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[Senate Hearing 107-1131]
[From the U.S. Government Publishing Office]

                                                       S. Hrg. 107-1131

 
          NOMINATIONS TO THE FEDERAL COMMUNICATIONS COMMISSION

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

                                HEARING

                               BEFORE THE

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 17, 2001

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation

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           COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                     JOHN McCAIN, Arizona, Chairman
TED STEVENS, Alaska                  ERNEST F. HOLLINGS, South Carolina
CONRAD BURNS, Montana                DANIEL K. INOUYE, Hawaii
TRENT LOTT, Mississippi              JOHN D. ROCKEFELLER IV, West 
KAY BAILEY HUTCHISON, Texas              Virginia
OLYMPIA J. SNOWE, Maine              JOHN F. KERRY, Massachusetts
SAM BROWNBACK, Kansas                JOHN B. BREAUX, Louisiana
GORDON SMITH, Oregon                 BYRON L. DORGAN, North Dakota
PETER G. FITZGERALD, Illinois        RON WYDEN, Oregon
JOHN ENSIGN, Nevada                  MAX CLELAND, Georgia
GEORGE ALLEN, Virginia               BARBARA BOXER, California
                                     JOHN EDWARDS, North Carolina
                                     JEAN CARNAHAN, Missouri

                  Mark Buse, Republican Staff Director
               Ann Choiniere, Republican General Counsel
               Kevin D. Kayes, Democratic Staff Director
                  Moses Boyd, Democratic Chief Counsel

                            C O N T E N T S

                              ----------                              

                                                                   Page
Hearing held on May 17, 2001.....................................     1
Statement of Senator Allen.......................................     6
Statement of Senator Brownback...................................    35
Statement of Senator Burns.......................................    28
    Prepared statement...........................................    75
Statement of Senator Carnahan....................................    26
Statement of Senator Cleland.....................................    33
Statement of Senator Edwards.....................................    30
Statement of Senator Hollings....................................     3
    Prepared statement...........................................     4
    Article, dated Feb. 8, 1996, entitled Communications Bill 
      Signed, and the Battles Begin Anew, from the New York Times    38
    Article, dated Feb. 9, 1996, entitled Stakes are Huge as 
      Scramble to Gain Market Share Gears Up, from the Orange 
      County Register............................................    40
Prepared statement of Senator Inouye.............................     5
Statement of Senator McCain......................................     1
    Prepared statement...........................................     2
Statement of Senator Rockefeller.................................     6
Statement of Senator Stevens.....................................    24
Statement of Senator Wyden.......................................    21

                               Witnesses

Abernathy, Kathleen Q., Commissioner-Designate, Federal 
  Communications Commission......................................47, 49
    Prepared statement...........................................    50
    Biographical information.....................................    51
Copps, Michael J., Ph.D., Commissioner-Designate, Federal 
  Communications Commission......................................47, 55
    Prepared statement...........................................    56
    Biographical information.....................................    58
Davis, Hon. Tom, U.S. Representative from Virginia...............     7
Martin, Kevin J., Commissioner-Designate, Federal Communications 
  Commission.....................................................48, 65
    Prepared statement...........................................    65
    Biographical information.....................................    66
Powell, Hon. Michael, Chairman, Federal Communications Commission  3, 9
    Biographical information.....................................    10

                                Appendix

Response to written questions submitted to Kathleen Q. Abernathy 
  by:
    Hon. John McCain.............................................    78
    Hon. Gordon Smith............................................    77
Response to written questions submitted to Kevin J. Martin by:
    Hon. Barbara Boxer...........................................    86
    Hon. Max Cleland.............................................    87
    Hon. Ernest F. Hollings......................................    85
    Hon. Daniel K. Inouye........................................    89
    Hon. John F. Kerry...........................................    91
    Hon. John McCain.............................................    81
    Hon. Gordon Smith............................................    83
    Hon. John D. Rockefeller IV..................................    92
Response to written questions submitted to Hon. Michael Powell 
  by:
    Hon. John McCain.............................................    93
    Hon. Gordon Smith............................................    97
Letter, dated May 21, 2001, to Hon. John Edwards from Hon. 
  Michael Powell.................................................   101

          NOMINATIONS TO THE FEDERAL COMMUNICATIONS COMMISSION

                              ----------                              

                         Thursday, May 17, 2001

                               U.S. Senate,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 9:56 a.m. in room 
SR-253, Russell Senate Office Building, Hon. John McCain, 
Chairman of the Committee, presiding.

            OPENING STATEMENT OF HON. JOHN McCAIN, 
                   U.S. SENATOR FROM ARIZONA

    The Chairman. Good morning. The Senate Commerce Committee 
is meeting today to examine the qualifications of Mr. Michael 
Powell, who has been nominated by the President to serve as 
Chairman of the Federal Communications Commission.
    I would like to welcome Mr. Powell this morning, as well as 
his family and friends, and I would like to take this 
opportunity to congratulate him on his exceptional and 
distinguished record. As Chairman and as a Commissioner of the 
FCC and as an attorney in private practice, he has consistently 
demonstrated extraordinary talent and leadership abilities.
    A recent Washington Post article said it best when they 
wrote: ``Michael Powell is well-liked and respected to a degree 
not often found in Washington, drawing praise from both sides 
of the partisan aisle.'' Such qualities are absolutely 
essential to an FCC Chairman who must lead the FCC into the 
digital age and the new economy.
    Mr. Powell has already devoted much of his career to public 
service. In addition to being the current Chairman and 
Commissioner of the FCC, he served as Chief of Sstaff of the 
Antitrust Division at the Department of Justice and had a 
distinguished military career as an officer in the United 
States Army. I appreciate his willingness to continue to serve 
his country and I thank him for his steadfast commitment and 
dedication. I also thank his family, who I am sure have been 
instrumental in his success and his being here with us this 
morning.
    Today we are here to review and seek comment from Mr. 
Powell on his qualifications to be Chairman of the FCC and to 
engage in a dialog with the members of this Committee about 
what direction the FCC will take under his leadership if he is 
confirmed.
    I would like to point out that the FCC is an independent 
agency created by the Congress. As such, its primary 
responsibility is to implement and enforce the will of Congress 
and thereby facilitate Congress' exercise of its 
responsibilities pursuant to the Commerce Clause. The Congress 
enacts the laws governing interstate commerce, including 
telecommunications. The FCC is an agency created by the 
Congress and delegated the responsibility to implement the 
telecommunications laws that Congress enacts.
    Again, I would like to congratulate you for your continued 
service to your country. Public service is a worthy cause and 
it is people such as yourself who embody and demonstrate the 
type of leadership that inspires young Americans to serve their 
country and renew their pride in public service. As Chairman of 
the FCC, you will face many pressing issues and difficult 
decisions, but I am confident that you will confront these in 
the fair and balanced manner for which you have been justly 
praised.
    Chairman Powell, would you care to introduce members of 
your family who are with us this morning.
    [The prepared statement of Senator McCain follows:]

                Prepared Statement of Hon. John McCain, 
                       U.S. Senator from Arizona

    We continue with the second panel of today's hearing to examine the 
qualifications of three individuals nominated by the President to serve 
as members of the Federal Communications Commission.
    We welcome this morning FCC nominees Kathleen Abernathy, Michael 
Copps, and Kevin Martin, their family members and guests. Together with 
Michael Powell, who will continue as Chairman of the Commission, these 
individuals, if confirmed, will guide American telecommunications 
policy into the digital age.
    I congratulate the nominees on the talent and dedication that has 
brought them the recognition they enjoy today, and I appreciate their 
willingness to undertake the tremendous responsibilities of serving as 
an FCC Commissioner. They are outstanding individuals with diverse 
individual talents and deep collective expertise in telecommunications.
    These talents and expertise will prove particularly important as 
the FCC continues to confront the tremendous challenges that face us in 
the digital age, and to address the issues raised by the rapid changes 
taking place in the telecommunications industry.
    Ms. Abernathy has an extensive background and experience in 
telecommunications both at the FCC, where she served as legal advisor 
to two FCC commissioners and served in the Office of the General 
Counsel. Recently, Mr. Copps served as the Assistant Secretary of 
Commerce for Trade Development. Mr. Martin was also a staff member at 
the FCC, serving as Legal Advisor to Commissioner Harold Furchtgott-
Roth. Each one of these individuals brings to the Commission years of 
experience and knowledge of the issues. I commend each of them for 
their commitment to serve their country. I would also ask of them that 
they dedicate their efforts to implementing sound public policy, that 
serves the interest of consumers, during this era of convergence in the 
telecommunications industries.
    I can also appreciate the pride their families must feel today, and 
I thank them for their support because it will be so important to the 
nominees' performance of their official duties.
    The Congress enacts the laws governing interstate commerce, 
including telecommunications. The FCC is an agency created by the 
Congress and delegated the responsibility to implement the 
telecommunications laws that Congress enacts.
    I take this Committee's advice and consent role very seriously, and 
it is our responsibility to ensure that prospective members of the FCC 
fully understand their duties and are capable and committed to 
fulfilling the mission requested of them. However, while we must be 
thorough, we must also be careful. Just as it is not appropriate for 
nominees to the bench be asked how they will vote on a specific issue 
that is currently before, or likely to come before, their court; it is 
not appropriate for commissioners who have quasi-judicial 
responsibilities to pre-judge cases they must consider. I hope and 
trust that we will all respect those boundaries, in deference to the 
process and in fairness to those who have the right to a fair and 
impartial hearing before the commission.
    With that, I would like to yield to Senator Hollings, who will 
introduce Mr. Copps, followed Senator Stevens, who will introduce Ms. 
Abernathy, and finally Senator Edwards, who will introduce Mr. Martin.

         INTRODUCTORY REMARKS OF HON. MICHAEL POWELL, 
          CHAIRMAN, FEDERAL COMMUNICATIONS COMMISSION

    Mr. Powell. Yes, Mr. Chairman. It is good to be here, 
Senator Hollings and distinguished members of the Committee. 
Let me take an opportunity to introduce my moral and important 
family backbone. I have with me here my wife Jane, whose 
beloved support and unflinching caring for our children gives 
me some of the ability to do the challenging mission that is 
before me. I am forever grateful and thankful for her here in 
public.
    I would like to introduce my mother- and father-in-law, 
Navy Captain Dick Knott and his wonderful wife Eleanor, some of 
the best in-laws you could ever hope for.
    The Chairman. I am sure that Navy influence was very 
beneficial.
    Mr. Powell. It is not bad.
    I also have with me here a woman who is known in this town, 
my gracious mother, Alma Powell, who I can say unquestionably 
without whose efforts I really would not be here today.
    [Laughter.]
    Mr. Powell. Even though he is not here, I have to publicly 
thank my father, the Secretary of State of the United States, 
who never pushed me to public service, but merely lured me by 
virtue of his example and his commitment to selfless service, 
one that I follow with great pride and great honor. That is the 
family I have with me here today.
    The Chairman. We want to welcome all the members of the 
family and thank you for the influence you have had.
    Senator Burns. Can they stand?
    The Chairman. Senator Burns demands that you stand. I do 
not, but we would like for you to stand if you would care to. 
Thank you. Would you care to stand so that we can all recognize 
the family members.
    [Applause.]
    The Chairman. We welcome you here today and we appreciate 
your presence and we share your pride in this outstanding 
American. Thank you for being here.
    Senator Hollings.

             STATEMENT OF HON. ERNEST F. HOLLINGS, 
                U.S. SENATOR FROM SOUTH CAROLINA

    Senator Hollings. Mr. Chairman, let me take the liberty 
here at this moment to introduce for the record and ask that it 
appear at the appropriate time, my friend Dr. Michael J. Copps, 
who has been nominated by the President for Commissioner of the 
Federal Communications Commission. The reason for this is the 
fact that we have already commenced at the Subcommittee on 
State, Justice, Commerce hearing, the hearing on the FBI which 
is my major Committee and I have got to get over there. So with 
your indulgence, Mr. Chairman.
    The Chairman. Without objection.
    Senator Hollings. I thank you very much. I will put in an 
opening statement. Let me congratulate Chairman Powell on his 
outstanding record and dedication to public service.
    With respect to Dr. Copps, he is an honor graduate at 
Wofford and also at the University of North Carolina in history 
and Russian, professor of history down at Loyola until 1970, 
when he came to help our friend Ed Muskie, and Ed Muskie 
withdrew from the race. So we picked him up, and for 15 years 
Dr. Copps served not only as a Legislative Assistant, but more 
particularly, Chief of Staff, and he learned both sides of 
every question.
    I have always, in addressing graduating classes at this 
time of year, called on them as my fellow students. As long as 
they remain a student, they will continue to live. That is the 
best part of the U.S. Senate; it is the best postgraduate 
course I know of.
    Dr. Copps has taught me a great deal, as he has also 
learned tremendous amounts here. He went on, of course, in the 
private sector with the Collins and Aikman firm as their 
Director of Government Affairs, then Senior Vice President of 
the American Meat Institute, served as Deputy Assistant 
Secretary at the Department of Commerce on the Trade 
Development Division, and then, of course, in the last few 
years as the Assistant Secretary of Commerce on the 
Department's International Trade Administration.
    So he has had a distinguished career here in Washington. 
Most of us who know him really admire him for his objectivity. 
Like I say, more than a balanced budget we need balanced 
Senators and public servants up here. He is balanced. I am 
confident that he will bring outstanding service here to the 
Federal Communications Commission. So I welcome him, and I 
appreciate, Mr. Chairman, your indulgence.
    [The prepared statement of Senator Hollings follows:]

            Prepared Statement of Hon. Ernest F. Hollings, 
                    U.S. Senator from South Carolina

    Today's nomination hearing represents a unique opportunity to share 
our concerns and thoughts with a new FCC chairman and three nominees to 
the FCC. In the upcoming months there are a number of issues that the 
FCC will have to address that will have an impact on how consumers 
receive their communications service.
    First and foremost, the FCC must enforce the pro-competitive 
provisions of the Telecommunications Act of 1996. The Act's overarching 
goal is to provide a transition from monopoly local phone markets to 
competitive local markets with multiple service providers offering new 
and innovative services. This transition certainly will not happen of 
its own accord. It will be the responsibility of the FCC to apply the 
existing law to 271 applications and effectively enforcing the 
competitive tenets of the 1996 Act.
    Second, since the passage of the 1996 Act, there have been record-
breaking mergers and the FCC and the courts are in the process of 
reviewing various ownership limits. The diversity of local broadcast 
programming that we receive is in part due to a diversity of owners. 
The many wireless phone competitors from which we choose, is in part 
due to the existing spectrum cap. The availability of programming and 
the ability of cable programmers to negotiate carriage is in part due 
to the cable ownership rules. Therefore, as mergers occur and as 
ownership caps are reviewed, it is important that rates, programming, 
competition, and consumers do not become casualties in the process.
    Third, the FCC has before it, increasingly difficult spectrum 
coordinations--domestically between commercial and government users as 
well as internationally with other countries. It is important that the 
FCC working with Congress, NTIA, and the industry put in place a 
mechanism to better manage spectrum. Wireless communications has the 
potential to revolutionize the way we live our lives. Therefore, the 
FCC must fulfill its responsibilities and successfully manage spectrum, 
allocate spectrum for new services, and license spectrum to applicants.
    Lastly, the universal service system we have today has been 
successful in maintaining low cost affordable phone service in rural 
and high cost areas. These areas of the country probably would have 
very little telephone service were it not for the federal support and 
government mandate of universal service. The FCC has taken a number of 
steps to reform universal service and has opened a proceeding to look 
at the various inter-carrier compensation mechanisms that exist today. 
As competition evolves and as the FCC works to make the existing 
universal service funding explicit, it must effectively strike a 
balance between the sufficiency of the fund, affordable rates, 
promoting competition, and maintaining service to high cost areas.
    With that said, I welcome the nominees and look forward to hearing 
their testimony.

    [The prepared statement of Senator Inouye follows:]

             Prepared Statement of Hon. Daniel K. Inouye, 
                        U.S. Senator from Hawaii

    I am pleased to be a part of this nominations hearing. I welcome 
the nominees for chairman and commissioner of the Federal 
Communications Commission, and also their family and friends.
    This is an important period in the history of the communications 
industry. As we transition from a monopoly local phone market to a 
competitive one, the FCC must ensure that Bell companies fully meet the 
requirements outlined in section 271, before they are allowed into the 
long distance market. The FCC must also enforce the Act's market 
opening requirements and pursue violators of these provisions. The FCC 
must send a strong message to the industry that we expect nothing less 
than full competition and that slowing the entrance of competition into 
local markets is unacceptable.
    Two policies of great importance to my home state of Hawaii are 
rate integration and geographic averaging. These policies were first 
adopted by the FCC in order to ensure that the so called ``off shore 
points'', Alaska, Hawaii, Puerto Rico, and the Virgin Islands were 
integrated into the telecommunications rate and service structure 
prevailing on the mainland. Previously, these points were deemed 
``international'' points for purposes of telephone communications. Long 
distance rates were 3 times that of mainland levels. In the 1996 Act, 
Congress in adding section 254(g) codified these policies and expanded 
their reach. Even though the long distance market was deemed 
competitive, Congress took this action to ensure that all Americans, 
even those in remote areas, received the benefits accorded by a 
competitive market.
    In Commission proceedings and in the legislative processes, long 
distance carriers have opposed rate integration and geographic 
averaging. There have been petitions for exemption and forbearance, but 
none prevailed because the simple logic supporting the adoption of the 
policies remain valid. I believe it is important that the FCC continues 
to sustain these policies in order to ensure that residents of Hawaii 
have affordable phone service.
    Lastly, Hawaii has long struggled to obtain DBS service similar to 
that available on the mainland. Today, one provider does, pursuant to 
the Commission's mandate, provide service in Hawaii that roughly 
approximates that available in the mainland states. The other DBS 
provider does not, and has vigorously resisted doing so. For this 
reason, it is important that the Commission enforces its rules and 
ensures that there is no misunderstanding that DBS services must be 
offered to Alaska and Hawaii and that such services must be 
substantially equivalent to that offered in the mainland states. This 
is important, because DBS promises not only video programming and 
competition to cable, but it also promises Internet access services.
    I look forward to working with all of the nominees in the months 
ahead.

    The Chairman. Thank you very much.
    We have an informal rule on this Committee that there be 
only opening statements by the Chairman and the Ranking Member. 
But, like every rule, there is exceptions to it, and Senator 
Rockefeller has asked to make a brief statement.
    Senator Rockefeller.

           STATEMENT OF HON. JOHN D. ROCKEFELLER IV, 
                U.S. SENATOR FROM WEST VIRGINIA

    Senator Rockefeller. Mr. Chairman, I appreciate that, as I 
appreciate your permission and the permission of the Ranking 
Member. I would be happy to yield, Mr. Chairman.
    The Chairman. Would you like for them to make the 
introductions and then a statement?
    Senator Rockefeller. Yes.
    The Chairman. Fine. We welcome our two colleagues from 
Virginia here and we appreciate that you are here on his 
behalf.
    Mr. Davis. I have a vote, but the Senator has to preside, 
so I will yield.
    Senator Allen. I am supposed to preside at this moment.
    The Chairman. Senator Allen. Thank you, Senator Allen.

                STATEMENT OF HON. GEORGE ALLEN, 
                   U.S. SENATOR FROM VIRGINIA

    Senator Allen. Thank you, Mr. Chairman, and thank you, 
members of the Committee, of which I am a member. It is a 
pleasure to be here also with my colleague Tom Davis, 
Congressman from Northern Virginia, for a wonderful event, 
obviously, the cross-examination of someone who everyone knows 
fairly well in this Committee, and that is Michael Powell. It 
is great to see his wonderful family here. I will not get into 
all sorts of satirical verse as far as his upbringing and how 
he had to move around the country. Suffice it to say he, like 
most people in the military, but particularly Michael, was 
raised by outstanding parents.
    I do think that he does have a lot of good experience in 
the Department of Defense working with Mr. Armitage, and years 
ago I am sure he had some conversations with the Joint Chiefs 
of Staff, the Chairman of the Joint Chiefs of Staff. But also, 
some of the issues that do have to do with communications, such 
as the challenges of limited spectrum, a term that we would 
have laughed at merely a decade ago, now is very important; new 
technologies such as the third wave, the third generation of 
wireless communications, wireless Web browsers, the impact of 
new regulations in foreign countries and what impact they have 
on our country's businesses as they try to expand.
    He is clearly conversant with the issues. He is 
knowledgeable on the issues. Clearly, when you look at this 
Committee, which has a tremendous amount of jurisdiction, there 
is probably no Federal agency that reports to this Committee 
that is any more important than the Federal Communications 
Commission. It is essential that we have someone who has 
already shone steady leadership on the Federal Communications 
Commission on difficult issues from reciprocal compensation to 
increasing fines for Section 251 violations to access rates to 
universal service reform.
    Clearly, we will, I think, welcome his insight on issues of 
what is the impact of Internet access taxes or discriminatory 
taxes and what segment of society is most impacted by any of 
those sort of proposals.
    So the decisions made in this Committee and with the FCC 
have a tremendous impact on our schools, on our commerce, and 
our ability to even interact with our family members. Mr. 
Chairman, the President has once again come forward with an 
outstanding individual and clearly there is no better person in 
this entire country in my estimation to be Chairman of the 
Federal Communications Commission, whether it is based on 
integrity, knowledge, experience, or also having that 
enterprising spirit of innovation and embracing the advances of 
technology, no one better to meet all those characteristics 
than Michael Powell.
    It is my pleasure to present him to this Committee and 
wholeheartedly endorse his nomination.
    The Chairman. Thank you, Senator Allen. We appreciate you 
being here. We understand you have to go preside over the 
Senate, and I thank you very much for your statement.
    Senator Allen. Thank you, Mr. Chairman.
    The Chairman.  Congressman Davis, welcome.

                 STATEMENT OF HON. TOM DAVIS, 
               U.S. REPRESENTATIVE FROM VIRGINIA

    Mr. Davis. Thank you, Senator. Mr. Chairman, it is both an 
honor and a privilege to appear before you and the members of 
the Committee this morning to present one of my most 
distinguished constituents, FCC Commissioner Michael Powell, 
for your consideration as the Commission's next Chairman. As 
you know, the House Subcommittee on Telecommunications and the 
Internet, on which I serve, had the distinct pleasure of having 
Chairman Powell testify before us in late March. My colleagues 
and I and the Subcommittee were deeply impressed by the high 
caliber of his expertise, his responsiveness to members' 
concerns, and his willingness to tackle the most difficult 
issues facing the telecommunications industry over the next 
decade.
    Chairman Powell's list of career accomplishments is as 
diverse as it is impressive. A long-time resident of the 
Virginia Commonwealth, he is a 1981 graduate of Lake Braddock 
High School in my district, of the College of William and Mary. 
Chairman Powell has served as a Commissioner on the FCC since 
1997 and in that capacity he also serves as the FCC's defense 
Commissioner, responsible for the oversight of the Commission's 
national security emergency preparedness functions.
    During his previous life, he served as the Department of 
Justice's Chief of Staff for the Antitrust Division and 
specialized in litigation and regulatory issues affecting 
telecommunications, antitrust, and employment law at the law 
firm of O'Melveny and Myers.
    After graduating from the Georgetown University Law Center, 
Chairman Powell clerked for the Honorable Harry T. Edwards, 
Chief Judge of the U.S. Circuit Court of Appeals for the 
District of Columbia.
    The FCC has entered a critical period that will affect our 
Nation's long-term competitiveness in the overlapping arenas of 
technology and telecommunications. With issues as diverse as 
the spectrum management and the widespread deployment of 
broadband and digital television pressing on the congressional 
agenda, I am thankful we have such an exceptionally qualified 
and articulate individual as Chairman Powell to lead us through 
this time.
    I appreciate you giving me the opportunity to be here today 
and am just very, very happy to recommend his confirmation. 
Thank you very much.
    The Chairman. Thank you very much, Congressman Davis. You 
are always welcome here and we thank you for taking the time to 
speak on behalf of this candidate.
    Now, Senator Rockefeller, would you like----
    Senator Rockefeller. Thank you, Mr. Chairman, and I will 
eliminate one page from my two-page remarks.
    I will get right to the point. I think the FCC is the most 
important Commission in Washington, DC I think it is now and I 
think it will be for years and years to come. Therefore, this 
hearing this morning, which I will come back to in time for 
questioning, I want to emphasize two points. First is the E-
rate. Chairman Powell, I am not just speaking to you, but also 
to your fellows, your colleagues and fellow nominees.
    I think the E-rate has been a great success. We have wired 
thousands and thousands, in fact millions of classrooms and 
libraries. Demand far exceeds the money available. We have this 
year about $5 billion of requests for $2.25 billion available 
in the universal service fund. Together we are bringing 
technology to teachers and to kids in a way which would simply 
never have been possible in my State and other places across 
the country.
    I strongly believe, Mr. Chairman, that we should not make 
risky changes to the E-rate now because it is doing its job. I 
think we have to keep its funding level. I think we have to 
keep its funding source, that is the universal service fund, 
rather than turn it over to the appropriations process. I think 
we have to keep the funding source secure and stable from year 
to year. That means keeping the E-rate at the FCC, within the 
universal service program.
    We should not, in my judgment, add new programs, new 
services beyond those hammered out in very, very tough, lengthy 
negotiations in 1996. These additions could undermine the 
program's core mission. They will undermine the program's core 
mission, as well as the funding for it, and create 
opportunities without any doubt for lawsuits. I will elaborate 
on that when I return.
    We should not subject schools to new formula-based systems. 
We should keep the current system that in fact creates 
accountability, school planning, creates that, that has spurred 
$500 million in local and educational technology investment.
    When I do my questioning, I am going to need to know that 
each of you will promise not to use the FCC to undermine the 
will of the Congress as passed in the law and threaten this 
important program through rules and regulations.
    Second and finally, broadband deployment and rural telecom. 
I have introduced a bill along with a lot of folks who are on 
this Committee. Those of us from rural States have seen the 
connection between communications infrastructure and economic 
development firsthand. It is the future. Internet is great. 
Broadband is what counts.
    Broadband deployment, the universal service fund, other 
infrastructure initiatives, are not subsidizing luxuries. They 
are subsidizing jobs, they are subsidizing hope and the future 
of many, many millions of people across our country. You must, 
all of you must help us figure out how to make sure that the 
technologies that we all fight to support do not only benefit a 
small portion or the most profitable portion of America. I 
think that is a sacred trust that the FCC Commission has.
    I will stop here, Mr. Chairman. I feel passionately about 
those two subjects, and four or five others which I have not 
mentioned. I respect the Chairman greatly. He knows that. We 
have talked in many exchanges and I have talked with the other 
members, all except one, and I look forward to the hearing. I 
particularly thank the Chairman for his indulgence.
    The Chairman. Thank you very much, Senator Rockefeller.
    Welcome, Commissioner Powell. Please proceed with your 
opening statement.

          STATEMENT OF HON. MICHAEL POWELL, CHAIRMAN, 
               FEDERAL COMMUNICATIONS COMMISSION

    Mr. Powell. Thank you, Mr. Chairman, and thank you, members 
of the distinguished Committee.
    It was nearly 4 years ago that I had an opportunity to sit 
here and present myself for the advice and consent of the 
Senate in response to the President's nomination and my 
selection. I am deeply honored to do so again. I was humbled 
then by the challenges that lay before me, and if I was humbled 
then I am in awe today.
    I have seen over the course of the past 4 years how truly 
tough a job it is, how difficult and complex our decisions are. 
Despite the desire sometimes of the media and various industry 
segments to translate communications issues into good versus 
evil, simple versus simple, our issues are always complex, 
subtle, intricate, and difficult. I am uniquely aware of those.
    I understand increasingly, in a world driven by 
technological change, convergence, and innovation, we operate 
in a world more uncertain than ever before. We cannot know, 
with the kind of certainty that we ever once had, what will be 
the case in the communication industry, what services consumers 
will respond to, and the manner in which they will be provided. 
We have to make our decisions against that backdrop of 
uncertainty and retain a sufficient amount of flexibility and 
foresight to make thoughtful ones as we proceed into the bright 
future.
    When I completed my questionnaire that has to be submitted 
to this Committee, there was a question that arrested me as I 
was looking through the sheet. It asks: ``Why do you want this 
job?'' Trust me, after 4 years I often ask myself that. But put 
in a nutshell, the opportunity to serve one's country is 
singularly unique and I would do it for that purpose alone.
    But I am more challenged and driven by the idea of being 
able to be involved in the great undertakings of my day. The 
decisions we make will have far-reaching impact, not only on 
our economy, but on our children, on us as human beings. The 
way that we communicate and relate are all going to resonate 
from the decisions that we make in conjunction with this 
Committee and the Congress. I am awed by that responsibility, 
but I assume it wholeheartedly because I recognize the 
importance of it.
    I look forward to serving, not only with the extraordinary 
staff of the Federal Communications Commission, but, should you 
deem worthy, the members who will follow me for confirmation as 
we proceed into that future.
    As I said, I do not know what the world looks like in 5 
years. Candidly, I do not know what the world looks like in 1 
year. But I can pledge this to the Committee and the American 
public: I will make decisions and I will make the hard 
decisions, and at times many will not agree with them. Members 
of this Committee undoubtedly will disagree with them. But I 
will assure you this: They will be principled, they will be 
based on the facts, they will be based on my most sober 
analysis of the law, and they will be based on a little bit of 
instinct and intuition just for good measure. But you will 
never have any doubt that they are the exercise of my best 
judgment as best I know how.
    Finally, an important emphasis: They will be independent 
decisions. This is what I am paid to do. We are guided by a 
simple credo: ``We owe fairness to all and allegiance to 
none.'' Everything we do is in the public interest.
    With that, I am honored to sit before you and submit my 
name for confirmation and for advice and consent of the Senate, 
and welcome to take your questions.
    [The biographical information of Mr. Powell follows:]

                      A. BIOGRAPHICAL INFORMATION

    1. Name: Michael Kevin Powell.
    2. Position to which nominated: Chairman, Federal Communications 
Commission.
    3. Date of nomination: May 10, 2001.
    4. Address: Not released to the public. Office: Federal 
Communications Commission, 445 12 Street, S.W., Suite 8B201, 
Washington, DC 20554.
    5. Date and place of birth: March 23, 1963; Birmingham, Alabama.
    6. Marital status: Married to Jane Knott Powell, formerly Jane 
Ellen Knott.
    7. Names and ages of children: Jeffrey Michael Powell, Age 12; 
Bryan Richard Powell, Age 6.
    8. Education: Lake Braddock Secondary School, Burke, Virginia, 
August 1977 to June 1981, H.S. Diploma; The College of William & Mary, 
Williamsburg, Virginia, August 1981 to May 1985, A.B. in Government; 
Georgetown University Law Center, Washington, DC, August 1990 to May 
1993, Juris Doctor.
    9. Employment record: Chairman, Federal Communications Commission, 
Washington, DC, January 2001 to Present; Commissioner, Federal 
Communications Commission, Washington, DC, November 1997 to January 
2001; Chief of Staff, Antitrust Division, U.S. Department of Justice, 
Washington, DC, December 1996 to November 1997; Associate, O'Melveny & 
Myers LLP, Washington, DC, July 1994 to December 1996; Judicial Clerk 
to the Honorable Harry T. Edwards, Chief Judge, U.S. Court of Appeals 
for the District of Columbia Circuit, Washington, DC, July 1993 to July 
1994; Summer Associate, Williams & Connolly, Washington, DC, May 1993 
to June 1993; Summer Associate, O'Melveny & Myers LLP, August 1992; 
Summer Associate, Arnold & Porter, Washington, DC, May 1992 to August 
1992; Summer Associate, O'Melveny & Myers LLP, May 1991 to August 1991; 
Assistant for Japan, Office of the Secretary of Defense, The Pentagon, 
Washington, DC, May 1988 to August 1990; Army Officer (Armor Branch), 
3/2 Armored Cav Regiment (last duty station), Amberg, Germany, May 1985 
to February 1988.
    10. Government experience: None other than that listed above.
    11. Business relationships: Member, Board of Visitors 
(uncompensated), Georgetown University Law Center; Trustee 
(Uncompensated), The Endowment Association of the College of William & 
Mary; Advisor (Uncompensated), The ABA Standing Committee on Law and 
National Security; Board Member (Uncompensated), Reeves Center for 
International Studies, The College of William & Mary.
    12. Memberships: Member, The District of Columbia Bar; Member, The 
Pennsylvania Bar; Member, The American Bar Association; Member, Theta 
Delta Chi Fraternity.
    13. Political affiliations and activities: (a) None; (b) 
Fundraising for Senator John Warner's 1996 Campaign; Member, Republican 
Party; Staff Member, 1992 Republican Platform Committee; (c) $300.00 to 
RNC in 1999.
    14. Honors and awards: ROTC Scholarship; Distinguished Military 
Graduate, William & Mary, 1985; Distinguished Graduate (first in 
class), Armor Officer Basic Course, 1985; Army Service Ribbon, Army 
Commendation Medal; Aspen Institute Crown Fellow 1999-2001; Media 
Institute First Amendment Award, 1999.
    15. Published writings: Michael K. Powell, ``Why Y2K?: Challenges 
for the Communications Industry'' (Catholic University of America, 
Columbus School of Law, Washington, DC CommLaw Conspectus, ed. Winter 
1999); Michael K. Powell, ``Communications Policy Leadership for the 
Next Century'' (Indiana University School of Law-Bloomington, Federal 
Communications Bar Association, Federal Communications Law Journal, ed. 
May 1998); Michael K. Powell, ``Waiting For The Unlikely, In Beyond the 
Hoppo Ryodo: Japanese-Soviet American Relations In The 1990s'' (J. 
Jacobs, American Enterprise Institute, Washington, DC ed. 1990). There 
are a number of statements and other writings regarding proceedings in 
which I have participated while serving at the Federal Communications 
Commission. Although not published, these writings can be found on the 
Worldwide Web at the Commission's Internet site at http://www.fcc.gov/
commissioners/powell/statements and at http://www.fcc.gov/
commissioners/powell/271essays.html. (As a courtesy, a reproduction of 
a list of Mr. Powell's statements are appended hereto at Tab A.)
    16. Speeches: See, www.fcc.gov/commissioners/powell for complete 
list. (For the convenience of the Committee, the requested copies are 
provided herein at Tab B.)
    17. Selection: (a) I believe the President chose me for this 
nomination because of my public policy experience in the field of 
communications. Prior to being designated Chairman of the FCC by the 
President in January 2001; I served for approximately 3 years as a 
Commissioner of the Agency. In this role, I have developed subject 
matter expertise in all facets of communications law and policy. 
Additionally, my tenure has afforded me the opportunity to develop a 
keen understanding of the inner workings of the Agency. This prior 
experience has allowed me to assume the Chairmanship more seamlessly 
than would otherwise be possible. (b) In addition to my FCC experience 
referenced above, I believe my background and further work have 
prepared me for this appointment. Immediately prior to the FCC, I 
served as Chief of Staff of the Antitrust Division in the Department of 
Justice. In that capacity I advised the Assistant Attorney General on 
substantive antitrust matters, including criminal and civil 
investigations and mergers. Prior to joining the Antitrust Division, I 
was an associate in the law firm of O'Melveny & Myers LLP, where I 
focused on litigation and regulatory matter involving 
telecommunications, antitrust and employment law. Upon graduation from 
Georgetown University Law Center, I served as a judicial clerk to the 
Honorable Harry T. Edwards, Chief Judge of the United States Court of 
Appeals for the District of Columbia Circuit. Before attending law 
school, I served as a policy advisor to the Secretary of Defense on 
matters involving the United States-Japan security relationship. My 
experience also includes military service as an armor officer in the 
United States Army. I spent the majority of my active service with the 
3/2 Armored Cavalry Regiment in Amberg, Germany where I served as a 
cavalry platoon leader and troop executive officer.

                   B. FUTURE EMPLOYMENT RELATIONSHIPS

    1. Will you sever all connections with your present employers, 
business firms, business associations or business organizations if you 
are confirmed by the Senate? Not Applicable.
    2. Do you have any plans, commitments or agreements to pursue 
outside employment, with or without compensation, during your service 
with the government? If so, explain. No.
    3. Do you have any plans, commitments or agreements after 
completing government service to resume employment, affiliation or 
practice with your previous employer, business firm, association or 
organization? No.
    4. Has anybody made a commitment to employ your services in any 
capacity after you leave government service? No.
    5. If confirmed, do you expect to serve out your full term or until 
the next Presidential election, whichever is applicable? Yes.

                   C. POTENTIAL CONFLICTS OF INTEREST

    1. Describe all financial arrangements, deferred compensation 
agreements, and other continuing dealings with business associates, 
clients or customers. None.
    2. Indicate any investments, obligations, liabilities, or other 
relationships which could involve potential conflicts of interest in 
the position to which you have been nominated. I am aware of none.
    3. Describe any business relationship, dealing, or financial 
transaction which you have had, during the last 10 years, whether for 
yourself, on behalf of a client, or acting as an agent, that could in 
any way constitute or result in a possible conflict of interest in the 
position to which you have been nominated? O'Melveny & Myers LLP. 
Served as an Associate from July 1994 to December 1996. Major firm 
clients that might present a conflict of interest: Pacific, Gas & 
Electric; Goldman, Sachs; GTE; Univision Communications Co.; The Game 
Show Network, L.P.; The Walt Disney Co./ABC; Sony Pictures 
Entertainment, Inc.; Columbia Pictures, Inc.; KnightRidder, Inc.; 
Calcell Wireless, Inc. (Served as an uncompensated advisory board 
member for roughly 1 year between 1995 and 1996).
    4. Describe any activity during the past 10 years in which you have 
engaged for the purpose of directly or indirectly influencing the 
passage, defeat or modification of any legislation or affecting the 
administration and execution of law or public policy. In my law 
practice, I advised Conoco Oil in its attempt to win administration 
approval for a deal to drill for oil in Middle East waters. In my 
official capacity as a FCC Commissioner, I have discussed legislation 
relating to telecommunications issues with various lawmakers both in 
open testimony and private conversations. I have specifically given 
public remarks supporting the concept of a tax initiative to encourage 
diversity of ownership of telecommunications facilities. Most recently, 
in my capacity as current Chairman of the Federal Communications 
Commission, I sent letters to various Members of Congress encouraging 
them to increase the FCC's authority to impose forfeitures on common 
carriers and take other action to improve the FCC's enforcement 
authority.
    5. Explain how you will resolve any potential conflict of interest, 
including any that may be disclosed by your responses to the above 
items. (Please provide a copy of any trust or other agreements.) I 
would resolve any potential conflict of interest in a manner consistent 
with the applicable conflict of interest statutes and ethics rules. 
More specifically, I would consult with the FCC's ethics officials and 
follow their advice for dealing with any possible conflict.
    6. Do you agree to have written opinions provided to the Committee 
by the designated agency ethics officer of the agency to which you are 
nominated and by the Office of Government Ethics concerning potential 
conflicts of interest or any legal impediments to your serving in this 
position? Yes.

                            D. LEGAL MATTERS

    1. Have you ever been disciplined or cited for a breach of ethics 
for unprofessional conduct by, or been the subject of a compliant to 
any court, administrative agency, professional association, 
disciplinary committee, or other professional group? If so, provide 
details. No.
    2. Have you ever been investigated, arrested, charged or held by 
any Federal, State, or other law enforcement authority for violation of 
any Federal, State, county, or municipal law, regulation or ordinance, 
other than a minor traffic offense? If so, provide details. No.
    3. Have you or any business of which you are or were an officer 
ever been involved as a party in interest in an administrative agency 
proceeding or civil litigation? If so, provide details. No.
    4. Have you ever been convicted (including pleas of guilty or nolo 
contendere) of any criminal violation other than a minor traffic 
offense? No.
    5. Please advise the Committee of any additional information, 
favorable or unfavorable, which you feel should be considered in 
connection with your nomination. None.

                     E. RELATIONSHIP WITH COMMITTEE

    1. Will you ensure that your department/agency complies with 
deadlines set by congressional committees for information? Yes.
    2. Will you ensure that your department/agency does whatever it can 
to protect congressional witnesses and whistle blowers from reprisal 
for their testimony and disclosures? Yes.
    3. Will you cooperate in providing the committee with requested 
witnesses, to include technical experts and career employees with 
firsthand knowledge of matters of interest to the committee? Yes.
    4. Please explain how you will review regulations issued by your 
department/agency, and work closely with Congress, to ensure that such 
regulations comply with the spirit of the laws passed by Congress. The 
FCC's first obligation is to ensure any action it takes complies 
squarely with the letter of the law. Moreover, the FCC will ensure it 
complies with the spirit as well, by keeping abreast of and promptly 
responding to Congressional correspondence and other communications. I 
also make a point of visiting members frequently to solicit their views 
and to maintain a dialog on key issues. Finally, oversight hearings 
provide a fruitful opportunity to hear the views of members on FCC 
actions.
    5. Describe your department/agency's current mission, major 
programs, and major operational objectives. The mission of the FCC is 
to encourage and facilitate effective competition in all communications 
markets and to protect the public interest. In response to direction 
from the Congress, the FCC develops and implements policy concerning 
interstate and international communications by radio, television, wire, 
satellite, and cable. At present, its primary task is the 
implementation of the Telecommunications Act of 1996. Additionally, it 
is very focused on promoting the efficient deployment of broadband 
technology.
    6. Are you willing to appear and testify before any duly 
constituted committee of the Congress on such occasions as you may be 
reasonably requested to do so? Yes.

                  F. GENERAL QUALIFICATIONS AND VIEWS

    1. How have your previous professional experience and education 
qualifies you for the position for which you have been nominated. My 
military career taught me the fundamentals of leadership and management 
that will prove useful in the administration of the Agency and the 
management of its' nearly two thousand employees. Law school provided 
the legal training and basic understanding of administrative law that 
are important to administering properly the communication statutes. My 
legal clerkship on the DC Circuit exposed me to administrative 
decisions from a variety of agencies, including the FCC, and gave me 
insight into how the court views those actions. My service as Chief of 
Staff of the Antitrust Division allowed me to further my management 
development and gave me experience with complex antitrust and 
competition policy questions that are fundamental to competitive 
markets. Finally, my preceding 3.5 years as a Commissioner has given me 
first hand experience at the FCC wrestling with communications issues.
    2. Why do you wish to serve in the position for which you have been 
nominated? It is a high privilege to serve my country in any capacity. 
This position is particularly challenging, for communications is a 
central driver of the economy and the decisions we make today will have 
important and far-reaching impact on the lives of our citizens and our 
children. I will have a front row seat at the revolution and believe my 
experience and my commitment to the public interest will allow me to 
make the very tough decisions necessary to illuminate America's bright 
future.
    3. What goals have you established for your first 2 years in this 
position, if confirmed? I intend to substantially improve the operation 
of the FCC, so that it is an efficient, effective and responsive Agency 
fitting of the Internet age. I intend to substantially advance the 
FCC's independent technical capability in order to responsibly address 
the complex issues of a technology-driven marketplace. I intend to 
improve the effectiveness of the Agency's enforcement activities.
    4. What skills do you believe you may be lacking which may be 
necessary to successfully carry out this position? What steps can be 
taken to obtain those skills? I continue to try to improve my 
understanding of advanced technical and economic issues. I have 
undertaken a concerted program of reading and study. I attend forums 
and seminars, and reach out to leading thinkers in these fields.
    5. Please discuss your philosophical views on the role of 
government. Include a discussion of when you believe the government 
should involve itself in the private sector, when should society's 
problems be left to the private sector, and what standards should be 
used to determine when a government program is no longer necessary. I 
believe that the role of government, particularly in the realm of 
commerce, is multi-faceted. Government must establish the legal and 
economic framework in which private entities will operate. Free markets 
can only thrive where the rule of law is clear. It must, for example, 
establish property rights and decide the manner in which disputes over 
such property will be resolved. Government must also police against 
harms to individuals and to the public generally, such as laws and 
regulations prohibiting fraud, theft or pollution. Government in a 
democratic capitalist society, in particular, must ensure that no actor 
or group of actors is allowed to exert undue influence in economic 
markets, lest such influence deny consumers the benefits of quality, 
efficient pricing and innovation that competition brings. Government 
officials have a solemn duty to carry out faithfully and vigorously the 
economic, social and other programs that have been duly adopted by 
citizens' elected representatives.
    I firmly believe that, in many areas of commerce, consumer welfare 
is maximized where competitive market forces allocate economic 
resources. Consumers empowered with accurate and meaningful information 
on products, as well as a choice of suppliers generally can direct what 
will be produced, what they will buy and the terms and conditions of 
these activities. History over the twentieth century has confirmed 
that, in most cases, competition will lead to greater efficiency, 
wealth and liberty for society. Government may unwittingly inflict 
great losses in economic welfare if it intrudes on the functioning of 
competitive markets unnecessarily.
    My belief in the benefits of competitive markets, however, is more 
practical than ideological. In particular, I believe that government 
can play a useful role in both promoting competition and in policing 
already competitive markets. Government should safeguard important 
issues, such as health and safety that are not readily factored into 
competitive market decisions. The analytical and remedial tools of 
antitrust should be used to prevent already competitive markets from 
becoming so concentrated that the efficiencies of such concentration 
are outweighed by the losses to consumers in light of diminished 
competitive choice. In many cases, the government can and should take 
affirmative steps to transform industries, such as telecommunications, 
that have been subject to legal and economic monopolies into more 
competitive markets. One of the critical questions in deciding whether 
the government should intervene is whether the benefits of choice, 
innovation, and more efficient pricing that come with competition 
outweigh the stability of legally sanctioned monopolies. Often, I 
believe they do.
    Just as government has a critical role with respect intervening to 
preserve and promote important interests, government has an equally 
critical role in deciding when to withdraw from a subset of its 
activities. In particular, the government can and should release the 
reins of regulation to the extent technological or market developments, 
or its own efforts to promote competition, obviate the need for such 
regulation. There are many possible standards by which one could decide 
when the government should step aside, but one apt standard is provided 
by section 10 of the Communications Act. To paraphrase, section 10 
mandates that the FCC withdraw telecommunications regulations that are 
no longer necessary to protect consumers or prevent discriminatory or 
anticompetitive actions among firms. Section 10 also requires the FCC 
to consider whether withdrawing regulation would promote competition 
among telecommunications firms. I believe that this standard, when 
rigorously applied, can provide useful guidance to regulators regarding 
when and in what areas to deregulate.
    6. In your own words, please describe the agency's current 
missions, major programs, and major operational objectives. The FCC is 
tasked primarily with carrying out the Communications Act of 1934, as 
amended, in a manner that promotes competition, deregulation and 
innovation in the communications industry. In keeping with the Act's 
mandates regarding universal service, advanced telecommunications 
capability, etc., the FCC's mission is also to promote the availability 
of high quality communications services for all Americans.
    The major programs of the FCC consist primarily of the activities 
of its seven operating bureaus: mass media, common carrier, wireless 
telecommunications, cable services, international, enforcement and 
consumer information. The Mass Media Bureau regulates AM-FM radio and 
television stations and broadcast facilities. The Common Carrier Bureau 
regulates wire and radio communications common carriers, such as 
telephone and telegraph companies. The Wireless Telecommunications 
Bureau regulates all domestic wireless telecommunications programs, 
except those involving satellite communications. The Cable Services 
Bureau regulates multichannel video program distributors. The 
International Bureau handles all FCC international telecommunications 
and satellite programs and policies. The Enforcement Bureau enforces 
the Communications Act and the FCC's rules affecting common carriers, 
wireless telecommunications carriers, as well as broadcast radio and 
television stations. And the Consumer Information Bureau handles public 
inquiries and informal consumer complaints regarding communications 
services and regulation. Thus, the Agency has traditionally organized 
its activities according to the type of service being regulated, in 
keeping with the statutory requirements.
    The FCC's major objective is to implement faithfully and vigorously 
the Communications Act of 1934, as amended, including the promotion of 
competition, deregulation and innovation in communications markets. In 
carrying out this objective, the FCC should strive to: (1) establish a 
clear substantive policy vision; (2) manage the organization in a 
manner that promotes cohesion and efficiency, and that leads to clear 
and timely decisions; (3) train its staff regarding developments in 
technology and economics; and (4) develop an organizational structure 
that complements the dynamic and converging marketplace.
    7. In reference to question No. 6, what forces are likely to result 
in changes to the mission of this agency over the coming 5 years? As I 
state in response to Question F.6, above, the FCC has traditionally 
organized its activities according to the type of service being 
regulated, in keeping with the statutory requirements. However, rapid 
evolution and convergence of Internet-based and other new technology 
will continue to erase traditional regulatory distinctions between 
different sectors of the communications industry. Although the FCC will 
retain its duty to implement the Act in a manner that promotes 
competition, deregulation and innovation in the communications 
industry, the will have to modify its policy vision, further refine its 
organizational structure and develop new expertise to keep pace with 
technological evolution and convergence.
    8. In further reference to question No. 6, what are the likely 
outside forces which may prevent the agency from accomplishing its 
mission? What do you believe to be the top three challenges facing the 
department/agency and why? There are several outside forces that will 
challenge the FCC in the pursuit of its mission. First, is the 
challenge of attracting, developing and retaining exceptional 
technological, economic and legal talent. The communications industry, 
despite some of setbacks recently facing certain segments, will 
continue to be an important and lucrative component of the Nation's 
economy. In this environment, the best technologists, economists and 
lawyers will have numerous options for employment. Thus, the FCC will 
need to pursue recruitment and retention activities aggressively in 
order to tap that pool of talent.
    Second, technological convergence will enable firms to compete in 
non-traditional markets to provide both familiar and innovative 
services to customers. Such convergence will put increasing pressure on 
the regulatory structure, which developed when a given service tended 
to he provided by firms using identical or very similar technologies. 
As firms use technology in new ways, the question will arise whether 
entrants from other sectors should be subjected to their traditional 
regulations, to the regulations of the sector they are entering, to 
some new form of regulation or to no regulation at all. In the absence 
of perfect foresight, the FCC will thus be challenged to answer these 
questions expeditiously and in a manner it hopes will promote 
competition, deregulation and innovation in the short and long terms.
    Third, the FCC will be faced with more numerous and contentious 
disputes among communications firms as those firms, predictably, 
applaud being permitted to compete freely in new markets, while 
simultaneously advocating protection from new entrants in their 
traditional, core businesses. Complicating these disputes will be, as I 
have suggested above, knotty issues of first impression regarding 
services and technologies that do not fit conveniently into the 
regulatory classifications of the statute and the FCC's implementing 
rules. In order to withstand the enormous pressures and distractions 
occasioned by such disputes, the FCC will have to hew even closer to 
its substantive policy vision and replenish the expertise by which it 
can see through the smoke of this advocacy to divine the public 
interest.
    9. In further reference to question No. 6, what factors in your 
opinion have kept the department/agency from achieving its missions 
over the past several years? See responses to Questions F.6 and F.7. I 
am proud of the FCC's many accomplishments over the last several years, 
including the immeasurable hard work that the Agency staff has invested 
in the success of its implementation efforts. To the extent it has 
fallen short of the mark, however, I believe it has been with respect 
to the objectives I believe the Agency should pursue in earnest now. In 
particular, I believe the FCC must do more to (1) establish a clear 
substantive policy vision; (2) manage the organization in a manner that 
promotes cohesion and efficiency, and that leads to clear and timely 
decisions; (3) train its staff regarding developments in technology and 
economics; and (4) develop an organizational structure that complements 
the dynamic and converging marketplace. Making these improvements is 
especially critical in light of the ever-increasing challenge of 
adapting the FCC's activities in light of technological convergence.
    10. Who are the stakeholders in the work of this agency? The 
primary stakeholder in the work of this Agency is the American public. 
Everything the FCC does and every judgment we make should be in the 
public interest. Additional stakeholders include the industries 
regulated by, and affected by FCC policy including the broadcasting, 
cable television, common carrier and wireless industries.
    11. What is the proper relationship between your position, if 
confirmed, and the stakeholders identified in question No. 10. We owe 
fairness to all stakeholders and favoritism to none. In my opinion this 
should be the proper relationship between all FCC employees and the 
Agency's stakeholders.
    12. The Chief Financial Officers Act requires all government 
departments and agencies to develop sound financial management 
practices similar to those practiced in the private sector. (a) What do 
you believe are your responsibilities, if confirmed, to ensure that 
your agency has proper management and accounting controls? I believe 
that I hold a public trust. Each year, the FCC is provided by Congress 
an annual appropriation of funds Congress and the American public have 
a right to an accurate accounting of how those resources are used. In 
1998, the FCC hired its first Chief Financial Officer with the express 
intent of generating auditable financial statements to provide 
assurance that the funds entrusted to the FCC are adequately protected. 
I encouraged that action as a Commissioner. In 1999, the Treasury 
Department notified the FCC that because of the expansion of the 
auction program the Agency would be required to provide CFO Act level 
audited financial statements annually. Fiscal year 2000 was the first 
year the FCC produced auditable statements. The OIG has informed us 
that we will receive an ``unqualified,'' or ``clean,'' opinion on our 
financial statements. Most Federal agencies began efforts in 1991, 
after the passage of the CFO Act, to prepare statements. Many are still 
trying to get an opinion on those statements. I support the goals of 
the CFO Act and am proud of our accomplishments thus far. I value this 
added independent verification of our accounting activities very highly 
and will hold the. Agency to this standard as long as I am Chairman. 
The audit process has raised a number of questions and given us a 
roadmap of improvements to our process, and we are strongly committed 
to making continuous progress in this area.
    (b) What experience do you have in managing a large organization? I 
have been a Commissioner of the Federal Communications Commission since 
November 3, 1997. In addition to my normal duties as a Commissioner 
since my appointment, I served as the FCC's Defense Commissioner and 
was responsible for overseeing all National Security Emergency 
Preparedness functions for the FCC as a whole. I also served as the FCC 
representative to the President's Council on Year 2000 Conversion to 
address the Year 2000 computer problem. This involved not only ensuring 
that the FCC as an Agency of the Federal Government was prepared, but 
that the telecommunications industry as a whole was prepared for the 
potential issues associated with the date conversion. Prior to my 
service with the Commission, I served as the Chief of Staff of the 
Antitrust Division in the Department of Justice. In that capacity, I 
led a staff of nearly 800, and advise the Assistant Attorney General on 
substantive antitrust matters, including policy development, criminal 
and civil investigations and mergers.
    I commanded and combat platoon of 46 people as an armor officer in 
the United States Army. While serving with the 3/2 Armored Cavalry 
Regiment in Amberg, Germany, I also served as a troop executive 
officer, the second in command of a 150 person armored cavalry unit.
    13. The Government Performance and Results Act requires all 
government departments and agencies to identify measurable performance 
goals and to report to Congress on their success in achieving these 
goals. (a) Please discuss what you believe to be the benefits of 
identifying performance goals and reporting on your progress in 
achieving those goals. Every successful organization, whether it is a 
small business enterprise, a private corporation, or a government 
Agency, must have a business plan with measurable milestones in order 
to succeed. An enterprise without a performance plan is much like a 
ship at sea without charts or navigation aids. The Government 
Performance and Results Act, with its requirements for a Strategic Plan 
and Annual Performance Plans, provides Federal agencies and Congress 
with a structured approach to measuring performance and determining 
budget allocations.
    Measurable performance goals allow the Agency, Congress and the 
public to assess the progress that is being made in meeting concrete 
benchmarks. They also guide the Agency's allocation of human and 
budgetary resources to the most essential programs. Additionally, 
performance goals and benchmarks aid in determining whether certain 
programs must be changed, de-emphasized or eliminated.
    (b) What steps should Congress consider taking when an agency fails 
to achieve its performance goals? Should these steps include the 
elimination, privatization, downsizing or consolidation of departments 
and/or programs? One of the key benefits of GPRA planning is that it 
allows an Agency to. adjust its plans to accommodate revised resources, 
a changing marketplace, the emergence of new technologies, and other 
pertinent developments. GPRA also recommends that agencies conduct 
program evaluations when an activity is not meeting established 
objectives. An Agency's failure to achieve performance goals may be due 
to a variety of factors, some of which are within the Agency's control 
and some of which are not. It is, of course, the prerogative of 
Congress to decide whether to take action in those circumstances. The 
techniques mentioned above are among the many options that may be 
considered in addition to the options of restructuring, modifying or 
automating underperforming programs.
    (c) What performance goals do you believe should be applicable to 
your personal performance, if confirmed? In my Opening Statement before 
the Subcommittee on Telecommunications and the Internet on March 29 of 
this year, I noted that for this Agency to fulfill its congressional 
charge, indeed to remain relevant at all, it must write and execute a 
new business plan built along four dimensions: (1) a clear substantive 
policy vision, consistent with the various communications statutes and 
rules, that guides our deliberations; (2) a pointed emphasis on 
management that builds a strong team, produces a cohesive and efficient 
operation and leads to clear and timely decisions; (3) an extensive 
training and development program to ensure that we possess independent 
technical and economic expertise; and (4) organizational restructuring 
to align our institution with the realities of a dynamic and converging 
marketplace.
    These are the goals on which my performance should be measured.
    14. Please describe your philosophy of supervisor/employee 
relationships. Generally, what supervisory model do you follow? Have 
any employee complaints been brought against you? I believe that 
executives, managers and supervisors should lead by example and by the 
vision they articulate for the organization. A well-articulated vision 
ensures that staff understands the goals of the organization, which in 
turn enables them more effectively to achieve those goals.
    For staff to fulfill the organization's goals, they must be given 
the necessary tools, training and incentives to succeed. This involves 
creating an environment in which human capital is prized and sufficient 
resources are devoted to training and technology enhancements. It 
involves creating a reward system that rewards individuals quickly and 
well for meeting organizational goals. And it involves transferring 
ownership of projects to those who actually do the work so that they 
have a clear stake in the outcome of the undertaking. Supervisors 
should expect results and hold employees accountable for those results. 
Last, they must also establish work/life programs that allow employees 
to strike a reasonable balance between their work and personal lives. 
If I had to put a label on that philosophy, I would characterize it as 
judicious employee empowerment. And no, I have never had an employee 
complaint brought against me personally. However, since becoming 
Chairman in January 2001, there have been three complaints filed 
against me in my official capacity as Chairman. In addition, there are 
four cases that were brought under my predecessor that will be 
automatically converted to include my name as Chairman of the Agency.
    15. Describe your working relationship, if any, with the Congress. 
Does your professional experience include working with committees of 
Congress? If yes, please describe. I would describe my working 
relationship with the Congress as cooperative, productive and positive. 
In the course of my professional career at the Department of Justice, 
the Department of Defense and the FCC, I have had numerous 
opportunities to work with Congressional committees. In all of these 
encounters I have endeavored to make myself available and to provide 
substantive expert advice to the Members of Congress and their staff as 
requested. I have specifically endeavored during my tenure at the FCC 
to comply, to the best of my ability, with directives and deadlines 
established by the Communications Act of 1934, as amended, and 
subsequent communications-related obligations mandated by the Congress. 
If confirmed, I expect to continue to work to be an attentive and 
responsive public servant to the Congress.
    16. Please explain what you believe to be the proper relationship 
between yourself, if confirmed, and the Inspector General of your 
department/agency. I believe that the FCC Inspector General must have 
autonomy from the Chairman and Commissioners and all other employees of 
the FCC. It would be my duty to report possible impropriety to the 
Inspector General and his duty to investigate in a thorough but 
independent manner. In addition, each year the Inspector General 
develops a plan for audits of various FCC programs. I would accept and 
review any recommendations from the Inspector General with regard to 
the operation of the FCC and decide whether to act on those 
recommendations based on applicable legal and policy considerations.
    17. Please explain how you will work with this Committee and other 
stakeholders to ensure that regulations issued by your department/
agency comply with the spirit of the laws passed by Congress. I intend 
to work closely with this Committee, as well as Congress in general, to 
ensure that our regulations faithfully implement the laws. I believe 
that elected representatives that Congress first and foremost sets the 
communications agenda for the American people and I will endeavor to 
work closely with you to make sure our regulations reflect those 
important decisions. I will, for example, ensure that the Agency keeps 
abreast of Congressional concerns and that it responds promptly to 
Congressional correspondence and other communications. I will also make 
a point of visiting members as appropriate to solicit their views, as 
well as those of the various stakeholders and maintain open dialog on 
key issues.
    18. In the areas under the department/agency's jurisdiction, what 
legislative action(s) should Congress consider as priorities? Please 
State your personal views. As I stated in my May 4, 2001 letter to 
members of this Committee, I am committed to working with Congress to 
improve the breadth of the FCC's enforcement tools. In addition, I 
believe Congress should consider ways to encourage diversity of 
ownership of telecommunications facilities. I have specifically 
supported efforts to design a tax initiative aimed at this goal. 
Further, I believe Congress should consider changes in the 
Communications Act that gives the FCC greater flexibility in dealing 
with the convergence occurring in the communications industry. Often we 
are stymied by the different regulatory systems applicable to different 
technologies. Flexible regulatory authority will permit us to address 
these changes more effectively.
    19. Within your area of control, will you pledge to develop and 
implement a system that allocates discretionary spending based on 
national priorities determined in an open fashion on a set of 
established criteria? If not, please state why. If yes, please state 
what steps you intend to take and a timeframe for their implementation. 
I fully intend to develop and implement a system that allocates 
spending based on the best national priorities, which we will determine 
in an open fashion with the guidance of OMB and Congress. Under my 
leadership, the FCC will develop and implement an accounting system 
that will measure budgetary allocations and expenditures against those 
criteria. I will continue to forward the Agency's Government 
Performance and Results Act plan each year to Congress with our budget 
so that it is clearly stated how our resources are being allocated and 
the program results they are producing. I have established a process 
for setting up measurable performance goals and will hold managers 
accountable for attaining these goals. I anticipate that the first 
phases of this plan will be implemented this year. This will be a 
priority of mine for the FCC under my chairmanship.

    The Chairman. Thank you very much.
    Five years after the enactment by Congress of the 
Telecommunications Act of 1996, incumbent local exchange 
carriers, or ILECs, continue to hold a level of service in our 
Nation's local exchange markets that most would not have 
anticipated when the Act was passed. According to your 
organization's own numbers, in 1999, ILECs directly served over 
92 percent of all local customers and 97 percent of all 
residential and small business customers, and in the process 
collected over 94 percent of all local exchange 
telecommunications revenue.
    Further, over two-thirds of competitive local exchange 
carriers, CLEC, customers were served by CLECs using ILEC 
facilities leased or resold by the CLECs. Only 2.2 percent of 
all local customers were served by CLECs using CLEC-owned 
facilities.
    The Commission's report makes clear that meaningful local 
competition has not developed in the residential or business 
local exchange markets. Is this because of the structure of the 
act, enforcement of the act, or is it some combination?
    Mr. Powell. Mr. Chairman, I suspect it is some combination, 
but I think it is also this. It is hard, and I think it is 
harder than many people understood or expected. To build a 
local company with long-term viability is more akin to a 
construction project than a dot-com venture. Regrettably, I 
believe that not only the financial markets, but often even the 
regulatory environment, have misapprehended that. We 
misapprehended how difficult it would be to build viable 
business models, how difficult it would be to develop 
interconnection relationships with incumbents who had 
extraordinary power, and how long and complex the legal 
resolution of ambiguities that existed in the legal framework 
would take to resolve.
    All of those things have combined 6 years later to lead to 
the numbers that you identified. But I would also like to 
emphasize that all is not lost. In my view, one has to think 
about convergence and the communications marketplace as a 
whole. When I sit down in my home and I----
    The Chairman. Thanks to technology.
    Mr. Powell. Excuse me?
    The Chairman. Thanks to technology.
    Mr. Powell. Thanks to technology, and thanks to a 
competitive and economic environment that encourages 
innovation.
    I believe that when I sit down to make a decision to 
communicate with my sister, it might be by e-mail, it might be 
by instant messenger, it might be by my mobile phone, it might 
be by the local telephone exchange. But each one of those 
opportunities is available to me, and I would argue each one of 
them is a competitor, in essence, to the traditional local form 
of calling that we are accustomed to.
    Those are difficult to measure in the way that market 
shares for basic telephony, voice telephony, are. But they are 
nonetheless things that we should learn from and continue to 
try and encourage the technical differentiation of 
communications.
    The Chairman. So has the 1996 Act failed?
    Mr. Powell. I do not believe it has failed, no.
    The Chairman. Would the numbers that I just cited to you--
92 percent of all local customers and 97 percent of all 
residential and small customers, and in the process collected 
over 95 percent of all local exchange telecommunications 
revenue----
    Mr. Powell. If the sole purpose of the Act was to create 
market shares that are much higher than that, certainly it has 
failed. But I think that its purposes were broader and more 
far-reaching than that. I think it also tried to incent an 
economic model, a commitment to innovation and convergence that 
allowed other services to flourish, which we are seeing the 
beginnings of.
    We may conclude at some point that it did not achieve these 
objectives, but I personally believe that we continue to have 
an environment, even if strained, that provides opportunity for 
this to continue to be a good deal for consumers. It will be 
harder than it was ever imagined, but I do think that we have a 
chance at realizing it.
    The Chairman. Several applicants for mobile satellite 
licenses have asked the FCC for authorization to use their 
valuable spectrum to provide terrestrial mobile services in 
urban areas. I would be concerned about any Commission action 
that allowed the mobile satellite providers to substitute 
terrestrial service for their licensed services without 
competitors having a chance to apply for licenses. All 
qualified parties for a proposed service should have the chance 
to apply for licenses. As available spectrum becomes 
increasingly scarce, it will be increasingly difficult for the 
FCC to balance competing demands for spectrum.
    What principles do you think should guide the FCC in its 
decisionmaking?
    Mr. Powell. I think that is an excellent question. We have 
a problem with convergence in that increasingly innovative 
producers will attempt to provide services using technologies 
and, frankly, regulatory structures that do not necessarily 
jibe. In the example that you pointed to, we have a satellite 
regime that has a particular licensing structure. Under 
congressional statute, you cannot auction licenses for 
satellite services. Similarly, you have a terrestrial wireless 
system that has a very different regulatory process for 
allocating and assigning licenses, in which auctions are 
mandatory.
    When innovators try to combine the two into a single 
service offering, you run into the difficult, complex 
challenges of two different regimes. One of the things that we 
have made a pointed effort to do is in the effort of FCC reform 
and FCC evaluation of its processes to look for more aggressive 
ways to harmonize regulatory structures across technology 
differentiated areas. We are constrained in that regard to some 
degree by virtue of the statute itself. For example, the 
example I pointed out: I simply do not have the discretion to 
auction satellite spectrum, nor do I have the discretion not to 
auction it in the context of mutually exclusive terrestrial 
applications.
    But I think there are ways that we are looking at trying to 
find to make sure that we provide an opportunity for that 
innovation, but it is still fair under the different licensing 
regimes.
    The Chairman. Today one of the news outlets headlined ``ITU 
Chief Urges U.S. to Catch Up With Rest of the World on 3G.'' 
``With decisions still pending on 3rd-generation wireless 
spectrum, ITU Secretary-General Yoshio Utsumi warned in 
Washington . . . that U.S. `is at this moment left aside from 
the world trend' of 3G licensing. Unfortunately, the U.S. 
doesn't have secure frequencies for this service . . . 
development of 3G in the U.S. market is very, very crucial for 
the success of these services,'' etcetera, etcetera.
    Do you share that view?
    Mr. Powell. Parts of it. Parts of it I do not agree with. 
Let me talk about what I do agree with. I do think that the 
United States is strained and constrained by its inability to 
have as cohesive a spectrum management policy as it could due 
to the fact that, for historical reasons, spectrum management 
is divided across the government. As you are well aware, 
Federal spectrum in the hands of Federal Governmental users is 
in the hands of the Commerce Department, under the jurisdiction 
of the Secretary of Commerce. Commercial spectrum and State and 
public safety spectrum is in the jurisdictional realm of the 
Federal Communications Commission, an independent agency, not 
part of the government particularly.
    Trying to coordinate coherently spectrum policy across 
those realms has proven difficult. It has proven difficult 
within our own agency. We have problems between spectrum that 
is in the mass media realm, and spectrum that is in the 
wireless realm and the satellite realm. We are working on our 
little piece within the FCC.
    We have also reached out to Secretary Evans in the Commerce 
Department to look for ways to harmonize our decisions in more 
cohesive ways that allow us to be more efficient in providing 
spectrum, as the Europeans have done, for these advanced 
services.
    Now, that said, I am not a fan of national champion 
comparisons. I believe that Europe may be ahead, but it depends 
on what they are headed to. This stuff to my mind is a lot like 
a marathon race. Sometimes the best place to be is in the third 
slot on the twentieth mile, not the first. We are looking now 
at European's environments that went very fast on third 
generation spectrum. The amount of money paid at auctions is 
breathtaking.
    By some estimates, there are venerable companies that may 
be facing collapse purely as a consequence of getting ahead of 
themselves on third generation wireless spectrum. British 
Telecom may face the grim reaper as a consequence of their 
decisions and the amount of money they bid at auctions, for an 
input that they do not yet know whether consumers are going to 
respond to. I think that example introduces some level of 
caution that we need to be consistent and persistent in chasing 
new opportunities for advanced spectrum, but we need not get 
too far ahead of ourselves, lest we enjoy similar fates in the 
United States.
    The Chairman. Well, I would appreciate it if you and the 
Commission would give us some recommendations as to how to 
address this issue. I agree with you that perhaps the Europeans 
have gotten out too far ahead of themselves, but with great 
frequency we are deluged with people who want this spectrum 
moved one place to another, that want DOD to give up theirs, 
that want more auctions or not auctions.
    I think there is a degree of incoherency on what obviously 
will become a scarcer and scarcer commodity. It is not a matter 
of whether, it is a matter of when. So I would hope that you 
would prepare at least your recommendations for some overall 
policy as to how we can address this issue.
    Senator Wyden.

                 STATEMENT OF HON. RON WYDEN, 
                    U.S. SENATOR FROM OREGON

    Senator Wyden. Thank you, Mr. Chairman.
    Mr. Powell, welcome. I enjoyed working with you in the past 
and look forward to working with you again. I want to explore 
with you the question of the major media in this country being 
owned by fewer and fewer hands. I think we know that the merger 
trend is on the upswing in a variety of sectors. I happen to 
think most mergers are just the comings and goings of the 
modern marketplace, but certainly in a number of sectors they 
can be very troubling.
    I am concerned about media concentration. I want to ask you 
specifically about it. As you know, the FCC has imposed limits 
on ownership of mass media outlets, including the 35 percent 
national audience reach cap on TV stations and the newspaper-
broadcast cross-ownership rule. You have expressed formally 
questions, skepticism about the need for such limits, and what 
concerns me is if I look at all of your inclinations in terms 
of what I have seen in print, on your watch we could perhaps 
have the most radical consolidation of media ownership in the 
country's history.
    We could have one company owning 60 percent of all the 
cable outlets. The same company could buy two TV broadcast 
networks, NBC and another. The same company could buy at least 
one-third of all radio stations in the country. The same 
company could buy newspapers in every town in which it owned 
radio stations, and most towns already have a monopoly 
newspaper situation.
    I think the first question I would like to ask is what are 
your views formally on this question of media concentration, 
and are you troubled by the prospect of what I have described, 
and if so what would you do about it?
    Mr. Powell. I believe that the concern about media 
concentration is genuine. I believe that there is a reason to 
be concerned about consolidation generally. As an antitrust 
attorney, I know what the dangers are of monopolization of any 
producer of any goods or services, and I understand the 
uniqueness of the media in our society as well.
    That said, all I have expressed publicly is a commitment to 
do what Congress ordered me to do, which is to on a biennual 
basis thoughtfully review each and every one of the ownership 
rules to consider whether they continue to be necessary, given 
the changes in the environment. That is a legal obligation and 
one that I have merely suggested we would pursue.
    I also believe that it is healthy to do so. One of the 
reasons is that the goals of many of these rules I would be the 
first to support, both the limitation on concentration and the 
continued importance of diversity in the media. But a good 
number of these rules date back to their original conception in 
the 1970s, some of them in the 1940s, in a world in which 
nobody can intellectually defend the proposition that the 
marketplace has not changed dramatically.
    Maybe these rules will be validated in the context of a 
fulsome examination of the current media marketplace 
environment. I will say publicly if that case can be 
demonstrated--I do not deregulate for its own sake, and that if 
the rule continues to serve that purpose then it will be 
maintained.
    Moreover, if those goals can be pursued in a more 
thoughtful and less interventionist way I would consider that 
as well. But I do think that part of our obligation and 
responsibility is not to ignore changes in the environment and 
the market and what is available to consumers and what is not 
in the preservation of rules without examining fulsomely 
whether those rules continue to serve those purposes in the 
modern context.
    Finally, I would say we have an obligation to do so because 
whenever you talk about concentration or issues of diversity in 
the media area you are talking about an upper constraint in the 
form of the First Amendment, which I do not believe is some 
cynical ``get-out-of-jail'' card for broadcasters, but is one 
of the most cherished obligations that this country adheres to.
    Many of these rules have been increasingly threatened in 
court because of the government's unwillingness to articulate 
strong and thoughtful defenses of them. If we have any hope of 
their goals being continually pursued, I think that we have an 
obligation to review them and even defend them thoroughly and 
rigorously or offer alternatives or eliminate them.
    Senator Wyden. What about the prospect of the scenario that 
I described? That is a very real prospect. In fact, I could go 
further. I mean, you would have this one outfit owning almost 
everything and then one or two others owning what is left. I 
look at the FCC statutory responsibility to regulate in the 
public interest, which I know you take very seriously, to 
promote diversity of media sources, and I say that 
responsibility that the Commission has does not square with the 
very real prospect of a radical concentration of media in a few 
hands on your watch.
    I would like to know if that scenario troubles you.
    Mr. Powell. It troubles me that it is ascribed to me before 
we have done anything.
    Senator Wyden. That is why I asked.
    Mr. Powell. That to me is a speculation in and of itself 
that I sort of will not agree with the fundamental premise of. 
Any rule that is altered or changed in the context of a factual 
record that is rigorously evaluated and considered will be one 
that includes into consideration the kinds of prospects that 
you maintain. I will always have to yield to whether that 
result will occur or not until we have the opportunity to have 
a record and a fulsome examination of it.
    The second thing I think we need to say, which is not 
trivial, is that many of the scenarios you postulate would also 
violate the antitrust laws of the United States. I would 
certainly hope that if the radical levels of concentration you 
suggest were to begin to occur that they would find ourselves 
in violation of the Sherman and Clayton Acts and that forceful 
antitrust would not allow that to occur, just like it would not 
in the context of oil or automobile concentration.
    Senator Wyden. That raises an important point. Do you 
believe that the goal of media diversity is separate from 
issues of antitrust enforcement? I happen to. I happen to think 
that it is possible that you may not have two major companies 
coming together, violating the antitrust laws, but still 
undermining in a very significant way important diversity 
objectives. Do you share that view?
    Mr. Powell. I do. I believe that the government could make 
a judgment about the importance of diversity that fell short of 
what traditional antitrust would say is the level of 
concentration that considers traditional anticompetitive 
effects. That said, I also think it has been one of the most 
difficult areas for the government to actually make 
constructive and defensible rules in, because diversity, unlike 
antitrust, where we have the ability to almost mathematically 
determine the antitrust effects--we can examine price effects 
and we can use HHI indexes--the problem with diversity which is 
difficult is that it has a certain visceral component to it.
    When is too much? When is too little? An HHI index for 
diversity does not exist. We also have the additional 
constraint, that we do not have in concentration analysis, of 
the upper limits of the First Amendment which the courts do not 
fail to regularly remind us of when we assert diversity as a 
purpose but do not defend the validity of the rule's 
furtherance of that objective.
    Senator Wyden. Mr. Chairman, I know my time is up.
    Just for the record, Mr. Powell, could you state your views 
with respect to the matter of limits on ownership of mass media 
outlets? I think, given the fact you have been concerned about 
positions that have been imputed to you, it would be good to 
have you formally on the record with respect to your views on 
the question of whether you ought to keep limits on ownership 
of mass media outlets.
    Mr. Powell. I think we have a duty to ask, in sort of a 
critical schematic, first and foremost, whether something is 
necessary above and beyond the antitrust laws, which should be 
rigorously enforced. If so, should it be in a prophylactic way, 
as opposed to case-specific way? A rule that prohibits up front 
certain kinds of combinations? What are we pursuing?
    Diversity may be a justification for that. But can we 
demonstrate to the satisfaction of the First Amendment and the 
satisfaction of the Administrative Procedures Act that the rule 
in fact promotes that purpose in a defensible way. If all those 
things can be done, I assure you we will have a rule on it.
    But I do not think that we should shy from the challenge. I 
would also argue--and I am one of them--for those of us who do 
believe in diversity, we had better commit ourselves to a more 
thorough, intellectual and rigorous defense of those rules, 
lest we will see them continually eroded by judicial 
skepticism, as I think we have seen. The greatest threats to 
these rules recently has been judicial intervention, not 
regulatory intervention. I would submit that we have to, if we 
wish to preserve those goals in a regulatory context, examine 
30- to 50-year-old rules to see whether they continue to serve 
those purposes and whether there is a better way.
    Senator Wyden. Thank you, Mr. Chairman.
    The Chairman. Senator Stevens.

                STATEMENT OF HON. TED STEVENS, 
                    U.S. SENATOR FROM ALASKA

    Senator Stevens. Thank you very much.
    Mr. Powell, I am delighted to see you here. I am sorry I 
was not here when you introduced your mother. Those of us who 
have known and loved your father and mother are delighted that 
you are here and carrying on in the Powell tradition.
    Having said that, I do have some specific questions that 
are related to the rural areas. What steps do you think the FCC 
should take to assure consumers in rural and high cost areas 
such as Alaska and the rural States receive telecommunications 
and access to information services that are reasonably 
comparable in price and quality to those that are received by 
people in urban areas, where by definition they are much lower 
cost?
    Mr. Powell. I think the first thing to do is the Commission 
can quell the degree of uncertainty that has hung over the 
continuance of the rural subsidization programs and rural 
universal service programs that I think have been a drain on 
investment in rural America. One of the first things I was 
committed to doing was ensuring that the rural high cost 
proceeding was completed quickly, which we voted last month, 
which establishes a universal service regime in rural America 
for at least the next 5 years, which I believe will not only 
provide more money for the subsidization and deployment of new 
infrastructure, but also will lessen the uncertainty that I 
think was causing a drain on investment in rural America 
because of an uncertainty about what that regulatory 
environment will be.
    We are going to complete the second half of that this year 
in the form of access charge reform for rural areas as well, 
and I think that will be the final shoe in order to create the 
rationalized environment necessary for investment in rural 
America.
    The other thing I think we need to do is have a pointed and 
concerted focus on the promotion of new and advanced 
technologies that are able to bypass the traditional geographic 
and demographic limitations of rural America because the cost 
infrastructures are not as critical to those services as they 
were in the traditional wired form.
    I am one of those who believe deeply that satellites 
services and wireless services hold great promise for rural 
America as well as the lower developed world. You see this all 
over the world, in the continent of Africa for example, that 
never really had the step of a first class wired 
infrastructure, just skipping it altogether, moving right into 
infrastructures that put a premium on wireless technologies.
    I think there are policies that can incent investment in 
that technology and innovation that we should pursue.
    Senator Stevens. Well, I hope you are right. We have 161 of 
our villages and small cities that do not have even dial-up 
Internet access now. They do have cells and they have gone 
directly to those and they work very well. But we have a real 
problem in trying to get deployed the advance services in the 
areas that do have voice communications but have really no 
digital access and really no basic high-speed access to the 
Internet.
    What do you think you can do to help in the deployment of 
full-scale communications to rural areas?
    Mr. Powell. Well, it is a tough question. The real answer 
to that will have to be in partnership with the Congress to 
find new ways to incent the deployment of that technology. One 
is to protect to the greatest extent possible, as I mentioned, 
the sort of universal service subsidizations that allow for 
basic infrastructure on top of which advanced capability is 
built.
    For those areas that do not have basic wire line 
infrastructure to build on, which is what most of the country 
will do in pursuit of broadband, I think we have to look for 
ways to lower the cost of some of the wireless advanced 
services. I know that Senator Burns and others have pursued tax 
credits and other forms of incentives for the deployment of 
satellite-delivered high-speed infrastructure. Those things 
hold promise for that kind of development.
    3G--quite candidly, the rigorous pursuit of new spectrum 
for purposes of high-speed wireless Internet data holds the 
possibility of using those wireless infrastructures in remote 
areas to provide real-time high-speed interactivity experiences 
for all Americans.
    Senator Stevens. I would like to submit some questions to 
you, if you would answer them. That quorum call I believe is 
for me to come make a statement. But Mr. Powell, I am basically 
concerned about the survival of the universal service fund. It 
really does derive from the action that Senator Inouye and I 
instigated to bring about a basic concept of rate integration 
and the industry itself created that fund. It created it in a 
meaningful way.
    Those are not taxes that are paid into that fund. But 
unfortunately, through action of the Congress that fund is now 
being treated as though it was a tax revenue fund and is being 
allocated by your Commission to a whole series of things that 
have nothing to do with access to rural America. I really think 
the burdens on it are so great now that it is really a great 
problem for us to foresee that it will survive.
    I do not think those people paying into the fund who are 
getting long distance service are going to keep up and go along 
with a constant increase in the rate they pay in order to 
subsidize rural America. It has to be done by everybody. So I 
hope you will find a way to do that.
    Mr. Chairman, if I may, if you will pardon me, Mr. Powell, 
I told an old friend that I would do this. Jim Quello was so 
much a member of the Alaska side of the Commission that we gave 
him an honorary citizenship. Kathleen Quinn Abernathy worked 
with my great friend, a graduate of Marquette University and 
Catholic University School of Law. She came to CBO in 1980. She 
has been with several well-known law firms here in the area and 
she has worked in various capacities in the telecom business.
    Above all, she was legal adviser to Commissioner Jim 
Quello. I think that says that this young lady is eminently 
qualified to be one of your colleagues. But beyond that, she 
has had a series of involvements in the industry for Bells such 
as USWest and Qwest, for the broadband industry. She has 
practiced representing wireless companies and Vodafone. She is 
going to bring a new perspective to the Commission, but above 
all her reputation as one of Jim Quello's great advisers really 
qualifies her eminently to be a member of the Commission.
    She has one major defect. She has never been to Alaska. But 
she has promised me she will come.
    [Laughter.]
    Thank you, Mr. Chairman.
    The Chairman. They all get to come.
    Senator Stevens. It is a basic requirement.
    [Laughter.]

               STATEMENT OF HON. JEAN CARNAHAN, 
                   U.S. SENATOR FROM MISSOURI

    Senator Carnahan. Thank you, Mr. Chairman. Mr. Powell, 
thank you for being here this morning. I share Senator Stevens' 
interest in broadband deployment in rural and low income 
America, and we appreciate any concern you could have for that 
as well.
    There has been a great deal of speculation about the 
concern about the future of the E-rate program. I am a strong 
supporter of the E-rate program and I fear that any changes 
could have a detrimental effect on our schools and libraries in 
Missouri and across the country. So I was wondering if you 
could discuss your thoughts about this program and what, if 
any, changes you envision for the future.
    Mr. Powell. Well, thank you, Senator. I first would say I 
think the program has been an extraordinary success, as well as 
other programs that have contributed toward the universal goal 
of trying to make sure our children have access to this 
technology in their schools and in their libraries. I think, at 
last count, 95 percent of all public schools had access to the 
Internet. I think, at last count, 63 percent of all classrooms, 
public classrooms in America, had access to Internet services. 
I think that it is fair to say that the E-rate program was a 
substantial engine that fueled that development.
    My responsibilities are to administer the program as 
written by Congress. We, at the Commission, have no independent 
intention, of doing anything but. It will continue to be 
administered thoughtfully and carefully to ensure its 
preservation and to ensure its adequate funding. 
Simultaneously, though, it needs to balance the interests of 
consumers who pay the costs of the universal service fund and 
make sure we do not jeopardize the fund by, as Senator Stevens 
pointed out by contributing to increases in bills that are more 
than consumers are prepared to sustain.
    The debates over where it belongs and what it should 
include I am happy to say are above my pay grade. These are 
proposals that had been at one time floated by the President.
    I think that it is legitimate for the President and the 
Congress to have that discussion. But I just stand ready to 
administer the program as you all see fit to deliver it to me.
    In its current form, I think it is a success and going to 
continue to be.
    Senator Carnahan. I have one other question. I am very 
concerned about the State of competition in our local phone 
markets and I was wondering if you could give me your thoughts 
on the State of the industry now, 5 years after passage of the 
Telecom Act, and tell me what you see as the FCC's role in 
fostering competition.
    Mr. Powell. The Act did a lot of things, but we sometimes 
forget what it could not do. It could not eliminate business 
cycles. It could not eliminate economic downturn and it could 
not prevent ``irrational exuberance,'' to use Alan Greenspan's 
phrase, in the financing of business models. I think we enjoyed 
5 years of frenetic activity, much of which unfortunately 
pursued, in my opinion, unsound business models, short-term 
revenue collection, growth that was too fast and too quick for 
the network's ability to deliver or to market and adequately 
serve consumers at the quality levels that were demanded, and 
it broke. I think it broke principally because the financial 
markets I think are just as capable of irrational disinterest 
as they are irrational exuberance and they quickly recognized 
in some ways the error of their ways, and had extended 
financing far beyond what those business models should have 
predicted and they pulled back and they pulled back hard.
    Regrettably, what has happened is that they have pulled 
back not only on the carriers that are probably deserving of 
it--that is, those who did not come up with solid plans, who 
pursued regulatory arbitrage, who did not invest in serious 
long-term viable options--but, they also, sadly, have turned 
away from companies that I think are outstanding, that are 
viable, that still are pursuing fundamentals that are healthy. 
I think there are more than a few of them.
    I hope and I firmly believe that many of them are going to 
rise again. They are going to restructure and reorient toward 
healthier models. I think that consumers still want those 
services and there will be people prepared to provide them. But 
many of them will have to do it through the pain of bankruptcy 
reorganization. Many of them will have to weather capital 
markets that do not seem willing, sadly, to look, given their 
exposure and their losses from their first round.
    We need to do everything we can to try to encourage the 
financial markets to see the long-term viability of this option 
for our consumers and hope that the cash comes back.
    What can regulators do? It is limited, but the regulators 
can, No. 1, be vigilant to the opportunities for regulatory 
arbitrage. We too can inadvertently provide opportunities to 
chase short-term opportunities. I think that is what reciprocal 
compensation was. I think that is the problem with certain 
parts of access charge reform. Companies entered the market to 
cream-skim at times. They entered the market to take super-
economic profits as a consequence of regulatory distortions.
    I think it has taken the Commission a little too long to 
jump in and rationalize those things. That is painful medicine. 
Those are some of the toughest items I work on. They are 
sometimes wrongly interpreted as being anti-CLEC. Well, they 
are only anti-CLEC because we will not let you drink 
indefinitely from revenues that are unsustainable based on 
economics.
    We hope that in the end what happens as a consequence of 
market correction--and I think it is important to point out 
that markets do not just reward people, they also punish them 
for inefficient activity. I think what I hope for and am 
confident about is that the market will produce longer-range 
competitors with much more viable models, with much more 
sustained growth levels, and consumers will see the benefits.
    I also think it will take longer than we tend to talk about 
in political Washington. I think it is a long-term project. I 
do not think it is a year, or a 2-year thing. I think we are, 
after 100 years of monopoly, it is going to take more than a 
few years to see the benefits of the changes.
    Senator Carnahan. Thank you very much.
    Thank you, Mr. Chairman.
    The Chairman. Senator Burns.

                STATEMENT OF HON. CONRAD BURNS, 
                   U.S. SENATOR FROM MONTANA

    Senator Burns. Thank you, Mr. Chairman.
    Chairman Powell, congratulations on your opening statement. 
After our visit in our office and everything, understanding the 
challenge that you have to make and under the circumstances in 
which you have got to do it, and also in this 17 square miles 
of logic-free environment, I want to congratulate you for doing 
that.
    I also want to congratulate you of your leadership in 
grasping what is in front of us, as we talked before, the 
future of wireless, and your organization's ability to deal 
with some of the challenges that you will have in front of you 
in requesting some money to upgrade your laboratories. We know 
that is a very, very important part of what you do, and also 
your hiring practices, attracting good engineers to the FCC.
    As you know, the way technology is moving and the speed it 
is moving, we cannot afford to be behind in making some 
decisions that are very important to the success of any new 
idea or innovative thing that we might want to deploy. So I 
congratulate you on that.
    Also, as you know, Senator Kerry and Senator Hollings and I 
have requested a study of spectrum. As you have heard from the 
rest of the members on this Committee, spectrum is of concern, 
and the way we manage it and the way we allot it. So I, 
realizing this last year--and of course, I was in the middle of 
a campaign, but also understanding that I think it is time 
that, working with the Commission and you working with us, that 
we should start investigating and turning our thoughts to the 
way we manage our spectrum and look to some reforms.
    As you know, we are fragmented. In some cases that is why 
maybe we regard the Europeans as a foot-and-a-half in front of 
us on 3G, third generation. But nonetheless, I think this 
country will always be the international leader in 
communications because of the way that we can respond to new 
technologies and the way we look at them and the way our 
sorting process, our thought process, to deploying those new 
technologies.
    So we have great challenges ahead. I want to shift just a 
little bit from the discussion of 271, so to speak. The FCC has 
initiated a notice of inquiry regarding interactive television. 
I am concerned that without continued action by the FCC 
consumers will not have access to all the creative and 
innovative interactive television offerings that are currently 
being deployed. Will you support the continued rulemaking in 
this area?
    Mr. Powell. I voted for the Notice of Inquiry that was 
initiated and I see no reason why it will not proceed. I think 
there is a lot we can learn from that inquiry and examination 
of what the status of the market is and what the technologies 
are and what kind of regulatory problems are going to be 
presented by them, if any.
    Senator Burns. Also, in the areas of universal service, I 
would like your opinion: Is it time for Congress to look at 
universal service for some reform there, working with the 
Commission?
    Mr. Powell. I think universal service is the kind of thing 
that should be looked at constantly, because I think the goals 
of ubiquity and affordability are unassailable, but I do 
believe that the foundation of how to achieve those goals is 
constantly shifting. It is shifting--it is probably about to 
undergo some of the most dramatic shifts ever as it moves to 
advanced technology infrastructures to deliver datacentric 
services. Whether the historical approach to ubiquity and 
affordability will translate well into the new infrastructures 
is a real question that I think is not yet ripe for dramatic 
change, but I do think begins to peek through the clouds and is 
something we are going to have to start thinking about early 
and often as networks move more out of the traditional copper 
switched environment into packet-based IP protocol 
environments.
    Senator Burns. I think, you know, it is incumbent on us 
that serve on this Committee to keep the rest of the Congress 
apprised on what is going on, because there is a lot of 
activities that are very fast moving. I think two of these 
areas spectrum management reform and also in universal service, 
are things that we are going to have to take a look at, and 
they will create quite a lot of interest as we take a look at 
those. They also have international impact with our friends in 
Canada, Mexico in the hemisphere, but also around the world.
    So I am very supportive of your nomination and your 
permanency to the chairmanship. I look forward in working with 
you and the Commission on those challenges that we have ahead 
of us.
    Thank you, Mr. Chairman.
    The Chairman.  Senator Edwards.

                STATEMENT OF HON. JOHN EDWARDS, 
                U.S. SENATOR FROM NORTH CAROLINA

    Senator Edwards. Thank you, Mr. Chairman.
    Good morning, Mr. Powell.
    Mr. Powell. Good morning, Senator.
    Senator Edwards. I want to talk to you about privacy on a 
couple of different aspects. You know, there are a lot of new 
technologies that allow people to determine the location of 
people, including cell phones and these technologies that they 
put in automobiles now that allow you to figure out where you 
need to go, but also allows them to figure out where you are.
    Senator Dorgan and I have been working on a bill to address 
this issue, but I just wanted to get some sense from you about 
what your feelings are about the privacy aspects of that 
information, because a lot of people believe that their 
location is something that they would not want the world to 
know. I can imagine a situation where that information, if 
gathered, could be sold to third parties and it could be used 
for marketing purposes. For example, Starbucks figures out you 
are in the area, so they give you information about something 
they have got going on, or a retail store, whatever.
    My belief is that that information is information that the 
consumer should have control over, and that is what our bill is 
dealing with.
    But tell me. Give me your sense of that and what your 
feelings are about the privacy aspects of this location 
information.
    Mr. Powell. I would love to. I am going to throw my 
mandatory caveats first. First, the Commission only lightly 
touches on privacy issues. Some of the ones you mentioned are 
generally outside of our expertise or jurisdiction. It is not 
going to stop me from talking about it, but I just wanted that 
caveat.
    I am not that familiar with your bill, so I apologize; I 
cannot comment as to the specifics. I think privacy is a very, 
very important issue, but a very, very difficult one. It will 
prove to be a critical component of how the new economy and 
Internet-based services evolve. If you think about it, in many 
ways the real beauty and curse of modern technology is it is 
ultimate diversity--it is ultimate tailored services.
    That is, this is the sort of the my generation: my Yahoo, 
my Amazon, my this-my that. You are increasingly able to use 
the technology to customize services for you, not legions of 
people like you, but actually you. I think it is what consumers 
are partly responding to and liking in Internet-based services 
and other advanced services. It is also where producers are 
excited about the opportunities. If Nordstrom's knows it is 
you, it can be much more efficient in tailoring things for you 
that you like. When Amazon is up on your habits, your book-
buying interests, it begins to aggregate that information. And 
every time you come on Amazon tells you a little bit about what 
you might like. Some of us like that, like the fact that I see 
things that I might not otherwise stumble into.
    Consumers are funny about privacy. They all care immensely 
about it, as they should, but it is also something people seem 
to want the right to trade for something of value, within 
limits. That is, you will see companies that offer free PCs if 
you will tell them everything about you. They ran out of those 
PCs before you could count to three.
    What you find is that you have to ensure that consumers are 
well aware of what can be made use of their private information 
and that if any of it is going to be used that it is done with 
their full knowledge and acquiescence. But on the other hand, I 
think that there will probably be a difficulty making sure that 
consumers have the right to make judgments about how intrusive 
they are willing to allow providers to be as long as it is an 
exchange for value.
    When I was in law school we wrestled with the Fourth 
Amendment and it is because the expectation of privacy is a 
critical sub-component to the constitutional provision, and 
expectations evolve and migrate and change for different 
consumers.
    This is going to be a fundamental question on how the 
Internet evolves, whether its promises are realized, and 
whether consumers are adequately protected. I cannot think of 
any one question or issue more central to the government's 
consideration and debate over.
    Senator Edwards. Specifically to the question I asked you 
on location kinds of information. From your perspective, does 
that sound like the kind of information that consumers ought to 
have some control over?
    Mr. Powell. Oh, sure, up to a point. I have friends who 
have GPS receivers that we use to tell us where we are going in 
our cars. I own a small boat; we use it to know where we are on 
the water. That is location-specific technology. That GPS 
receiver knows where I am. I would like to be able to control 
who knows where I am.
    But, I also might want the right to provide it. For 
example, I may be in a strange city with my 3G wireless phone 
and would like it to tell me what the closest coffee shop is or 
where Starbucks is. I may want to authorize that my location-
specific information is released to some service that will then 
be able to, given where I am, identify options for me locally.
    But I think, as you point out rightly, the critical issue 
is to make sure that I have a sufficient amount of control over 
that choice, as opposed to someone's misuse of it.
    Senator Edwards. Good, good.
    Mr. Chairman, if I could ask briefly about one other area. 
Are you familiar with the Tenth Circuit decision in USWest 
versus FCC case?
    Mr. Powell. Yes.
    Senator Edwards. In the 1996 Telecom Act Congress talked 
about telephone companies getting ``approval''--that is the 
term they used--prior to selling confidential or private 
telephone records to any third party. The FCC issued 
regulations to support that language. The Tenth Circuit said--
basically struck down the FCC regulations, but invited us, us 
being the Congress, to come back and define exactly what we 
mean by ``approval,'' and did not deal with the constitutional 
argument that was raised in that case.
    We are going forward with some legislation, me 
specifically, to define what ``approval'' means and to define 
it basically exactly as the FCC had defined it, which is that 
``approval'' means that a customer gives prior approval before 
the telephone company can sell their personal records to third 
parties. I wanted to get your view about that subject.
    Mr. Powell. I think it is a legitimate way to go. I think 
basically this is two options: You either opt-in or you opt-
out. Our attempt to proffer an opt-in regime was struck down by 
the circuit court, as you pointed out. I think part of it was 
statutory. Also, I think part of it was a sense of whether we 
had been able to adequately justify why that level of 
affirmance was required.
    You know, when we were doing this we made some effort to 
examine how it works in a lot of other areas of the economy. 
For example credit cards. There are many things in the economy 
that make use of your information, and a lot of the uses opt-
out, to be candid. So I think that it is a legitimate judgment 
on the part of the Congress or anyone else that we would prefer 
to have affirmance.
    But there is a welfare loss, which is you will get much 
less incidental subscription or advice or information. There 
are a lot of things that if I had pre-selected not to know 
about that I will never have the opportunity to trip on and 
see. I think that is just a balancing judgment and I do not 
have a strong view of which is superior, but I think that 
either will potentially work.
    Senator Edwards. So you continue to support the notion that 
the customer ought to have control over that decision, No. 1; 
and No. 2, that they ought to be able to affirmatively have 
control over giving the telephone company permission before it 
can go to third parties?
    Mr. Powell. I would agree, but I would probably move 
slightly further than maybe you would. That is, I believe that 
they should have absolute clear knowledge of the choice. I also 
believe that they should act affirmatively. But I also believe 
that it is possible you could have an opt-out regime that 
satisfied those objectives, that is that--many Internet sites, 
for example, that subscribe to the trustee privacy regime make 
sure that you are given an identification at a Web site of what 
will be done with your information and you are boldly, clearly 
given the opportunity to check not to be included, to opt-out. 
Otherwise you will receive this. I would consider that to be at 
least an example potentially of ``I had knowledge, I took an 
affirmative act, but my affirmative act was passive. That is, I 
elected not to check the box.
    Senator Edwards. My time is up, but my concern about that 
in the context of telephone companies is that there is a 
difference, of course, in the way people interact with a Web 
page and receiving something in the mail, which they throw in 
the garbage with everything else. So I just want to be sure 
that people actually have notice and have control over the 
decision.
    Mr. Powell. That is absolutely correct, there are different 
environments.
    Senator Edwards. Thank you, Mr. Chairman.
    The Chairman. Senator Cleland.

                STATEMENT OF HON. MAX CLELAND, 
                   U.S. SENATOR FROM GEORGIA

    Senator Cleland. Thank you very much. Thank you very much, 
Mr. Chairman. Mr. Powell, welcome. We want to thank you for 
your years of public service. I know your father and have the 
utmost respect for him and I know the apple does not fall too 
far from the tree. So welcome, and you have my unqualified 
support in your nomination and we think you are going to be an 
outstanding leader there at the FCC.
    May I just follow onto Senator Edwards' point. I am, as I 
look at this question of privacy, more and more pro-choice here 
in terms of the consumer or the individual. I think that is 
where the question of privacy really lies, is who has the power 
to choose whether to opt in, opt out, choose to be found or not 
found, disclosed or non-disclosed; and that the real question 
is who chooses.
    I think there is no question but what, with our values in 
our society and our democratic society, we leave that decision 
to the consumer. Then the consumer has the confidence then to 
enter the marketplace and make other choices. I think that will 
facilitate the continued growth of the Internet. I just thought 
I would mention that.
    But we appreciate your leadership, your guidance on these 
issues as they come along. May I just say, in a parochial way, 
that Georgia has been a big beneficiary of the E-rate funding 
for schools and libraries, allowing youngsters to be connected 
to the Worldwide Web and to the Internet. I think we are fifth 
in the country in terms of receiving E-rate funding, which is 
why I would just like to make a point here.
    The FCC has apparently proposed to change its rules for 
distributing E-rate funding to schools and libraries when the 
requests for funding exceed the available funds. Specifically, 
the FCC has proposed to exclude from funding this year--this is 
year 4 of the E-rate program--any school or library that 
received a commitment for internal connections last year. This 
proposal was just made April 30.
    I see two problems with this proposal. First, the FCC would 
be changing its rules after the applications has already been 
filed, potentially causing disruption and delay in the funding. 
Second, there are likely to be a number of unintended 
consequences of these new rules. For example, even a school 
that received a small amount of funding last year could be 
excluded this year.
    Also, any school that received funds for its internal 
connections last year could be barred from receiving the 
maintenance funds needed to keep its network running. There are 
over 40 schools that could be affected in my own home State 
alone.
    I would just like to ask you, what consideration would you 
give to the potential problems that could result from changing 
these E-rate rules?
    Mr. Powell. Well, just to be clear, that is only one 
proposal among several to be considered about how to deal with 
priority funding when funds fall short of demand. I can 
honestly say that I do not think that the Commission has 
expressed any particular bias yet as to how that should come 
out.
    We will consider that. That is, frankly, being currently 
considered along with other evaluations of the priority funding 
system. But to be clear, that is not the process that is in 
place now and it is not, as best as I understand it, the one 
that is currently going to be used for the allocation of 
shortfalls unless the Commission--and maybe that will be the 
three behind me in addition--make a decision to change that.
    There are some complaints from States, which is why we had 
to and we wanted to consider it, which are unable to get access 
to funds, claiming that certain applicants seem to get 
repetitive funding where they have gotten none. I think that is 
something we have an obligation to examine to ensure that it is 
widely distributed. But I assure you, we are just in the 
beginnings of looking at that question and I personally have 
reached no judgment.
    Senator Cleland. Thank you very much.
    Now, you were with the Justice Department, particularly the 
Antitrust Division. Now you are up for head of the FCC, have 
been on the FCC for a number of years now. I would like to have 
your view of the FCC role in this whole world of quicksilver 
mergers and acquisitions in the telecom world. What role does 
the FCC play here in your opinion to protect the public 
interest?
    Mr. Powell. Well, first of all, it plays the role that is 
articulated in the statute, which is if a merging party owns a 
license--it is important to know if the merging party has a 
license and that license will have to be transferred to the new 
entity--then that license transfer has to be examined by the 
Commission and the Commission has to affirmatively approve, as 
in the public interest, the transfer of that license.
    That is a different standard than that employed by 
antitrust authorities which administer the standards of the 
Clayton Act and the Sherman Antitrust Act. But as a practical 
matter, more often than not, it also involves on the part of 
the Commission a review of traditional horizontal and vertical 
merger concentration analysis in an examination of that 
transfer.
    I will admit that I have been critical of the way the 
Commission has administered this process in the past. I think 
the government has a real interest in asking itself whether we 
are value adding as to that. And I want to be particular about 
this--value adding as to that concentration analysis or are we 
simply duplicating the activities of the Federal Communications 
Commission or the Antitrust Division. If we are, I think it is 
legitimate to ask whether that additional duplication is 
warranted.
    That said, there are other things that we do in the context 
of a public interest analysis which I think are warranted. For 
example, it is important to make sure that the merging parties 
would comply with all the provisions of the Communications Act 
and the Federal Communications Commission's rules. That is not 
something the Antitrust Division will do.
    I also think, as Senator Wyden was alluding to, to the 
degree that we have a good analytical basis for doing so, 
diversity is a component that the antitrust authorities will 
never consider. It is not a legitimate consideration under the 
standards.
    Senator Cleland. My time is up, but where are we going 
here? Are we going to wind up with just three or four major 
global telecom companies in this country and then just 
everybody else?
    Mr. Powell. I do not think so. I think that the mistake we 
make, in some sense, on that discussion is the idea that local 
is not valuable. Local is an extremely valuable service. If 
anything, I see a trend toward increased parochial provision of 
service. We just talked about the Internet. Talk about 
penultimate diversity: service providers attempting to provide 
the programming content that you want, not even people in your 
community, not even all those who like history on the History 
Channel, but you personally.
    I think that the trends are very powerful toward being able 
to provide diversity in local content to consumers. I think 
that it is not only valuable as a public interest policy, which 
it has always been talked about as, but I think we sometimes 
underestimate about how valuable it is as an economic matter. A 
local television station's most valuable content, its highest 
rated card, will always be local news if it provides it. It 
will be the programming that draws the greatest advertising and 
it will be the programming that is most watched on most local 
television stations.
    That is not an argument, by the way, for ``who cares, 
laissez faire''. But there can be threats to those values that 
we should be vigilant about.
    But I do think that we sometimes underappreciate that 
people do live in communities. We are a diverse Nation with 
different interests and as long as there is a value component 
in that we can incent people to serve those interests.
    Senator Cleland. Thank you, Mr. Powell.
    Thank you, Mr. Chairman.
    The Chairman. Senator Brownback.

               STATEMENT OF HON. SAM BROWNBACK, 
                    U.S. SENATOR FROM KANSAS

    Senator Brownback. Thank you, Mr. Chairman.
    Welcome, Chairman Powell. Delighted to have you here. I 
think your service on the Commission has already shown you are 
well up to the task. I look forward to supporting you in that 
role as Chairman. Your tenure there on the Commission has been 
rewarded and rewarding for those looking for a little bit of 
common sense and courage in dealing with some tough issues of 
the day.
    I want to focus you on, if I could, on two question areas. 
One is the deployment of high-speed Internet access into rural 
areas and the second is the role of FCC in addressing 
television content under its public interest test. Those are 
the two areas I would like to inquire with you for a minute.
    We still are having a great deal of difficulty getting any 
high-speed Internet access into many rural areas of the 
country. The distance, the ability to get the customers they 
wanted, the concentration of customers, has been difficult. I 
have got an example, though, of one place in Kansas where we do 
have some high-speed Internet access, and I would just like to 
put this in front of you and pose a question to you.
    There is a small cable company, Sumner Cable, located in 
Wellington, Kansas. Wellington has about 8,700 people. Sumner 
is deploying cable modem services in Wellington. Yet, the major 
Bell company that offers local telephone service is not.
    Do you believe that there is any different treatment that 
these two have in the regulatory regime that has any bearing on 
whether or not one deploys and the other one does not for high-
speed Internet access?
    Mr. Powell. That is a good question. I think that it varies 
dramatically from market to market as to the choice to invest 
in that infrastructure. One thing I would say which I think is 
hopeful, both for rural America and America generally, about 
broadband is, unlike the original telephone system, it will not 
have to be laid across our public rights-of-way and land from 
scratch, like telephone or rural electrical service was. It is 
basically a functionality that is going to be built on top of 
networks that already reach a substantial number of Americans. 
Whether it be 94 or 95 percent penetration by the telephone 
network. Cable networks pass 96 percent of American households.
    So we have a real opportunity to try to incent investment 
in the upgrading of existing infrastructure, rather than laying 
the first infrastructure.
    The cable incentives are sometimes similar, sometimes 
different. I think that the biggest reason we have seen cable 
lead the way on this technology is not just, as some would 
suggest, the regulatory freedom, which is a real part of it, 
but because cable was very committed to expanding video 
programming capacity by digitizing the system. If anything, I 
worry to make sure that cable companies continue to have 
incentives focused on the data side as much as they do on what 
their traditional biases have been, which is more capacity for 
more viewing programs.
    I think that they really were driven, first and foremost, 
to increase the capacity of video product available. 
Coincidentally, the upgrades that were required to do that were 
similar to the upgrades necessary to do high-speed Internet, 
and it became a real possibility to create a value-added 
product being driven by the possible revenues of both of those 
things combined. I think that is part of why cable jumped out 
fast.
    I also think that cable's quick actions have led 
principally to the competitive threat to the telephone 
companies. By the way, I do not think it is just because of the 
possibility of cable telephony. I think people now get it, 
which is datacentric communications is without question the 
future. We may not know exactly what it looks like, but if you 
are sitting on a horse that cannot do this you are going to 
lose, and everyone understands that they need to be able to 
start converting networks and drive revenue toward datacentric 
capability. The phone companies are starting to respond and are 
responding, interestingly enough, having lagged, at a much 
faster rate of growth than cable modem service at the moment.
    Any given specific market, any given specific phone 
company, I do not know for sure. Part of the problem with phone 
companies has been the problem that is often true of large, 
entrenched interests who make a lot of money from their legacy 
stuff: It is hard to move boldly. It is easy to continue to 
draw revenue from incremental changes. A lot of phone companies 
had DSL technology for 15 years. They also have other 
technologies they make a lot of money on, like T-1, that they 
did not want to cannibalize in rolling out a cheaper service, 
and I think the competitive threat of cable started to spur 
them to do that.
    Senator Brownback. I am still concerned about the disparity 
in access between rural and urban and suburban areas for high-
speed Internet, and I hope you will continue to look at that 
and to see ways, if there are, that we can incentivize or have 
a regulatory regime or reduce the regulatory regime that could 
incentivize more of this to take place, so that we do not get 
in a big digital divide.
    The second question: This Committee has held a lot of 
hearings about television content, particularly violent 
content, particularly that during the family viewing hour, and 
some letters sent to the FCC regarding the public interest test 
on this. I just wanted to get, if I could, your views on that 
public interest test relative to the issue of highly violent, 
violence outside of any context, being presented on over-the-
air broadcasts during the family hour, if you think the FCC has 
any role or need to, not regulate the industry, but to press it 
to move to a higher standard if they could, and to review what 
the industry is doing in putting out this sort of programming, 
particularly during the family hour.
    Mr. Powell. I will try to be brief. Candidly, we have a 
right to be outraged, both as consumers of television, watchers 
of television, and listeners to radio, about outrageous conduct 
or content that offends us. I wholly subscribe to that and I 
often am disappointed myself. What I think we have seen 
increasingly in the media space is, to use a sine wave, we have 
seen greater amplitude. That is, I would argue we see some of 
the finest television product that we have ever seen in the 
history of television. At the same time, we have seen some of 
the darkest. We really have dramatically expanded the range of 
what is available to consumers and what they have access to in 
the consumer space, and many of those troughs are truly deep. 
But I do want to point out that I think many of the crests of 
those waves are very high as well.
    I think it is a difficult issue, not so much because of the 
desire, but because of the challenge in definition and the 
crafting of actual rules. I, for one, as the father of two 
children, get very concerned about violent content. I get 
concerned about it a lot more in the video games that I see 
them play, to be candid, than I do in some of the things they 
see on television.
    But I often sit there in front of it and think, OK, 
hotshot, write the rule; distinguish between the inappropriate 
violent content and appropriate. You know, what about ``Saving 
Private Ryan'' is art and what about something else is not? 
That is where I think it becomes very difficult, and it becomes 
very difficult given the fact that it is layered over, no 
matter what anyone wants to debate about its parameters, a 
First Amendment limitation.
    So you have--only to mean, not that you cannot do it, but 
that you have to do it at a higher level of rigor than you do 
all your other rules. So I have always been frustrated. It is 
very difficult for me to imagine at times how to do that.
    The second quick thing I would say is we are a diverse 
country and we all make different value judgments about what is 
acceptable. I am always amazed about what my neighbors think it 
is OK for their kids to see, where we do not want them to, and 
vice versa. What I am very uncomfortable with is the Commission 
making these judgements--we are not elected individuals. We 
operate by a 3 of 5 majority and I am not always comfortable 
that we impose our value preferences on society as a whole.
    I am happy, though, and indeed willing, to administer those 
judgments of the Congress, because there I think that all of 
the public, of all those interests, have an opportunity through 
their representatives to debate and arrive at, through that 
deliberative process, a value judgment that we are prepared to 
impose on the medium and the country as a whole.
    That is not to say I do not think there is anything that 
the Commission could or would do independently. But I am a lot 
more comfortable when we are given a statutory basis to pursue 
this because I feel like then the people through their 
representatives have made some deliberative judgment about 
these value choices, as opposed to the Commission, who may 
answer to the Congress but does not have any direct answering 
to the public.
    Senator Brownback. Thank you for your response.
    Senator Hollings [presiding]. The Chairman indicated it was 
my turn. Mr. Chairman, I am looking at a statement you made 
relative to enforcement. All of these Bell companies operate as 
former Ma Bell, dissemblers, artful dodgers, and everything 
else that you know of. In fact, Judge Greene, after 12 years 
and 12 decisions made by your Federal Communications 
Commission, none of them could be enforced because they out-
lawyered them--they just kept filing motions and everything 
else like that. Not the Congress, not the Commission, but the 
courts had to finally move in and break up that monopoly.
    Now we see monopolistic conduct that our distinguished 
Chairman was just referring to with the CLECs and so forth 
trying to get in and survive and otherwise trying to open up 
the local Bells. The local Bells told us advisedly again and 
again that they wanted to open up and get into long distance. 
In fact, I have got two of their statements I will provide for 
the record, that they would be in within 12 months of the 
signing of the bill.
    [The press articles follow:]

                [From The New York Times, Feb. 8, 1996.]

         Communications Bill Signed, and the Battles Begin Anew

                         (By Edmund L. Andrews)

    Washington, DC.--President Clinton today signed a sweeping bill to 
overhaul the telecommunications industry, starting a new round of 
warfare between the giant media and communications companies even 
before the ink was dry.
    Scores of industry executives, from Ted Turner to the chairman of 
AT&T, crowded into the signing ceremony along with politicians of both 
parties and the lobbyists, lawyers and regulators who will be the foot 
soldiers in the struggles ahead.
    ``Today, with the stroke of a pen, our laws will catch up with the 
future,'' Mr. Clinton said, signing a bill that knocks down regulatory 
barriers and opens up local telephone, long-distance service and cable 
television to new competition.
    Within hours of the signing at the Library of Congress, however, 
civil liberties groups filed a lawsuit challenging provisions that 
block indecent sexual material from being transmitted over computer 
networks. Television broadcasters began bracing for a new battle with 
the Clinton Administration over provisions aimed at reducing violence 
on television. And top executives at local and long-distance telephone 
companies immediately vowed to start attacking each other's markets 
within the next 12 months.
    Robert E. Allen, chairman and chief executive of AT&T, vowed that 
his company would try to offer local telephone service in every state 
and pledged to capture one-third of the business now controlled by the 
regional Bell companies. Elsewhere in the same room, the president of 
the Bell Atlantic Corporation all but said publicly that his company 
was actively seeking some kind of alliance or merger with the Nynex 
Corporation--a deal that would create a company that controls local 
phone service from Virginia through Maine.
    The measure, passed after years of struggle and lobbying between 
rival segments of the communications industry, is expected to unleash a 
wave of mergers and acquisitions but eventually knock down traditional 
monopolies in local telephone service and cable television.
    Its most immediate impact will probably be ferocious legal battles 
in the the courtroom and at the Federal Communications Commission. In 
Philadelphia, a broad range of civil liberties groups led by the 
American Civil Liberties Union immediately sought a court injunction 
against provisions that impose heavy fines and prison terms on those 
who make available pornography or indecent sexual material over 
computer networks.
    In Brooklyn, abortion-rights groups went to court to block a 
provision that some say would make it illegal to transmit information 
about abortions over computer networks. But the Justice Department said 
the provision, which expanded the reach of a little-known law passed in 
1873, was clearly unconstitutional and would never be enforced.
    President Clinton also put new pressure on television broadcasters 
to develop a system for rating violence on their shows. The new law 
requires manufacturers of television sets to install a special V-chip 
in every new set to allow parents to automatically block any program 
with a special code.
    To be effective, however, broadcasters must develop a system for 
deciding which shows are violent and then transmit the signal. 
Commercial broadcasters are adamantly opposed to the whole idea, and 
some have threatened to challenge the law in court.
    Today, Mr. Clinton announced that the White House would meet with 
representatives of the entertainment industry on Feb. 29 to discuss 
ways of reducing gratuitous violence on television and to make a plea 
for a new rating system.
    ``However well intentioned, legislative proposals to restrict 
violence or access to programs deemed to contain `objectionable 
content' mean government control of what people see and hear and 
violate the First Amendment,'' the National Association of Broadcasters 
said in a statement today.
    Much of today's ceremony was couched in theater and hoopla, a rare 
moment of relief shared by political leaders from both parties and 
executives of most segments of industry after finally passing the huge 
bill.
    To that end, Vice President Al Gore engaged in a bid of cybershtick 
with Lily Tomlin, the comedian, who reprised her famous role as 
Ernestine the telephone operator. Ms. Tomlin, who appeared over a 
voice-and-video link through the Internet, told Mr. Gore he wasn't as 
stiff as he seemed. ``You're just a techno-nerd,'' she snorted, as Mr. 
Gore politely thanked her.
    Behind the theater, however, the country's biggest telephone and 
media companies were already gearing up for a new era of unbridled 
competition. One of the biggest battles will between the local Bell 
telephone companies and long-distance carriers like AT&T, MCI 
Communications and Sprint.
    Mr. Allen, AT&T's chairman, said his company would offer an 
unprecedented new range of local, long-distance and even television 
services to its customers in the near future.
    Mr. Allen said his company would immediately start striking deals 
to lease local telephone capacity from both the Bells and from newer 
rivals in the local phone market, and that AT&T would also invest in 
local communication networks of its own--possibly using wireless links 
as a substitute for phone service carried over copper wires today.
    Even though long-distance carriers fought adamantly against 
provisions to let the Bell companies offer long-distance service within 
about two years, Mr. Allen said the future was bright for his company.
    ``This legislation is good for America, it's good for the 
communications industry and, not incidentally, it's good for AT&T,'' he 
said.
    James G. Cullen, president of Bell Atlantic, which provides local 
phone service in the mid-Atlantic region, said his company would start 
offering long-distance service outside its traditional region 
immediately and inside its region within a year. He also strongly 
suggested today that Bell Atlantic would team up in some fashion--
though probably not an outright merger--with Nynex, which serves New 
York and New England.
    ``We've got to figure out how we can offer long-distance and local 
service in competition with the likes of AT&T,'' Mr. Cullen said as he 
waited for President Clinton to arrive at the signing ceremony. Mr. 
Cullen insisted he could not comment on widespread news reports about 
merger talks with Nynex, but offered a broad hint. ``In between where 
we are today and something that falls short of a full merger, there are 
things that make sense,'' he said.
    Cable television executives, who suffered a huge political defeat 
only four years ago when Congress voted to regulate cable rates, 
gleefully talked about how the new law would sweep away regulatory 
barriers that keep them from entering the local phone business and 
other new markets.
    ``The beauty of this is that there is enough new business, both 
domestically and internationally, that there won't be a war of 
attrition'' between telephone and cable companies, said Gerald M. 
Levin, the chairman and chief executive of Time Warner Inc.
    Even some consumer advocates who had warned that the new law would 
raise prices for consumers and lead to a new era of media conglomerates 
said the final bill had been moderated by pressure from Mr. Gore and 
Senate Democrats and might actually be good for ordinary people.
    ``This bill went from being a consumer nightmare to being something 
that while it still has significant risks is dramatically improved and 
offers at least at hope of greater competition and lower prices,'' said 
Gene Kimmelman, co-director of Consumers Union.
                                 ______
                                 

            [From The Orange County Register, Feb. 9, 1996.]

  Stakes Are Huge As Scramble To Gain Market Share Gears Up; Outlook: 
 Investors Will Have to Sort Through a Frenzy of Deal-Making Over the 
                             Next Few Weeks

              (By Liza McDonald, Bloomberg Business News)

    Washington, DC.--Telecommunications companies wasted no time 
touting plans toenter one another's markets after President Clinton 
signed into law the most sweeping industry reform in 62 years.
    ``The gloves are off and we are now free to take on the monopolies 
head-on,'' said Nate Davis, chief operating officer for MCI 
Communications Corp.'s local phone unit.
    As the ink on the new law was drying, MCI said it would become the 
first U.S. long-distance company to offer local phone service in 
Boston.
    Not to be outdone, AT&T Corp. said it would start making moves into 
the $90 billion local phone market in all 50 states by March 1. ``We're 
ready to play, we're ready to win, and we don't intend to lose any time 
doing it,'' Chairman Robert Allen said.
    And the largest local telephone company, GTE Corp., announced that 
it had a contract with WorldCom Inc., the fourth-largest long distance 
company, to resell long-distance service under the GTE name.
    While the jockeying created a frenzy among telecommunications 
companies, investors weren't quite so euphoric.
    ``Who knows if they (telecom companies) will do it correctly? `' 
said Scott Vergin, portfolio manager at Lutheran Brotherhood in 
Minneapolis. ``The concern, as an investor, is all the spending they 
are going to do.
    Investors will have to sort through a frenzy of deal making over 
the next few weeks. Communications companies will be trying to fill 
gaps in their service with alliances or acquisitions.
    Wall Street analysts say small long-distance companies and so-
called competitive-access providers, which let businesses bypass local 
carriers when connecting to long distance, are in great positions to 
make deals or even be acquired.
    US West Inc., one of the seven local Bells, made its first overture 
into the $70 billion long-distance market by naming the head of its 
long-distance unit. Pacific Telesis Group said it plans to be in the 
long-distance market in 10 to 12 months.
    Some companies decided to forgo the bill-signing festivities in 
Washington.
    ``While (Bell Atlantic Chairman) Ray Smith, Robert Allen, and other 
industry bigwigs were toasting the bill, we've been sitting in a war 
room in San Antonio planning our next offense,'' said Brian Posnanski, 
spokesman for SBC Communications Inc.
    SBC said it will immediately begin offering long-distance service 
to its cellular phone customers. ``It's not a time to celebrate, it's a 
time to get down to business,'' he said.
    At stake is the $200 billion phone and cable TV market. Not since 
before AT&T was broken up in 1984, creating the Baby Bells, has there 
been such a frenzy to stake a claim in the telecommunications market.
    And not everybody's going to be a winner. ``There will have to be 
some sort of shakeout, because not everybody can get rich at 
everybody's else game just because the restrictions have been lifted,'' 
said Albert Lin, an analyst at Cowen & Co.
    Consumer advocates, meanwhile, wondered what's in it for phone 
customers. They said the telecommunications overhaul may mean a rash of 
mergers that may lead to higher prices.
    But Vice President Al Gore said: ``Over time, we'll all see prices 
come down significantly. `'
    The Associated Press contributed to this report.

    Senator Hollings. They got no idea of doing that. They hold 
onto their monopoly and they play these tricks on each other. 
AT&T has lost $100 million up there in the New York market. SBC 
has already said we have got to get back out of Atlanta. I 
think Verizon lost another with GEC, another $100 million. They 
try and they try, and we have got a hard experience.
    Evidently, you have experienced it also. So you make the 
statement: ``I might give you the benefit of the doubt, but 
when you cheat I am going to hurt you and hurt you hard.'' Do 
you really believe that?
    Mr. Powell. Absolutely, if I can get more power to do it.
    Senator Hollings. More power? I mean, what power would you 
ask the Congress to give you that you do not have?
    Mr. Powell. Well, I submitted to the Congress several weeks 
ago a letter expressing my concern that under the statute the 
penalties that are within our authority to impose are wholly 
inadequate to give meaning to a statement as bold as that.
    Senator Hollings. Inadequate in what way? Not a sufficient 
amount or what?
    Mr. Powell. Not a sufficient amount. A billion dollar 
company who can face at times a maximum of a million dollar 
fine, well, that is the cost of doing business, and 
particularly when the cost of compliance is not trivial. If you 
look at the amount of money that the Bell Operating Companies 
have to spend in order to bring OSS systems to allow CLECs to 
interconnect pursuant to the standards that we have 
established, it is in the billions of dollars. If you are the 
CEO of a company and you are faced with a simple economic 
decision of whether to spend a billion to comply or to write a 
check for a million dollars not to, it does not get too 
difficult a decision to make at times.
    I think we have tried to increase our aggressiveness within 
the limits of what we have. My best judgment is that we do not 
have enough to provide the deterrent value that I think is 
required if it is going to really work.
    Senator Hollings. Your request is that the limit be removed 
so that you can make a $10 million fine, I think, according to 
your letter?
    Mr. Powell. Our letter noted at least $10 million, as well 
as some other modifications that would give us investigatory 
authority.
    Senator Hollings. Well, I am looking at the record, which I 
could pick, and I have got all of them here: BellSouth, Qwest, 
and so forth. For example, SBC, since July of last year, have 
had 21 violations: $8,750,000 fine in Ohio; a $13,750,000 fine 
in Wisconsin; $19 million in Michigan; $1,800,000 in Illinois; 
another $1,750,000 in Wisconsin, these last two in March of 
this year. That does not seem to affect them. You have got 
Verizon with eight violations since March of last year, for a 
total for Verizon of $233 million. Do you think the directors 
pay that?
    Mr. Powell. I am sorry, the what?
    Senator Hollings. Do you think the directors of Verizon pay 
that $233 million?
    Mr. Powell. No, I suspect not. The shareholders do.
    Senator Hollings. Do you think that the ratepayers ought to 
pay it?
    Mr. Powell. No, I think the shareholders and the company 
leadership ought to pay it.
    Senator Hollings. Do you think the shareholders ought to 
pay it?
    Mr. Powell. As investors in that company, for a company 
whose behavior is irresponsible, yes.
    Senator Hollings. As between the shareholders and the 
users, the ratepayers, who do you think really is paying it?
    Mr. Powell. I have no idea where the checking accounts come 
from for Verizon.
    Senator Hollings. They are a monopoly and they are passing 
it on in the rates. They are guaranteed a profit. It is just 
like them hiring their Washington reps around here chasing us 
any and everywhere. They just write it off. I have been through 
on one company 11 of them. They have not found out yet how to 
get me. All good friends and everything else, but I believe as 
the Chairman. I want to see them compete. I want to see them 
open up. And, what about structural separation? The 
Pennsylvania Commission has experienced the same thing you and 
I are talking about. The fines mean nothing, whether it is $10 
million or $233 million in a year's time. They just pass it on 
either to the ratepayers or to the stockholders, but more or 
less to the ratepayers. They do not worry about it. They are, 
just like you say, a billion-dollar company. They do not mind 
these things at all.
    So it is not the authority. It is the approach you and I 
are using which is not responsive at all. We have got to have 
some kind of structural separation. We did that for 
manufacturing when we wrote the 1996 Act and it has worked. Why 
not separate out wholesale and retail so we can really audit 
the thing and just look at it and make sure they are selling to 
the competition at the same time they sell to their former 
monopoly? You and I organized these monopolies. I have been 
paying the rates. They are outstanding services and an 
outstanding company. Not trying to reflect on them, but I mean, 
it is just the nature of having a monopoly. They have still got 
98 percent of that last line into the home and into the 
business.
    That is what is frustrating us here at the congressional 
level. They come and ask for more fines that mean absolutely 
nothing, like water off a duck's back as I see it. Why not go 
with the structural separation?
    Mr. Powell. Well, I will tell you that many years ago I too 
thought that that theory was not given sufficient consideration 
in the context of what you might have done at the first 
inception of the statute. Now, that said, I would have to be 
candid and say that doing it now would be possible, but at 
great cost to the stability of the market and would likely be 
an extraordinary period of disruption, and maybe it would work, 
but maybe it would not.
    I also think that it would be a very complex undertaking 
and one that would require many, many years, just like the 
divestiture of AT&T did, to achieve a complete separation, and 
once it was achieved maybe it would improve the efficiency of 
interconnection.
    Senator Hollings. About the instability of the market, now, 
come. What we are looking at is for the benefit of the 
consumers. It is easy to keep--they have got more auditors and 
recordkeeping of any group you will ever find. They have just 
got to get another column and put it down here, and here is the 
wholesale price that we sold to ourselves and we sold to 
everybody, the same price, here are the records. What is 
destabilizing to the market in that?
    Mr. Powell. Well, I think we have had experience with 
structural separation. We would merely have to examine them and 
see what it took to do it effectively. I do not take a position 
whether the Congress should or should not do that, but I will 
say that I think that any suggestion that it is a light or easy 
thing to do I do not subscribe to. I think it would be a very 
difficult thing to do and it would be certainly some periods of 
years of working through it.
    That said, it may be in the judgment of the Congress the 
best option. My job is to say that, given that the agency will 
probably have to administer such change, that I think that they 
would involve a very substantial amount of effort and work and 
we will probably have a fairly unsettled environment for quite 
some period.
    Again, that is not to take away from the merits of the 
theory and whether in the long term that is the better answer 
for consumers, but just that it will be very difficult to do.
    Senator Hollings. That is your task and mine, on behalf of 
the public interest, is to unsettle the environment. We are not 
to stabilize it. We are supposed to unsettle it and get all the 
market forces of competition in play. What is easy is obviously 
to give these fines, because nobody cares. They write a little 
story about it or a statement is made, ``I am going to hurt you 
and hurt you hard.'' There is no way to hurt them by fines. You 
cannot hurt them.
    I know if I was on the board of directors I would go on 
back out to the club and have another drink.
    [Laughter.]
    Senator Hollings. I mean, come on. He has puffed and blowed 
and acted like he is doing something for Congress, but I mean, 
nothing has happened.
    Thank you, Mr. Chairman.
    The Chairman. Senator Rockefeller.
    Senator Rockefeller. Thank you, Mr. Chairman.
    Chairman Powell, I, as you know, am passionate about the E-
rate and I am not letting loose of this subject, even though I 
know Jean Carnahan has some very good questions on it. I feel 
equally passionately about the digital divide. I want to get to 
in a moment the statement that you made to Senator Brownback 
about when he was referring to broadband and small 
corporations, and you said if you are not on the right horse 
that will not make it, they will not make it.
    My point will be, I think, that also occurs to people and 
groups of people. I want you to comment on that in a minute.
    But very specifically, the whole 1996 Telecom Act worked 
out and what followed within the FCC with the Joint Board and 
the FCC on setting up the E-rate and making it work was an 
extraordinarily complex, painstaking, difficult process. There 
was a lot of going back and forth, and courts ruled this and 
that, and people said they were not going to sue and did. Now 
it has settled down and, as I indicated, it is $5 billion in 
search of $2.25 billion, one of the probably five great things 
that has happened in education in this century in my judgment.
    So you talked about this being higher than my pay grade, so 
to speak, and the whole question of does the FCC make changes 
in this. You say that your instruction needs to come from 
Congress, and I respect that very much.
    The President, however, wants to make some changes, or at 
least I believe he does, and I do not know where that stands at 
the present time. But one of those is, whereas the statute is 
very clear about what can be done and what cannot be done with 
the E-rate, what the money can be spent for, he has added on 
software, teacher training, things of this sort, which would 
clearly dilute the universal service fund if the FCC were to do 
that.
    So ``higher than my pay grade'' can refer to Congress, 
which confirms you, as I certainly plan to. But it also can 
relate to who appointed you in the first place, and that is 
another form of it. I think that you are deeply moral and very 
strong and very bright and very firm in your views, but I just 
want to get on record that you are going to, as Chairman, stick 
with the E-rate as a discount program.
    Mr. Powell. Absolutely, and I have no other alternative 
even if I was inclined, which I am not. ``Above my pay grade,'' 
I personally meant the President and the Congress. Unless it is 
written in a statute that instructs me to administer the 
differently than it is currently administered, there is no 
discretion on my part to make the kinds of changes that you are 
concerned about, whatever the merits of them are. Even if I 
personally agree with those changes as a citizen debating how 
the program should be, as a regulator and administrator of 
Section 254 and the provision of specific universal service for 
schools and libraries, it is unassailable.
    Senator Rockefeller. I respect that, but Senator Carnahan 
did not actually ask these specific questions and I just want 
to do it, as I will with those that follow. Also, ensuring that 
all groups continue to have fair and equal access to the E-
rate, including private and parochial schools, and libraries, 
as well as the public schools; you will support that?
    Mr. Powell. Sure, absolutely.
    Senator Rockefeller. Ensuring that the E-rate is 
predictable for the telecommunications companies that both 
contribute and collect from the universal service?
    Mr. Powell. Yes.
    Senator Rockefeller. The telecommunications folks have been 
very good partners with the E-rate and the demand for 
telecommunications and Internet is growing, partly because 
through all of these internal connections that are being set up 
we are building exactly the network that we hoped that we would 
and that creates more demand.
    Above all, I want to hear Chairman Powell say that he will 
protect the universal service fund and that, where teacher 
training is important and software is important and hardware is 
important and none of those are included in the statute, and so 
there is that problem, but that nevertheless is the nature of 
the universal service fund and what the money is spent on will 
not change.
    Mr. Powell. I do not see any reason to even consider 
changing them. They cover information services, Internet 
services, telecommunications services, and internal connection.
    Senator Rockefeller. It is all very clear, is it not?
    Mr. Powell. That is what we distribute and that is what, as 
far as I am concerned, we will continue to distribute.
    Senator Rockefeller. I respect and appreciate that and am 
greatly relieved by your answer, sir. The other is just a 
general question with respect to the point I raised about 
broadband access, because K through 12 is absolutely the 
essential building block, but in the State I come from, as we 
have discussed privately, only 36 percent of homes have 
computers, 28 percent have access to the Internet on those 
computers. That is a lot of computers that are not there, so if 
one is moving--if one assumes that what you learn in school is 
buttressed fourfold by what happens at home and then adds onto 
that the question of broadband and what broadband implies for 
data, video, and voice, that is a daunting prospect for rural 
areas, and hence the digital divide. I take this even farther.
    The Chairman. Senator Rockefeller, your time has expired.
    Senator Rockefeller. Then I would simply ask your comment, 
sir.
    Mr. Powell. Just generally about the importance of pursuing 
it in rural areas, I take it to be the question. Of course. The 
Telecom Act in its preamble talks about services for all 
Americans. That has always been understood and interpreted to 
try to aggressively pursue ubiquitous and affordable service.
    I think that the modifications in Section 254 that talk 
about an evolving level of service means we continually try to 
ensure that service is deployed broadly, including the areas 
that have been historically difficult. My only caveat is that 
we should be challenged to always look for creative ways to do 
it, innovative new ways to do it. Do not always assume that you 
have to do it the same way you did it before, but never lose 
sight of the sub-principles of ubiquity and affordability and 
pursue those pretty rigorously.
    I think that Congress set that vision out in Section 254 
pretty clearly and I think the Commission is on a course to 
continue it.
    Senator Rockefeller. Thank you, Mr. Chairman.
    The Chairman. Senator Wyden has an additional question, 
which is going to be brief.
    Senator Wyden. Thank you, Mr. Chairman, and it will.
    Mr. Powell, you said this morning that markets punish 
inefficiency, but that is not usually the case when it comes to 
allocating spectrum. As you know, the spectrum rules determine 
not just who can use it, but exactly what services they can use 
it for. So the incumbents sort of cling to these licenses like 
fleas to a dog and, in effect, they just hold themselves 
hostage in order to drive up the value of what they have.
    Now, the FCC has broad powers to change this and to put 
some real marketplace forces into allocating spectrum. I would 
like to ask you to just respond to whether you think that is 
something you would like to see, whether we ought to create 
trading rights, for example, in spectrum.
    I am working on legislation in this area, because I think 
we have got a mess on our hands and that is the beachfront 
property, and it is not right now responding to marketplace 
forces.
    Mr. Powell. If I understand your inquiry, I think I agree 
with you very much so. I think that if you read most economic 
literature about spectrum policy, economists are nearly 
unanimous in the idea that we do not create a sufficient amount 
of market incentive by allowing licenses to have greater 
flexibility in the alienability of licenses, mixed uses.
    Frankly, this is an area where the Commission has been 
steadily moving toward in many ways. We have created greater 
incentives for secondary markets. We increasingly issue 
licenses with much more flexibility as to what can be done with 
them and what cannot be done. We have started to be a little 
more ruthless in the return of spectrum when it is not being 
used by milestones and benchmarks in the satellite context. We 
certainly, with some blood on the floor, have fought for the 
return of C and F block licenses that went into bankruptcy.
    I think that there is a lot the government needs to be 
thinking about in terms of increased flexible use of spectrum 
and greater property-like rights, if you will. I do not mean 
that in the conservative ideological sense, but when we talk 
about not being able to keep up with Europe or the challenges 
of spectrum, part of the reason is the government has got to go 
through a thousand steps before it can even get spectrum back, 
then allocate it again, and we do not have the ability to let 
players in the marketplace. It ought to be more like a driver's 
license: Here is your license, here is what you cannot do for 
interference purposes, and then you can do almost whatever else 
you want to do, and let the market and consumers figure out 
what those highest and best uses are.
    Senator Wyden. That is a very constructive answer.
    The Chairman. Thank you, Senator Wyden, for your question.
    Thank you very much, Chairman Powell. We look forward to 
many visits with you before the Committee. As one of the 
members of the Committee said, we believe that the FCC is 
perhaps the most important and impactful bureaucracy in the 
Federal Government today, given the scope of your 
responsibilities and its effect on information technology, 
which is the basis of our economic future.
    We thank you for your testimony today. We will try to mark 
up your nomination next week at the markup and get you and the 
other Commissioners confirmed as rapidly as possible.
    Thank you very much.
    Mr. Powell. Thank you, Mr. Chairman.
    The Chairman. Our next panel is: Ms. Kathleen Abernathy, 
who is a Commissioner-designate of the Federal Communications 
Commission; Dr. Michael Copps; and Mr. Kevin Martin. Would you 
please come forward.
    I would like to welcome the witnesses today of our second 
panel and we would like to have our witnesses introduce any 
family members who are here with them today, and I will put the 
balance of my statement in the record.
    Ms. Abernathy.

        INTRODUCTORY REMARKS OF KATHLEEN Q. ABERNATHY, 
   COMMISSIONER-DESIGNATE, FEDERAL COMMUNICATIONS COMMISSION

    Ms. Abernathy. Thank you, Senator. It is a pleasure to be 
here and I would like to introduce two family members. I think 
my sister found her way back, and I know my husband, Charles 
Abernathy, is here with me today.
    The Chairman. Would you stand, please, Ms. Abernathy? Thank 
you. Welcome.
    Ms. Abernathy. We have known each other over 20 years. He 
has been an incredible support, particularly in the last 
several months as we have been going through this process.
    My sister, Marilyn Quinn, who is not back, is taking care 
of child care arrangements for me.
    Senator Rockefeller. You are a little hard to hear, Ms. 
Abernathy. Could you pull that a little bit closer, the mike?
    The Chairman. Well, your sister is welcome, too, and I 
understand her priorities. We welcome her and your husband.
    Ms. Abernathy. She is also a public servant. She is an FBI 
agent here in town.
    The Chairman. Wonderful. Thank you.
    Dr. Copps.

       INTRODUCTORY REMARKS OF MICHAEL J. COPPS, Ph.D., 
   COMMISSIONER-DESIGNATE, FEDERAL COMMUNICATIONS COMMISSION

    Dr. Copps. Thank you, Mr. Chairman. I have full 
representation here today. Let me introduce first of all my 
wife Beth, who is the managing partner of the Copps household.
    The Chairman. Stand as you are mentioned. Ms. Copps.
    Dr. Copps. She is also the mainstay of our family and works 
at Saint Mary's Church in Alexandria as church secretary.
    The Chairman. Welcome, Ms. Copps.
    Dr. Copps. We have five children. The eldest could not be 
here today. His name is Bobby and he is an attorney in Atlanta, 
Georgia.
    My eldest daughter, Betsy Von Hagen, is here. She is a 
reading teacher. She was Teacher of the Year at Queen of 
Apostles School here in suburban Virginia a year or two ago. 
Her husband, Richard Von Hagen, is also with us today. He is a 
school psychologist. They are going to present us shortly with 
our first grandchild, which we are very much looking forward 
to.
    Our son Michael is here. He is a recent graduate, last 
year, of James Madison University in Harrisonburg, Virginia, 
and he is a communications assistant with a national trade 
association, located in Alexandria.
    My youngest son Will is here. He got the day off, much to 
the consternation of his classmates from Gonzaga High School, 
where he is a freshman, honor student, tennis player. He is 
also the poet laureate of the Copps family.
    My youngest daughter, Claire, who is 13 years old, is a 
seventh grader at Saint Mary's Elementary School, and she is a 
pianist, an artist, and a basketball player, too.
    So I am very proud of all of them and they are really 
life's sweetest reward.
    The Chairman. Welcome to the entire Copps family. We are 
glad you are here at this occasion. We know you are very proud 
of Dr. Copps.
    Mr. Martin.

           INTRODUCTORY REMARKS OF KEVIN J. MARTIN, 
        COMMISSIONER-DESIGNATE, FEDERAL COMMUNICATIONS 
                           COMMISSION

    Mr. Martin. Thank you, Mr. Chairman. I would like to 
introduce my wife Cathy and thank her for her unwavering 
support and constant commitment through this process.
    I would like to introduce my father, who owns a small 
insurance company in North Carolina and has always tried to 
remind me to be wary of the burdens that government can place 
on small businesses.
    Finally, I would like to introduce my mother, who always 
tried to impart in me one of her greatest strengths, one I 
think this Committee will be particularly appreciative of, and 
that is the importance of talking a little bit less and 
listening a little bit more. I know that a lot of Commissioners 
have gotten themselves in trouble by not heeding that advice 
and, if confirmed, I will make sure to follow her wisdom.
    Thank you.
    The Chairman. Thank you again. Welcome to the Martin family 
as well.
    I believe that Senator Edwards would like to make a 
statement concerning Mr. Martin.
    Senator Edwards. Thank you, Mr. Chairman. Mr. Chairman, it 
is my pleasure to introduce Kevin Martin, who is a fellow North 
Carolinian from Waxall, and his parents. We are glad to have 
all of you and his wife here.
    He currently serves as Special Assistant to the President 
for Economic Policy, where he is responsible for coordinating 
telecommunications, technology, and other commerce-related 
policy. He is no stranger to the FCC. Before joining the 
Administration, he worked at the FCC as a legal adviser. He is 
a very good lawyer. He began his legal career at the law firm 
of Wiley, Rein & Fielding, after first spending a year as a 
clerk for Federal Court Judge Hoeveler--am I pronouncing it 
right, Kevin?--in Miami, Florida.
    He attended the University of North Carolina as an 
undergraduate and received a Master's Degree in public policy 
from Duke. He is a real North Carolinian, Mr. Chairman, 
because, even though he went to Harvard Law School, he wrote 
his law school thesis on legal and historical development of 
NASCAR.
    We are proud and happy to have you here, Kevin.
    Thank you, Mr. Chairman.
    The Chairman. Thank you very much. I now question your 
qualifications.
    [Laughter.]
    The Chairman. Senator Hollings, would you like to make----
    Senator Hollings. No. My previous introduction of Dr. 
Copps, let it appear in the record. We welcome him. The hour is 
late. Let us find out what questions we have got.
    The Chairman. Ms. Abernathy, we will begin with you. All 
three witnesses, your complete statements will be made part of 
the record.

  STATEMENT OF KATHLEEN Q. ABERNATHY, COMMISSIONER-DESIGNATE, 
               FEDERAL COMMUNICATIONS COMMISSION

    Ms. Abernathy. Mr. Chairman and members of this Committee: 
It is indeed a pleasure for me to have the opportunity to 
appear today before the members of the Senate Committee on 
Commerce, Science, and Transportation. I want to especially 
thank Senator Stevens for his kind and generous introduction 
today.
    I have had the pleasure of talking with many members of 
this Committee over the past few weeks and I want to thank all 
of you for taking the time to share your thoughts and concerns 
with me. At this time I would also like to take the opportunity 
to tell you how deeply honored I am to have been nominated by 
President Bush to serve as a Commissioner on the Federal 
Communications Commission. Having had the opportunity to work 
in various capacities in the Federal Government, I know that it 
is a genuine privilege to be in government service and I 
understand the importance and necessity of developing and 
administering sound public policy.
    If confirmed, it will also be a special privilege to work 
with Chairman Powell, my fellow Commissioners, and the highly 
dedicated and talented FCC staff. I think that Chairman Powell 
is a leader of unusual foresight and energy and it will be a 
distinct pleasure to serve with him at the Commission.
    If confirmed, I also look forward to working with Congress 
and this Committee in particular, with the understanding that 
fundamentally it is the Commission's responsibility to 
administer and implement communications policy as set forth by 
Congress. I understand this role and I welcome the opportunity 
to serve in this capacity.
    Despite the challenges facing the FCC, I think it is 
important to remember we have communications systems, 
industries, and choices that are second to none and that are in 
fact the envy of the world. I also recognize, however, that 
through its decisions and policies it is the responsibility of 
the FCC to help ensure that this excellence and world 
leadership continues.
    In this regard, communications policy stands at a critical 
juncture for consumers and for the economy. As Chairman Powell 
has said, the FCC is facing a unique challenge, in that 
virtually all communications industry segments are in the midst 
of revolution. They are attempting to adapt to the most 
fundamental changes in their history, and frequently this 
translates into FCC proceedings in which the Commission is 
called upon to balance many competing interests.
    These are not easy issues. I do not presume to think that 
they are. But if confirmed, I pledge to you to thoroughly weigh 
these critical issues as they come before the Commission, to 
deal with them fairly, and to be guided always by the 
principles and policies set forth by Congress in the 
Communications Act.
    With your support and approval, I look forward to the 
opportunity to serve the people of this country at the Federal 
Communications Commission, and I look forward to working with 
this Committee and with my colleagues at the FCC.
    Thank you again for the opportunity to be here today, and I 
look forward to responding to any questions you may have.
    [The prepared statement and biographical information of Ms. 
Abernathy follow:]

 Prepared Statement of Kathleen Q. Abernathy, Commissioner-Designate, 
                   Federal Communications Commission

    Mr. Chairman and Members of the Committee, it is indeed a pleasure 
for me to have the opportunity to appear today before the members of 
the Senate Committee on Commerce, Science and Transportation. I have 
had the pleasure of talking with many members of this Committee over 
the past few weeks and I want to thank all of you for taking the time 
to share your thoughts and concerns with me.
    I am deeply honored to have been nominated by President Bush to 
serve as a Commissioner on the Federal Communications Commission. 
Having had the opportunity to work in various capacities in the Federal 
government, I know that it is a genuine privilege to be in government 
service. My government experience has also led me to understand the 
importance and necessity of developing and administering sound public 
policy.
    If confirmed, it will be a special privilege as well to work with 
Chairman Powell--as well as my colleagues on the Commission--and with 
the highly dedicated and competent FCC staff I think that Chairman 
Powell is a leader of unusual foresight and energy--one who has charted 
a challenging agenda of promoting competition, deregulation, and 
internal reform--and it will be a distinct pleasure to serve with him 
at the Commission.
    If confirmed, I also look forward to working with the Congress--and 
this Committee in particular--with the understanding that fundamentally 
it is the Commission's responsibility to administer and implement 
communications policy as set forth by Congress. I understand this role 
and welcome the opportunity to serve in this capacity.
    Despite the challenges facing the FCC, I think it is important to 
remember that we have communications systems, communications 
industries, and communications choices that are second to none--that 
are, in fact, the envy of the world. This is true across the board--
from voice telecommunications to television, from two-way radio systems 
to satellite platforms. I also recognize, however, that through its 
decisions and policies, it is the responsibility of the FCC to help 
insure that this excellence and world leadership continues into the 
21st Century.
    In this regard, communications policy stands at a critical juncture 
for consumers and for the economy. As Chairman Powell has said, the FCC 
is facing a unique challenge in that virtually all communications 
industry segments are in the midst of revolution--attempting to adapt 
to the most fundamental changes in their history. And frequently this 
translates into FCC proceedings in which the Commission is called upon 
to balance many competing interests and industries.
    These are not easy issues--and I do not presume to think that they 
are. But if confirmed, I pledge to you to thoroughly weigh these 
critical issues as they come before the Commission, to deal with the 
myriad competing interests fairly, and to be guided always by the 
principles and policies set forth by Congress in the Communications 
Act.
    With your support and approval, I look forward to the opportunity 
to serve the people of this country at the Federal Communications 
Commission. And I look forward to working with the Committee and my 
colleagues at the FCC on the communications policies that vitally 
affect the lives of us all.
    Thank you, again, for the opportunity to be here today. I would be 
happy to answer any questions you might have.

                                 ______
                                 
                      A. BIOGRAPHICAL INFORMATION

    1. Name: Kathleen Quinn Abernathy (maiden name Kathleen Marie 
Quinn).
    2. Position to which nominated: Commissioner, Federal 
Communications Commission.
    3. Date of nomination: April 30, 2001.
    4. Address: Not released to the public. No office address.
    5. Date and place of birth: June 5, 1956, Louisville, Ky.
    6. Marital status: Married to Charles Fuzell Abernathy, June 30, 
1984.
    7. Names and ages of children: Julia Quinn Abernathy (5\1/2\ years 
old); Charles F. Abernathy, Jr. (31 years old).
    8. Education: Presentation Academy High School, Louisville, Ky., 9/
70 to 6/74, Diploma (1974); Marquette University, Milwaukee, Wisconsin, 
9/75 to 12/78, BS in Speech Pathology (5/82); Columbus School of Law, 
The Catholic University of America, 9/80 to 5/84, JD (5/84).
    9. Employment record: Secretary, Congressional Budget Office, 
Washington, DC, 9/80 to 12/81 (approximately); Reader and Researcher 
for Blind Attorney and Voting Rights Analyst, U.S. Department of 
Justice, Washington, DC, 1/82 to 5/83; Summer Associate, Semmes, Bowen 
& Semmes, Baltimore, MD., 6/83 to 8/83; Law Clerk and, after passing 
the bar exam, associate, Fletcher, Heald & Hildreth, Washington, DC, 9/
83 to 4/86; Associate, Kadison, Pfaelzer, Woodard, Quinn & Rossi, 
Washington, DC, 5/86 to 7/87; Associate, Thelen, Marrin, Johnson & 
Bridges, Washington, DC, 8/87 to 2/88; Director, Federal Affairs, 
COMSAT World Systems Division, Washington, DC, 3/88 to 6/90; Special 
Assistant to the General Counsel and subsequently legal advisor to 
Commissioner Sherrie Marshall and Legal Advisor to Chairman James H. 
Quello, Federal Communications Commission, Washington, DC, 7/90 to 8/
93; Vice President, Federal Regulatory, AirTouch Communications 
(acquired by Vodafone), Washington, DC, 8/93 to 3/98; Vice President, 
Regulatory Affairs, U.S. West Inc. (now known as Qwest Communications), 
Washington, DC, 3/98 to 3/99; Partner, Wilkinson Barker Knauer, LLP, 
Washington, DC, 7/99 to 3/00; Director, Government Affairs, BroadBand 
Office, Inc, 3/00 to 3/01.
    10. Government experience: None other than listed in #9.
    11. Business relationships: None other than employment listed in 
#9.
    12. Memberships: Former President and Executive Officer of the 
Federal Communications Bar Association (FCBA) and still a member 
Volunteer for the American Diabetes Association Member of the 
Washington DC Bar.
    13. Political affiliations and activities: (a) None. (b) None. (c) 
Bush for President 2000, $500. No others.
    14. Honors and awards: Meyer Scholarship recipient, Marquette 
University, 9/76 to 12/79; Member of Alpha Sigma Nu while attending 
Marquette University.
    15. Published writings: None.
    16. Speeches: None.
    17. Selection: (a) I have an extensive background in the field of 
telecommunications and a reputation as a consensus builder. (b) I have 
worked for international, wireless, and wireline telecommunications 
companies and I understand the critical role regulation plays in their 
growth and development. In addition, I have worked for both the large 
Bell Operating Companies and most recently for one of the smaller new 
competitors and that inside experience has increased my understanding 
of the competitive marketplace and the hurdles encountered by the new 
competitors.

                   B. FUTURE EMPLOYMENT RELATIONSHIPS

    1. Will you sever all connections with your present employers, 
business firms, business associations or business organizations if you 
are confirmed by the Senate? Yes.
    2. Do you have any plans, commitments or agreements to pursue 
outside employment, with or without compensation, during your service 
with the government? If so, explain. No.
    3. Do you have any plans, commitments or agreements after 
completing government service to resume employment, affiliation or 
practice with your previous employer, business firm, association or 
organization? No.
    4. Has anybody made a commitment to employ your services in any 
capacity after you leave government service? No.
    5. If confirmed, do you expect to serve out your full term or until 
the next Presidential election, whichever is applicable? Yes.

                   C. POTENTIAL CONFLICTS OF INTEREST

    1. Describe all financial arrangements, deferred compensation 
agreements, and other continuing dealings with business associates, 
clients or customers. None.
    2. Indicate any investments, obligations, liabilities, or other 
relationships which could involve potential conflicts of interest in 
the position to which you have been nominated. Affected investments 
include the following: Qwest Communications Common (formerly U.S. West 
Communications); Verizon Communications Common; Vodafone PLC Common; 
Dobson Communications Common; U.S. West Savings Plan/ESOP (Qwest Shares 
Fund) (Adm'd by METLIFE); U.S. West Savings Plan/ESOP (U.S. Asset 
Allocation Fund) (Adm'd by METLIFE); AirTouch Communications Retirement 
Plan 401K; Vodafone AirTouch Stock Fund; Zephion Communications 
Networks Common (not publicly traded); BroadBand Office Common (not 
publicly traded); BroadBand Office Preferred (not publicly traded). 
(Employment--see #3).
    3. Describe any business relationship, dealing, or financial 
transaction which you have had during the last 10 years, whether for 
yourself, on behalf of a client, of acting as an agent, that could in 
any way constitute or result in a possible conflict of interest in the 
position to which you have been nominated? Employment: BroadBand 
Office, Inc., 2900 Telestar Court, Falls Church, VA 20402--Director, 
Government Affairs; Wilkinson Barker & Knauer, 2300 N Street, N.W., 
Suite 700, Washington, DC 20037--Law Partner; U.S. West, Inc. (now 
known as Qwest Communications), 1020 19th Street, N.W., Suite 700, 
Washington DC 20036--Vice President, Federal Regulatory Affairs; 
AirTouch Communications, Inc., 1818 N Street, N.W., Washington, DC 
20036--Vice President, Federal Regulatory.
    4. Describe any activity during the past 10 years in which you have 
engaged for the purpose of directly or indirectly influencing the 
passage, defeat or modification of any legislation or affecting the 
administration and execution of law or public policy. See #3. I engaged 
in no lobbying before legislative bodies. I represented my employers in 
matters before the FCC. In addition, as a partner at Wilkinson Barker & 
Knauer LLP, I represented clients before the FCC. My clients were 
wireless companies, large and small wireline telecommunications 
companies, and international telecommunications companies.
    5. Explain how you will resolve any potential conflict of interest, 
including any that may be disclosed by your responses to the above 
items. (Please provide a copy of any trust or other agreements.) See 
#2. I will divest my holdings as outlined in a letter from the FCC or I 
will disqualify myself from any proceedings that may affect any 
companies whose stock I retain. In addition, I will not participate in 
any particular matter involving specific parties coming before me as a 
member of the Commission in which BroadBand Office, Inc. or Zephion 
Communications Networks is a party during a 1-year period ending on 
March 30, 2002.
    6. Do you agree to have written opinions provided to the Committee 
by the designated agency ethics officer of the agency to which you are 
nominated and by the Office of Government Ethics concerning potential 
conflicts of interest or any legal impediments to your serving in this 
position? Yes.

                            D. LEGAL MATTERS

    1. Have you ever been disciplined or cited for a breach of ethics 
for unprofessional conduct by, or been the subject of a compliant to 
any court, administrative agency, professional association, 
disciplinary committee, or other professional group? If so, provide 
details. No.
    2. Have you ever been investigated, arrested, charged or held by 
any Federal, State, or other law enforcement authority for violation of 
any Federal, State, county, or municipal law, regulation or ordinance, 
other than a minor traffic offense? If so, provide details. No.
    3. Have you or any business of which you are or were an officer 
ever been involved as a party in interest in an administrative agency 
proceeding or civil litigation? If so, provide details? No, (never an 
officer).
    4. Have you ever been convicted (including pleas of guilty or polo 
contendere) of any criminal violation other than a minor traffic 
offense? No.
    5. Please advise the Committee of any additional information, 
favorable or unfavorable, which you feel should be considered in 
connection with your nomination. None

                     E. RELATIONSHIP WITH COMMITTEE

    1. Will you ensure that your department/agency complies with 
deadlines set by congressional committees for information? Yes.
    2. Will you ensure that at your department/agency does whatever it 
can to protect congressional witnesses and whistle blowers from 
reprisal for their testimony and disclosures? Yes.
    3. Will you cooperate in providing the committee with requested 
witnesses, to include technical experts and career employees with 
firsthand knowledge of matters of interest to the committee? Yes.
    4. Please explain how you will review regulations issued by your 
department/agency, and work closely with Congress, to ensure that such 
regulations comply with the spirit of the laws passed by Congress. I 
plan to work closely with members of the House and Senate, in all ways 
permitted by law, to understand and appreciate their views and 
concerns.
    5. Describe your department/agency's current mission, major 
programs, and major operational objectives. The FCC's primary objective 
is to implement the mandates of the Communications Act. In addition, it 
strives to further competitive alternatives for consumers, ensure 
advanced telecommunications services are available to all Americans and 
manage the allocation of spectrum in a way that furthers the public 
interest.
    6. Are you willing to appear and testify before any duly 
constituted committee of the Congress on such occasions as you may be 
reasonably requested to do so? Yes.

                  F. GENERAL QUALIFICATIONS AND VIEWS

    1. How have your previous professional experience and education 
qualified you for the position for which you have been nominated? My 
experience working in the private sector for a number of different 
telecommunications companies combined with my prior government service 
at the FCC provides me with a unique perspective on the role and 
benefits of regulation. Most recently I worked for a startup company 
interested in deploying broadband service to small and medium sized 
businesses. In addition, I have worked for international, wireless and 
wireline telecommunications companies. This experience has increased my 
understanding of the competitive landscape and the effect regulation 
has on the marketplace.
    2. Why do you wish to serve in the position for which you have been 
nominated? I strongly believe in public service. I have been very 
fortunate to work with, and learn from, a number of talented and 
dedicated FCC Commissioners and staff. My nomination provides an 
incredible opportunity for me to utilize the experience I have gained 
over the last 20 years to implement the mandates of the Communications 
Act and, to the best of my abilities, serve the American people.
    3. What goals have you established for your first 2 years in this 
position, if confirmed? If confirmed, and under the guidance of 
Congress, I hope to provide quick, decisive answers to industry 
questions, thereby avoiding regulatory uncertainty, and to closely 
adhere to the mandates of the Telecommunications Act in an effort to 
enhance the credibility of the FCC in the eyes of Congress and the 
Courts.
    4. What skills do you believe you may be lacking which may be 
necessary to successfully carry out this position? What steps can be 
taken to obtain those skills? Although my work experience includes 
international, wireless and wireline experience, I have had very 
limited opportunity throughout my career to work with Congress. 
Therefore I intend to spend a significant amount of time getting to 
know the Members and their staff to build a relationship of trust and 
respect that will be critical as the FCC confronts many controversial, 
difficult issues during the next several years.
    5. Please discuss your philosophical views on the role of 
government. Include a discussion of when you believe the government 
should involve itself in the private sector, when should society's 
problems be left to the private sector, and what standards should be 
used to determine when a government program is no longer necessary. 
First, I recognize that the Commission is an independent agency that 
responds to, the direction of Congress. Therefore, my first frame of 
reference will be the statutory framework enacted by Congress to govern 
the actions of the FCC. To the extent this framework leaves room for 
interpretation, my past experience with both large and small 
telecommunications companies has led me to the following conclusions. 
Competitive markets generally benefit consumers. In addition, fewer 
rules allow companies to respond to consumer demand more quickly and 
cost effectively and this usually translates into more choices and 
lower prices. Nevertheless, I realize that every rule has its 
exceptions. There are certainly instances where competition is so 
limited that companies need not be responsive to consumer demands and 
in those instances the government must stand ready to respond to 
protect the public interest. There are also instances where the 
government has articulated broad public policy goals that can not be 
furthered absent direct government oversight. Therefore, while my 
general philosophy is deregulatory I appreciate the critical role that 
government plays in protecting consumer interests.
    6. In your own words, please describe the agency's current 
missions, major programs, and major operational objectives. In no 
particular order, I believe the FCC's current mission includes all of 
the following: (1) Promote competition in the telecommunications arena 
because that directly translates into reduced prices for consumers. (2) 
In cooperation with the Executive Branch, manage the allocation and 
assignment of spectrum. (3) Fulfill Congressional mandates as set forth 
in the Communications Act. (4) Provide business certainly for companies 
regulated by the FCC. (5) Ensure that the benefits of advanced 
telecommunications capabilities are ultimately available to all 
Americans.
    7. In reference to question No. 6, what forces are likely to result 
in changes to the mission of this agency over the coming 5 years? The 
FCC's core mission will change only to the extent that Congress 
modifies the Communications Act. Nonetheless, the Commission will be 
called upon to adapt its discretionary regulations to account for 
changes in technology and in the marketplace. In this regard, the FCC's 
mission will not only be to promulgate sensible regulation, but also to 
enforce vigorously those mandates.
    8. In further reference to question No. 6, what are the likely 
outside forces which may prevent the agency from accomplishing its 
mission? What do you believe to be the top three challenges facing the 
department/agency and why? I am not aware of any outside forces which 
may prevent the agency from accomplishing its statutorily mandated 
mission.
    Three key challenges facing the Agency are: (1) keeping pace with 
the rapidly changing state of the technology to ensure that the FCC's 
regulations are appropriate and effective; (2) ensuring that the 
benefits of advanced telecommunications services are available to all 
Americans, including those in rural areas; and (3) developing a 
spectrum management policy that maximizes the public interest.
    9. In further reference to question No. 6, what factors in your 
opinion have kept the department/agency from achieving its missions 
over the past several years? In some instances the judicial review 
process has led to differing or inconsistent interpretations of the 
Communications Act and this has sometimes delayed the FCC as it 
attempts to move forward to implement various important policy 
objectives.
    10. Who are the stakeholders in the work of this agency? The 
primary stakeholders are consumers. In addition, Congress, regulated 
companies, and trade associations also have an immediate interest in 
the work of the FCC.
    11. What is the proper relationship between your position, if 
confirmed, and the stakeholders identified in question No. 10? I 
believe the FCC has an obligation to work cooperatively with all 
stakeholders and to listen attentively and to act responsively to their 
concerns, consistent with the Act. Procedurally, this requires the FCC 
to act in a prompt and fair way to resolve stakeholder concerns. 
Substantively, it requires the agency to give each stakeholder an 
opportunity to be fully heard. If confirmed, I hope to reach out to all 
the stakeholders to improve the information available to the FCC in 
assessing the proper course of action.
    12. The Chief Financial Officers Act requires all government 
departments and agencies to develop sound financial management 
practices similar to those practiced in the private sector. (a) What do 
you believe are your responsibilities, if confirmed, to ensure that 
your agency has proper management and accounting controls? I believe I 
should work closely with the Chairman, my fellow Commissioners and the 
staff to review those controls and ensure they are effective. (b) What 
experience do you have in managing a large organization? My prior 
experience in private industry and as President of the Federal 
Communications Bar Association has provided me with a unique 
opportunity to manage people and budgets.
    13. The Government Performance and Results Act requires all 
government departments and agencies to identify measurable performance 
goals and to report to Congress on their success in achieving these 
goals. (a) Please discuss what you believe to be the benefits of 
identifying performance goals and reporting on your progress in 
achieving those goals. During my employment in the private sector I 
have seen performance goals utilized by employees and supervisors to 
measure current efforts against a concrete list of goals. This constant 
evaluation process results in a more focused, directed organizational 
unit. (b) What steps should Congress consider taking when an agency 
fails to achieve its performance goals? Should these steps include the 
elimination, privatization, downsizing or consolidation of departments 
and/or programs? I would not presume to tell Congress how it should 
respond to such a failure. Clearly all of the above remedial options 
are available. (c) What performance goals do you believe should be 
applicable to your personal performance, if confirmed? I should be 
evaluated based on whether I am responsive to the concerns of Congress 
and consumers and whether I keep my commitment to provide regulatory 
certainty for industry.
    14. Please describe your philosophy of supervisor/employee 
relationships. Generally, what supervisory model do you follow? Have 
any employee complaints been brought against you? As a supervisor, I 
attempt to hire the most qualified people available. I then set the 
broad philosophy and goals of my organization and allow the employees 
significant freedom in designing a plan to achieve our goals. No 
employee complaints have been brought against me.
    15. Describe your working relationship, if any, with the Congress. 
Does your professional experience include working with committees of 
Congress? If yes, please describe. I look forward to building a 
productive and close working relationship with Congress.
    16. Please explain what you believe to be the proper relationship 
between yourself, if confirmed, and the Inspector General of your 
department/agency. The Inspector General serves a vital role in 
ensuring the integrity of the Commission. Therefore, if confirmed, I 
pledge to give my full support and cooperation to the Inspector General 
to ensure that he has the unfettered authority and ability to fulfill 
his obligations.
    17. Please explain how you will work with this Committee and other 
stakeholders to ensure that regulations issued by your department/
agency comply with the spirit of the laws passed by Congress. The 
primary mission of the FCC is to execute the Communications Act as 
written by Congress. Thus, my primary responsibility is to ensure that 
the FCC's regulations adhere to the letter and spirit of the Act. In 
advancing this goal, and if confirmed, I plan to work closely with 
members of the House and Senate, in all ways permitted by law, to 
understand and appreciate their views and concerns. I look forward to 
an open and constructive dialog on the important communications issues 
facing the nation. Similarly, as stated previously, I fully intend to 
work cooperatively with all interested parties to ensure that their 
views are fully considered in the policymaking process.
    18. In the areas under the department/agency's jurisdiction, what 
legislative action(s) should Congress consider as priorities? Please 
state your personal views. I do not believe FCC Commissioners should be 
advocates for specific changes in the law. Rather, I believe my role 
would be to execute the laws as written. To the extent that Congress 
seeks my view on pending legislation, in my role as a Commissioner at 
the FCC, I would be more than willing to assist Congress in any way it 
deems helpful.
    19. Within your area of control, will you pledge to develop and 
implement a system that allocates discretionary spending based on 
national priorities determined in an open fashion on a set of 
established criteria? If not, please state why. If yes, please state 
what steps you intend to take and a timeframe for their implementation. 
Not applicable.

    The Chairman. Thank you very much.
    Dr. Copps.

 STATEMENT OF MICHAEL J. COPPS, Ph.D., COMMISSIONER-DESIGNATE, 
               FEDERAL COMMUNICATIONS COMMISSION

    Dr. Copps. Mr. Chairman, Senator Hollings, Senator 
Rockefeller: Thank you very much for granting us this hearing 
so soon after our nominations came up. I want to thank all of 
you and all the many Senators on the Committee with whom I had 
the pleasure of meeting over the past few weeks. These 
discussions have been just tremendously invaluable to me in 
learning more about your priorities and about the many issues 
which, if confirmed, I will be grappling with at the 
Commission, and I look forward to many more such meetings.
    Permit me a moment to thank my mentor and my friend, 
Senator Hollings, for his warm and generous introduction. I do 
not deserve all of those accolades, but I happily accept them 
anyhow. My formative years in Washington, in many ways the best 
years, were working with Senator Hollings from 1970 to 1985. I 
am enormously grateful to him, not only for the support he has 
given me, but for the knowledge and wisdom that he has 
imparted, the experiences he shared, and the lessons he taught.
    When I think of public service at its best, I think of 
Senator Hollings and the intelligence and the commitment he has 
brought to his long and productive service to the people of 
South Carolina and to the Nation. It is not only his tremendous 
record of accomplishment that I admire, but equally I admire 
the respect in which he holds public service and the effort he 
has made to bring credibility and the restoration of pride to 
the honorable calling that is public service.
    I could never find the words to begin to express the 
admiration and the respect and the appreciation that I feel for 
him.
    Mr. Chairman, my 15 years working here in the Senate 
imparted a deep and lasting loyalty to the Legislative Branch 
of our government. So when I say to you how much I look forward 
to working with you and your colleagues if confirmed, I am 
saying something that comes not just from my brain, but comes 
from my bones. I cannot imagine being effective in this job 
without having a close and an ongoing and a cooperative 
relationship with each of you, this Committee, and your 
congressional colleagues.
    The FCC is the creation of Congress. Its mission is to 
carry out the responsibilities conferred upon it by the 
Congress. It is always politic to talk cooperation, I know 
that, but I just do not believe that this country can 
accomplish what it needs to accomplish in communications or in 
anything else without this kind of open communication. I have 
worked to build close relationships with Congress in every 
capacity I have served in this city and I look forward, if 
confirmed, to implementing the laws the Congress has passed 
with just as thorough an understanding of congressional intent 
as I can possibly muster.
    My pledge to you, to my fellow Commissioners, to the entire 
FCC team, to telecom's industries, telecom's workers, and all 
of telecom's many stakeholders is to work tirelessly and 
inclusively and with the best judgment I can garner to get the 
job done. I want to help bring our people, and I mean all of 
our people, the best, the most accessible, and the most cost-
effective telecommunications system in the world. Each and 
every citizen of this great country should have easy access to 
the wonders of telecommunications. I would hope that at the end 
of my term, if I am lucky enough to serve, that people will say 
that I helped move the ball downfield toward that goal.
    Mr. Chairman, I appreciate your including the rest of my 
remarks in the record and with that I will conclude my 
statement.
    [The prepared statement and biographical information of Dr. 
Copps follow:]

Prepared Statement of Michael J. Copps, Ph.D., Commissioner-Designate, 
                   Federal Communications Commission

    Mr. Chairman, Senator Hollings, Members of the Committee, thank you 
for granting us this hearing so soon after our nominations. We know how 
crowded the Committee's docket is, and we appreciate your prompt 
attention in bringing us together. Thank you also to the many Senators 
with whom I have been privileged to meet over the past few weeks since 
my nomination by President Bush. These discussions have been invaluable 
to me in learning more about your priorities and about the many issues 
with which, if confirmed, I will be grappling at the Commission. I look 
forward to many more such meetings with each of you and your fine 
staffs.
    Permit me a moment to thank my mentor and my friend, Senator 
Hollings, for his warm and generous introduction. The formative years 
of my career in Washington, and in so many ways the best years, came in 
working with Senator Hollings from 1970 to 1985, and I am enormously 
grateful to him not only for the support he has given me, but for the 
knowledge and wisdom that he imparted, the experiences he shared and 
the lessons he taught.
    When I think of public service at its best, I think of Senator 
Hollings and the intelligence and commitment he has brought to his long 
and productive service to the people of South Carolina and the Nation. 
But it is not only his tremendous record of accomplishment that I 
admire. Equally, I admire the respect in which he holds public service 
and the effort he has made to bring credibility and the restoration of 
pride to the honorable calling that is public service. I could never 
find the words to express the admiration and the appreciation that I 
feel for him.
    Mr. Chairman, my 15 years working here in the Senate imparted a 
deep and lasting loyalty to the Legislative Branch of our government, 
so when I say to you how much I look forward to working with you and 
your colleagues if confirmed, I am saying something that comes not just 
from my brain, but from my bones. I cannot imagine being effective in 
this job without having a close, ongoing and cooperative relationship 
with each of you, this Committee and your Congressional colleagues. The 
FCC is the creation of Congress whose mission is to carry out the 
responsibilities that have been conferred upon it legislatively. It's 
always politic to talk cooperation, I know, but I just don't believe 
this country can accomplish what it needs to accomplish, in 
telecommunications or anything else, without this kind of 
communication. I have worked to build such relationships with Congress 
in every capacity I have served in this city. I look forward, if 
confirmed, to implementing the laws Congress has passed, with as 
thorough an understanding of Congressional intent as I can muster.
    Mr. Chairman, I am humbled at this nomination by the President and 
the support I have received from so many Senators. And I am enormously 
excited at the possibility of serving as Commissioner. To be an active 
participant in the deliberations of the FCC as the telecommunications 
revolution transforms our lives and remakes our world is a privilege 
few are given. I believe that in telecom, we haven't seen anything yet. 
I believe that telecommunications will transform this nation of ours 
more in the next 50 years than it did over the past 50 remarkable 
years. We will work differently, learn differently, play differently, 
perhaps even govern ourselves differently, because of the 
transformative power of telecommunications.
    I know that many of the issues presently before the Commission are 
highly contentious. If they were easily resolved, they would have been 
resolved already. And who knows what new and presently unforeseen 
issues we will be dealing with just a year or two hence? But I'm an 
optimist. (Some have told me I will need this sense of optimism if I 
make it to the Commission!) I believe that we can do a better job of 
working together, industry and government and all the many other 
stakeholders in the Communications Revolution, to make sure that our 
nation and our people continue to lead and prosper from this exciting 
revolution. I enjoy bringing people together, working with 
stakeholders, and, together, finding workable solutions for tough 
problems. This is what I focused on during my eight years at the 
Department of Commerce and it is what I would hope to focus on if I am 
confirmed for the Federal Communications Commission.
    I am pleased to be getting to know my fellow Commissioners-
designate, Kathleen Abernathy and Kevin Martin. and I know we all look 
forward to working with Chairman Powell, Commissioner Tristani and the 
excellent team at the FCC to help turn our national vision, as 
enunciated by Congress. into reality. My pledge to you, to them, to 
telecom industries and telecom workers, and to all of telecom's 
stakeholders, is to work tirelessly and inclusively and with the best 
judgment I can garner to get this job done. I want to help bring to 
ourpeople--and I mean all our people--the best, most accessible and 
cost-effective telecommunications system in the world. Each and every 
citizen of this great country should have easy access to the wonders of 
telecommunications, and I would hope that at the end of my term, if I 
am lucky enough to serve, people will say that I helped move the ball 
downfield toward that goal.
    I value, and I enjoy, public service. As you Senators know better 
than I do, it is a demanding life. And upon no one do the demands fall 
more heavily than the members of one's own family. I am many times 
blessed in this regard, and very grateful to each member of my family 
for the support and patience and encouragement I have received over the 
years. My wife Beth, who I talked into marriage in 1970 only after 
assuring her we were moving to Washington for only a couple of years, 
is my nominee for the world's best partner, best friend, and best mom, 
too. We are the proud parents of five children, ranging in age from 29 
to 13, and most of them are here with us today. They are their parents' 
pride and life's sweetest reward.
    Mr. Chairman, this concludes my brief statement. Thank you very 
much.

                                 ______
                                 

                      A. BIOGRAPHICAL INFORMATION

    1. Name: Michael Joseph Copps.
    2. Position to which nominated: Commissioner, Federal 
Communications Commission.
    3. Date of nomination: May 1, 2001.
    4. Address: Not released to the public.
    5. Date and place of birth: April 23, 1940 in Milwaukee, Wisconsin.
    6. Marital status: Married to the former Elizabeth Catherine 
Miller.
    7. Names and ages of children: Robert Edmund Copps, 29; Elizabeth 
Copps Von Hagen, 26; Michael Albert Copps, 22; William Thomas Copps, 
15; Claire Louise Copps, 13.
    8. Education: University of North Carolina, Chapel Hill, NC., 1963-
1967, Ph.D.; Wofford College, Spartanburg, SC., 1959-1963, BA; St. 
Petersburg Jr. College, St. Petersburg, FL, 1959; Northeast High 
School, St. Petersburg, FL 1958-1959, Diploma; Oconomowoc High School, 
Oconomowoc, WI, 1954-1958.
    9. Employment record: 1998-2001: Assistant Secretary of Commerce 
for Trade Development, U.S. Department of Commerce, Washington, DC; 
1993-1998: Deputy Assistant Secretary of Commerce for Basic Industries, 
U.S. Department of Commerce, Washington, DC; 1989-1993: Senior Vice 
President for Legislative Affairs, American Meat Institute, Arlington, 
VA; Dec. 1988-Jan. 1989: Manuscript Editor, The Whalen Company, 
Washington, DC; 1985-1988: Director of Government Affairs, Collins & 
Aikman Corporation, Washington, DC; 1974-1985: Administrative Assistant 
to U.S. Senator Ernest F. Hollings, U.S. Senate, Washington, DC; 1970-
1974: Special Assistant to U.S. Senator Ernest F. Hollings, U.S. 
Senate, Washington, DC.; 1967-1970: Assistant Professor of History, 
Loyola University of the South, New Orleans, LA.
    10. Government Experience: Member, Agricultural Trade Advisory 
Committee, USDA/USTR-cleared private sector advisor, 1992-1993.
    11. Business relationships: Institute for Innovation, Creativity & 
Capital, University of Texas (Austin, TX). Served as ``Washington 
Fellow, unpaid advisor, 1989-1993; University of North Carolina (Chapel 
Hill, NC), Graduate School Advisory Board. Served as unpaid advisor on 
ways to enhance graduate education at UNC., 1997-1998.
    12. Memberships: Business-Government Relations Council, Washington, 
DC, 1985-1993; Association of Former Administrative Assistants, U.S. 
Senate, Washington, DC, 1985-Present; Gonzaga College High School 
Fathers Club, Washington, DC, 2000-Present; St. Mary's Elementary 
School Home & School Association, Alexandria, VA, 1977-Present; Meat 
Industry Trade Policy Council, Washington, DC, 1989-1993. Served 1 year 
as unpaid coordinator of this multi-trade association industry advisory 
group; U.S Meat Export Federation, Denver, CO, 1989-1993. Served 2 
years as unpaid ex officio member of Board of Directors; Capitol View 
Club (Hyatt Regency Hotel, Washington, DC) 1986-1993. Private dining 
club; Little Hunting Park, Alexandria, VA, 1980's-Present. Nearby 
neighborhood swimming pool and tennis courts; American Association of 
Retired Persons, 1995-Present; Phi Beta Kappa, inducted in 1963.
    13. Political affiliations & and activities: (a) Party offices 
held: None. (b) Offices held and services rendered to political parties 
and election committees during last 10 years: No offices held. 
Volunteered brief personal leave time (2 days) for 1998 U.S. Senate 
election in South Carolina in behalf of U.S. Senator Ernest F. 
Hollings. Volunteered brief personal leave time (4 days) in behalf of 
Democratic slate in 2000 Federal election campaign in Milwaukee, WI. 
(c) Political contributions of $500 or more during the past 10 years: 
DNC Federal Account, $1000. October, 2000 Hollings for Senate 
Committee, $1000. 1998 Hollings for Senate Committee, $1000, 1992.
    14. Honors and Awards: Phi Beta Kappa; Pi Gamma Mu (national 
scholastic fraternity); Secretary of Commerce citation for coordinating 
record-breaking Department-wide charitable Combined Federal Campaign 
(CFC) in 1997. Various U.S. Senate and Department of Commerce citations 
for service.
    15. Published writings: January, 1982 op-ed in the Washington Post 
entitled ``Defending FDR's Legacy.''
    16. Speeches: As both Deputy Assistant Secretary and Assistant 
Secretary of Commerce, I delivered numerous speeches on international 
trade. I do not have copies of most of these, but the general format 
was similar. I attach a December, 2000, speech focusing on trade and 
information technologies which is relevant to the position for which I 
am being nominated. I attach also copy of a speech I presented shortly 
after leaving the Department of Commerce earlier this year and 
presenting an overview of our work.
    17. Selection: (a) Do you know why you were chosen for this 
nomination by the President?
    I believe I was selected because those who supported my nomination 
believed that I could make a meaningful contribution to the work of the 
Federal Communications Commission.
    (b) What do you believe in your background or employment experience 
affirmatively qualifies you for this particular appointment?
    I served most recently as Assistant Secretary of Commerce for Trade 
Development, where I was responsible for promoting U.S. exports, with 
significant emphasis on telecommunications, information technologies 
and e-commerce. While there, I oversaw a reorganization of Trade 
Development to include creation of a new Deputy Assistant Secretarial 
Office of Information Technologies Industries, including Telecom, IT 
and e-commerce divisions. I also, advocated internationally for the 
creation of independent telecommunications regulatory regimes, 
transparent legal and regulatory regimes for telecom and IT, and 
investor-friendly commercial climates.
    Additionally, I have over 30 years of rather unique Washington 
experience, having served as a chief of staff in the U.S. Senate for 
over a dozen years and as a senior Department of Commerce official for 
8 years. My experience also includes senior executive positions with a 
Fortune 500 company and a major national trade association. I believe I 
understand government and how Washington works, and I have dedicated 
myself in each of these positions to developing creative public sector-
private sector partnerships to achieve positive bottom-line results.

                   B. FUTURE EMPLOYMENT RELATIONSHIPS

    1. Will you sever all connections with your present employers, 
business rums, business associations or business organizations if you 
are confirmed by the Senate? I have no such connections to sever as of 
April 2001.
    2. Do you have any plans, commitments or agreements to pursue 
outside employment, with or without compensation, during your service 
with the government? If so, explain. No.
    3. Do you have any plans, commitments or agreements after 
completing government service to resume employment, affiliation or 
practice with your previous employer, business firm, association or 
organization? No.
    4. Has anybody made a commitment to employ your services in any 
capacity after you leave government service? No.
    5. If confirmed, do you expect to serve out your full term or until 
the neat Presidential election, whichever is applicable? Yes.

                   C. POTENTIAL CONFLICTS OF INTEREST

    1. Describe all financial arrangements, deferred compensation 
agreements, and other continuing dealings with business associates, 
clients or customers. None.
    2. Indicate any investments, obligations, liabilities, or other 
relationships which could involve potential conflicts of interest in 
the position to which you have been nominated. None.
    3. Describe any business relationship, dealing, or financial 
transaction which you have had during the last 10 years, whether for 
yourself, on behalf of a client, or acting as an agent, that could in 
any way constitute or result in a possible conflict of interest in the 
position to which you have been nominated. None.
    4. Describe any activity during the past 10 years in which you have 
engaged for the purpose of directly or indirectly influencing the 
passage, defeat or modification of any legislation or affecting the 
administration and execution of law or public policy.
    As Assistant Secretary of Commerce, I testified on three occasions 
before Congress. In 1999, I testified twice on our Department; of 
Commerce efforts to confront and combat the Y2K problem, appearing both 
times before the Special Senate Committee established for this issue 
and chaired by Senator Robert Bennett. Also in 1999, I testified before 
the House Committee on Government Reform's Criminal Justice, Drug 
Policy and Human Resources Subcommittee, chaired by Congressman John 
Mica, to explain the operation of our International Trade 
Administration's trade promotion programs. More informally, during each 
year that I was at the Commerce Department, I met with staff of the 
House and Senate Appropriations Committees to answer questions relative 
to our budget requests. I also met informally with staffs of the 
various Committees with authorization oversight of the International 
Trade Administration.
    As an employee of the American Meat Institute, I testified on April 
9, 1992, before the Subcommittee on Agricultural Research and General 
Legislation of the U.S. Senate Committee on Agriculture, Nutrition, and 
Forestry to discuss a U.S.-European Union trade dispute involving meat 
products.
    5. Explain how you will resolve any potential conflict of interest, 
including any that may be disclosed by your responses to the above 
items. (Please provide a copy of any trust or other agreements.) I have 
no such conflicts nor do I envision any. Should any develop, however, I 
would immediately take whatever steps are required to eliminate the 
conflict as well as the appearance of any conflict of interest.
    6. Do you agree to have written opinions provided to the Committee 
by the designated agency ethics officer of the agency to which you are 
nominated and by the Office of Government Ethics concerning potential 
conflicts on interest or any legal impediments to your serving in this 
position? Yes.

                            D. LEGAL MATTERS

    1. Have you ever been disciplined or cited for a breach of ethics 
for unprofessional conduct by, or been the subject of a complaint to 
any court, administrative agency, professional association, 
disciplinary committee, or other professional group? If so, provide 
details. No, not to my knowledge.
    2. Have you ever been investigated, arrested, charged or held by 
any Federal, State, or other law enforcement authority for violation of 
any Federal, State, county, or municipal law, regulation or ordinance, 
other than a minor traffic offense? If so, provide details. No.
    3. Have you or any business of which you are or were an officer 
ever been involved as a party in interest in an administrative agency 
proceeding or civil litigation? If so, provide details. No.
    4. Have you ever been convicted (including pleas of guilty or nolo 
contendere) of any criminal violation other than a minor traffic 
offense? No.
    5. Please advise the Committee of any additional information, 
favorable or unfavorable, which you feel should be considered in 
connection with your nomination. I have nothing material to add to the 
information already submitted.

                     E. RELATIONSHIP WTTH COMMITTEE

    1. Will you ensure that your department/agency complies with 
deadlines set by congressional committees for information. Yes, insofar 
as the relevant decisionmaking authority resides in the position to 
which I have been nominated.
    2. Will you ensure that your department/agency does whatever it can 
to protect congressional witnesses and whistle blowers from reprisal 
for their testimony and disclosures? Yes, insofar as relevant 
decisionmaking authority resides in the position to which I have been 
nominated.
    3. Will you cooperate in providing the committee with requested 
witnesses, to include technical experts and career employees with 
firsthand knowledge of matters of interest to the committee? Yes.
    4. Please explain how you will review regulations issued by your 
department/agency, and work closely with Congress, to ensure that such 
regulations comply with the spirit of the laws passed by Congress. 
Before such regulations are issued, I will have subjected them, 
wherever feasible, to rigorous discussion among the various 
stakeholders who stand to be affected by them. I will also have 
discussed them thoroughly with the professionals working at the 
Commission, and will have sought the advice and counsel of my fellow 
commissiopers. I will have looked at them cognizant of the laws 
Congress has passed, in an effort to make sure that the proposed 
regulations track the letter and the spirit of said statutes, and will 
have sought the direct advice and counsel of Members of Congress and/or 
their professional staffs as appropriate.
    5. Describe your department/agency's current mission, major 
programs, and major operational objectives. Since I have not served at 
the Federal Communications Commission, I assume the Committee does not 
wish an extensive description of current agency programs from my 
perspective. Very briefly, I view the FCC as an independent regulatory 
agency carrying out critically important responsibilities and 
priorities conferred upon it by Congress. The Commission confronts the 
ongoing challenge of helping to expedite to the American people--all of 
them--the best, most efficient and cost-effective telecommunications 
service in the world. It should work toward this objective in 
continuing dialog with all its many stakeholders. The Commission has 
seven operating bureaus and ten offices each concerned with important 
aspects of the policies, laws and regulations governing interstate and 
international telecommunications activities. The range of FCC programs 
is wide because the industry with which the Commission works is so vast 
and so integral to the future progress and prosperity of the American 
people. The Commission's specific responsibilities include, inter alia, 
spectrum allocation; the processing of applications for licenses, 
approvals and various other filings; the formulation and implementation 
of rules to fiuther industry competition and consumer protection; 
enforcement; conducting investigations; dealing with stakeholder 
complaints; education and outreach to stakeholders; and the development 
and implementation of numerous regulatory and other programs. The 
Commission has a number of current specific initiatives, including, 
among many others, innovative programs for the delivery of 
telecommunications services to under-served populations and regions, 3G 
wireless, broadband access, disability rights, enhanced 911, and 
children's television. The Commission is on the front-line on many of 
the most exciting opportunities and challenges confronting our country 
today.
    6. Are you willing to appear and testify before any duly 
constituted committee of the Congress on such occasions as you may be 
reasonably requested to do so? Yes.

                  F. GENERAL QUALIFICATIONS AND VIEWS

    1. How have your previous professional experience and education 
qualified you for the position for which you have been nominated? My 
professional experience has given me a 30-year long involvement in 
government affairs, including service in the Legislative and executive 
branches, and in the private sector working for both a major company 
and a national trade association. I believe that I have a background 
both broad and deep in how government policy and programs are shaped 
and implemented. In addition, I have the benefit of knowing, and having 
worked with, many people in both the public and private sectors in this 
city, and throughout the country, who are intimately involved with 
public policy formulation and execution. As to my education, it 
conferred a sense of history, an appreciation for the accomplishments 
of this great country, and a profound dedication to the belief that 
unless we as Americans progress together, we progress not at all. These 
convictions would accompany me to the Federal Communications 
Commission.
    2. Why do you wish to serve in the position for which you have been 
nominated? I wish to serve in this position because our firture 
progress and prosperity as a people and as a Nation depend so heavily 
on successfully meeting the telecommunications challenges confronting 
us today. Telecommunications will transform the Nation more in the next 
50 years than it did over the past 50 remarkable years. I believe that 
my experience, judgment and integrity will enable me to make a 
meaningful contribution to meeting the nation's telecom challenges.
    3. What goals have you established for your first 2 years in this 
position, if confirmed? My goal would be to assist, both pragmatically 
and imaginatively, in the implementation of the telecommunications 
legislation passed by Congress and enacted into law. The next few years 
will be a watershed in our nation's telecommunications development and 
in our public policy toward that development. Communications 
technologies are converging in new and undreamed of ways, presenting 
new challenges to regulators as well as to policymakers: Never before 
have so many citizens been stakeholders in an industry, not just as 
investors but, more importantly, as users and consumers. I believe the 
Commission must enhance its already impressive efforts at stakeholder 
input and educational outreach. I want to be heavily involved in this 
effort. Similarly, our success here at home depends upon progress in 
the international arena. I want to use the experience I have had in the 
international arena over the past decade to help build a more effective 
global climate for telecommunications. Finally, I believe the FCC 
itself must be constantly adapting itself--its organization and its 
people--to new technologies, new stakeholders and new opportunities. 
FCC Chairman Powell has expressed his desire to address this challenge 
and I look forward to working with him in this important endeavor.
    4. What skills do you believe you may be lacking which may be 
necessary to successfully carry out this position? What steps can be 
taken to obtain those skills? Many skills apply to mastery of so 
complex an industry. No one individual could possibly master them all: 
regulator, student of the law, engineer, technology maven, student of 
government, student of entrepreneurship, educator, public relations 
specialist, consumer affairs specialist, and even a visionary, I will 
be looking, early on, for intensive exposure to the specifics of 
telecommunications law and its detailed legislative history and to 
enhancing my knowledge base on evolving telecommunications 
technologies. I am confident that I will be able to amass needed 
information from the skilled professionals who populate the FCC and 
externally from among the many stakeholders involved in 
telecommunications programs.
    5. Please discuss your philosophical views on the role of 
government. Include a discussion of when you believe the government 
should involve itself in the private sector, when should society's 
problems be left to the private sector, and what standards should be 
used to determine when a government program is no longer necessary. I 
would begin with the old adage that government exists to accomplish 
those things for our citizens which the people individually are not 
able to accomplish. Our government was founded over 200 years ago to 
establish justice, insure domestic tranquility, provide for the common 
defense, promote the general welfare, and secure the blessings of 
liberty. The people's representatives establish the policy and enact 
the laws to achieve these great public purposes, all the while 
loosening those restraints which for so many centuries in so many lands 
hobbled the creative energies and freedoms of the people.
    Through the years, and against the backdrop of an historically 
unique American consensus, competing philosophies have tugged this way 
and that way on the question of when it is proper and productive for 
the government to involve itself in the nation's development. These 
issues are generally sorted out and hopefully resolved at the ballot 
box or in the assemblies of the people's representatives, so that 
Federal regulators and government bureaucracies view the process from a 
distance.
    We in the United States pride ourselves on individual freedoms and 
unleashing the spirit of enterprise. There are times, however, when we 
invoke government to confront a major challenge, and sometimes these 
challenges are economic and developmental. Government participated in, 
and provided incentives for, many of the great economic enterprises in 
our nation's history. Incentives for land ownership, river and harbor 
improvements, the construction of roads and turnpikes, the building of 
the great transcontinental railroads, are some of the major enterprises 
that come quickly to mind. Similarly, government has involved itself 
historically in providing the legal underpinnings for incorporation, 
and in designing tax and tariff policies to promote America's economic 
success. Many laws had to be passed for all this to happen, and the 
same number of laws had to be implemented., sometimes mandating varying 
levels of regulatory oversight. In the contemporary age, 
telecommunications has become a dominant economic and commercial 
driver, involving the creative energies of millions of individuals and 
the active involvement of the people's representatives, too. Striking 
just the right balance is the continuing challenge confronting the 
industries concerned, the country's lawmakers, the government's 
regulators, and all the many other stakeholders combined.
    Government programs can and do become obsolete. Perhaps the 
challenge is overcome. Perhaps new technologies change the industrial 
and the regulatory landscape. Perhaps the problem itself has altered, 
so that the solution also must change. Or, perhaps an old regulation 
remains on the books simply because no one bothers to go back to study 
if it still has any reason for being. I believe that an efficient 
regulatory agency will look at all these criteria, and more, to assess 
the effectiveness of what it is doing.
    6. In your own words, please describe the agency's current 
missions, major programs, and major operational objectives. Very 
briefly, the FCC is an independent regulatory agency charged with 
carrying out critically important responsibilities conferred upon it by 
Congress. The Commission confronts the ongoing challenge of helping to 
provide to the American people--all of them--the best, most efficient 
and cost-effective telecommunications service in the world. It should 
work toward this objective through continuing dialog with all its many 
stakeholders. The Commission has seven operating bureaus and ten 
offices, each concerned with important aspects of the policies, laws 
and regulations governing interstate and international 
telecommunications activities. The range of FCC programs is wide 
because the industry with which the Commission works is so vast and so 
integral to the future progress and prosperity of the American people. 
The Commission's specific responsibilities include, inter cilia, 
spectrum allocation; the processing of applications for licenses, 
approvals and various other filings; the formulation and implementation 
of rules to further industry competition and consumer protection; 
enforcement; conducting investigations; dealing with stakeholder 
complaints; education and outreach; and the development and 
implementation of numerous regulatory and other programs. The 
Commission has a number of current specific initiatives, including, 
among many others, innovative programs for the delivery of 
telecommunications services to under-served populations and areas, 3G 
wireless, broadband access, disability rights, enhanced 911, and 
children's television. The Commission is on the front-line of many of 
the most exciting opportunities and challenges confronting our country 
today.
    7. In reference to question No. 6, what forces are likely to result 
in changes to the mission of the agency over the coming 5 years? In no 
particular order, I would list: burgeoning technological innovation; 
judicial decisionmaking; Congressional direction; and non-traditional 
stakeholder input.
    8. In further reference to question No. 6, what are the likely 
outside forces which may prevent the agency from accomplishing its 
mission? What do you believe to be the top three challenges facing the 
department/agency and why? I believe that lack of innovative 
stakeholder outreach, especially to non-traditional stakeholders, could 
imperil the agency's effectiveness in the years just ahead. I also 
believe that significantly enhanced communication and coordination 
between Federal and State regulators is essential if the mission of the 
FCC is to be accomplished.
    Finally, I believe that a more regular and ongoing dialog between 
Congress and the Commission is needed in order for the agency to 
implement the powers it has been delegated by statute.
    9. In further reference to question No. 6, what factors in your 
opinion have kept the departmentlagency from achieving its missions 
over the past several years? I believe that the FCC has compiled an 
admirable record over the past several years. It has performed credibly 
in facilitating profound changes mandated by the Telecommunications Act 
of 1996. It has worked against a backdrop of technological innovation 
that can only be described as revolutionary. And it has had to respond 
to a significantly enlarged stakeholder world wherein ever more groups 
are interested in the decisions that the Commission takes. So while 
much remains to be accomplished, the Commission is making, I believe, a 
viable effort to deal with the challenges of a far different 
telecommunications environment than existed even 5 years ago.
    10. Who are the stakeholders in the work of this agency? The 
various industries, such as telephone, broadcast, wireless, cable and 
numerous others, come first to mind. The nation's lawmakers, in 
Congress. and the states, are key players, as are members of the 
Executive branches of governments at various levels. Consumers, 
individually and through many fora, are of course pivotal. 
Increasingly, international governments, industries and other 
stakeholders wish to be, and are, heard. The press is intensely 
interested in the work of the Commission.
    11. What is the proper relationship between your position, if 
confirmed, and the stakeholders identified in question No. 10? The 
Federal Communications Commission is an independent regulatory 
government agency. It is privy to both business confidential and 
occasionally governmentclassified information, so that it must always 
protect such data. It must always act to preserve and protect its 
independent stature, mandating at times something of an arms-length 
distance compared to, say, a Cabinet department or other agency of a 
Presidential administration. A Commissioner must be constantly vigilant 
of the responsibilities attending his position in an independent 
agency. All this being granted, however, this nominee believes that 
there is still more than ample room for the Commission to expand and 
extend its stakeholder dialogs and to engage in partnership-building 
with these stakeholders.
    12. The Chief Financial Officers Act requires all government 
departments and agencies to develop sound financial management 
practices similar to those practiced in the private sector.
    (a) What do you believe are your responsibilities, if confirmed, to 
ensure that your agency has proper management and accounting controls? 
My responsibility as a Commissioner would be to work closely with FCC 
administrative and management personnel to encourage a clean audit 
every year. I would also hope to work closely with FCC Chairman Powell 
as he seeks to develop organizational plans for the optimal utilization 
of Commission resources. Finally, I would administer those personnel 
and financial resources directly under my purview with diligence and 
continuing scrutiny.
    (b) What experience do you have in managing a large organization? 
In my most recent job as Assistant Secretary of Commerce for Trade 
Development, I was responsible for the management of a unit consisting 
of 400 employees. My assignment immediately prior to that, as Deputy 
Assistant Secretary of Commerce for Basic Industries, entailed 
supervision of 90 employees.
    13. The Government Performance and Results Act requires all 
government departments and agencies to identify measurable performance 
goals and to report to Congress on their success in achieving these 
goals.
    (a) Please discuss what you believe to be the benefits of 
identifying performance goals and reporting on your progress in 
achieving those goals. Setting mission-oriented performance goals 
focuses the attention and energies of a department/agency on its 
priorities. A requirement to report on an agency's success, or lack 
thereof; in achieving these objectives provides strong discipline 
toward the realization of targeted results. This whole process also has 
the effect of reassuring stakeholders that the agency is implementing 
results-oriented strategies.
    (b) What steps should Congress consider taking when an agency fails 
to achieve its performance goals? Should these steps include the 
elimination, privatization, downsizing or consolidation of departments 
and/or programs? Congress is the best judge in deciding upon 
appropriate actions to take in the face of an agency's failure to-
realize its objectives. Often, the exercise of continuing Congressional 
oversight has provided mid-course corrections enabling a departinenfor 
agency to achieve its goals. While such options as agency or program 
elimination, privatization, downsizing or consolidation are always 
available to Congress, history seems to indicate that very often the 
efficacy of continuing oversight and good communication between an 
agency and Congress makes such drastic action unnecessary.
    (c) What performance goals do you believe should be applicable to 
your personal performance, if confirmed? A definitive response to this 
question would have to await my immersion into the FCC's actual work. 
Overall objectives would likely include a successful, and hopefully 
quantifiable, contribution to processing the Commission's work load in 
such measurable tasks as licensing, rulemaking and related endeavors. 
Making a significant contribution to FCC organizational adjustments in 
the important months just ahead would comprise another performance 
measurement. I am also of the opinion that efforts at private sector-
public sector partnering and in community and stakeholder outreach are 
important performance objectives that should be counted in measuring 
the success of an FCC Commissioner.
    14. Please describe your philosophy of supervisor/employee 
relationships. Generally, what supervisory model do you follow? Have 
any employee complaints been brought against you? Open doors for two-
way communication, candid and regular discussion of an employee's 
performance, and employee participation in helping to establish agency 
strategies and tactics are all part of the model I would follow at the 
FCC. I also believe that in almost every government agency, 
insufficient resources are available for employee training and self-
improvement programs. Such training and programs are especially 
important to an agency like the FCC that deals every day with a world 
of rapid technology innovation and change. Without more training and 
self-improvement opportunities, professional employees will be unable 
to meet the new challenges coming at them. Finally, agency turnover 
accelerates as training opportunities dissipate. Given the rather 
dismal projections on government retirement in the years just ahead, we 
should be working to enhance the attractiveness of public sector 
employment. In response to the last part of the query, I have not been 
the object of a formal or informal employee complaint.
    15. Describe your working relationship, if any, with Congress. Does 
your professional experience include working with committees of 
Congress. If yes, please describe. As mentioned earlier, I worked as a 
senior staffer in the office of U.S. Senator Ernest F. Hollings for 
nearly 15 years, more than a dozen of those years as his Administrative 
Assistant and Chief of Staff. In that capacity, I worked closely with 
the several committees on which Senator Hollings served. I have also 
testified before Congress and met informally with Members and staff 
throughout the years since I left the Senate in 1985.
    16. Please explain what you believe to be the proper relationship 
between yourself, if confirmed, and the Inspector general or your 
department/agency. I believe that the Office of Inspector General 
should focus on enhancing the efficiency, effectiveness and integrity 
of the agency to which it is attached. As one of the five Commissioners 
responsible for the FCC, I would, if confirmed, seek to develop contact 
and good communication with the OIG at the outset of my tenure, rather 
than waiting for problems. to develop. I would not only familiarize 
myself with the objectives of the OIG, but also those under my 
supervision and, indeed, all the members of the FCC team. I would also 
seek to be promptly responsive to the reports and other communications 
emanating from the Inspector General and his staff.
    17. Please explain how you will work with this Committee and other 
stakeholders to ensure that regulations issued by your department/
agency comply with the spirit of the laws passed by Congress. My 
approach would be to start early and ``keep at it.'' To the maximum 
extent possible, I would want to vet the approach being considered with 
the Committee, other interested lawmakers, and all the relevant 
stakeholders. There is no substitute for open dialog, beginning at the 
earliest stages, and continuing through until the maximum amount of 
underbrush has been cleared away. Because the telecommunications 
industry and telecom technology are so critically important to the 
future of American workers and businesses, the decisions of the Federal 
Communications Commission are often of very great importance to very 
many people. The Commission's credibility can only be enhanced by this 
kind of give-and-take. Once regulations are issued, the Commission must 
have the resources and enforcement capacities to administer them 
comprehensively. And review mechanisms must be built into the process 
to provide for adjustments and corrections to new regulations and for 
terminating regulations that are no longer necessary.
    18. In areas under the departmeuttagency's jurisdiction, what 
legislative action(s) should Congress consider as priorities.? Please 
state your personal views. I would not be comfortable at this stage in 
suggesting legislative actions regarding the Federal Communications 
Commission. The agency is still searching for the best ways in which to 
administer the substantial changes contained in the Telecommunications 
Act of 1996. Since my personal reaction to this question has been 
solicited, I will express the hope that Congress will continue to be 
attentive to the resource needs of the Commission as it confronts so 
many new and far-reaching challenges and changes.
    19. Within your area of control, will you pledge to develop and 
implement a system that allocates discretionary spending based on 
national priorities determined in an open fashion on a set of 
established criteria? If not, please state why. If yes, please state 
what steps you intend to take and a timeframe for their implementation. 
Yes. If confirmed, I will request a budget briefing at the outset of my 
tenure, including information on where the Commission is in planning 
its budget submission for Fiscal Year 2003, as well as information on 
opportunities for input as the Fiscal Year 2002 budget process moves 
toward completion. I would expect, if confirmed, to meet with my fellow 
Commissioners early on to address these issues and to establish 
allocations based on national priorities.

    The Chairman. Thank you, Dr. Copps.
    Mr. Martin.

 STATEMENT OF KEVIN J. MARTIN, COMMISSIONER-DESIGNATE, FEDERAL 
                   COMMUNICATIONS COMMISSION

    Mr. Martin. Thank you, Mr. Chairman and all the members of 
the Committee. It is a great privilege to have the opportunity 
to appear before you today. I am honored to have been nominated 
by the President to be a member of the FCC. I had the distinct 
pleasure of serving at the FCC as legal adviser just a few 
short years ago and prior to that practiced before the 
Commission for several years.
    I have the utmost respect for the agency, its mission, its 
staff, and certainly its new Chairman, who has brought great 
energy and leadership to the Commission. I am humbled, but 
truly excited, by the prospect of serving at this important 
agency in an era of such extraordinary innovation and change in 
the communications sector. I sincerely thank President Bush for 
believing I can make a valuable contribution there.
    If confirmed, I look forward to working closely with 
Congress, with the Chairman, and with my fellow Commissioners 
to tackle the important issues facing the industry today and in 
so doing, to help to administer the policies that will guide 
this vibrant industry, so vital to our national economy and the 
American people we are entrusted to serve.
    Again, thank you for inviting me here today and I look 
forward to answering any questions.
    [The prepared statement and biographical information of Mr. 
Martin follow:]

Prepared Statement of Kevin J. Martin, Commissioner-Designate, Federal 
                       Communications Commission

    Thank you, Mr. Chairman and members of the Committee, it is a great 
privilege to have the opportunity to appear before you today.
    I am honored to have been nominated by the President to be a member 
of the Federal Communications Commission. I had the distinct pleasure 
of serving at the FCC as a legal advisor just a few years ago, and 
prior to that practiced before the Commission. I have the utmost 
respect for the agency--its mission, its staff, and certainly its new 
Chairman, who has brought great energy and leadership to the FCC. I am 
humbled, but truly excited, by the prospect of serving at this 
important agency in an era of such extraordinary innovation and change 
in the communications sector. And I sincerely thank President Bush for 
believing I could make a valuable contribution.
    Over the past several weeks, I have met with many of you to discuss 
your thoughts about the Commission--what it is doing well, and where it 
should improve. I very much appreciate the time that you have spent 
with me talking about the FCC and communications policy. If confirmed, 
I look forward to continuing to hear from you. I recognize that the FCC 
is a creation of Congress, and its highest priority is to implement the 
will of Congress.
    It is news to no one here that these are times of unprecedented 
opportunity, yet also daunting challenge, in our telecommunications and 
information industries. We are witnessing the digitalization of 
communications, the dawning age of broadband, and the harvesting of 
new, more efficient uses of spectrum. In turn, business models are in 
flux as technologies converge, existing markets merge, and new markets 
are created. And all this occurs against a backdrop of unpredictable 
consumer demand, protracted legal uncertainty, and, of late, both 
shrinking capital markets and growing investor apprehension.
    The pieces of the puzzle are many, and their successful resolution 
will be critical to the health of our economy and the welfare of our 
people. New advanced services hold the promise of changing the way 
Americans communicate, learn, work, socialize, and entertain 
themselves. Fulfilling that promise will depend, in part, on decisions 
made by the FCC. Not surprisingly, however, the same factors that have 
injected such complexity into the marketplace also have created 
significant policy challenges for the Commission. Over the course of 
the coming years, the FCC will need to resolve key issues such as:

   How to apply distinct regulatory regimes to converging 
        technologies;

   How to do so in a manner that fosters vigorous competition 
        in these rapidly changing markets;

   How to manage spectrum with optimal efficiently as new 
        technologies are developed and markets become ever more global; 
        and

   How to facilitate the deployment of new services while 
        advancing the goal of universal service--that no American be 
        left out of the technological revolution sweeping the country.

    These are weighty tasks, but tasks that I would approach with 
enthusiasm, dedication, and an open mind.
    If confirmed, I look forward to working closely with Congress, with 
Chairman Powell, and with my fellow commissioners to tackle these 
issues and, in so doing, help administer the policies that will guide 
this vibrant industry so vital to our national economy and the American 
people we are entrusted to serve.
    Again, thank you for inviting me here today. I look forward to 
answering any questions.
                                 ______
                                 
                      A. BIOGRAPHICAL INFORMATION

    1. Name: Kevin Jeffrey Martin.
    2. Position to which nominated: Commissioner of the Federal 
Communications Commission.
    3. Date of nomination: April 30, 2001.
    4. Address: Not released to the public.
    5. Date and place of birth: December 14, 1966; Charlotte, NC.
    6. Marital status: Married to Catherine Jurgensmeyer Martin.
    7. Names and ages of children: Not Applicable.
    8. Education: Charlotte Catholic High School, 1981-1985; High 
School Diploma; University of North Carolina at Chapel Hill, 1985-1989, 
Bachelor of Arts; Duke University, 1989-1990, Masters in Public Policy 
(Received Degree in 1993); Harvard School of Law, 1990-1993, Juris 
Doctorate.
    9. Employment record: Intern, Southern Finance Project, Charlotte, 
NC; Summer 1990; Summer Associate, Robinson, Bradshaw & Hinson, PA, 
Charlotte, NC, Summer 1991; Summer Associate, Smith Currie & Hancock, 
Atlanta, GA, Summer 1991; Summer Associate, Alston & Bird, Atlanta, GA, 
Summer 1992; Summer Associate, Robinson, Bradshaw & Hinson, PA, 
Charlotte, NC, Summer 1992; Summer Associate, Akin, Gump, Strauss Hauer 
& Feld, LLP, Washington, DC, Summer 1993; Summer Associate, Kennedy 
Covington Lobdell & Hickman, LLP, Charlotte, NC, Summer 1993; Judicial 
Clerk for United States District Judge William M. Hoeveller, Miami, FL, 
1993-1994; Associate, Wiley, Rein & Fielding, Washington, DC, 1994-
1997; Associate Independent Counsel, Office of the Independent Counsel, 
Washington, DC, 1997; Legal Advisor to Commissioner Harold Furchtgott-
Roth, Federal Communications Commission, Washington, DC, 1997-1999; 
Deputy General Counsel, Bush for President, Austin, TX, 1999-2000; 
Deputy General Counsel, Bush-Cheney Transition Team, Washington, DC, 
2000-2001; Special Assistant to the President for Economic Policy, 
Executive Office of the President, Washington, DC, 2001-Present.
    10. Government experience: None.
    11. Business relationships: Member, Board of Trustees of the 
University of North Carolina at Chapel Hill, 1988-1989; Member, Board 
of Directors for UNC Alumni Association, 1988-1989; Partner, JDJR 
Investments (Family Investment Club), ended participation in 1997.
    12. Memberships: American Bar Association, Member; Florida Bar, 
Member; DC Bar, Member; Federal Communications Bar Association, Member; 
Federalist Society, Vice-Chair for the Telecommunications Committee; 
Sigma Nu Fraternity, Member; Lincoln's Inn Society (Harvard Law School 
Fraternal Organization), Member; Board of Student Advisors to Harvard 
Law School, Member.
    13. Political affiliations and activities: (a) None. (b) Deputy 
General Counsel, Bush for President, 1999-2000; Counsel to the Platform 
Committee, Republican National Convention, 1996; (c) Bush for 
President, $1,000.
    14. Honors and awards: Phi Beta Kappa; University of North Carolina 
Tuition Scholarship; UNC Honorary Societies (Orders of the Golden 
Fleece, Grail & Old Well); Pi Sigma Alpha; UNC James J. Parker Award 
for Student Achievement.
    15. Published writings: None.
    16. Speeches: I have appeared on several panels and given a few 
informal speeches over the last 5 years. My remarks were informal and 
based on outlines. I do not have copies of my remarks.
    17. Selection: (a) I am not aware of the specific reason why I was 
selected to be nominated to the Federal Communications Commission by 
the President. I believe I was selected to serve as the President's 
nominee because of my legal background and experience in the 
telecommunications area; (b) I served as a Legal Advisor to 
Commissioner Furchtgott-Roth. Prior to joining the Commission, I 
practiced telecommunications law for several years.

                   B. FUTURE EMPLOYMENT RELATIONSHIPS

    1. Will you sever all connections with your present employers, 
business firms, business associations or business organizations if you 
are confirmed by the Senate? Yes.
    2. Do you have any plans, commitments or agreements to pursue 
outside employment, with or without compensation, during your service 
with the government? If so, explain. No.
    3. Do you have any plans, commitments or agreements after 
completing government service to resume employment, affiliation or 
practice with your previous employer, business firm, association or 
organization? No.
    4. Has anybody made a commitment to employ your services in any 
capacity after you leave government service? No.
    5. If confirmed, do you expect to serve out your full term or until 
the next Presidential election, whichever is applicable? Yes.

                   C. POTENTIAL CONFLICTS OF INTEREST

    1. Describe all financial arrangements, deferred compensation 
agreements, and other continuing dealings with business associates, 
clients or customers. Administaff 401 K (Bush for President campaign; 
no further contributions being made): Baron Asset Fund; Fidelity 
Contrafund; Fidelity Diverse International; Fidelity Fund; Spartan U.S. 
Equity Index; Steptoe & Johnson 401K (Spouse's 401 K); no further 
contributions being made); City National Global Growth Fund; City 
National U.S. Stock Fund.
    2. Indicate any investments, obligations, liabilities, or other 
relationships which could involve potential conflicts of interest in 
the position to which you have been nominated. None.
    3. Describe any business relationship, dealing, or financial 
transaction which you have had during the last 10 years, whether for 
yourself, on behalf of a client, or acting as an agent, that could in 
any way constitute or result in a possible conflict of interest in the 
position to which you have been nominated? I served as an associate 
from 1994 to 1997 at Wiley Rein & Fielding, which practices before the 
Federal Communications Commission.
    4. Describe any activity during the past 10 years in which you have 
engaged for the purpose of directly or indirectly influencing the 
passage, defeat or modification of any legislation or affecting the 
administration and execution of law or public policy. In my law 
practice, I advised various clients on the implications of the 
Telecommunications Act of 1996.
    5. Explain how you will resolve any potential conflict of interest, 
including any that may be disclosed by your responses to the above 
items. (Please provide a copy of any trust or other agreements.) To the 
extent that a conflict of interest arises of which I am not currently 
aware, I plan to consult with agency ethics counsel and comply with all 
appropriate laws and regulations.
    6. Do you agree to have written opinions provided to the Committee 
by the designated agency ethics officer of the agency to which you are 
nominated and by the Office of Government Ethics concerning potential 
conflicts of interest or any legal impediments to your serving in this 
position? Yes.

                            D. LEGAL MATTERS

    1. Have you ever been disciplined or cited for a breach of ethics 
for unprofessional conduct by, or been the subject of a compliant to 
any court, administrative agency, professional association, 
disciplinary committee, or other professional group? If so, provide 
details. No.
    2. Have you ever been investigated, arrested, charged or held by 
any Federal, State, or other law enforcement authority for violation of 
any Federal, State, county, or municipal law, regulation or ordinance, 
other than a minor traffic offense? If so, provide details. No.
    3. Have you or any business of which you are or were an officer 
ever been involved as a party in interest in an administrative agency 
proceeding or civil litigation? If so, provide details. No.
    4. Have you ever been convicted (including pleas of guilty or nolo 
contendere) of any criminal violation other than a minor traffic 
offense? No.
    5. Please advise the Committee of any additional information, 
favorable or unfavorable, which you feel should be considered in 
connection with your nomination. Not Applicable.

                     E. RELATIONSHIP WITH COMMITTEE

    1. Will you ensure that your department/agency complies with 
deadlines set by congressional committees for information? Yes.
    2. Will you ensure that your department/agency does whatever it can 
to protect congressional witnesses and whistle blowers from reprisal 
for their testimony and disclosures? Yes.
    3. Will you cooperate in providing the committee with requested 
witnesses, to include technical experts and career employees with 
firsthand knowledge of matters of interest to the committee? Yes.
    4. Please explain how you will review regulations issued by your 
department/agency, and work closely with Congress, to ensure that such 
regulations comply with the spirit of the laws passed by Congress. If 
confirmed as a Commissioner, I would carefully review regulations 
within the framework of the applicable statute to ensure that they 
comply with the spirit of the law and with Congressional intent. In 
addition, I would work with Members of Congress and their staff to 
maintain open communications regarding the spirit and intent of 
relevant laws.
    5. Describe your department/agency's current mission, major 
programs, and major operational objectives. The Federal Communications 
Commission is an independent Federal regulatory agency created by 
Congress to develop and implement policy concerning interstate and 
international communications by radio, television, wire, wireless, 
satellite and cable. Its mission is to encourage competition in all 
communications markets and to protect and promote the public interest. 
With Congress, the Commission works to ensure that all Americans have 
access to a world-class communications system. One of its primary 
objectives remains the implementation of the Telecommunications Act of 
1996.
    6. Are you willing to appear and testify before any duly 
constituted committee of the Congress on such occasions as you may be 
reasonably requested to do so? Yes.

                  F. GENERAL QUALIFICATIONS AND VIEWS

    1. How have your previous professional experience and education 
qualified you for the position for which you have been nominated? I 
believe an effective FCC commissioner will need a clear understanding 
of the laws Congress charged the Commission with implementing. After 
graduating from Harvard Law School, I practiced communications law for 
several years and later served at the Commission as a legal advisor. 
This experience has helped prepare me for the central task of clearly 
understanding and faithfully implementing the will of Congress as 
expressed in the communications laws it has enacted.
    A successful commissioner also will need a broad understanding of 
public policy, including how to anticipate the consequences government 
actions may have on consumers and the economy. In earning a Masters in 
Public Policy from Duke University, and particularly through my service 
at the Commission, I gained an appreciation for how sound public policy 
is formulated and implemented that I believe could help me make more 
informed policy decisions.
    Finally, beyond an understanding of the relevant law and public 
policy, an FCC Commissioner also will need to understand the many 
challenges confronting the communications industry. During my years in 
private practice and at the Commission, I learned about various sectors 
of the communications industry and developed substantial knowledge and 
technical grounding that should offer a helpful foundation for 
analyzing complex regulatory issues affecting the industry.
    2. Why do you wish to serve in the position for which you have been 
nominated? The challenges facing the communications industry in the 
21st century are daunting, and their successful resolution will be 
critical to the welfare of our people and the health of our economy. 
Congress has charged the FCC with the important role of implementing 
the laws that govern this industry, and I view the opportunity to help 
lead this agency as an exciting and meaningful way to serve our 
country.
    3. What goals have you established for your first 2 years in this 
position, if confirmed? If confirmed, my goals as Commissioner would 
include:

   Implementing communications policy in a manner that serves 
        the public interest by providing a clear and sound regulatory 
        framework that promotes competition and enhances the ability of 
        all Americans to enjoy the benefits of new technology and 
        services;

   Supporting deregulation where such action would further 
        competition, foster innovation, and enhance consumer choice and 
        welfare; Encouraging more timely agency decisionmaking; and

   Playing a constructive role in defining and implementing 
        needed reforms to make the FCC (as Chairman Powell has stated) 
        more efficient, effective, and responsive.

    4. What skills do you believe you may be lacking which may be 
necessary to successfully carry out this position? What steps can be 
taken to obtain those skills? Over the last several years, I have 
worked on a broad range of communications issues and developed a 
working knowledge of various technical issues. However, I believe that 
a more detailed understanding of the engineering underlying today's--
and tomorrow's--technologies would strengthen my appreciation of the 
potential and the limitations of a given technology, thereby allowing 
me to make more fully informed decisions affecting telecommunications 
policy. I am confident that the many technical experts within the 
Commission could aid me in this endeavor.
    5. Please discuss your philosophical views on the role of 
government. Include a discussion of when you believe the government 
should involve itself in the private sector, when should society's 
problems be left to the private sector, and what standards should be 
used to determine when a government program is no longer necessary. 
Government should be carefully limited, but forceful within the bounds 
of its responsibilities. Government should help create an environment 
that promotes innovation and preserves equal opportunity for all 
Americans.
    I believe policymakers should pursue a prudent, pro-competitive, 
pro-consumer approach to regulating the communications sector that 
holds such promise for every American. My view is that market-driven 
forces are the best method of delivering the benefits of choice, 
innovation, and affordability to our nation. However, government 
regulation is appropriate--indeed, can be critical--when the structure 
of a given market is such that the consumer benefits of competition are 
clearly impeded.
    Accordingly, regulators must remain aware of how quickly markets in 
this sector can change, standing ready to evaluate both the marketplace 
and their existing regulations on a regular basis to ensure that 
existing rules and policies continue to achieve their intended 
objective in the most effective and efficient manner possible. If and 
when existing rules or policies fail this test, regulators should act 
quickly to determine whether those rules should be altered or repealed.
    6. In your own words, please describe the agency's current 
missions, major programs, and major operational objectives. The FCC is 
an independent agency created by Congress to develop and implement 
communications policy concerning interstate and international 
communications by radio, television, wire, wireless, satellite, and 
cable. Its mission, as set forth in statute, is to encourage 
competition in all communications markets and to protect the public 
interest.
    One of the FCC's primary objectives remains the implementation of 
the Telecommunications Act of 1996, in which Congress set forth the 
ground rules and incentives for a communications industry that would be 
governed more by market forces than detailed regulations, yet would 
continue to ensure universal service. The FCC is to use its expertise 
to govern the communications sector in a manner that encourages 
competition, fosters the development of technology, and promotes the 
deployment of services to all consumers.
    Congress also has instructed the FCC to efficiently manage 
spectrum--a task that has grown more complex as new technologies are 
developed and as markets become more global. The FCC must continue to 
allocate this valuable resource in a way that maximizes efficient use, 
encourages investment, spurs innovation, and accelerates deployment of 
new services to consumers.
    From an operational perspective, the FCC must vigorously and 
consistently enforce existing regulations. It also should strive to 
work closely with Congress in implementing the laws Congress has passed 
and the priorities Congress communicates in its continuing oversight of 
the agency.
    7. In reference to question No. 6, what forces are likely to result 
in changes to the mission of this agency over the coming 5 years? The 
FCC's fundamental mission--to promote and protect the public interest--
has not (and, I expect, will not) change. However, forces that could 
contribute to a changing focus at the agency include rapid advances in 
technology, newly discovered uses of spectrum, further technological 
convergence across traditional regulatory lines, and significant 
marketplace developments.
    8. In further reference to question No. 6, what are the likely 
outside forces which may prevent the agency from accomplishing its 
mission? What do you believe to be the top three challenges facing the 
department/agency and why? Though outside forces certainly could make 
agency progress more difficult, I do not foresee any forces that would 
prevent the agency from accomplishing its mission of promoting and 
protecting the public interest.
    Given the pace of change, the importance of promoting competition, 
and the great promise of the communications services at stake, I 
believe the agency's top challenges are: (1) encouraging the 
development and deployment of advanced services while remaining 
committed to the principle of universal service; (2) fostering 
competition in local and long distance telecommunications markets; and 
(3) managing the spectrum in a manner that fosters the efficient 
deployment of services.
    9. In further reference to question No. 6, what factors in your 
opinion have kept the department/agency from achieving its missions 
over the past several years? I believe that among the most important 
factors that may, at times, have frustrated the ability of the FCC to 
achieve its mission was a failure to maintain an effective relationship 
with Congress. It is incumbent on the FCC to seek and listen to the 
guidance of Congress as the agency shapes policies designed to fulfill 
its statutory mandates and serve the public interest.
    10. Who are the stakeholders in the work of this agency? The 
ultimate stakeholders in communications policy are the American 
consumers. Congress establishes the statutory framework through which 
the FCC pursues policies that foster the public interest, and vital to 
this framework is, of course, listening to all interested and affected 
parties, be they governments, businesses or consumers.
    11. What is the proper relationship between your position, if 
confirmed, and the stakeholders identified in question No. 10? If 
confirmed, my fundamental role as an FCC Commissioner would be to 
protect the public interest, as instructed by Congress--that is, I 
would work to promote competition and the availability of 
communications services for all American consumers.
    12. The Chief Financial Officers Act requires all government 
departments and agencies to develop sound financial management 
practices similar to those practiced in the private sector. (a) What do 
you believe are your responsibilities, if confirmed, to ensure that 
your agency has proper management and accounting controls? While the 
Chairman is the chief executive officer of the Commission, I believe it 
is the responsibility of all Commissioners to facilitate the efficient 
management of the agency in order to successfully accomplish the tasks 
with which Congress has charged it. (b) What experience do you have in 
managing a large organization? Again, while the Chairman is the member 
of the Commission appointed to direct management of the agency, as a 
Commissioner I would draw upon my experience from working within, and 
analyzing how to reform, the FCC in order to promote its efficient and 
effective management.
    13. The Government Performance and Results Act requires all 
government departments and agencies to identify measurable performance 
goals and to report to Congress on their success in achieving these 
goals. (a) Please discuss what you believe to be the benefits of 
identifying performance goals and reporting on your progress in 
achieving those goals. The determination of goals and the delivery of 
status reports are useful tools for any organization. They provide 
focus to an agency and give Congress the opportunity to inform the 
Commission when the agency appears to be misinterpreting its delegated 
powers. Periodic status reports also provide interested parties a way 
to ensure that the FCC is moving forward. Chairman Powell has outlined 
his plan to integrate a strategic planning process into the annual 
Federal budget cycle, including a review of the FCC's performance. I 
understand that he is already working to establish uniform measures of 
productivity across the agency. If confirmed, I would fully support him 
in these efforts.
    (b) What steps should Congress consider taking when an agency fails 
to achieve its performance goals? Should these steps include the 
elimination, privatization, downsizing or consolidation of departments 
and/or programs? If an agency and Congress maintain open and continuous 
lines of communication, Congress will be able to inform the agency 
early that it is concerned with its progress in fulfilling the agency's 
performance goals. If and when Congress is faced with ultimate failure 
by the agency, it would be appropriate to investigate the causes of the 
failure and take whatever course of action Congress deems appropriate.
    (c) What performance goals do you believe should be applicable to 
your personal performance, if confirmed? As an FCC Commissioner, I 
should be expected to implement my statutory obligations consistent 
with Congressional intent and in a fair and expeditious manner.
    14. Please describe your philosophy of supervisor/employee 
relationships. Generally, what supervisory model do you follow? Have 
any employee complaints been brought against you? I believe supervisors 
should establish individual accountability and an open, collaborative 
working environment that together provide incentives and opportunities 
for excellence. I have never been the subject of an employee complaint.
    15. Describe your working relationship, if any, with the Congress. 
Does your professional experience include working with committees of 
Congress? If yes, please describe. I have had the pleasure of working 
with various Members of Congress and Congressional staff over the 
course of my professional experience. As a legal advisor at the FCC, I 
worked with the staff of the Commerce Committee as well as the personal 
staff of various Members in order to identify their concerns regarding 
communications policies.
    16. Please explain what you believe to be the proper relationship 
between yourself, if confirmed, and the Inspector General of your 
department/agency. If confirmed, I would support the office of the 
Inspector General and urge cooperation throughout the agency in any and 
all of its activities.
    17. Please explain how you will work with this Committee and other 
stakeholders to ensure that regulations issued by your department/
agency comply with the spirit of the laws passed by Congress. If 
confirmed, I would place a high priority on the maintenance of an open 
dialog with the Members of this Committee and their staff. I would 
endeavor to seek guidance from this Committee as to the letter and 
spirit of the laws we are working to implement and enforce.
    18. In the areas under the department/agency's jurisdiction, what 
legislative action(s) should Congress consider as priorities? Please 
state your personal views. If confirmed, I would look forward to 
establishing a relationship with this Committee that would allow me to 
better understand legislative priorities and, where appropriate, to 
offer Commission input into the Committee's legislative agenda. In 
particular, I would hope for the Commission to be able to approach the 
Committee with requests for effective but narrowly drawn tools that 
will give the FCC the ability to accomplish Congressional goals. For 
instance, I strongly support the Chairman in his request for 
legislation providing increased enforcement authority such as 
heightened penalties and lengthened statutes of limitations.
    19. Within your area of control, will you pledge to develop and 
implement a system that allocates discretionary spending based on 
national priorities determined in an open fashion on a set of 
established criteria? If not, please state why. If yes, please state 
what steps you intend to take and a timeframe for their implementation. 
If confirmed, I would support the Chairman in efforts to establish 
appropriate budgetary priorities and processes.

    The Chairman. Thank you very much.
    Ms. Abernathy, you will be recused from issues affecting 
your previous employer?
    Ms. Abernathy. Yes, Senator, I will be. However, that may 
become a moot point because they have recently filed for 
bankruptcy. So I am not exactly sure how many issues I will be 
precluded from dealing with.
    The Chairman. Thank you.
    Senator Hollings.
    Senator Hollings. Thank you, Mr. Chairman. I have really no 
questions, just one comment with respect to the comment made by 
a Commissioner in recent months that the matter of public 
interest was so nebulous it was meaningless.
    That sort of shocked me, for the simple reason that that is 
your charge, carrying out the intent of Congress and looking 
out for the public interest.
    The questions about the universal service, the reason we 
have that is because market forces would not look out for it. 
No one is going to lay lines or extend communications to costly 
areas in rural America unless we provide for it by law.
    Incidentally, the regulation, the fetish about deregulate, 
deregulate, deregulate; we deregulated the airlines and messed 
them up, trucking, now electric power, natural gas. Mind you 
me, your particular industry asked for the regulations. We had 
deregulation. We tried it after the Sarnoff experience on top 
of Wanamaker at the sinking of the Lusitania, and everybody had 
a wireless radio and they were all jammed. They came to 
Secretary Hoover as Secretary of Commerce and said: Please 
regulate us. We had that 1934 Act and updated now with the 1996 
Act.
    So it is an industry that cannot succeed except by certain 
government controls and allocations. Just remember that 
particularly with the fetish about that the idea is that the 
government is not the solution, the government is the problem, 
and get rid of the government. I hear that too much around, in 
particular with respect to all these various governmental 
commissions, like they are totally useless, they get in the 
way, and if they would only get out of the way everything would 
work.
    We know right now, for example--you heard my questions 
about the monopolistic Bells. They would never move, and if I 
was sitting on the board of a Bell, I would hold onto my 
monopoly. That is the whole idea, I guess, in business, is to 
get all the business you possibly can control.
    Having said that, thank you, Mr. Chairman.
    The Chairman. Thank you.
    Senator Rockefeller.
    Senator Rockefeller. Thank you, Mr. Chairman.
    I want to say first of all that I really enjoyed the--it 
was not a long amount of time, but each of the conversations 
that we had were different and I found each of you to be people 
of great integrity, some differences, not necessarily with me, 
but as personalities, smart, and I look forward to voting for 
you.
    I do not often say that kind of thing to either political 
party, but I just found you very able and interesting, 
inquiring minds, and I think that is the most important part, 
except as I now get to my questions, which, of course, 
predictably will deal with the E-rate, because I want to get 
you all on record in the same way that I did with Chairman 
Powell, and hopefully with the same result.
    So I would ask each of you just to answer these in turn. 
That is, do you feel that the E-rate is a part of universal 
service and are you willing to protect the E-rate as it was 
laid out in the 1996 Telecom Act?
    Dr. Copps. Well, I can begin. I certainly do. I very much 
enjoyed the discussion that you and I had in your office about 
this. As I said in my statement, I am a believer in bringing 
the kind of telecommunications service that I talked about to 
all of our people, no matter who they are, no matter where they 
live. It is absolutely essential if we are going to progress in 
this country. We will progress together or we will progress not 
at all.
    As for the E-rate program, I share your confidence in it 
and your belief in it, and I look forward to working with you 
and to implementing that program to make it the best program 
that is possible.
    Senator Rockefeller. Thank you, sir.
    Ms. Abernathy.
    Ms. Abernathy. Thank you, Senator. The E-rate program has 
been an extraordinary success. It was a brainchild of Congress. 
It is something the FCC is committed to. I agree with Chairman 
Powell that the only role is if we can make it more efficient, 
more effective. We should always be looking toward that.
    But otherwise, you have set forth the parameters and you 
have designed a program that the FCC has implemented. I am 
committed to seeing that program continue.
    Senator Rockefeller. More efficient within the definitions 
laid out by Congress?
    Ms. Abernathy. Absolutely. If ever you can make it easier 
for the schools, the forms, the application process, that is 
always a good thing.
    Senator Rockefeller. Thank you.
    Mr. Martin.
    Mr. Martin. Senator, the E-rate is an important part of 
universal service and I am certainly committed to fully 
implementing it, as we have discussed. It is important, I 
think, that to the extent that there are some things that could 
be done, as you and Ms. Abernathy were just discussing, as far 
as making it more efficient, they have to be within the terms 
of what Congress has laid out in the statute.
    Senator Rockefeller. Thank you very much for that.
    Now, the E-rate was intended to provide affordable service 
to public schools, to private schools, parochial schools--not 
all private schools. Chairman McCain laid out an amendment 
which passed 99 to 1, which said, I think, that any private 
school with an endowment of over $50 million did not qualify, 
but any less than that, because we found the private schools 
were actually less wired up than public schools, which was 
interesting. So, I think that the whole question of discounts 
as a way of making sure that we do this fairly and are 
absolutely fundamental. We have a very clear way of doing that 
within the FCC and the Joint Board decision, based in part on 
the school lunch program.
    Do you appreciate my view and will you work to follow what 
the Act says about that, the three of you?
    Ms. Abernathy. Yes.
    Dr. Copps. Absolutely.
    Mr. Martin. Yes, Senator.
    The Chairman. Thank you.
    The E-rate again is very clear in that it covers 
telecommunications, Internet, connecting classrooms. This is 
the law. This is the conference report. As important as teacher 
training is, as important as software is, as important as 
hardware is, they are not in that. They are not a part of that. 
But the three that I mentioned are, and they are a part of 
universal service.
    I need to know that you will stay consistent in your views 
with the Joint Board and the FCC as that has been determined by 
Congress.
    Mr. Martin. Yes, Senator.
    Dr. Copps. Yes, sir.
    Ms. Abernathy. Yes, sir.
    Senator Rockefeller. Thank you. I do not mean to be so 
literal, but this is such an important program that getting 
people on the record is important. You understand that.
    Finally, just a question about broadband. The 1996 Act 
explicitly told the FCC: ``Consumers in all regions of the 
Nation, including low-income consumers and those in rural, 
insular, and high-cost areas, should have access to 
telecommunications and information services, including advanced 
telecommunications and information services, that are 
reasonably comparable to those services provided in urban areas 
and that are available at rates that are reasonably comparable 
to rates charted for similar services in reasonable areas.''
    Do you agree with that and do you have any thoughts as to 
how we can get there?
    Mr. Martin. Well, Senator, I certainly agree with it. I 
think that one of the great insights of the 1996 
Telecommunications Act was its use of an evolving definition of 
``universal service,'' which makes sure that no area of the 
country is left behind. I think that universal service and the 
rural components of it are somewhat like a tool. It is a rubber 
band with one end wrapped around the urban areas and one end 
around the rural, that makes sure that when the urban area gets 
too far out ahead, the universal service mechanism can pull the 
rural areas back up, to make sure they do not get left behind. 
I am certainly committed to that.
    Ms. Abernathy. Absolutely. I think that a critical piece of 
the Act, is how do you ensure broadband deployment, not simply 
to urban areas, but to rural areas. Based on my last year's 
experience, I appreciate just how difficult that is when you 
are coming into a market that is incredibly complex--where 
competition is tough and deployment is hard.
    I know that the Congress is thinking about additional ways 
to facilitate broadband deployment to rural America and I look 
forward to seeing where that takes us. I think that the FCC 
should continue to encourage this kind of deployment. 
Unfortunately, it is just taking longer than any of us thought 
that it would.
    Dr. Copps. Senator Rockefeller, I certainly concur with 
your views. That is the statutory instruction to the FCC from 
the Congress and my intention would obviously be to implement 
that. I think there are lots of other things we can do. Of 
course, the market, as Kathleen was saying, has something to do 
with how we roll out broadband, but so does the Commission in 
establishing predictable and prompt rules of the road. So does 
the Commission from the standpoint of devising an adequate 
program of spectrum allocation and spectrum management.
    So I think there are lots of things we can be doing and I 
imagine this will be occupying a tremendous amount of all of 
our time if we are lucky enough to go to the Commission.
    Senator Rockefeller. All three of you would agree that the 
paragraph that I read is legally binding upon you?
    Ms. Abernathy. Absolutely.
    Mr. Martin. Yes, sir.
    Senator Rockefeller. I appreciate very much your answers 
and look forward to voting for you.
    I thank you, Mr. Chairman.
    Senator Hollings. Senator Burns.
    Senator Burns. Thank you. I have more of a statement than 
anything else. When we start talking about spectrum and 
spectrum management, this is an historical occasion as far as 
the FCC is concerned, because this is the first time we have 
had a clatter of folks all going on at the same time. Spectrum 
and spectrum management is something that I think you are going 
to have to be around a little while to fully understand the 
management and the challenges that we have in front of us. So I 
think it would be unfair right now to go down that road.
    But I look forward in working with all of you on the 
Commission, as with the Chairman, as we move that issue down 
the field, because I feel it is very, very important at this 
time.
    So I am going to ask unanimous consent that my statement be 
made part of the record.
    [The prepared statement of Senator Burns follows:]
   Prepared Statement of Hon. Conrad Burns, U.S. Senator from Montana
    Thank you, Mr. Chairman.
    Today's hearing is a truly historic occasion, given the scope of 
the mission of today's nominees for the Federal Communications 
Commission. While numerous issues of immense impact will be faced by 
the next Commission, I would like to focus on three items of 
particularly critical importance-spectrum management, E-911 
implementation and enforcement of the 1996 Telecommunications Act.
    The United States is the unquestioned leader in the Internet and we 
have a vibrant commercial wireless industry. At a time of economic 
uncertainty, it is increasingly important that the United States 
maintain its leadership in the high-tech market. If the United States 
is to stay ahead of the pack in E-commerce, then we must ensure that we 
are leaders in advanced wireless 1 services that will support the 
mobile Internet.
    Efficient spectrum management is key to maintaining American 
leadership in this area. The U.S. Government must take action to 
develop a comprehensive sand rational spectrum policy, and it should do 
so in a way that provides long-term benefits rather than merely 
realizing short-term revenue gains. With this goal in mind, yesterday 
Sen. Kerry, Sen. Hollings and I requested that the GAO undertake a 
comprehensive, top-down review of all aspects of spectrum allocation 
policy. We specifically asked the GAO to look at whether a more 
coordinated approach for addressing the needs of both Federal and 
commercial stakeholders would be more efficient than the current 
patchwork system.
    The FCC certainly has a vital role to play in spectrum management, 
but first it must revamp its outdated facilities and hiring practices. 
Chairman Powell has recognized this need and has requested funding to 
Modernize the FCC's spectrum lab in Columbia, Maryland and tO create an 
incentive program to hire qualified engineers. I have already spoken 
with Sen. Gregg about this matter and he indicated that he is fully 
supportive of this request.
    Mobile connection to the Internet will play a key role in realizing 
the vision of a fully networked America in which people have access to 
information and services when and where they need them. The American 
public must have access to the Internet at data rates that allow them 
to take true advantage of Internetbased services.
    I would like to comment on an area of literally life-or-death 
importance--that of E-911 implementation. The number of emergency calls 
from wireless phones is growing rapidly. Nationally, over half the 
calls for 911 for emergency services are now made over wireless phones. 
That ratio of wireless emergency calls will continue to increase 
dramatically in the future. With more and more people depending upon 
wireless access to 911, it is particularly important for the FCC to 
support the speediest possible deployment of E-911 service to all parts 
of the country, rich and poor, urban and rural.
    Requests for Phase Two implementation of the FCC's E-911 rules, 
which would provide Public Service Answering Points (PSAPs) an 
emergency caller's exact location have come in from states, cities and 
rural communities all across the country. This technology will 
literally save thousands of lives. One thing the FCC can do to ensure 
this happens sooner, rather than later, is stick to the Commission's 
own mandated October 1, 2001 deadline for initial deployment of E-911 
technologies. The integrity of the E-911 system and the welfare of the 
numerous people who will depend on it for their very lives from that 
day forward are at stake.
    Finally, I would like to touch on the issue of the implementation 
of the Telecommunications Act of 1996 and the constructive role that 
the Commission has to play in enforcement. Chairman Powell has 
requested that the Commission's enforcement authority be expanded, its 
fining levels increased and that it be allowed to award punitive 
damages and attorneys fees to harmed businesses. I think this request 
is entirely reasonable and I will work with the Chairman to make sure 
that the Commission is given the ability to go after any bad actors who 
don't follow the competitive provisions of the Act.
    Clearly, the many challenges which will face our nominees are 
immense, but I have no doubt that they are up to the task-in fact, I 
fully support each of them and am confident that the next Commission 
will be the most talented and productive ever. 1 thank the nominees for 
their commitment to public service and I look forward to working with 
them on these crucial public policy issues.
    Thank you Mr. Chairman.

    Senator Burns. Also, I want to advise you that any 
questions that you have from Senators or the Committee, if you 
could respond to them by Tuesday of next week to the individual 
Senators and to the Committee, as we go to mark-up, I think on 
the 24th, something like that. So we look forward to that.
    Other than that, I congratulate you for stepping forward 
for public service. The FCC has become and will be the center 
of the economic engine in this country for the next 25 or 30 
years, because that is where our future--and we are also in a 
global. It is just not the United States. We have to take into 
consideration on the international and the global markets. So 
we have a great challenge in front of us.
    I congratulate each and every one of you and look forward 
to working with you.
    With that, if there is no more questions, the hearing is 
closed.
    [Whereupon, at 12:11 p.m., the hearing was adjourned.]
     

                            A P P E N D I X

    Response to Written Questions Submitted by Hon. Gordon Smith to 
                         Kathleen Q. Abernathy

    Question 1. The price a local exchange carrier charges in rural 
areas is artificially low and kept low because of our universal service 
policy. For competition to develop, a business needs to attract that 
customers. How do we attract companies to compete with the local 
exchange carriers and build out advanced services to rural areas when 
the price normally charged is kept universally low?
    Answer. This is one of the most difficult issues facing the FCC and 
I do not know the answer. Normal business incentives combined with the 
portability of USF contributions thus far have failed to attract 
wireline competition to rural areas. The answer may be greater reliance 
on wireless and satellite technologies. I am also aware that Congress 
is exploring various alternatives to encourage greater deployment to 
rural areas. In the interim, I think the FCC should continue to 
encourage the growth and development of competition and the growth and 
development of new technologies.
    Question 2. As broadband continues to be deployed in the urban 
technology communities in Oregon, I am hearing from Oregonians in some 
of these lesser populated areas that they are afraid that their 
communities are going to be passed by. Our largest local exchange 
carriers in Oregon are Qwest, Verizon and Sprint, and they are all 
working with the Oregon Public Utility Commission to build out their 
infrastructure throughout the state. What concerns me, is that rural 
deployment is not being made as rapidly, or as broadly in our rural 
areas, as I would like to see. When I raise this issue with the local 
exchange carriers who serve many of these communities with telephone 
service, they say that the regulatory policies that were designed to 
promote competition in their telephone business are being extended to 
include these new advanced services, and these regulatory costs slow 
down the investment available to bring advanced services to rural 
areas. So while I fully support the notion that competition in 
telephone service has been good for our urban business communities, I 
am concerned that those same policies, when applied to these new 
advanced services, are making it harder for my rural constituents to 
gain access to these new technologies. Would you discuss your approach 
to the regulatory role for these advanced new services, and whether you 
view the increased costs for the local exchange carriers to be a 
problem for rural America?
    Answer. As stated previously, the costs of deployment has resulted 
in an economic model that at this time has discouraged some companies 
from significant investment in rural markets but newer technologies 
such as wireless and satellite may hold promise. I do not know to what 
extent regulatory costs affect the economic analysis. I look forward to 
further discussions with you and your staff about he various 
alternatives that may be available to address this problem.
    Question 3. These advanced new services called ``broadband'', are 
provided with a variety of new technologies. The ``local exchange 
carriers'' have DSL service, cable companies have cable modems, and 
satellite and wireless carriers are also in the market, and maybe 
others will be entering that we don't even know about. All have some 
sort of government regulation whether local, state or federal. Do you 
think our policy should be technology neutral, or do you think we 
should continue our current policies which apply different regulatory 
policies to each competitor based on the technology used to provide the 
broadband access?
    Answer. One of the most difficult challenges facing the FCC is 
keeping pace with the rapidly changing state of the technology to 
ensure regulations are appropriate, symmetrical, and effective and that 
decisions are not delayed. In addition, companies should not design 
their business plans to accommodate regulatory structures that may be 
outdated. Therefore, I support Chairman Powell's decision to engage in 
a comprehensive FCC reform project.
    Question 4. When I look at the telecommunications market that has 
evolved in this country during the past five years, it appears to me 
that the most successful sector of the market in terms of growth, 
attracting investment, deploying new technologies, and providing new 
services to amazing numbers of Americans, both rural and urban, is 
wireless communications. It seems that real customer demand has 
``pulled'' the wireless investment and new technologies into the 
marketplace, not only here, but around the world. Even in areas where 
they have never had any communications network. On the other hand, 
these ``pro-competitive regulatory policies'' as applied to the 
telephone companies seem to be slowing down investment and delaying 
technological innovation, in their attempts to ``push'' competition 
into the marketplace. As a regulator, do you think the role of 
government should be to ``push'' competition through regulatory 
policies, or to allow deregulated markets to ``pull'' the investments 
create competition? Do you see any disparity between wireless and 
wireline in bridging the digital divide?
    Answer. Regulatory policies should be designed to allow the market 
to flourish, where possible, since that best ensures multiple choices 
and reduced prices for consumers. To the extent a market is not yet 
competitive and regulations can encourage the growth of competition, 
that is also a good thing. But it is not wise to establish regulatory 
policies that create an ``artificial'' kind of competition that can 
never be supported by the market. With regard to the differences 
between wireless and wireline technology, thus far it appears that 
wireless technology has been more effective at serving rural America 
because it does not face the same deployment hurdles as those companies 
seeking to compete using wireline technology. This may be due to the 
fact that wireless telephony was effectively born in the 1990s when our 
national spectrum policy permitted multiple providers to enter the 
marketplace on a relatively equal footing. In contrast, wireline 
telephony evolved through a regulated monopoly model, that even today 
we are striving to adapt to the market and technological world of 2001.
    Question 5. Given the largely rural make up of the Eastern part of 
my state of Oregon, the timely deployment of broadband technologies to 
these areas is of great interest to me. I am concerned that imposing 
technology-based restrictions on access to the local loop would 
undermine our objective of promoting broadband competition in rural 
areas. What is your view on such restrictions?
    Answer. I am not yet familiar with such restrictions and therefore 
I can offer not opinion at this time. If confirmed I commit to learning 
more about whether any FCC regulatory policies may inadvertently create 
a hurdle for broadband deployment to rural areas.
    Question 6. The transition to digital television continues to be an 
issue of great importance. In fact, this Committee held a very 
informative hearing on this issue just a few months ago. What are your 
thoughts on how this transition can be done more efficiently and 
effectively?
    Answer. My primary background is in the area of telecommunications 
and I am not as familiar with the pending broadcast proceedings. Having 
said that, I am aware of the need to ensure a smooth transition for 
digital television and I am excited about the range of new digital 
services that are now or will soon become available to the public. In 
order to encourage this transition, the FCC has an obligation to ensure 
its rules are clear. In addition, it may also be appropriate for the 
FCC to provide a forum for the resolution of controversial issues that 
may delay the transition. Although some of the factors affecting the 
transition are out of the control of the FCC, whenever the FCC can have 
an impact on the process, such as through its regulatory review 
process, it should move quickly to provide clear, definitive guidance 
to the industry.
    Question 7. Deregulation has significantly affected the 
broadcasting industry. As we all know, the marketplace has become more 
competitive over the past several years. What are your thoughts on what 
can be done in order to keep the broadcast industry competitive in the 
marketplace today? What about in the smaller and medium sized markets?
    Answer. At this time I have no specific suggestions regarding 
action the FCC should take to ensure the continued existence of a 
competitive broadcasting industry but this is certainly an area I 
intend to learn more about should I be confirmed. Clearly, diversity of 
voices and the need to ensure effective competition will be key 
elements in any discussion regarding broadcast ownership. In addition, 
free over the air broadcasters play a very significant role in the 
marketplace, particularly in small and medium sized markets. Again, 
since I have limited experience in this area I look forward to further 
discussions with you and your staff to further my understanding of the 
challenges affecting the broadcasting industry.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. John McCain to 
                         Kathleen Q. Abernathy

    Question 1a. The responsibilities reposed in the Commission demand 
that its Commissioners understand that their job will require their 
full time and undivided attention to the matters before them and 
affirmatively agree to undertake these responsibilities in that manner.
    Will you devote your full time and attention to your duties as a 
Commissioner?
    Answer. Yes
    Question 1b. Are there any activities in which you are now engaged, 
or in which you expect to be engaged, which would divert your full time 
and attention from your duties as a Commissioner?
    Answer. No
    Question 1c. Is there anything in your background, in your previous 
endeavors, or in your current plans, that would make you unsuitable for 
this responsibility?
    Answer. No
    Question 2. The FCC is an independent regulatory agency. Please 
describe how you view the appropriate relationship between the FCC and 
the Congress, and between the FCC and the Administration.
    Answer. It is the FCC's responsibility to administer and implement 
communications policy as set forth by Congress. The FCC also works 
cooperatively with the National Telecommunications and Information 
Administration (NTIA) to develop national telecommunications policies 
and that agency is the representative of the Administration.
    Question 3. The Washington Post recently said, ``the modern-day FCC 
holds sway over much of the so-called New Economy.'' As Commissioners, 
you will therefore have a tremendous impact on the economy and will 
play a crucial role in shaping policy for the digital age. Given this 
responsibility, I would like to know what your general regulatory 
philosophy will be, what set principals will guide you in your decision 
making, and what will be your priorities as a member of the Commission.
    Answer. My past experience with both large and small 
telecommunications companies and in government and private practice has 
molded and shaped my regulatory philosophy. First and foremost, the FCC 
must be faithful to the Telecommunications Act as written by Congress. 
Where the statute grants the Commission discretion, I generally trust 
that competitive markets free of regulatory distortions benefit 
consumers. Thus, fewer rules allow companies to respond to consumer 
demand more quickly and cost effectively and this usually translates 
into more choices and lower prices. Nevertheless, I realize that every 
rule has its exceptions. There are certainly instances where 
competition is so limited that companies need not be responsive to 
consumer demands and in those instances the government must stand ready 
to respond to protect the public interest. There are also instances 
where the government has articulated broad public policy goals that can 
not be furthered absent direct government oversight. Therefore, while 
my general philosophy is deregulatory I appreciate the critical role 
that government plays in protecting consumer interests. If confirmed, 
and under the guidance of Congress, I hope to provide quick, decisive 
answers to industry questions, thereby avoiding regulatory uncertainty, 
and to closely adhere to the mandates of the Telecommunications Act in 
an effort to enhance the credibility of the FCC in the eyes of Congress 
and the Courts.
    Question 4. Each year consumers pay more for cable television 
service. A recent USA Today article points out that cable rates are up 
32 percent since the passage of the 1996 Telecommunications Act. 
Additionally, the FCC's February 2001 Report on Cable Industry Prices 
indicates that cable rates increased 5.8 percent over a 12-month period 
ending July 1, 2000. What, if any, further actions should the 
Commission take to encourage the development of competition in the 
provision of multichannel video programming services?
    Answer. I am certainly well aware of the concerns consumers express 
regarding the prices charged for cable television service. While I 
believe that the FCC has a somewhat limited role to play when it comes 
to rate regulation of cable companies, I do understand that it 
maintains and collects data regarding cable rates and I believe that 
data is critical to analyzing the scope and scale of the problem. In 
addition, the FCC can certainly implement policies that encourage and 
promote alternative forms of competition as a means of putting downward 
pressure on cable rates. I look forward to further discussions with you 
and your staff regarding the extent of this problem and the various 
regulatory options that may be available.
    Question 5. How do you view the relationship between Universal 
Service and competition in the local exchange residential market?
    Answer. Congress in the 1996 Act sought to promote competition 
while at the same time ensuring the preservation and advancement of 
universal service. Therefore, it is very important for the FCC to 
achieve a careful balance between maintaining affordable rates and 
promoting competition.
    Question 6. We have heard a lot recently about increased demands 
for the allocation and reallocation of spectrum. What is your opinion 
of the current spectrum management and allocation process and what 
reforms, if any, would you propose?
    Answer. At this time I will need to hear more about the various 
proposals suggested to reform the U.S. spectrum allocation process but 
I am aware that it is difficult to manage the process efficiently and 
effectively when a variety of different government agencies are 
involved in the process. Given that there are numerous, competing 
demands for spectrum and that government controls the allocation 
process, it is critical that the FCC implement policies that ensure 
spectrum is available for new technologies while continuing to protect 
current users from harmful interference. I look forward to working with 
Chairman Powell in cooperation with NTIA and the Administration to 
develop a comprehensive spectrum policy that recognizes the importance 
of spectrum as a valuable, national resource.
    Question 7a. What are your views on auctions as a means of 
assigning spectrum?
    Answer. Congress has directed the FCC to use auctions as a means 
for assigning some parts of the spectrum and I believe the auction 
process in an important and effective licensing tool for the FCC. While 
it is not an appropriate licensing mechanism in all instances, for 
example where spectrum is assigned to public safety, it appears to have 
improved the FCC's ability to allocate licenses.
    Question 7b. Are there instances in which auctions are currently 
used, but in your view they should not be?
    Answer. The decision as to whether to utilize an auction for 
licensing various parts of the spectrum is fundamentally a legislative 
decision. Nor am I familiar enough with the current auction mechanisms 
to offer an opinion as to whether its use should be curtailed or 
expanded. I am anxious, however, to engage in further discussions with 
you or your staff regarding ways to improve the FCC's auction 
processes.
    Question 7c. Are there instances in which auctions should be used, 
although they currently are not?
    Answer. As stated previously, I am not familiar enough with the 
current auction mechanisms utilized by the FCC to offer an opinion but 
I am anxious to learn more about the impact auctions have on the FCC's 
licensing process.
    Question 8. As The Wall Street Journal recently stated, ``[It has 
been] five years since the passage of the Telecommunications Reform 
Act, [and] huge segments of the industry are in dire straits. Intended 
to spur competition, the law has left long-distance companies 
struggling with low profits, the Bell local phone companies still 
angling to get into long distance, cable-TV rates on the rise, and many 
phone and high-speed Internet service start-ups on the verge of 
collapse. Consumers, many say, aren't much better off than before.'' 
Where do you feel the 1996 Telecommunications Act has worked and where 
it hasn't?
    Answer. I continue to believe that the Communications Act laid out 
an appropriate blueprint for the development of competition and we 
should stay the course. It now appears that many of the predictions 
made at the time of the passage of the Act were overly optimistic and 
it also appears we expected too much too soon from technology and the 
industry. The Act did not change normal business cycles nor did it 
ensure immediate mass availability of certain new technologies. That 
being said, I remain confident that we are headed in the right 
direction.
    Question 9. Last year, I introduced legislation regarding low-power 
FM radio service. Low-power FM is supported by many national and local 
organizations who seek to provide the public with increased sources of 
news and perspectives in an otherwise increasingly consolidated medium. 
This legislation would have struck a fair balance by allowing non-
interfering low-power FM stations to operate while affecting only those 
low-power stations that the FCC finds to be causing harmful 
interference in their actual, everyday operations. You don't have to 
comment on my legislation, but what is the best way to balance existing 
incumbents, while allowing new technology to move forward?
    Answer. It is important to continue to encourage the development of 
new technology, especially those that are spectrum efficient. At the 
same time, the FCC must continue to ensure that existing licensees are 
protected from harmful interference. Therefore, the FCC should 
similarly engage in a balancing process by continuing to implement 
policies that encourage new applications and technologies while also 
clearly articulating the rules of the road when it comes to 
interference standards.
    Question 10. As you know, this Committee has held several hearings 
on the transition to digital television. Several witnesses have 
testified before the Committee that the transition to digital 
television will not occur by the deadlines set by Congress. What can be 
done to facilitate the DTV transition?
    Answer. My primary background is in the area of telecommunications 
and I am not as familiar with the pending broadcast proceedings. Having 
said that, I am aware of the need to ensure a smooth transition for 
digital television and I am excited about the range of new digital 
services that are now or will soon become available to the public. In 
order to encourage this transition, the FCC has an obligation to ensure 
its rules are clear. In addition, it may also be appropriate for the 
FCC to provide a forum for the resolution of controversial issues that 
may delay the transition. Although some of the factors affecting the 
transition are out of the control of the FCC, whenever the FCC can have 
an impact on the process, such as through its regulatory review 
process, it should move quickly to provide clear, definitive guidance 
to the industry.
    Question 11. In light of the dramatic changes in the 
telecommunications marketplace over the last several decades, how do 
you plan to approach review of the FCC's broadcast ownership rules in 
the next biennial review?
    Answer. As required by Congress, it is important for the FCC to 
continually evaluate its rules to ensure they continue to benefit the 
public interest and to ensure they remain relevant and appropriate in 
the rapidly changing telecommunications marketplace. I will keep an 
open mind when it comes to reviewing these rules with the understanding 
that the need to ensure effective competition will be a key element of 
such an analysis.
                               __________
    Response to Written Questions Submitted by Hon. John McCain to 
                            Kevin J. Martin

    Question 1a. The responsibilities reposed in the Commission demand 
that its Commissioners understand that their job will require their 
full time and undivided attention to the matters before them and 
affirmatively agree to undertake these responsibilities in that manner.
    Will you devote your full time and attention to your duties as a 
Commissioner?
    Answer. Yes, I will.
    Question 1b. Are there any activities in which you are now engaged, 
or in which you expect to be engaged, which would divert your full time 
and attention from your duties as a Commissioner?
    Answer. No, there are not.
    Question 1c. Is there anything in your background, in your previous 
endeavors, or in your current plans, that would make you unsuitable for 
this responsibility?
    Answer. No, there is not.
    Question 2. The FCC is an independent regulatory agency. Please 
describe how you view the appropriate relationship between the FCC and 
the Congress, and between the FCC and the Administration.
    Answer. The FCC was created by Congress to develop and implement 
communications policy concerning interstate and international 
communications. The FCC is, in effect, an arm of Congress and is 
responsible for implementing the will of Congress as expressed in 
statute. The agency should maintain an open and cooperative working 
relationship with Congress, seeking guidance as to the letter and 
spirit of the laws the FCC implements and enforces.
    The Commission is, of course, an independent agency. It is 
appropriate for the Administration to express its policy views to the 
Commission, consistent with the FCC's role as an independent regulatory 
agency.
    Question 3. The Washington Post recently said, ``the modern-day FCC 
holds sway over much of the so-called New Economy.'' As Commissioners, 
you will therefore have a tremendous impact on the economy and will 
play a crucial role in shaping policy for the digital age. Given this 
responsibility, I would like to know what your general regulatory 
philosophy will be, what set principals will guide you in your decision 
making, and what will be your priorities as a member of the Commission.
    Answer. I believe the FCC should ensure that American consumers 
continue to enjoy the benefits of the best communications system in the 
world. The Commission should create an environment that fosters 
competition while preserving and enhancing the ability of all Americans 
to enjoy the benefits of new technology and services. Where the 
marketplace is working, competition can serve to maximize consumer 
choice, access and affordability. When the marketplace is not working, 
however, it is incumbent on the FCC to take concrete steps to protect 
consumers and open markets.
    If confirmed, my priorities as a member of the Commission would be: 
(1) to provide a clear regulatory framework that promotes competition 
and enhances the ability of all Americans to enjoy new technology and 
services; (2) to support streamlining regulations where it would 
further competition, foster innovation, and enhance consumer choice; 
and (3) to play a constructive role in defining and implementing needed 
reforms to make the FCC more efficient, effective, and responsive.
    Question 4. Each year consumers pay more for cable television 
service. A recent USA Today article points out that cable rates are up 
32 percent since the passage of the 1996 Telecommunications Act. 
Additionally, the FCC's February 2001 Report on Cable Industry Prices 
indicates that cable rates increased 5.8 percent over a 12-month period 
ending July 1, 2000. What, if any, further actions should the 
Commission take to encourage the development of competition in the 
provision of multichannel video programming services?
    Answer. The Commission should indeed strive to encourage increased 
competition among multichannel video programming services. I look 
forward to reviewing further action the FCC could take to foster the 
deployment of new, video-capable technologies to remove entry barriers 
and obstacles to full multichannel competition for existing video 
technologies, and to vigorously enforce the Commission's existing rules 
to these ends.
    Question 5. How do you view the relationship between Universal 
Service and competition in the local exchange residential market?
    Answer. In 1996, Congress codified the long-held view that all 
Americans should be able to enjoy the benefits of access to affordable 
communications services. Congress also directed the FCC to make 
previously implicit subsidies explicit and competitively neutral. As a 
result, providers should be able to offer services at a rate that is 
affordable for consumers to purchase while still earning a competitive 
return on its investment--thereby creating the incentive for providers 
to enter, and compete in, high-cost markets.
    Question 6. We have heard a lot recently about increased demands 
for the allocation and reallocation of spectrum. What is your opinion 
of the current spectrum management and allocation process and what 
reforms, if any, would you propose?
    Answer. Spectrum management is an issue of global competitiveness 
and might well prove the most important trade issue of this decade. 
Allocation decisions have become increasingly complex as technology 
advances, user demand grows, competitors increase, and international 
considerations become more prominent. The FCC needs to respond to these 
challenges by improving its spectrum management and allocation process. 
Sound, efficient spectrum management must strike a balance between the 
desire to facilitate deployment of innovative technologies that make 
new and more efficient uses of spectrum, and the potential for harmful 
technical interference to existing licensees.
    Question 7a. What are your views on auctions as a means of 
assigning spectrum? Are there instances in which auctions are currently 
used, but in your view they should not be?
    Answer. I am a firm supporter of auctions as a useful tool to 
efficiently assign spectrum, while enabling taxpayers to benefit from 
the sale of this public property. It is important, however, that the 
auction process remain at its core a means of assigning spectrum, not 
simply a means of raising revenue absent consideration of 
communications policy. I have not yet had the opportunity to study 
whether there are specific instances in which auctions are currently 
used but should not be.
    Question 7b. Are there instances in which auctions should be used, 
although they currently are not?
    Answer. Again, I have not yet had the opportunity to study whether 
there are instances in which auctions are not currently used but should 
be. As I stated above, however, I believe auctioning spectrum can 
promote efficient assignment and I support the use of this tool 
wherever appropriate.
    Question 8. As The Wall Street Journal recently stated, ``[It has 
been] five years since the passage of the Telecommunications Reform 
Act, [and] huge segments of the industry are in dire straits. Intended 
to spur competition, the law has left long-distance companies 
struggling with low profits, the Bell local phone companies still 
angling to get into long distance, cable-TV rates on the rise, and many 
phone and high-speed Internet service start-ups on the verge of 
collapse. Consumers, many say, aren't much better off than before.''
    Where do you feel the 1996 Telecommunications Act has worked and 
where it hasn't?
    Answer. The 1996 Act was the first major review of the Act since 
1934, and it succeeded in affirming and refining a course towards 
convergence, competition across and within markets, and deregulation. 
Although it is probably too soon to declare the Act a success or 
failure in most areas, it is clear that competition in local 
residential markets has not taken hold as quickly as most observers in 
1996 hoped for or anticipated.
    The Act has been more successful in the area of wireless services. 
Recognized and building upon the then-emerging innovation in mobile 
wireless technology, the 1996 Act set forth policies that have fostered 
competition and continued growth.
    Question 9. Last year, I introduced legislation regarding low-power 
FM radio service. Low-power FM is supported by many national and local 
organizations who seek to provide the public with increased sources of 
news and perspectives in an otherwise increasingly consolidated medium. 
This legislation would have struck a fair balance by allowing non-
interfering low-power FM stations to operate while affecting only those 
low-power stations that the FCC finds to be causing harmful 
interference in their actual, everyday operations. You don't have to 
comment on my legislation, but what is the best way to balance existing 
incumbents, while allowing new technology to move forward?
    Answer. Promoting the deployment of new technology can enhance the 
public interest in a rich diversity of services if this can be done on 
a viable basis free of harmful interference. The Commission should 
always work to efficiently use spectrum by fostering the use of 
services that will not cause such interference, and by promptly 
investigating and acting upon claims of harmful interference.
    Question 10. As you know, this Committee has held several hearings 
on the transition to digital television. Several witnesses have 
testified before the Committee that the transition to digital 
television will not occur by the deadlines set by Congress. What can be 
done to facilitate the DTV transition?
    Answer. The DTV transition is well underway, and I am excited about 
the range of new digital services that are becoming available to the 
public. But conversion from analog to digital television is one of the 
most complex undertakings the broadcast industry has ever pursued, and 
the DTV transition clearly has been slower and less certain than 
expected. To help facilitate the ongoing transition, the FCC should 
provide effective leadership by coordinating and expediting necessary 
regulatory determinations while ensuring that the various parties 
involved continue working toward resolution of the key remaining 
issues.
    Question 11. In light of the dramatic changes in the 
telecommunications marketplace over the last several decades, how do 
you plan to approach review of the FCC's broadcast ownership rules in 
the next biennial review?
    Answer. As instructed by Congress in the 1996 Telecommunications 
Act, I would closely review the record to determine whether the FCC's 
broadcast ownership rules ``are necessary in the public interest as the 
result of competition.'' Diversity of voices and competition will 
continue to be key elements in such an analysis. This analysis must be 
rigorous, based on a strong record and well reasoned, if the FCC's 
decision is to withstand judicial scrutiny.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Gordon Smith to 
                            Kevin J. Martin

    Question 1. The price a local exchange carrier charges in rural 
areas is artificially low and kept low because of our universal service 
policy. For competition to develop, a business needs to attract that 
customers. How do we attract companies to compete with the local 
exchange carriers and build out advanced services to rural areas when 
the price normally charged is kept universally low?
    Answer. Successfully implementing a policy that promotes 
competition and preserves universal service is not just a statutory 
requirement, it is essential if all Americans are to enjoy the benefits 
of new technologies and services. Congress established a structure that 
would keep services in high cost areas affordable, but also would grant 
providers in these markets subsidies that would be explicit, 
sufficient, and competitively neutral. As a result, providers should be 
able to offer services at a rate that is affordable for consumers to 
purchase while still earning a competitive return on its investment--
thereby creating the incentive for providers to enter, and compete in, 
high-cost markets.
    Universal service issues are complex, but progress is being made to 
fulfill the statutory mandates of Section 254--providing reasonably 
comparable services at reasonably comparable prices for rural areas. 
For the Commission to get the answers right, it must achieve a careful 
balance between maintaining affordable rates and promoting competition 
and the deployment of services.
    In addition, advances in technology hold the promise of being able 
to provide services to rural areas in more efficient and cost effective 
manner. Fixed wireless technologies, for instance, hold particular 
promise for these underserved areas.
    Question 2. As broadband continues to be deployed in the urban 
technology communities in Oregon, I am hearing from Oregonians in some 
of these lesser populated areas that they are afraid that their 
communities are going to be passed by. Our largest local exchange 
carriers in Oregon are Qwest, Verizon and Sprint, and they are all 
working with the Oregon Public Utility Commission to build out their 
infrastructure throughout the state. What concerns me, is that rural 
deployment is not being made as rapidly, or as broadly in our rural 
areas, as I would like to see. When I raise this issue with the local 
exchange carriers who serve many of these communities with telephone 
service, they say that the regulatory policies that were designed to 
promote competition in their telephone business are being extended to 
include these new advanced services, and these regulatory costs slow 
down the investment available to bring advanced services to rural 
areas. So while I fully support the notion that competition in 
telephone service has been good for our urban business communities, I 
am concerned that those same policies, when applied to these new 
advanced services, are making it harder for my rural constituents to 
gain access to these new technologies. Would you discuss your approach 
to the regulatory role for these advanced new services, and whether you 
view the increased costs for the local exchange carriers to be a 
problem for rural America?
    Answer. In the 1996 Act, Congress created an evolving definition of 
universal service to ensure that rural areas received reasonably 
comparable services at reasonably comparable prices to urban areas. 
Congress also provided the FCC with great flexibility in Section 706 to 
encourage the deployment of advanced services to all Americans by price 
cap regulation, regulatory forbearance, measures that promote 
competition in the local telecommunications market, or other regulating 
methods that remove barriers to infrastructure investment.
    I do believe that the cost for local exchange carriers in rural 
America to provide advanced services is a deep concern for all of us, 
and I would examine the existing situation closely in order to make an 
informed judgment about whether additional action is needed.
    Question 3. These advanced new services called ``broadband'', are 
provided with a variety of new technologies. The ``local exchange 
carriers'' have DSL service, cable companies have cable modems, and 
satellite and wireless carriers are also in the market, and maybe 
others will be entering that we don't even know about. All have some 
sort of government regulation whether local, state or federal. Do you 
think our policy should be technology neutral, or do you think we 
should continue our current policies which apply different regulatory 
policies to each competitor based on the technology used to provide the 
broadband access?
    Answer. One of the biggest challenges facing the Commission today 
is technological convergence, which has resulted in comparable services 
being regulated differently depending on the nature of the underlying 
technology. The Commission's proper role is not to pick winners and 
losers among competing technologies. Rather, it should strive to adopt 
policies that are technologically neutral. There are constraints on its 
ability to accomplish this task, however, for the Communications Act 
and historical precedent treat various technologies differently, 
subjecting them to separate and distinct regulatory regimes.
    Question 4. When I look at the telecommunications market that has 
evolved in this country during the past five years, it appears to me 
that the most successful sector of the market in terms of growth, 
attracting investment, deploying new technologies, and providing new 
services to amazing numbers of Americans, both rural and urban, is 
wireless communications. It seems that real customer demand has 
``pulled'' the wireless investment and new technologies into the 
marketplace, not only here, but around the world. Even in areas where 
they have never had any communications network. On the other hand, 
these ``pro-competitive regulatory policies'' as applied to the 
telephone companies seem to be slowing down investment and delaying 
technological innovation, in their attempts to ``push'' competition 
into the marketplace. As a regulator, do you think the role of 
government should be to ``push'' competition through regulatory 
policies, or to allow deregulated markets to ``pull'' the investments 
create competition? Do you see any disparity between wireless and 
wireline in bridging the digital divide?
    Answer. I believe the role of the FCC is to ensure that American 
consumers continue to enjoy the benefits of the best communications 
system in the world. The Commission should promote an environment that 
fosters competition while preserving and enhancing the ability of all 
Americans to enjoy the benefits of new technology and services.
    In the 1996 Act, Congress instructed the FCC to foster competition 
by implementing specific deregulatory and market-opening provisions. 
Where the marketplace is working, competition rather than regulation 
will help maximize consumer choice, access and affordability. When the 
marketplace is not working, however, it is incumbent on the FCC to take 
concrete steps to protect consumers and open markets.
    I believe continued deployment of both existing and advanced 
wireline and wireless services will be critical to enabling consumers 
in rural areas to enjoy services and prices that are reasonably 
comparable to that provided in urban America. The FCC needs to ensure 
it is creating a legal framework that encourages investment in new 
technologies that could facilitate deployment to underserved areas. 
Fixed wireless, for instance, hold particular promise as a means of 
providing service to rural areas in a more efficient and cost effective 
manner.
    Question 5. Given the largely rural make up of the Eastern part of 
my state of Oregon, the timely deployment of broadband technologies to 
these areas is of great interest to me. I am concerned that imposing 
technology-based restrictions on access to the local loop would 
undermine our objective of promoting broadband competition in rural 
areas. What is your view on such restrictions?
    Answer. The timely deployment of broadband services to rural areas 
should be a priority concern. The goal should be to facilitate 
investment while removing unnecessary regulatory barriers. In such 
respects, technology-based restrictions need to be examined to see if 
they are outdated or counterproductive.
    Question 6. The transition to digital television continues to be an 
issue of great importance. In fact, this Committee held a very 
informative hearing on this issue just a few months ago. What are your 
thoughts on how this transition can be done more efficiently and 
effectively?
    Answer. The DTV transition is well underway, and I am excited about 
the range of new digital services that are becoming available to the 
public. But conversion from analog to digital television is one of the 
most complex undertakings the broadcast industry has ever pursued, and 
the DTV transition clearly has been slower and less certain than 
expected. To help facilitate the ongoing transition, the FCC should 
provide effective leadership by coordinating and expediting necessary 
regulatory determinations while ensuring that the various parties 
involved continue working toward resolution of the remaining issues.
    Question 7. Deregulation has significantly affected the 
broadcasting industry. As we all know, the marketplace has become more 
competitive over the past several years. What are your thoughts on what 
can be done in order to keep the broadcast industry competitive in the 
marketplace today? What about in the smaller and medium sized markets?
    Answer. We have witnessed a dramatic expansion in the video 
marketplace over the last several years. New entrants using a variety 
of technologies have increased both the number of voices and diversity 
of viewpoints. The role of the FCC is to review this market on an 
ongoing basis to ensure that its actions encourage competition, not 
impede it. More specifically, Congress has instructed the FCC, in the 
context of a biennial review, to assess the impact that recent mergers 
and other factors have had on the media marketplace, and to determine 
whether these market changes demand a corresponding change in the FCC 
rules in order to ensure that such rules continue to serve the public 
interest. Of course, diversity of voices and competition will continue 
to be key elements in such analysis. The impact may vary based upon the 
size of the market, and the FCC should consider this factor in its 
assessment.
                                 ______
                                 
 Response to Written Questions Submitted by Hon. Ernest F. Hollings to 
                            Kevin J. Martin

    Question 1. The FCC has taken action to reform Universal Service 
funding for both large and small carriers. It is also in the process of 
reforming access charges for small carriers, and has opened a 
proceeding to review the existing structure of intercarrier 
compensation. In addition, I expect that voice traffic will 
increasingly migrate to the Internet, potentially bypassing the access 
charge regime. With that said, what role do you believe the FCC has 
with respect to balancing the need to ensure that the universal service 
fund remains sufficient to address the needs of consumers in high cost 
areas as well as ensuring that rates across the country remain 
affordable?
    Answer. Universal service is a critical component of U.S. 
communications policy. Congress has enacted into law our desire as a 
society that all Americans should be able to access and afford 
communications services. Yet, universal service issues are as 
challenging as they are important. The FCC must ensure that there are 
sufficient funds to fulfill the statutory mandates of Section 254--that 
is, to ensure that rural areas have access to reasonably comparable 
services at reasonably comparable rates as urban areas. In so doing, 
the FCC must achieve a careful balance between preserving ubiquitous 
universal access, maintaining affordable access to communications 
services across the country, and promoting the deployment of services 
to all Americans. This balance requires the FCC to review continually 
its universal service policies as technology and the marketplace 
develop, in order to be sure that its statutory mandate and the 
underlying policy goals continue to be met.
    Question 2. Mergers continue to take place in the broadcast 
industry. The FCC also plans to review the various broadcast ownership 
rules including the 35 percent cap and the newspaper cross ownership 
rules. Are you concerned about the increasing consolidation of the TV 
industry, and the already highly consolidated radio industry? Are you 
concerned about the impact this consolidation will have on diversity of 
programming, viewpoint, and ownership?
    Answer. I am concerned about consolidation and concentration in the 
broadcast industry and with preserving a diversity of voices. I am also 
concerned about maintaining a competitive broadcast industry. Indeed, 
these are key elements underlying the Commission's ownership rules. If 
confirmed, as part of the FCC's next requisite biennial review of the 
broadcast industry regulations, I will closely review the record to 
assess the impact that recent mergers and other factors have had on the 
marketplace. Without question, the diversity of voices and the 
remaining levels of competition will continue to be key elements in 
this analysis. To satisfy our statutory obligations and meet the 
standards established by reviewing courts, this analysis must be 
rigorous and whatever conclusions are reached must be clearly 
articulated and justified with the record before the Commission.
    Question 3. Over the past few years, the issues that are critical 
to the digital transition have been split into several separate FCC 
proceedings handled by different bureaus. Currently, digital biennial 
review issues, carriage issues, interoperability issues, and spectrum 
reallocation issues--to name a few--are being handled in different 
bureaus within the Commission. Thus, when decisions are made, they are 
made incrementally and possibly without considering the larger picture 
of what the DTV transition should look like. This creates a great deal 
of uncertainty in the industry about what regulatory standards will 
apply, making it difficult to create effective business plans to bring 
the wonders of DTV to the American public. What vision of the DTV 
transition will you bring to the Commission and how would you ensure 
that decisions are made comprehensively, fairly and with finality?
    Answer. The DTV transition is well underway, and I am excited about 
the range of new digital services that are becoming available to the 
public. But conversion from analog to digital television is one of the 
most complex undertakings the broadcast industry has ever pursued, and 
the DTV transition clearly has been slower and less certain than 
expected. To help facilitate the ongoing transition, the FCC should 
provide effective leadership by coordinating and expediting necessary 
regulatory determinations while ensuring that the various parties 
involved continue working toward resolution of the remaining issues.
    Question 4. In 1999, the FCC determined that no single wireless 
provider can possess more than 45 MHz of spectrum in most markets, and 
more than 55 MHz in rural markets (out of 180 MHz available). This cap 
is designed to preserve multiple wireless competitors in individual 
markets and limit the amount of consolidation that can occur in any one 
market. The existence of the cap has helped create markets with four to 
seven major competitors. Some wireless companies note that the wireless 
markets are sufficiently competitive and that lifting the spectrum caps 
would allow them to provide third generation wireless service. However, 
some smaller and more recent entrants are concerned that lifting of the 
cap would result in larger cellular carriers purchasing them. I am 
concerned that changes with respect to the spectrum caps may adversely 
impact competition in the wireless marketplace. Do you believe that it 
is important to maintain a competitive wireless marketplace?
    Answer. Yes, I believe that promotion and maintenance of a 
competitive wireless marketplace is not just important, but essential 
to the successful development and deployment of affordable services to 
all Americans. Clearly, though, the Commission should approach any 
review of its spectrum cap with a full appreciation of the vital role a 
competitive wireless industry will play in ensuring no Americans are 
left behind in today's technological revolution. The Commission also 
should look to see whether its rules promote or impede these goals and 
should assess their effect upon innovation and the availability of 
improved services to the public.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Barbara Boxer to 
                            Kevin J. Martin

    Question 1. As interactive television becomes a common method for 
accessing the web over the next few years, are you concerned that 
companies who are cable providers, own channels, and have websites 
might discriminate against the content of their competitors?
    Answer. Interactive television is an emerging arena promising an 
array of new services and challenges. The Commission recently issued a 
Notice Of Inquiry seeking comment on some of the issues related to 
interactive television. The FCC compiled a record of comments that 
reflect a variety of viewpoints, including such concerns about possible 
discrimination as well as cautions against premature regulation of 
nascent technologies. I look forward to closely reviewing the record, 
if confirmed.
    Question 2. I understand that the FCC has put out for comment a 
proposal to change the E-rate funding plan for year 4 of the program, 
to not allow those who participated in the program in year 3 (the 
current year). While I understand that it is important to spread the 
program around, would it not be better to make this change at the 
beginning of the next application phase than at the end of the current 
application phase? Isn't this changing the rules in the middle of the 
game?
    Answer. I am always concerned about, and hesitant to make, a change 
to the rules in the middle of the game, but I would need to review the 
proposed change and the supporting rationale for it in order to 
determine whether circumstances warrant such action in this situation. 
I am not familiar with the FCC's reasons for suggesting this change and 
thus am not able to make a determination of the merits. I fully agree, 
however, that implementation of the E-rate program must be fair and 
nondiscriminatory to all schools and libraries.
    Question 3. There has been consistent RBOC (Regional Operating Bell 
Companies) failure to meet the Section 271 metrics imposed in Texas and 
NY. The current penalty system is not acting as a deterrent to this 
behavior. Do you intend to initiate formal Commission review of merger 
condition violations and ``backsliding'' following Section 271 
approval?
    Answer. If confirmed, I will support effective enforcement of 
merger conditions and our Section 271 authority to promote competitive 
and open local markets. If claims of violations and ``backsliding'' are 
best addressed in the context of a formal FCC review, I would support 
such action.
    Question 4. Do you support Chairman Powell's view that penalties 
and forfeitures for violations of the FCC's rules and orders need to be 
substantially increased so that they deter conduct rather than be 
viewed as another cost of doing business?
    Answer. Yes, I strongly support this initiative.
    Question 5. To ensure that new market entrants are not impeded by 
poor RBOC performance and that the actual injured party is compensated, 
would you support the development of national performance standards and 
penalties for ordering, provisioning, maintenance and repair for all 
RBOCs, irrespective of 271 status, and direct payment to the injured 
party?
    Answer. Local competition lags well behind the levels anticipated 
by Congress and the FCC, and the Commission should make the promotion 
of local competition a top priority. The development of national 
performance standards and penalties is an interesting idea and, if 
confirmed, I look forward to exploring the merits of the proposal. 
Obviously, any such evaluation would have to look at the Commission's 
statutory authority and the appropriate relationship with state public 
utility commission policies.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Max Cleland to 
                            Kevin J. Martin

    Question 1. I am a former Army Signal officer. I know that in order 
to deliver communications, you need spectrum over which those signals 
travel. What role do you believe the FCC has in promoting smart 
spectrum policy? How do you envision developing a relationship with the 
National Telecommunications & Information Administration (NTIA) to 
ensure good communications between the public and private spectrum 
managers?
    I would also like your comments on how the U.S. compares to Europe 
and Asia as far as domestic spectrum policy for each of these areas is 
concerned.
    Answer. Spectrum management is an issue of global competitiveness 
and might well prove to be the most important trade issue of this 
decade. Allocation decisions have become increasingly complex as 
technology advances, user demand grows, competitors increase, and 
international considerations become more prominent. The FCC needs to 
respond to these challenges by establishing a clear, smart spectrum 
policy that strikes a balance between the desire to facilitate 
deployment of innovative technologies that make new and more efficient 
uses of spectrum, and the potential for harmful technical interference 
to existing licensees. As you suggest, the Commission also needs to 
ensure an effective relationship with NTIA based on an open and ongoing 
dialogue about public and private spectrum needs. This collaboration is 
not just statutorily required, but it also is increasingly important to 
promote the efficient use of spectrum.
    U.S. spectrum policy is in fact an amalgamation of the policies of 
the FCC and NTIA, for it must reflect the needs of the private sector 
and government while ensuring our national security is not compromised. 
Although I have not yet had the opportunity to become closely familiar 
with the spectrum policies of Europe and Asia, my understanding is that 
the spectrum management responsibilities in many governments of Europe 
and Asia are not as widely shared as they are in the U.S. While these 
systems may yield a higher level of efficiency in decision-making in 
some cases, the U.S. has achieved significant innovation, in part, 
because of the various interests that participate in our spectrum 
policy process. Again, it is important for the U.S. to strive for a 
continuing balance between the need for full participation and the need 
for timely, forward-looking decision-making.
    Question 2. I strongly support free over-the-air television, and I 
know that without the must carry obligation, many broadcasters would 
not reach their audiences. A few years ago, Congress acted to level the 
playing field between multi-channel broadcasters by requiring direct 
broadcast satellite (DBS) systems to comply with the same must carry 
regulations as the cable industry. The satellite industry has 
subsequently challenged this provision in the federal courts.
    In Georgia, for instance, we are served by 11 local television 
``Designated Market Areas.'' The DBS operators carry some local 
channels in two markets: 10th-ranked Atlanta and 35th-ranked 
Greenville-Spartanburg, which primarily serves the Carolinas. But in 
the other markets, DBS providers carry no Georgia stations.
    The NAB and local broadcasters, including three stations in GA--
WPXA (Rome, GA--PAX); WBSG (Brunswick, GA--PAX); and WRDW (Augusta, 
GA--CBS)--have filed comments with the FCC supporting the opportunities 
of Northpoint Technology and its Broadwave affiliates. The broadcasters 
point out that Northpoint may be able to carry local channels on a must 
carry basis in all 210 television markets. Could you discuss local-
into-local implementation and the potential opportunities presented by 
Northpoint technology?
    Answer. Congress carefully crafted a structure for DBS must-carry 
that is analogous to, but distinct from, cable. The FCC has taken steps 
to implement this framework, and, if confirmed, I will work to ensure 
its efficient implementation and enforcement.
    My understanding is that the Northpoint matter is now pending 
before the Commission following detailed engineering studies. The 
issues appear to be technical and policy in nature, raising questions 
of interference and whether the spectrum should be auctioned. If 
confirmed, I certainly will take a hard look at the merits of this 
matter and encourage timely action by the agency.
    Question 3. Does the FCC see unbundled network element platform 
(UNE-P) as a legitimate vehicle for providing competitive service to 
residential and small business customers? For multi-location business 
customers?
    Answer. Although I am not able to speak for the current FCC, 
clearly, residential and business customers alike could benefit from 
further competition in local exchange services. If confirmed, I will 
make the enhancement of local competition a priority and will study the 
merits of UNE-P as a means to that end in the residential and business 
markets generally, and in the multi-location business market in 
particular.
    Question 4. As you know local phone service competitors have been 
working hard to gain more customers. Is there a particular segment of 
the population--residential, small business, medium business, large 
business, urban, suburban, and rural--that in your opinion has received 
the majority of the benefits of competition in the local phone market? 
Where is more work needed?
    Answer. Many observers believe that businesses have enjoyed the 
most competition among local exchange providers, but that there is less 
competition for residential consumers. The goal should be to promote an 
environment that fosters competition in all markets for local phone 
service--particularly those in rural areas.
    Question 5. There has been much talk about revamping the FCC. I 
would like to get your comments on this. Are there changes you would 
make? If so, what are they?
    Answer. Having worked at the Commission, I have great respect for 
the agency and its staff, but also an appreciation for ways in which 
the FCC clearly could benefit from reform. If confirmed, I will support 
the efforts initiated by Chairman Powell to spearhead a comprehensive 
FCC reform project, and I look forward to working with the Chairman and 
my colleagues on this critical effort to enhance the efficiency, 
expertise, and effectiveness of the agency.
    Question 6. Several states have established their own policies on 
certain issues. For example, Pennsylvania, New York, and Texas has 
established their own directives on UNE-P. What role do you see the 
state public service commissions serving in shaping and complementing 
federal communications policy?
    Answer. Federal communications law makes clear that state public 
service commissions have an important role in shaping communications 
policy and are a complement to federal regulation and policy. Indeed, 
it is important that the FCC cooperate with state PUCs in several 
areas, most notably competition in local exchange markets. Important 
formal and informal mechanisms exist to facilitate the exchange of 
views between states and the Commission, and I look forward to 
participating actively in this dialogue.
    Question 7. What do you see as the role of the FCC in the merger 
review process?
    Answer. In reviewing proposed mergers, the FCC must ensure that the 
transfer of licenses serves the public interest, convenience and 
necessity. This review requires a fact-specific inquiry. Each merger 
presents unique issues and I would evaluate each on its own merits.
    Question 8. Currently, an Internet service provider (ISP) opens the 
entire world wide web to its user. However, there are some who are 
concerned that broadband capability, whether via a computer or 
television, will allow an ISP to limit consumers' access or prohibit 
their accessing certain sites. I would like to get your comments on the 
capability to, and fairness of, limiting access.
    Answer. Technology exists that allows ISPs some level of ability to 
limit access to content. This ability could be used to the benefit of 
consumers; for instance, parents with young children may prefer an ISP 
that limits access to adult content. On the other hand, if ISPs use 
technology to limit access in a way contrary to what consumers desire, 
customers will surely look elsewhere. If alternative providers do not 
exist, however, this could indeed raise concern. The Commission must be 
vigorous in protecting consumers, but I am optimistic that the 
marketplace for ISPs will develop in a manner that will continue to 
promote consumer choice.
    Question 9. When we passed the Telecommunications Act in 1996, we 
intended that all American consumers, including those in rural areas, 
would benefit from competition through more choices, lower prices, and 
new and innovative services. Since that time, there hasn't been much 
competitive entry in rural areas. What specific steps can the FCC take 
to bring local competition to all areas of the country?
    Answer. As we have witnessed over the last five years, bringing 
local competition to all Americans is not a simple task. The FCC must 
work to create a regulatory environment that provides incentives to 
invest in new technologies and to enter new markets, particularly in 
rural and underserved areas. Establishing this framework will require 
the FCC to be vigilant in policing discriminatory conduct and 
identifying and removing entry barriers. It must also ensure that the 
universal service program strikes the right balance between maintaining 
affordable rates and promoting competition and the deployment of 
services.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Daniel K. Inouye to 
                            Kevin J. Martin

    Question 1. The Communications Act gives the FCC authority to act 
based on the public interest. This authority provides an FCC 
commissioner with an ability to balance the issues before them based on 
the ``greater good.'' I believe this authority is important and 
necessary in developing communications policy and ensuring such factors 
as rates, competition, quality of service, and consumers are protected. 
What importance do you place on the FCC's public interest authority?
    Answer. The FCC's public interest authority is the cornerstone of 
the FCC's power to establish and implement communications policy that 
helps ensure American consumers continue to have access to the best 
communications system in the world.
    Question 2. There have been many mergers and substantial 
consolidation in the marketplace. How can the FCC ensure that rates, 
service, innovation, and competition are not undermined by 
consolidation?
    Answer. Congress and the Commission together establish the 
framework and implementing guidelines for the degree of permissible 
consolidation in regulated communications industries. This regulatory 
structure incorporates a review of many factors, including the impact 
of mergers on the marketplace, in terms of the effect on rates, 
service, innovation, competition, and diversity. Through this 
regulatory process and by reviewing individual mergers, the FCC ensures 
that the transfer of control of an FCC license serves the public 
interest.
    Question 3. Congress passed the 1996 Telecommunications Act 
outlining a structure to introduce competition into the local markets. 
Under the Act, the FCC is required to oversee a section 271 process. 
From your perspective, how important is it for our local markets to be 
open to competition?
    Answer. It is extremely important that our local markets be open to 
competition. Doing so is both a statutory requirement and an essential 
predicate to bringing the benefits of choice and affordable access to 
all Americans.
    Question 4. Congress often hears from competitors in the 
marketplace about difficulties in gaining access to the phone networks 
of incumbent carriers. Chairman Powell recently stated that Congress 
should increase the FCC's enforcement authority including increasing 
its forfeiture authority. Do you believe that the FCC should more 
vigorously pursue violators of its local competition rules?
    Answer. Yes, I support Chairman Powell's proposal and desire to 
vigorously enforce rules aimed at increasing competition.
    Question 5. For many years, the FCC crafted policies to integrate 
the so called ``off-shore'' points, including Hawaii and Alaska, into 
the structure of telecommunications rates and services prevailing in 
the Mainland states. Historically, long distance rates to these states 
were often greatly in excess of those prevailing in the Mainland 
states. Indeed, at one point these were treated as ``international 
points'' for purposes of the carriers' rate structures. Also, the FCC 
encouraged the averaging of rates so as to assure that all Americans, 
including residents in rural and remote areas, had the benefit of 
reasonably priced telecommunications. This was perceived as essential 
to the social and economic integration and development of these areas. 
In the Telecommunications Act of 1996, Congress added Section 254(g) to 
the Communications Act of 1934. This provision codified and expanded 
these FCC policies. Both at the FCC and in Congress, these steps were 
deemed necessary even with increased competition in telecommunications 
in order to assure that all Americans benefitted from the changes in 
the telecommunications market. Subsequently, the FCC issued rules 
implementing the statutory mandate, which are included in the 
Commission's rules as 47 CFR 64.1801.
    Are you familiar with these policies? Are you familiar with the 
telecommunications issues facing rural and remote areas? Do you agree 
with the policies set forth in the FCC's rate integration and 
geographic averaging policies and the Congressional mandate?
    Answer. I am familiar with these policies and am very concerned 
about the telecommunications issues facing rural and remote areas. I 
believe that the rate integration and geographic averaging policies are 
consistent with the governing statute and, if confirmed, I will 
faithfully implement the Congressional mandate to promote competition 
in all areas of America and to ensure that rural areas have access to 
reasonably comparable services at reasonably comparable rates as urban 
areas.
    Question 6. For many years, direct broadcast satellite (DBS) 
providers did not serve residents of the States of Alaska and Hawaii. 
This prompted the FCC to adopt rules in 1996, which mandated DBS 
service to the States using all DBS orbital locations with a clear view 
of the States. Some limited service was provided starting late in 2000, 
however, this service is not equivalent to the service available in the 
continental United States in terms of price, quality, or quantity of 
programming. Are you familiar with the FCC's policies governing the 
provision of DBS services to Hawaii and Alaska? Do you agree that the 
FCC should take steps to assure that residents in these states have 
available the DBS services that are substantially equivalent to those 
provided on the Mainland?
    Answer. I generally agree that we must work in a cooperative manner 
to make sure that no one is left behind and that all Americans enjoy 
access to new services such as DBS. I am not specifically familiar with 
the FCC's policies governing the provision of DBS services to Hawaii 
and Alaska, but I am eager to see all Americans enjoy the benefits of 
competition among multiple video programming services. If confirmed, I 
will examine this issue to ensure that providers comply with all 
applicable statutory and regulatory provisions.
    Question 7. On several occasions over the past twenty years, we 
have adopted legislation and made findings to the effect that the FCC 
needs to ensure that minorities and women enjoy every reasonable 
opportunity to seek work in the broadcast and cable industries on the 
basis of merit. Our concern is that these industries use public 
spectrum and rights of way worth billions of dollars, and these 
industries play a special role in the socialization of children, the 
formation and dissemination of culture, and the effectuation of 
democracy; thus, race and gender exclusion is unacceptable. Assume that 
the FCC will implement equal employment opportunities policies in a 
manner that meets constitutional standards.
    Do you favor FCC intervention to ensure, at a minimum, that 
broadcast and cable companies analyze their recruitment efforts 
periodically to be sure that they are reaching the entire community? Do 
you favor FCC intervention to ensure that these companies take steps to 
ensure that they also recruit minorities and women?
    Answer. I am concerned about ensuring a fair opportunity for all 
Americans to participate in the media at every level. If confirmed, I 
would encourage effective minority outreach programs implemented in a 
manner that meet constitutional standards.
    Question 8. Since at least l977, there has been a broad consensus 
among FCC commissioners that policies to foster minority ownership of 
broadcast and cable facilities serve the public interest. FCC Chairmen 
Wiley, Ferris, Fowler, Patrick, Sikes, Lee, Quello, Kennard and Powell 
have endorsed these efforts, as have the National Association of 
Broadcasters and the National Cable Television Association, among many 
others. As far as we are aware, only one FCC commissioner since l977 
has ever opposed these policies. Currently, according to NTIA, only 
about 3 percent of broadcast properties are owned by minorities; the 
Minority Media and Telecommunications Council estimates that these 
properties account for only about l percent of broadcast industry asset 
value.
    Assuming that the FCC's policies are operated in a manner that 
satisfies the constitutional standards, do you think it is good policy 
for the federal government to take pro-active steps to foster minority 
media ownership? In the past, the FCC has utilized such policies as tax 
incentives and bidding credits, What kinds of policies should the FCC 
pursue in fostering minority media ownership?
    Answer. Diversity is an important value and I would welcome federal 
government actions that foster minority media ownership. I am, however, 
cognizant of where courts have spoken on this issue and would support 
such actions that are taken in Constitutionally permissible ways.
    I would support the FCC's pursuit of policies that would serve the 
public interest and promote minority media ownership consistent with 
Constitutional requirements.
    Question 9. When the FCC recently voted to allow one of the four 
major television networks to own UPN or WB, a majority of the 
Commission held that on the facts of that case it was more important to 
preserve diversity of content than diversity in the number of voices 
expressing that content. The FCC agreed with the argument of minority 
groups that it was important to rescue UPN so as not to have just one 
over-the-air network that targets minority audiences. As a general 
matter, do you favor FCC intervention to preserve diversity of voices, 
diversity of content, or both?
    Answer. Diversity has long been a core principle in the FCC's 
definition and promotion of the public interest. I am hopeful we would 
not have to make a choice between diversity of voices and diversity of 
content. I am optimistic we could preserve both, and I would work to do 
so.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. John F. Kerry to 
                            Kevin J. Martin

    Question 1. The FCC has proposed to change its rules for 
distributing E-rate funding to schools and libraries when the requests 
for funding exceed the available funds. Specifically, the FCC has 
proposed to exclude any school or library that received a commitment 
for internal connections in the previous year from receiving funds the 
next year. In my opinion, there are two problems with this proposal. 
First, the FCC would be changing its rules after the Year 4 
applications have been filed, causing disruption and delay in funding. 
Second, there are likely to be a number of unintended consequences of 
these new rules. For example, even a school that received a very small 
amount of funding last year could be excluded this year. Also, a school 
that received funds for its internal connections last year could be 
barred from receiving the maintenance funds needed to keep its network 
running. If you are confirmed to be an FCC Commissioner, will you 
commit to taking a hard look at this and consider the disruption and 
delay that would result from changing the E-rate rules at the 11th 
hour?
    Answer. Yes, I will.
    Question 2. The Boston Public Schools is implementing a long-range 
plan to construct a technology infrastructure throughout each of its 
137 school buildings. It is a phased approach that brings technology to 
schools and classrooms when administrators and teachers are ready to 
use it. Over two years ago, 17 schools went through an extensive design 
process to bring technology wiring to every classroom, followed by bids 
from electrical contractors last fall, leading to signed contracts just 
prior to the E-rate filing deadline for Year 4. Last year these same 
schools received a small amount of E-rate funds, mostly for maintenance 
and equipment, for the operation and maintenance of the existing small 
networks (4-8 classrooms per school plus a lab and library) that were 
installed in all 137 schools in the fall of 1998. If the proposed rule 
change goes into effect, none of the 17 schools, all of which qualify 
for the highest discount because at least 75 percent of the students 
qualify for the free and reduced school lunch program, would be 
eligible for internal connection funds this year. Boston's technology 
upgrade program will be disrupted and delayed because of this last 
minute E-rate rule change. Boston will be penalized for developing and 
implementing a long-range technology plan for its schools. If you are 
confirmed to be an FCC Commissioner, will you commit to taking a hard 
look at this and consider the disruption and delay that would result 
from changing the E-rate rules at the 11th hour?
    Answer. Yes, I will.
                                 ______
                                 
 Response to Written Question Submitted by Hon. John D. Rockefeller IV 
                           to Kevin J. Martin

    Question 1. I have proposed the use of tax credits to provide 
incentives for the deployment of current generation capability to rural 
and underserved areas and to accelerate the deployment of next 
generation broadband capabilities to all residential subscribers. What 
authority does the Commission have to accelerate the deployment of 
current generation to rural and underserved areas and next generation 
to all residential areas? Even if the Commission does not have the 
authority to use tax credits specifically, what is your view regarding 
use of credits and other tax incentives to accelerate deployment?
    Answer. I generally believe the FCC should be doing all it can to 
encourage the deployment of advanced telecommunications capability on a 
reasonable and timely basis to all Americans, especially those in rural 
and underserved areas. While tax policy is within the purview of 
Congress, I believe the idea of using tax incentives to accelerate 
deployment of broadband is an idea worth exploring. Ultimately, 
however, this remains a decision for Congress to make.
    Question 2. Under the current E-rate program structure, where 
schools and libraries apply directly to the Schools and Libraries 
Division for discounted telecommunications services, the inclusion of 
private, religious schools has not been challenged. Changing the 
program into a formula grant program administered through the state 
education agency could raise concerns regarding the equitable 
participation of private, religious schools, in my view. How will you 
protect such equity?
    Answer. If confirmed, I would support fair and nondiscriminatory 
administration of the E-rate program consistent with FCC strict 
statutory authority and parameters. Any proposed changes to the E-rate 
program should be carefully considered, taking into account the impact 
on all schools and libraries. I generally believe the government should 
consider the impact its policies may have on the equitable 
participation of private, religious organizations and should avoid 
disincentives wherever possible.
    Question 3. Currently, libraries and public and private schools all 
receive equal consideration through a direct application process. If E-
rate funds are administered in a manner similar to ESEA programs, 
private schools would have to navigate a maze of different public 
school bureaucracies to ensure they receive the right amount and type 
of telecommunications services they need. If the goal is to provide 
affordable access to schools, with the greatest help to the neediest, 
shouldn't we make certain the application process remains fair and 
equitable for all schools and libraries?
    Answer. Yes, I believe the E-rate application process should be 
fair and equitable for all schools and libraries.
    Question 4. Given that under the current E-rate program structure:
     The discount formula emphasizes the neediest recipients 
while still providing some benefit for all applicants.
     The need-based E-rate program has brought the public and 
private school communities together because discounts are not 
contingent on competition with public schools.
     Due to frustration with dealing with LEA there is greater 
private school participation in E-rate than ESEA.
     And, the direct application process gives private schools 
the flexibility to request services that meet their needs.
    Since, at its core, the E-rate program is meeting the needs of the 
private school community. Rather than restructuring the program 
shouldn't we be looking at ways to improve the process to build on our 
current success?
    Answer. I certainly agree that the FCC should build on its current 
successes as part of any effort to reform the E-rate program.
    Question 5. Libraries are the number one point of public access to 
the Internet for people without access at home, work or school. Much of 
the access that libraries are able to offer is a direct result of the 
E-rate program. What steps will you take to ensure that libraries 
become a fully saturated market and are able to maintain Internet 
access for the continuing educational needs of many of our nation's 
most needy?
    Answer. Bringing affordable Internet access to libraries is an 
integral part of the E-rate program as set forth by Congress, and, if 
confirmed, I will work to ensure that all of universal service is 
sufficiently funded.
    Question 6. Much of the data about E-rate discounts is aggregated 
to the point where it is difficult to illustrate the full impact of the 
E-rate for libraries. Are there any plans to provide more data specific 
to libraries?
    Answer. I am not aware of any plans regarding the collection of 
such data. The collection of data specific to libraries could be 
helpful, but I would want to make sure no additional and unnecessary 
burdens were placed on libraries.
    Question 7. More than 95 percent of public libraries offer Internet 
access to their users. However, the demand for access in individual 
library buildings far exceeds the level of service most libraries are 
currently able to provide. There are long lines and strict time limits. 
How will you ensure that libraries are able to continue to use the E-
rate program to improve library services and meet the demands of the 
American public?
    Answer. Libraries--and their users--are important beneficiaries of 
the E-rate program. If confirmed, my role as an FCC Commissioner will 
be to administer the E-rate program consistent with statutory 
requirements. As long as those requirements continue to incorporate 
libraries into the program, libraries--and their many users--will 
continue to enjoy the benefits of affordable access.
    Question 8. Libraries are the primary point of public access to the 
Internet for all Americans. They are one of the only institutions 
already asking what user needs are. Are there any plans to assess the 
unmet national demand for access to the Internet or other advanced 
technologies for ongoing educational needs?
    Answer. I am not familiar with any plans to assess these unmet 
national demands, but, if confirmed, I would support exploring the 
merits of initiating such a study.
    Question 9. The Telecommunications of 1996 emphasized the 
importance of the E-rate program in assisting all Americans to have 
access to advanced telecommunications services and applications. The 
Act recognizes the critical role of libraries and schools in providing 
that access. How do you envision reaching this goal, especially for 
libraries, the largest provider of public access?
    Answer. Reaching this goal of greater access requires a careful 
balancing of universal service costs and funding needs. The 1996 
Telecommunications Act recognizes the critical role that schools and 
libraries play in providing access to advances services to many 
Americans.
                               __________
    Response to Written Questions Submitted by Hon. John McCain to 
                          Hon. Michael Powell

    Question 1a. The 1996 Telecommunications Act requires that the FCC 
review the need for its rules every two years, beginning in 1998, and 
to eliminate unnecessary measures.
    Do you see this as an opportunity or a potential problem?
    Answer. The biennial review provisions of the 1996 
Telecommunications Act are important tools and present the Commission 
with a tremendous opportunity to validate its rules to make sure they 
are still necessary.
    Question 1b. What is your personal philosophy regarding this kind 
of systematic ``attic-to-basement'' regulatory review?
    Answer. This kind of review exercise compels the Commission to 
review whether market conditions justify continued prospective, 
prophylactic regulations of the telecommunications and broadcast 
industries. For example, in the 1996 Telecommunications Act, Congress 
explicitly and unabashedly directed the FCC to review its ownership 
rules every two years and to repeal or modify any regulation that is 
``no longer in the public interest as a result of meaningful economic 
competition.'' In mandating that we review the ownership rules, 
Congress was primarily concerned that the Commission adjust or 
eliminate these rules if, as anticipated by the Telecommunications Act, 
sufficient robust competition developed. I believe that the FCC has a 
duty to take a hard look at its rules in light of the present and 
likely state of competition and to ask and answer whether, in light of 
changes in competitive conditions, the rules are still valid. I also 
believe that the burden should be on the FCC to re-assess and re-
validate the rules under review. We must be prepared, if this is what 
the record evidence shows, to make a compelling and convincing case 
that the rule must be kept. If we cannot, or if the evidence in support 
of the rule is lacking, we must modify or eliminate it and rely on 
competitive market forces or other mechanisms, such as the antitrust 
laws.
    Question 2. In the Telecommunications Act of 1996, Congress 
specifically prescribed the extent to which the FCC could preempt local 
and state government decisions in areas such as zoning, right-of-way 
management and compensation, cable television franchising, and other 
telecommunications matters.
    What are your views on when, if ever, the FCC should preempt local 
and state government authority and decisions?
    Answer. I believe the FCC should be cautious in using its authority 
to preempt local and state government authority and decisions. There 
are, however, situations where preemption is appropriate. The 
Commission should exercise preemptive authority in instances where 
Congress has expressed a clear intent to preempt state law. Section 253 
of the Communications Act directs the Commission, for example, to 
preempt state and local regulations that prevent new telecommunications 
providers from entering a market. The Commission should also preempt in 
situations where a state or local law clearly frustrates federal 
policy. Although I believe the bar for making such a finding is fairly 
high, in those instances where the local regulation crosses the line, I 
believe the Commission should act to protect federal policy.
    Question 3. Just as competition is getting off of the ground for 
video services, one provision of the program access rules is about to 
sunset unless the FCC acts. The prohibition of exclusive contracts will 
cease to be effective on October 5, 2002, unless the FCC determines 
during 2001 that continuing the provision beyond the termination date 
is necessary for competition. Exclusive contracts by vertically 
integrated entities--especially for sports programming--can stop 
competitors in their tracks as they attempt to enter new markets.
    Do you intend to launch a rulemaking this year to examine this 
issue and its possible effect on consumers?
    Answer. As you know, pursuant to Section 628 of the Communications 
Act, the prohibition on exclusive contracts ceases to be effective 10 
years after October 5, 1992 unless the Commission finds ``in a 
proceeding conducted during the last year of such 10-year period'' that 
the prohibition continues to be necessary. In accordance with this 
provision, the Commission intends to commence a proceeding to examine 
the issue and make a determination as to whether the prohibition 
``continues to be necessary to preserve and protect competition and 
diversity in the distribution of video programming.'' I anticipate that 
this proceeding will be commenced during the latter part of 2001.
    Question 4a. We all know that local residential telephone rates 
have been subsidized for years in this country under a policy called 
universal service. The basic idea of this policy is to ensure that any 
residential customer would have access to telephone service at 
affordable prices, regardless of the actual cost of providing that 
service to any particular customer.
    Do you agree with that policy?
    Answer. Yes. I fully support the goal of universal service, as set 
forth in section 254, to ensure that consumers in all regions of the 
Nation have access to telecommunications service at affordable rates.
    Question 4b. What do you think the intent of Congress was in 
preserving affordable residential telephone service for all Americans?
    Answer. I believe that, in adopting section 254, Congress delegated 
to the Commission the task of preserving affordable residential service 
throughout the Nation, while also ensuring that the universal service 
fund grows no larger than is necessary to accomplish this purpose. 
Through section 254, Congress established clear and explicit principles 
for the preservation and advancement of universal service in an 
increasingly competitive telecommunications marketplace. Although the 
cost of providing telephone service can vary dramatically depending on 
the geographic area being served, Congress wanted to ensure that rates 
remain reasonably comparable and affordable for all Americans. Congress 
presumed that when rates are kept at affordable levels, the maximum 
number of people remain connected to the network, and all Americans 
benefit as a result.
    Question 5a. You have indicated that you want to increase the 
agency's enforcement efforts. Do you think that increased enforcement 
affects the need for prophylactic regulation?
    Answer. I believe that prophylactic rules, by their nature, can be 
both over-inclusive and under-inclusive, and, as a result, we must be 
diligent in reviewing their effectiveness. However, I believe that 
effective enforcement is important to the implementation of the 
Commission's rules, overall, and for meaningful implementation of the 
Act.
    Question 5b. What improvements can the FCC make and what can 
Congress do to assist you?
    Answer. I have emphasized that the Commission should vigorously 
enforce the Communications Act and Commission rules, and do so in a 
prompt manner. I believe, however, there is more that we can do with 
the help of Congress. First, Congress should consider increasing the 
forfeiture caps that apply to common carriers from the current $1.2 
million to at least $10 million to enhance the deterrent effect of 
Commission fines and to make sanctions more meaningful. Second, 
Congress should consider extending the statute of limitations for 
forfeiture actions by the Commission against common carriers from its 
current one year to two years of the date of the alleged violation. The 
longer limitations period would allow the Commission thoroughly to 
investigate alleged violations without running the risk of statute of 
limitations expiring. Finally, Congress should consider other 
mechanisms to compensate harmed CLECs and enhance deterrence. For 
example, Congress could give the Commission the authority to award 
punitive damages, attorneys fees, and costs in formal complaint cases 
filed under Section 208 of the Communications Act, or require that 
interconnection agreements include liquidated damages provisions.
    Question 6. One of the ways Congress intended to encourage 
deregulation was to strengthen the statutory language allowing the FCC 
to forbear from regulating. Under the statutory provisions, the FCC can 
initiate regulatory forbearance. Can you please give the Committee your 
views on when the agency should forbear and when they should not?
    Answer. Forbearance authority is one of the most important 
deregulatory tools that Congress has provided to the FCC. In many cases 
forbearance can eliminate the unnecessary burdens and red tape that 
impede the development of competition, innovation and infrastructure 
investment. I do not believe the Commission should be shy about using 
this tool where appropriate. For example, under certain circumstances, 
it would be appropriate to refrain from applying legacy regulation to 
emerging services and technologies, especially when such regulations 
may impede the continued development and deployment of new services to 
consumers. It is also most appropriate to forbear from regulating 
industry segments that have or will experience significant levels of 
competition among providers. In such circumstances, market forces tend 
to replace the need for over-reaching prophylactic regulation, adopted 
originally during a time when the industry was comprised of one or two 
players.
    Question 7. I am aware that the U.S. may be in danger of losing its 
rights to international Ka-band satellite orbital locations that are 
due to expire beginning in 2004. While this may still be a few years 
away, given the long lead time necessary to design, fund and launch a 
satellite system, and the potential of satellite systems to deliver 
broadband data services nationwide--can you assure me that you will 
keep the FCC's prior commitment to industry to issue these licenses by 
this summer?
    Answer. I agree that satellites--particularly those satellite 
systems proposed in the Ka-band--have great potential to deliver 
broadband data services nationwide. Presently, the International Bureau 
is working diligently to meet its commitment to issue licenses for 
geostationary satellites (``GSOs'') in the second Ka-band processing 
round this summer. The licensing process is complicated by the fact 
that the number of CONUS locations requested (providing coverage of the 
contiguous United States) exceeds the number of locations available for 
assignment.
    As you may be aware, in the first processing round, the applicants 
were able to reach an agreement regarding assignments to specific 
orbital locations. In spite of numerous discussions, the second round 
applicants were not able to reach such an agreement. Consequently, the 
Bureau's staff is working on an orbital assignment plan that it 
believes creates a fair result for new entrants as well as other 
applicants. To that end, a team of staff has implemented a specific 
work plan that ensures all second-round GSO authorizations will be 
released with ample time for the licensees to construct, launch and 
operate their Ka-band systems. For the majority of orbital locations 
available, the ``brought into use date'' to protect the date priority 
of U.S. ITU filings is June 2005. Because it generally takes two to 
three years to launch a satellite, we believe that issuing licenses 
this summer will allow entities to meet the ITU dates without undue 
difficulty.
    Question 8. We have heard a lot recently about increased demands 
for the allocation and reallocation of spectrum. What is your opinion 
of the current spectrum management and allocation process and what 
reforms, if any, would you propose?
    Answer. As you know, the demand for spectrum for both existing and 
new services has increased dramatically over the past few years, and 
the supply of spectrum especially in the more desirable portions of the 
radio frequency is limited. Some examples of how the FCC's task of 
managing and allocating the spectrum under its jurisdiction is becoming 
more difficult include: (1) efforts to allocate adequate spectrum for 
advanced wireless services (including ``third generation'' wireless 
systems); (2) proposals to share the direct broadcast satellite 
spectrum by new terrestrial and satellite services; (3) proposals to 
use mobile satellite spectrum for terrestrial service; (4) reclaiming 
broadcast television spectrum for auction in a timely and certain 
manner; and (5) authorizing new technologies such as ultra-wide band 
and software-defined radios.
    Other challenges stem from the fact that much of the spectrum 
resource is used or authorized for use by other Federal governmental 
agencies, such as the Departments of Defense and Transportation (FAA), 
through the Department of Commerce (NTIA). Further complicating matters 
are mandatory auction dates and specific spectrum re-allocation schemes 
enacted by Congress as a component of appropriations or budget 
legislation. These circumstances affect the Commission's flexibility to 
make sound spectrum policy decisions. Furthermore, the spectrum 
management decisions, whether made by the Congress, FCC or NTIA, are 
done on an ad hoc basis with no reference to any broader plan or 
guiding principles.
    Therefore, I believe we need a national plan for spectrum 
management. Too often in the past, spectrum policy has been driven by 
budget policy. We also need an effective means to balance national 
security and economic priorities. Given the importance of the spectrum 
resource to both our nation's defense mission and its economic growth, 
I would suggest that these issues need to be addressed at the highest 
levels of the Federal government. I have initiated a dialogue with 
Commerce Secretary Evans to discuss next steps on how, working with the 
Congress, we might begin to formulate and implement a national spectrum 
plan.
    Notwithstanding the challenges noted above, I believe that the 
FCC's own spectrum management decisions have been generally heading in 
the right direction. For example, the Commission's approach to spectrum 
allocation has been to provide for significant service and technical 
flexibility while at the same time ensuring interference is avoided. 
Market-based approaches permit licensees to provide the kinds of 
services demanded by their customers and to employ the technology that 
is most appropriate to their needs without government micro-management 
of their business plans. The FCC's successful use of competitive 
bidding has also helped ensure that parties that value the spectrum the 
most provide the kinds of services that consumers want in an efficient 
and effective manner. In addition, the Commission is pursuing new ways 
to make spectrum available through the development of more effective 
secondary markets, which could permit more efficient use of the 
spectrum resource by enabling parties, for example, to acquire (or 
lease) the spectrum for short term or special uses. A key aspect of 
this initiative is the examination of frequency agile radio technology 
such as software defined radios. We are also exploring ways to create 
incentives for using spectrum more efficiently.
    Question 9. My experience suggests that interference disputes are 
one of the most common barriers to the introduction to new 
telecommunications services. When new services are proposed, users of 
incumbent technologies frequently object, claiming that the new service 
will cause interference.
    Some parties have proposed to introduce a new service typically 
called Ultra Wide Band. Many believe that Ultra Wide Band technologies 
may provide new and innovative services. However, some users of 
existing GPS systems claim that UWB will cause harmful interference to 
GPS transmissions--a claim that UWB proponents vigorously dispute. 
Obviously, respect for business plans and consumers dictates that this 
type of dispute be resolved quickly and fairly. Please comment on the 
priority the Commission should give to the resolution of this type of 
interference issue.
    Answer. Resolution of this issue is a high priority. As your 
question points out, the FCC has been presented with a highly technical 
dispute about whether new UWB technology will cause interference to 
existing services. There is particular concern regarding interference 
with GPS. Licensees and equipment vendors in the Personal Communication 
Service (PCS) and Digital Audio Radio Service (DARS) have also raised 
concerns. I agree that it is the job of the Commission to resolve these 
types of technical matters as fairly and as quickly as possible. As you 
know, I have called for increasing and strengthening the Commission's 
engineering and technical expertise so we will be better able to 
address and resolve the technical matters before the Commission.
    On May 10, 2000, the Commission adopted a Notice of Proposed Rule 
Making (NPRM) in ET Docket No. 98-153, proposing to permit low power, 
unlicensed operation of UWB devices under Part 15 of our rules. In the 
NPRM, the Commission encouraged parties to perform testing in order to 
develop technical data on the potential for interference between UWB 
and other services. Several parties submitted technical studies and 
test reports in response to the NPRM. The National Telecommunications 
and Information Administration (NTIA) tested potential interference to 
GPS and evaluated potential interference to other government systems. 
The Department of Transportation (DOT) through Stanford University also 
tested potential interference to GPS. Time Domain, an entity developing 
UWB technology, through the University of Texas and the John Hopkins 
Applied Physics Laboratory, also submitted testing with regard to 
interference to GPS. In addition, Qualcomm submitted a technical 
analysis of potential interference to personal communications services 
(PCS). NTIA and others have indicated that further studies may be 
submitted.
    We have dedicated substantial engineering resources to analyzing 
the test results and public comments. Our Office of Engineering and 
Technology (OET) is currently reviewing all of the studies and comments 
submitted in order to develop a recommendation on UWB. Our staff is 
also participating in numerous meetings to ensure that the views of all 
concerned parties are fully taken into account. It is currently 
anticipated we will be able to address this matter before the end of 
the year.
    Question 10. As you know, this Committee has held several hearings 
on the transition to digital television. Several witnesses have 
testified before the Committee that the transition to digital 
television will not occur by the deadlines set by Congress. What can be 
done to facilitate the DTV transition?
    The transition to digital television is a tremendous undertaking, 
which is well under way. There are now close to 200 stations on the air 
with digital television signals. There are, however, a number of 
challenges ahead. While the FCC has taken several steps to facilitate 
the transition to DTV, some of the most significant challenges are 
outside of the Commission's direct purview.
    As an initial matter, the FCC should continue to provide 
broadcasters with regulatory and licensing certainty. For example, 
after extensive testing and analysis, we recently re-confirmed the 8-
VSB transmission standard. We also recently clarified the level and 
timing of service that DTV broadcasters must provide to their 
communities of license. We should continue to clarify potentially 
ambiguous requirements to ensure that the rules of the digital road are 
clearly marked. In that regard, we have in place a DTV periodic review 
mechanism to examine issues that arise on an ongoing basis and to 
provide guidance to licensees as early as possible in the build-out 
process. On licensing matters, we have granted and will continue to 
grant all applications that generally conform to the DTV Table of 
Allotments, and have expedited processing for any applicant that has 
expressed a readiness and a willingness to build DTV facilities.
    There are some potentially important issues affecting the DTV 
transition that are difficult to resolve and are under Commission 
review. For instance, the question of mandatory cable carriage of both 
the analog and digital signals during the transition is currently out 
for public comment. Similarly, the FCC has issued a notice of proposed 
rulemaking seeking comment on a requirement that certain television 
sets contain a tuner that can receive over-the-air DTV signals.
    In addition, there are issues that the FCC has determined would be 
resolved most efficiently through inter-industry negotiations, such as 
technical standards for cable inter-operability. With the FCC's 
encouragement and regular monitoring, the cable and consumer equipment 
industries have already resolved several of these issues cooperatively. 
There are also some difficult challenges to the DTV transition that are 
not within the FCC's direct jurisdiction, such as copy protection. In 
those areas, the FCC is prepared to do what it can to help facilitate 
agreements among industries and is monitoring discussions with the 
industries involved.
    Finally, as an expert agency, the FCC should act as ``headlights'' 
for Congress and the public--looking down the road to identify any 
problems on the horizon and how, in its view, those problems can be 
avoided or minimized. Congress may then decide whether or not to 
address these potential problems through legislation or other means.

                                 ______
                                 
    Response to Written Questions Submitted by Hon. Gordon Smith to 
                          Hon. Michael Powell

    Question 1. The price a local exchange carrier charges in rural 
areas is artificially low and kept low because of our universal service 
policy. For competition to develop, a business needs to attract 
customers. How do we attract companies to compete with the local 
exchange carriers and build out advanced services to rural areas when 
the price normally charged is kept universally low?
    Answer. This is an issue of critical importance to both rural 
consumers and to the nation as a whole. In general, I believe that 
market forces should determine whether competitors decide to offer 
telecommunications services in a given marketplace. Thus, with respect 
to high cost rural areas, I have been a proponent of alternative 
technologies--such as satellite and wireless facilities--which might be 
able to provide service in a more efficient and less-costly manner than 
traditional wireline facilities. High initial capital costs might, 
however, make the deployment of such technologies in rural areas cost 
prohibitive. As a result, I support efforts to lower the costs of 
wireless services to rural and remote areas.
    I also believe that competitors should have the same financial 
incentive to compete in rural areas as incumbent local exchange 
carriers. Therefore, I support the Commission's policy of providing 
competitive eligible telecommunications carriers with access to 
portable high-cost universal service support. Under the Commission's 
portability rules, a competitive eligible telecommunications carrier 
receives the same per-line level of high-cost support as the incumbent 
for lines that it captures from an incumbent carrier, as well as any 
new lines it serves in high-cost areas. Our current rules also allow 
wireless telecommunications providers to become eligible for portable 
high-cost universal service support. Consistent with Congress's mandate 
in section 254 of the Act, I believe that such policies ensure the 
preservation and advancement of universal service in an increasingly 
competitive marketplace.
    I should add, moreover, that the federal government will need to 
address this issue in partnership with state and local governments and 
private entities. Some states have taken steps on their own. For 
example, I applaud the efforts of some local government and private 
entities to aggregate rural demand for advanced services and to take 
other steps to promote rural broadband deployment.
    Question 2. As broadband continues to be deployed in the urban 
technology communities in Oregon, I am hearing from Oregonians in some 
of these lesser populated areas that they are afraid that their 
communities are going to be passed by. Our largest local exchange 
carriers in Oregon are Qwest, Verizon and Sprint, and they are all 
working with the Oregon Public Utility Commission to build out their 
infrastructure throughout the state. What concerns me, is that rural 
deployment is not being made as rapidly, or as broadly in our rural 
areas, as I would like to see. When I raise this issue with the local 
exchange carriers who serve many of these communities with telephone 
service, they say that the regulatory policies that were designed to 
promote competition in their telephone business are being extended to 
include these new advanced services, and these regulatory costs slow 
down the investment available to bring advanced services to rural 
areas. So while I fully support the notion that competition in 
telephone service has been good for our urban business communities, I 
am concerned that those same policies, when applied to these new 
advanced services, are making it harder for my rural constituents to 
gain access to these new technologies. Would you discuss your approach 
to the regulatory role for these advanced new services, and whether you 
view the increased costs for the local exchange carriers to be a 
problem for rural America?
    Answer. The Commission has a statutory duty, under section 706 of 
the Telecommunications Act, to encourage the deployment of advanced 
services to all Americans on a reasonable and timely basis. In carrying 
out this charge, the statute requires us to use ``price cap regulation, 
regulatory forbearance, measures that promote competition in the local 
telecommunications market, or other regulating methods that remove 
barriers to infrastructure investment.'' To that end, the Commission, 
in 1997, began a yearly inquiry in which it is carefully monitoring 
whether advanced services are actually being deployed to all areas of 
the country, including rural America. To the extent that this inquiry 
reveals clear evidence of a lack of advanced services deployment in 
rural areas, I would urge my colleagues to consider appropriate 
deregulatory solutions.
    In addition, it is our duty to question the continuing 
applicability of existing regulations. To the extent that certain 
regulations are disproportionately impacting rural incumbent LEC 
incentives to deploy broadband infrastructure, I would again urge my 
colleagues to consider whether the Commission should exercise 
forbearance authority under section 10 of the Act.
    Question 3. These advanced new services, called ``broadband,'' are 
provided with a variety of new technologies. The ``local exchange 
carriers'' have DSL service, cable companies have cable modems, and 
satellite and wireless carriers are also in the market, and maybe 
others will be entering that we don't even know about. All have some 
sort of government regulation whether local, state or federal. Do you 
think our policy should be technology neutral, or do you think we 
should continue our current policies which apply different regulatory 
policies to each competitor based on the technology used to provide the 
broadband access?
    Answer. The problem is that each of these technologies grew up 
differently with separate and distinct purposes, and at different 
times. In turn, each technology, for various policy reasons, tended to 
be subject to different regulatory treatment. Now that convergence of 
``broadband'' services is happening on parallel tracks and riding on 
all these technologies, it would seem that the regulation (or de-
regulation) of ``broadband'' should be technology agnostic. But, legacy 
regulatory models and the current statutory structure have placed each 
technology into its own regulatory ``bucket.'' I believe that 
technological neutrality in policy making is a laudable principle and 
that we must strive to harmonize regulatory treatment in a manner 
consistent with converged technology and markets. At the same time, 
however, because these technologies (and their regulation) evolved 
differently and some essential facilities are still owned by entities 
with substantial market power, policymakers should closely examine 
whether the facilitation of broadband deployment can be accomplished by 
regulatory and technological neutrality alone. For example, economic 
considerations, cost and deployment issues as well as consumer demand 
should constantly be evaluated along with regulatory policies. 
Therefore, while technological neutrality is one important principle, 
government policymakers should also strive to: (1) consider incentives 
that promote innovation; (2) rely on de-regulation and competitive 
markets; (3) recognize that the convergence involves every segment of 
the communications industry and reject their examination in isolation; 
and (4) develop a deeper understanding of technology, innovation 
theory, economic incentives and capital markets.
    Question 4. When I look at the telecommunications market that has 
evolved in this country during the past five years, it appears to me 
that the most successful sector of the market in terms of growth, 
attracting investment, deploying new technologies, and providing new 
services to amazing numbers of Americans, both rural and urban, is 
wireless communications. It seems that real customer demand has 
``pulled'' the wireless investment and new technologies into the 
marketplace, not only here, but around the world. Even in areas where 
they have never had any communications network. On the other hand, 
these ``pro-competitive regulatory policies'' as applied to the 
telephone companies seem to be slowing down investment and delaying 
technological innovation, in their attempts to ``push'' competition 
into the marketplace. As a regulator, do you think the role of 
government should be to ``push'' competition through regulatory 
policies, or to allow deregulated markets to ``pull'' the investments 
create competition? Do you see any disparity between wireless and 
wireline in bridging the digital divide?
    Answer. The role, and effect, of government in the marketplace 
should be limited. Government is not going to create markets, 
innovative technologies or jobs. Only profit-maximizing entities, 
acting together with consumers, will make the investment and take the 
risk that results in competition in the marketplace. In the long run, 
de-regulated markets versus a heavy-handed central planning model 
almost universally produce better results. I would therefore likely 
subscribe to the ``pull'' analogy in your question. The ability of 
regulators to ``push'' competition or innovation into the marketplace 
is substantially limited in that regulators cannot control many of the 
other variables in the market such as capital market fluctuations and 
consumer acceptance. The limited role of regulators is to foster an 
environment in which innovation and capitol investment can flourish 
unimpeded.
    As to a disparity between wireless and wireline in bridging the so-
called ``digital divide,'' I do see the potential for huge advantages 
of wireless technologies; mainly cost advantages. Some developing 
countries have almost completely by-passed the development of a 
wireline infrastructure in favor of less-costly wireless technologies. 
As a general matter, in less densely populated areas, wireless 
communications, including satellite, can be deployed in a more cost 
efficient manner. Wireless also has the potential to provide last-mile 
broadband connectivity to homes and businesses in direct competition 
with wireline, including cable, providers. The only ``disparity'' that 
I am aware of that may impact wireless negatively is the difficulty of 
wireless carriers in some states to become eligible to receive 
universal service funds. Without this funding source, wireless 
providers may lack the incentive to deploy their systems in high-cost 
areas. The FCC is working to rectify these difficulties where it has 
jurisdiction to do so and will encourage the states to closely examine 
wireless alternatives.
    Question 5. Given the largely rural make up of the Eastern part of 
my state of Oregon, the timely deployment of broadband technologies to 
these areas is of great interest to me. I am concerned that imposing 
technology-based restrictions on access to the local loop would 
undermine our objective of promoting broadband competition in rural 
areas. What is your view on such restrictions?
    Answer. To date, the Commission has generally declined to place any 
restrictions on the use of the unbundled local loop. Section 251(c)(3) 
permits requesting telecommunications carriers to use unbundled network 
elements in the provision of any telecommunications service, including 
broadband telecommunications services. In interpreting this provision, 
the Commission has held that when competitors purchase access to the 
unbundled local loop, they obtain access to every feature, function, 
and capability of that loop. These policies were intended to foster 
innovation in technologies and the creation of new services. 
Specifically, the Commission's rules have permitted competitors to use 
network elements, such as the local loop, to provide consumers services 
that the incumbent does not. For example, most incumbent LECs provide 
customers with one flavor of xDSL service, ADSL, while competitors may 
seek to provide customers with a variety of xDSL services. Thus, the 
absence of use restrictions has allowed competitors to offer new and 
innovative services and to differentiate themselves from the incumbent. 
Although there may be other effective approaches, particularly in light 
of the unique circumstances of rural areas, I believe that the 
Commission's interpretation of the statute has helped to stimulate the 
development of competitive xDSL services.
    Question 6. The transition to digital television continues to be an 
issue of great importance. In fact, this Committee held a very 
informative hearing on this issue just a few months ago. What are your 
thoughts on how this transition can be done more efficiently and 
effectively?
    The transition to digital television is a tremendous undertaking, 
which is well under way. There are now close to 200 stations on the air 
with digital television signals. There are, however, a number of 
challenges ahead. While the FCC has taken several steps to facilitate 
the transition to DTV, some of the most significant challenges are 
outside of the Commission's direct purview.
    As an initial matter, the FCC should continue to provide 
broadcasters with regulatory and licensing certainty. For example, 
after extensive testing and analysis, we recently re-confirmed the 8-
VSB transmission standard. We also recently clarified the level and 
timing of service that DTV broadcasters must provide to their 
communities of license. We should continue to clarify potentially 
ambiguous requirements to ensure that the rules of the digital road are 
clearly marked. In that regard, we have in place a DTV periodic review 
mechanism to examine issues that arise on an ongoing basis and to 
provide guidance to licensees as early as possible in the build-out 
process. On licensing matters, we have granted and will continue to 
grant all applications that generally conform to the DTV Table of 
Allotments, and have expedited processing for any applicant that has 
expressed a readiness and a willingness to build DTV facilities.
    There are some potentially important issues affecting the DTV 
transition that are difficult to resolve and are under Commission 
review. For instance, the question of mandatory cable carriage of both 
the analog and digital signals during the transition is currently out 
for public comment. Similarly, the FCC has issued a notice of proposed 
rulemaking seeking comment on a requirement that certain television 
sets contain a tuner that can receive over-the-air DTV signals.
    In addition, there are issues that the FCC has determined would be 
resolved most efficiently through inter-industry negotiations, such as 
technical standards for cable inter-operability. With the FCC's 
encouragement and regular monitoring, the cable and consumer equipment 
industries have already resolved several of these issues cooperatively. 
There are also some difficult challenges to the DTV transition that are 
not within the FCC's direct jurisdiction, such as copy protection. In 
those areas, the FCC is prepared to do what it can to help facilitate 
agreements among industries and is monitoring discussions with the 
industries involved.
    Finally, as an expert agency, the FCC should act as ``headlights'' 
for Congress and the public--looking down the road to identify any 
problems on the horizon and how, in its view, those problems can be 
avoided or minimized. Congress may then decide whether or not to 
address these potential problems through legislation or other means.
    Question 7. Deregulation has significantly affected the 
broadcasting industry. As we all know, the marketplace has become more 
competitive over the past several years. What are your thoughts on what 
can be done in order to keep the broadcast industry competitive in the 
marketplace today? What about in the smaller and medium sized markets?
    Answer. The broadcast industries--television and radio--face 
competition not only from within their industry, but from a growing 
number of non-broadcast competitors, including programming delivered by 
cable, DBS and the Internet. Moreover, these communications services 
are either inherently digital or are increasingly turning to digital 
formats, giving them extraordinary capacity and flexibility in their 
product offerings. From a regulatory perspective, two key issues that 
directly affect broadcasters' ongoing ability to compete in this 
environment are critical.
    First, broadcasters must be afforded a path to a robust and 
flexible digital platform that will allow them to provide high-quality 
and diverse services. Congress and the Commission have developed this 
platform for television broadcasters by adopting digital television 
transmission standards, providing an additional television channel to 
all existing television licensees and developing service and technical 
rules for the service. Digital television (DTV) will allow today's 
television broadcasters to better compete with new technologies in the 
digital age. The FCC's rules permit broadcasters to provide ancillary 
or supplementary services on their DTV channel. These services--
including the transmission of data, paging or other wireless services--
may be provided by the broadcaster or by a lessee who uses the 
broadcaster's DTV spectrum. It is up to DTV licensees to develop 
creative and competitive uses of this flexible resource.
    Despite substantial progress, there remain significant challenges 
ahead in the transition to digital television service [see response to 
Question #6 above]. And there is an increasing concern that small 
market television stations may encounter difficult financial problems 
in building and operating digital facilities while they continue to 
operate their analog stations. Although these stations were afforded 
additional time to build their digital stations, there is growing 
evidence that the current deadline of May 2002 may be difficult to 
meet. The Commission will address whatever problems arise in this 
connection on a case-by-case basis.
    Radio broadcasters are not as far along in their transition to 
digital service as their television counterparts. However, a promising 
``in-band, on-channel'' (IBOC) approach to affording radio licensees 
with a digital alternative is currently being tested. The Commission 
expects results from these studies and an evaluation of the data by the 
National Radio Systems Committee to be available sometime in the fall. 
Once this information is provided to the Commission, appropriate 
rulemaking steps can be taken to review and, if warranted, implement an 
IBOC digital radio service.
    Second, the Commission through its biennial review process will 
subject its broadcast ownership rules to rigorous review. In light of 
the dramatically changed competitive landscape in which broadcasters 
operate today, it is critical for the Commission to examine whether the 
existing ownership rules impede the broadcasters' ability to compete 
effectively in this radically changed environment. That review will 
commence sometime this year.
                               __________
                         Federal Communications Commission,
                                       Washington, DC, May 21, 2001
Hon. John Edwards,
U.S. Senate,
Hart Senate Office Building.
Washington, DC.

    Dear Senator Edwards: After my confirmation hearing last week, I 
realized that it may be helpful if I clarified my response to your 
questions regarding wireless location privacy during the hearing. I 
would like, for the record, to make sure that you are provided a 
complete and accurate response.
    First, as I stated during the hearing, I agree with many of your 
concerns regarding consumers' ability to be fully informed and 
empowered with regard to their ability to control private information 
about them, including location information. I believe that current law 
addresses these concerns, and the FCC is currently engaged in balancing 
them against others raised by recent amendments to the Communications 
Act and by the courts.
    Congress enacted the Wireless Communications and Public Safety Act 
of 1999, Pub. L. No. 106-81, 113 Stat. 1286, in October 1999 with the 
purpose of enhancing public safety by facilitating the prompt 
deployment of a nationwide emergency communications infrastructure, 
including wireless. It also amended the customer proprietary network 
information (``CPNI'') provision of the Telecommunications Act of 1996, 
47 U.S.C. 222, to further protect the privacy of wireless callers. 
Under the 1999 amendment, wireless location information is further 
restricted from use or disclosure by a carrier without the ``express 
prior authorization of the customer,'' except in specified emergency 
situations to respond to a wireless user's emergency call or in the 
transmission of automatic crash data. These statutory protections are 
self-effectuating and enforceable today. However, the wireless industry 
has asked the Commission to adopt rules to implement the E-911 Act's 
CPNI provision. The FCC staff is evaluating the comments filed in 
response to the rulemaking petition.
    Also, as you mentioned at the hearing, the FCC also has before us a 
remand from the U.S. Court of Appeals for the 10th Circuit, U.S. West 
v. FCC, 182 F.3d 1224 (10 Cir. 1999), that struck down our prior CPNI 
rules that provided for an ``opt-in'' approach. We will soon be 
considering a further notice of proposed rulemaking to respond to the 
court's first amendment concerns.
    Thank you for the opportunity to clarify the record.
                                         Michael K. Powell,
                                                     Chairman, FCC.
  

                                  
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