling  of   local  service,  mobility   services,  long

                                                              65
 1    distance services.
 2              The current options available to us, and we have
 3    tried them, have been difficult in some cases.  We think
 4    the industry needs a strong competitive push, and we're
 5    going to position for a strong competitive push, and I
 6    think history has taught us one thing.  We think it's a
 7    lot more than 1 million customers.  We think we can
 8    deliver a service that is going to meet consumers'
 9    expectations.
10              I think it's very important, though, that we're
11    looking at services that are differentiating.  We're not
12    looking at strictly POTS service.  We believe the
13    contemporary home, to win the contemporary customer is
14    going to take some work.  We think this is kind of where
15    it starts.
16              We think that as we're learning and as we
17    miniaturize and as we reduce cost and as volumes go up,
18    life will change and cost will come down, and deployment
19    business cases will change as well, and fundamentally what
20    we're doing is building today for the networks of the
21    future.
22              Thank you.
23              (Applause.)
24              MR. ALLEN:  I would like to thank all of our
25    speakers one more time.

                                                              66
 1              (Applause.)
 2              MR. ALLEN:  And we are interested in receiving
 3    any questions that you may have.
 4              VOICE:  As I understand it, most of the
 5    discussion was focused on terrestrial systems, but if we
 6    think of a local loop as a last mile and dial tone, LIO
 7    and MIO systems, do you see a future here, and if not, why
 8    not?
 9              DR. SLEKYS:  I will address that, but there will
10    be some people here from Teledesic later on who may want
11    to address that.  Certainly we see an opportunity there,
12    and companies like Iridium already off and running with
13    their local service globally.
14              The issue is that capacity density, traffic
15    density in the context of voice, in a city and so forth,
16    and data services.  I think the terrestrial systems are
17    still going to win out on the economic side, and for
18    satellite to compete with that, it's not really -- it's
19    not its turf.
20              I think we see satellite delivery through LIO's
21    and MIO structures certainly as proven.  With business
22    plans that are being funded, Iridium, Global Star and
23    others, there will be an opportunity, and there's a global
24    roaming market of some number.  I don't know what that is
25    yet, but clearly there is some global roaming market.

                                                              67
 1              The new generation mobile networks, the 2 G that
 2    was put up there that's coming to fruition sometime in
 3    2000-plus, David, I guess, will seek to address that as
 4    well from the terrestrial side, so even that will be
 5    tackled by terrestrial wireless, and certainly with the
 6    numbers you saw up there, 200 million and growing at the
 7    rate we're growing, I think satellite fundamentally should
 8    stick to broadband data services.
 9              VOICE:  In regard to the current ongoing NPRM,
10    regarding the two-way broadband services using MMDS
11    licenses, I would like to get a little more information in
12    terms of the interference issues that I think Dr. Krauss
13    had brought up and also maybe from whoever in the panel
14    would like to help us with a better understanding of what
15    are the current technologies in terms of air link that is
16    being considered suitable for MMDS.
17              DR. KRAUSS:  Well, let me take the first part of
18    that, at least the question of interference.  The MMDS
19    service today has serious interference issues, because
20    even though it's all one-way video distribution the
21    channel plan, the FCC's channel plan and the way the
22    channels are assigned, they're not contiguous in
23    assignment to a particular licensee.
24              It's not four channels continuous, but it's four
25    channels every other  channel, and that means  that if you

                                                              68
 1    have these four channels -- and I won't use my fingers
 2    because the people that are recording this won't be able
 3    to get that.
 4              If you're assigned channels A-1 through A-4, and
 5    somebody else is assigned channels B-1 through B-4, they
 6    are interleaved, and if you don't operate at the same
 7    transmission location then a particular receive location
 8    might be getting interference, adjacent channel
 9    interference in his TV set because of the near-far
10    problem, the fact that he might be a lot closer to the
11    unwanted transmitter than to the wanted transmitter.
12              So let's say that now we go to an environment
13    where some of these MMDS channels are used for two-way
14    operations.  You have an even more serious problem with
15    the near-far problem, or near-far interference, because
16    the two-way operations are going to be much lower power
17    than the one-way broadcast.
18              And unless you can convince everybody, or almost
19    everybody in the market area to convert from high power to
20    lower power, if your receiver if your subscriber station
21    is too close to a high-powered transmitter he's going to
22    get adjacent channel interference, and there are a
23    substantial number of licensees who are likely to continue
24    to want to use these frequencies for one-way video
25    distribution,  because these are  educational institutions

                                                              69
 1    that are using it for educational lectures.
 2              So unless it's going to be possible to
 3    coordinate all of the users in a particular geographic
 4    area, I foresee practical problems if this does go to two-
 5    way.
 6              MR. ALLEN:  If anyone else would like to ask a
 7    question, if you would come up to the microphone, then we
 8    could take you in order that way.
 9              QUESTION:  Could you address the second part of
10    my question?
11              MR. TRINKMON:  We have been watching, but we
12    have not seen anything emerge yet.  And we do not see a
13    solution apart from the power interference problems that
14    Jeffrey just mentioned.  The fact that nobody has
15    contiguous spectrum means it is very difficult to
16    construct a series of air interfaces that you could deploy
17    for any voice or data service, even if you did not have
18    the high power problem.  If you have to live within the 6
19    meg boundaries in some applications, even though some
20    licensees might be able to put two or three together.  It
21    makes it very difficult to figure out an architecture and
22    a system that you could sell and get volume out of.
23              The major obstacle we have seen is that the
24    starting point of most business cases assumes that they
25    can  reuse their  very  high towers  on  the biggest  hill

                                                              70
 1    around, which is the way you do broadcast.  And when you
 2    look at the coverage plans that you would need to do a
 3    two-way service, that is probably the last place you would
 4    choose to put your towers.
 5              So this whole idea that they have got a cheap
 6    ride already, they have basically got to pull it all down
 7    and start again.  So those are the factors, I think, that
 8    are stopping this from moving on.  But that does not stop
 9    a lot of people from trying to find the answer.  Which is
10    great.  And we are watching.  But we have not seen one pop
11    up yet.
12              MR. NELSON:  I am Mike Nelson with the FCC.  And
13    I had a question for Mr. Vanderwel.
14              I was wondering if you could give us a few more
15    details of your Chicago trial, and tell us a bit more
16    about how many people were involved, what kind of services
17    they were signing up for, what some of the bugs were.  And
18    I would also like to hear a bit more about some of the
19    regulatory barriers that you anticipate that you might
20    have to deal with as you roll out the service.
21              MR. VANDERWEL:  Maybe the latter point I am not
22    probably as qualified as some others in our organization
23    to deal with the regulatory issues, but I would like to
24    address the former, if I may.
25              Chicago is a significant accomplishment for this

                                                              71
 1    particular team, because it required proof of concept of
 2    many of the technologies that we have been building.  We
 3    are, obviously, from a base station, from a fixed
 4    perspective, trying to emulate many of what you would call
 5    I suppose traditional telephony building blocks, to allow
 6    a high degree of compatibility with switching
 7    infrastructures that exist, to allow cost-effective
 8    deployment.  And so much of the testing was to demonstrate
 9    that our prototype products were in fact operational.
10              The second part of the test was to prove that
11    the air link concepts that we were working on were also
12    doable.  And therefore, what we did, we utilized one of
13    our towers in Chicago, our mobility towers, we collocated
14    on that tower.  We located residences -- I think the
15    furthest residence was 1.9 kilometers away from the tower.
16
17    We populated all homes.  There were a total of nine
18    participants in a distributed area.  We populated their
19    homes with this technology.  You saw in the last slide the
20    square pizza box.
21              We gave them telephony service, traditional
22    telephony service.  We did not have the data architecture
23    in place.  And as I mentioned earlier, that basically ends
24    up being diverted to a separate network, which is in the
25    process of being developed and built.

                                                              72
 1              But we did demonstrate analog circuit switch
 2    data capability over the system.  And we did allow people
 3    to make any number of call combinations, including
 4    house-to-house calls.
 5              When we tested the thing, obviously we had
 6    prototype problems in the boards because of the state of
 7    the technology as it was being supported.  But when it was
 8    stable, it was very, very clean communications.  The air
 9    links performed as we expected.  We were stress tested by
10    weather.  It was snowing and cold.  RU's were installed in
11    the middle of that.  Testing was done to make sure that we
12    had correct signal strength and that customers would be
13    happy.  And we noticed no degradation because of snow or
14    ice or any other situations.
15              MR. NELSON:  How fast were the applications?
16              MR. VANDERWEL:  The data applications were
17    circuit switched.  They would be constrained to what
18    people could do with a portable PC at 2833.  Obviously we
19    need to go much higher than that.  But that is part of a
20    specialized data network that is being built as a
21    companion piece to this particular architecture.
22              DR. KRAUSS:  Let me put in a plug for regulatory
23    barriers -- the question that you asked.  I think that it
24    is time for the FCC to go back and take another look at
25    the computer  inquiry  rules and  regulation  of  customer

                                                              73
 1    premises equipment.  We are talking here about different
 2    regulatory schemes that apply to different kinds of
 3    service providers for equipment that is located at or on
 4    or near the customer premises.
 5              And this is not only for radio based, for
 6    wireless technology that we are talking about, but also
 7    for a telephone company that wants to put in fiber to the
 8    home or co-ax to the home or anything like that requires
 9    what you might call a residential gateway or some kind of
10    a terminal in the home that is more complex than just an
11    RJ-11 jack.
12              QUESTION:  Is there any place to go for more
13    details on the Chicago trial?  Is there any Web site?
14              MR. VANDERWEL:  We do have a Web site.  I could
15    get that maybe for you at the conclusion of the session. 
16    You could always contact me.  I would be pleased to
17    provide you with more information.
18              QUESTION:  Thank you.
19              QUESTION:  I guess this is directed toward all
20    of you.  I am curious that, given the continuing need for
21    wire line services in terms of a loop, OC-3's and OC-12's,
22    for those that continue to be wire line, do you really
23    feel that wireless can develop to be a true wireless local
24    loop, or is it more of a less-mile solution, as the cliche
25    goes?

                                                              74
 1              MR. VANDERWEL:  If I could try to take it.  We
 2    see it as a last-mile solution.  The solutions that we
 3    have proposed here have been that.  However, we see a lot
 4    or emerging technologies.  LMDS may be one where we are
 5    going to see significant capacity capability.  And so we
 6    are looking at all of the emerging technology.  And we do
 7    expect that some of them will become more appropriate.
 8              Our current architecture leverages much of what
 9    is there.  We just take it from the last serving office
10    and take it to the customer in a different implementation
11    than people are used to.
12              DR. SLEKYS:  I think your question really is: 
13    Does wireless impact broad band and high bandwidth
14    services?
15              I guess I am not sure everyone knows the buzz
16    words, but you are talking about data rates that are
17    multiples of T-1 rates, and multiples of E-1 rates in
18    European norms and so forth.  And I think the answer is
19    yes, wireless is going to impact that and already is. 
20    Technologies are coming out that have bit error rate
21    performance of 10-to-the-minus-9.  And other than this
22    issue of weather, which does have a deleterious effect --
23    and in particular, rain -- but that can be solved as well
24    with proper planning.
25              So I  think that  the impact  is clear.   It  is

                                                              75
 1    happening.  The economics of wireless have the advantage
 2    over fiber in the context of delivery on demand.
 3              The European ETSI norm, 1.75 megahertz at a
 4    time, 2 and a half bits per second per hertz, yields a
 5    couple of E-1's on every link.  And you can just keep
 6    going.  And they basically view that as a standard that
 7    can be applied at any of these allocations, 28, 38, and so
 8    forth.
 9              MR. TRINKMON:  If I could comment, on a couple
10    of things.  We are not comfortable with this last-mile
11    phrase, because in the economics of deployment,
12    particularly for universal service and so on, it is the
13    last 10 or 15 miles.  And it completely changes where you
14    put your switches and all your backhaul costs.  And that
15    is a big factor in it.  So you need to be aware that some
16    technologies are limited to the last mile, but others are
17    not.
18              And in the broad band case, I have not found too
19    many people putting OC-48's to the residential yet.
20              (Laughter.)
21              MR. TRINKMON:  Or even fiber to the home.  As I
22    mentioned earlier, there are economic problems.  And the
23    same applies with the wireless technologies.  The higher
24    frequencies that go with the very high bandwidth require
25    you to go pure line of sight, limited link budgets  and so

                                                              76
 1    on.  So they are not really deployable to individual
 2    residential premises.  But to business parks or apartment
 3    buildings and stuff it is fine.  So it is horses for
 4    courses again.  And the goal posts keep on moving.  But
 5    there are some limits.  Ohm's Law still applies somewhat.
 6              QUESTION:  I would like to extend that point in
 7    the form of a question regarding what you had just
 8    mentioned, David, and what Jeff had mentioned also.  We
 9    are clearly a technology-driven industry here.  But, on
10    the other hand, when we keep looking at the investment and
11    operating cost, my question is, to what extent do we
12    consider the interactive nature of the current regulatory
13    environment and the pricing structure that is associated
14    with, for example, flat-rate ISP usage and things like
15    that?
16              And how does that dictate, if it does at all,
17    any kind of emphasis in terms of frequency spectrum
18    utilization and emphasis on technical design, excepting
19    the asymmetry, if you want to call it that, of the
20    regulatory policies that are in being and may continue
21    indefinitely?
22              DR. KRAUSS:  Well, this is, as you say,
23    interactive.  It is an interactive process.  A
24    manufacturer comes up with an idea for using radio
25    spectrum in  a particular  way and  tries to  get spectrum

                                                              77
 1    available to use it.  That, I guess, is what is going on
 2    with Nortel's product right now.
 3              So some manufacturers will take the lead and do
 4    the technology development and then go to the government. 
 5    Others will look at the technical rules that are in the
 6    FCC regulations and the spectrum allocations that are in
 7    the FCC regulations and they will design products that
 8    confirm to the existing regulations.  And there is -- you
 9    know, this is not a simple -- this is a very complex
10    situation.  Different manufacturers have different
11    incentives.  There are some manufacturers who will try to
12    drive -- who are perfectly happy with existing standards
13    and will try to evolve their products to improve the
14    performance and decrease the cost within the existing
15    standards.
16              There are others who will say, I can do a lot
17    better if you will change the standards for me.  And this
18    is simply a process that goes on over time.
19              QUESTION:  Excuse me, I just want to clarify.  I
20    am not talking about the technical standards alone.  I am
21    talking about the financial and regulatory rate design
22    standards, access charges, interconnection, unbundling,
23    the asymmetry of the treatment of the different service
24    providers.  To what extent does that dictate, if at all,
25    any change or emphasis in the technical design criteria in

                                                              78
 1    the process of design?
 2              MR. TRINKMON:  Yes, you have touched on some
 3    very key points.  Obviously, manufacturers do not just
 4    invent stuff for the hell of it.  We try and figure out
 5    who is going to buy it and use it and what for and how
 6    many and so on.  And it actually is a key area at the
 7    moment in the segment I talked about, on the fixed mobile
 8    integration.  One of the biggest factors holding back the
 9    mobile industry at the moment from going into fixed
10    services is how to compete with free local calls and so
11    on.  Which happens to be the way tariffs are set up in
12    this country.
13              That itself has spawned a huge paging industry. 
14    The called party pays philosophy.  All these things are
15    all linked together and limit what people can choose to
16    operate and deploy, and therefore what people develop to
17    meet those services.
18              On the sort of implied part of your question, in
19    terms of the different types of spectrum and the value of
20    them, we are seeing the example in the Mexican auctions at
21    the moment, where the two PCS A and B bands -- I have not
22    kept up with the latest numbers, but I think they are
23    adding up to a couple of hundred million or something --
24    300 at the moment -- and the 3 and a half gig fixed
25    wireless block, three-four  to three-six, is sitting  at I

                                                              79
 1    guess about 50 million or somewhere around there.
 2              Which confirms what we have always known, but it
 3    needed confirming:  That not all spectrum is equal.  There
 4    is not a so many dollars per megahertz number out there. 
 5    And it depends on the value of the applications.  And if
 6    the service is a wire line fixed service competing with a
 7    copper technology or nothing at all -- you know, you just
 8    go without dial tone for another 50 years -- then that
 9    puts a constraint on what the spectrum is worth.
10              So I think some of that was buried in your
11    question as well, in terms of the interplay between the
12    way regulations are set out and the way spectrum is
13    managed and allocated and licensed, as well as what the
14    various technologies can and cannot do -- which changes --
15    and what various people see as an attractive business
16    case, or not.  What business do they want to be in?
17              So you can obviously take a lot longer to go
18    over this stuff.  But I think those are the main elements
19    I picked out of your question.
20              DR. SLEKYS:  Perhaps the most provocative
21    conclusion of that whole dialogue would be, Why do we need
22    any rate control?
23              DR. KRAUSS:  But there is also a related issue. 
24    And that has to do with spectrum and spectrum allocation
25    and  whether  spectrum is  free  or not  and  the cost  of

                                                              80
 1    coordination.  It would be wonderful if there were an
 2    infinite amount of spectrum and everybody could do
 3    whatever they wanted with it.  That would mean that you
 4    could buy relatively inexpensive equipment that makes
 5    relatively inefficient use of the spectrum.  That would
 6    drive down the cost of the equipment and drive down the
 7    cost of the service, and totally, totally revolutionize
 8    the way the telephone industry operates.
 9              But that is not the case.  And so we live within
10    the constraints that spectrum is a limited resource and we
11    will always have that constraint.
12              MR. ALLEN:  I was hoping to get one last
13    question in.  And that is that I think some PCS service
14    providers are advertising that they have home
15    communication available, as well, where they do not charge
16    you, or something, for the air time when you are in your
17    home.  But going beyond cellular and PCS offerings, when
18    do you envision a person living in a typical metropolitan
19    area in the United States expecting to be able to have a
20    choice and at least one wireless local loop service being
21    offered?  How many years from now do you expect that to
22    happen?
23              MR. TRINKMON:  I think it comes back to what is
24    the service.  Many people would think they are getting
25    that at  the moment from their cellular or PCS phones, and

                                                              81
 1    the only issue is how much they have got to pay for it. 
 2    Is it 50 bucks a month, all you can eat, or is it 10 cents
 3    a minute or whatever?  And that is the tariff issue I
 4    referred to earlier.
 5              There are examples now, in Israel and Denmark
 6    particularly I can think of, where the mobile rates have
 7    come close enough -- not equal to, but close enough to the
 8    fixed rates, but that is on a per-minute basis -- that
 9    people are giving up their wire lines now and just using
10    their mobile service.  So these are tariffing and bundling
11    issues, which is particularly difficult to solve in the
12    U.S. and Canada, with the free local call tariffs on the
13    fixed service.
14              So that is a hurdle which people have not quite
15    managed to jump yet.  One or two operators have tried it
16    and then suddenly attracted more capacity than they could
17    deal with.  So they sort of backed off for a little while
18    until they figure out the next combination that works.
19              MS. BROWN:  Well, I want to thank this first
20    panel.  Are there any last comments from anyone?
21              DR. SLEKYS:  I was going to add to what David
22    says.  It is happening now.  Most of the business plans we
23    look at for PCS investment all have all you can eat plans
24    at some point.  And the key will be their bundling of
25    that,  with not  just their  mobile, but  then with  other

                                                              82
 1    services.  Because they are all hungry to do direct to
 2    home video and anything else they can get their hands on
 3    as service providers.
 4              So I think that the wireless world, which is
 5    looking at a 50 percent penetration in the next 5 years,
 6    will have flat rate and mobile combined in a way that it
 7    will be questionable whether you will want to keep your
 8    land line phone.
 9              MS. BROWN:  We may just hold you to that.
10              (Laughter.)
11              MS. BROWN:  So, on that note -- and I think we
12    will press this issue throughout the day -- and when we
13    get back to the next panel, which will really center
14    around this notion of universal service, perhaps we can
15    take that question up some more.
16              I really want to thank this first panel.  I
17    think you have laid a very good, solid foundation for the
18    discussions for the rest of the day.
19              There are refreshments around the corner.  We
20    will resume back at 11:15.
21              (Applause.)
22              (Recess.)




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