Over the years, I have watched PCIA grow, merge, and evolve. With each step, you have expanded your horizons and redefined your mission to embrace emerging trends in the wireless industry. I am especially grateful for your efforts to highlight and seek resolution of policies on third generation PCS -- an issue on which I have been focused for some time.

As this organization knows so well, the wireless industry has enjoyed explosive growth. Wireless technology is poised to provide facilities-based competition to wireline telephony, and serve as a major conduit for Internet access.

New satellite-delivered voice and data services are about to be launched, enabling subscribers to reach out and be reached any time any place around the globe.

As the need for bandwidth grows, so grows the demand for a critical resource -- radiofrequency spectrum. Indeed, at the heart of many key issues facing the wireless industry today -- third generation PCS, wireless local loop allocations, and GPS spectrum sharing, to name a few -- are the Commission's policies for allocating, setting service rules and assigning licenses for radio spectrum.

Spectrum management is one of the core functions of the FCC. Yet, often our decisions are made on an ad hoc basis -- band by band -- rather than as part of a well articulated spectrum policy.

The Commission has made tremendous progress in revamping its spectrum policies over the last few years. We have emphasized flexible use, and have limited our reliance on standard-setting, to enable licensees to adjust their services to the rapidly changing marketplace. We have instituted auctions and have streamlined the application process.

En Banc Policy Forum

In March of 1996, at my request, the Commission held an en banc hearing to examine policy issues involving management of the radio spectrum. Since then, much has happened. We have auctioned multiple bands of spectrum. Technology continues to extend our horizons.

Competing demands for spectrum have multiplied, even for bands that not long ago were considered the new frontier. The globalization of wireless services has become a reality, marked by a contentious 1997 World Radio Conference which challenged our satellite and terrestrial wireless industries to accept complex sharing and non-interference proposals.

How well have our policies served the American public? What is working and what is not? Our assumptions have now had the test of time. And with a new Commission, it is time to hold an en banc forum again, to enable us to examine our spectrum policies without the constraint of any particular proceeding.

So I thought I would begin this dialogue today -- focusing on spectrum policy, with the hope of stimulating new ideas about the ways we can improve the management of this unique national resource during this time of rapid technological and global change.

I specifically challenge the members of PCIA and others in the wireless industry, to play an active role in designing creative proposals for how we should manage the spectrum in the 21st century.

Radio Spectrum - an Amazing Natural Resource

Radio spectrum is an amazing natural resource. Unlike coal or mineral deposits, spectrum can be "consumed" all day today without diminishing the amount left for tomorrow. Unlike coal or mineral deposits, failure to use spectrum is to waste it.

Today's useable bands of spectrum are limited in supply, and can sustain only a finite number of users at any one time and at any one place. To be sure, technological advances permit more efficient spectrum use -- and enable use of higher frequencies. But exploding demand for bandwidth continues to produce scarcity, particularly in more densely populated areas.

Because spectrum is limited in supply and is a critical factor of production in a host of essential products and services, how we choose to distribute it among different uses and users is enormously important. The choices we make have a direct impact on this nation's economic and social well being.

Stages of Spectrum Management

Generally, the Commission's management of this resource has been divided into three stages:

Allocating the spectrum for particular services or groups of services;

Developing the service rules; and

Assigning licenses to use the allocated spectrum under the rules.

But these stages are interdependent; misguided allocation policies can impair efforts to develop flexible service rules for use of the spectrum; and poorly designed service rules can render the spectrum valueless for wireless services.

Moreover, the rapidly changing marketplace requires a more streamlined regulatory process so that spectrum can be put to immediate use.

We all criticize the fourteen years it took for the Commission from start to finish to license cellular mobile telephone. In contrast, our PCS proceeding was much faster. There we combined the allocation and service rules into one proceeding, reducing costly delays. I'd like to speed that up even more.

Allocating the Spectrum

Allocating spectrum among competing commercial uses is, perhaps, the Commission's most fundamental responsibility. In starkest terms, we determine whether particular uses -- indeed, entire industries -- are able to exist.

In addition, we exert a strong impact on the technical and economic performance of an industry by deciding (a) how much spectrum should be allocated to a particular use, (b) where in the spectrum the allocation should be placed, and (c) what service rules will govern that use.

Global Allocation of Spectrum

But even before the Commission implements a commercial service allocation domestically, basic allocations for use of the spectrum must first be sketched out and adopted at ITU biennial World Radio Conferences. Given the proliferation of global satellite and terrestrial wireless systems seeking to use new spectrum, these World Radio Conferences have taken on critical importance.

By promoting global spectrum allocations, we enable mobile satellite systems to serve global populations. Also, common allocations enhance export opportunities for equipment manufacturers and benefit consumers through lower prices created by greater economies of scale in equipment production.

On the other hand, the international allocation process constrains our domestic allocation decisions and our ability to implement domestic policies. That can be extremely frustrating at times.

It is clear that, as communications becomes increasingly global and complex, the public and our industry are best served by the U.S. government devoting adequate high-level, timely attention and resources to international spectrum management.

This also requires the U.S. wireless industry to adequately prepare for these international allocation conferences. Competitors need to redouble their efforts to reach consensus early on, to help the U.S.Government move with a decisive voice in international gatherings.

Having served as the FCC's World Radio Conference commissioner at WRC '95 and WRC '97, I have actively sought to make our WRC preparatory process more responsive to the needs of U.S. industry. In light of the impact that international allocations have on our domestic allocations, in my view, we need to do a better job of engaging early and often in discussions with our key trading partners, before positions are set in concrete, to minimize allocation controversies or delays at WRC conferences.

These steps will make it easier to ensure that our domestic allocation decisions both reflect and influence regional and world outcomes.

Domestic Spectrum Allocations

The Commission must take a long range view of spectrum allocation. Auctions

-- which are primarily a license assignment tool -- have helped allocations by demonstrating the relative value of spectrum.

Auctions, however, are not a substitute for the allocation process. In other words, we should not -- indeed, we must not -- back away from our fundamental duty to allocate and reallocate spectrum in broad categories in accordance with the public interest.

This is so for both policy as well as pragmatic reasons. The value to the public of certain uses of the spectrum does not always translate into pure economic terms.

For example, we need to ensure that adequate spectrum is available for public safety purposes, for unlicensed -- that is, Part 15 -- uses, for the amateur service, and for experimental and scientific purposes. None of these needs would be met if auctions displaced judgment in the spectrum allocation process.

Indeed, all of these spectrum uses serve the public interest. They are fundamentally different and merit different rules and allocation strategies. One size does not fit all.

A final point about spectrum allocations. Government also needs to retain the ability to readjust allocations on a large scale to reflect broad changes in international allocations, technological developments, and fundamental shifts in demand.

Rather than just trying to fit added uses into the spectrum on a case-by-case, one-at-a-time basis, we occasionally need to take bold initiatives to adjust spectrum allocations on a broader scale to serve the public.

The Commission undertook a bold initiative in the early 1990's in our Emerging Technologies docket. There we reviewed existing spectrum allocations and developed a comprehensive plan for adjusting allocations to accommodate new PCS technologies, while remaining cognizant of the needs of incumbent licensees.

I don't need to persuade this audience that the results have been extraordinarily beneficial.

Developing Technical and Service Rules

Besides allocation, spectrum management also entails the development of technical and service rules. Generally, these two categories of rules are interrelated. The first -- technical rules -- are designed to protect other users of the spectrum against harmful interference from a particular use. Typical rules include maximum transmitter power levels and maximum signal power permitted at the edge of a service area. It may also include out-of-band emission limits.

The second category -- service rules -- foster competition among service licensees and ensure that systems are built out rapidly. These rules typically include eligibility requirements, size of designated service area, amount of spectrum to be licensed, and build-out requirements.

Generally, we have in recent years given licensees great flexibility on how to use their assigned spectrum. Area, rather than site-by-site, licensing, and disaggregation and partitioning rights have expanded options for our licensees to make the most productive use of the spectrum.

But sometimes flexibility conflicts with our desire to promote spectrum sharing. By using innovative technical approaches to fit all applicants into a limited amount of spectrum, we may be able to accommodate competing applications. Thus, with industry cooperation, service rules can be designed that avoid auctions and contentious international rivalry.

Our recent experience in trying to arrange sharing between terrestrial and satellite systems and between certain Federal government and non-Federal government uses highlights the difficulty of these issues.

Nonetheless, we need to recognize that efforts to increase sharing also come at a cost. Developing complex technical sharing rules may lead to long delays between the time that the spectrum is allocated and the time that service to the public is initiated. And overly restrictive technical rules can in some cases threaten the economic viability of the service.

Also, in developing service rules, we generally have found that consumers are best served when technologies are allowed to battle it out in the marketplace. The FCC usually does not adopt technical standards for consumer equipment as part of our service rules. Mandatory technical standards can inhibit innovation.

We did not select a particular technology for the cellular industry's migration to digital nor did we mandate a particular technology for PCS or for WCS. More recently, we did not mandate a particular technology for use in the LMDS spectrum.

Admittedly this policy has generated considerable controversy. Some major equipment suppliers have voiced concern about the Commission not being more specific about services to be offered and technical characteristics of equipment to be used in the WCS band.

They assert that multiple standards make it difficult for consumer equipment to be compatible with different communication systems and consumers are deprived of lower prices because of the lack of economies of scale.

Let me state clearly that the notion of government selecting any single technology or standard is not an ideological litmus test for me. If I thought -- on purely pragmatic grounds -- that consumers would benefit by the FCC selecting detailed

technology-specific standards, I would not hesitate to do so.

In some situations, standards -- especially open, not proprietary, standards -- can promote competition in the provision of equipment, reduce uncertainty in the investment community, facilitate interoperability and roaming, and produce greater economies of scale -- all to the ultimate benefit of consumers.

As an example, I have supported free over-the-air digital television broadcasting transmission standards to keep equipment prices low and so that a television set bought in Orlando also will work in Oakland. In addition, I have supported carefully measured steps to ensure that certain critical telecommunications networks --- like public safety networks --- can interoperate.

Indeed, just last month the Commission set aside spectrum for the specific purpose of promoting interoperability among public safety radio systems.

But having government -- rather than the marketplace -- as a policy -- set detailed technology specific standards has its risks. For example, had we mandated a single TDMA-based or CDMA-based system for cellular or PCS, we would have, in effect, deprived consumers of the benefits of the intense marketplace rivalry between the various TDMA and CDMA solutions.

Would consumers really be better off today -- and tomorrow -- without the rivalry between these different technical approaches?

Or take an even more recent example. Suppose we had undertaken to establish detailed technology specific standards for LMDS. One immediate consequence, of course, is that if we had done so, we probably would still be fighting over the standard and the spectrum would not be in the hands of entrepreneurs.

Even more fundamentally, what standard would we have chosen? LMDS was initially regarded as a potential competitor to cable for the delivery of video entertainment program. Its real potential, however, may be providing high-speed access to the rapidly growing Internet.

As a consequence, it is quite conceivable that after considerable delay we would have ended up choosing the wrong standard or technology to fit current marketplace conditions.

One noteworthy development is that technology itself may be reducing the penalty of having multiple standards. We already have multi-mode/multi-band cellular and PCS handsets, and I am aware of intriguing developments in so-called software-defined radios.

The current debate over the third generation of wireless PCS illustrates the need for the FCC to work with industry to develop a policy that best serves the consumer in the global marketplace.

I moderated an impromptu debate on IMT 2000 at our Chinese dinner last evening. The best advice came in my fortune cookie -- it said: " Keep a cool head when making decisions."

Seriously, I am convinced that the time is ripe for us to review our role in the standards process in light of our recent experience. We should step back and evaluate what is working and what is not. The stakes are simply too high for us to do otherwise.

Methods of Assigning Spectrum

Having discussed allocations and the development of technical and service rules, I would now like to turn to the methods we use to assign spectrum.

In the "good old days," it was possible -- in some services and in some locations -- to award licenses on a first-come, first-served basis because the number of licenses available exceeded demand. Today, we must almost invariably choose from among competing applicants.

I need not tell this group about the difficulties associated with conducting comparative hearings, nor about the problems with lotteries. You've been there and done that.

To address these problems, Congress in 1993 authorized the Commission to award mutually exclusive licenses using competitive bidding or auctions.

Last year, the Commission sent to the Congress a report evaluating our first four years of auction experience. By then, we had conducted fourteen auctions and awarded over 4,300 licenses for spectrum-based services.

We concluded that the auction program had been successful. Namely, we found that our auctions have put spectrum to productive uses, encouraged the emergence of innovative firms and technologies, generated valuable market information, and raised revenues for the public -- all with greater speed and lower costs than comparative hearings or lotteries.

The auctions have not been without their detractors. First, some have expressed disappointment at the amount of money raised in particular auctions. But our objective has never been to maximize revenues for the U.S. Treasury.

If that were the objective, we would have the incentive to hold spectrum off the market to create artificial scarcity and drive up prices. Clearly that was not the intent of Congress in moving to auctions. Rather the goal is to maximize consumer benefits by getting spectrum into the hands of those who value it highly and to do so expeditiously and efficiently. I think that the use of auctions clearly has achieved that goal.

Second, some observers have expressed concern that some of the spectrum we have auctioned -- for example, the WCS spectrum -- has not been used extensively. This concern should not be dismissed lightly because, as I noted at the outset, spectrum is wasted when it is not used. So, it is important to identify spectrum that is not being used and to ascertain why.

One reason might be that the technology and economics have not caught up with the allocation. After a reallocation and auction, it takes time for providers to refine their business plans and for system providers to develop, test, produce, and deliver the necessary hardware and software. Delays in the use of spectrum for these reasons can be expected and should not necessarily be a cause for alarm.

Another reason that spectrum may lay fallow may have to do with the technical and service rules governing the allocation. For example, the associated technical and/or service rules may be too restrictive to make the service viable at a given point in time.

On the other hand, as I suggested earlier, the development of the spectrum might be delayed if we did not provide some direction -- adopt at least minimal standards around which the industry could coalesce.

All in all, I think auctions are working well as a means of assigning mutually exclusive licenses. That is not to say that we should not be continuously trying to improve and refine the auction process. For example, we need to speed up issuing licenses after an auction is completed.

In addition, we should periodically review actual spectrum usage. By doing so, we may discover ways of encouraging the use of spectrum that might otherwise lie fallow.

Summary and Concluding Thoughts

In short, we have made great progress in introducing flexibility in the use of the spectrum so that the licensee can be in front of a rapidly changing marketplace. And generally, the process of assigning licenses by auction has worked well.

However these are only my impressions -- my ideas. It is extremely important that we hear directly from the public -- users, providers, manufacturers, academics, and so forth -- on how we can improve our management of the radio spectrum in a globally competitive world.

It is timely for us to hold an en banc on spectrum management to better assess how we are doing and what are the long term effects of our spectrum policies. I look forward to your thoughts and ideas.

Thank you.