**Remarks of the Honorable Robert M. McDowell**

**Commissioner, Federal Communications Commission**

**before the**

**Federal Communications Bar Association**

**Monday, February 2, 2009**

**12:00 p.m.**

**Capital Hilton Hotel**

Thank you, Mark, for your kind introduction. Thank you also for inviting
me to speak with you today. It's wonderful to be back at the FCBA. Many
thanks for all that you do, and I'd especially like to thank Stan Zenor
for all of his hard work on behalf of the FCBA.

I see we have some special guests in the audience. They should look very
familiar to all of you. In reverse order of seniority, first let's all
give a warm FCBA welcome to my friend and colleague Commissioner
Jonathan Adelstein. And, in his first appearance before the FCBA as
Acting Chairman of the FCC, let's give a rousing congratulatory welcome
to my distinguished friend, Mike Copps. Congratulations again, Mike, on
being named to that post.

On a scale of one to ten, I'd rate his first few days as Chair as an 11.
Chairman Copps acted swiftly to open up lines of communication not only
with his fellow commissioners and outside parties but, more importantly,
with every employee of the FCC. I have sensed an immediate boost in
morale as a result. In his address to all FCC employees last week, he
eloquently crystallized several of the ideas many of us have been
thinking about for some time. As he implied then, no one should have
exclusive ownership of ideas regarding FCC reform. Or to paraphrase
President Ronald Reagan, it is amazing what you can accomplish if you
don't care who gets the credit. And Mike, I bet it's not often you get
compared to President Reagan, but in this context, I hope you'll take it
as a high compliment.

But before I get into the heart of my remarks on FCC reform, I'd like to
discuss briefly the more urgent issue of the digital television
transition. It looks as though Congress will try again later this week
to pass legislation to push back the analog cut-off deadline to June 12.
If and when a new bill is signed into law I know that my colleagues on
the Commission and I will work diligently to implement it. In the
meantime, it is important for all of us to stay focused on February 17
regardless of what Congress does or does not do. Most broadcasters are
prepared to shut off their analog signals on that date, and an estimated
392 stations have either already converted to all-digital or will do so
by February 17. Broadcasters have invested hundreds of millions of
dollars in new DTV equipment in the past few years in reliance upon the
February 17 deadline. On top of that, broadcasters have been incurring
additional costs to broadcast in both analog and digital. If government
is going to change the rules of the game with precious few minutes left
on the clock, I hope that the Commission will be afforded some
flexibility in allowing broadcasters to go all-digital on February 17,
or before June 12, provided they have been acting in good faith and both
their viewers and the Commission have been properly notified. I also
hope that the Commission would be given the resources it would need to
carry out any new mandate.

At the same time, we should be frank with the American public and get
the word out that many TV viewers will be left behind regardless of when
the cut-off date is. I know that Chairman Copps, Commissioner Adelstein
and I will do all that we can to minimize the inevitable collateral
damage this transition will cause.

In the meantime, let's all stay on message: if you need a converter box,
get it *today* and hook it up *today* and start enjoying the benefits of
digital television *today*.

Now, back to FCC reform. I could think of only *one* audience on the
*planet* that I could give this speech to, and that is the FCBA. I come
to you today not only as a commissioner, but as a FCBA member and former
practitioner. As you know, Chairman Copps and I have been corresponding
with open letters setting forth some ideas on improving the public's
ability to participate in the FCC's work, as well as its overall
decision-making abilities. After many conversations with him and
Commissioner Adelstein, I'm confident that *we* *all* share the goals
of: boosting employee morale; promoting greater transparency; creating a
more informed, collaborative and considerate decision-making process;
and encouraging meaningful and effective public comment. We all have an
interest in advancing the timely and orderly resolution of Commission
business.

So, let's talk about some ideas.

As a first step, I recommend that we commence a thorough operational,
financial and ethics audit of the Commission and its related entities,
such as the Universal Service Administrative Company and the Federal
Advisory Committees. As with all reform endeavors, I hope that all of
the commissioners would be involved in this process, including its
development and initiation. A couple of folks have expressed their
concern over my use of the word "audit." I certainly did not intend for
that to be a scary word. What I mean by an audit is something akin to a
due diligence review of a company as part of a proposed M & A, or after
a change in top management. It doesn't have to take a lot of time. After
this type of review, we should be able to answer the questions: What is
the current condition of the FCC and its related entities? How do they
operate? The purpose wouldn't be to initiate a witch hunt against anyone
or anything. I'm not seeking to abolish USAC or FACs, for instance. I'm
merely seeking to take the first step on the road to improving the
agency.

During the review, we should seek comment from the public and the
Commission staff, and we should provide Commission employees with an
opportunity to submit comments anonymously. I also propose that we hold
a series of "town hall" meetings at the FCC's Washington headquarters,
at a few field offices, as well as in a few cities around the country
for the general public to attend. In fact, maybe we can start the first
such "town hall" meeting here today at the conclusion of my remarks. All
of us might find it cathartic. This could be the beginning of the first
FCC "wiki" that we all shape and share.

As part of a financial review, it is crucially important that we examine
the Commission's contracting process, as well as the processes relating
to the collection and distribution of administrative and regulatory fees
currently conducted exclusively by the Office of Managing Director. For
instance, we should consider whether the full Commission should receive
notice prior to the finalization of significant contracts or other large
transactions.

In the same vein, it is time to examine the Commission's assessment of
fees. Regulatory fees are the primary means by which the Commission
funds its operations. You may not know it, but the FCC actually *makes*
money for the tax payers. Our methodology for collecting these fees may
be imperfect, however. At first blush, it appears that we may have
over-collected by more than \$10 million for each of the last two years.
Some have raised questions regarding how the fee burden is allocated.
Our recent further notice of proposed rulemaking could lead to a day
when we can be sure that we have a methodology that lowers regulatory
fees and levies them in a more nondiscriminatory and competitively
neutral manner.

We should also work with Congress to examine how the Commission
continues to collect *administrative* fees under Section 8 of the Act.
Let's take another look at why we continue to levy a tax of sorts of
allegedly \$25 million or so per year on industry, after the Commission
has fully funded its operations through regulatory fees. That money goes
straight to the Treasury and is not used to fund the agency. Every year,
we increase those fees to stay current with the Consumer Price Index.
Why? Our regulatees pass along those costs to consumers and they are the
ones who ultimately suffer from unnecessary fee collection.

Furthermore, we should examine the financial management of the universal
service fund. Our Inspector General reported last year that the
estimated erroneous payment rate for the USF High Cost Program between
July 2006 and June 2007 was 23.3%, with total estimated erroneous
payments of \$ 971.2 million. How and why did that happen? I'm delighted
that OIG caught it, but why did that happen to begin with?

In the same spirit, an ethics audit should ensure that all of our
protocols, rules and conduct are up to the highest standards of
government best practices. Faith in the ethics of government officials
has, in some cases, eroded over the years and we should make sure that
we are doing all that we can to maintain the public's trust.

Also in connection with this review, I hope that we can work together to
update and re-publish the Commission's strategic plan. As we toil on
day-to-day tasks, it can be easy to lose sight of our strategic
direction. A review and update could help sharpen our focus and put a
spring in our step not to mention demonstrate our commitment to
transparency and an orderly process.

The findings of our review, combined with our work to develop a new
strategic plan, would provide us with the information and ideas
necessary for considering a potential restructuring of the agency. As
you know, the Commission has been reorganized over the years -- for
instance, the creation of the Enforcement Bureau under Chairman Kennard
and the Public Safety and Homeland Security Bureau under Chairman
Martin. Close coordination among the staff in pursuit of functional
commonality historically has improved the Commission's effectiveness.
Nonetheless, the time is coming again to reconsider this option. Make no
mistake: I am not suggesting that we make change for the sake of change.
But the agency needs to be flexible and efficient if we are to serve the
American people effectively.

I understand and respect Chairman Copps' preference to wait for a
permanent chair to lead the effort to tackle the issue of restructuring,
but I hope there is no harm in starting to talk about such tasks now.

There are, however, steps we may want to take to maximize our
efficiency. Given today's economy, it is more important than ever that
the Commission use all of its resources to improve taxpayer value. For
example, I share and applaud Chairman Copps' view that we delegate some
authority back to upper and mid-level management. We ought to have the
confidence in our deputy bureau chiefs and division chiefs to provide
them with authority to handle routine matters, conduct meaningful *ex
parte* discussions and generally discuss their subject areas with
*anyone*, including commissioners, without prior approval from the head
of the agency.

As Chairman Copps emphasized, the Commission's most precious resource,
really our only resource, are its people. Many of our most valued team
members are nearing retirement age. We need to do more to recruit and
retain highly-qualified professionals to fill their large shoes. I hope
our next budget will give us adequate resources to address this growing
challenge.

Similarly, I am hopeful that we will make more efficient use of
non-attorney professionals, such as engineers and economists. For
example, there is no reason why we cannot use engineers to help
investigate complaints and petitions that involve technical and
engineering questions. This would be especially useful as we continue to
consider matters pertaining to network management.

We can all agree that the Commission could improve external
communications. This is especially true with respect to process.
Luckily, there is some low-hanging fruit. As a first step, I suggest
that we establish and publish Open Meeting dates for the entire 2009
calendar year. I greatly appreciate Chairman Copps starting us off on
the right foot by posting the meeting dates through the first quarter.
Perhaps once we get a permanent chairman, the public, the staff, the bar
and the media who cover us, would greatly benefit if we would provide at
least six-months advance notice of meeting dates for 2010 and beyond.

In addition, I propose that we create, publish on the website and update
regularly an easy-to-read matrix setting forth a listing of all pending
proceedings and the status of each. This matrix would include those
matters being addressed on delegated authority. The taxpayers should
know what they are paying for.

Similarly, I suggest that we establish and release a schedule for the
production of all statistical reports and analyses regularly conducted
by the Commission, and publish annual updates of that schedule. This
would include, for example: the *Wireless Competition Report*, which has
traditionally been released each September; the *Video Competition
Report*, which until recently, was released at the end of each year; and
the *High-Speed Services Report*, which, at one point, was released
biannually. The goal here would be not only to ensure that the public is
fully aware of what we are working on and when, but also to give these
valuable analyses to their owners -- the American people -- with
regularity.

We also need to overhaul our internal information flow, collaboration
and processes. Chairman Copps, Commissioner Adelstein and I are working
together to identify and implement measures to increase coordination
among the commissioner offices, between commissioner offices and the
staff, as well as among the staff. In fact, our senior advisors all met
with the Commission's senior staff this morning. It is important that we
cooperate with each other to foster open and thoughtful consideration of
potential actions well before jumping into the drafting process. The
bottom line is simple: No commissioner should learn of official actions
through the trade press. We could call this our "leave no commissioner
behind" program.

Since arriving at the Commission, I have operated under the firm
principle that the FCC is an independent agency and each commissioner
should always vote his or her conscience, independently. At the same
time, Section 5 of the Communications Act provides that the chair acts
as the chief executive officer of the Commission, and, therefore, has
responsibility for setting the agenda. However, a CEO has a board of
directors, in this case the other commissioners, and an associated
fiduciary obligation to consult with and report to his or her board.
Likewise, all members of the Commission have a duty to the organization,
and each has one vote. The Act makes clear that no one vote is weighted
more heavily than another. In light of this statutory structure,
thorough, honest and unfettered communication and thoughtful cooperation
should usually yield positive results. As with the private sector,
bottlenecks, information hoarding and opaque management styles can
stifle innovation and efficiency. As a result, the public interest can
be harmed.

In contrast, an effective FCC would be one where, for instance,
Commissioner offices would receive options memoranda and briefing
materials long before votes need to be cast. And, again, I'd like to
praise Chairman Copps for his efforts to make that happen. For all
rulemakings, within 30 days of a comment period closing, perhaps all
commissioners could receive the same comment summaries. And maybe,
notices of proposed rulemakings could sometimes actually contain
proposed rules. Maybe within a fixed timeframe after receiving comment
summaries, say 60 to 90 days, all commissioners could receive options
memos complete with policy, legal, technical and economic analyses. In
preparation for legislative hearings, it might be helpful if all
commissioners received briefing materials, including witness lists, at
least five business days prior to the hearing date. For FCC *en banc*
hearings or meetings, I'd appreciate it if all commissioners received
briefing materials at least one week prior to the event date. The
details here are less important than the upshot: to echo Chairman Copps,
all commissioners should have unfettered access to the agency's experts,
and receive the benefit of their work.

In the same spirit, it might help us reach legal conclusions better if
we were to require the bureaus and offices to seek legal advice from the
Office of the General Counsel at the early stages of, and throughout the
drafting process. Rather than slow the process, I believe this would
shorten the process -- after all, we would be capitalizing on our
in-house expertise early and often. Taking such precautions might also
bolster the Commission's track record on appeal. Indeed, this type of
close collaboration might lead to more logical, clear and concise policy
outcomes that better serve the public interest.

As part of these communications improvements, I suggest that we update
the Commission's licensing databases, IT and web systems. We are overdue
for an upgrade. Well-organized and user-friendly information systems
will ensure that all public information is available, easily located and
understandable. And, I recommend that we update the General Counsel's
part of the website to include litigation calendars, as well as access
to pleadings filed by all the parties. I also wonder whether our
customers would prefer that licenses of all stripes be housed in one
database, rather than separate databases spread across the stovepipes of
our several bureaus?

Another idea, which I hope will have particular appeal to the current
and former FCC employees is to update and rewrite our guide to the
Commission's internal procedures, currently entitled *Commissioner's
Guide to the Agenda Process*. **\[**Prop?**\]** For instance, I propose
that we undertake a thorough review of the physical circulation process,
including identifying and making changes to reduce the amount of paper
unnecessarily distributed throughout the agency. Current procedures
require that each office receive about eight copies of every document on
circulation when one or two would suffice. I also wonder why our
procedures mandate delivery of 30 paper copies of released Commission
documents to our press office. The overwhelming majority of reporters
who cover our agency pull the materials they need from our website.
Perhaps this is another area where we could save money and help the
environment all at the same time.

I'm starting to get into some real inside baseball here. But perhaps we
could revamp and tighten the process for 8^th^ floor offices' approval
of FCC documents once they are adopted. Now that you've eaten, I can let
you in on some inside FCC lingo. This system is known to insiders as the
Bureau Agenda Release Form process -- the acronym for which is B-A-R-F
or "BARF." Anyway, the goal would be to provide offices with a
meaningful opportunity to review documents prior to release, to reduce
the need for issuing *errata*. Similarly, let's examine the process for
releasing documents approved by the commissioners. In recent history
some have been delayed, while others have not.

Finally, on a more "macro" level, I propose that the commissioners work
together to build an ongoing and meaningful rapport with other facets of
government, especially in the consumer protection, homeland security,
and technology areas. Each of us should be able to collaborate and
coordinate with the appropriate experts and decision makers across every
branch of government regardless of function or political affiliation.

Well, I sort of feel like I've been sitting on Santa's knee giving him
my geeky FCC reform wish list. Nonetheless, I am eager to work closely
with the Obama Administration, Congress, FCC employees, FCBA members,
consumer groups and *all* interested parties to improve our agency. I
again applaud Chairman Copps' actions thus far.

So, in the spirit of working toward a reinvigorated FCC, I'd like to
kick off our FCC "Wiki," hear your views and open the floor to a
free-flowing discussion.