The telecommunications infrastructure comprises the public telecommunications network; the Internet; and the millions of computer systems for government, defense, commercial, and personal use. The public network includes a complex web of interconnected networks operated by local and long-distance carriers, cellular networks, and satellite services. The Internet is a global network of networks interconnected by routers using a common set of protocols. Significant portions of the Internet rely on services provided by the public telecommunications networks. The rich array of reliable telecommunications services is made possible by a complex web of highly interconnected networks supported by switchesand other telecommunications devices. Along with national and local carriers and service providers, other important links in the chain are the equipment manufacturers and suppliers and customers, some of whom have specific telecommunications devices installed on their premises, such as private branch exchanges (PBX), and voice mail systems. The key is connectivity: all of the pieces must work together. Telecommunications are critical to the operations of nearly every public- and private-sector organization. All other major sectors rely on it: banking and finance; health, safety, and emergency services; transportation; utilities; and manufacturing and small business. For example, it (1) enables the electronic transfer of funds, (2) is essential to the service economy, manufacturing, and efficient delivery of raw materials and finished goods, and (3) is basic to responsive emergency services. The federal government depends on the telecommunications infrastructure to deliver a wide range of services. Many agencies, including those in the Department of the Treasury and Department of Health and Human Services (HHS), rely on both their private networks and on the public telecommunications network to conduct mission-critical business. For example, the route of an electronic Medicare payment may traverse several networks—those operated by the HHS, Treasury’s computer systems and networks, and the Federal Reserve’s Fedwire electronic funds transfer system. Seamless connectivity among a wide range of networks and carriers is essential nationally and internationally. Recent nationwide telecommunications failures remind us of our dependence on telecommunications—and the fragility of complex communications systems. On April 13, 1998, a software error in a single switch caused a major carrier to fail nationwide. According to press reports, during the 24-hour outage, the carrier’s corporate customers were unable to complete critical network-based business; retailers were unable to authorize credit card payments; and financial institutions could not complete electronic transactions. Another failure occurred on May 19, 1998, when a communications satellite went into an uncontrolled spin after failure of a control system. The satellite’s failure disrupted the operations of credit card authorization services, paging services for 80 to 90 percent of all pagers in the United States, and the distribution of television programs. While these failures were not caused by a Year 2000 problem, they illustrate the degree to which we depend upon reliable, available, interoperable telecommunications. Major disruption in the service provided by the public telecommunications network can affect millions of users and cause massive financial losses. The cost of disruptions and outages caused by noncompliant computer or telecommunications systems was discussed in a recent study of the potential impact of Year 2000-related foreign exchange settlement failures. According to the study, the market costs of a single major bank’s inability to settle its trades could reach $3.3 billion in a single week. Business dependence on the public telecommunications infrastructure is particularly evident in the retail and financial sectors, where financial transactions with a combined value in the billions of dollars are made every day. Businesses and financial institutions rely heavily on telecommunications networks to participate in the global payments system, to exchange information with trading partners and regulatory agencies, and to manage their internal control systems and sophisticated computer equipment. The consequences of not resolving Year 2000 problems in the telecommunications infrastructure are broad-based and potentially disastrous. For example, if critical telecommunications systems fail: The Internal Revenue Service would be unable to receive electronic tax returns or process electronic tax refunds. HHS would be unable to make electronic Medicare payments. Financial institutions and brokerages would be unable to process financial transactions and trades. The manufacturing and retail sectors would be unable to manage inventories. Air travel would have to be severely curtailed because air traffic control systems would fail. Credit card transactions would be hindered if communications links with point-of-sale systems fail. Emergency services would suffer if 911 calls were not properly and promptly routed. International voice and data services would be disrupted. Telecommunications problems can affect virtually all network components—switches, routers, PBXs, and Internet servers—all of which must be assessed and tested. Compounding the risk is the global nature of today’s telecommunications, which rely on seamless connections among widely scattered and widely diverse networks. In light of the potential risks involved, the federal government has recently begun to address the Year 2000 readiness of the telecommunications sector. The government is undertaking telecommunications initiatives from three perspectives: national, international, and governmental. On February 4 of this year, the President’s Council on Year 2000 Conversion was created, with the mandate to cooperate with private-sector operators of critical national and local systems, including telecommunications, in addressing the Year 2000 crisis. The council’s recently established telecommunications working group—chaired by a Federal Communications Commission (FCC) commissioner—held its first meeting on April 29, 1998; membership includes representatives of the Departments of Agriculture, Commerce, Defense, and State; FCC; the General Services Administration (GSA); and the National Science Foundation. The group reports that it is developing a strategy and an action plan to address the key issues facing the telecommunications sector. These include raising industry awareness of the problem and disseminating information on best practices and contingency planning. In addition to its role on the council, within the past 2 months FCC has established a Year 2000 Internet web site, formed a task force to coordinate the activities of FCC bureaus to provide Year 2000 information for consumers and industry, and coordinated an outreach effort to state public utility commissions. Its specific national efforts are focusing on raising the Year 2000 awareness of companies under its jurisdiction, monitoring the status of Year 2000 readiness of the telecommunications sector, and helping telecommunications users obtain information from individual telecommunications service providers needed for testing. As part of this campaign, FCC in late April sent letters to over 200 telecommunications service providers, industry associations, and other interested organizations, advising them of the seriousness and potential impact of the Year 2000 problem and asking them to share information about the Year 2000-compliance status of their services with FCC, others in the telecommunications industry, and the public—including making such information available on the Internet. FCC is also contacting additional service providers and equipment manufacturers, and is working with industry associations to reach the hundreds of small and midsized telecommunications service providers. The Securities and Exchange Commission also has an initiative to gather information on companies’ Year 2000 activities. In October 1997 and January 1998, the Commission urged public operating companies (which would include those in the telecommunications sector) to disclose their anticipated costs, problems, and uncertainties associated with the Year 2000 issue. FCC is also working on the international front, by coordinating with the International Telecommunications Union to reduce the risk of disruption to international telecommunications services. In addition, the Department of State has initiated discussions between embassies and public telecommunications network providers worldwide to determine the potential impact of the Year 2000 problem. In July 1997, the department’s Diplomatic Telecommunications Services Program Office sent a cable to foreign posts asking them to determine whether the local telecommunications carriers—the national post, telephone, and telegraph companies—are aware of the problem and whether they are making plans to ensure the availability of telecommunications services on January 1, 2000. Year 2000 actions concerning the federal government’s telecommunications networks have been initiated by the Chief Information Officers (CIO) Council’s Year 2000 Committee, GSA, and federal agencies. The CIO Council Year 2000 Committee has a telecommunications subcommittee to focus on telecommunications issues in addressing the Year 2000 problem. This subcommittee, chaired by GSA, has adopted a Year 2000 telecommunications compliance program that lays out a framework, including milestones, for agencies to use in addressing telecommunications issues. This compliance program also focuses on enhancing partnerships with industry to identify Year 2000-compliant products and services, develop test methodologies and processes, perform collaborative testing of network elements/systems, and share compliance information and test results. The subcommittee is also addressing contingency planning for telecommunications. In addition to its role chairing the Subcommittee on Telecommunications, GSA owns, manages, or resells consolidated telecommunications services to federal agencies throughout the United States; it controls about 25 percent of all federal telecommunications services. GSA’s Year 2000 program addresses three service areas: Federal Telecommunications System (FTS 2000) services, other federal telecommunications services, and commercial services. In the FTS 2000 area, GSA plans to complete assessment of Year 2000 compliance by this September, renovation by March 1999, and validation and testing between April and December 1999. In the other federal services area, GSA is supporting agencies in hardware testing, is conducting Year 2000 telecommunications working group meetings with agency representatives, and is managing its Year 2000 web site. In the area of commercial services, GSA plans by March 1999 to conduct interoperability testing between government systems and network service providers. Key federal initiatives are in their early stages on a national, international, and governmental level, and critical issues remain to be addressed. Less than 19 months remain, yet no one currently has an overall assessment of the degree of Year 2000 risk in the telecommunications infrastructure. Accordingly, it is imperative that the executive branch, and particularly FCC and the Conversion Council’s telecommunications working group, take a more active approach to addressing the Year 2000 issues of the domestic and international telecommunications sectors.