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





 
               THE STATUS OF DEPLOYMENT OF DATA SERVICES

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

                                HEARING

                               before the

                  SUBCOMMITTEE ON TELECOMMUNICATIONS,
                     TRADE, AND CONSUMER PROTECTION

                                 of the

                         COMMITTEE ON COMMERCE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION

                               __________

                             APRIL 11, 2000

                               __________

                           Serial No. 106-128

                               __________

            Printed for the use of the Committee on Commerce

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

                    U.S. GOVERNMENT PRINTING OFFICE
64-024CC                    WASHINGTON : 2000




                         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                    TOM 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               TOM 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:
    Allely, Eric, Founder and Owner, Tekamah Corporation.........    31
    Asnes, Anthony K., President, Pseudo Programs................    14
    Campbell Ray A., III, Executive Director, Mass Corporation 
      for Educational Telecommunications.........................    44
    Harter, Peter F., Vice President, Global Public Policy and 
      Standards, Emusic.com......................................    22
    Kushner, David, Chairman, Diagnostic Imaging and Radiology, 
      Children's National Medical Center.........................    48
    Linkous, Jonathan D., Executive Director, American 
      Telemedicine Association...................................    37
    Vuckovich, Gene, Executive Director, Montana Rural 
      Development Partnership....................................    40

                                 (iii)

  


               THE STATUS OF DEPLOYMENT OF DATA SERVICES

                              ----------                              


                        TUESDAY, APRIL 11, 2000

              House of Representatives,    
                         Committee on Commerce,    
                    Subcommittee on Telecommunications,    
                            Trade, and Consumer Protection,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:10 a.m., in 
room 2123, Rayburn House Office Building, Hon. W.J. ``Billy'' 
Tauzin (chairman) presiding.
    Members present: Representatives Tauzin, Stearns, Gillmor, 
Largent, Cubin, Shimkus, Fossella, Blunt, Markey, Gordon, Rush, 
Eshoo, Luther, Sawyer, Green, McCarthy, and Dingell (ex 
officio).
    Staff present: Mike O'Rielly, professional staff; Cliff 
Riccio, legislative analyst; and Andy Levin, minority counsel.
    Mr. Tauzin. The hearing will please come to order. Good 
morning and welcome.
    Today we embark upon a series of hearings on the Internet 
infrastructure and its impact on how Americans will participate 
in the new digital economy, both at work and at home. This is 
not the fireworks hearing. This is not the clash of the 
carriers. We term this hearing, the hearing on the need for 
speed. My staff pointed out that when we were growing up, the 
theme was that speed kills, and today we find out that the lack 
of speed may kill. So today we embark upon a series of hearings 
to discover what is broadband and what it means in our lives 
and what it could mean in our lives if, in fact, everyone has 
access to it.
    There is no denying the fact that the Internet has become 
an integral part of everyday life for nearly two thirds of all 
Americans. We rely on it as a primary means of communications, 
as a convenient tool for doing business and as a rich source of 
content such as news, music and other important information.
    Since the passage of the 1996 Telecom Act, however we have 
come to understand that the Internet uses an architecture that 
is, in a large part, separate from the telephone network. The 
FCC has determined that the Internet is operationally and 
technologically distinct from plain old telephone or cable 
service, even though data traffic can pass through some of 
these same infrastructures.
    Most importantly, this new and distinct Internet 
architecture has facilitated the emergence of new broadband 
capacity networks, the likes of which we have never before 
witnessed. Broadband networks can carry much more voice, much 
more data traffic than narrow band systems can carry. They can 
also deliver such traffic at much faster speeds than narrow 
band lines. This essentially means that digital convergence is 
a realistic possibility for some time in the near future. It 
will soon be technologically possible for residences and 
businesses to receive telephone service, ISP services, digital 
television service and streamed audio and visual content over 
one line with no service disruptions or delays. That is pretty 
exciting. Make no mistake about that.
    However, before we get too carried away with all this, we 
in Congress have an obligation to ensure that all Americans 
will have access to these digitally converged high speed 
services via broadband networks. Such access is crucial for 
many rural and underserved areas of this country to develop in 
step with the thriving urban hubs that are driving this 
Internet economy.
    In 1995 when we were crafting the Telecommunications Act, 
we all knew what that saying was, that speed kills. Today, it 
is clear that with the lack of access, the high speed networks 
may, in fact, kill, may destroy opportunity, may deny 
businesses and individuals success and prosperity in their 
lives. If businesses and residences don't have high speed 
connections to the Internet backbone, they are relegated to 
narrow band dirt road, and narrow band dirt roads are so 
incompatible with the rest of the high speed infrastructure 
that promises to significantly impede the flow of 
communications across our Nation's web-based infrastructures.
    Let me explain. If certain regions of our country, are 
crawling at narrow band dial up access, if they are crawling at 
this slow speed while other areas of the country are utilizing 
high speed infrastructure, then everyone on the web will be 
forced at times to operate at narrow band slower speed. If I am 
connected to you, I am at high speed and you are at lower 
speed, I am at your speed. It is that simple. And under this 
scenario, the Internet cannot materialize into the fluid 
nationwide communications network that all of us are hoping it 
will be. Instead, ISP subscribers will continue to encounter 
service disruptions and data transfer delays in every instance 
where broadband-facilitated high speed traffic is thrust upon 
narrow band slower speed infrastructure.
    Last October in an article published by the Associated 
Press, John Robbs, CEO of Nortel Networks, estimated that in 
1998, 2.5 billion hours were wasted on line as people waited 
for Web pages to download. But this worldwide wait is only 
customary in certain parts of the country. Connections to the 
Internet backbone vary significantly between Houma, Louisiana, 
and Houston, Texas, Dodgeville and Detroit, Brockton and 
Boston, Wichita and Washington or Muleshoe and Miami.
    Now in order to have speed, American consumers and small 
businesses must as well have connections to adequate broadband 
infrastructures. Otherwise, they will not be able to 
meaningfully participate in the converged digital economy.
    As a result, I get worried when I see reports like the one 
interactive week on line released just this last February. I 
quote from it. Contrary to many previous predictions, experts 
now believe that there could be a global bandwidth shortage as 
the Internet continues to grow rapidly. Furthermore, increases 
in demand for bandwidth will outstrip increases in capacity by 
at least twice as much in the coming years. And as more and 
more subscribers purchase DSL and cable modem access, public 
networks will come under increasing pressure. Some analysts say 
traffic could be 10 times the current level in just a few 
years. Time and demand for bandwidth could be up to 200 times 
today's demand by 2005.
    If these figures are accurate, then a fear that deployment 
of advanced services and broadband infrastructure may not 
extend to many rural, western and underserved areas of this 
country, and that are no less important, trust me when I tell 
you this, that are no less important than any other part of 
this great country.
    Just as proximity to railroad lines determined that 
communities prospered in the 19th century, I hate to think that 
proximity to POPs or Internet points of presence may ultimately 
determine which communities prosper in the 21st century. Under 
such a scenario, I can tell you that it will take too long for 
adequate broadband infrastructure to reach my own Louisiana's 
third congressional district.
    As a result, my district and others like it will not be in 
a position to contribute to or to benefit from this new 
Internet economy.
    And to prove it, Diane Press, Idaho, recently summed up 
what many small communities now face, caught between cumbersome 
Federal regulation and the hard facts of prudent business 
investment. Small town America is in danger of missing out on 
the economic benefits of modern telecommunications 
technologies. Echoing those sentiments, Nicholas Stegrafonti of 
MIT has stated that the absence of broadband and the absence of 
bandwidth would be more isolating, the densest forest of the 
largest desert.
    With all that having been said, today's hearing is not 
about the regulation of the Internet. Rather, it is about, 
first and foremost, understanding just how beneficial broadband 
services are, can be and should be to all consumers in America. 
It is also about determining what types of broad brand 
infrastructure are necessary to deploy these advanced services 
to all Americans.
    And finally, today's hearing is being held to discuss how 
best to avoid a digital divide rather than to be talk about how 
government can close one, to avoid a digital divide so that 
broadband tools and services are available to consumers across 
the country.
    We have two panels of witnesses today. I want to welcome 
them and look forward to their testimony. I think this first 
panel will have some exciting and interesting demonstrations 
for us. We can see the potential in the exciting aspects of 
broadband delivered digital services, and I am confident that 
they will enlighten us and they will enlighten all Americans of 
this hearing today on how we will use the Internet in the 21st 
century.
    The Chair yields back and will recognize Mr. Dingell, the 
ranking minority member of the full Commerce Committee for his 
opening statement.
    Mr. Dingell. Mr. Chairman, thank you. I ask unanimous 
consent to be permitted to insert my statement into the record.
    Mr. Tauzin. Without objection.
    Mr. Dingell. So I will try and summarize. Mr. Chairman, I 
commend you for having this hearing. I believe it is an 
important one. The issues are going to drive the debate over 
the telecommunications policy for many years to come. We will 
hear from witnesses about the critical role of broadband 
technology in building the Nation's new economy, transforming 
our health care delivery systems, reinventing the way children 
are educated. The benefits to the American public are going to 
be staggering, and I am satisfied that what we are doing today 
will be the tip of the iceberg.
    The question is not how we will benefit but how quickly. 
Frankly, we are in somewhat of a regulatory mire. We need to 
know what policies need to be adopted so that these new 
technologies can be rolled out to the public in the most 
expeditious manner.
    Four years ago, we passed the Telecommunications Act. It is 
the most sweeping rewrite of telecommunications law since 1934. 
It was quite an achievement. We are still, however, debating on 
what we should do to make that legislation, in fact, realize 
the promise we felt it was going to deliver. To be sure, it has 
benefited consumers and the economy, but like all legislation, 
it is not without blemishes and all of our hopes have yet to be 
materialized. Like all legislation, it simply reflected 
Congress' best policy judgments based on the facts that we knew 
at that particular time, but in this information age, the facts 
change more rapidly than ever before, and those who operate on 
Internet time find that 4 years is more like an eternity.
    With the benefit of 20/20 hindsight, perhaps the most 
glaring oversight of the Telecom Act was its failure to create 
with certainty a proper environment for the Internet, one that 
allows all companies the freedom to innovate and invest in new, 
more robust ways to carry the vast potential of digital 
communications to every American at home.
    As a result, despite the explosive growth of the Internet, 
it is still grinding along in low gear. We hear a great deal 
about the benefits of the information superhighway, but the 
truth is that most Americans are relegated to the slow lane or 
even to back roads. Too many consumers remain stuck in low 
speed dial-up service. They await faster access at reasonable 
prices and quite frankly, the future growth of electronic 
commerce demands it.
    Unfortunately the Telecom Act did little to create the 
proper environment for the deployment of broadband services. 
Worse, it created uncertainties with regard to how the 
different technologies are treated under law and how they 
compete to provide services to consumers.
    Do we treat one broadband technology as a cable service if 
it happens to come over fiberoptic and coaxial wires or because 
it originates with a cable company? Do we create another 
technology like a telephone service simply because it travels 
over twisted wire pairs or because it comes from a telephone 
company? What if the Web pages are beamed on pizza-size dishes 
from a satellite orbiting above earth? Even though the 
information service delivered to the consumer is the same, each 
method of delivery falls under quite a different regulatory 
scheme in current law, resulting in unfairness to competitors 
and unfairness to consumers and indeed slows down the delivery 
of the service which is needed.
    This problem has to be resolved. The promise of electronic 
commerce has catapulted any dot com stock into the 
stratosphere, but very few have yet to show a profit. The 
values are staggering, but they are surviving on vapor. The new 
economy will either sink or swim, depending on the speed with 
which the broadband Internet services reach the public.
    In my view, all broadband technology should be treated the 
same from a regulatory standpoint, regardless of the historical 
mission of the company offering service, and I believe any 
different view is irresponsible. It should not matter whether 
the service is offered by a cable company, telephone provider 
or electric utility. Each should be free to offer the service 
according to the same rules. If we remove this disparity and 
uncertainty that accompanies it, I am confident we will see 
competitive platforms flourish, and the consumer will be the 
immediate beneficiary.
    Mr. Chairman, I thank you for your kindness and for your 
holding this hearing. I look forward to the result. Thank you.
    [The prepared statement of Hon. John D. Dingell follows:]
    Prepared Statement of Hon. John D. Dingell, a Representative in 
                  Congress from the State of Michigan
    Thank you, Mr. Chairman, for recognizing me. The subject of today's 
hearing is an important one; in fact, these issues are likely to drive 
the debate over telecommunications policy for many years to come.
    We will hear from witnesses about the critical role of broadband 
technology in building the nation's new economy, transforming our 
health care delivery systems, and reinventing the way our children are 
educated. The benefits to the American public will certainly be 
staggering, and I am sure the ones highlighted today are just the tip 
of the iceberg.
    The question, though, is not simply how we will benefit, but how 
quickly. What policies will encourage these new technologies to reach 
the public in the most expeditious manner?
    Four years ago Congress passed the most substantial rewrite of the 
nation's telecommunications laws since 1934. That Act was quite an 
achievement. After debating for almost two decades whether to 
deregulate the telecommunications industry, it was time to break down 
the barriers to competition once and for all.
    To be sure, the Telecom Act has benefitted consumers and the 
economy greatly since its enactment, but like all legislation, it is 
not without blemishes. Not all of our hopes have yet materialized.
    And like all legislation, the Telecom Act simply reflected 
Congress's best policy judgments based on facts we knew or anticipated 
at a specific moment in time. But in the Information Age, these facts 
change more rapidly than ever before. And for those who operate on 
``Internet time,'' the last four years is more like an eternity.
    With the benefit of 20/20 hindsight, perhaps the most glaring 
oversight of the Telecom Act was its failure to create, with certainty, 
the proper environment for the Internet--one that allows all companies 
the freedom to innovate and invest in new, more robust ways to carry 
the vast potential of digital communications to every American home.
    As a result, even with its explosive growth the Internet is still, 
in many ways, grinding along in low gear. While we hear a great deal 
about the benefits of the ``Information Superhighway,'' the truth is 
most Americans are relegated to the slow lane.

    Mr. Tauzin. The Chair now recognizes the gentlelady from 
the west, from Wyoming, Mrs. Cubin.
    Mrs. Cubin. Thank you, Mr. Chairman, for holding this 
important hearing, but also your commitment and concern to 
making sure that rural areas are treated the same as urban 
areas in receiving this technology, also, for your recognition 
of the fact that Federal regulation really could be a deterrent 
to deployment of these services as well.
    I have always been interested in finding out what broadband 
Internet technologies are being or soon will be offered to 
consumers, especially in rural areas. Mr. Chairman, I know that 
you realize that last year it was reported just 2 percent of 
U.S. households have access to high speed Internet service, and 
even less than that in rural areas. In Wyoming, if consumers 
have access to the Internet at all, it has been provided mainly 
over the local telephone lines with narrow band capabilities. 
If anyone has ever tried to open up a file or download a 
graphics program using 28 kilobits per second, they soon find 
out that that is just not fast enough. Wyoming Internet users 
don't want to get their information from a squirt gun. They 
would like to get it from a fire hose, and time is money and 
that is helpful to everyone.
    Today several areas of the country are being served with a 
wide variety of broadband services that deliver from 1.5 
million bits per second to 300 million bits per second. I think 
it is important that the subcommittee holds these types of 
meetings to find out what Federal policy changes, if any, are 
needed to help improved telecommunications services.
    I hope that this forum will shed some light on the problems 
facing Americans, especially in rural areas that are trying to 
keep up with the changing face of global economic, education 
and communication and determine what role the Federal 
Government should play in finding solutions to our 
telecommunications needs. There is no question that small towns 
across America that lack high speed Internet access will find 
it harder to attract new jobs and to keep up with the global 
marketplace.
    Consider that in New Jersey, the average distance between a 
customer and the phone company's nearest switching facility 
that connects them to the Internet is about 2.6 miles. In 
Wyoming, the distance is twice that far and in some cases, it 
is 10 times that far, and the cost to the telephone company of 
reaching a customer is twice as high. Parts of Wyoming have as 
few as half a dozen households per square mile compared with 
the thousands in urban and suburban areas. This discrepancy 
lessens the incentive to the phone companies, both big and 
small, to invest in stringing new lines in rural areas where 
the margin of profit is half of what it is in urban areas.
    One way in which I have been working to speed the 
deployment of new telecommunications services in rural areas is 
by advocating for the reduction of outdated regulations on 
companies that serve many rural areas. This streamlining of 
regulatory burden on small and mid-sized telecommunications 
providers will allow for greater investment in telephone 
networks and in new services. It only makes sense, I believe, 
to provide small and mid-size companies the regulatory 
environment so that they can both lower prices in response to 
competition and roll out new high speed data services.
    For too long, outmoded rules have held small and mid-sized 
companies back from serving consumers in rural areas. Federal 
telecommunication regulations need to be brought into the 
competitive realities of the 21st century. There is no reason 
why telecommunication companies that primarily serve rural 
areas should not have the opportunity to deploy high speed 
services so we can enjoy the same types of technological 
advances as people who live in Denver, Chicago, New York and 
Los Angeles.
    New technology has brought billions of dollars worth of 
revenue to all corners of the globe, and I believe it will 
bring much needed jobs and revenue into rural America as well. 
Here in Congress we have to look and have to work to ensure 
that the Federal regulatory environment is conducive to luring 
businesses into rural areas of the country.
    Mr. Chairman, thank you again. I appreciate your holding 
this important hearing.
    Mr. Tauzin. And the Chair now recognizes the gentlelady 
from California, Ms. Eshoo, for an opening statement.
    Ms. Eshoo. Good morning, Mr. Chairman and thank you for 
holding the hearing today on the status of the broadband and 
welcome to our panel. Peter Harter is here with Emusic, and I 
am very proud that they call the 14th Congressional District 
their home in Redwood City.
    Mr. Tauzin. If the gentlelady would yield, is it true he 
has brought some Cajun music?
    Ms. Eshoo. Yes, I understand that. So you will be highly 
entertained.
    Mr. Tauzin. I never hear that stuff.
    Ms. Eshoo. Because of you we will. Today's hearing 
addresses one of the most exciting components of the technology 
revolution, the development and the deployment of the delivery 
system used to bring the information age into our homes and 
businesses. The term broadband is used to describe this system 
in which sufficient bandwidth is used to utilize large amounts 
of information, whether it be voice, video, graphics or data. 
The explosive growth and economic success of the Internet is 
dependent upon the size of this pipeline.
    Mr. Chairman, we were here and helped to shape the 
Telecommunications Act in 1996. As you know, we intended that 
that legislation deregulate a communications industry in which 
competition had been choked off by years of monopolistic 
practices. Since the law was passed we have seen the 
telecommunications revolution occur with breathtaking speed, in 
my view. No sooner does one technology seem to offer more speed 
and capability when along comes another that offers more data 
and faster. I think the Telecom Act has resulted in a larger 
menu of broadband delivery options with an increase in 
competition and it has produced lower prices for consumers 
across the country.
    One of the best examples of this is seen in the development 
of the development of the competitive local exchange carriers 
or CLECs. These companies, companies like Covad and Rhythm 
Networks, are children of the Telecom Act. They provide DSL-
based access to the Internet through local loops or their own 
high speed fiber networks. Once these companies were permitted 
to offer their services, what happened? Telephone companies 
that before had only offered the more expensive T-1 lines began 
to rapidly expand their DSL service, a service I think they 
could have offered much earlier. The result increased broadband 
services at a cheaper price.
    As we hear today about the outstanding services that are 
available on the Internet today, I think we need to keep in 
mind the successes of these recent years. I think we also need 
to recognize that more dramatic successes are just around the 
corner. I hope Congress will be patient in permitting the 
brilliant and creative entrepreneurs, some of whom are here 
today before this committee, to achieve those successes.
    So thank you again, Mr. Chairman, for holding this hearing. 
It will be interesting and lively, and who knows, we may even 
dance to the music. I yield back.
    Mr. Tauzin. The Chairman thanks the gentlelady, and 
speaking of high speed movement, the Chair is now pleased to 
welcome the chief deputy whip of the majority in this House, 
also an esteemed member of our committee from Missouri.
    Just to give you an idea how important that position is, 
just a few short months ago the speaker of the House Denny 
Hastert held the position of chief deputy whip. The gentleman 
from Missouri, Mr. Blunt, is recognized.
    Mr. Blunt. I thank the gentleman for the introduction. I 
will tell you, when the speaker knows more about your job than 
you do, then you are in a tough situation, which I have been in 
for some time but glad to be there. I am glad to be at this 
hearing also, and in your theory of high speed movement I think 
I will let the hearing move on. I don't know that I can say 
anything better than has already been said. This is an 
important hearing, it is an important topic. I look forward to 
a chance to see both the technology and to hear what our 
witnesses have to say, and I thank the Chairman for holding 
this hearing.
    Mr. Tauzin. I thank the gentleman. The Chair now yields to 
the gentleman from Ohio, Mr. Sawyer, for an opening statement.
    Mr. Sawyer. Thank you, Mr. Chairman. Thank you for your 
leadership on this issue generally and for holding this hearing 
in particular. I have a wonderful five-page opening statement. 
I know it will move all of you. You may laugh, you may cry, but 
I urge you to reference it in the record of this hearing, and I 
will not offer it for you today.
    Just let me say, in brief part though, that the future of 
broadband is full of both promise and uncertainty as companies 
and industries try to anticipate technological advances and 
cultural and societal changes, market conditions, consumer 
preferences. The work that we do here today to try to ensure 
that deployment is timely, that industry competes fairly and 
that the service is provided to all sectors and geographical 
locations of the country for the good of all concerned is 
important work, and I urge that we get on with it. I yield back 
the balance of my time.
    [The prepared statement of Hon. Tom Sawyer follows:]
  Prepared Statement of Hon. Tom Sawyer, a Representative in Congress 
                         from the State of Ohio
    Broadband access, along with the content and services it might 
enable, has the potential to transform the Internet--both what it 
offers and how it is used. For example, a two-way high speed connection 
could be used for interactive applications such as online classrooms, 
showrooms, or health clinics, where teacher and student (or customer 
and salesperson, doctor and patient) can see and hear each other 
through their computers. An ``always on'' connection could be used to 
monitor home security, home automation, or even patient health remotely 
through the Web. The high speed and high volume that broadband offers 
could also be used for bundled service where, for example, cable 
television, video on demand, voice, data, and other services are all 
offered over a single line. In truth, it is possible that many of the 
applications that will best exploit the technological capabilities of 
broadband, while also capturing the imagination of consumers, have yet 
to be developed.
    Currently, the cost of residential broadband service ranges from 
about $40 and upward per month, plus up to several hundred dollars for 
installation and equipment. On the other hand, a May 1999 survey 
conducted by ZDNET found that nearly 80% of respondents were only 
willing to pay a monthly fee of $25 or less for broadband service. 
According to research from Juniper Communications, broadband users will 
number about 5.5 million through 2000, compared to 43.6 million dial-up 
users, and by 2002, broadband penetration will be 11.7 million users or 
19% of online households.
    The future of broadband is full of uncertainty, as competing 
companies and industries try to anticipate technological advances, 
market conditions, consumer preferences, and even cultural and societal 
trends. Congress should work to ensure that broadband deployment is 
timely, that industry competes fairly, and that service is provided to 
all sectors and geographical locations of American society.
    Some analysts assert that legislation is necessary to ensure fair 
competition and timely broadband deployment. Currently, the debate 
centers on two specific proposals. Those are: 1) compelling cable 
companies to provide ``open access'' to competing Internet Service 
Providers, and 2) easing certain legal restrictions and requirements, 
imposed by the Telecommunications Act of 1996, on incumbent telephone 
companies that provide high-speed data (broadband) access.
Compelling open access to cable broadband
    Currently, customers using cable broadband must sign up with an 
Internet Service Providers (ISPs) affiliated or owned by their cable 
company. If customers want to access another ISP, they must pay extra--
one monthly fee to the cable company's service (which includes the 
cable ISP) and another to their ISP of choice. Some members of Congress 
think we should enable cable broadband customers to subscribe to their 
ISP of choice without first going through their cable provider's ISP. 
At issue is whether cable networks should be required to share their 
lines with, and give equal treatment to, rival ISPs who wish to sell 
their services to consumers.
Easing Restrictions and Requirements on Incumbent Telephone Companies
    Another proposal, H.R. 2420 would case certain legal restrictions 
and requirements, imposed by the Telecommunications Act of 1996, on 
incumbent telephone companies who provide broadband access.
    Those supporting the lifting or modification of restrictions claim 
that action is needed to promote the deployment of broadband services, 
particularly in rural and under served areas. Rural communities argue 
that present regulations are overly burdensome and discourage needed 
investment in broadband services. According to proponents, unbundling 
and resale requirements, when applied to advanced services, provide a 
disincentive for incumbent local exchange carriers (ILECs) to upgrade 
their networks, while the Bell operating companies (BOCs) interLATA 
data restrictions unnecessarily restrict the development of the 
broadband network. ILECs, they state, are the only entities likely to 
provide these services in low volume rural and other under served 
areas. Therefore, proponents claim, until these regulations are removed 
the development and the pace of deployment of broadband technology and 
services, particularly in unserved areas, will be lacking.
    Opponents claim that the lifting of restrictions and requirements 
will undermine the incentives needed to ensure that the BOCs and the 
other ILECs will open up their networks to competition. Present 
restrictions, opponents claim, were built into the 1996 
Telecommunications Act to help ensure that competition in 
telecommunications will develop. Modification of these regulations, 
critics claim, will remove the incentives needed to open up the 
``monopoly'' of local services. A major change in existing regulations, 
opponents claim, would not only remove the incentives needed to open up 
the local loop but would likely result in the financial ruin of 
providers attempting to offer competition to incumbent local exchange 
carriers.
    There are also concerns over the inability of regulators to 
distinguish between provision of voice only and data services if BOC 
interLATA restrictions for data services and ILEC unbundling and resale 
requirements for advanced services are lifted.
    I look forward to hearing from our witnesses today on the current 
application and access to broadband services as well as their comments 
on what Congress can do to improve these features of broadband in the 
future.

    Mr. Tauzin. The Chair now recognizes my friend from 
Florida, Mr. Stearns.
    Mr. Stearns. Thank you, Mr. Chairman. I will make my 
statement part of the record. I just want to mention that 
according to Forester research business to business, e-commerce 
will explode in growth from $43 billion in 1998 to more than 
$1.3 trillion by the year 2003. And this hearing, 
unfortunately, is bringing out the aspects that this broadband 
deployment in the suburbs and small towns or rural areas is not 
as good as it should be. The practical effect is that rural and 
underserved users must suffer with Internet access that is far 
slower and unreliable than those that are available to some of 
the densely populated areas.
    The New West report captures the implications of being 
without high speed Internet access in today's business day and 
age, and their report indicates, most of America's small 
businesses have a symbiotic relationship with a big business, 
with large business enterprises increasingly preferring to deal 
with their small and mid-size business enterprises over high 
speed data lines because business transactions are faster, 
cheaper and more timely and with fewer errors. If the small and 
mid-size business enterprise does not have access to high speed 
transport, they cannot be players in the new economy, and their 
large business customers will look elsewhere for suppliers who 
can.
    So I think it is important to have this hearing, and I 
commend you, Mr. Chairman, and look forward to the testimony of 
the witnesses.
    Mr. Tauzin. The gentleman from Minnesota, Mr. Luther.
    Mr. Luther. Thank you, Mr. Chairman, and thank you for the 
hearing today. I am looking forward to the testimony of the 
witnesses, and particularly I hope that they will address some 
of the positive changes that we can see from broadband. The 
kinds of things that I have in mind are probably similar to 
those of other committee members, but dealing with obviously 
the so-called digital divide that we hear a lot about. 
Obviously the whole consumer issue, what will help consumers, 
what gives them more choices, what gives them better 
information, and finally, just what we can look for in the 
future in terms of more positive contact quite frankly, whether 
it is educational services or whatever. I mean, I think a lot 
of times we spend our time thinking about more video games or 
whatever. What would interest me is how we can see broadband 
working in the equation of providing more positive, delivering 
more positive content to people in this country, and so I look 
forward to the testimony. Thank you.
    Mr. Tauzin. The Chair thanks the gentleman. The gentlelady 
from Missouri, Ms. McCarthy, for an opening statement.
    Ms. McCarthy. Thank you, Mr. Chairman, and I thank the 
witnesses for being with us today. I agree with all that has 
been said about the importance of this discussion as we 
reconcile the digital divide in making sure that the public and 
private sector are working together to make sure this 
technology is available to as many people as possible.
    I don't want to overlook the fact that as we work toward 
progress being made and bringing entertainment products to the 
consumers that we also consider the effect on the artists, 
particularly the recording artists, and what this may mean to 
them, what will be the effect on the--will it create 
competition for content? What do we do about copyright issues? 
What about work-for-hire matters? So I would welcome any input 
you have on that today as we explore this issue.
    Thank you very much, Mr. Chairman, for having this hearing.
    Mr. Tauzin. The Chair now recognizes the gentleman from 
Chicago, Mr. Rush, for an opening statement.
    Mr. Rush. Thank you, Mr. Chairman. Mr. Chairman, I too am 
very excited about this particular hearing. I look forward to 
the testimony of the panelists here. I am very interested in 
what they have to say about the future of broadband.
    Consumers are now more sophisticated and are more demanding 
in terms of requiring that the industry provide better and 
faster Internet access. Hence, it is increasingly important 
that enhanced Internet access and broadband deployment is 
available to Internet users. The status quo simply does not cut 
it anymore. It is incumbent upon us, members of this committee 
and this Congress, to remove any regulatory impediments that 
may stifle broadband deployment.Broadband is the technology 
that will fuel the continued growth of the Internet, and it is 
important that this technology is available to all Americans.
    I look forward to this hearing, Mr. Chairman, on the 
creative uses of broadband technologies, especially as it 
relates to bridging the digital divide, and I also look forward 
to hearing about what is being done to deploy those 
technologies at a faster pace to all of America and to 
America's consumers, and I want to thank you, Mr. Chairman. I 
yield back the balance of my time.
    Mr. Tauzin. Finally, the Chair now recognizes the gentleman 
from Tennessee, Mr. Gordon, for an opening statement.
    Mr. Gordon. Mr. Chairman, this is an important and timely 
issue. I appreciate you having this. I hope you will have 
additional hearings. I want to become better educated in this 
area. I am also interested in Mrs. Cubin's concerns about rural 
development and look forward to hearing the witnesses today. 
Thank you.
    Mr. Tauzin. The Chair thanks the gentleman. Any further 
requests for opening statements?
    [Additional statements submitted for the record follow:]
Prepared Statement of Hon. Steve Largent, a Representative in Congress 
                       from the State of Oklahoma
    Mr. Chairman, thank you for holding this morning's oversight 
hearing on the current state of broadband deployment as it relates to 
applications that utilize broadband networks, and the use of broadband 
networks to provide service to what is traditionally thought of as 
underserved areas of America.
    After this subcommittee's recent consideration of the Rural Local 
Broadcast Signal Act, I now have an entirely new perspective as to what 
qualifies as an underserved area. I would hope for the purpose of this 
hearing, an underserved area is just that--underserved.
    On February 2, 1999 the FCC released its first report on the state 
of deployment of advanced telecommunications services.
    At that time, the commission concluded that broadband deployment 
appeared to be ``reasonable and timely'' although the commission 
believed that it was difficult to reach a firm judgement given the 
early stage of deployment.
    On February 17th of this year, the FCC initiated its second notice 
of inquiry, as required by Congress, to look into the current state of 
broadband deployment to business and residential customers, and to 
different geographic areas and socio-economic groups. This report is 
scheduled to be released by the commission sometime this September.
    I believe the 1996 Telecommunications Act is working as intended. 
Since the passage of the act, we have seen an explosion in the number 
of new competitors in the telecommunications market and a corresponding 
growth in e-commerce and the internet economy.
    Today, there are over 375 competitive local exchange carriers 
(CLECs) operating in every state of the country. These CLECs have gone 
to the capital markets and invested $30 billion in state-of-the-art 
technology to offer service in urban, suburban, and rural areas of the 
country.
    Cable operators are investing billions of dollars to upgrade their 
facilities to offer broadband services throughout the country.
    The fixed and mobile wireless industry is currently developing the 
so-called ``third generation'' wireless standard that will enable 
providers to offer an array of internet-related services to the home, 
business, and individual handsets.
    The satellite industry is developing technologies to bring 
broadband services to the home.
    And the largest market participant providing broadband, the Bell 
Companies and GTE, have announced plans to make highspeed DSL available 
to over 60 million households by the end of this year.
    As a result of this flurry of deployment, this subcommittee heard 
testimony from Governor Gilmore last week that ``the Nation's internet-
based economy grew by 68% last year to produce over $507 billion in 
business revenues. The internet economy has created 2.3 million jobs. 
The internet and the information technology sector now accounts for 
more than half the capital investment in our economy.''
    Mr. Chairman, industry has responded quite favorably to the intent 
of the '96 act. It is important to remember that it took nearly 50 
years after its invention before conventional telephone technology 
became commonplace in America's businesses and homes. It would be a 
stretch to believe that the '96 act is not fulfilling its promise 
because high speed internet is not linked to every computer in this 
country only four years after the passage of the act.
    It appears that the so-called ``digital divide'' has become the 
poster child of perceived problems with current telecommunications 
policy rather than a real telecommunications phenomenon. I have to 
question whether the ``digital divide'' is being used by the 
administration and some in Congress as an excuse for governmental 
agencies to create a role for themselves within the telecommunications 
industry. It also appears that certain groups and companies are seizing 
this as an opportunity to undermine the section 271 requirements of the 
'96 act.
    In light of industry's efforts to deploy broadband services 
throughout the country, I'll be interested in hearing from today's 
witnesses as to what more industry needs to do to encourage broadband 
deployment.
                                 ______
                                 
 Prepared Statement of Hon. Tom Bliley, Chairman, Committee on Commerce
    Thank you, Mr. Chairman. I appreciate you scheduling this hearing 
on this important topic.
    Today's hearing is an interesting twist from the traditional debate 
over the deployment of broadband services. The witnesses will discuss 
how they use or apply broadband technologies to bring new services to 
the marketplace.
    These types of companies and organizations provide a new 
perspective on the issue, which expands beyond the simple deployment of 
broadband technologies.
    However, I am interested to hear views on the important issues 
surrounding deployment as well. I am hopeful that at the end of the day 
we will have a broad, balanced discussion of all issues from all the 
relevant parties on this subject.
    I believe that if we are to have hearings on this subject that we 
need to hear from the vast number of companies--from competitive 
providers to equipment manufacturers--that are flourishing from the 
explosion in the telecommunications and electronic commerce 
marketplaces. It is an exciting time to be in these industries.
    Much of this success is due to the great work we did to establish 
the legal rules-of-the-road by enacting the Telecommunications Act of 
1996.
    I also hope to hear as well from the incumbent providers on how 
they are complying with their obligations--ones they agreed to--in the 
Telecom Act. Further, I hope to hear how they are taking advantage of 
the marketplace to roll-out broadband services. It seems that almost 
every day I am hearing about a new merger--I mean a new broadband 
service--from one of the Bell Companies. These folks seem to be doing 
quite well in the marketplace notwithstanding any restrictions they see 
as unnecessary.
    Today's witnesses will talk about how they use broadband 
technologies in their product or service offerings. They are examples 
of the creative and innovative forces making the potential of the 
Internet and electronic commerce a reality.
    And some very creative people are using such technologies to bring 
products and services to under-served populations. The Internet truly 
provides a digital opportunity for all Americans. Some people have 
argued that services and products will only come to rural or urban 
centers if the federal government forces or mandates that it occur. I 
think that today's witnesses are only a small slice of the examples of 
companies and organizations that are trying to solve any perceived 
deployment disparity problem rather than look for a federal government 
program.
    I thank the chair for his indulgence and yield back my time.
                                 ______
                                 
   Prepared Statement of Hon. Edward J. Markey, a Representative in 
                Congress from the State of Massachusetts
    Good Morning. I'd like to thank Chairman Tauzin for calling this 
hearing this morning on broadband applications.
    The broadband revolution that is taking place on the Internet today 
is breathtaking in its sweep and impressive in its rapid evolution. A 
few mere years after passage of the Telecommunications Act of 1996, 
consumers are reaping the digital dividend of communications 
competition. Without the competitive forces unleashed by the Telecomm 
Act, we probably wouldn't be having this hearing today.
    The feature-rich, information-driven content that is everyday 
igniting the enthusiasm of our nation's entrepreneurs and investors is 
riding upon a telecommunications infrastructure that is the envy of the 
world. Across the globe, country after country is trying to emulate the 
dramatic steps that America has made in opening up historic monopoly 
markets to marketplace competition, in building bandwidth, and in 
bringing the benefits to all sectors of society.
    The cable industry alone makes broadband capability available to 41 
percent of U.S. homes and has over a million subscribers today. The 
competitive local telephone companies have driven broadband deployment 
on the competing wire and currently invest roughly a Billion dollars 
per month on new telecommunications infrastructure around the nation. 
Bell Atlantic has proven it can meet the market-opening requirements of 
the Telecomm Act in New York and is setting the pace among incumbents 
for long distance entry. In addition, wireless applications promise 
ever more capacity and competition for businesses and residential 
consumers.
    We are truly a long way from the debates in the late 80s and early 
90s about deployment of ``fiber to the home'' and the promise of 
``video dialtone'' and ``cable-telco.'' The marketplace is responding.
    That's because the goal of telecommunications policy is not the 
deployment of a particular technology or application, but rather the 
goal of telecommunications policy is competition--everywhere and for 
everyone. Competition will determine whether consumers prefer wireless 
services, DSL, cable modems or any other technology and competition 
will pick winners and losers among applications.
    Moreover, the competitive telecommunications industry is exerting 
tremendous effort to meet the bandwidth needs of the growing Internet 
content industry.
    As much as this hearing is an exploration of exciting new 
applications for the Internet, it is also a celebration of the 
handiwork of this Subcommittee. The fact that the witness table today 
has independent content entrepreneurs and entities interested in making 
the new technology serve important societal needs is testimony to the 
fact that hundreds of companies today might not even exist--or certain 
applications would still be relegated to mere speculation--if some of 
our policy decisions had come out differently.
    This is something we should all take stock of because in the end, 
our effort is not just about the deployment of the latest flavor of 
digital technology be it ISDN, ADSL, DSL, xDSL, or any other acronym: 
it's about the future. And I think our competitive future is a bright 
one if we remain true to our Subcommittee's history with these issues.
    Thank you Mr. Chairman and I look forward to hearing from our 
witnesses this morning.
                                 ______
                                 
  Prepared Statement of Hon. Gene Green, a Representative in Congress 
                        from the State of Texas
    Thank you Mr. Chairman. Mr. Chairman, the Internet is the fastest 
growing communications medium in this country. While I am very 
interested in hearing today's panel discussion on the access to and 
applications for broadband, I am disappointed that we are not going to 
discuss the more substantive aspects of broadband like competition and 
the deployment of competitive networks.
    With internet traffic doubling every 90 days and data traffic 
increasing over voice by roughly 30% a year, implementing a coordinated 
broadband strategy is essential. Because of this tremendous growth in 
the Internet, Congress needs to ensure that we balance the need for 
networks and backbones with the demand for faster service and 
innovation. I believe it is imperative that we on the Subcommittee 
begin taking a substantive look at roadblocks to full competitive 
broadband deployment.
    Again, I do appreciate the panel members being here today and I 
look forward to hearing from Mr. Linkous regarding his thoughts on the 
impact broadband will have on telemedicine. I have a particular 
interest in subject because my home State of Texas is emerging as a 
leader in the research and application of telemedicine. Texas is one of 
only three States whose Medicaid program requires insurance companies 
to cover telemedicine services. And the results from this program have 
been very promising. Having access to telemedicine using a broadband 
connection could mean the difference between life and death in many of 
our rural communities.
    Mr. Chairman, I appreciate the opportunity we have today to gain 
differing perspectives on the benefits of broadband. However, I hope 
this hearing will be the first of many on this important issue and that 
the Subcommittee allocates time after the Easter work period to 
continue the debate.
    Thank you Mr. Chairman for beginning the dialogue on this important 
issue.

    Mr. Tauzin. The Chair is pleased to recognize our very 
esteemed people. They consist of Mr. Anthony Asnes, president 
of Pseudo Programs; Mr. Peter Harter, formerly introduced of 
Emusic.com; and Dr. Eric Allely, founder and owner of Tekamah 
Corporation. And we will see some exciting demonstrations I 
think about what broadband can do and what consumers might just 
be able to just enjoy if we have full deployment of broadband 
services across America.
    We will begin with Mr. Anthony Asnes of Pseudo Programs, 
and gentleman, your demonstrations will not count against 5 
minutes of oral presentations. The way we work the committee is 
that if you have written statements, they are part of our 
record, without objection and so ordered. The Chair will also 
make all members' written statements part of the record, 
without objection so ordered, so that when we get to the time 
for the testimony, we will ask you to summarize in 
conversational tone with us the major points of your testimony 
within a 5 minute frame. However these demonstrations will not 
count against that 5 minutes. We will begin with Mr. Anthony 
Asnes of Pseudo Programs.
    Welcome, Mr. Asnes.

  STATEMENTS OF ANTHONY K. ASNES, PRESIDENT, Pseudo PROGRAMS; 
   PETER F. HARTER, VICE PRESIDENT, GLOBAL PUBLIC POLICY AND 
  STANDARDS, EMUSIC.COM; AND ERIC ALLELY, FOUNDER AND OWNER, 
                      TEKAMAH CORPORATION

    Mr. Asnes. Thank you, Mr. Chairman. I will begin with 
testimony and then we will show you some of the demonstration 
as I go through this. I would like to say good morning to the 
committee and again, thank the chairman and the rest of the 
committee for inviting me here today.
    My name is Tony Asnes and I am the president of New York 
City-based Pseudo Programs, Inc., the world's largest original 
Internet TV network. Today I will give you some background 
about Pseudo, explain what Internet TV and streaming media are, 
and describe the technology we and others use to deliver our 
programming throughout the world.
    To understand Pseudo today, it is important to know about 
our core funding mission, to harness the communications and 
interactive powers of the Internet to create a new medium. 
Pseudo was founded in 1994 by Joshua Harris, who also founded 
Jupiter Communications, which is now one of the world's largest 
and most respected research and consulting firms dedicated to 
the Internet economy.
    Pseudo began as a company that managed on-line chat 
communities on the Prodigy on-line service and later on the 
Worldwide Web. In 1995, we added streaming media audio 
capabilities to those chat communities and introduced Chat 
Radio. In 1997, Pseudo added streaming video capabilities to 
our Chat Radio communities and became one of the earliest 
enterprises to begin Web casting or transmitting video and 
audio via the Internet, and a pioneer in the Internet TV 
business.
    Today, Pseudo is positioned as a leader in what the vision 
consulting group predicts will be a multibillion dollar 
business by 2004. Our investors include Prospect Street 
Ventures, the Tribune Company, Intel and Sycamore Ventures. We 
produce approximately 50 different Internet TV shows per week, 
organized into 10 Web site channels. Pseudo's shows cover 
topics from ranging from politics, space exploration, business, 
hip hop music, NFL football, computer games and entertainment.
    Unlike traditional broadcast media, Pseudo's net television 
shows are fully interactive. Internet audiences tune into live 
video shows from a chat room where they can interact not only 
with other audience members, but also with the hosts and 
performers who appear on screen.
    The Pseudo on-line experience combines live video, 
interactive features like chat that makes the audience part of 
the show, editorial graphics and other features into a vibrant 
on line entertainment community.
    Pseudo operates in a very similar fashion to traditional TV 
or cabled broadcasting. We shoot our programs on digital video, 
which is then captured from our studio control room and sent to 
a bank of encoders. These encoders convert analog video and 
audio signals into a digital signal. Our software creates 
several signals for low and broadband consumers. These signals 
are then streamed live over the Internet and also archived and 
made available for on-demand viewing.
    It is no secret that the Internet is becoming a way of life 
for more and more people, but what you might find astonishing 
is that a growing number of those Internet users now have the 
capability of watching live video over the Internet, at school, 
in the office and at home. Real networks reported yesterday 
that their streaming video player software has been downloaded 
more than 100 million times and that its user base grows by 
more than 200,000 users per day. In addition, more than 100 
million licensed copies of Microsoft windows media player are 
in circulation around the world.
    We are proud to be a broadband content creator. In the past 
few months, Pseudo has delivered millions of viewers some truly 
exciting moments live or available on demand, and the really 
exciting part is that our interactive features allow the 
audience and the guests and host to talk back and forth.
    In December, Pseudo's Spacewatch channel captured the drama 
of an anticipated video feed from the Mars Polar Lander and 
informed and entertained space fans of all ages with detailed 
video explanations of the experiments, interviews with NASA 
engineers and more. Our Pseudo politics channel, together with 
the hotline, reported from the polling center for the South 
Carolina Republican primary. We repeated the experience on 
Super Tuesday live from our New York studios and guests 
included Congressman Gerald Nadler and Congresswoman Carolyn 
Maloney, among others.
    The audience not only watched and listened, they asked 
questions, took part in polls and engaged in a dialog with 
voters from around the country.
    Our music channels allow viewers to be truly engaged in 
sight, sounds, people and cultures they might not otherwise 
experience where they live. Because we can produce our 
programming in a very cost effective manner, we can offer 
viewers programming and access to communities that appeal to 
special, cultural or ethnic groups that are often underserved 
by traditional media.
    Viewers can watch our programs on either low band dial-up 
connections to the net or via different broadband delivery 
methods, but the experience for the end user is dramatically 
different. Those viewing via dial-up or low bandwidth 
connection must wait longer for the streams to load, they will 
subject to more interruptions and might receive blurry, 
distorted images and audio, but broadband connectivity is 
another story.
    About 6 percent of U.S. Internet users can afford and are 
lucky to enough to live in areas where cable modem, digital 
subscriber lines, satellite and other high speed access is 
available. Those with broadband access see clear digital images 
delivered at much higher speed and with much higher reliability 
than those with dial-up connections can, but right now, 
broadband is still primarily only within reach of the well-
educated and well-to-do. They also tend to live in urban areas. 
Most broadband subscribers earn at least $100,000 per year and 
are college educated. That is an imbalance I would like to see 
corrected.
    As a businessman, the success of our company depends on 
much higher penetration of broadband access. We want to ensure 
that broadband access is affordable, but just as important, we 
want broadband to be available, period. And right now there are 
too many geographic regions, both urban and rural, that don't 
have access to those fat broadband pipes.
    As a citizen I also want to see more rapid deployment of 
broadband to as many people as possible. Unless businesses and 
policymakers work together, a huge segment of the population 
will not benefit from the educational, cultural and economic 
advantages that broadband access offers and the digital divide 
that already exists in this country will be even more serious.
    In conclusion, the latent consumer and business demand for 
broadband services is tremendous, even greater than the recent 
decades of demand for faster and more affordable computers. 
This presents industry and our economy with a huge opportunity 
to fill this demand, provided we can build the infrastructure 
and offer content that truly realizes broadband capabilities. 
Policy-makers and industry must work hand in hand to create a 
competitive environment that will spur innovation and 
facilitate the further development of broadband infrastructure. 
We must also work together to ensure cost effective delivery of 
these services to as many consumers as possible.
    Thank you.
    [The prepared statement of Anthony K. Asnes follows:]
  Prepared Statement of Anthony K. Asnes, President, Pseudo Programs, 
                                  Inc.
    Good Morning. I would like to thank Chairman Tauzin and the rest of 
the members of the Committee for inviting me here today. My name is 
Tony Asnes and I am the President of New York City-based Pseudo 
Programs, Inc., the world's largest, original Internet TV network. You 
can find us on the Web at www.pseudo.com.
    Today, I will give you some background about Pseudo, explain what 
Internet TV and streaming media are and describe the technology we--and 
others--use to deliver our programming throughout the world. I will 
also tell you about some exciting developments in our industry that can 
only be advanced with a rapid and robust deployment of a broadband 
infrastructure. I hope you'll see why we believe that the unimpeded 
expansion of broadband in this country is critical, not only to our 
business, but to the future of our nation's economic health and global 
leadership.
    To understand Pseudo today, it is important to know about our core 
founding mission: to harness the communications and interactive powers 
of the Internet to create a new medium. Pseudo was founded in 1994 by 
Joshua Harris, who also founded Jupiter Communications--which is now 
one of the world's largest and most respected research and consulting 
firms dedicated to the Internet Economy.
    Pseudo began as a company that managed online chat communities on 
the Prodigy Online Service, and later, on the World Wide Web. We 
recognized the social and communications power of chat, and created 
virtual ``destinations'' where consumers could go to communicate with 
like-minded people on subject matters that were under-served by 
traditional media, such as poetry, the arts, different kinds of music 
and the culture of the Internet itself.
    In 1995, we added streaming audio capabilities to these chat 
communities and introduced ``Chat Radio.'' The chat audience not only 
talked to one another, they could also interact with the hosts and 
guests on the radio show and not just see written replies, but actually 
hear them. In 1997, Pseudo added streaming video capabilities to our 
chat radio communities and became one of the earliest enterprises to 
begin Webcasting--or transmitting video and audio via the Internet--and 
a pioneer in the Internet TV business.
    Today, Pseudo is positioned as a leader in what The Vision 
Consulting Group predicts will be a $4.1 billion business by 2004. Our 
investors include Prospect Street Ventures, The Tribune Company, Intel 
and Sycamore Ventures. We produce approximately 50 different Internet-
TV shows per week, organized into ten Website ``Channels.'' Pseudo 
shows cover topics ranging from politics, space exploration and 
business to Hip-Hop music, NFL football, computer games and 
entertainment.
    These video programs are digitized into one's and zeros, encoded--
or formatted so that Internet users can view them--and streamed out via 
the Internet to viewers around the U.S. and the globe.
Pseudo Overview
    Unlike traditional broadcast media, Pseudo's Net-television shows 
are fully interactive. Internet audiences tune into live video shows 
from a chat room where they can interact not only with other audience 
members, but also with the hosts and performers who appear onscreen. 
(See Figure 1)
    The Pseudo online experience combines live video, interactive 
features like chat that makes the audience part of the show, editorial, 
graphics, and other features into a vibrant online entertainment 
community.
    The result: Pseudo's onscreen performers communicate directly with 
Internet audience members watching the show, and in turn, audience 
members can ask questions of the performers, vote in ``quick polls'' 
associated with each show, contribute comments, play in live trivia 
games, and request songs (Figure 2). This dynamic, two-way programming 
creates a powerful communications tool, builds a strong sense of 
community and brings culture, news and entertainment to a worldwide 
audience. Pseudo's audience currently registers an average of ten to 
twelve million page views and approximately 750,000 media stream views 
per month.
How Pseudo's Technology Works:
    Pseudo operates in a very similar fashion to traditional TV or 
cable broadcasting. We shoot our programs on digital video, which is 
then captured from our studio control room and sent to a bank of 
encoders. These encoders convert analog video and audio signals into a 
digital signal. Our software creates different kinds of digital 
signals: one for low bandwidth, and one for high bandwidth. These 
signals are then streamed live over the Internet and also archived and 
made available for on demand viewing. At high bandwidth, viewers can 
get amazing quality that approaches a standard television signal.
    It's no secret that the Internet is becoming a way of life for more 
and more people: more than 123 million U.S. consumers have access to 
the Internet, and 77 million of them used the 'Net at least once in the 
month of February. But what you might find astonishing is that a 
growing number of those Internet users now have the capability of 
watching live video over the Internet--at school, in the office and at 
home. Real Networks reported yesterday that their streaming video 
player software has been downloaded more than 100 million times, and 
that its user base grows by more than 200,000 users per day. In 
addition, more than 100 million licensed copies of Microsoft's Window's 
Media Player are in circulation around the world.
    We're proud to be a broadband content creator. In the past few 
months, Pseudo has delivered millions of viewers some truly exciting 
moments--live or available on demand. And the really exciting part is 
that our interactive features allow the audience and the guests and 
hosts to talk back and forth.

 In December, Pseudo's Spacewatch Channel captured the drama of 
        an anticipated video feed from the Mars Polar Lander and 
        informed and entertained space fans of all ages with detailed 
        video explanations of the experiments, interviews with NASA 
        engineers and more.
 We've even jumped into the election, with our Pseudopolitics 
        Channel. Together with The Hotline, we reported from the 
        polling center for the South Carolina Republican Primary, where 
        we put our live audience in touch with candidates, noted 
        journalists and opinion-makers from both parties. We repeated 
        the experience on Super Tuesday, live from our New York 
        studios, and the guests included Congressman Gerald Nadler and 
        Congresswoman Carolyn Maloney, among others. The audience not 
        only watched and listened; they asked questions, took part in 
        polls and engaged in a dialogue with voters from around the 
        country.
 Our music channels, such as 88HIPHOP.COM and Streetsound.com, 
        bring live performers and interviews with some of the world's 
        best-known performers and emerging artists to a global 
        audience. We allow viewers to be truly engaged in sights, 
        sounds, people and cultures they might not otherwise experience 
        where they live. Because we can produce our programming in a 
        very cost-effective manner, we can offer viewers programming 
        and access to communities that appeal to specific cultural or 
        ethnic groups that are often under-served by traditional media
Future Innovations
    At Pseudo, our mission is to harness all the communication power 
and interactivity of the Internet to create and define a whole new 
medium. To that end, our research and development group is 
experimenting with some very exciting innovations that will put tools 
in the hands of our viewers to allow them to play producer. We envision 
a day when consumers will be able to watch and interact with our 
programs anywhere or anytime, such as on hand-held or wireless devices 
like pagers. We will invite consumers to contribute their own content. 
We will allow viewers to pick from several different camera angles and 
watch several simultaneous streams. The technology is available, but we 
will need a robust broadband infrastructure to make it possible to 
deliver these innovations (Figure 3)
Lowband Versus Broadband
    Viewers can watch our programs on either low-band dial-up 
connections to the 'Net or via different broadband delivery methods, 
but the experience for the end-user is dramatically different. Those 
viewing via a dial-up or low bandwidth connection must wait longer for 
the streams to load, they will be subject to more interruptions and 
might receive blurry, distorted images and audio.
    But broadband connectivity is another story. About 6% of U.S. 
Internet users can afford broadband service and are lucky enough to 
live in areas where cable modem, digital subscriber lines, satellite or 
other high-speed access is available. Those with broadband access see 
clear, digital images, delivered at much higher speed and with much 
higher reliability than those with dial-up connections can. Those with 
broadband access have a much richer experience and can really realize 
the full potential of the Internet. It probably won't surprise you to 
learn that, while the average person goes on the Internet about 18 
times in a month, those with broadband log on between 30 and 40 times a 
month.
    But right now, broadband is still primarily only within reach of 
the well educated and well to do. They also tend to live in urban 
areas. Most broadband subscribers earn at least $100,000 per year and 
are college educated. That's an imbalance I would like to see 
corrected.
    As a businessman, the success of our company depends on much higher 
penetration of broadband access. We want to ensure that broadband 
access is affordable. But just as important, we want broadband to be 
available, period. And right now, there are too many geographic 
regions--both urban and rural, that don't have access to those fat, 
broadband pipes.
    As a media company, we generate revenues from advertising, and as 
broadband access rises, our ability to build our audience and attract 
more advertisers will rise with it. A broadband infrastructure is not 
only critical to our business, it is also critical to of keeping the 
U.S. economy competitive and growing.
    As a citizen, I also want to see more rapid deployment of 
broadband, to as many people as possible. Unless businesses and policy 
makers work together, a huge segment of the population will not benefit 
from the educational, cultural and economic advantages that broadband 
access offers, and the digital divide that already exists in this 
country will be even more serious.
    The latent consumer and business demand for broadband services is 
tremendous, even greater than recent demand for faster, more affordable 
computers. This presents industry with a huge economic opportunity to 
fulfill this demand, provided we can build the infrastructure and offer 
content that truly realizes broadband capabilities.
    Policy makers and industry must work hand-in-hand to create a 
competitive environment that will spur innovation and facilitate the 
further development of a broadband infrastructure. We must also work 
together to ensure cost-effective delivery of these services to as many 
consumers as possible.
    Thank you.
    [GRAPHIC] [TIFF OMITTED] T4024.001
    
    [GRAPHIC] [TIFF OMITTED] T4024.002
    
    Mr. Tauzin. Thank you, Mr. Asnes.
    Did you want to do your demonstration now?
    Mr. Asnes. Sure. I will take you through a very quick walk 
through the visuals here and cross my fingers that this works. 
As we mentioned, we have 10 different channels. We will bring 
up as an example, Spacewatch, which covers space and space 
exploration. We do our programming live out of our studios in 
New York city, as well as one live show from Space Center 
Houston, where we actually get the people at NASA to come 
across the street from the Johnson Space Center and be a part 
of the live programming. It is a chance to get to know more 
than just the astronauts, but the actual men and women who work 
behind the scenes to put everything up in the air and keep it 
running.
    What you are seeing on the screen is our player. The video 
is embedded within that player, and to the left and right of 
the player are HTML areas that allow for either polling or 
pushing of editorial or other static images. Down below is the 
chat environment. During the live programming, users come in 
and watch the programming while being present within a chat 
room, and a very bonding opportunity to talk with each other 
and know that everybody is watching the same thing as well as 
have the chance for the hosts and guests of the programming, 
who are also looking at the chatters, respond to them and 
actually talk to them. It is a very powerful experience in the 
live format. The on-demand format is incredibly convenient and 
allows you to pick up the week's new programming whenever you 
would like.
    What we see this player evolving into is an opportunity to 
deliver very factual brand messages as well as what we call 
contextual e-commerce opportunities for our sponsors and 
advertisers. As the programming is being delivered, commercials 
will be embedded within the programming like normal television 
commercials, and additionally synchronized with those 
advertisements will be opportunities to purchase product.
    This is really an interesting medium because it allows for 
the delivery of an entertainment experience that combines not 
only video but communications, editorial, and allows our 
advertisers and sponsors to complete the final objective, which 
is to sell their product.
    Our music categories cover several different cultures. 
88HIPHOP is a very strong channel covering hip hop and urban 
culture. The programming brings in the artists in a very 
collegial atmosphere. It is much more down to earth than the 
kind of blow-dried presentation of traditional television and 
it has a lot of meaning and credibility to the audience. This 
is the way we tackle the musical genres to really bring the 
audiences much closer to the stars and the guests who are very 
important to them.
    Now, I guess, as a final comment you can see right now the 
screen embedded within this player is tiny. You have really got 
to be pulled up close to your computer and it works, and if you 
are involved with the chatters, it is a compelling experience. 
The reason why that screen is so small is because of the 
broadband limitations. We could actually expand the size of 
that screen but the picture would pixilate and would not be as 
clear, and that is purely a function of how much data we get 
through the pipe.
    We really need to think about who our users are. Most of 
them are 56K modem users, which allows us to get a video stream 
through that has a very slow frame rate. Once you start 
encoding 80K and above, the video really starts to smooth out, 
and the broader the connection for the end user, the larger 
that screen can get and the more compelling the experience can 
get.
    So that gives you a flavor of where we are. Again, when you 
pull up close, it is an interesting experience. I think from 
the distance that you are at now you can see some of the 
limitations that the broadband environment faces us with. Thank 
you.
    Mr. Tauzin. Thank you very much, Tony. Now what we have 
seen what video streaming begins to look like on the Internet 
and what television itself will become on the Internet. We will 
now turn to music, and Mr. Peter Harter, vice president of 
Global Public Policy Standards and representing Emusic.com will 
give us not only a presentation, but a demonstration of what 
the music industry--how it views the possibilities of 
broadband-delivered services.
    Mr. Harter.

                  STATEMENT OF PETER F. HARTER

    Mr. Harter. Thank you, Mr. Chairman, and members of the 
committee. It is a pleasure to be back as a witness before this 
committee. Last year I was here to speak about the Digital 
Millennium Copyright Act, and I imagine many of the issues we 
talked about there are still relevant as some of their members 
in their statements mentioned, and I will try and touch upon 
those. I am sure we can get into those in the Q and A, but I 
have been invited here to talk about downloadable music and the 
music industry's view of broadband, and I would like to make my 
comments brief. But Mr. Chairman, I would like to formally ask 
to introduce my written statement into the record.
    Mr. Tauzin. Without objection, that is so ordered.
    Mr. Harter. Thank you. Again, my name is Peter Harter, and 
I serve as vice-president for Global Public Policy and 
Standards at Emusic.com, a 2-year old company based in Redwood 
City, California, in the heart of Silicon Valley. Emusic has 
offices in New York and Los Angeles, Nashville and Austin, the 
country's centers for music, and we also own 20 percent of a 
company in London called Crunch, and we have an interest in 
expanding worldwide because music is a worldwide medium, art 
and business, and I will get back to that point later. It is a 
fairly important point.
    But I also serve as president of DiMA, the Digital Media 
Association, and while I am not here today on DiMA's behalf 
formally, I think it is important to note that this industry 
has grown very rapidly. DiMA started 2 years ago with just a 
handful of founding companies, and notwithstanding the 
consolidation within the Internet, audio and video industry of 
companies buying other companies, mergers and so forth, which 
is another issue up here on the Hill, it seems these days 
DiMA's membership has grown from a handful of companies to 
nearly 60 companies, and now we are expanding over to Europe.
    We have many European companies that are over here in the 
U.S. with operations. Audio Soft from Switzerland has offices 
in San Francisco and Catewa from Italy has offices in, of all 
places, Salt Lake City, Utah. Why they are there, with no 
disrespect to Utah, I don't know. I guess the technology sector 
there, but music and Utah, well, maybe I should go to Salt Lake 
and find out for myself.
    So the music industry is a very interesting industry, 
blending music and technology, blending southern California, 
Los Angeles, with northern California high technology, blending 
music from New York City with technology from the west coast, 
the different cultures in the business of how to get music out, 
and we are all trying to figure out how to get music out on 
broadband networks because I think college kids, the biggest 
demographic consumers of music, are people under age 25, and 
there is a large concern of piracy by high school and college 
kids on their broadband networks on college campuses, but I do 
think we have to focus on getting broadband access to the home 
so consumers can actually buy music legally.
    And I am proud to say Emusic is the leading retailer in the 
world for legal, downloadable music. All the music on Emusic's 
site is there by license from the rights holders and we pay 
royalties for the performance rights and publishing rights and 
we also make money for the artist or rights holder. There is no 
illegal music on Emusic, in contrast to some other sites on the 
Internet I won't mention by name unless of course I am asked.
    I am also proud to say that in the short 2-year history of 
Emusic, we have now sold over 1 million songs, legal songs in 
the popular MPEG format. MP3 is an open standard. Emusic uses 
this open standard because not of its sound quality or anything 
else, it is relatively free. We pay a small patent fee to the 
Fundhoffer Institute in Thompson, which owns the IP rights to 
the format, but MP3 is the most widely used, and any business 
trying to gain access to a market, they are going to choose the 
method that consumers most readily use, and MP3, to date, is 
the most readily used format and that is what we will use, but 
there are better sound qualities out there in technology that 
we are looking at, and so we can see the world moving away from 
this well-known format of MP3 into other platforms. It could be 
real networks. It could be Microsoft. It could be AOL. It could 
be some other new startup. We just don't know. This industry 
moves very quickly. So MP3 today, maybe not MP3 tomorrow. We 
should not get hung up on formats.
    Emusic's catalogue has over 100,000 high quality MP3s for 
sale from over 650 independent labels. Emusic has focused on 
bringing independent label music to the masses because in the 
record industry, you have five major record labels that earn 
over 80 percent of the revenue but only produce about 20 
percent of the music. In contrast, the independents produce 80 
percent of the music and garner little more than 20 percent of 
the revenue, and we think the Internet distribution channel 
will rapidly accelerate the market share revenue for 
independent labels.
    It is often said the record industry is a $100 billion 
industry trapped in a $40 billion suit. I think the 
inefficiencies of physical distribution and the pricing schemes 
by the major labels which they have to have because the cost of 
physical distribution will be very interesting to see how the 
market plays out, because I think there are people in Britain 
and France and southern Louisiana who want to share culture, 
and you frankly can't get a Cajun music star to get on MTV with 
their music. It is just not going to reach the same audience 
size as Brittany Spears.
    Mr. Chairman, it is a problem. I don't know if you can do 
anything about that.
    Mr. Tauzin. Did you know Brittany Spears is also from 
Louisiana?
    Mr. Harter. I didn't know that. Well, maybe you should get 
her some Cajun music. Anyway the point is, there are people all 
over the planet who share culture and traditions, and the 
Internet can obviously connect them in a very efficient and 
inexpensive rate, and I think we are already seeing people 
share culture through music and downloading songs for free or 
for, at my company, is $.99 a track, $8.99 an album, very 
inexpensive, that we are going to see people consuming more 
music. If you lower the prices and make the experience more 
convenient than buying it through traditional channels, you 
will see the existing demand that I think there is a lot of 
demand out there.
    And Mr. Chairman, I am not going to go over time, but I 
wish to conclude that we think broadband is very important for 
downloading music, because as you will see in my demonstration 
not having a direct broadband connection to the Internet here 
in this hearing room, I have gone through some difficult 
gyrations to get a demonstration, but if we had a broadband 
connection, I could simply go out and download some music, but 
I will make do here without the connection.
    Mr. Tauzin. You mean we don't have access to broadband in 
this room?
    Mr. Harter. Your router is down I was told this morning. 
But on the issue of broadband, we do believe at Emusic that we 
need more competition among satellite, wireless and land line 
providers so there are competition on six points: competition 
on availability of access; competition on price; competition on 
features; competition on content choice--that is very 
important--competition for user control over the access; and 
most importantly, competition.
    So there is a quality of service, that broadband is a 
better quality of getting access to communications than 
existing medium, and with that I will conclude my remarks, Mr. 
Chairman.
    [The prepared statement of Peter F. Harter follows:]
 Prepared Statement of Peter F. Harter, Vice President, Global Public 
                 Policy and Standards, EMusic.com, Inc.
    Mr. Chairman and members of the Committee. It is a pleasure to 
appear before you to discuss the broadband revolution that is taking 
place today on the Internet. My company, EMusic.com, Inc., is the 
world's leader in online, Internet-based distribution of downloadable, 
digital electronic music. We are a key player in that broadband 
revolution, and can report to you that the new commercial, educational 
and recreational opportunities that broadband-based Internet content 
promises to make available will transform America's communications and 
economic system in very profound ways, for the benefit of all 
Americans, and indeed the entire world.
Introduction
    There has been much discussion of broadband as a form of Internet 
transport, that is, a ``faster pipe'' to bring the Internet into the 
homes and offices of Americans and throughout the world. But in 
reality, broadband is about far more than mere transmission speed 
alone; it is about the new and exciting forms of rich, interactive 
digital content that this high-speed transmission supports. Just as 
television replaced movie theater newsreels, and now 24-hour cable news 
channels have virtually supplanted the once-dominant network news 
divisions, broadband will allow not just faster content, but new forms 
of digital-based information. This feature-rich content ( making the 
Internet an interactive experience instead of an adventure through 
static World Wide Web pages ( is just beginning to appear. EMusic and 
the digital music revolution are the vanguards of broadband content, 
but we are just the start.
    Ten years ago the telephone companies were all abuzz about ``fiber 
to the home'' and the promise of interactive television. Like many 
false starts on the way to the Information Superhighway, that one 
turned out to be a clear dead-end. But now, Digital Subscriber Line 
(DSL) services, cable modems and fixed wireless services ( as well as 
satellite-delivered, locally cached broadband packet-switched networks 
( are bulldozing away the underbrush of these old pipe dreams to create 
a new type of Internet. From the Bells to Covad, from Akami to 
Excite@Home and RoadRunner, among others, firms are building a new 
Internet infrastructure that will provide a platform for new Internet 
content. We in the content business are eagerly awaiting the continued 
development of this new, broadband Internet, because our businesses 
benefit directly from consumers' having access to a broadband Internet 
connection in all of America and throughout the world.
    Since the explosive growth of the Internet began less than ten 
years ago, demand for Internet content has increased dramatically. 
Americans spend on average more than one hour online every day. More 
than 40 million Americans subscribe to an Internet service provider, 
and it is predicted that this number will double by 2005. Stephen King 
has published the first Internet novel, and the downloadable music 
service industry is changing the recording industry forever. In my 
roles as President of the Digital Media Association and member of the 
Board of The Progress and Freedom Foundation, I have been happy to 
observe the very rapid growth of membership. In just a short two years, 
DiMA has grown from a handful of founding companies to more than 50 
companies in the audio and video products and services industry. These 
companies know how important public policy is and are working 
diligently to educate policy makers about digital media issues.
About EMusic.com
    Let me take a few moments to tell you about EMusic. Since it was 
founded in January 1998, EMusic has established itself at the forefront 
of how new music will be discovered, delivered and enjoyed in the next 
decade. In addition to having the Internet's largest catalog of 
downloadable MP3 music available for purchase, EMusic operates one of 
the Web's most popular families of music-oriented Web sites ( including 
RollingStone.com, EMusic.com, DownBeatJazz.com, and IUMA. The company 
is based in Redwood City, California, with regional offices in Chicago, 
Los Angeles, New York, Nashville and Austin.
    EMusic.com is the Web's leading site for sampling and purchasing 
music in the MP3 format, which has become the standard in the digital 
distribution of music. Through direct relationships with leading 
artists and exclusive licensing agreements with over 650 independent 
record labels, EMusic.com offers music fans an expanding collection of 
more than 100,000 tracks for purchase ( individual tracks for 99 cents 
each or entire downloadable albums for $8.99. EMusic.com features top 
artists in all popular musical genres, such as Alternative (Bush, Kid 
Rock, They Might Be Giants, Frank Black), Punk (Blink-182, The 
Offspring, Pennywise), Jazz (Duke Ellington, Dizzy Gillespie, Louis 
Armstrong, Concord Records), Blues (John Lee Hooker, B.B. King, Buddy 
Guy), Hip Hop (Kool Keith, The Coup), Country (Willie Nelson, Merle 
Haggard, Patsy Cline), Rock (Phish, Goo Goo Dolls, David Crosby), World 
(Nusrat Fateh Ali Kahn, Lee ``Scratch'' Perry) and Vintage Pop (Liza 
Minnelli, Eartha Kitt, Judy Garland).
    To give you an idea of how fast the downloadable music industry is 
growing, the company has now sold over 1 million songs in the popular 
MP3 format since its launch. This total includes single-track sales as 
well as tracks included as part of albums and special collections. In 
addition, we recently announced an exclusive deal to sell all of Elvis 
Costello's albums in MP3 format online.
    I have brought a sample of EMusic services to demonstrate for the 
Committee how Internet content can work.
Broadband Content Needs Broadband Networks
    Consumers' search for online music, film, video games, shopping and 
educational services in many cases is far greater than the supply of 
network facilities that must support it. As so often happens, demand 
has outrun technology. One reads in the news that the traffic from 
college students downloading the 300 greatest songs of all time has 
congested campus Internet servers. Many e-commerce shopping Web sites 
ground to a halt over Christmas, unable to serve the millions of 
Americans eager to do their shopping without braving the malls. Thus, 
though the services are there for consumers, access remains limited. 
The Internet needs the communications industry to catch up.
    More importantly, Internet content has become increasingly rich, 
consisting of large data files that become interactive news, video and 
sound at the end user's computer. This richness of content requires 
large amounts of data to be transmitted efficiently, which is achieved 
through compression and decompression technologies (CODECs). MP3, for 
instance, a shorthand for MPEG-3, is a format initially developed for 
digital transmission of motion pictures. Because MP3 files can be 
either audio or video or both, they are perfectly suited for the 
digital transmission of music, and today are the dominant form in which 
digital music is stored, sold and transported over the Internet. EMusic 
principally sells its music in MP3 file format, but is in fact format 
agnostic, and will distribute content in whatever form is desired by 
consumers. We are also particularly conscious of the need to provide 
legal, efficient mechanisms for the distribution of digital content 
that do not undermine the interests of musicians and other content 
creators. While the term MP3 has often been coupled to the concept of 
piracy, EMusic has proven the skeptics wrong by fashioning a viable 
revenue model for the sale of licensed MP3 files on the Internet.
    But whether a digital music file is encoded in MP3, RealPlayer, 
LiquidAudio or any other CODEC format, it takes a huge amount of 
bandwidth to make downloadable music work seamlessly. For instance, 
EMusic is now offering, as a free cut, ``Radio, Radio,'' a song from 
one of Elvis Costello's first albums in the 1970s. In MP3 format, this 
three-minute cut is a full 2.3MB (that's nearly the size of two 3.5'' 
floppy disks). For those members of the Committee familiar with dial-up 
Internet services, even using the fastest 56 Kbps modem available 
(which provides an effective throughput of only three to five kilobytes 
per second), this song would take approximately 15 minutes to download. 
At ISDN speeds (144 Kbps), download time is reduced to about three 
minutes. And at T-1 or ADSL speeds (1.55Mbps), download time is 
something on the order of 30 seconds or less.
    Without delving too far into the technical realm, the lesson is 
clear: feature-rich Internet content requires bandwidth, bandwidth and 
more bandwidth. The ubiquitous availability of high-speed Internet 
connections will create a sea-change in the distribution of digital 
information of all sorts. Not only will consumers be able to get more 
and faster content, they will get higher-quality content. Soon the 
compression loss that is inherent in squeezing broadband content into 
the narrow, slow confines of dial-up connections will be a thing of the 
past. No longer will streaming video look like a Keystone Cops silent 
film when delivered over a truly broadband Internet.
Public Policy for Accelerating Broadband Deployment
    The communications industry is striving to meet the needs of 
Internet content. EMusic applauds the efforts of this industry to 
provide broadband capability to consumers. Cable modems and DSL 
technologies are leading the way, providing Internet connectivity at 
speeds 20 to 100 times faster than dial-up modems. These technologies 
make seamless, high-resolution Internet and data communication 
possible, enabling Americans to access information and services as 
quickly from home as from any office building. The continuing 
development and deployment of broadband technology will truly build the 
Information Superhighway and give content providers like EMusic a path 
to every American home.
    The Telecommunications Act of 1996 (``1996 Act''), fashioned by 
this Committee, has created a competitive marketplace that has spurred 
the fastest rollout of innovative communications technologies in 
history. Just two years ago, almost no one except corporate Internet 
users was able to get a high-speed Internet access service. Today is 
vastly different. The robustly competitive telecommunications 
environment forces prices down and increases carrier efficiencies. In 
addition, by unleashing competitive forces into the telecommunications 
arena, the 1996 Act has broad broadband connectivity to consumers at an 
unprecedented rate. Cable modems, DSL providers, and fixed wireless 
services connect millions of Americans to each other and the world 
through the Internet.
    The varying types of broadband services help to ensure that every 
American has access to at least one choice of service and service 
provider, enhancing the ability of content providers to reach as many 
consumers as possible. Equally as important, this competitive 
environment has ensured that the prices for these services have 
consistently decreased as their reach has widened. EMusic congratulates 
this Committee and the FCC for fostering this competitive environment 
for all technologies and carriers, by leveling the playing field rather 
than picking technological winners. We believe that public policy 
should encourage providers to deploy broadband services by reducing 
barriers for ``last mile'' interconnection and by ensuring that the 
government maintains a hands off policy towards the Internet. We do not 
believe that government can manage or structure the development of 
broadband networks better than the competitive marketplace.
Addressing the ``Digital Divide''
    Broadband access is limited, however, by the Digital Divide facing 
America today. This divide lies not only in the fact that personal 
computer penetration is far lower in minority and lower-income American 
homes and schools, but also that rural, inner-city and low-income areas 
do not typically offer the population density or economics to make 
rapid entry possible in the near term. Although the Digital Divide 
grows more narrow every day as the competitive broadband industry 
widens its footprint, it is clear that some governmental attention to 
this social problem is warranted, in order that we do not unwittingly 
create a two-tiered system of access to digital information and the 
Internet. EMusic supports this Committee's continued efforts to 
monitor, analyze and remedy this inequity that to varying degrees 
remains a divisive force within our society and threatens to 
disenfranchise many areas from the economic and information revolution 
that the United States is experiencing.
    But there is another divide that persists and, in many cases, lies 
along the same boundaries: This divide creates different have-nots ( 
Americans living in areas that have limited commercial presence. These 
persons include the rural doctor who must travel miles to the nearest 
pharmacy, the woman living in an inner city abandoned by the retail 
sector, and the elementary school situated 50 miles from the nearest 
supply store. It is this divide that makes the Internet so necessary, 
for only the Internet can reverse the abandonment of inner-city and 
rural citizens by the forces of commerce. Just as the Sears Catalog 
empowered rural Americans in the late 19th and early 20th centuries, a 
broadband Internet will empower both rural and inner city Americans in 
the 21st century.
    The Internet makes every library, doctor and music store 
immediately ubiquitous. Its tremendous economies of scale and ability 
to operate in the realm of the virtual allow it to reach every American 
in every sector simultaneously. The Internet server has replaced the 
``bricks and mortar'' storefront, and a well-constructed sales Web site 
performs faster and more reliably than any staff. Without adding any 
urban infrastructure, without constructing another shopping mall, the 
Internet can become the nation's library, video rental store, and CD 
player. It can become the nation's equalizer, for it cannot detect the 
race or ethnicity of its users and has no means to discriminate among 
cities, neighborhoods or customers.
    To realize these benefits, the United States must ensure that the 
sophistication and diversity of Internet content is supported by the 
nation's telecommunications network. This Committee can assist in this 
effort by exploring ways to encourage all technologies and carriers to 
build faster, more efficient communications networks. It was the 
procompetitive but technology-blind 1996 Act that spawned the broadband 
industry in the first instance. Through local network unbundling and 
interconnection, as well as a consistent policy of forbearance in 
information services regulation, Congress and the FCC have created 
rampant competition out of monopolies. With competition came the 
incentive, if not the necessity, to win customers by providing faster, 
less expensive services. Innovation was the result.
    EMusic is committed to working with this Committee, the FCC and 
other federal and state government agencies to address the Digital 
Divide, to improve technological and informational literacy in our 
nation's impoverished areas and to help grow the Internet as a 
liberating force for rural and insular Americans. This is a truly 
exciting time to be involved in the broadband Internet content 
business. If you thought that the Web changed the world in 1995, just 
wait!
    I again thank the Committee for its time and attention, and would 
be pleased to answer any questions that the members have.

    Mr. Tauzin. Thank you, Peter, and if you would be kind 
enough to do your demonstration. By way of explanation there 
were four committees that crashed this morning 5 minutes before 
the hearing so we are limited in the way we can demonstrate 
this, but I think you have still done a good job of presenting 
it to us if you will do that now.
    Mr. Harter. Yeah, sure thing. I am not going to bother 
going through the settings again and take more of the 
committee's time, but basically what you see on the screens is 
Emusic's Web site at www.emusic.com, and what I will briefly do 
is take you from our home page to what a consumer sees when 
they download music, and I will play a brief sample of some 
music and that will be the demonstration. You are seeing 
Emusic's home page here. On the left hand side become brassed 
by different genres. We have rock, classical, electronic, hip 
hop, alternative, punk, country, new age, reggae, sound tracks, 
inspirational, jazz, blues and within each genre there are sub 
genres.
    These are very general high-level separations, different 
categories of music, and since the Chairman is from New Orleans 
and I am going to Jazz Fest, and my girlfriend, I figured I 
would see what we had in our catalogue from country, folk, and 
well, there is some Zydeco music and Cajun Zydeco music, I hope 
the Chairman likes that, listens to that, and we don't have all 
that much yet.
    We just licensed two catalogues in New Orleans. One is the 
Jewel Pollop catalogue, which is mostly rhythm and blues, and 
also Black Top Records, I believe, from the Stan the Music Man, 
who is an infamous figure down in New Orleans music scene. You 
can download a whole album from Sunset Beaujolais, and I have 
stored locally on my laptop here the 30-second samples. Before 
the consumer buys the music, they can sample as many songs as 
they want to.
    [Playing music]
    Now do did you recognize anything from the catalog there?
    Mr. Tauzin. No.
    Mr. Harter. Anyway, the other things I can't show because 
we don't have a full-time connection here is you can see on the 
right, you can check off which songs you want to buy and then 
go through a checkout counter which is similar to other e-
commerce sites.
    Mr. Tauzin. Explain the buying process.
    Mr. Harter. Once you sample and figure out which songs you 
want, we don't make you buy the whole album. You can just pick 
out the songs you want. So you don't end up buying a CD and 
have all this music you don't really care to listen to. You 
just get the songs you want and you check off which tracks you 
want by putting a checkmark there. So I want to buy the 
Accadian Two stuff and then I would check songs above and then 
add to the cart, and what is not going to work here, since we 
don't have a connection, we don't have an interactive session 
with our service and user.
    But basically what happens is the shopping cart will 
remember which songs you checked off during the time you have 
browsed through our site. You have a customer profile set up, 
you register as a customer with your name and credit card and 
so forth, and then we charge the amount of the songs and albums 
you bought to your credit card and that is very quick. We have 
very good relations with the credit card companies, do it very 
cheaply at a good rate and very quickly, so you don't have to 
sit there and wait and then songs are downloaded.
    In terms of the speed of the songs the latest data I have 
and other people's data may differ is that in the MP3 format a 
3-minute song is about 2.3 megabits, and that is about the size 
of two floppy disks. For those members of the committee that 
have normal dial-up access using 56K modems, that song would 
take 15 minutes to download.
    If you are at an ISDN, it downloads about 3 minutes per 
song. On T-1 or Radio Cell, speed is about 30 seconds or less. 
At our corporate network at Emusic, when we download a song it 
takes between 15 and 20 seconds, and some friends here in the 
audience from various companies like John Ingel from 
Excite@Home, which is down the street from me in Redwood City, 
he may brag that his network is even faster. Redwood City is 
interesting. We have liquid audio, Emusic and Excite@Home all 
within 4 blocks of one another, but yet we don't have a 
business deal with Excite@Home, John.
    Anyway, any other questions about the Web site, Mr. 
Chairman?
    Mr. Tauzin. Anyone want to hear or see any other 
demonstration? We are limited, as you said, because we don't 
have the broadband connect, but the idea again is that the 
consumer can actually receive all this music, download it on 
demand, pay a price so the artist is compensated, and the music 
is then stored in his own computer?
    Mr. Harter. Right, and that is important because the 
computers aren't all that stable these days, and say a person 
doesn't make a backup copy of their hard disk, well they can 
download the music and their hard disk will be the library and 
they can copy the music under fair use to all their devices 
within their household, if the computer crashes or stolen, all 
the music is gone, well, at Emusic, because we have a customer 
profile--and we protect your privacy, we don't show it to 
anybody else--they can come back and say, hey, I am so and so, 
here is my name and here is my credit card, I bought this 
music, we will download to them, again, no charge but because 
it is another copy, we will pay again to the rights holders 
because the rights holder is whole new sale, but as a customer 
service to our customers, we will provide that service.
    So we are trying to make this easier, for simple for the 
customers. Over the 2-year period of our history at Emusic, we 
have reduced the number of steps it takes for a person to click 
through to a purchase, and we are still working on that. This 
is a very new industry, but we are working very hard and we are 
the world's leader in retailing music on line.
    Mr. Tauzin. Any member want to see any more of this 
demonstration?
    Mr. Stearns.
    Mr. Stearns. Just when you have it on your hard disk do you 
put on a real audio player?
    Mr. Harter. What you can do is play it off your laptop. 
What you just heard was on the hard disk here, and you can have 
these speakers. Many people have their hard disk connected by 
wire to their home stereo. Just as your home stereo has a 
cassette deck, a CD player, this is another component to your 
stereo at home. As hard as it may sound, people have home area 
networks where they simply connect their laptop or desktop 
computer to their home stereo.
    Mr. Tauzin. And under fair use, they can copy it on those 
systems, right?
    Mr. Harter. Or you can copy it to a portable device like a 
Walkman. Under fair use, you can copy it in your home because I 
only have one set of ears, so whether it is in my hard disk or 
my home stereo or my portable device, I have paid for one song 
and I listen to one song. Now where the problem is, digital 
copies are very easily recopied, transmitted, a kid could e-
mail to his thousand closest friends, and these are some of the 
more recent issues. We thought the DMC would address all these, 
but we are applying a law to these new technology distribution 
schemes.
    The Computer Science Technology Board, the National 
Research Council, has a great report out called the Digital 
Dilemma, where they have studied issues about access to 
technology and what access does to copyright, and the gentleman 
who read the report, a professor at MIT whose name escapes me 
right now, he said technology enables access to broadband and 
other things but technology can also control access, and I 
think for consumers, we have to find a balance between enabling 
access, we break the digital divide, get access to rural areas 
as people have asked about this morning. We also have to be 
careful that we don't have too much technology to slow down 
access to make access more expensive or too difficult, 
otherwise consumers are not going to adopt this technology.
    Walt Mossberg of the Wall Street Journal who writes a great 
column on personal technology, heavily criticized Sony products 
because security tools impeded consumer use of music in the 
Sony music club, and his own words, Walt Mossberg's word in the 
paper and on CNBC Power Lunch, the Financial News Channel, he 
said the security used by Sony and their music club treats 
consumers like criminals.
    So I think the music industry is still, as I said before, 
still learning how to get music out legally to consumers so it 
is easy and inexpensive, and they adopt it and you meet this 
pent-up demand for music, but also protect the rights of the 
rights holder because Emusic, we have relations with over 500 
independent record labels. If we are not selling the music 
legally and not returning the revenue to the them, then this 
channel distribution--well, what I think we have proven is that 
in 2 years we are selling lots of music legally, and I am not 
terribly worried about that, but piracy is not an insignificant 
issue, and I think other companies in this industry of Internet 
have to look at the issue more carefully than they are right 
now.
    Mr. Tauzin. Thank you very much, Mr. Harter, and now we 
will turn to our third----
    Mr. Gordon. May I just say quickly, I want to acknowledge 
the responsible approach to the copyright issue here. You can't 
make money if you don't have a product and you don't have a 
product if, in your case, the copyright holders aren't 
rewarded. The music is going to run out, and you have been 
farsighted enough to understand that. I look forward to working 
with you and others that want to handle this in a legal way to 
help us better understand the technology and keep it legal and 
to get the bad guys off the street. Thanks.
    Mr. Tauzin. Thank you, Mr. Harter. The Chair now recognizes 
the third member of our panel, Dr. Eric Allely, founder and 
owner of Tekamah Corporation. Dr. Allely, if you will give your 
testimony and a demonstration, sir.

                    STATEMENT OF ERIC ALLELY

    Dr. Allely. Good morning, Mr. Chairman, and members of the 
subcommittee. I am Dr. Eric Allely, and I am the founder and 
chief executive officer of the Tekamah Corporation, a software 
development company based up in Rockville, Maryland, and our 
primary focus in life is training and education technologies. 
So that is what I would like to focus on today is how I see the 
high speed Internet servicing people in their training and 
education needs.
    First of all, I am honored to have the opportunity to 
testify before this committee and I am also excited about your 
interests in the technology, and I know that you have some 
difficult decisions to make as we go forward, and I hope that 
my input can serve in some small way.
    I come to you today wearing several hats. In fact, I wear 
them everyday. I am surgeon, I am a physician, a doctor as a 
physician doctor, not a technical one. Although I shouldn't 
probably tell that to my patients about the technical part, but 
my interest from a medical perspective is in propelling or 
pushing medical information out, in other words, a knowledge 
transfer, and I will speak to that in a moment.
    I am also a lieutenant colonel in the army national guard, 
and in that capacity I am interested in the idea of improving 
the readiness in our forces and in the mixture of those two 
positions will be the basis of my presentation and you will see 
that in a moment.
    I am also a scientist and I am very interested in the 
concepts and the things that make people learn, what makes them 
learn faster, what makes them retain information longer and 
what makes them perform better under stress.
    But foremost, of all these things, I am a teacher. I enjoy 
learning things and then imparting that information to somebody 
else, and I am very excited about the technologies that we have 
unfolding before us, particularly in the ability to reach more 
people, and so if I urge the committee to do anything, I urge 
them to act on those things that they have said today, and that 
is to make sure that everybody has access to this because 
whether it is Pseudo television or Emusic or training and 
education, the Digital Divide is going to be defined or 
eliminated by your actions.
    A couple of things I like to preach about, one is that I 
see the opportunity to raise everybody up a notch, and what I 
mean by that is rather than, for example, in medicine, rather 
than focusing on things like telemedicine, we focus on 
telemedicine extending the reach of the physician, you know, 
being able to provide care at a distance. This is very 
important stuff, and I am very much in support of it, but my 
emphasis, I think, is on something that is going to have a much 
larger impact to the greater good, and that is to project the 
information outward. In other words, other than trying to reach 
people with my capabilities, I would rather teach people what 
my capabilities are and raise everybody up.
    I would like to see the general public be a little bit more 
like medics. We all own a body. It would be nice to know 
something more about it than we do. It would be nice to able to 
help other people on the street when you see them injured. I 
would like to see medics be a little bit more like physician 
assistants and nurse practitioners, and I would like to see 
nurse practitioners be a lot more like physicians.
    So rather than trying to hold on to what I know as a 
physician, so that I can meter it out and charge for it, I 
would rather push it outward and raise everybody up a notch, 
and I think that it applies not just in medicine, but in any 
industry. We find a lot of expertise and reliance on experts to 
do our jobs. The example I like to make is the fact that my 
grandmother was probably more comfortable managing a 
temperature of 104 degrees in her children than my wife is, and 
my wife has a medical background. To me this is a little bit 
backwards, and part of it has to do with the fact that we have 
kind of become accustomed to sort of handing over what we know 
about things to an expert, so that when we have a problem with 
it, we run up and say, hey, can you help me with this, and if 
the technology comes and only answers the question rather than 
teaching me something about how to deal with it next time, then 
I would argue that all it is is a crutch, all it is is 
something that encourages me to remain naive in what may be a 
very important area of my life.
    So that is a considerable difference. So that is my little 
piece on raising people up a notch.
    The second thing I would like to say is that we need to be 
flexible. We need to approach training in a little bit 
different way than we have before. In the past, things were 
kind of homogenous. I mean, from the Industrial Revolution, we 
needed lots of people that did the same thing. So what we did 
was brought we them in and trained them all the same way, we 
taught them the same thing at the same time, and what we got is 
we got a production line taken from the Industrial Revolution 
and turned into an education system.
    And I would fight the tendency to keep that kind of a 
system and instead try to develop a technology that is, rather 
than homogenous, one that is heterogenous, one that is 
flexible, on that responds to individual people's needs, 
because what we are going to find in this rapidly changing 
environment that we find ourselves in in terms of the workforce 
is that at greater and greater speeds, people are going to need 
to be better reeducated. There is going to be greater need for 
just-in-time training.
    The labor force is going to enter at the age of 20, and by 
the time they are age 40, they may have had to change jobs 
several times, not necessarily by their choice, but simply by 
the changing environment, and I would suggest it is going to be 
difficult to ask those people to stop every 10-years and go 
back to school so they can reenter the workforce and instead 
what we need to do is develop a system that teaches them what 
they need to know and let them change with the workforce 
environment, and I would argue that the distance learning kinds 
of technologies that would be available only if broadband is 
accessible are the kinds of things that we can use to make 
those changes.
    So what I would like to do is--I also thank the chairman, 
by the way, for allowing us to submit our written comments 
separately, and what I would like to do is change to an example 
now, a simple demonstration, one that I do from the desktop 
rather than on the network, but one that can be done if the 
bandwidth were available through the network, and I am going to 
attempt a technological--let me get it working on one side of 
the room. There we go.
    What I am about to show you is a mix, again, of military 
and medical kinds of things. The scenario that I am going to 
pay is a casualty scenario that we used to train, actually, to 
reorient physicians. It was developed in order to reorient 
physicians and nurses to field medicine. You know, we are used 
to doing tertiary care kind of things at Walter Reed or 
Bethesda Naval, and then all of a sudden we are asked to go to 
someplace else in a much different logistical situation.
    So in order to help them prepare for that, we have 
developed some of these scenarios, and I am going to hope that 
the audio plays appropriately.
    Now here we are playing video straight from the computer. 
It would be streaming if we had the bandwidth. Essentially, we 
are setting a scene, and what is going to happen is a number of 
casualties are going to come off of the vehicle, and the 
teaching point here we are focusing on is the first step in 
caring for these individuals is to triage them. We all watch 
ER, and we all know what Dr. Carter does, although some of us 
are more entertained by it than others, but what we see, one of 
the first problems we have in medical care is knowing what to 
do for whom and in what order. So what I am going to do here is 
I am going to go ahead and triage these individuals.
    This gentleman is an immediate category person. We need a 
little bit of information. I have to make what could 
potentially be a life-saving decision based on a small amount 
of information which, again, is part of what we are getting 
people to do. This gentleman is a little more immediate than 
the other one, so I am going to make him a little bit higher 
priority, and I am going to say I am done there. Anyone talking 
that comfortably is delayed until proven otherwise. And 
finally, this gentleman has a little bit of combat stress. We 
will treat him, but we will wait for a while.
    Now what happens now that it naturally just went back and 
spoke to the server, and it tells us a little bit about what we 
can do. We can go in here, here is the most immediate guy, I am 
going to examine him. I can take a look at his leg. It looked 
kind of gross. I apologize for those who don't like that kind 
of picture, but I can go ahead and treat him. I can do all the 
kinds of things that I would need to do, including in the 
military setting, I need to be able to decontaminate him and 
finally I need to dispose of him.
    I apologize for our terminology, but that is what we talk 
about, and including talking about the prognosis, how far he is 
going to have to go back, et cetera. And once I evacuate him, 
he leaves my care and he is gone.
    These are all things that I would normally be doing in a 
real environment, and I am going to go ahead and jump to an 
evaluation and see how bad I am.
    So now what has happened is based on my score--well, 
actually, the device is scoring in the background. It is 
reminding me of what was happening because if I had done this 
properly, I might have taken 15, 20 minutes to get through this 
and I will skip over this, and I assure you that I am a better 
field surgeon than this if when really presented with a 
problem.
    But you see, what I am now afforded is I am afforded a 
review of each of these. In fact, I am now shown the seven core 
areas that we would like you to be thinking about when you are 
doing triage. I can jump between the casualties and change 
ways.
    What I would like to talk about very briefly in the 
wrapping up is the transference that I talked about before, 
raising everybody up. I mean I believed in this before we made 
this program. Then we made this program and I am ready to throw 
everything else out the window, but to talk about raising 
people up a notch. This was designed for physicians and nurses. 
We saw so much value from it. In fact, some of the other 
ancillary medical people came in and said hey, that that looks 
like a great game, let me play it, that we set up a study and 
we went out to Camp Pendleton and got a bunch of enlisted 
Marines and we ran them through this training program alone, 
and then we took a bunch of independent duty corpsmen, which is 
the Navy's version of a medic, and we ran both the Marines and 
the Navy medics through a controlled side-by-side study to see 
who would do better in managing field casualties.
    Well, the marines, shall I say, did very poorly in the 
areas of applying treatment. We hadn't taught them that. But 
when it came to making triage decisions, they were 
statistically indistinguishable from the Corpsmen and they did 
it only with this program, and these were, God save us, United 
States enlisted Marines, who I love dearly, but I will tell 
you, they are not highly schooled in medicine. They picked it 
all up from the program.
    In fact, the then-commanding general of Camp Pendleton, 
after seeing the results made the comment that he hoped that 
one of these guys driving home on I5 in his little Ranger pick-
up would come across an accident and jump out and look at what 
the problem was and get on the cell phone and call 911 and say, 
you know, I have got four guys here, one of them is immediate 
because he has got a blocked air way, two guys delayed and the 
other guy can wait a while, and was hoping this would all be 
recorded on 911 so that when the dispatcher said, oh, are you a 
medical resident, he says no, I am a gunnery sergeant at Camp 
Pendleton. He was praying for that to happen.
    The point is, I think, well made in that we can easily 
forget that we have given a lot of our lives over to experts, 
and I would suggest to you, with the right technologies and 
with good access to high speed Internet, we can reclaim some of 
that stuff and quickly close not only the Digital Divide, but 
even some of the educational divide that we already know exists 
in our fair country today.
    And with that, sir, subject to your questions, I conclude 
my briefing.
    [The prepared statement of Eric Allely follows:]
Prepared Statement of Eric Allely, Founder and Chief Executive Officer, 
                          Tekamah Corporation
                              introduction
    Good Morning, Mr. Chairman and members of the Subcommittee. I am 
Dr. Eric Allely, Founder and Chief Executive Officer of Tekamah 
Corporation, a software engineering company based in Rockville, 
Maryland.
    I am honored to have the opportunity to testify before this 
subcommittee today and appreciate your interest in learning more about 
the potential benefits of broadband--or high-speed Internet access--
technologies.
    I come to you today wearing several hats: I am a physician 
interested in pushing medical information forward to patients and the 
general public; I am a Lieutenant Colonel in the Army National Guard 
interested in improving the overall readiness of our Services; I am a 
scientist interested in what makes people learn faster, retain 
information longer and perform better under stress. But foremost, I am 
a teacher and I'd like to share with you my vision of how broadband 
technologies will impact training and education in the future.
    First, we need to raise everyone up a notch.
                      raising everyone up a notch
    There has been a lot of work done in medicine to reach patients 
through telemedicine. A great deal more can be done and other panel 
members may speak to those specific issues. While providing diagnostic 
and therapeutic services over a distance may provide significant 
advancement in medical care, I suggest that Distance Learning using 
broadband technologies will do far more for the common good by 
transferring medical knowledge rather than simply extending the reach 
of the physician. While both may be needed, those methods that project 
capabilities are usually not as efficient as those that multiply 
capabilities. My vision for medicine is that everyone would be raised 
up a notch. The general public would be more like medics. Medics would 
be more like Physician Assistants (PA's) and Nurse Practitioners, and 
PA's would be more like Physicians. In my opinion, transfer of 
knowledge should be a key focus for the use of broadband technologies. 
Not just in medicine, but in all industries.
    However, raising everyone up a notch is not the end of it. We need 
flexibility in our training technologies.
                           flexible training
    Today's work environment is changing so rapidly that it will not be 
enough to simply provide continuing education. Continuing education, as 
we know it today assumes that a particular worker will remain within a 
single career track. Unfortunately, the type of work you are trained to 
do when you are twenty may be what you will be doing when you are 
forty. In fact, the earlier job may no longer exist due to changes in 
technology. With the work environment changing so rapidly, we need to 
provide better methods for life long training so that workers can 
change with their work environment. Workers cannot be expected to drop 
out of the work force every ten years to be ``re-educated''. Instead, 
their continued education needs to meet them where they are. Doing 
``just-in-time'' training is a beginning, but we will have to become 
much better at adaptive training techniques to meet the needs of 
tomorrow's work force. Workers in the continuous schoolhouse 
environment of the future will be far from homogenous. Instead, they 
will come from a wide variety of backgrounds and capabilities. They 
will not be well served by a single teaching method but will require an 
engaging and effective learning environment that can adapt to their 
individual needs and interests.
    What do we need to implement such a flexible learning environment? 
One major requirement will be the rapid movement of data between the 
training server and the student
                          moving data rapidly
    Much of the information needed to manage an effective Distance 
Learning program can be passed between a training server and a student 
using current Internet connections. However, the major difficulties 
come when we need to move high-density data such as video, audio, and 
high-resolution images or graphics. The Internet connections most of us 
use today are not capable of moving high-density data between the 
training server and the student rapidly enough to produce a high 
quality learning environment. Students rapidly loose interest with 
increasing download times.
    Streaming video and audio over the current connections have 
provided a step forward in making engaging materials. Unfortunately 
serving multiple students simultaneously can quickly cause information 
bottlenecks that slow or even stop the training program. Even when the 
connection speeds are adequate to move video and audio, the current 
streaming technologies make it difficult to rapidly change the content 
being sent from the server to the student and therefore are limited 
when it comes to computer adaptive training.
    Add to this the demands of team training and network speed rapidly 
proves to be the limiting factor. Broadband technologies will 
significantly change the quality of training available using the 
Internet by providing the higher speed connections we need to move 
high-density data rapidly between the server and the student.
    Tekamah has been building toward the day of broadband Internet.
                       about tekamah corporation
    The Tekamah Corporation opened its development lab in Rockville, 
Maryland in January of 1995 and has been active in research and 
development of advanced training technologies. We have done a 
significant amount of work on adaptive training technologies and 
realize that any particular piece of information may be used in several 
ways, particularly when serving a variety of audiences.
    To reduce the need to rebuild the same materials for each new 
computer technology, we have designed an extensible training language 
that supports a variety of computer devices including computer flat 
screens, virtual reality display devices and even instrumented 
mannequins. Each of these human-computer interface technologies has its 
own particular strengths and weaknesses with no single training 
technology meeting all training needs.
    By developing our training materials and algorithms to support a 
wide variety of training methods, we are building the training library 
needed by tomorrow's students. Distributing this library to those that 
need it when they need it will require much higher bandwidth. The full 
benefits of our technology are currently limited to use on local area 
networks and for those who have very high-speed Internet connections. 
The full impact cannot be felt until such high-speed access is widely 
available.
                               conclusion
    While I am proud that Tekamah is using the latest in Internet 
technologies in our products and services, the technologies are not our 
principal focus. Training and education are. I am here today as an 
advocate for everyone interested in learning; whether it's something 
required by his or her job, something that gets him or her a better 
job, or something simply new and interesting. I believe that as access 
to broadband Internet technologies expands, we will witness a watershed 
in Distance Learning technologies that will radically change our 
ability to access information and to learn.
    I leave you with one thought: these technologies will create new 
opportunities for those whose homes and businesses have the high-speed 
connections. I am not an economist and cannot help you figure out how 
best to encourage the deployment of broadband Internet. However, I am a 
teacher and will tell you that no matter how cool the technology, for 
those without access to it, it may as well not exist.
    I thank you again for the opportunity to appear before you this 
morning and look forward to answering any questions you may have.

    Mr. Gillmor [presiding]. Thank you very much, Dr. Allely. 
My thanks to all of the panel. We will now move to questions. 
The gentlelady from Wyoming.
    Mrs. Cubin. I don't have any questions.
    Mr. Gillmor. Any questions from the minority side? If not, 
I want to thank all of you for your testimony and your 
demonstrations. Thank you. We will move to our second panel.
    We will begin with our second panel and we do have the 
complete written statements of all the panelists. We would ask 
that the panelists try to stay within the 5-minute limit, and 
then we will get into questions after the panel is completed. 
And first is Mr. John Linkous, who is the executive director of 
the American Telemedicine Association.
    Mr. Linkous.

     STATEMENTS OF JONATHAN D. LINKOUS, EXECUTIVE DIRECTOR, 
 AMERICAN TELEMEDICINE ASSOCIATION; GENE VUCKOVICH, EXECUTIVE 
    DIRECTOR, MONTANA RURAL DEVELOPMENT PARTNERSHIP; RAY A. 
    CAMPBELL III, EXECUTIVE DIRECTOR, MASS CORPORATION FOR 
 EDUCATIONAL TELECOMMUNICATIONS; AND DAVID KUSHNER, CHAIRMAN, 
 DIAGNOSTIC IMAGING AND RADIOLOGY, CHILDREN'S NATIONAL MEDICAL 
                             CENTER

    Mr. Linkous. Thank you, Mr. Chairman. My name is John 
Linkous, and I am the executive director of the American 
Telemedicine Association, and I provide these remarks today 
about broadband deployment and telemedicine on behalf of the 
Association. ATA is a nonprofit membership-based organization 
based in Washington, DC, established in 1993 and serves to 
promote telemedicine and resolve the barriers to its 
deployment. This morning I will make my remarks brief, as my 
written remarks will be in the record, and I thank you for 
that.
    Telemedicine represents a marriage of advanced 
telecommunications technology and new approaches to improving 
medical and health care at affordable rates. Be it through 
telehome care for homebound frail patients, remote medical 
support for astronauts in space, or the Nation's military in 
the front lines of battle or access to comprehensive data bases 
of health medical information for consumers over the Internet, 
telemedicine holds a promise of using telecommunications in a 
direct way to improve the lives of all Americans. It is not 
surprising that telemedicine is one of the fastest growing 
segments in health care.
    Today, telemedicine encompasses a multimillion dollar 
industry, including high speed networks, linking hospitals and 
clinics, remote patient monitoring systems that need health 
services.
    The Federal Government alone is estimated to spend close to 
$300 billion for telemedicine this year. Critical to the growth 
and success of telemedicine is access to broadband networks. 
Deployment of telemedical links to rural and suburban medical 
centers require communication networks that are reliable and 
capable of handling large amounts of data in a short time. In 
the very near future, telemedicine will be used in practically 
every part of the United States, and I would dare say that 
there are telemedicine projects probably active in every 
district of every Congressman who is represented here today.
    I would like to share two examples of how access to 
broadband technologies can make a substantial difference in 
providing patient care. Teleradiology allows medical clinics in 
a rural or suburban area to gain access to services of 
qualified radiologists by simply digitizing an X-ray or an MRI 
scan, sending it to the radiologist at some distant point. Two 
mid-size medical images with relevant patient data attached 
needing rendering for medical opinion can easily consist of 
anywhere from 5 to 15 megabits of data. If this was transmitted 
over plain old telephone lines with a normal 56K modem, this 
could take about 2 hours to transmit, maybe double that if 
there are glitches in the line. For most emergency situations, 
that amount of time to wait is unacceptable. For other 
situations, that amount of time is, at best, inefficient.
    Transmission of live video images from a quality that 
allows for actual medical diagnoses of a patient's condition 
also requires broadband technology. Live video is required for 
such applications as mental health consults, assisted surgery, 
emergency medicine and even some pathology examinations. The 
standard frame rate for a high quality video like you would see 
on television is 30 frames per second, although lesser quality 
may be employed with the use of some image compression that is 
available today.
    Transmission of video, typically requires bandwidth speeds 
of anywhere from 128K to 1.5 megs, what is known as a T-1 line. 
Rural areas of the country which do not have such bandwidth 
will continue to lack access to many types of telemedicine 
service, and indeed we are seeing that throughout the country 
today. Parts of Louisiana, parts of Montana, parts of other 
parts of the country that do not have access to broadband 
technology are not getting access to telemedicine as the more 
urban parts of country do have today. The alternative for 
people in rural areas is either travel by the patient and a 
patient's family to the distance location or simply doing 
without health care alone.
    There are broadband issues with telemedicine, both in rural 
and metropolitan areas, but both differ. Rural communities are 
limited in the availability of high speed communication 
networks and where available have problems with reliability and 
cost. The problem is lessened in metro areas in recent year as 
more areas come on line with alternative bandwidth choices such 
as in the wireless area with cellular and satellite as well as 
terrestrial applications with cable, ADSL, DSL, other types of 
services that are related to that.
    Reliability with the Internet has been less of an issue and 
more dependent as had mentioned earlier here in the testimony 
today as to whether the user has to compete with a small finite 
pipe coming into their work area versus a slow computer that 
makes downloading information tedious.
    A related issue is providing reliable and affordable 
communication networks to the home. As mentioned earlier in my 
testimony, telehome care is one of the promising new 
applications of telemedicine and from a business perspective 
probably has the greatest market potential of any application 
we have seen to date. While much can be accomplished over voice 
grade telephone lines, some applications into the home require 
a greater bandwidth. Deployment of high speed networks to the 
home via wire line, wireless or cable should be a priority in 
the development of telecommunications-related policy by this 
subcommittee.
    Finally, I should mention the program within the Federal 
Communications Commission that provides assistance to rural 
health providers in obtaining access to broadband services. The 
rural health program, which was established by Congress under 
the Telecommunications Reform Act of 1996, provides improved 
broadband access by rural health centers. Although well 
intentioned, this program has fallen far short of its 
potential, and my association has been particularly critical of 
its implementation. However, recent improvements by the Federal 
Communications Commission in the program create hope that the 
program can still be a major benefit to rural America.
    Indeed money for grant fees is finally flowing 2 years 
after passage, and the potential impact of the program on rural 
health is also finally growing. So we would encourage Congress 
to continue this relatively small yet very significant program.
    Thank you very much for the opportunity, and I will answer 
any questions you may have.
    [The prepared statement of Jonathan D. Linkous follows:]
Prepared Statement of Jonathan D. Linkous, Executive Director, American 
                        Telemedicine Association
    Mr. Chairman: My name is Jonathan D. Linkous. I am the executive 
director of the American Telemedicine Association and provide these 
remarks today about broadband deployment and telemedicine on behalf of 
the Association. ATA is a non-profit membership-based organization, 
established in 1993, which serves to promote telemedicine and resolve 
barriers to its deployment. The Association seeks to bring together 
diverse groups from traditional medicine, Internet online firms, 
academic medical centers, technology and telecommunications companies, 
e-health sites, medical societies, government and others in order to 
resolve barriers to the advancement of telemedicine through the 
professional, ethical and equitable improvement in health care 
delivery.
    Telemedicine represents a marriage of advanced telecommunications 
technology and new approaches to improving medical and health care at 
affordable rates. Be it through telehomecare for homebound frail 
patients, remote medical support for astronauts in space or the 
nation's military on the front lines of battle, or access to 
comprehensive databases of health and medical information for consumers 
over the Internet, telemedicine holds the promise of using 
telecommunications in a direct way to improve the lives of all 
Americans.
    It is not surprising that telemedicine is one of the fastest 
growing segments in healthcare. Today, telemedicine encompasses a 
multimillion-dollar industry including high-speed networks linking 
hospitals and clinics, remote patient monitoring systems and e-health 
services available over the Internet. The federal government alone will 
spend close to $300 million for telemedicine over the next year. 
Private insurance reimbursements as well as applications in managed 
care settings are also on the rise. Market reports consistently predict 
a healthy and steady increase of 15 to 30 percent per year in 
telemedicine investments over the next five years.
    However, critical to the growth and success of telemedicine is 
access to broadband networks. The deployment of telemedical links to 
rural and suburban medical centers require communications networks that 
are reliable and capable of handling large amounts of data in a short 
time. In the very near future telemedicine will be used in practically 
every part of the United States. In the Chairman's home state of 
Louisiana, telemedicine is already used in: the state's correctional 
care facilities, for a multi-specialty program at LSU, for 
telepsychiatry in Lake Charles, for ophthalmology exams for patients in 
rural communities out of St. Francis Medical Center in Monroe, and for 
home care in Baton Rouge. Each of these applications benefits from the 
availability of broadband technology.
    I'd like to share two examples of how access to broadband 
technologies can make a substantial difference in providing patient 
care:
    Teleradiology allows medical clinics in a rural or suburban area to 
gain access to the services of qualified radiologists. An X-ray or 
other radiological image is transmitted to the radiologist for an 
assessment. For almost all radiology services there are several images 
to be viewed of the area in question taken from two or more angles. Two 
mid sized medical images sent at the quality needed for rendering a 
medical opinion can easily consist of 5 megs of data. If transmitted 
over plain old telephone lines with a normal 56 K modem this could take 
almost two hours to transmit. If there are glitches in the line 
affecting the initial transmission, it could require double that amount 
of time. For most emergency situations, that amount of time to wait is 
unacceptable. For other situations that amount of time is, at best, 
inefficient.
    Transmission of live video images of a quality that allows for an 
actual medical diagnosis of a patient's condition requires broadband 
technology. Live video is required for such applications as mental 
health consults, assisted surgery, emergency medicine and even some 
pathology examinations. The standard frame rate for high quality video 
(like seen on television) is 30 frames per second although lesser 
quality may be employed with the use of image compression. Transmission 
of video typically requires bandwidth speeds of anywhere from 128 kps 
to 1.5 mbs. For most telemedicine services this requires more than just 
plain old telephone service. Rural areas of the country without such 
bandwidth will continue to lack access to many types of telemedical 
services. The alternative is either travel by the patient and the 
patient's family to a distant location or simply doing without health 
care. Unfortunately, national health statistics show that all too often 
patients in remote areas without adequate healthcare do not ever get 
the care they need in order to remain healthy, productive citizens.
    In March 1994 ATA testified before Congress about the need for 
rural access to high-speed telecommunications infrastructure saying:
        ``Installation of telemedicine equipment serving rural 
        communities would be fruitless without adequate transmission 
        lines and facilities to carry the quality of video and speed of 
        transmission required for many medical consultations. A 
        principal goal of health care reform is providing greater 
        access to health care for all Americans. Without an adequate 
        communications infrastructure, rural America will lose the 
        opportunities it now holds for using telemedicine to increase 
        access to medical care.''
    There are broadband issues with video teleconferencing, both in 
rural and metropolitan areas--but both differ. Rural communities are 
limited in the availability of high-speed communications networks and 
where available, have problems with reliability and cost, whereas 
metropolitan areas are less affected. This problem has lessened in 
recent years as more areas come on line with alternate bandwidth 
choices--wireless (cellular, satellite) as well as terrestrial (cable, 
ADSL). Our members have had problems in the past with various ISDN 
providers having different ``clock speeds'' for their proprietary ISDN 
systems, such that connecting between facilities was impossible or 
fraught with reliability concerns. This is less of a problem now as 
ISDN development matures in this country. Reliability with the Internet 
has been less of an issue and is more dependent on whether a user has 
to compete with a small finite ``pipe'' coming into their work area, 
vs. slow computers that make downloading information tedious. Again, 
this has become less of an issue as technology improves for both 
hardware as well as bandwidth availability.
    A related issue is providing reliable and affordable communications 
network to the home. As mentioned above, telehomecare is one of the 
most promising new applications of telemedicine. While much can be 
accomplished over voice grade telephone lines some applications require 
more than just plain old telephone service. Deployment of high-speed 
networks to the home via wireline, wireless or cable should be a 
priority in the development of telecommunications related public 
policy.
    Finally, I should mention the program within the Federal 
Communications Commission that provides assistance to rural health 
providers in obtaining access to broadband services. Congress 
established the program under the Telecommunications Reform Act of 1996 
to provide improved broadband access by rural health centers. Although 
well intentioned, this program has fallen far short of its potential 
and ATA has been particularly critical of its implementation. However, 
recent improvements by the FCC in the program create hope that the 
program can still be a major benefit to rural America. Indeed, money 
for grantees is finally flowing and the potential impact of the program 
on rural health is growing. ATA encourages Congress to continue this 
relatively small yet very significant program.
    Thank you. I will be happy to answer any questions you may have.

    Mr. Gillmor. Thank you, Mr. Linkous.
    And we will move to Gene Vuckovich, the executive director 
of the Montana Rural Development Partnership.

                   STATEMENT OF GENE VUCKOVICH

    Mr. Vuckovich. Thank you, Mr. Chairman, committee members. 
For the record, I am Gene Vuckovich. I am the executive 
director of the Montana Rural Development Partners. We are a 
partnership of Federal, State, local and tribal governments and 
private development entities, both for profit and nonprofit, 
and our mission is to improve and develop prosperous Montana 
rural communities through the collaborative efforts and 
resources of all of our partners. I am deeply honored to be 
afforded the opportunity to testify before you today as to the 
status of deployment of broadband technologies in Montana and 
the need for same.
    With the passage of the Telecommunications Act of 1996, it 
was anticipated that because of the increase in competition, 
broadband technologies would be made available to rural areas 
of the country, such as Montana, as well as to the urban areas. 
I am here to tell you this has not happened. Most private 
companies have targeted the urban centers for deployment of 
broadband technologies due to the greater return on their 
investment. Again, it is the old formula of density and 
distance.
    Montana has been designated as one of the ``disconnected 
dozen,'' and through the perspective of the high-tech economy 
prism, Montana is closed to business. A pressing need exists in 
this country to address the alarming Digital Divide that 
continues to grow between western and southern rural 
communities and the rest of the Nation. According to a recent 
report, the current gap is expanding between the rural poor and 
the rest of the Nation regarding computer use and on-line 
access. Organizations such as ours and others in many 
communities throughout the country are working to provide the 
assistance needed to allow rural citizens to participate in the 
new economy. However, all of the preparation in the world will 
be of little avail if fundamental broadband deployment to rural 
areas is not achieved.
    Montana's business market has to become more diverse as our 
traditional extraction industries of coal, gas, mining, timber 
decline, and we are forced to compete on the world market. 
Farmers and ranchers must be able to communicate with the world 
and track market trends and future opportunities. More and more 
of Montana's businesses need and demand access to advanced 
telecommunication technologies to be successful in Montana. We 
have individuals who want to move their businesses to Montana 
for the quality of life offered there. We have lone eagles that 
can do business anywhere that has the telecommunications 
capabilities to operate their businesses.
    Young people in rural parts of America like Montana need 
the same access to educational materials as young Americans in 
urban areas. Advanced telecommunications and the Internet are 
an efficient way to provide educational opportunities to 
Montana, and the same is true with regard to provisions of 
health care and government services.
    The important point that must be emphasized to this 
committee is that our government policies must keep pace with 
the demand of people everywhere for evolving telecommunications 
services. The Internet and other telecommunications 
technologies is the great equalizer for businesses and 
individuals who are geographically isolated from major national 
and world markets. We do not need another study or more 
regulatory hurdles thrown in in our way. Areas need access to 
quality, affordable, advanced telecommunications from every 
potential resource, and we need them now.
    And in closing, I want to thank you once again for the 
opportunity. I would be glad to answer any questions. I have 
one other thing to say, Mr. Chairman, and that is, there is 
rural and then there is rural. In Montana, we have the fourth 
largest State in the union that if it were superimposed and 
started in New Hampshire, it would go to Virginia, and we only 
have 890,000 people there and many people in Montana consider 
us one community. We wouldn't even be large size city there. We 
have very long streets. We go from east to west 500 miles and 
from north to south 275 miles.
    Thank you.
    [The prepared statement of Gene Vuckovich follows:]
Prepared Statement of Gene Vuckovich, Executive Director, Montana Rural 
                          Development Partners
    The Montana Rural Development Partners, Inc. (MT RDP) is part of a 
national initiative to strengthen rural America by, coordinating among 
existing development agencies; identifying intergovernmental projects; 
eliminating duplication of effort; and removing impediments created by 
poorly designed regulations. This organization which was created in 
1992 is one of thirty-seven State Rural Development Councils throughout 
the United States. The Montana Rural Development Partners' mission is 
to improve and develop prosperous rural Montana communities through the 
collaborative efforts and resources of federal, state, local, and 
tribal governments and private development entities, both profit and 
non-profit.
    Due to the explosive growth of the new e-commerce economy, the 
Internet and the high-speed data infrastructure that supports it have 
become essential to the economic goals of this organization. This year, 
the Montana Rural Development Partners is undertaking a variety of 
projects to increase the use and knowledge of Internet related 
resources, including the following. (1) Small Business/Marketing On The 
Net: this project allows MT RDP to provide training through the use of 
a ten laptop portable lab, for web site development, instruction in 
marketing on the Internet, and temporary web hosting to economic 
development agencies, small business owners and the general public. (2) 
Montana Cities/Counties Online: this is a challenge to provide support 
for web page development, training and hosting so that all Montana 
cities and counties can be online. (3) Wow Van--Widening Our World: 
this project coordinates the scheduling of training through the use of 
a high-tech van that is put to use by trained University of Montana 
interns who travel the state to provide on-site Internet training to 
individuals, teachers and businesses. It is a goal of this partnership 
through these efforts and others like them to prevent communities in 
Montana and other rural areas from being left behind by the data 
revolution sweeping most of the country.
    Government Policy: Organizations like the Montana Rural Development 
Partners push to educate and prepare our residents to participate in 
the new Internet economy in hopes that, despite the shortcomings of the 
Telecommunications Act of 1996, rural America will some day have the 
broadband infrastructure sufficient to fully participate in this new 
world. The enactment of the Telecommunications Act of 1996 brought 
anticipation that increased competition among industry sectors would 
allow broadband technologies to be made available in rural areas of the 
country, such as Montana, as well as in urban areas. This has not 
happened. Today, over four years after passage of the 1996 Act, most 
competitors have targeted urban centers for the deployment of broadband 
technologies due to greater potential return on investment. It is 
simple: greater densities in population coupled with shorter distances 
to transmit equals larger revenue and profit. However, many states in 
this country are not densely populated and the distances that data or 
voice communications must travel are not short. Consequently, these 
profit-only motivated companies are not serving the vast majority of 
citizens in Montana or other rural areas of the country.
    Montana has been designated one of the ``Disconnected Dozen''. 
Through the perspective of the high-tech economy prism, Montana is 
``closed for business''. A pressing need exists in this country to 
address the alarming ``Digital Divide'' that continues to grow between 
Western and Southern rural communities and the rest of the nation. 
According to a July, 1999 NTIA report, ``Falling Through The Net II'', 
the current gap is expanding between the rural poor and the rest of the 
nation regarding computer use and online access. Organizations like 
this one, and many communities throughout the country, are working to 
provide the assistance needed to allow rural citizens the opportunity 
to participate in the new economy. However, all the preparation in the 
world will be to no avail if fundamental broadband deployment to rural 
areas is not achieved.
    Rural Economies: Montana's business market has to become more 
diverse as traditional extraction industries such as coal, gas, mining 
and timber decline and we face new competition in the world market. 
Every day, more of Montana's businesses require and demand access to 
advanced telecommunications technology. Even our farmers and ranchers 
must be able to quickly communicate with the world to track market 
trends and future opportunities. The Internet and advanced 
telecommunications technology is the great equalizer for rural 
businesses who are geographically isolated from national and world 
markets. Consequently, to a large extent, Montana's ability to be 
economically competitive has become directly contingent on the 
establishment of a world class high-speed telecommunications 
infrastructure. Unfortunately, existing taxes and regulatory 
restrictions on for-profit telecommunications companies make it 
difficult for them to justify investment in Montana's communications 
infrastructure.
    The important point that must be emphasized to this Committee is 
that our governmental policies must keep pace with the demand of people 
everywhere for evolving telecommunications services. Young people in 
rural parts of America like Montana need the same access to educational 
materials as young Americans in urban areas. Advanced 
telecommunications and the Internet are an efficient way to provide 
educational opportunities to Montana. The same is true with regard to 
the provision of health care and government services. We do not need 
another study or more regulatory hurdles thrown in our way. Rural areas 
need access to quality advanced telecommunications services from every 
potential provider now. Set forth below are some examples of the 
various sectors' needs for advanced broadband services.
    Distance Learning: The Jason Foundation for Education offers a 
nationally recognized curriculum focused on teaching science and math 
to students in grades 4 through 8. Montana schools are eager to use 
this curriculum, however, ubiquitous distribution is problematic. 
Currently, satellite downlink and cable are serving most of the schools 
in the program. Cable, however, cannot be used to bring real time 
broadcasts to the classroom since regular programming is already 
scheduled. Consequently, programs are taped and played at other times. 
Expanding satellite reception requires a sizeable expenditure of 
capital, and the technology is not easy for teachers to use. The ideal 
medium for distribution is interactive video over the Internet. 
However, to bring the students quality visuals of Jason activities and 
experiments, classrooms must have access to additional bandwidth.
    Cisco Academies: This project in high schools and colleges of 
technology provides viable career opportunities for Montana children 
who choose not to seek four-year degrees. There is a high demand for 
router technicians throughout the country. Cisco Academies' produces 
the most nationally recognized certificates. Many of Montana high 
schools have enrollments of 50 or less, so installing a full academy is 
financially impossible. However, it is possible for remote schools to 
be linked to larger institutions through the Internet and for students 
in both locations to be taught by one instructor.
    Internet based businesses: All businesses will need to be able to 
conduct transactions via the Internet in the foreseeable future, in 
order to remain competitive. In Montana, over 50 percent of businesses 
employ less than five people and 96 percent employ less than fifty 
people. The customers of and suppliers to these small businesses are 
much larger companies and are beginning to demand that their business 
transactions be handled electronically.
    Tourism: Today, Montana's largest economic sector, next to 
agriculture, is tourism. In 1999, revenues from the accommodations tax 
were $10.9 million. Out-of-state visitors spent $1.6 billion in 
Montana, and total travelers (in state and out of state) spent $2.0 
billion. In 1996, the State Tourism Department began offering vacation-
planning information through its web page. In 1999, 1.3 million user 
sessions were logged (a user session is a contact that goes beyond the 
Home Page). Log-in times have gone from 3 minutes to 13 minutes and 48 
seconds. We are getting 3,400 hits per day and 83 percent of our 
inquiries are not filled electronically. The travel industry tells us 
that 50-60 percent of travelers get their information on line. The new 
electronic distribution method now includes a reservation feature. As 
Internet-based services continue to provide more opportunities to local 
Montana businesses, and as they change to streaming video for 
information distribution, access to small communities within Montana 
becomes increasingly important.
    The Montana Grain Growers: This group realized a few years ago that 
Montana producers were not trained to market their products in an 
international market. And in fact, at least $100 million ``was left on 
the table'' in 1998 because of missed marketing opportunities. To 
remedy this problem, the Grain Growers developed a training program to 
bring producers up to speed. This training often includes real time 
presentations delivered to producers via satellite. Additional 
broadband access in our rural agricultural communities would permit 
these training sessions to be delivered via the Internet, into homes 
and businesses, rather than requiring producers to travel long 
distances to centers with satellite downlinks.
    Native American Economy: The state is currently assisting a new 
business venture, which would bring jobs to Native Americans. This new 
venture converts hard copy technical manuals to digitized formats, so 
repair and service information can be accessed via the Internet and 
manuals can be updated quickly. Success of the business will depend 
upon broadband capability within Montana and capacity to end users 
throughout the United States.
    Conclusion: The Internet exploded into our lives and our economy 
beginning primarily in 1997. Its growth and impact since then on the 
economies of the nation, states and localities is almost immeasurable. 
The Telecommunications Act of 1996, passed over four years ago, is now 
ancient history in Internet years. The law needs to be updated to 
reflect the realities of what has occurred since its enactment, and to 
ensure that all potential providers of broadband and/or builders of 
communications infrastructure be allowed to participate.

    Mr. Tauzin. The Chair is pleased now to welcome Mr. Ray 
Campbell, executive director of Mass Corporation for 
Educational Telecommunications of Cambridge, Massachusetts.
    Mr. Campbell.

                STATEMENT OF RAY A. CAMPBELL III

    Mr. Campbell. Thank you very much, Mr. Chairman. Mr. 
Chairman and members of the subcommittee, my name is Ray 
Campbell. I am executive director of the Massachusetts 
Corporation for Educational Telecommunications. It is a public 
instrumentality of the Commonwealth of Massachusetts, and we 
were chartered by the legislature with a mission of providing 
distance learning and education services for the citizens and 
businesses of the Commonwealth.
    What I would like to talk about today is a recent 
initiative we have had in Massachusetts called the 
Massachusetts Community Network, and it has been a novel 
approach to the Digital Divide and to the broadband deployment 
question, and it is not something that can be replicated 
everywhere, but I think it represents an interesting approach 
to these problems that the committee find useful as you go 
about your deliberations.
    Government has been active in the telecommunications field 
using a number of the different levers that government can 
bring to bear on public policy questions. I mean, whether it is 
taxing or regulating or subsidizing and things like that. The 
Massachusetts Community Network is premised on using government 
in a different role, and that is, government as a market 
participant, as a purchaser of services. We tried to leverage 
the government's role as a large player in the market and tried 
to address some public policies concern that we had with regard 
to Digital Divide issues.
    Prior to the advent of the Massachusetts Community Network, 
every city and town, every library, every public school in 
Massachusetts would go to market individually for Internet 
access services, and as a result, other than cities like 
Boston, most of these purchasers were treated as small retail 
participants in the market and they were charged accordingly. 
The range in prices for a T-1 connection to the Massachusetts 
ranges from $900 a month in Boston to as much as $2,500 in some 
of the rural areas of the State.
    So we thought that if the State was to go to market and 
speak with a single voice on behalf of all the municipal 
organizations in the State, which collectively have some 4,000 
facilities, that we would be able to exercise enormous presence 
in the market and get a very different reception from the 
vendor community.
    So to test this proposition, my organizations, MCET, issued 
an RFP seeking a private sector partner to provide data 
communications and Internet access services for any public 
sector facility anywhere the Commonwealth of Massachusetts. We 
decided that rather than having a State-owned-and-operated 
network, we would rather rely on the expertise of a private 
sector partner due to the changes in technology and the core 
competencies involved in running a network.
    In response to the RFP that we issued, or in the RFP that 
we issued, we only had two mandatory requirements. We insisted 
that any vendor that we partnered with would have to serve any 
public sector facility anywhere in the Commonwealth of 
Massachusetts, no matter how remote, and the second requirement 
is that we insisted on a flat rate pricing structure so that 
regardless of location, any organization would pay the same 
amount for a given amount of bandwidth anywhere in the State.
    We had a fiercely competitive selection process. I think 
there were 23 vendors that participated, and at the end of the 
day, we partnered with a competitive local exchange carrier 
called Digital Broadband Communications, which is a 
Massachusetts-based company and also with a Tennessee-based 
company called Education Networks of America, and the deal that 
we got is pretty astounding. These are very high quality 
vendors. We did a lot of due diligence about their capabilities 
and their performance and were very satisfied in that regard, 
but the price point we were able to achieve by aggregating our 
demand is pretty astonishing. Our price point is $400 anywhere 
in Massachusetts for T-1 speed Internet access, and as I said, 
that compares to the previous prices of 900 to $2,500. So we 
were able to achieve remarkable cost savings and were able to 
get that price point for everybody, including the most rural 
locations in Massachusetts. So in exchange for the franchise of 
the whole State, there was very aggressive competition and it 
resulted in a breakthrough price point.
    I should mention that there are a couple of interesting 
things about this network. No. 1, nobody has to use it. There 
is no requirement that public organizations join MC in a buy 
fee out. So we have to earn everyone's business, and we are 
very happy to do that because we think it will result in better 
long-term service. In addition, the cost of starting this 
network, there was a $9 million appropriation from the State 
legislature to cover some one-time expenses and some startup 
costs, but the $400 per month is the fully loaded cost of 
operating the network.
    We have committed to the administration and the legislature 
that we will never come back for any additional funding. So 
$400 covers all of my organization's costs in providing the 
service as well as all of the vendor costs we incur, and it 
includes a state-of-the-art Cisco router with each 
installation. So $400 for T-1 speed Internet access and also 
including a router.
    Another interesting thing about the deal we struck is that 
the vendor is going to be using SDSL rather than ADSL 
technology wherever they can because it has got some inherent 
cost advantages, but if there is any public facility that is 
too far from a central office or if there are line quality or 
other issues, they will be provisioning standard T-1 circuits. 
So regardless of location, 1.54 megs of bandwidth, and it is up 
to the vendor to find the technology that will deliver on that 
requirement.
    I think one of the things that is most important to mention 
about the network is that because we have put this requirement 
in place that the public sector needs statewide data 
communication services, our private partner is having to build 
out their infrastructure in every single central office in 
Massachusetts. That was not in their business plan.
    Frankly, it is not in anybody's business plan to serve the 
100 to 150 smallest communities in Massachusetts, but because 
the State came to market and said we insist that we find a 
partner that will serve every single corner of the State in 
exchange for being able to serve the more lucrative parts of 
the State, our partner has now altered their investment 
strategy. They are building out every central office in 
Massachusetts with digital subscriber line technology.
    Once that is in place to serve the public sector 
organizations that we represent, it is available to serve 
residential and business customers in all of those communities. 
So by this summer when the network is fully deployed, to my 
knowledge, Massachusetts will be the only State in the country 
that has DSL technology available in every single central 
office in the State, that is, in addition to other providers 
that are serving the tier 1 and tier 2 markets in 
Massachusetts.
    Another final interesting point that I would like to 
mention is that our arrival on the scene with this 
Massachusetts Community Network product offering has ignited 
just an explosion of competition by the providers that are 
already in the market. We have seen across the board 50 percent 
price cuts offered to the city of Boston by their existing 
carrier. The Commonwealth of Massachusetts, where I used to 
work at the information technology division, which does data 
communication services for most State agencies, has similarly 
been approached and offered a unilateral 50 percent price cut. 
We are seeing an incredible amount of competitive energy 
occurring in the market in response to our arrival.
    So I know it is not a solution that can probably work in a 
State that is 500 miles by 250 miles, but it is an interesting, 
and it is a different way of thinking about the Digital Divide 
and the broadband infrastructure deployment issues, and I hope 
it is useful to the committee.
    Thank you very much.
    [The prepared statement of Ray A. Campbell III follows:]
    Prepared Statement of Ray A. Campbell III, Executive Director, 
      Massachusetts Corporation for Educational Telecommunications
    Mr. Chairman and members of the Subcommittee, my name is Ray 
Campbell and I am the Executive Director of the Massachusetts 
Corporation for Educational Telecommunications (``MCET''). MCET is a 
public instrumentality of the Commonwealth of Massachusetts, chartered 
by the legislature in 1982 to use technology to improve education, the 
business climate, and the lives of the citizens of Massachusetts. Thank 
you for the opportunity to testify at this hearing on the status of 
deployment of broadband technologies.
    The Commonwealth of Massachusetts has been at the forefront of the 
information revolution ever since Alexander Graham Bell invented the 
telephone, in Boston, in 1876. Massachusetts has also been at the 
forefront of the Internet revolution ever since Cambridge-based BBN won 
the contract to build the original ARPA-Net in 1968. Over the years, 
Massachusetts has incubated and been home to an incredible number and 
variety of businesses that have created many of the computer and 
communications tools that are fundamentally changing our economy and 
our society. We are proud of this tradition and look forward to even 
greater successes in the future.
    I would like to focus my comments on a recent, highly successful 
initiative in Massachusetts called the Massachusetts Community Network 
(``MCN''). With the leadership and support of Governor Paul Cellucci, 
Lt. Governor Jane Swift, and both branches of the state legislature, 
MCN is a pioneering example of how government can speed the deployment 
of broadband infrastructure without relying on the traditional 
mechanisms of government regulation or subsidies. Instead, MCN has 
capitalized on the government's role as a major purchaser of data 
communications services to spur private investment in the state's 
telecommunications infrastructure. Once completed this summer, MCN will 
result in state-of-the-art broadband infrastructure being available in 
every city and town in Massachusetts. To my knowledge, we will be the 
only state in the nation able to make this claim.
    Before the arrival of MCN, every city and town, school district, 
and public library in Massachusetts went to market for Internet access 
services on their own or in small groups. With the exception of Boston, 
and perhaps two or three other cities, this resulted in these public 
organizations being treated by the market as small retail purchasers. 
As a consequence, the monthly cost of a T-1 speed (1.54 megabits per 
second) Internet connection ranged from a low of $900 in Boston to as 
much as $2500 in the more rural parts of the state. The central premise 
of the MCN initiative is that if MCET went to market on behalf of all 
these organizations, which collectively have over 4,000 separate 
buildings, we would be by far the largest purchaser of data 
communications and Internet services in the state. We believed this 
would allow us to radically alter the nature of the Internet service 
market for public-sector organizations in the Commonwealth.
    To test this theory, the legislature and the Cellucci 
Administration provided $9 million to MCET to cover MCN's startup and 
other one-time costs. The early visions of MCN were of a state owned 
and operated network, but the rapid pace of technological advances and 
the emergence of robust competition in the market for Internet access 
convinced MCET that MCN should rely, to the maximum extent possible, on 
the infrastructure and expertise of a private partner. In the fall of 
1999 MCET, in cooperation with the state's Department of Education, 
issued an RFP seeking a private sector telecommunications firm that saw 
a strategic opportunity in partnering with the Commonwealth in this 
endeavor.
    The RFP purposely contained only two mandatory requirements. First, 
whoever we chose as a partner would have to be able provide service to 
any public-sector facility in the state, regardless of location. 
Second, we insisted on a flat-rate pricing structure so that a given 
amount of bandwidth would cost the same for any public organization in 
the state, regardless of location. These two requirements reflected 
MCET's determination that as a public instrumentality dedicated to 
serving all of the people of Massachusetts it was unacceptable to 
deploy a solution that excluded more remote parts of the Commonwealth 
from the benefits of MCN.
    As a result of a fiercely competitive selection process, MCET has 
partnered with a Massachusetts-based competitive local exchange 
carrier, Digital Broadband Communications, to provide statewide data 
transport services. Digital Broadband intends to use 1.54 mbps 
symmetric digital subscriber line technology wherever possible, because 
of its inherent cost advantages, but has committed to provisioning 
standard T-1 circuits where distance or other limitations rule out 
SDSL. Regardless of the last mile technology, MCN will deliver its 
services on a brand new, cutting edge network that has been optimized 
for advanced applications including data, video, and voice traffic. 
MCET has also partnered with a Tennessee-based company, Education 
Networks of America, to offer additional network services such as 
filtering, caching, web hosting, e-mail, and the like. ENA's experience 
operating Tennessee's statewide K-12 network ensures that they have the 
expertise to provide unparalleled services at the scale of operations 
demanded by MCN.
    The combined MCN service offering features state-of-the-art 
technology, commercial grade reliability, 7x24 network monitoring and 
help desk support, and a rich set of bundled services. And the price 
point we have been able to achieve is nothing short of revolutionary: 
high-speed (1.54 mbps SDSL or T-1), fully managed data communications 
and Internet access for $400 per month, including a new router. The 
same services at the same price anywhere in Massachusetts. In addition 
to closing the digital divide for Internet access, we project that MCN 
can save the public sector, and hence the taxpayers, approximately $125 
million over MCN's first five years.
    There are two other important points to note about MCN. First, no 
public organization is required to use MCN. While it would have been 
easier if the legislature had directed end users to subscribed to MCN, 
MCET prefers an environment in which we have to earn our customers' 
business each and every day. Second, MCET has made a commitment to the 
Cellucci Administration and the legislature that MCN will never require 
additional state funding. Instead, end user monthly charges will cover 
all of the operating costs of the network. While state funds were 
essential in getting MCN started, the $400 monthly price is the 
unsubsidized, fully-loaded cost of ongoing operations. The combination 
of these two factors means that MCN can, and in fact must, operate like 
a private business. We think this is in the best interests of MCN's 
customers and the taxpayers of Massachusetts.
    Beyond direct cost savings, MCN also offers the promise of 
improving the efficiency, quality, and convenience of government 
services. Not only will MCN allow more government organization to get 
online, but the fact that these facilities are on the same homogeneous 
network will facilitate data sharing and electronic interoperations. 
Imagine a world where school districts are connected to each other and 
the Department of Education across the same network, where local police 
stations are connected to each other and the State Police across the 
same network, where public health facilities are connected to each 
other and the Department of Public Health across the same network, and 
so on, and so on. The possibilities for more responsive, more cost 
effective government are staggering.
    One final accomplishment of MCN is worth noting. In order to 
satisfy MCET's requirement that MCN be able to serve any public 
facility in Massachusetts regardless of location, Digital Broadband 
will be deploying its broadband infrastructure into every central 
office in the state. Once installed, this infrastructure will be 
available to serve residential and business customers in these towns. 
This will result in the availability of broadband Internet access in 
communities that otherwise would not have had access to such services 
for at least several years.
    I hope the foregoing has given the Subcommittee a sense of the 
historic accomplishment Massachusetts has been able to achieve with the 
Massachusetts Community Network initiative without relying on the 
traditional mechanisms of government regulation or subsidies. By 
leveraging the public sector's status as a major purchaser of data 
communications services, MCN has allowed Massachusetts to attract 
private investment in the state's telecommunications infrastructure. I 
thank the Chairman and the members of this Subcommittee for the 
opportunity to testify today on this important topic. If there is 
anything I can do in the future to be of assistance as you weigh your 
options in this critical area, please feel free to call on me. Thank 
you.

    Mr. Tauzin. Thank you very much, extremely interesting. And 
finally, Dr. David Kushner, chairman of the Diagnostic Imaging 
and Radiology at Children's National Medical Center here in 
Washington, DC.

                  STATEMENT OF DAVID C. KUSHNER

    Mr. Kushner. Thank you, Mr. Chairman, for the opportunity 
to present our testimony. Thanks to the committee and the 
members. I would like to compliment all of you for your 
sophisticated understanding of these issues. It is quite 
difficult work, and I can understand there are some areas where 
fact and fiction clearly do not demarcate. I would like to 
thank the previous presenters who I endorse in their approach, 
and I would like to present a different view of the Digital 
Divide, that of the urban underserved.
    Children's National Medical Center has been in Washington, 
DC. Since 1870. For all of this time, we have served the people 
of the Washington metropolitan region focusing on high quality 
pediatric subspecialty health care with many primary care 
providers in the city and in the surrounding suburbs. Our 
current challenge is to present and to practice high quality 
cost effective health care that gives children access that is 
appropriate to the American expectations.
    We find and you know that the children in the inner city 
are simply underserved in every category with regard to health 
care and education. We are taking on the challenge of providing 
such health care, and the real issue is access. Children's 
Hospital has invested significant infrastructure and physical 
buildings in the inner city. We have four urban health centers. 
We have 250 specialty practitioners trying to provide health 
care to the underserved, but it is very difficult for a young 
child who is ill in a family where two parents are working to 
get access to health care. The parents miss a day at work, the 
children miss days at school. The impact on this family, on the 
economy of the District of Columbia and on every city in 
America is tremendous. And so I would urge you to consider the 
bandwidth issue as one of the issues that can help us provide 
access to health care for those who do not have access 
currently.
    If one were to take three taxi rides from your home to 
Children's Hospital and a day off from work, you would begin to 
understand the cost and time and frustration and difficulty for 
each of these families. So we have established the inner city 
connections with partnership health care providers, with our 
own health centers. We have telemedicine network deployed into 
these health centers and the problems are many.
    Current barriers are three, that is, reimbursement for 
technology, reimbursement for physician services and bandwidth. 
It is very difficult for us to send the information across the 
city. We still use trucks and courier services because the 
bandwidth electronically is insufficient as you have seen in 
this committee room. I would like to try to persuade you that 
this issue is replicable in every city in America, in fact, 
across the world.
    In an odd way I present the opinion of the other 56 
children's hospitals in this country who are trying to do the 
same thing.
    It is not cost effective to have a physician sitting in 
every single inner city location. It is cost effective to have 
telecommunications serve as a foundation for early access, 
early triage and early entry into the system to provide medical 
information to travel from the central treating site out to the 
community, to deal with schools and churches and community 
centers as places where health care can happen.
    One of our partnerships is a place called Brookland Manor, 
which is a Washington, DC, housing area that has been rehabbed 
and it has a smart home project in it, a telehealth center in 
it, and we are the health care providers to it. The local 
residents, in fact, are the telemedics who examine the patients 
and can communicate with us via an indwelling T-1 line because 
there is no way to get a less expensive form of communication 
going through.
    It is not currently cost effective. I would implore you to 
consider the bandwidth issue in this application as a way to 
lower the cost and increase the access for health care to the 
urban underserved.
    And so I live and practice in the Digital Divide as do 250 
of my colleagues at our hospital, as do the other children's 
hospitals across America. So on behalf of this group of 
physicians and health care providers and institutions, I would 
ask you to consider making it easier and less expensive for us 
to provide access to children.
    Thank you.
    [The prepared statement of David C. Kushner follows:]
  Prepared Statement of David C. Kushner, Medical Director, Pediatric 
        Telemedicine Program, Children's National Medical Center
    Good Morning, Chairman Tauzin, and Members of the Committee. My 
name is Dr. David Kushner, Medical Director of the Pediatric 
Telemedicine Program at Children's National Medical Center. I am happy 
to have the opportunity to testify before the Committee on the 
application of broadband technology in improving health care access for 
poor and underserved communities.
    According to the Children's Defense Report is 1998,

  Every 43 minutes a child was reported abused or neglected . . .
  Every 6 hours a baby was born to a teenage mother . . .
  Every 7 hours a baby was born at low birth weight . . .
  Every 3 days a baby died during the first year of life . . .
    These ``moments'' represent reality in the lives of many District 
of Columbia infants, children and adolescents, and are reflective of a 
growing trend in our region and our nation. The region's children face 
a long list of challenges that impact their ability to receive quality 
health care so that they may lead healthy and productive lives.
    Despite dramatic advances in our knowledge of how to treat the 
medical conditions of our population, children of urban underserved 
communities encounter many obstacles when attempting to access quality 
healthcare--including socioeconomic isolation, maldistributed health 
services, lack of health insurance, and poverty. Fragmented access, 
inconsistent quality, excess costs, loss of continuity, and ineffective 
continuing medical education characterize the deficiencies of our 
existing health care system.
    Since 1870, Children's National Medical Center has provided 
comprehensive quality medical care and health services. Children's is 
the only integrated healthcare system in the Washington D.C. area 
dedicated exclusively to the care of infants, children, adolescents and 
young adults, and ranks among the nation's top pediatric hospitals. In 
addition to our main campus, Children's network of care includes four 
inner-city pediatric health centers, six regional outpatient centers, 
several suburban ambulatory surgical locations, and a hearing and 
speech center.
    Children's seeks to be preeminent in providing pediatric healthcare 
services that enhance the health and well-being of children regionally, 
nationally, and internationally. We are creating solutions to pediatric 
healthcare problems. To meet the unique healthcare needs of children, 
adolescents, and their families, CNMC will excel in the core components 
of our mission--Care, Advocacy, Research, and Education.
    Currently, much of our community outreach and our efforts to 
improve healthcare access occur through the four Community Pediatric 
Health Centers (CPHC) located throughout the District. They are in 
Adams Morgan, Shaw, Anacostia on Good Hope Road, and Hadley Hospital. 
Since the first opening in 1967, the CPHC have provided three 
generations of District of Columbia families with high quality primary, 
specialty and preventive healthcare services.
    After a decade of preliminary work, CNMC established a formal 
Pediatric Telemedicine Program in 1997 in an effort to provide leading 
edge technological support for clinical care and research. CNMC has 
actively pursued telemedicine in an effort to define opportunities 
where technology can be leveraged to improve patient care and medical 
education. The telemedicine team is dedicated to planning, 
implementing, and analyzing telemedicine activities in order to improve 
access to primary and specialty care, to increase convenience for 
patients and physicians, and to improve education for physicians, 
healthcare professionals, families and patients.
    Meeting the healthcare challenges of our inner city children and 
families requires a collaborative network of community partners working 
to improve access to the health-related services for preventative care, 
education, treatment, and disease management. These partnerships 
provide the foundation for a new technology-enabled delivery model, the 
Pediatric Community Health Network (PCHN). Our proposed approach will 
be a major step toward achieving our long-term goal of providing a 
means to improve pediatric health indicators at the local and national 
level.
    The deployment of broadband communication and advances in 
technology will facilitate access to pediatric healthcare in 
underserved urban communities. Initially, telemedicine technology will 
be integrated into current practices at partner sites such as schools, 
community health resource centers, and a primary care clinics. The 
pilot sites have been chosen for their location in an underserved 
community, and have direct, regular contact with children lacking 
access to healthcare.
    The Pediatric Community Health Network uses broadband technology to 
enable children to have direct and immediate access to primary and 
specialty healthcare. The network augments current systems by providing 
the means for effectively integrating health services at the point they 
are most needed. In addition, the underserved community are exposed to 
benefits of technology in an effort to bridge the ``Digital Divide''.
    We envision a telehealth ``suite'' at each community site, linked 
by broadband telecommunication to Children's National Medical Center. 
The ``suite'' will include PC-based technology capable of clinical care 
and distance learning (digital otoscopes, scanners, and cameras). This 
technology will link the child (via store-and-forward technology or 
synchronous video conferencing) to a pediatric healthcare provider and 
educator.
    This technology-enhanced model strives to achieve the following 
goals: 1) increase access to pediatric primary and specialty healthcare 
for the child and family; 2) increase convenience of healthcare 
delivery by bringing the specialist and healthcare professionals to the 
child and family; (2) decrease cost and time to primary and specialty 
care (lost school days, lost work days); (3) decrease delays in 
diagnosis by allowing earlier access to the specialist, reducing cost 
and time involved in diagnosis and treatment; (4) improve communication 
and provide a means to support the continuum of care for the patient, 
family and healthcare provider(s); (5) improve healthcare education by 
providing the patient and their family with better resources from which 
educational healthcare material can be accessed and discussed; (6) 
improve quality and effectiveness of medical follow-up appointments.
    By deploying this broadband technology in the urban setting, the 
impact on the underserved community will be extensive. This technology 
and telemedicine program empowers families and communities to improve 
the health status of their most valuable asset--the children.
    Children's telemedicine program for the underserved urban community 
sites is the first initiative of its kind. Our goal is to build a 
sustainable model that will be replicated across the country. However, 
significant barriers prevent us, and other health care providers from 
deploying this technology solution in the underserved community. The 
significant challenges we face are (1) funding for technology; (2) 
reimbursement for physician services; (3) bandwidth; and (4) licensure, 
legal questions and others issues.
    Children's National Medical Center is dedicated to improving the 
health status of our community. We can not do this alone. The 
advancement of new technologies coupled with a highly competitive and 
challenging healthcare environment requires innovative patient care. It 
is critical that telemedicine be permitted to enter the mainstream 
delivery system. We implore Members of Congress to: (1) conduct an 
aggressive review of reimbursement issues are barriers for urban health 
care; (2) develop incentive programs for payors, including Medicaid 
that support telemedicine programs; and (3) support research and 
development initiatives for urban telemedicine programs through annual 
appropriations process that advance the use of broadband technologies 
in an urban setting.
    Again, thank you for the opportunity to testify before your 
committee. I look forward to working with you and my colleagues to 
advance the use of broadband technologies to help build healthy 
communities.

    Mr. Tauzin. Thank you very much.
    The Chair recognizes himself and members in order. Let me 
first thank you all for contributing again to our understanding 
of how bandwidth broadband itself can expand our capability of 
providing service to citizens of our country in medicine, and 
we learned earlier in entertainment and other uses.
    I wanted to put on the record a couple of quotes that I 
found extraordinarily interesting. There is a story just out 
dated Tuesday, April 11, relative to the fact in San Diego, 
California, that a high speed service provider in San Diego 
this week told several hundreds of its customers to stop 
running the music exchange software, Napster, or lose their 
cable modem accounts, and the reason they did so is the fact 
that apparently by running it, running the Napster, the music 
service on their cable modems, that they were interfering with 
the capacity of the system to continue its e-mail service, and 
this is a quote: This e-mail serves as a 72-hour notice to 
reduce account activity to compliant usage levels and to remove 
any servers. What is a compliant usage level? I mean, you get 
the picture.
    We have increasing evidence that the lack of bandwidth, the 
lack of capacity in these systems is beginning to impact even 
the reception of music, and yet we are talking about increasing 
the use of visual and video streaming in the Internet and the 
capacity to do telemedicine, serving consumers in their home 
without dragging them all over the city when they need 
services. We are talking about reaching out to rural areas of 
Americas with service which they can't even contemplate having 
today. You can see how we have some real problems and why 
innovative solutions like Mr. Campbell's solution in 
Massachusetts, you have to think about them all, what works to 
get it out there.
    There is a quote from someone I think everybody will 
recognize, John Chambers of Cisco Systems, who sells so much of 
the components of the Internet and broadband systems in America 
and around the world. His quote, the next wave will be e-
training, e-education, e-convenience. We should talk about E 
medicine, says Cisco's CEO John Chambers, envisions a world in 
which companies and universities will put courses on line, 
people will turn to the net for streaming video, other forms of 
entertainment. These applications, in his quote, are bandwidth 
hogs that will make e-mail, which is a major load on the 
Internet today, look like a rounding area, Chambers says.
    In short, if our Nation is to realize any of the benefits 
that you gentlemen represent here today, the extraordinary 
advances in inefficiently serving people medically, the 
extraordinary capacity to reach out and bring rural America 
into the heartbeat of our country economically, the capacity to 
touch parts of underserved urban areas that are not going to be 
served we are told by some account 3 to 5 years from now will 
still be underserved in broadband, we have got to do some real 
work quickly in ensuring that this Digital Divide does not 
happen.
    I wanted to ask you, Mr. Campbell, sort of this project you 
put together in Massachusetts, you say it might not be 
replicable in a State like Montana, many of our western States. 
How many States in the Nation might you see this sort of a 
concept replicated if the States became interested in it?
    Mr. Campbell. I think that it can be replicated probably 
just about everywhere but not exactly. Massachusetts is not a 
geographically large State, so our provider believes it will be 
able to provide 1.5 meg SDSL connections to about 65 to 75 
percent of the facilities in Massachusetts. So it will be 
provisioning T-1s to only 25 or 35 percent. Because of that 
relatively large proportion of SDSL to T-1 it could offer us 
flat rate pricing. I think the general model of banding 
together and aggregating demand and having government come to 
the market, not as a regulator, not as a taxer, not as a 
prescriber, but instead as a market participant----
    Mr. Tauzin. Facilitator.
    Mr. Campbell. Exactly. And leveraging its market presence 
and demanding that the market respond to it, that I think you 
can replicate everywhere. Maybe you don't get complete flat 
rate pricing. Maybe it is a tiered-pricing structure. There is 
any one of a number of varieties on the themes. So I don't 
think what we have been able to accomplish could be exactly 
duplicated in a much larger State, but I think the concept of 
having the government come to market as a market player instead 
of as a market maker, that is something you can do anywhere.
    Mr. Tauzin. Where are the bottlenecks in the system right 
now? Identify them for us. You are all in this business of 
wanting to make sure that there are no bottlenecks, everybody 
gets access. Where do you see the bottlenecks? I have got a 
quote from Nortel and from other companies indicating that 
bottlenecks occur all over the place. You can experience them 
in many places, not just in the phone wire or the cable. You 
can get it, for example, where the crossing points exist in the 
major hubs. There are real slowdowns there. There are 
estimates, according to Solom Heddeya of Infolibria, found that 
health sites manage their service. It is a quote from him, but 
I think the greatest bottleneck is in the backbone itself and 
the crossing points between the major networks.
    So are they correct that the bottlenecks exist not, just in 
the rural parts of America, but even in the major backbones 
where their crossing are inefficient and there are literally 
problems across the spectrum of the infrastructure? Is that 
accurate? Are there bigger problems in the country, bigger 
problems in the urban centers? Where are they? Who is now going 
to get this stuff?
    Mr. Vuckovich. Mr. Chairman, I would just like to comment 
on that, that I don't know if the problems are with regard to 
the bottleneck is the points of presence and the backbone 
because we don't have any in Montana, and I think this is a 
real----
    Mr. Tauzin. Let us say that again. You have no point of 
presence of Internet access in Montana? There are quite a 
number of States that have problems.
    Mr. Vuckovich. And that is correct, and I think that what 
it is going to do in order to get points of presence, we are 
going to have to aggregate the demand, and several States may 
have to go together to do that, to aggregate that demand so 
that it is feasible to have a point of presence there. However, 
with the present legislation, that can't be accomplished 
because of the LATA lines and other things there.
    Mr. Tauzin. What is a LATA line?
    Mr. Vuckovich. It is an imaginary line.
    Mr. Tauzin. Drawn by a court.
    Mr. Vuckovich. I am not sure.
    Mr. Tauzin. By the court in the decision that split up 
AT&T. So these old LATA lines are preventing the accumulation 
of market demand that might connect you to a POP in Montana, 
that's right?
    Mr. Vuckovich. That is right.
    Mr. Tauzin. And that is true of a lot of western States and 
rural States, is it not? And so the services we are talking 
about, you might eventually get them in DC. You may eventually 
get enough--they are tearing up streets like crazy in DC. You 
might eventually get enough fiber and systems deployed so that 
with the right kind of dollars you can serve this underserved 
community in DC. How long will Montana have to wait?
    Mr. Vuckovich. Mr. Chairman, that is a very good point, and 
the longer we wait, the more we lose, and we can't afford to 
lose anymore. Businesses are leaving our State because there is 
not a point of presence there, and it is virtually impossible 
to get them back from wherever they have to go.
    So I don't know how to say this, but we are hurting in 
Montana with regard to broadband deployment, and one of the few 
areas is telecommunications that we can compete on an equal 
footing with urban areas, but we have to have that and we don't 
have it now, and I think it is going to take a partnership of 
Federal, State, local, and probably private industry to be able 
to provide this the same way that we had to do to get our 
interstate highways built, to get electrification to the rural 
areas and so on. I think we are going to have to--this is a 
basic infrastructure for a State and we have to have it.
    Mr. Tauzin. And you put your finger on it, and my friend 
from Oklahoma, I want to recognize him in a second, but if I 
lived in Oklahoma and I didn't have access to the backbone, and 
I couldn't cross these LATA lines to get service, I might have 
high speed in my little town among all the residents in that 
town, but we can't get to the main highways, we can't get to 
the backbone because there is none in our State, or so far away 
the only thing we can get is an expensive T-1 line. That is 
where I am.
    Mr. Vuckovich. We don't care about the price of the service 
as long as somebody provides it.
    Mr. Tauzin. The choices you face there, you may be left out 
of a business network or to be in that business network, you 
have to move, you have to move to an urban center somewhere 
where a point of presence or connection is available to you, 
and that is the dilemma of lack of service. It is not just the 
lost opportunity. It is the fact that whole communities 
potentially could dry up if the people who live in those 
communities are limited to high speed conversations in the 
family because they can't get outside and talk to anybody else.
    If they are a Ford parts supplier, GM parts supplier and 
they can't get in on that part supply network because they 
don't have high enough speed. Nobody wants to connect to them 
because it drives them all down to the lowest denominator 
speed, and then they have to go out.
    And so that the point I think you make, and I keep trying 
to make to my colleagues, is that if we don't, as quickly as 
possible, take away all the barriers to everyone building out 
and create some new innovative facilitation of the deployment 
of these services to parts of America that don't now have them, 
then places like Montana will become deserted in e-commerce, in 
effect. They will become deserts of e-commerce, and places in 
Oklahoma and Louisiana and States that don't necessarily have 
the capacity as perhaps Massachusetts had to put together such 
an innovative plan, Mr. Campbell. We will be left in the dust 
and when this train leaves it is leaving pretty fast.
    My friend from Oklahoma, Mr. Largent.
    Mr. Largent. Thank you, Mr. Chairman. Mr. Vuckovich, who is 
the incumbent carrier in Montana? Is it U.S. West?
    Mr. Vuckovich. U.S. West serves approximately, I would say, 
60 percent of the residences and businesses in Montana.
    Mr. Largent. And what has the experience been in Montana 
with U.S. West? Are they trying to provide service to the rural 
communities in Montana?
    Mr. Vuckovich. I think, for the most part, they have been 
fairly receptive to providing upgrades to their system. I know 
we have probably the best digital switching of all of the U.S. 
West States. We do have DSL in one community, and that is in 
the State capital right now. That is the only community that 
has DSL.
    As I stated in my testimony, we were under the assumption 
that as was the FCC and everybody else with the passage of the 
Telecommunications Act, that competition would come in, and we 
would get this broadband service. We have not seen that. We 
have not seen any of the big carriers, the AT&Ts, the Sprints, 
the MCIs, and we have not seen them come into the State. We 
wish they would.
    Mr. Largent. Mr. Vuckovich, are you familiar with Dr. John 
Fitzpatrick?
    Mr. Vuckovich. I am. He is now with Touch America.
    Mr. Largent. Located in?
    Mr. Vuckovich. Butte, Montana, 25 miles from where I live.
    Mr. Largent. In his testimony in the Senate here is what he 
says. For example, during the past 5 years U.S. West has 
offered 70 of its Montana rural exchanges for sale and has 
undertaken similar initiatives in others States in its region. 
That doesn't sound like a real commitment of U.S. West to rural 
communities in Montana.
    Mr. Vuckovich. I can't answer for U.S. West or what----
    Mr. Largent. I am just talking about----
    Mr. Vuckovich. --John is saying. I know that U.S. West has 
put up some exchanges for sale.
    Mr. Largent. Let me just continue by saying that Dr. 
Fitzpatrick's testimony, he doesn't view that as bad thing, but 
as a good thing because he is saying that U.S. West is not 
committed to the rural community in Montana in the first place, 
and that is obvious in the fact that they are offering to sell 
70 of their local exchanges in rural communities in Montana. So 
U.S. West is bailing out on rural Montana. That is the bad 
news.
    The good news is that there is a lot of private sector 
companies that are coming in, competitive local exchange 
carriers that are coming in and buying these and upgrading 
them. Let me give you some examples because you mentioned that 
Montana doesn't have a point of presence. You mentioned that 
DSL is available in only one city in the State of Montana. Here 
is what he says: Examples of this commitment to rural customers 
include--these are the people who are coming in and buying the 
exchanges from U.S. West that is bailing out on Montana--
Blackfoot Telephone Cooperative acquired nine exchanges 
totaling 7,000 access lines from U.S. West in 1994. Since then 
Blackfoot has invested $17 million upgrading switching 
equipment, installing fiberoptics and improving service 
offerings.
    Five years ago, areas that did not have access to 911, 
custom-calling features, voice mail, ISDN, DSL or even simple 
dial-up access Internet have them today. Montana Advance 
Information Network created by the State's small independent 
companies and cooperatives provide fiberoptic connectivity and 
transport throughout Montana's rural areas. VisioNet, Midrivers 
and range cooperatives who use main networks provide 
interactive video services to around 90 rural sites in the 
State of Montana. Midrivers' Telephone Cooperative, based in 
Circle, Montana, plans to deploy DSL services in exchanges 
during 2000 including Circle, Jordan, Baker and Ekalaka, 
Montana. These communities are located in some of the most 
sparsely populated territory in the continental United States.
    In contrast, U.S. West currently offers DSL in one Montana 
community, Helena, the State capital, and the Montana 
headquarters for U.S. West.
    My point is, and there are several other examples here, my 
point is we just this year updated Glass-Steigel, a law that 
went into effect in 1934. In your testimony what you are asking 
for in your conclusion, it says the Internet exploded into our 
lives and our economy beginning primarily in 1997. Its growth 
and impact since then on the economies of the Nation, States 
and localities is almost immeasurable. The Telecommunications 
Act of 1996 passed over 4 years ago and is now ancient history 
in Internet years. The law needs to be updated to reflect the 
reality of what has occurred since its enactment and to ensure 
that all potential providers of broadband and/or builders of 
communication infrastructure be allowed to participate.
    Aren't we being a little impatient? I mean, we just updated 
Glass-Steigel that was enacted in 1934 this year, and now 4 
years after we enacted the telecommunications bill, you are 
saying we need to update it, when, in fact, the private sector 
is already doing what you are asking to be done. Isn't patience 
called for here, Mr. Vuckovich?
    Mr. Vuckovich. Mr. Chairman, Representative Largent, I 
think that the private sector is moving forward in this. I also 
think that the Internet, 4 years since the passage of the 
Telecommunications Act, is probably like 24 or 25 years of 
normal time because advances have been so rapid, and that is 
why I think we have to be able to make adjustments and changes 
to this rapid change of information and technologies that are 
available, and even though it is--the law is a great law, and I 
applaud it, and even though it is only 4 years old I think it 
has to be upgraded because it is 4 years of Internet.
    And in that 4 years of Internet, the progress has been so 
tremendous that it is equivalent to probably 25 years or 24 
years of progress prior to the Internet. And so I think that we 
have to look at whatever is viable out there and make 
adjustments to be able to provide and do what the Act says it 
will do, and that is, provide everybody in the country with 
access to these telecommunication entities that are out there 
or the things that are out there.
    Mr. Largent. Thank you, Mr. Vuckovich. I would like to ask 
unanimous consent, if I can ask one more question, seeing that 
there is not a long line here.
    Mr. Tauzin. I think we can probably accommodate you, Mr. 
Largent.
    Mr. Largent. I would like to ask Dr. Kushner. Dr. Kushner, 
you are at Children's Hospital here in DC.?
    Dr. Kushner. Yes, sir.
    Mr. Largent. Can you give us kind of a laymen's definition 
of Digital Divide?
    Dr. Kushner. Yes, I can. I would have to do it at several 
levels if you would permit me to just go on for a moment, I 
suppose. In health care, the Digital Divide has to do with the 
distance learning and the practice of medicine using digital 
technology. For instance, it is very easy for us, or most urban 
hospitals to connect to suburban hospitals using these high 
width band lines because they exist.
    We, in fact, have some T-1 lines and some T-3 lines or ATMs 
that go out to other hospitals with which we are connected, 
ISDN technology.
    In the inner city, if we are interested in doing that same 
service, and we are, because it is part of our mission, the 
carriers don't provide the service so we rely on CLECs or other 
sorts of interesting innovative solutions, and the time 
difference between the moment we could establish such 
communications with health care systems in the suburbs and 
those with which we still haven't established 
telecommunications in the inner city is shocking.
    Looking at Pennsylvania Avenue or K street or M street, the 
whole city is totally ripped up. There are switch hotels all 
over the city. I have lectures from all of my friends in the 
telecom business how wonderful it is in DC. And yet there are 
literally no high speed lines going into ward 7 and 8, and 
there may be some other wards in which there are none.
    So in a technical sense, the Digital Divide portrays that 
way, and when we try to deliver health care over it or distance 
learning or just storage of medical records, there is a great 
discrepancy between what happens in certain parts of the city 
and other parts of the city or the suburbs.
    The same is true for the distribution of physicians. There 
are certain parts of Washington where there are many 
pediatricians for a certain number of children and other wards 
like 7 and 8 in which there are very few. In ward, I am 
forgetting the ward number which is northwest, in ward 3 there 
is one pediatrician for 300 to 500 children, and in ward 7 and 
8 there is 1 to 5,000 to 7,000 children. So the distribution of 
health care providers and the technology to provide health care 
access in other ways is really quite striking.
    From our standpoint, if there is a way to use the Digital 
Divide as a way to address opportunity in general, that is how 
I view it. These families are, in many ways, as isolated as 
families on a farm in the middle of Minnesota or Montana. The 
paradox is shocking. Three miles from where we are sitting, 
there are people who have never had access to any of this 
Internet capacity in their health care environment, in their 
schools, in their churches, their community centers, and as we 
reach into those communities trying to empower them, trying to 
teach, as the other gentleman said, trying to teach the 
families how to take care of their own children, try to give 
them access to all of the things we have access to, it is a 
tremendous difficulty.
    So the barriers and bandwidth if you are using the 
technical definition, are clear, from my standpoint. You can 
just draw a map of where the wires go and where they don't go. 
It is very simple. From the standpoint of opportunity, in every 
category these families are, in a way, isolated. The education, 
access to the Internet in every sense that the Chair on the 
committee has spoken to today, access to health care, access to 
e-mail. It is an amazing difference just in this little 3-mile 
area.
    Mr. Largent. Just to kind of, in your estimation, what 
percent of the people in this country do not have access to 
broadband technology?
    Dr. Kushner. Sir, I would have to defer for a knowledgeable 
answer to my friends on the technical side. I don't think I 
could give you that answer. In terms of physicians, the answer 
is probably less than 1 percent of physicians have access to 
broadband technology. That would be my estimate. Mr. Linkous 
could probably comment on that. I think even the doctors' 
offices, because that is my area of practice, are, in a way, 
very primitive compared to where they should be to provide the 
home health care, to provide the access to hospitals, to make 
sure we have faster triaging as the other physician said.
    It is really shocking. The disconnection between the level 
of bandwidth provided to businesses and to really the e-
commerce side of America is very different than in the health 
care business itself in any way.
    Mr. Largent. Do you feel like it is the government's 
responsibility to make sure that every American has access to 
broadband technology?
    Dr. Kushner. You are putting me on the spot. I think it is 
the government's responsibility to make sure the opportunity 
exists so that the private and public sector can work together. 
I tend to be kind of conservative in my views. I am not sure 
the government needs to do it, but I do know it isn't happening 
and I can testify with great enthusiasm about that. We need to 
find out why it isn't happening and create the economic 
environment whereby if it is appropriate, private individuals 
or private companies will give us the bandwidth. I don't need 
for the government to wire southeast Washington. What I need is 
to have the bandwidth, and I don't really care how it gets 
there. It has to be cost effective. It has to be technically 
reasonable. And it has got to do what I need it to do. I don't 
care who does it.
    Mr. Tauzin. Will my friend yield?
    Mr. Largent. Yes.
    Mr. Tauzin. There is a Legg-Mason report that came out late 
last year that indicates that 3 years from now, according to 
their estimates, that fully one half of America would not have 
access to broadband, except that one half of that half might 
have it with one provider. So that a quarter of America would 
have none at all, a quarter of America would have one provider, 
perhaps, and half of America would have multiple providers. 
That is in a 3-year period, according to the Legg-Mason study. 
And where that occurs also is kind of interesting because they 
also indicated that it was going to be in the inner cities, 
underserved areas within the cities and in more rural parts of 
America, such as yours and mine and much of the western States.
    Mr. Largent. Dr. Kushner, what percent of the American 
population do not have access to MRIs?
    Dr. Kushner. I am certainly not prepared with data to 
answer that question, and I guess access is defined as how long 
does it take you to get there. I think all of America can get 
there. It is a matter of how quickly. Certainly in urban 
environments, depending on where you live in the urban 
environment you can get it the next day, but in Washington, DC, 
for instance there is a relatively limited number of MRIs and 
the urban underserved that we are talking about, specifically 
today, have to wait some time to get to them because they can't 
figure out a way to get out to the suburbs nor do they have the 
insurance to get the health care.
    Mr. Largent. Yet you would acknowledge MRIs are a valuable 
tool for physicians to use.
    Dr. Kushner. Oh, absolutely.
    Mr. Largent. Should it be the government's responsibility 
to ensure that all Americans have access to MRIs?
    Dr. Kushner. I think MRIs are a part of health care and the 
government should be interested in it and should try to 
determine the barriers to it, and if possible, legislation 
might be a way to lower the barriers.
    Mr. Largent. Thank you, Mr. Chairman.
    Mr. Tauzin. Mr. Vuckovich, I know you want to respond, too. 
I want to let you do that.
    Mr. Vuckovich. Just briefly, Mr. Chairman, thank you. I 
think one of the concerns in Montana, as I say, 60 percent of 
our residents are served by U.S. West, but still a ruling from 
the FCC that was recently made, it classifies U.S. West as a 
nonrural telephone company, and they lose access to universal 
service charges or funds, and in our area, they are serving 
rural people.
    I mean, the whole State is rural. We are actually frontier, 
and if they don't have the--I think the only way you are going 
to get broadband service is through universal service fees 
being part of the equation.
    Mr. Tauzin. I would hope we don't have to go there. It is 
sort of like Dr. Kushner has pointed out, the first obligation, 
I think of government, ought to be to remove the barriers that 
don't allow companies like U.S. West or other companies to 
provide broadband services to you and get as much done in the 
marketplace as possible before we go around asking one consumer 
to subsidize another, as we have done in telephone service. It 
ought to be the last resort, not first resort, but I want to 
make a point with you, Mr. Vuckovich.
    My friend from Oklahoma talked about some of the CLECs that 
are offering high speed broadband in given rural areas in 
Montana. That is not the problem, as I see it, as I think 
Montanans see it, and I think folks in Louisiana and Oklahoma 
see it. The problem is you can have all the broadband you want 
in your little town in rural Louisiana or rural Montana, and 
you can speak at high speed on the Internet with everybody in 
town, but if you don't have the connect to connect that town to 
a POP somewhere to the broadband backbone, you are as isolated 
as anybody living in a desert oasis. You might have a lot of 
water to drink in the oasis, but you just can't leave it 
because you can't cross the desert.
    And the problem that I see, and I hope we focus on, is the 
fact that as long as we have government barriers to any 
provider providing the service to people in making those 
connects from the small towns where broadband may be available 
inside the town, from that town to the broadband pipe somewhere 
where a POP does exist, until we remove those barriers and open 
it up to competition, we are going to be stuck with talking 
about subsidies and innovative concepts of government 
facilitation as Mr. Campbell has worked out in Massachusetts, 
or we are going to be debating arguments as to whether how much 
government owes a responsibility to connect people up who are 
not connected in the inner cities of America.
    So the concern I have is that we keep debating these old 
long distance and local issues that have a lot to do with 
telephones, designed in an old age where distance was relevant, 
and have nothing to do with the Internet where distance is 
totally irrelevant, have nothing to do with satellite 
communications where distance is irrelevant.
    I ask any of you, you are on a cable line somewhere, you 
get cable television, any of you? Do you pay more because you 
are at the end of the line instead of at the front of the line? 
If you are on the Internet do you pay more when you are talking 
to somebody in Tokyo than when you are talking to somebody in 
Tibido? The answer is no.
    Distance is irrelevant in these new systems, and yet we 
still find ourselves absolutely just incapable of making 
decisions because we are still fighting the old 1996 battles 
over who can make a long distance call and who can make a local 
call and who can carry it in America, and it frustrates the 
dickens out of me because, again, let me say it again, Mr. 
Vuckovich, and I think those of you who live out west have this 
experience so much more than we do in rural bayou country in 
Louisiana.
    I can have all the high speed service I want in Tibido, but 
if I can't connect to the hub in New Orleans without an 
expensive T-1 line and nobody is going to build a system for me 
to get it even at $400 a month, how many families can afford 
that, Mr. Campbell? If I can't get connected to the hub, I am 
dead when it comes to broadband. I am isolated. I am gone in 
this new world, and yes, it is moving at high rapid speed, and 
4 years, you were right, Mr. Vuckovich, 4 years in this system 
is like dozens and dozens of years in the old communications 
system, and we need to start thinking a little bit about who 
are we going to leave behind and who is going to suffer from 
lack of pediatric care because we haven't figured out how to 
get telemedicine out to rural and inner city places where there 
is a lack of physicians and a lack of care.
    And it seems to me that the first place we ought to look is 
at the government barriers. We ought to take them down. We 
ought to take them down as soon as we can, and then if the 
market doesn't take care of somebody, then we talk about 
innovative plans and government subsidies if that is required. 
That is a model I think this committee ought to focus on. It is 
the reason we focused that way in SHVA.
    The first move was to give the satellite companies 
regulatory relief so they could carry local programming in the 
satellites, and recognizing they weren't going to do it 
everywhere in America because they couldn't, we came with a 
second bill that provided government loan guarantees to make 
sure rural America was not left out. That ought to be the model 
here. We ought to take down the barriers so that companies can 
deliver.
    Mr. Kushner, you said it best. Who the heck cares who it is 
that is delivering it to you if nobody is? I mean what is the 
difference whether Bell or an AT&T or a CLEC or somebody is 
delivering me service if nobody is? Shouldn't we say in America 
everybody can, come on in? And if companies are selling their 
exchanges, it may just be because we don't let companies do 
business anymore in Montana the way business is going to be 
done in the 21st century. I mean I would be selling out, too, 
areas I couldn't serve.
    Mr. Kushner. Mr. Chairman, I wish I could vote for you 
right now.
    Mr. Tauzin. Thank you. And the bottom line is, that if you 
live in Louisiana, even if you are not alive in Louisiana, you 
can have that privilege in many cases. The bottom line is that 
this is a subject that will not go away, and the sooner we 
address, it the sooner we prevent this Digital Divide you 
talked about today.
    I have got a sneaky suspicion, I was just telling staff 
about it, I am a little cynical as I get older in government. 
That is a shame, and it shouldn't happen to us, but it is 
happening to me. My cynical thought is that this government 
kind of likes the idea that it is helping to create a Digital 
Divide because government loves to come in and solve those kind 
of problems, and my conservative heart tells me the first thing 
we ought to do is prevent government from creating a Digital 
Divide, so we don't have to end up helping government solve it 
with my tax dollars. We ought to let the market work in order 
to free our people.
    Thank you very much. Hearing stands adjourned.
    [Whereupon, at 12:30 p.m., the subcommittee was adjourned.]
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