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 TESTIMONY 
 Of 
 MICHAEL  K.  POWELL 
 Chairman  Federal  Communications  Commission 

 Before  the 
 Subcommittee  on  Commerce,  Justice,  State,  and  the  Judiciary  of  the  Committee  on  Appropriations 
 United  States  House  of  Representatives 

 On  the 
 Federal  Communications  Commission's  Fiscal  Year  2003  Budget  Estimates 

 Wednesday,  April  17,  2002 
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 SUMMARY  OF  TESTIMONY  OF  FCC  CHAIRMAN  MICHAEL  K.  POWELL 
 April  17,  2002 

 The  Federal  Communications  Commission  ("  FCC")  continues  its  efforts  to  implement  a  long-term  business  plan  designed  to  make  it  a  more  responsive,  efficient  and  effective  agency,  capable 
 of  facing  the  technological  and  economic  opportunities  and  challenges  of  the  new  millennium.  As  always,  the  Commission's  efforts  are  guided  by  its  commitment  to  protect  consumer  welfare 
 and  the  public  interest. 
 To  effectuate  its  goals,  the  FCC  has  requested  $278,092,000  and  1,975  FTEs  for  Fiscal  Year  2003.  This  request  includes  $9,765,000  to  fund  the  Administration's  government-  wide  proposal 
 to  fully  fund  retirement  costs  in  each  agency's  budget.  The  Commission's  requested  operating  costs  are  $268,327,000. 

 The  FCC  has  demonstrated  during  the  past  calendar  year  a  commitment  to  its  regulatory  purpose.  The  fundamental  mission  of  the  FCC  is  to  implement  the  Communications  Act  of  1934,  as 
 amended,  in  a  manner  that  promotes  competition,  innovation,  deregulation,  and  the  availability  of  high-  quality  communications  services  for  all  Americans. 

 The  Fiscal  Year  2002  funds  have  been,  and  are  continuing  to  be,  used  to  fund  critical  infrastructure  improvements,  especially  related  to  the  FCC's  information  technology  needs,  and 
 to  improving  consumer  services  and  reducing  regulatory  backlogs.  The  FCC  also  has  dedicated  resources  to  improving  its  workforce,  hiring  more  engineers,  training  staff,  and  providing 
 incentives  for  talented  staff  to  remain  for  longer  periods  of  time  and  serve  the  public  interest.  During  the  past  year,  the  Commission  began  improvements  at  the  Columbia,  Maryland 
 Laboratory  facility  to  upgrade  its  testing  capabilities  and  install  trained  personnel  to  facilitate  this  process.  Most  importantly,  the  FCC  has  completed  a  complete  self-  examination,  developed  a 
 restructuring  plan,  and  is  poised  to  begin  the  process  of  implementing  critical  reorganization  changes. 

 On  January  17,  2002,  the  FCC  sent  the  cornerstone  of  its  improvement  plan  to  this  Committee  a  Section  605  Report  detailing  the  reorganization  of  the  Commission.  After  approval,  we  began 
 the  implementation  of  the  reorganization  this  past  month.  The  reorganization  is  more  then  just  a  retooling  of  an  old  agency  it  represents  an  important  step  in  streamlining  the  FCC.  It  is  built 
 along  four  important  concepts:  (1)  a  clear  substantive  policy  vision;  (2)  a  pointed  emphasis  on  management;  (3)  an  extensive  training  and  development  program;  and  (4)  organizational 
 restructuring. 
 The  FCC  has  articulated  specific  areas  for  policy-  making  emphasis:  broadband  deployment,  competition  policy,  spectrum  policy,  building  a  foundation  for  media  ownership  regulation, 
 digital  television  transition  and  homeland  security.  The  Commission's  policy  emphasis  also  has  a  new  sense  of  purpose  since  September  11,  2001.  Everyone  has  seen  the  critical  importance  of 
 a  healthy  and  competitive  communications  system  both  in  times  of  national  crisis,  and  in  times  of  peace.  With  the  funds  requested  for  Fiscal  Year  2003,  the  FCC  will  continue  its  important 
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 work  in  ensuring  a  dynamic  regulatory  environment  that  facilitates  the  development  and  deployment  of  new  technologies  and  services  for  all  Americans. 
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 Mr.  Chairman,  Ranking  Minority  Member,  and  Members  of  the  Subcommittee,  I  appreciate  this  opportunity  to  appear  before  you  today  to  provide  you  with  a  report  of  our  work 
 conducted  during  the  past  calendar  year  and  to  discuss  the  Federal  Communications  Commission's  ("  FCC")  Fiscal  Year  2003  Budget. 

 Last  year,  I  appeared  before  this  Subcommittee  for  the  first  time  and  made  a  personal  commitment  to  effectuate  fundamental  change  within  the  Commission.  I  guaranteed  that  the 
 Commission,  as  an  institution,  would  complete  a  thorough  self-  examination  and  develop  a  reform  plan  designed  to  make  the  FCC  a  more  responsive,  efficient  and  effective  agency,  capable 
 of  facing  the  technological  and  economic  opportunities  and  challenges  of  the  new  millennium.  The  Commission  delivered  on  this  promise  and  sent  you  a  reprogramming  request  for  its 
 reorganization  six  months  later.  We  appreciate  your  rapid  consent  to  our  request,  and  we  began  the  implementation  of  our  reorganization  plan  last  month. 

 I  also  pledged  to  enhance  the  Commission's  independent  technical  and  engineering  expertise.  The  Commission  dedicated  resources  to  recruiting,  training  and  retaining  a  solid 
 technology-  oriented  workforce  under  our  "Excellence  in  Engineering"  Program.  We  have  hired  24  mid-  and  senior-  level  and  15  entry-  level  engineers.  We  instituted  training  programs  to  keep 
 current  and  future  engineers  up  to  date  in  their  profession.  And,  we  have  improved  the  environment  for  engineers  by  purchasing  equipment  to  facilitate  the  spectrum  management 
 process,  and  to  upgrade  the  Columbia,  Maryland  Laboratory's  testing  capabilities.  Our  on-  going  efforts  in  this  regard,  coupled  with  the  Agency's  "FCC  University"  and  "Excellence  in  Economic 
 Analysis"  initiatives,  hopefully  will  preserve  our  existing  wealth  of  FCC  staff  knowledge  and  expertise  and  enhance  and  extend  that  collective  knowledge  well  into  the  new  millennium. 

 When  I  last  appeared  before  this  Subcommittee,  I  pledged  to  make  the  Commission  a  model  of  solid  management  techniques  and  performance.  As  such,  the  Commission  moved 
 forward  to  continue  to  streamline  agency  processes  and  procedures,  automate  agency  processes,  provide  improved  access  to  agency  information,  and  modernize  its  information  technology 
 infrastructure.  During  our  January  2002  Open  Agenda  Meeting,  the  Commission's  staff  delivered  presentations  which  demonstrated  substantial  improvement  in  backlog  reduction  levels 
 and  other  management  benchmarks. 
 Finally,  I  also  vowed  that  the  Commission  would  use  the  remainder  of  its  Fiscal  Year  2001  and  expected  Fiscal  Year  2002  funds  to  implement  its  statutory  mandates  and  serve  as  a 
 constructive  and  fair  independent  agency,  cognizant  of  the  intent  of  Congress  and  dedicated  to  serving  the  public  interest  and  consumer  welfare.  I  am  confident  that  the  Commission  has  met 
 all  of  these  commitments  and,  in  doing  so,  has  raised  its  standards  for  serving  the  public. 
 The  Commission  has  made  these  achievements,  however,  against  the  backdrop  of  tragic  and  dramatic  national  events.  The  events  of  September  11,  2001,  provided  us  all  with  an 
 important  lesson  in  the  significance  of  the  FCC's  portfolio.  We  know  now  that  our  society  has  developed  more  than  just  an  appetite  for  communications  services  America  is  dependent  upon 
 these  services  in  times  of  crisis  and  in  times  of  peace.  A  strong  and  competitive  communications 
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 network  is  essential  to  a  healthy  economy  and  our  nation  depends  on  both,  whether  to  bolster  its  ability  to  defend  itself,  or  to  communicate  in  times  of  normalcy. 
 For  Fiscal  Year  2003,  the  Commission  is  requesting  $278,092,000,  of  which  $268,327,000  will  be  dedicated  toward  our  operational  requirements.  Although  we  did  not 
 receive  full  funding  for  our  FY2002  programs,  we  are  appreciative  of  this  Subcommittees  attention  to  our  needs  and  your  recognition  of  the  importance  of  our  programming.  Last  years 
 appropriation  was  an  important  first  step  in  ensuring  adequate  funding  for  the  Commission,  and  we  hope  that  you  will  agree  that  our  FY2003  funding  request  is  critical  to  accomplishing  our 
 statutory  mandates. 
 This  year,  you  have  my  personal  pledge  to  continue  driving  forward  in  a  patient  and  deliberate  manner  to  handle  the  expected  and  the  unexpected;  from  homeland  and  internal 
 security  to  biennial  reviews,  an  expected  heavy  influx  of  Section  271  long-  distance  applications,  and  pending  major  merger  reviews,  just  to  name  a  few.  The  Commission  intends  to  use  its 
 expected  funding  to  continue  its  campaign  to  upgrade  the  Agency's  facilities,  as  well  as  to  initiate  and  complete  critical  rulemakings.  The  present  request  is  the  minimum  amount 
 necessary  to  continue  to  capitalize  on  our  past  successes  and  to  carry  us  through  the  immense  challenges  of  the  next  fiscal  year.  Already,  Fiscal  Year  2002  has  been  marked  by  a  tidal  wave  of 
 new  policy  and  regulatory  challenges.  I  expect  Fiscal  Year  2003  to  be  at  least  as  opportune  and  challenging. 

 FISCAL  YEAR  2002:  MAXIMIZING  AVAILABLE  RESOURCES 
 At  the  beginning  of  the  last  century,  innovations  and  improvements  in  telecommunications  services  took  years,  and  sometimes  decades.  Today,  we  develop  new 
 communications  products  and  services  at  a  more  rapid  speed  then  ever  before,  in  an  exponential  fashion  that  makes  science  fiction  a  matter  of  science  fact  within  just  a  handful  of  years. 
 Looking  forward,  that  makes  for  policy  and  management  opportunities,  as  well  as  hurdles  and  challenges. 

 As  a  consequence,  the  Commission  continues  to  capitalize  on  its  well-  established  core  competencies,  especially  honed  over  the  past  six  years,  to  eliminate  barriers  to  entry  in  domestic 
 communications  markets;  to  deregulate  where  appropriate  to  promote  competition;  to  vigorously  enforce  Commission  rules  so  that  corporate  entities  compete  fairly;  and,  to  promote  competition 
 in  international  communications  markets.  Moreover,  the  Commission  continues  to  build  upon  the  cornerstone  principles  of  the  public  interest  and  general  consumer  welfare  to  promote  access 
 to  communications  services  for  all  Americans,  and  to  promote  heightened  consumer  education  and  information. 

 The  Commission  must  stay  abreast  of  technological  advances  and  be  prepared  to  face  the  future  before  the  future  arrives.  To  do  so,  the  Commission  needs  funding  to  improve  its  use  of 
 internal  technology  and  to  develop  a  highly  trained  workforce  to  evaluate  communications  industry  trends.  Last  year  when  I  appeared  before  you,  I  discussed  the  Commission's  critical 
 need  to  upgrade  its  infrastructure.  I  also  emphasized  our  efforts  to  re-  evaluate  the  Agency  and 
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 develop  a  business  plan  to  reform  its  organizational  structure.  A  well-  funded  infrastructure  and  an  efficient  organizational  structure  are  intrinsically  linked.  The  overall  ability  of  the 
 Commission  to  function  as  an  institution  is  dependent  upon  the  quality  of  both.  When  I  last  testified,  we  already  had  made  strides  toward  upgrading  information  technology  and 
 technological  resources.  Less  then  a  year  after  my  testimony,  I  sent  you  a  report  outlining  a  significant  internal  reorganization  of  the  Commission. 

 The  foundation  for  the  Commission's  reorganization  rests  on  the  shoulders  of  its  staff  a  diverse  and  committed  group  of  people  dedicated  to  utilizing  resources  to  maximum  capacity 
 and  rebuilding  a  trim,  well-  focused  organization  that  meets  the  needs  of  America's  communications  industries  and  their  consumers.  The  reform  and  reorganization  of  the 
 Commission  is  built  along  four  specific  concepts:  (1)  a  clear  substantive  policy  vision;  (2)  a  pointed  emphasis  on  management;  (3)  an  extensive  training  and  development  program;  and  (4) 
 organizational  restructuring.  The  implementation  of  each  of  these  concepts  exemplifies  how  the  Commission  utilized  its  financial  resources  during  the  past  year,  and  explains  our  plans  for 
 additional  funding  in  Fiscal  Year  2003. 
 A  Clear  Policy  Vision 
 I  enumerated  above  a  set  of  policy  and  management  imperatives  that  will  extend  the  Commission's  mission,  evolve  its  operational  strategies,  and  drive  further  the  culture  of  efficient, 
 effective  and  responsive  performance.  First,  we  articulated  a  clear  policy  vision.  The  Commission's  staff  also  evaluated  our  activities  in  these  identified  issue  areas  and  tied  the 
 highlighted  policies  to  the  reform  of  the  Commission  as  an  institution.  We  initially  specified  several  areas  for  policy-  making  emphasis:  broadband  deployment,  competition  policy,  spectrum 
 policy,  building  a  foundation  for  media  ownership  regulation,  digital  television  transition,  and  homeland  security.  Although  these  issues  sometimes  overlap,  their  individual  significance 
 guides  our  dedication  of  resources  in  the  regulatory  arena. 
 Broadband 
 Recently,  I  noted  that  one  of  the  FCC's  central  policymaking  objectives  is,  and  should  be,  the  promotion  of  efficient,  widespread  deployment  of  broadband  infrastructure.  Recognizing  the 
 importance  of  broadband  deployment  a  topic  of  conversation  that  is  extensively  discussed  here  on  Capitol  Hill,  as  well  as  at  the  Commission,  Wall  Street,  and  Main  Street  the  Commission  is 
 taking  a  concerted,  comprehensive  approach  to  bringing  regulatory  clarity  to  what  is,  at  best,  a  murky  and  confusing  policy  area.  To  that  end,  the  Commission  has  committed  significant 
 resources  to  initiate  and  consider  several  proceedings  that  pointedly  address  broadband  issues.  Of  course,  our  actions  in  this  area  will  be  grounded  first  and  foremost  in  the  Act,  taking  into 
 account  the  statutory  objectives  of  competition,  universal  service,  and  consumer  protection. 
 It  is  important  to  emphasize  that  while  we  have  committed  significant  resources  to  initiating  or  completing  various  rulemakings,  the  legal  and  regulatory  issues  implicated  here 
 have  yet  to  be  resolved.  But  they  must  be  resolved  if  we  collectively  intend  to  facilitate  the  ubiquitous  availability  of  broadband  to  all  Americans.  The  Commission  welcomes  the  input  of 
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 all  Americans  in  our  deliberative  process  including  the  opinions  of  the  Members  of  this  Subcommittee  and  Congress  as  a  whole  as  we  proceed  in  developing  a  regulatory  framework 
 for  successful  broadband  deployment. 
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 Competition  Policy 
 Competition  is  a  fundamental  and  guiding  statutory  principle  under  the  Telecommunications  Act  of  1996.  It  is  the  root  from  which  most  of  our  policy  grows.  The 
 Commission  has  been  outspoken  in  its  support  for  competition,  both  inter-  and  intra-  modal.  More  significantly,  however,  our  actions  have  backed  up  our  words.  We  recognized  that 
 ensuring  that  competitors  have  access  to  those  network  elements  that  are  necessary  to  provide  competing  telecommunications  services  is  only  half  the  battle  as  the  competitive  local  exchange 
 carrier  ("  CLEC")  community  told  us  that  to  be  useful,  network  elements  must  be  provisioned  in  a  timely  manner.  In  response  to  these  provisioning  concerns,  we  launched  two  Notice  of  Proposed 
 Rulemakings  on  proceedings  on  performance  standards  that  begun  an  effort  to  simplify  performance  levels  and  standards  to  both  clarify  obligations  and  to  allow  for  a  mechanism  for 
 swift  enforcement  when  those  levels  and  standards  are  compromised.  The  Commission  has  also  begun  a  second  analytical  look  at  the  regulatory  implementation  of  the  Act,  through  our 
 Triennial  Review  of  Unbundled  Network  Elements  Requirements  NPRM,  that  takes  account  of  market  experiences  to  determine  which  of  our  regulations  are  working  to  provide  a  competitive 
 environment  for  consumers  and  which  are  not. 
 Positive  rules  to  promote  competitive  entry  are  meaningless  without  a  credible  enforcement  effort.  Therefore,  we  have  made  enforcement  a  cornerstone  of  our  competition 
 policy.  As  you  will  recall,  last  year  we  called  on  Congress  to  increase  dramatically  the  forfeiture  amount  allowed  under  the  statute.  We  eagerly  await  the  fulfillment  of  this  request,  and  we 
 continue  to  enforce  vigorously  our  current  rules  that  serve  to  promote  competition.  Indeed,  we  have  been  diligent  in  our  enforcement  efforts,  imposing  major  fines  on  Bell  operating  companies 
 for  local  competition  failures,  and  augmenting  our  enforcement  staff  with  top  flight  litigators. 
 Moreover,  the  Commission  remains  vigilant  in  its  review  of  Section  271  applications.  Since  2001,  despite  the  fact  that  the  roadmap  for  Section  271  approval  was  drawn,  three  Section 
 271  applications  involving  four  states  were  withdrawn  (and  subsequently  re-  filed),  demonstrating  the  Commission's  continued  determination  in  ensuring  the  competitive  checklist  is 
 met  and  local  markets  are  open  for  competition. 
 Spectrum  Policy 
 The  Commission's  first  assigned  task  in  1934  was  to  manage  the  spectrum.  The  same  basic  principles  articulated  then  continue  to  exist  today.  The  Commission  has  an  obligation  to 
 ensure  that  spectrum,  an  important  and  precious  resource,  is  used  wisely,  ensuring  the  broadest  public  benefit  and  satisfying  urgent  public  safety  needs. 

 The  Commission  has  acted  decisively  utilizing  our  staff  and  the  spectrum  auctions  process  to  follow  Congress'  mandate  that  we  work  toward  the  rapid  deployment  of  spectrum. 
 During  the  past  few  months,  we  have  reallocated  the  spectrum  used  for  channels  52-  59,  designated  the  4.9  GHz  band  for  public  safety  purposes,  and  authorized  the  use  of  spectrum  for 
 Ultra-  Wideband  technology.  In  a  major  rulemaking  completed  on  December  28,  2001,  the  Commission  reallocated  27  MHz  of  spectrum  transferred  from  the  Federal  Government.  This 
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 spectrum  will  permit  the  initiation  of  new  and  flexible  services  for  example,  in  the  fixed  satellite  service,  fixed  mobile  service,  telemetry,  and  low  power  radio.  In  addition,  the 
 Commission  has  experimented  with  innovative  methods  for  licensing  that  encourage  private  band  management  within  the  confines  of  existing  statutory  guidelines. 

 Media  Ownership  Foundation 
 The  time  has  come  to  rebuild  the  factual  foundations  that  support  a  contemporary  regulatory  regime  for  media  ownership  regulations.  Although  the  media  landscape  has  changed 
 dramatically  since  the  initiation  of  many  of  the  Commission's  ownership  regulations,  the  long-standing  goals  of  diversity,  competition,  and  localism  remain  paramount. 

 As  you  are  aware,  the  U.  S.  Court  of  Appeals  for  the  D.  C.  Circuit  recently  vacated  some  of  the  Commission's  broadcast  ownership  rules,  and  has  remanded  others  for  our  reconsideration. 
 At  the  heart  of  the  court's  concern  is  the  ability  of  the  Commission  to  justify  these  restrictions  in  light  of  the  dynamic  changes  in  today's  marketplace. 

 Long  before  the  recent  court  decision,  however,  I  expressed  concern  about  the  quality  of  the  record  the  Commission  relied  on  in  reaching  media  ownership  decisions.  In  an  effort  to 
 shore  up  this  area,  I  announced  the  creation  of  a  Media  Ownership  Working  Group  on  October  29,  2001.  This  working  group  is  tasked  with  developing  a  solid  factual  and  analytical  foundation 
 for  media  ownership  regulation.  Moreover,  they  are  working  to  provide  an  empirical  and  analytical  basis  for  the  Commission  to  ensure  that  our  regulatory  regime  in  this  area  actually 
 serves  the  goals  of  diversity,  localism,  and  competition  in  the  media  marketplace. 
 It  is  important  to  note,  however,  that  the  D.  C.  Circuit's  recent  decision  found  that  the  Act  compels  the  Commission  to  review  its  media  ownership  regulations  every  two  years  and  to 
 repeal  these  regulations  unless  the  Commission  makes  an  affirmative  finding  that  the  rules  are  necessary  to  serve  the  public  interest.  To  address  the  court's  criticism  that  we  lack  a  factual 
 foundation  for  our  ownership  rules,  we  must  expend  a  meaningful  amount  of  resources  to  improve  the  evidence  before  us.  We  cannot  afford  to  sit  back  and  hope  the  public  submits  all  the 
 information  we  need  to  make  good  decisions.  We  must  be  proactive  in  deciding  what  questions  need  to  be  answered,  and  then  to  go  out  and  answer  them.  That  is  what  I  have  set  up  the  Media 
 Ownership  Working  Group  to  do. 
 We  then  need  to  apply  those  factual  findings  to  our  media  ownership  rules  and  determine  if  the  rules  as  written  truly  promote  competition,  diversity  and  localism,  or  whether  today's 
 media  market  requires  different  approaches.  I  welcome  that  challenge,  but  must  emphasize  that  overhauling  our  knowledge  base  on  media  ownership  and  then  re-  initializing  it  every  two  years 
 hence  will  require  a  significant  commitment  of  resources. 
 In  addition  to  appointing  specific  FCC  personnel  to  gather  empirical  information,  the  Commission  has  launched  a  comprehensive  examination  of  rules  on  multiple  ownership  of  local 
 radio  stations  and  set  interim  policies  to  resolve  pending  radio  transfer  applications.  The  Commission  also,  as  recommended  by  the  prior  Commission,  initiated  a  proceeding  to  review 
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 the  newspaper-  broadcast  cross-  ownership  rule.  The  Commission  also  began  a  rulemaking  on  cable  ownership  rules  last  year.  In  addition,  the  Commission  has  proposed  new  equal 
 employment  opportunity  rules  for  broadcast  and  cable.  I  believe  that  by  next  year,  with  the  proper  allocation  of  resources  within  the  Commission,  I  will  be  able  to  report  on  significant 
 beneficial  progress  in  this  area. 
 Digital  Television  Transition 
 While  broadband  deployment  and  the  inherent  competitive  issues  involved  rank  as  the  most  important  communications  issues  facing  America,  the  economic  by-  products  of  digital 
 television  ("  DTV")  are  equally  important  in  scope  and  stature.  Television  is,  after  all,  a  central  part  of  our  society  and  provides  our  citizenry  with  essential  information  and  entertainment. 

 Consequently,  the  DTV  transition  and  its  economic  and  regulatory  implications  maintain  an  important  place  in  the  Commission's  overall  policy-  making  efforts.  In  October  2001,  I 
 announced  the  creation  of  a  Digital  Television  Task  Force.  This  task  force  has  been  reviewing  the  ongoing  transition  to  DTV,  making  recommendations  to  the  Commission  regarding  transition 
 priorities,  and  facilitating  discussions  among  the  various  parties.  Earlier  this  month,  with  the  task  force's  assistance,  I  released  a  plan  seeking  voluntary  commitments  from  the  major  relevant 
 industries  to  move  the  transition  forward.  The  plan  is  designed  to  avoid  the  finger-  pointing  that  often  characterizes  this  debate  by  asking  all  of  the  affected  industries  to  accept  an  equitable  share 
 of  the  burden.  While  the  voluntary  plan  is  not  a  comprehensive  solution  to  all  of  the  difficult  issues  raised  by  the  transition  to  DTV,  I  am  hopeful  that,  if  adopted  by  the  industries  involved,  it 
 can  provide  a  real  boost  to  the  transition  in  the  coming  months. 
 Homeland  Security 
 In  response  to  the  events  of  September  11,  2001,  the  Commission  established  a  Homeland  Security  Policy  Council  ("  HSPC").  The  formation  of  the  HSPC  and  its  work  involves 
 the  use  of  significant  resources  in  an  area  that  we  did  not  consider  for  budgetary  purposes  during  the  Fiscal  Year  2002  appropriations  process.  Like  other  agencies,  we  are  using  our  current  pool 
 of  Full-  Time  Employees  ("  FTEs")  to  cope  with  the  events  of  September  11,  2001,  and  we  are  demanding  more  of  them  in  handling  their  regular  workload  along  with  new  tasks. 
 HSPC  is  assigned  to  handle  overlapping  security  issues  and  respond  to  specific  mission  objectives.  First,  the  mission  of  this  group  is  to  assist  the  Commission  in  evaluating  and 
 strengthening  measures  for  protecting  U.  S.  telecommunications,  broadcast  and  other  communications  infrastructure  and  facilities  from  further  terrorist  attacks.  Second,  HSPC  assists 
 the  Commission  in  ensuring  rapid  restoration  of  U.  S.  telecommunications,  broadcast,  and  other  communications  infrastructure  and  facilities  after  disruption  by  a  terrorist  threat  or  attack.  Third, 
 HSPC  assists  the  Commission  in  ensuring  that  public  safety,  public  health,  and  other  emergency  and  defense  personnel  have  effective  communications  services  available  to  them  in  the 
 immediate  aftermath  of  any  terrorist  attack  within  the  United  States. 
 Emphasis  on  Management 
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 As  an  outgrowth  of  the  Commission's  self-  examination  and  reform,  the  Commission  has  placed  a  new  emphasis  on  the  management  of  available  resources  and  the  creation  of  tools 
 designed  to  enhance  the  operation  of  the  bureaus.  We  asked  all  managers  to  review  their  internal  processes  and  develop  real  solutions  to  existing  problems.  Specified  management  initiatives 
 include:  (1)  backlog  reduction;  (2)  better  use  of  technology,  including  a  re-  designed  Internet  site;  (3)  improved  productivity;  and  (4)  consolidated  and  simplified  licensing  systems. 

 At  our  January  2002  Open  Agenda  Meeting,  most  Bureau  and  Office  Chiefs  reported  on  their  reduction  in  regulatory  backlogs  a  matter  that  has  dogged  the  Commission.  We  have 
 posted  these  statistics  on  the  Commission's  Internet  site  (<  http://  www.  fcc.  gov>),  so  that  our  progress  in  this  area  is  evident  to  the  industry.  One  major  highlight  in  this  area  is  the  Wireless 
 Telecommunications  Bureau.  In  1998,  they  had  a  13.12  percent  backlog  of  applications  pending  for  more  then  a  year.  By  December  2001,  that  percentage  had  dropped  to  0.  24  percent. 
 Likewise,  the  International  Bureau  managed  to  achieve  a  55  percent  reduction  in  pending  applications  for  Review  and  Petitions  for  Reconsideration,  as  well  as  a  56  percent  reduction  in 
 the  number  of  existing  non-  routine  applications  and  a  25  percent  reduction  in  existing  satellite  space  station  applications. 

 This  past  year,  the  Commission's  management  maximized  improved  information  technology  resources  to  increase  responsiveness  to  consumers.  The  FCC's  redesigned  Internet 
 site  is  part  of  our  management  plan  to  make  the  Agency  more  responsive  and  transparent.  We  average  approximately  265,000  hits  on  a  daily  basis,  and  we  were  ranked  third  overall  among 
 federal  agencies  for  Internet  site  design.  At  the  end  of  November  2001,  the  Commission  launched  a  new  FCC  search  engine  to  improve  its  Internet  site. 

 In  addition  to  a  general  managerial  emphasis  on  outreach,  the  Commission's  staff  leadership  is  tasked  with  improving  bureau  productivity.  For  instance,  the  Commission 
 instituted  comprehensive  accounting  and  reporting  reform  for  incumbent  local  exchange  carriers.  And,  in  an  effort  to  reach  out  to  our  core  constituencies,  the  bureaus  have  all  undertaken  efforts 
 designed  to  consolidate  and  simplify  licensing  systems.  The  Commission  has  proposed  new  procedures  to  increase  the  efficiency  of  satellite  licensing  procedures.  The  Commission  also  has 
 proposed  a  uniform  system  for  filing  informal  complaints.  This  particular  change  would  promote  efficiency  and  predictability  for  consumers  and  service  providers. 

 Training  and  Development 
 The  Commission's  long-  term  policy  objectives  require  a  highly  trained  staff  capable  of  adapting  to  technological  change  and  industry  trends.  Accordingly,  the  Commission  has 
 instituted  a  range  of  training  and  technical  initiatives:  (1)  the  "FCC  University";  (2)  the  "Excellence  in  Engineering"  Program  to  recruit  engineers  and  improve  their  physical  resources; 
 and  (3)  recruitment  and  retainment  of  economic  experts,  or  the  so-  called  "Excellence  in  Economic  Analysis"  Program. 

 Already  we  have  instituted  internal  training  programs  in  a  variety  of  areas  and  brought  outside  experts  in  to  train  our  staff  in  various  disciplines.  The  most  successful  element  of  this 
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 program  so  far,  however,  is  the  FCC's  "Excellence  in  Engineering"  Program,  initiated  during  the  previous  fiscal  year  and  continued  with  funds  in  our  Fiscal  Year  2002  appropriation.  Already  we 
 have  hired  24  mid-  and  senior-  level  and  15  entry-  level  engineers  in  open  FTE  positions.  We  have  instituted  a  special  training  program  to  educate  and  retain  our  technological  experts.  We 
 have  dedicated  a  substantial  portion  of  our  funding  to  improving  the  physical  infrastructure  used  by  the  engineers  for  testing  and  other  purposes.  At  the  Columbia,  Maryland  Laboratory,  we  have 
 purchased  five  new  spectrum  analyzers  and  three  new  signal  generators  to  enhance  our  ability  to  adequately  measure  emissions.  As  a  result  of  these  improvements,  we  now  have  the  capability  to 
 take  measurements  at  110  GHz  instead  of  the  outdated  30  GHz  level.  We  also  have  dedicated  financial  resources  toward  the  purchase  of  equipment  designed  to  measure  cellular  phone 
 radiation. 
 Restructuring 
 Although  managerial  goals  and  engineering  equipment  are  essential  components  of  an  efficient  agency  dedicated  to  high-  tech  matters,  the  key  to  ensuring  a  well-  functioning  agency  is 
 to  create  an  organizational  backdrop  that  maximizes  human  and  technological  resources.  On  January  17,  2002,  the  Commission  sent  the  cornerstone  of  its  improvement  plan  to  this 
 Committee  a  Section  605  Report  detailing  the  reorganization  of  the  Commission.  This  past  month,  we  began  implementing  that  reorganization.  The  Commission's  plan  is  more  then  a 
 simple  retooling  of  an  old  agency  it  represents  an  important  step  in  streamlining  the  Commission.  Although  there  will  be  no  initial  budgetary  impact  from  the  restructuring,  we 
 expect  that  in  years  to  come,  the  streamlining  approach  taken  here  will  pay  dividends  in  efficiency  and  good  management.  I  have  attached  to  my  written  testimony  a  copy  of  the  newly 
 designed  organizational  chart  for  the  Commission. 
 We  intend  to  dedicate  the  bulk  of  our  human  resources  to  continue  to  move  forward  in  these  areas,  to  make  the  Agency  responsive  to  consumer  and  industry  demands  and  to  facilitate 
 telecommunications  growth  and  deployment.  The  best  way  to  accomplish  this  goal  is  to  ensure  adequate  funding  to  purchase  necessary  equipment,  improve  our  information  technology 
 capabilities,  and  hire  and  retain  trained  technical  personnel  capable  of  assisting  the  Commission  in  its  decision-  making  process. 

 FISCAL  YEAR  2003:  CONTINUING  A  YEAR  OF  PROGRESS 
 It  is  important  to  note  that  all  of  the  reform  and  restructuring  efforts  started  in  Fiscal  Year  2001  continue  to  be  limited  by  the  available  discretionary  funding  in  Fiscal  Year  2002. 
 Currently,  69  percent  of  the  Fiscal  Year  2002  appropriation  is  earmarked  for  salaries  and  benefits.  Additionally,  29  percent  will  cover  non-  discretionary  cost  increases  related  to  rent  and 
 supplies.  That  amount  leaves  the  Commission  with  two  percent  of  its  total  appropriation  to  implement  reform    streamline  operations,  enhance  technical  and  economic  expertise,  oversee 
 spectrum  management,  and  provide  funds  for  resolution  of  ongoing  enforcement  issues  such  as  cramming  and  slamming.  For  this  reason,  focussing  on  improving  the  funding  picture  in  the 
 future  i.  e.,  Fiscal  Year  2003  is  especially  important. 
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 In  addition  to  receiving  full  funding,  we  would  appreciate  a  favorable  decision  related  to  this  request. 
 Without  adequate  support,  we  will  be  required  to  eliminate  some  of  the  Commission's  programmatic  initiatives,  or  cut  back  on  the  implementation  of  individual  programs.  I  believe 
 that  I  already  have  made  the  hard  choices  necessary  to  operate  the  Commission  on  as  tight  a  budget  as  practicable.  As  I  outlined  in  the  first  part  of  my  testimony,  the  infrastructure  and 
 manpower  initiatives  are  interconnected  to  the  general  health  of  the  agency  and  the  completion  of  its  core  mission. 

 CONCLUSION 
 I  respectfully  request  that  this  Subcommittee  grant  the  Commission  its  full  funding  request  for  Fiscal  Year  2003. 

 Thank  you.  I  would  be  happy  to  answer  any  questions  this  Subcommittee  may  have. 
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