```

[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]

 
    HOW INTERNET PROTOCOL-ENABLED SERVICES ARE CHANGING THE FACE OF 
            COMMUNICATIONS: A VIEW FROM TECHNOLOGY COMPANIES

=======================================================================

                                HEARING

                               before the

          SUBCOMMITTEE ON TELECOMMUNICATIONS AND THE INTERNET

                                 of the

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                            FEBRUARY 9, 2005

                               __________

                           Serial No. 109-12

                               __________

       Printed for the use of the Committee on Energy and Commerce

 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 house

                               __________

                 U.S. GOVERNMENT PRINTING OFFICE

99-910                 WASHINGTON : 2005
_________________________________________________________________
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                   ------------------------------  

                    COMMITTEE ON ENERGY AND COMMERCE

                      JOE BARTON, Texas, Chairman

RALPH M. HALL, Texas                 JOHN D. DINGELL, Michigan
MICHAEL BILIRAKIS, Florida             Ranking Member
  Vice Chairman                      HENRY A. WAXMAN, California
FRED UPTON, Michigan                 EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida               RICK BOUCHER, Virginia
PAUL E. GILLMOR, Ohio                EDOLPHUS TOWNS, New York
NATHAN DEAL, Georgia                 FRANK PALLONE, Jr., New Jersey
ED WHITFIELD, Kentucky               SHERROD BROWN, Ohio
CHARLIE NORWOOD, Georgia             BART GORDON, Tennessee
BARBARA CUBIN, Wyoming               BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois               ANNA G. ESHOO, California
HEATHER WILSON, New Mexico           BART STUPAK, Michigan
JOHN B. SHADEGG, Arizona             ELIOT L. ENGEL, New York
CHARLES W. ``CHIP'' PICKERING,       ALBERT R. WYNN, Maryland
Mississippi, Vice Chairman           GENE GREEN, Texas
VITO FOSSELLA, New York              TED STRICKLAND, Ohio
ROY BLUNT, Missouri                  DIANA DeGETTE, Colorado
STEVE BUYER, Indiana                 LOIS CAPPS, California
GEORGE RADANOVICH, California        MIKE DOYLE, Pennsylvania
CHARLES F. BASS, New Hampshire       TOM ALLEN, Maine
JOSEPH R. PITTS, Pennsylvania        JIM DAVIS, Florida
MARY BONO, California                JAN SCHAKOWSKY, Illinois
GREG WALDEN, Oregon                  HILDA L. SOLIS, California
LEE TERRY, Nebraska                  CHARLES A. GONZALEZ, Texas
MIKE FERGUSON, New Jersey            JAY INSLEE, Washington
MIKE ROGERS, Michigan                TAMMY BALDWIN, Wisconsin
C.L. ``BUTCH'' OTTER, Idaho          MIKE ROSS, Arkansas
SUE MYRICK, North Carolina
JOHN SULLIVAN, Oklahoma
TIM MURPHY, Pennsylvania
MICHAEL C. BURGESS, Texas
MARSHA BLACKBURN, Tennessee

                      Bud Albright, Staff Director

      James D. Barnette, Deputy Staff Director and General Counsel

      Reid P.F. Stuntz, Minority Staff Director and Chief Counsel

                                 ______

          Subcommittee on Telecommunications and the Internet

                     FRED UPTON, Michigan, Chairman

MICHAEL BILIRAKIS, Florida           EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida                 Ranking Member
PAUL E. GILLMOR, Ohio                ELIOT L. ENGEL, New York
ED WHITFIELD, Kentucky               ALBERT R. WYNN, Maryland
BARBARA CUBIN, Wyoming               MIKE DOYLE, Pennsylvania
JOHN SHIMKUS, Illinois               CHARLES A. GONZALEZ, Texas
HEATHER WILSON, New Mexico           JAY INSLEE, Washington
CHARLES W. ``CHIP'' PICKERING,       RICK BOUCHER, Virginia
Mississippi                          EDOLPHUS TOWNS, New York
VITO FOSSELLA, New York              FRANK PALLONE, Jr., New Jersey
GEORGE RADANOVICH, California        SHERROD BROWN, Ohio
CHARLES F. BASS, New Hampshire       BART GORDON, Tennessee
GREG WALDEN, Oregon                  BOBBY L. RUSH, Illinois
LEE TERRY, Nebraska                  ANNA G. ESHOO, California
MIKE FERGUSON, New Jersey            BART STUPAK, Michigan
JOHN SULLIVAN, Oklahoma              JOHN D. DINGELL, Michigan,
MARSHA BLACKBURN, Tennessee            (Ex Officio)
JOE BARTON, Texas,
  (Ex Officio)

                                  (ii)

                            C O N T E N T S

                               __________
                                                                   Page

Testimony of:
    Jacobs, Irwin Mark, Chairman and Chief Executive Officer, 
      QUALCOMM, Inc..............................................    18
    Mattes, Andy, President and Chief Executive Officer, Siemens 
      Communications, Inc........................................    25
    Quigley, Michael, Chief Executive Officer, Alcatel USA.......    33
    Russo, Patricia, Chairman and Chief Executive Officer, Lucent 
      Corporation................................................    29
    Zander, Edward J., Chairman and Chief Executive Officer, 
      Motorola...................................................    11
Material submitted for the record by:
    Jacobs, Irwin Mark, Chairman and Chief Executive Officer, 
      QUALCOMM, Inc. response for the record.....................    72
    Mattes, Andy, President and Chief Executive Officer, Siemens 
      Communications, Inc. response for the record...............    67
    Quigley, Michael, Chief Executive Officer, Alcatel USA, 
      letter dated April 1, 2005, enclosing response for the 
      record.....................................................    68
    Russo, Patricia, Chairman and Chief Executive Officer, Lucent 
      Corporation, letter to Hon. Fred Upton, enclosing response 
      for the record.............................................    69
    Zander, Edward J., Chairman and Chief Executive Officer, 
      Motorola, letter dated March 31, 2005, enclosing response 
      for the record.............................................    71

                                 (iii)

  

    HOW INTERNET PROTOCOL-ENABLED SERVICES ARE CHANGING THE FACE OF 
            COMMUNICATIONS: A VIEW FROM TECHNOLOGY COMPANIES

                              ----------                              

                      WEDNESDAY, FEBRUARY 9, 2005

              House of Representatives,    
              Committee on Energy and Commerce,    
                     Subcommittee on Telecommunications    
                                          and the Internet,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 9:36 a.m., in 
room 2123 of the Rayburn House Office Building, Hon. Fred Upton 
(chairman) presiding.
    Members present: Representatives Upton, Stearns, Gillmor, 
Whitfield, Cubin, Shimkus, Wilson, Pickering, Radanovich, Bass, 
Walden, Terry, Ferguson, Sullivan, Blackburn, Barton (ex 
officio), Markey, Engel, Wynn, Gonzalez, Inslee, Boucher, 
Towns, and Brown.
    Staff present: Will Nordwind, policy coordinator; Howard 
Waltzman, chief counsel; Neil Fried, majority counsel; Jaylyn 
Jensen, senior legislative analyst; Andy Black, deputy staff 
director; Julie Fields, special assistant to the policy 
coordinator; Jon Tripp, deputy communications director; Billy 
Harvard, legislative clerk; Johanna Shelton, minority counsel; 
Peter Filon, minority counsel; and Turney Hall, staff 
assistant.
    Mr. Upton. If someone could get the doors in the back 
there. Good morning. We have a busy day in this committee and 
subcommittee all day long. I want to thank and welcome all of 
our returning subcommittee members, including our able ranking 
member, Mr. Markey, suffering from a tough Irish loss. You 
know, Notre Dame's only about 2 miles from my district, you 
know. I want to extend a warm welcome to all of the new 
subcommittee members. We are ready to begin.
    Today, we are beginning a series of hearings on Internet 
Protocol, or IP-enabled services. These hearings will serve as 
a foundation for our effort this year to modernize our 
telecommunication laws so that we bring them up to speed to 
today's and tomorrow's technology and its marketplace. Today, 
we will hear from some of the world's biggest and brightest 
stars in the high tech constellation, and we will hear how 
their companies are manufacturing equipment and infrastructure 
for the new IP-enabled world.
    These companies are building the engines and the networks 
which will bring to the consumer a converged world of IP-
enabled voice, video, and data, enabling a dramatic change in 
the way that we communicate, shop, work, learn, and entertain.
    Testimony of today's witnesses will prove that now is the 
time for Congress to come together to update our obsolete 
telecommunication laws, because the telecommunications 
marketplace has evolved dramatically since the 
Telecommunications Act of 1996 became law. As the 1996 Act was 
debated in the Congress, the telecommunications marketplace was 
virtually dominated by the Bell companies who provided local 
voice services over traditional circuit-switched copper 
networks, and several carriers who provided the long distance 
service. Consequently, much of the debate focused on injecting 
competition into the plain old telephone service in both the 
local and long distance markets as we knew them then. The 
regulations implementing the 1996 Act relied on the government 
to manage this competition. And no surprise, when the 
government anointed itself the chief regulator in lieu of 
market forces, investment in the telecommunications sector 
initially rose, but then it sharply dropped, and to make 
matters worse, the wrongheaded regulatory decisions resulted in 
numerous legal challenges, causing the FCC to rewrite many 
regulations in order to comply with the various successive 
court remands. And as a result, there has been a dark cloud of 
regulatory uncertainty hanging over the tech sector industry, 
further depressing investment in that industry.
    Despite these hindrances, tremendous advances in technology 
have emerged since 1996, and they have begun to do an end run 
around the wrongheaded government managed regulation. And 
without a doubt, intermodal, facilities-based competition has 
taken root, as IP-enabled voice, video, and data are being 
delivered into homes and businesses over multiple technological 
platforms. All of this robust competition is a byproduct of 
those free market forces that have been allowed to take root 
where government, by and large, has kept its hands off. Our 
experience with implementation of the 1996 Act should teach us 
not to repeat the mistakes of the past. I suspect we know--we 
knew no better then, but we know better now. What our 
experience with the 1996 Act should have taught us is that 
investment in innovation goes into the less regulated space.
    As we speak, there are multiple government proceedings at 
both the Federal and the State level concerning the proper 
regulatory treatment under the 1996 Act of broadband, VoIP, and 
other advanced IP-enabled services. Hanging in the balance is 
whether these services will be managed by the government, or in 
the alternative, allowed to flourish in open markets, where 
they have already begun to show great promise.
    My fear is that if the government chooses a path of 
regulation, then we will see these emergent technologies 
smothered by the new red tape. But it is not enough to just 
rely on regulatory proceedings to ensure that these new 
technologies are not choked off by regulation. Congressional 
action is essential. Congress must retool the 1996 Act to bring 
it up to speed to today and tomorrow's marketplace in 
technology, so that the specter of the government trying to 
manage this competition is foreclosed once and for all.
    I look forward to statements by our distinguished witnesses 
today, and I yield for an opening statement to the ranking 
member of the subcommittee, Mr. Markey.
    [The prepared statement of Hon. Fred Upton follows:]
   Prepared Statement of Hon. Fred Upton, Chairman, Subcommittee on 
                  Telecommunications and the Internet
    Good morning. I want to welcome back all of the returning 
Subcommittee Members, including our able Ranking Member, Ed Markey.
    I also want to extend a warm welcome to all of the new Subcommittee 
Members. We have a big year ahead of us--so let us begin!
    Today, we are beginning a series of hearings on Internet Protocol--
or ``IP''-- enabled services. These hearings will serve a foundation 
for our effort this year to modernize our telecommunications laws so 
that we bring them up to speed to today's--and tomorrow's--technology 
and marketplace.
    Today we will hear from some of the world's brightest stars in the 
hi-tech constellation, and we will hear how their companies are 
manufacturing equipment and infrastructure for the new IP-enabled 
world. These companies are building the engines and networks which will 
bring to the consumer a converged world of IP--enabled voice, video, 
and data--enabling a dramatic change in the we communicate, shop, work, 
learn, and entertain.
    The testimony of today's witnesses will prove that now is the time 
for Congress to come together to update our obsolete telecommunications 
laws because the telecommunications marketplace has evolved 
dramatically since the Telecommunications Act of 1996 became law.
    As the '96 Act was debated in Congress, the telecommunications 
marketplace was virtually dominated by the Bell Companies who provided 
local voice services over traditional, circuit-switched copper networks 
and several carriers who provided the long distance service. 
Consequently, much of the debate focused on injecting competition into 
the ``plain old telephone service'' in both the local and long distance 
markets as we knew them then.
    The regulations implementing the '96 Act relied on the government 
to manage this competition, and--no surprise--when the government 
anointed itself the chief regulator in lieu of market forces, 
investment in the telecommunications sector initially rose, but then 
sharply dropped. To make matters worse, the wrong-headed regulatory 
decisions resulted in numerous legal challenges, causing the FCC to 
rewrite many regulations in order to comply with the various, 
successive court remands. As a result, there has been a dark cloud of 
regulatory uncertainty hanging over the tech sector industry, further 
depressing investment in the industry.
    Despite these hindrances, tremendous advances in technology have 
emerged since 1996 and have begun to do an end-run around the wrong-
headed government managed regulation. Without a doubt, inter-modal, 
facilities-based competition has taken root as IP-enabled voice, video, 
and data are being delivered into homes and businesses over multiple 
technological platforms.
    All of this robust competition is a by-product of those free-market 
forces that have been allowed to take root where government, by and 
large, has kept its hands-off. Our experience with implementation of 
the '96 Act should teach us to not repeat the mistakes of the past. I 
suspect we knew no better then; but we know better now. What our 
experience with the '96 Act should have taught us is that investment 
and innovation goes into the less regulated space.
    As we speak, there are multiple government proceedings at both the 
federal and state level concerning the proper regulatory treatment 
under the '96 Act of broadband, VoIP, and other advanced, IP-enable 
services. Hanging in the balance is whether these services will be 
managed by the government or, in the alternative, allowed to flourish 
in open markets, where they have already begun to show great promise. 
My fear is that if the government chooses a path of regulation, then we 
will see these emerging technologies smothered by red tape.
    But it's not enough to just rely on regulatory proceedings to 
ensure that these new technologies are not choked-off by regulation. 
Congressional action is essential.
    Congress must retool the '96 Act--to bring it up to speed to 
today's--and tomorrow's--marketplace and technology--so that the 
specter of the government trying to manage this competition is 
foreclosed once and for all.
    I look forward to hearing from today's distinguished witnesses.

    Mr. Markey. I thank you, Mr. Chairman, and I thank you for 
putting together this incredible all star cast. We haven't had 
a panel like this before our committee in several years, and I 
just think that this is an incredible way to begin what is 
going to be a very important year in telecommunications policy.
    Yesterday was the ninth anniversary of the signing of the 
Telecommunications Act of 1996. After years of a small number 
of companies saying have the government keep their hands off of 
the private sector, in the 1996 Act, through brilliant 
government policy, we opened up a digital free for all, so that 
dozens of companies could now begin to engage in the deployment 
of the digital technology that had been denied us as a country 
by a small number of companies. And we have gone, from 1996 to 
zero deployment of broadband in the United States to a point 
where, today, 85 percent of all homes in our country have 
access to digital broadband at their homes. Now, that is an 
incredible result after only 9 years. In other words, this 
digital technology had been out there for a decade or longer up 
to 1996, but until the government got in and created this 
policy, it had been going nowhere, because a small number of 
companies had held it hostage. So this is an incredible 
victory, 85 deployment. Now, those small number of companies 
have tried to destroy, and unfortunately have been too 
successful, in destroying a lot of their competition. But 
nonetheless, we already have 48 million Americans that have 
broadband, 24 percent of adult Americans have high speed access 
at home. That is a remarkable figure, representing a tripling 
of broadband adoption in just the last 3 years. Yet, we must 
also reflect on the fact that while half of American consumers 
with incomes over $75,000 a year now have broadband access, 
half of those who earn less than $30,000 have no Internet 
access at all. So clearly, more work needs to be done with 
respect to deployment in less affluent areas, and also with 
respect toward creating a competitive climate, which makes 
broadband service more affordable to all Americans.
    And while we have had regulatory setbacks with ill-
considered decisions by the FCC, destroying the competition 
that dozens of companies were providing, there is a deal which 
is still at the heart of the Telecommunications Act, which I 
cut with Jack Fields back in 1993, which prohibits the 
telephone companies from buying cable companies inside of their 
own service areas, and vice versa, because one of the key goals 
which I had back then was to make sure we had, at a minimum, a 
two wire world, where the telephone companies wouldn't get into 
the cable business by buying cable companies inside of their 
own region, but ultimately be forced to deploy their own 
services, no matter how long it took, because they promised 
that they could get it done.
    Now, I think that is still a good regulatory framework, 
having a two wire world at a minimum, because we need some 
place where companies who are providing services technology can 
go. Companies that are needing to upgrade on an ongoing basis 
because they are competing against each other. And while a 
duopoly is not an ideal marketplace, we at least have that that 
we can rely upon, so that we can foster policies which add 
wireless competition, satellite competition, competition from 
electric utilities, and perhaps municipal utilities as well, 
into that competitive mix. In the digital era, our national 
goal should be affordable, ubiquitous access to multiple 
broadband providers to the Internet for all Americans. 
Competition rather than subsidies should remain our preferred 
route to achieve such affordable ubiquity of broadband service. 
We must also ensure that affordable broadband reaches remote 
areas of the country where competitive deployment may not 
occur. And again, the government has the responsibility to make 
sure that happens for more remote parts of the country, where 
urban America is being served, this is something where the 
urban parts of America understand why the rural parts of the 
country do need the government to help them to provide that 
access.
    In addition, there must be legal prohibitions against 
economic redlining in the deployment of such services. And 
across America's broadband networks, consumers must be 
permitted to reach the information sources and services of 
their choice in unfettered fashion without hindrance from 
network operators. We should reexamine the Telecommunications 
Act with an eye toward building upon the progress made in 
cracking open these new markets to new competition and 
innovation. We need these hearings to bring all members of this 
panel up to speed on the marketplace changes fostered by the 
Telecommunications Act, and I am pleased that we begin that 
process today, and look forward to our upcoming hearings that 
will focus on voice service, video, and data services 
jurisdictional issues and consumer interests.
    Mr. Chairman, you get an A plus for this incredible hearing 
that will kick off this year of history. Thank you.
    Mr. Upton. Thank you. I thank my friend. I recognize the 
chairman of the full committee, Mr. Barton, for an opening 
statement.
    Chairman Barton. Thank you, Chairman Upton. I also commend 
you on this hearing, and I want to thank our panelists for 
being here this morning. I am going to put my entire written 
statement in the record. I just want to compliment our 
witnesses, and I also want to tell you how important it is that 
we get this right as we begin to decide what to do to reform or 
tweak the Telecommunications Act of 1996.
    I can give an example of why it is important. I went to the 
Super Bowl this weekend, and the Monday after the Super Bowl, I 
went over to Disney World, and I was at Epcot Center, and I was 
theoretically deep under the sea, in The Living Seas, looking 
at an exhibit of Kirk Douglas wrestling a giant squid outside 
of the submarine Nautilus, and my little Blackberry went off, 
and the staff here in Washington was worried that I was having 
too much fun, and so they sent me an email over the--a wireless 
email about this hearing and several other hearings, and asked 
for an immediate answer. Now, you wouldn't think, if I am 
sitting there watching Kirk Douglas wrestle the giant squid, 
that I would be able to do this, but I did, and so for about 5 
minutes, we went back and forth, and the staff up here was 
happy that I was working some, and life went on.
    Now, what you folks are talking about doing, if we get the 
law right, is absolutely amazing. And it is important that we 
get it right, because each of you right now, as I understand 
it, is regulated in a little bit different way, because of how 
you got started and what you are doing, and the purpose of this 
hearing is to not only talk about convergence of the 
technology, but convergence of regulation, or lack of 
regulation and freedom at the Federal level, so that we can 
unleash the competitiveness and all the economic growth that 
will happen if we get it right.
    So I want to thank you all for coming in again, and thank 
Mr. Upton for the hearing.
    [The prepared statement of Hon. Joe Barton follows:]
 Prepared Statement of Hon. Joe Barton, Chairman, Committee on Energy 
                              and Commerce
    Mr. Chairman, thank you for calling this hearing today. We truly 
have a blockbuster panel. We have the CEOs of the leading technology 
companies in the world.
    Mr. Chairman, the Internet has revolutionized communications. The 
Internet has created new communications mediums. In the 1990s, 
consumers were introduced to electronic mail. Email enabled a person 
hooked up to a computer and the Internet anywhere in the world to 
correspond with anyone else in the world also hooked up to a computer 
and the Internet.
    Now, we have more sophisticated Internet Protocol (IP) services. 
These services transmit voice, video, and data in packets of ones and 
zeros over the Internet and private networks. IP-enabled services 
provide enhanced features such as interactive video, unified messaging 
(including video messaging), ``nomadic'' voice access, customized voice 
mail boxes, and the ability to program a phone to forward to a cell 
phone or work phone if unanswered.
    IP-enabled services are in the process of transforming the 
communications industry. As that transformation occurs, Congress needs 
to act to ensure that all companies have the right incentives to invest 
and innovate. Congress has the opportunity to enact legislation as 
significant to the communications industry as the Communications Act of 
1934.
    If we create the right rules for IP-enabled services, Congress will 
be paving the way for strong economic growth. If our economy is going 
to continue to grow, it will be because of investment and innovation in 
IP technology. But if we permit regulators to stifle IP-enabled 
services and fail to adopt new legislation, we will have missed a 
significant opportunity to ensure that the United States remains the 
preeminent source of technological innovation.
    Mr. Chairman, thank you for holding this hearing. I look forward to 
the testimony of our witnesses. This distinguished panel will provide 
us with the ``big picture'' with respect to IP technology. And I hope 
our colleagues will join us in passing legislation that removes 
obstacles to IP deployment.

    Mr. Upton. Thank you, Mr. Chairman. Mr. Towns.
    Mr. Towns. Thank you very much, Mr. Chairman, for holding 
this hearing, and let me thank the witnesses as well. I look 
forward to even future hearings on this topic, as we embark on 
updating our Nation's telecommunication laws. Nearly 10 years 
ago, when we completed the Telecommunications Act, the Internet 
was just beginning to blossom. As we tried to fashion a bill 
that spurred competition, the Act really did not even consider 
the Internet. In fact, the word Internet is hardly even 
mentioned. Thus, it seems odd to me that the FCC and the courts 
are making statutory interpretations of how IP service should 
be treated under the law, when the Act did not even contemplate 
this technology. I am hopeful that our committee, working with 
our counterparts in the Senate, will send the President a bill, 
this Congress, that reflects our new competitive landscape.
    As we consider changes, I think it is important to reflect 
on what we have learned from the 1996 Act. While some of the 
regulatory revisions we have made helped lay the groundwork for 
competition, I think a strong argument can be made that it has 
been the advent of IP technology that is creating the 
competition this committee sought. Voice Over Internet 
Protocol, enabled television are breaking down traditional 
lines of competition. Additionally, it is bringing new 
competitors into the market. So we should remember that 
technology will often outpace the regulations we try to 
implement here in the Congress.
    While IP-enabled services are clearly the future, the vast 
majority of consumers still use traditional phone networks. 
Consequently, I believe our challenge is to create a regulatory 
environment that encourages investment and forces competition 
and innovation, while still protecting consumers who use 
traditional phone networks.
    Mr. Chairman, on that note, I yield back, and I am anxious 
and eager to hear from the witnesses.
    Mr. Upton. Thank you. Mr. Radanovich.
    Mr. Radanovich. Good morning, and thank you, Mr. Chairman, 
for--again, for putting together a fine panel. I am looking 
forward to the testimony, and I won't speak much more than 
that. Being a new member of the committee, I am real interested 
in getting up to speed, and you have provided some of the best 
resources for that, so I want to thank you and the Chairman for 
that, and I look forward to the testimony.
    [The prepared statement of Hon. George Radanovich follows:]
   Prepared Statement of Hon. George Radanovich, a Representative in 
                 Congress from the State of California
    Mr. Chairman, thank you for holding the first in what is to be a 
series of hearings that will examine how broadband and IP-based 
services are changing the ways in which we communicate, obtain 
information, and entertain ourselves, as well as how these new 
technologies and services should or should not be regulated in order to 
enhance competition, innovation and deployment.
    In the last several years, the United States has continually fallen 
behind the other industrialized countries in terms of the percentage of 
the American population that subscribe to residential broadband 
services. I hope that this hearing and the subsequent hearings will 
provide us with the reasons why we are lagging behind, and help us 
develop polices that will increase broadband deployment in the U.S., 
which will help Americans compete in a global economy.
    Additionally, it has become increasingly clear over the last few 
years, that the current communications laws and regulations do not and 
cannot adequately address IP-based technologies and services. When 
Congress enacted the 1996 Telecommunications Act, IP-based services 
were unheard of. For the past few years, the FCC, state regulators and 
the courts all have been attempting to force-fit these new technologies 
and services into out dated traditional telephone and cable regulatory 
structure without much success. Therefore, it seems that it is time for 
Congress to develop legislation to update the communications laws and 
create national policies that are reflective of today's marketplace, 
that increase competition and consumer choices, and that are flexible 
enough to ensure that the innovative technologies and services of the 
future will not be stifled by restrictive regulations.
    I hope that today's witnesses will provide us with suggestions on 
how Congress should move forward.
    Thank you Mr. Chairman.

    Mr. Upton. Mr. Walden. Mr. Terry. Mr. Ferguson.
    Mr. Ferguson. Thank you, Mr. Chairman. I will just say I am 
delighted to be a new member of the subcommittee, looking 
forward to getting to work in the awesome task that we have 
ahead of us this year. I also want to welcome Pat Russo, a 
constituent, and Lucent Technologies, of course, is 
headquartered in my district. We are proud to have them. They 
have done extraordinary work over the years, and they have much 
more extraordinary work to do in the future. We also have a 
major Siemens presence in our district, so I want to thank the 
panel for being here, welcome them, and we really look forward 
to their input and others from the industry, as we seek to 
recraft our telecommunications legislative infrastructure.
    When Chairman Barton was talking before about his 
experience in Sea World, I thought he was going to say that 
rewriting the Telecom Act of 1996 is going to be like wrestling 
a giant squid. But I--he didn't say that, so hopefully, our 
task will be a little bit easier than that, but I certainly 
look forward to our work this year, and I yield back.
    Mr. Upton. We are glad to have you on the subcommittee as 
well. Ms. Blackburn. Mr. Bass.
    Mr. Bass. Thank you, Mr. Chairman, and I thank you very 
much for scheduling this hearing. This is going to be a very 
interesting year for those of us who are interested in the--in 
reauthorizing the Telecom Act of 1996, and I would like, if I 
could, to make three quick points as we begin this debate. The 
first one, or the first objective that we ought to be pursuing, 
is developing a mechanism that will free consumers from waiting 
for new services and competition because of the merry-go-round 
that exists between FCC rules and planning, and then the 
lawsuit process that occurs immediately thereafter. And it just 
seems to--it seems that the FCC is hamstrung in what it can do, 
because of the fact that everything seems to automatically go 
to court.
    Second, I hope in the process of making decisions on 
developing a new plan, that we don't try to pick winners or 
losers, or not focus on one technology versus another, but 
rather, we focus on the consumers themselves, and what services 
they are offered, and what level of competition they can 
benefit from, and in what ways government can either help or 
hinder their experience, because they ultimately are the 
objective of this reauthorization.
    Finally, I hope that we keep in mind the peculiar and 
important needs of rural areas of America, because 
telecommunications, like roads, bridges, and airports, are a 
very important form of communication, and probably represent 
the greatest hope for less wealthy, poorer parts of the country 
to compete in the international marketplace. It is just as easy 
for somebody to sell a service in a rural area as it is in an 
urban area if they have access to good telecommunications, and 
I represent areas of the country that are extremely rural, but 
beautiful. The environment and the quality of life is 
wonderful, and telecom and telecom reform is probably the best 
hope for long term economic recovery for these parts of the 
country. So I hope that we move forward expeditiously over the 
next year to reauthorize the Telecommunications Reform Act, and 
I look forward to hearing from our witnesses today, and I yield 
back.
    Mr. Upton. Mr. Shimkus.
    Mr. Shimkus. Thank you, Mr. Chairman, and I want to welcome 
our panelists, and many of you who know who follow this issues, 
is I co-chair the E911 Caucus, along with my colleague Anna 
Eshoo on the other side, and there is a Senate caucus too, with 
Senator Burns and Senator Clinton. In the waning minutes of the 
last Congress, we were successful, with the chairman's help, to 
get E911 legislation passed and signed by the President, which 
is--so our--my focus will be on that, and it should be of no 
surprise. Last week, a girl in Texas tried desperately to call 
911 from her home phone as she watched her parents being shot 
by a home intruder. Her family had switched to Voice Over 
Internet Protocol technology, but that phone service did not 
include 911 capabilities. She ran from phone to phone in her 
house trying to call the police, but wasn't able to do so. 
Hence, a problem.
    We want to encourage you to help us address that and make 
sure in anything that we do, we move to make sure that all 
these services that we need, especially first line response 
public service and safety is included. In fact, we will 
probably demand that from our side that that occur, but we need 
your expertise, and we need your technological assistance. The 
E911 issue is a lot more complicated than people think, because 
you have the PSAPS, you have the local exchanges, so--but 
please work with us to make sure that we can limit this 
application of really a tragedy, and with that, Mr. Chairman, 
thank you, and I yield back.
    [The prepared statement of Hon. John Shimkus follows:]
Prepared Statement of Hon. John Shimkus , a Representative in Congress 
                       from the State of Illinois
    Thank you Mr. Chairman. I want to highlight 3 stories from recent 
weeks on telecommunication technologies, all of which stress the need 
for Congress to be active on E911 and make sure E911 is part of our 
technology future.
    Earlier this month a couple in Nebraska died during a snow storm. 
Despite repeated attempts to call 911 from their cell phone, they could 
not be located. The technology that could have located them is not new. 
We have been talking about it for years in the Committee. The problem 
is parts of the country are still not equipped to handle 911 calls from 
cell phones, and with the leadership of Chairman Upton we are 
addressing this problem.
    Last week a girl in Texas tried desperately to call 911 from her 
home phone as she watched her parents being shot by a home intruder. 
Her family had switched to VoIP technology, but their phone service did 
not include 911 capabilities. She ran from phone to phone in her house 
trying to call the police, but was unable to do so.
    A doctor from the University of Chicago has invented an implantable 
device to detect emerging heart attacks. The new device can detect a 
rise in enzymes that usually lead to heart attacks. While still in the 
developmental stage, the goal is to incorporate wireless technology to 
enable the device to send 911 signals when a heart attack is about to 
occur. Imagine a fireman knocking at your door and telling you that you 
are about to have a heart attack!
    We should not place roadblocks on the next generation of 
telecommunication technologies, but government does have a role in 
making sure this new technology serves a public good.

    Mr. Upton. Thank you. Mr. Stearns.
    Mr. Stearns. Thank you, and good morning, Mr. Chairman, for 
holding this first, I believe, of several hearings we will be 
having on Internet Protocol-Enabled services. They are changing 
the face of telecommunications. I think we all remember back in 
1996, when we passed the bill, we weren't fully cognizant of 
the enormous innovations that would occur in technology, and 
now, don't necessarily fit in this inflexible framework we 
established in 1996, and they demand different treatment and 
classifications.
    As a result, we must now figure out how we can provide a 
more flexible framework that will provide regulatory certainty, 
incentives to invest in the infrastructure in order to help 
this industry and these technologies to flourish. Congressman 
Boucher joined with me, and we introduced a bill that proposed 
to provide the certainty necessary to encourage companies to 
deploy these IP services. Our goal was to ensure that the 
Federal Government treats these new applications with a light 
regulatory touch. This is not just in regard to Voice Over 
Internet Protocol, but all these IP-enabled services. The FCC 
and the Federal courts will have their say as well, of course. 
I was encouraged by the leadership of Chairman Powell in this 
regard, and I was pleased by the FCC's recent ruling in the 
Vonage decision. On the other hand, the Ninth Circuit Court's 
decision in the Brand X case leaves much to be desired, and I 
imagine that the telecommunication industry is obviously 
carefully watching these decisions, with great concern.
    The technology that we will be discussing in this hearing 
and others are truly wonderful, almost killer services, as we 
talk about, that can provide all the communications, 
information, and entertainment applications with even less 
effort on the side of the consumer.
    I think this is what companies such as Motorola and Lucent, 
for example, are going to be talking about. This seamless 
mobility--in fact, this is what all the companies will be 
trying to provide the American consumer, this seamless 
mobility. The best possible communication products from the 
latest and most innovative technologies. It is these inventors 
and entrepreneurs and businesses that do the hard work in this 
country, and we all benefit, and so again, Mr. Chairman, I 
thank you for your holding this hearing.
    [Additional statements submitted for the record follow:]
    Prepared Statement of Hon. Paul E. Gillmor, a Representative in 
                    Congress from the State of Ohio
    I thank the Chairman for holding this important hearing.I believe 
that today will give us an important, and much needed, first 
opportunity to learn the basics about an exciting Internet-Protocol 
technology that enables providers to offer voice, video, and data 
services on one platform in a more cost-effective manner, benefiting 
consumers in terms of price and opportunity.
    More importantly, while most of us have heard of ``IP,'' and many 
of our constituents are beginning to subscribe to services like VOIP 
through companies such as Vonage, many, including myself, are anxious 
to learn more about what exactly this revolutionizing technology is, 
how it works, and what it means for the telecommunications sector and 
all who use it.
    I welcome the well-balanced panel of witnesses, look forward to 
their testimony, and again, thank the Chairman and yield back the 
remainder of my time.
                                 ______
                                 
Prepared Statement of Hon. Barbara Cubin, a Representative in Congress 
                       from the State of Wyoming
    Thank you, Mr. Chairman.
    I look forward to our hearing today on the changing face of 
communications, and specifically how Internet Protocol (IP)-enabled 
services will deliver content and communications in the not-too-distant 
future. The Internet has not only revolutionized how we conduct 
research, exchange written communication and shop, but its use of 
``information packets'' has profoundly affected the function of what we 
have traditionally considered non-Internet services like voice and 
video.
    This brave new world requires that we look beyond the historic 
paradigm that says you cannot get voice and video through the same 
source. In fact, we have to embrace the reality that the consumer will 
be more empowered than ever before to choose their means of 
communication; be it wireline, wireless or cable, and that requires 
even regulatory treatment for historically disparate services.
    This is a truly exciting time, and one where innovation is 
rewarded. It also requires that we in Congress review the overall 
assumptions upon which the Telecom Act is based. Yes the lines between 
voice, video and data communications have been blurred, and yes we are 
on the precipice of exciting new ways to interconnect, but we need to 
ensure that those of us in rural America are not left using 19th 
Century technology in a 21st Century world. That will be the challenge 
for the Congress as we tackle changes to this nearly 10-year old law.
    I look forward to hearing from our distinguished panel on these 
matters Today and want to continue our dialog as we tackle legislation 
addressing these matters.
    I yield back the balance of my time.
                                 ______
                                 
Prepared Statement of Hon. John Sullivan, a Representative in Congress 
                       from the State of Oklahoma
    Thank you Mr. Chairman. As a new member of this Subcommittee, I 
look forward to hearing from these companies today about these services 
and the future of these technologies.
    Telecommunications in the United States today is a complicated 
regulatory and statutory landscape. Many new technologies are 
converging to create a dynamic, ever-changing world, and one that the 
FCC and Congress struggle to keep up with. This year will be 
particularly eventful, and I am honored to be a member of this 
subcommittee at this critical juncture.
    I believe that the free market must be allowed to operate, without 
over-regulation, monopolistic practices, or forced competition. It is 
important for our nation to encourage competition, innovation, and the 
flourishing of new technologies. This can only be done with free market 
principles are adhered to.
    It is also critically important that taxpayer dollars are being 
used effectively. Waste, fraud and abuse in any form must not be 
allowed to continue.
    The changing landscape of VOIP services will have profound effects 
on how we all live our lives, and I welcome the panelists and look 
forward to hearing their testimony.

    Mr. Upton. Thank you. We are, in fact, joined, as all the 
members of the subcommittee indicated, an all star lineup. And 
we are delighted that you could join us this morning.
    We are joined by Mr. Edward Zander, the Chairman and CEO of 
Motorola; Dr. Irwin Jacobs, Chairman and CEO of QUALCOMM; Mr. 
Andy Mattes, President and CEO of Siemens Communications; Ms. 
Patricia Russo, Chairman and CEO of Lucent; and Mr. Michael 
Quigley, CEO of Alcatel. And ladies and gentlemen, we 
appreciate you being here with us today. We also very much 
appreciate sharing your testimony with us yesterday so we were 
able to review it in advance. That testimony will be made part 
of the record in its entirety. We would like to limit your 
remarks, your opening statements, to no more than 5 minutes.
    And Mr. Zander, we will begin with you. Welcome.
    Mr. Zander. Chairman Upton----
    Mr. Upton. You need to turn that mike switch.

  STATEMENTS OF EDWARD J. ZANDER, CHAIRMAN AND CHIEF EXECUTIVE 
   OFFICER, MOTOROLA; IRWIN MARK JACOBS, CHAIRMAN AND CHIEF 
 EXECUTIVE OFFICER, QUALCOMM, INC.; ANDY MATTES, PRESIDENT AND 
CHIEF EXECUTIVE OFFICER, SIEMENS COMMUNICATIONS, INC.; PATRICIA 
      RUSSO, CHAIRMAN AND CHIEF EXECUTIVE OFFICER, LUCENT 
  CORPORATION; AND MICHAEL QUIGLEY, CHIEF EXECUTIVE OFFICER, 
                          ALCATEL USA

    Mr. Zander. Okay. I got you. Chairman Upton, Ranking Member 
Markey, and members of the subcommittee, good morning and thank 
you for holding today's hearings. I am thrilled to help kick 
the Telecom Act Reform you will lead in Congress. Before I 
begin, I would like to thank many of you for your efforts, 
particularly at the end of the last session, to enact the 
Spectrum Relo Bill. I enjoyed working with you on that 
immensely important piece of legislation. As you know, spectrum 
is vital to our vision.
    I serve as chairman and CEO of Motorola, a company with a 
76 year heritage of innovation in telecom. In many ways, 
Motorola was the first high tech startup. We helped the world 
discover the power of mobile communications through RF, 
cellular, and telephony technologies. Today, we are blown past 
the age of the Internet into the age of personal technology and 
total mobility. Among other things, we are transforming the 
device formerly known as the cell phone----
    Mr. Upton. We are just going into session. That is----
    Mr. Zander. That is our communications. Among other things, 
we are transforming the device formerly known as the cell phone 
into a universal remote control for life. Everything the tech 
industry predicted in the late 1990's is starting to come true. 
It took a little longer than we thought, and the wakeup call of 
2000 was healthy for all of us. But today's statistics, 
especially globally, are staggering. 10 years ago, there were 
38 million Internet users. Now, more than 800 million, growing 
geometrically. One billion short messages or SMS messages are 
sent every day, and that is also growing exponentially. 
People's love for technology is insatiable. If you have 
teenagers, you know what I mean. Everything we think is cool is 
so 20 minutes ago. As my chief marketing officer taught me last 
month, people are no longer looking for wow experience, they 
are looking for things like this, a whoa experience. But our 
experience with technology is still amazingly complex. We all 
have things that don't talk to one another, car door openers, 
credit cards, cell phones, PCs, PDAs, wireless email devices, 
with dozens of different interfaces, hundreds of different 
passwords, that somehow just won't work together.
    We not only have to simplify people's experiences with 
technology, we have to tie it together, make it greater than 
the sum of the parts. That is why Motorola is committed to 
something we call seamless mobility. Imagine if the Internet 
followed you, if there was a broadband connection in every 
molecule of the air around us. Imagine if all of our devices, 
our cars, our homes, spoke the same language. If our ability to 
connect with our friends, our families, our favorite music and 
shows, all of the news and all of the knowledge of the Internet 
was always with us, simply, seamlessly, wherever we went, 
wherever we wanted, in all of the spaces of our lives. That is 
seamless mobility. That is the world Motorola envisions, and we 
are investing in the technologies, innovation, and 
relationships it will take to make seamless mobility real.
    We have no illusions we can do it alone. We don't believe 
one device or one technology will win. Seamless mobility means 
changing the rules of the game. We are ready, but we need your 
help. The U.S. has always led the world in innovation. To lead 
in the post-Internet age, this means a different take on 
regulation, and a lighter touch. For Motorola and tech 
companies everywhere to freely compete, we ask Congress to 
establish a unified and rationalized Federal model for all IP-
enabled services. We applaud Congressman Pickering, Stearns, 
and Boucher for their leading efforts in this area. There can 
be no more silos for cable, wired, and wireless. We and our 
customers want to be seamless.
    You have stated the clear need for the reform of the Act, 
and like my industry peers gathered here, I am committed to 
working with you to achieve meaningful, transforming change. 
Like you, I believe it is time to enable the future of 
communications. Let us get it started, ladies and gentlemen. 
Thank you.
    [The prepared statement of Edward J. Zander follows:]
 Prepared Statement of Edward J. Zander, Chairman and Chief Executive 
                           Officer, Motorola
    Good morning Chairman Upton and Ranking Member Markey. I would like 
to thank you for holding today's hearing. I am excited to be with you 
today to help kick off the Telecom Act reform that you will lead in 
this Congress. This is an historic initiative, and on behalf of 
Motorola, I am delighted to serve with you on the front-end of this 
important effort.
    It is an honor to be here before you with industry colleagues to 
discuss our technology vision. We call it Seamless Mobility. You have 
articulated the clear need to reform the Telecom Act to bring it into 
the Internet age, and I am committed to working with you to achieve 
this very important objective. It has been nearly a decade since the 
last major overhaul of the Act, and it is now time to make the 
necessary changes that will enable the future of communications.
    Before I begin today's testimony, I would be remiss if I did not 
thank you, Chairman Barton as well as Congressmen Dingell, Markey, and 
Pickering for your tremendously successful efforts, particularly at the 
end of the last session, to enact the Spectrum Relocation bill as a 
part of HR 5419. It is an immensely important piece of legislation that 
will spur economic growth in the US through the deployment of powerful 
broadband wireless services across the nation.
                         background on motorola
    I serve as the Chairman and CEO of Motorola, the original high-tech 
start-up. We have over 75 years of world-changing innovation, a rich 
portfolio of patents, an amazing team of technologists, and a 
passionate commitment to R&D.
    Just look at these Motorola firsts:

 The car radio
 Walkie-talkies for the American soldiers of WWII and every major war 
        since
 Affordable color TVs
 1st responder mission critical radio communications technologies
 Carriage of Neil Armstrong's voice to earth from the moon
 The pager, and
 The cell phone
    Motorola is unique in that the company designs consumer devices and 
infrastructure for virtually every communications sector. Our products 
include: 1st responder networks; cable infrastructure and consumer 
equipment; wireline and wireless communications infrastructure and 
consumer equipment, including both commercial and private systems; and, 
telematics communications equipment embedded in vehicles. Now, we are 
working to make the cell phone--as we know it--obsolete. It is becoming 
a much more sophisticated mobile device. We call it the 3rd screen, 
after the TV, and the PC.
                           seamless mobility
    Central to Motorola's commitment and vision for the future of 
communications is a concept we call ``Seamless Mobility.'' Seamless 
Mobility is about the connected experience as people move between 
environments and switch their activities among devices and networks. It 
occurs transparently to the user.
    Providing a Seamless Mobility experience across all user 
environments--home, vehicle, office, and beyond--is a key 
characteristic of Motorola's approach. Motorola's Seamless Mobility 
vision provides complete end-to-end communications that can lower 
communications costs, increase user efficiencies, and create new 
capabilities.
    With Seamless Mobility, devices will adapt to their owners. Devices 
will know where consumers are, their preferences, their schedule, where 
they want to go and what they want to do when they get there. Our 
mobile devices will be capable of secure payments for parking with the 
touch of a key. Cars and homes will be capable of storing, sharing and 
continuously updating consumer information to make life simpler, 
smarter, safer, synchronized and more fun. All the while, these 
communications capabilities will travel seamlessly with the consumer 
across domains, with the transition between networks imperceptible to 
the consumer.
    Consumers want more mobility with the least effort possible. 
Seamless Mobility accelerates the intersection of these two concepts. 
The result is a continuity of experience which is valuable to users as 
they live their lives.
    Seamless Mobility increases as full mobility increases and user 
effort decreases. By focusing on solutions that deliver full mobility 
with the least effort, Seamless Mobility will boost the adoption rate 
for mobile communications further.
    Digitization is driving a number of applications, but the 
applications that provide a Seamless Mobility experience will drive the 
future. Enhanced privacy and security will also be critical to satisfy 
the economic interests of content owners and users' needs. The future 
is about full mobility, which requires mobility across different types 
of coexisting networks `` a heterogeneous continuum of Internet 
Protocol (IP) packet and circuit switched networks.
    The future is also about users wanting to be ``always on'' and 
needing to know what is happening somewhere else. This will require 
sessions that seamlessly cross networks and devices.
    The device formerly known as the cell phone has come a long way 
from its original ``portable telephone'' application when Motorola 
created it in 1983. It has moved from a simple phone without wires to a 
broad ranging communications device. Technology has allowed devices to 
grow applications from wireless access to display, to audio, to 
processing power in MIPS, memory in Mbits, and faster data rates. And 
it is not over. Many advanced technologies have yet to be implemented. 
When they arrive, they will enable:

1. Continuous communications
2. Spontaneous sharing
3. Being right there `` experiencing together
4. Making life simpler
5. Making life more productive
6. Personalizing experiences to desires or current situation
    Motorola believes that when this occurs, the demand for mobile 
communications will soar. This, in turn, creates opportunities for new 
kinds of services, applications, infrastructure, devices, platforms, 
and components.
Seamless Mobility Will Enrich Our Lives And Foster Inclusion
    Anyone who has ever used a personal device, such as a mobile phone, 
pager, PDA, or PC, has said, ``This is fine, but wouldn't it be great 
if my device could . . .'' We, at Motorola, are turning your personal 
device wishes from ``wish it could'' to ``now it can.''
    Imagine if you, Chairman Upton, were able to receive your draft 
opening remarks on your handheld device, in the same word processing 
program you use on your PC, as you were flying back to Washington from 
Kalamazoo.
    Then, imagine if you could easily review those remarks, make edits 
and email the document back to your staff using your handheld device. 
Using the same device you then send a video mail regarding today's 
hearing to Mr. Markey, using the airplane's onboard wireless 
capabilities.
    After you land, imagine driving to the Hill and receiving 
notifications from1 your automobile that there are road improvements 
taking place on the 14th Street Bridge which are causing traffic 
congestion. Your car advises you to take Memorial Bridge, instead, and 
gives you step-by-step instructions for the detour.
    As you are driving, you receive a notification in your vehicle from 
your home monitoring system that your home alarm had not been engaged 
when your kids left the house for school and you are asked whether you 
would like it to be turned on.
    Then imagine you make a phone call in the car, using the vehicle's 
wireless capability. As you drive into the garage, the call transfers 
from the cellular network, to a Wi-Fi network. After you park the car 
and turn it off, the call transfers to your mobile device. As you walk 
into your office, the call transfers from the Wi-Fi network to your 
office PBX. All of this is done seamlessly, without interrupting your 
communication.
    This is a small snapshot of what is possible in the digital age and 
this is Motorola's vision of Seamless Mobility.
Seamless Mobility Will Drive Economic Growth And Productivity
    With full mobility, we can harness the power of technology for 
consumers and the economy. The actions you take, in this Telecom Act 
reform initiative, can drive this reality. Enacting deregulatory 
policies will accelerate and amplify the adoption of mobile technology 
and increase users from 1.5 Billion today to the next Billion. 
Together, we can drive the largest number of revenue generating 
opportunities since the early days of the Internet
    Indeed, with technology solutions to interoperability among other 
products, appliances, equipment, and devices in our homes, offices and 
autos, we could become a lot more productive and stimulate significant 
economic growth.
    With the digitization of things, the expansion of broadband, and 
the explosion of smart devices, Motorola is making this type of 
communication possible.
Seamless Mobility in Action--Examples
Seamless Mobile Handset
    Jenny has a dual mode handset and is on a cellular call. As she 
travels she reaches a point where her cell coverage is at risk; her 
handset recognizes a possible call-drop, and senses a wireless local 
area network access point, which picks up the call as Jenny continues 
talking. Her call is now being delivered via VoIP and not a cellular 
circuit. As Jenny's call was converted to a different network, she 
continued speaking, and the entire conversion remained transparent to 
her and the other speaker.
Seamless Video
    As he commutes home from his office, Sam has a multimode handset 
and is participating in a video conference via a 3G data network. When 
he arrives home, his handset detects his home's wireless network and 
moves the conference to the house network. But Sam wants to participate 
in this conference via his PC, which uses a broadband network and a 
larger screen. Transparent to Sam and the other participants, his 
home's network is informed of his choice and the conference is moved 
from the handset to the PC. Because Sam's home infrastructure includes 
a set-top box and television, he could have used his television and the 
network would still have moved the conference to his target device. 
This type of session handover can work in small offices, residences, 
hotspots, or enterprises.
Seamless Home Delivery
    Serviceman Tom receives a message from headquarters that Jenny's 
liquid propane gas tank is below 10 percent of capacity. A text message 
is sent to Jenny's mobile phone while she is commuting to work, which 
when acknowledged, sends a message to her home network to open the 
gate. The service distribution center checks Tom's position, schedule, 
and fuel level. Delivery is set between 3:00-5:00 pm, after verifying 
Jenny's account is in good standing. Tom receives an updated route for 
distribution on his GPS system, minimizing the distance driven. The 
final estimated level in Tom's truck tank is communicated to the 
distribution center to set fill level for tomorrow's scheduled 
deliveries. An accurate level before and after fill determines the 
charge for delivered propane. Jenny's bank account is automatically 
debited, and her house is comfortably warm when she arrives home.
Seamless Business Travel
    Sam is flying to Boston on a business trip. When he arrives in 
Boston he knows there is a multi-hour drive to reach his customer's 
office. He transacts an auto rental agreement remotely, using his 
electronic assistant and biometric authentication feature. He receives 
directions to the rental car via his electronic assistant, and the car 
door unlocks when it senses his presence. As he enters the car, his 
electronic assistant loads the destination into the car's navigation 
system to help Sam drive in a city with which he is unfamiliar. Once 
Sam fastens his seat belt, the vehicle's intelligence system scans 
metadata to locate a local radio station that meets Sam's music 
preferences, which are stored in his user profile at the auto rental 
firm.
Seamless Auto Service
    While driving home one night, Jenny's car operates poorly. The on-
board diagnostics system decides that the problem requires dealer 
attention, and communicates this to Jenny via the car console. When she 
arrives home, Jenny's car connects with the manufacturer's service 
website via her home broadband connection, and reports the symptoms. It 
consults Jenny's appointment calendar in her mobile phone, and 
schedules an appointment convenient for her. It confirms the 
appointment in her calendar and arranges a reminder for her on the car 
console the next time she turns it on. Apprised of the appointment via 
a diagnostic signature passed from the manufacturer's website to 
Jenny's dealer, the dealer orders the correct parts and they await her 
arrival for the appointment.
Seamless 1st Response
    A joint federal, state, and local taskforce targeting a terrorist 
cell in the U.S. is planning a series of simultaneous raids that must 
be carefully coordinated. A federal SWAT team is preparing to move into 
a residence in the Washington, D.C. suburbs and is communicating via 
two-way radio with state and local police who will assist in sealing 
off the area. The taskforce virtual command center is tying together 
all agencies involved in the event, including DHS and DOJ. It is also 
communicating with undercover agents who are using covert radio gear 
while they follow suspects en route to the house. Simultaneously, a law 
enforcement agent traveling to the scene in a vehicle on I-95 is 
talking to the command center on a public carrier's push to talk phone. 
Down in Richmond, Virginia, agents are collecting evidence from a 
storage facility and are communicating by voice with the command center 
by means of a second carrier's push to talk phone and uploading 
pictures and other data by means of dedicated high speed, broadband 
spectrum. All voice communications are interoperable with one another 
because all the devices comply with the national standard for public 
safety radio interoperability--the Project 25 Standard.
The Architecture
    Motorola has identified four elements of a basic, conceptual 
architecture, spread across homes, vehicles, workplaces, and public 
spaces between them:

1. Devices
2. Heterogeneous networks
3. Local servers/gateways
4. Global servers/services.
    This architecture builds on Motorola's strengths in traditional and 
evolving mobile devices, infrastructure, in-vehicle, and home 
communications. It incorporates a continuum of existing and emerging 
wide-area systems, including CDMA, GSM, 3G, 802.16, and 4G. It also 
includes the co-existence of shorter range systems, such as 802.11 and 
ultra-wide band wireless (UWB) that may be deployed in homes, vehicles, 
enterprises, or hot spots. All of these systems are connected to a 
common IP core network through a gateway.
    In each space there is a local area network and a communications 
gateway. The LAN provides connectivity in the space that may be wired 
or wireless. The gateway permits mobility within a space as well as 
assists with seamless transitions between spaces.
    To enable the user experiences, devices run client software to 
connect via gateways and/or directly to networks that find their way 
through other networks to a converged core, and ultimately to common 
user services. The network is IP-based with gateways to legacy 
networks. For example, a communication starts with VoIP across a 
wireless LAN with a handover to a legacy cellular network.
                     ip-enabled services & motorola
    The Committee has begun to explore the new, advanced types of 
Internet-enabled communications that are increasingly being introduced. 
IP-enabled services, including VoIP, are truly transformative and will 
offer consumers a number of important benefits including lower prices 
and cutting-edge products and services. Your policy leadership can 
support and expedite this transition.
    Motorola is at the forefront of these technologies and we are 
dedicating substantial resources toward bringing the promise of IP to 
the marketplace. We are working with cable operators, wireline, and 
wireless service providers to roll out VoIP products and services as 
quickly as possible. Motorola is advancing the deployment of VoIP in 
every industry sector with specific products, services, and resources.
    For example, last year, Motorola and Verizon announced a multi-year 
contract for Motorola to provide digital video network infrastructure 
and digital video consumer premise equipment in support of Verizon's 
launch of video service on the company's new Fiber to The Premises 
(FTTP) network next year. Verizon's plans for new FTTP deployment to 
homes and businesses include California, Florida, Texas, Delaware, 
Maryland, Massachusetts, New York and Pennsylvania. Verizon plans to 
pass some 1 million homes and business with new technology this year, 
and some 2 million additional in the next.
    Motorola also supplies solutions to major cable operators in the 
U.S. including Comcast, Time Warner, Cox, Charter, and Adelphia. These 
operators are moving from traditional video services to other 
innovative services, including VoIP, in scores of major markets.
    Motorola also manufactures data networking and VoIP products for 
both network operators and retail customers. For instance, from our 
full line of retail products for home data networking, Motorola 
supplies the telephony adapter used by a number of independent VoIP 
service providers. In addition, Motorola has begun to distribute VoIP 
products. Last year, we announced an agreement with WorldGate 
Communications to begin distribution of the Ojo personal video phone. 
The Motorola Ojo personal video phone is expected to be available to 
consumers and businesses in the fall of this year.
                 importance of ip to seamless mobility
    As I've stated, providing a Seamless Mobility experience across all 
user environments--home, vehicle, office, and beyond--is a key 
characteristic of Motorola's approach to its development of VoIP 
products and services. In our vision of Seamless Mobility, wired and 
wireless communications networks will converge and be accessed by a 
single device providing wireless VoIP telephony services that extend to 
the wide area cellular network outside--without dropping calls. User 
services connected and transported by Internet protocols are a key 
facilitator of a Seamless Mobility experience. Among these Internet-
based services, the advancement of VoIP is a critical element in making 
this vision a reality.
    The effective use of these Internet protocols that are so critical 
to the Seamless Mobility experience depends primarily on the continued 
evolution of networking technology. As Congress examines VoIP services, 
the decisions this Committee makes can help establish a framework for 
the future stages of this evolution. VoIP applications will be among 
the first applications deployed to consumers as they move to Seamless 
Mobility.
    Including this hearing, Motorola is encouraged by the high level of 
government interest in the treatment of IP-enabled services. During his 
recent technology briefing at the Commerce Department, President Bush 
saw innovative uses of new IP-enabled products, such as Motorola's home 
monitoring system and the Ojo personal video phone.
    The President experienced how a consumer can activate the 
monitoring system in his or her home using a mobile phone, and receive 
a text alert back to the handset if a motion sensor is triggered. Using 
an ordinary high-speed broadband Internet connection, the President was 
able to use the Ojo videophone to make a face-to-face conversation with 
remote individuals, complete with streaming full-motion video and high-
fidelity audio. These are just a few examples of some of the exciting 
new products and services that IP technology is bringing to the 
marketplace.
                      conclusion & recommendations
    The continued progress of these and other new IP-enabled products 
depends upon the legal approach Congress adopts for IP-enabled 
services. Manufacturers, service providers and investors need legal and 
regulatory certainty in order to aggressively ramp up deployment of 
these new services. Industry needs decisive action by Congress 
preempting state regulation of IP-enabled services. We simply cannot 
fully invest in the design, manufacture, distribution and promotion of 
IP-enabled products while unsure of whether or which State or Federal 
regulations apply.
    While we applaud the FCC's decision establishing federal 
jurisdiction for Vonage, that decision is now being litigated. Motorola 
and other companies not only struggle with uncertainty, we spend time, 
money and other resources in state and federal regulatory proceedings 
and multiple rounds of litigation in order to establish what the rights 
and responsibilities are for IP-enabled services. These resources could 
be much better deployed crafting technology solutions to the wants and 
needs of all users of mobile technologies.
    The Congress must act to preempt state regulation of VoIP. With 
this legal clarity IP-enabled products will launch from technology 
demonstrations to the homes of American consumers. Because VoIP will be 
one of the first widely available IP-enabled services, it is especially 
important that Congress act to establish the proper regulatory 
framework for VoIP quickly.
    To realize our vision of Seamless Mobility, Motorola is encouraged 
that the Committee has considered legislating a light regulatory touch 
for IP-enabled technologies. Congressmen Pickering, Boucher, and 
Stearns are to be commended for their leadership efforts in this area.
    The Congress must clarify the jurisdictional nature of IP-enabled 
services, beginning with VoIP, and establish a unified and rationalized 
regulatory paradigm for new advanced IP-enabled services that are 
agnostic to the platform. Such transformative transmissions should not 
be subject to each of the differing sets of legacy regulations that 
apply to each platform subset of the Seamless Mobility experience. That 
approach may have been needed in the analog world, but it is 
inappropriate for the new Internet economy.
    A unified, deregulatory approach for these new services will 
provide needed certainty and pour rocket fuel on the investment fire 
that is burning in our industry.
    For example, a discrete communication that originates, traverses, 
and or terminates on a variety of different platforms such as wireless, 
broadcast, fiber, traditional telephone lines, or satellite, should not 
be subject to disparate and multiple regulatory treatments. With the 
advent of Seamless Mobility, the network supports the consumer no 
matter where they are--the law should not impose artificial physical 
constraints either. The consumer's IP-enabled device allows them to 
move freely between networks to the platform that can do the job best, 
most efficiently, and cost-effectively. The law ought to align with 
this vision.
    Another recommendation I would urge the Congress to consider is 
establishing a requirement that the FCC must provide an annual report, 
for the next 5 years, identifying regulatory actions it has taken to 
break down the competitive barriers between services, and the status of 
competition between various IP-enabled platforms whether they be cable, 
wireline, wireless or broadcast. The report should also identify any 
roadblocks to cross competition and provide recommendations to 
eliminate such roadblocks, either through regulatory actions or through 
legislation. Such analysis by an expert agency will be useful in 
identifying areas for action.
    Seamless Mobility will keep the US apace with competition and 
innovation in other parts of the world. Without changes in US policy, 
Seamless Mobility will not reach its most robust deployment. The 
European Commission is examining these very same questions and is 
expected to conclude a light regulatory touch for Internet-based 
services within the year. Thereafter, member countries will follow on 
with their policies in a consistent manner. Meanwhile, administrations 
within Asia have promoted national policies to support the fullest 
deployment of these advanced technology solutions for the betterment of 
their citizenry. From a competitiveness standpoint, Motorola applauds 
this Committee for its commitment to pursue appropriate policies to 
ensure domestic leadership in the global race for technology dominance 
in the Internet Age.
    Finally, Mr. Chairman, spectrum is a foundational resource needed 
to deliver Seamless Mobility. Motorola greatly appreciates the focus 
that you and the Committee leadership are placing on ending the Digital 
Television transition by a fixed date. Such certainty is critical to 
planning for valuable subsequent uses for the spectrum, such as the 
mission critical homeland security communications needs of our 1st 
Responders across the country and the deployment of advanced high-speed 
mobile broadband technologies. The discussion around fixing the date at 
December 31, 2006 and providing a technology solution to ensure that 
every household continues to enjoy access to free over-the-air 
television is a powerful plan that will work.
                                summary
    Seamless Mobility is about simplifying our lives as we communicate 
with business colleagues, friends, and family while on-the-go. 
Motorola's innovations will improve communication and interactions, and 
will enrich our lives as technology becomes even more widespread and 
indispensable. Decisions made by Congress as it examines VoIP services 
and beyond will establish a framework for the future stages of this 
evolution.
    With Seamless Mobility, we can harness the power of technology for 
all Americans and our economy. This is a truly historic initiative 
before us today. Your leadership and the decisions you make throughout 
the reform of the Telecom Act can change the Internet from one people 
must seek out to one that seeks us and surrounds people with 
productivity, enrichment, inclusion, and innovation. I commit Motorola 
to work with you to make the Internet Age powerful for us all.

    Mr. Upton. Thank you very much. Dr. Jacobs.
    Mr. Jacobs. Thank you, Mr. Chairman. I am going to----
    Mr. Upton. Again, you have got to turn that mike button.

                 STATEMENT OF IRWIN MARK JACOBS

    Mr. Jacobs. Thank you very much, Mr. Chairman. I have some 
slides that hopefully will be appearing here. A bit of a 
PowerPoint to follow some of the latest technology. Get those 
on.
    Mr. Upton. She is working that over here.
    Mr. Jacobs. Thank you. In any case, I will be talking about 
mobility, about access to the Internet, wideband access to the 
Internet, using mobile devices. And the mobile devices we are 
talking about these days are very powerful. We have that. Next 
slide, please.
    [Slide.]
    The capability of a cell phone, of course, to carry voice 
has been with us now for over a decade. The ability to carry 
high data rates to provide position location, to handle the 
E911 type problems, but other issues. Many capabilities, much 
computing power, now going into the phones. Next slide, please.
    [Slide.]
    As you look at the growth of the number of phones we are 
moving toward, a prediction of 775 million phones being sold in 
the year 2009. We are now about half of that. And if you 
compare that to the growth in notebooks, in smart phones, in 
desktop PCs, all of those, the lines you can barely see there 
are much lower, and so clearly, the impact of the mobile phone 
is going to be even more massive than it is today. Next slide, 
please.
    [Slide.]
    We are moving to a situation now that we have third 
generation of cellular, supporting the high data rate Internet 
connections. All of the accepted approaches to that are based 
on CDMA technology, and are moving ahead very quickly, as we 
see in the next slide, please.
    [Slide.]
    There, the growth of third generation, the access to it, is 
now over 140 million. There are three different flavors of 
that, but it has been such that, for example, I was just in 
India, stopped in several cities, and in each of those cities, 
I was able to immediately get high data rate access on my 
laptop. So the technology is moving ahead. Next slide, please.
    [Slide.]
    I won't go into great details here, but--there is a lot 
more on this chart--but in fact, the ability to--of a handset 
now to supply audio is approaching that of CD quality, to 
support gaming, 3 dimensional projections, of that of the Game 
Boys of a short while, cameras 4 to 6 megapixels, video, DVD 
quality, and processing, a very high level of computing power 
in the phone, such that I think for many people, a phone may 
end up being their main device, their main computer, with in 
fact, a display and a keyboard that connects up automatically 
by a personal area network, wireless network, where they might 
be.
    How is all of this being done? It is being accomplished 
because of Moore's Law, the ability to put more and more 
transistors on a single part. Next slide, please.
    [Slide.]
    And it means that we can have all of these capabilities on 
a single chip in a phone, and therefore, provide them at low 
cost, with large battery power. Next slide, please.
    [Slide.]
    One interesting aspect of this has been moving toward what 
is called the ability to have a third screen, one that is with 
you at all times, delivering video to it. And one of our major 
operators, Verizon, has now offered such a service, and perhaps 
you can bring that up and demonstrate that. It is interesting 
that in this conference room, in this building, despite all of 
the walls, et cetera, we have a very strong signal here 
supporting up to 2 megabits per second of data rate. So next 
slide, please.
    [Slide.]
    The service is called V Cast, and it provides video, as we 
found that in many areas, having this high data rate connection 
to the Internet is being used to get news clip, sporting, 
educational materials, et cetera, in both video and audio. Next 
slide, please.
    [Slide.]
    One of the issues, of course, with having these complicated 
devices--in fact, having all of the complicated services we 
have been talking about, is having simple user interfaces, ones 
that people are familiar with. We have been moving toward one 
that, in fact, looks like a standard TV set, a movie guide on 
that TV set. Next slide, please.
    [Slide.]
    We do have the need to support these capabilities less 
expensively, and we are going in the technology to support this 
over mobile communications at high data rates, but we are also 
supplementing that with the use of a UHF channel--we have 
channel 55 throughout the US--to support direct broadcast to 
the--or multicasting to the handsets in a very cost effective 
way. So we expect that this, in fact, is going to support many 
services. Next slide.
    [Slide.]
    In fact, being able to download capabilities to the phones, 
including this user interface, is important. Next slide, 
please.
    [Slide.]
    And we are seeing a very strong use of the Internet to 
deliver new applications to the phones. Next slide, please.
    [Slide.]
    One of those, of course, does involve the precise position 
location, E911 capabilities, including also mapping 
capabilities that are now available to the phone. Next slide, 
please.
    [Slide.]
    One important next application is moving Voice over 
Internet Protocol, making use of the phones, and that is well 
underway. We are going to get higher capacity, I believe, as 
well as higher quality with VoIP. Next slide, please.
    [Slide.]
    An interesting application already in--being demonstrated 
in some countries, the rural--the need for rural Internet has 
been mentioned, doing this economically. The ability, 
therefore, to support this, for example, a demonstration down 
in Chile, another one with Lucent support down in Brazil. Next 
slide.
    [Slide.]
    Taking these capabilities immediately to rural areas and 
making them available, next slide. In that van, for example, 
that drove around, that had the high broadband Internet 
capability through wireless, one had a number of desks set up, 
next slide, and you can see the children very much enjoying the 
ability to have that in areas where, in fact, they had never 
seen a computer, never mind a connection before. Next slide.
    [Slide.]
    The commercial networks also supply high security, and so 
it is possible, therefore, to support a number of the public 
safety functions that I know that you are very much interested 
in, and so the whole ability to support not just, as was 
mentioned, two wires to the home, but wireless in a fully 
mobile environment, is very important. I think that this 
committee has to be very careful, therefore, with making 
spectrum more available--next slide, please.
    [Slide.]
    Maintaining the current allocations of wireless licensed 
spectrum below a gigahertz, where it is least expensive to 
provide services in all areas, making sure that unlicensed 
devices do not interfere in the licensed spectrum, reducing the 
capacity, and encouraging the FCC not to impose any regulatory 
barriers and impede delivery of Voice over Internet Protocol to 
the wireless platforms.
    Thank you very much.
    [The prepared statement of Irwin Mark Jacobs follows:]
 Prepared Statement of Irwin Mark Jacobs, Chairman and CEO, QUALCOMM, 
                              Incorporated
    I am pleased to join the Subcommittee to discuss and demonstrate 
how technological convergence is today supporting delivery of advanced 
features and services to wireless customers. The rapid deployment of 
two national and several regional broadband wide-area wireless 
networks, the increasing computing power and memory resident in today's 
wireless devices, and diverse software applications now available for 
these Internet-connected wireless devices have combined to efficiently 
deliver new multimedia applications and services in a mobile, rather 
than fixed or hot spot, environment. These Internet Protocol (IP) 
enabled applications include, but are not limited, to video streaming, 
video on demand, digital imaging, gaming, location based services, high 
speed Internet access, e-medicine, e-government, e-medicine, education, 
and many more.
    The rapid deployment of these services and their wide availability 
to the American people are in part the result of US telecommunications 
policies that have reallocated substantial new spectrum to commercial 
licensed use, permitted licensees flexibility in the utilization of 
that spectrum, and maintained a single national authority at the 
Federal Communications Commission (FCC) for the regulation of wireless 
services in the United States. Over the past fifteen years, the pro-
competitive, technology neutral policies, coupled with a general 
``hands-off'' approach to government regulation of the Internet, has 
allowed the wireless industry to grow rapidly to a point where 
currently over 170 million Americans subscribe to wireless services.
Advanced Wireless Networks Provide National and Regional High-Speed 
        Access
    The first key driver of wireless convergence is the current and 
accelerating deployment of regional and national high speed wireless 
networks using third-generation (3G) code-division multiple access 
(CDMA) technology on licensed spectrum. These networks are providing 
ubiquitous network access to IP services wherever and whenever 
customers need to connect. Around the world, wireless operators are 
deploying 3G wireless systems based on CDMA technology including WCDMA/
UMTS and CDMA2000 1X and CDMA2000 1xEV-DO. These national and regional 
deployments are significant because they are providing customers 
reliable wide-area wireless access to broadband services over licensed 
spectrum.
    For example, in the case of WCDMA/UMTS, although commercial network 
launches have really only begun in earnest over the past 12 months, we 
see that over 60 regional or national networks have been launched to 
date in dozens of countries in Europe and Asia, with over 16 million 
subscribers globally at the end of 2004. These subscribers enjoy wide-
area wireless access at peak data speeds of 384 kbps. These WCDMA 
deployments will accelerate rapidly in 2005, and we will soon see WCDMA 
wide-area networks throughout much of the developed world, and the 
addition of many millions of WCDMA subscribers globally in nations and 
regions where wireless access is economically the best option for 
broadband internet connectivity.
    In the case of CDMA2000 1xEV-DO (also referred to as EV-DO), 
deployed for over two years in South Korea, then across Japan, and now 
being rapidly deployed across the U.S., over 11 million subscribers 
currently enjoy peak data rates of 2.4 Mbps on 16 networks in Asia and 
the Americas. In the United States, Verizon Wireless has launched EV-DO 
in over 30 major metropolitan markets, a footprint that extends service 
to over 75 million Americans. It is notable too that these wide-area 
deployments do not represent a disparate set of individual ``hot 
spots,'' but rather large contiguous service areas featuring seamless 
hand-offs and seamless roaming, not only between EV-DO equipped cell 
sites but also to CDMA2000 1X service at the boundaries of EV-DO 
coverage.
    The significance of these networks for technology convergence is 
that wireless devices can now maintain reliable high-speed wireless 
connectivity over wide-area regional and national footprints deployed 
on licensed spectrum. For example, a business traveler taking the 
metroliner train from Washington, DC to New York City can maintain a 
high-speed wireless data connection continuously during her entire 
trip. Using this connection, this traveler can access her corporate 
intra-net as well as the Internet and other applications while fully 
mobile just as if she were working in her office.
    It is important to note here that these national and regional 
wireless networks are deployed in licensed spectrum. There has been 
much discussion recently of the benefits of unlicensed spectrum and 
services, with some advocating that the U.S. government allocate 
additional prime, high-value spectrum (that spectrum below 1 GHz) to 
unlicensed use. At QUALCOMM, we are heavy users of local-area network 
unlicensed wireless services on our campus, and nation-wide users of 
wide-area licensed wireless services when we are off our campus now on 
a fixed monthly charge, ``all-we-can-eat'' basis. I think that our 
example illustrates the complementary nature of unlicensed and licensed 
wireless services--unlicensed is useful in the local area, like an 
individual office suite that is not prone to significant interference 
from other unlicensed users, while licensed wireless services are 
needed to provide wide area service everywhere else. As national and 
regional wide-area network are playing and will continue to play a 
crucial role in meeting the Internet connectivity needs of American 
citizens, I recommend that the Congress maintain and expand spectrum 
currently allocated for licensed wide-area use and seek to clear and 
auction that spectrum as soon as possible.
    Economics and protection from interference plays an important role 
here. It costs billions of dollars to build out a national or regional 
wireless network. Corporations are not prepared to make that level of 
investment without certainty that they will be able to serve customers 
at the expected level of service quality without the threat of harmful 
interference. In an unlicensed regime, no one can be sure that they 
will be able to sell a wireless service even in a local area without 
the threat of harmful interference from another unlicensed operator or 
device. I believe that it is this uncertainly that has dampened 
commercial enthusiasm for project like the ``Cometa'' unlicensed 
network that was proposed by a well-financed team of major corporations 
but then ultimately abandoned.
    Those of us who build and operate commercial licensed wireless 
systems also worry about the impact of unlicensed ``overlays'' and 
``underlays'' in spectrum licensed for commercial mobile radio systems. 
Our research indicates that operation of these devices impacts the 
accuracy of the GPS measurements taken by our cellphones when E-911 
calls are placed, and similarly impacts the call quality particularly 
in certain coverage areas. What is especially difficult for network 
operators is that they might experience inference from an unlicensed 
wireless device (which generates a customer complaint), and by the time 
they can get a technician into the field to investigate the complaint, 
the source of interference has moved on, leaving them unable to 
diagnose and correct the problem.
    Some observers have also suggested that ``smart'' or ``cognitive'' 
radios can permit multiple unlicensed and licensed devices to share 
spectrum. At QUALCOMM we have conducted research and examined the 
literature in this area, and found such capability to be complex and 
expensive and not of dependable reliability. Without proven results and 
standards, there will always be a commercial incentive for individuals 
and businesses to take short cuts when fielding devices that depend on 
intelligence to avoid interference, resulting in more interference in a 
particular location than anyone planned or that the government 
authorized. Since, as we noted earlier, it is difficult to locate and 
police sources of harmful interference, we may end up in a situation 
where network performance is intermittently impaired and we are unable 
to diagnose and correct it.
    Modern CDMA wireless networks that are enabling the advancements we 
are discussing today operate efficiently at low power levels. They can 
rapidly lose capacity and performance and require higher transmitted 
power in an effort to overcome interference from unlicensed devices. 
Efficient, low power systems, both cellular and GPS, are by their 
nature more susceptible to interference than higher power, less 
efficient systems. Given the enthusiasm in some quarters for unlicensed 
wide-area services, I feel the need to urge the limitation of 
unlicensed uses to local area, low power uses to protect existing and 
planned services over wide-area licensed systems from harmful 
interference.
The Processing Power & Functionality in Wireless Devices Enable 
        Advanced Services
    The growing processing power and functionality in the chips inside 
wireless handsets are also contributing substantially to convergence. 
CDMA wireless handsets are now increasingly smaller and faster devices 
that can deliver and receive voice, music, video and 3D graphics. These 
features enable wireless subscribers to enjoy useful, interactive 
applications and services on their phones. We will soon deliver a 
chipset that will enable a wireless device to roam across multiple 3G 
networks--permitting a global convergence of wireless access.
    As a point of reference, the processing power of the chipsets that 
power today's advanced cell phones trail the processing power of 
personal computers by only a few years. That is to say, the new cell 
phone in your pocket today has the computing power of the desktop PC 
you might have purchased only two or three years ago. And that trend is 
continuing. With the 7000 series of cellphone chipsets that QUALCOMM 
announced this year, dubbed the ``convergence platform,'' cellphone 
manufacturers will have access to dual processors on a single chipset, 
and that chipset will enable phones to provide the following advanced 
features:

 Two-way video streaming--smooth, high resolution video streaming at 
        30 frames per second (the same frame replacement rate as your 
        TV at home).
 Outstanding audio quality for MP3 features and surround sound.
 Extreme 3D graphics--up to 4 million triangles per second and 7 
        million 3D pixels per second for game-counsole quality 
        graphics.
 6.0 Megapixel camera--for high quality imaging.
 Position location using GPS coupled with high resolution maps.
 VGA--improved high resolution display.
 Support of ancillary devices for medical monitoring and security
These features will support services such as: point-to-point video 
telephony for mobile conferencing, interactive gaming, downloadable 
feature-length movies, downloadable music, streaming video, photos, and 
more. Because these functionalities are resident on the chipset, 
handset manufacturers will be able to build wireless devices with these 
capabilities in the same form factors that customers expect in their 
wireless devices today.
    This new chipset series will also support multiple 2G and 3G 
standards including all major common air interfaces, including:

 CDMA2000 1X
 CDMA2000 1xEV-DO Rev 0 and Rev A
 IS-95 A/B
 WCDMA (UMTS)/HSDPA
 GSM/GPRS/EDGE
Since the chipsets powering wireless devices will operate on the major 
3G networks in use globally, these networks will also ``converge'' in 
that customers will enjoy ubiquitous high-speed data services 
regardless of location or of the 3G air interface provided in a 
specific location.
    A notable present example of the ``convergence'' of new 
capabilities enabled by 3G CDMA data networks and high-speed processors 
in cell phones is the ``V CAST'' service launched this month by Verizon 
Wireless. The V CAST service uses Verizon Wireless's EV-DO high speed 
data network to download media content including:

 High-quality video-on-demand of;
     current news, weather, sports and entertainment programming
     music videos and short programs specifically designed for mobile 
            phones, and
 3D games.
Using V CAST, customers can also download branded video content such 
as:

 News Corp. and 20th Century Fox,
 ``24: Conspiracy,'' ``Sunset Hotel'' and ``Love & Hate''--
        specifically designed for mobile phones,
 NBC newscasts made exclusively for mobile phones, and
 MTV Networks' VH1, Comedy Central
The V CAST service supports the downloads of video clips of up to 5 
minutes in length, with high quality sound and video with the same 30 
second video frame replacement rate used for traditional television. As 
an example of the continuing convergence of services enabled by 
wireless networks and devices, last week Verizon Wireless and Warner 
Music Group announced the launch of the nation's first mobile music 
video download service on V CAST. Using this service, Warner Music will 
be the first major music company to make its music video catalog of 
artists available for download to consumers in the U.S. on their 
wireless phones.
    I have given you examples of wireless handset features that will 
inform and entertain, but the wireless industry is also working hard to 
deploy features that will enhance both the personal security of 
individual customers and also our collective homeland security. The 
most important of these safety features is wireless enhanced 911 (E-
911). I say this because the National Emergency Numbering Association 
reports that wireless customers dial ``911'' on their wireless phones 
over 120,000 times each day in the United States. I am pleased to 
report that according to official reports filed in at the FCC by 
wireless operators, at least 1,628 public safety answering points in 
the US (these are the 911 dispatch centers) are equipped to receive E-
911 position location data from wireless phones. Fully 136 million 
people live in the cities and counties served by these dispatch 
centers, which are spread over 39 states. In a recent report to the 
FCC, Sprint PCS reported that they have now sold a total of 33 million 
wireless phones equipped with GPS position location to locate wireless 
customers when they dial ``911'' in an emergency.
    The deployment in the near future of streaming video capabilities 
on wireless phones will permit emergency personnel to not only tell the 
hospital about a patient's injuries but also to show the doctor in real 
time exactly what they are observing at a rescue site.
Software Downloads Bring Desktop Functionality to Mobile Environment
    The software used by these wireless handsets and networks is also 
contributing to the convergence of rich and diverse services. An 
example of how software advancements and facilitating technological 
convergence is QUALCOMM's BREW 1 platform. Using BREW-
enabled handsets, wireless customers are able to download and operate 
software applications in a mobile setting that heretofore could only by 
utilized on stationary desktop computers. By utilizing BREW to make 
more applications available to wireless customers, we have observed an 
explosion in new access, including over 200 million cumulative 
individual BREW application downloads by November of 2004. These 
applications downloaded to wireless devices that are BREW-enabled 
include:
---------------------------------------------------------------------------
    \1\ Binary Runtime Environment for Wireless

 Communications--instant messaging, email, photo sharing, greeting 
        cards and other interactive message delivery,
 Location--mapping, navigation, traffic, city guides and other 
        position location specific content,
 Productivity--mobile address/contacts synchronization to office 
        applications and helpful tools that increase personal 
        efficiency,
 Games--single-player and interactive multi-player games,
 m-Commerce--financial transactions such as account balance, point-of-
        purchase, product/merchandise purchase, stock trades and more,
 Entertainment--ring tones, music, video, comics, screen savers, wall 
        papers,
 Information--flight tracking, news, weather, sports and other 
        magazine-oriented content.
    BREW enables access to these multiple applications by serving as a 
common platform for wireless applications. Sitting ``on top'' of a 
phone's chip system software, the BREW platform has access to chip-
level features allowing it to download and run applications directly on 
the phone. By dynamically allocating the phone's random access memory 
for applications as they are running and by using local storage and 
processing the BREW platform optimizes the phone's memory allocation.
Advancements in Wireless Multimedia Capabilities Will Continue
    Advancements in multimedia convergence over wireless systems will 
only accelerate over time. For example, QUALCOMM recently announced 
plans for a subsidiary (MediaFLO USA) to deploy and operate a 
nationwide ``mediacast'' network, delivering many channels of high-
quality video and audio programming to third-generation mobile phones 
at mass market prices. QUALCOMM intends to offer the network as a 
shared resource for U.S. CDMA2000 and WCDMA cellular operators, 
enabling them to deliver mobile interactive multimedia to their 
wireless subscribers without the cost of network deployment and 
operation. Subscribers to this service will enjoy access to a broad 
range of high-quality content from the entertainment industry's leading 
media companies. MediaFLO USA will aggregate and distribute the content 
that is available to all MediaFLO partners and will provide seamless 
integration of this content with unique content that individual 
operators provide to maintain their competitive differentiation. The 
system will give TV stations and networks, cable TV and satellite 
operators and networks, and other content providers a major new 
distribution channel that complements their current offerings, enabling 
them to reach their audiences when they are away from home and on the 
go. U.S. consumers will gain access to compelling media services 
whenever and wherever they want them.
    The nationwide mediacasting network will deliver multimedia content 
to wireless mobile devices in the 700 MHz spectrum for which QUALCOMM 
holds licenses covering the entire nation. The network will support 50-
100 national and local content channels, including up to 15 live 
streaming channels and numerous clip-cast and audio channels. This 
content will be delivered in an easy-to-use and familiar format at 
quality levels that dramatically surpass current mobile multimedia 
offerings through the use of QVGA video at up to 30 frames per second 
and high-quality stereo audio. I should point out here, however, that 
QUALCOMM will not be able to deploy this service nationally until the 
broadcasters who currently are operating in channel 55 complete their 
conversion to digital and relinquish their analog channel. Since this 
conversion is moving at a pace that is much slower than Congress 
anticipated when it enacted its digital transition plan, we believe 
that a new hard end date in statute will be required to ensure that the 
transition moves forward and the public can enjoy these new services.
Advancements Will Allow VoIP Over Wireless Data Networks
    QUALCOMM recently announced enhancements to current CDMA2000 EV-DO 
networks that will enable rich wireless multimedia services such as 
high-speed transfer of bandwidth-intensive files (including high-
quality pictures, video and music), interactive 3D gaming as well as 
multicasting services.
    Revision A to CDMA2000 1xEV-DO supports peak data rates of 3.1 Mbps 
on the forward link and 1.8 Mbps on the reverse link, 192 forward-link 
and reverse-link channels and four-way receive diversity, delivering 
eight times the user capacity compared to EV-DO Revision 0. Optimized 
for packet data service, Revision A provides one of the lowest costs 
per bit when compared with other wireless wide area network (WAN) 
technologies. CDMA2000 EV-DO Revision A also includes support for low-
latency applications, including a variety of IP-based services such as 
Voice over Internet Protocol (VoIP) and real-time conversational 
services such as push to talk, video telephony and instant multimedia--
an extension of push to talk that combines immediate voice with 
simultaneous delivery of video and pictures, offered over a cellular 
and/or PCS platform. As a result, VoIP will not be only a desktop 
phenomenon--advanced wireless networks using the technologies we have 
discussed today will enable mobile wireless VoIP delivering high 
quality and high capacity while lowering capital and operating costs.
National Policies to Help Facilitate These Advancements
    To facilitate this digital convergence and the delivery of 
additional Internet Protocol enabled services over wireless networks 
the US Congress can:

1. Make more spectrum available for advanced wireless services by 
        establishing in law a hard end date of December 31, 2006 to end 
        the digital TV transition.
2. Maintain the current allocations of licensed wireless spectrum below 
        1 GHz.
3. Ensure that before unlicensed devices are permitted to operate in 
        licensed spectrum that there is clear and convincing proof that 
        they will not cause harmful interference to the licensed 
        services.
4. Encourage the FCC not to impose any regulatory barriers that impede 
        the delivery of VoIP over PCS or cellular platforms.
    Support of the policy goals listed above will ensure that the 
operators that deliver advanced wireless services have access to the 
additional spectrum necessary to carry multimedia services like video 
to wireless devices. These policies have enabled wireless operators to 
quickly evolve the technologies used on specific bands of licensed 
spectrum without the need for any new approvals from the FCC, and to 
deliver new Internet based services to wireless devices without the 
need for government involvement. The result is that Americans now enjoy 
access to the fastest national wireless network in the world, and 
wireless devices with the richest feature sets available anywhere. 
These policies will ensure that wireless networks and technologies can 
``converge'' as rapidly as possible, yielding the greatest benefits to 
American consumers and to our national economy.

    Mr. Upton. Thank you very much. Mr. Mattes.

                    STATEMENT OF ANDY MATTES

    Mr. Mattes. Chairman Upton and members of the subcommittee, 
it is a pleasure and an honor being here today, and presenting 
Siemens' view on IP convergence.
    As you may know, Siemens is one of the largest electrical 
and electronic companies around the globe. We do employ some 
70,000 people in the United States, with employment in every 
single State within the United States. Globally, we employ some 
430,000 people and operate in 190 countries. The largest 
segment of our portfolio is IP communications. Our target 
markets are consumers, enterprises, and service providers, 
including wireless, wireline, and cable operators.
    Convergence is taking place at many levels. IP-based 
broadband networks will change the way we communicate, work, 
and play. For example, SBC and BellSouth are deploying IP-
centric solutions as we speak today. Technological advancements 
are also rapidly changing the way the industry is structured in 
order to meet customer needs. The use of IP-based services is 
spreading dramatically, and this is the reason why 
communication platforms are converging.
    It is only in a truly IP-converged broadband environment, 
with standard based platforms and end user empowerment that 
such seamless unification becomes reality. This would represent 
a world where there are no longer artificial boundaries between 
fixed line networks, mobile networks, and cable networks. 
CableVision, for example, is adding 1,000 new subscribers to 
their Voice over IP service every working day. There would no 
longer be a multitude of email boxes and voicemail boxes. Users 
will not be forced to learn how to use different interfaces, 
and to access their information, and to communicate is going to 
be a whole lot easier.
    Through our close work with our carriers, service 
providers, businesses, and end users, we believe we know some 
of the communication issues that are top priority. Businesses 
tell us that their employees need communication tools to make 
them more effective, productive, and more responsive to their 
customer needs. Carriers and service providers tell us that 
they need to offer new services and create new business models. 
And end users are telling us that they want to bring all of 
these devices and networks and applications together in a way 
to achieve a better work/life balance. At Siemens, we call all 
of this LifeWorks, because we believe that IP convergence can 
make life work better.
    As we look across markets, we see the impact and potential 
of IP everywhere. Converged IP-based broadband networks will 
dramatically address many of the Nation's challenges, from 
reducing healthcare costs, improving delivery, protecting 
national security, and providing a more satisfying quality of 
life. Siemens applauds the subcommittee for recognizing these 
significant changes, and for moving forward in creating a 
public policy framework that embraces the new converged IP-
based world.
    In considering changes to the Act, we recommend that 
Congress adopt policies that follow these guiding principles. 
First, the overriding goal of any policy should be to promote 
the accelerated design, development, and deployment and 
adaptation of converged packet-based broadband infrastructures, 
applications, and services. The FCC's recent order exempting 
new fiber-based broadband networks from regulation is a good 
model to follow.
    Second, in our view, Voice over Internet Protocol is not a 
service, but a technology that enables a multitude of new 
services. Therefore, we recommend that this technology be 
exempt from traditional telecommunications regulations. We 
applaud Congressmen Pickering, Stearns, and Boucher for their 
efforts to accelerate the debate on how to approach these new 
technologies and applications and balance existing social needs 
with tomorrow's technology.
    Third, new rules should be applied evenly across network 
platforms. Providers who are similarly situated should face the 
same rules when providing the same services. With this in mind, 
Congress should regulate down.
    Fourth, when reforming universal service, Siemens 
recommends that Congress take the opportunity to bring the 
universal service program into the IP future as well. We 
understand the funding challenges. However, Siemens recommends 
searching for innovative ways to create incentives for 
providers, schools, libraries, and rural health providers to 
invest in next generation infrastructure. In this way they, 
just like the rest of us, will be able to take advantage of 
cost savings and new applications driven by IP-based 
convergence.
    It is absolutely necessary that the United States match the 
pace with other developed countries in terms of broadband 
penetration. I am surprised that the most innovative country in 
the world ranks number 13 in terms of per capita broadband 
penetration, with only about 32 million broadband subscribers. 
All Americans must benefit from the rich media experiences now 
offered by the Internet.
    And finally, as Congress considers new policies and rules, 
it should look to what has happened under the Federal wireless 
regulatory model. Consumers are the winners in this market 
through significant price reductions and the explosion of new 
services and technologies. The hands-off approach has paved the 
way for this consumer-focused and fast growing environment.
    Thank you again for giving Siemens the exciting opportunity 
to testify before this panel. We look forward to working with 
you to help shape policies that will help drive the development 
and deployment of next generation networks for all Americans.
    [The prepared statement of Andy Mattes follows:]
     Prepared Statement of Andy Mattes, President and CEO, Siemens 
                          Communications, Inc.
    Chairman Upton, Ranking Member Markey, and members of the 
subcommittee, it is an honor and privilege to appear before you today 
to discuss Siemens' view of convergence and the emerging IP-based 
world. My name is Andy Mattes and I am the President and CEO of Siemens 
Communications USA. Mr. Chairman, with your permission, I will submit 
my entire written statement for the record and will summarize briefly.
    As you may know, Siemens is one of the largest electronic and 
electrical engineering companies in the world. Our largest market is 
the United States where we employ over 70,000 people with employment in 
every state. Globally we employ over 430,000 people and operate in 190 
countries. We are a market leader in energy and power generation, 
industry and automation, information and communications, healthcare, 
transportation and lighting. The largest segment is our portfolio 
focused on IP communications devices, applications, and infrastructure 
for the individual, for the enterprise, and service providers including 
wireless, wireline and cable.
    Convergence is taking place at many levels: We're seeing 
convergence of the television and the personal computer, of wireless 
and wireline networks and devices, and of voice, data, and video. IP-
based broadband network infrastructures will change the way we 
communicate, work and play. Technological advancements are also rapidly 
changing the way industry is structured to meet consumer needs. The use 
of IP-based services is spreading dramatically and this is the reason 
why communications platforms are converging.
    Since passage of the Telecommunications Act of 1996, fixed-line 
long distance no longer is the sole player in that market. Wireless 
carriers are long distance providers, local providers and Internet 
access providers. Your current cable company is not your old cable 
company. They are now providing voice, data and Internet access. 
Existing rules designed to spur wireline vs. wireline competition may 
no longer be relevant. Real competition is facilities-based, which is 
now occurring across industries.
    True packet-based convergence is crucial to allowing multimedia 
applications and services to seamlessly coexist on a streamlined asset 
base. These new pathways will enable the dramatic improvement in asset 
utilization rates for enhanced capital and operational efficiency, 
along with the improved price-performance characteristics required to 
restore a sound economic foundation to spur the industry's continued 
innovation and growth.
    In addition to broadband access and transport infrastructures, IP-
based applications and related servers, media gateways, soft-switching 
platforms and related management systems must be allowed to be packaged 
as key building blocks for the future.
    The end-game is seamless unification of communications domains with 
end-user applications. It is only in a truly IP-converged, broadband 
environment with standards-based platforms and end-user empowerment 
that such seamless unification becomes possible. This would represent a 
world where there are no longer artificial boundaries between fixed-
line networks, mobile networks, and cable networks. There would no 
longer be multiple e-mail boxes and voicemail boxes. Users will not be 
forced to learn how to use different interfaces to access their 
information and communicate.
    Users want simpler communication tools and more efficient 
communications. We currently have more choices than ever before, but 
these very choices have made our communication more convoluted and 
redundant. Trying to manage all of today's communications devices, 
applications and networks is like trying to run an airport without air 
traffic control--there is no synchronization or communication.
    Through our close work with carriers, service providers, businesses 
and end-users, we believe we know which communication issues are top 
priority. Businesses tell us that employees need communication tools to 
make them more effective, more productive and more responsive to 
customer needs. Carriers and service providers tell us they need to 
offer new services and create new business models. And end users are 
telling us they want to bring all of these devices and networks and 
applications together to achieve a better work-life balance. At 
Siemens, we call all of this LifeWorks because we believe that IP 
convergence can make life work better.
    Perhaps the biggest and most exciting development is the advent of 
the wireless world. Today, we're like a tether ball tied to our desk. 
Our communications world is based around the idea of a wired world 
where wireless augments our communications. The communications world of 
tomorrow will be built around the idea of a wireless voice, data and 
entertainment infrastructure augmented by a wired network. That 
represents a complete reversal of today's paradigm.
    As we look across markets, we see the impact--and potential--of IP 
everywhere. Converged IP-based broadband networks will dramatically 
address many of the nation's challenges, from reducing health care 
costs and improving delivery, protecting national security and 
providing a more satisfying quality of life.
    Hospitals using innovative and secure communications technology can 
operate with less cost, because they have fewer medication errors, 
fewer mistakes, earlier detection rates and better overall clinical 
outcomes. We know because Siemens builds and provides the 
communications infrastructure for ``digital'' hospitals across the 
country.
    Building and information security is enhanced by convergence 
solutions that marry physical access with network security and identity 
management. At Delaware State University, for example, students use 
Siemens smart cards to enter their dorm rooms, access the campus 
computer network, buy text books, and pay for meals in the cafeteria.
    Emergency responders will benefit by instant conferencing and 
presence awareness--something like the buddy list for the telephone so 
that you know who is available even before you dial.
    And consumers will benefit because of things like dual-mode 
devices--a handset that will work over a WiFi network at home and over 
the public wireless network outside of the home. They'll be able to 
receive one bill for payment convenience. And they'll finally be able 
to end the communications chaos caused by so many devices, applications 
and networks.
    Siemens applauds the subcommittee for recognizing these significant 
changes and for moving forward in creating a public policy framework 
that embraces the new converged IP-based world. In considering changes 
to the Act, we recommend that Congress adopt policies that follow these 
guiding principles.
    First, the overriding goal of any policy should be to promote the 
accelerated design, development, deployment and adoption of converged, 
packet-based broadband infrastructures, applications and services. The 
FCC's recent order exempting new fiber-based broadband networks from 
regulation is a good model to follow.
    Second, in our view, Voice over Internet Protocol is not a service, 
but a technology that enables multiple new services. Therefore, we 
recommend that this technology be exempt from traditional 
telecommunications regulation. We applaud Congressmen Pickering, 
Stearns and Boucher for their efforts to accelerate the debate on how 
to approach these new technologies and applications and balance 
existing social needs with tomorrow's technologies.
    Third, new rules should be applied evenly across network platforms. 
Providers who are similarly situated should face the same rules when 
providing the same services. With this in mind, Congress should 
regulate down.
    Fourth, when reforming universal service, Siemens recommends that 
Congress take the opportunity to bring the universal service program 
into the IP future as well. We understand the funding challenges. 
However, Siemens recommends searching for innovative ways to create 
incentives for providers, schools, libraries, and rural health 
providers to invest in next-generation infrastructure. In this way, 
they, just like the rest of us, will be able to take advantage of cost 
savings and new applications driven by IP-based convergence.
    And it is absolutely necessary that the United States match the 
pace with other developed countries in terms of broadband penetration. 
I am surprised that the most innovative country in the world ranks 13th 
in terms of per capita broadband penetration with only about 32 million 
broadband subscribers. All Americans must benefit from the rich media 
experiences now offered by the Internet.
    And finally, as Congress considers new policies and rules it should 
look to what has happened under the federal wireless regulatory model. 
Consumers are the winners in this market, through significant price 
reductions and the explosion of new services and technologies. The 
hands-off approach has paved the way for this consumer-focused and 
fast-growth environment.
    Thank you again for giving Siemens the exciting opportunity to 
testify before this panel. We look forward to working with you to help 
shape policies that will help drive the deployment of next-generation 
networks for all Americans.

    Mr. Upton. Thank you. Ms. Russo.
    Ms. Russo. Thank you, Chairman Upton, and members of the 
committee----
    Mr. Upton. Again, you have to hit that mike button.
    Ms. Russo. Yes. Keep forgetting. Chairman Upton, members of 
the subcommittee.
    Mr. Upton. You might get it just a little closer to you, 
to----
    Ms. Russo. Is that better?
    Mr. Upton. That is better. Yes.
    Ms. Russo. Okay.
    Mr. Upton. It will move.

                   STATEMENT OF PATRICIA RUSSO

    Ms. Russo. Thank you. Thank you for inviting me to testify. 
I am proud to represent the 31,500 Lucent and Bell Labs 
employees all around the world, and I thank you for the 
opportunity.
    As you know, Bell Labs has spent over 100 years creating 
technologies that have a profound impact on the communications 
and computing world. The industry has come a long way since 
Congress passed the Telecom Act of 1996. Today, IP-based 
technologies have dramatically changed the cost and reach 
paradigms, and will soon enable the seamless delivery of 
blended voice, video, and data services to any type of device 
across any kind of network. Many of the technologies that drive 
today's networks are fundamentally different than those that 
drove networks when the Act was developed. Therefore, it only 
stands to reason that the regulatory requirements must be 
updated as well.
    If permitted to achieve their full potential, IP-enabled 
services can help create value and more choice for consumers 
and businesses, drive innovation and investment in the sector, 
stimulate economic growth, drive efficiencies in industries 
like healthcare and education, and help the United States 
maintain a global technology leadership position. For this to 
happen, we believe it is critical for Congress to adopt a 
Federal policy framework that recognizes the changes in 
technology and the market, and is designed to promote and 
enable the converged lifestyle services that people are 
demanding. To do that, we need to minimize, in some cases, 
perhaps eliminate economic and entry regulation into the 
communications marketplace. In today's increasingly mobile 
world, our market research tells us that people want 
communications services that are simple, seamless, and secure, 
as well as personal, portable, and reliable.
    As my colleagues today have described, people want to check 
their investments, send photographs, download music, access 
educational information, make dinner reservations, and hold 
teleconferences using any end user device, and they want to be 
able to access these broadband services at home, at work, or 
anywhere in between. Lucent's Bell Labs has developed 
technologies and solutions that make it possible for these IP-
enabled services to be deployed simply and cost effectively. 
Many are available today, with many more to come.
    We are currently a major provider of open standards based 
IP multimedia subsystems, or IP-enabled third generation 
wireless technologies, like CDMA-EVDO and UMTS, to service 
providers around the world. We also provide the core backbone 
over which IP-enabled services travel in what is called the 
optical and data domain, and we are leveraging these networks 
and operations environment to offer IP-enabled services faster. 
We believe they can become an engine of growth, and 
fundamentally change the way we work and play.
    This is already at work in consumer and business 
environments. For example, Lucent's Active Phonebook 
application allows groups of colleagues to access instant 
messages on a portable device, download slides for a critical 
presentation, find out who is available to have a real time 
discussion, and set up that teleconference all at the same 
time. It does this within an environment that allows for 
privacy. The same technology could be invaluable to teams of 
first responders, soldiers in the field, or even a group of 
friends or family members who simply want to stay in touch more 
conveniently.
    It is also becoming increasingly clear that, enabled by IP, 
the distinction between wireless, wireline, and cable offers 
will continue to blur over the next few years. Our own product 
line demonstrate that convergence in real, and that 
communications markets are competitive. Therefore, Lucent is 
breaking down the barriers between our own product lines by 
developing a common IP platform to enable converged services 
across our portfolio.
    This committee is beginning the process of rethinking the 
Telecommunications Act, and how to best create an environment 
that enables consumers and businesses to realize the full 
potential of these technologies. Obviously, that requires 
change. Let me preface my recommendations by saying that any 
legislative action should promote investment and choice, should 
provide for the requirements of critical emergency needs and 
our national security, and should provide the industry some 
flexibility around aligning itself to best serve its market and 
its constituents.
    I have a few recommendations. First, given the fundamental 
differences between communications in the traditional and IP 
worlds and the complexities involved, I believe Congress needs 
to take a very thoughtful approach to the development of the 
appropriate environment for IP services. I believe that minimal 
regulation is better, and equal treatment for the same services 
should be considered. Fundamentally, this should happen at the 
Federal level. Today's communications are all about 
convergence, converging networks, converging technologies, 
converging applications, and converging devices. We are very 
mindful that new technologies will coexist with existing 
infrastructures for some time, and the full transformation to 
next generation networks will take time. If Congress works to 
break down existing barriers, it could serve to facilitate and 
accelerate the rollout of IP services.
    Second, I would urge you to consider new means to promote 
and facilitate the deployment of broadband access platforms, 
both fixed and wireless, upon which these services depend. I 
would recommend that Congress ensure that sufficient 
allocations of cleared licensed spectrum are available on a 
timely basis to service providers that are rolling out powerful 
new third generation networks. It would also be useful to 
explore ways to expedite the provisioning of broadband access 
that enables the delivery of such services.
    And last, I would ask Congress to consider increased 
support for favorable R&D tax treatment and other mechanisms 
that will support increasing research into these new 
technologies. This will encourage the development of new 
services, and will add value to our economy, and continue to 
help this country maintain its leadership.
    Your leadership in each of these areas will help all of us 
at this table to continue to develop ever more compelling 
solutions that will help the United States maintain leadership 
in the area of communications.
    Thank you, Mr. Chairman, for the opportunity to testify.
    [The prepared statement of Patricia Russo follows:]
    Prepared Statement of Patricia Russo, Chairman and CEO, Lucent 
                              Technologies
    Chairman Upton, Ranking Member Markey, and members of the 
subcommittee, I'm Pat Russo, Chairman and CEO of Lucent Technologies. 
I'm proud to represent the 31,500 Lucent employees around the world, 
and I thank you for the opportunity to testify before this 
distinguished Committee.
    Lucent Technologies shares the enthusiasm of the other panelists 
about the tremendous potential of IP-Enabled Services, and we are 
encouraged that this Committee has embarked on a careful review of the 
technologies and trends that are changing the way the world 
communicates.
    The industry has come a long way since Congress passed the Telecom 
Act of 1996. The Act was developed in a voice-centric environment, 
where time, distance and geographic boundaries drove the market. Today, 
these factors have receded to the background. In an IP-enabled world, 
voice is merely one of many applications, along with video and data, 
which are fundamentally digital packet streams of information. IP-based 
technologies have dramatically changed the cost and reach paradigms and 
will soon enable the seamless delivery of blended voice, video and data 
services to any type of access device across any kind of network. These 
changes obviously have ramifications for the way these services are 
regulated at the state and federal levels.
    As a result, there is a discontinuity between the legacy of the Act 
and where the industry and market are today. From a technological 
perspective, we have traveled much farther in the last ten years than 
anyone could have anticipated, and looking forward, we see this trend 
continuing. Many of the technologies that drive today's networks are 
fundamentally different than those that drove networks when the Act was 
developed. Therefore, it only stands to reason that the regulatory 
requirements must be updated as well.
    If permitted to achieve their full potential, IP-Enabled Services 
can help

 drive both innovation and investment in the sector,
 create value for consumers and businesses,
 stimulate economic growth,
 drive efficiencies in areas like health care and education,
 and help the United States maintain a global technology leadership 
        position.
    For this to happen, we believe it is critical for Congress to 
create at the federal level a framework that recognizes the changes in 
technology and the market, and is designed to promote and enable the 
converged lifestyle services people are demanding. To do so, we need to 
remove the existing constraints within traditional legal and regulatory 
boundaries that impede the full development of these services.
    Let me provide a brief glimpse into some of what Lucent is doing in 
the area of IP-Enabled Services. Then I'll discuss a few specific 
measures we believe Congress can take to help unlock their potential.In 
today's increasingly mobile world, our market research tells us that 
people want communications services that are simple, seamless and 
secure, as well as personal, portable and reliable. As my colleagues 
here today have also described, people want to check their investments, 
send photographs, download music, make dinner reservations and hold 
teleconferences using any end-user device--and they want to be able to 
access these broadband services at home, at work or anywhere in 
between. Lucent's Bell Labs--which is responsible for such world-
changing innovations as the transistor, the laser, and the cellular 
technology so many of us can't live without today--has developed 
technologies and solutions that make it possible for these IP-Enabled 
Services to be deployed simply and cost-effectively. Many already are 
available today, and others will be coming to market shortly.
    We are currently a major provider of open standards-based IP 
Multimedia Subsystems (or IMS) and of IP-enabled third-generation 
wireless technologies like CDMA-EVDO and UMTS to service providers 
around the world. We also provide the core backbone over which IP-
Enabled Services travel in the optical and data domain, and we're 
leveraging these embedded networks and operations environments to offer 
IP-Enabled Services faster. Because these technologies combine 
broadband bit rates with mobility, we see them as the cornerstones of 
the IP revolution. We believe that IP-Enabled Services will become an 
engine of economic growth that will change the way we work and play as 
profoundly as the Internet itself has changed the way we access 
information.
    This engine of growth is already at work. IP-Enabled Services are 
beginning to provide secure, personalized networks that are customized 
to the needs of end users, thus increasing productivity--especially in 
business environments. For example, Lucent's Active Phonebook 
application allows groups of colleagues to better manage their 
communications by tracking team members carrying a mobile phone and 
providing customized e-mail, text messages or phone alerts when a 
designated group arrives at--or departs from--a designated area. This 
means that whether you or your colleagues are on a 2G, 3G or home 
network, you can access your instant messages on a portable device, 
download slides for a critical presentation, find out who is available 
to have a real-time discussion about the presentation and set up that 
teleconference--all at the same time. It does this within an 
environment that also allows for privacy by enabling users to control 
whether they can be tracked and from how far. This same technology 
could be invaluable to teams of first responders, enabling them to see 
where each member of the team is, send plans or images and communicate 
with one another. It could help soldiers in the field share 
reconnaissance data in real time while planning their next maneuver. Or 
it could help a group of friends or family members who simply want to 
stay in touch more conveniently, and in different and fun ways.
    It is also becoming increasingly clear that, enabled by IP, the 
distinction between wireless, wireline and cable offers will continue 
to blur over the next few years. Therefore, Lucent is breaking down the 
barriers between our own product lines by developing new products, 
services and software that support our ``common IP platform approach'' 
to convergence across our entire portfolio.
    Obviously, I could spend hours explaining the latest technology 
platforms and their impact on business models, but I know my time is 
limited today. Therefore, I invite each of you to visit Bell Labs to 
see our demos first hand and to engage in a more in-depth discussion of 
where we see technology going and what impact it will have on various 
parts of the economy.
    My understanding is that this committee is interested in what 
today's technologies can do and how best to create an environment that 
enables consumers and businesses to realize the full benefits of these 
technologies. That brings me to back the need for change. Let me 
preface my recommendations by saying that any legislative action must 
promote investment and choice, must provide for the requirements of our 
critical national infrastructure needs, and must not hamper the 
industry's initiatives to align itself in a manner that best serves the 
market and its constituents. That being said, there are three key 
recommendations I would like to make.
    First, given the fundamental differences between communications in 
the traditional and IP worlds and the complexities involved, I believe 
Congress needs to take a thoughtful approach to the development of an 
appropriate legislative environment for IP-Enabled Services. 
Fundamentally, this needs to happen at the federal level. Today's 
communications are all about convergence--converging networks, 
converging technologies, converging applications and converging 
devices. However, the current inconsistencies of legislative and 
regulatory requirements leave carriers and end users in a position 
where they at times have to piece together their communications 
solutions. If Congress were to help break down these barriers, it could 
serve to facilitate and accelerate the rollout of IP-Enabled Services.
    Second, I would urge you to consider new means to promote and 
facilitate the deployment of broadband access platforms, both fixed and 
wireless, upon which IP-Enabled Services depend. In particular, I would 
recommend that Congress ensure that sufficient allocations of cleared 
licensed spectrum are available on a timely basis to service providers 
that are rolling out powerful new 3G networks throughout the country. 
It would also be useful to explore ways to expedite the provisioning of 
broadband access that enables the delivery of such services as video 
over broadband--or what many refer to as IPTV or Mobile TV.
    Third, I would ask Congress to consider increased support for 
favorable R&D tax treatment and other mechanisms, such as increased 
government funding for advanced telecommunications research, to 
accelerate research into these new technologies. This will encourage 
the development of services and applications that will add value to our 
economy.
    Your leadership in each of these areas will help all of us at this 
table to continue to develop ever more compelling solutions that will 
help the United States maintain a leadership position in the area of 
communications.
    Let me close by saying that Lucent continues to look for ways to 
collaborate with the federal government in the area of advanced 
research in communications. This is an area where Bell Labs has a long 
history of success, and we would welcome new opportunities to work 
together.
    We also look forward to working with this Committee on all of the 
important issues that surround the deployment of IP-Enabled Services 
and the broadband access services critical to their future success.
    Thank you again, Mr. Chairman, for the opportunity to testify 
before the Committee.

    Mr. Upton. Thank you. Mr. Quigley.

                  STATEMENT OF MICHAEL QUIGLEY

    Mr. Quigley. Chairman Upton, Ranking Member Markey, members 
of the subcommittee, ladies and gentlemen. Good morning. Thanks 
for the opportunity to speak before the subcommittee this 
morning.
    First, I would like to give you a little bit of background 
on Alcatel. We are a global company with operations in 130 
countries around the world, 2004 revenues of just over $16 
billion U.S. dollars, worldwide employees of about 56,000 
people. We view the North American market as vital to the 
future of Alcatel, and in fact, to the entire technology 
industry. And one of the reasons Alcatel has made investments 
of over $16 billion in technology in North America. We have 
9,000 people here, and in fact, we spend some 20 percent, a 
little over 20 percent of our North American revenue, on R&D, 
which is a higher percentage than any other part of the world.
    We have global G&D centers for IP routing and enterprise 
applications in California, and our global R&D center for fiber 
to the home technologies, and fiber to the node technologies, 
is in North Carolina, as well as our headquarters here in 
Dallas. Mr. Chairman, we see IP----
    Chairman Barton. Mr. Chairman, Mr. Chairman. I just want 
the committee to listen to this real Texas accent. I just--you 
all are always making fun of me, but that is the real McCoy 
right there.
    Mr. Quigley. Of course, an East----
    Ms. Russo. By way of Australia.
    Mr. Quigley. East Texan accent. So we--Mr. Chairman, we do 
see, in Alcatel, IP technologies as the driver of a new 
generation of communication services. IP enables services 
providers and enterprises to offer a wide array of 
applications, including voice, video, and data, over a unified 
network. The unified network drives both increased 
productivity, and gives enterprises and consumers more choice.
    Ongoing investments in IP technologies is, we see, driven 
by both demand and supply. On the demand side, we see what we 
call user-centric service. We have conducted primary research, 
as have others, that says users these days prefer to able to 
get their communications from whatever type of terminal they 
like, on whatever network at whatever time suits them. It is a 
clear trend we are seeing with--from users. For example, a 
doctor who can log on into a phone or a PC in his local 
hospital, and have that network automatically recognize him, 
provide his email, his voicemail, and secure access to patient 
records, is going to have more time for patients. And perhaps 
even more importantly, he is unlikely to miss vital 
information. It is IP technology which will make those types of 
services, user-centric services, possible.
    The other key enabler is the growing ubiquity of broadband. 
It--as it was commented before, it was not long ago that 
residential broadband was virtually nonexistent. Today, there 
are approximately 150 million broadband customers throughout 
the world, including 32 million here in the U.S. We in Alcatel, 
on a worldwide basis and in North America, are a leader in 
broadband access technologies. We have shipped, in fact, over 
50 million digital subscriber lines to service providers on a 
worldwide basis.
    So our view is the combination of widespread broadband 
supply and user-centric demand, while they are very productive 
technologies, they are going to be a real tall order for 
service providers and enterprises, and this is where IP 
technologies will come into play. IP enables us to provide all 
of these integrated services over a unified network with high 
levels of interactivity, security, and quality of service.
    Chairman Upton, I know that you have a particular interest 
in education technology, and we share your appreciation for 
what technology can do both inside the school and outside, and 
for example, Alcatel is working with Verizon to complete a 
deployment of 27,000 IP phones in Clark County, Nevada, that 
school district. Clark County has adopted Voice over IP because 
it reduces telecom costs by combining voice and data networks, 
so they can spend more resources on teaching and less on IT 
management. The IP system provides more features for the 
teachers and administrators, such as call blocking during 
school hours and increased reliability.
    Another example is IPTV. In October of last year, Alcatel 
was selected by SBC as its primary network infrastructure and 
integrator for Project Lightspeed. You may recall that this is 
a project which is going to bring IP television with ultra-
high-speed broadband to 18 million households by the end of 
2007. In addition to multiple services with high quality over 
this single pipe into each home, is bring widespread benefits, 
distance learning, telecommuting, telemedicine, and others, as 
well, obviously, as IPTV.
    But what IPTV will do for the consumer is to provide 
additional choice over the video services currently available 
from both cable and satellite providers. For example, IPTV 
customers will be able to select varying camera angles while 
watching sporting programs. The main point is that this service 
will be switched video rather than broadcast, which will be 
particularly important to those organizations wanting to offer 
niche video offerings, such as foreign or educational 
programming.
    Alcatel believes that for IP technologies to flourish in 
the U.S., we need an environment that encourages service 
providers to invest in IP-based networks, that will also drive 
industry to invest in IP technologies. This requires a level 
playing field in which all players have an equal opportunity to 
rapidly deploy IP technologies without unreasonable constraints 
or disincentives. Equally crucial is the continuing focus on 
education. The U.S. has traditionally been the world leader in 
the development of IP technologies, in great part thanks to the 
superior quality of its engineering and science programs. Many 
countries, including China and India, are now graduating 
equally qualified engineers in very large numbers. Innovation 
is crucial to the--if the U.S. is to maintain its lead in this 
ever more competitive environment. The policies that this 
Congress sets with regard to IP technologies can help ensure 
that the right incentives are in place to enable the U.S. to 
continue to lead in IP innovation.
    Mr. Chairman, I appreciate the opportunity to testify 
before the committee, and would be happy to answer any 
questions. Thank you.
    [The prepared statement of Michael Quigley follows:]
Prepared Statement of Michael Quigley, Chief Executive Officer, Alcatel 
                             North America
    Chairman Upton, Ranking Member Markey, Members of the Subcommittee, 
ladies and gentlemen. Good morning. My name is Michael Quigley, I am 
the Chief Executive Officer of Alcatel North America and the President 
of Alcatel's global Fixed Communications Group.
    Thank you for this opportunity to speak before the Subcommittee 
concerning the development of communications technologies using 
Internet Protocol. First, I would like to provide the Subcommittee with 
a little background concerning Alcatel and the equipment and services 
we offer to the marketplace. Alcatel is a global company with 
operations in 130 countries; 2004 revenues of 12.3 billion Euros; and 
worldwide employees totaling 56,000. The North American market is vital 
to the future of Alcatel and the entire technology industry. Alcatel 
has made over $17 billion in technology investments in North America. 
We have 9,000 people here, and dedicate more than 20% of our North 
American revenue to research & development that we conduct in North 
America--a higher percentage than we reinvest worldwide. Our global R&D 
centers for IP routing and enterprise applications are based in 
California, and our global R&D center for fiber to the home 
technologies is based in North Carolina. Alcatel's customers include 
traditional telephone companies, mobile carriers, private and public 
enterprises, transportation networks, and satellite operators.
    Mr. Chairman, the world is at a threshold of a communications 
revolution, and Alcatel sees IP technologies as the driver for this new 
generation of communications services. IP enables service providers and 
enterprises to offer a wide array of applications, including voice, 
video, and data, over a unified network that does not discriminate 
based on any particular application. This drives both increased 
productivity for businesses and enhanced consumer choice and 
experience.
    Ongoing investment in IP technologies is driven by both demand and 
supply. First is the demand for what we call ``user centric services.'' 
We've conducted primary research, as have others, that show that end 
users prefer to have their communications services available to them 
ubiquitously, regardless of what device they are using, or what network 
they are accessing. For example, I prefer to have my same email 
available to me on my PC at home, my PC at work, and my cell phone. If 
I have to forward it between those three, I lose precious time. By the 
same token, a doctor who can log into any phone or PC at his local 
hospital, and have that network automatically recognize him, and 
provide his email, voicemail, and secure access to his patient's 
records is going to have more time for patients. Moreover, he can be 
sure he is not missing vital information that he might otherwise have 
had to check multiple devices or networks to get. Today, we each have 
services that are only available on a particular device or network. 
Tomorrow, we can securely move information more effectively, and attach 
it to a user's profile across multiple devices and networks. IP is the 
technology that makes these user centric services possible.
    The second key enabler of this user centric world is the growing 
ubiquity of broadband. It was not long ago that residential broadband 
was nonexistent. Traditionally, the local access networks--that is the 
``last mile'' to the customer--were a bottleneck of slow, dial-up 
speeds. An offering of integrated voice, data, and video to a customer 
would not have much appeal if the user had to turn off his computer to 
use the voice services or watch video that took hours to download. 
Today, there are approximately 150 million broadband customers 
throughout the world, including 32 million here in the U.S. Alcatel is 
the worldwide and North American leader in broadband access 
technologies, with over 50 million digital subscriber lines shipped to 
service providers.
    This combination of widespread broadband supply and user-centric 
demand creates a tall order for service providers and enterprises 
alike, and they turn to technology leaders like Alcatel to help. This 
is where IP-based technologies come into play. IP enables us to provide 
all of these integrated services over a unified network with high 
levels of interactivity, security, and quality of service. Service 
providers gain the efficiency of a unified network that offers voice, 
data, and video to the customer, while satisfying the customer's demand 
to be at the center of their communications universe.
    The importance of IP-based technologies to satisfy this demand is 
best made with examples. Chairman Upton, I know that you have a 
particular interest in education technology, and Alcatel shares your 
appreciation for what technology can bring to the classroom and the 
educational opportunities that can be delivered to those outside the 
classroom. Alcatel is working with Verizon to complete a deployment of 
27,000 IP phones in the Clark County, Nevada, School District. Like 
many other large school districts, Clark County adopted VoIP because it 
reduces telecom costs by combining voice and data networks. The reduced 
network management overhead means a school can spend more of its 
resources on teaching, and less on IT management. Further, the IP 
Telephony system provides more features for the teachers and 
administrators, such as call blocking during school hours, and 
increased reliability so there is no single point of failure in the 
network. Indeed, one application we recently developed would allow a 
teacher in a classroom that has an emergency to immediately notify the 
rest of the school by simply pressing a few buttons.
    Another example that illustrates the importance of IP: In October, 
Alcatel was selected by SBC as its primary network infrastructure and 
services supplier for Project Lightspeed, which will deliver integrated 
IP Television and other ultra-high-speed broadband services to 18 
million households by year-end 2007. Alcatel will enable SBC to provide 
this suite of services by building fiber deeper into the SBC network--
using shorter copper subloops in existing neighborhoods and building 
fiber all the way to customers' premises in new housing developments. 
Equally as important, Alcatel will enable SBC to deliver multiple 
services with high quality over a single pipe to each home by 
leveraging the IP technologies it has developed.
    This new network will enable SBC to provide broadband Internet 
access that offers downstream and upstream speeds measured in megabits 
instead of kilobits. We are all aware of the widespread benefits 
offered by high speed Internet access--distance learning, 
telecommuting, telemedicine, and others.
    IPTV will offer consumers an additional choice to the video 
services currently available from cable or satellite providers. For 
example, IPTV customers may select varying camera angles while watching 
sports programming--focusing on any one angle or splitting the screen 
to watch several sporting events at once. Additionally, because this 
service will be switched video rather than broadcast video, the 
bandwidth demands on the local access network are no greater than the 
program the user is currently viewing. This will be a great benefit to 
organizations wanting to offer niche or unique offerings, such as 
foreign or educational programming.
    Alcatel believes that for IP technologies to flourish in the US, we 
need an environment that encourages service providers to invest in IP-
based networks and this will continue to drive the industry to invest 
in IP technology and standards development. This also requires a level 
playing field in which all players have an equal opportunity to rapidly 
deploy IP technologies without unreasonable constraints or 
disincentives.
    Equally crucial is a continuing focus on education. The US has 
traditionally been the world leader in the development of IP 
technologies, in great part thanks to the superior quality of its 
engineering and science programs. Many countries including China and 
India are now graduating equally qualified engineers in huge numbers. 
Innovation is critical for the US if it is to maintain its lead in this 
ever more competitive environment. The policies that this Congress sets 
with regard to IP technologies can help ensure that the right 
incentives are in place to enable the US to continue to lead in IP 
innovation, and continue to be the choice of those who invest in IP 
technology development.
    Mr. Chairman, I appreciate the opportunity for Alcatel to testify 
before the Committee, and I would be happy to answer any questions you 
may have. Thank you.

    Mr. Upton. Well, thank you all very much for your great 
testimony, and it--without a doubt, I think many of us, most of 
us, all of us, are on exactly the same page.
    Sort of interesting, last night, I was at a dinner. And--a 
lot of friends, and the question came up, how are your kids? 
And I whipped out my wallet, and I showed a very nice picture 
of my daughter, who is in high school, and my son is a few 
years old, but my son is a seventh grader, and all of the 
sudden, the fellow next to me, Dr. Jacobs, whipped out that 
phone that you showed. Did you get them all back, by the way?
    Mr. Engel. I still have mine.
    Mr. Upton. Yes. All right. Watch Mr. Engel. But he whipped 
out that phone, and with it, he showed a video of his son 
singing a little song, and talked about MapQuest, and all the 
different services that are available. I even liked the color 
of the light, blue, in terms of the services available. That is 
where we are today. Just think about where we are going to be 
tomorrow, and it is exciting to see all of that. And no 
question about it, and it makes no sense, at least in my mind, 
that we regulate any of these platforms differently. They all 
need to be the same. In fact, one of the terms that I have used 
is deregulatory parity, to allow them to advance without the 
regulations that would otherwise, perhaps, curtail their 
deployment, not only to businesses, but to families, and as--
particularly as we look to compete with other companies and 
countries around the globe.
    Does--no one disagrees with that, of the five. Is that 
right? No one would disagree with that. What I would like to 
ask each of you is what do you think would happen to the sales 
of these IP products down the road if, in fact, they were 
subjected to the same rules, the same telecommunications rules, 
that we had in the 1996 Act.
    Mr. Zander?
    Mr. Zander. Well, again, I think you hit it right on the 
head. I think we can't--we have never been able to, you know, 
stop the rate of technology, in the 30 years that I have been 
in the business, and we are undergoing as much change today as 
I have seen probably since the Internet got discussed 10 years 
ago, just tremendous disruptive technology that is going to 
bring broadband access to every man, woman, and child, probably 
on the planet, and the concern that I have in this concept of 
seamless mobility, is that we do, as you said, provide 
regulations that will inhibit the rate of change of technology 
and not provide these services, putting us at a competitive 
disadvantage, putting the consumer at a competitive 
disadvantage, and as we have seen in other parts of the world, 
the United States at a competitive disadvantage. So I urge us 
to understand that there aren't distinctions necessarily any 
more between wireline, wireless, cable, all of the technologies 
that were in the world of the net, or in the world of IP 
access, and it is going to be available on all devices to all 
consumers at any time. So we must understand the big paradigm 
shift here of the technology, the disruptive technology, and 
then from there, work to handle the various issues that were 
discussed here today.
    Mr. Upton. Dr. Jacobs.
    Mr. Jacobs. Yes, I am obviously very focused on the 
wireless part of that, and I think the wireless part is very 
powerful. It has come a long way in a fairly short time, and 
without too great a regulatory constraint. But now, we are 
moving into a whole range of new services based on having 
broadband access to a device that we carry with us where we 
might be, that is kind of indispensable to all of us. And so 
there is a whole range of services there. Voice will be going 
over the Internet Protocol, hopefully that that doesn't get 
regulated and additional charges put on that. A range of other 
services, providing video clips, et cetera. The question is how 
might those be handled. The freedom to provide these services 
that people clearly want. They are paying for them already. 
Therefore, the market is working. Allowing that to continue to 
develop, I think, is a very important part of how we proceed 
ahead.
    In addition, there is additional spectrum that is always 
required, and again, one of the aspects is making that spectrum 
available. I know one of the key aspects of that you have been 
looking at is the digital TV transition, making the UHF 
frequency channels available as the broadcasts move over to 
digital. And I think having a firm deadline there would be a 
help in supporting, providing additional spectrum to support 
these interactive services.
    Mr. Upton. Mr. Mattes.
    Mr. Mattes. I believe that businesses are not deploying 
technology because they enjoy technology. They are deploying 
technology in order to gain a competitive edge. And consumers 
are not using technology for technology's sake. We are trying 
to balance--our work requirements are always on--work 
environment and our family lives. Now, the minute you put 
regulation on top of that, we take some of the creativity out 
of the system, because I am absolutely certain that the 
applications that will drive productivity or enhance our 
lifestyles, they are not all invented at this point in time. 
People will get extremely creative. The more we put 
stipulations on them, the more we put them at a competitive 
disadvantage, as a company and as a country.
    Mr. Upton. Ms. Russo.
    Ms. Russo. Yes. I would just add to what my----
    Mr. Upton. You have got to hit that button.
    Ms. Russo. Can you hear me? I would just add, maybe, from a 
little bit different perspective. In order for companies to be 
willing to invest in the network technologies that will enable 
these services, they have to operate in an environment that 
makes that investment a good choice. At the same time, the 
services have to be adopted by the users. That requires an 
environment of choice, an environment of competition, an 
environment of cost effectiveness that would cause someone to 
adopt, to want to adopt those services, whether they are a 
consumer or whether they are a business.
    So I think, as many of us have said, creating an 
environment that is designed to promote and advance the 
investments necessary to make these services available, the 
competitive environment that allows these services to be viewed 
to be valuable by consumers and businesses, I think is what is 
required to assure that we have an environment of promotion, as 
opposed to an environment where there is uncertainty, where 
there is lack of clarity, where there is overregulation that 
will, in fact, stall the investment decisions, and the adoption 
that will ultimately occur?
    Mr. Upton. Very good point. Mr. Quigley.
    Mr. Quigley. Jim, when I arrived in the U.S. a little more 
than 5 years ago now, the U.S. was absolutely one of the world 
leaders in rolling out DSL broadband technologies. What I saw, 
though, in the subsequent years, is regulatory uncertainty 
holding that rollout up, and we in fact, I think, as one of my 
colleagues remarks, slipped down the chain of countries that 
was deploying broadband. What we see now, more recently, with 
the outcomes from the broadband unbundling, are much more 
certainty, and once again, the industry really picking up, in 
the amount of equipment and new and innovative technologies 
that are willing to be deployed. So I think there is no doubt 
in our minds that regulatory uncertainty will hinder the 
deployment of IP technologies.
    Mr. Upton. Mr. Markey.
    Mr. Markey. Thank you, Mr. Chairman. You represent the 
digital telecommunications arms merchants. You sell this 
technology to companies that are out there deploying in an 
effort to compete, and you sell to all comers. They want to buy 
your equipment to get out there and compete, you will be more 
than willing to sell to them. Could you tell us, and this is a 
yes or no--I have a second question which will ask, I will ask 
for longer answers, but this one just a yes or no. Could you 
tell us whether you support or oppose the ability, with 
appropriate nondiscriminatory protections, of municipal 
entities, and municipal utilities, to deploy broadband 
infrastructure in their communities? Yes or no. Mr. Zander?
    Mr. Zander. I am going to go first. Can I go last?
    Mr. Markey. I will let anyone down here who wants to go 
first. Anyone have a view on that?
    Mr. Quigley. Municipal utilities, yes. Yes, we would 
support----
    Mr. Markey. You would support----
    Mr. Quigley. Municipalities, yes?
    Mr. Markey. Okay. Thank you.
    Mr. Jacobs. It is hard to make a yes or no answer. 
Because----
    Mr. Markey. Oh, you got to say yes or no.
    Mr. Jacobs. Right. Because there is an economic issue here, 
and I think that--with----
    Mr. Markey. Yes.
    Mr. Jacobs. [continuing] carriers providing wireless 
services at an almost all you can eat fixed monthly amount, 
that makes the competition for a local area----
    Mr. Markey. No, but if they want to get in--if the 
municipality wants to get in.
    Mr. Jacobs. If the service is being supported already, I 
don't believe there is a need for the municipality to become 
involved.
    Mr. Zander. I will say yes.
    Mr. Markey. You would say yes, they should be allowed in.
    Mr. Zander. Yes.
    Mr. Quigley. I would perhaps just add one other point, if I 
could, Congressman Markey. The--in terms of supporting 
municipalities, providing that it is on an equal and----
    Mr. Markey. Yes. Absolutely.
    Mr. Quigley. [continuing] equitable basis.
    Mr. Markey. Absolutely.
    Mr. Quigley. In other words, not publicly funded, 
competitive----
    Mr. Markey. That is right.
    Mr. Quigley. Somebody has to come in competitively.
    Mr. Markey. Precisely. Yes. Mr. Mattes.
    Mr. Mattes. I would go a definite maybe on that one. I 
think if there is a level playing field.
    Mr. Markey. A level playing field. Assume that.
    Mr. Mattes. There might be ways of doing it, but it has to 
be a level playing field----
    Mr. Markey. Okay.
    Mr. Mattes. [continuing] between the municipalities and 
the----
    Mr. Markey. Okay. Assume that level playing field, and Ms. 
Russo?
    Ms. Russo. Obviously, there are lots of complexities in 
this kind of question, including your request for a simple yes/
no.
    Mr. Markey. But assuming all things are equal, there is no 
discrimination.
    Ms. Russo. Yes. Assuming everything is equal----
    Mr. Markey. Yes.
    Ms. Russo. [continuing] and there is no discrimination, it 
would be hard to argue you can't provide the service. It is how 
do you assure everything is equal----
    Mr. Markey. Right. But----
    Ms. Russo. [continuing] is really----
    Mr. Markey. [continuing] if it could be done.
    Ms. Russo. [continuing] yes, is really the question.
    Mr. Markey. If it could be done, you would support it. 
Second question, one of the cornerstones of the Internet is 
that it is an open architecture network, availing entrepreneurs 
of opportunity to innovate and to experiment, and extending to 
consumers the ability to reach the services of their choice, 
and use the equipment of their choice. Could each of you please 
comment on the importance of retaining an open architecture 
model for our IP broadband future, and the advisability of 
ensuring that the Internet remains a platform for innovation, 
in terms of stimulating economic growth and creating jobs? Mr. 
Zander.
    Mr. Zander. Well, it is, you know, it is just essential. I 
think it is what has made this incredible, you know, growth and 
opportunity, and the whole mobility efforts of the last 10 
years, and we as vendors and suppliers, as you mentioned, have 
an obligation to make sure that the Internet does remain open, 
that there are published interfaces, that we have the 
specifications. I mean, the real problem today, in talking to 
the average consumer, is the complexity we bring to them. And 
for seamless mobility to work, we need to increase mobility 
with less effort, and you will know the Internet, I think, 
really has arrived when it follows you, not when you have to 
follow it, and I urge all of us, as vendors, and all of you, to 
help us maintain an open set of interfaces and standards that 
allow us to build this Internet of the future.
    Mr. Markey. Thank you. Dr. Jacobs, open architecture.
    Mr. Jacobs. That is much easier one, yes.
    Mr. Markey. Thank you. Mr. Mattes.
    Mr. Mattes. Open architecture ensures both creativity as 
well as competition, and adherence to standards is the only way 
to go about it.
    Mr. Markey. Okay. Thank you.
    Ms. Russo. We support an open architecture, it--for a lot 
of reasons. It is radically different, by the way, than the 
architecture of networks of the past, which have been more 
proprietary. But in an open architectural environment, you can 
get lots of companies involved in helping to create the 
services that will enable a broader and richer set of options 
for consumers and businesses, and should spur economic growth 
and job development.
    Mr. Markey. Okay. Thank you. Mr. Quigley.
    Mr. Quigley. Yes. Open architectures and general standards 
have been the cornerstone of being able to provide 
interoperability across states, across the world. So I think 
most of us in the industry would absolutely support open 
architectures, and also support the important area of standards 
development, such as address takes a lead here in North 
America.
    Mr. Markey. Thank you. Thank you, Chairman.
    Mr. Upton. Mr. Barton.
    Chairman Barton. Thank you, Mr. Chairman, and you know I 
only tease people I like, so I am not--I think you have got a 
great accent. Don't hold that against me. Which country is No. 
1 in the world in terms of broadband penetration?
    Ms. Russo. Korea.
    Mr. Mattes. No. 1 is Korea at this point in time.
    Ms. Russo. Korea.
    Mr. Mattes. No. 2 is Canada, and No. 3 is Denmark.
    Chairman Barton. Denmark.
    Mr. Mattes. Followed by countries like Iceland.
    Chairman Barton. Does Argentina have more broadband 
penetration than the United States?
    Mr. Mattes. No, sir.
    Chairman Barton. They don't? See, I thought they did. So 
why are we so far behind?
    Mr. Mattes. That is a question with a lot of answers, but 
the one thing, if you take a look at those countries, what you 
will find is, with the exception of Canada, every single 
country ahead of the United States has a smaller geographic 
footprint than the United States, and that might be one part of 
the answer.
    Chairman Barton. So part of it is just our geography.
    Mr. Mattes. And maybe the way we deal about it, and the 
regulation, and the regulatory----
    Chairman Barton. State regulation has no part of it?
    Mr. Mattes. It sure does have a part of it.
    Chairman Barton. It has--it does have a part of it.
    Mr. Mattes. Absolutely.
    Chairman Barton. So how many of you all think that whatever 
we do here, if we do anything at all, it ought to have Federal 
preemption? I saw 2 hands go up, 3, 2 hands went up twice.
    Ms. Russo. They obviously feel strongly.
    Chairman Barton. I mean, isn't that an automatic, that if 
we are going to have a model that is forward-based and 
innovative, you have to preempt the State and local governments 
in terms of the rollout? I am not talking about access, in 
terms of geographically going in and putting in the broadband, 
and those--but just the regulatory model. I mean, how could we 
get to No. 1, if we don't do that? Does anybody think we 
should--we shouldn't----
    Mr. Quigley. Perhaps I can comment. If--a good example that 
Andy mentioned was Canada, which is up there, which is also 
very geographically dispersed. They were running a considerably 
higher broadband penetration than the U.S. was, and if you look 
at the difference there, the CITC really focused on facilities-
based competition as they regulated broadband. So I think--my 
view is that facilities-based competition is important, as is 
preemption at the Federal level, to make sure that the people 
who are willing to invest don't have to deal with 51 different 
regulatory bodies as they try and roll out this new technology.
    Chairman Barton. See, I think it is a given that--yes, sir.
    Mr. Zander. Let me--you know, I think certainly that is 
part of the answer. I think if you ask why we fell, you know, 
to number 13, whatever it is right now--in my travels, is--when 
I go to Korea or China, and I have just been over there, or 
even Japan or India, you tend to sit down with government 
official, and there seems to be mandate from the top. There 
seems to be a program. There seems to be a platform for 
broadband as well as technology investments, as well as the 
whole communications area, and there is a program to get this 
done, and it does involve the regulation. It does involve the 
Federal mandates, as you pointed out. I just think the U.S. has 
to really approach this whole idea of broadband and 
communications, along with education, along with technology 
investments, as a natural platform. And it concerns me to look, 
not only at the rollout of broadband, but all the things that 
go with it, as I mentioned. As I go to these countries, we are 
falling behind, I believe. And I am very anxious and excited to 
see what we are talking about here today. It is long overdue, 
and I think we have to understand the competitive advantage. It 
is just not about getting TV to an individual on a phone. It is 
about competitive advantages for our businesses. It is about 
competitive advantages for everything we do every day, so this 
is very, very important, what we are talking about.
    Chairman Barton. Mr. Jacobs, you had something you wanted 
to say.
    Mr. Jacobs. Yes, I think when you were referring to the 
broadband access, you are probably very focused on the 
wireline, and that of course has been going up, but there are 
other countries further ahead. There is also, of course--the 
world is changing very rapidly--a lot of that broadband access 
is now going wireless, and your statement about needing Federal 
rules to cover that, since wireless devices, mobile devices, in 
fact, can be taken across State lines and often are, I think it 
is important to have that Federal rules overruling. So I would 
certainly support that. But the situation is changing rapidly. 
I think any rules that one comes up with, you have to look 
ahead to that, at wireless, indeed, and wireless devices 
becoming very powerful. That, indeed, is going to be a major 
way in which everybody does access the Internet, and so the 
world is indeed changing.
    Chairman Barton. Yes, ma'am.
    Ms. Russo. Yes, I would just punctuate what two of my 
colleagues have said. First of all, in countries where you see 
significant investment, there is a governmental priority and 
initiative and focus on getting that done, and the appropriate 
mechanisms put in place, depending on the country, to make that 
happen. So it is deemed to be a priority, and it has been 
executed that way. With respect to the question about State and 
Federal purview of responsibility, for all the reasons we talk 
about the need for change, I think it is very important that 
the role of State regulation and Federal regulation be examined 
as part of the work that is being done, because the dramatic 
changes that have occurred in the technologies, the presence of 
wireless broadband access in such a huge role, the fact that 
time, distance, and geography are far less relevant than they 
have been, I think requires that to be looked at as part o the 
work of the committee.
    Chairman Barton. Thank you. And thank you, Mr. Chairman.
    Mr. Upton. Mr. Engel.
    Mr. Engel. Well, thank you very much, Mr. Chairman. Before 
I begin, I want it duly noted that I am wearing an Upton 2006 
button.
    Mr. Upton. It is going to work----
    Mr. Engel. And I want to know when the hearing is coming to 
New York, the next field hearing.
    Mr. Upton. I know when it is.
    Mr. Engel. Okay. Thank you. And Mr. Zander.
    Mr. Upton. June.
    Mr. Engel. Thank you. Mr.--June--Mr. Zander mentioned 
traveling all over Korea and China, and since you and I were 
traveling buddies over in Korea and China not long ago, it is 
very, very true when we see different governments making an 
effort, and making it a priority to get in line. Mr. Quigley, 
you used the words regulatory uncertainty, and I think those 
are the key words--and I think that--when we are talking about 
the deployment of IP technology. I believe that if you take a 
look at the Telecommunications Act, the first one was 1934, I 
believe, and we rewrote it in 1996. That is 62 years, and now 
it is 9 years since 1996, and we can see how things are rapidly 
changing, that 9 years later, we need to have a rewrite. I 
happen to believe that we should have a total rewrite of the 
telecommunications laws. I am wondering what some of your 
feelings are about a total rewrite, or perhaps a limited 
rewrite dealing with IP services. Does anybody feel strongly 
about it one way or another, about what we ought to be doing? 
Yes.
    Mr. Quigley. In response, Congressman, I think--probably if 
I am--I guess I wouldn't be too far off saying that my 
colleagues would likely agree with me which--whatever we see, 
we would like to see it happen relatively quickly, so that we 
do get the certainty that we need in this domain. If that means 
that a complete rewrite is going to take a long time, we would 
probably be less enthusiastic than if we could address the key 
areas of IP technologies more quickly.
    Mr. Jacobs. Let me, perhaps, touch on one aspect, which is, 
again, has to do with wireless. There is the issue between 
licensed spectrum and unlicensed spectrum. There is a need for 
some regulations in order to allow networks to be planned, the 
investments to be made, to make sure that there is no 
interference. Those types of requirements, I think, are needed 
as one rewrites the rules here. One also has to look at, in a 
little bit more detail, at the kind of services, and there is a 
range of them, from very wide area coverage, and typically 
there, one needs to use licensed spectrum to prevent 
interference, down to local, home, office, campus, and 
personal, just connecting from a device to a display, a 
keyboard, whatever. The latter two, the personal area, the 
local area, don't need regulation. The signals typically don't 
go very far. It is a rather different situation. The wide area 
needs to be carefully examined, and I think the regulations and 
licensing is required there.
    Mr. Zander. I think there are three things I will say. One 
is, sense of urgency. I think, as you said, this is long 
overdue to address these issues, and we have to bear that in 
mind, that this technology is moving very fast, and the user 
requirements are also going. Two, I would say that we need to 
focus on the regulation of IP-enabled services with a light 
touch. And three is to tear down these regulatory silos of the 
platforms, including cable, wireline, and wireless. So I think 
if we focus on those things and start there, I think we will 
make a lot of progress moving this along pretty quickly.
    Mr. Mattes. Let me just give you a little feedback of what 
many of the service providers are pondering on right now. They 
are trying to define the business models on how they can 
provide good service to their customer, and of course, earn 
good money while they are doing that. And there are some 
fundamental decisions they all have to take at this point in 
time. I think the more we give them security, that once they do 
invest into their new business models that they can reap the 
benefits of the investment, the better it is for the industry, 
and the faster we can provide that security and guidance to 
them, the better. So you might want to--just according to how 
fast can you provide security for investment decisions.
    Mr. Engel. You know, it is so obvious to me that we need 
regulatory parity over different systems of communications. You 
know, in these regulatorily uncertain times, you know, it 
quacks like a duck, it walks like a duck, it looks like a duck, 
but we can't call it a duck. It doesn't make much sense to me 
at all. I am wondering if I could just slip in one quick 
question, and that is as Congress is going to require VoIP to 
be compatible with 911, I would like to know, if anything, what 
your companies are doing to make your products compatible? 
Quickly.
    Mr. Jacobs. Well, it is a much easier situation in some 
sense with the wireless phones, because they already have the 
capability of using the GPS to get a very accurate position 
location, and then sending that the same way that is currently 
being done on circuits, which being able to send out over the 
packet switch as well. So I think we will have--that problem 
has been worked, needs to continue to have attention paid to 
it, but I think that that will happen with the mobile devices.
    Mr. Zander. The technology is there. We just have to go do 
it.
    Ms. Russo. Yes. I mean, I would just add that there is a 
clear recognition on the part of the manufacturers that thing 
like CALEA, E911, are important elements of networks, 
regardless of whether they are IP-enabled, that are required to 
support emergency preparedness, emergency issues, and really, 
the security of the critical infrastructure. So we are building 
that into our product plans, both from a hardware and a 
software standpoint.
    Mr. Engel. Thank you. Thank you, Mr. Chairman.
    Mr. Upton. Mr. Radanovich.
    Mr. Radanovich. Thank you, Mr. Chairman. Can I get a sense 
from anybody who wants to answer this question, in order to 
kind of build the platform for the changes, I think, that we 
would like to do in any telecom legislation, would be what 
would be the benefit to consumers? And on that, I am wondering 
if you can--is it possible for you to quantify for us the 
savings to customers of having all the--this communication 
services and devices converged onto one platform? Can you build 
a case for how it will help American business or consumers in 
general?
    Mr. Mattes. I think the case can be made, but to give you 
just a very tangible example, is if we check our pockets today, 
probably all of us carry 3, 4, 5 different devices for 
different networks and different environments with us, and I 
don't think we enjoy checking 5 voice mail box and 5 email 
boxes, and making sure we are always synced up. The minute that 
we converge, the interface between the circles that we are in, 
because we are in a family circle, we are in a company circle, 
we are in a friend circle, gets so much easier, and you can put 
real dollar savings to that, if you really want to run the 
models on that.
    Ms. Russo. I would add from the consumer standpoint, there 
is the dimension of what services are made available to enhance 
their own personal productivity, their own efficiency, their 
own entertainment, their own education, whatever. So there is 
an aspect of this around more services, more useful services 
for consumers. In an environment where, if the consumer has 
choice, because there is investment going on in the industry 
for a broad array of services from many different places, then 
I think you could make a case that it is good for the consumer, 
because it enhances, you know, we call them lifestyle services. 
Right. It enhances their lifestyle. It makes them more 
efficient. It makes them more productive, providing the 
portability, the personalization, the customization, that in 
essence brings the network, really takes the network to them as 
opposed to them going to the network. So that is the kind of 
thing that is possible with IP services, and that will happen 
if investment is incented, and the regulatory environment 
promotes that.
    Mr. Radanovich. It is not really--well, it is an issue of 
dollars, but it is more expressed on convenience and 
efficiencies, and simplification of the communications, right?
    Ms. Russo. Yes, but what comes with that, of course, is 
bundling. So what you are doing--what you are getting from 
multiple services today can be combined and converged or 
blended services, and so from a pricing standpoint, much as 
what we have seen happen in the industry, there is a pricing 
model that goes along with that that makes it worth what paid 
for kind of a model.
    Mr. Zander. Just let us not affect--let us not also forget 
the enterprises and businesses, what mobile communications can 
do for companies like myselves, I have 66,000 workers, and if 
you take a look at our workforces today, they are mobile, and 
to give the ability to have field service people, manufacturing 
people, office workers, the ability to have their mobile 
communications with them at all times, to be able to walk 
seamlessly through environments, whether it is in the office or 
out in the open, is a tremendous amount of productivity 
improvements that I can measure to the bottom line today. Also 
in public safety and our military and our defense, to be able 
to bring these kind of mobile services improves the ability, 
you know, improved efficiencies and capabilities in those 
areas. So this, as far as business and government and public 
safety, is a great productivity improvement, and as Pat talked 
about, for the consumer, is an efficiency and ability to access 
services for convenience for the consumers. So I can actually 
measure it in my own company as I roll out mobile devices and 
the cost savings I can see.
    Mr. Radanovich. Mr. Zander, can you quickly, before my time 
is out, you had mentioned earlier about the three things that 
you like to see in reform legislation. Can you give those to me 
real quick? I missed them.
    Mr. Zander. Well, the first thing I said was speed, sense 
of urgency. Being in tech all my life, I just--I look at the 
rate of technology changes, and I ask that we act with a sense 
of urgency, which I see here today. Second is to the regulation 
of IP services, do it with a light touch, and the third, I 
said, is tear down the regulatory silos of the platforms such 
as cable, wireline, and wireless. We have to think of this, 
seamless communications and seamless mobility.
    Mr. Radanovich. Okay. All right. Thanks very much. Thank 
you, Mr. Chairman.
    Mr. Upton. Mr. Boucher.
    Mr. Boucher. Thank you very much, Mr. Chairman, and I want 
to join with my colleagues in welcoming these distinguished 
witnesses, and thank each of you for your outstanding and very 
informative testimony this morning. I was personally pleased to 
see the convergence among your views, that the time has arrived 
for us to legislate a new set of regulatory parameters with 
respect to IP applications. I think Mr. Stearns, in his opening 
remarks, may have described the legislation that he and I have 
put forward, that is designed to achieve that goal. Basically, 
it follows the outline that most of you have suggested we 
should pursue this morning. It would declare all Internet 
applications to be interstate and subject to exclusive Federal 
jurisdiction. It would then limit the Federal regulatory 
authority to very narrow areas, E911, disability access, CALEA, 
law enforcement access, universal service, and appropriate 
intercarrier compensation.
    Third, it would declare that all IP services be neither 
telecommunications services nor information services, and would 
break us away from the silos into which all services over the 
last decade have had to be wedged, and then it would declare 
that all platforms would receive the same regulatory treatment. 
That is essentially what our legislation achieves. I have one 
question that is a very short one for you, and would hope that 
you could limit this just to a yes or no. Would you agree that 
our legislation, with regard to IP applications, should be 
broad in scope, and that it should cover all IP applications, 
including things such as multi-channel video, which I note that 
two of the leading telephone companies are now providing over 
IP, as opposed to simply being a very narrow, targeted statute 
that only addresses VoIP, and one legislative proposal we have 
had before us would just address VoIP. So could we get 
agreement from everyone that the statute should be broad, and 
should cover all of the advanced Internet applications?
    Mr. Zander. Yes.
    Mr. Jacobs. A very strong yes.
    Mr. Zander. Yes.
    Mr. Quigley. Yes.
    Mr. Boucher. All right. Any disagreement? No disagreement. 
I have another subject that I would like to address with you, 
and I was pleased to hear that Mr. Markey opened the 
conversation with respect to open architectures. And I was 
pleased to note your responses, many of which related to the 
need to have uniform standards and full interoperability. But I 
think there is another aspect of open architectures that 
deserves our consideration, and that is this. I strongly think 
that every platform provider should be required to offer 
nondiscriminatory treatment, and by that, I mean that someone 
who is offering a cable modem service or a DSL service or other 
broadband application should not be permitted in the law to 
discriminate in favor of his own product being offered across 
that service. So the cable modem provider should not be able to 
discriminate in favor of his multi-channel video package 
offered across the cable modem service to the disadvantage of 
an independent provider of multi-channel video. And a telephone 
company, by the same token, offering DSL, should not be able to 
discriminate in favor of its VoIP product, for example, to the 
disadvantage of some independent offeror of VoIP.
    Can we get agreement that such a provision is appropriate 
and that this basic nondiscriminatory treatment concept should 
be a part of the law? Ms. Russo.
    Ms. Russo. Let me--yeah, let me just say. I don't--this is 
a complex set of issues, so I would be more than happy to work 
with you on this, but I would certainly like a little bit more 
time to understand all of the ramifications before I just 
blanketly say, you know, yes, I agree.
    Mr. Boucher. That is fair enough.
    Ms. Russo. Okay.
    Mr. Boucher. Would others like to take a more definitive 
plunge at this point?
    Ms. Russo. Others willing to do that?
    Mr. Boucher. Mr. Quigley.
    Mr. Quigley. I would absolutely support what Pat said. This 
is a very complex area. I think all of us, I certainly--I would 
like to take a little more time and give you a considered 
answer.
    Mr. Boucher. Okay. Thank you. Anyone else?
    Mr. Jacobs. Well, in some sense, you are talking about a 
level playing field and allowing competition to occur. I think 
the more competition, the better benefits for both consumers 
and businesses. So in that sense, yes. As one gets into the 
details of what exactly is being controlled or made equally 
available, then it takes some very careful wording on that. But 
for example, the equal access to different content over the 
different media I think is very important.
    Mr. Boucher. I mean, I see this as really a pretty simple 
proposition. What we are basically saying through this kind of 
nondiscriminatory treatment requirement is that someone that 
offers a broadband platform has got to let the customer of that 
broadband service go to any website he wants, and have total, 
unrestricted access to whatever that particular website might 
offer. And to allow anything less than that I think really runs 
the risk of broad interference with the functionality of the 
Internet. Now, phrased in that way, do I get a different 
answer? No? All right. Well, thank you all very much. This has 
been a helpful conversation. On reflection, if you would like 
to submit some additional comments answering that particular 
question, I would be very interested in reading your answers.
    Thank you, Mr. Chairman.
    Mr. Upton. Thank you. Mr. Ferguson.
    Mr. Ferguson. Thank you, Mr. Chairman. Again, I want to 
welcome the panel, and appreciate your comments this morning, 
and your insights, as we look at a really huge task. And again, 
I wanted to talk to Pat Russo a little bit, not only because 
Lucent, of course, is headquartered in my district in New 
Jersey, but the storied Bell Labs facility that is so much a 
part of Lucent, so many of the technologies that we are talking 
about, and that we are dealing with the complexities of, as we 
look toward writing this legislation, really come from--have 
come out of Bell Labs, and it is something that we are not only 
very proud of in New Jersey, but something that I think is a 
huge benefit to people as we now see, literally around the 
world.
    With these new technologies, of course, come great 
complexities, and they are, in some ways, fraught with peril. 
We have, because of the increased ability to share information 
and data, and services along with these technologies, come 
obviously potential problems, potential fraud, theft, security-
related issues. And I wanted to ask Ms. Russo if you would, 
perhaps, comment on--because Bell Labs and Lucent have really 
been at the forefront of so many of these technologies that we 
are now enjoying and are able to employ, if you could talk a 
little bit about what some kind of security risks or security 
issues that we deal with. As we deal with these great new 
technologies, they have to be, I would--I got to believe--
coupled with similar advances in security technology. Can you 
talk a little bit about that, as it relates to your work in the 
company?
    Ms. Russo. Yes. I think the observations and the comments 
that you make are absolutely right on. Bell Labs has a history 
in building security in, and reliability into networks 
traditionally, and it is an area of very high priority for us, 
from an advanced technology standpoint. In addition to the work 
going on, not only in Bell Labs, but in, I am sure, many other 
companies around security for these next generation networks, 
there is also a lot of work in the industry going on that I 
would just make the committee aware of. The National Security 
Telecommunications Advisory Committee, where I serve as vice 
chair, has taken a major task to look at security requirements 
associated with next generation networks. You should hear that 
as IP-enabled networks. There is a lot of very good work going 
on by a taskforce of the industry in that regard.
    At the second--additionally, the National Reliability 
Council, NRIC, is another body that is adopting initiatives 
around security for IP networks. So there is a lot that is 
going on. There is a lot more to do, but I think all of us in 
the industry share the sense of urgency about what is different 
in these next generation networks, and what has to be cared for 
from a security standpoint. There is a lot of investment going 
into it, and there is a lot of industry work going on.
    Mr. Ferguson. Well, I appreciate that. And it is--I just 
want to reiterate my concern and interest in this particular 
issue. We are all excited about and thrilled and awed by the 
technologies that are available today. And frankly, that will 
continue to be developed and made available, need to be made 
more available to Americans and people around the world. And we 
are, I think, unanimous, I would imagine, in our desire to 
expand accessibility and availability of these technologies, of 
creating a marketplace where companies can compete and offer 
these services and these technologies to people. Because there 
is, you literally can't quantify the good that can be done.
    Ms. Russo. Absolutely.
    Mr. Ferguson. To build the economy, to build quality of 
life for people. But as I say, we need to make sure that we 
always keep in mind the security of these technologies, because 
with more and more information and data and whatnot being, you 
know, traveling around and being able to be shared more easily, 
we need to make sure that bad actors aren't empowered by, 
perhaps, an oversight in some way of security issues. Did you 
want to add something to that? I am sorry.
    Ms. Russo. No. Oh. Go ahead.
    Mr. Ferguson. Mr. Mattes.
    Mr. Mattes. If you talk about security, you actually want 
to look at it from two ways. The one way is how to keep the bad 
guys out, that is, all the firewalls and everything that we are 
working on. The other one, which will be equally as important, 
is let the good guys in. As we are in such a mobile 
environment, once I hook up to such a network, what am I 
allowed to do so? And as companies become more and more open 
ecosystems, with subcontractors--take the automotive industry, 
you don't even notice where the car seat manufacturer stops and 
the car manufacturer starts. Who is allowed to do what if you 
are part of an extranet, or a mobile workforce? And those are 
the two flip sides of security, and both will drive the 
deployment of such technology as we embrace better solutions.
    Mr. Ferguson. Well, I--just to close, I would look forward 
to continuing to work with all of you. We certainly appreciate 
your willingness to be here today, and to share your expertise 
with us, and we are going to need your continued expertise as 
we work on this bill.
    Thank you, Mr. Chairman.
    Mr. Upton. Thank you. Mr. Wynn.
    Mr. Wynn. Thank you, Mr. Chairman. I would like to thank 
all of the panel members for opening up, or giving us a vision 
of what the new world is going to look like. Let me ask just a 
couple of quick questions.
    I believe, Ms. Russo, I heard you make a remark that we 
need to have equal treatment for the same services. I also 
believe, Mr. Mattes, that you were saying something along the 
same line. In view of that, do you believe we ought to consider 
a more functional approach to regulation, more along the 
European model, so that regardless of the industry, if you do 
this service, this is how you are regulated by this branch of 
the FCC, or this section of the FCC, as opposed to what we are 
doing now, which seems to focus more on what you call yourself? 
Ms. Russo, and then, Mr. Mattes.
    Ms. Russo. Yes. My point was to suggest that in an 
environment where services are becoming increasingly IP-
enabled, voice, for example, is an application that is a set of 
bitstreams that runs over the same network as data, text, et 
cetera. And it gets provided from--in many ways. So the point I 
was trying to make is that certainly, looking at what is the 
service, and consideration should be given for treating 
services the same, regardless of who is providing them, and 
if--and so, you know, it is----
    Mr. Wynn. Is that kind of a yes?
    Ms. Russo. Yes, conceptual. Yes.
    Mr. Wynn. To functional regulation?
    Ms. Russo. Yes.
    Mr. Wynn. Okay. Mr. Mattes. Am I pronouncing your name 
right?
    Mr. Mattes. Yes, sir. Absolutely. It should be more 
functional. The one thing I would like to add to it is if you 
compare different levels of regulation, what you might want to 
consider is going to the lowest level of regulation if you 
compare those functions, rather than the opposite.
    Mr. Wynn. You have got to get that in. I----
    Ms. Russo. Yes.
    Mr. Wynn. I understand.
    Ms. Russo. It is an important point.
    Mr. Wynn. Okay. Ms. Russo, you said that we ought to 
probably look at eliminating some regulations. Could you give 
us an example, or a couple of examples, of things that you--
regulations that currently exist that you think are impeding 
the development of these IP services?
    Ms. Russo. Yes. I was suggesting that as the committee 
looks at the Act and the changes that are necessary with 
respect to the Act, thought should be given to are there areas 
where regulation exists today, where it will no longer be 
necessary as these technologies roll out.
    Mr. Wynn. Any specifics at this point? Well, I will tell 
you what. Perhaps I can follow up, send you something, a 
question----
    Ms. Russo. Yes.
    Mr. Wynn. [continuing] in writing, and if you could provide 
us with that.
    Ms. Russo. I would like to do that.
    Mr. Wynn. That would be helpful. Let us see. Mr. Quigley, 
you were talking about facilities-based competition as one way 
to increase our broadband penetration. Can you talk about that 
a little bit more? How would we promote this facilities-based 
competition?
    Mr. Quigley. It is--Congressman, when I was mentioning 
facilities-based competition, it was an observation of what I 
have seen, for example, in Canada, which we supply a lot of 
technology to. And there, there was no reluctance on the part 
of our customers, the people who build, end up building 
networks, to invest, provided they realized they were competing 
with people who were also making investments, on an even basis. 
There is more trouble--we had more trouble in the U.S., where 
there was, frankly, people arbitraging investments that others 
were making. That is the type of area in which people shy away 
a little bit from making big investments. If you are not sure, 
you have got to, then, make those facilities available to 
others who are not making equivalent investments. And I think 
it is very important in the regulation that we try and make 
sure it is evenhanded. Everybody has to invest equally.
    Mr. Wynn. Thank you. I agree with that. Dr. Jacobs, you 
were talking about the need for more spectrum, and you 
commented on licensed and unlicensed. Would you give me your 
position on the role of unlicensed spectrum?
    Mr. Jacobs. Yes, I think unlicensed spectrum has been very 
valuable in providing for personal area and local area 
networks. That is, again, the ability to have hotspots within 
your home, within your campus, at certain areas where there 
might not otherwise be coverage. Those can be unlicensed 
because they don't cover much of an area, and therefore, the 
possibilities of interference are much more limited.
    The wide area, that is, systems that cover very large areas 
and provide the services over very large areas, there, you have 
the opportunity for interference to come in, in fact, come and 
go, and therefore, be very difficult to react to that 
interference. And so there, I think, it is very important to 
have licensed spectrum.
    Mr. Wynn. Can you give me some sort of geographical 
parameter for what you would consider to be an appropriate zone 
for unlicensed spectrum?
    Mr. Jacobs. I don't think there is any very specific 
number, but something in the order of perhaps several hundred 
feet. The use--I can do it somewhat technically. The use of 
very high frequencies automatically means that the signals get 
weaker as they go out further, and so if you go to unlicensed 
in the 2 or 3 gigahertz and higher frequency bands, then you 
tend to not run into a problem. One difficulty with giving a 
specific radius is radio waves don't necessarily behave too 
well. You can't confine them. And so again, it is--the purpose 
is supporting just local or personal uses, and versus just 
trying to cover a very wide area with a service.
    Mr. Wynn. Okay. Thank you very much. Thank you, Mr. 
Chairman.
    Mr. Upton. Thank you. Ms. Blackburn.
    Ms. Blackburn. Thank you, Mr. Chairman, and I want to say 
thank you to each of you on the panel, for being here today. I 
have certainly enjoyed listening to your comments. And this 
past weekend, I had the opportunity to spend some time with my 
Screaming Eagles out of Fort Campbell, the Daring 101st, down 
at Fort Polk, Louisiana. They are getting ready to redeploy to 
Iraq, and had the opportunity to look at some of the things 
they are doing with some of the VoIP technology, and talk about 
some of the successes, talk about some of the problems. So I 
enjoyed hearing what you had to say about an open architecture 
and convergence in a single platform, because some of the 
problems we have in those protocols is data conversion, being 
able, where those--the generation in which we are right now 
with those protocols, being able to transfer some of that data. 
So I appreciate the work that you all are doing.
    I have got a couple of different questions. One pertains to 
your bottom line, one is going to pertain to your structure. So 
let us talk to the bottom line first, and I tell you. I think 
it is very difficult to be working off of a piece of 
legislation, probably for you all 9 years old, the mindset, or 
the attitudes that went into building that are probably 10, 12 
years old. And you are dealing with the technology that has a 
life cycle of about 2 years, and then you are on to something 
new. So we know that environment can be very difficult. And you 
all have talked a little bit today about what you are investing 
in R&D. We have talked some about regulation, taxation, the 
impact that that has on how you do your job, and the type of 
investments that you are able to make into your job. And Ms. 
Russo, you talked a little bit, touched on, just barely touched 
on tax incentives on R&D.
    What I would like to hear from each of you is what 
percentage of your annual budget are you spending meeting the 
burden of regulation and taxation in the U.S., and what 
percentage of your budget--I think Mr. Quigley is the only one 
who stated it at 20 percent for them, but what percentage are 
you spending on R&D, and as we move forward into a different 
environment, or into the next generation where you are using an 
open architecture, or a converged platform, what type savings 
would you visualize the American consumer receiving? And if 
anyone would like to start. If you have that with you, great. 
If not, if you want to submit that to me later, that would be--
that is fine, too. Anyone who would like to answer first, go 
ahead.
    Mr. Jacobs. First of all, with the very rapidly changing 
industry, one needs to be investing in R&D. You need to 
continue to do that, even when the industry slows down a bit, 
because you know that over time, it is going to be growing. We 
have been continuing to increase our R&D. We are pretty much 
limited often by the availability of trained people, and so 
this issue of making sure our universities are producing more--
K-12 is doing a better job, all of that becomes quite 
important. But R&D expenses are between 15 and 20 percent of 
revenues, probably now getting close to the 20 percent point.
    With regard to the savings to consumers, I think we are 
going to converge devices. Just we do carry a device with us at 
all times, a telephone, but now, it does many other things, and 
because of the increased power, it is just going to handle most 
tasks that we are quite interested in having with us at all 
times. There, the question of making sure there is competition, 
that there is ability to buy services from different operators, 
will guarantee that the consumer and businesses do get a very 
good pricing for those services. So competition, maintaining 
competition, I think, is very critical.
    Ms. Blackburn. Ms. Russo.
    Ms. Russo. Yes.
    Ms. Blackburn. Would you like to respond?
    Ms. Russo. I will provide some answers, and then what I 
miss, we can forward to you. First of all, in terms of R&D, we 
are in the 16, 17 percent range of R&D as a percent of revenue, 
even through the downturn, the dramatic downturn in the 
industry, we reserved investment in pure research. As Dr. 
Jacobs noted, you have got to continue to invest in the 
technologies that are going to make a difference down the road, 
and we have done that.
    With respect to percent of budget--percent of revenue 
associated with regulation, I would argue that, you know, we 
tend to be spending more associated with--not telecom-related 
regulation, but things like Sarbanes-Oxley, et cetera, and so 
obviously, we are making investments, as are all companies in 
that regard. The regulatory investment, or lack thereof, or 
effect, if you will, associated with us as a communications 
supplier, tends to be a relatively small percentage of folks 
who we have who have to stay on top of the regulation, interact 
here in Washington. Obviously, that is an investment that we 
make. The other side of the effect of regulation is what we 
have commented on, which is when there is lack of clarity, it 
really stalls investment. And the industry has obviously been 
affected by that over the last couple of years, and that has 
more of effect than actually spending on regulation in the kind 
of companies that we have.
    Ms. Blackburn. Okay. Mr. Zander.
    Mr. Zander. The question on R&D spending, we spend about 
$3.5 to--or more billion dollars in R&D every year. About 11 
percent of our budget. It is quite a sizable all around--
seamless mobility in communications. We, too, have maintained 
that R&D spending levels throughout the last few years of the 
downturn, and continue to think that it is probably the most--
single most important thing we focus on inside of Motorola, how 
we are deploying our R&D assets.
    In terms of the consumer savings, I think there is the 
savings about the converged devices, but I always like to 
approach it from the productivity increases for both consumers 
and businesses of what we are providing. I think there is more 
of an upside to productivity than it is necessarily on cost 
savings. But--and that is somewhat, at times, hard to measure, 
but I think in corporations, we begin to see with mobile 
communications and mobile devices, the kind of dollars we can 
save, but more importantly, the productivity increases through 
our employees and our business processes.
    Ms. Blackburn. Thank you. Mr. Quigley, go ahead.
    Mr. Quigley. Yes. If I could, perhaps, just add to what Pat 
has said, emphasize that point again, in terms of what is the 
cost of regulations to us. So we will certainly provide the 
information on the internal costs, but the point that Pat made, 
that the--it is very difficult to make a profit if you don't 
have a top line. And the top line is what is constrained if our 
customers aren't willing to invest, and that is why regulatory 
certainty, again, is so important to all of us in the industry.
    Ms. Blackburn. Thank you. Mr. Mattes.
    Mr. Mattes. Siemens spends about $6 billion in R&D every 
year, but the one thing, it is not just the number that you are 
looking into. You also need to look into where you spend the 
R&D dollars. R&D is now also becoming a global industry, and I 
think we have got a second challenge to tackle here. It is not 
just about spending the money, but making certain that we have 
the innovation in a country like the United States, because if 
you just compare cost per engineer, you will find yourself in a 
very tough environment. So we need to foster an environment 
where we have creativity and innovation to make certain that we 
do have R&D spent in the Western world.
    Ms. Blackburn. Thank you. I appreciate that. One question 
pertaining to structure. I am, like most folks, have read 
plenty of media reports that say several of the companies, some 
of you at the table even, are looking to merge or acquire one 
another during the coming year, and when we look at 
reauthorization of the Telecom Act, should we continue 
prohibitions on certain types of companies from merging, or 
should we end them? Any comment? Thank you. Thank you, Mr. 
Chairman.
    Mr. Upton. Time had expired, right? Mr. Inslee.
    Mr. Inslee. Thank you, Mr. Chairman. My name is Jay Inslee. 
I am up from the Seattle neck of the woods, and I just want to 
thank you and your industry for providing American cities' 
citizens to chew out their Congressmen in real time from 
virtually any place on the planet. It really is--we appreciate 
that, and it is put to good use. But I do--I am serious about 
that. I just want to say thanks a little bit about the 
incredible creativity of your industry. It is really amazing. 
It is stunning for us who learn about it, and I hope you will 
give some thanks to your creative geniuses that you are putting 
to work.
    I want to ask you a question sort of dovetailing what Mr. 
Boucher was asking about regulatory aspects of exclusivity of 
certain technologies hooked up to certain other technologies. I 
was out at Microsoft the other day. I have got half their 
campus in my district, and I was talking to the people who 
developed the IPTV system that is reaching some success with 
SBC now, and Verizon, which shows you investments take time 
sometime. It is working out finally. But one of their pleas 
were whatever you do, make sure that you don't stifle 
creativity. Make sure you don't create off-limits zones that 
would prevent anybody from really creating a new box or 
technology that, if had access to bits, can do some good stuff. 
So instinct is to make sure that we allow everybody access, of 
new technology, to get access to those bits one way or another, 
to do good things with those bits. On the other hand, there is 
an instinct to want to preserve an investment, and this other 
argument, that you ought to be able to control your own end of 
your wires, so to speak, and I am just trying to figure out a 
way to sort of, as a model of how to think of this, one way I 
have thought about it is sort of distinguishing transmission 
from manipulation, if you will, and sort of looking at it in 
those terms. Transmission ought to be freed access to either 
end, if you will, for new technologies, but manipulation, 
perhaps you could have exclusivity, if you will. Can you just 
suggest sort of a model, how we should sort of think about 
this? It is not the most intuitive thing. That is a free fire 
zone, for anyone who wants to tackle that.
    Mr. Jacobs. Well, it is a difficult area, because, for 
example, in the case of wireless operators, they want to have 
some exclusive services that they can offer to attract users to 
their particular system. On the other hand, you don't want to 
have a walled garden where their users can't get out and access 
the Internet elsewhere. I think much of that gets handled by 
the competitive issues. If you are unhappy with what your 
current carrier is allowing you to do, there are other 
carriers. So having competition, I think then forces companies 
to support the things that consumers and companies do need.
    So for example, number portability turned out, I think, to 
be a very good aspect in allowing both companies and 
individuals to move from one user to another. Aspects that 
support competition are important. There will, however, also be 
common services. I mentioned earlier that we are working with 
operators and content providers to support video, many channels 
of video and audio over one of the UHF TV channels, 55, to cell 
phones. That would be operating in conjunction with operators, 
where they would take some of the stream that was common, but 
then be able to offer very particular services themselves. I 
think it is important to be able to get the full content 
available over a common channel, though. And so it is always 
going to be a bit of a balancing act. Competition, I think, is 
the key to making sure that consumers can get what they need.
    Mr. Inslee. So in that scenario you just posed, is there a 
regulatory aspect of that to make sure that can occur?
    Mr. Jacobs. There could be issues with being able to 
provide content to cell phones. That, I think, will turn out to 
be very positive, in the sense that just getting access for 
content providers to be able to provide many more consumers 
looking at their content in a variety of ways. I think that 
that will cause support from the industry. But it is quite 
possible that broadcast might say no, this is my territory, et 
cetera, et cetera. So regulations can come into this.
    Mr. Inslee. Anyone else want to take a crack?
    Mr. Mattes. I think you want to differentiate between 
access, what you call transmission, and then content, on the 
access side, and then, the transmission side, you need open 
systems and open standards to provide that seamless 
communication and this ubiquitous approach to companies and end 
users. The minute you go into content, if you want to--you gave 
IPTV as an example, if you would want to download a video, 
apparently, the people that make the video want to make sure 
that it is downloaded to you and not you and all of the State 
of Washington. So there, you--the minute you get into content, 
you start having different models than when you talk about 
access and control.
    Ms. Russo. Yes. I would offer--all the things we are 
talking about today have levels of complexity that are 
considerable. I would--rather than trying to respond with a 
model suggestion, I would rather get back to you with some 
thoughts about that after really spending some time thinking 
through it.
    Mr. Inslee. I very much appreciate that. I am a new member 
of this committee willing to be taught, so we are looking for 
good ideas in any form. Thank you very much.
    Mr. Upton. Thank you. Mr. Walden.
    Mr. Walden. Thank you, Mr. Chairman. In Ms. Russo's 
statement, I believe you said the act was developed in a voice-
centric environment, where time, distance, and geographic 
boundaries drove the market. Does anyone disagree with that 
statement? You are all on the same place. And then, I think you 
went on to say there is a discontinuity between the legacy of 
the Act, and where the industry and market are today. Does 
everybody agree with that as well? What happens in--I represent 
a very rural district, on the other--well, he is in Washington, 
but I am on the eastern side of Oregon, and I guess I am 
concerned about some of the issues relative to the Universal 
Service Fund, and if phone gets shifted over into IP, what 
happens to support that? What happens for 911 communication? I 
know others have asked that, and I would be curious to get more 
comments from you on those two topics, and then, the third is 
just this sort of the legacy companies, and how they are 
regulated. It strikes me that in telecom policy, we create a 
new set of regulations or not as each new technology emerges, 
and then, we wait 4 or 5, 6, 10 years, and we review all that. 
And meanwhile, you have got economic models and systems built 
on one set of rules, to develop or deliver, let us say, phone, 
and the next group is doing cable TV, but pretty soon, they are 
into phone, and you know, where we have the Internet, where it 
can do it all. Would you take the regulation off of everybody 
who wants to deliver what can be delivered over the Internet? 
Where do we regulate and how, I guess? And so Universal Service 
Fund, if each of you could address that, what you think, if 
any, is necessary. And then--so we can serve rural areas. And 
then, these other topics. Mr. Zander, could we just start with 
you, and give us your best?
    Mr. Zander. I think, certainly any system that promotes 
universal telecommunications and broadband services would help 
to make our vision of seamless mobility a reality. So we 
certainly fully support that. I do think the--and we talked 
earlier about developing countries that we visit, and the 
growth of mobile communications is just that, to help those 
rural communities, that we can bring these services much 
quicker than the conventional way of past, of putting in 
telephone poles and all of that infrastructure. And I think the 
E911, I think all of the other potential issues can be 
incorporated, or are being incorporated, actually, and you 
know, we have today GPS on these devices, and we have E911 in 
these devices, so that we can reach to rural areas much 
quicker. So I see the vision of seamless mobility to be 
inclusive overall. In fact, a faster adoption rate in getting 
many of your customers the kinds of services that are enjoyed 
by the inner cities, for example.
    Mr. Walden. All right. Dr. Jacobs.
    Mr. Jacobs. Yes. I think when one was talking just wired 
communications, then subsidy is some way of being able to help 
finance it in rural areas was critical, because the cost per 
subscriber was much higher.
    Mr. Walden. Exactly.
    Mr. Jacobs. With wireless, that equation has changed 
tremendously, as Mr. Zander points out. You are able to put up 
a tower and cover very broad areas. Again, I was just in India. 
They are building the towers to every one of the villages. 
Right now, doing without government subsidy, doing it with 
private companies, although they are talking about subsidies, 
then, for supporting educational services, et cetera. And so I 
think the needs are changing. The technology has allowed rural 
service to be provided with a whole variety of capabilities, 
the broadband as well as the voice capability. It is important, 
I think, therefore, to--rather than trying to provide taxes to 
pay for this service, to allow the services to spread and take 
advantage of the technology.
    Mr. Walden. Yes, there is parts of my district where there 
is one customer for every 9 miles of wire. So that is an 
economic model that gets difficult to maintain in a wired 
environment. Mr. Mattes.
    Mr. Mattes. Well, Siemens does support the Universal 
Services Program. However, we also believe that it probably 
needs some revisiting, and the focus should be more on how do 
you deploy next gen networks, whether they are wired or 
wireless, whatever is suitable for the respective area, at a 
much more rapid pace than we are doing today. Maybe one of the 
examples that you want to look at where this would be extremely 
beneficial for the end user, would be the whole digital 
hospital environment. We have that type of environment all 
through the Americas, and not just in metropolitan areas.
    Ms. Russo. Yes, I would just echo, really, what my 
colleagues have said. I think the--I think it is important to 
revisit what was the original purpose of the Universal Fund? Is 
that still legitimate? I mean, certainly, there are legitimate 
requirements to cover rural areas, and--with availability and 
affordability. I think the point made about wireless 
technologies today not having been available when it was first 
created, create a whole different paradigm. We see that in 
countries like India, China, and many other areas where wired 
networks aren't being built. So I think there is a technology 
dimension to it. There is a revisiting of what problem are we 
trying to solve, and what possibilities exist with these next 
generation services, to really enhance productivity and 
efficiency in education, healthcare, in the rural areas. And so 
the point I would make is I think while the Act is being 
relooked, really folding this in, in terms of clarity around 
what problem are we trying to solve, and how best can we solve 
it, because there are legitimate requirements, has to be a 
factor. I would agree with you.
    Mr. Quigley. I would just support what Pat has said. And 
Congressman Walden, we would be happy to provide an input on 
the Universal Service Fund. It is a very complex area, as we 
have seen, to a broadband world. On the other two questions 
asked, on E911, I think we all recognize the industry has to 
solve that problem working through the standards bodies. And on 
your third question, do we need some type of regulatory 
framework as we move forward into this new world, I think the 
first thing I would certainly recommend we see is confirming 
the orders that have taken place just recently from the FCC, to 
have them codified into any change to the Act. Once again, it 
comes back to making sure we are not making radical changes as 
we move forward. The industry has now got a base. It is moving 
forward. It is making investment. It is developing products and 
services. We would like that to continue, and I think 
certainly, there is a real need to have a--some Federal 
jurisdiction to make sure we do have preemption, so that we are 
not dealing with a vast array of different regulations as we go 
State by State, or district by district.
    Mr. Walden. Then I guess my final question for each of you, 
how do we deal with consumer complaints in an unregulated 
environment? I see it in my own business, when we deal with 
providers of broadband and elsewhere, other services, and I 
hear this argument back here, the one you have made, and I am, 
as a businessperson, somewhat sympathetic to it, and yet, I 
don't see the FCC as having the capability to deal with the 
many consumer complaints that are, frankly, very legitimate, on 
bandwidth and capacity and connection and I mean, you all 
probably have never suffered it, but some of us have tried to 
do plug and play with multiple vendors, and it is always the 
other vendor not on the phone that is causing the problem. And 
it is hard to get a solution, and how do we address that?
    Mr. Quigley. If I could just comment on the point on the 
states. I think there is absolutely a key role for the states 
to play, the State regulators to play in that area of making 
sure quality is provided to consumers, consumer complaint 
areas, that there is no doubt, within the framework of an 
overall set of rules, set on a Federal level, there is 
absolutely a place for the states to play a rule.
    Mr. Walden. All right. Thank you. Anyone else want to take 
a crack before the gavel drops? Thank you.
    Mr. Upton. Mr. Bass.
    Mr. Bass. Thank you, Mr. Chairman. Mr. Chairman, you and I 
had a chance, a couple of years ago, to tour a police precinct 
headquarters in Chicago, which Motorola was involved in a pilot 
project to provide real time communication between officers on 
the street, in vehicles, and it required a considerable amount 
of bandwidth in the upper 700 megahertz area. I was wondering 
whether or not you, Mr. Zander, could comment on Motorola's 
position relative to a hard date for DTV transfer, which 
obviously, I know what the answer to that is, and the other 
representatives here today, what your position is on that 
issue. In other words, I threw a softball.
    Mr. Zander. Thanks. I needed one today. Well, you know how 
we feel, we think is vital that a certain date be established, 
as close as possible to the December 31, 2006. The spectrum 
recovered will be used for the next generation of public safety 
equipment and services providing for the safety and security of 
our citizens. And also will be available to--for commercial 
services. So we fully support that, and urge that we get close 
to that December 31 date, as soon as possible.
    Mr. Bass. Anybody else want to comment? You don't have to, 
but----
    Mr. Jacobs. I also support that very strongly, including 
the December 31, 2006 date, if we can get there. That spectrum 
is, indeed, very valuable. There are more and more services 
that one wishes to provide support, and having that available 
in a known time period, without having to go through very 
lengthy periods to clean the spectrum, that would be very 
helpful.
    Mr. Bass. And does anybody else have any other----
    Ms. Russo. No.
    Mr. Bass. Anything else to add to that?
    Ms. Russo. Support that.
    Mr. Bass. Okay. Mr.--the record can show, it looks like the 
whole team here supports that hard date. Mr. Mattes, you made a 
reference to e-medicine. I was wondering if you could be a 
little bit more specific, and talk about the interaction of 
hospital services and the Internet, and how that might work in 
a real life situation.
    Mr. Mattes. Well, there are two things that you can 
basically look at. The one is that a hospital is no longer 
confined to a physical building, but you can basically have 
outpatients being serviced at the same rate of expertise that 
you can have people in a traditional hospital.
    The second thing, if you just imagine if a doctor is 
walking through a hospital, and has some form of a PDA with him 
in an IP environment, you would get the patient's records, all 
the information that you need about that individual, as well as 
all of your communication opportunities at the same time. Let 
us say something is happening to that individual, you would 
know automatically who in an emergency room or a specialist 
type of person, who is on duty, where they are, where are they 
located in the building, how long would it take them to get 
there, those type of services. And I believe it is going to 
propel the whole hospital environment into a much more cost 
effective, but at the same token, much more user friendly type 
of environment.
    Mr. Bass. Is it going to take any kind of special 
legislative initiative to achieve that goal, or----
    Mr. Mattes. It is actually already happening right now. 
There is hospitals out there that are doing this, at this point 
in time, and the market is driving it.
    Mr. Bass. Ms. Russo, you want to----
    Ms. Russo. Yes. I would just support that with the real 
service that we have been involved in supporting for visiting 
nurses, where through broadband wireless access, which enables 
the bandwidth, to download patient data from the home, images 
when appropriate, so to Andy's point, these are, you know, some 
of these services are in place today as a result of the 
broadband technologies that are available.
    Mr. Bass. Dr. Jacobs.
    Mr. Jacobs. Yes. We talked about convergence, but one 
additional convergence does have to do with medical aspects. 
For example, the phone that we carry with us, very powerful 
computer, display, communications. There are now devices that 
plug in, for example, one of them has to do with a sensor that 
you can put a little drop of blood on. It senses the blood 
sugar, provides information, then, through the program that is 
downloaded to the phone about whether you need to take action, 
if there is an emergency, to send that back. Another service 
that we are supporting has to do with connecting the phone to a 
heart monitor, making sure that that information is then sent 
back. If they are doing the filtering, so you don't just send 
back lots of information.
    Mr. Bass. I just want to make sure----
    Mr. Jacobs. Responding to that.
    Mr. Bass. Before my time expires, there are no telecom 
issues, legislative issues, that are directly associated with 
e-medicine, that you think need to be addressed. If not, that 
is fine. I am--all right.
    Mr. Mattes. Actually, if you take a look at it, the United 
States probably has a competitive edge, if you compare to some 
of the legislation that you have in Europe with the hospital 
environments regulated.
    Mr. Bass. Thank you. I yield back, Mr. Chairman.
    Mr. Upton. Thank you. Mr. Shimkus.
    Mr. Shimkus. Thank you, Mr. Chairman, and thanks to the 
panel for their patience. And I know Mr. Engel mentioned the 
911 issue, and there is great challenges, and I just want to 
encourage us to keep focused on that, because it is going to be 
critical, and I--while I have a few--a little bit of time, I 
want to ask Dr. Jacobs a question on reverse 911 issues, 
homeland security concerns. There is great promise. I know that 
you can help us explain the media flow network, and I want to 
give you the opportunity to do that.
    Mr. Jacobs. The--first of all, we were kind of pioneers in 
allowing cell phones to have GPS but at very low cost, so that 
the phone actually receives from the GPS satellites the 
location information, but because it is a cell phone that has a 
radio link, one has additional information about time, 
frequency, rough location, you can actually integrate that 
satellite signal longer, in particular, get position where 
before it was not possible. And so indeed, we therefore are 
able, I think, to provide very good services as the PSAPs 
become, now, equipped to handle this information, very good 
services to public safety, to first responders, et cetera. I 
think that is going to be a key use of this mobile 
communication capability.
    Mr. Shimkus. For my colleagues who are new to the 
committee, and the premise of reverse 911 is when there is an 
emergency, whether that is at a refinery, or--and you can 
calculate downwind characteristics, you can--in theory, you can 
in essence call all the cell phones in the downwind direction 
of the cloud, and give them specific directions as to which way 
to move out of the harmful path, and those of us on the E911 
Caucus are--I mean, I speak on this a lot. I am glad to see 
that we have the capability, and we are moving in that 
direction, because from all the security aspects, it is another 
way why a deregulated market that is trying to meet the needs 
of the consumers turns around new products and services quicker 
and faster, and I would concur with a lot of the comments that 
have been made, that we want less regulation, not more, if we 
want to continue in this path of being world innovators. And 
Mr. Chairman----
    Mr. Jacobs. Right. On the regulation side, there is an 
issue there because of privacy, and we are all aware of the 
fact that it is important that you can control who knows where 
you are. When you dial 911, automatically, in a sense, you give 
them permission for that location to be transmitted. The 
problem with this reverse E911, being able to send out 
information to a group, is you would need their permission to 
receive certain types of emergency information, and let their 
locations be calculated, in order to do so properly. And so 
there may be some regulatory issue here having to do with the 
privacy aspects of that.
    Mr. Shimkus. Or a Good Samaritan clause, to the extent that 
says you are going to be held harmless for doing that for 
public safety or individual safety concerns. And Mr. Chairman, 
I think that is a great thing to address, and I am glad you 
made those comments, because that is what we are here, to try 
to help reconcile the legislative concerns to make that 
possible. Thank you, Mr. Chairman. I yield back.
    Mr. Upton. Thank you. Mr. Pickering.
    Mr. Pickering. Thank you, Mr. Chairman. I thank you for 
holding this hearing and getting us started as we go on the 
path of reform. All right. Let me--Mr. Mattes, let me ask a 
question. An issue that was raised last week in the Rural 
Telecommunications Caucus, and that has come to my attention, 
is that in many of our rural areas, we have now wireless 
broadband networks, but it seems that there is an issue as to 
access, or being able to purchase from equipment manufacturers 
the digital devices, Blackberry like devices. And so my 
question to you, why is that, one? Or two, let us just say a 
company from Mississippi called you, independent wireless 
company, wanted to buy your device. What would you tell them?
    Mr. Mattes. Honestly, I am not sure whether I understand 
the first part of the question.
    Mr. Pickering. The question is, from what I am hearing, 
independent wireless companies, not the large national 
carriers, but rural-based wireless companies, that are serving 
a lot of, for example, in Mississippi, one of these companies 
probably serves about 40 percent of the Mississippi 
subscribers, around 400,000 people. Now, they have advanced 
networks. So it is not an issue of deploying networks. But they 
cannot purchase the Blackberries or the devices to be able to 
then use the full range of services that come with the devices. 
So that creates a problem with consumer choice and competition. 
It is not an issue of networks. It is an issue of access to 
devices. What is the problem, and what is the solution?
    Mr. Mattes. As an industry, I think the industry would be 
happy to serve just about anybody. The majority of the devices 
in this country are being sold through providers at this point 
in time. In order to get a specific answer, you need to look, 
really match the type of network, the type of standard that you 
have, and the type of device that these companies are looking 
at, and whether that type of device is available on that type 
of network, and----
    Mr. Pickering. Okay. Let us say that it is compatible with 
Siemens. It is--their network is compatible with Siemens 
devices. If they called you, would you sell to them?
    Mr. Mattes. Sure.
    Mr. Pickering. Anybody else?
    Mr. Jacobs. You know, I think the problem----
    Mr. Pickering. You sell down that--I mean, is it a supply 
issue? Can you manufacture enough? Do you need to have a new 
manufacturing facility in Mississippi?
    Mr. Jacobs. I think the problem that you are probably 
encountering is that as you manufacture these devices, you 
provide software that may be very specific to a particular 
carrier. That causes the manufacturer to say well, that is only 
a few sales, another one is many more sales, therefore, I will 
focus on the much larger carrier. And that reduces it. 
Technology is coming to the rescue there.
    Mr. Pickering. Now----
    Mr. Jacobs. Technology is coming to the--I am sorry.
    Mr. Pickering. I will say that there is a group of 
independent wireless carriers that are forming a co-op, whether 
they can purchase in volume and in bulk. And again, I would 
hope that, because this is a real issue in states like mine, 
that you all would work with all companies to find a way to 
sell the devices, because not only do you need the networks, we 
need your devices.
    Mr. Jacobs. Yes. Let me just add that the technology is 
coming to the rescue there, because you can manufacture 
essentially a basic device, and then download the software to 
it that particularizes it to a given carrier, to a given set of 
functions that that carrier wants to provide. If you can do 
that after you have done the manufacture and initial testing, 
the cost of doing that individualization is very low. That is 
where we are all going. We are going there very rapidly.
    Mr. Pickering. Thank you very much. Mr. Boucher is no 
longer, and so if you all feel free to say that you prefer my 
legislation to his, you can go ahead and do that. But let me 
just say something real quickly as we get into the larger 
subject of reform. I think that there is consensus on 
preemption across--that we need on wireless, and on IP, to 
preempt, it needs to be a Federal. There are issues of video 
entry that also need to be looked at, as to whether we should 
preempt, at the city and the franchising, and at the State 
level. But I think that those are probably critical issues that 
we can find consensus on.
    The more difficult things Mr. Boucher got into, as far as 
access to networks. Now, the subcommittee chairman, Mr. Upton, 
said he wanted to get to deregulatory parity. I agree with him. 
The line of questioning of Mr. Boucher was actually increasing 
regulations and perpetuating regulations at a higher level on 
both Bell companies and cable companies. I think our objective 
should be deregulatory parity, but that does not mean 
regulatory parity. And let me just quickly, Mr. Chairman, if I 
could just have a minute.
    On regulatory parity, it sounds good, but as--any of you 
are parents. I have five children. Now, I regulate all five of 
mine differently. One is 15 and the other is 6. Depending upon 
their age and their maturity, I regulate them according to 
where they are. I teach and correct in different ways. Now, 
when they are 18, I hope to achieve deregulatory parity. I can 
say go forth and do well and do right, but don't call me, or 
don't ask me. Now, I don't know if that will be possible, but 
that is my hope. As we have gone from 1996 from monopoly to 
competitive policy, the history of regulation, whether it is in 
energy or transportation or in telecommunications, or in many 
other sectors, it is to treat dominant different than non-
dominant, new entrants different and new technologies 
differently. And so we are now on a path of a transition to get 
to deregulatory parity. I would hope that we maintain that 
certain as we treat legacy networks differently, and then, as 
we can get into deregulatory parity, of new networks.
    Would you all agree with--that is the correct path to take, 
to achieve?
    Mr. Mattes. Absolutely.
    Ms. Russo. Yes.
    Mr. Pickering. And my legislation does that a little bit 
better, doesn't it? Thank you very much.
    Mr. Upton. Mr. Boucher is on the way, I understand. Ms. 
Cubin. Ms. Cubin.
    Ms. Cubin. Thank you. I apologize. I had to step away for a 
few minutes, but I am really glad I made it back. And I 
understand that Mr. Walden and Mr. Mattes, touched on this, but 
if you wouldn't mind answering it for me. It seems like, from 
your testimony, that you support ubiquitous broadband, and I 
certainly agree with that, and I think most of us do, but could 
you expand on your comments regarding reforming universal 
service, and how it would help achieve ubiquity? I mean, are 
there any specific suggestions that you might have? I am from 
Wyoming, and I know people on this panel are so tired of 
hearing that Wyoming is the least populated State and it is 
almost 100,000 square miles, and so, you know, deployment of 
all of these services to rural America, and Wyoming in my 
heart, is just really very, very, very important in order for 
our country to move forward as a country, as a culture, and as 
a strong country.
    Mr. Mattes. I have made the statement earlier that we do 
support the universal service, but the same token, we believe 
that the whole approval process might need some relooking. It 
needs to be more speedy. It needs to be more along the lines of 
how do I deploy next gen networks, and also, the question of 
how can I have the advanced infrastructure connectivity brought 
to those areas, and one of the examples that I used earlier, 
saying that a good case in point are digital hospitals, because 
they provide a level of support and service to the community 
that you otherwise would not have in those parts of the U.S. of 
A that you just described. The same holds true for schools, 
libraries----
    Ms. Cubin. Right.
    Mr. Mattes. [continuing] what have you.
    Ms. Cubin. Right. I think it is very important that we do 
act on that. Dr. Jacobs, did you have something that you wanted 
to say?
    Mr. Jacobs. Yes. Again, the technology is helping. I think 
the cost of providing service, even to the spread out 
population of Wyoming, is coming down markedly. Wireless, 
clearly, you can get a lot of coverage from a cell tower. But 
we are going to a situation now where there is also abilities 
to--through the Internet, to provide minimal capabilities with 
the towers, so it is very low expense, at that point, low 
maintenance, go through a satellite, for example, if you are 
away from wirelines or fiber, and get back to all of the 
controlling circuitry elsewhere. And so again, the technology 
is moving in a direction that is going to make this problem 
much simpler, much less expensive, not the need for a high tax 
level.
    Ms. Cubin. That is really good news. Dr. Quigley, as a 
leader in broadband access technologies, you testified--the 
continuing rollout of DSL and other broadband technologies has 
affected the cost of hardware. I guess specifically what I want 
to ask is, what is going to happen on the cost of hardware?
    Mr. Quigley. We see in this industry hardware dropping, I 
guess as a general rule, at least 15 percent a year. In fact, 
recently, it has been dropping even further than that, due to 
competitive pressures. We don't expect that to let up. Just in 
terms of addressing the types of solutions also in the rural 
areas. As Dr. Jacobs has said, there is going to be a variety 
of technologies, either satellite, WIMAX technologies, 
particularly as we--if we open some of the spectrum at lower 
frequencies, we will be able to get further. So we are 
optimistic that we will be able to find technical solutions to 
rural connectivity issues, and--it will give you some heart--
the place where I originally came from makes Wyoming look 
fairly populated. We have got a lot of--in fact, it was a 
problem I studied some time before, about how to really reach 
these rural communities that are a long way away from 
population centers, and I think we are all reasonably 
optimistic that over the next few years, we will start to see 
some technologies emerge that can help solve those problems 
cost-effectively.
    Ms. Cubin. Good. And all of you feel that that is the right 
thing to do, I take it. Good? Thank you. I see my time is just 
about out. Thank you, Mr. Chairman.
    Mr. Upton. Mr. Stearns.
    Mr. Stearns. Thank you, Mr. Chairman. I was able to watch a 
little of it on the TV back in my office, and I appreciate 
Congressman Boucher's support for the bill that he and I co-
sponsored. I guess I would make a plug for it. We need a broad 
sweep to cover all IP-enabled services, so on whatever 
legislation we consider. Oftentimes, when you ask questions, 
you say to them, give us your expert opinion. I want to ask a 
question, what do you see, to get to seamless mobility, that 
you showed with that phone, and some of the things you have 
talked about, what could we as legislators do to enable this to 
happen? We are getting ready to rewrite the Telecom Act of 
1996, and you know, I--obviously, you will say regulatory 
certainty would be one of them. But I mean, is there anything 
else that maybe has not been mentioned, that if you were 
sitting in my spot, that you think Congress should do? Maybe 
just start from my left. Mr. Zander.
    If there is nothing other than regulatory certainty, we 
will just let it go, but I mean, is there some incentive that 
you would like to see in the tax code, or something like that, 
or the--obviously, the President talked about, by 2007, we want 
to have broadband available for all of our economy to make it 
more competitive. Obviously, that is one thing that we are 
hoping will happen. But, I mean, is there anything specific 
that, as Congresspeople, we should do?
    Mr. Zander. I think that is a really good question. I mean, 
we covered some of the things today. I would prefer to get back 
to you, perhaps, with some more specifics, but you know, I am 
getting, you know, tearing down the silos, regulation of IP-
enabled services, and making sure that we continue to have an 
environment where we can fund R&D, I think, is a necessity.
    Mr. Stearns. So make sure that the funding of R&D.
    Mr. Zander. Absolutely. We are encouraged, as corporations, 
as we have in the past, that we have a very robust investment 
in this country in next generation research and development. I 
think it is--and again, I think there are other areas outside, 
maybe, this committee, in terms of education and funding 
technology initiatives, as we have in the past 30 years in this 
country. So I would like to see our labs. I would like to see 
our education. I would like to see R&D.
    Mr. Stearns. Probably see more scientists and engineers in 
our colleges.
    Ms. Russo. Yes. Absolutely.
    Mr. Zander. Yes. I mean, I think it is a real issue. I 
mean, probably maybe outside this----
    Mr. Stearns. We have all voted to help fund the industry by 
letting immigration--supporting immigration for those people 
who come, for example, from India, who has all the expertise. 
Dr. Jacobs, anything just quickly, and then I have got one more 
question, Mr. Chairman, and I will be done.
    Mr. Jacobs. Yes. No, I would just reiterate the importance 
of the education initiatives, the visa initiatives. We are 
educating many students from other countries here. In the past, 
we have been able to relatively easily hire them to stay on, 
but with the lack of visas, and even now, although there has 
been some help for students with advanced degrees, it is still 
a very tight situation.
    Mr. Stearns. Because of the homeland security problem.
    Mr. Jacobs. Partly that, and partly, this question of 
feeling that because they are foreign, they may be being paid 
less.
    Mr. Stearns. Yes.
    Mr. Jacobs. And therefore, unfair competition, but that is 
not the case at all. The students coming out of our 
universities, the competition is fierce, because there are so 
few.
    Mr. Stearns. Mr. Mattes.
    Mr. Mattes. Just two points. The one that the minimal 
regulation that you are going to put in place would be on a 
Federal level, and we won't have to go through 50 different 
State versions thereof. And the second issue is the awareness 
that technology is a competitive edge. I do find it honestly 
disturbing that countries like Iceland are way ahead of the 
United States when you look at broadband deployment, and they 
are using this as a competitive niche to position their 
economies, and we should raise the awareness that the 
investment will better the economy, and----
    Mr. Stearns. And Japan is doing the same thing.
    Mr. Mattes. Yes.
    Ms. Russo. Yes. I----
    Mr. Stearns. Ms. Russo.
    Ms. Russo. This is really just punctuating what my 
colleagues have said, but really understanding the value chain 
that supports the industry, I think, is important. Everything 
from how do you get the technology developed, where is the 
talent coming from, how do we make sure we have it? How do we 
make sure we are incenting investment is important? And at the 
same time, oh, I just lost my thought. Hang on. I will--it will 
come back to me. But understanding the value chain--oh, and 
then, as part of the process, I am sure you all will invite the 
providers of the services in to articulate to you what will 
cause them to do it, to deploy technology faster.
    Mr. Stearns. Like we are doing today, having you come in--
--
    Ms. Russo. Well, no, I mean, actually--I mean, we are happy 
to provide technology and systems and networks to the service 
providers, who are the companies that are actually investing in 
and deploying these services. So as part of the committee's 
work, I am assuming you will be asking the wireless, wireline 
converged companies, what is it that would cause you to invest 
more and deploy more faster?
    Mr. Stearns. Okay. Dr. Quigley.
    Mr. Quigley. I would just say we were all, I think, very 
pleased that President Bush did set the goal to make broadband 
available to every American by the end of 2007, and I would 
probably just amplify again, if I can, the words of my 
colleagues, that light regulation, with preemption of the key 
issues at the Federal level is very important, and also, the 
importance of education. Without those people coming through, 
very clever people coming through, the industry simply will 
stall.
    Mr. Stearns. Mr. Chairman, I would just ask one more 
question here for Mr. Quigley. How is the IPTV different from 
today's traditional cable television programming service?
    Mr. Quigley. Okay, I could give you a long answer, or a 
short one.
    Mr. Stearns. Just a short answer.
    Mr. Quigley. In the--real short one. It is about--it is a 
switched service, for a start, which means what you get 
normally today is a raft of channels, several hundred, which 
you can pick one out of. With IPTV, you have a link directly 
into every premises or home, which means the customer or the 
subscriber can select what channel they want. They get what 
they want when they want it, at the time they want it. And it 
is a fundamentally different experience than a broadcast TV. 
You can also do a lot of things, of picture-in-picture, of 
combining Internet services and video services at the same 
time. So you can be--vary camera angles, if there is different 
cameras on a sporting event. There is a raft of different 
services you can get. So it is a very different viewing 
experience.
    Mr. Stearns. Thank you for your courtesy, Mr. Chairman.
    Mr. Upton. Mr. Markey.
    Mr. Markey. Thank you, Mr. Chairman. I just wanted to get 
to one key question here, and that is where the United States 
ranks in the deployment and subscription to broadband compared 
to other countries. Using the criteria that other countries, 
South Korea, subsidizes the subscription to broadband. So for 
example, in the United States, if dialup is $25 and broadband 
is $50, you are on your own if you want to subscribe. So 25 
percent of Americans now subscribe. In South Korea, they make 
sure that the price is $25, so do any of you suggest that we 
should adopt the South Korean model, the Icelandic model, where 
the government subsidizes the subscription to broadband? Where 
does America rank among countries that don't subsidize the 
customer in deployment of broadband? Does anyone know that?
    Anyway, I guess my point is that since most people in 
Iceland live in Reykjavik, one city, and South Korea, in Seoul, 
and most of these people are living in apartment buildings, and 
they also get a subsidy from the Federal Government, that 
adopting the South Korean or Icelandic model might not actually 
work here, if most of the members are willing to subsidize 
every customer in America for half of their bill out of the 
government treasury, and we are having a hard enough time 
getting a consensus on subsidizing senior citizens for their 
retirement, much less on people for broadband. Do you 
understand what I am saying, Mr. Mattes?
    Mr. Mattes. Yes. I think, without going through every 
single country detail, I think it would be a fair assumption 
that about 50 percent of the countries that are ahead of us in 
broadband deployment are not subsidizing the services to their 
end users.
    Mr. Markey. And what are the top two countries there, in 
your mind?
    Mr. Mattes. As far as I know, that would be Denmark and 
Netherlands.
    Mr. Markey. Denmark and Netherlands. And the Carterfone 
decision back in 1968 basically made it possible for companies 
to sell devices to the network and to consumers in the analog 
era, and basically broke down the Western Electric monopoly, 
which was basically one company had one supplier, and that was 
it, AT&T. Is there any reason to repeal that law, even though 
it is an analog era law, the Carterfone law? Is that still 
appropriate for the digital era, to keep the Carterfone 
regulations on the books, or is that obsolete, because we have 
moved to digital? That is, the sale of network and consumer 
equipment to all customers on a nondiscriminatory basis. Anyone 
want to speak to that?
    Mr. Upton. It sounds like this hearing is going to be 
adjourned.
    Mr. Markey. Okay. I have got a--I actually, I think I am 
going to have a chance to go to Ash Wednesday services if we 
adjourn the hearing right now, and perhaps, Ms. Russo, you 
might want to come over to Mass with me. And you too, Mr. 
Quigley. Thank you all very much.
    Mr. Upton. I want to thank all of you for joining us for a 
considerable time today, and I note that we are going to have a 
vote on the House floor in literally seconds, and right after 
that, we start a full committee markup, so we appreciate your 
time, and we look forward to working with you in the next 2 
years.
    [Whereupon, at 12:15 p.m., the subcommittee was adjourned.]
    [Additional material submitted for the record follows.]
  Response for the Record by Andy Mattes, President and CEO, Siemens 
                             Communications
    Question 1: Should Congress mandate that voice IP technologies are 
911 compliant?
    Answer: Siemens recognizes that certain core public interest issues 
are implicated by all communications technologies and, therefore, that 
all communications technologies should play a part in advancing these 
interests. Communications technologies should, to the extent 
technically and operationally feasible, support the emergency response 
needs of public safety authorities.
    Question 2: Is Siemens working on 911 solutions as part of your 
company's development of new IP-enabled voice products and services and 
if so will these solutions include location and call back capabilities? 
Other capabilities?
    Answer: Siemens is voluntarily building into its VoIP product 
portfolio support for 911 services.
    Today the SURPASS hiQ 8000 softswitch currently supports emergency 
calling (E911) by handing off calls via ISUP trunks or MF CAS (Channel 
Associated Signaling) trunks through a tandem connection to a Public 
Safety Answering Point (PSAP). The SURPASS hiQ 8000 will provide the 
following functions for E911:

 Receive and recognize E911 calls and route the calls to the E911 
        tandem over SS7 or MF CAS trunks.
 Provide the ANI of the calling party to the E911 tandem/PSAP via SS7 
        or MF.
 Disable subscriber features (such as call waiting) that could 
        interfere with the handling of E911 calls.
    Question 3: Are there any technical or policy barriers stopping you 
from offering 911 capable products rapidly?
    Answer: Siemens recognizes the public benefits for supporting 
access to 911 emergency services regardless of the communications 
technology being used (e.g. TDM, wireless, VoIP, etc.) and is building 
such capabilities into its VoIP product portfolio.
    From a technology perspective certain technical barriers do exist. 
The most significant challenge is in the area of supporting roaming 
subscribers in a residential environment, specifically as it relates to 
first determining and then providing the physical location of the 
subscriber and callback information to the emergency service 
organization. Siemens is currently investigating possible options for 
resolving this issue.
                                 ______
                                 
                                                    Alcatel
                                                      April 1, 2005
Hon. Fred Upton
Chairman
Subcommittee on Telecommunications and the Internet
House Commerce on Energy and Commerce
United States House of Representatives
Washington, DC 20515
    Dear Mr. Chairman: Thank you for the opportunity to testify before 
the Subcommittee on Telecommunications and the Internet as part of its 
hearing to examine the state of the Internet Protocol industry from 
Alcatel's perspective as a communications equipment manufacturer and 
vendor. I am pleased to respond to questions that will become a part of 
the hearing record. My responses are as follows:
    Question 1. Should Congress mandate that voice IP technologies are 
911 compliant?
    Response. Alcatel believes that Voice-over-Internet-Protocol 
(``VoIP'') technology and other IP-enabled services have tremendous 
potential to fundamentally change the way our society communicates, and 
should be allowed to develop without unnecessary regulatory impediment. 
Alcatel maintains that the advancements in technology that have enabled 
high-quality IP voice service to become a reality will also provide the 
technical solutions needed to achieve certain social benefits, 
including 911 emergency access services. In comments filed with the 
Federal Communications Commission (FCC) in its IP-Enabled Services 
docket, Alcatel expressed its view that IP-enabled voice services 
should continue to meet 911 and E911 obligations.
    Question 2. Are you working on 911 solutions as part of your 
company's development of these devices and services, and if so, will 
these solutions include location and call back capabilities? Other 
capabilities?
    Response. Alcatel is currently offering several products that 
provide GPS location capabilities. For example, Alcatel offers GPS 
tracking capability for mobile networks that can be used to aide in the 
tracking of a caller in an emergency situation. We believe that 911 
access over IP may be available in the near future but many service 
providers do not currently possess this capability in a manner that can 
be widely deployed. Alcatel remains interested in the development of 
similar solutions for carriers deploying IP-enabled voice services.
    Question 3. Are there any technical or policy barriers stopping you 
from offering 911 capable products and services rapidly?
    Response. By the very nature of the public Internet, determining 
the exact location of a user is a challenge. Users enter the Internet 
via IP addresses, which do not correlate with physical addresses. 
Moreover, many IP-enabled service offer ``nomadic'' features that 
provide the user with the capability to access and use services 
wherever they can find Internet access. This is an important 
distinction with the legacy circuit-switched network where location was 
determinable, commercially necessary for billing purposes, and legally 
necessary to determine jurisdiction.
    Alcatel is a leader in the standards-making bodies throughout the 
world and can attest to the significant efforts to build location 
capabilities for public safety and law enforcement into Internet 
services. These processes are ongoing, and Alcatel is confident that 
industry can develop services and practices to address these 911 
issues.
    Mr. Chairman, thank you again for the opportunity to appear before 
your subcommittee.
            Sincerely,
                                                    Michael Quigley
                                 ______
                                 
                                                 Lucent Corporation
The Honorable Fred Upton
Chairman
Subcommittee on Telecommunications and the Internet
United States House of Representatives
Washington, DC 20515
    Dear Chairman Upton, thank you for your letter dated March 4, 2005. 
It was a pleasure to appear before your subcommittee and I am happy to 
provide you with responses to the questions that you have submitted. A 
copy will be submitted electronically as well.
    We look forward to continuing to work with you.
            Sincerely,
                           Patricia Russo, Chairman and CEO
                                                 Lucent Corporation
cc: The Honorable Edward Markey
Enclosure
                questions from the honorable bart gordon
    Question: Should Congress mandate that VoIP technologies are 911 
compliant?
    Response: Lucent has over time been at the forefront of efforts to 
perfect E911 services for traditional PSTN and wireless networks. 
Lucent believes that industry has an obligation to ensure that people 
who use IP enabled services that emulate traditional telephone services 
can access 911 services. There can be no mistake about that. 
Considerable effort is being made by industry to ensure that VoIP users 
can access 911 services and Lucent supports and participates in these 
efforts. Lucent believes that such industry led initiatives should be 
given a chance to succeed before more formal regulation is considered. 
We must all be aware that adequate E911 services may require network 
infrastructure upgrades that are unique to the E911 capability and new 
ways of collaborating across networks and service providers that are 
unique to IP-enabled services. Industry may need financial incentives 
to deploy the needed upgrades and collaboration models in a timely 
fashion.
    Question: Are you working on 911 solutions as part of your 
company's development of these devices and services, and if so will 
these solutions including location and call back technologies? Other 
capabilities?
    Response: Yes we are. Lucent believes that both location and call 
back capabilities are required to provide E911 capabilities across IP-
enabled networks that are comparable to today's E911 services. Carriers 
and operators are increasingly interested in addressing user demand for 
location-based services. Lucent is also involved in a number of groups 
under the Network Reliability and Interoperability Council (NRIC) that 
are working on just these issues. While the granularity of defining 
location for this type of service may currently not suffice for E911, 
we are looking at refining the capability for both commercial and 
security applications. The location requirement for E911 services will 
be more stringent than for commercial services.
    By enabling emergency agencies with IP communications capabilities, 
these agencies can leverage IP enabled communications more effectively 
in emergency situations. In particular, through the use of the IP 
Multimedia Subsystem (IMS) service architecture, emergency agencies can 
take advantage of new blended voice, video, and data services to 
enhance emergency communications.
    Question: Are any technical or policy barriers stopping you from 
offering 911 capable products and services rapidly?
    Response: There are both technology and policy barriers to next 
generation application of the 911 services that we know of today. E911 
has traditionally been a fixed location, voice-oriented service. 
Increasingly user demand is for services that are not location-based, 
but user-based and this is frequently mobile in nature. What that means 
is that people used to have to go home, to an office or use a pay phone 
to make a call and all of those are fixed and known locations. Today 
people increasingly want to access a broad range of voice and 
multimedia services, across a broad range of devices that may not 
include our traditional definition of a telephone, regardless of their 
location. So this is not just a voice issue or telephone issue.
    Technically, the challenge is to take what is today a one-
dimensional service--which involves, in essence determining where the 
call originated--and integrate other technologies to address the highly 
variable components of IP-Enabled Services: end user devices that are 
often mobile and frequently incorporate technologies such as GPS, which 
do not work inside buildings and tunnels for instance and triangulation 
of cell sites which perhaps is not a totally reliable method of 
determining where a user is in the case of an emergency.
    However, we believe these barriers can be overcome. One method we 
are looking at is the use of the IP Multimedia Subsystem, which 
provides a standards-based means of correlating a broad range of user 
and network data for service delivery, but which we believe could also 
be used to address E911 issues. The IMS could track users whereabouts 
using GPS feeds and cell site activity or other activity indicators and 
have that information available to report a users last-known location 
in the event of a 911 call. We believe we can make this information 
secure; however, privacy issues are raised with the collection and 
storage of this information.
    Location capabilities place serious challenges on both networks and 
applications since IP networks do not inherently provide location 
information. Location information is required to identify the 
appropriate public services access point as well as to provide accurate 
geographical or address information for emergency responders. The 
ability to provide authenticated and accurate location information will 
likely require network infrastructure enhancements. Security is another 
key technical challenge for IP enabled emergency services. Emergency 
communications must have security mechanisms to ensure the accuracy and 
authenticity of the location, call back, and other relevant 
information. These new security procedures are presently being actively 
discussed in the industry.
    Again, Lucent is actively involved in a number of groups under NRIC 
that are working on issues.
               question from the honorable albert r. wynn
    Question: You said in your testimony that Congress should consider 
removing certain telecommunications regulations. Where do you see an 
opportunity to do so and why?
    Response: Next generation networks are fundamentally different than 
traditional telephone networks. In an IP-enabled world, voice is merely 
one of many applications, along with video and data, which are 
fundamentally digital packet streams of information. IP-based 
technologies have dramatically changed the cost and reach paradigms and 
with time will enable the seamless delivery of blended voice, video and 
data services to any type of access device across any kind of network. 
They have also transformed the ability of service providers, network 
operators, and others, to quickly introduce exciting new services in 
response to a variety of market factors, customer demand, and the 
evolution of technology. These changes obviously have ramifications for 
the way these services are regulated at the state and federal levels. 
We believe that the power of next generation networks, and really, 
convergence, will be best unleashed when service providers, operators 
and others can change their service offer without complicated 
regulation or a lengthy approval process or prior approvals. An example 
of a way that new service introduction could be streamlined is the 
removal of current barriers that limit a traditional service provider's 
ability to offer IP-enabled services without having those services 
subject to traditional video regulations.
                                 ______
                                 
                                                   Motorola
                                                     March 31, 2005
The Honorable Fred Upton
Chairman
Subcommittee on Telecommunications and the Internet
Committee on Energy and Commerce
U.S. House of Representatives
Washington, DC 20515
    Dear Mr. Chairman, thank you for inviting me to appear before your 
Subcommittee last month to testify about the seamless mobility of 
technology users along with their voice, video, and data communications 
as they go about living their lives or saving others--in the case of 
first responders. You chaired an outstanding hearing that kicked off 
the Telecom Reform that you and Members of the Commerce Committee will 
lead. I look forward to sharing in this critical initiative which will 
carry the Telecom Act beyond the Internet, leave the cell phone as we 
know it in the dust, and truly make it the universal remote control for 
life.
    You have asked for further information on IP-enabled voice 
technologies and emergency communications, including whether Congress 
should mandate 911 compliance on VoIP technologies, what solutions 
Motorola might be developing in this space, and what barriers exist. 
Let me begin by sharing my view that ensuring that emergency 
communications are available to users of IP-enabled technologies is the 
right thing to do. In particular, Motorola prides itself on its 
heritage in public safety communications. We will continue to strive so 
that users of new technologies can get help when and where they need 
it.
    To address your questions, I offer the example of what Motorola is 
working on with respect to 911 solutions as we develop new IP-enabled 
devices. Motorola has developed a mobile office or what we call an 
``enterprise'' device that has dual network features--voice 
communications over cellular and voice over an IP-enabled WLAN 
workplace network. The dual network provides a seamless hand-off of 
active calls between the WLAN and the cellular networks. The device 
uses WLAN network IP access points within the workplace and uses the 
cellular network when outside the workplace.
    Motorola has worked closely with our partners to support emergency 
communications on both the cellular and IP-enabled sides of this 
device. On the WLAN side, the 911 call feature allows authenticated and 
registered enterprise WLAN users to make emergency 911 calls from the 
enterprise WLAN / PBX network. The system provides the calling party 
number to the Public Safety Answering Point (PSAP) which is mapped by 
the enterprise administrator to the caller's Emergency Location 
Information Number (ELIN) information specific to the facility 
location. The calling party number also functions as the callback 
number to allow the PSAP to re-establish the call back to the 
enterprise emergency response system, if necessary.When the PBX 
receives a 911 call from the device, the PBX maps the handset's initial 
enterprise WLAN registration location to the publicly routable ELIN and 
sends the 911 call and calling party number to the PSAP. If a situation 
arises where the call drops while the caller is in the workplace WLAN 
network, the PSAP can make a call to the calling party number provided 
by the enterprise. The enterprise emergency response system and PBX 
would then re-establish the call to the originating caller in the 
enterprise WLAN network. If the caller moves out of the enterprise WLAN 
network, the call is seamlessly handed-off to a cellular carrier as any 
other non-emergency call. If a situation arises where the call drops 
after moving to the cellular network, the PSAP can make a call to the 
calling party number provided by the enterprise. The enterprise 
emergency response system and PBX would then forward the call to the 
originating caller, now on the cellular network. If a call is initiated 
when the caller is in the cellular network, the call is treated like 
any other 911 call on the carrier's network.
    As you know, these innovative technologies are complex and somewhat 
nascent. However, the vision for these technologies is robust, and we 
hope to learn from the experience we are gaining in deploying the 
enterprise solution with our customers and partners. Your continued 
oversight of this issue will keep developers of devices and services 
focused on its utmost importance while recognizing that some things 
will be harder technologically to do than others.
    We applaud the Congress' studied approach to addressing complicated 
technical questions such as this. We are moving to solve them in a way 
that will meet the expectations of the public, and we pledge to work 
with you to get it right. I hope the example of what we are doing in 
the enterprise space is of service to the Committee and demonstrates 
our commitment to this important public policy objective. We're getting 
it started.
            Sincerely,
                                                  Ed Zander
                                           Chairman & CEO, Motorola
                                 ______
                                 
The Honorable Fred Upton, Chairman
Committee on Energy and Commerce
Subcommittee on Telecommunications and the Internet
U.S. House of Representative
Washington, DC 20515-6115
    Dear Chairman Upton:  Thank you for the opportunity to testify at 
the Subcommittee's February 9th, 2005 hearing titled ``How Internet 
Protocol-Enabled Services are Changing the Face of Communications: A 
View from Technology Companies.'' I am in receipt of questions 
submitted by Congressman Gordon related to the hearing that you 
requested I answer for the Committee's hearing record. I am pleased to 
provide this information. As these questions relate to wireless 
technologies supporting enhanced 911 position location, QUALCOMM is 
well qualified to speak on this subject.
    Question #1: Should Congress mandate that voice IP technologies are 
911 compliant?
    Response: Not at this time. The Federal Communications Commission 
(FCC) has, through its rules, mandated enhanced E-911 for all wireless 
and wireline telephony. Our understanding is that the FCC is in the 
process of deciding whether to impose a similar E911 mandate with 
respect to VoIP services. If the FCC imposes such a mandate on VoIP, 
then Congressional action will not be necessary.
    Question #2: Are you working on 911 solutions as part of your 
company's development of these new devices and services, and if so, 
will these solutions include location and call back capabilities? Other 
capabilities?
    Response: Yes. QUALCOMM is in the process of developing chipsets 
for wireless phones for the next generation of our EV-DO technology, 
known as 1xEV-DO Rev. A, that will enable wireless operators to use 
VoIP for voice calls. Each of these chipsets will also incorporate 
QUALCOMM's Assisted GPS solution, which enables operators to offer the 
most reliable, precise, and accurate commercial E-911 position location 
capability in the world.
    Question #3: Are there any technical or policy barriers stopping 
you from offering 911 capable products and services rapidly?
    Response: No. QUALCOMM recently announced that over 100 million 
wireless phones containing our Assisted GPS technology have been sold 
worldwide. It is clear that we are well into the mass production and 
mass commercial delivery of these devices. Neither I nor my staff is 
aware of any policy barrier inhibiting our continued mass delivery of 
these devices in the United States.
    We believe that the inclusion of GPS-based position location 
technology into wireless phones has transformed these phones into 
greatly improved safety tools, which enhance both the personal safety 
of individual citizens as well as our collective homeland security. 
Conversely, if mobile VoIP devices do not include this capability, 
citizens who use these devices to place emergency calls will not be 
locatable by public safety personnel. I have attached a recent story 
from Texas that reports on the tragic results for one family that tried 
to call for help on a VoIP phone and was not able to connect with their 
local 911 dispatch center.
    We are therefore eager to help you define the best public policies 
to ensure the rapid dissemination of GPS equipped wireless devices to 
all Americans. I hope that you find this information helpful. If you 
have any additional questions please do not hesitate to contact me.
            Sincerely,
                                          Irwin Mark Jacobs
                             Chairman and CEO QUALCOMM Incorporated

                                 
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