Order Code RS20993
Updated June 8, 2005
CRS Report for Congress
Received through the CRS Web
Wireless Technology and Spectrum Demand:
Third Generation (3G) and Beyond
Linda K. Moore
Analyst in Telecommunications and Technology Policy
Resources, Science, and Industry Division
Summary
Advances in wireless telecommunications technology are converging with Internet
technology to foster new generations of applications and services. Presently, the United
States and other countries are moving to a third generation (3G) of mobile telephony.
The defining feature of 3G technology is that transmission speeds are significantly faster
than prevailing technology.
A related trend is the growth in use of Wi-Fi (wireless fidelity); these are localized
wireless networks providing high-speed access to the Internet. Whereas 3G could be
described as bringing Internet capabilities to wireless mobile phones, Wi-Fi provides
wireless Internet access for portable computers and handheld devices, such as Personal
Digital Assistants. The two technologies are seen by some as competing for customers
and by others as complementary — providing a broader base and greater choice of
devices for wireless communications and networking. From the perspective of
spectrum management, a significant difference between the two technologies is that 3G
services operate on designated frequencies licensed by the Federal Communications
Commission (FCC), while Wi-Fi shares unlicenced spectrum with other technologies.
Providers of the two technologies share in common the concern that there is insufficient
spectrum available for their services to be developed to full market potential. As the
market for Wi-Fi develops, wireless carriers have become concerned about the
competitive impact on their business when municipalities offer broadband services over
Wi-Fi. Responding to lobbing efforts by telecommunications companies , several states
have passed laws prohibiting or limiting local governments’ ability to provide
broadband service to residents. A bill to restrict municipal communications services,
H.R. 2726 (Representative Sessions), has been introduced in the 109th Congress.
This report will be updated.
Congressional Research Service ˜ The Library of Congress

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Wireless Technology: Development and Demand
In order to deploy third-generation (3G) and other advanced wireless technologies,
telecommunications carriers and their suppliers are seeking effective strategies to move
to new standards, upgrade infrastructure, and develop software for new services. This
migration path includes decisions about using spectrum.
Radio frequency (RF) spectrum is used for all wireless communications. It is
managed by the Federal Communications Commission (FCC) for commercial and other
non-federal uses and by the National Telecommunications and Information
Administration (NTIA) for federal government use. International use is facilitated by
numerous bilateral and multilateral agreements covering many aspects of usage, including
mobile telephony. Spectrum is segmented into bands of radio frequencies and typically
measured in cycles per second, or hertz.1
Spectrum bandwidth is a finite resource that is infinitely re-usable. Commercial
wireless communications currently rely on bandwidth within a narrow range.2 American
competitiveness in advanced wireless technology may be constrained by the limited
amount of exploitable bandwidth that is available. This constraint is both specific, in the
inherent finiteness of useful spectrum, and relative, in comparison to the amount of
spectrum available for commercial use in other countries. Developments in technology
have in the past facilitated the more efficient use of bandwidth within a given portion of
the spectrum. New technologies, such as Software-Defined Radio (SDR) and “smart”
antennae for terrestrial wireless, are being explored and implemented to increase the
efficiency of spectrum and to expand its usable range.
Technology Development. Mobile communications became generally available
to businesses and consumers in the 1980s. This “first generation” technology, still in use,
is analog, the prevailing telecommunications technology of the time. Second generation
(2G) wireless devices are characterized by digitized delivery systems that provide
qualitatively better delivery of voice and small amounts of data, such as caller ID. The
next major advance in mobile technology is referred to as the third generation — 3G —
because it represents significant advances over the analog and digital services that
characterize current cellular phone technology. A dramatic increase in communications
speed is the most important technical feature of 3G.3
Wireless communications services have grown significantly worldwide, and
explosively in some countries. Consumer demand for wireless telephony in the United
States has soared in recent years, totaling over 190 million mobile phone subscribers in
1 One million hertz = 1 megahertz (MHZ); 1 billion hertz = 1 gigahertz (GHz).
2 The FCC limits consideration of bandwidth available for 3G to frequencies below 3 GHz.
3 The Federal Communications Commission (FCC) identifies key service attributes and
capabilities of 3G as the following: capability to support circuit and packet data at high bit rates;
interoperability and roaming; common billing and user profiles; capability to determine and
report geographic position of mobiles; support of multimedia services; and capabilities such as
“bandwidth on demand.” 3G speeds are: 144 kilobits per second at vehicular traffic speeds; 384
kilobits for pedestrian traffic; 2 megabits or higher for indoor traffic, [http://www.fcc.gov/3G].
Viewed June 8, 2005.

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June 2004.4 In approximately the same time frame, use of the Internet expanded
dramatically from an arcane tool for specialized research to a popularized, user-friendly
service providing near instant access to information and entertainment. Wireless Internet
is widely expected to redefine how computers are used in the future. 3G technologies
bring the wireless Internet revolution to cell phones. Business and consumer demand for
new, advanced wireless services — including 3G and Local Area Networks (LANS), such
as those using Wi-Fi ( wireless fidelity) — is considered by many to be an engine for
future growth in American and global economies.
Third-generation and future developments in wireless technology will be able to
support many services for business and consumer markets, such as: enhanced Internet
links, digital television and radio broadcast reception, high-quality streaming video, and
mobile commerce (m-commerce) — including the ability to make payments
Wi-Fi
Wireless Local Area Networks (W-LANs) operate on unlicenced spectrum, using
radio frequencies in the free 2.4 GHz and 5.4/5.7GHz spectrum bands. A group of
standards for frequency use in these bands is known as the 802.11 family. The 802.11b
standard is currently the most widely used and is commonly referred to as Wi-Fi, for
wireless fidelity. Wi-Fi provides high-speed Internet access for personal computers and
Personal Digital Assistants (PDAs) and is also widely used by businesses to link
computer-based communications within a local area. Links are connected to a high-speed
wireline (landline) either at a business location or through HotSpots. HotSpots are
typically located in homes or convenient public locations, including many airports and
café environments such as Starbucks. Another standard for wireless Internet is
Bluetooth, which has a shorter range than Wi-Fi but works well in cell phones. Bluetooth
handles both voice and data; Wi-Fi is mostly data but also supports Voice over Internet
pPotocol (VoIP) calls, sometimes known as VoWiFi..
Municipal Deployment of Broadband. The Telecommunications Act of 1996
was intended, among other purposes, to foster and encourage competition among
providers of telecommunications services. In the act, Congress barred states from
“prohibiting the ability of any entity to provide any interstate or intrastate
telecommunications service.”5 Some states have in recent years passed laws that prohibit
or limit local governments from providing telecommunications services. An effort to
challenge such a law in Missouri by municipalities offering local communications
services in the state was heard before the U.S. Supreme Court in 2004.6 The Court ruled
that “entity” was not specific enough to include state political divisions. If Congress
wished to specifically protect both public and private entities, they could do so by
amending the language of the law. This decision, and the steady improvement in
broadband communications technologies that municipalities wish to have available in
their communities, have provided fuel for a policy debate about access to broadband
services. The central debate is whether municipal broadband services are part of essential
4 Statistic updated regularly at [http://www.ctia.org].
5 47 U.S.C. 253 (a).
6 U.S. Supreme Court, Docket Number 02-1238.

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infrastructure — like electrical power or water — with many benefits, including stimulus
to the local economy, or whether they provide unfair competition that distorts the
marketplace and discourages commercial companies from investing in broadband
technologies.
The two main broadband technologies that are particularly attractive to communities,
in part because they support existing community services such as Internet access for
schools and communications for public safety, are fiber-optic-based networks and
wireless access. The spread of wireless access to the Internet, commonly referred to as
Wi-Fi, and anticipated advances in wireless technology are modifying the business case
for broadband. Networks that depend on a fiber-optic cable backbone are capital-
intensive and usually most profitable in high-density urban areas. A number of rural
communities have used their resources to install fiber-optic broadband services in part
because they were too small a market to interest for-profit companies. The technology
for Wi-Fi costs less and has a wider geographic reach, broadening the size of potential
markets for broadband. Therefore, although the arguments pro and con about the
municipal provision of broadband applies generally to all types of broadband services,
it is the long-term profit potential of Wi-Fi and its successor technologies that are
apparently spurring commercial wireless service providers to lobby against municipal
competition. In particular, the fact that urban areas are creating Wi-Fi networks and
providing, among other services, free access to HotSpots (wireless links to the Internet)
is viewed as a threat to commercial companies and a form of unfair competition.
Municipalities around the world have installed free Wi-Fi zones, including New York and
Chicago; one is planned for the entire city of Philadelphia The cities argue that generally
available access to the Internet through wireless connections has become an urban
amenity, arguably a necessity in sustaining and developing the local economy. Municipal
Wi-Fi also provides the opportunity to improve social services and Internet access in
disadvantaged communities that often are not served by fiber optic networks.
The fierce debate around public-sector provision of what some consider to be a
private-sector service is expected to continue unabated. Increasingly, Congress can
expect pressure from advocates from both sides to clarify the language of Section 243
or to take some other action that resolves the issue.
Policy Considerations in the 109th Congress
The continued growth in demand for bandwidth for private and public sector use is
one of the factors prompting Congress to review the policies and laws that guide the
management of this resource. Areas of debate include the role of auctions in allocating
spectrum,7 the transition to digital television,8 and the availability of spectrum to support
public safety communications and interoperability.9 It is possible that these issues will
7 See CRS Report RL31764, Spectrum Management: Auctions and CRS Report RS21508,
Spectrum Management and Special Funds.
8 See CRS Report RL32622, Public Safety, Interoperability and the Transition to Digital
Television.
9 See CRS Report RL32594, Public Safety Communications: Policy, Proposals, Legislation and
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conflate and be treated together in a single bill or be included in various other initiatives
for telecommunications reform under consideration by the 109th Congress. For example,
the Preserving Innovation in Telecom Act (H.R. 2726, Representative Sessions) would
amend the Communications Act of 1934 to prohibit states and local governments from
providing telecommunications, information services, or cable in any geographic area in
which a similar service is offered by a private sector company.
9 (...continued)
Progress.

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