**PREPARED REMARKS**

**of**

**MICHAEL K. POWELL**

**Commissioner**

**Federal Communications Commission**

**445 12^th^ Street, S.W.**

**FCC Commission Meeting Room**

**Washington, D.C.**

# **March 30, 1999**

Thank you for joining us today. The year 2000 will be upon us in 276
days, 10 hours and 59 minutes, but who is counting? Actually, we are.
Today, I am pleased to announce the release of the FCC's Y2K
Communications Sector Report - an extensive analysis of the readiness of
the telecommunications industries to have their computers ready and able
for the new millennium on January 1, 2000.

I am pleased to recognize two key officials who have played vital
leadership roles in working on the Y2K issue:

-   John Koskinen of the President's Council on Year 2000 Conversion,
    who coordinates the Federal Government's efforts with respect to the
    Y2K problem and with whom I work closely as Co-chair of the
    Council's working group on telecommunications; and

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-   Michael Armstrong---CEO of AT&T, who also chairs the Network
    Reliability and Interoperability Council (NRIC), a federal advisory
    group to the FCC whose efforts with respect to the Y2K problem have
    been invaluable.

I would also like to acknowledge William Kennard, Chairman of the
Federal Communications Commission, and thank him for his support,
encouragement, and commitment of time and resources.

This Report analyzes the Y2K readiness as of January 1999 of five
industry sectors: (1) wireline telephone; (2) wireless telephone; (3)
cable television; (4) broadcast television and radio; and (5) satellite.

It also contains special sections dedicated to the international
telephone network and emergency services.

In addition, we have attempted to offer limited, but useful consumer
tips for each of these services.

Today\'s interim report card on the Y2K readiness of the communications
industries is mixed, but we are guardedly optimistic about this industry
as a whole. In the Report, we cover each sector in detail, but let me
offer some general observations:

-   *[High marks]{.underline}* for the largest companies in each
    separate sector that have already completed Y2K fixes, and have
    systems in place to quickly resolve any isolated and minor
    disruptions. These large companies serve much of the population,
    which indicates that the vast majority of the consumer public will
    experience minimal disruptions.

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-   *[Warning grades]{.underline}* for smaller and medium-size companies
    that have been proceeding too slowly in addressing potential Y2K
    issues. These smaller companies have either not adopted the
    necessary systematic approach to preventing Y2K problems, or have
    adopted systematic approaches with completion deadlines dangerously
    close to January 1, 2000, leaving little time to solve problems
    discovered in their testing processes.

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-   *[Below average grades]{.underline}* for sectors that have failed to
    provide full and complete information to allow us to assess their
    readiness and to validate their claims that they are, or will be,
    Y2K ready. Although they may be doing well, we have no choice but to
    acknowledge some risk in sectors whose companies are unwilling to
    respond to requests for information.

The assessments are based on information collected from a number of
sources, including FCC-sponsored public and private forums, industry
umbrella groups, the work of NRIC, and voluntary and mandatory surveys
of each sector.

It is important to remember that Y2K remediation is the responsibility
of industry, collectively, and each company, individually. Nonetheless,
we recognize the important role our agency can, and has, played in
coordinating activity and facilitating the flow of critical information.

In fulfilling this role, we have employed a three-dimensional approach
that drives all of our efforts on the Y2K issue: (1) outreach and
advocacy---to raise awareness; (2) monitoring and assessment---to keep
track of industry efforts and to facilitate the development of workable
solutions; and (3) contingency planning---to ensure that the industry
has a plan to deal with inevitable failures. This Report is one product
of that process.

Though we can prod, facilitate, coordinate and even threaten industry to
fix this problem, the ultimate responsibility rests with them to deploy
the resources and execute a remediation plan that will ensure service to
their customers. . . our citizens. While some companies should be proud
of the progress that is reflected in this Report, they dare not pause,
for time continues to tick away and this is a task for which there are
no extensions.

I am going to take just a few minutes now to highlight our assessments
in each sector:

**[WIRELINE]{.underline}**

Perhaps, of all these industries, the most critical to the nation is the
wireline telephone network. The telephone network is a critical
infrastructure upon which virtually everyone relies. It is vast and
complex, and consists of many players that must work together to
complete a single phone call.

The wireline telecommunications industry, however, is probably better
equipped to address these challenges than most. These companies maintain
a high level of reliability, have top quality experts, and are working
together to address the Y2K problem.

Our assessment of the wireline industry divides the industry into two
groups: 1) the seven largest local telephone carriers providing service
to 92% of the country, which are participating in the NRIC assessment
process, and 2) the remaining small and medium size carriers that the
Commission surveyed directly.

Our analysis reveals that the largest local and long distance carriers
have nearly completed their Y2K remediation. These carriers are expected
to be 100 percent ready, including having their contingency plans in
place, by the second quarter of this year. The same is true for the
largest long distance carriers that account for 82% of total U.S. long
distance revenues. This means that the vast majority of telephone
consumers can expect few, if any, Y2K disruptions.

The remaining carriers, however, lag behind the large carriers in their
remediation and contingency planning. Nearly half of those surveyed by
the Commission reported not having a formal plan in place for managing
the Y2K problem. This is obviously of concern to us and we will be
redoubling our efforts with respect to these carriers.

As anyone who has studied this problem will tell you, testing is
critical to having any real confidence in remediation results. In this
sector, we have had fairly rigorous and comprehensive testing. And, the
reports are encouraging. After 6 months of testing, the industry found
only 6 anomalies, which have now been fixed. More testing results will
be released in April 1999. These results give us confidence that their
survey responses and our guarded optimism is justified.

**[WIRELESS]{.underline}**

According to the industry, wireless handsets have very few Y2K problems
associated with them. The Commission's survey revealed a similar gap
between the readiness of large and small wireless carriers. Our
assessment, however, was hampered by a disappointingly low response rate
from the wireless carriers that we surveyed. As a result, we must
acknowledge a certain degree of risk with this industry until we are
able to assess a broader portion of the industry. We intend to continue
working with this industry to get a better picture of its overall
efforts.

**[BROADCAST]{.underline}**

The broadcasting industry appears to be adequately readying itself for
the Year 2000, and we believe the public will continue to have access to
broadcast services throughout the year 2000 date rollover. Unlike some
other industries, there is a high degree of redundancy in the
broadcasting industry, as most Americans receive many no-cost
over-the-air broadcast signals. Thus, if one station were to potentially
go down, a viewer or listener could switch to another station.

**[CABLE]{.underline}**

According to our survey results, Y2K problems are not likely to cripple
cable system operations and it appears that the vast majority of the
nation's 65 million cable subscribers will continue to receive cable
service on January 1, 2000. It should be remembered, however, that cable
receives its video channels from a variety of sources, including
broadcast signals and satellite programming. As a result, isolated
channel outages and limited problems may be encountered.

**[SATELLITE]{.underline}**

The industry consensus is that the Y2K problem is unlikely to affect
satellites now in orbit. Few satellites actually have date sensitive
components and the more likely area of difficulty will be in the ground
segment. We received quantifiable data from only 12 of 32 operators
contacted, however, so we do not feel we have enough information to
speak authoritatively on the status of readiness of this industry.

**[INTERNATIONAL]{.underline}**

In this Report, we convey the findings released by NRIC in January 1999
on the risk facing the international network. Those findings reaffirm
our concern that other parts of the world are not as far along as we
would like or expect. This area will require intensified attention.

**[EMERGENCY SERVICES]{.underline}**

The Report dedicates a special section to emergency services. Testing to
date has not revealed problems with remediated 911 equipment.
Nonetheless, some of the enhanced systems possess fairly sophisticated
equipment for identifying callers, problems and locations. Though
nothing we have seen suggests widespread problems, we think it prudent
to expect some delays in call processing in some systems. In emergency
situations, time can be of the essence, so we will continue to work
diligently with this sector.

**CONCLUSION**

We are guardedly optimistic of the overall assessment of
telecommunications industry readiness and activities in preparing for
the year 2000. Interestingly enough, the results in these sectors mirror
those of other industries with regard to the disparity between the
readiness of the larger companies and some of the smaller and medium
sized companies.

This assessment is merely a snapshot as of January 1, 1999. Fortunately,
the Y2K remediation process is an on-going one, not a static one. For
our part, we are going to continue to monitor and prod the companies in
the telecommunications sector to explore ways to reduce this gap between
large and small company readiness.

Everyone in the industry needs the next assessment to show them
receiving a big \"E\" for effort.