Third Generation wireless services is moving very very quickly in Asia. Japan is going to be the first country to roll out third generation wireless services by May. Hong Kong expects to roll out some time next year. Korea and China are very close to rolling out 3G services. So, Asia is moving very quickly on rolling out 3G, and that is going to be very significant.
Even though currently the United States has the most Internet users in the world, we also have, in terms of numbers, the highest the number of wireless users in the world. Those numbers are going to change very quickly. And, we are going to see Asia surpass us in terms of the total number of wireless users.
We are going to see Asia play a very significant role in the development of the Internet. I mean, not only is the Internet going to change China and Asia, but Asia is going to change the nature of the Internet. Currently, the United States as is the dominant player, a lot of the content is developed here. And -- but, that is going to very quickly change when 3G rolls out in Asia. As you can see more and more Asians using the Internet, accessing the Internet, a lot more development of local content in the Asia region.
So, for these reasons, this is a very important market for us to pay attention to in the United States. So, that is why Malcolm Lee and I felt it was very important that we go to this event, and that we have our bilaterals. A big topic of discussion in all of our bilaterals was Third Generation wireless. We -- there was a lot of interest in terms of what the United States is doing. They have obviously seen and read about our efforts to move ahead very aggressively in a very tight time frame. A lot of countries are very interested in knowing about that process. We had a chance to explain that.
But, more importantly we talked about the need for us to closely coordinate between North America and Asia. The reason for that is one of the characteristics of Third Generation wireless is that we will achieve global harmonization. It is a frustration to consumers around the world, but in our hemis -- in North America, as well as in Asia, and also in Europe, that cell phones cannot work everywhere. And, one of the desires of Third Generation wireless is that there be harmonization. All of us who belong to the ITU, the United States, Asian countries, and others, have, in addition to identifying addition spectrum, at least for 3G, all agreed to the principle of harmonization. So, it is something, it is a goal that we all share, and requires that we all have a lot of coordination between us.
So, last week was, I think, a very good step in, for us, in beginning our international outreach, and working with Asia in beginning that coordination process. We received agreements in principle with all of these countries that I mentioned, with China, with Hong Kong, with Japan, and with Canada, to begin a series of formal seminars between our spectrum engineers and their spectrum engineers, so our engineers can be talking to each other, and help guide us in our decisions as we go about this process.
It is very important that the United States, as we go through our process, by identifying additional spectrum by next July, which is our target date, that we need to have a clear understanding as to where other regions of the world are heading, like Asia, like Europe, like Latin America. I think we made some very good progress in working with some of the Asian leaders to get a good idea of where they are headed. And, we intend to have a series of very close discussion between the experts from the United States, and with Asia, so that we can learn more about where they are headed. And that will help guide our decision and have a big impact on our decision.
What I have here is a list of the Ministers that we had formal bilaterals with. And so, I will pass these around so you can have those, without my butchering their names to you.
So, with that, I am happy to have an informal discussion with you about any of these issues, or anything else.
Greg Rohde then answered questions.
Question: ... when did these discussion take place and where?
Rohde: Last week. Last week was the Asia Telecom 2000, which is one of the regional ITU telecommunications. It is not a workshop, but it is a kind of a industry forum, a showcase of technology. In addition, you know, along side of that there were policy discussions under the auspices of the ITU, which we all participated in. And then, in addition to that, Malcolm Lee from the State Department and I had a series of bilateral discussions with these individuals that I have listed here.
I will tell you one of my impressions that I went away with after seeing this, the telecom show, is that Asia is really on fire when it comes to wireless services. I mean Third Generation wireless is exploding there. Many of these countries in Asia, Japan, Hong Kong, Korea, and others, they have more wireless users than they have land line telephone users. And so, wireless services have really become engrained into their culture. And, one of the interesting phenomenons, particularly of, if you are familiar the iMode service offered by DoCoMo in Japan, which has been an astonishing success in Japan where there is over fifteen million users in less than two years that have this service. And it is a data service. It is like a precursor to what we are going to see in Third Generation wireless. And, nearly a hundred percent of the teenagers in Japan have this service, and use it readily.
So, we have already seen introduction of some of these wireless data services in Asia. And, like, iMode was the big star of this show. And, it is really a precursor to what, I think, we are about to see once Third Generation wireless services are introduced, and when they get introduced in Japan. This is really going to take off in Asia. And it gives us a glimpse of the kind of services that we are going to see.
A lot of it is entertainment driven. A lot of it is, you know, people have signed up for services where they can figure out what time movies are showing. They are going to have video streaming over wireless phones. A lot of it is, you know, being able to communicate with a cell phone, and visually see the person you are talking to, because you will see a clear picture that will appear on your screen, as well as the other person's screens.
So, we are seeing the development of a lot of very interesting wireless communications devices that will make use of accessing the Internet. And, Asia is very well poised to take off on this. So, it was very very interesting to see all this. It very important for us to understand what is going on there.
Question: You discussed the global harmonization of 3G. Is that spectrum use, and technologies? Are they looking at the same spectrum we are looking at?
Rohde: The basis is that, well, the first step in harmonization is, of course, to get similar spectrum use. The point of harmonization is to try to get a device that can go anywhere. And, part of that process is to have these devices operate on similar spectrum bands. You know, the United States, this goes back to our position going into the World Radio Conference. We have never taken the position that we need to have one spectrum band for a particular technology. We believe that you can have harmonization by having multiple bands. But, we need it to be narrowed down. If there is no direction at all, it makes harmonization very difficult. We think that the result of the World Radio Conference in Istanbul which narrowed down to three general spectrum bands, went a long way to help us getting toward harmonization.
So, I think we have narrowed it down to three very general bands. There is still a lot of coordination and work that needs to be done about where all these various services are within these particular bands. And, as you know, right now, we are looking at two candidate bands. One is in the 1700 band, which a portion of that is being used largely by the Defense Department. That is a ___ band that we are looking at. Another band that we are looking at is the 2.5 GigaHertz band, which is now largely a commercial service. And, these are two candidate bands, we are looking for additional allocations that would help fill in the spots of where we already have spectrum allocated.
Question: And, are these Asian countries looking at these spectrum bands? And, do they anticipate some of the difficulties that we are having, in terms of moving incumbents out?
Rohde: Some of these Asian countries have already licensed 3G services. And, for example, Japan is going to role out 3G services by next year. You know, Hong Kong is looking at licensing coming up. And so, some of them are already licensed services. Some we will be looking at further, future allocations. And so, part of it is, I don't know the full answer to your question, because we haven't, you know, we just begun this process of reaching out to them. But, this is one of the things that we need to do, is we need to have our experts talking to their experts, so that, you know, it is important that they understand the bands that we are looking at. And we need to understand the bands that they are looking at. We need to do, to the greatest degree that we can, start to coordinate, and start to put these services in similar bands.
Question: (inaudible question regarding Japan)
Rohde: I do not know the band that they have licensed services in. As I said, this was just the beginning of our outreach process. This is among the things that we hope to learn more about.
Question: Considering they are a year, year and a half ahead of us, on this 3G process, won't their decision eventually inform our decision as to what spectrum we should use?
Rohde: I think it will impact it, yes. I think we have to understand where they are at as we make our decisions. It doesn't mean that we have to mirror their decision about where we put this. It is just that, you know, again, you know, it is not that 3G is not anywhere in the United States. We are not, we are starting from scratch. Our carriers who currently have First and Second Generation services can evolve into Third Generation services. And, in some of those bands that correspond with where Europe has been looking at. So, you know, this evolution is going to occur with some of our carriers. The question is, as we look to additional spectrum, where are we going to find that. And, it is important for us to understand where other countries are going to have developed 3G. And that will help us make a decision as to what we should -- that will impact our decision, I should say. It does not mean it is going to dictate our decision. But, I think it is certainly a factor that we have to take into consideration as we make these decisions.
Question: Does this issue of band harmonization become moot though as like software defined radio, and some of those technologies, develop, because my understanding is that with software defined radio, is that it does not matter what band it is, you just download the software, and then you can go anywhere. Does this become moot in a couple of years?
Rohde: No. I don't think it becomes moot. I mean software defined radio, there is still going to be some definition to it. You are still going to require some coordination of services within certain bands.
Rohde: The standardization issue is always hanging out there. And, it is part of 3G race if you will. We got some good news last week. And that was -- we expressed our gratitude to the Chinese Minister -- for this, is that Unicom in China, the second largest cellular carrier in China, has agreed to use the Qualcomm CDMA 2000 technology, which is a very significant decision.
When you look at the potential of the Chinese market, and how this is a huge huge market. It already is a big market. But, very soon, China is going to have more cell users than the United States, because it is growing very quickly. And the second largest carrier there is now using a U.S. technology. And also, when you look elsewhere in Asia, in Korea, they are also using a CDMA 2000 technology, which is a U.S. technology. And that is going to be the technology for their roll out of 3G. So, this is very significant. And this is one of the reasons that the United States has to move very aggressively on developing 3G. Otherwise, we will be stuck with having to adopt other technologies that are developed elsewhere around the world. We don't want to do that. We want to have U.S. technology playing a lead role. And the way to do that is we have to be on the forefront of developing 3G.
Some of these services -- when manufacturers are making devices, they looked to where these devices are going to be absorbed by the market place. And, they make multiple band devices. In a lot of Asian countries, and a lot of European countries, they use the GSM technology, which is European technology. The more the aggressively that the United States moves ahead in developing 3G and making spectrum available and the services out there, the greater likelihood that U.S. technology is going to keep pace in this race.
Question: Are these advanced technologies, the 3G based on Qualcomm, and the European standards, are they going to be interoperable? Do you know? Or is it a matter of U.S. getting its technology into Asia so it can dominate?
Answer: There will always -- there will be multiple technologies out there -- GSM and CDMA. We it requires is that the guts of the device will need to have -- be a multiband device, so it can work in both technologies. For example, some of these devices -- there -- there are cell phone made today that are multiband phones, that are both a GSM phone and a CDMA phone, and can work with both technologies, and can roam in different systems. So, for example, my cell phone that I have works both here in Washington, DC, and it also worked in Hong Kong because it was able to roam between the various technologies. Not all cell phones are made that way. I mean, it becomes more expensive the more bands you have to have. So, you can have multiple standards. But, it is definitely different between three, as opposed to twenty or fifty. Then it become unworkable. When you get it down to a small handful of standards, then it is easier for manufacturers to make these devices, and it will make it easier for these things to roam, and harmonize around the world.
In other words, I don't think we are going to get to -- the goal is not to have one standard. We don't need to have -- get to the point of having one single standard worldwide. But we need to get to the point where we have a limited number of standards, that can be worked with, so that it will make it feasible to manufacture devices that can work in various systems.
Rohde: Interconnection rates on Internet backbone? You mean the _______ issue? Yeah, we had discussions. That was actually one of the agenda items that we had in our bilateral discussions. And, as you know, this is also a hot issue within all of ITU, especially following Montreal. And, so, this is obviously one of which we had a lot of discussion of. People continual to like to ask us questions about this we were the lone dissenter in Montreal on all of this.
In our bilateral discussions, the way in which we approached this, we think that, we still believe our position is correct. The area where we disagree we many of the other -- with the other ITU countries is really on the solution. We just believe that the proposed solution of having the ITU direct governments to establish some kind of a regulatory scheme about cost sharing is going to be an approach that is going to effectively help achieve the goals that everyone has.
Where we agree with everybody else, in particular, developing countries, is there is a need to do more to develop the Internet. And, we also agree that there is an imbalance in how these commercially derived arrangements, and how the payments are structured. There is an imbalance between the two regions. That is a fact. We are not denying that fact. But, the reason for that is because the Internet is largely been a U.S. centric developed technology.
As Asia gets more online, and we made this case with our counterparts in our bilaterals, is that as you see 3G develop in Asia, and as more and more Asians go online and begin to use the Internet, you are going to see the development of more local content in Asia, that then will demand greater presence of Internet hubs in Asia, and they will no longer need to do the backhaul that they do to the United States to download content. And that, I believe, will take care of the issue.
So, in our meetings, yes, we did discuss this. We tried to spend a lot of time listening to fundamental concerns that these countries have. And the fundamental concerns that we are hearing from them is they want to see the Internet develop more rapidly in their economies. And, we expressed to them that we share that desire too, because we think that that is in our interest as well. And, we think that is what is going to resolve this cost sharing issue, not taking taking the approach of trying to get the ITU to start directing regulations. We just don't believe that that is going to solve the issue.
Question: Could you talk a little about how the FCC auction went on ... (inaudible)
Rohde: Yeah, well, obviously, the spectrum that was at question in this auction obviously could be used by carriers for providing 3G services. I can't speak for those who won the auction as to what they are going to do with that. What it does mean is that we now have -- there is more spectrum now available for 3G that could be developed for 3G provided that carriers chose to do so. But also, as you know, this particular auction has still got a lot of hurdles to overcome before it comes to fruition.
But, I think we have got a very aggressive plan. I think, I feel confident that the plan that we have laid out that was articulated in the President's memorandum, I think has given us some good direction to do some very term planning about how we are going to develop 3G wireless services in this country, as well as to look at potential new spectrum. And a process that is going -- and the kind of process that we need in order to succeed in that. We can't just have a process anymore where we just simply say just grab spectrum here and throw it over here and put it out on the market. We have -- we don't have unencumbered spectrum. We have to have a process that takes care of the needs of the incumbents.
And I think that is what is unique about the process that we are engaged in now, is that we for the first time are doing long term planning with all the stakeholders at the table. And as we identify the needs for developing this technology, 3G, we are at the same time looking at how do we make sure that those who are going to loose this spectrum are going to be taken care of, so that we can avoid the nasty political fights that would delay and derail this whole process.
So, I think what all this speaks to is that we have to be -- I think this is one of the most significant telecommunications issues in probably a generation that we face in this country. We have to be very focused, and very aggressive on developing 3G. And, it is going to be a long term process. It is not going to be just a one time shot.
Question: When you say making sure that people who loose their spectrum are taken care of, what specifically do you mean?
Rohde: Meaning that this process can't be one that just shuts down existing services. It has got to one, that if we are going to allocate additional spectrum, wherever it might come from on one of the candidate bands, then we have to figure out how can those services that are currently being provided in that band be moved somewhere else, and be done, and how do we make sure that that is going to happen.