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93–976PDF 2004

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

COMMITTEE ON ENERGY AND COMMERCE

JOE BARTON, Texas, Chairman

W.J. ‘‘BILLY’’ TAUZIN, Louisiana

RALPH M. HALL, Texas

MICHAEL BILIRAKIS, Florida

FRED UPTON, Michigan

CLIFF STEARNS, Florida

PAUL E. GILLMOR, Ohio

JAMES C. GREENWOOD, Pennsylvania

CHRISTOPHER COX, California

NATHAN DEAL, Georgia

RICHARD BURR, North Carolina

ED WHITFIELD, Kentucky

CHARLIE NORWOOD, Georgia

BARBARA CUBIN, Wyoming

JOHN SHIMKUS, Illinois

HEATHER WILSON, New Mexico

JOHN B. SHADEGG, Arizona

CHARLES W. ‘‘CHIP’’ PICKERING,

Mississippi, Vice Chairman

VITO FOSSELLA, New York

STEVE BUYER, Indiana

GEORGE RADANOVICH, California

CHARLES F. BASS, New Hampshire

JOSEPH R. PITTS, Pennsylvania

MARY BONO, California

GREG WALDEN, Oregon

LEE TERRY, Nebraska

MIKE FERGUSON, New Jersey

MIKE ROGERS, Michigan

DARRELL E. ISSA, California

C.L. ‘‘BUTCH’’ OTTER, Idaho

JOHN SULLIVAN, Oklahoma

JOHN D. DINGELL, Michigan

Ranking Member

HENRY A. WAXMAN, California

EDWARD J. MARKEY, Massachusetts

RICK BOUCHER, Virginia

EDOLPHUS TOWNS, New York

FRANK PALLONE, Jr., New Jersey

SHERROD BROWN, Ohio

BART GORDON, Tennessee

PETER DEUTSCH, Florida

BOBBY L. RUSH, Illinois

ANNA G. ESHOO, California

BART STUPAK, Michigan

ELIOT L. ENGEL, New York

ALBERT R. WYNN, Maryland

GENE GREEN, Texas

KAREN MCCARTHY, Missouri

TED STRICKLAND, Ohio

DIANA DEGETTE, Colorado

LOIS CAPPS, California

MICHAEL F. DOYLE, Pennsylvania

CHRISTOPHER JOHN, Louisiana

TOM ALLEN, Maine

JIM DAVIS, Florida

JANICE D. SCHAKOWSKY, Illinois

HILDA L. SOLIS, California

CHARLES A. GONZALEZ, Texas

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

CLIFF STEARNS, Florida

Vice Chairman

PAUL E. GILLMOR, Ohio

CHRISTOPHER COX, California

NATHAN DEAL, Georgia

ED WHITFIELD, Kentucky

BARBARA CUBIN, Wyoming

JOHN SHIMKUS, Illinois

HEATHER WILSON, New Mexico

CHARLES W. ‘‘CHIP’’ PICKERING,

Mississippi

VITO FOSSELLA, New York

STEVE BUYER, Indiana

CHARLES F. BASS, New Hampshire

MARY BONO, California

GREG WALDEN, Oregon

LEE TERRY, Nebraska

JOE BARTON, Texas,

(Ex Officio)

EDWARD J. MARKEY, Massachusetts

Ranking Member

ALBERT R. WYNN, Maryland

KAREN MCCARTHY, Missouri

MICHAEL F. DOYLE, Pennsylvania

JIM DAVIS, Florida

CHARLES A. GONZALEZ, Texas

RICK BOUCHER, Virginia

EDOLPHUS TOWNS, New York

BART GORDON, Tennessee

PETER DEUTSCH, Florida

BOBBY L. RUSH, Illinois

ANNA G. ESHOO, California

BART STUPAK, Michigan

ELIOT L. ENGEL, New York

JOHN D. DINGELL, Michigan,

(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)

(1)

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 unforeVerDate 11-MAY-2000 11:30 Aug 30, 2004 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 93976.TXT HCOM1 PsN: HCOM1
2

seen 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 enVerDate 11-MAY-2000 11:30 Aug 30, 2004 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 93976.TXT HCOM1 PsN: HCOM1
3

visioning 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.

4

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 socalled 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

5

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

6

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

7

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

8

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.

9

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

10

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.

11

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.

12

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 email 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

13

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.

14

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 technoVerDate 11-MAY-2000 11:30 Aug 30, 2004 Jkt 000000 PO 00000 Frm 00018 Fmt 6633 Sfmt 6602 93976.TXT HCOM1 PsN: HCOM1
15

logical 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-tolunch’’, 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. Realtime 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

16

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.

17

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 IPCentrex, 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.

18

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:]

19

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 twoway 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.

20

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.’’

21

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 alldigital 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 highspeed 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

22

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 1xEVDO. 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

23

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 fiberto-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

24

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

25

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

26

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.

27

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 deVerDate 11-MAY-2000 11:30 Aug 30, 2004 Jkt 000000 PO 00000 Frm 00031 Fmt 6633 Sfmt 6602 93976.TXT HCOM1 PsN: HCOM1
28

ployment, 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 11⁄2 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

29

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?

30

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

31

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

32

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.

33

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

34

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

35

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.

36

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

37

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 indusVerDate 11-MAY-2000 11:30 Aug 30, 2004 Jkt 000000 PO 00000 Frm 00041 Fmt 6633 Sfmt 6602 93976.TXT HCOM1 PsN: HCOM1
38

tries 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.

39

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 investorowned, 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 perVerDate 11-MAY-2000 11:30 Aug 30, 2004 Jkt 000000 PO 00000 Frm 00043 Fmt 6633 Sfmt 6602 93976.TXT HCOM1 PsN: HCOM1
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spective, 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.

41

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——

42

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-overInternet 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 beVerDate 11-MAY-2000 11:30 Aug 30, 2004 Jkt 000000 PO 00000 Frm 00046 Fmt 6633 Sfmt 6602 93976.TXT HCOM1 PsN: HCOM1
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cause 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

44

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

45

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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