Press Briefing on Third Generation Wireless Technology (10/13/00)
                              THE WHITE HOUSE

                       Office of the Press Secretary

Immediate Release                          October 13, 2000

                         TELEPHONE PRESS BRIEFING
                       COUNCIL OF ECONOMIC ADVISORS,

     MR. KALIL:  Thank you, Art.  I want to start off by reading a
statement that President Clinton issued today.  He said, "Today, I am
pleased to sign an executive memorandum that will help ensure that America
maintains its leadership in two of the most important technologies driving
the U.S. economy:  wireless telecommunications and the Internet.  I am
directing federal agencies to work with the Federal Communications
Commission and the private sector to identify the radio spectrum needed for
the third generation of wireless technology.

     "These so-called 3G systems will allow Americans to have mobile,
high-speed access to the Internet and new telecommunications services
anytime, anywhere.  My administration is committed to strengthening U.S.
leadership in the information communications industry.  Over the last five
years, the information technology sector has accounted for nearly one-third
of U.S. economic growth and has generated jobs that pay 85 percent more
than the private sector average.

     "The action I am taking today will help U.S. high-tech entrepreneurs
compete and win in the global marketplace.  It will also allow consumers to
enjoy a wide range of new wireless tools and technologies, such as
hand-held devices that combine services like a phone, computer, a pager, a
radio, customized newspaper, GPS locater and a credit card.

     "I'm confident that federal agencies, working with the private sector,
can develop a plan for identifying the spectrum that will meet the needs of
the wireless industry and is fully consistent with national security and
public safety concerns.  As made clear in a report released today by my
Council of Economic Advisors, time is of the essence.  If the United States
does not move quickly to allocate the spectrum, there is a danger the
United States could lose market share in the industries of the 21st

     "If we do this right, it will help ensure continued U.S. economic
growth, the creation of new high-tech jobs and the creation of exciting new
Internet and telecommunication services."

     Our plan today for the briefing is that --

     Q    Is that statement available at

     MR. KALIL:  Yes.

     Q    No, it's not on there yet.

     MR. KALIL:  It will be soon.  Martin Baily, Chairman of the
President's Council of Economic Advisors, will brief you on a CEA report
that is being released today.  Greg Rohde, Assistant Secretary for
Communication and Information at the Department of Commerce, will walk you
through the executive memorandum that the President is issuing today.  Lin
Wells, Deputy Assistant Secretary of Defense, will discuss the DOD role in
this process.  Bill Kennard, Chairman of the FCC, will discuss the FCC's
perspective on this important issue.

     So without further ado, Martin, take it away.

     MR. BAILY:  Thank you.  Well, we have issued, as you know, this paper
today, which is called, "The Economic Impacts of Third Generation Wireless
Technology."  And this is clearly a vital area.  Telecommunications and the
Internet are clearly among the most important sectors of the new economy,
and the new economy has been driving the outstanding economic performance
that we've had during this expansion.

     This is -- shifting to 3G is a huge new sectoral opportunity.  It
combines two powerful innovations:  wireless communications and the
Internet.  We find that today's wireless devices, which can transmit voice
and brief text messages, are not able yet to handle the digital multimedia
and other Internet high-bandwidth kind of content.  As we open up to 3G
devices, by contrast, we can get the kind of high-speed mobile connections
that we need to really send the Internet wireless.

     Now, I think it's clear from the usage of the Internet already that
that opportunity to go wireless is going to be a big step forward, but I
think it also is going to open up things that we don't yet fully
anticipate, just as previous openings in technology have done.

     There are a number of benefits that come from 3G.  The first and
foremost is the benefit to users or consumers, to include ordinary
households and consumers, but also business people who are able to operate
more efficiently as a result of access to this kind of bandwidth

     Now, we don't know at this point what the full benefits are going to
be.  But this report comments on a fairly detailed and careful study that
was done recently that estimated the annual consumer benefit from today's
wireless telephone service.

     Now, this consumer benefit I want to stress is over and above -- the
benefit over and above what consumers actually pay.  When people buy
something, you only buy it if it's worth more to you than you pay for it.
And economists, by using econometric techniques, are able to estimate this
surplus, what it's worth to you over and above what you pay for it.

     And the study estimated that today's wireless telephone service --
between $53 and $111 billion of annual benefit to consumers.  So it's
really a huge thing.  We suspect that the benefits from 3G will be of this
order of magnitude.  We don't know that.  It could be more than that.  But
that's one way of sort of getting a handle on what this is going to be
worth by looking at historically what the opening up of wireless telephone
services is worth.

     There are also benefits that come to the providers.  They stand to
gain profits from participating in this industry.  Again, we don't know
exactly what that's going to be, but one way of getting a handle on it is
to take a look at some of the auctions that have taken place in Europe for
companies to use the 3G spectrum.  These have raised between $150 and $600
per capita in the places where the auction has taken place.

     So if companies are bidding that kind of money, that suggests that
they believe the flow of profits will be very substantial to them from the
availability of this technology.  And obviously they think they are going
to earn more than they're essentially paying in the licenses from this 3G.
Now, again, we would stress circumstances in the U.S. may be different from
Europe, so the exact amount that might possibly be raised by auctions or
exact worth of the spectrum for 3G purposes may be different, but this does
provide a sort of order of magnitude of what might be available.

     We think this, though, really is only the beginning of what we can get
out of this technology, because once we have the 3G available, we think
this will generate a whole set of new industries; just as we developed
Silicon Valley around the computer chips and the computer, we think there
will be a whole spectrum of whole -- that's not really the right word --
whole range of industries that will grow up as a result of the ability to
use this technology.

     The U.S. is already in a very strong position on both the Internet and
wireless, but we do need to make sure that we maintain its leadership.
Some other countries have already made auctions of their spectrum.  A small
country like Finland is actually the leader, as you know, in wireless
technology.  They are already developing new companies, new lines of
business around their capacity on 3G, looking for ways to exploit this

     Again, we think that our economy is very strongly positioned here, but
we want to make sure we don't lose that -- and that we can, in fact, by
taking advantage of it.

     So we believe the delays in introducing 3G products and services could
be costly -- the delay the benefit to consumers and providers, but it also
delays the U.S. companies that are going to seek to provide complimentary
products and services.

     Finally, we stress that the government policy, which will be worked
out -- an allocating spectrum does have to weigh carefully all the benefits
of costs involved.  Obviously, you've got a lot of benefits here, but to
the extent there are incumbent users on some of the spectrum, you need to
make sure that their interests are taken into account, as well.

     Thank you.

     MODERATOR:  Great.  Thank you very much, Martin.  Greg, if you could
walk the reporters through what is actually in the President's executive

     MODERATOR:       Tom, this is Art Brodsky.  Before we get to Greg, I
just wanted to make one change for the reporters.  When I started asking
who was on the line to send statements to, the list sort of grew longer
than I had anticipated, and that's my fault.  So what we're doing is
posting everybody's statements on the NTIA website, which is -- and those will be statements from Chairman Baily, as
you heard; it will be from Greg Rohde; from Chairman Kennard; and from Dr.
Wells.  So that will eliminate the need for us to send you all stuff
individually.  That's being done as we speak, and when it happens, I'll let
you know.

     Thank you, and here is Greg.

     MR. ROHDE:  Okay, thank you.  Before we walk through the memorandum, I
wanted to give a little bit of context.  Some of this might be redundant
for some of you.  But the fact is that currently the United States enjoys
widespread access to the Internet, in large part because we have a near
ubiquitous telephone network.  And in recent years, our cable network,
which -- as well over 90 percent of American homes has provided high-speed
Internet access to the Internet.

     In addition, the near ubiquitous access to the Internet has also given
us a competitive advantage in the whole electronic commerce revolution
we've seen emerge in recent years.  In addition to this, the United States
enjoys a very vibrant, dynamically growing wireless industry that is
growing at a rate of about 30 percent a year.

     The development of third generation wireless is going to dramatically
affect both of these significant trends, the Internet as well as the growth
of wireless services.  In fact, some predict that within the next 10 years
that about two-thirds of the revenues that come from services and
infrastructure in the wireless industry will come from data and nonvoice
services, which is a dramatic comparison that currently most of the
revenues and most of the services that are over wireless are voice

     So, in other words, what that means is the electronic commerce is
strictly becoming mobile commerce and the Internet is getting wings.  And
the fact is if the United States does not understand and come up to the
plate with this trend, that we will quickly fall behind and fall into a
competitive disadvantage.  So that's why this is so important.

     The administration has been working on the development of third
generation wireless for quite some time.  In fact, there has been a great
deal of activity this entire year.  A lot of activity began early in the
year as a number of federal agencies -- Department of Defense, the FCC, the
NTIA and others and State -- developed the U.S. position going into the
World Radio Conference.

     One of the top issues that was addressed this year in the World Radio
Conference, which was held in Istanbul in May, was to look at the question
of identifying certain spectrum bands that would be used for the
development of third generation wireless or allocated for third generation

     The United States succeeded in accomplishing our goals with respect to
this issue at that conference.  And that we advocated a policy that would
provide maximum flexibility to administrations to identify what spectrum
bands they want to develop for third-generation wireless.  And we were very
pleased at that result.

     Now, what this does, though, is, that success now puts us in a
position of now having to face the challenge as to, where are we going to
look for additional spectrUM for third-generation wireless?  The bands that
were identified at the World Radio Conference include our existing first-
and second-generation cellular and PCS services.  And one of the objectives
that we've had is to allow for these first- and second-generation services
to evolve into third-generation services.  We're already starting to see
that happen.  That's a very important development from the United States's

     Now, we also have the challenge of looking ahead as to, if we're going
to need additional spectrum, where will that come from?  The challenge that
we have for the United States that's relatively unique is that we don't
have unencumbered spectrum -- that the spectrum bands that were identified
at WRC have heavy incumbent use.  And so that puts us in a very difficult
spot, and a very challenging spot.

     The purpose of this memorandum today, signed by President Clinton, is
to set up a process through which the federal agencies that are affected --
with the private sector, will proceed to address these issues and identify
the necessary spectrum to develop third-generation wireless.

     So with that, I want to outline -- and again, this memorandum, copies
of this will be made available to you.  But I'm going to outline very
briefly -- there are five principles of which the President is directing
the federal agencies, to guide them as they proceed in this process.

     The first principle is that the executive departments and agencies are
to work -- are to work cooperatively with the Federal Communications
Commission and the industry to identify the necessary spectrum that can be
allocated for third-generation wireless use by July 2001.

     Second principle is that incumbent users of spectrum that is
identified for reallocation, or for sharing, must be treated equitably, and
we must take national security and public safety into account.

     Third principle is that the federal government must remain
technologically neutral as we develop third generation wireless.  We do not
want to have a circumstance where the government is directing the standards
for third generation wireless, or specific technology, that we want to
allow for technologic neutrality.

     The fourth principle is that the federal government is going to
support policies to encourage competition and flexibility in these
allocations.  We want to maintain additional support for competition within
the wireless industry, where we've seen great success so far.

     And the fifth principle is that the federal government must support
the industry efforts to identify and harmonize spectrum globally and
regionally.  Included in this memorandum are four specific directives.  The
first one is the President is directing the Secretary of Commerce to work
cooperatively with the Federal Communications Commission and with all the
other affected agencies within the federal government, to develop by
October 20, 2000, a plan to select spectrums for third generation wireless

     And also this directive is to require an interim report be developed
by November 15th of 2000 on the current spectrum uses within our -- within
the bands that have been identified by (inaudible).  In other words, by
October 20th, the President is asking the Commerce Department to lead an
effort to develop a game plan as to how we're going to go about, over the
next several months or next couple years, to identify second and third
generation wireless.

     And in that game plan, we are to develop a report, an interim report,
by November 15th of this year, as to what is in the incumbent bands that
have been identified by the World Radio Conference.  The second directive
is to the Secretary of Commerce to lead an industry outreach effort,
working of course -- that the other federal agencies and the Federal
Communications Commission to reach out the industry.

     It's very important in this process that we have not only
collaboration and cooperation amongst government agencies, but also it is
equally important that we have a collaborative and close working
relationship with U.S. industry as we proceed to this process.

     The third directive in this memorandum is to the Secretaries of
Defense, Treasury, Transportation and heads of other executive departments
and agencies that are affected by the spectrum to work cooperatively within
this process and enforce -- there is a directive to the Department of State
to participate in this process and also to coordinate the evolving views of
the United States government with foreign governments and their national
bodies to ensure that we have effective global roaming, which is one of the
goals of third generation wireless systems.

     So with that, I'll be happy to answer questions after other statements
have been made.  Thank you.

     MODERATOR:  Great.  Thanks, Greg.  Lin Wells will talk about the
Defense Department's views on this issue.

     MR. WELLS:  DOD is pleased the presidential decision memorandum on
third generation wireless services has been released and -- the President
has provided.  DOD looks forward to continuing in full cooperation with
NTIA and FCC in the studies to consider all possible operations for 3G

     DOD is working closely with them during the spectrum identification
and decision-making process.  Both DOD and Commerce agree national security
must be protected.  At the same time, DOD has an interest in a strong
commercial industry because the Department uses a great deal of commercial

     MODERATOR:  Great.  Thank you.  Bill?  William Kennard, Chairman of
the FCC, will talk about the FCC's perspective on this issue.

     MR. KENNARD:  Thank you, Tom.  As many of you know, for most of this
year, I have been warning of spectrum drought in this country if we do not
take the steps now to make sure that we are freeing up more spectrum for
services such as third-generation wireless.  As the Internet migrates out
of the personal computer and into wireless web-enabled devices, spectrum
management is becoming increasingly important.  Indeed, spectrum, or the
absence of spectrum in some cases, is emerging as a major (inaudible)
factor for the new economy.  That's why it's so important that we elevate
spectrum management to a national priority.

     That's why we're very pleased at the FCC to see the President and the
Vice President focused on a coordinated federal government approach to
spectrum management.  This is important not only for all the reasons
outlined in the CEA report, and all the benefits to our economy, but it
also is very important to the competition policies that we are working so
hard at the FCC to promote.

     As we see more wireless providers entering the marketplace and
providing not only more innovative services, but also more innovative
pricing structures, more and more consumers are finding that wireless
phones are an acceptable substitute for the wire-line phones.  And that, of
course, is great for competition.

     Let me outline now a couple of the upcoming events that you can watch
for as we roll out this plan.  As Greg mentioned, we are going to be
working closely with NTIA and all the other relevant government agencies.
And we'll be looking to release the interim results of our studies on
November 15th of this year, studying the possibility of using spectrum that
is currently encumbered and freeing that spectrum up for 3G.

     At the WRC Conference in Istanbul, world governments identified three
spectrum bands that could be used for 3G.  We are going to be focusing a
lot of attention on the spectrum identified in the 2500 megahertz band,
which is currently encumbered by multi-point distribution services and
instructional television fixed service.  NTIA is going to be working with
the Department of Defense and other agencies to study the use of the 1700
megahertz band.  And we'll be working closely on releasing interim results
of our studies on November 15th.

     Now, the FCC goal is to release by the end of the year the notice of
proposed rule-making, which will identify these and other possible bands
for use for 3G.  We will go out for public comment and aggressively solicit
comment from all the stakeholders in the industry and in government.  And
our goal is to allocate spectrum for 3G services by July 30th of 2001.
This will involve a rule making both to allocate the spectrum and also to
establish the service and option rules, culminating in a competitive
bidding or option for the spectrum by September 30th of 2002.  So that is
our plan, but obviously it's going to involve a lot of coordination among
the federal government agencies, and that's why it's so important to have
the President's involvement here.

     I neglected to mention that while the November 15th studies are
interim studies, we hope to have final studies by March 1 of 2001, and this
will hopefully dovetail with our rule making process, so that the study
process among the federal agencies will be moving in parallel to our rule
making process.  This is very important, because after lots of discussion
among the people represented on this call, we decided that it's really not
feasible for there to be the federal agency coordination to end, and then
the FCC rule making process begin, because that would probably push us off
beyond September 30th of 2002, when we want to have these options.

     So we are obviously embarked on an aggressive program, and a very
necessary program for the country.

     MR. KALIL:   Great, thank you very much.  The other thing that I
wanted to mention is that this is an action that has very strong support
from industry, and I think if you don't have them, we could certainly make
available to you the statements from the major industry associations,
including CTIA, representing the Cellular industry, PCIA, representing the
personal communications industry, and TIA, representing the
telecommunications equipment manufacturers.

     So with that, why don't we open it up for questions.  You can either
direct your question to someone specific, or just ask general questions and
I'll field it to somebody.

     Q     I had a question for Chairman Kennard.  I wondered if you were
considering your speech earlier this week to the Museum of Broadcasters, or
whatever they call that place up in New York.  I wondered if you were
hopeful of getting any of the spectrum from the broadcasters?

     MR. KENNARD:  Oh, absolutely.  Doug, as you know, one of the
centerpieces of that speech is finding a way to accelerate the return of
the analog broadcast spectrum, so that it can be reauctioned sooner rather
than later.  That, of course, is the congressional plan that was outlined
in the '96 Telecommunications Act and it's essential if we're going to
expedite the digital TV transition.

     But the plan that Congress laid out in the '96 act is that that analog
spectrum would be returned and reauctioned and, as you know, when we
auction spectrum, we auction it for flexible use, so it could be used for a
variety of things.

     Q    I guess my question, though, is do you think you're going to be
able to get that spectrum by the time you said you wanted to allocate it,
which was -- when did you say -- allocate by July 30, 2001?

     MR. KENNARD:  Well, the analog spectrum should be reauctioned by 2002,
according to the congressional directive.  And we will be proceeding to try
to expedite the return of that spectrum and, in this process, identify
other spectrum that is encumbered that can be freed up for other uses as
well, so that frequencies are really moving in tandem.

     MR. ROHDE:  This is Greg Rohde from NTIA.  I want to make a clarifying
point about that particular spectrum.  It's important to understand that
that spectrum that Chairman Kennard is speaking about is not within one of
the bands identified by the World Radio Conference and therefore is not
part of the process that we were speaking about today with respect to this
memorandum that we'll be evaluating.

     That doesn't suggest that that spectrum cannot be used for third
generation wireless services.  But I just wanted to make sure everybody
understood that that spectrum is not within one of the bands that were
identified by the World Radio Conference and is also not part of the two
studies that Chairman Kennard spoke to that NTIA and the FCC are going to
do on the incumbent use.

     Q    Greg, is the military still seen as a likely source of this 3G
spectrum and, if so, how much will you need of it?  And they claim that
it's going to take at least 30 years and several hundred million dollars
for them to move off that spectrum to free it up.

     MR. ROHDE:  Well, I'll tell you what we know at this point.  At this
stage, there are two basic blocks of spectra that we are looking at, that
are equal options with respect to identifying for reallocation.  One of
those blocks is the 1755 to 1850 band, which the DOD is now the major
incumbent in that band.  That is one of the blocks we are looking at.  And
the interim report that I spoke to, that will be developed by November
15th, 2000, and the final report that Chairman Kennard mentioned, are going
to be looking at that band, as well as the 2500 band to 2690, which is
under the jurisdiction of the FCC.  That is a commercial band which
currently provides for MMDS and ITFS services.

     So as Chairman Kennard said, NTIA is looking at the 1755 to 1850 band.
The FCC is looking at the 2500 to 2690 band.  Both of these are both going
to be examined thoroughly.  And the options of looking for a reallocation
out of these bands are equal amongst these two bands.

     Q    Question for Tom Kalil.  Is the White House committed to seeing
the C and F block auctions go forward on December 12th?  And will the White
House veto attempts to delay the auctions as part of the budget process?

     MR. KALIL:  The administration is committed to seeing these auctions
go forward in December.  But I'm not in a position to make a statement on
vetoing a particular bill over a particular rider.  But we're strongly
committed to seeing those auctions go forward.

     Q    Why is this coming out now?

     MR. KALIL:  The reason this is coming out now is that this follows on
the heels of the World Conference, in which there was an international
decision about which blocks of spectra were to be used for third-generation

     Q    Did the Chairman's speech recently -- you know, the fight over
700 megahertz -- prompt this in any way, or --

     MR. KALIL:  No.  No.  This was in the works already.

     MR. KENNARD:  Yes.

     Q    A question for DOD, please -- the services that they're currently
operating in the 1755 to 1860 band identified, and what it will cost to
remove those?

     MR. WELLS:  Services are satellite operations uplink, air combat
maneuvering, mobile (inaudible) for tactical radio relays.  We don't know
yet the cost to relocate; that's one of the purposes of doing this whole
study process.

     MR. KALIL:  But also options for sharing it, and band segmentation
will be considered, as opposed to just sort of whole-cloth kind of
relocating use of that space.

     Q    Currently, don't the deployed forces in Kosovo and Bosnia use MSE
as one of their primary means of communication?

     MR. WELLS:  Certainly this is an important issue for us, and that's
one of the reasons why we're concerned that national security concerns be
adequately considered.  Also, our issue is to find a comparable spectrum if
we do have to relocate.  So we'll be watching this very carefully, but look
forward to working with all the players to make sure that the equities are

     Q    But Mr. Wells, is that a "yes" to the fact that the deployed
forces in Bosnia and Kosovo, the Army forces, use MSE extensively?

     MR. WELLS:  I believe that is correct.  I will get back and verify it.
But that's my understanding.

     Q    I have a question for Tom Kalil.  I thought the military had
previously committed itself to a November 15th deadline to submit a report.
Why was it necessary for the President to submit an executive order, to
order that?

     MR. KALIL:  No, I -- the administration, the President issued this
executive memorandum as a way of encouraging inter-agency cooperation,
laying out a set of principles and a set of action items, and also
elevating this issue, because we think this is really important.

     Q    Does that suggest there wasn't cooperation?

     MR. KALIL:  No.

     Q    Question for Chairman Kennard.  There are emerging three and five
gigahertz options for MNDS coming out in the industry.  Do you think that
competitive pressures alone can be accelerated to remove MMDS for two and a
half, or will this require some form of eventual mandate?

     MR. KENNARD:  It's unclear.  It's important for us to recognize that
at this point, we are very, very open minded as to which of these bands
will ultimately be used.  We have a lot of work to do, to study the cost
and benefits of using the spectrum.  What is clear is that whatever
spectrum is identified will require moving out incumbents in the band.  And
what we'll have to do with these studies is evaluate carefully what the
cost and benefits of that will be.

     Q    Another question for Chairman Kennard.  I was somehow under the
impression that the federal government, and FCC in particular, was already
looking for 3G spectrum.  What exactly is the force of this memorandum?

     MR. KENNARD:  Well we are, as you know, we're an independent agency,
charged with managing the spectrum.  So we're always trying to identify the
relevant spectrum for 3G.  But this is an extraordinary circumstance here,
because we are coordinating both with the government internationally, and
we have to coordinate with the other relevant federal agencies.  In fact,
if you look at our communications act, we're charged by Congress with
coordinating with NTIA on managing the spectrum.  So we can't do this in a
vacuum by ourselves.  We have to work closely with our colleagues in the
federal government.

     Q    Chairman Kennard, will this affect the Commission's plan for the
March auction of the 700 megahertz spectrum?

     MR. KENNARD:  No, again, that's really moving on a separate track.
The 700 megahertz spectrum, as Greg Rohde pointed out, was not identified
in the Work 2000 and it's not the subject of these studies.

     Q    How much spectrum are you trying to free up here exactly?  Is
there a limit, a number?

     MR. ROHDE:  This is Greg Rohde, from NTIA.  The World Radio Conference
looked at the question of whether or not there should be up to 160
megahertz allocated for third generation services by the year 2010.  That
was the recommendation by the World Radio Conference.

     Q    150 megahertz.

     MR. ROHDE:   Well, 160 Megahertz by the year 2010.  Right now at this
point, we don't know that.  That's what these studies are about that NTIA
and the FCC are going to do, is we first of all assess what is our spectrum
need and that also points to the need to have a great deal of coordination
and cooperation with the U.S. industry to make this assessment.

     So the first step is we have to assess what our needs are and then
secondly we have to look at, if we need additional spectrum, which we
anticipate we may need additional spectrum, where are we going to get that?
And we have to then go through the process of looking at how can we move

certain services to other spectrum bands, what are the costs of moving
those services, what's the time frame for moving services.  And we have to
do all that evaluation when we get to that point.

     I wanted to make one other point that is very important to understand,
particularly with respect to the military ban.  And that is, it's a matter
of law that if an incumbent is being moved, that there is provisions made
to continue on those services.  So one thing that is not on the table, we
are not looking at what kind of services we could shut down that are
currently being used; we are looking at can we move those services to
another band.  So that's really what the question is.  It's not a matter of
threatening an existing service; it's a matter of can you do that somewhere
else in order to free up spectrum.

     Q    But, excuse me.  But for Tom Kalil or anybody else there, it's my
understanding that under the way the law is written, that insofar as
relocation costs that a commercial provider, a mobile phone company or
anybody else, that money would go directly into the U.S. Treasury and the
Department of Defense would not be able to use any of it unless the law is
changed; is that correct?

     MR. ROHDE:  This is Greg from NTIA.  At this point, there are no
provisions in the law that would require the revenues to go to an incumbent
user to offset them.  There is a requirement in the law that says that the
incumbent must be reimbursed for the cost of their moving.  And so you are
correct in that if, indeed, this process resulted in a recommendation to
say we were going to move somebody, and we wanted to use those revenues to
cover those costs of moving, that would probably require a change in the

     Q    The 700 megahertz I know is a completely separate issue, but it
has highlighted a problem with incumbered spectrum.  There's a whole
problem now with getting the broadcasters off there, all the thing -- are
you going to find a way to sort of avoid that quagmire with (inaudible),
identify in the future?  Any plans for how to get people off the spectrum
without creating any problem?

     MR. KALIL:  The 700 megahertz spectrum is somewhat unique in that it
was subject to a Congressional plan that was outlined in the '96 act.  As
I've stated recently, I think that we need to re-evaluate whether that plan
will work to move the incumbents out of that spectrum, and facilitate DTV.
But I really think we have to look at 700 megahertz as unique, because it
was subject to a congressional plan that established the deadline and what
requirements had to be met, which is not directly relevant to the spectrum
we're dealing with.

     Q    Chairman Kennard, what do you envision for the idea --providers
right now, using it for a video and so forth, if that be moved?

     MR. KENNARD:  I'm sorry?

     Q    How do you envision dealing with the idea best users right now?

     MR. KENNARD:  Well, in our studies, we're going to evaluate how the
spectrum is being used, and what alternatives are available, if we have to
relocate those services out of the 2500 megahertz band.  Increasingly, all
of our spectrum is becoming more valuable, but we're seeing increasing
demand for that spectrum for multi-channel video use, and also for mobile
data uses.  And so we're going to evaluate the technology that's available
for wireless mobile use for that spectrum, and whether it can be
transferred elsewhere, and what the cost would be.

     MR. KALIL:  Okay, this is Tom Kalil.  We've got time for two more

     Q    Yeah, can I ask you, can someone answer -- which of these dates
that you have shown are newly set?  I understand that September 2002
deadline for auction was already there.  And even though you are speeding
up the process, that final goal is still unchanged.  Is there any way that
auction date can be earlier is there actually no change in the schedule

     MR. ROHDE:  This is Greg from NTIA.  The reason for that deadline in
here, it's September 2002, that is because NTIA has already provided to the
FCC the spectrum that is within one of the bands identified at the spectrum
between 1710 and 1755 as well as 2110 and about 2160.  And those bands have
already been allocated to the FCC under a previous order from Congress.  I
believe it was the 1997 Budget Act.

     And the reason we put that date down there is that it makes sense for
us to understand what we're going to do with 1755 to 1850, whether or not
that's going to be part of a reallocation before the FCC is required by
statute to auction off those two other small blocks that are within that
larger band that was identified in the World Radio Conference.

     So that is where that date comes from, is that we should really -- we
use that date to back up from to make our decisions.

     Q    Chairman Kennard, I have a question about the deadline.  If the
auction isn't for another two years and other countries have already
auctioned off spectrum, how are we then to stay ahead of these other

     MR. KENNARD:  Well, we are going to continue to work aggressively to
get our spectrum allocated as quickly as possible.  It's really not a
question of staying ahead or not; it's really a question of making sure we
are doing everything we can to get our spectrum allocated as quickly as we

     You know, we face challenges that other countries don't, in that we
already have a much more congested use of our bands.  And so we have got to
really work aggressively to meet our deadline.  If we can get this done in
advance of the September 30, 2002, deadline, all to the better.

     Q    Can I just step in?  Isn't it possible that some of the existing
wireless spectrum holders can migrate their existing spectrum into 3G?  The
additional spectrum would lower the cost and create more competition but I
thought it was possible that some of the existing spectrum could be used
for that?

     MR. ROHDE:  This is Greg from NTIA.  I said -- I think I referred to
that earlier.  That was one of the reasons why we fought for the multiple
bands at the World Radio Conference.  And, indeed, that's what's already
happening.  It's not like U.S. industry is standing still.  U.S. industry
is actually moving ahead very quickly.

     The question before us is how do we allocate -- we need to reallocate
more spectrum to allow it to grow even faster.  So it's not like in the
interim nothing is happening.  There are carriers already migrating with --

     Q    Can somebody tell us roughly what percentage of the available or
possibly usable spectrum is now controlled by the Defense Department?

     MODERATOR:  Can you repeat the question, please?

     Q    Yeah.  I mean, roughly, how much of the spectrum that could
conceivably be used for 3G is now claimed by the Defense Department?

     MR. KALIL:  I think we will have a better answer for you of that when
the study is completed.

     Q    Well, I mean, surely, you have to have some sort of ballpark.
You can characterize it any way you want, but --

     MR. ROHDE:  Well, currently -- this is Greg from NTIA -- within the
three bands identified by the World Radio Conference, it looks like it's
only -- there's 100 megahertz which is 1755 to 1850.  There is another
block between 2025 and about 2110, which is both government and
non-government, that's within those bands, but really I think the answer to
your question is probably about 100 megahertz, and that's the thing we're

     Q    I know you mentioned that it's important to have our U.S.
technology companies get in first, and don't fall behind.  But
specifically, what is the big deal if we fall behind on 3G?  What problems
will we face?

     MR. KALIL:  Martin, do you want to talk about sort of the importance
of first mover advantages, something that was highlighted in the CGS study?

     MR. BAILY:  Well, I think experience with information technology has
been that there is some geographic specificity if you get -- if you have
the ability to develop industries around the area, so that it's really
important that we locate some of the new industries and new technologies
here in the United States.  And we've seen that happen obviously in the
high tech sectors in the United States.  We're seeing it now happening in
Finland, where they have moved toward the 3G and they're beginning to set
up locations there.

     Now, some of the companies that are operating there are American
companies like HP, and so again it's not that American companies will
necessarily be shut out, but it does make a difference to have that
technology available in the United States as soon as possible and to the
greatest extent possible.
     MR. KALIL:  I mean, just to give you an example, I think it's fair to
say that companies like Cisco have benefited from the fact that the
Internet happened in the United States before it happened in the rest of
the world.  So there's a real advantage to U.S. companies for having the
United States continue to be the center of innovation and new technologies.

     And I think that, although we have some issues in terms of more a
suggested spectrum in the United States, an advantage that we have is lots
of small entrepreneurial companies that are developing software and
applications, a very strong venture capital sector that can invest in these
new high tech start ups.  So I think the U.S., although we've got some
challenges to deal with, is very well positioned to maintain its leadership
in this area.

     Q    Who was speaking, I'm sorry?

     MR. KALIL:  Tom Kalil.

     Q    I'll follow up on the education and the ITFX spectrum.  You know,
there isn't an elected leader in this country that's not all for education,
particularly the ones running for office.  But what I take away from this
press conference is that the ITFS spectrum is really up for grabs.  So
instead of helping to educate children, we're going to auction it off to
the highest bidder, so that people can buy flowers while walking down the
street with their cell phones.  If you would address yourself to this

     MR. KALIL:  Well, again, let me be really clear about this process.
We're not proposing to take away spectrum from any incumbent user and leave
them with no spectrum at all.  We're looking at ways that we can relocate
them to other uses.  And this is what we've done historically in this
country.  That's one of the reasons why we have a PCS industry in this
country, because we found a way to relocate the incumbent microwave users
in those bands and find ways that they were compensated and able to find
spectrum uses elsewhere.

     So, you know, I don't want there to be confusion here that we're going
to pull the plug on any incumbent user, be it a defense use or a commercial

     Q    -- guarantee today that they'll have exactly the same amount of
spectrum when this process is done, the ITFS users, as when they started?

     MR. ROHDE:  This is Greg from NTIA.  I'd just refer you back to the
presidential memorandum, where it's very clear that one of the principles
that's going to drive this process is that incumbents are going to be
treated equitably, and that we are going to address the incumbents.  It's
the only way that we can move ahead and be successful in this process.

     So if this process were to denigrate into a spectrum grab, and not
take care of the incumbent needs, we won't succeed in moving ahead.  So
it's very clear in the President's memorandum that this is a key principle
on which we're going to move ahead, whether that incumbent is commercial or
a non-profit educational incumbent, or whether it's a government incumbent.

     MODERATOR:  Thank you all very much.  Thank you very much for
participating in the call.


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