U.S. GOVERNMENT PRINTING OFFICE

56–610CC WASHINGTON : 1999

THE NTIA REAUTHORIZATION ACT OF 1999

HEARING

BEFORE THE

SUBCOMMITTEE ON TELECOMMUNICATIONS,

TRADE, AND CONSUMER PROTECTION

OF THE

COMMITTEE ON COMMERCE

HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTH CONGRESS

FIRST SESSION

MAY 11, 1999

Serial No. 106–55

Printed for the use of the Committee on Commerce

(

COMMITTEE ON COMMERCE

TOM BLILEY, Virginia, Chairman

W.J. ‘‘BILLY’’ TAUZIN, Louisiana

MICHAEL G. OXLEY, Ohio

MICHAEL BILIRAKIS, Florida

JOE BARTON, Texas

FRED UPTON, Michigan

CLIFF STEARNS, Florida

PAUL E. GILLMOR, Ohio

Vice Chairman

JAMES C. GREENWOOD, Pennsylvania

CHRISTOPHER COX, California

NATHAN DEAL, Georgia

STEVE LARGENT, Oklahoma

RICHARD BURR, North Carolina

BRIAN P. BILBRAY, California

ED WHITFIELD, Kentucky

GREG GANSKE, Iowa

CHARLIE NORWOOD, Georgia

TOM A. COBURN, Oklahoma

RICK LAZIO, New York

BARBARA CUBIN, Wyoming

JAMES E. ROGAN, California

JOHN SHIMKUS, Illinois

HEATHER WILSON, New Mexico

JOHN B. SHADEGG, Arizona

CHARLES W. ‘‘CHIP’’ PICKERING,

Mississippi

VITO FOSSELLA, New York

ROY BLUNT, Missouri

ED BRYANT, Tennessee

ROBERT L. EHRLICH, Jr., Maryland

JOHN D. DINGELL, Michigan

HENRY A. WAXMAN, California

EDWARD J. MARKEY, Massachusetts

RALPH M. HALL, Texas

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

RON KLINK, Pennsylvania

BART STUPAK, Michigan

ELIOT L. ENGEL, New York

THOMAS C. SAWYER, Ohio

ALBERT R. WYNN, Maryland

GENE GREEN, Texas

KAREN MCCARTHY, Missouri

TED STRICKLAND, Ohio

DIANA DEGETTE, Colorado

THOMAS M. BARRETT, Wisconsin

BILL LUTHER, Minnesota

LOIS CAPPS, California

JAMES E. DERDERIAN, Chief of Staff

JAMES D. BARNETTE, General Counsel

REID P.F. STUNTZ, Minority Staff Director and Chief Counsel

SUBCOMMITTEE ON TELECOMMUNICATIONS, TRADE, AND CONSUMER PROTECTION

W.J. ‘‘BILLY’’ TAUZIN, Louisiana, Chairman

MICHAEL G. OXLEY, Ohio,

Vice Chairman

CLIFF STEARNS, Florida

PAUL E. GILLMOR, Ohio

CHRISTOPHER COX, California

NATHAN DEAL, Georgia

STEVE LARGENT, Oklahoma

BARBARA CUBIN, Wyoming

JAMES E. ROGAN, California

JOHN SHIMKUS, Illinois

HEATHER WILSON, New Mexico

CHARLES W. ‘‘CHIP’’ PICKERING,

Mississippi

VITO FOSSELLA, New York

ROY BLUNT, Missouri

ROBERT L. EHRLICH, Jr., Maryland

TOM BLILEY, Virginia,

(Ex Officio)

EDWARD J. MARKEY, Massachusetts

RICK BOUCHER, Virginia

BART GORDON, Tennessee

BOBBY L. RUSH, Illinois

ANNA G. ESHOO, California

ELIOT L. ENGEL, New York

ALBERT R. WYNN, Maryland

BILL LUTHER, Minnesota

RON KLINK, Pennsylvania

THOMAS C. SAWYER, Ohio

GENE GREEN, Texas

KAREN MCCARTHY, Missouri

JOHN D. DINGELL, Michigan,

(Ex Officio)

(II)

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C O N T E N T S

Page

Testimony of:

Crawford, Kenneth C., Director, Oklahoma Climatological Survey, University of Oklahoma ...................................................................................... 66

Irving, Hon. Larry, Assistant Secretary for Communications and Information, Department of Commerce .................................................................... 6

Miller, Harris, President, Information Technology Association of America 52

Rogers, James A., Retired Representative, United Parcel Service ............... 60

Ross, George E., Assistant Inspector General for Auditing, Department

of Commerce .................................................................................................. 42

Skinner, Colonel Richard W., Assistant Deputy Secretary of Defense,

Space and ISR Programs, Department of Defense ..................................... 48

(III)

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THE NTIA REAUTHORIZATION ACT OF 1999

TUESDAY, MAY 11, 1999

HOUSE OF REPRESENTATIVES,

COMMITTEE ON COMMERCE,

SUBCOMMITTEE ON TELECOMMUNICATIONS,

TRADE, AND CONSUMER PROTECTION,

Washington, DC.

The subcommittee met, pursuant to notice, at 2 p.m., in room

2123, Rayburn House Office Building, Hon. W.J. ‘‘Billy’’ Tauzin

(chairman) presiding.

Members present: Representatives Tauzin, Deal, Shimkus, Pickering, Markey, Luther, and Dingell (ex officio).

Also present: Representative Upton.

Staff present: Mike O’Rielly, professional staff member; Cliff

Riccio, legislative clerk; and Andy Levin, minority counsel.

Mr. TAUZIN. The Subcommittee on Telecommunications, Trade

and Consumer Protection will please come to order. I would like to

thank you all for being here for the hearing on the NTIA Reauthorization Act of 1999.

This hearing is an opportunity to take a look at a discussion

draft of legislation that tries to help reform NTIA to be more efficient and better equipped to handle the better changing world of

communications.

NTIA is a small Agency within the Department of Commerce.

Some of the NTIA’s core functions include serving as the President’s principal advisor on telecommunications matters—I thought

the Vice President did that—signing and managing spectrum for

Federal users, representing the United States on telecommunications trade matters, and NTIA also administers two active Federal grant programs.

Congress last authorized the agency 7 years ago, and this committee held a hearing on the agency’s reform 2 years ago. Let me

say at the outset that I believe this discussion draft, which all of

you have received and focused your testimony on, is just that, a

discussion draft upon which we hope to base some dialog. And I

want to thank the members who worked very hard to make this

possible—Mr. Upton, Mr. Deal and Mr. Shimkus in particular—

and offer to them again the assistance of the Chair in coming to

some agreements on the bill.

The NTIA Reauthorization Act of 1999 will be introduced in the

House soon, and changes between now and then could reflect the

exchange that we have today. If there are problems that you have

with the discussion draft, now is the chance to make them known

and to suggest changes as may be the case.

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The draft does several things. First, it authorizes appropriations

for NTIA operations. It was therefore imperative to have its head

of operations, my good friend, Larry Irving, here to discuss the entire draft as well as the overall reform effort.

Second, it deals with the spectrum management function of

NTIA. We have an opportunity to hear from a representative of the

Department of Defense to talk about something other than Kosovo,

to talk about the spectrum management of NTIA and how his

agency as well as representatives from UPS will discuss with us

how spectrum management by NTIA actually aids the main competition to their business and serves the agencies for whom it is designed to serve.

What the draft does is to statutorily require NTIA to receive full

reimbursement from the other Federal agencies for the spectrum

management duties that NTIA performs. A very important issue of

spectrum management reimbursement or lack thereof has been an

ongoing problem, and even though NTIA has improved on this,

right now the other agencies will only pay about 80 percent of what

they owe. I wonder how the IRS would react if you or I decided to

pay 20 percent less in taxes this year and claimed there is just no

way that I can give you the rest, so do without it.

The discussion draft sets up a mechanism to find the value of the

lab in Boulder, Colorado and see if there is an interest in the lab’s

purchase.

Fourth, the draft establishes a road map for the future of NTIA.

The draft requires GAO and the Inspector General, who is represented here today, to conduct studies into the long-term efficiency

of the agency and, in turn, for NTIA to report to Congress its final

plan for reform. It is important to note that the discussion draft

does not mention the grant programs that operate under NTIA, its

largest expenditure in the area of largest controversy.

It is my hope that this hearing should examine whether these

programs are already allocated on similar programs in other Federal agencies. If my memory serves me correctly, it was Chairman

Bliley who mentioned in our last hearing on this issue that there

is evidence of grants given to entities who compete against private

firms. This issue is one certainly we ought to review today. At the

very least, there is room for improvement in this area.

At the end of the day, the American public and this subcommittee will be more educated on the question of whether targeted reform of NTIA is necessary, justified, and beneficial to

American taxpayers. I want to thank the witnesses here before us

in advance and look forward to their testimony.

The Chair is now pleased to recognize the ranking member of the

full Commerce Committee, the gentleman from Michigan, Mr. Dingell, for an opening statement.

Mr. DINGELL. Thank you, Mr. Chairman. I commend you for

holding this hearing and appreciate the fact that we are going into

the question of the reauthorization of NTIA which has not for some

time been reauthorized. The agency has been acting without express authorization since 1994, and I commend you for your efforts

to remedy that unfortunate situation.

Mr. Chairman, I believe you join me in supporting the important

functions that NTIA reforms. It is a well-run agency, thanks in

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good part to the fine leadership of Larry Irving who was associated

intimately with this committee over the years. When writing legislation, the committee often calls upon NTIA to conduct studies and

make telecommunications policy recommendations. We rely on that

agency because it has a well-deserved reputation for conducting

balanced and thorough reviews.

In fact, NTIA was recently tapped by this committee to perform

an important study on the impediments to cable TV competition in

rural markets. You, Mr. Chairman, were quite forthright in explaining to the reporters why the committee made that selection.

You said, ‘‘There is confidence in this committee with the NTIA

that does not extend to the FCC.’’ I wonder why it is this committee does not hold such high enthusiasm for the FCC, but certainly I understand why it is that we approve of the activities of

NTIA. And I certainly can’t agree with you more.

For that reason, Mr. Chairman, I am somewhat troubled by the

so-called discussion draft now being circulated. I hope this draft is

merely a first cut made by the staff, because it contains some apparent serious defects. First, it contains no funding for the Telecommunications and Information Infrastructure Assistance Program, or the TIIAP. TIIAP is arguably the most effective information technology grant program available today. The program provides seed money for nonprofit groups for the best and most creative projects that might otherwise never get off the ground. It is

a tremendous success story that has touched community-based organizations all over the country, many no doubt in districts served

by members of this committee. Congress has consistently appropriated funds to this program for each of the past 5 years, and certainly there is no evidence to suggest that such funding should be

curtailed.

My hope, Mr. Chairman, is that the elusive TIIAP program was

a simple oversight in the drafting process, and that matter will be

corrected.

Second, the draft contemplates sales of NTIA’s research lab in

Boulder, Colorado to a private entity. Privatization on many occasions makes great sense. For example, it may be done to gain operating efficiencies. It may be done to recoup value for the taxpayers.

It may be done because the investment is no longer useful for its

intended purpose. I am not sure that any of these reasons apply

in this case. In fact, the sale of this facility may actually reduce

efficiency and lose value to the taxpayer.

I look forward to hearing from the witnesses today on these and

other topics relative to NTIA’s reauthorization. It is a critically important responsibility of this committee, and I look forward to

working with you and Chairman Bliley to fashion a bill we can all

support. Thank you again for holding this hearing and for initiating a very important process. I yield back the balance of my time.

Mr. TAUZIN. I thank the gentleman.

The Chair now yields to Mr. Upton.

Mr. UPTON. Thank you, Mr. Chairman. We all appreciate this

hearing on NTIA. One of the important duties of our committee is

to conduct oversight hearings on departments and agencies under

our jurisdiction.

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It has been a number of years since the NTIA was last reauthorized, so I believe today’s hearing will provide the subcommittee

with important information regarding the workings of the agency

and how it is addressing telecommunications issues that truly face

our Nation.

I am also looking forward to a discussion of the grant program

under the agency’s direction and the process by which Federal

funding has been allocated to recipients around the country. Although the formal NTIA bill is close to being introduced, the discussion draft that has been circulated should in fact serve as a

good starting point as this committee seeks to develop a bill that

is fiscally responsible, bipartisan, and in the best interests of the

American people. I yield back the balance of my time.

Mr. TAUZIN. I thank the gentleman.

Mr. Shimkus is recognized for an opening statement.

Mr. SHIMKUS. Thank you, Mr. Chairman.

I appreciate you calling this hearing today, and I would like to

also thank Chairman Bliley and yourself for allowing me to be part

of the working group on reauthorization. I am proud of the work

we have done, especially the issue that we have sorted through, our

discussion draft that we have before us today. While it does not address all of NTIA’s programs or the concerns voiced by members of

the working group, I believe it is a very good start in the reauthorization of the agency.

Mr. Chairman, I am specifically interested in the grant programs

and how we can make them work efficiently, especially TIIAP. Additionally, there is an ever-present issue of the duplicative nature

of the grant program that I think we need and should address.

These grants allow many organizations to gain access to new technologies, and most of the time these grantees work hard to fulfill

their obligations under the grant contract.

Additionally, I believe that the good that comes from the grant

program should continue. However, there are programs with TIIAP

that we need to take a close look at before any authorization language is added to the bill. I realize that the IG has reviewed some

of the grants that have had problems, and also NTIA’s grant process. I will be following that up with questions in the question period. While NTIA has recognized some of these problems and tried

to correct them, more can still be done to make these grant programs even more beneficial.

Thank you for holding this hearing, Mr. Chairman, and I look

forward to today’s testimony.

Mr. TAUZIN. I thank the gentleman.

[Additional statement submitted for the record follows:]

PREPARED STATEMENT OF HON. NATHAN DEAL, A REPRESENTATIVE IN CONGRESS

FROM THE STATE OF GEORGIA

Thank you, Mr. Chairman, for holding this hearing today regarding reauthorization of the National Telecommunications and Information Administration (NTIA).

As a member of Chairman Bliley’s task force to reauthorize NTIA under the Department of Commerce, I appreciate your attention to this important matter.

I believe the draft bill before our discussion today is a good baseline from which

to examine NTIA. While we held a hearing on the agency in 1997, and studies have

been conducted to look at individual components of NTIA programs and grants, we

must gain perspective for the agency as a whole. Thus, as we advance further into

the age of telecommunications, I agree it is pertinent to examine the agency overall.

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Perhaps one of the most significant tasks of the NTIA is managing radio spectrum

for the federal government. We must ensure that national departments and agencies

have access to the spectrum necessary for public safety measures, education, and

consumer protection, while avoiding interference over the radio waves. For example,

our military and air traffic controllers greatly depend on adequate and reliable spectrum to succeed in their government functions. I look forward to hearing from Col.

Skinner of the Department of Defense on this issue today.

Spectrum management must be efficient. I am pleased that the discussion draft

of legislation would require NTIA to receive reimbursement for all spectrum management functions conducted for other federal agencies. As you know, previous appropriations bills in Congress have asked that NTIA recoup only 80 percent of reimbursement costs. The provisions of the draft bill would provide NTIA with a statutory requirement that it not conduct such work without reimbursement at 100 percent. Such a provision would also allow agencies the time to comply with such additional costs, as NTIA would not collect associated fees until October 1, 2001. We can

improve in this area—we must ensure that NTIA is reimbursed by other federal

agencies at a rate of 100 percent for spectrum allocated. It is not fair for NTIA to

subsidize other government entities at rates of up to 20 percent.

We should also encourage the use of spectrum provided by the private sector or

commercially available service providers by government entities if appropriate and

less costly. At the same time, we must also promote fair and competitive opportunities for businesses competing with government for spectrum services. I hope to learn

more on this issue from Mr. Jim Rogers of UPS here today.

With improvements made in these areas, increased funds will allow NTIA to better able perform its overall responsibilities of spectrum management, informative

telecommunications policy, development of a national telecommunications and information infrastructure, and performance of research in telecommunications sciences.

Once again, thank you, Mr. Chairman, for drawing your attention to this issue.

I look forward to the testimony from our witnesses as well as to working with the

committee on reauthorizing a forward-looking and efficient NTIA for the 21st century.

Mr. TAUZIN. And the Chair is now pleased to introduce the panel.

As is usually the case, we try to have a large panel, for two reasons: One, nobody sits around here for the second panel, and so we

try to get it in on the first panel and the Chair ends up by himself

with the second panel. So I decided to punish all my members by

making them sit through the first panel, but they didn’t show up

to be punished.

The second thing is that it gives us an opportunity to have an

exchange among you, and I want to encourage you in that regard.

As I introduce you, let me ask you, please, to remember that your

written statements are part of the record so you don’t need to read

us a statement. I wish you would engage us in a conversation, perhaps engage each other in a conversation, and challenge each other

to comment as we go through so we can get a full educational experience today.

Larry, you are an old friend of mine and this committee, I echo

the comments of Mr. Dingell. I have always had great confidence

in you personally and the way you have conducted your agency.

There is no hostility here. Please know that. The bill is a draft bill,

and the idea of leaving out the grant programs was designed for

you to come in and prove to us that they ought to be added and

how they might be reformed to make them better. So it is with that

approach that we welcome you to the committee.

Again, let me introduce The Honorable Larry Irving, Assistant

Secretary for Communications Information; Mr. George Ross, Assistant Inspector General for Auditing, representing the Department of Commerce; Colonel Richard Skinner, the Assistant Deputy

Secretary of Defense for Space and ISR Programs; Mr. Harris Miller, President, Information Technology Association of America; Mr.

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Jim Rogers, Retired Representative of the United Parcel Service;

and Mr. Kenneth Crawford, Director, Oklahoma Climatological

Survey, University of Oklahoma.

I suspect that we will learn a lot, and I invite you to present your

testimony. We recognize first Mr. Irving.

STATEMENTS OF HON. LARRY IRVING, ASSISTANT SECRETARY

FOR COMMUNICATIONS AND INFORMATION; GEORGE E.

ROSS, ASSISTANT INSPECTOR GENERAL FOR AUDITING, DEPARTMENT OF COMMERCE; COLONEL RICHARD W. SKINNER,

ASSISTANT DEPUTY SECRETARY OF DEFENSE, SPACE AND

ISR PROGRAMS, DEPARTMENT OF DEFENSE; HARRIS MILLER, PRESIDENT, INFORMATION TECHNOLOGY ASSOCIATION OF AMERICA; JAMES A. ROGERS, RETIRED REPRESENTATIVE, UNITED PARCEL SERVICE; AND KENNETH C.

CRAWFORD, DIRECTOR, OKLAHOMA CLIMATOLOGICAL SURVEY, UNIVERSITY OF OKLAHOMA

Mr. IRVING. Thank you, Mr. Chairman. Let me thank you and

members of the subcommittee for holding this important hearing.

Having served as Assistant Secretary for NTIA for the last 6 years,

I have seen our role continue to evolve. As telecommunications becomes more and more important, information technology becomes

more and more important.

Just last week, Alan Greenspan stated that technological innovation is responsible for the Nation’s phenomenal economic performance—and that is his word. Mr. Greenspan noted that the newest

innovations which we label information technologies are beginning

to alter the manner in which we do business and create value,

often in ways not readily foreseeable even 5 years ago. And having

served in this job for 6 years, I can tell you almost nothing I am

doing today did I think I would be doing 5 years ago.

The reality is information technologies and telecommunications

represent $1 trillion of the $7 trillion economy. One-seventh of our

national economy is telecommunications information technology.

Our expertise in information and telecommunications sectors are

helping resolve critical questions of our global economy. We are trying every day to do more with less.

In addition to the daily functions that NTIA has, we have taken

a new function over the past year. We are working actively across

the administration on electronic commerce issues, issues such as

domain names, on-line privacy content, how to get more broadband

access built out. We cosponsored international telecommunications

summits, including the Latin American Telecom Summit and the

China-U.S. Telecom Summit where U.S. industry had a chance to

meet with Chinese and Latin American officials to talk about opening up those markets.

We served a lead role at the International Telecommunications

Conference and at the Plenipotentiary Conference in Minneapolis.

And thank you for your support of the ITU Plenipotentiary.

We are taking the lead, pursuant to the President’s directive, on

the Critical Infrastructure Protection Initiative. Just as Y2K

threatens problems for our Nation’s economy, so do attacks on our

Nation’s telecommunications information infrastructure. We are

very dependent upon them.

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And that is just the beginning of all of the things that we have

to do. We are pleased that this committee and other congressional

committees have asked NTIA to conduct five or more studies, and

also to staff the congressionally appointed Children’s On-line Protection Commission within the next year. Pending legislation would

give us responsibility for three more studies.

And at the same time as our responsibilities are mounting, our

staffing levels have been decreasing. Since 1994, we have gone

from 361 full-time employees to 267, more than a one-fourth decrease. And in our fiscal year 2000 budget, we sought an increase

in our staffing levels in a budget of $17.2 million, primarily because of Critical Infrastructure Initiatives and to help public broadcasters as they move over to digital television.

Let me turn to our concerns with the discussion draft. First, the

funding level of $7.9 million is well below the $17.2 million requested and would not provide, we believe, the funds for new initiatives or programs such as the staffing for the CIP program or

the Children On-Line Protection Act Commission.

My second concern is the privatization of the lab. We believe that

would eliminate a critical Federal resource. There is unparalleled

expertise in these laboratories supporting NTIA’s spectrum management and telecommunications functions. It provides our office

spectrum management and those we serve in that office with critical research expertise and it conducts research for many other

Federal agencies. My concern is if you get rid of NTIA’s labs, the

people we support will go out and create their own duplicative labs,

and in many instances, because security clearance is needed and

specific subject matter expertise, there are not private labs to do

this job.

The laboratory recently helped this committee with regard to the

Satellite Home Viewers Act. There was no independent lab that

wasn’t doing similar work for someone who had a vested, commercial interest in how the SHVA turned out.

We have also assisted the FCC as they were doing digital television. Again, because of the impartial interest of those labs, we

were able to give an objective view, and those labs are cost efficient. We follow the Economy Act, and we only charge for costs incurred. If the lab were privatized, Federal agency users would either increase their research budgets or pay higher rates to private

businesses. No savings to the taxpayer; and, moreover, there are

very few assets to be sold. Most of the assets are the tremendous

human resources in those labs. We have very few physical resources that can be sold to a private sector entity.

For those reasons, external and internal reviews have concluded

that NTIA’s labs satisfy a compelling need for a centralized, costeffective, unbiased Federal facility.

Mr. Chairman, I have three studies dating back to Dave Markey

and Al Sikes that I would like to present the committee with regard to privatization initiatives that preceded me.

[The information follows:]

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Mr. IRVING. A third concern that I would like to raise is that it

doesn’t authorize TIIAP. That is a merit-based, competitive matching grant program that disadvantaged communities across this Nation are taking advantage of. We are doing things in health care,

public safety and delivering of better public services, and I don’t

make decisions in Washington except as to what should be funded.

What particular grants come to us, those are locally driven.

There is tremendous national interest in this program. We have 14

applicants for every one that we fund, and today you will hear from

Oklahoma about how this grant saved lives just last week in Oklahoma across that State.

I have worked with Congressman Upton on projects in Kalamazoo and I remember speaking over a teleconference when that

grant was awarded. We have worked closely with you, Mr. Chairman, with regard to Nicholls State. We talk about connecting

schools and libraries; what about those men and women who work

on oil rigs who need further education? TIIAP has provided educational facilities, and is doing things with health care in the State

of Louisiana.

Today, Mr. Chairman, there is a front page USA Today article

on one of our grant programs. It is talking about parents adopting

on-line. Four years ago, 5 years, NTIA gave a grant, and there is

a fuller story in the inside section, about adoptions on-line.

[The article follows:]

[USA TODAY]

ONLINE ADOPTION SITES FORGE UNLIKELY LINKS

By Marilyn Elias

They were hardly members of the Most Likely to Be Adopted club. In fact, if it

hadn’t been for the Internet, they might never have found homes.

Six-year-old Abel had been kicked out of Head Start for aggression. His foster parents said he shredded curtains in fits of fury, and he still was not toilet-trained.

Joshua had attempted suicide by age 7. Social workers described him as aggressive, probably retarded.

Breauna, 14, survived severe abuse from parents said to be in a satanic cult. Her

social worker doubted any family would adopt her. She’d soon start on an ‘‘independent living’’ track, preparing to live on her own at 18 with Social Security payments for those with disabilities.

But all three youngsters were adopted by American families in the past few years.

And after some bumps along the way, all three appear to be thriving in their new

homes.

Abel, Josh and Breauna joined families in other states who saw their photos and

personal profiles on the Internet.

Net listings first appeared in 1995 with a few dozen hard-to-place kids shown on

a Web site established by the National Adoption Center and Children Awaiting Parents, two national agencies that find adoptive homes. Now there are 1,600 youngsters at the site, largest in the USA.

Thirty-seven states have created sites since 1995, typically listing children they’ve

been unable to place locally. Last month, the federal government announced plans

to create a Web site by 2001 for all U.S. kids awaiting homes through public agencies.

‘‘The Net is the best tool we have,’’ says Carolyn Johnson, executive director of

the National Adoption Center. Many youngsters adopted from FACES, the center’s

site, ‘‘weren’t likely to have ever found homes,’’ she says.

The Net’s capacity to dissolve state lines instantly, linking children to prospective

parents everywhere in the USA, could make it a key asset for meeting the challenges ahead, says Carol Williams of the Children’s Bureau at the U.S. Department

of Health and Human Services.

About 8,000 U.S. youngsters now need adoptive homes. But that number could

double or triple in the next two years, Williams says. A 1997 federal law shortened

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the time kids can remain in foster care without plans for a permanent home. As

youngsters become available more rapidly, the need for families is expected to grow,

and so must the pool of prospective parents.

The new government site will not deliver adoption nirvana for parents seeking a

pink-faced infant, Williams cautions. The vast majority of youngsters shown online

will be over 3 years old. Many will have disabilities—physical, intellectual or emotional. Some will be part of package-deal sibling groups. A significant number will

be racial minorities, Williams says. But the site will improve the chances that these

difficult-to-place children will find parents who want them.

Instant access to children’s photos and profiles through computers doesn’t mean

instant adoption, experts emphasize. It’s not like ordering books from Amazon.com.

Just as in traditional placements, parents must have a home study done by an

agency in their state to ensure they can provide a safe, healthy environment. The

child’s social worker then considers whether the family would meet his needs.

Texas, the largest state site, with 532 kids shown, started offering short video

downloads in March. An adorable 3-year-old shows she can sing her ABCs. Other

kids tell about their interests. ‘‘It humanizes children, especially those with disabilities,’’ says Ella Zamora of the Texas Adoption Resource Exchange.

‘‘When you see that child’s face and hear her voice, you may decide you don’t want

to adopt a kid like that. But sometimes people have stereotypes—a child with cerebral palsy is a certain way—and when you see the child, you realize your perceptions were not true.’’

Texas adoptions increased in fiscal 1997-98 by 76% from the average for the three

previous years. It was among the largest rises of any state, ‘‘and the Internet was

an important factor in that,’’ Zamora says. Inquiries soared from 1,100 in 1996 to

9,555 in 1998, ‘‘and the big jump came from families looking on the Net.’’

For Illinois children, Net outreach has helped place brother/sister groups, including three black siblings recently adopted by a Virginia family, says Marilyn Panichi

at the Adoption Information Center of Illinois.

Families adopting through the Net typically visit a child several times, including

overnight and longer visits, and the child might visit in the family’s home before

the decision to adopt is made.

Social workers sometimes prefer that their adoptable kids stay in-state.

This resistance to letting go of children is among the areas that need work at the

state level before the federal Web site goes up, says Williams of the federal Children’s Bureau. More social workers will be needed, too, as family inquiries increase,

and costs will be shared by the federal and state governments, she says.

Some critics see the most serious drawback of using the Internet to expand special-needs adoptions not in the Net itself, but in human failure to inform adoptive

parents about what they’ll face when they adopt older children or those with disabilities.

Candor about the extent of kids’ problems has increased the past 20 years. But,

concedes Williams, ‘‘full disclosure is something we continue to work toward. Most

state agencies expect their staffs to provide full disclosure, but it continues to be

a concern.’’

Sometimes children don’t even tell all that’s happened to them until they’ve been

in a safe adoptive home for years.

In other cases, the travails and placements are so labyrinthine that the child is

already adopted by the time a state’s bureaucratic machinery untangles and presents the long story of the child’s life.

That’s what happened to Jim and Heide Thatcher of Pleasant Grove, Utah. They

adopted 14-year-old Breauna, severely abused by parents said to be in a satanic

cult. Records of her last four years were readily available. But Breauna had been

in the Thatchers’ home for more than three months before they received her full file.

‘‘They had tried to describe the extent of her abuse. But you go in so optimistic,

thinking you can handle anything,’’ Heide Thatcher says. Breauna even had a courtappointed advocate who kept asking the Thatchers if they were sure they could handle the teen.

As it turns out, they almost couldn’t. Breauna wrestled with bipolar disorder, took

up with a bad crowd and even attempted suicide. But with the Thatchers’ help, she

has turned a corner. Now she’s a college-bound 10th-grader with better than a B

average who says her friends are ‘‘preppies.’’

Sometimes adoptive parents feel they were fully informed but still faced crucial

challenges. Laurie and Jon LeBar of Hot Springs, S.D., found 6-year-old Abel from

Texas and 7-year-old Joshua from Illinois on the FACES site. They had to persist

in teaching both boys to talk out their anger rather than harm themselves or others.

But both were receptive, and two years after adoption they’re happy, amazingly

well-adjusted kids, Laurie says. The LeBars have adopted several other youngsters

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of varied races through their initial Net contact. ‘‘I don’t regret it a bit; they’re a

joy,’’ Laurie says. ‘‘We are really living our dream. We’ve got a big house out in the

country, and we’ve got this great multicultural family. It’s awesome.’’

To increase these Net-initiated adoptions will cost the government more upfront.

The federal Web site alone is expected to cost $1.5 million to set up, then $1.25 million a year to run, though HHS hopes for private contributions.

‘‘You’re either going to pay now or pay later,’’ says Ann Sullivan, adoption program director at the Child Welfare League of America.

Youngsters in serial foster care fare poorly as adults in terms of mental health,

education and employment. About 20,000 U.S. youngsters a year turn 18 without

having been adopted. ‘‘We don’t talk about (adoption) costs. We talk about investment.’’

And there’s something besides dollar signs to consider in launching Internet recruitment sites.

‘‘Ethically and morally, the state is the parent of these children,’’ Sullivan says.

‘‘I don’t see how we can do less than everything possible to find good homes for

them.’’

Mr. TAUZIN. How did you manage that?

Mr. IRVING. We have good public affairs people. Ken Johnson has

been helping me out.

But the amazing thing is that over 5 years we have been able

to do things. We talk about the critical need to make sure that parents know about adoption opportunities and adopting children are

known across this country; we do that on-line with a small, less

than $200,000 grant. You will hear about other important grant

proposals.

And just today, I picked up an e-mail, noting while we are getting lots of awards nationally, we are getting international acclaim.

The Bangemann Awards has a TIIAP grantee, the Erickson

Awards has a TIIAP grantee as nominees. I know that I have got

to finish up.

We are working closely with the Department’s Office of Inspector

General to make these grant programs better, more efficient and

run better.

I also want to talk about the spectrum management. The 80/20

split in our estimation is the correct split, and the reason is that

it does not make me a wholly owned subsidiary of my clients. By

having the 20 percent that the taxpayer pays—many times I am

fighting the Department of Defense, fighting Transportation or Interior over a decision that I have to make. When somebody pays

your bills, they believe they have a lot more influence over your decisionmaking process, and we never want to get to a fully 100 percent our clients are paying our bill.

But the second important issue is by the time the appropriations

process starts in October and Defense gets their money and gives

it to us, there is a timing problem. That 20 percent ensures that

we can continue doing the things that we need to do in our agency

while we are waiting for the checks to be cut at Defense, Coast

Guard, and Interior and other places across the administration.

Those are my primary concerns, Mr. Chairman, but we look forward to talking to you. I appreciate again your holding this hearing

this afternoon.

[The prepared statement of Hon. Larry Irving follows:]

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PREPARED STATEMENT OF HON. LARRY IRVING, ASSISTANT SECRETARY FOR COMMUNICATIONS AND INFORMATION, NATIONAL TELECOMMUNICATIONS AND INFORMATION

ADMINISTRATION

Mr. Chairman and Members of the Committee: Thank you for this opportunity to

testify today on the reauthorization of the Department of Commerce’s National Telecommunications and Information Administration (NTIA).

Today, I would like to describe NTIA’s unique role in developing and advocating

policy in the telecommunications and information technology sectors; summarize our

FY 2000 Budget Request; and highlight our key programs and initiatives. I have

also attached to my testimony two appendices. The first is NTIA’s Comments on the

Discussion Draft ‘‘NTIA Reauthorization Act of 1999.’’ The second is a list of Recent

Congressional Studies for NTIA and Potential Studies Proposed by Congress.

INTRODUCTION

NTIA’s Unique Role

NTIA is the principal adviser on telecommunications and information policy

issues in the Executive Branch. In this role, NTIA helps develop and present the

Administration’s position on these issues before the Federal Communications Commission (FCC) and other domestic and international fora. NTIA’s goal is to assist

the Administration and Secretary of Commerce William M. Daley in promoting the

role of the nation’s telecommunications and information industries by creating more

job opportunities, enhancing U.S. competitiveness in the global economy, and ensuring that all Americans benefit from the digital age.

NTIA is unique among Federal government agencies. The agency’s expertise encompasses every aspect of telecommunications and information technology. In addition to advocating the Administration’s positions on domestic and international

issues, we also manage the Federal use of the spectrum; resolve complex technical

issues through cutting-edge research in our laboratories; administer infrastructure

grants to promote the development of a widely accessible information infrastructure;

and manage grants to help public broadcasting maintain their infrastructure and

transition to the digital age.

NTIA’s role in these areas is more important than ever, given the ever-increasing

significance of the telecommunications and information technology (IT) sectors to

our nation. Today, these technologies are driving this country’s economic growth.

The White House Council of Economic Advisors recently determined that revenues

of communications services and equipment companies rose over 60 percent in the

last five years. Over a third of real domestic product growth in the past three years

has come from IT industries. More than 7 million people are now employed by IT

industries and earn wages that are almost two-thirds higher than the average for

all private sector jobs. And, investments in new technologies—including computers,

satellites, wireless devices, and information processing systems—account for over 45

percent of total real business equipment investment.

New technologies will shape our economy even more significantly in the 21st century, particularly with the growth of the Internet and electronic commerce. Today,

some 160 million worldwide are going online to shop, invest, trade, and e-mail, according to Nua Internet Surveys. That figure is expected to increase to 320 million

by the end of next year. As more people and businesses connect online, the ‘‘virtual

marketplace’’ will become commonplace. Electronic commerce among businesses is

expected to grow more than fifteen-fold in the next few years, from $64 billion in

1999 to $980 billion in 2003, according to International Data Corporation analysts.

The heightened importance of the telecommunications and information sectors has

engendered new and pressing policy development and advocacy needs. NTIA is

using its expertise, leadership, and vision to address these urgent new questions.

In order to sustain the rapid development of our information infrastructure, NTIA

is considering ways to promote the deployment of high-speed broadband networks,

and to insure that information and telecommunications services are available and

affordable for all Americans. We are facilitating the development of electronic commerce (‘‘e-commerce’’) by addressing new questions of consumer privacy, security,

and domain name management. We are also working with other nations to promote

a market-driven, flexible and decentralized, and technology-neutral approach to ecommerce policy. And, we are coordinating efforts under the federal Critical Infrastructure Protection (CIP) plan to ensure that our telecommunications and information infrastructures are secured against physical and cyber attacks.

NTIA’s management of the federal use of radio spectrum is also promoting public

safety and competition. As the managers of federal spectrum, we are trying to improve efficiency, increase private access to spectrum resources, and plan for future

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spectrum needs, including those relating to public safety. These goals will become

ever-more important as global uses of satellite and wireless devices increase.

We are also working to open up wireless and wirelined markets to competition,

both domestically and internationally. NTIA helped secure the success of the World

Trade Organization (WTO) Agreement on basic telecommunications services in

March 1997. Nearly 70 countries, representing approximately 95% of the world’s

telecommunications revenues, agreed to liberalize their telecommunications markets

under that Agreement. NTIA is now working to ensure, among other things, that

the signatories comply with their countries’ regulatory principles in implementing

the WTO Agreement.

NTIA’s expertise in these areas will help resolve some of the critical questions in

our global economy. The demands on our expertise and personnel are growing rapidly, however, as the telecommunications and information sectors take on increasing

importance. Virtually every day, we address new technologies and new issues. The

importance of these issues is reflected in the increasing number of requests we have

also received from the White House, the Department of Commerce, other Federal

agencies, and Congress. At the same time, our staffing levels have declined in recent

years. In 1994, NTIA had 361 employees; today, we have 267. NTIA’s budget request for FY 2000 should provide necessary resources to help us respond to the increasing number of demands and challenges as we enter the new digital economy

of the 21st century.

Overview of FY2000 Budget Estimates

Let me start by giving an overview of NTIA’s proposed FY 2000 budget. NTIA’s

budget request for FY 2000 is $72,369,000, with a staffing level of 336 FTEs. This

represents an increase of $23,604,000 over NTIA’s FY 1999 funding level and an increase of 48 FTEs. NTIA is seeking $17,212,000 for Salaries & Expenses (S&E).

This includes increases for enhancing Federal radio spectrum management; upgrading our telecommunications research facility; implementing World Trade Organization requirements; and implementing the Presidential Critical Infrastructure Protection (CIP) program. NTIA is also requesting $20,102,000 to fund the Telecommunications and Information Infrastructure Assistance Program (TIIAP), and

$35,055,000 to fund the Public Telecommunications Facilities Program (PTFP). The

PTFP request is part of an Administration initiative with the Corporation of Public

Broadcasting to assist broadcasting stations during the transition to digital broadcasting.

This funding will help NTIA maintain and augment its existing programs, which

support the development of the nation’s information and telecommunications sectors. I would now like to describe highlights of these, and other of NTIA’s programs,

which are critical to the continued development of our telecommunications and information technology sectors.

HIGHLIGHTS OF NTIA’S PROGRAM OPERATIONS

Domestic Policy

NTIA’s domestic policy activities support NTIA’s responsibilities as principal adviser to the President on telecommunications and information policies. The goal of

these activities is to enhance the public interest by generating, articulating, and advocating creative and influential policies and programs in the telecommunications

and information sectors.

While NTIA believes that open markets, competition, and industry development

serve the public interest, NTIA also works to ensure the public interest in other

ways. Foremost among these issues are those related to access to basic and advanced telecommunications services, the ability for people to control indecent or violent information coming into their homes, the transition to digital television, and

encouraging minority participation in telecommunications. NTIA has also played a

significant role in promoting electronic commerce and developing Internet policy,

discussed in a separate section below. Throughout its existence, NTIA has developed

and advocated policies to support the public interest in many areas such as these,

and will continue to do so.

NTIA frequently files comments with the Federal Communications Commission

(FCC) to represent the Administration’s position on a broad range of matters. This

year, for example, our filings included comments on the broadcast ownership rules;

‘‘truth-in-billing’’ on local telephone bills; the definition of ‘‘over the air signals’’ for

purposes of the Satellite Home Viewers Act; guidelines to promote the deployment

of broadband services; and tariffs relating to digital subscriber loops (DSL).

As mentioned above, NTIA is also increasingly called upon for its telecommunications expertise. We assist the White House and other Federal agencies in impleVerDate 20-MAR-2000 15:27 Mar 27, 2000 Jkt 010199 PO 00000 Frm 00029 Fmt 6633 Sfmt 6621 E:\HEARINGS\56610.TXT pfrm02 PsN: 56610
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menting the pro-competitive goals of the Telecommunications Act of 1996, addressing issues relating to new technologies, and promoting affordable access to the nation’s growing information infrastructure. NTIA also will be an integral part of a

congressionally mandated commission on Internet content as a result of the Children’s Online Protection Act.

Promoting Competition—NTIA continues to work towards eliminating barriers to

competition in the telecommunications industry while protecting consumers.

Throughout NTIA’s twenty-year history, this agency has been at the forefront of

pro-competitive telecommunications issues. Among other things, we contributed our

expertise to debates concerning first passage, then implementation, of the Telecommunications Act of 1996. This Act required the FCC to adopt regulations regarding such things as access charges, universal service to rural and other areas, interconnection, and broadband services. NTIA filed comments in each of these areas.

Going forward, NTIA will continue to articulate policies on a host of issues surrounding new, better and lower priced communications products and services. We

are continuing to advocate policies that spur innovation, encourage competition, and

create jobs. NTIA will suggest, for example, ways to encourage the availability of

new services to rural and underserved communities and will identify impediments

to the growth and vitality of industry sectors.

Addressing New Technologies—New technologies and new competitive providers

are also spawning new questions in domestic policy. Foremost among these issues

are those related to the growth of the Internet, the transition to digital television,

and the widespread availability of wireless communications devices. NTIA has met

these challenges in various ways. We often focus our limited resources on identifying and analyzing ‘‘over-the-horizon’’ issues well before they become widely known

even among telecommunications professionals. One such issue is that of ‘‘Internet

telephony,’’ the use of the Internet or Internet Protocol, in place of traditional long

distance telephony. NTIA sponsored a forum in 1997 to bring together technical and

industry experts with policymakers. In comments to the FCC that same year, NTIA

took the view that this technology should be allowed to grow and therefore should

not come under full common carrier regulation.

The intersection of industry sectors is also raising additional sets of issues regarding technological convergence. The telephone network, for example, is increasingly

used to transmit data, and the television provides viewers access to the World Wide

Web. As a result, we are seeing varied and unique combinations of previously discrete technologies. Such convergence presents major challenges to the existing regulatory infrastructure, and NTIA is examining new regulatory issues and challenges.

Competition, Diversity, and the Public Interest in Mass Media—NTIA has been active in mass media issues as well. Several years ago, we promoted inclusion of provisions in the 1996 Telecommunications Act calling for a voluntary television ratings

system and the requirement that all new television sets be equipped with a ‘‘VChip.’’ NTIA believes that the V-chip, in particular, will help parents choose which

television programming is suitable for their children. As the first television sets containing the V-Chip become available this year, we will lead efforts to monitor implementation of the V-Chip requirement.

NTIA has also worked to advance policies to protect and extend the public interest

in many other contexts as well. We believe that, as with other telecommunications

services, robust competition in the video services markets will serve the public interest by providing consumers with greater choices, lower prices, and better services.

Thus, for example, we wrote to the FCC last year regarding the matter of delivery

via satellite of television network signals to households unable to receive local

broadcast signals. We urged the FCC to adopt a definition and measurement of

‘‘over the air grade B signal intensity’’ to promote consumer choice and competition.

More recently, NTIA helped develop the Administration position on pending legislative proposals to modify the Satellite Home Viewer Act.

In developing mass media policies, competition often supports the additional goal

of providing a diversity of voices to be heard by the American people. NTIA has been

monitoring trends towards concentration in the ownership of radio and television

stations. The Telecommunications Act of 1996 relaxed broadcast ownership rules

and directed the FCC to review the public interest merit of remaining rules every

two years. In February of this year, NTIA wrote to FCC Chairman Kennard supporting relaxation of some broadcast ownership rules while maintaining others.

NTIA’s involvement with the mass media also extends to new broadcast services,

such as the upcoming transition to advanced television. Most notably, NTIA served

as Secretariat for the President’s Advisory Committee on the Obligations of Digital

Television Broadcasters, which presented its report in December 1998. In the role

of secretariat, NTIA did not direct or influence the recommendation of the committee. NTIA was pleased to be a part of this consensus-building process, which

28

brought together experts from the broadcasting industry, the public interest community, and academia to look at the future of television. Now that the work of this

committee is complete, NTIA plans to continue policy development in this field.

Minority Ownership—Another of NTIA’s goals is to enhance minority participation

in telecommunications. NTIA’s Minority Telecommunications Development Program

(MTDP) is undertaking specific efforts in this regard, including: (1) directing

ComTrain, a training program to assist new minority commercial broadcast owners;

(2) disseminating information and conducting seminars on ownership opportunities

in telecommunications (3) developing and commenting on legislative and regulatory

proposals that promote minority ownership in telecommunications; (4) working with

industry, and other government agencies on initiatives to increase public/private

sector assistance to minorities interested in ownership of telecommunications businesses and services; (5) promoting TELECAP, a study of capital development strategies for minority investment in telecommunications; and (6) tracking minority ownership in broadcasting. NTIA will also continue to analyze policies that affect minority participation in telecommunications.

Universal Access—Ensuring universal access to communications and information

networks also remains a high priority for NTIA. We have been leading efforts to redefine universal service to telecommunications services to ensure that rural Americans have access to the same new services being offered in urban and suburban

America. Over the past 40 years, rural Americans have gone from about 60 percent

having basic phone service to 94 percent today. This is due in large part to our commitment as a nation to universal service policies.

NTIA has undertaken numerous activities to promote universal service. In the

1995 and 1998 Falling Through the Net reports, NTIA documented the relatively

low penetration of telephone connections and computer and modem ownership in

rural and inner city communities. In a 1996 filing with the FCC, we recommended

that the Commission set a national subscribership goal for the year 2000 to ensure

that the telephone penetration level for all segments of society will be at least equal

to the national average existing as of November 1996. As the Telecommunications

Act of 1996 continues to be implemented, NTIA will continue to be a strong advocate for rural and underserved Americans, undertaking research, filing comments

with the FCC, and participating in a variety of fora to ensure that these communities have access to these services, and the opportunities they provide, at reasonable rates.

NTIA has vigorously argued for the connection of schools, libraries, and other

‘‘community access centers’’ to the National Information Infrastructure. This step is

integral to making access to advanced telecommunications and information services

more readily available. Technology will be central to the mission of our nation’s

schools in our country. Numerous studies demonstrate the advantages afforded to

students who have access to this technology. As the President has clearly stated,

in order to succeed in the 21st century, our children must attain technological

knowledge and tools. NTIA continues working to ensure that these tools are broadly

available to the public.

Electronic Commerce

In addition to the domestic policy issues listed above, NTIA is playing a pivotal

role in the Administration’s cross-cutting efforts to develop electronic commerce and

Internet policy. NTIA has been at the forefront of these issues, both domestically

and internationally. We were a key participant in the development of the Administration’s electronic commerce policy, reflected in A Framework For Global Electronic

Commerce, issued in July 1997. Since then, NTIA has been a key participant in the

White House’s Electronic Commerce Working Group on such issues of broadband deployment, online content, domain name management, and consumer protection. Finally, NTIA has also played a leading role internationally by representing the

United States government at bilateral discussions and at international fora. We

have advocated the tremendous benefit of the Internet and electronic commerce to

other nations’ economies, as well as the merits of a non-regulatory, market-driven

approach to the development of electronic commerce.

Domain Name Management—Since July 1997, NTIA has also been the lead agency responsible for implementing the President’s directive to privatize the management of Internet domain name system (DNS) functions and increase competition in

the registration of Internet domain names. The Statement of Policy on the Management of Internet Names and Addresses, which resulted from extensive public consultations, invited the private sector to create a new, not-for-profit corporation to

undertake management of DNS functions and was universally well received. The

private sector responded by creating the Internet Corporation for Assigned Names

and Numbers (ICANN) to assume this management responsibility.

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Currently, NTIA is working with ICANN under a Memorandum of Understanding

to develop the procedures and steps necessary to complete a smooth and stable transition from the government to the private sector by September 2000. NTIA is also

working with ICANN and Network Solutions to introduce competition in domain

name registration services. On April 21, 1999, ICANN announced the names of 34

companies that have been accredited to begin registering names in the .com, .net

and .org domains within the next 60 days. We believe that this competition will result in lower prices, greater choice, and better registration services for all users of

the World Wide Web and we look forward to our continued work on these issues.

We have had numerous discussions with the staff of House Commerce Committee

Chairman Bliley on the progress being made on this issue, and will continue to keep

them informed of developments in this area.

Privacy—NTIA has also been at the forefront in addressing privacy on the Internet. We played a leading role in encouraging private industry and privacy advocacy

groups to develop and adopt effective codes of conduct and technological tools to protect privacy on the Internet. Following extensive consultation with the private sector

in January 1998, NTIA and the Department of Commerce issued The Elements of

Effective Self Regulation for Protection of Privacy, which expresses our view that effective self regulation involves substantive rules, the means to ensure that consumers know the rules, that companies comply with them, and that consumers have

appropriate recourse when injuries result from noncompliance.

In June 1998, the Department of Commerce held a public meeting on privacy, coordinated by NTIA. Although industry was somewhat slow to take up the self-regulation challenge, there are signs that business leaders are beginning to understand

the need to take decisive action on privacy. For example, the Online Privacy Alliance (OPA), a consortium of information technology companies and industry associations, representing over 80 global corporations and associations, requires its members to adopt and post privacy policies consistent with OPA guidelines and participate in a self-regulatory enforcement mechanism provided through third parties

such as BBBOnLine and TRUSTe. We will continue to closely monitor their

progress.

NTIA has been involved in examining other issues of domestic privacy. For example, NTIA has met with leaders in the area of online profiling by Internet advertisers and is planning a meeting in July 1999, in collaboration with the Federal

Trade Commission (FTC), to examine the issue in a public forum.

Controlling Indecent and Violent Content—NTIA will continue to examine policies

that empower parents and other individuals to control the nature of information

that comes into their homes, particularly that which is indecent or violent. NTIA

supports the free flow of information over the Internet or through television and

radio. It therefore has directed its policy positions towards developing tools to allow

individuals to determine the types of material they receive.

NTIA has helped promote online content initiatives, such as ‘‘green spaces’’ to

help parents and others find Web sites suitable for their children. We were designated as the Secretariat for the Congressionally-appointed Child Online Protection

Act (COPA) Commission. We look forward to working with the Commission in producing a report on child online safety issues.

All of these efforts take on new importance, following the senseless killings at Columbine High School in Littleton, Colorado. NTIA will continue to work on national

policies to help citizens control the type of information their children receive, while

not impinging on fundamental free speech rights.

Consumer Protection—Another critical issue is online consumer protection. We

know that consumers will be reluctant to shop on the Internet unless they feel confident that they will get what they pay for online and that redress will be available

if they do not. Therefore, NTIA has facilitated private sector outreach in developing

US policy in this area.

NTIA is working both domestically and within a number of international fora to

foster the development of effective consumer protections for consumers participating

in electronic commerce. In cooperation with the FTC and other government agencies, we have also helped to shape the policy debate in the Organization for Economic Cooperation and Development (OECD) regarding the development of guidelines for online consumer protection. The issue of online consumer protection intersects with many other e-commerce issues in which NTIA is active, such as jurisdiction, privacy, security, and authentication. NTIA provides an important broad perspective on these issues when formulating policy approaches for electronic commerce

consumer protection.

International Advocacy—Finally, as the representative of the United States government, NTIA has been working to build international consensus for a non-regulatory, market driven approach to the development of electronic commerce. We know

30

that the Internet allows its users to exchange ideas and to experience the freedom

of public speech of political expression, unlike any other medium before it. In many

parts of the world, including Asia and Eastern Europe, the Internet is used by citizens to promote and spread the values of democratic government. Our efforts to promote greater use of the Internet and other new technologies should also facilitate

the promotion of democratic values.

NTIA is actively engaged in discussions, both bilaterally and in international fora,

to ensure that the ‘‘rules of the road’’ for the Information Superhighway are procompetitive, empower end users, and avoid establishing artificial impediments to

the conduct of global electronic commerce over the Internet. NTIA led the U.S. negotiations on Internet and electronic commerce issues at the International Telecommunication Union’s (ITU) Plenipotentiary Conference in November 1998. NTIA

has also been a leader formulating best practices for Internet infrastructure deployment in developing countries.

International Policy

In addition to Internet and e-commerce issues, NTIA plays a key role on a range

of other important international matters. As the representative of the U.S. government, we are working to attain an international consensus on open, competitive

telecommunications policy; develop international satellite communications policy;

and open foreign markets to U.S. industries. NTIA’s efforts in these areas are spurring the development of the telecommunications and information sectors on both a

national and global level.

International Telecommunications Policy—NTIA continues to play a lead role in

promoting and building international consensus for open, competitive telecommunications networks, which creates opportunities for U.S. businesses abroad and offers

market-based solutions to close the digital global divide.

We are a strong advocate for liberalization and privatization both in developed

and developing country fora. For example, NTIA promotes implementation of the

World Trade Organization’s (WTO) Basic Agreement on Telecommunications, which

calls for the liberalization of signing nations’ telecommunications markets. We have

also helped develop and implement training workshops for foreign telecommunications regulatory authorities, which focused on implementing the WTO Basic Telecommunications Agreement and covered a range of issues, including interconnection, spectrum management and universal service. NTIA has also served as a U.S.

Vice-Chair at both the ITU World Telecommunications Development Conference in

Malta and at the Plenipotentiary Conference held in Minneapolis last November. In

our view, the ITU conference would not have been such a success without the Federal support provided by the Congress.

Additionally, we have sponsored several international telecommunications summits in cooperation with the Telecommunications Industry Association (TIA) and the

International Trade Administration (ITA). These summits bring together government officials and telecommunications industry representatives to discuss major policy matters affecting specific regions. They provide a unique opportunity for foreign

government officials and business representatives to meet privately with senior U.S.

telecommunications industry representatives.

Currently, NTIA is planning the fifth Latin American Telecommunications Summit (LATS). Industry participants report that previous LATS have facilitated millions of dollars in sales and invaluable contacts with Latin American government

and industry representatives. In March 1999, NTIA, TIA and ITA also collaborated

on the second China-U.S. Telecommunications Summit (CATS) in Guangzhou,

China, where 32 U.S. companies met with Chinese telecommunications officials, and

Chinese telecommunications and IT companies. One company reported that the

summit provided ‘‘immediate opportunities that may not have developed without the

summit’’ and that they ‘‘were approached with proposals for joint ventures and set

plans for further high level negotiations for deals that could run into hundreds of

millions of dollars.’’

In addition to our activities in international fora, we have also pursued other

steps to open markets to U.S. companies. Recently, NTIA helped assess the anticompetitive impact of Deutsche Telekom’s interconnection policy. Working with U.S.

companies seeking to enter the newly-liberalized German telecommunications market and with other agencies, NTIA found that certain changes made market entry

by new service providers more difficult. NTIA has supported efforts to bring about

appropriate corrective action.

NTIA is also supporting the U.S. wireless industry in proposing multiple standards for third generation (3G) wireless systems. NTIA is advocating the industry’s

position through the ITU and is further advocating that other governments similarly support the outcome of the ITU deliberations. NTIA and other agencies have

31

successfully obtained assurances from the European Union Commission that the European Union member states will respect the recommendations developed by the

ITU for 3G systems and offer licenses on a technology-neutral and non-discriminatory basis.

Finally, NTIA has been an active and longstanding advocate for reform of international accounting rates (i.e., those charges paid by U.S. carriers, such as AT&T,

Sprint and MCI WorldCom to foreign carriers to terminate traffic at the foreign destination). NTIA seeks to lower accounting rates by bringing them in line with cost.

We have helped shape U.S. advocacy and outreach efforts at the ITU, where member countries are seeking to reach an agreement on accounting rate reform. In 1999,

NTIA has been concentrating its efforts on transitional arrangements for lesser and

the least developed countries, which may need more time to adjust their rates to

international competitive market pressures.

International Satellite Policy—NTIA also continues to play a pivotal role in the

development and implementation of the U.S. policy objective of increasing competition in the international satellite communications sector.

On April 15, 1999 Inmarsat was privatized, completing a process begun over 5

years ago. We expect that INTELSAT itself will be fully privatized in the next several years. Throughout, NTIA has advocated policy changes to increase global competition in the international satellite communications sector. Iridium recently stated

that it is able to offer service in 150 countries and expects this number to increase

to 230 by year end. Moreover, ICO Global has, as NTIA consistently insisted, issued

an initial public (stock) offering diluting control by former Inmarsat signatories and

two U.S. firms (TRW and Hughes) have become strategic investors in ICO. The

United States government, with NTIA’s leadership, has pursued a procompetitive

outcome in the face of opposition from other nations, and we are confident of achieving a similar result with INTELSAT’s privatization.

As a result of the International Anti-Bribery and Fair Competition Act of 1998,

NTIA will be conducting a study of any advantages accruing to the intergovernmental satellite organizations (INTELSAT and Inmarsat; the ISOs) as a result of

their unique status. NTIA’s report will examine any advantages affecting market access which result from government ownership, government contracts to the signatories, favorable tax or regulatory treatment for the signatories or from use of the

ISOs’ privileges and immunities. The study will be included in the Secretary’s report

to Congress.

Spectrum Management

Another of NTIA’s chief roles is to manage the radio frequency spectrum that is

used by Federal agencies in satisfying their legislatively assigned missions. In this

role, NTIA processes the Federal agencies’ requests for frequency assignments; provides Executive Branch leadership in coordinating both current and future spectrum

requirements among the Federal agencies and with the FCC; develops and promotes

positions at Treaty Conferences and other technical and management fora of the

International Telecommunication Union regarding United States spectrum management interests; and supports specialized administration initiatives that are designed

to achieve specific improvements in areas such as air traffic safety, federal spectrum

management procedures, protection of critical infrastructures, and public safety.

The fundamental goal of spectrum management at NTIA, as it is worldwide, is

to avert potential interference between users and to ensure that spectrum is available for future needs. NTIA’s spectrum coordination is therefore critical to the success of air traffic control, national defense, national resource management, and

other vital government functions.

Nevertheless, further coordination efforts are essential, particularly for public

safety purposes. The horrific incident in Littleton, Colorado last month demonstrates the need for further coordination among communications systems. We understand that a number of the local, state, and federal agencies lacked interoperable

communications systems, making the coordination of a response more difficult.

NTIA will be looking more closely in the coming year at new ways to manage spectrum to help coordinate public safety efforts.

Satisfying Spectrum Needs—NTIA continues to coordinate the spectrum needs of

the Federal Government by processing frequency assignment requests by some 53

Federal agencies. NTIA processes 300 to 400 such requests daily through an automated screening process to correct errors in the data and ensure conformity of rules

and regulations and through a coordination process with Federal spectrum-using

agencies via the Interdepartment Radio Advisory Committee (IRAC) to ensure interference free operation. In addition, NTIA also certifies spectrum availability of approximately 60 to 70 new major radiocommunications annually.

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NTIA also provides leadership for and manages the activities of the IRAC, a body

of representatives from twenty major Federal agencies. The IRAC has provided valuable advice to the Executive Branch on numerous spectrum policies and issues for

the past 75 years. NTIA has maintained a constant relationship with the FCC both

through the IRAC and directly to ensure compatible operations. This is especially

important today since the vast majority of the spectrum is no longer divided into

exclusive private-sector and Federal-sector bands, but is shared by all users in the

United States.

Spectrum Efficiency—The Federal Government constantly seeks to modernize its

radiocommunications, increase the amount of information transmitted per unit

bandwidth, and expand the use of more efficient digital technology and the use of

private sector radiocommunications. In order to improve Federal spectrum use,

NTIA uses the following management tools. First, NTIA requires that every Federal

Government user requesting a frequency assignment determine whether its need

can be met by a private or commercially available service provider. This policy has

helped encourage consideration of commercial services by many Federal Government agencies, including the Department of Defense.

Second, we promote the use of new spectrum efficient technologies. The Federal

Government is a leader in developing new spectrum-efficient techniques such as

narrowbanding, digital modulation, and spectrum sharing as well as in the use of

the highest quality spectrum-efficient equipment. These techniques will lead to

nearly double the number of frequencies available for land mobile communications.

NTIA has required that all Federal users move to more efficient 12.5 KHz equipment for mobile communications by 2005 or 2008, depending on the frequency bands

in which they operate.

Third, NTIA collects fees from Federal agencies for its spectrum management

services, pursuant to Congressional mandate. Congress initially directed NTIA to

begin a process to collect fees from federal agencies in the FY 1996 Appropriations

bill for NTIA. At the same time, Congress reduced the amount of direct appropriations to NTIA by the amount of the fees. Because of serious difficulties in collecting

fees in FY 1996, Congress subsequently passed a law directing Federal agencies to

cease using the spectrum if such fees were not paid. Based on this legislation, NTIA

and the Federal agencies entered into agreements in which the agencies agreed to

pay their prorated share. These fees cover 80% of the Spectrum Management’s funding requirement. Although we continue to experience some delay in payments because of the different methods of payment within the Federal agencies, NTIA has

received the requested funds from the agencies. We are pleased with the progress

that has been made with this program.

Increasing Private Sector Access to Spectrum—NTIA continues to work with the

FCC, the private sector, and Federal agencies to promote sharing of spectrum,

where feasible, with private sector users. Since 1978, NTIA has coordinated the reallocation of more than 5,000 MHz of spectrum to exclusive private use or greater

shared use with private sector entities. This is a significant amount of spectrum—

today’s entire wireless telephone system, including cellular and personal communications systems, is allocated only 170 MHz.

Spectrum reallocation and reimbursement—Over the past several years,

NTIA has begun to reallocate 235 MHz of spectrum from Federal Government use

to the private sector. The process for identifying spectrum for reallocation was based

on a two year study which took into account two major factors: (1) the impact on

the Federal agencies, in terms of mission, costs, and potential reduction of services

to the public, and (2) the benefits expected to be realized by the public. Based on

the extensive planning and coordination with the FCC, government agencies, and

the public to produce this report, NTIA identified an additional 35 MHz of Federal

spectrum to transfer to private use. NTIA has already reallocated 195 MHz of the

previously identified spectrum. The remaining spectrum is scheduled for auction by

the FCC by 2002, in accordance with the Balanced Budget Act of 1997.

NTIA has also recently transferred spectrum to the private sector to support satellite systems. During the International Telecommunication Union World

Radiocommunication Conference (ITU/WRC) in October 1995, NTIA coordinated the

release of 3 MHz of Federal Government spectrum for exclusive use in mobile satellite systems (low earth orbiting satellites, or LEOs). NTIA has also arranged for

shared use of 360 MHz of Federal Government spectrum for mobile satellite links

for big LEOs.

Most recently, NTIA identified 20 MHz of spectrum for reallocation by the FCC

to private sector uses and assignment by competitive bidding in accordance with the

Balanced Budget Act of 1997. Proceeds of these auctions were originally to be contributed towards balancing the Federal budget by fiscal year 2002. Federal agencies’

relocation costs associated with this reallocation are in excess of $ 1 billion. Under

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the recently enacted defense authorization statute, these affected Federal agencies

will be reimbursed for their relocation costs by the winners of the spectrum auctions

of the 20 MHz and the previously identified 1710-1755 MHz band. NTIA will work

closely with the Office of Management and Budget, the FCC, and affected Federal

agencies to see that this process is successful. We appreciate the Commerce Committee’s support in securing this legislative authority.

Planning for Future Spectrum Needs—Reinventing the spectrum authorization process—NTIA began a program in 1993 to develop an automated Federal

spectrum management system to provide a standardized, automated method for

Federal agencies to submit applications for spectrum support, select spectrum that

is interference free, and validate that the spectrum requested is within the rules

and regulations governing spectrum authorization. This system will allow NTIA to

make the spectrum management process more efficient and responsive, more accessible, and less bureaucratic. NTIA introduced the Joint Spectrum Management System for windows (JSMSw) in March 1997. Based on feedback the Federal agency

users, JSMSw has been revised to make it efficient and effective. Improvements will

continue on JSMSw to make it even more effective and to make actual use of spectrum more efficient. JSMSw provides spectrum management tools to spectrum managers in the field so that they can manage their own use of the spectrum, use the

spectrum more efficiently, and more rapidly obtain spectrum to meet their needs.

Seventeen seminars have been conducted by NTIA for Federal agency spectrum

managers in the use and application of JSMS.

Public Safety Needs—One of the most pressing Federal spectrum needs is that

of public safety. Under Congressional leadership, NTIA and the FCC established the

Public Safety Wireless Advisory Committee (PSWAC) in 1995. The Committee was

composed of appointees from Federal, State, and local governments and private sector public safety organizations. The goals were to evaluate the wireless communications needs of public safety agencies through the year 2010 and recommend possible

solutions to the lack of available spectrum and interoperability problems. In September 1996, PSWAC submitted a report outlining the public safety community’s

need for additional spectrum, improved interoperability, more flexible licensing policies, and increased sharing of spectrum resources. Many of the PSWAC recommendations have now been adopted.

The FCC is currently conducting a rulemaking to provide the state and local public safety community with 24 MHz of spectrum that will be made available when

broadcast TV migrates to other portions of spectrum as part of the deployment of

digital television. NTIA is working with the FCC to develop procedures for licensing

of this spectrum and to provide a means to establish interoperability between state,

local and the Federal government. To this end, NTIA will be participating in the

FCC’s recently established Public Safety National Coordination Committee. The advisory committee will develop an operational plan to achieve national interoperability, as well as technical standards to achieve full interoperability and network

integration. The work of the committee is to be completed by September 2000.

As provided for in the FY 1999 budget, NTIA is increasing its public safety staff

to identify the long-range spectrum requirements for the next 10 years and develop

a strategy to provide sufficient spectrum for growth of current services, advanced

technologies, and interoperability requirements. Through these efforts, we will continue to ensure that spectrum is available for Federal Government and the public

safety community to meet the needs of law enforcement, national security, safe airways, disaster and environmental control, and the promotion of safe living conditions.

Global Positioning System (GPS) Expansion.—NTIA is also addressing issues

that will protect the radio spectrum currently used by the global positioning system

(GPS) and facilitate the expansion of GPS services. GPS is a worldwide utility that

provides precise position, velocity, and time information anywhere in the world.

GPS information is used by the public and private sectors in such areas as aviation,

maritime and waterways, public transportation, railroads, telecommunications, surveying, defense, weather, environmental protection, and law enforcement.

In order for GPS to be used reliably and confidently as a worldwide utility, the

radio spectrum within which it operates must be protected. NTIA is responsible for

leading the efforts in preparation for the World Radio Conference 2000 to protect

the radio spectrum used by GPS.

NTIA is also dedicated to making spectrum available for the expansion of GPS.

The President’s FY 2000 budget would provide for two new signals for civilian uses

of GPS. One of the signals will be available for general applications. The other signal will be located in a portion of the spectrum allocated to aeronautical radionavigation services for aeronautical safety applications.

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NTIA will be addressing the associated international spectrum issues at forthcoming technical fora and the World Radiocommunications Conference 2000. NTIA

will also continue its efforts to work with the Department of Transportation, the Department of Defense, the Department of State, the FCC, and the private sector to

ensure that spectrum is available in the future for this purpose.

Infrastructure Protection—Finally, NTIA has taken a leading role in protecting

the national information infrastructure. As information and telecommunications systems become increasingly critical to our daily communications and our national

economy, protection of this infrastructure is also becoming a priority for the nation.

In May 1998, the President issued a Decision Directive (PDD-63) to create a public/

private partnership to address the nation’s need to protect our critical infrastructures from purposeful attacks. PDD-63 designated the Department of Commerce as

the lead agency to conduct a vulnerability assessment to protect the nation’s information and communication infrastructure. The Secretary of Commerce assigned

NTIA the responsibility to carry out this program.

NTIA is planning to undertake numerous activities as lead agency. Among other

things, we will be working with industry to raise awareness of the threat to, and

vulnerabilities of, their infrastructure. NTIA will also work with industry to develop

plans to mitigate the risks, deal with attacks, and reconstruct damaged infrastructure. Additionally, we will encourage the adoption of security standards and best

practices, not only within the United States, but also among our major industrialized partners. Our goal is to harmonize our efforts with other countries and take

best advantage of their developments in technology and policy because this infrastructure is inherently global.

Throughout this process, we will be working closely with industry, as most of the

information and communications infrastructure is owned and operated by the private sector. We are working with three key trade associations—the Information

Technology Association of America (ITAA); the United States Telephone Association

(USTA) and the Telecommunications Industries Association (TIA). In addition,

NTIA has established close working relations with other government agencies,

which will contribute to the effort. These include the National Communications System (NCS), the President’s National Security Telecommunications Advisory Committee (NSTAC), the Federal Communications Commission’s Network Reliability

and Interoperability Council (NRIC) and the FBI’s National Infrastructure Protection Center (NIPC). These close working relationships should ensure the cooperation

of industry and government in our efforts to protect the nation’s infrastructure.

Telecommunications Research

NTIA is greatly assisted on spectrum management and other telecommunications

issues by its laboratory in Boulder, Colorado. The laboratory, operated by NTIA’s

Institute for Telecommunication Sciences (ITS), performs state-of-the-art telecommunications research to support NTIA and Department of Commerce goals. It

also conducts specific research under reimbursable agreements with other Federal

agencies and under cooperative research agreements with private sector partners.

ITS is an active contributor to many agency endeavors, including those dealing

with spectrum efficiency and sharing issues, digital television, broadband wireless

technology and convergence issues, advanced video and voice performance testing

and standards development, Internet technology issues, and critical information and

communication infrastructure research and development. Most recently, ITS provided essential information with respect to signal contours for purposes of the Satellite Home Viewers Act and related proceedings.

The Value of Federal Research—ITS’s research laboratory plays a critical role in

telecommunications research because it is is unbiased and cuts across government

and industry needs. In many instances, ITS’s input is essential to resolving pressing

technical questions that can’t be resolved by industry. For example, ITS’s research

laboratory recently assisted the FCC in the development of the national digital television channel assignment plan to facilitate the introduction of Digital Television

(DTV) across the United States. Without this work, digital television channel assignments could not have been made in a timely and effective way, potentially costing television broadcasters millions of dollars due to increased interference. Private

sector experts probably could not have done this work in an unbiased fashion, since

their livelihood depends on the continued affiliation with their broadcast customers.

In another recent example, ITS participated in international frequency band allocation proceedings for direct satellite audio broadcasts. ITS was tasked to determine

the viability of the proposed bands in the United States. ITS’s measurements, which

showed that the satellite signals could not be received, prevented the investment of

billions of dollars in potentially unusable satellites. The private sector probably

could not have provided such measurements, because they would be considered biVerDate 20-MAR-2000 15:27 Mar 27, 2000 Jkt 010199 PO 00000 Frm 00037 Fmt 6633 Sfmt 6621 E:\HEARINGS\56610.TXT pfrm02 PsN: 56610
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ased and would not have had the same influence as Government measurements. Additionally, industry did not have the means to make these measurements in a short

time frame.

Over the years, there have been numerous external and internal reviews of

NTIA’s laboratory. All these reviews concluded that there is a compelling need for

a centralized Federal telecommunications laboratory that serves the public interest

by undertaking uniquely governmental research functions in a cost-effective fashion.

The ITS laboratory is essential because it is guided by the public interest, not profit

motives. A centralized laboratory is also crucial to preventing the duplication of telecommunications research efforts among Federal agencies.

Review of Telecommunications and Information Technology (IT) Systems—ITS also

provides expert advice to government agencies with regard to telecommunication

and IT planning and implementation. The laboratory helps these agencies provide

cost-effective and interoperable systems to accomplish their missions. For example,

ITS provided the U.S. Forest Service a national strategic plan for upgrading telecommunications and IT systems across all National Forests; assisted the Department of Transportation in developing a national Intelligent Transportation System

to aid traffic control and general public transportation safety; analyzed Federal Railway Administration telecommunication requirements for rail safety and positive

train control systems; evaluated and designed Federal Aviation Administration augmentations to Global Positioning System capabilities for air traffic control and ship

navigation; and conducted engineering studies and developed standards for the National Communications System to assure interoperability and continuity of operations during national emergencies.

ITS is also playing a central role in the Department of Justice’s Interoperability

Standards Task Force (a consolidated effort of several Justice information integration programs), which is aimed at establishing telecommunications interoperability

and effective information sharing among agencies in the local, State, and Federal

criminal justice and public safety communities. ITS has the responsibility for identifying and analyzing the user needs at all levels and for proposing a comprehensive

set of interoperability standards that will allow a nationwide criminal justice and

public safety enterprise network.

Spectrum Use—Finally, NTIA’s laboratory provides significant information on

spectrum use. ITS maintains the Nation’s database of radio propagation characteristics for the entire radio spectrum to help improve radio communications in the U.S.

and internationally. The database provides the foundation for models used by NTIA

to prepare domestic and international radio standards and spectrum sharing agreements, by NTIA and the FCC in national spectrum management, and by the broad

community of private sector and government users for planning, designing, and implementing radio telecommunication systems. This information also facilitates work

on advances in telecommunications technology—such as personal communications

services and high definition television--to benefit all citizens.

ITS also provides comprehensive measurements of spectrum use and occupancy.

These measurements provide critical information for spectrum policy and regulation

which otherwise would be based solely on information contained in licensing documents and other records. This measurement capability is also used to solve difficult

radio interference problems. Suspected radio interference between Government

agencies, or the Government and private sector, can become contentious. ITS, because of its neutrality and expertise, is able to establish the trust of the parties and

develop the evidence regarding any suspected interference. ITS has been able to

quickly resolve many interference problems that other Government agencies and

private sector organizations were not able to resolve.

ITS is proposing in FY 2000 a Broadband Initiative to develop the fourth generation of its Radio Spectrum Measurement System. This work is required to keep pace

with the changes in spectrum use brought about by the deployment of new technologies such as spread spectrum wireless communications. Without the initiative,

ITS will not be able to maintain its capability to make comprehensive spectrum use

and occupancy measurements and to quickly resolve suspected interference by Government systems to private sector operations.An FY 2000 initiative has been proposed for ITS to lead efforts in Critical Infrastructure Protection (CIP) research related to telecommunications and information technology. With its tremendous expertise and experience, ITS is a natural candidate to lead these efforts. ITS will develop

a process for characterizing the assets of existing infrastructures, work with other

Federal agencies and industry to identify threats and vulnerabilities to specific

parts of the infrastructure, and define and evaluate mitigation strategies based on

existing and emerging products and technologies.

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Grant Programs

Another significant area of NTIA’s activities is its two grant programs, which help

expand access to new technologies. Having documented the ‘‘digital divide,’’ NTIA

is also seeking to bridge the divide between those with access to new technologies,

and those without. The Telecommunications and Information Infrastructure Assistance Program (TIIAP) provides matching grants to non-profits and public entities

that are using new technologies in innovative ways to reach those in rural, low-income, and traditionally underserved areas. NTIA’s Public Telecommunications Facilities Program (PTFP) supports the maintenance and improvement of public broadcasting facilities throughout the United States and its territories. Both programs are

ensuring that Americans have greater access to the benefits provided in our digital

age.

Telecommunications and Information Infrastructure Assistance Program—Since

1994, TIIAP has helped underserved communities use information infrastructure to

improve the quality of, and the public’s access to, lifelong learning, health care, public safety, and other community based services. TIIAP provides critical seed money,

without which many innovative and vital applications would not take root and grow

in these communities. We have awarded 378 grants to schools, libraries, hospitals,

State and local governments and other non-profit entities in all 50 states, the District of Columbia and the U.S. Virgin Islands.

This competitive program has been able to award only one out of every 14 applications. Over the first five years of the program, NTIA received almost 5400 applications. Approximately $118 million in federal grants have been matched by more

than $180 million in non-federal funds. In 1998 alone, TIIAP leveraged $18.5 million in federal funds matched by $24 million in private, State and local funding and

awarded 46 grants from over 750 applicants to projects in 35 states and the District

of Columbia. For 1999, TIIAP has received 702 applications seeking over $278 million in grant funds. These applications represent more than sixteen times what

NTIA can fund, making TIIAP one of the most competitive federal grant programs.

TIIAP has an excellent track record of supporting highly successful information

infrastructure projects in underserved communities. The program leverages a modest federal investment into significant community investments and provides national models for public and nonprofit organizations to follow.

For example, through a TIIAP grant to the City of Winston-Salem, fire department vehicles responding to emergencies in Winston-Salem and surrounding communities have access to graphic information about the emergency sites as they respond. Detailed images of all city buildings have been created and made accessible

in the fire department vehicles by using technologies such as document imaging, geographic information systems (GIS), mobile computers, and global positioning technology. By giving fire fighters better decision-making options during emergency responses, the system enables them to fight and contain fires more effectively, to save

lives and property, and, in some cases, prevent fires from spreading to other locations. This project has received international acclaim—it was recently selected as a

finalist in the prestigious Global Bangemann Challenge, which honors ‘‘the best information technology projects that cities can show.’’

A TIIAP grant has also provided Internet connectivity for chronically-ill children

at the University of Mississippi Medical Center. This connectivity enables these patients to continue their education and maintain contact with peers, teachers, and

parents. Through the TIIAP grant, both hospitalized and homebound patients can

use laptop computers and desktop video conferencing to gain access to their teachers, their classroom assignments, and their friends and families. Its impact on their

emotional well-being, as well as their continued classroom involvement, is invaluable.

The benefits of the TIIAP grant program were confirmed recently by an independent evaluation by Westat of projects funded in the program’s first two years.

Among other things, the evaluation found that 90 percent of the projects are still

in operation, and that the majority of projects reported meeting or exceeding nearly

all of their objectives. Most important, the projects are sustaining themselves beyond the federal grant period and are generating new funds. Each grant dollar has

generated another four non-federal dollars to support information infrastructure. In

addition to matching funds, the grants led to investments that expanded their services beyond the original scope and further investments to support spin-off activities.

The projects’ role as national models further leverages the TIIAP investment. Extensive outreach by the projects in response to the tremendous interest is spreading

the benefits of the TIIAP grants to other communities. The 206 organizations surveyed in the independent study reported responding to 79,000 unsolicited requests

for information and hosted visitors representing over 5,000 organizations.

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The evaluation also found that TIIAP projects help communities in need and serve

a diverse public. Sixty-five percent of the projects involved rural areas, while 48 percent served the inner cities. Fifty-nine percent reached those living in extreme poverty and 42 percent involved users with disabilities.

TIIAP grants provide the catalyst for the vast majority of these programs. Seventy-five percent of grant recipients reported to Westat that their projects never

would have happened without the TIIAP funds. Of the remaining 25 percent, 90

percent indicated that, without TIIAP support, the projects would have either

reached significantly fewer people, or have been substantially delayed, or dramatically reduced their range of services.

For a modest federal investment, TIIAP is providing a tremendous body of knowledge on which policy makers, community leaders, and technologists in the private,

public, and nonprofit sectors can rely as they work to ensure that advanced telecommunications and information technologies reach the farthest corners of our nation. The excellence of the TIIAP-funded projects is reflected in the nationwide and

international acclaim they receive. For example, four TIIAP grant recipients were

recently named on a short list of finalists in the Global Bangemann Challenge,

which honors the best information technology projects that cities can show. TIIAP

projects have also received awards from the NII/GII awards competition, the National Rural Health Association, the National Association of Development Organizations, the Medical Library Association, and the National Association of Counties,

among many others.

Most importantly, TIIAP is strengthening our communities by revolutionizing how

we learn, how we take care of our sick, how we control crime, and how we create

opportunities for people most in need.

Public Telecommunications Facilities Program (PTFP)—NTIA’s PTFP has helped

public broadcasters maintain and expand their equipment and facilities for the last

35 years. The grants achieve three Congressionally mandated objectives: (1) extend

delivery of public telecommunications services to as many American as possible by

the most effective and efficient means; (2) increase public telecommunications services and facilities available to, operated by and owned by minorities and women;

and (3) strengthen the capability of existing public broadcasting stations.

Facilities funded by PTFP have given millions of Americans access to the educational and cultural programming of public broadcasting. With the program’s assistance, a public television signal now reaches about 95% of our nation’s population

and public radio reaches approximately 90% of the population. NTIA and its predecessor agencies have assisted noncommercial entities to acquire the necessary hardware to produce and broadcast public television and radio programs, radio reading

services, and descriptive video services for the disabled. NTIA also supports the delivery of instructional and educational services by a broad array of community institutions.

Since PTFP’s inception, over $500 million in federal funds has been invested in

the public broadcasting infrastructure. Local communities have provided upward of

another $500 million dollars to match the federal grants. In 1998, NTIA awarded

$19.9 million for 115 projects in 41 states to facilitate the expansion of public broadcasting services to communities across the country and ensure the continuation of

service. After receiving clearance from the FCC, NTIA recently awarded three addition projects from 1998. A number of the awards will expand access to public radio

to 450,000 persons who presently do not receive any signal. Communities such as

Santa Rosa, CA; Wilmington, DE; Kilauea Town, on the island of Kauai, HI;

Leonardtown, MD; Manteo, Buxton, and Waves, NC; Manahawkin, NJ; Lund and

Ely, NV; the Duck Valley Reservation of the Shoshone-Paiute Tribes in Owyhee,

NV; Defiance, OH; and Vernal/Uintah, UT, will receive either their first public radio

service or greatly expanded service.

The President’s FY 2000 budget requests $450 million over 5 years to go towards

the conversion of digital television. In April 1997, the FCC issued regulations requiring broadcasters to transition from analog to digital broadcasting. Public broadcasters must convert to digital broadcasting by May 1, 2003. This deadline allows

the analog spectrum to be turned over to commercial users by the 2006 date established by Congress and mandated in the Federal Balanced Budget Act of 1997. The

President’s budget requests advance appropriations for a multi-year effort to allow

advance planning and certainty in the public broadcasting system’s transition to

digital broadcasting. In FY 2000, the Administration is seeking $35 million from

Congress to the PTFP. The $35 million request is part of the $450 million initiative,

now in its second year. The initiative seeks funds in both the Corporation for Public

Broadcasting and PTFP. Funding through PTFP will be targeted for digital transmission equipment, while funding for Corporation for Public Broadcasting will support necessary expenses related to digital program production and development.

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Public broadcasting stations are undertaking an enormous new financial burden as they transition to the digital format. Over $700 million is needed for the nation’s

public television stations to meet the FCC’s minimum digital broadcast pass

through requirements. The conversion will place an enormous strain on the already

precarious budgets of many of the public broadcasting stations. Federal assistance

is critical during this transition period. For almost half the public television licensees, the cost of conversion to digital is projected to exceed their annual revenues.

If stations are forced to convert without assistance, many stations will be forced to

go off the air or reduce hours of operation, adversely affecting programming quality

and diversity.

PTFP will take special measures to assure that the full potential of the new digital technology is used to provide the most economical means possible of providing

public broadcasting services. Special consideration will be given to stations broadcasting in under served markets, especially those in rural, remote, or disadvantaged

communities. In addition to digital conversion assistance, PTFP will continue its

traditional support to expand the availability of public broadcasting services to

those areas without such service. PTFP also will assist public radio and television

stations to continue providing their existing analog service during the federally

mandated transition period.

Since September, NTIA has awarded fifty-two awards to assist public television

stations with the purchase of digital-ready or digital-compatible equipment. Three

of these projects—KCTS-TV, Ch. 9, Seattle; KQED-TV, Ch. 9, San Francisco; and

KCET-TV, Ch. 28, Los Angeles—will allow stations to complete their full digital conversion. Another grant will permit KERA-TV, Ch. 13, Dallas, TX, to share the cost

of a digital TV antenna, thus allowing the station to remain on its current tower

and greatly assist in its digital conversion.

As a result of an emergency grant to the Mississippi Authority for Education Television, the state network restored analog public television service to the Jackson

area and allowed the Jackson station to broadcast experimental digital programming. NTIA funded a new tower and transmission equipment in response to the collapse of the commercial tower on which the public television station’s antenna had

been located.

These examples demonstrate NTIA’s efforts to preserve public broadcasting, bring

service to remote and rural communities, and encourage efficient technologies. NTIA

will follow the same objectives as we assist public television with digital conversion

and ensure that all public television transmitters are converted by 2003.

Agency Operations

NTIA is also committed to improving agency operations and management. Beginning in 1990, Congress passed several major pieces of legislation governing the way

Federal departments and agencies operate, specifically:

—the Chief Financial Officers Act of 1990, as amended by the Government Management Reform Act of 1994;

—the Government Performance and Results Act of 1993; and

—the Clinger-Cohen Act of 1996.

NTIA has made significant progress in implementing these laws. The Chief Financial Officers Act requires Federal departments and agencies to prepare annual

financial statements and have those statements audited in accordance with generally accepted auditing standards. The Department of Commerce is committed to

improving financial information and financial management capabilities. NTIA was

one of the first Commerce agencies to receive an unqualified opinion on its financial

statements for 1993, and has continued to receive unqualified opinions on all subsequent statements. Since 1995, the audits conducted have been formal full scope audits. The unqualified opinions confirm that NTIA’s financial statements fairly

present the financial position of the agency.

Under the guidance provided by the Government Performance and Results Act

(GPRA), NTIA has established a strategic planning process and developed an agency

strategic plan. During the past year, NTIA’s senior managers have focused on redefining NTIA’s goals and objectives and succeeded in reducing the agency goals from

seven to four. A continuing emphasis has been placed on measuring performance,

both internally and at the Department level. NTIA’s internal planning process is designed to complement and reinforce the Department of Commerce planning efforts.

NTIA managers have embraced the planning process as a way to improve our management and maximize the return to the public from the agency resources available.

NTIA is also supporting the Department’s efforts to properly implement the philosophy of the Clinger-Cohen Act. Clinger-Cohen (also called the Information Technology Management Reform Act) is designed to improve our management of the information technology investments necessary to enable us to fulfil our missions. The

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information technology investments NTIA makes are directly linked to our business

needs. The strategic and operational information technology plans directly support

for the agency’s goals and objectives. NTIA has processes in place designed to ensure that all major information technology investments are evaluated in terms of

the overall business value to the organization. In addition, NTIA’s laboratory (ITS)

is performing a Telecommunications Assessment across all bureaus and agencies of

the Department to provide the current status of telecommunications and information technology assets for Commerce management, and to allow informed decisionmaking on future evolutions in the infrastructure.

NTIA has declared two information technology systems to be mission critical for

year 2000 efforts: the Spectrum Frequency Management Systems and the Grants

Processing System. Both these systems are year 2000 compliant. NTIA is in the

process of developing year 2000 contingency plans for its own essential operations

and working with the Department of Commerce to ensure telecommunications and

other services are available for essential personnel.

CONCLUSION

NTIA serves a critical role in developing and promoting policy in all areas relating

to the telecommunications and information sectors. We have taken the lead, both

on the domestic and international front, in setting forth positions in spectrum management, universal service, broadband networks, global competition, and electronic

commerce—to name a few key areas. Given the increasing importance of these

issues to our domestic and global economy, NTIA is playing an increasingly significant role in its position as representative of the U.S. government and Executive

Branch advisor.

As NTIA Assistant Secretary for six years, I continue to be proud of the role we

play and the accomplishments we have achieved. We hope to continue to address

the myriad new issues in telecommunications and information technology with the

same level of expertise and thoroughness that we have always displayed. This objective has become increasingly difficult, however, as the issues and demands on NTIA

have increased, and the staff levels have decreased. I fear that NTIA’s leadership

in the dynamic and expanding telecommunications and information arena could be

compromised without adequate resources. We therefore appreciate the support of

this Committee as it considers our FY2000 Budget Estimates so that NTIA can continue to play a leadership role.

APPENDIX A

NTIA COMMENTS ON MAY 5, 1999 DISCUSSION DRAFT ‘‘NTIA REAUTHORIZATION ACT OF

1999’’

The Administration offers the following comments on the Discussion Draft ‘‘NTIA

Reauthorization Act of 1999’’ (dated May 5, 1999):

The funding level contained in the Discussion Draft falls short of the President’s

request for fiscal year 2000 and does not reflect the fiscal year 2000 budget priorities for NTIA. The President’s fiscal year 2000 budget provides a funding level of

an estimated $17.2 million for salaries and expenses. The President’s budget request

acknowledges the increasing demands on NTIA’s resources and personnel as a result of the rapid growth of the telecommunications and information technology sectors of the economy. The President’s request also includes additional funding to implement World Trade Organization requirements; enhance Federal radio spectrum

management and efficiency; undertake a new broadband initiative for the telecommunications research facility at Boulder, Colorado; and implement Presidential

Decision Directive-63 on Critical Infrastructure Protection. The Administration

notes that Congress has directed NTIA to conduct 5 or more studies and staff a new

Commission within the next year. Moreover, pending legislation would direct NTIA

to conduct 3 or more additional studies.

The Discussion Draft does not include funds for the Telecommunications and Information Infrastructure Assistance Program (TIIAP). TIIAP provides matching

grants on a competitive basis to community-based, non-profit and other public organizations, to demonstrate and promote the practical applications of new telecommunications and information technologies that improve the quality of, and the

public’s access to education, health care, public safety and other community-based

services. In the five years of the program, NTIA has awarded 378 grants totaling

$118 million, matched by an additional $180 million from the grantees and their

private sector and State and local government partners. NTIA grant recipients have

been recognized for their excellence on a national and international level by the

Global Bangemann Challenge, the National Rural Health Association, the National

40

Association of Development Organizations, the Medical Library Association, the National Association of Counties, and the NII/GII Awards. The President’s fiscal year

2000 budget requests $20 million for this program.

Although the Public Telecommunications Facilities Program (PTFP) has not traditionally been authorized through NTIA’s authorization legislation, please note that

the President’s fiscal year 2000 budget also requests $35 million for this program.

PTFP provides matching grants on a competitive basis to community based public

telecommunications entities to plan and construct facilities that provide educational

and cultural service to the public. Additional funding has been requested for fiscal

year 2000 to assist public broadcasters with an orderly transition to digital broadcasting within the Congressionally mandated deadline for the transition.

The Discussion Draft would also require Federal agencies to reimburse NTIA for

all of the costs associated with the agency’s spectrum management function. Since

fiscal year 1997, the Federal agencies have been reimbursing NTIA for a portion of

the costs associated with these functions. The current reimbursement rate for fiscal

year 1999 and the proposed rate in the President’s fiscal year 2000 budget request

is 80 percent. The Administration believes the 80 percent reimbursement/20 percent

appropriated funds strikes the correct balance for the funding of its spectrum management functions for the following reasons. As the President’s principal adviser on

telecommunications, NTIA performs certain spectrum management functions on behalf of the well-being of the nation rather than directly related to spectrum management performed on behalf of the Federal agencies. Moreover, the 20 percent appropriated funds allows NTIA to retain its independence, objectivity and flexibility to

perform spectrum management functions that might not be within the narrow interests of the Federal agencies, but are necessary in the national interest, e.g., spectrum efficiency. These appropriated funds also provide bridge funding for spectrum

management activities during the first quarter of the year as agency payments are

received.

The Discussion Draft would also privatize NTIA’s telecommunications research facility in Boulder, Colorado. Prior reviews of NTIA’s Institute for Telecommunication

Science (ITS) to determine its value to the nation have all reached the conclusion

that there is a compelling need for a centralized, cost-effective, unbiased Federal

telecommunications presence that serves the public interest and performs unique

governmental engineering research. Further, the Administration believes that privatization of ITS would be detrimental to the national interest for the following reasons. First, privatization of ITS through the sale of the laboratory would not result in

any substantial revenues. The underlying laboratory assets, e.g., telecommunications measurement and testing equipment, are very specialized prototype equipment with little or no market value. The true value of the laboratory resides in the

knowledge and expertise of its highly trained and specialized senior engineering and

scientific staff, many of whom could be expected to leave the laboratory for other

Federal employment locally (e.g., the Boulder laboratories of the National Institute

of Standards and Technology or National Oceanic and Atmospheric Administration)

or elsewhere to complete their Federal careers, rather than remain automatically

with a privatized entity.

Second, privatizing the laboratory would eliminate an invaluable national telecommunications resource. ITS provides the Federal Government’s only impartial

telecommunications research and engineering capability to support the nation’s telecommunications policy development efforts and Federal spectrum management mandate. For example, ITS has provided essential technical support in the following

telecommunications policy areas: National Digital Television Channel Assignment

Planning; spectrum occupancy and interference analyses to support national and

international (e.g., World Radio Conference) spectrum planning requirements; Satellite Home Viewers Act network coverage analysis; quick response measurement

support to resolve potential safety-of-life interference; and audio and video telecommunication quality of service standards development.

Third, if ITS were no longer available to conduct this research, NTIA would need

additional Federal funding to accomplish its essential technical research work. For

a direct appropriated investment in ITS of approximately $3 million, the Federal

government and the private sector receive approximately $10 million in research results through reimbursable telecommunications research work for other Federal

agencies (e.g., Departments of Defense, Justice, Transportation) and through cooperative research activities with the private sector (e.g., US West, BellAtlantic, PacTel,

BellSouth, GTE, Hewlett-Packard, Netrix, Integrator Corporation, Audio Logic,

American Automobile Manufacturing Association).

Finally, the Administration believes that a legislative mandate to review the longterm efficiency of NTIA is unnecessary. It is our understanding that the DepartVerDate 20-MAR-2000 15:27 Mar 27, 2000 Jkt 010199 PO 00000 Frm 00043 Fmt 6633 Sfmt 6621 E:\HEARINGS\56610.TXT pfrm02 PsN: 56610
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ment’s Inspector General and the Comptroller General already have such authority.

Moreover, during the past six years, NTIA has worked cooperatively with the Department’s Inspector General on a number of studies examining the agency’s management practices and efficiencies. For example, in 1997, the Office of the Inspector

General conducted an audit of NTIA’s Office of Spectrum Management (OSM) and

reviewed in detail OSM’s funding, fee collection and staffing practices. The Office

of Inspector General determined that ‘‘no significant conditions’’ exist meriting the

issuance of an audit report, but did note that OSM needed additional personnel and

resources to meet its current and future needs and more timely reimbursement payments from Federal agencies. Since that report, OSM has worked to address these

issues. Most recently, the Office of the Inspector General completed audits of NTIA’s

grant programs and found that both programs promote merit-based decisions. NTIA

has already implemented the Office of the Inspector General’s recommended improvements to the grant award processes. NTIA has also worked cooperatively with

the General Accounting Office in its examination of federal funding for universal

service, technology programs for schools and libraries, and law enforcement assistance, and on spectrum management issues involving the Department of Defense.

APPENDIX B

RECENT CONGRESSIONAL STUDIES FOR THE NATIONAL TELECOMMUNICATIONS AND

INFORMATION ADMINISTRATION

Congress in recent years has authorized the National Telecommunications and Information Administration (NTIA) and Department of Commerce certain mandates.

• As a result of the Child Online Protection Act (COPA), NTIA will serve on a 19-

member commission to study methods to reduce access by minors to material

deemed harmful on the Internet. Further, NTIA, is required to staff the Congressionally-appointed Commission. The Commission has one year to submit a

report to Congress. • As a result of the Digital Millenium Copyright Act, NTIA is required to consult

with the Register of Copyrights regarding infringing uses of copyright material;

NTIA is required to consult with the Register of Copyrights and report to Congress on the Act’s effect on encryption, technological measures and protection

of copyright owners; and consult with the Register of Copyrights and report to

Congress on the development of electronic commerce and associated technology. • As a result of the Next Generation Internet Research Act of 1998, the Secretary

of Commerce is directed to sponsor a National Academy of Sciences study that

will look at the effects on trademark rights of adding new top-level domain

names and make recommendations on how best to protect trademarks in the

growing cyberspace economy. Congress authorized $800,000 for this study; however, no funds were appropriated. NTIA is the lead government agency carrying

out the Presidential directive on Electronic Commerce supporting efforts to

make the governance of the domain name system private and competitive.

NTIA is working towards creating a contractually based self-regulatory regime

that deals with potential conflicts between domain name usage and trademark

laws on a global basis.

• As a result of the International Anti-Bribery and Fair Competition Act of 1998,

the Secretary of Commerce is required to report to Congress on July 1, 1999,

and each year for 5 years thereafter, with respect to implementation of the

OECD Anti-Bribery Convention. Among other things, the Secretary is required

to report on advantages, in terms of immunities, market access, or otherwise,

in the countries or regions served by Intelsat and Inmarsat, the reason for such

advantages, and an assessment of progress towards a procompetitive privatization of these organizations. NTIA has been tasked as the lead for the Department on the Secretary’s report to Congress.

POTENTIAL STUDIES PROPOSED BY CONGRESS

• H.R. 1554, the Satellite Copyright, Competition, and Consumer Protection Act,

passed by the House on April 27, 1999, directs NTIA and the Register of Copyrights to submit to Congress a joint study on technical and economic impacts

of the must-carry obligations on delivery of local signals. The study would be

due to Congress on July 1, 2000.

• H.R. 1714, the Electronic Signatures in Global and National Commerce Act, introduced by House Commerce Committee Chairman Bliley on May 6, would,

among other things, require NTIA to report to Congress, within 180 days, and

annually thereafter, identifying foreign barriers to commerce in electronic signatures. Second, the bill would direct NTIA to promote the acceptance and use

42

internationally of electronic signatures, and take such actions as necessary to

eliminate or reduce impediments to commerce in electronic signatures. Third,

the bill would direct NTIA within three years after enactment, to conduct an

inquiry regarding State statutes, regulations, or other rules of law enacted or

adopted after enactment and the extent to which statutes, comply with statute. • Senate Commerce Committee Chairman McCain has indicated he will introduce

soon legislation that will require NTIA, in collaboration with the FCC, to analyze the facts and the issues involved in the ongoing deployment of advanced

broadband data networks, especially in rural and low-income areas, and report

findings to Congress.

Mr. TAUZIN. I wonder how that logic, that analogy, would work

with the IRS. If I don’t pay the IRS 20 percent, do they really have

to work for me?

Mr. IRVING. I am not going to try and find out.

Mr. TAUZIN. Let me now introduce our second witness, Mr.

George Ross.

STATEMENT OF GEORGE E. ROSS

Mr. ROSS. Thank you, Mr. Chairman, members of the committee,

I am pleased to appear before you. Our most recent work in NTIA

concentrated on audits of its fiscal year 1998 financial statements

and its fiscal year 1997 grant funding decisions. We have also conducted audits of NTIA grantees and reviewed several of NTIA’s operations. Based on that work, we have found NTIA to be a wellmanaged agency whose leadership has responded positively to our

recommendations for management improvements.

Since fiscal year 1994, NTIA has received an unqualified opinion

on its financial statements, which means that those statements

present fairly on all material aspects of NTIA’s financial position

and results of operations. That was a particularly noteworthy accomplishment for fiscal year 1998, considering that four new financial statements were mandated by OMB.

NTIA is also making steady progress to comply with the Government Performance and Results Act requirement that agencies report performance information. In March of this year we completed

audits of NTIA’s two discretionary financial assistance programs,

the Public Telecommunications Facilities Program and TIIAP.

In fiscal year 1997, PTFP competitively awarded 97 grants total- ing more than $14 million. TIIAP competitively awarded 55 grants

totaling almost $21 million. We found that NTIA’s criteria, procedures and practices for soliciting, reviewing, and selecting those

awards generally complied with statutory Department of Commerce and NTIA requirements and appeared designed to result in

merit-based awards.

However, PTFP program staff adjusted independent review

scores for almost 90 percent of the applications without consulting

the reviewers. Additionally, the Assistant Secretary, as the selection official, added and deleted applications from the recommended

list without sufficiently documenting all of those decisions.

We recommended that NTIA implement its state of commitment

not to adjust independent review scores and maintain written documentation of the reasons for making awards that deviate from the

program director’s recommendation. NTIA concurred. We also performed audits to ensure that NTIA grantees adequately account for

the use of funds. Since October 1995, we have issued 10 OIG audit

reports related to TIIAP recipients. These audits did not identify

43

any major systemic problems with the recipients of NTIA financial

assistance.

A 1996 performance audit of TIIAP did disclose problems. NTIA

officials agreed with our findings. Spending and staffing restrictions were lifted in the summer of 1996 and NTIA officials took a

number of actions to implement our recommendations to properly

monitor grants.

Our recent OIG inspection found relatively little cooperation between NTIA and the Department’s International Trade Administration. In fact, ITA’s Office of Telecommunications has its own staff

working on many of the same issues as NTIA staff. Not only is

there an overlap of duties, but roles and responsibilities for telecommunications policy initiatives and the promotion of interests

abroad have not been clearly defined. We recommended that the

Assistant Secretary for Communications and Information and the

Under Secretary for International Trade firmly agree on their

agencies’’s respective roles and responsibilities and immediately expand cooperation between their offices and staffs. The Assistant

Secretary generally concurred with our findings, but also noted

that NTIA enjoys a close working relationship with certain components of ITA.

Our January 1994 Report on NTIA Interagency Agreements focused on the Institute for Telecommunications Sciences. We found

that the growth in reimbursable work had shifted much of ITS’s

emphasis to projects only remotely related to Department of Commerce priorities. We recommended that NTIS focus ITS’s work on

the priorities of the Department and NTIA.

In October 1997 we completed a review of the Office of Spectrum

Management’s funding, fee collection, and staffing practices. Our

work revealed no significant conditions meriting issuance of an

audit report, but we did suggest NTIA co-inspect management fees

in a timely fashion.

In November 1997 we completed an audit of the role of OSM and

the FCC’s decisions to relocate DEMS licenses and to award a license to a specific company. We conducted a detailed review to determine whether NTIA met its statutory responsibilities for Federal spectrum management. Our work revealed no significant conditions meriting the issuance of a report.

With respect to the bill we offer two comments. Section 3, requiring Federal agencies to reimburse NTIA for its spectrum management activities, is consistent with our review of OSM. These should

be paid by Federal agencies throughout the fiscal year, since OSM

conducts its spectrum management activities on a continuous basis.

Section 5 includes a requirement for the OIG to conduct an audit

or evaluations of the performance of the NTIA in conducting each

of its programs, functions, and operations, and to report the results

and recommendations to Congress and NTIA. It may be helpful to

point out that under the basic IG legislation, we already have the

authority to audit the topics itemized in the proposed bill. Consequently, we view section 5 as an unnecessary provision. Of

course, we will be pleased to discuss our audit and evaluation with

members of the subcommittee and its staff.

[The prepared statement of George E. Ross follows:]

44

PREPARED STATEMENT OF GEORGE E. ROSS, ASSISTANT INSPECTOR GENERAL FOR

AUDITING, U.S. DEPARTMENT OF COMMERCE

Mr. Chairman and Members of the Committee, I am pleased to appear before you

today to discuss the Office of Inspector General’s work related to the Department

of Commerce’s National Telecommunications and Information Administration

(NTIA) and aspects of the Subcommittee’s draft reauthorization bill for NTIA. I

have attached a list of the OIG reports that will be covered in my testimony.

Our most recent work in NTIA concentrated on audits of the agency’s fiscal year

1998 financial statements and its fiscal year 1997 funding decisions with respect to

discretionary financial assistance. We have also conducted 10 financial audits of

NTIA grantees; an audit of NTIA’s Telecommunications and Information Infrastructure Assistance Program (TIIAP); an assessment of the coordination between NTIA’s

international activities on behalf of the telecommunications industry and the International Trade Administration (ITA), as part of a broad review of the Department’s

trade promotion program; and an evaluation of the performance of NTIA’s Office of

Spectrum Management (OSM).

Financial Statements Audits

An audit of NTIA’s financial statements was first performed for fiscal year 1993.

The audit, performed by an independent CPA firm under a contract with our office,

resulted in an unqualified opinion on NTIA’s Statement of Financial Condition, a

significant achievement that resulted from the concerted efforts of the bureau’s

management to implement sound internal controls. An unqualified opinion means

that the financial statements present fairly, in all material aspects, the entity’s financial position and results of operations.

That achievement continued into subsequent year audits. The audits of NTIA’s

fiscal year 1994 and 1995 financial statements resulted in unqualified opinions on

all financial statements. For fiscal year 1993, the auditors had identified four reportable conditions, but no material weaknesses in internal controls. Reportable conditions are significant deficiencies in the design or operation of an agency’s internal

control system that could adversely affect its ability to record, process, summarize,

and report financial data consistent with the assertions made by management in the

financial statements. Material weaknesses represent serious reportable conditions

where the design or operation of an internal control component does not minimize

the risk that errors, fraud, or noncompliance in material amounts may occur and

not be readily detected.

Only one of the four reported conditions was cited again for fiscal year 1994.

While the fiscal year 1995 audit found the same reportable condition, the fiscal year

1996 and fiscal year 1997 audits resulted in no reportable conditions.

The latest audit of NTIA’s fiscal year 1998 financial statements also resulted in

an unqualified opinion on all statements. This is a noteworthy accomplishment, considering that four new financial statements were mandated by OMB Bulletin 97-

01, Form and Content of Agency Financial Statements. The independent audit firm

did not identify any material weaknesses. In fact, the audits have never reported

a material weakness for NTIA. However, the firm did cite one reportable condition

in the bureau’s internal controls over financial reporting of grants. Although the

issue affected NTIA, corrective action is not within the purview of NTIA management because NTIA receives its grant accounting services from another Commerce

Department bureau.

Government Performance and Results Act of 1993

NTIA, along with other operating units of the Commerce Department and other

agencies throughout the federal government, faces many inherent challenges in determining how to best plan and measure its performance in accordance with the

Government Performance and Results Act of 1993 (GPRA). Our office has reviewed

NTIA’s overviews to its financial statements. The overviews provide the linkage between the financial statements and the GPRA requirement that government entities

collect and report information on their performance in meeting goals and objectives.

Our review of the draft fiscal year 1997 overview found that (1) it should be more

clear and concise, (2) the linkage to the Department’s Strategic Plan could be improved, (3) improved financial and program performance data were needed, and (4)

the overview needed to discuss positive and negative results. We presented our findings to NTIA management. NTIA was responsive to our comments, making changes

and indicating that they would make additional improvements in future years. In

our transmittal memorandum to the final audit report, we stated that NTIA should

strengthen reported performance measurement data and improve the presentation

of information to facilitate trend analysis and assessment of whether target levels

of performance have been achieved.

45

Our review of the fiscal year 1998 overview found that the bureau had incorporated many of our suggestions to strengthen the overview. We informally provided

NTIA our observations on the draft fiscal year 1998 overview, including suggestions

to (1) discuss the status of Y2K-compliance efforts, (2) strengthen the linkage between the financial statements and the overview, and (3) include more forecasts of

potential problem areas. Once again, management was responsive to our suggestions. In our transmittal memorandum to the final audit report, we encouraged the

bureau to strengthen next year’s discussion of actual results and to continue efforts

to improve performance measurement and reporting.

Year 2000 (Y2K) Compliance

NTIA has reported significant progress in ensuring that its computer systems and

proprietary software will be operational after the turn of the century. NTIA has two

mission-critical systems. The first is used by the Office of Spectrum Management

in managing the government spectrum, and the second is used by the Office of Telecommunications and Information Applications (OTIA) in managing its grants process.

OSM has tested for and corrected the Y2K problems in its systems, and is already

processing data with dates into the next century. A contractor has re-written OTIA’s

grants management software. According to NTIA, both systems have been subsequently tested and certified as Y2K-compliant.

Discretionary Financial Assistance Program Performance Audits and Grantee Audits

In March of this year, we completed audits of NTIA’s two discretionary financial

assistance programs: (1) the Public Telecommunications Facilities Program (PTFP),

and (2) the Telecommunications and Information Infrastructure Assistance Program

(TIIAP). Discretionary financial assistance programs are those programs for which

federal agencies have the authority to independently determine the recipients and

funding levels of awards. These programs involve a significant portion of NTIA’s

budget and operations, about $35 million in fiscal year 1997 awards and $38 million

in fiscal year 1998 grants. These audits were conducted as part of a Departmentwide review of Commerce’s discretionary financial assistance programs initiated at

the request of the Chairman of the Senate Commerce, Science, and Transportation

Committee.

Through PTFP, NTIA provides financial assistance for planning, acquiring, installing, and modernizing public telecommunications facilities. In fiscal year 1997,

the program received 221 applications for more than $50.5 million. Of these, 215

were accepted for review, and 97 grants totaling more than $14.1 million were

awarded. All 97 awards were made competitively in response to a formal solicitation

notice published in the Federal Register, posted on NTIA’s Internet web site, and

mailed to over 3,000 potential applicants on NTIA’s mailing list.

Through TIIAP, NTIA provides financial assistance to nonprofit organizations, colleges and universities, and state, local and Indian tribal governments, to promote

the widespread use of telecommunications and information technologies in the public and nonprofit sectors. In fiscal year 1997, the program received more than 920

applications for over $350 million; 876 were accepted for review; and 55 grants totaling almost $20.9 million were awarded. All 55 awards were made competitively in

response to a formal solicitation notice published in the Federal Register, posted on

NTIA’s Internet web site, and mailed to over 18,000 potential applicants.

We examined NTIA’s criteria, procedures, and practices for soliciting, reviewing,

and selecting awards under both programs and found that they generally complied

with statutory, Departmental, and agency requirements and appeared designed to

promote merit-based funding decisions. We found that NTIA (1) developed and published merit-based technical and public policy criteria that were consistent with the

programs’ objectives and (2) complied with the Departmental and agency requirement to place a notice in the Federal Register, at least annually, announcing the

availability of funds, soliciting award applications, and specifying the criteria and

process to be used in reviewing and selecting applications.

We also found that NTIA followed established requirements for the competitive

review of applications for TIIAP, but not totally for PTFP. Specifically, NTIA program staff participated in review panels for PTFP awards and routinely adjusted

the independent reviewers’ scores or composite evaluation scores without consulting

with the reviewers. The staff adjusted either the score given by the independent reviewer(s) or the review panel’s composite score, without consulting with the panel,

for 191 of the 215 applications, or almost 90 percent of the applications reviewed

by the panels. The program staff adjusted 153 applications to a higher score and

38 applications to a lower score. The program staff stated that the adjustments were

made to correct applications misjudged or unfairly scored by the external reviewers.

46

Unilateral adjustment of evaluation scores has the potential to undermine the independence and objectivity of the review process. NTIA officials determined, prior to

the audit, that they would not repeat the practice in fiscal year 1998.

Moreover, although Departmental and NTIA requirements for selecting applications were followed for both programs, documentation was lacking to fully explain

the reasons for deviations from the program directors’ lists of applications recommended for funding. For the year reviewed, we found that the Assistant Secretary for Communications and Information, as the selecting official, added three

applications to the PTFP list, and added nine applications to and deleted seven applications from the TIIAP recommended funding list. A memorandum concerning

the additional PTFP applications noted that the selecting official’s decision was

made to achieve greater geographical distribution, but did not provide specific reasons why certain applicants were selected over others. The Assistant Secretary provided justifications for the nine added TIIAP applications, but there were no written

justifications for any of the seven deleted applications.

We recommended that NTIA ensure that the bases for making awards that deviate from a program director’s recommendations are adequately documented. Additionally, we recommended that PTFP staff ensure that independent reviewers’

scores are not adjusted by program staff during the review process. NTIA agreed

with our findings and recommendations and is modifying its financial assistance

award process to implement our recommendations.

We have also performed financial audits of grants awarded under these financial

assistance programs to ensure that grantees adequately account for the use of

award funds. Since October 1995, we have issued 10 OIG audit reports related to

recipients of NTIA financial assistance. In that period, we also processed 236 Single

Audit Act reports that covered $56.7 million of NTIA funding. These audits did not

identify any major or systemic problems with recipients of NTIA financial assistance.

Performance Audit: ‘‘Information Superhighway’’ Program

NTIA’s Office of Telecommunications and Information Applications (OTIA) is responsible for managing the TIIAP program, also known as the ‘‘Information Superhighway’’ program. We reviewed several program grants in 1996. Our reviews of

those grants disclosed programmatic and financial problems, which were attributable in large part to inadequate program management staffing. For example,

OTIA program officers did not normally visit grantees and only rarely contacted

them by telephone, conducted only perfunctory reviews of grantee status reports and

took no action when significant problems were indicated, and did not ensure that

grantees were aware of federal grant requirements, particularly those pertaining to

matching funds. Moreover, OTIA did not require independent evaluations of grant

results, did not have a mechanism for grantees to exchange useful information with

each other, and required program officers to perform routine administrative work

to the detriment of their monitoring responsibilities.

OTIA officials agreed with our findings, but said that because of spending and

staffing restrictions, they lacked the resources to properly monitor grants. These restrictions were lifted in the summer of 1996, and NTIA officials took a number of

significant actions to implement our recommendations. For example, OTIA established an on-site monitoring program and conducted visits of 25 grantees from August through October of 1996; and instructed its program officers to make detailed

analyses of grantee status reports, contact grantees if the reports indicate any problem areas or concerns, and forward the analyses to the Department for appropriate

action.

Inspection Report: Coordination on International Telecommunications Issues

In a recent inspection report, we found that despite NTIA’s participation in international telecommunications policy forums, there is relatively little cooperation between NTIA and the International Trade Administration. In fact, ITA’s Office of

Telecommunications within the Office of Trade Development has its own staff working on many of the same issues as NTIA’s staff. Not only is there an overlap of duties, but the roles and responsibilities of each agency for telecommunications policy

initiatives and the advancement and promotion of U.S. telecommunication interests

abroad have not been clearly defined.

We recommended that the Assistant Secretary for Communications and Information and the Under Secretary for International Trade (1) formally agree on their

agencies’ respective roles and responsibilities in telecommunications export promotion and trade policy development, and (2) seek to immediately expand cooperation between NTIA and ITA offices and staffs. In response to our draft report, the

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ship with ITA, but noted a positive working relationship with certain components

of the ITA.

Inspection Report: Interagency Agreements With Institute for Telecommunication

Sciences

In January 1994, we issued a final report on our review of NTIA’s interagency

agreements that were performed for, and reimbursed by, other agencies, focusing on

those agreements conducted by the Institute for Telecommunication Sciences (ITS).

We examined the relationship between the work ITS performs through such agreements and NTIA’s core mission, the benefits NTIA receives from those agreements,

the amount of resources involved, and the adequacy of oversight by NTIA senior

management. We found the following:

1. The growth in the volume of reimbursable projects had shifted much of the focus

of the lab’s work to projects that were remotely, if at all, related to Commerce

Department priorities. Because of the volume of the reimbursable work, the size

and staffing of the lab was larger than needed to accomplish the primary mission of NTIA and the Department.

2. The increase in lab operating costs, due almost exclusively to the growth of reimbursable projects, resulted in an unending cycle of employment growth and increased funding requirements. Senior managers were dissatisfied with the

amount of time spent soliciting new projects.

3. ITS routinely entered into reimbursable agreements with the Defense Department in the last few days of the fiscal year, resulting in carryovers of funds to

the next fiscal year. This practice raised serious questions about the propriety

and legality of NTIA’s obligating and expending ‘‘one-year’’ funds in the next fiscal year.

We recommended that NTIA (1) focus ITS’s work on the priorities of the Department and NTIA; (2) seek alternative procedures for improving the lab’s efficiency

at handling reimbursable projects; (3) ensure that reimbursable ‘‘one-year’’ funds are

properly obligated in the year received; and (4) return all reimbursable funds that

were not obligated by the end of the prior fiscal year to the sponsoring agency. NTIA

agreed to ensure that future reimbursable funding would be obligated in the same

fiscal year, but otherwise disagreed with most of our specific observations and recommendations.

Other Correspondence: Performance Reviews of Office of Spectrum Management

In October 1997, we completed a review of the performance of NTIA’s Office of

Spectrum Management. The review included a detailed examination of OSM’s funding, fee collection, and staffing practices. Although our field work revealed no significant conditions meriting the issuance of an audit report, we found several issues

warranting management’s attention, which we discussed in a memorandum to the

Assistant Secretary for Communications and Information.

Specifically, resource assessments essential for effective long-range federal spectrum planning had not been performed; hardware and software had not been maintained to meet current and future needs; and inadequate support had been provided

for national and international policy development and execution. OSM also lacked

the personnel to fulfill its responsibility of ensuring that other federal agencies were

complying with the conditions of their spectrum authorizations and using the limited spectrum efficiently, or that radio interference problems were quickly detected

and corrected. We noted that these deficiencies might be exacerbated because a

large percentage of the OSM work force would become eligible for retirement within

three years. Furthermore, Interdepartment Radio Advisory Committee member

agencies had not promptly paid their fiscal year 1997 spectrum management fees

to NTIA.

We suggested that NTIA (1) evaluate the work that OSM had been unable to perform, determine priorities within the context of the agency’s strategic plan, and

begin planning to replace OSM staff who might retire within the next three years;

and (2) take appropriate action to collect fiscal year 1998 spectrum management

fees in a timely fashion.

Also, in November 1997, we completed an audit of the role of OSM in the Federal

Communications Commission’s (FCC) decisions to relocate Digital Electronic Messaging Service (DEMS) licenses and award a license to a specific company. We conducted a detailed review of OSM’s actions to determine whether NTIA met its statutory responsibilities for federal spectrum management with respect to these decisions. Again, our audit work revealed no significant conditions meriting the issuance

of an audit report. We found that OSM officials acted properly and protected government interests by offering spectrum for the FCC to use in the relocation of spectrum

allocated for DEMS licensees. OSM officials also followed established procedures for

48

consulting with the Interdepartment Radio Advisory Committee on the use of federal spectrum.

We noted, however, that an FCC licensing bureau had issued DEMS licenses

without the knowledge of FCC headquarters or OSM officials, even though the technology interfered with existing licenses for federal government satellite operations

and with the planned use by private-sector satellite communications systems for

which the U.S. government had negotiated an international agreement. In a memorandum to the Assistant Secretary for Communications and Information, we suggested that NTIA work with the FCC to establish a real-time licensing information

system between FCC licensing bureaus and OSM that would reduce the likelihood

of issuing licenses that interfere with federal spectrum use.

OIG Comments on Discussion Draft of Reauthorization Bill

We have reviewed the discussion draft of the proposed reauthorization bill and

have these comments:

1. Section 3 of the draft, ‘‘Payment for Spectrum Management Functions,’’ requiring

federal agencies to reimburse NTIA for its federal spectrum management activities, is consistent with our findings during the aforementioned review of OSM.

During the year under review, fiscal year 1997, NTIA and OSM experienced severe difficulties in collecting fees required under the appropriations act for that

year. During fiscal year 1998, these fees were paid in a more timely manner

by the other federal agencies. These fees should be paid by federal agencies

throughout the fiscal year, and not just near the end, since OSM conducts its

spectrum management activities on a continuous basis.

2. Section 5 of the draft, ‘‘Long-Term Efficiency,’’ includes a requirement for the OIG

to ‘‘conduct an audit or evaluations of the performance of the NTIA in conducting each of its functions, programs, and operations’’ and report the results

and recommendations to the Congress and NTIA. It may be helpful to point out

that under the basic Inspector General legislation, we already have the authority to audit and review the topics itemized in the proposed bill. Consequently,

we view section 5 as an unnecessary provision. For example, we are currently

considering performance audits of the PTFP and TIIAP programs to evaluate

both program management and program performance. Of course, we would be

pleased to discuss audit and evaluation areas with Members of the Committee

and staff to ensure that our efforts address key areas of interest.

That concludes my testimony. I would be pleased to answer any questions that

the Members of the Committee would have.

Mr. TAUZIN. Thank you.

Colonel Skinner.

STATEMENT OF RICHARD W. SKINNER

Mr. SKINNER. Thank you, Mr. Chairman. I am pleased to have

the opportunity to discuss with you a matter that is of critical importance to the Department of Defense: spectrum management and

the important relationship we have with the NTIA. I am delighted

to share the witness table with Secretary Irving, who is a good

friend of the Department of Defense and understands the many

challenges that stewardship of America’s radio spectrum has presented to us in the past and will no doubt present in the future.

I submitted a statement for the record, but if you will indulge

me, I would like to share the Department of Defense’s views on the

importance of spectrum and the significant responsibilities domestic and international management place on NTIA.

There is increasing pressure for the government to reduce its

spectrum usage and make this resource available for private sector

development. We have been directed to reallocate spectrum from

the government service to the private sector. We believe it is important to consider the impact to national security in these deliberations and understand the full costs in terms of security and dollars spectrum reallocation incurs. We believe the NTIA has an important role in coordinating and exposing these issues as spectrum

49

reallocation decisions are made. The Department of Defense is committed to using the spectrum allocated to it more efficiently.

On the other hand, military requirements such as development

of information technology systems that are less vulnerable to

enemy jamming and interference, exploitation of video-based reconnaissance systems and detecting stealthy threats exacerbates an already difficult problem of requiring significant spectrum for these

unique national security applications. We hope that the modernization plan required by the draft legislation will be expanded to take

a close look at spectrum allocations across the broadest policy areas

of national endeavors, and we hope that we will have a process to

balance the equities of all of the stakeholders in the process. You

may want to consider carefully whether 12 months is an adequate

period of time over which to make these deliberations.

Information technology affects almost every aspect of the Department of Defense, from tactical units to the supply lines that support them. Information superiority is at the heart of the Department’s vision of future war fighting, a concept of the future we call

Joint Vision 2010. Within Joint Vision 2010 we define information

superiority as the capability to collect, process, and disseminate an

interrupted flow of information while exploiting and/or denying an

adversary’s ability to do the same.

Radio spectrum is absolutely essential to pursuing and achieving

our future vision. Much of our information superiority depends on

access to the radio spectrum. The priority our military planners

place on mobility, range and speed dictates that a large portion of

our information technology be wireless. Consequently, we value access to the radio spectrum because it provides us the essential

media for communicating information, unhampered by mechanical

connections or weather and other natural phenomena.

While communications is a dominant role, we exploit the radio

spectrum for much, much more. Our radars identify potential enemies, using the spectrum to range and track objects in space, on

the ground, on the water and in the area. We use the same technology to manage our air operations and provide necessary air traffic control services. Systems like the DOD’s Global Positioning System, a constellation of satellites that provides very accurate navigation and timing from space, would not be possible without access

to the radio spectrum and the ability to coordinate its use on a national and international basis so that the important signals from

these satellites can be received without interference by thousands

of military and private sector users, both domestically and internationally.

Secretary Irving’s statement addresses the challenges of the

modernization of the GPS system, and we are very pleased with his

indulgence in that area. The importance of spectrum to the United

States military is not lost on our adversaries. We fully expect our

enemies to attempt to deny our access to the spectrum in times of

war. Moreover, they will monitor and observe our use of the spectrum during peace and the transition from peace to war so they

can exploit our vulnerabilities to their own advantage. To this extent, we must have the ability to train in an environment where

military spectrum is intentionally jammed and develop those sysVerDate 20-MAR-2000 15:27 Mar 27, 2000 Jkt 010199 PO 00000 Frm 00052 Fmt 6633 Sfmt 6602 E:\HEARINGS\56610.TXT pfrm02 PsN: 56610
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tems and operational tactics and techniques so we can maintain

continuity of operations during attacks on a radio spectrum.

Furthermore, we must be able to deny the use of spectrum by

our adversaries to create confusion in the command and control

structure and deny them the sensors they are dependent upon.

We are frankly not surprised to find that many of the attributes

the Department of Defense values in sensing and communicating

using the radio spectrum have private sector and commercial value

as well. In fact, many of these commercial systems are in use by

our Armed Forces. DOD has a close working relationship and has

received extensive support from the NTIA Office of Spectrum Management. This office is essential to achieving the goal of meeting

the spectrum needs of both government and industry. We thank

NTIA for this and look forward to our continuing relationship.

DOD would also like to thank this committee for its language on

reimbursement of spectrum reallocations. We will keep the committee informed on how well it is working. Finally, the Department

is ready to work with Congress and NTIA to ensure efficient and

effective use of the spectrum into the next millennium. That concludes my statement. I look forward to your questions.

[The prepared statement of Richard W. Skinner follows:]

PREPARED STATEMENT OF COLONEL RICHARD SKINNER, PRINCIPAL DIRECTOR, DEPUTY ASSISTANT SECRETARY OF DEFENSE, (COMMAND, CONTROL, COMMUNICATIONS,

INTELLIGENCE AND SURVEILLANCE, RECONNAISSANCE & SPACE), OFFICE OF THE ASSISTANT SECRETARY OF DEFENSE FOR COMMAND, CONTROL, COMMUNICATIONS AND

INTELLIGENCE

Thank you Mr. Chairman and members of the Subcommittee. I am pleased to

have the opportunity to discuss with you a matter that is of critical importance to

the Department of Defense—spectrum management and our relationship with the

National Telecommunications and Information Administration (NTIA). Spectrum is

a very important resource to the Department of Defense and, as evidenced by this

hearing, the Congress as well. I am also delighted that I can share the witness table

with Secretary Larry Irving who is a good friend of the Department of Defense and

understands the many challenges that stewardship of the America’s spectrum has

presented us in the past and will no doubt present us in the future. In recognizing

the supplier and customer relationship between the NTIA and the Department of

Defense, I would be remiss if I didn’t highlight as well that the Department of Defense is only one of Secretary Irvings many customers. Perhaps we are the largest

or the most demanding but we are only one of more than 50 federal agency customers. So please do not interpret my remarks as representing the entire customer

base, there are many more federal spectrum users, each with their own unique perspective on this business.

Why is Spectrum Management Important to Us?

Information and information technology (IT) affect almost every aspect of the Department of Defense, from tactical units to the supply lines that support them. At

the heart of the Department’s Joint Vision 2010 is Information Superiority: the capability to collect, process, and disseminate an uninterrupted flow of information

while exploiting and/or denying an adversary’s ability to do the same. As a result,

Information Superiority is the key enabler for an entire range of operational concepts, from Dominant Maneuver to Precision Engagement to Focused Logistics to

Full-Dimensional Protection. Information profoundly influences the entire range of

military endeavors including humanitarian assistance, peacekeeping and coalition

operations.

Spectrum is not only necessary, but absolutely essential to achieving JV2010. For

example, without assured access to necessary frequencies, we could not have successfully rescued our downed pilots during recent military operations. These rescues

required assured spectrum access for all aspects of our search and rescue operation.

Much of our information superiority depends on access to the electromagnetic

spectrum. The priority we place on mobility, range, and speed dictates that much

of our information technology be wireless and consequently we value access to the

51

radio frequency spectrum which provides us the essential media for communicating

information, unhampered by mechanical connections or weather and other natural

phenomena. The U.S. military has an incredible investment in systems that exploit

the spectrum. They provide us our interaction between echelons of command and

within our units of course, but we exploit the spectrum for much, much more. Our

radars identify potential enemies using the spectrum to range and track objects in

space, on the ground, on the water, and in the air. We use the same technology to

manage our air operations and provide necessary air traffic control services. Systems like the Department of Defense’s Global Positioning System—a system of satellites that provides very accurate navigation and timing signals from space—would

not be possible without access to spectrum and the ability to coordinate its use on

a national and international basis. Of course, the importance of spectrum to the

United States Military is not lost on our adversaries. We fully expect our enemies

to attempt to deny our access to the spectrum in times of war. Moreover, they will

doubtlessly observe our use of the spectrum during peace and the transition from

peace to war so they can exploit any vulnerabilities to their own advantage. To this

extent, we must have the ability to train and develop those systems and operating

tactics and techniques so that we can maintain continuity of operations during attacks on our electromagenetic spectrum. Furthermore, we must be able to deny the

use of spectrum by our adversaries to create confusion in the command and control

structure and to deny them the sensors they are dependent upon.

We are frankly not surprised to find that the many attributes we value in sensing

and communicating using the radio spectrum have private and commercial value as

well. In fact, many of these commercial systems are in use by your armed forces.

There is increasing pressure for the government to reduce its spectrum usage and

to make this resource available for private sector development. We understand the

resolution of who should use and how the spectrum is used is an important one.

It is equally important we consider the impact to national security in these deliberations and understand the full costs in terms of security and dollars spectrum reallocation incurs. The DoD is committed to using the spectrum allocated to it more

efficiently, but new military requirements for passing video and detecting low observable threats exacerbates an already difficult problem.

National security is made up of several pillars. It is essential to balance our economic security needs with the security your armed forces provides. To do so may

require changes in spectrum policy that include:

• Improved processes and procedures for balancing the national security needs of

the nation with commercial interests • Implementing spectrum reallocations using the NTIA spectrum management

structure. Legislating reallocation has had a serious impact. Using the normal

process provides an opportunity to develop sharing arrangements where possible. We believe that the NTIA process has been extremely responsive to commercial needs while addressing the Department of Defense equities in the process

• Recognizing that unique military spectrum requirements demand exclusive priority access to portions of the RF spectrum while acknowledging that spectrum

sharing among competing customers is a desirable national goal

• Establishing and complying with equipment design standards to permit sharing

for all users

• Requiring a technical analysis of spectrum use, commercial and federal, when considering resolution of new requirements

• Considering national security and commercial significance in technical analyses of

spectrum users’ requirements

• Providing all funding to develop, test, train personnel, and deploy replacement

systems for incumbent systems during the reallocation process

• Including costs to reengineer displaced systems in the calculation of potential net

income from spectrum auctions

• Recognizing that national security priorities may outweigh economic interests in

specific cases

Specific Issues

I understand there are several specific issues you would like me to discuss regarding the fee-for-service of NTIA, the privatization and outsourcing of NTIA laboratories, and the examination of the NTIA by the Government Accounting Office. Let

me address each of the issues as I understand them, briefly.

The proposal to raise the fees paid by DoD and other federal agencies to NTIA

for its spectrum management services misses the mark in our opinion. In this era

of ever more complicated calls for spectrum allocation, DoD is not the only entity

that benefits from NTIA’s work on DoD matters. Moreover, as my prior discussion

52

makes clear, the Office of Spectrum Management performs many functions that are

not solely for the benefit of a particular user. Both the civilian and military, government and private worlds benefit from a robust and well managed NTIA. Finally, the

‘‘business school’’ logic of fee for service is to restrain the excessive use of the good

or to give users a way to evaluate the cost of the service against ready alternatives.

In this case, DoD must use NTIA for spectrum management, there are no alternative service providers, and neither of those rationales is applicable. The current

arrangement works, and I would leave it as it is.

With regard to privatization of the NTIA laboratories, we believe this is a decision

that NTIA must make on its own, after consultation with its laboratory customers.

In the Department of Defense’s outsourcing initiatives, we have worried that we

could erode the pool of government expertise required to address detailed and complex government matters. We would hope that NTIA will consider that issue carefully. DoD uses the laboratories on a cost reimbursable basis. The NTIA laboratory

capabilities are world class, and we hope that any future change would improve

their status. A transition of laboratory operations must address customer concerns

for national security and the needs to protect the trade secrets and intellectual property of the government and its private sector partners. So, our organizational conflict of interest concerns and the continued ability to provide laboratory support in

matters where secrecy is as important as technical excellence must be addressed in

the future laboratory arrangement. Of course, any change in the laboratory arrangement should result in maintaining or improving the quality and responsiveness that

the government labs provide.

With regard to the GAO report and modernization plan required in the draft bill,

we are enthusiastic proponents of modernization and process improvement through

business process reengineering. However, we have equities that must be protected

to successfully accomplish our mission. We hope that in the GAO process we will

have an opportunity to comment on the report, either directly with GAO or via

NTIA. We also hope to have an opportunity to comment on, or perhaps even participate in the development of, the modernization plan. Although I said I would not attempt to represent NTIA’s many other customers, I would expect that at least some

of these agencies would want to engage as well.

Conclusion

DoD has a close working relationship and has received extensive support from the

NTIA Office of Spectrum Management. This Office is essential to achieving the goal

of meeting the spectrum needs of both government and industry. We thank them

for this and look forward to our continuing relationship.

DoD also would like to thank this Committee for the language on reimbursement

for spectrum reallocations. We will keep the Committee informed on how well it is

working.

The Department is ready to work with Congress and NTIA to assure efficient and

effective us of the spectrum into the next millenium.

Mr. TAUZIN. Thank you very much, Colonel.

Our next witness is Mr. Harris Miller.

STATEMENT OF HARRIS MILLER

Mr. MILLER. Thank you. Thank you, Mr. Chairman and members

of the subcommittee. I am here representing the 11,000 companies

that are members of the information technology economy. It is an

honor to appear before your subcommittee to discuss what I believe

to be the next Y2K issue for our country and our global information

and technology community; namely, critical information infrastructure protection.

Information technology now represents over 6 percent of global

GDP, the spending volume of more than $1.8 trillion, according to

Digital Planet, a report recently released by the World Information

Technology and Services Alliance. From China to Mexico, from Argentina to Germany, countries have come to recognize that IT is

the engine of national development, accelerating the expansion of

business and investment while acting as a buffer against economic

downturns.

53

However, the Y2K software glitch and other well-publicized episodes of natural or man-made disasters have also triggered an

awareness of the importance of and vulnerabilities posed by interruptions to information technology. These threats come in numerous guises: mischief-minded hackers, disgruntled employees, corporate spies, cyber criminals, cyber terrorists and unfriendly nations.

A recent Computer Security Institute survey reports that 62 percent of companies have experienced computer breaches. Fifty-one

percent of respondents reported financial losses due to computer security problems. Criminal hacking losses of the 163 responding organizations was placed at $123 million in 1998 and is climbing at

an extraordinary pace. The Institute found that system penetration

by outsiders has risen in each of the past 3 years, as has unauthorized access by insiders. Twenty-six percent of the CSI respondents

reported theft of proprietary information, and 27 percent reported

financial fraud. Twenty percent reported unauthorized use or misuse of Websites.

Virus episodes such as the recent Melissa and Chernobyl are becoming much too frequent. The Antivirus Research Institute estimates that new viruses are being launched at the rate of 10 to 15

per day, and that over 2,400 currently exist. Thirty-five percent are

considered to be intentionally disruptive.

And, of course, not all threats are man-made. As has been demonstrated by the Red River flooding, the Kobe earthquake, the

North Ridge earthquake in California, and Hurricane Andrew in

1992, natural disasters also lead information technology disasters

in disruptions. The Kobe earthquake caused over 5,000 deaths,

damaged or destroyed over 180,000 buildings, and left 300,000 people homeless. But it is also important to remember that the telecommunications and computer infrastructures in that area were

out for weeks and even months.

And then, of course, there is the Y2K issue itself. The sum and

substance of this, Mr. Chairman, is that our country, our economy,

and the global economy have difficult challenges ahead. In the

cyber realm, as we know, ambiguity reigns supreme. What makes

our new environment so different? Some of the factors include the

following: increasing technological and environmental complexity;

the boundless nature of the Internet; ambiguous laws; the anonymity of adversaries; conflicting responsibilities and jurisdiction; limited consequence management preparedness; low levels of awareness, particularly by those in senior management in the private

sector and government; and limited human resources to deal with

this challenge.

Understanding the challenge, I do believe that NTIA enjoys the

opportunity to play a very important role in helping the Nation

achieve critical information infrastructure protection. Assessing the

CIIP role for NTIA and other government agencies, it comes down

to a simple issue. Our new information-based economy must be

protected and preserved. Participants and users must understand

that along with the obvious benefits of living in this IT age are corresponding commitments to protect the information technology system. The societal stakes involved in critical information infrastrucVerDate 20-MAR-2000 15:27 Mar 27, 2000 Jkt 010199 PO 00000 Frm 00056 Fmt 6633 Sfmt 6602 E:\HEARINGS\56610.TXT pfrm02 PsN: 56610
54

ture protection compel both government and private industry to

seek common ground on the issue.

The road to this common ground, Mr. Chairman, will not be easy

to reach. While the ultimate ends are shared between government

and the private sector, the policies that each will develop in order

to provide the protection could be quite different. For instance, government policy may seek to establish very stringent internal- and

external-directed rules to protect cyber infrastructure. The private

sector, however, is going to look for threats to be responded to in

terms of appropriate business responses.

To deal with these different directions, there must be increased

communications, and that is very important. In my written statement I have included a series of first principles necessary to

achieve the proper balance between the government and industry

desires. Part of this is working together with the government.

Our Association, for example, announced a major effort in partnership with the Justice Department and Attorney General Reno

focusing on cyber citizen partnership to educate both government

and the private sector regarding the importance of cyber protection.

While the IT is frequently uncomfortable in working with government agencies on policy issues, the agency we are usually most

comfortable with is DOC. It is for this reason that ITAA and the

information technology industry supports the selection and continued mission of NTIA within DOC as the lead agency for and primary liaison to our industry.

The private commercial sector owns, operates and manages over

90 percent of the information and communications infrastructure.

As such, it is appropriate that a civilian agency such as NTIA focus

on the advancement of U.S. industry, and the U.S. economy be assigned the lead for working and collaborating with the innovative

companies that have responsibility for and manage these important

elements of our economy.

We look forward to cooperating with all agencies throughout the

government involved in the CIA challenge, yet we feel strongly that

NTIA is the proper representative to work with our industry to

build the necessary levels of cooperation to help develop the national infrastructure protection plan. It has the knowledge, experience and relationships necessary.

We very much encourage this committee to include funding in

the NTIA reauthorization so that they can carry out their mission

in the CIIP area, and we look forward to working with you and

other members of the subcommittee in this area, Mr. Chairman.

[The prepared statement of Harris Miller follows:]

PREPARED STATEMENT OF HARRIS N. MILLER, PRESIDENT, INFORMATION

TECHNOLOGY ASSOCIATION OF AMERICA

Introduction

I am Harris Miller, President of the Information Technology Association of America (ITAA), representing over 11,000 direct and affiliate member companies in the

information technology (IT) industry—the enablers of the information economy. Our

members are located in every state in the United States, and range from the smallest IT start-ups to industry leaders in the custom software, services, systems integration, telecommunications, Internet, and computer consulting fields. These firms

are listed on the ITAA website at www.itaa.org.

55

It is an honor to appear before your Subcommittee again, Chairman Tauzin. I

want to commend you and your colleagues for inviting me to discuss what I describe

as the next Y2K—Critical Information Infrastructure Protection.

Information technology represents over 6 percent of global gross domestic product (GDP), a spending volume of more than $1.8 trillion, and over 8% of US GDP, according to Digital Planet, a report recently released by the World Information Technology and Services Alliance (WITSA), a group of 38 IT trade associations around

the world (I am proud to serve as president of the WITSA organization). Enormous

in its own right, these Digital Planet figures mask the contribution made by this

technology to the growth, competitiveness and vitality of other industries. From

China to Mexico, from Argentina to Germany, countries have come to recognize that

information technology is the engine of national development, accelerating the expansion of business opportunity and investment while acting as a buffer against economic downturns.

The Year 2000 software glitch and other well-publicized episodes of natural or

man-made disasters have also triggered an awareness of the importance of and

vulnerabilities posed by disruptions to information technology. The threat comes in

numerous guises. Mischief minded hackers. Disgruntled employees. Corporate spies.

Cyber criminals. Terrorists. Unfriendly nations.

Aggressors attack at the point of maximum leverage. For modern society, this

means critical infrastructure—transportation, telecommunications, oil and gas distribution, emergency services, water, electric power, finance and government operations. A critical information infrastructure supports all of these vital delivery systems and becomes itself a target of opportunity for terrorists, adversary nations,

criminal organizations, and non-state actors. Disrupting the underlying information

infrastructure of a transportation or finance system often can be as effective or even

more effective than disrupting the physical infrastructure. Why blow up a power

grid, when destroying the computers which control the power grid will have the

same impact?

As recently as last week, the International Institute for Strategic Studies (IISS)

published a study on this topic citing one expert claiming he could bring down the

U.S. information infrastructure with 10 computer specialists and in 90 days time.

This potential vulnerability—even if overstated—raises numerous difficult questions

for industry and government about how to best provide critical information infrastructure protection.

A recent Computer Security Institute (CSI) survey reports 62 percent of companies have experienced computer breaches; 51 percent of respondents reported financial losses due to computer security problems; criminal hacking losses of the 163 responding organizations was placed at $123 million in 1998 and is climbing at an

extraordinary pace. The Institute found that system penetration by outsiders has

risen in each of the past three years as has unauthorized access by insiders. Twenty-six percent of respondents in the CSI study reported theft of proprietary information and 27 percent reported financial fraud. Twenty percent reported unauthorized

use or misuse of websites.

Virus episodes like Melissa and Chernobyl are becoming much too frequent. The

Symantec Anti-Virus Research Center estimates that new viruses are being

launched at a rate of 10 to 15 per day and that over 2400 currently exist. Thirtyfive percent are considered to be intentionally destructive.

Not all threats are man-made. As has been demonstrated by the 1997 Red River

flooding of Grand Forks, North Dakota; the 1995 Kobe earthquake in Japan; and

the 1994 Northridge earthquake in California; and South Florida’s Hurricane Andrew in 1992, natural disasters pose substantial threats to both major systems

themselves and the critical information infrastructure undergirding. This is indicative of the fact that the physical element of the information infrastructure requires

a similar level of attention and concern. The Kobe earthquake, for instance, caused

over 5,000 deaths, damaged or destroyed 180,000 buildings and left 300,000 people

homeless. Total damages reached $147 billion. Telecommunications and computer

infrastructures were out of commission for weeks and months.

And then there is that set of ‘‘unintended consequences’’ associated with a new

and dynamic period in the evolution of technology. I refer to the Year 2000 computer

bug as exhibit number one. As a global information economy, we stand at the very

edge of the Year 2000 divide. Just eight months remain for companies all over the

world to complete their Y2K repairs. How successfully countries will make this transition is the subject of much speculation. The only sure bet for Y2K prognosticators

is that no one knows for sure how this situation will play out. Year 2000 underscores the interconnectedness of society and its computers and the dependence of

one on the other. Where we do not have all the technology bases covered, we have

social, economic, and political vulnerability instead.

56

We have difficult challenges ahead. In the cyber realm, ambiguity reigns supreme.

What makes our new environment so different? Some of the factors include:

• Increasing technological and environmental complexity—new technologies are replacing ‘‘old’’ ones at a breathtaking pace as hundreds of thousands of new players enter cyberspace on an almost daily basis;

• Boundless environment—geographic boundaries are irrelevant in cyberspace raising jurisdictional conflicts;

• Ambiguous laws;

• Anonymous adversaries—The anonymous nature of the Internet combined with a

lack of geographic boundaries makes it extremely difficult to distinguish between nuisance hackers, vandals, criminals, terrorists and nation-states. This

results in indistinguishable motives or intentions;

• Conflicting responsibilities and jurisdictions—while cyberspace is boundless, turf

battles abound;

• Limited consequence management preparedness—if progress for preparations for

Y2K and the recent Melissa and Chernobyl viruses are any indication, worldwide, individuals and enterprises are unprepared to manage contingencies and

consequences of such incidents;

• Low levels of awareness—it was, and is still, difficult to get leaders to focus on

Y2K as a major issue. We must now take pains to point out that Y2K is solely

one ‘‘incident’’ on the continuum of potential vulnerabilities to our critical systems: the proverbial tip of the iceberg. A significant hurdle to meeting the most

basic challenges, however, is low levels of awareness and understanding. These

issues must be raised to the executive level;

• Limited human resources—The public and private sectors continue to struggle to

find the skilled workers to manage the resources they currently have. Assuring

our information infrastructures calls for more highly specialized individuals who

are in extremely limited supply.

Today you have asked me to talk about the reauthorization of the National Telecommunications and Information Administration (NTIA) of the U.S. Department of

Commerce (DOC) and role that we think this agency can play in helping the nation

achieve its critical information infrastructure protection goals. I believe that NTIA

enjoys the opportunity to play a critical role in helping the nation achieve Critical

Information Infrastructure Protection. Before I speak specifically about NTIA, I will

offer a broader conceptual framework on how we see government and industry

working together on this issue. I will provide you details on the specifics of ITAA’s

CIIP program. I will then turn my attention to NTIA.

Government and Industry: Seeking Common Ground

Assessing the ultimate CIIP roles for NTIA, other government agencies and the

private sector is really very simple: our new information-based assets must be protected and preserved. The proliferation of low cost computers and networks have

spread information technology to every quarter of society. As technologies have advanced and been implemented, we have seen enormous payoffs in the form of increased efficiency, increased productivity and newfound prosperity. Chairman

Greenspan recently credited large investments being made in computers and other

high-tech products for the dramatic boost in the nation’s productivity. Even previously skeptical economists now concede that IT driven productivity increases have

enabled our country to have what they said we could not have: high growth, low

unemployment, low inflation, growth in real wages.

Rights come with responsibilities. Participants and users must understand that

along with the obvious benefits of information technology are corresponding commitments to protect IT. The societal stakes involved in critical information protection

compel government and industry to seek common ground on the issue.

The road to this common ground will never be, of course, a straight line. On the

contrary, while the ends may be commonly shared, the policies that government and

industry will develop in order to provide this protection are likely to be quite different.

For instance, government policy may seek to establish both internal and externally directed standards to protect infrastructure elements from physical or cyber

attack, to require systems to detect when attacks are imminent or underway, to develop processes to react to the attack, and to reestablish the critical service. By definition, if the service has been deemed critical to the nation, then the federal, state

and local governments will have increased interest in the operation, management

and protection of the private businesses and services which comprise the infrastructure elements. The manner in which this government concern is manifested can

have a significant effect on private sector interests.

57

Similarly, industry can be expected to react to infrastructure threats in appropriate ways, guided by sound business considerations. Individual companies will

make infrastructure protection investments commensurate with the risk management principles in their industries. Government policies that impose protection

standards more stringent than those inherent in the private sector risk mitigation

process may not be acceptable. Additionally, requirements for reporting incidents to

government operations centers and responding to government directed reconstitution plans may impose burdens that need to be developed in consultation with the

private sector.

Private sector firms face other real world pressures in formulating a CIIP response. First, companies run the significant risk of negative publicity and exposure.

Companies are concerned that revealing and admitting past mistakes, shortcomings,

negative experiences or incidents can open them up for criticism from the press,

their competitors and their shareholders. Along the same lines, and for good reason,

companies are loath to share proprietary or privileged corporate information. Additionally, firms run the risk of harming consumer, customer, partner and investor

confidence. The private sector is also unprepared to share information and/or experiences out of fear that such information will be misused, abused or released to the

public by the government or competitors. Lastly, with the focus in today’s corporate

world on the immediate bottom line, most firms see no clear short-term return on

their information sharing investment.

To minimize the likelihood of, minimize the possible impact from, or prepare a

response to a coordinated, comprehensive attack on critical US infrastructure will

require coordinated, comprehensive teamwork by government and industry. No matter what the business or political pressures, we all have a stake in protecting our

information infrastructure. The nature of that teamwork is being decided through

national debate, substantive analysis and constructive dialogue. As we look ahead,

our nation is in need of new modes of cooperation, collaboration and experience

sharing among the private sector and between the public and private sectors. A well

prepared and informed private sector can work with government to find the proper

balance which optimizes the government’s need to protect the critical infrastructure

with business’ need to manage risks appropriately.

Significant reservations on the part of both private industry and government to

fully collaborate on these important issues exist, however, which ITAA is attempting

to address from both a theoretical and practical viewpoint.

CIIP: Establishing First Principles

In developing industry positions on national CIP issues, ITAA has established an

initial list of general principles that will guide the development of future policy.

• The protection of the national information infrastructure must be based on the

minimum amount of government (federal, state, and local) regulation as is feasible.

• The cost of protecting the national information infrastructure must be kept to the

lowest level possible commensurate with the threat and the consequences of attack. Parties must be able to differentiate between potential vulnerabilities and

specific threats.

• Industry owns and operates the Global Information Infrastructure and, as such,

has primary responsibility for CIIP requirements, design and implementation.

• Industry and government share an interest in the proliferation of a free and open

Internet, electronic commerce, other value added networks, and an efficient, effective information infrastructure generally.

• In protecting these resources, the specific and immediate priorities of government

and industry are apt to diverge.

• Industry will be guided by business considerations to protect itself against physical and cyber-attack as the threat to the information infrastructure evolves.

• Where corrective CIIP action is required to protect the public good, government

must identify such instances and create appropriate funding mechanisms.

The Internet and electronic commerce are inherently global in nature; therefore,

critical information protection will require collaboration among international bodies.

• Critical information protection measures much be commensurate with the threat

involved; risks must be appropriately identified and managed but not magnified

or embellished.

• Positive interaction between government and industry is essential. Among issues

which will require on-going communication and assessment is the need to balance the Constitutional right to privacy with national security concerns.

• Industry must monitor the private sector portion of the national information infrastructure and cooperate both internally and with government in reporting

and exchanging information concerning threats, attacks, and protective measVerDate 20-MAR-2000 15:27 Mar 27, 2000 Jkt 010199 PO 00000 Frm 00060 Fmt 6633 Sfmt 6621 E:\HEARINGS\56610.TXT pfrm02 PsN: 56610
58

ures. Coordination among principals must facilitate creation of early warning

systems. • In creating the information infrastructure, as well as attendant tools and technologies, industry must be provided safe harbor protections and its works

viewed as incidental to losses caused by criminal or malicious misbehavior or

natural disasters. • Distinctions must be made among cyber-mischief, cyber-crime and cyber-war to

clarify jurisdictional issues and determine appropriate responses. The adequacy

of current laws to prevent these threats must be reviewed. • Existing laws must be adapted as necessary to allow appropriate levels of information sharing among companies, and between the private sector and government. • Current policy in areas such as the R&E tax credit, software encryption, workforce training, and longterm government research and development funding

must be reviewed in light of common CIIP goals and objectives. • Law enforcement agencies must gain sufficient cyber-crime expertise to combat

specific threats and to investigate specific criminal acts. • Emergency response organizations must gain sufficient disaster recovery expertise

to minimize the effect of catastrophic events on the information infrastructure. • Implementing this diverse set of principles will require substantial work.

Difficult Issues Remain

At this nascent stage, many questions remain unanswered:

• What are the criteria for determining the individual elements of the critical information infrastructure, and who is involved in the determination? • What should be the process/mechanism by which the government will provide

threat, indications and warning information to critical information infrastructure companies? • What legislative remedies are necessary to overcome the current legal barriers to

information sharing? • Will shared information be protected from FOIA requests? • What threshold should be established for reporting anomalous activity? What type

of reporting will be required, given that industry will be motivated to monitor

and protect itself against cyber-attack for business reasons, and how will reported information be protected? • What government restrictions/legislation must be modified or lifted so that private

sector companies may implement active cyber-defense and/or counter-measures

(i.e., anti-trust provisions leading to NSTAC-like organizations)? • What type of organization(s) should plan and execute the strategy for critical information infrastructure defense? • What policy determinations are required to distinguish between law enforcement

and national security (warfare) jurisdictions as a result of attacks on critical information infrastructure elements?

• How should industry organize itself to represent private sector views, to exchange

relevant ‘‘lessons learned,’’ and to participate in policy development? Given that

IT is both a vertical industry sector itself, but also undergirds all the other

vertical sectors, what should be the relationship between the IT sector and the

others?

• What considerations must be allowed for those elements of the critical infrastructure which are foreign controlled or are part of multi-national businesses, considering that most infrastructures are international in nature?

• How should the information technology private sector assess the implications of

liability and insurance for critical services?

• Is there a sufficient research and development effort underway to improve the

ability of the private sector to monitor and protect its designated critical elements? Who should fund this effort? How should R&D information be distributed?

• If information system security becomes a competitive market differentiator, how

will the private sector accommodate the needs of the government for infrastructure protection while maintaining market competitiveness?

• How does our country develop a corps of IT workers with particular skills to focus

on security and infrastructure protection, particularly in light of the overall IT

workforce shortage?

In addition to substantive legal and policy issues, less tangible concerns must also

be addressed, particularly the development of trust—within the private sector and

between the private sector and government. ITAA and its member companies are

working with government to help build the necessary bridges. I would like to describe briefly a few of these initiatives now.

59

ITAA and CIIP

ITAA is taking a number of actions, has initiated programs, and motivated its

membership to address the CIIP challenges that the nation and our industry face.

ITAA realized the importance of this issue and took it on over two years ago with

the establishment of a dedicated Critical Information Protection Task Group to examine and analyze policy developments in this area and to offer input into the policy process. In the past year ITAA’s Critical Information Protection Task Group has

continued its mission of providing ITAA outreach and education to Administration

officials, federal civilian, military, national security, and law enforcement agencies,

Congress, the media, international organizations, and the public on the issues of

critical information protection and assurance. The CIP Task Group has been very

active particularly in the wake of Presidential Decision Directive 63 (PDD63), which

was issued last spring. The activity of our industry Task Group is increasing as federal agencies and industry grapple with the implementation of PDD63 which has

provided the initial outline and direction for the development of a more comprehensive national infrastructure protection strategy and plan.

In the past 12 months, much has happened. Through the Task Group, our members have been active in what has been the rapid development of information infrastructure security issues and policy. Our organization has produced one of the first

concerted industry efforts to address CIP issues. We have issued white papers focused on critical information infrastructure protection. We prepared an industry response to President’s Commission on Critical Infrastructure Protection (PCCIP) report and recommendations when they were released in the fall of 1997.

Since then, we have held frequent meetings with representatives across the government to educate, discuss and provide input into the evolving national policy developments.

In February of this year, ITAA was selected as a Sector Coordinator by the Department of Commerce for the Information and Communications infrastructure sector, in conjunction with two other associations focused primarily on the telecommunications industry—the US Telephone Association and the Telecommunications Industry Association. As a Sector Coordinator, we are continuing to work

with the federal government and, in particular, with NTIA on the implementation

of PDD 63.

Education and outreach will be critical to the success of our efforts. This March,

ITAA created the framework for a new Cybercitizen Partnership in conjunction with

Attorney General Janet Reno. The Partnership will focus on promoting individual

responsibility in cyberspace and creating a public-private sector forum for exchange

and cooperation. Through the Partnership, private sector representatives hope to

work with federal partners, including the Attorney General, the Department of Justice and National Security Agency representatives, on development of a critical infrastructure protection education and awareness campaign and other initiatives. In

addition to an awareness campaign we will be coordinating with the FBI’s National

Infrastructure Protection Center to identify and coordinate industry representation

and participation in Center activities to build the communication and trust that will

be so essential in moving forward.

Also of note: In October, 1998, I was appointed by the World Information Technology and Services Alliance (WITSA) to chair a new task force on critical information infrastructure. WITSA has been quick to recognize the need for industry to take

a proactive role in protecting information infrastructures. At a meeting in Taipei

earlier this spring, WITSA members approved a policy statement which encourages

government-industry dialogue at the local, national and international levels.

While both private industry and governments at all levels agree that there is a

growing need to address the challenges of CIP, there is little agreement on what

measures, if any, should be taken to protect those infrastructures. At the heart of

the Statement is the message that industry has a vested interest in anticipating and

confronting infrastructure threats in appropriate ways, guided by business considerations. While countries have very different ways of approaching CIP, WITSA believes that it is of critical importance that governments and international organizations always cooperate fully with industry in shaping CIP policy.

In all honesty, we at ITAA face a daunting job of convincing the IT industry to

work with these agencies on these initiatives. It is a challenge we must step up to

if we are to achieve any degree of success in opening lines of communication. Our

industry continues to have reservations about working too closely with the federal

law enforcement and national security community, particularly with the scars of the

encryption conflict still fresh.

60

ITAA Endorses Role of NTIA

While the IT industry is frequently uncomfortable in working with government

agencies on policy issues, the agency we are usually most comfortable with is DOC.

It is for this reason that ITAA and the information technology industry support the

selection and continued mission of NTIA, within DOC, as the lead agency for and

primary liaison to our industry for CIIP. While the national security implications

of information infrastructure security and assurance are clear, it must be remembered that it is the private commercial sector that owns, operates and manages over

90% of the nation’s information and communications infrastructure. As such it is appropriate that a civilian agency, focused on the advancement of US industry and

the US economy, be assigned the lead for working and collaborating with the innovative companies that have responsibility for and manage these important elements

of our economy.

ITAA and our members will continue to look forward to cooperating with all agencies and elements of government to meet the CIIP challenges. Yet we feel that NTIA

is the proper representative to work with our industry to begin to build the necessary levels of cooperation to help develop the National Infrastructure Protection

Plan. Within DOC, NTIA has the knowledge of and experience and relationships

with the IT and Communications industries that are necessary.

Over the past two years, ITAA, its members and the IT industry have begun to

develop collegial and constructive relationships with the leadership and staff of the

Commerce Department, NTIA and the Critical Information Infrastructure Assurance Program Office at NTIA in their capacity as the lead agency for our industry.

While significant, positive levels of trust, cooperation and communication have been

developing, the important work that must be done has barely started. This is not

because of any lack of desire or ability on behalf of NTIA or the CIIAP Office, but

because they have been asked to do their job without the necessary resources. They

lack even the minimum funding and support that is necessary for them to carry out

their mission. It is essential that the necessary programmatic funding and resources

be appropriated to the NTIA to carry out its mission. $3.5 million is a small price

to pay for getting these important programs moving down the track.

Conclusion

The U.S. and much of the world are building their economic house on an information technology foundation. This is extremely positive approach to take, delivering

tangible benefits to a fast growing percentage of the world’s population. As we build

this house which reaches to a better, more prosperous and democratic future, we

must be ever vigilant of cracks in this structure. If Year 2000 is the first challenge

to place our economic house at risk, failure to adopt a rigorous approach to CIIP

will be the second. I have offered a conceptual framework on which government and

industry can work towards common ground. A framework which recognizes inherent

differences and builds on mutual strengths. A framework in which ITAA continues

to play a leadership role. A framework in which NTIA must now be allowed to step

to the forefront. As you consider the NTIA Reauthorization Act of 1999 and the future role for the agency, I encourage you to make this possible.

Mr. TAUZIN. Thank you, Mr. Miller.

Next is Mr. Rogers.

STATEMENT OF JAMES A. ROGERS

Mr. ROGERS. Thank you, Mr. Chairman. My name is Jim Rogers

and I am retired manager of UPS. I have been asked by UPS to

describe to you the spectrum management dilemma that UPS experienced as customers for package delivery started calling for advanced information and telecommunications services such as tracking, tracing, and electronic signatures.

The company also has submitted a letter and has asked that it

be made part of the this subcommittee’s record.

[The letter referred to follows:]

61

UNITED PARCEL SERVICE

May 10, 1999

The Honorable BILLY TAUZIN

Chairman

Subcommittee on Telecommunications, Trade and Consumer Protection

Commerce Committee

2125 Rayburn House Office Building

U.S. House of Representatives

Washington D.C. 20515

DEAR MR. CHAIRMAN: On behalf of United Parcel Service, I want to extend my

appreciation to you and the subcommittee for holding the hearing on Tuesday, May

11, 1999, on NTIA and its spectrum activities, particularly those involving government use of spectrum to compete with the private sector. UPS also appreciates the

invitation to provide a witness. Jim Rogers, who will be speaking for UPS at that

hearing, is best suited to explain our history on this matter in that he was the person responsible for handling the agency and legislative issues associated with the

development of 220 MHz spectrum.

UPS believes that the current situation needs to be corrected. The case that will

be laid out by Jim Rogers at the hearing clearly provides convincing evidence that

our nation’s spectrum policy has evolved into an unacceptable situation as it pertains to the United States Postal Service (USPS) and its efforts to enter into private

commercial markets. UPS, as a commercial enterprise, must fulfill its spectrum

needs by applying for licenses issued by the Federal Communications Commission.

The Postal Service—UPS’s primary competitor in the marketplace—is given government agency status, and is able to obtain from NTIA the frequencies it needs to

compete in the marketplace against the private sector.

The disparity in treatment creates an enormous competitive advantage. UPS has

had to live with the delays there are inherent in FCC proceedings. The Postal Service does not. UPS has to pay for licenses by bidding for them at auction. The Postal

Service gets its licenses for free.

The competitive advantage enjoyed by the Postal Service is not merely theoretical.

As I have illustrated, UPS paid a significant price, in both dollars and opportunity

costs, to develop the system and obtain the frequencies needed to compete against

the Postal Service. In contrast, the Postal Service has avoided paying the costs that

UPS has borne, and has instead been able to acquire its frequencies without charge.

The solution is both fair and simple.

First, and at a minimum, when the Postal Service needs radio licenses in support

of its competitive activities, it should not be treated as a Government agency by

NTIA. It should be forced to go to the FCC and compete against everyone else for

scarce frequencies. It is one thing to give the Government users of the spectrum the

access that they need to serve the public interest. It is another thing altogether to

grant the Postal Service preferential rights of access, under preferential terms and

conditions, when it’s competing against private business.

Second, a determination as to whether a Postal Service application is for radio

frequencies to support competitive ventures should be made in a public proceeding,

and should be subject to challenge in the courts. It is not appropriate that this determination be made by the IRAC—on which the Postal Service sits. Nor is it appropriate that it be made without public scrutiny, or without accountability. The Postal

Service should be subject to the same rules as the rest of us when it is acquiring

frequencies in support of its competitive ventures.

Finally, in my view, the Postal Service should be removed from the IRAC altogether. To the extent that it is permitted to remain a member, it will be in a position to influence and use leverage over the other members of IRAC in order to benefit its own competitive objectives.

Sincerely,

KEN CHURCHILL,

Vice President, Corporate Public Affairs

Mr. ROGERS. As most of you know, UPS is the largest package

delivery service in the United States. We have grown from a local

service that delivers packages for local merchants to their customers to a worldwide enterprise that delivers more than 12 million packages per day around the globe. UPS customers are demanding ever more information about their shipments. To meet

that need, UPS has transformed itself from a large package delivery service to a technology-intensive global communications comVerDate 20-MAR-2000 15:27 Mar 27, 2000 Jkt 010199 PO 00000 Frm 00064 Fmt 6633 Sfmt 6602 E:\HEARINGS\56610.TXT pfrm02 PsN: 56610
62

pany that makes extensive use of radio spectrum to transmit package information data.

In this effort, we discovered a company in Oregon that was engaged in the business of building LORAN equipment for aircraft

and was doing some exciting work with amplitude compandered

single sideband. It is ACSB. This company, IIMorrow, was interested in expanding its market beyond aircraft instrumentation, and

we realized that we would both benefit from accelerating

IIMorrow’s development of ACSB.

In order to maximize that benefit, UPS eventually acquired

IIMorrow. Developing the equipment was one thing; having frequencies on which to operate was another. So we began discussions

with the FCC to determine whether there were frequencies available to support the applications we were interested in using.

On a separate track, the FCC began the proceedings to reallocate

the 220-222 megahertz band. Many of you remember that proceeding. The band had been utilized on a secondary basis by amateurs, and the reallocation proceeding got bogged down as the amateurs resisted these efforts. The Commission’s notice of proposed

rulemaking was released in December 1998, but a final report and

order was not issued until mid-1991.

While this was proceeding, UPS successfully conducted a test in

the Chicago area using frequencies in the 220-222 megahertz band

that were licensed for our use on an experimental basis.

In 1992, the FCC adopted its pioneer preference rules. While we

did receive tentative designation as a pioneer, the Commission ultimately declined to give us the award. We were getting close to the

time when we needed a track-and-trace system, but a couple of

things occurred. First, the FCC commenced to hold a series of lotteries to issue licenses in the 220-222 band. The geographic area

covered by these licenses was local. We spent more than $50,000

to participate in these lotteries, and while we did win some, we had

nowhere near the nationwide coverage we needed.

In 1993 Congress enacted amendments to the Communications

Act of 1934, giving the authority to auction licenses based on the

values that are placed on these frequencies. We do not quarrel with

the determination that auctioning licenses has many advantages

over lotteries or comparative hearings. One of the side effects of enacting the auction statute was a long delay in the Commission’s

proceeding with respect to issuing nationwide licenses in the 220-

222 megahertz band.

All of the activity that I have described took place between 1988

and 1994. The upshot is that UPS eventually invested over $40

million in its efforts to develop a data network using the 220-222

megahertz band, and it didn’t work.

We couldn’t wait. We had to get into the market. So we entered

into agreements with cellular licenses around the country to utilize

cellular frequencies for the track-and-trace services our customers

were demanding.

Today UPS is the No. 1 user of cellular services in the U.S.

UPS’s primary competitor, the U.S. Postal Service, did not sit idly

by. In 1996 the Postal Service applied for and obtained licenses to

utilize frequencies in the 220-222 band. This is the same band we

spent more than $40 million unsuccessfully to obtain permission to

63

use. To get its licenses, the Postal Service didn’t participate in an

auction. It filed an application with the Interagency Radio Advisory

Committee, the IRAC. IRAC advised NTIA with respect to the need

for government users to obtain frequency.

Who sits on IRAC? Among its members is the Postal Service. The

IRAC is composed of government users who work together to ensure the spectrum needs of all government users are met. The

Postal Service sits as a member of IRAC and participates in the

process of advising NTIA on whether or not its licenses should be

granted. It is an applicant, advocate, and a juror.

I suppose that would be fine if it weren’t for the fact that approximately $12 billion per year of the Postal Service revenues

come from providing services in competition with the private sector, including UPS. But when the Postal Service is engaged in competitive activities, its membership on the IRAC gives it a huge competitive advantage. The disparity between UPS and Postal Service

creates an enormous competitive advantage. UPS had to live with

the delays inherent in the FCC proceedings. The Postal Service did

not. UPS had to pay for licenses by bidding for them at an auction

or paying cellular fees now. The Postal Service gets its licenses for

free.

The competitive advantage enjoyed by the Postal Service is not

merely theoretical. UPS paid a significant price in both dollars and

opportunity costs developing the system and hoping to obtain the

frequencies needed to compete. In contrast, the Postal Service has

avoided paying the cost UPS has borne, and has instead been able

to acquire its frequencies without charge.

The solution is fair and simple. First and at a minimum, when

the Postal Service needs radio licenses in support of its competitive

activities, it should not be treated as a government agency by

NTIA. It should be forced to go to the FCC and compete against

everyone else for scarce frequencies. It is one thing to give the government users of the spectrum the access they need to serve the

public interest. It is another thing to grant the Postal Service preferential rights of access under preferential terms and conditions

when it is competing against private businesses.

Second, determination as to whether a Postal Service application

is for radio frequencies to support competitive ventures should be

made in a public proceeding and should be subject to challenge in

the courts. It is not appropriate that this determination be made

by the IRAC on which the Postal Service sits. The Postal Service

should be subject to the same rules as the rest of us when it is requiring frequencies in supports of its competitive ventures.

The Postal Service should be removed from the IRAC altogether.

To the extent that it is permitted to remain a member, it will be

in a position to influence and use leverage over the other members

of IRAC in order to benefit its own competitive services.

This ends my prepared remarks. I will be happy to answer any

questions that you have.

[The prepared statement of James A. Rogers follows:]

64

PREPARED STATEMENT OF JAMES A. ROGERS, RETIRED REPRESENTATIVE, UNITED

PARCEL SERVICE

Introduction

Good afternoon, Mr. Chairman and Members of the Subcommittee. I am pleased

to have the opportunity to appear before you today. My name is Jim Rogers, and

I am a retired employee of United Parcel Service. I have been asked by UPS to describe for you the spectrum dilemma that UPS experienced as customers for package delivery started calling for advanced information and telecommunications

serviices, such as tracking and tracing, and electronic signatures. Over the last decade, it had been my responsibility to coordinate UPS’s spectrum activities before the

FCC, and later, the NTIA. UPS has asked me to give you a brief narration of what

happened. The Company has also submitted a letter and has asked that it be made

part of the Subcommittee’s record.

Background

As most of you know, UPS is the largest package delivery service in the United

States. We have grown from a local service that delivered packages for local merchants to their customers, to a worldwide enterprise that delivers more than 12 million packages per day around the globe. Today we have a fleet of more than 500

aircraft, 157,000 ground vehicles, and more than 325,000 employees to meet the

needs of our customers.

Those needs have gotten far more sophisticated—particularly in the last 15 years.

Today’s shippers want to know whether their shipments have arrived, and if not,

where they are, and when they’ll get there. They need information about their shipments.

That’s what UPS’s customers are demanding. To meet that need, UPS has transformed itself from a large package delivery service to a technology-intensive global

communications company that makes extensive use of the radio spectrum.

UPS Experience

By the mid 1980’s, our customers were telling us that we needed to be able to

give them up-to-the minute information regarding the status of their shipments. In

response, we began the preliminary efforts to identify radio-based technologies that

could fill this need, and give us the ability to track our vehicles.

We discovered a company in Oregon that was engaged in the business of building

LORAN equipment for aircraft and terrestrial uses, and was doing some exciting

work with a new technology called ACSB—amplitude compandered single sideband.

This company—IIMorrow—was interested in expanding its market beyond aircraft

instrumentation, and we quickly realized that we would both benefit from accelerating IIMorrow’s development of ACSB. In order to maximize that benefit, UPS

acquired IIMorrow

But having the equipment was one thing, and having frequencies on which to operate was another. So we began discussions with the FCC to determine whether

there were frequencies available that could support the applications we were interested in using. The FCC was familiar with IIMorrow’s work on ACSB technology,

and in 1988 encouraged us to look at the 220-222 MHz band as a possible ‘‘home’’

for a new tracking and tracing service. As our customers continued to push us for

increased information about their shipments, we continued to push forward with the

development of ACSB technology to operate in the 220-222 MHz band. UPS successfully conducted a test in the Chicago area using frequencies that were licensed for

our use on an experimental basis.

On a separate track, the FCC began the proceeding to reallocate the 220-222 MHz

band. Many of you may remember that proceeding. This band had been utilized (on

a secondary basis) by amateurs, and the reallocation proceeding got bogged down

as the amateurs resisted the FCC’s efforts. The Commission’s Notice of Proposed

Rulemaking was released in December, 1989, but a final Report and Order was not

issued until mid-1991.

In 1992, the FCC adopted its ‘‘Pioneer Preference’’ rules. At this point, given the

sizable investment that UPS had made to develop the new technology to operate in

the 220-222 MHz band, we determined that we would apply for a pioneers preference award. Our hope was to receive a ‘‘Pioneer’’ designation that would enable

us to receive a license for this new technology without bidding for it at auction.

While we did receive ‘‘tentative’’ designation as a pioneer, the Commission ultimately declined to issue us the award that we sought. But as we were getting to

the point where we were ready to develop an operating ‘‘track and trace’’ system,

two things occurred.

65

First, the FCC commenced to hold a series of lotteries to issue licenses in the 220-

222 MHz band; however the geographic area covered by these licenses was very limited. UPS spent more than $50,000 to participate in these lotteries, and while we

did win a few, we had nowhere near the nationwide coverage that we sought.

Second, in 1993, Congress enacted the amendments to section 309(j) of the Communications Act giving the FCC the authority to auction licenses based on the value

that bidders placed on these frequencies. We do not quarrel with the determination

that auctioning licenses has many advantages over lotteries or comparative hearings. But one of the side effects of enacting the auction statute was a long delay

in the Commission’s proceedings with respect to issuing nationwide licenses in the

220-222 MHz band.

All of the activity I’ve described to you took place between 1988 and 1994. The

upshot is that UPS had invested over $40 million in its effort to develop a national

digital data network using the 220-222 MHz band, which didn’t come to fruition.

We couldn’t wait. Faced with unacceptable delay, UPS entered into agreements with

many cellular licensees around the country to utilize cellular frequencies for the

‘‘track and trace’’ services that our customers were demanding. Today, UPS is the

number one user of cellular services, with a nationwide network pieced together

from cellular licensees that permits us to offer our customers the ‘‘track and trace’’

capability that they demand.

U.S. Postal Service Actions

UPS’s primary competitor, the U.S. Postal Service, was not sitting idly on the

sidelines. In 1996, the U.S.P.S applied for, and obtained, licenses to utilize frequencies in the 220-222 MHz band. This is the same band that we had spent more

than $40 million—unsuccessfully—to obtain permission to use.

To get its licenses, the Postal Service didn’t have to participate in an auction. It

filed its applications with the Interagency Radio Advisory Committee—the ‘‘IRAC.’’

The IRAC advises NTIA with respect to the need for Government users to obtain

frequencies.

And who sits on IRAC? Well, among its members is none other than the U.S.

Postal Service. The IRAC is comprised of Government users, who work together to

ensure that the spectrum needs of all Government users are met. The Postal Service

sits as a member of the IRAC, and participates in the process of advising NTIA on

whether or not its licenses should be granted. It is at once an applicant, an advocate

and a juror.

I suppose that would be fine if it weren’t for the fact that approximately $12 billion dollars per year of the Postal Service’s revenues comes from providing services

in competition with the private sector, including UPS. But when the Postal Service

is engaged in competitive activities, its membership on the IRAC gives it a huge

competitive advantage.

Recommendations

The letter that Ken Churchill has submitted for the record states both the problem, and the solution, correctly. UPS, as a commercial enterprise, must fulfill its

spectrum needs by applying for licenses issued by the Federal Communications

Commission. UPS’s primary competitor in the marketplace—the U.S. Postal Service—is treated as a government agency, and is able to obtain from NTIA the frequencies it needs to compete in the marketplace against the private sector.

The disparity between UPS and the Postal Service creates an enormous competitive advantage. UPS has had to live with the delays there are inherent in FCC proceedings. The Postal Service does not. UPS has to pay for licenses by bidding for

them at auction. The Postal Service gets its licenses for free.

The competitive advantage enjoyed by the Postal Service is not merely theoretical.

As I have illustrated, UPS paid a significant price, in both dollars and opportunitiy

costs, to develop the system and obtain the frequencies needed to compete against

the Postal Service. In contrast, the Postal Service has avoided paying the costs that

UPS has borne, and has instead been able to acquire its frequencies without charge.

The solution is both fair and simple.

First, and at a minimum, when the Postal Service needs radio licenses in support

of its competitive activities, it should not be treated as a Government agency by

NTIA. It should be forced to go to the FCC and compete against everyone else for

scarce frequencies. It is one thing to give the Government users of the spectrum the

access that they need to serve the public interest. It is another thing altogether to

grant the Postal Service preferential rights of access, under preferential terms and

conditions, when it’s competing against private business.

Second, a determination as to whether a Postal Service application is for radio

frequencies to support competitive ventures should be made in a public proceeding,

66

and should be subject to challenge in the courts. It is not appropriate that this determination be made by the IRAC—on which the Postal Service sits. Nor is it appropriate that it be made without public scrutiny, or without accountability. The Postal

Service should be subject to the same rules as the rest of us when it is acquiring

frequencies in support of its competitive ventures.

Finally, in my view, the Postal Service should be removed from the IRAC altogether. To the extent that it is permitted to remain a member, it will be in a position to influence and use leverage over the other members of IRAC in order to benefit its own competitive services.

Mr. Chairman, this ends my prepared remarks. I will be happy to respond to any

questions you may have.

Mr. TAUZIN. Thank you, Mr. Rogers.

We will now hear from Mr. Kenneth Crawford.

STATEMENT OF KENNETH C. CRAWFORD

Mr. CRAWFORD. Mr. Chairman, I am pleased to say that as a result of a TIIAP grant that we received 2 years ago, there are people

alive in Oklahoma today that might have died Monday, May 3, so

I am pleased to be here to testify on behalf of the reauthorization

legislation.

My testimony will be based upon a program that we know is OKFIRST. It was established in 1996 through a 2-year TIIAP grant.

It was developed by my office at the University of Oklahoma. Our

goal was to provide public safety officials in our State, that is police, fire and civil emergency management, with the data from the

modernized National Weather Service, in particular their modern

Doppler weather radar network, sometimes called NEXRAD, sometimes called the WSR-88D.

We also provided extensive precursor training, extensive followup after the fact, and we designed our system to be multipurpose,

not just weather-related. My background in this comes from a 35-

year professional career that had me in the National Weather Service in States like Louisiana and Texas and Oklahoma. And for the

last decade I have been at the University of Oklahoma where I

have had a little bit more freedom to be creative in these areas.

The weakness that I saw in the weather warning system of our

Nation, be it Louisiana, Texas or Oklahoma, was simply the ability

to—or inability to disseminate time-critical information to a population at risk. Often that meant a rural area. Historically, as the

National Research Council has documented on a number of occasions, access to information from the National Weather Service has

been cumbersome, expensive, non-intuitive, and lacked critical details. And while the modernization of the National Weather Service

through the 1990’s has helped considerably with the quality of that

data, there still remains no real viable delivery mechanism to get

time-critical information to public safety officials in rural areas. In

particular, the public safety sector of our society have not really

reaped the benefits associated with the modernization of the

weather service.

It is my opinion that the rural population of our Nation is likely

in an information drought when it comes to natural disasters. And

as best I understand things from talking to friends across the Nation, the use of NEXRAD data in a host of public safety offices remains practically nonexistent, even though the NEXRAD radar

network has been in existence for almost 5 years now.

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In Oklahoma, as a result of TIIAP, we have 85 trained agencies.

Of those agencies, 49 percent are from communities where the population is 5,000 or smaller. As you well know, we had major tornado damage in central Oklahoma 8 days ago. It killed 41 people.

It wounded and injured 742. There were nearly 7,000 structures

that were destroyed, mostly in central Oklahoma. And while the

weather service and the broadcast media provided an excellent

service, the rural areas were also being hammered at the same

time that the media in Oklahoma City was saturated. All of the

media attention went to Oklahoma City.

I would like to read just one of many comments that I can give

you. This comes from the civil defense director in Guthrie, Oklahoma, to the north of Oklahoma City. He said when police and rescue crews arrived at the first Logan County damage site near the

city of Crescent, one of the first tasks was to open the highway sufficiently to get an ambulance through from Crescent to the hospital

in Guthrie. All efforts were to get that ambulance moving with a

critically injured tornado victim.

About the time they succeeded, a second tornado approached in

the dark and wrapped in rain. The ambulance and the tornado

were moving on intersecting paths. Emergency management, aware

of both events, was able to stop the ambulance until the tornado

had passed in front of it, and he closed that episode by saying,

‘‘And we received no tornado information from any source other

than OK-FIRST.’’ And the reason he didn’t was the media in Oklahoma City was saturated with what was going on.

I could give you a hundred success stories like that. I would close

with three or four points. One, they would never had occurred had

it not been for the availability of TIIAP funds to permit a pilot

project that we know as OK-FIRST to be developed.

Second, in my opinion it speeded the development of this kind of

information dissemination to the rural areas by at least 5 years,

possibly even more. As a result of our successes in Oklahoma, the

National Weather Service has now teamed with us to marry our efforts of OK-FIRST with their efforts, AWIPS, to try to take our

work into a national forum.

Finally, I would close by saying had not the TIIAP grant opportunity been known to us, we likely would have never had thought

about proposing such an effort as OK-FIRST.

My final comment would be taken from the Daily Oklahoma this

morning. I picked it up on my way here. If Larry has PR people,

it is just a coincidence, but there is a front page story, ‘‘Warning

System Called a Life Safer,’’ and it mentions TIIAP and the U.S.

Department of Commerce on the front page of a very conservative

newspaper. When journalists can say——

Mr. TAUZIN. Larry has his hands everywhere.

Mr. CRAWFORD. When journalists can say that they see the value

in these systems, I believe we as meteorologists have gained a new

level of credibility in our Nation, and I thank you for the time.

[The prepared statement of Kenneth C. Crawford follows:]

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PREPARED STATEMENT OF KENNETH C. CRAWFORD, REGENTS’ PROFESSOR OF METE- OROLOGY, DIRECTOR, OKLAHOMA CLIMATOLOGICAL SURVEY, THE UNIVERSITY OF

OKLAHOMA

Mr. Chairman and Members of the Subcommittee on Telecommunications, Trade

and Consumer Protection of the House Committee on Commerce, I am Kenneth C.

Crawford, currently a Regents’ Professor Of Meteorology and Director of the Oklahoma Climatological Survey (OCS) at the University of Oklahoma. I am honored to

appear before you today to testify on behalf of reauthorization legislation for the National Telecommunications and Information Administration (NTIA). Specifically, I

bring testimony in support of the Telecommunications Information Infrastructure

Assistant Program (TIIAP), a unit within the NTIA. My testimony also is based

upon a program we know in Oklahoma as OK-FIRST—Oklahoma’s First-response

Information Resource System using Telecommunications—which was initially funded by TIIAP.

OK-FIRST was established in 1996 through a two-year TIIAP grant. Continued

funding was provided by the State of Oklahoma during FY99. For FY00, funding

is still subject to Legislative and Gubernatorial approval during the current Legislative session.

OK-FIRST, developed by the Oklahoma Climatological Survey, provides public

safety officials in rural and urban areas with data from a network of modern Doppler weather radars (known as the WSR-88D or NEXRAD) along with other information from the modernized National Weather Service (NWS). In addition, OK-FIRST

provides extensive precursor training on how to use and how NOT to use the data.

From the beginning, the OK-FIRST system was designed to be multipurpose (e.g.,

it is routinely used during episodes of severe weather, flooding, wildfires, and hazardous material incidents).

I would begin by telling you that I have been on the faculty at the University of

Oklahoma since 1989. During the intervening 10-years, my office has developed

three major public-service programs—all lying within the scope of enabling legislation from the Oklahoma Legislature in 1978. The first service program is the Oklahoma Mesonetwork (known as the Mesonet), an automated network of 115 remote

observing stations deployed across Oklahoma which provide environmental data at

5 minute intervals on an around-the-clock basis. Building upon this early 1990s effort which was funded by the State of Oklahoma, the OCS developed a K-12 educational outreach program designed to put real-time Mesonet data into the K-12

classrooms of Oklahoma and to bring the information age to tomorrow’s leaders.

This latter program, called EARTHSTORM, was supported for three years (1992-

1995) by a competitively-earned grant from the National Science Foundation. Today,

the Mesonet and EARTHSTORM continue to provide services to the citizens of

Oklahoma using funds appropriated by our State Legislature and via funds derived

from various other partnerships.

Our third outreach effort—known as OK-FIRST and made possible by TIIAP—

was built upon the credibility brought to us by these past experiences along with

a number of other relevant experiences and technological advances. This important

experience base includes:

• My own experiences as an NWS employee of 30 years that encompassed duty as

an operational forecaster, as a research meteorologist at the National Severe

Storms Laboratory during the early development days of the NEXRAD program

(Doppler weather radar that became known as the WSR-88D), and as a senior

NWS field manager for nearly 10 years. The last 8 years of my NWS career

were spent in central Oklahoma where the NWS was focusing much of its modernization effort at the time. From these experiences, I learned first-hand that

a major weakness in the nation’s weather warning system was the difficult

issue of the dissemination of time-critical information to the populated area

with the greatest risk.

Historically, access to NWS information by local officials nationwide had, for

years, been cumbersome, expensive, non-intuitive, and lacked critical details.

The $4.5 billion NWS modernization of the 1990s made this problem much

worse by producing vast amounts of high-quality, county-scale information with

no viable delivery mechanism to those ultimately responsible for making lifeand-death decisions. In addition, rural areas—traditionally under served by

telecommunications and technology and often ignored by programs in both the

public and private sector—were especially at high risk when severe weather,

wildfires, and hazardous material incidents occurred. Consequently, local officials made weather-impacted decisions without adequate information (e.g.,

storm spotters were deployed precariously because coordinators lacked information about storm location, movement, and intensity). Despite the NWS modVerDate 20-MAR-2000 15:27 Mar 27, 2000 Jkt 010199 PO 00000 Frm 00071 Fmt 6633 Sfmt 6621 E:\HEARINGS\56610.TXT pfrm02 PsN: 56610
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ernization which dramatically improved their forecasting and warning capabilities, public safety officials still have not reaped many of the associated benefits.

Thus, it is my opinion, based upon front-line experiences in Oklahoma during

the 1980s, that the rural population of our nation is likely in an information

drought when natural disasters strike. Disaster survey after disaster survey

continue to point out that the population-at-risk did not understand the real

risks they faced. • The modernization of the National Weather Service included deployment of the

WSR-88D radar network that consisted of 154 Doppler weather radars. Because

of NEXRAD’s thoughtful design, all data were digital, updated frequently, and

sharable. Yet, access to and use of NEXRAD data in public safety offices remains pratically non-existent in rural areas due to a host of small issues (e.g.,

available funds, affordable fees, knowledge of what is available, training, etc.). • The maturation of the Internet, and in Oklahoma, its statewide equivalent known

as OneNet (funded by the State of Oklahoma for $14 million in 1992), represented a cost-effective capability to move data into the most rural of areas

across Oklahoma. In addition, the maturation of PC technology represented the

affordable tools to display important digital information.

All that was lacking to improve the delivery of critical weather information into

rural areas was (1) an affordable access to NEXRAD data and an authority to redistribute this unique data to state and locally-supported agencies within Oklahoma,

and (2) funds to develop a pilot project designed to deliver the best possible information from the modernized NWS to rural Oklahoma, including the provision of training and on-going support.

These two obstacles were overcome by a unique partnership, formed in 1996 between the Unisys Corporation of Kennett Square, PA and the University of Oklahoma. This partnership permitted the State of Oklahoma to acquire digital radar

data from 15 nearby systems in the WSR-88D network (Figure 1—appended at end

of narrative). As a result, access to the NEXRAD pipeline has become very affordable (compared to acquiring NEXRAD data agency-by-agency on the open market).

The partnership between Unisys and the University of Oklahoma remains unique

(as far as I know) among the four agencies authorized to distribute NEXRAD data

beyond the Federal Government. With this partnership in hand, the State of Oklahoma was given the authority to redistribute WSR-88D data to public safety agencies

across Oklahoma—to include civil emergency management, law enforcement, and

fire protection agencies. As a result, Unisys now receives data fees from a market

not previously tapped, because market forces had made the data prohibitively expensive for rural agencies that routinely operate on shoestring budgets.

In addition, funds were provided by a competitively-earned grant from TIIAP— $549,910 for 2.5 years beginning in October of 1996. As a result of the momentum

generated by the TIIAP grant, eighty-five OK-FIRST agencies (Figure 2—appended

at end of narrative) have been well trained (we believe) to access and use highly

technical data produced every 6 minutes by each radar in the WSR-88D network

(e.g., estimated hail size, the probability of severe-sized hail, the presence of

mesocyclones, radar estimated rainfall, etc.) and to resolve potential conflicting information produced by two adjacent WSR-88Ds. Of these 85 user agencies, 49% represent communities where the population is 5,000 or less.

On May 3, 1999, the National Weather Service and the radio and television media

contributed greatly to the quality and efficient delivery of warnings for a devastating series of killer storms. Clearly, the severe weather outbreak of May 3rd extracted a horrific toll, yet produced evidence that modern-day technology does save

lives:

• 75 tornadoes moved across Oklahoma during a 10 hour period killing 41 and injuring an additional 742 Oklahomans. In their path, these tornadoes destroyed

4,156 structures (a grand total of 7,000 structures severely affected), and left

an economic price tag that will exceed one billion dollars! • WSR-88Ds used on May 3rd pinpointed the location of most, if not all killer

storms with incredible accuracy and clarity. • NWS meteorologists at the Storm Prediction Center in Norman, and at the NWS

Forecast Offices in Norman and in Tulsa produced a series of outstanding forecasts and warnings that represent major dividends from the NWS modernization.

• The electronic broadcast media in Oklahoma City performed superbly—in fact, in

my 35+ years as a professional meteorologist, I have never seen the broadcast

media perform their warning dissemination tasks in so admirable a manner.

• Public safety agencies across Oklahoma also were trained and ready for this onslaught, due partially to the existence of OK-FIRST. They performed their local

emergency response tasks in no less admirable a fashion—for the real miracle

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of May 3, 1999 was a death toll that stood at 41 and did not exceed 1,000! The

effects of the tornadoes which struck Oklahoma on that day could have been

worse. Much worse.

However, the best story of May 3rd may not necessarily be those which made the

national and international headlines. Instead, it might be how OK-FIRST worked

as an information-delivery system to save lives on this most stressful of nights:

The OK-FIRST dissemination system shared 36,278 NEXRAD files of information

with OK-FIRST agencies on May 3rd. A typical NEXRAD image used by an OKFIRST agency on this day is shown in Figure 3—appended at end of narrative.

Steve Chapman, Emergency Management Director for the town of Chickasha

(southwest of OKC), saw the tornadoes developing on his OK-FIRST displays. Using

pinpoint information from OK-FIRST (hence, the NWS and NEXRAD), Mr. Chapman ordered the evacuation of the Chickasha Airport—fifteen minutes before one

of the first tornadoes of the day struck. No fatalities or injuries resulted.

Later that evening, when another tornado demolished the Tanger Outlet Mall in

Stroud (between OKC and Tulsa), all stores had been vacated. Ben Springfield, Lincoln County Emergency Management Director, used OK-FIRST and notified Stroud

30 minutes in advance.

People in their homes in rural areas also were more secure thanks to the actions

of emergency managers that day. After the storms had spun their path of destruction across the Oklahoma City metropolitan area, they continued northeast. Residents in rural areas had minimal attention from the media, as local news media

focused much of their coverage upon the devastation and recovery operations in and

near Oklahoma City. One of Ben Springfield’s assistants, who was monitoring the

OK-FIRST radar display, relayed updates every five minutes on their scanner. People in the path of the tornado received the information and took shelter. Mr. Springfield said that many of these people would otherwise not have taken shelter had

it not been for the trustworthy information coming across their scanner.

In Kingfisher County (northwest of OKC), the town of Dover was hit hard, with

one-third of the homes destroyed and another one third damaged. Despite the extent

of the devastation, only one fatality occurred. The town’s warning system was

sounded 10 to 20 minutes in advance of the storm, according to Danny Mastalka,

Director of Kingfisher County Emergency Management. The lone fatality was an individual who received the warning but chose not to take action.

Rescue workers themselves were targets of the storms. A tornado completely devastated the small community of Mulhall in Logan County (north of OKC). Rescue

workers set up a command center to manage the recovery operations. John Lewis,

Logan County Emergency Management Director, saw another tornado approaching

on his OK-FIRST system; it was following a nearly identical path to the first tornado. He alerted the command center to move their operations twice. As a result,

the rescue workers did not themselves become victims of the storms.

Mr. Lewis, in his letter of May 10, 1999 (appended at the end of narrative) stated:

‘‘When police and rescue crews arrived at the first Logan County damage site

near the City of Crescent, one of the first tasks was to open the highway sufficiently to get an ambulance through from Crescent to the hospital in Guthrie.

All efforts were to get that ambulance moving with a critically injured tornado

victim. About the time they succeeded, a second tornado approached in the dark

and wrapped in rain. The ambulance and the tornado moved on intersecting

paths. Emergency management, aware of both events, was able to stop the ambulance until the tornado had passed just in front of it. We received NO tornado

information from any source other than OK-FIRST for this tornado.’’

‘‘The town of Mulhall, devastated by the initial tornado after it passed Crescent,

was warned primarily by two law enforcement units sounding their vehicle sirens in the town. The units had been dispatched there by the Sheriff’s Office

based upon OK-FIRST data. Both units continued warning residents until they

were each hit by debris: one by power lines down across his car, the second by

a large tree on top of his unit. Both officers were uninjured—and so were all

but one Mulhall town resident!’’ [Note: practically every structure in Mulhall,

a community of 945 citizens, was destroyed, including the town’s only water

tower which had stood since the 1920s.]

In Seminole County (east of OKC), Emergency Management Director Herb Gunter

radioed a warning to a convoy of emergency vehicles responding to a mutual aid call

from the Oklahoma City area. Mr. Gunter noticed that another tornado was developing and would cross I-40 ahead of them. The law enforcement convoy closed I40 so that neither they nor other vehicles would drive into the path of the storm.

Unfortunately, two vehicles (and two fatalities) were later found swept from the

road in the exact spot where Mr. Gunter identified the storm.

71

Meanwhile, in far northeast Oklahoma, as attention remained focused on killer

tornadoes, heavy thunderstorms with flood producing rains brought 5-6 inches to

Ottawa and surrounding counties on the night of May 3rd. Terry Durborow, Emergency Management Director for the City of Miami, used OK-FIRST to ‘‘help protect

the public in a timely manner.’’

Incidentally, OK-FIRST has been named a semifinalist in Harvard University’s

‘‘Innovations in American Government’’ awards program for 1999, ranking in the top

6% of the 1609 applications submitted. Selection of finalists in this prestigious

awards program will occur at the end of May 1999.

These success stories (and others too numerous to document) would have never

occurred had it not been for the availability of TIIAP funds. Three points illustrate

the impact of TIIAP upon the development of OK-FIRST.

First, in my opinion, the development of an information-delivery system like OKFIRST—one that would meet the needs of public safety officials because agency

users are trained to use a modern information-delivery system—would not have

happened prior to 2005 had TIIAP funds not been awarded to jump-start a project

that now has national applications.

Second, the National Weather Service awarded substantial funds in FY99 to link

OK-FIRST and the University of Oklahoma with the evolution of its LDAD System

(Local Data Acquisition and Dissemination)—the external data-sharing arm of

AWIPS (Advanced Weather Interactive Processing System). With NWS support, two

agencies concerned with public service and public safety are working in partnership

to bring university ideas and concepts into the Federal Government. The joint program is known as ONALERT—Observations Necessary for Aiding Local Emergency

Response via Telecommunications. TIIAP funds made a cooperative project possible

because the University of Oklahoma now is a leader in weather-information dissemination to rural areas and has much to offer the NWS in solving the difficult

problem of getting modernized data into the rural communities of our nation.

Finally, and most importantly, without the TIIAP grant opportunity being available, the creative staff at the Oklahoma Climatological Survey likely would never

have proposed a project like OK-FIRST. Moreover, other funds to develop a program

like OK-FIRST would have been unavailable because federal leaders in Washington

are not always sensitive to needs and constraints in rural areas and always seem

to target national programs to populated areas. Furthermore, large corporations involved in weather dissemination are not always sensitive to rural areas (e.g., market forces have made WSR-88D data prohibitively expensive for small communities).

In addition, smaller companies involved with weather information have provided

neither adequate tools designed for public-safety use nor the training that is critical

for the proper interpretation and application of the data. Thus, TIIAP funds bridged

a long-standing chasm that exists in the complex chain of ‘‘technology transfer’’.

With these final three points, I am available to answer any questions you may

have. However, I would call to the Committee’s attention three figures appended to

this narrative along with a letter from John Lewis, Emergency Management Director for Logan County (north of OKC). His letter provides a perspective of life on the

firing-line that few people appreciate and understand.

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73

74

LOGAN COUNTY CIVIL DEFENSE

GUTHRIE, OKLAHOMA 73044

May 10, 1999

Director

Oklahoma Climatological Survey

Boyd St

Norman OK

Dr. Crawford: I want to pass on to you how critical a role the OK-FIRST program

played in response to the tornado disaster which occurred on May 3, 1999 in Logan

County Oklahoma. Having current weather radar data, available ‘‘on demand’’ to

emergency services, probably saved dozens of lives. Some examples follow:

Following the devastating storms in Oklahoma City, Moore, and Del City, numerous Logan County police and fire crews were eager to go there to assist. Only by

real-time OK-FIRST data were we able to persuade department chiefs that our own

threat was not over; that crews and equipment should be retained in our area until

several additional supercells capable of producing tornados passed. Thus, emergency

response was still strong in Logan County when we were struck about 90 minutes

later.

When police and rescue crews arrived at the first Logan County damage site near

the City of Crescent, one of the first tasks was to open the highway sufficiently to

get an ambulance through from Crescent to the hospital in Guthrie. All efforts were

to get that ambulance moving with a critically injured tornado victim. About the

time they succeeded, a second tornado approached in the dark and wrapped in rain.

The ambulance and the tornado moved on intersecting paths. Emergency management, aware of both events, was able to stop the ambulance until the tornado had

passed just in front of it. We received NO tornado information from any source other

than OK-FIRST for this save.

The town of Mulhall, devastated by the initial tornado after it passed Crescent,

was warned primarily by two law enforcement units sounding their vehiclesirens in

the town. The units had been dispatched there by the Sheriff’s office based upon

OK-FIRST data. Both units continued warning residents until they were each hit

by debris: one by power lines down across his car, the second by a large tree on

top of his unit. Both officers were uninjured—and so were all but one Mulhall town

resident!

Police, sheriff, and rescue crews responding to Mulhall began arriving as two additional tornados approached. Requests for timely detailed storm information were

very urgent. Emergency management provided continuous, accurate locations on two

tornados at each 6 minute radar update. Locations of intense circulation were evident on the storm relative velocity product of the OK FIRST radar. Officers on-scene

visually confirmed the presence of these follow-on tornados and accuracy of the

emergency management’s warnings, and scrambled out of the tornado’s path. During these events, TV media was focused on other areas, then being hit by larger

storms, so again there was no tornado information source except OK-FIRST.

During recovery operations on May 9, severe thunderstorms again threatened

Mulhall where electricity was still limited, and widespread public viewing of news

media warnings was impossible. Emergency management set up OK-FIRST displays

in the command post. Emergency management used the radar and mesonet to

evaluate the weather threat and provide a four hour warning. This was important

for work crews in order to protect the exposed supplies and donations (clothing, toilet paper, bedding, etc) and adjust work schedules and locations. More importantly

perhaps, town officials used bullhorns to notify the workers and residents, relieving

fears and dispelling rumors of more tornados.

I hope these examples help to portray the crucial role played by OK-FIRST in

warning, emergency response and disaster recovery. I am totally convinced that

without the weather displays made available to us through OK-FIRST, and the

training you provided to interpret those displays, there would have been a very different story to tell.

Please pass along our gratitude to your staff as well as the miriad of people responsible for making the OK-FIRST project a reality. We absolutely have to keep

your project alive and growing.

JOHN W LEWIS

Director

Mr. TAUZIN. The Chair recognizes himself for a round of questions, and the Chair will be generous with time.

First of all, Mr. Irving, the gentleman from UPS, Mr. Rogers, in

his letter to our office makes a fairly compelling case that he sufVerDate 20-MAR-2000 15:27 Mar 27, 2000 Jkt 010199 PO 00000 Frm 00077 Fmt 6633 Sfmt 6602 E:\HEARINGS\56610.TXT pfrm02 PsN: 56610
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fers some real disadvantage with the U.S. Postal Service when it

comes to the allocation of spectrum and the way the Postal Service

sits on the very board that makes the decisions. How do you answer that?

Mr. IRVING. I don’t believe I have a lot of discretion. The U.S.

Postal Service is a creature of statute. They are a quasi-Federal

agency. They have the rights of all other quasi-Federal agencies. I

think the Congress, including the Government Operations Committee, would look askance if an Assistant Secretary said this is a

Federal agency.

Mr. TAUZIN. You don’t have a choice under current law.

Mr. IRVING. I don’t. I have to do what the law requires me to do.

Right now they are a Federal agency and they have the same

rights and privileges of every other Federal agency.

Mr. TAUZIN. You also heard Mr. Ross make the recommendation

of a much closer, cooperative agreement between your office and

the ITA in terms of international trade issues. Has your office followed through on that recommendation? Does that require legislation? What is the news there?

Mr. IRVING. It does require us to work closer, but I think that

the Department of Commerce and Congress needs to look at

redundancies. I think there are some questions as to who has what

role in what circumstances.

Mr. TAUZIN. Do you have some recommendations for us in that

regard?

Mr. IRVING. Personally, I believe that there are some

redundancies. I believe NTIA is fully capable of doing what needs

to be done in national telecommunications. I wonder if we were

starting from a baseline, if we would create two offices in the Department of Commerce that had international telecommunications

responsibilities.

Having said that, having traveled across this country with U.S.

industry, without ITA’s support, particularly in-country support,

the Foreign Commercial Service, I could not do my job. They know

those markets and know those people. But having one office that

has 16 or 17 people doing international telecommunications and

another office that has 300 or 260 people, there are some overlaps

and some questions.

Mr. TAUZIN. We need to visit more on that.

Colonel Skinner, you and Mr. Miller focused a little bit on the

critical nature of security of telecommunications information, obviously for military purposes. Mr. Miller pointed out how NTIA assists in the bridging of that work so that private sector critical information is also subject to the same kind of attacks and security

issues.

You probably cannot answer this, but it occurred to me we build

stealth technology but that stealth technology is communicating as

it flies, as it operates. Obviously emissions, points of emission of

communications are points of—if I were looking for something, that

is the place I would look. That is where we target radar on the

ground when it is turned on.

How much of NTIA’s work in allocating spectrum, working with

you, assists the Department of Defense in protecting our vital assets when it comes to those kinds of threats? I assume that they

76

are threats. Identifying the source of a communication or some

form of information technology obviously allows our military to

identify the location of a potential enemy asset as it makes our own

assets vulnerable to some degree. Would you comment?

Mr. SKINNER. I would prefer not to comment in detail in an open

hearing. I think that you have hit an important aspect of our relationship with NTIA and the future of that relationship as well.

Clearly as our technologically advanced adversaries become more

able to counter our current ability to sense them, we need to take

actions to improve that capability. And one of the challenges that

it is creating for Secretary Irving and DOD is that many of the

technologies that we need to imply against future threats require

more and more bandwidth. While it is in our best interests to manage that bandwidth that is allocated to us as efficiently as possible,

the demands for more bandwidth are growing. And all of those

issues that Mr. Miller brought up strike close to home in the national security environment, and we have to use some of our bandwidth to provide the security our systems demand.

Mr. TAUZIN. Do you call upon Mr. Irving’s lab? He was mentioning that if his lab were privatized, you would have to build

your own. Do you use his lab?

Mr. SKINNER. Absolutely. Secretary Irving runs a real center of

excellence. We have used those labs for national security projects,

and we are concerned that outsourcing may change our relationship on a couple of fronts, as you will see noted in my written testimony.

At issue is both security and proprietary information that many

of our weapons systems produce.

Mr. TAUZIN. You use private labs, but your point is for security

purposes——

Mr. SKINNER. It must meet our security requirements and have

the organizational conflict of interest, which is the way we can protect the intellectual property of our contractors who we want to

have confidence in the DOD, which will protect their trade secrets

as well.

Mr. TAUZIN. The Chair recognizes the ranking member for a

round of questions.

Mr. MARKEY. Thank you, Mr. Chairman.

Mr. Crawford, your OK-FIRST program provides public safety officials in rural and urban areas with data from a network of Doppler weather radar, along with information from the National

Weather Service. This is an innovative program, and I congratulate

you for that because it helps to warn people of severe weather,

flooding, tornadoes and hazardous materials accidents.

You already made reference to this, but in Oklahoma you helped

save lives, and we very much appreciate that. How did you pinpoint those threats? What was the key? And if the program was

not in existence, that is, if there was no grant program from NTIA,

would lives have been lost?

Mr. CRAWFORD. In my opinion, yes. The reason for that is the

public safety officials, be it fire, police, or civil defense, would have

been operating from an information void, either due to lack of TV

coverage, due to lack of quantitative details by teletype circuits,

whatever means, it would be dated information and, in particular,

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nonspecific. Now they have the same radar images that the National Weather Service meteorologists use. Once that NWS employee has made a decision this storm is tornadic, then the local

official is empowered to follow it through its lifetime and take appropriate action.

Mr. MARKEY. Thank you.

Mr. Irving, as you know, I believe you are the Chamique

Holdsclaw of telecommunications policy.

Mr. IRVING. My game is not that good.

Mr. MARKEY. In your testimony and opening statement, you

noted that prior reviews of NTIA’s research facility in Boulder, Colorado have resulted in a determination that there is a real need

for a centralized cost-effective Federal telecommunications entity

that serves the public interest and performs unique government engineering research.

When were these prior reviews conducted? What has been your

experience with the NTIA labs in Boulder?

Mr. IRVING. The studies—we have had at least 4 studies. In 1983

under then-Assistant Secretary Sikes; in 1988, under David Markey, not Ed Markey; 1988, under Mr. Sikes; 1988, under our then

budget officer, Sarah Maloney who now runs our management program at NTIA.

We just recently, working with the Department to look to see

whether the labs should be folded into NIST labs, did another survey in 1997. I have asked for those to be included in the record.

[The information referred to is retained in subcommittee files.]

Mr. IRVING. But our experience has been basically that these labs

do serve an important function. If we didn’t have these labs, we

would have to reinvent them and that is the concern.

A few weeks ago I was talking to Chairman Kennard, and I

know this committee has had some conversations with Mr.

Kennard. There are some important engineering analyses that they

need done. They have requested, I think, either here or in the Senate to be able to bring on some engineering personnel. I believe the

solution is to have them contract with my labs, and I have discussed that with Mr. Kennard. To the extent that you have engineering needs, I have got engineers, I have a facility, you can contract with them. It works in terms of the reauthorization that you

are talking about with the commission, and with regards to preserving a important Federal resource.

But I don’t know how the work we do with the DOD, which has

to be both security and proprietary, my guys don’t have a dog in

most of these proprietary fights, and they have clearances that

they need. So what we are able to do—and we also don’t add a

markup. It is cost-based. The Economy Act requires it to be costbased.

So if the Colonel needs some information and he goes to the private sector, one, he has to find those labs that are not conflicted

and those with the requisite clearances. And that may put him in

a position of having to pay a monopoly price. I can’t charge monopoly rent because the IG would come down on me if we mark up

above what we are allowed to charge them.

Mr. MARKEY. Could you help to clarify for us notions of

privatizing the Boulder labs related to cooperative research and deVerDate 20-MAR-2000 15:27 Mar 27, 2000 Jkt 010199 PO 00000 Frm 00080 Fmt 6633 Sfmt 6602 E:\HEARINGS\56610.TXT pfrm02 PsN: 56610
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velopment agreements, agreements struck with the private sector?

It is my understanding that these agreements reflect a very small

portion of the overall operations of the Boulder labs. Can you tell

us how they work?

Mr. IRVING. They are an extremely small portion. We have put

$41 million in NTIA’s lab total. I have a chart that I would like

to enter into the record that demonstrates only about 1 percent of

our labs—well, approximately 1 percent funding comes from work

for other than Federal agencies. About 40 percent of the money is

direct appropriations, and 60 percent of the money is work we do

for other agencies. And depending on the year, it is 50 or 60, sometimes it comes up to 70 or 80 percent with the DOD.

The reality is we do what the Defense Department needs when

they need it, but we are increasingly, I believe, trying to move to

independence of the vagaries of the system. We have gone from

$5.3 million in direct funding of the labs to $3.7 million now. That

makes us more dependent upon Federal agencies. We like working

with our brothers and sisters in the Federal Government, but we

believe that we could be doing more if we had more direct funding.

I don’t know if these budget days we are going to get it, but it is—

I think it is a misapprehension on many people’s part that the

work is being done for the private sector on a contract basis. Ninety-nine percent is done for the Federal taxpayer or for Federal

agencies.

Mr. MARKEY. I ask unanimous consent that the report referred

to in this answer be made a part of the record.

[The information referred to follows:]

NATIONAL TELECOMMUNICATIONS AND INFORMATION ADMINISTRATION

Institute for Telecommunication Sciences

Sources of Funding-July 1999

($ in Millions)

FY1994 FY1995 FY1996 FY1997 FY1998 FY1999

$%$%$%$%$%$%

Direct Appropriations: $5.3 39.8 $5.7 45.6 $4.3 38.4 $4.3 39.1 $4.4 45.8 $3.8 38.8

Other Agency: .............. $7.6 57.0 $6.3 50.4 $6.7 59.8 $6.5 59.1 $5.1 53.1 $5.7 58.2

Other ....................... $3.8 28.5 $3.2 25.6 $4.0 35.7 $3.6 32.7 $3.2 33.3 $2.7 27.6

Defense ................... $3.8 28.5 $3.1 24.8 $2.7 24.1 $2.9 26.4 $1.9 19.8 $3.0 30.6

CRADA .......................... $.4 3.2 $.5 4.0 $.2 1.8 $.2 1.8 $.1 1.1 $.3 3.0

TOTAL ........................... $13.3 ....... $12.5 ....... $11.2 ....... $11.0 ....... $9.6 ....... $9.8

Mr. TAUZIN. Without objection, the reports will be made a part

of the record as well as the letter, Mr. Rogers, that you requested

be made a part of the record.

The gentleman, Mr. Shimkus, is recognized for a round of questions.

Mr. SHIMKUS. Thank you, Mr. Chairman.

Mr. Irving, I have a couple of questions on the grant programs.

That is primarily my focus of today. I want to talk about the PTFP

grants first.

In St. Louis we have a wonderful public television station, channel 9, KETC. They have been very entrepreneurial in their aspects

and are moving in the direction that I think Congress is expecting

TV to move on. In fact, they just moved into a $13 million facility

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1 47 U.S.C. 392(b) ‘‘with respect to any project for the construction of public telecommunications facilities, the Secretary (of Commerce) shall make a grant... except that such amount

shall not exceed 75 percent of the... reasonable and necessary cost of such project.’’

of which only $500,000 was from the Federal Government. They

were able to raise $12 million from the local community in St.

Louis.

Now in your testimony you mentioned four stations that will be

receiving grants: Seattle, San Francisco, Los Angeles, and Dallas.

All these cities are larger than St. Louis.

I would like to know how much these stations have raised from

the local community to assist in digital transition, and you may not

be able to give me that information so if you can give me that in

writing.

[The information referred to follows:]

If the PTFP grant award process takes into consideration whether a station has raised community funds to ease digital conversion costs. If so, are

the stations penalized for making an effort to raise money.

By law, the PTFP is a matching program which can fund no more than 75% of

the costs to construct public telecommunications facilities.1 This restriction applies

to all public broadcasting equipment replacement projects, including those to convert public television stations to digital technologies. Public television stations

therefore are required to raise local funds in order to receive support from PTFP.

Many stations use the opportunity afforded by having the Federal government

match locally raised funds as a key component in their fund raising strategies.

In recent years, PTFP has usually awarded funding for equipment replacement,

which includes digital conversion projects, at a rate of 50% Federal funding. Stations are permitted to request up to the legal limit of 75% Federal by providing justification of their need for this additional level of support. We believe that the PTFP

therefore encourages stations to raise funds from their local community, while providing those stations unable to raise 50% of project costs with the opportunity to

receive Federal support up to 75% of the project costs.

Mr. SHIMKUS. And does a PTFP grant application take into account what stations have done on their own to raise funds?

The issue is who are we rewarding? Are we rewarding those who

are working and developing their base to move into this new age

by the people that respect the service they provide, or are we rewarding those who are not moving as fast as we would like? That

would be the first thing that I open up for comments.

Mr. IRVING. I don’t have the specific statistics, but we will work

with the Association of Public Television Stations to give that.

With regard to how we try to give grants, my preference is to try

to give grants where the need is clearest. With regard to digital

transition, I think all stations are going to have some problem

making the commitment, the financial commitment needed to get

a digital age. But there are some communities where they are

going to have a hard time getting 10 or 20 percent. There are rural

communities that are—to want to have digital television, smaller

communities are going to have difficulty. The WGBHs, the WETAs,

the WNETs will have some difficulty, but clearly they will have

less difficulty than a station in the bottom 75, bottom 80 market.

Mr. SHIMKUS. I put this into baseball analogy. Look at these

markets that you have in your testimony, Seattle, San Francisco,

Los Angeles and Dallas, as compared to St. Louis. St. Louis fields

a competitive baseball team because the consumers in St. Louis appreciate the St. Louis Cardinals and are willing to support it, although we are a small market.

80

Many of these markets—Los Angeles is probably 4 times larger

than the St. Louis community. They should be able to go, based

upon their community, and draw much better. So the question is

how—I can understand the small markets, but you are not addressing the small markets in your testimony.

Mr. IRVING. Even in larger markets, it is a matching grant. We

don’t give anybody 100 percent of anything. We change the match

for the smaller markets. On things like some new and novel approaches that all public television can derive benefits from, we will

generally go to those who have the money up front and have the

ability to drive out the technology.

Digital television is going to happen in the top 10 markets, for

two reasons: One, those stations have the resources to do it faster.

Two, the competitive realities, not that they should be in competition for commercial purposes, but in making sure that viewers who

are moving to digital television, as they are moving to it in commercial worlds, we want to make sure that public broadcasters in

those communities are also able to provide those kinds of services.

Digital VTRs, video tape recorders and other things in the studios were studios used first in the larger markets because they

have some resources to offset. Many of the small stations are just

trying to stay together. It is rubber bands and spit that keep those

towers up and keep those VTRs running.

I can’t tell you the specifics as to why those four were ahead of

St. Louis, but if they were doing things that were novel, going to

extend their services and provide a needed service in public broadcasting, that is probably why we funded them. I think all of us

want to see the public continue to support public broadcasting, but

I think we also know from the numbers that the public has never

in any community supported public broadcasting with 100 percent

of the funding that they needed.

Mr. SHIMKUS. The St. Louis statistics that I provided you shows

a strong commitment. The point is that I want to reward those who

are doing the job and not rewarding those who have the need but

are not doing the job in their own markets.

Mr. IRVING. This is a rhetorical question, but what comes to

me—if I have a station like a St. Louis that is raising a lot of

money to do the right thing, and they come to me for a grant, I

don’t want to punish them for having raised a lot of money.

On the other hand, if I have a station that has raised a lot of

money and doesn’t come to me for a grant, that is unlikely. Almost

none of the stations in the public broadcasting are not going to

come to me for some assistance. I don’t know how I measure if

there is a recession in one community or they don’t have a good PR

person or fund-raising capabilities; do I make the decision based on

that?

I will be happy to work with any member of the committee on

that. I don’t know what I do if there is a need in the community

and they have the match. Do I not give them the grant because

somebody else was able to raise the money on their own?

Mr. SHIMKUS. I just don’t want you to penalize effort and commitment by the local community.

Mr. IRVING. I would love to be able to give better awards to those

who are working with their local community. They should be local

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and community-based decisions, not federally or Washington-based

decisions.

Mr. SHIMKUS. Thank you.

Mr. TAUZIN. We will do a second round if anyone desires one. Mr.

Deal, the gentleman from Georgia.

Mr. DEAL. Thank you, Mr. Chairman.

Mr. Irving, it is my understanding that NTIA subsidizes the

other Federal agency spectrum management by about 20 percent.

Would you describe the reimbursement mechanisms and how you

determine the fee that is assigned to these agencies, and is it possible those fees could be increased without doing substantial damage to the management system?

Mr. IRVING. Let me answer the first question first. The fees could

be increased without substantially damaging our management system, but we believe it would be a policy mistake to move it up to

100 percent. I can submit the glide path that we have been on for

4 or 5 years now.

Congress asked us to move from—for almost the entirety of

NTIA’s existence except for the last 5 years, we got appropriated

every dollar that we used to manage spectrum for the Federal

agencies. Over the last 4-5 years, we have been on a gradual glide

path where it is now 80/20. A decision was made in consultation

with the appropriations committees that that 20 percent was the

appropriate number, because my spectrum management team

works on behalf of the U.S. taxpayer as well as on behalf of the

Federal agencies.

When those teams go off to Geneva, the ITU and other places,

they are negotiating for all of America, not just any individual segment. The way that we charge our individual clients, members of

IRAC, members of Federal agencies, is based on how many assignments and allocations they have from the Federal Government.

The Department of Defense pays a significant portion. U.S. Information Agency or Department of Education may pay a relatively de

minimis fee. And we are trying to get processes that we get paid

in the front end of the year instead of the back end, but a lot of

the budget officers in the services and in other Federal agencies

have not yet figured out the easiest way to do it. We are doing better every year, but we are still waiting for some people to cut us

a check.

I would love to continue to have some degree of autonomy. I don’t

want to become a captive of just my clients.

Spectrum, when Spectrum Management goes over to a war conference or goes to a standards conference—we have been working

on GPS. We have a multibillion dollar commercial industry that is

benefiting from GPS. GPS was a defense technology. We worked

with the DOT and Department of Defense to develop the Global Positioning Satellite System. Now you can’t go to a fishing store or

a Wal-Mart and not find a $99 thing that any camper or boater can

use. We have created a billion dollar industry based upon the work

that we did with the Department of Defense.

There are other issues like that. Technologies are going to benefit

every American as we get better, smarter uses of technology. It is

not unfair to have one-fifth of that budget come from the general

taxpayer as opposed to directly from our client base.

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Mr. DEAL. Colonel Skinner, could you tell me how much DOD reimbursed NTIA for spectrum management last year and how that

figure was calculated?

Mr. SKINNER. Sir, I would have to take that for the record. I

don’t have those details with me.

Mr. DEAL. Could you get that and also the payment time schedule as to when that payment was made?

Mr. SKINNER. Yes, sir, we will take that for the record. We believe it is approximately $5 million divided among the service components and agencies of the Department of Defense.

Mr. DEAL. Thank you, Mr. Chairman.

Mr. TAUZIN. Thank you, Mr. Deal. The Chair now recognizes Mr.

Pickering for a round of questions.

Mr. PICKERING. Thank you, Mr. Chairman.

Mr. Irving, it is good to be on the Commerce Committee, and in

the past, we worked together on the Science Committee on the domain name system and the transfer from NSF to NTIA. I have a

few questions related to that.

The cooperative agreement has now been transferred, as I understand it, from the National Science Foundation to you at the NTIA.

In your view, do you need congressional authorization or legislative

authorization for that transfer of authority and administrative responsibility?

Mr. IRVING. I believe it is actually to the Department, and the

Department has designated us. Our belief is what we are doing is

consistent with the law.

Mr. PICKERING. Is there any funding as a result of that transfer

that comes through NTIA to administer the domain names?

Mr. IRVING. To my understanding, the work we are doing on domain names is being funded directly out of our existing appropriated level. We have received no additional funding, nor have we

requested additional funding for our increased responsibilities in

working with the domain name system.

Mr. PICKERING. As you recall from the hearings we had in the

Science Committee in the last Congress, as we transfer, go from

government control to private sector control, one remaining question is to a certain degree accountability. To that objective, do you

have any plans to issue a report concerning NTIA, the transfer of

domain names, and what is being done so that Congress and the

public will be familiar with what has happened, what is occurring,

what is the governing board, those types of issues any time in the

near future?

Mr. IRVING. I believe there is a final report that we will have to

issue, but while we are working on this managed transition—and

we want to get out of this business as rapidly as possible and have

the private sector do it all, and we are getting to the point where

the private sector can do it all. Everything that we do during the

transition is public. I read an e-mail this morning that we are

going to have an on-line discussion about what has happened with

domain name systems. Every meeting that we are involved in, we

try to make as public as possible. But we will have a final report

explaining what is happening.

When we moved to the 34 new registrars, we immediately sent

out information. And if any member of the committee feels that

83

they are not getting information, we will send folks up here to brief

you. We want to get the information out. We do not have anything

to hide.

This is the most interesting process that I have ever been in.

People who care about domain names care about it as passionately

as Trekkies care about Star Trek. I have never seen as much traffic

cross my desk from people who are anguished about an issue that

is so arcane, and so we know the importance not to try to hide anything.

Mr. PICKERING. Most people say this is just the transference of

the domain names or the www.com and the registries. But fundamentally what is the crux of the issue is the governing body. We

are setting up, in essence, the constitutional structure for how

Internet operations will be conducted, disputes resolved, intellectual property determined. So it is much more important and much

more comprehensive than just the transfer of domain name systems.

So, because of that, I want to encourage you to continue being

as open as possible. If you are planning to do an annual report of

what has happened, what is happening and what is projected to

happen, I would encourage the NTIA to make that type of annual

report to Congress so that we can inform the public of what we are

doing; that it is not viewed as a closed process or an exclusive process or that any type of conspiracy could be projected onto the operation of what we are trying to do, which is a very important transition and very fundamental to the success of the Internet and the

governing of the Internet in the outyears. Thank you, Mr. Irving.

Mr. IRVING. Thank you, Mr. Congressman.

Mr. TAUZIN. Thank you, Mr. Pickering. The Chair will do a second round.

Mr. Crawford, let me first thank you and the work that you have

done in Oklahoma on behalf of all of us who are aghast at the

awful loss of life and tragedy out there. I am facing a similar situation in Louisiana along the coast of my State. We have had some

pretty good hurricane years, and very little hurricane activity in

the last several years. They are predicting an 80 percent chance of

a very mean season.

I also visited the FEMA offices where they tell me that New Orleans is going to be 27 feet under water with a category 4 storm

coming in from Lake Borgne or Barataria Bay, which are the two

big water areas on the other side of the city. Those kinds of storms

will breach the levies, and New Orleans sits below sea level. Twenty-seven feet of water. You are not going to get a population of 1.5

million out of town. With the kind of warnings that we get, you will

get some evacuation.

The ability to notify people in the face of that kind of a threat

and to assist in moving them, perhaps vertically up into taller

buildings or whatever it is going to take, is heavy on my conscience. I have been urging FEMA. We just passed some legislation

to get FEMA involved in a vertical evacuation study.

But cities along the coastline that are going to experience potentially a disaster like that have no idea how to handle it. And I

would be very interested in knowing whether what you put together in Oklahoma has meaning to solving problems like that.

84

You mentioned your own experience in Louisiana with their weather conditions. If you can briefly comment, sir.

Mr. CRAWFORD. I am quite familiar with your problems in southeast Louisiana, having worked at the New Orleans and Slidell offices for the Weather Service for 10 or so years. I worked with their

SLOSH model to deal with surges from hurricanes in Lake Pontchartrain, so I know what you are talking about. And I think what

hurts an emergency manager to know what to do is how bad is it

going to be and where is it going to be the worst. And while we

can give generic advice, today’s modern society demands far more

of us, because there are more of us and they demand more.

With the ability of the Information Highways that we have in existence in the Nation, it is very easy to send graphics of images

that either are radars or projected radar images or forecast——

Mr. TAUZIN. It is not going to be the forecasting. We get pretty

good forecasts right now. The problem is these storms make radical

changes in their direction. And a forecaster may say, Our best information is going west, and all of a sudden it turns. We ducked

the bullet with George, like we ducked our Y2 triple K problem in

Louisiana when Duke didn’t make the run-off.

But the problem we have with hurricanes is that they make that

quick turn. We couldn’t evacuate the city. What I am asking is

whether or not there are models and whether or not we can learn

from the Oklahoma experience as to what kind of systems ought

to be in place to aid everybody who is going to be desperate to get

people out of harm’s way when this bowl of a city suddenly fills

with 27, 28 feet of water. I just call that to your attention. I would

love to know what you have learned in terms of how your system

works and whether it has any relevance to us.

Mr. IRVING. When we give grants, one of the key criteria is

whether or not they are replicable, whether or not what we learned

in Oklahoma has any value in Louisiana, in Texas.

My understanding is that what they have done has become a national model and they are working with the National Weather

Service to try to figure out how to do it and replicate it. What you

basically have are the advanced weather service statistics and

graphics laid over a map that gives you a sense of where things

are likely to happen. While it would not maybe solve every problem

Louisiana is going to have, if you have a tornado spun off from a

hurricane, that will give you notice that you wouldn’t otherwise

have.

I have been down to Louisiana visiting Mr. Morial a few times,

and you will not get everybody out when there is a problem. This

will let the folks know where a hurricane or tornado is and where

the storm surges are, where the heavy rains are likely to be, based

on what I know.

And what we try to do is give folks like the counties in Louisiana

the e-mail addresses, the telephone numbers, and other ways of

getting in touch with the folks in Oklahoma so they can begin to

marry their respective skills and knowledge and do a better job of

transferring information.

Mr. TAUZIN. I would appreciate, at least if you could share with

us how you think—knowing the weather experience you had in

85

Louisiana, how you think some of those systems might have a relevance for us?

Let me conclude. I am going to give everybody a chance. Mr. Rogers, I just want to ask you quickly. We can’t change the law of this

committee on the postal service obviously. We don’t have jurisdiction. We do have jurisdiction over the IRAC.

IRAC sounds like a country. In terms of that, we could very easily require that IRAC hearings, when it comes to issuance of spectrum, will be public hearings. We could require that, perhaps take

into consideration the anti-competitive nature of a grant of spectrum, or we could do some minimum things like that.

Mr. ROGERS. It would make a difference.

Mr. TAUZIN. I would encourage you to perhaps think about, within the jurisdiction of this committee, what it is we might do; and

Larry, obviously we wouldn’t necessarily change your authority. We

would simply be talking about making sure that where there are

any competitive issues at stake, that would be one of the considerations in the allocation of spectrum.

I suppose that might help, at least call attention, perhaps, in a

public setting, to the——

Mr. ROGERS. I am sure the various bipartisan advisors I have

could think up something very helpful.

Mr. TAUZIN. We would be very interested in hearing from you.

Mr. IRVING. There is one problem. The IRAC hearings are generally classified hearings and they are closed——

Mr. TAUZIN. That is what I thought. They have a lot to do with

whether the military gets spectrum to——

Mr. IRVING. And it’s going to be very hard to have a hearing that

95 percent of the hearing——

Mr. TAUZIN. Well, maybe you can have one when it deals only

with the postal service. I am not sure our national security is

threatened over a question of whether or not the postal service gets

some spectrum to compete with UPS.

Mr. ROGERS. One of the things we proposed is that we have some

sort of a hearing when the postal service seeks authority to determine whether or not it is in a competitive area and that that decision would be appealable in a court.

Mr. TAUZIN. We can look at that. Obviously, we have an interest,

you know, in the postal service, and we want it to be strong

and——

Mr. ROGERS. I am sure that we could come up with something

to improve the situation.

Mr. TAUZIN. And I invite your comments on it. The Chair recognizes Mr. Markey for a second round.

Mr. MARKEY. Thank you, Mr. Chairman, very much.

Mr. Irving, you know, on this committee we have to deal with

OMB and CBO, and they are constantly trying to put their fingers

into the spectrum piggybank and grabbing more spectrum to go sell

off for whatever purpose to meet whatever the short-term needs

are, and the budget committee, all of them, there is a deep seated

pathology as, you know, that exists when these budgeteers get together.

Now, we have Colonel Skinner over here, and he is somebody

who has often had his territory raided in order to find more freVerDate 20-MAR-2000 15:27 Mar 27, 2000 Jkt 010199 PO 00000 Frm 00088 Fmt 6633 Sfmt 6602 E:\HEARINGS\56610.TXT pfrm02 PsN: 56610
86

quency. Are you under any pressure right now to be talking to Mr.

Skinner to get him to cough up some more spectrum so that OMB

and CBO can put it in to be auctioned off?

Mr. IRVING. I would not want to have that conversation with Mr.

Skinner or his colleagues again. We have had some very contentious discussions during my tenure, and I don’t—but generally they

have tried to work with us as much as they can. They have been

cut deeper than anybody else in terms of what they have given up.

We have given up 255 megahertz spectrum since I have been here

which is an enormous amount of spectrum.

What is troubling about that is 95 megahertz of that spectrum

is in the hands of the FCC right now, and only $14 million, only

$14 million has been realized by the Federal treasury from all of

the spectrum we have given over to the FCC.

It has cost the military $1 billion to relocate. They have given up

between now and 2002, 255 megahertz of spectrum across all of

their program platforms. They need more spectrum as they get

smarter bombs and trying to keep our men and women out of

harm’s ways. One of those cruise missiles goes into a building anywhere in the world, that is using spectrum to direct it and to make

sure it gets to where it is going and to identify the location.

I have got a very difficult time going to these guys and saying

we are going to put boys and girls, men and women, into harm’s

way because you have got to give up some spectrum, and then we

get $14 million into the Federal treasury and it cost the military

$1 billion of appropriated moneys to have that happen.

I don’t know what happened to this spectrum. It goes into some

kind of a black hole, but it is not going out and being sold. And

we are constantly being asked to give up more. I am not sure that

the FCC—what they are doing with the stuff we have already

given them or plan to give them.

Mr. MARKEY. That is very helpful to us now and, I am sure, to

Mr. Skinner. You have helped his argument out a lot on whatever

new issues might be heading in his direction.

Let me ask you at NTIA how you are handling the workload that

we put on you—the WIPO legislation, the Satellite Home Viewer

Act, the Child Online Protection Act, the International Bribery Bill,

perform research and other studies for Congress coming from various directions. Do you have enough staff to get all this done for

us?

Mr. TAUZIN. A good answer would be: ‘‘no problem.’’

Mr. IRVING. Because of the excellence of the staff with whom I

work there is no problem. However, we——

Mr. MARKEY. Your staff, by the way, was nodding their head, no

problem.

Mr. IRVING. They don’t sleep, they never see their wives and husbands and children, but they do the work. They do an excellent job.

Candidly, we are stretched. We are stretched beyond—Congressman Pickering asked us about an annual report. My problem is, my

folks who work on the main names, the two people who work almost 80 hours a day on the main names, they are so busy treading

water to keep all of the work we have to do on a daily basis, it is

very difficult for them to do any prospective work or to do a report

just on the bodies to throw into that fray when we are trying to

87

manage a transition. We are skeleton staff. You lose 25 percent of

your staff over 4 years when you have about a 70, 80 percent increase in the area of responsibility you have.

And we will do with what this Congress asks us to do or the Secretary and the President and Vice-president ask us to do because

that is who we report to, but we are really, really down to muscle

and sinew. We don’t have a whole lot of fat on our bones right now.

Mr. TAUZIN. Thank you very much.

Mr. Shimkus.

Mr. SHIMKUS. Thank you, Mr. Chairman.

Mr. Crawford, has the University of Oklahoma ever violated a

contract that is part of the NTIA grant?

Mr. CRAWFORD. If they have, I don’t know it. My guess is the one

we have is the first.

Mr. SHIMKUS. Okay.

Should there be provisions to prevent the violation of contracts?

Mr. CRAWFORD. What do you mean ‘‘violation of contract’’?

Mr. SHIMKUS. Well, you get a grant, you sign an agreement, and

if someone doesn’t uphold their end of the agreement, should there

be provisions to prevent that?

Mr. CRAWFORD. By and large, the university puts its name behind anything that it agrees to do and holds either the dean, the

president, or faculty members like me accountable.

Mr. SHIMKUS. Should the NTIA have the ability to recover moneys spent on grantees that stop providing the service or don’t follow

up with the initial agreement?

Mr. CRAWFORD. I don’t feel that I am really qualified to answer

that.

Mr. SHIMKUS. Let me ask you this.

If you were awarded a grant and you promised to do X, Y and

Z, and you only did X and the Federal Government gave you money

to do Y and Z, do you think the Federal Government would be

within its rights to recover the money for Y and Z?

Mr. CRAWFORD. Yes, sir, I do. I would say, though, that the likelihood of that happening the way this grant was monitored, the reporting back to TIIAP is so tremendous that it is very carefully

watched.

Mr. SHIMKUS. Well, be careful because I have examples from the

Inspector General, not in yours, but on grants that call into question how much we scrutinize grant applications, and I would like

to direct my next question to Mr. Ross.

The report that I have in front of me is the Inspector General’s

report on LatinoNet, and I am sure that is a name that is infamous

in the NTIA. If not, it should be. You report that you asked that

the NTIA recover $94,336 in excess—to recover that in excess grant

disbursements.

What happens after that? Have you—in a follow-up review, do

you evaluate their ability to recover these moneys in previous reports?

Mr. ROSS. The normal process is when we issue a report questioning costs related to a grant, such as LatinoNet, first of all, the

auditee, LatinoNet, the operator, is afforded 30 days to provide additional information to support its costs or any other issue raised

by the audit report.

88

Within that first 30 days, it provides information. Then there is

another 30-day interval during which the grants officer, who is

within the Department of Commerce, also solicits the advice of

NTIA because the Department’s Office of Executive Assistance

Management serves as the grants office for NTIA, reviews any information that the auditee might submit, for example, to document

additional costs or, perhaps, additional work that was performed,

reviews that documentation, and prepares an audit resolution proposal, which is then submitted to the OIG for a review.

So in any one of these grants that we have looked at, if we question costs, then the grants officer comes back to us with an audit

resolution proposal that says we have reviewed the additional documentation that has been submitted, and any other supporting material, and based on that, we propose to make the following decision. We then would look at that information and come to a concurrence with the grants office of whether it is an appropriate basis

to change our questioned costs.

So it is a concurrence.

Mr. SHIMKUS. Okay. And so this report was in August 1997, and your recommendation was an attempt to recover $94,336 in excess

grant disbursements. Has there been a follow-up to determine

whether that money has been recovered?

Mr. ROSS. What I can tell you is, as a result of the resolution,

the federal portion of the questioned costs was reduced from

$118,991 in the report to $31,014 in disallowed costs, which would

have converted into a recovery amount that I don’t have in front

of me. That then gets communicated to the operator. The audit determination letter says that the Department of Commerce has established a debt in X number of dollars.

The Department makes demand immediately, but the organization could try to enter into a repayment agreement, if it cannot pay

up immediately, under the standard debt collection provisions of

the Department.

The Department does have a mechanism whereby every 6

months the Secretary of Commerce has to produce a report that follows up on what has actually happened with those disallowed costs

and the amount to be recovered. I can’t tell you as I sit here today

what the current status is. I will be glad to submit that.

Mr. SHIMKUS. If you would, please.

[The information referred to follows:]

The audit resolution was transmitted to LatinoNet by letter dated December 9,

1997. LatinoNet was advised that $77,496 of the questioned costs of $297,329 was

disallowed. (The federal portions of those amounts were $31,014 and $118,991,

respecttively.)

The period of performance for the award was October 15, 1994 through October

31, 1996. The audit covered the period up to March 31, 1996. Because seven months

remained on the award, the recipient was not billed for the excess funds disbursed

as of March 31, 1996 ($6,359). LatinoNet was required to delete the $77,496 in disallowed costs from its claimed costs and to submit to the Office of Executive Assistance Management a revised SF-269, Financial Status Report, to reflect the revised

costs as of March 31, 1996. In addition, LatinoNet was asked to provide a final SF269.

Mr. SHIMKUS. And following up, if I may, Mr. Chairman.

On Mr. Irving, it is my understanding that on these grant applicants, they are quarterly reports, and it is also my understanding

that the problem with LatinoNet really surfaced a year after, alVerDate 20-MAR-2000 15:27 Mar 27, 2000 Jkt 010199 PO 00000 Frm 00091 Fmt 6633 Sfmt 6602 E:\HEARINGS\56610.TXT pfrm02 PsN: 56610
89

though they—in fact, in their response, they say, well, we have

been submitting quarterly reports, you-all haven’t questioned them,

so they must have been okay, so we don’t need to pay this debt because you have approved them.

How do you respond to an accusation like that, and what good

are the quarterly reports if you can’t put an early halt to abuse of

Federal funds?

Mr. IRVING. The quarterly reports are useful. There are some

things that are obvious right from the quarterly reports, and we

can go right to them. There are other times, if you have 400, roughly, grants out there, there are going to be some problems.

I don’t know if they are bad actors or just problem children, but

some percentage you are going to have a problem. In some instances we have gone to the IG and said we are hearing there is

a problem, will you investigate for us because I don’t have the staff

to go out and do the kind of investigation that they can do in terms

of a field audit.

We often, on a blind basis, send people out to do field monitoring.

What we try to do is what any organization that is responsible for

handling public goods should do. With the resources we have, we

try to get the reports in and look at them for facial problems, and

then we try to go the extra step and send folks out. But we can’t

send and shouldn’t send, I don’t believe, field monitoring to every

office we give a grant to. But we do try to give a fairly representative view and have folks out there looking at the problems. And if

we know either from our view, what we are hearing from across

the trenches, somebody lets us know anonymously, or when we go

out and do a field audit, we will call the IG and say, please check

this out for us, you have got the resources to let us know. And I

think there have been occasions where we have had some problems

within PTFP and in TR.

Can we do a better job? If we had more resources, maybe, but

given the resources I have, we have done a pretty good job, I think,

of making sure that we are not wasting Federal resources.

Mr. SHIMKUS. Thank you, Mr. Irving. I do have a follow-up, but

I will do it in the next round, if I may, Mr. Chairman.

Mr. TAUZIN. The gentleman from Georgia, Mr. Deal.

Mr. DEAL. Mr. Rogers, we have heard reference to the fact that

spectrums are not raising the funds that were anticipated. As I understand, UPS spent over $40,000.

Mr. ROGERS. $40 million.

Mr. DEAL. $40 million to develop an alternative system to the

one that the postal service received from the granting of their spectrum for free. Would that $40 million have been a good investment

had you been able to purchase the spectrum in a timely fashion?

Mr. ROGERS. Yes.

Mr. DEAL. And would you have preferred to have had that alternative approach?

Mr. ROGERS. Yes, but spectrum is an asset that, as technology

improves, you can do more and more with it. The position we are

in now is we are a purchaser of message units from vendors of message units, and it is more difficult to advance the technology when

you are buying it on a per unit basis.

90

Mr. DEAL. And as I understand, part of the reason was the fact

of the delay in the auctioning process; is that correct?

Mr. ROGERS. Yes. It really slowed us down, and we were to a

point where the competition who had gotten ahead of us in the

spectrum race was putting out services and we weren’t, and we just

had to do something. The cellular system had developed to the

point that it was providing us with a real alternative to use digital

data on a cellular network nationwide, and we jumped into it.

Mr. DEAL. Had that spectrum that postal service received been

auctioned, do you have an opinion as to what the fair value of it

would have been?

Mr. ROGERS. I really couldn’t judge. I don’t know even if any of

the nationwide 220 spectrum was ever auctioned.

Mr. DEAL. Okay.

Mr. ROGERS. We just—after we went cellular we didn’t put the

effort into this to follow it up until we saw a notice in the newsletter that the postal service was going and getting the same spectrum that we couldn’t get.

Mr. DEAL. Thank you.

Colonel Skinner, could you give us some specifics as to what

changes that you might be looking for in the current spectrum policy?

Mr. SKINNER. I think that, number 1, you have to ask yourself

today if you have a spectrum policy. You know, a lot of things have

changed since the radioactive 1934. We have talked a lot today

about technology.

Mr. DEAL. Well, if we don’t have one, what would you suggest we

do?

Mr. SKINNER. Well, I think we have to consider all the equities

that make up the American interests in this resource.

We have to understand it is not a renewable resource. If we give

it to a specific user to use as he or she would use it, it will not

be available to others unless we can harness our technical prowess

on sharing the spectrum that is available, and we have many,

many demands, many different demands.

There are many different elements of national power, whether it

be the Defense Department’s or our economic power on international community. And we also have to consider ourselves that

we are part of a larger international community, and in the case

of military interests in this area, what we do in the United States,

we need to be able to export as we take our military interests overseas. And so we have to consider that larger international aspect.

We have to consider, frankly, the fact that other developing countries have interests in spectrum which we are currently using. It

is a very, very complicated issue, but it is certainly one of national

importance.

So I know I have described what the problem is, and I cannot

offer you solutions today. But it is going to take some of the best

minds in the world, some represented today in your hearing, that

need to lay down the groundwork for a new National policy on how

we use and allocate spectrum.

Mr. DEAL. Thank you, Mr. Chairman.

Mr. TAUZIN. Thank you, Mr. Deal. The gentleman from Mississippi, Mr. Pickering.

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Mr. PICKERING. Thank you, Mr. Chairman.

Mr. Irving, part of our congressional responsibility is oversight

and to hold whether it is NTIA or any administration’s feet to the

fire.

But I think it is also our responsibility to say good job and to

make a commendation when something right and good happens.

And I want to recognize two things you did for the State of Mississippi: One, the grant for the University of Mississippi Medical

Center which takes chronically ill children and it connects them

back to their classroom, to their teacher and to their families and

is a great model of what can be done with technology to improve

the quality of life.

And the second thing I want to commend is the emergency grant

to the Mississippi Educational TV. When the tower collapsed and

lost that service, you quickly stepped in. And we were able to get

that service back up and running.

So I want to begin this round by first saying, thank you, and acknowledging and giving you a sense of appreciation from the people

of Mississippi of what you have done.

The second thing is a question on research, and the third if I

have the time, goes to culture. On research, one of the things that

we worked on in the 1996 Telcom Act was to make sure that electric utilities could provide telecommunication services. The barriers

to their entry were removed, and that was something I was personally very involved and interested in because a State like Mississippi the rural electric utilities could provide the infrastructure,

the advance network and all the capabilities and applications that

come with that.

I was recently briefed on a technology, and I wanted to ask, one,

if you’re aware of it, and two, are there any plans to provide any

research in these applications. Something called Media Fusion

which takes the electromagnetic field that is generated around the

electric wire during the transmission of power, that creates the

field by which telecommunications, data, voice, video, could be

transmitted. Are you familiar with this concept within this research both in our country and in Europe, and do you have any

plans to perform any research in that area?

Mr. IRVING. I am not familiar with it, but next time I see you

I will be familiar with it, and I will check with my labs. I don’t believe we are doing anything on it right now, but I am certain that

somebody there is familiar with it, and we can find out if there’s

a way we can—I agree with you completely.

As we watch more and more consolidation in the industry, if we

can get more and more players like the utilities and others providing broadband and they are into the homes, that would be a

great thing for the American people, and if we can find a way to

get that in there, that’s good.

Mr. TAUZIN. Just, actually at Stennis Space Center in Mississippi, a company called Media Fusion out of Texas is working

with NASA on this technology, but there are others, there are others as well that are working on different aspects of it.

Nortel, I understand, has an aspect where they are working inside the wire itself, and they ran into some electric transmitter

problems, but they have overcome those now. Some pretty exciting

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work. It might be very good, Larry, to—frankly, I would love some

advice from you as to whether or not any of this stuff is real because the gentleman, he will know more about it than all of us because I think the gridwork is going to go on in his—is Stennis in

your district?

Mr. PICKERING. It is not in my district but it connects—Stennis

really works in all of our districts as well as the rest of the country.

Mr. TAUZIN. They are going to have the grid in Mississippi, so

he’ll probably be the first to know about whether they are having

success and what is going on with it, but I would be very interested

in knowing from you, as you check into it, how much of this is real,

because that kind of technology could dramatically affect the kind

of policy we make on broadband and how we deal with critical information in the future.

I thank the gentleman for yielding.

Mr. PICKERING. Thank you, Mr. Chairman, and Mr. Irving. I will

try to work with you and your office to get you further information,

and again, as Mr. Tauzin said, it would be good for us to have some

of your technical advice and your judgment as to the viability, the

potential, and whether it warrants a research investment, whether

it is by NTIA or NASA or other entities, where we can bring the

potential of a technology that could be a very important component

of reaching out in rural areas and all over the country.

Mr. Chairman, if I could ask for an extension of just one more

question?

Mr. TAUZIN. Without objection, it will be awarded.

Mr. PICKERING. My last question, and this goes back to a parallel

policy that we did in the 1996 Act as well and where the administration advocated and supported the V-chip, and in your testimony

you talk about what we need to do to look at indecent and violent

material on the Internet and how we can try to find ways to protect

our children.

Congressman Franks and I have introduced a bill that would require all schools and libraries that receive the erates to—we don’t

mandate a filter, per se, or we don’t tell them exactly what filter

they should use, but that they must have some type of filtering device if they receive an erate. Would the administration support that

legislation and that approach?

Mr. IRVING. We are close, but it is not an exact fit. We have sent

a letter to the FCC on behalf of the administration requiring that

every school district or library that receives Federal funding, the

erate, to have an acceptable use policy, that the local community

make a decision as to how they are going to protect——

Mr. PICKERING. Mr. Irving, if you require every TV set to have

a V-chip mandate, why can we not say that every school and library, especially after Littleton, have a filter?

Mr. IRVING. Filtering technology, we are trying not to mandate

a technology for something as dynamic as the Internet, and again,

the V-chip can be turned on or off. A parent can have a V-chip and

disable it.

You put a filtering device inside of a computer, you are telling

the library you have got to use it unless you are saying, put a filter

in there and then you have a choice. I have a choice as a parent.

If I was a parent or my niece and nephew come and visit me, I can

93

disable the V-chip, I wouldn’t, but I could. I don’t know if it is from

Washington we should mandate how Texas or New York City or

Tulsa or Jackson should check their children and that is—we agree

a 100 percent——

Mr. PICKERING. You mandate for each TV set that is manufactured that they have a V-chip. There is a little disconnect from a

principle point of view as to why you can mandate a V-chip in a

TV, but let us say, a sixth grader receiving an erate, you wouldn’t

say that he should be protected from pornography or violence like

we saw the groups in Littleton. And surely, we have the capability

to find a flexible technology that appropriate subject matter can be

available to school-age children while we can block offensive, indecent, and violent material. And surely, the administration would

put a high priority in research into the technology of the type of

filter that would protect our children.

Mr. IRVING. We agree 100 percent that we need the technology.

We agree 100 percent that we need to find a way to make sure that

the people who want to use the technology can have the technology.

The only place where the minor difference is whether or not Washington should mandate it or whether we should leave it up to

the——

Mr. PICKERING. Didn’t the administration support a mandated Vchip in a TV?

Mr. IRVING. We support a mandated technology in the TV, but

not a mandated use of that chip in the television. There is the difference.

Mr. PICKERING. But surely we can find a way that you can turn

off a filter and turn it on.

Mr. IRVING. If you are going to do that, then you are pretty close

to the acceptable-use policy that we have because a community still

has the ability, if it wants to go out and get a computer with a chip

in it if they want to do that. But we are not mandating that they

do use blocking technologies, and I have looked at all of them,

CyberSurf, Target Patrol, Net Nanny. I have gone through a lot of

them to see what works. They all have some glitches. They all have

a problem that doesn’t make them perfect. So you——

Mr. PICKERING. Could you provide research into the glitches so

we have a——

Mr. IRVING. I can’t, but we can certainly work with you to develop it. This is anecdotal, personal experience, but I will certainly

work with my staff to get back to you on some of the problems,

what has happened, and I think we can put some surveys together

and work with you on that.

Congressman, I want to assure you, I want to do the same thing

you do. I want to protect America’s children from filth, from violence, from pornography. I don’t, however, feel that on behalf of

this administration we can mandate a particular technology. And

we also—and I kind of feel like I am on the wrong side of this argument. I am kind of going to State and local rights, not a position

I have been——

Mr. PICKERING. Let me get this straight. The administration’s

policy is that we should have mandatory gun control requirements,

but we should not have mandatory filters to protect them from porVerDate 20-MAR-2000 15:27 Mar 27, 2000 Jkt 010199 PO 00000 Frm 00096 Fmt 6633 Sfmt 6602 E:\HEARINGS\56610.TXT pfrm02 PsN: 56610
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nography and violent material; is that the administration’s position?

Mr. IRVING. I would say that you are correct that there are mandatory gun control policies this administration has supported, and

you are correct in saying that with regard to whether or not every

school and library that gets an erate should have a filter, we would

say at this point, leave it to communities to figure out what is best

for the people in the community.

Mr. PICKERING. Thank you. For the consistency in position, philosophy, and principal.

Mr. IRVING. I am trying.

Mr. TAUZIN. Consistency being the hobgoblin of little minds anyhow.

Actually, Larry, I am not at all quarrelling with your position.

I think we have to be careful what we mandate in terms of technology. My friend, Mr. Markey, and I disagree on that to some degree. So this debate is going to go on some time. Although, I think

we share the common purpose of advancing technology so that parents and schools and everybody else can have more control over

what comes in under these systems. Obviously what a parent

chooses to do or not to do in terms of how they raise their own children is one thing, but when the children are in the custody of the

government, as they are in the school, public school, perhaps there

is a different standard.

We need to talk about that. Maybe there is.

Mr. MARKEY. Will the gentleman yield?

Mr. TAUZIN. I will be happy to yield, my friend.

Mr. MARKEY. And we might be talking—we are trying to accomplish the same goal. So it is theoretically possible for a school to

subscribe to an online service that does not need a filter because

the only thing that kids have access to is good stuff. So mandating

that they have a filter built into a service that already has been

certified as kid-safe would create a dilemma for the school system.

So I think that we all agree that kids should be protected in

school from stuff that they shouldn’t be exposed to, but there may

be a way in which there is just a generic program which is used

that substitutes for a filter and the same goal is accomplished.

Mr. TAUZIN. And these are the old arguments, but I made them

before, while the parents are watching the TV with the V-chip in

it downstairs, the kids are going to be upstairs watching the old

TV, unfiltered.

So there is all kinds of problems with how you manage these

technologies in a home and in a public setting. But I think we can

start with the proposition we all want to advance the ball in this

area so that there is at least some opportunities to protect children,

particularly when it is a government’s responsibility because they

are in a public setting, they are in a public school or hospital or

what have you which is receiving government funds.

Mr. IRVING. And we also want to encourage industry and private

sector and schools to create green space on the Net. We want to

find positive places. I enjoy the Net. I love the Net, and I can find

wholesome things to do 24 hours on the Net. There is a lot of bad

stuff, and I think if we created opportunity and incentives to create

green spaces where if you are in that space, you have pretty much

95

certified that your child is going to be safe. That is the important

thing.

When I was growing up, my momma wouldn’t let me play with

certain boys or go to certain playgrounds because she didn’t like

the element there. She would say you can play in the park down

the street but don’t go to the park across town because I don’t like

those kids over there.

Mr. TAUZIN. I know parents who wouldn’t let their sons and

daughters play with you.

Mr. IRVING. Oh me, far too many of them. It hurt my dating, but

if we can find more positive places on the Net for our children, as

well as finding ways, and I want to continue to work with you,

Congressman, on this minor difference we have on finding ways to

bridge it. This is important for our children. It is too much good

stuff for us to say the Net’s an evil place.

Mr. PICKERING. And Mr. Chairman, let me just follow up. I believe Mr. Markey may have hit on something that, you know,

maybe there are other ways in a filter that we can protect, a safe

place for our children, and I am willing to work with you and with

Mr. Markey and Mr. Tauzin to see whether it is a multitude of

tools that we can bring to bear, but we should find a way, and we

should do something in this area. We ought to look at it just like

we do toxic pollution because, for our children, it is deadly and it

is dangerous.

Mr. IRVING. I think everybody that I work for, including me, will

give you whatever resources you need to help accomplish that goal.

We want to do what you want to do.

Mr. TAUZIN. In fact, it might be very interesting, Larry. You

might be interested in helping us with this. I have talked about

doing this for quite a number of months, and we never really put

it together, but it may be useful for us to have a hearing where

we actually look at the state of technology, and we hear from people who are innovating and developing new technology like this,

new security systems.

I know Mr. Miller could probably contribute a great deal with

your member organizations.

Mr. MILLER. I would second what Mr. Markey was suggesting.

We share Mr. Pickering’s goal but what is happening is this is becoming a competitor’s issue and different products, particularly

when they are trying to get into the schools and get into the libraries, are going to come out and offer the fact that they either have

tool capabilities to offer the kind of acceptable-use policy that Mr.

Irving was talking about and that you are trying to achieve, Mr.

Pickering, or they are not. And if they are not, they are going to

find themselves at a distinct disadvantage in the marketplace.

So there are very strong incentives right now in this industry

and there are some products that Mr. Markey was suggesting

which are already very prideful of their ability to filter out, and

that is one of their strong selling points when it comes to——

Mr. TAUZIN. It might be good at some point—we will discuss it

with you—to actually have a hearing at some point where we examine the state of all that technology because obviously if we are

going to enact some policy in the area it ought to be as expansive

as possible to take into account all those possibilities. So, again,

96

this is maybe the beginning of a very good and useful discussion,

and we will continue at another date.

Any further questions by any member of the committee? Let me

thank you all—I am sorry, Mr. Shimkus.

Mr. SHIMKUS. I would like to ask to keep the record open for

suggestion——

Mr. TAUZIN. Without objection the record will be open for 30

days, 30 days.

Mr. SHIMKUS. I have got a lot of questions. Mr. Chairman, can

I ask——

Mr. TAUZIN. The gentleman is recognized.

Mr. SHIMKUS. [continuing] three short questions. One, going back

to Mr. Crawford. Going back to one of the IG reports in 1997, if

you were listed as an—your application was listed as outstanding,

and then the assistant secretary took seven of the outstanding requests and for reasons only dispersion of grants throughout the

country and you knew that you were one of—there were 38, now

there are 31 grants going to outstanding candidates, you were one

of the candidates that was pulled off, do you feel that the university would at least deserve some justification for that?

Mr. CRAWFORD. I think university faculty are used to being told

no a fair amount, and so we would have just taken it in stride and

not thought twice about it, but would have vowed to come back the

second time and do better.

Mr. SHIMKUS. So you don’t have any problem with the Federal

Government not justifying why one grant went versus against another?

Mr. CRAWFORD. No.

Mr. SHIMKUS. Especially when one grant may have been listed

as fair versus as outstanding?

Mr. CRAWFORD. Those are details that normally an individual

like me would never, ever know.

Mr. SHIMKUS. That is why we have a Federal Government that

has an Office of Inspector General, so everybody has access to these

public documents, and people could find out that information

should they want to know the internal proceedings of a Federal

agency.

Mr. CRAWFORD. No. I think most of my colleagues would not

question it. They might be disappointed; but they would not question it, saying that is the way it is, and we will just do better next

time.

Mr. SHIMKUS. But you already got an outstanding. You were listed as an outstanding applicant. How much better can you get in

the next try?

Mr. CRAWFORD. Well, sometimes there are emphases that an administration or a Congress would bring to bear as a hot button

issue.

Mr. SHIMKUS. And, Mr. Irving, can you address some of those?

Mr. IRVING. I would love to. Let me tell you what can happen.

I had, say, 38 outstandings. I might have had 100, 150 outstandings, but I might not have had an outstanding from, since I

am from New York, New York State, and I want geographic

dispersity or diversity. So what I will do is I may not—in the State

of Illinois I may have eight outstandings. In the New York the best

97

I have is a fair. I want to give every State—maybe all I can do is

two in Illinois so I want to give all to Illinois, so I give one to——

Mr. SHIMKUS. I don’t know, Illinois, if they are all outstanding.

Mr. IRVING. Maybe it is one fair in Illinois and eight outstanding

in New York and I want geographic diversity. Maybe I have got

five that are using satellite technology and one fair but the board

says with a little bit of tweaking this can be a great grant, but the

way they wrote it it is only a fair grant.

I did college admissions, and a lot of times we wanted to get a

kid who was a drum major into the university. He may not have

a 3.9, he may not have a 1600, but he is the best drum major in

the country or he is the best tuba leader or he is a great entrepreneur and made a billion dollars with some innovation.

That is what we do with these grants. We try to look below the

surface. If I could fund every outstanding grant I would, but I

can’t.

Mr. SHIMKUS. Let me follow up, and I understand and I appreciate you all do great work, but the IG has testified you haven’t

provided justification for these——

Mr. IRVING. What he said was we didn’t provide justification for

the ones we dropped off. We did provide justification for the ones

we added on, and the reason we didn’t provide justification, I didn’t

know you wanted it. We will in the future. There will never be a

grant that is dropped off——

Mr. SHIMKUS. I think it is only fair if they provide an outstanding application and they make it to the final-cut list and then

they get dropped off for——

Mr. IRVING. Congressman, can I make one point?

Mr. SHIMKUS. Sure.

Mr. IRVING. That final-cut list is the list that is presented to me

by my staff, and they have a great deal of knowledge, but they

don’t have necessarily all the political knowledge I have of what

the Congress wants me to emphasize, rural, underserved, this year

we want to make sure we do more satellite and so——

Mr. SHIMKUS. I understand.

I hear you, and let me follow up with this question. Can you provide for me, for the record, the grants that have not met the requirements, which of those fell into the scoring breakdown for applications? My question is, if we are making political considerations, and then we are providing grants to fair and good applicants based upon political applications, then we have a problem

like LatinoNet that cannot meet their requirements and actually

end up owing the Federal Government.

Then that is something that we ought to look at, and I think we

are justified in asking those questions.

Mr. IRVING. When I say political, I want to be very clear. I mean,

things like this Congress has said to me, we want rural, we want

you to focus on underserved, not on—this is not——

Mr. SHIMKUS. No, no, politics—good politics is good government,

but what I am saying is, we have an Inspector General’s report on

LatinoNet that show that they didn’t meet their requirements and

owe the Federal Government a lot of money.

I want to know if they were a poor rating, and if they were a

poor rating, if they were bumped up because of good political conVerDate 20-MAR-2000 15:27 Mar 27, 2000 Jkt 010199 PO 00000 Frm 00100 Fmt 6633 Sfmt 6602 E:\HEARINGS\56610.TXT pfrm02 PsN: 56610
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siderations, dispersal, big cities, inner cities, minority populations,

whatever, I think that ought to be put into consideration.

Mr. IRVING. I will be happy to find out what their rationale

was—what the rating was for LatinoNet.

[The information referred to follows:]

LATINONET

In 1994, LatinoNet of San Jose, California, received a TIIAP grant in the amount

of $450,000. The grant was made for a demonstration project to show how minority

communities can participate in the nation’s advanced information infrastructure.

LatinoNet’s application was highly rated by the peer review panel, receiving a

‘‘Good to Outstanding,’’ ‘‘Good Plus to Outstanding,’’ and ‘‘Good’’ ratings respectively

from the three panelists. [Note: Outstanding indicates ‘‘Recommended for Priority

Funding,’’ Good indicates ‘‘Recommended for Funding if Funds Available.’’]

The application was rated in the top 20% of applications reviewed by the review

panel. Based on its high ratings, the TIIAP Director recommended the application

for award.

The OIG audit of LatinoNet occurred while the grant was still active. At the time

of the audit, LatinoNet had received an excess disbursement of federal funds. However, LatinoNet spent local matching funds after the audit and, based on their final

financial report, the Department’s grants office has determined that LatinoNet does

not owe the federal government any funds.

Mr. SHIMKUS. And we will probably follow up with other reports.

Mr. IRVING. Thank you, Congressman.

Mr. SHIMKUS. I yield back.

Mr. TAUZIN. I thank you—my mike is not on. You were mentioning grants in a lot of districts of members of the committees.

You didn’t mention Mr. Markey.

Mr. IRVING. To my chagrin and his dismay, we have never funded a grant in his district.

Mr. TAUZIN. You and I are pretty close. I will be happy to intercede for Mr. Markey.

Mr. MARKEY. I am living proof there is such a thing as good government. You would think statistically with 400 projects that he

has given out——

Mr. TAUZIN. There is also another good Russell Long story I just

really want to share with you because it is so good.

His staffer once—one of his staffers once came to him when he

was having a particular important moment with one of the presidents of the United States who needed him very badly on a point.

And his staffer said, well, sir, what you need to do is write out a

good list of things you need from the president. When you see him

this afternoon, just hand him that list. Isn’t that a good idea?

And Russell said, absolutely not. And the kid said, well, why not?

I think it would be a good idea. Just hand that list to the president. You know, he needs you bad right now. Just be good, put it

in his hand personally, you know. And Russell said, no, terrible

idea. He says, well, why not? He said, well, son, every list has an

end.

Thank you very much. We are going to move, as I said, legislation this year on NTIA. We’re going to do our best to get it done.

So if you have some thoughts on how the grant program can be improved and want to add those sections of the bill, please submit

them for the record, Mr. Ross or any of you.

If you have some—we mentioned some talk about how we might

insure that IRAC perhaps a little fairer. We need to know how that

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might work, Larry, in the context of national security. Comment

back to us. The record is open for 30 days.

Gentlemen, thank you very much for the contributions you made.

[Whereupon, at 4:25 p.m., the subcommittee was adjourned.]