[House Hearing, 105 Congress]
[From the U.S. Government Publishing Office]
YEAR 2000 PROBLEM AND TELECOMMUNICATIONS SYSTEMS
=======================================================================
HEARING
before the
SUBCOMMITTEE ON OVERSIGHT
of the
COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTH CONGRESS
SECOND SESSION
__________
JUNE 16, 1998
__________
Serial 105-47
__________
Printed for the use of the Committee on Ways and Means
----------
U.S. GOVERNMENT PRINTING OFFICE
51-590 cc WASHINGTON : 1998
COMMITTEE ON WAYS AND MEANS
BILL ARCHER, Texas, Chairman
PHILIP M. CRANE, Illinois CHARLES B. RANGEL, New York
BILL THOMAS, California FORTNEY PETE STARK, California
E. CLAY SHAW, Jr., Florida ROBERT T. MATSUI, California
NANCY L. JOHNSON, Connecticut BARBARA B. KENNELLY, Connecticut
JIM BUNNING, Kentucky WILLIAM J. COYNE, Pennsylvania
AMO HOUGHTON, New York SANDER M. LEVIN, Michigan
WALLY HERGER, California BENJAMIN L. CARDIN, Maryland
JIM McCRERY, Louisiana JIM McDERMOTT, Washington
DAVE CAMP, Michigan GERALD D. KLECZKA, Wisconsin
JIM RAMSTAD, Minnesota JOHN LEWIS, Georgia
JIM NUSSLE, Iowa RICHARD E. NEAL, Massachusetts
SAM JOHNSON, Texas MICHAEL R. McNULTY, New York
JENNIFER DUNN, Washington WILLIAM J. JEFFERSON, Louisiana
MAC COLLINS, Georgia JOHN S. TANNER, Tennessee
ROB PORTMAN, Ohio XAVIER BECERRA, California
PHILIP S. ENGLISH, Pennsylvania KAREN L. THURMAN, Florida
JOHN ENSIGN, Nevada
JON CHRISTENSEN, Nebraska
WES WATKINS, Oklahoma
J.D. HAYWORTH, Arizona
JERRY WELLER, Illinois
KENNY HULSHOF, Missouri
A.L. Singleton, Chief of Staff
Janice Mays, Minority Chief Counsel
______
Subcommittee on Oversight
NANCY L. JOHNSON, Connecticut, Chairman
ROB PORTMAN, Ohio WILLIAM J. COYNE, Pennsylvania
JIM RAMSTAD, Minnesota GERALD D. KLECZKA, Wisconsin
JENNIFER DUNN, Washington MICHAEL R. McNULTY, New York
PHILIP S. ENGLISH, Pennsylvania JOHN S. TANNER, Tennessee
WES WATKINS, Oklahoma KAREN L. THURMAN, Florida
JERRY WELLER, Illinois
KENNY HULSHOF, Missouri
Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public
hearing records of the Committee on Ways and Means are also published
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C O N T E N T S
__________
Page
Advisory of June 9, 1998, announcing the hearing................. 2
WITNESSES
U.S. General Accounting Office, Joel C. Willemssen, Director,
Civil Agencies Information Systems, Accounting and Information
Management Division............................................ 5
Federal Communications Commission, Hon. Michael K. Powell,
Commissioner................................................... 15
______
AT&T Year 2000 Program, A.J. Pasqua.............................. 50
GTE, A. Gerard Roth.............................................. 43
Lucent Technologies, Inc., Ronnie Lee Bennett.................... 53
Schwab Washington Research Group, David E. Baker................. 39
Telco Year 2000 Forum, William O. White.......................... 60
TRW, Priscilla E. Guthrie........................................ 57
YEAR 2000 PROBLEM AND TELECOMMUNICATIONS SYSTEMS
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TUESDAY, JUNE 16, 1998
House of Representatives,
Committee on Ways and Means,
Subcommittee on Oversight,
Washington, DC.
The Subcommittee met, pursuant to notice, at 3 p.m., in
room 1100, Longworth House Office Building, Hon. Nancy Johnson
(Chairman of the Subcommittee) presiding.
[The advisory announcing the hearing follows:]
ADVISORY
FROM THE
COMMITTEE
ON WAYS
AND
MEANS
SUBCOMMITTEE ON OVERSIGHT
CONTACT: (202) 225-7601
FOR IMMEDIATE RELEASE
June 9, 1998
No. OV-18
Johnson Announces Hearing on the
Year 2000 Problem and Telecommunications Systems
Congresswoman Nancy L. Johnson (R-CT), Chairman, Subcommittee on
Oversight of the Committee on Ways and Means, today announced that the
Subcommittee will hold a hearing on the Year 2000 (Y2K) computer
problems and telecommunications systems. The hearing will take place on
Tuesday, June 16, 1998, in the main Committee hearing room, 1100
Longworth House Office Building, beginning at 3:00 p.m.
In view of the limited time available to hear witnesses, oral
testimony at this hearing will be from invited witnesses only.
Witnesses will include representatives from the U.S. General Accounting
Office; the President's Council on the Year 2000 Conversion; and the
telecommunications industry. However, any individual or organization
not scheduled for an oral appearance may submit a written statement for
consideration by the Committee and for inclusion in the printed record
of the hearing.
BACKGROUND:
The United States, with almost half of the world's computer
capacity and 60 percent of the world's Internet assets, is arguably the
world's most advanced, and most dependent, producer and user of
information and telecommunications technologies. Telecommunications are
critical to the operations of nearly every public and private sector
organization, including the Medicare, Social Security, customs,
welfare, child support enforcement, and the Internal Revenue Service
programs within the jurisdiction of the Committee on Ways and Means.
The telecommunications infrastructure is composed of the public sector
network (a network of hundreds of local telephone companies and long
distance carriers), the Internet, and millions of government and
private sector telecommunications and computer networks.
Although most of the attention concerning the Y2K problem has
focused on its impact on information technology and computer systems,
there is a growing recognition of the vulnerability of
telecommunications. The Y2K problems affect virtually all
telecommunications network components. Because a single noncompliant
component could potentially shut down an entire network, rigorous
testing will be necessary. To minimize the adverse consequences of
noncompliant telecommunications systems, a massive logistical effort
will be required--including closely monitoring the status of the Y2K
readiness programs of the local and long distance carriers. The
Executive Branch, in response to Congressional concerns, has recently
begun to address the Y2K telecommunications issues. The key initiatives
include the creation, in February 1998, of the President's Council on
the Year 2000 Conversion and in April 1998, the FCC's Year 2000
Initiatives.
In announcing the hearing, Chairman Johnson stated: ``Given the
embryonic stage of the Administration's telecommunications initiatives,
with only 19 months left, I am concerned that this may be too little,
too late. The telecommunications infrastructure is critical to Social
Security checks getting to our seniors, our hospitals and doctors being
paid by Medicare, and our taxpayers being served properly and
efficiently by the Internal Revenue Service. It is imperative that we
know the Y2K status of our telecommunications system. We need to assess
the adequacy of the planning and management for Y2K readiness of the
telecommunications system to avert a potential disaster for the
programs within our Committee's jurisdiction.''
FOCUS OF THE HEARING:
The hearing will explore the Y2K issues for the Nation's
telecommunications infrastructure and its impact on the major programs
within the jurisdiction of the Committee on Ways and Means. In
particular, the Subcommittee will examine the implications of the Y2K
risks posed by the telecommunications infrastructure, including those
posed by critical infrastructure components failures.
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noted above.
Chairman Johnson of Connecticut [presiding]. Good
afternoon. The United States has almost one-half of the world's
computer capacity and 60 percent of its Internet assets. We are
the world's most advanced producer and user of information and
telecommunications technologies, and the most dependent upon
them, in both the public and private sector.
In our May 7 Oversight hearing, we learned much about
agency officials' efforts to renovate their mission-critical
systems. While Y2K compliance is proving to be an all-consuming
job, it is clear that even if the government is successful in
making their systems Y2K compliant, and that is by no means a
certainty, they may still not be able to provide continuous
service to beneficiaries or taxpayers into the next century if
others they rely upon are not Y2K compliant.
The agencies within our jurisdiction are particularly
reliant on telecommunications, both for their own processes and
those that cross organizational boundaries. Consequently, Y2K
compliance is a massive technical challenge, a tremendous
managerial challenge, and a serious logistical public-private
problem.
Telecommunications capabilities are critical to the
operations of nearly every public and private organization. We
have become reliant on telecommunications for just about
everything we do. Just the agencies within the jurisdiction of
this Committee rely on telecommunications for critical
activities, like Social Security benefit payments to the
elderly, hospital and doctor payments through Medicare, and
answering taxpayers' questions, as well as processing their
refunds.
The telecommunications infrastructure is highly complex. It
is made up of a public telecommunications network, millions of
computer networks and systems for government, defense,
commercial, and personal use. The public telecommunications
network includes a web of interconnected networks operated by
hundreds of local telephone companies and long-distance
carriers, cellular networks, and satellite services. A growing
number of private networks have also emerged and are supported
by the public network. For example, the Treasury Department has
agencies, including the IRS, rely heavily on their own private
networks, as well as the public network to conduct mission-
critical business.
A key feature of the telecommunications infrastructure is
the seamless connection between a wide range of carriers and
networks. The route of a Social Security benefit payment
illustrates this. An electronic payment may move across several
networks, operated by the Social Security Administration,
Treasury, Federal Reserve, and the beneficiary's own commercial
bank. The transaction's travels are not at all apparent to
sender or recipient.
We are here today to learn from officials familiar with the
telecommunications industry about the efforts underway to meet
the Y2K challenge. We will be hearing from the Federal
Communications Commissioner and a U.S. General Accounting
Office Director about the Y2K issues facing the
telecommunications industry and those relying on its services.
We will also be hearing from industry analysts and
representatives of various sectors of the industry about the
challenge presented by those Y2K issues and how they are being
managed.
The more I learn about the Y2K problem, the more I
understand those who equate it to peeling an onion. It seems
that peeling a layer of the Y2K problem only produces another
layer to be peeled. The later we discover new layers, the less
time we will have to respond to their needs and peel remaining
ones.
Our purpose today is to shed more light on the
telecommunications layer and determine whether more action is
needed, including legislative or congressional action to help
insure that beneficiaries and taxpayers are not shedding tears
at the turn of the century over lost services due to systems
and network failures.
Mr. Coyne.
Mr. Coyne. Thank you, Madam Chairman. The Ways and Means
Committee Oversight Subcommittee is going to hold its second
hearing today to review the status of Federal agency efforts to
address year 2000 systems conversions.
As we move closer and closer toward the new millennium, it
is important that this Subcommittee continue to review our
governmentwide conversion efforts.
As will be discussed by the witnesses that we have here
today, just as private sector and government systems need to be
updated by the end of next year, computer and
telecommunications systems internationally must reach the same
high standards of compliance by that date.
Telecommunications systems throughout the world are
integrally linked. The interdependence of these systems needs
to be recognized and thoroughly evaluated by the experts.
I would like to welcome the witnesses scheduled to appear
before the Subcommittee today, including the U.S. General
Accounting Office, the President's Representative on the Year
2000 Conversion Council, officials from several of the Federal
agencies, and industry experts in the telecommunications field.
I thank each of you for appearing today.
And finally, I thank the Subcommittee Chairman, Mrs.
Johnson, for scheduling the followup session today. Thank you.
Chairman Johnson of Connecticut. Thank you, Mr. Coyne.
It's my pleasure to welcome our first panel. Joel
Willemssen, the Director of Information Systems, Management
Accounting, and Information Management of the U.S. General
Accounting Office, and Hon. Michael Powell, Defense
Commissioner, Federal Communications Commission.
Mr. Willemssen.
STATEMENT OF JOEL C. WILLEMSSEN, DIRECTOR, CIVIL AGENCIES
INFORMATION SYSTEMS, ACCOUNTING AND INFORMATION MANAGEMENT
DIVISION, U.S. GENERAL ACCOUNTING OFFICE
Mr. Willemssen. Thank you, Madam Chair. Thank you, Ranking
Member Coyne. Thank you for inviting us to testify today on a
critical issue, year 2000 and telecommunications. As requested,
I'll briefly summarize our statement.
The consequences of not resolving year 2000 problems for
telecommunications are potentially disastrous. Without
compliant telecommunications, Federal agencies would be unable
to provide basic services to the American public. For example,
the IRS wouldn't be able to process electronic tax refunds and
electronic Medicare payments would not be made.
In light of these types of risks, the Federal Government
has recently begun to address year 2000 telecommunications
issues. For example, the President's Council on Year 2000
Conversion has established a telecommunications working group,
chaired by Commissioner Powell. The group reports that it's
developing a strategy and plans to address the key issues
facing the telecommunications sector.
In addition, within the past 2 months, FCC has initiated
other activities, such as sending letters to over 200
telecommunications service providers and others, asking them to
share information about their year 2000 compliant status.
Despite these recent efforts, critical areas remain to be
addressed. Only 1\1/2\ years remain, but no one currently has
an overall assessment of where we stand on year 2000 and
telecommunications risks. It's therefore imperative that the
executive branch take a more proactive approach in addressing
this.
In line with producing a strategy with specific milestones
and defined accountability, several major areas must be
addressed. One is that information must be obtained on the
current readiness status of the telecommunications industry.
FCC has compiled general information on this, and on the
various telecommunications segments. However, as of last week,
the FCC was unable to provide us with information on the
current status and anticipated readiness dates in areas such as
satellite, cable, broadcast, wireless services, and long-
distance and local exchange carriers.
Second, it's essential that FCC obtain this kind of data on
telecommunications preparedness on a regular basis. Just as OMB
and the Congress monitor Federal agencies' efforts on year
2000, FCC would benefit from such a mechanism that would
provide recurring telecommunications year 2000 information.
Third, FCC has not yet developed schedules and milestones
for the various segments of the telecommunications industry to
achieve year 2000 compliance. Milestones for such activities as
renovation, validation, and implementation can serve as useful
benchmarks for evaluating progress in reaching compliance,
especially as it relates to testing.
Fourth, it's important that FCC provide information to the
public on telecommunications preparedness, to give assurance
that this area is being adequately addressed.
And fifth, the private and public sectors must work in
partnership to develop contingency plans to insure a minimum
level of business continuity in the event that not all
telecommunications systems are ready by 2000.
Finally, many major departments and agencies still do not
yet know the year 2000 compliance status of their own
telecommunications networks and systems. In fact, many agencies
are still assessing the readiness of their telecommunications.
As of last month's quarterly reports, we find that only 11 of
24 major Federal agencies had reported that they had completed
inventories and/or assessments of their telecommunications.
For example, Treasury reported that many of its bureaus are
still inventorying their telecommunications. Regarding HCFA,
HHS reported that HCFA had completed its inventory, however it
was just now starting to develop plans to get its
telecommunications systems compliant. With relatively little
time left, this must be done as soon as possible.
Madam Chair, that concludes the summary of my statement.
I'd be pleased to address any questions that you or the Members
may have.
[The prepared statement follows:]
Statement of Joel C. Willemssen, Director, Civil Agencies Information
Systems, Accounting and Information Management Division, U.S. General
Accounting Office
Madam Chairwoman and Members of the Subcommittee:
We are pleased to join you today to discuss the computing
crisis posed by the upcoming change of century, and its
implications in one critical area: telecommunications. As you
know, the year 2000 presents a particularly sweeping and urgent
challenge for entities in this country.\1\ For this reason, in
February 1997 we designated the Year 2000 problem as a high-
risk area \2\ for the federal government, and have published
guidance \3\ to help organizations successfully address the
issue. Since that time we have issued over 45 reports and
testimony statements detailing specific findings and
recommendations related to the Year 2000 compliance of a wide
range of federal agency systems.\4\ The common theme has been
that serious vulnerabilities remain in addressing the federal
government's Year 2000 readiness, and that much more action is
needed to ensure that agencies satisfactorily mitigate Year
2000 risks to avoid debilitating consequences.
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\1\ For the past several decades, automated information systems
have typically represented the year using two digits rather than four
in order to conserve electronic data storage space and reduce operating
costs. In this format, however, 2000 is indistinguishable from 1900
because both are represented only as 00. As a result, if not modified,
computer systems or applications that use dates or perform date- or
time-sensitive calculations may generate incorrect results beyond 1999.
\2\ High-Risk Series: Information Management and Technology (GAO/
HR-97-9, February 1997).
\3\ Year 2000 Computing Crisis: An Assessment Guide (GAO/AIMD-
10.1.14, September 1997), which includes the key tasks needed to
complete each phase of a Year 2000 program (awareness, assessment,
renovation, validation, and implementation; and Year 2000 Computing
Crisis: Business Continuity and Contingency Planning (GAO/AIMD-10.1.19,
March 1998 [exposure draft]), which describes the tasks needed to
ensure the continuity of agency operations.
\4\ A listing of our publications is included as an attachment to
this statement.
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We have made many recommendations to the executive branch
to reduce the risk of Year 2000-induced disruptions of critical
services. Among these, we recommended that the Chair of the
President's Council on Year 2000 Conversion develop a
comprehensive picture of the nation's Year 2000 readiness. This
effort would include identifying and assessing the risk of the
nation's key economic sectors, including those posed by
telecommunications.
The readiness of the telecommunications sector is one of
the most crucial concerns. No one--large corporation, small
business, government agency, family, or individual--is immune
from the potential disruption of vital telecommunications
services. The United States, with almost half of the world's
computer capacity and 60 percent of Internet assets, is the
world's most advanced--and most dependent--producer and user of
information and telecommunications technologies.\5\ In
particular, such technologies have helped fuel the growth of
the U.S. economy and have enabled major improvements in the
nation's infrastructure. As a result, telecommunications
service providers and their public- and private-sector
customers have a lot at stake; the potential losses and
disruptions that could accrue from noncompliant
telecommunications systems could be staggering.
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\5\ Critical Foundations: Protecting America's Infrastructures
(President's Commission on Critical Infrastructure Protection, October
1997).
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My testimony today will (1) describe our nation's
telecommunications infrastructure; (2) discuss the risks we
face if critical components of that infrastructure are not Year
2000 compliant by the turn of the century; (3) describe federal
government actions relating to national, international, and
governmental telecommunications infrastructure; and (4) present
issues that must be addressed.
The Telecommunications Infrastructure
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 \6\ using a common set of protocols.\7\ Significant
portions of the Internet rely on services provided by the
public telecommunications networks.
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\6\ Routers are devices that direct messages. Routers receive
packets of information from computers or other routers on the network;
they then send these packets to their destinations based on
``addresses'' at the beginning of the packets and a road map of the
other computers and peripherals on the network.
\7\ Protocols are a set of procedures for establishing and
controlling data transmission.
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The rich array of reliable telecommunications services is
made possible by a complex web of highly interconnected
networks supported by switches \8\ and 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), \9\ and voice
mail systems. The key is connectivity: all of the pieces must
work together.
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\8\ Switches are electronic or mechanical devices that allow
connections to be established as necessary and terminated when there is
no longer a session to support.
\9\ A PBX is a telephone switch located on a customer's premises
that primarily establishes voice-grade circuits between individual
users and the public switched telephone network. A PBX also provides
switching within the customer premises local area.
---------------------------------------------------------------------------
Services Vital to the Nation Depend Upon Reliable Telecommunications
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.\10\
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.
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\10\ Sustaining Stable Financial Markets Through the Millennium,
Computer Sciences Corporation.
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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 routed in a timely manner.
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.
Federal Activity Related to the Year 2000 Readiness of the
Telecommunications Sector
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.
National initiatives
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 and with
others in the telecommunications industry, and with 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 mid-sized
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.
International initiatives
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.
Governmental initiatives
Year 2000 actions concerning the federal government's
telecommunications networks have been initiated by the Chief
Information Officers (CIO) Council's \11\ 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.
---------------------------------------------------------------------------
\11\ The CIO Council comprises CIOs and Deputy CIOs from 28 large
federal departments and agencies, 2 CIOs from small federal agencies,
agency representatives from the Office of Management and Budget (OMB),
and the Chairs of the Government Information Technology Services Board
and Information Technology Resources Board.
---------------------------------------------------------------------------
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: FTS 2000 \12\ 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.
---------------------------------------------------------------------------
\12\ The Federal Telecommunications System (FTS 2000) is a
nationwide telecommunications network providing long-distance voice and
data services to federal agencies.
---------------------------------------------------------------------------
Issues Surrounding Year 2000 Telecommunications Readiness
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.
National Issues
The federal government is uniquely positioned to publicize
the Year 2000 computing crisis as a national priority; take a
leadership role; and identify, assess, and report on the risks
and necessary remediation activities associated with the
nation's key economic sectors, such as telecommunications.
Accordingly, in an April 1998 report, we recommended that the
President's Council on Year 2000 Conversion establish public/
private partnership forums composed of representatives of each
major sector that, in turn, would rely on task forces organized
along economic sector lines to help (1) gauge the nation's
preparedness for the Year 2000, (2) periodically report on the
status and remaining actions of each sector's Year 2000
remediation efforts, and (3) ensure the development of
contingency plans to assure the continuing delivery of critical
public and private services.\13\
\13\ Year 2000 Computing Crisis: Potential for Widespread
Disruption Calls for Strong Leadership and Partnerships (GAO/AIMD-98-
85, April 30, 1998).
---------------------------------------------------------------------------
In disagreeing with this recommendation, the Chair of the
Conversion Council stated his belief that the council needs to
be a catalyst, facilitator, and coordinator. He did, however,
establish five new working groups--telecommunications among
them; while not providing specific guidelines or expectations,
the Chair told them to focus on developing a coordinated
outreach plan and establish communications with public and
private parties within each sector, and to monitor the Year
2000 readiness of each sector.
Given the inarguably critical nature of telecommunications
services to the functioning of our nation, coordinated
oversight is essential. In order to gain confidence that our
telecommunications infrastructure will be ready for the next
century, accountability must be established; this includes a
broad strategy as well as specific milestones and defined
accountability.
We see several major areas that must be addressed: (1)
obtaining information on the current readiness status of
various segments of the telecommunications industry for the
next century, (2) establishing a mechanism for obtaining such
readiness information on a regular basis, (3) setting
milestones for achieving Year 2000 compliance, (4)
disseminating readiness status information to the public and
the Congress, and (5) developing--in conjunction with the
private sector--contingency plans to ensure business
continuity, albeit at reduced levels, in the event that not all
telecommunications systems are fully operational on January 1,
2000.
Current status
Based on data from industry associations and
telecommunications companies, FCC has compiled general
information on the status and activities of various segments of
this sector. In late April of this year, the agency asked the
telecommunications industry for Year 2000-compliance
information; however, as of last week, FCC was unable to
provide us with information on the current status and
anticipated readiness dates in areas such as satellite, cable,
broadcast, and wireless services. As a major example, FCC could
not provide us with data on when major interexchange (long
distance) and local exchange carriers were expecting to be Year
2000 compliant.
Because FCC did not have such data readily available, we
attempted to obtain Year 2000 milestone information from the
major interexchange (long distance) and local exchange
carriers. We focused on these 12 carriers because they hold key
positions within the telecommunications sector and account for
over 90 percent of the market.\14\ We obtained this information
from the carriers' World Wide Web sites, or through telephone
interviews with carrier representatives.
---------------------------------------------------------------------------
\14\ According to FCC, there are over 1,300 companies that provide
local telephone service in the United States. More than 700 firms buy
access from these companies.
---------------------------------------------------------------------------
Table 1 provides a summary of the information we gathered.
The table shows that most major carriers expect to achieve Year
2000 compliance of their networks by December 1998, although
for some it is either later than that date or we were unable to
obtain this information. The table also shows that most major
carriers plan to be fully compliant--including support
systems--by mid-1999.
In addition to the individual carrier information shown in
the table, some interoperability testing is planned. This
laboratory-based testing, sponsored by the Telco Year 2000
Forum and by the Alliance for Telecommunications Industry
Solutions (ATIS), is scheduled to begin later this year and
continue throughout 1999. The forum-sponsored testing will
focus on interoperability between local exchange carriers,
while the ATIS-sponsored tests will focus on common equipment
interoperability between a local exchange carrier and a long-
distance carrier.
Recurring status information
Not only is it important that FCC know the current status
of telecommunications preparedness, it is imperative that such
information be obtained on a regular basis. Just as OMB and the
Congress monitor individual agency progress through quarterly
reports on the status of Year 2000 systems compliance, FCC
would benefit from a mechanism that would provide updated
status data on a recurring basis. Without this information, FCC
will find it more difficult to address major problems that may
occur. FCC's recent letters to the industry are a start, but
ongoing receipt of information will be essential to effectively
monitor sector readiness.
Table 1: Year 2000-Compliance Status of Major Telecommunications
Carriers.
------------------------------------------------------------------------
Date expected to be Year 2000
compliant
Service providers ---------------------------------------
Network services Support services
\1\ \2\
------------------------------------------------------------------------
Interexchange carriers
AT&T....................... December 1998..... June 1999
Excel...................... (did not respond). (did not respond)
Frontier................... December 1998..... December 1998
MCI........................ December 1998..... June 1999
Sprint..................... December 1998..... June 1999
Worldcom................... April 1999........ April 1999
Local exchange carriers
Ameritech.................. January 1999...... January 1999
Bell Atlantic.............. July 1999......... (not specified)
BellSouth.................. December 1998..... December 1998
GTE........................ December 1998..... December 1998
SBC........................ December 1998..... December 1998
Sprint..................... December 1998..... June 1999
US West.................... June 1999......... June 1999
------------------------------------------------------------------------
\1\ Network services are key systems and network elements affecting
customer services.
\2\ Support services are services and systems supporting carrier
operations.
Source: individual carriers. We did not independently verify this
information.
Milestone setting
While telecommunications service providers are establishing
their own Year 2000 schedules, FCC has not developed schedules
and milestones for the various segments of the
telecommunications industry to achieve Year 2000 compliance.
Milestones for activities such as renovation, validation, and
implementation are important to overall Year 2000
telecommunications planning and for evaluating progress in
reaching compliance.
Information dissemination
Beyond obtaining current and ongoing status information, it
is important that FCC make such information available to the
public--including telecommunications customers--and the
Congress. The dissemination of this information could provide
continuous information about the preparedness of this essential
sector for the century change. Potential vehicles for such
dissemination include regular reports to the Congress.
Contingency planning
Contingency plans should be formulated to respond to two
types of failures: predictable (such as repairs or replacements
that are already far behind schedule) and unforeseen (such as a
system that fails despite having been certified as Year 2000
compliant or one that, it is later found, cannot be corrected
by January 1, 2000, despite appearing to be on schedule today).
Given the central nature of telecommunications to the ability
of other sectors to be Year 2000 ready, a public/private
partnership could be formed to develop and test necessary
contingency plans, critical to ensuring the continuity of
service in the event of failures.
International Issues
Little is known about the Year 2000 readiness of foreign
telecommunications carriers and their ability to continue to
provide telecommunications services after December 31, 1999. In
September 1997 the Gartner Group conducted several surveys to
determine how companies around the world were dealing with the
Year 2000 problem. The study did not focus on the
telecommunications sector; however, its findings provide an
indication of the overall Year 2000 readiness of the various
geographic regions of the world. According to the study,
``[t]hirty percent of all companies have not started dealing
with the year 2000 problem. Small companies, health care
organizations, educational institutions, and many companies in
30 percent of the world's countries are at a high risk of
seeing year 2000 mission-critical failures due to a lack of
readiness.'' \15\ A more recent survey focusing on foreign
telecommunications service providers was conducted by the
International Telecommunication Union; its results are not yet
available.
---------------------------------------------------------------------------
\15\ Year 2000-World Status (Gartner Group, Document #M-100-037,
November 25, 1997).
---------------------------------------------------------------------------
FCC has also noted that Year 2000 issues have not received
the same level of attention abroad as in the United States,
with the exception of the United Kingdom. This was confirmed by
the results of the State Department's initiative to assess the
Year 2000 readiness of foreign carriers. As shown in table 2,
the department received information from 113 countries, updated
through March 1998. Of those, 25 countries (22 percent)
expected to be compliant by this December; 26 countries (23
percent) expected to be compliant by December 1999; 33
countries (29 percent) stated that they were addressing the
Year 2000 issue but were having problems; and 29 countries (26
percent) were unaware of or had not begun to address the
problem. The State Department is continuing its activities to
determine the Year 2000 readiness of its foreign posts, and is
developing contingency plans to ensure continuity of diplomatic
telecommunications services.
Table 2: Year 2000-Compliance Status of International Post, Telephone, and Telegraph Companies.
----------------------------------------------------------------------------------------------------------------
Compliance Compliance Addressing
expected expected Year 2000, Unaware
Region by the end by the end but having or not Total
of 1998 of 1999 problems begun
----------------------------------------------------------------------------------------------------------------
Central and South America................................ 4 2 4 5 15
Europe and Canada........................................ 8 15 9 9 41
Africa................................................... 2 1 10 9 22
East Asia and the Pacific................................ 8 6 5 4 23
Near East and South Asia................................. 3 2 5 2 12
-----------------------------------------------------
Total................................................ 25 26 33 29 113
=====================================================
Percentage........................................... 22% 23% 29% 26% 100%
----------------------------------------------------------------------------------------------------------------
Source: Department of State. We did not independently verify this information.
The World Bank is reporting similar findings. In an
informal survey of foreign Year 2000 readiness conducted this
month, only 18 of 127 countries (14 percent) had a national
Year 2000 program; 28 countries (22 percent) report working on
the problem; and 16 countries (13 percent) report only
awareness of the issue. No conclusive data were received from
the remaining 65 countries surveyed (51 percent). The World
Bank is now planning to appoint a field Year 2000
representative for each country.
The Year 2000 readiness of international telecommunications
networks and carriers is clearly an area of concern. All
sectors of the global economy depend upon reliable
communications networks to handle billions of dollars in
financial transactions. Current and ongoing information to
monitor the compliance status of foreign carriers would,
therefore, allow the federal government and the private sector
to identify troubled regions and develop contingency plans for
ensuring the continuity of vital telecommunications services.
Governmental Issues
Without compliant telecommunications, federal agencies will
be unable to provide basic services to the American public.
However, many major departments and agencies do not yet know
the Year 2000 compliance status of their own telecommunications
networks and services. In fact, many federal agencies are just
beginning to assess the readiness of their telecommunications.
As of last month's quarterly reports to OMB, only 11 of 24
major federal agencies reported that they had completed
inventories and/or assessments of telecommunications. The
Department of Agriculture, for example, does not expect to
complete its telecommunications inventory until next month--a
critical assessment task that should have been completed last
summer.
In closing, let me reiterate that the importance of the
telecommunications infrastructure in the successful functioning
of our nation cannot be overemphasized; it is the linchpin of
our economy and critical citizen services. Yet the
telecommunications industry faces a massive challenge to make
sure that it can finish the Year 2000 job in time. While the
federal government must take a stronger, more active oversight
role to help ensure that this central sector is prepared, much
of the responsibility inevitably lies with the industry and
other countries around the world.
Madam Chairwoman, this concludes my statement. I would be
pleased to respond to any questions that you or other members
of the Subcommittee may have at this time.
GAO Reports and Testimony Addressing the Year 2000 Crisis
Year 2000 Computing Crisis: Actions Must Be Taken Now to Address
Slow Pace of Federal Progress (GAO/T-AIMD-98-205, June 10, 1998)
Defense Computers: Army Needs to Greatly Strengthen Its Year 2000
Program (GAO/AIMD-98-53, May 29, 1998)
Year 2000 Computing Crisis: USDA Faces Tremendous Challenges in
Ensuring That Vital Public Services Are Not Disrupted (GAO/T-AIMD-98-
167, May 14, 1998)
Securities Pricing: Actions Needed for Conversion to Decimals (GAO/
T-GGD-98-121, May 8, 1998)
Year 2000 Computing Crisis: Continuing Risks of Disruption to
Social Security, Medicare, and Treasury Programs (GAO/T-AIMD-98-161,
May 7, 1998)
IRS' Year 2000 Efforts: Status and Risks (GAO/T-GGD-98-123, May 7,
1998)
Air Traffic Control: FAA Plans to Replace Its Host Computer System
Because Future Availability Cannot Be Assured (GAO/AIMD-98-138R, May 1,
1998)
Year 2000 Computing Crisis: Potential For Widespread Disruption
Calls For Strong Leadership and Partnerships (GAO/AIMD-98-85, April 30,
1998)
Defense Computers: Year 2000 Computer Problems Threaten DOD
Operations (GAO/AIMD-98-72, April 30, 1998)
Department of the Interior: Year 2000 Computing Crisis Presents
Risk of Disruption to Key Operations (GAO/T-AIMD-98-149, April 22,
1998)
Year 2000 Computing Crisis: Business Continuity and Contingency
Planning (GAO/AIMD-10.1.19, Exposure Draft, March 1998)
Tax Administration: IRS' Fiscal Year 1999 Budget Request and Fiscal
Year 1998 Filing Season (GAO/T-GGD/AIMD-98-114, March 31, 1998)
Year 2000 Computing Crisis: Strong Leadership Needed to Avoid
Disruption of Essential Services (GAO/T-AIMD-98-117, March 24, 1998)
Year 2000 Computing Crisis: Federal Regulatory Efforts to Ensure
Financial Institution Systems Are Year 2000 Compliant (GAO/T-AIMD-98-
116, March 24, 1998)
Year 2000 Computing Crisis: Office of Thrift Supervision's Efforts
to Ensure Thrift Systems Are Year 2000 Compliant (GAO/T-AIMD-98-102,
March 18, 1998)
Year 2000 Computing Crisis: Strong Leadership and Effective Public/
Private Cooperation Needed to Avoid Major Disruptions (GAO/T-AIMD-98-
101, March 18, 1998)
Post-Hearing Questions on the Federal Deposit Insurance
Corporation's Year 2000 (Y2K) Preparedness (AIMD-98-108R, March 18,
1998)
SEC Year 2000 Report: Future Reports Could Provide More Detailed
Information (GAO/GGD/AIMD-98-51, March 6, 1998
Year 2000 Readiness: NRC's Proposed Approach Regarding Nuclear
Powerplants (GAO/AIMD-98-90R, March 6, 1998)
National Weather Service: Budget Events and Continuing Risks of
Systems Modernization (GAO/T-AIMD-98-97, March 4, 1998)
Year 2000 Computing Crisis: Federal Deposit Insurance Corporation's
Efforts to Ensure Bank Systems Are Year 2000 Compliant (GAO/T-AIMD-98-
73, February 10, 1998)
Year 2000 Computing Crisis: FAA Must Act Quickly to Prevent Systems
Failures (GAO/T-AIMD-98-63, February 4, 1998)
FAA Computer Systems: Limited Progress on Year 2000 Issue Increases
Risk Dramatically (GAO/AIMD-98-45, January 30, 1998)
Defense Computers: Air Force Needs to Strengthen Year 2000
Oversight (GAO/AIMD-98-35, January 16, 1998)
Year 2000 Computing Crisis: Actions Needed to Address Credit Union
Systems' Year 2000 Problem (GAO/AIMD-98-48, January 7, 1998)
Veterans Health Administration Facility Systems: Some Progress Made
In Ensuring Year 2000 Compliance, But Challenges Remain (GAO/AIMD-98-
31R, November 7, 1997)
Year 2000 Computing Crisis: National Credit Union Administration's
Efforts to Ensure Credit Union Systems Are Year 2000 Compliant (GAO/T-
AIMD-98-20, October 22, 1997)
Social Security Administration: Significant Progress Made in Year
2000 Effort, But Key Risks Remain (GAO/AIMD-98-6, October 22, 1997)
Defense Computers: Technical Support Is Key to Naval Supply Year
2000 Success (GAO/AIMD-98-7R, October 21, 1997)
Defense Computers: LSSC Needs to Confront Significant Year 2000
Issues (GAO/AIMD-97-149, September 26, 1997)
Veterans Affairs Computer Systems: Action Underway Yet Much Work
Remains To Resolve Year 2000 Crisis (GAO/T-AIMD-97-174, September 25,
1997)
Year 2000 Computing Crisis: Success Depends Upon Strong Management
and Structured Approach (GAO/T-AIMD-97-173, September 25, 1997)
Year 2000 Computing Crisis: An Assessment Guide (GAO/AIMD-10.1.14,
September 1997)
Defense Computers: SSG Needs to Sustain Year 2000 Progress (GAO/
AIMD-97-120R, August 19, 1997)
Defense Computers: Improvements to DOD Systems Inventory Needed for
Year 2000 Effort (GAO/AIMD-97-112, August 13, 1997)
Defense Computers: Issues Confronting DLA in Addressing Year 2000
Problems (GAO/AIMD-97-106, August 12, 1997)
Defense Computers: DFAS Faces Challenges in Solving the Year 2000
Problem (GAO/AIMD-97-117, August 11, 1997)
Year 2000 Computing Crisis: Time is Running Out for Federal
Agencies to Prepare for the New Millennium (GAO/T-AIMD-97-129, July 10,
1997)
Veterans Benefits Computer Systems: Uninterrupted Delivery of
Benefits Depends on Timely Correction of Year-2000 Problems (GAO/T-
AIMD-97-114, June 26, 1997)
Veterans Benefits Computers Systems: Risks of VBA's Year-2000
Efforts (GAO/AIMD-97-79, May 30, 1997)
Medicare Transaction System: Success Depends Upon Correcting
Critical Managerial and Technical Weaknesses (GAO/AIMD-97-78, May 16,
1997)
Medicare Transaction System: Serious Managerial and Technical
Weaknesses Threaten Modernization (GAO/T-AIMD-97-91, May 16, 1997)
USDA Information Management: Extensive Improvements Needed in
Managing Information Technology Investments (GAO/T-AIMD-97-90, May 14,
1997)
Year 2000 Computing Crisis: Risk of Serious Disruption to Essential
Government Functions Calls for Agency Action Now (GAO/T-AIMD-97-52,
February 27, 1997)
Year 2000 Computing Crisis: Strong Leadership Today Needed To
Prevent Future Disruption of Government Services (GAO/T-AIMD-97-51,
February 24, 1997)
High Risk Series: Information Management and Technology (GAO/HR-97-
9, February 1997)
Chairman Johnson of Connecticut. Thank you, Mr. Willemssen.
Mr. Powell.
STATEMENT OF HON. MICHAEL K. POWELL, COMMISSIONER, FEDERAL
COMMUNICATIONS COMMISSION
Mr. Powell. Thank you, Madam Chairman, and Members of the
Subcommittee. Let me first of all commend you for holding a
hearing on, to what is in my mind, one of the most pressing
issues facing our Nation. And in particular, to recognize the
criticality and the fundamental importance of the
telecommunication infrastructure, as well as other critical
infrastructures, such as energy and transportation.
I thought I would take this opportunity with my comments to
do a number of things for you in our discussion about this
important issue. First of all, I'd like to give you a brief
background about our approach, especially in light of some who
would suggest a slightly more activist heavy regulatory
approach than the one that we've chosen.
Second, I would like to point out some of the unique
attributes of the telecommunications industry, which provides
some level of confidence that they are better prepared to deal
with this problem than a significant number of other industries
in our economy.
Third, I'll give you a rough general assessment where
telecommunications carriers are and how they're progressing.
And finally, a little bit about our ongoing efforts to assess
the status.
I first would say that our approach to this issue is to
leverage our existing regulatory relationship with industries
and to encourage and promote a cooperative mission-oriented
relationship that will allow us to actually get this problem
licked, rather than set up for regulatory consequences.
We've elected this approach, rather than a top-down
regulatory one, for a number of reasons. I think they're
important to point out. First and foremost among them is that
there is very little time to get this job done. Only private
firms can fix these problems, and we must have their
cooperation and we must have their timely and candid disclosure
of information to get it done.
We at the FCC are of the opinion, and our experience shows,
that a heavy regulatory approach will lead to guarded
communications, the involvement of lawyers rather than
technologists and managers, and a huge loss of time while we
haggle over requests and regulatory demands. Significant time
to my mind would be lost to developing, issuing, evaluating,
and compiling lengthy data requests, and such efforts would
divert both the agency's limited resources and those of
companies from actually working the problem, which after all,
is what matters most.
The FCC has been working this problem for a number of
years. More importantly, so have most of the major carriers.
Indeed, I think it would be important to understand that this
industry is probably better equipped and positioned to address
this issue than most in our economy. And let me give you a few
reasons why.
First and foremost, this industry is dependent upon a
highly complex technical network that is engineered for near
unfailing reliability. The Bellcore standard is 99.9999-percent
uptime. Indeed, the average switch is supposed to be
operational and only be down for 3 minutes in any given year.
Thus, these companies have a strong stable of trained experts
in network reliability issues. They have experience with
identifying threats to network reliability, planning
corrections, and executing those corrections. They also have
experience doing similarly herculean tasks, such as having
pulled apart the network after the AT&T divestiture, and
reengineering that network when we changed the area code
system.
Second, because of the importance of network reliability
and interoperability, there are a number of first-class
technical consortiums that have a long history of developing
standards and addressing network issues, and then sharing that
work with its members. Bellcore has served in this role for the
phone system since days of old. In the area of cable, for
example, there is CableLabs, a research and development
consortium of cable television system operators which currently
represent more than 85 percent of all subscribers in the United
States.
Third, the industry has a number of very influential
umbrella associations that serve as important contact points
for the FCC, and they are optimized to provide timely
dissemination of information to its members.
Fourth, though in the throes of deregulation
telecommunications has been heavily regulated at both the State
and Federal level. This means there are well established
relationships between the industry and the government.
And fifth and perhaps most importantly, for once the
industry's own self-interest happens to be congruent with that
of regulators. They well understand that they potentially face
financial ruin, diminished good will and brand name, regulatory
trouble, and perhaps most importantly, legal liability. All at
a time when the Telecommunications Act of 1996 is ushering in
new competition.
Let me offer you a general assessment of the
telecommunications industry. Given the factors I've just
discussed and other things we've observed, our general
assessment of the industry is positive. While there are
problems and concerns, we are quite confident that the basic
phone net will be able, in year 2000, to provide phone service
of similar quality and reliability as that that's being
provided today.
Madam Chairman, I see my time is up. Could I briefly
conclude?
Chairman Johnson of Connecticut. Thank you both. Are you
close to conclusion? Did you cut yourself off?
Mr. Powell. Well, I can either give you a general
assessment of the telephone industry as part of the opening
statement, or just in response to your question.
Chairman Johnson of Connecticut. I would prefer you
conclude.
Mr. Powell. Though others and we are concerned about the
network because of its importance, no one I'm aware of believes
the telephone network is headed toward catastrophic failure.
And let me just briefly share with you the partial basis of
our positive assessment. First, most major carriers anticipate
completing the mission-critical changes by the end of this
year, with most others confident they will wrap it up in the
first half of next year. The time they have dedicated to these
issues, on average 3 to 4 years; the expenditures for working
the issue, on average $300 to $400 million; the personnel being
dedicated; and the strength of the assessment and executive
plans we have seen, gives us some confidence that these
timelines are realistic. Moreover, they comport with what we
hear from State regulatory agency and key users of the system.
Second, manufacturers of critical equipment, such as
switches and software, report that they have corrected and
tested most of their products and have them available for
customers. Major manufacturers have extensive programs in place
and are working closely with the carriers. Most have targeted
the end of this year, the beginning of next, for general
availability of all their products.
And finally, there are well organized efforts to conduct
mission-critical testing. The Telco Y2K Forum, comprised of
eight major ILECs, including Ameritech, Bell Atlantic, Bell
South, and the others, is conducting component integration
testing. The forum allows companies to share resources
information solutions. The Alliance for Telecommunications
Industry Solutions, ATIS, is another major forum that is
conducting critical interoperability testing in January and
February 1999. ATIS reports that such testing should encompass
network configurations that serve over 90 percent of the
Nation. Indeed, we heard recently that wireless carriers are
planning to test off the ATIS effort.
These efforts are critical because it is nearly impossible,
and this must be understood, to conduct end-to-end testing on
the network, which everyone must understand must run 24 hours a
day, 7 days a week, and will not have the luxury of being taken
offline for testing.
With that, I will conclude, Madam Chairman, and await your
questions. Thank you.
[The prepared statement follows:]
Statement of Hon. Michael K. Powell, Commissioner, Federal
Communications Commission
Good afternoon, Madam Chairman, and distinguished members
of the Subcommittee. I commend you for holding a hearing on the
critical issue of the Year 2000 problem, and I welcome this
opportunity to discuss the potential impact of the Year 2000
problem on our nation's telecommunications networks.
In the seven months that I have been at the Federal
Communications Commission (FCC), I have been struck by the fact
that almost every sector of our economy and every part of our
government depends upon our telecommunications system. Many of
the critical programs that the Ways and Means Committee
oversees, such as Social Security and Medicare, also depend
upon this ubiquitous communications infrastructure and
consequently could be seriously affected if the Year 2000
problem interrupts telephone and data networking services.
Today, I would like to: (1) summarize what we know about
the Year 2000 problem and how it might affect the nation's
telecommunications networks; (2) list what we do not know; and
(3) describe what the FCC has done, and intends to do, to
ensure that our nation's critical telecommunications
infrastructure still functions at its full capacity and
effectiveness on and after January 1, 2000.
My comments today will focus primarily on wireline
telecommunications services. However, it is important to note
that the FCC is engaged in outreach and assessment initiatives
in each of the different subsectors of the communications
industry, including terrestrial wireless, radio and television
broadcast, cable television, international telecommunications
and satellites. Attached to my testimony is an appendix
summarizing how each of these different industries may be
affected by the Year 2000 problem and what industry and the FCC
are doing to address these problems.
What We Know About the Year 2000 Problem
The FCC has been monitoring the telecommunications
industry's efforts to meet the Year 2000 problem for the past
several years, and has developed an understanding of the scope
of problem and how it may affect the nation's
telecommunications networks. Let me elaborate briefly on some
of our observations.
The Year 2000 problem is simple to understand.
The cause of the Year 2000 problem is very simple. It is
caused by the fact that many computer programs use only two
digits to store the year (e.g., the program translates ``67''
to mean ``1967''). At the turn of the century when the date
changes from 1999 to 2000, there are concerns that these
systems will fail to recognize the millennial change, thereby
erroneously assuming ``00'' to be ``1900,'' not ``2000.''
The Year 2000 problem has complicated consequences.
While the cause is simple, because so many computer and
communications systems are interlinked and interdependent, the
consequences could be complex, unpredictable, and in some cases
very serious. The recent AT&T frame-relay network outage and
the failure of PanAmSat's Galaxy IV satellite highlighted how
many different systems can be affected by the failure of a
single piece of hardware. Fortunately, telecommunications
networks are designed to be fault-tolerant and there is no
reason to believe that one or two Y2K-related failures could
lead to a chain reaction that could disable large parts of the
nation's telecommunications networks.
The Year 2000 problem does not affect every computer.
After reading some articles on the Year 2000 problem, it
would be understandable that one would conclude that every
computer chip, every software program, and every computer had a
Year 2000 problem. That is not the case. Most devices do not
care what time it is and thus are not affected.
Most Year 2000 glitches will be annoying, not disastrous.
For those systems that have a Year 2000 problem, it will
often be the case that the problem will not disrupt the whole
system, it simply will make some features or functions, which
are not ``mission-critical,'' difficult or impossible to use.
What We Know About Fixing the Year 2000 Problem
As part of the FCC's outreach and assessment initiatives,
the Commission's Bureaus and Offices have been communicating
with the various industry players who are individually
responsible for ensuring that their networks and systems are
Year 2000 compliant. We are reminded daily of the fact that
carriers, manufacturers, licensees, and users of
telecommunications services--many of whom are assembled here
today--have been working on the problem for many years and have
invested substantial capital and manpower.
We are also reminded of the many technical and management-
oriented challenges that lie ahead. First, the
telecommunications network is a tremendously complicated thing
and consists of millions of interconnected parts. When you make
a phone call from here to New York, every element along the
established circuit has to work: the telephone itself, the
Private Branch Exchange (i.e., switchboard) in your building,
the central office switch, the computers that connect your call
to its destination, the long-distance trunk lines, as well as
the central switch and the telephone on the other end. If any
one of those components is affected by the Year 2000 problem,
your call might be disrupted.
Second, there are literally thousands of companies to
engage in the wireline telecommunications industry. Simply put,
there are the major telecommunications carriers like the Bell
Operating Companies, GTE, AT&T, MCI and Sprint. But there are
also 1,400 small to mid-size telephone companies that serve
many rural, insular and underserved parts of the country as
well as the U.S. territories and possessions.
Telecommunications carriers alone, however, cannot solve the
whole problem. For example, manufacturers of central office
switches and other customer premises equipment are vital
participants in the collective Year 2000 effort. And, finally,
we cannot forget about the telecommunications users who have to
take action to ensure that their telecommunications equipment--
their telephones, their voice mail systems, their Private
Branch Exchanges (PBXs), their local area computer networks--
are all Year 2000 compliant. It will not do much good if all
the telephone companies fix all their networks, but then major
corporations and governmental organizations cannot call out of
their buildings because their internal systems do not work.
Third, it will be long and hard work to fix the Year 2000
problem. There are no magic bullets that will automatically fix
software affected by the Year 2000 problem, and it is
unrealistic to expect that one will be invented between now and
the year 2000. There will also be a profound management
challenge to deploy technical solutions in a timely fashion
without affecting the quality and level of communications
service.
Fourth, testing is (and will continue to be) the hardest
part. Most telecommunications companies estimate that testing
comprises 50 to 70 percent or more of their Year 2000 efforts.
And, testing often uncovers more problems that need to be
fixed.
Fifth, we cannot get an extension on this deadline. Time is
of the essence with only 564 days left till January 1, 2000.
What We Know About Telecommunications Industry Y2K Efforts
In the last few weeks, public attention has started to
focus on the Year 2000 problem. There have been illustrative
examples of non-Year 2000 related network failures, such as the
AT&T data network incident and the Galaxy IV satellite
incident, that have been prominently featured in the general
media. These events have hastened public concern about the
telecommunications industry's readiness and capacity to
implement Year 2000 compliance remedies. Unfortunately, we hear
more Year 2000 horror stories than Year 2000 success stories.
Horror stories get repeated and reprinted, success stories get
filed away and forgotten.
The subcommittee should know (and it is my understanding)
that U.S. telecommunications carriers are very motivated to fix
the problem. However, this is a dynamic process.
Simultaneously, the equipment manufacturers have to develop
upgrades and patches for their products, telecommunications
carriers have to assess and prepare their systems for change
and when technical ``fixes'' arrive they must install and test
the equipment in their networks, and they also have to conduct
interoperability tests with other carriers and with their
customers.
I have been told that U.S. equipment manufacturers have
already tested and fixed most of their products. The major
manufacturers have had extensive Year 2000 programs in place
for some time, and have been working closely with both local
and long distance carriers to develop strategies for Year 2000
readiness. Manufacturers report that most of their software and
hardware products are already Year 2000-ready and have been
made available to customers. They have targeted end-of-year
1998 or first quarter 1999 for general availability for all
Year 2000-ready products.
The carriers report that the manufacturers' schedules will
enable them to meet their compliance objectives. According to
information submitted by the carriers to the FCC, the major
local and long distance carriers have been working on the Year
2000 problem since 1995 or 1996 and generally plan by late 1998
or early 1999 to have completed internal testing of all systems
that are critical to the passage of telecommunications traffic.
The carriers are also cooperating on interoperability and
end-to-end testing. The Telco Year 2000 Forum, which is
comprised of eight large regional local exchange carriers, is
performing integration testing on Year 2000-ready equipment
throughout 1998. The Alliance for Telecommunications Industry
Solutions (ATIS), which is an industry-funded organization
whose mission is to advance new telecommunications
technologies, will conduct inter-network interoperability
testing in January and February 1999. According to ATIS, the
interoperability tests should encompass network configurations
that serve over 90 percent of the country. This type of
cooperative industry testing is very important because it is
nearly impossible to conduct interoperability and end-to-end
tests on the public-switched telephone network. The nation's
phone network has to be up and running 24 hours a day, 7 days a
week and it involves millions of different elements. The
telephone companies cannot disconnect their network and turn
the clock ahead to the year 2000 to do a test.
Of course, there are areas of concern to the FCC. For
example, although the largest 20 phone companies provide 98% of
U.S. phone lines, there are over 1,400 telephone companies, and
each one needs to address the Year 2000 problem. The small to
mid-size telecommunications carriers have further to go, and
the FCC is working with the various trade associations to
ensure that these smaller carriers also meet the challenge.
There is also the international dimension to the Year 2000
problem. The United States, Canada, and the United Kingdom are
ahead of the rest of the world, but the FCC is concerned that
some international telecommunications carriers, especially
those in developing countries, are just realizing the
seriousness of the problem and have not yet taken the necessary
steps to prevent system failures. Because global
telecommunications rely upon seamless interconnection of
networks, the international dimensions of the Year 2000 problem
are especially significant.
On the international front, the FCC is taking an active
role in the International Telecommunication Union's (``ITU'')
Year 2000 Task Force to promote international awareness and
provide guidance on Year 2000 readiness. The ITU Year 2000 Task
Force is establishing ``Y2000 Ambassadors'' who will serve as
regional coordinators for assistance on Year 2000 problems and
activities, and the FCC will assist in the region of the
Americas.
What We Know About the Government's Role
The FCC's role is important, but our power to force
carriers, manufacturers, and telecommunications users to
address the Year 2000 problem is limited. Consequently, we are
working to promote an effective public-private partnership.
We believe that the FCC can play an important role by
encouraging companies to share information with each other and
with their customers. This will increase the sharing of
solutions, avoid duplicative testing, help companies spot
undetected problems, and reduce customer uncertainty and
anxiety. Fortunately, the World Wide Web provides a very
powerful tool for information sharing. We have discovered over
2000 Year 2000 Web sites, including the FCC's own Web site at
http://www.fcc.gov/year2000/, which has received over 10,000
hits to date.
There may also be a significant role to be played by the
Administration and Congress with regard to the legal liability
issue which has slowed the information flow. Some companies
have been reluctant to divulge information due to concerns
about liability. Several companies and organizations have
developed very useful Web sites and databases, which are not
available to the general public because of liability concerns.
In addition, antitrust concerns have discouraged some
cooperative efforts. I understand that the Justice Department
recently released a letter designed to allay antitrust
concerns, but uncertainty still exists.
What We Do Not Know Yet
The real problem with the Year 2000 problem is what we do
not know.
How serious are the cascade effects?
At this point, we just do not know all the ways that the
failure of one piece of the network could trigger failures
elsewhere in the system.
Can we make sure that all the fixed systems work together
properly?
It is essential that companies do interoperability testing
to make sure that their systems will function on January 1,
2000. But unfortunately, such tests cannot be done until all
the individual pieces of the system are fixed.
How long will it take to fix problems that occur in January
2000?
If too many problems are overlooked or ignored, there just
will not be enough technicians and equipment to fix everything.
Unless companies are willing to be off-line for months, they
cannot wait until the Year 2000 to fix their problems.
What the FCC has Done
The FCC has been aware of the Year 2000 problem for many
years. In 1995, we started to examine and fix our internal
computer systems. In early 1997, the FCC made a coordinated
effort to find out what industry was doing about the problem.
At that time the responses were: (1) ``It is not that serious.
. .'' (2) ``We are taking care of it. . .'' and (3) ``There is
not much the FCC can or should do. . .'' Prior to 1997, the
FCC's individual Bureaus and Offices were following the issue.
By late 1997, we were starting to hear increased concern as
more companies did more tests and discovered just how pervasive
the problem is and realized that they could be vulnerable if
their partners, suppliers, and customers were adversely
affected by the Year 2000 problem. Earlier this year, many
telecommunications users came to the FCC seeking more
information on the seriousness of the problem and what the
telecommunications companies were doing about it. We determined
we could play a valuable role by promoting information
dissemination.
In mid-March, the Commission created its Year 2000 Working
Group. In mid-April, at the request of FCC Chairman William
Kennard, I agreed to oversee the FCC's Year 2000 efforts and
represent the agency on the President's Council on Year 2000
Conversion, which was established on February 4, 1998. I also
co-chair with Dennis Fischer of the General Services
Administration (GSA) the Council's Working Group on
Telecommunications, which met for the first time on April 30,
1998.
We have been encouraged because telecommunications
companies have been providing more information on how the Year
2000 problem could affect their systems and services and what
they are doing to ensure they are Year 2000 compliant. This is
partly in response to pressure from customers, the FCC and the
Securities and Exchange Commission, but primarily due to the
fact that the companies are making good progress, and are more
willing to share the good news.
What the FCC Intends To Do
I want to emphasize that the FCC takes very seriously its
responsibility to work closely with the communications industry
to ensure that the Y2K challenge is successfully met. As part
of the Commission's sector outreach initiative, the FCC is
engaged in activities divided into three distinct but
interrelated operational modes: (1) outreach and advocacy; (2)
monitoring and assessment; and (3) regulatory actions and
contingency planning.
The FCC's first operational mode is to encourage private
sector compliance efforts and to foster information sharing.
Accordingly, we will continue efforts to ensure all companies
understand the seriousness of the problem. We have set up a Web
site and sent over 200 letters to major companies and
organizations in all sectors of the telecommunications
industry. Chairman Kennard, myself, the other commissioners,
and FCC staff are all mentioning this problem in speeches and
in meetings with leaders in the telecommunications industry.
Our second mode is to monitor industry Year 2000 compliance
efforts and to assess the pace and extent of the implementation
of remedial actions. In June alone, we organized five
roundtables with representatives of different sectors of the
telecommunications industry to facilitate information sharing
and see how the FCC can assist industry efforts to tackle the
Year 2000 problem. The Commission is asking the National
Reliability and Interoperability Council, a private-sector
committee that advises the FCC on technical issues, to take
steps to foster industry cooperation on Y2K compliance testing
and other related problems.
Finally, if we learn in coming months that some companies
are not making enough progress in addressing the Year 2000
problem, we may decide to use our regulatory authority to
gather additional information or to accelerate Year 2000
compliance efforts. We have done a thorough review of how we
might use our regulatory authority to ensure that companies in
all sectors of the telecommunications industry are adequately
addressing the Y2K problem and are fully informing their
customers about their efforts. Of course, we view regulation as
a last resort.
Because we know that not every problem will be fixed and
because we cannot anticipate all the consequences of Murphy's
Law, we intend to encourage contingency planning by service
providers and customers.
Conclusion
Without a doubt, it is critical that the U.S.
telecommunications community take prompt, comprehensive and
effective action to address the Year 2000 problem. Our national
well-being is dependent upon the reliability of all the
nation's telecommunications networks, and government and
industry must work together to ensure that whatever disruptions
occur do not lead to widespread outages and failures. To that
end, the FCC is committed to taking whatever actions it can to
facilitate information sharing and industry compliance efforts.
Once again, I commend the committee for holding this
hearing and focusing attention on this critical issue. I would
be happy to answer any questions you might have.
Attachment
Overview of the Year 2000 Problem in the Communications Sector:
Concerns and Actions
Common Carrier Bureau
Biggest concerns:
Upgrading network switches (although manufacturers are on
schedule to provide fixes).
Upgrading Customer Premises Equipment (CPE), voice mail
systems, Private Branch Exchanges (PBXs), ensuring interoperability
with the network.
Ensuring telephone companies (telcos) cooperate fully with
major customers and each other to facilitate Year 2000 interoperability
testing.
Ensuring small telcos have the resources and expertise
needed to fix the problem.
Dealing with billing and other internal systems.
What the FCC is doing:
Meeting with large and small telcos, telephone trade
associations, switch manufacturers, financial interests (banks and
clearing houses), and other major users.
Requesting information from telcos, equipment
manufacturers, trade associations, and Bellcore, and encouraging the
sharing of Year 2000 information among industry participants.
Planning interindustry roundtables to facilitate the
sharing of solutions to Year 2000 problems and identify barriers to
solving Year 2000 problems. Telcos, equipment manufacturers, and users
have been invited to participate.
Assessing possible regulatory actions to facilitate Year
2000 readiness, including requiring detailed information on Year 2000
compliance, if necessary.
Sharing information with other Federal agencies, and
improving the FCC Year 2000 website with updated information and links
to other Year 2000 websites.
Analyzing responses to detailed information requests sent
to all local exchange carriers and interexchange carriers, as well as
to some smaller carriers and to the major telephone equipment
manufacturers, on their Year 2000 efforts. Responses have begun
arriving. As of June 11, 1998, nineteen companies had filed responses.
These efforts will help develop a clearer picture of the Year 2000-
readiness of the telecom sector.
Meeting with Year 2000 project managers from manufacturers
and telcos to impart the Commission's concern and to obtain additional
information about their Year 2000 programs.
Encouraging companies and industry trade associations to
make more information about their Year 2000 efforts available to the
public through their websites.
Planning an interindustry roundtable forum for late-June
1998 to facilitate dialogue among manufacturers, carriers and major
users on Year 2000 issues.
Continuing outreach efforts to ensure that all companies
understand the seriousness of the problem, as well as monitoring to
obtain as much information as possible.
Assessing regulatory actions that could be taken, if
necessary, to gather additional information and/or accelerate Year 2000
compliance efforts.
What industry is doing:
Major telephone companies have been devoting significant
resources to ensuring that primary telecommunications networks continue
to function on and after January 1, 2000.
Eight regional telcos have formed the Telco Year 2000
Forum to share information and facilitate intranetwork testing of
remediated systems.
The Alliance for Telecommunications Industry Solutions
(ATIS), funded by exchange and interexchange carriers, is undertaking
the development of laboratory tests (now scheduled for January-February
1999) of inter-network interoperability of remediated systems.
Bellcore is providing expertise, leadership, testing
facilities, and technical standards for Year 2000 compliance.
U.S. Telephone Association sent out an advisory to its
members in mid-1997.
Cable Services Bureau
Biggest concerns:
Power system failures could disrupt cable service,
including the cable system's emergency alerting system
messages.
Billing systems could generate faulty data.
Satellite telecommunications links could be
disabled.
What the FCC is doing:
Sent inquiries to major cable television
companies, cable equipment manufacturers and cable trade
associations regarding Y2K.
Posted questions on the Internet regarding Year
2000 problems in cable systems to more than 1500 cable
engineers and technicians.
Conferred with CableLabs, the research arm of a
consortium of cable companies, which has established an
industry task force to address Y2K issues. Will continue this
dialogue.
Trained Cable Services Bureau telephone contact
representatives to answer questions from the public and
operators regarding Y2K problems and compliance.
Continued dialogue with cable operators and
equipment manufacturers, including informal sessions with
multiple system operators (MSOs).
Scheduled to hold an open forum for the public and
the cable industry.
What industry is doing:
CableLabs has formed a Year 2000 working group
that consists of the major cable multiple system operators.
These MSOs encompass a significant number of cable subscribers
and a large majority of the nation's cable systems. Cable
operators who are not members of the Year 2000 Working Group
will still benefit from the group's efforts because CableLabs
is conducting a nationwide assessment and will share
information with all cable operators.
To our knowledge, the CableLabs group intends to
meet every two months to monitor the progress of the industry
and to provide the industry with CableLabs' research. In
addition, CableLabs will monitor the equipment of cable
suppliers to determine Y2K compliance. In September, 1998 in
Denver, CableLabs plans to hold a cable vendors conference at
which cable equipment suppliers, cable billing systems vendors,
and vendors of television commercial insertion equipment are
invited to attend and confer on their progress in achieving Y2K
compliance.
Mass Media Bureau
Biggest concerns:
Emergency Alert System may fail just when it is
needed most.
Lack of broadcast news may result in
misinformation and mass panic.
Old transmitters and other systems may be hard to
test or fix.
What the FCC is doing:
Speaking out on Year 2000 issues at National
Association of Broadcasters (NAB) convention and other forums.
Writing to broadcasters and trade associations.
Meeting with broadcasters and equipment
manufacturers.
What industry is doing:
NAB has created a Web site on Year 2000 issues and
assigned a Senior Vice President to work on the issue.
Wireless Telecommunications Bureau
Biggest concerns:
Radios for police, fire, and other emergency
services could fail due to Year 2000 problems. Many of these
systems are quite old and manufacturers may not be able to
provide fixes for all of them.
Wireless systems could fail, just when they might
be needed as backup to wireline telephones.
What the FCC is doing:
Writing the major wireless companies, equipment
manufacturers, and trade associations.
Meeting with representatives of different part of
the wireless industry to assess their efforts.
Planning future forums on the Year 2000 problem
and the wireless industry. The FCC has already held three of
these forums.
Considering options to condition licenses,
renewals, and auctions on Year 2000 compliance.
What industry is doing:
The public response of the wireless industry to
the Year 2000 problem has been uneven.
Major manufacturers and large companies have
tested almost all of their products and intend to have fixes
available by the end of the year.
Many users of wireless devices, most notably
police and fire departments, are just starting to assess their
Year 2000 problems.
International Bureau
Biggest concerns:
Whether foreign telecommunications companies,
especially large segments of the developing world, will be able
to provide service on January 1, 2000. This could have a huge
impact on international trade, foreign investment, the global
economy, and even national security.
Whether satellite links are Year 2000 compliant.
In many foreign countries, particularly in Asia
and Africa, telecommunications companies are only now becoming
aware of the Year 2000 problem, and they lack the resources to
fully address it.
What the FCC is doing:
Writing to international telecommunications
companies and satellite and HF service providers.
Publishing letters in industry publications and
ITU publications.
Working with the International Telecommunications
Union to educate and motivate foreign telephone companies as
well as with the Department of State.
Planning roundtable discussions to raise
awareness, seek solutions, and informally survey progress of
industry's efforts to ensure that industry is doing all it can
to avoid any disruptions in service. A roundtable with
international telecommunications carriers will occur June 29. A
roundtable with the satellite industry will be July 14.
Raising issues with foreign delegates, in tandem
with these roundtables, in the context of the FCC's Visitor's
Program and Foreign Regulator Workshop.
Speaking out about the Year 2000 problem at
international telecommunications meetings.
Increasing international awareness through the ITU
Year 2000 Task Force and providing direction on Year 2000
readiness by hosting workshops. FCC is participating in these.
What industry is doing:
Telecommunications companies are working hard to
fix Year 2000 problems.
Satellite companies have set up ``war rooms'' to
deal with the Year 2000 problems.
Most, if not all, U.S. telecommunications
companies have established an office for Year 2000 compliance.
Several countries, including the United Kingdom,
Canada, and Australia have high-profile efforts under way to
tackle the Year 2000 bug, and their telecommunications
companies (e.g., British Telecom) are working with foreign
partners on the problem.
Compliance and Information Bureau
Biggest concerns:
Ensuring that internal database systems and
equipment used by the Bureau for enforcement purposes is Year
2000 compliant.
Preparing the National Call Center to collect data
and respond to inquiries relating to Year 2000.
What the FCC is doing:
Checking CIB database software and computers used
in the enforcement program, such as mobile and fixed direction
finding systems, Global Positioning System (GPS) receivers and
the software used to operate these systems.
Preparing to collect data regarding calls received
by the National Call Center and to provide information to the
Call Center personnel from other Bureaus and Offices to use in
responding to incoming Year 2000 calls.
Office of Engineering and Technology
Biggest concerns:
Telecommunications equipment testing labs may
close down or generate faulty data due to Year 2000 problems
What the FCC is doing:
Sending letters to testing labs.
Directing the Network Reliability and
Interoperability Council to focus on Year 2000 issues and
facilitate Year 2000 testing of telecommunications networks.
Coordinating construction of the FCC's new Year
2000 Web site.
Office of the General Counsel
What the FCC is doing:
Reaching out to the Communications Bar to increase
their awareness of Year 2000 issues and urge them to press
telcos to increase their efforts to address the problem.
Office of Plans and Policy
What the FCC is doing:
Coordinating the FCC's efforts to work with
industry on Year 2000 issues.
Examining whether the Internet will be affected by
Year 2000 problems.
Contacting Internet organizations and Internet
equipment vendors.
Office of Inspector General
Biggest concern:
The possibility that the Commission's mission-
critical systems will not be Year 2000 compliant.
What the FCC is doing:
Participating on a Year 2000 task force addressing
the Commission's mission-critical information systems and
Information Technology infrastructure.
Participating on a Year 2000 task force monitoring
the telecommunications industry.
Monitoring the activities of other Inspectors
General, the Office of Management and Budget, and the General
Accounting Office.
Chairman Johnson of Connecticut. I thank you very much,
both of you, for your testimony this morning. I do think an
interesting aspect of private sector compliance is the enormous
motivation that every private sector company has to make sure
that they are compliant. On the other hand, I don't think that
the problems of interconnectedness and the enormous complexity
of the interactive systems can be underestimated.
Let me ask both of you whether or not it's your opinion--
this is in followup from our hearing in May--when you look at
what the Federal agencies are doing, do you think they have
sufficient in-house expertise in the telecommunications area to
be able to both assess and correct the problems?
Mr. Willemssen. I'd say, Madam Chair, the answer is very
mixed. We see varying degrees of strength at different
agencies. An example of one of the strongest information
technology organizations among the civilian agencies would be
the Social Security Administration. They've got generally quite
a bit of talent in this area. They've taken a lot of
initiative, not just on telecommunications, but on year 2000 in
general.
In other areas, that strength is not always so apparent in-
house, and therefore it's obviously critical to get additional
contractor and consultant help to address the issue.
Chairman Johnson of Connecticut. How effective is OMB in
supporting the agencies in getting the quality contractor that
they need and in coordinating the inventory and movement toward
solution?
Mr. Willemssen. I think we've seen very recently more
efforts on the part of the administration, centrally led by Mr.
Koskinen's group, to get the necessary support, especially in
the personnel area. There has been some movement in this area.
For example, OPM has recently allowed waivers of recent
retirees to come back to work for the Federal Government
without financial penalties, if they have the capabilities to
help on the year 2000 issue. So I think we're seeing more
movement on that. If you'd asked me that question 6 months ago,
I would have been more pessimistic.
Chairman Johnson of Connecticut. Do you think it's
sufficient to meet the challenge?
Mr. Willemssen. Not in all cases at this point. We still
have major challenges at several agencies. But I think there's
a much greater degree of attention to those challenges and
responsiveness to take the action that's necessary. I'll hold
in suspense my judgment until I see that action--but at least
we're seeing more of a willingness to move in that direction.
Chairman Johnson of Connecticut. Mr. Powell.
Mr. Powell. Based on my responsibilities and my position, I
have very little information about how individual agencies are
doing with respect to their own telecommunications systems.
I do think that what I can add to your question, which you
rightly recognize, is that in the telecommunications network
it's going to be critical to understand that while even if we
were able to ensure the reliability of the basic network, there
are critical gateways to that network that are in the
possession of private parties within their own internal
systems.
Whether it be a government agency or a major end user, like
the bank, the average large institution has a pretty
sophisticated internal network that's solely their property and
their possession, and indeed their responsibility. PBX systems,
internal networks and connections, phone systems, phone
equipment all must be compliant and able to properly access the
network as well.
So, AT&T or your local phone company may do all that it
needs to do, or is capable of doing, in terms of the network,
but you still may not be able to communicate or use that
network because of equipment within your possession.
Unfortunately, the FCC doesn't have much regulatory
authority with respect to that kind of equipment. But, what
we've been trying to do is to sort of use the bully pulpit and
urge the service providers to make its major customers aware
that it needs to do inventory and assessments of those systems
and needs to bring them into compliance if they have hope of
communicating effectively, and to get the equipment
manufacturers to play a critical role of making sure a lot of
these customers understand that a serious amount of the
equipment is within their own possession. Some of which hasn't
been upgraded in a very, very long time, and is unlikely to be
compliant.
Chairman Johnson of Connecticut. Is it--you say in your
testimony that you've been told that U.S. equipment
manufacturers have already tested and fixed most of their
products. How confident are you that they'll be able to produce
the volume of product needed, when all of these inventories and
assessments are complete?
Mr. Powell. I would say that we have some guarded optimism
in that respect for a number of reasons. I think first and
foremost, largely what we're talking about in many cases is
software patches and fixes, which has the benefit of being able
to be distributed in some cases electronically. We also have a
community of pretty sophisticated operation folks who are very
accustomed to doing such network upgrades, and sophisticated
operations like this, so I'm confident that they can execute it
efficiently.
There will be a number who actually need real equipment in
the sense that you and I would understand it. That is, a big
box, a big switch, a big computer. I think that's a much
smaller number of carriers and private companies, but
nonetheless, that will be a much more significant logistical
and capital challenge.
Chairman Johnson of Connecticut. Is the FCC working with
the International Telecommunications Union?
Mr. Powell. Yes, indeed we are. I think as Congressman
Coyne pointed out, one of the areas we are most profoundly
concerned about is the network in the international sense. It
will be a significant blow to the economy if AT&T is not able
to terminate traffic in significant capitals around the world.
It will be a very significant blow to the financial system if
monetary payments are inhibited because of the international
telecommunications systems.
Chairman Johnson of Connecticut. Certainly given the
seriousness of the consequences of inability to communicate
internationally, is this organization developing or moving
toward the development of international standards so that there
will be broad compliance?
Mr. Powell. My evaluation would be that the international
forums are moving, but moving very slowly. Significantly slower
than domestic efforts in the United States and progressive
countries such as Canada and the United Kingdom. What we see in
the ITU, International Telecommunications Union, is at least a
serious acknowledgment now of the issue. They've created the
appropriate forums, they had deputized what they call, I
believe, Y2K ambassadors, whose mission and role it is to begin
to push international telecommunications companies toward doing
this.
We work very hard with those companies we do regulate to
push them in their business and commercial relationships with
foreign carriers to try to press this issue. But it's difficult
to underestimate how serious it is, because there are many
challenges facing some of the key parts of the world that are
distracting from this problem.
As the president of Deutsche Telecom recently said to me,
we have two year 2000 problems--one is this, and one is the
Euro. These are things that are really diverting energy and
efforts from this issue, and we're going to have to find every
forum possible to push that.
Chairman Johnson of Connecticut. Is the EC pushing it,
along with Euro? I mean, what's happening? You mentioned the
United Kingdom, but----
Mr. Powell. Madam Chairman, I don't have specific
information about the EU specifically, but I will say that this
issue has begun to be put on the agenda of major multilateral
and bilateral forums.
Indeed, while I don't speak for the administration, it's my
understanding that this issue was placed on the agenda at the
recent G8 Summit. It's my understanding that the State
Department has been working to provide communiques and make
contacts with foreign government ambassadors in order to raise
and place the issue at the height of the foreign policy agenda.
I know Secretary Albright has spoken out about the issue. I
think we are in the heavy awareness stage, and again, that's
important. But where we're not, from my general assessment,
we're not yet in the significant implementation phases in key
parts of the world.
Chairman Johnson of Connecticut. Just one last question. In
preparing for this hearing, the Congressional Research Service
did some background work for us. They say, based on currently
observed measures, the telecommunications and networking
infrastructure of small companies would have an 80-percent
probability of experiencing a failure, compared to a 50-percent
probability of large companies.
Now the disturbing thing about this--these are pretty
strong numbers--80 percent--but their definition of a small
company is an employer under 2,000. And I can name on one hand,
the number of employers I have in my district who have more
than 2,000 employees. So, by far, the majority of American
employers and by far the majority of the American workers work
for companies that are in the 80-percent probability range,
rather than the 50-percent probability range.
I found that startling, and you, in a sense, government
people who follow this issue and who are directly involved in
our trying to meet this as a society, would you comment on that
figure. Mr. Willemssen.
Mr. Willemssen. Yes, I'll comment on that figure. That's
one of the reasons that we'd like to see more information on
exactly the status of key sectors within the telecommunications
area. And not to say that we want FCC to be overly burdensome,
but to collect the kind of information that should already be
readily available by telcos that are doing the year 2000 job
that should be done. And it's just a matter of sharing that
information which should already be readily available with
other parties, so that an assessment can be made of where we
stand on risks and we can make some conclusions about the
probability of failures, along the lines of what you just
mentioned.
Chairman Johnson of Connecticut. Mr. Powell.
Mr. Powell. If I understand the figure correctly, it was
companies as a whole as opposed to specifically
telecommunications companies.
Chairman Johnson of Connecticut. Right.
Mr. Powell. I guess my response to that would be that I
think there's a tendency to try to oversimplify how complex Y2K
is in order to give snapshot pictures of the problem. Problems
can range from being serious and catastrophic to relatively
minor nuisances.
The questions I would have when we think about statistics
like that is curiously, what are we talking about. What kinds
of experiences we're talking about. How mission-critical are
they. Because I think what's going to be really critical is
that with 19 months to go, here's the sober truth to my mind.
Everything isn't going to make it, and there's a limited
amount of resources, money, time, people, and effort available,
and how are we going to prioritize those things. How are we
going to make sure that we are using our time productively?
Chairman Johnson of Connecticut. I guess a follow-on
question, or perhaps one that would focus the issue a little
bit more specifically, is beyond your work with the big
telephone companies, what do you know about the smaller
telephone companies? What do you know about local compliance,
and is anybody that you know of in government talking with, in
a sense, the chambers of commerce across the country about what
kind of program they're implementing, and whether it complies
with what you think they ought to be doing in order to assure
that all of these telecommunications users in remote areas are
going to be compliant.
Because, I don't think, at least I gather from the
information I've read, we really don't know what is going to be
the impact of noncompliant companies on the system as a whole,
and whether there will be ramifications for the system that
would be hostile to the interests of the compliers and even a
complying communication system. So, certainly given that, we
ought to pay, I think, a good deal of attention to both local
telecommunications networks and small users, and the educators
of the small users.
Mr. Powell. No, it's an absolutely valid concern and indeed
one of the things I had originally hoped to say in the outset
of my comments, that we have much more significant concerns
with respect to the small- and medium-sized telephone
companies. Indeed, once you get past the majors there's still
some 1,400 telephone companies in America serving the areas
that you described.
We are working in our own efforts, I would say, just as
diligently to try to bring solutions to them as well, or bring
assistance to them as well. We're trying to work--there are a
number of critical umbrella organizations, trade associations,
and forums with which we're able to communicate and work
through them. They too are heavily regulated, just like large
companies are, and have ongoing regulatory relationships with
the Federal Government, but more importantly, with the State
government regulatory agencies.
One of the things we've done since I began working on this
problem several weeks ago, is at our request, we've asked the
National Association of Regulatory and Utility Commissioners,
NARUC, to form a companion Y2K operation in order for us to
interface with--that would allow us to work through them to
help deal with the problem of smaller and local companies that
are better known say in Texas, to the Texas PUC, Public
Utilities Commission, than they are to the Federal
Communications Commission. We're pretty hopeful that we will be
able to set up mechanisms to allow us to work as effectively
with them as we do the large companies.
I believe--it's my understanding that through Mr. Koskinen
and the council's effort, there's an attempt to try to get
Governors involved in order to get some sort of top-down
pressure within States, if you will, for every level of State
and local government assistance to be working on these problems
as well.
But there's no question it's a very complex
multidimensional problem, and we will have to try to hit every
spot that we can.
Chairman Johnson of Connecticut. I thank you.
Mr. Coyne.
Mr. Coyne. Thank you, Madam Chairman. Director Willemssen,
we've heard predictions of the year 2000 disaster predicated on
the assumption that computer glitches will shut down the
country's electric utilities. I think we've all heard those
predictions. And I wonder if you could give us your assessment
of how likely that is.
Mr. Willemssen. I'm not in a position to give an assessment
on the utility sector, because we've not completed any work on
that. We have some recently initiated work that we're going to
embark on with the Bureau of Reclamation, and the Department of
Interior, some of the hydroelectric power in the Western United
States, and some of the power marketing administrations.
But I think my assessments here should be based on the work
we've done, and we just haven't done that work yet. And we're
now going to embark on that very quickly, so that we can have a
better assessment of where we're at with the utilities area.
Mr. Coyne. Do you think there's enough time left?
Mr. Willemssen. I think that the most important thing we
can remember, and the Commissioner touched on this, whether
it's the utilities or telecommunications, we've got to set
priorities. With the amount of time left, priority setting has
to be primarily based on the level and severity of adverse
impact that would happen, and we've got to put our resources in
those areas where the impact would be most severe.
So I think it's a bit problematic to put percentages on
futuristic events, where we still have an opportunity to shape
those events by making priorities and acknowledging that, as
the Commissioner said, there's no way everything is going to
get done in time.
Mr. Coyne. How many of the Federal Government's most
critical systems still need to be repaired?
Mr. Willemssen. What we've seen over the last year is the
first quarterly reports that came in from the 24 major Federal
departments and agencies--about 21 percent of the total
mission-critical systems were compliant at that point. One year
later, as of last month, we were at 40 percent. So, you can see
in a year, we've gone from about 21 to 40. At that rate, for
mission-critical systems, we're obviously not going to make it
in time.
It again reinforces the point that we've got to set
priorities--priorities based on factors such as health, safety,
national defense, and adverse economic repercussions. The
administration has not done that yet, and we're hoping that Mr.
Koskinen will eventually move in that direction.
Mr. Coyne. Commissioner Powell, to what extent does the
Federal Government have control or lack of control over our
telecommunications systems conversions, recognizing that the
systems are privately owned?
Mr. Powell. If I understand the question, there is a huge
range of what we would categorize as customer premises
equipment and internal network configuration that are purely
privately owned. And as a pure regulatory matter, we have
absolutely no authority whatsoever over those systems.
That said, I don't think that we would responsibly stop
trying. That is, we do have some oversight and some ongoing
relationships with many people who do interact with those users
on a daily basis, whether they be your major service provider,
AT&T, Sprint, Bell Atlantic, Nynex, or any of the many small
companies that would actually be providing service to these end
users who could help convey information or point out the
urgency of having internal systems.
I think something really important to remember is, while
there is this huge layer of complexity on top of it, there are
some very critical key systems that are in the control of a
few. The heart and soul of the telephone network is the switch,
and there really are not that many major manufacturers of
central office switches. And if Lucent, and Nortel, and Siemens
do a yeoman's job in having their systems upgraded and they're
able to distribute those upgrades, through those actors alone,
you can reach a lot of people.
And we're also trying to use our bully pulpit to get them
to be active in providing through Web pages or other
distribution channels, detailed information about it. If you
have the following switch, 5EES, model number whatever--v.2--
you're not compliant and here's the steps we would recommend
you taking, or here's who you should contact to get that done.
Mr. Coyne. Thank you.
Chairman Johnson of Connecticut. Mr. Portman.
Mr. Portman. I thank the Chair and commend her for having
this hearing. I'm sorry I was late. I was held up by bad
weather in Cincinnati. I'd like to announce that at 3 today
when this hearing began and I was dodging thunderstorms, we had
563 days and 10 hours left until January 1, 2000. Clearly, time
is running short. Just over 500 days.
My concerns, Mr. Willemssen, have mostly been focused on
the IRS, as you know. And you've testified before us before,
and I know you looked at a lot of the different agencies. Let
me ask you whether you think my assessment is correct or not.
But, as I've looked at this more over the last year or so,
mostly in relationship to the IRS, it seems to me that what I
initially thought, that this is a technology problem, really is
not so. It's more of a management problem. Would you agree with
that?
Mr. Willemssen. It is predominantly a management problem
from our perspective. Not to say that there aren't significant
technological challenges to surmount, especially in the sector
we're discussing here on telecommunications. But it is
primarily a management issue.
Mr. Portman. Now the other thing that I'm seeming to find,
and not just at the IRS, but in our agencies and in a lot of
the private sectors, is that I find that managers tend to be
quite optimistic. And that perhaps a bunch of managers in the
room here are probably working on this, but are too optimistic.
I just wonder if you, as a general matter, would find that you
think managers' assessments of the ability of their
organizations to meet the Y2K problem are too optimistic?
Mr. Willemssen. We have seen some level of optimism that
later did not bear out, even in our work over the last 18
months. That's why one of the things that we think is important
in making those assessments is having the necessary data in
hand--data that should already be available as part of
management practice to understand what's going on. Not putting
an extra burden on folks in taking them away from the work they
should be doing.
Mr. Portman. And that concerns me. I guess the one issue
that I think we haven't focused on maybe as much as we could
have up here, is the importance of not just compliance in the
eyes of the managers--and I'm talking about the Federal
agencies here--but also to have independent verification and
independent validation of Y2K compliance. Could you tell the
Subcommittee if you think that is important to have that kind
of independent verification as part of the critical steps?
Mr. Willemssen. Yes, sir. We definitely do think that's
important. We've made the recommendation to Mr. Koskinen, the
Chair of the Council, in our April 30 report, to put together a
strategy to have independent verification and validation
strategies. And on a positive note, we are seeing much more of
that in the Federal agencies, just in the last couple of
months--of getting additional support to assist them in that
area.
Mr. Portman. The IRS--again, to focus on that for a moment,
Commissioner Powell, has major telecommunications problems, as
you know. Cincinnati has a service center, for instance, and
once we get the Cincinnati computers Y2K compliant and the
mainframes are compliant in West Virginia or here in
Washington, DC, then the issue is how do you test it. Well, the
only way you can test it is to have the two work together. And
that involves the telecommunications link being Y2K compliant.
Again, I think that's an area where I applaud the Chair for
having the hearing today, because we haven't focused enough on
the key linkage.
Also with regard to the IRS, all these service centers then
didn't feed into the mainframe, and that often is a three step
process--from the district office or service center to the
mainframe, and this is all really linked by telecommunications.
And so the other thing I would ask both of you is whether
you're satisfied that our Federal agencies have looked into
that step. Not just independent verification, but really a
third step in the process of having computers in two places Y2K
compliant, but then in the third step, making sure that
telecommunications systems are compliant. As a general matter,
are you satisfied that that is being done? The question is for
either.
Mr. Willemssen. Congressman, I would say the results at
this point are mixed. Again, one of the areas of emphasis that
we've had on this year 2000 issue is the need to perform such
end-to-end testing, to make sure that all of the necessary
systems are in place. It's not like we can take down the public
switch network totally and test it. We've got to rely a lot on
lab-based testing, but we still have opportunities, in some
cases, to take components and segments of the network down and
fully test those.
Mr. Powell. I would just echo those comments, which I think
are completely correct. I can't really offer an assessment
about particular independent agencies, but I will say that the
complexity of the network is that sometimes it is only as good
as the nodes that are on it, and you are recognizing that fact,
and it's very important to do some level of interconnectivity
and interoperability testing. Within the telecommunications
industry itself they have established forums in order to do
that for their key functionalities and their own
interoperability, but what is more of a challenge is to try to
provide some sort of interoperability exercises that provide
confidence to key end users or key agencies, like the IRS, like
the banking or financial community, that when their systems
hook into all of this it still works. Even in the best of
circumstances on that day we are all going to hold our breath,
but I think, from what I hear from some of these key
telecommunications industry forums, they are getting their own
stuff taken care of but they are beginning to examine ways in
which they can sort of expand the envelope on their operability
testing to sort of increase their confidence. And that may, at
some point, include selective, smart interoperability testing
with very, very key sectors, key client sectors or key
government agencies. I certainly am encouraging that effort to
see if there aren't ways that that can be done.
Mr. Portman. My time is up, but we're not very good up here
in Congress at programming or at testing telecommunications
networks so maybe we can't help too much, but you need to tell
us, perhaps you've done that already earlier before I got here,
but specifically where you think we can be more helpful in this
to be able to meet this challenge in the next 563 days and 10
hours. And I think my time is up. Perhaps I should ask that you
give me that in writing.
Mr. Willemssen. I can comment if you'd like, sir.
Chairman Johnson of Connecticut. Briefly?
Mr. Willemssen. I would say having hearings such as this
can serve an especially useful purpose in raising the issues
and, in many cases, getting actions done that would otherwise
not have been taken.
Chairman Johnson of Connecticut. Thank you.
Congresswoman Thurman----
Ms. Thurman. Thank you, Madam Chairman.
Chairman Johnson of Connecticut [continuing]. A very
diligent Member of this Subcommittee, I might add.
Ms. Thurman. Commissioner, you mentioned that you would
suggest to them toward the time that they think they have come
into compliance that you should do some of this testing. What
kind of response have you gotten from industry in trying to set
that up?
Mr. Willemssen. The process of testing?
Ms. Thurman. Right. From once they say they are in
compliance and being able to network throughout some of the
governmental agencies or other folks that they may need to have
their services for. Have they been reluctant? Have they come
forth? I mean, what kind of an attitude are we seeing?
Mr. Powell. I think to use the word of the day is mixed.
First of all I think they are doing a pretty decent job with
recognizing the importance of interoperability testing within
their own networks and their interconnectivity and
compatibility with adjacent networks, that is, say, an AT&T
being able to terminate traffic with a local exchange carrier.
I think the more difficult issue that still needs some work is
the idea of being able to provide the public switch telephone
network for testing with key customers. One worry, and you can
ask them themselves when they come up----
Ms. Thurman. I will.
Mr. Powell [continuing]. Is that there are just, there
would be trillions of people who would want to do that. I mean,
everybody uses the phone system and so if you start going down
that road, I think you have to be very, very selective and
thoughtful about how and who you do that kind of testing with.
I think the second component is the concern and reluctance
that, you know, we still do have a live network that has to be
working, unlike, say, Wall Street, who might on the weekend be
able to take the whole system down and exercise it, you can't
really do that with the fundamental switch phone network, and I
think that's another problem.
And, I think a third problem, which I think we would be
remiss if the hearing didn't go by and we talk to, is the
really serious concerns about legal liabilities as barriers to
information. Companies, I think in part rightfully, and
sometimes overstated, are very, very worried about legal and
regulatory consequences of compliance and we have seen a very,
you know, that be a very significant barrier to providing
candid, detailed information about testing and compliance. We,
from our small part, have been doing everything we can to try
to eliminate some of those fears. For example, we pursued with
the antitrust division the issuance of a business advisory
letter that would say you can cooperate on Y2K compliance and
you won't be in violation of antitrust laws. Hopefully, that
will help. Some have suggested at some point Congress may have
to be prepared to provide some levels of indemnification. I
don't offer an opinion on that, but that's a demonstration
about how worried people are about that as an obstacle to those
things. So I think that also has been getting in the way of the
comfort of opening up to your critical customers and the
competitive consequences, your weaknesses, and strengths. And
so we just have to work that process to the end I think.
Ms. Thurman. Mr. Willemssen, let me ask you a question that
has somewhat bothered me over the last couple of months as
we've gotten involved in this and as we've heard from different
agencies and particularly because you have made recommendations
to the administration. In your recommendations, the
Commissioner probably needs some money to also do his own shop,
let alone worry about all the rest of the world that's out
there, but have you made any recommendations, as we get ready
to go into appropriations, for these agencies and departments
to be able to get additional dollars other than the dollars
that they already have in their agency for just running their
computer systems?
Mr. Willemssen. We have not made any recommendation
specific to an agency on particular dollar amounts. What we
have seen is in selected instances where agencies have said
they've needed more. Their particular authorizing and
appropriations committees have asked them, Please tell us now
if you need more. We don't want to hear about it later, please
tell us now. And I think in many cases that has occurred.
Ms. Thurman. Commissioner, you made a comment and I don't
know what's happening in other States, but I can tell you in
Florida, in this past legislative session, there were several
millions of dollars put forth for this project to help both our
State agencies. One last question that I have, and this is also
very troubling. This is a new era, this is a time when
everybody wants to come into compliance. What are we doing to
ensure that those folks that say they can, you know, do 2000,
what kind of criteria is being used to pick these vendors? Or
is there just this list? You said something to the effect that
if you don't have that switch, this is who you should call, or
this is who you should use. What criteria are we using for
vendors? Is it just come here and sign up, put your name on,
and that's it, without any--I mean, I'm just kind of curious.
Mr. Powell. It's an excellent question; unfortunately,
there's no easy answer, at least with respect to the
telecommunications industry. It's a phenomenally large and
complex network and if I began to recite to you the number of
components we would call critical we would be in the thousands
very quickly. You also have telephone companies, let's say, for
example, that have very, very different business models and
have very, very different priorities about components within
their system. They might emphasize certain features and
functionalities that another company doesn't; they may do it a
different way. You know, you take one phone company, I mean,
I'd take, say, GTE as an example. It has 25.2 million digitally
switched access lines, 658 unique systems, 2,400 central office
switches--that's one company. And, you know, they all have
different components and different emphasis.
But the benefit we have, as I mentioned at the outset of my
testimony, with telecommunications is there have always been
historically some critical-clearing forums. Bellcore is just a
tremendous institution that has always provided standards and
technical interoperability components and they are very heavily
involved. The companies naturally come together because they
have a self-interest in being interconnected with each other,
so there has to be a degree of standardization for it to all
work, and it's a sort of live by the sword, die by the sword.
You can't exactly cut off your competitors, or you cut off your
own nose. So I think we have some benefits in that regard, and
so I think that that's one way.
What I would be remiss if I didn't say is what we can't do,
at least the FCC can't do. You heard the numbers for one phone
company. We have no ability to go out and audit systems or
evaluate systems in any meaningful way. Not only do we not have
resources, or time to do that, we don't have the expertise to
do that. I mean, while we regulate them, we are not the experts
on how a network works. We do not have someone in the
Commission who could walk up, there may be an exception, who
would walk up to a switch and start sort of testing it. And so
what we've had to do is, in a sense, we bracket what we hear.
That is, we try to find independent verifications of whether
the rosy assessments we're hearing track with reality.
For example, if a local phone company says it's ready, you
know, one good place to talk to is the long-distance companies
who have a very serious interest in making sure their traffic
can be terminated locally. So if they're saying, we don't buy
it, we have a real problem, then that makes us more doubtful.
State commissions can be incredibly helpful in giving us a
sense of whether this optimism is justified. And key end users,
like the financial community, are critical in that regard.
Ms. Thurman. Thank you.
Chairman Johnson of Connecticut. Just a couple of brief
followup questions. Mr. Willemssen, do you, are you aware, or
do you have any reason to believe that OMB is not willing to
back the amount of the requests from the agencies? I've heard
some sort of miscellaneous comment about agencies having a hard
time getting OBM, OMB, to really support them in the amount of
money they think they'll need.
Mr. Willemssen. I don't have strong evidence of that, but I
have anecdotal evidence, folks in agencies coming up to me and
saying so forth and so on. But my recommendation, my suggestion
is that they need to get Mr. Koskinen involved. And I can
assure you that if Mr. Koskinen believes that somebody needs
more resources, I think at this point in time he is going to
make a case for it, given how little time is left and the major
challenge that we face.
Chairman Johnson of Connecticut. Thank you. The other
question that I just want to ask you is that Treasury--
Treasury, IRS, and TRW have formed a slightly different
partnership or a really pretty new partnership since our last
hearing to ensure that managing the telecommunications
compliance program will work better. In your estimation, is
that going to make a difference?
Mr. Willemssen. I think the level of attention that has
recently been paid to telecommunications at Treasury will make
a very positive difference. They've made a number of changes in
approach and management and we're encouraged that it is a major
priority and that they plan to pay the necessary attention to
it. I just hope that we have enough time to get every critical
thing done that we have to get done.
Chairman Johnson of Connecticut. And, Mr. Powell, I just
wanted to ask you briefly. The FCC sent out 200 letters to
major companies and organizations in all sectors of the
telecommunications industry. Could you just briefly share your
analysis with us and then there's more provided for the record,
the responses to those letters.
Mr. Powell. Well it's fair to say that we are sort of in
the early- to mid-phase of the assessment so it is difficult to
give a total comprehensive picture, but I would say that we're
generally satisfied that we're getting a fair amount of useful
information giving us some sense of where we think the industry
as a whole is. Again, with respect to wire line telephone
companies, we're pretty confident, and when I say that I mean
to be defined as in light of what we see in terms of their
efforts, the amount of money they're spending, the seriousness
and strengths of their plans, how long they've been working on
the problem, and their stated deadlines, we're relatively
confident that they will more likely than not be complying.
Chairman Johnson of Connecticut. But, when you conclude
your analysis of these responses, will you share it with the
Committee please?
Mr. Powell. Yes, we'll be happy to try to provide that to
you.
[The following was subsequently received:]
27 October 1998
The Honorable Nancy L. Johnson
United States House of Representatives
343 Cannon House Office Building
Washington, D.C. 20515
Dear Congresswoman Johnson:
At the House Ways and Means Subcommittee Hearing on June 16, 1998,
you expressed your interest in the responses the FCC received to the
over 200 letters sent to various industry members regarding Year 2000
preparedness. In this letter I will summarize what we learned from
those responses. Please be aware that this summary represents a
snapshot of what we learned from the responses to our letters, and is
not representative of all that we have learned since those responses
were received.
Methodology
The FCC has adopted a standard lifecycle model for Year
2000 remediation. This model consists of five steps:
1) Inventorying computer and telecommunication systems,
2) Assessing these systems and determining whether they
need repair, replacement or no change,
3) Remediating as required,
4) Performing individual tests (unit test phase), and
5) Integration and Systems Testing.
Once the first step is completed, the others proceed in
parallel. We are carefully tracking industry progress by
meauring the percentage completion and estimated completion
dates in each phase of the lifecycle model.
Common Carrier
With respect to the wireline telephone industry we queried
over 20 companies that account for more than 97% of the access
lines in the United States. Letters were also sent to major
equipment manufacturers. Responses to these letters were
mandatory, and we received a 100% response rate. Overall, we
are relatively confident that this segment of the
Telecommunications industry is seriously addressing Year 2000
conversion issues. (We have also sent an informational letter
to the more than 1300 smaller carriers).
According to the responses, the carriers have completed the
inventory and assessment phases of their Y2K conversion
efforts, and set completion dates for remediation, testing and
integration by the second-quarter of 1999. One carrier states
that remediation will be completed in the 1st quarter of 1999,
and two carriers will finish this phase during the 2nd quarter
of 1999. Carriers are already engaged in, or are in the process
of planning, their unit test phases. Most are targeting late
this calendar year, or early next year for the completion of
their unit tests. The Telco Year 2000 Forum, which is comprised
of eight large regional local exchange carriers, has contracted
with Bellcore and is presently performing integration testing
on Year 2000 ready equipment; intial results from this testing
will be available in the first quarter of 1999. ATIS, which is
an industry-funded organization whose mission is to advance new
telecommunications technologies, will conduct interoperability
testing in January and February 1999, and is also working with
Bellcore.
Cable
The Cable Services Bureau sent 25 letters to the 10 largest
multiple systems operators (``MSOs''), 6 manufacturers, 5 cable
network programmers, and 4 trade associations. These letters
asked companies to share information on a voluntary basis. We
received a healthy 68% response rate.
All respondents have initiated an inventory phase, with the
majority of the MSOs far along towards completing the review of
their inventories. Cooperative efforts among members of a Y2K
group set up by Cablelabs should help provide a common
framework and should expedite the development of common
solutions to Y2K remediation efforts.
Based on the responses that have been received, there
appears to have been less progress on remediation, unit
testing, or integration (based upon data as of the date of
those responses). However, several respondants state that they
will achieve Year 2000 compliance well ahead of the century
date rollover.
Wireless
The Wireless Telecommunications Bureau sent a letter to
licensees, associations, and other entities involved with
wireless communications. The letter shared Y2K information and
made a voluntary request for information. The response to this
voluntary inquiry has been insufficient to do an analysis of
the responses. The Bureau is engaged in active follow up which
has produced additional responses. The current response rate is
at 78% and we are in the process of completing our assessment.
Mass Media
According to the responses received by the Mass Media
Bureau, the major broadcasting networks have been addressing
the Year 2000 problem for some time, with the earliest reported
effort beginning in 1996. These and other broadcasting networks
responded that they are well aware of the Y2K problem and have
formed teams and reporting structures to insure adequate
project monitoring and risk assessment. Networks have been
communicating the importance of being Y2K ready to their
affiliates. Most of the broadcasters who responded provided
information that suggests that they are taking the Year 2000
problem seriously, and are devoting resources, systematically,
to insure that they will be Y2K ready. Most respondants
indicated that they are working closely with equipment and
software vendors to ensure Y2K readiness and/or ascertain the
need for fixes or new products.
Broadcasters have found that their entire equipment
inventory must be thoroughly checked. For example, transmitters
were described as essentially ``dumb'' devices that should not
cause a problem. However, remote control, cooling and other
systems that may be computer controlled could render the
transmitter inoperative should they fail as a result of Y2K
problems. Thus, it was widely agreed that every piece of the
broadcasting process must be working and must be tested in an
integrated fashion to best assure compliance.
FCC is also concerned about the Emergency Alert System
(EAS). Under 47 CFR Part 11, all broadcast stations (14,000+)
had to have FCC certified EAS equipment on January 1, 1997.
Cable systems with 10,000 or more subscribers (1,200+) must
have the equipment by December 31, 1998. All seven EAS
equipment manufacturers have stated that their systems will
correctly process dates; in some cases, equipment will have to
be upgraded to current versions.
International
The following information regarding the international arena
stems mostly from forums that were conducted earlier this
summer, and is included for your information only. Developing a
comprehensive understanding of international telecommunications
readiness for Year 2000 is a difficult task. The wide range of
companies and countries involved creates difficult logistic
problems, not only in collecting data but also in developing
and integrating solutions across disparate networks.
Some governments were characterized by forum participants
as being apathetic with respect to Year 2000 assessment,
remediation, and testing. The ITU, however, is taking a strong
leadership position. The ITU has a Y2K task force that has sent
a mailing to more than 5,000 members--governments, telecom
carriers, and operators--to which there has been a low number
of responses.
Regarding satellite carriers, there is little concern with
the satellites themselves which do not, according to the
industry, have much, if any, date sensitive information in
them. However, ground equipment needs to be carefully checked
because antenna controls are date and time dependent and ground
stations contain complex electronics and larger computers.
Companies are confident they will complete conversion in time,
but cite interoperability testing as difficult.
We hope you find this information helpful. If you would
like a briefing on these issues or any other information
regarding the telecommunications industry and Y2K, please do
not hesitate to call me.
Sincerely,
Michael K. Powell
Commissioner
Chairman Johnson of Connecticut. And then second, you note
in your testimony that the FCC has adopted a three-prong year
2000 strategy, including awareness and outreach, monitoring and
assessment, and regulatory action and contingency planning. Is
the FCC going to publish an outline of the plan, of its plan to
carry out this strategy? Will there be milestones in that plan?
Will it be published soon?
Mr. Powell. I think that's to be determined. I mean, we
balance what we release publicly again with this concern about
stifling the flow of candid information to be perfectly honest.
We are happy to publish the general outlines of all that you
just described, but I think I would have to be responsible and
reserve some judgment with respect to some of the details, lest
we sort of inhibit the ability to continue to get good
information.
Chairman Johnson of Connecticut. Thank you, and I thank
this panel very much. I appreciate your input today.
Mr. Powell. Thank you very much.
Mr. Willemssen. Thank you very much.
Chairman Johnson of Connecticut. It is my pleasure to
welcome the second panel. David Baker, managing director of
Schwab Washington Research Group; A. Gerard Roth, vice
president of technology programs, GTE; A. John Pasqua, program
management vice president of AT&T Year 2000 Program; Ronnie Lee
Bennett, program management vice president for Lucent
Technologies; Priscilla Guthrie, vice president and general
manager, TRW Business Enterprise Solutions and
Telecommunications; William O. White, member of Telco Year 2000
Forum.
We appreciate your joining us this afternoon and look
forward to your testimony.
Mr. Baker.
STATEMENT OF DAVID E. BAKER, MANAGING DIRECTOR, SCHWAB
WASHINGTON RESEARCH GROUP
Mr. Baker. Madam Chairman, good afternoon; distinguished
Members and guests. Thank you for the opportunity to discuss
the challenges facing the telecommunications industry in
solving the year 2000 computer problem. While Schwab never says
buy, sell, or hold on a stock, Madam Chairman, the Washington
Research Group does cover the year 2000 problem and its impact
on the industry.
My area of expertise is global information operations and I
first became involved with the millennium bug about 4 years ago
while serving on the Joint Staff as a Deputy Director for
Operations, National Systems Support. In that capacity I was
aware early on of the absolute requirement for the computer
systems that operate and fly our national constellation of
intelligence satellites to be totally year 2000 compliant.
Since retiring the Air Force and joining the Schwab
Washington Research Group, one of the areas I cover is Y2K from
a global perspective, as well as an industry perspective. It is
beyond question that the telecommunications capability of this
country is critical to our economic health and security. Each
day billions of dollars flow across State and national borders.
The massive increase in electronic commerce underscores the
radical shift in how Americans conduct business. The future
will ride on the digital bits traveling through high bandwidth
facilities being built throughout the world.
Public safety, of course, is even more critical. Fire,
police, and ambulance services depend on satellite
infrastructure to reach individuals in need of assistance. With
the year 2000, as was pointed out, just 563 days away,
telecommunications companies and the FCC have been focusing on
the potential disruption that could result if mission-critical
systems are noncompliant.
In the communications sector a number of critical, social,
and regulatory goals could be derailed or at least suffer
severe setbacks if computer systems tying together the world's
networks are not ready to handle the year 2000. With the
passage of the 1996 Telecommunications Act, Congress commenced
the process of shifting our communications industry from a
monopoly environment to a competitive and deregulated one.
Competition in telecommunications services promises to
bring innovation, improve service quality, and lower prices to
consumers and businesses. If healthy competition in the
telecommunications industry is a long-term goal of this
country, a seamless transition to the year 2000 is mandatory. A
colleague of mine at MetaGroup points out that the year 2000
compliance in this industry is about a lot more than just
switching gear and billing systems.
Year 2000 compliance in the telecommunications sector
requires companies to also be sure they take a hard look at the
provisioning systems, network management, and intelligence, as
well as their physical facilities and IT, information
technology, infrastructure. If any one of these elements is
neglected in the process of upgrading and fixing year 2000
problems, the entire network may be slowed down or negatively
effected due to a lack of interoperability.
Most of us are aware of what happened when the Galaxy 4
satellite turned away from the Earth on May 19 of this year.
Businesses suffered significant disruptions as paging
operations, Internet access, and wire service news
transmissions were shut down. We live in a high-tech world
depending on computers and high bandwidth transmission
technologies. The economic consequences of a disruption will be
even more substantial by the year 2000. Internet retailing, for
example, generated about $3 billion in sales last year. By 2000
some estimates project that to reach $16 billion.
I would like to briefly comment on some observations from a
global perspective on Y2K. I recently published a special
report for the Research Group on the progress of different
countries and regions in preparing their computer systems for
the year 2000. As a general statement, my research shows that
the United States is way ahead of other countries in addressing
this problem. Many will soon find themselves well behind where
they should be and scrambling to catch up. Much of the
expertise available to fix noncompliant computer systems is
already actively employed working on other computer programs,
and will not be available when the call for help is made. Those
who have elevated awareness of this problem to the senior level
of their organizations and countries and have taken action to
develop a roadmap to compliance with adequate time for testing
will have a definite advantage in the global market as we
approach the year 2000.
An exception to the negative progress reports by foreign
countries are in the efforts of our neighbors to the north, the
Canadians. Last fall, at the invitation of their Industry
Minister, they formed a Year 2000 Task Force. The members of
this organization are chief executive officers from a number of
key Canadian economic sectors. Banking, insurance,
transportation, manufacturing, and telecommunications, are all
represented.
They recently came to a very early conclusion and I'd like
to share that today. No business is immune from the year 2000
problem. Every firm is affected either directly in its own
operations or indirectly by the actions of others. I make note
of these efforts by the Canadians because they really are
making some great progress in increasing both the awareness of
and action taken on squashing the millennium bug.
As a technology analyst at the Research Group, I receive a
lot of questions about the status of publicly owned companies.
An OMB official told me its what they call ``an absolute
silence from corporate America'' on this issue. Panels such as
this one will start to eradicate the enormous uncertainty about
the status of different sectors of our economy and promote both
the sharing of relative information and an undertaking of
remedial action.
We have to act now, Madam Chairman; this is the last year
to do something about it.
Thank you very much for the opportunity to discuss the year
2000. I look forward to questions. Thank you.
[The prepared statement follows:]
Statement of David E. Baker, Managing Director, Schwab Washington
Research Group
Chairman Johnson, distinguished members and guests. Thank
you for an opportunity to discuss the challenges facing the
telecommunications industry in solving the Year 2000 computer
problem. While it is a Charles Schwab corporate policy to never
give a buy or sell recommendation on a stock, the Schwab
Washington Research Group does cover the Year 2000 computer
problem and its impacts on industry. My area of expertise is
global information operations and I first became involved with
the Millennium Bug about four years ago while serving in the
Pentagon on the Joint Staff as the Deputy Director for
Operations (J3), National Systems Support. I was also the
Deputy Director Military Support at the National Reconnaissance
Office and in that capacity was aware early on of the absolute
requirement for the computer systems that operate and fly our
national constellation of intelligence satellites to be year
2000 compliant. Since retiring from the Air Force and joining
the Schwab Washington Research Group, one of the areas I cover
is Y2K, from a global, macro perspective, as well as an
industry perspective.
It is beyond question that the telecommunications
capability of this country is critical to our economic health
and security. Each day, billions of dollars flow across state
and national borders. The massive increase in electronic
commerce underscores that a radical shift in how Americans
conduct business will ride with the digital bits traveling
through high bandwidth facilities being built throughout the
world. Public safety, of course, is even more critical. Fire,
police and ambulance services depend on a reliable
telecommunications infrastructure to reach individuals in need
of assistance.
With the Year 2000 only 563 days away, telecommunications
companies and the FCC have been focusing on the potential
disruption that could result if mission critical systems are
non-compliant. In the communications sector, a number of
critical social and regulatory goals could be derailed or at
least suffer severe setbacks if computer systems tying together
the world's networks are not ready to handle the Year 2000.
With the passage of the 1996 Telecommunications Act,
Congress commenced the process of shifting our communications
industry from a monopoly environment to a competitive and
deregulated one. Competition in telecommunications services
promises to bring innovation, improved service quality, and
lower prices to consumers and businesses. Critical to this
process is the opening of telecommunications infrastructure
controlled by incumbent phone carriers to new competitors
seeking to enter the market. By leasing parts of existing phone
networks, competitors hope to build sufficient scale to justify
the additional capital investments essential to the
construction of independent and advanced facilities.
To accomplish this, back office systems, often referred to
as operation support systems, must be capable of transferring
customer lines, billing information and other account data to
new competitors struggling to gain market share. Ultimately,
the systems of competitors must be capable of accomplishing the
same tasks, as customers switch carriers in what is hoped to be
a vibrant competitive market in the years ahead. Obviously, the
failure of these computer systems would have a chilling effect
on the progress of creating a competitive environment. Although
new computer systems should be Year 2000-compliant, disruptions
or other publicized failures could seriously impact the growth
of competition.
If healthy competition in the telecommunications industry
is a long-term goal of this country, a seamless transition to
the year 2000 is mandatory. In order for that to happen
carriers must ensure they are compliant in several distinct
areas. A colleague of mine at META Group points out that year
2000 compliance in this industry is about more than just
switching gear and billing systems. Year 2000 compliance in the
telecommunications sector requires companies to also be sure
they take a hard look at provisioning systems, network
management and intelligence, as well as their physical
facilities and information technology (IT) infrastructure. If
any one of these elements is neglected in the process of
upgrading and fixing year 2000 problems the entire network may
be slowed down or negatively affected due to a lack of
interoperability.
Similarly, the massive increase in electronic commerce
underscores our economic dependence on a reliable system of
interconnected telecommunications networks. As noted by FCC
Chairman Bill Kennard, the recent failure of an advanced data
network offered a glimpse of what a network failure could mean.
Stores were unable to process credit card transactions and the
Red Cross encountered difficulty processing blood donations.
Of course, we are all aware of the recent failure of the
Galaxy 4 satellite on May 19th of this year. Businesses
suffered significant disruptions as paging operations, Internet
access, and wire service news transmissions were shut down. We
live in a high-tech world dependent on computers and high-
bandwidth transmission technologies. The economic consequences
of a disruption will be even more substantial by the year 2000.
Internet retailing, for example, generated about $3 billion in
sales last year. By the year 2000, some estimates project sales
to reach $16 billion.
As we approach 1999, it becomes more and more apparent that
this country and the rest of the world will experience computer
system disruptions with the new millennium. It is vital that we
minimize these disruptions in the communications area. Our
investments in newer and faster telecom technologies, and the
promotion of policies that foster new carriers with their own
networks, render us increasingly vulnerable to the consequences
of a Year 2000 breakdown.
I would like to briefly comment on some observations from a
global perspective on Y2K. I recently published a special
report for the Schwab Washington Research Group on the progress
of different countries and regions in preparing their computer
systems for the year 2000. As a general statement, my research
shows that the US is well ahead of other countries in
addressing this problem. Many countries and foreign companies
will soon find themselves well behind where they should be and
scrambling to catch up. Much of the expertise available to fix
non-compliant computer systems is already actively employed
working on other computer programs and will not be available
when the call for help is made. Those that have elevated
awareness of this problem to the senior levels of their
organizations and countries and have taken action to develop a
road map to compliance with adequate time for testing will have
a definite advantage in the global market as we approach the
year 2000.
An exception to negative progress reports by foreign
countries are the efforts of our neighbors to the north, the
Canadians. Last fall, at the invitation of Industry Minister
John Manley, an organization called Task Force Year 2000 was
formed. The members of this organization are CEOs from a number
of key Canadian economic sectors. This includes representatives
from banking, insurance, transportation, manufacturing,
information technology, resource-based, retail and service,
small and medium-sized businesses, and telecommunications. A
recent letter from this group to business executives and
business owners across Canada explains the seriousness of Y2K
and the fact that they have come to an early conclusion. No
business is immune from the Year 2000 problem; every firm is
affected--either directly in its own operations, or indirectly,
by the action or inaction of others. In addition, the Task
Force's reports and recommendations are brought to the
attention of Prime Minister Jean Chretien and the provincial
premiers. I make note of these Year 2000 efforts by business
leaders in Canada because they are making great progress in
increasing both awareness of and action taken on squashing the
Millennium Bug.
As a research analyst at the Schwab Washington Research
Group I receive many questions regarding the status of publicly
owned companies in preparing their computer systems for the
year 2000. Visibility into this area is limited in many cases
and I believe liability is the issue. A staff member at the OMB
described this to me as ``an absolute silence from Corporate
America on Year 2000 preparations.'' I expect this will change
and soon because of shareholder demands as well as
Congressional help. Panels such as this one will start to
eradicate the enormous uncertainty about the true status of the
different sectors of our economy and promote both the sharing
of relevant information, and the undertaking of remedial
action. We have to act now, as this is the last year to do
something about it.
Thank you again for the opportunity to discuss the Year
2000 Problem and its challenges to the telecommunications
industry. I look forward to answering any questions you might
have.
Chairman Johnson of Connecticut. I'm very impressed with
getting through that many pages almost on time, I'd have to
say, Mr. Baker.
Mr. Roth.
STATEMENT OF A. GERARD ROTH, VICE PRESIDENT, TECHNOLOGY
PROGRAMS, TECHNOLOGY AND SYSTEMS, GTE
Mr. Roth. Thank you, Chairman Johnson, Members of the
Subcommittee.
My name is Gerard Roth, vice president for Technology
Programs, responsible for GTE's Year 2000 Program. I'd like to
commend you for having this hearing to open up the awareness
issue.
While GTE has a variety of interests here, it has
represented itself principally as a local exchange carrier in
the context of this hearing. We've prepared written testimony,
but I'd like to, in the interest of time, summarize if I may.
As properly stated in the background you provided for this
hearing, the public switched network is truly comprised of
smaller networks supplied by hundreds of local exchange
carriers and several long-distance companies. These networks,
in turn, connect millions of government and private sector
telecommunications computer networks. The Y2K compliance of
each of these pieces is exclusively the responsibility of its
owner. As you will see in my testimony today, network
functionality provided by the major telephone companies and
their suppliers is progressing well, with first network testing
beginning as early as July 1998.
My presentation today focuses on the simple question that I
was asked to address by your staff: Why can't you simply
certify the public switch network for the year 2000 and tell us
by what date it will be compliant? I believe the answer to this
is that it is not possible for three principle reasons.
First is ownership. There is no one owner as we all have
stated earlier. There are only pieces of this network all
individually owned. The second is mathematics. The
transactions, the events, the potential routing paths are too
numerous to validate with 100-percent testing.
And last, which you've heard earlier, is the limitations on
testing in a live network. We cannot perform Y2K clock advance
testing in a live network without corrupting or disrupting the
operations of the current network itself. This does not mean
that the public switch network will not work in the year 2000;
it simply means that each of us must do our portions and then
verify them through operability testing.
Work has been underway for several years throughout the
telecommunications industry. That work is thorough, well-
thought-through, cooperative with interactive involvement with
the industry, being accomplished at an exceptional rate, and
represents the best known solution to the year 2000 and the
public switch network.
As requested by your Subcommittee staff, I would like to
depict the complexity, interdependency, and interoperability
issues affecting the public switch network and, in doing so, I
will attempt to ``build the onion'' from the inside out.
First, the core of the basic physical system, and I have a
chart here to my right, your left, to address this. Chart one
represents the basic, generic system. As you can see this
hierarchy starts at the bottom with the computer hardware and
moves up through individual operating systems all the way
through to communications protocols. The physical computer-
based system is best described as the combination of hardware,
firmware, software products and applications.
Each element of each system must be, in turn, verified by
each company involved. Whether this is a telephone switch or a
customer contact system, this is the basic structure of all of
our systems which first need to be year 2000 compliant. A
typical company or agency will have hundreds of these. GTE's
current plan, by way of example, is for year 2000 compliance of
all of our systems at this level by December 1998.
Chart two depicts the functional thread. In looking at this
chart, its complexity precludes my trying to explain it; but
each of those circles could be an individual system as I
described in chart one. To provide major functions, several
systems must work together both logically and physically in a
continuously reliable fashion. It should be noted that these
threads or clusters must also be verified Y2K compliant after
their individual components have been certified.
Chart two in this example is a real customer service thread
comprised of 17 separate systems, 26 formal communications
channels, and 10 separate data bases. A typical company or
agency will have hundreds, if not thousands, of these threads.
The third chart depicts the logical local exchange carrier.
There are actually three parts to this diagram: The first, at
the bottom is the legacy, the business, and back office support
system. The middle layer consists of the network management
systems: The controls for the public switch network itself. The
top layer are the fully integrated, network elements which do
not stand alone.
Using the logic of this chart, GTE processes thousands of
calls per minute on 21.5 million access lines in the United
States alone. To accomplish this, we have several hundred
systems, a few thousand central office switches, thousands of
supplier products, tens of thousands of client server desktops,
and extensive local and wide-area networks. GTE's present plan
for fully tested compliance at this level of the network is by
the end of June 1999.
Our last chart is the logical public switch network. This
expands to include all of the local exchange carriers,
interexchange carriers, and private networks into one logical
picture. There are hundreds of local exchange carriers in the
United States alone; plus several interexchange carriers,
millions of pieces of customer premise equipment and private
network emplacements and gateway connectivity to international
telephone companies. This network processes millions of
transactions per minute; its complex, realtime, dynamic call
routing prohibits us from knowing in advance where any
particular component will play.
I'd just like to point out parenthetically that the largest
external dependency on this is the ubiquitous power cord coming
off of the end of this network.
In conclusion, I would like to say year 2000 compliance is
a gigantic ongoing task. In the last Securities and Exchange
Commission disclosures, seven telephone companies projected
more than $2 billion for year 2000 expenditures. More than 50
percent of that effort is expected to be testing of all types.
We need to keep in mind year 2000 must occur simultaneously
with operations and maintenance of the public switch network,
without degradation of quality of service or the variety of
features we've all come to take for granted.
Today's testimony will show that we are dealing with this
in a responsible fashion, targeted for a mid-1999 completion.
If I may continue, I have just a few more statements for
conclusion.
Collectively and individually, the telephone companies
understand the year 2000 challenge they face. They have plans
in place to address these issues in a timely fashion as you
will hear today. Our testing strategies provide verification
for the public switch network year 2000 compliance to the
maximum extent possible, and the work remaining is hard, it is
complex, and it is of significant volume. However, based on the
status to date, we have reasonable expectations that we will be
successfully completing our essential systems on time.
Chairman Johnson, I thank you for the opportunity to
testify.
[The prepared statement follows:]
Statement of A. Gerard Roth, Vice President, Technology Programs,
Technology and Systems, GTE
Chairwoman Johnson and members of the Subcommittee. Good
afternoon, my name is A. Gerard Roth. I am Vice President,
Technology Programs, GTE, responsible for GTE's Corporate Year
2000 Program Management Office (PMO). I am here to discuss Year
2000 (Y2K) as it relates to telecommunications
interdependencies and interoperability. I commend the
Subcommittee on Oversight for conducting hearings focused on
the telecommunications industry interdependency and ask that a
copy of my written remarks be entered into the record.
Introduction
The focus of this testimony is to bring perspective from
GTE's considerable Y2K experience and apply it to this
important discussion of telecommunications interdependency.
GTE, and other telecommunications providers, are continually
being asked, ``Why can't you simply certify your network and
tell us when it will be compliant?'' The following discussion
will describe the complexity and interdependencies that make
that question so difficult to answer. Three principal issues
come into play in addressing this question:
1. Ownership--There is no one owner of the whole network.
2. Mathematics--The permutations and combinations of
calling events, service requests and routing possibilities
exceed the industry's ability to do 100% testing of Y2K.
3. Testing cannot be done on the live network--Out of
cycle--clock roll-ahead testing would disrupt current
operations, create unacceptable outages.
Nevertheless, the work being done to remediate and test the
Public Switched Telephone Network (PSTN) is well thought
through, is being accomplished at an acceptable rate, and
represents the best known solution to Y2K we are able to
accomplish. I believe you will be reassured today that the
telecommunications industry understands the importance of the
Y2K challenge and is working aggressively to meet it.
Y2K Background
Year 2000 is unique in the history of this the
telecommunications and information technology industries. Left
unattended, it could simultaneously undermine the operation and
reliability of the computer and network infrastructure at a
specific, known, future point in time. However, it is also true
that the precise impact on our information-based economy and
society cannot be predicted in part due to the complexity and
interdependency of systems. Nor can we accurately predict the
full extent of successful remediation of Y2K due to the
interoperable, multi-path nature of the PSTN.
We can, however, significantly reduce the likelihood of the
apocalyptic scenarios sometimes predicted for January 1, 2000.
You will hear from me and my collegues at this hearing some of
the measures underway to address your Year 2000 concerns.
Let me quickly summarize some of the major lessons of Y2K
that contribute to the complexity:
Schedule is not just important; it is the only
thing.
Y2K is truly a ``weakest link'' problem--the
single system or date conversion we miss may be the undoing of
the 99% we did find.
Normally, development and maintenance activities
introduce incremental change into an otherwise stable
environment; however, in Y2K, modified systems are reintroduced
into an environment which has been universally and
simultaneously de-stabilized.
Since it is impossible to recreate an ``off-line''
PSTN for testing, complex Year 2000 interoperability must be
tested in pieces by various companies separately and can be
actually proven compliant only once those pieces are in
operation together on January 1, 2000.
There is an increasing recognition of the need to
devote more time and effort to enterprise and interoperability
testing than was previously planned.
Testing of all types constitutes greater consumes
more than 50% of required cost and effort; actual conversion of
applications or products is relatively minor.
Completion of conversion prior to the end of 1998
should be a priority. This allows for validation of year-end
close transactions in the operational environment, and provides
up to 12 months of Y2K verification testing.
Test everything you can.
Complexity and Interdependency
In discussing the complexity and interdependency of the
PSTN, I intend to gradually ``build the onion'' from the center
using four models. To demonstrate an increasing complexity and
interdependency, each model builds upon the one before like the
currently popular ``nesting dolls.'' The end result points to
the conclusion that the PSTN is not readily certifiable due not
only to ownership issues but also to mathematical complexity
and test scenario limitations.
1. The Basic System
Telecommunications complexity begins with the essential,
computer-based systems used in telecommunications. Chart 1
depicts a representative, physical system, best described as a
combination of hardware, firmware, software products and
applications. A typical company will have hundreds of these.
Each component in Chart 1 must be assessed for Y2K impact;
remediated, if required, and tested and verified compliant at
the system level.
[GRAPHIC] [TIFF OMITTED] T1590.001
2. The Functional Thread
To perform a ``function'' (such as customer contact,
service provisioning, call routing), these physical systems
must work with others. Chart 2 depicts a real customer service
provisioning cluster as an example of system interdependencies.
This example portrays the relationships of among 17 separate
systems or users, 26 formal communications channels, and more
than 10 separate data bases needed to provide a basic service.
This also includes the actual linkage of support functions to
the physical PSTN and to other companies.
[GRAPHIC] [TIFF OMITTED] T1590.002
Each of the elements depicted here can also be represented
in some version of Chart 1. As such, assuring that each of the
core components is Y2K compliant precedes the verification of
this functional thread. A medium-sized company will have
hundreds of these threads.
3. The Core Interoperability of the PSTN-Logical Topology
Chart 3 expands the interdependency model to include
network elements of the PSTN.
[GRAPHIC] [TIFF OMITTED] T1590.003
Logically, each component on this chart can be described
functionally as a thread or cluster. This schematic simply
integrates the elements of the legacy software systems. The
systems manage the Network, the signaling, data and voice
components of the switched network. This complex hierarchy of
systems and interaction of function provides an example of a
single company's network interdependency. The actual LEC
portion of the Public Switched Telephone Network provides for
random, multi-path, real-time interaction of these elements,
simultaneously processing thousands of calls each minute of
each day.
By way of example, a typical local exchange carrier may
have several million digitally switched access lines in the
U.S. Depending upon the LEC, it may have also hundreds of
unique systems worldwide, representing millions lines of
computer code (LOC), all of which must be Y2K tested in
thousands of functional test clusters. In addition, to verify
Y2K readiness, the typical LEC must assess and test perhaps a
couple of thousand of central office (e.g., end office) and,
possibly, international gateway switches and associated support
systems in not only domestically but, depending upon the
company, in overseas locations as well.
4. The Expanded PSTN
The final illustration, (the outside of the ``onion'')
depicted in Chart 4, captures the logic of the Public Switched
Telephone Network overall by incorporating the essential logic
of Chart 3 for each of several Local Exchange Carriers (LECs),
Inter-exchange Carriers (IXCs), International PTT Interfaces,
Customer Premise Equipment (CPE), and Private Network
installations. Within the U.S. alone there are hundreds of
local exchange carriers, several inter-exchange carriers; and
perhaps millions of private networks or customer premise
emplacements. The obvious interconnectivity potential of these
network relationships points to the mathematical limitations on
100% test. It should not go unnoticed that the largest external
risk to the operational integrity of the PSTN is the continued
availability of electric power across the national power grid
on January 1, 2000.
[GRAPHIC] [TIFF OMITTED] T1590.004
The Call/Virtual Network Circuits
The Nationwide PSTN processes millions of calls per minute.
In order to complete a telecommunications transaction beyond a
local exchange, ``calls'' are spontaneously routed in advance
to take advantage of the most efficient call-processing path.
Furthermore, in addition to routine voice/data traffic and
wireless access, the PSTN provides a myriad of additional
services including call waiting, directory assistance, 800-
number look-up, and 911 emergency support. Because of this
complexity, a ``virtual'' network circuit is dynamically
defined for each transaction such that advance prediction of
specific circuit connectivity is impossible to determine. The
process creates a continuously changing pattern within and
between LECs and IXCs. Consequently, it is impossible for any
one company to verify the whole network Y2K compliant.
Nonetheless, the worldwide telecommunications Year 2000
remediation effort is proceeding, with LEC's, IXC's and others
actively and cooperatively working to implement Y2K readiness
at all levels of this model. You will hear more today from my
colleagues on this panel on what the industry is doing to
respond to Y2K.
Cost
It is useful in closing to give this technical issue a
context or grounding with respect to cost. GTE currently
expects to spend about $350 million on Y2K compliance;--more
than 50% of which is focused on the testing of these products,
applications, or and the interoperability test of the functions
they provide.
As of March 1998, a sample of SEC filings indicates seven
(7) telecommunications companies (LECs and IXCs) have estimated
a combined expenditure in excess of $2 billion for Year 2000
remediation. This is a gigantic task; one that I fear is often
trivialized by the casual media and unfairly criticized by
otherwise well-intentioned Y2K experts. Nothing is to be gained
by public chanting of doomsday scenarios formed out of
ignorance.
It should be noted that this massive Year 2000 remediation
activity is occurring at the same time as we continue operating
the live PSTN and maintaining it with the quality of service
and variety of features we have all come to take for granted.
Chairwoman Johnson, I thank you for the opportunity to
present this testimony.
Chairman Johnson of Connecticut. Thank you very much, Mr.
Roth.
Mr. Pasqua.
STATEMENT OF A.J. PASQUA, PROGRAM MANAGEMENT VICE PRESIDENT,
AT&T YEAR 2000 PROGRAM, WARREN, NEW JERSEY
Mr. Pasqua. Madam Chairman, Members of the Oversight
Subcommittee, my name is John Pasqua and I am the program
management vice president of the AT&T Year 2000 Program. I'm
pleased to be here with you to share the approach AT&T is
taking to meet this global challenge and I'll try to summarize
my submission.
There are no competitors when it comes to Y2K. We all need
to be working collaboratively on the issues. AT&T launched its
Y2K program in 1996 with the establishment of a corporate Y2K
program office answerable to AT&T senior leadership team,
including chairman and chief executive officer, Michael
Armstrong, and Frank Ianna, executive vice president of Network
and Computing Services.
The overall process framework for our program is based on
proven and accepted industry models. We monitor and track
progress of the Y2K program through a series of metric
scorecards. Program status is reviewed monthly at all
management levels in our corporation. AT&T has an embedded base
of more than 3,000 internally developed applications. I am
pleased to report that through May of this year, we have
assessed 91 percent of our application lines of code, repaired
72 percent of those that needed modification, and application-
certified over 40 percent.
AT&T is committed to a target of December 31, 1998, for the
completion of assessment, revision and testing of all customer-
affecting systems, and has reinforced that commitment with
associated funding of approximately half-a-billion dollars
through 1998.
Relative to the AT&T networks, our overarching goal is to
avoid any degradation to network reliability due to the
millennium change. Our year 2000 program addresses not only the
core public switched network but also the AT&T wireless
network, our data networks, the AT&T government networks,
including FTS 2000, and all other AT&T-branded networks.
In addition to internally developed applications that
support our networks, we have inventoried over 800 externally
purchased network elements, including switches, network control
processors, and signal transfer points. Approximately 97
percent of the network elements have been assessed, and more
than 80 percent are already Y2K-compliant or planned for
retirement.
AT&T is on target to complete network element certification
by yearend 1998, with full deployment in the first half of
1999.
A comprehensive testing strategy is a key component of our
program. Our overall approach is to test any claims of Y2K-
compliance from suppliers and partners. We are also
independently validating the testing programs using peer
reviews, internal audit reviews, program office reviews which I
lead, and external audits.
We are leveraging AT&T's participation in a variety of
industry forums and standards-setting bodies as a framework for
external interface and testing agreements.
Within North America, AT&T is partnering with the Alliance
for Telecommunications Industry Solutions, or ATIS, to plan and
conduct necessary Y2K signaling interoperability tests. For
international bilateral relations, we will use the
International Telecommunications Union, or the ITU, to develop
international standards regarding network planning activities
and as a sponsor for interoperability testing.
In addition, we plan to perform end-to-end call tests
across our network and selected domestic and international
access and egress provider networks, using a sample of call
types, access configurations and geographical dispersions. AT&T
has also proposed the reestablishment of the NRIC, the Network
Reliability and Interoperability Council, as an advisory
committee to the FCC to assess the impact of year 2000 on our
Nation's networks and to encourage sharing of information
solutions.
To further mitigate risk, contingency plans will be
established well in advance of the millennium.
In summary, we are confident that AT&T will be successful
in meeting the year 2000 challenge. At the most fundamental
level, our year 2000 initiative is dedicated to ensuring
business continuity, providing our customers with services that
will work at the requisite level of performance in the year
2000 and beyond. AT&T's Y2K program is designed to achieve that
goal.
But it's also about helping others--our network partners,
our suppliers, and indeed, our customers--to prepare for year
2000. We believe our approach encompasses that broader view,
too.
I want to thank you for inviting AT&T to participate in
this hearing. We think your interest in this area will increase
cooperation and openness within the telecommunications
industry. We have been meeting with representatives of the FCC
and other government agencies, and are committed to work with
our industry colleagues on the year 2000 opportunity.
AT&T is aggressively attacking this logistically complex
situation and we won't let you down. Thank you very much.
[The prepared statement follows:]
Statement of A.J. Pasqua, Program Management Vice President, AT&T Year
2000 Program, Warren, New Jersey
Madame Chairwoman, Members of the Oversight Subcommittee,
My name is John Pasqua, and I am the Program Management
Vice President of the AT&T Year 2000 Program. I'm pleased to be
here with you to share the approach AT&T is taking to meet this
global challenge.
The Year 2000 issue is possibly the most critical problem
we have ever faced at AT&T. It spans all aspects of our
business and goes well beyond the boundaries of any one company
...; and, for that matter, beyond the boundaries of any one
country. However, I believe it is a challenge we will deal with
successfully.
There are no ``competitors'' when it comes to Y2K. Today,
many businesses and industries are so interdependent that the
failure of any one can cause serious problems for the others.
We all need to be working collaboratively on the issue and I
welcome this opportunity to share some of our AT&T Y2K
experiences with you.
AT&T launched its Y2K Program in the fall of 1996 with the
establishment of a Corporate Y2K Program Office answerable to
AT&T's senior leadership team, including Chairman and CEO
Michael Armstrong, and Frank Ianna, Executive Vice-President of
Network and Computing Services.
We established several fundamental operating principles as
the framework for the program:
A governance and oversight model with enterprise-
wide program management;
Responsibility for ``fixing'' the problem
distributed to our operating units; and
Outsourcing some of the Y2K work to vendors who
have demonstrated the required core competencies.
Our Y2K Program is focused on four inter-related areas:
Internally-developed applications, which support
business functions such as ordering, provisioning and billing;
AT&T's information technology infrastructure,
which includes the hardware, software and communications
platforms and components that support these applications;
AT&T's voice and data networks; and
Building automation components and embedded
systems.
The overall process framework for AT&T's program is based
on accepted industry models. The key milestones include:
assessment, repair, application-certification, integration
testing, deployment and environment-certification.
We monitor and track progress of the Y2K program through a
series of metric scorecards. Program status is reviewed monthly
at all management levels in our corporation.
AT&T has an embedded base of more than 3,000 internally
developed applications, of which:
Approximately 400 directly support AT&T's voice
and data services;
800 are critical to the provisioning,
administration, maintenance and customer service; and
The balance represent applications supporting
AT&T's sales and marketing organizations and internal
administrative functions.
I'm pleased to report that--through May of this year--we
have assessed 91% of our application lines of code, repaired
72% of those that needed modification, and application-
certified over 40%.
AT&T is committed to a target of December 31, 1998 for the
completion of assessment, revision and testing of all customer-
affecting systems, and has reinforced that commitment with
associated funding of approximately half-a-billion dollars
through 1998.
Relative to the AT&T Networks, our overarching goal is to
avoid any degradation to network reliability due to the
millennium change. Our Year 2000 Program addresses not only the
core public-switched network but also the AT&T wireless
network, our data networks, the AT&T government networks and
all other AT&T-branded networks.
In addition to the AT&T-developed applications that support
our networks, we have inventoried over 800 externally-purchased
network elements, including switches, network control points
and signal transfer points. Approximately 97% of the network
elements have been assessed, and more than 80% are already Y2K-
compliant or planned for retirement.
AT&T is on target to complete network element certification
by year-end 1998, with full deployment no later than June 1999.
A comprehensive testing strategy is a key component of our
program. AT&T's overall approach is to test any claims of Y2K-
compliance from suppliers and partners. Each AT&T organization
that supports a system is accountable for prioritizing and
certifying all components of that system to ensure the most
important components are addressed first.
We are also independently validating the testing programs
using peer reviews, internal audit reviews, program office
reviews, and external audits.
We are currently defining the requirements for inter-system
testing and certification for our critical business processes,
focusing on two phases of validation:
Business process testing, which involves
applications and components that comprise a business function
to insure the integrity of the business process; and
End-to-end product and service testing, which
includes all systems and network elements involved in offering
the service to our customers.
These phases of testing will start in mid-1998 and continue
into 1999.
We are also leveraging AT&T's participation in a variety of
industry forums and standards-setting bodies as a framework for
external interface and testing agreements. I'd like to
highlight some examples in this area.
Within North America, AT&T is partnering with the Alliance
for Telecommunications Industry Solutions, or ATIS, to plan and
conduct necessary Y2K signaling interoperability tests. The
ATIS Network Testing Committee has proposed a series of tests
during which each test network advances the network clock
relative to different time zones and critical Y2K-related
dates.
For international bilateral relations, AT&T will use the
International Telecommunications Union, or the ITU, to develop
international standards regarding network planning activities
and as a sponsor for interoperability testing. The ITU has
established a Year 2000 Task Force as well as an Inter-Carrier
Testing Task Force to address Y2K assurance of customer
services involving multiple networks.
For AT&T-branded networks and global partnerships,
additional interoperability testing will be conducted, as
necessary.
In addition, AT&T plans to perform end-to-end call tests
across its network and selected domestic and international
access and egress provider networks, using a sample of call
types, access configurations and geographical dispersions. The
timeframe for these tests will be during 1999, after the
involved networks have achieved Y2K-compliance.
AT&T has also proposed the re-establishment of the NRIC--
the Network Reliability and Interoperability Council--an
advisory committee to the FCC to assess the impact of Year 2000
on our nation's networks and to encourage sharing of
information solutions. This council could meet on a quarterly
basis and membership would include the 20 or so major carriers,
suppliers and LECs in the telecommunications industry.
To further mitigate risk, contingency plans will be
established well in advance of the millennium. In addition to
existing operational safeguards and ``common sense'' practices
like prioritization of test schedules to certify mission-
critical systems first, we are in the process of establishing
Y2K-related contingency plans, including:
Business resumption teams, on call during the
millennium change, to react immediately to facilitate repairs
and activate emergency alternate processes;
Time zone ``quiet periods'' to de-activate some
systems and processes during the 24-hour transition period when
regional time zones pass through the millennium change period;
Network capacity expansion engineered to
accommodate demand peaks; and
Alternate suppliers and implementation plans to
replace third-party products or services that fail to meet
commitment schedules.
In summary, we are confident that AT&T will be successful
in meeting the Year 2000 challenge.
At the most fundamental level, our Year 2000 initiative is
dedicated to ensuring business continuity--providing our
customers with services that will work at the requisite level
of performance in the year 2000 and beyond. AT&T's Y2K Program
is designed to achieve that goal.
But it's also about helping others--our network partners,
suppliers and customers--to prepare for Year 2000. We believe
our approach encompasses that broader view, too.
I want to thank you for inviting AT&T to participate in
this hearing. We think your interest in this area will increase
cooperation and openness within the telecommunications
industry. We have been meeting with representatives of the FCC
and other government agencies, and are committed to work with
our industry colleagues on the Year 2000 opportunity.
Thank you.
Chairman Johnson of Connecticut. Thank you very much.
Mr. Bennett.
STATEMENT OF RONNIE LEE BENNETT, PROGRAM MANAGEMENT VICE
PRESIDENT, LUCENT TECHNOLOGIES, INC.
Mr. Bennett. Madam Chairman, Congressman Coyne, and Members
of the Subcommittee, good afternoon.
I appreciate this opportunity to discuss the impact of the
year 2000 date change on government communications systems and
the national telecommunications infrastructure.
Lucent Technologies is the world's largest communications
systems and technology company. We have more than 100,000
employees in the United States with a significant presence in
18 States. Our more than $12 billion in annual purchasing
supports more than 100,000 additional jobs in the United
States. We have been designing and manufacturing
telecommunications equipment for more than 100 years. With that
history and experience we fully appreciate the magnitude of the
challenge hosted by the year 2000 date change.
Lucent has embarked on a full-scale effort to minimize the
impact of the year 2000 date change on Lucent and our
customers. We are aggressively working toward making our
internal information technology and manufacturing
infrastructure year 2000 ready. We believe that the year 2000
date change will not significantly affect our ability to
deliver products and services to our customers.
Lucent has made significant progress in preparing both our
switched network products and our business systems products for
year 2000. For example, the year 2000 upgrade for the current
Lucent 5ESS switch became available last month. This switch is
one of the most important and widely deployed Lucent products
in the public network. By the end of the third quarter of 1998,
more than 90 percent of our currently supported network
products will be year 2000 compliant or have available
upgrades.
We have also committed that all customer communications
systems, manufactured and sold by our business communication
systems unit that were introduced on or after September 30,
1996, will be year 2000 compliant.
Lucent has conducted year 2000 impact tests on many of our
products that are not currently year 2000 ready and we're
sharing those results with our customers. Lucent year 2000
tests are performed in laboratories that follow clearly
specified processes and methodologies. However, the public
switched network and customer communication systems are
complex, custom-designed systems that are assembled using
equipment and software from many, many vendors. As a result, it
is important that the owners of telecommunications equipment
investigate the interoperability of their equipment.
To support the interoperability testing of the public
switched network, we are working the Telco Year 2000 Forum to
test our network and products and their interoperability with
other vendors' products. We are working in many ways to make
our customers aware of the year 2000 challenge including
reaching out to the industry groups, individual customer
meetings and through direct mailings.
Our goal is to understand the customers installed base of
Lucent products, provide relevant product information and
jointly develop year 2000 strategies.
Lucent has a dedicated government solutions division that
supports sales to the Federal Government, serving more than
1,000 agencies, departments and offices. Within that division,
a year 2000 team has been established to coordinate and support
the efforts of these customers to meet the government's year
2000 deadlines.
We're also working with the GSA. We have provided
information on the status of relevant products for the GSA year
2000 telecommunications database. We've participated in two GSA
government industry forums, and in addition, we've actively
participated through presentations and survey responses in the
year 2000 efforts of the FCC and the President's Council on the
Year 2000 Conversion.
Identifying year 2000 issues and implementing and testing
solutions is time consuming. We believe we have sufficient
resources to provide our customers with the year 2000 support
that they require, but success can only be achieved in concert
with our customers. Time is of the essence, therefore, we urge
all involved parties to act with speed.
Thank you.
[The prepared statement follows:]
Statement of Ronnie Lee Bennett, Program Management Vice President,
Lucent Technologies, Inc.
Introduction
Thank you, Madam Chairwoman, Congressman Coyne and members
of the Subcommittee, for the opportunity to appear before you
to discuss the impact of the Year 2000 date change on
government communications systems and the national
telecommunications infrastructure.
Lucent Technologies, headquartered in Murray Hill, New
Jersey, became a fully independent company on September 30,
1996. Lucent has over 100,000 employees in the United States
and a significant presence in eighteen states. In addition,
Lucent's more than $12 billion in annual purchasing supports
over 100,000 additional jobs in the U.S.
Lucent has a more than one-hundred-year heritage of
designing and manufacturing telecommunications equipment.
Central to this heritage is Bell Labs, the research and
development arm of Lucent Technologies.
Lucent is the world's largest communications systems and
technology company, with over $27 billion in sales. Lucent
supports a broad line of products--from network switches
supporting local and long-distance carriers to voice and data
business systems for enterprises. Business systems handle the
communications needs of businesses and other multi-user
environments, including, for example, the systems found in the
offices of the agencies overseen by this Subcommittee. Lucent's
products support the transmission of voice, video and data over
wireline and wireless networks.
The past hundred years have seen great changes in the
design of Lucent's products. Today, software is the engine that
drives virtually all of Lucent's products and supports all of
Lucent's internal operations. As such, Lucent fully appreciates
the magnitude of the challenge posed by the Year 2000 date
change.
Lucent's Response to the Year 2000 Challenge
Lucent has embarked on a full-scale effort to minimize the
impact of the Year 2000 date change on Lucent and its
customers. Lucent's Year 2000 effort is coordinated by a
company-wide program office. This office is charged with
verifying that the multiple Year 2000 teams within Lucent have
sufficient resources and are progressing in this effort in a
timely fashion.
Lucent is aggressively working toward making its internal
information technology and manufacturing infrastructure Year
2000 ready. Based on our current progress, Lucent believes that
the Year 2000 date change will not significantly affect
Lucent's ability to deliver products and services to its
customers on a timely basis into the next century.
Lucent has committed significant resources to make its
current product offerings Year 2000 compliant, as well as to
provide evolution paths for its customers who have non-Year
2000 ready equipment. Lucent has several distinct product lines
with very different customer groups. As a result, Lucent is
organized into several business units that are structured to
best support the needs of their respective customers. Lucent
has established Year 2000 program offices in each of its
business units. These program offices have identified non-Year
2000 ready products and developed evolution strategies that
include the upgrade of some products and the replacement of
others. In addition, these program offices support Lucent's
customer teams, who are working with their customers to develop
customer-specific Year 2000 solutions.
Product Status
Lucent has made significant progress in preparing both its
switched network products and its business systems products for
the Year 2000. For example, the Year 2000 capability upgrade
for the current Lucent 5ESS Switch became available
last month. This switching equipment is one of the most
important Lucent network products used in the public switched
network. These 5ESS upgrades are now being tested by
customers or have been deployed in their networks. By the end
of the third quarter of 1998, Lucent believes that in excess of
90 percent of its currently supported network products will
either be Year 2000 compliant or have available upgrades.
Virtually all of the remaining supported network products are
targeted to be Year 2000 compliant or to have available
upgrades by the end of 1998.
Lucent also has committed that all products manufactured
and sold by its Business Communications Systems business unit
that were introduced as generally available on or after
September 30, 1996 will be Year 2000 compliant. With respect to
products generally available for sale prior to that date,
Lucent has developed migration strategies as needed that call
for either replacement or upgrade of the products. Lucent
expects that the necessary upgrades will be available before
the end of the third quarter of this year.
In addition to preparing its products for the Year 2000,
Lucent has conducted tests to understand the functional impact
of the Year 2000 date change on many of its products that are
currently not Year 2000 ready. The impacts vary widely by
product and the significance of the impacts also varies by the
type of equipment and customer application. Lucent is sharing
this impact information with its customers.
Both Lucent's product determinations and impact information
are generated as a result of tests performed in laboratories
that follow clearly specified processes and methodologies.
However, the public switched network and many customer in-house
communications systems are complex, custom-designed systems
that are assembled using equipment and software from multiple
vendors. As a result, it is important for the owners of
telecommunications equipment to investigate the
interoperability of their equipment.
Lucent is working with its customers to provide information
and other support to help customers' investigations. Further,
to support the interoperability testing of the public switched
network, Lucent is working with the Telco Year 2000 Forum, a
group that includes many of the major local telephone
companies, to test Lucent networking products and their
interoperability with other vendors' products. Lucent supports
the Telco Forum's interoperability testing by providing product
information, reviewing test plans and providing access to
Lucent's testing facilities. Lucent is working with the Telco
Forum and Bell Communications Research, commonly known as
Bellcore, to define Year 2000 interoperability test
requirements for all telecommunications equipment
manufacturers. Bellcore is the entity that creates many of the
technical specifications and standards for the public switched
network.
Support of Customers
Effective communication and coordination are important to
minimizing the impact of the Year 2000 on Lucent's customers.
For example, Lucent is working with the Organization for the
Promotion and Advancement of Small Telecommunications Companies
(OPASTCO) to communicate Year 2000 product information to its
members. In addition, Lucent's Business Communications Systems
business unit successfully demonstrated a clock roll-over to
January 1, 2000, on all of its major products last week at its
International DEFINITY User Group meeting here in
Washington, attended by 2500 of Lucent's enterprise and
government customers.
Lucent does not rely exclusively on public presentations to
convey Year 2000 information to its customers. Lucent's
communications and coordination efforts with its customers are
primarily handled through direct contacts, ranging from
individual meetings to general mailings to its customers.
Common to all of these contacts is an effort by Lucent to
understand the customer's installed product base of Lucent
products, provide relevant product information and jointly
develop a strategy for migrating the customer as appropriate.
Lucent Year 2000 Support of the Federal Government
In support of the U.S. Government, Lucent has a dedicated
Government Solutions division that supports its sales to the
Federal Government. Through this unit, Lucent serves more than
1,000 agencies, departments and offices of the Federal
Government. Lucent supports the Government through dedicated
sales, customer service and maintenance teams. A Year 2000 team
has been established within Government Solutions to coordinate
and support these efforts. By providing product information and
migration strategies, Lucent is working with its Government
customers to support their efforts to meet or exceed the
Government's various deadlines.
Lucent began contacting its Government customers who have
non-Year 2000 compliant products in the second half of 1997 to
begin Year 2000 coordination and planning for these products.
Lucent began a direct mail campaign in December 1997 to
specifically notify its Government customers that they may need
to update or replace some of their Lucent products. These
customer communications efforts are continuing.
Lucent has also supported the General Services
Administration (GSA) in addressing Lucent telecommunications
products within the Government agencies. At the end of 1997,
Lucent provided information on the status of relevant products
to GSA for inclusion in its Year 2000 Telecommunications
database and participated in two GSA government industry
conferences to facilitate information sharing between
Government agencies and the telecommunications industry. Lucent
is actively working with GSA and other agencies in their
efforts to conduct Year 2000 demonstrations.
In addition to Lucent's work with its government customers
and the GSA, Lucent has also participated in the valuable,
proactive Year 2000 efforts of the Federal Communications
Commission (FCC) and the President's Council on the Year 2000
Conversion. Lucent has made presentations in several Year 2000
meetings held by these organizations. In addition, Lucent was
among several telecommunications industry companies that
responded to an FCC survey relating to Year 2000 readiness.
Conclusion
The Year 2000 date change is a significant technological
and management challenge, requiring full commitment by both the
private and public sectors of a variety of industries. Lucent
believes it has sufficient resources to provide its customers,
both in the Government and in the private sector, with the Year
2000 support they require, but the assistance of Lucent's
customers is essential. If a significant percentage of Lucent's
customers wait until 1999 to act, it will be difficult for
Lucent to provide the necessary engineering, installation,
demonstration and testing services for their Year 2000 support.
Therefore, we are urging all involved parties to act with
urgency to address this fundamentally important issue.
This Subcommittee and Congress generally can play a very
important role in raising awareness within Government and
relevant industry sectors about the need for prompt action. The
process of identifying products with Year 2000 issues and
developing and implementing evolution strategies is very time
consuming. Time, therefore, is of the essence. However, with
careful planning and timely execution of readiness strategies,
Lucent believes that its customers can successfully prepare
themselves for the impact of the Year 2000 challenge.
Thank you.
Chairman Johnson of Connecticut. Thank you very much, Mr.
Bennett.
Ms. Guthrie.
STATEMENT OF PRISCILLA E. GUTHRIE, VICE PRESIDENT AND GENERAL
MANAGER, BUSINESS ENTERPRISE SOLUTIONS & TELECOMMUNICATIONS
STRATEGIC BUSINESS UNIT, TRW, FAIRFAX, VIRGINIA
Ms. Guthrie. Thank you, Chairman Johnson and distinguished
Members of the Subcommittee.
My name is Priscilla Guthrie and I am the vice president
and general manager of TRW's Business Enterprise Solutions &
Telecommunications Strategic Business Unit. TRW is a premier
provider of systems engineering and integrations services and
has solved complex problems of national significance for over
40 years. Our network integration business is a critical
component of these services.
I have been asked to present a network integrator's
insights into the year 2000 conversion effort. I've provided a
written statement. In the interest of time, I'll summarize my
statement by providing several rules of thumb which we have
learned which apply to network Y2K compliance initiatives.
The first rule of thumb is that a network's Y2K compliance
schedule is contingent on the compliance schedules of those who
supply the network's components. Suppliers of these components
establish their own Y2K compliance schedules to meet their own
unique business objectives and these schedules are obviously
not always in tune with user schedule requirement.
The second rule of thumb is to anticipate and prepare for a
cascading effect when a single Y2K noncompliant application or
device impacts other interfacing applications or devices,
resulting in a need to replace them all. A well-thought-out
plan for prioritized upgrades, integration and tests is
essential.
The third rule of thumb addresses an issue raised in
testimony at previous hearings. The issue is risk and
contingency planning. In spite of an integrator's best efforts,
there will be items that are unique to a changing operational
environment and could not be reasonably anticipated. Because of
this, risk management and contingency planning are essential.
As a final point, I'd like to address the issue of
liability. There is no precedent for Y2K liability. Full
cooperation of all organizations in business and government is
critical to timely resolution of Y2K problems. The threat of
litigation is currently an impediment to full cooperation. It
is in the government's best interest to pass legislation
protecting technology suppliers from undue litigation
associated with Y2K issues.
Thank you for the opportunity to testify today and I will
be happy to answer any questions.
[The prepared statement follows:]
Statement of Priscilla E. Guthrie, Vice President and General Manager,
Business Enterprise Solutions & Telecommunications, Strategic Business
Unit, TRW, Fairfax, Virginia
Chairwoman Johnson and distinguished members of the
Subcommittee, my name is Priscilla Guthrie and I am the Vice
President and General Manager of TRW's Business Enterprise
Solutions & Telecommunications Strategic Business Unit. TRW is
a premier provider of systems engineering and integration
services and has solved complex problems of national
significance for over 40 years. Our network integration
business is a critical component of these services because the
movement and management of digitized information is a dominant
force in our society. It is a pleasure to be here today to talk
about TRW's experiences with the Y2K conversion problem.
I have been asked to present a network integrator's
insights into the Year 2000 conversion effort. For the purposes
of this discussion, a network is defined as a collection of
hardware, software, and transport media that supports the
movement and management of information between geographically
dispersed locations. Networks are normally configured to meet
the requirements of a specifically defined customer community
and can vary in complexity from a private intercom system
within your Congressional office to a worldwide public network
such as the Internet.
The value and function of a network integrator lies in its
ability to design, implement, maintain and operate a network
that is reliable, flexible, secure and responsive. To
accomplish this goal, a network integrator must select and use
products and services from multiple sources. These sources
include network hardware suppliers, transport media and local
connection providers, and software developers. TRW provides
network integration services to customers and, as part of these
services, we are directly involved in the evaluation and
implementation of Y2K-related activities. Network Y2K
compliance is subject to the same basic activities as all Y2K
efforts: accurate inventory; correct evaluation and assessment
(including risk); rigorous test; aggressive remediation; and,
on-going validation. The difficulty of a large-scale network
Y2K compliance effort lies in the sheer number of components,
many of which are legacy systems, spread over a wide geographic
area and interfacing with numerous systems controlled by other
companies or agencies. These factors make it extremely
difficult, if not impossible, to perform end-to-end tests.
Through our Y2K efforts, we have found several basic ``rules of
thumb'' that apply to network compliance initiatives.
The first rule of thumb is that a network's Y2K compliance
schedule is contingent on the compliance schedules of those who
supply the network's components. Suppliers of these components
establish their own Y2K compliance schedules to meet their own
unique business objectives. Those schedules are not always
consistent with their users' schedule requirements. This is
particularly true for large-scale limited access networks,
where Commercial Off The Shelf (COTS) and Non-Development Items
(NDI) dominate the network and applications software arena. For
example, as an integrator, we may desire Y2K compliant network
operations for a full year prior to the millennium date. This
operational time allows for the identification and resolution
of issues that could not be adequately evaluated and tested in
a simulated environment. To do so, all elements of the system
must be compliant and available as much as 16-18 months in
advance of the millennium date. Unfortunately, the inability of
suppliers to provide compliant products on time often keeps us
from meeting milestones. We do not always have the luxury of
following our optimum plan.
The second rule of thumb is to anticipate and prepare for a
cascading effect when a single Y2K non-compliant application or
device impacts other interfacing applications or devices,
resulting in a need to replace them all. This issue is
fundamental to all networks. In one example, a network's
database management system (DBMS) must be upgraded with a new
version that is Y2K compliant. The new DBMS is not compatible
with the current operating system, and the operating system
must then be upgraded. Unfortunately, several compliant
applications are incompatible with the new operating system and
must be replaced. Because the upgraded operating system is
designed to operate with the newer/faster processors and
requires more memory than current hardware can support, the
hardware must also be replaced. At a certain point, the most
cost-effective long-term solution is to ``bite the bullet'' and
go forward with a complete modernization effort. It is TRW's
role to analyze tradeoffs and assist the customer in making
appropriate decisions.
In addition, the integrator must be prepared for problems
resulting from a network's interface with systems of other
individuals, companies or agencies. For financial institutions
this could be a big problem due to the large number of
individuals and small business customers over whom they have
little or no control. Because of efforts undertaken in the
telecommunications industry, these compliance issues are not
expected to disrupt network operations. However, application
compatibility between these users will be essential to assure
data integrity. Discerning the difference between network
problems and applications problems will be difficult, time
consuming, and costly.
The third rule of thumb addresses an issue raised in
testimony at previous hearings. The issue is risk and
contingency planning. In spite of an integrator's best efforts,
there will be items that are unique to a changing operational
environment and that could not be reasonably anticipated.
Although the one-year, on-line verification mentioned above is
a reasonable risk mitigation approach, it may not be realistic.
In situations where the availability of critical Y2K compliant
elements is uncertain, risk assessment and planning includes
evaluation of alternative hardware and software solutions that
will meet operational schedules. Another risk mitigation
approach is the prioritization of Y2K activities into either
`technical compliance' or `failure mode' categories. `Failure
mode' issues will either disrupt the operation of the network
or cause the network to deliver or act upon inaccurate
information. Elements of a network which present Y2K issues but
do not create failure modes fall into the `technical
compliance' category. `Technical compliance' issues are
reasonable candidates for waivers and/or deferrals when
schedule and resource problems cannot be resolved by other
means.
As a final point, I would like to address the issue of
liability. There is no precedent for Y2K liability. Network
integrators address performance liability issues on a
continuing basis. As a network integrator, the limitations on
our liability regarding network performance are defined in our
contracts. We expect that Y2K liability will be handled in the
same fashion as other contract requirements, such as
availability and throughput.
Liability issues faced by individual hardware, software,
and transport media providers are not fully defined. Many
customers require vendors to provide certification of Y2K
compliance before they buy or continue to use a supplier's
products. The liability implications of these certifications
are obvious. Unfortunately, the specter of liability has caused
many organizations to defer certification of their products.
Some suppliers have even refused to consider written
certification due to the liability implications. These are
straightforward business decisions, but they are not
necessarily in the government's best interest. Unfortunately,
delays in certification delay the ability of networks to be
brought into full compliance. Full cooperation of all
organizations--in business and government--is critical to the
timely resolution of Y2K problems. The threat of litigation is
currently an impediment to full cooperation. It is in the
government's best interest to pass legislation protecting
technology suppliers from undue litigation associated with Y2K
issues.
Thank you for the opportunity to testify today, and I would
be happy to answer any questions.
Chairman Johnson of Connecticut. Thank you very much.
Mr. White.
STATEMENT OF WILLIAM O. WHITE, MEMBER, TELCO YEAR 2000 FORUM
Mr. White. Madam Chair, Members of the Subcommittee, on
behalf of the Telco Year 2000 Forum, I'd like to provide
testimony on its purpose and activities to address year 2000
issues in the telecommunications industry.
First, the Forum would like to commend the Ways and Means
Committee for conducting hearings on this critical issue. We
have heard how the year 2000 is an issue of worldwide concern
and it will be the largest single project impacting companies,
and in fact, it affects customer computer systems, hardware,
operating environments and networks. It is a strategically
important process for the telecommunications industry to make
sure that we have addressed that.
To that end, the Telco Year 2000 Forum was formed
approximately 2 years ago as an outgrowth for Bellcore's CIO
Forum which holds discussions on industry trends. The purpose
of the Telco Forum is to focus and share information on common
industrywide issues and to discuss and come up with solutions
for potential impacts of the year 2000.
The Telco Forum consists of Ameritech, Bell Atlantic, Bell
South, Cincinnati Bell, GTE, SBC, Southern New England
Telephone, and U.S. West. Its purposed is to act as an informal
working Committee to address year 2000 issues and to share
information. Our discussions are focused exclusively on
technical and operational aspects of the year 2000. Our intent
is to identify common challenges and solutions in order to
facilitate and accelerate responsive actions by each of the
member companies.
Our principle activities are to pool and to share testing
resources for common network components and to perform
interoperability testing. The key in all this activity is that
each member company is responsible for its own year 2000 plan
and activity. Each member company has a very detailed and
company specific plan to address their particular year 2000
issues.
Our process is that we meet six times a year, every other
month with numerous conference calls and submeetings in
between. We have focus areas within the public switched
network, information technology and communication issues.
The primary objection is network interoperability testing
or, in other words, intranetwork testing. This is a voluntary
effort by the member companies and is funded by the member
companies and the intent is to test components of the public
switched network. It will verify the operation of a multivendor
multicompany environment. It is based on a standard issued by
Bellcore called GR-2945. It is becoming the industry standard
for meeting Y2K requirements for the telecommunications
industry.
As the process continues, each of the companies will
configure its labs to support this interoperability testing.
The basic types of components or services that the testing will
comprise will be emergency services, basic enhanced and
intelligence services, network management services, and data
networks.
For example, we'll be testing 7-digit calling, 10-digit
calling, 800 numbers, operator-assisted completion calls, and
so forth. Testing will be performed for approximately 21
suppliers and 82 network elements and/or management systems.
These configurations represent common deployed
telecommunications capabilities in northern America.
Our goal is to minimize risks of network failures, to
minimize the risk of service interruptions, and to test the
functionality of daytime sensitive operations. This process has
been going on for 1\1/2\ years. We have been spending the last
year organizing and defining these equipment configurations and
the testing schedules. We have been negotiating with each of
the member companies to utilize their laboratories.
We anticipate our testing to begin in the third and fourth
quarter of 1998 and to be done in our analysis by the early
part of the first quarter of 1999.
Some of the company's labs also support some of the
Internet work testing being performed by the Alliance for
Telecommunications Industry Solutions through its national test
committee.
The benefits of our forum is to improve the timeliness of
deploying Y2K ready releases by working with major
telecommunication equipment suppliers. We represent a unified
force in working with companies as Lucent's Northern Telecom,
and so forth, to make sure that we can have early access to
their releases and software, such that we may conduct our
testing and more quickly move them into the public network.
This also reduces the need for each company to test each
configuration by defining this in a common fashion we can
expedite and achieve testing results much earlier than if each
company had stood on its own.
This allows each company to direct resources to other areas
within the company to address other year 2000 issues. The forum
also provides an area to discuss contingency planning on a
joint basis.
In conclusion, the year 2000 is a significant challenge to
business and governments. And a Telco Forum demonstrates the
degree in which our members are committed to being ready for
the year 2000 and sets an example of cooperation within an
industry.
Thank you.
[The prepared statement follows:]
Statement of William O. White, Member, Telco Year 2000 Forum
Chairwoman Johnson and members of the Subcommittee, on
behalf of the Telco Year 2000 Forum, I would like to submit the
following written testimony on its purpose and activities to
address Year 2000 issues in the telecommunications industry.
First, the Forum would like to commend the Ways and Means
Committee for conducting hearings on this critical issue.
Background
The Year 2000 issue is a worldwide concern, which has been
identified by many industry experts as the largest single
project that companies will have to face. Many aspects of
technology will be impacted including a variety of computer
systems, hardware, operating environments and networks.
As the end of the 20th Century approaches, it is becoming
more evident that the Year 2000 will cause problems for some
systems due to the limitation of the date field on some
``legacy'' and other older systems. In a number of these older
systems, the developers used a two-digit year field with the
assumption that the century is nineteen (19). With the turn of
the 21st century the need to differentiate between the 20th and
21st century (19 versus 20) will be required in some
applications.
The Chief Information Officer (CIO) Forum sponsored by
Bellcore has been discussing the Year 2000 issue at its
meetings for some time. The Telco Year 2000 Forum was created
as an outgrowth of these Bellcore CIO Forum discussions. The
Telco Year 2000 Forum was created to focus and share
information on a common, industry wide issue: the potential
impact of the Year 2000 on the telecommunication industry.
Telco Forum Participants
The Telco Year 2000 Forum was formed with participation
from some of the largest U.S. telecommunication companies. The
present participants include the following companies:
Ameritech Corporation
Bell Atlantic
BellSouth Telecommunications, Inc.
Cincinnati Bell Telephone Company
GTE
SBC
Southern New England Telecommunications Corporation
US West Communications Group, Inc.
The Forum has also invited AT&T, MCI, SPRINT and USTA to be
participants in the Forum activities. In addition, it has
invited some of the major telecommunications equipment
suppliers to attend the Forum meetings to discuss mutual
concerns and issues.
The Forum acts as an informal working committee to help
address Year 2000 issues in the telecommunications industry.
Its purpose is to share relevant Year 2000 information. The
discussions are focused on issues exclusively relating to the
technical or operational aspects of the Year 2000 problem. The
intent of the information sharing is to identify potentially
common challenges and solutions to address the Year 2000 issue
and thereby facilitate and accelerate necessary responsive
actions by each of the member companies.
A principal activity of the Forum is to pool and share
testing resources for common network components and to perform
interoperability testing.
Although the companies share relevant Year 2000
information, each company is responsible for its own Year 2000
plan and activities. Each member company has a very detailed
and company specific plan to address its particular Year 2000
issues.
Telco Forum Structure
The Forum meets approximately six times a year (every other
month). Sub-groups are established to focus on some of the
major issues in a more timely and efficient manner. At the
present time there are sub-groups in place to address:
Network issues
Information technology issues
Communications issues
The entire Forum and/or its sub-groups also participate in
conference calls to address specific issues or concerns between
its regularly scheduled meetings
Network Interoperability Testing Initiative
A major initiative being undertaken by the Telco Year 2000
Forum is the Network Interoperability Testing Project. This
intra-network testing initiative is a voluntary project, which
is entirely funded by the member companies to test the network
and various services for Year 2000 Readiness. Its purpose is to
verify the operation of a multi-vendor, multi-company
environment.
The goals of the testing project are to:
Minimize risk of network failures
Minimize risk of service failures
Test the functionality of date/time sensitive
operations
The testing initiative is based on Bellcore's GR-2945 which
has emerged as an industry standard for telecommunications
products for the Year 2000 issue. The participating company
laboratories are to be configured for Year 2000
Interoperability testing to include:
Emergency services
Basic, enhanced, and intelligent services
Network management systems
Data networks
Within these test configurations, a number of individual
services such as 7 digit calls, 1+ 10 digit calls, operator-
handled calls, 800 calls, etc. will be tested and documented.
The test configurations will test the Year 2000 readiness of
approximately 21 suppliers and 82 network elements and/or
management systems. Collectively this equipment represents the
suite of equipment commonly deployed in the network for
Northern America.
The Forum has already contracted with a project manager and
has concluded contract negotiations with an independent testing
laboratory to validate and document the test results. Detailed
schedules are being developed with the member company test
laboratories and the equipment suppliers to test the Year 2000
ready releases. It is anticipated that the testing will be
conducted in the 3rd and 4th quarter of 1998.
In addition to this testing initiative, Forum participants'
laboratories will be used to support some of the inter-network
testing being performed by the Alliance for Telecommunications
Industry Solutions (ATIS) through its National Test Committee
(NTC). The co-chair of the NTC is also a Telco Forum
participant working on the Interoperability Testing Initiative.
This will help ensure that there is a linkage between the two
testing initiatives, which are intended to be complementary.
The benefit of the interoperability testing approach is
that it improves the timeliness of deploying Year 2000 ready
products. It reduces the need for each Company to test every
aspect of every new release and permits each to focus work
efforts on the deployment of Year 2000 ready equipment. As
noted previously, the interoperability testing initiative is a
completely self-funded voluntary undertaking. It will
supplement individual supplier testing and individual company
testing of critical network elements and systems.
In addition to the major interoperability testing efforts
of the Forum, some of the other on-going activities and
accomplishments of the Forum are outlined below.
Other Activities and Accomplishments of Telco Forum
Sharing information regarding best/representative practices
This is the purpose and major activity of the Forum. The
sharing of information on best/representative practices
facilitates and accelerates responsive actions by each of the
member companies. The sharing of information regarding the
approach being used to take responsive action and/or test some
of the ``industry standard'' systems permits individual
companies to focus their resources on company unique systems.
Working with major equipment suppliers
The Forum has met with and/or contacted some major
telecommunication equipment suppliers regarding their Year 2000
Ready Releases. It has worked with some of these suppliers to
improve delivery dates and/or for an earlier testing date on
some of their products. The Forum plans to continue to work
with suppliers to address identified Year 2000 equipment
issues.
Sharing information regarding network products
The network representatives on the Forum have developed an
internal data set of suppliers' Year 2000 ready releases and
their availability dates. This data set contains approximately
93 vendors and 470 network elements. The database is a valuable
resource to help ensure all participants are receiving and
using consistent information regarding Year 2000 product
release and availability dates.
Meeting with various government and industry groups
Forum participants have met with various government and
industry groups to share the Forum's concept and benefits. It
has been useful to demonstrate the cooperative efforts being
undertaken by the industry to help minimize the risk of network
or service failures.
Starting discussions on contingency planning
Although the individual members are responsible for their
own Year 2000 plan and activities, the Forum has recently
started discussing the issue of contingency planning. Also,
since GTE has a close affiliation with the Canadian
telecommunications industry, it has been able to share some of
the contingency planning concepts being used there. It is
expected that the issue of contingency planning will be
addressed in greater detail in the months ahead.
Conclusion
The Year 2000 issue represents a significant challenge to
business, its customers, and the government. As noted at the
outset, it is a worldwide concern, which has been declared by
many industry experts as the largest single project that
companies will have to face. It requires cooperation within
industry and across industry boundaries. It also presents an
opportunity to work with others on a common issue. The Telco
Year 2000 Forum is a cooperative effort governed as a limited
liability corporation actively working to address the Year 2000
issue in the telecommunication industry.
Chairman Johnson of Connecticut. Mr. White, you've invited
AT&T, MCI, Sprint, and USTA to be participants in the forum and
a number of suppliers as well, why have these four major
telephone companies not participated?
Mr. White. AT&T was a member for approximately 1 year,
withdrew last fall, and I'm unable to comment on their reasons
for withdrawing. Comments like Lucent have been very
cooperative attending a number of our meetings and presenting
their status, and we've had ongoing discussions with USTA.
Chairman Johnson of Connecticut. Is the Bellcore GR-2945
that you say is emerging as an industry standard, is that a
divisive development?
Mr. White. It's a document that was developed in late 1996
that provides the requirements for the network equipment to be
year 2000 compliant. It is the specifications provided to the
industry vendors.
Chairman Johnson of Connecticut. And are the other
companies, whether they're in this group or not in this group
using that as their standard?
Mr. White. I know for a fact that Lucent is and most of the
equipment suppliers to the forum have adopted that and are
complying with that standard.
Chairman Johnson of Connecticut. Mr. Pasqua, could you
comment?
Mr. Pasqua. Yes, we are using that standard, for one. The
question about AT&T being in the Telco Forum are not--the
gentleman is correct. We chose not to continue participation in
Telco Forum. For what it's intended to do we think it's an
excellent forum for its membership. It's primarily focused, if
I could characterize it, on intranetwork testing. Mainly,
testing the components that make up the network, as the
gentleman indicated.
We're doing that anyhow at AT&T. We have the wherewithal,
as I mentioned in my submission, to independently test all of
our vendor products in our test environments with our test
suites, ways that we use those products to assure ourselves and
our customers that those components are compliant, and if
they're not, to get a supplier that does have compliant
components.
So the benefit to AT&T to participate in this joint testing
of components was not significant. Rather, we're focusing our
attention, to build on the Telco Forum when that's completed
its testing, on internetwork testing. We think that's the
critical testing and testing that's required, not only between
AT&T, but the other players in our industry, not only
domestically but internationally. That's why we're focusing our
attention there.
Chairman Johnson of Connecticut. And are the standards you
are using the same standards as they are using?
Mr. Pasqua. Yes, they are.
Chairman Johnson of Connecticut. And what influence has
this had on the development of international standards? This
level of agreement among American companies?
Mr. Pasqua. I believe these standards are being reviewed by
standards bodies like the ITU for consideration on the
international front. But, you'd have to speak to the ITU
representatives as to what the status of that is.
Chairman Johnson of Connecticut. Does it concern you that
there are not yet any international standards?
Mr. Pasqua. No, there is still time. It's not a time to
panic. There is time to be successful with Y2K. I think we're
well beyond the awareness stage. I think most corporations,
certainly domestically, are making the investment in terms of
critical skills, dollars, resources and priorities to get Y2K
on track. I think the initiatives we've launched with the ITU
and other correspondent relationships that we have are making
great progress in defining test plans and to ensure that
compliancy will be in time for us to implement those standards.
Chairman Johnson of Connecticut. And are the standards, for
instance, that have emerged in Canada and the United Kingdom
such that they are similar to these standards? And, am I
offbase in assuming that if you're all using the same
standards, it's more likely that we'll have interoperability or
are they unrelated?
Mr. Pasqua. This is perhaps, giving it more time than it
might deserve. We are talking standards for compliancy. It's
pretty simple, at least to my simple brain. You have to have
your system work before, during and after the millennium
change. Millennium change may not be for your system 12/31/99.
It may, in fact, occur earlier in 1999 because you're running a
system that has transactions that will span a year.
To make sure that your system works before, during, and
after, we know how to do that. We have regression tests and
we've supplemented our regression test suites with specific Y2K
scenarios running certain dates. For instance, 12/31/99, 1/1/
2000, 1/3/2000--the first business day of the new millennium;
2/28 and 2/29 because as you know, the year 2000 will be a leap
year because it's divisible by 400.
So there are some unique Y2K scenarios, if you will, that
we will supplement our existing regression tests to ensure this
thing works before, during, and after the millennium change.
Chairman Johnson of Connecticut. Ms. Guthrie, could you
comment on this issue of standards and the national and
international acceptance of standards and the implications for
interoperability?
Ms. Guthrie. Yes. I would agree that the actual test
execution is fairly simple. It's not too much of an issue.
There are some issues with international standards. We're
obviously a global company. We find that Europe especially, is
lagging a little behind in their Y2K compliance. They tend to
be more focused on the Euro, and because of that, their
standards aren't in place immediately. It would be helpful to
have international standards.
Chairman Johnson of Connecticut. Could you elaborate on the
portion of your statement that says the second rule of thumb is
to anticipate and prepare for the cascading effect when a
single Y2K noncompliant application impacts other interfacing
applications or devices. It sound to me like you know a lot
about devices; you know a lot about testing; and why is there
such a fear of cascading?
Ms. Guthrie. Well, it's very easy to look at the set of
things that you think are on the table when you look at Y2K
compliance. You may have to make a change with one component
which then won't run with another component. You have to track
these things all the way back to the root, and it's a very
interesting problem. Some of the products, they're not there
yet, or they haven't been completed, so you don't know exactly
what they'll run with.
So when you put together a baseline plan to do your Y2K
compliance, you have to not only look at the things right
before you, but the next level back.
Chairman Johnson of Connecticut. And how much do we know
about the things that are not compliant? About how many
products are there that are not yet compliant and what is the
timeframe for those products to be compliant?
Ms. Guthrie. Let's see, we're learning more everyday. I
think that from a telecommunications only perspective, it's not
such a difficult problem. I think that the real trouble will be
when we do or don't do the end-to-end tests because the
environment's not available. There will be a tremendous
opportunity for fingerpointing because not all of the system
components will work in concert with one another.
I guess the easy analogy is that most of us have tried to
print something off our computers and had the printer not work.
We spend an inordinate amount of time trying to figure out
whether it was the connectivity between the computer and the
printer or it was the printer problem, whether it was an
application problem, or whether it was user error. And those
are the kinds of problems that end-to-end tests should help us
find early. If we don't have an opportunity for end-to-end
tests, there are liable to be a lot of small problems that
require a lot of time and effort and are very costly to find
that probably have nothing to do with telecommunications, per
se. But it will be difficult to discern the difference between
an applications compatibility issue and a telecommunications
issue.
Chairman Johnson of Connecticut. I'm going to yield to
Congresswoman Thurman.
Ms. Thurman. Thank you, Madam Chairman. I apologize for not
being here for all of the testimony.
This is probably not a question that private industry
always likes to hear, and to say that here, we're with the
government and we're here to help, but as folks are involved in
this, and listening to GAO and listening to the Commissioner:
What do you see as our role in this process within the private
sector as far as--I think, Ms. Guthrie, what you were talking
about earlier, it's not only what you're doing but what's going
on beyond that with those people that will integrate into your
system--what can we do to help this process? Or is it best for
us to just stay out of it totally? I mean, I don't know.
Mr. Pasqua. I think, you can obviously help keep awareness
up as to the nature of the problem. I think you can help by
sorting through--what we call, the chaff from the hard bodies--
sorting through what the facts are regarding where we are and
what remains to be done as opposed to sometimes the claims as
to where we are. My experience has been, at least in some
areas, the claims are not as positive as reality.
But doubling back to a previous question: How much do we
know about our supplier products? AT&T has over 4,000 products
supplied from outside suppliers. We either have the compliant
product and have integrated it into our system or we're testing
it or we're about to get it in a timeframe that's consistent
with our overall program milestones.
The reason that's true, is that suppliers that wouldn't
give us the information have been replaced. So, along that
front, are we declaring victory? Absolutely not. But we have a
handle on the problem. We have the data we need to be
successful.
But I think the other things that I mentioned and some of
the other speakers mentioned about the support with the ITU, a
part of the UN, the NRIC, the advisory board we could meet
perhaps, and I know my colleague from GTE supports this. We
could meet on a quarterly basis or as frequently as the FCC
would deem warranted to share progress on our Y2K plans against
our baseline plan, to share lessons learned and barriers that
we may be having that perhaps, the government can help us with.
So there are things, but they are so obvious, I shouldn't have
taken this much time.
Ms. Thurman. But none of those things are happening now?
Mr. Pasqua. No, I think they are happening now. If I could,
in the spirit of candor, mention a point, however, we need to
keep working with the Federal agencies and regulators--I'll
speak for AT&T--and share information on a regular basis. If
there would be a way to facilitate, to coordinate that dialog,
that ongoing status reporting in a focused way to minimize
responding to--and this is a future potential--responding to
the same questions again that we've responded to another agency
or another group, that would be very helpful.
I don't know if that's something I should say here, but
that would be helpful for all of us.
Ms. Thurman. We asked the question, we want an honest
answer.
Mr. Pasqua. Thank you.
Ms. Thurman. Anybody else?
Mr. Bennett. Also, continuing to press the need to move
quickly. As I mentioned we feel that there are enough resources
to manage the problem to make sure that our customers have what
they need. But as time moves on, if there is an action, really
this year, then you start to run out of the ability to support
and that's when we get into real trouble. So I think,
encouraging moving now is very important.
Ms. Thurman. Mr. Baker.
Mr. Baker. I think your keeping the awareness up and
keeping panels like this is also very important. But some bad
things can happen if we get down the road where the media plays
year 2000 and it's the movie of the week, and we want this on
the Learning Channel, the Discovery Channel, not Jerry
Springer, I think the efforts in that area, because there is a
lot of uncertainty out there. And clearly the people
representative at this table and the companies I've talked to
have not been asleep at this wedge for 2 years. They have
senior people with a roadmap compliance and adequate time for
tests.
There's a lot of uncertainty out there and across the
board, the large companies that I speak to, they're not worried
about themselves so much, it's about the other guy. We're
worried about the other guy. Something that they are not
visible, down in the food chain that comes up and then it bites
them.
I think there's a lot of positive things going on but it
needs to be increased. It's the very last and we've got
something to do about it, and I think that's a very important
part of this. In the United Kingdom, Tony Blair has put his
country on an emergency footing. Clearly, I think the
discussions inside the beltway in Washington are going to stop
real quickly asking the question: Will your mission-critical
systems be compliant in time?
Some probably will not. The shift has to go to contingency
plans to work around to minimize the impacts, and I think
that's an important thing to keep in mind.
Ms. Thurman. Can I take this one step further? Because all
of you are making that point that we need to be focused. We
need to have these things happen. We need to make sure these
things are happening. Are there incentives, penalties or
anything that you see that we should be looking at for those
that are not? I'm just curious. I mean, sometimes, the Chairman
has been working for years on trying to get compliance with the
IRS just to be able to do electronic filing and we end up
backtracking every other year, that well, we're going to now
just worry about this group, and then we'll worry about this
group, now, we find out that it's going to save millions of
dollars and just easier for everybody. Somebody was saying we
put in some penalties or we might say, give them some
incentives.
Are there some things that we should be looking at in that
direction?
Mr. Baker. Well, I could give you a few examples of some
things that just happened in the last week actually, that
proved to be some pretty positive steps.
Back to our friends up north in Canada, they figured out
slowly and we probably will here too, that the impacts are
going to be to the smaller companies that don't have the senior
vice president in charge or a year 2000 staff or an IT budget.
Companies like that were recognized to give them an incentive
for information technology upgrades, computers, and things like
that they buy because of the year 2000. Small and medium
companies were given some tax credits. That was very well
received. That just happened in the last 3 to 4 days, I
believe. And that's across the country to Canada and we failed
to break any news on that.
I think we're going to have to get involved in the
liability question. That's going to have to come up. You hear
the figures that are out and unbelievable. Some people are
saying that the corporate lawyers are saying, show me the
carcass to feed from. We can't let that happen. That's why our
visibility, I think, ma'am, is shallow in a lot of areas
because of liability. It's not the fact that they don't want to
show their hands, it's the liability question. I think you
ought to get involved in this Subcommittee with that issue this
year.
Ms. Thurman. Well, I thank you for your openness. I
appreciate it. Thank you.
Chairman Johnson of Connecticut. Thank you. That is a
question I wanted to turn to. Ms. Guthrie brought up the
liability issue. I have heard that the legal profession is
already offering workshops on how to sue whom if there are
problems. I am very concerned about the statements you made in
your testimony, Ms. Guthrie, regarding the reluctance of
companies to certify because they can only certify the
performance of their own equipment and they can't certify the
performance of their equipment's interoperability with other
equipment.
So would any of you like to comment further on the
liability issue and what we need to do to fix it? What is it
that's needed? Would you like to answer in writing?
Mr. Pasqua. I could make a comment on that. We're from the
school just tell the truth and get on with it, especially when
we have a global situation. This is, and I know it sounds trite
and obvious, it's the most unique project we've ever
experienced in our lifetime. That's why I volunteered to take
over this role. Because it's one program you can't debate
whether it's deferrable, and we can't slip the date. That gets
us through a lot of issues that tend to trip us up.
There are certain contractual arrangements we have with
some of our suppliers built into the contracts that say,
information that you develop by testing our product, you cannot
release that to the public unless you have our approval in
advance. Tell us, so we can fix it. So, those contracts have to
be honored.
In terms of public disclosure, with that one exception to
the rule of what we're doing at AT&T, we're now coming out,
bigtime, on announcing what we're doing, how we're doing it,
where we are, where we want to be. We have an external Web site
now and plan on substantially improving it with score cards
showing where we are. I must sign 100 to 200 customer letters
and inquiries a week responding to customers as to where we
are. I meet with customers, and my other colleagues at AT&T
meet with customers on a daily basis, in large groups and small
groups trying to share not only where we are as a supplier, but
our approach and our technique because maybe they can benefit
from it in improving their Y2K program.
And similarly, in some cases, they share their Y2K program
approach with us and we will steal shamelessly to improve our
program. So it's a collective benefit.
Chairman Johnson of Connecticut. Ms. Guthrie--I'm sorry.
Mr. Bennett.
Mr. Bennett. We've been asked to participate through the
Special Assistant of the President on some legislation comment
we've done. We also recognize if we work with our customers
that there may be a need for such legislation. We're still
monitoring and watching it.
But importantly, we've been sharing information with our
customers all along and will continue. In particular, sharing
information about the impact of our products that aren't Y2K
compliant, our test plans, and summaries about our test results
are the data that we are passing. So, we haven't seen a need to
change laws in that case to be able to pass that information.
And our intent is to continue to share that information with
our customers as we move forward.
Chairman Johnson of Connecticut. Mr. Baker, would you like
to comment further?
Mr. Baker. Say it again, Ms. Johnson?
Chairman Johnson of Connecticut. Would you like to comment
further, share your level of concern, and why you think it's
going to be such a big problem?
Mr. Baker. On liability and what that's going to be. Well,
the way you look at it. A couple of States, and you're probably
aware of this, have put Y2K in an act of God category. Nevada
has done that and there are several others that are looking at
that. Real danger flags come up when you see something like
that. That's a real incentive not to do something. Hopefully,
that's not going to catch on.
It's hard for people to come out into the open to talk
about Y2K because of liability. That's why you don't see a lot
of CEO's raising their hands and coming to Washington to talk
about their 3-year program and the millions and millions of
dollars spent on it.
I will comment that AT&T is one of the very companies that
actually have an external Y2K Web site. What a breath of fresh
air it is to see something where someone's interested in the
company, or a shareholder in the company, and you can actually
ask questions and you can get answers back. I've tried it and
it actually works. Things like that really would help and be a
real incentive to get through the liability issue. The more
disclosure the better. It's a real positive thing to down play
the liability question, itself.
Chairman Johnson of Connecticut. So, you think it would be
in the interest of companies as well as in the interest of the
level of awareness in the business community and in society as
a whole if everybody were very open about the information?
Mr. Baker. Oh, absolutely, I think so. I think there's a
potential, talking about the stock market, to drive people out
of the market. I think there's a logic trail we can follow
here. Where there is uncertainty because of the lack of
disclosure on Y2K, it would drive people away from the market.
Where there is disclosure and openness about it, I think that
confidence, that shareholder confidence, would clearly be there
and the liability will go to small L, rather than a large L.
Disclosure and the cooperative efforts are positive things
because the shareholders and the public out there sure are
interested in this.
Before the media gets hold of it and puts a bad spin on it,
we have the opportunity now to start initiatives and to get the
word out. Start in open forums to bring confidence up, and then
you'll see liability be a much smaller issue I think, at the
end of the day.
Chairman Johnson of Connecticut. Mr. Pasqua.
Mr. Pasqua. Madam Chair, I have one followup cautionary
note I'd like to add though. That is, some of this information
needs to be analyzed and used carefully. I can tell you I've
tested a product and it's compliant, you can assume it's
compliant. I don't have to test it, you don't have to test it
in your environment and be lulled perhaps into a false sense of
security because my tests were not as extensive as your tests,
my test environment, my test scripts, our different use of that
same technology. So we have to be guarded in terms of is there
really a silver bullet here?
Chairman Johnson of Connecticut. I guess that's why I was
so interested in this issue and standards. And perhaps, I'm
hearing your testimony on the issues of standards as somewhat
more definitive and assuring than perhaps I should.
Mr. Pasqua. Yes, standards give guidelines for defining
what is compliance and the types of test scenarios or cases you
should consider using. We don't consider those spelled out test
cases sufficient. We do additional testing than what the
minimal standards suggest, and that's a local call by an
individual business and group as to what's really your
priorities, how are you triaging, what are your business
processes, what's important to your customers--and so forth.
So standards is a start but it's not the definitive end of
specifying every test case that you need to run.
Chairman Johnson of Connecticut. Well, I appreciate that.
But certainly, when we set standards in any area it's just to
advise its positions or technology or certify any level of
capability. There is sort of a general level at which you
determine everyone must reach. And above that there are
additional levels, but would you say, Mr. White, that the
standards that have been generally agreed to in your group are
specific enough so that if a company uses them or if they say
they meet those standards, that should give it some confidence?
Mr. White. Yes, they should. But they do go through and
specify the types of dates and the type of test scenarios and
requirements that go along with that. However, if you take a
look that maybe on a component-by-component basis, if I go and
take 10 components and put them together, that's where you have
to take a look at the usage. So, the gentleman from AT&T is
correct. That's where you start and that does provide a high
level of assurance within the telecommunications----
Chairman Johnson of Connecticut. And so, do we have no
standards that govern the use of a number of different
components?
Mr. White. There are standards on how the network is
actually put together, what elements talk to another.
Chairman Johnson of Connecticut. Are the standards well
enough to go up so that you could say anything that has met
these standards that there would be a presumption of innocence
on liability?
Mr. White. I wouldn't be able to comment on the liability
issue within the Telco Forum, that we have been working on the
last 6 months is not just the tests per component, but the
actual complete integration of those components and how we want
to test those integration--those connection points--just to
ensure ourselves as we went through each level of componency
testing and that passed, then we add all the pieces back
together. So we have taken the standard as a foundation and
gone well beyond that.
Chairman Johnson of Connecticut. Ms. Guthrie, would you
comment on this?
Ms. Guthrie. Yes, I think that all the standards that are
available today have problems with them. You can get products
that meet standards and yet, they don't interface properly. So,
yes. It would be beneficial if there were strong standards
about Y2K. But I think that interoperability and end-to-end
testing will still be required because there is no standard
that's going to be sufficient to assure that you have an
interoperable system just because you've worked off----
Chairman Johnson of Connecticut. But how can you hold that
individual producer or provider of service liable for the
affects of interoperability when really all they can do is test
their components and systems and the product within a certain
point within their system.
Can we define the level of accountability that individual
producers of parts and systems and providers of services should
be accountable for, recognizing that then as things are
integrated, we are going to have problems? And there are going
to be failures. I don't see any way that you can move into
this, the interlocking of this repaired, accommodated, adjusted
system as we must deal with, and imagine that you won't have
some glitches.
So, if you're going to get people out there doing the very
best job they can to avoid glitches, I think, we are going to
have to begin thinking about what is any one company liable for
and what's the state of the art that we can hold people for? We
can't hold people liable for things they have no control over.
Would you say, Ms. Guthrie, that you could actually define
those levels?
Ms. Guthrie. No, I'm not saying you can. System development
is an arena that still has a lot of problems associated with
it. There are many programs that have had difficulties because
of these very many issues. And to mandate a set of standards
that allows you to take an installed legacy base and make
modifications across the board in this very short timeframe and
have no glitches is not reasonable.
What's important is that everyone work together to try to
resolve the issues and be open and communicate so that there's
not a withholding of information.
Chairman Johnson of Connecticut. And yet, you say that the
threat of litigation is currently an impediment to full
cooperation. That's certainly the impression I got from Mr.
Baker. It is also the comment that people walk up and make at
home after the formal discussion of these issues.
Ms. Guthrie. Yes, it very much is. And I think that we're
seeing it more in our commercial business rather than in our
government business. We're seeing companies pull back from Y2K
conversion----
Chairman Johnson of Connecticut. But you can't sue the
government? It's real easy.
Ms. Guthrie. Well, yes. And there's still a question about
how will government respond to their vendor base when Y2K
issues do arise, because they will arise. I think that it's
better understood how commercial companies are going to
respond. But we need the openness to solve the problems.
Chairman Johnson of Connecticut. Well, I don't want to beat
that issue to death, but I do offer to you the opportunity to
put any comments you may have in writing. We will treat them
confidentially. I am convinced that this is an area we are not
getting the input we need for a lot of very good and logical
reasons and I have talked to a number of other Committee
leaders about this and it only stands to reason, and I was
truly horrified to hear the legal profession is already holding
workshops on how to go about this.
So, we can only damage ourselves as an economy and a
community and a market if we expend our resources in that
fashion over this problem which is far beyond the dimensions of
any problem we have ever been confronted with. It's far beyond
the capability of any one company, or any individual, or
bureaucracy to handle. And if we do to ourselves in Y2K what we
did to ourselves in Superfund--because we've done this before--
in the Superfund. We wrote a law that penalized people and held
them liable for things they could not have known and for
abiding by standards that actually, we set.
So totally irrational things can happen intentionally. And
we've seen that. So, I'm very concerned about the possibility
through, in a sense, neglect and an unwillingness to face the
seriousness of this aspect of the problem we could create for
ourselves an extraordinarily costly and diversionary sector of
the economy--of economic activity. So, I am very concerned
about it. I will treat your comments respectively and assure
that they will be treated with confidence unless we decide to
go ahead, and then we would check with you. But, we do need
input. I can tell you that.
Last, Ms. Guthrie, do you think the Treasury in the IRS
have sufficient in-house expertise in telecommunication
technology to be able to assess and implement the solutions to
their problems?
Ms. Guthrie. No, and that's why they're using their
contractor base.
Chairman Johnson of Connecticut. And is their use of their
contract base broad enough now to give you some confidence they
will be able to succeed?
Ms. Guthrie. Let's see. They are starting to involve their
contractor base. I believe the new Commissioner of IRS has
taken some fairly aggressive steps to work Y2K. He's very
focused on it and we're pleased with what he's doing.
Chairman Johnson of Connecticut. I am too. I am very
impressed with what he is doing and I want to know from your
point of view as an insider in that operation, whether you
think it is as strong as it needs to be. And I hear the answer
to that is yes.
Ms. Guthrie. Yes.
Chairman Johnson of Connecticut. Mr. Bennett and anyone
else who might like to comment very briefly: Do you think that
private sector is going to be capable of delivering in an
adequate and timely fashion telecommunication components to
allow their installation throughout the many levels of the
system that we have, in a timely fashion, both public and
private sector to renovate the networks? I'm sorry that was
sort of a backhanded question.
Mr. Bennett.
Mr. Bennett. Sure. First, I do believe that resources are
available both from us, Lucent, as a manufacturer, but I
believe from the other manufacturers as well, to solve the Y2K
problem. What I'm concerned most about is getting it done
quickly because as we kind of push this bough wave--if I can
use the term--forward through the year, all of it becomes much
more difficult. So the issue is to move quickly and to get what
needs to be done now.
As I work with the Telco Forum and others, I see that
happening.
Chairman Johnson of Connecticut. Time is certainly of the
essence and it's one of the reasons why we've been holding this
hearing and some of the other Committees have to try to give
the kind of focus and pressure that will develop a greater
urgency.
But last, let me just ask you whether or not, through your
contacts and experience out there in the private sector,
whether you are concerned about compliance in the small
business sector. You heard me quote earlier the CRS report that
says ``80 percent of small businesses will probably experience
some failure.'' They're defining small as under 2,000
employees. So, that's extremely concerning to me. What do you
see in terms of business compliance out there?
Mr. Bennett. Based on the information we provided to the
FCC, for example, with the Lucent products rollover, half of
our products as we began our process of making sure Y2K was
ready--our products were ready--we're already there, over half
of the products. So, I am a little surprised by the numbers
that I heard earlier today.
As we move forward making many of our products, the
majority them now ready, I am surprised as I heard the numbers.
So, I don't have any basis to support the numbers I heard
earlier. I believe we're moving better than that. But I don't
know from which basis they drew their----
Chairman Johnson of Connecticut. Anyone else have any
comment on that?
Mr. White.
Mr. White. I think what Commissioner Powell's alluding to
always needs to be asked is: ``80 percent of the businesses may
experience a year 2000 problem, what kind of problem will they
experience?'' If they have a file that they print that's got
the wrong date at the top of the paper, is that of significant
consequence to the business versus a more significant one that
they can't produce bills to send out to their customers? So, I
think that's always the key question to ask any analyst who
touts very large numbers is to break that answer apart into
multiple categories.
Chairman Johnson of Connecticut. Well, thank you very much
for testifying before us today. I appreciate your input and I
invite your follow-on comments on any aspect of these problems
that you might observe in the coming weeks ahead.
Thank you very much.
This hearing is adjourned.
[Whereupon, at 5:15 p.m., the hearing was adjourned subject
to the call of the Chair.]
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