WASHINGTON-Thomas Wheeler, the president and chief executive of the Cellular
Telecommunications Industry Association, does not want to enter the ‘holy war’ between local and long-distance
companies. Rather, he wants to focus on what is best for the wireless industry. And, what is best for the wireless
industry is not to be regulated like a local phone company.
Wheeler wants regulators to get out of the mindset of
“If it looks like a duck and walks like a duck and quacks like a duck, let’s regulate it like a duck. We aren’t a
duck. We are a competitive duck and this competitive duck is tired of seeing wireless policy made in footnotes in
common carrier items.”
In preparation for Wireless ’99, RCR reporter Heather Forsgren Weaver sat down
with Wheeler to find out his vision for the wireless industry for the next year and beyond.
RCR: What are
the critical issues facing the industry today?
Wheeler: From a business stand-point, existing in a competitive
market is tough. Business practices in the kind of market that wireless has are therefore tough and challenging.
I am
thinking in terms of how companies do their business. How they have to change from the way they used to do their
business because of the new intense competition.
Today, there are over 60 percent of the people in America who
can choose from five wireless carriers.
Let me give you an example, it kind of sums it all up. It seems almost
metaphorical.
I was visiting a company where there was a discussion about the turn-around time that the general
counsel of the company has to approve advertising copy-four hours. He had to have reviewed and made his comments
on advertising copy within four hours of it being submitted regardless of where he was, regardless of what else was on
his schedule that day, because in a competitive market we can’t sit around here and wait for a message from the
mountaintop.
There’s the perfect metaphor of what is going on in this business because we are having to adapt the
manner in which we operate corporately in order to deal with the realities of this highly competitive market. You can’t
do business today the way you did it yesterday.
Embracing change, managing change is critical.
For
legislative/regulatory: Let’s do something different. Instead of going through talking about this docket or that piece
of legislation or whatever, let’s try to take a broader look.
If you want to see what competitive telecommunications
is going to look like tomorrow, look at wireless today. I think that is our No. 1 policy challenge for the coming years-
plural.
We fall into two traps in the regulatory/legislative track.
The first trap is that if it looks like a duck and
walks like a duck and quacks like a duck, let’s regulate it like a duck. We aren’t a duck. We are a competitive duck and
this competitive duck is tired of seeing wireless policy made in footnotes in common-carrier items. There is a
difference between the competitive wireless market and the traditional common-carrier market and policy has to
recognize that.
We have to deliver the message that the competitive market is different because there is no malice of
forethought. There is no malfeasance or misfeasance involved in this. It is inertia. It is habit-“We have always
done it this way.” I think the wireless industry’s biggest challenge is going to be to explain to policy makers that
if you treat the wireless industry the same as you treat the traditional telephone industry, you will kill competition. You
cannot impose on a competitive market the rules that were designed to address the grievances in a noncompetitive
market. You do that and you will make the competitive market, noncompetitive per se. So for the coming next couple
of years, we are going to be like a broken record in delivering that message, and we hope that the policy makers will
understand and react.
If they do understand and react, then the issues we talk about in the legislative environment or
the regulatory environment will be entirely different, and the way we talk about them will be entirely
different.
RCR: In what ways can the wireless industry become more visible in the local competition
debate?
Wheeler: I think if you want to see what competitive telecommunications is going to look like
tomorrow, you ought to look at the wireless industry today. There is no more competitive facilities-based service in
America than wireless. Period. So I think we are the precursor of what the competitive local market is going to look
like in other segments in a few years.
RCR: What efforts are being made to get into the local telephone
market?
Wheeler: Because of competition in wireless within the wireless sector, wireless carriers are having by
necessity to look for growth opportunities outside of the traditional wireless business. Clearly one of those growth
potentials is as a wireless local loop service. The marrying of the cordless phone and the wireless phone.
We have
seen in Louisiana, for instance, BellSouth PCS (says) 15 percent of their subscribers don’t have a wireline
phone.
We have seen stories in New York Times, Kara Swisher’s article in the Wall Street Journal, “I cut the
cord.”
You will see at the opening session at [Wireless ’99] a focus on this issue. The theme of the opening
session is “The Principal Phone” because obviously we believe this is a large portion of the wireless
industry’s future.
RCR: Would CTIA support including cellular service with PCS as a way for the Baby Bells to
satisfy the 14-point local-competition checklist?
Wheeler: One of the things we have deciduously avoided is
getting into that holy war.
RCR: But Sen. John Breaux (D-La.) has indicated a willingness to do just that, so
wouldn’t that bring you into the holy war whether you like it or not?
Wheeler: We weren’t in the mix of that
issue when it was included in the telecom act. I recognize the fact the telecom act says PCS, not cellular.
Again, I
think what CTIA needs to be focusing on are the needs of wireless carriers not the issues of wireline carriers. Our job is
to worry about what is going to help wireless competition grow, not get in the middle of holy wars between wireline
and interexchange carriers.
RCR: How will the rapid consolidation among wireless carriers impact the
industry in terms of competition?
Wheeler: I think it is being driven by competition. In a vibrantly
competitive market, you have to drive down costs so that your prices can be as competitive as possible. That means you
have to have economies of scope and scale. That means that the bigger your footprint, the more you can spread your
fixed costs across multiple operations the better. Let’s not get confused, however, the consolidation that is occurring is
not something that is having an impact on the number of competitors in the market. This is just various competitors
shuffling the chairs around the table so that they can compete more effectively with each other.
RCR: Do you
think small and rural players are going to be able to survive?
Wheeler: I have always been a believer in niche
markets. I think that creative well-managed companies will be able to exist in niches-specialized markets.
RCR:
CTIA has said that spectrum caps need to be lifted for carriers to offer third-generation wireless. What will
happen if the spectrum caps are not lifted?
Wheeler: It is simple. You will have people making decisions by
rules rather than by efficiency. Again, in a competitive market the name of the game is efficiency. It is entirely one
thing to say that during an auction to facilitate the activities of the auction you put spectrum caps in place. It is
something entirely diffe
rent to-three or four years later-say that you need a vibrantly competitive market and in a
market where technology is changing to the next-generation digital, we have to maintain those kinds of artificial
structures that were designed for regulatory purposes and have no relationship to what is really happening in the
marketplace-either the consumer marketplace or the technology marketplace.
RCR: Does CTIA support the
Telecommunications Industry Association’s proposal for additional spectrum at 2 GHz for third
generation?
Wheeler: There are hurdles to get over before you go opening up more spectrum. It would be a
travesty if the government opened more spectrum before assuring that the existing spectrum was being used efficiently-
which brings us back to the spectrum cap. Why have an artificial guarantee of inefficiency.
So that is one thing. We
have got to deal with making sure that what is out there is being used efficiently.
Secondly, we have to ask
ourselves. We have to predicate any decision on that in terms of really what the demand will be based on some interim
experiences.
We are now going to start rolling out this year 2G+ and 2G++ and all types of different names. We are
going to start seeing what’s going on in the marketplace insofar as demand.
I don’t doubt that at some point in time
additional spectrum will make sense, I just don’t think we are at a point today in 1999, where we have to rush out and
do that before we make sure that existing spectrum is sufficiently used, and frankly, before we have a better
understanding as to what 3G is going to be and what its applications are going to be.
RCR: What is the main
purpose of the ComCare bill-to deploy 911 service or site antennas?
Wheeler: It is to help the wireless
industry continue to provide the level of safety that it has for subscribers and even expand it. There are some studies
that show the impact of time on traffic fatalities. If you can cut between a crash and 911 being notified, you can save
lives. The doctors call it the “golden hour,” the first 60 minutes are the most important. Yet the record is
replete, particularly in a wireless environment, where people don’t know what number to dial, so that has to be dealt
with. A universal 911 number would go a long way to speed things up.
Having a phone in the car or a passerby
having a phone in the car cuts down notification time and that helps saves lives. Then if you can direct the EMS to get
there faster, that cuts down time and that saves lives.
That’s why CTIA supported the E911 rules and we worked
with the public safety answering points on those rules.
It is interesting what we are finding is that there is some
hesitance to deploy these enhanced services in part because of the fact they trigger increased liability for the wireless
community. Folks are saying, “Excuse me, you want me to put out this new capability, which is going to enable
someone to sue me for some kind of act of God that resulted from my delivery of this service?” The answer in a
wireline world is that the tariff has a limit on liability so you really can’t be sued. There is no incentive. In a wireless
world, we don’t have tariffs. Nor is there in 20-some states a limitation on liability. This is a classic example of
unintended consequences.
The wireless industry agrees to do something that is going to further save lives and
“Oh my Goodness, it turns out that there are people that want to prey on that and file lawsuits.”
RCR: So
one of things the bill does is to turn around and say can you deal with that, and provide the similar kinds of limitations
on liability as the wireline carriers have so there is not a statutory or legal disincentive.
Wheeler: The bill
will deal with that kind of thing-unintended consequences.
There is a whole series of things like this, which can help
expand the wireless industry’s ongoing record of how wireless phones can save lives.
We just did a new study,
98,000 times a day-98,000 times a day-someone uses their wireless phone to call for help either for themselves or for
someone else. We have to be encouraging that. We should make it easier for the consumer. We should remove the
roadblock that carriers see standing in the way of them providing enhanced 911 service.
RCR: What should be
done to help with the deployment of Phase I 911?
Wheeler: I think I just answered that. The liability question is a
major question.
Another major question is that there needs to be a coordinated statewide effort among the [PSAPs]-
the 911 agencies-as to what their relationship to carriers will be.
In some states, there are almost as many PSAPs as
there are incorporated towns, yet the licenses that a wireless carrier receives cover multiple states. The license for the
Washington [metropolitan trading area] covers five states. There needs to be coordination.
First of all, if we go
PSAP-by-PSAP, it will take forever. Secondly, is that if one PSAP says, “Well I don’t care how they are doing it
down the road, this is the way we are doing down here,” they can ruin it for everybody else in the license area in
terms of making an impossible system that won’t work. So we need to have some kind of coordinated policy amongst
the PSAPs.
Thirdly, there is a need to work with the PSAPs on better routing of the calls to the appropriate public-
safety agency. It is ridiculous in the state of California every single 911 call from a wireless phone goes to the highway
patrol. If you are having a heart attack on Fisherman’s Wharf and I use my [wireless] to call [911]. First it goes to the
highway patrol. They have to figure out where you are. Then they have to figure out who the appropriate agency is.
Then they have to forward the call. All the while, the clock is ticking away.
There was some testimony in Minnesota
about the difficulty of directing a wireless [911] call to the fire department so “the fire department got there to
save the basement,” was the quote from the testimony.
If we are going to provide this more specific location
capability, then let’s work to make sure that it gets used and used appropriately.
And, by the way, that ties into the
liability issue again because some lawyer is not going to sue the fire department, they are going to sue the wireless
carrier.
RCR: Are carriers prepared to fight the Federal Communications Commission and the FBI in court if the
current proposal to keep five of the nine punch-list items is adopted?
Wheeler: I think we need to wait and
see what happens. I think there is no doubt in anyone’s mind, whether it be in the wireless industry, amongst your
readers, or at the FBI, or at the FCC, as to where this issue stands on the issues raised in the FBI’s implementation of
the [Communications Assistance for Law Enforcement Act of 1994].
RCR: What can Congress do at this point to
make sure that a C-block debacle does not happen again?
Wheeler: That is a really interesting question. This is
probably an answer that a lot of your readers won’t find very acceptable. The process is not always pretty. I think that
by and large the FCC did an excellent job running the auction. I am not sure that it is a congressional issue but more of
an implementation issue.
I had discussions with [the FCC staff] around the time the rules were being developed. As
an entrepreneur myself, I tried to say to the folks that were writing the rules, “You don’t understand. You have
never been to the capital market. I have been to the capital mark
et. Let me tell you the kinds of things that
happen.” But, they went and did something else and that is fine.
I think we can learn from that experience. I
think it can be administratively resolved. I am not sure Congress needs to be di
ctating solutions.
RCR: What will
the industry do if strongest-or adequate-signal is mandated by the FCC?
Wheeler: Lament how the regulatory
process has been manipulated and abused for the enrichment of one patent holder.
