WASHINGTON-The Cellular Telecommunications & Internet Association’s name may have changed, and CTIA may hope to increase its membership by focusing on wireless data, but it is by and large still concentrating on the issue that has been front and center for the last several years: spectrum and how to get more of it. Continuing a tradition, RCR Wireless News Washington Reporter Heather Forsgren Weaver sat down recently with CTIA President Thomas E. Wheeler to see how the wireless industry’s central trade association has changed as it has taken on the “and Internet” mantel. The answer appears to be not much.
RCR Wireless News: What new issues are you currently working on that were not issues two years ago?
Wheeler: I think everything is evolutionary. Everything has a root someplace else. We would probably define our top two public-policy activities as the spectrum question, which has two subsets: getting the spectrum cap lifted, and secondly, getting more spectrum. The other public-policy issue is our relationship with local exchange carriers. That also has two subsets. One is interconnection and how much the interconnection rates are. The other is how universal service will end up playing out and our ability to offer services-competitive service-in rural areas.
(When asked to further clarify, Wheeler confirmed he was talking about the ability of wireless carriers to be granted eligible telecommunications carrier status, the first step in the process to receive universal-service subsidies.)
RCR Wireless News: Those are still the same issues you have been working on. With the emergence of the Internet, are there things you are looking at specifically?
Wheeler: Those things are not self-limiting. First, there are many other issues that we are dealing with, like privacy legislation, various issues with regard to Rep. Anthony David Weiner’s (D-N.Y.) bill and other activities at the [Federal Communications Commission]. I think the lesson I have learned is there is a great deal of synergy and commonality between our carrier and manufacturer constituency-our old constituency, if you will, and our new constituency of the Internet companies. Spectrum is a life-or-death issue to the Internet companies. Similarly, the economics of the business are life-or-death issues. So one of the reasons the Wireless Data Forum and CTIA merged was to enjoy some synergies on common challenges. Now does that mean there are not challenges that are unique to the new members in the Internet community? Absolutely not. Their challenges, beyond the policy challenges, are also “How do I build the business, and what can the trade association do to help me be successful in that business?” The interesting thing in all of this is that neither our new constituency nor our old constituency-the new constituency being the Internet people and the older constituency being the carriers and manufacturers-can succeed if the other doesn’t succeed. So there is a strong symbiotic relationship between the two. It is CTIA’s responsibility to exploit that and make it work for both of them.
RCR Wireless News: Will wireless ever be a true competitor to wireline? When and how?
Wheeler: Today, about 4 or 5 percent of consumers say they only want wireless for their connectivity. That continues to grow. At the core of the question is will there be the spectrum to be able to deliver that kind of service? The average residential user uses 1,200-1,400 minutes a month. That would eat up a lot of spectrum if we were to provide that for everybody. So we have to make sure there is the highway to provide that kind of competitive service. The interesting thing is that I think what we are going to see is that as wireless data services-Internet Protocol data services-become more of a mainstay of the wireless market, and as voice goes to IP, the costs for delivering voice get driven down. The ability then to offer a competitive service if there is spectrum becomes more feasible.
RCR Wireless News: What is the magic number of competitors in the market? Would CTIA support a cap that would mandate that number?
Wheeler: First, we have to recognize the cap might have made sense in an auction environment to make sure that no one carrier walked off with all the spectrum. But now, seven years later, it only serves to inhibit competition and inhibit spectrum from being used in the most efficient manner. The mistake with the spectrum cap is that it is a bright line. You can’t get to the question you asked because the government has ordained it will be 45 megahertz. Period. You can never get to the question of what is effective competition in this or that market. So you have to get rid of the cap to begin to address that question.
RCR Wireless News: But, there is an argument that if you were to remove the cap and let all the players beat each other up, you might get to a noncompetitive situation with only two competitors in a market again, and it’s too late to unwind that.
Wheeler: First of all, I have to take issue when you say the wireless industry was not competitive with two carriers. You have to remember what the alternative then was, and that was the telephone company. One carrier. So there was twice as much competition than existed anywhere else. Be that as it may, I would have a hard time envisioning the Department of Justice, under any administration, allowing that type of situation. There are such things as antitrust reviews like Hart-Scott-Rodino, Florio-Exon and activities like that that give the Justice Department the ability to step in and say “No. Wait a minute. This is not an effectively competitive market.” That, it seems to me, is a far better approach than to have some type of bright-line test that keeps you from getting to an appropriate antitrust assessment, an appropriate assessment under antitrust laws.
RCR Wireless News: How could the public-relations debate around the mobile-phone health issue be handled better?
Wheeler: I think the facts speak for themselves. We are looking at a situation where in the last six weeks there have been three major studies released-published in the New England Journal of Medicine, the Journal of American Medical Association and the Journal of the National Cancer Institute-that have been rather definitive on the topic. What I am hearing when I talk to people is they have seen those studies, they have all seen the very substantial press reports. There was a very good analysis in the Washington Post health section [in February] on this issue. I think that scientific rigor and analysis is now being entered into a topic that heretofore had been running on emotion. So I think the facts speak for themselves.
RCR Wireless News: Do you see the new commission as a friend or a foe?
Wheeler: We don’t know the new commission.
RCR Wireless News: What about the Bush administration?
Wheeler: At this point, we are still looking at the key vacancies relative to telecommunications standing in the country. The problem is that policy makers have not started making statements.
RCR Wireless News: There is a view out there that they will be more industry friendly. When the Republicans won, did you think, “Oh good, they won’t be so regulatory?”
Wheeler: The interesting thing about telecom policy is that I don’t really think it has been a partisan issue. The [Telecommunications Act of 1996] wasn’t partisan. Most of the decisions out of the FCC are not decided along party lines. The process of making public policy is one of give and take. Telecom has been one issue that has been able to surmount party lines for the most part.
RCR Wireless News: What is the big deal about wireless data? A recent Legg Mason report predicts it will only account for 10 percent of revenues 10 years from now?
Wheeler: I haven’t seen the Legg Mason report, so I am not really able to comment. However, I will say I am a large believer in the future of the del
ivery of content over wireless. We will continue to see huge growth in that area in terms
of year-over-year types of growth. It is clear that if we can get the spectrum-through eliminating the spectrum cap and through additional allocation-we will have the pathway. So I remain quite bullish on wireless data. I do think, however, we need to define more of what we mean by the term wireless data. There is wireless delivery from fixed services-whether it is meter reading or whatever-that is wireless data. There is wireless delivery of enterprise information that hooks together the claims adjusters for an insurance company. There is wireless data that brings my desktop to me so I can check my e-mail and surf the Web. Then there is wireless data that is a consumer product. When we lump everything together, we have a hard time getting our arms around it and defining what wireless data is and what services we are talking about. We have a hard time understanding what we are talking about. So we have to ask what is the enterprise space? What is the consumer space? What is the fixed-services space like? How do we win in these spaces?
RCR Wireless News: Are there certain Internet issues that are more wireline in nature that CTIA will now tackle?
Wheeler: No, the cellular modifies Internet also.
Wheeler clarified that CTIA will not be engaging in wireline Internet debates unless there is a specific wireless-or cellular-angle.
RCR Wireless News: How much influence do Internet companies have in the organization compared with your traditional base of carriers and manufacturers?
Wheeler: Because they came in mid-year and because we haven’t had a board election with all of them being full members, we have to wait until the election this spring. There are already some Internet companies sitting on the board as a result of their previous membership.
RCR Wireless News: Does that occur at the convention?
Wheeler: It is done by mail ballot in April or May.
RCR Wireless News: How will the board be structured?
Wheeler: It is interesting that you ask. I really don’t know because we are going through [the merger process]. There was a blue-ribbon committee that made some recommendations on how to structure the board, which the board is going to consider at the convention.
