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This chapter is from the book

This chapter is from the book

Personal Communication Service

For the wireless communications industry, 1994 was a banner year as the Federal Communications Commission (FCC) 13 launched the first set of spectrum auctions for the narrowband and broadband personal communication service (PCS), giving birth to a whole new era—the era of personal communications. The vision of PCS is the concept of anytime, anywhere communications—whether that be data communications, voice communications, or both. But what is the real potential for this marketplace? How many individuals are likely to buy into the vision of anytime, anywhere communications?

In early 1995, the Personal Communications Industry Association (PCIA) 14 completed a survey of PCIA members to evaluate the growth, composition, and characteristics of the existing and future personal communications industry; it published the results in a PCS Market Demand Forecast (see the sidebar "Personal Communications Industry Association"). The results indicate that, by 2002, combined demand for new PCS, cellular, and paging and narrowband PCS will amount to almost 330 million subscriptions.

Personal Communications Industry Association

Established in 1949, PCIA has been instrumental in advancing regulatory policies, legislation, and technical standards that have helped launch the age of personal communications services. Through many vehicles (policy boards, market forecasts, publications, spectrum-management programs, seminars, technician-certification programs, and its industry trade show, the Personal Communications Showcase), PCIA is committed to maintaining its position as the association for the PCS industry.

PCIA's member enterprises include PCS licensees and those involved in the cellular, paging, Enhanced Specialized Mobile Radio (ESMR), Specialized Mobile Radio (SMR), mobile data, cable, computer, manufacturing, and local and interexchange sectors of the industry, as well as private enterprise systems users, wireless system integrators, communication site owners, distributors and service professionals, and technicians 26.

To meet this level of demand in the marketplace, the wireless industry must be ensure that it will be able to deploy services in a timely fashion. Issues such as site acquisition and interconnection to the local exchange carriers are critical to timely deployment of developing wireless networks for the enterprise and competing effectively. Government must ensure that the industry has the opportunity to meet the anticipated demand outlined in the PCS Market Demand Forecast by ensuring a level playing field for all wireless telecommunications service providers and by allowing, where appropriate, competition (not regulation) to govern the marketplace.

The personal communication service includes a broad range of telecommunications services that enable people and devices to communicate independent of location. PCS networks and devices operate over a wide range of frequencies assigned and authorized by the FCC. There are currently seven different air interface technologies proposed for standardization for the new PCS licensees that will be operating in the 1.8GHz band. Service providers that will be operating at these frequencies either are new entrants with no established network or are existing telecommunications service providers, such as cable, cellular, local exchange, and long-distance carriers. With the technology choices enterprises make over the next few months, there will need to be analysis of how and to what extent the various wireless and wireline networks will work together.

Interoperability and Interworking

To facilitate roaming among PCS carriers, some degree of interoperability and interworking needs to be accomplished between the networks. PCIA defines interoperability and interworking as follows.


Interoperability is the ability to logically connect two or more functional network elements for the purposes of supporting shared processes such as call delivery. Service interoperability is defined as the assurance that a service invoked by a subscriber in a network will be performed by the other network in the same way from a user perspective. Network interoperability is defined as the direct one-to-one mapping of services and protocols between interconnected networks. For example, a subscriber may invoke call-waiting features exactly the same way in a data collection system (DCS) 1900 (Global System for Mobile-Communications [GSM]–based) network in New York City as in a DCS 1900 (GSM-based) network in San Francisco. In this scenario, call-waiting network protocol messages map between the two networks on a direct one-to-one basis.


Interworking is the ability to translate between two or more dissimilar networks for the purpose of achieving effective interoperability. Service interworking is defined as the protocol translation that may or may not result in the service being performed in the receiving network in the same way from a user perspective. Network interworking is defined as a functional mapping of services and protocols across networks (some services may not be delivered or may be delivered in a different way). For example, a subscriber with a PCS 2000 (composite code-division multiple access/time-division multiple access [CDMA/TDMA]) wireless personal terminal may register and authenticate on a San Francisco Interrupt Status–41 (IS-41)–based network, just as he or she could on a home-based, DCS 1900 (GSM-based) network in New York City. Although the method of registering may not be identical between systems, the end result is effectively the same—the subscriber can be registered and authenticated on both networks, and location services work across both platforms.


The composite CDMA/TDMA system is an air interface technology currently being standardized for PCS in the 1.8GHz band.

Standards should be developed and are currently being worked on in domestic and international standards bodies to facilitate features and services delivered consistently and in similar fashions to an end user, regardless of the air interface or network implementation used. All networks do not necessarily need to interoperate or interwork with every other network. Those decisions will be made on a enterprise-by-enterprise basis. But the industry is working to make sure that if that choice is made, the technology will be available to support it.

Market Forecast

Since 1992, PCIA has regularly surveyed wireless communications industry leaders to evaluate the growth, composition, and characteristics of the future of the personal communications industry, and it has published these results in a PCS Market Demand Forecast. In its yearly surveys, PCIA has asked respondents to provide market size predictions in terms of the number of anticipated subscriptions, not subscribers, anticipating that an individual would probably subscribe to more than one type of wireless service in the coming decade. As in previous years, the 2000 figures show that consumer demand for personal communications services is expected to grow at ever-increasing rates.

Demand growth for new broadband PCS customers is expected to reach 40 million subscriptions by 2002. Total revenues are expected to reach $10 billion by the year 2002, with 9% of that revenue coming from data services. Average revenue per subscription is expected to be 40% less than that for cellular. Figures for 2007 indicate strong sustained growth to almost 60 million subscriptions and total revenues reaching $39.7 billion, with 14% from data services.


Broadband PCS refers to the family of mobile or portable radio services operating in the 1.8GHz range and providing a wide variety of innovative digital voice and data services.

Established voice services such as cellular are expected to grow as well. Respondents expect strong cellular growth during the next six years, with the 2000 year-end subscriber count of 68.6 million expected to double to approximately 137.6 million subscriptions by 2003, with nearly 98 million cellular subscriptions expected by 2008. Sixty percent of the total cellular subscriptions are expected to come from the enterprise segment, representing a presumed growth of the cellular markets into households over the next 11 years. Total cellular revenues are forecast to be approximately $58 billion by 2003 and $64 billion by 2008.

In the narrowband PCS arena, market size is expected to reach more than 70 million subscriptions by 2002; by 2007, 93 million one-way and 43 million two-way messaging subscriptions are anticipated. In addition, survey results forecast strong growth from new narrowband PCS and advanced one- and two-way messaging, and suggest that these will become established in the wireless world of the enterprise over the next decade. Customer segments will grow due to new narrowband applications and services. Survey results show that by the year 2002, more than 70% of one-way and about 87% of two-way subscribers are expected to be from enterprise segments. Assuming that enterprises will continue to upgrade services, they are expected to remain more than 70% of the total subscriber base through the next decade. Total revenues are expected to reach $6.9 billion for one-way paging and $3.2 billion for two-way paging by 2002, and $7.8 billion and $5 billion, respectively, by 2007.

Site Acquisition Issues

The process of acquiring PCS antenna and base station sites and gaining the appropriate zoning approvals varies by state and local jurisdictions and is important in wireless network deployment in the enterprise. Furthermore, there are issues regarding site acquisition (such as the Federal Aviation Administration [FAA] 15 tower regulations and the lack of a uniform policy regarding sites on federal property) that need to be addressed at the federal level.

Issues at the Local Level

There are more than 50,000 local jurisdictions throughout the nation, each with the authority to prevent antenna construction, establish standards that can result in site location degrading the quality of service, or prolong site selection, thereby making it unnecessarily expensive. With an estimated 300,000 new wireless antenna sites predicted over the next 11 years, any licensing obstacles present significant problems.

Congress has recognized the need to remove state and local barriers to deploying Commercial Mobile Radio Service (CMRS) facilities by prohibiting state and local government regulation of matters relating to market entry and rates. The current draft of the Senate's Telecommunications Competition and Deregulation Act of 1995 states that no state or local statute may prohibit or have the effect of prohibiting the ability of any entity to provide interstate or intrastate telecommunications services. It further states that if after notice and comment the FCC determines that a state or local requirement is inconsistent with the legislation, the FCC shall immediately preempt enforcement of the requirement.

The Cellular Telecommunications Industry Association (CTIA) 16 filed a Petition for Rule Making requesting that the FCC initiate a rule-making proceeding to preempt state and local regulation of tower sites for CMRS. The petition states that the state preemption language in Section 332(c) of the Communications Act gives the Commission authority to exercise such preemption, since local zoning could constitute an indirect regulation of entry.

Comments on the Petition for Rule Making were pro and con. Predictably, service providers filed in support of the petition, while state and local governments and consumer groups filed in opposition. The challenge the wireless industry faces is balancing the recognized needs of the local community to have oversight and fee administration of zoning issues against attempts to meet the ever-increasing demand for new wireless services.

Additionally, the FCC has imposed build-out requirements on the new PCS licensees that mandate that certain percentages of the licensees' markets be covered within set time frames. Potential conflicts between state and federal regulations threaten to delay the entry of wireless services.

Site Acquisitions on Federal Property

Federal property could, in many situations, provide prime locations for PCS base stations. Unfortunately, many agencies of the federal government are not willing or are unable to entertain the prospect of such facilities because of perceived administrative burdens, lack of benefit to local agency staff, or lack of clear policy or regulations for leasing of federal property for such an installation. Additionally, all of the federal agencies that allow private communications facilities on their land have different regulations, lease documents, and processes for doing so. These are often difficult, time-consuming, and expensive for both the agency and the communications enterprises.

Making sure federal land resources continue to be available for efficient delivery of mobile communications services, and ensuring that taxpayers receive a fair price from every communications enterprise with transmitters on public lands are goals shared by industry, the federal agencies, and the public. However, there needs to be a consistent, government-wide approach for managing the site-acquisition process on federal property.

The executive branch needs to set a clear directive in order to overcome the obstacles that wireless licensees face when trying to acquire sites on federal property. The benefits to the federal government could include increased revenues from the installation of PCS networks above and beyond the auction proceeds, and the potential for improved communications on federal property.

FAA Tower Review Process

PCIA has initiated discussions with the Federal Aviation Administration (FAA) to remove any possible FAA obstacles to efficient deployment of PCS systems. The FCC has established licensing rules that have streamlined the approval necessary to bring systems and PCS cell sites online. However, due to administrative limitations, the FAA, which must review many requests for towers to ensure air safety, has experienced longer processing times that have delayed carriers' ability to activate certain transmitter sites. With approximately 30% to 35% of new wireless enterprise sites requiring FAA action and review, PCIA fears that FAA processing delays could significantly burden the industry. Working groups at the national and local levels have been established as a forum to explore methods of educating the industry about FAA procedures and to explore ways to streamline the FAA tower review process.

The FAA, the FCC, PCIA, and the Cellular Telecommunications Industry Association (CTIA) have all agreed to participate in this dialogue as part of an antenna work group (AWG) in Washington, D.C. PCIA has also participated in dialogues with the FAA Southern Region and is working on a local level in other working groups to identify ways to improve the FAA process.

Federal Radio Frequency Emissions Standard

As PCS, cellular, paging, and other wireless carriers build out networks for enterprises, they are increasingly facing state and local laws and ordinances based on radio frequency (RF) exposure levels, often with conflicting scope and standards, resulting in compliance difficulties. Conflicting standards affect the range of wireless services and can greatly diminish the quality of service that consumers receive. This adds greatly to the expense borne by the industry, not only in legal and other enterprise expenses, but also in lost revenue opportunities from long delays in providing services.

The FCC has the authority to preempt local jurisdictions on cell/antenna/tower siting, but to date it has approached this issue on a case-by-case basis. With as many as 300,000 new wireless sites to be installed (including new PCS sites and additional sites that will be needed for the expansion and enhancement of service areas for paging, SMR, ESMR, and cellular service), a case-by-case approach to preemption is no longer realistic.

The FCC on April 3, 1993, issued its Notice of Proposed Rule Making, which proposed updating guidelines and methods for evaluating the environmental effects of electromagnetic exposure and adopting the standard developed by the American National Standards Institute (ANSI)17 with the Institute of Electrical and Electronic Engineers (IEEE)18. In December 1994, the Spectrum Engineering Division of the Office of Engineering and Technology of the FCC issued information indicating that levels of exposure to RF at ground level below typical cellular towers are hundreds to thousands of times lower than the proposed standard.

On December 22, 1994, the Electromagnetic Energy Association (EEA) filed a petition with the FCC for a Further Notice of Proposed Rule Making. The petition requested that the FCC preempt state and local regulation of RF exposure levels found to be inconsistent with the FCC proposed ANSI standard.

PCIA favors the establishment of a single, national RF emissions standard that may not be exceeded by local regulations. PCIA encourages the relevant federal agencies to work cooperatively with the industry on this issue to develop such a national standard.


Interconnection is composed of interconnection with local exchange carriers and mutual compensation.

Interconnection with Local Exchange Carriers

Negotiating reasonable rights, rates, and terms under which enterprises will interconnect with other networks is critical to the success of PCS. With many PCS hopefuls eyeing the local exchange market as a potentially lucrative area in which to compete, the terms of enterprises' interconnection agreements as a co-carrier will become even more important as they strive to compete with local exchange carriers (LECs); therefore, they will need reasonable interconnection agreements so that they can offer customers low-cost exchange service.

As an example of current interconnection costs, Type 2 interconnection charges for cellular carriers generally are measured on a per-minute basis, with costs ranging from 1 cent per minute to 5 cents per minute, and 2 cents per minute often being considered a good interconnection rate.

Interconnection charges have diminished cellular carriers' revenues since the first system came online, and they remain a high cost to carriers today. Take, for example, a cellular monthly bill of $48, which includes 97 minutes of air time at the rate of 2 cents per minute for interconnection. Interconnection charges represent $1.94 of the bill, or 4.04% of revenue.

As air time costs continue to decline in the wireless marketplace, interconnection costs will begin to reduce revenues even more. For example, Honolulu, Hawaii's Cybertel Cellular offers 4 cents per minute of air time in Kauai, Hawaii, to compete with the local exchange carrier. At an interconnection rate of 2 cents per minute, interconnection charges could consume 70% of the carrier's air time revenue.

Obviously, those wishing to compete at the local loop must achieve lower interconnection costs to compete with established carriers on price. One solution to this problem is mutual compensation, where both telecommunications carriers are compensated for the traffic that terminates on their network.

Mutual Compensation

Mutual compensation is the concept that a carrier should be compensated for traffic that originates on another network but terminates on that carrier's network, and vice versa. Currently, wireless carriers must compensate wireline carriers for traffic that originates on a wireless enterprise network and terminates on a wireline network. Almost without exception, wireline carriers do not compensate wireless carriers for traffic originating on a wireline network and terminating on a wireless network.

The FCC has repeatedly stated that, for interstate traffic, wireline carriers must compensate wireless carriers for traffic originating on a wireline network and terminating on a wireless network. However, states have been reluctant to enforce mutual compensation on an intrastate basis; therefore, wireline carriers have refused to participate in mutual compensation on either an intra- or an interstate basis.

Enforcement of mutual compensation rights of wireless carriers is considered to be a key to full competition by wireless carriers in the telecommunications market and will have a significant positive financial impact for the wireless industry. One potential solution to the high cost of interconnection would be mandating mutual compensation through reciprocal elimination of interconnection charges. One example of this solution is the agreement reached in New York between Time Warner20 and Rochester Telephone (Rochester, New York), whereby Rochester Telephone will collect 1.1 cents per minute for traffic terminating on its network and pay at the same rate for its own traffic terminating on other networks. According to the agreement, mutual compensation provisions are eliminated when the traffic flow differentials fall below 9%.

Numbering Issues

The issue of who controls numbers is key to the success of PCS carriers. Traditionally, most national numbering resources have been assigned by the North American Numbering Plan Administration sponsored by Bellcore21, which, in turn, is owned by the Bell operating enterprises. Generally, the dominant local exchange carrier ends up assigning numbers to wireless carriers in its local telephone market. Wireless carriers usually are charged for activating blocks of numbers in local exchange carrier networks, and the charges vary greatly.


Name ring a bell? The former research arm of AT&T, Telcordia Technologies, is one of the world's top providers of telecom software (80% of the public telecom networks in the United States rely on its software) and consulting services. The company holds more than 800 patents and handles such tasks as doling out area codes. Created as the research unit for the seven Baby Bells during AT&T's 1984 breakup, Telcordia was then known as Bell Communications Research (Bellcore). After becoming a subsidiary of defense contractor Science Applications International, and with research only about 10% of its work, the company changed its name and began focusing on Internet-based technology. Clients include AT&T, GTE, and PCS Group.

Recently, Bellcore has come under scrutiny for its administration of numbering resources and actions by wireline carriers who have brought the issue to the forefront. For instance, in Chicago, Ameritech22 proposed an overlay area code. This would require cellular and paging subscribers to give back their numbers and receive a new area code, thus freeing up numbers in the almost-exhausted code for new wireline subscribers. At a recent FCC open meeting, the FCC found this proposal to be unreasonably discriminatory against wireless carriers.

The FCC initiated a proceeding more than a year ago to examine whether an independent entity should oversee the assignment of numbers, and it appears as if the Senate telecommunications reform effort might mandate the formation of an independent entity to oversee the numbering assignment process.

Number Portability

Another key issue for those who want to compete with the local telephone enterprise is number portability, or the ability of an end user, such as an individual or enterprise, to retain its 10-digit geographic North American Numbering Plan (NANP) number—even if the end user changes its service provider, the telecommunications service with which the number is associated, or its permanent geographic location. With few exceptions, today end users may not retain their 10-digit NANP number if they:

  • Switch service providers, referred to as service provider portability (a user switches from an incumbent LEC to a new competitive access provider)

  • Change the service to which the number was originally assigned, referred to as service portability (a cellular telephone number becomes the wireline home telephone number)

  • Change their permanent location, referred to as geographic portability (an end user moves to a different part of the city or state and may be assigned either a new 7-digit phone number in the old area code or a new 10-digit number in a new area code) 26

Service provider portability—that is, moving a number from one service provider to another—is vital for those enterprises that wish to compete for customers at the local exchange level. It is much easier to gain market share if the customer that an enterprise is trying to attract does not have to change his or her phone number when changing service providers.

Currently, 800 numbers are portable between 800 number service providers—an example of service provider portability. This portability allows the 800 service end user to retain his or her individual 800 number, even when switching 800 service providers. Portability of 800 numbers was ordered by the FCC and implemented in 1993.


This portability does not apply to bulk numbers such as paging numbers.

Industry Efforts to Address Number Portability

The Industry Numbering Committee (INC), a consensus-based industry body sponsored by the Inter-Carriers Compatibility Forum (ICCF), has been actively addressing number portability issues since the fall of 1993. The INC Number Portability Workshop has been addressing a range of issues associated with number portability, including a target portability architecture, network impacts of number portability, and high-level policy issues such as mandated interconnection.

Public Service Obligations

The advent of increased mobility is having an impact on telecommunications public policy. How does wireless technology fit into public policy initiatives such as universal service and access to enhanced 911 emergency calling services? Policies regarding universal service were developed to apply to a strictly wireline environment where competition at the local level was nonexistent. Additionally, wireless technologies present a challenge to the traditional wireline approach to providing enhanced 911 emergency calling. As wireless service providers begin to compete for the local loop, how wireless fits into such public policy provisions will need to be seriously considered.

Universal Service

Universal service, as a public policy concept, is the belief that access to basic telephone services by the widest possible cross-section of the American public is in the social and economic interests of the United States. Over a period of many years, Congress has mandated the creation of universal service programs to support universal service public policy goals. The FCC is charged with fulfilling these congressional mandates.

Within the telecommunications industry, universal service refers to a complex system of explicit and implicit charges and cost-allocation mechanisms levied on particular carriers and customers in order to provide access to and subsidize the rates of basic wireline services for residential customers, high-cost customers and carriers, low-income customers, rural areas, and services for hearing- and speech-impaired consumers. Estimates of the current total costs of supporting universal service goals and policies range as high as $40 billion to $50 billion annually. Congress is intent upon reform of the universal service policy and funding mechanisms as part of its effort to reform existing telecommunications law. Any reforms could have a potentially huge economic impact upon the wireless industry.

Universal service reform is a critical part of telecommunications reform, and it appears inevitable if Congress passes a telecommunications reform bill. Although it is too early to tell what shape universal service will take, a number of issues need to be considered.

Wireless Access to Enhanced 911 Emergency Services

The FCC, on October 19, 1994, released a Notice of Proposed Rule Making (NPRM) regarding revision of the Commission's rules to ensure compatibility with enhanced 911 (E-911) emergency services. In many areas of the country, wireline subscribers are provided E-911 service by wireline carriers, which entails transmitting the address and phone number of the caller to the public safety answering point. The NPRM addresses private branch exchange (PBX) issues and wireless service provider issues. The NPRM outlines proposed requirements on wireless services regarding:

  • 911 availability
  • Grade of service
  • Privacy
  • Rering/call back
  • Grade of service
  • Liability
  • Cost recovery
  • Access to text telephone devices (TTY)
  • Equipment manufacture, importation, and labeling
  • User location information
  • Compatibility with network services
  • Common channel signaling
  • Federal preemption 26

The proposed requirements have considerable technical and economic implications that need to be fully examined. PCIA, in cooperation with representatives of the public safety community, drafted the Joint PCIA, Association of Public Safety Communications Officials (APCO)23, NASNA Emergency Access Position Paper, which was filed with the FCC in July 1994. This joint paper documented the first attempt of the PCS community to comprehensively address the needs of the public safety community. The FCC used the joint paper as a basis for its NPRM addressing enhanced 911 emergency calling systems.

PCIA fully shares the Commission's important objective of maximizing compatibility between wireless services and enhanced 911 emergency calling systems. Specifically, it concurs that subscribers to real-time voice services interconnected with the public switched telephone network ultimately should enjoy the same access to advanced emergency response services as do wireline service subscribers, with due consideration for the unique characteristics of radio-based technology. At the same time, however, PCIA strongly disagrees with the approach toward achievement of the compatibility objective that is set forth in the NPRM.

PCIA believes that full-scale regulatory intervention is not necessary at this time and that the profound technical issues raised by compatibility cannot be resolved through imposition of arbitrary deadlines as proposed in the NPRM. PCIA proposes, as an alternative to arbitrary deadlines, that the industry work to develop technical solutions to the public safety community's requirements and that the FCC require periodic reports from the industry on its progress in meeting the ultimate goals the FCC has set forth.

Now let's look at wireless LANs for the enterprise by introducing the basics behind wireless LANs and giving an overview of how they work. Economically, wireless LANs are predicted to reach $3 billion in revenues by the year 2002. The cost of installing and maintaining a wireless LAN generally is lower than the cost of installing and maintaining a traditional wired LAN. Hence, more and more enterprises are implementing this new LAN configuration.

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