STATEMENT ON 3G WIRELESS PRESIDENTIAL MEMORANDUM
October 13, 2000
Gregory L. Rohde, Assistant Secretary for Communications and Information and Administrator of the National Telecommunications and Information Administration, issued the following statement related to the Executive Memorandum on Advanced Mobile Communications:

Today's announcement provides a significant roadmap to develop successfully the third generation of wireless technology that will bring us the benefits of high-speed Internet connections without the limitations of being tied to a desktop.

By instructing Federal agencies, including the Department of Commerce, to work cooperatively with other parts of the government, President Clinton pledged that the groundwork necessary to make the third generation spectrum available for commercial use will be a balanced process. We, the other Federal agencies, and the Federal Communications Commission, will proceed through an orderly, cooperative process. The government and the private sector will work together to assess our spectrum needs and to fulfill them. The result of this process will respect the requirements of national security and public safety while at the same time keeping in mind the enormous economic benefits of 3G technology.

The tasks before us are too important to have anything less. The development of third generation wireless services will not only have significant impacts on the economy - the emergence of "m" commerce will take the "e" commerce revolution to new heights - but will also help achieve the Administration's goals of digital inclusion. The intersection of the wireless and Internet revolutions in general, and 3G in particular, could help lead to the development of lower-cost and more accessible access to the Internet, making it possible for low-income individuals, minorities, and rural residents and others -- of ensuring that all Americans will be able to reap the benefits of the information economy.
 

The National Telecommunications and Information Administration (NTIA) serves as the principal adviser to the President, Vice President and Secretary of Commerce on domestic and international communications and information issues and represents the Executive branch before Congress, other Federal agencies, foreign governments and international organizations.

Statement from Dr. Linton Wells, principal deputy assistant secretary for command, control, communications and intelligence (C3I), U.S. Department of Defense:

"DoD is pleased that the Presidential Directive Memorandum (PDM) on
Third Generation Wireless services has been released and fully supports the
direction provided by the President. DoD looks forward to continuing full
cooperation with the NTIA and FCC in the studies to consider all possible
options for 3G spectrum, and is working closely with them during the
spectrum identification and decision-making process. Both DoD and Commerce
agree national security concerns must be protected."

Statement from FCC Commissioner Susan Ness:

PRESS STATEMENT OF FCC COMMISSIONER SUSAN NESS
ON SPECTRUM REQUIREMENTS FOR ADVANCED WIRELESS SERVICES

The FCC is committed to ensuring that American consumers enjoy the full benefits of advanced wireless services such as Third Generation (3G) mobile services as these new offerings become available. We recognize that we will need to make sufficient spectrum available to accommodate future generations of wireless services that offer enhanced data, voice, and broadband capabilities. We are committed to taking the steps necessary to make adequate spectrum available for future wireless needs, consistent with balancing the legitimate interests of the many other existing uses.

I am pleased that the Administration places a high priority on this important issue, as reflected in the Presidential Decision Memorandum released today. We look forward to working with the Executive Branch in our respective spectrum management roles to ensure that the American public has widespread and timely access to the next generation of advanced wireless services.

Statement by Martin N. Baily
Chairman, Council of Economic Advisers

Today, the Council of Economic Advisers released a report, The Economic Impact of Third-Generation Wireless Technology. The next generation of wireless devices and applications, called "third generation" or "3G," combines two powerful innovations: wireless communications and the Internet. As documented in the report, 3G is likely to provide substantial benefits to consumers, significant profits to producers of 3G products and services, and complementary benefits to related industries.

Telecommunications is extremely important to the U.S. economy. The telecommunications sector represented 3 percent of GDP in 1998, having grown at a 7 percent annual rate over the previous 10 years. Wireless carriers employ over 150,000 people in the United States and generate $44 billion in annual revenue. At the end of 1999, the United States had 86 million wireless subscribers; today that number exceeds 100 million. By year-end 2000 there will be over 600 million wireless subscribers worldwide.

However, today's wireless devices are designed to transmit voice and brief text messages and cannot handle digital multimedia and other high-bandwidth Internet content. 3G devices, by contrast, provide high-speed mobile connections to the Internet and other communications networks, giving users full access to the rich content and commercial possibilities of the "information superhighway."

The benefits from introducing new communications technologies can be tremendous. The annual consumer benefit from today's wireless telephone services is estimated to be $53-$111 billion. As new wireless technologies were introduced, consumers benefited from improved services, cost reductions leading to lower prices, and increased competition. For example, following the allocation of new commercial spectrum licenses for digital wireless services starting in 1994, the average number of competitors in major metropolitan areas doubled, average monthly use per subscriber increased by 60 percent, and consumers' weighted cost per minute fell by nearly 50 percent.

Wireless carriers are also likely to realize substantial gains from 3G technology. Recently completed 3G spectrum auctions in Europe raised $150-$600 per capita, and these bids indicate the expected producer benefits from operating 3G licenses.

Beyond the benefits to carriers, the introduction of this technology could unleash a wave of secondary innovations in related goods and services such as specialized applications and content. It could also foster the development of new "technology corridors" such as Silicon Valley. The emergence of the Internet economy, particularly in the United States, highlights the importance of early investments in emerging industries. Startup companies, along with established retailers and information services, have created hundreds of billions of dollars of shareholder wealth through Internet-related activities. Nearly 54 percent of U.S. households have access to the Internet, and surveys indicate that over 50 percent of U.S. businesses will sell products online in the year 2000. Internet sales to consumers were $5.5 billion for the second quarter of 2000 alone. Sales over the Internet between businesses are expected to reach $251 billion in 2000, up from only $43 billion in 1998. Employment in several information-technology (IT) sectors more than doubled between 1993 and 1999. These investments in IT and complementary services have been major contributors to productivity improvements over the latter half of the 1990s.

Similarly, early investments are necessary to develop a vibrant U.S. industry for 3G applications. Knowledge spillovers, which are important in high-tech industries, tend to be geographically localized. Finland, which allocated its 3G spectrum licenses in March 1999, has already taken the lead in developing an industry to provide mobile applications. To promote a cluster of internationally competitive wireless firms here in the United States, it is essential that adequate spectrum be made available for commercial use.

In short, consumer benefits, provider profits, and the potential benefits of industry leadership must be weighed against the costs of providing spectrum for 3G applications. These costs can be significant, particularly if allocating additional spectrum for 3G requires moving incumbent users. However, as our analysis shows, the benefits from a thriving domestic 3G wireless industry in the United States may be tremendous.

The full text of the report can be found on line at the following site: http://www.whitehouse.gov/WH/EOP/CEA/html/whitepapers.html

FOR IMMEDIATE RELEASE:
October 13, 2000
 

The FCC is committed to ensuring that U.S. consumers enjoy the full benefits of advanced wireless services -- such as Third Generation (3G) mobile services -- as these new offerings become available. We recognize that future generations of wireless services, which will offer increased data, voice and broadband capabilities, will require us to make sufficient spectrum available to accommodate these new innovative services.

I am pleased that the Administration has placed a high priority on this important issue, as reflected in the Presidential Decision Memorandum released today. For the FCC's part, we are fully committed to taking the steps necessary to make much needed spectrum available for future wireless needs, consistent with balancing the legitimate interests of existing uses, such as national security, public safety, education, and broadband services. We look forward to working with the Executive Branch in our respective spectrum management roles to ensure that the American public has widespread and timely access to the next generation of advanced wireless services.