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April 13, 2000, Thursday

SECTION: CAPITOL HILL HEARING

LENGTH: 13959 words

HEADLINE: HEARING OF THE TECHNOLOGY SUBCOMMITTEE OF THE HOUSE SCIENCE COMMITTEE

SUBJECT: WIRELESS INTERNET TECHNOLOGY

CHAIRED BY: REPRESENTATIVE CONSTANCE MORELLA (R-MD)

LOCATION: 2318 RAYBURN HOUSE OFFICE BUILDING, WASHINGTON, D.C.

TIME: 10:00 AM. EDT DATE: THURSDAY, APRIL 13, 2000

WITNESSES:

IRWIN M. JACOBS, CEO, QUALCOMM INC.;

RICHARD J. LYNCH, EXECUTIVE VICE PRESIDENT AND CHIEF TECHNOLOGY OFFICER, VERIZON WIRELESS;

TIMOTHY R. GRAHAM, GENERAL COUNSEL, EXECUTIVE VICE PRESIDENT AND AMEMBER OF BOARD OF DIRECTORS, WINSTAR COMMUNICATIONS INC.;

PAUL FULTON, VICE PRESIDENT AND GENERAL MANAGER, WIRELESS DIVISION, 3COM CORP.;

BODY:
REP. CONSTANCE A. MORELLA (R-MD): I want to call to order the Technology Subcommittee of the Science Committee. I knew that was going to happen. I think we're going to have a -- we're going to vote now, or just going into session?

There may be a vote coming up very soon, but I think we can commence as we also await the arrival of our ranking member on this subcommittee.

I'm very pleased to welcome everyone to this hearing on wireless Internet technologies. From its humble roots as a simple tech-based tool for generals to talk to each other in the event of a nuclear catastrophe, the Internet has been a perpetually evolving technology. Today, with its advanced, multi-media applications, the Internet is being used by millions of people across the globe for everything from business transactions, to sending an e-mail from a grandparent to a child, to simulcasting this very hearing on the Web. As we continue to push the frontiers of the Internet, many feel the next stage of the evolution of the Internet is its development to a wireless technology. This morning, we're going to hear from representatives of companies that are on the forefront of this evolution, and it's very exciting for many reasons. Not least among these reasons is a very practical one for those of us who drive through the streets of our nation's capital.

The streets of this city have been carved out to lay fiber optic cable intended to deliver broadband Internet service. And while we will all ultimately benefit from this fiber optic infrastructure, I know our cars and our city streets would better appreciate the virtues of a wireless Internet infrastructure.

Actually, all joking aside, fiber optic cable is, of course, a wonderful method to provide broadband Internet. And coaxial cable wires are excellent also. But not everyone will be reached by these two technologies. In fact, right now 98 percent of all homes are not wired for broadband Internet service. And this is not a rural or an inner-city problem.

Even though Montgomery County, Maryland, is only a short distance from the hundreds of miles of fiber being laid throughout the streets of Washington, the vast majority of homes in my district cannot receive broadband service. And only 3 percent of all businesses nationwide are connected to fiber optic networks.

Wireless technologies could help bridge this gap and provide broadband internet to areas lacking the infrastructure for wired access. In addition to providing broadband to more customers, wireless technologies have the potential to change the way we use the Internet. A few of us are already checking e-mail and receiving real- time stock quotes with wireless devices, and this is only the beginning of what's possible. Mobile, wireless Internet will allow us to use all features of the Internet away from our desktop PC, and soon we'll have mobile access to the Internet at faster speeds than most businesses have right now.

And because these hand-held devices are usually cheaper than personal computers, the potential exists to introduce even more people to the conveniences of the Internet.

Yet, in order for us to fully realize the potential of an Internet that's both wired and wireless, we must have technologically sound standards that allow the seamless transfer of information between networks. The National Institute of Standards in Technology has taken a very active role in developing these standards. NIST has developed the concept of the National Wireless Electronic Systems Testbed, NWEST. NWEST is intended as an extensive laboratory facility, developing and applying measurements to wireless systems with the goal of advancing the voluntary standardization process. This is intended to initiate the development of interoperability tests which are necessary for the standard to fully succeed.

Two of our witnesses today, 3COM and Winstar, are among the 80 companies that support NWEST. Both NIST and 3COM are active in Blue Tooth, a project to develop the standards in technology necessary to allow phones, laptops and other portable hand-held devices to be able to talk seamlessly with one another and to connect to the Internet.

NIST participates in Blue Tooth as a trusted neutral, a technical expert, and impartially reviews Blue Tooth documents to help identify gaps in the specifications. And while NIST is not a witness in today's hearing, we want to recognize their role in promoting the standards for the wireless Internet. And I understand NIST will be submitting a written statement to be made part of the official record.

Before we begin, I want to welcome Mr. Nathan Price, the Assistant Director of the Science, Technology in Society program at the University of Maryland; and I think he may have some members here of his Internet in Society class. Whether they're here -- okay, great. See you in the back of the room. Welcome.

I'm very happy to see the students that may someday help shape the next evolution of the Internet with us here. I believe that you, as well as I, will find this hearing useful and informative. It was only like nine years ago where there were only 50 sites on the Internet. Look where we are now.

So, I'm looking forward to hearing from our distinguished panel of witnesses and their efforts to create a promising, wireless Internet future.

I would now like to recognize the distinguished ranking member of this subcommittee, Mr. Barcia.

REP. JAMES A. BARCIA (D-MI): Thank you, Chairwoman Morella. I want to join you in welcoming our distinguished panel to this morning's hearing.

Six years ago, the Congressional Office of Technology Assessment issued one of its last reports, "Wireless Technologies and the National Information Infrastructure". At that time, the Office of Technology Assessment found that private-sector innovation in the development of wireless technologies and services had been quite remarkable.

Today's witnesses are a testament to the continued growth and the rate of innovation of the private sector. As in all Office of Technology Assessment Reports, they listed a number of policy issues which even in retrospect are right on target. They identified that wireless technologies offered a possibility of universal service. However, the Office of Technology Assessment also pointed out that interconnection and interoperability standards were key elements to allow the widespread deployment of wireless technologies. They also suggested that more research was needed on how to compress more data using less bandwidth and allowing more users was needed.

These important issues are still with us today. However, the scope has expanded so that these are no longer just national issues, but issues facing nations all across the globe. Much like in 1995, the Office of Technology Assessment talked about a national information infrastructure. We now realize that the reality is a global information infrastructure. This hearing is a chance for subcommittee members to learn more about wireless technology, its potential and some of the challenges it faces in its deployment.

In addition, I would like to note there are current wireless demonstration projects for connecting public institutions, libraries, hospitals, government offices and underserved institutions. Such demonstrations would uncover some of the unique capabilities of wireless, while helping to advance the technology and reduce the cost.

I want to thank our witnesses for taking the time to appear before the subcommittee today. I would also ask our witnesses to be as clear as possible in their explanations of this technology for people of my capability. Not everyone in the room may be as familiar with the terminology and acronyms of this complex technology. And I look very much forward to listen to your testimony.

And we'll probably have to excuse ourselves for a vote and return to listen to that testimony. But thank you very much, Madam Chairman.

REP. MORELLA: Thank you, Mr. Barcia. I associate myself with your comments also. We are going to recess now for about 15 minutes for a vote, and we shall be back and then commence our panel.

Thank you.

(Brief recess.)

REP. BRIAN P. BILBRAY (R-CAL): -- in California, and, actually, our nation's communication technology people. Many people come before our committees who have credentials that are usually academic in nature, are reviewed by their peers. But Mr. Irwin Jacobs not only has his academic credentials, but he actually has the credentials, in my opinion, which is second to none -- he is not only accomplished in the world of science and technology, but he's also accomplished in the world of the economics and the marketplace in the application of that technology.

I feel it is a privilege to represent a district that has QUALCOMM and Mr. Jacobs as part of our family. And I think it behooves those of us with history background to remind the rest of us sometimes that, as we live through our life, we've got to remember we're making and witnessing history at this time. And I say this with sincerity that I think Dr. Jacobs is going to be going down in history in many ways as being a man who in our century did for wireless telephone what Mr. Bell did for wire telephone.

And it's my privilege to welcome Dr. Jacobs to Capitol Hill and the Congressional process.

REP. MORELLA: Thank you, Mr. Bilbray.

We do have a distinguished panel here this morning to help us review the evolution of wireless Internet technologies. And we've just had Dr. Irwin Jacobs introduced by his member of Congress. He's the CEO of QUALCOMM, headquartered in San Diego, California. And I understand that Dr. Jacobs was recently named Scientist of the Year by the San Diego Chapter of the Achievement Reward for College Scientists. That's a woman's group that raises scholarship money for students studying science, an area that I'm very interested.

So, congratulations, and thank you for being with us, Dr. Jacobs.

And next we have Mr. Richard J. Lynch, the Executive Vice President and Chief Technology Officer of Verizon -- Verizon Wireless, located in Bedminster, New Jersey. As many of you know, Verizon Wireless is a joint venture between Bell Atlantic and VodaPhone, Air Touch. There're -- so many of these companies have come together, and some of them have assumed new names as a result of the partnerships. We welcome you, Mr. Lynch.

And next we have Timothy R. Graham, who serves as General Counsel and Executive Vice President and a member of the Board of Directors at WinStar Communications, Inc., headquartered in New York City. We welcome you, Mr. Graham.

And last but not least, we have Mr. Paul Fulton, Vice President, General Manager of the Wireless Connectivity Division at 3COM Corporation, located in Santa Clara, California.

I thank you all for joining us. A very distinguished panel we have. Look forward to hearing your testimony. And before we commence with your testimony, it is the policy of the Science Committee to swear in all of its witnesses. So, if you would rise and raise your right hand? (Witnesses are sworn)

REP. MORELLA: Thank you. The report will reflect an affirmative response. And, again, in the interest of time and equity, we will allocated approximately five minutes with, again, some latitude, if necessary, for testimony. And I hope that you know that your written testimony will be included in its entirety in the record, so you may want to approach it differently. And that way, it will allow us an opportunity for questioning.

So, we'll start off with Dr. Jacobs. I'm glad that you're taking advantage of this high-tech committee room.

DR. IRWIN JACOBS: Thank you very much, Madam Chairman. It's a great pleasure to be here today.

And we have been very busy in the wireless industry. To date, it's been largely an industry-supporting voice. And, as you can see in this first slide, the mobile voice communications has been growing very rapidly, expected to go through one billion subscribers worldwide sometime over the next two years. Of course, the Internet has also been growing very rapidly. The interesting aspect, as you have mentioned, is that they're both now coming together; and so we will be providing wireless access to the Internet. And we think that the growth of both will, in fact, increase and be more broadly available. Moreover, the type of devices that we carry around with us -- the wireless phones -- will also be available to act as browsers, access to the Internet, and so the number of available devices to access the Internet will increase rapidly, and the cost will come down, allowing them to be more broadly available.

QUALCOMM has been involved with the technology -- and I will apologize, because I'm about to begin with some acronyms; but I'll try to be careful -- a technology called CDMA, Co-division Multiple Access. That's a fairly recent technology as far as application to commercial use.

The concept was -- we first came up with it the end of 1988. We provided a demonstration to the industry that this technology could work in the end of 1989. It was standardized in 1993. The first commercial system went into operation in Hong Kong -- by the way, using phones delivered from San Diego -- in the fall of 1995. So, it was seven years from concept to actual use. It has been moving ahead fairly rapidly, along with the growth of wireless; and so there are now over 50 million subscribers in over 35 countries using CDMA.

The interesting aspect, though, is to focus in now on the data. Most wireless manufacturers and operators who have not been using CDMA have now recognized that data is going to be very important in their future, and there is now technology referred to as "third-generation." Most users have agreed that they would be using CDMA for this technology, and that agreement pretty much occurred during 1999.

During that same year, we came up with a standard for the first of the third-generation technologies.

I refer to it as 1-X multicarrier, MC. It uses the same band-width carrier, same band-width radio signal, that we have been using for our voice communications; but it provides a doubling of the voice capacity and, therefore, a further lowering of cost. It also supports higher data rates up to roughly 300 kilobits per second, and so it begins to provide some interesting Internet capabilities.

But we also, ten years after our first demonstration of CDMA, demonstrated what we refer to as 1-X HDR, for "high data rate," which supports 2.4 megabits on, again, the same radio bandwidth. And so this does open the capability for very exciting, wireless Internet access at low cost. 2.4 megabits per second will satisfy just about every application that we can think of quite well at this point.

We achieve that by optimizing the wireless separately for packet data -- for Internet type of data -- and use the 1-X multicarrier for optimization for voice. They're rather different. By doing this, we actually end up with a technology that supports data rates that are competitive at costs that are competitive with both the use of DSL over twisted-pair or set-top boxes on cable. And so for areas that are not equipped, one can have the high-data-rate Internet access. But even where they are -- where both DSL and cable are available, they will be cost-competitive.

The additional value, however, it brings is that not only can you have this high-data-rate, wireless Internet access quickly available rural areas, other areas that are not served -- but it's not only available for fixed use; it's also available for mobile use. And so it appears to provide a very promising next step for supporting high- data-rate Internet access. It can be done without tearing up the streets for putting in cables or wireless. It, again, is done by wireless; but it uses existing antennas, existing radio structure that has been put in place for supporting the rapid growth of voice.

And so it's compatible with existing CDMA networks -- same coverage areas, same types of componentry. And that's the reason that it can be put in quickly and at low cost.

It could also be put in initially to serve those areas that require it, shown in the yellow, hatchmark area here. And that would be surrounded by the more normal voice on our 1-X MC, which also supports data up to 300 kilobits. And one can, in fact, roam between the two areas, and the data calls would be maintained. Voice calls would also, of course, be maintained. So, very much backward-forward compatible technology.

I have a movie here -- let me show it quickly -- that shows the use of this technology in the mobile environment. Now, it's exactly the same technology that we use mobile as we used fixed. So, we inserted it in a van. There's a technical screen on the right. There's a modem, and I have a piece of it here -- a prototype that will become part of one chip as we move forward. We equipped the van with some technical capabilities so that when we invited people in November to come and witness this, they were able to see exactly what was happening. But the interesting part was they could, in fact, bring up their favorite website while they were driving along; and they could see the speed at which data could be downloaded. Screens could be painted.

Here's a view with a streaming video presentation as we're driving along. So, very high-data-rate access to the Internet.

Here's a case where we're downloading one-quarter megabyte files, several of them simultaneously, as we're driving along in the van. And so it's not a technology that's a futuristic; it's a technology that's available now, using technology equipment that's already in place and, therefore, that can allow some very inexpensive addition and allow this wireless Internet access.

I mentioned earlier that the devices are changing rapidly also. One question that people often ask: Is there an application for mobile, wireless Internet access? And I think we can think of many. I suspect our youngsters will, however, make use of it to download music off the Net and be able to play it back with their telephone when they're not using their telephone for communications or for web access.

Very quickly, it will be built into computers as delivered. And so in the lower right-hand corner it shows a computer with a chip on the motherboard providing this high-data-rate access. Further, I think, very quickly, the phone itself will for many people become the computer, because it has so much computer power into it. And, therefore, it's only limited by the size of the screen, the size of the keyboard. But as you come into a room, or a hotel room, or office, or home, you can drop the phone on the desk and, through Blue Tooth or its successors, immediately have a connection to a larger keyboard, a larger display, other devices. And, further, this wireless-capability Internet access will be going into lots of equipments, lots of machines.

Time-scale. We've already done a public demonstration of the capability. We're now going through capacity tests that allow the economics to be clearly defined. Be going into market trials to let consumers get a feel for the quality of the technology and, hopefully, commercial availability for some operators in the year 2001 toward the end of the year. So, it is a technology moving ahead rather rapidly.

If you look at CDMA, we started with the area on the lower end of "blue" technology that was put through standards again in 1993, recently updated. We're now moving to the green area, the 1-X multicarrier, the 1-X high data rates that support wireless Internet access and very efficient use of voice.

And then moving on to support both those technologies and other technologies that are being considered in other parts of the world, to allow upgrades from existing systems where CDMA is not currently permitted -- for example, in Europe -- to being able to use CDMA for both the voice and the wireless Internet access. So, there is an evolution taking place. Wireless continues to move ahead very rapidly.

There are, of course, always some areas where it's necessary to have perhaps some government attention. We have to date not been able to introduce CDMA in Europe because of standards issues and a memorandum of understanding among governments. We're hoping that will change shortly. China has been mostly using a different technology; recently agreed to use CDMA, but it's being held up, we think partly waiting for the vote on PNTR. And so, although there're many other reasons for a positive vote on trade from our point of view on the wireless side, this is also one of them.

The technical standards issue is an area that can be used to block competition. Again, I think it's necessary to pay some attention to what is happening. If one ends up with a standard that works in the United States or another region, then one should very quickly be able to adopt those in areas since it's now proven that it can work.

Finally, we think that wireless broadband services will be a significant capability, new technology, new service here in the United States. I think it's important that the regulatory playing field be kept level with that of the wire-line type services. We think it will, in fact, be a significant way to help solve some of the problems of the digital divide. Right now, those regulatory areas seem to be nondiscriminatory, so we have been proceeding in a very good direction. But we hope that that would be kept on that score.

So, thank you very much for the opportunity to tell you a bit about the further progress on the use of wireless for Internet access. We think that it is going to be explosive growth over the next several years. Thank you.

REP. MORELLA: Thank you. Thank you, Dr. Jacobs. It is pretty remarkable what has been done and what can be done.

Pleased now to recognize Mr. Lynch for his comments.

MR. RICHARD J. LYNCH: Okay. Thank you.

REP. MORELLA: And, incidentally, before you do speak, Mr. Lynch, I wanted to recognize the fact that Ms. Rivers from Michigan is with us. Mr. Baird from Washington is with us, and I now Mr. Wu from Oregon was here; and Mr. Gutknecht, who's the vice chair of our Technology Subcommittee, from Minnesota, is with us. You pay proceed, sir.

MR. LYNCH: Madam Chair, we have some slide issues.

(Off-mike comments.

)

MR. LYNCH: Now we're okay. Okay, okay.

Thank you to Madame Chairwoman and members of the Subcommittee. I do want to thank you for inviting me to give a carrier perspective on wireless Internet technologies today.

Verizon is still a hard word to get out of my mouth, as well, but (chuckle) -- I will make an attempt not to make a mistake in that area. But I will tell you that, clearly, the company is very bullish on wireless, given that it's part of our name, as you would expect. But we are very bullish on wireless data, as you'll see from my remarks this morning. I hope to leave the Subcommittee with some major points today, all of which are amplified in the written testimony that I submitted.

First of all, wireless Internet is really here today in its earliest forms, and I'll point out. Pending technologies, such as Dr. Jacobs just talked about will make it attractive to a huge base of customers within this country and throughout the world. I believe this subcommittee needs to encourage harmonization of standards, as has been occurring, on a worldwide basis, while leaving the development of the standards in the industry. And spectrum and its scarcity is the only major risk I see in an otherwise very bright future for wireless Internet.

Wireless Internet does exist today. Verizon's predecessor companies have been very active and, in fact, Bell Atlantic Mobile has deployed CDPD technology since 1994. CDPD is really the first what I would call generally available, IP-based, or packet data technology -- something which really to the consumer speaks about always-on capability. And I think that's critical as we move forward. It's relatively slow at 19.6 kilobits and, really, while certain phones are available for use with CDPD, it was essentially a PC card-based enabler for laptops.

But we do have some very notable applications that have been using CDPD for quite a while. And just to point to one, in the public safety arena there are many police departments in our footprint who have gone to CDPD as a means of communicating with databases, including the national databases used in the law enforcement community. This has provided a tremendous opportunity for a police officer, for example, in making a stop on the roadway to know what he or she's getting into before they get out of their cruiser.

In terms of wireless Internet today, at Verizon we have, in fact, chosen to deploy -- and quite aggressively done so -- the CDMA technology that is currently available. It is a circuit switch technology, and because of that it really has a very close tie to the voice technology. And as a result, we've made a commitment that wherever we put digital voice into our network, we will put data in at exactly the same time. And that has really, I think, been very helpful to communicate to customers throughout our territory that data is really here today. It, like CDPD, is relatively slow to most people today. But I would suggest to you that it's amazing what you can do at 14.4 kilobits. There are CDMA data-enabled phones today that we sell. Customers can walk into our stores and buy a variety of these kinds of phones.

Some of the basic applications that are currently available include microbrowsing, which is allowing you to receive short messages, allowing you to get the stock quotes that Mrs. Morella suggested early on in her comments, get weather and the like. It also does provide for limited web browsing by using the phone in place of a modem, connected directly to a laptop. It is clearly easy to deploy, and we have deployed it in both rural and urban areas at this point in time.

Something about wireless that is very important to this group is that it is very fast to deploy -- particularly in rural areas where the stories that you hear about how long it takes to cable and how expensive it is can all be circumvented with CDMA or any other kind of wireless data technology.

Let me move quickly to the next steps in this march toward the wireless Internet we're all looking for. Since Irwin has already talked about it, I will not go through the details of 1-XRTT or 1-XMC, other than to tell you that we see that as the next generation of technology that we're going to deploy. And it will provide a minimum of 144- kilobits data rate which, by the way, is faster than today's landline modems that are typically in most people's homes.

In addition to the other attributes which are already self- evident here, I do want to point out that we will be doing field trials with at least two infrastructure vendors in the second half of this year, and we will have commercial availability of 1-XRTT in our network beginning in the first half of next year.

Moving on one step further, what is beyond 1-XRTT, I think, has already been alluded to. With all due respect to Dr. Jacobs, there are a number of technology opportunities that are out there that will get us to 2-megabit service. And we will be looking at a number of these and, in fact, are committed to field-trialing three of these various technologies in the second half of 2000, with a focus on getting something into the marketplace in the year 2001.

What are the keys to success for the wireless Internet? First of all, availability of advanced technologies. And I will tell you that they are coming. The economies of scale and scope are very important. To the point of having something that is standardized throughout the world, it benefits the customer because of the scope and scale economies that we can gain.

Spectral efficiency is very important, and I'll mention that again in just a minute. One thing, though, that we can't lose sight of, and that is that we can have all the technology in the world, and it can be the best technology that is humanly possible; but without an availability of applications we have no wireless Internet success. We need to somehow foster in the applications development community a willingness to develop before the market is ready for it. That is not something that every software developing is intent on doing today, but we need to encourage that.

Next, quality of service is critical. We cannot have a service that works sometimes, in some places, that's slower than advertised speeds.

And, finally, we need availability of spectrum. Data, even at only 144 kilobits -- look at it as using as much as ten times the spectral capacity as a single voice call. And if you think of spectrum as the fuel that we need to run the Internet, you can take that analogy one step further, and you can see gas lines of people queued up, waiting for their service to respond, if we don't have sufficient spectrum available to put out these higher-band-width services.

Sources of spectrum is extremely important, I believe, to this committee. And one of the reasons for that is that in order to enable the widespread adoption that you would like to see, we need to have the ability to offer the customer service that, in fact, meets those quality standards, including the speeds necessary to be truly competitive. There's a couple of opportunities here.

First of all, the World Radio Conference is to take place in Turkey soon -- in fact, later this month. We need a worldwide harmonization of spectrum. We need to ensure that whatever is adopted throughout the world is adopted here in the United States. And we really need to ensure that after the conference is over that early availability becomes an objective.

Even at best, I envision a five-year time period between the time that the decisions are made in Turkey and we can begin to commercialize some of the spectrum that might become available.

You might say, "Well, there is a 700 mhz auction coming up just in the next couple of months. Why don't you go after that spectrum?" That spectrum will, in fact, be available, and we're looking seriously at going after that spectrum as an adjunct to the spectrum we have today. But because it contains television stations today, they have no obligation to vacate the spectrum in the near term. Clearing that spectrum and making it useful is a five-to 10-year process.

Finally, the PCS reoptions, I believe, are the only real near- term option for getting more spectrum in the hands of the carriers. And that is an encumbered spectrum, from my viewpoint -- that of an existing carrier.

There are two things that I would like to ask to have considered here. First of all, we are currently ineligible to have more than 45 mhz a spectrum in any NCMRS carrier.

And that spectrum cap is really limiting our ability to expand wireless Internet as rapidly as we need to do.

And furthermore, in the PCS reoptions there is currently a restriction that prevents us from bidding on this spectrum, because it has been designated previously for designated entities -- small businesses. We have no problem with the small business having a leg up. And by that I refer to bidding credits. But what I don't believe is appropriate is to ask that the major carriers in this country not have an opportunity to bid because it is set aside for these designated entities.

So, I would really like to ask here that you recognize the tie between spectrum requirements and the success of a wireless Internet, and consider that these two impediments really limit Verizon Wireless' capability and most other carriers' capability of deploying as rapidly, ubiquitously as we would like to see done.

And, finally, how can you help? Continue to promote harmonized standards. That is something which in my written testimony I've explained. Regarding the E.U.'s position on many standards, we have gotten beyond that; but I think diligence to continue to ensure that that happens needs to be foremost in our minds.

I'd like to ask that you support aggressive positions at Warp (sp) 2000 that identifies 3-G spectrum and provides for worldwide harmonization of the spectrum. I'd like to see you challenge NTIA and the FCC to work quickly to implement these warp decisions, so that that five-year period doesn't stretch out beyond that.

And, finally, I'd like to ask you to consider elimination of spectrum caps and other restrictive ownership rules as one of the enablers that will allow wireless Internet to flourish in this country.

Thank you very much.

REP. MORELLA: Thank you, Mr. Lynch. We also appreciated the fact that you followed up in true professorial style with a list of what can be done.

Pleased to recognize Mr. Graham for your comments, sir.

MR. TIMOTHY R. GRAHAM: Thank you for having me here today. My name is Tim Graham. I'm the General Counsel and Executive Vice President of WinStar Communications. I'm here today to provide some background on broadband, fixed, wireless Internet technologies and to provide some insight about the factors impacting its deployment.

WinStar is a broadband service company. We operate a purpose- built, broadband network. This means that from our first network deployment in 1996, our intent has been to build a facility-based, broadband network from the ground, up. We're the largest holder of fixed spectrum in the United States, with holdings covering over 200 million people and almost every major business center. Our business is helping small and medium-size companies do their jobs better by using the Internet and broadband communications.

Fixed wireless is used primarily to connect customers in buildings. The most obvious differences between a cellular network and a fixed, wireless network are that fixed wireless antennas are highly directional, bolted to a rooftop, possess larger data capacities, and do not support roaming -- i.e., they are not mobile. The antennas themselves are generally smaller than a pizza dish and, therefore, they're not very obvious to the outside eye.

WinStar deploys a line-of-sight technology over its area-wide licenses, which are primarily in the 38 ghz and 28 ghz bands. These are the millimeter wave bands. In the top 50 U.S. markets, WinStar possess an average of 800 mhz a spectrum.

A typical installation works like this. Inside a multi-tenant building a conventional lit cable links our customers with an antenna on the roof. When a user sends data, it is sent along cable line to the antenna, which then uses the spectrum to transmit data packets in a tight beam aimed at a hub site antenna on the second building. The second building is a hub that receives transmissions simultaneously from many customers in the surrounding buildings, aggregates the transmissions and pushes them out on a -- onto a fiber backbone for distribution to the national network.

For local access, we use a combination of point-to-point and point-to-multipoint radios to carry these signals. The multipoint technology, which we are now deploying nationwide, was introduced commercially in the fourth quarter of last year. It will reduce the network deployment costs and provide customers with bandwidth on demand.

Unlike the lower spectrum bands, the millimeter wave band signals do not penetrate buildings and generally travel less than five miles. As such, with the use of low power techniques, WinStar can reuse the same channels again and again within a city. Currently, 150 to 200 links can be concentrated in a one square kilometer, and that number is growing rapidly as equipment is developed and techniques become more refined.

Because audio signals can be digitized and sent as data packets, fixed wireless carries telephone service simultaneously. And as the chart indicates, voice and data transmission will soon be converged and lose their separate network characteristics. As you know, long- haul fiber companies are building tremendous high-capacity connections between cities. However, once those high-capacity lines reach a city, they often cannot reach the buildings housing the end-user customer. Fiber has reached only 10,000 commercial buildings nationally. That's about 1.5 percent of the nation's 750,000 commercial buildings. Fixed wireless allows broadband capacity to be extended to the places where people work, to their desktops at a fraction of the cost of fiber.

For example, to install fiber to an office building can cost hundreds of thousands of dollars, requires extensive permits and, as the Chairwoman mentioned, causes significant disruption by cutting up city streets. In contrast, a large office building can be connected to our network with fixed wireless radio costs of only a few hundred dollars per each T-1.

Fixed wireless radio costs are dropping even more rapidly, because these costs are based primarily on technology and scale of equipment production. Fiber deployment, on the other hand, is inherently labor-intensive; and, therefore, costs will continue to rise; and that will impede the roll-out of fiber.

Four years ago, when WinStar created this business, a customer could receive only one T-1 per 100 mhz channel. WinStar currently offers OC-3 radios, which provides the equivalent of a hundred T-1s. Our next-generation radio being tested today provides the equivalent of 400 T-1s per channel. That means in the last four years, we have quadrupled the capacity.

Our business is to supply the wherewithal for our customers to achieve breakthroughs in productivity by making Internet access that is always on, and by introducing new services that businesses can use to take advantage of the potential of the Internet.

For example, one of the new content services we provide is Office.com, and online business service focused on the needs of small to medium-size businesses. Others have recognized the benefits of fixed wireless, and we have entered into strategic partnerships with a number of major plays to enhance the deployment and use of our network, including Lucent, Williams Communications, Metro Media Fiber, MicroSoft and WinNet, to name just a few.

Today, we're providing service to 60 major U.S. markets and 10 international markets, and we are clearly the worldwide leader in the deployment of broadband, fixed wireless service.

In the U.S., flexible policies of spectrum allocation have encouraged the development of wireless Internet technologies. Internationally, many countries have not yet adopted policies which make sufficient blocks of area-wide spectrum available. An area-wide spectrum is a key to fixed wireless. However, this is changing as foreign regulators realize the economic benefits from deployment of broadband technologies such as fixed wireless.

Domestically, our greatest hurdle is the difficulty of securing timely access rights to buildings where our customers work. In many cases, it can take nine months to two years to negotiate building access with building owners. As noted, there are over 750,000 commercial office buildings in America, and one third of all Americans live in apartment buildings.

Today, only 2 percent of building tenants have access to facilities- based, competitive communication services. Federal legislative and regulatory action is key.

The Telecommunications Act intended to shift monopoly gatekeeper control away from local exchange carrier. It did not intend to give that control to building owners. Yet, when competitive providers like WinStar offer to pay reasonable, market-based rates for access to customers in buildings, they still often face unreasonable delay or, in some cases, denial.

This directly contributes to the gulf between the haves and the have-nots -- the "digital divide." Unless corrected, it will take decades to obtain broadband services and the economic benefits arising from fixed wireless deployment.

Support for bipartisan bills like HR 3487 and HR 2891 will enable national processes for securing nondiscriminatory access to buildings to be implemented.

In conclusion, let me say that there's great power for good in our model of fixed, wireless, broadband networks. It is one of many ways of providing broadband access, and that's the key and why all of us are here today. You who make the policies that shape our markets are vital to its deployment.

And I believe that it is important that we work together for the benefit of our common customer, the individuals who initiate and receive communications -- whether it be voice, data or video.

Thank you very much

REP. MORELLA: Thank you very much, Mr. Graham.

I'm now pleased to recognize Mr. Fulton.

MR. PAUL FULTON: Madam Chairwoman, members of the Subcommittee, I'm Paul Fulton, Vice President and General Manager of 3COM Corporation's Wireless Connectivity Division. Thank you for inviting me to share 3COM's views with the Committee about development and wireless Internet technology.

This is truly an exciting time to be in the industry, and I'm happy to be able to give you a taste of what is in store for our economy and our way of life. 3COM Corporation, based in Santa Clara, California, is a global networking technology company with $6 billion in annual sales, 181 offices in 49 countries. With more than 300 million customer connections worldwide, 3COM Corporation connects more people and organizations to information in innovative, simple and reliable ways.

We are in the midst of an information connectivity revolution fueled by the popularity of the Internet. This revolution was made possible by protocols that standardized how users created and connected to content, and which enabled users on diverse systems to easily share information. These innovations have led to the emergence and characterization of the new economy, where information exchange and, increasingly, commercial exchange take place over an electronic network, rather than the physical world.

This new economy has not only led to significant job creation, but is also revolutionizing work processes in the old economy, spearheading tremendous productivity gains that have allowed for tremendous economic growth without inflationary pressure. The wireless Internet builds upon the success of the Internet and Internet technologies by giving people access to information whenever and wherever they need it.

Today, people participate in new economy from a computer, while seated at a desk or an office, school lab or at home. They access the Internet by local Internet LANs installed in the building or home. However, the advent and maturity of wireless data-networking products and services extend the access of new economy through a variety of platforms such as portable PCs, hand-held computers, mobile phones and gaming units. Regardless of whether they are in an office, down the hall, or in a public environment such as a library or train station, the wireless Internet enables a truly anytime, anywhere Internet economy, furthering the productivity gains that the Internet makes possible.

3COM is a leading provider of wired equipment for computer networks, and will participate in the wired Internet by delivering products and services that provide people with access to the Internet and corporate networks, regardless of location. The wireless markets in which we participate are expected to grow tremendously over the next few years, creating more jobs, more opportunities and increased productivity for many Americans.

By 2003, wide-area, wireless networks capable of supporting data communications will grow to approximately 24 million subscribers. Annual sales of wireless local area connections installed inside businesses, universities and other buildings will grow to 15 million connections. Finally, the annual sales of emerging applications for short-range and wireless personal area networks will grow to over 250 million connections.

3COM was particularly active in the development of the emerging market for wireless local area networks. These networks provide high- speed, in-building, wireless networking capabilities. This technology will benefit managers and professionals in offices by -- in office settings by allowing them to access e-mail, corporate networks and the internet while away from their desks.

This technology also provides real-life benefits to students and teachers in educational settings, allowing them to quickly and inexpensively deploy flexible computer networks on the fly to assist computer learning experiences and to provide connectivity without the installation and expense to fixed wireless networks.

Finally, wireless LAN technology will also provide convenience for consumers, who at home will increasingly turn to wireless networking as a hassle-free alternative to sharing Internet connections between two or more computers that may reside within the household.

Wireless LAN capabilities have been made possible by standards developed in the private sector. The IEEE 802.11 family of specifications was developed in compliance with FCC regulations regarding usage of unlicensed radio spectrum, the 2.4 ghz industrial, scientific and medical band commonly referred to as the ISM band.

The widespread acceptance of these standards for high-speed, wireless LAN communications has reduced the R&D risk for equipment manufacturers such as 3COM and others, allowing large investments that enable high-quality, low-cost products. Companies such as 3COM, Apple, Sysco, Compac, Dell and Lucent are advocates of the standard, together with a host of lesser known start-up companies; and have created 802.11-compliant products.

As a result of this activity and competition, retail prices for wireless LAN equipment have dropped by over 50 percent over the last 12 months, opening up the market to mass adoption in offices, schools, homes and other environments.

In addition, compatibility testing across vendors has succeeded, increasing the confidence in the buying public of the 802.11 technology -- all of this as evidence of our belief that the U.S. standards system, which is decentralized and led by the private sector, is extremely successful in meeting public and private-sector technology standards needs in promoting the global competitiveness of U.S. Information Technology Industry.

As a member of the Information Technology Industry Council, ITI, 3COM (sp) supports ITI's position that responsiveness to market forces is best achieved when standard setting is performed and guided by the directly affected parties. This leads naturally to a sector-by-sector mix leading to formal consensus and de facto mechanisms for standards development. All parts of this mix are now playing important roles in development of wireless Internet technologies.

Madam Chairwoman, understanding the Committee's interest in the importance of standard setting to the growth of evolving technologies like wireless, it's important to me to make a very specific point about a potential problem that we see on the horizon. I'm speaking of the need of the government to not undermine privately crafted industries (sic) standards by ill-advised and sudden changes to rules that have guided years of research. Let me specify my concern.

I refer back to my earlier discussion of wireless LANs operating in the 802.11 standard.

After years of painstaking effort, the IEEE has developed standards that allow for development of wireless local area networks, or LANs. The standard known as 802.11 will allow businesses' consumers to link their computers without the complexity or expense of putting in new cables and wires.

This newly developed standard promises to make office networks far less expensive and home networks affordable for the first time. It will also open a new, billion-dollar, global market for the U.S. industry.

But the FCC has been asked to consider new rules that would undermine this new industry. At the behest of one of two companies, it is considering changing in its rules that would permit wireless devices to interfere with the operation of 802.11 devices. This will make already-installed devices useless and undermine the market for such devices. It will, in fact, subvert the 802.11 standard and deal a body-blow to the private standard-setting activity. The FCC and all government agencies, when considering rule changes, must be careful not to undermine the private standard-setting process for, if they do, damage to the U.S. industry will be enormous.

In closing, Madam Chairwoman, we are at the beginning of a new era in Internet connectivity where access becomes location- independent, allowing productivity gains of the new economy to be exploited in the fullest, extending the Internet revolution. Your committee is to be commended for recognizing the importance of the industry and its impact to society and the economy.

I'll be happy to answer any questions you have.

REP. MORELLA: I want to thank all of you for testifying. And I guess I can see the refrain being somehow repeated about the need for harmonization of standards; should be private-sector standards, not governmental standards. I think you all care about what's going to happen at that word conference in Turkey, and several of you particularly care about an increased spectrum.

(Vote buzzer sounds.)

REP. MORELLA: So, I hope that you'll keep us posted. I am going to meet -- I'm leaving now not only to vote, but to meet with Meg Whitman of E-bay to discuss maybe some of the -- some similar issues. And I'm going to relinquish the Chair to our very distinguished and very capable vice-chair, Mr. Gutkneecht for any questioning. And any questions he doesn't get to, or Ms. Rivers doesn't get to, we will submit to you in writing and ask for your response. So, thank you.

(Dialogue off-mike)

REP. GILBERT GUTKNECHT (R-MIN): I think Ms. Rivers is absolutely correct. I think what we'll do is we'll recess the Committee for about 10 minutes, and so we'll try to get back as soon as we can and because I have a couple of questions. And I think there may be some members who will be back. We really appreciate your being here. So, you can get out your cellular phones and do whatever you have to do for 10 minutes. We'll be right back. Thank you.

(Recess, back on the record.)

REP. GUTKNECHT: I'm going to call the committee meeting back to order.

There may be some other members. I do apologize -- and first of all, I want to say thank you to the staff. We feel a little like a pair of brown shoes at a black-tie event. I mean what a tremendous panel to assemble to talk about this exciting, new technology. And I want to thank all of you for coming.

And I apologize that the attendance is not as good as it really should be, but do understand -- for example, I have another committee meeting going on at the same time, in the Agriculture Committee. And I suspect that's true of most members. Unfortunately, this is sort of a three-ring circus up here, and all three rings are going at the same time.

I say that this is a very exciting technology, and particularly for those of us who represent what might be described as more rural districts. And I think the comment was made about the digital divide. I think this really does represent the potential to close that divide very quickly. We had a demonstration a couple of weeks ago of a small, start-up company, and they demonstrated -- now, I apologize. I'm not particularly technical. But they demonstrated how much information can go across this fixed, wireless system at lightning speeds.

And I think one of the demonstrations they showed -- and I can't remember -- I'm not into gigahertz or megahertz, but it was a lot of information. They described it as a file that would contain roughly twice -- if you took all the writings of William Shakespeare, multiply it times two, on my computer in my office, to download that file currently would take me almost 20 minutes. This downloaded in eight seconds. It really gave me some concept of how much information can go back and forth. And the ability to build the system out, particularly to rural communities, using wireless technology, rather than waiting for expensive fiber optics to get there, is just tremendous.

And I'm just struck by the fact that we're at the beginning of this new revolution, and where it will lead us all no one really knows.

For the members and anyone else who may be interested, this committee meeting -- and I don't know if the Chairwoman announced this but will be available on the web. It's available on the web now, and will be available at www.house.gov/science/welcome/ht -- I'm sorry dot-htm. It will be available at that site after six o'clock today. And you just go to "Technology Subcommittee" and "Archives" and, with a few clicks after you get to www.house.gov/science/ welcome.htm. And we'll hand that out to anybody.

But after six o'clock tonight, you'll be able to get that. And members will be able to review this at home over the weekend, if they like. So, again, thank you.

Now, my principal question is the role that we should play in terms of public policymakers. And I want to make sure I'm clear on this. It sounds to me, based on what I've heard so far, that the industry is satisfied to proceed with three, essentially, different standards here in the United States, while in Europe they are moving towards -- or have already moved towards -- a singular standard.

Am I correct in that? And, perhaps -- any of you can take a shot at this. And we did have with us at the -- at the demonstration a couple of weeks ago, we did have representatives from the NIST office. And I think they seem to be very eager to work with the industry and to make certain that the United States is in a good position. But is that essentially what's happening? And, what role can we play here from a public policymaker standpoint?

DR. JACOBS: I would like to comment on that, if that's all right. In Europe, there was an agreement several years ago among governments -- an MOU -- to use one technology to go digital, and that's because the original analog networks had been all-different. So, you went country-to-country, you could not reuse the same telephone. And so what they needed to do was to allow roaming to occur easily, and they did it by specifying a technology.

In the U.S., on the other hand, the technology was left to the marketplace. There was a need to standardize. The technology was left to the marketplace. And so, originally, there were -- was one, then two, now three different digital standards. In a sense, that actually has been advantageous in that, as -- in Europe, one looks ahead to providing wireless Internet access. The recognition is that one needs to go to CDMA to use for this interface. And so there's been reasonably good agreement -- not a hundred percent, but reasonably good agreement -- on the use of CDMA for that next step, that next generation. That's a rather complete revolution, because one is going from a TDMA technology to a CDMA technology.

It -- in the most expensive parts of the system -- the radio part of the system -- means a complete change. In the U.S., significant parts of the operators, the industry, are using CDMA already; and so it's an evolutionary step, not a revolutionary step. And one is ahead in the sense of being able to have already had experience with the technology.

Now, I think that the fact the government allowed the marketplace to make these decisions is very positive.

In Europe, I think it would have been better to simply say a requirement is that one allow roaming. And so, for example, one can have telephones that have multi-mode capabilities that adjust to whatever the local condition is and do allow roaming. But one does not need for the government to get into the details of the technology, or an agreement that one use a specific technology.

And so what we're hoping as we go into this next generation -- actually, a new spectrum that there're currently auctions and contests "beauty contests," they call them, going on in Europe and elsewhere, that there be the freedom to use any of the standards that have been currently worked on at the ITU; that the regions will accept those, allow those to be used not only in the new spectrum, but also be allowed to be used in the existing spectrum. I think that would open up the situation much more readily.

And so the government has been watching that from a competitive point of view -- the executive. I think that that ends up being a very important aspect, that the governments not deny the use in any way or require the use of a specific part of standard; but, rather, leave it open and allow the marketplace to make decisions.

REP. GUTKNECHT: Do the rest of you basically concur? Mr. Lynch?

MR. LYNCH: If I could add to what Dr. Jacobs has just said, I think two things to put into perspective. As was mentioned, in Europe, not even the analog -- the oldest technology -- was technology from country to country. In this country we have had, and continue to have, the base reference point to be analog. So, the fostering of multiple digital technologies and letting the best one win has been very successful here, because there was an underlying commonality -- that all of the digital -- most of the digital technologies still had the analog backup, if you will, when the customer would roam. The phones would work both ways.

What we really see as an advantage in the next generation of technology -- that which will support the Internet as well as more voice capacity -- is a universality in the handset that will allow a customer to go from New York, or Los Angeles, or wherever, to Europe and have that phone work there -- something which, for the most part, really can't be done today.

So, there really is an opportunity here for you to watch that the standards remain -- or that everyone remains committed to the ITU 2000 standards set, so that the industry can foster that transcontinental roaming that is not really available today.

REP. GUTKNECHT: Do you hope to get those kinds of matters resolved at this conference in Turkey?

MR. LYNCH: No, sir. The conference in Turkey really is more for allocation of spectrum. It is the international community's way to try to assure a consistency of assignment of allocations of spectrum for various services, like for wireless Internet or for what we would refer to as 3-G standards. That's what should happen in Turkey -- is a common assignment of frequency bands across the world. Where you would talk the standards would be within the ITU.

REP. GUTKNECHT: Okay. Mr. Graham?

MR. GRAHAM: Yes. A carrier -- I think this is on. As a carrier, I'm somewhat technology- and standards-agnostic. I mean I use fiber -- I use wireless fiber, which is what we use at 38 and 28 ghz. I use DSL, I use whatever. So, the one thing that I think has made the United States a hotbed of innovation is the fact that the government has not become -- mandated standards. So, I -- as a carrier, I actually would like to keep it that way, because I think that has really fostered the type of developments we've talked about here.

MR. FULTON: 3COM is in the area of local wireless networking and personal wireless networking, which is different from what you're speaking of here in the wide area. However, we agree with the comments here that privatization of this makes a lot of sense, and fostering competition is good. Our products will bolt up to all of these mentioned, so we just wait for the fallout and go from there.

REP. GUTKNECHT: Ms. Rivers.

REP. LYNN N. RIVERS (D-MI): Thank you. I want to follow up on this question that was just asked because, while I understand why individual companies would want to maintain the standard that they have been developing their products in, isn't it in fact, more expensive for the consumer to have multi-standards and equipment that has to be able to read multi-standards? Wouldn't the price to consumers go down if we had a single standard, as they do in Europe? Mr. Jacobs -- Dr. Jacobs.

DR. JACOBS: Well, yes, for part of the time, perhaps. But over time, if you don't allow the best technology to move ahead -- which then does result in lower costs -- you end up giving up the potential of the lower cost because of the larger quantities that was due to the mandated standard.

For example, if we wanted to go ahead now to wireless Internet access, we could do that with a evolution with CDMA; but one needs to make some fairly major changes with the other technology. So, that does result in higher costs back to the consumers.

It turns out that --

REP. RIVERS: Is that higher cost from established companies that have to cover their cost of switching over? But for new, start-up companies, would their product be less if it didn't have to meet all three standards -- or, be compatible with all three standards?

DR. JACOBS: Well, there are different types of businesses you can start. And so if you have a business that is regional, then you can work without having that multi capability.

The interesting thing is that the technology is moving ahead so rapidly, more is more -- wanting to get more and more -- recognizing the fact that you get more and more transistors on a piece of silicon allows you to, in fact, support multiple standards at very low cost. And so today, there are other barriers; but if those barriers go away and part of those are governmental -- if those go away, if they're at very low cost will be able to support multiple air interface standards -- what's been called CDMA, TDMA. Multiple networks -- there're two major, different -- mobile networks, plus the Internet -- can do those at low cost.

Actually, the largest cost isn't supporting the different frequency bands that people use; but it's desirable to be able to support those if you want large range of roaming, because in different areas different companies will use different frequencies.

REP. RIVERS: Mm-hmm (in acknowledgment).

DR. JACOBS: And so that's probably the highest cost that you add to a phone, and it's independent of the fact that there are multiple standards.

REP. RIVERS: Okay, thank you. Does anybody want to add to that, or do you agree?

MR. LYNCH: Yeah. If I could follow up with --

REP. RIVERS: Mr. Lynch?

MR. LYNCH: -- a real-life example. Back in the cellular industry -- and if -- you'll have to excuse the dates, because my memory doesn't always make them accurate. But back in the 1989-1990 period, we in the industry were experiencing a very tense battle of standards. "Should we be TDMA?" "Should we be CDMA?"

And, in fact at that time, I had to make that decision. And I had to look at exactly the issue that you were talking about. Would it be better for every carrier in the country to have selected TDMA -- which was at that time the leading candidate to be the standard throughout the country? Or, should we bolt from that unified position and adopt CDMA, with all of its promise?

And, in fact, we have chosen to go CDMA and, frankly, for a period of time, I lost a lot of sleep because I wasn't sure whether the handsets would ever come down to the price of a TDMA handset or they would always be more expensive.

What we have actually seen -- and it's reflected in our costs, but also in the rates to the consumer -- we have seen CDMA, with its promise having been delivered, to be today far cheaper than TDMA for the same amount of capacity.

And so I would suggest to you that, while in theory a single standard does provide that opportunity to be less costly because of volumes, when you're talking about millions and millions of units anyway, that cost differential goes away. And if you can gain the advantages of -- for example, as in the case of CDMA, far more capacity per cell site -- you really can benefit the consumer and the company.

REP. RIVERS: Thank you. Mr. Graham, I have a question for you, because I was intrigued by your technology as you were talking. And you may remember in 1996, when we passed the telecon bill here, one of the provisions was that we were going to help schools and libraries all over the country hook up to the Internet. And we decided -- or someone decided; there's a little controversy about that -- it was decided that we would pay for that by tacking a fee onto everyone's telephone bill all over the country.

So, certainly looking for ways to save money on e-connections for public buildings is a big issue.

What you were walking about, which is to not have traditional wiring through the building, but to go to a wireless system, strikes me as being much less expensive. Can you give me an estimate of how much less expensive it is than traditional wiring costs and whether or not schools, libraries and other public-sector buildings are coming to you to get help in this area?

MR. GRAHAM: Well, actually, what we currently do is we have an antenna on the roof. So, the cost of connecting to the network is the wireless part. Inside the building, we generally will use -- today, we'll drop cable on down to the 66 block, and then distribute that to the wiring in the building. I, the future, we may be using wireless inside the building but, currently, we don't.

With respect to schools and universities and things like that, we have serviced some. We have a group that works in education, and we recently entered into contracts with the -- MAA contracts -- with the GSA, which actually is in three cities, which schools and universities in those cities can participate if they sign up with GSA.

REP. RIVERS: What is the comparison between the old and the new technology in terms of cost?

MR. GRAHAM: Well, okay. I can't really speak to exactly what --

REP. RIVERS: Right.

MR. GRAHAM: -- the fiber costs are, because I have seen it quoted and published by -- it's approximately $300,000 to connect to a on average, to connect fiber to a building. Our costs are probably somewhere under about 25,000 to make that same connection.

REP. RIVERS: Great. Thank you so much. Thank you, Mr. Chair.

REP. GUTKNECHT: And now to Mr. Bartlett, who is actually the holder of 11 patents.

REP. ROSCOE G. BARTLETT (R-MD): Thank you very much. Not in this area. Actually, the number is 20, and 19 of them are military patents, and they have to do with respiratory support.

I have a general question that I will ask in just a moment about the dual-use technologies. I'm intrigued at the one that Mr. Graham referred to, was one that was developed by the military -- LNDS. And I'm curious as to how many other dual-use technologies are now finding application in this area.

But first, let me ask about a unique requirement that I was introduced to. We have a place down in a mountain valley in West Virginia. It is quite remote. There are no phone lines that are anywhere near. You can hardly get good snow on your television set. We're in a --

(Laughter.)

REP. BARTLETT: -- we're in a mountain valley there. And there are -- there's no cell there for any cell phone. In addition, in our valley we are within the National Radio Astronomy Observatory RF-quiet area. Are you familiar with the National Radio Astronomy Observatory?

I explored the possibility of a phone by way of satellite. This was a couple of years ago. At that time, the basic hookup was -- the equipment was very expensive, and the use was prohibitively -- the cost for use was prohibitively expensive. The usual remote area does not have to cope with one of those problems -- that is the Radio -- National Radio Astronomy Observatory RF-quiet zone. But they do have to deal with the other two -- that is you just can't get to a hardwire; they're too far away, and you are remote from any cell. What can you do with your technologies for people in situations like that?

DR. JACOBS: Well, actually, you can tie both of your interests together. When we first started QUAL-COM not quite 15 years ago, one of the early programs we worked on was a program for the military based on using low-earth-orbit satellites for providing military communications in a highly reliable fashion. That has since grown into a commercial system called Global Star. And Global Star uses the CDMA technology, which also was first developed in the military, although not for this type of commercial use. It uses that to communicate through the satellites and provide a high-quality voice and a low data rate service that will serve any remote area. And so that is one solution and, interestingly, that solution does go back to its military origins. That system is commercial today, just beginning to expand. The whole issue of low-earth-orbit satellites has had a setback with two other companies going into bankruptcy. And so there's a lot of attention being paid to it by the financial community, among others. But it appears that there are enough users in isolated areas that need communications that -- for which this will, in fact, work quite well.

REP. BARTLETT: Will the cost be competitive? When I checked on it, they were really not competitive -- nowhere near it.

DR. JACOBS: I think the system you were thinking of was a geostationary system that was quite expensive. Yes. These are not as inexpensive as cell phones nor air time on a cellular system, because it is somewhat more expensive. But it's not a large amount more expensive. So, I think that indeed it can be used in many or most parts of the world.

REP. BARTLETT: They were then talking about a dollar or so a minute.

DR. JACOBS: Well, that probably is in the ball park right now.

REP. BARTLETT: Yeah, that's not really competitive with other --

DR. JACOBS: Not with -- not with terrestrial. With the ability to reach into areas where otherwise you can't get communications, it can be. But I agree with you that it's desirable to bring it down at least another factor of 2.

REP. BARTLETT: And the RF-quiet zone? Are any of these technologies compatible with an RF-quiet zone?

DR. JACOBS: I think you do run into trouble with the astronomy zones because of using the radio waves, because they are quite sensitive. They're making very sensitive measures. And so I'm not sure about the area that you're referring to, but I know there is an aspect that you do have to prohibit operation in certain regions near radio antennas -- radio astronomy antennas.

REP. BARTLETT: Yeah, they're pretty picky. They're in a quite remote mountain valley ringed by mountains. And if you haven't been there, it's worth seeing. An enormous array of dishes. The largest one is 300 feet across, and it is focusable. They can follow a distant star as the Earth turns. It's really quite a capability. Only one other in the world, and that's in the Soviet Union. This is almost unique in the world.

Are the -- you now have mentioned two dual-use technology applications.

Are there others that the panel knows of, where we've developed technologies with taxpayers' money, which are now coming back to benefit the taxpayer through these dual uses?

MR. LYNCH: Mr. Bartlett, I can't be responsive directly to that question, but to the question that you asked about being able to provide cellular service in a rural area where there are no cable connection capabilities to telephone cable or what have you -- that is, in fact, something that we do routinely. I also can't speak to the specific location, but I suspect I know why we're not there -- because of the quiet zone.

However, one of the ways that we do connect cell sites, particularly in the rural areas, is using microwave as a connectivity tool; so that it is not at all uncommon for areas like the one you're referring to, to service the community that's in those areas using WinStar, for one -- we do that sometimes -- but also to use some of the lower-frequency microwave that we put in ourselves. So, the rural area can clearly be served, even if there is no cable plant available in those locations.

REP. BARTLETT: Are any of those over the horizon? Or, are they line-of-sight?

MR. LYNCH: No, it's all line-of-sight.

REP. BARTLETT: All line-of-sight -- which means you have to build a tower.

MR. LYNCH: Yes. Well, the tower's got to be there for the cellular antennas, anywhere, so it's just --

REP. BARTLETT: Right.

MR. LYNCH: -- added to the same.

REP. BARTLETT: Which is our problem. We have no tower, we have no cellular.

MR. LYNCH: Yeah.

REP. BARTLETT: Okay. Thank you. Thank you very much.

REP. GUTKNECHT: Mr. Bartlett, you have mountains, though. You could put one of them --

REP. BARTLETT: Oh, there are plenty of mountains. In fact, that's all you see there. At night from there, you go outside, and you do not see a single light. There is no evidence that there's anybody else in the world when you go out -- except maybe a high- flying plane that might be up there. It's the only light you're likely to see, except for stars -- which you can see, by the way.

REP. GUTKNECHT: Well, thank you, Mr. Bartlett. And I will correct the record. Twenty patents.

REP. BARTLETT: Twenty.

REP. GUTKNECHT: Twenty patents.

Ms. Rivers, do you have a following question?

REP. RIVERS: Thank you very much. I have two, actually. I hope I can get to both of them.

This is for Mr. Lynch. You talked a little bit about freeing up space on the spectrum, which -- I understand the desire to do that, but I'm very curious to know who is parked on that area of the spectrum now? We're going to have a debate later on today about low- power radio stations, and there are people who feel very strongly that we should have more voices utilizing the media than fewer. So, if, in fact, the spectrum space that industry is hoping to take over is freed up, who's going to be displaced?

MR. LYNCH: Well, I need to answer that by piece, private spectrum, because it obviously varies. Let me answer the question that is most foremost in my mind, and that is spectrum which is currently unused --

REP. RIVERS: Mm-hmm.

MR. LYNCH: -- which is the spectrum that was turned back from the PCS auctions, which has not yet begun to be used.

One of the points I was making earlier was that companies like mine are currently prohibited from using or from actually bidding for that spectrum to levels above 45 mhz in a general sense, because of the spectrum cap limitations. But more importantly, for the particular PCS reauction that is coming up, we are prohibited from bidding at all as long as the designated entity rule remains in effect, which provides a set-aside of that spectrum for small businesses.

REP. RIVERS: Mm-mm.

MR. LYNCH: So, that is the single piece of spectrum that I'm focusing on as in the interim opportunity.

REP. RIVERS: Because you had mentioned specifically -- your term was "clearing" -- that, with government help, "clear" certain parts of the spectrum. And I'm curious --

MR. LYNCH: But that's --

REP. RIVERS: -- to know who --

MR. LYNCH: -- that's -- but that's --

REP. RIVERS: -- is being "cleared."

MR. LYNCH: Okay. That's the next piece.

REP. RIVERS: Yes.

MR. LYNCH: The 700 mhz spectrum, which also come up for auction this year, is currently occupied by UHF TV stations, and is scheduled to be cleared as part of the conversion to digital TV. But I'm sure you're more aware than I of the specifics of the rules; however, currently, that spectrum will not be cleared before at least 2006.

REP. RIVERS: Mm-hmm.

MR. LYNCH: And if -- as I understand the rules, if 85 percent of the population of that area has not become enabled for digital TV at that time, then it doesn't get cleared even then.

REP. RIVERS: Mm-hmm.

MR. LYNCH: So, there will be an extended period, based upon what I've seen in the last couple of weeks coming out of the various TV interests -- that it is very unlikely, in my mind, that that spectrum will be cleared without some additional initiatives far beyond 2006.

And the third piece of spectrum that I'm talking about is not yet really defined, but the World Radio Conference that is taking place in Turkey -- the U.S. position has identified three or four segments of spectrum that currently in this country is used by a variety of users. One of them is DOD. I'm not sure which the others are right here, off the top of my head. But those pieces of spectrum would also require clearing before they could be used for commercial mobile services.

REP. RIVERS: Okay. Thank you.

The last question I have is to anyone who chooses to come in on it. There have been a lot of concerns raised in print and in discussion around the security and the integrity of wireless transmissions. And on this committee we have followed the debate around encryption and security very closely.

I'm curious to know, in your work do you feel you are able, under the current policies of the government, to provide the kind of security and integrity to your systems that you would like? And if not, what would you propose for changes in governmental regulations in that area?

MR. FULTON: I can take a --

REP. RIVERS: Mr. Fulton?

MR. FULTON: -- stab at this first. So, we found that in our wired network security is something that people have options to take, and they can secure their wired networks. But on wireless there is no option. We must secure the data.

In our wireless LAN products we have different strengths of encryption from 40-bit, to 56, to 128-bit. But we've run into lots of regulations over where we can ship these technologies, and that's a big constraint on not only my company, but the industry as a whole. So, relaxing the standards of where we can ship these products would be very beneficial to our industry.

REP. RIVERS: Mm-hmm. And are you losing out competitively to other nations' products that can be shipped all over the world?

MR. FULTON: Yes, absolutely. Technologies in encryption that are developed outside of the U.S. can be shipped to other places, and they don't have those same rules. So we find ourselves struggling to get into the market as quickly as some of these other companies have.

REP. RIVERS: Okay. Anyone else like to comment?

MR. GRAHAM: Well, we --

REP. RIVERS: Mr. Graham?

MR. GRAHAM: -- fixed wireless -- at least the fixed wireless we use -- has enormous capacity. For example, an OC-3 has about 250 mhz of capacity, but it's sort of unique. There's a small antenna you put on a roof, which is -- and it's like a pencil beam shot that goes out, usually two miles. So, with -- quite honestly, with respect to the security risks, we don't really have a lot of risks, because it's awfully difficult for somebody to tap into that.

Well, I think is more of an issue, perhaps, for the mobile users, because they are --

REP. RIVERS: Right.

MR. GRAHAM: -- a little bit more accessible.

REP. RIVERS: Anyone else? Dr. Jacobs?

DR. JACOBS: Well, I think that the technology, although not perfect, is able to do a better job than we've been permitted to do because of the need of contrasting privacy versus the law enforcement requirements. But I think we've been moving in a direction to support more and more privacy. I think that it's very important. The ability to export it also becomes very important. And so I think the trend is in the right direction, and we just still have to continue to work on that.

Coming back just for a minute to the dual-use, also on this encryption, I mentioned CDMA that we're currently using in our commercial systems originated with work in the military, in the government --

REP. RIVERS: Right.

DR. JACOBS: -- actually back in World War II. And that has been taken forward and made commercial. It's now interesting that it is going back into the government to provide and support highly private communications for government use. And, in fact, two companies are cooperating on some demonstrations of this technology right now. And so it's come full-circle in some sense, which has been useful. In the government case we don't have the same requirements we have for --

REP. RIVERS: Right.

DR. JACOBS: -- commercial use.

REP. RIVERS: Thank you very much. Thank you, Mr. Chair.

REP. GUTKNECHT: Just in closing, back to this issue of privacy, though -- and -- based on what I've learned -- and help me out here because, again, we're kind of novices on this side of the desk. Maybe Mr. Graham. I mean, obviously, part of it -- with a microwave-type beam, that's not a problem.

But also, when you digitize all of this information over this broad spectrum, it is very hard if you don't know if, unless you know what's being sent, to re-put this back together. Is that --

MR. GRAHAM: Yeah, that's accurate. It's much harder to put it back together.

REP. GUTKNECHT: So,with this new technology, in some respects, concerns of privacy are greatly diminished just by the new technology.

MR. GRAHAM: Well, to the extent it's wireless, yeah. And I also think with respect to the technology these people deploy I think it's true also.

REP. GUTKNECHT: Now -- yes, Dr. Jacobs.

DR. JACOBS: Well, you have to be a little bit careful. Yes, the casual listener would have more difficulty listening to a digital signal than to an analog signal --

REP. GUTKNECHT: Right.

DR. JACOBS: -- and then to certain types of digital signals, as opposed to others. But having said that, the capabilities also are increasing. The power of computers that people can use if they wish to do an interception can, in fact, support that type of interception if you don't provide very strong privacy. And so casually it's a little harder, but there's more and more tools for allowing one to break in despite that.

REP. GUTKNECHT: Yeah. Several of you -- we've talked a little bit today about this meeting in Turkey. And I can't remember who it was mentioned the United States' position. Who speaks for the United States at a meeting like this? Is it NIST?

MR. LYNCH: Yeah. It is the State Department who heads up the delegation. The delegation also consists of folks from the industries in support of the State Department's position, which in itself has been a negotiated position among all of the interested parties within the government and the industry in this country.

MR. GRAHAM: There's a government position. There're usually task forces that are set up before the meetings. The NTIA, the FCC, the State Department and industry gather and really coordinate the positions. Then the U.S. government, I think through the State Department and the FCC, make the position at the WOR conference.

REP. GUTKNECHT: Well, I have no further questions. Again, we thank you very much for sharing your time with us today. This is a -- we're at the very cutting edge, I think, of this next generation of the Information Age.

Those of us on this subcommittee and, I think, members of Congress, who at least have a small understanding of what is happening with this new technology want to make certain that Americans have access to this, but more importantly, that the United States and the companies you represent, as well as other companies out there, have a real chance to go out there, compete and -- and I think, perhaps, even ultimately dominate the marketplace worldwide for this technology.

Because I am told that almost half of the people in the world have never made a telephone call. And so when you look at the potential of this not only in the United States, but particularly in underdeveloped countries, it really is tremendous. And we want to do our part, and we hope that you'll continue to dialogue with us as public policymakers, to make certain that American companies have every opportunity to gain real market share -- not only here, but around the world.

So, thank you very much. And with that, I will adjourn the meeting.

END

LOAD-DATE: April 18, 2000

Document 102 of 223.


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