UNITED STATES OF AMERICA

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FEDERAL COMMUNICATIONS COMMISSION

CONSUMER ADVISORY COMMITTEE

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MEETING

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Friday, July 11, 2003

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The Committee came to order at 9:00 a.m. in Room

TW‑C305 of 445 12th Street, S.W., Washington, D.C.,

Shirley L. Rooker, Chair, presiding.

MEMBERS PRESENT:

JEFFREY KRAMER AARP

BRENDA KELLY‑FREY National Association of State

Relay

Administration

LARRY GOLDBERG Media Access Group, WGBH

SHIRLEY ROOKER Call for Action

SCOTT MARSHALL FDIC, CAC‑Designated Federal

Officer

RICHARD ELLIS Verizon Communications

JOY RAGSDALE National Association of State

Utility

Consumer Advocates

VERNON R. JAMES San Carlos Apache

Telecommunications Utility, Inc.

SUSAN GRANT National Consumers League

DAVID HOROWITZ Fight Back Foundation for Consumer

Education

DIXIE ZIEGLER Hamilton Telephone Company, d/b/a

Hamilton Relay Service

DONALD SNOOP Hometown Online

MEMBERS PRESENT:

LINDA WEST The Native American Community and

others concerned with

telecommunications service in

rural America

MICHAEL DelCASINO AT&T Corp.

MIKE DUKE blind or visually impaired

persons, licensed radio amateur

operators, and management of

audio information services for

the blind

KAREN KIRSCH National Association of

Broadcasters

RON BARNES Cellular Telecommunication &

Internet

Association

RICHARD MALLARD National Association of Consumer

Agency Administrators

JOSEPH GORDON League for the Hard of Hearing

CLAUDE STOUT Deaf and Hard of Hearing Consumer

Action Network

MATT BENNETT Alliance for Public Technology

CHERYL JOHNSON Affiliated Tribes of N.W. Indians

Economic Development Corp.

MILTON LITTLE National Urban League

DIANE BURSTEIN National Cable Telecommunications

Association

JIM CONRAN Consumers First, Inc.

SUSAN PALMER MAZRUI Cingular Wireless

DAVID BRUGGER Brugger Consulting

REBECCA LADEW users of speech‑to‑speech

technology

BYRON ST. CLAIR National Translator Association

DEBRA BERLYN Consumer Policy Consulting

MARK PRANGER academia and consumers concerned

with telecommunications service

in rural America

ANNETTE CLECKNER MCI

THOMAS ALLIBONE LTC Consulting/Teletruth

MARY HENZE BellSouth

EUGENE SEAGRIFF Telecommunications Industry

Association

PRESENT:

MICHAEL COPPS Commissioner, FCC

KEVIN MARTIN Commissioner, FCC

KATHLEEN ABERNATHY Commissioner, FCC

K. DANE SNOWDEN Chief, Consumer & Governmental

Affairs Bureau

RICHARD SMITH Acting Chief, Policy Division, CGB

GREG GUICE, ESQ. Attorney Advisor, Policy Division,

CGB

THOMAS CHANDLER Chief, Disability Rights Office,

CGB

KRIS MONTEITH Deputy Bureau Chief, CGB

PAUL SCHROEDER Vice President for Governmental

Relations, American Foundation

for the Blind

DAVID SOLOMON Chief, Enforcement Bureau

NICHOLAS MILLER Miller & Van Eaton, P.L.L.C.

SCOTT RANDOLPH Director, Federal Regulatory

Advocacy, Verizon

DAN BRENNER Senior Vice President, Law and

Regulatory Policy, National

Cable Telecommunications

Association

JOHN WINDHAUSEN President, Association of Local

Telecommunications Services

COMM. DAVID SVANDA Michigan Public Service Commission

and President, National

Association of Regulatory

Utility Commissioners

JARED CARLSON Acting Chief, Policy Division, WTB

AGENDA

WELCOME AND CALL TO ORDER

Shirley L. Rooker, Chair,

Consumer Advisory Committee (CAC)

MEETING LOGISTICS

Scott Marshall, CAC Designated Federal Officer,

Consumer & Governmental Affairs Bureau (CGB)

INTRODUCTION OF THE CHAIRMAN AND COMMISSIONERS

K. Dane Snowden, Chief,

Consumer & Governmental Affairs Bureau

UPDATE ON THE CONSUMER & GOVERNMENTAL

AFFAIRS BUREAU

K. Dane Snowden, Chief, CGB

UPDATE ON THE TELEPHONE CONSUMER PROTECTION ACT

Richard Smith, Acting Chief,

Policy Division, CGB

ISSUES RELATING TO E‑911 SERVICE

Greg Guice, Attorney Advisor, Policy Division,

Wireless Telecommunications Bureau (WTB)

SUMMARY OF ORDER REGARDING HEARING AID

COMPATIBILITY

Greg Guice, WTB

UPDATE ON TRS ORDER AND FURTHER NOTICE OF

PROPOSED RULEMAKING

Thomas Chandler, Chief,

Disability Rights Office, CGB

OUTREACH TO INDIAN COUNTRY

Kris Monteith, Deputy Bureau Chief, CGB

HOMELAND SECURITY AND PEOPLE WITH DISABILITIES

Kris Monteith, Deputy Bureau Chief, CGB

LUNCH PRESENTATION: ACCESSIBLE WIRELESS

PHONES FOR THE BLIND

Paul W. Schroeder, Vice President for Governmental

Relations, American Foundation for the Blind

CONSUMER PROTECTION: THE ROLE OF THE

ENFORCEMENT BUREAU

David Solomon, Chief, Enforcement Bureau

PANEL: STATE OF BROADBAND REGULATION

Moderator: Larry Goldberg, Chair, CAC Broadband

Working Group

Scott Randolph, Director ‑ Federal Regulatory

Advocacy Verizon (representing ILECs)

Daniel L. Brenner, Senior Vice President, Law and

Regulatory Policy, National Cable Telecommunications

Association (representing cable companies)

John Windhausen, President, Association of Local

Telecommunications Services (representing CLECs)

Nicholas Miller, Esq., Miller & Van Eaton, PLLC

(representing local governments)

Commissioner David Svanda, Michigan Public Service

Commission and President, National Association of

Regulatory Utility Commission (representing state

governments)

UPDATE ON WIRELESS LOCAL NUMBER PORTABILITY

Jared Carlson, Acting Chief, Policy Division, WTB

COMMENTS FROM THE PUBLIC; WRAP‑UP;

FUTURE MEETINGS

ADJOURNMENT

P-R-O-C-E-E-D-I-N-G-S

(9:03 a.m.)

CHAIR ROOKER: Could everyone take their seats, please. Scott, my little
stool is wonderful. Okay, everyone. The time to be nice is over. Take
your chairs, please. I have some announcements I need to make. Number
one, Cindy Cox who is with BellSouth, unfortunately could not get out of
Atlanta last night because of the thunderstorms, so consequently, she\'s
being replaced today by Mary Henze, who\'s with the Washington Office of
BellSouth. Mary, thank you very much for being here to pinch hit for
Cindy.

Also, we have a new member, who is Diane Burstein, who was an alternate
last time, and now she\'s a member. She\'s with the National Cable
Telecommunications Association. And, Diane, welcome. We\'re pleased to
have you here.

I think the first order of business, why don\'t we just go around the
table and briefly just state your name and your organization. I want
this to be very fast, but I think it would be useful for us to put faces
with names. So let\'s just start down here at the end with Jeff.

MR. KRAMER: Thank you, Shirley. I\'m Jeff Kramer with AARP.

MR. GOLDBERG: Larry Goldberg, WGBH Media Access Group.

CHAIR ROOKER: And I forgot to tell you that I\'m Shirley Rooker with
Call for Action.

MR. MARSHALL: I\'m Scott Marshall with the FCC.

MR. ELLIS: Rich Ellis from Verizon.

MR. JAMES: Good morning. Vernon James with the San Carlos Apache
Telecommunications Utility, Incorporated. We call it SCATCOM for short,
and I\'d like to introduce my alternate that has come with me, Yolanda
Jo Lazo. She\'s here this morning.

CHAIR ROOKER: Thank you.

MS. GRANT: Hi. I\'m Susan Grant from the National Consumers League. I\'m
sorry I missed the first meeting, but it was a choice between being here
or being in Australia, and Australia won out.

MR. HOROWITZ: I\'m David Horowitz with the Fight Back Foundation for
Consumer Education.

MS. ZIEGLER: I\'m Dixie Ziegler with Hamilton Relay Services. We\'re at
TRS provider.

MR. SNOOP: I\'m Don Snoop, Hometown On Line.

MS. WEST: I\'m Linda West with Native American and rural America issues.

MR. DelCASINO: Mike DelCasino, AT&T.

MR. DUKE: Mike Duke, International Association of Audio Information
Services, and also licensed radio amateurs.

MS. KIRSCH: Good morning. I\'m Karen Kirsch from the National
Association of Broadcasters.

MR. MALLARD: Good morning. I\'m Ron Mallard with the National
Association of Consumer Agency Administrators.

MR. GORDON: Good morning. I\'m Joe Gordon with the League for Hard of
Hearing.

MR. BENNETT: Hi. I\'m Matt Bennett with the Alliance for Public
Technology.

MS. JOHNSON: Good morning. I\'m Cheryl Johnson, Affiliated Tribes of
Northwest Indians.

MS. BURSTEIN: Good morning. I\'m Diane Burstein with the National Cable
Telecommunications Association.

MR. CONRAN: I\'m Jim Conran, Consumers First.

MS. MAZRUI: I\'m Susan Mazrui, Cingular Wireless.

MR. BRUGGER: David Brugger, Brugger Consulting.

MS. LADEW: Rebecca Ladew. I\'m here to represent the speech relay users
on the committee, and I have a comment. Bob Siegelman has prepared a
suggested procedure for recruiting people with speech disabilities as
members of State Relay Advisory Committees. If anyone wants a copy,
please write Bob at Bob@DOR.CA.gov. Also, Bob would like to congratulate
the Texas PUC for starting an extensive speech‑to‑speech outreach
program. Bob applauds Sprint for establishing a call center in Hawaii,
and using speech‑to‑speech CAs who speak Hawaiian dialect; whereas
before, all speech‑to‑speech calls in Hawaii were being transferred to
Virginia, and there was a communications barrier between some
speech‑to‑speech Cas in Virginia, who sometimes spoke with a southern
accent, that the Hawaiian speech‑to‑speech caller could not sometimes
understand. Likewise, the Virginia speech‑to‑speech Cas could not
understand the Hawaiian dialect of the speech‑to‑speech caller. Thank
you.

MR. ST. CLAIR: I\'m Byron St. Clair from the National Translator
Association. I guess I should just explain it\'s not anything to do with
languages. Translators repeat TV and FM stations into rural areas that
don\'t get direct reception.

MS. BERLYN: Good morning. I\'m Debra Berlyn with Consumer Policy
Consulting.

MR. PRANGER: Good morning. I\'m Mark Pranger from Rogers State
University in Oklahoma.

MS. CLECKNER: Annette Cleckner with MCI Consumer Affairs.

MR. ALLIBONE: Tom Allibone with LTC Consulting.

MS. HENZE: Mary Henze with BellSouth, sitting in for Cindy Cox.

MR. SEAGRIFF: I\'m Eugene Seagriff of Panasonic, representing the
Telecommunications Industry Association.

CHAIR ROOKER: Okay. Well, thank you. We have some other people who
joined the panel.

MR. BARNES: Ron Barnes, CTIA.

CHAIR ROOKER: Thank you, Ron. Joy.

MS. RAGSDALE: Joy Ragsdale with NASUCA.

MS. FREY: Susan Kelly Frey representing the National Association of
State Relay Administration.

CHAIR ROOKER: Did we get everyone? Okay. Well, thank you very much for
being here.

I think the next order of business ‑‑ Scott\'s going to give us the
logistics. Those are the really important things that you need to know.

MR. MARSHALL: Good morning. Just a word. The rest rooms are right out
the doors that you came in down the short corridor and to your left, and
telephones are out in that corridor, as well. And this afternoon, I\'ll
be talking about transportation to the airport and such that for those
people who need that this afternoon during our break. Thanks for coming.
Great attendance today.

CHAIR ROOKER: Yes, it is. It\'s very impressive. I also would like to
thank Verizon for our breakfast and lunch. Also, MCI and Verizon have
generously made possible teleconferencing services for some of our
working groups, and I\'d like to thank them.

Also, the group chairs and the team leaders have been working hard, and
they\'ve given us a great deal of input on today\'s agenda, and we
appreciate that, especially since their last meeting was only in April,
which is not the three months we usually have, but it was only two.

I also like to give particular thanks to Betty Thompson for making so
many of the logistical arrangements. And, of course, the person who does
all the work, the real work is Scott Marshall. And he just said to me,
\"Don\'t say that, Shirley\". Well, it\'s the truth. Exactly.

MR. MARSHALL: Thank you very much.

CHAIR ROOKER: I tell him he does all the work so I can look good,
because believe me, he puts a lot of time in this.

Our next order of business, I\'m very happy to welcome Dane Snowden,
who\'s the Chief of Consumer & Governmental Affairs Bureau. He really
doesn\'t need an introduction since he\'s spoken to us, I think at every
meeting of CAC. And I would just like to personally also thank him for
the wonderful support that he\'s given our group. Things like this group
couldn\'t happen without the support of Dane, so thank you, Dane.
Welcome.

MR. SNOWDEN: Well, good morning and welcome back to the FCC. I must also
thank someone who makes me look good all the time, and that\'s my legal
advisor, Amelia Brown, who\'s over here in the green, who supports CAC,
as well. So thank you very much, Amy, and thank you, Shirley, and all of
you for coming back.

I\'m not sure how many were here actually last night. I assume most of
you were, and you were awakened like I was, and I had a hard time
getting back to sleep with the storm that went through Washington, D.C.,
so I would like to say that I\'m glad you\'re here. I got a little
worried when I woke up this morning, I guess around 1:00, and didn\'t
really fall back to sleep, or I guess have a sound sleep. And I thought
is anybody going to show up for the meeting today, because I thought I
was going to oversleep, let alone the rest of you. So we braved the
storm. I know there\'s another one coming which, of course, ruins my
golf day, but I will survive.

Well, welcome back. It is a pleasure to have you all back here this fine
summer day. At least the heat is not as bad as it usually is here in
Washington since we\'re on a swamp.

I want to say a few things to you all this morning. And particularly, I
want to say I\'m happy to see that the working groups have really gotten
a great start. We\'ve seen a lot of advisory groups here at the
Commission, and one of the things in particular that we always look to
see is how quickly they actually mobilize and start working. And this
particular advisory committee wasted no time to get things started.

We will have some of the commissioners coming down to speak with you, as
well. Because of the storm last night, some folks are stuck in traffic.
Washington, D.C. in a disaster area right now with trees everywhere, but
when commissioners come in, I will pause from my remarks, as I just see
one coming in now, and I will turn it over to that particular
commissioner.

But before I do that, I would like to embarrass Shirley for a second,
and that\'s something I tend to do. But last month, Shirley was given
the Betty Furness Media Service Award presented to Call for Action by
the Consumer Federation of America at, what I understand, a fabulous
gala event held here in Washington, so congratulations to you, Shirley,
and Call for Action for your good work for helping out consumers.

I see that Commissioner Copps has arrived, so I\'m going to pause, and
ask Commissioner Copps to please join me at the podium here and make
some remarks.

COMMISSIONER COPPS: Good morning. Welcome to the FCC on this nice Friday
morning. We\'re delighted to see you here. I see a lot of old friends
around the table, and hope we can make some new ones today too. I\'ll
just a minute or two of your time, because I know you have a very, very
busy agenda today, but I just wanted to primarily thank you all for the
commitment you make in serving on this committee.

When I was over at the Commerce Department with the previous
Administration, I was responsible for administering all of our industry
sector advisory committees at Commerce, and we had I guess 16 or 17
sector‑specific ones, and then some functional committees too. And I was
always impressed by the level of commitment that people serving on those
committees made. And I know it\'s harder and harder to do that, and
we\'re in an era when a lot of offices and organizations are downsized,
and it\'s more and more difficult to get done what you need to get done
just to survive on a day‑to‑day basis, and finding time to serve on a
committee like this I know is not easy, but it\'s merely essential
really. We couldn\'t get along without the kind of input that you give
us.

When I was at Commerce ‑‑ well, before that when I was out in the
private sector, I served on an industry advisory committee on
International Trade, and I almost thought when we were negotiating the
North American Free Trade Agreement, I wondered what that agreement
would look like without the input of outside sources, and just let it to
the government to do it by itself would not have been a pretty affair.

So I want to thank you for your commitment, thank you for your help, and
the help you give us makes the work we do a lot more productive and a
lot better, I think, than it otherwise would be. This is the first time
I\'ve had a chance to meet, I think, with the reconstituted committee. I
looked at your agenda today. It\'s an impressive agenda. I know we no
longer have the word \"disabilities\" in the committee\'s name, but I
trust that that signals no less a priority. And from talking to the
people here at the Commission, I believe it does not, so I\'m delighted
to see us working on that.

We had just yesterday at this table right up here on one of the
disability issues on hearing aid compatibility and cell telephones, and
I was glad to see us move ahead unanimously on that. And I think we had
very productive discussions with a lot of input over the last week
especially from outside, and I think that that helped to enhance the
quality of the product that we came up with.

As I told some of you before, the first speech I made when I came to the
FCC was to the deaf and the hard of hearing out in South Dakota, and I
really appreciated the feel that they gave me for both the challenges
that are faced by the disabilities communities, and the opportunities
that we have through all of these new technologies to afford opportunity
for folks to really become productive members of society. There was so
much human talent, and still is, that\'s going unused, and we\'ve just
got to find a way to correct that situation.

And one of the secrets, well, obviously, you have to have good policy,
but we always have to have that outreach. And I think of that in terms
of the disabilities communities, I think of it in terms of our Native
American citizens. So much of what we do here affects all of these
groups. It\'s not just the issues that are entitled, you know, something
Native Americans, or something for the hard of hearing. What we do on
broadband, what we do on all of these things affects everybody. And
resources are stretched thin in these communities. It\'s hard to cover,
so the duty for outreach that we have at the Commission, and that you
have as members of this committee to go back and make sure that
everybody in these communities knows what\'s before us is really a
pressing one.

I don\'t think there\'s anything much more important now than this
broadband that you\'re going to be talking about today. And I think you
have to really step back and look. I\'m a little bit troubled, as some
of you know, about where we may be going on broadband, on the
reclassification of broadband transmission and what it can mean to the
disabilities community, what it can mean to rural America. We\'ve really
got to take a good close look at this. We have all of these wonderful
liberating, dynamic, open technologies, broadband, the Internet and all
that. If we\'re heading in the direction of closing that off, then
we\'re messing with something very fundamental to the future of America,
and we\'ve got to be awfully darned careful of how we do that, so we
need your input on that. I\'m glad you have a section on broadband
coming up today. Spend a lot of time looking at that.

I could go on, but I\'d rather just sit here and listen a little bit as
you get started this morning. But again, thank you all for your
willingness to serve. Thank you for coming, and my office door is always
open. I look forward to seeing all of you when you\'re in town, those
from out of town, and seeing those who live here even on a more regular
basis. So thank you very much for coming.

CHAIR ROOKER: Thank you.

MR. SNOWDEN: It\'s always hard to follow Commissioner Copps. He\'s such
a great speaker.

Touching on some of the things that Commissioner Copps said, I would
like to give you all an update on some things that have happened since
your last meeting here in April, particularly as it relates to outreach.

One of the things that we\'re planning to do actually next week is host
a summer consumer forum in Reno, Nevada on July 16th, touching on issues
such as telemarketing, telephone scams, understanding your phone bills,
cell phone service, and the role of the FCC. And this is an example of
something we\'re trying to do, as Commissioner Copps mentioned. It\'s
important that we get out more so that consumers are aware of what we
all do here at the FCC, and that we are a resource here at the FCC. And
it\'s not by mistake that we\'re on the other coast.

One of my personal frustrations is that I have several friends and
family over on the west coast, and they always say we pay out taxes,
Dane. How come the federal government is not open when we need it to be
open, so what we\'re doing is trying to bring the federal government to
them as much as we can.

In addition and in conjunction with that summer consumer forum, we will
also be hosting an FCC Indian Telecommunications Initiative in Reno with
the Washo Tribe. It\'s a regional workshop so that we can bring more
services and work on our government‑to‑government relationship, and the
responsibility that we have with our Native American colleagues and
friends across the country. My Deputy Bureau Chief, Kris Monteith, will
be here later today to talk about that and other issues, so you\'ll hear
more about that as the day goes on.

I want to point out that it is our goal with all of these forums,
particularly with the Indian‑related forums that we\'re going to have,
designed to make sure that essential telecom issues are covered in the
Indian community.

In addition, we are going to have a very busy next couple of months
looking at our calendar. We have the National Conference of State
Legislators. Of course, also the National Association of Regulatory
Utility Commissioners. Their meetings are coming up, and again, what
we\'re doing is working with our state counterparts, our local
counterparts, and our consumer counterparts across the country.

We will also be making a trip up to the northwest to meet with the
Affiliate Tribes of Northwest Indians, and we\'re planning to make a
trip to Alaska. That\'s one of the things that we have noticed that,
particularly on the tribal area, that our Alaska natives are more short
shrift than our west coast consumers. And because it\'s not often that
the federal governments gets out there, so we\'re going to do that, and
make that effort some time later this summer.

Our goal, as you can imagine, is to cast as wide a net as possible as we
go forward so that we can reach out to consumers, and they can have
access to the Commission.

This has also been a very busy regulatory season for the Commission, as
I\'m sure you\'ve read and heard, and seen debated. One of the items
that we\'re very proud of ‑ actually, we\'re proud of all of our items I
should say ‑ but one in particular that I\'m personally proud of is our
recent action on the Telephone Consumer Protection Act or telemarketing
rules. This is, by all estimates, the most comprehensive consumer
protection item the Commission has ever done.

In a short sense, what we have done is we have given the power of
managing your telephone calls to you, to the consumer, not to the
telemarketer. This is a major change in our country. And as you might
imagine, with the Do Not Call Registry going into effect as of October
1st ‑ of course, you can register now. This has gotten a lot of
attention. I\'m not sure if any paper did not cover this particular
issue. Richard Smith, my Acting Chief of the Policy Division in my
Bureau will be here to discuss that with you.

On the disabilities front, as many of you, I\'m sure, are aware, we have
taken some steps for telecommunications relay services order and further
notice, and our goal is quite simple. We amended and added new rules
that will improve the overall effectiveness of TRS to ensure that
persons with hearing and speech disabilities have access to the telecom
network, that it\'s consistent with the goal of functional equivalency,
so we are moving forward. And Tom Chandler from my bureau will be here
later today to talk about that and many other things, as well.

And, of course, as Commissioner Copps said, just yesterday we took a
major step forward, we like to think, positive, proactive step forward
to ensure that more consumers have access to the network by lifting the
exemption on our hearing aid compatibility rules. So we are moving
forward and making sure more consumers have access to this very, very
important network.

Another issue that, of course, was debated between your last meeting and
now was our media ownership or broadcast ownership rules. And I do not
plan to go into details about that. It was very hotly debated on both
sides. It was probably the most ‑‑ the one issue that we got the most
comments on anything we\'ve ever gotten at the Commission. At one point,
I think we received over 1 million postcards, 1 million plus postcards
from consumers alone on this particular issue, so this is something that
was very much debated throughout the country, throughout Washington,
D.C., and definitely throughout this Commission.

As Commissioner Copps mentioned, outreach is very important. Of course,
our regulatory policy is very important, but one of the things I also
wanted to mention is important is that we have information for
consumers. That is very important. And one of the pieces that we are
focusing on is our website, and we\'re making it, of course, compliant,
and we\'re also making sure it\'s chock full of information for
consumers.

We launched, in connection with Commissioner Abernathy, who I saw has
just arrived, we launched our Parents Place page, which we intentionally
did it for the summer months because, of course, that\'s when students
or kids are usually home. They have more idle time. I think we all
remember being a child when we didn\'t have these fancy‑dancy computers
like the kids have today, but we wanted to make sure that parents had a
resource that they could go. They would know exactly what\'s available
out for them, for example, when students are making phone calls, or
going on the web. How they can do that in a safe and productive manner,
and I was happy that Commissioner Abernathy led that charge for the
Commission. And we\'ve gotten a lot of good feedback from consumers as
we go forward.

In addition, we launched a National Environmental Policy Act, or
Historic Preservation page on our website. And this is important because
it contains information about the Commission\'s responsibility to manage
the expansion of communications infrastructure in a way that preserve
the country\'s environmental and historic resources. And this is
important not just when we see these beautiful sites across the country,
but it\'s particularly important on our tribal lands as we go forward.

We, of course, added lots of publications to all of our work, meaning
that every time we do a major item, such as the hearing aid
compatibility revision that we just did yesterday, or the Telephone
Consumer Protection Act, we\'re creating consumer alerts. We\'re also
creating information for consumers and fact sheets so they can read and
understand exactly how the new rules apply to them, and the positive
steps that the Commission is taking.

We are close to finalizing a broadband booklet, or a fact sheet on that
particular subject. And this is very important for us. I know you have
it on your agenda today. The reason I say this is very important is
because this is the new technology. This is the new cool thing, as the
kids say today, that many of you, I\'m sure, have already, but not
enough Americans have taken advantage of this exciting opportunity. And
we want to make sure that we do our part, not only in our regulatory
world, but also in the outreach world, that they can understand,
consumers can understand what\'s important, and why this is so critical.

And, of course, we\'ve been busy in our enforcement area, and we\'re
creating more information so consumers understand how our enforcement
bureau works, and how the Commission ‑‑ how we treat enforcement issues.

I know you have a full agenda, and I see Commissioner Abernathy is here.
And I would like to ask Commissioner Abernathy to please join me up
here. And while she\'s coming, I\'d like to extend apologies from
Commissioner Adelstein and Chairman Powell, who both had conflicts with
today\'s meeting, but they do send their best wishes to each of you.
It\'s my pleasure now to introduce Commissioner Kathleen Abernathy.

COMMISSIONER ABERNATHY: Thank you, Dave. It\'s good to see everybody
here again. It\'s been a while since I\'ve had a chance to come down and
say hi, and I don\'t want to take up too much of your time, because I
was looking over your agenda, and you have real work to do. But I did
want to tell you once again how important and how much we value the work
that you do, how we\'re very, very pleased that you\'re willing to take
the time and the effort on a Friday in July to come here and help us
with so many of these issues that are very, very important.

I think as Dane mentioned, and I believe Commissioner Copps also
mentioned, just the other day we did our order on hearing aid
compatibility and what we do with wireless phones, and trying to ensure
that there are more wireless phones out there that work with all of the
different kinds of hearing aids, so that all of the population gets to
tap into the vast benefits of wireless phones. Which because very clear
to me yesterday, when I had to attend my daughter\'s parent\'s day at
camp, dressed in a full FCC meeting agenda day outfit, and I\'m outside
watching tennis, and I get three urgent calls. But the point is, I had
to be in touch. I knew that I had to be in touch that day. We\'re
working on some important items, but it also was very important to me
personally that I be able to attend her summer camp. And if I hadn\'t
been able to use a wireless phone, that would have been a huge problem
for me, and so that\'s just a small illustration of one day, of why it
is so very important that everyone have access to wireless technology.

I\'m pleased that the technology now allows us to push out more phones
to more people. I\'m anxious to see how that works out. I\'m glad we\'re
bringing in a report. I think it\'s in about three years when we\'re
going to get an update and see do we have the right balance here. Are we
getting enough phones out in the market? Is there enough information?

It\'s a joint effort, and I want to make that clear too, that this
wasn\'t done in isolation. We worked closely with the industry, with
both the wireless industry, and the manufacturing industry, as well as
the consumer groups. Because, again, this was in an area where we
certainly ‑‑ we didn\'t have the expertise here in‑house about what
decisions to make, and so we relied very heavily on input from so many
different parties to figure out how we could move that process forward.
So I\'m very, very pleased about that proceeding.

As you know, we\'ve been working on a number of other issues, all in
many way, shape or forms related to how do we make consumer lives a
little better. The National Do Not Call List, I think we knew there was
a lot of consumer frustration out there. I don\'t think we at all
anticipated the level of consumer frustration, which became evident as
people were signing up for the Do Not Call List. And, frankly, I\'ve
been badgered about this for over a year by my husband, so it is ‑‑
again, it goes to the benefits of technology, and then there are some
downsides associated with technology. And I think it really was a
reaction to all of the numerous calls, the hang‑up calls, and the
frustrations with not being able to control in our own home what we
listen to. So I think those are just a couple of examples of the items
that we\'ve been working on.

We\'re rolling out E‑911, another very, very critical safety and
security feature that will make a difference for many, many people
including ‑‑ I mean, once there\'s location, I seriously start thinking
about how do I use it for the rest of my family? You know, it\'s not
that I think that my daughter needs to talk on the phone because,
frankly, she doesn\'t. But I do think that there are times when I will
want to be able to locate her, so to the extent that devices come on the
market that allow her ‑‑ one of the devices they\'re talking about are
these emergency phones where basically I can call her. She can make
three outgoing calls I\'ve pre‑programmed to, you know, like me, her dad
and somebody else, and then I can locate her any time.

Once those devices are on the market, yeah, it\'s important to me. I
think it will be important to a lot of other people at certain price
points, so these are all ways in which we can tap into the new
technology. At the same time that we\'re tapping into it, and accessing
it in a way to better our lives we, as an agency, have to rely on you to
tell us when is it not working right. When are consumers being abused?
When are you getting too many unwanted calls? When are you being slammed
or crammed on your phone bill? When is it so complex out there as far as
figuring out appropriate programming for your children that you throw up
your hands in defeat, and we need to do something like the Parents Place
on our website.

So again, thank you for coming today. I\'m very, very happy that you
were able to take the time, and willing to take the time. I want to sit
around for a few minutes and listen, but at the end of the day, it\'s
really going to be up to you and Dane to bring to the Commissioners
action items that you think we need to pursue. So thank you again.

MR. SNOWDEN: And I am just at my end. I did want to make a few comments
about your agenda. I think this is a very comprehensive agenda, and I
applaud those who put it together. Particularly, as I know you\'re going
to be talking about the Telemarketing Rules, the TRS item, the E‑911,
and of course, your broadband panel.

I did want to highlight David Solomon\'s presentation, who is the Chief
of our Enforcement Bureau. And as you might imagine, in this
environment, the Enforcement Bureau plays a very, very vital role to
what we do here at the Commission. Without the Commission\'s strong
commitment and his good work to enforcement, the rules that we create
are meaningless. So I encourage you to enjoy what David Solomon has to
say when he comes down here later this afternoon.

I should also say that the fact sheets and other things that I was
mentioning a moment ago, we have a disk, and some of the fact sheets are
in your packet, so all that information is there. And, of course, all
this information is available on our website. So with that, I want to
thank Commissioners Copps and Abernathy for joining us. And, of course,
I believe Commissioner Martin will be joining us at some point during
the day. And again, extend apologies for Commissioner Adelstein and
Chairman Powell.

I see that Richard Smith is here, who will be talking more about some of
our consumer policy issues, which is telemarketing. But, Shirley, if
you\'d like, I could take a few questions, if there are any.

CHAIR ROOKER: Yes. We would like that, please.

MR. SNOWDEN: Sure.

CHAIR ROOKER: Do we have questions for Dane about any of the things that
he\'s discussed? I can\'t believe this group. They\'re still asleep.

MR. SNOWDEN: I will take that as a positive thing, that you don\'t have
any questions for me. Not that you\'re asleep, the positive thing to
have ‑‑ yes, sir.

MR. CONRAN: I won\'t let you get away. I\'m Jim Conran from California.
Recently, I attended a seminar, and there was a presentation by some
high tech companies on how to bypass the telephone network by using the
Internet. And I was very concerned ‑ one, I thought it was kind of
interesting, but I was concerned that many of the funds that rate payers
pay into, Universal Service, in my state the relay system for the deal
consumers, 911. All these are going to be bypassed if people use the
Internet rather than using traditional telephone services. Is the
Commission looking at this issue?

MR. SNOWDEN: We have ‑ as many of you know, we have created or allowed
for IP Relay to occur, and that is the first ‑‑ I guess, that\'s
probably the first part of our toe that\'s going into the water to see
how it works. We are looking into it. We have not made a decision one
way or the other just yet on that particular issue.

MR. CONRAN: All right. Thank you.

MR. SNOWDEN: Thank you.

CHAIR ROOKER: Any other questions? Well, Dane, thank you so much. I need
to do a couple of items of business before I introduce Richard, if
that\'s okay, if you don\'t mind.

MR. SNOWDEN: You\'re the Chair.

CHAIR ROOKER: All right.

MR. SNOWDEN: I will follow your lead.

CHAIR ROOKER: Thank you.

MR. SNOWDEN: Thank you, and congratulations again on your award.

CHAIR ROOKER: Thank you very much, Dane. We really enjoy having you
here.

We have ‑‑ you\'ve been sent the minutes of the last meeting. And as the
Chair, I can certify the correctness of the minutes, but before I do
that, I would like to make certain that they are correct, which I think
would be a smart thing to do. So does anyone have any changes or
corrections that we need to make, or additions to the minutes of the
last meeting? Are they okay? All right. Okay. Well, thank you very much.

Also, I would like to mention a couple of things about developing the
agenda. As I indicated, there are quite a bit of ‑‑ there was quite a
bit of input from group leaders into the agenda that we have today. But
what you need to know is that we really ‑‑ our goal ‑‑ and today\'s
presentation, I realize, is really jam‑packed with people talking to us.
And the reason we\'re doing that is because we want to provide you with
background on the issues that we\'re going to be dealing with. And we
feel that today\'s agenda will give you a lot of the knowledge to help
us deal with some of these issues.

For the next meeting, we are going to set up time for working groups to
meet, which has been one of your requests. But this means that you are
going to have to do some work prior to the next meeting, and you have
been very busy working. I want to thank everyone.

If you have ideas for the agenda, we welcome them. You can contact
either Scott or me about your ideas, but we really need about six weeks
lead‑time before the next meeting. The reason for that is so that we can
see if the agenda items can be fit in. We can contact the people
necessary to make presentations or whatever needs to be done for those
agenda items. And in addition, the agenda has to be posted in the
Federal Register 15 days before the meeting, so we have to have all this
put together. So that\'s why we need a lead‑time for new ideas. We
cannot decide yesterday that we\'re going to do something today and add
it to the agenda. That just doesn\'t work, because it has to be posted
in the Federal Register. So unfortunately, we have to work within the
rules in doing that. So if you have issues for the Committee, there are
two things that could be done. You can set up a working group, or you
can take the issue to an existing working group, so we want to come out
of this with a lot of productive work.

And by the way, the prior committee in our last ‑‑ before we were
reincarnated as CAC, we did recommend to the FCC that they establish a
Do Not Call Registry. I hope they listened and took our comments into
consideration. We\'re very happy at the action that the FCC has taken.
And I think from that, unless any of you have comments about agenda
items or anything else, we\'ll just move into our next presentation. Is
that okay? Any questions or comments?

All right. I just learned that I think there\'s now over 20 million
people signed up for the Do Not Call Registry, which I think is just
astonishing since it was only put in place what, two weeks ago? So at
any rate, the Do Not Call Registry has really hit a nerve with
consumers.

Richard Smith, who is the Acting Chief of the Policy Division within the
Consumer and Governmental Affairs Bureau, is going to give us a
briefing, and then he will take questions about the TCPA. Richard,
welcome. We\'re glad to have you here with us.

MR. SMITH: Thank you very much. I\' here to discuss what I think is a
very popular topic with this group, and that is the Commission\'s recent
order on telemarketing, which Chairman Powell called the most sweeping
consumer protection measure ever adopted by the Commission. And my task
this morning is to try to summarize what is approximately a 200 page
order for you hopefully in the next five to ten minutes, so please bear
with me, and I\'ll try to do that. And I would like to take questions
primarily this morning, rather than just going through all the rules and
regulations.

Our goal in this proceeding all along has been to provide consumers with
options for managing telemarketing calls. And, of course, the primary
tool for that is the National Do Not Call Registry. Beginning October
the 1st, telemarketers will be prohibited from contacting those
consumers who have registered their telephone number on the National
Registry by August 31st.

It\'s also important to note that there will only be one National
Registry. I know there was some confusion initially because the Federal
Trade Commission and the FCC had sort of dual rulemakings going on at
the same time, and there was a concern that maybe there would be two
National Registries, but there will only be one. And that registry will
be administered by the FTC. They have acquired the funding for that, and
they\'ve hired an entity called AT&T Governmental Solutions to actually
handle the administration of the list.

Consumers may register on the list by two means, either over the
Internet or from the telephone that they\'re attempting to register on
the list. You have to actually call from the telephone that they want to
register. The registrations are limited to residential telephone
subscribes, and those do include wireless numbers.

As was indicated, since the registry was up and running two weeks ago,
my understanding is approximately 23 million numbers have now been
registered on the list. And the FTC estimates that approximately 60
million numbers will ultimately be on the list. The registrations are
valid for five years, and anyone who has registered on the list may, if
they so choose, revoke their registration.

Consumers that have registered on the list will automatically be
included in any state administered list. That\'s a requirement of the
TCPA. The list cannot be used for any purpose other than federal and
state enforcement of the rules, and will include only the telephone
numbers of those who have registered. It will not include names,
addresses, or any other types of information. I know that\'s a concern
for many people.

Telemarketers will be able to purchase the list beginning in September.
They can do so either by area code, or they can purchase the entire
list. The FTC proposed initially, I believe, a \$29 fee per area code,
and approximately \$7,200 to purchase the entire national list. And the
telemarketers are required to check that list at least once every three
months.

It\'s also very important to note that there are, of course, exemptions
to the National Do Not Call requirements. These include calls from
non‑profit organizations, calls from companies that have established
business relationships with a consumer who is on the list. One important
new caveat on that is that there is a time limitation now on the EBR,
and that is 18 months from any purchase or transaction, and 3 months
from any inquiry.

There is also a prior expressed permission that can be acquired from the
consumer who is on the list. That must be in writing and signed by the
consumer, and include the telephone number to which they are providing
permission.

One other new exemption is something called the personal relationship
exemption, and that allows the telemarketer that is making the call to
call family, friends and acquaintances who may otherwise be on the list.
It is important to note that consumers can revoke all of these
exemptions except for the non‑profit exemption by requesting to be
placed on the company‑specific list.

One of the last and more important pieces of this puzzle that\'s still
being sort of put together is the role of the federal agencies and the
state governments, and how this is going to work. The FTC and the FCC
are currently in the process of putting together a Memorandum of
Understanding that will clarify how enforcement will work between the
two federal agencies.

The FCC has much broader authority to regulate telemarketing than the
FTC. For example, the FTC has jurisdiction over common carriers, banks,
insurance companies, intrastate telemarketing, which all fall outside of
the FTC\'s authority.

The other piece of this, of course, are the numerous state lists.
Nothing that we have done in our order would prohibit the states from
continuing to administer their own list. We do, however, encourage them
to download the numbers that are on their list into the federal list.
And ultimately, the goal would be to have one national list.

One of the more complex and controversial pieces of this are exactly how
the state regulations work in conjunction with the federal rules. And in
the order ‑ and I\'ll try to go through this very carefully ‑ what we
have said is that any less restrictive state requirements are preempted
by the federal rules. For the most part, these include exemptions that
are not recognized under the federal rules. Some of the common ones are
for insurance companies, real estate agents, newspapers, those types of
things, none of which are recognized under the federal rules. Those are
all preempted.

States may continue to enforce consistent regulations in state
proceedings. This is where it gets a little more complicated. The TCPA
specifically allows states to adopt more restrictive requirements for
intrastate and state calls, both which originate and terminate within
the state, so those are still permissible.

In terms of more restrictive requirements being placed on interstate, we
have not specifically preempted that, but what we have said is that we
will look at that very carefully on a case‑by‑case basis as it\'s
presented to us.

In addition to the National Do Not Call List, there are a couple of
other measures that were taken in the order that may be of interest. The
first relates to abandoned calls, and new rules will limit to 3 percent
the number of abandoned calls that telemarketers may make to consumers.
Within the permissible 3 percent of abandoned calls, the telemarketer
will be required to provide a pre‑recorded message that indicates who
they, a number you can call to be placed on their Do Not Call List, and
that the call is for a telemarketing purpose. They will not be allowed
to provide any other information other than that.

The abandoned call rules will become effective October the 1st. In
addition, we have adopted rules on Caller ID that will require
telemarketers to transmit Caller ID. It will also prohibit them from
blocking Caller ID information that is sent.

The Caller ID rules are effective January 29th. And last but not least,
we have made some important changes to the rules on unsolicited faxes.
Most importantly, it is now required to obtain the prior express
permission in writing from the recipient before sending an unsolicited
fax. They may no longer rely on an established business relationship in
the fax context.

And I think that\'s plenty to absorb, so if you have any questions,
let\'s start this way.

MR. KRAMER: Thank you, Richard. On behalf of AARP, I just want to thank
the Commission for the great work you\'ve done on this TCPA. It\'s clear
to everyone in the room that unless the Commission acted as it did, the
FTC\'s Do Not Call Registry wouldn\'t have nearly the impact that it\'s
going to have down the road for consumers.

With that though, certainly our members who are calling in record
numbers on this, are excited about it, have high expectations too that
their calls ‑‑ excuse me, that they\'re not going to get calls after
this goes into effect. How are you guys going to work the enforcement
angle on this?

MR. SMITH: That is a very important concern to us. We realize that
consumer expectations are high, and one of the things we\'d like to do
is certainly to educate them, that they will continue to receive some
calls, the EBR, the non‑profit organizations, et cetera. I think that\'s
important to make them understand.

As I said, we are engaging with the Federal Trade Commission and coming
up with a Memorandum of Understanding exactly how that will work, and
David Solomon can probably talk to you a little more this afternoon
about the enforcement process here and how it works.

I know that we have made it a priority to increase enforcement of the
TCPA complaints once the National Do Not Call List becomes effective in
October, and David could probably talk a little more about that.

CHAIR ROOKER: We\'ll work our way around the table.

MS. RAGSDALE: Good morning. Joy Ragsdale of the Office of the People\'s
Council for D.C., representing NASUCA. We\'re also very pleased, we\'ve
received a lot of calls from our constituents about the Do Not Call
Registry. I wanted to ask a few questions for clarification.

In regards to the enforcement, we are not sure who has access to the
customer\'s information. And we were also informed that there was an
inter‑ agency education task force that was being created with the FTC
and FCC. We wanted to know if that process was indeed taking place. And
also, NASUCA has spoken with David Torok, who is the Staff Attorney at
the FTC, and also Kris Monteith spoke with us at our mid‑year conference
in Portland, Oregon this past June, in regards to establishing a
partnership with NASUCA and other consumer advocate offices to assist
the FCC and the FTC in the educational process.

There are a number of our constituents who cannot or do not access the
Internet, so relying on those fact sheets and consumer information
alerts on the Internet does not reach all of our population, so we
wanted to know how we can get the brochures, and to use them to help the
organizations disseminate the information.

In terms of access to the list, it will be limited to the state and
federal law enforcement agencies. In terms of the educational aspect of
this, I know that efforts will be made, and I keep kicking these
questions to people who are coming up later. Kris will be here, and she
probably knows more about what the outreach efforts are than I do at
this point.

MS. RAGSDALE: With regards to the inter‑agency consumer education,
that\'s happening. Are you are you aware of that? I believe it\'s with
the Attorney General\'s Association.

MR. SMITH: Yes. We consult ‑‑ we have been consulting with the Attorney
Generals. In fact, we talked to them yesterday at a conference call, and
we had a conference call with them today, along with the FTC, and so
that is all in the works.

MS. GRANT: I\'m Susan Grant from the National Consumers League. The
different jurisdictions of the FTC and the FCC are very confusing to
consumers. Is there going to be one central place where people can
complain about Do Not Call violations, where the complaints can then be
parceled out to the appropriate agencies?

MR. SMITH: That is a very important issue, and it\'s something that we
are working on. Currently, they can file complaints pursuant to the FCC
website. And I believe the FTC website will also take complaints. And
what I assume will ultimately happen is the complaints will come in, and
they will be sort of doled out to the appropriate agency.

MR. HOROWITZ: Richard, David Horowitz. I have a real concern, and that
concern is about the privacy and the security of these lists. Because
we\'re talking about lists that will have 60 million anticipated users
who are using the program, and for \$7,200 you can buy a complete list.

Now we know there are such things as reverse telephone books that people
can get numbers from, take numbers and get addresses, and names, and all
that other kind of information. How is this going to be secured in a way
that if telemarketers buy the list, that it doesn\'t become no longer a
telemarketing list, but a mail order list. or that other groups just
pick up these lists. Are these lists going to be available to anyone who
wants to pay the \$7,200?

MR. SMITH: They will only be available, my understanding is, to people
who are engaged in telemarketing. And it\'s also, as I said, it\'s
important to note that the only information on the lists are telephone
numbers. There are no names and addresses. And most of those telephone
numbers are available in telephone books, which include a lot more
information than the National Do Not Call List is going to contain.

MR. HOROWITZ: But what I\'m saying, Richard, that my concern is that
yes, you will only have telephone numbers. But in my experience in
working with telemarketing companies, which is a long time, working I
should say against them, rather than with them, is that they have all
sorts of means to be able to translate phone numbers or anything else
into actual addresses and names. And it\'s like saying to a pregnant
shark, don\'t have baby sharks, you know, because to have lists like
this that are so complete out there with 60 million, or I\'m trying to
think of the figure, 60 million people on these lists, that somewhere
along the line either some widow hacker or some other person who wants
to do something really negative gets a hold of these lists, and just
uses it basically as a rocket of some kind. And I\'m just saying that
there ought to be some stipulations about what kind of contracts people
have to sign that take these lists, because it\'s like buying a registry
that could be worth literally millions and millions of dollars for
marketers.

MR. SMITH: Well, your concern is noted. Of course, the difficulty is
that in creating the Do Not Call List, there has to be a way to make the
telemarketers aware of which numbers that they can\'t call. And that\'s
the only means that we could think of.

MR. HOROWITZ: I\'m aware of that. I\'m aware of that, but I say that\'s
the real weakness in the program, because by making these lists
available to telemarketers, you\'re making these lists available to
anyone basically who wants to use them, no matter what they sign on
paper. And I think the enforcement has to, in some legal way, nail these
people for taking these lists, and also have some kind of a list for
them ‑ a contract to sign ‑ making them aware of the fact if they ever
use any of these names, or numbers, or whatever is there, that the
penalties could be really too high to mess around with. Because in
talking to some telemarketing groups, not to mention any names, to find
out how they feel about it, most of them are just, you know, you\'re
taking our jobs away. You\'re doing this. We\'ll find another way to get
back.

Well, I\'m not saying they will, but having this information around sure
makes it tempting for somebody who maybe isn\'t even a telemarketer to
use them maybe for finding website addresses for spamming. I mean, I\'d
love to have a list if I was a spammer of 60 million people to turn out
onto the Internet, and that\'s just my concern. I\'m wondering if anyone
has really looked at that from a legal standpoint.

MR. SMITH: That is certainly something that we will keep track of. And
to the extent that there are abuses, we\'ll try to take action as
necessary.

MR. HOROWITZ: Well, I\'m saying is it going to be done, or isn\'t it
going to be done? That\'s my question to you.

MR. SMITH: Well, one of the difficulties with this, of course, is that
the Federal Trade Commission is administering the list, so I don\'t want
to speak exactly in terms of what they\'re doing. But we are aware of
that concern, and we certainly will raise it with them.

MR. HOROWITZ: One other thing, brief. And that is, that in looking at
the public\'s reaction, because we have somewhat of a gauge on what
people react to things ‑ like on our website, we\'ve had tens of
thousands of requests for people who really want to know about the
program, which is easy. We just send everyone over to .gov and to the
website. But there has to be something that is distributed either state
by state, or in some way personally to the person who signs up that
really outlines in a simple way how it\'s used, what the exemptions are,
and where they can get more information, you know, not instantly, but at
least without ‑‑ if they don\'t have a computer they can\'t go to the
website. There has to be a number available.

And I think it\'s really important to sit down and do this before the
program goes into effect, so that there is everything written out in
simple language, and also bilingually. I don\'t know how many different
languages are concerned here but, you know, nowadays, it\'s good to have
bilingual booklets and pamphlets so that people of other ethnic
persuasions can use them. Is there anything going to be done to notify
these people, the ones that sign up, some way where they\'ll be getting
a booklet, or one sheet or something that will explain it to them in
their language, as well as English.

MR. SMITH: I\'m not sure about the languages, but I know if you sign up
on the Internet, there\'s a certain amount of information available to
the consumer at the time that they sign up. And also, when they call in,
there\'s a sort of a pre‑recorded message that provides some
information.

In the short time that we\'ve had since this has been up and running, we
have made every effort to put fact sheets and material on the Internet.
And Kris Monteith, who is in charge of some of the outreach will be here
shortly, and perhaps you can talk to her a little bit more about some of
your ideas.

MR. HOROWITZ: One final thing; and that is, that the all the phone
companies we have here, I was wondering if there might be some
commitment that we can get from the major phone companies to have some
kind of a slip‑in with their bills, or in some way to let the people who
are customers, users of the phone system, to give them also hints on how
to use the new system, and where they can get information and things
like that, because that would really be helpful, because you have a draw
of an enormous audience also. I hate to be looking at you when I\'m
doing this, Richard, but ‑‑

MR. SMITH: Let me just add one thing. That is actually in the order.
There\'s a requirement in the TCPA that, I believe it\'s common carriers
that provide local exchange service must notify their customers of the
availability of this list. And beginning January the 1st, they will be
required to provide an annual notification to their customers how to get
on the list.

CHAIR ROOKER: I have a couple of questions for you. Increasingly,
telemarketing is moving off‑shore. What about the companies ‑ for
example, I just received a telemarketing call recently from India. The
reason I knew it was from India is because I asked for a number so I
could call them back, and this seems to be occurring. How does this rule
impact on companies outside the United States?

MR. SMITH: We consider that to be a violation of the federal rules,
they\'re actually violating the Do Not Call rules, regardless of where
the call is originating. In terms of practically how we could enforce
that if they are truly an international‑based company, and perhaps it
would not be possible to enforce, but we do consider it to be a
violation.

CHAIR ROOKER: So if it\'s a U.S. based company using off‑shore
telemarketers, then they will definitely have to follow the rules.

MR. SMITH: Yes, I don\'t think ‑‑ we certainly don\'t want to allow them
to circumvent the rules by simply setting up some off‑shore calling.

CHAIR ROOKER: Okay. And then the other question has to do with the
charities. I know that the charities are allowed to continue soliciting.
However, there are a lot of organizations that take most of the money,
but solicit on behalf of a charity. Will they be able to continue doing
that?

MR. SMITH: I didn\'t catch what you ‑‑ can you repeat it?

CHAIR ROOKER: There are a lot of organizations that solicit on behalf of
a charity that are for‑profit companies. Will these for‑profit companies
be allowed to continue soliciting for charities, even though they take
most of the money?

MR. SMITH: That is addressed in the order, and it\'s a little bit
complicated. There are a couple of different scenarios. There is a
scenario where a non‑profit hires a for‑profit telemarketer to
telemarket on their behalf. And in that case, they are exempt. If it is
a for‑profit commercial entity that\'s providing some of its revenue to
a non‑profit organization, that would not be an exemption.

CHAIR ROOKER: Wait a minute. Say that again. It would not be?

MR. SMITH: It would not be characterized as a non‑profit organization
subject to the exemption. They will be subject to the rules.

CHAIR ROOKER: So I mean, like some of the ‑‑ they recruit ‑‑ I mean,
they solicit on behalf of the firemen, for example, and we know that
most of that money goes into the pockets of the people doing the
recruiting, so they would have to abide by the telemarketing rule?

MR. SMITH: If they are soliciting on behalf of the non‑profit
organization, they will fall within the exemption.

CHAIR ROOKER: Oh, they\'ll be exempt.

MR. SMITH: If they are selling something, for example, and giving a
certain portion of that to a non‑profit, they will not.

CHAIR ROOKER: Okay. Thank you.

MR. SNOOP: My name is Don Snoop, and one question I do have to follow‑up
on what Shirley was speaking about, was that elderly people, my parents,
my in‑ laws have this challenge when somebody calls up from the local
state police. I\'m representing the local state police and I\'m doing a
fund raiser. How are they to know? Is there anything that we can
incorporate into those rules that will allow seniors specifically,
because they seem to be the most gullible, and I\'m approaching that age
also, so I\'m not speaking out of turn. But the fact is that, how are
they to know that, in fact ‑‑ is there going to be some form of
credentials required or something of that nature?

MR. SMITH: I believe, and I\'m not an expert on this, that there was
recently a case in the Supreme Courts that derived ‑ and maybe somebody
here knows more about it than I do ‑ from Illinois, from a company that
was soliciting on behalf of Viet Nam Vets and keeping most of the money.
And that is really more a case of fraud than it is a case of violation
of the Do Not Call Rules, and it would fall within the FTC\'s
jurisdiction.

MR. GOLDBERG: A lot has been made of the exemption for political
candidates. Does that fall under the non‑profit exemption?

MR. SMITH: Yes.

MS. BERLYN: Good morning. Debra Berlyn. I have a question about removing
your name from the Do Not Call List. Could you discuss how that happens,
and is there some concern that names could be removed without the
consumer\'s permission?

MR. SMITH: I don\'t think anyone has done that yet, but the process
would be exactly the same. You can do it by the website or the same
telephone number you would call to register.

MS. BERLYN: As a follow‑up, is there concern that it is easy enough so
that others could remove consumers\' names?

MR. SMITH: That is a possibility. It certainly is not fool‑proof. You do
have to call from the telephone number that you\'re either registering
or revoking, so there\'s some safety in that.

CHAIR ROOKER: Susan.

MS. GRANT: Can I just clarify the question about charities. And this is
concerning the FTC\'s rules. I thought I understood that if it was a
for‑ profit concern soliciting on behalf of a charity, that the
for‑profit concern would have to abide by the Do Not Call Registry. Is
that incorrect?

MR. SMITH: That is correct in part. If a for‑profit is soliciting on
behalf of a charity under the FTC\'s rules, they\'re not subject to the
National Do Not Call List requirements, but they are subject to the
company‑specific requirements. In other words, if they call someone and
the person asked to be placed on their Do Not Call List, they have to
honor that. That is not the case under the FCC\'s rules.

MS. GRANT: Okay. Thanks.

CHAIR ROOKER: Joy.

MS. RAGSDALE: Yes. I had a question on the consumer complaint process.
It appears that the FCC requires a little bit more information for the
consumer to supply in filing a complaint. Not only do they have to give
name, telephone number of the company that\'s called them, but the names
of the persons whom they\'ve attempted to resolve their issues, and all
the steps that they have gone through. And it does not appear that the
FTC requires the consumer to supply an extensive amount of information,
like a log that identifies all the steps that they\'ve gone through to
resolve the issue. And I\'m concerned about the confusion that will
cause to the consumer.

MR. SMITH: One of the major problems in enforcing the telemarketing
rules is that there\'s often very sketchy information about the calls,
and so we are certainly encouraging people to provide as much
information as possible, but we will certainly operate on what we can
get from them.

MS. RAGSDALE: So if they don\'t supply all of that information, you will
still proceed in trying to resolve their complaint?

MR. SMITH: We will certainly take every effort to investigate it, but
certain critical pieces of information have to be provided to us before
we can ‑‑ for example, who called you, you know, those types of
information we just have to have.

MS. RAGSDALE: But they don\'t need the name of the representative that
they have spoken with.

MR. SMITH: No, I don\'t believe that\'s necessary.

MS. RAGSDALE: Okay. And from what I understand, David indicated that ‑
and I\'m speaking of David Torok from the FTC ‑ not all of the consumer
complaints will be investigated. And how will the consumer know whether
their complaint is one of the ones that will be resolved?

MR. SMITH: Well, that again is a very good question, and is of concern
to us because, of course, we have only a certain number of staff who
look into these, and resolve them. With the adoption of the National Do
Not Call List, and this is perhaps a question for David Solomon, I think
that efforts will be made to increase that staff and investigate those.

It certainly is unlikely that every single complaint will be
investigated and acted upon. What is more likely to happen is that we
will look for patterns and practices, and abuses on sort of a general
level and act on those.

MS. RAGSDALE: Okay. And since the complaint process is handled through
an IBR system, is there opportunity for the complainant to hit zero if
they need to speak to an operator?

MR. SMITH: That I\'m not sure of it, and it might be ‑‑ Dane is saying
yes, so I assume the answer is yes.

MS. RAGSDALE: Okay. Thank you.

MR. SNOOP: A short question, and that is, with the registration, you
know, most people have more than one phone number. I mean, it\'s just
kind of a way of life. We have two phones or three phones, or a fax
phone, or whatever numbers you have in your home. Are you asking people
who register to register all the numbers, or just the numbers that are
the basic numbers that they use in their household?

MR. SMITH: That is up to the consumer. The only sort of limitations on
this are that if you are registering by phone, you have to call from the
phone number that you\'re registering. So if you have three lines,
you\'re going to have to call from each one of those. My understanding
is if you register on the Internet, you can register as many as three
numbers.

MR. SNOOP: Okay. At a time.

MR. SMITH: Yes.

CHAIR ROOKER: Okay. Do we have other questions for Richard? Okay. Well,
thank you so much. We really appreciate, Richard, for the excellent
presentation.

CHAIR ROOKER: Dane.

MR. SNOWDEN: I know you all are about to take a break, but we\'re trying
to work on the schedule for Commissioner Martin, so he may be down in a
second, but if he doesn\'t come down, actually he will be down a little
later. But I do want to touch on a couple of things that Richard was
bringing up, and I think Richard did a fantastic job with explaining, as
he pointed out, this order that has over 200 pages. And it was a lot of
hard work from a very small staff, Richard being one of them, that put
this together.

First, there\'s a lot of debate about the non‑profit issue, and the
political calls and things of that nature. We are prohibited by Congress
to change that. We cannot touch that, and that is not something that we
can say arbitrarily we want to do, or we can\'t do. What Congress told
us to do is to leave it exactly like it is. And for those of us who have
to go to the Hill a lot, we do exactly as Congress tells us to do, and I
being one of those people. So we will continue to follow that, unless
Congress tells us otherwise.

In terms of the outreach issues that came up, we are ‑ and again, Kris
Monteith will be down here a little later, who\'s my Deputy for Consumer
Affairs and Outreach in addition to governmental affairs, but we will
continue to make sure that consumers can call the 188‑CALL‑FCC or
188‑TEL‑FCC for TTY, and get any information they need on the
telemarketing rules, all the exemptions, all the facts. They can get
that no matter if they have access to a computer or they have access to
a telephone. Hopefully, you have access to both. If you don\'t, you only
have access to a telephone, you can call and get that information sent
directly to you. And that is true for not only our telemarketing rules,
but all of ‑‑ everything we do here at the FCC. So that was directly to
you, Mr. Horowitz, so please tell your listeners that they can call
188‑CALL‑FCC if they don\'t have access to a telephone.

In terms of the complaint information, the more information, obviously ‑
and David Solomon will be here, and I\'m sure he would echo this ‑ the
more information we have in terms of a complaint the better. That\'s the
nature of the beast. If we only have a telephone number or a time, it
makes it harder for us to go out and do enforcement action. So we are
encouraging, strongly encouraging consumers to provide as much
information as they can when they file a complaint because it makes it a
lot easier to actually go after the person that you are complaining
against.

And it\'s important to note that the FCC has the prerogative to act
against a telemarketer or any other violator of our rule, no matter if
it\'s on one complaint or a trend of complaints. So depending on how
egregious the violation is, we can act, or if it\'s a trend that we\'re
seeing we can act, so it\'s not just limited to one thing that we
receive from one particular consumer.

But I wanted to clarify some of those things. And we are, as Richard
pointed out, and I\'ll say, the poor guy hasn\'t gotten any sleep since
this thing went into effect on July ‑‑ since it went out on July 26th
when we made our decision here at the Commission.

This is brand new. We are still getting through this, and we have ‑‑ and
I want to pat ourselves on the back a little bit, and I don\'t usually
do this, but Congress gave us until September to get this done, and we
are ahead of schedule. We did that intentionally so that we could work
on some of the other details before October 1st, so that we could answer
some of these questions, we can get the enforcement issues worked out.
And we are well underway to do that, so I am very proud of Richard, and
Erica, and Margaret, and all the members of my staff who have put this
together to make sure that we got this done for the American consumer.
And so we have a lot more work to do.

This will be a very busy summer for our policy folks, but I know this is
an important issue for the American consumer, so I hope that everyone
looks at this issue as a giant step forward for the American consumer
regarding managing the telephone calls that come to their homes each and
every day. So with that, I will turn it back over to you, but I wanted
to just bring those few points out.

CHAIR ROOKER: Thank you, Dane. Thank you very, very much for an
excellent presentation.

We\'re going to take a 15 minute break, be back just a little bit before
10:30 because we\'re a little bit early. I can\'t believe it. Everybody
is running on great schedule here. Thank you.

(Whereupon, the proceedings in the above‑entitled matter went off the
record at 10:15 a.m. and went back on the record at 10:33 a.m.)

CHAIR ROOKER: Back to work, folks. Oh, good, Richard. You\'re doing so
good. You all are getting to be so obedient. By the time this term of
office is over, you\'re going to be right in your chairs at the minute.
It\'s wonderful.

Oh, yes. Scott is not back yet. He had to go pick up something for us,
but you\'re absolutely right. That was nice of him, wasn\'t it. And boy,
was it ever.

One person did join us after we made the introductions this morning, so
Milton is right there. Would you just introduce yourself so that we\'ll
know who you are?

MR. LITTLE: Sure. Good morning, everyone. Sorry I\'m late. Milton
Little, Chief Operating Officer of the National Urban League.

CHAIR ROOKER: He actually was here right after we did the round of
introductions, so you\'re not that late, Milton. We\'re glad to have you
here. Thank you very, very much.

Now I think Greg Guice is here. There you are. Yes, that\'s absolutely
great. Our next subject is ‑‑ actually, Greg is going to cover two
subjects. He is an Attorney Advisor with the Policy Division in the
Wireless Telecommunications Bureau. He\'s going to talk about the E‑911
Service and, of course, much of the interest in this service grew out of
the terrorist attacks, which pointed up some needs for change.

And then the second thing that he\'s going to address is the order that
was passed yesterday regarding the hearing aid compatibility issue. And
this is an issue in which the committee has been very interested. And
Greg will continue with information about that after the E‑911
discussion. Thank you, Greg. Welcome.

MR. GUICE: Thank you. Good morning, everyone. Yeah. I\'m here to talk to
you about the E‑911 issues that we\'re dealing with at the Commission.
As some of you may know, at the end of last year we actually began a new
proceeding looking at expanding the scope of the E‑911 requirements.
Currently, wired line services and wireless CMRS services comply with
those requirements. And there are a number of services that came about
after that, or just sort of got overlooked in the process, and so we\'re
revisiting those issues at this time.

Just for everybody\'s benefit, Enhanced 911 Service allows Public Safety
answering points to automatically receive caller\'s phone numbers and
location information. Enhanced 911 provides critical information to the
PSAP that they may not otherwise be able to get.

In the item that we adopted at the end of last year, the Commission
proposed using specific criteria to determine whether a particular
service or device should be required to provide consumers with Enhanced
911 capabilities. Those criteria sought to base the decision on whether
the service or device offered real time two‑way voice services that
interconnected to the public switch network on either a stand‑alone
basis, or packaged with other telecommunication services, whether the
consumers of those services or devices had a reasonable expectation of
having access to 911 service, whether the service competed with
traditional CMRS service or with the wireline local exchange services,
and whether or not it was technologically or operationally feasible for
those services to provide 911 service.

What I\'ll do now is just run through a list of those services and sort
of what we thought we would ask about them. Mobile Satellite Services
was the first issue teed up. The Commission has been considering Mobile
Satellite Service and the need to comply with 911 for some time now.

Mobile Satellite systems, by their nature, have fewer local
interconnection points than terrestrial wireless systems. This
technological difference affects the ability of Mobile Satellite Service
providers to both locate callers, and to route their emergency calls to
the appropriate PSAP. The item, therefore, sought comment on whether or
not maybe these services would be better served by using call centers
that could then find the local PSAP and route the call there. The item
also sought additional information on other enhancements to E‑911, that
maybe Mobile Satellites could benefit from in their implementation.

The next issue we sought comment on was Telematic Service. Some
Telematic Service providers offer their customers the ability to place a
911 call directly if they subscribe to a resold CMRS service, or they
offer it through a hot button which is ‑ for those of you who may not
know, this is sort of like an On‑Star or ATX is another provider of
these services, and you sort of hit a button and it goes to an emergency
call center.

If the hot button is used, the request is sent first to an advisor at
the Telematics Call Center, who then forwards the call to the
appropriate PSAP. The hot button approach may actually have certain
benefits, as well as draw‑ backs, and the item, therefore, sought
comment on whether we should craft our rules to take account of this
option.

The item next looked at multi‑line telephone systems which have been
around for a long time. Multi‑line systems include things such as PBXs.
Multi‑line systems present a challenge in delivering accurate call‑back
and location information, because the systems may not assign a unique
telephone number to the outbound call, and because the system itself may
not be located at the same physical location as the caller.

Some states have adopted rules to address these issues, so the further
notice sought comment on whether ‑‑ on what the appropriate role for the
Commission is in this matter in light of such state action.

Next the item looked at resellers, prepaid calling, and disposable
phones. There we are looking at more of an explicit obligation issue.
Currently, the underlying facilities‑based licensee has a requirement to
comply with our rules. And what we sought comment on there is whether we
should put a more explicit obligation on the resellers.

There\'s also a service known as Automated Maritime Telecommunication
Systems. These have traditionally been ship‑to‑ship and ship‑to‑shore
systems. The Commission relaxed its rules and allows those folks to now
offer voice services that connect with the public switch network, so we
sought comment on whether, to the extent that they do connect to the
public switch network, if they should have an E‑911 obligation.

And then finally, sort of the catchall category, we looked at emerging
services and devices. Among these, you know, you can think of things
such as voice‑over IP. And there we sought, you know, information on ‑‑
really it\'s more like information on what the potential for any of
these such devices or services were to provide 911 service, and also
what the expectation of consumers might be in using these services. And
so that\'s sort of where we are in the E‑911 proceeding. Comments have
been filed, so unfortunately we can\'t say too much at this point. We
are reviewing it, and we hope to do something soon in those regards.

What I\'d like to do is maybe take questions on both of these things at
the end; that way, it kind of gets me out of this position that I don\'t
like. So next, the hearing aid compatibility proceeding that we did
yesterday.

Yesterday the Commission adopted a report and order requiring wireless
manufacturers and service providers to make digital wireless phones
accessible to the more than 6 million individuals with hearing
disabilities that use hearing aids.

Approximately one in ten Americans, about 28 million, have some level of
hearing loss, and this proportion increases to one in three among the
population over age 65. As the median age of the population continues to
rise, the proportion of Americans with hearing loss will likely
increase.

As many of you probably know, hearing aids operate in two modes,
acoustic coupling which allows the microphone to receive and amplify
sound, and then there\'s telecoil coupling, which allows the user to
avoid unwanted ambient noise by turning off the microphone and receiving
only magnetic fields generated by telecoil compatible phones. In the
U.S., approximately 25 to 30 percent of all hearing aids contain
telecoils, which generally are used by individuals with most profound
hearing loss.

In 1998, Congress passed the Hearing Aid Compatibility Act, and required
the Commission to make all essential phones hearing aid compatible.
However, the statute exempted certain categories of telephones from
these requirements; one of those was wireless phones.

The Commission, based on a petition and the statute itself, began its
review of the exemption for wireless phones, and through the record that
we developed there, we found that the statutory requirements for lifting
the exemption on wireless phones has been met.

Specifically, the Commission found that continuing the exemption would
have an adverse effect on individuals with hearing disabilities, and
removing the exemption is in the public interest. In addition, it found
that it was both technologically feasible to require compliance, and
that the compliance would not increase cost to such an extent that
phones could not be successfully marketed. As a result, the order
modifies the exemption to impose certain requirements on digital
wireless phone manufacturers and service providers.

The item requires digital phone manufacturers and service providers to
take steps to reduce the amount of interference emitted from the digital
wireless phones, and to provide the internal capability for telecoil
coupling.

Specifically, phones subject to the rules must comply with certain
performance levels specified in a technical standard established by the
American National Standards Institute, known as ANSI C‑6319. Under that
standard, covered phones must provide reduced radio frequency or RF
emissions, sufficient to meet a U‑3 rating, and telecoil coupling
sufficient to meeting a U‑3T rating.

These requirements do not go into effect immediately, recognizing that
manufacturers have design cycles that they need to work through, and so
what we\'ve required is that within two years, each digital wireless
phone manufacturer and service provider must make available at least two
handsets that comply with the ANSI standard for interference. That\'s
the U‑3 rating, with a carve‑out on the tier one or nationwide carriers,
Sprint, Verizon, those folks. They will be required to provide two
models or 25 percent of the total number of models offered in a given
market. I know this is a little bit confusing. It will be clear in the
order.

Within three years, each manufacturer and service provider must make
available at least two phones for each air interface that it offers,
that provides telecoil coupling at the U‑3T rating under the ANSI
standard.

To ensure consumers\' continued accessibility and a range of product
options, the item does three other things. First, by February 18th,
2008, which is when the Analog Sunset Order takes effect, 50 percent of
all digital wireless phone models offered by manufacturers or carriers
must be compliant with the acoustic coupling or the u‑3 rating.

Second, the item encourages manufacturers and providers to offer at
least one compliant handset that\'s lowered price, and one that has sort
of the higher end features, that are becoming available.

And third, the item applies the requirement across all air interfaces
offered in order to further expand the service options available to
individuals with hearing disabilities.

The order also adopts what\'s called a notice requirement, which is a
carve‑ out to try to address the concerns of smaller providers and
smaller manufacturers, or those with just a smaller presence in the U.S.
market. There, if you\'re a manufacturer or service provider offering
two or fewer handsets in a given market, you will be exempt from the
requirements that we have adopted. Those who offer three models,
they\'ll have to offer at least one compliant handset. And those who
offer four or more will be required to meet the requirements.

So the consumers will get the information that they need to make an
informed decision, manufacturers will be required to label both the
packages that the phones come in, as well as put an explanation in the
manual, or through a product insert. And to facilitate the matching, the
item encourages hearing aid manufacturers to label their products, their
pre‑customized products according to the ANSI standard for hearing aids.

Finally, the Commission will engage in a comprehensive targeted outreach
campaign in coordination with the FDA to ensure that individuals with
hearing disabilities are informed of the actions taken in this order,
and the availability of hearing aid compatible digital wireless phones.

And so with that, I\'ll open up the floor to any questions anyone might
have.

CHAIR ROOKER: All right. Joe. Be sure that you put your hand up again
when Joe is about finished so that the people with the microphone ‑ and
identify yourself when you start to speak, if you would, please.

MR. GORDON: Hi. I\'m Joe Gordon, the League for Hard of Hearing. And I
guess I congratulate you on this big first step of many steps. You just
mentioned that dissemination of information about the accessibility of
the hearing aid compatible phones will be made to medical community and
to schools, and you also say to groups and associations representing
individuals with hearing disabilities, and to audiologists. Can you
briefly tell me how you ‑‑ do you have any ‑‑ what your plans are in
informing the organizations that represent hard of hearing people that
wear hearing aids and audiologists. Thank you.

MR. GUICE: Yes. What we\'ve done is, our Consumer and Governmental
Affairs Bureau is actually going to do a targeted mailing, where they
have information that they\'re going to disseminate to those groups so
that they can get it to their members.

In addition, I\'d mention that CTIA has posted on its website an area
where folks could go to see some of these phones that are going to be
compliant with the requirement. Also, the Consumer and Governmental
Affair Bureau is doing a consumer fact sheet that should be available
shortly, detailing sort of these requirements, and we\'ll be posting
that on our website, as well.

The FDA, as we understand, has a list of audiologists, and so we\'ll be
working with them to get a mailing out to those folks, so that when they
meet with their customers, they can explain to them that this is
something new that\'s coming about. I\'ll be a couple of years. And in
talking through the proceeding, and talking with the Hearing Aid
Industry Association, they indicated that what they would be doing is
working with the audiologists, as well, to put questions on the
questionnaire so that this question comes up when you\'re doing your
pre‑screening.

MR. GORDON: Just one follow‑up question. You mention in the order
release that 25 percent of hearing aids in the United States have
telecoils. And, hopefully, this order will increase that 25 percent
number, which is extremely low.

MR. GUICE: Right. I know from this proceeding that telecoils are a lot
more popular in Europe as far as use, and hopefully, this item will help
that. In addition, what we\'re also encouraged by is wireless
manufacturers have indicated to us that there may be better ways of
doing telecoil coupling, so the item is actually going to make an
allowance for some of that, with the understanding that telecoil is sort
of a standard that they need to go to.

MR. GORDON: Thank you.

CHAIR ROOKER: Eugene.

MR. SEAGRIFF: Hi. Eugene Seagriff representing TIA. Greg, thanks very
much for your taking the time to speak with us today, and your
informative presentation. And actually, your comments cleared up my
question, but my question was generated by the HAC press release.

MR. GUICE: Sure.

MR. SEAGRIFF: And in the bulleted points labeled under \"Specifics of
Adopted Report and Order\", it says that it\'s required that within two
years, at least two HAC compliant handsets with reduced RF emissions ‑
okay. The concept of \"HAC compliant\" means, has a telecoil and has
volume control based on the HAC Act. So by saying \"HAC compliant\"
there, and then just saying with the reduced emissions, implies that you
need to have a telecoil at that point, to your point, when in reality
it\'s the three‑year point.

MR. GUICE: Right. Yeah, actually ‑‑

MR. SEAGRIFF: So when you\'re looking at that wording ‑‑

MR. GUICE: I guess actually what we\'re using ‑‑ there we\'re using
\"HAC compliant\" to mean something different than our Part‑68
requirements, where we\'re ‑‑

MR. SEAGRIFF: Yeah. And that\'s going to confuse a lot of people.

MR. GUICE: Well, that\'s a great point. Then we should definitely clear
that up.

What we\'re actually doing is ‑‑ the phrase \"HAC compliant\" in the
wireless context is going to refer to a different set of requirements,
and that will be the U‑3 RF Emission Standard, and the U‑3T for
telecoil. And as you pointed out, the RF standard comes in in two years,
telecoil in three. And I would mention that ANSI\'s telecoil standard is
a little bit higher than the Part‑68 requirement, so yeah, that will be
‑‑ thank you for bringing that up.

MR. SEAGRIFF: Perhaps a new term is in order than \"HAC compliant\".

MR. GUICE: Yeah. Perhaps we should say WAC or something, wireless ‑‑

CHAIR ROOKER: We have a question here from Susan Mazrui.

MS. MAZRUI: Hi. I was wondering how you came up with the figure for the
telecoil, the number of telecoil compatible phones?

MR. GUICE: Well, in dealing with the various interests in the
proceeding, the wireless manufacturers, as well as the Consumer Advocacy
Groups, I think everybody understood that telecoil is a difficult issue
to address. And the HAC Act specifically requires the Commission to take
into account that difficulty through a cost ‑ not necessarily a cost
benefit analysis, but sort of having recognition of the fact that
technologies may require us to delay or wait, or lessen a burden. And so
in looking at the way that the various interests came to us and put
information on the record, we felt that two was certainly a requirement
that was well within reach. And so, I think a number of the
manufacturers should be pleased with that. I know that ‑‑ I believe that
SHHH, in particular, in an ex parte filing to the Commission, mentioned
that telecoil was going to be a difficult issue. They realize that it
would probably need to be on a different glide path than the RF Emission
issue. And so what we tried to do in the order is recognize that, so
that we can ensure choice.

And, you know, what may get lost ‑‑ two sounds to some like a small
number, but if you\'re a service provider and you offer four different
manufacturer\'s handsets, potentially you would have eight offerings
that you could make to the individuals with hearing disabilities. So
this is real choice, even though the number itself my seem a little low
to other folks.

MS. MAZRUI: If I can comment back, I would say from the number of users
‑‑ I mean, certainly we want to serve our customers, including customers
with hearing loss, but I would say the number would seem high when you
look at the actual number of users compared to the total population.
Although we certainly understand the need and the desire to provide
choices.

MR. GUICE: And I would say to that, I think that in the wireline
context, every single phone is telecoil compatible. There\'s nothing
necessarily that the telecoil compatibility does that would affect a
person who doesn\'t use the telecoil, or just regular hearing
individuals from using that exact same phone. And granted, there are
some technological challenges in putting this into such a small device
and one that operates in sort of an environment that\'s very different
than a wireline environment. But what I would say is that while 25 to 30
percent of hearing aids are equipped with telecoil and a smaller number
of those people actually use the telecoil, I think what we\'re striving
at is really getting customer choice. And, you know, for hearing
individuals, we have one manufacturer that offers us 45 choices, so I\'m
not sure that two is necessarily a bad benchmark.

CHAIR ROOKER: Do we have any other questions for Greg? If not, Greg,
thank you so much for your time. We really appreciate your being here.

MR. GUICE: Thank you.

CHAIR ROOKER: Scott Marshall would like to make an announcement.

MR. MARSHALL: Very quickly, you have a lot of material in your packets,
some of which was mentioned by Dane this morning. We have that material
available on floppy, as well as CD disks, so we want to be sure we get
that to the people that need the electronic versions.

In addition, the press release on the Hearing Aid Compatibility issue,
as well as the Consumer Alert are in your packet, as well as an
off‑the‑press fresh, just newly minted handout on broadband. And
finally, as you probably know, we invite people from the public to
submit comments to the committee on issues on our agenda. And your
packet includes some material from the National Emergency Numbering
Association regarding the E‑911 issue. And we have a version of that on
disk, as well. Thanks.

CHAIR ROOKER: Thank you very much, Scott.

This next subject, the Telephone Relay Service update we\'re going to be
talking about next, should provide excellent background for the working
group on this subject. And in fact, it\'s important that you realize
that the Commission has asked this committee for recommendations on TRS.
And what we\'d like to see happen is that the group, the working group,
which is headed by Brenda Kelly Frey, make recommendations for action by
the Full Committee at our November meeting.

We\'ve been asked to provide comments regarding the outreach provisions
of the order; that is publicizing the order to users of the service,
making the public aware of it and, of course, how to pay for it. That\'s
a big question.

Joining us this morning to discuss this important issue is Tom Chandler.
He\'s the Chief of the Disability Rights Office with the Consumer and
Governmental Affairs Bureau. Tom, welcome to CAC.

MR. CHANDLER: Well, good morning. It\'s a pleasure to be invited here
again to give you an update on our recent TRS orders. I see a lot of
familiar faces here, even though I\'ve sort of run in a little late. In
the almost one year that I\'ve been working in the Disability Rights
Office, it\'s certainly been a great pleasure to get to know many of
you, and talk to many of you, and discuss all the issues that are
relevant to the important work that we do.

I think as you can tell, we\'ve had a very busy several months.
Hopefully, some of you don\'t think we\'ve been too busy in the last
month or so. And this morning, I\'d like to briefly talk about two of
the TRS items that we have released in the last month, and that would be
the second improved TRS Report and Order, and Notice of Proposed
Rulemaking that was released on June 17th, and the TRS Cost Recovery
Order setting forth these permanent reimbursement rates for TRS that was
released on June 30th.

By way of a little bit of background, which may be unnecessary, but
I\'ll say it anyway. Obviously, one of the major regulatory activities
with which the Consumer and Governmental Affairs Bureau and the
Disability Rights Office is involved is TRS. I know most of you ‑‑ many
of you are very knowledgeable about the subject, some of you that might
be new to the committee may be less so, so let me just make a few brief
pointers.

TRS, or the Telecommunications Relay Services allows persons with
hearing and speech disabilities to communicate by telephone with persons
without such disabilities. This is done through a communications
assistant or CA, who is in a sense a middle person, who\'s in the middle
of the call between the two parties. And on a typical call, the CA
receives text typed, for example, by a person with hearing disabilities
on a TTY. The CA in the middle voices that text to the hearing person,
and listens to what the hearing person says, and types that back to the
person with the hearing disability. And that way, you have a two‑way
conversation with the CA in the middle.

TRS was enacted as part of Title IV of the Americans with Disabilities
Act in 1990. Pursuant to the Act, the Commission issued regulations that
provided for the nationwide roll‑out of TRS in July of 1993. And you
don\'t have to be a math major to figure out that that means we\'re
coming up on the 10th anniversary of TRS which is, in fact, later this
month ‑ or at least the 10th anniversary of its availability on a
uniform nationwide basis under our regulations. So I think that\'s a
milestone that we can all be proud about.

In enacting Title IV, Congress obviously recognized that persons with
speech and hearing disabilities have long experienced various barriers
to telecommunication services. And, therefore, the intent of the Act was
to further the broader goal of universal service by providing to persons
with hearing and speech disabilities functionally equivalent telephone
service. And that\'s sort of the mantra throughout the Act, and the
regulations.

And I always, at this point, digress a little bit just to emphasize,
because maybe given my background as a Civil Rights attorney,
broader‑based, the Title IV and the whole TRS program is part of the
Americans with Disabilities Act, which is really a very broad act to end
discrimination based on disability generally throughout the country. So
you have Title I, that covers employment situations. Title II, which
covers discrimination by states and local governments in terms of
access. And Title III, which covers public accommodations, which
ironically are private entities, such as hotels, restaurants, movie
theaters, stores and things like that. And then Title IV is the
Telecommunications Relay Services, and the Telecom. So I think it\'s
always important to step back every once in a while and realize that
Section 225, and what we do in TRS is really part of this much broader
Act.

If you read the legislative history, they talk about the importance of
access and barriers to telecommunications in the same breath that they
talk about the barriers to employment, access to facilities, access to
businesses, movie theaters, et cetera.

Since 1990 or 1983 ‑ I see I have a typo in my own speech ‑ no, 1993. I
don\'t have a typo in my own speech. I have a typo in my brain. TRS
obviously originally started out what we now call traditional TRS, which
was a TTY or similar device, typing it through the phone lines, going to
the other party. Now we obviously have expanded that, and we have other
types of TRS, including IP Relay, Internet Protocol, and Video Relay
Service. And, of course, all of the action of late has really been in
these other Internet‑based services, IP Relay and BRS. That has made our
work both exciting and a challenge, and has raised a lot of interesting
issues for a lot of reasons; in part, because you don\'t necessarily
know the geographic location of one leg of the call when it\'s through
the Internet, so it makes the whole intrastate/interstate paradigm on
which much of the TRS program is based difficult to figure out. So
that\'s an ongoing challenge.

How wide‑spread has the use of TRS been? Well, my number crunchers tell
me that for 2002 and 2003, throughout the various forms of TRS,
consumers have used almost 40 million minutes of interstate TRS alone,
which equals again if you\'re a math major, which I obviously am not,
given I can\'t even read my own numbers earlier, 27,550 days or over 75
years worth of communication.

With that background, let me turn to these orders. On June 17th, of
course as you now know, we released the Second Improved TRS Order, and
the NPRM that went along with it. To briefly summarize the meat of this
order, we first required several new types of TRS calls, that they be
provided on an intrastate and interstate basis, including things that a
year ago I didn\'t know what they were, like two‑line voice carryover,
two‑line hearing carryover, VCO‑to‑VCO, HCO‑to‑HCO, and various other
permutations. That\'s all set forth in the order. Most of these things
were being provided already, but there are a lot of different forms and
spin‑offs on sort of the traditional TRS type of call.

Second of all, we clarified that providers may use any preferred
technology that complies or facilitates meeting our mandatory minimum
standards, including SS‑7 technology, which is sort of this parallel
network out there that\'s used for transmitting call data, and billing
information, and ties into providing Caller ID and other services. There
was some ambiguity out of our previous orders as to the ability to use
SS‑7 and things like that.

In addition, we clarified that in the important area of Emergency TRS
Calls, that they be routed to the appropriate Public Safety Answering
Point, PSAP, instead of the nearest PSAP, because the appropriate one is
not always geographically the nearest. And we also concluded that 711,
the sort of universal three digit dialing access to get to a TRS Center
would also be the access number for speech‑to‑speech, so we would keep
having one number that everyone could remember, that could get them
access to any of the types of TRS services.

And finally, we required a bunch of new features, again sort of like the
other types of TRS. Most of these have already been provided, things
like call release where you can through a CA to connect what actually
ends up being a TTY‑to‑TTY call. But if you\'re trying to reach somebody
and you have to go through a hotel switchboard or something like that,
the CA can set up the call and then drop out of the call. Also, other
features like three‑way calling, and a speed dialing type of
functionality.

Turning to the Notice of Proposed Rulemaking, which may or may not seem
a little more exciting than the notice itself, first, of major
importance is the proposal that TRS facilities be treated like LEC for
purposes of the National Security Emergency Preparedness Priority Status
under our Telecommunications Service Priority System, and all that
gobbledy‑gook which I can barely read here, is really making the very
important point that currently LEC facilities are covered by our rules
and programs to restore communication services in the event of an
emergency, but TRS facilities are not. So in the post‑911 world that we
are unfortunately stuck with, it seems to us extremely important that
those who use TRS have the same access to have their telecommunications
service restored that the hearing world does in terms of the LEC
facilities, so we put the TRS facilities on the same footing as the LEC
facilities.

We also seek comment on a bunch of other matters, such as the encryption
of IP Relay calls for security purposes, how 711 emergency calls should
be handled over wireless devices. There\'s obviously a big difference
between making wireline versus wireless calls. With the wireless call,
there\'s obviously no necessary correlation between where the person is
making the call, and what the phone number is on the phone that may
suggest where it is. So if I take my Virginia cell phone and make a call
from California, and it\'s a 911 call, they may think I\'m in Virginia,
when really I\'m in California, so that presents additional challenges.

Also, we asked about our Call Setup Rules, and whether they should be
sort of specified for the various types of non‑traditional TRS calls,
such as two‑ line, HCO, speech‑to‑speech. Instead of having one rule
that applies to all the various types of TRS, whether they should be
made more specific.

And finally, we asked about other important matter, which is eligibility
of providers to receive payment from the Interstate TRS Fund. Currently
under the rules, the rules certify state programs, but there\'s nothing
to certify providers, so especially with the advent of VRS and new
companies coming out and wanting to offer VRS, there\'s some confusion
about how they can do that, and be eligible to be reimbursed for their
cost from the Interstate TRS Fund, so we have raised an issue regarding
that.

I think that is one of those issues, obviously, where the regs have not
kept pace with the technology. And as new things like VRS has come out,
I think the regulations just didn\'t contemplate that, and there might
be non‑telephone companies coming out wanting to offer the service, and
they really have no place to go in terms of being \"certified\", because
there\'s nothing in the regs about us doing that.

And finally, in the NPRM is the matter of outreach. And I know that was
mentioned earlier, and as was noted earlier, outreach is a matter that
we specifically are seeking your assistance on that. And we also realize
it\'s an issue of great importance.

Stepping back for a minute in the report and order itself, also
addresses outreach because that issue was raised in the 2000 TRS order.
But we concluded in the report and order that given that the record
contained conflicting views about matters relating to outreach, that we
really needed to seek additional comments on that. And, therefore, we
pushed the issue to the NPRM.

And so in the order, in the NPRM, we asked for data and other
information on what types of outreach mechanisms may work, who can play
what role in outreach? For example, you have the states, you have the
providers, you have the Commission. And then, of course you also have
the important point of who would fund the outreach, and what should the
role of the federal funding be for that.

I should note and remind us all about outreach, that the rules do
already require that the providers take outreach steps to inform and
educate the public about TRS, and that some of these costs are submitted
by the providers in taking into account and determining the
reimbursement rates, the permanent reimbursement rates. But I think
we\'re all aware that there\'s been some consensus for several years
now, that whatever outreach is out there has not been enough, and
there\'s been some interest in really beefing that up, and even having
some kind of national program. So that is back on the table, and again,
we note that we\'re specifically asking you guys, the committee, to
address this issue and make recommendations to the Commission. And my
understanding, of course, now that there\'s already a working group on
this, and that\'s going to happen. So we\'re happy about that, and
excited about that, and really do look forward to hearing your
recommendations on this very important issue, and a difficult one in
terms of legal and other matters in terms of the role of the FCC, and
the Interstate TRS Fund, et cetera.

Let me note also with regard to this order that shortly it\'s going to
be published in the Federal Register, and then the public will be able
to file comments within 30 days, and then there\'ll be a reply comment
period, so we\'re anxious to obviously have all interested parties
weigh‑in on all of these issues. Some of these issues, again like the
emergency situation and the status of TRS centers, as well as outreach,
as well as the certification process for providers seeking money from
the Interstate Fund. They\'re really very important issues, are new
issues, and we\'re anxious and interested to hear what people have to
say about those.

Very briefly, let me turn to the June 30th order on the TRS Cost
Recovery. And although that order, like all of our orders, really speaks
for itself, what I really thought I\'d mention is the process that goes
into coming up with these reimbursement rates for payments out of the
Interstate TRS Fund.

On May 1st of each year, NECA, which is the Interstate TRS Fund
Administrator, they file a proposal with the Commission, which sets
forth their proposed reimbursement rates for the various services. These
rates are based on cost and usage data that they get from the providers.
They basically crunch the numbers, and come up with proposed rates.

Our rules require that by June 30th, which is, again if you\'re a math
major, which I really should go back to school probably, on that is only
about a 60 day window for the Commission to approve or modify these
proposed rates. And the regs specifically say that the Commission is to
approve or modify these rates, and our rules also make clear that the
rates are intended to compensate the providers for the reasonable and
fair costs of providing TRS. So accordingly, we review the submission
and other data that we may obtain from providers, and also the same data
used by NECA. And in this case, we found that some adjustments were in
order, so we adjusted the proposed rate, at least with regard to VRS.

And I think with regard to these rates, it\'s important to remember that
this is really an annual exercise, that setting these rates is a
process, that the rates necessarily do and have changed from year to
year. And that the end gain in this for all of us is to arrive at rates
that obviously reflect the reasonable and fair cost of providing these
important services.

So in closing, I\'d like to thank you for the opportunity to bring you
up‑to‑ date on these orders, and thank you for all your good works, both
past, present and future on behalf of all consumers, and particularly,
on behalf of those who rely on our TRS services. So with that, thank
you, and I don\'t know if there\'s time for ‑‑

CHAIR ROOKER: We only have a couple of minutes, but I can tell you, you
will definitely be hearing from us. Do we have questions? Does anyone
have questions for him? Yes, Claude.

MR. STOUT: (Off mic.) Okay. I\'ll go back and repeat. I\'ll go back in
reverse now. Now I\'ll hit the play button. Hello, Tom. We, as
consumers, want to thank you for the June 17th decision. We applaud the
FCC for moving the TRS functionality ahead for us.

We, as consumers though, do have some concerns with the June 30th
decision; specifically on the VRS rates. We, as consumers, don\'t have
all of our facts together, and we haven\'t made a final decision
ourselves. Am I right in saying that the FCC did receive recommendations
from NECA to approve the VRS reimbursement at like \$14, but the FCC
decided against that and decided on \$7.75. But you made that decision
based on NECA and other data. You mentioned other data, and so I\'m
curious what the other data is that you\'re referring to, other than the
recommendations from NECA that you based your decisions on for
reimbursement rates for the VRS system.

MR. CHANDLER: Right. You\'re correct that NECA\'s May 1st submission,
based on their calculations had a rate of 14 some odd dollars, 14
dollars and change for VRS. The information we looked at was not really
different information. We got the same underlying cost data that they
did, and also, it requested some other supplemental cost data from the
various providers.

We looked at that cost data, and made some adjustments to various parts
of it because we ‑ this is all spelled out in the order ‑ because we
thought that there were some numbers either that didn\'t make sense, or
that might have been improper, so we excluded certain numbers. But we
did the same kind of math starting with the same data. We just adjusted
it because we thought various parts, it wasn\'t correct or wasn\'t
clear. And as we\'ve noted, set out an interim rate at this point
because we do plan to keep revisiting the data, and look at it further.

Part of it was, of course, the 60‑day window didn\'t give us a lot of
time. NECA was very helpful in trying to get us the data, as were the
providers. It just was a very short window. And I think as a footnote,
and the order makes clear, we invited ‑‑ since the providers were
understandably interested in keeping their cost data confidential, we
had to address the data and the numbers in the aggregate in the order.
And as the footnote says, have invited the providers to come in and talk
to us individually if they want to see what adjustments we\'ve made on
an interim to their cost data. Some of them have taken us up on that,
and we\'re in the process of having those meetings over the next week or
two.

CHAIR ROOKER: Tom, thank you so much for giving us ‑‑ this subject is,
of course, something that we\'re going to be discussing and working on,
so thank you ever so much for being here.

MR. CHANDLER: Thank you.

CHAIR ROOKER: Our next speaker is responding to a request by the
consumer and outreach working group. They wanted more information on the
different kinds of outreach to under‑served populations by the FCC. And,
of course, what we\'re going to talk about today, Kris Monteith is the
Deputy Bureau Chief of the CGB, and she\'s going to talk about outreach
to Indian Country, but that\'s only one aspect that this committee is
interested in in terms of outreach to under‑served populations.

And then following that, while we don\'t have a working group on
addressing Homeland Security and people with disabilities, it is a
subject that was discussed with the prior committee just after 9/11, and
it may be an area where we want to make recommendations. I think we\'ll
have to see about that, so Kris will follow ‑‑ that will be her second
discussion.

Please join me in welcoming Kris Monteith. Kris, thank you.

MS. MONTEITH: Good morning. It\'s nice to see some old friends, and to
meet new ones. And I realize ‑‑ thank you very much for that
introduction, Shirley. I realize that I am the last speaker between you
and lunch, so I will try and be brief, but hopefully informative.

On the Tribal Outreach, this is an activity that the Commission has had
underway for a number of years. And we are involved in a very
wide‑ranging, comprehensive effort aimed at fulfilling the mandate that
all Americans have access to quality affordable telecommunications
services, including Americans that live on reservations, American
Indians and Alaska Native Communities.

This effort which we have called our \"Indian Telecommunications
Initiative\", takes several different forms. First, we sponsor regional
workshops to provide How‑To information on telecommunications services
and infrastructure development.

In the past, we have had several big annual conferences to deal with
telecommunications issues affecting Native Americans, and what we\'re
doing with our regional workshops is trying to hold on a more frequent
basis, a workshop that\'s smaller, perhaps, in scope, and specifically
aimed at attracting folks within a particular region of the country. But
hopefully, more hands‑on and interactive, so we can really get down to
the nitty‑gritty of how to do this stuff.

Our regional workshops acknowledge that tribes are at different stages
of economic development, and their experience is different and varies.
One workshop that we\'re holding in the very near future, in fact, next
Thursday and Friday, will be held in Reno, Nevada, and we\'re working in
cooperation with the Washo Tribe of Nevada and California, to make sure
that we address issues that are of concern in that region of the
country.

We have a number of folks that will be coming in and speaking, and one
of them is here today, Mr. Vernon James; we\'re delighted to have
participating in that workshop, and I hope it will be very successful.

The second kind of activity that we engage in is attending and
participating in conferences that are sponsored by other organizations,
whether it be the National Congress of American Indians, Tribal Tech
Workshops that are held by universities, on occasion. We have
participated and look forward to participating with the Affiliated
Tribes of Northwest Indians, really getting out there and going to
conferences of others to try and interact, establish relationships, and
get the message out.

We participated also in the National Summit that was held last September
in Phoenix, Arizona, which was a very large conference sponsored by the
Department of Interior. And DOI had a number of federal agencies that
came, and worked with folks that were in attendance at that conference
to address different programs that the federal agencies had underway.

We also meet individually with tribes on a very, you know, one‑on‑one,
person‑to‑person type of basis. Recently, we met with members of the
Tribal Council of the Standing Rock Sioux Tribe, to discuss that
tribe\'s efforts to increase the quality of service on their
reservation. We also toured the San Carlos Apache Telecommunications
facilities, and the Gila River Telecommunications facilities to learn
more about the challenges that tribally‑owned telcos face. And those
kinds of tours are just incredible for us to take part in. They\'re such
a valuable learning experience for us, and we very much appreciate the
hospitality that was offered to us on those tours, very much.

The fourth kind of activity that we engage in is distributing
educational materials to Native American tribes and organizations. For
example, we\'ve done direct mailings on our enhanced lifeline and linkup
programs. We put together publications that are very specifically
targeted at the Native American population. One we have called,
\"Expanding Telecommunications Access in Indian Country.\" Those kinds
of direct outreach types of activities are another activity that we have
ongoing.

So in a nutshell, that just describes some of the types of activities
that we engage in as part of our outreach plans and strategy in this
particular area. And I\'m happy to answer any questions folks may have,
or wrap it up and ‑‑

CHAIR ROOKER: Do you want to just go ahead and talk about Homeland
Security?

MS. MONTEITH: Sure.

CHAIR ROOKER: And then we can leave the questions for the end, if
that\'s okay with you.

MS. MONTEITH: That\'s just fine.

CHAIR ROOKER: Okay.

MS. MONTEITH: I\'ll change hats and put on my Homeland Security hat. The
Commission\'s Homeland Security Policy Council was established in
November of 2001 in the aftermath of the September 11th events. The
Council\'s mission is three‑fold, it\'s to protect, it\'s to restore,
and to ensure effective communications during a national emergency,
whether it be a national disaster type of emergency, or a terrorist
attack, or other threat.

The Homeland Security Policy Council comprises senior staff from the
Commission\'s bureaus and offices. The Director is the FCC Chief of
Staff, Marsha McBride. Each of the bureaus has a senior staff
representative, and I\'m the representative from the Consumer and
Governmental Affairs Bureau. The HSPC\'s work complements the work of
the Commission\'s bureaus and offices, and the Federal Advisory
Committees that the FCC oversees. With respect to Federal Advisory
Committees that are sort of specifically targeted at homeland
security-related matters, we have two that we have chartered or
recharted in recent years. Two principal Federal Advisory Committees.
The first is the Network Reliability and Interoperability Council, NRIC,
and the second is the Media Security and Reliability Council. And these
committees work to ensure the sustainability of public
telecommunications networks, and to sustain and secure broadcast and
multi‑channel video programming distribution facilities and services
respectively. NREC is focused on Network Security, and MSREC is focused
on Media Security.

The HSPC also works to coordinate federal policy, the FCC\'s Policy
Initiatives. We worked on a broad range of issues, such as promoting
E‑911, promoting wireless priority access, promoting telecommunications
service priority programs, developing sound spectrum policy, promoting
public safety interoperability, and promoting the security of satellites
and international telecommunication systems.

Yesterday, Marsha McBride announced that the Commission has undertaken a
couple of new programs with respect to Homeland Security. Specifically,
we announced the creation of an Office of Homeland Security within the
Commission\'s Enforcement Bureau. The new office will provide
consolidated support for the Homeland Security and Emergency
Preparedness responsibilities, and coordinate again with our two federal
advisory committees that are devoted to Homeland Security types of
issues, and coordinate with the offices and bureaus, as well as the
Homeland Security Policy Council. Jim Daley was named as the Director of
that new office.

The second thing that Marsha did yesterday and which has been released
now publicly, it\'s available on our web, is she released, or the
Commission released a Homeland Security Action Plan. And as part of that
action plan, the Commission identified a number of key objectives or
priorities that together the new office and the Homeland Security Policy
Council will focus on.

The action items were broadly classified under two main objectives. The
first objective is to strengthen measures for protecting the nation\'s
communications infrastructure, and facilitate rapid service restoration
after disruption. And the second objective is to promote access to
effective communication services by Public Safety, Public Health, and
Emergency Personnel.

That second objective included an action item that specifically involves
this committee, and I\'d like to just briefly, if I could, read the
action item to you. It states that, \"The Commission shall convene a
summit of stakeholders, including representatives from the Disabilities
Rights organizations, telecommunications relay centers, the
Commission\'s Consumer Advisory Committee, and local and state
government advisory committee, and other governmental entities to
identify specific communications issues that confront individuals with
disabilities, particularly the hard of hearing and deaf individuals
during national emergencies or terrorist attacks, and develop a strategy
for resolving these issues where possible.\"

This is an issue that was brought to the Commission\'s attention, or has
been brought to the Commission\'s attention on a number of occasions by
different groups really. You know, Claude has come in and talked to us
about this issue. Folks from the Maryland Relay Center and the Virginia
Relay Center have come in and talked to us, and so it was something that
we thought was very appropriate for inclusion in the newly released
action plan.

We look forward to discussing with you, Shirley, and hopefully you can
bring it to the committee\'s attention, just how we might go about
working on this action item and bringing it to a successful resolution.
I think it\'s a very important issue, and I might note that it was the
first action item listed under that second objective, so I think in the
eyes of the Commission it\'s a very important issue, as well.

Then I think a couple of other sort of Homeland Security related items
you\'ve already been briefed on. Tom Chandler just spoke to you about
the TRS, NPRM and how that tees up the issue of TRS Centers inclusion in
the TSP Program, how we might address that issue. And then yesterday, I
just would note too that we adopted the wireless HAC report and order,
which takes steps to make sure that there\'s compatibility between
digital wireless phones and those wearing hearing aids, so I think that
was an important step too in making sure that during times of national
emergencies, we don\'t forget those that have disabilities.

So with that said, I\'ll make myself available for questions on these
issues, or any others. I hear my name was mentioned earlier this
morning.

CHAIR ROOKER: Yes, we have questions. Joy.

MS. RAGSDALE: Good morning. Joy Ragsdale representing NASUCA.

MS. MONTEITH: Hi, Joy.

MS. RAGSDALE: How are you? Just a few questions in regards to your
outreach activities and your personal visits. Do you have any reports
that detail the specific concerns of the various tribal members you met
with that you can disseminate? We felt we could not make recommendations
without knowing the efforts the FCC had already made.

MS. MONTEITH: We have not put together a comprehensive report per se,
but we do have a number of outreach types of materials that talk about,
you know, the various activities that we have undertaken. I know our
website, we\'re trying to include materials on our website too, about
either past or future outreach activities. But I like the idea of trying
to do something perhaps a little bit more detailed.

Sometimes we\'re talking to individual tribes on, you know, a very
specific basis, and I do think that we would want to talk to them about
sharing information. Not that it\'s, you know, a secret, but it\'s not
‑‑ they aren\'t open to the public types of meetings sometimes. But I
think it\'s a great idea of trying to cross‑pollenize and share what
activities we\'re undertaking, what the experiences are so we can all
benefit from them.

MS. RAGSDALE: Would it be possible for the individual members of the
Consumer Outreach Organization ‑ I believe also Susan Mazrui wanted to
‑‑ in modernizing the FCC\'s sub‑working group that we\'ve developed to
address the Internet access that the tribal groups have in terms of
public participation. Is it possible that we can meet on an individual
basis?

MS. MONTEITH: Yeah. We\'d be delighted to sit down with you and brief
you. And as I said, I do think it\'s a good idea. We can look at going
back into documents and things that we have done in the past, to the
extent they\'re not fully documented in a public way, and make that
information available to you.

CHAIR ROOKER: Vernon.

MR. JAMES: Good morning. Vernon James with the San Carlos Apache
Telecommunications Utility, Incorporated. A mouthful, like I said
before, we call it SCATCOM.

Just to comment, not specifically questions, but comments. During ‑‑
well, since the last meeting, I\'ve thought about the working groups and
some of the questions that were going back and forth, and some of the
comments being made. I saw the need to address those issues and concerns
specifically as it relates to the Native American communities, those
entities that have special concerns, special conditions that need to be
addressed.

The working group with broadband, for example, could not really focus in
on conditions that affect Native Americans, as well as rural America,
because of geographical concerns, because of geo‑political
jurisdictions, because of the high cost of infrastructure build‑out,
just a number of factors that relate to providing basic
telecommunication services in those areas. And as a result, I would like
to recommend to this group that a working group specifically on rural
America and Native Americans be formulated to address these concerns. Or
if that is impossible because there is an existing committee, that a
subcommittee be formulated to address this issue.

CHAIR ROOKER: Excellent comment, Vernon. I\'ll have to check and see
what we have in terms of ‑‑ we have a lot of working groups, and we\'ll
talk about that. We\'ll discuss it with you. Thank you very much, very
pertinent comments.

Do we have other questions? Yes, Joy. Joy chairs the Consumer Outreach
Complaints, Education and Participation Working Group.

MS. RAGSDALE: Thank you. Just a question on the Homeland Security. Are
there consumer fact sheets available that indicates what telephone or
telecommunications services will not be available to the consumer on an
emergency basis. The day of the 9/11 tragedy, of course, all cell phones
were inactive, and families were trying to reach ‑‑ and we only new our
cell phone would not be available because of people with military
experience. But on a general background, is that information known to
the public?

MS. MONTEITH: We do have a fact sheet that\'s called \"Communicating
During Emergencies\", and it does cover really very general, but very
important information about how to communicate during an emergency, and
what some of the reliability issues are during an emergency. So it\'s
very tip‑oriented, you know, trying to give consumers tips on what to do
in an emergency, and I\'m happy to make that available to you.

CHAIR ROOKER: Maybe we can make that available to the entire committee.

MS. MONTEITH: Yes.

CHAIR ROOKER: We could do that if we\'re doing a mailing, or is it
on‑line? Can we transmit it electronically?

MS. MONTEITH: It is on‑line. Yes.

CHAIR ROOKER: Okay.

MS. MONTEITH: We also put together a package of information, and it ‑‑
we just did a, unfortunately, somewhat of a limited publication for
yesterday\'s meeting, but we have put together a package of Homeland
Security related materials that we also are happy to make available to
this committee.

CHAIR ROOKER: Do we have other questions for Kris? Yes, Brenda.

MS. FREY: Brenda Kelly Frey, representing the Relay. Kris, first of all,
I want to thank you very much for taking your time to meet with both
Clayton Vellen and myself, and Pam Stewart on this very important issue
regarding Homeland Security and how it applies to TRS. I just wanted to
assure you that we\'re there ready, willing and able to roll up our
sleeves and assist in any way we possibly can, and that our working
group will be addressing this issue shortly with you additionally. Okay?

MS. MONTEITH: That\'s great. Thank you so much.

MS. FREY: Thank you.

CHAIR ROOKER: Do we have any other questions? Well, Kris, thank you so
much for being with us and bringing us a very informative discussion
this morning. It\'s very important subjects for us. Thank you very, very
much.

MS. MONTEITH: Absolutely. Thank you.

CHAIR ROOKER: We are very pleased that Commissioner Martin has joined
us. Commissioner Martin, welcome. It\'s nice to see you. The Commission
has been so busy that we\'re honored to have so many people coming in
and visiting with us this morning. You all have been really working.

COMMISSIONER MARTIN: Yes, we have been very busy, and I just wanted to
come by and thank you all for all of your work, and say I\'m sorry that
I missed getting the chance to come by and see you all at your first
meeting, your last meeting, and wanted to make sure I had the chance to
introduce myself, although most of you, or a lot of you at least I\'ve
met before. And tell you that how important I think the work is, and how
I hope that we\'ll be able to continue to work together, and I\'m
anxious to get to spend a little more time with you at some time in the
future at some of your other meetings. So I just wanted to make sure I
had the chance to come by and say hi.

CHAIR ROOKER: Well, thank you so much. We appreciate that. You\'ll be
hearing from all of us, I\'m sure.

COMMISSIONER MARTIN: I\'m sure. I\'m confident. Okay. I mean, I\'m happy
to actually also ‑‑ if anybody has any particular questions about
anything, I\'m happy to try to answer, but I\'m sure you\'ll get better
answers from some of the other folks who are here with some of the other
expertise. But I\' happy to engage in a dialogue, and you guys were
getting ready to take a break, as well, so I was going to try to
interact with you, and see if you guys wanted to talk about a few issues
that way, as well.

CHAIR ROOKER: Okay. Well, does anyone have any questions? We have a few
minutes. Anyone have questions for Commissioner Martin? They\'re hungry.

COMMISSIONER MARTIN: I don\'t blame them. Okay.

CHAIR ROOKER: Well, thank you very, very much. We really appreciate your
taking the time to come in. We\'ll be looking forward to talk with you
again. Thank you.

COMMISSIONER MARTIN: Thank you.

CHAIR ROOKER: You\'re welcome to join us for lunch. It promises to be
delicious.

Just a couple of things that I have to say to you. I really would like
to say that this has been a really extraordinary morning. And thank you
again, Scott, for all the work in putting this together, and for all the
people here who have given their time to us this morning.

We\'re going to just have until noon. I want you back at the table. You
can pick up your lunch, because we\'re going to have a former committee
member here to make a presentation on accessible wireless phones for the
blind. Paul Schroeder, who\'s really been on the cutting edge of this
technology is going to be here at 12:00. I don\'t think you\'re going to
want to miss this presentation, so I encourage you very strongly be back
at the table, or you\'ll have me yelling at you. So anyway, let\'s take
our lunch.

For those of you who are members of the public and not a member of the
committee, I\'ll have to let Scott tell you where you can go to find
lunch.

MR. MARSHALL: Thank you, Shirley. We have food service available on the
courtyard level of our building, which is one level up from this floor.
Enjoy.

CHAIR ROOKER: Okay. Thank you. We\'ll see you back here at noon.

(Whereupon, the proceedings in the above‑entitled matter went off the
record at 11:44 a.m. and went back on the record at 12:10 p.m.)

CHAIR ROOKER: Paul Schroeder is with the American Foundation for the
Blind, and he was a valued member of our committee for two years, and
we\'re so pleased to welcome him back. Paul, thank you for being here.

MR. SCHROEDER: Hi. Thanks so much for the invitation to come back. It\'s
nice to be back here and have even less to do than I did when I was here
before as a member of the committee. Thank you very much, nice to be
able to present to you.

I want to talk a little bit about the issue of cell phones for people
who are blind or visually impaired. I actually do have something I want
to demonstrate. It\'s essential when you demonstrate technology that it
be relatively unstable and relatively new in your hands, and so you\'re
not really familiar with it, so it makes the demonstration kind of fun
because you never know what\'s going to happen. It\'s a lot like getting
married or something. And this is my first time with the cell phone, and
I\'ve only been married once, so there you go.

I\'m not sure what that says, but in short, we have from the blindness
community been very frustrated at a couple of things. And I\'m not going
to spend a lot of time ‑ in fact, I won\'t spend any time doing any
finger pointing, but I do want you to understand the level of
frustration among people who are blind or visually impaired with the
lack of discernible. And I\'m somewhat careful in saying discernible
progress, because people ‑‑ you know, there are things happening below
the surface and behind the scenes, but the lack of discernible progress
in accessible cell phones that meet the needs of people who are blind or
visually impaired.

I would argue that if one were to go to almost any ‑‑ well, any service
provider store and any other consumer product store to buy a cell phone,
and ask about something basic like can I gain access independently to
the menu systems, can I gain access independently to setting up my own
phone book, you would be told no if you are blind or visually impaired,
because all of those things depend to one degree or another on being
able to see the screen of the phone.

I\'m going to assume that virtually everyone, if not everyone here has a
cell phone. I\'m going to assume that with a couple of exceptions of
folks in the audience, you have never operated your cell phone without
the screen working, or never just for fun covered up your screen to see
what you could do with the cell phone. So tell you what, after the
presentation, why don\'t you try that, maybe duct tape over the screen
of your phone, but put something under the duct tape so you don\'t tear
your screen off when you take the tape off.

I know you just talked about Homeland Security, so duct tape seems like
an appropriate segue. Duct tape a business card over the screen of your
phone and then trying running it and see how you do. That\'s the mode in
which people who are blind or visually impaired are now operating.

What I often tell my friends and colleagues is the words that we\'ve
gotten to know the best when it comes to the cell phone world are the
three words \"with sighted assistance\", because it almost always the
case that except for the simple act of turning on and off, and maybe
dialing a phone number, virtually nothing can be performed on a cell
phone by a blind person, except with sighted assistance.

To try to figure out what\'s going on in this situation and why we
haven\'t seen the progress that we thought we might since the rules came
out in late \`99, and became effective, I gather, as of January 2000, so
we\'ve had three and a half years. We decided to take a look at cell
phones in more detail, try to look at the platforms that are used, try
to discover the chip sets that are used, to look at things like battery
capacity to the extent that we could understand all of these items. Now
you have to be aware of the fact that we are not cell phone engineers at
the American Foundation for the Blind, and we are not individuals who
are particularly expert in the operating systems of cell phones, so I
don\'t want to even pretend out the outset that this is an expertise
that we have.

We did employ a consultant who\'s with us today, and if I run into
trouble, it\'s the job of the consultants to bail me out, among other
things. So Caesar Equisadi, who is with us today, has done a marvelous
job of trying to help us understand better what\'s happening inside of a
cell phone, and why we maybe haven\'t seen particular progress in
accessibility. Or turn it around, to understand where, in fact, we might
be able to help influence and drive accessibility forward by working
more closely with the cell phone industry.

We began this effort last fall with Caesar. And again, I would say that
this really came out of frustration, because what we heard a lot from
cell phone manufacturers, and to one degree or another, from many cell
phone service providers, is that the kinds of things that you need as
blind or visually impaired people simply can\'t be done yet. And we
didn\'t think that sat very well with the good old, you know, efforts of
industry that usually like to solve problems rather than throw them out.
So we decided maybe we ought to try to learn a little bit more ourselves
so that we can have a more intelligent conversation about exactly what
can be done, or why it can\'t be done.

What is it that blind folks want? I have brought copies of an article
with me. I\'ve asked if we could make a couple of additional print
copies, because the committee got a little larger than I thought it was,
and so we\'re going to have those copies available afterward.

This is an article that appeared in this current issue of \"Access
World\", a magazine published by the American Foundation for the Blind.
And it is a review of three cell phones. It\'s not critical why we
picked those particular three cell phones. But what is interesting, I
think, is to look through the article and get a sense of the kinds of
needs that we were reviewing these cell phones for, whether they met
particular needs of blind users. And also, to get a sense of where the
problems seem to be. We also include in that article a bit of summary
from a previous article on another cell phone from a previous edition of
\"Access World.\"

The kinds of things that people who are blind want, I think are not
particularly unique. They\'re exactly what, of course, anyone would
want. The ability to be able to actually use the phone. Well, that seems
somewhat elemental, but that is, in fact, what we want. Well, how do we
spec out what that actually means?

First of all, of course, that means we have to be able to discern
principally by touch, but also for those of us with some useable vision,
it\'s helpful to have visual cues. We have to discern what key is which,
is which key is what. In other words, we have to be able to find the
keys on the phone. We have to be able to distinguish them from each
other, and have some idea of their function.

And as you all know, if you reviewed at all the rules that implement
Section 255, and the Accessibility Requirements that were incorporated
in those rules from the Access Board, there is a requirement that keys
be tactfully identifiable.

Unfortunately, we have found that the state‑of‑the‑art is mixed in that
regard. And to some degree, the state‑of‑the‑art has actually gotten
worse in terms of keys being identifiable. So along with duct taping a
card over your screen, the other thing I\'d suggest is that you hold
your phone behind your back and try to find which key is which, and see
if you can distinguish them. I suspect that ‑‑ now for the blind folks
you might actually do this because you\'ve already probably optimized
your choices of cell phones. But I\'m guessing you sighted folks are
going to be kind of lost with many of your phones because the keys have
gotten to be very close together. They\'ve gotten to be very flat.
Somebody described them almost like terra cotta tiles or something. I
imagine they look good, but the functionality has declined some.

The second principal thing, of course, is we need to be able to get the
information off of the screen. Cell phones are obviously very screen
dependent, very visual display dependent in terms of their functions,
and so it\'s important for people who are blind to be able to know
what\'s on the screen.

Obviously, there are two things that are important to do. The first and
principal one is to make sure that that visual information is available
in another mode, the most obvious and really the only workable one for
the moment is an auditory mode. In other words, the information on the
screen has to be able to be spoken by the phone, as well, so that a
blind person can navigate it.

The other access point to cover, of course, with the screen is that the
visual display be as customizable as possible for somebody with some
usable vision so that, in fact they can rearrange information on the
screen, make certain words and icons larger so that they can, in fact,
have the most opportunity to see that screen with its limited space. And
we recognize that cell phone screens are very limited. Those would be
the principal items.

Now those sound simple enough, but they have proven to be
extraordinarily difficult. I\'ve already gone on a little bit about the
key design, and it seems to me that we\'re ‑‑ what we thought was
relatively straightforward apparently is not as straightforward as we
thought, or we have not been able to have the right kind of dialogue
with industry on key design. So hopefully, that\'s something that can
happen.

One of the elements, as you know, is to have a nib on the center of the
five key. It\'s a nice orientation device to the key middle of your
phone dial, if you will. And even that has proven to be somewhat
challenging as we find phones. I bet if you look at your phone, many of
you will have nibs around the key. Some of you will have a nib on the
key but it\'s on the corner of the key, so it might even be hard to tell
which key it actually is associated with. And then in a couple of
instances, we\'re actually familiar with companies that have painted
nibs on their key, which I have to at least give an award for
creativity, if not for functionality. So hopefully, we\'ll start to see
some improvement in those areas, as well.

And it is interesting, because as I start to talk to sighted people
about this, many times sighted folks have the same gripes, but they
don\'t recognize that they have any opportunity to really do anything
about it. They don\'t like their key design that much either, because
they find it very difficult to dial their phone when they can\'t look at
it, even though they are in instances where they\'re not supposed to be
looking at their phone.

Okay. As for the screen information, how to get that out in audio form
has proven to be a bit of a challenge, as well. We\'ve had some
discussions with folks in the industry about the right approach to do
that, and for us, from our standpoint, the only way to really do that
for the foreseeable future is through synthetic text to speech. Now this
is a type of access that\'s been operating in the computer that blind
people have been using to access computers for a long time. And I think
for a while, the cell phone industry argued ‑ it may be right, it may be
wrong, I don\'t know ‑ that, in fact, the phones ‑‑ the phones, of
course, are not computers. That\'s true, but they do function in many
ways, and in fact are beginning to look increasingly inside like
computers in the way the chipsets are structured, and the way there\'s
operating systems on the phone. So for a while, the industry argued that
text speech simply couldn\'t be accommodated, both for battery strength
reasons and for memory capacity reasons, and for reasons having to do
with the way the phone interface is actually designed.

That may or may not be true, but certainly over the last year what we
have discovered is that\'s become less true, as we\'ve begun to examine
phones and realize a couple of ‑‑ three things really that are key. One
is that the memory has expanded greatly, so there\'s a lot more capacity
on even the lower end cell phones. The second thing is, phones are
incorporating operating systems, so there\'s much more management
capability within the phone for the software that needs to run. And,
obviously, one of the reasons for this is that there\'s a strong
interest in having downloadable applications on phones. The third thing
is that the text‑to‑speech engines that we would need in order to
provide access through synthetic speech to the text on a screen have
gotten to be smaller in terms of their footprint and their demands on
memory. And so all of those things combined have led us to the
conclusion that certainly we now should be able to have a much better
dialogue with industry about how to bring accessibility into the
marketplace.

In the process of doing some of this research, we discovered a couple of
things. One is, we discovered that there is a phone in Japan that
actually has text‑to‑speech, interestingly enough available, but the
Japanese do not have a law that requires accessibility, so we thought
this was kind of an interesting thing to discover.

We then found shortly thereafter, that there was a couple of things
happening in Europe with respect to text‑to‑speech. One is in the high
end PDA and cell phone area where software has now been successfully
loaded, and is now being sold and distributed, in fact, here in the
U.S., as well as in Europe on a high end PDA‑type cell phone with
software that makes the phone talk.

We also discovered though that there was a company in Europe making
software available on lower capacity phones, or phones that are not PDA
and cell phones together. And that, in fact, they were taking advantage
of exactly the things I talked about, the increased memory on the phone,
the operating systems of the phone, and loading this relatively small
footprint from text‑to‑speech software.

That\'s the phone that we actually have here. This is a Nokia 3650
phone. I\'m not commending this phone, certainly not for blind folks. It
has a really funky dial. The buttons are in a circle rather than in the
old three by four grid that we\'ve all gotten kind of used to. It\'s
sort of harkening ‑‑ I guess it\'s sort of techno retro in that it\'s
going back to the old dial phones, I guess, but it is cute, and it
certainly does get attention when you pull this phone out and show it to
people. This phone has a talking feature built in. I will acknowledge to
you early‑on that this is a demo that I have in my hand, and it\'s one
that I managed to screw up last week, and have spent most of the last
ten days trying to figure out how to get it reinvoked.

We apparently were able to get this back to working this morning, and so
‑‑ and it was in somebody else\'s hand who actually knows, you know,
what they\'re doing as opposed to me, so now I\'ve managed to blow it up
again, so while we\'re talking I\'m going to switch it off and bring it
back up again. I think it went into rest mode while we were chatting.

The point of this phone is not to say that this is the answer. I\'m
assuming it\'s off now. The point of this phone is to suggest that, in
fact, simply this; that we have found what we thought to be true is in
fact true, that phones can now accommodate text‑to‑speech. They can, in
fact, give access to a fairly robust range of functions with that
text‑to‑speech.

Not everything is available on this phone in text‑to‑speech, but the
majority of functions are. The main menu is available, setting up
contacts is available. Even Caller ID is available through
text‑to‑speech on this phone.

The other point that I want to make is that this company, actually it\'s
a combination of three entities in Europe that did this work, Code
Factory, S‑ Vox and was funded in large part by the Spanish Organization
of the Blind which owns the lottery in Spain so they\'re really rich.
Yeah, it\'s a cool thing. I don\'t know how we missed out on that in
this country. We kind of screwed up.

They funded Code Factory and S‑Vox to sort of do this work, and it is
relatively limited in the sense that there are only a few phones that it
currently works on. This particular phone, for example, runs on the
Symbion Platform. And it\'s, as I said, a Nokia phone. They do make this
available on a Siemen\'s phone, and on I believe a Sony Erickson phone,
as well.

The other point that I wanted to make though, was that this may have had
‑‑ this implementation may or may not have had cooperation from Nokia,
for example. Obviously, they\'re aware of it, and it\'s not really
important for today\'s discussion to talk about how much cooperation.
The point really is to talk about the fact that there hasn\'t been
enough cooperation in making sure that even if we go this third party
route for accessibility, even if the right answer is to have third‑party
downloads for accessibility, that essentially reshape the phone ‑ I\'m
going to hand this over to Jason to see if he can figure out why we\'re
not coming up. Even if we hand that over to a third party there\'s got
to be much more involvement from industry in ensuring that the software
is stable, and ensuring that there is a sufficient level of quality for
the interaction of the phone and the network.

It\'s, of course, in the industry\'s interest, service provider and
manufacturers alike to make sure that that\'s the case, because
obviously you don\'t want a phone, and industry doesn\'t want a phone in
a customer\'s hands that is working only part of the time, or that is
suspect to this level of instability that we found on this phone.

I will admit, or at least take responsibility for a lot of it. I tend to
blow up any piece of technology that gets in my hands for very long so,
you know, likely as not, I\'m at least 90 percent of the problem. But it
is, in fact, true that we have found some instability within this
software. It is also a fairly early piece of software.

I\'m going to stop here, I think, and take some questions, and if there
are any technical questions, I can certainly refer those over to Caesar.
I should also say that we are not aware yet of the full breadth of
capabilities for other platforms and operating systems in the cell phone
industry for adding text‑to‑speech. And then I want to reserve just a
couple of minutes for closing comment.

CHAIR ROOKER: We have one question here.

MR. DUKE: Okay. This is Mike Duke. I saw your presentation on Wednesday
in Pittsburgh, and for the rest of you, he said pretty much the same
thing there he\'s saying here. And we are, indeed, very frustrated as
folks who do not have access to the screen. And I\'d like to point out
that that encompasses more than just blindness, so you\'re looking at ‑
for those of you in the industry ‑ you\'re looking at additional markets
beyond blindness when you make these things work.

Paul, has anything been done ‑ given voice feedback is the best, and
also the most complex, and most desirable option ‑ but has anything been
done with trying to have the menus emit beeps, different tones,
different pitches from circuitry that\'s already in the phone. If I
could get a menu to beep when I cross through its default mode, much as
is done on some amateur radio equipment, that would greatly improve my
access. It wouldn\'t necessarily let me know who was in memory channel
47, but it would still let me know where I am on the phone. Has anything
been done in those regards?

MR. SCHROEDER: Thanks, Mike, for the questions, and we\'re trying to get
the audio up on the phone so I can at least demonstrate a couple of the
features, and walk it through.

MR. DUKE: And I have another when you deal with that.

MR. SCHROEDER: Okay. We have suggested that, as well; that, in fact,
there could be a lot more done with creative use of auditory alerts than
is currently the case. For the most part, auditory alerts now are used
as a compliment to what\'s on the screen visually, so they\'re
essentially a hey, look at the screen kind of an alert.

Now there are a couple of exceptions to that. For example, most
companies have given you at least some different tones for power on and
off, for example. And obviously, you can set some of those alerts to be
more constructive from a blind person\'s standpoint, to give you some of
what you\'re suggesting.

Some companies have gone the route of having the menus be stable so
that, in fact, you know where you are in those menus, or give you that
option to set them stable so that you can count functions. But,
obviously, I would say that none of those are ‑‑ those are helpful as
sort of interim step. And for the last three years that might be fine,
but it seems to me, if I can, you know, be a little ‑‑ express a little
frustration for the moment here. Three years after passage of a rule
that said, you know, information on the display should be available in
another form, it seems to me we ought to have achieved something more
than maybe trying to guess at what a tone might mean.

I\'m going to hold this up to the microphone and see if I can get
anything out of this phone. The audio connection isn\'t working to the
PA.

(Phone demonstration.)

MR. SCHROEDER: Okay. I\'m just kind of going through the menu system.
I\'m going to go into calls. Now this is the missed calls.

(Phone demonstration.)

MR. SCHROEDER: That\'s now starting to give you the numbers of the
calls, and I haven\'t taught it to say my name right either. It is
Schroeder and not Schroeder. I\'m going to come out of the calls menu.
Now it is actually possible to set up a contact. I did set up my own on
here. However, as any of you know who\'ve done this on your phone, it\'s
extraordinarily tedious to enter, and I\'m quite certain that I could
not do it and talk to you at the same time, but I just want to go
through. That\'s just a contact list.

Let me try a quick call on here to see if the ID ‑ you want to get your
phone up. I\'m going to do a quick call to see if the ID feature is
working. Actually, what was happening before is I couldn\'t get it to
ring so, you know, that\'s a small problem with a phone, probably one
that shouldn\'t be unstable. If it does ring, we should be able to get
this to ID either the number or the contact information, if you set up a
contact for that person.

Now this gives you the choice to do what a blind person never gets to
do, which is to blow off a call intentionally, knowing full well that
it\'s not a number to have interrupt you. And again, I think all of us
‑‑ these are pretty basic kinds of functions that any cell phone user
would want to be able to have access to. This is why we carry these
things after all, of course, is they give us a connection to the world,
and they give a world of connection to us, which is almost as good and
as bad. And so, if you don\'t have the ability to manage your incoming
calls, for example, and to be able to make some smart choices about what
it\'s going to cost you, it\'s going to cost you money for one thing in
terms of minutes used that you might not have wanted to. But it\'s also
going to cost you time and frustration if you miss a call that you
really needed in an important setting, or if you interrupt an important
meeting for a call that you thought was coming and it\'s the wrong one.
And so all of these things that I think folks who are sighted pretty
much take for granted are things that blind people simply can\'t do on
today\'s cell phones with some limited exceptions, and always with
sighted assistance. Other questions?

CHAIR ROOKER: We have several questions over here, Paul. Susan Grant.

MS. GRANT: Hi. Susan Grant from the National Consumer\'s League. Paul, I
agree with you that the kinds of things that you need and want are
things that we all could use. And you\'re also not alone in blowing
things up, because I think that a lot of us are technically challenged,
and things need to be built to deal with that.

I guess my question is, if the rules aren\'t being followed, has anybody
mounted a legal challenge to try to hold industry\'s feet to the fire
here?

MR. SCHROEDER: There is. I won\'t say anything more about it other than
to say there\'s a formal complaint pending here with the Commission on
access to cell phones. And that\'s ‑‑ and actually, I\'m glad you asked
this question because I won\'t speak about the formal complaint, but I
do want to address the fact that not only do we feel like industry has
not met our needs, but in fact, we feel like the Commission has not met
our needs, as well.

Prior to this formal complaint, several informal complaints were filed.
Now I should tell you that not enough informal complaints have been
filed. I don\'t know what it is, but blind people, or maybe all people
with disabilities are just way too complacent, and we have allowed for
far too long companies, and heard companies tell us well, it can\'t be
done, and we haven\'t challenged it, and so ‑‑ because we simply said
oh, well, they\'re smart enough to know. They must be right. They
wouldn\'t lie to me about that. And I\'m not saying they\'re lying, but
what I am saying is you have to challenge these things in order to find
out where the truth really is. And, obviously, Section 255 gives us only
access to the Commission in terms of a complaint structure. And if the
Commission isn\'t going to vigorously follow‑up on informal complaints,
obviously, that leaves us in two places. One is to have to file formal
complaints, which I don\'t think is a good idea. And is never something
that we have counseled individuals to do.

One individual, as I said, has filed one because she finally got fed up.
The other option is, of course, for us to come to the Commission and
really start making a major push to say take this more seriously. You
guys have not ‑‑ this is something I think we are at a point of needing
to say to the Commission, that you guys have not faced up to your
responsibilities in addressing this issue.

Industry may well be correct in saying that none of this is achievable
today, other than what I just showed you, in terms of what a third‑party
is able to do. I find that a little interesting, at least. I mean, so at
least something is achievable today if a couple of little companies in
Europe funded by a blindness organization in Spain, which may be rich,
but it ain\'t as rich as some of the cell phone manufacturers, I don\'t
think. If they can figure out a way to do it, it strikes me that there
ought to be some answers that could be forthcoming from industry. And I
would hope that if we don\'t see some satisfaction fairly soon, that the
Commission can and will take a much stronger action, at least in trying
to get down to the bottom of answering is it achievable, what can be
done today, and what can be put in the plans for near future to achieve
accessibility? And one of the things I\'d love to see this Committee
come out with is an action statement to that effect, urging the
Commission to take seriously this situation, and at least investigate
the informal complaints that come in with some rigor and vigor to
determine whether, in fact, there is more that industry can be doing to
achieve accessibility.

CHAIR ROOKER: We have time for one brief question.

MR. HOROWITZ: Paul, I\'m just wondering with all the things that have
happened against getting this done. Let me get my microphone here. My
name is David Horowitz. I\'m with the Fight Back Foundation for Consumer
Education.

I have always been of the thought, if there is a need for something,
that the need can be met by the people sometimes who have that need. And
have any of the groups that are supportive of you in the blind area come
forward and said well, let\'s develop our own phone. Let\'s get a
company and develop our own phone.

MR. SCHROEDER: Yeah. I mean, we did develop our own phone in Europe. We
didn\'t do it here, but the folks in Europe developed ‑‑ I mean, this is
a Nokia phone.

MR. HOROWITZ: I know.

MR. SCHROEDER: It had very little to do with Nokia.

MR. HOROWITZ: But why can\'t ‑‑ and I\'m saying the ‑‑

MR. SCHROEDER: And those two companies developed it.

MR. HOROWITZ: Proceeding in the courts or proceeding with complaints can
take years, and years, and years. You have there something that has
started already, where some technology is existing. Maybe the institute
for the blind or some other groups that are involved ‑‑ I mean, you seem
to be a very well spoken person on this issue, about starting a company
that develops your own phones.

Now how big is this market? If you were to sell cell phones to the blind
community in the United States, how many people do you think would want
to have a cell phone? I don\'t even know how large the market is.

CHAIR ROOKER: We\'ve got a very brief answer here, Paul.

MR. SCHROEDER: I\'ll give you a very brief answer. I don\'t know how
large the market is either. We estimate about 10 million people are
blind or visually impaired. But let me answer the question this way and
say I don\'t believe that it\'s our responsibility to meet the
requirements of Section 255. I believe it\'s industry\'s responsibility.
I don\'t believe that any other consumer has to come up with their own
accessible cell phone that they can use.

No sighted person in this room had to design their own cell phone. They
were sold to them over the counter by companies. That\'s what Section
255 is intending to do for people with disabilities, and it seems to me
that that\'s where the responsibilities lies. It lies with industry to
provide us a product that we can use.

Having said that, we want to help. We want to have a dialogue. We want
to help. If it\'s this third‑party process that makes the most sense,
let\'s help work through how to make this the most stable and useful,
and accessible environment it can be, and make sure that it works well
for blind customers, and that it works well for industry, as well.

MR. HOROWITZ: Yeah, but you have 10 million people. And my feeling is, I
think you\'re right about the government\'s responsibility here, but
while the government ‑‑ while they\'re trying to find out where their
responsibility takes them in terms of getting this done, in the
meantime, you should go on and try to find the way it can be done so you
have something to present to them, and they don\'t come back and say
well, we have to start from scratch.

MR. SCHROEDER: Point noted, but we do want to have dialogue, and that\'s
the key.

CHAIR ROOKER: I\'m sorry. Paul, thank you so much. You have given us a
lot to think about.

We\'re very honored to have David Solomon as our next speaker. He\'s the
Chief of the Enforcement Bureau, and he\'s a key person in helping us
understand the complaint process, the different levels of complaint, and
so on. Please join me in welcoming David Solomon.

MR. SOLOMON: Good afternoon. Well, I can tell you that I\'m really
pleased to be here, because we spend a lot of effort and attention on
Consumer Protection Enforcement in the Enforcement Bureau, so it\'s a
pleasure to talk with all of you today, and hear some of your ideas, and
get hopefully some helpful input.

Since the creation of the Enforcement Bureau almost four years ago, and
particularly under the leadership of Chairman Powell, the FCC has made
strong enforcement a very high priority. The statutes and rules that we
have only work if we have the commitment and the will to enforce them,
and through a variety of actions and in a variety of areas, we think the
FCC has made clear that we do have that will and commitment to enforce
the relevant statutes and rules.

I like to collect quotes from the Chairman that are helpful for what I
do. And one of the quotes that I like the best from Chairman Powell is,
he said, \"If you cheat, we will hurt you, and hurt you hard\", so we
use that as one of our informal approaches to things, when it\'s
warranted. Also, I\'d just note that the Chairman has suggested various
statutory changes that would enhance our enforcement authority even
more.

We\'ve made consumer protection enforcement, as I mentioned, one of our
top enforcement priorities, along with competition enforcement and
public safety enforcement, which also, although they don\'t use the word
\"consumer\", ultimately are still about helping consumers.

We have one division that\'s devoted entirely to telephone,
telecommunications consumer protection enforcement. That\'s our
Telecommunications Consumer\'s Division. It\'s headed by Colleen
Heitkamp, who\'s sitting in the back with her Deputy, Kurt Schroeder.

Now while as I said, only one ‑‑ we have one division devoted entirely
to consumer protection, you think about public safety enforcement, or
competition enforcement, that also directly benefits consumers.

The basic idea of strong enforcement and, you know, this is not
particularly subtle, but it\'s important to emphasize it, is that you
punish people, both in some level because it\'s deserving, but also to
deter future violations, because ultimately, what you want to do is push
people into compliance with the law so that consumers will get the
benefit that either the statute or the rules were designed to do.

So what I\'m going to try to do today is give you an overview of our
process, and some of the things we\'ve done in the consumer protection
area, and also talk briefly about out competition and public safety
enforcement, and how that relates to consumers.

We have broad authority in the consumer protection area. In addition to
the general statutory requirement that carriers have that practices be
just and reasonable, there are a number of specific provisions in the
Communications Act relating to consumer protection. And just to kind of
rattle them off, to give you a sense of the breadth of what we do,
there\'s the Americans with Disabilities Act of 1990, Telephone Operator
Consumer Services Improvement Act of 1990, the Telephone Consumer
Protection Act of 1991, the Telephone Disclosure and Dispute Resolution
Act of 1992, Cable Television Consumer Protection and Competition Act of
1992. Of course, the \`96 Telecommunications Act, and the recent Do Not
Call Implementation Act earlier this year.

The basic process we use in the consumer protection area is that we
track very closely the informal complaints that the Consumer and
Governmental Affairs Bureau gets from consumers. We look at it from a
statistical perspective. We go through their complaint data, and we
analyze it in various ways, looking for new trend areas, if we seen
problems areas, types of complaints from consumers that we haven\'t seen
in the past, as well as just high volume areas, what are the areas where
there are major problems with consumers. Then we start looking at some
of the complaints, and basically use the information we get from CGB\'s
informal complaint database and those complaints, as well as information
we get from the FTC Sentinel database, and the National Consumer Fraud
Center database. We use all of that data to sort of target our
investigations and look for areas that we want to focus on, and specific
companies that we want to focus on.

Once we\'ve gone through that process, we then begin investigations.
Typically, we begin them by issuing a letter of inquiry to the company
that\'s the target, in which we direct them to provide to us various
information and often documents to find out more about what\'s going on.

In some cases, we start investigations. Through that process, we might
have tips from people inside the company, confidential informants, that
sort of thing. But typically, we will first get the company\'s input
into what we think is going on. And then if it looks like there is a
problem, what we then do is, in a typical case, is start a monetary
forfeiture proceeding, which is basically, we issue something called a
Notice of Apparent Liability, which says it looks like you\'ve done
something wrong, violated the law in the following way, and we propose
to fine you a certain amount.

In very egregious cases, we may move in the first instance, in the case
of common carriers, to a revocation proceeding. Recently we did that in
a couple of cases with long distance carriers where we have hearings
before administrative law judges pending.

Another way that we get information to start our investigations is we
work closely with the State Public Utility Commissions and State
Attorney Generals to share information, to share priorities. We have
monthly calls with each of those groups to share information on consumer
protection.

As I said, we will typically start a forfeiture proceeding, which may
end in a forfeiture. It also, in many cases, may end in a consent
decree, which basically in those cases, the company agrees to make a
voluntary payment to the government, essentially in lieu of a penalty,
and will agree to variance compliance measures that, from our
perspective, show that they\'ve got to demonstrate a commitment to clean
up their act, and basically are going to take steps not just to comply
with the law, which they\'re required to do anyway, but to do something
more, and to ensure that they\'re really providing benefits that the
various rules and statutes are designed to provide the consumers. So let
me give you some examples of the areas we focused on, and some of the
things we\'ve done.

In the slamming area, since the Enforcement Bureau began in 1999, we\'ve
taken actions against 17 carriers totaling over \$17 million. The most
recent one was a \$1.2 million forfeiture against a company where we had
worked closely with 14 different State PUCs building a case against this
company.

In the marketing and advertising area, two years ago we had some joint
guidelines that the FCC and the FTC issued in this area. Most recently,
we had a revocation hearing just initiated against a carrier that seemed
to be basically misleading or fraudulently misleading consumers in the
context of a Win Back Campaign, so we\'re now trying that case before an
FCC Administrative Law Judge.

We also fairly recently had a \$1 million consent decree with a company
involving issues of misleading advertising in the long distance area. We
also have had actions in the operator service provider area. This is a
requirement that basically operator services provide information to
consumers, particularly from locations like pay phones about who the
carrier is, and make rate information available. We\'ve had a couple of
large proposed forfeitures that we did several months ago. And prior to
that, we had several consent decrees with some carriers based on
basically a field audit that we did, where we sent people out from our
field offices and went to pay phones to see if they were getting the
correct kinds of notice.

In the telemarketing area, we\'ve been aggressively enforcing the Junk
Fax Prohibition and other telemarketing rules. One of the major actions
we took was a \$5.38 million proposed fine against basically the biggest
Junk Fax company in the country. That was complicated by the fact that a
district judge held that the Junk Fax Statute was unconstitutional under
the First Amendment, and conjoined us from continuing with this
enforcement action. That district judge\'s action was overturned, and
the Circuit Court recently denied rehearing. We\'re hopeful that the
technical legal steps that need to be taken to basically allow us to
pursue our enforcement will occur very soon.

Another area that we\'ve been involved in involves common carrier
discontinuance of service. You\'re required to get FCC approval in most
instance before you discontinue common carrier service. And in
particular, we have requirements about notification to consumers. In a
recent case where we also worked with two states, Vermont and Maine, we
designated for hearing a carrier that basically seems to have lied in
connection with its application to discontinue service, and questions
about whether it did, in fact, provide the right kind of disclosure to
consumers. And also, appears to have lied to us or lacked candor in
connection with an investigation we were doing about slamming.

Another important area is the disabilities area. We\'ve designated one
carrier for again a revocation hearing, a company that seems to have
defrauded the Telecommunications Relay Service Fund. In fact, we worked
closely with the U.S. Attorney\'s Office, and they indicted that company
for fraud.

Also, we have pending before us ‑ I can\'t talk about the details
because it\'s a pending case ‑ but we do have pending before us the
first formal disabilities complaint involving Section 255, with access
to communication services and equipment for persons with disabilities.

To touch briefly on the broadcast area we also do consumer protection‑
related activity in that area, as well. We\'re responsible for
Broadcasting Decency Enforcement, and also such requirements as there
are statutory provisions about the amount of advertising that can be on
children\'s television programming.

The main consume ‑‑ I want to mention a couple of consumer protection
priorities that we\'re going to be devoting a lot of our attention to in
the coming months. Obviously, one is implementation of the new National
Do Not Call List. The FCC recently adopted rules that compliment the
Federal Trade Commission\'s rules in this area, and that\'s really going
to be a major enforcement priority for us.

We\'re going to focus ‑‑ to avoid duplication, we\'re going to focus
certainly in the first instance on those entities that are not within
the Federal Trade Commission\'s jurisdiction. For those of you who
don\'t know, the FTC doesn\'t have jurisdiction over telemarketing
practices of certain kinds of companies. Those companies include
telecommunications carriers, which obviously is an area of our
expertise. And also, banks, insurance companies, and airlines, also they
don\'t cover intrastate telemarketing. And so those are the areas that
we\'re going to focus on in the first instance.

Enforcement will start October 1st. One of the things that we\'re happy
about is the way the FTC has set up their database, which our rules use
their database, as well. We will hopefully avoid some of the problems of
proof we\'ve had in the past with our own company‑specific Do Not Call
Lists.

One of the things about the FTC database is that there will be evidence
about the fact that somebody is registered, and when they registered, so
you won\'t get factual issues where somebody says to us I registered on
this company\'s list. I don\'t remember when it was, but I\'m sure I did
it, and the company has no record of it.

As a process matter, we\'ll follow basically the same kind of approach I
was saying before that we use generally, that we\'re going to track the
complaints carefully. We\'re going to look, particularly in these areas
where we\'re going to focus on, we\'re going to look for those companies
that we see a lot of complaints, or spiking complaints over time,
whatever. To the extent there are common carriers involved, we can move
right to a forfeiture proceeding. In those instances, our authority is
we could fine them up to \$120,000 per violation. For others, it\'s
generally up to \$11,000 per violation; although, if a broadcaster or
cable operator were doing telemarketing ‑ I don\'t know whether they
would be, but if they were, the violation there would be higher. It
would be \$27,500 would be the maximum for a single violation.

We\'re going to be looking carefully at people\'s use of some of the
exceptions, established business relationship and the like to make sure
that those exceptions aren\'t being abused. And we\'re working with the
Federal Trade Commission on a Memorandum of Understanding on
Enforcement, to coordinate with them to share information to avoid
duplication.

One other major priority that\'s a new area we\'re going to be moving
into later this year, the Commission\'s rules on wireless local number
portability will take effect in late November, assuming ‑‑ there\'s
discussion in Congress about potentially delaying them, but assuming
those aren\'t delayed, that\'s another area where we\'re working now on
setting up an enforcement plan, and being ready to move seriously into
that area.

Another area I would mention that may be of interest is that we\'re
working on a compliance review of the requirements for carriers to
publicize the availability of life line and link‑up programs in
under‑served areas, such as tribal lands.

Let me touch briefly on competition enforcement and public safety
enforcement, and then open things up for questions. Basically,
competition is a good thing for consumers. It helps consumers get better
services at lower prices. Obviously, there are sometimes market
failures, which is why we have aggressive consumer protection
enforcement. But it also helps consumers that we\'re aggressively
enforcing the competition rules so that, in fact, there is competition.

So we just ‑‑ in the last couple of months, for example, we had a six
and a half million dollar consent decree with one of the Bell operating
companies, and a consent decree of \$5.7 million with another one
dealing with premature marketing of long distance service; again,
violation of the competition rules, or issues of violation of
competition rules that are designed to benefit consumers.

The Commission also recently decided two important formal complaint
cases in the local competition area, which confirmed that the Commission
has authority sharing it with the states to adjudicate disputes about
compliance with the local competition rules. And in one of the cases,
the Commission found that the BOC involved had not been providing
interconnection service in an appropriate manner. And in the other case,
it found that it had failed to provide what\'s called shared transport
service that\'s important to local competition, in violation of the
conditions of its merger order.

In the public safety area, probably the area with the most direct
consumer benefits, that it\'s gotten a lot of attention, is E‑911
Enforcement. We\'ve had several recent enforcement actions in that area.
We had \$675,000 consent decree with one carrier, a \$2 million consent
decree with another carrier, a \$1.2 million forfeiture for one carrier.
Last year we had a \$2 million consent decree with a different carrier.
And again as I mentioned before in the context of the consumer
protection‑type issues, consent decrees can get you a very serious
compliance plan. In these cases where we have consent decrees, there are
industry issues about compliance. And now we have specific carriers
having agreed to automatic penalties if they don\'t meet certain
benchmarks. And hopefully, that\'s doing a lot to further stimulate
compliance and getting E‑911 Service rolled out.

Some of the other areas where we\'ve been active in public safety
enforcement, again in ways that I think give direct benefits to
consumers, interference resolution, pirate radio enforcement, lighting
of communications towers, enforcement of the Emergency Alert System
rules.

So to sum up, consumer protection is and is going to remain a top
priority of the FCC, and of the Enforcement Bureau. And I look forward
to answering your questions, and continuing to work with many of you in
the future.

CHAIR ROOKER: I think you\'re going to have a lot of questions.

MR. SOLOMON: That\'s fine.

CHAIR ROOKER: We\'re so pleased to have you with us. Why don\'t we just
start and work our way around the table. That\'s probably the fairest
way to do it.

MR. SOLOMON: Okay.

CHAIR ROOKER: We\'ll start with Susan.

MS. GRANT: Hi. Susan Grant, National Consumers League. What percentage
of the fines and other kinds of penalties that you seek do you actually
collect? What are the impediments to your ability to collect? And are
there any circumstances where you actually return money to consumers?

MR. SOLOMON: Starting with your last point, the way our statute is set
up, if we take forfeiture action, we don\'t have authority to give the
money to consumers. Through a formal complaint proceeding, consumers can
get damages, so unlike the Federal Trade Commission, we\'re really not
in a position to get money directed back to consumers, unless people
file formal complaints for damages.

As to collectability, I don\'t have an exact percent. Certainly, in the
consent decrees when people have agreed to pay money and take various
steps, we get all of that money. It depends ‑‑ whether we collect in
other situations sort of depends on the area.

I think in the consumer protection area, one of the things that happens
in a lot of cases, and I don\'t think this is necessarily a bad result,
is that the issuance of the forfeiture forces the company out of
business, so we don\'t, in fact, collect. But if they\'re out of
business, and if they\'re not immediately restarting with sort of the
same people under different names, that\'s a good result, even if we
don\'t get the money. But we do work closely with U.S. Attorney\'s
Offices, and there are some pending cases. Colleen, I think, recently
testified in one of those cases, so we do actively work with DOJ to
collect the amounts.

CHAIR ROOKER: Linda, I believe you were next.

MS. WEST: Linda West.

CHAIR ROOKER: Stick your hand up so they can find you. Oh, right here.

MS. WEST: I\'m a member of the Confederated Salish and Kootenai Tribes
in Montana. And I\'ve been in contact with other reservations, and did I
understand you to say that there are penalties, or there will be
penalties in place for the companies that are not doing outreach on the
lifeline link‑up program to Indian reservations?

MR. SOLOMON: It\'s an area we\'ve been working on right now with ‑‑ in
fact, we\'ve been in touch with some of the Indian groups to identify
who are the telephone companies in those areas, so we\'re not at the
stage of being able to say yes, we\'re imposing penalties. But it is an
area where we\'ve definitely decided to look into, and see what\'s going
on, and we\'re in the process of collecting information.

MS. WEST: Okay. Because I can testify to the fact that these phone
companies are not getting that information out to the Indian people.

MR. SOLOMON: Well, if when we\'re done you want to see Colleen or Kurt
in the back and tell them the areas and the names of the companies, that
would be helpful.

MS. WEST: I\'ll be glad to. Thank you, sir.

MR. SOLOMON: And I\'m serious. I mean, we want to know that information.

CHAIR ROOKER: Okay. Mike, I think you\'re next. Stick your hand up so
they can find you for the microphone.

MR. DUKE: Okay. We have it. I\'m Mike Duke from Jackson, Mississippi,
and I have to wear my amateur radio hat on this one, just an observation
to you. You didn\'t mention it, but I know it\'s there.

About five years ago, you or a predecessor ‑ I\'m not sure how long
you\'ve been where you are in that division ‑ designated a gentleman
named Raleigh Hollingsworth to handle amateur radio rules and
regulations enforcement. And I just want to say publicly it has made a
tremendous difference in the ability of those of us who tried in the
first place to abide by the things we\'re supposed to, to enjoy the
hobby. I hope it continues, and it\'s really been wonderful to have the
enforcement working on our behalf.

MR. SOLOMON: Well, good. I\'m pleased to hear that. Raleigh is our
special counsel for amateur enforcement, and he does a great job, so
I\'m glad to hear that.

CHAIR ROOKER: Joe.

MR. GORDON: Hi. Joe Gordon, League for the Hard of Hearing. Can you
share some violations that you\'ve encountered with the cable industry,
whether it\'s captioning or other type of violation, and the penalties
involved? I\'d like to hear some encounters you\'ve had with the cable
industry.

MR. SOLMON: Sure. Most of our work in the cable area has been in the
technical area. So we\'ve had, for example, we\'ve had forfeitures I
know of over \$100,000 against cable companies for what\'s called cable
signal leakage, which is basically cable companies send transmissions
through their wires. If you don\'t have coating around the wires that
are strong enough, the signals leak out and the bands they use are the
aviation bands. So if signals leak from cable companies, you could have
interference with aviation, so that\'s certainly a very serious issue.

Cable is one area that a fair amount of the enforcement is still handled
in the Media Bureau. For example, a big area of cable enforcement
involves the Must Carry Rules, where there are issues about broadcast
stations, rights to access to cable. I don\'t think we\'ve had many
complaints in the closed captioning area. We have recently been doing
some investigations in closed captioning. I don\'t remember whether
it\'s cable or broadcast, but at this point I don\'t know whether
that\'s going to lead to a finding of any violations.

MR. GORDON: Just a fast follow‑up question. I would imagine, whether
they\'re right or wrong, that there\'s been many, many complaints about
the lack of closed captioning either to the FCC or to the caption
companies, and I think that\'s an area that should be looked into. And
also, the recent regulations of emergency captioning is also another
area where there has been, and are many violations.

I was watching TV last night, and I put the volume down because I
didn\'t want to annoy the people around me. And there was tornado
warnings, and I didn\'t see any emergency scrolling. So whether it\'s
closed captioning violations, or emergency violations, I think there are
complaints out there.

MR. SOLOMON: Well, and I agree those are important areas. And we
certainly, as I mentioned before, we look carefully, and disabilities is
one of the areas that we\'ve made a high priority, so I know we\'ve been
looking into some closed captioning issues. And I know also some
emergency captioning. Again, sometimes, you know, the complaints don\'t
lead to findings of violations, but that is a very high priority.

CHAIR ROOKER: David.

MR. HOROWITZ: This morning when we were listening to Richard Smith, I
asked him a question about the enforcement would be of these lists,
which are supposed to have as much as 60 million names on it for the
people who are signing up for the program. And at this juncture he said
well, you know, we\'ll have to think about it. And my feeling is, when
you have lists like that, that are going to be sold for \$7,200 a list,
that there has to be some enforcement built into who gets the list, what
do they use the list for, can they sell the list off to some spamster
who\'ll go and look in the other phone books where you could go back and
get a telephone number and find out a person\'s address and all that
kind of stuff.

And has anything been given to how these books are going to be policed
when they\'re sold, and how we\'re going to be able to know if these
books are going to legitimate telemarketers, or they sell them off to
others? And what kind of enforcement of that there\'s going to be?

MR. SOLOMON: Yeah. I think that\'s an important area. We do have rules,
and the Federal Trade Commission has rules that you can\'t use the list
in those sorts of ways. Having said that, you\'re absolutely right, that
having a rule isn\'t the end of it. And it\'s something, you know, as we
develop our enforcement plans, as we work with the FTC, it\'s certainly
an important area. And again, I think that, you know, that\'s the kind
of issue, as we track the complaints that will come into us and the FTC
and others. If we start seeing complaints about misuse of the list in
those ways, that\'s something where we can go after these companies
under our statute, assuming they\'re not telecom companies, cable
operators or broadcasters, not FCC regulated entities, if the first
instance, we have to give them what\'s called a citation. And that after
that, if they violate again, you can fine them. But the citations often
are effective for two reasons.

One, we\'ve done a lot of citations in Junk Faxes, where again we can\'t
move directly to forfeiture. We\'ve issued a couple of hundred
citations, and in a vast majority of the cases, at least in that area,
where you issue the citations, people honestly didn\'t know they
weren\'t allowed to use it that way. And they get the citation and, you
know, it\'s a formal‑looking document, and they seem to get scared by
the prospect that the government is doing something. And then in the
smaller number of cases where the companies have continued to do it, we
have followed up with forfeiture proceedings. So I think you\'re
absolutely right, that\'s an area that has to be followed carefully.

MR. HOROWITZ: Will there be something in advance of issuing these lists
and selling these lists that will make it absolutely clear that if these
lists are used for anything other than what they\'re intended to, that
these enforcement regulations and these penalties will go into effect,
and that these companies that buy them sign‑off on knowing that that\'s
the risk they\'re taking by getting these lists?

MR. SOLOMON: It\'s certainly in the rules that they can\'t do it, and I
think that\'s ‑‑ you make a good point. It\'s something we should think
about, about whether there should be some sort of additional publicity
either by us or the Federal Trade Commission about people understanding
that.

CHAIR ROOKER: Yes. We have another question here. Brenda.

MS. FREY: Brenda Kelly Frey representing the National State Relay
Administration. I have a question about the filing of complaints. I
realize that on the website of the FCC, you have an easy way of filing
complaints. Is there going to be any easier way to file formal
complaints with the FCC? It\'s rather cumbersome right now for my
constituents, for consumers. Have you given it any thought?

MR. SOLOMON: I mean, it\'s a difficult trade‑off. And, I mean, we\'re
always thinking about, you know ‑‑ to file a formal complaint, basically
you do need a lawyer. It\'s like a lawsuit. And what the Commission has
tried to do is basically kind of maximize the different kinds of avenues
that are available to people. So it\'s very easy to file an informal
complaint, and the informal complaints are dealt with in two ways.

One way, and someone from CGB may have talked to you about this this
morning, but an informal complaint against a carrier, it\'s served on
the carrier and they have to respond. And often, I think in a fairly
significant number of cases, that does get somebody, you know, their
refund or something like that, get them some action.

We track that information, as I mentioned before, so even if let\'s say
a company is over‑billing something and, you know, every time somebody
complains they just give them \$50 and the people go away, that doesn\'t
mean we would be done with it. We would still say okay, the fact that
you\'ve resolved these informal complaints has nothing to do with
whether we will initiate an enforcement action against you. And we will
initiate an enforcement action if we see that kind of pattern.

The formal complaints really are designed to be like lawsuits. Under the
statute, you have a choice of either filing a formal complaint in
federal court, or with the FCC. And, I mean, the way it\'s set up is to
have the kind of case that if in the end you\'re awarding damages, that
you have a legal process that basically enables us to build a case.

But having said that, you know, we do realize that it\'s difficult.
There have been consumer complaints. You know, we probably work somewhat
more informally with some of the, you know, consumer advocates to help
make sure that they comply with the various procedural rules than we
necessarily would with a big carrier that\'s coming in. You know,
there\'s a formal disabilities complaint. There was a complaint a couple
of years in the Do Not Call area by a group called Consumer Net that
was, you know, litigated through and they won, so it\'s ‑‑ I recognize
it\'s difficult. It\'s not impossible, and it\'s a trade‑off, and we do
try to keep thinking about it.

CHAIR ROOKER: I\'d like to ‑‑ do you have a follow‑up question, Brenda?
I\'m just concerned about the, you know, Joe Smith Consumer, you know,
filing a formal complaint. And they have the right to do so, but they
don\'t have the money with which to file a formal complaint, get an
attorney and so forth.

MR. SOLOMON: Again, I think it, in some ways ‑‑ we try to have avenues
for the Joe Smith who, you know, by doing the informal complaint route,
he has that route. And under some of the statutes, you know, the TCPA,
the Telephone Consumer Protection Act, you know, they have the right to
go to state court, as well. But, you know, part of what we have to do,
and I know some of you are in government or quasi‑government
institutions, and part of what we have to do is use very limited
resources to try to figure out the best strategy. And from our
perspective, I think a lot of attention has been that we can sort of get
the most bang for the buck if we take, you know, certain resources we
have and say we\'re going to look for the trend. So if there are 20 Joe
Smiths, than that\'s more important to sort of, you know, attach staff
resources. But I don\'t mean to at all sort of under‑estimate the burden
you\'re talking about. And it is one that, you know, in a perfect world
we would figure out a way to devote more resources to that, as well, but
we struggle with it.

CHAIR ROOKER: I have a question. It\'s not very important, but it\'s a
little bit confusing to consumers. And that\'s when they call you, and
they\'re told that they can only file an informal complaint. Well, many
of them seem to think that that means that they\'re not really filing a
complaint. Whereas, I know that it is, but they ‑‑ but in the
consumer\'s mind, the fact that there\'s an informal and a formal
complaint, they all want to file a formal complaint but they can\'t. So
is there any consideration being given to renaming those processes? As I
said, this is not of major importance, but in the consumer\'s mind, I
run a consumer hotline, and we refer people to you all the time because
we feel it\'s very important that they complain. But they\'ll come to us
and say well, they wouldn\'t let me file a formal complaint. And we
explain to them, you know, what this really means, but maybe we just
need to think about making a change to what we call it.

MR. SOLOMON: Well, that\'s an interesting idea. We can certainly talk to
the Consumer and Governmental Affairs Bureau that runs that website. But
maybe there is a way to say, you know, you can file a complaint or you
can file a formal complaint or something. I understand what you\'re
saying.

CHAIR ROOKER: Yeah.

MR. SOLOMON: People think informal complaints mean it\'s not really a
complaint.

CHAIR ROOKER: That\'s exactly right. And while I know that that\'s not
the case, they feel that they\'ve been kind of put down because this is
the only thing that they can do. And, you know, they are really angry,
and they want blood, and they don\'t feel like they\'re getting it, so
it\'s just a suggestion.

MR. SOLOMON: Yeah. That\'s interesting. I\'ve never heard that, so
that\'s interesting.

CHAIR ROOKER: Well, it\'s been something that we\'ve heard quite a bit,
because we talk to consumers every single day. And it\'s kind of
interesting. I mean, you know, the first time someone said that to me, I
said well, wait a minute. I know you can file a complaint with them.
What are you talking about? I had to find out what it was all about. So
at any rate, well, I think that ‑‑ Ron. Yeah, take one more question,
two more questions if they\'re brief, very brief.

MR. MALLARD: Ron Mallard, National Association of Consumer Agencies.
Just curious as to whether or not you have an opinion, David, on how the
FCC might ultimately resolve the issue of providing some kind of
complaint resolution mechanism for cable modem services in light of the
Commission\'s decision that cable modem services are information, is an
information service and not a cable service.

MR. SOLOMON: Well, I mean, I think at this point, the Commission didn\'t
impose rules on cable modem service, so there\'s basically ‑‑ there\'s
nothing to enforce until there are requirements.

MR. MALLARD: But there is a decision that has to be made, because right
now, local governments are without any authority to act upon complaints
about cable modem services.

MR. SOLOMON: Right.

MR. MALLARD: So there is a void there in regulatory authority at any
level to act upon legitimate complaints about cable modem services. And
I was just wondering if you had an opinion as to whether or not the ‑‑
your division would support some kind of form of authority being granted
to localities to enforce cable modem service complaints as they
currently do with cable television‑related complaints.

MR. SOLOMON: Yeah, that\'s ‑‑ I don\'t want to sound bureaucratic, but
that\'s not really our issue, you know. Our job is to enforce the laws
that apply to the FCC. I know what you\'re talking about, but I don\'t
really have a comment on it.

CHAIR ROOKER: The last question.

MR. ALLIBONE: Tom Allibone with LTC Consulting. I\'ve got a question on
your Part 42 rules. Okay. A number of years ago, Part 42 was gutted as
part of the Paperwork Reduction Act. And embedded within the Part 42
rules were some very important consumer protection rules concerning
preservation of customer phone billing records.

In the old 42 rules, it used to require the common carrier to retain
these records for three years. When the rule was gutted, that rule went
out the window, and was modified with a ‑‑ I guess a provision that in
essence allows the industry to be in charge of chicken coop. And what it
basically says is that every common carrier must maintain a master index
of records. And within that master index, presumably there would be some
type of a, you know, customer billing‑type record. And I found that to
be true.

My question is that within the master index of records, which is
maintained by the carriers, and is not maintained by the FCC, how do you
go about enforcing your Part 42 rules if you don\'t have access to the
information?

I have filed a number of complaints in this area with the FCC, so it\'s
not a question of nobody ever bringing it to your attention, because I
can assure you, may paper trail is probably about two miles long if you
check out my name. So I just would be curious, you know, what you can do
or plan to do in that area. Because customer phone bills, to get to the
bottom line, is that a lot of phone bills contain hidden billing errors.
They can be on the phone bill for a number of years. And I\'ve seen
cases where they go back 20 years. Actually, even more, 30 years, so
it\'s not an isolated incident. It\'s a very serious consumer protection
issue.

MR. SOLOMON: It\'s certainly hardly for me to answer with the level of
detail you\'re looking for, but all I can really say is that I know when
we\'re doing our investigations, we have a number of tools so that, you
know, we are able to get information, documents we need from carriers. I
don\'t know if there\'s, you know, a specific issue in your specific
case where there was a problem, but as a general matter, we\'re
certainly ‑‑ you know, we have tools and we\'re able to get the
information we need from the carriers to investigate.

CHAIR ROOKER: Well, thank you so much. As you can see, I think we can go
on all afternoon. We\'ll have to have you back.

MR. SOLOMON: Thank you.

CHAIR ROOKER: Thank you very much. WE have some handouts for you. Betty
is going to be passing them out, and we have them on disk if you need a
disk copy, so we will make those provisions available to you.

Now our afternoon, what we\'re calling our marathon panel is ‑ you may
think it is too ‑ is a result of the efforts of the broadband working
group. And our kudos to Larry Goldberg, who\'s heading up that group.
And the group itself are putting together this panel on what is a very
hot topic, one that\'s being looked at by Wall Street, the media, and a
whole host of others. It should be a very lively afternoon. I hope
everybody has gotten here, because I know someone was stuck in traffic.

Just for your planning purposes, we will have a break at 2:15. So don\'t
worry, you\'re not going to have to sit here until 3:30. And at that
time, we will be ordering cabs for your transportation, so that you can
think about if you want a cab, you\'ll let us know at 2:15 when we take
the break. We\'ll poll everybody to see who wants transportation, and
we\'ll have it outside the Commission building at 4, a little after
4:00.

Now Larry is about to get this all set up. Again, thanks, Larry, for
your hard work on this, and go to it.

MR. GOLDBERG: Okay. While we set up here, let me just give a little
background. I was originally called the facilitator of the Broadband
Working Group, and all I was supposed to do was call together phone
calls. That\'s envolved. But the important thing is that we are all very
interested in broadband. There are so many issues that are of concern to
so many of us that as the broadband working group began deliberating at
what issues we could bring to the Full CAC, it was clear that we needed
a lot more information about regulation.

The words are often used that there isn\'t a level playing field. We
want to know what does that mean. It\'s a complex issue about broadband,
and the different providers, and so we felt it would be great to pull
together a panel of experts who could really help us understand this
complex issue a lot better. Members of the working group suggested some
potential panelists. We presented those to Shirley and Scott, and the
FCC, and they were all quite enthusiastic about doing this, and so
we\'re here now to learn.

I want to particularly thank Ron Mallard, and Debra Berlyn, and Rich
Ellis and Cindy Cox for helping gather this very distinguished group,
this expert group. And I certainly ant to thank the panelists in advance
for taking the time to come here and enlighten us.

We\'re not going to get to everything that needs to be known about
broadband, but I think we\'re representing a lot of interesting common
and divergent opinions here today. And we should get to a lot of really
good information. Here\'s how we hope to spend the next two hours or so.

Each of the panelists will have from seven to ten minutes to give an
opening statement, and the order of these opening presentations have
been chosen at random by our Chairperson, Shirley Rooker, so you know
it\'s an honest selection.

After the panelists have made their opening statements, two of which
have Power Point presentations as part of it, we\'ll have some Q&A,
first from a list of questions that the broadband working group has
generated themselves, and then to the rest of the CAC. And then in the
middle, or near the middle, as Shirley indicated, there will be a 15
minute break.

So I will give longer introductions to each of the panelists as they
begin to speak, but just so we know who they are. Nick Miller, who\'s
caught in ‑‑ oh, look at that. Perfect entrance line. From the law firm
of Miller & Van Eaton, representing local government, cities and
counties.

MR. MILLER: I apologize.

MR. GOLDBERG: That\'s fine. You\'re just on time. Next is Scott
Randolph, who\'s Director of Federal Regulatory Advocacy at Verizon,
representing the Telcos. And Dan Brenner, Senior Vice President of Law
and Regulatory Policy at the National Cable and Telecommunications
Association, representing the cable companies. John Windhausen,
President of the Association of Local Telecommunications Services, ALTS,
representing facilities‑based CLECs. And to my left, Commission David
Svanda of the Michigan Public Service Commission, representing state
government.

The order of presentations will be Scott Randolph, and then Dan Brenner,
then John Windhausen, Nick Miller, and finally David Svanda, so it
actually is a nice lineup in that order, as well. So we\'ll start off
with Scott Randolph. I\'ll tell you a little bit more about him as ‑‑
are we ready to go? Working on it.

I have a few words to vamp here. Scott Randolph is Director of the
Federal Regulatory Advocacy for Verizon in Washington, D.C., and he\'s
responsible for directing Verizon\'s involvement in regulatory
proceedings and industry activities related to the broadband and local
telephone competition provisions of the \`96 Telecom Act.

Prior to the merger of Bell Atlantic and GTE in 2001, he served as
Director of Regulatory Matters in GTE\'s Washington, D.C. office, and
before that worked for GTE in Irvine, Texas, with responsibility for
tariffs, and video and cable television‑related regulatory proceedings.

Scott began his career in telecommunications with Contel Corporation in
Atlanta, Georgia in 1984, and was responsible for implementing the
FCC\'s access charge and accounting rules, and acted as a result of a
divestiture of AT&T. He received his Bachelor\'s Degree in Economics
from Georgia State University in Atlanta, Georgia.

MR. RANDOLPH: Thank you very much for having this opportunity to talk
today. What I\'d like to start off with first is talk a little bit about
what we\'re doing at Verizon today with respect to broadband. Today at
Verizon, we provide digital subscriber line service which many of you
are familiar with. It\'s a high speed always‑on access to the Internet
over your local telephone line that you can use to access the Internet
at the same time that you\'re talking on the telephone.

Verizon On‑Line, which is Verizon\'s affiliated Internet service
provider markets DSL Service and combines it with it\'s Internet access
service to market to consumers. You may have noticed that recently
we\'ve reduced some of our pricing, particularly in response to
competition. We\'re now offering a new price for DSL of \$29.95.

Verizon also has a very viable wholesale business in DSL. We offer DSL
services to Internet service providers such as AOL, Earthlink and MSN,
and they take the DSL functionality and they package it with their own
Internet and provide it to consumers under their own brand name, so we
have both a retail and a wholesale business at Verizon.

What are we going to do in the future? Well, in March we announced a
very aggressive roll‑out of DSL and fiber optic facilities in our
network. We hope by the end of the year to have 46 million DSL equipped
lines, which means that we\'ll make broadband available in our serving
territories to about 80 percent of all of our customers, equip about
1,000 additional local switching centers.

We\'ve announced aggressive plans to push fiber optic facilities deeper
into neighborhoods, and eventually all the way to the home. And we
recently enacted hundreds of Wi‑Fi spots in New York City, which
essentially allows customers to access the Internet in various downtown
locations in Manhattan via their laptops. And we also have some fixed
wireless trials underway in Virginia and Maryland, so we have a lot
going on at Verizon.

Just to take a look at what is available to Verizon customers, today
about 50 percent of Verizon customers have a choice between their
broadband service providers. DSL and cable modem are available to about
half of Verizon customers. And in about 31 percent of our serving
territory, customers only have a choice of cable, and 11 percent a
choice of only DSL, and even in 12 percent some limited choice, even
though we have satellite and wireless applications that are out there in
some markets. So we\'re trying to aggressively roll‑out new DSL
functionality in new areas, and hopefully we\'ll reduce some of those
numbers, and increase that number where DSL and cable are both available
to consumers.

If you step back and let\'s take a look for a second at the national
market. Since the FCC has been collecting statistics on broadband since
1999, cable modem providers have outpaced DSL subscription by about two
to one almost every year. Today cable modem service is provided to about
65 percent of the broadband market compared to DSL\'s 32 percent. So
clearly you can see that Verizon and the local telephone companies are
not the dominant players in the market. Cable is maintaining its
advantage.

But if you kind of step back and broaden the scope a little bit of what
this market looks like, and take a look at all of Internet households in
the country, about 73 percent, depending upon the studies that you see,
of customers today are still using dial‑up to access the Internet, so
what does that tell you? Well, that tells you that there\'s still a
large market out there for companies like Verizon and companies that
Dan, for example, represent, the cable companies.

A lot of customers may never want to go to broadband. They don\'t use
the Internet that often. Maybe they use it just for e‑mail and some
limited applications. But increasingly we find that customers are
getting dissatisfied with dial‑up and want more out of their Internet
experience, not only with faster speeds, but able to do more with it.

So how do we compete in this kind of market? Well, to compete in the
market, customers like Verizon is going to have to continue to focus
more on content, on applications, and on services, not just high speed
access, although we are rolling out higher DSL access speeds. And what I
mentioned a few minutes ago, the aggressive roll‑out of more fiber in
our network will allow us to provide Internet access at speeds that no
one ever thought of in the past.

Delivery of those services are going to depend on a number of factors.
One, it\'s going to depend on the ability of Verizon to continue to
invest in broadband infrastructure. And second, it\'s going to be the
ability for Verizon to have the flexibility to interact among all the
players in what we call the Internet value chain. Let me give you an
example of both of those.

Today, using current broadband technologies like DSL, cable modem,
broadband brings a whole host of services into people\'s homes, home
office applications, access to remote education material, entertainment,
healthcare. But tomorrow, the future bandwidth services, the bigger
fatter pipes, fiber to the home, the next generation versions of
technology are going to give us much more, video conferencing, on‑line
interactive video games, virtual classrooms, telerobotics used for
surgery, video on demand, and that\'s just only the beginning.

We also think when we look at the Internet that there is a value chain,
and this value chain serves both companies and consumers. And it
involves all the different players that are involved in the Internet. We
have application software providers like Netscape or Explorer, operating
systems like Apple and Windows, network technology providers like
LinkSys, and you have access service providers like Comcast and the
cable companies, AOL and Verizon, BellSouth, SBC and Qwest. You have web
services provided by Yahoo and MSN, content provided by companies like
ABC News or MSNBC. And those are just only a few examples of the many
players that are involved between the actual consumer and the content,
and the applications that the consumer accesses on the Internet.

If you take a look at all of those players, only one player sticks out
as a little bit different, and that is the local telephone companies.
They\'re all not regulated in this Internet space. The only regulated
entity is the local telephone companies and the provision of DSL
service. So what does that mean?

The regulations that we\'re subject to today are somewhat complex, and
sometimes it\'s a little bit difficult to explain. But essentially, we
are subject to regulations that were designed over a decade ago for a
voice network, not a broadband network. If I can give you a couple of
examples, the current rules today require that for every broadband
service like Yahoo, we have to break apart a separate transmission
service away from other enhanced services and offer those in piece
parts.

Oftentimes, that requires us to offer the piece parts under separate
affiliates. It\'s sort of like requiring, you know, McDonald\'s to offer
‑‑ you know, to price the price of meat separately than a bun, regulate
the price of meat, but allow them to price whatever they want to on the
bun. It just doesn\'t make a lot of sense.

We also have to file public disclosures announcing plans in advance of
where we decide to deploy new services and technologies, which
essentially gives competitors advance notice of our plans.

And finally, we have to obtain approval for new broadband service
offerings and prices from the FCC before we actually offer those to
consumers. We\'re required to file tariffs with the Commission, that
essentially restricts us in our ability to be able to be flexible to
work with consumers. In general, it inhibits the ability to be able to
introduce new services and partner with all of those entities that you
just saw a few minutes ago over this Internet value chain. None of these
rules apply to our competitors, which puts them at a significant
competitive advantage.

So what should the FCC do? Well, the FCC has a number of proceedings
open looking at what is the proper regulatory treatment of the telephone
companies\' DSL and broadband services. We think the answer is very
simple. Give us the same freedoms that our competitors do, the ones that
have 65 percent of the market to our 25 percent of the market. Freedom
to partner with individual Internet service providers, content
providers, manufacturers across that value chain on a contractual basis
rather than via regulatory tariffs. Freedom to offer a wider range of
service bundles and packages that consumers want without artificial
regulatory constraints that we\'re currently subject to. And freedom to
quickly introduce new services and change prices in response to our
competitors without undue delay. If we do that, and if we have that
freedom and that flexibility, consumers are going to benefit.

We\'ll have greater incentives to invest in the network. We\'ll have
greater flexibility to partner with other entities across that Internet
value chain, to develop new and innovative services, applications,
Whizbang, capabilities that consumers want. And if we\'re able to be a
more potent competitor, then that will translate into better value to
the consumer, and better prices. And maybe even we\'ll see the cable
companies reducing their prices for cable modem service.

So lastly, a word about Verizon\'s commitment. We\'re committed to open
networks and providing consumers with access to the content that they
want, and access to the choice of Internet service providers. A lot of
folks have said that if the regulations are lifted on the Bell
companies, then we\'ll restrict consumers\' access to certain content,
and we\'ll restrict their choice of Internet service providers. I don\'t
think that that\'s so.

It simply doesn\'t make sense for Verizon as the underdog in this market
to block a consumer\'s access to content, and to restrict their choice
on the Internet. We want more content provider to our end‑users, whether
we provide it, or AOL does, or EarthLink or other providers.

We have a viable wholesale business today. We provide dial‑up access to
about 400 Internet service providers, and a part of those Internet
service providers buy our DSL service and repackage it with their own
offerings, under their own brand name. So it\'s a viable wholesale
business today, and want it to be viable wholesale business tomorrow.
But the day that we start restricting consumer choice is the day that
they leave our networks and they go over to the cable networks, and we
lose a customer. So we think a truly competitive market, not one based
on regulation, will best ensure that consumers and providers have access
to each other across the entire Internet. Thank you.

MR. GOLDBERG: Dan Brenner, Senior Vice President for Law and Regulatory
Policy at the National Cable and Telecommunications Association in
Washington, D.C., where he has served since 1992. Previously, he served
as Director of the Communications Law Program, and a member of the
faculty at UCLA Law School.

Brenner was Senior Legal Advisor to Chairman Mark Fowler of the FCC. He
was also Vice Chairman of the U.S. Delegation to the ITO World Radio
Conference in Geneva, Switzerland in 1984. He\'s been a consultant to
various organizations, was a senior fellow at the Annenberg Washington
Program, and serves on the faculty of Georgetown School of Law. Mr.
Brenner has served as a member and Vice Chairman of the Board of
Directors of the Corporation for Public Broadcasting from 1986 to 1991.
He is a graduate of Stanford University and Stanford Law School and the
Senior Executive Program of Stanford\'s School of business. Thanks for
coming.

MR. BRENNER: Thank you, Larry and the group for inviting me. I think
this is a great topic for you guys to talk about, and I hope ‑‑ I\'ll
try to keep myself to my time. And, Larry, cut me off if I go long,
because I think the question and answers are likely to be the most
interesting part of this marathon.

It might be interesting to step back for just a moment and a lot of
people don\'t know where cable modem service came from, as if it was
fore ordained as part of a great scheme as the next product for the
cable industry, and that\'s really not what happened.

The way it\'s been explained to me, having lived through it at the NCTA
is that cable companies in Boston, as it turned out, wanted to develop
local area networks for some customers, just provide data transport as a
commercial enterprise for an industrial park. And it was a new business
for cable. We were developing some prowess with telecommunications, but
we hardly were very ‑‑ the leader in it. We\'re still a pretty small
player in telecommunication service, but the idea was that as long as we
were going to build a LAN, maybe it made sense to have access to what
was then called the World Wide Web, and be able to browse, as well as
transmit data among offices in an industrial park. And Intel, at least,
took the position that the cable modem would never work. Our network
could not do this. And some very enterprising engineers working with
some cable companies developed a product. And at the beginning, those of
you who were really adopters, if any of you were of cable modem service,
know that it was not the product that you see today.

It was originally to get cable model service took two engineers the
better part of half a day in your home to try to install this thing.
Usually have to come back the next day because it didn\'t work the first
day. Over time it\'s developed so that you can go to a Circuit City, buy
a cable modem, call the company, Plug N Play, and you have always‑on
broadband service. So it\'s really emerged as a very customer friendly
product that\'s easy to install.

I think in fairness to Scott\'s comments about the cable industry, it\'s
worth knowing that the DSL technology, and many of you know this, was
around a lot longer than cable modem service. And it sort of sat on the
shelf of the phone companies for many years until cable came along and
said hey, there\'s a residential market for broadband. Because as you
know, even today the phone companies offer T‑1 circuits and other ‑‑ and
ISDN was the product that they thought would sell, but it cost a great
deal more. And T‑1, of course, is still a lot more than any cable modem
service. And it was ‑‑ I think the cable industry\'s risked capital and
ingenuity that led the ‑‑ really roused the phone companies from their
slumber and got them into the residential phone service. So that\'s why
you see the competition that\'s heating up in residential broadband
service. And cable leads it in some ways because we were out ahead
first.

Cable has spent since 1996 about \$75 billion in risk capital, not rate
of return capital coming from an embedded phone base, but risk capital
to improve our networks. That\'s about \$1,000 per customer to rebuild
our networks, not just for modem service, but also to provide digital
cable service so that we can compete with DDS, which in the mid‑90s sort
of took the lead on diversity and quality in video. They had more
offerings than the typical cable company did.

And in 2002 alone, we spent about \$215 per customer upgrading our
network for that customer. The numbers as Scott indicated, show
continued growth cable is in over 12 million homes today, but passes
nearly 90 million homes. DSL is in front of around 60 million homes, and
it\'s adopted by ‑‑ a little over six and a half million of those homes
take DSL.

That service is going to grow. Morgan Stanley estimates that broadband
will account for 35 percent of residential access, so that\'s down from
the 70 plus number that Scott indicated, so it\'s a growing business.
And cable continues and wants to complete build‑out.

One of the issues, I think, for policymakers is that at some point
reaching certain unserved areas is difficult. We don\'t ‑‑ cable
doesn\'t serve every home, and phone companies, because of at least the
current technical limitations of DSL may not be able to reach rural
telephone customers, so there are some, I think, policy challenges in
reaching the last 10 percent, maybe the last 7 percent of American
residences with broadband. Congress has looked at these in terms of
different incentive programs.

Let me just make a couple of policy points, and save time for questions
and comments. Now cable has taken the view that while this may not be a
mason service any more, it\'s a service that\'s still growing. It\'s
hardly ‑‑ I think the first adopters have adopted it. There are lots of
reasons why people don\'t have broadband in their homes.

Let me ask, how many people here in the room have residential broadband?
It\'s a large number here but not everyone, and it may be that because
you have broadband at your office, or you do mostly e‑mail at home, and
so that\'s satisfactory. So there is the challenge, I think, of finding
products and services and ways of meeting customers, including price
competition that Scott\'s indicated that phone companies have engaged in
some very aggressive pricing right now for their service to try to boost
subscription rates, to get people to subscribe, because there is a
network effect, as some of you are familiar with that term, with
broadband. The more people on the network, the more companies will
produce programming for networks, broadband networks.

I think that one way to think about the next era of broadband is, in
fact, terms of premium programming. It\'s hard to believe because
there\'s so much free available on the Internet, and early efforts at
pay services on the Internet weren\'t all that popular. The Wall Street
Journal has been struggling to convince people to pay for subscriptions,
and I think the restaurant review Zagot switched from a free to a pay
model, and is still trying to find its way. But if you think about what
happened with cable television in the 70s, the cable industry convinced,
because there was good programming, convinced people who were getting
plenty of free television to start paying for their television. And
today, nearly 70 percent of ‑‑ more than 70 percent of Americans pay for
television, even though there\'s a substantial amount of free television
over the air, including public television, non‑commercial television. So
there is an ability to convince people.

And another comment I\'d just like to point out, that people pay a lot
for water. I see some blue bottles in here that suggests that people are
convinced that something that\'s available at the tap, it\'s still worth
paying \$1.25 for if presented in an attractive dark bottle.

Well, this is, after all, a consumer group, so I take it that there\'s
some awareness of the fact that it is available just outside the door.
But be that as it may, I think that may happen with broadband too, that
there will be services that we can\'t envision today that people will
pay for ‑ and I\'m not just talking about pornography or adult websites
which have already demonstrated, I think, beyond anyone\'s ‑‑ most
people\'s tolerance that there\'s a demand for pay adult websites. But
other kinds of products and services that we haven\'t quite been able to
see developed because the number of broadband subscribers isn\'t large
enough. So my advice as a policy man would be to keep the government
involvement at an absolute minimum. Keep government taxes, and fees, and
franchises and franchise fees at a minimum to get this service out, to
get a large number of people on the broadband network. And then see the
innovative, creative programming things that can happen.

Today we have over 300 programming networks on cable that provide all
kinds of programs, some good, some bad, some interest you and some that
bore you. But the fact is, there\'s that fabulous choice that didn\'t
exist in 1975 when there were no satellite delivery program networks,
and I think we\'re all the better for it because we have more choice. So
we feel that regulation is a mistake.

I think the Commission had it exactly right in declaring this an
interstate information service, interstate in the sense that there
really is not a need for extensive local regulation. Problems on the
Internet, whether they\'re customer service or other kinds of issues can
emanate from the local CMTS, the cable tied in, but it may just be as
likely happening at some hop somewhere out in the cyberspace, so it\'s
not the traditional local service problem that you have with cable
television, where you can generally identify the technical problem
somewhere in the local network.

And I think that people do view this product as something that is
interstate, indeed, international. And that is, I think, why the
Commission was right to declare it to be an interstate service. I look
forward to talking about it with my colleagues and with all of you.

MR. GOLDBERG: Thanks, Dan. It\'s great to see you and Scott agreeing so
much. And again, I\'m also glad you asked about how many people here
have broadband, because as you can see, quite a few of the members of
this committee do. And I think like they say about people who own TIVO,
you can pry it out of our cold dead fingers, because once you get
broadband, you really want to keep it.

Again, fortuitously, our next speaker is John Windhausen. John
Windhausen is President of the Association of Local Telecommunications
Services with nearly 19 years of telecommunications experience in D.C.,
including on Capitol Hill and at the FCC. As AFCS President, Windhausen
speaks on behalf of the CLECs, Competitive Local Exchange Carrier
industry, on legal, regulatory and commercial issues.

From \`96 to \`99, Mr. Windhausen served as General Counsel for the
Competition Policy Institute, a non‑profit consumer advocacy
organization in the energy and telecommunications field. From 1987 to
1996, Mr. Windhausen was Senior Counsel and Counsel for the
Communication Subcommittee of the U.S. Senate Commerce Committee,
working with Senators Hollings, Inouye, and others, and he worked
closely on the Telecom Act of \`96.

Prior to his work in the Senate, Mr. Windhausen was a Staff Attorney in
the FCC\'s Common Carrier Bureau from \`84 to \`87. Mr. Windhausen holds
a JD degree from UCLA School of Law, and a Bachelor\'s Degree in History
from Yale. Thanks for coming.

MR. WINDHAUSEN: Thank you, Larry. Let\'s see. I have a couple of
apologies I\'d like to start off with. First, an apology for not being
able to present or prepare this Power Point presentation enough in
advance to have it transcribed in the right presentation format for
everybody. I am going to walk through it on the screen here, I believe,
and will talk through each of the slides as they come up. And it has
been e‑mailed out, and I can make sure that it\'s presented to all of
you who need it in a better format.

Second apology is for my lack of preparation here today. I didn\'t
realize in advance that I might have the chance to sit in what appears
to be the FCC Chairman\'s Chair, and it\'s so unusual for a CLEC
representative to have the authority or power. I don\'t quite know what
to do with this.

So not having that preparation, I\'m just going to proceed through this
presentation for you. And if you would bear with me too a little bit at
the beginning, because I\'m not sure how many of you are familiar with
ALTS and who we are, so I\'m going to try to walk you through a little
bit of who ALTS represents, and what we do, and the platforms that we
provide service over.

But first off, ALTS, as mentioned, the Association for Local
Telecommunication Services. We are the leading trade association that
represents the facilities‑based CLECs, so that means that we are the
companies that are building our own separate broadband networks in
competition with the telephone companies.

Some of the companies are listed here. I won\'t read all of them, but
KMC Telecom, Allegiance, Focal, Covad, Time Warner, Telecom, Choice One,
PacWest are the kinds of companies that we represent. And these are all
local companies competing for local service, so that means we represent
companies who build their own fiber optic cables. We have DSL companies
such as Covad, New Edge Networks, DSL Net. We have fixed wireless
companies, and we provide the full suite of voice and broadband services
to consumers.

That means that we do not represent the Bell companies, who are our main
competitors. We also do not represent the main long distance companies,
so AT&T, MCI and Sprint, for instance, are not members of ALTS. Our
focus is on the local market.

Now a lot of you may be familiar with the fact that the CLEC industry
has taken it on the chin over the last few years financially, and a lot
of the stories you may have seen in the trade press reflect the fact
that a lot of our companies have gone bankrupt in the last couple of
years. And the overall numbers of competitors has diminished quite
significantly.

Having said that, we are, I think, on the cusp of a revival in the CLEC
industry. In the year 2002, was the first year that the CLEC industry
posted positive EBITDA. That means Earnings Before Interest, Taxes,
Depreciation, and Amortization. It\'s a measure of our future
profitability, and it basically means that for the first time in 2002,
our companies brought in more revenue than we spent on running our
network, so it\'s a very important milestone toward profitability, and
very significant that we\'re able to achieve that.

Also, in the first six months of this year, our stock has doubled in
value, at least the publicly traded CLECs. So we\'re very optimistic
that the future is bright for our companies, the companies that have
survived.

And lastly, of course, our market share continues to grow. And this is,
I think, quite astounding that even though we probably lost about
two‑thirds of our companies in the number of companies, our total market
share is now up to about 13 percent of the local telephone marketplace
when measured in terms of revenues.

Now I\'d like to spend a couple of minutes talking about the benefits
that we provide to consumers because after all, this is what you all are
primarily focused on, and what policymakers should be focused on first
and foremost.

Our companies ‑‑ our first benefit is that we offer very significant
price discounts to the services that are generally offered by the
telephone companies. I used to say 10 to 30 percent discount, and in
doing some more research, I found quite a number of examples of our
companies offering up to 50 percent discounts off the prices that you
would have to pay for the Bell Company to receive an equivalent service.

And let\'s face it, we don\'t have the name recognition that the Bell
Companies do. If we\'re going to win market share, and compete well, we
have to offer a value to the consumer. And a big part of that value are
the lower prices that we can provide, and we\'re very proud of that. We
also offer new innovative technologies, which I\'ll talk about more in a
second. And we also do our most ‑‑ the most we can to contribute to our
community.

Just spending one more minute on each of those three criteria, there\'s
a lot of text here in this slide, but the basic point is that the Yankee
Group has done surveys each of the last couple of years on customer
satisfaction, and they found from both of those years that the CLEC
industry has out‑polled, out‑ranked the Bell Companies with regard to
their customer service. The prices are cheaper, and also the level of
customer service that we provide is superior to that that you can get
from the Bell Companies. And there\'s a big article that was written up,
I recommend to you, in the Chicago Tribune last month, which detailed
the consumer benefits that we provide.

In terms of broadband innovation, CLECs are often at the forefront of
bringing new broadband technologies to the market. We were the first to
innovate and provide what\'s called frame relay services, one of the
first broadband data services. We were also the first to provide DSL to
the market.

As Dan mentioned, DSL had been sitting on the shelf of the Bell
Companies for years. It wasn\'t until CLEC started to deploy the
technology that it really began to take‑off in the market. And we\'re
also deployed fixed wireless service.

A couple of examples here on this slide, PacWest, one of our members, is
currently rolling out a new service to triple the speed of dial‑up
access, and this is going to be particular advantageous for rural areas
that don\'t have typical broadband availability today. They\'re going to
be able to get the equivalent speeds over their dial‑up service without
having to pay extra cost for it, or without having to upgrade their
computers. It\'s an example of the kinds of innovation that we\'re able
to provide.

And why are we able to provide that? Well, it\'s because we use the
local loop that we lease from the Bell Company. This pictorial tries to
demonstrate how we provide service. We connect our equipment, and the
three switches there that are in color on this screen are meant to
exemplify the intelligence that we put onto what we call the dumb pipe,
which is the transmission capability.

Now I use the word \"dumb\" not pejoratively towards any particular
company. It\'s just the best way to make the point that the actual
transmission technology, whether it\'s the copper or the fiber, is
fairly transparent. It just carries data back and forth. But the more
intelligence you put on that pipe, the higher quality service you can
provide to the consumer, and that\'s what our companies specialize in.
We come up with the more sophisticated intelligence and data speeds
using the dumb pipes provided to us by the phone companies.

I\'ve provided here a few examples our humanitarian programs. In
particular, I\'ll mention Covad\'s grant program to Micro Entrepreneurs
specializing in helping companies owned by women and minorities, but we
have all kinds of these kinds of public service programs that our
companies provide.

Now to face the main question of this panel head‑on, you\'ve been asked
to consider this notice of parody, and Scott has done a good job of
framing the issue for you. In terms of parody between the Bell Companies
on the one hand, and the cable companies on the other, I respectfully
suggest, that should not be the main question that this group focuses
on. That\'s a false premise on which to start this debate.

The real question is, what\'s in the best interest of the consumer, not
what\'s in the best interest of two sets of giant companies and
industries. And in that score, I think, as I\'ve demonstrated, the
participation by our companies, the CLECs, provide an awful lot of
benefits to the consumer, and you should ‑‑ I would ask that you keep
that in mind, the tremendous consumer benefits that we provide.

But if you do want to talk about parody, well, let\'s really talk about
parody. Let\'s talk about all the advantages the Bell Companies have
over the CLECs, over our competitors. The Bell Companies have access to
every city street. They have access to every building. They have access
to extremely low cost of capital. They have access to loops and
transport, and they provision their customers much more quickly than
they provide them to us.

These are all ways in which the Bell Companies have a disparate
advantage over the competitive industry. So if you do want to go down
that road, we\'re happy to go down that road, but there are an awful lot
of disparities out there in the marketplace that we would ask you to
take into consideration.

The Bell Companies will similarly make the argument that they need to be
deregulated in order to promote broadband, and deploy it more widely. If
you look at the evidence, however, on investment, it shows a very
different story than what you might be led to believe. In fact,
investment has been very, very high since 1996, in large part because of
the competition that the 1996 Act set in motion. If you look at the
CLECs investment, our industry alone has invested \$71 billion. I think
that\'s comparable to the \$75 billion that Dan mentioned from the cable
industry. Even though we\'re a far smaller industry than the cable
companies in terms of revenues, we\'re actively building these
competitive networks as much as we can.

And when you look at the Bell Companies\' investment levels and track
them over a decade, rather than just looking at the last two years, you
see that their levels of investment have increased significantly, almost
doubled in 2000 over their historic rate of investment through the
1990s. We think this is all because of the competitive forces that were
set in motion by the 1996 Act, so there\'s really a great success story
here. The amount of investment has been very significant. The
availability of broadband is higher than it\'s ever been before, and
something to be proud of. Up to 83 percent of consumers now can choose a
broadband provider, if they wish.

So what the Bell Companies plea for deregulation comes down to is, you
should feel sorry for us. And Scott signaled that there are all these
players in the broadband marketplace, and they\'re the only ones that
are regulated. But if you look at their financial statistics in the last
few years, they\'re doing very, very well. Most folks realize that they
now have more long distance customers that they\'ve lost in the local
market, and their revenues are very high. Their EBITDA margins are very
high, higher than our\'s, so there\'s no reason to feel sorry for the
Bell Companies.

So in conclusion, I would ask that you consider that consumers will
benefit most from a wide variety of competitors, and including the
competition that our CLECs provide in the marketplace. Ideally, consumes
should want a variety of players offering various technologies, over a
variety of platforms.

Scott mentioned that if they refuse to let us have access to their
network, we could go somewhere else. Well, we can\'t. We might like to
go to the cable companies and use their platform, but technologically,
it\'s not available to us. It\'s not possible. Our only avenue of
providing this competition is through leasing the local loop from the
Bell Company, and that\'s how consumers are going to benefit the most.
Thank you.

MR. GOLDBERG: Thank you. I\'m glad we\'re finally getting at some of
these regulatory issues. And I think maybe what we\'ll do once we finish
all the presentations, be about time for the break, is to offer rebuttal
opportunities down the panel so we could answer some of the questions
each of you are bringing up.

Our next speaker is Nick Miller. He\'s the Managing Partner of Miller &
Van Eaton, a law firm that is involved in telecommunications and cable
TV law. He served as Communications Counsel to the U.S. Senate, and was
special consultant to the White House on telephone deregulation issues.
He represents local governments and real estate interest in telecom and
cable television matters.

Mr. Miller is a frequent public advocate for the rights and interests of
local governments in modern communications. Mr. Miller is also counsel
to ALOAP in the cable modem proceedings at the FCC. That\'s the Alliance
of Local Organizations Against Preemption, and it includes the National
League of Cities, U.S. Conference of Mayors, National Association of
Counties, International Municipal Lawyers Association and others.

Mr. Miller received his law degree in \`73, and his undergraduate degree
in Economics in 1966, both from the University of Washington. He served
with commendations and awards in the U.S. Navy, and his service did
include a tour of duty in Viet Nam. Mr. Miller.

MR. MILLER: Thank you very much. First, I want to say it\'s an honor to
be here. I want to be clear about who I am, and what I\'m representing.
I am counsel to the National Municipal Local Government Associations in
the proceeding at the FCC dealing with the DSL and cable modem issues.
The acronym is ALOAP, as Larry indicated, but I bring you greetings from
the local elected officials.

That hat means I am not here speaking on behalf of consumers. I\'m here
speaking on behalf of folks who care deeply about consumers, but who
keep the consumer interest in balance and perspective with other
interests that are also in the day‑to‑day fray that is before every city
council. So one of the things I would point out to you is that there are
very well expressed consumer views that have been filed on all of these
matters by very substantial consumer organizations here in Washington,
D.C. And I would hope that the committee would take those under
advisement and read those with great care. I\'m speaking specifically of
the comments of the Consumers Union and Consumer Federation of America,
and various other organizations, including AARP.

So with that said, let me explain the point of view of local governments
as we look at this issue. One point I think we bring is, we are less
concerned about the deployment of technology, and much more concerned
about the deployment of services.

If you want to roll‑out fiber optic to the home as quickly as possible,
you create an unregulated monopoly. You generate super profits in the
marketplace, and guess what? Wall Street will flow money to that result.
But the price you pay, is you also give up control of the services
market in that process. And so I would ask the committee to keep in mind
clearly the question of what is the way that you\'re going to allot the
most, and most competitive, and most diverse range of services to
consumers? And what is the way in which you will allow consumers to
avoid market failures, and to have their voice really heard as they vote
with their dollars for and among those services. So it\'s striking me,
for example, and I assume that this is only the first of many of these
sessions that the committee will have, that it seems to me that the
service providers are a group that ought to be heard from by this
committee.

Local governments see the issue as two‑fold. There is a problem now
that\'s created by the fact that cable modem and DSL service is not
being rolled out in a competitive market. Even Scott\'s figures suggest
that 50 percent of the homes have only the choice of one provider. And,
in fact, I believe that data ‑ and I\'ll allow him to clarify ‑ I
believe that data is based upon zip code availability, not actual homes
passed. So in only 50 percent of the zip codes is there two service
providers offering service to one home in that zip code. So I would
suggest that right now, we are still very much dealing with a monopoly
service provider environment. And to step back and totally deregulate
the behavior of that monopolist in that context is very threatening, and
has a lot of implications for how the market will take shape.

Then there\'s a second problem. When the market becomes competitive, at
this point, no one is talking about more than a duopoly, but let\'s
assume a duopoly isn\'t fair, it is, in fact a competitive market. You
still have the problem of market failure in adopting appropriate rules
that give consumers real recourse as individuals when they experience
real problems as individuals. And this is where I think the Conference
of Mayors and the National League of Cities is quite disturbed at what
has happened in this building in the last year.

On March 15th of 2002, the FCC unilaterally adopted a Declaratory Order
that set aside the existing set of regulatory rules that govern all
forms of consumer protection with respect to broadband services by
declaring that cable modem service was not a cable service and,
therefore, was out from under the whole regulatory regime for cable
franchising. But, in fact, was an interstate information service. They
unilaterally attempted to prevent the state regulators and the local
regulators from being available to provide recourse to consumers who are
having real problems.

Now that was March of 2002. We are now in July of 2003. We still have no
rules in place that give any guidance or any state or local regulator
guidance about what kind of remedies are available when a consumer
experiences real harm, and real injury in the marketplace. So I would
ask this committee to focus on that issue, and come to grips with it
relatively quickly.

Local governments are particularly concerned because, in fact, we had a
very elaborate, and we thought pretty efficient set of regulatory
remedies out there to protect consumers in our individual markets
through the cable franchise process. By declaring that this service is
no longer a cable service, the Commission has taken all of those
regulatory remedies out from within the grasp of consumers.

Now we do have some staff letters from the FCC that suggest that that
decision doesn\'t completely eliminate local and state consumer
protection authority in this area. But what that practically means is
that the 35 to 36 hundred local franchise authorities have to adopt new
rules and regulations, specifically aimed at the cable modem service.
And that the 52 state regulatory commissions have to adopt specific
rules aimed at DSL service, trying to get through the legal landmine
that the Commission has created with its decision.

So we are here before the Commission as the National Associations,
asking the Commission to pay attention to what Commissioner Copps said
in his dissent, when he said, \"The Commission was adopting a decision
on March 15th that was clearly far beyond the reach of the headlights of
the Commission. And was creating an\" ‑‑ and if I can extrapolate what I
believe Commissioner Copps was saying, we have set up a situation
that\'s going to replicate the problems that we had with long distance
slamming.

There is not today a place that a consumer can take a complaint if they
are unhappy with the service that they are getting from their cable
model provider, except to the provider itself. There is no other remedy
out there.

Now there are some jurisdictions that are moving forward with expanding
their traditional consumer protection relation, and I would encourage
you to go home and encourage your local elected officials to take that
initiative to fill that gap. But there\'s a real problem out there, and
this group has something to say on that. And I would encourage you, and
I would be happy to provide whatever assistance local governments can
provide you to understand that problem in more detail.

I think there\'s a growing awareness that you cannot have even a
competitive market without rules in place that allow investors to
understand what the expectations are, that allow consumers to understand
what the expectations are, and that provides an unbiased place to
adjudicate and resolve disputes.

The example I like to use is ‑ because I\'m a real soccer fan ‑ is World
Cup Soccer. You know, when the World Cup final game goes onto the
playing field, you have the two best, most competitive, perfectly at
parody teams competing with each other. If you did not have a set of
rules and a referee on that field, you could not have a game. Thank you.

MR. GOLDBERG: Thank you. As I mentioned, we\'ll have a chance for some
follow‑up statements and rebuttals after the break. But finally, we\'ll
now hear from the states.

David Svanda is a Commissioner with the Michigan Public Service
Commission. He\'s been very active with the National Association of
Regulatory Utility Commissioners, NARUC, as the elected President, as an
Executive Committee and Board Member, and having held other leadership
positions.

Mr. Svanda is also very familiar with the FCC and its advisory boards as
a member of the Commission\'s Local and State Government Advisory
Committee. He served as Director of Administrative Services for Governor
John Engler, as Director of the Governor\'s Northern Michigan office.

Mr. Svanda has a Bachelor of Arts Degree in Political Science and Urban
Affairs from Western Illinois University, and a Master\'s in Public
Administration Degree from Maxwell Graduate School at Syracuse
University, and he\'s been involved with elective politics, as well,
having run for Congress in 1994. Welcome.

COMMISSIONER SVANDA: Thank you very much, Larry, and Madam Chairman and
Members of the Committee. It\'s an honor and privilege to be here with
you. And so early, as you are beginning your service to the FCC and to
the communication needs and interests of this country, I understand this
is just your second meeting. And so I guess it makes it even more
meaningful to be here so soon as you begin your work. I appreciate that.

In case some of you don\'t know what NARUC is, just a moment of
explanation about it. It is the National Association of State Utility
Commissioners. We represent the interests at the national level of the
state commissions of all 50 states, plus the District of Columbia, plus
the U.S. territories, and so we are a constant advocate at the national
level in this town, both before Congress and the Administrative
Agencies, with regard to a wide range of issues. And those issues do
include, as was already mentioned, trying to present a balanced
position, which is what state commissions attempt to do back home, and
what we work towards in our policy attempts here in Washington.

We do try to balance consumer interests with those of shareholder
interests. We do that on a continuing basis. We attempt to balance the
interests of the various consumer classes represented in many instances
by some of you in this room, but acknowledging that there are vast
differences between the needs of each of us as individual consumers of
services, and in this instances, network services and our commercial and
our industrial types of friends, who also have needs of their own and
are very real as they make their contributions to how this country
works. And lastly, balancing the needs of individuals as we identify
them with the particular sets of needs that they bring to the table.

I tended to focus my thoughts coming into this session on the issue of
parody and regulatory parody in particular, thinking that that was the
issue that you were tending to struggle with. States sit in a fairly
unique position with regard to the question of parody because we\'re
right in the middle of the federal mix that happens to occur around
broadband, happens to occur around other telecommunication services. And
what I mean by the \"federal mix\", is that the FCC representing our
national government, certainly has interests that flow across state
lines, are interstate in nature, don\'t recognize the differences
between the states, but recognize, in fact, that networks, national and
international communication systems need to be very free and flowing, so
the FCC has a very broad scope.

The states have a very narrowed scope in relationship to what the FCC
does. The states are concerned with what we tend to call principally
plain old telephone service. Plain old telephone service is what most of
us have grown up with over time, and recognize it as the outgrowth of
what used to be just old AT&T. And yet, states have a very strong
concern for new developments, new technologies, what broadband is doing
for us, and what it can do for us. And those interests are because there
is a direct relationship between that plain old telephone service, what
the new technologies are, what we can expect by way of pricing, what
will be delivered by way of service. And it is all interrelated and
interconnected.

As we see the Internet, as we see cellular phones replacing the need for
old wireline phones in many instances, we have ways that our kids and
grandchildren use to communicate that we maybe never thought of, as a
possibility. It all points to the need for better coordination and view.

And lastly in that regard, we are the entity that in many instances
across the country are responsible for the creation of cities, and
counties, and townships as creatures of state government. Local
governments are responsive to state legislature, state executives, and
in some instances, constitutional kinds of provisions. But we recognize
‑ and I will slip to my Michigan Commissionership a little bit ‑
recognize the need to coordinate as best we can, being in the middle,
the efforts of local governments, our own efforts at the state level,
and then what\'s occurring at the national level, so that we can get to
a climate that is conducive to achieving the objectives that we all tend
to set out for ourselves.

Like my panel colleague at the end, Nick, I wanted to talk to you about
regulatory parody by talking about a sport game. Instead of soccer,
Nick, I wanted to draw out an example of parody for you by talking about
the national sport of baseball, and thought this late in the afternoon
after you\'ve been flooded with probably technical and legal kinds of
presentations all day, thought you might be up for a little baseball.

But think about a baseball, two baseball teams starting the season out,
say this season. Two professional baseball teams at that league and
playing at that level. One of those teams has been around for 100 years,
and has all of the usual kinds of trappings that you would expect from a
major league baseball team that\'s been around that long. And the other
one is just starting out as a brand new upstart. That brand new upstart,
and the old 100 year old team are obviously expected to play by the same
rules. Three strikes, four balls, same number of innings played, same
number of fielders, all of those kinds of things. The umpires are
expected to call them as they see them, the balls and the strikes, and
the sliding outs and all of those kinds of things. And it is
professional baseball, so it\'s hard and fast. The pitches are thrown
fast, and the short stop to first can be approaching 80 or 90 miles an
hour as they whip it over.

Now the same rules, remember. However, the new team can\'t quite afford
to have gloves or bats, and in not being able to afford gloves and bats,
they also ride around in a bus, and so getting to games is a little
slower. Now imagine those two teams. When they meet on the playing
field, you guys can probably pick the winner. You can probably pick
where they will finish at the end of the season in terms of statistics,
and where they are in the rankings. And so it\'s something to be
considered when discussing parody; playing by the same rules, umpires
calling them exactly the same way, but what are the resources that are
available, and how can it be deployed in the game strategy and playing
it out.

That is the point of, I guess, my little diversion here, is to point out
that in addition to considering regulatory parody, there is a much
bigger environment that has to be taken into account. There are other
things that also need to be brought into parody at the same time, or
relative time as parody in regulation is considered. And that can\'t be
done overnight. It can\'t be done quickly. It requires transition to get
there. It sometimes, in fact, requires planning in order to get there.
It requires the players to be trying to achieve the same public
interest, and one of the other panelists mentioned what that focus
should be. And that\'s a focus on consumer services, and quality, and
pricing that suits the needs of consumers of all types.

So parody at the regulatory level is dependent on, must be cognizant of
the rest of the environment in which regulation is occurring. Access to
capital parody might be a good thing to also be discussing. Access to
the customer might be a good parody issue to be discussing. And so with
that said, from the State Public Service Commission perspective,
certainly getting to parody is a goal that we should all have tacked up
on the wall. It\'s one where we should be working towards, but one that
we cannot in an artificial way move too quickly because we\'ll have many
undesired consequences that would not be productive. The goal is
certainly one to endorse. Adding our efforts to achieving it is
certainly one that state regulatory folks have an interest in pursuing,
but to do it with care and caution.

In that regard, State Utility Commissions through our research, put
together a 2002 survey of what states are doing with regard to broadband
regulation. By and large, it is a very light‑handed approach, and one
that is consistent with how broadband regulatory attitudes generally
seem to be; and that is to stay out of the way of a great technology,
and let the innovative forces unfold as they will.

There are a few states that have gone a little further than that, and I
guess we\'re all watching for what comes out of the FCC in its final
order on tri‑annual review, to understand whether or not the state
actions will, in fact, remain valid afterwards, or if they will be open
and subject to challenge. And there are, I think, a good number of
states that have taken the approach ‑ my own State of Michigan is one of
these ‑ taken the approach that we want to do everything that we can in
our state to incent broadband deployment. So it is not a matter of
burdening deployment with regulatory layers, but instead, understanding
what the needs are to get broadband deployed in every corner of our
state just as quickly as it can be, and serving the needs of our
citizens and businesses.

We have, in Michigan, enacted just last year what some call a model set
of statutes that does exactly that, and I\'d be happy to talk
individually or at a future time with all of you about what\'s entailed
in those provisions.

Let me close at that point, and I look forward to the rest of the
conversation.

MR. GOLDBERG: I appreciate how well everyone here has worked towards
explaining these issues, and the sports analogies, I think, are
appreciated by some or most. As a Yankee fan living in Boston, I very
much appreciate that.

We\'ll take a break now, maybe just 10 minutes. We\'ll do our rebuttals
right after the break, and maybe we\'ll enter the game of darts after
that. Ten minutes.

(Whereupon, the proceedings in the above‑entitled matter went off the
record at 2:28 p.m. and went back on the record at 2:49 p.m.)

CHAIR ROOKER: Okay. Larry, we\'re going to turn it back over to you.

MR. GOLDBERG: Thank you, Shirley.

CHAIR ROOKER: Do we have anything else that we need? No, we\'re going to
go back to business. Okay. It\'s your\'s.

MR. GOLDBERG: Okay. Well, I promised a couple of minutes for rebuttal or
answers to the questions that were raised by the other panelists. So why
don\'t we go down and try to take no more than two minutes, because we
really do want to get to Q&A by members of the committee. So in the
order that we started, Scott.

MR. RANDOLPH: Okay. Thank you. I\'m not really sure who was the
incentive to get the telephone companies to roll‑out DSL, whether it was
the CLECs or the cable companies, but I\'ll let you guys fight about
that. But I would like to say one thing about that.

DSL is an interim technology. It\'s not a means to an end. It\'s not
going to get us where we need to be in the broadband networks of the
future. We\'re going to have to be able to make significant investment
out there in the network. We\'re going to have to deploy more fiber to
neighborhoods, and even all the way into individual customers\' homes.

In fact, we have a trial going out in a neighborhood called Brambleton
out in Loudoun County out here in Virginia, where we are wiring houses
directly with fiber. So that\'s going to take quite an amount of
investment, and we\'re going to have to be able to sell the services and
applications and be successful in the market out there in order for us
to be able to recoup that investment.

One point that I\'ll just make that Nick had brought up, regarding my
chart being sort of showing that there are 50 percent of the customers
in our territory that have no choice. Well, that\'s not where we want to
be, and hopefully by the end of this year, we will reach about 80
percent of our customers with DSL. And as Dan mentioned, cable is
available to about 90 percent of the households in the United States, so
we\'re going to get there as far as deployment.

The question is, how do we compete in this market? And for us to compete
in the market, we need to be able to sell the services and applications,
and the content that the consumers want. And we can\'t do that under the
current rules. It\'s impeding us.

I will say one more thing, just to comment to one of John\'s remarks
regarding the competitive local exchange carriers. Even with the FCC\'s
ruling that they came out with in February, that we\'re awaiting the
order on regarding local competition, the FCC declined to require us to
unbundle our broadband networks and sell it in piece parts to
competitive local exchange carriers. But they did preserve the right of
the CLECs to continue to have access to loops, so going forward in the
future, even as we are putting fiber out there into neighborhoods and to
our network, the competitive local exchange carriers will still have
access to loops to be able to serve customers.

We don\'t think that anything that we are proposing as far as broadband
is concerned in the FCC\'s open broadband proceedings will affect the
capability of some of the CLECs to be able to access customers.

MR. GOLDBERG: Thanks. Dan.

MR. BRENNER: Yeah. There are just 27 quick things.

(Laughter.)

MR. BRENNER: I\'m kidding with the 27. One thought I had, you know, I
was thinking about consumer protection. And I don\'t think, contrary to
some of the views here, that consumer protection turns on how many
players there are in the market. You can have 100 different car
companies, car dealerships, and you still need consumer protection. And
you may have one provider of clock repair, and you don\'t need extensive
consumer protection of that.

I think the key is really not how many players there are in the market,
but what is the utility of the regulation. Will the apparatus that
you\'re spending taxpayer money for benefit the customer? And I think
you always have to analyze that. And I think that that debate does get
lost.

One of the points Nick made was gee, we\'ve had no consumer regulation
since March of \`02 to July of \`03, and it\'s going to go on for maybe
more months. I don\'t see that the sky is falling down. What I have seen
is that more and more people are taking broadband, more and more people
are finding new ways to offer applications of broadband. And that while
there have been some consumer complaints, the FCC does log complaints
from cable, including broadband, and it\'s less than 100 complaints
nationwide. Ron is disagreeing with that number.

Anyway, at the FCC I\'m saying. There may be complaints at the local
level, but ‑‑ and I\'m not saying that it\'s a complaint‑free service,
but many of the issues on the Internet are not ‑‑ if there are local
issues or local billing problems, that are often issues that ought to be
settled out, I think, between the customer and the cable company.

I\'ve said this when any people complain about video service or cable
service, if you\'re not getting what you\'re paying for, don\'t pay for
it until the cable operator gets a clean good picture into your home,
don\'t pay for the service. And just insist that the cable company
deliver a good picture, or come to some settlement as to what the
picture is worth. But don\'t pay for something that you\'re not getting,
and that goes for cable modem service, and it goes for DDS service, and
it goes for telephone service from Verizon, and it goes for service from
any CLEC company.

Unfortunately, we don\'t quite have that relationship with the
government, but ‑‑ I point to you, David. You withhold tax and see what
happens. The cable industry, and Nick knows this, did not oppose the
definition of cable modem service. In fact, the cable industry went
along with that. It was the FCC that changed it, although we didn\'t
oppose the FCC\'s view of it either. At that point, we were paying a
cable franchise fee, or a 5 percent fee. But it\'s not as if municipal
governments are bereft of funds to regulate cable.

You may not be aware of it, but over \$2 billion a year come out of your
customers or out of consumer\'s pockets who are cable subscribers to pay
for regulation at the local level. That\'s what the money is supposed to
be used for. It\'s not supposed to be used to balance budgets. Maybe it
is being used for balancing budgets in these times of lack of revenues
from cities, but the idea was that there would be an adequate fund for
regulating cable, and the administrative cost of it. That\'s a lot of
money. It\'s 10 times the budget of the building we\'re in, so if there
is still an inadequate amount of consumer protection due to lack of
funding, I\'m suggesting that it\'s not a funding question.

And finally, we\'ve heard a lot about parody. You may have noticed in my
comments that I didn\'t really address how the telephone company should
be regulated, or how CLECs should be regulated. We are not in the
business, as a trade association, and I think I\'m glad ‑‑ it makes my
job easier, and I think I feel better about my job. I\'m not in the
business of telling government how to regulate other industries.

If the phone companies deserve to be deregulated based on their history,
based on their current offerings, based on policy judgments, then so be
it. But I don\'t think that there\'s any magic to the word \"parody.\"
What you want to do is have the right regulation for the right
circumstances. If regulation doesn\'t help and doesn\'t work, don\'t
impose it because it does impose costs.

MR. GOLDBERG: Thanks. John.

MR. WINDHAUSEN: Thanks, Larry. Actually, I\'ll respond to Scott\'s
comments. Scott, you\'re indicating that your view of this FCC decision
on bundling rules is that it will not harm the CLECs. And I certainly
hope that\'s true, but I have a couple of reasons for thinking
otherwise.

First, I think your suggestion is that we\'ll continue to get access to
the loop, so we\'ll continue to be able to do the ‑‑ have access to our
current customers and technologies. That\'s kind of a best case
scenario, but think about that. Even in that case, that relegates the
CLEC industry to the older technology, and that will not allow us to
participate in the broadband future.

Our companies specialize in broadband deployment. That\'s one of the big
marketing advantages we have had. That\'s why we\'ve said, we came up
with DSL first before they did, frame relay and these other
sophisticated broadband services. We don\'t want to be relegated to the
old technologies. We want to participate in the future, as well, and be
able to continue to provide these full benefits for the newer
generations of technologies. So that\'s why we think we should be able
to get access to all of the network, regardless of the technologies
deployed, and we pay for it. We pay a rate for it that compensates the
Bell Companies, and we\'re willing to do that.

Now that\'s the best case scenario. Even worse, however, is that our big
fear is that, as you know, it\'s very difficult to identify, go into the
telephone network and say okay, that piece of equipment is a broadband
piece, and that piece of equipment is not. Because actually, the
telephone network is so interconnected, and has so many pieces to it,
and to get a broadband service may be transmitted over lots of different
technologies, so our big fear is that as the Bell Companies say okay,
our broadband technologies are exempted from unbundling, that they\'ll
start applying that that could be a huge exemption, which they start
taking away our basic rights to the existing facilities in the ground
today. And that ‑‑ if that interpretation is what happens, that
essentially puts us out of business. I mean, and that gets rid of the
whole competitive thrust of the Telecommunications Act of 1996. Our
companies really do then fold up shop and have to go away, if that\'s
how this order ends up being interpreted.

MR. MILLER: Larry, I just want to make two brief points. One is, and
this is a personal view, the genius of the U.S. economic system, to me,
has always been its use of the rule of law to provide remedy so that
third‑parties who are total strangers can do business with each other
with confidence.

If you look at the developing world, the single most serious problem
they have is that you cannot do business outside the oligargee because
there\'s no remedy, if you are cheated, or if you are lied to, or if the
person ignores the contract.

The genius of this system is we have a rule of law that provides a
remedy. If you want to create the most vibrant broadband services
environment, you have to simultaneously create a set of rules that
provide real remedy to the participants in that marketplace. And let me
give you a specific example. I\'m a Comcast cable modem subscriber. I
love the service. I need the service. Every night my firewall tells me
that Comcast has downloaded to my machine a piece of support software
that is trying to get through the firewall back to the Comcast server
and the firewall blocks it, and asks me do I want to permit or block,
and I block it every day.

I cannot find out from Comcast what information they\'re trying to
download from my home computer that all my personal financial
information on it. And there\'s no place I can go with that question.
You know, now that means that Comcast ‑‑ if I don\'t find a solution to
that problem, there will come a point at which the information on that
computer is so sensitive, I will stop using that service in the way that
I have become used to using it.

Now that\'s a burden on the economy, because there isn\'t a rule in
place that gives me a remedy. And that\'s what I would ask this group to
really focus on, those kinds of very real day‑to‑day problems. And the
fact that ‑‑ and let me give you another example.

Dan made the comment that this is really an interstate world and,
therefore, it\'s really not up to local officials. It\'s beyond the ‑‑
he didn\'t really say this, but let me extrapolate. The implication to
me was, it\'s beyond the capability of local officials to deal with it.

You know, we refinanced ‑‑ my wife and I refinanced our house last
month. The first payment went off to the mortgage company. The mortgage
sells the paper to another mortgage company. I get a notice from the
second mortgage company that the first payment is late, with a \$150
charge attached.

Now that\'s in interstate commerce, because when I called the second
mortgage company, it was clear they were in California. But you know
what, my remedy is with Maryland State Consumer Protection Office, and
I\'m prepared to use it if there isn\'t a fix to it. So the fact that we
are an interstate world doesn\'t mean that we can\'t adopt rules that
are appropriate to deal with a specific problem. And again, that\'s what
I would hope you folks would focus on. Thank you.

MR. GOLDBERG: Jared.

MR. CARLSON: I don\'t have rebuttal for any of these guys. It probably
has to do with where I\'m sitting. I guess that\'s how I got isolated
clear over here on this side of things too.

(Laughter.)

MR. CARLSON: I have sat in chairs similar to your\'s, I guess, in terms
of sitting on a committee that\'s trying to give good advice to the FCC
on very critical and important issues to folks that you represent. And I
guess rather than spending any time in rebuttal and, in fact, spending
much time at all, I guess I just wanted to put out there by way of
suggestion to you as you work your way through this issue, as you have
your discussions after this panel is over. And I think that probably the
reason you had us as a panel was to try and build some common
understanding of the issue, so that your discussions were more
coordinated and efficient.

And so, I guess I would just add to the mix of the comment, that you
consider whatever recommendation you ultimately are able to formulate,
consider it in light of assuring that that recommendation takes into
account all of the complexities that you\'ve heard from this panel.

This is not one of those issues that is very complex with a simple
answer. If it had a simple answer, others would probably have already
presented it. And so, think very carefully as a group about what
recommendation you enter on the record with the FCC, assure that ‑ and I
know this is how you live your lives ‑ assure that all of the groups
have good representation in terms of the solution that you represent to
the FCC, and that you are not inflicting any sort of unintended
consequential harm to parties to the record.

MR. GOLDBERG: Good points. Our working group which, at this point, I
assume that MCCA would like to join. You\'re on. Well, let\'s hear from
the rest of the CAC now, and the members of the working group. WE\'ve
heard a lot about parody, whether it\'s possible, whether it\'s good,
about needs for consumer protection. Does that include such things as
rate regulation, must‑ carry, universal service, those sorts of things.
I know lots of people have questions. We\'ll go right to Ron Mallard.

MR. MALLARD: Thank you, Larry. First of all, I didn\'t want to interrupt
Dan during his comments, but I was ‑‑ and I didn\'t really disagree with
95 percent of what you had to say. I think my only real objection was to
the implication that because the FCC had only received 100 complaints,
meant that there wasn\'t a problem, and there wasn\'t a need for some
kind of regulatory action at some level of government. Because we\'re
clearly experiencing great numbers of complaints across the country with
cable modem service, and there are no solutions for local governments to
handle those kinds of complaints. They\'re customer ‑‑ they\'re the
basic kind of ‑‑ they are the very same kind of basic customer service
complaints that we experience with cable television services everyday.
And it comes from the same providers that provide cable television
services, so I would ask the panel ‑ and I\'m not posing this question
right now ‑ what better authority is there to handle those kinds of
local consumer problems than the local government regulatory agencies
that have been set up at the local level to do that?

So anyway, again, it\'s not the ‑‑ as I say, I didn\'t disagree with
most of what you said. I do take issue with the small number of
complaints that the FCC is having. But let me get on to my question, if
I could.

This is kind of a proposition, and then I\'d like some responses from at
least three of the panel members. I would argue that local government
franchising authorities are really the only practical level of
government, the only government provider of consumer complaint
investigation and resolution services that can be responsive to
legitimate consumer problems. And I would ask first, Mr. Brenner, and
then Mr. Svanda, and then Mr. Miller to respond to that allegation, or
to that argument, whether you agree with it, or if you don\'t agree with
it, why not.

MR. BRENNER: Well, I should go first. I mean, I think it sort of relates
to my question ‑ I didn\'t interrupt your presentation, but I do think
it relates to the nature of the problem. There are ‑‑ I\'ve been to a
call center of a cable company that handles incoming call center
problems with data. And, you know, actually in the customer care area of
data services, there are Level 1, Level 2, Level 3 type call centers.
And Level 1 deals with, you know, maybe some of the billing questions,
stuff that has nothing to do with the network. Level 2, you know, may
get more into the actual connectivity and some of the technical
problems. And, you know, Level 3 may be an advanced problem somewhere on
the net. I\'m having a problem getting to this website. It keeps coming
up.

I don\'t see that the local government regulator is good at any of
those. I think it turns out that every one of those problems has to be
addressed, because I think the local government regulator can put
pressures. And Nick says in the end, it\'s a back‑stop if the cable
operator doesn\'t answer his phone, and doesn\'t respond to questions,
and doesn\'t correct a billing problem. It\'s good to have a backup
there. But the problems that are going to get solved in this, what is
really an interstate service, are not going to get solved by a local
regulator who will simply, you know, then have to call the cable company
and say you better answer your phone.

I think you could put, and the FCC could be charged with setting up
those kinds of rules. It\'s part of the inquiry that the Commission is
looking at since the March order, as to what is the role of consumer
protection in this service. But I just don\'t know if local government
has any expertise on the real problems that confront consumers.

There\'s an enormous consumer education issue that needs to be performed
by local government. But solving the problems, now they\'re probably
going to get solved either by the cable operator, or by somebody conking
the head of the cable operator if they don\'t answer the phone properly
to get the answers.

MR. MILLER: I want to go back to my home mortgage refinancing example.
To me, the regulatory entity that should step up and assume
responsibility is the entity that gave the license to that person to be
in business. That\'s who the consumer has a legitimate complaint
against, if that licensor is not overseeing the behavior of the
licensee. And that\'s the local government that gave that franchise to
that cable operator. I mean, that\'s why the cable operator enjoys that
privileged position in the community. And I don\'t think you can look at
a taxpayer, or look at a consumer as a city council member and say you
have no responsibility. And it makes no sense to the consumer to say
you\'ve been preempted by the federal government, so call the FCC.

COMMISSIONER SVANDA: I would answer yes, in theory in the perfect world.
Now there are practicalities that cause me to probably attach some
caveats to that. One is, that the local franchising authority really
needs to be in sync with thousands of other local franchising
authorities, so that there is a common and recognized set of standards
that don\'t impose business costs on service providers and deliverers
that are just unreasonable and crazy, and counterproductive in the way
that they might be implemented. So if we can solve that, if we can
assure that the local franchising authorities are not playing games and,
in fact, are working in the best common interest, then we\'re working
with a good system.

The local franchising authority in that same vein, should not be in a
position to act as a barrier to entry. My experience at the state level
has shown me some examples where local franchising authorities will act
as barriers to entry for one reason or another, will have selected some
provider than another provider, and that doesn\'t add up to very good
business plans for a business to do its roll‑out either. And so I think
with some practical overlays, yes, it doesn\'t necessarily answer some
of the things that transcend wireless and satellite, and some of those
kinds of issues. I\'m not sure how quite local franchising authority
applies, and with that then, would it work on the radios that we have in
our vehicles and that sort of thing. Probably not.

But in general, of course, the closer to home you can drive things, the
better off it\'s going to be. I think even as the FCC explores some of
these issues, over time we\'ve talked with them about well, where is the
floor of people in this building, the portals building that\'s going to
be answering the phones if they, in fact, start ringing? The local
franchising authorities in a particular area may well receive in the
course of a month 100,000 calls. And if all of those calls were to start
coming into the FCC, who\'s going to answer the phone? And they aren\'t
staffed‑up. State Commissions are not staffed‑up, so ‑‑ and for certain,
we can\'t abruptly change that system. Once again, if a new ‑‑ if
something new is going to work better, it\'s going to take some time to
get there.

COMMISSIONER SVANDA: I think there\'s pretty broad agreement here,
actually, on the general point. But I want to sing a refrain you often
hear from the local governments, and it\'s called \"unfunded mandates\".
I think local governments are truly prepared to step‑up and do this, but
one of the ironies in what the Commission did last March, is they said
oh, by the way, not only do you lose regulatory authority, but you lose
all your franchise fees associated with cable modem services. So taking
Dan\'s point, that it would be nice to have some source of revenue that
could pay for this regulatory authority, it would be nice to have the
Commission be consistent about this, and recognize that if we\'re going
to take responsibility and provide real consumer relief, we ought to be
able to set the tax, rent, and fee policy with respect to cable model
services, as well.

MR. HOROWITZ: I have a foundation which is called the Fight Back
Foundation for Consumer Education. We also have a website that\'s called
FightBack.com. I do a lot of media stuff, and as far as you\'re
concerned, Mr. Miller, we can get those problems solved for you in
probably 24 hours, without going through the measures that you want to
go through with the mortgage company and all that. That\'s what we do.

And the reason I\'m saying this, is I\'m listening to something hear
that really, really has met upset, because I\'m listening to a bunch of
really important people who are out on the street, supposedly, knowing
what\'s going on. And I feel like you\'re twirling around like you\'re
on a merry‑go‑round.

First of all, as far as complaints are concerned, the gentleman from
Verizon. Verizon happens to be a monopoly now. It\'s a monopoly. They
joined with a lot of companies. They joined with Bell Atlantic, and they
joined up with a wonderful company that was called ‑‑ in Los Angeles
that was called ‑‑ oh, God. They\'re a wireless company. And if you go
to the FCC, the state commission, these guys have been fined millions of
dollars for bad customer service, and haven\'t paid it. All right.

I have a DSL connection. I started with a company that I call PacHell.
And PacHell was PacBell, which became Southwest Bell which, as you know,
is a monopoly. It took them seven months to try to find out what the
problem was with the DSL line. And the problem was that they were
running the wires to my house out of an old set of cables that were not
fiber optic cables. And then they told me well, you know something. I
hate to tell you this, Mr. Horowitz, but you\'re at the end of the line.

I said, \"Oh, really? I\'m at the end of the line. You mean we don\'t
have fiber optic cable here, as I was told when they installed my DSL?
Oh, no. You don\'t have fiber optic cable there.\"

Well, it\'s very simple. I went to my state agency and complained. These
guys immediately came on and said well, we\'ll take care of it. They
still have not taken care of it. What they\'ve done is they\'ve refunded
every month that it doesn\'t work. I don\'t want the refund. I want the
service. Okay? And someone said well, just don\'t pay your bill. Well,
you don\'t pay your bill to a DSL or to one of the monopoly phone
companies, you will not have any service. They\'ll cut your service off.

Now my DSL has gone from DSHell with the earlier phone company, to
DSHell with Southwest Bell. And finally, I got to a point that what I
did is I took our internet service provider that feeds all the computers
in our office, and I now have a dial‑up which is a pain in the ass. But
the good thing about it is I have my computer working every day, and I
don\'t have to call DSHell or any of those DSL companies.

Now with these other remarks that were made, I mean, I\'m just
absolutely floored by it. You guys would like to have open competition
in a marketplace that is a monopoly marketplace. You can\'t have open
competition in a monopoly marketplace because you have to go to the
local companies that run whatever is there, and make a deal with them to
hook‑up, so that you can get into the houses and the places where you
want to sell your goods. And they\'re not going to give you a bargain
price because you compete with them. They compete with you.

So then we get back to the ‑‑ you know, we always look to government for
the reward to go in and save us. Government can\'t save you in a
situation like that. You want the FCC to come up with a set of rules
that\'s going to apply to how you deal with these companies intra and
interstate, so that there would be a uniform rate that you could pay for
whatever systems you want to put in there. That\'s part of what they
call \"free enterprise.\"

And, you know, I feel here that you\'re calling this parody. You want
parody. That\'s the free enterprise system. And to compete in this
marketplace, you have to be pretty tough, and you have to be pretty fast
on your feet. And when you talk about going and being fast on your feet,
and you\'re dealing with these franchise boards and the local
municipalities, you\'re dealing with entities that have picked one
provider usually, or maybe two in a market who are going to give you all
the service for whatever you watch on television. Now that to me is not
fair.

MR. GOLDBERG: Could you give the guys a chance to answer some of these
things?

MR. HOROWITZ: No, wait. I\'ve got to finish, and I\'ll be out of here,
because this is really bothering me.

MR. GOLDBERG: We only have 15 minutes.

MR. HOROWITZ: Let me just say this. That is not fair. It is not fair for
a local municipality to decide on what they think would be the company
that provides the service in that market. And yet, most of the companies
that provide the service in those markets are, guess what, monopoly
companies. And what we\'re facing here is a war with the monopolies.

Now if you could find a way to defeat the monopolies and have them kick
back money so that they could give you a good deal to get into those
markets and be professional, that would be great. But by and large,
across the United States we get so many ‑‑ I mean, I can\'t believe you
guys don\'t go into areas where you could find out what the complaints
are really like. Go to the State of California, go to the Public
Utilities Commission there, you know, don\'t depend on the FCC
complaints to be able to give you a true picture, because a lot of
people do not know that they complain to the FCC. Nor do they have,
believe it or not, a computer, nor do they want to be bothered with it.

We\'re trying to make it known that the FCC will do things for you. But
to say that 100 problems, there\'s got to be tens of thousands of
problems across the country. And I can vouch for that, because we get
thousands.

MR. GOLDBERG: All right. Any one care to respond? Scott.

MR. RANDOLPH: I\'ll just say a couple of things, and I\'m not sure what
your experience was with PacBell, but I can tell you, you know, when we
started first rolling out the DSL, and I think Rich can agree with this.
We had some real problems, and our service was fairly lousy in a lot of
places because it was a new technology. The telephone network was not
necessarily designed to roll that technology out. There\'s a lot of old
stuff out there on those copper wires that have to be pulled out. And
I\'m one them too. I work for Verizon, but I have Comcast cable modem
because I\'m, you know, at the end of a long loop. But that\'s exactly
what we did in March with our announcement, that we were going to go out
there and take the step to pull fiber out there, to get out there closer
to the neighborhoods, to shorten those loops to be able to provide DSL.

Let me something about service quality. Our service quality has
improved. In fact, it has to improve. We can\'t compete in this market
unless it does, because the cable ‑‑ you know, consumers are going to go
to cable companies who are going to blanket the country with 90 percent
penetration very quickly if we\'re not able to really deliver on our
service.

MR. HOROWITZ: But, Scott, I can\'t get Verizon to give me DSL because we
don\'t have fiber optic cable. And it\'s too expensive to run it down
the hill where it has to go to.

MR. BRENNER: Yeah. I mean, the technology of DSL is limited that way.
That\'s why you don\'t have 100 percent head‑to‑head competition with
the cable and DSL, although they\'re trying to improve the DSL
technology so they can go. It used to be about, you know, a couple of
miles from a central office, and if you lived farther than that, you
couldn\'t get DSL. But I would submit that ‑‑

MR. HOROWITZ: I\'m two and an eighth miles away from a central office.

MR. BRENNER: Well, how about an extension of your ‑‑ see, I grew up in
Southern California, so I know who you are. And they\'re one of the ‑‑

MR. HOROWITZ: I don\'t think that has anything to do with it.

MR. BRENNER: No, it doesn\'t. But I think ‑‑ you know, I grew up
watching you, you know. And I think you are somebody who helped elevate
the whole idea of consumers understanding their rights. And that\'s why
I feel, as a consumer, I just last night wrote a letter to my plumber,
and I cited the Maryland Licensing Commission if they don\'t call me
back with my half‑ installed boiler, you know. But I don\'t that
Licensing Commission is going to do me any good, so I\'m not ‑‑ you
know, I know what you\'re talking about.

But I think that, you know, I am ‑‑ you know, having worked at the FCC
for many years, and as a student of regulation, I\'m not sure ‑‑ you
know, bring ‑‑ having the club of regulation sometimes is helpful, but
in the end, the consumer needs to be able to get answers. And, I mean,
if a company doesn\'t give me a good answer ‑ and that\'s why I said, I
kind of learned a little bit watching your telecast ‑ you know, you keep
going well, let me talk to your supervisor, and you just keep going
until you get an answer. Now not every consumer has the patience, or
willingness or time to do that.

I don\'t think the solution, really having been a regulator, is to go
and seek a regulatory solution in every instance. I don\'t think that\'s
going to solve the consumer problem either. In the end, the companies
have to face competition, because if they don\'t like the cable company,
they can say goodbye. Call up and get good service from DSL, if they can
provide good service, and we lose a customer. We\'re losing customers
every day to DDS because we don\'t provide ‑‑ we\'re fighting back with
a better product and a digital tier, but we were losing customers to DDS
because we didn\'t have the right product. But that is a much better
solution than, I feel, going to city councils and having them tell us
what programming network should be on, and having regulated that way.

The market has taught us that we have to improve our service. And I
think when you have a monopoly, you need to have regulation if you
assume that there\'s market failure and entry is difficult. The whole
point of John Windhausen\'s ‑‑

MR. HOROWITZ: But wait a second.

MR. BRENNER: Let me just finish.

MR. HOROWITZ: Dan, this is important.

MR. GOLDBERG: We have some other questions.

MR. HOROWITZ: That\'s what we have the Telco Act for.

MR. BRENNER: Right. And that\'s John\'s organization.

MR. HOROWITZ: And we still don\'t have open competition.

MR. WINDHAUSEN: I will ask, have you tried to call Covad?

MR. HOROWITZ: Covad?

MR. WINDHAUSEN: Covad.

MR. HOROWITZ: Covad went bankrupt, and then I stopped with Covad.

MR. WINDHAUSEN: No. Covad is back, and going full swing.

MR. HOROWITZ: They\'re back?

MR. WINDHAUSEN: Yeah. They are very active, and I would bet you that
they would be able to provide you that DSL service.

MR. HOROWITZ: I could be surprised.

MR. GOLDBERG: We have lots of hands. Don had his first, then Vern, and
then Joy. Don, go ahead.

MR. SNOOP: I just wanted to ‑‑ David took away a lot of what I was going
to say, because he\'s so eloquent in how he presents things. But
basically, I disagree with part of what he said, only because I think
that the phone industry, the cable industry are getting away from being
monopolies. There are competition in both industries right now. DVS has
been out there for a while, wireless cell phones are coming in. There\'s
a lot of things going on.

The entire broadband issue, access to the Worldwide Web, those type of
things are becoming an issue that I think two years from now, we\'re
going to look back and say, you know, we were crazy back then trying to
regulate this stuff. Because if we allow it to develop, and we\'re right
in the developmental phase right now, I think we have to allow it to
develop. I think we have to allow the marketplace.

The more marketplaces that we have where we have DSL and cable modems
both providing that service, and DDS has threatened that they\'re going
to be providing also a satellite delivered service, once we have two or
three players in a marketplace, David\'s point goes away, because now
they\'re going to have more and more people.

I\'m a good example myself. I mean, I used to work in the cable
industry. I\'m now working in the phone industry. I tried to get DSL. My
local phone company wouldn\'t get it. Guess what, I have a cable modem,
very happy with it. So there\'s a lot of things that can happen, and I
think we have to allow it to develop.

MR. GOLDBERG: Vernon.

MR. JAMES: Vernon James, San Carlos Apache Telecommunications. Thank
you.

I really just want to comment more so than ask questions. I want to make
these comments to the panel here, the committee. These are some of the
problems that metropolitan and urban areas face. There are greater
problems in rural America.

These problems present itself to rural America based on the fact that
you don\'t have the kind of infrastructure to provide the kinds of
services urban and metropolitan markets enjoy. True, there is wireless
technology that\'s coming into play, but wireless isn\'t the total
picture. You can\'t provide for the hospitals, you can\'t provide for
the schools, you can\'t provide for the community centers, you can\'t
provide for the libraries. Those are services that go untended because
the infrastructure to provide those services are too costly.

DSL has its limitations, so in a rural setting such as a reservation,
the only way you\'re going to get services to a community that has
people living spread out, is to buy the local exchange at a cost higher
than what is fair. But you\'ve got to have that local exchange to become
a real local exchange carrier. When you become that local exchange
carrier, LEC as we call it, you then develop the infrastructure to
provide the kinds of services.

In my case, the tribe had to go to the federal government, borrow the
kinds of money because they couldn\'t go to commercial sources, because
of the status of the land. So went to the federal government, we
borrowed millions to build the kind of infrastructure that is needed to
be provide the kinds of services out in our community. With that, the
tribe turned around and charged Vernon James here to make sure we pay
our loan back, to make sure we make money so that we can improve the
infrastructure that we just built.

The problem is insurmountable when it comes to trying to provide the
services at a break‑even cost. With regulations, services will not come
out to rural America, must less reservation. And so when we talk about
parodies, let\'s talk about parodies in rural America. Thank you.

MR. RANDOLPH: Let me address that comment real quick. And like I said
before, Verizon, for example, has some wireless trials right now out in
McLean, Virginia and some areas in Maryland, where we actually have
employees that are testing the wireless applications that we hope will
be effective in the rural areas, and we hope that that will happen
eventually.

One situation we had recently that came to us, we had a small community
in the northeast that knew that we were not going to get DSL deployed
into that community for some time. They came to us with a proposition.
They said look, we will buy the DSL equipment, the D‑SLAM equipment, and
either you can put it in your office, or we\'ll put it in City Hall, or
we\'ll put it somewhere, but we\'ll let you maintain it. We\'ll actually
incur the cost, and then in turn, you turn around and provide DSL
service to the community at a reduced rate. And we actually thought
well, maybe that\'s a good proposition. Maybe that\'s something we
should try out.

But unfortunately, under the current rules that we\'re under at the FCC,
it precludes us from being able to work out individual deals with local
communities, or colleges and universities, or school districts, or
internet service providers, or any customers. And we have to do a one
size fits all. So I would say, I mean, loosen the regulations. Give us
the opportunity to do more things like that, or at least test the market
to see if things like that are viable.

MR. WINDHAUSEN: Could I make a general comment in response to all three
of the last speakers here. The overriding general proposition that I
think each of you has raised is that monopolies, in general, do not have
good incentives to innovate. And they do not have good incentives to
solve customer problems. And I think each of the three of you have
raised that that\'s been your experience. But they don\'t have any
market incentive to in usual, because they\'re not ‑‑ because if you
don\'t have a choice, you don\'t have anywhere else to go.

Ideally, the kind of structure you want to create is a more competitive
atmosphere, where you have a lot of different companies trying to
provide that service and innovate. And as shown by the research that
we\'ve seen, that the Yankee Group has seen, is that our CLECs are doing
much better job with customer service. You need to make sure that we\'re
able to stay in the marketplace. And the recent policy changes that the
FCC has been considering adopting in this tri‑annual review, which has
not yet been issued, could really spell the death bell of this
competition, and you won\'t get these kind of choices. And in that case,
the only thing you\'re going to have left then is to go back and to deal
with these companies, at least with market power, if not monopolies. So
I encourage you, if you create more competition, the consumers needs are
going to be satisfied more quickly.

MR. BRENNER: I would just add very briefly, that I think in the case of
Indian reservations, tribal spaces may be unique in the sense that
because of their geographic location, they may need special government
attention. And I mentioned in my opening remarks about the problem of
unserved areas. It\'s not just Indian areas, but other areas, which for
economic reasons, are not being served.

But I do have good news on that score. Some cable companies, small cable
companies in North Dakota, and in Minnesota too, that I\'m familiar
with, and very small markets of five, six hundred and 1,500 subscribers
are rolling out advanced services like broadband. So even in very small,
what appear to be tiny markets, you can get cable companies to offer
that. And I think that will cause phone companies, and maybe CLECs then
to come in and try to grab some of that market too. So that\'s the good
news. I think though, in very, very rural areas, that may prove more
difficult.

MR. JAMES: If I might just respond to that. Indian tribal lands are not
the only rural areas. We\'re talking about close to 1,000 cooperatives
who are providing local exchange carrier services in mid‑America all the
way across the plains, into the areas in the west. And they all go and
borrow money.

The problem that we face is that we get CLECs coming in who want to take
advantage of the infrastructure that we built with out sweat, with our
blood, and with our tears sometimes. And it makes it harder to repay the
loan when CLECs come in.

CHAIR ROOKER: Down here if you don\'t mind. Larry, I don\'t think you
saw that we have a question on the other end.

MR. GOLDBERG: Yeah. Debra was on the working group. She does get a shot,
and I know Joy has been trying too. And we\'re almost at time, so see if
you can make them quick.

MS. BERLYN: I\'ll be very brief. When I saw the agenda and I saw we had
two hours, I thought how are we going to fill up two hours. And now I
wish we had another hour, because I do have a couple of questions. John,
thanks for your last remark, because I was going to make the point that
a better option, Dan, to not paying your bill is to be able to have
alternative providers that you can go to with your business.

My question, and if we don\'t have time ‑ I don\'t think we do. Perhaps
it\'s something that our working group can get the advice of these
panelists on, is in light of the eminent tri‑annual review order, and
the impending broadband wireline proceeding, what issues should this
Consumer Advisory Committee consider in terms of the implications of
these decisions for consumers? So it\'s a big question, and it\'s, I
think, something that we want to take to our working group, and then
eventually to the CAC. But thank you all. It\'s been a great panel.

CHAIR ROOKER: Yeah. I think ‑‑ I believe we\'re out of time, if I see
that clock correctly. Is my vision failing me? Is it 3:30? Yes. I really
would again like to express my thanks also to all of you for taking the
time out of your day. You spent a heck of a chunk of time with us, and
we really appreciate it. And Larry, you and your group are doing a super
job, as our other working groups are doing.We also have a report from
Joy Ragsdale and her group that has been passed out to you, so there\'s
lot of things going on here.

Thank you all very much for being here. I\'ll give them just a minute to
get off the podium. But our next speaker is going to talk about Local
Number Portability, which is the ability to take your cell phone number
with you when you change carriers. And this is a big issue for a lot of
people who are using their cell phones now instead of their home phones.
They\'re using it for their business and everything else. And to give us
an update on the status of portability is Jared Carlson, who is the
Acting Chief of the Policy Division of the Wireless Telecommunications
Bureau. Jared, welcome. We are delighted to have you here. Thank you.
Let\'s give him a welcome.

You can actually just ‑‑ if you want to sit, since I think the podium
has been taken, you can just make yourself comfortable there. The podium
is gone, and that\'s not you.

MR. CARLSON: Is this all right? First, I wanted to thank you for letting
me have an opportunity to speak on what really is one of my favorite
topics, and one of the most interesting things that I\'ve had to work on
in my five years or so at the FCC, and that\'s local number portability.
And as you know, I am in the Wireless Bureau, so the focus is on
wireless number portability.

Let me start off with what the bottom line for the Bureau, and I think
the whole Commission is, is that we want to right now work with carriers
to ensure that porting process goes as smoothly and efficiently for
consumers well in advance of the number portability deadline, which is
November 24th of this year for wireless carriers.

Let me start with a little recent history on number portability,
specifically, wireless number portability. Last summer in July, the
Commission released an order that denied a request for permanent
forbearance from our number portability rules, but we did approve a
one‑year delay in the implementation of number portability, primarily to
avoid the simultaneous implementation of number pooling, which I can
talk about if anybody is interested, and number portability.

And a big win for this Commission and for our consumers, I think, this
order was upheld by the D.C. Circuit just last month. And I wanted to
read one quote from that order, because I couldn\'t have said it better
myself. The D.C. Circuit said:

\"The simple truth is that having to change phone numbers presents a
barrier to switching carriers, even if not a total barrier, since
consumers cannot compare and choose between various service plans and
options as efficiently.\"

And some more recent history, last Thursday, just last Thursday, the
Wireless Bureau restated our commitment to ensure a smooth process for
consumers in terms of wireless number portability by addressing some of
the issues that have been brought forward to us by CTIA, primarily, and
also by Verizon Wireless.

Let me start with a statement, and then sort of walk through it, and
parse it through so that everybody here knows what is actually going to
happen come November 24th, when we start to see wireless number
portability.

I think you probably heard that on November 24th, you\'ll be able to
take your number with you when switching wireless carriers, but what
does that really mean? And let me kind of try to break it apart.

What it means is that wireless customers, and at the very least, certain
wireline customers who live in the largest 100 metropolitan statistical
areas, will be able to take their numbers with them when they switch
carriers.

When you go from a wireless to a wireless carrier, there really is very
little question that you will be able to take your number with you.
They\'ve already made the investments that they\'ll need to do. The
carriers have to support the technical requirements necessary to handle
number portability, and they did so largely when they had to implement
number pooling, which is something that\'s been going on for the last
year. And I also wanted to just let everybody know that the Commission
is standing firm on the November 24th date for wireless number
portability.

When going from wireline to wireless carriers, there is something of a
question there that CTIA has raised, and it\'s fair to say that the
whole industry has raised, I think. And that is, that depending on where
you live, you may be able to take your wireline number with you to a
wireless phone; which is to say, it doesn\'t mean the Bureau would like
to say, you may be able to cut the cord and keep your number with you.

And the reason why it\'s not so cut and dry when you\'re going from
wireline to wireless is what we call the rate center problem. And this
occurs because you\'ve got wireline carriers who historically have
always routed and rated calls through the use of rate centers, which are
historically the areas that are served by end offices. And these rate
centers are the whole entire paradigm of the wireline world. They
control not only how calls are routed, but whether a call is local or
toll. And while wireless carriers aren\'t bound to serve customers only
on particular wireline rate centers, nonetheless, they do interconnect
to the network, and they have to use the paradigm that\'s out there, the
wireline rate center paradigm.

And they also, as a matter of fact, get telephone numbers, when they do
get telephone numbers that are assigned to given wireline rate centers.
Now they\'re able to serve fast suaves of people with those numbers, but
they are still, in fact, tied to one particular rate center.

And in the wireline world, when you\'re going from an ILEC to a CLEC, or
a CLEC to an ILEC and keeping your number with you, number portability
is limited by the rate center. The industry standards that are out there
that the Commission has blessed, do say that number portability in the
wireline world is limited to rate centers.

And this actually does make some sense, because if you are a home user
being served by two companies, and you want to switch between them, then
almost by definition, they\'re both going to be located in the same rate
center.

But in the wireless world, CTIA, that\'s the Cellular Telecommunications
and Internet Association, has asked that the Commission, as they would
have it, that the Commission confirm that competition demands that
wireless carriers are able to port numbers outside of wireline rate
centers. And according to CTIA, wireless carriers are only about one out
of every eight wireline rate centers, so there really could be some
fairly major limitations on porting numbers. It would only be if you
wanted to go from wireline to wireless, you would only be able to do so
if you happen to be one of those customers lucky enough to be in one of
those one out of every eight of those rate centers where wireless
carriers and wireline carriers actually overlap.

The other issue that I wanted to point out is that come November 24th,
there will be wireless number portability in the largest 100
metropolitan statistical areas. And the way number portability works is
one carrier requests number portability of another carrier switch. And
for the most part, carriers had to do that for the largest 100 MSAs in
February of this year. And in the Bureau, we understand that as far as
wireless carriers are concerned, that\'s happened. Every wireless, or
not every wireless carrier, but all of the wireless switches that are
out there have received a request for number portability. So there\'s
very little question that in the largest 100 metropolitan statistical
areas there will be number portability come November 24th.

Outside of those largest 100 metropolitan statistical areas, carriers
have a maximum of 6 months to comply with a request from another
carrier, and those requests can start to come in on November 24th. So
what that means is, if there is an area where there are a couple of
providers, and one wireless carrier says hey, I think I want to be able
to port numbers in because I think I can get customers from this guy
coming to me, you can make that request on November 24th. And at most,
the other carrier has 6 months to comply with that. So by May 24th of
2004, you\'ll probably see number portability in the vast majority of
the country, if not everywhere.

Let me tell you some of the outstanding issues that we have right now.
I\'ll mention some aspects of some of the issues that CTIA, the Cellular
Telecommunications and Internet Association has brought up. One is, as I
said before, the rate center problem. The Wireless Bureau released that
letter last week that I mentioned, that stated that although we\'re
currently grappling with the issue, and determining what the boundaries
of wireline to wireless portability are going to be, there isn\'t any
question that if you are in one of those, like CTIA says, one out of
every eight rate centers where wireline carriers and wireless carriers
are, you will be able to port from your wireline carrier to a wireless
carrier.

Another issue that CTIA has raised and put kind of two different
questions to us, has to do with the porting interval. And what the
porting interval refers to is the amount of time it takes for a customer
to go to a new carrier and say I want to take my old number to this new
phone, and the amount of time that the network, the telecommunications
network actually takes to recognize that that port has occurred.

If you go from wireless to wireless, this takes place according to
industry standards in only two and a half hours. In the wireline world,
and this is not only going wireline to wireline, but also wireline to
wireless, that period of time is about three days. And there are a
couple of issues associated with this.

One of them is a public safety issue, E‑911. And that is, during this
period of time, you will be able to call 911 and connect to the nearest
Public Safety answering point. However, there might be some problems
with that PSAP, Public Safety Answering Point, being able to receive
your call‑back information, so there would be a period of time when, if
for whatever reason they needed to call you back, they may not be able
to, because the number that\'s delivered to them is incorrect, or if
they try to call‑back that number, it could be the old device that
actually rings, whether it\'s wireline or wireless.

But we did confirm in this letter from last week that as far as that
issue is concerned, the Commission\'s rule already do address situations
in which, for whatever reason, a valid call‑back number can\'t be
delivered to a PSAP. And what the Commission said is that in such cases,
your obligation is to at least get the call to the PSAP, deliver
whatever call‑back or whatever identifying information you can. But at
the very least, get the call to the PSAP. And as I understand it, that
shouldn\'t be a problem, even during the porting interval.

CTIA has also taken a look at the porting interval from a competitive
point of view. They view it as somewhat of an impediment to get people
to port from wireline to wireless carriers, the fact that it takes three
days might discourage some people to do so. And that is an aspect that
the Commission is also considering.

A couple of other issues I wanted to mention that weren\'t necessarily
brought up by the industry; but nonetheless, that I\'d like to talk
about. One of them is, what Verizon Wireless has termed \"business
rules\". And Verizon Wireless sent us a letter saying that they would
like us to state that ‑‑ to agree with them, that a wireless carrier
can\'t deny a request for portability from an individual consumer on the
basis of an unpaid bill, or an unfulfilled contract. And in our letter
from last week, we did state that carriers, and I\'m quoting: \"Carriers
may not refuse to port while attempting to collect fees or settle an
account.\"

The last point I wanted to mention is about cost recovery, and the
flexibility that wireless carriers have. Verizon Wireless, for their
part, has said they\'re not going to charge a fee for customers to port
numbers. And if that turned out to be the way that the industry went,
I\'d be thrilled. However, as if often the case in the wireless world,
there aren\'t that many regulations on this topic. And we do permit
wireless carriers to recover their costs, however they see fit, so long
as they\'re just and reasonable, of course. And so you could see various
paradigms, I suppose you call it, for recouping their number portability
costs, whether it\'s charges on every customer\'s bill, or charges to
port out a number, or charges to port in a number.

That\'s really the state of play of things on wireless number
portability. And if anybody has any questions, I\'m certainly happy to
try to answer them.

CHAIR ROOKER: Do we have any questions for Jared?

MR. ALLIBONE: Tom Allibone, LTC Consulting. I\'ve been noticing on
Verizon phone bills recently, there\'s been some language that\'s saying
that due to changes, no details, but due to certain changes that the
charges that used to be passed between carrier‑to‑carrier, between
Verizon and certain, I guess, cellular carriers are now going to be
billed by Verizon.

MR. CARLSON: They are Verizon land‑line, not Verizon wireless.

MR. ALLIBONE: Yeah. Land‑line, but on the land‑line bill, it\'s
referring to something happening in the cellular industry. And does this
have anything to do with that?

MR. CARLSON: Yes and no. What you\'re talking about is arrangements that
wireline and wireless carriers, that used to be fairly common, now are
not quite so common, are called \"reverse toll billing\" type
relationships. And they were established to encourage land‑line callers
to call wireless phones. And because of the rate center issue, you\'ve
got a wireless carrier who might serve a whole huge area, but really is
getting numbers from a rate center that\'s out here. And there\'s a
land‑line caller that\'s here, wanting to call the wireless carrier.
I\'m sorry ‑ somewhat further away. And there has been a toll associated
with that charge, just like there would be if you were making an
intralata toll call, you might see a charge on your bill.

It was somewhat common for wireless carriers and wireline carriers to
have agreements, whereby the wireless carrier would basically pick up
the tab. The charge still exists. I mean, the wireline carrier was still
billing somebody for the cost of this toll call because the call had to
go a fairly long distance, but the wireless carrier was picking that up.

It used to be easier to identify which calls were local and which calls
were toll, just because you could look at the first three digits of the
phone number and figure out what rate center it was in. Once you have
number portability, that\'s not quite so clear any more. You\'ve got the
potential for numbers to essentially move from one rate center to
another, and that\'s been cited as a reason why these relationships have
been terminated throughout the country.

And it\'s interesting, in some places, like I know that California
hasn\'t had reverse toll billing for a number of years, and I\'m
starting to see more and more inquiries about reverse toll billing in
Texas and Tennessee. I just got a lot of inquiries about it in the last
couple of months.

CHAIR ROOKER: All right. Jared, thank you so much. We really appreciate
your taking the time to come and visit with us today. Thank you.

MR. CARLSON: Thank you.

CHAIR ROOKER: It\'s time for those people who have been waiting
patiently here from the public, if you would like to make any comments
or ask questions of the committee. We\'re most interested to hear from
you. Do we have anyone? This would be the first time we don\'t have a
public comment.

Well, then we\'ve got a couple of things that we need to say. There have
been some very interesting topics that have come up today, in terms of
things that we should be considering as a committee. And I think what we
need to do is to look about whether or not they fit into existing
working groups, or whether we might need to setup another working group
or two. And we will be talking about that. We\'ll be talking to Vernon
about the outreach to the Indian population, and under‑served
populations as to whether or not we need a working group, or whether it
fits within one of the existing ones. So there\'s a whole lot of things
that are going to be going on.

I also need to remind you to please take off your badges and just leave
them. I guess leave them right there by your sign so that we can pick
those up and recycle, since recycling is good.

Now does anybody have any comments or questions, or concerns that we
need to address? Yes, Jeff.

MR. KRAMER: Just very basically. Jeff Kramer here. I like this setup
much better than the table in the round.

CHAIR ROOKER: Oh, you do? The only thing is I can\'t read people\'s
names, so I have to make sure I know everybody\'s name.

MR. KRAMER: Well, I\'m just used to having my back to the podium, and
having to turn around the whole time.

CHAIR ROOKER: Well, that\'s because you\'re young and agile.

MR. MARSHALL: I\'d like to thank everybody for staying for the duration,
as well.

CHAIR ROOKER: Yes, indeed.

MR. MARSHALL: It\'s been a long day.

CHAIR ROOKER: It\'s been wonderful.

MR. MARSHALL: And thank you for sticking with us.

CHAIR ROOKER: Any other questions, or comments, or feedback on today?
Well, I do want to thank again our working groups. Thank you. It was
good. It was good, wasn\'t it? And, Scott, again thank you for all your
hard work in putting this together. Believe me, he has done a ‑‑

MR. MARSHALL: It was a joint effort, and all the working groups did the
work.

CHAIR ROOKER: But at any rate, thank you all so much. Remember our next
meeting is in November, and it\'s on a Thursday. November the 20th, so
put that into your planning schedules. And I hope everyone has a safe
journey home, and I hope we don\'t have any more thunderstorms out
there. But anyway, I thank you for your attention here, and being such a
good group. We\'re adjourned.

(Whereupon, the proceedings went off the record at 3:53 p.m.)