In preparation for PCS ’98, RCR sat down last month with Jay Kitchen, president of the Personal Communications Industry Association to talk about the trade show, the wireless industry in general, and PCIA specifically. The following is a transcript of that interview:
RCR: What is going to be the focus of this year’s show?
Kitchen: In general terms, it is a continuation of the idea that this is still a new and upcoming industry with room for phenomenal growth. We want to expose the attendees to the widest possible educational opportunities about the industry and of course the technology through the exhibit floor itself.
RCR: Do you have any new technologies that you know are going to be unveiled?
Kitchen: Not that I can talk about. We know that a number of exhibitors are planning new product announcements. We are expecting some important things to be announced at the show. We are going to have the 3G pavilion.
RCR: So you are doing a whole pavilion on 3G this year?
Kitchen: We are doing a whole pavilion. We are very excited about the response we have gotten from the manufacturers that want to play a part in that or be a part of it. As part of our Agenda for a Wireless America, we have talked about spectrum planning in the United States, but obviously spectrum planning in the United States must be coordinated internationally with the International Telecommunication Union, and 3G gives us the opportunity to do that. The current U.S. position is inconsistent with the ITU, and our hope is that whatever we can do to bring those two allocations closer together will help the entire industry. As we move forward, it is not as major a problem as it once was because technology is solving many of the problems through multiband radios. So the manufacturer is building a radio that will work both in the U.S. frequency bands and as well in some of the foreign frequency bands. It is not going to be as big a problem as it once was.
RCR: Has PCIA taken a position on the whole 3G trade debate? Qualcomm Inc. has tried to move the debate from technology to trade.
Kitchen: No, we have been very careful to avoid that so far.
RCR: Will the pavilion have all of the four standards sent over to the ITU?
Kitchen: Yes, as far as I know. We will have to double-check to make sure that all four are going to be there, but the pavilion is being widely supported by all of the segments of the industry. We want it to be technology-neutral, so I hope that means that they will all be there.
RCR: Explain for me, what you are doing along the regulatory fronts for 3G.
Kitchen: PCIA did a needs study. We went out and did a survey of the manufacturers in the industry to [ask] what is going to be the communications requirement in the year 2010? And, from that, what kind of spectrum allocations are we going to need as far as the bandwidth of spectrum? We are working backwards and have presented those papers to [ITU] Task Group 8. The paper was presented to Task Group 8 in an effort to help ultimately define what the spectrum requirements are going to be. That is PCIA’s focus: What are the spectrum requirements going to be, and where in the spectrum [band] is it going to be? We are staying neutral on which technology.
RCR: Is this going through the World Radiocommunications Conference (WRC) process?
Kitchen: Yes.
RCR: The Latin America show is going to occur during the first couple of days of the week. What are going to be some of the things you are going to be touching on specific to Latin America?
Kitchen: What we want to do with the Latin American show-and what we will do-is give the Latin American community an opportunity to be exposed again to educational opportunities that day and create networking opportunities for Latin Americans to meet their counterparts here in the states because we see tremendous synergies developing between Latin America and South America and the United States. BellSouth (Corp.), for example, in Brazil. We have over 48 speakers lined up, and we are looking at the attendance somewhere in the 500-person range. We have talked to a lot of people in South America and Latin America that are very much looking forward to the show.
RCR: Is this something you are going to do every year? Is this ongoing?
Kitchen: This is the first year, and if we come anywhere close to the successes we anticipate, yes. Just as we plan to continue our efforts in the Asia market with the Singapore show.
RCR: How will the general show be different this year than in previous years?
Kitchen: We always try to change the format a little bit to keep it interesting. Broader educational tracts this year. More opportunities. Four out of five [Federal Communications Commission] commissioners are going to be there. [FCC Commissioner Gloria] Tristani is not because it is National Hispanic Week. She had originally accepted but ended up with some conflicts that she couldn’t work around. But FCC Chairman [William] Kennard will be there, and Commissioners [Susan] Ness, [Michael] Powell and [Harold] Furchtgott-Roth will all be giving speeches.
RCR: The attendance at the Singapore show was not as many had expected it to be. Partly, I would gather that is from what has been happening over there with the economy. Are there things you are working on for future Singapore [shows] or future Asian [shows] to help that?
Kitchen: Well, let me say first that the attendance was not what we had wanted it to be but we were pleased at the ultimate turnout. I look back and say the year before when we started planning that show if we had had the perfect crystal ball and could have said which day is going to be the worst in Asia, it would have been the day the show started, so it was unfortunate that all of that came together at the same time. But, even with that, we had 3,200 attendees go through the exhibit hall. Many of the exhibitors were very, very pleased with the quality of the traffic as opposed to the quantity. We’re full steam ahead for a show in January 2000. The other thing we think is that it was a great opportunity for Singapore and you will see it happen again and again. It gives the opportunity for not only U.S. carriers to meet their counterparts in Asia, but also U.S. manufacturers to sell product in Asia. Up until the financial crisis, the Asian market was considered one of the top three markets-Asia, South America and the U.S. But obviously with the economy over there, the economy has fallen. We anticipate that when the economy starts back, telecommunications is going to be one of the first segments to rebound.
RCR: So this is a biennial show?
Kitchen: Right.
RCR: My understanding from previous shows is that there has been a de-emphasis on paging. Is paging going to be more emphasized this year?
Kitchen: No, I don’t think there is an intent or I don’t think it actually has happened, to de-emphasize paging. I think rather what has happened is that the show has broadened to represent not only the broadband [personal communications services] PCS and the paging industry, but the tower-siting industry, the software industry. As the whole wireless industry gets a broader base, so does the show. But no, there was never an effort to de-emphasize paging.
RCR: How has the PCS industry exceeded your expectations?
Kitchen: Well I go back and look at how we have all been underestimating where this industry is going to be. All the way back to where AT&T predicted there would only be 900,000 cellular phones in the United States. Now AT&T is arguing that you only need one phone in your life and it is your wireless phone. So I think that is a perfect example, or illustration, of how far the industry has come. What we are seeing-and what I expect some of the announcements we are going to see at the show is going to be-even smaller equipment with even more services available to
the consumers.
RCR: Are there any disappointments with PCS?
Kitchen: I wouldn’t call it a disappointment but
certainly a concern that we all have is an open marketplace for full and robust competition. PCIA’s Agenda for a Wireless America is designed to eliminate any or all of the roadblocks to that end goal of open competition. What we are really here to do is make sure that the end consumer is getting the most options at the least cost to provide wireless communications.
RCR: What would you say are the biggest factors slowing down the buildout of PCS?
Kitchen: All of the auction problems that we have had that we hope are coming to a close with the re-auctioning of the C-block. That was just a terrible obstacle-roadblock-for the C-block licensees that has really put them behind. And now they have to play catch-up against the A- and B-block guys that have a strong foothold. Is it impossible? No. It just creates more of a challenge. We look at the Agenda for a Wireless America and the tax issues the carriers are still wrestling with, the interconnect issues, the siting [issues]. While we have made great progress, we are pleased with our agreements through the [FCC’s Local and State Government] Advisory Committee [LSGAC] on antenna sitings. I think I described that as one more tool in the tool box. Those kind of things will help pave the way for PCS to continue to grow.
RCR: What is the next step in antenna sitings? Are there similar agreements that you would like to see signed by other bodies?
Kitchen: I don’t know that there are any other bodies that need to join in right now with the participation of that Advisory Group. This issue now is to see how this is going to work. I think it is important to remember that [LSGAC Chairman] Ken Fellman made the point that there are 36,000 zoning authorities out there and we only have moratoriums in 300, which percentage-wise is pretty darn small. However, I don’t want to de-emphasize the importance of that because if it happens to be in an area where you are trying to build out a PCS system, it can be completely devastating to the network.
RCR: Do you have a prediction as to when consolidations in the PCS industry may start occurring and who the players will be?
Kitchen: If you look back at all of the wireless telecommunications segments of the industry that we have had, consolidation is absolutely been the rule from day one. The paging industry has gone through consolidation, the [specialized mobile radio] industry went through consolidation. Now, you have the giants of the industry going through consolidation on the wireline side and I fully anticipate that it will start happening on the wireless side. As you see the C-, D-, E-and F-block guys build out, there is going to be the opportunities there for smaller guys to consolidate and gain scope and scale. And then there is going to be the opportunity for the larger guys to buy those people out.
RCR: Do you think consolidation will happen this year?
Kitchen: As far as the broadband PCS, we are probably a couple of years away.
RCR: Last year you unveiled a new industry advocacy program. I assume that is part of the Agenda for a Wireless America. Give it a grade A to F. How is it going?
Kitchen: “A.” We are very pleased with the work we have been able to do and the focus we have been able to bring to the Agenda for a Wireless America. When we developed that, we shared it with the FCC commissioners and their staffs. We have shared it on [Capitol] Hill and everywhere it has been received openly and as a great tool of focusing the industry on what are the major roadblocks.
RCR: Do you have specific accomplishments you would like to highlight?
Kitchen: When it comes to the Agenda for a Wireless America, in no particular order of importance, running down through the list:
Tax Relief: We have certainly been very, very vocal in the universal-service issues, and I think it is in large part to our effort, we have seen both the [FCC] and Congress rethink the whole universal service plan and the high-cost funds so the efforts there have paid off. It has paid off at the FCC with respect to regulatory fees, where we have been able to limit the increase in fees at the FCC. Again, costs that the carriers shouldn’t have to pay.
Interconnection: The letter last December was a major major move forward for the paging industry. The recent interconnection agreements between GTE and AirTouch-major step forward. We hope that will be a model for other interconnect agreements. So that has helped on the interconnection side.
Infrastructure development: We have already talked about the siting issues. I think we are at a position where we have made great in-roads with the local and state authorities, so I think people understand the industry more than they ever have before. Our [Site Owners Management Association] SOMA have really worked on this.
Network coordination issues: We have been very, very involved with all of the numbering issues, number portability, number exhaust. Cathy Handley [PCIA director of numbering strategy], formerly with U S West, did a lot of their numbering work, and has been invaluable in pushing [PCIA’s] position on those issues.
Spectrum planning: We have already talked about how that is going to work in the U.S. with 3G. Of course [local multipoint distribution service] LMDS is a part of that.
Internationally: We have already talked about the Latin America trade show and the Singapore trade show. We continue to meet with representatives from those countries and our people are going to those countries to develop relationships, long term relationships, that will help our members as they move into the international arena.
RCR: Did you have any major disappointments in the past year?
Kitchen: I think our single biggest disappointment was the [FCC] denying our petition on forbearance. While there were things in that item that we were pleased with, the single biggest thing in that item was forbearance and apparently the [FCC] is simply not ready to deregulate to the extent that we had hoped. And, I think, to the extent Congress had hoped.
RCR: Along those lines, you just recently sent a letter to the FCC containing 71 areas where you believe the FCC can deregulate the industry. Do you have any ideas on which items have a better chance than others?
Kitchen: Gee, I don’t know. I would have to go back through the list. I really don’t know. We divided the list up into different segments. There are those that we think the [FCC] can just go ahead and act on without even doing a [notice of proposed rule making] NPRM. There are others that might require action in the short term, 30-day notice and react. And, then there are some things that will probably require a rule making. But, those 71 items can go a long way to easing the administrative burden that the licensees have, and there are items that we think the [FCC] could act on very, very quickly and then move on to the bigger issues.
RCR: Let’s talk about [the Communications Assistance for Law Enforcement Act of 1994] CALEA.
Kitchen: We have a CALEA meeting go on here today.
RCR: Is it paging?
Kitchen: Yes.
RCR: Give me your scenario for CALEA. How do you think this is going to proceed in the next few weeks?
Kitchen: We will definitely see in the next couple of weeks an extension. We have been anticipating that every day but with the August vacation schedule, I think it has been difficult to get the [FCC] together to get a vote on anything but we are anticipating an extension of anywhere from 15 to 24 months. I think it is very important for the FCC to understand that the length of time it will take the industry to become CALEA-compliant is directly related to when they can come out with a standard and either adopt the standard the industry has adopted already and eliminate the punch list or decide which one of the punch-list items will be required. But we just cannot expect the manufacturing industry to go
out and build equipment to meet as-yet undefined standard. It is not going to happen. I think the FBI and law e
nforcement is being short-sighted, but for one or two punch list items that they feel are important, they have successfully delayed the implementation of this program by years. (In fact, the FCC extended the CALEA compliance date to June 2000).
RCR: I have been having conversations with a couple of manufacturers, which at least claim on the outset, they have a CALEA-compliant solution that would include at least part of the punch list.
Kitchen: I have heard that as well.
RCR: Do you think any of your members are going to be willing to sign up with these manufacturers that are ready now?
Kitchen: I can’t imagine that they would do that because with those remaining punch-list items out there, some of which are very complex and very costly, why would a carrier want to go out and buy equipment now that may not meet the ultimate standard adopted by the FCC.
RCR: Some of these manufacturers are urging the FCC to go ahead and extend the deadline if they have to, but put in place click-box dates that say implement the interim standard by a certain date and the rest of the standard later.
Kitchen: Our members have always been willing to accept some type of proposed implementation schedule once the standard has been adopted. But until the standard is adopted, it is absolute speculation as to when the industry can comply with it because if all of the punch-list items-in the worst case-were included in the standard, there are some major, major hurdles from the technology stand point to be overcome.
RCR: Do you think this will go to the courts based on privacy, regardless of what happens?
Kitchen: Privacy is not my area of expertise, but I am certainly aware that the privacy folks have been very concerned about how far CALEA goes with respect to wiretapping.
RCR: We are now ready to re-auction the C-block spectrum next spring. When do you think we are going to actually see those markets being built out?
Kitchen: I think the buildout will come very quickly after the auctions this time. I am looking for bidders to be far more sophisticated, far more educated and have great deal of financial backing. More financial backing than they had the first time around. I think we have learned a lot from the C-block auction.
As I mentioned earlier in the interview, I think it has been very unfortunate that the C-block [winners] have been held back because of the fiascoes with the whole process. It has put them at a disadvantage and I think they will have a lot of catching up to do. I think it also creates a lot of opportunities now for them to move forward. I was very pleased to read in the press that the [FCC] chairman is saying that companies whose financial indicators are stronger and have exceeded the original expectations of the C-block auctions will still be allowed to bid. I think what that does is ensure that you will have financially viable bidders participating in the auction.
