The next few years will be a critical period, both for the Japanese efforts to pull closer to technical parity with the United States in HTS microwave components, and for market acceptance (in the United States or elsewhere) of HTS for wireless. The roll-out of wireless services is proceeding at a hectic pace, and the hardware providers are being challenged by the service companies to rapidly exploit successive cycles of an increasingly broad range of "conventional" (that is, room temperature) technologies. Many major new services will be offered in the international wireless market well before the year 2000. For terrestrial services, the well publicized personal communication system (PCS) allocations licensed by the U.S. government require initial services before the year 2000. Within the United States the number of wireless subscribers is growing at an approximate annual rate of 40% and is projected to reach 63 million by the year 2000. According to ISTEC, in Japan the number of wireless phones was 20 million at the end of 1996, was expected to reach 40 million at the end of 1997, and in 1998 the number of wireless phones was expected to exceed the 60 million wired phones. In addition to the ground-based systems, the space- based Iridium system has many satellites already in orbit and will see initial operation in this century. It is not clear that HTS technology can compete in any sector of the demanding wireless market, nor was it the task of this WTEC panel to assess the viability issue -- the market will be the real test of performance and cost.

The telecommunications market, of course, has been "deregulated" and opened to competition in both the United States and Japan. Still, there are differences in these two microwave markets. In Japan, NTT still sets, de facto, the standard and pace for wireless services, despite the existence of several other new common carriers. NTT officials currently consider cryocooled technology impractical for the wireless market. (See the Saitama site report in Appendix B.) In the United States there are stronger competitive forces at play. Lucent Technologies and Motorola are the largest domestic hardware competitors, and many others, including Ericsson and Northern Telecom, are also important participants. There are also stronger competitive forces among service providers, which range from very small (100 base stations) to very large. This competition currently provides more opportunities for HTS ventures in the United States and has resulted in a dominant focus on wireless in the small entrepreneurial U.S. firms. In essence, the smaller providers seek to achieve market penetration via advanced technology such as HTS, and the larger providers will consider HTS to avoid "technological surprise" at the hands of their competitors. In the United States, unlike Japan, there is also a second potential customer base for HTS rf/microwave technology: the Department of Defense (DOD). DOD has provided substantial funding for the development of a wide range of preprototype devices, both LTS and HTS, and in the microwave arena, it is this customer that has enriched the diversity of device types listed in the tables above. This is a high- performance market segment and is well matched to the performance attributes of superconductive electronics. It is probably not, however, of sufficient volume to sustain the approximately 300 persons currently working in small firms developing HTS electronics technology in the United States. In addition, both Japan and the United States have similar activities exploring submillimeter-wave mixer/antenna structures, but of course, the needs of the small international radio astronomy community cannot sustain the superconductive R&D community.

At this time, the wireless market is the only one with potential for high-volume requirements for HTS filters and subsystems. The satellite environment and the U.S. DOD requirements are substantially more demanding, and quantities of identical devices are much smaller. HTS filters must therefore achieve commercial viability in wireless applications if high volume sales are to amortize the very substantial cost of the HTS microwave technology development.

It is important to emphasize that this amortization of costs is a far more urgent issue in the U.S. arena than it appears to be in Japan. In the United States, the penetration of the wireless market by HTS subsystems is crucial to the business strategies of the several small commercial firms. The venture capitalists and public shareholders of these firms have high expectations of impending volume orders for HTS wireless subsystems. Delay beyond 1998 or 1999 could very well mean the inability to raise further investment dollars by these firms. This anticipated impact of delays has already had one casualty. SCT, a privately held development-stage company specializing in cryoelectronic receivers for the wireless base station market, announced cessation of commercial operations in March 1998, as it was unable to raise further venture investment funds. Because these same firms have performed much of the R&D on HTS microwave components with cost-shared government and private funds, the technological investment in the United States also depends critically on this market success. The Defense Advanced Research Projects Agency (DARPA), the principal U.S. government funding agency for superconductive microwave technology, has an exit strategy for its investment that relies on the commercial success of HTS for wireless to sustain the technology.

In Japan, the two teams developing HTS wireless technology, AMTEL and "Western Alliance," are funded primarily by the government. Although their development schedules are not as aggressive as those in the United States, they certainly are capable of exploiting the wireless marketplace should viability be established by the efforts of the small firms in the United States. Furthermore, although the technical maturity of the wireless teams in Japan currently lags that of the leading U.S. companies by up to two years, the Japanese efforts appear to have a greater reserve of "patient" investment capital. The Japanese efforts would likely persevere even should the investors in the United States lose faith in the HTS wireless market. (Witness the continuation in Japan of the Josephson Computer Project for 7 years beyond the termination at IBM of the major U.S. digital superconductive effort.)

Published: July 1998; WTEC Hyper-Librarian