WIRELESS WEB WORKSHOP
Opening Remarks Panel Number 1 Panel Number 2 Panel Number 3 Panel Number 4 FEDERAL TRADE COMMISSION THE MOBILE WIRELESS WEB, DATA SERVICES & BEYOND: Emerging Technologies & Consumer Issues Monday, December 11, 2000 CONFERENCE PROCEEDINGS VOLUME 1 PROCEEDINGS - - - - - MR. WINSTON: Well, Good afternoon, everyone, and welcome to the FTC's wireless workshop. I'm glad to see so many people here who have survived walking across Pennsylvania Avenue, which is a challenge in and of itself. I'm Joel Winston, I'm the Acting Associate Director for Financial Practices at the FTC, and I'm looking forward to a good day and a half on wireless technology. As we enter the wireless age, I think this workshop is a very timely and important one. It's an opportunity for all of us to learn more about this exciting new technology and about the consumer issues it raises. It follows in the footsteps of a number of other recent FTC workshops we have had on technology and consumer issues, including the issue of online privacy. We're very fortunate today and tomorrow to have an exemplary group of speakers and panelists who will share their knowledge and insight with you over the next day and a half. First I would like to introduce Robert Pitofsky, who has served as the Chairman of the Federal Trade Commission for the last five years. This is Chairman Pitofsky's third stint at the FTC, having previously served as a Commissioner and Bureau Director of the Bureau of Consumer Protection. I'm sure you know that Chairman Pitofsky has had a very distinguished career in antitrust and trade regulation and is widely recognized as one of the nation's foremost scholars in this field. I could stand here for a long time and extol Chairman Pitofsky's virtues, but let me just say one thing that comes from a profile in today's New York Times of Chairman Pitofsky, a very good profile, and I think there's one sentence in here that really sums it up. The Times says that, "Mr. Pitofsky has been a central player i the transformation of the agency from what was known as the little old lady of Pennsylvania Avenue to a formidable institution that is the leading regulatory body of Internet and consumer issues, as well as one of Washington's two antitrust enforcers." I think that's a pretty good summary. Chairman Pitofsky? (Applause.) CHAIRMAN PITOFSKY: Thank you very much, Joel, and welcome to all of you, I add my welcome to this mobile wireless web workshop, the latest in a series of workshops that the FTC has been holding in recent years. In 1995, we held an extensive set of hearings on globalization and the impact of technological innovation on competition and on consumers, and since then we've held workshops on online privacy, advertising disclosures and new media, online dispute resolution, global electronic commerce, business-to-business electronic marketplaces and so forth, and I'm especially pleased about that. It is in the tradition of what this place really was designed to be, not just a law enforcement agency but an agency that met with business leaders, consumers, academics, and other government agencies and tried to anticipate important economic trends, and I think that's certainly what we're trying to do. This time we explore the wireless data services sector of the economy, a new technology that has been heralded as allowing people to communicate and gain access to information when they want, where they want and how they want. I understand that some industry analysts predict that over the next five years, mobile commerce and wireless data services, including Internet services, access to wireless devices, will grow at an even more rapid pace than electronic commerce and the Internet did over the last five years, which itself is amazing. A few examples of what this wireless technology could be about. It's the eve of the holiday and you decide to do some last-minute shopping. As you walk into a mall, your all-in-one cell phone, pager and digital assistant rings with a message. Your phone talks to you and says, "Doing some last-minute shopping? Stop by the gift shop next to the food court and give the cashier this number and you'll receive 25 percent off your next purchase." You find a parking space on the street outside your favorite store, and then you realize that you don't have the right change. Not a problem, you take out your cell phone, dial a number, point it at the meter and enter the amount and the time that you want to keep this space, and the cost is automatically deducted from some account you have elsewhere. After a full day of shopping, you decide to grab a cup of coffee. With a buddy list on your smart phone, friends and family within a five-block radius can be alerted to your location in case they want to stop by and chat. I'm not so sure about that one. I mean, it's not an unmitigated virtue, all this technology, I mean, whatever happened to a quiet cup of coffee? But all these examples make clear the benefits of mobile commerce for business and for consumers. They are potentially enormous but like other high-tech developments, they can be good and bad. They can be profoundly pro-consumer, but there are risks involved. If people can be located any time they use wireless technology, is that a good thing? Well, in some respects it is, but I'm reminded of Professor Larry Tribe's comment somewhere, I think it's in his treatise, that part of human dignity is the ability to hide. We also want to educate ourselves and other interested parties about these emerging technologies and the implications for consumers. Toward that end, we have, as has become our tradition recently, brought together industry representatives, privacy advocates, consumer advocates, government officials and researchers to explore three fundamental questions. First, where is wireless Internet and data technology today, and where is it going? What types of relationships will consumers have with this new equipment and with various providers of wireless and data services? Critically, will consumers' wireless data services be supported by advertising, as many Internet sites are, or will consumers pay separately for these services? Second, what privacy and security issues do wireless devices raise? For example, how will location information be used? Is transmission of personal information secure in this wireless media? As wireless devices converge so that cell phones, personal digital assistants, electronic wallets become a single device, what are the risks of identity theft -- are they increased and what security measures are possible? Third, what forms will wireless advertising take? How can companies make effective advertising and privacy disclosures on small screens? How do traditional concepts like clear and conspicuous and equal prominence apply with respect to this new medium? Obviously there's a great deal to cover over the next several days and a lot for us to learn and I hope to learn from each other. In providing a forum for discussion of the privacy, security and consumer protection issues raised by these new technologies, we hope the FTC can facilitate the dialogue among the various interested constituencies. In the best traditions of this agency, we look forward to exploring these complex and fascinating issues with all of you. Thank you. (Applause.) MR. WINSTON: Why don't we have the first set of panelists come up to the table. Before we begin, one request, which may seem a little ironic, but if you could turn off your wireless devices so we don't have all this beeping going on, thank you. Our first series of presentations concerns wireless technology. First we will have Walt Mossberg of The Wall Street Journal to tell us where technology is today. Next, Bill Bodin of IBM's Pervasive Computing Lab will show us where wireless technology may be heading in the not-too-distant future. Then last, we'll have Danny Weitzner of the World Wide Web Consortium explain some of the mechanics of the wireless web, to give some of us without a technical background some context and some vocabulary on the discussion that will follow the next day and a half. Now, some ground rules. After the three presentations are completed, we should have at least 15 minutes or so for questions from the audience. Those who are in the overflow rooms, hopefully you can hear me, who would like to ask a question should come downstairs to this room, 432, where we will have some microphones set up in the hallway and you can ask questions, in the doorway there. You might want to come down around 2:15 or so. Now, as many of you probably know, Walt Mossberg is the author and creator of the weekly Personal Technology column in The Wall Street Journal and is a contributing editor to the Journal's monthly magazine, Smart Money. Walt is the source that consumers and industry insiders go to for the straight scoop on technology. Walt? (Applause.) MR. MOSSBERG: Well, thanks, Joel. I'm sorry to start off by disappointing people, and picking up on the Chairman's speech, I'm not an industry official, not a privacy advocate, not a government official, I'm just a newspaper reporter, and you are just going to have to settle for that in the next 20 minutes or so, but I can assure you of a few things. One, wireless communications, wireless data communications, are going to be incredibly important. Two, they will be incredibly important at a much later date than most of the people speaking to you at this conference and, indeed, on Wall Street and in the press say they will. Everything about it, every single thing about it, is being grossly over-hyped, just as was true of the Internet, is still true of the Internet, and even of the PC itself. Three, they will not work nearly as well as their manufacturers and service providers say they will. They will be a source of considerable frustration. They are today, and they will continue to be over at least the next four or five years. If you don't believe me, I would point out that even the older technology of wired and portable computing with no effort to do wireless Internet is still so inconvenient, so clumsy and so difficult that very few people in this room are taking notes on any electronic device. Danny, who's I'm sure a brilliant fellow and works in the heart of the world wide web and has a laptop is -- thank you, Danny, you knew just what I was going to say -- using a fountain pen, and when I attend the computer and Internet industry's most sacred inner circle, high-tech conferences, attended by people like Bill Gates and Steve Case and all these people and you give a talk like this and you look out over the room, 80 to 90 percent of the people are using pen and paper to take their notes, and that's -- these are just important cautions I want to leave with you. I would also say, picking up on the Chairman's point, there are many more qualified and in-depth privacy experts in the audience and certainly a lot more people from the industry. Based on the experience of the Internet, I will absolutely guarantee that the wireless Internet will be saturated with the worst sort of marketing pitches, worst both in terms of how annoying they are, how ineffective they are for the shareholders of the companies trying to market things, and how much they will clog the bandwidth, which, as you know, is very limited for the things you really want. This is true in every pixel of your computer today, and it will be true in the far more limited number of pixels on the screen of a wireless device. Well, what I am going to do in a very short time here is to try to talk about where we are and give you some context for thinking about this, and for those of you who read my column, and even those who don't, let me just explain that what I do is try to look at the state of what we have in technology, services, technologies and devices, for consumers and small businesses today and also out into the near future. I think it is folly, although I'm sure some will attempt it, to predict what will happen even as far out as five years, but I can certainly talk about the next year, year and a half. As a result, I get to see -- and have seen, in fact, as I stand here -- lots of the things that will not come on the market until the next six months or nine months or a year. They are brought to my office, I look at them, I try them out and so forth, and some of them I write about and some of them I like and some of them I hate. Everything I do is from the perspective of normal, nontechnical, mainstream consumers. So, from that perspective, where do we stand now on wireless? Well, let me start by giving you a way to think about the Internet that I think is a little different. The Internet is not an activity you perform on a box called a PC. In fact, we are just closing out the first year of the post-PC era. What do I mean by that? What I mean by that is we are just closing out the first year in which we see the introduction of a proliferation of devices that can do digital things, all of which have been performed only on this thing called the PC. We are going to see a massive diffusion of digital tasks, including Internet tasks, both in wired devices and in wireless devices. The best way I think to think about the Internet is to compare it to the electrical grid. In this room, God knows when this room was built, but in this room there are electrical outlets, I think, and there are electrical outlets in every room you will be in today, and I think we are gradually evolving into a situation where there will be sort of plugs into the Internet everywhere you go. Some of them will be physical, like ethernet jacks or telephone lines, and some of them will be virtual, think of it as a wireless plug into the Internet grid. Now, the electrical grid provides a certain kind of power to an innumerable array of devices. Some of them make toast; some of them wash dishes; some of them play music; some of them are PCs. I think that that's what the Internet is going to become and is rapidly in the process of becoming. There will be an innumerable array of devices that will take some portion, not everything, but some portion of the services and the information and the entertainment and the commerce opportunities that are afforded by the Internet and present them to you in a form that is convenient for where you are and what you are doing at that moment. You will still have something like a PC that will give you a more full-form experience at the cost of crashing every two or three hours. You will also have something like a phone with a small screen that will give you a very tiny amount of information that's appropriate and formatted for that screen, and you'll have lots of things in between. But when you go and plug an electrical device in today and you use it, when you made toast this morning, when you made coffee, when you used your hair dryer, you did not turn to whoever was with you and say, "Hey, I'm on the electrical grid." And this phrase we have now, "I'm on the Internet," will look as ridiculous and archaic as that in the next five years, I think, because everything you do with a powered device that has any kind of user interface, a screen or an audio interface, anything, will be informed by some extent by some sort of content or service provided over what we now call the Internet. So, when you turn on the television, a television program will have information and richness behind it that comes from the Internet, and you're not going to say, "I'm on the Internet." You're just going to think I'm watching television. And I'm not talking about the early WebTV idea of looking at sort of the web pages on the screen. I'm talking about television shows being enhanced. When you're on the phone, when you're doing many things, the Internet will be behind it. Part of this new spectrum of digital devices and services will be wireless, which is what we're here to talk about. Now, where we are today on wireless is that it is essentially in the United States an extremely bad, extremely limited service on extremely inappropriate and bad devices that cost a lot of money but is accompanied by, as I said a few minutes ago, unrelenting and unrealistic and ridiculous hype that is propagated by people who hope to make a lot of money by convincing you to buy the stuff. That is where we are today. Only a true techie geek or somebody who has invested in this is ever going to try to read an e-mail on this screen, and yet you can pick up any newspaper and any magazine and read articles that make it sound like this is not only cool, not only useful, but ubiquitous. It's not. There are millions, tens of millions probably phones in this country that are so-called web-enabled, but there are only thousands of people that use it. This is a web-enabled phone. Most of you probably have a web-enabled phone. I took a look at it once or twice, because it's my job. They pay me to do it. There's no way in the world I would scroll through these ridiculous menus to try to look up some piece of information which would then require me to constantly scroll to get the next bit of data at the hopelessly slow speeds we have in this country. So, I think today what we need is two or three important things. We need new devices. This is never talked about. Everybody talks about the networks and the services and the spectrum and the fees. We need new devices. This will not happen until we have new devices. This is a great voice device; in fact, this was a fairly advanced voice device. It's a very bad data device. And if I need to know what movie is playing somewhere, if I need to know what a stock is trading at, how low the Internet stocks have gone today -- and I have to assure you that one of the bad things a few years ago and one of the great things today is under the ethics policies of The Wall Street Journal, I have no shares of any technology company -- but if I want to know, the best thing for me to do is to hit the speed dial button on this phone which calls a service called Tell Me, which is free, which is a voice recognition and audio service that takes all this material from the Internet, and guess what, transfers it into what this device was made for, which is voice. On this particular device, that's the best way to get Internet information. Now, we have this. This is a Blackberry, the new Blackberry with the bigger screen, and this if I turned it on would be collecting my e-mail. It would be a little rude since I'd attempt to look at it here. It also can get the web. You can actually read a reasonable amount of an e-mail message on the thing. It's still slow, but at least the device is better. But I have got to carry both of these devices. This also has a calendar and appointment book, not as good as a Palm, much clumsier. What I really want is a Palm, about this size, that I can make phone calls on and can get this data. And there's a race on right now, there's a huge race on between the guys that make phones and the guys that make PDAs to try to create sort of hybrid devices. I'm covering this race. If you read my column, I review these things as they come out. There are a few of them that have come out. I have not seen one that's really great yet. I'm not personally convinced that we're going to have everybody carrying just one device, because people will have preferences. Some people -- I mean, you are not going to have a device this small that's a great data device, because the screen can't be very big on a device this small, but if you're primarily a phone call person, you may want to carry this. If you're primarily a data person, you may want to carry something like this with some phone capability that you occasionally use. The Handspring Visor is a device that is essentially a clone of the Palm, made by the people who developed the Palm, but it has an expansion slot in the back, and one of the things you can pop into that slot is a phone. It's just a small little phone. [Holding up Blackberry device.] When it pops in, this thing becomes a phone, and, of course, because it has an antenna, you can also get wireless data. So, now you have a device with the wonderful Palm interface that synchronizes well with your computer, get your calendar, get your appointments, you can make phone calls on it. You can also get the web and e-mail on it and so forth, and that will be an -- that's probably the best early effort to combine everything in a PDA format. The phone attachment I think will be out probably right toward the end of this year. I used it for a few weeks and wrote a fairly favorable review. The phone guys are fighting back with somewhat bigger phones that when you open the lid, you see sort of a regular phone window, but then you can do this and get a Palm-type screen, which can get all your web data. Kyocera, which has taken over the phone franchise from QualComm, will have a phone like that out in a few weeks. Sprint brought one out a few weeks ago that actually isn't very good, but they're working on it. So, there's a race, and there's going to be more of these devices coming. But even if we get the perfect device, we have the network problem, and the network problem, again, is the source of great hype. It's not going to be fixed nearly as fast as people hope, and here is the source of the greatest embarrassment technologically for the United States of America in the 23 years since the personal computer came out and maybe for long before that. We are now in a situation where we are behind Europe and behind Japan in a key consumer mainstream technology for the first time really I mean in my lifetime, and I'm 53. It's because of a failure, a massive blunder, there is no other word for it, committed by our government and by our industry 20 or 30 years ago, I don't know the details, when it was decided not to set a technical standard for wireless phones in this country. In Europe, they picked a technology and they went forward, and you know what? We did it for television, we do it for all kinds of other basic technologies. The idea in this country is competition. It's what this building is about and certainly The Wall Street Journal is about, and I'm all for capitalist competition, but there is a role for standard-setting bodies and for government bodies in saying, Okay, here's the basic technological choice, now you boys go off -- or girls -- go off and compete and make money and make this better. We didn't do that. We decided to have an unending competition on the very basic technical choice, unlike Europe, and what's the result? The result is that today we have less digital voice coverage, even poorer digital voice coverage, much more expensive phones, much more power vested in the most backward part of the industry, which is the carriers, and much less technologically advanced phones. This is the only area of digital technology in the history of recent digital technology where the coolest things now come out first in Europe and Japan and arrive here maybe a year, year and a half later. This is the opposite of what drove our economy in the PC era, when people in Europe and Japan were dying to see the new computer or the new software or the new web service, and all of it came out here first. If you don't think that this has phenomenal international economic and even national security implications, I would suggest you're wrong, and I speak with some slight qualifications as the former international economics lead correspondent for the Journal and as the former national security correspondent. This is important, and we've blown it.We have flatly blown it. There are lots of other consequences. Every time somebody wants to extend wireless voice or data services to a part of the United States where it doesn't exist or to improve it, you have to build a tower. The same in Europe, the same in Japan. At least in Europe and here, you have a big environmental fight, and I'm not disparaging the people who don't want towers, I'm just making a point, you get an environmental fight. Here you have to have it three times, because you have three ridiculous incompatible standards. You have CDMA, TDMA and GSM. If you want to introduce -- if you're Nokia or Ericsson or even Motorola, which is an American company, and you want to introduce a very nice, interesting handset with new data capabilities, you've got to wait on, beg, plead with and court these phone carriers, because they control it all here. In Europe, it's all one standard.What works with one carrier works with another carrier. So, we made a big blunder, and you all know and you'll hear about later that there's a thing called 3G, and that's going to unify the world and we're all going to move toward it, but I'll tell you two things about that. One is that Europe will get there faster by over a year, and the other is it will disappoint you.Everything I know about it off the record tells me that there's an excellent chance it will be nowhere near as fast and as high bandwidth as it's supposed to be. So, we're faced with, no matter what great devices come out, for a while with a slow, weak, wireless bandwidth proposition that will be worse in the United States than anywhere else. Now, we have a silver lining, and I'm going to go out on a limb here and say this, and that is American innovation and American high-tech. We've been somewhat behind not only in the actual roll-out of good wireless devices and a wireless infrastructure here, I think we've been behind on mind share. I think our best technical minds have been very slow in getting to this, and what has happened is they've been just locked into the PC, while the rest of the world was moving forward into wireless, and so we haven't really paid much attention to it. But now people are beginning to work on some very interesting things, and I would caution you when you think about this, when you read about it, when you listen to the other speakers here, that this progression from GSM to 3G and all this stuff that's approved by the ITU and all of that may not be the whole story. There are at least two technologies I know of in the United States that are unofficial, not approved by the European international bodies that I think could break us out of the box. One is Ricochet. It's by a company called Metricom, and it's here right now. It's unlicensed spectrum, and it operates at 128 kbps, which is stunning. It's so much faster than any wireless technology anywhere in the world that it's breathtaking. It's almost broadband, and it's wireless, and it is here now, and it's rolling out slowly and without the benefit of sanctions from any government body because it's unlicensed spectrum, in six or eight cities, and they have plans to be in something like 70 cities in the United States. A slower version of it three years ago was rolled out in three cities, including D.C., and three years ago its slower version was still faster than the fastest wireless technology we think of today. That's one. There's another one called I-Burst that I heard about just recently which promises a megabit. So, I just want to leave you with -- I know that some of what I said was discouraging or gloomy, but I do think the same kind of American ingenuity that has given us a lot of benefits in the PC and the Internet space in a fixed wire is finally being applied to wireless, and there may be a ray of hope. I look forward to listening to everybody else, and thank you very much for your time. (Applause.) MR. WINSTON: Thank you, Walt, for a very interesting presentation, although I wish you had been a little bit more up front about how you really feel about these things. Our next speaker is Bill Bodin. The range of wireless devices and services available today is impressive enough, but much more is on the way as we will hear from our next speaker, Bill Bodin. Bill leads the advanced technology and prototyping efforts for IBM's Pervasive Computing Division. As you'll hear from Bill's presentation, this lab is where the future of technology is actually taking place today. Bill? (Applause.) MR. BODIN: I just have a little bit of reconfiguration here to do. There's a couple of different -- well, I am totally depressed. You mean it's not going to be as easy as they say it's going to be? I don't think it ever is. As I was introduced, I'm an STSM, senior technical staff member, with IBM and charged with the mission of making all these advanced technologies actually real and incorporating them into a lot of the mainstream product ideas that IBM has. What pervasive computing is, just to kind of define it, is basically delivering any data over any network to any device, and as Walter said, it's not going to be an easy proposition, and there are a lot of things that make it tough. In other words, on the any device side here, we have a heterogenous mix of clients, right? Things like screen phones, things like PDAs, wireless PDAs, transiently connected PDAs, PDAs with color VGA screens, PDAs with monochromatic screens that are 160 by 160 pixels like Palm devices. Walter, I was taking notes on my Palm, by the way -- MR. MOSSBERG: You were the one. MR. BODIN: -- I was cheating on you over there. I was writing down all these new ideas. And devices like Internet access devices in light of wireline devices or wireless devices, in-vehicle information systems that will help us navigate in vehicle scenarios, those kinds of scenarios go on and on, but basically they'll be shored up by technologies like speech recognition, technologies like the ability to replicate e-mail, calendaring data, location-based services directly in the car and communicate with location-based services wherever you are, all the way to set-top boxes and things we call gateways, either residential gateways or enterprise gateways, with these gateways bringing the broadband experience into the home, right, and also providing network address translation, IP filtering, VPN functionalities, virtual private networking functionalities, inside the home or the enterprise seamlessly to these devices, and as you can see here, attributes of the network here are availability, security, and scalability. One thing I did want to mention is that IBM has recently, as recently as last week, appointed a CPO position. Now, CPO is chief privacy officer, and8 that's Harriet Pearson for the IBM Company. So, you might want to make note of that. Any data, data in this case in terms of these broad scenarios are news, weather, sports, banking, travel, stocks and things like that, all sorts of things all the way to the enterprise side of it, which has us tied into the ERP processes, the CRM, customer relationship management processes, all the way to the back end. So, as you can see, the fabric here is really taking this any data paradigm, moving it through networks and delivering it to any device very seamlessly. Now, the challenge is how do we make that seamless and how do we make that a great proposition for the consumer? One thing that we're working on is standardizing a toolset for all of these particular client devices, client devices as varied as Internet appliances, wired, wireless Internet appliances, web pads, automotive, set-top boxes and service gateways. Now, the last thing that we will be working on is interfaces that transcend operating system infrastructure into the mobile phone arena. Just a little bit of infrastructure speak here before we get into the nature of pervasive computing and the scenarios of pervasive computing. The device9 architecture that we're working with puts a very strong emphasis on the ability to run cross-platform program logic on devices, and what we have here is a JVM, something called a Java virtual machine that actually abstracts the application logic from the hardware beneath it so that we can take an investment that we make in one particular application that might run on a cell phone and move it over to a PDA environment or move it over to a set-top box environment and even an in-vehicle information system and maintain the investment, preserve the investment that we make in that particular device. Now, you might also notice that to the left-hand portion of this, I have things that are relative to things called GUIs, graphical user interfaces, or speech recognition, text to speech. A lot of those particular features are what we call native features, features that run languages that are compiled with particular devices and particular CPUs in mind. In our lab, and a few people in the audience have actually been to our lab in Austin, this is basically the schematic for the lab. The lab really uses service gateway technology, the same technology that I talked about just a while ago, to bring a broadband experience into the home, whether it's a cable modem scenario or a DSL scenario, even dial-up for that matter, but brings that capability in and shares Internet connectivity with a host of devices. Now, you'll notice that the host of devices can range anywhere from WAP-related phones or Internet appliances and conventional home PCs, all the way to wireless web pads, and I do have an example -- I do have an example here of an appliance that has a bit more acceptable user interface for actually giving you a broadband experience. Now, this is a wireless web pad. This wireless web pad is -- it's an 802.11 client, which means that it's running a fairly rich bandwidth in terms of its ability to take information from a gateway and actually populate this device. It's running at 11 megabits. If I wake it up into its awake state, we'll see that we have a web page here, and this web page obviously could be any web page. This particular appliance is basically a research grade appliance, but it gives you an idea of where technology is actually going in a very robust, handheld kind of way. That's one device. You'll notice that there are a lot of other devices on here, devices that we deal with every day, things like microwave ovens or refrigerators or washing machines. In our lab, we experiment with all of this infrastructure and all of these devices, and, in fact, all of these devices are actually network-enabled. So, we have rapid-cook technology that actually cooks -- it cooks ten times faster than regular oven cooking technology, but it's aided by the web, because we can actually get recipes, and these aren't recipes that allow us to bring food to the cooking stage, but they are recipes that are device-specific, and they are recipes that we can actually download dynamically simply by clicking on a URL either on the device or on the wireless web pad and delivering them straight away to the device itself. So, that device can then use that granular recipe data to ideally cook the food. So, it's not necessarily implementing Internet-enablement or Internet connectivity for connectivity's sake, but it's actually using it for something beneficial. You will notice that many of these devices here, the microwaves and dishwashers and things like that are all connected simply by the power line. We are using a combination of technologies there. We're researching CeBus technology, researching Ethicon technology, but we're moving bits over the power line using this service gateway, simply by plugging this service gateway in, which has a modem inside, not a modem that really modulates things over telephone wires but a modem that actually modulates data right over the power lines so our networked appliances can actually communicate. Just a few words on standards, actually more than a few words on standards. OSGI, HAVI, WAP, XML, SyncXML, all important standards to us. OSGI, meaning open services gateway initiative, is an approach that we're actually implementing in our stack of software that we offer for pervasive computing that enables us to keep the platform open, to keep it very minimalistic but then to increase the opportunity that many, many more businesses can actually populate a device with that kind of an approach. HAVI, you know, I guess not too many of us thought too many years back that our home audio/video receiver or our VCR or our DVD player would actually be network-enabled, but the time is now coming with the HAVI architecture to actually implement network connectivity in those kinds of devices, as well. Once those devices are actually communicating back and forth, it becomes easier for us to actually deal with any one of those devices or actually take data from those devices and deliver it to things like WAP phones, for instance. Imagine, you know, making a trip to Blockbuster because you think you might need to rent a movie that night but actually being able to communicate back and forth with your 300-disk DVD carousel. You'll be able to take that data, have it transcoded uniquely for that device and delivered to that device. In fact, one of the things I'd like to do as part of the very last part of this presentation is to bring an online tour of this lab up and running here and actually communicate to that lab with a WAP device. More on HAVI, you will notice that HAVI is an architecture, and, you know, even things like havlets, let's say, many of you in this room may have heard of servelets. Servelets are technology that are server side that enable servers to interact with, you know, things like search engines and do all sorts of logic. Now we even have havlets, which will be living in our home theater stack. A few words on cellular protocols. I think Walter was right on the money here. He talked about the disappointing data rates that we get in the U.S. here. In fact, CDPD, which purports to be 19-2 in terms of its data rate is, you know, more like 4800 when you really get down to it. So, it's 4800, maybe 9600 tops, and that's what we have had to put up with for quite some time. A couple things on the forefront. GSM in two different flavors, one at 43.2 kilobaud and another at 120 k-baud, the 120 k variety coming in early 2001 and the lower bandwidth -- maybe, okay -- may be coming currently. RF technology, RF technologies like 802.11, like the one that I just had here, the wireless web pad, they run at about 11 megabits tops. They're currently available from a number of vendors, IBM, Cisco, Nokia. Bluetooth is something that's coming more or less on the horizon. Bluetooth is going -- the promise of Bluetooth I'll talk about in a minute, but basically it's close-range device interaction that forms things called personal area networks or PICO nets, and then Home RF, which is more of a consumer-grade variety of wireless. In terms of wireline, Home PNA. Home PNA is a home networking and phone line alliance which basically enables us to communicate via phone lines. That's actually how I have a large majority of the PCs in my house wired up, and my kids now enjoy a music collection -- I'll not tell you where I got that music collection, of course -- but, you know, they have an old Pentium I, 133, upstairs, and, you know, it was either buy them a stereo or just buy a network card.So, the network card prevailed, and they had a phone jack there, so now they have 10 megabits that they can communicate downstairs to the monster PC in the kitchen, all right, and they have all their Britney Spears and all their NSync and all the tunes that make them happy upstairs now, and they share that, you know, in realtime. There is no local copy of it, and like I said, 10 megabits. What was that? Do I have a question already? Just a few other technologies, POTS, conventional dial-up, DSL, many flavors, cable satellite. Bluetooth's vision actually is to create ad hoc personal area networks wherever you are and however you need to collaborate. In other words, if you're in a business scenario and you have a number of individuals that want to collaborate online, right, but they don't have the necessary network connectivity to the firewall there, they might use Bluetooth in a way that they form this ad hoc personal area network and actually collaborate between themselves, either pass notes during a presentation and make that presentation stronger or do something of value.6 Ease of connectivity is one of the benefits of Bluetooth, yet to be realized, but something that needs quite a bit of work. Freedom to work anywhere, high interoperability and a lot of new applications. Lots of industry adopters worldwide. One thing, like I said, this really brings up the point of personal area networks, and you see here what is called a scatternet. This scatternet is basically an overlapping of networks. In other words, there are two nodes to the right there that are communicating with another node in the middle that is communicating with a further node as a gateway to other devices. Now, these can be any kinds of devices in the future. They might be PDAs, might be cell phones, or some other ubiquitous device that emerges, might be laptops, you know, full-feature devices that have broadband capability within airports, with technologies like Walter mentioned like Ricochet, but there are many other trials going on with technologies other than Ricochet, like 802.11, in various airports at high speed, 11 megabits. But some of the scenarios here are, you know, either mobile PCs communicating with -- you know, communicating with phones that are nearby, hopefully your phone; the phone on your hip, the phone in your pocket; digital cameras that use Bluetooth to communicate to Bluetooth-enabled cell phones so that you can actually share that digital photo experience with anybody that you want in realtime. In other words, you're standing on a mountaintop taking a picture of the family. Well, there is no reason that that picture can't instantaneously be a part of your family's web page, be delivered to that web page and be administered to that web page seamlessly. Even digital ink, there are companies that are coming up with technologies that have pens that are Bluetooth-enabled, pens that since they are in the proximity of a more beefier CPU can actually decode what you're writing down, store that, transfer the pen contents to the robust device and store that as documentation. So, just a background on Bluetooth, basically 2.4 gigahertz variety communication, either 10-meter or 100-meter optional, eight devices per PICO net, ten PICO nets, and you can see there are a couple different bandwidths, either 400K or 700K depending on the implementation. Now, just to revisit this pervasive computing residential topology here, one thing you'll notice that I didn't necessarily make evident here is that the car -- and we have a car in our lab. That car is considered to be docked, all right? You don't just park your car in the garage anymore; you dock your car, okay? Exactly. This car, since it's in the proximity of a service gateway and the service gateway is actually capable of delivering wireless content from a broadband Internet connection, can do things like replicate e-mail and calendaring to the car and things like that. In fact, the in-vehicle information system topology looks a bit like this, where we either have satellite-to-ground stations or we have all sorts of connectivities that enable us to do things with either wireless modems or Bluetooth capabilities, interact with PDAs, interact with cell phones in a hands-free way and take advantage of delivering data right when we need it, either for -- either for doing things like navigating around town or navigating through your e-mail. Fairly extensive web infrastructures are going to be critical for this, and one thing I want to get to here is not just the service side of the structure that makes it all possible but something called transcoding actually, and if I refer back to the notes that I took on my PDA here, I heard a term called -- I guess it was pixilation clogging, right, so we have clogged pixels on devices that are very, very small. We have small -- small bits of -- small user interfaces here, which it's very critical to populate them ideally for the -- for a good user experience to actually come about. We call that at IBM, we call that transcoding, and what that does is take data of one particular style and brings about a change in that data, a fundamental change in how that data is actually constructed and how that's going to be rendered on a particular device, matching, like I say here, the form factor to the capabilities of the client devices, personalizing the data for environmental requirements. One environmental requirement might be if you're driving, right, and your car knows you're driving because it's making progress and either inertial guidance or GPS navigation is telling it that it's being driven, you may not be able to actually read your e-mail on this in-vehicle information system, but you might be able to hear it. So, environmental factors come into play. Enhanced B-to-B communications, this is supporting a wide range of devices and systems. One just pictorial example of what transcoding looks like or content adaptation is here in this particular web page where we have Yahoo's weather forecast, right? We have a very rich set of graphics that went along with that weather forecast, but it is possible to deliver content fairly seamlessly to a WAP-enabled phone, and as you can see here, that the actual rendering on the WAP-enabled phone tells you the essence of it. It doesn't necessarily deliver the ad banners or all the eye candy that you might be accustomed to on conventional web pages, but it does get down to the nuts and bolts of it. So, things like converting images from one type to another type, things like reducing the size or the bravacity (phonetic) of text and converting languages from one type to another type is what transcoding is all about. And really, what it does for customers, for users, for actual companies that deliver data is make it a little bit more palatable to deliver that to a wide variety of devices, because they actually render content one way, but it's transcoded dynamically for a number of different devices depending on those devices' characteristics. One thing we've done fairly successfully with Safeway in the UK is actually bring the experience of shopping to a fairly small PDA. This is a Palm PDA, actually Palm PDA made by -- rebranded by symbol, made to our specs that has an on-board scanner right inside, okay? So, you can go into your pantry, you can shop in your pantry, you can have all those items actually accumulated to this device and then actually hot-sync this device to have your groceries delivered. It can be used anytime. It can be used while you're at the doctor's office, waiting in line anywhere, and it's actually boosted sales by about 10 percent. You'd think that people would be more judicious on what they bought when they had something like this to organize their thoughts, but the thought is that they're actually spending less time at the convenience stores and more time at the Safeway store. All of our technology's based on open architectures, just another note on that, and I'll be ready to go into this demonstration on the lab in just a minute, but I thought I would give you a little idea of how the thing is laid out, how the floor plan actually is. We have a family room, a kitchen, garage, all with network connectivity. It's really a living lab where developers work every day. The server farm is located right there in the lab with video conferencing facilities. And just to give you a look at what it looks like, large-screen televisions rendering web pages, but web pages that are being delivered dynamically from things like the service gateway here and web pages that actually allow you to interact with other appliances within the home, things like e-fridges, and I think I probably have a close-up on this. You know, everybody has to have one of these. If you have an advanced technology lab and you don't have an e-fridge, then you're nowhere in this business. And we have to go out on a limb actually. We do a lot of things that we think are very, very leading edge. Some things will get adopted; some things will not. We even have antenna arrays in the fridge that actually detect the RF tags that are affixed to food items, okay, so you can actually tell dynamically what you have in your fridge at any one given time, and since you can tell, right, since your fridge knows that, there's no reason your WAP phone doesn't know that, as well. So, we transcode that to WAP phones and things like that. Rapid code technology with wireless web pads, this is an older version wireless web pad, the one I had up here is a little bit newer version, but with the same CPU cloning and the same wireless infrastructure. Internet access devices, in-vehicle information systems, all with voice capability. So, what I'll do now is -- hopefully I'll wake this PC up and start really quick a browser session, and I will also disconnect this and connect it to the video here, and hopefully we see something, right? Okay, so, we have a browser session started here, I'll maximize that, look for my bookmark that I left earlier -- pays to get here early -- and we'll just bring up the lab here. Since I'm bringing up a new -- now, hopefully this will work, Walter, or else you can claim to be right on every point here. MR. WEITZNER: I think he will claim that anyway. MR. BODIN: Fair enough, though. MR. MOSSBERG: Just to clarify one thing, though, while you're doing this, Bill, I want to make sure people understand that a lot of what you described had to do with wireless networks like 802.11 and Bluetooth inside a building, but the actual Internet is being received to your house or to this lab over a wireline network. MR. BODIN: Correct. MR. MOSSBERG: You are distributing wirelessly inside the building, but it is not as if the broadband Internet connection is coming wirelessly to the building. MR. BODIN: That's correct, absolutely correct. MR. MOSSBERG: That's an important distinction. MR. BODIN: Absolutely. If you notice here, I actually have some presets that I can actually go and visit here.Hopefully everything, like I said, all of the network is working correctly here, but we have a little bit -- it looks like we have the Fox News channel on, and if I -- well, who is that? MR. MOSSBERG: So, you are going all the way to Boston and back to show what's happening two blocks from here? MR. BODIN: That's right, that's right. Hey, you know, I use this elsewhere, you know? I'm going to take my WAP phone, and I think that we have a connection here, so it looks reasonable. Now, I have family and -- oh, I have to use the mike? Okay, so, I have a user interface here that actually is the user interface being used from the service gateway. In other words, I have -- number one corresponds to lights on, number two, lights off, mundane things but things that actually enable us to prove some concepts here, and what I just did was I just -- to hit number two, which is lights off, and if we're still receiving data here, and we should be, we should notice a change in the device itself, in the lights itself -- let's refresh that real quick, and I did get an indication that it did actually happen over my -- over my phone. Number three would be, in fact, blinds up. Now, these just -- what these do for us is actually give us a way to pioneer how we can actually get back into the lab. I mean, the lab is behind a firewall. We are going over public Internet services to actually make, in effect, changes on devices like this but then tunnel back into the service gateway so that we can actually effect the change on the device itself. I think I'm all set. What I'm going to do is I'll click over to just a couple of different rooms here, and as you can see here, our network connection is still continuing to be up and running, albeit a little bit slow right now. You notice I just zoomed in on the ceiling fan. If I turn fan on, what that really does is it's going through the service gateway, right, from here, via tha public Internet, but it's also effecting a change in the thermostat. It's actually changing the set point of the thermostat to a temperature below the current temperature, and it seems like we have a very, very slow connection here, but if I -- hey, there you go -- there you go. So, we're getting a few frames, and that might be because I'm set up at a bit of a high frame right now, I'm just blowing the buffer on the navigator here, but as you can see, a lot of the interaction with devices is actually possible. Whether or not all of it will happen or not, I'm sure that they will not, but we go out on a limb. We study some of the more advanced, evolving technology, and hopefully we win on a few and a lot of business partnerships are the result. That's all I have. Thanks a lot. (Applause.) MR. WINSTON: Thank you, Bill. For those of us who are trained in law rather than technology, I can't tell you how impressive that was. I'm just hoping we're not going to be quizzed on this later, because I'm not sure I'm ready. In our last technology presentation, we have Danny Weitzner. Danny's the director of the World Wide Web Consortium's technology and society activities. In this role, he's responsible for the development of technology standards that enable the web to address social, legal and public policy concerns, including privacy. Some of you may recognize Danny from his presentations at previous FTC workshops. Danny? One reminder before Danny begins, we're going to be having questions starting in about 15 minutes, so for those of you in the overflow rooms who want to ask a question, you might want to come down in a few minutes. Again, we'll have microphones in the doorway. MR. WEITZNER: Thank you, Joel, very much. To prove what Walt Mossberg writes, something about Bill's presentation crashed my laptop, so bear with me while this restarts. MR. MOSSBERG: And it will scan your hard disk and punish you. MR. WEITZNER: That's right, that's right. MR. MOSSBERG: If only someone in Washington would do something about Microsoft, that's... MR. WEITZNER: I don't think I have a snappy comment on that last one. First of all, let me -- while we're getting started up here, let me thank the Commission for holding this workshop. Indeed, I was -- had the privilege to be at the first workshop that the FTC held in 1996 on privacy and the web, which certainly for me was an important opportunity to start to get a handle on some of these issues, and I think that this workshop is actually in many ways analogous. Someone who I won't mention was saying, boy, we're really so far behind on all these issues, and I think that's the way a lot of us probably on just about all sides of the table here felt back in 1996. Whether we feel that we've caught up any further on these issues and the web space, I guess I have a glass half full view and think that we have made some real progress, in some part thanks to the FTC, since 1996, but there is clearly quite a bit to do. And my laptop is still churning a little bit. Just by way of introduction, let me say that -- I hope you can see this. Good, okay. My name is Danny Weitzner, and I'm with the World Wide Web Consortium. For those of you who don't know the W3C, we're the organization that sets the technical standards for the web. So, we're best known for our work in areas like HTML, the basic language that just about all web pages are written in, we're known more on the hype side for a lot of our work on XML, the next generation markup language that is somewhere in Walt Mossberg's time scale of a couple of years from now going to make I think a very substantial impact on the way we all experience the wireless and the wireline web, the web we know today, and we also have the responsibility, I suppose, of trying to keep track of where a lot of these technologies are going. So, one of the implications of that has been that we've spent a lot of time over the last year or two in very close consultations with standards bodies that are oriented specifically towards the wireless world, such as the WAP Forum, to try to make sure that as we develop many of the new technologies that Bill pointed to and that Walt maligned, that they at least all work together to one degree or another, and I'm going to talk a little bit about what that means. What I'm going to do today in the time we have left is engage in what I think is going to be an exercise in dramatic oversimplification. I was asked to talk about a lot of the underlying technologies in the wireless space. Number one, I'm probably not the right person to do that, and number two, it's pretty impossible to do that at this point in time and come out with any kind of meaningful understanding of what we ought to expect relative to the public policy space. So, what I'm going to try to do is to talk a little bit about how many of the new technologies that we've heard about are going to change the experience that people have -- both of their traditional voice wireless telephone experience around the world and how those same technologies are going to change the experience that people have of the web today. I think that for many of us those are hopefully kind of solid starting points, and what I hope to do is to point out some of the changes that are going to be underway and the ways that I think we'll need to respond as a public policy community. I am lucky enough to have just returned from a joint workshop that W3C held with the WAP Forum last week in Munich specifically on mobile web privacy issues, trying to understand some of the privacy requirements that many of the new wireless access technologies bring to core web infrastructure, and we had a very fruitful two-day set of initial discussions and I think all came away feeling that there's a huge amount of work to do in this area, both in terms of clarifying the basic public policy requirements and understanding how to help the technology in both of these industries evolve to better address the privacy issues. I know that's going to come up later today and tomorrow, so I won't dwell on that. Oh, and I think I brought up the wrong presentation. MR. MOSSBERG: The analog, Danny. MR. WEITZNER: Well, I did all this work on these slides, so, you know -- there we go, okay. So, this is the web today in, as I promised, diagramatically oversimplified form. There's a client on the website, that's us when we sit down at a web browser, one of these machines with Internet Explorer or Netscape Navigator or Opera or any of a number of web browsers, in effect, there are a bunch of them out there, and we interact with a web service, whether it's the FTC website where we find the agenda for today's meeting or CNN to find out what in the world is happening with the election saga at this moment. This is a pretty straightforward set of interactions here I think we all understand and that I would dare say even the public policy communities around the world are beginning to get their hands around the kind of relationship here. The world changed, the public policy world, particularly with respect to privacy issues changed somewhat significantly when we added another element to this relationship, and that's what I would generically call third-party embedded content. Specific examples of that include ads, banner ads served by the various networks and serving organizations and streaming media, in fact, so all of a sudden what was really a two-way relationship, a simple two-way relationship between me, the user, and a content provider out there has three components, and I think any of you who have paid even the slightest bid of attention to some of the questions that have come up in the online advertising debate understand that the addition of this extra architectural element, this extra piece of the network into the relationships that we have raise all kinds of questions, including some of the questions that the Chairman alluded to. How does notice work? Who do you go to complain to if you have a problem? Is it the web service or is it that third-party content provider? The mobile web world, what I think is actually sort of appropriately identified by Bill as pervasive computing environments, introduces I think a dramatic extra degree of complexity in the kinds of relationships that we're going to participate in as users that content providers are going to interact with and perhaps particularly a dramatic expansion in the relationships that the public policy community is going to have to look at and understand and respond to in one way or another. So, again, this is a simplification of a lot of the very complex set of technologies that Bill talked about and that I'm sure that we'll hear about during the day, but in what is really I'll just say my own kind of personal reflection on what's different about this new environment from the web environment today, what I think has to be striking to all of us is that all of a sudden, there are a whole new set of intermediaries between us as users on the left side and the traditional web service up there on the top right side. So, what are some of those intermediaries or what in many contexts are identified as gateways, what do some of those do? Well, you heard about some of them from Bill. For example, when I'm accessing some kind of service here on Bill's little Thinkpad -- little Palm Pilot here or whatever IBM calls it -- here, I'll give it back to you -- when I'm accessing -- oh, and there's another one here, they're everywhere -- what I'm accessing -- no, let me keep this -- when I'm accessing a service -- accessing a traditional web-based service on a little screen like this, as Bill pointed out, the service, in order to deliver meaningful content to me, has got to, number one, assume that I don't -- that I can't see color, that all I'm going to see is black and white. Number two, it's going to assume that I don't have anything that looks like a mouse. So, any of those web pages that allow you to move a mouse pointer over certain parts of the screen and have other stuff pop up, that may not work here. Number three, the data path, the bandwidth available between this device -- this device -- well, I don't know about this device, because it looks like it's been modified all kinds of ways, but between a typical device like this and a typical web page is dramatically smaller than the bandwidth available between an average PC that runs a web browser and a website. So, the expectation is either that people are going to sit around for hours and hours while home pages download onto these little devices or those home pages, that content that's over there on the right side are going to have to be, in IBM's words, transcoded. They are going to have to be changed so that people can -- so that people's little devices like this will remain useful. Now, how is that going to happen? The way that the technology seems to be evolving is that the devices that we carry around will be identified to these gateways. The gateway will know I'm using this particular kind of, in fact, customized Palm Pilot, and when it receives a request, it may do one of two things. It may then tell the web service that I'm trying to access, Danny's got this funny device and it's got this ID number, make sure you send content that that device can understand, or instead, it may do something different, and it may do -- it may actually engage itself in this kind of transcoding that Bill was mentioning, so that the -- that full, feature-rich, content-rich, color-rich, mixed-media web page that we're used to seeing when we look at the CNN.com site is going to be shrunk down in all kinds of ways dramatically by this intermediate device. Another function of the gateways is going to be that, for example, if I'm trying to order the proverbial airline ticket over this cell phone because I'm stuck in O'Hare because it's snowing, how am I going to do this with these little four lines of display, and more importantly, with these nine buttons where I have to press them multiple times just to get a single letter? Well, probably what I'm going to want to do is I'm going to want this gateway, this entity that sits in between me and the content provider, in between me and in my case probably United Airlines, I'm going to want United Airlines to know that I'm Danny Weitzner, that I'm at this address, that I use this credit card number, that I use this frequent flyer number, that I like window seats, et cetera, et cetera, et cetera. Who is going to store that information about me? Who am I going to trust to store that? Am I going to enter it all in, and I'm going to say window -- no, I'm not going to do that, because I'll miss the last plane possible. What instead I'm going to do is I'm going to rely on these -- on the user profiles that are stored by someone in between me and United Airlines to send that information, to send them my credit card number, to send them other preferences that I may have. Finally, lots of services that I may be interested in, some of the services that the Chairman, in fact, mentioned, the buddy service, the "I'm downtown and I want to have a beer with someone" service, rely on knowing a fair amount about the location of me, assuming that I'm connected to the particular wireless device I'm using, and they rely on some ability to provide that location information hopefully to the people I want to see it only, to services out there. And again, this is not going to be a situation where I'm going to see on this little device that maybe is enabled with a direction-finding service, like GPS, that's going to tell me I'm at 49 degrees, 22 minutes, et cetera, et cetera, and I'm not going to type in all these things, I promise you, into these phones. Even the geekiest of people are not going to want to do that. Instead, we are going to end up in many cases relying on gateway services provided somewhere inside the network to relay that information to the people who we want to have it. Now, finally, the question about how the third-party content, such as ads or streaming media, gets between the services and the users in this network I think is substantially an open question, but no doubt there will be a lot of interest in doing that. What I would also point out here is that my expectation is that when I'm using this kind of network, I'm going to -- I'm going to have access to in some sense what are technically really two different kinds of services. I expect that I'm going to have access through the traditional web services we understand that can be accessed -- where the same service can be accessed either through one of these mobile devices that goes to this relatively complex network architecture, or through a PC web browser, and also a web service that I access in this very simple way. I don't think that just because we add all this complexity we're going to lose what we now understand to be the traditional and perhaps somewhat quaint kind of web interactions that we have today, and I would suggest to you that it's very important for all of our thinking going forward that the user here, the client on the left side, in many cases isn't going to know what kind of service he or she is accessing. Maybe it's a traditional website. Maybe it's a service provided uniquely by that user's network provider, their cellular network provider. The user's not going to know, and in many cases the user's not going to care. So, I want to try to address very quickly how you do all this, how do you make that very complex world possible. As I said, I think that whereas the web in 1996 was in a state of significant development, if not confusion, it has now more or less settled down, and the way that we from a technology standpoint interact with web services is relatively clear and stable. All of us essentially use the basic Internet protocols to access websites, TCP/IP and HTTP. Those are the -- TCP/IP is the basic network service that moves information around, whether it's for the web or e-mail or for anything else. For the web we use a protocol called HTTP, which is specially designed to give people access to web pages and to create links among web pages. We access a pretty uniform kind of content.People who want to make content available on the web today know that they have to do it with a particular language called HTML. That will change probably over time. And increasingly even on today's web, the way that people's public policy-oriented services, such as information about privacy policies, information about the signatures or the authentication of documents, are managed according to a developing set of technical standards. On the wireless web today, I think what we see is a pretty substantial diversity. I don't know that I'm quite as pessimistic as Walt about the kind of Tower of Babel problem, but it's pretty clear that at all of these levels, there's quite a lot of diversity. There is not a single standard for the underlying network transport; there's not a single standard for the protocol that moves information around in these networks. Content has not settled down into a single standard, and certainly for security and privacy and other kinds of policy issues, there's not a single standard that everyone can rely on. Let me -- since we're coming close to the end of time for this panel, I want to try to conclude very quickly. These are some issues that I think we have to keep in mind as we explore this public policy space, and they're my effort really to point out what I think are some of the critical differences between policy frameworks and ways of thinking that we've evolved for the web and the ones that are going to be appropriate for this environment. First of all, as I talked about, there are going to be a variety of gateways, a variety of intermediaries that stand in between the user and the service at the other end of the network. In many cases, those gateways are for purely technical purposes. In some cases, those gateways will exist to manage or in some cases alter the business relationship or other kinds of relationships that the user has with the service provider on the other end. What I would suggest -- and finally -- and those gateways are important both from the user perspective and also from the content provider perspective. I think it's sort of axiomatic on the web today that when I put up a website, I don't have to negotiate with anyone to make sure that that content is available to every single user on the web who wants to see it. Whether that's the same in this environment I think is an open question. I think that what I would suggest, though, is that for all of the importance of these gateway relationships, the boundaries between interactions that go through these gateways and those that don't, interactions that are secured perhaps by some intermediary, interactions where perhaps some intermediary is watching out for my privacy rights, interactions where perhaps an intermediary is monitoring the intellectual property rights of a content provider, that from the user perspective, those interactions will blur together with the interactions that we have today with a typical website. I think that from my perspective, what is most important as we go forward is to build on the common shared information space that we have with the Internet and the web today. This is not to say that every single device has to be able to access every single kind of content. As I think was eloquently pointed out, I may not want to watch a full motion video on this little device, and we shouldn't require that that is the case, but I do think we have to pay very careful attention to making sure that the evolving protocols ensure the possibility of consistent access and make sure that we don't create Balkanization between different islands of content spread around. Finally, I would say -- and this was really the subject of the workshop that we had with the WAP Forum last week, so it's very much a work in progress, because of the fact that users will be navigating across different environments between the traditional web world and the new kinds of services that will be possible through the wireless world, I think there was a fair amount of consensus just in the discussion that we had that users do expect a common experience. They expect that if they have a privacy relationship with a website in the traditional web world, that that relationship will be carried over when they access that same service in the wireless world. I think that they expect that if they have digitally signed a document with a web service, maybe it was a check that they sent, maybe it was securing access to a credit card statement or something like that, that they will have that same kind of security in the wireless world. So, we have to be very careful I think to create a consistent set of expectations, and certainly work to build technology and policy approaches that alert users when they're crossing boundaries and when the expectations are changing. So, since I see several people encouraging me to conclude, I will do that, and thank you very much, and I look forward to questions. (Applause.) MR. WINSTON: Thank you, Danny. I think we have a few minutes for questions. We're going to do this the old-fashioned way. If you have a question, raise your hand, and I will call on you. Wait for the microphone to come from someone, there's a microphone right there, and if you could just identify yourself and your organization when you ask the question. MR. DANIELS: Sure, Seth Daniels. I think everyone did a very good job, and I want to thank you, but one thing that really came across to me is that there are really different technologies that we're talking about. We're talking about cell phone technology, and then we're talking about a new technology that wasn't really clearly defined, that being wireless IP. I think we identified that Ricochet and a couple other providers are talking about wireless IP, and if you're talking about wireless IP, WAP does not necessarily apply, because WAP is more device-dependent with the issues involved with the cell phone technology. So, what's kind of interesting is even in this room of people that should be in the know, there's still a lot of confusion or not -- maybe I shouldn't say confusion, but there's not a clear message being sent, and to the consumers, it's even more obscured. The other part or maybe more of a question is what are the regulatory requirements for the wireless IP providers that are not making calls but seem to be somewhat outside of the scope of some of the guidelines as I have read them relative to location reporting? MR. MOSSBERG: Can I just say, I can't -- I don't know anything about regulatory requirements, maybe others do, but I think you're right, that just observing the three of us so far, and the conference has hardly started, this word "wireless," this term "wireless" is way too broad, and it means many things to many people. Bill showed you what I thought was a very interesting demonstration of a whole kind of wireless that I didn't even mention, which is essentially wireless inside buildings. 802.11, which incidentally has been renamed just to confuse you further Wi-Fi, Bluetooth, which has produced more press releases than actual devices, and Home RF and some other things, all of those things are designed to allow devices that are properly equipped to talk to each other over relatively short distances, and one of the things that they can do in talking to each other is to pass along an Internet connection and, of course, hopefully a broadband one, but that Internet connection today is primarily coming across the same wired system, not wireless, but wired that we all know about. So, in other words, I wrote about -- for those of you who read my column, a couple weeks ago I reported on what it was like to set up an 802.11 high-speed wireless network inside my house to distribute a wired DSL line coming into my house, and I hope you're following me. I don't have wireless Internet in my house just because I have a wireless network that operates within the walls of the house. I have a wired Internet connection that's distributed wirelessly. The experience is wonderful, incidentally, in terms of being able to carry laptops and eventually things like this around in rooms, and I actually have one or two of these in my house that I'm testing, but it's not the same as being out on the street or in this building or in a cab and trying to get this thing to give me a broadband wireless connection. So, we have to be very careful in the terminology that we use. I'm sorry, I don't know about the regulation part. Did you guys -- okay. MR. WINSTON: Yes, over here. If you could introduce yourself again. MR. LEMAITRE: Mark LeMaitre, I work for Nextel Communications. This is going to be difficult. I'm not going to talk about technology, but it's quite obvious that amongst the speakers today so far there's been both a desire and a concern about extending the wireline existing Internet experience out to the wireless device. I think it's both desirable in some circumstances and very difficult practically to achieve, but I was interested to -- and I was at the workshop that Danny was at last week. One of the things that we found was that -- or discussed was that in order to make the experience a lot more compelling in a wireless environment, certainly with the PDA, the notion of where I am and what I'm doing becomes extremely important, and so whilst I agree that protocols that we have got on the -- being developed on the Internet today for privacy satisfy the notion that I'm in front of a big screen surfing content, when I get into a wireless environment, the stakes go up in that I've now got information about my personal location, my personal --you know, my state, what am I doing. What am I doing and where am I doing it are very difficult things for people to give away easily, and I'm wondering if you can just touch, Danny, on the notion that as the stakes go up, so do the controls, and the levers that we have to put back in the consumers' hands have to get better. MR. WEITZNER: I think that there is no question that they do. There is -- and one of the points that I found particularly striking about the workshop, and I don't want to give anything more than my personal impressions of it, because we're still working on developing a kind of a common statement coming out of it, but my personal impression was that there is a shared sense across the web industry and the wireless industry, however you define those boundaries, and everyone in between that putting users in control of their personal information, particularly, as you pointed out, when it comes to very sensitive information such as the location of your device or whether you consider yourselves at work or on -- or having fun at any given moment, whether you're receiving calls or not receiving calls, et cetera, whether you're in a restaurant or in a bar or whatever else you're doing, that indeed I think we need much finer-grained user control mechanisms for the wireless world than we currently have for the web world. In the web world we've taken one step in developing a privacy-oriented standard, P3P, which I won't rattle on about, but I think that the wireless world introduces a whole set of requirements on top of that. I think we need the consistency of a common platform like P3P, and this is true really for essentially any protocol we're talking about, I would suggest, that the user is aware of, whether it's security or privacy or any number of other things, but we clearly need more features available, and most importantly, I think we need a higher degree of control so that users are comfortable operating in an environment where they are, in fact, disclosing and relying on the disclosure of quite a bit of personal information. One of the points that I would just bring out quickly from the workshop that, Mark, you had a lot to do with raising was really the question of who is the user going to trust in these sorts of situations? The wireless carrier is the source maybe of that location or maybe it's some other entity in the network that knows your location. Who is the user going to rely on to mediate in some sense the disclosure of that information to make sure that as it's used in various other parts of the network, it's used consistent with the desire of the user, and how are we going to work that, and what kinds of interoperability protocols do we need across all the services that are going to participate both on the web and on the wireless side?How are we going to get that all to work together? I think it's a very substantial challenge that the wireless world has brought here and one that I think we've got a lot to do to figure out. MR. MOSSBERG: Can I interject a note of deep skepticism for a moment, as I have been trying to do all morning? I don't even for a nanosecond doubt your sincerity, Danny, or those of the people of this workshop, although I would point out that WAP is a 100 percent utter failure as of the moment on cell phones, but to tell you about the privacy thing, I just would like to note that we have had four or five years now of experience with consumers using the wired web on very powerful devices which could afford you a tremendous amount of privacy protection, and we have done very, very badly. There is no privacy and a very bad level of security for people using the web on computers in a wired way today, and I personally now -- speaking as a journalist who is paid to offer opinions, that's what being a columnist means, I would tell you that I believe you won't hear this from many other people who write in The Wall Street Journal -- I believe we need a federal law that is very tough and very powerful on privacy that would cover wired and wireless, and in the absence of a federal law enforceable by jail terms -- I'm very serious about this -- none of -- as I said, I attribute complete integrity and honorable intentions to you guys, but none of that will matter, because to the extent the wireless web and location-based services and user profiling become economically important and marketable, you will have the same kind of irresistible pressure from people ranging from the worst sort of hucksters to the most honest businesses to try to sell you things based on that. There has to be some basic legal -- I'm not talking about micromanaging every transaction, but a law that would set out at least some general guidelines on who -- saying that the consumer should be in control. In other words, little things like opt-out versus opt-in, and I know there are privacy people here who know much more about it. Sorry, I just needed to try to inject reality, that's all. MR. WEITZNER: Could I just respond very quickly? All I can do is to say that I think that what we have to do is take a global perspective on this and recognize that any of these infrastructures that we're talking about exist in a context that I think will always be marked by a real diversity and a real divergence in real standards. Already Europe has I think the kind of environment you might want to have, without getting into it too far, and what we see is the need for services to be able to exist in a variety of legal environments -- MR. MOSSBERG: Well, ultimately you need a treaty -- ultimately, I'm sorry, there is a role for governments, and you need a treaty ultimately. MR. WEITZNER: And I'm not disagreeing with that in any way. I think there is absolutely a role for governments. I think the question on the table is whether it is more than is currently happening, and I think there are serious arguments on both sides of that. MR. MOSSBERG: Nothing is currently happening. MR. WEITZNER: Let me just say real quickly, you say you're not trying to micromanage. I am actually talking about trying to micromanage, because I think whether you're working in an environment where there's a real comprehensive privacy framework such as the European Union or whether you're working here where I think everyone would agree there's a much lower profile legal environment, without making judgments about it, that from the user standpoint clearly what users want is the ability to make very fine-grained choices -- MR. MOSSBERG: I'm sorry, I meant the government should not be micromanaging, but the user needs to be in control. They need to be able to say no, you can't -- you know, I want you to know my location because I want to know what's playing at the nearest movie theater, but that goes no farther, and by the way, I don't want you to serve up an ad based on my location or I do want you to serve up an ad. MR. WEITZNER: That's right, and I was just riffing off of your micromanagement to say that the need for micromanagement is there. I tend to agree with you that it's not at the level of regulation. MR. WINSTON: We are going to be spending a lot of time on this topic over the next day and a half, and it's obviously one people have a lot of opinions about, so why don't we hold off for now. We do need to move on to our next speakers, so I want to thank our panelists. We have enjoyed your presentations. (Applause.) MR. WINSTON: If you could all wait around, we have one more speaker before the break. We are now going to turn from the discussion on technology to look at the international experience in the wireless area. As we've heard, both Europe and Japan are ahead of the U.S. in terms of deployment of wireless services to consumers, and so we may be able to learn some lessons from the international experience that will help us. Our next speaker is Jason Pavona, who is the director of wireless strategy and personalization for Terra Lycos. He's been instrumental in building the infrastructure necessary to take the Lycos network into the next generation of content, including Lycos' extension into wireless, and he's going to be speaking about the development of the wireless space abroad and offer an assessment of how that may translate to the U.S. Again, hopefully we will have time for a few questions afterwards, but we'll see how it goes. Jason? (Applause.) MR. PAVONA: All right, so, I am going to start off with just a couple remarks and then really kind of delve into what's reality now in Europe and finish a little bit on Asia. I, unlike some of the other panelists, do not share the skepticism that's really out there in the market. I think that as you'll see moving forward that as the Internet grew, it was about applications and services, and wireless is much the same way. You know, we have kind of three mantras that we move to in this space that make it pretty appropriate. The first one is the right device for the right person. I think one of the most interesting things that I saw was not the presentation that Walter gave but the fact that he spent the entire time actually using his Blackberry checking e-mail. So, obviously he found a very interesting way to use wireless, and I think that that's really what this is all about. It's finding the right device and the right application that drives adoption and drives usage across the board. Obviously there are technology needs that need to be addressed, there are regulatory needs that need to be addressed, but at the end of the day, this is an industry and this is a mechanism for delivering data and information that is incredibly important and going to happen. We just need to make sure that we're addressing it. So, let me kind of walk through how Europe is different. First, GSM technology standard, one standard across the board makes it very easy for operators and content providers to work together to deliver up content and services and to roam across different countries. Next, lack of a traditional land line infrastructure, why is this important? Basically in the U.S. we are very lucky to have the ability to get almost universal access to the Internet, while in Europe, for example, in Italy, it can take up to six months to get a telephone line into your house. Obviously this means that mobile access is something that people are incredibly willing and have the need to get as soon as possible. So, what you'll see is that while in the United States the GPL land line structure is important, it will leverage wireless, where it's opposite in Europe, where the traditional wireless user will leverage land line as it continues to grow out if it grows out. Negotiation, metropolitan environment, moving towards oligopoly. Obviously most of the countries in Europe had a state-owned telephone agency. That has obviously opened up over the last decade in terms of competition, but it is still very much pervasive where the traditional carrier still holds a majority of the penetration of wireless users. Next, operators building portals. They're very much moving towards an AOL versus EarthLink and Terra Lycos model. So, AOL provides access and they also provide content in a walled garden type environment. Now, this is obviously changing across the board wherepeople want open environments to get information, but it's important to realize that in some ways, especially in Europe and Asia, carriers want to control what information people are seeing. Next, pay-by-the-drink culture. In Europe, it's very different, where people actually do not pay for every call. If you receive a call, you do not pay for that call. So, it obviously drives adoption upwards. Next, limited flat rate pricing. The culture in the U.S. is all about what am I going to pay? I want to know what's the most I can pay, and if there's a maximum, that's important to me. So, that's very different than where everything is pay by the drink. Prepaid and low credit card use, which means that people understand what the billing is or they have already set up a calling plan that's important to them. And caller pays, obviously driving usage, as we talked about before. So, I did not put up this slide to make everyone have a problem reading it or test your eyesight, but it really goes to showing kind of where online penetration and mobile penetration are important. So, as you can see, mobile penetration in most European countries is extremely high. This is not true in the United States; however, the lines are completely different that PC at home or actually access to land line infrastructure is hugely -- has a huge penetration versus the wireless penetration, and this goes back to the point where in the U.S. we are very much considered centric on the home and the PC and how that's very different than wireless and that's why most people have had a bad experience. Now, take it to a different level. What happens if the only way I can access e-mail is on a WAP phone or on a device that has a limited ability to view that information? I will tend to use that advice, I will just use it in a very different way, and that's what we're talking about here. So, how to view the European market, really three ways that we really look at it, Internet focused, Internet aware and mobile focused. Internet focused is much like the U.S. where PC and Internet access is pervasive and the relationships with portals and other content providers are already there. Next, Internet aware, where, you know, there's medium PC penetration, Internet access rates are lower, there's really not a distinct relationship on the Internet side for particular access. And then finally mobile focused, where there's a very low Internet penetration but high mobile penetration, and what you'll see is these cultures taking on devices and services very differently than they would in the U.S. or around the globe. So, what have we kind of learned across Europe and Asia with our joint ventures, and what mobile applications do people really prefer to see? Number one by far, and I think that this -- this line should be across the top, e-mail access. It's really about communicating with one another. Instant messaging, it's about being able to access people on the go wherever they are and be able to get important messages to them. Obviously there is -- there is an incredible need for that not only in the U.S. but around the world, and it's incredibly important that we have the ability to do that, whether it's on a small device, whether it's on a traditional PC, whether it's a voice application, it doesn't matter, it's about communicating with individuals across the board. As you move down into some of the other content areas that we've worked with, driving directions is incredibly -- has been an incredibly sticky product that people want to use, traffic and driving updates obviously, weather information, finance and stock information. So, obviously things that are near and dear to people's hearts, sports, for example, and betting. Where the laws are somewhat different around the world, betting is an incredibly popular application on these devices. And then entertainment. So, as we'll see moving forward, one of the key facets of mobile devices will be entertainment. This is incredibly important if you look at some of the demographics of cell phone use around the world, and it's a very high penetration of teens and people within their -- in their low twenties. Why is this important? Because those people are on the device for two reasons. One, to talk with their friends, and two, to entertain themselves, and that is something that will not only drive the penetration of wireless here, when gaming and chat and all those other things that you think of on your PC move to your device, whether it's, you know, a Palm device, whether it's a phone or whatever, but it will just be in a very different way. So, mobile applications road map, where are we and where are we going? The number one product and service for most mobile carriers in Europe in terms of data is SMS. There's about a billion SMS messages sent in Europe every day. So, most people in the U.S. have never received an SMS message, they don't know what an SMS message is, they don't care; however, if any of you have been in a train in Europe or seen teenagers or school kids in a classroom, the number one thing that they're doing is they're sitting on a phone and typing in messages to their friends or they're receiving messages about updates. Now, this may seem insane to a lot of you, and it seems insane to me a lot of times, but really what it's about is communicating, and what we tend to do is find the easiest way to communicate with people, and whether that's an SMS message, whether that's voice, as we've kind of talked about here, it's finding the right application, it's finding the right device and it's finding the right means to get that information to them. How does this kind of change, though, as technology changes? We talked a little bit about next-generation networks. What does that mean? At the end of the day, it means how much faster can I get data to the user? So, whether that's -- you know, obviously a roll-out that is, you know, in the future or today, in Europe right now we're looking at roll-outs in several countries of what's called GPRS, and that's basically a data network on top of GSM, their current standard. Is the bandwidth that that's providing, an incredibly huge jump, does it make it compelling to play peer-to-peer video games or download the video of the Supreme Court hearing? No; however, what it does do is provide a mechanism for us to allow users to have different experiences, and that's what it's all about. As you'll see, you know, some of the things that will continue to come, you know, device location, something that I'm sure will be a heated battle not only today but for years to come in terms of privacy and getting that information to you. Gaming, as we talked about. Video, but not video in terms of, you know, 15-minute clips of ABC News, but more importantly, small clips of information. For example, you know, I'm driving to Logan Airport. For those of you that live in Boston, that could be a 15-minute trip or that could be a three-hour trip. So, I'd like to see, you know, what -- one of the -- you know, what 93 looks like at the current time. So, I want to get a snapshot of that. Now, is that a -- you know, is that a 15-minute process? No, it's probably a three-minute, two-minute, one-minute application that says, show me the best route to Logan Airport and show me what the traffic looks like. So, that's what we're talking about, designing applications to use the best technology. Obviously local advertising, emergency services, things that you've seen already come out, like OnStar. So, there are a bunch of applications that continue to come out and be driven by new technology and consumer needs. So, mobile revenue streams and why is this important? Because in order to understand what people are doing, you need to understand in some ways what people are willing to pay for. Information services, this is really about connecting people with information that they may want. It will be a tiered system. There will be services that are free, there will be services that are premium, just like there are today. Mobile advertising, the same thing, a tiered system. Peoplewill either pay for services or they won't. They will be able to opt out of those services if we, you know, create the correct mechanism to allow them to do that in a compelling way. Mobile services that connect you to e-mail and PIM and unified messaging and mobile commerce, so the question is how broad is mobile commerce? It's the same way when you take an example of calling a call center. You know, when I am -- instead of calling Tiffany's or going to a Tiffany's store for -- for a, you know, a diamond earring for my girlfriend for Christmas, is that Internet commerce? Is that, you know, brick and mortar commerce? I don't know, but the question is, you know, how do I get -- how do I make it as easy as possible for people to buy in the way that they prefer to buy? And whether it's defined as mobile commerce, whether it's defined as e-commerce or whether it's traditional, you know, brick and mortar commerce, it doesn't really matter, and it's about providing them with the best service. Mobile distribution, providing mobile ISPs, whether it's through products like Ricochet, whether it's through products like a traditional carrier would provide, it's getting them the type of ISP they need. And then mobile enablement, really allowing people to move across different areas of the world and have the same access, and that's going to be an incredibly important piece. One of the relationship pieces that we talked about earlier that started off to be a heated battle was location and billing. So, one of the keys that will drive this, and I'll talk a little bit about this when I talk about DoCoMo in Japan, is the location of the user, obviously that can drive an easy product or it can be a nightmare for privacy, and then finally the billing relationship, how easy is it for me to pay for something, which is an incredibly important piece of mobile commerce and mobile moving forward. So, North American mobile consumers are different. I think that this is a statement that I often hear within the industry, and I don't always buy it, because at the end of the day, cultures are always different, and the applications that are within those cultures really drive the adoption. For example, you know, we've talked with some folks in the Midwest that want to basically have built for them a way to get the hog report every week, and that -- well, that would not transfer anywhere else in the world, but for them it's a very important application and one that needs to be built. So, is that something that we should do? Definitely, and that's providing access to information that's important. So, some of the things that we talked about earlier in the panel is U.S. technology standardization and carrier market infrastructure drive adoption. No technology standard in the U.S. is an incredibly difficult problem, not only for people within the industry but for the consumer at large. Multiple operator choice and limited nationwide coverage. I'm sure all of you have had the experience of traveling across the U.S. and having poorer coverage in some areas, depending on the network that you're on or the carrier that you use. High land line, low mobile penetrations, so obviously the U.S. consumer has very high expectations of what mobile data is, and that's a very dangerous thing. Obviously we want to make sure that we have the best possible product that makes it very easy for the user to use, but it's not the Internet. It's not, you know, high-speed, you know, video and voice to a phone, and people need to understand that. Flat rate pricing and all calls are billed, so this makes a very different piece of the puzzle for sure. Low affinity carriers and high churn. So, because of the multitude of carriers across the United States, it's a very different mechanism for providing products and services, because you don't always know where you are. Next, applications drive adoption in any region. So, I don't care if we're in the United States, I don't care if you're in Israel, I don't care if you're in Russia, in Japan or Europe, it's all about applications in specific markets, and it's making those applications as simple to use as possible. The one thing that we have learned across the board, whether it's on the Internet or it's on wireless, is if you make applications and services simple to use, people adopt them, especially when they're compelling. Then finally, culture drives applications obviously. So, I am going to talk a little bit about NTT DoCoMo now as a case study. Besides NTT DoCoMo, for those of you who don't know, has been used a great deal in the wireless community as one of the wireless success stories, and that's had a lot to do with the number of subscribers that they've gotten, the number of applications that they've built and the adoption of the product across the board. Obviously it doesn't help that they're a monopoly within their country and that there's, you know, little competition, but that being said, they have built a very compelling product, and as you'll see, it's very interesting. What NTT DoCoMo has reallyat the end of the day provided is an ISP, a content source and a billing mechanism. So, consumers have the ability to easily access content and services and be billed for those. And what is this really translated into? Let's look at the subscriber growth rate. The service launched in February of 1999. There was an original one-year target of 3 million users. By mid-May of 2000, there was already 7 million users, and basically out of 60 million mobile subscribers in Japan. So, that's a huge jump. I think now they're up to about 12 or 14 million at this point. So, this slide is actually old. And half of iMode users are less than 30. So, subscriber growth rate, what are the services that people are using? Messaging, 60 percent of iMode users use mail every day. So, as you would obviously log onto a PC to get mail every day, e-mail users log onto their phone to get mail every day, a very different paradigm. Database access, whether it's a telephone directory search, restaurant guides, trying to find out information, where you are, where you want to go. Information, something that is near and dear to all of our hearts, we want to find the most up-to-date information as fast as possible. Entertainment, one of iMode's most popular products right now is a ridiculous based game that involves, you know, karaoke types characters, and it drives absolutely immense minutes of use within the teen-age market. Transactions -- being able to access 270 banks, online purchases, stock trading and travel reservations. So, it's a very different model but much of the same products and services that you see in the U.S. Now, obviously there is a need to temper some of these points, I'm not -- I'm sure most of you can't imagine walking up to a bank and instead of use an ATM use your phone to transfer information, but that time is coming. Is it coming tomorrow? No. Is it coming down the road? Yes. So, I won't go too much into the pricing model here, but, you know, at the end of the day, what NTT did, NTT DoCoMo, that is, is really price it so that it can provide personal access and they would get a high adoption rate, but it has incredibly increased their average monthly bill across the board. So, what's the future look like? And we talked a little about this earlier, but it's really about enabling mobile assets for the future, and the future will look very different than it does today, but the same principles will be there. It's about providing people or having -- providing access to people how they want and when they want it. So, whether that's through a WAP device, whether that's through an SMS alert, whether it's through voice or whether it's through the Internet, everyone will be able to access the same information that same way. It's also about providing personalized content. So, people want to be able to see the same user interface and same piece of information no matter where they are. Now, that is somewhat different in terms of -- let's take an example of -- let's take an example of a stock portfolio. If I'm sitting at my PC at my desk with a broadband connection, I may want to see charts, I may want to see information that is about that -- you know, news stories, whatever it may be. Now, if I'm on my Palm Pilot, I may want to see a subset of that information. I may want to see four or five stocks I want to know about. If I'm on my cell phone, I may want to see one stock, know if it moved and know what the current price is if I trade, as easily as possible. So, it is about having information that iscompelling and also being able to access it in a means that the user wants, and that will continue to be a compelling piece of where the Internet moves. So, it won't be the traditional means of just the PC. That is it. So, happy to take any questions that you guys have. MR. WINSTON: We are not going to have time for questions. MR. PAVONA: Okay, then I guess I'm not. (Applause.) MR. WINSTON: Thank you, Jason. Sorry about cutting off the questions. We're going to take a break. We need to be back about 3:20, that's in 15 minutes. Just a reminder, we have all the presentations upstairs of the various devices on the 7th floor, and I want to thank the U.S. Chamber of Commerce for providing the refreshments during the break. See you back in about 5 minutes. (A brief recess was taken.) MS. FEUER: If everyone could take their seats, we would like to get started with this session, and if people can sort of pull the people in from the hallway if you're standing by the door. Great. Well, I could tell it was a wireless conference, because when I walked outside, everybody was on their cell phone. It was pretty amazing. I didn't know if you all were just making calls or accessing the Internet, but it's more cellular use than we're used to seeing here at the FTC. I'm Stacy Feuer, an attorney in the Bureau of Consumer Protection and the moderator of this workshop's first round table discussion. During the opening presentations, the speakers talked to us about various technologies, products and services, described how consumers are using these products in Europe and Japan and the issues implicated in delivering wireless services to American consumers that will meet their expectations. Now we shift focus to take a look at the business models that the industry is employing for the wireless space and how these models will help or hinder consumer adoption of e-commerce and wireless services. In Jason Pavona's words, what are people going to be paying for and what are they going to get in return? To discuss these issues, we're pleased to have on the panel Amanda McCarthy, an analyst in the telecommunications group of Forrester Research, a leading independent research firm that analyzes the future of technology change and its impact on businesses, consumers and society. Next to Amanda is Mark MacCarthy, the senior vice president for public policy at Visa USA, Inc. who coordinates Visa's public policy initiatives and strategies in electronic commerce, the Internet and m-commerce. Then we have Alan Reiter, president of the consulting firm Wireless Internet & Mobile Computing. He has been analyzing the convergence of wireless communications and computing since 1978 and specializes in jump-starting new businesses and enhancing existing operations in the development of leading edge wireless products and services around the world. He also publishes a newsletter covering the wireless industry. Jerry Cerasale, senior vice president for government affairs at the Direct Marketing Association, the largest trade association for businesses interested in interactive and database marketing is also with us. We also have Reuven Carlyle, the vice president for strategic development at Xypoint Corporation, a provider of wireless location services. Xypoint, which was one of the earliest companies to develop location technology, last year refocused its business operations and added wireless data and voice applications. Just last month, Maryland-based Telecommunications Systems, Inc., purchased Xypoint for $68 million in stock, which will enable them to offer new services. Mr. Carlyle, who has also worked with various wireless startups, has kindly offered to substitute for Al Gidari who was supposed to appear on this panel but unfortunately came down with the flu. Finally, we have Jack McArtney, director of messaging for Verizon Wireless, one of the largest wireless providers in the United States. Mr. McArtney is in charge of messaging and integrating all types of messaging into Verizon's wireless strategy, including its development of voice portals. Mr. McArtney has asked me, and I have to read this, to advise the audience that Verizon Wireless is in the registration period for a prospective initial public offering of its equity, and therefore there are restrictions on his ability to discuss certain matters concerning Verizon Wireless operations, especially with respect to forward-looking statements and forecasts. Being an attorney, I can appreciate the person who drafted that and sent it to me. Before I pose the first question to the panelists, I want to invite members of the audience who are viewing us from the overflow rooms to join us for the Q&A period. If you want to ask a question, please come down by about 4:05 and stand at the door to 432 and we'll give you a roving microphone so that you will be able to participate in the Q&A. To start off, I want to start by asking Amanda the first question and encouraging the other panelists to jump in if they have thoughts. Amanda, in your May 2000 report on mobile Internet realities, you advise the main operators in the wireless space, the carriers and the portals to "give up trying to own the customer and instead offer multiple distribution channels, best of breed content and new branding." What types of relationships do you see consumers having in this new wireless space and who will those relationships be with primarily? MS. MCCARTHY: Thank you, hello. That sort of statement makes a lot of friends and influences a lot of people in this industry, and I think the statement is really important, and I think it's important in the States right now today only because those folks to whom the wireless web is being offered are really adopters, if you -- it's really hard to explain the mobile Internet in one sentence, let alone explain all its nuances and benefits. So, those folks using it are in the vanguard of technology adoption today. I think that will change in the future, but today it is those early adopters. So, those early adopters today have a lot of different communications services provider relationships. They might have relationships with online providers of content and commerce, and they undoubtedly have a whole lot of relationships with mobile operators and carriers for things like broadband services. My question then is, all right, if the mobile Internet will be offered to these people, who is in the best position to offer it to them? Is it a major operator who is in the phone business suddenly bringing the Internet to these people, or is it the online leading brands who will bring these mobile Internet services to consumers? I think that's a real issue, and I think that already we've seen folks trying to get together to use those big brands to market the mobile Internet, but a whole lot of cooperation is not yet in the cards, because let's face it, everybody wants to own the customer, and I do feel for the mobile Internet to really make sense, to really be brought home, there's got to be an awful lot more cooperation and kind of working together to create new applications than we've seen thus far. MS. FEUER: Does anyone have any response? Mark? MR. MACCARTHY: I'm not sure it's a response, but it's I think an agreement. As this market matures, I think we'll see that the customer is going to maintain a relationship with each of the major players in the market. The device manufacturers, the wireless operators themselves, the merchants, the content providers, and the payment facilitators, such as Visa, will all maintain a direct relationship with the customer, but we don't think that any one player in the market is going to maintain a dominance in the relationship with the customer. MS. FEUER: Jack, what do you think of that from the carrier perspective? MR. MCARTNEY: Well, I think the point that struck me the most from the first comments by Amanda was the term "ownership" and what is meant by "ownership," and I think that a very important element of that is the responsibility for providing service to the customers, and we take very seriously our relationship with our customers, and I think if it comes down to defining ownership as the person that gets the phone call at 3:00 in the morning when something doesn't work, we have that obligation, and we must honor that obligation. So, we have to be very careful about how we define those terms. As we look at our relationship with our customers, we would hope that it is always one of if not the primary, relationship that we have for wireless communication and that we work in partnership with content providers, services providers, commerce providers to offer those services. MS. FEUER: Alan? MR. REITER: I don't know about the people in the audience here, but my carrier doesn't own me; it holds me hostage. I don't think most carriers -- I would say that Amazon and Nordstrom own me more than my cellular carrier. If you look at how the carriers have not been doing a job in selling wireless data in this country, I think it's incumbent to see that the future, the future of wireless data services will be based not upon what the carriers are doing as much as what Yahoo is going to be doing and what AOL will be doing and what the retail industry will be doing that they haven't been, like Nordstrom and so forth. Give me Amazon for a customer service rather than a cellular carrier. So, I think that the future in the United States will have to be other companies that really know how to service the customer getting into this market and providing good services. MS. FEUER: Well, I -- Jerry? MR. CERASALE: Yeah, I think that the relationship with the customer potentially changes. I mean, when you have something where your wireless communication doesn't work, you're going to go to Verizon and complain, because that's with whom you have a contract to get your service, but if you're looking at the web and you're on a web page, you are dealing directly with that web page. Now, also potentially there's an AOL that could be inside somewhere, so the relationship that I have as a customer can change as the application -- where I'm looking -- changes, and I would know that. So, I don't think that there's any particular one person that owns the customer in these applications. MS. FEUER: Well, let me if you don't mind, Amanda, segue into another area I think that directly relates to this, and it was one that Reuven and I were talking about this morning. He's been in the wireless space for a long time, both working for a carrier and working for an application provider and working with various startups, and we were talking about how many in the industry are combining, carriers and information providers and location service providers, to create one product, and there's, of course, many questions about how it ultimately gets delivered to the consumer, but I'd like to ask Reuven to address what kinds of partnerships he sees developing and how do these partnerships impact on consumer issues like price and choice and availability. MR. CARLYLE: It was discussed this afternoon that wireless carriers have a relationship with customers that some customers object to. If you look at it in the context of like an ISP in terms of access, the reality is that the wireless carrier does have a relationship and they're going to continue to have a very substantive relationship for a very long time. One of the reasons is that the marketplace drives services to carriers, because they have a billing relationship fundamentally, they have a desire to provide enhanced services and applications to the user base, but the fact is that the bumblebees that buzz around major carriers from a vendor point of view, from an application provider point of view, from an infrastructure point of view, that provide wireless data, that provide software and provide services, fundamentally treat the carrier as the customer. So, that means that applications that come to market are going to have that kind of orientation. That's not to say that there isn't a revolving customer relationship, but what's interesting is that Yahoo mobile has been live with their mobile portal for 18 months or 24 months. It's been for all intents and purposes a complete disaster. I mean, it's one-way SMS to your phone. Now, users don't particularly value that service, okay, and that's been the primary data application from the web to the phone. Nobody uses it. I mean, how many people want to get SPAM on their phone? There's a very personal, intimate relationship that users have with the phone, and the fact is that data is still figuring out its comfort level around providing services to users given that reality. Now, the Palm and other hand-held devices obviously have a different type of relationship, and you have got all these startups and companies trying to provide applications to that market, but let's deal with the reality. People buy phones to have a phone conversation. Voice is still the driver. As data becomes more of a viable business model and a viable service model, which, of course, is what the carriers and others are driving toward, there is a reality that there's going to be a shift in what people use it for, but until there's an appreciation that the marketplace is looking for applications that carriers can provide as enhanced services to the user, other applications, like Yahoo Mobile and others, are still going to struggle outside of the infrastructure side. MS. FEUER: Well, let me recognize Amanda. One note, though, I have received a note asking all the speakers to speak closer to their microphones so that this is all picked up in the overflow rooms and for the videotape. MS. MCCARTHY: Sure. I'd just make a quick point that I don't think mobile operators are necessarily going to be able to deliver continued great services, voice and data, and make them result in a reduced churn on the part of their customer base unless they actually do work with folks like the Yahoos of the world, to have them work with pieces of the network that are doing very interesting things, such as in the arena of location-based services to build the compelling mobile data apps. I agree with you 100 percent. I think carriers as a distribution channel, you can't beat it for reach and for relevancy; however, if mobile operators only pick and choose those services that basically pay the most for a great position on the start deck, we're not going to get a situation that I think iMode actually did benefit from, whereby a whole lot of different applications are basically thrown in front of the consumer base, and those that stick continue to be developed and continue to be honed and perfected, and those that don't fall by the wayside. So, I guess what I'm really arguing for is we've got to open up the world guard to some extent so that the innovative mobile applications can come in. Other than that, I don't think we are really going to deliver something really compelling in terms of a data service to consumers over mobile handsets. MS. FEUER: One interesting point, I just recently read an article saying that there was something like a thousand applications for iMode in Japan, those are the official ones. There are about 19,000 unofficial applications that you can access through your iMode. So, I think that points to what Amanda is saying. This is a service that's controlled primarily through the carrier, NTT DoCoMo, but that there are lots of partnerships out there. Mark? MR. MACCARTHY: I want to speak to the partnership question, because we think that that's the way this will actually have a future in the United States, and to find out more about how those partnerships might work, we're working with a company called SkyGo in a trial in the Denver area. A thousand subscribers were given Internet-enabled cell phones, and we're working with 50 retail operators in the Boulder area, we're working with AT&T, with Nextcard, and the purpose of this experiment is to find out to what extent the merchants themselves will experience an uptake in their business based upon the advertisements and promotion that the people who got the thousand Internet-enabled phones receive. Longer-term, we're looking to find out what kinds of promotions, what kind of advertisements in that kind of context really prove to be the most beneficial and helpful, both for the consumers and the merchants. In other contexts, we have done the survey research asking the users of mobile phones what their interest in |