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 1996 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.


According to Web-Counter, this article has been accessed times since Nov 3, 1995.





 

AUCTIONING THE AIRWAVES



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?


#####