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41
NII 2000: The Wireless Perspective
Mary Madigan
Personal Communications Industry Association
Abstract
As a key component of the national information infrastructure
(NII), the mobile nature of wireless communications provides
consumers with the opportunity to access the NII from any place at
any time. Today, as the Federal Communications Commission (FCC)
makes available new spectrum for wireless networks that will
support a range of new services, both voice and data, wireless
communications is poised on the brink of a new era.
However, new spectrum leads to new entrants, and wireless
companies of the future will face a much more competitive
marketplace. This competition will mean great things to the
American consumer, who will benefit from the innovation and lower
prices that the increased competitiveness will spark.
With the introduction of more competition into the
telecommunications marketplace, public policy decisions need to be
crafted to ensure that this vision of a wireless future can be
realized.
Introduction
For the wireless communications industry, 1994 was a banner year
as the FCC launched the first set of spectrum auctions for the
narrowband and broadband PCS, giving birth to a whole new
era—the era of personal communications.
The vision of PCS is the concept of anytime, anywhere
communications—whether that be data communications, voice
communications, or both. But what is the real potential for this
marketplace? How many individuals are likely to buy into the vision
of anytime, anywhere communications?
In early 1995, the Personal Communications Industry Association
(PCIA) completed a survey of PCIA members to evaluate the growth,
composition, and characteristics of the existing and future
personal communications industry and published the results in a PCS
Market Demand Forecast. The results indicate that by 2000, combined
demand for new PCS, cellular, and paging and narrowband PCS will
amount to almost 118 million subscriptions.
To meet this level of demand in the marketplace, the wireless
industry must be assured that it will be able to deploy services in
a timely fashion. Issues such as site acquisition and
interconnection to the local exchange carriers are critical to
timely deployment of developing wireless networks and competing
effectively. Government must assure that the industry has the
opportunity to meet the anticipated demand outlined in the PCS
Market Demand Forecast by ensuring a level playing field for all
wireless telecommunications service providers and by allowing,
where appropriate, competition—not regulation—to govern
the marketplace.
Personal Communications Industry
Association
Established in 1949, PCIA has been instrumental in advancing
regulatory policies, legislation, and technical standards that have
helped launch the age of personal communications services. Through
many vehicles—policy boards, market forecasts, publications,
spectrum management programs, seminars, technician
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certification programs, and its industry trade show, the
Personal Communications Showcase—PCIA is committed to
maintaining its position as the association for the PCS
industry.
PCIA's member companies include PCS licensees and those involved
in the cellular, paging, ESMR, SMR, mobile data, cable, computer,
manufacturing, and local and interexchange sectors of the industry,
as well as private corporate systems users, wireless system
integrators, communication site owners, distributors and service
professionals, and technicians.
Personal Communication Service
Personal communication service includes a broad range of
telecommunications services that enable people and devices to
communicate independent of location. PCS networks and devices
operate over a wide range of frequencies assigned and authorized by
the FCC. There are currently seven different air interface
technologies proposed for standardization for the new PCS licensees
that will be operating in the 1.8 GHz band. Service providers that
will be operating at these frequencies either are new entrants with
no established network or are existing telecommunications service
providers, such as cable, cellular, local exchange, and
long-distance carriers. With the technology choices companies make
over the next few months, there will need to be analysis of how and
to what extent the various wireless and wireline networks will work
together.
Interoperability and Interworking
To facilitate roaming among PCS carriers, some degree of
interoperability and interworking needs to be accomplished between
the networks. PCIA defines interoperability and interworking as
follows:
•
Interoperability. The ability to logically
connect two or more functional network elements for the purposes of
supporting shared processes such as call delivery. Service
interoperability is defined as the assurance that a service invoked
by a subscriber in a network will be performed by the other network
in the same way from a user perspective. Network interoperability
is defined as the direct one-to-one mapping of services and
protocols between interconnected networks. For example, a
subscriber may invoke call waiting features exactly the same way in
a DCS 1900 (GSM based) network in New York City as in a DCS 1900
(GSM based) network in San Francisco. In this scenario, call
waiting network protocol messages map between the two networks on a
direct one-to-one basis.
•
Interworking. The ability to translate
between two or more dissimilar networks for the purpose of
achieving effective interoperability. Service interworking is
defined as the protocol translation that may or may not result in
the service being performed in the receiving network in the same
way from a user perspective. Network interworking is defined as
functional mapping of services and protocols across networks (some
services may not be delivered or may be delivered in a different
way). For example, a subscriber with a PCS 2000 (Composite
CDMA/TDMA) wireless personal terminal may register and authenticate
on a San Francisco IS-41 based network, just as he or she could on
a home base, DCS 1900 (GSM based) network in New York City.
Although the method of registering may not be identical between
systems, the end result is effectively the same—the subscriber
can be registered and authenticated on both networks, and location
services work across both platforms.
Standards should be developed and are currently being worked on
in domestic and international standards bodies to facilitate
features and services delivered consistently and in similar
fashions to an end user, regardless of the air interface and/or
network implementation used. All networks do not necessarily need
to interoperate or interwork with every other network; those
decisions will be made on a company-by-company basis. But the
industry is working to make sure that if that choice is made, the
technology will be available to support it.
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Market Forecast
Since 1992, PCIA has regularly surveyed wireless communications
industry leaders to evaluate the growth, composition, and
characteristics of the future of the personal communications
industry and has published these results in a PCS Market Demand
Forecast. In its yearly surveys, PCIA has asked respondents to
provide market size predictions in terms of the number of
anticipated subscriptions, not subscribers, anticipating that an
individual would probably subscribe to more than one type of
wireless service in the coming decade. As in previous years, the
1995 figures show that consumer demand for personal communications
services is expected to grow at ever-increasing rates.
Demand growth for new broadband PCS customers is expected to
reach 15 million subscriptions by 2000. Total revenues are expected
to reach $8.8 billion by the year 2000, with 7 percent of that
revenue coming from data services. Average revenue per subscription
is expected to be 20 percent less than that for cellular. Figures
for 2005 indicate strong sustained growth to almost 40 million
subscriptions and total revenues reaching $17.5 billion, with 12
percent from data services.
Established voice services such as cellular are expected to grow
as well. Respondents expect strong cellular growth during the next
5 years, with the 1994 year-end subscriber count of 23.2 million
expected to double to approximately 50 million subscriptions by
2000, with nearly 65 million cellular subscriptions expected by
2005. Thirty percent of the total cellular subscriptions are
expected to come from the business segment, representing a presumed
growth of the cellular markets into households over the next 10
years. Total cellular revenues are forecast to be approximately $26
billion by 2000 and $31 billion by 2005.
In the narrowband PCS arena, market size is expected to reach
more than 50 million subscriptions by 2000; by 2005, 71 million
one-way and 21 million two-way messaging subscriptions are
anticipated. In addition, survey results forecast strong growth
from new narrowband PCS and advanced one- and two-way messaging and
suggest that these will become established in the wireless world
over the next decade. Customer segments will grow due to new
narrowband applications and services. Survey results show that by
the year 2000, more than 50 percent of one-way and about 65 percent
of two-way subscribers are expected to be from business segments.
Assuming that businesses will continue to upgrade services, they
are expected to remain more than 50 percent of the total subscriber
base through the next decade. Total revenues are expected to reach
$4.7 billion for one-way paging and $1.9 billion for two-way paging
by 2000, and $5.6 billion and $3 billion, respectively, by
2005.
Deployment of the National Information
Infrastructure
Site Acquisition Issues
Acquiring PCS antenna and base station sites and gaining the
appropriate zoning approvals vary by state and local jurisdictions
and are important in wireless network deployment. Furthermore,
there are issues regarding site acquisition (such as FAA tower
regulations and the lack of a uniform policy regarding sites on
federal property) that need to be addressed at the federal
level.
Issues at the Local Level
There are more than 38,000 local jurisdictions throughout the
nation, each with the authority to prevent antenna construction;
establish standards that can result in site location degrading the
quality of service; or prolong site selection, thereby making it
unnecessarily expensive. With an estimated 100,000 new wireless
antenna sites predicted over the next 10 years, any licensing
obstacles present significant problems.
Congress has recognized the need to remove state and local
barriers to deploying CMRS facilities by prohibiting state and
local government regulation of matters relating to market entry and
rates. The current draft of the Senate's Telecommunications
Competition and Deregulation Act of 1995 states that no state or
local statute may prohibit or have the effect of prohibiting the
ability of any entity to provide interstate or intrastate
telecommunications services. It further states that if after notice
and comment the FCC determines that a state or
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local requirement is inconsistent with the legislation, the FCC
shall immediately preempt enforcement of the requirement.
CTIA filed a Petition for Rule Making requesting that the FCC
initiate a rule-making proceeding to preempt state and local
regulation of tower sites for CMRS. The petition states that the
state preemption language in Section 332(c) of the Communications
Act gives the Commission authority to exercise such preemption,
since local zoning could constitute an ''indirect" regulation of
entry.
Comments on the Petition for Rule Making were due in February
1995. Predictably, service providers filed in support of the
petition, while state and local governments and consumer groups
filed in opposition. The challenge the wireless industry faces is
balancing the recognized needs of the local community to have
oversight and fee administration of zoning issues against attempts
to meet the ever-increasing demand for new wireless services.
Additionally, the FCC has imposed build-out requirements on the
new PCS licensees which mandate that certain percentages of the
licensees' markets be covered within set time frames. Potential
conflicts between state and federal regulations threaten to delay
the entry of wireless services.
Site Acquisitions on Federal
Property
Federal property could, in many situations, provide prime
locations for PCS base stations. Unfortunately, many agencies of
the federal government are not willing or are unable to entertain
the prospect of such facilities because of perceived administrative
burdens, lack of benefit to local agency staff, or lack of clear
policy or regulations for leasing of federal property for such an
installation. Additionally, all of the federal agencies that allow
private communications facilities on their land have different
regulations, lease documents, and processes for doing so. These are
often difficult, time consuming, and expensive for both the agency
and the communications companies.
Making sure federal land resources continue to be available for
efficient delivery of mobile communications services, and ensuring
that taxpayers receive a fair price from every communications
company with transmitters on public lands, are goals shared by
industry, the federal agencies, and the public. However, there
needs to be a consistent, government-wide approach for managing the
site acquisition process on federal property.
The Executive Branch needs to set a clear directive in order to
overcome the obstacles wireless licensees face when trying to
acquire sites on federal property. The benefits to the federal
government could include increased revenues from the installation
of PCS networks above and beyond the auction proceeds, and the
potential for improved communications on federal property.
FAA Tower Review Process
PCIA has initiated discussions with the Federal Aviation
Administration (FAA) to remove any possible FAA obstacles to
efficient deployment of PCS systems. The FCC has established
licensing rules that have streamlined the approval necessary to
bring systems and PCS cell sites on line. However, due to
administrative limitations, the FAA, which must review many
requests for towers to ensure air safety, has experienced longer
processing times that have delayed carriers' ability to activate
certain transmitter sites. With approximately 25 to 30 percent of
new wireless sites requiring FAA action and review, PCIA fears that
FAA processing delays could significantly burden the industry.
Working groups at the national and local levels have been
established as a forum to explore methods of educating the industry
about FAA procedures and to explore ways to streamline the FAA
tower review process.
The FAA, FCC, PCIA, and the Cellular Telecommunications Industry
Association (CTIA) have all agreed to participate in this dialogue
as part of an antenna work group (AWG) in Washington, D.C. PCIA has
also participated in dialogues with the FAA Southern Region and
will be working on a local level in other working groups to
identify ways to improve the FAA process.
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Federal Radio Frequency Emissions
Standard
As PCS, cellular, paging, and other wireless carriers build out
networks, they are increasingly facing state and local laws and
ordinances based on radio frequency (RF) exposure levels, often
with conflicting scope and standards, resulting in compliance
difficulties. Conflicting standards affect the range of wireless
services and can greatly diminish the quality of service consumers
receive. This adds greatly to the expense borne by the industry,
not only in legal and other business expenses, but also in lost
revenue opportunities from long delays in providing services.
The FCC has the authority to preempt local jurisdictions on
cell/antenna/tower siting but to date has approached this issue on
a case-by-case basis. With as many as 100,000 new wireless sites to
be installed, including new PCS sites, and additional sites that
will be needed for the expansion and enhancement of service areas
for paging, SMR, ESMR, and cellular service, a case-by-case
approach to preemption is no longer realistic.
The FCC on April 3, 1993, issued its Notice of Proposed Rule
Making, which proposed updating guidelines and methods for
evaluating the environmental effects of electromagnetic exposure,
and adopting the standard developed by the American National
Standards Institute (ANSI) with the Institute of Electrical and
Electronic Engineers (IEEE). In December 1994, the Spectrum
Engineering Division of the Office of Engineering and Technology of
the FCC issued information indicating that levels of exposure to RF
at ground level below typical cellular towers are hundreds to
thousands of times lower than the proposed standard.
On December 22, 1994, the Electromagnetic Energy Association
(EEA) filed a petition with the FCC for a Further Notice of
Proposed Rule Making. The petition requested that the FCC preempt
state and local regulation of RF exposure levels found to be
inconsistent with the FCC proposed ANSI standard.
PCIA favors the establishment of a single, national RF emissions
standard that may not be exceeded by local regulations. PCIA
encourages the relevant federal agencies to work cooperatively with
industry on this issue to develop such a national standard.
Interconnection
Interconnection with Local Exchange
Carriers
Negotiating reasonable rights, rates, and terms under which
companies will interconnect with other networks is critical to the
success of PCS. With many PCS hopefuls eyeing the local exchange
market as a potentially lucrative area in which to compete, the
terms of companies' interconnection agreements as a co-carrier will
become even more important as they strive to compete with local
exchange carriers (LECs), and therefore they will need reasonable
interconnection agreements so that they can offer customers
low-cost exchange service.
As an example of current interconnection costs, Type 2
interconnection charges for cellular carriers generally are
measured on a per-minute basis, with costs ranging from 2 cents per
minute to 6 cents per minute, and 3 cents per minute often being
considered a "good" interconnection rate.
Interconnection charges have diminished cellular carriers'
revenues since the first system came on line, and they remain a
high cost to carriers today. Take, for example, a cellular monthly
bill of $59, which includes 86 minutes of air time, at the rate of
3 cents per minute for interconnection. Interconnection charges
represent $2.58 of the bill, or 4.37 percent of revenue.
As air time costs continue to decline in the wireless
marketplace, interconnection costs will begin to reduce revenues
even more. For example, Cybertel Cellular offers 5 cents per minute
of air time in Kauai to compete with the local exchange carrier. At
an interconnection rate of 3 cents per minute, interconnection
charges could consume 60 percent of the carrier's air time
revenue.
Obviously, those wishing to compete at the local loop must
achieve lower interconnection costs to compete with established
carriers on price. One solution to this problem is mutual
compensation, where both telecommunications carriers are
compensated for the traffic that terminates on their network.
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Mutual Compensation
Mutual compensation is the concept that a carrier should be
compensated for traffic that originates on another network but
terminates on that carrier's network, and vice versa. Currently,
wireless carriers must compensate wireline carriers for traffic
that originates on a wireless network and terminates on a wireline
network. Almost without exception, wireline carriers do not
compensate wireless carriers for traffic originating on a wireline
network and terminating on a wireless network.
The FCC has repeatedly stated that, for interstate traffic,
wireline carriers must compensate wireless carriers for traffic
originating on a wireline network and terminating on a wireless
network. However, states have been reluctant to enforce mutual
compensation on an intrastate basis, and therefore wireline
carriers have refused to participate in mutual compensation on
either an intra- or interstate basis.
Enforcement of mutual compensation rights of wireless carriers
is considered to be a key to full competition by wireless carriers
in the telecommunications market and will have a significant
positive financial impact for the wireless industry.
One potential solution to the high cost of interconnection would
be mandating mutual compensation through reciprocal elimination of
interconnection charges. One example of this solution is the
agreement reached in New York between Time Warner and Rochester
Telephone, whereby Rochester Telephone will collect 2.2 cents per
minute for traffic terminating on its network and pay at the same
rate for its own traffic terminating on other networks. According
to the agreement, mutual compensation provisions are eliminated
when the traffic flow differentials fall below 10 percent.
Numbering Issues
The issue of who controls numbers is key to the success of PCS
carriers. Traditionally, most national numbering resources have
been assigned by the North American Numbering Plan Administration
sponsored by Bellcore, which in turn is owned by the Bell operating
companies. Generally, the dominant local exchange carrier ends up
assigning numbers to wireless carriers in its local telephone
market. Wireless carriers usually are charged for activating blocks
of numbers in local exchange carrier networks, and the charges vary
greatly.
Recently, Bellcore has come under scrutiny for its
administration of numbering resources, and actions by wireline
carriers within the past few months have brought the issue to the
forefront. For instance, in Chicago, Ameritech proposed an
"overlay" area code. This would require cellular and paging
subscribers to give back their numbers and receive a new area code,
thus freeing up numbers in the almost-exhausted code for new
wireline subscribers. At a January FCC open meeting, the FCC found
this proposal to be "unreasonably discriminatory" against wireless
carriers.
The FCC initiated a proceeding more than a year ago to examine
whether an independent entity should oversee the assignment of
numbers, and it appears as if the Senate telecommunications reform
effort might mandate the formation of an independent entity to
oversee the numbering assignment process.
Number Portability
Another key issue for those who want to compete with the local
telephone company is number portability, or the ability of an end
user, such as an individual or business, to retain its 10-digit
geographic North American Numbering Plan (NANP) number—even if
the end user changes its service provider, the telecommunications
service with which the number is associated, or its permanent
geographic location.
With few exceptions, today end users may not retain their
10-digit NANP number if they:
•
Switch service providers, referred to as "service
provider portability" (e.g., a user switches from an incumbent LEC
to a new competitive access provider);
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•
Change the service to which the number was
originally assigned, referred to as "service portability" (e.g., a
cellular telephone number becomes the wireline home telephone
number);
•
Change their permanent location, referred to as
"geographic portability" (e.g., an end user moves to a different
part of the city or state, and may be assigned either a new 7-digit
phone number in the old area code or a new 10-digit number in a new
area code).
Service provider portability, that is, moving a number from one
service provider to another, is vital for those companies that wish
to compete for customers at the local exchange level. It is much
easier to gain market share if the customer a company is trying to
attract does not have to change his or her phone number when
changing service providers.
Currently, 800 numbers are portable between 800 number service
providers—an example of service provider portability. This
portability allows the 800 service end user to retain his or her
individual 800 number, even when switching 800 service providers.
Portability of 800 numbers was ordered by the FCC and implemented
in 1993.
Industry Efforts to Address Number
Portability
The Industry Numbering Committee (INC), a consensus-based
industry body sponsored by the Inter-Carriers Compatibility Forum
(ICCF), has been actively addressing number portability issues
since the fall of 1993. The INC Number Portability Workshop has
been addressing a range of issues associated with number
portability, including a target portability architecture, network
impacts of number portability, and high-level policy issues such as
mandated interconnection.
Public Service Obligations
The advent of increased mobility is having an impact on
telecommunications public policy. How does wireless technology fit
into public policy initiatives such as universal service and access
to enhanced 911 emergency calling services? Policies regarding
universal service were developed to apply to a strictly wireline
environment where competition at the local level was nonexistent.
Additionally, wireless technologies present a challenge to the
traditional wireline approach to providing enhanced 911 emergency
calling. As wireless service providers begin to compete for the
local loop, how wireless fits into such public policy provisions
will need to be seriously considered.
Universal Service
Universal service, as a public policy concept, is the belief
that access to basic telephone services by the widest possible
cross section of the American public is in the social and economic
interests of the United States. Over a period of many years,
Congress has mandated the creation of universal service programs to
support universal service public policy goals. The FCC is charged
with fulfilling these congressional mandates.
Within the telecommunications industry, universal service refers
to a complex system of explicit and implicit charges and cost
allocation mechanisms levied on particular carriers and customers
in order to provide access to, and subsidize the rates of, basic
wireline services for residential customers, high-cost customers
and carriers, low-income customers, rural areas, and services for
hearing- and speech-impaired consumers.
Estimates of the current total costs of supporting universal
service goals and policies range as high as $20 billion to $30
billion annually. Congress is intent upon reform of universal
service policy and funding mechanisms as part of its effort to
reform existing telecommunications law. Any reforms could have a
potentially huge economic impact upon the wireless industry.
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Universal service reform is a critical part of
telecommunications reform and it appears inevitable if Congress
passes a telecommunications reform bill. Although it is too early
to tell what shape universal service will take, a number of issues
need to be considered.
Wireless Access to Enhanced 911
Emergency Services
The FCC, on October 19, 1994, released a Notice of Proposed Rule
Making (NPRM) regarding revision of the Commission's rules to
ensure compatibility with enhanced 911 (E-911) emergency services.
In many areas of the country, wireline subscribers are provided
E-911 service by wireline carriers, which entails transmitting the
address and phone number of the caller to the public safety
answering point. The NPRM addresses PBX issues and wireless service
provider issues. The NPRM outlines proposed requirements on
wireless services regarding:
•
911 availability;
•
Grade of service;
•
Privacy;
•
Re-ring/call back;
•
Grade of service;
•
Liability;
•
Cost recovery;
•
Access to text telephone devices (TTY);
•
Equipment manufacture, importation, and
labeling;
•
User location information;
•
Compatibility with network services;
•
Common channel signaling; and
•
Federal preemption.
The proposed requirements have considerable technical and
economic implications that need to be fully examined. PCIA, in
cooperation with representatives of the public safety community,
drafted the Joint PCIA, APCO, NASNA Emergency Access Position
Paper, which was filed with the FCC in July 1994. This joint
paper documented the first attempt of the PCS community to
comprehensively address the needs of the public safety community.
The FCC used the joint paper as a basis for its NPRM addressing
enhanced 911 emergency calling systems.
PCIA fully shares the Commission's important objective of
maximizing compatibility between wireless services and enhanced 911
emergency calling systems. Specifically, it concurs that
subscribers to real-time voice services interconnected with the
public switched telephone network ultimately should enjoy the same
access to advanced emergency response services as do wireline
service subscribers, with due consideration for the unique
characteristics of radio-based technology. At the same time,
however, PCIA strongly disagrees with the approach toward
achievement of the compatibility objective that is set forth in the
NPRM.
PCIA believes that full-scale regulatory intervention is not
necessary at this time and that the profound technical issues
raised by compatibility cannot be resolved through imposition of
arbitrary deadlines as proposed in the NPRM. PCIA proposes, as an
alternative to arbitrary deadlines, that the industry work to
develop technical solutions to the public safety community's
requirements and that the FCC require periodic reports from the
industry on its progress in meeting the ultimate goals the FCC has
set forth.
Conclusions
The fact that the NII is a complex web of wireline and wireless
service providers providing both voice and data services to the end
user at home, in the office, and walking or driving down the street
needs to be considered in any telecommunications policy initiative.
The new wave of wireless service providers, while providing the
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consumer with more choices in services and features than ever
before, presents a challenge to the public policymaker who tries to
determine how to ensure that telecommunications services are made
available to the broadest range of consumers. Competition will take
care of that to a certain extent. However, where appropriate,
government may need to step in on issues such as interconnection
rights, mutual compensation, and numbering to ensure that new
entrants are treated as equals by incumbent carriers. Furthermore,
revision of universal service and enhanced 911 policies needs to
take into consideration both the wireless and the wireline
industries.
Additionally, the wireless industry is often faced with federal
and state regulatory processes that can slow down the deployment of
new networks. Federal guidelines regarding site acquisition and
radio frequency emissions are necessary to ensure timely
availability of new services. There continues to be a high demand
for wireless services, and the industry is poised to meet that
demand. However, public policy should be developed such that the
promise of wireless services as an integral component of the NII is
realized.
Notes
1. The Composite CDMA/TDMA system is an
air interface technology currently being standardized for PCS in
the 1.8-GHz band.
2. Broadband PCS refers to the family of
mobile or portable radio services operating in the 1.8-GHz range
and providing a wide variety of innovative digital voice and data
services.
3. Narrowband PCS services are expected to
include advanced voice paging, two-way acknowledgment paging, data
messaging, and both one-way and two-way messaging.
Representative terms from entire chapter:
universal service
