The Other Wireless Revolution

Good afternoon. It is a great honor for me to speak tonight to such a distinguished group of wireless industry CEOs and executives. I particularly want to thank our hosts, Chairman Ronald J. Resnick, the WIMAX Forum President, and Andrew Kreig who you all know as WCA President but who I have known for years as a good friend and a wise colleague. Thank you Andrew, for your kind introduction. As someone who has spent the better part of his lifetime in the wireless industry, all I can say is "It's nice to be home."

Ladies and gentleman, we are seeing at least two wireless revolutions taking place today. The first wireless revolution is the one that immediately springs to mind. Everywhere, people are cutting the cord. Wireless technologies are liberating us by giving us the freedom to communicate where we want, when we want. The other wireless revolution, which is a product of the first, also is helping to liberate people and helping them to communicate where they want, when they want. But it is doing so in ways that are deeply troubling to the world's authoritarian governments.

Let me address the first revolution first.

We all can see that we are living in an increasingly wireless world. You know the statistics better than I do. Here at home, the mobile phone industry finished the first six months of 2004 with 169.5 million active customers, adding more than 21 million new customers in 12 months. Total industry revenue for the 12 months from July 2003 to June 2004 reached $95 billion in service revenues.[1]

But cell phones are only part of the story. This wireless revolution's depth is as astounding as its breadth. Whether it is cell phones, BlackBerries, Wi-Fi, WiMax, proprietary broadband systems, 3G, WCDMA, EV-DO, Ultra Wide Band, Bluetooth or RFID, "wirelessly" is increasingly the way we live.

The number of WiFi hotspots in the United States increased from 3,400 to 21,500 between 2002 and 2004, according to one recent report. And that number is expected to grow to 32,500 this year and to 64,200 by 2008, a 31.5 percent compound annual growth rate.[2] WiMax also is beginning to make inroads as companies announce plans to launch WiMax services in cities from Atlanta to San Francisco. Some observers believe the fixed broadband wireless market will pass the $2 billion mark by 2010.

As you well know, the wireless revolution is not just an American phenomenon, although as a U.S. government official I like to think of it as "Born in the USA." The global impact of wireless is profound. Some 100 countries, for example, now offer Wi-Fi access and there are over 65,000 WiFi hotspots around the world, according to another report.[3] London reportedly has more hotspots than any other city, including New York. And Sao Paolo, interestingly enough, ranks just after New York.[4]

In October 2003, the Asia-Pacific region passed the symbolic mark of one billion telecommunication users, mobile phones and fixed lines combined. Before the end of this decade, another billion users of information and communication technologies are likely to be added to the region’s networks. But the ITU estimates that the majority of them will be connected using radiocommunications.[5] The GSM Association expects 2 billion customers later this year.

The U.S. government is doing its part to aid and abet this wireless revolution. Among other steps, we are working closely with industry to prepare for the World Radio Conference, which will take place in late 2007 or early 2008. Both the FCC and the National Telecommunications and Information Administration have ongoing WRC preparatory activities. We have reached Domestic Preliminary Views on all but four WRC agenda items, although, among those four, are such difficult items as unwanted interference from active services into passive services in adjacent bands.

We also are working to use the second phase of the United Nations World Summit on the Information Society, which will be held in Tunis in November, to ensure that the wireless revolution continues to expand, particularly in the developing world. Our priorities for the second phase of WSIS, which is bringing all stakeholders together to put information and communication technologies into the service of development, include:

1. Promoting effective competition to maximize the benefits of telecommunications and the Internet;
2. Recognizing the role of all participants, including especially the private sector, in the Internet's development;
3. Supporting continued private sector leadership;
4. Avoiding excessive regulation;
5. Ensuring the stability and security of networks; and
6. Embracing the global, collaborative and cooperative nature of the network.

I hope you will advocate similar priorities when you talk to foreign government officials.

Some governments in the developing world have begun to recognize that the old, worn out rhetoric of yesteryear has become irrelevant. Government-mandated technology transfer schemes, excessive government taxation, and inefficient state-owned telephone companies, they have concluded, are not the path of progress. They have begun to recognize, instead, that the private sector, through competition, investment and technological innovation, represents the real engine of change.

In Africa, for example, governments have fueled an investment boom in the continent's wireless sector by passing investor-friendly legislation. Wireless subscribership has increased 1,000% in the past 5 years.

In turn, you in industry have begun to recognize that the developing world represents a large and growing market that has yet to be fully tapped.

Something like 80 percent of the population in the developing world has mobile coverage but only 25 percent use mobile services, largely because the majority cannot currently afford to connect.[6] It is estimated that some 700 million people could be connected if handsets cost around $30 and service was available for no more than 3 percent of disposable income.

I have little doubt that the private sector will find a way to reach these potential customers. I also suspect the opportunity for wireless broadband might prove enticingly large at the right price points.

Undoubtedly, despite the collective efforts of industry and the U.S. Government, there are still significant challenges to the growth of wireless and wireless broadband. One major problem recently has been attempts by some countries to craft country-specific technical standards as a form of industrial policy and protectionism. We have sought to counter this trend by encouraging greater participation in international standards bodies. Particularly in the wireless broadband area, we have sought to outline to governments the benefits of industry-driven standards processes that will result in the best solution for customers and industry alike.

But, as you know, some countries have responded by trying to push their country-specific standards -- WAPI, in the case of China -- through these entities. Others, like Korea, have quietly pressured their indigenous companies to adopt home-grown cell-phone related standards like WIPI. We have encouraged these countries -- with some success -- to abandon these counter-productive efforts.

Despite these hurdles, there is strong evidence that wireless technologies have a bright future, nowhere more so than in the developing world. The primary telecommunications and information challenge in less developed economies, of course, remains the last mile. This is a segment of the market where wireless holds an enormous advantage.

Earlier this month, I had the pleasure of meeting with Romania's Minister of Communications and Information Technology Zsolt Nagy at Supercomm 2005 in Chicago. I was impressed by his drive and his commitment to reform. He recounted how in Romania deregulation and competition had dropped international tariffs by 60 percent, how the information and communication technology sector had grown by 20 percent last year, and how mobile phones were enjoying phenomenal growth.

But I was really struck by his intense interest in how the latest wireless broadband technologies could address the shortfalls in Romania's telecommunications infrastructure. As we toured the wireless broadband offerings, I was impressed by the fervor with which Minister Nagy pressed marketers for business cards and urged them to contact him after the show.

But in some sense I should not have been surprised. Wireless is no longer merely a technological, economic or even cultural phenomenon. Wireless has become politically pertinent as well.

In India, for example, the wireless voice market remains quite competitive with remarkably low ARPUs. Companies there are adding millions of subscribers monthly at a rate second only to China's. Last autumn, in fact, the number of wireless phone subscribers surpassed wireline subscribers.

Yet the current government was elected last year in part because of rural dissatisfaction with its predecessor's perceived failures to bring connectivity to the heartland.
When I met with India's Minster for Communications and Information Technology Maran earlier this year, he was intensely interested in pushing private and public companies to deploy wireless solutions to villages and small towns. He told me that he views wireless broadband technologies like WiMAX as an essential component of his connectivity strategy.

Bangladesh is another instance where despite deep poverty wireless has the potential to change the rules of the game. Five mobile companies competing head-to-head are expected to double the subscriber base this year alone. But problems remain. The government has applied excessive taxes on handsets and services that will inhibit mass deployment and its attendant economic benefits. It will be interesting to see whether the Bangladeshi government will pay a political price -- as in India -- for strangling the goose before it has had a chance to lay the golden egg.

In Nigeria, we are seeing not only how wireless can boost telephony penetration rates but how mobile and fixed wireless increasingly are competing head-to-head.

In 2000, Nigeria had just 400,000 telephone lines, all provided by the parastatal telephone company, to serve its population of 130 million. That gave Nigeria the world's third-lowest telephony penetration rate. After four GSM licenses were awarded in 2001, eight million GSM subscribers were added. Researchers estimate another 15 million Nigerians could become subscribers by 2007.

But the competitive landscape is changing rapidly. In February, Nigeria announced that it would remove restrictions on existing fixed wireless operators and allow them to offer nationwide roaming services. It will be interesting to see how the GSM operators respond competitively to fixed wireless providers whose costs are reportedly six times lower than those of the GSM operators.

So the state of the first wireless revolution is strong. I see enormous progress in rolling out wireless and wireless broadband. I see the number of mobile subscribers surpassing the number of telephone landlines in country after country. I see new wireless broadband technologies emerging at a dizzying pace.

But is there a broader political significance to these events? I believe there is. This is the "other" wireless revolution I referred to earlier.

Wireless Freedom
From my perch at the State Department, nothing is more exciting than to see the ever-growing nexus between your work expanding the growth of information and communications technology, and the work of American foreign policy. There is a an almost philosophic connection between the expansion of telecommunications and our foreign policy objectives.

The thematic consistency between these two seemingly disparate arenas lies in the indivisibility of our most basic and compelling aspirations. The bedrock of telecommunications growth and good foreign policy, it seems to me, is the desire to empower individuals to exercise the freedom to which they were born and to create the conditions in which they can fulfill their potential. Freedom of choice and freedom to communicate constitute some our most cherished values and unite us in a common purpose.

The wireless industry, of course, has always had a role to play in advancing freedom of choice within the telecommunications market. As a provider of telecommunications and information services, you have often challenged the status quo by providing alternatives to wireline and cable networks.

The wireless information and communication technologies that you provide, however, also have contributed materially to the cause of freedom. Now, the mere introduction of the Internet or other communications technologies does not necessarily and automatically open closed societies. But democracy is strengthened by access to knowledge. And the introduction of new communications and information technologies can help shape a political eco-system where the friends of freedom are strengthened and tyranny is weakened.

Mobile phones, the Internet, and satellite TV among other technologies can have a powerful impact in weakening repression, shaping how people relate to their governments, and sometime even providing the means for organizing and sustaining movements for political change.

In the Philippines in January 2001, for example, hundreds of thousands of angry citizens mobilized by electronic messaging [SMS] were able to drive then President Joseph Estrada from office. As Estrada later commented, he was "ousted by a coup d'text."

During the recent Orange Revolution in Ukraine, opposition groups set up online forums -- using servers abroad to avoid hackers loyal to the regime -- to discuss policy and strategy. The opposition also made effective use of cell phones. In what became an infamous video clip, a young activist using a phone recorded a university professor illegally instructing his students to vote for the ruling party candidate.[7]

We also are seeing wireless and other information and communications technologies contributing to reform in the Middle East. There is, of course, no more important foreign policy priority for this Administration than advancing the cause of freedom in the greater Middle East. Here the contribution of wireless and other ICTs has been profound.

In many Gulf states, where cell phones are becoming as ubiquitous as oil wells, text messaging has facilitated unprecedented political dialogue. Opposition groups have used cell phones to mobilize followers, circulate candidate slates, arrange for flash demonstrations , and talk about their opponents.[8]

Text messaging in particular has allowed organizers to build unofficial membership lists for political parties that remain formally banned. It also has helped them to spread news about detained activists, encourage voter turnout, and schedule meetings.

Cut-off from state-controlled media like radio, television and newspapers, opposition groups who years ago used cassette tapes and faxed pamphlets have turned to not only to cell phones but to CDs, DVDs, Web sites, Internet chat rooms and blogs to reach out, especially to younger supporters.

So far, governments have had difficulty stemming the tide.
They have had some success licensing fax machines and blocking dissident Web sites. In Iran, for example, the government has tightened its control over the Internet. Worried about the growth of home-brewed dissent, it increasingly has tried to block reformist content in its local language, Farsi and restrict what citizens can publish through Web journals.[9]

But governments reportedly have had a particularly hard time figuring out whether and how to block text messaging. Mobile operators, in fact, have helped reformers by allowing them to use commercial services that can relay messages to tens of thousands of users for a fee.

In Syria, one reformer who had his Web site blocked by the government reportedly turned to sending out mass e-mails instead. When the government began blocking e-mails from his address, he stayed one step ahead by constantly changing the address. Eventually, the censors gave up.[10]

Given the important role that wireless and other technologies can play in breaking down the bonds of repression, it should come as no surprise that we have seen in Iraq a tremendous expansion in the number of cell phone and Internet users since the fall of the Baathist regime.

Cell phone service was nearly non-existent under Saddam Hussein. Today, there are about 2.7 million cell phone subscribers. Pre-war, there was limited Internet service with approximately 3,000 Internet and 8,000 e-mail only accounts. As of earlier this month, there are more than 170,000 active subscribers and approximately 2,000 unregulated Internet cafes.

As Iraq's rapid telecoms growth and its newly vibrant political scene suggest, the two wireless revolutions are intertwined. I credit the WCA for devoting so much time to Iraq during the course of this conference and for having the foresight to help make my point for me.

For whether you intend to or not, the wireless industry is advancing the values that animate U.S. foreign policy and the foreign policy of all democratic countries. You are serving not only your shareholders, but a larger cause as well. We are embarked on a common project: to provide people throughout the world with the means to communicate and the ability to live in a world of freedom and democracy.