[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.]
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