Spectrum Challenges Facing The U.S. Wireless Industry

MS. DIANE REHM

11:06:53
Thanks for joining us. I'm Diane Rehm. Growing demand for smartphones, computers and other mobile devices is putting enormous pressure on wireless networks. Cellphone carriers like AT&T and Verizon say they need more spectrum to meet rising consumer demand. Joining me to talk about spectrum capacity and the future of the wireless industry, Christopher Guttman-McCabe of CTIA - The Wireless Association, Blair Levin of the Aspen Institute and joining us from a studio in Berkley, Ca., Jonathan Spalter, chairman of Mobile Future.

MS. DIANE REHM

11:07:38
Throughout the hour, I'll look forward to hearing your questions and comments. Join us on 800-433-8850, send us your email to drshow@wamu.org, join us on Facebook or Twitter. Good morning to all of you.

MR. BLAIR LEVIN

11:07:58
Good morning.

MR. CHRISTOPHER MCCABE

11:07:58
Good morning.

REHM

11:07:59
Good to have you with us.

MCCABE

11:07:59
Good morning.

REHM

11:08:00
Christopher Guttman-McCabe, let me ask you to define spectrum for our listeners, what it is and how it affects the wireless internet and cellphone users.

MCCABE

11:08:15
Sure. Thank you, Diane. Well, the simplest way to explain it is that spectrum, it's our highways. It's our lanes. It's the way we deliver our traffic. For your listeners, many of them receive these radio signals over the air. Broadcast television delivers to some of its constituents over the air. Wireless service is delivered, both the sending and the receiving, over the air. And so spectrum is our lanes. And what we are seeing now is that we have such a significant uptick in traffic, you know vehicles, to use the example again, that we need more lanes, we need more bridges, we need more highways. We need to be able to find a way to increase the capacity of the mechanism by which we deliver our signals and that's spectrum. And so that's what's important.

REHM

11:09:00
Okay. If you say these signals from our radio are being delivered over the air and you've got wireless and other data going via spectrum, differentiate for me, an ignoramus, between the air and spectrum.

MCCABE

11:09:23
Sure. So the capability of our technology is such that through the air we can take signals, parse them up and send them to devices. And with radios it's radio receivers; with televisions, it's your antennas; with wireless devices it's the device itself. It has a receiver and an antenna built into the device. And it can capture the signals. And in some instances, it's a voice call, in some, it's a text message and in some, it's a data session, a one or two-way data session where you're reaching out to the internet or you're exchanging files. And so we use slices or slivers of the air, of that spectrum to deliver it.

MCCABE

11:10:05
And the federal government controls which services occupy which slivers of the spectrum. And they license it out. Some of it is government use, some of it goes to broadcasters, some of it goes to AM and FM stations. And some of it goes for our wireless companies.

REHM

11:10:21
And turning to you, Blair Levin, what role then does spectrum play in our economy, our economic growth? Talk about its importance.

LEVIN

11:10:35
Mobile services are what you might think of as a horizon industry. It is an industry that points to the way every industry will go. Every industry now, whether it be retail, manufacturing, construction, very significantly relies on mobile services to be able to do their job better. And so you have all kinds of different new services that are emerging or improved services. If you just look at the apps economy you see 500,000 new jobs being created in a very short period of time, but that really undersells the story because there's no business in America that does not rely on mobile services.

LEVIN

11:11:15
And that's even before we get to the real age of machine-to-machine connectivity, so machines will be talking to each other. And that leads to a whole new cycle of productivity. So it's incredibly important and is a big driver. In fact, in the '90s one of the reasons we had such great job growth was we were building the wireless networks. And people who started the decade with no cellphones, by the end of the decade we had a couple hundred million Americans with them.

REHM

11:11:41
And to you, Jonathan Spalter, out there in California. The chairman of the Federal Communications Commission said we're facing a looming spectrum crunch. Tell us what's driving this.

MR. JONATHAN SPALTER

11:12:00
Well, it's as we've already discussed. The increasing demand by, not only American businesses and carriers, but more importantly by American consumers, at our laptops, with our cellphones and our homes and our schools and our hospitals in using mobile connectivity as the next phase of our not only economic, but our social and even our political evolution as a society is increasing so rapidly that we simply are out-stripping our available spectrum capacity. It's really important to think of spectrum as a natural resource, but what's important is to understand it's a finite resource.

MR. JONATHAN SPALTER

11:12:47
Unlike other natural resources, it's depleted when it's used. There is not an ability that we have to manufacture new spectrum. And for those of us who are increasingly relying on our mobile platforms, either tablets or smartphones or as Blair said, the way that we're connecting things to this incredible mobile ecosystem is very, very constrained. It's increasingly constrained. The spectrum that is allocated by the federal communications commission to telecom operators is amongst the most crowded and inadequate to accommodate the now 300 million wireless subscriptions that exist in the United States.

MR. JONATHAN SPALTER

11:13:35
A historic moment has just happened this year, where there are now there are more wireless subscriptions in the United States than there are people. And this is just the beginning, the proverbial tip of this enormous iceberg that's only growing.

REHM

11:13:48
Jonathan Spalter, he's chairman of Mobile Future. He served on the National Security Council staff here during the Clinton administration. Here in the studio, Blair Levin, a fellow at the Aspen Institute, former director of the FCC's National Broadband Plan and Christopher Guttman-McCabe, vice president of Regulatory Affairs for CTIA - The Wireless Association. Do join us, 800-433-8850. Send us your email to drshow@wamu.org and join us on Facebook or Twitter.

REHM

11:14:40
What I am surprised to learn is that the iPhone itself uses 24 times more or as much spectrum as a simple cellphone. Why is that, Christopher?

MCCABE

11:15:03
Sure, Diane. Well, what we have seen -- and we actually call it a virtuous cycle. We saw our networks get upgraded as more spectrum was brought to market. And once our networks were upgraded with greater technology -- we call it 3G or 4G, third generation or fourth generation -- then the device manufacturers all of a sudden had a new platform on which to build. And they built more robust devices that could do things that we couldn't imagine, you know, five or six years ago. And then as Blair had mentioned, came sort of the apps and content developers followed behind once they realized they had high-speed networks and devices that were basically mini computers.

MCCABE

11:15:45
And so what we have seen is that a smartphone -- and the iPhone is obviously in that category -- will take up the capacity of 24 traditional phones. But actually an iPhone or an android-enabled phone actually is four times that. It's 96 times the impact on our networks. And when you put in tablets, tablets have been measured of having the impact of 122 phones. So as you're moving millions of smartphones into our networks and millions of wireless-enabled tablets, the impact is just staggering. And the reason this is happening is because the devices can do so much more than they used to be able to do.

REHM

11:16:29
So, Blair, what is the FCC being asked to do about this? What are they thinking about doing about this? And how would they do it?

LEVIN

11:16:42
Well, one of the things that came out of the national broadband plan was an idea that is somewhat rare in Washington, D.C. these days. This is an idea that gained bipartisan support. It was for reallocating spectrum through what's called an incentive auction, where the government says to current users it may be that your spectrum is now more valuable than your business. If so, give us back your spectrum and we'll share the proceeds of an auction with you. And this is a way of freeing up more spectrum. The FCC congress passed the law. The FCC is working on doing that. In a few years from now, we'll get more spectrum.

LEVIN

11:17:17
But I think we should understand that there are a couple different dimensions. That's part of the solution, but it's not the total solution. First, there's new technologies that enable spectrum sharing. And I think that's something -- there's a presidential science commission that just came out with a new proposal on that. That holds some promise. The government itself holds a lot of spectrum and frankly uses it in many places inefficiently. We have to look at that and redo that. We have to look at unlicensed -- you know, it's interesting, the iPhone and the iPad drive a lot of traffic, but people actually use that traffic on their WiFi network which comes off the wired network.

LEVIN

11:17:57
And I think it's about 94 percent of the use of the iPad is actually not on a cellular network, but actually is on the WiFi network. So then the license becomes a very important part of the puzzle. And let me finally say that rural is a very different problem. The problem we're talking about -- when Chairman Genachowski said the looming spectrum crunch, he's really talking about an urban problem. Rural we have almost the opposite problem. We have a huge amount of spectrum that's not being used. And so we have to find new ways of doing that. And I might note that this morning a group composed of some tech companies and 500 colleges are talking about using rural spectrum to drive up broadband in rural America.

REHM

11:18:33
Blair Levin, a fellow at the Aspen Institute, former director of the FCC's National Broadband Plan. Short break, right back.

REHM

11:20:05
And during the first segment of this program on spectrum, you heard one of our guests say that to a certain extent spectrum is being used inefficiently. Now what do you mean, Christopher, when you say it's being used inefficiently?

MCCABE

11:20:27
Sure. So there are instances where spectrum has been set aside or assigned or licensed to a particular service and that service doesn't take full advantage of it. And one example, and I think Blair referenced this when they talked about the reverse auction, incentive auction process to reclaim some spectrum from broadcasters, a perfect sort of illustration of this issue is you look at Washington D.C. and the surrounding areas. There are 19 high powered broadcasters that are licensed for the Washington area. Each one is assigned six megahertz of spectrum, so a slice of spectrum. If you do 19 times 6 you get 114.

MCCABE

11:21:08
Broadcasters in Washington have been set aside 294 megahertz. They're using 114. So there's 180 megahertz of prime spectrum that currently isn't being utilized. And the goal of Blair's team came up with this idea of trying to squeeze out some of that efficiency through a reverse auction, through paying some of the broadcasters to exit. Once you get enough to exit in certain markets you can have some intelligent people put an algorithm together and they can repack these broadcasters.

MCCABE

11:21:39
And all of a sudden you've taken, you know, north of 100 megahertz and put it back into use by wireless providers. You drive efficiency, you drive revenues for the treasury and then you drive tremendous follow-on revenues for the U.S. economy.

REHM

11:21:53
So Blaire, what does the FCC think about that kind of proposal?

LEVIN

11:21:59
Well, the FCC's obviously in favor of it. It's one of the most important initiatives for this FCC. And I suspect no matter who is elected it'll be probably the single most important initiative for the next FCC as well to drive an auction. But I think also driving shared use, driving utilization of things like Wi-Fi, better utilization in rural America, all of these things are on the table. Spectrum is the single most important asset for what we imagine the broadband eco system to be and we have to use it more effectively.

REHM

11:22:31
And, Jonathan Spalter, what do you think of that idea of auctioning, buying back spectrum?

SPALTER

11:22:40
It is an absolutely profoundly important step forward in one of the mosaic of solutions that we have to move very, very quickly to adapt and implement in our increasingly mobile and wireless society. But I mentioned it's just one of the various solutions. The president historically stood up in front of the nation at the State of the Union and talked about the need to connect all Americans to mobile broadband – high-speed mobile broadband.

SPALTER

11:23:10
But to get there we have to be extremely creative. We have to continue a tradition of a bipartisan approach to policymaking about our telecommunications policy in general and spectrum specific to accomplish very, very tough things. Things like getting the spectrum that's now held by government agencies, which by the way is about 60 percent of the overall spectrum pie, to begin to allocate and make available for consumers and hospitals and schools and public safety officials around the country to have access to a lot of that spectrum, that important spectrum that is not as efficiently used as it could be. Really important...

REHM

11:23:57
But what about spectrum that's not even being used? What about that?

SPALTER

11:24:05
Well, the fact is is that there is in this very limited world of spectrum that we've inherited from the laws of physics a irony that the government has made available via licenses and other protocols to various users including government users, including broadcasters, including telecom operators, there still are pockets that are essentially laying dormant. But I would say that those dormant pockets are not -- do not exist within that 10 percent slice of this overall pie that's allocated to the world of wireless carriers that is making available mobile platforms for the 300 million consumers in America that have -- the 300 million subscriptions to -- that Americans have to wireless carrier services.

SPALTER

11:25:03
Ten percent of the overall spectrum pie is actually the very small amount that's held by telecom operators. And they are investing literally hundreds of billions of dollars to upgrade the available capacity and infrastructure to squeeze out every single microdot of available spectrum within that 10 percent by the new target -- the new opportunity that is joining I think all of us in this world.

SPALTER

11:25:32
The innovators that I work with out here in California, the folks in -- all across the country who are relying and are expecting on having sustainable access to wireless and -- fast wireless speeds understand that we have to now look at broadcast spectrum and government spectrum and make more of it available to American consumers.

REHM

11:26:00
All right. And then, Blair, in April you had Verizon announcing plans to sell off spectrum. And then you had T-Mobile and some smaller networks oppose the kind of transactions that Verizon was talking about. So what's going on there?

LEVIN

11:26:28
Well, all the companies are in an effort to rationalize their own holdings and they're constantly thinking about what do we need to buy and what would that enable us to sell? So the roots of the Verizon transaction were last year they struck a deal to buy spectrum that the cable industry bought and never utilized. Yesterday Verizon and T-Mobile struck a deal in which T-Mobile would get some of the spectrum that Verizon now no longer needs because of the cable spectrum. And not ironically but consequently T-Mobile said they no longer oppose the transaction between Verizon and the cable industry and what Verizon is able to get.

LEVIN

11:27:04
So all the companies are constantly buying and selling and thinking about that problem.

REHM

11:27:10
Here's a fascinating email from a fan who says, "There is a gloriously simple solution. Instead of selling it once and for all to the highest bidder, rent it. Let them bid on how much rent they, the corporations, are willing to pay we the people who are after all the owners of the airwaves." What do you think, Chris?

MCCABE

11:27:44
Well, to some extent that's the model that is in place. A licensee in the wireless space gets access to the spectrum for a determined amount of years, 10, 15 years. But the reality is you need some certainty in that -- whether it's a lease or a purchase, a light version of a purchase, you need some certainty if you're going to turn around and invest. And I think Jonathan suggested this, but our industry each year invests about $25 billion just to continue to upgrade and turn over new technology.

MCCABE

11:28:19
So when you're talking about $25 billion, you want some expectation that the platform on which you're expending these capital expenditures is actually going to be there. And to put the $25 billion into some context, that is more than the five largest European countries combined spend on their wireless capital expenditures. So there's a lot of money going into the U.S. wireless space. And the expectation is that if you're going to spend that money you will have the foundation -- to go back to my original explanation -- the lanes or the highways. You'll know that it's there so that you can drive your traffic and that your expenditures are well spent.

REHM

11:29:01
But here's a question following up on that for you, Blair, this from Ken in Seattle who says, "Why are the rates so high when the public owns the airways? Why don't we have a say in the rates and their poor service?"

LEVIN

11:29:23
Well, the rates are really set by the market. And if you look historically, the rates have gone down dramatically from when I first got to the FCC in 1993. And actually we did the spectrum auctions and the numbers of competitors was increased from about two to about seven by the time we left. Rates started going down rather dramatically. Chris would know the numbers better than I and he could probably do the international comparisons.

LEVIN

11:29:52
But I think that we should understand that it is not the government that sets the rate, but rather it's the market. And that the government's job is to make sure that the market is working.

REHM

11:30:01
All right. Let's open the phones, 800-433-8850. First to Greenbelt, Md. Good morning, Marco. You're on the air. Marco, are you...

MARCO

11:30:17
Am I on?

REHM

11:30:17
Yes, you are, sir. Go right ahead.

MARCO

11:30:20
Okay. Well, I've been thinking about this. I'm a big fan of radio and broadcasting and I really think that what really isn't said in this debate is that the only place there's enough spectrum and the right frequency range, you know, between 50 or 100 megahertz and 3 gigahertz are so the range where the antenna sizes and all that are correct, the only place there's enough contiguous spectrum left is broadcasting. And the only way that broadcasting doesn't get superseded is if we start to tell people that, you know, maybe watching the baseball game on their phone isn't, you know, the best use of the spectrum.

MARCO

11:31:05
So I think really what we're talking about in 10, 20 years is broadcasting as we know it, free radio, free television is gone.

REHM

11:31:15
What do you think, Blair?

LEVIN

11:31:17
First of all, I don't think free radio will ever be gone. It doesn't really utilize that much spectrum. As to free broadcasting I think we should let the market forces determine that. I mean, we gave a lot of spectrum to the broadcasters at a time in the '40s and '50s when there was no such thing as cell phones and there was no such thing as an iPad. Spectrum wasn't as valuable then as it is now.

LEVIN

11:31:38
But I'd rather -- one of the joys or one of the ideas behind the incentive auction is that we let the market forces in terms of consumer preferences, technology and changes in the market enable a constant reallocation of spectrum. If it turns out that broadcasting really doesn't meet the needs of the consumers in 2020 then so be it.

REHM

11:31:59
Chris.

MCCABE

11:31:59
Well, and I think that suggesting that the only impact on the traffic is, you know, consumers watching video over their devices really, you know, suggests that the innovation, the evolution that we're seeing in a space isn't happening. And so I know Blair mentioned this but Arlington, Va. just a few miles away, the public utility company has changed our meters over to wireless-enabled SmartMeters. The public school district, the grade schools and the middle schools where my children attend are using wireless-enabled devices to now drive education for hours a day every day.

MCCABE

11:32:36
And I myself over the last couple weeks has benefitted from a wireless heart monitor. So we're -- we call them verticals but we're seeing the explosion and evolution of this service into so many areas beyond the traditional, you know, carrier consumer equation. So it's something that we're seeing and it's something that all Americans will enjoy.

REHM

11:32:57
Christopher McCabe. He's with CTIA -- The Wireless Association. And you're listening to "The Diane Rehm Show." I hope that wireless monitor is working well.

MCCABE

11:33:13
Yes, it is. Thank you.

REHM

11:33:14
All right. Good to hear it. Let's go to St. Louis, Mo. Good morning, Ken.

KEN

11:33:20
Good morning, Diane. Thanks for having me.

REHM

11:33:22
Sure.

KEN

11:33:22
You know, I've done some traveling to Europe and the Middle East with the military and some vacations and stuff. And what I've noticed is that having those data plans over there are so cheap and they're actually nonexistent if you're just getting a cell phone and getting usage. And then in addition to that you get these data plans. Well, here in the United States, because the corporations have their paws in everything, that it -- the data plans here are so expensive compared to Europe. And why is that?

REHM

11:33:53
Why is that, Jonathan?

SPALTER

11:33:56
Well, I would respectfully disagree. In fact, you know, what's driving our innovation economy ultimately is consumer choice. And there's very few places in our innovation economy where consumers have so many choices, subscriber plans, the types of platforms that they're using, either tablet or phone. And the fact is, if you do a cross border international comparison that the United States serially ranks amongst the most expensive per customer cost basis than any country in the world. And this is despite the fact that in terms of spectrum we, in the United States, are using about 80 percent of our available capacity compared to an international average of about 65 percent.

SPALTER

11:34:42
So even though there is less available spectrum, our costs on a comparative basis are and have been low. And I think one of the reasons is is because of the almost bewildering array of choices that any American consumer can have in terms of the type of platform that they use, there are 600 different types of cell phones that we have choices on and the kinds of subscriber services that we can sign up for.

REHM

11:35:06
Jonathan, did you mean to say most expensive or least expensive?

SPALTER

11:35:13
Oh, we have amongst the least expensive service plans.

REHM

11:35:16
All right. I think -- okay.

SPALTER

11:35:18
If I said the other I -- please, I sit corrected.

REHM

11:35:21
Okay. Does anybody have any other comments on that? Chris.

MCCABE

11:35:26
Sure, Diane. Well, one of the other things we're seeing in the United States, and it's reflected in sort of a movement by many foreign manufacturers to actually locate research and development facilities in the United States, is that while we have about 6 percent of the world's subscribers we have almost three-quarters of the world's high-speed subscribers. And what that means is that you're not getting a similar service in many of the European countries in terms of speed and throughput that you're getting here right now.

MCCABE

11:35:57
The newest technology is called LTE and we have three-quarters of the world's LTE subscribers in the United States. And so that -- it's not -- you're also not comparing apples to apples when you compare a broadband experience in the United States to a broadband experience in some other countries around the world.

REHM

11:36:15
All right. Blair, I want to ask you about AT&T's attempt to acquire T-Mobile to gain spectrum and accelerate 4G. That move was not approved on the basis that it reduced competition. Now is that good policy?

LEVIN

11:36:39
Well, the anti-trust division, which has expertise in this, found in their complaint that it would diminish competition in a way that violates the anti-trust laws. And I would -- you know, as to whether or not I think that's good or bad I think the Justice Department does a very good job of evaluating those things. And so I think that, you know, it stands on its own. It is -- in an industry you have to look at the level of concentration, the number of players. And a number two buying a number four raises those kinds of questions that was addressed here.

LEVIN

11:37:12
Having said that, I do think that AT&T's pursuit of spectrum is an important issue. All the companies will ultimately need more spectrum. It becomes more and more important. We've talked about that. So -- but that -- a merger might not be the best way to solve that problem.

REHM

11:37:28
Blair Levin, Fellow at the Aspen Institute. Short break here and when we come back, more of your emails, your phone calls. I look forward to hearing from you.

REHM

11:40:01
And welcome back. Let's go now to Ogden, Utah. Good morning, David.

DAVID

11:40:08
Good morning.

REHM

11:40:08
Go right ahead, sir.

DAVID

11:40:10
My question is concerning 4G and it's on everybody's mind and the issues with incompatibility. One of the guests said that the United States has three-quarters of the 4G users, yet none of them are compatible. WiMax with Sprint was a measured failure that they've abandoned. And Light Squared was a big debacle. And now T-Mobile, Sprint, Verizon and AT&T are all rolling out LTE. And none of it will be compatible. So bewilderment was a term that also came up earlier. And no phone will be compatible with all four carriers, again. It wasn't with 3G and it doesn't look like it's going to be with 4G. So while innovation is great, how do your guests respond to that?

REHM

11:41:19
Blair?

LEVIN

11:41:20
Well, this is actually a very tricky issue about to what extent should the government mandate standards to drive certain kinds of compatibility. This issue came up when I was at the FCC in the early '90s. And the question was whether we should mandate a standard for what was then going to be 2G, which went to 3G. We decided not to. There were definitely down sides of that, but one of the things that it enabled was that a little known company, that really had nothing at that time, called Qualcomm or it became Qualcomm, that developed a technology called CDMA that now has led to huge innovations in spectrum efficiency.

LEVIN

11:41:59
So the down side of mandating compatibility is you can undercut innovation. On the other end this is what happened, WiMax and LTE were two different 4G standards. LTE, in most of the world, has won. And so actually in the United States we will have a large degree of compatibility on LTE, but those who may have purchased WiMax phones or devices earlier are probably gonna have to switch out.

REHM

11:42:23
Here's an email from Brenton. He says, "An emerging technology called cognitive radio promises to change the spectrum crowding problem. It addresses the fact that in many cases up to 90 percent of the licensed spectrum is idle most of the time. Please ask about this. It's my experience that many journalists who weigh in on spectrum crowding have never heard of cognitive radio, even though it is under consideration by the FCC." Chris?

MCCABE

11:43:08
Sure. You know I've been at CTIA for 11 years. And I remember one of the first technology issues that I addressed was the sort of impending launch of cognitive radio. And conceptually it is a fantastic idea. The idea is that the devices would have intelligence built into them that would allow them to sort of jump in and off different frequency signals that weren't being used at that point in time. And I think if you look at it from our industry's perspective, when and if that is sort of commercially available and commercially scalable, that's a fantastic sort of element of the solution.

MCCABE

11:43:50
But the reality is we're not at that point. There are no sort of cognitive radio solutions yet that could be embedded into our architecture or our networks. And so we are looking at other forms of sharing spectrum that Blair referenced. We call it temporal sharing or time-based sharing, if someone's using it now, but not the rest of the year; geographic sharing, if there's a military installation that's using spectrum in a portion of the United States, but not anywhere else. And then there's sharing where you have two uses that can operate simultaneously that don’t interfere with one another.

REHM

11:44:24
And to Durham, N.H. Good morning, Todd.

TODD

11:44:27
Yes. Good -- thanks for taking my call. I just wanna ask a quick question. And that is as a veteran TV person I've always found it interesting how little the public knows about, you know, broadcasting and the technical side. And I'm just intrigued to ask you about how do you feel the public should learn about the things that you're talking about on the show today, other than going to like FCC.gov website. I mean, what sort of resources, other than this show, should the public be using to learn more about all this that's going on?

REHM

11:45:13
I agree that it's fascinating. It's confusing. Most of us, including myself, know very little about this. So I'm delighted to have these three knowledgeable people here today. Blair, where do people go?

LEVIN

11:45:33
Well, I might recommend the national broadband plan has a whole chapter on spectrum. It's not that long and I think gives a good background on it. Actually, I might turn it over to Jonathan...

SPALTER

11:45:43
Sure.

LEVIN

11:45:43
...because Jonathan actually writes a lot on this subject and I think does a great job of it.

REHM

11:45:47
Good. Jonathan?

SPALTER

11:45:48
Well, thank you, Blair. And I hope that what I write is actually transmitted wirelessly as well. And in fact, there really are. You know the wonderful thing about this conversation is that it emphasizes the fact that though spectrum is a profoundly important household need, it's not yet really a household word. And there are a number of resources increasingly that are out there. On the internet, sites that have been developed focusing entirely on the wireless industry, on new developments and techniques; and really interesting apps that are being developed by folks in innovation hubs across the country; chat rooms.

SPALTER

11:46:27
I would, with modesty, invite you to take a look at our own website, www.mobilefuture.org. We've spent quite a bit of time trying to put into simple English what the complexity of these technical innovations actually mean for American consumers. All of us who really do care about not only having sustainable access to mobile wireless, but really are making real investments in the future economic value that the mobile world is bringing to our entire national economic life and our cultural life, too.

SPALTER

11:47:04
So there are increasingly efforts to make available and clear what these technical issues are that we're talking about here. And I really believe that there's gonna be even a broader uptake of these types of information platforms...

REHM

11:47:23
And we will...

SPALTER

11:47:24
...through all media.

REHM

11:47:25
We will certainly put your website, Jonathan, onto ours. You can go to drshow.org to find mobilefuture.org. And here's a follow-up to that from Don, here in Washington. He wants to ask whether any of you sees a day in the future when there will be a personal spectrum assigned to individuals. What do you think, Chris?

MCCABE

11:48:00
I don’t personally see it, I guess I would say. The reality is and the reason why sort of licensing makes sense is it allows manufacturers to drive some form of scale and scope so that prices can come down. And networks are important to this equation. So you need to be able to build a network for these devices to operate on. But then again, I didn't think that ringtone business would be a billion-dollar business. Or that, you know, we would have tablets at some point in the future.

MCCABE

11:48:39
So, you know, we've missed more than we've hit I think in the United States in terms of our guesses about where the wireless eco system was going.

REHM

11:48:46
Blair?

LEVIN

11:48:46
I'm gonna answer differently. You already have it. It's called WiFi in your house. It's not spectrum that's assigned to you, but it's unlicensed spectrum that you have complete control over. Now, what's interesting of course is a combination of both wireless and wired. And that's true everywhere. In other words, the normal wireless call and fax travels most of the distance over a wired network, but my point is I think the WiFi network is gonna become increasingly important because that gives us a capacity we need to really do the things that we love to do.

REHM

11:49:16
What do you think, Jonathan?

SPALTER

11:49:18
Well, I'd like to put an exclamation point against what Blair just said. He's absolutely right. We do have, in a sense, a franchise on our own personal spectrum for things like WiFi. I would like to say though that let's not forget that it took about 10 years for WiFi to become broadly commercially adapted. It takes time for these new innovations to actually come to market, which is why when the previously caller talked about things like the importance of spectrum-sharing technologies like cognitive radio, absolutely. We agree that spectrum-sharing technologies, WiFi, these are all really important parts of this broader solution set.

SPALTER

11:49:57
But let's be very, very clear. It takes time. It takes a long time for spectrum to be made available for folks at home or in their coffee shop or in their office. It can take anywhere from seven to 15 years. And yet there really is not yet any magic bullet spectrum-sharing technology currently in our pipeline that can address what we've been talking about, which are the really important, clear and present dangers of the short and mid-term spectrum challenges faced by American consumers.

REHM

11:50:30
So what do you see the FCC doing in the new future? Blair?

LEVIN

11:50:36
Number one, they are looking at doing this incentive auction to free up hopefully 120 megahertz of spectrum, which will be the biggest auction in this decade. And number two, the president's commission...

REHM

11:50:49
Let me stop you right there.

LEVIN

11:50:50
Yeah.

REHM

11:50:50
The auctions themselves are expected to raise billions of dollars.

LEVIN

11:50:56
They've already raised like $80 billion.

REHM

11:50:58
Okay. And where's that money going?

LEVIN

11:51:01
The federal treasury. I participated in helping design the first auction. I remember giving a check to the president for $10 billion and thinking, well, that's about three minutes of interest. But …

REHM

11:51:14
Wow.

LEVIN

11:51:15
… the purpose of it is not really to raise money, it's to allocate spectrum more efficiently and more quickly than we did in the '70s and '80s.

REHM

11:51:21
Okay. And keep going. You were talking about other things.

LEVIN

11:51:25
Well, other things that they should do, there's this new presidential commission which goes to spectrum-sharing and utilizes some of the technologies involved with cognitive radios. We wanna do that. And I also think another really big thing that the FCC and the entire federal government needs to do is focus more clearly on how do we manage government spectrum more effectively. The problem is, in the private sector there are incentives to use assets very efficiently because of the way you have a market dynamic. In government assets aren't used as effectively because you don't have the same kind of measurement.

LEVIN

11:52:02
So how do you get the government to use its spectrum more effectively I think is a big challenge for the next term.

REHM

11:52:07
And where does the cloud fit into all this, Chris?

MCCABE

11:52:12
Sure. That's sort of gonna be, obviously, part of the equation. It will give you a place to store some of what you need access to.

REHM

11:52:22
You're gonna have to define the cloud.

MCCABE

11:52:25
Well, interestingly it can be both part of the solution and part of the ongoing increase in usage. The cloud is a place outside of your direct control where you can efficiently store information that is important to you. It is a place where, you know, you don't have to have your own I.T. department in your house or things like that.

REHM

11:52:49
How do you get access to it?

MCCABE

11:52:52
Well, I think that's a question for probably the next panel of I.T. experts, but there are a number of companies that really are operating sort of, in essence, these storage centers in the air, in the cloud I guess is the word we've used for it.

REHM

11:53:06
But isn't it true that other people could have access to the cloud and your information stored in that cloud?

MCCABE

11:53:16
Well, I think a key part of any storage effort is making sure that you are protecting and securing that information. So the companies that provide that -- and they're some of the biggest technology companies in our country. Sort of the key goal of theirs is obviously to protect the information, to secure it such that people don't get access to it. I think for the overwhelming most part that happens. Our information is protected.

REHM

11:53:40
And you're listening to "The Diane Rehm Show." How big of a strain has the cloud put on wireless networks?

LEVIN

11:53:52
Well, I think it's, in some ways, put a huge strain and it's all to the good. In other words, what this really represents is we have found more effective ways to do things that we love to do. We found more effective ways to communicate, to share information, to monitor patients, to deliver educational content. These are all good things. I think what we need to develop is a mindset that says we need to drive an abundance of bandwidth so that we can utilize this to solve problems ever better. So yeah, it puts a strain, but that's really an opportunity to solve problems more effectively.

REHM

11:54:27
And finally, to Ali in Detroit, Mich. You're on air.

ALI

11:54:33
Thank you for taking my call.

REHM

11:54:34
Surely.

ALI

11:54:34
I was reading about this yesterday and one of the articles I read showed that AT&T is testing out in China, around sports arenas and such, seamless integration with WiFi that they're establishing there, so you can be on a phone call or using at the internet and you would seamlessly transfer over to a WiFi network that they've established there. Is that some sort of solution that we could look into here to solve our problem? I assume integration with your home wireless network, via you're on a call and you can seamlessly switch over or establish the WiFi networks that carriers could establish in populated, condensed areas.

REHM

11:55:17
Chris?

MCCABE

11:55:18
Yes, absolutely. And I think both Blair and Jonathan referenced this. It's gonna be a whole suite of solutions. One of them being more robust use of WiFi and integrating a seamless transition from WiFi to wireless. We're already starting to see it. You're seeing integrated chip sets in devices. And you're seeing more and more off-loading of traffic to the WiFi networks. And so it is inevitably part, as are these different sharing technologies, all part of the suite of solutions we're gonna need to address this explosion in consumer demand.

REHM

11:55:53
And Jonathan, are we going to stay competitive?

SPALTER

11:55:58
I believe we are. And the key catalyst for our ability to stay competitive globally is the continued belief and confidence and regularity that our wireless companies will have to continue to make the kinds of investments that they are. The incentives that our innovators in Silicon Valley, all across the country, have to be able to continue to do the work of developing and deploying innovative new wireless services for consumers. And that has to begin with another very important step government needs to take, which is to allow a climate in which this kind of investment and innovation can continue to proceed by allowing our private sector to dynamically and flexibly address the needs of the consumers...

REHM

11:56:50
All right.

SPALTER

11:56:51
...that really have shown their interest.

REHM

11:56:52
We'll have to leave it there Jonathan Spalter. He's chair of Mobile Future. Blair Levin is a fellow at the Aspen Institute. Christopher Guttman-McCabe, vice president at CTIA - The Wireless Association. Fascinating discussion. Thank you so much.

MCCABE

11:57:17
Thank you.

REHM

11:57:18
Thanks for listening all. I'm Diane Rehm.
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