Consumer Electronics Association Consumer Electronics Association 2004 International CES Conference2004 International CES Conference

Michael D. GallagherMichael D. Gallagher

Acting Assistant Secretary for Communications and InformationActing Assistant Secretary for Communications and Information

U.S. Department of CommerceU.S. Department of Commerce

National Telecommunications and Information AdministrationNational Telecommunications and Information Administration

www.ntia.doc.gov

22

Economic IndicatorsEconomic Indicators

Thanks to the President’s policies, America is once again growing robustly:

“Real” personal consumption expenditures rose 6.4 percent in the third quarter this year compared to a 3.8 percent growth rate in 2Q 2003.

“Real” GDP grew at an 8.2 percent annual rate during the third quarter.

The manufacturing sector enjoyed a 9.0 percent increase in productivity in the 3Q.

This year, the S&P 500 is up over 20 percent. The NASDAQ Composite is ahead 42 percent. The President will not be satisfied until every American who

wants a job has a job.

33

Administration Commitment to Administration Commitment to Technology DevelopmentTechnology Development

"The role of government is not to create wealth; the role of our government is to create an environment in which the entrepreneur can flourish, in which minds can expand, in which technologies can reach new frontiers."

-- President George W. Bush, Technology Agenda, November, 2002.

44

Broadband Household AccessBroadband Household Access

12.313.7

15.4

17.2

19.120.7

22.7

0

5

10

15

20

25

Q1-2002 Q2-2002 Q3-2002 Q4-2002 Q1-2003 Q2-2003 Q3-2003

Household

s (

mill

ions)

Source: Leichtman Research Group as reported in USAToday on 11/14/2003.

55

Broadband Market ShareBroadband Market Share(Residential Users)(Residential Users)

Cable Modem

59%

DSL34%

Wireless3%

Other4%

Source: Pew Internet & American Life Project (August, 2003)

66

Voice Over Internet Protocol (VoIP)Voice Over Internet Protocol (VoIP)

VoIP is like gravity – it is an irresistible force• 10% of international minutes were IP in 2002; projected to be

more than 50% by 2007. (Source: Probe Research 2002)

• About 1 billion business phone lines worldwide were IP by the 2Q 2003, or about 12% of the total; numbers are projected to be approx. 1.8 bill. (17%) by year end 2003. (Source: Wall Street Journal, Oct. 9, 2003)

VoIP could increase competition in equipment and services• Business spending on IP phone equipment worldwide more than

doubled between 2002 and 2003 to approx. $1 billion (nearly 20% of all business phone equipment purchases). (Id.)

Need sound regulatory approach to VoIP – should not be a “grey market” service

77

Spectrum PolicySpectrum Policy

Spectrum Policy: The who, what, where, when, and why of access

Great potential for government action towards a positive effect on economic and national security

NTIA and FCC share joint jurisdiction over spectrum• NTIA authorizes use by Federal Government Agencies

• FCC authorizes all other spectrum use, by license or by license exempt operation

• NTIA and FCC work together to determine national and international allocations

88

WiFi MarketWiFi Market

WiFi investment is growing rapidly. Venture capital firms pumped over $2.8 billion

into 296 wireless startups in 2002. Projections for WiFi spending on hardware and

subscriptions are $3.4 billion in 2003. Network build outs over 2004 and 2005 are

expected to be $8.2 billion.

Source: BusinessWeek Online

99

WiFi in Schools & HospitalsWiFi in Schools & Hospitals

One third of K-12 public schools and 85 percent of colleges in the US now use wireless networking technology. (Source: WiFi News)

Public schools spend $6.2 billion on IT needs each year, including $500 million on wireless technologies, which is expected to quadruple in 2004. (Source: SBC Press Release)

U.S. hospitals are projected to spend nearly $295 million on WLAN technologies by 2005. (Source: SBC Press Release)

1010

WiFi In-FlightWiFi In-Flight

Boeing’s Connexion service will provide airline passengers with in-flight broadband connections to their computers and PDAs. (Source: PR Newswire)

Connexion uses WiFi connections inside the airplane to provide 5-10 Mbps downstream and 2 Mbps upstream. Some airlines plan to switch the link from satellite to a ground-based WiFi access point when the plane is at or near the gate. (Source: EDN, 12/25/03)

Boeing has agreements with several foreign airlines (including Lufthansa, Scandinavian Airlines (SAS), and Japan Airlines) to roll out the service in 2004. (Source: CBS MarketWatch)

The U.S. government worked at the 2003 World Radio Conference (WRC) to gain approval for use of the 12-14.5 GHZ frequency band on a global basis.

1111

WiFi On The RoadWiFi On The Road

A close cousin of WiFi, DSRC is a short to medium range communications service that supports both public safety and private operations in roadside to vehicle and vehicle to vehicle communication environments.

The FCC recently adopted DSRC licensing and service rules in the 5.9 GHz band to facilitate provision of public safety and Intelligent Transportation Systems (ITS).

NTIA coordinates frequency use with DSRC operators to avoid interference with governmental operations.

DSRC technology is currently used in automatic toll collection applications such as E-Z Pass.

Future applications may include intersection collision avoidance, work zone warnings, road condition warnings, and even electronic payment of gas, parking and fast food.

1212

Other New Wireless ServicesOther New Wireless Services

Ultra-wideband: phenomenal capacity to deliver rich media to many devices, at low-power and low-cost.

Third Generation (3G) Service: current generation of service provides speeds up to 300 Kbps.

WiMAX (802.16): enables wireless networks to extend as far as 30 miles at speeds up to 70 Mbps.

1313

Administration’s WiFi ApproachAdministration’s WiFi Approach

Create a low tax and limited regulatory environment that promotes our growing economy.

Work with industry and government engineers to reduce interference and promote spectrum “best practices”.

Remove government obstacles to development of new communications technologies and applications.

Use sharing where technically feasible to increase the amount of spectrum available for wireless services and streamline the process of licensing when licenses are required.

1414

ConclusionConclusion

The American economy is recovering and expanding.

WiFi is an important and growing part of U.S. productivity and consumer enrichment.

The Administration has developed successful policies to advance new wireless technologies while protecting existing critical services.

Technology will continue to challenge our policy framework – and your input is critical to finding the answers.