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January 13, 1998
CAMBRIDGE, MASS.—Finding wires twisted ever more thickly above us and below us, in our buildings and beneath our streets, it may be hard to realize that wireless communications could someday be the norm. Wireless telephony, if it breaks out of the high-end market, may fill a gap in rural or poor regions that are hard to serve with wires. And as a way to deliver Internet service and local networking, wireless devices may make it possible finally to digitize schools and other institutions that benefit from fast information transfer. But it’s not happening yet, and regulators are trying to find out why.
Last week, the National Telecommunications and Information Administration released transcripts of a forum held in December to examine the potential of wireless communications to further universal access to both telephony and the Internet. While industry leaders touted their technologies and promised great service for a reasonable price, the blame for the failure of wireless to serve needy populations got batted around like a beach ball from one side to another.
Technically speaking, there are many different types of wireless service, each type tied to the part of the radio spectrum it uses. Some are lower on the spectrum than the TV and radio bands we use all the time; some are higher. Some frequencies can go farther across open space than others, some are more subject to interference when it rains, and so on.
Put a string of towers across a flat landscape, one every 10 or 15 miles, and you can deliver voice and data cheaply to a Native American reservation or another isolated community that has trouble affording land-wire service. This feat is harder to carry off in an area with lots of buildings, trees, or hills—and of course, the public has to agree to tolerate unsightly towers.
At a higher frequency, which carries a lot of data in a small bandwidth but doesn’t travel so far, you can possibly provide Internet access to every classroom of a school without asking 20 parents to come in on Saturday to crawl around old walls and ceilings putting in cables, as schools have done on Netdays. In January 1997, the FCC responded to an Apple Computer petition and allocated a chunk of the spectrum for unlicensed wireless equipment, with users like schools in mind.
But few actual examples exist of any of these socially valuable applications. Wireless is still associated with mobile phones for the affluent. (Not that they have to be just for the affluent—look at a society like Israel where half the people on the street seem to be carrying them. This is probably due to a combination of favorable regulation, aggressive marketing, and a national attraction to gadgetry.)
Furthermore, wireless doesn’t compete in the least with local telephone service. Persuading people to give up wired service for wireless may well be the only way to break the current local monopolies, as was pointed out at the form by David Turetsky of the wireless provider Teligent: “it’s hard to see how adopting a competitive strategy heavily dependent on the monopolist can be or will be anything but problematic.” In other words, the current wire-based strategy for attaining competition will fail because it depends on cajoling or threatening current monopolies to give competitors access to their equipment.
Where did the failures take place? The industry tends to look for culprits in one type of regulation or another.
Jonathan Chambers of wireless provider Sprint PCS complained about the universal service fund, which takes money from long-distance telephone companies for the purpose of providing data service to schools, libraries, and health-care providers. “In a way, it actually contradicts the intent of Congress to make basic telephone service—in this case, basic wireless service—affordable to all Americans.” He wanted less taxing and regulation of telecom in general, along with a broader definition of universal service options that would make it easier for wireless companies to compete for these subsidized markets.
Attorney Thomas Sugrue suggested that local telephone companies were being forced to lease their equipment too cheaply to competitors; this supposedly gave land-wire companies an unfair advantage against wireless. Several people also suggested that landlords charge too much for the privilege of putting antennae on their buildings. (Whether this cost can be changed by regulation is open to debate.)
Representatives of the FCC gave credence to some of these complaints, so I am not about to dismiss them, but still I find them unpersuasive. The one element I find missing in the provision of wireless to under-served communities is the will to do so.
Several reasons for this have been suggested, some at the NTIA forum. For instance, wireless companies have a big cellular phone market that they have yet to saturate. Meanwhile, a small market penetration allows companies to price their services as a “luxury.” Gerry Salemme of NextLink said that mobile phones will continue to be the focus because, “that is what the banks want. That is what is going to get you the cheapest financing.”
Sometimes, a single company offers both land-wire and wireless service, and thus is not eager to present the latter as competition for the former. Finally, schools and poor communities do not understand what they may be missing and do not mobilize to ask for it; we cannot really blame the companies for aiming at individual buyers.
So we don’t really know yet how robust wireless may be as a substitute for traditional phone service. That’s too bad, because it could just be the crowbar that pries open local competition and the invisible genie that brings Internet access to a wider public.
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