Advanced wireless services are much less valuable than FTTH

Dec. 1, 2001

The private sector's desire to push the military out of a radio spectrum ideal for "3G" wireless services to accommodate mobile users looks frivolous after Sept. 11.

Stephen N. Brown writes on public policy in telecommunications. He can be contacted by e-mail at [email protected] or telephone: (615) 399-1239.

Perhaps the biggest commercial success in the past decade within the United States is wireless service. At last count, nearly 86 million subscribers were obliging themselves to pay from $25 to $50 a month for a basic-service contract lasting up to three years, with new subscriber plans appearing faster than they can be counted. In many countries, wireless subscribers outnumber wired subscribers, a cue for the major wireless service providers and equipment makers to push "third generation" (3G) wireless service. This service is a code-division multiple-access digital signaling system based on spread-spectrum technology and commercialized by QualComm, which looks forward to a healthy flow of royalties as 3G services spread. Companies such as Vodafone, Deutsche Telekom, Verizon, AT&T Wireless, Cingular (a joint venture of BellSouth and SBC), Sprint, Nextel, and Alltel have already spent huge sums of money acquiring spectrum licenses for 3G services, which are seen as a lucrative, long-lasting market where fixed-wired users of the Internet pale before the number of mobile Internet users picking up video, data, and speech transmission at speeds exceeding 2 Mbits/sec.

Anyone supporting fiber-to-the-home (FTTH) should wonder why so much money has been poured into the delivery of 2 Mbits/sec to mobile users and why even more money is aimed at this market, when its ultimate capability is so inferior to FTTH. One answer deals with the idea of "spread-spectrum," originally developed in the 1960s by the American military for short-range communication in theater operations. A radio message is broken into coded packets spread across a number of frequencies far more numerous than the number of packets being sent, thus minimizing the chance that a portion or all of the message could be intercepted.

The short-range reach of spread-spectrum and the empty frequencies that surrounded it suggested to commercial developers that many short-range uses could be found, where multiple signals would fill up the empty frequencies without causing the signals to interfere with each other. A body of knowledge and a series of core patents were developed around these technical characteristics, creating a long-range emphasis on continuing development of the technology. Spread-spectrum made its way into the utility meter-reading market in the late 1980s, when one company designed a system that continuously sent spread-spectrum signals from an electric meter to a receiver, which fed the data to a power-line carrier and on to the utility's central collection point. That was one of many systems developed to bring the electric, gas, and water metering systems into the 20th century, eliminating the vast overhead expenses of meter-readers, auto fleets, fuel, and insurance fees required to deliver retail sales data from the consumer's premises to the company.

The utility industry's struggle with the meter-reading issue is a "last mile" issue that has never had the glamour of the last mile debates, which permeate the telecommunications industry and its regulatory agencies. Unfortunately, the utility-metering systems of 2001 have something in common with the local telephone loops of 2001: neither one is much different than it was in 1990. Well over 200 million meters across the electric, gas, and water industries are still read by sending a reader to the meter, and real-time metering remains physically impossible. Meanwhile, well over 150 million local telephone loops are no different than they were in 1990, with the exception of the few percent being "gussied up" with DSL modems.

With so much money already passed on to government for spectrum licenses, the FCC has to befriend 3G. In January 1999, the agency issued its first report in CC docket 98-146, "Deployment of Advanced Telecommunications Capability." The report put a positive spin on 3G, saying it would hasten the delivery of broadband services in the last mile: "more entry for residential consumers is possible via third-generation mobile wireless broadband service." In the agency's second report, issued in August 2000, the FCC warmed up even more: "We will also consider granting waivers of the commercial mobile radio service (CMRS) spectrum aggregation limit to CMRS providers where the limit proves to be an impediment to the deployment of third generation." It is ironic to see the FCC work with a private sector hungering after spectrum whose current occupants developed 3G's technical basis and spread-spectrum technology and who are doing more good with it expressly for the public-interest than the 3G private sector has ever dreamed of.

The issues were laid out sharply in a Congressional hearing of last July 24 by the Subcommittee on Telecommunications and the Internet of the House Committee on Energy and Commerce, chaired by Rep. Billy Tauzin (R-LA). The CEO of Verizon Wireless, Denny Strigl, represented the 3G sector and asserted, "3G services will be the next important chapter in a compelling success story, as wireless industry growth continues unabated...This committee is in a key position to ensure that the needed spectrum is made available...the wireless communications industry must have additional radio spectrum to provide innovative new services and other critical benefits to the American public and to foster continued economic growth...most of the 1,710-1,850-MHz band is currently occupied by the U.S. Department of Defense (DoD) and other federal agencies."

Opposing comments were made by Linton Wells, Assistant Secretary of the DoD's Defense for Command: "DoD is not 'hoarding' spectrum and using it inefficiently...we must have comparable spectrum if we are to relocate, and this must be identified and certified prior to any decision to reallocate. If comparable spectrum cannot be identified within the next few months, then the federal band should be taken 'off the table'...proposed [draft] legislation drafted by CTIA, would cause grave damage to National Security. In effect, without comparable spectrum, we would be risking the lives of our soldiers, sailors, airmen, and Marines." Before Sept. 11, Linton's comments could have been described as hyperbole, but not now.

Wells's comments raise an important issue: If in the future, DoD shifts to another band, who bears the costs-taxpayers or the 3G industry? If the cost comes out of taxpayers' pockets, then this is a hidden subsidy to a technology delivering 2 Mbits/sec to mobile users. Of all the radio technologies pushed at the public, 3G looks the weakest, with the least potential for "innovative services" that contribute to the public interest. The country does not need another 200,000 radio towers lining highways or being placed on hilltops for everyone to see so a subsidized and inferior technology can be deployed for the benefit of a select group in the wireless industry.