POWELL TELLS CTIA SHOW MATURING INDUSTRY CREATES NEW EXPECTATIONS

On issue of E911, Wheeler said industry had demonstrated its “desire to do the right thing” by working out solution with public safety community that was taken to Commission. In intervening years, regulatory requirements involving E911 changed “and now we're being castigated for not being able to deliver this changed priority,” Wheeler said, referring to criticism consumer groups and Congress have levied at sector for recent round of waivers needed for Phase 2 of E911. While Powell agreed that industry had taken early initiative, he said: “I think to be perfectly Machiavellian, if you hadn’t, someone was going to do it to you.” He said “the greater reliance for consumers on the handsets and mobile uses as a substitute for wireline was going to mean increasing pressure for ensuring that that kind of national emergency functionality was available.”

“I don’t think,,though, that the industry is being castigated,” Powell said. “Frankly, I think there have been some instances where we have been a bit tougher on some carriers who are struggling to get through but I don’t think irresponsibly or unfairly so. For most of the major carriers who are experiencing technical difficulties, we worked with them to develop waiver policies to allow them to move forward in a productive way.” In such instances, Powell said, he saw his job as “being a persistent pusher and an urger.”

On wireless PAS, Powell said he remained committed to principle of it being voluntary service for carriers to provide. FCC has enacted rules for PAS requirements when carriers decide to offer that service, but agency hasn’t required it. Wheeler cited PAS, for which carriers voluntarily are entering into agreements with govt. to provide spectrum capacity to priority emergency and national security personnel during emergencies, as case in which “you try to do the right thing and the next thing you know there is a landslide coming at you.” Wheeler said Administration’s 2003 budget proposal set aside $60 million for wireless PAS. Powell said FCC’s rules on PAS predated Sept. 11 attacks, which generated new interest by federal govt. in using that service. “To be candid, the landslide occurred on Sept. 11 and that landslide and the repercussions and the tremors have been felt ever since,” Powell said. He took note of concerns Wheeler raised that there had been influx of groups that wanted their own carve-out in PAS system: “That’s the natural cacophony of policymaking.”

Commission has “deep understanding” of how significantly depressed capital markets are in telecom space, Powell said, and he had heard that message sooner from others in wireline, cable and broadcasting industries. Wheeler had raised twin challenge faced by wireless industry faces of managing tightly shrinking capital and redirecting part of that money toward govt. mandates. “You pick your industry under my portfolio and all of them would say nearly the identical thing that you just said,” Powell said. “I think wireless is not completely immune but I think better positioned than most.” Govt. isn’t “constantly” asking that capital be redirected to mandates, he said. “There will always be certain government policies and mandates that cost money,” Powell said. “That is a way of life. You can’t completely eliminate that proposition.”

Powell described spectrum decisions that FCC must sort through as “messy… There’s nothing clean about it. It’s an infantryman’s crawl to keep trying to find more spectrum but one that we are very, very committed to in continuing to work with Commerce to continue to push through.” Wheeler reiterated message he has sounded in recent weeks on extent that new govt. demands for spectrum in emergencies as part of PAS increased impetus on federal policymakers to break loose more spectrum for industry. “The reality is the federal government is saying we want part of your capacity in important times. That is going to impact consumers,” Wheeler said, saying that raised policy question for govt. of “breaking loose additional spectrum.” But Powell declined to draw direct policy line between PAS demands and spectrum. “I think that’s a bit of a deceptively simple story,” Powell said. “Tom just crossed 4 jurisdictions and 5 branches of government in one sentence. And that’s what makes spectrum hard.”

One critical problem for govt. spectrum allocation policies is “fact that we can’t get spectrum to its highest and better uses quickly enough,” Powell said: “If this DoD process doesn’t convince anybody that the slog of government always be asked to come back into the game, take from somebody, move it over here, figure out how to pay these people, figure out how to provide suitable spectrum for them to move to, get all the money to move and all this is supposed to happen in Internet time.” Commission has been focused on more flexible spectrum policies such as secondary markets and other ways “in which we could limit our intercession in getting spectrum to higher and better uses,” Powell said. -- Mary Greczyn

CTIA Wireless 2002 Notes…

Increased wireless data usage has fed uptick in voice traffic for Telecom Italia Mobile (TIM), Dir. Gen. Mauro Sentinelli said in Tues. keynote at CTIA Wireless show. He said there was need to reverse average revenue per user trends that traditionally had been dominated by voice services. “Both data and voice usage feed one another,” he said. “Either we start a new business cycle as the Japanese” have begun new cycle for wireless data revenue, or “we are going to die because the house is burning,” Sentinelli said. “So we have to do something very quickly.” He said industry had to “invent new services that are not yet in our pipeline.” He projected that in future, based on percentage of revenue, wireless data would make up larger portion of mobile revenue base in U.S. than in Europe and Japan. In Europe, he broke down short message service consumer market into categories: (1) Users who are active and send and receive SMS messages regularly. (2) Those who are “passive” because they can receive SMS messages free but don’t send them. (3) Users who do neither with their handsets. Key revenue generator for SMS in general has been what Sentinelli called “WAP push” -- capability of SMS recipient to receive more information from Web-based applications when they have read SMS missive. So even “passive” users who don’t pay to receive SMS messages will drive wireless data usage higher when they use them as jumping off point for Internet applications, he said.