    [House Hearing, 106 Congress]
    [From the U.S. Government Publishing Office]

                      THE NTIA REAUTHORIZATION ACT OF 1999

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

                                    HEARING

                                   before the

                      SUBCOMMITTEE ON TELECOMMUNICATIONS,
                         TRADE, AND CONSUMER PROTECTION

                                     of the

                             COMMITTEE ON COMMERCE
                            HOUSE OF REPRESENTATIVES

                           ONE HUNDRED SIXTH CONGRESS

                                 FIRST SESSION

                                   __________

                                  MAY 11, 1999

                                   __________

                               Serial No. 106-55

                                   __________

                Printed for the use of the Committee on Commerce

                        ------------------------------

                        U.S. GOVERNMENT PRINTING OFFICE
    56-610CC                    WASHINGTIN : 1999

                             COMMITTEE ON COMMERCE

                         TOM BLILEY, Virginia, Chairman

    W.J. ``BILLY'' TAUZIN, Louisiana     JOHN D. DINGELL, Michigan
    MICHAEL G. OXLEY, Ohio               HENRY A. WAXMAN, California
    MICHAEL BILIRAKIS, Florida           EDWARD J. MARKEY, Massachusetts
    JOE BARTON, Texas                    RALPH M. HALL, Texas
    FRED UPTON, Michigan                 RICK BOUCHER, Virginia
    CLIFF STEARNS, Florida               EDOLPHUS TOWNS, New York
    PAUL E. GILLMOR, Ohio                FRANK PALLONE, Jr., New Jersey
      Vice Chairman                      SHERROD BROWN, Ohio
    JAMES C. GREENWOOD, Pennsylvania     BART GORDON, Tennessee
    CHRISTOPHER COX, California          PETER DEUTSCH, Florida
    NATHAN DEAL, Georgia                 BOBBY L. RUSH, Illinois
    STEVE LARGENT, Oklahoma              ANNA G. ESHOO, California
    RICHARD BURR, North Carolina         RON KLINK, Pennsylvania
    BRIAN P. BILBRAY, California         BART STUPAK, Michigan
    ED WHITFIELD, Kentucky               ELIOT L. ENGEL, New York
    GREG GANSKE, Iowa                    THOMAS C. SAWYER, Ohio
    CHARLIE NORWOOD, Georgia             ALBERT R. WYNN, Maryland
    TOM A. COBURN, Oklahoma              GENE GREEN, Texas
    RICK LAZIO, New York                 KAREN McCARTHY, Missouri
    BARBARA CUBIN, Wyoming               TED STRICKLAND, Ohio
    JAMES E. ROGAN, California           DIANA DeGETTE, Colorado
    JOHN SHIMKUS, Illinois               THOMAS M. BARRETT, Wisconsin
    HEATHER WILSON, New Mexico           BILL LUTHER, Minnesota
    JOHN B. SHADEGG, Arizona             LOIS CAPPS, California
    CHARLES W. ``CHIP'' PICKERING,
    Mississippi
    VITO FOSSELLA, New York
    ROY BLUNT, Missouri
    ED BRYANT, Tennessee
    ROBERT L. EHRLICH, Jr., Maryland

                       James E. Derderian, Chief of Staff

                       James D. Barnette, General Counsel

          Reid P.F. Stuntz, Minority Staff Director and Chief Counsel

                                     ______

       Subcommittee on Telecommunications, Trade, and Consumer Protection

                   W.J. ``BILLY'' TAUZIN, Louisiana, Chairman

    MICHAEL G. OXLEY, Ohio,              EDWARD J. MARKEY, Massachusetts
      Vice Chairman                      RICK BOUCHER, Virginia
    CLIFF STEARNS, Florida               BART GORDON, Tennessee
    PAUL E. GILLMOR, Ohio                BOBBY L. RUSH, Illinois
    CHRISTOPHER COX, California          ANNA G. ESHOO, California
    NATHAN DEAL, Georgia                 ELIOT L. ENGEL, New York
    STEVE LARGENT, Oklahoma              ALBERT R. WYNN, Maryland
    BARBARA CUBIN, Wyoming               BILL LUTHER, Minnesota
    JAMES E. ROGAN, California           RON KLINK, Pennsylvania
    JOHN SHIMKUS, Illinois               THOMAS C. SAWYER, Ohio
    HEATHER WILSON, New Mexico           GENE GREEN, Texas
    CHARLES W. ``CHIP'' PICKERING,       KAREN McCARTHY, Missouri
    Mississippi                          JOHN D. DINGELL, Michigan,
    VITO FOSSELLA, New York                (Ex Officio)
    ROY BLUNT, Missouri
    ROBERT L. EHRLICH, Jr., Maryland
    TOM BLILEY, Virginia,
      (Ex Officio)

                                      (ii)

                                C O N T E N T S

                                   __________
                                                                       Page

    Testimony of:
        Crawford, Kenneth C., Director, Oklahoma Climatological
          Survey, University of Oklahoma.............................    66
        Irving, Hon. Larry, Assistant Secretary for Communications
          and Information, Department of Commerce....................     6
        Miller, Harris, President, Information Technology Association
          of America.................................................    52
        Rogers, James A., Retired Representative, United Parcel
          Service....................................................    60
        Ross, George E., Assistant Inspector General for Auditing,
          Department of Commerce.....................................    42
        Skinner, Colonel Richard W., Assistant Deputy Secretary of
          Defense, Space and ISR Programs, Department of Defense.....    48

                                     (iii)

                      THE NTIA REAUTHORIZATION ACT OF 1999

                                  ----------

                             TUESDAY, MAY 11, 1999

                  House of Representatives,
                             Committee on Commerce,
                        Subcommittee on Telecommunications,
                                Trade, and Consumer Protection,
                                                        Washington, DC.
        The subcommittee met, pursuant to notice, at 2 p.m., in
    room 2123, Rayburn House Office Building, Hon. W.J. ``Billy''
    Tauzin (chairman) presiding.
        Members present: Representatives Tauzin, Deal, Shimkus,
    Pickering, Markey, Luther, and Dingell (ex officio).
        Also present: Representative Upton.
        Staff present: Mike O'Rielly, professional staff member;
    Cliff Riccio, legislative clerk; and Andy Levin, minority
    counsel.
        Mr. Tauzin. The Subcommittee on Telecommunications, Trade
    and Consumer Protection will please come to order. I would like
    to thank you all for being here for the hearing on the NTIA
    Reauthorization Act of 1999.
        This hearing is an opportunity to take a look at a
    discussion draft of legislation that tries to help reform NTIA
    to be more efficient and better equipped to handle the better
    changing world of communications.
        NTIA is a small Agency within the Department of Commerce.
    Some of the NTIA's core functions include serving as the
    President's principal advisor on telecommunications matters--I
    thought the Vice President did that--signing and managing
    spectrum for Federal users, representing the United States on
    telecommunications trade matters, and NTIA also administers two
    active Federal grant programs.
        Congress last authorized the agency 7 years ago, and this
    committee held a hearing on the agency's reform 2 years ago.
    Let me say at the outset that I believe this discussion draft,
    which all of you have received and focused your testimony on,
    is just that, a discussion draft upon which we hope to base
    some dialog. And I want to thank the members who worked very
    hard to make this possible--Mr. Upton, Mr. Deal and Mr. Shimkus
    in particular--and offer to them again the assistance of the
    Chair in coming to some agreements on the bill.
        The NTIA Reauthorization Act of 1999 will be introduced in
    the House soon, and changes between now and then could reflect
    the exchange that we have today. If there are problems that you
    have with the discussion draft, now is the chance to make them
    known and to suggest changes as may be the case.
        The draft does several things. First, it authorizes
    appropriations for NTIA operations. It was therefore imperative
    to have its head of operations, my good friend, Larry Irving,
    here to discuss the entire draft as well as the overall reform
    effort.
        Second, it deals with the spectrum management function of
    NTIA. We have an opportunity to hear from a representative of
    the Department of Defense to talk about something other than
    Kosovo, to talk about the spectrum management of NTIA and how
    his agency as well as representatives from UPS will discuss
    with us how spectrum management by NTIA actually aids the main
    competition to their business and serves the agencies for whom
    it is designed to serve.
        What the draft does is to statutorily require NTIA to
    receive full reimbursement from the other Federal agencies for
    the spectrum management duties that NTIA performs. A very
    important issue of spectrum management reimbursement or lack
    thereof has been an ongoing problem, and even though NTIA has
    improved on this, right now the other agencies will only pay
    about 80 percent of what they owe. I wonder how the IRS would
    react if you or I decided to pay 20 percent less in taxes this
    year and claimed there is just no way that I can give you the
    rest, so do without it.
        The discussion draft sets up a mechanism to find the value
    of the lab in Boulder, Colorado and see if there is an interest
    in the lab's purchase.
        Fourth, the draft establishes a road map for the future of
    NTIA. The draft requires GAO and the Inspector General, who is
    represented here today, to conduct studies into the long-term
    efficiency of the agency and, in turn, for NTIA to report to
    Congress its final plan for reform. It is important to note
    that the discussion draft does not mention the grant programs
    that operate under NTIA, its largest expenditure in the area of
    largest controversy.
        It is my hope that this hearing should examine whether
    these programs are already allocated on similar programs in
    other Federal agencies. If my memory serves me correctly, it
    was Chairman Bliley who mentioned in our last hearing on this
    issue that there is evidence of grants given to entities who
    compete against private firms. This issue is one certainly we
    ought to review today. At the very least, there is room for
    improvement in this area.
        At the end of the day, the American public and this
    subcommittee will be more educated on the question of whether
    targeted reform of NTIA is necessary, justified, and beneficial
    to American taxpayers. I want to thank the witnesses here
    before us in advance and look forward to their testimony.
        The Chair is now pleased to recognize the ranking member of
    the full Commerce Committee, the gentleman from Michigan, Mr.
    Dingell, for an opening statement.
        Mr. Dingell. Thank you, Mr. Chairman. I commend you for
    holding this hearing and appreciate the fact that we are going
    into the question of the reauthorization of NTIA which has not
    for some time been reauthorized. The agency has been acting
    without express authorization since 1994, and I commend you for
    your efforts to remedy that unfortunate situation.
        Mr. Chairman, I believe you join me in supporting the
    important functions that NTIA reforms. It is a well-run agency,
    thanks in good part to the fine leadership of Larry Irving who
    was associated intimately with this committee over the years.
    When writing legislation, the committee often calls upon NTIA
    to conduct studies and make telecommunications policy
    recommendations. We rely on that agency because it has a well-
    deserved reputation for conducting balanced and thorough
    reviews.
        In fact, NTIA was recently tapped by this committee to
    perform an important study on the impediments to cable TV
    competition in rural markets. You, Mr. Chairman, were quite
    forthright in explaining to the reporters why the committee
    made that selection. You said, ``There is confidence in this
    committee with the NTIA that does not extend to the FCC.'' I
    wonder why it is this committee does not hold such high
    enthusiasm for the FCC, but certainly I understand why it is
    that we approve of the activities of NTIA. And I certainly
    can't agree with you more.
        For that reason, Mr. Chairman, I am somewhat troubled by
    the so-called discussion draft now being circulated. I hope
    this draft is merely a first cut made by the staff, because it
    contains some apparent serious defects. First, it contains no
    funding for the Telecommunications and Information
    Infrastructure Assistance Program, or the TIIAP. TIIAP is
    arguably the most effective information technology grant
    program available today. The program provides seed money for
    nonprofit groups for the best and most creative projects that
    might otherwise never get off the ground. It is a tremendous
    success story that has touched community-based organizations
    all over the country, many no doubt in districts served by
    members of this committee. Congress has consistently
    appropriated funds to this program for each of the past 5
    years, and certainly there is no evidence to suggest that such
    funding should be curtailed.
        My hope, Mr. Chairman, is that the elusive TIIAP program
    was a simple oversight in the drafting process, and that matter
    will be corrected.
        Second, the draft contemplates sales of NTIA's research lab
    in Boulder, Colorado to a private entity. Privatization on many
    occasions makes great sense. For example, it may be done to
    gain operating efficiencies. It may be done to recoup value for
    the taxpayers. It may be done because the investment is no
    longer useful for its intended purpose. I am not sure that any
    of these reasons apply in this case. In fact, the sale of this
    facility may actually reduce efficiency and lose value to the
    taxpayer.
        I look forward to hearing from the witnesses today on these
    and other topics relative to NTIA's reauthorization. It is a
    critically important responsibility of this committee, and I
    look forward to working with you and Chairman Bliley to fashion
    a bill we can all support. Thank you again for holding this
    hearing and for initiating a very important process. I yield
    back the balance of my time.
        Mr. Tauzin. I thank the gentleman.
        The Chair now yields to Mr. Upton.
        Mr. Upton. Thank you, Mr. Chairman. We all appreciate this
    hearing on NTIA. One of the important duties of our committee
    is to conduct oversight hearings on departments and agencies
    under our jurisdiction.
        It has been a number of years since the NTIA was last
    reauthorized, so I believe today's hearing will provide the
    subcommittee with important information regarding the workings
    of the agency and how it is addressing telecommunications
    issues that truly face our Nation.
        I am also looking forward to a discussion of the grant
    program under the agency's direction and the process by which
    Federal funding has been allocated to recipients around the
    country. Although the formal NTIA bill is close to being
    introduced, the discussion draft that has been circulated
    should in fact serve as a good starting point as this committee
    seeks to develop a bill that is fiscally responsible,
    bipartisan, and in the best interests of the American people. I
    yield back the balance of my time.
        Mr. Tauzin. I thank the gentleman.
        Mr. Shimkus is recognized for an opening statement.
        Mr. Shimkus. Thank you, Mr. Chairman.
        I appreciate you calling this hearing today, and I would
    like to also thank Chairman Bliley and yourself for allowing me
    to be part of the working group on reauthorization. I am proud
    of the work we have done, especially the issue that we have
    sorted through, our discussion draft that we have before us
    today. While it does not address all of NTIA's programs or the
    concerns voiced by members of the working group, I believe it
    is a very good start in the reauthorization of the agency.
        Mr. Chairman, I am specifically interested in the grant
    programs and how we can make them work efficiently, especially
    TIIAP. Additionally, there is an ever-present issue of the
    duplicative nature of the grant program that I think we need
    and should address. These grants allow many organizations to
    gain access to new technologies, and most of the time these
    grantees work hard to fulfill their obligations under the grant
    contract.
        Additionally, I believe that the good that comes from the
    grant program should continue. However, there are programs with
    TIIAP that we need to take a close look at before any
    authorization language is added to the bill. I realize that the
    IG has reviewed some of the grants that have had problems, and
    also NTIA's grant process. I will be following that up with
    questions in the question period. While NTIA has recognized
    some of these problems and tried to correct them, more can
    still be done to make these grant programs even more
    beneficial.
        Thank you for holding this hearing, Mr. Chairman, and I
    look forward to today's testimony.
        Mr. Tauzin. I thank the gentleman.
        [Additional statement submitted for the record follows:]
     Prepared Statement of Hon. Nathan Deal, a Representative in Congress
                           from the State of Georgia
        Thank you, Mr. Chairman, for holding this hearing today regarding
    reauthorization of the National Telecommunications and Information
    Administration (NTIA). As a member of Chairman Bliley's task force to
    reauthorize NTIA under the Department of Commerce, I appreciate your
    attention to this important matter.
        I believe the draft bill before our discussion today is a good
    baseline from which to examine NTIA. While we held a hearing on the
    agency in 1997, and studies have been conducted to look at individual
    components of NTIA programs and grants, we must gain perspective for
    the agency as a whole. Thus, as we advance further into the age of
    telecommunications, I agree it is pertinent to examine the agency
    overall.
        Perhaps one of the most significant tasks of the NTIA is managing
    radio spectrum for the federal government. We must ensure that national
    departments and agencies have access to the spectrum necessary for
    public safety measures, education, and consumer protection, while
    avoiding interference over the radio waves. For example, our military
    and air traffic controllers greatly depend on adequate and reliable
    spectrum to succeed in their government functions. I look forward to
    hearing from Col. Skinner of the Department of Defense on this issue
    today.
        Spectrum management must be efficient. I am pleased that the
    discussion draft of legislation would require NTIA to receive
    reimbursement for all spectrum management functions conducted for other
    federal agencies. As you know, previous appropriations bills in
    Congress have asked that NTIA recoup only 80 percent of reimbursement
    costs. The provisions of the draft bill would provide NTIA with a
    statutory requirement that it not conduct such work without
    reimbursement at 100 percent. Such a provision would also allow
    agencies the time to comply with such additional costs, as NTIA would
    not collect associated fees until October 1, 2001. We can improve in
    this area--we must ensure that NTIA is reimbursed by other federal
    agencies at a rate of 100 percent for spectrum allocated. It is not
    fair for NTIA to subsidize other government entities at rates of up to
    20 percent.
        We should also encourage the use of spectrum provided by the
    private sector or commercially available service providers by
    government entities if appropriate and less costly. At the same time,
    we must also promote fair and competitive opportunities for businesses
    competing with government for spectrum services. I hope to learn more
    on this issue from Mr. Jim Rogers of UPS here today.
        With improvements made in these areas, increased funds will allow
    NTIA to better able perform its overall responsibilities of spectrum
    management, informative telecommunications policy, development of a
    national telecommunications and information infrastructure, and
    performance of research in telecommunications sciences.
        Once again, thank you, Mr. Chairman, for drawing your attention to
    this issue. I look forward to the testimony from our witnesses as well
    as to working with the committee on reauthorizing a forward-looking and
    efficient NTIA for the 21st century.

        Mr. Tauzin. And the Chair is now pleased to introduce the
    panel. As is usually the case, we try to have a large panel,
    for two reasons: One, nobody sits around here for the second
    panel, and so we try to get it in on the first panel and the
    Chair ends up by himself with the second panel. So I decided to
    punish all my members by making them sit through the first
    panel, but they didn't show up to be punished.
        The second thing is that it gives us an opportunity to have
    an exchange among you, and I want to encourage you in that
    regard. As I introduce you, let me ask you, please, to remember
    that your written statements are part of the record so you
    don't need to read us a statement. I wish you would engage us
    in a conversation, perhaps engage each other in a conversation,
    and challenge each other to comment as we go through so we can
    get a full educational experience today.
        Larry, you are an old friend of mine and this committee, I
    echo the comments of Mr. Dingell. I have always had great
    confidence in you personally and the way you have conducted
    your agency. There is no hostility here. Please know that. The
    bill is a draft bill, and the idea of leaving out the grant
    programs was designed for you to come in and prove to us that
    they ought to be added and how they might be reformed to make
    them better. So it is with that approach that we welcome you to
    the committee.
        Again, let me introduce The Honorable Larry Irving,
    Assistant Secretary for Communications Information; Mr. George
    Ross, Assistant Inspector General for Auditing, representing
    the Department of Commerce; Colonel Richard Skinner, the
    Assistant Deputy Secretary of Defense for Space and ISR
    Programs; Mr. Harris Miller, President, Information Technology
    Association of America; Mr. Jim Rogers, Retired Representative
    of the United Parcel Service; and Mr. Kenneth Crawford,
    Director, Oklahoma Climatological Survey, University of
    Oklahoma.
        I suspect that we will learn a lot, and I invite you to
    present your testimony. We recognize first Mr. Irving.

       STATEMENTS OF HON. LARRY IRVING, ASSISTANT SECRETARY FOR
       COMMUNICATIONS AND INFORMATION; GEORGE E. ROSS, ASSISTANT
    INSPECTOR GENERAL FOR AUDITING, DEPARTMENT OF COMMERCE; COLONEL
      RICHARD W. SKINNER, ASSISTANT DEPUTY SECRETARY OF DEFENSE,
     SPACE AND ISR PROGRAMS, DEPARTMENT OF DEFENSE; HARRIS MILLER,
    PRESIDENT, INFORMATION TECHNOLOGY ASSOCIATION OF AMERICA; JAMES
     A. ROGERS, RETIRED REPRESENTATIVE, UNITED PARCEL SERVICE; AND
    KENNETH C. CRAWFORD, DIRECTOR, OKLAHOMA CLIMATOLOGICAL SURVEY,
                         UNIVERSITY OF OKLAHOMA

        Mr. Irving. Thank you, Mr. Chairman. Let me thank you and
    members of the subcommittee for holding this important hearing.
    Having served as Assistant Secretary for NTIA for the last 6
    years, I have seen our role continue to evolve. As
    telecommunications becomes more and more important, information
    technology becomes more and more important.
        Just last week, Alan Greenspan stated that technological
    innovation is responsible for the Nation's phenomenal economic
    performance--and that is his word. Mr. Greenspan noted that the
    newest innovations which we label information technologies are
    beginning to alter the manner in which we do business and
    create value, often in ways not readily foreseeable even 5
    years ago. And having served in this job for 6 years, I can
    tell you almost nothing I am doing today did I think I would be
    doing 5 years ago.
        The reality is information technologies and
    telecommunications represent $1 trillion of the $7 trillion
    economy. One-seventh of our national economy is
    telecommunications information technology. Our expertise in
    information and telecommunications sectors are helping resolve
    critical questions of our global economy. We are trying every
    day to do more with less.
        In addition to the daily functions that NTIA has, we have
    taken a new function over the past year. We are working
    actively across the administration on electronic commerce
    issues, issues such as domain names, on-line privacy content,
    how to get more broadband access built out. We cosponsored
    international telecommunications summits, including the Latin
    American Telecom Summit and the China-U.S. Telecom Summit where
    U.S. industry had a chance to meet with Chinese and Latin
    American officials to talk about opening up those markets.
        We served a lead role at the International
    Telecommunications Conference and at the Plenipotentiary
    Conference in Minneapolis. And thank you for your support of
    the ITU Plenipotentiary.
        We are taking the lead, pursuant to the President's
    directive, on the Critical Infrastructure Protection
    Initiative. Just as Y2K threatens problems for our Nation's
    economy, so do attacks on our Nation's telecommunications
    information infrastructure. We are very dependent upon them.
        And that is just the beginning of all of the things that we
    have to do. We are pleased that this committee and other
    congressional committees have asked NTIA to conduct five or
    more studies, and also to staff the congressionally appointed
    Children's On-line Protection Commission within the next year.
    Pending legislation would give us responsibility for three more
    studies.
        And at the same time as our responsibilities are mounting,
    our staffing levels have been decreasing. Since 1994, we have
    gone from 361 full-time employees to 267, more than a one-
    fourth decrease. And in our fiscal year 2000 budget, we sought
    an increase in our staffing levels in a budget of $17.2
    million, primarily because of Critical Infrastructure
    Initiatives and to help public broadcasters as they move over
    to digital television.
        Let me turn to our concerns with the discussion draft.
    First, the funding level of $7.9 million is well below the
    $17.2 million requested and would not provide, we believe, the
    funds for new initiatives or programs such as the staffing for
    the CIP program or the Children On-Line Protection Act
    Commission.
        My second concern is the privatization of the lab. We
    believe that would eliminate a critical Federal resource. There
    is unparalleled expertise in these laboratories supporting
    NTIA's spectrum management and telecommunications functions. It
    provides our office spectrum management and those we serve in
    that office with critical research expertise and it conducts
    research for many other Federal agencies. My concern is if you
    get rid of NTIA's labs, the people we support will go out and
    create their own duplicative labs, and in many instances,
    because security clearance is needed and specific subject
    matter expertise, there are not private labs to do this job.
        The laboratory recently helped this committee with regard
    to the Satellite Home Viewers Act. There was no independent lab
    that wasn't doing similar work for someone who had a vested,
    commercial interest in how the SHVA turned out.
        We have also assisted the FCC as they were doing digital
    television. Again, because of the impartial interest of those
    labs, we were able to give an objective view, and those labs
    are cost efficient. We follow the Economy Act, and we only
    charge for costs incurred. If the lab were privatized, Federal
    agency users would either increase their research budgets or
    pay higher rates to private businesses. No savings to the
    taxpayer; and, moreover, there are very few assets to be sold.
    Most of the assets are the tremendous human resources in those
    labs. We have very few physical resources that can be sold to a
    private sector entity.
        For those reasons, external and internal reviews have
    concluded that NTIA's labs satisfy a compelling need for a
    centralized, cost-effective, unbiased Federal facility.
        Mr. Chairman, I have three studies dating back to Dave
    Markey and Al Sikes that I would like to present the committee
    with regard to privatization initiatives that preceded me.
        [The information follows:]

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        Mr. Irving. A third concern that I would like to raise is
    that it doesn't authorize TIIAP. That is a merit-based,
    competitive matching grant program that disadvantaged
    communities across this Nation are taking advantage of. We are
    doing things in health care, public safety and delivering of
    better public services, and I don't make decisions in
    Washington except as to what should be funded.
        What particular grants come to us, those are locally
    driven. There is tremendous national interest in this program.
    We have 14 applicants for every one that we fund, and today you
    will hear from Oklahoma about how this grant saved lives just
    last week in Oklahoma across that State.
        I have worked with Congressman Upton on projects in
    Kalamazoo and I remember speaking over a teleconference when
    that grant was awarded. We have worked closely with you, Mr.
    Chairman, with regard to Nicholls State. We talk about
    connecting schools and libraries; what about those men and
    women who work on oil rigs who need further education? TIIAP
    has provided educational facilities, and is doing things with
    health care in the State of Louisiana.
        Today, Mr. Chairman, there is a front page USA Today
    article on one of our grant programs. It is talking about
    parents adopting on-line. Four years ago, 5 years, NTIA gave a
    grant, and there is a fuller story in the inside section, about
    adoptions on-line.
        [The article follows:]

                                  [USA TODAY]

                   Online Adoption Sites Forge Unlikely Links
                                By Marilyn Elias
        They were hardly members of the Most Likely to Be Adopted club. In
    fact, if it hadn't been for the Internet, they might never have found
    homes.
        Six-year-old Abel had been kicked out of Head Start for aggression.
    His foster parents said he shredded curtains in fits of fury, and he
    still was not toilet-trained.
        Joshua had attempted suicide by age 7. Social workers described him
    as aggressive, probably retarded.
        Breauna, 14, survived severe abuse from parents said to be in a
    satanic cult. Her social worker doubted any family would adopt her.
    She'd soon start on an ``independent living'' track, preparing to live
    on her own at 18 with Social Security payments for those with
    disabilities.
        But all three youngsters were adopted by American families in the
    past few years. And after some bumps along the way, all three appear to
    be thriving in their new homes.
        Abel, Josh and Breauna joined families in other states who saw
    their photos and personal profiles on the Internet.
        Net listings first appeared in 1995 with a few dozen hard-to-place
    kids shown on a Web site established by the National Adoption Center
    and Children Awaiting Parents, two national agencies that find adoptive
    homes. Now there are 1,600 youngsters at the site, largest in the USA.
        Thirty-seven states have created sites since 1995, typically
    listing children they've been unable to place locally. Last month, the
    federal government announced plans to create a Web site by 2001 for all
    U.S. kids awaiting homes through public agencies.
        ``The Net is the best tool we have,'' says Carolyn Johnson,
    executive director of the National Adoption Center. Many youngsters
    adopted from FACES, the center's site, ``weren't likely to have ever
    found homes,'' she says.
        The Net's capacity to dissolve state lines instantly, linking
    children to prospective parents everywhere in the USA, could make it a
    key asset for meeting the challenges ahead, says Carol Williams of the
    Children's Bureau at the U.S. Department of Health and Human Services.
        About 8,000 U.S. youngsters now need adoptive homes. But that
    number could double or triple in the next two years, Williams says. A
    1997 federal law shortened the time kids can remain in foster care
    without plans for a permanent home. As youngsters become available more
    rapidly, the need for families is expected to grow, and so must the
    pool of prospective parents.
        The new government site will not deliver adoption nirvana for
    parents seeking a pink-faced infant, Williams cautions. The vast
    majority of youngsters shown online will be over 3 years old. Many will
    have disabilities--physical, intellectual or emotional. Some will be
    part of package-deal sibling groups. A significant number will be
    racial minorities, Williams says. But the site will improve the chances
    that these difficult-to-place children will find parents who want them.
        Instant access to children's photos and profiles through computers
    doesn't mean instant adoption, experts emphasize. It's not like
    ordering books from Amazon.com.
        Just as in traditional placements, parents must have a home study
    done by an agency in their state to ensure they can provide a safe,
    healthy environment. The child's social worker then considers whether
    the family would meet his needs.
        Texas, the largest state site, with 532 kids shown, started
    offering short video downloads in March. An adorable 3-year-old shows
    she can sing her ABCs. Other kids tell about their interests. ``It
    humanizes children, especially those with disabilities,'' says Ella
    Zamora of the Texas Adoption Resource Exchange.
        ``When you see that child's face and hear her voice, you may decide
    you don't want to adopt a kid like that. But sometimes people have
    stereotypes--a child with cerebral palsy is a certain way--and when you
    see the child, you realize your perceptions were not true.''
        Texas adoptions increased in fiscal 1997-98 by 76% from the average
    for the three previous years. It was among the largest rises of any
    state, ``and the Internet was an important factor in that,'' Zamora
    says. Inquiries soared from 1,100 in 1996 to 9,555 in 1998, ``and the
    big jump came from families looking on the Net.''
        For Illinois children, Net outreach has helped place brother/sister
    groups, including three black siblings recently adopted by a Virginia
    family, says Marilyn Panichi at the Adoption Information Center of
    Illinois.
        Families adopting through the Net typically visit a child several
    times, including overnight and longer visits, and the child might visit
    in the family's home before the decision to adopt is made.
        Social workers sometimes prefer that their adoptable kids stay in-
    state.
        This resistance to letting go of children is among the areas that
    need work at the state level before the federal Web site goes up, says
    Williams of the federal Children's Bureau. More social workers will be
    needed, too, as family inquiries increase, and costs will be shared by
    the federal and state governments, she says.
        Some critics see the most serious drawback of using the Internet to
    expand special-needs adoptions not in the Net itself, but in human
    failure to inform adoptive parents about what they'll face when they
    adopt older children or those with disabilities.
        Candor about the extent of kids' problems has increased the past 20
    years. But, concedes Williams, ``full disclosure is something we
    continue to work toward. Most state agencies expect their staffs to
    provide full disclosure, but it continues to be a concern.''
        Sometimes children don't even tell all that's happened to them
    until they've been in a safe adoptive home for years.
        In other cases, the travails and placements are so labyrinthine
    that the child is already adopted by the time a state's bureaucratic
    machinery untangles and presents the long story of the child's life.
        That's what happened to Jim and Heide Thatcher of Pleasant Grove,
    Utah. They adopted 14-year-old Breauna, severely abused by parents said
    to be in a satanic cult. Records of her last four years were readily
    available. But Breauna had been in the Thatchers' home for more than
    three months before they received her full file.
        ``They had tried to describe the extent of her abuse. But you go in
    so optimistic, thinking you can handle anything,'' Heide Thatcher says.
    Breauna even had a court-appointed advocate who kept asking the
    Thatchers if they were sure they could handle the teen.
        As it turns out, they almost couldn't. Breauna wrestled with
    bipolar disorder, took up with a bad crowd and even attempted suicide.
    But with the Thatchers' help, she has turned a corner. Now she's a
    college-bound 10th-grader with better than a B average who says her
    friends are ``preppies.''
        Sometimes adoptive parents feel they were fully informed but still
    faced crucial challenges. Laurie and Jon LeBar of Hot Springs, S.D.,
    found 6-year-old Abel from Texas and 7-year-old Joshua from Illinois on
    the FACES site. They had to persist in teaching both boys to talk out
    their anger rather than harm themselves or others.
        But both were receptive, and two years after adoption they're
    happy, amazingly well-adjusted kids, Laurie says. The LeBars have
    adopted several other youngsters of varied races through their initial
    Net contact. ``I don't regret it a bit; they're a joy,'' Laurie says.
    ``We are really living our dream. We've got a big house out in the
    country, and we've got this great multicultural family. It's awesome.''
        To increase these Net-initiated adoptions will cost the government
    more upfront. The federal Web site alone is expected to cost $1.5
    million to set up, then $1.25 million a year to run, though HHS hopes
    for private contributions.
        ``You're either going to pay now or pay later,'' says Ann Sullivan,
    adoption program director at the Child Welfare League of America.
        Youngsters in serial foster care fare poorly as adults in terms of
    mental health, education and employment. About 20,000 U.S. youngsters a
    year turn 18 without having been adopted. ``We don't talk about
    (adoption) costs. We talk about investment.''
        And there's something besides dollar signs to consider in launching
    Internet recruitment sites.
        ``Ethically and morally, the state is the parent of these
    children,'' Sullivan says. ``I don't see how we can do less than
    everything possible to find good homes for them.''

        Mr. Tauzin. How did you manage that?
        Mr. Irving. We have good public affairs people. Ken Johnson
    has been helping me out.
        But the amazing thing is that over 5 years we have been
    able to do things. We talk about the critical need to make sure
    that parents know about adoption opportunities and adopting
    children are known across this country; we do that on-line with
    a small, less than $200,000 grant. You will hear about other
    important grant proposals.
        And just today, I picked up an e-mail, noting while we are
    getting lots of awards nationally, we are getting international
    acclaim. The Bangemann Awards has a TIIAP grantee, the Erickson
    Awards has a TIIAP grantee as nominees. I know that I have got
    to finish up.
        We are working closely with the Department's Office of
    Inspector General to make these grant programs better, more
    efficient and run better.
        I also want to talk about the spectrum management. The 80/
    20 split in our estimation is the correct split, and the reason
    is that it does not make me a wholly owned subsidiary of my
    clients. By having the 20 percent that the taxpayer pays--many
    times I am fighting the Department of Defense, fighting
    Transportation or Interior over a decision that I have to make.
    When somebody pays your bills, they believe they have a lot
    more influence over your decisionmaking process, and we never
    want to get to a fully 100 percent our clients are paying our
    bill.
        But the second important issue is by the time the
    appropriations process starts in October and Defense gets their
    money and gives it to us, there is a timing problem. That 20
    percent ensures that we can continue doing the things that we
    need to do in our agency while we are waiting for the checks to
    be cut at Defense, Coast Guard, and Interior and other places
    across the administration.
        Those are my primary concerns, Mr. Chairman, but we look
    forward to talking to you. I appreciate again your holding this
    hearing this afternoon.
        [The prepared statement of Hon. Larry Irving follows:]
       Prepared Statement of Hon. Larry Irving, Assistant Secretary for
        Communications and Information, National Telecommunications and
                           Information Administration
        Mr. Chairman and Members of the Committee: Thank you for this
    opportunity to testify today on the reauthorization of the Department
    of Commerce's National Telecommunications and Information
    Administration (NTIA).
        Today, I would like to describe NTIA's unique role in developing
    and advocating policy in the telecommunications and information
    technology sectors; summarize our FY 2000 Budget Request; and highlight
    our key programs and initiatives. I have also attached to my testimony
    two appendices. The first is NTIA's Comments on the Discussion Draft
    ``NTIA Reauthorization Act of 1999.'' The second is a list of Recent
    Congressional Studies for NTIA and Potential Studies Proposed by
    Congress.
                                  introduction
    NTIA's Unique Role
        NTIA is the principal adviser on telecommunications and information
    policy issues in the Executive Branch. In this role, NTIA helps develop
    and present the Administration's position on these issues before the
    Federal Communications Commission (FCC) and other domestic and
    international fora. NTIA's goal is to assist the Administration and
    Secretary of Commerce William M. Daley in promoting the role of the
    nation's telecommunications and information industries by creating more
    job opportunities, enhancing U.S. competitiveness in the global
    economy, and ensuring that all Americans benefit from the digital age.
        NTIA is unique among Federal government agencies. The agency's
    expertise encompasses every aspect of telecommunications and
    information technology. In addition to advocating the Administration's
    positions on domestic and international issues, we also manage the
    Federal use of the spectrum; resolve complex technical issues through
    cutting-edge research in our laboratories; administer infrastructure
    grants to promote the development of a widely accessible information
    infrastructure; and manage grants to help public broadcasting maintain
    their infrastructure and transition to the digital age.
        NTIA's role in these areas is more important than ever, given the
    ever-increasing significance of the telecommunications and information
    technology (IT) sectors to our nation. Today, these technologies are
    driving this country's economic growth. The White House Council of
    Economic Advisors recently determined that revenues of communications
    services and equipment companies rose over 60 percent in the last five
    years. Over a third of real domestic product growth in the past three
    years has come from IT industries. More than 7 million people are now
    employed by IT industries and earn wages that are almost two-thirds
    higher than the average for all private sector jobs. And, investments
    in new technologies--including computers, satellites, wireless devices,
    and information processing systems--account for over 45 percent of
    total real business equipment investment.
        New technologies will shape our economy even more significantly in
    the 21st century, particularly with the growth of the Internet and
    electronic commerce. Today, some 160 million worldwide are going online
    to shop, invest, trade, and e-mail, according to Nua Internet Surveys.
    That figure is expected to increase to 320 million by the end of next
    year. As more people and businesses connect online, the ``virtual
    marketplace'' will become commonplace. Electronic commerce among
    businesses is expected to grow more than fifteen-fold in the next few
    years, from $64 billion in 1999 to $980 billion in 2003, according to
    International Data Corporation analysts.
        The heightened importance of the telecommunications and information
    sectors has engendered new and pressing policy development and advocacy
    needs. NTIA is using its expertise, leadership, and vision to address
    these urgent new questions.
        In order to sustain the rapid development of our information
    infrastructure, NTIA is considering ways to promote the deployment of
    high-speed broadband networks, and to insure that information and
    telecommunications services are available and affordable for all
    Americans. We are facilitating the development of electronic commerce
    (``e-commerce'') by addressing new questions of consumer privacy,
    security, and domain name management. We are also working with other
    nations to promote a market-driven, flexible and decentralized, and
    technology-neutral approach to e-commerce policy. And, we are
    coordinating efforts under the federal Critical Infrastructure
    Protection (CIP) plan to ensure that our telecommunications and
    information infrastructures are secured against physical and cyber
    attacks.
        NTIA's management of the federal use of radio spectrum is also
    promoting public safety and competition. As the managers of federal
    spectrum, we are trying to improve efficiency, increase private access
    to spectrum resources, and plan for future spectrum needs, including
    those relating to public safety. These goals will become ever-more
    important as global uses of satellite and wireless devices increase.
        We are also working to open up wireless and wirelined markets to
    competition, both domestically and internationally. NTIA helped secure
    the success of the World Trade Organization (WTO) Agreement on basic
    telecommunications services in March 1997. Nearly 70 countries,
    representing approximately 95% of the world's telecommunications
    revenues, agreed to liberalize their telecommunications markets under
    that Agreement. NTIA is now working to ensure, among other things, that
    the signatories comply with their countries' regulatory principles in
    implementing the WTO Agreement.
        NTIA's expertise in these areas will help resolve some of the
    critical questions in our global economy. The demands on our expertise
    and personnel are growing rapidly, however, as the telecommunications
    and information sectors take on increasing importance. Virtually every
    day, we address new technologies and new issues. The importance of
    these issues is reflected in the increasing number of requests we have
    also received from the White House, the Department of Commerce, other
    Federal agencies, and Congress. At the same time, our staffing levels
    have declined in recent years. In 1994, NTIA had 361 employees; today,
    we have 267. NTIA's budget request for FY 2000 should provide necessary
    resources to help us respond to the increasing number of demands and
    challenges as we enter the new digital economy of the 21st century.
    Overview of FY2000 Budget Estimates
        Let me start by giving an overview of NTIA's proposed FY 2000
    budget. NTIA's budget request for FY 2000 is $72,369,000, with a
    staffing level of 336 FTEs. This represents an increase of $23,604,000
    over NTIA's FY 1999 funding level and an increase of 48 FTEs. NTIA is
    seeking $17,212,000 for Salaries & Expenses (S&E). This includes
    increases for enhancing Federal radio spectrum management; upgrading
    our telecommunications research facility; implementing World Trade
    Organization requirements; and implementing the Presidential Critical
    Infrastructure Protection (CIP) program. NTIA is also requesting
    $20,102,000 to fund the Telecommunications and Information
    Infrastructure Assistance Program (TIIAP), and $35,055,000 to fund the
    Public Telecommunications Facilities Program (PTFP). The PTFP request
    is part of an Administration initiative with the Corporation of Public
    Broadcasting to assist broadcasting stations during the transition to
    digital broadcasting.
        This funding will help NTIA maintain and augment its existing
    programs, which support the development of the nation's information and
    telecommunications sectors. I would now like to describe highlights of
    these, and other of NTIA's programs, which are critical to the
    continued development of our telecommunications and information
    technology sectors.
                    highlights of ntia's program operations
    Domestic Policy
        NTIA's domestic policy activities support NTIA's responsibilities
    as principal adviser to the President on telecommunications and
    information policies. The goal of these activities is to enhance the
    public interest by generating, articulating, and advocating creative
    and influential policies and programs in the telecommunications and
    information sectors.
        While NTIA believes that open markets, competition, and industry
    development serve the public interest, NTIA also works to ensure the
    public interest in other ways. Foremost among these issues are those
    related to access to basic and advanced telecommunications services,
    the ability for people to control indecent or violent information
    coming into their homes, the transition to digital television, and
    encouraging minority participation in telecommunications. NTIA has also
    played a significant role in promoting electronic commerce and
    developing Internet policy, discussed in a separate section below.
    Throughout its existence, NTIA has developed and advocated policies to
    support the public interest in many areas such as these, and will
    continue to do so.
        NTIA frequently files comments with the Federal Communications
    Commission (FCC) to represent the Administration's position on a broad
    range of matters. This year, for example, our filings included comments
    on the broadcast ownership rules; ``truth-in-billing'' on local
    telephone bills; the definition of ``over the air signals'' for
    purposes of the Satellite Home Viewers Act; guidelines to promote the
    deployment of broadband services; and tariffs relating to digital
    subscriber loops (DSL).
        As mentioned above, NTIA is also increasingly called upon for its
    telecommunications expertise. We assist the White House and other
    Federal agencies in implementing the pro-competitive goals of the
    Telecommunications Act of 1996, addressing issues relating to new
    technologies, and promoting affordable access to the nation's growing
    information infrastructure. NTIA also will be an integral part of a
    congressionally mandated commission on Internet content as a result of
    the Children's Online Protection Act.
        Promoting Competition--NTIA continues to work towards eliminating
    barriers to competition in the telecommunications industry while
    protecting consumers. Throughout NTIA's twenty-year history, this
    agency has been at the forefront of pro-competitive telecommunications
    issues. Among other things, we contributed our expertise to debates
    concerning first passage, then implementation, of the
    Telecommunications Act of 1996. This Act required the FCC to adopt
    regulations regarding such things as access charges, universal service
    to rural and other areas, interconnection, and broadband services. NTIA
    filed comments in each of these areas.
        Going forward, NTIA will continue to articulate policies on a host
    of issues surrounding new, better and lower priced communications
    products and services. We are continuing to advocate policies that spur
    innovation, encourage competition, and create jobs. NTIA will suggest,
    for example, ways to encourage the availability of new services to
    rural and underserved communities and will identify impediments to the
    growth and vitality of industry sectors.
        Addressing New Technologies--New technologies and new competitive
    providers are also spawning new questions in domestic policy. Foremost
    among these issues are those related to the growth of the Internet, the
    transition to digital television, and the widespread availability of
    wireless communications devices. NTIA has met these challenges in
    various ways. We often focus our limited resources on identifying and
    analyzing ``over-the-horizon'' issues well before they become widely
    known even among telecommunications professionals. One such issue is
    that of ``Internet telephony,'' the use of the Internet or Internet
    Protocol, in place of traditional long distance telephony. NTIA
    sponsored a forum in 1997 to bring together technical and industry
    experts with policymakers. In comments to the FCC that same year, NTIA
    took the view that this technology should be allowed to grow and
    therefore should not come under full common carrier regulation.
        The intersection of industry sectors is also raising additional
    sets of issues regarding technological convergence. The telephone
    network, for example, is increasingly used to transmit data, and the
    television provides viewers access to the World Wide Web. As a result,
    we are seeing varied and unique combinations of previously discrete
    technologies. Such convergence presents major challenges to the
    existing regulatory infrastructure, and NTIA is examining new
    regulatory issues and challenges.
        Competition, Diversity, and the Public Interest in Mass Media--NTIA
    has been active in mass media issues as well. Several years ago, we
    promoted inclusion of provisions in the 1996 Telecommunications Act
    calling for a voluntary television ratings system and the requirement
    that all new television sets be equipped with a ``V-Chip.'' NTIA
    believes that the V-chip, in particular, will help parents choose which
    television programming is suitable for their children. As the first
    television sets containing the V-Chip become available this year, we
    will lead efforts to monitor implementation of the V-Chip requirement.
        NTIA has also worked to advance policies to protect and extend the
    public interest in many other contexts as well. We believe that, as
    with other telecommunications services, robust competition in the video
    services markets will serve the public interest by providing consumers
    with greater choices, lower prices, and better services. Thus, for
    example, we wrote to the FCC last year regarding the matter of delivery
    via satellite of television network signals to households unable to
    receive local broadcast signals. We urged the FCC to adopt a definition
    and measurement of ``over the air grade B signal intensity'' to promote
    consumer choice and competition. More recently, NTIA helped develop the
    Administration position on pending legislative proposals to modify the
    Satellite Home Viewer Act.
        In developing mass media policies, competition often supports the
    additional goal of providing a diversity of voices to be heard by the
    American people. NTIA has been monitoring trends towards concentration
    in the ownership of radio and television stations. The
    Telecommunications Act of 1996 relaxed broadcast ownership rules and
    directed the FCC to review the public interest merit of remaining rules
    every two years. In February of this year, NTIA wrote to FCC Chairman
    Kennard supporting relaxation of some broadcast ownership rules while
    maintaining others.
        NTIA's involvement with the mass media also extends to new
    broadcast services, such as the upcoming transition to advanced
    television. Most notably, NTIA served as Secretariat for the
    President's Advisory Committee on the Obligations of Digital Television
    Broadcasters, which presented its report in December 1998. In the role
    of secretariat, NTIA did not direct or influence the recommendation of
    the committee. NTIA was pleased to be a part of this consensus-building
    process, which brought together experts from the broadcasting industry,
    the public interest community, and academia to look at the future of
    television. Now that the work of this committee is complete, NTIA plans
    to continue policy development in this field.
        Minority Ownership--Another of NTIA's goals is to enhance minority
    participation in telecommunications. NTIA's Minority Telecommunications
    Development Program (MTDP) is undertaking specific efforts in this
    regard, including: (1) directing ComTrain, a training program to assist
    new minority commercial broadcast owners; (2) disseminating information
    and conducting seminars on ownership opportunities in
    telecommunications (3) developing and commenting on legislative and
    regulatory proposals that promote minority ownership in
    telecommunications; (4) working with industry, and other government
    agencies on initiatives to increase public/private sector assistance to
    minorities interested in ownership of telecommunications businesses and
    services; (5) promoting TELECAP, a study of capital development
    strategies for minority investment in telecommunications; and (6)
    tracking minority ownership in broadcasting. NTIA will also continue to
    analyze policies that affect minority participation in
    telecommunications.
        Universal Access--Ensuring universal access to communications and
    information networks also remains a high priority for NTIA. We have
    been leading efforts to redefine universal service to
    telecommunications services to ensure that rural Americans have access
    to the same new services being offered in urban and suburban America.
    Over the past 40 years, rural Americans have gone from about 60 percent
    having basic phone service to 94 percent today. This is due in large
    part to our commitment as a nation to universal service policies.
        NTIA has undertaken numerous activities to promote universal
    service. In the 1995 and 1998 Falling Through the Net reports, NTIA
    documented the relatively low penetration of telephone connections and
    computer and modem ownership in rural and inner city communities. In a
    1996 filing with the FCC, we recommended that the Commission set a
    national subscribership goal for the year 2000 to ensure that the
    telephone penetration level for all segments of society will be at
    least equal to the national average existing as of November 1996. As
    the Telecommunications Act of 1996 continues to be implemented, NTIA
    will continue to be a strong advocate for rural and underserved
    Americans, undertaking research, filing comments with the FCC, and
    participating in a variety of fora to ensure that these communities
    have access to these services, and the opportunities they provide, at
    reasonable rates.
        NTIA has vigorously argued for the connection of schools,
    libraries, and other ``community access centers'' to the National
    Information Infrastructure. This step is integral to making access to
    advanced telecommunications and information services more readily
    available. Technology will be central to the mission of our nation's
    schools in our country. Numerous studies demonstrate the advantages
    afforded to students who have access to this technology. As the
    President has clearly stated, in order to succeed in the 21st century,
    our children must attain technological knowledge and tools. NTIA
    continues working to ensure that these tools are broadly available to
    the public.
    Electronic Commerce
        In addition to the domestic policy issues listed above, NTIA is
    playing a pivotal role in the Administration's cross-cutting efforts to
    develop electronic commerce and Internet policy. NTIA has been at the
    forefront of these issues, both domestically and internationally. We
    were a key participant in the development of the Administration's
    electronic commerce policy, reflected in A Framework For Global
    Electronic Commerce, issued in July 1997. Since then, NTIA has been a
    key participant in the White House's Electronic Commerce Working Group
    on such issues of broadband deployment, online content, domain name
    management, and consumer protection. Finally, NTIA has also played a
    leading role internationally by representing the United States
    government at bilateral discussions and at international fora. We have
    advocated the tremendous benefit of the Internet and electronic
    commerce to other nations' economies, as well as the merits of a non-
    regulatory, market-driven approach to the development of electronic
    commerce.
        Domain Name Management--Since July 1997, NTIA has also been the
    lead agency responsible for implementing the President's directive to
    privatize the management of Internet domain name system (DNS) functions
    and increase competition in the registration of Internet domain names.
    The Statement of Policy on the Management of Internet Names and
    Addresses, which resulted from extensive public consultations, invited
    the private sector to create a new, not-for-profit corporation to
    undertake management of DNS functions and was universally well
    received. The private sector responded by creating the Internet
    Corporation for Assigned Names and Numbers (ICANN) to assume this
    management responsibility.
        Currently, NTIA is working with ICANN under a Memorandum of
    Understanding to develop the procedures and steps necessary to complete
    a smooth and stable transition from the government to the private
    sector by September 2000. NTIA is also working with ICANN and Network
    Solutions to introduce competition in domain name registration
    services. On April 21, 1999, ICANN announced the names of 34 companies
    that have been accredited to begin registering names in the .com, .net
    and .org domains within the next 60 days. We believe that this
    competition will result in lower prices, greater choice, and better
    registration services for all users of the World Wide Web and we look
    forward to our continued work on these issues.
        We have had numerous discussions with the staff of House Commerce
    Committee Chairman Bliley on the progress being made on this issue, and
    will continue to keep them informed of developments in this area.
        Privacy--NTIA has also been at the forefront in addressing privacy
    on the Internet. We played a leading role in encouraging private
    industry and privacy advocacy groups to develop and adopt effective
    codes of conduct and technological tools to protect privacy on the
    Internet. Following extensive consultation with the private sector in
    January 1998, NTIA and the Department of Commerce issued The Elements
    of Effective Self Regulation for Protection of Privacy, which expresses
    our view that effective self regulation involves substantive rules, the
    means to ensure that consumers know the rules, that companies comply
    with them, and that consumers have appropriate recourse when injuries
    result from noncompliance.
        In June 1998, the Department of Commerce held a public meeting on
    privacy, coordinated by NTIA. Although industry was somewhat slow to
    take up the self-regulation challenge, there are signs that business
    leaders are beginning to understand the need to take decisive action on
    privacy. For example, the Online Privacy Alliance (OPA), a consortium
    of information technology companies and industry associations,
    representing over 80 global corporations and associations, requires its
    members to adopt and post privacy policies consistent with OPA
    guidelines and participate in a self-regulatory enforcement mechanism
    provided through third parties such as BBBOnLine and TRUSTe. We will
    continue to closely monitor their progress.
        NTIA has been involved in examining other issues of domestic
    privacy. For example, NTIA has met with leaders in the area of online
    profiling by Internet advertisers and is planning a meeting in July
    1999, in collaboration with the Federal Trade Commission (FTC), to
    examine the issue in a public forum.
        Controlling Indecent and Violent Content--NTIA will continue to
    examine policies that empower parents and other individuals to control
    the nature of information that comes into their homes, particularly
    that which is indecent or violent. NTIA supports the free flow of
    information over the Internet or through television and radio. It
    therefore has directed its policy positions towards developing tools to
    allow individuals to determine the types of material they receive.
        NTIA has helped promote online content initiatives, such as ``green
    spaces'' to help parents and others find Web sites suitable for their
    children. We were designated as the Secretariat for the
    Congressionally-appointed Child Online Protection Act (COPA)
    Commission. We look forward to working with the Commission in producing
    a report on child online safety issues.
        All of these efforts take on new importance, following the
    senseless killings at Columbine High School in Littleton, Colorado.
    NTIA will continue to work on national policies to help citizens
    control the type of information their children receive, while not
    impinging on fundamental free speech rights.
        Consumer Protection--Another critical issue is online consumer
    protection. We know that consumers will be reluctant to shop on the
    Internet unless they feel confident that they will get what they pay
    for online and that redress will be available if they do not.
    Therefore, NTIA has facilitated private sector outreach in developing
    US policy in this area.
        NTIA is working both domestically and within a number of
    international fora to foster the development of effective consumer
    protections for consumers participating in electronic commerce. In
    cooperation with the FTC and other government agencies, we have also
    helped to shape the policy debate in the Organization for Economic
    Cooperation and Development (OECD) regarding the development of
    guidelines for online consumer protection. The issue of online consumer
    protection intersects with many other e-commerce issues in which NTIA
    is active, such as jurisdiction, privacy, security, and authentication.
    NTIA provides an important broad perspective on these issues when
    formulating policy approaches for electronic commerce consumer
    protection.
        International Advocacy--Finally, as the representative of the
    United States government, NTIA has been working to build international
    consensus for a non-regulatory, market driven approach to the
    development of electronic commerce. We know that the Internet allows
    its users to exchange ideas and to experience the freedom of public
    speech of political expression, unlike any other medium before it. In
    many parts of the world, including Asia and Eastern Europe, the
    Internet is used by citizens to promote and spread the values of
    democratic government. Our efforts to promote greater use of the
    Internet and other new technologies should also facilitate the
    promotion of democratic values.
        NTIA is actively engaged in discussions, both bilaterally and in
    international fora, to ensure that the ``rules of the road'' for the
    Information Superhighway are pro-competitive, empower end users, and
    avoid establishing artificial impediments to the conduct of global
    electronic commerce over the Internet. NTIA led the U.S. negotiations
    on Internet and electronic commerce issues at the International
    Telecommunication Union's (ITU) Plenipotentiary Conference in November
    1998. NTIA has also been a leader formulating best practices for
    Internet infrastructure deployment in developing countries.
    International Policy
        In addition to Internet and e-commerce issues, NTIA plays a key
    role on a range of other important international matters. As the
    representative of the U.S. government, we are working to attain an
    international consensus on open, competitive telecommunications policy;
    develop international satellite communications policy; and open foreign
    markets to U.S. industries. NTIA's efforts in these areas are spurring
    the development of the telecommunications and information sectors on
    both a national and global level.
        International Telecommunications Policy--NTIA continues to play a
    lead role in promoting and building international consensus for open,
    competitive telecommunications networks, which creates opportunities
    for U.S. businesses abroad and offers market-based solutions to close
    the digital global divide.
        We are a strong advocate for liberalization and privatization both
    in developed and developing country fora. For example, NTIA promotes
    implementation of the World Trade Organization's (WTO) Basic Agreement
    on Telecommunications, which calls for the liberalization of signing
    nations' telecommunications markets. We have also helped develop and
    implement training workshops for foreign telecommunications regulatory
    authorities, which focused on implementing the WTO Basic
    Telecommunications Agreement and covered a range of issues, including
    interconnection, spectrum management and universal service. NTIA has
    also served as a U.S. Vice-Chair at both the ITU World
    Telecommunications Development Conference in Malta and at the
    Plenipotentiary Conference held in Minneapolis last November. In our
    view, the ITU conference would not have been such a success without the
    Federal support provided by the Congress.
        Additionally, we have sponsored several international
    telecommunications summits in cooperation with the Telecommunications
    Industry Association (TIA) and the International Trade Administration
    (ITA). These summits bring together government officials and
    telecommunications industry representatives to discuss major policy
    matters affecting specific regions. They provide a unique opportunity
    for foreign government officials and business representatives to meet
    privately with senior U.S. telecommunications industry representatives.
        Currently, NTIA is planning the fifth Latin American
    Telecommunications Summit (LATS). Industry participants report that
    previous LATS have facilitated millions of dollars in sales and
    invaluable contacts with Latin American government and industry
    representatives. In March 1999, NTIA, TIA and ITA also collaborated on
    the second China-U.S. Telecommunications Summit (CATS) in Guangzhou,
    China, where 32 U.S. companies met with Chinese telecommunications
    officials, and Chinese telecommunications and IT companies. One company
    reported that the summit provided ``immediate opportunities that may
    not have developed without the summit'' and that they ``were approached
    with proposals for joint ventures and set plans for further high level
    negotiations for deals that could run into hundreds of millions of
    dollars.''
        In addition to our activities in international fora, we have also
    pursued other steps to open markets to U.S. companies. Recently, NTIA
    helped assess the anti-competitive impact of Deutsche Telekom's
    interconnection policy. Working with U.S. companies seeking to enter
    the newly-liberalized German telecommunications market and with other
    agencies, NTIA found that certain changes made market entry by new
    service providers more difficult. NTIA has supported efforts to bring
    about appropriate corrective action.
        NTIA is also supporting the U.S. wireless industry in proposing
    multiple standards for third generation (3G) wireless systems. NTIA is
    advocating the industry's position through the ITU and is further
    advocating that other governments similarly support the outcome of the
    ITU deliberations. NTIA and other agencies have successfully obtained
    assurances from the European Union Commission that the European Union
    member states will respect the recommendations developed by the ITU for
    3G systems and offer licenses on a technology-neutral and non-
    discriminatory basis.
        Finally, NTIA has been an active and longstanding advocate for
    reform of international accounting rates (i.e., those charges paid by
    U.S. carriers, such as AT&T, Sprint and MCI WorldCom to foreign
    carriers to terminate traffic at the foreign destination). NTIA seeks
    to lower accounting rates by bringing them in line with cost. We have
    helped shape U.S. advocacy and outreach efforts at the ITU, where
    member countries are seeking to reach an agreement on accounting rate
    reform. In 1999, NTIA has been concentrating its efforts on
    transitional arrangements for lesser and the least developed countries,
    which may need more time to adjust their rates to international
    competitive market pressures.
        International Satellite Policy--NTIA also continues to play a
    pivotal role in the development and implementation of the U.S. policy
    objective of increasing competition in the international satellite
    communications sector.
        On April 15, 1999 Inmarsat was privatized, completing a process
    begun over 5 years ago. We expect that INTELSAT itself will be fully
    privatized in the next several years. Throughout, NTIA has advocated
    policy changes to increase global competition in the international
    satellite communications sector. Iridium recently stated that it is
    able to offer service in 150 countries and expects this number to
    increase to 230 by year end. Moreover, ICO Global has, as NTIA
    consistently insisted, issued an initial public (stock) offering
    diluting control by former Inmarsat signatories and two U.S. firms (TRW
    and Hughes) have become strategic investors in ICO. The United States
    government, with NTIA's leadership, has pursued a procompetitive
    outcome in the face of opposition from other nations, and we are
    confident of achieving a similar result with INTELSAT's privatization.
        As a result of the International Anti-Bribery and Fair Competition
    Act of 1998, NTIA will be conducting a study of any advantages accruing
    to the intergovernmental satellite organizations (INTELSAT and
    Inmarsat; the ISOs) as a result of their unique status. NTIA's report
    will examine any advantages affecting market access which result from
    government ownership, government contracts to the signatories,
    favorable tax or regulatory treatment for the signatories or from use
    of the ISOs' privileges and immunities. The study will be included in
    the Secretary's report to Congress.
    Spectrum Management
        Another of NTIA's chief roles is to manage the radio frequency
    spectrum that is used by Federal agencies in satisfying their
    legislatively assigned missions. In this role, NTIA processes the
    Federal agencies' requests for frequency assignments; provides
    Executive Branch leadership in coordinating both current and future
    spectrum requirements among the Federal agencies and with the FCC;
    develops and promotes positions at Treaty Conferences and other
    technical and management fora of the International Telecommunication
    Union regarding United States spectrum management interests; and
    supports specialized administration initiatives that are designed to
    achieve specific improvements in areas such as air traffic safety,
    federal spectrum management procedures, protection of critical
    infrastructures, and public safety.
        The fundamental goal of spectrum management at NTIA, as it is
    worldwide, is to avert potential interference between users and to
    ensure that spectrum is available for future needs. NTIA's spectrum
    coordination is therefore critical to the success of air traffic
    control, national defense, national resource management, and other
    vital government functions.
        Nevertheless, further coordination efforts are essential,
    particularly for public safety purposes. The horrific incident in
    Littleton, Colorado last month demonstrates the need for further
    coordination among communications systems. We understand that a number
    of the local, state, and federal agencies lacked interoperable
    communications systems, making the coordination of a response more
    difficult. NTIA will be looking more closely in the coming year at new
    ways to manage spectrum to help coordinate public safety efforts.
        Satisfying Spectrum Needs--NTIA continues to coordinate the
    spectrum needs of the Federal Government by processing frequency
    assignment requests by some 53 Federal agencies. NTIA processes 300 to
    400 such requests daily through an automated screening process to
    correct errors in the data and ensure conformity of rules and
    regulations and through a coordination process with Federal spectrum-
    using agencies via the Interdepartment Radio Advisory Committee (IRAC)
    to ensure interference free operation. In addition, NTIA also certifies
    spectrum availability of approximately 60 to 70 new major
    radiocommunications annually.
        NTIA also provides leadership for and manages the activities of the
    IRAC, a body of representatives from twenty major Federal agencies. The
    IRAC has provided valuable advice to the Executive Branch on numerous
    spectrum policies and issues for the past 75 years. NTIA has maintained
    a constant relationship with the FCC both through the IRAC and directly
    to ensure compatible operations. This is especially important today
    since the vast majority of the spectrum is no longer divided into
    exclusive private-sector and Federal-sector bands, but is shared by all
    users in the United States.
        Spectrum Efficiency--The Federal Government constantly seeks to
    modernize its radiocommunications, increase the amount of information
    transmitted per unit bandwidth, and expand the use of more efficient
    digital technology and the use of private sector radiocommunications.
    In order to improve Federal spectrum use, NTIA uses the following
    management tools. First, NTIA requires that every Federal Government
    user requesting a frequency assignment determine whether its need can
    be met by a private or commercially available service provider. This
    policy has helped encourage consideration of commercial services by
    many Federal Government agencies, including the Department of Defense.
        Second, we promote the use of new spectrum efficient technologies.
    The Federal Government is a leader in developing new spectrum-efficient
    techniques such as narrowbanding, digital modulation, and spectrum
    sharing as well as in the use of the highest quality spectrum-efficient
    equipment. These techniques will lead to nearly double the number of
    frequencies available for land mobile communications. NTIA has required
    that all Federal users move to more efficient 12.5 KHz equipment for
    mobile communications by 2005 or 2008, depending on the frequency bands
    in which they operate.
        Third, NTIA collects fees from Federal agencies for its spectrum
    management services, pursuant to Congressional mandate. Congress
    initially directed NTIA to begin a process to collect fees from federal
    agencies in the FY 1996 Appropriations bill for NTIA. At the same time,
    Congress reduced the amount of direct appropriations to NTIA by the
    amount of the fees. Because of serious difficulties in collecting fees
    in FY 1996, Congress subsequently passed a law directing Federal
    agencies to cease using the spectrum if such fees were not paid. Based
    on this legislation, NTIA and the Federal agencies entered into
    agreements in which the agencies agreed to pay their prorated share.
    These fees cover 80% of the Spectrum Management's funding requirement.
    Although we continue to experience some delay in payments because of
    the different methods of payment within the Federal agencies, NTIA has
    received the requested funds from the agencies. We are pleased with the
    progress that has been made with this program.
        Increasing Private Sector Access to Spectrum--NTIA continues to
    work with the FCC, the private sector, and Federal agencies to promote
    sharing of spectrum, where feasible, with private sector users. Since
    1978, NTIA has coordinated the reallocation of more than 5,000 MHz of
    spectrum to exclusive private use or greater shared use with private
    sector entities. This is a significant amount of spectrum--today's
    entire wireless telephone system, including cellular and personal
    communications systems, is allocated only 170 MHz.
        Spectrum reallocation and reimbursement--Over the past several
    years, NTIA has begun to reallocate 235 MHz of spectrum from Federal
    Government use to the private sector. The process for identifying
    spectrum for reallocation was based on a two year study which took into
    account two major factors: (1) the impact on the Federal agencies, in
    terms of mission, costs, and potential reduction of services to the
    public, and (2) the benefits expected to be realized by the public.
    Based on the extensive planning and coordination with the FCC,
    government agencies, and the public to produce this report, NTIA
    identified an additional 35 MHz of Federal spectrum to transfer to
    private use. NTIA has already reallocated 195 MHz of the previously
    identified spectrum. The remaining spectrum is scheduled for auction by
    the FCC by 2002, in accordance with the Balanced Budget Act of 1997.
        NTIA has also recently transferred spectrum to the private sector
    to support satellite systems. During the International
    Telecommunication Union World Radiocommunication Conference (ITU/WRC)
    in October 1995, NTIA coordinated the release of 3 MHz of Federal
    Government spectrum for exclusive use in mobile satellite systems (low
    earth orbiting satellites, or LEOs). NTIA has also arranged for shared
    use of 360 MHz of Federal Government spectrum for mobile satellite
    links for big LEOs.
        Most recently, NTIA identified 20 MHz of spectrum for reallocation
    by the FCC to private sector uses and assignment by competitive bidding
    in accordance with the Balanced Budget Act of 1997. Proceeds of these
    auctions were originally to be contributed towards balancing the
    Federal budget by fiscal year 2002. Federal agencies' relocation costs
    associated with this reallocation are in excess of $ 1 billion. Under
    the recently enacted defense authorization statute, these affected
    Federal agencies will be reimbursed for their relocation costs by the
    winners of the spectrum auctions of the 20 MHz and the previously
    identified 1710-1755 MHz band. NTIA will work closely with the Office
    of Management and Budget, the FCC, and affected Federal agencies to see
    that this process is successful. We appreciate the Commerce Committee's
    support in securing this legislative authority.
        Planning for Future Spectrum Needs--Reinventing the spectrum
    authorization process--NTIA began a program in 1993 to develop an
    automated Federal spectrum management system to provide a standardized,
    automated method for Federal agencies to submit applications for
    spectrum support, select spectrum that is interference free, and
    validate that the spectrum requested is within the rules and
    regulations governing spectrum authorization. This system will allow
    NTIA to make the spectrum management process more efficient and
    responsive, more accessible, and less bureaucratic. NTIA introduced the
    Joint Spectrum Management System for windows (JSMSw) in March 1997.
    Based on feedback the Federal agency users, JSMSw has been revised to
    make it efficient and effective. Improvements will continue on JSMSw to
    make it even more effective and to make actual use of spectrum more
    efficient. JSMSw provides spectrum management tools to spectrum
    managers in the field so that they can manage their own use of the
    spectrum, use the spectrum more efficiently, and more rapidly obtain
    spectrum to meet their needs. Seventeen seminars have been conducted by
    NTIA for Federal agency spectrum managers in the use and application of
    JSMS.
        Public Safety Needs--One of the most pressing Federal spectrum
    needs is that of public safety. Under Congressional leadership, NTIA
    and the FCC established the Public Safety Wireless Advisory Committee
    (PSWAC) in 1995. The Committee was composed of appointees from Federal,
    State, and local governments and private sector public safety
    organizations. The goals were to evaluate the wireless communications
    needs of public safety agencies through the year 2010 and recommend
    possible solutions to the lack of available spectrum and
    interoperability problems. In September 1996, PSWAC submitted a report
    outlining the public safety community's need for additional spectrum,
    improved interoperability, more flexible licensing policies, and
    increased sharing of spectrum resources. Many of the PSWAC
    recommendations have now been adopted.
        The FCC is currently conducting a rulemaking to provide the state
    and local public safety community with 24 MHz of spectrum that will be
    made available when broadcast TV migrates to other portions of spectrum
    as part of the deployment of digital television. NTIA is working with
    the FCC to develop procedures for licensing of this spectrum and to
    provide a means to establish interoperability between state, local and
    the Federal government. To this end, NTIA will be participating in the
    FCC's recently established Public Safety National Coordination
    Committee. The advisory committee will develop an operational plan to
    achieve national interoperability, as well as technical standards to
    achieve full interoperability and network integration. The work of the
    committee is to be completed by September 2000.
        As provided for in the FY 1999 budget, NTIA is increasing its
    public safety staff to identify the long-range spectrum requirements
    for the next 10 years and develop a strategy to provide sufficient
    spectrum for growth of current services, advanced technologies, and
    interoperability requirements. Through these efforts, we will continue
    to ensure that spectrum is available for Federal Government and the
    public safety community to meet the needs of law enforcement, national
    security, safe airways, disaster and environmental control, and the
    promotion of safe living conditions.
        Global Positioning System (GPS) Expansion.--NTIA is also addressing
    issues that will protect the radio spectrum currently used by the
    global positioning system (GPS) and facilitate the expansion of GPS
    services. GPS is a worldwide utility that provides precise position,
    velocity, and time information anywhere in the world. GPS information
    is used by the public and private sectors in such areas as aviation,
    maritime and waterways, public transportation, railroads,
    telecommunications, surveying, defense, weather, environmental
    protection, and law enforcement.
        In order for GPS to be used reliably and confidently as a worldwide
    utility, the radio spectrum within which it operates must be protected.
    NTIA is responsible for leading the efforts in preparation for the
    World Radio Conference 2000 to protect the radio spectrum used by GPS.
        NTIA is also dedicated to making spectrum available for the
    expansion of GPS. The President's FY 2000 budget would provide for two
    new signals for civilian uses of GPS. One of the signals will be
    available for general applications. The other signal will be located in
    a portion of the spectrum allocated to aeronautical radionavigation
    services for aeronautical safety applications.
        NTIA will be addressing the associated international spectrum
    issues at forthcoming technical fora and the World Radiocommunications
    Conference 2000. NTIA will also continue its efforts to work with the
    Department of Transportation, the Department of Defense, the Department
    of State, the FCC, and the private sector to ensure that spectrum is
    available in the future for this purpose.
        Infrastructure Protection--Finally, NTIA has taken a leading role
    in protecting the national information infrastructure. As information
    and telecommunications systems become increasingly critical to our
    daily communications and our national economy, protection of this
    infrastructure is also becoming a priority for the nation. In May 1998,
    the President issued a Decision Directive (PDD-63) to create a public/
    private partnership to address the nation's need to protect our
    critical infrastructures from purposeful attacks. PDD-63 designated the
    Department of Commerce as the lead agency to conduct a vulnerability
    assessment to protect the nation's information and communication
    infrastructure. The Secretary of Commerce assigned NTIA the
    responsibility to carry out this program.
        NTIA is planning to undertake numerous activities as lead agency.
    Among other things, we will be working with industry to raise awareness
    of the threat to, and vulnerabilities of, their infrastructure. NTIA
    will also work with industry to develop plans to mitigate the risks,
    deal with attacks, and reconstruct damaged infrastructure.
    Additionally, we will encourage the adoption of security standards and
    best practices, not only within the United States, but also among our
    major industrialized partners. Our goal is to harmonize our efforts
    with other countries and take best advantage of their developments in
    technology and policy because this infrastructure is inherently global.
        Throughout this process, we will be working closely with industry,
    as most of the information and communications infrastructure is owned
    and operated by the private sector. We are working with three key trade
    associations--the Information Technology Association of America (ITAA);
    the United States Telephone Association (USTA) and the
    Telecommunications Industries Association (TIA). In addition, NTIA has
    established close working relations with other government agencies,
    which will contribute to the effort. These include the National
    Communications System (NCS), the President's National Security
    Telecommunications Advisory Committee (NSTAC), the Federal
    Communications Commission's Network Reliability and Interoperability
    Council (NRIC) and the FBI's National Infrastructure Protection Center
    (NIPC). These close working relationships should ensure the cooperation
    of industry and government in our efforts to protect the nation's
    infrastructure.
    Telecommunications Research
        NTIA is greatly assisted on spectrum management and other
    telecommunications issues by its laboratory in Boulder, Colorado. The
    laboratory, operated by NTIA's Institute for Telecommunication Sciences
    (ITS), performs state-of-the-art telecommunications research to support
    NTIA and Department of Commerce goals. It also conducts specific
    research under reimbursable agreements with other Federal agencies and
    under cooperative research agreements with private sector partners.
        ITS is an active contributor to many agency endeavors, including
    those dealing with spectrum efficiency and sharing issues, digital
    television, broadband wireless technology and convergence issues,
    advanced video and voice performance testing and standards development,
    Internet technology issues, and critical information and communication
    infrastructure research and development. Most recently, ITS provided
    essential information with respect to signal contours for purposes of
    the Satellite Home Viewers Act and related proceedings.
        The Value of Federal Research--ITS's research laboratory plays a
    critical role in telecommunications research because it is is unbiased
    and cuts across government and industry needs. In many instances, ITS's
    input is essential to resolving pressing technical questions that can't
    be resolved by industry. For example, ITS's research laboratory
    recently assisted the FCC in the development of the national digital
    television channel assignment plan to facilitate the introduction of
    Digital Television (DTV) across the United States. Without this work,
    digital television channel assignments could not have been made in a
    timely and effective way, potentially costing television broadcasters
    millions of dollars due to increased interference. Private sector
    experts probably could not have done this work in an unbiased fashion,
    since their livelihood depends on the continued affiliation with their
    broadcast customers.
        In another recent example, ITS participated in international
    frequency band allocation proceedings for direct satellite audio
    broadcasts. ITS was tasked to determine the viability of the proposed
    bands in the United States. ITS's measurements, which showed that the
    satellite signals could not be received, prevented the investment of
    billions of dollars in potentially unusable satellites. The private
    sector probably could not have provided such measurements, because they
    would be considered biased and would not have had the same influence as
    Government measurements. Additionally, industry did not have the means
    to make these measurements in a short time frame.
        Over the years, there have been numerous external and internal
    reviews of NTIA's laboratory. All these reviews concluded that there is
    a compelling need for a centralized Federal telecommunications
    laboratory that serves the public interest by undertaking uniquely
    governmental research functions in a cost-effective fashion. The ITS
    laboratory is essential because it is guided by the public interest,
    not profit motives. A centralized laboratory is also crucial to
    preventing the duplication of telecommunications research efforts among
    Federal agencies.
        Review of Telecommunications and Information Technology (IT)
    Systems--ITS also provides expert advice to government agencies with
    regard to telecommunication and IT planning and implementation. The
    laboratory helps these agencies provide cost-effective and
    interoperable systems to accomplish their missions. For example, ITS
    provided the U.S. Forest Service a national strategic plan for
    upgrading telecommunications and IT systems across all National
    Forests; assisted the Department of Transportation in developing a
    national Intelligent Transportation System to aid traffic control and
    general public transportation safety; analyzed Federal Railway
    Administration telecommunication requirements for rail safety and
    positive train control systems; evaluated and designed Federal Aviation
    Administration augmentations to Global Positioning System capabilities
    for air traffic control and ship navigation; and conducted engineering
    studies and developed standards for the National Communications System
    to assure interoperability and continuity of operations during national
    emergencies.
        ITS is also playing a central role in the Department of Justice's
    Interoperability Standards Task Force (a consolidated effort of several
    Justice information integration programs), which is aimed at
    establishing telecommunications interoperability and effective
    information sharing among agencies in the local, State, and Federal
    criminal justice and public safety communities. ITS has the
    responsibility for identifying and analyzing the user needs at all
    levels and for proposing a comprehensive set of interoperability
    standards that will allow a nationwide criminal justice and public
    safety enterprise network.
        Spectrum Use--Finally, NTIA's laboratory provides significant
    information on spectrum use. ITS maintains the Nation's database of
    radio propagation characteristics for the entire radio spectrum to help
    improve radio communications in the U.S. and internationally. The
    database provides the foundation for models used by NTIA to prepare
    domestic and international radio standards and spectrum sharing
    agreements, by NTIA and the FCC in national spectrum management, and by
    the broad community of private sector and government users for
    planning, designing, and implementing radio telecommunication systems.
    This information also facilitates work on advances in
    telecommunications technology--such as personal communications services
    and high definition television--to benefit all citizens.
        ITS also provides comprehensive measurements of spectrum use and
    occupancy. These measurements provide critical information for spectrum
    policy and regulation which otherwise would be based solely on
    information contained in licensing documents and other records. This
    measurement capability is also used to solve difficult radio
    interference problems. Suspected radio interference between Government
    agencies, or the Government and private sector, can become contentious.
    ITS, because of its neutrality and expertise, is able to establish the
    trust of the parties and develop the evidence regarding any suspected
    interference. ITS has been able to quickly resolve many interference
    problems that other Government agencies and private sector
    organizations were not able to resolve.
        ITS is proposing in FY 2000 a Broadband Initiative to develop the
    fourth generation of its Radio Spectrum Measurement System. This work
    is required to keep pace with the changes in spectrum use brought about
    by the deployment of new technologies such as spread spectrum wireless
    communications. Without the initiative, ITS will not be able to
    maintain its capability to make comprehensive spectrum use and
    occupancy measurements and to quickly resolve suspected interference by
    Government systems to private sector operations.An FY 2000 initiative
    has been proposed for ITS to lead efforts in Critical Infrastructure
    Protection (CIP) research related to telecommunications and information
    technology. With its tremendous expertise and experience, ITS is a
    natural candidate to lead these efforts. ITS will develop a process for
    characterizing the assets of existing infrastructures, work with other
    Federal agencies and industry to identify threats and vulnerabilities
    to specific parts of the infrastructure, and define and evaluate
    mitigation strategies based on existing and emerging products and
    technologies.
    Grant Programs
        Another significant area of NTIA's activities is its two grant
    programs, which help expand access to new technologies. Having
    documented the ``digital divide,'' NTIA is also seeking to bridge the
    divide between those with access to new technologies, and those
    without. The Telecommunications and Information Infrastructure
    Assistance Program (TIIAP) provides matching grants to non-profits and
    public entities that are using new technologies in innovative ways to
    reach those in rural, low-income, and traditionally underserved areas.
    NTIA's Public Telecommunications Facilities Program (PTFP) supports the
    maintenance and improvement of public broadcasting facilities
    throughout the United States and its territories. Both programs are
    ensuring that Americans have greater access to the benefits provided in
    our digital age.
        Telecommunications and Information Infrastructure Assistance
    Program--Since 1994, TIIAP has helped underserved communities use
    information infrastructure to improve the quality of, and the public's
    access to, lifelong learning, health care, public safety, and other
    community based services. TIIAP provides critical seed money, without
    which many innovative and vital applications would not take root and
    grow in these communities. We have awarded 378 grants to schools,
    libraries, hospitals, State and local governments and other non-profit
    entities in all 50 states, the District of Columbia and the U.S. Virgin
    Islands.
        This competitive program has been able to award only one out of
    every 14 applications. Over the first five years of the program, NTIA
    received almost 5400 applications. Approximately $118 million in
    federal grants have been matched by more than $180 million in non-
    federal funds. In 1998 alone, TIIAP leveraged $18.5 million in federal
    funds matched by $24 million in private, State and local funding and
    awarded 46 grants from over 750 applicants to projects in 35 states and
    the District of Columbia. For 1999, TIIAP has received 702 applications
    seeking over $278 million in grant funds. These applications represent
    more than sixteen times what NTIA can fund, making TIIAP one of the
    most competitive federal grant programs.
        TIIAP has an excellent track record of supporting highly successful
    information infrastructure projects in underserved communities. The
    program leverages a modest federal investment into significant
    community investments and provides national models for public and
    nonprofit organizations to follow.
        For example, through a TIIAP grant to the City of Winston-Salem,
    fire department vehicles responding to emergencies in Winston-Salem and
    surrounding communities have access to graphic information about the
    emergency sites as they respond. Detailed images of all city buildings
    have been created and made accessible in the fire department vehicles
    by using technologies such as document imaging, geographic information
    systems (GIS), mobile computers, and global positioning technology. By
    giving fire fighters better decision-making options during emergency
    responses, the system enables them to fight and contain fires more
    effectively, to save lives and property, and, in some cases, prevent
    fires from spreading to other locations. This project has received
    international acclaim--it was recently selected as a finalist in the
    prestigious Global Bangemann Challenge, which honors ``the best
    information technology projects that cities can show.''
        A TIIAP grant has also provided Internet connectivity for
    chronically-ill children at the University of Mississippi Medical
    Center. This connectivity enables these patients to continue their
    education and maintain contact with peers, teachers, and parents.
    Through the TIIAP grant, both hospitalized and homebound patients can
    use laptop computers and desktop video conferencing to gain access to
    their teachers, their classroom assignments, and their friends and
    families. Its impact on their emotional well-being, as well as their
    continued classroom involvement, is invaluable.
        The benefits of the TIIAP grant program were confirmed recently by
    an independent evaluation by Westat of projects funded in the program's
    first two years. Among other things, the evaluation found that 90
    percent of the projects are still in operation, and that the majority
    of projects reported meeting or exceeding nearly all of their
    objectives. Most important, the projects are sustaining themselves
    beyond the federal grant period and are generating new funds. Each
    grant dollar has generated another four non-federal dollars to support
    information infrastructure. In addition to matching funds, the grants
    led to investments that expanded their services beyond the original
    scope and further investments to support spin-off activities.
        The projects' role as national models further leverages the TIIAP
    investment. Extensive outreach by the projects in response to the
    tremendous interest is spreading the benefits of the TIIAP grants to
    other communities. The 206 organizations surveyed in the independent
    study reported responding to 79,000 unsolicited requests for
    information and hosted visitors representing over 5,000 organizations.
        The evaluation also found that TIIAP projects help communities in
    need and serve a diverse public. Sixty-five percent of the projects
    involved rural areas, while 48 percent served the inner cities. Fifty-
    nine percent reached those living in extreme poverty and 42 percent
    involved users with disabilities.
        TIIAP grants provide the catalyst for the vast majority of these
    programs. Seventy-five percent of grant recipients reported to Westat
    that their projects never would have happened without the TIIAP funds.
    Of the remaining 25 percent, 90 percent indicated that, without TIIAP
    support, the projects would have either reached significantly fewer
    people, or have been substantially delayed, or dramatically reduced
    their range of services.
        For a modest federal investment, TIIAP is providing a tremendous
    body of knowledge on which policy makers, community leaders, and
    technologists in the private, public, and nonprofit sectors can rely as
    they work to ensure that advanced telecommunications and information
    technologies reach the farthest corners of our nation. The excellence
    of the TIIAP-funded projects is reflected in the nationwide and
    international acclaim they receive. For example, four TIIAP grant
    recipients were recently named on a short list of finalists in the
    Global Bangemann Challenge, which honors the best information
    technology projects that cities can show. TIIAP projects have also
    received awards from the NII/GII awards competition, the National Rural
    Health Association, the National Association of Development
    Organizations, the Medical Library Association, and the National
    Association of Counties, among many others.
        Most importantly, TIIAP is strengthening our communities by
    revolutionizing how we learn, how we take care of our sick, how we
    control crime, and how we create opportunities for people most in need.
        Public Telecommunications Facilities Program (PTFP)--NTIA's PTFP
    has helped public broadcasters maintain and expand their equipment and
    facilities for the last 35 years. The grants achieve three
    Congressionally mandated objectives: (1) extend delivery of public
    telecommunications services to as many American as possible by the most
    effective and efficient means; (2) increase public telecommunications
    services and facilities available to, operated by and owned by
    minorities and women; and (3) strengthen the capability of existing
    public broadcasting stations.
        Facilities funded by PTFP have given millions of Americans access
    to the educational and cultural programming of public broadcasting.
    With the program's assistance, a public television signal now reaches
    about 95% of our nation's population and public radio reaches
    approximately 90% of the population. NTIA and its predecessor agencies
    have assisted noncommercial entities to acquire the necessary hardware
    to produce and broadcast public television and radio programs, radio
    reading services, and descriptive video services for the disabled. NTIA
    also supports the delivery of instructional and educational services by
    a broad array of community institutions.
        Since PTFP's inception, over $500 million in federal funds has been
    invested in the public broadcasting infrastructure. Local communities
    have provided upward of another $500 million dollars to match the
    federal grants. In 1998, NTIA awarded $19.9 million for 115 projects in
    41 states to facilitate the expansion of public broadcasting services
    to communities across the country and ensure the continuation of
    service. After receiving clearance from the FCC, NTIA recently awarded
    three addition projects from 1998. A number of the awards will expand
    access to public radio to 450,000 persons who presently do not receive
    any signal. Communities such as Santa Rosa, CA; Wilmington, DE; Kilauea
    Town, on the island of Kauai, HI; Leonardtown, MD; Manteo, Buxton, and
    Waves, NC; Manahawkin, NJ; Lund and Ely, NV; the Duck Valley
    Reservation of the Shoshone-Paiute Tribes in Owyhee, NV; Defiance, OH;
    and Vernal/Uintah, UT, will receive either their first public radio
    service or greatly expanded service.
        The President's FY 2000 budget requests $450 million over 5 years
    to go towards the conversion of digital television. In April 1997, the
    FCC issued regulations requiring broadcasters to transition from analog
    to digital broadcasting. Public broadcasters must convert to digital
    broadcasting by May 1, 2003. This deadline allows the analog spectrum
    to be turned over to commercial users by the 2006 date established by
    Congress and mandated in the Federal Balanced Budget Act of 1997. The
    President's budget requests advance appropriations for a multi-year
    effort to allow advance planning and certainty in the public
    broadcasting system's transition to digital broadcasting. In FY 2000,
    the Administration is seeking $35 million from Congress to the PTFP.
    The $35 million request is part of the $450 million initiative, now in
    its second year. The initiative seeks funds in both the Corporation for
    Public Broadcasting and PTFP. Funding through PTFP will be targeted for
    digital transmission equipment, while funding for Corporation for
    Public Broadcasting will support necessary expenses related to digital
    program production and development.
        Public broadcasting stations are undertaking an enormous new
    financial burden as they transition to the digital format. Over $700
    million is needed for the nation's public television stations to meet
    the FCC's minimum digital broadcast pass through requirements. The
    conversion will place an enormous strain on the already precarious
    budgets of many of the public broadcasting stations. Federal assistance
    is critical during this transition period. For almost half the public
    television licensees, the cost of conversion to digital is projected to
    exceed their annual revenues. If stations are forced to convert without
    assistance, many stations will be forced to go off the air or reduce
    hours of operation, adversely affecting programming quality and
    diversity.
        PTFP will take special measures to assure that the full potential
    of the new digital technology is used to provide the most economical
    means possible of providing public broadcasting services. Special
    consideration will be given to stations broadcasting in under served
    markets, especially those in rural, remote, or disadvantaged
    communities. In addition to digital conversion assistance, PTFP will
    continue its traditional support to expand the availability of public
    broadcasting services to those areas without such service. PTFP also
    will assist public radio and television stations to continue providing
    their existing analog service during the federally mandated transition
    period.
        Since September, NTIA has awarded fifty-two awards to assist public
    television stations with the purchase of digital-ready or digital-
    compatible equipment. Three of these projects--KCTS-TV, Ch. 9, Seattle;
    KQED-TV, Ch. 9, San Francisco; and KCET-TV, Ch. 28, Los Angeles--will
    allow stations to complete their full digital conversion. Another grant
    will permit KERA-TV, Ch. 13, Dallas, TX, to share the cost of a digital
    TV antenna, thus allowing the station to remain on its current tower
    and greatly assist in its digital conversion.
        As a result of an emergency grant to the Mississippi Authority for
    Education Television, the state network restored analog public
    television service to the Jackson area and allowed the Jackson station
    to broadcast experimental digital programming. NTIA funded a new tower
    and transmission equipment in response to the collapse of the
    commercial tower on which the public television station's antenna had
    been located.
        These examples demonstrate NTIA's efforts to preserve public
    broadcasting, bring service to remote and rural communities, and
    encourage efficient technologies. NTIA will follow the same objectives
    as we assist public television with digital conversion and ensure that
    all public television transmitters are converted by 2003.
    Agency Operations
        NTIA is also committed to improving agency operations and
    management. Beginning in 1990, Congress passed several major pieces of
    legislation governing the way Federal departments and agencies operate,
    specifically:

    --the Chief Financial Officers Act of 1990, as amended by the
            Government Management Reform Act of 1994;
    --the Government Performance and Results Act of 1993; and
    --the Clinger-Cohen Act of 1996.
        NTIA has made significant progress in implementing these laws. The
    Chief Financial Officers Act requires Federal departments and agencies
    to prepare annual financial statements and have those statements
    audited in accordance with generally accepted auditing standards. The
    Department of Commerce is committed to improving financial information
    and financial management capabilities. NTIA was one of the first
    Commerce agencies to receive an unqualified opinion on its financial
    statements for 1993, and has continued to receive unqualified opinions
    on all subsequent statements. Since 1995, the audits conducted have
    been formal full scope audits. The unqualified opinions confirm that
    NTIA's financial statements fairly present the financial position of
    the agency.
        Under the guidance provided by the Government Performance and
    Results Act (GPRA), NTIA has established a strategic planning process
    and developed an agency strategic plan. During the past year, NTIA's
    senior managers have focused on redefining NTIA's goals and objectives
    and succeeded in reducing the agency goals from seven to four. A
    continuing emphasis has been placed on measuring performance, both
    internally and at the Department level. NTIA's internal planning
    process is designed to complement and reinforce the Department of
    Commerce planning efforts. NTIA managers have embraced the planning
    process as a way to improve our management and maximize the return to
    the public from the agency resources available.
        NTIA is also supporting the Department's efforts to properly
    implement the philosophy of the Clinger-Cohen Act. Clinger-Cohen (also
    called the Information Technology Management Reform Act) is designed to
    improve our management of the information technology investments
    necessary to enable us to fulfil our missions. The information
    technology investments NTIA makes are directly linked to our business
    needs. The strategic and operational information technology plans
    directly support for the agency's goals and objectives. NTIA has
    processes in place designed to ensure that all major information
    technology investments are evaluated in terms of the overall business
    value to the organization. In addition, NTIA's laboratory (ITS) is
    performing a Telecommunications Assessment across all bureaus and
    agencies of the Department to provide the current status of
    telecommunications and information technology assets for Commerce
    management, and to allow informed decision-making on future evolutions
    in the infrastructure.
        NTIA has declared two information technology systems to be mission
    critical for year 2000 efforts: the Spectrum Frequency Management
    Systems and the Grants Processing System. Both these systems are year
    2000 compliant. NTIA is in the process of developing year 2000
    contingency plans for its own essential operations and working with the
    Department of Commerce to ensure telecommunications and other services
    are available for essential personnel.
                                   conclusion
        NTIA serves a critical role in developing and promoting policy in
    all areas relating to the telecommunications and information sectors.
    We have taken the lead, both on the domestic and international front,
    in setting forth positions in spectrum management, universal service,
    broadband networks, global competition, and electronic commerce--to
    name a few key areas. Given the increasing importance of these issues
    to our domestic and global economy, NTIA is playing an increasingly
    significant role in its position as representative of the U.S.
    government and Executive Branch advisor.
        As NTIA Assistant Secretary for six years, I continue to be proud
    of the role we play and the accomplishments we have achieved. We hope
    to continue to address the myriad new issues in telecommunications and
    information technology with the same level of expertise and
    thoroughness that we have always displayed. This objective has become
    increasingly difficult, however, as the issues and demands on NTIA have
    increased, and the staff levels have decreased. I fear that NTIA's
    leadership in the dynamic and expanding telecommunications and
    information arena could be compromised without adequate resources. We
    therefore appreciate the support of this Committee as it considers our
    FY2000 Budget Estimates so that NTIA can continue to play a leadership
    role.
                                   APPENDIX A
     ntia comments on may 5, 1999 discussion draft ``ntia reauthorization
                                 act of 1999''
        The Administration offers the following comments on the Discussion
    Draft ``NTIA Reauthorization Act of 1999'' (dated May 5, 1999):
        The funding level contained in the Discussion Draft falls short of
    the President's request for fiscal year 2000 and does not reflect the
    fiscal year 2000 budget priorities for NTIA. The President's fiscal
    year 2000 budget provides a funding level of an estimated $17.2 million
    for salaries and expenses. The President's budget request acknowledges
    the increasing demands on NTIA's resources and personnel as a result of
    the rapid growth of the telecommunications and information technology
    sectors of the economy. The President's request also includes
    additional funding to implement World Trade Organization requirements;
    enhance Federal radio spectrum management and efficiency; undertake a
    new broadband initiative for the telecommunications research facility
    at Boulder, Colorado; and implement Presidential Decision Directive-63
    on Critical Infrastructure Protection. The Administration notes that
    Congress has directed NTIA to conduct 5 or more studies and staff a new
    Commission within the next year. Moreover, pending legislation would
    direct NTIA to conduct 3 or more additional studies.
        The Discussion Draft does not include funds for the
    Telecommunications and Information Infrastructure Assistance Program
    (TIIAP). TIIAP provides matching grants on a competitive basis to
    community-based, non-profit and other public organizations, to
    demonstrate and promote the practical applications of new
    telecommunications and information technologies that improve the
    quality of, and the public's access to education, health care, public
    safety and other community-based services. In the five years of the
    program, NTIA has awarded 378 grants totaling $118 million, matched by
    an additional $180 million from the grantees and their private sector
    and State and local government partners. NTIA grant recipients have
    been recognized for their excellence on a national and international
    level by the Global Bangemann Challenge, the National Rural Health
    Association, the National Association of Development Organizations, the
    Medical Library Association, the National Association of Counties, and
    the NII/GII Awards. The President's fiscal year 2000 budget requests
    $20 million for this program.
        Although the Public Telecommunications Facilities Program (PTFP)
    has not traditionally been authorized through NTIA's authorization
    legislation, please note that the President's fiscal year 2000 budget
    also requests $35 million for this program. PTFP provides matching
    grants on a competitive basis to community based public
    telecommunications entities to plan and construct facilities that
    provide educational and cultural service to the public. Additional
    funding has been requested for fiscal year 2000 to assist public
    broadcasters with an orderly transition to digital broadcasting within
    the Congressionally mandated deadline for the transition.
        The Discussion Draft would also require Federal agencies to
    reimburse NTIA for all of the costs associated with the agency's
    spectrum management function. Since fiscal year 1997, the Federal
    agencies have been reimbursing NTIA for a portion of the costs
    associated with these functions. The current reimbursement rate for
    fiscal year 1999 and the proposed rate in the President's fiscal year
    2000 budget request is 80 percent. The Administration believes the 80
    percent reimbursement/20 percent appropriated funds strikes the correct
    balance for the funding of its spectrum management functions for the
    following reasons. As the President's principal adviser on
    telecommunications, NTIA performs certain spectrum management functions
    on behalf of the well-being of the nation rather than directly related
    to spectrum management performed on behalf of the Federal agencies.
    Moreover, the 20 percent appropriated funds allows NTIA to retain its
    independence, objectivity and flexibility to perform spectrum
    management functions that might not be within the narrow interests of
    the Federal agencies, but are necessary in the national interest, e.g.,
    spectrum efficiency. These appropriated funds also provide bridge
    funding for spectrum management activities during the first quarter of
    the year as agency payments are received.
        The Discussion Draft would also privatize NTIA's telecommunications
    research facility in Boulder, Colorado. Prior reviews of NTIA's
    Institute for Telecommunication Science (ITS) to determine its value to
    the nation have all reached the conclusion that there is a compelling
    need for a centralized, cost-effective, unbiased Federal
    telecommunications presence that serves the public interest and
    performs unique governmental engineering research. Further, the
    Administration believes that privatization of ITS would be detrimental
    to the national interest for the following reasons.
        First, privatization of ITS through the sale of the laboratory
    would not result in any substantial revenues. The underlying laboratory
    assets, e.g., telecommunications measurement and testing equipment, are
    very specialized prototype equipment with little or no market value.
    The true value of the laboratory resides in the knowledge and expertise
    of its highly trained and specialized senior engineering and scientific
    staff, many of whom could be expected to leave the laboratory for other
    Federal employment locally (e.g., the Boulder laboratories of the
    National Institute of Standards and Technology or National Oceanic and
    Atmospheric Administration) or elsewhere to complete their Federal
    careers, rather than remain automatically with a privatized entity.
        Second, privatizing the laboratory would eliminate an invaluable
    national telecommunications resource. ITS provides the Federal
    Government's only impartial telecommunications research and engineering
    capability to support the nation's telecommunications policy
    development efforts and Federal spectrum management mandate. For
    example, ITS has provided essential technical support in the following
    telecommunications policy areas: National Digital Television Channel
    Assignment Planning; spectrum occupancy and interference analyses to
    support national and international (e.g., World Radio Conference)
    spectrum planning requirements; Satellite Home Viewers Act network
    coverage analysis; quick response measurement support to resolve
    potential safety-of-life interference; and audio and video
    telecommunication quality of service standards development.
        Third, if ITS were no longer available to conduct this research,
    NTIA would need additional Federal funding to accomplish its essential
    technical research work. For a direct appropriated investment in ITS of
    approximately $3 million, the Federal government and the private sector
    receive approximately $10 million in research results through
    reimbursable telecommunications research work for other Federal
    agencies (e.g., Departments of Defense, Justice, Transportation) and
    through cooperative research activities with the private sector (e.g.,
    US West, BellAtlantic, PacTel, BellSouth, GTE, Hewlett-Packard, Netrix,
    Integrator Corporation, Audio Logic, American Automobile Manufacturing
    Association).
        Finally, the Administration believes that a legislative mandate to
    review the long-term efficiency of NTIA is unnecessary. It is our
    understanding that the Department's Inspector General and the
    Comptroller General already have such authority. Moreover, during the
    past six years, NTIA has worked cooperatively with the Department's
    Inspector General on a number of studies examining the agency's
    management practices and efficiencies. For example, in 1997, the Office
    of the Inspector General conducted an audit of NTIA's Office of
    Spectrum Management (OSM) and reviewed in detail OSM's funding, fee
    collection and staffing practices. The Office of Inspector General
    determined that ``no significant conditions'' exist meriting the
    issuance of an audit report, but did note that OSM needed additional
    personnel and resources to meet its current and future needs and more
    timely reimbursement payments from Federal agencies. Since that report,
    OSM has worked to address these issues. Most recently, the Office of
    the Inspector General completed audits of NTIA's grant programs and
    found that both programs promote merit-based decisions. NTIA has
    already implemented the Office of the Inspector General's recommended
    improvements to the grant award processes. NTIA has also worked
    cooperatively with the General Accounting Office in its examination of
    federal funding for universal service, technology programs for schools
    and libraries, and law enforcement assistance, and on spectrum
    management issues involving the Department of Defense.
                                   APPENDIX B
     recent congressional studies for the national telecommunications and
                           information administration
        Congress in recent years has authorized the National
    Telecommunications and Information Administration (NTIA) and Department
    of Commerce certain mandates.

     As a result of the Child Online Protection Act (COPA), NTIA
            will serve on a 19-member commission to study methods to reduce
            access by minors to material deemed harmful on the Internet.
            Further, NTIA, is required to staff the Congressionally-
            appointed Commission. The Commission has one year to submit a
            report to Congress.
     As a result of the Digital Millenium Copyright Act, NTIA is
            required to consult with the Register of Copyrights regarding
            infringing uses of copyright material; NTIA is required to
            consult with the Register of Copyrights and report to Congress
            on the Act's effect on encryption, technological measures and
            protection of copyright owners; and consult with the Register
            of Copyrights and report to Congress on the development of
            electronic commerce and associated technology.
     As a result of the Next Generation Internet Research Act of
            1998, the Secretary of Commerce is directed to sponsor a
            National Academy of Sciences study that will look at the
            effects on trademark rights of adding new top-level domain
            names and make recommendations on how best to protect
            trademarks in the growing cyberspace economy. Congress
            authorized $800,000 for this study; however, no funds were
            appropriated. NTIA is the lead government agency carrying out
            the Presidential directive on Electronic Commerce supporting
            efforts to make the governance of the domain name system
            private and competitive. NTIA is working towards creating a
            contractually based self-regulatory regime that deals with
            potential conflicts between domain name usage and trademark
            laws on a global basis.
     As a result of the International Anti-Bribery and Fair
            Competition Act of 1998, the Secretary of Commerce is required
            to report to Congress on July 1, 1999, and each year for 5
            years thereafter, with respect to implementation of the OECD
            Anti-Bribery Convention. Among other things, the Secretary is
            required to report on advantages, in terms of immunities,
            market access, or otherwise, in the countries or regions served
            by Intelsat and Inmarsat, the reason for such advantages, and
            an assessment of progress towards a procompetitive
            privatization of these organizations. NTIA has been tasked as
            the lead for the Department on the Secretary's report to
            Congress.
                     potential studies proposed by congress
     H.R. 1554, the Satellite Copyright, Competition, and Consumer
            Protection Act, passed by the House on April 27, 1999, directs
            NTIA and the Register of Copyrights to submit to Congress a
            joint study on technical and economic impacts of the must-carry
            obligations on delivery of local signals. The study would be
            due to Congress on July 1, 2000.
     H.R. 1714, the Electronic Signatures in Global and National
            Commerce Act, introduced by House Commerce Committee Chairman
            Bliley on May 6, would, among other things, require NTIA to
            report to Congress, within 180 days, and annually thereafter,
            identifying foreign barriers to commerce in electronic
            signatures. Second, the bill would direct NTIA to promote the
            acceptance and use internationally of electronic signatures,
            and take such actions as necessary to eliminate or reduce
            impediments to commerce in electronic signatures. Third, the
            bill would direct NTIA within three years after enactment, to
            conduct an inquiry regarding State statutes, regulations, or
            other rules of law enacted or adopted after enactment and the
            extent to which statutes, comply with statute.
     Senate Commerce Committee Chairman McCain has indicated he
            will introduce soon legislation that will require NTIA, in
            collaboration with the FCC, to analyze the facts and the issues
            involved in the ongoing deployment of advanced broadband data
            networks, especially in rural and low-income areas, and report
            findings to Congress.

        Mr. Tauzin. I wonder how that logic, that analogy, would
    work with the IRS. If I don't pay the IRS 20 percent, do they
    really have to work for me?
        Mr. Irving. I am not going to try and find out.
        Mr. Tauzin. Let me now introduce our second witness, Mr.
    George Ross.

                       STATEMENT OF GEORGE E. ROSS

        Mr. Ross. Thank you, Mr. Chairman, members of the
    committee, I am pleased to appear before you. Our most recent
    work in NTIA concentrated on audits of its fiscal year 1998
    financial statements and its fiscal year 1997 grant funding
    decisions. We have also conducted audits of NTIA grantees and
    reviewed several of NTIA's operations. Based on that work, we
    have found NTIA to be a well-managed agency whose leadership
    has responded positively to our recommendations for management
    improvements.
        Since fiscal year 1994, NTIA has received an unqualified
    opinion on its financial statements, which means that those
    statements present fairly on all material aspects of NTIA's
    financial position and results of operations. That was a
    particularly noteworthy accomplishment for fiscal year 1998,
    considering that four new financial statements were mandated by
    OMB.
        NTIA is also making steady progress to comply with the
    Government Performance and Results Act requirement that
    agencies report performance information. In March of this year
    we completed audits of NTIA's two discretionary financial
    assistance programs, the Public Telecommunications Facilities
    Program and TIIAP.
        In fiscal year 1997, PTFP competitively awarded 97 grants
    totaling more than $14 million. TIIAP competitively awarded 55
    grants totaling almost $21 million. We found that NTIA's
    criteria, procedures and practices for soliciting, reviewing,
    and selecting those awards generally complied with statutory
    Department of Commerce and NTIA requirements and appeared
    designed to result in merit-based awards.
        However, PTFP program staff adjusted independent review
    scores for almost 90 percent of the applications without
    consulting the reviewers. Additionally, the Assistant
    Secretary, as the selection official, added and deleted
    applications from the recommended list without sufficiently
    documenting all of those decisions.
        We recommended that NTIA implement its state of commitment
    not to adjust independent review scores and maintain written
    documentation of the reasons for making awards that deviate
    from the program director's recommendation. NTIA concurred. We
    also performed audits to ensure that NTIA grantees adequately
    account for the use of funds. Since October 1995, we have
    issued 10 OIG audit reports related to TIIAP recipients. These
    audits did not identify any major systemic problems with the
    recipients of NTIA financial assistance.
        A 1996 performance audit of TIIAP did disclose problems.
    NTIA officials agreed with our findings. Spending and staffing
    restrictions were lifted in the summer of 1996 and NTIA
    officials took a number of actions to implement our
    recommendations to properly monitor grants.
        Our recent OIG inspection found relatively little
    cooperation between NTIA and the Department's International
    Trade Administration. In fact, ITA's Office of
    Telecommunications has its own staff working on many of the
    same issues as NTIA staff. Not only is there an overlap of
    duties, but roles and responsibilities for telecommunications
    policy initiatives and the promotion of interests abroad have
    not been clearly defined. We recommended that the Assistant
    Secretary for Communications and Information and the Under
    Secretary for International Trade firmly agree on their
    agencies''s respective roles and responsibilities and
    immediately expand cooperation between their offices and
    staffs. The Assistant Secretary generally concurred with our
    findings, but also noted that NTIA enjoys a close working
    relationship with certain components of ITA.
        Our January 1994 Report on NTIA Interagency Agreements
    focused on the Institute for Telecommunications Sciences. We
    found that the growth in reimbursable work had shifted much of
    ITS's emphasis to projects only remotely related to Department
    of Commerce priorities. We recommended that NTIS focus ITS's
    work on the priorities of the Department and NTIA.
        In October 1997 we completed a review of the Office of
    Spectrum Management's funding, fee collection, and staffing
    practices. Our work revealed no significant conditions meriting
    issuance of an audit report, but we did suggest NTIA co-inspect
    management fees in a timely fashion.
        In November 1997 we completed an audit of the role of OSM
    and the FCC's decisions to relocate DEMS licenses and to award
    a license to a specific company. We conducted a detailed review
    to determine whether NTIA met its statutory responsibilities
    for Federal spectrum management. Our work revealed no
    significant conditions meriting the issuance of a report.
        With respect to the bill we offer two comments. Section 3,
    requiring Federal agencies to reimburse NTIA for its spectrum
    management activities, is consistent with our review of OSM.
    These should be paid by Federal agencies throughout the fiscal
    year, since OSM conducts its spectrum management activities on
    a continuous basis.
        Section 5 includes a requirement for the OIG to conduct an
    audit or evaluations of the performance of the NTIA in
    conducting each of its programs, functions, and operations, and
    to report the results and recommendations to Congress and NTIA.
    It may be helpful to point out that under the basic IG
    legislation, we already have the authority to audit the topics
    itemized in the proposed bill. Consequently, we view section 5
    as an unnecessary provision. Of course, we will be pleased to
    discuss our audit and evaluation with members of the
    subcommittee and its staff.
        [The prepared statement of George E. Ross follows:]
     Prepared Statement of George E. Ross, Assistant Inspector General for
                     Auditing, U.S. Department of Commerce
        Mr. Chairman and Members of the Committee, I am pleased to appear
    before you today to discuss the Office of Inspector General's work
    related to the Department of Commerce's National Telecommunications and
    Information Administration (NTIA) and aspects of the Subcommittee's
    draft reauthorization bill for NTIA. I have attached a list of the OIG
    reports that will be covered in my testimony.
        Our most recent work in NTIA concentrated on audits of the agency's
    fiscal year 1998 financial statements and its fiscal year 1997 funding
    decisions with respect to discretionary financial assistance. We have
    also conducted 10 financial audits of NTIA grantees; an audit of NTIA's
    Telecommunications and Information Infrastructure Assistance Program
    (TIIAP); an assessment of the coordination between NTIA's international
    activities on behalf of the telecommunications industry and the
    International Trade Administration (ITA), as part of a broad review of
    the Department's trade promotion program; and an evaluation of the
    performance of NTIA's Office of Spectrum Management (OSM).
    Financial Statements Audits
        An audit of NTIA's financial statements was first performed for
    fiscal year 1993. The audit, performed by an independent CPA firm under
    a contract with our office, resulted in an unqualified opinion on
    NTIA's Statement of Financial Condition, a significant achievement that
    resulted from the concerted efforts of the bureau's management to
    implement sound internal controls. An unqualified opinion means that
    the financial statements present fairly, in all material aspects, the
    entity's financial position and results of operations.
        That achievement continued into subsequent year audits. The audits
    of NTIA's fiscal year 1994 and 1995 financial statements resulted in
    unqualified opinions on all financial statements. For fiscal year 1993,
    the auditors had identified four reportable conditions, but no material
    weaknesses in internal controls. Reportable conditions are significant
    deficiencies in the design or operation of an agency's internal control
    system that could adversely affect its ability to record, process,
    summarize, and report financial data consistent with the assertions
    made by management in the financial statements. Material weaknesses
    represent serious reportable conditions where the design or operation
    of an internal control component does not minimize the risk that
    errors, fraud, or noncompliance in material amounts may occur and not
    be readily detected.
        Only one of the four reported conditions was cited again for fiscal
    year 1994. While the fiscal year 1995 audit found the same reportable
    condition, the fiscal year 1996 and fiscal year 1997 audits resulted in
    no reportable conditions.
        The latest audit of NTIA's fiscal year 1998 financial statements
    also resulted in an unqualified opinion on all statements. This is a
    noteworthy accomplishment, considering that four new financial
    statements were mandated by OMB Bulletin 97-01, Form and Content of
    Agency Financial Statements. The independent audit firm did not
    identify any material weaknesses. In fact, the audits have never
    reported a material weakness for NTIA. However, the firm did cite one
    reportable condition in the bureau's internal controls over financial
    reporting of grants. Although the issue affected NTIA, corrective
    action is not within the purview of NTIA management because NTIA
    receives its grant accounting services from another Commerce Department
    bureau.
    Government Performance and Results Act of 1993
        NTIA, along with other operating units of the Commerce Department
    and other agencies throughout the federal government, faces many
    inherent challenges in determining how to best plan and measure its
    performance in accordance with the Government Performance and Results
    Act of 1993 (GPRA). Our office has reviewed NTIA's overviews to its
    financial statements. The overviews provide the linkage between the
    financial statements and the GPRA requirement that government entities
    collect and report information on their performance in meeting goals
    and objectives.
        Our review of the draft fiscal year 1997 overview found that (1) it
    should be more clear and concise, (2) the linkage to the Department's
    Strategic Plan could be improved, (3) improved financial and program
    performance data were needed, and (4) the overview needed to discuss
    positive and negative results. We presented our findings to NTIA
    management. NTIA was responsive to our comments, making changes and
    indicating that they would make additional improvements in future
    years. In our transmittal memorandum to the final audit report, we
    stated that NTIA should strengthen reported performance measurement
    data and improve the presentation of information to facilitate trend
    analysis and assessment of whether target levels of performance have
    been achieved.
        Our review of the fiscal year 1998 overview found that the bureau
    had incorporated many of our suggestions to strengthen the overview. We
    informally provided NTIA our observations on the draft fiscal year 1998
    overview, including suggestions to (1) discuss the status of Y2K-
    compliance efforts, (2) strengthen the linkage between the financial
    statements and the overview, and (3) include more forecasts of
    potential problem areas. Once again, management was responsive to our
    suggestions. In our transmittal memorandum to the final audit report,
    we encouraged the bureau to strengthen next year's discussion of actual
    results and to continue efforts to improve performance measurement and
    reporting.
    Year 2000 (Y2K) Compliance
        NTIA has reported significant progress in ensuring that its
    computer systems and proprietary software will be operational after the
    turn of the century. NTIA has two mission-critical systems. The first
    is used by the Office of Spectrum Management in managing the government
    spectrum, and the second is used by the Office of Telecommunications
    and Information Applications (OTIA) in managing its grants process.
        OSM has tested for and corrected the Y2K problems in its systems,
    and is already processing data with dates into the next century. A
    contractor has re-written OTIA's grants management software. According
    to NTIA, both systems have been subsequently tested and certified as
    Y2K-compliant.
    Discretionary Financial Assistance Program Performance Audits and
            Grantee Audits
        In March of this year, we completed audits of NTIA's two
    discretionary financial assistance programs: (1) the Public
    Telecommunications Facilities Program (PTFP), and (2) the
    Telecommunications and Information Infrastructure Assistance Program
    (TIIAP). Discretionary financial assistance programs are those programs
    for which federal agencies have the authority to independently
    determine the recipients and funding levels of awards. These programs
    involve a significant portion of NTIA's budget and operations, about
    $35 million in fiscal year 1997 awards and $38 million in fiscal year
    1998 grants. These audits were conducted as part of a Department-wide
    review of Commerce's discretionary financial assistance programs
    initiated at the request of the Chairman of the Senate Commerce,
    Science, and Transportation Committee.
        Through PTFP, NTIA provides financial assistance for planning,
    acquiring, installing, and modernizing public telecommunications
    facilities. In fiscal year 1997, the program received 221 applications
    for more than $50.5 million. Of these, 215 were accepted for review,
    and 97 grants totaling more than $14.1 million were awarded. All 97
    awards were made competitively in response to a formal solicitation
    notice published in the Federal Register, posted on NTIA's Internet web
    site, and mailed to over 3,000 potential applicants on NTIA's mailing
    list.
        Through TIIAP, NTIA provides financial assistance to nonprofit
    organizations, colleges and universities, and state, local and Indian
    tribal governments, to promote the widespread use of telecommunications
    and information technologies in the public and nonprofit sectors. In
    fiscal year 1997, the program received more than 920 applications for
    over $350 million; 876 were accepted for review; and 55 grants totaling
    almost $20.9 million were awarded. All 55 awards were made
    competitively in response to a formal solicitation notice published in
    the Federal Register, posted on NTIA's Internet web site, and mailed to
    over 18,000 potential applicants.
        We examined NTIA's criteria, procedures, and practices for
    soliciting, reviewing, and selecting awards under both programs and
    found that they generally complied with statutory, Departmental, and
    agency requirements and appeared designed to promote merit-based
    funding decisions. We found that NTIA (1) developed and published
    merit-based technical and public policy criteria that were consistent
    with the programs' objectives and (2) complied with the Departmental
    and agency requirement to place a notice in the Federal Register, at
    least annually, announcing the availability of funds, soliciting award
    applications, and specifying the criteria and process to be used in
    reviewing and selecting applications.
        We also found that NTIA followed established requirements for the
    competitive review of applications for TIIAP, but not totally for PTFP.
    Specifically, NTIA program staff participated in review panels for PTFP
    awards and routinely adjusted the independent reviewers' scores or
    composite evaluation scores without consulting with the reviewers. The
    staff adjusted either the score given by the independent reviewer(s) or
    the review panel's composite score, without consulting with the panel,
    for 191 of the 215 applications, or almost 90 percent of the
    applications reviewed by the panels. The program staff adjusted 153
    applications to a higher score and 38 applications to a lower score.
    The program staff stated that the adjustments were made to correct
    applications misjudged or unfairly scored by the external reviewers.
    Unilateral adjustment of evaluation scores has the potential to
    undermine the independence and objectivity of the review process. NTIA
    officials determined, prior to the audit, that they would not repeat
    the practice in fiscal year 1998.
        Moreover, although Departmental and NTIA requirements for selecting
    applications were followed for both programs, documentation was lacking
    to fully explain the reasons for deviations from the program directors'
    lists of applications recommended for funding. For the year reviewed,
    we found that the Assistant Secretary for Communications and
    Information, as the selecting official, added three applications to the
    PTFP list, and added nine applications to and deleted seven
    applications from the TIIAP recommended funding list. A memorandum
    concerning the additional PTFP applications noted that the selecting
    official's decision was made to achieve greater geographical
    distribution, but did not provide specific reasons why certain
    applicants were selected over others. The Assistant Secretary provided
    justifications for the nine added TIIAP applications, but there were no
    written justifications for any of the seven deleted applications.
        We recommended that NTIA ensure that the bases for making awards
    that deviate from a program director's recommendations are adequately
    documented. Additionally, we recommended that PTFP staff ensure that
    independent reviewers' scores are not adjusted by program staff during
    the review process. NTIA agreed with our findings and recommendations
    and is modifying its financial assistance award process to implement
    our recommendations.
        We have also performed financial audits of grants awarded under
    these financial assistance programs to ensure that grantees adequately
    account for the use of award funds. Since October 1995, we have issued
    10 OIG audit reports related to recipients of NTIA financial
    assistance. In that period, we also processed 236 Single Audit Act
    reports that covered $56.7 million of NTIA funding. These audits did
    not identify any major or systemic problems with recipients of NTIA
    financial assistance.
    Performance Audit: ``Information Superhighway'' Program
        NTIA's Office of Telecommunications and Information Applications
    (OTIA) is responsible for managing the TIIAP program, also known as the
    ``Information Superhighway'' program. We reviewed several program
    grants in 1996. Our reviews of those grants disclosed programmatic and
    financial problems, which were attributable in large part to inadequate
    program management staffing. For example, OTIA program officers did not
    normally visit grantees and only rarely contacted them by telephone,
    conducted only perfunctory reviews of grantee status reports and took
    no action when significant problems were indicated, and did not ensure
    that grantees were aware of federal grant requirements, particularly
    those pertaining to matching funds. Moreover, OTIA did not require
    independent evaluations of grant results, did not have a mechanism for
    grantees to exchange useful information with each other, and required
    program officers to perform routine administrative work to the
    detriment of their monitoring responsibilities.
        OTIA officials agreed with our findings, but said that because of
    spending and staffing restrictions, they lacked the resources to
    properly monitor grants. These restrictions were lifted in the summer
    of 1996, and NTIA officials took a number of significant actions to
    implement our recommendations. For example, OTIA established an on-site
    monitoring program and conducted visits of 25 grantees from August
    through October of 1996; and instructed its program officers to make
    detailed analyses of grantee status reports, contact grantees if the
    reports indicate any problem areas or concerns, and forward the
    analyses to the Department for appropriate action.
    Inspection Report: Coordination on International Telecommunications
            Issues
        In a recent inspection report, we found that despite NTIA's
    participation in international telecommunications policy forums, there
    is relatively little cooperation between NTIA and the International
    Trade Administration. In fact, ITA's Office of Telecommunications
    within the Office of Trade Development has its own staff working on
    many of the same issues as NTIA's staff. Not only is there an overlap
    of duties, but the roles and responsibilities of each agency for
    telecommunications policy initiatives and the advancement and promotion
    of U.S. telecommunication interests abroad have not been clearly
    defined.
        We recommended that the Assistant Secretary for Communications and
    Information and the Under Secretary for International Trade (1)
    formally agree on their agencies' respective roles and responsibilities
    in telecommunications export promotion and trade policy development,
    and (2) seek to immediately expand cooperation between NTIA and ITA
    offices and staffs. In response to our draft report, the Assistant
    Secretary of NTIA generally concurred with our findings on its
    relationship with ITA, but noted a positive working relationship with
    certain components of the ITA.
    Inspection Report: Interagency Agreements With Institute for
            Telecommunication Sciences
        In January 1994, we issued a final report on our review of NTIA's
    interagency agreements that were performed for, and reimbursed by,
    other agencies, focusing on those agreements conducted by the Institute
    for Telecommunication Sciences (ITS). We examined the relationship
    between the work ITS performs through such agreements and NTIA's core
    mission, the benefits NTIA receives from those agreements, the amount
    of resources involved, and the adequacy of oversight by NTIA senior
    management. We found the following:

    1. The growth in the volume of reimbursable projects had shifted much
            of the focus of the lab's work to projects that were remotely,
            if at all, related to Commerce Department priorities. Because
            of the volume of the reimbursable work, the size and staffing
            of the lab was larger than needed to accomplish the primary
            mission of NTIA and the Department.
    2. The increase in lab operating costs, due almost exclusively to the
            growth of reimbursable projects, resulted in an unending cycle
            of employment growth and increased funding requirements. Senior
            managers were dissatisfied with the amount of time spent
            soliciting new projects.
    3. ITS routinely entered into reimbursable agreements with the Defense
            Department in the last few days of the fiscal year, resulting
            in carryovers of funds to the next fiscal year. This practice
            raised serious questions about the propriety and legality of
            NTIA's obligating and expending ``one-year'' funds in the next
            fiscal year.
        We recommended that NTIA (1) focus ITS's work on the priorities of
    the Department and NTIA; (2) seek alternative procedures for improving
    the lab's efficiency at handling reimbursable projects; (3) ensure that
    reimbursable ``one-year'' funds are properly obligated in the year
    received; and (4) return all reimbursable funds that were not obligated
    by the end of the prior fiscal year to the sponsoring agency. NTIA
    agreed to ensure that future reimbursable funding would be obligated in
    the same fiscal year, but otherwise disagreed with most of our specific
    observations and recommendations.
    Other Correspondence: Performance Reviews of Office of Spectrum
            Management
        In October 1997, we completed a review of the performance of NTIA's
    Office of Spectrum Management. The review included a detailed
    examination of OSM's funding, fee collection, and staffing practices.
    Although our field work revealed no significant conditions meriting the
    issuance of an audit report, we found several issues warranting
    management's attention, which we discussed in a memorandum to the
    Assistant Secretary for Communications and Information.
        Specifically, resource assessments essential for effective long-
    range federal spectrum planning had not been performed; hardware and
    software had not been maintained to meet current and future needs; and
    inadequate support had been provided for national and international
    policy development and execution. OSM also lacked the personnel to
    fulfill its responsibility of ensuring that other federal agencies were
    complying with the conditions of their spectrum authorizations and
    using the limited spectrum efficiently, or that radio interference
    problems were quickly detected and corrected. We noted that these
    deficiencies might be exacerbated because a large percentage of the OSM
    work force would become eligible for retirement within three years.
    Furthermore, Interdepartment Radio Advisory Committee member agencies
    had not promptly paid their fiscal year 1997 spectrum management fees
    to NTIA.
        We suggested that NTIA (1) evaluate the work that OSM had been
    unable to perform, determine priorities within the context of the
    agency's strategic plan, and begin planning to replace OSM staff who
    might retire within the next three years; and (2) take appropriate
    action to collect fiscal year 1998 spectrum management fees in a timely
    fashion.
        Also, in November 1997, we completed an audit of the role of OSM in
    the Federal Communications Commission's (FCC) decisions to relocate
    Digital Electronic Messaging Service (DEMS) licenses and award a
    license to a specific company. We conducted a detailed review of OSM's
    actions to determine whether NTIA met its statutory responsibilities
    for federal spectrum management with respect to these decisions. Again,
    our audit work revealed no significant conditions meriting the issuance
    of an audit report. We found that OSM officials acted properly and
    protected government interests by offering spectrum for the FCC to use
    in the relocation of spectrum allocated for DEMS licensees. OSM
    officials also followed established procedures for consulting with the
    Interdepartment Radio Advisory Committee on the use of federal
    spectrum.
        We noted, however, that an FCC licensing bureau had issued DEMS
    licenses without the knowledge of FCC headquarters or OSM officials,
    even though the technology interfered with existing licenses for
    federal government satellite operations and with the planned use by
    private-sector satellite communications systems for which the U.S.
    government had negotiated an international agreement. In a memorandum
    to the Assistant Secretary for Communications and Information, we
    suggested that NTIA work with the FCC to establish a real-time
    licensing information system between FCC licensing bureaus and OSM that
    would reduce the likelihood of issuing licenses that interfere with
    federal spectrum use.
    OIG Comments on Discussion Draft of Reauthorization Bill
        We have reviewed the discussion draft of the proposed
    reauthorization bill and have these comments:

    1. Section 3 of the draft, ``Payment for Spectrum Management
            Functions,'' requiring federal agencies to reimburse NTIA for
            its federal spectrum management activities, is consistent with
            our findings during the aforementioned review of OSM. During
            the year under review, fiscal year 1997, NTIA and OSM
            experienced severe difficulties in collecting fees required
            under the appropriations act for that year. During fiscal year
            1998, these fees were paid in a more timely manner by the other
            federal agencies. These fees should be paid by federal agencies
            throughout the fiscal year, and not just near the end, since
            OSM conducts its spectrum management activities on a continuous
            basis.
    2. Section 5 of the draft, ``Long-Term Efficiency,'' includes a
            requirement for the OIG to ``conduct an audit or evaluations of
            the performance of the NTIA in conducting each of its
            functions, programs, and operations'' and report the results
            and recommendations to the Congress and NTIA. It may be helpful
            to point out that under the basic Inspector General
            legislation, we already have the authority to audit and review
            the topics itemized in the proposed bill. Consequently, we view
            section 5 as an unnecessary provision. For example, we are
            currently considering performance audits of the PTFP and TIIAP
            programs to evaluate both program management and program
            performance. Of course, we would be pleased to discuss audit
            and evaluation areas with Members of the Committee and staff to
            ensure that our efforts address key areas of interest.
        That concludes my testimony. I would be pleased to answer any
    questions that the Members of the Committee would have.

        Mr. Tauzin. Thank you.
        Colonel Skinner.

                    STATEMENT OF RICHARD W. SKINNER

        Mr. Skinner. Thank you, Mr. Chairman. I am pleased to have
    the opportunity to discuss with you a matter that is of
    critical importance to the Department of Defense: spectrum
    management and the important relationship we have with the
    NTIA. I am delighted to share the witness table with Secretary
    Irving, who is a good friend of the Department of Defense and
    understands the many challenges that stewardship of America's
    radio spectrum has presented to us in the past and will no
    doubt present in the future.
        I submitted a statement for the record, but if you will
    indulge me, I would like to share the Department of Defense's
    views on the importance of spectrum and the significant
    responsibilities domestic and international management place on
    NTIA.
        There is increasing pressure for the government to reduce
    its spectrum usage and make this resource available for private
    sector development. We have been directed to reallocate
    spectrum from the government service to the private sector. We
    believe it is important to consider the impact to national
    security in these deliberations and understand the full costs
    in terms of security and dollars spectrum reallocation incurs.
    We believe the NTIA has an important role in coordinating and
    exposing these issues as spectrum reallocation decisions are
    made. The Department of Defense is committed to using the
    spectrum allocated to it more efficiently.
        On the other hand, military requirements such as
    development of information technology systems that are less
    vulnerable to enemy jamming and interference, exploitation of
    video-based reconnaissance systems and detecting stealthy
    threats exacerbates an already difficult problem of requiring
    significant spectrum for these unique national security
    applications. We hope that the modernization plan required by
    the draft legislation will be expanded to take a close look at
    spectrum allocations across the broadest policy areas of
    national endeavors, and we hope that we will have a process to
    balance the equities of all of the stakeholders in the process.
    You may want to consider carefully whether 12 months is an
    adequate period of time over which to make these deliberations.
        Information technology affects almost every aspect of the
    Department of Defense, from tactical units to the supply lines
    that support them. Information superiority is at the heart of
    the Department's vision of future war fighting, a concept of
    the future we call Joint Vision 2010. Within Joint Vision 2010
    we define information superiority as the capability to collect,
    process, and disseminate an interrupted flow of information
    while exploiting and/or denying an adversary's ability to do
    the same.
        Radio spectrum is absolutely essential to pursuing and
    achieving our future vision. Much of our information
    superiority depends on access to the radio spectrum. The
    priority our military planners place on mobility, range and
    speed dictates that a large portion of our information
    technology be wireless. Consequently, we value access to the
    radio spectrum because it provides us the essential media for
    communicating information, unhampered by mechanical connections
    or weather and other natural phenomena.
        While communications is a dominant role, we exploit the
    radio spectrum for much, much more. Our radars identify
    potential enemies, using the spectrum to range and track
    objects in space, on the ground, on the water and in the area.
    We use the same technology to manage our air operations and
    provide necessary air traffic control services. Systems like
    the DOD's Global Positioning System, a constellation of
    satellites that provides very accurate navigation and timing
    from space, would not be possible without access to the radio
    spectrum and the ability to coordinate its use on a national
    and international basis so that the important signals from
    these satellites can be received without interference by
    thousands of military and private sector users, both
    domestically and internationally.
        Secretary Irving's statement addresses the challenges of
    the modernization of the GPS system, and we are very pleased
    with his indulgence in that area. The importance of spectrum to
    the United States military is not lost on our adversaries. We
    fully expect our enemies to attempt to deny our access to the
    spectrum in times of war. Moreover, they will monitor and
    observe our use of the spectrum during peace and the transition
    from peace to war so they can exploit our vulnerabilities to
    their own advantage. To this extent, we must have the ability
    to train in an environment where military spectrum is
    intentionally jammed and develop those systems and operational
    tactics and techniques so we can maintain continuity of
    operations during attacks on a radio spectrum.
        Furthermore, we must be able to deny the use of spectrum by
    our adversaries to create confusion in the command and control
    structure and deny them the sensors they are dependent upon.
        We are frankly not surprised to find that many of the
    attributes the Department of Defense values in sensing and
    communicating using the radio spectrum have private sector and
    commercial value as well. In fact, many of these commercial
    systems are in use by our Armed Forces. DOD has a close working
    relationship and has received extensive support from the NTIA
    Office of Spectrum Management. This office is essential to
    achieving the goal of meeting the spectrum needs of both
    government and industry. We thank NTIA for this and look
    forward to our continuing relationship.
        DOD would also like to thank this committee for its
    language on reimbursement of spectrum reallocations. We will
    keep the committee informed on how well it is working. Finally,
    the Department is ready to work with Congress and NTIA to
    ensure efficient and effective use of the spectrum into the
    next millennium. That concludes my statement. I look forward to
    your questions.
        [The prepared statement of Richard W. Skinner follows:]
      Prepared Statement of Colonel Richard Skinner, Principal Director,
           Deputy Assistant Secretary of Defense, (Command, Control,
    Communications, Intelligence and Surveillance, Reconnaissance & Space),
      Office of the Assistant Secretary of Defense for Command, Control,
                        Communications and Intelligence
        Thank you Mr. Chairman and members of the Subcommittee. I am
    pleased to have the opportunity to discuss with you a matter that is of
    critical importance to the Department of Defense--spectrum management
    and our relationship with the National Telecommunications and
    Information Administration (NTIA). Spectrum is a very important
    resource to the Department of Defense and, as evidenced by this
    hearing, the Congress as well. I am also delighted that I can share the
    witness table with Secretary Larry Irving who is a good friend of the
    Department of Defense and understands the many challenges that
    stewardship of the America's spectrum has presented us in the past and
    will no doubt present us in the future. In recognizing the supplier and
    customer relationship between the NTIA and the Department of Defense, I
    would be remiss if I didn't highlight as well that the Department of
    Defense is only one of Secretary Irvings many customers. Perhaps we are
    the largest or the most demanding but we are only one of more than 50
    federal agency customers. So please do not interpret my remarks as
    representing the entire customer base, there are many more federal
    spectrum users, each with their own unique perspective on this
    business.
    Why is Spectrum Management Important to Us?
        Information and information technology (IT) affect almost every
    aspect of the Department of Defense, from tactical units to the supply
    lines that support them. At the heart of the Department's Joint Vision
    2010 is Information Superiority: the capability to collect, process,
    and disseminate an uninterrupted flow of information while exploiting
    and/or denying an adversary's ability to do the same. As a result,
    Information Superiority is the key enabler for an entire range of
    operational concepts, from Dominant Maneuver to Precision Engagement to
    Focused Logistics to Full-Dimensional Protection. Information
    profoundly influences the entire range of military endeavors including
    humanitarian assistance, peacekeeping and coalition operations.
        Spectrum is not only necessary, but absolutely essential to
    achieving JV2010. For example, without assured access to necessary
    frequencies, we could not have successfully rescued our downed pilots
    during recent military operations. These rescues required assured
    spectrum access for all aspects of our search and rescue operation.
        Much of our information superiority depends on access to the
    electromagnetic spectrum. The priority we place on mobility, range, and
    speed dictates that much of our information technology be wireless and
    consequently we value access to the radio frequency spectrum which
    provides us the essential media for communicating information,
    unhampered by mechanical connections or weather and other natural
    phenomena. The U.S. military has an incredible investment in systems
    that exploit the spectrum. They provide us our interaction between
    echelons of command and within our units of course, but we exploit the
    spectrum for much, much more. Our radars identify potential enemies
    using the spectrum to range and track objects in space, on the ground,
    on the water, and in the air. We use the same technology to manage our
    air operations and provide necessary air traffic control services.
    Systems like the Department of Defense's Global Positioning System--a
    system of satellites that provides very accurate navigation and timing
    signals from space--would not be possible without access to spectrum
    and the ability to coordinate its use on a national and international
    basis. Of course, the importance of spectrum to the United States
    Military is not lost on our adversaries. We fully expect our enemies to
    attempt to deny our access to the spectrum in times of war. Moreover,
    they will doubtlessly observe our use of the spectrum during peace and
    the transition from peace to war so they can exploit any
    vulnerabilities to their own advantage. To this extent, we must have
    the ability to train and develop those systems and operating tactics
    and techniques so that we can maintain continuity of operations during
    attacks on our electromagenetic spectrum. Furthermore, we must be able
    to deny the use of spectrum by our adversaries to create confusion in
    the command and control structure and to deny them the sensors they are
    dependent upon.
        We are frankly not surprised to find that the many attributes we
    value in sensing and communicating using the radio spectrum have
    private and commercial value as well. In fact, many of these commercial
    systems are in use by your armed forces.
        There is increasing pressure for the government to reduce its
    spectrum usage and to make this resource available for private sector
    development. We understand the resolution of who should use and how the
    spectrum is used is an important one. It is equally important we
    consider the impact to national security in these deliberations and
    understand the full costs in terms of security and dollars spectrum
    reallocation incurs. The DoD is committed to using the spectrum
    allocated to it more efficiently, but new military requirements for
    passing video and detecting low observable threats exacerbates an
    already difficult problem.
        National security is made up of several pillars. It is essential to
    balance our economic security needs with the security your armed forces
    provides. To do so may require changes in spectrum policy that include:

     Improved processes and procedures for balancing the national
            security needs of the nation with commercial interests
     Implementing spectrum reallocations using the NTIA spectrum
            management structure. Legislating reallocation has had a
            serious impact. Using the normal process provides an
            opportunity to develop sharing arrangements where possible. We
            believe that the NTIA process has been extremely responsive to
            commercial needs while addressing the Department of Defense
            equities in the process
     Recognizing that unique military spectrum requirements demand
            exclusive priority access to portions of the RF spectrum while
            acknowledging that spectrum sharing among competing customers
            is a desirable national goal
     Establishing and complying with equipment design standards to
            permit sharing for all users
     Requiring a technical analysis of spectrum use, commercial and
            federal, when considering resolution of new requirements
     Considering national security and commercial significance in
            technical analyses of spectrum users' requirements
     Providing all funding to develop, test, train personnel, and
            deploy replacement systems for incumbent systems during the
            reallocation process
     Including costs to reengineer displaced systems in the
            calculation of potential net income from spectrum auctions
     Recognizing that national security priorities may outweigh
            economic interests in specific cases
    Specific Issues
        I understand there are several specific issues you would like me to
    discuss regarding the fee-for-service of NTIA, the privatization and
    outsourcing of NTIA laboratories, and the examination of the NTIA by
    the Government Accounting Office. Let me address each of the issues as
    I understand them, briefly.
        The proposal to raise the fees paid by DoD and other federal
    agencies to NTIA for its spectrum management services misses the mark
    in our opinion. In this era of ever more complicated calls for spectrum
    allocation, DoD is not the only entity that benefits from NTIA's work
    on DoD matters. Moreover, as my prior discussion makes clear, the
    Office of Spectrum Management performs many functions that are not
    solely for the benefit of a particular user. Both the civilian and
    military, government and private worlds benefit from a robust and well
    managed NTIA. Finally, the ``business school'' logic of fee for service
    is to restrain the excessive use of the good or to give users a way to
    evaluate the cost of the service against ready alternatives. In this
    case, DoD must use NTIA for spectrum management, there are no
    alternative service providers, and neither of those rationales is
    applicable. The current arrangement works, and I would leave it as it
    is.
        With regard to privatization of the NTIA laboratories, we believe
    this is a decision that NTIA must make on its own, after consultation
    with its laboratory customers. In the Department of Defense's
    outsourcing initiatives, we have worried that we could erode the pool
    of government expertise required to address detailed and complex
    government matters. We would hope that NTIA will consider that issue
    carefully. DoD uses the laboratories on a cost reimbursable basis. The
    NTIA laboratory capabilities are world class, and we hope that any
    future change would improve their status. A transition of laboratory
    operations must address customer concerns for national security and the
    needs to protect the trade secrets and intellectual property of the
    government and its private sector partners. So, our organizational
    conflict of interest concerns and the continued ability to provide
    laboratory support in matters where secrecy is as important as
    technical excellence must be addressed in the future laboratory
    arrangement. Of course, any change in the laboratory arrangement should
    result in maintaining or improving the quality and responsiveness that
    the government labs provide.
        With regard to the GAO report and modernization plan required in
    the draft bill, we are enthusiastic proponents of modernization and
    process improvement through business process reengineering. However, we
    have equities that must be protected to successfully accomplish our
    mission. We hope that in the GAO process we will have an opportunity to
    comment on the report, either directly with GAO or via NTIA. We also
    hope to have an opportunity to comment on, or perhaps even participate
    in the development of, the modernization plan. Although I said I would
    not attempt to represent NTIA's many other customers, I would expect
    that at least some of these agencies would want to engage as well.
    Conclusion
        DoD has a close working relationship and has received extensive
    support from the NTIA Office of Spectrum Management. This Office is
    essential to achieving the goal of meeting the spectrum needs of both
    government and industry. We thank them for this and look forward to our
    continuing relationship.
        DoD also would like to thank this Committee for the language on
    reimbursement for spectrum reallocations. We will keep the Committee
    informed on how well it is working.
        The Department is ready to work with Congress and NTIA to assure
    efficient and effective us of the spectrum into the next millenium.

        Mr. Tauzin. Thank you very much, Colonel.
        Our next witness is Mr. Harris Miller.

                       STATEMENT OF HARRIS MILLER

        Mr. Miller. Thank you. Thank you, Mr. Chairman and members
    of the subcommittee. I am here representing the 11,000
    companies that are members of the information technology
    economy. It is an honor to appear before your subcommittee to
    discuss what I believe to be the next Y2K issue for our country
    and our global information and technology community; namely,
    critical information infrastructure protection.
        Information technology now represents over 6 percent of
    global GDP, the spending volume of more than $1.8 trillion,
    according to Digital Planet, a report recently released by the
    World Information Technology and Services Alliance. From China
    to Mexico, from Argentina to Germany, countries have come to
    recognize that IT is the engine of national development,
    accelerating the expansion of business and investment while
    acting as a buffer against economic downturns.
        However, the Y2K software glitch and other well-publicized
    episodes of natural or man-made disasters have also triggered
    an awareness of the importance of and vulnerabilities posed by
    interruptions to information technology. These threats come in
    numerous guises: mischief-minded hackers, disgruntled
    employees, corporate spies, cyber criminals, cyber terrorists
    and unfriendly nations.
        A recent Computer Security Institute survey reports that 62
    percent of companies have experienced computer breaches. Fifty-
    one percent of respondents reported financial losses due to
    computer security problems. Criminal hacking losses of the 163
    responding organizations was placed at $123 million in 1998 and
    is climbing at an extraordinary pace. The Institute found that
    system penetration by outsiders has risen in each of the past 3
    years, as has unauthorized access by insiders. Twenty-six
    percent of the CSI respondents reported theft of proprietary
    information, and 27 percent reported financial fraud. Twenty
    percent reported unauthorized use or misuse of Websites.
        Virus episodes such as the recent Melissa and Chernobyl are
    becoming much too frequent. The Antivirus Research Institute
    estimates that new viruses are being launched at the rate of 10
    to 15 per day, and that over 2,400 currently exist. Thirty-five
    percent are considered to be intentionally disruptive.
        And, of course, not all threats are man-made. As has been
    demonstrated by the Red River flooding, the Kobe earthquake,
    the North Ridge earthquake in California, and Hurricane Andrew
    in 1992, natural disasters also lead information technology
    disasters in disruptions. The Kobe earthquake caused over 5,000
    deaths, damaged or destroyed over 180,000 buildings, and left
    300,000 people homeless. But it is also important to remember
    that the telecommunications and computer infrastructures in
    that area were out for weeks and even months.
        And then, of course, there is the Y2K issue itself. The sum
    and substance of this, Mr. Chairman, is that our country, our
    economy, and the global economy have difficult challenges
    ahead. In the cyber realm, as we know, ambiguity reigns
    supreme. What makes our new environment so different? Some of
    the factors include the following: increasing technological and
    environmental complexity; the boundless nature of the Internet;
    ambiguous laws; the anonymity of adversaries; conflicting
    responsibilities and jurisdiction; limited consequence
    management preparedness; low levels of awareness, particularly
    by those in senior management in the private sector and
    government; and limited human resources to deal with this
    challenge.
        Understanding the challenge, I do believe that NTIA enjoys
    the opportunity to play a very important role in helping the
    Nation achieve critical information infrastructure protection.
    Assessing the CIIP role for NTIA and other government agencies,
    it comes down to a simple issue. Our new information-based
    economy must be protected and preserved. Participants and users
    must understand that along with the obvious benefits of living
    in this IT age are corresponding commitments to protect the
    information technology system. The societal stakes involved in
    critical information infrastructure protection compel both
    government and private industry to seek common ground on the
    issue.
        The road to this common ground, Mr. Chairman, will not be
    easy to reach. While the ultimate ends are shared between
    government and the private sector, the policies that each will
    develop in order to provide the protection could be quite
    different. For instance, government policy may seek to
    establish very stringent internal- and external-directed rules
    to protect cyber infrastructure. The private sector, however,
    is going to look for threats to be responded to in terms of
    appropriate business responses.
        To deal with these different directions, there must be
    increased communications, and that is very important. In my
    written statement I have included a series of first principles
    necessary to achieve the proper balance between the government
    and industry desires. Part of this is working together with the
    government.
        Our Association, for example, announced a major effort in
    partnership with the Justice Department and Attorney General
    Reno focusing on cyber citizen partnership to educate both
    government and the private sector regarding the importance of
    cyber protection. While the IT is frequently uncomfortable in
    working with government agencies on policy issues, the agency
    we are usually most comfortable with is DOC. It is for this
    reason that ITAA and the information technology industry
    supports the selection and continued mission of NTIA within DOC
    as the lead agency for and primary liaison to our industry.
        The private commercial sector owns, operates and manages
    over 90 percent of the information and communications
    infrastructure. As such, it is appropriate that a civilian
    agency such as NTIA focus on the advancement of U.S. industry,
    and the U.S. economy be assigned the lead for working and
    collaborating with the innovative companies that have
    responsibility for and manage these important elements of our
    economy.
        We look forward to cooperating with all agencies throughout
    the government involved in the CIA challenge, yet we feel
    strongly that NTIA is the proper representative to work with
    our industry to build the necessary levels of cooperation to
    help develop the national infrastructure protection plan. It
    has the knowledge, experience and relationships necessary.
        We very much encourage this committee to include funding in
    the NTIA reauthorization so that they can carry out their
    mission in the CIIP area, and we look forward to working with
    you and other members of the subcommittee in this area, Mr.
    Chairman.
        [The prepared statement of Harris Miller follows:]
        Prepared Statement of Harris N. Miller, President, Information
                       Technology Association of America
    Introduction
        I am Harris Miller, President of the Information Technology
    Association of America (ITAA), representing over 11,000 direct and
    affiliate member companies in the information technology (IT)
    industry--the enablers of the information economy. Our members are
    located in every state in the United States, and range from the
    smallest IT start-ups to industry leaders in the custom software,
    services, systems integration, telecommunications, Internet, and
    computer consulting fields. These firms are listed on the ITAA website
    at www.itaa.org.
        It is an honor to appear before your Subcommittee again, Chairman
    Tauzin. I want to commend you and your colleagues for inviting me to
    discuss what I describe as the next Y2K--Critical Information
    Infrastructure Protection.
        Information technology represents over 6 percent of global gross
    domestic product (GDP), a spending volume of more than $1.8 trillion,
    and over 8% of US GDP, according to Digital Planet, a report recently
    released by the World Information Technology and Services Alliance
    (WITSA), a group of 38 IT trade associations around the world (I am
    proud to serve as president of the WITSA organization). Enormous in its
    own right, these Digital Planet figures mask the contribution made by
    this technology to the growth, competitiveness and vitality of other
    industries. From China to Mexico, from Argentina to Germany, countries
    have come to recognize that information technology is the engine of
    national development, accelerating the expansion of business
    opportunity and investment while acting as a buffer against economic
    downturns.
        The Year 2000 software glitch and other well-publicized episodes of
    natural or man-made disasters have also triggered an awareness of the
    importance of and vulnerabilities posed by disruptions to information
    technology. The threat comes in numerous guises. Mischief minded
    hackers. Disgruntled employees. Corporate spies. Cyber criminals.
    Terrorists. Unfriendly nations.
        Aggressors attack at the point of maximum leverage. For modern
    society, this means critical infrastructure--transportation,
    telecommunications, oil and gas distribution, emergency services,
    water, electric power, finance and government operations. A critical
    information infrastructure supports all of these vital delivery systems
    and becomes itself a target of opportunity for terrorists, adversary
    nations, criminal organizations, and non-state actors. Disrupting the
    underlying information infrastructure of a transportation or finance
    system often can be as effective or even more effective than disrupting
    the physical infrastructure. Why blow up a power grid, when destroying
    the computers which control the power grid will have the same impact?
        As recently as last week, the International Institute for Strategic
    Studies (IISS) published a study on this topic citing one expert
    claiming he could bring down the U.S. information infrastructure with
    10 computer specialists and in 90 days time. This potential
    vulnerability--even if overstated--raises numerous difficult questions
    for industry and government about how to best provide critical
    information infrastructure protection.
        A recent Computer Security Institute (CSI) survey reports 62
    percent of companies have experienced computer breaches; 51 percent of
    respondents reported financial losses due to computer security
    problems; criminal hacking losses of the 163 responding organizations
    was placed at $123 million in 1998 and is climbing at an extraordinary
    pace. The Institute found that system penetration by outsiders has
    risen in each of the past three years as has unauthorized access by
    insiders. Twenty-six percent of respondents in the CSI study reported
    theft of proprietary information and 27 percent reported financial
    fraud. Twenty percent reported unauthorized use or misuse of websites.
        Virus episodes like Melissa and Chernobyl are becoming much too
    frequent. The Symantec Anti-Virus Research Center estimates that new
    viruses are being launched at a rate of 10 to 15 per day and that over
    2400 currently exist. Thirty-five percent are considered to be
    intentionally destructive.
        Not all threats are man-made. As has been demonstrated by the 1997
    Red River flooding of Grand Forks, North Dakota; the 1995 Kobe
    earthquake in Japan; and the 1994 Northridge earthquake in California;
    and South Florida's Hurricane Andrew in 1992, natural disasters pose
    substantial threats to both major systems themselves and the critical
    information infrastructure undergirding. This is indicative of the fact
    that the physical element of the information infrastructure requires a
    similar level of attention and concern. The Kobe earthquake, for
    instance, caused over 5,000 deaths, damaged or destroyed 180,000
    buildings and left 300,000 people homeless. Total damages reached $147
    billion. Telecommunications and computer infrastructures were out of
    commission for weeks and months.
        And then there is that set of ``unintended consequences''
    associated with a new and dynamic period in the evolution of
    technology. I refer to the Year 2000 computer bug as exhibit number
    one. As a global information economy, we stand at the very edge of the
    Year 2000 divide. Just eight months remain for companies all over the
    world to complete their Y2K repairs. How successfully countries will
    make this transition is the subject of much speculation. The only sure
    bet for Y2K prognosticators is that no one knows for sure how this
    situation will play out. Year 2000 underscores the interconnectedness
    of society and its computers and the dependence of one on the other.
    Where we do not have all the technology bases covered, we have social,
    economic, and political vulnerability instead.
        We have difficult challenges ahead. In the cyber realm, ambiguity
    reigns supreme. What makes our new environment so different? Some of
    the factors include:

     Increasing technological and environmental complexity--new
            technologies are replacing ``old'' ones at a breathtaking pace
            as hundreds of thousands of new players enter cyberspace on an
            almost daily basis;
     Boundless environment--geographic boundaries are irrelevant in
            cyberspace raising jurisdictional conflicts;
     Ambiguous laws;
     Anonymous adversaries--The anonymous nature of the Internet
            combined with a lack of geographic boundaries makes it
            extremely difficult to distinguish between nuisance hackers,
            vandals, criminals, terrorists and nation-states. This results
            in indistinguishable motives or intentions;
     Conflicting responsibilities and jurisdictions--while
            cyberspace is boundless, turf battles abound;
     Limited consequence management preparedness--if progress for
            preparations for Y2K and the recent Melissa and Chernobyl
            viruses are any indication, world-wide, individuals and
            enterprises are unprepared to manage contingencies and
            consequences of such incidents;
     Low levels of awareness--it was, and is still, difficult to
            get leaders to focus on Y2K as a major issue. We must now take
            pains to point out that Y2K is solely one ``incident'' on the
            continuum of potential vulnerabilities to our critical systems:
            the proverbial tip of the iceberg. A significant hurdle to
            meeting the most basic challenges, however, is low levels of
            awareness and understanding. These issues must be raised to the
            executive level;
     Limited human resources--The public and private sectors
            continue to struggle to find the skilled workers to manage the
            resources they currently have. Assuring our information
            infrastructures calls for more highly specialized individuals
            who are in extremely limited supply.
        Today you have asked me to talk about the reauthorization of the
    National Telecommunications and Information Administration (NTIA) of
    the U.S. Department of Commerce (DOC) and role that we think this
    agency can play in helping the nation achieve its critical information
    infrastructure protection goals. I believe that NTIA enjoys the
    opportunity to play a critical role in helping the nation achieve
    Critical Information Infrastructure Protection. Before I speak
    specifically about NTIA, I will offer a broader conceptual framework on
    how we see government and industry working together on this issue. I
    will provide you details on the specifics of ITAA's CIIP program. I
    will then turn my attention to NTIA.
    Government and Industry: Seeking Common Ground
        Assessing the ultimate CIIP roles for NTIA, other government
    agencies and the private sector is really very simple: our new
    information-based assets must be protected and preserved. The
    proliferation of low cost computers and networks have spread
    information technology to every quarter of society. As technologies
    have advanced and been implemented, we have seen enormous payoffs in
    the form of increased efficiency, increased productivity and newfound
    prosperity. Chairman Greenspan recently credited large investments
    being made in computers and other high-tech products for the dramatic
    boost in the nation's productivity. Even previously skeptical
    economists now concede that IT driven productivity increases have
    enabled our country to have what they said we could not have: high
    growth, low unemployment, low inflation, growth in real wages.
        Rights come with responsibilities. Participants and users must
    understand that along with the obvious benefits of information
    technology are corresponding commitments to protect IT. The societal
    stakes involved in critical information protection compel government
    and industry to seek common ground on the issue.
        The road to this common ground will never be, of course, a straight
    line. On the contrary, while the ends may be commonly shared, the
    policies that government and industry will develop in order to provide
    this protection are likely to be quite different.
        For instance, government policy may seek to establish both internal
    and externally directed standards to protect infrastructure elements
    from physical or cyber attack, to require systems to detect when
    attacks are imminent or underway, to develop processes to react to the
    attack, and to reestablish the critical service. By definition, if the
    service has been deemed critical to the nation, then the federal, state
    and local governments will have increased interest in the operation,
    management and protection of the private businesses and services which
    comprise the infrastructure elements. The manner in which this
    government concern is manifested can have a significant effect on
    private sector interests.
        Similarly, industry can be expected to react to infrastructure
    threats in appropriate ways, guided by sound business considerations.
    Individual companies will make infrastructure protection investments
    commensurate with the risk management principles in their industries.
    Government policies that impose protection standards more stringent
    than those inherent in the private sector risk mitigation process may
    not be acceptable. Additionally, requirements for reporting incidents
    to government operations centers and responding to government directed
    reconstitution plans may impose burdens that need to be developed in
    consultation with the private sector.
        Private sector firms face other real world pressures in formulating
    a CIIP response. First, companies run the significant risk of negative
    publicity and exposure. Companies are concerned that revealing and
    admitting past mistakes, shortcomings, negative experiences or
    incidents can open them up for criticism from the press, their
    competitors and their shareholders. Along the same lines, and for good
    reason, companies are loath to share proprietary or privileged
    corporate information. Additionally, firms run the risk of harming
    consumer, customer, partner and investor confidence. The private sector
    is also unprepared to share information and/or experiences out of fear
    that such information will be misused, abused or released to the public
    by the government or competitors. Lastly, with the focus in today's
    corporate world on the immediate bottom line, most firms see no clear
    short-term return on their information sharing investment.
        To minimize the likelihood of, minimize the possible impact from,
    or prepare a response to a coordinated, comprehensive attack on
    critical US infrastructure will require coordinated, comprehensive
    teamwork by government and industry. No matter what the business or
    political pressures, we all have a stake in protecting our information
    infrastructure. The nature of that teamwork is being decided through
    national debate, substantive analysis and constructive dialogue. As we
    look ahead, our nation is in need of new modes of cooperation,
    collaboration and experience sharing among the private sector and
    between the public and private sectors. A well prepared and informed
    private sector can work with government to find the proper balance
    which optimizes the government's need to protect the critical
    infrastructure with business' need to manage risks appropriately.
        Significant reservations on the part of both private industry and
    government to fully collaborate on these important issues exist,
    however, which ITAA is attempting to address from both a theoretical
    and practical viewpoint.
    CIIP: Establishing First Principles
        In developing industry positions on national CIP issues, ITAA has
    established an initial list of general principles that will guide the
    development of future policy.

     The protection of the national information infrastructure must
            be based on the minimum amount of government (federal, state,
            and local) regulation as is feasible.
     The cost of protecting the national information infrastructure
            must be kept to the lowest level possible commensurate with the
            threat and the consequences of attack. Parties must be able to
            differentiate between potential vulnerabilities and specific
            threats.
     Industry owns and operates the Global Information
            Infrastructure and, as such, has primary responsibility for
            CIIP requirements, design and implementation.
     Industry and government share an interest in the proliferation
            of a free and open Internet, electronic commerce, other value
            added networks, and an efficient, effective information
            infrastructure generally.
     In protecting these resources, the specific and immediate
            priorities of government and industry are apt to diverge.
     Industry will be guided by business considerations to protect
            itself against physical and cyber-attack as the threat to the
            information infrastructure evolves.
     Where corrective CIIP action is required to protect the public
            good, government must identify such instances and create
            appropriate funding mechanisms.
        The Internet and electronic commerce are inherently global in
    nature; therefore, critical information protection will require
    collaboration among international bodies.
     Critical information protection measures much be commensurate
            with the threat involved; risks must be appropriately
            identified and managed but not magnified or embellished.
     Positive interaction between government and industry is
            essential. Among issues which will require on-going
            communication and assessment is the need to balance the
            Constitutional right to privacy with national security
            concerns.
     Industry must monitor the private sector portion of the
            national information infrastructure and cooperate both
            internally and with government in reporting and exchanging
            information concerning threats, attacks, and protective
            measures. Coordination among principals must facilitate
            creation of early warning systems.
     In creating the information infrastructure, as well as
            attendant tools and technologies, industry must be provided
            safe harbor protections and its works viewed as incidental to
            losses caused by criminal or malicious misbehavior or natural
            disasters.
     Distinctions must be made among cyber-mischief, cyber-crime
            and cyber-war to clarify jurisdictional issues and determine
            appropriate responses. The adequacy of current laws to prevent
            these threats must be reviewed.
     Existing laws must be adapted as necessary to allow
            appropriate levels of information sharing among companies, and
            between the private sector and government.
     Current policy in areas such as the R&E tax credit, software
            encryption, workforce training, and longterm government
            research and development funding must be reviewed in light of
            common CIIP goals and objectives.
     Law enforcement agencies must gain sufficient cyber-crime
            expertise to combat specific threats and to investigate
            specific criminal acts.
     Emergency response organizations must gain sufficient disaster
            recovery expertise to minimize the effect of catastrophic
            events on the information infrastructure.
     Implementing this diverse set of principles will require
            substantial work.
    Difficult Issues Remain
        At this nascent stage, many questions remain unanswered:

     What are the criteria for determining the individual elements
            of the critical information infrastructure, and who is involved
            in the determination?
     What should be the process/mechanism by which the government
            will provide threat, indications and warning information to
            critical information infrastructure companies?
     What legislative remedies are necessary to overcome the
            current legal barriers to information sharing?
     Will shared information be protected from FOIA requests?
     What threshold should be established for reporting anomalous
            activity? What type of reporting will be required, given that
            industry will be motivated to monitor and protect itself
            against cyber-attack for business reasons, and how will
            reported information be protected?
     What government restrictions/legislation must be modified or
            lifted so that private sector companies may implement active
            cyber-defense and/or counter-measures (i.e., anti-trust
            provisions leading to NSTAC-like organizations)?
     What type of organization(s) should plan and execute the
            strategy for critical information infrastructure defense?
     What policy determinations are required to distinguish between
            law enforcement and national security (warfare) jurisdictions
            as a result of attacks on critical information infrastructure
            elements?
     How should industry organize itself to represent private
            sector views, to exchange relevant ``lessons learned,'' and to
            participate in policy development? Given that IT is both a
            vertical industry sector itself, but also undergirds all the
            other vertical sectors, what should be the relationship between
            the IT sector and the others?
     What considerations must be allowed for those elements of the
            critical infrastructure which are foreign controlled or are
            part of multi-national businesses, considering that most
            infrastructures are international in nature?
     How should the information technology private sector assess
            the implications of liability and insurance for critical
            services?
     Is there a sufficient research and development effort underway
            to improve the ability of the private sector to monitor and
            protect its designated critical elements? Who should fund this
            effort? How should R&D information be distributed?
     If information system security becomes a competitive market
            differentiator, how will the private sector accommodate the
            needs of the government for infrastructure protection while
            maintaining market competitiveness?
     How does our country develop a corps of IT workers with
            particular skills to focus on security and infrastructure
            protection, particularly in light of the overall IT workforce
            shortage?
        In addition to substantive legal and policy issues, less tangible
    concerns must also be addressed, particularly the development of
    trust--within the private sector and between the private sector and
    government. ITAA and its member companies are working with government
    to help build the necessary bridges. I would like to describe briefly a
    few of these initiatives now.
    ITAA and CIIP
        ITAA is taking a number of actions, has initiated programs, and
    motivated its membership to address the CIIP challenges that the nation
    and our industry face. ITAA realized the importance of this issue and
    took it on over two years ago with the establishment of a dedicated
    Critical Information Protection Task Group to examine and analyze
    policy developments in this area and to offer input into the policy
    process. In the past year ITAA's Critical Information Protection Task
    Group has continued its mission of providing ITAA outreach and
    education to Administration officials, federal civilian, military,
    national security, and law enforcement agencies, Congress, the media,
    international organizations, and the public on the issues of critical
    information protection and assurance. The CIP Task Group has been very
    active particularly in the wake of Presidential Decision Directive 63
    (PDD63), which was issued last spring. The activity of our industry
    Task Group is increasing as federal agencies and industry grapple with
    the implementation of PDD63 which has provided the initial outline and
    direction for the development of a more comprehensive national
    infrastructure protection strategy and plan.
        In the past 12 months, much has happened. Through the Task Group,
    our members have been active in what has been the rapid development of
    information infrastructure security issues and policy. Our organization
    has produced one of the first concerted industry efforts to address CIP
    issues. We have issued white papers focused on critical information
    infrastructure protection. We prepared an industry response to
    President's Commission on Critical Infrastructure Protection (PCCIP)
    report and recommendations when they were released in the fall of 1997.
        Since then, we have held frequent meetings with representatives
    across the government to educate, discuss and provide input into the
    evolving national policy developments.
        In February of this year, ITAA was selected as a Sector Coordinator
    by the Department of Commerce for the Information and Communications
    infrastructure sector, in conjunction with two other associations
    focused primarily on the telecommunications industry--the US Telephone
    Association and the Telecommunications Industry Association. As a
    Sector Coordinator, we are continuing to work with the federal
    government and, in particular, with NTIA on the implementation of PDD
    63.
        Education and outreach will be critical to the success of our
    efforts. This March, ITAA created the framework for a new Cybercitizen
    Partnership in conjunction with Attorney General Janet Reno. The
    Partnership will focus on promoting individual responsibility in
    cyberspace and creating a public-private sector forum for exchange and
    cooperation. Through the Partnership, private sector representatives
    hope to work with federal partners, including the Attorney General, the
    Department of Justice and National Security Agency representatives, on
    development of a critical infrastructure protection education and
    awareness campaign and other initiatives. In addition to an awareness
    campaign we will be coordinating with the FBI's National Infrastructure
    Protection Center to identify and coordinate industry representation
    and participation in Center activities to build the communication and
    trust that will be so essential in moving forward.
        Also of note: In October, 1998, I was appointed by the World
    Information Technology and Services Alliance (WITSA) to chair a new
    task force on critical information infrastructure. WITSA has been quick
    to recognize the need for industry to take a proactive role in
    protecting information infrastructures. At a meeting in Taipei earlier
    this spring, WITSA members approved a policy statement which encourages
    government-industry dialogue at the local, national and international
    levels.
        While both private industry and governments at all levels agree
    that there is a growing need to address the challenges of CIP, there is
    little agreement on what measures, if any, should be taken to protect
    those infrastructures. At the heart of the Statement is the message
    that industry has a vested interest in anticipating and confronting
    infrastructure threats in appropriate ways, guided by business
    considerations. While countries have very different ways of approaching
    CIP, WITSA believes that it is of critical importance that governments
    and international organizations always cooperate fully with industry in
    shaping CIP policy.
        In all honesty, we at ITAA face a daunting job of convincing the IT
    industry to work with these agencies on these initiatives. It is a
    challenge we must step up to if we are to achieve any degree of success
    in opening lines of communication. Our industry continues to have
    reservations about working too closely with the federal law enforcement
    and national security community, particularly with the scars of the
    encryption conflict still fresh.
    ITAA Endorses Role of NTIA
        While the IT industry is frequently uncomfortable in working with
    government agencies on policy issues, the agency we are usually most
    comfortable with is DOC. It is for this reason that ITAA and the
    information technology industry support the selection and continued
    mission of NTIA, within DOC, as the lead agency for and primary liaison
    to our industry for CIIP. While the national security implications of
    information infrastructure security and assurance are clear, it must be
    remembered that it is the private commercial sector that owns, operates
    and manages over 90% of the nation's information and communications
    infrastructure. As such it is appropriate that a civilian agency,
    focused on the advancement of US industry and the US economy, be
    assigned the lead for working and collaborating with the innovative
    companies that have responsibility for and manage these important
    elements of our economy.
        ITAA and our members will continue to look forward to cooperating
    with all agencies and elements of government to meet the CIIP
    challenges. Yet we feel that NTIA is the proper representative to work
    with our industry to begin to build the necessary levels of cooperation
    to help develop the National Infrastructure Protection Plan. Within
    DOC, NTIA has the knowledge of and experience and relationships with
    the IT and Communications industries that are necessary.
        Over the past two years, ITAA, its members and the IT industry have
    begun to develop collegial and constructive relationships with the
    leadership and staff of the Commerce Department, NTIA and the Critical
    Information Infrastructure Assurance Program Office at NTIA in their
    capacity as the lead agency for our industry. While significant,
    positive levels of trust, cooperation and communication have been
    developing, the important work that must be done has barely started.
    This is not because of any lack of desire or ability on behalf of NTIA
    or the CIIAP Office, but because they have been asked to do their job
    without the necessary resources. They lack even the minimum funding and
    support that is necessary for them to carry out their mission. It is
    essential that the necessary programmatic funding and resources be
    appropriated to the NTIA to carry out its mission. $3.5 million is a
    small price to pay for getting these important programs moving down the
    track.
    Conclusion
        The U.S. and much of the world are building their economic house on
    an information technology foundation. This is extremely positive
    approach to take, delivering tangible benefits to a fast growing
    percentage of the world's population. As we build this house which
    reaches to a better, more prosperous and democratic future, we must be
    ever vigilant of cracks in this structure. If Year 2000 is the first
    challenge to place our economic house at risk, failure to adopt a
    rigorous approach to CIIP will be the second. I have offered a
    conceptual framework on which government and industry can work towards
    common ground. A framework which recognizes inherent differences and
    builds on mutual strengths. A framework in which ITAA continues to play
    a leadership role. A framework in which NTIA must now be allowed to
    step to the forefront. As you consider the NTIA Reauthorization Act of
    1999 and the future role for the agency, I encourage you to make this
    possible.

        Mr. Tauzin. Thank you, Mr. Miller.
        Next is Mr. Rogers.

                      STATEMENT OF JAMES A. ROGERS

        Mr. Rogers. Thank you, Mr. Chairman. My name is Jim Rogers
    and I am retired manager of UPS. I have been asked by UPS to
    describe to you the spectrum management dilemma that UPS
    experienced as customers for package delivery started calling
    for advanced information and telecommunications services such
    as tracking, tracing, and electronic signatures.
        The company also has submitted a letter and has asked that
    it be made part of the this subcommittee's record.
        [The letter referred to follows:]

                                          United Parcel Service
                                                           May 10, 1999
    The Honorable Billy Tauzin
    Chairman
    Subcommittee on Telecommunications, Trade and Consumer Protection
    Commerce Committee
    2125 Rayburn House Office Building
    U.S. House of Representatives
    Washington D.C. 20515
        Dear Mr. Chairman: On behalf of United Parcel Service, I want to
    extend my appreciation to you and the subcommittee for holding the
    hearing on Tuesday, May 11, 1999, on NTIA and its spectrum activities,
    particularly those involving government use of spectrum to compete with
    the private sector. UPS also appreciates the invitation to provide a
    witness. Jim Rogers, who will be speaking for UPS at that hearing, is
    best suited to explain our history on this matter in that he was the
    person responsible for handling the agency and legislative issues
    associated with the development of 220 MHz spectrum.
        UPS believes that the current situation needs to be corrected. The
    case that will be laid out by Jim Rogers at the hearing clearly
    provides convincing evidence that our nation's spectrum policy has
    evolved into an unacceptable situation as it pertains to the United
    States Postal Service (USPS) and its efforts to enter into private
    commercial markets. UPS, as a commercial enterprise, must fulfill its
    spectrum needs by applying for licenses issued by the Federal
    Communications Commission. The Postal Service--UPS's primary competitor
    in the marketplace--is given government agency status, and is able to
    obtain from NTIA the frequencies it needs to compete in the marketplace
    against the private sector.
        The disparity in treatment creates an enormous competitive
    advantage. UPS has had to live with the delays there are inherent in
    FCC proceedings. The Postal Service does not. UPS has to pay for
    licenses by bidding for them at auction. The Postal Service gets its
    licenses for free.
        The competitive advantage enjoyed by the Postal Service is not
    merely theoretical. As I have illustrated, UPS paid a significant
    price, in both dollars and opportunity costs, to develop the system and
    obtain the frequencies needed to compete against the Postal Service. In
    contrast, the Postal Service has avoided paying the costs that UPS has
    borne, and has instead been able to acquire its frequencies without
    charge.
        The solution is both fair and simple.
        First, and at a minimum, when the Postal Service needs radio
    licenses in support of its competitive activities, it should not be
    treated as a Government agency by NTIA. It should be forced to go to
    the FCC and compete against everyone else for scarce frequencies. It is
    one thing to give the Government users of the spectrum the access that
    they need to serve the public interest. It is another thing altogether
    to grant the Postal Service preferential rights of access, under
    preferential terms and conditions, when it's competing against private
    business.
        Second, a determination as to whether a Postal Service application
    is for radio frequencies to support competitive ventures should be made
    in a public proceeding, and should be subject to challenge in the
    courts. It is not appropriate that this determination be made by the
    IRAC--on which the Postal Service sits. Nor is it appropriate that it
    be made without public scrutiny, or without accountability. The Postal
    Service should be subject to the same rules as the rest of us when it
    is acquiring frequencies in support of its competitive ventures.
        Finally, in my view, the Postal Service should be removed from the
    IRAC altogether. To the extent that it is permitted to remain a member,
    it will be in a position to influence and use leverage over the other
    members of IRAC in order to benefit its own competitive objectives.
                Sincerely,
                                                 Ken Churchill,
                               Vice President, Corporate Public Affairs

        Mr. Rogers. As most of you know, UPS is the largest package
    delivery service in the United States. We have grown from a
    local service that delivers packages for local merchants to
    their customers to a worldwide enterprise that delivers more
    than 12 million packages per day around the globe. UPS
    customers are demanding ever more information about their
    shipments. To meet that need, UPS has transformed itself from a
    large package delivery service to a technology-intensive global
    communications company that makes extensive use of radio
    spectrum to transmit package information data.
        In this effort, we discovered a company in Oregon that was
    engaged in the business of building LORAN equipment for
    aircraft and was doing some exciting work with amplitude
    compandered single sideband. It is ACSB. This company,
    IIMorrow, was interested in expanding its market beyond
    aircraft instrumentation, and we realized that we would both
    benefit from accelerating IIMorrow's development of ACSB.
        In order to maximize that benefit, UPS eventually acquired
    IIMorrow. Developing the equipment was one thing; having
    frequencies on which to operate was another. So we began
    discussions with the FCC to determine whether there were
    frequencies available to support the applications we were
    interested in using.
        On a separate track, the FCC began the proceedings to
    reallocate the 220-222 megahertz band. Many of you remember
    that proceeding. The band had been utilized on a secondary
    basis by amateurs, and the reallocation proceeding got bogged
    down as the amateurs resisted these efforts. The Commission's
    notice of proposed rulemaking was released in December 1998,
    but a final report and order was not issued until mid-1991.
        While this was proceeding, UPS successfully conducted a
    test in the Chicago area using frequencies in the 220-222
    megahertz band that were licensed for our use on an
    experimental basis.
        In 1992, the FCC adopted its pioneer preference rules.
    While we did receive tentative designation as a pioneer, the
    Commission ultimately declined to give us the award. We were
    getting close to the time when we needed a track-and-trace
    system, but a couple of things occurred. First, the FCC
    commenced to hold a series of lotteries to issue licenses in
    the 220-222 band. The geographic area covered by these licenses
    was local. We spent more than $50,000 to participate in these
    lotteries, and while we did win some, we had nowhere near the
    nationwide coverage we needed.
        In 1993 Congress enacted amendments to the Communications
    Act of 1934, giving the authority to auction licenses based on
    the values that are placed on these frequencies. We do not
    quarrel with the determination that auctioning licenses has
    many advantages over lotteries or comparative hearings. One of
    the side effects of enacting the auction statute was a long
    delay in the Commission's proceeding with respect to issuing
    nationwide licenses in the 220-222 megahertz band.
        All of the activity that I have described took place
    between 1988 and 1994. The upshot is that UPS eventually
    invested over $40 million in its efforts to develop a data
    network using the 220-222 megahertz band, and it didn't work.
        We couldn't wait. We had to get into the market. So we
    entered into agreements with cellular licenses around the
    country to utilize cellular frequencies for the track-and-trace
    services our customers were demanding.
        Today UPS is the No. 1 user of cellular services in the
    U.S. UPS's primary competitor, the U.S. Postal Service, did not
    sit idly by. In 1996 the Postal Service applied for and
    obtained licenses to utilize frequencies in the 220-222 band.
    This is the same band we spent more than $40 million
    unsuccessfully to obtain permission to use. To get its
    licenses, the Postal Service didn't participate in an auction.
    It filed an application with the Interagency Radio Advisory
    Committee, the IRAC. IRAC advised NTIA with respect to the need
    for government users to obtain frequency.
        Who sits on IRAC? Among its members is the Postal Service.
    The IRAC is composed of government users who work together to
    ensure the spectrum needs of all government users are met. The
    Postal Service sits as a member of IRAC and participates in the
    process of advising NTIA on whether or not its licenses should
    be granted. It is an applicant, advocate, and a juror.
        I suppose that would be fine if it weren't for the fact
    that approximately $12 billion per year of the Postal Service
    revenues come from providing services in competition with the
    private sector, including UPS. But when the Postal Service is
    engaged in competitive activities, its membership on the IRAC
    gives it a huge competitive advantage. The disparity between
    UPS and Postal Service creates an enormous competitive
    advantage. UPS had to live with the delays inherent in the FCC
    proceedings. The Postal Service did not. UPS had to pay for
    licenses by bidding for them at an auction or paying cellular
    fees now. The Postal Service gets its licenses for free.
        The competitive advantage enjoyed by the Postal Service is
    not merely theoretical. UPS paid a significant price in both
    dollars and opportunity costs developing the system and hoping
    to obtain the frequencies needed to compete. In contrast, the
    Postal Service has avoided paying the cost UPS has borne, and
    has instead been able to acquire its frequencies without
    charge.
        The solution is fair and simple. First and at a minimum,
    when the Postal Service needs radio licenses in support of its
    competitive activities, it should not be treated as a
    government agency by NTIA. It should be forced to go to the FCC
    and compete against everyone else for scarce frequencies. It is
    one thing to give the government users of the spectrum the
    access they need to serve the public interest. It is another
    thing to grant the Postal Service preferential rights of access
    under preferential terms and conditions when it is competing
    against private businesses.
        Second, determination as to whether a Postal Service
    application is for radio frequencies to support competitive
    ventures should be made in a public proceeding and should be
    subject to challenge in the courts. It is not appropriate that
    this determination be made by the IRAC on which the Postal
    Service sits. The Postal Service should be subject to the same
    rules as the rest of us when it is requiring frequencies in
    supports of its competitive ventures.
        The Postal Service should be removed from the IRAC
    altogether. To the extent that it is permitted to remain a
    member, it will be in a position to influence and use leverage
    over the other members of IRAC in order to benefit its own
    competitive services.
        This ends my prepared remarks. I will be happy to answer
    any questions that you have.
        [The prepared statement of James A. Rogers follows:]
     Prepared Statement of James A. Rogers, Retired Representative, United
                                 Parcel Service
    Introduction
        Good afternoon, Mr. Chairman and Members of the Subcommittee. I am
    pleased to have the opportunity to appear before you today. My name is
    Jim Rogers, and I am a retired employee of United Parcel Service. I
    have been asked by UPS to describe for you the spectrum dilemma that
    UPS experienced as customers for package delivery started calling for
    advanced information and telecommunications serviices, such as tracking
    and tracing, and electronic signatures. Over the last decade, it had
    been my responsibility to coordinate UPS's spectrum activities before
    the FCC, and later, the NTIA. UPS has asked me to give you a brief
    narration of what happened. The Company has also submitted a letter and
    has asked that it be made part of the Subcommittee's record.
    Background
        As most of you know, UPS is the largest package delivery service in
    the United States. We have grown from a local service that delivered
    packages for local merchants to their customers, to a worldwide
    enterprise that delivers more than 12 million packages per day around
    the globe. Today we have a fleet of more than 500 aircraft, 157,000
    ground vehicles, and more than 325,000 employees to meet the needs of
    our customers.
        Those needs have gotten far more sophisticated--particularly in the
    last 15 years. Today's shippers want to know whether their shipments
    have arrived, and if not, where they are, and when they'll get there.
    They need information about their shipments.
        That's what UPS's customers are demanding. To meet that need, UPS
    has transformed itself from a large package delivery service to a
    technology-intensive global communications company that makes extensive
    use of the radio spectrum.
    UPS Experience
        By the mid 1980's, our customers were telling us that we needed to
    be able to give them up-to-the minute information regarding the status
    of their shipments. In response, we began the preliminary efforts to
    identify radio-based technologies that could fill this need, and give
    us the ability to track our vehicles.
        We discovered a company in Oregon that was engaged in the business
    of building LORAN equipment for aircraft and terrestrial uses, and was
    doing some exciting work with a new technology called ACSB--amplitude
    compandered single sideband. This company--IIMorrow--was interested in
    expanding its market beyond aircraft instrumentation, and we quickly
    realized that we would both benefit from accelerating IIMorrow's
    development of ACSB. In order to maximize that benefit, UPS acquired
    IIMorrow
        But having the equipment was one thing, and having frequencies on
    which to operate was another. So we began discussions with the FCC to
    determine whether there were frequencies available that could support
    the applications we were interested in using. The FCC was familiar with
    IIMorrow's work on ACSB technology, and in 1988 encouraged us to look
    at the 220-222 MHz band as a possible ``home'' for a new tracking and
    tracing service. As our customers continued to push us for increased
    information about their shipments, we continued to push forward with
    the development of ACSB technology to operate in the 220-222 MHz band.
    UPS successfully conducted a test in the Chicago area using frequencies
    that were licensed for our use on an experimental basis.
        On a separate track, the FCC began the proceeding to reallocate the
    220-222 MHz band. Many of you may remember that proceeding. This band
    had been utilized (on a secondary basis) by amateurs, and the
    reallocation proceeding got bogged down as the amateurs resisted the
    FCC's efforts. The Commission's Notice of Proposed Rulemaking was
    released in December, 1989, but a final Report and Order was not issued
    until mid-1991.
        In 1992, the FCC adopted its ``Pioneer Preference'' rules. At this
    point, given the sizable investment that UPS had made to develop the
    new technology to operate in the 220-222 MHz band, we determined that
    we would apply for a pioneers preference award. Our hope was to receive
    a ``Pioneer'' designation that would enable us to receive a license for
    this new technology without bidding for it at auction. While we did
    receive ``tentative'' designation as a pioneer, the Commission
    ultimately declined to issue us the award that we sought. But as we
    were getting to the point where we were ready to develop an operating
    ``track and trace'' system, two things occurred.
        First, the FCC commenced to hold a series of lotteries to issue
    licenses in the 220-222 MHz band; however the geographic area covered
    by these licenses was very limited. UPS spent more than $50,000 to
    participate in these lotteries, and while we did win a few, we had
    nowhere near the nationwide coverage that we sought.
        Second, in 1993, Congress enacted the amendments to section 309(j)
    of the Communications Act giving the FCC the authority to auction
    licenses based on the value that bidders placed on these frequencies.
    We do not quarrel with the determination that auctioning licenses has
    many advantages over lotteries or comparative hearings. But one of the
    side effects of enacting the auction statute was a long delay in the
    Commission's proceedings with respect to issuing nationwide licenses in
    the 220-222 MHz band.
        All of the activity I've described to you took place between 1988
    and 1994. The upshot is that UPS had invested over $40 million in its
    effort to develop a national digital data network using the 220-222 MHz
    band, which didn't come to fruition. We couldn't wait. Faced with
    unacceptable delay, UPS entered into agreements with many cellular
    licensees around the country to utilize cellular frequencies for the
    ``track and trace'' services that our customers were demanding. Today,
    UPS is the number one user of cellular services, with a nationwide
    network pieced together from cellular licensees that permits us to
    offer our customers the ``track and trace'' capability that they
    demand.
    U.S. Postal Service Actions
        UPS's primary competitor, the U.S. Postal Service, was not sitting
    idly on the sidelines. In 1996, the U.S.P.S applied for, and obtained,
    licenses to utilize frequencies in the 220-222 MHz band. This is the
    same band that we had spent more than $40 million--unsuccessfully--to
    obtain permission to use.
        To get its licenses, the Postal Service didn't have to participate
    in an auction. It filed its applications with the Interagency Radio
    Advisory Committee--the ``IRAC.'' The IRAC advises NTIA with respect to
    the need for Government users to obtain frequencies.
        And who sits on IRAC? Well, among its members is none other than
    the U.S. Postal Service. The IRAC is comprised of Government users, who
    work together to ensure that the spectrum needs of all Government users
    are met. The Postal Service sits as a member of the IRAC, and
    participates in the process of advising NTIA on whether or not its
    licenses should be granted. It is at once an applicant, an advocate and
    a juror.
        I suppose that would be fine if it weren't for the fact that
    approximately $12 billion dollars per year of the Postal Service's
    revenues comes from providing services in competition with the private
    sector, including UPS. But when the Postal Service is engaged in
    competitive activities, its membership on the IRAC gives it a huge
    competitive advantage.
    Recommendations
        The letter that Ken Churchill has submitted for the record states
    both the problem, and the solution, correctly. UPS, as a commercial
    enterprise, must fulfill its spectrum needs by applying for licenses
    issued by the Federal Communications Commission. UPS's primary
    competitor in the marketplace--the U.S. Postal Service--is treated as a
    government agency, and is able to obtain from NTIA the frequencies it
    needs to compete in the marketplace against the private sector.
        The disparity between UPS and the Postal Service creates an
    enormous competitive advantage. UPS has had to live with the delays
    there are inherent in FCC proceedings. The Postal Service does not. UPS
    has to pay for licenses by bidding for them at auction. The Postal
    Service gets its licenses for free.
        The competitive advantage enjoyed by the Postal Service is not
    merely theoretical. As I have illustrated, UPS paid a significant
    price, in both dollars and opportunitiy costs, to develop the system
    and obtain the frequencies needed to compete against the Postal
    Service. In contrast, the Postal Service has avoided paying the costs
    that UPS has borne, and has instead been able to acquire its
    frequencies without charge.
        The solution is both fair and simple.
        First, and at a minimum, when the Postal Service needs radio
    licenses in support of its competitive activities, it should not be
    treated as a Government agency by NTIA. It should be forced to go to
    the FCC and compete against everyone else for scarce frequencies. It is
    one thing to give the Government users of the spectrum the access that
    they need to serve the public interest. It is another thing altogether
    to grant the Postal Service preferential rights of access, under
    preferential terms and conditions, when it's competing against private
    business.
        Second, a determination as to whether a Postal Service application
    is for radio frequencies to support competitive ventures should be made
    in a public proceeding, and should be subject to challenge in the
    courts. It is not appropriate that this determination be made by the
    IRAC--on which the Postal Service sits. Nor is it appropriate that it
    be made without public scrutiny, or without accountability. The Postal
    Service should be subject to the same rules as the rest of us when it
    is acquiring frequencies in support of its competitive ventures.
        Finally, in my view, the Postal Service should be removed from the
    IRAC altogether. To the extent that it is permitted to remain a member,
    it will be in a position to influence and use leverage over the other
    members of IRAC in order to benefit its own competitive services.
        Mr. Chairman, this ends my prepared remarks. I will be happy to
    respond to any questions you may have.

        Mr. Tauzin. Thank you, Mr. Rogers.
        We will now hear from Mr. Kenneth Crawford.

                    STATEMENT OF KENNETH C. CRAWFORD

        Mr. Crawford. Mr. Chairman, I am pleased to say that as a
    result of a TIIAP grant that we received 2 years ago, there are
    people alive in Oklahoma today that might have died Monday, May
    3, so I am pleased to be here to testify on behalf of the
    reauthorization legislation.
        My testimony will be based upon a program that we know is
    OK-FIRST. It was established in 1996 through a 2-year TIIAP
    grant. It was developed by my office at the University of
    Oklahoma. Our goal was to provide public safety officials in
    our State, that is police, fire and civil emergency management,
    with the data from the modernized National Weather Service, in
    particular their modern Doppler weather radar network,
    sometimes called NEXRAD, sometimes called the WSR-88D.
        We also provided extensive precursor training, extensive
    follow-up after the fact, and we designed our system to be
    multipurpose, not just weather-related. My background in this
    comes from a 35-year professional career that had me in the
    National Weather Service in States like Louisiana and Texas and
    Oklahoma. And for the last decade I have been at the University
    of Oklahoma where I have had a little bit more freedom to be
    creative in these areas.
        The weakness that I saw in the weather warning system of
    our Nation, be it Louisiana, Texas or Oklahoma, was simply the
    ability to--or inability to disseminate time-critical
    information to a population at risk. Often that meant a rural
    area. Historically, as the National Research Council has
    documented on a number of occasions, access to information from
    the National Weather Service has been cumbersome, expensive,
    non-intuitive, and lacked critical details. And while the
    modernization of the National Weather Service through the
    1990's has helped considerably with the quality of that data,
    there still remains no real viable delivery mechanism to get
    time-critical information to public safety officials in rural
    areas. In particular, the public safety sector of our society
    have not really reaped the benefits associated with the
    modernization of the weather service.
        It is my opinion that the rural population of our Nation is
    likely in an information drought when it comes to natural
    disasters. And as best I understand things from talking to
    friends across the Nation, the use of NEXRAD data in a host of
    public safety offices remains practically nonexistent, even
    though the NEXRAD radar network has been in existence for
    almost 5 years now.
        In Oklahoma, as a result of TIIAP, we have 85 trained
    agencies. Of those agencies, 49 percent are from communities
    where the population is 5,000 or smaller. As you well know, we
    had major tornado damage in central Oklahoma 8 days ago. It
    killed 41 people. It wounded and injured 742. There were nearly
    7,000 structures that were destroyed, mostly in central
    Oklahoma. And while the weather service and the broadcast media
    provided an excellent service, the rural areas were also being
    hammered at the same time that the media in Oklahoma City was
    saturated. All of the media attention went to Oklahoma City.
        I would like to read just one of many comments that I can
    give you. This comes from the civil defense director in
    Guthrie, Oklahoma, to the north of Oklahoma City. He said when
    police and rescue crews arrived at the first Logan County
    damage site near the city of Crescent, one of the first tasks
    was to open the highway sufficiently to get an ambulance
    through from Crescent to the hospital in Guthrie. All efforts
    were to get that ambulance moving with a critically injured
    tornado victim.
        About the time they succeeded, a second tornado approached
    in the dark and wrapped in rain. The ambulance and the tornado
    were moving on intersecting paths. Emergency management, aware
    of both events, was able to stop the ambulance until the
    tornado had passed in front of it, and he closed that episode
    by saying, ``And we received no tornado information from any
    source other than OK-FIRST.'' And the reason he didn't was the
    media in Oklahoma City was saturated with what was going on.
        I could give you a hundred success stories like that. I
    would close with three or four points. One, they would never
    had occurred had it not been for the availability of TIIAP
    funds to permit a pilot project that we know as OK-FIRST to be
    developed.
        Second, in my opinion it speeded the development of this
    kind of information dissemination to the rural areas by at
    least 5 years, possibly even more. As a result of our successes
    in Oklahoma, the National Weather Service has now teamed with
    us to marry our efforts of OK-FIRST with their efforts, AWIPS,
    to try to take our work into a national forum.
        Finally, I would close by saying had not the TIIAP grant
    opportunity been known to us, we likely would have never had
    thought about proposing such an effort as OK-FIRST.
        My final comment would be taken from the Daily Oklahoma
    this morning. I picked it up on my way here. If Larry has PR
    people, it is just a coincidence, but there is a front page
    story, ``Warning System Called a Life Safer,'' and it mentions
    TIIAP and the U.S. Department of Commerce on the front page of
    a very conservative newspaper. When journalists can say----
        Mr. Tauzin. Larry has his hands everywhere.
        Mr. Crawford. When journalists can say that they see the
    value in these systems, I believe we as meteorologists have
    gained a new level of credibility in our Nation, and I thank
    you for the time.
        [The prepared statement of Kenneth C. Crawford follows:]
       Prepared Statement of Kenneth C. Crawford, Regents' Professor of
     Meteorology, Director, Oklahoma Climatological Survey, The University
                                  of Oklahoma
        Mr. Chairman and Members of the Subcommittee on Telecommunications,
    Trade and Consumer Protection of the House Committee on Commerce, I am
    Kenneth C. Crawford, currently a Regents' Professor Of Meteorology and
    Director of the Oklahoma Climatological Survey (OCS) at the University
    of Oklahoma. I am honored to appear before you today to testify on
    behalf of reauthorization legislation for the National
    Telecommunications and Information Administration (NTIA). Specifically,
    I bring testimony in support of the Telecommunications Information
    Infrastructure Assistant Program (TIIAP), a unit within the NTIA. My
    testimony also is based upon a program we know in Oklahoma as OK-
    FIRST--Oklahoma's First-response Information Resource System using
    Telecommunications--which was initially funded by TIIAP.
        OK-FIRST was established in 1996 through a two-year TIIAP grant.
    Continued funding was provided by the State of Oklahoma during FY99.
    For FY00, funding is still subject to Legislative and Gubernatorial
    approval during the current Legislative session.
        OK-FIRST, developed by the Oklahoma Climatological Survey, provides
    public safety officials in rural and urban areas with data from a
    network of modern Doppler weather radars (known as the WSR-88D or
    NEXRAD) along with other information from the modernized National
    Weather Service (NWS). In addition, OK-FIRST provides extensive
    precursor training on how to use and how NOT to use the data. From the
    beginning, the OK-FIRST system was designed to be multipurpose (e.g.,
    it is routinely used during episodes of severe weather, flooding,
    wildfires, and hazardous material incidents).
        I would begin by telling you that I have been on the faculty at the
    University of Oklahoma since 1989. During the intervening 10-years, my
    office has developed three major public-service programs--all lying
    within the scope of enabling legislation from the Oklahoma Legislature
    in 1978. The first service program is the Oklahoma Mesonetwork (known
    as the Mesonet), an automated network of 115 remote observing stations
    deployed across Oklahoma which provide environmental data at 5 minute
    intervals on an around-the-clock basis. Building upon this early 1990s
    effort which was funded by the State of Oklahoma, the OCS developed a
    K-12 educational outreach program designed to put real-time Mesonet
    data into the K-12 classrooms of Oklahoma and to bring the information
    age to tomorrow's leaders. This latter program, called EARTHSTORM, was
    supported for three years (1992-1995) by a competitively-earned grant
    from the National Science Foundation. Today, the Mesonet and EARTHSTORM
    continue to provide services to the citizens of Oklahoma using funds
    appropriated by our State Legislature and via funds derived from
    various other partnerships.
        Our third outreach effort--known as OK-FIRST and made possible by
    TIIAP--was built upon the credibility brought to us by these past
    experiences along with a number of other relevant experiences and
    technological advances. This important experience base includes:

     My own experiences as an NWS employee of 30 years that
            encompassed duty as an operational forecaster, as a research
            meteorologist at the National Severe Storms Laboratory during
            the early development days of the NEXRAD program (Doppler
            weather radar that became known as the WSR-88D), and as a
            senior NWS field manager for nearly 10 years. The last 8 years
            of my NWS career were spent in central Oklahoma where the NWS
            was focusing much of its modernization effort at the time. From
            these experiences, I learned first-hand that a major weakness
            in the nation's weather warning system was the difficult issue
            of the dissemination of time-critical information to the
            populated area with the greatest risk.
        Historically, access to NWS information by local officials
            nationwide had, for years, been cumbersome, expensive, non-
            intuitive, and lacked critical details. The $4.5 billion NWS
            modernization of the 1990s made this problem much worse by
            producing vast amounts of high-quality, county-scale
            information with no viable delivery mechanism to those
            ultimately responsible for making life-and-death decisions. In
            addition, rural areas--traditionally under served by
            telecommunications and technology and often ignored by programs
            in both the public and private sector--were especially at high
            risk when severe weather, wildfires, and hazardous material
            incidents occurred. Consequently, local officials made weather-
            impacted decisions without adequate information (e.g., storm
            spotters were deployed precariously because coordinators lacked
            information about storm location, movement, and intensity).
            Despite the NWS modernization which dramatically improved their
            forecasting and warning capabilities, public safety officials
            still have not reaped many of the associated benefits.
        Thus, it is my opinion, based upon front-line experiences in
            Oklahoma during the 1980s, that the rural population of our
            nation is likely in an information drought when natural
            disasters strike. Disaster survey after disaster survey
            continue to point out that the population-at-risk did not
            understand the real risks they faced.
     The modernization of the National Weather Service included
            deployment of the WSR-88D radar network that consisted of 154
            Doppler weather radars. Because of NEXRAD's thoughtful design,
            all data were digital, updated frequently, and sharable. Yet,
            access to and use of NEXRAD data in public safety offices
            remains pratically non-existent in rural areas due to a host of
            small issues (e.g., available funds, affordable fees, knowledge
            of what is available, training, etc.).
     The maturation of the Internet, and in Oklahoma, its statewide
            equivalent known as OneNet (funded by the State of Oklahoma for
            $14 million in 1992), represented a cost-effective capability
            to move data into the most rural of areas across Oklahoma. In
            addition, the maturation of PC technology represented the
            affordable tools to display important digital information.
        All that was lacking to improve the delivery of critical weather
    information into rural areas was (1) an affordable access to NEXRAD
    data and an authority to redistribute this unique data to state and
    locally-supported agencies within Oklahoma, and (2) funds to develop a
    pilot project designed to deliver the best possible information from
    the modernized NWS to rural Oklahoma, including the provision of
    training and on-going support.
        These two obstacles were overcome by a unique partnership, formed
    in 1996 between the Unisys Corporation of Kennett Square, PA and the
    University of Oklahoma. This partnership permitted the State of
    Oklahoma to acquire digital radar data from 15 nearby systems in the
    WSR-88D network (Figure 1--appended at end of narrative). As a result,
    access to the NEXRAD pipeline has become very affordable (compared to
    acquiring NEXRAD data agency-by-agency on the open market). The
    partnership between Unisys and the University of Oklahoma remains
    unique (as far as I know) among the four agencies authorized to
    distribute NEXRAD data beyond the Federal Government. With this
    partnership in hand, the State of Oklahoma was given the authority to
    redistribute WSR-88D data to public safety agencies across Oklahoma--to
    include civil emergency management, law enforcement, and fire
    protection agencies. As a result, Unisys now receives data fees from a
    market not previously tapped, because market forces had made the data
    prohibitively expensive for rural agencies that routinely operate on
    shoestring budgets.
        In addition, funds were provided by a competitively-earned grant
    from TIIAP--$549,910 for 2.5 years beginning in October of 1996. As a
    result of the momentum generated by the TIIAP grant, eighty-five OK-
    FIRST agencies (Figure 2--appended at end of narrative) have been well
    trained (we believe) to access and use highly technical data produced
    every 6 minutes by each radar in the WSR-88D network (e.g., estimated
    hail size, the probability of severe-sized hail, the presence of
    mesocyclones, radar estimated rainfall, etc.) and to resolve potential
    conflicting information produced by two adjacent WSR-88Ds. Of these 85
    user agencies, 49% represent communities where the population is 5,000
    or less.
        On May 3, 1999, the National Weather Service and the radio and
    television media contributed greatly to the quality and efficient
    delivery of warnings for a devastating series of killer storms.
    Clearly, the severe weather outbreak of May 3rd extracted a horrific
    toll, yet produced evidence that modern-day technology does save lives:

     75 tornadoes moved across Oklahoma during a 10 hour period
            killing 41 and injuring an additional 742 Oklahomans. In their
            path, these tornadoes destroyed 4,156 structures (a grand total
            of 7,000 structures severely affected), and left an economic
            price tag that will exceed one billion dollars!
     WSR-88Ds used on May 3rd pinpointed the location of most, if
            not all killer storms with incredible accuracy and clarity.
     NWS meteorologists at the Storm Prediction Center in Norman,
            and at the NWS Forecast Offices in Norman and in Tulsa produced
            a series of outstanding forecasts and warnings that represent
            major dividends from the NWS modernization.
     The electronic broadcast media in Oklahoma City performed
            superbly--in fact, in my 35+ years as a professional
            meteorologist, I have never seen the broadcast media perform
            their warning dissemination tasks in so admirable a manner.
     Public safety agencies across Oklahoma also were trained and
            ready for this onslaught, due partially to the existence of OK-
            FIRST. They performed their local emergency response tasks in
            no less admirable a fashion--for the real miracle of May 3,
            1999 was a death toll that stood at 41 and did not exceed
            1,000! The effects of the tornadoes which struck Oklahoma on
            that day could have been worse. Much worse.
        However, the best story of May 3rd may not necessarily be those
    which made the national and international headlines. Instead, it might
    be how OK-FIRST worked as an information-delivery system to save lives
    on this most stressful of nights:
        The OK-FIRST dissemination system shared 36,278 NEXRAD files of
    information with OK-FIRST agencies on May 3rd. A typical NEXRAD image
    used by an OK-FIRST agency on this day is shown in Figure 3--appended
    at end of narrative.
        Steve Chapman, Emergency Management Director for the town of
    Chickasha (southwest of OKC), saw the tornadoes developing on his OK-
    FIRST displays. Using pinpoint information from OK-FIRST (hence, the
    NWS and NEXRAD), Mr. Chapman ordered the evacuation of the Chickasha
    Airport--fifteen minutes before one of the first tornadoes of the day
    struck. No fatalities or injuries resulted.
        Later that evening, when another tornado demolished the Tanger
    Outlet Mall in Stroud (between OKC and Tulsa), all stores had been
    vacated. Ben Springfield, Lincoln County Emergency Management Director,
    used OK-FIRST and notified Stroud 30 minutes in advance.
        People in their homes in rural areas also were more secure thanks
    to the actions of emergency managers that day. After the storms had
    spun their path of destruction across the Oklahoma City metropolitan
    area, they continued northeast. Residents in rural areas had minimal
    attention from the media, as local news media focused much of their
    coverage upon the devastation and recovery operations in and near
    Oklahoma City. One of Ben Springfield's assistants, who was monitoring
    the OK-FIRST radar display, relayed updates every five minutes on their
    scanner. People in the path of the tornado received the information and
    took shelter. Mr. Springfield said that many of these people would
    otherwise not have taken shelter had it not been for the trustworthy
    information coming across their scanner.
        In Kingfisher County (northwest of OKC), the town of Dover was hit
    hard, with one-third of the homes destroyed and another one third
    damaged. Despite the extent of the devastation, only one fatality
    occurred. The town's warning system was sounded 10 to 20 minutes in
    advance of the storm, according to Danny Mastalka, Director of
    Kingfisher County Emergency Management. The lone fatality was an
    individual who received the warning but chose not to take action.
        Rescue workers themselves were targets of the storms. A tornado
    completely devastated the small community of Mulhall in Logan County
    (north of OKC). Rescue workers set up a command center to manage the
    recovery operations. John Lewis, Logan County Emergency Management
    Director, saw another tornado approaching on his OK-FIRST system; it
    was following a nearly identical path to the first tornado. He alerted
    the command center to move their operations twice. As a result, the
    rescue workers did not themselves become victims of the storms.
        Mr. Lewis, in his letter of May 10, 1999 (appended at the end of
    narrative) stated:
            ``When police and rescue crews arrived at the first Logan
            County damage site near the City of Crescent, one of the first
            tasks was to open the highway sufficiently to get an ambulance
            through from Crescent to the hospital in Guthrie. All efforts
            were to get that ambulance moving with a critically injured
            tornado victim. About the time they succeeded, a second tornado
            approached in the dark and wrapped in rain. The ambulance and
            the tornado moved on intersecting paths. Emergency management,
            aware of both events, was able to stop the ambulance until the
            tornado had passed just in front of it. We received NO tornado
            information from any source other than OK-FIRST for this
            tornado.''
            ``The town of Mulhall, devastated by the initial tornado after
            it passed Crescent, was warned primarily by two law enforcement
            units sounding their vehicle sirens in the town. The units had
            been dispatched there by the Sheriff's Office based upon OK-
            FIRST data. Both units continued warning residents until they
            were each hit by debris: one by power lines down across his
            car, the second by a large tree on top of his unit. Both
            officers were uninjured--and so were all but one Mulhall town
            resident!'' [Note: practically every structure in Mulhall, a
            community of 945 citizens, was destroyed, including the town's
            only water tower which had stood since the 1920s.]
        In Seminole County (east of OKC), Emergency Management Director
    Herb Gunter radioed a warning to a convoy of emergency vehicles
    responding to a mutual aid call from the Oklahoma City area. Mr. Gunter
    noticed that another tornado was developing and would cross I-40 ahead
    of them. The law enforcement convoy closed I-40 so that neither they
    nor other vehicles would drive into the path of the storm.
    Unfortunately, two vehicles (and two fatalities) were later found swept
    from the road in the exact spot where Mr. Gunter identified the storm.
        Meanwhile, in far northeast Oklahoma, as attention remained focused
    on killer tornadoes, heavy thunderstorms with flood producing rains
    brought 5-6 inches to Ottawa and surrounding counties on the night of
    May 3rd. Terry Durborow, Emergency Management Director for the City of
    Miami, used OK-FIRST to ``help protect the public in a timely manner.''
        Incidentally, OK-FIRST has been named a semifinalist in Harvard
    University's ``Innovations in American Government'' awards program for
    1999, ranking in the top 6% of the 1609 applications submitted.
    Selection of finalists in this prestigious awards program will occur at
    the end of May 1999.
        These success stories (and others too numerous to document) would
    have never occurred had it not been for the availability of TIIAP
    funds. Three points illustrate the impact of TIIAP upon the development
    of OK-FIRST.
        First, in my opinion, the development of an information-delivery
    system like OK-FIRST--one that would meet the needs of public safety
    officials because agency users are trained to use a modern information-
    delivery system--would not have happened prior to 2005 had TIIAP funds
    not been awarded to jump-start a project that now has national
    applications.
        Second, the National Weather Service awarded substantial funds in
    FY99 to link OK-FIRST and the University of Oklahoma with the evolution
    of its LDAD System (Local Data Acquisition and Dissemination)--the
    external data-sharing arm of AWIPS (Advanced Weather Interactive
    Processing System). With NWS support, two agencies concerned with
    public service and public safety are working in partnership to bring
    university ideas and concepts into the Federal Government. The joint
    program is known as ONALERT--Observations Necessary for Aiding Local
    Emergency Response via Telecommunications. TIIAP funds made a
    cooperative project possible because the University of Oklahoma now is
    a leader in weather-information dissemination to rural areas and has
    much to offer the NWS in solving the difficult problem of getting
    modernized data into the rural communities of our nation.
        Finally, and most importantly, without the TIIAP grant opportunity
    being available, the creative staff at the Oklahoma Climatological
    Survey likely would never have proposed a project like OK-FIRST.
    Moreover, other funds to develop a program like OK-FIRST would have
    been unavailable because federal leaders in Washington are not always
    sensitive to needs and constraints in rural areas and always seem to
    target national programs to populated areas. Furthermore, large
    corporations involved in weather dissemination are not always sensitive
    to rural areas (e.g., market forces have made WSR-88D data
    prohibitively expensive for small communities). In addition, smaller
    companies involved with weather information have provided neither
    adequate tools designed for public-safety use nor the training that is
    critical for the proper interpretation and application of the data.
    Thus, TIIAP funds bridged a long-standing chasm that exists in the
    complex chain of ``technology transfer''.
        With these final three points, I am available to answer any
    questions you may have. However, I would call to the Committee's
    attention three figures appended to this narrative along with a letter
    from John Lewis, Emergency Management Director for Logan County (north
    of OKC). His letter provides a perspective of life on the firing-line
    that few people appreciate and understand.
    [GRAPHIC] [TIFF OMITTED] T6610.015

    [GRAPHIC] [TIFF OMITTED] T6610.016

                             Logan County Civil Defense
                                        Guthrie, Oklahoma 73044
                                                           May 10, 1999
    Director
    Oklahoma Climatological Survey
    Boyd St
    Norman OK
        Dr. Crawford: I want to pass on to you how critical a role the OK-
    FIRST program played in response to the tornado disaster which occurred
    on May 3, 1999 in Logan County Oklahoma. Having current weather radar
    data, available ``on demand'' to emergency services, probably saved
    dozens of lives. Some examples follow:
        Following the devastating storms in Oklahoma City, Moore, and Del
    City, numerous Logan County police and fire crews were eager to go
    there to assist. Only by real-time OK-FIRST data were we able to
    persuade department chiefs that our own threat was not over; that crews
    and equipment should be retained in our area until several additional
    supercells capable of producing tornados passed. Thus, emergency
    response was still strong in Logan County when we were struck about 90
    minutes later.
        When police and rescue crews arrived at the first Logan County
    damage site near the City of Crescent, one of the first tasks was to
    open the highway sufficiently to get an ambulance through from Crescent
    to the hospital in Guthrie. All efforts were to get that ambulance
    moving with a critically injured tornado victim. About the time they
    succeeded, a second tornado approached in the dark and wrapped in rain.
    The ambulance and the tornado moved on intersecting paths. Emergency
    management, aware of both events, was able to stop the ambulance until
    the tornado had passed just in front of it. We received NO tornado
    information from any source other than OK-FIRST for this save.
        The town of Mulhall, devastated by the initial tornado after it
    passed Crescent, was warned primarily by two law enforcement units
    sounding their vehiclesirens in the town. The units had been dispatched
    there by the Sheriff's office based upon OK-FIRST data. Both units
    continued warning residents until they were each hit by debris: one by
    power lines down across his car, the second by a large tree on top of
    his unit. Both officers were uninjured--and so were all but one Mulhall
    town resident!
        Police, sheriff, and rescue crews responding to Mulhall began
    arriving as two additional tornados approached. Requests for timely
    detailed storm information were very urgent. Emergency management
    provided continuous, accurate locations on two tornados at each 6
    minute radar update. Locations of intense circulation were evident on
    the storm relative velocity product of the OK FIRST radar. Officers on-
    scene visually confirmed the presence of these follow-on tornados and
    accuracy of the emergency management's warnings, and scrambled out of
    the tornado's path. During these events, TV media was focused on other
    areas, then being hit by larger storms, so again there was no tornado
    information source except OK-FIRST.
        During recovery operations on May 9, severe thunderstorms again
    threatened Mulhall where electricity was still limited, and widespread
    public viewing of news media warnings was impossible. Emergency
    management set up OK-FIRST displays in the command post. Emergency
    management used the radar and mesonet to evaluate the weather threat
    and provide a four hour warning. This was important for work crews in
    order to protect the exposed supplies and donations (clothing, toilet
    paper, bedding, etc) and adjust work schedules and locations. More
    importantly perhaps, town officials used bullhorns to notify the
    workers and residents, relieving fears and dispelling rumors of more
    tornados.
        I hope these examples help to portray the crucial role played by
    OK-FIRST in warning, emergency response and disaster recovery. I am
    totally convinced that without the weather displays made available to
    us through OK-FIRST, and the training you provided to interpret those
    displays, there would have been a very different story to tell.
        Please pass along our gratitude to your staff as well as the miriad
    of people responsible for making the OK-FIRST project a reality. We
    absolutely have to keep your project alive and growing.
                                                   John W Lewis
                                                               Director

        Mr. Tauzin. The Chair recognizes himself for a round of
    questions, and the Chair will be generous with time.
        First of all, Mr. Irving, the gentleman from UPS, Mr.
    Rogers, in his letter to our office makes a fairly compelling
    case that he suffers some real disadvantage with the U.S.
    Postal Service when it comes to the allocation of spectrum and
    the way the Postal Service sits on the very board that makes
    the decisions. How do you answer that?
        Mr. Irving. I don't believe I have a lot of discretion. The
    U.S. Postal Service is a creature of statute. They are a quasi-
    Federal agency. They have the rights of all other quasi-Federal
    agencies. I think the Congress, including the Government
    Operations Committee, would look askance if an Assistant
    Secretary said this is a Federal agency.
        Mr. Tauzin. You don't have a choice under current law.
        Mr. Irving. I don't. I have to do what the law requires me
    to do. Right now they are a Federal agency and they have the
    same rights and privileges of every other Federal agency.
        Mr. Tauzin. You also heard Mr. Ross make the recommendation
    of a much closer, cooperative agreement between your office and
    the ITA in terms of international trade issues. Has your office
    followed through on that recommendation? Does that require
    legislation? What is the news there?
        Mr. Irving. It does require us to work closer, but I think
    that the Department of Commerce and Congress needs to look at
    redundancies. I think there are some questions as to who has
    what role in what circumstances.
        Mr. Tauzin. Do you have some recommendations for us in that
    regard?
        Mr. Irving. Personally, I believe that there are some
    redundancies. I believe NTIA is fully capable of doing what
    needs to be done in national telecommunications. I wonder if we
    were starting from a baseline, if we would create two offices
    in the Department of Commerce that had international
    telecommunications responsibilities.
        Having said that, having traveled across this country with
    U.S. industry, without ITA's support, particularly in-country
    support, the Foreign Commercial Service, I could not do my job.
    They know those markets and know those people. But having one
    office that has 16 or 17 people doing international
    telecommunications and another office that has 300 or 260
    people, there are some overlaps and some questions.
        Mr. Tauzin. We need to visit more on that.
        Colonel Skinner, you and Mr. Miller focused a little bit on
    the critical nature of security of telecommunications
    information, obviously for military purposes. Mr. Miller
    pointed out how NTIA assists in the bridging of that work so
    that private sector critical information is also subject to the
    same kind of attacks and security issues.
        You probably cannot answer this, but it occurred to me we
    build stealth technology but that stealth technology is
    communicating as it flies, as it operates. Obviously emissions,
    points of emission of communications are points of--if I were
    looking for something, that is the place I would look. That is
    where we target radar on the ground when it is turned on.
        How much of NTIA's work in allocating spectrum, working
    with you, assists the Department of Defense in protecting our
    vital assets when it comes to those kinds of threats? I assume
    that they are threats. Identifying the source of a
    communication or some form of information technology obviously
    allows our military to identify the location of a potential
    enemy asset as it makes our own assets vulnerable to some
    degree. Would you comment?
        Mr. Skinner. I would prefer not to comment in detail in an
    open hearing. I think that you have hit an important aspect of
    our relationship with NTIA and the future of that relationship
    as well. Clearly as our technologically advanced adversaries
    become more able to counter our current ability to sense them,
    we need to take actions to improve that capability. And one of
    the challenges that it is creating for Secretary Irving and DOD
    is that many of the technologies that we need to imply against
    future threats require more and more bandwidth. While it is in
    our best interests to manage that bandwidth that is allocated
    to us as efficiently as possible, the demands for more
    bandwidth are growing. And all of those issues that Mr. Miller
    brought up strike close to home in the national security
    environment, and we have to use some of our bandwidth to
    provide the security our systems demand.
        Mr. Tauzin. Do you call upon Mr. Irving's lab? He was
    mentioning that if his lab were privatized, you would have to
    build your own. Do you use his lab?
        Mr. Skinner. Absolutely. Secretary Irving runs a real
    center of excellence. We have used those labs for national
    security projects, and we are concerned that outsourcing may
    change our relationship on a couple of fronts, as you will see
    noted in my written testimony.
        At issue is both security and proprietary information that
    many of our weapons systems produce.
        Mr. Tauzin. You use private labs, but your point is for
    security purposes----
        Mr. Skinner. It must meet our security requirements and
    have the organizational conflict of interest, which is the way
    we can protect the intellectual property of our contractors who
    we want to have confidence in the DOD, which will protect their
    trade secrets as well.
        Mr. Tauzin. The Chair recognizes the ranking member for a
    round of questions.
        Mr. Markey. Thank you, Mr. Chairman.
        Mr. Crawford, your OK-FIRST program provides public safety
    officials in rural and urban areas with data from a network of
    Doppler weather radar, along with information from the National
    Weather Service. This is an innovative program, and I
    congratulate you for that because it helps to warn people of
    severe weather, flooding, tornadoes and hazardous materials
    accidents.
        You already made reference to this, but in Oklahoma you
    helped save lives, and we very much appreciate that. How did
    you pinpoint those threats? What was the key? And if the
    program was not in existence, that is, if there was no grant
    program from NTIA, would lives have been lost?
        Mr. Crawford. In my opinion, yes. The reason for that is
    the public safety officials, be it fire, police, or civil
    defense, would have been operating from an information void,
    either due to lack of TV coverage, due to lack of quantitative
    details by teletype circuits, whatever means, it would be dated
    information and, in particular, nonspecific. Now they have the
    same radar images that the National Weather Service
    meteorologists use. Once that NWS employee has made a decision
    this storm is tornadic, then the local official is empowered to
    follow it through its lifetime and take appropriate action.
        Mr. Markey. Thank you.
        Mr. Irving, as you know, I believe you are the Chamique
    Holdsclaw of telecommunications policy.
        Mr. Irving. My game is not that good.
        Mr. Markey. In your testimony and opening statement, you
    noted that prior reviews of NTIA's research facility in
    Boulder, Colorado have resulted in a determination that there
    is a real need for a centralized cost-effective Federal
    telecommunications entity that serves the public interest and
    performs unique government engineering research.
        When were these prior reviews conducted? What has been your
    experience with the NTIA labs in Boulder?
        Mr. Irving. The studies--we have had at least 4 studies. In
    1983 under then-Assistant Secretary Sikes; in 1988, under David
    Markey, not Ed Markey; 1988, under Mr. Sikes; 1988, under our
    then budget officer, Sarah Maloney who now runs our management
    program at NTIA.
        We just recently, working with the Department to look to
    see whether the labs should be folded into NIST labs, did
    another survey in 1997. I have asked for those to be included
    in the record.
        [The information referred to is retained in subcommittee
    files.]
        Mr. Irving. But our experience has been basically that
    these labs do serve an important function. If we didn't have
    these labs, we would have to reinvent them and that is the
    concern.
        A few weeks ago I was talking to Chairman Kennard, and I
    know this committee has had some conversations with Mr.
    Kennard. There are some important engineering analyses that
    they need done. They have requested, I think, either here or in
    the Senate to be able to bring on some engineering personnel. I
    believe the solution is to have them contract with my labs, and
    I have discussed that with Mr. Kennard. To the extent that you
    have engineering needs, I have got engineers, I have a
    facility, you can contract with them. It works in terms of the
    reauthorization that you are talking about with the commission,
    and with regards to preserving a important Federal resource.
        But I don't know how the work we do with the DOD, which has
    to be both security and proprietary, my guys don't have a dog
    in most of these proprietary fights, and they have clearances
    that they need. So what we are able to do--and we also don't
    add a markup. It is cost-based. The Economy Act requires it to
    be cost-based.
        So if the Colonel needs some information and he goes to the
    private sector, one, he has to find those labs that are not
    conflicted and those with the requisite clearances. And that
    may put him in a position of having to pay a monopoly price. I
    can't charge monopoly rent because the IG would come down on me
    if we mark up above what we are allowed to charge them.
        Mr. Markey. Could you help to clarify for us notions of
    privatizing the Boulder labs related to cooperative research
    and development agreements, agreements struck with the private
    sector? It is my understanding that these agreements reflect a
    very small portion of the overall operations of the Boulder
    labs. Can you tell us how they work?
        Mr. Irving. They are an extremely small portion. We have
    put $41 million in NTIA's lab total. I have a chart that I
    would like to enter into the record that demonstrates only
    about 1 percent of our labs--well, approximately 1 percent
    funding comes from work for other than Federal agencies. About
    40 percent of the money is direct appropriations, and 60
    percent of the money is work we do for other agencies. And
    depending on the year, it is 50 or 60, sometimes it comes up to
    70 or 80 percent with the DOD.
        The reality is we do what the Defense Department needs when
    they need it, but we are increasingly, I believe, trying to
    move to independence of the vagaries of the system. We have
    gone from $5.3 million in direct funding of the labs to $3.7
    million now. That makes us more dependent upon Federal
    agencies. We like working with our brothers and sisters in the
    Federal Government, but we believe that we could be doing more
    if we had more direct funding. I don't know if these budget
    days we are going to get it, but it is--I think it is a
    misapprehension on many people's part that the work is being
    done for the private sector on a contract basis. Ninety-nine
    percent is done for the Federal taxpayer or for Federal
    agencies.
        Mr. Markey. I ask unanimous consent that the report
    referred to in this answer be made a part of the record.
        [The information referred to follows:]

                               NATIONAL TELECOMMUNICATIONS AND INFORMATION ADMINISTRATION
                                        Institute for Telecommunication Sciences
                                              Sources of Funding-July 1999
                                                     ($ in Millions)
    ----------------------------------------------------------------------------------------------------------------
                                     FY1994        FY1995        FY1996        FY1997        FY1998        FY1999
                                 -----------------------------------------------------------------------------------
                                     $      %      $      %      $      %      $      %      $      %      $      %
    ----------------------------------------------------------------------------------------------------------------
    Direct Appropriations:......    $5.3  39.8    $5.7  45.6    $4.3  38.4    $4.3  39.1    $4.4  45.8    $3.8  38.8
    Other Agency:...............    $7.6  57.0    $6.3  50.4    $6.7  59.8    $6.5  59.1    $5.1  53.1    $5.7  58.2
      Other.....................    $3.8  28.5    $3.2  25.6    $4.0  35.7    $3.6  32.7    $3.2  33.3    $2.7  27.6
      Defense...................    $3.8  28.5    $3.1  24.8    $2.7  24.1    $2.9  26.4    $1.9  19.8    $3.0  30.6
    CRADA.......................     $.4   3.2     $.5   4.0     $.2   1.8     $.2   1.8     $.1   1.1     $.3   3.0
    TOTAL.......................   $13.3  ....   $12.5  ....   $11.2  ....   $11.0  ....    $9.6  ....    $9.8
    ----------------------------------------------------------------------------------------------------------------

        Mr. Tauzin. Without objection, the reports will be made a
    part of the record as well as the letter, Mr. Rogers, that you
    requested be made a part of the record.
        The gentleman, Mr. Shimkus, is recognized for a round of
    questions.
        Mr. Shimkus. Thank you, Mr. Chairman.
        Mr. Irving, I have a couple of questions on the grant
    programs. That is primarily my focus of today. I want to talk
    about the PTFP grants first.
        In St. Louis we have a wonderful public television station,
    channel 9, KETC. They have been very entrepreneurial in their
    aspects and are moving in the direction that I think Congress
    is expecting TV to move on. In fact, they just moved into a $13
    million facility of which only $500,000 was from the Federal
    Government. They were able to raise $12 million from the local
    community in St. Louis.
        Now in your testimony you mentioned four stations that will
    be receiving grants: Seattle, San Francisco, Los Angeles, and
    Dallas. All these cities are larger than St. Louis.
        I would like to know how much these stations have raised
    from the local community to assist in digital transition, and
    you may not be able to give me that information so if you can
    give me that in writing.
        [The information referred to follows:]

        If the PTFP grant award process takes into consideration whether a
    station has raised community funds to ease digital conversion costs. If
    so, are the stations penalized for making an effort to raise money.
        By law, the PTFP is a matching program which can fund no more than
    75% of the costs to construct public telecommunications facilities.\1\
    This restriction applies to all public broadcasting equipment
    replacement projects, including those to convert public television
    stations to digital technologies. Public television stations therefore
    are required to raise local funds in order to receive support from
    PTFP. Many stations use the opportunity afforded by having the Federal
    government match locally raised funds as a key component in their fund
    raising strategies.
    ---------------------------------------------------------------------------
        \1\ 47 U.S.C. 392(b) ``with respect to any project for the
    construction of public telecommunications facilities, the Secretary (of
    Commerce) shall make a grant . . . except that such amount shall not
    exceed 75 percent of the . . . reasonable and necessary cost of such
    project.''
    ---------------------------------------------------------------------------
        In recent years, PTFP has usually awarded funding for equipment
    replacement, which includes digital conversion projects, at a rate of
    50% Federal funding. Stations are permitted to request up to the legal
    limit of 75% Federal by providing justification of their need for this
    additional level of support. We believe that the PTFP therefore
    encourages stations to raise funds from their local community, while
    providing those stations unable to raise 50% of project costs with the
    opportunity to receive Federal support up to 75% of the project costs.

        Mr. Shimkus. And does a PTFP grant application take into
    account what stations have done on their own to raise funds?
        The issue is who are we rewarding? Are we rewarding those
    who are working and developing their base to move into this new
    age by the people that respect the service they provide, or are
    we rewarding those who are not moving as fast as we would like?
    That would be the first thing that I open up for comments.
        Mr. Irving. I don't have the specific statistics, but we
    will work with the Association of Public Television Stations to
    give that.
        With regard to how we try to give grants, my preference is
    to try to give grants where the need is clearest. With regard
    to digital transition, I think all stations are going to have
    some problem making the commitment, the financial commitment
    needed to get a digital age. But there are some communities
    where they are going to have a hard time getting 10 or 20
    percent. There are rural communities that are--to want to have
    digital television, smaller communities are going to have
    difficulty. The WGBHs, the WETAs, the WNETs will have some
    difficulty, but clearly they will have less difficulty than a
    station in the bottom 75, bottom 80 market.
        Mr. Shimkus. I put this into baseball analogy. Look at
    these markets that you have in your testimony, Seattle, San
    Francisco, Los Angeles and Dallas, as compared to St. Louis.
    St. Louis fields a competitive baseball team because the
    consumers in St. Louis appreciate the St. Louis Cardinals and
    are willing to support it, although we are a small market.
        Many of these markets--Los Angeles is probably 4 times
    larger than the St. Louis community. They should be able to go,
    based upon their community, and draw much better. So the
    question is how--I can understand the small markets, but you
    are not addressing the small markets in your testimony.
        Mr. Irving. Even in larger markets, it is a matching grant.
    We don't give anybody 100 percent of anything. We change the
    match for the smaller markets. On things like some new and
    novel approaches that all public television can derive benefits
    from, we will generally go to those who have the money up front
    and have the ability to drive out the technology.
        Digital television is going to happen in the top 10
    markets, for two reasons: One, those stations have the
    resources to do it faster. Two, the competitive realities, not
    that they should be in competition for commercial purposes, but
    in making sure that viewers who are moving to digital
    television, as they are moving to it in commercial worlds, we
    want to make sure that public broadcasters in those communities
    are also able to provide those kinds of services.
        Digital VTRs, video tape recorders and other things in the
    studios were studios used first in the larger markets because
    they have some resources to offset. Many of the small stations
    are just trying to stay together. It is rubber bands and spit
    that keep those towers up and keep those VTRs running.
        I can't tell you the specifics as to why those four were
    ahead of St. Louis, but if they were doing things that were
    novel, going to extend their services and provide a needed
    service in public broadcasting, that is probably why we funded
    them. I think all of us want to see the public continue to
    support public broadcasting, but I think we also know from the
    numbers that the public has never in any community supported
    public broadcasting with 100 percent of the funding that they
    needed.
        Mr. Shimkus. The St. Louis statistics that I provided you
    shows a strong commitment. The point is that I want to reward
    those who are doing the job and not rewarding those who have
    the need but are not doing the job in their own markets.
        Mr. Irving. This is a rhetorical question, but what comes
    to me--if I have a station like a St. Louis that is raising a
    lot of money to do the right thing, and they come to me for a
    grant, I don't want to punish them for having raised a lot of
    money.
        On the other hand, if I have a station that has raised a
    lot of money and doesn't come to me for a grant, that is
    unlikely. Almost none of the stations in the public
    broadcasting are not going to come to me for some assistance. I
    don't know how I measure if there is a recession in one
    community or they don't have a good PR person or fund-raising
    capabilities; do I make the decision based on that?
        I will be happy to work with any member of the committee on
    that. I don't know what I do if there is a need in the
    community and they have the match. Do I not give them the grant
    because somebody else was able to raise the money on their own?
        Mr. Shimkus. I just don't want you to penalize effort and
    commitment by the local community.
        Mr. Irving. I would love to be able to give better awards
    to those who are working with their local community. They
    should be local and community-based decisions, not federally or
    Washington-based decisions.
        Mr. Shimkus. Thank you.
        Mr. Tauzin. We will do a second round if anyone desires
    one. Mr. Deal, the gentleman from Georgia.
        Mr. Deal. Thank you, Mr. Chairman.
        Mr. Irving, it is my understanding that NTIA subsidizes the
    other Federal agency spectrum management by about 20 percent.
    Would you describe the reimbursement mechanisms and how you
    determine the fee that is assigned to these agencies, and is it
    possible those fees could be increased without doing
    substantial damage to the management system?
        Mr. Irving. Let me answer the first question first. The
    fees could be increased without substantially damaging our
    management system, but we believe it would be a policy mistake
    to move it up to 100 percent. I can submit the glide path that
    we have been on for 4 or 5 years now.
        Congress asked us to move from--for almost the entirety of
    NTIA's existence except for the last 5 years, we got
    appropriated every dollar that we used to manage spectrum for
    the Federal agencies. Over the last 4-5 years, we have been on
    a gradual glide path where it is now 80/20. A decision was made
    in consultation with the appropriations committees that that 20
    percent was the appropriate number, because my spectrum
    management team works on behalf of the U.S. taxpayer as well as
    on behalf of the Federal agencies.
        When those teams go off to Geneva, the ITU and other
    places, they are negotiating for all of America, not just any
    individual segment. The way that we charge our individual
    clients, members of IRAC, members of Federal agencies, is based
    on how many assignments and allocations they have from the
    Federal Government. The Department of Defense pays a
    significant portion. U.S. Information Agency or Department of
    Education may pay a relatively de minimis fee. And we are
    trying to get processes that we get paid in the front end of
    the year instead of the back end, but a lot of the budget
    officers in the services and in other Federal agencies have not
    yet figured out the easiest way to do it. We are doing better
    every year, but we are still waiting for some people to cut us
    a check.
        I would love to continue to have some degree of autonomy. I
    don't want to become a captive of just my clients.
        Spectrum, when Spectrum Management goes over to a war
    conference or goes to a standards conference--we have been
    working on GPS. We have a multibillion dollar commercial
    industry that is benefiting from GPS. GPS was a defense
    technology. We worked with the DOT and Department of Defense to
    develop the Global Positioning Satellite System. Now you can't
    go to a fishing store or a Wal-Mart and not find a $99 thing
    that any camper or boater can use. We have created a billion
    dollar industry based upon the work that we did with the
    Department of Defense.
        There are other issues like that. Technologies are going to
    benefit every American as we get better, smarter uses of
    technology. It is not unfair to have one-fifth of that budget
    come from the general taxpayer as opposed to directly from our
    client base.
        Mr. Deal. Colonel Skinner, could you tell me how much DOD
    reimbursed NTIA for spectrum management last year and how that
    figure was calculated?
        Mr. Skinner. Sir, I would have to take that for the record.
    I don't have those details with me.
        Mr. Deal. Could you get that and also the payment time
    schedule as to when that payment was made?
        Mr. Skinner. Yes, sir, we will take that for the record. We
    believe it is approximately $5 million divided among the
    service components and agencies of the Department of Defense.
        Mr. Deal. Thank you, Mr. Chairman.
        Mr. Tauzin. Thank you, Mr. Deal. The Chair now recognizes
    Mr. Pickering for a round of questions.
        Mr. Pickering. Thank you, Mr. Chairman.
        Mr. Irving, it is good to be on the Commerce Committee, and
    in the past, we worked together on the Science Committee on the
    domain name system and the transfer from NSF to NTIA. I have a
    few questions related to that.
        The cooperative agreement has now been transferred, as I
    understand it, from the National Science Foundation to you at
    the NTIA. In your view, do you need congressional authorization
    or legislative authorization for that transfer of authority and
    administrative responsibility?
        Mr. Irving. I believe it is actually to the Department, and
    the Department has designated us. Our belief is what we are
    doing is consistent with the law.
        Mr. Pickering. Is there any funding as a result of that
    transfer that comes through NTIA to administer the domain
    names?
        Mr. Irving. To my understanding, the work we are doing on
    domain names is being funded directly out of our existing
    appropriated level. We have received no additional funding, nor
    have we requested additional funding for our increased
    responsibilities in working with the domain name system.
        Mr. Pickering. As you recall from the hearings we had in
    the Science Committee in the last Congress, as we transfer, go
    from government control to private sector control, one
    remaining question is to a certain degree accountability. To
    that objective, do you have any plans to issue a report
    concerning NTIA, the transfer of domain names, and what is
    being done so that Congress and the public will be familiar
    with what has happened, what is occurring, what is the
    governing board, those types of issues any time in the near
    future?
        Mr. Irving. I believe there is a final report that we will
    have to issue, but while we are working on this managed
    transition--and we want to get out of this business as rapidly
    as possible and have the private sector do it all, and we are
    getting to the point where the private sector can do it all.
    Everything that we do during the transition is public. I read
    an e-mail this morning that we are going to have an on-line
    discussion about what has happened with domain name systems.
    Every meeting that we are involved in, we try to make as public
    as possible. But we will have a final report explaining what is
    happening.
        When we moved to the 34 new registrars, we immediately sent
    out information. And if any member of the committee feels that
    they are not getting information, we will send folks up here to
    brief you. We want to get the information out. We do not have
    anything to hide.
        This is the most interesting process that I have ever been
    in. People who care about domain names care about it as
    passionately as Trekkies care about Star Trek. I have never
    seen as much traffic cross my desk from people who are
    anguished about an issue that is so arcane, and so we know the
    importance not to try to hide anything.
        Mr. Pickering. Most people say this is just the
    transference of the domain names or the www.com and the
    registries. But fundamentally what is the crux of the issue is
    the governing body. We are setting up, in essence, the
    constitutional structure for how Internet operations will be
    conducted, disputes resolved, intellectual property determined.
    So it is much more important and much more comprehensive than
    just the transfer of domain name systems.
        So, because of that, I want to encourage you to continue
    being as open as possible. If you are planning to do an annual
    report of what has happened, what is happening and what is
    projected to happen, I would encourage the NTIA to make that
    type of annual report to Congress so that we can inform the
    public of what we are doing; that it is not viewed as a closed
    process or an exclusive process or that any type of conspiracy
    could be projected onto the operation of what we are trying to
    do, which is a very important transition and very fundamental
    to the success of the Internet and the governing of the
    Internet in the outyears. Thank you, Mr. Irving.
        Mr. Irving. Thank you, Mr. Congressman.
        Mr. Tauzin. Thank you, Mr. Pickering. The Chair will do a
    second round.
        Mr. Crawford, let me first thank you and the work that you
    have done in Oklahoma on behalf of all of us who are aghast at
    the awful loss of life and tragedy out there. I am facing a
    similar situation in Louisiana along the coast of my State. We
    have had some pretty good hurricane years, and very little
    hurricane activity in the last several years. They are
    predicting an 80 percent chance of a very mean season.
        I also visited the FEMA offices where they tell me that New
    Orleans is going to be 27 feet under water with a category 4
    storm coming in from Lake Borgne or Barataria Bay, which are
    the two big water areas on the other side of the city. Those
    kinds of storms will breach the levies, and New Orleans sits
    below sea level. Twenty-seven feet of water. You are not going
    to get a population of 1.5 million out of town. With the kind
    of warnings that we get, you will get some evacuation.
        The ability to notify people in the face of that kind of a
    threat and to assist in moving them, perhaps vertically up into
    taller buildings or whatever it is going to take, is heavy on
    my conscience. I have been urging FEMA. We just passed some
    legislation to get FEMA involved in a vertical evacuation
    study.
        But cities along the coastline that are going to experience
    potentially a disaster like that have no idea how to handle it.
    And I would be very interested in knowing whether what you put
    together in Oklahoma has meaning to solving problems like that.
    You mentioned your own experience in Louisiana with their
    weather conditions. If you can briefly comment, sir.
        Mr. Crawford. I am quite familiar with your problems in
    southeast Louisiana, having worked at the New Orleans and
    Slidell offices for the Weather Service for 10 or so years. I
    worked with their SLOSH model to deal with surges from
    hurricanes in Lake Pontchartrain, so I know what you are
    talking about. And I think what hurts an emergency manager to
    know what to do is how bad is it going to be and where is it
    going to be the worst. And while we can give generic advice,
    today's modern society demands far more of us, because there
    are more of us and they demand more.
        With the ability of the Information Highways that we have
    in existence in the Nation, it is very easy to send graphics of
    images that either are radars or projected radar images or
    forecast----
        Mr. Tauzin. It is not going to be the forecasting. We get
    pretty good forecasts right now. The problem is these storms
    make radical changes in their direction. And a forecaster may
    say, Our best information is going west, and all of a sudden it
    turns. We ducked the bullet with George, like we ducked our Y2
    triple K problem in Louisiana when Duke didn't make the run-
    off.
        But the problem we have with hurricanes is that they make
    that quick turn. We couldn't evacuate the city. What I am
    asking is whether or not there are models and whether or not we
    can learn from the Oklahoma experience as to what kind of
    systems ought to be in place to aid everybody who is going to
    be desperate to get people out of harm's way when this bowl of
    a city suddenly fills with 27, 28 feet of water. I just call
    that to your attention. I would love to know what you have
    learned in terms of how your system works and whether it has
    any relevance to us.
        Mr. Irving. When we give grants, one of the key criteria is
    whether or not they are replicable, whether or not what we
    learned in Oklahoma has any value in Louisiana, in Texas.
        My understanding is that what they have done has become a
    national model and they are working with the National Weather
    Service to try to figure out how to do it and replicate it.
    What you basically have are the advanced weather service
    statistics and graphics laid over a map that gives you a sense
    of where things are likely to happen. While it would not maybe
    solve every problem Louisiana is going to have, if you have a
    tornado spun off from a hurricane, that will give you notice
    that you wouldn't otherwise have.
        I have been down to Louisiana visiting Mr. Morial a few
    times, and you will not get everybody out when there is a
    problem. This will let the folks know where a hurricane or
    tornado is and where the storm surges are, where the heavy
    rains are likely to be, based on what I know.
        And what we try to do is give folks like the counties in
    Louisiana the e-mail addresses, the telephone numbers, and
    other ways of getting in touch with the folks in Oklahoma so
    they can begin to marry their respective skills and knowledge
    and do a better job of transferring information.
        Mr. Tauzin. I would appreciate, at least if you could share
    with us how you think--knowing the weather experience you had
    in Louisiana, how you think some of those systems might have a
    relevance for us?
        Let me conclude. I am going to give everybody a chance. Mr.
    Rogers, I just want to ask you quickly. We can't change the law
    of this committee on the postal service obviously. We don't
    have jurisdiction. We do have jurisdiction over the IRAC.
        IRAC sounds like a country. In terms of that, we could very
    easily require that IRAC hearings, when it comes to issuance of
    spectrum, will be public hearings. We could require that,
    perhaps take into consideration the anti-competitive nature of
    a grant of spectrum, or we could do some minimum things like
    that.
        Mr. Rogers. It would make a difference.
        Mr. Tauzin. I would encourage you to perhaps think about,
    within the jurisdiction of this committee, what it is we might
    do; and Larry, obviously we wouldn't necessarily change your
    authority. We would simply be talking about making sure that
    where there are any competitive issues at stake, that would be
    one of the considerations in the allocation of spectrum.
        I suppose that might help, at least call attention,
    perhaps, in a public setting, to the----
        Mr. Rogers. I am sure the various bipartisan advisors I
    have could think up something very helpful.
        Mr. Tauzin. We would be very interested in hearing from
    you.
        Mr. Irving. There is one problem. The IRAC hearings are
    generally classified hearings and they are closed----
        Mr. Tauzin. That is what I thought. They have a lot to do
    with whether the military gets spectrum to----
        Mr. Irving. And it's going to be very hard to have a
    hearing that 95 percent of the hearing----
        Mr. Tauzin. Well, maybe you can have one when it deals only
    with the postal service. I am not sure our national security is
    threatened over a question of whether or not the postal service
    gets some spectrum to compete with UPS.
        Mr. Rogers. One of the things we proposed is that we have
    some sort of a hearing when the postal service seeks authority
    to determine whether or not it is in a competitive area and
    that that decision would be appealable in a court.
        Mr. Tauzin. We can look at that. Obviously, we have an
    interest, you know, in the postal service, and we want it to be
    strong and----
        Mr. Rogers. I am sure that we could come up with something
    to improve the situation.
        Mr. Tauzin. And I invite your comments on it. The Chair
    recognizes Mr. Markey for a second round.
        Mr. Markey. Thank you, Mr. Chairman, very much.
        Mr. Irving, you know, on this committee we have to deal
    with OMB and CBO, and they are constantly trying to put their
    fingers into the spectrum piggybank and grabbing more spectrum
    to go sell off for whatever purpose to meet whatever the short-
    term needs are, and the budget committee, all of them, there is
    a deep seated pathology as, you know, that exists when these
    budgeteers get together.
        Now, we have Colonel Skinner over here, and he is somebody
    who has often had his territory raided in order to find more
    frequency. Are you under any pressure right now to be talking
    to Mr. Skinner to get him to cough up some more spectrum so
    that OMB and CBO can put it in to be auctioned off?
        Mr. Irving. I would not want to have that conversation with
    Mr. Skinner or his colleagues again. We have had some very
    contentious discussions during my tenure, and I don't--but
    generally they have tried to work with us as much as they can.
    They have been cut deeper than anybody else in terms of what
    they have given up. We have given up 255 megahertz spectrum
    since I have been here which is an enormous amount of spectrum.
        What is troubling about that is 95 megahertz of that
    spectrum is in the hands of the FCC right now, and only $14
    million, only $14 million has been realized by the Federal
    treasury from all of the spectrum we have given over to the
    FCC.
        It has cost the military $1 billion to relocate. They have
    given up between now and 2002, 255 megahertz of spectrum across
    all of their program platforms. They need more spectrum as they
    get smarter bombs and trying to keep our men and women out of
    harm's ways. One of those cruise missiles goes into a building
    anywhere in the world, that is using spectrum to direct it and
    to make sure it gets to where it is going and to identify the
    location.
        I have got a very difficult time going to these guys and
    saying we are going to put boys and girls, men and women, into
    harm's way because you have got to give up some spectrum, and
    then we get $14 million into the Federal treasury and it cost
    the military $1 billion of appropriated moneys to have that
    happen.
        I don't know what happened to this spectrum. It goes into
    some kind of a black hole, but it is not going out and being
    sold. And we are constantly being asked to give up more. I am
    not sure that the FCC--what they are doing with the stuff we
    have already given them or plan to give them.
        Mr. Markey. That is very helpful to us now and, I am sure,
    to Mr. Skinner. You have helped his argument out a lot on
    whatever new issues might be heading in his direction.
        Let me ask you at NTIA how you are handling the workload
    that we put on you--the WIPO legislation, the Satellite Home
    Viewer Act, the Child Online Protection Act, the International
    Bribery Bill, perform research and other studies for Congress
    coming from various directions. Do you have enough staff to get
    all this done for us?
        Mr. Tauzin. A good answer would be: ``no problem.''
        Mr. Irving. Because of the excellence of the staff with
    whom I work there is no problem. However, we----
        Mr. Markey. Your staff, by the way, was nodding their head,
    no problem.
        Mr. Irving. They don't sleep, they never see their wives
    and husbands and children, but they do the work. They do an
    excellent job. Candidly, we are stretched. We are stretched
    beyond--Congressman Pickering asked us about an annual report.
    My problem is, my folks who work on the main names, the two
    people who work almost 80 hours a day on the main names, they
    are so busy treading water to keep all of the work we have to
    do on a daily basis, it is very difficult for them to do any
    prospective work or to do a report just on the bodies to throw
    into that fray when we are trying to manage a transition. We
    are skeleton staff. You lose 25 percent of your staff over 4
    years when you have about a 70, 80 percent increase in the area
    of responsibility you have.
        And we will do with what this Congress asks us to do or the
    Secretary and the President and Vice-president ask us to do
    because that is who we report to, but we are really, really
    down to muscle and sinew. We don't have a whole lot of fat on
    our bones right now.
        Mr. Tauzin. Thank you very much.
        Mr. Shimkus.
        Mr. Shimkus. Thank you, Mr. Chairman.
        Mr. Crawford, has the University of Oklahoma ever violated
    a contract that is part of the NTIA grant?
        Mr. Crawford. If they have, I don't know it. My guess is
    the one we have is the first.
        Mr. Shimkus. Okay.
        Should there be provisions to prevent the violation of
    contracts?
        Mr. Crawford. What do you mean ``violation of contract''?
        Mr. Shimkus. Well, you get a grant, you sign an agreement,
    and if someone doesn't uphold their end of the agreement,
    should there be provisions to prevent that?
        Mr. Crawford. By and large, the university puts its name
    behind anything that it agrees to do and holds either the dean,
    the president, or faculty members like me accountable.
        Mr. Shimkus. Should the NTIA have the ability to recover
    moneys spent on grantees that stop providing the service or
    don't follow up with the initial agreement?
        Mr. Crawford. I don't feel that I am really qualified to
    answer that.
        Mr. Shimkus. Let me ask you this.
        If you were awarded a grant and you promised to do X, Y and
    Z, and you only did X and the Federal Government gave you money
    to do Y and Z, do you think the Federal Government would be
    within its rights to recover the money for Y and Z?
        Mr. Crawford. Yes, sir, I do. I would say, though, that the
    likelihood of that happening the way this grant was monitored,
    the reporting back to TIIAP is so tremendous that it is very
    carefully watched.
        Mr. Shimkus. Well, be careful because I have examples from
    the Inspector General, not in yours, but on grants that call
    into question how much we scrutinize grant applications, and I
    would like to direct my next question to Mr. Ross.
        The report that I have in front of me is the Inspector
    General's report on LatinoNet, and I am sure that is a name
    that is infamous in the NTIA. If not, it should be. You report
    that you asked that the NTIA recover $94,336 in excess--to
    recover that in excess grant disbursements.
        What happens after that? Have you--in a follow-up review,
    do you evaluate their ability to recover these moneys in
    previous reports?
        Mr. Ross. The normal process is when we issue a report
    questioning costs related to a grant, such as LatinoNet, first
    of all, the auditee, LatinoNet, the operator, is afforded 30
    days to provide additional information to support its costs or
    any other issue raised by the audit report.
        Within that first 30 days, it provides information. Then
    there is another 30-day interval during which the grants
    officer, who is within the Department of Commerce, also
    solicits the advice of NTIA because the Department's Office of
    Executive Assistance Management serves as the grants office for
    NTIA, reviews any information that the auditee might submit,
    for example, to document additional costs or, perhaps,
    additional work that was performed, reviews that documentation,
    and prepares an audit resolution proposal, which is then
    submitted to the OIG for a review.
        So in any one of these grants that we have looked at, if we
    question costs, then the grants officer comes back to us with
    an audit resolution proposal that says we have reviewed the
    additional documentation that has been submitted, and any other
    supporting material, and based on that, we propose to make the
    following decision. We then would look at that information and
    come to a concurrence with the grants office of whether it is
    an appropriate basis to change our questioned costs.
        So it is a concurrence.
        Mr. Shimkus. Okay. And so this report was in August 1997,
    and your recommendation was an attempt to recover $94,336 in
    excess grant disbursements. Has there been a follow-up to
    determine whether that money has been recovered?
        Mr. Ross. What I can tell you is, as a result of the
    resolution, the federal portion of the questioned costs was
    reduced from $118,991 in the report to $31,014 in disallowed
    costs, which would have converted into a recovery amount that I
    don't have in front of me. That then gets communicated to the
    operator. The audit determination letter says that the
    Department of Commerce has established a debt in X number of
    dollars.
        The Department makes demand immediately, but the
    organization could try to enter into a repayment agreement, if
    it cannot pay up immediately, under the standard debt
    collection provisions of the Department.
        The Department does have a mechanism whereby every 6 months
    the Secretary of Commerce has to produce a report that follows
    up on what has actually happened with those disallowed costs
    and the amount to be recovered. I can't tell you as I sit here
    today what the current status is. I will be glad to submit
    that.
        Mr. Shimkus. If you would, please.
        [The information referred to follows:]

        The audit resolution was transmitted to LatinoNet by letter
    dated December 9, 1997. LatinoNet was advised that $77,496 of
    the questioned costs of $297,329 was disallowed. (The federal
    portions of those amounts were $31,014 and $118,991,
    respecttively.)
        The period of performance for the award was October 15,
    1994 through October 31, 1996. The audit covered the period up
    to March 31, 1996. Because seven months remained on the award,
    the recipient was not billed for the excess funds disbursed as
    of March 31, 1996 ($6,359). LatinoNet was required to delete
    the $77,496 in disallowed costs from its claimed costs and to
    submit to the Office of Executive Assistance Management a
    revised SF-269, Financial Status Report, to reflect the revised
    costs as of March 31, 1996. In addition, LatinoNet was asked to
    provide a final SF-269.

        Mr. Shimkus. And following up, if I may, Mr. Chairman.
        On Mr. Irving, it is my understanding that on these grant
    applicants, they are quarterly reports, and it is also my
    understanding that the problem with LatinoNet really surfaced a
    year after, although they--in fact, in their response, they
    say, well, we have been submitting quarterly reports, you-all
    haven't questioned them, so they must have been okay, so we
    don't need to pay this debt because you have approved them.
        How do you respond to an accusation like that, and what
    good are the quarterly reports if you can't put an early halt
    to abuse of Federal funds?
        Mr. Irving. The quarterly reports are useful. There are
    some things that are obvious right from the quarterly reports,
    and we can go right to them. There are other times, if you have
    400, roughly, grants out there, there are going to be some
    problems.
        I don't know if they are bad actors or just problem
    children, but some percentage you are going to have a problem.
    In some instances we have gone to the IG and said we are
    hearing there is a problem, will you investigate for us because
    I don't have the staff to go out and do the kind of
    investigation that they can do in terms of a field audit.
        We often, on a blind basis, send people out to do field
    monitoring. What we try to do is what any organization that is
    responsible for handling public goods should do. With the
    resources we have, we try to get the reports in and look at
    them for facial problems, and then we try to go the extra step
    and send folks out. But we can't send and shouldn't send, I
    don't believe, field monitoring to every office we give a grant
    to. But we do try to give a fairly representative view and have
    folks out there looking at the problems. And if we know either
    from our view, what we are hearing from across the trenches,
    somebody lets us know anonymously, or when we go out and do a
    field audit, we will call the IG and say, please check this out
    for us, you have got the resources to let us know. And I think
    there have been occasions where we have had some problems
    within PTFP and in TR.
        Can we do a better job? If we had more resources, maybe,
    but given the resources I have, we have done a pretty good job,
    I think, of making sure that we are not wasting Federal
    resources.
        Mr. Shimkus. Thank you, Mr. Irving. I do have a follow-up,
    but I will do it in the next round, if I may, Mr. Chairman.
        Mr. Tauzin. The gentleman from Georgia, Mr. Deal.
        Mr. Deal. Mr. Rogers, we have heard reference to the fact
    that spectrums are not raising the funds that were anticipated.
    As I understand, UPS spent over $40,000.
        Mr. Rogers. $40 million.
        Mr. Deal. $40 million to develop an alternative system to
    the one that the postal service received from the granting of
    their spectrum for free. Would that $40 million have been a
    good investment had you been able to purchase the spectrum in a
    timely fashion?
        Mr. Rogers. Yes.
        Mr. Deal. And would you have preferred to have had that
    alternative approach?
        Mr. Rogers. Yes, but spectrum is an asset that, as
    technology improves, you can do more and more with it. The
    position we are in now is we are a purchaser of message units
    from vendors of message units, and it is more difficult to
    advance the technology when you are buying it on a per unit
    basis.
        Mr. Deal. And as I understand, part of the reason was the
    fact of the delay in the auctioning process; is that correct?
        Mr. Rogers. Yes. It really slowed us down, and we were to a
    point where the competition who had gotten ahead of us in the
    spectrum race was putting out services and we weren't, and we
    just had to do something. The cellular system had developed to
    the point that it was providing us with a real alternative to
    use digital data on a cellular network nationwide, and we
    jumped into it.
        Mr. Deal. Had that spectrum that postal service received
    been auctioned, do you have an opinion as to what the fair
    value of it would have been?
        Mr. Rogers. I really couldn't judge. I don't know even if
    any of the nationwide 220 spectrum was ever auctioned.
        Mr. Deal. Okay.
        Mr. Rogers. We just--after we went cellular we didn't put
    the effort into this to follow it up until we saw a notice in
    the newsletter that the postal service was going and getting
    the same spectrum that we couldn't get.
        Mr. Deal. Thank you.
        Colonel Skinner, could you give us some specifics as to
    what changes that you might be looking for in the current
    spectrum policy?
        Mr. Skinner. I think that, number 1, you have to ask
    yourself today if you have a spectrum policy. You know, a lot
    of things have changed since the radioactive 1934. We have
    talked a lot today about technology.
        Mr. Deal. Well, if we don't have one, what would you
    suggest we do?
        Mr. Skinner. Well, I think we have to consider all the
    equities that make up the American interests in this resource.
        We have to understand it is not a renewable resource. If we
    give it to a specific user to use as he or she would use it, it
    will not be available to others unless we can harness our
    technical prowess on sharing the spectrum that is available,
    and we have many, many demands, many different demands.
        There are many different elements of national power,
    whether it be the Defense Department's or our economic power on
    international community. And we also have to consider ourselves
    that we are part of a larger international community, and in
    the case of military interests in this area, what we do in the
    United States, we need to be able to export as we take our
    military interests overseas. And so we have to consider that
    larger international aspect.
        We have to consider, frankly, the fact that other
    developing countries have interests in spectrum which we are
    currently using. It is a very, very complicated issue, but it
    is certainly one of national importance.
        So I know I have described what the problem is, and I
    cannot offer you solutions today. But it is going to take some
    of the best minds in the world, some represented today in your
    hearing, that need to lay down the groundwork for a new
    National policy on how we use and allocate spectrum.
        Mr. Deal. Thank you, Mr. Chairman.
        Mr. Tauzin. Thank you, Mr. Deal. The gentleman from
    Mississippi, Mr. Pickering.
        Mr. Pickering. Thank you, Mr. Chairman.
        Mr. Irving, part of our congressional responsibility is
    oversight and to hold whether it is NTIA or any
    administration's feet to the fire.
        But I think it is also our responsibility to say good job
    and to make a commendation when something right and good
    happens. And I want to recognize two things you did for the
    State of Mississippi: One, the grant for the University of
    Mississippi Medical Center which takes chronically ill children
    and it connects them back to their classroom, to their teacher
    and to their families and is a great model of what can be done
    with technology to improve the quality of life.
        And the second thing I want to commend is the emergency
    grant to the Mississippi Educational TV. When the tower
    collapsed and lost that service, you quickly stepped in. And we
    were able to get that service back up and running.
        So I want to begin this round by first saying, thank you,
    and acknowledging and giving you a sense of appreciation from
    the people of Mississippi of what you have done.
        The second thing is a question on research, and the third
    if I have the time, goes to culture. On research, one of the
    things that we worked on in the 1996 Telcom Act was to make
    sure that electric utilities could provide telecommunication
    services. The barriers to their entry were removed, and that
    was something I was personally very involved and interested in
    because a State like Mississippi the rural electric utilities
    could provide the infrastructure, the advance network and all
    the capabilities and applications that come with that.
        I was recently briefed on a technology, and I wanted to
    ask, one, if you're aware of it, and two, are there any plans
    to provide any research in these applications. Something called
    Media Fusion which takes the electromagnetic field that is
    generated around the electric wire during the transmission of
    power, that creates the field by which telecommunications,
    data, voice, video, could be transmitted. Are you familiar with
    this concept within this research both in our country and in
    Europe, and do you have any plans to perform any research in
    that area?
        Mr. Irving. I am not familiar with it, but next time I see
    you I will be familiar with it, and I will check with my labs.
    I don't believe we are doing anything on it right now, but I am
    certain that somebody there is familiar with it, and we can
    find out if there's a way we can--I agree with you completely.
        As we watch more and more consolidation in the industry, if
    we can get more and more players like the utilities and others
    providing broadband and they are into the homes, that would be
    a great thing for the American people, and if we can find a way
    to get that in there, that's good.
        Mr. Tauzin. Just, actually at Stennis Space Center in
    Mississippi, a company called Media Fusion out of Texas is
    working with NASA on this technology, but there are others,
    there are others as well that are working on different aspects
    of it.
        Nortel, I understand, has an aspect where they are working
    inside the wire itself, and they ran into some electric
    transmitter problems, but they have overcome those now. Some
    pretty exciting work. It might be very good, Larry, to--
    frankly, I would love some advice from you as to whether or not
    any of this stuff is real because the gentleman, he will know
    more about it than all of us because I think the gridwork is
    going to go on in his--is Stennis in your district?
        Mr. Pickering. It is not in my district but it connects--
    Stennis really works in all of our districts as well as the
    rest of the country.
        Mr. Tauzin. They are going to have the grid in Mississippi,
    so he'll probably be the first to know about whether they are
    having success and what is going on with it, but I would be
    very interested in knowing from you, as you check into it, how
    much of this is real, because that kind of technology could
    dramatically affect the kind of policy we make on broadband and
    how we deal with critical information in the future.
        I thank the gentleman for yielding.
        Mr. Pickering. Thank you, Mr. Chairman, and Mr. Irving. I
    will try to work with you and your office to get you further
    information, and again, as Mr. Tauzin said, it would be good
    for us to have some of your technical advice and your judgment
    as to the viability, the potential, and whether it warrants a
    research investment, whether it is by NTIA or NASA or other
    entities, where we can bring the potential of a technology that
    could be a very important component of reaching out in rural
    areas and all over the country.
        Mr. Chairman, if I could ask for an extension of just one
    more question?
        Mr. Tauzin. Without objection, it will be awarded.
        Mr. Pickering. My last question, and this goes back to a
    parallel policy that we did in the 1996 Act as well and where
    the administration advocated and supported the V-chip, and in
    your testimony you talk about what we need to do to look at
    indecent and violent material on the Internet and how we can
    try to find ways to protect our children.
        Congressman Franks and I have introduced a bill that would
    require all schools and libraries that receive the erates to--
    we don't mandate a filter, per se, or we don't tell them
    exactly what filter they should use, but that they must have
    some type of filtering device if they receive an erate. Would
    the administration support that legislation and that approach?
        Mr. Irving. We are close, but it is not an exact fit. We
    have sent a letter to the FCC on behalf of the administration
    requiring that every school district or library that receives
    Federal funding, the erate, to have an acceptable use policy,
    that the local community make a decision as to how they are
    going to protect----
        Mr. Pickering. Mr. Irving, if you require every TV set to
    have a V-chip mandate, why can we not say that every school and
    library, especially after Littleton, have a filter?
        Mr. Irving. Filtering technology, we are trying not to
    mandate a technology for something as dynamic as the Internet,
    and again, the V-chip can be turned on or off. A parent can
    have a V-chip and disable it.
        You put a filtering device inside of a computer, you are
    telling the library you have got to use it unless you are
    saying, put a filter in there and then you have a choice. I
    have a choice as a parent. If I was a parent or my niece and
    nephew come and visit me, I can disable the V-chip, I wouldn't,
    but I could. I don't know if it is from Washington we should
    mandate how Texas or New York City or Tulsa or Jackson should
    check their children and that is--we agree a 100 percent----
        Mr. Pickering. You mandate for each TV set that is
    manufactured that they have a V-chip. There is a little
    disconnect from a principle point of view as to why you can
    mandate a V-chip in a TV, but let us say, a sixth grader
    receiving an erate, you wouldn't say that he should be
    protected from pornography or violence like we saw the groups
    in Littleton. And surely, we have the capability to find a
    flexible technology that appropriate subject matter can be
    available to school-age children while we can block offensive,
    indecent, and violent material. And surely, the administration
    would put a high priority in research into the technology of
    the type of filter that would protect our children.
        Mr. Irving. We agree 100 percent that we need the
    technology. We agree 100 percent that we need to find a way to
    make sure that the people who want to use the technology can
    have the technology. The only place where the minor difference
    is whether or not Washington should mandate it or whether we
    should leave it up to the----
        Mr. Pickering. Didn't the administration support a mandated
    V-chip in a TV?
        Mr. Irving. We support a mandated technology in the TV, but
    not a mandated use of that chip in the television. There is the
    difference.
        Mr. Pickering. But surely we can find a way that you can
    turn off a filter and turn it on.
        Mr. Irving. If you are going to do that, then you are
    pretty close to the acceptable-use policy that we have because
    a community still has the ability, if it wants to go out and
    get a computer with a chip in it if they want to do that. But
    we are not mandating that they do use blocking technologies,
    and I have looked at all of them, CyberSurf, Target Patrol, Net
    Nanny. I have gone through a lot of them to see what works.
    They all have some glitches. They all have a problem that
    doesn't make them perfect. So you----
        Mr. Pickering. Could you provide research into the glitches
    so we have a----
        Mr. Irving. I can't, but we can certainly work with you to
    develop it. This is anecdotal, personal experience, but I will
    certainly work with my staff to get back to you on some of the
    problems, what has happened, and I think we can put some
    surveys together and work with you on that.
        Congressman, I want to assure you, I want to do the same
    thing you do. I want to protect America's children from filth,
    from violence, from pornography. I don't, however, feel that on
    behalf of this administration we can mandate a particular
    technology. And we also--and I kind of feel like I am on the
    wrong side of this argument. I am kind of going to State and
    local rights, not a position I have been----
        Mr. Pickering. Let me get this straight. The
    administration's policy is that we should have mandatory gun
    control requirements, but we should not have mandatory filters
    to protect them from pornography and violent material; is that
    the administration's position?
        Mr. Irving. I would say that you are correct that there are
    mandatory gun control policies this administration has
    supported, and you are correct in saying that with regard to
    whether or not every school and library that gets an erate
    should have a filter, we would say at this point, leave it to
    communities to figure out what is best for the people in the
    community.
        Mr. Pickering. Thank you. For the consistency in position,
    philosophy, and principal.
        Mr. Irving. I am trying.
        Mr. Tauzin. Consistency being the hobgoblin of little minds
    anyhow.
        Actually, Larry, I am not at all quarrelling with your
    position. I think we have to be careful what we mandate in
    terms of technology. My friend, Mr. Markey, and I disagree on
    that to some degree. So this debate is going to go on some
    time. Although, I think we share the common purpose of
    advancing technology so that parents and schools and everybody
    else can have more control over what comes in under these
    systems. Obviously what a parent chooses to do or not to do in
    terms of how they raise their own children is one thing, but
    when the children are in the custody of the government, as they
    are in the school, public school, perhaps there is a different
    standard.
        We need to talk about that. Maybe there is.
        Mr. Markey. Will the gentleman yield?
        Mr. Tauzin. I will be happy to yield, my friend.
        Mr. Markey. And we might be talking--we are trying to
    accomplish the same goal. So it is theoretically possible for a
    school to subscribe to an online service that does not need a
    filter because the only thing that kids have access to is good
    stuff. So mandating that they have a filter built into a
    service that already has been certified as kid-safe would
    create a dilemma for the school system.
        So I think that we all agree that kids should be protected
    in school from stuff that they shouldn't be exposed to, but
    there may be a way in which there is just a generic program
    which is used that substitutes for a filter and the same goal
    is accomplished.
        Mr. Tauzin. And these are the old arguments, but I made
    them before, while the parents are watching the TV with the V-
    chip in it downstairs, the kids are going to be upstairs
    watching the old TV, unfiltered.
        So there is all kinds of problems with how you manage these
    technologies in a home and in a public setting. But I think we
    can start with the proposition we all want to advance the ball
    in this area so that there is at least some opportunities to
    protect children, particularly when it is a government's
    responsibility because they are in a public setting, they are
    in a public school or hospital or what have you which is
    receiving government funds.
        Mr. Irving. And we also want to encourage industry and
    private sector and schools to create green space on the Net. We
    want to find positive places. I enjoy the Net. I love the Net,
    and I can find wholesome things to do 24 hours on the Net.
    There is a lot of bad stuff, and I think if we created
    opportunity and incentives to create green spaces where if you
    are in that space, you have pretty much certified that your
    child is going to be safe. That is the important thing.
        When I was growing up, my momma wouldn't let me play with
    certain boys or go to certain playgrounds because she didn't
    like the element there. She would say you can play in the park
    down the street but don't go to the park across town because I
    don't like those kids over there.
        Mr. Tauzin. I know parents who wouldn't let their sons and
    daughters play with you.
        Mr. Irving. Oh me, far too many of them. It hurt my dating,
    but if we can find more positive places on the Net for our
    children, as well as finding ways, and I want to continue to
    work with you, Congressman, on this minor difference we have on
    finding ways to bridge it. This is important for our children.
    It is too much good stuff for us to say the Net's an evil
    place.
        Mr. Pickering. And Mr. Chairman, let me just follow up. I
    believe Mr. Markey may have hit on something that, you know,
    maybe there are other ways in a filter that we can protect, a
    safe place for our children, and I am willing to work with you
    and with Mr. Markey and Mr. Tauzin to see whether it is a
    multitude of tools that we can bring to bear, but we should
    find a way, and we should do something in this area. We ought
    to look at it just like we do toxic pollution because, for our
    children, it is deadly and it is dangerous.
        Mr. Irving. I think everybody that I work for, including
    me, will give you whatever resources you need to help
    accomplish that goal. We want to do what you want to do.
        Mr. Tauzin. In fact, it might be very interesting, Larry.
    You might be interested in helping us with this. I have talked
    about doing this for quite a number of months, and we never
    really put it together, but it may be useful for us to have a
    hearing where we actually look at the state of technology, and
    we hear from people who are innovating and developing new
    technology like this, new security systems.
        I know Mr. Miller could probably contribute a great deal
    with your member organizations.
        Mr. Miller. I would second what Mr. Markey was suggesting.
    We share Mr. Pickering's goal but what is happening is this is
    becoming a competitor's issue and different products,
    particularly when they are trying to get into the schools and
    get into the libraries, are going to come out and offer the
    fact that they either have tool capabilities to offer the kind
    of acceptable-use policy that Mr. Irving was talking about and
    that you are trying to achieve, Mr. Pickering, or they are not.
    And if they are not, they are going to find themselves at a
    distinct disadvantage in the marketplace.
        So there are very strong incentives right now in this
    industry and there are some products that Mr. Markey was
    suggesting which are already very prideful of their ability to
    filter out, and that is one of their strong selling points when
    it comes to----
        Mr. Tauzin. It might be good at some point--we will discuss
    it with you--to actually have a hearing at some point where we
    examine the state of all that technology because obviously if
    we are going to enact some policy in the area it ought to be as
    expansive as possible to take into account all those
    possibilities. So, again, this is maybe the beginning of a very
    good and useful discussion, and we will continue at another
    date.
        Any further questions by any member of the committee? Let
    me thank you all--I am sorry, Mr. Shimkus.
        Mr. Shimkus. I would like to ask to keep the record open
    for suggestion----
        Mr. Tauzin. Without objection the record will be open for
    30 days, 30 days.
        Mr. Shimkus. I have got a lot of questions. Mr. Chairman,
    can I ask----
        Mr. Tauzin. The gentleman is recognized.
        Mr. Shimkus. [continuing] three short questions. One, going
    back to Mr. Crawford. Going back to one of the IG reports in
    1997, if you were listed as an--your application was listed as
    outstanding, and then the assistant secretary took seven of the
    outstanding requests and for reasons only dispersion of grants
    throughout the country and you knew that you were one of--there
    were 38, now there are 31 grants going to outstanding
    candidates, you were one of the candidates that was pulled off,
    do you feel that the university would at least deserve some
    justification for that?
        Mr. Crawford. I think university faculty are used to being
    told no a fair amount, and so we would have just taken it in
    stride and not thought twice about it, but would have vowed to
    come back the second time and do better.
        Mr. Shimkus. So you don't have any problem with the Federal
    Government not justifying why one grant went versus against
    another?
        Mr. Crawford. No.
        Mr. Shimkus. Especially when one grant may have been listed
    as fair versus as outstanding?
        Mr. Crawford. Those are details that normally an individual
    like me would never, ever know.
        Mr. Shimkus. That is why we have a Federal Government that
    has an Office of Inspector General, so everybody has access to
    these public documents, and people could find out that
    information should they want to know the internal proceedings
    of a Federal agency.
        Mr. Crawford. No. I think most of my colleagues would not
    question it. They might be disappointed; but they would not
    question it, saying that is the way it is, and we will just do
    better next time.
        Mr. Shimkus. But you already got an outstanding. You were
    listed as an outstanding applicant. How much better can you get
    in the next try?
        Mr. Crawford. Well, sometimes there are emphases that an
    administration or a Congress would bring to bear as a hot
    button issue.
        Mr. Shimkus. And, Mr. Irving, can you address some of
    those?
        Mr. Irving. I would love to. Let me tell you what can
    happen. I had, say, 38 outstandings. I might have had 100, 150
    outstandings, but I might not have had an outstanding from,
    since I am from New York, New York State, and I want geographic
    dispersity or diversity. So what I will do is I may not--in the
    State of Illinois I may have eight outstandings. In the New
    York the best I have is a fair. I want to give every State--
    maybe all I can do is two in Illinois so I want to give all to
    Illinois, so I give one to----
        Mr. Shimkus. I don't know, Illinois, if they are all
    outstanding.
        Mr. Irving. Maybe it is one fair in Illinois and eight
    outstanding in New York and I want geographic diversity. Maybe
    I have got five that are using satellite technology and one
    fair but the board says with a little bit of tweaking this can
    be a great grant, but the way they wrote it it is only a fair
    grant.
        I did college admissions, and a lot of times we wanted to
    get a kid who was a drum major into the university. He may not
    have a 3.9, he may not have a 1600, but he is the best drum
    major in the country or he is the best tuba leader or he is a
    great entrepreneur and made a billion dollars with some
    innovation.
        That is what we do with these grants. We try to look below
    the surface. If I could fund every outstanding grant I would,
    but I can't.
        Mr. Shimkus. Let me follow up, and I understand and I
    appreciate you all do great work, but the IG has testified you
    haven't provided justification for these----
        Mr. Irving. What he said was we didn't provide
    justification for the ones we dropped off. We did provide
    justification for the ones we added on, and the reason we
    didn't provide justification, I didn't know you wanted it. We
    will in the future. There will never be a grant that is dropped
    off----
        Mr. Shimkus. I think it is only fair if they provide an
    outstanding application and they make it to the final-cut list
    and then they get dropped off for----
        Mr. Irving. Congressman, can I make one point?
        Mr. Shimkus. Sure.
        Mr. Irving. That final-cut list is the list that is
    presented to me by my staff, and they have a great deal of
    knowledge, but they don't have necessarily all the political
    knowledge I have of what the Congress wants me to emphasize,
    rural, underserved, this year we want to make sure we do more
    satellite and so----
        Mr. Shimkus. I understand.
        I hear you, and let me follow up with this question. Can
    you provide for me, for the record, the grants that have not
    met the requirements, which of those fell into the scoring
    breakdown for applications? My question is, if we are making
    political considerations, and then we are providing grants to
    fair and good applicants based upon political applications,
    then we have a problem like LatinoNet that cannot meet their
    requirements and actually end up owing the Federal Government.
        Then that is something that we ought to look at, and I
    think we are justified in asking those questions.
        Mr. Irving. When I say political, I want to be very clear.
    I mean, things like this Congress has said to me, we want
    rural, we want you to focus on underserved, not on--this is
    not----
        Mr. Shimkus. No, no, politics--good politics is good
    government, but what I am saying is, we have an Inspector
    General's report on LatinoNet that show that they didn't meet
    their requirements and owe the Federal Government a lot of
    money.
        I want to know if they were a poor rating, and if they were
    a poor rating, if they were bumped up because of good political
    considerations, dispersal, big cities, inner cities, minority
    populations, whatever, I think that ought to be put into
    consideration.
        Mr. Irving. I will be happy to find out what their
    rationale was--what the rating was for LatinoNet.
        [The information referred to follows:]

                                   LatinoNet

        In 1994, LatinoNet of San Jose, California, received a
    TIIAP grant in the amount of $450,000. The grant was made for a
    demonstration project to show how minority communities can
    participate in the nation's advanced information
    infrastructure.
        LatinoNet's application was highly rated by the peer review
    panel, receiving a ``Good to Outstanding,'' ``Good Plus to
    Outstanding,'' and ``Good'' ratings respectively from the three
    panelists. [Note: Outstanding indicates ``Recommended for
    Priority Funding,'' Good indicates ``Recommended for Funding if
    Funds Available.'']
        The application was rated in the top 20% of applications
    reviewed by the review panel. Based on its high ratings, the
    TIIAP Director recommended the application for award.
        The OIG audit of LatinoNet occurred while the grant was
    still active. At the time of the audit, LatinoNet had received
    an excess disbursement of federal funds. However, LatinoNet
    spent local matching funds after the audit and, based on their
    final financial report, the Department's grants office has
    determined that LatinoNet does not owe the federal government
    any funds.

        Mr. Shimkus. And we will probably follow up with other
    reports.
        Mr. Irving. Thank you, Congressman.
        Mr. Shimkus. I yield back.
        Mr. Tauzin. I thank you--my mike is not on. You were
    mentioning grants in a lot of districts of members of the
    committees. You didn't mention Mr. Markey.
        Mr. Irving. To my chagrin and his dismay, we have never
    funded a grant in his district.
        Mr. Tauzin. You and I are pretty close. I will be happy to
    intercede for Mr. Markey.
        Mr. Markey. I am living proof there is such a thing as good
    government. You would think statistically with 400 projects
    that he has given out----
        Mr. Tauzin. There is also another good Russell Long story I
    just really want to share with you because it is so good.
        His staffer once--one of his staffers once came to him when
    he was having a particular important moment with one of the
    presidents of the United States who needed him very badly on a
    point. And his staffer said, well, sir, what you need to do is
    write out a good list of things you need from the president.
    When you see him this afternoon, just hand him that list. Isn't
    that a good idea?
        And Russell said, absolutely not. And the kid said, well,
    why not? I think it would be a good idea. Just hand that list
    to the president. You know, he needs you bad right now. Just be
    good, put it in his hand personally, you know. And Russell
    said, no, terrible idea. He says, well, why not? He said, well,
    son, every list has an end.
        Thank you very much. We are going to move, as I said,
    legislation this year on NTIA. We're going to do our best to
    get it done. So if you have some thoughts on how the grant
    program can be improved and want to add those sections of the
    bill, please submit them for the record, Mr. Ross or any of
    you.
        If you have some--we mentioned some talk about how we might
    insure that IRAC perhaps a little fairer. We need to know how
    that might work, Larry, in the context of national security.
    Comment back to us. The record is open for 30 days.
        Gentlemen, thank you very much for the contributions you
    made.
        [Whereupon, at 4:25 p.m., the subcommittee was adjourned.]