Telecom/1996-04-telecom-walnutcreek.iso/george.gilder.essays/auctioning.the.airwaves

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Subject: George Gilder Essay - Auctioning the Airwaves

Here is another essay by George Gilder for your enjoyment.

PAT

   Date: Fri, 29 Apr 1994 13:24:38 -0400
   From: [e-mail] (Gordon Jacobson)
   Subject: George Gilder's Seventh Article - Auctioning The Airwaves


This series of articles by George Gilder provides some interesting
technological and cultural background that helps prepare readers to
better understand and place in proper perspective the events relative
to the National Data Super Highway, which are unfolding almost daily
in the national press.  I contacted the author and Forbes and as the
preface below indicates obtained permission to post on the Internet.
Please note that the preface must be included when cross posting or
uploading this article.

The following article, AUCTIONING THE AIRWAVES, was first published in
Forbes ASAP, April 11, 1994.  It is the seventh article in a series
excerpted from chapters in George Gilder's book, Telecosm, which will
be published 1995 by Simon & Schuster, as a sequel to Microcosm,
published in 1989 and Life After Television, published by Norton in
1992.  Further chapters of Telecosm are scheduled to be published in
future issues of Forbes ASAP.

Please post Auctioning The Airwaves to any Usenet newsgroups deemed
suitable.


                          AUCTIONING THE AIRWAYS

                                    BY

                              GEORGE GILDER

     Imagine it is 1971 and you are chair of the new Federal Computer
Commission.  This commission has been established to regulate the
natural monopoly of computer technology as summed up in the famous
Grosch's Law.  In 1956 IBM engineer Herbert Grosch proved that
computer power rises by the square of its cost and thus necessarily
gravitates to the most costly machines.  According to a famous IBM
projection, the entire world could use some 55 mainframes,
time-sharing from dumb terminals and keypunch machines.  The owners of
these machines would rule the world of information in an ascendant
information age.  By the Orwellian dawn of 1984, Big Bre'r IBM would
establish a new digital tyranny, with a new elite of the data-rich
dominating the data-poor.

     As head of the computer commission, you launch a bold program to
forestall this grim outcome.  Under a congressional mandate to promote
competition for IBM and ensure the principle of universal computer
service, you ordain the creation of some 2,500 mainframe licenses to
be auctioned to the highest bidders (with special licenses reserved
for minorities, women and farmers).  To ensure widespread competition
across all of America, you establish seven licenses in each
metropolitan Major Trading Area and seven in every rural Basic Trading
Area as defined by Rand McNally.  To guarantee universal service, you
mandate the free distribution of keypunch machines to all businesses
and households so that they can access the local computer centers.

     In establishing this auction in 1971, you had no reason at all to
notice that a tiny company in Mountain View, Calif., called Intel was
about to announce three new technologies together with some hype about
"a new era of integrated electronics."  After all, these technologies
-- the microprocessor; erasable, programmable read-only memory
(EPROM); and a one-kilobit dynamic random access memory (DRAM) -- were
far too primitive to even compare with IBM's massive machines.

     The likely results of such a Federal Computer Commission policy
are not merely matters of conjecture.  France pretty much did it when
it distributed free Minitel terminals to its citizens to provide them
access to government mainframes.  While the United States made
personal computers nearly ubiquitous buying perhaps 100 million since
the launch of the Minitel in the late 1970s the French chatted through
central databases and ended up with one-quarter as many computers per
capita as this country, and one-tenth the number of computer networks.
Today, PC networks are leading the US economy to world dominance while
Europe founders without a single major computer company, software firm
or semiconductor manufacturer.

     IT IS NOW 1994, and Reed Hundt, the new chairman of the Federal
Communications Commission, is indeed about to hold an auction.

     Rather than selling exclusive mainframe licenses, the current FCC
is going to sell exclusive ten-year licenses to about 2,500 shards of
the radio spectrum.  Meanwhile, a tiny company called Steinbrecher
Corp. of Burlington, Mass., is introducing the new microprocessor of
the radio business.

     In the world of radio waves ruled by the Federal Communications
Commission, the Steinbrecher MiniCell is even more revolutionary than
the microprocessor was in the world of computing.  While Intel put an
entire computer on a single chip, Steinbrecher has put an entire
cellular base station -- now requiring some 1,000 square feet and
costing $ 1.5 million -- in a box the size of a briefcase that costs $
100,000 today.  Based on a unique invention by Donald Steinbrecher and
on the sweeping advance of computer technology, the MiniCell
represents a far bigger leap forward beyond the current state of the
art than the microprocessor did.  What's more, this MiniCell is in
fact much superior to existing cellular base stations.  Unlike the 416
hard-wired radio transceivers (transmitter-receivers) in existing base
stations, the MiniCell contains a single digital broadband radio and
is fully programmable.  It can accommodate scores of different kind of
cellular handsets.

     Most important, the MiniCell benefits from the same technology as
the microprocessor.  Making possible the creation of this broadband
digital radio is the tidal onrush of Moore's Law.  In an antithesis of
Grosch's Law, Gordon Moore of Intel showed that the cost-effectiveness
of microchip technology doubles every 18 months.  This insight
suggested the Law of the Microcosm -- that computing power gravitates
not to the costliest but to the cheapest machines.  Costing $ 100,000
today, the MiniCell will predictably cost some $10,000 before the turn
of the century.

     In time, these digital MiniCells will have an impact similar to
that of the PC.  They will drive the creation of a cornucopia of new
mobile services -- from plain old telephony to wireless video
conferencing -- based on ubiquitous client/server networks in the air.
Endowing Americans with universal mobile access to information
superhighways, these MiniCells can spearhead another generation of
computer-led growth in the US economy.  Eventually, the implications
of Steinbrecher's machines and other major innovations in wireless
will crash In on the legalistic scene of the FCC.

     And that's only the beginning of the story.

     Going on the block in May will be 160 megahertz (millions of
cycles per second) of the radio frequency spectrum, divided into seven
sections of between 10 and 30 megahertz In each of 543 areas of the
country, and devoted to enhanced Personal Communications Services
(PCS).

     Existing cellular systems operate in a total spectrum space of 50
megahertz in two frequency bands near the 800 megahertz level.  By
contrast, PCS will take four times that space in a frequency band near
two gigahertz (billions of cycles per second).  Became higher
frequencies allow use of lower-power radios with smaller antennas and
longer-lasting batteries, PCS offers the possibility of a drastically
improved wireless system.  Unfortunately, the major obstacle to the
promise of PCS is the auction.

     Amid the spectrum fever aroused by the bidding, however, new
radio technologies are emerging that devastate its most basic
assumptions.  At a time when the world is about to take to information
superhighways In the sky -- plied by low-powered, pollution-free
computer phones -- the FCC is in danger of building a legal
infrastructure and protectionist program for information smokestacks
and gas guzzlers.

     Even the language used to describe the auction betrays its
fallacies.  With real estate imagery, analysts depict spectrum as
"beachfront property" and the auction as a "land rash."  They assume
that radio frequencies are like analog telephone circuit: no two users
can occupy the same spot of spectrum at the same time.  Whether large
50-kilowatt broadcast stations booming Rush Limbaugh's voice across
the nation or milliwatt cellular phones beaming love murmurs to a
nearby base station, radio transmitters are assumed to be infectious,
high-powered and blind.  If one is on the highway, everyone else has
to clear out.  Both the prevailing wisdom and the entrenched
technology dictate that every transmitter be quarantined in its own
spectrum slot.

     However, innovations from such companies as Steinbrecher and
Qualcomm Inc. of San Diego overthrow this paradigm.  Not only can
numerous radios operate at non-interfering levels in the same
frequency band, they can also see other users' signals and move to
avoid them.  In baseball jargon, the new radios can hit 'em where they
ain't; in football idiom, they run for daylight.  If appropriately
handled, these technologies can render spectrum not scarce but
abundant.

     These developments make it retrograde to assign exclusive
spectrum rights to anyone or to foster technologies that require
exclusivity.  Spectrum no longer shares any features of beachfront
property.  A wave would be a better analogy.


The New Rules Of Waves

     In the early decades of this century, radio was king. Electronics
hackers played in the waves with a variety of ham, citizens band and
short-wave machines.

     Experimenting with crystal sets, they innocently entered the
domain of solid-state devices and acquired some of the skills that
fueled the electronic revolution in the United States and the radar
revolution that won World War II.  The first point-contact transistor,
created by John Bardeen and Walter Brattain at Bell Labs in 1948,
functioned like a crystal radio.  The first major solid-state product
was a 1954 Texas Instruments pocket radio with six germanium
transistors.

     Over the following decades, the radio became a mass commodity.
There are now some 230 million radios in the United States alone, not
even including more than 16 million cellular phones (which are in fact
portable two-way radios).  Radios roll off Asian assembly lines at a
rate that might be meaningfully measured in hertz (cycles per second),
and they come in sizes fit for pockets, belts, watches and ears.  But
the romance of radio has died and given way to the romance of
computers.

     Today it is PC technology that engages the youthful energies
previously invested in radio technology.  The press trumpets a coming
convergence between computers and TVs and games and films.  But no one
talks much about radios.  For many years, we have been taking radios
for granted.

     As the foundation of wireless communications, however, radio --
no less than TV or films -- will burst into a new technoscape as a
result of a convergence with computers.  The hackers of the '50s and
'60s are joining forces with the hackers of the '80s and '90s to
create a new industry.  Moore's Law is about to overran the world of
radio.

     You double anything every 18 months and pretty soon you find
yourself with a monster.  During the 1970s and 1980s, Moore's Law
overturned the established order in the computer industry and spawned
some 100 million personal computers that are as powerful as
million-dollar mainframes were when the revolution began.  In the
current decade, Moore's Law is upending the telephone and television
industries with interactive teleputers that will be able to send,
receive, shape and store interactive full-motion video.  And during
the next five years, Moore's Law is going to transform exotic and
costly radio equipment once consigned to the military and outer space
into the basic communications access routes for the new world economy.

     To understand this new world of radio, however, you must forget
much of what you learned about the old world of radio.  For example,
these new radios differ radically from the radios of the past in the
way they use spectrum, the way they interfere with one another and the
way they are built.

     For some 15 years, a hacker of the 1950s named Don Steinbrecher
and a small group of students and associates have been making the
world's most powerful and aerobatic radios.  Steinbrecher radio gear
can soar to spectrum altitudes as high as 94 gigahertz to provide
radar "eyes" for smart bombs and pies, plunge down to the cellular
band at 800 megahertz to listen in on phone calls or drop discretely
to 30 megahertz -- waves that bounce off the ionosphere -- for remote
over-the-horizon radar work identifying cocaine traffickers flying in
low from Latin America.  At the same time, some of these radios may
soon command enough dynamic ranges of accurate broadband reception --
rumored to be as high as 120 decibels (one trillion-to-one) -- to
detect a pin drop at a heavy-metal rock concert without missing a
high-fidelity note or twang.

     Like every radio transceiver, a Steinbrecher radio must have four
key components: an antenna, a tuner, a modem and a mixer.  The antenna
part is easy; for many purposes, your metal shirt hanger will do the
trick (backyard wire fences collect millions of frequencies).  But
without tuners, modems and mixers, nothing reaches its final
destination -- the human ear.

     A tuner selects a desired carrier frequency, usually by
exploiting the science of resonant circuits.  A modem is a
modulator-demodulator.  In transmitting it applies information to the
carrier frequency by wiggling the waves in a pattern, called a
modulation scheme, such as AM or FM.  In receiving the modem strips
out (demodulates) the information tom the carrier wave.

     The key to Steinbrecher radios is the broadband mixer.  It
surmounts what was long seen as an impossible challenge: moving a
large array of the relatively high career frequencies on the antenna
down to a so-called baseband level where they can be used without
losing any of the information or adding spurious information in the
process.  Compared to FM carrier frequencies of 100 megahertz or even
PCS frequencies of two gigahertz, baseband audio frequencies run
between 20 hertz and 20 kilohertz.

     Mixers were the basic Steinbrecher product, and in 1978 and 1980,
Steinbrecher acquired patents on a unique broadband mixer with high
range and sensitivity called the Paramixer.  Even to its expected
military customers, the Paramixer was a hard sell because other radio
components were unable to keep pace with its performance.  Today,
however, the Paramixer is the foundation of the Steinbrecher radio in
the MiniCell.

     In the old world of radio, transceivers integrated all of these
components -- antenna, tuner, modem and mixer -- into one analog
hardware system.  Because the radio is analog and hard-wired, its
functions must be standardized.  Each radio can receive or transmit
only a very limited set of frequencies bearing information coded in a
specific modulation scheme and exclusively occupying a specific
spectrum space at a particular power range.  If you are in the radio
business -- whether as an equipment manufacturer such as Motorola or
Ericsson, a provider of services, such as McCaw or Comsat, or a
broadcaster, such as NBC or Turner -- you care deeply about these
hard-wired specifications, frequencies and modulation schemes.

     Comprising the "air standard," these issues embroil businesses,
politicians, standards bodies and regulators in constant warfare.  For
everything from High Definition Television to digital cellular and
cordless telephony, standards bodies are wrangling over frequencies
and modulation schemes.


How Digital Radios Can End The Spectrum Wars

     To the people at Steinbrecher Corp., all these wrangles seem
utterly unnecessary.  With antennas, tuners, modems and mixers,
wideband digital radios perform all the same functions as ordinary
radios.  Only the antenna and mixer are in hardware, and these are
generic; they don't care any more about air standards than your shirt
hanger does.

     In Steinbrecher radios, all of the frequency tuning, all of the
modulating and demodulating, all of the channelization, all of the
coding and decoding that so embroil the politicians are performed by
programmable digital signal processors and can be changed at a base
station in real time.  Strictly speaking, the tuner and modem are not
part of the base station radio at all.  The broadband radio in a
Steinbrecher base station can send or receive signals to or from any
handset or mobile unit operating within its bandwidth (in current
cellular systems the full 12.5 megahertz of the band; in PCS, still
larger bands of as much as 30 megahertz).

     All the processing of codes, frequencies, channels and
modulations, as well as all special mobile services, can move onto
computers attached to the network.  Steinbrecher technology thus can
open up the spectrum for open and programmable client/server systems
like those that now dominate the computer industry.  Moore's Law, in
fact, is changing radios into portable digital computers.  The most
pervasive personal computer of the next decade will be a digital
cellular phone operating at least 40 MIPS (millions of instructions
per second).

     Today the performance of analog-to-digital converters defines the
limits of Steinbrecher radios.  Even if the mixers are perfect, the
system's performance can be no better than the accuracy of the A/D
processors that transform the output of the mixers into a digital bit
stream for the DSPs.  Steinbrecher estimates that better broadband A/D
converters -- which can sample wave forms more accurately at high
frequencies -- could increase the performance ofSteinbrecher systems
by an amazing factor of 10.  Pushed by demands and designs from
Steinbrecher, Analog Devices and other suppliers are advancing
converter technology nearly at a pace with Moore's Law, and
Steinbrecher's broadband digital radios are rapidly approaching the
ideal.

     As Don Steinbrecher puts it, broadband A/D and DSP have changed
wireless "turn a radio business to a computer business."  At first,
the computer portion of a broadband radio was very expensive.  Until
the early 1980s, military customers performed advanced broadband
analog-to-digital conversion and digital signal processing on
million-dollar custom supercomputers.  In 1986, an advanced DSP system
for graphics at Bell Labs entailed the use of 82 AT&T DSP32 chips and
supporting devices in a custom computer that cost some $ 130,000.
Today, these same functions are performed on an Apple Quadra 84o AV
using an AT&T 3210 running at 33 megaflops (million floating-point
operations per second) and 17 MIPS for under $ 20 in volume.  This
rising tide of advances in digital technology, propelled by Moore's
Law, is about to sweep Steinbrecher's recondite radio company into the
midst of a mass market in cellular telephony.

     And the entire cellular and PCS industries will be beating a path
to Steinbrecher's door.  Just as millions of people today have learned
the meaning of MIPS and megabytes, millions of people around the
world, believe it or not, are going to come to understand the meaning
of "spurious-free dynamic range."

     As a very rough analogy, imagine cranking the volume of your
radio as high as possible without marring the desired signal with
static and distortion.  The spurious-free dynamic range of your radio
would measure the distance between the lowest and the highest volumes
with a clear signal.  In more technical terms, spurious-free dynamic
range is defined as the range of signal amplitudes that can
simultaneously be processed without distortion or be resolved by a
receiver without the emergence of spurious signals above the noise
floor.

     In building broadband radios with high dynamic range, however,
Steinbrecher faced a fundamental technical problem.  As a general
rule, bandwidth is inversely proportional to dynamic range.  You can
have one or the other, but you can't have both.  The broader the band,
the more difficult it is to capture all of its contents with full
accuracy and sensitivity or with full spurious-free dynamic range.  An
ordinary radio may command a high dynamic range of volumes because it
is narrowband.

     But Steinbrecher radio does not begin by tuning to one frequency
alone; it gasps every frequency in a particular swath of spectrum.  In
some extreme Paramixer applications (94-gigahertz radar, for example),
the bandwidth could be 10 gigahertz -- larger than the entire range of
spectrum commonly used in the air, from submarine communications at 60
hertz to C band satellite at 6 gigahertz.

     In most Steinbrecher applications that require high dynamic
range, however, the bandwidth runs between a few megahertz and
hundreds of megahertz (compared to 30 kilohertz in a cellular phone).
Unless all of the frequencies captured by the broadband radio are
really present in the band rather than as artifacts of the equipment
 -- in technical jargon, unless the signals are spurious-free -- the
radio user cannot tell what is going on, cannot distinguish between
spurs and signals.

     Steinbrecher has devoted much of his career to the graft of
spurious-free dynamic range.  Soon after he arrived at Massachusetts
Institute of Technology in September 1961 to pursue work on device
physics, he moved into the school's new Radio Astronomy Lab.  The
radio astronomers were using millimeter waves at 75 gigahertz to probe
remote galaxies and pour through evidence of a big bang at the
beginning of time.  Because the return reflections from outer space
were infinitesimal, the radio telescopes had to command a bandwidth of
at least two gigahertz, a spurious-free dynamic range of more than 100
decibels (tens of billions-, or even trillions-to-one) and noise
levels of less than 10 decibels (millionths of a watt).

     The telescope signals turned out not to be spurious-free.  More
than 90 percent of the receiver noise -- the spurious signals --
originated in the frequency converter or mixer, which translated the
75-gigahertz millimeter waves in cascading analog stages of diodes and
transistors, fed by tunable local oscillators, down to baseband levels
that could be usefully analyzed.  This impelled Steinbrecher's
obsession with spurious-free dynamic range in mixers.

     To achieve high dynamic range in broadband mixers, Steinbrecher
discovered, was chiefly a problem of the basic physics of diodes.  At
the University of Florida, at ECI Corp. and at MIT, Steinbrecher had
pursued studies in device physics focusing on the theory of PIN
junctions -- the positive-negative interfaces that create the active
regions in diodes and transistors.  How cleanly and abruptly they
switch from on to off -- how fully these switches avoid transitional
effects--determines how well they can translate one frequency to
another without spurs.

     From this experience, Steinbrecher concluded in 1968 that
receivers could be built with at least a thousand times more dynamic
range than was currently believed possible.  He assigned his student
Robert Snyder to investigate the issue mathematically, integrating the
possible performance of each component into the performance of a
mixer.  Snyder's results stunningly continued Steinbrecher's
hypothesis.  They predicted that in principle -- with unlimited time
and effort -- the linearity and dynamic range of a radio could be
improved to any arbitrary standard.  In a key invention, Steinbrecher
figured out how to create a diode circuit that could produce a perfect
square wave, creating a diode with essentially zero switching time.

     Steinbrecher then proceeded to put his theory into practice by
developing the crucial diode and field-effect transistor arrays,
mixers, amplifiers and other components necessary to build a working
system of unparalleled dynamic range.  Most of their advances required
detailed knowledge of the behavior of P/N junctions.  To this day, the
performance of Steinbrecher's equipment depends on adjustment to
unexpected nonlinearities and noise sources that were discovered as
part of Robert Snyder's work but are still not integrated into the
prevailing models of diode behavior.

     Beyond radio astronomy, the people who were interested in
analyzing signals of unknown frequencies, rather than tuning into
preset frequencies, were in the field of military intelligence.
Enemies did not normally announce in advance the frequencies they
planned to use or how they would modulate them.  Steinbrecher Corp.'s
first major contract came in the early 1980s for remote over-the-horizon
radar (ROTHR) systems used to detect planes carrying drugs from Latin
America.  Steinbrecher also won contracts to supply MILSTAR satellite
transceivers and 94-gigahertz "eyes" for smart munitions and jet
aircraft.

     In 1986 these large potential businesses began to attract venture
capitalists, including EG&G venture partners, The Venture Capital Fund
of New England and Raytheon.  As often happens, the venture
capitalists sought professional management.  They pushed Steinbrecher
upstairs to chairman and summoned a Stanford EE graduate named Douglas
Shute to manage the company's move from a manufacturer of hard-sell
mixers Into a producer of revolutionary digital radios.

     Still, Steinbrecher Corp. long remained a tiny firm occupying a
dingy one-story building in a Woburn, Mass., industrial park, where it
rarely pulled in more than $ 5 million in revenues.  Not until the
early 1990s, when its technology converged with Moore's Law, did the
company begin to escape its niche.


Collision With Texas Instruments' DSP

     Indeed, strictly speaking even Moore's Law was not enough to make
this Pentagon turkey fly.  Crucial was Texas Instruments' mid-1980s
campaign to remake the digital signal processor into a commodity
device comparable to Intel's microprocessor.  Creating development
systems and software tools, TI transformed the DSP from an exotic and
expensive printed circuit board full of integrated circuits into a
single programmable microchip manufactured in volume on the same
factory floor the company used to produce hundreds of millions of
dynamic random access memories.  The results exceeded all expectations.
Outpacing Moore's Law by a factor of nearly four for some eight years so
far, DSP cost-effectiveness began soaring tenfold every two years.
Pricing the devices for digital radios, Douglas Shute saw that the
wideband digital radio had "moved onto the map as a commercial
product."

     Also in 1989, a secret contractor asked the company if its radios
could snoop on calls in the cellular band.  After gigahertz
explorations in radio astronomy and military projects, the 12.5
megahertz of the cellular bandwidth seemed a piece of cake.  Although
this national security application never came through, the idea
galvanized the company.  If it should need a commercial market,
cellular telephony was a good bet.

     The pull of opportunity, however, is usually less potent than the
push of catastrophe -- which is the key reason for socialism's
failure.  Insulating the economy from failure, it also removes a key
spur for success.  For all the bureaucratic rigmarole of military
procurement, producers for the Pentagon live in a relatively
comfortable socialist world of cost plus contracts.

     In 1989, however, just before the fall of the Soviet Union,
Steinbrecher began to get clear signals from Washington that the
market for his products was about to collapse.  MILSTAR remained an
experimental program; the ROTHR system was halted after the creation
of just four stations with 1,600 mixers; and suddenly the cellular
opportunity was not merely an attractive option -- it was crucial for
survival.

     When Shute and Steinbrecher viewed the cellular scene in the
United States, however, they became increasingly disdainful.  These
radio companies had no more idea of what was possible in radio
technology than had the MIT engineering lab when he arrived in 1961.
Indeed, Steinbrecher Corp.'s first potential customer -- a wireless
colossus -- refused even to meet with Shute: The chief technologist
said he had investigated digital radios several years before and
determined they were unable to achieve the requisite dynamic range.
Moreover, at scores of thousands of dollars apiece, digital signal
processors were far too expensive.  Most cellular executives, along
with their Washington regulators, seemed stuck in a 1970s time warp
when analog still ruled and DSP was a supercomputer.


Importing Obsolescence

     As a result, the entire industry was convulsed by what Shute and
Steinbrecher saw as a retrograde war over standards.  Because Europe
in general lagged far behind the United States in adopting analog
cellular technology, the EEC had sponsored a multinational drive to
leapfrog the United States by adopting a digital standard, which could
then be exported to America.  The standard they chose was called GSM
(global services mobile), a time-division multiple-access (TDMA)
scheme that exceeded analog capacity by breaking each channel into
three digital time slots.  Racing to catch up, the American industry
adopted a similar TDMA approach that also increased the current
system's capacity by a factor of three.  With McCaw Cellular in the
lead, American firms quickly committed themselves to deploy TDMA as
soon as possible.

     Then in 1991, Qualcomm unleashed a bombshell Exploiting the
increasing power of DSPs to process digital codes, the company
demonstrated a spread-spectrum, code-division multiple-access (CDMA)
modulation scheme that not only increased capacity some twentyfold
over analog but also allowed use of the entire 11.5 megahertz of the
cellular bandwidth in every cell.  To prevent interference between
adjoining cells, analog and TDMA systems could use a frequency in only
one cell out of seven.

     Much of the industry seemed paralyzed by fear of choosing the
wrong system.  To Shute and Steinbrecher, however, these fears seemed
entirely reckless.  Using wideband digital radios, companies could
accommodate any array of frequencies and modulation schemes they
desired TDMA, CDMA, voice, data and eventually even video.  Shute
resolved to adapt Steinbrecher's advanced radio technology to these
new markets.  In mid-1991, Shute rushed ahead with a program to create
a prototype cellular transceiver that could process all 12.5 megahertz
of the cellular bandwidth and convert it to a digital bit stream.

     The first major customer for the radios turned out to be
ADC-Kentrox, a designer of analog cell extenders designed to overcome
"dead zones" caused by large buildings in urban areas.  This system
was limited in reach to the few hundred meters the signals could be
sent over analog wires without deterioration.  By converting the
signals to digital at the remote site, the Steinbrecher radio extended
this distance from hundreds of meters to scores of kilometers and
allowed the price of the product to remain at $ 100,000.

     But these gains concealed the potential impact and meaning of the
Steinbrecher technology.  Once again, the Steinbrecher radios are
being used to complement the existing system rather than overthrow it.
In a similar way, McCaw plans to buy some $ 30 million worth of
Steinbrecher machines to carry through its cellular digital packet
data (CDPD) network.  To be provided to 95 percent of McCaw's regions
by the end of 1995, CDPD is a data overlay of the existing cellular
system, which allows users of the current analog system to send
digital data at a rate of 19.2 kilobits per second, compared to the
9.6-kilobit-per-second rate offered by most modems over twisted-pair
wires.

     The Steinbrecher radio can survey any existing swath of spectrum
in real time and determine almost instantly which channels are in use
and which are free.  It is this capability that convinced McCaw to buy
Steinbrecher data cells despite the commitment of McCaw's putative
owner, AT&T, to sell narrowband units made by Cirrus Logics'
subsidiary Pacific Communications Sciences Inc. (PCSI), which have to
scan through channels one at a time.  McCaw is using the Steinbrecher
radios as sniffers that constantly survey the cellular band and direct
data bursts to those channels that are not being used at a particular
time.

     Indeed, the immediate needs of the marketplace alone justify the
adoption of Steinbrecher data cells.  With modems and antennas
increasingly available and even moving sometime next year to PCMCIA
slots the size of a credit card, demand for wireless data is likely to
soar.

     PCSI is now shipping a quintuple-threat communicator that fits
into the floppy bay of an advanced IBM ThinkPad notebook or an Apple
PowerBook, enabling them to send and receive faxes, make wireless or
wire-line phone calls, dispatch data files across the existing
cellular network or send CDPD packets at 19.2 kilobits per second.
Speech recognition capabilities from IBM and Dragon Systems will come
next year to personal digital assistants, permitting them to read or
receive E-mail by voice.  Although the first Newtons and Zoomers have
disappointed their sponsors, the market will ignite over the next two
years as vendors adopt the essential form factor of a digital cellular
phone with computer functions rather than providing a kluge computer
with a vaporware phone.

     Nonetheless, McCaw has more on its mind with Steinbrecher than
merely gaining a second source for CDPD sniffers.  By simultaneously
purchasing some 10 percent of the company and putting chief technical
officer Nicholas Kauser on the Steinbrecher board, McCaw is signaling
not a tactical move but a major strategic thrust.  The Steinbrecher
rollout in fact represents McCaw's stealth deployment of broadband
digital capability.

     Today the rival CDPD equipment from PCSI, Hughes and AT&T all can
be made to perform CDPD communications as an overly to the existing
cellular phone system.  However, only the Steinbrecher systems can be
upgraded to perform all of the functions of a base station and more,
for voice, data and video.  Only Steinbrecher allows the replacement
of 416 radio transceivers, one for each channel, with one broadband
radio and some digital signal processing chips.  Only Steinbrecher can
replace a $ 1.5 million, 1,000 square foot cellular base station with
a box the size of a briefcase costing some $ 100,000 but, thanks to
Moore's Law, racing toward $ 10,000.

     It remains to be seen only whether McCaw will have the guts to
follow through on this initiative by completely rebuilding its network
to accommodate the wideband radio being installed at its heart.
Self-cannibalization is the rule of success in information technology.
Intel and Microsoft, for example, lead the way in constantly attacking
their own products.  But this mode of life is deeply alien to the
telephone business -- even an entrepreneurial outfit like McCaw.

     With new software and a simple upgrade to a MiniCell, the
Steinbrecher DataCell will allow the McCaw system to handle all
modulation schemes simultaneously -- AMPS, TDMA, CDMA and future
methods such as Orthogonal Frequency Division Multiple Access --
obviating the need for hybrid phones.  The multiprotocol and aerobatic
capabilities of broadband digital radios could enable McCaw to roll
out a cornucopia of PCS services -- for everything from monitoring
vending machines or remote power stations to tracking tracks and
packages, and linking laptops and PDAs -- while the rest of the
industry is still paralyzed by wrangles over incumbent users,
regulatory procedures, frequency access and radio standards.

     Making channel sizes a variable rather than a fixed function of
radios, Steinbrecher systems offer the possibility of bandwidth on
demand.  They could open up the entire spectrum as one gigantic
broadband pipe into which we would be able to insert packets in any
empty space -- dark fiber in the air.



So Stop The Auction

     So what does this have to do with the impending spectrum auction?
Almost everything.  Strictly speaking, the FCC is leasing 10 year
exclusive rights to radiate electromagnetic waves at certain
frequencies to deliver PCS.  This entire auction concept is tied to
thousands of exclusive frequency licenses.  It has no place for
broadband radios that treat all frequencies alike and offer bandwidth
on demand.  It has no place for modulation schemes that do not need
exclusive spectrum space.  Continuing to use interference standards
based on analog transmissions that are affected by every passing spray
of radiation, FCC rules fail to grasp the far more robust nature of
digital on-off codes with error correction.  By the time the FCC gets
around to selling its 1,500 shards of air, the air will have been
radically changed by new technology.

     The FCC is fostering a real estate paradigm for the spectrum.
You buy or lease spectrum as you would a spread of land.  Once you
have your license, you can use it any way you want as long as you
don't unduly disturb the neighbors.  You rent a stretch of beach and
build a wall.

     The Steinbrecher system, by contrast, suggests a model not of a
beach but of an ocean.  You can no more lease electromagnetic waves
than you can lease ocean waves.  Enabled by new technology, this new
model is suitable for an information superhighway in the sky.  You can
use the spectrum as much as you want as long as you don't collide with
anyone else or pollute it with high-powered noise or other nuisances.

     In the Steinbrecher model, you employ the spectrum as you use any
public right of way.  You are responsible for keeping your eyes open
and avoiding others.  You cannot just buy a 10 year lease and then
barge blindly all over the air in a high-powered vessel, depending on
the government to keep everyone else off your territory and out of
your way.  The spectrum is no longer dark.  The Steinbrecher broadband
radio supplies you with lights as you travel the information
superhighway.  You can see other travelers and avoid them.

     Even if Steinbrecher radios did not exist, however, the
assumptions of the auction are collapsing in the face of innovations
by Qualcomm and other spread-spectrum companies.  Like Steinbrecher
radios, CDMA modulation schemes allow you to use spectrum without
interfering with others.  To auditors without the code, calls seem
indistinguishable from noise.  But radios with the code can dig up
signals from under the noise floor.  Up to the point of traffic
congestion where the quality of the signal begins to degrade
gracefully, numerous users can employ the same frequencies at the same
time.

     This property of CDMA has been tested in Qualcomm's CDMA
Omnitracs position locator and two-way communications system.  Mainly
used by trucking companies, it is now being extended to cars, boats,
trains and other mobile equipment.  Based on geosynchronous
satellites, it operates all across the country, with some 60,000
units, under a secondary license that forbids Qualcomm to interfere
with the primary license-holders of the same frequencies.  Qualcomm's
transceivers on the tops of trucks use a small antenna that issues a
beam six to 10 degrees in width.  Because satellites are just two
degrees apart, the Qualcomm beam can blanket several satellites.
Other users, however, are entirely unconscious of the presence of the
CDMA signal.  Omnitracs has operated for some six years and has not
interfered with anyone yet.


No More Blind Drivers On The Information Superhighway

     With an increasing array of low-interference technologies
available, the FCC should not give exclusive rights to anyone.
Instead, it should impose a heavy burden of proof on any service
providers with blind or high-powered systems that maintain that they
cannot operate without an exclusive license, that want to build on the
beach and keep everyone else out of the surf.  In particular, the FCC
should make all the proponents of TDMA, whether in the American or
European GSM systems, explain why the government should wall off
spectrum.  The wireless systems of the future will offer bandwidth on
demand and send their packets wherever there is room.

     At the same time that new technologies make hash of the need to
auction off exclusive licenses, Qualcomm and Steinbrecher also
radically attack the very notion of spectrum scarcity on which the
auction is based.  Steinbrecher's radio makes it possible to
manufacture new spectrum nearly at will.  By putting one of his
MiniCells on every telephone pole and down every alley and in every
elevator shaft, the cellular industry can exponentially multiply the
total number of calls it can handle.  At some $ 100,000 apiece and
dropping in price, these MiniCells can operate at 900 megahertz or six
gigahertz just as well as at the two-gigahertz range being auctioned
by the government.  It is as if Reed Hundt is auctioning off
beachfront property, with a long list of codicils and regulations and
restrictive covenants, while the tide pours in around him and creates
new surf everywhere.

     Still more important in view of the coming auction, the wideband
capability of the Steinbrecher radio joins CDMA in allowing the use of
huge spans of spectrum that are ostensibly occupied by other users.
The Steinbrecher radio can survey the gigahertz reserves of the
military and intelligence services, UHF television and microwave, and
direct usage to the many fallow regions.  For example, the prime
territory between 225 megahertz and 400 megahertz, consisting of some
3,0130 25-kilohertz channels, is entirely occupied by government and
air force communications.  But most of the channels are largely
unused.  A Steinbrecher radio could sit on those frequencies and
direct calls to empty slots.

     An ideal system would combine Steinbrecher broadband machines
with Qualcomm's modulation schemes.  Steinbrecher supplies the lights
and eyes to find space in already licensed spectrum bands; CDMA allows
the noninvasive entry Into spans of spectrum that are in active use.

     Meanwhile, the Steinbrecher system changes the very nature of
spectrum "ownership" or rental.  Unrestricted to a single band or
range of frequencies, Steinbrecher radios can reach from the kilohertz
to the high gigahertz and go to any unoccupied territory.  As
Steinbrecher radios become the dominant technology, the notion of
spectrum assignments allotted in 2,500 specific shards becomes a
technological absurdity.

     Wall Street is beginning to catch on.  When Steinbrecher
announced in January a private placement through Alex. Brown, the
company wanted to raise some $ 20 million.  The response was
overwhelming, and hundreds of frustrated Investors were left wringing
their hands as the new radio left the station.  The sole
proprietorship of the mid-1980s with revenues of $ 5 million or less
was moving into sleek new headquarters off Route 198 in Burlington.
Steinbrecher Corp. was becoming yet another of the Moore's Law
monsters.

     Meanwhile, the issue for Washington emerges starkly.  Do we want
a strategy for MiniCells or for Minitels?

                                    #####

Posted by:

                           Gordon Jacobson
                     Portman Communication Services
                            [phone]

     [e-mail]                          [e-mail]
  MCI Mail ID:  385-1533                   Channel One BBS - Cambridge, MA