```

[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]

 
   COMPETITION IN THE COMMUNICATIONS MARKETPLACE: HOW CONVERGENCE IS 
       BLURRING THE LINES BETWEEN VOICE, VIDEO, AND DATA SERVICES

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

                                HEARING

                               before the

          SUBCOMMITTEE ON TELECOMMUNICATIONS AND THE INTERNET

                                 of the

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                               __________

                              MAY 19, 2004

                               __________

                           Serial No. 108-85

                               __________

       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

93-976                  WASHINGTON : 2004
_________________________________________________________________
For sale by the Superintendent of Documents, U.S. Government Printing 
Office Internet: bookstore.gpo.gov Phone: toll free (866)512-1800: 
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                             __________

                    COMMITTEE ON ENERGY AND COMMERCE

                      JOE BARTON, Texas, Chairman

W.J. ``BILLY'' TAUZIN, Louisiana     JOHN D. DINGELL, Michigan
RALPH M. HALL, Texas                   Ranking Member
MICHAEL BILIRAKIS, Florida           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
JAMES C. GREENWOOD, Pennsylvania     FRANK PALLONE, Jr., New Jersey
CHRISTOPHER COX, California          SHERROD BROWN, Ohio
NATHAN DEAL, Georgia                 BART GORDON, Tennessee
RICHARD BURR, North Carolina         PETER DEUTSCH, Florida
ED WHITFIELD, Kentucky               BOBBY L. RUSH, Illinois
CHARLIE NORWOOD, Georgia             ANNA G. ESHOO, California
BARBARA CUBIN, Wyoming               BART STUPAK, Michigan
JOHN SHIMKUS, Illinois               ELIOT L. ENGEL, New York
HEATHER WILSON, New Mexico           ALBERT R. WYNN, Maryland
JOHN B. SHADEGG, Arizona             GENE GREEN, Texas
CHARLES W. ``CHIP'' PICKERING,       KAREN McCARTHY, Missouri
Mississippi, Vice Chairman           TED STRICKLAND, Ohio
VITO FOSSELLA, New York              DIANA DeGETTE, Colorado
STEVE BUYER, Indiana                 LOIS CAPPS, California
GEORGE RADANOVICH, California        MICHAEL F. DOYLE, Pennsylvania
CHARLES F. BASS, New Hampshire       CHRISTOPHER JOHN, Louisiana
JOSEPH R. PITTS, Pennsylvania        TOM ALLEN, Maine
MARY BONO, California                JIM DAVIS, Florida
GREG WALDEN, Oregon                  JANICE D. SCHAKOWSKY, Illinois
LEE TERRY, Nebraska                  HILDA L. SOLIS, California
MIKE FERGUSON, New Jersey            CHARLES A. GONZALEZ, Texas
MIKE ROGERS, Michigan
DARRELL E. ISSA, California
C.L. ``BUTCH'' OTTER, Idaho
JOHN SULLIVAN, Oklahoma

                      Bud Albright, Staff Director

                   James D. Barnette, 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
  Vice Chairman                      ALBERT R. WYNN, Maryland
PAUL E. GILLMOR, Ohio                KAREN McCARTHY, Missouri
CHRISTOPHER COX, California          MICHAEL F. DOYLE, Pennsylvania
NATHAN DEAL, Georgia                 JIM DAVIS, Florida
ED WHITFIELD, Kentucky               CHARLES A. GONZALEZ, Texas
BARBARA CUBIN, Wyoming               RICK BOUCHER, Virginia
JOHN SHIMKUS, Illinois               EDOLPHUS TOWNS, New York
HEATHER WILSON, New Mexico           BART GORDON, Tennessee
CHARLES W. ``CHIP'' PICKERING,       PETER DEUTSCH, Florida
Mississippi                          BOBBY L. RUSH, Illinois
VITO FOSSELLA, New York              ANNA G. ESHOO, California
STEVE BUYER, Indiana                 BART STUPAK, Michigan
CHARLES F. BASS, New Hampshire       ELIOT L. ENGEL, New York
MARY BONO, California                JOHN D. DINGELL, Michigan,
GREG WALDEN, Oregon                    (Ex Officio)
LEE TERRY, Nebraska
JOE BARTON, Texas,
  (Ex Officio)

                                  (ii)

                            C O N T E N T S

                               __________
                                                                   Page

Testimony of:
    Birnbaum, Jay, Vice President and General Counsel, Current 
      Communications Group.......................................     7
    Burris, John, Director, Data Product Marketing, Sprint 
      Corporation................................................    12
    Jachner, Jack, Senior Director, Research and Innovation, 
      Office of the Chief Technology Officer, Alcatel North 
      America....................................................    14
    Leddy, Kevin, Senior Vice President, Strategy and 
      Development, Time Warner Cable.............................    17
    Neihardt, Jonas, Vice President, Federal Government Affairs, 
      Qualcomm, Inc..............................................    21
    Rizzo, Adriana, Executive Director, eServices, Verizon 
      Communications.............................................    23

                                 (iii)

  

   COMPETITION IN THE COMMUNICATIONS MARKETPLACE: HOW CONVERGENCE IS 
       BLURRING THE LINES BETWEEN VOICE, VIDEO, AND DATA SERVICES

                              ----------                              

                        WEDNESDAY, MAY 19, 2004

              House of Representatives,    
              Committee on Energy and Commerce,    
                     Subcommittee on Telecommunications    
                                          and the Internet,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 11 a.m., in 
room 2123, Rayburn House Office Building, Hon. Fred Upton 
(chairman) presiding.
    Members present: Representatives Upton, Stearns, Gillmor, 
Cox, Deal, Whitfield, Shimkus, Pickering, Buyer, Bass, Walden, 
Terry, Barton (ex officio), Markey, Wynn, Davis, and Gonzalez.
    Staff present: Howard Waltzman, majority counsel; Neil 
Fried, majority counsel; Will Nordwind, majority counsel and 
policy coordinator; William Carty, legislative clerk; Peter 
Filon, minority counsel; and Voncille Hines, minority 
professional staff.
    Mr. Upton. Good afternoon, everyone. I know we have a 
number of subcommittee meetings this morning and the House is 
in session and we expect votes about 1 I am told. Good morning. 
Today's hearing is entitled ``Competition in the Communications 
Marketplace: How Convergence is Blurring the Lines Between 
Video, Voice, and Data Services.''
    This is another in a series of hearings that the 
subcommittee will be holding this year regarding competition in 
the communications marketplace. These hearings are designed to 
lay a foundation for us as we prepare to revisit the 
Telecommunications Act of 1996 in the next Congress.
    Today's hearing is a rather unique approach in that we are 
focusing solely on technology, not policy. Today's witnesses 
are not policy people. They are technologists who will 
demonstrate through their company's gadgets how the marketplace 
is evolving to one where voice, video, and data services are 
converging and blurring the lines between those services.
    Subsequent hearings will have a policy discussion about how 
this convergence, this blurring of the lines should impact our 
regulatory approach to the marketplace. I, for one, have made 
no secret of my belief that the legacy stovepipe regulation 
perpetuated by the Telecommunications Act of 1996 needs to be 
revisited given the evolution and technology in the marketplace 
that was virtually unforeseen at the time that the Act was 
written. The technology that will be demonstrated today will 
provide us a few examples of this incredible innovation, 
evolution, and convergence about which I speak.
    I want to thank all of our witnesses for their extra 
efforts in making sure in advance that their demonstrations 
would work in our hearing room today. I might note that my mom 
was a teacher so I know how important that is. I also want to 
especially thank our committee's information technology 
director John Clocker who assisted our witnesses with the 
setting up of their demonstrations. As usual, John has made all 
of the terrific technology in this room not only work, but also 
look so effortless to use.
    At this point I yield for an opening statement from my 
colleague from Maryland, Mr. Wynn.
    Mr. Wynn. Thank you, Mr. Chairman. I really appreciate the 
fact that you are having this show and tell hearing. I think it 
is going to be very exciting. I am looking forward to seeing 
the presentations and learning about the new technology.
    With respect to the Telecomm Bill I would only say it is 
interesting that just about the time we figure out what we put 
in and how it actually affected the industry, we find it is 
time to revisit it again. I think it really reflects the fact 
that generally technology out-paces policy so we are going to 
have to really scramble to keep up, but also be mindful of the 
fact that there are limits to what we can do as policymakers in 
this new frontier of high technology.
    I relinquish the balance of my time. Thank you for calling 
the hearing, Mr. Chairman.
    Mr. Upton. Mr. Cox.
    Mr. Cox. Thank you, Mr. Chairman. I am looking very much 
forward to the presentations that we are going to have today. I 
want to thank you for holding this important hearing on the 
explosion of new Internet-based services available to 
consumers.
    Given the pace of technological change, it is important to 
have an almost daily reality check to ensure that we understand 
the products, the markets, the consumers, and the producers who 
have to live under the laws that we write. With all the options 
for consumers today and all the competing platforms, that are 
now able to offer video and voice and everything else that can 
be converted into digital data, we might wonder whether our 
laws can possibly keep up.
    Seven years ago Peter Huber published a book arguing that 
it was time to shut down the FCC and let common law and the 
courts settle any disputes that arise in this rapidly changing 
high-tech market, because anything else would fall short.
    Given that the premise of our legislation and regulation 
over the last century is to regulate communications based on 
our apparent scarcity of communications, today's hearing gives 
us an opportunity to step back and ponder the big questions: 
whether we still need the kinds of regulators that we 
presuppose when cable companies, phone companies, wireless 
companies, even satellite companies are all competing to offer 
a package of digital services.
    This seems to be the competition we have all sought for a 
long time and so perhaps we should declare a victory, perhaps 
even envisioning the Peter Huber future in which we shut down 
the FCC and schedule a long district work period.
    As we look at all the products to be demonstrated today, 
all of them enabled by the Internet and driven by advances in 
computer hardware and software markets, it is useful to 
remember that these largely unregulated markets have a history 
of innovation that the highly regulated telephone market cannot 
match. I think it is not because of the lack of innovative 
creativity in telephony, but rather the difference in the 
regulatory environment.
    We should be chary about bringing 1930's telephone 
regulations into these high-tech industries and we should be 
seeking ways to liberate telephony from the heavy regulation 
that began so long ago in the age of analog scarcity and 
dominant carriers.
    There is much talk in Washington now of Congress gearing up 
for a rewrite of America's communications law. But possibly 
what we will learn today is that retirement would be a better 
option. I thank the Chairman again for holding this important 
hearing.
    Mr. Upton. Mr. Gonzalez.
    Mr. Gonzalez. Waive opening.
    Mr. Upton. Mr. Walden.
    Mr. Walden. Thank you, Mr. Chairman. I am just looking 
forward to the presentations.
    Mr. Upton. Mr. Pickering.
    Mr. Pickering. Mr. Chairman, I thank you for having this 
hearing. I am looking forward to hearing the testimony of the 
panel. We do have many exciting new technologies and 
innovations as we move forward on applications like Voice-over-
Internet.
    As you all know, I have recently introduced legislation 
that would free that from any threat of regulation protected 
from taxation and create mechanisms as it applies to other 
issues from social responsibilities to compensation and 
universal service. Those are all issues that are important as 
we look at telecomm policy in the future.
    Mr. Chairman, I look forward to hearing what we can do for 
this committee to incent new innovation, deployment, 
competition, and convergence. I hope to work with those in the 
technology and telecommunications sectors as we go forward on 
this committee. Thank you very much.
    Mr. Upton. Mr. Terry.
    Mr. Terry. Waive.
    Mr. Upton. Mr. Bass.
    Mr. Bass. Thank you, Mr. Chairman. I see this as the 
opening act in a very complicated and long play which will 
extend through hopefully 2004 as we examine the whole 
Telecommunications Act. There are, as my friend from 
Mississippi said, many different and somewhat thorny 
controversial issues that we will be bringing up including 
Voice-Over-Internet protocol, satellite radio, perhaps another 
look at satellite, television, and so on, digital conversion. I 
mean, a whole menu of things.
    The underlying and most important issue behind all of this 
debate is not who wins or who loses. The winner has to be the 
consumer. The winner has to be the U.S. economy and the United 
States must maintain its prominence in telecommunications 
development and utilization.
    I look forward to this hearing as a beginning and an 
interesting, if not complex, debate on how we proceed next 
year. Yield back.
    Mr. Upton. Mr. Stearns.
    Mr. Stearns. Good morning and thank you, Mr. Chairman, for 
holding this hearing. As we begin to re-examine the Telecomm 
Act of 1996 and the Communication Act as a whole, it is vital 
that we get a hand on how these new technologies are reshaping 
the telecomm markets and affect a consumer demand.
    Before us today we have a number of highly innovative 
technologies which demonstrate that the elusive convergence of 
telecomm service is now apparently within the market's reach. 
What we will see today is how a voice data network based on 
Internet protocol can revolutionize business and residential 
services.
    Voice-over-Internet protocol, or VoIP, has dominated the 
news over the past 6 months. It is a tremendous advancement in 
voice communication, and is an example of the tremendous 
potential of these nascent telecomm technologies. Broad band 
over power lines is another incredible technology that uses the 
existing electric power grids to deliver high- speed services.
    The telecomm sector as a whole has suffered over the years, 
yet technologies, especially broad band technologies, are on 
the verge of serious growth. With these technologies there is a 
reasonable expectation that the market can be saturated with 
numerous offerings of broad band services regardless of the 
provider. The provider could be your phone, your cable, your 
wireless, or your current electric company.
    One criticism of the broad band market in America has been 
the lack of application that significantly drives consumer 
demand or so-called killer app. I think that with advances in 
offering broad band, the consumers are always connected meaning 
they have the ability to access information and entertainment 
whenever and wherever they choose.
    Consumers are increasingly becoming reliance on instant 
gratification. If our desires can be satisfied in the least 
amount of time with the least amount of effort, well, so much 
the better. The technologies we are seeing today have one thing 
in common, Internet protocol addressing, the underlying system 
that runs the Internet.
    By offering voice and data to consumers using Internet 
protocol addressing, we are seeing what I would term as an 
advanced Internet communication service. Instead of a killer 
app, then we have a killer service, one that can provide all 
the communication, information, entertainment applications with 
less effort on the side of the consumer. VoIP is a tremendous 
marketing challenging application but it is just that at this 
point, an application.
    As we move forward in debating changes to the Telecomm Act, 
we should be mindful that we examine the provisions of 
services, not each individual application. I applaud you on 
this hearing, Mr. Chairman, and I look forward to the 
testimony.
    Mr. Upton. Mr. Deal.
    Ms. Deal. Waive.
    Mr. Upton. Well, that concludes the opening statements. We 
welcome the panel that is here today. Normally we allow--I will 
advise and extend my remarks. We have not quite completed our 
opening statements and I yield for an opening statement by my 
friend and ranking member of the subcommittee, Mr. Markey.
    Mr. Markey. Thank you Mr. Chairman, very much. I apologize 
to you and to our excellent panel here today. This hearing, Mr. 
Chairman, is about the future. It showcases technologies and 
products and services that may become an everyday reality for 
millions of Americans in the coming months and years.
    The inexorable march of digital technologies and the 
continuing development of Internet based communications 
technologies allow for a flowering of technological appliances 
and services that represent a cross-pollination of hitherto 
distinct applications.
    Yet, as much as this hearing on communications convergence 
is about the future, it is also about the past. By creating an 
environment where such technologies could flourish, the 
subcommittee is in essence the convergence committee of the 
Congress.
    From our work in the 1996 Telecommunications Act in 
insuring that incumbent telephone and cable companies were 
prohibited from buying each other out, we made sure that there 
were at least two wires independently competing for residential 
services. By preempting the 26 states which in 1996 prohibited 
a cable company, electric company, municipality, or 
entrepreneur from offering a competing telecommunications 
service, we created the prospect of a national marketplace for 
telecommunications services.
    By visciating all exclusive franchise agreements in the 
1992 Cable Act, we permitted competing cable companies to enter 
the residential video marketplace paving the way for cable, 
broadband companies to serve consumer demands such as Starpower 
and RCN.
    By staring down the FCC in the late 1980's when it wanted 
to impose per-minute access charges on enhanced services, this 
subcommittee ensured that Internet service providers could 
offer flat rate access and that nascent Internet-based services 
weren't saddled with onerous per-minute fees.
    By shifting over 200 megahertz of spectrum to the FCC in 
1993 and then insisting that major licenses could not be 
auctioned in region to the incumbent cellular duopoly, this 
subcommittee fostered an explosion of digital wireless growth. 
I continue to believe, Mr. Chairman, that the model we chose 
for the wireless industry is a good lesson.
    In other words, by insisting on competition through the 
sheer ability of the FCC to create competition through 
effective licensing rules which prohibited the incumbents from 
simply gobbling up the new frequencies, we were able to create 
a third, a fourth, a fifth, and more wireless competitors in 
each market. Although the incumbent cellular duopoly vigorously 
opposed our efforts, Congress and the FCC stuck to their guns 
in creating a more competitive wireless market.
    Because we did, sufficient competition developed to protect 
consumer interest and we were able to subsequently deregulate 
the wireless market to a very large degree. Millions of 
Americans, consumers, workers, and entrepreneurs have benefited 
from this policy and the emergence of additional digital 
wireless technologies and ever lower consumer prices is 
testimony to this success story. I still believe that insisting 
upon competition to the incumbents was the right thing to do.
    The point is that regardless of how ingenious a new whiz 
bang device might be in our telecommunications marketplace, its 
creators need governmental policies which allow it to reach the 
market. Otherwise, it will remain merely a gleam in the eye of 
an engineer in a laboratory. Moreover, the marketplace needs 
sufficient competition to ensure the participants continue to 
innovate, the innovators have a sufficient number of companies 
to whom they can sell their products and services, and that 
consumers see higher quality offerings and lower prices.
    We are fortunate that by in large over the years we have 
made a series of policy decisions that have worked. We 
obviously have more work to do in some areas and I look forward 
to working with all the subcommittee members on those issues in 
the future. I applaud the all-start class of witnesses for 
taking time out of their busy schedules to give us a sense of 
what they are currently working on and I look forward to their 
testimony. I yield back the balance of my time.
    [Additional statements submitted for the record follow:]
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 on the convergence of a 
multitude of communications technologies. Clearly, we have come a long 
way from the Telecommunications Act of 1996. I'm not certain any of us 
at that time could fully envision how the Act would change the 
communications landscape. Now, we can actually touch the new 
technologies, visualize how they will fit into our lives, and choose 
what platform on which we receive voice communications, data services 
and video content.
    Wireless, fiber to the premises, cable, satellite, and power lines 
are these platforms, and we need to ensure that the law treats them 
fairly and also encourages companies to build these technologies out--
even to our most remote constituents. Unfortunately, there are many in 
rural America do not have the choice that others have with regard to 
how they receive voice, video and data content, if they can even get 
broadband services at all. That's why we must continue lowering 
barriers to these important services and streamline access to rights of 
way and a capital. The president's recent Executive Order is a good 
start, but these still a ways to go before we achieve platform 
neutrality and comprehensive consumer choice.
    I look forward to hearing from our distinguished panel on these 
matters today and want to continue our dialog as we tackle legislation 
affecting these services.
    I yield back the balance of my time.
                                 ______
                                 
 Prepared Statement of Hon. Joe Barton, Chairman, Committee on Energy 
                              and Commerce
    Mr. Chairman, thank you for calling this hearing today. I am 
delighted that Members of the subcommittee will have this opportunity 
to view firsthand the products that are driving the convergence of 
voice, video, and data services.
    The competition that was envisioned by the Telecommunications Act 
of 1996 is finally taking shape. And that competition is coming from 
companies using different technology platforms and networks to provide 
consumers with the same suite of services.
    Cable companies, in addition to leading the broadband market, are 
beginning to offer both circuit-switched and Internet Protocol-based 
phone service. Wireless companies are offering high-speed data and 
video services on mobile phones. Telephone companies are putting fiber 
in their networks so that they can offer video services. For example, I 
understand that Verizon is planning to build a fiber-optic network in 
Keller, Texas over which Verizon will offer voice, video, and data 
services. Electricity companies are using the grid to offer Internet 
Protocol-based voice, video, and data services. And Voice-Over-
Internet-Protocol companies are using all of these platforms to offer 
consumers new services.
    The devices showcased today will demonstrate that. And these 
devices will demonstrate that facilities-based competition is here. 
This competition will greatly benefit consumers through lower prices, 
more choices, and better service. In a converged communications world 
where consumers will purchase an entire suite of services from one 
company rather than each service individually from multiple companies, 
competition forces companies to innovate to keep or attract customers. 
That is something that will benefit all of us.
    Mr. Chairman, thank you again for holding this hearing. I look 
forward to learning more about the products brought by our witnesses 
today, and to ensuring that our constituents have access to these and 
other exciting communications products.

    Mr. Upton. Thank you. At this point we have concluded our 
opening statements. Now we are blessed with a superior panel 
this morning that will be led by Mr. Jay Birnbaum, Vice 
President and General Counsel of Current Communications Group; 
Mr. John Burris, Director of the Data Product Marketing, 
Sprint; Mr. Jack Jachner, Senior Director, Research and 
Innovation, Office of the Chief Technology Officer, Alcatel; 
Mr. Kevin Leddy, Senior VP, Strategy and Development, Time 
Warner Cable; Mr. Jonas Neihardt, VP of Federal Government 
Affairs, Qualcomm; and Ms. Adriana Rizzo, Executive Director, 
eServices for Verizon.
    I know that generally we try to limit your remarks and 
opening statements to about 5 minutes. We may go over a little 
bit so we get to see some of the things that you have 
developed.
    We will start with Mr. Birnbaum. Welcome.

     STATEMENTS OF JAY BIRNBAUM, VICE PRESIDENT AND GENERAL 
 COUNSEL, CURRENT COMMUNICATIONS GROUP; JOHN BURRIS, DIRECTOR, 
   DATA PRODUCT MARKETING, SPRINT CORPORATION; JACK JACHNER, 
 SENIOR DIRECTOR, RESEARCH AND INNOVATION, OFFICE OF THE CHIEF 
TECHNOLOGY OFFICER, ALCATEL NORTH AMERICA; KEVIN LEDDY, SENIOR 
 VICE PRESIDENT, STRATEGY AND DEVELOPMENT, TIME WARNER CABLE; 
  JONAS NEIHARDT, VICE PRESIDENT, FEDERAL GOVERNMENT AFFAIRS, 
    QUALCOMM, INC.; AND ADRIANA RIZZO, EXECUTIVE DIRECTOR, 
               eSERVICES, VERIZON COMMUNICATIONS

    Mr. Birnbaum. Thank you. Good morning, Mr. Chairman and 
fellow members of the committee. I suspect that of the 
companies represented on this panel and the technologies, in 
fact, represented, Current Communications Group and Broadband 
over Power Lines, is probably the least well known. Let me 
start by just explaining who Current is.
    We are a local company based just outside of Washington in 
Germantown, Maryland. We are both a technology developer and a 
services provider. One of our companies called Current 
Technologies has, in fact, developed a technically and 
economically viable way of providing broadband services over 
the electric power lines.
    Much the way cable television and telephone companies 
provide broadband over the cable network and the telephone 
network, we have devised a safe and efficient manner to do that 
over the electricity wires. Current Communications, the sister 
company, is actually a service provider and is right now 
providing commercial broadband services in Cincinnati, Ohio and 
we will start providing voice services, Voice-over-Internet 
protocol this summer.
    Unlike the cable and telephone wire, electricity wires run 
essentially into every home, in fact, every wall of every home 
and business in the United States. That gives us an advantage, 
at least as far ubiquity. We are certainly later coming to the 
broadband game than cable and DSL companies. We recently 
announced the first commercial roll-out of Broadband over Power 
Lines in Cincinnati.
    Our partner there is Cinergy Corporation. Our goal is to 
pass 250,000 homes in the next 3 years including thousands of 
small businesses. The commercial roll-out actually follows two 
technical trials, one in Cincinnati and one just out the 
beltway here with Potomac Electric Power. We had over 700 homes 
and 200 customers. We had very high satisfaction rates. We have 
now turned the commercial key and are providing multiple 
megabyte services, both data and voice, soon to be video, over 
the power lines.
    Some of the advantages of BPL, as the FCC has now called 
it, because we can provide significant through-put, we get 
right now actually 2 to 4 megabits routinely, as high as 5 or 6 
megabits per second, at every house, in fact, every outlet in 
every house. Our next generation products, which should be 
available within the next year or 2, actually can provide 50 
megabits plus of service.
    That means that we can provide competitive video 
programming services. We are now providing broadband data in 
Cincinnati. We are rolling out commercial Voice-over-IP 
services this summer. It is true plus and play technology. All 
a customer has to do is take a device like this one here, we 
call this a power line modem, inexpensive off-the-shelf device, 
plug it into any outlet in their home, and it instantly syncs 
up with our equipment on the poles.
    Because the electricity network, again, goes to every 
outlet, this supports other applications, things like Internet 
radio. There are hundreds of radio stations that are available 
on the Internet both from the United States and from overseas. 
If you can plug in a radio instead of using rabbit ears or a 
regular antenna, you can plug it into an ethernet modem and you 
can actually listen to Internet radio or play Internet gaming 
in any outlet in the house. You can move computers and have 
multiple computers going on using the Internet simultaneously.
    One of the reasons why utility companies are very excited 
about Broadband over Power Lines, though, is actually not 
because of the broadband services. I just want to take a minute 
to talk about some of the enhanced utility applications. When 
out equipment is installed on the wires, the utility companies 
can then engage in automated outage detection and restoration 
detection. They can provide preventive maintenance. They can 
actually monitor equipment on their network and find out 
problems before they result in outages.
    We can do automated meter reading or the utility company 
can do automated meter reading which can result in time-of-day 
pricing and other enhanced functionality at the utility level. 
Certainly post-911 and with last year's blackout and Hurricane 
Isabel which hit this area hard, these enhanced utility 
applications are actually driving utility companies to look 
into and hopefully soon deploy Broadband over Power Lines.
    I am sure you are all familiar with this picture. Basically 
the power network in the U.S. and, for that matter everywhere 
else, once electricity is generated at a power plant, it gets 
distributed to substations in local neighborhoods whether they 
be residential or commercial. Between the substation and the 
end users we have electricity stepped down to about 10,000 
volts that runs down the streets right outside our houses.
    Each cluster of homes in the U.S. has a transformer 
associated with it. It is that trash can looking device that 
sits on the telephone pole. That converts the fairly dangerous 
10,000 volts into about 120 volts. The problem with Broadband 
over Power Lines and the difficulty in it competing over the 
last few years with cable and DSL is how to get around that 
transformer so we can actually run the broadband signals down 
the electricity wires.
    What Current does is we actually overlay our equipment on 
the existing distribution portion of the electricity network 
between the substation and customer's homes. Working backwards 
from the house, again the customer installs a modem like this. 
This device will talk directly to our equipment that we install 
up on the poles. We call that device a bridge.
    The bridge simply manages the traffic from all the 
customers served off that transformer by the electric company. 
That averages about six homes per transformer in the United 
States. Sometimes it is more and sometimes it is only one or 
two homes. We then essentially bypass the transformer by 
sending the signal around the transformer onto the higher 
voltage, the medium voltage, 10,000 volt lines.
    We run that signal down the wires and, again, take it off 
of the 10,000 volt wires. We do that with a device called a 
coupler connected to a device we call a backhaul-point. That 
backhaul-point then will connect using fiber or wireless 
technologies, and even satellite.
    One of the economic ways we think Broadband over Power 
Lines can be distributed, for instance, in rural area is to use 
satellite as a backhaul technology which certainly provides for 
some synergies with a video as well as data and voice. From 
there we connect them to the Internet through any voice network 
or eventually into video content service.
    This is what the equipment looks like. Believe it or not, 
this took about--it has been in design for the last 20 years. 
Our company has been at it for 4. On the left-hand side you 
have a device. Again, we call that the coupler. It is the only 
device that touches the higher voltage wires and does so 
safely. Utility companies have helped us develop the safety 
techniques. Obviously they spent a lot of time keeping the 
10,000 volts outside of customers' homes and businesses.
    The two devices on the right look fairly similar and they 
have a lot of electronics inside of them but basically all they 
do is manage the traffic that goes in and out of the customer's 
house out to the Internet or from a video content server or 
into a voice network.
    Once installed on the poles, this is essentially what it 
looks like. You see the transformer up on the right. This is 
true to scale. This is not actually a large transformer. Our 
device is much smaller than the electricity equipment that is 
already up there. Essentially this is our bridge device which 
provides service into a home. It connects to the wires both 
below the bridge and below the transformer which are the low 
voltage wires.
    It is hard to tell from this picture but a wire runs up the 
pole and connects to the medium voltage wires through our 
coupler. Much the way the transformer isolates the 10,000 volts 
and converts it down to 120 volts, our device isolates 
electricity entirely and just lets the broadband signal travel 
from one wire to the other. We have essentially bypassed the 
transformer and we have created a single contiguous 
communications path, yet maintain the integrity of the 
electricity network.
    From the customer's standpoint Broadband over Power Lines 
is very easy. We have leveraged a standard called HomePlug 
which has been developed in the United States for local area 
networking inside the house, home or business for that matter. 
It is actually not a product that is proprietary to current.
    They come in three forms. This is a ethernet version. They 
are made with USB connections, as well as WiFi or 802.11 
connections. Because the power line signal is ubiquitous and it 
is essentially everywhere in your house, you can take this 
device and move it from room to room and in any room get video 
data or broadband signals.
    That is the bulk of my presentation.
    [The prepared statement of Jay Birnbaum follows:]
Prepared Statement of Jay Birnbaum, Vice President and General Counsel, 
                   Current Communications Group, LLC
    On behalf of Current Communications Group I am pleased to introduce 
to the Subcommittee the latest broadband technology to revolutionize 
the way Americans can communicate: Broadband over Power Lines, or 
``BPL.'' BPL is now furthering the ongoing convergence of data, voice, 
and video services by offering consumers a third alternative for 
broadband access. Much the way other broadband technologies use the 
existing telephone and cable television infrastructure to provide 
broadband services, BPL converts the electric distribution network into 
a broadband super highway.
    Current Communications Group has developed a proprietary, safe 
means of using the electric distribution network to provide data, 
voice, and video communications services. By installing its BPL 
equipment on an electric grid, Current transforms the electric network 
into a robust communications network that offers customers speeds much 
faster than that available from DSL and cable modem systems today. 
Specifically, Current's customers can enjoy always on, broadband speeds 
up to four megabits or more at every outlet in their home or business. 
Moreover, whereas DSL and cable modem are largely asymmetrical in 
nature--that is their advertised ``download'' speeds are much faster 
than the speeds at which consumers can actually send data, pictures, or 
video--BPL offers the same fast speed whether one is sending or 
receiving information. This means consumers can send pictures, videos 
and other large files and play on-line games much more effectively.
    Although BPL is not conceptually new, commercially speaking it is 
in its infancy. Current and the Cinergy Corporation recently announced 
the first commercial deployment of the BPL in the United States. 
Although the commercial deployment has only recently begun, together 
the Current-Cinergy joint venture plans to enable several hundred 
thousand homes in Cinergy's electric service territory during the next 
three years. In addition, Current and Cinergy have created a second 
venture to market and deliver Current's BPL technology to small 
municipal-owned and rural cooperative electric utilities throughout the 
country. Because electricity lines run into virtually every room of 
every home and business, BPL can deliver broadband to many areas where 
cable or DSL simply cannot reach, or cannot reach economically. In 
fact, BPL married with broadband satellite can be a powerful force to 
serve rural areas.
    The Cincinnati commercial roll-out follows two year-long trial 
deployments of Current's technology, one in Cincinnati, Ohio with 
Cinergy and the other with Potomac Electric Power, or Pepco, in 
suburban Maryland just outside the Washington, D.C. Beltway. These 
trials included more than 200 hundred customers, including both 
residences and small businesses. The trials also confirmed the robust 
nature of BPL and elicited strong customer satisfaction and desire for 
commercial BPL service in areas where cable modem and DSL service were 
already widely available.
    Through BPL customers can enjoy robust broadband data speeds at 
virtually every outlet in their home or business. This summer Current 
will also begin offering voice telephony service over its BPL network 
using Voice over Internet Protocol, or VoIP. Current's broadband 
Internet access offering will in many cases be a consumer's first and 
only choice to participate in the broadband revolution, since cable 
modem and DSL are not available everywhere. Indeed, according to one 
recent study more than 87 million American homes still do not use 
broadband, remaining relegated to dial-up access or no access at all. 
At a minimum, however, BPL will afford consumers another broadband 
outlet with features and price points better suited to the way 
Americans really want to ``Surf the Net.'' Similarly, Current's full 
VoIP service will often be a consumer's only alternative to second and 
third line local voice service.
    As far as video, existing iterations of BPL technology and service 
already support high quality video streaming over the Internet. 
Current's BPL technology, for instance, actually enables users to send 
and receive video, whether it be in the form of real-time, on-line 
games or home movies downloaded from a camcorder, faster than other 
broadband technologies. Next-generation BPL technologies will offer 
users speeds in excess of 50 megabits, paving the way for true digital 
quality video programming, such as video on demand, within the next two 
years.
    So how does BPL work? From a consumer standpoint, Current's BPL 
solution is simple to use. The customer plugs a small, off-the-shelf, 
inexpensive ``powerline'' modem into any wall outlet in the home or 
business. That modem easily connects to a user's computer via a 
standard USB or Ethernet cord, or even using a wireless fidelity, or 
``WiFi,'' connection. The customer need do nothing further other than 
register on-line for service much the way he or she would register for 
any other Internet-based service. Literally in a matter of minutes the 
customer is surfing the Internet without the need for a technician's 
visit.
    A signal from the consumer's computer travels the through the 
consumer's powerline modem, over the 120 volt premises wiring and ``low 
voltage'' electricity wire outside the home or business toward the 
utility company's ``step-down'' transformer. The utility uses 
transformers to convert the medium voltage (e.g., 10,000 or more volts) 
electricity that runs down the street from one of its distribution 
substations to the 120 volts that can safely come into homes and 
businesses. Because the medium voltage lines carry such high voltages 
and because the step-down transformer also tends to block any BPL 
signals on the power lines, sending BPL signals along such wires and 
past transformers historically had been difficult. But at each 
transformer Current installs its proprietary BPL equipment, which 
enables Current safely to ``bypass'' the transformer and send BPL 
signals to and from the low and medium voltage lines. This enables us 
to form a single, integrated communications path on the electricity 
wires while preserving the integrity of the electricity network. Once 
on the medium voltage line the BPL signals travel down the wires to an 
aggregation point, where Current's equipment again safely extracts the 
BPL signal from the medium voltage wires. Current's equipment then 
converts the BPL signals into traditional communications packets and 
sent along fiber, wireless, or other means to reach the Internet, a 
voice telephony network, or some other network. Communications traffic 
headed to a customer from the Internet, voice telephony network, or 
video content server simply travels the reverse path.
    Finally, BPL is not just a consumer application. By effectively 
overlaying a communications network on the electric distribution grid 
BPL enables electric utilities to improve the safety, reliability, and 
efficiency of their networks. Once installed, BPL technology enables a 
utility to engage in power outage and restoration detection on an 
automated basis, rather than waiting for consumers to call and begin a 
process whereby the utility must dispatch crews for a painstaking seek 
and restore operation. Similarly, BPL equipment can communicate with 
utility equipment such as specially designed IP-enabled meters and 
switches to offer automated meter reading, time-of-day pricing, load 
management, demand side management, and remote monitoring and 
operability of the local electric distribution system.
    The desire for a more efficient and reliable network is a key 
driver for utility companies seeking to deploy BPL in their 
territories. Given the post 9/11 world, the better our critical 
infrastructure is monitored and maintained, the better utilities and 
others can avoid or respond to unforeseen events. Even last year's 
August Blackout and Hurricane Isabel revealed the vulnerability of the 
electric distribution network, a condition upon which BPL can certainly 
improve.

    Mr. Upton. Thank you.
    Mr. Burris.

                    STATEMENT OF JOHN BURRIS

    Mr. Burris. Yes. Thank you. Good morning, Mr. Chairman, 
Members of Congress. I work for Sprint. I run our wireless data 
business there. Over the next 5 minutes I hope to show you guys 
some pretty cool technology that we have that really most of 
our consumers have in their hands today.
    If we have a few moments, it would be great to hand out a 
few handsets that I brought while I can of give my overview 
slides. Feel free to browse around. We have a very cool kind of 
hot product right, live TV called MobiTV, as well as we have a 
live product called MobiMLB which is live baseball audio. If 
there were some baseball games being played this early in the 
morning, you can choose either your home announcer or visitor 
announcer and listen to live baseball.
    Mr. Upton. We were hoping the Cubs would have had extra 
innings.
    Mr. Burris. Or you could have watched the perfect game last 
night or, at least, you know, listened to it.
    Real quick, a few things that are going on. There is no 
question that at Sprint and at several other carriers here in 
the U.S. wireless data services, which in a lot of ways is kind 
of the center point of the convergence of video, voice, and 
data, are an important part of our business. It is a huge 
mandate at Sprint to be the No. 1 or certainly play in the 
short list of winners in the wireless data space.
    To this end we have got a big portion of our customer base 
that have wireless data handsets. Over half of our customers 
have got handsets that can do the various services that you 
guys will be showing off there.
    We sell over 4 million plus downloadable applications a 
month so whether it is ring tones, screensavers, games, it is a 
hot product today, primarily in the youth and young adult 
market, but as well as applications come out that appeal to a 
broader set that is growing as well. Of course, the business is 
growing. As an indicator of customer adoption, money is being 
made in this space at Sprint and other carriers.
    Real quick what is kind of going on is that we have got the 
right networks today and, of course, with some of our partners 
like QUALCOMM. Even faster and better networks are down the 
line here. Sprint has got a great lineup of handsets so it 
really takes a great network, great handsets.
    Then it takes great data plans. It is key to have plans 
that are understandable to customers, that have unlimited data 
usage with them, or customers don't have to learn how many 
kilobytes an e-mail is or how much TV they are watching. We 
have those as well. Then, of course, it takes the right 
services, services that truly appeal to customers on the 
handset.
    So real quick, what are some of those services? Of course, 
as you guys know, you can browse the Internet on your handset. 
You can send text messages. Those are kind of table stakes 
today. Sprint made a big bet a year ago that taking pictures 
and now 15 second video clips and sending those over the 
wireless network would be a big deal and it is.
    We have penetrated our base with wireless camera phones 
more than any other carrier in the U.S. In the last 8 months we 
have over 100 million pictures and videos uploaded or shared 
across our network so it is a phenomenon that is happening and 
will continue to grow with all carriers over the next few 
years. Of course, as folks know, ring tones and music on the 
handset, those things are popular. I can play some of that 
stuff later today if we have some time.
    Wireless games are a big deal. Most of the carriers have 
embraced the idea of wireless games. I will talk a little bit 
about some of the cool things Sprint is doing in that category. 
And then something that I think Sprint leads in today is multi-
media services. Are the 1x network that we have over the entire 
nation we have got some very cool products that you guys are 
probably viewing right now, live TVs whether it is MSNBC, FOX 
Sports, or live MLB updates. We have that on your handset and 
it is selling very, very well.
    Real quick I have three kind of high-level slides here in a 
couple of key categories that we are excited about. One is 
gaming. People are downloading just about a million games on 
our network each month and playing these on the handset. Of 
course, the wireless network is also a great place to play 
multi-player games. Those are very popular.
    Then Sprint was the first carrier to launch a game lobby so 
a wireless community of gamers, hardcore kind of gamers that 
can have a single sign-on across multiple games who can talk to 
each other, share high scores, request that you download the 
baseball game they are playing and invite you to play if you 
have some free time. These things are taking off like crazy. 
Other carrier are asking to be a part of that.
    One of the most talked about applications we have right now 
is called MobiTV. It is live TV. We have about 15 channels. 
This is an example of a clip, kind of the Mars lander. As you 
guys can see, we have MSNBC so you can watch Chris Matthews 
anytime you want, Rudy Guiliani kind of hearings this morning, 
live baseball updates. There are music videos, cartoons. It is 
a handset and a service that we are finding that is shared not 
amongst just the person who pays the bill but with spouses, 
husbands and wives, and then, of course, kids. It is a service 
that everybody is gravitating toward. And with Sprints plan for 
about $10 a month you can watch all the TV you want. Pretty 
much unlimited.
    The next product we have is, or the last slide that I have 
is on a new hot product that launched just in the last few 
weeks. This is live baseball audio. For all the teams in the 
major leagues if a game is currently being played, you can go 
to your sprint phone and listen to those games. You can choose 
the home announcer, the visiting announcer. If you're a Cub 
fan, you can always hear the announcer you want to hear talking 
about the games.
    Mr. Markey. What if you are Red Sox fan?
    Mr. Burris. Red Sox fan same thing.
    Mr. Shimkus. Cardinal fan.
    Mr. Burris. Red Sox come in very clear as well. As well as, 
of course, you can pop over to MobiTV and actually watch actual 
video of games and highlights and those kinds of things.
    These are some of the key services. They truly are a 
convergence of products. The live TV product, as you can guess, 
has raised eyebrows and we are having discussions with all 
kinds of players in the space whether it is the entertainment 
outlets that actually create the content, whether it is the 
cable providers that are partners of ours today as we discuss 
how does this change the playing field. It affects the Internet 
insofar as services that today require broadband networks can 
now work over handsets. Again, a very exciting space, very cool 
technologies that I think will continue to grow. Thank you.
    Mr. Upton. Thank you.
    Mr. Jachner.

                    STATEMENT OF JACK JACHNER

    Mr. Jachner. Good morning, Mr. Chairman and members of the 
subcommittee. My name is Jack Jachner and I work for Alcatel as 
a Senior Director in Alcatel's corporate research organization. 
I lead a worldwide research team based here in the U.S. focused 
on the development of converged applications delivered over a 
converged IP infrastructure. Alcatel is one of the leading 
vendors of Telecomm infrastructure worldwide, with a broad 
portfolio of products that support both the service provider 
and enterprise markets.
    In the service provider market, Alcatel is a market leader 
in Broadband Access, Optical Transport, Class 5/Class 4 
switching--with over 310 million lines deployed worldwide--and 
Intelligent Networks. Alcatel is also a leader in the supply of 
multi-service switching, Edge Routing, VoIP softswitches, VoIP 
gateways and 2G/2.5G and the emerging 3G wireless solutions.
    In the Enterprise market, Alcatel is the leading supplier 
of converged IP Telephony and Contact Center solutions and 
provides a comprehensive suite of Enterprise switch products. 
Finally, Alcatel is also the only telecommunications equipment 
vendor that develops and supplies satellite based 
communications systems.
    Today, I will focus on two aspects of the convergence of 
Voice, Data and Video where technological evolution is driving 
change in communication services and markets. The first aspect 
is that of converged transport, leading to increased 
competition, and the second aspect is of converged 
functionality, leading to new services and opportunities.
    Technological evolution in networks, in algorithms and in 
cost reduction of computing has enabled the convergence of 
transport of Voice, Data and Video. So now a twisted pair cable 
which has historically been deployed to deliver only voice 
services, can now also deliver broadband data and video 
services, using DSL technology. A coaxial cable can, in 
addition to television, deliver telephony and broadband data. 
Other access technologies have emerged including satellite, 
wireless and fiber to the home. Not just the access, but also 
the core of the network, can now be converged.
    This convergence in transport has stimulated competition 
between what were previously distinct sectors of service 
providers, and has enabled new entrants. The ramifications of 
this technological change are currently playing out and 
creating a dynamic market.
    The convergence of transport is also changing the way 
Enterprises communicate, both internally and externally. First 
internally, VoIP is gaining rapid acceptance for Enterprise 
employees, in remote offices or on the road, to call 
headquarters. And now externally, VoIP service providers are 
emerging.
    During the first quarter of this year, Alcatel's enterprise 
division shipped 35 percent of its large PABX lines as IP 
Telephony. Our next generation phones provide both voice and 
application integration, with a screen and keyboard to access 
web services.
    This leads to the second aspect that I would like to 
address, namely the convergence of the functionality of voice, 
data and video in new applications. As an example of the new 
services that are emerging let's consider the convergence of 
traditional telephony and of Instant Messaging. Traditional 
telephony can be enriched by the indication of Presence, which 
is used in Instant Messaging.
    Presence gives an indication of the availability of the 
person we wish to call, typically shown as an icon on our 
screen. If the person's Presence indicates ``unavailable'', 
``on-the-phone'' or ``out-to-lunch'', then we may choose not to 
call at this time. Presence reduces the occurrence of the busy 
signal and of voice mail tag.
    A complementary notion is that of Preference, as I may 
choose to use Presence in order to maintain my privacy or to 
manage my time. For example my Presence might be ``available'' 
to my boss, but only during working hours, and ``available'' to 
my family, except when I am in a meeting.
    Another example is convergence of Telephony and real-time 
text--using Instant Messaging or SMS on mobile terminals. Real-
time text that arrives with my call, can be used to deliver the 
Subject of my call. The call subject helps the receiving person 
to decide whether to take the call.
    As you can see from these examples, blending of Telephony 
and Instant Messaging offers rich new uses.
    Blending of telephony and video can also enable video 
conference meetings, which today are rather complex to set up. 
Soon, video conferences will be as easy as conference calling.
    In Enterprises, the blending of telephony and data enables 
extending enterprise services beyond its borders. Traditional 
PSTN connectivity was very good at delivering calls, but had 
very little additional capability. Today the underlying IP 
network can deliver the signaling to support rich enterprise 
services to be accessed remotely. My home phone or my cell 
phone can provide the dial tone from within the enterprise, 
with four digit dialing and secretarial assistance, as if I 
were at my office.
    These Enterprise services can be provided from the Customer 
Premises, or by service providers over IP networks. Traditional 
Centrex service is evolving to IP-Centrex, with a middle ground 
mixing customer-premise with network-based solutions.
    It is these and other applications that are the ultimate 
benefit. The convergence of transport is the first step, and 
the technology exists today--the market impact has begun. The 
convergence of functionality is the next step--the technology 
is just emerging, and will impact the market in the next 2 to 5 
years. It is a dynamic and exciting time for both convergence 
technology and for the communications marketplace.
    Thank you for your attention.
    [The prepared statement of Jack Jachner follows:]
   Prepared Statement of Jack Jachner, Senior Director, Research and 
                          Innovation, Alcatel
    Good Morning Mr. Chairman and Members of the Subcommittee: My name 
is Jack Jachner and I work for Alcatel as a Senior Director in 
Alcatel's corporate research organization. I lead a worldwide research 
team based here in the U.S. focused on the development of converged 
applications delivered over a converged IP infrastructure. Alcatel is 
one of the leading vendors of Telecom infrastructure worldwide, with a 
broad portfolio of products that support both the service provider and 
enterprise markets. In the service provider market, Alcatel is a market 
leader in Broadband Access, Optical Transport, Class 5/Class 4 
switching (with over 310 million lines deployed worldwide) and 
Intelligent Networks. Alcatel is also a leader in the supply of 
multiservice switching, Edge Routing, VoIP softswitches, VoIP gateways 
and 2G/2.5G and the emerging 3G wireless solutions. In the Enterprise 
market, Alcatel is the leading supplier of converged IP Telephony and 
Contact Center solutions and provides a comprehensive suite of 
Enterprise switch products. Finally, Alcatel is also the only 
telecommunications equipment vendor that develops and supplies 
satellite based communications systems.
    Today, I will focus on two aspects of the convergence of Voice, 
Data and Video where technological evolution is driving change in 
communication services and markets. The first aspect is that of 
converged transport, leading to increased competition, and the second 
aspect is of converged functionality, leading to new services and 
opportunities.
    Technological evolution in networks, in algorithms and in cost 
reduction of computing has enabled the convergence of transport of 
Voice, Data and Video. So now a twisted pair cable which has 
historically been deployed to deliver only voice services, can now also 
deliver broadband data and video services, using DSL technology. A 
coaxial cable can, in addition to television, deliver telephony and 
broadband data. Other access technologies have emerged including 
satellite, wireless and fiber to the home. Not just the access, but 
also the core of the network, can now be converged.
    This convergence in transport has stimulated competition between 
what were previously distinct sectors of service providers, and has 
enabled new entrants. The ramifications of this technological change 
are currently playing out and creating a dynamic market.
    The convergence of transport is also changing the way Enterprises 
communicate, both internally and externally. First internally, VoIP is 
gaining rapid acceptance for Enterprise employees, in remote offices or 
on the road, to call headquarters. And now externally, VoIP service 
providers are emerging. During the first quarter of this year, 
Alcatel's enterprise division shipped 35% of its large PABX lines as IP 
Telephony. Our next generation phones provide both voice and 
application integration, with a screen and keyboard to access web 
services.
    This leads to the second aspect that I would like to address, 
namely the convergence of the functionality of voice, data and video in 
new applications.
    As an example of the new services that are emerging let's consider 
the convergence of traditional telephony and of Instant Messaging. 
Traditional telephony can be enriched by the indication of Presence, 
which is used in Instant Messaging. Presence gives an indication of the 
availability of the person we wish to call, typically shown as an icon 
on our screen. If the person's Presence indicates ``unavailable,'' 
``on-the-phone'' or ``out-to-lunch,'' then we may choose not to call at 
this time. Presence reduces the occurrence of the busy signal and of 
voice mail tag.
    A complementary notion is that of Preference, as I may choose to 
use Presence in order to maintain my privacy or to manage my time. For 
example my Presence might be ``available'' to my boss, but only during 
working hours, and ``available'' to my family, except when I am in a 
meeting.
    Another example is convergence of Telephony and real-time text--
using Instant Messaging or SMS on mobile terminals. Real-time text that 
arrives with my call, can be used to deliver the Subject of my call. 
The call subject helps the receiving person to decide whether to take 
the call.
    As you can see from these examples, blending of Telephony and 
Instant Messaging offers rich new uses.
    Blending of telephony and video can also enable video conference 
meetings, which today are rather complex to set up. Soon, video 
conferences will be as easy as conference calling.
    In Enterprises, the blending of telephony and data enables 
extending enterprise services beyond its borders. Traditional PSTN 
connectivity was very good at delivering calls, but had very little 
additional capability. Today the underlying IP network can deliver the 
signaling to support rich enterprise services to be accessed remotely. 
My home phone or my cell phone can provide the dial tone from within 
the enterprise, with four digit dialing and secretarial assistance, as 
if I were at my office.
    These Enterprise services can be provided from the Customer 
Premises, or by service providers over IP networks. Traditional Centrex 
service is evolving to IP-Centrex, with a middle ground mixing 
customer-premise with network-based solutions.
    It is these and other applications that are the ultimate benefit. 
The convergence of transport is the first step, and the technology 
exists today--the market impact has begun. The convergence of 
functionality is the next step--the technology is just emerging, and 
will impact the market in the next two to five years. It is a dynamic 
and exciting time for both convergence technology and for the 
communications marketplace.
    Thank you for your attention.

    Mr. Upton. Thank you.
    Mr. Leddy.

                    STATEMENT OF KEVIN LEDDY

    Mr. Leddy. Good morning, Mr. Chairman, Congressman Markey, 
and members of the subcommittee. My name is Kevin Leddy, I am 
Senior Vice President of Strategy and Development for Time 
Warner Cable. I do primarily strategy work in our advanced 
technology group.
    I am very excited to have the opportunity to talk about how 
convergence is enabling Time Warner Cable and our cable 
industry colleagues to offer American consumers a vast array of 
innovative new services over one integrated state-of-the art 
network.
    As a direct result of significant capital investment we 
have transformed networks designed for the delivery of one-way 
video into digital thoroughfares capable of bringing consumers 
a ``triple-play'' of advanced video, high-speed data, and now 
voice service. Since 1996 the cable industry as invested more 
than $85 billion in private risk capital to rebuild and upgrade 
its facilities.
    At Time Warner Cable 98 percent of our customers are today 
served by two-way broadband cable systems. Dollars invested are 
only important to the extent that they translate into products 
and services that are valuable to consumers and I would like to 
talk to you this morning about some of those products and 
services.
    No longer just a one-way means of delivering a preset menu 
of programming, video technology today empowers consumers by 
giving them control, convenience, and choice. New enhanced 
digital video products such as Video on Demand, Subscription 
Video on Demand, and digital video recorders have made video a 
two-way interactive experience.
    Using these services and products, customers can access 
programming they want to watch when they want to watch it. They 
can rewind, fast forward, pause or stop programming and resume 
watching at a convenient time. They can program their digital 
video recorder to find, record, and store programming they 
enjoy and then watch it at their leisure.
    There are now more than 22 million digital cable customers 
across the country. At Time Warner our digital video 
penetration exceeds 40 percent. Although digital video 
recorders were only introduced to Time Warner customers about 
18 months ago, we now have almost half a million DVR customers.
    New technology also allows us to offer customers the high 
definition programming being offered by broadcasters and cable 
networks. Time Warner cable has HD carriage agreements with all 
the major broadcast networks and by year end out cable systems 
will offer an average of 15 HD channels each. That number today 
is about 12.
    I am also pleased to report that by the end of 2004 cable 
modem service will be available to nearly 100 million U.S. 
homes. At Time Warner cable we recently launched faster 
download speeds in all of our markets and that speed now 
averages about three megabits a second.
    Our residential Internet access customers now exceed 3.4 
million which represents more than 30 percent of our customer 
base. To enhance the Internet experience we also offer our 
customers both wired and wireless home networking solutions. 
Perhaps the most dramatic example of convergence to benefit 
consumers is in the area of telephone competition. Advances in 
Voice-over-Internet Protocol technology, or VoIP, have enabled 
Time Warner and other cable operators to use their new 
broadband networks to offer subscribers high quality, reliable, 
local and long distance telephone services. Now true facility-
based competition is becoming a reality.
    After several years of testing and developing a potential 
VoIP offering, Time Warner Cable launched VoIP service on a 
commercial basis to residential customers in a number of 
markets. In our first market, Portland, Maine, 11 percent of 
households in the market have subscribed to our phone service 
in just 1 year. We plan to make VoIP operational throughout 
most of Time Warner Cable's footprint by the end of 2004.
    In addition to a facilities-based alternative to the 
incumbent TELCO, deployment of VoIP by cable operators also has 
the potential to provide customers new features and 
functionality. Video conferencing, interactive gaming, and 
other multimedia applications will over time demonstrate the 
real benefits consumers can reap from the integration of video 
data and voice over a single broadband network. Features like 
unified messaging or e-mails and voicemails can be checked and 
responded to on your TV is one possibility we are developing.
    Having made a substantial investment in new technology, 
Time Warner Cable is leading the way in offering consumers the 
greatest possible benefits from advanced digital services. Our 
upgraded network allows us to offer subscribers a robust triple 
play package of voice, video and data services at a discounted 
price for the consumer. Our networks capability means that we 
will be able to deliver additional services quickly to all 
consumers.
    Thank you again for the opportunity to speak with you 
today.
    [The prepared statement of Kevin Leddy follows:]
Prepared Statement of Kevin Leddy, Senior Vice President, Strategy and 
                     Development, Time Warner Cable
    Good morning Mr. Chairman, Congressman Markey, and members of the 
Subcommittee. I am very excited to have the opportunity to share with 
you the details of how convergence--driven by technological 
advancements and fueled by years of steady investment--is enabling Time 
Warner Cable and our industry colleagues to offer American consumers a 
vast array of innovative new services, features and functions over one, 
integrated state-of-the-art network.
    At the outset, it is important to note that the transformation of 
networks designed for the delivery of one-way video service into 
digital thoroughfares capable of bringing consumers a ``triple-play'' 
of advanced video, high-speed data, and now voice service, is a direct 
result of significant capital investment. Since 1996, the cable 
industry as a whole has invested more than $85 billion in private risk 
capital to rebuild and upgrade its facilities, including $10.6 billion 
in 2003 alone.
    At Time Warner Cable, we have spent over $5 billion since 1996 on 
plant related rebuilds upgrading, enhancing and growing our network so 
that we could deliver a full suite of new services and products as 
quickly as they become available. As a result, ninety-eight percent of 
Time Warner Cable subscribers are today served by a 750 MHz cable 
system capable of carrying two-way broadband transmissions. But dollars 
invested and technological capabilities are only important to the 
extent they translate into products and services that are valuable to 
consumers. And I'd like to talk about some of those with you this 
morning, starting with our traditional video business.
Our Video Business
    Although video was once perceived as a mature line of business with 
little prospect for growth, digital technology has changed viewer 
behavior dramatically. No longer a one-way means of delivering a pre-
set menu of programming, video technology today empowers the consumer 
by giving them control, convenience and choice--which have always been 
the hallmarks of cable television. New enhanced digital products such 
as Video on Demand (VOD), Subscription Video on Demand (SVOD), and 
Digital Video Recorders (DVRs) have made video programming a two-way 
interactive experience in which consumers can make sure that their 
viewing preferences match with their schedule preferences.
    Using these services and products, customers can access programming 
they want to watch when they want to watch it. They can rewind, fast 
forward, pause or stop programming and resume watching at a convenient 
time. They can program their personal digital video recording service 
to find, record, and store programming they enjoy--as well as 
programming that meets criteria they set, and then watch it at their 
leisure.
    All these new products are driving digital penetration in America. 
There are now more than 22.2 million digital cable customers across the 
country. At Time Warner Cable, our digital video penetration has 
reached 41%. That's about 4.5 million digital subscribers, a 16% 
increase from the previous year. The number of VOD customers has more 
than tripled between 2002 and 2003. And although DVRs were only 
introduced to Time Warner Cable customers beginning in the late summer 
of 2002, we now have 458,000 DVR subscribers as of the end of the first 
quarter of this year. Based on the enthusiastic consumer response in 
this still early stage of deployment, we expect these numbers to 
continue to grow as these products become more widely available and 
more and more Americans realize their value.
    New technology also allows us to offer our subscribers the high-
definition (``HD'') programming being developed by broadcasters and 
cable networks. Time Warner Cable has carriage agreements with all of 
the major broadcast networks for the HD programming carried by the 
stations they own, and by year-end, our cable systems will offer an 
average of 15 HD channels each. As HD programming becomes more widely 
available, we will seek to incorporate it into our service offerings. 
We support the broadcaster' transmission of high-quality HD programming 
that is helping drive the digital transition. Aided by the drop in 
price for HD sets, consumers are responding. Last year, for instance, 
our HD subscribership grew 218%.
Our Data Business
    As this Committee knows, residential high-speed data services are 
enriching the lives of more Americans than ever. And I am pleased to 
report that by the end of this year, cable modem service will be 
available to nearly 100 million homes. More than 90% of all the homes 
passed by cable systems have access. The seven largest cable MSOs have 
all deployed high speed Internet service nearly ubiquitously or will 
reach that goal in the very near future.
    At Time Warner Cable, we recently launched faster download speeds 
in all our markets, and we unveiled an all-new redesigned version of 
our Road Runner high speed Internet access service last quarter. We've 
also increased our spending on customer service, to ensure that our 
customers can derive the fullest benefit from all these new services.
    Consumers clearly have seen the benefits from cable modem service. 
Our residential Internet access customers now number over 3.4 million, 
which represents 18% of eligible homes passed. To enhance the Internet 
experience, we also offer our subscribers home networking, both wired 
and wireless, that allows multiple computers in a home to share a 
single Internet connection and to connect to one another. We offer 
wireless home networking for data using WiFi (802.11) technology and 
are considering deploying WiMax. Time Warner Cable is also offering a 
whole house solution for all parts of our service. This will include a 
multi-room DVR for routing video and voice service networked via the 
customer's existing in-home telephone wiring.
Our Voice Business
    Perhaps the most dramatic example of how investment by the cable 
industry and new technology have ``converged'' to benefit consumers can 
be found with respect to the voice services long dominated by incumbent 
telephone companies. Advances in Voice-over-Internet Protocol 
technology--or ``VoIP'' as it has come to be known--have enabled Time 
Warner and other cable operators to use their new broadband networks to 
offer subscribers high quality, reliable, local and long distance 
telephony services. Now, for the first time, facilities-based 
competition is a reality.
    After several years of testing and developing a potential VoIP 
offering, Time Warner Cable launched ``Digital Phone'' service on a 
commercial basis to residential customers in Portland, Maine in May 
2003, and we now serve over 11% of customers there. In addition to 
Portland, we have launched Digital Phone service in five markets: 
Raleigh, Kansas City, Rochester, Syracuse and Charlotte. Nine 
additional markets served by Time Warner Cable have turned up dial 
tone, but are still in the testing phase of their rollout. We plan to 
make Digital Phone operational throughout the majority of the Time 
Warner Cable footprint by the end of 2004.
    To the customer, Digital Phone feels just like conventional 
telephone service. Digital Phone customers can receive voice service 
over each existing telephone jack in their home; can maintain their 
current telephone numbers (nearly 85% do so); and have access to toll-
free 800 calling, Telecommunications Relay Services for the disabled, 
Enhanced 911 (E911) services, and Directory Listings. Digital Phone 
also includes the capability to assist law enforcement agencies by 
permitting the interception, when necessary, of both call identifying 
information and call content in response to lawful requests. Time 
Warner Cable views this as a critical aspect of its service in this 
time of heightened national security and law enforcement concerns. 
Finally, Time Warner Cable contributes to both state and federal 
universal service funds in connection with our Digital Phone service.
    The upgraded, two-way capable, digital network that we have built 
during the past several years is the central component of the 
architecture used to provide Digital Phone services. And unlike some 
other VoIP services, which use the public Internet, Digital Phone 
traffic travels within our proprietary network. As a result, Time 
Warner Cable's Digital Phone service is delivered with quality of 
service standards designed to ensure that customers are provided with 
the same high quality of service they have come to expect from 
traditional telephone service providers.
    In addition to a facilities-based alternative to the incumbent 
local telephone company, the deployment of Digital Phone service by 
Time Warner and VoIP services by other cable operators also has the 
potential to offer consumers new features and functionality such as 
multimedia conferencing, interactive gaming, and other multimedia 
applications which will over time demonstrate the real benefits 
consumers can reap from the integration of video, data, and voice 
services over a single broadband network. Features like unified 
messaging, where emails and voice-mails could be checked and responded 
to on your TV screen is one possibility. Others might include a 
variable dial-tone feature, whereby callers can get immediate sports or 
weather updates.
The Benefits of Convergence
    Time Warner Cable is leading the way in offering consumers the 
greatest possible benefits from offering all our advanced services over 
one enhanced digital network. Our upgraded network allows us to offer 
subscribers a robust ``triple play'' package of voice, video and data 
services at a discounted price. This offering has proven extremely 
valuable to consumers; in Portland, for example, over 75% of our 
digital phone customers take the ``triple play.''
    Our network's digital capability means that it will be capable of 
delivering additional services quickly to all consumers without having 
to invest in substantial new construction. We designed our current 
upgrades to allow us to transition to the all-digital world we see on 
the horizon. As use of analog technology fades, we will be able to add 
capacity through electronic upgrades. Combined with the additional 
capacity that naturally flows from the replacement of analog with 
digital--one retired analog channel allows us to launch nine or more 
digital channels--we are well positioned to serve our customers far 
into the future.
    Thank you again for the opportunity to speak with you today, and I 
look forward to your questions.

    Mr. Upton. Mr. Neihardt.

                  STATEMENT OF JONAS NEIHARDT

    Mr. Neihardt. Thank you, Mr. Chairman. Jonas Neihardt from 
QUALCOMM. If I can ask Mr. Clocker to put our AV feed up. Thank 
you very much. I am representing QUALCOMM out in San Diego, 
California. I would like to thank many of you on the committee 
who have made the trip out to our laboratories to see some of 
these technologies I am going to show you today in the lab or 
at the CTIA show.
    I am very proud today because now----
    Mr. Markey. May I also note that Mr. Neihardt actually 
worked on the Telecommunications Subcommittee many years ago.
    Mr. Upton. Hard not to call him Jonas.
    Mr. Markey. He is so successful we have to call him Mr. 
Neihardt. He has done extremely well. I am sorry to interrupt.
    Mr. Neihardt. Thank you, Congressman. So, again, we have 
shown you some of these technologies in the lab and now we are 
very proud because the signal that you are seeing that is being 
displayed on the monitors here is not coming from a hardwired 
solution or a special setup that we have here for the hearing 
room but it is coming from the cellular infrastructure outside 
of this building and coming in through the windows behind you 
and into my little antenna here on my lap top. I have a spare 
here to show you.
    What we have done here working with Verizon is set up a 
high-speed data capability that covers in Washington, DC this 
entire area in yellow, about 550 square miles of ubiquitous 
high-speed data coverage that is also hands off. I have driven 
in my car from Manassas all the way downtown and kept up a 
continuous data session all the way into DC. You can see we 
have Congressman Wynn's district covered substantially and 
working up the highway here to Congressman Cox's district and 
it will be there shortly, sir.
    Mr. Upton. I'm looking at a blank space there in Southwest 
Michigan. Do you see that?
    Mr. Neihardt. The area in red you see is Verizon's 1x data 
coverage and I'll let Verizon speak in a minute about their 
plans for future deployment of this high-speed data service. I 
know that many of the areas in red they plan to cover shortly.
    Let me just run this thing through its paces here and go to 
a couple of my favorite websites just to show you how fast this 
is. Again, this is not a canned demo. This is a live demo. 
We'll go to some of the cities that I like to visit in 
Michigan. Come on Battle Creek. Come on up. We will have to 
come back to Battle Creek.
    What I am doing here is just surfing the web. This is a 
wireless connection that, again, is available commercially 
through Verizon and throughout the Washington, DC area and then 
will be carried more broadly throughout the country by Verizon 
over the next 18 months. What this technology permits you to do 
is access the Internet at typically between 300 and 500 
kilobits per second and with bursts up to two megabits per 
second.
    Here we go, Mr. Stearns.
    Mr. Upton. Does Bass not have a website.
    Mr. Neihardt. I think he does. We will have to find it. I 
may have found the best way to exceed my 5 minutes here. Okay. 
Here we go. Let us see how fast we can do this. This is pretty 
speedy. Again, this is coming from the cellular infrastructure 
outside of this room and is available throughout the 
Washington, DC area ubiquitously. Since I got a nice intro from 
my old boss, I will have to do this for the Red Sox and since I 
know the Chairman's favorite team.
    Although a bit challenged this year in terms of overall 
team speed, we can pull the website up pretty quickly.
    Mr. Upton. They are giving cough drops to Sammy Sosa.
    Mr. Neihardt. There you go. Favorite place, Wrigley Field. 
So what we wanted to show you then is that we can go all over 
the Internet and wirelessly show you speeds that are similar to 
what you are used to seeing on your desktop. Let me go through 
the fuselage here to show you how it works.
    What we are trying to prove here today is that the data 
speeds that are capable through the wireless Internet are 
approaching what can be attained in the fixed Internet. We 
actually believe that because mobility and ubiquity are so 
valuable to people and that the economics are so powerful for 
wireless solutions that over the next few years the wireless 
Internet usage will exceed the wireline Internet usage.
    How will this happen? There is a couple different ways. 
What I am showing you today is this top bar which is CDMA2000 
1xEV-DO. We are better at technology than marketing. This is 
our name for it. This is a solution that runs in 1.25 megahertz 
of spectrum so a little sliver of spectrum. This is in 
Verizon's current spectrum.
    Here is another solution called EV-DV that adds a voice 
component. Then in new spectrum there is a solution called wide 
band CDMA that will also provide high-speed voice and data. We 
think that of the six wireless operators in America, the major 
ones, and, of course, there are many smaller ones, they will go 
along one of these paths and provide at least six new data 
pipes to homes and individuals.
    I have talked a bit how EV-DO works. Again, reuses the 
cellular infrastructure. This is very important economically. 
We find that customers around the world really value mobility 
in their data usage. It is sort of analogous to the fact that 
cell phones are driving pay phones to extinction. We believe 
that people will not want to go to a place to log in or plug 
into a wall or to find a wireless hot spot. Rather, they will 
value ubiquity and want to log in wherever they are. Just like 
nowadays we all talk on our cell phones and we don't look for 
pay phones anymore.
    Devices for these technologies, again, I showed you the 
little card that I am using here. In Asia our customers over 
there are deploying millions and millions of EV-DO-enabled 
phones for personal broadband and those phones will be coming 
here shortly. What are we doing next? We are going to make it 
faster and cheaper and better and smaller and bring all these 
solutions, we hope, right into little handsets that people will 
find very useful and valuable.
    Mr. Upton. Just for the benefit of the folks up here, if 
you would just hold your lap top up and just show that there is 
no strings or cord attached.
    Mr. Neihardt. Right. I have my power line here. This is the 
cord that attaches me to the AV system. I am here on the 
Internet with only----
    Mr. Upton. Just the power cord.
    Mr. Neihardt. Just my little antenna and no strings 
attached.
    Mr. Upton. Terrific. Thank you.
    Mr. Neihardt. Thank you.
    Ms. Rizzo.

                   STATEMENT OF ADRIANA RIZZO

    Ms. Rizzo. Thank you, Mr. Chairman, members of the 
subcommittee. I am Adriana Rizzo and I am here with my 
colleague, John Reformato. We work for Verizon and our job is 
to develop the applications that ride on Verizon's new high-
speed broadband platforms. What we really do is we are part of 
a group that gets to create the cool new gadgets that consumers 
want. We actually have a pretty fun job.
    Everyday about 100 million Americans connect to a Verizon 
network. To keep that progress growing, we at Verizon are 
reinventing our networks around broadband, packet and Voice-
over-IP technologies. Today, in fact, Verizon is announcing the 
rollout of fiber-to-the-premises, or ATTP, in our first city, 
Keller, Texas, which is right outside of Dallas.
    It is a pretty amazing technology. The slowest broadband 
connection we will offer customers will be three times as fast 
as broadband speeds commonly available today. Our plan is to 
reach a million homes by the end of the year and potentially 
double that rate by the end of 2005.
    Our customers are actually beginning to demand already the 
types of products that FTTP makes available such as home 
monitoring, photo sharing, video conferencing, interactive 
gaming, and other demand video services. But there is a lot 
more. Obviously you have seen EV-DO and you have seen that it 
is working quite well here in Washington. It is also working in 
San Diego. By the end of the year we are going to be expanding 
EV-DO to one-third of our wireless network which will cover 
about 75 million Americans providing wireless high-speed 
connections instantly.
    Verizon's other major role, though, is creating the tools 
that help people use these networks. That is where our product 
iobi comes in. I am going to take you through a little 
demonstration of that. What you see on this slide at the bottom 
is basically our networks, wireline, wireless, broadband, soon 
fiber. These are the networks that people connect to every day.
    What you see at the top are the devices that they use to 
connect to those networks. For the most part this has been a 
one-to-one relationship. This is where iobi comes in. Iobi is 
both a product and a software platform that we will bring to 
market this year. As a software platform it allows us to 
develop features and services that work across our networks and 
across devices, and it also allows us to work with outside 
companies and use their products and provide them to our 
customers through that platform.
    Also because it is a software platform, it can actually run 
on APC, on a phone, on a television screen, and you can access 
it through a website. But the best way to really see what iobi 
does is to actually show you so I am going to take you through 
a couple of simulations first using this prototype. I will see 
if I can turn this around so you can see it.
    This is a prototype of a cordless phone and it will also 
have a DSL modem and it will have a wireless router imbedded in 
it. At the same time it has a rather large screen. It is a 
touch screen that is connected to the Internet and it runs the 
iobi software.
    What this allows you to do is I can simply come to this 
phone at any point during the day in my home and I can see 
exactly what has been happening. For example, I can simply 
click on it and see all the calls that I have received since I 
checked last. I can see whether those calls have pictures 
attached to it because iobi allows you to take a picture on 
your camera phone and send it to anybody that is using iobi so 
you can get pictures on your lap top or on this device.
    It also give me visual voice mail which our customers tell 
us they want a lot. The reason they want it is because now they 
see exactly who has called, when they have been called, and 
they can decide which of these voice mails they want to listen 
to now and which ones they can, frankly, wait until later. 
Listening to it is also simple so that gives them a lot more 
control about what they want to listen to and what is important 
to them at that particular moment in time.
    Another feature on here that I like very much and our 
customers really love is the ability to leave memos and you can 
leave memos in a couple of ways. You can actually write the 
memo right on the screen because you can write on the screen 
and you can leave that. Or you can leave a memo such as this 
one. ``Happy birthday to you.''
    The reason you can do that is because this device also has 
a camera imbedded in it so leaving a video memo or placing a 
video call is as simple as just hitting record video memo or 
just start a video call. Anyone with another device such as 
this will be able to do that. The video memos are recorded and 
left on the device for as long as you want to keep them.
    There are a lot of other services and features that this 
phone has but, in the interest of time, I am going to switch 
back to my PC to take you through a simulation of some of the 
things you can also do on the PC. I should mention that 
anything you can do here you can also do on the PC, you can do 
on the website, and you can do through our voice portal because 
everything rides on the same network and your information is 
always available to you.
    Let me take you through simulation of a couple of things 
that I can do. For example, today I am in Washington and my 
boss is trying to reach me so he calls my New York office. Now, 
normally he wouldn't be able to reach me there but with iobi 
running on my PC I get a pop-up such as this that give me a few 
options. It tells me that he is calling and it gives me 15 
seconds to interact with that phone call in a variety of ways.
    One way is I can route that call in mid ring to my cell 
phone and take the call immediately so that we can be 
connected. But if I am in a meeting such as this where I cannot 
be interrupted, I can also see if he is online and if he 
happens to be online, I can send him an instant message that 
tells them, ``You know what? I can't talk now but let's talk in 
an hour.'' He can respond back very easily and now we know that 
we are going to be talking later and he knows that I have 
gotten his message. This is a very useful tool for us.
    Let me show you one other thing that is very cool, at least 
for me, and this is conference calling but it is sort of 
conference calling on steroids. I don't know about you but I am 
on constant conference calls every day including weekends 
sometimes. What iobi allows me to do is by using my contact 
list on my iobi address book, I can simply drag and drop people 
into the conference call screen and as soon as I do that and I 
press the button that says ``start conference call'' iobi calls 
all the participants, gets them on the phone, then calls me, 
tells me which participants are now on the phone and allows me 
to immediately start this call.
    It also makes it very easy for me to add a new participant 
to the call just again by dragging and dropping a person on 
that. The coolest thing that this does and the feature that I 
think everybody wants is that while you are on the call, you as 
the host have the power to mute anyone on the call or, if they 
are really annoying, you can drop them entirely from the call.
    Everyone who sees this wants this product immediately. It 
also, frankly, lets you know exactly who is on the call because 
right now people call in to bridge numbers and you don't 
actually know who is on unless they announce themselves.
    Anyway, Mr. Chairman, in the interest of time, there are a 
lot of other features and services that I could show you, some 
actually that will run on television but I think I am way over 
my 5 minutes so I thank you for the opportunity to show you 
these features and I look forward to your questions.
    [The prepared statement of Adriana Rizzo follows:]
  Prepared Statement of Adriana Rizzo, Executive Director, eServices, 
                                Verizon
    Hello. My name is Adriana Rizzo. I am the executive director for 
eServices at Verizon.
    My job is to help develop applications that ride on Verizon's new, 
high-end broadband platforms.
    Or, to put it simply, I'm part of a group that gets to come up with 
the cool new communications gadgets that consumers want. At the same 
time, I help make our networks more accessible so other companies can 
develop applications, too, and make our networks even more useful to 
the public.
    The world is becoming ``all broadband, all the time.''
    Around 24 million have broadband connections through cable or DSL.
    More than 150 million Americans have a mobile phone.
    And high-speed wireless networks are popping up everywhere.
    Overall, more than 100 million Americans connect to a Verizon 
network every day.
    To keep the progress going, we at Verizon are reinventing our 
networks around broadband, packet and voice-over-IP technologies.
    Today Verizon is announcing the rollout of fiber-to-the-premises 
(FTTP) in our first city, Keller, Texas, just outside of Dallas. Once 
deployed, the slowest broadband connection we'll offer customers will 
be three times as fast as broadband speeds commonly available today.
    FTTP involves the use of glass, fiber-optic cable and associated 
electronics to replace traditional copper wires. This makes possible a 
vast array of new high-speed broadband services and video applications, 
along with our traditional voice and data services.
    The fiber link into your home or business allows us to do things 
that aren't even on the drawing board yet, because the limits of copper 
go away.
    Once this technology is in place, we also expect to be increasingly 
cost-efficient due to fiber's reduced maintenance and other operating 
expenses. One of the beauties of FTTP is that the technology will allow 
us to diagnose and correct problems, if and when they do occur in our 
network, much faster than today.
    Our plan is to reach 1 million homes by the end of the year, and 
potentially double the rate in 2005.
    We have been putting fiber optics to work for our customers for 
years, but its use has been limited for the most part to our long-
distance and inter-city networks.
    We in fact already have over 10 million miles of fiber-optic 
systems in our nationwide network, more than any other 
telecommunications company in the nation.
    But until recently, it didn't make sense--financial and otherwise--
to use fiber beyond big business. It was too expensive and too involved 
for mass, neighborhood use. Today, though, the technology for that 
level of use has matured. It works and it works well at the small- and 
medium-business level, as well as house-to-house, and it's cost-
effective.
    Perhaps most important, our customers today are demanding the types 
of products that FTTP makes available--things beyond basic and advanced 
data services--such as interactive gaming, photo sharing, PC backup and 
telecommuting, as well as video conferencing, premises surveillance, 
and other novel video services that can be delivered on demand and in 
high definition.
    FTTP is one thing we're doing, but there's more.
    We are the first to deliver a true wireless broadband wide-area 
network in major markets, with 3G technology, known as EV-DO.
    It works a little like WiFi, but better. You don't have to be 
within a few hundred feet of a hotspot. EV-DO works over a much wider 
area. You can use it on a train or in a cab.
    We are taking wireless into the broadband age, and we are 
committing $1 billion over the next two years to expand this 
breakthrough technology nationwide.
    EV-DO will let people create, send and download content at 
broadband speed from their laptop while on the move. It also means 
people will be able to get richer, more visual services like video 
content, messaging and interactive gaming on their cell phone.
    It provides new, powerful tools to put their creativity to work. 
Through EV-DO, Verizon is opening up even more opportunities for other 
sectors of the economy like applications developers who design and 
package these richer services.
    EV-DO is already up and running here in Washington, and in San 
Diego. By the end of the year, we'll expand EV-DO to one-third of 
Verizon Wireless' network, covering 75 million Americans--providing 
wireless, high-speed connections instantly.
    With EV-DO, and other plans we have for packet technologies and 
fiber, we are enabling a new generation of flexible, highly reliable 
services to ride on our infrastructure--from voice-over-IP to video 
messaging, to virtual private networking, to multi-player games, 
interactive learning and lots of others.
    Verizon's other major role in the converged marketplace is creating 
the tools to help people use these networks.
    This is where iobi comes in.
    Most of what customers do to communicate can be done only in a 
single mode, on a single device.
    Voice calls and messages arrive by telephone.
    E-mail and IMs display on a computer or a PDA.
    And entertainment comes through a TV or PC.
    People end up with multiple networks and a briefcase or purse full 
of devices, and a desk full of callback messages.
    iobi will bring them all together for true intermodal 
communication.
    The essential function of iobi is to let customers use the Internet 
to manage and get information about inbound calls.
    It puts customers in control of their own communications, and lets 
them configure the network they use to help them as they see fit.
    The customer can make it happen themselves in real time, with just 
a click.
    iobi makes this possible because it enables users to interact with 
their networks through a variety of channels.
    And you don't need your own personal IT manager--or a 13-year-old--
to set it up. It is easy to use and operate. You will even be able to 
use our voice recognition facilities to set things up, or to retrieve 
messages from any phone anywhere. The era of flashing ``12-12-12''--
like on the VCR--is over.
    iobi translates all your incoming messages to the format you want, 
where you want, and it works with phones, PDAs, laptops, and, one day, 
digital TVs.
    We believe ideas like these add immeasurably to the power of the 
networks we are building because they give the consumer more control. 
They make life more convenient for the consumer, cutting down on 
information clutter and lost time scrolling through voice mails and e-
mails.
    We look forward to more ideas like these, including:

 Peer-to-peer multimedia capabilities that will do for video what 
        desktop publishing did for print;
 Video instant messaging; and
 Telemedicine, distance learning, virtual town meetings, and more.
    Verizon's broadband networks will be the platform for thousands of 
new applications and devices--some from us, and many more from new 
businesses that form because this opportunity exists.
    But most will come from customers themselves, who will put these 
technologies to use in ways that you and I can't even imagine today.
    In order to create an environment in which these innovations can 
flourish, we at Verizon urge Congress to follow the example set in the 
wireless industry: Minimal regulation helped create that vibrant 
sector. We think the same thing can happen in broadband.
    At Verizon, we're proud of what we're doing. We think our networks, 
our iobi technology, and the innovation we're making possible will send 
a jolt of growth, progress, and genuine excitement throughout the 
economy. The technological revolution underway is going to change our 
lives in ways we can only begin to imagine. I'm excited about this 
opportunity to build the future.
    Thank you.

    Mr. Upton. Well, terrific. Thank you all for bringing in 
your dream machines that hopefully will soon be in our homes.
    Mr. Upton. Ms. Rizzo, I would be interested to know, you 
said you just started this in Texas just outside Dallas?
    Ms. Rizzo. Yes. Fiber-to-the-premises we just announced 
this morning, in fact, in Keller, Texas, right outside of 
Dallas. It will be our first city. We have already started 
deploying fiber there and literally are digging and putting in 
fiber as we speak.
    Mr. Upton. So is it a different type of fiber that you 
might have in the east coast or some place else or not? Let me 
ask you this question. I have in my neighborhood here, I think, 
we have fiber in Alexandria for Verizon. Would you have to 
replace that fiber and have a different fiber for the iobi 
service or not?
    Ms. Rizzo. I am sorry. Hold on. I am not an expert in 
fiber.
    Can you answer this, John?
    Mr. Reformato. It is the same fiber. We will be reusing the 
existing fiber and then adding new to the infrastructure.
    Mr. Upton. And these devices, how much will they cost a 
consumer, the device that you have there?
    Ms. Rizzo. This device right here? We haven't actually 
finalized the price for it. We selected the manufacturer and 
have finalized the industrial design. We are looking to bring 
it to market at the end of the year. The first units will hit 
the market around Christmas time. But from a business model we 
haven't finalized the price.
    Mr. Upton. Do you have an idea what the cost will be?
    Ms. Rizzo. I can tell you that it will be under our cost. 
The device itself is not what--we see it really as a way for 
customers to use the features more easily and to actually help 
us with DSL deployment, but it really does depend on what the 
ultimate cost is going to be to us and we don't have that yet 
from the manufacturer.
    Mr. Upton. Mr. Leddy, your system that you indicated, and 
in your testimony, too, you have 11 percent of the market 
already in 1 year and 75 percent of the folks that you have as 
your customers have taken the triple-play option which is the 
whole range of services. What is the cost to the consumer that 
you are asking for the triple play?
    Mr. Leddy. The voice component of the package in the triple 
play goes down to $40 if the customer buys high-speed data and 
digital video from us at the same time. If he just buys the 
phone service, it is $50.
    Mr. Upton. Mr. Neihardt, how does the system work with 
handheld devices, pretty well? Have you tried that?
    Mr. Neihardt. That is right. We have got, I think, 4 
million subscribers in Korea who are using handheld devices and 
are very pleased. The uptake has been strong and we expect to 
add millions more in that country and then over here when the 
devices come over to this country.
    Mr. Upton. So is your system that you showed us today, 
could somebody actually do that today? I mean, you just did it 
today. Could we do it as well? Everybody can connect to the 
same type of system?
    Mr. Neihardt. Absolutely. In Washington, DC we have this 
550 square mile area of coverage and these cards are 
commercially available by Verizon. Again, we expect other 
wireless operators to add similar services down the road in due 
course.
    Mr. Upton. Sounds like we need to encourage southwest 
Michigan to get within the shaded area.
    Mr. Markey.
    Mr. Markey. Thank you. Mr. Neihardt, how much would your 
service cost a customer per month?
    Mr. Neihardt. Right. this service is currently priced at 
$80 per month all you can eat so you can be on it all day at 
home, at work, take it with you. The card, I believe, is 
currently $150.
    Mr. Markey. What is your goal for subscribers for your 
service over the next 3 years, let's say?
    Mr. Neihardt. Oh, that is a good question. In Korea we 
added about 4 million subscribers in the first 1\1/2\ years of 
operation and we would expect hopefully to do something 
similar.
    Mr. Markey. Four million?
    Mr. Neihardt. Right.
    Mr. Markey. In a country of, what, 30 million?
    Mr. Neihardt. Right. Right.
    Mr. Markey. Wow.
    Mr. Neihardt. Again, people want to connect to their data 
wherever they are. We think it is a compelling technology and 
will be widely used.
    Mr. Markey. Wow. Are there security features built into the 
technology?
    Mr. Neihardt. Yes. By its very nature CDMA is a former 
military technology that was used to evade some of the jamming 
techniques that were used in World War II so it operates on 
spread spectrum at very low power and is virtually undetectable 
by most spectrum analyzers. No. 1, you have the low power 
aspect. No. 2, CDMA code division multiple access so it is 
encoded. Then, of course, you are in a packetized mode so it is 
surveilable over the air but it takes a great deal of expertise 
and maybe about $50,000 worth of equipment. It is very 
difficult to do.
    Mr. Upton. Very difficult. Interesting.
    Mr. Jachner, could you go through some of the hybrid 
applications again very briefly that you have, the phone cell 
call capacity with simultaneous data. Could you just explain 
that again briefly?
    Mr. Jachner. Yes. We see that as kind of the convergence in 
functionality. For example, in this set you can clearly see it 
has voice capability delivered over an IP connection. But at 
the same it is a data terminal. It is a light one.
    Mr. Upton. How would I see it? How would it appear to me, 
this simultaneous text and voice? What would that look like?
    Mr. Jachner. Well, suppose in the instance of simultaneous 
text and voice I may be wishing to call you and you might even 
recognize my name but choose not to take the call. If I could 
indicate that I am standing with Mr. Chairman Upton and that he 
wishes for all three of us to converse, that inclusion of the 
text as the subject of my call would perhaps guide you to 
differently prioritize taking my call.
    The phone rings, you look at it, there is the subject of 
the call where we see today caller ID. We might see this is 
Jack and I am calling about such and such. You may still choose 
not to take the call but the analogy is to e-mail as if we were 
sending e-mail without including a subject line. That is where 
we are with telephony today.
    Mr. Markey. I get it. Interesting.
    Mr. Burris, how many subscribers are you targeting over the 
next year or 3 years because this is the Dick Tracey two-way 
wrist TV that I always wanted to have.
    Mr. Burris. It certainly is.
    Mr. Markey. What is your goal now for penetration of the 
market?
    Mr. Burris. Well, because I run the wireless data business, 
I wish every phone that we sold was a data phone. In fact, we 
are getting more and more near that goal. We have now got very 
inexpensive data handsets for anywhere from $20 to $30 that 
have color screens. In fact, one or two that I passed around 
are these phones. I would think mid next year you could 
definitely see a point where Sprint's handset lineup is 
dominated by phones that are not only voice but data handset.
    In essence, every new subscriber that takes a phone from 
Sprint would have a data handset as well. Some, of course, 
would use it a lot and others may not. Sprint today has over 20 
million subscribers either direct or through our partnerships. 
I am not really privy to the long-term goals of that other than 
just growing share quite a bit.
    Mr. Markey. And this will be a nationwide service?
    Mr. Burris. It is.
    Mr. Markey. The ABC feeds, whatever, would be national 
feeds, not local. Is that correct?
    Mr. Burris. Right. In fact, we are really independent of 
that so wherever Sprint has coverage nationwide where our 1x 
network is covered, you can have access to all those different 
whether it is the audio baseball or all the TV channels. 
Theoretically you could have cable TV channels even if you are 
not a cable subscriber technically.
    Mr. Markey. Thank you, Mr. Chairman.
    Mr. Upton. Mr. Cox.
    Mr. Cox. Thank you. Mr. Birnbaum, can you help me 
understand why it is that public utilities, let's say Southern 
California, Edison, where I live, haven't gotten into the 
broadband market?
    Mr. Birnbaum. I think there are several reasons. Some 
utility companies over the last 5 or so years, basically 
starting in the late 1990's, did get into the communications 
market and it didn't fare very well for some of them so some 
utilities we find are a little reticent to reinvest in that 
marketplace.
    The main reason, though, I think is basically technology. 
Broadband over Power Line technology, which is now commercially 
and technically viable, really wasn't just 3, 5, 10 years ago. 
Although utility companies are looking at it, and we talk to 
dozens of utilities all the time, they are very slow movers. 
They are essentially prioritizing their investment, what few 
dollars they do have to invest and, in fact, are looking for 
the enhanced utility application that I talked about.
    I think over the cost of the next couple of years we will 
see more and more utilities get into the business either 
directly by investing in Broadband over Power Lines, or 
allowing Broadband over Power Line providers to come onto the 
network and actually provide services and users while at the 
same time providing utility applications back to the utility.
    Mr. Cox. Current communications hasn't received any equity 
funding from utilities. Is that right?
    Mr. Birnbaum. Actually, in Ohio, where we have our first 
venture, it is actually a 50/50 joint venture with Cinergy 
Corporation.
    Mr. Cox. Well, that is a good sign. My hope is that we 
would see the utility industry put in some money into this and 
that it wouldn't all be left to entrepreneurs elsewhere to do 
this innovation and then bring it to the old line regulated 
companies and say, ``Please come along.''
    Mr. Birnbaum. In our discussions with utilities we are 
seeing that regularly. Obviously they need to do that often 
through the unregulated side of the company. Cinergy has made 
its investment through the unregulated side and not the 
regulated utility. We have also set up a separate venture with 
Cinergy to actually go deploy the technology in rural 
cooperative areas, as well as smaller municipal-owned 
utilities. Cinergy is one of the more entrepreneurial minded 
utility companies but several others are looking at doing 
something similar.
    Mr. Cox. Mr. Neihardt and Ms. Rizzo, I wonder if you could 
tell me the degree to which you think that the lack of 
operating software that works on mobile phones has prevented 
convergence from happening as fast as we would like? This fall 
in November we are going to have palmtops that run XP, Windows 
XP, little palmtops that fit in your pocket, weigh an ounce or 
less than a pound anyway, 12, 14 ounces, in there.
    They won't be phones, though, and I think we are a long way 
from having--I have a Verizon instrument in my pocket. It is 
Samsung I-600 which holds the promise of being able to surf on 
the web and exchange e-mail and text messaging and so on. It 
doesn't do any of those things but it almost does. It does work 
as a phone but we are getting close. My sense is this Windows 
operating software on here is really clunky and awful and 
Microsoft is not represented on this panel so I apologize to 
those who might be in the audience or aren't here. I guess I've 
betrayed the bias in the question.
    My sense is that we are being slowed down by the lack of 
operating software that will permit a device that I can carry 
in my pocket to load the same productivity applications that I 
use everywhere else. Not little miniature versions of them, but 
the very same ones. I wonder if you care to comment on that.
    Mr. Neihardt. I will start since QUALCOMM is more on the 
device side. We recognize the same problem in our industry and 
have allocated substantial resources within our company to 
developing software that facilitates the use of standard 
applications on phones. Another thing that is happening is that 
the processing power that we are building into these phones is 
increasing very dramatically.
    Mr. Cox. The processes are very impressive so I know they 
are capable of doing the work.
    Mr. Neihardt. Right. As we are cycling to newer and newer 
phones, the processing power is increasing. We are developing 
software that is going to, we hope, resolve some of these 
issues that you are seeing and we absolutely recognize that as 
a shortcoming in the user experience and are working to improve 
that.
    Mr. Cox. Ms. Rizzo.
    Ms. Rizzo. Yes. Hi. I do not work in the wireless division 
so I am certainly not an expert in the area. I say that we 
certainly have phones and devices that work. They are palm 
based, that are Windows based that are proprietary and we leave 
it up to you, our customers, to choose and let us know what 
they would prefer.
    Personally, from a consumer perspective, myself I actually 
think it is also a form factor issue that hasn't really been 
resolved yet about how you want to use these devices. I have a 
BlackBerry that is a phone but, frankly, it is not comfortable 
for me to use it that way. I think that has to be fixed as well 
by the manufacturers.
    I will say that our iobi product will work on any wireless 
device in 2005 and it will be designed so that it isn't just a 
website you are browsing but it is actually an application that 
runs on the device and can be used adequately on that size 
screen.
    Mr. Cox. Well, thank you all. I thank the Chairman for 
putting this panel together. It was a very impressive 
presentation and I have every confidence that as long as we 
don't regulate and legislate improperly that all this 
competition is going to lead to wonderful things in the very 
near future.
    Mr. Upton. Mr. Wynn.
    Mr. Wynn. Thank you, Mr. Chairman. I, too, have really 
enjoyed the presentations. I wanted to open with an 
announcement to my colleagues. Tech Day sponsored by CTIA and 
the Wireless Caucus will be on June 2nd from 10 to 4 in the 
Rayburn foyer. It will be an opportunity to see more such 
gadgets, more excitement, and even more hands on experience. I 
encourage my colleagues to come out to our tech day on June 
2nd.
    Just a couple of low-tech questions. Mr. Birnbaum, I just 
need an assurance from you from the standpoint of safety your 
plug-in devices have been completely tested and all those 
issues have been resolved favorably?
    Mr. Birnbaum. Yes, they have.
    Mr. Wynn. Great. That is what I thought you would say but I 
just wanted to hear it.
    Mr. Birnbaum. Again, these devices, the ones I am holding 
here, the power line modem that the customer uses, are UL 
certified. They are manufactured by the likes of Siemens, 
Linksys, NETGEAR, the companies that make essentially any of 
the other devices we all plug into.
    Mr. Wynn. Subject to the same restrictions on overloading?
    Mr. Birnbaum. Right.
    Mr. Wynn. Second question, some communities in my area are 
moving toward underground power lines as a result of Isabel, 
Hurricane Isabel. Would your system work on an underground 
power line environment?
    Mr. Birnbaum. Yes. Good question. We generally show the 
overhead pictures because they are easier to see the 
transformer and the way the topography works but the technology 
is essentially the same. Some of the safety mechanisms are 
different in an underground environment so the way we actually 
bypass a transformer is a little different but conceptionally 
it is the same and the consumers can get the same speeds and 
same services.
    Mr. Wynn. Great. Mr. Burris, I believe, you had the 
handsets that got everybody all excited with the baseball game.
    Mr. Burris. Right.
    Mr. Wynn. Did you say that you thought that the market 
price would be in the neighborhood of $20?
    Mr. Burris. Yes. In fact, these things have been on the 
market since late last year and currently the live TV product 
is $10 a month. You also buy a Sprint vision plan for unlimited 
data which is about $15 a month and that comes with $10 of 
credits which you can apply toward MobiTV so really effectively 
about $15 a month you can watch all the live TV you want. $15.
    Mr. Wynn. Would a customer encounter subscriber fees 
similar to what we have experienced in cable so that the 
introductory rates could change dramatically over time to get 
access to this TV programming?
    Mr. Burris. It is very possible. All the channels that we 
have today whether it is FOX sports, MSNBC, CNBC, those are all 
being paid for within the guidelines of that $10 of fees so 
today we have covered that. As we go into potentially more 
expensive channels like ESPN or MTV or some of those, those 
channels request larger payments so potentially there could be 
a tiered model much like the cable model where subscribers sign 
up for more or less a basic type of TV service and then maybe 
individual channels that they choose.
    Mr. Wynn. If I could just follow-up on that. You right now 
or initially are offered this as a package? Is that correct?
    Mr. Burris. Today what we offer is not unlike Internet 
service that you might buy today where you kind of buy an 
unlimited data plan, which we call Vision, and then you can add 
extra services to it. You can add MobiTV to it. You could add 
live music to it. You could live Baseball to it. All the 
channels together are truly a package. The product itself is 
stand-alone.
    Mr. Wynn. One of the issues that we are confronted with, of 
course, a la carte pricing. Would that come into play with the 
MobiTV?
    Mr. Burris. I'm sorry? What kind of pricing?
    Mr. Wynn. A la carte pricing. Someone would say, ``Look, I 
just want ESPN'' or ``I just want major league baseball.'' Will 
those options be available?
    Mr. Burris. Yes. Very possible. In fact, we will be rolling 
out new services late this year that have many more channels 
and, in fact, are a video-on-demand type service where you can 
actually select different stations as well as different types 
of content. Imagine that you can choose CNN and then choose the 
actual story that you want to see, the 5-minute clip of that 
story. Those kind of services will lend themselves to being a 
la carte so you can certainly buy a package but insofar as 
channels are willing to do a deal with us, you can also watch 
channels individually so you can imagine buying just a single 
channel.
    Mr. Wynn. Thank you very much. I relinquish the balance of 
my time.
    Mr. Upton. Mr. Walden.
    Mr. Walden. Thank you, Mr. Chairman.
    Mr. Birnbaum, I have some questions regarding Broadband 
over Power Line. I think there was an April 27th NTIA report 
that demonstrated some concerns about interference, especially 
with aircraft communications, maybe upwards of 40 kilometers 
within a BPL transmissionsite and 460 meters to fix stations, 
75 meters to land vehicles. I hear from some of my amateur 
radio friends concerns about interference on some of the ham 
bands as well. Can you speak to those issues and how you are 
dealing with them and what you are finding in notching ability 
and all?
    Mr. Birnbaum. Yes, I will. There has been a lot of talk. 
The FCC is actually now involved in a second proceeding 
regarding the technical aspects of BPL. It was in that context 
in which the NTIA study was recently published.
    Let me address the ham question first, if I can. There have 
been a significant number of spectrum proceedings where the FCC 
has had to deal with opposition from the amateur radio 
community. The power levels at which our equipment operates, by 
that I mean the communications power levels, not the 
electricity power levels, are very, very low and under FCC 
rules they have to be.
    As a result, the portion of the radio frequency signal that 
leaks off the wire is what the NTIA and the amateur radio folks 
are concerned about. That signal is very, very low. Engineers 
would tell you it is in the billionths of a watt. It dissipates 
very quickly, or attenuates very quickly. We actually think 
that the concerns of the amateur radio community, although we 
understand where they are coming from, we think they are 
unfounded and the FCC so far as found the same thing.
    With respect to current technology, in particular, we 
actually do notch the ham bands. It is not because we 
necessarily decided to do so, but the HomePlug specification 
decided it was easier not to use those bands than to deal with 
the political wranglings, if you will, that would come if they 
did use the ham frequencies. We actually do not transmit on any 
of the allocated ham radio bands.
    With respect to the NTIA study, we have actually worked 
with both the FCC and the NTIA engineering staff for more than 
a year now. We are very familiar with the report. It draws 
generalized conclusions based upon some assumptions that we 
think are inaccurate. I think generally speaking NTIA has 
suggested BPL should go forward, can go forward. I know Mr. 
Gallagher has many a very strong proponent of the technology.
    As a result, we think in continuing to work with NTIA we 
were able to demonstrate that Broadband over Power Line, not 
just the current version but any other technology, really 
doesn't pose the hazards that NTIA has raised. They have raised 
them as issues, I think, yet still propose that the technology 
move forward with certain abilities to notch frequencies if 
interference does occur, all which we would support.
    Mr. Walden. When you talk about the interference or 
missions attenuate rather rapidly, how far away from the power 
line itself on average----
    Mr. Birnbaum. Good question. There is some disagreement on 
that. We know that our emissions are literally undetectable, 
just tens of meters away. In fact, when anyone has ever come to 
do system testing of current system, that includes the FCC 
staff and the NTIA staff, they each have called us and said, 
``We need you to turn your system on because we can't measure 
the signal with our spectrum analyzer.'' We, of course, told 
them, ``It is on. Let us come show you how low the signal is 
and what you have to look for.'' there are a number of 
emissions out there, or licensed transmissions, and when you go 
out with a spectrum analyzer, it doesn't tell you that one is 
from my BPL system or one is from a cellular system or from any 
other transmitter. It takes a while to really understand the 
interference potential of these signals.
    Mr. Walden. I understand that. I guess the issue is I 
believe you probably can technically notch around some of these 
frequencies and we can deal with some of these. My concern 
would be that it gets rolled out before that gets addressed and 
then how do you deal with the Section 315 issues on 
interference and all of that?
    I think the technology holds great promise, especially to 
bring broadband into rural communities. I noticed on, I think, 
it was the Verizon map of the country and the covered areas. My 
district in Oregon was what wasn't covered which is about 
three-quarters of the land mass of the state. We will look 
forward to that getting rolled out further.
    I just want to make sure that these issues do get addressed 
technically so that we don't have interference, especially in 
mobile communications as well because that is one of the 
concerns I have heard about, too, is that if you are driving 
underneath these power lines, you can see some splatter on a 
spectrum analyzer when the broadband is turned on. Now, that 
may be old, too. You may all have dealt with that.
    Mr. Birnbaum. And there is a significant history of, 
unfortunately, accurate information then that is no longer 
accurate today. The technology that people were working with 5, 
6, 7 years ago is not that which is being deployed today. These 
new protocols such as OFDM, which is an easier way to notch 
frequencies rather than using, for instance, spread spectrum 
which will broadcast over a swatch of spectrum. We can actually 
dedicate which carriers would operate or not operate at a given 
time and given location.
    Mr. Walden. Are all of the broadband providers using the 
same type of equipment you are talking about today? I was under 
the impression there wouldn't be one at every transformer on 
every pole, that there is another way to do it absent that.
    Mr. Birnbaum. There are two or three ways that companies 
are actually trying to provide Broadband over Power Lines. Ours 
essentially we bypass the transformer. We think technically and 
economically it is the most efficient cost-effective way to do 
it. Another approach is to literally send a signal through that 
transformer which is not designed to let an RF signal go 
through it so there is some technology involved in trying to 
get that signal through.
    That would also require actually more equipment, not just 
on every transformer pole but virtually on every pole. The 
third approach, I think, maybe is what you have heard about and 
that is taking the signal off the wires that run down the 
street and sending them to homes and businesses using wireless 
technologies.
    That, in theory, wouldn't need to be on every pole 
certainly, although it depends on how far WiFi signal, if you 
are using WiFi, would travel. There are some limitations on 
that technology. WiFi wasn't designed to go very far, to 
penetrate through buildings and walls and trees and things of 
that nature. But there are various flavors all of which are 
substantially similar in that they send the signal over the 
power lines.
    Mr. Walden. All right. Thank you. Thank you, Mr. Chairman.
    Mr. Upton. Mr. Gonzalez.
    Mr. Gonzalez. Thank you very much, Mr. Chairman. I am going 
to try to keep it simple because my understanding is rather 
simplistic. Will you attempt to regulate, of course, what goes 
on with technology which will determine just how far you are 
going to go with the technology? Seldom do we really understand 
it and I love your presentation but, to be real honest with 
you, I still have problems conceptually so please forgive me.
    The question is to Mr. Birnbaum. Years ago, I thought it 
was just a stroke of genius, I had this little attachment. 
Stick it to the stereo, take these two portable speakers into 
the bedroom, stick it into the outlet and I had speakers in the 
bedroom. I just thought that was absolute genius. I don't know 
what happened to all that technology.
    I guess people now just buy different stereos. I never did 
that. But I understand the concept. What you are saying we have 
now, Broadband over Power Lines, is really you have an 
infrastructure or delivery system already existing in every 
building in the United States whether it is--we weren't able to 
get cable in downtown San Antonio for a long time in our 
commercial buildings.
    We have it so we should take advantage of it is what you 
are saying. You have the technology when it comes to broadband 
to deliver it. My question goes beyond that. I just moved into 
an apartment. I wanted certain telephone and fax capability. It 
meant the technician had to come in and put all the different 
jacks in the different rooms. Right?
    Time Warner had to come out and put in another connection, 
whatever it was, in the living room and that ran into a lot of 
problems because they had to go under the apartment and such. 
My question is is this delivery system, this power line, right 
now you say Broadband over Power Line. In the future is 
everything over power lines?
    Mr. Birnbaum. I think the answer is yes. All the 
technologies we're talking about, to an extent, are using 
Internet protocol. All we are doing is sending packets whether 
the packets contain video voice or data. Most of our devices 
don't really care which one they are. The only thing that 
matters is from where they came and to what network are they 
getting sent.
    One of the advantages of using the power lines is since 
they are ubiquitous in every room of every house, every office, 
subject to what is behind the walls you can send the signal to 
whatever room you want without rewiring or needing to pull 
category five wiring, for instance, throughout the house which 
can cost, in some cases, hundreds or thousands of dollars.
    All you need to do is take two of these modems, plug one in 
room A and one in room B and now both computers can talk to one 
another over electricity wires or they can share an existing 
printer. The modem technology was actually designed for local 
area networking to use those electricity wires in the home or 
office. What we have currently done is extended that out to the 
Internet, out to the broadband world so you can now actually 
communicate outside the home or office but, again, using the 
same electricity wires.
    Mr. Gonzalez. I think there is still a few minutes so if 
anyone else on the panel wishes to address basically, again, 
conceptually what it means to your particular industry, are you 
free to do that. Thank you very much.
    Mr. Upton. Anybody else want to answer on the panel? Does 
the gentleman yield back? Mr. Bass.
    Mr. Bass. Thank you, Mr. Chairman. I was gong to ask just 
one question and that was what action could this committee take 
or regulatory agent or the Congress take in the arena of your 
own technological research that would scare you the most?
    I decided to turn it around and make it a little more 
positive and say in the course of our debate and deliberations 
over telecomm reauthorization and the whole issue of 
telecommunication, what action could this subcommittee take 
that you would be the most pleased with as it relates to your 
own sphere of research and development? It is my only question 
and I would like each one of you to address that if you would 
beginning with you, sir.
    Mr. Birnbaum. Yes. Thank you. I guess there are two issues 
that could help sphere certainly the technology that Current is 
developing. One is from a financing perspective a number of 
utilities companies--Mr. Cox asked about why aren't some of 
them involved more in the communications industry. Much of it 
is because they don't have the capital. There aren't tax 
credits or other types of financial incentives.
    I don't think these need to be tied necessarily to 
broadband, particularly in the case of utilities and centers 
for them to develop technology that improves the electricity 
grid are significant and many states actually have some 
programs along those lines so something that actually gives 
incentives. Not subsidizes but gives some incentives for 
utility companies to join in the broadband game.
    There are thousands of utility companies and even the 
largest utility company only serves about 4 million customers 
and, although a lot, it pales by comparison to the telephone 
companies, for instance. They don't see the same financial 
windfall necessarily to advance the technologies and deploy 
them like cable and telephone companies.
    I guess one other clarification is the FCC has been 
struggling with how to deal under the existing framework of the 
1996 Telecommunications Act with these different types of 
services. Are they telecommunications services? Are they 
information service? If you live in the 9th Circuit, it is a 
different answer right now than if you live somewhere else in 
the country, some clarification from the Congress on how 
actually different types of broadband services are to be 
treated.
    I think most of us here would prefer that they be treated 
with more of a deregulatory touch than a regulatory touch. I 
think that might also help spearhead some of the deployment. We 
do get questions from utility companies from time to time that 
if I deploy it, particularly if I am in one state or another, 
how am I going to get regulated by the state utility commission 
and what is the FCC going to do?
    Mr. Burris. My role at Sprint is pretty straightforward. I 
am supposed to just build the best data services business I can 
within the confines of current laws and regulations so I am not 
really prepared to discuss anything we may like to see changed 
or stay in place.
    I would just to defer to Bill Barloon and Bill O'Neill here 
in our DC office that would probably love to follow up on some 
of those points. Thanks.
    Mr. Jachner. I likewise am a technology person in our 
research labs but we do have our people working in Washington 
that I think are going to be communicating our positions going 
forward. Thank you.
    Mr. Leddy. Well, I won't completely pass on this one. I am 
a technologist but we spend capital like there is no tomorrow 
in our group. As I said earlier, the cable industry spent $85 
billion upgrading its network and purchasing new consumer 
premises equipment since 1996. It is a very capital intensive 
industry. We need to borrow a lot of money to keep the cable 
industry moving and lenders like a stable regulatory 
environment.
    I think the spirit of the 1996 Act was a very good spirit. 
It essentially had a deregulatory flavor to it trying to create 
deregulating the entire environment and promoting facilities 
based competition. I think we all want parity between 
industries, parity in the marketplace. We would like to see 
that achieved by deregulating industries down to parity rather 
than regulating industries up to maybe levels of parity where 
old regulations exist. In general, a deregulatory environment 
and one that favors facilities-based competition.
    Mr. Neihardt. Well said. I am going to make the same point 
in a little bit different way which is to say that within the 
last year I heard a speech by a senior official at a local 
telephone company who said that more of the calls that are 
terminated on her network are now coming from wireless phones 
than from wireline phones. Similarly in 2004 they predict that 
the number of wireless minutes are going to exceed the number 
of wireline minutes for voice.
    We believe you can take that a step further to say that in 
the future the wireless Internet is going to be more pervasive 
and carry more traffic than the wireline Internet in terms of 
getting data out to the users. With that as context, I would 
say maintain the strict policy technology neutrality that this 
country as made a cornerstone of its telecommunications policy 
and don't subsidize obsolete technologies as things move to 
their natural--as traffic that should be wireless moves to its 
natural wireless state in terms of the economic drivers for 
that.
    Ms. Rizzo. Okay. I work in a product innovation group so 
certainly policy is not my area of expertise but I will tell 
you that what gets us excited is the ability to come up with 
new products and new ideas and get them to market as quickly as 
quickly as possible to test whether our customers actually want 
those.
    We are extremely excited by this space. It is a very 
innovative dynamic area for us and I think for everyone here on 
this panel. What we would argue is that the wireless model has 
worked quite well in generating a lot of competition and 
product innovation and we would hope that we have something 
similar to that.
    Mr. Bass. Thank you, Mr. Chairman. I would say that it 
might be appropriate to have a follow-up hearing from the 
policy side as to how these technologies can be best developed 
as we debate telecomm.
    Mr. Upton. Mr. Davis.
    Mr. Davis. Thank you, Mr. Chairman. Thanks for holding this 
hearing. I am sorry I couldn't get myself here sooner.
    Mr. Birnbaum, you may have already covered these points and 
if you just say so, I will go back and read your testimony 
later. I am very intrigued by what I heard you say today. Is 
there anything you would like to say further that you haven't 
about what are the--well, my question is really how far and how 
fast for you and other investor-owned utilities or I suppose it 
could apply to municipal-owned utilities and others as well. 
Perhaps even rural cooperatives.
    What would you say we can expect to see in your industry 
and what are some of the other obstacles or potential 
incentives that need to be addressed to allow you to become a 
competitor on a level playing field?
    Mr. Birnbaum. Taking the first part. I think what we will 
see from utility companies--most of the folks in my company 
actually come from the communications industry and what we have 
learned about utilities is they tend to take to new 
technologies fairly slowly. We have been fortunate enough to 
work with some utilities that are moving more quickly than 
others.
    I think that over the next year or 2 you will see many more 
utilities start to deploy. We are in discussions right now and 
I think by the end of this year we will have additional 
commercial deployments going forward with our technology. I 
think as more utilities see other utilities of their same type 
whether they be investor-owned, municipal-owned, or 
cooperative, or whatever area of the country, I think more and 
more utilities will get more comfortable.
    The technology is very new so we understand why they are 
taking a while to adopt it. I think the biggest issue for 
utility companies is what is the incentive for them to do that. 
If they are going to invest in this new technology and have no 
upside because any upside has to just go, for instance, to 
their electricity rate base. Several utility companies look at 
it and say, ``I don't really want to make an investment in 
broadband and, therefore, what is in it for me?'' As I 
mentioned earlier, utility commissions in some cases are as or 
more interested in getting this technology deployed in their 
areas than the utilities are because they want their customers 
to be able to do time-of-day pricing so they can use their 
dishwasher when it makes more sense to do and so that outage 
detection and restoration detection, which was a big issue here 
after Hurricane Isabel.
    I myself live just outside the beltway and have had three 
power outages in the last 6 weeks, none of which lasted too 
long but they all would have been much more quickly resolved if 
the utility company had automated outage detection restoration 
capabilities.
    Mr. Davis. So are the utilities making capital investments 
now to facilitate the services that are more directly related 
to providing electricity like you just mentioned in a manner 
that is being regulated under rate of return and financed by 
the rate payers, etc.?
    Mr. Birnbaum. It is regulated in that manner. Utilities 
have put some R&D dollars to work for the enhanced utility 
applications. A small handful are actually trying to go deploy 
technology. One of the problems is although once our equipment 
for Broadband over Power Lines is, in fact, on the wires, we 
can provide all those services, the utility company still needs 
a meter that is capable of being read essentially an IP-enable 
meter.
    They need a different meter on each house. They would need 
their switching equipment to also be capable of being remote-
controlled over the electricity wires. There are a number of 
different industry segments that need to come together and we 
are literally working with them as we speak in trying to get 
some of the other end user or utility company devices to 
collaborate with the technology.
    Mr. Davis. I would like to ask--I think there is somebody 
here from Verizon as well as others. What general comments you 
have on the electric utilities as a competitor and their entry 
into the marketplace here. I recognize you didn't come here 
today to talk policy.
    Ms. Rizzo. Give me 1 second.
    Mr. Davis. And really it is the same questions for others 
but I thought you were a good one to start with.
    Ms. Rizzo. Clearly I am not the right person to answer 
that. I mean, for us, certainly from a product perspective, we 
see it as just another platform for our products to run on but 
from a policy perspective, I can't really comment on that but 
we can certainly get back to you on that.
    Mr. Davis. Sure. Anyone else care to offer some general 
observations on the entry of the electric utility industry as a 
competitor here as far as delivery of service?
    Mr. Leddy. I don't think we know what it is yet. We will be 
competing with Mr. Birnbaum, I guess, in Cincinnati shortly but 
I am not sure how video, voice, and data can really be 
delivered over a pipe with such a narrow bandwidth. I don't 
know what the pricing is so we will have to see what the 
offering is.
    Mr. Davis. Let me just close by saying that I want to thank 
you all for coming and showing your stuff and it is my loss 
that I wasn't here earlier. I think you will find a lot of 
Members of Congress will be really interested in you all 
helping us walk through this.
    Mr. Chairman, I think this is one of the youngest panels 
we've had here and that is not a coincidence. Thanks again.
    Mr. Upton. Mr. Stearns.
    Mr. Stearns. Thank you, Mr. Chairman. Mr. Leddy, how is 
Time Warner able to incorporate enhanced 911 into its VoIP 
product?
    Mr. Leddy. Our VoIP product, unlike some others that you 
may be familiar with, is supported by our CLEC partners MCI and 
Sprint so the last mile is our plant but we partner with CLECs 
that have 911 services for that part of the offering. We have a 
very complete replacement service available to our customers. 
It includes all of the services that you would expect from a 
phone company, 911 service, director listings, 411 service.
    It supports all CALEA requirements from the Government. It 
also uses all the customer's existing facilities in his home. 
You get one of these little gadgets from us which is a 
telephone modem, the combination of a high-speed data modem and 
a telephone modem, and plug this into any socket in the wall, 
any existing phone jack in your house. You now have VoIP 
throughout the house.
    You use your existing phones, your existing jacks. You can 
port your existing telephone number over to our service and 85 
percent of our customers take their phone number with them. 
Unlike Avantage or some of the other CIP-based VoIP services 
that you may know about, ours is a more complete service.
    Mr. Stearns. How does law enforcement get access to call 
identifying information and call content in response to lawful 
requests?
    Mr. Leddy. I don't know the specific answer to that, sir. I 
can get it for you but we are CALEA compliant.
    Mr. Stearns. I mean, you are compliant but you don't know 
how the law enforcement gets access to it then?
    Mr. Leddy. I don't, sir, but I am not in charge of our 
phone business. I can get you an answer on that.
    Mr. Stearns. It might be helpful, Mr. Chairman, if you 
could. You know, I think the hearing, Mr. Chairman, is about 
what can we do to get broadband so stimulated that everybody 
wants it. I think a lot of the questions are going to how we 
make it easier and is there one single application that would 
push everybody over to get broadband whether it is going to be 
from utilities or different other cable or so forth.
    I think just a general question for the panel. Is there 
anything Congress should do to help this along or should be 
stay out of the mix? Maybe just start from my left to my right 
and go right across. Is there anything that Congress right now 
in your opinion should be doing to make it so that consumers 
would have easy access to broadband in multiple competitive 
ways? Just a short answer. Maybe the answer is no.
    Mr. Birnbaum. I think there probably are some things, as I 
mentioned earlier. You may have stepped out. There are some 
clarifications that probably could help in the way the FCC is 
trying to clarify certain things under the Act.
    Mr. Stearns. Okay. Mr. Burris. Maybe all of you have 
already said this, too.
    Mr. Burris. I will just pass on that. I don't run or am not 
that involved in our broadband business at Sprint. Mr. Barloon 
and Mr. O'Neill are.
    Mr. Stearns. Okay.
    Mr. Jachner. My focus is the enterprise. I guess in that 
space I just would like to see an open competitive environment 
and a level play field for all the players, as probably others 
do, in their parts of the space.
    Mr. Leddy. I think for cable it is a one-ward answer, 
certainty. We need a stable environment that we can count on.
    Mr. Neihardt. I would say on the technology that we demoed 
here today broadband over the commercial cellular 
infrastructure, we took these actions without any help or 
activity from the Government and we did it in existing spectrum 
so we didn't need to go back to the Government and ask for new 
spectrum. I think over time we expect a level of usage that 
will need to involve new spectrum.
    Mr. Stearns. So you would like to see the new spectrum 
finalized?
    Mr. Neihardt. Indeed. That would be helpful.
    Mr. Stearns. That would be very helpful. Ms. Rizzo?
    Ms. Rizzo. Yes. Well, I think have you have seen here today 
that this is already a dynamic, competitive, and innovative 
space and we would like to keep that going. We really favor 
something similar to the wireless model that is not heavily 
regulated and broadband providers are all treated equally.
    Mr. Stearns. My last question, I guess, goes to Birnbaum, I 
guess, deal with the utility companies. You know, in Florida we 
have lots of hurricanes and a lot of times the electricity goes 
out but the phone was always on because you have that telephone 
network that has reliability. But my electricity is always 
gone. I mean, in the summer time it is always gone every 2 or 3 
weeks. A storm will come up and it is gone. That would be such 
a hassle that I wouldn't think I would go on the utilities so 
what kind of reliability can you provide?
    Mr. Birnbaum. As long as the electricity system is up, so 
will be broadband system be up. We can actually operate 
independent of the electricity so we don't need the electricity 
to flow in order to provide the broadband signal. However, 
these devices, much like your DSL or cable modem, do need 
electricity to operate so although your phone would work----
    Mr. Stearns. Like the one that Time Warner mentioned, too. 
That is going to go out, too.
    Mr. Birnbaum. I suspect. Now, you can build these devices 
and I think that device may actually have some backup battery 
life in there. Last time we had a blackout, which was in my 
neighborhood just a few weeks ago, I literally was working on 
my computer by candlelight. I couldn't get access to the 
Internet because the cable modem system which I had in my house 
didn't work.
    Mr. Stearns. So your cable modem did not go out even though 
the electricity went out?
    Mr. Birnbaum. No, the cable modem did go out.
    Mr. Stearns. Okay. How did you get on the Internet?
    Mr. Birnbaum. I couldn't. I could turn on my computer, use 
it by candlelight because it had a battery, but only for the 3 
hours that the battery life was there I could use the computer, 
but I couldn't get access to any broadband network. I think 
that would probably be the case with any of the three widely 
available technologies, or at least DSL cable and now power 
line. Although conceptually we can provide the service without 
backup power, most of the end user devices do require it.
    Mr. Stearns. You know, I can go on my computer using my 
cell phone and I just put my cell phone in my computer. It is 
not broadband obviously but it is very effective in the sense 
that at least if everything is gone, I can still use it.
    Thank you, Mr. Chairman.
    Mr. Upton. Mr. Shimkus.
    Mr. Shimkus. Thank you, Mr. Chairman. This has been a great 
hearing. I am a post-1996 Telecomm Act member. I think the 
basic premise, though, of the Telecomm Act was competition 
within the pipes. What we have seen evolve since then is really 
competition between the pipes. This is a perfect example of 
that. That is why I think you need a competitive market. You 
need to be technologically neutral.
    I answer to my friend from Florida, consumers will decide. 
When there is a head-to-head competition in Ohio, they will 
decide. If there is a weaker opponent, they will then have to 
produce the technology to try to compete on an equal footing. I 
think that is really what makes America great and I am excited 
to see this.
    Also, the convergence issue. I am in a rural district. 
Congressman Walden's comments are really appropo. We have rural 
electric coops and we have rural telephone coops. There may be 
competition now in between the rural electric coop who is 
somewhat subsidized but it has incentivized the rural electric 
coops to do those farmhouses that may be 15 miles down the 
road. Obviously it doesn't have the same market condition. 
There needs to be some incentivization by us to make sure that 
rural America is electrified. I think when we get to the 
broadband debate and this whole thing, that is going to be part 
of the discussion.
    My Congressman, Congressman Stearns, mentioned Voice-over-
Internet Protocol. Anna Eshoo and I obviously have been very 
involved in enhanced 911. For those who want to talk about 
enhanced 911, especially enhanced 911 with Voice-over-Internet 
Protocol, what we are being told is that there is actually a 
chance for more information to be received by the emergency 
responders because of the multitude of information that may be 
on, in essence, the data base from someone who calls. Are we 
getting the straight story on that or is there more 
technological hurdles?
    What we would like to see and we passed in the House, and I 
am optimistic the Senate will pass something. If they can pass 
anything, they should be able to pass enhanced 911, that will 
say we really want to identify the location of the individuals 
who call so we are dealing with Verizon and cellular companies, 
too.
    We want to know where they are at and that is the whole 
premise of enhanced 911. There are a lot of partners in this 
and I am talking to the technology people. You always see the 
incumbent local exchanges, the 911 call centers or the PSAPs. 
It is the cell companies. What do you see on enhanced 911 and 
the challenges of Voice-over-Internet Protocol? Why don't we 
just go down through the panel. Mr. Birnbaum, if you will 
begin.
    Mr. Birnbaum. I will be brief. Perhaps ours is the easiest 
because we haven't started offering the commercial VoIP 
services yet. We start doing that in the next month or 2. Like 
Mr. Leddy from Time Warner, what we are doing is working with 
backbone VoIP providers that can actually provide E911 today. 
Their technology or their sort of IP capabilities applied over 
our pipes or our broadband network actually will enable us to 
provide E911 data back to the PSAP.
    Mr. Shimkus. Great. Mr. Burris.
    Mr. Burris. Yes. Thank you. Again, I apologize. I am not 
involved with Sprint's 911 services other than just high-level 
understanding of our compliance from a wireless perspective. Of 
course, our wireline services, even some of the ones that 
support Time Warner Cable, are certainly compliant.
    Mr. Shimkus. The former CEO personally told me the story of 
how Sprint had identified someone who is, in essence, kidnapped 
and they were able to follow the cell towers and they asked the 
lady who was in the trunk of the car to pull out the plug of 
the rear-view light so the police could identify the car. I 
know Sprint has a long history in at least pushing and 
understanding the need for this.
    Mr. Burris. And that is true. Even today we have had 
stories of subscribers who have taken pictures or videos of 
cars and license plates, potential scary people, and sent those 
back to authorities or used those to actually capture people. 
Insofar as you can envision a future where E911 type services 
are tied into the capability of a handset, it gets very rich in 
the kind of information that can be sent back to authorities.
    Mr. Shimkus. Alcatel.
    Mr. Jachner. As VoIP is deployed, we remain compliant with 
E911. Within the enterprise there is a number of ways of doing 
it. From a technology point of view there is no reason it is 
not doable. At the end of the day what we have is an 
infrastructure where there are wires coming to the end device 
supported by a switch. Today E911 is deployed over the 
telephony infrastructure. As that infrastructure is now 
evolving to be a data or converged infrastructure, there is 
fundamentally no reason.
    The switch needs to notify which physical wire is being 
used for a particular conversation. There are some evolving 
proprietary and standard-based solutions. Perhaps that wasn't 
originally conceived of when the Internet was designed and 
maybe we are just playing catchup here. In the interim there is 
a number of solutions that I can envisage. Some might be end 
user based. I am not addressing mobile.
    I am addressing a fixed VoIP phone that you can plug in 
anywhere in the building and it would work. You could have the 
user not be able to use the device until he has responded to 
some questions like user name, password, location. It is upon 
this location that would be stored in the data base and made 
available if that device was ever used for an emergency call.
    It does shift the responsibility to the end user. Another 
solution might be to limit this ability to roam with your 
terminal device so that you can plug in anywhere and it will 
work but only within the square feet defined by the regulation 
of E911 and then post those limits on the data network that 
underlies it. You are a LAN, Local Area Network, but it is only 
there and that is where it would work. Or specifically you get 
an IP address associated with a restrictive physical area so 
the association of the port you have plugged into and the 
location would be satisfactory to the current laws of first 
responders finding you.
    Mr. Leddy. I shouldn't guess on the answer here. All I 
should say is we understand how important E911 and CALEA 
compliance is in this era where national security and safety 
are such a concern in America. It is fully our intention to be 
E911 compliance and CALEA compliant. We think we are with 
Sprint and MCI.
    To your specific question, though, whether Voice-over-IP 
actually gives you greater possibility for 911, I don't know 
but we will get you an answer back on that.
    Mr. Neihardt. As you know, Congressman, QUALCOMM has been 
very much involved in the deployment of a handset base solution 
and deploying a GPS measurement capability in cell phones. That 
has been a very successful aspect of this whole 911 program 
with Sprint and Verizon here on the panel. I would say at this 
point virtually all of the phones that they are selling now, 
the newly activated phones, have this capability resident in 
the phone so that has been successful.
    That has been possible because of Moore's law. As we have 
been able to ramp up production of these chips and burn the 
measurement capability to the silicon in mass quantities, we 
have been able to drive the parts cost of E911 for cell phones 
down to under $1 per phone.
    I think that the positions taken already by the National 
Public Safety Organizations are instructive in this matter in 
that what they are saying is that if a device, and it could be 
this device or PDA, the device that is used for Voice-over-IP, 
if that device acts like a telephone and you make 911 calls on 
that phone, that device should be position locatable. That is a 
blanket statement that would apply to all devices.
    We think that makes sense because if I am taking this 
device with my EV-DO card and I am wondering around here in the 
DC area, which I do almost every day, and I make a Voice-over-
IP call, or I am making calls and something bad happens or 
someone tries to hit me with a lead pipe or something and I 
call 911, I am not locatable by any technology at this time. I 
might think that I am when I am calling for help but, in fact, 
I am not. We have been successful on the hardware side through 
mass production in driving down cost of 911 through GPS 
measuring capabilities in phones and I would argue that is a 
good way to do it in other devices that are VoIP capable.
    Ms. Rizzo. I am not going to venture an answer in this area 
because I don't want to run the risk of telling you the wrong 
thing but we will get back to you on that.
    Mr. Upton. Well, thank you very much, panel. We appreciate 
looking at the gadgets. We look forward to having them in our 
homes soon. My wife actually stopped by a little earlier so it 
will be on the honey-do list, I know. I thank you for your 
testimony. As it turns out, I think we are going to be having 
votes literally within a minute or 2 so the timing was perfect. 
We appreciate your attendance with us today. Thank you.
    [Whereupon, at 1:11 p.m. the subcommittee was adjourned.]

                                 
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