Wireless industry may be at risk Rules could choke sector, FCC chief says

[Dave Farber <dave () farber net>]

Wireless industry may be at risk

Rules could choke sector, FCC chief says


Tuesday March 18, 2003


By Keith Darcé 
Business writer 


Efforts by some states to impose new regulatory control on the wireless
phone business will stifle technological innovation in the industry and
inflate wireless service bills, two top Washington phone industry regulators
warned Monday in New Orleans.

Federal Communications Commission Chairman Michael Powell, speaking to the
largest convention of the wireless industry, called for a "radical change"
in the way government officials view their role in the telecommunications
industry. 
 

"We have to approach this industry with a mind that's not locked to the old
structures or to the approach that telephony is something that has to be
regulated or it won't work," said U.S. Rep. Billy Tauzin, R-Chackbay. As
chairman of the House Commerce Committee, which handles telecommunications
bills, Tauzin has a powerful voice in Washington's debates over phone
industry regulation.

Powell and Tauzin spoke Monday morning to the opening session of the
Cellular Telecommunications & Internet Association's annual convention at
the Ernest N. Morial Convention Center. The convention is one of the largest
visiting the city this year, attracting about 800 exhibitors, nearly 20,000
attendees and filling almost all of the convention center.

The convention is closed to the public, but it's drawing some of the biggest
names in the telecommunications and computer industries to New Orleans,
including Microsoft Corp. Chairman Bill Gates.

Gates' presence at the conference reinforces the growing importance of data
communications in a business that was born in the 1980s as an alternative to
voice communications over land-line phones and two-way radios.

In fact, each of the past three times the convention has stopped in New
Orleans, it has had a different name, signaling the group's continuing
evolution. In 1999, the group gathered under the Cellular Telephone Industry
Association banner. In 2000, the name was Cellular Telecommunications
Industry Association. This year, "Internet" replaces the word "Industry."
Even with the frequent name changes, the group has managed to keep its more
widely recognized acronym, CTIA.

With other telecommunications segments reeling from the effects of the
recession and the stock market slump, the wireless industry offers one of
the few bright spots in the industry.

About 141 million people were subscribed to wireless phone service at the
end of 2002, or about 10 percent more than a year earlier, according to
results of a biannual market study commissioned by CTIA and released Monday.

About 5 percent of American households have turned off their copper-wire
telephone service and use their wireless phone exclusively, CTIA President
Tom Wheeler said. 

Minutes billed to wireless customers in 2002 totaled 619 billion, up 35
percent from the previous year, and revenue for the industry reached $76.5
billion, up 17 percent over 2001, according to the study.

If the industry is going to maintain that kind of growth, it needs to stay
free of the sometimes heavy regulatory hand of federal and state
governments, Wheeler said.

The role of government in the telecommunications market has been declining
since 1996, when Congress passed the sweeping Telecommunications Act that
began eliminating barriers that had protected traditional telephone and
cable television monopolies for decades.

But Tauzin said many government regulators are "anxious to get their hands
back on to the industry."

He warned that reregulation, particularly at the state level, would choke
the introduction of new communications technologies. "If the government had
to pre-approve every new innovation, imagine how slow it would be," he said.

Increased state regulation of wireless phone networks also could bring
higher taxes for consumers, Tauzin said. "Stepping back into the world of
telephony is a mistake," he said.

If anything, the government should be deregulating phone markets even more,
Powell said. 

The FCC should loosen its grip on the nation's broadcast airways by allowing
frequency license holders more freedom to decide what services they offer
over the government-controlled radio waves, the regulatory chief said.

The agency also should find ways to reallocate underutilized sectors of the
broadcast spectrum to wireless phone services that desperately need more
broadband space to deliver more advanced services such as high-speed
Internet access, Powell said.

"The trouble isn't spectrum scarcity, but that much of the spectrum goes
unused," he said. 

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