[Senate Hearing 107-1053]
[From the U.S. Government Publishing Office]



                                                       S. Hrg. 107-1053

       SPECTRUM MANAGEMENT AND THIRD GENERATION WIRELESS SERVICE

=======================================================================

                                HEARING

                               before the

                     SUBCOMMITTEE ON COMMUNICATIONS

                                 of the

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 31, 2001

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation



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                            WASHINGTON : 2003
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       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

              ERNEST F. HOLLINGS, South Carolina, Chairman
DANIEL K. INOUYE, Hawaii             JOHN McCAIN, Arizona
JOHN D. ROCKEFELLER IV, West         TED STEVENS, Alaska
    Virginia                         CONRAD BURNS, Montana
JOHN F. KERRY, Massachusetts         TRENT LOTT, Mississippi
JOHN B. BREAUX, Louisiana            KAY BAILEY HUTCHISON, Texas
BYRON L. DORGAN, North Dakota        OLYMPIA J. SNOWE, Maine
RON WYDEN, Oregon                    SAM BROWNBACK, Kansas
MAX CLELAND, Georgia                 GORDON SMITH, Oregon
BARBARA BOXER, California            PETER G. FITZGERALD, Illinois
JOHN EDWARDS, North Carolina         JOHN ENSIGN, Nevada
JEAN CARNAHAN, Missouri              GEORGE ALLEN, Virginia
BILL NELSON, Florida
               Kevin D. Kayes, Democratic Staff Director
                  Moses Boyd, Democratic Chief Counsel
                  Mark Buse, Republican Staff Director
               Jeanne Bumpus, Republican General Counsel
                              ----------                              

                     SUBCOMMITTEE ON COMMUNICATIONS

                   DANIEL K. INOUYE, Hawaii, Chairman
ERNEST F. HOLLINGS, South Carolina   CONRAD BURNS, Montana
JOHN F. KERRY, Massachussetts        TED STEVENS, Alaska
JOHN B. BREAUX, Louisiana            TRENT LOTT, Mississippi
JOHN D. ROCKEFELLER IV, West         KAY BAILEY HUTCHISON, Texas
    Virginia                         OLYMPIA J. SNOWE, Maine
BYRON L. DORGAN, North Dakota        SAM BROWNBACK, Kansas
RON WYDEN, Oregon                    GORDON SMITH, Oregon
MAX CLELAND, Georgia                 PETER G. FITZGERALD, Illinois
BARBARA BOXER, California            JOHN ENSIGN, Nevada
JOHN EDWARDS, North Carolina         GEORGE ALLEN, Virginia
JEAN CARNAHAN, Missouri


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on July 31, 2001....................................     1
Statement of Senator Burns.......................................     4
Statement of Senator Ensign......................................     6
Statement of Senator Hollings....................................     3
    Prepared statement...........................................     3
Statement of Senator Inouye......................................     1
    Prepared statement...........................................     2
Statement of Senator Rockefeller.................................     6
Statement of Senator Stevens.....................................     5
Statement of Senator Wyden.......................................     5

                               Witnesses

Cooper, Martin, Chairman, CEO, and Co-founder, ArrayComm, Inc....    59
    Prepared statement...........................................    61
Hatch, William T., Acting Assistant Secretary for Communications 
  and 
  Information Administration, Department of Commerce.............     7
    Prepared statement...........................................     9
Kelley, Mark C., Chief Technical Officer, Leap Wireless 
  International, Inc.............................................    50
    Prepared statement...........................................    51
Knapp, Julius P., Deputy Chief, Office of Engineering and 
  Technology, 
  Federal Communications Commission..............................    14
    Prepared statement...........................................    16
McHenry, Carroll D., CEO, Nucentrix Broadband Networks, Inc......    45
    Prepared statement...........................................    46
Strigl, Dennis F., President and CEO, Verizon Wireless...........    40
    Prepared statement...........................................    41
Wells, Linton II, Acting Assistant Secretary of Defense for 
  Command, Control, Communications and Intelligence..............    20
    Prepared statement...........................................    23
Wheeler, Thomas E., President and CEO, Cellular 
  Telecommunications and Internet Association....................    53
    Prepared statement...........................................    56

 
       SPECTRUM MANAGEMENT AND THIRD GENERATION WIRELESS SERVICE

                              ----------                              


                         TUESDAY, JULY 31, 2001

                               U.S. Senate,
                    Subcommittee on Communications,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 2:30 p.m. in 
room SR-253, Russell Senate Office Building, Hon. Daniel K. 
Inouye, 
Chairman of the Subcommittee, presiding.

          OPENING STATEMENT OF HON. DANIEL K. INOUYE, 
                    U.S. SENATOR FROM HAWAII

    Senator Inouye. We are here today to address two important 
missions, third generation wireless service, and the management 
of spectrum. Our ability to resolve issues surrounding 3G will 
have a significant impact on the health and competitiveness of 
the wireless industry. I expect that a resolution of the 3G 
issue will also be instructive with respect to policies of 
spectrum management. It was in the 1980s that companies like 
AT&T and the Baby Bells began providing wireless mobile phone 
service referred to as cellular service.
    However, it was only in the 1990s when Congress authorized 
the FCC to auction additional spectrum for personal 
communications service that the wireless phone industry truly 
began to blossom. PCS became a catalyst for the industry's 
transition from analog to digital. The question we now face is 
how to complete the next step. That is the transition to third 
generation wireless services.
    Clearly, whether or not U.S. service providers and 
manufacturers of third generation service will be able to 
compete successfully will depend in part on the decisions of 
policymakers. In this regard, the issue we face today is 
identifying sufficient spectrum for 3G transition. While the 
International Telecommunications Union has allocated the 806 to 
960, 1710 to 1885, and 2500 to 2690 megahertz bands for 3G 
service, our industry has set its sights on the 1755 to 1850 
megahertz band. The Department of Defense, the primary user of 
spectrum in this band, has indicated that it cannot effectively 
share the band with 3G technologies.
    If additional spectrum is necessary for 3G services, some 
form of compromise must be reached. If the only option is to 
relocate the Defense Department, we must find comparable 
spectrum, develop a migration timeframe that allows DOD to 
maintain its operation as it vacates the spectrum, and ensure 
that the department's costs are reimbursed. These monumental 
tasks must be accomplished without risking any reduction in 
military preparedness or degradation of systems that support 
mission capabilities.
    We are facing difficult issues with respect to 3G services 
because with increasing consumer demand for wireless service, 
spectrum has become scarce. Congress took an important step in 
distributing spectrum quickly and efficiently when it 
authorized the FCC to auction spectrum. Since that time, the 
FCC has implemented other spectrum management tools such as 
spectrum caps and band managers in order to promote competition 
and more quickly disseminate spectrum.
    As the FCC seeks to implement additional tools for spectrum 
management, it must make sure that its role in allocating 
spectrum and assigning licenses is clear. The wireless industry 
is competitive and consumers have benefited from this 
competition. However, the FCC must continue to fulfill its 
responsibilities in assuring that consumers are well served 
through its spectrum management policies. I welcome the 
witnesses, and I look forward to hearing your testimony.
    [The prepared statement of Senator Inouye follows:]

             Prepared Statement of Hon. Daniel K. Inouye, 
                        U.S. Senator from Hawaii

    We are here today to address two important issues--third generation 
(3G) wireless service and the management of spectrum. Our ability to 
resolve issues surrounding 3G will have a significant impact on the 
health and competitiveness of the wireless industry. I expect that a 
resolution of the 3G issue will also be instructive with respect to 
policies of spectrum management.
    It was in the 1980s that companies like AT&T and the Baby Bells 
began providing wireless mobile phone service referred to as cellular 
service. However, it was only in the 1990s, when Congress authorized 
the Federal Communications Commission (FCC) to auction additional 
spectrum for personal communications service (PCS), that the wireless 
phone industry truly began to blossom. PCS became a catalyst for the 
industry's transition from analog to digital. The question we now face 
is how to complete the next step--that is, the transition to third 
generation wireless services.
    Clearly, whether or not U.S. service providers and manufacturers of 
third generation service will be able to compete successfully will 
depend, in part, on the decisions of policymakers. In this regard, the 
issue we face today is identifying sufficient spectrum for the 3G 
transition. While the International Telecommunications Union has 
allocated the 806 to 960, 1710 to 1885, and 2500 to 2690 megahertz 
bands for 3G service, industry has set its sights on the 1755 to 1850 
megahertz band. The Department of Defense, the primary user of spectrum 
in this band, has indicated that it cannot effectively share the band 
with 3G technologies. If additional spectrum is necessary for 3G 
services, some form of compromise must be reached. If the only option 
is to relocate the Defense Department, we must find comparable 
spectrum, develop a migration timeframe that allows the Defense 
Department to maintain its operations as it vacates the spectrum, and 
ensure that the Department's costs are reimbursed. These monumental 
tasks must be accomplished without risking any reduction in military 
preparedness or degradation of systems that support mission 
capabilities.
    We are facing difficult issues with respect to 3G services, 
because, with increasing consumer demand for wireless service, spectrum 
has become scarce. Congress took an important step in distributing 
spectrum quickly and efficiently when it authorized the FCC to auction 
spectrum. Since that time, the FCC has implemented other spectrum 
management tools such as spectrum caps and band managers in order to 
promote competition and more quickly disseminate spectrum. As the FCC 
seeks to implement additional tools for spectrum management, it must 
make sure that its role in allocating spectrum and assigning licenses 
is clear. The wireless industry is competitive and consumers have 
benefited from this competition. However, the FCC must continue to 
fulfill its responsibility in ensuring that consumers are well-served 
through its spectrum management policies.
    I welcome the witnesses and look forward to hearing their 
testimony.

    Senator Inouye. May I call upon the Chairman for his 
thoughts.

             STATEMENT OF HON. ERNEST F. HOLLINGS, 
                U.S. SENATOR FROM SOUTH CAROLINA

    Senator Hollings. Mr. Chairman, we really thank you for 
setting this hearing. It is probably the most important hearing 
we have had in communications this year. I say that because you 
have noted that this is not just a customary hearing on 
spectrum, but that we intend to do something. I say that in 
light of the fact that 20 years ago, we had similar hearings.
    When we talk about the actual sale, auction of the 
spectrum, it wasn't done from the spectrum's benefit and 
purpose, on the contrary, just for financial needs. What we 
need to do is really allocate that spectrum for this 3G mobile 
satellite system, wireless system that, on a fail basis, there 
is no question that the Defense Department will be defended.
    I am not worried about the cost of spectrum moneys. We can 
reimburse that, and you more or less have been in charge of the 
defense appropriations as the Ranking Member for years, so I am 
not worried about reimbursing the Department of Defense, but I 
am more concerned that we get something done. You cannot get 
any better witnesses than what we have right at that panel.
    If we get something conclusive rather than a litany, then 
we know about all the problems. You can keep on testifying and 
testifying about these problems, and the next thing you know, 
the Europeans will go forward with this third generation 
wireless service. Then it could be that yes, the Federal 
Express man delivering the goods in Europe can talk, but the 
troops in Kosovo cannot. I mean, that is by way of emphasis. We 
are not in this alone. We are not in charge. We have got to 
respond to the technological developments, and I do not know of 
any better hearing. Let me ask that my full statement be 
included in the record.
    [The prepared statement of Senator Hollings follows:]

            Prepared Statement of Hon. Ernest F. Hollings, 
                    U.S. Senator from South Carolina

    Mr. Chairman, I appreciate your leadership in calling today's 
hearing to examine the steps that we, as policymakers, can and must 
take to facilitate the development of third generation (3G) wireless 
services in the United States.
    On October 13, 2000, President Clinton issued an executive 
memorandum directing all Federal agencies to identify spectrum that 
could be made available for 3G products and services. The principal 
result of that order has been to focus primary attention on two bands 
of spectrum in the United States identified by the international 
community as appropriate for 3G mobile systems: (1) the 1710-1885 MHz 
band, used by Federal agencies including the Department of Defense; and 
(2) the 2500-2690 MHz band, currently allocated to instructional 
television fixed services and multichannel, multipoint delivery 
services (MMDS).
    The merits of sharing and/or clearing these bands have been 
extensively studied by NTIA, DOD, and the FCC. As a result, I am happy 
that representatives from these three agencies are with us today to 
share their findings, to debate the relative merits of the various 
approaches, and to begin the difficult but necessary task of charting a 
course forward toward a spectrum management policy that will allow U.S. 
businesses to compete in the global market for 3G products and 
services.
    Still, while it is important that we move forward, we must not in 
our haste neglect the valid concerns of incumbent license holders--in 
particular, the impact of band clearing or sharing on our national 
security interests and on the commercial expectations of incumbent 
licensees. Ultimately, it is my hope that the testimony of today's 
witnesses will bring us closer to a consensus that protects our 
domestic security interests and encourages innovation in the 
development of new consumer products and services.
    The array of consumer services to be offered in a 3G world is 
nothing short of dazzling. Small handheld devices no bigger than a pack 
of cigarettes will connect to the Internet at high speeds, allowing 
consumers to quickly download songs, exchange photographs, or receive 
streaming video. Yet, unless we begin to act decisively, with a common 
voice and a common purpose, U.S. communications companies risk falling 
further behind their global competitors.
    As guardians of this public resource, it is the duty of this 
administration, the FCC, and this Congress to develop a reasoned 
approach toward management of the radio spectrum that will facilitate 
the development of 3G services. Accordingly, while the promise of 
robust 3G consumer services in the United States may be years away, 
this hearing could not be more timely.
    I look forward to listening to the recommendations of our 
distinguished panel of witnesses and to their responses to our 
questions.

    Senator Inouye. Without objection, so ordered.
    Senator Burns.

                STATEMENT OF HON. CONRAD BURNS, 
                   U.S. SENATOR FROM MONTANA

    Senator Burns. Thank you, Mr. Chairman. Thank you for 
holding this hearing today. As you know, we had talked about 
this a long time ago, and I appreciate the opportunity of 
participating on this important issue. I want to remind my 
colleagues on the panel that if you think there was a lot of 
moving parts in the 1996 Telco Act, when you start down the 
road of reforming and taking a look at managing spectrum, and 
looking at reforms, you have not seen anything yet. And because 
this is the information age, it is a bonus. Some people believe 
that we are already there in the advent of the wireless 
communications devices, laptops and of course, hand helds.
    I believe we have only begun the journey into the age of 
information. Yes, we have witnessed many amazing technological 
advancements over the past decade, but as a society, we have 
not fully realized the total impact that these technologies 
will have on the way we live and the way we interact on a day-
by-day basis. Put in another way, the second and third order 
effects of the information revolution have only begun to occur. 
For example, I foresee the day when our information devices 
will be the extensions of our very personalities, the ability 
to meet and interact with other people both approximately and 
personally will be greatly enhanced by our ability to share 
information.
    Already we have seen entirely new ways to buy goods through 
services such as e-bay, and as an auctioneer, I take offense to 
that. No, not really. That wasn't written in here, folks. I 
will guarantee you that. But I will find that an example of 
real life human interaction. E-bay is a second order effect in 
the simple email technology. Imagine what's going to happen in 
the 3G for the third generation industries.
    3G offers a personal interconnection never before imagined. 
When the telegraph and the telephone were invented, we tried to 
imagine what our forefathers would have thought at such 
abilities. As we tried to envision the communications wonders 
before us, we are, like our forefathers, completely unaware of 
what the future in the age of information holds for our 
children and our grandchildren and yes, our great 
grandchildren. That said, even though our forefathers could not 
imagine our current technical abilities, their wisdom foretold 
and facilitated the industrial revolution. Today, we are faced 
with a similarly daunting task.
    Clearly, there are many dimensions to the information age, 
but none more important than the use and the availability of 
spectrum. The U.S. Senate must carefully consider this manner. 
The issue at hand is not simply the allocation of spectrum for 
3G, but also how to best define a process for managing this 
valuable commodity in such a way to ensure national security, 
ensure, encourage commerce, but most of all, propel our 
transition into the information age.
    I look forward to working with the Chairman and the rest of 
my colleagues on this panel as we start down this road to 
reforming the way we manage our spectrum, and of course, making 
way for the next generation. Thank you very much, Mr. Chairman.
    Senator Inouye. I thank you very much. And may I now 
recognize the Vice Chairman of the Subcommittee, the gentleman 
from Alaska.

                STATEMENT OF HON. TED STEVENS, 
                    U.S. SENATOR FROM ALASKA

    Senator Stevens. Thank you very much. Mr. Chairman, my 
office has now been approached by several educational and 
religious groups who want to protect the continued availability 
of this band, GHC band. We have also been approached by several 
industry groups who want this block of spectrum to remain under 
consideration by the FCC. The first group wanted to have it 
removed from consideration obviously. I am really here because 
I'd like to find a way to ask both sides what will be the 
situation with regard to the total spectrum situation if this 
block of spectrum is taken off the table, what is its impact, 
particularly on the spectrum that is now so vital to our 
national defense. Thank you very much.
    Senator Inouye. Thank you.
    The gentleman from Oregon, Mr. Wyden.

                 STATEMENT OF HON. RON WYDEN, 
                    U.S. SENATOR FROM OREGON

    Senator Wyden. Thank you, Mr. Chairman. I congratulate you, 
Mr. Chairman, for holding this hearing and making it clear that 
we are going to be dealing with a very difficult issue in a 
bipartisan fashion. Obviously, today's challenge is finding 
spectrum for 3G wireless, but I am of the view that some day 
there is going to be a 4G or a 5G or an entirely different 
wireless application we haven't even imagined yet, and without 
fundamental reform, the current firestorm over 3G spectrum in 
my view will just be repeated again and again.
    It seems to me that the central problem I would say to my 
colleagues is that we have got a jurassic system. It has been 
virtually unchanged since 1920s when spectrum was used for 
radio and radio only, and it is creating all of the wrong 
incentives. If you are an incumbent license holder, you want to 
keep licenses scarce. You occupy as much spectrum as possible, 
and you fight tooth and nail against giving any up. In effect, 
you sort of collect ransom for holding the spectrum hostage, 
and if you have got a bright new idea for the use of spectrum, 
you have to have a lot of patience for a lot of red tape.
    It seems to me we have a variety of reforms that we ought 
to be looking at. But to me, one of the centerpieces that 
effort ought to be to make sure that licensees in the future 
have some flexibility and incentives to sell or lease excess 
spectrum, instead of hoarding it. We all understand this 
resource that you cannot see or touch is now one of the most 
important natural resources in the information age economy, and 
as far as I am concerned, you have got to have some reforms 
that are going to harness the power of marketplace forces so 
that we are going to go about using the spectrums as 
efficiently as possible. I thank you, Mr. Chairman, for a 
chance to speak for a moment this afternoon.
    Senator Inouye. I thank you very much.
    May I now recognize the gentleman from Nevada, Mr. Ensign.

                STATEMENT OF HON. JOHN ENSIGN, 
                    U.S. SENATOR FROM NEVADA

    Senator Ensign. Thank you, Mr. Chairman. I want to thank 
you for holding this hearing. I will keep my comments very 
brief, as I agree with the Senator from Oregon that the 
marketplace is critical, decreasing some of the red tape that 
goes on, but also we do have to take in the national security 
implications here, and I think that those are not mutually 
exclusive entities. I am looking forward to questioning some of 
the witnesses and hearing some of their testimony to try and 
work some of these issues out. I think it is critical that this 
body understand these issues. They are very complex. We are 
dealing not only with making law, but we are dealing with such 
a scientifically technical area, that we need outside experts 
to help advise us on these issues, as we do with most issues, 
but particularly, when we are dealing with such advanced 
technological issues, and so I am looking forward to working 
with my colleagues here to try to craft some legislation that 
will permit us as Americans to make sure that America does not 
fall behind in so many important areas, especially in 
technology. Thank you, Mr. Chairman.
    Senator Inouye. I thank you very much. The gentleman from 
West Virginia.

           STATEMENT OF HON. JOHN D. ROCKEFELLER IV, 
                U.S. SENATOR FROM WEST VIRGINIA

    Senator Rockefeller. Thank you, Mr. Chairman. At Katherine 
Graham's funeral, former Secretary of Defense Jim Schlesinger 
approached me. We talked about Ms. Graham for a moment, and he 
said to me, why did you sign that letter, and I said what do 
you mean? He said you signed the spectrum letter that sort of 
relegated the Department of Defense to being irrelevant. I have 
very, very strong friendship and admiration for Jim 
Schlesinger, and so I was really taken aback by that comment.
    On checking, I found that the letter that we sent was put 
by, passed through the Defense Department and proofed, but 
regardless of any of that, it raises the question of the 
difficulty of what we do. When I consider what has to be done 
in defense, I am overwhelmed. When I consider what has to be 
done on 3G, much less 5G, I am overwhelmed. When I consider the 
approach that the knowledge base in this Congress about 
spectrum matters has been, I am underwhelmed. When I consider 
the time we have in which to do something intelligent and 
useful, I am again overwhelmed. So this hearing, anything is 
timely.
    Senator Inouye. I thank you very much. Now, we will call 
upon the first panel. First the Acting Administrator of 
National Telecommunications and Information Administration, Mr. 
William T. Hatch. Then the Deputy Chief for the Office of 
Engineering and Technology, FCC, Mr. Julius Knapp, and the 
Acting Assistant Secretary of Defense for Command, Control, 
Communications and Intelligence, Mr. Linton Wells II.
    Mr. Hatch.

        STATEMENT OF WILLIAM T. HATCH, ACTING ASSISTANT 
         SECRETARY FOR COMMUNICATIONS AND INFORMATION 
             ADMINISTRATION, DEPARTMENT OF COMMERCE

    Mr. Hatch. Thank you, Mr. Chairman. Mr. Chairman and 
Ranking Members, and other Members of the Subcommittee, I want 
to thank you for inviting me to testify today on spectrum 
allocation process, and also the accommodation of third 
generation wireless systems in the United States. As you 
stated, Mr. Chairman, I am Bill Hatch, Acting Assistant 
Secretary for Communications and Information and Acting 
Administrator of the NTIA within the Department of Commerce. I 
am also the Associate Administrator at NTIA's Office of 
Spectrum Management. As Members of this Subcommittee know, NTIA 
serves as the spectrum manager for the Federal agencies and is 
also the principal advisor to the President on communications 
and information policy. Because of NTIA's unique role, the 
agency must then balance the spectrum interests of the Federal 
agencies while also advancing policies that promote the 
benefits of technology development in the United States for all 
of the telecommunications users.
    As you noted, the spectrum allocation process originally 
established by the Communications Act of 1934 has grown and 
adapted to change in both the private sector and the Federal 
Government spectrum requirements, and for the introduction of 
new technologies. The Federal Communications Commission on 
behalf of the private sector and NTIA on behalf of Federal 
agencies have coordinated their efforts on almost a daily basis 
to ensure that our goals are met now and in the future.
    Unfortunately, Mr. Chairman, this task is becoming more 
complicated given the proliferation and increasing 
proliferation of wireless technology and applications. 
Available spectrum is particularly scarce in the popular 
frequency band we are considering now below 3 gigahertz. I 
might note that over 90 percent of the government and private 
sector authorizations by NTIA and FCC are in the spectrum below 
3 gigahertz. Of this spectrum below 3 gigahertz, over 55 
percent is shared, 14 percent is Federal Government exclusive, 
and 31 percent is non-Federal Government exclusive.
    Despite congestion in these frequencies, finding spectrum 
for below 3 gigahertz with a deployment of new technology such 
as third generation wireless is a complex and challenging 
process. Over the past decade, there has been tremendous growth 
worldwide in the use of cellular-based wireless communications. 
The Department of Commerce and NTIA believes that this growth 
will continue.
    While current cellular and PCS wireless systems are 
expected to evolve into 3G over time, as you noted, there is a 
strong desire from the wireless industry for additional 
spectrum to establish 3G networks. The International 
Telecommunications Union has been fostering the development of 
advanced mobile systems, and that arena is currently referred 
to as IMT or International Mobile Telecommunications 2000, we 
will refer to it here as 3G, for a number of years.
    The last World Radio Conference in 2000 in Istanbul, 
Turkey, adopted a resolution that states that approximately 160 
megahertz of additional spectrum will be needed to meet the 
projected requirements of 3G in those areas where the traffic 
is highest, and this need will be required by 2010. There were 
a number of frequency bands identified at the conference, and 
resolution provided that each country may determine which of 
the bands to implement domestically, taking into account the 
impact on incumbent services. Here in the United States, we are 
now in the process of deciding which of the various frequency 
bands is most appropriate for implementation of 3G services.
    As a result of the cooperation between the Department of 
Commerce, Department of Defense, and the Federal Communications 
Commission, and other Federal agencies, the Department of 
Commerce, under guidelines set forth last year, has developed 
an ambitious action plan to identify spectrum for 3G. To date, 
both NTIA and FCC have completed reports on the 1710 to 1850 
megahertz band and the 2599 to 2690 megahertz band that you 
referred to. We have conducted outreach programs within the 
industry.
    In addition, you will hear from the FCC, and they have 
issued a notice of proposed rulemaking addressing 3G issues, 
and have received public comments from the issues raised in the 
NPRM. Because of the complex issues surrounding the allocation 
of spectrum for 3G, there is a general agreement amongst the 
Department of Commerce, the FCC, and the affected agencies to 
continue these efforts so that we may carefully study the 
various spectrum options that have been proposed both in our 
studies, the FCC studies and by the private sector, so that we 
can carefully study the various options to arrive at the best 
possible decision for the United States.
    In recognition of this work that remains to be done, 
Chairman Powell recently sent a letter to Secretary Evans 
suggesting that additional time to study all these options 
would be desirable, and requested that the department work with 
the FCC to come up with a revised allocation plan and auction 
timetable. Secretary Evans responded by agreeing with the 
Chairman that continuing these efforts would ensure that the 
final 3G allocation decision would be the best possible 
decision we could make. He has directed me to work with the FCC 
and the Federal agency to develop a new plan for the section of 
3G spectrum and consider ways to achieve flexibility on the 
statutory auction date if such a flexibility is needed to 
implement this new plan. I am happy to report, Mr. Chairman, 
that in accordance with Secretary Evans' memo, we have already 
started preliminary discussions with Federal agencies, 
including the FCC about establishing a new plan and timetable 
for selecting 3G spectrum. I thank you for this opportunity to 
share my views with you. I'd be pleased to answer any questions 
the Subcommittee may have.
    Senator Inouye. Thank you very much, Mr. Hatch.
    [The prepared statement of Mr. Hatch follows:]

Prepared Statement of William T. Hatch, Acting Assistant Secretary for 
 Communications and Information Administration, Department of Commerce

    Mr. Chairman, Ranking Member and other Members of this 
Subcommittee, I want to thank you for inviting me to testify today on 
spectrum matters relating to the spectrum allocation process and the 
accommodation of third generation (3G) wireless systems in the United 
States. I am William T. Hatch, Acting Assistant Secretary for 
Communications and Information, and Acting Administrator of the 
National Telecommunications and Information Administration (NTIA) 
within the Department of Commerce. I am also the Associate 
Administrator in NTIA's Office of Spectrum Management.
    One of NTIA's responsibilities is to serve as the President's 
principal advisor on telecommunication policies. The agency's other 
primary responsibility on behalf of the President is to manage the 
radio frequency spectrum used by the Federal agencies in satisfying 
their missions. In this role, NTIA processes the Federal agencies' 
request for frequency assignments; provides Executive Branch leadership 
in coordinating both current and future spectrum requirements among the 
Federal agencies; and with the Federal Communications Commission (FCC) 
and the Department of State, develops and promotes positions at Treaty 
Conferences and other technical and management fora of the 
International Telecommunication Union (ITU) regarding United States 
spectrum management interests. Because of NTIA's unique role, the 
agency must balance the spectrum interests of the Federal agencies 
while also advancing policies that promote the benefits of 
technological developments in the United States for all users of 
telecommunications services.
    NTIA's management of the Federal use of radio spectrum also 
promotes public safety and competition. As the managers of Federal 
spectrum, the agency is trying to improve efficiency, increase private 
access to spectrum resources, and plan for future spectrum needs, 
including those relating to public safety. These goals will become 
increasingly important as global uses of satellite and wireless devices 
increase. In this regard, I am pleased that the Subcommittee is looking 
into the matter of the allocation process and 3G wireless services, and 
would like to begin my remarks today by giving a brief background on 
the national allocation process, our accomplishments on 3G to date, and 
our plans for the future.

                      NATIONAL ALLOCATION PROCESS

    In 1934, the Communications Act was signed into law establishing 
the respective responsibilities for spectrum management in the United 
States. The statute reserved to the President the authority to make 
radio frequencies available to all stations belonging to or operated by 
the United States. NTIA exercises this authority on behalf of the 
President ensuring that federal agencies can meet their critical 
communications needs in the areas of national defense and security, air 
safety, maintenance and preservation of our natural resources, law 
enforcement, management of national disasters, exploration of space, 
and other Federal Government services and functions. The Communications 
Act of 1934 also created the FCC as an independent agency with the 
responsibility to manage the spectrum to meet the needs of the state 
and local governments and the private sector.
    To meet the respective needs of the private sector and federal 
government, the President, through NTIA and its predecessors, and the 
FCC over the past 67 years have allocated approximately 300 GHz of 
usable radio spectrum into government exclusive, non-government 
exclusive and ``shared'' bands. This 300 GHz of usable spectrum has 
been divided up over the years into approximately 900 bands, each being 
allocated to one or more of 41 radiocommunication services such as 
broadcasting, mobile, fixed, and mobile satellite.
    The FCC makes domestic spectrum allocation decisions through public 
rulemakings. NTIA coordinates its allocation decisions in government-
exclusive bands through the Interdepartment Radio Advisory Committee (IRAC), 
which is comprised of representatives from the major spectrum users 
among the Federal agencies. The FCC and NTIA coordinate on any spectrum 
allocation decisions involving ``shared'' bands. The FCC and NTIA work 
together on a daily basis to coordinate spectrum decisions that affect 
their mutual constituencies and to ensure that the current and future 
communications needs of both the government and private sector are 
satisfied.

                              SPECTRUM USE

    Over the years, spectrum use has expanded from the very low 
frequency ranges to the higher frequency ranges. As shown in Figure 1, 
over 93% of all licensees and Federal Government frequency 
authorizations are in the 0 to 3 gigahertz (GHz) range. Of the spectrum 
below 3 GHz, 14% of the spectrum is Federal Government exclusive, 31% 
is non-Federal Government exclusive, and the remaining 55% is shared. 
Throughout the usable spectrum, NTIA has authorized the use of some 
440,000 assignments for Federal Government use and the protection of 
spectrum used by our neighbors, Canada and Mexico, and other 
frequencies specified by the FCC. Approximately 40% of the assignments 
authorized by NTIA for Federal agency use are used by the Department of 
Defense as shown in Figure 2. NTIA processes approximately 300 to 500 
Federal agency requests for frequency assignment actions daily.
    The entire spectrum management process has to be flexible, dynamic, 
adaptable to changing requirements, and timely to meet the national 
needs for spectrum. The spectrum below 3 GHz is extremely congested, 
and thus, finding spectrum below 3 GHz for the deployment of new 
technologies such as 3G services will be a complex and challenging 
process.
    I would now like to address how the national spectrum management 
process has dealt with and will continue to deal with finding 
additional spectrum for 3G services.

                             3G BACKGROUND

    Although in the United States our wireless services are not 
generally distinguished by a ``generation'' label, we might classify 
the early cellular telephones as the ``first generation'' of wireless 
services that brought nationwide mobile telephone services to hundreds 
of thousands of Americans. Building on the success of cellular service, 
the current personal communications services (``PCS'') could constitute 
the ``second generation'' of wireless services. These services bring 
digital voice and messaging services to the Nation. In recent years, 
there has been robust competition in the field of wireless services. 
This competition has promoted lower rates, greater customer choice, and 
higher quality of service.
    Over the past decade there has been a tremendous growth worldwide 
in the use of cellular-based wireless telecommunications systems. The 
Department of Commerce and NTIA believe that this global growth will 
continue. The ``third generation'' (or ``3G'') systems advanced by 
industry propose to provide mobile and satellite-based broadband 
capabilities. While current cellular and PCS wireless systems are 
expected to evolve to 3G technology over time, there is a strong desire 
from the wireless industry for additional spectrum now to establish 3G 
networks.
    In recognition of this growth and the trend toward global markets 
for wireless services, the International Telecommunication Union (ITU) 
has considered the spectrum requirements for evolving 3G systems, which 
is internationally termed International Mobile Telecommunications-2000, 
or IMT-2000. At the May 2000 World Radiocommunication Conference (WRC-
2000) in Istanbul, Turkey, an ITU-established agenda item called for 
the review of spectrum and regulatory issues for advanced mobile 
applications in the context of IMT-2000. The ITU acknowledged the need 
to provide additional spectrum, particularly for the terrestrial 
component of IMT-2000 applications. The ITU forecast that 160 MHz of 
additional spectrum would be required for 3G systems. This amount is 
over and above that spectrum already allocated internationally for 1- 
and 2G systems. The ITU identified several frequency bands that could 
be used for IMT-2000 systems. However, member administrations of the 
ITU retained the right to implement any of the bands in any time frame, 
for any service or technology, and could use any portion of the 
identified bands that they deemed appropriate to satisfy national 
requirements.

                             CURRENT STATUS

    In October 2000, then President Clinton signed an Executive 
Memorandum which stated the need and urgency for the United States to 
select radio frequency spectrum for 3G. The Memorandum articulated 
principles to serve as guideposts for future actions that would be 
taken related to the development of 3G, and directed Federal agencies 
to undertake certain activities. Under the Memorandum, the Secretary of 
Commerce was directed to work cooperatively with the FCC to take 
certain actions that would enable the FCC to identify, in coordination 
with NTIA, 3G spectrum and to auction licenses to competing applicants 
by September 30, 2002. In addition, the Secretary of Commerce was 
directed to work with government and industry representatives through a 
series of public meetings to develop recommendations and plans for 
identifying spectrum for 3G wireless systems. The Secretaries of 
Defense, Treasury, Transportation, State and other agency heads were 
directed to participate and cooperate with this government-industry 
group. The Secretary of State was directed to coordinate and present 
the views of the United States to foreign governments and international 
bodies. The FCC was encouraged to participate in this government-
industry outreach program and to initiate a rulemaking to identify 
spectrum for 3G, in coordination with NTIA, with the goal of allocating 
3G spectrum so that licenses could be made available via auction by 
September 30, 2002.
    As a result of cooperation between the Department of Commerce, the 
Department of Defense, the Federal Communications Commission (FCC), and 
other Federal agencies, the Department of Commerce, under guidelines 
set forth by the Executive Memorandum, developed an ambitious action 
plan to identify spectrum for 3G services. To date, NTIA and the FCC 
have released interim and final reports on the 1710-1850 MHz band and 
2500-2690 MHz band, respectively; conducted a government-industry 
outreach program; and participated in the State Department's outreach 
program to foreign governments and international bodies. In addition, 
the FCC issued a notice of proposed rulemaking.
    We are now in the process of deciding which of the various 
frequency bands is most appropriate for the implementation of 3G 
services in the United States. The possible bands for allocation for 
the terrestrial component of IMT-2000 in the United States include the 
698-960 MHz, 1710-2025 MHz, 2110-2200 MHz, and 2500-2690 MHz bands. All 
of these bands are being considered in the FCC's rulemaking process. 
Two bands, however, the 1755-1850 MHz band (exclusive government 
spectrum) and the 2500-2690 MHz band (exclusive non-government 
spectrum) require a more extensive analysis to determine their 
potential to accommodate 3G services. NTIA has studied the 1755-1850 
MHz band and the FCC has studied the 2500-2690 MHz band and the study 
reports have been entered in the record of the FCC's 3G rulemaking for 
public comment.

                          NTIA SPECTRUM REPORT

    The NTIA report noted that the 1755-1850 MHz band supports various 
Federal functions: space telemetry, tracking and control (TT&C); 
medium-capacity fixed microwave; precision guided munitions; tactical 
radio relay training; and aeronautical mobile applications such as 
telemetry, video and target scoring systems. This band is currently 
allocated on an exclusive basis to the Federal Government for fixed and 
mobile; and in the 1761-1842 MHz portion, space operation (Earth-to-
space) and space research (Earth-to-space) services. This allocation 
supports Federal space tracking, telemetry and command. Fixed links are 
operated by Federal agencies for voice, data, and/or video 
communications where commercial service is unavailable, excessively 
expensive, or unable to meet required reliability. Applications include 
law enforcement, emergency preparedness, support for the national air 
space system, military command and control networks, and control links 
for various power, land, water, and electric-power management systems. 
Other fixed links include video relay, data relay, and timing 
distribution signals. Probably the most critical system in the band is 
the USAF Space Ground Link Subsystem (SGLS). This system, via Earth-to-
space uplinks in the 1761-1842 MHz band, controls the U.S. military 
satellites, including telecommunications satellites, intelligence 
gathering satellites, the Global Positioning System (GPS) satellite 
constellation and U.S. allies.
    The NTIA report studied three options as shown in Figure 3 for 
sharing or segmenting the 1710-1850 MHz band and provided estimated 
cost information for relocating Government systems to other bands based 
on the agencies' analyses of their respective systems. In its report, 
NTIA concluded that without some form of real-time coordination among 
IMT-2000 operators and the Federal users, sharing between the IMT-2000 
systems and Federal ground and airborne systems would be problematic. 
For example, a Department of Defense analysis (contained as an appendix 
to the NTIA report) indicated that IMT-2000 base stations would 
interfere with the control of Federal Government satellites. The 
Defense Department asserted that it would cost $3.95 billion (fiscal 
year 2002 estimate) to relocate its systems from the 1755-1850 MHz band 
assuming no relocation of satellite systems until the end of their 
projected useful life and that such relocation could not be completed 
before the year 2017. The relocation scenarios were contingent on 
whether spectrum could be identified to which the agencies' operations 
could be moved.
    In its report, NTIA discussed the possible ways in which the 1710-
1755 MHz band could be used for 3G services. NTIA previously identified 
the 1710-1755 MHz band for reallocation to the private sector on a 
mixed-use basis under the requirements of the Omnibus Reconciliation 
Act of 1993 (OBRA-93). However, under OBRA-93 the Federal Power 
Administration and fixed links supporting safety-of-life services were 
exempted from the requirement. In addition, NTIA protected operations 
within 16 military areas used for large-scale training exercises. In 
its final report, NTIA noted that one possible option to accommodate 3G 
services within the band would be to relocate Federal systems from this 
band completely if comparable spectrum for these military operations 
could be found and the Federal Power Administration services were 
willing to relocate on a voluntary basis. Identifying comparable 
spectrum is important to the 3G spectrum allocation process because of 
the need to continue important federal services and because of the 
provisions of the National Defense Authorization Act for Fiscal Year 
2000, which protects Department of Defense uses of the spectrum unless 
alternative spectrum can be identified that preserves essential 
military capability.

                           OUTREACH PROGRAMS

    To obtain much-needed technical information and to develop a better 
understanding of industry's needs, NTIA held a number of industry 
outreach sessions in which Federal agencies and industry exchanged 
information on various 3G issues. In addition, the wireless industry 
hosted several smaller, more focused working group meetings that 
addressed the operational and sharing possibilities of Federal systems 
in the 1755-1850 MHz band, and sharing possibilities in the 2500-2690 
MHz band. These outreach meetings included NTIA and Department of 
Defense staff as well as numerous industry stakeholders, including 
radio manufacturers and wireless service providers. These meetings were 
invaluable information exchanges--the Federal Government could provide 
information on radio systems used in the band, and industry could 
provide their views on the feasibility of IMT-2000 systems sharing with 
existing Federal systems.

                             GOING FORWARD

    Because of the complex issues surrounding the allocation of 
spectrum for 3G services, there is a general agreement among Department 
of Commerce, the FCC and the affected Federal agencies to continue 
these efforts beyond the original July 2001 target date so that we may 
study carefully the various spectrum options available to arrive at the 
best possible decision. In recognition of the work that remains to be 
done, Chairman Powell recently sent Secretary Evans a letter suggesting 
that additional time to study options would be desirable and requesting 
that the Department work with the FCC to come up with a revised 
allocation plan and auction timetable. Secretary Evans responded by 
agreeing with the Chairman that continuing these efforts would ensure 
that the final 3G allocation decision would be the best possible one. 
He directed NTIA to work with the FCC and other Federal agencies to 
develop a new plan for the selection of 3G spectrum and to consider 
ways to achieve flexibility on the statutory auction date if such 
flexibility is needed to implement the new plan.
    I thank you for this opportunity to share with you the views of the 
NTIA on this critical issue, and I would be pleased to answer any 
questions you may have. 

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    Senator Inouye. I will recognize Mr. Knapp.

      STATEMENT OF JULIUS P. KNAPP, DEPUTY CHIEF, OFFICE 
            OF ENGINEERING AND TECHNOLOGY, FEDERAL 
                   COMMUNICATIONS COMMISSION

    Mr. Knapp. Thank you, Mr. Chairman. Ranking Member, and 
Members of the Subcommittee, good afternoon. I am Julius Knapp, 
the Deputy Chief of the FCC's Office of Engineering and 
Technology, and I welcome this opportunity to discuss spectrum 
management issues and focus on allocations for advanced 
wireless services or so-called third generation 3G mobile radio 
services.
    Unfortunately, Chairman Michael Powell could not be here 
today, but he shares your interest in spectrum management and 
the future of 3G. The Commission throughout its history has met 
the challenge of demands for spectrum that exceed the available 
supply. This challenge is even greater today as we look to ways 
to accommodate a growing number of new services and 
technologies in a finite amount of spectrum.
    As spectrum usage has grown, so too have the problems of 
reallocating spectrum for new uses and developing standards to 
control interference. The Commission must maintain its ability 
to form independent judgments on these technical issues so that 
we can make the best use of the spectrum. The Commission 
recognizes that effective spectrum management also relies on 
the development of policies that encourage efficient use of the 
spectrum and provide licensees with the flexibility to best 
meet consumer needs.
    We continue to develop a wide variety of spectrum 
management tools to ensure availability of spectrum for the 
rapid deployment of new and innovative technologies, as well as 
promoting the spectrum efficiency. One of the most important 
emerging technologies is 3G, or advanced wireless 
communications services. The regulatory challenges inherent in 
ensuring the rapid deployment of this service require teamwork 
on a national scale, as well as attention to the most basic 
principles of spectrum management.
    It is crucial that we provide the essential ingredients for 
success in the marketplace for advanced wireless services. 
Adequate spectrum capacity and an open competitive deregulatory 
environment. In order to accomplish these goals, we must work 
together as a Nation to ensure cooperative atmosphere and 
unified voice. The Commission is dedicated to working with the 
industry, other agencies and Congress, to find and deploy the 
most suitable spectrum. Today's hearing is an important step 
toward encouraging the development of shared goals and 
perspectives and we welcome the opportunity to testify here 
today.
    Let me briefly outline the past and current situation. Mr. 
Hatch told you about the developments in the ITU and the 
process that we have gone through to work together 
cooperatively. I won't repeat that.
    Late last year the FCC initiated a rulemaking to consider 
spectrum allocations to facilitate the introduction of advanced 
wireless services. The Commission's notice of proposed 
rulemaking invited comment on the types of wireless services 
that will be provided and the technical characteristics, the 
amount of spectrum that may be required, spectrum pairing 
options and a variety of other issues. I'd like to take a 
moment to focus on the frequency bands.
    The Commission invited comment on the extent to which 
currently allocated spectrum might be used for advanced 
wireless services, including the frequency bands used by 
cellular, PCS and SMR services and spectrum recently 
reallocated for commercial use for TV channels 60 to 69 as a 
result of the transition to DTV. The Commission invited comment 
on five new frequency bands that are shown on the chart to the 
right. We proposed to allocate for mobile and fixed services 
the 1710 to 1755 megahertz band designated from Federal 
Government to non-Federal Government use under two budgetary 
directives.
    We sought comment on providing mobile and fixed locations 
for the 1750 to 1855 band if spectrum is made available for 
non-Federal Government use. We proposed to designate the 2110-
2150 megahertz band for a variety of fixed and mobile services, 
and that were identified previously for reallocation in the 
Commission's 1992 reallocation proceeding, and we asked for 
comment on various approaches for the 2100 to 2690 megahertz 
band which is currently used for multichannel, multipoint 
distribution and instruction of television fixed services of 
MDS. The Commission staff is evaluating the record in its 
rulemaking to determine how to proceed. Comments filed by the 
wireless industry suggest that the 1710 to 1850 megahertz band 
would be the preferred choice for 3G. This spectrum would 
harmonize spectrum allocations internationally, permit 
economies of scale and facilitate international roaming.
    We have been working in close consultation with the 
Department of Commerce and the Department of Defense. They are 
continuing to evaluate whether in addition to the 1710-1755 
megahertz band that has already been identified for transfer, 
spectrum may be made available in the 1755 to 1850 megahertz 
band. In addition, the Commission is working to identify non-
government spectrum that might be allocated for 3G or serve as 
relocation spectrum.
    The industry is also looking at additional spectrum 
options. CTIA recently filed a petition with the FCC seeking to 
reallocate spectrum that was allocated previously to the mobile 
satellite service.
    As Mr. Hatch explained, there has been an exchange of 
letters between the Chairman of the FCC and Secretary of the 
Department of Commerce. Both agreed to work together to develop 
a new plan for selection of spectrum for 3G. The Commission is 
committed to making spectrum available for new advanced 
wireless services and will continue to work closely with the 
Congress, the Federal Government, the Department of Defense and 
the wireless industry and other spectrum users toward that end. 
We must approach these issues by balancing the needs of all 
users through a well-managed national plan. I'd like to thank 
you, Mr. Chairman, for the opportunity to appear before you 
today. Thank you.
    Senator Inouye. I thank you very much, Mr. Knapp.
    [The prepared statement of Mr. Knapp follows:]

    Prepared Statement of Julius P. Knapp, Deputy Chief, Office of 
     Engineering and Technology, Federal Communications Commission

    Mr. Chairman, Ranking Member, and Members of the Subcommittee: Good 
morning. I am Julius Knapp, Deputy Chief of the Office of Engineering 
and Technology at the Federal Communications Commission (FCC). I 
welcome this opportunity to discuss spectrum management issues, and 
focus on allocations for advanced wireless service, or so-called third 
generation (3G) mobile radio services.
    Unfortunately, Chairman Michael Powell could not be here today, but 
he is cognizant of the importance of spectrum management and its role 
in the future of America. Spectrum management long has been one of the 
FCC's core responsibilities. We recognize that effective spectrum 
management is vital to America's national security, as well as our 
public safety needs, and to ensure the growth of our economy.
    The Commission throughout its history has met the challenge of 
demands for spectrum that exceed the available supply. This challenge 
is even greater today as we look for ways to accommodate a growing 
number of new services and technologies in a finite amount of spectrum.
    As spectrum usage has grown, so too have the problems of 
reallocating spectrum for new uses and developing standards to avoid 
interference. The Commission must maintain its ability to form 
independent judgments on these technical issues so that we can make the 
best use of the spectrum.
    The Commission recognizes that effective spectrum management also 
relies on the development of polices that encourage efficient use of 
spectrum and provides licensees with the flexibility to best meet 
consumers needs. We continue to develop a wide variety of spectrum 
management tools to ensure the availability of spectrum for the rapid 
deployment of new and innovative technologies, as well as promoting 
spectrum efficiency.
    One of the most important emerging technologies is 3G Wireless or 
advanced wireless communications services. The regulatory challenges 
inherent in ensuring the rapid deployment of this service require 
teamwork on a national scale, as well as attention to the most basic 
principles of spectrum management. It is crucial that we provide the 
essential ingredients for success in the marketplace for advanced 
wireless services--adequate spectrum capacity, and an open, competitive 
de-regulatory environment. In order to accomplish these goals, we must 
work together as a Nation to ensure a cooperative atmosphere and 
unified voice. The Commission is dedicated to working with the 
industry, other agencies, as well as Congress to find and deploy the 
most suitable spectrum. Today's hearing is an important step toward 
encouraging the development of shared goals and perspectives--both for 
spectrum management in general and 3G in particular, and we welcome the 
opportunity to testify here today.

                              INTRODUCTION

    Commercial mobile radio services have experienced unprecedented 
strong growth, particularly in the past several years. In the twelve 
months ending December 2000, the mobile telephony sector generated over 
$52.5 billion in revenues and subscribership increased from approximately 
86 million to 110 million users.
    The first wireless phones, introduced in the 1980s, used analog 
technology and offered only voice service. The second generation of 
wireless phones, introduced in the mid-1990s, use digital transmission 
technology but still primarily offer voice services. Data services are 
being introduced that allow consumers to use wireless phones and other 
devices to provide access to the Internet, but transmission speeds are 
relatively slow by today's standards.
    Industry has developed technology for advanced wireless services, 
referred to as third generation or 3G wireless, that will offer high-
speed data rates that make it possible to offer a variety of new voice 
and advanced services. The United States has been very involved 
internationally in developing technical standards and identifying 
spectrum for 3G services.
    Late last year, the FCC initiated a rulemaking to consider spectrum 
allocations to facilitate the introduction of advanced wireless 
services, such as 3G. Some of the spectrum identified internationally 
for 3G currently is used in the United States for Federal Government 
communications systems. The Commission's staff has worked closely with 
the Department of Commerce in addressing possible spectrum allocations 
for 3G.
    The FCC is continuing its efforts to address the spectrum 
requirements for 3G systems. I am pleased to report on our progress 
thus far.

               INTERNATIONAL SPECTRUM ALLOCATIONS FOR 3G

    The International Telecommunications Union (ITU) has been fostering 
the development of advanced wireless systems, commonly referred to as 
International Mobile Telecommunications-2000 (IMT-2000) or 3G systems, 
for a number of years. The 2000 World Radio Conference (WRC-2000) 
adopted Resolution 223, which states that approximately 160 MHz of 
additional spectrum will be needed to meet the projected requirements 
of IMT-2000 in those areas where traffic is highest by 2010. WRC-2000 
identified a number of frequency bands for possible IMT-2000 use and 
provided that each country may determine which of the bands to 
implement domestically after taking into account the impact on 
incumbent services. The WRC-2000 decisions also provided that 3G 
services may be introduced through evolution of technology in frequency 
bands used by existing mobile services.

                COORDINATION WITH DEPARTMENT OF COMMERCE

    The frequency bands identified internationally for possible use for 
advanced wireless services are allocated in the United States for both 
Federal Government and non-government use and therefore fall under the 
spectrum management responsibilities of both the Executive Branch and 
the Commission. Setting the direction for the Executive Branch, a 
Presidential Memorandum was issued in October 2000 instructing the 
Secretary of Commerce to work cooperatively with the Federal 
Communications Commission to develop a Study Plan to select spectrum 
for 3G systems.
    The Department of Commerce released a ``Plan to Select Spectrum for 
Third Generation (3G) Wireless Systems in the United States'' on 
October 20, 2000. The plan established target dates for completion of 
spectrum studies by the National Telecommunications and Information 
Administration (NTIA) and the Federal Communications Commission. The 
plan also called for the FCC to allocate spectrum by July 2001 and to 
subsequently establish rules so that spectrum can be assigned by 
competitive bidding by September 2002.

                             FCC RULEMAKING

    The Commission issued a Notice of Proposed Rule Making (``Notice'') 
in ET Docket No. 00-258 in December 2000 to identify spectrum for 
advanced wireless services, including third generation and future 
generations of wireless systems.
Service Requirements
    In the Notice, the Commission sought comment on the types of 
advanced wireless services that will likely be provided and the 
technical characteristics of such systems. The Commission noted that 
wireless carriers in the United States employ a variety of technical 
standards and sought comment on how networks will migrate to new 
technologies and whether networks have the capacity now to provide data 
services. We also requested information on the projected demand and 
growth rates for mobile data services, the number of licensees needed 
to meet this demand, how to accommodate global roaming, and other 
issues.

Amount of Spectrum Needed
    The Commission's rulemaking invited comment on the amount of 
spectrum required for advanced wireless services, for example, whether 
the 160 MHz of spectrum recommended by WRC-2000 Resolution 223 is 
required or whether some alternative amount is needed. The Notice 
states that the Commission intends to identify a flexible allocation 
for advanced wireless services, noting that it is not Commission policy 
to set aside spectrum restricted to a given technology.

Frequency Bands
    The Commission asked for comment on the extent to which currently 
allocated spectrum might be used for advanced wireless services. This 
spectrum includes the frequency bands used by cellular, PCS, and 
specialized mobile radio services, as well as spectrum recently 
reallocated for commercial use from TV channels 60-69 as a result of 
the transition to digital television.
    The Notice also invited comments on using additional candidate 
bands for advanced wireless systems. Three of these bands are ones that 
the Commission previously identified for reallocation and that the ITU 
identified for possible 3G use: 1710-1755 MHz, 2110-2150 MHz, and 2160-
2165 MHz.
    The 1710-1755 MHz band is now used by Federal Government operations 
and is scheduled for transfer to the private sector on a mixed-use 
basis by 2004.
    The 2110-2150 MHz and 2160-2165 MHz bands are currently used by the 
private sector for fixed microwave services. The Commission identified 
these bands several years ago for reallocation to emerging 
technologies.
    The Notice sought comment on whether portions of the 1755-1850 MHz 
band, which is now used by Federal Government operations, can be made 
available for advanced wireless services. Recent legislation sets 
certain conditions before the Department of Defense (DOD) surrenders 
use of a band, such as this one, in which it is a primary user. 
Further, Federal Government users in this spectrum would be entitled to 
compensation for relocation to other bands.
    The Commission's rule making asked for comment on whether the 2500-
2690 MHz band, which is now used for Instructional Television Fixed 
Service (ITFS) and Multipoint Distribution Service (MDS), can be used 
for advanced mobile, as well as fixed services. The proposal also asked 
whether we should simply add a mobile service allocation to this band 
or if ITFS/MDS incumbents should be relocated.
    Finally, the Notice requested comment on how newly available 
spectrum for advanced wireless services might be paired and the 
importance of global harmonization.
    The Commission's staff currently is reviewing the comments received 
in response to this Notice as we evaluate next steps, which I will 
discuss in a moment.

                          FCC TECHNICAL REPORT

    The staffs of NTIA and the FCC issued Final Reports in March 
reporting the results of studies for two of the frequency bands under 
consideration for advanced wireless systems.
    The FCC staff report examines the 2500-2690 MHz band. The report 
explains that this spectrum is heavily occupied by existing ITFS and 
MDS systems. These services are experiencing and are expected to see 
significant future growth, particularly in the provision of new 
broadband fixed access to the Internet. Given the ubiquitous nature of 
ITFS/MDS, the report found sharing of this spectrum for 3G does not 
appear feasible. Further, the report found that reallocating a portion 
of the 2500-2690 MHz band from incumbent services for new third 
generation mobile wireless services would raise significant technical 
and economic difficulties.

                  REIMBURSEMENT FOR FEDERAL RELOCATION

    The Strom Thurmond National Defense Authorization Act of 1999 (NDAA 
99) mandates that new commercial licensees (assigned via competitive 
bidding) reimburse Federal Government incumbents forced to relocate 
spectrum. The reimbursement requirement applies to the 1710-1755 MHz 
band that has already been identified for transfer from Federal to non-
government use. It would similarly apply to the 1755-1850 MHz band if 
the Federal Government were to make this spectrum available for use by 
the private sector.
    The first application of the mandatory reimbursement provisions is 
under consideration in a separate Commission (ET Docket 00-221) and 
NTIA rulemaking proceedings. The Commission's Advanced Services Notice 
invited comment on relocation rules and reimbursement procedures. The 
Commission and NTIA invited comment as to how these reimbursement rules 
and procedures would affect the commercial viability of Federal 
reallocated spectrum that may be made available for 3G. Concerns raised 
in the comments focused primarily on the availability of adequate 
information and reduced uncertainty in the process for potential 
licensees to develop viable bidding strategies. We are continuing to 
work closely with NTIA to develop reimbursement policies and procedures 
that are viable for Federal incumbents as well as prospective new 
users.

                               NEXT STEPS

    As I mentioned, the Commission is evaluating the record in the 
Advanced Services Rule making to determine how to proceed. The comments 
filed by the wireless industry suggest that the 1710-1850 MHz band 
would be the preferred choice for 3G spectrum. This would partially 
harmonize U.S. spectrum allocations with those in use or planned 
internationally. Harmonization would permit economies of scale and 
reduce costs in manufacturing equipment, as well as facilitate 
international roaming.
    Parts of the 1710-1850 MHz band could be used to harmonize with 2G 
GSM systems, which are currently used extensively throughout the world 
and are expected to transition eventually to 3G systems. Other parts of 
the 1710-1850 MHz band could be paired with the 2110-2150 MHz band to 
achieve partial harmonization with spectrum recently auctioned in 
Europe and elsewhere for 3G systems.
    The Department of Commerce and the Department of Defense are 
continuing to evaluate whether, in addition to the 1710-1755 MHz band 
that has already been identified for transfer, spectrum can be made 
available in the 1755-1850 MHz band. They have been working closely 
with industry in consultation with the Commission.
    The Commission staff has also been working to identify other 
possible non-government spectrum bands that might be reallocated for 3G 
or serve as relocation spectrum. These additional bands could be 
identified in a Further Notice of Proposed Rulemaking in the near 
future.
    Industry, as well, has been looking at additional spectrum options. 
For example, the Cellular Telecommunications and Internet Association 
recently filed a petition with the FCC seeking to reallocate spectrum 
currently allocated to the mobile satellite service.
    Given these developments, on June 26, 2001, FCC Chairman Powell 
sent a letter to Secretary of Commerce Donald Evans noting that the 
entire federal government faces a challenging set of issues in 
addressing how best to make available sufficient spectrum for advanced 
wireless services. Chairman Powell stated that the public interest 
would be best served by additional time for informed consideration, 
even if this results in some delay in reaching a decision. The Chairman 
also acknowledged that some of the bands identified for 3G are subject 
to September 30, 2002 statutory auction deadlines. The Chairman offered 
that, together with the Executive Branch and the Congress, we can come 
up with a revised allocation plan and auction timetable that would 
enable the important work in this area to be finalized in the most 
effective manner.
    Secretary Evans recently responded to Chairman Powell's letter and 
directed the Acting Administrator of the NTIA to work with the FCC to 
develop a new plan for the selection of 3G spectrum as quickly as 
possible. This effort will be carried out in close coordination with 
the appropriate Executive Branch entities, including the National 
Security Council, the National Economic Council, the Office of 
Management and Budget, and the Department of Defense. Secretary Evans 
encouraged the participants to consider ways to achieve flexibility 
with respect to the statutory auction dates if flexibility is needed to 
implement the new plan.

                               CONCLUSION

    The Commission is committed to making spectrum available for new 
advanced wireless services. We will continue to work closely with the 
Congress, the Federal Government, the Department of Defense, the 
wireless industry, and other spectrum users towards that end. We must 
approach these issues by balancing the needs of all users through a 
well-managed national plan.
    I would like to thank you, Mr. Chairman, for the opportunity to 
appear before you today. This concludes my testimony and I would be 
pleased to answer any questions you or the other Members may have.

    Senator Inouye. May I now recognize Dr. Wells.

        STATEMENT OF LINTON WELLS II, ACTING ASSISTANT 
          SECRETARY OF DEFENSE FOR COMMAND, CONTROL, 
                COMMUNICATIONS AND INTELLIGENCE

    Dr. Wells. Mr. Chairman, thank you very much, Ranking 
Member and Members of the Subcommittee. DOD recognizes that 
spectrum is a precious national and international resource. We 
recognize the world is changing and that we move ahead toward 
new opportunities. We also recognize our commitment, our 
importance of being good stewards of the spectrum to which we 
have granted access, and I will talk more about that in a 
minute. As Senator Burns mentioned, it is very important that 
we have a process to go forward to allocate this resource 
properly, to strengthen our ability to do this, our position of 
spectrum manager in the department has been elevated to deputy 
assistant secretary and we are doing internal organizational 
changes to improve our ability to participate in national and 
international discussions.
    Access to spectrum is absolutely crucial for DOD operations 
due to the nature of our forces. Mobile ground forces, ships, 
aircraft can only communicate by the radio frequency spectrum. 
There is no other way to connect them. Moreover, as we move 
into the information age and become more networkcentric force 
this reliance on radio frequency will become even more 
important. In this context, our national policy must balance 
government needs. Most U.S. spectrum already is allocated for 
commercial purposes or for shared commercial and government 
bands. Of the spectrum most suitable for this kind of mobile 
wireless, namely 700 to 2700 megahertz, the Federal Government 
uses only 14 percent. DOD has access to some of this 14 
percent, but in most cases we share with other government users 
so the image of DOD sitting on a large band of spectrum is 
something not correct.
    Moreover, I would argue that the Nation, indeed the world, 
reaps an exceptional return on the small amount of spectrum 
that has been made available at DOD since the U.S. military 
hopes to underwrite not only the economic security and 
prosperity of our Nation, but contributes to global, political, 
and economic stability from which we all benefit. For these 
reasons, our international peacekeeping and security 
responsibilities direct comparison of how we allocate spectrum, 
and how other nations do so are really not comparable.
    You may have heard that DOD is not managing spectrum 
efficiently. I would argue this is not the case. We have 
crowded several major functions over 100 different systems into 
the 95 megahertz from 1755 to 1850. We have to justify our 
continued need for allocated frequencies every 5 years in 
response to Mr. Whitehead's point, we have to rejustify it. We 
are investing in spectrum efficient technologies such as the 
spectrum that allows us to create four satellite channels 
before we can only use one, and we are investing literally tens 
of millions of dollars in research and development into finding 
more efficient spectrum approaches in the future.
    With regard to finding spectrum for third generation 
wireless, we are ready, indeed we are eager to participate with 
our colleagues in the executive branch, with the Congress, with 
the FCC and with the private sector to find a selection process 
that leads to the best allocation for the Nation of this 
critical resource. The DOD, along with all Americans, have 
benefited in the genius provided sector when we expect to do so 
again, but we have to protect the important national security 
interests that are at stake in this decision. I hope we can all 
agree on that point.
    As you know, the 1755 to 1850 megahertz band has become a 
particularly attractive part of the spectrum. Let me explain 
why this is so important to defense. Consider a pilot in the 
cockpit of an airplane. He is almost all the navigation, almost 
all the intelligence support, almost all the communications 
that he receives comes from one of the more than 120 defense 
and intelligence community satellites that are controlled 
within this band.
    In addition, the training he has received comes from the 
frequencies on the air combat maneuvering ranges such as those 
in Nevada that make our pilots the best in the world. Beneath 
his wing may be a precision guided missile, the data link for 
that missile whose military effectiveness and casualties make 
this so important, resides in this band. Underneath the 
aircraft is the backbone of the Army and Marine Internet. 
Tactical Internet, which is becoming so important to our 
soldiers and Marines, is carried in this band and it provides 
links to ships overseas. Other important systems including 
Army's new soldier radios are in this band and there are a 
number of very critical systems that operate for us here.
    Moreover, our demand for spectrum is growing. We forecast a 
90 percent increase in mobile spectrum by 2007. If you compare 
Kosovo to Desert Storm with one-tenth the number of troops in 
Kosovo, we used just 2 percent of the bandwidth we used in 
Desert Storm. Within the field from before combat broke out 
until combat started, spectrum demand increased 21 times, which 
indicates the burden of combat operations placed on the 
spectrum. As we move to networkcentric warfare that has 
spectrum in its core like water for ships and air space for 
aircraft, this will become even more important. So if a 
national decision is made that this is the best band, we are 
prepared to move, but as you pointed out, Mr. Chairman, there 
are some prerequisites we need to address.
    In cooperation with NTIA, we have addressed the possibility 
of sharing this band. Due to mutual interference, it does not 
appear that it will be possible to share this band. But to move 
then, we first of all need to find comparable spectrum. It is 
not enough just to make a general statement that says somewhere 
we will find it, all this spectrum is occupied by someone, and 
we need to identify where we would be moving into.
    Comparable technical characteristics are important. For 
example, the pilot with his munition under his wing. But the 
data link is increased to a higher frequency. The pilot will 
have to approach more closely to its target in order to 
maintain that data. That may put him at risk. Alternatively, 
you can increase the power to the data link. That may make the 
aircraft more detectable.
    Second, even if comparable spectrum can be found, it 
appears that that will be late in the next decade before we 
will be able to vacate, on two reasons. First of all, the 
satellites I mentioned earlier are on orbit. We have to wait 
until the constellations fly out, spend an inordinate amount of 
money, I would argue, to launch new satellites to replace them. 
The total value of that constellation is $100 billion. I 
honestly cannot believe we would invest in the taxpayers to 
relaunch satellites in order to retune receivers. Aside from 
other satellite control, many frequencies dependent on this 
band may not be available for moving until 2010. This is the 
time it takes to budget for and field a system like the 
training system.
    We need a mechanism to make sure that the money does in 
fact arrive at Defense in this compensation. One of the bands, 
one of the types of frequencies that is been cited that might 
be relocated is the Army Corps of Engineers fixed point-to-
point system. That is true. This system almost certainly could 
be relocated and perhaps could rely on some of the mobile 
wireless services that comparable companies are now using. The 
problem is that moving that function does not free up very much 
spectrum because it is already sharing the band with the 
satellites from the air traffic maneuvers. You can move all the 
fixed frequency out there under wouldn't really free up the 
spectrum.
    So far, we have only addressed what it would take to make 
the Federal band a feasible option for 3G. The question is even 
if it is feasible, does it make sense to relocate this band. I 
would encourage you to ask the commercial sector, are the 
commercial spectrum needs really well defined? Is additional 
commercial spectrum available? There is a very, I think, 
telling bar chart that compares the amount of spectrum 
available in different countries for third generation services 
and this shows, for example, in the UK, in Germany, in Japan, 
there is quite a lot of spectrum that has been made available. 
It also shows the United States right now in one version of the 
chart has only 189 megahertz available and that therefore we 
are somehow disadvantaged. The point, Mr. Chairman, is that 
actually is more spectrum available in the United States. One 
calculation is already 228 megahertz available and in about 10 
years, as much as 396 megahertz could be made available. Some 
would be fully compatible with other countries that they have 
provided on a time phased rollout of this spectrum which we 
think would match the employment of the commercial systems.
    An argument is made on harmonization. If only DOD would 
move out of this band, then there would be able to get a global 
1755 to 1850 megahertz use of this spectrum. That would be very 
attractive, sir. I will not--it will not occur. China has 
recently decided that this 100 or so million customers will 
operate in 2.3 to 2.4. North Africa is looking at 400 to 800 
megahertz. Europe is looking at 2.5 gigahertz. There is not 
going to be a single band for 3G services around the world. The 
argument is made that if DOD would relocate from this band, it 
would be easier to operate internationally. There would be sort 
of a common band from which we could work. The problem is we 
have already negotiated agreements with the host nations in 
which we operate to make use of most of our bands. There is an 
example of an exercise we held in a foreign country where part 
of the foreign telephone network had to be shut down in order 
to permit us to exercise. Inconvenient as that may have been 
overseas, this is exactly the point. The nations that seek our 
security cooperation have worked with us to find ways to allow 
our forces to operate in theater and that is the way we 
continue to work. The problem is when you begin to move one 
spectrum, it affects a lot of other things.
    On the AWACS aircraft, there are over 80 different 
antennas, so if you retune one of those antennas, it is going 
to have a ripple effect on all the others so moving one band is 
not a question of negotiating one agreement overseas.
    Mr. Chairman, let me conclude. There have been proposals 
for a win-win solution in which DOD would receive significant 
financial compensation to surrender the band and receive the 
cost of relocating to the other bands. We may be open to other 
solutions. The concern is moot if we cannot get comparable 
spectrum. We must find comparable spectrum.
    Second, while I am sure these proposals for changes are 
made in good faith, we have not seen a mechanism by which we 
can reasonably assure we received compensation beyond the 
marginal costs after all the various factors of these decisions 
come into play. To summarize, we could in theory move out of 
the Federal band, but we need to do it in ways that wouldn't 
affect national security and the impact would be felt and 
future missions put at risk, potentially greater casualties to 
our service members and denial of critical intelligence to 
national and military decisionmakers. We look forward to this 
process. Thank you very much.
    [The prepared statement of Dr. Wells follows:]

   Prepared Statement of Linton Wells II, Acting Assistant Secretary 
    of Defense for Command, Control, Communications and Intelligence

                            1. INTRODUCTION

    Thank you, Mr. Chairman, and Members of the subcommittee, for 
inviting me to speak on this issue of the utmost importance to our 
military forces, allocating radio frequency (RF) spectrum. As the 
Acting Assistant Secretary of Defense for Command, Control, 
Communications and Intelligence, I am responsible for spectrum policy 
and management within the Department of Defense.
    The United States has global security responsibilities and thus has 
needs for spectrum for military systems that are far greater than any 
other nation's requirements. This is part of the benefits and burdens 
that accrue to our Nation, given our worldwide leadership role in the 
21st Century. The US Department of Defense must have the resources it 
needs to carry out these responsibilities.
    Spectrum is one of those resources. It is crucial to the success of 
military operations, which inherently depend on communications and 
sensing. Satellite intelligence gives us precise data about situations 
on the ground. We avoid much harm to civilian populations if radio 
guided bombs precisely hit their targets. Our pilots in the air, 
soldiers on the ground and sailors at sea are better able to defend 
themselves if they have real time, effective communications capability. 
Effective use of spectrum enables us to put fewer American lives at 
risk during military operations. The transformation of the Defense 
force structure into a leaner and more agile networked force depends to 
a large degree on access to adequate spectrum. As the strongest and 
most effective military worldwide, in large measure because of our use 
of more sophisticated and simply more spectrum-dependent systems, DoD 
has unique requirements for spectrum. The safety of our fighting men 
and women and of civilian populations is at stake.

                         2. SPECTRUM MANAGEMENT

    Managing our national spectrum has become more important as well as 
more challenging as the demand for spectrum grows. The Department of 
Defense is committed to managing its allocated spectrum efficiently as 
well as to working effectively within the national and international 
regulatory processes to ensure access to adequate spectrum. To this end 
we are elevating the position of Director of Spectrum Management within 
the Office of the Secretary of Defense to the Deputy Assistant 
Secretary level and expanding and enhancing the staff to ensure that 
all key spectrum management functions are discharged properly. We are 
also studying options for improving the organization of the 
Department's Spectrum Management functions overall, and we will make a 
decision on that in the near future.
    Before going into greater substantive detail, it is critical to 
correct a mis-impression created by certain commercial spectrum users 
that the Federal Government, in particular DoD, enjoys access to a 
generous amount of spectrum in the bands under consideration. In fact, 
it is important to note that of the total amount of spectrum that is 
generally considered appropriate for 3G deployment today, 700 MHz to 
2700 MHz, the federal government is the exclusive occupant of only 
about 14%.
    Regarding national spectrum policy, we think it is important to 
strike the right balance among competing demands for spectrum, 
including the right balance between national security and commercial 
needs. We should remember that, while economic vitality contributes to 
national security, it is even more true that domestic prosperity 
depends upon adequate security. Furthermore, domestic prosperity 
increasingly is tied to global economic health, which depends in large 
measure on the international security and political stability that the 
US military helps to ensure.
    Under the existing structure for federal spectrum management, 
Secretary Evans, the Department of Defense and other federal agencies 
and the FCC, on behalf of commercial users, are currently engaged in 
the search for spectrum for future commercial and governmental uses, 
including 3G. The existing structure is intended to ensure that the 
Nation is making the best possible use of this precious resource and to 
ensure that there is adequate spectrum both for critical governmental 
responsibilities, including national security, safety of life and law 
enforcement functions, and for commercial uses. One of the challenges 
in managing spectrum is that the value to the Nation of spectrum 
allocated to vital government services such as national defense and air 
traffic control--``public goods'' in economic terms--is difficult to 
measure through market mechanisms such as spectrum auctions.
    The Department is committed to doing our part in an aggressive 
process whereby all users of the spectrum, commercial as well as 
governmental, develop creative solutions to the problems of spectrum 
scarcity.
    In our national efforts to better manage the spectrum resources of 
the United States, technology also is and will continue to open up new 
regions of spectrum such as the satellite Ka bands and laser 
communications. Furthermore, technology is one of the key tools for 
making better use of available spectrum. Spectrum-efficient 
technologies such as voice/data multiplexing and sideband filters 
should be employed wherever possible. The Department of Defense, 
through Defense Advanced Research Projects Agency (DARPA) programs and 
other activities, is pursuing advanced technologies for spectrum 
efficiency aggressively. We have recently received a briefing by DARPA 
on a ``smart'' frequency hopping technology that could make available 
unused spectrum in both government and commercial bands. Realizing the 
full benefits of some of the new technologies will require regulatory 
changes.

           3. FINDING SPECTRUM FOR THIRD GENERATION WIRELESS

    The issue of finding spectrum in the United States for Third 
Generation Wireless (``3G'') services illustrates the growing demand 
for spectrum in both the commercial and government sectors. The 
Department of Defense's needs for spectrum are growing along with those 
of other organizations. For example, the satellite bandwidth used in 
Operation Allied Force in Kosovo was two-and-one-half-times the 
bandwidth used in Desert Storm 9 years earlier, while the Kosovo force 
was one-tenth the size. Work done at the Department of Defense has 
projected significant growth in military spectrum requirements in all 
functional areas over the next few years (see Figure 1).
    Access to adequate spectrum was critical to US Forces' success in 
Desert Storm and Kosovo and will continue to be crucial to the 
Department's ability to transform itself into a leaner, more agile, and 
more effective force that can meet the security challenges of the 
future at reasonable cost to the taxpayers. Fundamental to this 
transformation is the network-centric concept of operations which is 
already being implemented. In this concept, all elements of a joint 
force are connected by a robust information network that enables common 
situational awareness and collaboration. Spectrum is virtually the only 
way to connect mobile ground forces, ships, aircraft, and satellites.

        4. DOD USE OF THE FEDERAL GOVERNMENT 1755-1850 MHZ BAND

    As you know, the Federal Government band from 1755-1850 MHz is one 
of the bands under consideration for 3G. DoD uses this band for 
satellite control, battlefield radio relay, aircrew combat training, 
precision weapons guidance, and many other important functions. The 
band was picked for these functions because the signals at these 
frequencies propagate in ways that make the spectrum ideal for mobile 
communications. Altogether more than 100 DoD systems, and a more than 
equal number of systems from other Federal agencies, utilize this band. 
Figure 2 depicts many of the uses. I will briefly describe each of the 
major functions resident in the 1755 MHz band.
    The control uplinks for all DoD and Intelligence Community 
satellites (more than 120 satellites representing a cumulative 
investment of about $100B) use the 1755 MHz band. These satellites 
perform communications, positioning and timing, surveillance and 
reconnaissance, weather observation, and other functions crucial to 
warfighting and to decision-making by National Command authorities, 
including the President, the Secretary of Defense, and the Chairman of 
the Joint Chiefs of Staff, as well as other senior military 
decisionmakers.
    DoD's Global Positioning System satellites have become crucial 
parts of the national civilian/military infrastructure supporting 
global navigation and positioning requirements for air, land and sea 
vessels. GPS serves functions that are as important as the functions 
provided by railroads and telecommunications systems.
    The battlefield radio relay systems in this band form the long-haul 
backbone of the Army and Marine tactical Internets. They let our ground 
forces share situational awareness and coordinate their operations in 
real time across the extended battlefield, as well as to ships off-
shore.
    The Air Force and Navy aircrew combat training system, which 
provides realistic training with engagement assessment and feedback, is 
one of the main reasons American pilots are the best-trained combat 
pilots in the world.
    The most accurate air-launched precision weapons in the Services' 
inventories are guided by data links using this Federal band. These 
weapons are often used by commanders to ensure the highest probability 
of mission accomplishment with the fewest possible civilian casualties.
    Virtually all of these systems played a key role in the Allied 
victory in Kosovo. The success of this operation would have been 
unlikely without satellite-based communications, navigation, and 
reconnaissance, without well-trained combat aircrews, without 
precision-guided weapons, and without tactical radio relay systems.
    Other important DoD systems that use the Federal band include 
Combat Identification, soldier radios, and weapon scoring.
    In an era of smaller force structure, fewer people, and increased 
mission responsibilities, these systems provide essential training and 
operational capabilities. The payoff is realized in terms of mission 
success and force protection across the full range of US military 
operations from combat to peacekeeping and humanitarian operations.
    I want to say in the most unequivocal way possible that the loss or 
degradation of our ability to perform the crucial functions that 
currently depend on this Federal band would have very severe 
consequences for national security. It would result in mission failures 
and increased casualties in future operations, and loss of vital 
intelligence information to the President and senior leaders. If 1755 
MHz-1850 MHz is to be reallocated, then other suitable spectrum must be 
found to enable the essential military functions to be performed 
without degradation, and we need enough time to relocate to the new 
spectrum.

                         5. DOD STUDY FINDINGS

    The White House-directed study conducted by DoD on accomodating 3G 
services in the Federal band examined the options of sharing the band, 
vacating all of the band, or vacating part of it. The study found that 
sharing the band between 3G services and incumbent DoD systems would 
not be feasible because there would be too much mutual interference. 
Vacating or segmenting the band is feasible in theory, provided that 
comparable spectrum could be allocated to DoD and adequate, timely 
financial compensation provided. However, the DoD study found that DoD 
satellite control systems might not be able to vacate the band before 
2017 and non-space systems before 2010. These timelines are driven by 
fact-of-life considerations including the expected satellite lifetimes, 
the inability to change the frequencies of on-orbit satellites and time 
required to design and field new systems in a different frequency band. 
NTIA's report incorporates the DoD findings.

                        6. COMPARABLE SPECTRUM.

    Let me emphasize again, as a matter of national defense and 
security, DoD's ability to carry out its operational mission will be 
jeopardized if the Department is not provided with access to spectrum 
with appropriate technical characteristics and regulatory protections. 
The National Defense Authorization Act of 2000 requires that DoD be 
provided ``comparable spectrum'' for functions displaced by 
reallocation of Federal spectrum to meet commercial needs. The 
Secretary of Defense, the Chairman of the Joint Chiefs of Staff, and 
the Secretary of Commerce must jointly certify that any replacement 
spectrum is comparable. We consider this to mean that the replacement 
spectrum for different DoD systems has suitable technical 
characteristics and similar regulatory status so that the displaced 
function can be performed with no degradation in essential military 
capability.
    The process of identifying comparable spectrum is ongoing. Forced 
relocation of DoD without provision of equivalent spectrum will result 
in the very severe consequences to National Security that I addressed 
earlier. We will continue to work with all parties to find a way ahead 
on spectrum for 3G. Nonetheless, we believe that the issue of 
equivalent spectrum must be resolved in tandem with the decision making 
process.

                           7. CTIA PROPOSALS

    In their 3G ``briefing book,'' CTIA has proposed work-arounds for 
satellite control, tactical radio relay, and air combat training 
systems to enable accommodation of 3G services in the Federal band 
earlier than the DoD timelines. Our initial assessment is that none of 
these proposals could be implemented without serious degradation to DoD 
capabilities. CTIA has not proposed work-arounds for precision guided 
weapons or many other important DoD systems.
    CTIA has proposed a ``win-win'' solution in which DoD would be 
provided modernization funds, beyond the marginal cost to relocate, as 
an inducement to accept relocation. We would be interested in seeing 
what could be included in such a package but have not yet seen such a 
proposal. Moreover, we emphasize that any such solution could only be 
viable if DoD is provided access to spectrum with equivalent technical 
characteristics and regulatory status, and if we are allowed sufficient 
time to relocate to the new spectrum if it can be found.

      8. NEED FOR ADDITIONAL SPECTRUM FOR 3G IN THE UNITED STATES

    While the World Radiocommunication Conference of 2000 identified a 
need for an additional 160 MHz of spectrum for 3G, there is reasonable 
doubt about whether this assessment is valid for the United States and 
uncertainty about the timeline for meeting any additional needs. We 
believe that the spectrum needs of the US wireless mobile industry 
should be updated and refined and timelines for such spectrum spelled 
out. The US has a much lower population density than Europe or Asia, so 
that requirements for 3G personal communications devices may be smaller 
than either of these regions. Further, we can expect that technological 
advances will enable the wireless industry to wring more use out of 
their spectrum (just as the DoD is counting on spectrum-efficient 
technologies to enable us to meet our growing needs without demanding 
more spectrum from the regulators). Finally, the amount of spectrum 
needed for 3G is undetermined because the demand for 3G services is 
unknown at this point. Many industry observers believe that second 
generation wireless services (``personal communications services'' or 
PCS in the United States), with enhancements (high speed voice and data 
connection, but not streaming video) will be sufficient for most truly 
mobile users.

                       9. CANDIDATE BANDS FOR 3G

    The Federal 1755 MHz band is heavily encumbered and would require 
nearly two decades to become available. There are other bands readily 
available to FCC for meeting the needs of the 3G vendors. Figure 3 
lists some of the other bands available. Some of this spectrum was 
reallocated from DoD/Federal use to commercial use by earlier 
legislation and NTIA action but it has not yet been made available 
through auction by the FCC. Altogether there is at least 130 MHz of 
suitable commercial spectrum that FCC could make available this year 
with limited displacement to established users, and more than 240 MHz 
could be available within ten years.
    Another means of meeting the 3G spectrum requirement in full or in 
part is to provide 3G services on spectrum currently used for PCS or 
other wireless services, as FCC regulatory flexibility allows and as 
some 3G vendors are planning.

                           10. HARMONIZATION

    CTIA argues that the Federal band is desired for 3G because it 
would harmonize US spectrum allocation with 3G allocations around the 
world, facilitating global roaming and cost savings due to economies of 
scale. However, there are at least six bands that WARC-92 and WRC-00 
suggested nations consider for 3G. Worldwide spectrum harmonization of 
3G bands will be difficult, if not impossible, to achieve and it is 
generally agreed that future mobile terminals will need to be both 
multi-mode and multi-band to meet the global roaming requirement. Many 
nations are still considering which bands will be used for 3G, and I am 
not aware of any nation that has auctioned the 1755 MHz band for 3G. In 
fact, Europe uses the 1755-1850 MHz band for 2G. Europe would need to 
make regulatory changes before using this spectrum for 3G and probably 
will not migrate it to 3G for more than a decade, if ever. Many nations 
are waiting to see which band the US picks.
    Within the 2G market today there is a lack of spectrum 
harmonization, but global roaming is enabled by tri-band/tri-mode 
terminals that are available today. In addition, the terminal and the 
usage costs are well within reach of most consumers. With the advent of 
new technology, multi-band and multi-mode terminals probably will be 
even cheaper to produce in the future. As a result, we believe that, 
not only is international wireless bands unlikely to be achieved, but 
also it is not required to enable affordable global roaming.
    The United States' long-standing strategy at the ITU has been to 
generally oppose setting of mandatory standards or allocating spectrum 
for specific systems within the broader service allocations. This 
strategy was developed to further the national interest, largely 
because of US policies intended to protect national sovereignty over 
telecommunications and to provide for market-driven innovation and 
competition by keeping radio services as flexible as possible. There, 
of course, are exceptions to this US strategy, most notably for global 
systems, such as the global mobile personal communications systems and 
global positioning systems such as GPS and Galileo. The Department has 
fully supported these national decisions.
    At WARC-92, the United States opposed ``allocation'' or 
``reservation'' of spectrum for the Future Public Land Mobile 
Telecommunications Systems (FPLMTS), the original name for IMT-2000. 
The US ultimately agreed to a compromise of only non-binding 
``identification of spectrum'' for FPLMTS. Subsequent to WARC-92, the 
FCC took action to make spectrum available for PCS services that 
substantially overlapped with the spectrum identified for 3G. By making 
this decision, the FCC decided that there were national interests more 
important than supporting worldwide ``harmonization'' of wireless 
mobile services. There have been great benefits to US consumers from 
this decision since there are millions of PCS users today in the US and 
many other countries but, as yet, there are no commercial 3G mobile 
operations in the bands identified for FPLMTS by WARC-92.
    Therefore, while spectrum harmonization should be considered along 
with other solutions to allow services to be more available and 
affordable to the consumer worldwide, it should not have an overriding 
priority when these services can be met at an affordable cost using 
existing as well as future technological solutions.

    11. THE FEDERAL GOVERNMENT, INCLUDING DOD, IS MANAGING SPECTRUM 
                              JUDICIOUSLY

    DoD is not ``hoarding'' spectrum nor using it inefficiently. DoD is 
granted access to spectrum by NTIA and, in a few cases, by FCC for 
specific purposes. The need for government spectrum for particular 
users and uses is reevaluated on an ongoing basis. DoD systems must be 
designed to a very high level of spectrum efficiency since the lives of 
servicemen and women are at risk and many military systems must operate 
in close proximity at the same time, during military operations. We are 
constantly pursuing new spectrum-efficient technologies. For example, 
we are fielding multiplexers for our UHF satellite receivers that 
multiply the number of channels per satellite by a factor of four. 
Moreover, we believe that the fact that some 100+ DoD systems--and 
systems of several other agencies, including the Departments of 
Justice, Agriculture, and Treasury and the National Aeronautics and 
Space Administration--make use of the 1755-1850 band for numerous 
important governmental functions illustrates the Federal Government's 
efficient use of this band.
    I would like to emphasize again the relative allocation of 
bandwidth between industry and the Federal Government. Out of the total 
amount of spectrum that is appropriate for 3G deployment, generally 
700MHz-2700MHz, the Federal Government is the exclusive occupant of 
about 14%.

                             12. CONCLUSION

    The issue of finding additional spectrum for wireless 
communications requires a balancing of economic and national security 
needs. We should remember that there can be no economic prosperity 
without national security. Furthermore, the value of national security 
cannot be measured in dollars. The benefits the Nation derives from 
making spectrum available for Defense are expressed in terms of wars 
that we won't have to fight, and victories achieved and casualties 
avoided in the wars we do fight.
    To summarize the DoD position on this issue, we must have 
comparable spectrum if we are to relocate, and this should be 
identified and certified as we make any decision to reallocate the 
Federal band. Forced relocation of essential military functions without 
comparable spectrum or without respect for the transition timelines 
would cause serious damage to National Security which would be 
reflected in increased casualties and mission failures, as well as 
reduced intelligence to our national and military leaders.
    However, we remain open to considering a solution that genuinely 
benefits DoD as well as industry if such a solution can be found. The 
way ahead is for all of us to work together to further assess what band 
options are feasible and, of the feasible set, which is the best choice 
for 3G based on mutually-agreed criteria. This process must include an 
attempt to identify and certify comparable spectrum for DoD if FCC 
still wishes to consider the Federal band.
    In conclusion, while we continue to have some serious concerns, we 
are confident that by working together we can achieve a long-term 
solution that will protect both our national security and our global 
leadership in commerce and technology.

    Senator Inouye. We have just been notified that we have 3 
minutes left to vote, and so we will stand in recess for 10 
minutes.
    [Recess.]
    Senator Inouye. We will resume our hearings. May I begin 
with Dr. Wells. I realize that the GAO has not completed its 
report. However, they have issued a draft report indicating 
that they would like to have more time to study this matter in 
greater detail. Notwithstanding that, I'd like to see if you 
can give us some enlightenment, information. If you are 
required to relocate, how much spectrum would you need? Do you 
have any idea?
    Dr. Wells. We have 95 megahertz. A lot of it, and my first 
answer would probably be about the same amount, subject to we 
need to sit down and look at could you define functions and 
stuff like that. For example, there has been discussion of 
moving some of the satellite control frequencies higher up into 
what's called the unified S-band. That might be possible again 
in some time with the--when you can launch new satellites in 
those frequencies.
    The problem is that that band is already crowded, and there 
is regulatory protections. For example, NASA now operates in 
that band. A newscaster can go out and report back from the 
field. Obviously you couldn't operate an intelligence satellite 
under those circumstances, so we would be willing to look at 
the unified S-band and see if you can compress some of the 
satellite frequencies. I cannot tell you whether it is one-to-
one. It is about 95 megahertz subject to some adjustments.
    Senator Inouye. What you are telling us is you have not yet 
identified any spectrum available to you?
    Dr. Wells. Within the government bands, there do not appear 
to be any bands available. We agree with NTIA on that. The 
question is commercial bands, that begins a negotiating process 
that we are not able to decide by ourselves.
    Senator Inouye. Many of us on this Subcommittee are members 
of the Defense Appropriations Subcommittee, so we are well 
aware of the investment we have made. A lot of money. Now, if 
you are required to move, how much would it cost?
    Dr. Wells. The----
    Senator Inouye. Do you have any idea?
    Dr. Wells. I cannot tell you precisely, sir. Some of the 
preliminary estimates that came in I believe were quite low 
because they did not consider time lines. For example, if 
someone wants us to move out of the satellite band early, one 
is going to have to build and launch replacement satellites 
which is going to be a pretty expensive proposition, so we are 
now looking at what it would take under different timelines. We 
need to be out by 2008. What does that mean in terms of 
developing the system instead of letting the old one die? I am 
reluctant to give you figures right now.
    Senator Inouye. Will you provide the Subcommittee with a 
response that is in much greater depth on the use of your 
spectrum efficiently, because there have been those who have 
suggested that DOD is not using its spectrum efficiently.
    Dr. Wells. I would be glad to do that.
    Senator Inouye. I thank you very much. Mr. Knapp, we have 
testimony that will be presented later which will suggest that 
we may not need additional spectrum because the present 
spectrum use is not efficient. What is your assessment?
    Mr. Knapp. One of the cornerstones of the Commission's 
policy has been to provide flexibility within the existing 
spectrum bands that are used by PCS, cellular and the 
specialized mobile radio service, and there really have been 
advances in spectrum efficiency through the years as a result 
of that policy. We are already hearing that the major cellular 
carriers and PCS carriers have announced that they are going to 
begin as a result of our flexible policies to offer 3G services 
within the existing spectrum. The real issue is as those 
services grow and there are more users and more extensive use 
of data services, that the capacity will need to increase down 
the road.
    So I think the Commission's overall view is that there is a 
need for additional spectrum. The real question is the amount 
and where.
    Senator Inouye. If I may, I'd like to ask the same question 
I asked Dr. Wells. Have you been able to identify any spectrum 
that may be made available to DOD if the move is required?
    Mr. Knapp. If a move is required there are additional bands 
in this region, but I would stipulate, as a starting point that 
all of the spectrum is crowded and shifting things around is 
always difficult. But there may be other bands in this region 
that are worth looking at that may help solve the relocation 
problems.
    Senator Inouye. Ninety-five?
    Mr. Knapp. I do not know that it would total up to 95, but 
part of that exercise would involve looking at whether you 
could repack or shrink some of the use into smaller bands, and 
it may be able to be done in small pieces, rather than one 
contiguous block.
    Senator Inouye. How would you suggest the DOD be reimbursed 
if such a thing is necessary?
    Mr. Knapp. Well, under the current legislation, DOD is 
required to be reimbursed for any relocation that is necessary, 
and----
    Senator Inouye. Should it come out of the auction fee?
    Mr. Knapp. I do not know if that is the Commission's issue 
to address. And to the extent that it may help relocation, that 
may be something to look at.
    Senator Inouye. Do you have any thoughts, Mr. Hatch?
    Mr. Hatch. Thank you, Mr. Chairman. In our study, we did 
look at some, one commercial band that Dr. Wells had just 
alluded to, the 2025, 2110 is a potential band for the 
satellite links. We looked at three other government frequency 
bands. Only one of those frequency bands was below three 
gigahertz. The other frequency bands were above three gigahertz 
and it would appear that we could accommodate the fixed systems 
in those frequency bands, but it does not appear that we in the 
government spectrum would be able to identify enough comparable 
spectrum to satisfy the DOD requirements.
    Relative to reimbursement, the legislation is now as you 
know, the costs would be paid by the winning bidder, in 
addition to the prices bid on the spectrum. There have been 
proposals and industry has certainly talked about having the 
proceeds come out of the auction receipts, and that is 
something that I think certainly warrants further discussion. 
Thank you, Mr. Chairman.
    Senator Inouye. So, Mr. Hatch, it is your view that at this 
moment you are not aware of comparable spectrum that can be 
made available to DOD?
    Mr. Hatch. Basically that is true. Yes, sir. We have looked 
at the government exclusive spectrum to see if we could 
accommodate all the requirements there, and we need to do a 
more detailed analysis when we determine if the spectrum is 
going to be given up, and how much to determine how much 
additional spectrum would be needed. Right now the spectrum 
that we have available to us does not appear to be sufficient 
to accommodate all of their requirements.
    Senator Inouye. Dr. Wells, if the move is required, how 
long would it take?
    Dr. Wells. Some things might be fixed system, like was 
referred to, can move through fairly quickly. The problem is 
that since other systems overlap, that moving that fixed system 
would not gain you any spectrum because the satellite 
frequencies we estimate would take into 2017 to fly out the 
existing constellations and begin launching systems with other 
bands. The fixed systems is 2010, actually 8 years from 
whatever year the money begins to be appropriated because you 
have to, in research and development, you have to build the 
systems, you have to test and field them and to do something 
like air-to-combat maneuvering ranges takes a long time. 2010 
is what we are saying for professional systems, 2017 for 
satellite.
    Senator Inouye. From your responses, am I to conclude that 
it is the view of DOD that now is not the time to make a firm 
decision? That we must wait a little while?
    Dr. Wells. I believe we need to explore other options, Mr. 
Chairman.
    Senator Inouye. Thank you very much.
    Senator Burns.
    Senator Burns. Thank you, Mr. Chairman. You covered most of 
the questions that I had on my list. I would ask Dr. Wells, it 
is hard to forecast anything in government on how long it is 
going to take to make the move or how much it is going to cost. 
My question is, how long do you think it would take you to 
develop the planning process of doing such an exercise?
    Dr. Wells. I believe that could be done fairly quickly. In 
fact, we met with Mr. Hatch and with the FCC last week to begin 
talking about an accelerated process to put on the table. As 
many options as need to be done to find the best national 
solution of this.
    Senator Burns. Do you have a working group within DOD that 
tends to monitor spectrum and how it is used and how much you 
have got on the shelf and have all that information available 
to you almost at your fingertip?
    Dr. Wells. We do. We also, as I mentioned, we are 
increasing the management visibility into this by creating the 
new frequency for data spectrum management.
    Senator Burns. I am not trying to lead us down the road of 
saying the only possibility that we have in developing 3G is 
the spectrum now being used by the Department of Defense. There 
is a lot of us who think we have a great Department of Defense 
and we think it is very critical to the security of this 
country, and we leave it to you fellas or the folks at DOD to 
assess that, and to give us a pretty realistic assessment of 
what it is going to take to carry out your national security 
mission.
    I would say, and I would ask the panel if we would disallow 
any other allocation of spectrum, and with the information that 
we have got that we are not using what we have a while ago what 
the Chairman alluded to, that we are not using the spectrum as 
efficiently as we could on what has already been allocated, 
what will happen to our R&D on the development of using a 
spectrum more efficiently? In other words, putting more on the 
same road as we have now? And Mr. Knapp, I would ask you that.
    Mr. Knapp. The use will always fill out the available 
space. So when there is a smaller amount of spectrum, it tends 
to drive, as long as you provide flexibility, advancements in 
spectrum efficiency. So there is a tension there between the 
amount of spectrum and the pressure to develop more advanced 
technology, more spectrum efficient technology.
    Senator Burns. Mr. Hatch, what's your assessment?
    Mr. Hatch. Thank you, Senator. I think that we have to look 
at all the options that are on the table for the various 
spectrum that can be made available. I think we have to look at 
these new efficient technologies that we are all hearing about 
to see how efficiently they will make use of the spectrum and 
try to make the best determination on the amount of spectrum 
that is available as well as the technical characteristics we 
should try and use.
    Senator Burns. We have seen a study that is in progress now 
that will be completed in November on the assessment of how we 
approach spectrum management reform. And it is like I alluded 
to in my opening statement, I believe if you thought there were 
a lot of moving parts in the 1996 Telco Act, there will be a 
lot of moving parts as we move down that highway of 
recommending the way we manage our spectrum. So I look forward 
to working with each and every one of you, but I do not want to 
just hurry and put together a piece of legislation in haste and 
get everybody, everybody in the dust, so to speak, and not have 
a lot of information that we are going to need or answers to 
questions that we are going to need before we complete the 
exercise. And I think we can work satisfactorily through this. 
I look forward to working with you, and I look forward to 
cooperating with you also as we tend to look at this big issue. 
I thank you for coming today. I thank you for your testimony.
    Senator Inouye. Thank you very much.
    Senator Stevens.
    Senator Stevens. Thank you very much. Let me ask you, Dr. 
Wells, suppose we just told you that you had to use 30 percent 
less spectrum within 2 years. Could you do that?
    Dr. Wells. I believe we would be putting our people at 
serious risk by doing that. I believe we can migrate over time. 
I believe there is a way ahead in a national approach to the 
problem. I believe a precipitous approach is going to cause 
problems.
    Senator Stevens. Have you ever analyzed to see how much the 
Department of Defense's spectrum use could be provided by the 
private sector on a contract basis?
    Dr. Wells. We have actually looked at commercial adjuncts 
to Department of Defense communications, for example, satellite 
communications, for example, using cellular telephones in lieu 
of mobile radios, and honestly, I have gone into this on 
several occasions thinking that would be a fabulous opportunity 
to do. This unfortunately, sir, we have been disappointed every 
time. We are about to go and look at this again. For example, 
some of the things we need are builders which are not part of 
the commercial need. We need security which is increasingly 
able to be provided by sleeves. One of the things I find very 
attractive about third generation is we have to work in a 
network world netted together, and really conference calling by 
a cell phone is not at the same level as military network 
radios. We are hoping that 3G will help bring that capability 
to us as well. Thus far it has been slower than we would hope.
    Senator Stevens. I don't think there is any stronger 
supporter of the Department of Defense than the two of us, 
however, we know the redundancies are in your systems. Have you 
ever looked to see if you must maintain those redundancies in 
the training and operational efficiencies of the department?
    Dr. Wells. The fixed mode, the fixed point-to-point is 
something that could move. I think that, I will take for the 
record the question about training because if anything, our 
training is becoming more network intensive as we go to this 
networkcentric warfare. We are increasingly able to make use of 
simulators, for example, which allows people to train without 
getting in the cockpits, without getting in the tanks. The Army 
is moving to digitized force. Navy is moving to netcentric 
warfare. Let me take that for the record and get you a balanced 
phrase. It is not as easy to cut the spectrum as one would 
expect.
    Senator Stevens. I hope you do. We have to defend you 
somewhere down the line, and I would like to make sure we are 
starting from the point that is defensible. People start coming 
up with some facts here that I think could be brought up in 
terms of the redundancy and the excess use of communications 
and spectrum, I think we are going to be in trouble.
    I do not think that the department has gone to the point of 
multiple use of existing spectrum that the private sector has. 
I do not know if that is cost or otherwise. I hope you will 
analyze it.
    Dr. Wells. I would also like to send someone over to meet 
with your staff to find the specifics that cause you concern, 
and we will address it particularly.
    Senator Stevens. Let me ask another question. As I listened 
to the testimony of the three of you, I am not sure we are in 
total agreement on the facts. Do you all agree on the facts of 
the total allocations and how they have been made and the basic 
necessity for Defense to have the spectrum it has now? Do you 
agree, Mr. Hatch?
    Mr. Hatch. Thank you, Senator. We have in fact reviewed the 
systems that are in the 17--actually the 1710 to 1755, although 
we have given up the 1710, the 1755 megahertz spectrum. There 
are protective sites in there for the DOD so their spector of 
use remains and looked at the 1755 to 1850 and we have asked 
some questions of the DOD of the total spectrum that they 
needed for some of those systems. They are in the process now 
of obtaining that information and providing that to us, so I do 
not have a complete answer. I will be glad to provide it.
    Senator Stevens. I asked the question because from a 
generational point of view, if you go back to the days of early 
allocation spectrum, it was on a much broader basis and less 
specific than it is now. The assignments over space now, I do 
not know how the department can say that the space it got, 
allocation it got in terms of spectrum 30 and 40 years ago is 
absolutely necessary now unless it can show that it is using 
that spectrum in the very modern sense of digital allocation.
    Have you examined that, Dr. Wells?
    Dr. Wells. We have given up since 1993 240 megahertz of 
spectrum. We are adjusting some of our frequency use based on 
that loss. There is a program called a joint tactical radio 
system, which I think is a very constructive example. This is 
what we look at the future of our tactical communication 
systems, and what we did was we went to industry and said if 
you would develop a software radio standard, standard for 
software programmable radio, technically change the radio with 
a card, but do it in software. We would build a system around 
that commercial standard and you, industry, could use that 
standard in the future. That program I believe is going to be 
sort of the wave of the future and represents an industry 
partnership that is not only going to be good for them, but 
also good for us and much more efficient in the use of 
spectrum.
    One of the other things we are looking at is so-called 
adaptive antennas. It samples the frequency and says that 
somebody is on this, can I hop to another unused frequency and 
transmit there, when that gets crowded, hop back to another. So 
that is the kind of research that is in place. We have in the 
test range community alone, $50 million worth of research and 
development in the next few years, and we have to ensure the 
best allocation of that spectrum.
    Senator Stevens. If you are sitting on spectrum if it was 
looked at from the point of view of recent sales of spectrum, 
it is worth trillions of dollars. I hope you keep that in mind.
    Dr. Wells. We will.
    Senator Stevens. Mr. Knapp, what's the position of FCC 
about allocations that are there in the Defense side? You 
really do not analyze that, do you?
    Mr. Knapp. No. We do not, Senator.
    Senator Stevens. I would hope that somehow or other, we 
would find some way to get a level playing field here in terms 
of the adaptation of the most up-to-date technology for the 
Department of Defense and see what needs, to totally digitize, 
totally utilizing up-to-date and most modern capability, we 
have to take the full advantage of this spectrum.
    Dr. Wells, I remember too well when I was in those planes 
in World War II, we would crank them two degrees this way. We 
would end up at the point in the middle. Everything was 
protected by at least two extra points on the spectrum. If you 
eliminate, have you eliminated all of that now and gone to 
digital use of your spectrum?
    Dr. Wells. One of the problems we have are the mega C 
systems that are out there. We are moving toward the joint 
system we mentioned is going to be the most modern frequency 
allocation in the world. We have numbers of systems. The 
Secretary just went out to Omaha, Nebraska to visit the 
commander of the strategic command and he was looking at some 
of the radios in those airplanes which date from the 1970s and 
1980s and we have to work through those old systems before I 
can tell you we have everything that is as digitally controlled 
as we would like to have.
    Senator Stevens. I remind the Subcommittee of this but when 
I came here the Senate controlled Army communications to 
Alaska. It was just twisted wire put up by Mitchell, as a 
matter of fact. We have totally modern communications and we 
have more penetration of this world per capita in our State 
than anywhere in the country, because we are no longer under 
that system, Dr. Wells. And we took full advantage of the 
development of new technologies that came along because of 
economics of it, and not because we just were entitled to it. I 
really think there is no economic pressure on the Department of 
Defense, and I wish there was some way we could work that out.
    I would like to point out, as the Chairman has hinted, if 
you can find more spectrum available to sell, we will give you 
the money. I think the thing to do is get the spectrum. The 
money is immaterial to us right now.
    Dr. Wells. Absolutely. We need to find the common spectrum 
to move into. Also, Senator, we are desperately seeking the 
best ways to use them. We forecasted 90 percent growth in our 
demand for mobile services in the next 5 or 6 years. We are in 
Kosovo, we experienced 21 times increase in the use of 
bandwidth and the only way we could fight that war was by 
commercial leasing. We could not do it with the available 
equipment in the Department of Defense. We have got to do this 
as public private partnership, and we have got to squeeze the 
absolute most out of our spectrum because we are moving the 
network concept. The Secretary is doing the Quadrennial Defense 
Review looking ahead. Central is the area of space information 
and intelligence and how we share knowledge, how we build 
shared awareness, how we synchronize our forces. That only 
happens through the use of radio frequency spectrum.
    Senator Inouye. Senator Wyden.
    Senator Wyden. Thank you, Mr. Chairman. I will say, 
listening to Senator Stevens was well worth waiting for because 
I think Senator Stevens, and you, Mr. Chairman, and Senator 
Burns have all put your hands on it. The name of the game is 
figuring out ways to get these technologies that increase 
efficiency. That is the single most important thing. I am glad 
that you, Mr. Chairman, and you, Senator Stevens, are going to 
be leading this on the military side. You are going to have my 
full support in this effort.
    As far as the civilian side is concerned, I think the 
problem is again that on the civilian side, we have 
insufficient financial incentives for the development of 
creative technologies that improve efficiency. Pin down for me, 
if you would, Mr. Knapp, how much of the privately-held 
spectrum is currently subject to the kind of flexibility which 
you have testified today actually increases innovation?
    Mr. Knapp. Senator, I would like to get back to you with 
precise amounts, but particularly through the 1990s as new 
spectrum was allocated, whether it was for PCS, wireless 
communication services and so forth, we have largely been 
assigning licenses that have flexibility as to the service that 
you use, the technology that you use, and of course, the 
licenses are assigned through competitive bidding.
    Senator Wyden. As of today, is it not correct to say that 
the amount of spectrum on the private side that is open to some 
flexibility and marketplace forces is under 20 percent today?
    Mr. Knapp. I do not know the exact percentage. We have been 
moving toward, recall, of course, that part of it is allocated 
for things like public safety and private mobile use, and even 
there where we did not have market forces in place, we had 
mandatory rules that forced efficiency.
    Senator Wyden. I just think the Chairman, and I have talked 
with him about it, is very motivated in the right direction 
here. But when I look at the civilian side, I say to my 
colleagues, what we are doing at this point is we are going to 
have a proceeding, have another proceeding, have another 
proceeding, and a motion for a proceeding, and my sense is at 
the end of 3 or 5 years, if we do not speed this up, and inject 
some real marketplace forces, the world is not going to look 
all that much different on the civilian side. I see you are 
nodding your head firmly, Mr. Knapp. I probably ought to quit 
while I am ahead.
    Mr. Knapp. The Commission, I think, would generally agree 
with you. We need to bring market forces to bear to spectrum 
management. We have been looking at things to increasingly do 
that, such as our initiative on secondary markets.
    Senator Wyden. Mr. Hatch, for a government spectrum user 
today, what are the incentives to economize on the use of 
spectrum?
    Mr. Hatch. Thank you, Senator. We are constantly reviewing 
the technical standards for our systems in the mobile area we 
have required government agencies to go to narrow banding. We 
have trunking systems that we require them to use common 
trunking systems within the same general geographical area. On 
our radio location and radio navigation systems which are very 
high power and have been notorious for causing energy to be in 
adjacent bands, we are continually looking with industry to 
update our technical standards and try to improve the 
efficiency of those radar so that they will use the spectrum 
more efficiently and not cause interference in the adjacent 
bands.
    Senator Wyden. Those are all good works. There is no 
doubting at this chair about your desire to do good works, but 
what are the actual reasons why someone would relinquish or 
share excess spectrum right now? What troubles me, folks, is I 
think we are going to keep repeating this 3G battle year after 
year unless we retool the system and Senator Stevens and the 
Chairman talked about some of the efforts they are going to 
make on the military side. This Subcommittee has jurisdiction 
on the civilian side. I want to make sure we get down on the 
record that the system is the problem. It is not the 
motivations that you see, which I consider to be very good and 
in the best interests to serve the public. Mr. Hatch, you gave 
me some examples of good works. But on the question of what 
incentives there are to economize with respect to spectrum, I 
do not see it. Maybe I can continue on more with this.
    Mr. Hatch. Thank you, Senator. We do have, as Dr. Wells has 
pointed out, our 5-year review cycle where we do review every 
assignment through all the government agencies to see the 
necessity for using the spectrum. We are running short of 
spectrum to satisfy our requirements the same as the private 
sector, and there is the same incentives there to use more 
efficient technology because there is no more spectrum. We have 
constant requirements coming in from the private sector to 
share spectrum with government users, and we have come up with 
some very innovative ways to use this spectrum more efficiently 
and share with the private sector. One of those new ways was to 
look at time sharing between our mobile satellite, between the 
private sector mobile satellite systems and our space research 
type of satellite systems where we were not in view all the 
time and we are not using that spectrum during certain times or 
in certain geographical areas. The private sector had 
satellites and we are now coordinating all of our satellite 
information and data to allow those systems to share both 
geographically and in time in order to use that spectrum more 
efficiently. So I think there are incentives out there to try 
and keep using the spectrum more efficiently and ensure that we 
are, as Dr. Wells has said, good stewards of the spectrum and 
are continually using it more efficiently.
    Senator Wyden. Well, I have to tell you that I am skeptical 
of that point. It has nothing to do with your intentions. I am 
glad that Senator Stevens and the Chairman are going to be 
looking for ways to continually push development of 
technologies on the military front. I am going to do it on the 
civilian side. I think this system is a dinosaur. I think it is 
right out of ``Jurassic Park,'' and part of what has happened 
politically, and you see it in discussion with the broadcasters 
and the like, is that any time anybody talks about a little bit 
of flexibility, everybody goes into a defensive crouch. I 
understand that. I mean, we have got to meet our national 
security needs.
    Fortunately, we have the Chairman and Ranking Minority 
Member who are going to do that. But it is the system that is 
skewed in my view away from innovation. On the marketplace 
side, it does not do enough to look at the next exciting 
opportunities for wireless. The Internet is going to be 
wireless. We all understand that potential. And we need to do 
more on the military side. So I thank you, Mr. Chairman, 
Senator Stevens, Senator Burns have said it so will. I look 
forward very much to working with you, Senator Stevens, Senator 
Burns on this because this is about creating incentives for 
efficiency. It is harder to make spectrum fall out of the air. 
We certainly should figure out more ways to make it attractive. 
I thank you.
    Senator Inouye. Senator Brownback.
    Senator Brownback. Mr. Chairman, I think it has been an 
excellent panel and a good discussion here. First, maybe to put 
a real time issue on it, industry people I have been talking to 
say that within the next 18 to 24 months we are going to have 
extensive amounts apparently of dropped calls, incomplete 
calls, problems that are going to be taking place because of a 
lack of spectrum in some of our most critical urban markets. So 
we have got a tight timeframe that we are talking about here, 
and I think what Senator Wyden and others are pointing out, 
along with the Chairman, Ted and Conrad, are that we need to 
start working on constructive solutions and press forward.
    Dr. Wells, I was concerned, one of your points at the end, 
and I am sorry I missed the first part of your testimony. But 
at the end you were saying we are waiting for the win-win 
solution to come to us, and for people to approach us about 
this. We want to do a win-win solution, but we do not see it. 
It sounded as if in your presentation that you are waiting for 
it to be presented to you. And I am really hopeful that what 
you are doing is searching internally to try and find what that 
is. You know best your system and you know the national 
security needs and you also know the pressures. But if you have 
got people this supportive of the Armed Services pressing too, 
we need to get some of this spectrum out in the private sector, 
and it is not coming forth, that is just going to build more 
and more pressure and there will be legislative solutions being 
put forward that really ought to come from you internally. 
Because that is where we would feel most confident and 
comfortable. But if the calls start getting dropped, if we are 
not having sufficient spectrum to meet the demands of the 
public, and it appears that there are some potential solutions 
that await internally, then the legislative solutions start 
coming forward, so I would just plead with you and press you to 
work internally to develop those win-win situations and to 
present those as options exteriorwise in these negotiations, 
and we do not have a lot of time to get this done. If you would 
care to respond either to the timeframe or the work internally, 
I would appreciate it.
    Dr. Wells. Let me assure you, Senator, we are searching 
aggressively in searching for these win-win options. The 
department is literally eager to work with my colleagues at 
NTIA and FCC, private sector economy to find a way ahead of 
this. This is not a matter of national security. The overall 
economic health of the country is a matter of national security 
as well, and we recognize the importance of wireless services 
to the future of that economy. So we are looking to be not just 
sort of hoarders of the spectrum that we have, we are looking 
at being efficient users of what we need but making sure at the 
same time that the national security functions we need to 
perform are performed. That is going to cause us to find ways 
to reach out. That is going to--we will be meeting here in the 
next few days, weeks with NTT, FCC and NTIA to find ways to put 
on the table all the options which may include some of our 
options as well of ways ahead. We know it is not going to go 
away. We know that we need a national solution that weighs all 
the factors.
    Senator Brownback. When we start getting millions of phone 
calls dropped, incomplete, other things because of the lack of 
spectrum, there is going to be a lot of pressure building here, 
and that time is just not that far away from us.
    Dr. Wells. If I could just make one reference, one of the 
things that operates in this band in terms of control 
frequencies is the global positioning system which most people 
do not think of as a military system, but in fact grew out of 
the military. That has become such a critical infrastructure 
for the Nation as a whole that as we find a way ahead to 
migrate these satellites, it is not just military. We have to 
make sure that those frequencies are protected for the civil 
community as well.
    Senator Brownback. I appreciate you being here and hearing 
this message from some of your strongest supporters. I am a 
strong supporter of the military as well. We have got to find 
these solutions if at all possible. We need to do so really 
within the next several months if we are going to get this to 
happen in a sequence such that we do not bump up against a lot 
of problems in some of the major markets in this country.
    Senator Stevens. Mr. Chairman, could I ask just one more 
question. I have been thinking about creating legislation to 
create a fund into which moneys would be paid from those who 
would lease--with leased spectrum from the Department of 
Defense or from those in the private sector that have spectrum, 
accelerate approval of that, Mr. Knapp, in the private sector 
so that we could have some joint use or multiple use of some of 
the spectrums up there now, particularly the spectrum that DOD 
might not currently need, some sort of a lease, sublease with 
an instant recall concept for the Defense spectrum, something 
that would meet what Senator Brownback is talking about right 
now. The absolute prediction of shortage we had at one meeting 
of this Subcommittee indicated that we are falling behind 
internationally because of the shortage of spectrum.
    If we did that so the Department of Defense could use that 
money to proceed to digitize and upgrade your communication, 
and so the FCC could use the money to find ways to try to 
improve the sharing of spectrum, what do you think about that? 
Is that a possibility that we could, if we could give you the 
money without waiting for Congress to approve it, put it into a 
fund, you could use it to digitize and modernize, Dr. Wells, 
and you could use, Mr. Knapp, the moneys to find some way to 
try to bring about more efficient use of the spectrum allocated 
to the private sector now? Is that feasible?
    Mr. Knapp. Senator, as I testified earlier to the extent we 
can bring market mechanisms to bear on spectrum management, 
whether it is the government sector or the private sector, that 
probably is a good thing to look at. We would be happy to work 
with you on it.
    Senator Stevens. If I had spectrum, I couldn't lease it 
without your approval?
    Mr. Knapp. That is correct. That is why we initiated a 
proceeding called secondary markets to maintain the protections 
to control interference, for example.
    Senator Stevens. If that happened right now, you wouldn't 
keep the money, would you? It would go to the general fund?
    Mr. Knapp. That is correct.
    Senator Stevens. Dr. Wells, if we could arrange that you 
got the money, is that an economic incentive?
    Dr. Wells. You are saying rather than transfer the spectrum 
to find secondary market and release it. I have not considered 
that.
    Senator Stevens. Thank you, Mr. Chairman.
    Senator Inouye. I have just one more question. Industry has 
indicated that they need DOD spectrum if we are to maintain our 
world leadership role in 3G. DOD says it needs its spectrum to 
carry out its mission. ITU now has set aside DOD's spectrum for 
worldwide use in 3G. We have no idea whether that worldwide use 
would interfere with DOD activities. Where do we request from 
here?
    Dr. Wells. Senator, if I may, the interference, spectrum 
interference with DOD operations overseas has been a fact of 
life for many years, whether this band or other bands. It is 
one of the reasons why we have spent a lot of time negotiating 
host nation agreements. I do not think we are ever going to get 
to a situation where we are going to designate IT band that is 
going to be for worldwide military ops and find it free of 
interference. This has not been a change from where we have 
been for a long period of time. Yes, it is true that 1755 has 
been one of the bands designated by the ITU, but it is one of 
only several. There are several other bands that could be used. 
I think as we look at the possibility for 3G, we just keep 
focusing on that one because interference occurs everywhere. We 
ought to take advantage of full opportunities here in the 
United States for this 3G service.
    Senator Inouye. Is the use of the DOD band necessary if we 
are to maintain our leadership role in the world on 3G 
activities? Mr. Knapp and Mr. Hatch?
    Mr. Knapp. I would suggest that there is still more work to 
be done in looking at this. We have looked at some options 
already and I think you have heard and you will hear from the 
other parties that there is still more work that we can do in 
making more efficient use of the spectrum. So with more work, I 
think we probably can come up with a solution here.
    Mr. Hatch. Thank you, Mr. Chairman. Yes. I would agree with 
Mr. Knapp. There are a number of options that have been put on 
the table and discussed in the DOD, FCC, the private sector has 
made some additional inputs and proposals for additional 
spectrum that could be made available. I think it would be 
prudent to sit down now and look at all of these options and 
see which options would be the best options to pursue to come 
up with a final answer for the spectrum.
    Senator Inouye. Thank you very much. Any further questions? 
Thank you very much. You have been very patient. Your responses 
have been clear but at times aggravating. Where do we go from 
here?
    Our next panel, Mr. Denny Strigl, CEO of Verizon Wireless; 
Mr. Carroll D. McHenry, CEO of Nucentrix Broadband Networks of 
Texas; Mr. Mark Kelley, Chief Technology Officer of Leap 
Wireless, San Diego; Thomas E. Wheeler, President and CEO of 
Cellular Telecommunications and Internet Association; and Mr. 
Martin Cooper, Chairman and CEO, Co-founder, ArrayComm, 
Incorporated of San Jose.
    Gentlemen, I thank you for your patience in waiting for us. 
May I now recognize the CEO of Verizon Wireless, Mr. Strigl.

       STATEMENT OF DENNIS F. STRIGL, PRESIDENT AND CEO, 
                        VERIZON WIRELESS

    Mr. Strigl. Thank you, Mr. Chairman. Good afternoon, Mr. 
Chairman, Members of the Subcommittee, thank you for inviting 
me to appear before you today. The allocation of adequate 
spectrum to support the continued growth of the wireless 
industry and the development of 3G services is the most 
important and timely issue facing my company. It is also vital, 
I believe, to the U.S. economy. Last year, the President's 
Council of Economic Advisors concluded that 3G services would 
provide more than $100 billion in annual consumer benefits and 
urge the government to promptly allocate sufficient spectrum 
for 3G. I am grateful to this Subcommittee for its interest and 
support on this issue, but I must underscore that we need 
prompt action. Verizon Wireless has one of the most advanced 
mobile networks in the industry, and we make every effort to 
efficiently use the spectrum we have to meet the needs of our 
customers.
    However, despite our deployment of the most spectrally 
efficient technologies available, the enormous growth in mobile 
voice and narrow band data services and the expected growth of 
advanced mobile services such as high-speed data will 
ultimately constrain our ability to meet future customer demand 
without additional spectrum.
    Some people would suggest that we have no need for 
additional spectrum, and that using our existing spectrum more 
efficiently will solve the problem. With all due respect, I 
think that those arguments are self-serving. I don't believe 
anyone could know as well as we do the needs of our customers 
and the demands on our network, and particularly someone would 
not know this with many fewer customers or much lower demand 
levels. I come before you today to urge you to act quickly to 
make additional spectrum available to meet the needs of our 
customers while bringing critical benefits to the American 
economy.
    The following actions, I believe, are needed. First, the 
Commerce Department and the FCC must allocate 200 megahertz of 
additional spectrum to support the continued growth of wireless 
services. The 1710 to 1850 megahertz band is a good start. And 
I believe that it was identified at the 2000 World Radio 
Conference as a primary candidate for 3G services and is the 
best choice for obtaining globally harmonized spectrum. 
Senator, the government and private industry must work together 
to develop an implementation plan for how and when the spectrum 
will be cleared for existing users and when it will be 
auctioned.
    Third, a workable process must be established for 
reimbursing Federal Government users for relocation to other 
spectrum. To this end, I urge Congress to pass legislation that 
would compensate the departments of Defense and other Federal 
users directly through auction proceeds. This would guarantee 
that compensation funds are available. The availability of 
funds for relocation, as well as modernization of Federal 
communications systems creates a win-win approach that is an 
important step forward in making spectrum available for 3G.
    Mr. Chairman, I cannot overstate the importance of spectrum 
to my company and to the wireless industry. Earlier this year, 
my company bid nearly $9 million for spectrum in Auction No. 35 
which raised $17 billion for the U.S. Treasury. This spectrum 
is necessary to meet the continued demand for mobile voice and 
to begin deployment of 3G services.
    Ultimately, this spectrum is stuck in legal limbo with 
likelihood of protracted legal battles. Last week, Verizon 
Wireless joined with four other high bidders with that auction, 
namely Alaska Native Wireless, Dobson Communications, Salmon 
PCS and VoiceStream Wireless in a letter urging the Commission, 
the Department of Justice, and the Office of Management and 
Budget to achieve an immediate settlement of the next wave case 
that would preserve the results of the auction. Congress should 
do all it can to encourage the parties to settle. This is the 
best way to ensure that the valuable mobile licenses purchased 
at auction are put into the hands of the carriers who can 
deploy immediately to serve our customers.
    The United States is the world leader in the development 
and deployment of advanced wireless technology, however, we are 
falling behind other nations in the allocation of spectrum that 
is necessary to support the development of the next generation 
of wireless technologies. I urge the Subcommittee to take every 
action you can to make spectrum available to the wireless 
industry so that carriers can deploy 3G services. Thank you 
again for your continued interest, and for your leadership on 
wireless policy issues.
    Senator Inouye. Thank you very much, Mr. Strigl.
    [The prepared statement of Mr. Strigl follows:]

      Prepared Statement of Dennis F. Strigl, President and CEO, 
                            Verizon Wireless

                                SUMMARY

    Mr. Chairman and Members of the Subcommittee, thank you for 
inviting me to appear before you today. The allocation of adequate 
spectrum to support the continued growth of the wireless industry and 
the development of Third Generation--or 3G--services is one of the most 
important and timely issues facing my company and my industry. We are 
grateful to this Subcommittee for its interest and support. Together we 
must find a way to quickly address the critical spectrum needs of this 
industry.
    The deployment of 3G wireless services and technologies will enable 
U.S. industry to maintain its global competitive and technological 
leadership in both wireless and Internet markets. In a report published 
last year, the President's Council of Economic Advisers (``CEA'') 
estimated that the benefits from 3G would likely approach $100 billion 
annually. It concluded that an adequate supply of additional spectrum 
was needed for 3G services and urged government action making adequate 
spectrum available. If spectrum is not available on a timely basis, we 
risk squandering our global position and a panoply of associated 
economic and societal benefits.
    Adequate spectrum was identified at the World Radiocommunications 
Conference (``WRC-2000'') held in Istanbul, Turkey last year. The 
decisions reached at WRC-2000 were supported by the United States and 
more than 150 other world governments. While efforts by many government 
and private sector interests have led to some progress in achieving the 
necessary spectrum allocations in the United States, spectrum 
identified at WRC-2000 has not yet been reallocated nor is such action 
imminent. For that reason, I come before you today with a simple but 
urgent message: 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. We are facing the prospect of our industry's 
equivalent of a ``fuel crisis''--with access to the spectrum ``fuel'' 
restricted by government policy and lack of action.
    The following actions are urgently needed:
    1. Reallocation of adequate globally harmonized spectrum for mobile 
services. As reflected in decisions made at WRC-2000, the U.S. wireless 
industry needs at least 200 MHz of additional spectrum, aligned with 
spectrum to be used in other regions of the world, to meet its long-
term growth requirements.
    2. Development of an implementation plan for how this spectrum will 
be cleared and when it will be auctioned. Equally important to the 
reallocation of needed spectrum is the plan setting out the timeframes 
when that spectrum will be auctioned and when it will be available for 
use by the industry. While all of the spectrum will not need to be 
available at once, operators need some certainty and predictability 
about what spectrum will be available and when.
    3. Establishment of a ``workable'' process for reimbursing Federal 
Government users. Legislation is needed to allow the Department of 
Defense and other Federal users to be compensated directly through 
auction proceeds thereby guaranteeing that compensation funds are 
available. The availability of funds for relocation as well as 
modernization of Federal communications systems creates a ``win-win'' 
approach that is an important step forward in the process of making 
spectrum available for 3G.
    4. Elimination of the ``spectrum cap''. This outdated rule limits 
the amount of spectrum a single company can own. In the intensely 
competitive wireless industry, this rule only impedes companies from 
competing for the spectrum needed to meet the future demand for 
wireless voice, data and other new services.
    5. Settlement of the NextWave case. The loss to the American public 
and to American taxpayers will be enormous if this matter is not 
resolved quickly.
    The continued growth of the wireless industry depends on the 
availability of adequate spectrum.
    3G services will be the next important chapter in a continuing 
wireless success story. However, the ability of wireless operators to 
meet the demand for 3G services depends on three key factors. First, 
the wireless industry continues to grow at a rapid pace. Today, more 
than 110 million people in the United States subscribe to mobile 
services and that number continues to grow at an annual rate of more 
than 20 percent. Only 2 years ago, analysts predicted a healthy 60 
percent of the public would subscribe to mobile services by 2008. But 
having reached 40 percent penetration this year, analysts now expect 
wireless penetration to hit 70 percent in 2004.
    Second, wireless customers are using mobile voice services much 
more frequently than they ever have before. Between 1992 and 2000, the 
industry experienced a 20-fold increase in total wireless minutes of 
use. The 2000 total of 280 billion minutes of use reflects a compound 
annual growth rate of 50 percent. During this time, we have seen a 
tremendous surge in individual subscriber usage. Between 1997 and 2000, 
monthly usage per subscriber doubled, and it is projected to double 
again between 2000 and 2004.
    Third, the growth of mobile data services is placing increasing 
demand on the network. Today, we offer data services at rates up to 
14.4 kilobits per second. These narrowband data services support a 
variety of applications including instant messaging, e-mail and web 
browsing. However, the development of 3G and other innovative wireless 
technologies will support a wide range of high-speed data and 
multimedia applications, including wireless Internet access. While 
mobile data services currently represent less than 2 percent of total 
network usage, analysts predict that future data applications supported 
by 3G technology will account for more than 50 percent of network usage 
by 2004 and ultimately those applications will dominate the use of the 
network.
    Technology improvements alone will not meet the anticipated demand 
for 3G services.
    Digital technology has been a primary driver of the amazing growth 
of wireless services. Since introducing digital technology into our 
network in 1997, we have substantially increased the capacity and 
efficiency of our network and provided consumers with enhanced services 
and choices, including many new pricing plans. Digital handsets feature 
longer battery time and reduced equipment size and cost. Wireless 
services are more accessible and affordable. They have become a part of 
our customers' daily routines, and many use wireless as an alternative 
to a wireline telephone.
    Verizon Wireless has one of the most sophisticated mobile networks 
in the industry, and we make every effort possible to use our spectrum 
efficiently to meet the needs of our customers. However, despite our 
deployment of the most spectrally-efficient technologies available, the 
enormous growth in customers and usage is placing increasing strain on 
network capacity. To address these capacity problems, Verizon Wireless 
will begin to deploy 3G technology later this year. This technology--
called cdma2000 1XRTT--will not only increase the efficiency of our 
existing network, but will allow us to provide customers with mobile 
data services at rates up to 144 kilobits per second--ten times what is 
currently available.
    Our deployment of 1XRTT is just the next step in the continuous 
evolution of our network and our efforts to deploy the most advanced 
technologies possible for the benefit of our customers. Unfortunately, 
technology alone cannot meet our capacity and new service needs. The 
new high-speed services that can be provided on 3G networks are much 
more spectrum-intensive than today's voice and data services. For 
example, while 1XRTT is nearly twice as efficient as current CDMA 
technology in delivering voice services, for data services it will take 
three to four times as much spectrum to serve the same number of 
simultaneous customers at the higher data rates (i.e., 144 vs. 14.4 
kilobits per second). As even higher speed data services are developed 
(e.g., up to 2 Mbits per second), the demand for spectrum will increase 
substantially.
    As I have indicated, we can initiate some new high-speed services, 
and Verizon Wireless will be among the first companies to do so, but we 
will be bandwidth limited in the nature and scope of these services. 
The industry needs additional spectrum before the services can reach 
their potential anticipated by analysts. I can think of no better 
evidence of the industry's urgent need for new spectrum than the $17 
billion bid for C and F block PCS licenses that were recently 
reauctioned.
    This Subcommittee is in a key position to ensure that the needed 
spectrum is made available.
    Congress has an important role in ensuring that spectrum resources 
are managed for the benefit of the American public--it is the public, 
after all, not carriers, that use these scarce resources to meet their 
communications needs. Given the significant benefits that 3G and other 
advanced wireless services will provide to American consumers, 
businesses, and the economy, Congress has every reason to ensure that 
adequate spectrum is available to support the full potential of such 
services. Other nations have already allocated and licensed sufficient 
amounts of spectrum to meet the needs of their wireless industries. The 
United States must do the same.
    There are specific, concrete steps that Congress should take now:

1. Allocate the Additional Spectrum Needed for Mobile Services
    WRC-2000 identified two spectrum bands to accommodate 3G 
development around the world. This action to identify spectrum on a 
global basis will provide the global ``harmonization'' that is so 
important to future services. By implementing the WRC-2000 actions and 
allocating harmonized spectrum, U.S. carriers will be able to compete 
globally in offering international roaming while achieving the 
economies of scale that reduce network and customer equipment and 
service costs.
    The 1710-1850 MHz band, as identified at WRC-2000, provides the 
best, initial opportunity to harmonize U.S. spectrum allocations with 
those being made around the world and thereby to meet the 3G growth 
needs of the industry. The band is already used for second generation 
mobile services in Europe and parts of Asia, where it is expected to 
evolve to 3G. In Canada, Mexico, Brazil, and other parts of North and 
South America, this band is the first choice for initial 3G deployment. 
Even though the United States, at WRC-2000, supported the potential use 
of this band for global 3G services, most of the band is currently 
occupied by the U.S. Department of Defense (``DOD'') and other Federal 
agencies. These systems will have to be relocated if the band is to be 
used for commercial wireless applications.
    In cooperation with the wireless industry, the U.S. Government has 
worked diligently to assess the potential for making this band 
available for commercial use. My company and others from the wireless 
industry have been working closely with the FCC, the Department of 
Commerce, DOD, and various other Federal agencies to develop a workable 
reallocation plan. We have made progress, but a final decision on this 
band has not been made; nor is one imminent. Beginning with this 
hearing, this Subcommittee can provide the impetus for the quick 
allocation action we need.
    Obviously since allocating the 1710-1850 MHz band alone will not 
satisfy the 200 MHz requirement, additional spectrum must be 
identified. To that end, the 2110-2165 MHz band, for example, is an 
appropriate and workable supplement. This band, most of which has 
already been proposed for reallocation, is encumbered with commercial 
fixed operators, and we are working with the FCC on relocation options.
    Recent events suggest that the 1990-2025 MHz and 2165-2200 MHz 
bands, currently allocated as additional spectrum for Mobile Satellite 
Service (``MSS''), may better serve the public interest by being 
reallocated at least in part to more viable purposes. Reported business 
difficulties among the applicants for MSS licenses raise questions as 
to the viability of MSS. For these reasons, we and other carriers 
requested the Commission to evaluate how this band could be used to 
facilitate the development of advanced mobile services, e.g., by 
accommodating the relocation of commercial and/or government systems 
from bands used for 3G.

2. Establish an Implementation Plan for Auctioning and Clearing 
        Spectrum
    Equally important to the reallocation of needed spectrum is the 
implementation plan setting out the timeframes when portions of that 
spectrum will be auctioned and when it will be available for use by the 
industry. The entire band will not be able to be auctioned at once, nor 
will it all be available at the same time, given the variety of 
incumbent uses. The industry can and will work with these logistical 
realities, but operators need certainty and predictability about what 
spectrum will be available and when so that we can develop our plans.
    This implementation plan must reflect the need for allocation 
decisions that promote harmonization. For example, the Commission is 
considering whether to pair the 1710-1755 MHz band (for mobile 
transmit) with the 2110-2150 MHz band (for base transmit) largely, it 
would appear, because these bands were designated by statute to be 
auctioned by 2002. However, this statutory action was taken prior to 
WRC-2000. Today, such a pairing would be inconsistent with existing and 
anticipated future uses of this spectrum around the world. Were such a 
pairing to occur, mobile base stations and portable devices developed 
for U.S. markets would be incompatible with and more expensive than 
equipment developed for markets where spectrum is harmonized. Making 
the additional spectrum in the 1755-1850 MHz band available would 
permit the Commission to establish pairing arrangements that are 
harmonized worldwide. I urge you to quickly resolve the broader 3G 
spectrum allocation decisions so that the Commission can consider all 
viable candidate bands before taking action on a few. In doing so, the 
Commission can establish a spectrum allocation and auction plan that 
promotes harmonized use of spectrum, reduces the costs of 3G equipment 
and services, and increases the overall value of spectrum.

3. Establish a ``Workable'' Process for Reimbursing Federal Users
    In establishing a workable process for clearing the 1710-1850 MHz 
Federal Government band, the method for reimbursing displaced Federal 
users can be improved and in so doing it may actually facilitate the 
clearing process. Current law requires that wireless operators 
negotiate with Federal agencies on relocation costs and timing after 
they have acquired their licenses at auction. Based on past experience, 
this ``after-the-auction'' approach means that operators have 
considerable uncertainty regarding the costs of relocation and the 
availability of spectrum, affecting their bidding strategy and the 
value they attribute to the license. It also imposes unnecessary 
transaction costs on operators when they proceed to the negotiation, 
and it may result in DOD and other Federal agencies being expected to 
disclose information about their systems that they contend is 
classified or proprietary.
    The law can be improved by providing for the identification of 
relocation costs and timing in advance of the auctions and collection 
of relocation costs directly from the auction proceeds. In this way, 
operators would know the timeframe for spectrum clearing and the costs 
attributable to that clearing. For its part, the government users would 
know that their relocation costs would be fully compensated without the 
need for any negotiations with industry. Legislation should be adopted 
that would make these changes to the relocation and reimbursement 
process.

4. Eliminate the ``Spectrum Cap''
    The spectrum aggregation limit (``spectrum cap'') prohibits any 
company from holding more than 45 MHz of cellular, PCS and Specialized 
Mobile Radio (``SMR'') spectrum in the same geographic area, with a 
higher limit of 55 MHz in rural areas. At the time it was implemented, 
it was designed to promote new market entry by limiting access to the 
newly available PCS licenses. The actual impact of this rule can be 
even more limiting because of the non-uniform nature of the size of 
license areas and licensed bands. This lack of uniformity may prevent 
carriers from reaching even the cap limit in their full footprint.
    The ``spectrum cap'' rule was adopted when there were only two 
carriers operating in each market, and when services were limited and 
prices were high. It was implemented to promote new entry in the 
marketplace, and that goal has been accomplished. Today, the 
Commission's own studies show that 75 percent of the population lives 
in areas with five or more mobile telephone providers. Nearly 50 
percent of the population has at least six carriers from which to 
choose. In Washington, D.C., for example, Verizon Wireless competes 
against Cingular, AT&T, Sprint, VoiceStream and Nextel.
    New entrants continue to gain considerable ground. Price 
competition is steep, but perhaps even more important, carriers are 
competing on the basis of new and enhanced product features. The 
consumer is winning.
    Because of the dramatic changes in the market, the rule has 
outlived its intended purpose and now is working to the detriment of 
the very competitive and robust market the rule sought to foster. The 
cap is not the way to perpetuate today's competitive market when the 
primary challenge is access to the additional spectrum we need to meet 
surging demand. The cap constrains our ability to meet customer demand 
for improved quality and reliability and for new services by obtaining 
additional spectrum. Lifting the cap will favor innovation and 
competition, facilitate the deployment of advanced mobile services and 
promote global competitiveness.

5. Encourage Settlement of the NextWave Case
    I cannot overstate the importance of spectrum to my company and the 
wireless industry. Earlier this year, my company bid nearly $9 Billion 
for spectrum in an auction that raised $17 Billion for the U.S. 
Treasury. This spectrum is necessary to meet the continued demand for 
mobile voice and to begin the deployment of advanced 3G services. 
Unfortunately, this spectrum is stuck in legal limbo with the 
likelihood of protracted legal battles. Last week, Verizon Wireless 
joined four other high bidders in Auction No. 35--Alaska Native 
Wireless, Dobson Communications, Salmon PCS, and VoiceStream Wireless--
in a letter urging the Commission, the Department of Justice, and the 
Office of Management and Budget to achieve an immediate settlement of 
the NextWave case that would preserve the results of the auction. 
Congress should do all it can to encourage the parties to settle. This 
is the best way to ensure that the valuable mobile licenses purchased 
at auction are put into the hands of carriers to deploy immediately to 
serve customers.

                               CONCLUSION

    Congress must act now to ensure the timely allocation of additional 
spectrum and the adoption of policies that will promote the development 
of 3G wireless technologies and services. This includes: (1) allocating 
a minimum of 200 MHz of additional, harmonized spectrum for mobile 
services, (2) establishing a plan for clearing and auctioning spectrum, 
while ensuring that all bands are dealt with as part of a comprehensive 
allocation plan that is harmonized worldwide, (3) revising the 
reimbursement process so displaced Federal users are reimbursed from 
auction proceeds, (4) eliminating artificial restrictions on access to 
the spectrum we need, and (5) settling the NextWave case so that 
service can be provided to the public and Federal auction revenues can 
be maximized.

    Senator Inouye. Mr. McHenry.

             STATEMENT OF CARROLL D. McHENRY, CEO, 
               NUCENTRIX BROADBAND NETWORKS, INC.

    Mr. McHenry. Good afternoon, Mr. Chairman, and Members of 
the Subcommittee, thank you for holding this hearing and 
inviting me here. I am Carroll McHenry, Chairman and Chief 
Executive Officer of Nucentrix Broadband Networks based in 
Carrollton, Texas. We are the third largest holder of MMDS/ITFS 
spectrum in the United States behind Sprint and WorldCom, 
covering millions of homes and small towns and rural 
communities, in Texas, Oklahoma, Kansas, Illinois, and several 
other states. We are licensed to deploy broadband services in 
these markets, bringing broadband to over 90 such smaller towns 
in rural America will be our only business.
    I am here not only on behalf of Nucentrix, but also on 
behalf of many other commercial operators, thousands of K to 12 
and higher education institutions who have joined forces to 
deploy broadband commercial and educational services. I am also 
here to tell you that the deployment of high-speed Internet in 
our markets has been seriously delayed as a result of the 
government's efforts to find additional spectrum.
    The cloud of uncertainty over our spectrum has shut down 
access to capital markets. As a result, we are currently unable 
to finance the buildout of our licensed network. While we agree 
that potential 3G mobile services are very important, so are 
fixed wireless broadband services, especially in the market 
that we serve. Today, I ask you to help end this uncertainty by 
urging the FCC to remove our spectrum from further 
consideration for 3G. The FCC staff has concluded that MDS and 
ITFS are not viable for 3G. In fact, the record shows there are 
more appropriate spectrum bands for 3G.
    There is no good reason to delay a decision regarding our 
spectrum while the FCC explores more desirable options for 3G. 
If our spectrum is held hostage to further proceedings, our 
rural broadband deployment will be delayed, and maybe 
foreclosed altogether. Fixed broadband wireless is vital to 
rural America. Five years after the Telecommunications Act of 
1996, broadband in rural America remains extremely limited.
    For example, in my home State of Texas, the PUC concluded 
in a recent report that the ILECS have largely ignored rural 
subscribers. There are no CLECS providing DSL to rural Texas, 
and only 5 percent of the rural counties in Texas have cable 
modem and most Nucentrix markets like Midland, Texas; 
Manhattan, Kansas; Peoria, Illinois, and the rural areas 
surrounding these towns, businesses and consumers have few, if 
any, broadband choices. In these choices, our fixed wireless 
service may be the only broadband option available. 
Additionally, in markets that actually have DSL and cable 
modems, we and other MDS companies may provide the only 
competitive broadband alternative to the ILEC and cable 
duopoly. Just recently, several large ILECS and cable modem 
providers announced price increases for their broadband 
services. Without an alternative, the duopoly has no incentive 
to lower prices.
    Regarding spectrum management, it is important to remember 
that Nucentrix and other operators purchased many of our 
licenses at auction in 1996. The FCC encouraged additional 
investment with the rulemaking they authorized the bands for 
digital two-way services. We are now faced with the prospect of 
losing the licenses purchased at auction only months after 
receiving authority for two-way broadband services. If winning 
bidders can not be assured that the government will honor its 
commitments and allow them to operate their licenses, integrity 
of the auction process would be undermined. The MDS and ITFS 
industry has invested billions of dollars in acquiring 
licenses, developing technology, and preparing to deploy 
broadband wireless networks.
    Nothing in the FCC's 3G record credibly supports 
reallocation of our bands. 3G carriers prefer other spectrum, 
and the FCC is exploring those other alternatives. Mr. Chairman 
time is of the essence. The bottom line is that Nucentrix needs 
capital to bring broadband services to rural America. The 
uncertainty created by the 3G spectrum search has shut down 
investment. Please help us to get moving again for rural 
America, urge the FCC to take MDS and IFTS off the table now. 
Thank you very much.
    Senator Inouye. Thank you very much, Mr. McHenry.
    [The prepared statement of Mr. McHenry follows:]

            Prepared Statement of Carroll D. McHenry, CEO, 
                   Nucentrix Broadband Networks, Inc.

    Mr. Chairman and Members of the Subcommittee, my name is Carroll D. 
McHenry. I am the Chairman and Chief Executive Officer of Nucentrix 
Broadband Networks, Inc. (``Nucentrix''), headquartered in Carrollton, 
Texas. Nucentrix is a facilities-based, last mile provider of broadband 
fixed-wireless Internet and multichannel video service over Multipoint 
Distribution Service (``MDS'') and Instructional Television Fixed 
Service (``ITFS'') spectrum in the 2.1 and 2.5 GHz bands. We are the 
third largest holder of MDS/ITFS spectrum in the United States, behind 
Sprint and WorldCom, with a coverage area of approximately 9 million 
homes in mostly rural communities across Texas, Oklahoma, Illinois, 
Missouri, and other states in the Midwestern United States. I am here 
not only on behalf of Nucentrix but also on behalf of Sprint, WorldCom 
and the thousands of ITFS licensees across the country who have joined 
forces to defend the MDS/ITFS spectrum. I have over 20 years of 
experience in the management and operation of telecommunications 
companies, including fixed wireless, mobile wireless and wireline 
telephone service providers.
    Nucentrix's mission is to provide low-cost, reliable, broadband 
data and voice service in primarily rural markets. I am here to tell 
you that our mission has been seriously jeopardized because of the 
cloud of uncertainty that hangs over our spectrum as a result of the 
government's efforts to find additional spectrum for third generation 
(``3G'') mobile wireless services. This regulatory uncertainty has 
chilled investment and prevented the access to capital that is 
necessary for us to complete the build-out of our broadband networks.
    I urge you to support our efforts to remove the MDS and ITFS bands 
from further consideration in the 3G proceedings. There are three 
compelling reasons for the Federal Communications Commission (``FCC'') 
to take this action now. First, the extensive record developed by the 
FCC demonstrates that the MDS and ITFS bands are not appropriate for 
reallocation to 3G, and that 3G proponents overwhelmingly prefer 
spectrum other than MDS/ITFS for their services. Second, removing the 
regulatory uncertainty surrounding MDS/ITFS spectrum will bring renewed 
certainty and credibility to the spectrum management and auction 
policies of the FCC. Third, removing the MDS/ITFS bands from further 
consideration in the 3G proceedings will result in immediate and 
tangible benefits to the American public and provide, among other 
things, a competitive alternative to the digital subscriber line 
(``DSL'') and cable modem services of the incumbent local exchange 
carrier (``ILEC'') and cable duopoly, especially in rural America where 
few broadband options currently exist. I would like to talk briefly 
about each of these points.

                         THE RECORD AT THE FCC

    MDS and ITFS spectrum has been the subject of extensive studies and 
proceedings for possible reallocation to 3G mobile wireless carriers 
for almost a year. During this time, the FCC has placed the spectrum 
under a microscope. The FCC staff issued an Interim Report on MDS and 
ITFS spectrum in November 2000, a Notice of Proposed Rulemaking in 
January 2001 and a Final Report in March 2001. The FCC requested public 
comment on each of these items, and voluminous comments, reply comments 
and ex parte submissions were placed into the FCC record.
    After months of study and analysis there is nothing in the FCC 
record that supports reallocating MDS/ITFS spectrum for 3G mobile 
service. Indeed, the Final Report released by the FCC staff on March 
31, 2001 demonstrates conclusively that the fixed wireless services 
provided over MDS/ITFS spectrum should not be sacrificed for the 
benefit of 3G mobile services. I would like to highlight just a few of 
the findings from the Final Report for you today.
    The FCC staff found that the ``MDS industry has invested several 
billion dollars to develop the band for fixed wireless data systems,'' 
and that ``these systems will provide a significant opportunity for 
further competition with cable and digital subscriber line (DSL) 
services and deliver broadband services to rural America.'' Final 
Report at 13.
    The FCC staff acknowledged there was ``no readily identifiable 
alternative frequency band that could accommodate a substantial 
relocation of the incumbent operations in the 2500-2690 band.'' It also 
found that relocation ``to higher bands could affect significantly the 
economics of current and planned ITFS and MDS systems and lessen their 
ability to provide service in rural areas or smaller markets.'' Final 
Report at iii.
    With regard to ``segmenting'' or dividing the bands for 3G 
services, the Final Report found that ``delivery of fixed broadband 
wireless services to the public and educational users would be delayed, 
and in rural areas or smaller markets, may never be realized.'' Final 
Report at 92-93.
    The FCC determined that sharing the MDS and ITFS bands with 3G 
systems was technically infeasible. Final Report at 36.
    And finally, regarding the educational licensees with whom we share 
our spectrum, the FCC staff found that such licensees ``make extensive 
use of their spectrum to provide formal classroom instruction, distance 
learning, and video conference capability to a wide variety of 
educational users throughout the nation.'' Final Report at 13.
    In addition to these findings, the record established at the FCC 
shows that the MDS/ITFS bands are not the preferred bands for 3G 
services. Rather, the record demonstrates that the 3G community prefers 
the 1.7 GHz band allocated for government use. In addition, there is 
other spectrum in a wide variety of bands that may be considered for 3G 
services, including the 700 MHz, 2110-2150 MHz and 1990-2025/2165-2200 
MHz bands. Given that nothing in the FCC record credibly supports 
reallocation of our bands, that 3G proponents prefer other parts of the 
spectrum and that the FCC may identify alternative spectrum for 3G 
services, I respectfully submit that there is no good reason to 
continue to hold our spectrum hostage and further delay a decision 
while the FCC explores other more desirable options.

                          SPECTRUM MANAGEMENT

    A second reason for removing MDS/ITFS spectrum from further 
consideration for 3G services is that it will bring renewed certainty 
and credibility to the FCC's spectrum management and auction policies. 
A bit of history about MDS and ITFS spectrum will help put this point 
into perspective.
    As originally licensed, MDS and ITFS spectrum was used primarily 
for one-way analog video programming. Commercial MDS providers, 
including Nucentrix, used the spectrum to provide so-called ``wireless 
cable'' services to consumers, and their educational ITFS partners used 
the spectrum to deliver one-way educational programming to classrooms.
    However, in late 1998, after a lengthy and complex rulemaking 
proceeding, the FCC issued new rules that would permit MDS/ITFS 
licensees to use their channels for a wide array of digital two-way 
data, voice and video services. The new FCC rules marked a significant 
milestone in the evolution of our spectrum. Among other things, these 
new two-way rules were intended to spur competition in the market for 
high-speed Internet access and data communications services. They were 
also intended to help ITFS licensees whose educational needs 
increasingly required broadband access.
    In reliance on the FCC's rules and policies, the MDS industry 
invested billions of dollars acquiring spectrum, preparing and filing 
complex two-way license applications with the FCC, developing next 
generation equipment, and planning and building the infrastructure 
needed to offer broadband wireless service to the public. In August of 
last year, Nucentrix filed over 400 applications with the FCC to 
provide broadband service in 70 markets. Just a few months ago, we 
began to receive FCC licenses for these markets, and now have approval 
for over 90% of our applications filed, covering more than 60 markets.
    The issuance of these licenses should be good news for Nucentrix 
and the millions of residents and thousands of businesses in our 
service areas. However, the news is not good because the cloud of 
uncertainty that hangs over MDS and ITFS spectrum as a result of the 
search for more 3G spectrum has chilled the capital investment 
Nucentrix needs to build new networks in unserved and underserved 
communities. Protracted uncertainty may chill investment permanently.
    This is fundamentally unfair. The FCC encouraged companies like 
Nucentrix to invest in MDS/ITFS spectrum and networks. The FCC 
encouraged educators, commercial service providers and equipment 
manufacturers to invest in the very expensive conversion of this 
spectrum from one-way analog video to two-way digital broadband 
service. Now, just as the services contemplated by the FCC are being 
rolled out, we are frozen in our tracks because the 3G proceeding has 
chilled the capital investment we need to build out our networks. After 
months of study and no support for continuing to include MDS/ITFS 
spectrum in the FCC proceedings, the MDS/ITFS community deserves a 
resolution of this issue.
    Mr. Chairman, there is another problem that I must mention. 
Nucentrix and other commercial operators purchased many of their MDS 
licenses at auction. Among other things, we paid for the exclusive 
right to provide fixed wireless services within our Basic Trading 
Areas. We are now facing the possibility of losing the licenses we 
purchased at auction mid-way through the term of the authorizations, 
and only months after receiving licenses for two-way digital services. 
If winning bidders at spectrum auctions cannot be guaranteed, with 
reasonable certainty, that the government will honor its commitments 
and allow them to operate their licenses for the full term, the 
credibility of the auction process will be irreparably destroyed. 
Certainty and stability must be maintained in formulating and 
implementing spectrum management policies.

                            PUBLIC BENEFITS

    A third reason for removing our spectrum from further consideration 
is that such action will provide immediate and concrete benefits to the 
American public.
    Competition and Broadband to Rural America. Removing MDS/ITFS 
spectrum from further consideration in the 3G proceeding will unleash a 
compelling competitive alternative to the ILEC-DSL and cable duopoly, 
especially in rural America, consistent with the mandate of Congress in 
the 1996 Telecommunications Act. The fixed wireless systems being 
deployed by Nucentrix and other MDS operators can cover up to a 3,800 
square mile area from a single tower and offer symmetric transmission 
speeds of between 256 Kbps to 1.5 Mbps. These vast coverage areas and 
high data rates are ideal for serving rural areas that, in many cases, 
are unable to receive any wireline broadband service offerings.
    The FCC recognized the unique opportunity provided by MDS and ITFS 
spectrum in a November 2000 report, when the FCC stated that in rural 
or otherwise underserved markets in this country, ITFS and MDS 
licensees may be the sole provider of broadband service. In a report to 
the Texas legislature in January 2001, the Texas PUC concluded that the 
last mile to the residential customer remains the largest constraint on 
the availability of broadband services, particularly in rural areas 
where low population densities and longer distances make it too 
expensive to deploy wireline services. The Texas PUC also found that 
(i) there are no competitive local exchange carriers providing DSL 
access lines in rural areas in Texas, (ii) ILECs have largely ignored 
rural subscribers and (iii) only 5% of rural counties in Texas have 
cable modem service.
    Five years after passage of the Telecommunications Act of 1996, the 
availability of affordable broadband in rural America remains limited. 
In our markets like Midland and Tyler, Texas, Tulsa and Stillwater, 
Oklahoma, Columbia and Springfield, Missouri, and Champaign and Peoria, 
Illinois, consumers and small businesses have few, if any, affordable 
broadband options. In markets like these, Nucentrix's fixed wireless 
service is likely to be the only broadband service available to many of 
the homes, offices, schools, hospitals, and community centers for the 
foreseeable future.
    To date, the chief way alternative broadband service providers 
could compete with the ILEC and cable duopoly was to buy services from 
their competitor and resell them. That model has failed as many 
competitive local exchange carriers have gone bankrupt or closed their 
doors. As competition has dwindled, consumer prices have risen. 
Recently, several of the large ILECs announced simultaneous price 
increases of up to 25% for their DSL service. These ILECs also have 
mobile wireless affiliates that demand more spectrum for 3G services. 
Without a facilities-based competitive broadband alternative that can 
completely bypass the ILEC-DSL and cable facilities, like fixed 
wireless, the duopoly has no incentive to lower prices. The benefits of 
competition in the broadband services market will not be realized 
without an alternative to the services offered by the duopoly. Fixed 
broadband wireless services offered in the MDS/ITFS spectrum can be 
that alternative.
    Equal Access To Information Technology. Facilitating the deployment 
of fixed wireless services in the MDS/ITFS bands also promotes equal 
access to all information technology for all Americans. The dramatic 
difference in broadband access between urban and rural America, and 
between affluent and poor Americans, has been identified and addressed 
in a series of NTIA publications. NTIA estimates that those who are 
poor and live in rural areas are about 20 times more likely to be left 
behind than wealthier residents of urban areas. As I mentioned earlier, 
in Texas for example, where approximately one-third of Nucentrix's 
markets are located, there are no competitive local exchange carriers 
providing DSL access lines in rural areas, and ILECs have largely 
ignored rural subscribers. The deployment of advanced fixed wireless 
services in the MDS/ITFS bands will help close this information 
technology gap.
    Important Educational Initiatives. Finally, rapid deployment of 
broadband services in the MDS/ITFS bands will help ensure the success 
of the important educational initiatives that are currently underway. 
Nucentrix has over 400 ITFS partners, consisting primarily of local 
independent school districts, small colleges and universities and 
faith-based educational organizations in rural areas. Nucentrix and 
other MDS operators contribute directly to the support of education, 
and supply the infrastructure to enable schools to satisfy their 
broadband and distance learning requirements. Today, by incorporating 
broadband technology into their curricula, educators are building plans 
to deliver multimedia, interactive, self-paced instruction to students 
at all levels and in all settings--urban and rural, rich and poor.

                           WE NEED YOUR HELP

    I want to thank you for holding this important hearing. I realize 
that the FCC, Congress and the Administration are faced with critical 
and complex decisions regarding how best to accommodate spectrum 
capacity demands of constantly evolving wireless technologies. 
Nucentrix does not disagree that some amount of additional spectrum may 
be necessary for transitioning existing mobile services to the 3G 
standard in the future. However, we do not believe that finding 
additional spectrum should come at the expense of fixed wireless 
broadband services that provide the only feasible solution for 
providing ubiquitous broadband service throughout the United States and 
that support the critical educational programs of our ITFS partners.
    I respectfully ask for your support to remove the MDS/ITFS bands 
from consideration in the 3G proceedings. The record at the FCC simply 
does not support reallocation or relocation of these bands for 3G. Yet, 
the regulatory uncertainty that hangs over this spectrum has shut down 
new investment and prevented companies like Nucentrix from building out 
broadband networks in rural and underserved communities. Please, don't 
allow the important broadband and educational services being provided 
over this spectrum to continue to be held hostage to efforts to find 
more spectrum for commercial 3G services.
    Thank you for the opportunity to testify today.

    Senator Inouye. Mr. Kelley.

         STATEMENT OF MARK C. KELLEY, CHIEF TECHNICAL 
           OFFICER, LEAP WIRELESS INTERNATIONAL, INC.

    Mr. Kelley. Thank you, Mr. Chairman, Members of the 
Subcommittee, for the opportunity to speak here today before 
you. My name is Mark Kelley. I am the Chief Technical Officer 
of Leap Wireless in San Diego. All of you are familiar with 
AT&T, Verizon, Cingular and other large wireless carriers. You 
are probably also familiar with large trade organizations such 
as the CTIA, but most likely, you are not familiar with Leap 
Wireless. Briefly, we provide unlimited local mobile phone use 
for a very low price. Our customers' average bill is about half 
of the national average for mobile phone bills, however, our 
subscribers use their Cricket mobile phones far more on average 
than other wireless carriers, about 1,100 minutes per month of 
use versus an average of around 300 nationwide. The average 
bill for our subscribers is $35 a month. We offer a $29.95 
unlimited use plan.
    Clearly we are more of a land line replacement than a 
classic mobile phone company. We provide the service using only 
10 to 15 megahertz of spectrum and we are deploying 3G this 
year and next. I have a few simple messages again. The first is 
as Mr. Strigl said, the United States is a world leader in 3G 
technology. An area we are not ahead in is adoption. Adoption 
is behind other areas in the world. One of the reasons for 
that, of course, is we have a fantastic land line network. 
Another reason is there is not enough opportunity for companies 
like Leap to innovate and offer plans like we do. Innovation 
was a key for Leap, could be a key to others.
    What we do is what several Members spoke of and the 
Chairman in the discussion prior to this, which was about 
efficient use of spectrum. We are using incredibly efficient 
spectrum technology. It is a very scarce public resource, only 
about 2,000 megahertz are available. We believe that all 
carriers should be required to use spectrum as efficiently as 
we do.
    As I said, we are going to deploy 3G this year and the 
technology we are using, CDMA 2000 has a couple components to 
it. One component is called 1 XRTT. It gives you 3G like data 
speeds for fully mobile environments. The New England component 
is 1 XEV data optimized. That component can provide over 2 
megabits a second in fixed and some local environments. We are 
going to deploy that early next year.
    When it comes to evolving technology and growing, the best 
way to do it is a way that is truly evolutionary. Kind of the 
way color television was using the same spectrum as black and 
white, but people did not have to go out if they couldn't 
afford to and get a new TV to watch the same channels. People 
who could afford a color TV could see it in color. What we are 
doing with 3G, we will use the same spectrum we are using today 
for 3G. For people who do not have new handsets, they won't 
have the new services. For people who can afford the new ones, 
the new services will become available to them. We are doing 
that with 10 to 15 megahertz of spectrum that we own today.
    Using and releasing more spectrum for commercial use does 
make sense when it serves the national interest. It does that 
when efficient use is made of all the spectrum, all the 
spectrum and all the markets. One way that the FCC has 
encouraged people to use the efficient spectrum is via a 
mechanism called a spectrum cap. The spectrum cap only allows 
any single carrier to own 45 megahertz in an urban market and 
55 in a rural market. That is a lot of spectrum. Keeping that 
cap will protect consumers. In the spectrum that we are using 
today, we will be able to allow 3G and accommodate big and 
small markets. It would take more spectrum to accommodate 
higher density population markets.
    So our final message is we believe you can do 3G in a 
spectrum that is available today provided everyone is using all 
their spectrum efficiently and that every hertz of spectrum is 
looked at that is available right now for commercial use and it 
is ensured that that is used efficiently. We do not believe 
there is as much of a crisis to get new spectrum in the hands 
of carriers today who already have a lot of spectrum in order 
to do 3G. Thank you.
    Senator Inouye. Thank you very much, Mr. Kelley.
    [The prepared statement of Mr. Kelley follows:]

  Prepared Statement of Mark C. Kelley, Chief Technical Officer, Leap 
                      Wireless International, Inc.

    Mr. Chairman and Members of the Commerce Committee: Thank you for 
the opportunity to appear before you today. I am Mark C. Kelley, Chief 
Technical Officer for Leap Wireless International, a San Diego-based 
wireless communication carrier. Leap provides wireless service under 
our Cricket Communications brand in over 20 markets, including markets 
in Nevada, Louisiana, Tennessee, Oregon, Georgia, North Carolina, 
California and may other markets across the US. We are a new, and we 
believe quite innovative, carrier.
    All of you are familiar with AT&T, Verizon, Cingular and the other 
large wireless carriers. You may also be familiar with the leading 
industry trade organization, CTIA, but you most likely have never heard 
of Leap. We provide unlimited local mobile phone use for a very low 
fixed monthly price. Our customers' average bill is about half the 
national average for mobile phone bills. However, our subscribers use 
their Cricket mobile phones far more on average than other wireless 
carriers--1,100 minutes per month, compared with an industry average 
300 minutes. Clearly we are more of a landline replacement than a 
classic mobile phone company. We provide this service using only 10 to 
15 MHz of spectrum--total.
    Our message to this Subcommittee is very simple. First, we believe 
the Subcommittee needs to understand the facts about 3G services, and 
the spectrum required to deliver those services. Second, we believe 
that the best use of scarce wireless spectrum is to have a holistic 
approach that focuses on competition-driven innovation and efficient 
spectrum use.
    Let me first speak about technology. First generation mobile 
services were essentially putting two-way analog FM radios in small, 
mobile packages. This technology served its purpose and is still in use 
today. Second generation mobile technology was essentially a digital 
version of first generation. This ``generational'' shift provided 
higher capacity, security and the ability to transmit digital data 
directly. This dominant digital technology takes several flavors--
European created GSM technology and US created TDMA and CDMA 
technology.
    We are now at the point of another technology shift to Third 
Generation technology. The primary driver of this shift is to desire 
provide higher data speeds, and when possible, higher voice capacity. 
The overall requirements of 3G services are universal: to provide 144 
Kbps data speed for vehicular speed service and up to 2000 Kbps for 
fixed applications; speeds comparable with landline broadband services. 
While there were several quite different technical approaches to meet 
second-generation requirements--which were quite different around the 
world--there is one fundamental approach to third generation--CDMA 
technology pioneered here in the U.S.
    There are two flavors of this 3G CDMA technology. One flavor is an 
evolutionary growth for carriers who currently use US CDMA as their 
second-generation technology, such as Leap, Verizon, Sprint and others. 
That flavor is called cdma2000. cdma2000 will be rolled out in several 
phases.
    The first phase of this third-generation technology will provide 
over 144 Kbps data rate (high speed wireless data) for vehicular speed 
applications. At the same time, this technology will nearly double the 
amount of voice phone calls that can be carried across a fixed amount 
of spectrum. That is to say, it nearly double today's voice capacity. 
Leap and several other carriers will be deploying this first phase of 
3G technology later this year, using our existing spectrum.
    I'd like to take a moment to discuss voice capacity. Carriers using 
the US developed CDMA second-generation digital technology enjoy a 
three to four times voice capacity advantage over those using GSM 
technology--assuming the same amount of spectrum. Stated differently, a 
carrier using GSM technology needs three or four times the amount of 
spectrum to carry the same amount of calls as does a 2G CDMA carrier. 
This ``voice capacity'' gap will continue to increase as we follow our 
different technology paths. Indeed, after rolling out the first phase 
of 3G the capacity gap will be more like ten times the voice capacity.
    The second phase of cdma2000 is focused on high mobile data speed. 
It will provide fixed data speeds of up to 2,400 Kbps--over 100 times 
faster than is available today. This technology will likely spur rapid 
wireless broadband data penetration where it is deployed. We at Leap 
plan to deploy this second phase of 3G early next year in several 
markets. We will be deploying these two phases of 3G in our existing 
spectrum, which as I mentioned is primarily bands of 10 MHz and 15 MHz 
total.
    The reason we are able to deploy 3G technology here in the United 
States during the next 12 months is due to the technology path we have 
chosen--cdma2000--which was developed here in the U.S., precisely to 
address the capacity needs that U.S. engineers knew would exist in this 
country.
    There is another flavor of CDMA technology that will be used for 3G 
called WCDMA. WCDMA stands for Wideband CDMA, so called because of the 
wide channels that it uses. Unlike cdma2000, WCDMA requires large new 
swaths of virgin spectrum to launch even a single channel.
    WCDMA has been described by its developers as the ``world 
standard'' 3G technology. It was developed by Europeans to be put in 
the new spectrum they auctioned last year. WCDMA is the ``evolution 
path'' for European-designed second generation GSM technology.
    If you believed some of the press reports and marketing materials 
you would think that the U.S. is behind Europe because we have not yet 
cleared out sufficient spectrum so that carriers would be able to 
deploy this flavor of technology. The glaring irony here is that the 
U.S. flavor of technology outshines the European flavor no matter how 
you measure it from a technological perspective, and yet some here in 
the U.S. who have chosen the less efficient European path complain that 
somehow the U.S. will ``fall behind'' Europe and Asia if we don't 
follow their lead.
    But the European rush to 3G has, so far anyway, been a 
disappointment--with frequent reports of new delays in deployment. This 
is a result that must be avoided. Prudent spectrum management will 
accomplish goals in the national interest by maximizing efficiency and 
spurring competition. What matters most is not how much spectrum is 
made available, but how that spectrum is used.
    Technology needs to be tried, tested, improved and made reliable 
before it is ready for widespread commercial use. And the best 
technology path is one with a painless evolution from existing 
standards into new standards without requiring excessive cost and lots 
of new spectrum. For example, when color TV was introduced there was no 
need to clear out lots of new spectrum--the technology allowed the 
color portion fit into the existing spectrum. Additionally, the system 
was backward compatible so that folks who could not afford a new color 
TV right away could still use their black and white TV while viewing 
the same signal. The wireless technology path that Leap and some other 
US companies are using does the same thing--it permits second and third 
generation technologies to co-exist in the same band, efficiently.
    The ability--and the need--to innovate and compete, to try new 
businesses and new technology, has made ours the greatest economy in 
the world. The fact that U.S. engineers developed CDMA in the first 
place is testimony to that. Businesses will innovate when they need to.
    Consider the Internet, where we've recently seen great innovation. 
Now, only the strongest, most innovative, are surviving. The attractive 
aspect of the Internet for innovation is that the so-called ``barriers 
to entry'' are low. A few software engineers, some computers and office 
space and you're off to the races.
    The same cannot be said of wireless services. The barriers to entry 
there are high--and in some cases literally insurmountable--because the 
available spectrum is held primarily by a small set of very large 
carriers. And when they hold all the spectrum, they can exclude others. 
This stifles competition, and it stifles innovation.
    The FCC has a policy that promotes competition, while also forcing 
carriers to use spectrum efficiently. That policy is the spectrum cap, 
which prohibits a single carrier from holding more than one-fourth of 
the total spectrum available for use. The spectrum cap is a good 
policy. It leaves room for innovators like Leap, and it ensures that 
carriers use spectrum efficiently.
    While some carriers complain about the cap, in fact the current 
spectrum cap of 45 MHz is an extraordinary amount of spectrum. We at 
Leap are providing full PCS service, with an average of 1,100 minutes 
of use per month with 10-15 MHz of spectrum. We could provide unlimited 
service to every single human being in our service area with about 25 
MHz of spectrum. And I'm not sure I'd really know what to do with 45 
MHz.
    It's true that some foreign carriers have over 60 MHz of spectrum. 
But beware of analogies to situations that are not analogous. The 
population density here in the U.S. is around about one-tenth that of 
Europe. Likewise, relatively inferior wireline service there has led to 
greater use of wireless as an alternative. When you combine the use of 
relatively inefficient GSM technology with higher population densities 
and greater usage, it is clear that foreign carriers would need 
significantly more spectrum than the their U.S. counterparts.
    Does that mean that Leap believes no new spectrum is ever needed 
for commercial mobile use here in the U.S.? No. We are frustrated by 
the fact that we are currently not able to offer our innovative Cricket 
service in our own headquarters--the city of San Diego, and other 
places in the U.S. We believe that Congress and the FCC should work to 
make spectrum available, and should ensure that spectrum is used 
efficiently, by the maximum number of competitors.
    However, we are concerned if spectrum management is hastily 
performed for the purpose of ``not falling behind'' some imaginary lead 
held by some other countries, that will make the U.S.'s competitive 
situation worse, not better. Congress and the FCC should ensure that 
what spectrum we have is used efficiently.
    In summary, I would like to reiterate that the U.S. has a 
technology lead in wireless; we are not behind anybody. And Congress 
should be skeptical of any claims that carriers need vast swaths of new 
spectrum to deploy third generation technology: Leap will deploy 3G 
services within the next 12 months, using small amounts of spectrum 
that it already has. Our spectrum policy should focus on innovation 
through competition, and should encourage the efficient use of this 
scarce public resource.

    Senator Inouye. Mr. Wheeler.

  STATEMENT OF THOMAS E. WHEELER, PRESIDENT AND CEO, CELLULAR 
                TELECOMMUNICATIONS AND INTERNET 
                          ASSOCIATION

    Mr. Wheeler. Thank you very much, Mr. Chairman. There is a 
spectrum shortage in this country. Technology is part of the 
solution, but it is not all of the solution. And let me say at 
the outset in response to the previous panel, we stipulate, 
clearly, we all are Americans first. We all recognize that we 
have the best military in the world, and we want to keep it 
that way. The challenge that we face is both for the economy 
and for the military in the long term, as well as the short 
term. We can show you a couple of examples.
    This is an overview of where we stand as a Nation today. In 
terms of our spectrum availability, compared to our 
international competitors, and as you can see, we are 
significantly lagging behind where the other countries who are 
developing services, developing technologies, and expanding 
their reach are in terms of their base. Now, the question 
becomes where do we go from here? Unfortunately, the story gets 
worse. Let us look at the next chart for a second here.
    You have been talking about the ITU, Mr. Chairman, and 
their forecasts. The ITU says that for this country, there is a 
need for 390 megahertz to deliver both voice and data. Now, 
that is less than they say is needed in Europe, Asia and some 
other places because of our geography and some of these other 
factors. But here's the real startling fact in that statistic.
    See this dot right here? That was the penetration that the 
ITU assumed would drive the spectrum needs. The yellow line, 
however, is the penetration expectations and forecasts of the 
market analysts, so the problem is that what this is saying is 
that even if 200 megahertz of spectrum fell into our lap today, 
the assumption upon which the voice component alone is based 
says that that may be insufficient.
    Now, this shortage hits carriers differently. You just 
heard Mr. Kelley, Mr. Strigl, who by the way, use the same CDMA 
technology in their systems. One says I need new spectrum and 
the other says no, he does not. But the important thing is that 
the time is running out. We cannot have a technological debate 
or a using policy to advantage one competitor over another.
    While we are debating, problems are happening around the 
world. Let us take a look at this map, for instance. The green 
represents those countries which either currently have planned 
or have indicated that they intend to offer wireless services 
in the 1710-1850 megahertz. Now, you heard Dr. Wells say that 
China was going to 2400 megahertz as well, yet it is green on 
this chart. The answer is yes to both. China has indicated they 
are using the 1700 to 1850 band, as well as looking at using 
the other band as well, but the point of the matter is that the 
United States of all of the major countries of the world is the 
entity that does not have spectrum that is harmonized with the 
rest of the world.
    Now, that has an impact on consumers. Because it means that 
the United States does not participate in the scope and scale 
economies that everybody else, all the other consumers and 
their companies in those other countries, participate in. It 
means higher rates for equipment. It means lower, slower 
development and introduction of new products. I mean, I am sure 
you are as sick as I am of the articles that say why is it the 
United States is behind the rest of the world in terms of 
wireless services? Spectrum is one of the issues, and the lack 
of harmonized spectrum is the other issue. But the other part 
is this has a huge impact on the military, because we have a 
forward, we have a forward deployed military. And when they go 
to these green countries, what do they find?
    This is what the Defense Department in their report on 
spectrum said. And they said that they have already found that 
when they deploy in Europe, that there is interference coming 
from wireless usage because those bands have been assigned by 
the European governments to wireless. In Korea, team spirit, 
the operation Dr. Wells talked about, had to knock off of the 
air some of the Korean cellular network in order to be able to 
operate American radio networks, and it is not going to get 
better, because if you flip this over, this is what the growth 
looks like of wireless subscribers around the world. And while 
there is a problem today, there is going to be a huge problem 
tomorrow, as you have hundreds of millions of consumers 
operating in the spectrum that our Defense Department is going 
to deploy in. This is a problem that is recognized by the 
Defense Department. Here is a report that was published 
recently, November, I believe, by the Defense Science Board, 
which as you know is the think tank of the Defense Department.
    Look what they said. This may be too fine to read from up 
there, but let me just highlight here, the current defensive 
nature of DOD's spectrum policy and its reluctance to consider 
alternative spectrum concepts, including sharing with non-
Defense users, leaves the military vulnerable to losing mission 
critical spectrum access. These important changes are not well 
understood by DOD leadership, and here is the most incredible 
sentence right here. Other nations are aggressively asserting 
their sovereign rights to manage their own spectrum, 
complicated OCONUS, outside the United States, deployments. 
This is the Department of Defense's own think tank saying that 
the lack of harmonized spectrum is a problem for our soldiers, 
sailors and airmen. That is the current reality.
    The current reality in the industry is that the lack of 
harmonized spectrum means that our consumers and our 
international competitiveness is going to get worse. Our 
military situation is getting worse. Our competitiveness and 
our consumer situation is getting worse. There has to be a 
common solution here. There has got to be a fix to this, 
because we are both on the shore. There has to be a win-win. I 
would suggest that I was really heartened by Dr. Wells' 
testimony, and by some of the material that DOD has prepared in 
their own spectrum report because they suggest themselves that 
there are solutions. This is a reprint from the Defense 
Department's own spectrum report. I want to call your attention 
to this section right here.
    Band vacation may be feasible under the following 
conditions. No. 1, requires provision of comparable spectrum. 
We agree. There needs to be comparable spectrum. There can be 
comparable spectrum. No. 2, requires timely cost reimbursement. 
We agree. Senator Stevens talked about the value of the 
spectrum that would be auctioned off. We agree that ought to go 
to the Defense Department, directly, do not pass go. No. 3, 
requires respect for DOD timelines to vacate. We agree with 
that, that we do not, we are not here asking you, Senators, for 
200 megahertz just to land tomorrow, but a plan that says how 
do we work through that with the Defense Department. We think 
that these dates that they put in are a little tardy. But that 
a plan can work through this.
    And in that regard, again, I want to focus on Dr. Wells' 
comment that he said several times as I heard him that he was 
eager to move forward on this, and he said that there were 
solutions. Let us emphasize that the glass is half full, that 
there are solutions. And to close, let me just show you a chart 
that reflects some of those solutions as identified by the 
Defense Department.
    In their spectrum report, they went through and they said 
OK, here are all the current bands that we are using. If we had 
to move, where can we move, and they identified these bands. I 
want to be really clear and say that this is not like picking 
up and changing the place you park your car. That there is 
regulatory work that needs to be done. There is coordination 
that needs to be done. There is clearly lots that needs to be 
done. But they have identified where it can go. And what the 
industry is saying is that with this kind of a migratory plan 
that will solve the Defense Department's international 
interference problems, that will create capacity for domestic 
wireless services, and that will generate revenue to fund these 
movements of the DOD, and to make sure that the communications, 
instead of being the tail on the dog in military spending, is 
leading the charge, that is possible and that is the kind of 
win-win situation that we believe we can all work toward 
together. It is not going to be easy, but it is possible if we 
will all bow our backs. Thank you, sir.
    Senator Inouye. Thank you very much, Mr. Wheeler.
    [The prepared statement of Mr. Wheeler follows:]

      Prepared Statement of Thomas E. Wheeler, President and CEO, 
          Cellular Telecommunications and Internet Association

    Mr. Chairman and Members of the Subcommittee: Thank you for the 
opportunity to appear before you today. I am Thomas E. Wheeler, 
President and CEO of the Cellular Telecommunications & Internet 
Association (CTIA) representing all categories of commercial wireless 
telecommunications carriers, including cellular and personal 
communications services (PCS).\1\
---------------------------------------------------------------------------
    \1\ CTIA is the international organization which represents all 
elements of the Commercial Mobile Radio Service (CMRS) industry, 
including providers of cellular, enhanced specialized mobile radio, 
personal communications services and wireless data services and 
products. CTIA has over 750 total members including domestic and 
international carriers, resellers, and manufacturers of wireless 
telecommunications equipment. CTIA's members provide services in all 
734 cellular markets in the United States and personal communications 
services in all 50 major trading areas, which together cover 95% of the 
U.S. population.
---------------------------------------------------------------------------
    As we look to the challenges of American national security at the 
dawn of the 21st century, it is increasingly apparent that our security 
is dependent upon not only traditional military capabilities, but also 
the strength of our economic competitiveness at home and abroad. We 
presently find ourselves challenged to upgrade military systems and to 
supply each and every one of our fighting men and women every 
technological advantage possible. We also find ourselves challenged to 
maintain our position as world leaders in technology, especially as the 
world prepares to debut the next generation of the wireless Internet. 
At few times in this Nation's history have the solutions to both these 
challenges been more closely intertwined.
    Economically, the reason the United States leads the world in 
Internet technology and services is because we had a ``home-field 
advantage'' at the Net's inception. A well-developed Internet backbone 
enabled companies like Yahoo to test an idea and then go quickly to 
scale. Our international economic competitors, however, have learned 
from that experience and are seeking to build their own ``home-field 
advantage'' for the next generation of the Internet--the wireless 
Internet. In countries like Japan, Germany, Great Britain and France, 
the governments have made available blocks of spectrum for next 
generation wireless services that approximately double the amount of 
spectrum the U.S. government has made available to its wireless 
industry. Our competitors' plan is transparent: control the next 
generation of Internet products and services by giving non-U.S. 
companies access to the pathway necessary to deliver those products and 
services.
    Militarily, there is almost uniform agreement that the new 
battlefield will increasingly be an information battlefield. Satellite 
infrared imaging, for instance, will enable soldiers to see behind the 
next hill. Real time intelligence updates and maps will show the 
enemy's latest positions. Leaders on the ground will have voice and 
data communications with superiors as well as with their own troops. 
Information superiority becomes a force multiplier for whoever is able 
to communicate best. Unless our soldiers are going to be dragging wires 
behind them as they deploy, these capabilities are all going to require 
the airwaves for their delivery.
    The problem is that the airwaves that the rest of the world is 
allocating or otherwise plans to use for expanded wireless services are 
the very same spectrum that the American military utilizes for its 
communications. In the next 5 years the ability of the American 
military to deploy or train abroad will be compromised by hundreds of 
millions of consumers using wireless devices in the spectrum to which 
U.S. military radios are tuned. Already the growth of wireless 
technology abroad has begun to impact U.S. military capabilities. A 
recent Department of Defense analysis reported on the ``nonavailability 
of alternate [spectrum] bands to provide the high-end frequency 
component'' of command and control systems. The reason these airwaves 
were not available, according to the report, was the growth of mobile 
phones. Decisions already made by other countries have, are, and will 
affect our national security capabilities for years to come.
    The seriousness of this situation was exemplified in the joint 
U.S.-Korean training exercise ``Team Spirit'' held in late 1999. In 
order for the U.S. radios to work, several channels of the Korean 
cellular network had to be shut down. According to a May 22, 2000 
article in Aviation Week & Space Technology, ``There are some U.S. 
weapons that currently aren't allowed to operate in South Korea out of 
fear they would interfere with civilian systems.'' No wonder Major 
General J. D. Bryan, Vice Director of the Defense Information Systems 
Agency, recently warned, ``If we're not real careful, we face chaos in 
the wireless environment.''
    The U.S. military is a forward-deployed force whose international 
assignments will increasingly be hindered by the conflict between 
airwave assignments made at home and those made abroad. In a ``double 
whammy'' affecting both U.S. military and economic security, the 
governments of the world simply changed the rules. For the purpose of 
spurring Internet-related growth, they reallocated to wireless phone 
use vast amounts of the very same piece of the airwaves the U.S. 
military relies upon for its communications because that is what has 
been assigned to it here at home.
    Fortunately, there appear to be solutions. Some solutions may be 
more costly than others--but not as costly to our national defense as 
losing the opportunity to modernize and upgrade older military 
equipment. Deploying new spectrum-hopping, frequency agile radios for 
both ground and air tactical communications could help solve some 
problems. By tuning across a wider band and then having the flexibility 
to jump from one frequency to another as conditions warrant, these new 
radios may solve the problem for our tactical ground troops and 
aircraft. An area requiring more patience is in satellite 
communications. With a fifteen-year average life, the lead-time for 
frequency changes in satellites is longer, but no less manageable.
    At a time of concern over budget-busting defense spending, the 
world's reallocation into domestic U.S. military frequencies 
paradoxically provides a solution. Because the rest of the world is 
rapidly increasing the number of wireless users in these same 
frequencies, the U.S. wireless industry would like to use them as well. 
Should the Federal Government decide to reassign the military to other 
spectrum and auction these airwaves, the resulting billions of dollars 
could pay for both the move to new frequency and the necessary upgrades 
to strategic and tactical equipment. There are 95 megahertz (MHz) of 
DoD spectrum in the 1755-1850 MHz band allocated to mobile use by the 
rest of the world. A recent U.S. auction of spectrum blocks ranging 
from 25 to 30 MHz and covering only about 60% of the population, 
generated over $17 billion from wireless carriers. The Department of 
Defense is sitting on a valuable domestic asset whose value can be 
utilized to help solve the military's international spectrum problem.
    This debate over spectrum for advanced mobile services puts a 
spotlight on the urgent need for some fundamental rethinking of our 
nation's spectrum management process. We need to create more positive, 
market-oriented incentives for incumbent users to free up spectrum. And 
we need to create a more efficient spectrum management process that 
focuses more on policy goals than on constituent interests. That does 
not mean that we should ignore the important interests of incumbents, 
especially when they involve crucial national security requirements. It 
means we need to find creative, effective and timely ways of making 
tough spectrum management decisions that leave all affected parties 
leaving the table satisfied that their interests have been addressed.
    One immediate step Congress could take to advance these goals would 
be to pass legislation to ensure that the proceeds of an auction could 
be used by the incumbent to move sooner allowing the auction winner to 
immediately utilize the spectrum acquired. Normally this would entail 
using those proceeds to pay the relocation expenses of the incumbent, 
but in some circumstances the funds could be used to enable the 
incumbent to modify its equipment to share with the new licensed uses. 
Congress might also consider earmarking an additional percentage of the 
auctions' proceeds for the incumbent user, to help give incumbents a 
positive incentive to turn in spectrum for auction. If incumbents were 
guaranteed that their needs would be accommodated and paid for, and 
that they could obtain some additional revenue as well, they would have 
a greatly increased incentive to turn back spectrum that could be 
auctioned. The result in the long run could be not only more efficient 
spectrum management, but higher revenues for the U.S. Treasury. In this 
particular instance, I believe it absolutely imperative the Congress 
guarantee DoD reimbursement funding and additional monetary incentives 
to move, with funds, to modernize and upgrade DoD capabilities. The 
test should be to maintain and enhance capabilities--not fall on your 
sword for a piece of spectrum that will be compromised by the decisions 
of other nations.
    This kind of ``win-win'' requires the implementation of a rational 
spectrum policy. Unfortunately, the United States does not have the 
kind of spectrum policy that would facilitate either this evolution, or 
taking advantage of the potential funding mechanism. In fact, the U.S. 
has no spectrum policy that can effectively deal with such a multi-
faceted problem. What has passed for spectrum policy has been budget 
policy decisions about when to sell pieces of the airwaves in order to 
generate funds for the Treasury. As the Defense Department's Defense 
Science Board has observed, the system is broken. That unfortunate 
situation hurts both military capability and economic competition.
    The seriousness of the spectrum issue to American combativeness and 
competitiveness calls for dedicated solution-oriented efforts by both 
the defense community and the wireless industry. Denying the economic 
viability of next generation wireless services in hopes of forestalling 
the inevitable need to deal with the spectrum crisis is not a solution. 
New technologies never come forth without hiccups. The military saw 
this with the Patriot Missile, Tomahawk Cruise Missile, Abrams Tank and 
Osprey aircraft, and the same will be true of the new technology of the 
wireless Internet. History's message is clear: those who place their 
bets against technological advancement are ``betting on a nag.''
    The wireless industry is most fortunate that this Administration 
has taken several bold steps to correct a decade-long refusal to make 
tough decisions. Secretary Evans just last week directed the National 
Telecommunications and Information Administration to work with the FCC 
to develop a new plan for (3-G) advanced mobile services. Secretary 
Evans even suggested flexibility in the statutory auction dates for 
1710 to 1755 MHz and 2110 to 2150 MHz may be necessary to implement the 
new spectrum plan. Additionally, over the past 3 months, various 
Executive Branch agencies have been brought together under the able 
direction of the White House NEC and NSC to address the spectrum 
problem. The White House attention to finding a solution to this 
decade-old problem has been most helpful. The industry is encouraged 
that some of the best and brightest minds in the Administration are 
committed to finding a solution that is good for the economy and our 
national security.
    An opportunity appears to exist to demonstrate the good faith 
possibilities of cooperation in the evolution to new military 
technology and continued wireless competitiveness. In recent Capitol 
Hill briefings the Defense Department indicated that approximately half 
of all the Department's spectrum usage for fixed wireless applications 
is by the Army Corps of Engineers to do remote monitoring of water 
levels, alarms and dams. Tying up that spectrum for intermittent 
services that take a quick reading and then report a data burst is not 
only spectrally inefficient; it is probably also overly expensive. 
Throughout America, the wireless industry is providing the exact same 
services on a commercial basis. If the grocery chain Albertson's can 
use commercial wireless networks to monitor and control electricity in 
their stores during the California power emergency, the same should be 
true for the Corps of Engineers to monitor water levels. What's more, 
buying a shared service will no doubt be much lower cost than building 
a stand-alone system with its own allocated airwaves. That spectrum 
then can be sold and the proceeds put into a Defense Department-only 
trust fund for the purpose of paying for the next spectrum move (which, 
in turn, will generate more auction revenue), and for the new 
technology to assure information dominance on the ground, in the air 
and at sea.
    Right now we are at a unique point in time. Most countries are 
reducing their monetary commitments to their military. No other country 
in the world has the available resources, technological know-how and 
the opportunity to up-grade military communications capabilities to 
21st century systems. The U.S military has it within its grasp and 
ability to do what no other country in the world can do in the current 
environment--deploy digital end-to-end encrypted state-of-the art 
communications capabilities. Now is the time to seek a better defense--
and a better economy. Unless we act now things will only become more 
confusing and more intractable. We must not fail to seize upon the win-
win opportunity before us--a second rate communication system is no 
real option for a world leader.

    Senator Inouye. Mr. Cooper.

          STATEMENT OF MARTIN COOPER, CHAIRMAN, CEO, 
                AND CO-FOUNDER, ARRAYCOMM, INC.

    Mr. Cooper. Thank you, Mr. Chairman. Members of the 
Subcommittee. It is really a privilege for me to be here before 
you today, and especially in light that we share the fact that 
I have spent a career of almost 50 years working on spectral 
efficiency and having a distinguished group like this looking 
at this matter is a source of great pleasure to me. It is also 
a great pleasure to be the last on this agenda so that I can 
explain to you what my distinguished colleagues really meant to 
say.
    Let me start by first urging the Subcommittee to ignore the 
technical gobbledygook that the wireless industry, myself 
included, have deluged you with in the past years. I want to 
focus on what your real agenda is. That agenda is the granting 
of rights to a national nonrenewable treasury, the radio 
frequency spectrum. You have the obligation to see that all the 
users of the spectrum collectively serve the public, all the 
public and any result in the way that you allocate that 
spectrum and excludes important constituencies, the public is 
simply wrong.
    When we created cellular some 30 years ago, what we 
envisioned was a personal, portable telephone service that 
unshackled all people from the wires that tied them to their 
homes, to their workplaces. We knew that wireless could deliver 
high-quality speeds at low cost with good reliability to all 
people.
    Further, we promised the FCC, and I was there, and I 
remember this, that cellular technology was capable of 
continuously improving spectral efficiency. Allocate 40 
megahertz to us, we said, and we will grow the service 
indefinitely and we will never come back for more. Well, we did 
come back for more. That initial 40 megahertz has grown to 170 
megahertz, and here we are asking for more.
    Today, if the industry, if the wireless industry proposed 
to serve all of the personal traffic in the United States, that 
was our dream. People on the move really do not want to talk 
about wires on telephones, they want to talk on personal 
phones. And if you put all of that traffic on wireless service 
using today's technology, you would use all of the existing 
spectrum. You would use 2,000 megahertz of spectrum and that 
allows no room for further growth and it allows no room for all 
of the various classes of data services that it will consume 
many times more spectrum.
    So that is the real problem of the Subcommittee. If you 
rely on today's technology, the need is not just for another 
100 or 200 megahertz. The demand is for another 2,000 or 4,000 
megahertz, and that spectrum simply does not exist. The 
cellular vision that we had 30 years ago remains incomplete 
today. Cellular serves some segments of the population very 
effectively, others poorly, some not at all, so what is the 
answer?
    The only answer is new technology that not only improves, 
that multiplies the spectrum capacity. Technology has come to 
the rescue in the past, properly stimulated, properly 
stimulated, it will come through again and that stimulation is 
the crucial role of this Subcommittee of the Congress, of the 
FCC, of the Department of Commerce. I want to give you some 
examples, because I was fortunate enough to be involved in 
three successful government industry collaboration in the past. 
And the process really does work. In each case, in each of 
these cases, the FCC said that new spectrum would be made 
available to industry, but only if the industry could provide 
new ways of using that spectrum. New spectrally efficient ways 
of doing it.
    The industry responded in the 1960s, paging systems were 
developed that could serve 100,000 subscribers in the same A 
spectrum that previously only hundreds of subscribers could be 
served. In the 1970s, the special multiradio service was 
created, SMRS. The concept of trunky was introduced into land 
mobile and that multiplied the spectrum capability for land 
mobile in excess of 10 times and in the 1980s, cellular 
technology brought public switch service to thousands of 
subscribers on every radio channel that previously had only 
served 100 subscribers and in every case, it was technology 
that came to the rescue. In every case, there was a magic 
bullet, and who stimulated the magic bullets? The vision of 
bodies like the FCC and this Subcommittee, and here we are 
again.
    I suggest that cellular technology needs to be refreshed. 
The new technologies are the basis of that refreshment, and 
these new technologies are ready and waiting and 3G alone does 
not do that. 3G itself is not a new spectrally efficient 
technology. And there is a magic bullet, and that magic bullet, 
it was referred to by the gentleman from the Department of 
Defense, Dr. Wells, is the adaptive smart antenna. Adaptive 
smart antenna array technology, adaptive smart antenna array 
technology has improved. This it not theoretical. It has been 
proven to multiply the use of the spectrum by not just a few 
times, not just by percentages, but by tens of times. It has 
been proved by the deployment of some 90,000 bay stations 
throughout the world today, mostly in Southeast Asia and the 
Middle East, and the nature of that technology was, had its 
source ironically enough in our own Defense Department years 
and years ago.
    Properly stimulated by the continuing oversight of Congress 
and the FCC, this kind of technology cannot only resolve the 
spectrum challenge, but it can also get American technology 
back into the leadership role that it deserves.
    So I want to close my remarks with my vision of the 
personal wireless future. It is a future where technology 
becomes invisible, where the consumer reigns, where the citizen 
reigns, where consumers of all kinds from teenagers to seniors 
to city folks to small towners, from techie early adopters to a 
heart patient whose life is saved by one burst, where all of 
these people and our defense forces have access to all of the 
radio spectrum. Technology can make that happen. You, Senators, 
have the power to make that real. Take your time and do it 
right. Thank you very much.
    Senator Inouye. Thank you very much, Mr. Cooper.
    [The prepared statement of Mr. Cooper follows:]

  Prepared Statement of Martin Cooper, Chairman, CEO, and Co-Founder, 
                            ArrayComm, Inc.

    Mr. Chairman and Members of the Subcommittee, thank you for the 
opportunity to appear before you today. I commend you for holding this 
hearing on spectrum management and Third Generation (3G) wireless--two 
critical issues facing the wireless communications industry today.
    My name is Martin Cooper. I am the Chairman and CEO and Co-Founder 
of ArrayComm, Inc., a U.S.-founded and based technology company 
headquartered in Silicon Valley, California. We founded the company in 
1992 and now have over 200 employees including many renowned 
scientists, engineers, and industry leaders in the field of wireless 
communications.
    Today, I would like to present my views on spectrum allocation, 
including how we can ensure that our nation's scarce spectrum is put to 
its most valuable use, and the need to encourage new technologies and 
the timely deployment of these technologies to all Americans. While 
these technologies originated in American laboratories and were often 
paid for by the Department of Defense, ironically, many are more widely 
deployed abroad than here at home.
    Wireless personal communications have contributed importantly to 
the productivity, safety, and convenience of people in this country 
over the past 60 years, but especially during the most recent 18 years 
of commercial cellular service. I would like to share with the 
Subcommittee the vision that inspired the creation of cellular service, 
to express an opinion on how well we have done in fulfilling that 
vision, and to project that vision into a future that includes the 
Internet.
    Specifically, I would like to make two points relative to this 
Subcommittee and its role in overseeing the Federal Communications 
Commission (FCC) and the Department of Commerce:
    1. Despite enormous progress in the personal communications 
industry, that industry is still in its infancy. Future services will 
require 10 to 20 times the spectrum allocated today. That spectrum just 
does not exist--unless the industry continues to aggressively adopt new 
technology that multiplies capacity of existing spectrum.
    2. 3G is one of a number of new personal communications services, 
each of which will serve different constituencies who have different 
needs. All of these services need to be accommodated in the fixed 
amount of spectrum that is available as limited by physical laws.
    When we created cellular 30 years ago, we envisioned a personal 
portable telephone service that unshackled people, all people, from the 
wires that tied them to their desks, their homes, and their workplaces. 
We knew that wireless technology had the capability of delivering high 
quality speech, at low cost, with good reliability to all the people. 
And further, we promised the FCC, which was a crucial participant in 
the creation of cellular service, that cellular technology was capable 
of continuously improving spectral efficiency. ``Allocate 40 MHz,'' we 
said, ``and we will grow the service indefinitely.''
    Despite the enormous strides made by the industry and the FCC--and 
without question, there has been progress--the cellular vision remains 
incomplete today. Some segments of the population are served 
effectively, others, not at all. Data over cellular pales in comparison 
with data over wireline. Despite the obvious convenience of wireless 
service, those of us who use the service still suffer from the lower 
reliability and higher cost that characterize wireless compared to 
wired service. As a result, although over 100 million people in the 
United States use cellular service, they still, on the average, use 
old-fashioned wired phones for over 90% of their talking and over 99% 
of their Internet access.
    The initial 40 MHz of cellular spectrum has grown to 170 MHz and 
here we are, asking for more. Consider that, with today's technology, 
if the industry proposed to serve all personal traffic, the FCC would 
have to allocate virtually all of the usable spectrum to cellular 
service to the exclusion every other defense and commercial service. 
Not to mention, I add, the demand for new classes of data services that 
will consume, again, with today's technology, far more spectrum than 
voice services.
    And that is the real problem faced by this Subcommittee. If we rely 
on today's technology, the need is not for just another 100 or 200 MHz, 
the demand is for another 2000 or 4000 MHz and that spectrum simply 
does not exist.
    The only answer is new technology that multiplies spectrum 
capacity. Technology has come to the rescue in the past and, properly 
stimulated, it will come through in the future. It is that stimulation 
that is the crucial role for this Subcommittee, Congress, the FCC and 
the Department of Commerce. There are industry standards for automobile 
fuel efficiency--why are there not standards for efficient use of the 
radio spectrum? We have huge reserves of fossil fuels--but only about 
2000 MHz of spectrum that is useful to connect people.
    The message is clear. The demand for more services is going to 
accelerate. People are learning the value of freedom from the wired 
tether and that freedom is every bit as important for the Internet as 
it is for plain old voice service. The only hope for providing this new 
freedom is continuing technological progress. We must, and will, 
continue to extract more and more value from the spectrum, just as we 
have been doing for the hundred odd years since radio was invented. We 
must ensure that our nation's scarce spectrum is put to its most 
valuable use, to enable U.S. telecommunications companies to meet 
consumer demands, and remain competitive globally.
    The wireless industry today stands at a crossroads. The momentum of 
the past 18 years has made mobile connectivity a part of our lifestyle. 
But, this is just the beginning. The next 20 years offer even greater 
promise for the American public and the American economy. But the 
mission has expanded. We started with voice. The technology of the 
entire communications world is now data. Voice is now just one of many 
applications that must be served within a limited amount of spectrum 
and voice is fast becoming a minor part of the demand. The Subcommittee 
Members know, I am certain, that I raise these challenges only because 
I am confident that solutions exist for all of them and I will touch 
briefly on those today.
    Let us look at the issues that this profound change of mission 
raises.

 A BASIC AND SCARCE RESOURCE: THE SPECTRUM ``SWEET SPOT'' FOR MOBILITY 
                                SERVICES

    There is a ``sweet spot'' for the frequencies allocated to mobile 
wireless systems, influenced by the physics of radio-communications, 
which extends from about 500 MHz to 2500 MHz, or about 2000 MHz in 
total. The size of this sweet spot cannot be expected to change 
dramatically over time. We must accept that there will always be 
competing interests for this spectrum, all in one form or another 
important for our country. The decisions made on 3G spectrum must 
include a comprehensive approach to all spectrum allocation in this 
range of frequencies or the problems we face today will resurface every 
few years indefinitely.
    Today, the cellular industry uses about 170 MHz of spectrum between 
850 MHz and 1.9 GHz, or 8.5% of the 2 GHz sweet spot. Let us assume 
that an additional 140 MHz (located between 1710 and 1850 MHz) is 
allocated to the cellular industry, and its share of the sweet spot 
goes to more than 15%. Without passing judgment on whether this is an 
equitable allocation of the sweet spot for this very important 
industry, it is clear that the amount of spectrum available for 
commercial mobile wireless cannot continue to increase without limit, 
given all of the other demands on the spectrum--other commercial, 
scientific, public safety, aviation and defense interests which consume 
a considerable portion of the rest of this frequency range.

               NEW SERVICES ARE MORE SPECTRALLY DEMANDING

    Compounding the difficulty is the fact that many of the new 
services that may be desired by the public and are contemplated by the 
cellular industry require more bandwidth than today's voice and low-
rate data services. The critical issue here is the price at which 
wireless operators can afford to offer new services to consumers. The 
techniques that are most effective at using the spectrum better and 
improving spectral efficiency also reduce deployment and operating 
costs for the carriers that use them.
    Efficient use of the spectrum can lower an operator's costs and 
bring wireless services to constituencies that would otherwise not be 
served.
    Without adequate spectral capacity, there is a risk that advanced 
services will not be available to the public at a price-point that most 
Americans can afford. Congress has already heard from some wireless 
carriers that spectrum shortages could cause their companies to 
increase their prices for cellular voice service. Of course, this is 
true using 30-year old technology. But there are technologies in 
widespread use today that have the opposite effect and carriers will 
soon have access to these technologies--if they are encouraged to adopt 
technologies that use spectrum more efficiently, rather than to solve 
capacity demands with more spectrum.
    There will be no benefit from 3G services to the American economy 
if they are not affordable.

                            ARRAYCOMM, INC.

    ArrayComm, Inc. is the global leader in fully adaptive smart 
antenna-based wireless communications. Our technologies are independent 
of the air-interface. They can work with every generation of cellular 
deployment; in fact, with any personal wireless communication system, 
and we license that technology to manufacturers of wireless 
communications equipment.
    ArrayComm has created one of the key technologies that will form 
the basis of the rescue that I just alluded to. Our technology, called 
IntelliCell, is an advanced form of smart antenna technology that is 
technically called adaptive array processing. A traditional cellular 
base station blankets a wide area with radio energy. Our smart antenna 
technology directs that energy to the person for whom it is intended 
and avoids putting energy in locations where it could interfere with 
others who wish to use a radio channel. This technology can be applied 
to any personal communications system. The result is an increase in the 
number of users, lower deployment costs, higher profitability, fewer 
dropped calls, faster data rates and improved customer satisfaction.
    There are, today, over 80,000 cellular base stations using this 
adaptive smart antenna technology serving many millions of people in 
Asia and the Middle East. In these developments, we have created a 
nine-times improvement in spectral efficiency over systems that were 
already using advanced technology. That is effectively multiplying the 
spectrum used in those systems by nine times. These systems are capable 
of serving nine times more people than earlier versions that did not 
incorporate adaptive smart antennas.
    Our patented IntelliCell technology (also known as a fully adaptive 
``smart antenna'') uses advanced software and antenna arrays to 
continuously optimize, in real time, the communication channel with 
every wireless user. IntelliCell dramatically enhances the quality, 
capacity and overall performance of wireless voice and data networks 
across all air interface standards. IntelliCell multiplies spectrum re-
use by creating multiple spatial channels on top of traditional time-
division and code-division multiple access methods used for voice and 
data transmission, thereby reducing the need for spectrum. IntelliCell 
technology is deployed in over 80,000 cellular base stations serving 
millions of commercial customers principally in China and Japan, as 
well as other Asian countries. This technology is not a vague future 
promise--its proven, real, and widely used--but not yet in the U.S.
    ArrayComm created a new service, i-BURST, in an effort to 
demonstrate the principles of our spectrally efficient technology and 
to offer new services not available today to constituencies that are 
not served effectively today. i-BURST is a wide-area, high-speed, 
portable, wireless Internet access system. It is very efficient in 
terms of spectrum use, and can be deployed at significantly lower cost 
than generic 2G and 3G cellular data systems. i-BURST can provide each 
user anywhere, with an always on, Internet connection at data rates in 
excess of 1 Mbps per user, even in a fully loaded network. Operating on 
as little as 5MHz of unpaired band of radio spectrum and using time 
division duplex (TDD) transmission technology, i-BURST can bring high-
speed wireless Internet access to people at far lower cost, by orders 
of magnitude, than systems designed for other purposes. Perhaps most 
importantly, its performance and its affordability make it a candidate 
for an array of applications of immense social value, such as tele-
education and telemedicine, which may unfortunately not be served by 
standard commercial wireless systems.
    ArrayComm is also working with U.S. and international standards and 
regulatory agencies to increase their awareness of how strategic 
spectrum allocations and the use of technologies like spatial 
processing can maximize the value of spectrum and enable the wireless 
industry to meet consumer demand.
    On a larger scale ArrayComm is also a charter member of the TDD 
Coalition, which is a group of like-minded U.S. and international 
companies, all with applications and services built on the TDD 
technology platform. The Coalition was founded earlier this year to: 
(1) promote TDD technology for wireless broadband products and 
services; (2) promote TDD technology into market and regulatory 
environments for broadband wireless; (3) inform the industry about TDD 
technology, and its benefits to the global broadband wireless industry; 
(4) pool promotional resources to develop common marketing approaches 
as they relate to TDD; (5) inform and educate international and 
national regulatory bodies to ensure that technologically neutral rules 
are adopted to allow economical deployment of TDD technology for 
broadband wireless access; (6) create a collaborative industry voice to 
address issues relating to TDD; (7) develop implementation guidelines 
that will allow TDD deployments and insure harmonious coexistence of 
TDD with other duplexing systems; and (8) support TDD within global, 
regional and national standard organizations.
    The TDD Coalition believes that policy makers and regulators can 
benefit from the Coalition's contributions, and perhaps most 
importantly, appreciate that there are many companies worldwide that 
are developing leading edge, spectrally efficient applications and 
services on the TDD technology platform. Commercial deployment of these 
applications and services will bring innumerable low cost, advanced 
data and voice applications and services to consumers worldwide.

                      WHAT CAN THE GOVERNMENT DO?

    What can the government do in the face of the fundamental limits on 
mobility spectrum? I suggest that the government can do the following:
    1. Empower the FCC to reexamine all spectrum allocations, in light 
of what can be done with new radio technologies and the Internet. The 
FCC and the Department of Commerce are currently doing the best that 
can be done in a very complex situation; handling an impossible task of 
satisfying so many constituencies. Commerce Secretary Donald Evans and 
FCC Chairman Michael Powell have demonstrated a commitment to make 
sufficient spectrum available for advanced wireless services. They have 
also acknowledged that time is needed to study options to develop a new 
3G allocation plan that best serves the public. As they reexamine the 
issue, I encourage them to develop a more unified approach to spectrum 
management that offers long term solutions for serving all Americans 
with a wide variety of voice and data services more efficiently. Just 
as the Subcommittee did under the Chairmanship of Senator Inouye and 
the leadership of Members like Senators Hollings, Stevens and Burns, 
nearly 10 years ago when it carefully reviewed the feasibility of 
auctioning radio spectrum, so too should it carefully explore spectrum 
allocation and encourage the efficient use of spectrum by licensees.
    2. Put the public first. The wireless industry has been focused on 
technology (illustrated by the myriad of acronyms such as CDMA, 3G, 
WAP, etc.), and is driven by delivering voice services. We need to 
challenge the industry to find the right solutions that will genuinely 
serve the masses with the Internet, which is a compelling matter for 
the telecom industry today. This will define an inclusive approach; to 
serve the elderly--the disabled--teenagers--the police-rural America. 
To serve all of the billions of people in the world who do not fit the 
profile of the traditional cellular subscriber.
    3. Hold spectrum users accountable. Many companies will indeed need 
new spectrum, but we must first ensure that we are all using the 
spectrum we have to its highest spectral efficiency. After all, there 
are fuel efficiency standards for cars, and planes, why should there 
not be efficiency standards for spectrum use--a finite national 
resource? According to what I call Cooper's Law, there could even be 
spectral efficiency timed goals. For instance, the reason we provide 
more spectrum fast has little to do with international standards, but 
much more to do with potential demand. Like with any infrastructure 
requirement, when the demand is here, you do not start a new 
technology, you do more of the same (e.g., when traffic jams become 
widespread, county authorities will first widen the road, and at some 
point prepare for mass transit). The most obvious thing to do, however, 
is to make sure that we--the industry--use as efficiently as possible 
the spectrum we have been allocated.
    4. Foster new radio technologies with inherently higher spectral 
efficiency. New radio technologies have been developed in the past 10 
years, which are drastically more spectrally efficient than the 
technologies used in cellular systems today, which are all evolutions 
of the standards developed 30 years ago. Built from the start to 
accommodate the Internet Protocol, they are eminently suited to 
carrying very affordably the new services that the public requires. 
ArrayComm is just one company that has developed technologies that can 
increase spectral efficiency. Neither Congress nor the FCC should be in 
the business of mandating technology or services. However, they can 
very well define guidelines to foster or specify minimum levels of 
spectral efficiency in radio systems. Suitable allocations of TDD 
spectrum in the overall 3G allocations would foster their quick 
adoption and deployment.
    5. Promote ``real'' competition at home and abroad. Without real 
competition we will not have much in the way of creative new services. 
Other countries are stimulating innovation and rolling out new mobile 
services because they have allocated spectrum for these services. We 
too would like many of these services at home. But to do so, the U.S. 
must allocate spectrum for these new services. Since this has already 
been done overseas, in one sense we are already behind.
    6. Avoid the trap of the ``universal solution.'' Universal gadgets 
that purport to do all things for all people do not do any of them 
well. There is no Holy Grail of solutions. People have different needs. 
They will need different devices and services to satisfy those needs. 
Future Americans will have lots of choices for their personal 
communications devices and services but all of them will interconnect. 
There will not be a universal network. Some networks will be optimized 
for voice and some for data. Some will be for travelers who need to 
communicate all over the world. Some will just service a neighborhood 
or small community.
    Chairman Powell and the FCC have been supportive of the initiatives 
regarding spectral efficiency, TDD and new systems to serve the public. 
The FCC has provided ArrayComm with experimental licenses to test its 
technologies. If 3G allocations occur, as they have elsewhere, they 
will embrace both FDD and TDD spectrum and this will provide for the 
competition that is crucial to successful consumer services.

                               THE FUTURE

    Despite the fine progress in cellular and other personal 
communications services in recent years, we have experienced only a 
glimmer of the impact that these services will have in the future. 
Delivering bandwidth to people has always increased their awareness of 
the world. Making high interactive bandwidth available at very low cost 
will have a profound effect. The practice of medicine, for example, 
will be very different, and far more effective, when a doctor can 
diagnose a patient remotely and immediately when the patient is sick--
not when the patient can make an appointment. The days of delivery of 
music by CD, by cardboard and plastic, are numbered. Someone will 
develop a way to pay the artists and distributors and their choice of 
music will be delivered to people when they want it. The workplace will 
expand to be anywhere that the worker wishes to be and instant 
collaboration, enhanced by the ability to see and hear (and why not 
touch, smell and taste), will be a way of life.
    The Internet will be truly meaningful to people only when it can be 
delivered wirelessly, at low cost, and with broad bandwidth. Efficient 
spectrum use will make that possible and will make the Internet a tool 
for everybody beyond the early adopters and ``techies'' who use it 
today.
    Bandwidth Is Awareness And Mobile Bandwidth Is Freedom.
    I thank the Chairman and Members of the Subcommittee for this 
opportunity to express my views today.

    Senator Inouye. Mr. Wheeler, on one of your charts, you 
showed a lot of green, a little red, and you spoke of lack of 
harmonizing. Now, could all the countries covered in green come 
to some agreement for the use of certain technologies is that 
they became harmonized?
    Mr. Wheeler. There is the difference between the issue of 
technology harmonization and spectrum harmonization. What they 
have all agreed by making individual decisions is to harmonize 
the spectrum. There are different kinds of technologies that 
are sometimes used within that spectrum.
    Senator Inouye. So it is not a conspiracy against us?
    Mr. Wheeler. Senator, you know, there are some who have 
said, let me put it that way, OK, there are some who have 
suggested that knowing that that is red, and that that is where 
the Defense Department sits domestically might be a great 
competitive place to go in the rest of the world, and place on 
our own target, if you will. I am not suggesting that. I am 
reporting what others have suggested.
    Senator Inouye. You have sat through and listened to 
testimony of the first panel, gentlemen. I concluded from 
listening to them that they want more time. I think most of you 
said time is of the essence. We must act promptly. Do you have 
any thoughts on the testimony of the three witnesses?
    Mr. Strigl. Mr. Chairman, if I may. First, sir, the time is 
clearly of the essence. Senator Brownback a few minutes ago 
talked about the, what I would call the spectrum exhaust in 
some of our major cities. The comments that the Senator made 
are quite true. In major cities across the United States, at 
current course and speed, considering the growth of the 
wireless customers, the growth in usage that we have seen, we 
will see and exhaust major cities in New York and Los Angeles 
in 18 to 24 months. Included in that estimate is a move to more 
efficient technology, so I think it is very important if we act 
now, sir.
    Mr. McHenry. If I might, we do not take a position on how 
rapidly the current cellular or mobile wireless carriers may 
need spectrum and that varies from market to market in the 
services that are offered. I would echo that time is absolutely 
of the essence. As I mentioned in my oral testimony, the 
ability to finance our company and roll out the broadband 
services has basically been held hostage to the proceeding that 
began in the fourth quarter of last year, and so I just 
couldn't emphasize enough that the studies have been made; the 
interim reports have been made; the final reports have been 
made, and that while there may be some need for a smaller 
amount of time or some additional time to study the issues that 
Mr. Wheeler described in developing a detailed plan, that 
process means certain delay and possible fatal delay to the 
roll out of broadband services in rural America.
    Mr. Wheeler. Could I piggyback on that, Mr. Chairman? Let 
me just repeat one of the--and that is that we recognize that 
the only logical way to deal with this challenge is over time. 
And as I said in my testimony, nobody is asking to have 200 
megahertz dropped in their laps next Thursday. But we need to 
start a process with a plan, a plan that helps DOD and other 
government agencies understand what they need to be planning 
for, a plan that tells Mr. Strigl and Mr. Kelley and others 
what they need to be thinking about, and then we can go at it 
in pieces over time. And the beauty of going at it in pieces 
over time is to Senator Stevens point a minute ago, it also 
happens to then fund the next piece. Because if you set up a 
trust fund that is funded by the first auction, and that trust 
fund can only be used to clear the next piece of spectrum that 
will be auctioned, and that means not only moving to new areas, 
but having the equipment that goes with it, then an amazing 
thing has happened. Two things have happened.
    No. 1, you have speeded up the move because you had a 
planned process, and No. 2, you have created an incentive for 
the government because spectrum that has been cleared, which is 
what this trust fund would pay for, is more valuable than 
spectrum that you have to buy and then wait to have cleared. 
Time, value, money issues. And so yes, there is a process that 
we can go through that will take time, but it has to start. 
There needs to be some pump priming, if you will, and that pump 
priming can be a much smaller piece of spectrum, but the pump 
has got to get primed.
    Mr. Cooper. Allow me to address your earlier question about 
response to the people of the Department of Defense because I 
was quite startled to hear that they had allocated some $50 
million to look at more spectrally efficient techniques for 
Defense. My company is looking at one very narrow area. We are 
looking at how to apply the smart intent technology I told you 
about to cellular systems like 3G and Internet access systems, 
and we have raised something in excess of $140 million of 
venture capital and by the way spent almost all of it just for 
this one narrow area. It is clear that the comment that one of 
the Subcommittee Members made is correct. I think it was you, 
Senator Stevens. These people are not looking at this as a 
trillion dollar problem. Because if you have a trillion dollar 
problem, which I am certain this is, you spend a lot more than 
$50 million.
    With regard to the issue of the timeliness, 3G, first of 
all, nobody really knows what 3G is. 3G has become one of the 
gobbledygook words, but there are at least four different 
versions of 3G expanding around the world today. Some of them 
share different frequency bands. 3G really is a collection of 
future technologies. The 3G systems that have already been 
started to be introduced are so complex that there are none in 
true operation today. AT&T who ostensibly is the word leader, 
was supposed to start service in July, have delayed their 
service to October, and are now talking about June. 3G is not 
the solution for Mr. Strigl's customers for the next 3 years. 
The only thing that is going to help, and by the way, I know 
Mr. Strigl is working on this area is to use spectrally 
efficient techniques that take care of today's customers.
    Mr. Kelley. Thank you, Mr. Chairman. I would echo 
completely Mr. Cooper's comments with regard to efficient use 
of spectrum, and we have heard many people refer to that here 
today. It is critically important. But there are some, with 
regard to time, how quickly we have to move, how urgent it 
actually is, and particularly in regards to the comment Mr. 
Cooper just made about the leaders outside his country who made 
big announcements and spend in Europe anyway close to $100 
billion on licenses. Those technologies have not yet been 
deployed. In fact, they have been delayed several times so I 
would be hesitant to suggest that we should rush into it any 
way doing something similar so that technologies are rushed out 
to deployment before they are ready, before we know they really 
work, and it really is the best use of spectrum, No. 1. The 
second thing is, do we really know how every hertz of spectrum 
is being used in this precious mobile band that is about 2,000 
megahertz wide, what it is being used for in every city? A 
large A spectrum that has been allocated in other parts of the 
world is really not being used at all today. We understand, and 
a lot of cities and the one that we are in right now where our 
company is based, we are not able to offer service. There is no 
spectrum available for us there. But there is the same 180 
megahertz available there and probably 120 megahertz actually 
being actively used. I do not know how much of that 
efficiently, and that is an estimate. There are just so many 
unknowns and the time definitely is right to examine the issue 
because it is very important, it is very timely, but I think it 
is worthwhile taking time, looking at what protects consumers, 
in fact, all Americans the most effectively, and what's in the 
highest national interest in terms of use of the spectrum.
    Senator Inouye. It would appear from the testimony that DOD 
spectrum is the key to what we are discussing today. DOD has 
indicated that it is not quite ready. GAO, our most respected 
agency, as far as the Congress is concerned, they set our 
agenda, as indicated, that they are not quite ready to report.
    What do you suggest we do, this Subcommittee?
    Mr. Wheeler. Mr. Chairman, I think there are two things 
that we have to look to you for leadership on. The first is 
that there needs to be a spectrum policy in this country. One 
of the reasons that we are in this hole is that there is no 
spectrum policy. Our spectrum policy has been budget policy. 
And how much spectrum do we have to auction off to raise how 
much money and it is where we grab it from. We do not have a 
plan. We do not have a structure for getting to that plan, and 
so that is the first thing, and that is something that I 
believe exactly is under the jurisdiction of this Subcommittee.
    Second, we have got to have, we cannot sit around and 
contemplate the perfect plan at the cost of priming the pump 
and getting the spectrum process started. So what we would urge 
this Subcommittee to do is to start down both of those paths 
and to act expeditiously on both so that we can begin to have a 
national spectrum plan and a component of that can be the 
beginning of the auctioning off of internationally harmonized 
spectrum for wireless use.
    Senator Inouye. Mr. Strigl.
    Mr. Strigl. Mr. Chairman, if I may. There are a number of 
things that I would encourage the Subcommittee to act upon. 
First is not necessarily only the relocation from DOD spectrum, 
but an overview, a plan, to identify over time, as Mr. Wheeler 
had suggested, a total of 200 megahertz, but there are some 
pieces of this that I think are extremely important that I 
would encourage the Subcommittee to consider.
    First of all, to set times on how the spectrum is cleared, 
and when the spectrum is auctioned. We have been hurting in 
this country because we have auctions that keep moving. We have 
auctions that mention spectrum with no intentions of clearing 
it. And then finally, I think that there is a clear need to 
identify the mechanism by which those who are relocated, 
whether it is the Department of Defense or others how they are 
reimbursed for that relocation.
    Mr. Kelley. Thank you, Mr. Chairman. As I was saying a 
moment ago, my recommendation to the Subcommittee would be to 
do a review of how all of the spectrum is being used today by 
all of the people who have the rights to use it, starting with 
those of us who are using it for commercial purposes, but 
including to the extent it does not compromise security, the 
use of the military, and the use by education and religious 
organizations and so forth to understand how much it is 
actually being used, where it is being used, and finally how 
efficiently it is being used today.
    Mr. McHenry. Thank you, Mr. Chairman. I would say that the 
two things that I would recommend that the Subcommittee 
consider would be the fostering of the spectrum management 
policy--overall spectrum management policy referred to by Mr. 
Wheeler, and I do suspect that that is going to take some time 
and further study and fact finding, and second, to begin to 
narrow the choices that are being looked at for 3G because it 
does have collateral effects on others, as I have described 
earlier, but to keep all potential 3G bands in play I think is 
unreasonable and I would urge the Subcommittee to foster the 
narrowing of options in the beginning of the process of 
negotiating and developing that interim plan.
    Mr. Cooper. Mr. Wheeler is right. The Congress has to 
create a spectrum policy, but I think that spectrum policy has 
been made clear. It has got to be a long-range policy because 
as powerful as this group is, there is absolutely nothing that 
the Congress or the FCC can do to make spectrum suddenly appear 
in anything less than the timeframe of 7 to 15 years. The 
people that address this problem from the Department of Defense 
are sincere, and if in fact they were spending the kinds of 
money that I think Senator Stevens thinks are appropriate, it 
would still take a substantial amount of time to bring 
satellites, establish new satellite systems and to create these 
new things, so my suggestion remains the same. No. 1, establish 
an appropriate policy. No. 2, that policy must embrace some 
criterion for giving spectrum to people, and that is when you 
make a spectrum assignment, it ought to be to someone who knows 
how to use that spectrum in a better way that has been used 
previously.
    Senator Inouye. Mr. Burns.
    Senator Burns. Thank you, Mr. Chairman. We have been 
monkeying along here and it is pretty close to supper time. I 
have not missed a meal in my life, and I do not plan to yet. 
Interesting comments about the efficiency of the spectrum. Mr. 
Strigl, I understand your call for more spectrum, and all of 
that, and facilitate some new stuff and services that you want 
to offer the American public, but last week, you applied for an 
extension or a waiver of the timeline of E 911, and we have 
already granted an extension from March 1 until October 1st of 
this year. And I think that I speak for all the Members on the 
Subcommittee that supporting the communications needs of the 
country is very vital, and I would also, in the emergency area, 
the police first responders. Supporting these kind of rescue 
personnel is one of the most important public duties that the 
FCC and our Subcommittee has. That is one of the high 
responsibilities. Would you agree with that?
    Mr. Strigl. Yes, sir.
    Senator Burns. I am saying that even though you are asking 
for more spectrum, we cannot--and 3Gs especially--we cannot get 
you to go ahead and deploy what we think is a vital, vital 
public service situation. In other words, let us get the 
conversion done. Why do we need another extension?
    Mr. Strigl. Senator Burns, let me please explain that we 
have spent tens of millions of dollars deploying E 911. We have 
people who do nothing but focus every working day on E 911. My 
company has asked for a waiver of months to be sure that what 
we are deploying works well and helps save lives. I may point 
out, sir, that if we look at the number of requests that we 
have received--not on phase II, but on phase I of E 911, number 
about one-third, only one-third of all the thousands of PSAPs 
that exist across the country, public answering points.
    On phase II of E 911, which identifies specific--pinpoints 
specific locations--we have received very few requests across 
the country, but we are complying and we are asking for a shift 
of months, not years. And if I look, Senator Burns, at the 
PSAPs within the State of Montana, for example, that have 
requested service, we have had no requests whatsoever. So what 
I do not want to have to do is deploy a technology that sends a 
signal nowhere. There is much more work, sir, that needs to be 
done. I commit to you that we are doing all we can to put it in 
place as quickly as we can across the United States.
    Senator Burns. That sort of distresses me, because a lot of 
people put off their requests until they need it. And I would 
hate to see that happen, but that does distress me, and I know 
that we, especially Montana, I just think it is vital for us. I 
just think even though our first responder and our emergencies, 
we stand well nationally, but we still have got a lot of space 
to cover in order to tend to some of those situations. I am 
interested in Mr. Kelley's comments today really that the 
demand for more spectrum right now probably is just tepid at 
best with using your technology. Why do you think, Mr. Kelley, 
that other companies that are in your same business are not 
getting the efficiency out of their spectrum that you are?
    Mr. Kelley. Well, as Mr. Wheeler pointed out, Verizon 
Wireless, Sprint PCS and others are using the same technology, 
CDMA, are using the same technology developed in the United 
States. We have deployed the newest technology. We are using it 
incredibly efficiently. 100 percent of our customers are using 
the new efficient technology. Those types of statistics are 
things that I do not know firsthand how the other carriers are 
doing it themselves. Some carriers who are represented here 
today have a number of different technologies that are 
considerably less efficient than the ones that we are using, 
and one exception that I would make that there are some markets 
that are here in the United States, specifically like New York 
City, for example, or here in Washington, where the population 
density is similar to that, as it is in other countries such as 
Europe and Asia, and in those kinds of areas, using more 
spectrum than the 10 or 15 megahertz that we have where we can 
serve up to 20 percent of the population with unlimited use 
would be a challenge and, in fact, may be downright impossible. 
We do not believe, based on our studies that require even more 
than the spectrum limit of 45 megahertz today or even beyond 
that, however, we do not have firsthand knowledge of doing 
that.
    Senator Burns. Well, it is like I said a while ago. We have 
a study that will be completed in November. We are going to be 
putting together legislation to deal with a spectrum policy, 
Mr. Wheeler, but we think that we have got to gather a lot more 
information and we have got to do our homework, especially on 
the Subcommittee with the Members, and also with the industry 
before we even start to move any kind of piece of legislation. 
In other words, bring it together, not only from an inventory 
standpoint, but our relationship with our international 
community, and have some sort of an idea before we start 
shaping legislation, so would you have any comments? I would 
ask the panel. Where do you think this wireless industry will 
be in 20 years? In 20 years, what do we do now to realize or to 
get us where you think we will be in 20 years?
    Mr. Wheeler. Senator, we are fishing for that ITU chart to 
put it back up again. Let me--there is clearly going to be 
phenomenal growth from where we are, and I remind you that this 
is just voice surfaces. We have not even begun to talk about 
the data services. With all due respect, Mr. Burns, and I know 
how you have been sensitive to this issue for some time, the 
issue of study is obviously important because you have to make 
an informed decision.
    Senator Burns. Well, that is just the beginning.
    Mr. Wheeler. Where a study, however, becomes a delay, we 
are a Nation, both our military and private sector in trouble, 
and this is a circumstance where our government went out and 
negotiated the agreements that identified all of the spectrum. 
The Defense Department participated in the formulating of that 
policy. And now we have a situation where the rest of the world 
has said yes, we will grab that. And we are studying. I 
recognize the importance of being informed. We cannot let that 
become an excuse for being immobilized, however, and with all 
due respect to my friends at the Defense Department, I 
sometimes feel as though when they say that they have been 
exploring alternatives, they are doing it with one eye. They 
are saying we will look at alternatives under certain 
circumstances. And they have given us a road map as to how if 
we collectively, and this body has the ability to do that, that 
kind of collective, broad analysis in effect to rules, how 
things can work out, and so hopefully, that work that has been 
done, it is, it is the study, and we can then move on to get 
some action, because we are falling behind every day.
    Mr. Cooper. I am glad we put that chart up there. I am 
going to sound like a broken record. If you look at the growth 
of cellular subscribers between--you asked about 20 years. We 
are talking about 10 times more subscribers in the next 9 
years.
    Senator Burns. In other words, that is going to get more 
precipitous?
    Mr. Cooper. If you have 10 times more subscribers and you 
do not change the technology, you are going to need 10 times 
more spectrum. I apologize for just continually repeating that. 
Just adding little hunks of spectrum is not going to solve the 
long-range problem and that is why I think we need to look at 
this thing on an actually long-range basis.
    Let me answer your question directly because that is what I 
do. I am not really quite as accountable. Maybe 30 years from 
now I wouldn't be accountable at all, but 20 years from now, we 
know technology now that permits you to do true sharing, and 
that really is what the future is, it is not only the spatial 
technology I described where you keep reusing the spectrum over 
and over again, it is the ability to use the spectrum for lots 
of different services when those services is needed. The bottom 
line is the crises that require Defense Department spectrum do 
not necessarily happen at the same time and the same place and 
the land mobile spectrum and you can move that spectrum around. 
It is happening with technology, the ability to process 
information has increased so enormously and it keeps 
increasing. We will have the ability in 20 years to manage 
information in such a way that we can make all the spectrum 
available to all the services. I mean defense, public safety, 
consumers, children playing games and make sure that everybody 
gets the appropriate attention, the appropriate priorities, the 
appropriate speeds and they all get this at whatever the value 
that they contribute to society.
    I tell you, this is not a pipe dream. That the technologies 
to do this are already in the minds of the researchers and some 
of that technology, as I tried to describe to you earlier, is 
available today and as a matter of fact, I am going to be 
calling on Mr. Strigl I hope over the next month or two and 
make some of this technology available in the next 2 to 3 
years. I did not want to make a sales call in front of this 
Subcommittee. Thank you.
    Mr. McHenry. I believe you asked what's our vision in 
telecommunications. I have been in telecommunications for 21 
years, prior to that, information technology, and one of the 
earlier cellular pioneers and yes, we know each other 15 years 
or better. I was in the cellular industry for many years and 
helped bring cellular to many of the U.S. marketplaces and what 
I have observed is yes, more spectrum has generally been 
required, primarily to create more competition in the 
marketplace and in this competition it has fostered the 
innovation that has driven the efficiencies in the use of 
spectrum that has been out.
    I think it is absolutely clear that more spectrum is not 
the total solution. I think it is also absolutely clear, 
particularly in the larger, denser urban environments that more 
spectrum may be needed and certainly as a migration place for 
existing carriers to continue to serve existing customers 
without degrading that service, and have flexibility to 
introduce new services, whatever 3G may turn out to be. But I 
would say that the two keys to the future, what 
telecommunications will look like, particularly wireless 
telecommunications, is that it will be any amount of 
communication that a user desires and is willing to pay for 
anywhere, any time and that demands broadband, and it demands 
competition to foster innovation, and broadband services are 
yet to even be defined. I heard a presentation not long ago by 
some content providers on the West Coast who said bring me 15 
to 20 million broadband subscribers, and I will bring you the 
content that those people will pay for. And yet the last mile, 
broadband is the stop. It is the stop that will prevent any 
broadband from being brought to the U.S. marketplace today. The 
long haul is there. Maybe even more supplying the long haul, 
but in the wireless piece, and the last small piece whether it 
be mobile wireless or in fixed wireless which our company 
contemplates bringing, broadband is stymied, and so what I 
would say to our vision is any time, any place, any amount of 
communication, and let the market determine it. Some amount of 
spectrum may be necessary to get that started, but clearly an 
overall spectrum policy is necessary to realize that vision, 
but maybe more importantly is getting broadband to the 
marketplace sooner rather than later to stimulate innovation 
and competition.
    Mr. Kelley. There have been some great comments here. We 
agree completely about competition innovation. We mentioned 
that previously. If you go back 20 years, sometimes the best 
way to look forward 20 years is to look back 20 years. If you 
look back 20 years, 1981 was sort of the dawn of 1G, but first 
generation mobile telephone, which were large car phones, then 
10 years ago, we were on 2G which was CDMA digital networks 
here in North America.
    Now, this year as we mentioned we are going to be deploying 
third generation technology ourselves this year and early next 
year. When we look ahead then logically we would say 4Gs and 
5Gs, but Mr. McHenry's point, what does that really mean, what 
it is really going to mean is multimedia communication, visual 
communication, and the ability to see really anywhere, any time 
and communication when you need it and access to information 
that you need when you need it. And to Mr. Cooper's point, 
ideally this is done in a mobile way, and in a nomadic way and 
that is really what the issue is is how to manage the spectrum 
so that you can get these technological advances that you get 
through innovation and competition that allow those kinds of 
services to flourish, and all of the businesses that we have 
today in this country will then be further enabled with all 
this wireless technology, and can flourish and innovate 
themselves and export the innovations they create.
    Senator Burns. Thank you, Mr. Chairman.
    Senator Inouye. Thank you.
    Senator Stevens.
    Senator Stevens. I know better than to stand in the way of 
Conrad's dinner. I won't be long. The chart that mesmerized me 
was the chart where our country was in red. I really think that 
is slightly misleading. In that country is the greatest 
adaptability of the existing technology in the world. You look 
at the green, those are primarily the countries that are very, 
very harsh on individual freedom and harsh on the private 
sector. Conrad did not ask me for my opinion, but I will tell 
you my opinion. Twenty years from now, I think you will 
probably be in 40G, Mr. Kelley. I think that the technology is 
tumbling so fast, and spectrum will almost become immaterial 
once it really takes off, and what we really ought to do is get 
out of the way. More than anything else, I think we are 
delaying this process, and the dollar sign is not the best 
test, but we believe that the next generation should be more 
friendly to the consumer and cost less, right? Every generation 
will do that. I do think that it is coming now and one of the 
problems I have is that we are delaying this now by our reviews 
and everything else. I do not know how to get us out of the way 
yet. But I think one of the ways is to give another economic 
incentive to move into another area. And I hope that you will 
help us devise that.
    The answers of just getting the Department of Defense out 
of the way are not sufficient because that is the worst part of 
our government to try and move and necessarily so, because we 
are still the strongest power in the world and we are not going 
to disturb that because some of you need to make more bucks. We 
want you to use those bucks in a way that makes immaterial how 
much that spectrum the Department of Defense has in the long 
run, but I do think we will help you in the interim, and I hope 
the Congress will listen and take some interim steps to just 
free up some of this. I hope you would help us work with the 
FCC. I think the problem is there are delays there, too. There 
are delays because they are compliant with some complex laws 
that maybe we ought to take a look at those, too. But my 
feeling right now is that you, Mr. Kelley, I am really, if you 
will pardon me, gentlemen, the way you are using your spectrum 
is right. You are totally using it. And I know we are starting 
to use spectrum in the hours when schools and libraries and 
health facilities do not use it, we are using for local 
communications.
    We need to find more ways to use this spectrum in a total 
manner and on a cooperative manner so that there is not just 
these lease lines and spectrum reserve for specific use that 
does not take place but once in a while. That we have got to 
have more machine gun use of every dot on the dial as far as I 
am concerned, but I do hope that you will help us convince some 
of our colleagues to get moving and do something. Give an 
incentive to the next era and I think this spectrum problem 
will help solve itself.
    Mr. Chairman, thank you for holding this hearing. I wish 
that it could be longer. And Mr. Cooper, I owe you lunch, all 
right. Thank you very much.
    Senator Inouye. Thank you. I too would like to join Senator 
Stevens in expressing my regrets that no other Members of the 
Subcommittee could be present here. I think this hearing was 
very important. Your suggestion that a new policy should be 
looked into because we do not have any policy at this time is a 
very important observation.
    We would like to spend about a week at least chewing over 
your testimony because frankly, for you to say it is mind 
boggling is an understatement, but I can assure you that we are 
intent upon doing something, and we hope that the something we 
do will be the proper one. With that, the hearing is adjourned.
    [Whereupon, at 5:30 p.m., the hearing adjourned.]
  

                                  
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