[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]



 FCC CHAIRMAN MICHAEL K. POWELL: AGENDA AND PLANS FOR REFORM OF THE FCC

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

                                HEARING

                               before the

          SUBCOMMITTEE ON TELECOMMUNICATIONS AND THE INTERNET

                                 of the

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 29, 2001

                               __________

                           Serial No. 107-21

                               __________

       Printed for the use of the Committee on Energy and Commerce


 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 house

                               __________

                   U.S. GOVERNMENT PRINTING OFFICE
71-488                     WASHINGTON : 2001

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                    COMMITTEE ON ENERGY AND COMMERCE

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

MICHAEL BILIRAKIS, Florida           JOHN D. DINGELL, Michigan
JOE BARTON, Texas                    HENRY A. WAXMAN, California
FRED UPTON, Michigan                 EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida               RALPH M. HALL, Texas
PAUL E. GILLMOR, Ohio                RICK BOUCHER, Virginia
JAMES C. GREENWOOD, Pennsylvania     EDOLPHUS TOWNS, New York
CHRISTOPHER COX, California          FRANK PALLONE, Jr., New Jersey
NATHAN DEAL, Georgia                 SHERROD BROWN, Ohio
STEVE LARGENT, Oklahoma              BART GORDON, Tennessee
RICHARD BURR, North Carolina         PETER DEUTSCH, Florida
ED WHITFIELD, Kentucky               BOBBY L. RUSH, Illinois
GREG GANSKE, Iowa                    ANNA G. ESHOO, California
CHARLIE NORWOOD, Georgia             BART STUPAK, Michigan
BARBARA CUBIN, Wyoming               ELIOT L. ENGEL, New York
JOHN SHIMKUS, Illinois               TOM SAWYER, Ohio
HEATHER WILSON, New Mexico           ALBERT R. WYNN, Maryland
JOHN B. SHADEGG, Arizona             GENE GREEN, Texas
CHARLES ``CHIP'' PICKERING,          KAREN McCARTHY, Missouri
Mississippi                          TED STRICKLAND, Ohio
VITO FOSSELLA, New York              DIANA DeGETTE, Colorado
ROY BLUNT, Missouri                  THOMAS M. BARRETT, Wisconsin
TOM DAVIS, Virginia                  BILL LUTHER, Minnesota
ED BRYANT, Tennessee                 LOIS CAPPS, California
ROBERT L. EHRLICH, Jr., Maryland     MICHAEL F. DOYLE, Pennsylvania
STEVE BUYER, Indiana                 CHRISTOPHER JOHN, Louisiana
GEORGE RADANOVICH, California        JANE HARMAN, California
CHARLES F. BASS, New Hampshire
JOSEPH R. PITTS, Pennsylvania
MARY BONO, California
GREG WALDEN, Oregon
LEE TERRY, Nebraska

                  David V. Marventano, Staff Director

                   James D. Barnette, General Counsel

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

                                 ______

          Subcommittee on Telecommunications and the Internet

                     FRED UPTON, Michigan, Chairman

MICHAEL BILIRAKIS, Florida           EDWARD J. MARKEY, Massachusetts
JOE BARTON, Texas                    BART GORDON, Tennessee
CLIFF STEARNS, Florida               BOBBY L. RUSH, Illinois
  Vice Chairman                      ANNA G. ESHOO, California
PAUL E. GILLMOR, Ohio                ELIOT L. ENGEL, New York
CHRISTOPHER COX, California          GENE GREEN, Texas
NATHAN DEAL, Georgia                 KAREN McCARTHY, Missouri
STEVE LARGENT, Oklahoma              BILL LUTHER, Minnesota
BARBARA CUBIN, Wyoming               BART STUPAK, Michigan
JOHN SHIMKUS, Illinois               DIANA DeGETTE, Colorado
HEATHER WILSON, New Mexico           JANE HARMAN, California
CHARLES ``CHIP'' PICKERING,          RICK BOUCHER, Virginia
Mississippi                          SHERROD BROWN, Ohio
VITO FOSSELLA, New York              TOM SAWYER, Ohio
TOM DAVIS, Virginia                  JOHN D. DINGELL, Michigan,
ROY BLUNT, Missouri                    (Ex Officio)
ROBERT L. EHRLICH, Jr., Maryland
LEE TERRY, Nebraska
W.J. ``BILLY'' TAUZIN, Louisiana
  (Ex Officio)

                                  (ii)


                            C O N T E N T S

                               __________
                                                                   Page

Testimony of:
    Powell, Hon. Michael K., Chairman, Federal Communications 
      Commission.................................................    14
Additional material submitted for the record:
    Powell, Hon. Michael K., Chairman, Federal Communications 
      Commission, letter dated June 15, 2001, enclosing response 
      for the record.............................................    64

                                 (iii)

  

 
 FCC CHAIRMAN MICHAEL K. POWELL: AGENDA AND PLANS FOR REFORM OF THE FCC

                              ----------                              


                        THURSDAY, MARCH 29, 2001

              House of Representatives,    
              Committee on Energy and Commerce,    
                     Subcommittee on Telecommunications    
                                          and the Internet,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10 a.m., in 
room 2123, Rayburn House Office Building, Hon. Fred Upton 
(chairman) presiding.
    Members present: Representatives Upton, Barton, Stearns, 
Gillmor, Cox, Deal, Cubin, Shimkus, Wilson, Pickering, 
Fossella, Davis, Ehrlich, Terry, Tauzin (ex officio), Markey, 
Rush, Eshoo, Engel, Green, McCarthy, Luther, Stupak, DeGette, 
Harman, Boucher, Brown, Sawyer, and Dingell (ex officio).
    Also present: Representatives Buyer and Walden.
    Staff present: Howard Waltzman, majority counsel; Andy 
Levin, minority counsel; and Hollyn Kidd, legislative clerk.
    Mr. Upton. Good morning, everyone. Good morning, Mr. 
Chairmen--men, m-e-n. Good morning. What I would like to do is 
try to limit members' opening statements and, if they do so, we 
will give them a little extra time on the question time, if 
that works out. We will find out if it works or not.
    Today, we are going to hear from Chairman Michael Powell. 
No stranger to this subcommittee, Chairman Powell has taken the 
reins of the Commission at the beginning of the 21st Century, 
and I believe it is very good news for our country.
    This is an auspicious occasion, since our subcommittee is 
the very first congressional panel which will hear from Michael 
Powell in his capacity as Chairman.
    Today, our Nation is facing an economic downturn. In part, 
it is Chairman Powell's leadership and vision that will help us 
get back on course. On Tuesday, the President was in my 
district speaking about his plan to get our economy back on-
track, and he noted ``In the final quarter of 2000, the 
American economy grew at a sluggish 1.1 percent pace. In that 
same quarter, there was no growth at all in new business 
investment.''
    Again last week, another major U.S. high-tech company 
announced that it will lay off 4,000 workers. This trend must 
change. And I think part of the formula will be reforming the 
FCC and lifting regulatory obstacles from the technology 
industry.
    Mr. Chairman, this panel knows you are committed to the 
cause, and I can say this today, that is music to our ears. If 
the FCC is going to keep pace with the speed-of-light advances 
of the Technology Age, it is going to have to dramatically 
retool itself. I have full faith and confidence in you, and I 
plan on giving you the time and resources you need to do the 
job and then assess where Congress may need to take the 
initiative to implement or perfect your plans.
    Approving mergers more quickly and efficiently will indeed 
spur business. Working with industry to deploy high-speed data 
services will bring communities together, foster innovation 
and, most importantly, create jobs. The technology, 
telecommunications and mass media sectors need to be fully 
realized, not to mention the incredible benefits to the 
consumer and job creation which likely would accompany them.
    We cannot afford to have an FCC which is mired in 
bureaucracy and lethargic decisionmaking or, as the case often 
has been, non-decisionmaking. Ultimately, I believe Congress 
may need to make perspective reforms permanent to hedge against 
future retreat.
    Speaking last year, you stated this: ``We at the FCC are 
saddled with an organizational structure that may not be adept 
at efficiently addressing certain developments in the market. 
We have limited resources, a legacy bias, and limited ability 
to keep pace with the technological changes and trends. 
Therefore, we must constantly and honestly ask ourselves 
whether a proposed rule can be crafted quickly and clearly 
enough to make a positive contribution to the market, for a 
really good rule adopted too late may as well not have been 
adopted at all.''
    Chairman Powell, I appreciate your acknowledgement of these 
issues, and I look forward to working with you on positive 
reforms. And as I look at my congressional district, I hear 
from business leaders about how the lack of broadband access is 
retarding growth in Southwest Michigan. I also have great 
concern about what is going to happen to my constituents if we 
flip the digital TV switch in 2006. What about spectrum 
management? Will my constituents have access to the less wire 
and satellite telecommunication services?
    These are but a few issues which confront our Nation and my 
district. In large part, resolution of these weighty issues 
relies upon FCC decisionmaking, which makes reform of the FCC 
all the more essential.
    Chairman Powell, we look forward to your testimony and 
perspective on FCC reform and the myriad which face this 
subcommittee and the country.
    I yield to the ranking member of the subcommittee, my 
friend Ed Markey, from Massachusetts.
    Mr. Markey. Thank you, Mr. Chairman, very much, and I want 
to commend you for holding this very important hearing, and I 
want to welcome the new Chairman of the Federal Communications 
Commission, Chairman Powell, to our committee.
    Chairman Powell, people are constantly asking me to compare 
you to your father, and what I always tell them is you are just 
as smart as your father, but you have a lot more power to 
affect the world. And so, obviously, there are millions of 
people and thousands of companies, not only in the United 
States but all around the world, that hang on your every word 
and what the Federal Communications Commission decides in just 
about every major area that affects the Internet and 
telecommunications and cable and satellite and on and on. So, 
we look forward to your hearing.
    Before we launch into a discussion, however, of the Federal 
Communications Commission and its structure and the job which 
it performs, I think it is very important for us to note that 
the United States has the very best telecommunications system 
in the world. It is the envy of the world. It is, overall, the 
most competitive, it is the most diverse, it is the most 
innovative telecommunications marketplace on the face of the 
earth. And that fact is in no small measure due to the 
excellent work which the Federal Communications Commission and 
its excellent staff has done over the last generation in 
implementing the laws which have been passed by this 
subcommittee.
    I think we need to keep in mind, as we look at the Agency 
today, that you have done a very good job. We just also 
recognize that many of the proceedings or tasks that some 
Members of Congress find unnecessary are considered vitally 
important by others, and that the Agency performs many of its 
tasks at the instigation of Congress or pursuant to direct 
statutes or a mandate.
    I would also caution against pursuing a deregulatory agenda 
simply for the sake of championing reform or by recasting 
Commission substantive proceedings as reform measures. The 
Congress often asks the FCC to achieve certain public policy 
objectives. The goal is to fulfill those objectives which 
Congress asks the Agency to perform. The fact that the FCC also 
achieves these goals efficiently is an important result of a 
well-run agency, but efficiency itself is not the goal--
creating the proper blueprint for the United States so that it 
continues to have the lead looking over its shoulder at Number 
2 and 3 in the world is the objective.
    So, I believe that there are certainly things that the 
Agency can do itself to streamline its operations, and I know, 
Chairman Powell, that you are looking at those things that the 
Agency can implement to ensure that it is more efficient, that 
it deals with the new issues that are constantly confronting 
the Agency, and I look forward to hearing from you so that we 
can help you to buildupon the reform ideas and actions that you 
have in your mind, building upon your predecessor's changes.
    So, I look forward to hearing from you, and I thank you, 
Chairman Upton, for calling this very, very important hearing.
    Mr. Upton. Thank you.
    Mr. Tauzin, chairman of the full committee.
    Chairman Tauzin. Thank you, Mr. Chairman. I realize you do 
want to limit opening statements today, but I think it is 
important that, as Chairman of the full committee, I spend a 
few moments welcoming the new Chairman of the Federal 
Communications Commission, Michael Powell. And I want to thank 
you, Mr. Powell, for joining us today and for sharing with us 
your vision of the new FCC under your stewardship.
    I am reminded, by the way, of the Kennedy years, when the 
theme of that Administration was to ``bring the best and the 
brightest to service of our country,'' and I think President 
Bush has done that in the selection he has made in terms of 
your appointment as Chairman of the Commission.
    To the other members of the committee, I will remind you 
that Chairman Powell is extraordinarily well-qualified for this 
position. Not only does he bring extraordinary intelligence and 
foresight and vision to the job, but he has military command 
experience, and he has strong political skills we have seen 
before, and those are going to be very important as we go 
forward.
    He has also watched how not to run the Commission for the 
last several years. It is my strong opinion that the Agency has 
been adrift, has drifted from its designated mission and has 
drifted from the law. And it is my profound hope that Chairman 
Powell will sail the FCC back into safe waters, and I have 
every confidence that he is going to be able to do that.
    Chairman Powell, I of course look forward to working with 
you in your efforts to reform the FCC and to finish the 
deregulation begun by the 1996 Act that was so important a 
piece of legislation produced by this committee. I think under 
your leadership, the FCC will become an agency that fosters 
innovation again, and investment, rather than one that inhibits 
the deployment of new services, and that is good news.
    I think it is becoming an agency that unleashes market 
forces rather than managing competition, and that is good news. 
And I think it is going to be an agency that shakes the 
competitive landscape free of regulation rather than 
facilitating the shakedown of companies on behalf of special 
interests, and that will be an important change.
    In particular, Chairman Powell, I want to work with you to 
rationalize the structure of the FCC so that the type of 
service rather than the service-provider dictates the 
regulatory or deregulatory frame. We are, frankly, tired of 
watching disparate treatment of broadband services, disparity 
that has skewed the deployment of broadband services--and I 
think deprive many constituents, my own--of access to high-
speed Internet services.
    I realize that some of that disparity stems from the 
different way we treat C-LEX and I-LEX and cable companies and 
satellite companies and wireless companies in the law, but I 
intend to work with my colleagues and Mr. Dingell and Mr. 
Markey and Mr. Upton, to see to it that this committee tries to 
fix that.
    Also, I want to work with you to streamline the approval 
process so that applications do not languish in bureaus for 
years on end, and I notice that you have already begun that 
process, and I thank you for that.
    I want to work with you to end the merger review process in 
which companies are shaken down and prevented from having 
judicial recourse from outlandish Commission requirements of 
voluntary conditions on every approval.
    Congressmen Burr and Pickering worked hard last year to put 
some reasonable restraints on the FCC merger review process. I 
intend to help them this year to enact a bill in this Congress.
    Mr. Chairman, I am confident that we have before us a man 
with a real vision that is going to take the FCC into the 21st 
Century. I think he knows, like Mr. Markey has pointed out, 
that the high-tech sector is now driving this economy, both up 
and down, and that the FCC regulations or its deregulations are 
going to have a profound effect on our economic viability both 
today and into the future.
    I have got a great sense of optimism as Chairman Powell 
takes the reins of this important Agency, and I look forward to 
his describing the new vision to this important committee as we 
work together to help this economy continue to grow. Thank you, 
Mr. Chairman.
    Mr. Upton. Thank you, Mr. Chairman.
    Recognize for an opening statement, my friend from the 
great State of Michigan, the ranking member of the full 
committee, Mr. Dingell.
    Mr. Dingell. Mr. Chairman, I thank you and, as you wisely 
observed, you and I do serve a great State. First of all, thank 
you. Second of all, welcome to the new Chairman of the FCC. 
Chairman Powell, we are delighted you are here today and we 
wish you great success in your undertaking.
    I have expectations, and they are high, that you will 
impose a more disciplined approach to the management of the 
Agency's business. Specifically, I expect one that will require 
judicious use of the Agency's delegated authority, fair 
treatment of all Agency and industry participants and, above 
all, an abiding appreciation that the public interest is 
paramount.
    The public interest standard is, of course, the guiding 
principle of all the Commission's activity. It is at the heart 
of FCC's grant of authority, and carries with it broad powers 
to regulate and to also forebear from regulation. The breadth 
of this power can be used to accomplish many worthy goals, but 
it can be just as easily been abused, as it has more recently 
in the past.
    My hope is the new Chairman will avoid using this authority 
as a means to justify a particular agenda but, rather, to 
establish clear standards, objective guidelines that will 
govern the Commission's use of its broad authority.
    In his prepared testimony, the Chairman has established a 
specific, four-pronged agenda for the Commission that appears 
to me to be right on the money. The FCC clearly needs a new 
vision that takes into account the rapid technological changes 
occurring with the industry. Convergence of technologies is 
more than just a cliche, it is real. It is here. And more than 
anything else, it is the key to breaking down traditional 
monopolies.
    The FCC can try with all its might to regulate its way to a 
competitive marketplace, but it won't succeed until all the 
companies have the proper incentives to use these new 
technologies to compete freely in each other's markets.
    The current regulatory approach is to treat companies based 
on the service which they provide, but on the technology they 
use to provide it. Clearly, this is an old-fashioned, unwise 
and unworkable approach.
    This approach to regulation causes a fundamental disparity 
between companies competing to provide the same service. Left 
unresolved, it will result in less effective competition, less 
innovation, less investment, fewer choices for the American 
public, and poorer service.
    The most obvious example of this regulatory disparity 
exists in the broadband market, but it is a growing problem for 
other services as well. It makes, to me, no sense whatsoever 
for broadband services offered by a cable company to be 
regulated differently than broadband services offered by a 
telephone company, a wireless provider, or any other 
telecommunications company, and I will ask the Chairman about 
his views on this matter. The FCC must address this problem 
across-the-board, and the sooner, the better.
    The Chairman should be commended for his commitment to 
improving management efficiency at the Agency. This has been 
one of the regrettable failures of the Agency. While none of 
these changes will happen overnight, I hope there will be a 
concerted, among everything else, to streamline Section 271 
application processes. This area is particularly important to 
achieving a key Telecom Act objective sometime before the next 
millennium.
    I would note that the Bell Company entry into long distance 
was designed to accomplish two distinct, but equally important, 
goals. One was to encourage more facilities-based long distance 
competition, the other was to facilitate and to stimulate 
facilities-based competition in the local market. In my view, 
these goals are flip-sides of the same coin, and we have seen 
compelling evidence that they are inextricably linked. One only 
need check AT&T's Web site to see how Bell Company long 
distance entry has the effect of stimulating local competition.
    I believe that it is more than coincidence that the only 
two places AT&T advertises the offering of local telephone 
service is in New York and Texas. These happen to be the first 
two States for which Bell Company entry into AT&T markets was 
permitted. I would also note that the rates for local service 
in these two States have dropped significantly.
    The FCC process for approving these applications has been 
exceedingly slow--as a matter of fact, distressingly so--in 
part, due to an over-reliance on State commission and DOJ 
recommendations. I would note that we carefully put in the 
statute when we wrote it that these two agencies were to be 
consulted. We did not give them veto nor did we make them 
participants beyond consultation. The statute provides then 
that these get consultative roles, they are entitled to it, but 
in many cases State proceedings have been interminably long, 
some lasting 5 years or more. In my view, it is intolerable 
that consumers should be held hostage to the slow roll of the 
regulatory process, waiting years for the green light from 
Government, to get the benefits of greater choices and lower 
prices. I cannot explain why the State agencies have behaved 
this way, but it is, indeed, to me at least, a source of 
curiosity, and I would hope, Mr. Chairman, it would be a source 
of curiosity to you.
    I would note that the Department of Justice has never been 
a friend of this legislation, has always sought extra special 
privileges in dealing with a telecommunications policy 
utilizing slow and inefficient antitrust mechanisms to address 
the business of your Commission. I hope you will take a hard 
look at their behavior, Mr. Chairman.
    At the same time, Bell Companies must be held accountable 
for their obligations to comply with market opening provisions 
contained in the Act. You do have the enforcement tools in the 
Commission at your disposal, Mr. Chairman, to ensure 
compliance. These tools must be used in a fair and consistent 
manner to assure that the anti-competitive consequences can be 
prevented. I would note, however, that these tools, according 
to the testimony of your predecessor, were rarely, if ever, 
used. I am delighted, Mr. Chairman, that you have committed to 
making enforcement of these and other FCC rules a top priority.
    I want to thank you again, Mr. Chairman, for appearing 
here, and I look forward to hearing your testimony. Thank you, 
Mr. Chairman, for your kindness.
    Mr. Upton. I would note that all members', under unanimous 
consent--I would ask unanimous consent that all members have 
their full statements as part of the record and will again 
advise members that if they could limit their opening 
statements, or pass, it would be terrific.
    Mr. Barton.
    Mr. Barton. Thank you, Mr. Chairman. I want to welcome 
Chairman Powell. I will put a formal statement in the record. 
It has been a pleasure to work with you in the past, as a 
Commissioner. It is going to be a pleasure as the Chairman. I 
have been surprised how many new friends I have gotten since I 
got back on this subcommittee. I am sure you have been 
surprised at how many new friends you have gotten since you 
became Chairman. What are friends for, right?
    We look forward to working with you. And, Mr. Chairman, I 
would ask if I could submit some questions for the record, to 
Chairman Powell. I am going to have to leave to do some 
meetings on the energy situation. But welcome to the 
subcommittee, and we look forward to working with you.
    Mr. Upton. All members will be able to submit questions to 
the record.
    Mr. Sawyer.
    Mr. Sawyer. Thank you very much, Mr. Chairman. I join my 
colleagues in thanking you for this hearing, and Secretary 
Powell for taking part in this way.
    Mr. Powell. That is the other one.
    Mr. Sawyer. Secretary Powell--thank you. Somebody had to do 
it, it might as well have been me. It probably won't be the 
last time today, either. It is kind of like Tom Sawyer jokes in 
that way.
    I am going to submit a longer statement for the record. Let 
me simply observe, along with Mr. Markey, that your opportunity 
to change the world really is an extraordinary thing. I have 
watched over the last few years as the e-rate has worked, in 
effect, in our schools in ways that I think go far deeper and 
have far more lasting effect than we might ever have 
anticipated when we put it in place.
    And so I just want to mention a continuing interest of mine 
to you, in that while we talk very much about increasing the 
number of hours in a day which children devote to education, 
perhaps even the number of days in a year, it seems to me that 
the unexplored dimension for doing what we did at the end of 
the last century--that is to say, elevating the skill levels of 
an entire Nation--the unexplored dimension is more deeply into 
life, so that an entire adult working population that is 
effectively illiterate today in terms of the kind of technology 
that has been promoted by e-rate represents an avenue for 
exploration that offers enormous promise, ont only within those 
who provide the technology but across our entire population.
    With that, I will yield back the balance of my time and 
hope to explore that question further.
    Mr. Upton. Recognize the vice chairman of the subcommittee, 
from Florida, Mr. Stearns.
    Mr. Stearns. Thank you, Mr. Chairman, and let me 
congratulate you for having this hearing and, of course, 
welcome Chairman Michael Powell to our subcommittee. Chairman 
Powell, as the ``good ship Michael Powell'' starts off, there 
are going to be lots of storms here, and the fact that you have 
all these people here and are waiting out in the hallway would 
indicate there is a problem, and they will be looking to you 
for guidance.
    When we passed the Telecom Act in 1996, we thought we would 
be a lot further along, I think, than we are in many areas. I 
will just give you sort of a litany of some of the problems 
that exist, you know them better than me, but these storms are 
out there, and when you come back year after year to our 
subcommittee, it is my hope that a lot of these will be solved. 
Some of these should have been solved under the previous 
Administration, and you have a unique opportunity now to break 
the Gordian knot on some of these problems: High definition 
television--within that area, interoperability, deployment, 
consumer demand, and must-carry; spectrum management--dealing 
with caps, the auctions, the budget, the commercial versus 
government; the FCC reform--this is something that you can 
initiate and not wait for Congress, we have harped upon this 
for years; third-generation wireless--European Union is 
overtaking us in the competition, there is no reason for that 
in this great country; rollout--dealing with a third 
generation; and competition--opening up the local line. Here we 
are, the year 2001, we don't have competition in the local 
line, and we want to ensure there is competition in the long 
distance, broadband, availability and access. These are just a 
few of the areas that are on your plate that we need some 
action and not every year just keep talking about them.
    Many feel in this room that the problem has been that there 
is an efficient and regulatory morass at the FCC. So, under 
your leadership, we hope this will change. I trust you will 
with Congress to do away with these inefficient regulations--
just for example, there are two clear examples of the 
Commission's rules on spectrum aggregation limits and broadcast 
ownership and cross-ownership limitations, areas in which I 
introduced legislation in the 106th Congress, and intend to do 
so again this year.
    The FCC's recent decision to re-examine a spectrum 
aggregation limit is a step, I believe, in the right direction, 
and I would appreciate more insight into the Commission's 
actions.
    I look forward to your ship as it leaves the harbor. I wish 
you well. Anytime this committee can help out, we will be here 
but, in the end, we will need your leadership and your ability 
and perseverance to break these regulatory problems. Thank you, 
Mr. Chairman.
    Mr. Upton. Thank you.
    Mr. Green.
    Mr. Green. Thank you, Mr. Chairman. I will put my total 
opening statement into the record, but I want to welcome 
Chairman Powell and, as I said before in visiting, it is good 
to see you. In our past dealings with the FCC, our committee 
and as an individual, we had difficulties. And I appreciate 
both the follow-through of your staff on two particular issues 
that were brought to your attention and your staff's attention 
just recently. So, I think we have a good working relationship 
for building on that. I share my colleagues' concern. The FCC 
and this committee have a lot of issues dealing with the 
transition to high-definition TV, the rollout of 3G services, 
reciprocal compensation, the continuation of addressing the 
digital divide, increased access to broadband services are just 
a few, and I know we will have that opportunity today, and I 
welcome you to the committee, and look forward to working with 
you. Thank you, Mr. Chairman.
    Mr. Upton. Thank you.
    Mr. Gillmor.
    Mr. Gillmor. Thank you, Mr. Chairman. I am not generally a 
big fan of opening statements in subcommittee hearings because 
I think it is important we move as quickly as possible to our 
witnesses. I did today want to take just a moment, though, to 
both congratulate and to welcome Chairman Powell, and to 
especially convey my personal interest in the issue of 
reforming and reauthorizing the Federal Communications 
Commission.
    I have been involved in this issue in one form or another 
since 1995, and our subcommittee has done some splendid work 
examining the structure of the FCC through the creation of 
informal task forces.
    I am under no illusion about the difficulty of enacting 
legislation to reform the FCC, particularly if 
telecommunications policy issues are rolled into a larger bill, 
but I would like to indicate to Chairman Powell my deep 
interest in such an undertaking in this Congress. I know that 
the members look forward to hearing your views, and that all of 
us look forward to working with you in the weeks and months 
ahead. I yield back the balance of my time.
    Mr. Upton. Thank you.
    Ms. Harman.
    Ms. Harman. Thank you, Mr. Chairman. I appreciate the 
chance to speak for less than 1 minute to welcome a friend, 
Michael Powell, before us.
    The issues that have been ticked off by many here affect 
real people, and that is just the point I would like to make in 
my 1 minute. I represent a district that in 1992 when I was 
first elected was properly called ``the Aerospace Center of the 
Universe''. Nine years later, it is ``the Tech Coast''. There 
are all sorts of new industry sectors--entertainment, green 
technology, biotechnology, dotcoms. There are new 
technologies--broadband Internet, videostreaming. There are new 
services--Web design, systems engineering.
    And the task obviously is for the FCC to appreciate that 
human beings work there in these new industries, and to figure 
out ways--and I know Chairman Powell already says he intends to 
do this--to reinvent the FCC so that it can interact 
effectively with these new workplaces and the new employees of 
the new workplaces. This will be a hard job, and to invent a 
digital FCC will take someone with the skills of Chairman 
Powell.
    Let me just conclude by saying that the Aspen Institute, a 
place I know well, picks a group of leaders called Crown 
Fellows. Michael Powell was a Crown Fellow recently. They made 
a good choice. Thank you, Mr. Chairman.
    Mr. Upton. Mr. Deal.
    Mr. Deal. Mr. Chairman, in the hopes that I will impress 
this committee more with what I don't say than what I do say, I 
take your suggestion and yield back my time.
    Mr. Upton. Extra time for you.
    Ms. McCarthy.
    Ms. McCarthy. Thank you, Mr. Chairman, and I will be brief. 
Welcome, Chairman Powell. We are delighted that you are here, 
we look forward to working with you. I am particularly 
interested in hearing your views on the implementation of the 
Act and the enforcement of its provisions. I also would welcome 
your thoughts on some of the bumps in the road that we have 
experienced with regard to competitive local exchange carriers.
    I have Birch Telecom in my district, and they have used the 
unbundled network element platform to provide local phone and 
broadband service. The ability to lease Southwestern Bell's 
switching facilities to serve residential and small business 
customers has enabled this 4-year-old company to thrive and 
consumers to save. So, I would like to know if you view the 
unbundled network element platform as a legitimate vehicle for 
providing competitive service to residential and small business 
customers.
    Also, the Telecommunications Act codified the deregulation 
of national ownership caps in radio and, KXTR, the city's sole 
classical station, as a result of this, had to close, and the 
deregulation resulted in a great deal of consolidation in the 
industry. So I hope you will explain what the FCC is doing, or 
will do, to ensure a diversity of voices are being heard over 
broadcast airwaves because I understand throughout the country 
stations that are diverse, but obviously not as great a revenue 
producer as some of the stations now playing NSync and the 
Backstreet Boys music, are being done away with, and I really 
feel that is a loss to the community, and I welcome your 
thoughts on that, too.
    Mr. Chairman, I will put my full remarks in the record, and 
I thank you for being here.
    Mr. Upton. Thank you.
    Mr. Shimkus.
    Mr. Shimkus. Thank you, Mr. Chairman, I will just yield 
back my time.
    Mr. Upton. Mr. Brown.
    Mr. Brown. Thank you, Mr. Chairman. I will also enter my 
statement in the record, but I welcome Chairman Powell also. I 
have some concerns about the FCC proposal to reduce the amount 
of information companies are required to report on service 
quality with local phone service, and hope that you would 
address that and rethink that, and also stress the importance 
of e-rate, which has been an enormous success for communities 
in my State of Ohio and other States across the country, and my 
concerns about low-power FM and what that means to our 
community, and would like to emphasize that there are many of 
us on this committee that care deeply also about that. I yield 
back the balance of my time, and thank you for joining use.
    Mr. Upton. Mrs. Cubin.
    Mrs. Cubin. Mr. Chairman, I will save my conversation for 
later on, yield back.
    Mr. Upton. Mr. Engel.
    Mr. Engel. Thank you, Mr. Chairman, and good morning, 
Chairman Powell. I want to congratulate you on your appointment 
and look forward to working with you on a range of important 
issues.
    I would briefly like to take this opportunity to deal with 
one of the major issues facing my district, the digital divide. 
The fact is that many of the schools in New York and the Bronx, 
where I grew up and your dad grew up, are too old to be wired, 
do not have adequate funds to buy computers, and are too 
concerned with teaching children the basics in over-crowded 
schools that have leaking roofs and falling plaster. But in our 
world today, we must provide our students with access to not 
just computers and wordprocessors, but the Internet. These are 
skills obviously they will need to just get a job.
    I am supporting efforts to quickly rollout broadband 
Internet access, to enable the young people of the Bronx and 
Westchester to benefit. I support legislation that provides a 
tax incentive to rollout broadband services to rural and low-
income communities. I also support the chairman and ranking 
member's bill to alter regulations to make it easier to 
introduce broadband services. We all now know how vital it is 
for our students and our economy to close the digital divide.
    I look forward to hearing your comments on this issue and 
to learn what the FCC plans to do to close the digital divide. 
Again, I welcome you. I think it was a marvelous choice to make 
you Chairman, and I look forward to working with you. Thank 
you.
    Mr. Upton. Thank you.
    Mrs. Wilson.
    Mrs. Wilson. Mr. Chairman, I will reserve my times for 
questions.
    Mr. Upton. Ms. DeGette.
    Ms. DeGette. I will reserve my time also.
    Mr. Upton. Mr. Terry.
    Mr. Terry. Welcome. Yield.
    Mr. Upton. Wonderful.
    Mr. Stupak, from the great State of Michigan.
    Mr. Stupak. Thank you, Mr. Chairman. I would just like to 
welcome Chairman Powell. I will be interested to see what you 
have to say about rural areas and how we get the new technology 
there and make sure we have competition in rural areas. So, I 
look forward to questions later.
    Mr. Upton. Mr. Cox.
    Mr. Cox. Thank you. I just want to thank Michael Powell for 
the time that he has already spent with members, talking to us 
about the future of the FCC and the future of the industries 
and the technologies and the information services that are the 
subject of your jurisdiction.
    As Chairman Tauzin has pointed out before, that only goes 
off when you are not telling the truth.
    Mr. Upton. Yielding back?
    Mr. Cox. I particularly want to commend you for your early 
emphasis on examining the structure of the FCC and of our 
statutory framework for regulation. In light of changing 
technology and the convergence of existing technologies, the 
way that the FCC approaches this and has approached it as a 
result of congressional mandate during the 20th Century 
probably is not well-suited to the 21st Century. Cable isn't 
just cable anymore. Wireless isn't just wireless anymore. 
Telecos aren't just telecos anymore. Everybody is getting into 
everyone else's businesses in similar ways to what we have seen 
in financial services, and in similar ways we have to change 
regulation to meet that new reality.
    There is something else going on, and that is destructive 
creativity in the very best sense. Congress and regulation and 
the State are usually enemies of that process because that is 
where buggywhip manufacturers go to stop progress, and we, all 
of us, in our offices are constantly met with firms who wish us 
to enact a law, or they perhaps will go to you so that you will 
enact a regulation, to make sure that their competitors don't 
take away their business.
    We have to make sure that we resist that temptation, and 
restructuring the FCC, and presumably for those of us sitting 
on this side, restructuring the statutes in order to make sure 
that our regulatory system of the future achieves the great 
potential that we know the Internet and other video and voice 
communications have is really our main aim.
    So, thank you for placing your emphasis early on on that 
precise topic, and I look forward to hearing your testimony and 
responses to members' questions on those very points. Thank 
you, Mr. Chairman.
    Mr. Upton. Thank you.
    Mr. Pickering.
    Mr. Pickering. Mr. Chairman, thank you. I know that we have 
limited time before our vote. I just want to welcome Chairman 
Powell. I look forward to working with you on the important 
issues before you, from FCC reform to spectrum reform to 
advancing competition, addressing issues in rural areas. I do 
think you have a tremendous opportunity to have a great legacy 
as a reformer and someone who values the staff of the FCC, and 
we want to work with you to make sure that you have all the 
resources that you need to carry out your duties. And I also 
look forward to a new era of cooperation between the FCC and 
the Congress, and I think we can have a very productive 
relationship. Look forward to working with you.
    Mr. Upton. Mr. Davis.
    Mr. Davis. Mr. Chairman, I want to commend you for giving 
us the opportunity today to listen to Chairman Powell discuss 
his vision for modernizing the FCC. For too long, I think, we 
have seen the FCC position itself more as an obstacle to the 
deployment of new technologies rather than an enabler for 
economic growth.
    I know that you, too, Chairman Powell, share our concerns 
that the FCC re-examine its organization and mission in order 
to play an efficient and effective role in encouraging 
innovation.
    Thanks for coming here today. I look forward to hearing 
your testimony and continuing to have a dialog with you on 
these issues.
    Mr. Upton. That concludes our opening statements. I would 
note that we have two votes on the House floor, this vote and 
another one. So we will reconvene as close to 11:10 as 
possible.
    [Additional statement submitted for the record follows:]

Prepared Statement of Hon. Barbara Cubin, a Representative in Congress 
                       from the State of Wyoming

    Thank you, Mr. Chairman, for holding this hearing and inviting 
Federal Communications Commission Chairman Michael Powell to be with us 
today. Welcome Chairman Powell. I appreciate this subcommittee being 
your first stop on Capitol Hill in your new position.
    You've come to lead the FCC at a very exciting time. We've just 
celebrated the fifth anniversary of the 1996 Telecommunications Act.
    I personally believe there were essentially two goals of the Act: 
more competition and less regulation.
    Since it's implementation the Act has shown tremendous potential in 
advancing competition where competition didn't exist.
    I represent an area of the country where we have yet to see real 
competition--five years after the passage of the Act.
    Although Wyoming has 50 Competitive Local Exchange Carriers (CLECs) 
operating in the state, the average person living in Wyoming would be 
hard pressed to find an alternative to his or her existing telephone 
service.
    I have several questions for you, Chairman Powell, regarding the 
second goal of the Act--deregulation or the lack thereof.
    First, an observation. It seems to me that a regulatory agency must 
move with the speed of the industry it regulates. The FCC has 
historically moved as if it is regulating the pony express instead of 
high-speed communications networks.
    When an emergency petition has been before the FCC for 14 months 
and has yet to be acted upon, that seems to negate the fact that it's 
an ``emergency petition.''
    I'm concerned not only about the fact that the intent of the Act 
hasn't taken hold in rural America, but also that the regulators of the 
Act--in particular the FCC--doesn't give rural America a second 
thought. Chairman Powell, I'd like to know your thoughts on that.
    Maybe the FCC has written off rural states like Wyoming. Maybe the 
Act wasn't intended for rural states. Maybe rural America should just 
resign itself to the fact that competition will never be realized.
    Well, I don't believe any of that is true and I certainly don't 
believe that there isn't more that can be done regarding implementation 
of the Act to help spur competition and bring advanced 
telecommunications services to Wyoming and other rural states.
    Chairman Powell, you've been around this business for quite a 
while.
    You know that different segments of the telecommunications industry 
are stronger than others in providing services to different parts of 
the country.
    In Wyoming, for example, we have 14 facilities based Incumbent 
Local Exchange Carriers with approximately 310,000 access lines.
    Qwest CEO Joseph Nacchio has joked that he lived in an apartment 
building in New York with more access lines than that.
    Nonetheless, the majority of those companies are small or mid-size 
carriers that make up the backbone of Wyoming's telecommunications 
infrastructure.
    Chairman Powell, I was delighted to hear you mention in a speech a 
while back that ``In the war to tear down the arcane regulatory walls 
that prevent firms from competing with other firms and from bringing 
customers the full benefits of a free market, I sometimes think of mid-
size independents as our `special forces.' ''
    I continue to quote, ``The Special Forces, for those of you who 
aren't military buffs, are elite, highly-skilled forces adept at 
operating undetected behind enemy lines. The infamous Green Berets, a 
Special Forces unit, are small and nimble, allowing them to slip 
through the cracks, untethered by the logistical constraints faced by 
larger military forces.''Mr. Chairman, I feel the same way. However, I 
don't believe your predecessor felt the way we do on this issue.
    For too long, at the FCC, small and mid-size companies are subject 
to a ``one-size-fits-all'' regulatory scheme that effectively puts 
these ``special forces'' carriers on KP duty.
    As you know, Chairman Powell, this Committee and the House have 
overwhelmingly supported and passed legislation in the form of H.R. 496 
that brings regulatory sense back into the way in which the FCC treats 
small and mid-size carriers.
    Many of the questions and comments I will have for you revolve 
around this singular issue. I'm sure you realize that these carriers 
are the only thing that stand between a rural telephone customer and 
silence at the other end of the telephone line.
    Mr. Chairman, I wish to once again thank you for calling this 
hearing and look forward to hearing from FCC Chairman Powell.

    [Brief recess.]
    Mr. Upton. Chairman Powell, I would note that there are a 
number of subcommittees and committees meeting today. Most of 
us--all of us--are on multiple subcommittees, some of us on 
multiple committees as well, so individuals will be coming in 
and out throughout the hearing. At this time, I would ask 
unanimous consent that all members' opening statements are made 
part of the record, as well as questions that they may submit 
for the record. Without objection, that is now the case.
    Chairman Powell, welcome. Your statement is made part of 
the record in its entirety. The time is now yours.

    STATEMENT OF HON. MICHAEL K. POWELL, CHAIRMAN, FEDERAL 
                   COMMUNICATIONS COMMISSION

    Mr. Powell. Thank you, Mr. Chairman and other distinguished 
members of the subcommittee. It is a great pleasure to be here. 
I have had the privilege of appearing before this subcommittee 
over the last few years in my capacity as a Commissioner of the 
Federal Communications Commission. I am particularly humbled 
and privileged, and some days daunted, to appear as its new 
Chairman. I feel privileged that the President of the United 
States felt enough confidence in me to designate me as such, 
and I am honored to have an opportunity to continue the very 
positive working relationship I have had with this subcommittee 
and Members of Congress generally. I really look forward to 
continuing that sound relationship. I think we will need it. I 
think that we are facing collectively, as a Government, a 
traumatic and important period in our history, in which 
communications, communications policy, will directly affect the 
future of our country.
    If you think about it, the FCC is facing something, in this 
regard, that it has never faced before--that is, every segment 
of its portfolio is in some form of revolution, the most 
profound change the industry has ever faced. Whether it be 
competition and de-regulation in the context of the telephone 
system; whether it be the transition to digital television for 
television broadcasters; whether it be the deployment of cable 
modem services and interactive services in cable; or on and on 
and on. This is a daunting period for our industry and it is a 
daunting period for the Commission.
    Suddenly, the Commission finds itself blown into a position 
in which its decisions have far-reaching impact, not only on 
the industry, but increasingly on the whole of the American 
national economy and that of the world. It is a profound 
responsibility.
    And this new environment is not linear. It is one that will 
be marked by chaos and dynamism, and the FCC, in the context of 
reform, will need a new business plan, to address and interact 
with that world.
    Mr. Chairman, I would ask that my full statement be 
included in the record. As you mentioned earlier, I would 
rather just speak with you about those challenges now.
    The way I envision reform is that it is a comprehensive 
exercise of retooling and redirecting the activities of the 
Agency. I am working to build a plan that is built along 
principally along four dimensions.
    The first is to ensure that the Commission has a very clear 
and substantive policy vision in which to guide its 
deliberations, with at least some predictability.
    Second, a pointed emphasis on operations and management. An 
agency must be effective and responsive in Internet time.
    Third, it is becoming critical that the Agency have 
independent technological expertise and economic expertise.
    And, fourth, it is time to consider seriously 
organizational restructuring of the Commission, and I would 
like to say a little bit of something about each of these 
points before I yield to your questions.
    Policy vision is not just the subject of Law Review 
articles, it is the way an institution stakes its flag and then 
drives and guides deliberations towards that flag. I believe a 
policy vision is sorely needed. As we mentioned many times 
earlier, I believe communication policy in the Government and 
the Commission finds itself between two worlds. The first world 
is one that has been relatively matured, the legacy networks 
and communications systems we are all accustomed with, the 
mature public switch telephone network, cable systems, the mass 
market delivery systems of television and cable and 
increasingly DBS, just to name a few. These systems are 
relatively well known to us. We understand their technology. We 
understand their cost characteristics. We understand what 
consumers want out of those services, and what the right prices 
are generally for those services. And in a sense, that world 
stands to our back, but we look ahead and see a cresting wave 
of a dramatically new communication system evolving as a 
consequence of revolutions in technology and economics.
    We now see a world marked by broadband infrastructure using 
and deploying and experimenting with multiple new technological 
platforms. Today for example fiber optic-coaxial cable is used 
as a broadband infrastructure. There have been systematic 
improvements in public switch copper that allow it to provide 
high-speed service, the airwaves, delivered through space are 
all vying for the Internet future and a way to provide services 
in a more efficient way. These worlds and these systems are 
known much less to us. They are in their infancy. We are 
struggling with what are the cost characteristics of new 
technology that operates substantially different than twisted 
copper wire. We are still trying to understand what the 
products are and what it is consumers will actually want and, 
probably more importantly, be willing to pay for in the new 
future. This puts us at an extraordinary crossroads of both 
having the responsibility to carry out the will and the wishes 
of Congress to facilitate the deregulation and competition of 
the legacy world, as well as facing new and unforeseen and 
previously questions in the context of the new world. What kind 
of policy is needed in the context of that position?
    I hope to follow a policy that is built around the notion 
of incubation, innovation and investment, and I hope to be 
guided by several distinct guideposts. First, I think it is 
important to state at the outset that it should be our 
objective to facilitate the timely and efficient deployment of 
broadband infrastructure and promote a wide variety of 
technologies in that deployment, not embracing any one as a 
winner or loser, neither any technology or any particular 
industry.
    I think we need to pursue the ubiquity and affordability of 
that infrastructure to all Americans, but to challenge 
ourselves to attempt to do so in creative ways and not simply 
assume the extension of the methods that worked miraculously in 
the context of the phone system.
    Third, I think we need to be focused on at innovation and 
investment. These are objectives specifically identified in the 
Act, but often misunderstood or ignored in policy. If money 
will not flow to business plans, if regulatory uncertainty 
creates risks for capital investment, things will not be 
invented and they will not be deployed and we will not be 
talking about divides, we will be talking about only a glimmer 
of the bright future that we envision for ourselves. We are 
trying to understand those concepts better and facilitate 
policies around them.
    Fourth, we need to harness competition and market forces to 
help drive these changes, and be humble enough to admit that we 
don't make the market in our image, or in a vision or a 
strawman that I develop, but the one that is developed between 
a healthy dialog between consumers and producers so that what 
is built and deployed maximizes their value, not the one that I 
might have envisioned, sitting in my office.
    And it is just as important to also not to attempt to build 
an image in the like of any particular competitor. 
Increasingly, we find in a period of anxiety and innovation and 
change, that competitors are fearful too, and it is often the 
case that we are asked and compelled and pushed and cajoled to 
develop rules and regulation in order to stem the pace of those 
changes, protect regulatory advantage, and we must be reluctant 
to do that as well. We owe fairness to all, but allegiance to 
none.
    Fifth, very critical in an era of convergence, we need to 
work to rationalize and harmonize regulations, to the extent 
the statute will permit, across technological lines. It has 
been historically true that we have regulated industries 
fundamentally premised on the technologies they use in 
deploying those services. As I have said often, it is as simple 
as this: If you use twisted copper wire, you are a Title 2 
common carrier most of the time. If you use coaxial cable to 
deliver one-way video services, you are what we call a cable 
service provider and you live in the bucket of Title 6. And if 
you provide something called Internet or information services, 
you don't seem to be in anybody's bucket. We are lost to know 
what an AT&T is when it provides all of those services over a 
single infrastructure, demonstrating each and every one of 
those characteristics.
    Increasingly, the regulatory challenge is a definitional 
challenge--what bucket do you belong in by virtue of your new 
and creative services, and is our attempt to label you in a 
legacy rearward-looking system distorting the efficient 
development of those new markets?
    I also believe that deregulation means simply this: 
Validate the purpose of a rule in the modern context, or 
eliminate it. As simple as that. Resist intervention, 
regulatory intervention, absent the evidence of persistent 
trends that can be understood, or evidence of clear abuse.
    And, finally, as I have heard mentioned a number of times 
in opening statements, enforcement becomes more critical than 
it has ever been in our period. It is simply a necessity, not 
an ideology. Historically, the Agency has operated by what I am 
fond of calling ``by the grace of us'' regulation. You want to 
do this, get my permission. You want to do that, I will have to 
give you my permission. That permission might take several 
months, but you still have to obtain it. And, interestingly 
enough, 98 percent of the time we give it. That is an 
inefficiency we can't afford. But I am also cognizant of the 
fact that if you are going to put less emphasis on up-front 
prophylactic regulations, you have to have a response to 
consumer harm and dangers of marketplace failure. I believe 
that response is enforcement.
    I might give you a better benefit of the doubt, but when 
you cheat, I am going to hurt you and hurt you hard. And that 
is what enforcement means. And I think to do that seriously, we 
will need the help of Congress. I believe the enforcement tools 
made available to us are inadequate with billion-dollar 
industries. Our fines are trivial, they are the cost of doing 
business to many of these companies. The statute of limitations 
conspires to limit our ability to get someone before the clock 
runs out. If we are serious about enforcement, we will need to 
be serious about the tools to execute it.
    A second dimension on which I have placed a great deal of 
emphasis, and to which many of you have alluded is operations 
and management. I don't want my legacy, if there is any such 
thing, to be about this rule or that rule. I want to leave an 
institution that has imbedded in it the efficiencies, the 
talent, and the abilities of an operation, a management team, 
that can take on any challenge, no matter what it might be. We 
intend to actively manage the Agency.
    To my mind, indecision, inaction and avoidance are 
absolutely illegitimate Government policies. We have to reduce 
backlog, and we have to do everything in our power to ensure 
they don't reoccur. Our anxieties don't justify sitting on 
something indefinitely.
    We are developing an annual strategic planning process in 
which we will integrate the natural cycle of the budget process 
and the performance of our institution, the performance of our 
individuals, such that our mission is tailored to the 
activities and our own measurement of performance, so that I 
can stand before you a year from now and proudly march off the 
metrics of how we are doing.
    One of the first things I discovered is we do measure 
productivity. We do it differently in each and every bureau. 
That is no help to someone who is trying to make sure that it 
works across-the-board, and we are trying to develop those 
uniform productivity measures.
    Additionally, the Commission needs much work in the area of 
its own internal procedures to government its operation. 
Remarkably, the Commission has no set, agreed on procedures for 
voting or deliberation. It doesn't have internal processes for 
security of documentation. It is shocking to me at times what 
we don't have when we often reach loggerheads. Rules like that 
are not for when we agree, they are for when we disagree, and I 
am pushing and urging my colleagues to support efforts to build 
those kind of rules to increase our ability to operate. And we 
need to modernize our own IT infrastructure.
    The third dimension is becoming perhaps the most critical. 
The Commission desperately has to have first-rate technological 
and economic expertise. It is becoming increasingly a challenge 
for the Commission to sit on the other side of tables with 
companies like America On Line and Steve Case, or Microsoft and 
Bill Gates, and have them provide us on-the-job tutorials at 
the same time we are trying to make decisions that affect their 
industries. Our capability has to be solid and independent, but 
we face a grave situation here.
    We, in the last 4 or 5 years, have lost 20 percent of our 
engineering talent. In the next 4 years, we will have 40 
percent of our engineers who will be eligible for retirement, 
and we are competing for them in the same type of labor pool as 
America OnLine, and Microsoft. And, by the way, up to now, we 
hire them at GS-5 and GS-7 entry levels. That is not going to 
work for much longer. It really doesn't work now.
    But I am convinced that people come to work for the 
Government for reasons other than salary, and we have got to be 
prepared to provide them, for we will never match introductory 
income. So we have begun an Agency-wide program that we refer 
to as ``Excellence in Engineering.'' There will be attempts to 
find greater personnel and pay flexibility. We find that 
members of the guild need to ensure that they continue to stay 
current with their profession. We have not done an adequate job 
of providing both the formal internal training so that an 
engineer continues to develop, or to provide and subsidize 
their participation in professional organizations and 
professional development opportunities outside the Commission. 
This is often the most principal reason cited by technical 
experts as to why they are not interested in a job at the 
Commission.
    The Government, the FCC, owns a laboratory, where every 
piece of electronic equipment is usually type-tested. If you 
have a Palm Pilot or a RIM in your hand, if you turn it over, I 
assure you you will see our smiling logo facing you. 
Increasingly, though, that lab is backing up. It is facing 
challenges in being able to get equipment type-certified and 
out on the market. Much of that is due to the fact that the lab 
itself is in growing disrepair. Increasingly, with advanced 
technologies, we don't have the equipment that will even 
measure at the levels of some of the new equipment that we have 
seen. It is not unusual to understand that in the context of 
low-power FM, or ultra-wideband, or many of the areas that many 
of the members here have expressed interest in, that one of the 
contentious problems is over technical interference that we 
increasingly have a great deal of difficulty arbitrating 
because we don't have an independent capability to test. This 
is something that also needs to be rectified.
    And I make this point clear: An agency doing this kind of 
work has to drive technical fluency much deeper than its 
engineers. Every attorney and every professional, and I 
daresay, even every administrative support person needs to 
increasingly have basic fluency in technological concepts if we 
are to be relevant.
    We have begin something we colloquially refer to as the 
``FCC University.'' We do have academics in-house that are able 
to develop curriculum and formalize training programs, and we 
have begun that. We are an Agency that has access to the 
world's finest technical talent. We may not be able to hire 
them, but we normally can convince them to hold seminars, 
courses and programs that would aid the development of our 
first-rate and professional staff, and we are working to do 
that.
    The fourth and final dimension is the one that garners 
sometimes most of the attention. It is organizational 
restructuring. As I mentioned at the outset and as many of the 
members have mentioned, one of the challenges to operating 
efficiently is that both the statute and our rules are 
generally developed along technological lines. And so are we 
organized. We have a Cable Services Bureau for cable, and on 
and on and on.
    We recognize that this problem creates some great 
inefficiencies that could be avoided, so we are undertaking a 
very systematic review of the Agency. It will be guided by 
three simple principles. We hope to develop an organization 
that is designed mostly along market lines, not technological 
ones. We hope for a flatter substantive bureau structure and, 
third, we hope to more carefully consolidate key support 
functions.
    We will proceed first by doing a systematic review, which 
is underway, of all of our functions and services, to see what 
works and what doesn't. After that, we hope to produce a plan 
of reorganization that will include two phases: A Phase I that 
will be short-term change, and a Phase II that will be longer-
term, more lasting change. These changes will be significant 
and they will require a great deal of buy-in support and 
interaction with the Congress, who will have a critical role in 
this--there will be areas that require legislative change and 
approval and it will require buy-in and understanding from the 
industry--our client, and the consumers--our client, and the 
employees themselves, who rightfully understand the anxieties 
of any reorganization and need to understand clearly the 
purposes of change and the reasons why they are initiated.
    We hope to do much of this in realistic timeframes that are 
aggressive. I hope a year from now, or within the year, we have 
completed a substantial portion of this effort.
    Finally, let me just conclude with this point. I can't 
predict the future, no one at the FCC can predict the future, 
and the tools of this new market economy are such that very few 
people anywhere are able to reasonably predict the future.
    So, in many ways, the question of ``what kind of 
organization you are'' is best addressed as, how do you manage 
against uncertainty, a world that you don't know and can't 
predict? The lessons I take from that might be the way an Army 
does, or a basketball team does. What you do is you recruit and 
assemble first-rate talent. You train them in all the 
fundamentals of tactics and strategy. You make sure they are 
disciplined and effective, and you make sure they are 
innovative and creative. And when you take the court, or you 
take the battlefield--no two battles or two games are the 
same--but if you are able to adapt and change and redirect and 
stay efficient, you will win more of those games than you lose, 
and it is that kind of organization I sincerely hope and intend 
to build at the Federal Communications Commission.
    It is a pleasure to be with you, and I really look forward 
to your questions.
    [The prepared statement of Hon. Michael K. Powell follows:]

    Prepared Statement of Hon. Michael K. Powell, Chairman, Federal 
                       Communications Commission

    Good morning, Mr. Chairman and other distinguished members of the 
House Subcommittee on Telecommunications and the Internet. Thank you 
for inviting me here to discuss the Federal Communications Commission's 
agenda for 2001 and the agency's reform effort.
    I am honored and humbled to lead the Commission at this time of 
unbelievable change in the communications industry. I believe a 
critical part of my job is to be a leader and steward of the agency, 
and I take this responsibility very seriously. In order to serve the 
American public, the FCC, as an institution, must be efficient, 
effective, and responsive. The challenges of reaching these goals at 
the Commission are complicated by the sweeping, fast-paced changes that 
characterize the industries that we regulate. Indeed, the Commission is 
experiencing a challenge it has never faced: each industry segment in 
our portfolio is in the midst of revolution, and is attempting to adapt 
to the most fundamental changes in their history--for example, 
competition and deregulation in telephones, DTV transition in 
television, modem and interactive services in cable, wireless Internet 
and digital services, consumer accessible satellite service, broadband 
everywhere, and on and on. Moreover, the changes are blurring the lines 
that once separated these industry groupings. There are new markets, 
new competitors, and new regulatory challenges. The game has become 
three-dimensional chess, where each board is spinning.
    These winds of profound and dynamic change, unleashed in part by 
the Telecommunications Act of 1996, have buffeted the Commission and 
blown it into a position where its decisions have far-reaching impact 
on the future of communications, not only in the United States but 
throughout the world. We have come a long way from an agency where the 
principal focus was the assignment of radio licenses, and its principal 
activity was conducting lengthy comparative hearings to assign those 
licenses. This new environment is no longer linear, but chaotic and 
dynamic. For this agency to fulfill its congressional charge, indeed to 
remain relevant at all, it must put together a new business model and 
build the type of team that can execute it effectively. That is what we 
intend to do.

                   FCC REFORM: THE NEW BUSINESS PLAN

    I conceive of FCC reform as a comprehensive retooling and 
redirection of the Commission's entire mission. Our approach is to 
write and execute a new business plan built along four dimensions: (1) 
a clear substantive policy vision, consistent with the various 
communications statutes and rules, that guides our deliberations; (2) a 
pointed emphasis on management that builds a strong team, produces a 
cohesive and efficient operation, and leads to clear and timely 
decisions; (3) an extensive training and development program to ensure 
that we possess independent technical and economic expertise; and (4) 
organizational restructuring to align our institution with the 
realities of a dynamic and converging marketplace.

1. Substantive Vision
    The industry, the capital markets, and the government find 
themselves navigating between the matured, legacy communications system 
and the nascent innovation-driven Internet space of the future. The 
legacy world to our back is a proud one. This nation built the finest 
voice communication system in the world, as well as top-notch mass 
media delivery systems in the form of radio, television, and cable. 
These systems have reached maturity though: that is, we understand the 
basic technology and architecture; we largely understand the cost 
characteristics; and, we understand what the consumer wants and what 
the product is. And, government regulation and policy had coalesced 
around these understandings, principally in the form of regulated 
monopoly and oligopoly.
    We now are looking up at a cresting wave of change that we are much 
less sure of how to navigate. The digital broadband world is in its 
infancy, and its qualities and characteristics are much less clear. The 
new advanced architectures and technologies are just beginning to be 
understood and deployed, with no clear winning technology or industry. 
The cost characteristics may differ substantially from those of 
traditional networks to which we are accustomed. Broadband Internet 
products are still being developed and we all wait to see what service 
offerings consumers will and will not embrace. It is a world of dynamic 
and chaotic experimentation in which any prediction of how it turns out 
is foolhardy.
    I believe government policy needs to migrate steadily toward the 
digital broadband future, but remain humble about what it does not 
understand and cannot predict. I submit that this digital broadband 
migration should be built around incubation, innovation and investment. 
At the Commission, our policy direction will focus on this migration 
and will have several directional guideposts:

 We will do everything we can to facilitate the timely and 
        efficient deployment of broadband infrastructure. In doing so, 
        we will endeavor to promote the growth of a wide variety of 
        technologies that can compete with each other for the delivery 
        of content and will strive not to favor--or uniquely burden--
        any particular one.
 We will pursue the worthy universal service goals of ubiquity 
        and affordability as new networks are deployed, but will 
        challenge ourselves to do so in creative ways.
 We will redirect our focus onto innovation and investment. The 
        conditions for experimentation and change and the flow of money 
        to support new ventures have often been misunderstood or 
        neglected. If the infrastructure is never invented, is never 
        deployed, or lacks economic viability we will not see even a 
        glimmer of the bright future we envision.
 We will harness competition and market forces to drive 
        efficient change and resist the temptation, as regulators, to 
        meld markets in our image or the image of any particular 
        industry player.
 We will rationalize and harmonize regulations across industry 
        segments wherever we can and wherever the statute will allow.
 We will validate regulations that constrain market activity 
        that are necessary to protect consumers, or we will eliminate 
        them.
 We will be skeptical of regulatory intervention absent 
        evidence of persistent trends or clear abuse, but we will be 
        vigilant in monitoring the evolution of these nascent markets.
 We will shift from constantly expanding the bevy of permissive 
        regulations to strong and effective enforcement of truly 
        necessary ones. We will need Congress' help to put real teeth 
        into our enforcement efforts.

2. Operations and Management
    All the vision in the world is useless if you do not build and 
manage an institution that can execute it. We intend to actively manage 
the agency. Indecision and avoidance are not legitimate policies and, 
thus, we will strive to reduce backlogs and put systems in place that 
will prevent them from returning. Managers will be measured, in part, 
on this basis.
    The Commission will develop an annual strategic planning process 
that will be integrated with the federal budget cycle and the review of 
our performance as an institution and as individuals. We are working to 
establish uniform measures of productivity across the agency to 
facilitate this activity.
    The Commission is developing a set of internal procedures that will 
allow it to function more smoothly. These procedures will cover 
subjects such as Commission deliberation, voting procedures and 
internal document security.
    The Commission should continue to modernize its information 
technology infrastructure to ensure productivity gains. We must strive 
to be a virtual agency--one in which someone in Connecticut is able to 
access us as easily and readily as someone on Connecticut Avenue. We 
are working to make this goal a reality through increased electronic 
access capability. We are engaged in a time-consuming and expensive 
project, but one that is critical to our ability to remain relevant in 
this new millennium. We must continue with due speed to use the 
advances of technology to our advantage.
    We have 18 major information technology systems that incorporate 
electronic filing or offer public access to data. The industry can file 
most license requests, equipment authorizations, and comments 
electronically. Seventy-two percent of our services have electronic 
filing capability, but I want to do better. We administered well over 
three million licenses last year, so it is critical that we are 
efficient in this area. It is also important that citizens all over 
America have the ability to contact us easily and from anywhere. 
Currently, they are able to do so electronically, by phone or the old 
fashioned way--by letter. Last year, we received well over one million 
inquiries from consumers. The public must be an active voice in the 
communications transformation, for they are the ultimate beneficiaries 
of the abundant choices resulting from full and fierce competition.
    We are also overlaying this virtual agency concept to the benefit 
of FCC staff through an expansive telecommuting program, which is open 
to all eligible employees. Virtually 100 percent of the Commission's 
employees are eligible for the telecommuting program. Approximately 400 
of our eligible employees, about 20 percent, have chosen to telecommute 
on either a regular or ad hoc basis. Fewer than one percent of those 
who wanted to telecommute have been turned down based on the 
Commission's criteria.

3. Technical and Economic Expertise
    The communications revolution is being driven by advances in 
technology. The Commission must have a strong fluency in technology. We 
cannot depend on those we regulate for on-the-job tutorials while we 
make decisions. This situation is grave. Over the last six years, our 
engineering staff has decreased by more than 20 percent. Within the 
next four years, 40 percent of our engineering staff will be eligible 
to retire. Conversely, we are not replenishing the coffers at the other 
end by bringing in new employees. We, like other governmental 
departments and agencies, are competing for this talent in a tight 
labor market and are challenged to convince talent to enter government 
service. This has been most apparent trying to recruit entry level 
engineers at the GS-5 and GS-7 levels.
    To address this situation the Commission is developing an agency-
wide ``Excellence in Engineering'' program. We will examine creative 
ways to gain greater personnel and pay flexibility to attract technical 
talent. Increased salaried alone, however, will not do the trick, nor 
is it the sole motivator for anyone entering government service. We 
will look at ways to ensure technical workers are able to continue to 
develop in their field, through strong training and development 
programs and job rotation. Our laboratory facilities in Columbia, 
Maryland, need to be upgraded to provide engineers with the tools to 
engage in critical and challenging work. Improvement in this area will 
be difficult to achieve, but we consider it imperative to our efforts 
to improve our workforce.
    It also is vital that we train our non-engineering staff in the 
areas of engineering and advanced technology. We already have begun to 
develop an FCC ``university'' of sorts using our own staff and guest 
lecturers, and taking advantage of various programs currently available 
through the government and local academic institutions. We can use this 
Washington, D.C. location to our advantage and tap into industry and 
academia. We can use local scholars and have them participate in an 
educational curriculum, to provide lectures, to provide classroom 
instruction, to provide counsel and advice. We need to take better 
advantage of our access to talent and knowledge.
    I am putting similar emphasis on economics and market analysis. 
These tools are essential to our agency's mission. We have the 
opportunity to take advantage of both internal resources, visiting 
experts, and outside educational programs to help not only our 
economists improve their skills but to help all the FCC's employees 
understand better the impact of our rules on technological innovations, 
and competitive markets.

4. Restructuring
    In addition to examining our systems and procedures, we need to 
look at the organizational structure of the agency. Communications 
policy has been written in carefully confined buckets premised on 
certain types of technology. The FCC's organizational structure largely 
mirrors that premise. But the convergence of technology tears down 
those traditional distinctions and makes it evermore difficult to apply 
those labels to modern communications providers. In the same way, it 
makes it more important than ever for us to examine whether those 
organizational buckets still hold water.
    About a year ago, we began breaking down the technology-based 
divisions with the creation of the Enforcement Bureau and the Consumer 
Information Bureau. With those reorganizations, we created two bureaus 
aligned along functional responsibility. We created the Enforcement 
Bureau to improve the effectiveness of our enforcement activities in an 
increasingly competitive and converging market. We created the Consumer 
Information Bureau to enhance consumers' ability to obtain quick, clear 
and consistent information about communications regulations and 
programs. These changes have proven to be quite beneficial. As the 
industry moves toward fuller competition, the missions of these bureaus 
become even more critical. For consumers to take full advantage of the 
choices that competition brings, it is important that they have access 
to information that allows them to make an informed choice. Their 
ability to easily and quickly convey to us instances where the markets 
are not providing useful information to consumers in a particular 
circumstance or with a particular business is our early warning system 
for market failure or malfeasance on the part of industry players. 
While the consolidation of these functions is almost complete, there 
are some additional functions that are transferable into or out of 
those two bureaus.
    We have undertaken a structural reorganization project that builds 
on some of the initial efforts of my predecessor, Chairman William E. 
Kennard. Our efforts will be guided by a few key objectives: (1) a 
functional organization designed along market lines, rather than 
technical ones; (2) a flatter substantive bureau structure; and (3) 
greater consolidation of key support functions.
    Our program will proceed in phases. We have begun by systematically 
taking account of the agency's activities and functions to see what is 
working well and what is not. From that review we will produce a Phase 
I, short term, restructuring plan and a Phase II, longer range plan. 
The Phase II plan will consider what wholesale change is necessary and 
whether it is timely to move away even more from technology-based 
buckets. The question has been asked whether the Commission should be 
aligned along functional lines--e.g., enforcement, consumer 
information, spectrum management, licensing and competition--given 
increased convergence in the industry. This question deserves to be 
asked and answered. But first, we must seek additional and substantial 
information, and be completely satisfied that it is the right thing to 
do, before we move to rearrange substantially the organizational 
structure of the agency.
    My goal is to improve the agency on all these fronts. An informed 
decision, however, is better than one based merely on supposition. I 
intend to seek the opinions and thoughts from a wide range of 
participants as we proceed down the path of reform. First, I look 
forward to working closely with this Subcommittee and other Members of 
Congress and their staffs. Second, I intend to hold forums to allow 
those that do business before us let us know how we can improve our 
processes and procedures. Third, I want to hear from the Commission's 
employees. They often know best how we should change and what tools 
they need to do their jobs. I want to gather opinions and ideas, but be 
swift to make changes. It is our goal to fully complete many of these 
changes this year.
    I will be turning to you for assistance. With regard to the 
organizational restructuring that is likely to be necessary, I hope you 
will concur in those changes. Most critically, I look to Congress to 
support the Commission's budgetary needs and objectives. Please keep in 
mind that we are largely a fee-based agency, where those who come 
before us pay for the services we render in the form of licensing and 
regulatory fees. We need to have the staff and other resources to 
provide those services efficiently, knowledgeably and decisively. 
Finally, I will look to this Subcommittee and Congress to help us 
expand our authority where necessary to bring about competition and to 
more effectively enforce our rules. For example, the authority given to 
us in Section 10 of the Communications Act to forbear from regulating 
when certain conditions are present has been quite helpful. I would 
like to be able to use that ability even more and would welcome the 
opportunity to work with you to explore whether that is feasible. 
Additionally, we need tougher penalties and longer statute of 
limitation periods if enforcement is to be more effective.

                               CONCLUSION

    I cannot predict the future, nor can anyone else at the Commission. 
When faced with future challenges that are uncertain, the best approach 
is to build a first-class operation, with top talent, that is trained 
and disciplined enough to adapt quickly to new and changing situations. 
No army, for example, can know in advance what it will find when it 
engages on the battlefield. The fog and terror of war never afford the 
luxury of predictability. The key to success is to have a force that is 
well-trained in tactics, strategy and the weapons it will need. A force 
that is disciplined and able to adjust quickly and adapt to fluid 
conditions--threats and opportunities both will present themselves 
through the haze. I hope to build, along with my colleagues and the 
outstanding FCC staff, just such a unit--one well suited to an 
uncertain future.
    Thank you. I would be happy to answer any questions this 
Subcommittee may have.

    Mr. Upton. Sounds like the winning attitude of the 
Wolverines over B.C.
    Mr. Markey. Well, in basketball, Mr. Chairman, our players 
weren't tall enough. That is an important consideration.
    Mr. Upton. Again, Mr. Chairman, thank you for spending so 
much time with us this morning. We are going to have questions 
from members, 5-minute segments back and forth.
    What are your views on the progress of the transition to 
digital TV and what we will be facing by 2006? It is pretty 
clear, I think, to all of us, that we are not going to reach 
the 85-percent goal by then. So, what do you think specifically 
we need to do to put the transition back on-track?
    Mr. Powell. I start with the premise that it depends on how 
we want to choose to measure success. Candidly, I believe that 
the expectations about how rapidly the deployment will occur 
are somewhat exaggerated.
    It requires the coming together of multiple industry 
segments, some of which are competitors, in the context of 
cable or DBS delivery, content providers, broadcasting, and the 
consumer electronics industry.
    And I also think that it requires a dramatic transition on 
the part of the people who matter most, which are consumers. 
And a rushed transition, in my mind, is one that runs the risk 
of pushing consumers before things are ready, dramatic changes 
in a service that they value at a very high level.
    So, I always feel compelled to start out with, what do we 
believe we think is a reasonable timeframe for the transition. 
I have made no secret that I believe 2006 has always been an 
extremely optimistic assessment of 85-percent penetration. You 
would be hard-pressed historically to find any technology, no 
matter how ``killer'' in its application, that ever reached 
anything like those sorts of penetration numbers on that 
timeframe. I am bullish about DTV. I think it is a great 
service. I think consumers will embrace it, but I think it will 
take longer than we had imagined.
    What can we do? The first thing we need to recognize is 
that most of the solutions are out with the industries and in 
the marketplace, and not in Government. On the margins, there 
are things we need to do and have done. The Commission has 
engaged in an effort to remove some of the ambiguities and 
questions associated with the deployment so that at least those 
aren't contributing to the risks and anxiety. For example, we 
took a position finally settling the debate over the 
transmission standard between 8VSB and COFDM. We made clear, 
which was less than it should have been, for reasons I don't 
understand, that there is a must-carry right for a digital 
signal at least in the final product, when that is the only 
signal you are providing.
    We have taken a number of other steps that we hope would 
facilitate that, and we are constantly examining whether there 
will be more. There are tough questions that we believe are 
outside our legal authority that the Congress and this 
subcommittee may have to examine. I would cite as examples the 
possibility of multiplexing on a single channel on cable. It 
was our sincere belief that we did not have that flexibility in 
the way the statute was written. I will tell you that many of 
us believe that it might be a viable way to provide service, 
but simply had to remain faithful to the statute.
    Mr. Upton. What are your thoughts on the future of 3G 
deployment in the U.S., specifically, if the Pentagon is 
unwilling to relocate from the 1755-1850 megahertz band and, 
second, is it prudent to auction the 1710-1755 megahertz band 
in the 2110-2165 megahertz band by September 1902, before we 
resolve whether mobile carriers can use the 1755-1850 megahertz 
band for 3G?
    Mr. Powell. I am one who is bullish about the prospects of 
3G, which I hope mean advanced Internet-type services over 
wireless devices so that----
    Mr. Upton. I saw the arrow go up on CNN.
    Mr. Powell. Did they? What power.
    I would like to emphasize there are two dimensions to this 
problem. One gets most of the attention, understandably, which 
is more spectrum, the ability to have a bigger highway if the 
highway is congested. But as we know, with highways, that is 
not the only dimension to the problem. One of them is the 
efficient use of spectrum.
    The Commission has tried to emphasize the importance of 
continuing to incent the development of technology and handset 
solutions and network solutions to get more out of what exists. 
Spectrum will always have a certain scarce dimension to it, 
just as any economic good does, and there always should be two 
efforts--one, to provide more, but also to provide greater, 
efficient use of what we do have. And I think that will have to 
be, if we are realistic, part of the solution to 3G, 
particularly if, as you say, Mr. Chairman, that if DOD 
ultimately cannot, for national security reasons, yield, or is 
unable. Or we are unable to reform sufficient amount of 
spectrum, we will have to look for other solutions.
    It is important to remember, it is a little bit of a zero-
sum gain--what is given to one is taken from another--and those 
represent conflicting values that we will have to reconcile.
    Mr. Upton. As a quick follow-up, though, is it prudent to 
do some of that spectrum before we resolve it with DOD?
    Mr. Powell. This is an area where I would have to confess 
the Commission finds itself between a rock and a hard place, 
between statutory mandates. Through the budget process, we have 
been commanded to auction spectrum that will nonetheless remain 
encumbered through its auction.
    From my perspective, I don't take a position as to whether 
that is good congressional policy, but it is the one that we 
are commanded to follow. We have tried to facilitate, as 
greatly as possible, incentives that would cause people to 
yield spectrum that is otherwise encumbered. We did so in the 
channel 60-69 spectrum proceeding. We are looking at ways in 
the channel 52 to 59 context. But, ultimately, we have a legal 
obligation to auction the spectrum which, upon dates that were 
specified in statute, which was clearly known to be encumbered.
    So, I think it is a problem. It will affect the value of 
the spectrum at auction. It will affect its effective 
deployment in the future, and I think it is just a messy thing 
we will have to work through.
    Mr. Upton. Thank you. Mr. Markey.
    Mr. Markey. Thank you, Mr. Chairman, very much. Recently, 
Mr. Chairman, there was an important court decision addressing 
the horizontal ownership limits for cable systems. As you know, 
the FCC had, pursuant to the Cable Act, established a 30-
percent limit. The court generally said two things of 
importance. First, it said they seem to be looking askance at 
diversity as an important criteria for establishing a 
particular cap. Second, the court indicated that the FCC had 
not provided sufficient detail to substantiate setting the cap 
where it did.
    Now, in the aftermath of this decision, you announced that 
the Commission would suspend AT&T's obligation to sell certain 
systems in order to meet the requirements in the AT&T merger 
order from last year in order to review the court decision and 
gauge its relevance to the AT&T merger order.
    Now, the AT&T merger order, perhaps in contrast to the 
general 30-percent cap, was the result of serious work by FCC 
staff and attorneys and represented the collective judgment of 
the Commission that concentration was a concern, that the 
cross-investments of AT&T--that is, TCI and Media One with Time 
Warner--could have negative consequences for competition. That 
order, as you know, was quite detailed, in fact, from the 
Commission.
    Now, you have had a couple of weeks to think about that 
court case. What are your thoughts on that decision now, Mr. 
Chairman?
    Mr. Powell. Sure. There are two parts to it. The court case 
clearly is significant. I agree with you, the two bases on 
which the court made its decision, which are also inter-
related, are: the court considered our belief that Congress' 
intent was both to facilitate diversity and competition and the 
concentration policy is in error. That is, in the opinion of 
the court, the statute's sole purpose was competitive 
considerations and concentration, and any limit we selected had 
to be premised on a competition analysis or one that considered 
concentration effects, and not one premised solely or 
substantially on diversity as a rationale.
    I will state candidly, I don't particularly and did not 
when we promulgated these rules, agree with that interpretation 
of that congressional provision, but I am now presently bound 
by the interpretation afforded to it by the court.
    So, any further justification which we will be required 
under the statute to now try to offer for a new rule will have 
to be, if faithful to the court, premised on concentration 
competitive concerns, which often lead to higher-number caps 
than the kind that could have been justified under diversity 
grants.
    Mr. Markey. Let me follow up on that then, Mr. Chairman. 
Let me ask if you think that decision has any relevance to the 
35-percent audience-reach cap that the broadcast industry is 
subject to?
    Mr. Powell. Sure. I think it has relevance, though I don't 
believe it is directly on point, which is part of the reason at 
the same time we issued the suspension you speak of, we also 
rejected a petition by a major broadcasting group to suspend 
the obligations of the 35-percent cap on the same basis.
    My judgment was, the judgment of the majority, was that the 
35-percent national broadcast ownership cap is specifically 
stated in the statute. The number is specifically stated in the 
statute. Now, while the statute does give the Commission 
discretion to modify that provision in the context of its 
biennual review, we believe that at least at present the 
statutory basis, which was the key underpinning of the court's 
decision as to the cable rule, was different.
    Mr. Markey. May I ask, what is your intention in terms of 
the AT&T case now? How are you going to proceed?
    Mr. Powell. Well, we are considering--I would like to 
emphasize, as you correctly noted, that it was a suspension of 
the condition, and not a limitation.
    I believe, as did the majority, that suspension was very 
much warranted because while there was a different basis on 
which the condition was reached, the analysis just was not 
defensibly any different than the one we had just used to 
defend the rule and, in fact, specifically imported the rule as 
the basis of the number it selected and believed quite 
seriously that if we had failed to do so, a court would rightly 
say that that was being flaunted in the context of the mandate.
    But we have an obligation to return to the question, which 
we are looking for a proper vehicle to do, to raise whether the 
AT&T condition is, in fact, itself in any way undermined by the 
court opinion.
    Mr. Markey. Let me ask one final question, and that would 
be--I think you should be very careful, by the way, in this 
area because, without question, diversity is a proxy that 
ensures that there is competition in the marketplaces that took 
a long time for Congress and the regulators to break down.
    There is a lot of railing that goes on, Mr. Chairman, about 
legacy regulations, and people, by definition, don't like the 
term. It doesn't sound good--legacy--it is the past whereas 
they are looking to do something toward the future. But as soon 
as the discussion of legacy regulations is joined with the 
subject of legacy subsidies, people start acting up because now 
you have to do away with unwarranted, historical subsidies that 
go, in large measure, to monopolists. And, of course, that 
makes the whole subject so much more complicated.
    What I would like you to do, if you could, is just to tell 
me what you think we can do for new service, so that we can 
save it from legacy subsidy structure, and that is Internet 
Telephony. What recommendations would you make to us on what 
things can the FCC do to make sure that it is not saddled with 
this legacy subsidy system that makes it hard for newer 
entrants to get into the traditional telephony business.
    Mr. Powell. Sure. Of course, as you would expect, I am not 
prepared to commit to the exact regulatory treatment that 
should be afforded to IP telephony, but that said, at the 
outset, when I listed a number of the substantive principles 
that I thought were important when considering the future, one 
of them was the commitment to ubiquitous and affordable 
service. But I also say in the statement that we should look 
for creative ways to do that rather than assume or lightly 
advance the regime that works successfully in the context of 
the telephone system. I will expand on that briefly.
    The key should be the first principles of universal 
service, which are ubiquity and affordability, and I think that 
as we get into that nascent world where the questions are less 
clear, we should be committed to that goal. We should be very 
rigorous in looking for ways to ensure that don't come up with 
it necessarily the same kind of enormous subsidization or 
market intervention that in some ways is characteristic of the 
phone system.
    One of the things that I think we should all be excited 
about is there are certain natural cost characteristic benefits 
in a lot of the new technologies that should give us cause for 
excitement that it will be deployed widely and it will be 
largely affordable.
    Now, I expect that there will be market failures, and there 
will be parts of the country and populations to which this does 
not happen naturally, but I think the Government would be 
better served if it attempts to, in this iteration, be very 
pointed and focused about where it attempts to provide 
governmental assistance as opposed to assume it in a 
broadbrushed way.
    Mr. Markey. Thank you very much.
    Mr. Upton. Thank you. Mr. Tauzin.
    Chairman Tauzin. Thank you, Mr. Chairman. Chairman Powell, 
I want to follow up on Mr. Markey's question about cable caps 
and also the national broadcast ownership caps. Am I to read 
from your testimony that you are really going to do biannual 
reviews at the Commission now?
    Mr. Powell. You bet.
    Mr. Upton. And in that biannual review, is there an 
opportunity under the law for the Commission to review the 35-
percent national broadcast ownership cap, and to adjust it if 
you find it necessary?
    Mr. Powell. Yes, I would say it is more than an 
opportunity, it is a legal obligation. In many ways, if I 
recall correctly, in the biennual last year, I dissented in 
part because I believed that we had not been willing to fully 
tackle some of the ownership questions, not presupposing the 
outcome, but that we had really seriously evaluated their 
continuing validity. And I think that that is important and a 
legal obligation to do.
    Chairman Tauzin. In fact, in a world where there are 
increasingly more diverse sources of information and a great 
deal more competition, as you point out, isn't it the 
obligation of the FCC to continue to review these caps?
    Mr. Powell. I think so, and that is at least also my 
interpretation of what Congress had in mind by directing an 
institution to continually re-evaluate its structural ownership 
rules on a biennual basis. I interpret it to be the recognition 
that there will be changed circumstances particularly brought 
about by the objectives of competitive services and diverse 
services that the Congress had in mind in the 1996 Act.
    Chairman Tauzin. Yesterday, Mike Armstrong, of AT&T, wrote 
an Op-Ed piece in the Wall Street Journal, calling for breaking 
up Bells on a wholesale-retail basis. To my thinking, that 
would be an extraordinarily overly regulatory approach to 
addressing some of the service quality issues brought up by the 
C-LEX.
    Do you think that this kind of a plan would be wise, or 
would it be a step backwards from the 1996 Act of pushing 
deregulation and open competition?
    Mr. Powell. Well, I think that at a minimum it would 
introduce yet another extraordinary period of disruption and 
uncertainty that would likely proceed for another multiple of 
years, just like the wake of the 1996 Act produced a period of 
settlement and uncertainty through litigation and a lack of 
clarity about the terms and conditions of the provision, and 
there would be a cost to that.
    I don't know whether I believe that the benefits would 
outweigh the costs, but I do think that we would find ourselves 
in another long period of confusion and anxiety that might 
further delay----
    Chairman Tauzin. Speaking of those periods, you also 
recently announced some changes in the rules governing Section 
271 processes. Could you walk us through quickly the changes 
specifically? Would you describe how an RBOCs would now file 
multi-state applications for relief under 271?
    Mr. Powell. I think what you are referring to, isn't 
specifically our approach, but instead the ones that have been 
adopted principally by the Western States through a regional 
testing of operational support systems in an attempt to, in a 
more efficient way, reach consensus and uniformity so that 
those applications could be brought in some combination or 
package, and that the regulatory questions and operating 
systems questions would be the same in that context. And I 
think that we generally supported any effort that tries to 
harmonize, streamline and make more efficient the 271.
    Chairman Tauzin. Are there other reforms in 271 that you 
are contemplating? Let me be specific. One of my concerns with 
the 271 process from Day One has been that the Commission has 
consistently told State Commission-approved plans that they 
were deficient, but never laid down a clear explanation of what 
needed to be done to make them sufficient, and that the shell 
game of simply saying ``No, you don't meet the standard today, 
come back later'', without telling you what you really needed 
to do to meet the standard, has unfortunately created a lot of 
that confusion and delay in the 271 process. Do you agree with 
that, and do you plan any changes in the way the Commission 
will approach these applications?
    Mr. Powell. I agree with it for some years and a little 
less so in other years. I do believe that in the first couple 
of years of implementation that was a serious problem, but I 
think, in fairness to the Commission, there was a lot of its 
own misunderstanding and learning curve as to exactly the nuts 
and bolts of the systems and the complexities of the 
interactions, and it took us a good bit of time to understand 
in our own mind what precisely were the subjects of the focus. 
And so I do believe we have gotten better through a number of 
things, and I am very optimistic that we will be better in the 
coming years.
    One thing that we recognize that we should do is to get out 
and get on the road and to be actively out there prior to the 
filing of applications to try to advise--we can't precommit to 
whether this will do it, but we can advise State Commissions, 
who particularly are often resource-constrained and expertise-
constrained, to telling them the kinds of ways that they might 
want to pursue the matter and develop their application so that 
it has a higher probability of success.
    In the first year I was at the Commission, we wrote a paper 
talking about the ``collaborative'' approach, an attempt to 
really be in partnership so that we get a higher probability of 
succeeding. And I also think the companies need to bring them 
in.
    We are constrained in that we have a 90-day window to make 
a decision. In many ways, the precedents we set are what guides 
the next one. And so I think we also get better, the more we 
see and the more we are able to have an opportunity to write 
about what we expect. We have only done that now in a handful 
of instances, and I think that this year there will probably be 
an increased opportunity for that.
    Chairman Tauzin. I think my time has expired. I simply want 
to piggyback on something former Chairman Dingell said about 
the operation of 271, and that is that it is our common 
observation that competition in the local market has really 
increased dramatically once 271s are approved, and that until 
that point I think there is a natural reluctance for 
competition because it makes the case for a 271 approval. And 
if that is true, if that observation is correct, obviously, 
improving, streamlining, expediting a system whereby State 
Commissions and RBOCs know precisely what needs to be done in 
order to achieve approval, will probably lead to the two things 
Mr. Dingell pointed to, which is more competition and lower 
prices for local telephone service, which was the game, after 
all, in 1996. And I share that observation by Mr. Dingell, as 
well as your own observation and his, it is time for us to 
functionally regard how we treat services delivered by 
different technologies. And I thank you--I almost wanted to 
applaud, Chairman Powell, after your statement. Thank you very 
much for being here today.
    Mr. Upton. Thank you, Mr. Tauzin. Mr. Sawyer.
    Mr. Sawyer. Thank you, Mr. Chairman. All of us up here have 
listened to a lot of testimony over the course of our time in 
the Congress, and I just hope that my colleagues would agree 
with me, this has been an absolutely virtuoso performance. It 
was superb.
    Mr. Powell. Thank you.
    Mr. Sawyer. If you carry out your goals with the clarity 
with which you have explained them, we are into a new era in 
terms of communications regulation.
    Let me return to a topic that Mr. Markey touched on in the 
abstract, I would like to touch on a little more in the 
specific. You talked about you planned to pursue worthy 
universal service goals, of ubiquity and affordability as new 
networks are deployed, but the challenge is to do it in new and 
creative ways.
    It seems to me that as telecommunications technologies 
merge, that there is a question of how the FCC administers the 
universal service charge becomes a question which is now, of 
course, just for voice and long distance.
    If we took a look at Internet telephony or wireless, would 
it be your view that the universal service charge might expand 
into that, without regard to technology but rather with regard 
to the way in which the service is structured?
    Mr. Powell. I think I understand the question. It is 
probably the ``$64 billion'' question, literally. Part of the 
answer to that depends on a pretty fact-specific evaluation of 
whether IP telephony can fairly be evaluated and categorized as 
a ``telecommunications service,'' as defined by Congress, such 
that the provisions that would be implicated by your question 
would be applied to them.
    If the factual analysis were to suggest it was something 
else--for example, an ``information service'' or as many of the 
Internet services have been categorized--it would largely fall 
outside of at least the traditional application of those kinds 
of subsidy programs.
    There is a limited amount of discretion the Commission has 
for extending service, but I think you still have a sort of 
touchy legal-versus-factual determination to see whether you 
can do that.
    The point about creativity, IP telephony is potentially a 
great example. At present--and there are some big ``ifs'' and I 
am cognizant of them--but if you are on the Internet, you are 
talking about the ability to communicate right now by utilizing 
a piece of software that in many instances is free or 
relatively inexpensive, using the public Internet which nobody 
owns, to talk to your friend in New York City without any per-
minute or service charges. Now, that is pretty ubiquitous and 
pretty affordable.
    I think that my only challenge in these areas is to ensure 
that we find the exact problem we are attempting to cure before 
we talk about the extension of the traditional program to them. 
One of the reasons I tend to resist prematurely intervening in 
the context of IP telephony is because it is engaged in a 
wonderful period of innovation, and experimentation is being 
deployed wildly such that it was a critical issue in a major 
merger recently, and consumers are really reaping the benefit 
of its deployment.
    Mr. Sawyer. In the few seconds that I have left, let me 
share with you my predisposition on this. I really believe that 
the Land Grant Colleges Act at the end of the 19th Century 
changed America in critical ways. It took the growth of a 
technology in terms of railroad transportation, and used it for 
the task of more broadly building that skill level that we 
needed as a Nation.
    It seems to me that the genius of the E-rate is that it has 
the potential, wisely applied, to do many of those same kinds 
of things, not just for putting equipment into schools but for 
elevating the skill levels of an entire population, something 
that we are challenged to do in ways that we probably never 
imagined before.
    So, with that, I will be revisiting the question with you, 
and thank you for your support.
    Mr. Upton. Mr. Stearns.
    Mr. Stearns. Thank you, Mr. Chairman. Chairman Powell, the 
FCC's January decision pertaining to the ``carriage of digital 
television broadcast signals'' has led many broadcasters and 
cable operators to visit my office on a number of occasions, 
and you and I talked about that.
    My question is specifically focusing on the multi-cast, 
must-carry provision. What impact will the rule have on small, 
independent broadcasters, Christian broadcasters, Spanish 
language and emerging network broadcasters, who have strong 
concerns here about this rulemaking?
    Mr. Powell. The decision will probably have a 
disproportionate impact, but it will have the same impact it 
has on all broadcasters, which is it is going to limit at least 
one viable business opportunity to effectuate the transition at 
least with the Government right-to-access. It is important to 
emphasize that nothing we said precludes any broadcaster from 
reaching a negotiated carriage agreement for those kinds of 
services. It is only that we can't interpret the must-carry 
statute to provide a Government-conferred, absolute right to 
that carriage because of the statute's use definitionally of 
the idea of a ``principal'' or, I should say, ``primary'' video 
signal.
    Mr. Stearns. But if the cable network shuts them down and 
says, ``We will accept your high-definition signal, but we are 
not going to do the multi-casting'', there is no negotiation. 
So, how can they negotiate?
    Mr. Powell. They might not be able to, and I think that if 
that is a critical desire for transition, that statutory change 
would be warranted. This was the area I was alluding to 
briefly. I sincerely believed our decision was one of those 
tough ones that we believe was just compelled by the only 
honest reading of the statute.
    Mr. Stearns. You are still going under taking comments, 
too, as I understand. You are still--I am not saying here you 
are going to revise it--but you are in the process of it?
    Mr. Powell. Well, I think you are referring to two things. 
There is a further notice, and there are two things potentially 
implicated there. One is the carriage of both--there is still a 
question about whether we would confer or interpret the statute 
to allow the carriage of both an analog and a digital signal 
simultaneously. That is different than the issue you are 
referring, that is teed up in the notice. Though we raised 
pretty significant constitutional concerns about dual carriage. 
The other issue is whether there is part of the statute that 
allows you to carry, in addition to your primary video signal, 
program-related material. The statute defines program-related 
material, but we provided another round of comment as to what 
that might include. And that also has an effect on what a 
broadcaster may be able to do over its must-carry signal in the 
vertical blanking role and other ways. It is a pretty narrow 
statutory provision, but we are seeking comment on whether 
there are ways to do more.
    Mr. Stearns. Let me follow up on Chairman Tauzin's 
question. I introduced legislation easing the duopoly rules and 
grandfathering of existing local marketing agreements and 
elimination of the one to a market rule. And the Commission's 
actions in this respect have been appreciated.
    Shouldn't the next step be to perhaps eliminate or at least 
relax the national ownership caps on broadcasters as well as 
repeal the broadcast cable and broadcast newspaper cross-
ownership rules? Yes or no, if possible.
    Mr. Powell. I can't do that. I think it is absolutely----
    Mr. Stearns. Maybe we could break it down.
    Mr. Powell. My effort is to always go back to my 
substantive points: validate or eliminate. The 35-percent 
national ownership rule, if I remember correctly, was 
promulgated in the 1970's with an entirely different media 
environment than the present environment, and should be 
validated, if it has any merit at all, in the current context. 
The biannual review will provide the vehicle for that.
    The newspaper cross-ownership is similar. We already have 
directed that we will have an item to examine that question 
very shortly, in the next month or so.
    Mr. Stearns. So the repeal or relaxing of the broadcast 
cable and broadcast newspaper cross-ownership rules are to be 
decided, when?
    Mr. Powell. There will be a proceeding that initiates the 
examination of those rules in the next month or 2. It is being 
slated for May.
    Mr. Stearns. Let me talk about ownership caps in this 
respect. The Commission generally seems to set ownership cap-
type rules well below the kind of threshold that might be 
expected if the affected industries were simply governed by the 
antitrust laws. In cases where you lack a clear direction from 
Congress as to where to set a cap, just give me an idea of the 
principles that you might use with respect to matters of 
ownership or concentration, maybe just some principles.
    Mr. Powell. Communication policy has always been infected 
with two principles, and they are not always consistent. One of 
the principles is competition or concentration concerns, the 
anti-competitive effects of concentration of market. That is 
also the historical gravamen of antitrust policy.
    The trick here, is the notion of diversity of program 
voices that may or may not bear direct resemblance to 
concentration levels that are impermissible. The horizontal 
cable are a perfect example, that the 30 percent, in all 
likelihood, couldn't be justified as a national cap for purely 
competitive purposes. That number would probably, in all 
likelihood, be lower than what antitrust would suggest to the 
typical HHI kind of economic analysis would suggest.
    Diversity is a harder thing to decide whether you believe 
this limit or that limit is too much or too little, and I think 
that is where the problem is most difficult to address. They 
are worthy policies, but very difficult to articulate and 
promulgate rules for because it is very easy to be subject to 
the accusation that, you know, why not this number, why not 
that number, and that is a very difficult thing to do.
    It is also difficult because when it involves diversity, it 
usually means it involves media, which usually means you have 
to defend the rule against First Amendment scrutiny, which is 
higher than our rules would be defended in concentration 
context. So, the Time Warner case was hard, in part, because 
the court said ``You have to pass constitutional scrutiny in 
defending the selections that you made''. And so, the long and 
short of it, those are the objectives.
    I am not the biggest fan of prophylactic caps generally 
just because I believe, as I learned in law school, rules tend 
to be almost always over-inclusive and under-inclusive at the 
same time. People you wish you got get away, people you don't 
want to get get caught. And I think a lot of times those 
judgments are very case- or fact-specific, and it is very 
difficult to pronounce that a level is too little or too much. 
But I think if they are warranted at all, they are probably 
more warranted if you are convinced by diversity concerns than 
they are usually by competition concerns, and it is many of the 
reasons why antitrust policy is a case-specific doctrine, it is 
not a prophylactic one.
    Mr. Stearns. Thank you, Mr. Chairman.
    Mr. Upton. Thank you. Ms. Harman.
    Ms. Harman. Thank you, Mr. Chairman. I apologize for being 
slightly distracted, but I have just learned from Mr. Boucher 
that our colleague, Norman Sisisky, passed away this morning, 
which I find truly upsetting. He was a wonderful and decent man 
with whom I served on the Armed Services and Intelligence 
committees for many years. Marvelous sense of humor. It reminds 
us all how fleeting life is.
    Pulling myself back together a bit, I would like to join 
Mr. Sawyer in his comments about your testimony, Chairman 
Powell. I thought it was extraordinary. And if you bring those 
skills to reforming the FCC, the rest of the Federal Government 
should come next.
    Let me associate myself particularly with your comments on 
enforcement and need to enforce the law. As one who threaded 
her way through the difficult votes on the Telecom Act of 1996, 
it is my personal bias that we should let that law work and we 
should enforce its provisions.
    I would like to just ask you a few questions, first, to 
bring to your attention two disputes involving the Los Angeles 
region, and to hope that your Agency will intervene to resolve 
them short of litigation and rulemaking.
    One involves something I just learned about, which is your 
approval for the construction of a new broadcast tower on Mt. 
Wilson, in Burbank, California. That broadcast tower is 
beginning to be built by Unavision, and it is extremely close 
to another broadcast tower which exists, that was built by ABC. 
And the issue is, how high will the Unavision tower go because, 
if it is too high, it will block the signal from the ABC tower. 
This should be a resolvable issue. People are talking to the 
Agency. I just wanted to be sure you personally knew about it, 
and hopefully there will be a satisfactory resolution soon. 
That is one.
    The second one involves the allocation of emergency radio 
frequencies which are the lifeline of effective police and fire 
services. El Segundo, California, another city in my district, 
was part of something called the South Bay Regional Public 
Communications Authority, which owns a number of frequencies, 
some of which are unused. El Segundo is no longer part of this 
group, and would like to reclaim some of these frequencies it 
previously owned. I am, again, hopeful--I will be writing you 
about this--that your Agency will try to intervene, work this 
out short of some prolonged dispute that is avoidable and that 
will disrupt police-emergency services.
    My question is on a different issue. We started out joking 
about basketball and football teams and so forth. One of the 
other things that local areas get incensed about is changes in 
zip codes and area codes for telephone numbers. And, of course, 
there is a dispute in Los Angeles about this.
    There is an answer that could alleviate a lot of this 
regional tension that I hope you will consider as you move your 
Agency toward one that operates across technologies, and that 
answer is called ``technology-based overlays''. A bill passed 
in California, SB-1741, which requires California's public 
utilities to adopt technology-based overlays. And this 
legislation cannot be implemented without your approval, your 
Agency's approval.
    What it would do is require that the new technologies--data 
lines, ATM machines, pay-point machines, and possibly pager and 
cellular phones--move to new area codes so that the businesses 
and homeowners wouldn't have to change theirs. This seems to me 
to be a logical idea. It would sure help neighbor-to-neighbor 
relations in the Los Angeles area and all over California, and 
probably in other States, and I would just like to know your 
view of this concept.
    Mr. Powell. Sure. The numbering issues are becoming quite 
serious. The explosion, the revolution, has created an 
extraordinary demand for unique identifiers to reach devices 
and new services, and that is leading to the big exhaustion of 
a numbering system that was principally designed around--this 
is one of those legacies--historically around the common-
carriage system.
    The Commission's prior rules were opposed to service-
specific overlays principally because they evolved from the 
fear, once upon a time, that if you had them, they would 
benefit the monopoly incumbent, who would deny the availability 
of numbers to new innovative entrants. Oddly enough, now we 
almost have the reverse of that problem, as new technologies 
come into the market.
    The Commission recently undertook a proceeding to re-
examine and to look again at whether service-specific overlays 
make sense. And so I think we are at least convinced that it is 
an idea that requires pretty serious attention, and maybe the 
original rationales for the prohibition are no longer 
justified. And we have worked very well with California and 
other States trying to provide as much relief--we know how 
sensitive it is to consumers in States. We know how sensitive 
it is politically in States, and we have really been trying to 
increasingly do everything we can to give States the 
flexibility they need to better deal with that problem.
    Ms. Harman. I thank you for that comment and just conclude 
on the point that California needs your attention to the three 
issues I mentioned, and you can be very helpful to us, and 
speaking for me, I am very excited about the fact that you are 
bringing to this job the enormous energy and vision that you 
obviously are bringing to it. Thank you, Mr. Chairman.
    Mr. Upton. Mr. Deal.
    Mr. Deal. Thank you, Mr. Chairman. I want to thank you for 
being with us today, and one of the themes you will probably 
hear from many of us who represent rural areas is our concern 
about universal service. And I would like to revisit that just 
briefly with you.
    I have recently introduced a bill that would remove the 
caps on the high-cost rural areas that have been imposed, I 
believe, since 1994 under FCC rule, and some would estimate 
that that has cost these high-service providers some $350 
million over the course of that timeframe.
    I would just like to ask briefly what your opinion is about 
the possibility of removing those caps to those service 
providers that are in those high-cost rural areas.
    Mr. Powell. Sure. The caps have a convoluted history as to 
what their purposes were, but there are actually two or three 
dimensions to which they go. The cost of the actual loop or 
line infrastructure which we call the high loop costs, is one 
example to which their caps run. There are also caps on sort of 
corporate general expenditures includes discretionary costs 
such as travel and lodging associated with the operation of the 
telephone company, and another one which I won't even pretend 
to remember.
    So, I think that I don't know the answer to the question at 
present, other than this is ripe and teed up in the context of 
our rural access reform and rural high-cost proceeding that is 
presently underway and to which we hope to have final decision 
by May, so that changes can be implemented in the July 1 
timeframe.
    The rural task force that worked to develop a 
recommendation to the Commission has filed some proposals that 
include modifications of the cap in a way that the rural 
companies believe would be beneficial to them, and those are 
very much alive and on the table for examination.
    The problem in my job always about subsidies is that they 
are not cost-free. That is, they do have a reverberating impact 
on other consumers who will have bill increases as a 
consequence. Removing the cap, we estimate, just on the high 
loop, is probably $198 million addition to the system. The 
corporate cap would be another $40 million addition to the 
system--not that they might not be justified, but that money 
comes from somewhere, and it comes from consumers who will then 
have line charges.
    So, it is not always easy to reconcile, but I think we are 
committed to making sure that rural America, rural companies 
have the subsidy that is critical to continued provision of the 
service, and this is just where we get paid, or we don't, the 
big bucks to balance those.
    Mr. Deal. Well, we look forward to working with you on 
that. Let me change subjects just slightly with you, and that 
is DBS.
    My district is one of those unique ones that borders four 
other States, and because of the current rules as to service 
provider areas, many of my constituents that are close to the 
borders are considered within the range only of television 
stations that are outside of our State and therefore DBS is not 
allowed to provide them as the local channels that they would 
prefer.
    I would simply ask if you would look at that issue because 
it is certainly one that affects many of our constituents. They 
would prefer to have, for example, the television stations 
broadcast from Atlanta, Georgia, the capital of our State, 
rather than from Chattanooga, Tennessee on the western side of 
my area, or from Greenville, South Carolina on the eastern 
side.
    It is a concern for those DBS subscribers in some of those 
rural areas, and I would look forward to working with you as we 
could try to solve that problem.
    Mr. Powell. Absolutely.
    Mr. Deal. Thank you. Thank you, Mr. Chairman.
    Mr. Upton. Mr. Green.
    Mr. Green. Thank you, Mr. Chairman. It has been a long 
morning, Mr. Chairman, but I have really two questions if I 
could do it in the 5 minutes. One of them is a local situation 
in Texas. NorthPoint Communications has had a pending 
application to offer digital television services and high-speed 
Internet access in direct competition with cable and DBS 
providers. I want to see more competition in cable and DBS, and 
we are talking both in terms of price and service, and 
innovative wireless technology developed in the State of Texas 
by NorthPoint technology could provide a real competitive boost 
to the marketplace, and their service, which would include 96 
channels including local stations could be marketed to 
consumers for just about $20 a month. Not only could they 
deploy it in Houston, but also in other television markets in 
the country.
    I understand NorthPoint first came to the Commission in 
1994, and that a license application has been pending for over 
2 years. The Commission concluded NorthPoint's signal would not 
cause harmful interference, so I wonder why the licenses 
haven't been granted. I know you may not be familiar with this 
particular one, but if you could get back with us.
    And do you believe the satellite broadcasters can meet 
their looming requirement to meet local communities, to provide 
local communities with a full set of local signals, and also 
whether it is NorthPoint's technology or someone else's 
technology, is there a solution to that particular problem?
    Mr. Powell. Yes. Actually, this is a perfect set of issues 
that highlight the problems of lack of harmony in different 
regimes. The NorthPoint service, which technically is a 
terrestrially delivered use of wireless technology but will be 
competing principally with direct broadcast satellite which is 
delivered by satellite are regulated, arguably, in two 
different ways, one is as a wireless terrestrial provider and 
one is as a satellite provider.
    In the satellite provider context, for example, under the 
ORBIT statute, we are prohibited from auctioning spectrum, but 
in terrestrial wireless we are specifically required to auction 
spectrum. NorthPoint quite innovatively filed for a license in 
a satellite window, and it has an innovative and interesting 
and hopeful technology, but it has presented a number of 
challenges to the policy of reconciling a spectrum that is in 
the satellite window that has specific process of licensing and 
service rules that are very different from terrestrial and in 
which we work to eliminate mutual exclusivity by trying to 
balance interference concerns.
    It has been too long. We are working hard on it. We 
recently have been directed by Congress to conduct independent 
tests to determine the interference issues. That has been 
somewhat challenging because not everyone is always happy with 
who you choose to do the testing, but that is underway and we 
are very hopeful that pretty shortly we will have an 
aggregation of the results and be able to proceed.
    Mr. Green. Do you have any kind of timeframe?
    Mr. Powell. I can get that to you. I don't feel comfortable 
advancing one right now.
    Mr. Green. Appreciate that. After reading your testimony, I 
get the feeling that you favor an industry solution to the HDTV 
transition. Do you believe we ought to wait for the industry to 
come together on the issue, no matter how long it takes?
    Mr. Powell. Well, not necessarily. It depends on what you 
believe to be an impediment of the condition. The Government, 
for the entire history of the transition, has been very 
involved in that process and, to the extent it continues to 
take responsibility for the transition, I suppose there are 
issues of Government focus. We have talked about must-carry 
regimes. If people are convinced that those are critical to 
transition, it is an issue that would require a governmental 
act, I suspect. Similarly, there are issues about copyright and 
intellectual property protections that are rights conferred and 
granted by the Government. If that was a serious and continuing 
obstacle, one might not be prepared to wait forever for them to 
reach mutual agreement on those terms and conditions.
    I would point out that most of those issues are outside the 
specific jurisdictional context of the Commission. But I 
suppose that my only caution is it sort of depends on which 
specific issue and whether it has a natural Government 
component. But there are a lot of issues here about finding a 
sweet-spot for consumers. I don't know what specifically to do 
about the development of high-definition creative content so 
that they have something to see when the TV turns on, or the 
natural product cycles associated with driving $3,000 sets down 
to levels that average Americans, can afford. Much of that 
takes product cycle time.
    The average family in America owns three to four television 
sets. That is a lot of swapping to go on for an 85 percent of 
the population. So, usually my challenge is, let us identify 
specifically where the rubs are. Let us see which ones involve 
what institutions, and let us get those institutions focused on 
those problems.
    Mr. Green. Thank you, Mr. Chairman, and one of the 
questions we will submit is an update on reciprocal 
compensation, and I know that is an issue our committee has 
dealt with, but also the FCC.
    Chairman Tauzin. Mr. Chairman.
    Mr. Upton. Mr. Tauzin.
    Chairman Tauzin. I have just had staff check out the 
announcement about Norm Sisisky, and the announcement is 
correct. Norm Sisisky passed away today. The information we 
have is that he was recovering very successfully from surgery 
yesterday, and the report we had was that he was expected to 
make a full and complete recovery, but obviously it didn't work 
out that way, and maybe we could all join in a moment of 
silence as we remember a dear friend and extraordinary servant 
of the American people, Norm Sisisky.
    [Silence.]
    Chairman Tauzin. Thank you, Mr. Chairman.
    Mr. Upton. Thank you. Mr. Shimkus.
    Mr. Shimkus. Thank you, Mr. Chairman. Mr. Chairman, 
welcome. I think many of us, the Members of Congress, 
especially on this committee, if we ran for the Presidential 
office, would get the same type of results that Senator McCain 
did when someone said, ``You wrote a letter to the FCC asking 
them to rule on an issue''. All of us have probably written at 
least one letter to that, and so it is probably--I know that 
you, in your short amount of time, have really moved the 
Commission to get stuff out the door, and we would encourage 
you to continue. I think most people I deal with, who ask me to 
intervene or at least address the FCC, they just want some 
legal certainty--I think that is my buzzword of this Congress--
legal certainty. Whether it is Superfund or whether it is small 
business liability protections, or actually results and 
decisions made by the FCC, we just need some legal certainty--
win or lose, up or down--and then we can move on, and I would 
just throw that out as a comment.
    I don't have any pamphlets for NorthPoint technology. Maybe 
my colleague, Gene Green, can give me some of the pamphlets, 
and I could add to his advertising, but I am a supporter of 
it----
    Mr. Green. Mr. Chairman, would the gentleman yield? If you 
teach him how to shoot a basketball shot, I will share it with 
him.
    Mr. Shimkus. That is right. We do work together on a lot of 
issues. But I do also want to echo and support from an issue 
which is small broadcast companies, particularly KHQA in 
Quincy, Illinois, and this whole direct satellite local into 
local. And many of us feel--and there is a letter that 
mentioned the rulemaking--the reality is, if--we see this as 
the only way to get local-to-local in the competitive markets 
in many of the unserved areas. And if rulemaking is delayed, we 
fear it could be years before this new service is deployed. In 
your estimation, timeframe, when do you think a decision could 
be rendered?
    Mr. Powell. Congressman, I am not sure I am clear on what 
specific rulemaking you are referring to.
    Mr. Shimkus. Well, I guess, really, how quickly can you all 
make a determination of this NorthPoint with all the things you 
had mentioned, my colleague, Mr. Green from Texas, is a 
suitable transmitter of the digital signal that would be in the 
satellite spectrum. That is pretty good for someone who is 
still having trouble taking care of the vocabulary here.
    Mr. Powell. The only reason I am hesitant to say exactly 
the timeframe is because it requires the submission of the 
completed evaluation of the technical requirements from an 
independent tester that we were required by statute to 
undertake. I just am not sufficiently confident to know how 
much is involved there before I put my engineers in hell 
suggesting it will be next week.
    Mr. Shimkus. And that is fine. Again, it just speaks to the 
whole legal certainty, not just from this company's ability but 
also the small local broadcasters who are in areas that they 
don't really see local-to-local going without--I mean, there 
are a lot of people waiting patiently.
    Let me skip to another issue because of time. We passed our 
E-911 bill that initially was a lot of people have a piece of 
the action on, and Chairman Tauzin allowed me to carry it in 
the last cycle, and we are excited about it.
    What is your perception of the status of the E-911 
implementation, you know, throughout the whole industry, 
through the folks who are making the equipment, the handset and 
network solutions, and what about the Phase II requirements 
that kick in on the E-911, where do you think we stand on the 
implementation of that law?
    Mr. Powell. I think the Phase II requirements require a 
greater degree of granularity in identification and require 
handset identification technology. It is set for this fall, and 
we continue to believe that that date should be, and are 
hopeful that will be, met by the vast majority of providers.
    That said, there are a lot of issues starting to creep in 
that are creating some churn and anxiety that are implicated by 
location-specific technology, not the least of which is growing 
concern about handset privacy and whether we are ensuring that 
location-specific challenges don't create the kinds of privacy 
quagmire that are associated with some forms of Internet 
services.
    The other thing I am less concerned about, there is also a 
lot of churn in the industry as it changes and adapts standards 
in preparation for advanced services, and whether any of those 
things--I am not sure, but whether any of those network re-
engineerings will have an impact, I think, is less clear. But 
the privacy issue may be one that the Congress would be 
concerned about in time.
    Mr. Shimkus. I am glad you addressed that because that was 
a follow-up, what are the privacy concerns, we are hearing the 
same thing, and there has got to be a way, and technology can 
master a lot of the difficulties, or if there is an emergency 
and a person has access to turn it on--I mean, that addresses 
the privacy implication information.
    Mr. Powell. And that is where a lot of them are going. I 
just got back from the wireless show, and a lot of the 
solutions do have technology which are activated only when you 
dial 911 and are turned off, or the phone is defaulted to not 
ever--but the wireless industry also filed petitions with us 
recently to examine certain self-determined rules about privacy 
that we will consider in the context of this as well.
    Mr. Shimkus. Thank you very much. Mr. Chairman, I yield 
back. Thank you.
    Mr. Upton. Thank you. Mr. Stupak.
    Mr. Stupak. Thank you, Mr. Chairman. I apologize, I have 
been in and out between two different hearings here.
    Mr. Chairman, as I said, I come from a very rural area, 
with a lot of different telephone companies, small telephone 
companies, and things like that. But the question I would like 
to get your thoughts on is local residential competition. It 
seems to be working in some States and not others. Maybe in the 
Midwest we might--at least I believe we may be a little better 
with competition in Michigan and Illinois and Pennsylvania, but 
what decisions that were made, or weren't made, where you don't 
see the same type of competition from State-to-State?
    Mr. Powell. I think there are a whole lot of explanations 
for it, but all driven by the same recognition, which is 
companies enter markets when there is a viable economic base-
case to be made for entering those markets. And even when they 
believe there is a viable economic base-case, there is a 
limited amount of capital and resources so that they prioritize 
where they go first, even if they have an intention of going 
elsewhere or everywhere eventually. That is, it is not 
uncustomary that carriers enter markets where they get the 
largest economic return for their investment in the beginning, 
even if ultimately their plans will include, or should include 
or even if there are good economic cases for entering other 
markets, regrettably, that often is in many of the areas that 
you are talking about. And I think, in some ways, the capital 
crunches over the last year make that even more challenging in 
some regard.
    The other thing I think that in all candor is a matter of 
policy, which is a tradeoff of some tension, is local rates are 
set by regulation. They are subsidized by Government policy. 
They do not naturally reflect--as we wouldn't want them to in 
some States, I suppose--don't naturally reflect the economic 
costs associated with them.
    So, many carriers look at the economic case for entering a 
high-cost market and believe that the retail prices they will 
be able to offer will not be sufficient to recoup investment 
and to operate viably because those rates are not only 
sometimes below-cost, but are also subsidized. So, in many 
ways, the companies look at the decision as a huge capital 
investment to compete for below-cost rates and hope the 
Government keeps subsidizing consumers, which comes up short to 
a lot of companies and a lot of markets. I think it is the 
tradeoff Congressman Markey was talking about, there is tension 
between a competitive model that is genuinely economic-based 
and universal service or Federal subsidies. And so I think that 
is part of our problem in America across-the-board, and I would 
say principally in the residential market. It is even more 
acute in a geographical, area like those that you represent.
    Mr. Stupak. Well, certainly, Michigan and Illinois were 
Bell Companies, and when you take a look at the Bell Companies, 
they will insist that their markets are open even to their 
competitors, but yet we haven't seen where there has been 
competition in each other's turf except where it has been 
required under a merger condition. Is it the policy, or 
shouldn't the FCC also consider whether the out-of-the-region 
Bells have entered into the local market when determining 
whether to permit 271 relief?
    Mr. Powell. I would submit that we are constrained in that 
regard as to the way Section 271 is written.
    Mr. Stupak. Constrained in what way?
    Mr. Powell. For example, the prerequisite to 271 is 
something referred to as ``Track A'' and ``Track B.'' It is 
legally possible that someone could gain long distance entry 
without any local competitors, if you accept that Track A 
provides that someone could have what we call an S-gap, which 
is essentially a local tariff filing that suggests what the 
prices of interconnection would be. The statute contemplates 
that a company could satisfy that track, and nonetheless gain 
271 relief.
    Similarly, the second track, Track B, which requires an 
interconnecting carrier, only requires at a minimum one to 
technically satisfy the prerequisite for at least going through 
the examination. So, in many ways, there are many alternatives 
to the way you could grant long distance entry through local 
market opening measures. It could have been required there be a 
certain percentage of local competition before obtaining 
approval, a proposal which was rejected in the Congress.
    So, we feel somewhat constrained about the degree to which 
we can import additional factors, particularly when the end of 
the checklist has a provision that states squarely the 
Commission shall not add in any way to the checklist.
    So, we try our best, but I do believe, to be faithful to 
the statute we are limited in some of those.
    Mr. Stupak. One more, if I may, Mr. Chairman. The 
telecommunications industry, more than any other business, 
continues to be dominated by companies that pretty much all but 
enjoy impregnable monopolies in key markets. If the FCC steps 
back in certain cases, or in certain areas, won't State 
regulatory agencies be forced to then step in, leading to not 
less regulation, but rather more of a hodge-podge of 
regulations and different rules that will ultimately benefit no 
one, especially the consumers?
    Mr. Powell. I certainly don't submit that we are stepping 
back. I don't think the statute lets us step back. I think the 
statute carefully lays out respective roles for both State and 
Federal authorities. I think there is always a debate over the 
degree, and the extent to which the statute inures to a more 
intrusive approach and a less intrusive approach. But I do 
believe that we sometimes--well, I do believe that it is 
relatively cabinet within the statute language, and there is 
some variation and flexibility, but we wouldn't, even if we 
wanted to, be able to walk away from that level of involvement 
and, indeed, Section 271 specifically says the Commission is 
not permitted to forebear.
    Mr. Stupak. Thank you. Thank you, Mr. Chairman. Thank you, 
Chairman Powell.
    Mr. Upton. Mrs. Cubin.
    Mrs. Cubin. Thank you, Mr. Chairman, and thank you, Mr. 
Chairman. It is delightful, it is refreshing to hear your view 
of where the Commission can go, and I am sure that even the 
problems that we face with technical shortcomings and personnel 
can be solved when we work together to do that.
    I am primarily interested, as you know, in rural issues. We 
just passed out of this committee and off the floor, H.R. 496, 
which helps to cut regulations on small and mid-size telephone 
companies. The FCC notified the CBO that when deregulatory 
efforts are made that it costs money, and in the case of H.R. 
496, the FCC advised CBO that it will cost $3 million in the 
first year, $2 million in the second year, and then costs would 
be incurred thereafter. Why is that?
    Mr. Powell. I honestly don't know. I am not familiar with 
the assessment that you are speaking of. My only educated guess 
would be that some aspect of the relief would result in 
potentially greater universal service subsidy costs that have a 
net increase in cost to either other consumers or to the 
Government fund. Other than that, I am not so sure at all what 
those numbers refer to. I will check.
    Mrs. Cubin. Thank you. And, you know, I just have to laugh 
because Chairman Tauzin and I just exchanged a few comments a 
minute ago, and he said--I had remarked about how pleased I am 
with your presentation and the future, and he said, ``There 
isn't anybody on this panel that can ask him a question he 
can't answer''. So, I apologize for that.
    I do want to get into some other rural issues. Rural 
carriers have indicated a willingness----
    Mr. Powell. Does it count if I answer late?
    Mrs. Cubin. That would make the Chairman exactly correct. 
The Chairman is always correct.
    Rural carriers have indicated a willingness to make 
significant investments in the delivery of competitive rural 
exchange services in under-served areas, but rural carriers 
also have indicated to me that they have postponed new 
competitive projects because of the uncertainty and the delay 
in FCC decisionmaking issues surrounding changes for 
competitive carriers.
    Under your chairmanship, when do you think we can expect a 
decision on the access charge issue?
    Mr. Powell. Our goal, because of the annual tariff cycle, 
is to be able to have these provisions voted and implemented in 
time for the July 1 start of the tariff filing change, which 
would, as a practical matter, really require the Commission to 
be finished by May or June.
    Mrs. Cubin. Thank you. Again, going back to dealing with 
the impact that regulation has on small and medium-size 
carriers, are there any other measures that you might have 
under consideration to expedite deployment of services in rural 
America, that can be weighed against the responsibility for 
filling out forms and the cost of regulation on small 
companies?
    Mr. Powell. Well, I believe that--and I wouldn't enumerate 
them now--but that the Commission has started to become quite 
aggressive about the streamlining of regulatory processes and 
procedures, and with particular attention to small and rural 
carriers, understanding the greater burden that they face as 
opposed to some of the major incumbent carriers, and we 
continue to do that. We think that those represent significant 
cost to their operations, but the challenge is that a lot of it 
is for naught if States don't engage in a similar concomitant 
effort because the real bulk of regulation, candidly, on local 
phone companies comes from State regulatory authority and State 
telecom statutes, and not the Federal component of their 
operation. I mean, if we walked away from all of them tomorrow, 
they would not be unregulated in any way, shape or form. And so 
I think it is important to make your concerns equally aware to 
the State authorities because I think that is where most of the 
most significant obligations come from.
    Mrs. Cubin. You are absolutely correct, and lots of times I 
think those folks like to punt the responsibility or the blame, 
if you will, to us. So, I absolutely agree with you on that.
    One last question. The Rural Independent Competitive 
Alliance filed an emergency petition in February 2000 regarding 
the nonpayment of access charges. It is now 14 months later so, 
the word ``emergency'' becomes an oxymoron at this point. But 
can you give the status of that petition?
    Mr. Powell. The petition implicates the access charge 
regime with CLEX, and we have an item on just that subject that 
will be, we hope, in parentis with the reciprocal compensation 
item, both of which will be on the floor for voting this week. 
The reciprocal compensation item--I hope I am not lying--is on 
the floor, as we speak, for voting, and as my colleagues make 
their decisions, we will be finished.
    Mrs. Cubin. Thank you very much, Mr. Chairman, and you, Mr. 
Chairman.
    Mr. Upton. Ms. Eshoo.
    Ms. Eshoo. Thank you, Mr. Chairman, and to Chairman Powell, 
welcome back. I believe this is your maiden voyage here at the 
committee. I welcome you and congratulate you on your 
appointment by the President to this prestigious position, and 
I look forward to working with you, and I think that you are 
off to a great start today before our committee.
    I have three questions and I am going to ask them and leave 
the rest of the time for you to answer.
    I know that you have been very supportive of new broadband 
wireless technologies, particularly those that have the promise 
of being low-cost and therefore being widely available to 
consumers, to educators, to health care professionals, amongst 
others.
    One such technology is ultra-wideband, which I think really 
holds great promise. Based on recent reports from the NTIA and 
some ultra-wideband technology, saying that some ultra-wideband 
technologies may interfere with GPS-based public safety 
services and while there are other UWB technologies that 
present less of a concern on this interference, I would like to 
know what your view on the potential of the technology is, and 
also how we can best bring its benefits to the marketplace. 
That is my first question.
    And very quickly, on the E-rate, I think that the committee 
heard testimony very recently--I thought it was an excellent 
hearing--on the benefits. It was really quite a panel of people 
that came from different parts of the country to talk about how 
so much of this has reached out into the community. And I would 
like to know how you plan to build on the successes of that 
program.
    My congressional district is the home to Silicon Valley, 
and no matter what community I go into, they are eager to build 
on what we have already put in place, so I would like to hear 
some of your ideas about that.
    And, also, I had offered a bill on E-911, after making the 
determination of some of really the horror cases that had taken 
place in our country. And as a result of that legislation and 
my continuing to remind Commissioners and the previous Chairman 
about that, it was taken up at the FCC, and I know that you are 
in Phase II. Is there a Phase III? Do you think Phase II is on 
time? Do you think that it can come in under time, you know, 
the time that is set?
    I think that there are still too many people in the country 
that are waiting for the full promise. In fact, I think that 
the promise was made and kept a long time ago. So, if you could 
comment on those questions. Again, thank you for being here, 
and I look forward to working with you on behalf of the 
magnificent people I represent, but in a broader sense that we, 
in this new century, move telecommunication and all that we are 
jointly responsible for to truly make it shine, make America 
shine, and you will be key in that.
    Mr. Powell. Thank you. I would be happy to address your 
questions in turn. Ultra-wideband technology, we think, is 
exciting and promising. It is a truly unique technology that is 
able to operate over the top of other radio frequencies, but 
therein lies also its challenge. There is an enormous amount of 
significant anxiety about the degree to which it interferes 
with other services, particularly some critical services like 
GPS, which even implicates some of the things you, too, are 
concerned about like the use of those GPS frequencies for 
navigation and public safety purposes.
    So, it is one of those classic technical questions, which 
is that I don't think there is any lack of enthusiasm for the 
technology, it has to do with the nitty-gritties of the 
technical interference.
    We presently have before us many technical studies that 
attempt to reconcile UWB interference both with GPS and, as you 
mentioned, with other services, and from very reputable 
sources. We are in the midst of digesting those studies and 
evaluating what our next steps might be. We would love to 
proceed expeditiously with the next step, which would likely be 
a Report and Order, unless--which is an important caveat--as we 
finish sorting through data, we find reasons to be of 
significant concern.
    I think your question about whether you could split from 
GPS concerns about other frequencies if they had different 
characteristics might be possible depending on what the data 
actually reveal, whether that proposition is correct. But we 
will keep you informed, and I think that we will probably be 
moving pretty soon on some of those questions.
    The E-rate program, which is set out in congressional 
statute, has been, as measured, truly successful. The last time 
I saw statistics, some 95 percent of public schools in America 
had some form of Internet access, and we have reached close to 
the 63-67 percent range for actual individual classrooms across 
the country. Certainly, if that alone is the objective, it has 
been tremendously successful.
    I consider the Commission principally the steward and 
administer of Congress' program, and we will continue to 
administer it effectively so that it continues to have those 
results.
    I also think we have a duty and obligation to be its 
diligent watcher for abuse, which I think could endanger the 
program. I mean, like with any large program, you will 
customarily run into incidents of people making abusive use of 
it, and we have, on occasion, and have treated those intrusions 
seriously and significantly. And I think it will be important 
to do so if we hope to continue to protect its purpose and its 
validity in any real measure.
    Ms. Eshoo. I hope you will be a champion and not just a 
steward. It is important as the steward is and enforcer is, I 
think a champion--nothing takes the place of a champ.
    Mr. Powell. Well, I don't know if I'm a champ, but I will 
do my best.
    Ms. Eshoo. I am inviting you to.
    Mr. Powell. E-911, I think, similar to the question that 
came up earlier, I think that we continue to be optimistic 
about meeting Phase II. We will very soon start to have a more 
appreciable understanding of whether that is true, as we get 
closer and industry more thoroughly reveals where they are, 
where they aren't. But I think for the moment we are pretty 
hopeful and optimistic that we will substantially get there 
with some of the caveats I alluded to earlier, which is there 
may rise public policy questions around privacy and around 
other issues that may have to be balanced against that 
objective as well. But I think we can certainly expect that 
Americans will very soon start to see and appreciate the 
benefits of those wonderful hand-held devices actually coming 
to their aid in a time of need.
    Ms. Eshoo. Thank you, Mr. Chairman.
    Mr. Upton. Mrs. Wilson.
    Mrs. Wilson. Thank you, Mr. Chairman. I want to join my 
colleagues in saying that I thought your testimony was 
refreshing and I think it will make a big change. I have to say 
that I think it was particularly thoughtful for a former Army 
officer, so I was very impressed.
    Mr. Powell. We are not so bad.
    Mrs. Wilson. A few questions on some things that I think 
are kind of important to New Mexicans as well as to the 
country. I have been kind of watching local competition and 
thinking about why things work in some places and why they 
don't work in others. And I would be interested in your 
thoughts about why local residential competition seems to be 
working in a handful of States, like Michigan, Illinois, 
Pennsylvania, and what decisions were made there that weren't 
made in most other States?
    Mr. Powell. It is a very hard question mostly because there 
are certainly two regulatory environments that can affect that 
decision. In the context of, say, Michigan, of the regulatory 
environment and the telecommunications statutory environment in 
that jurisdiction may have a lot to do with the ease of entry 
or the regulatory cost. Or the rights of everything from 
rights-of-way, to whether you are able to dig up streets 
without opposition, to whether you are able to access incumbent 
networks at different prices. States have varying prices on 
which many services can be offered by a competing incumbent. 
Some States are more aggressive about that than others. And so 
there is a real difference in the regulatory and political 
environments in different locations.
    There is also what I was alluding to before, real 
differences in the economic viability of certain models. 
Residential customers are always going to be the hardest, and 
the simple reason is their rates across the country, due to our 
historical commitment to universal service and the 
subsidization of local rates, are largely at or below cost in 
many parts of the country. And so an entrant who has to make 
major capital investments is often wary or last to offer a 
competitive alternative to compete for mostly high-volume, low-
margin service. You have to have a whole lot of customers to 
make low-margin individual customers work for you economically. 
And when you are going up against an incumbent--and that is a 
lot of growth to achieve--it is either a slow process or, in 
some instances, probably difficult or impossible process. So, 
those are some of the reasons.
    It is also why I think that we ought to be very thoughtful 
and creative about universal service going forward. Not because 
the goals are unassailable but because we should understand 
that if we can achieve ubiquity and affordability without 
similar intervention, or at least the same sort of thing, we 
might preserve more economic rationality in advanced services 
so that they stay competitive.
    If $10 a month flat service can be achieved in a 
competitive market without subsidization, or you might achieve 
a $7 price with subsidization and below-cost aid, you might 
take the former as better maximizing the welfare of both those 
consumers, and consumers across the country, because people 
will be able to viably compete for those services.
    There is an interesting example in the Internet Space 
National Research Council recently reported that 90 percent of 
Americans now have at least access to narrow-band Internet 
service, with 10 competing ISPs or more. There are some 
indirect benefits that ISPs have that could be called 
subsidies, but they have not yet received any direct 
subsidization, yet we have a very aggressive ISP competitive 
environment. For most of us, ISP service is an enormous deal as 
compared to the cost of even my local phone bill.
    And so I am always cautious and careful about, yes, let us 
pursue the goals, but let us try to do it this time, as much as 
we can, by preserving competitive and economic rationality so 
we won't have to do this 30 years from now--arguing why local 
broadband competition didn't work in your State either.
    Mrs. Wilson. Let me follow up on that, if I can, and you 
have said it a couple of times in answers to questions, and you 
also say it in your testimony, about the importance of ubiquity 
and affordability as principles in pursuing universal service, 
and that we should do that in creative ways.
    Color outside the lines with me here a little bit. What are 
the creative ways that you are thinking about? Does that mean 
just no regulation? I mean, what does it mean?
    Mr. Powell. Not necessarily. I mean, I am still creating, 
so I don't have my Crayola with me.
    Mrs. Wilson. You can borrow mine.
    Mr. Powell. I would say, we have very significant 
differences as we move to advance infrastructures in broadband 
than we did from the original phone experience. Broadband is 
going to be built on top of infrastructures that are largely 
already deployed. That is, telephone service reaches over 90 
percent of homes in America, or 94 percent. Cable is even 
higher in its reach of homes in America. Those are the leading 
broadband infrastructures. We will not start from scratch in 
laying out those infrastructures, we will overlay on top of 
them to provide advance services. That provides a huge cost 
advantage.
    So, you might look at policies designed to incent 
systematic upgrade, as opposed to the advancement of policies 
that were originally designed for the building from scratch and 
preservation of that model.
    Technology also is our huge friend in this regard. As I 
think members from rural States have already realized, the 
challenge of the phone system was that it was a ground-based 
wire infrastructure that required enormous geographic 
sensitivity and demographic sensitivity. If you are in a rural 
area of Montana 600 miles apart, that is a lot of wire for a 
relatively few number of customers. But we are starting to see 
technological solutions that may be agnostic about some of 
those things, which is why I think that there is reason to be 
excited about satellite-delivered services, and we should, at a 
minimum, be looking for policies that incent the continued 
innovation deployment of those services as a universal service 
policy.
    I also think it is not unusual why on the Continent of 
Africa there are no wired phones in many parts of it, but there 
are substantial numbers of wireless systems. They are solutions 
that are very applicable to environments in which wired 
infrastructure would be difficult. And as those technologies 
reach speeds that provide advance services, they may be very 
good tailored solutions for other environments.
    And I guess my creative notion is that it is a desire to be 
careful about what we want to incent as opposed to just rotely 
assume that universal service means what it meant in the public 
switch telephone context.
    Mrs. Wilson. Thank you. One final question, since I didn't 
use my opening statement time.
    I know that you have been very supportive of new broadband 
wireless technologies, particularly those that have the promise 
of being low-cost and therefore being widely available to 
consumers, to educators, to health care professionals, amongst 
others.
    One such technology is ultra-wideband, which I think really 
holds great promise. Based on recent reports from the NTIA and 
some ultra-wideband technology, saying that some ultra-wideband 
technologies may interfere with GPS-based public safety 
services and while there are other UWB technologies that 
present less of a concern on this interference, I would like to 
know what your view on the potential of the technology is, and 
also how we can best bring its benefits to the marketplace. 
That is my first question.
    And very quickly, on the E-rate, I think that the committee 
heard testimony very recently--I thought it was an excellent 
hearing--on the benefits. It was really quite a panel of people 
that came from different parts of the country to talk about how 
so much of this has reached out into the community. And I would 
like to know how you plan to build on the successes of that 
program.
    My congressional district is the home to Silicon Valley, 
and no matter what community I go into, they are eager to build 
on what we have already put in place, so I would like to hear 
some of your ideas about that.
    And, also, I had offered a bill on E-911, after making the 
determination of some of really the horror cases that had taken 
place in our country. And as a result of that legislation and 
my continuing to remind Commissioners and the previous Chairman 
about that, it was taken up at the FCC, and I know that you are 
in Phase II. Is there a Phase III? Do you think Phase II is on 
time? Do you think that it can come in under time, you know, 
the time that is set?
    I think that there are still too many people in the country 
that are waiting for the full promise. In fact, I think that 
the promise was made and kept a long time ago. So, if you could 
comment on those questions. Again, thank you for being here, 
and I look forward to working with you on behalf of the 
magnificent people I represent, but in a broader sense that we, 
in this new century, move telecommunication and all that we are 
jointly responsible for to truly make it shine, make America 
shine, and you will be key in that.
    Mr. Powell. Thank you. Be happy to address your questions 
in turn. Ultra-wideband technology, we think, is exciting and 
promising. It is a truly unique technology that is able to 
operate over top of other radio frequencies, but therein lies 
also its challenges, which creates an enormous amount of 
significant anxiety about the degree to which it interferes 
with other services, particularly some critical services like 
GPS, which even implicates some of the things you, too, are 
concerned about, about the use of those GPS frequencies for 
navigation and public safety purposes.
    So, it is one of those classic technical questions, which 
is that I don't think there is any lack of enthusiasm for the 
technology, it has to do with the nitty-gritty of the technical 
interference.
    We presently have before us many--maybe too many--technical 
studies that attempt to reconcile UWB interference both with 
GPS and, as you mentioned, with other services, and from very 
reputable sources. We are in sort of midst of digesting and 
evaluating what our next steps might be. We would love to 
proceed expeditiously with the next step, which would likely be 
a Report and Order, unless--which is an important caveat--as we 
finish sorting through data, we find reasons to be of 
significant concern.
    I think your question about whether you could split from 
GPS concerns about other frequencies if they had different 
characteristics might be possible depending on what the data 
actually reveal, whether that proposition is correct. But we 
will keep you informed, and I think that we will probably be 
moving pretty soon on some of those questions.
    The E-rate program, which is set out in congressional 
statute, has been as measured truly successful. The last time I 
saw statistics, some 95 percent of public schools in America 
had some form of Internet access, and we have reached close to 
the 63-67 percent range for actual individual classrooms across 
the country. Certainly, if that alone is the objective, it has 
been tremendously successful.
    I consider ourselves principally the steward and administer 
of your program, and we will continue to administer it 
effectively so that it continues to have those results.
    I also think we have a duty and obligation to sort of be 
its diligent watcher for abuse, which I think could endanger 
the program. I mean, like with any large program, you will 
customarily run into incidents of people making abusive use of 
it, and we have, on occasion, and have treated those intrusions 
seriously and significantly, and I think it will be important 
to do so if we hope to continue to protect its purpose and its 
validity in any real measure.
    Ms. Eshoo. I hope you will be a champion and not just a 
steward. It is important as the steward is and enforcer is, I 
think a champion--nothing takes the place of a champ.
    Mr. Powell. Well, I don't know if I'm a champ, but I will 
do my best.
    Ms. Eshoo. I am inviting you to.
    Mr. Powell. E-911, I think, similar to the question that 
came up earlier, I think that we continue to be optimistic 
about meeting Phase II E-911. We will very soon start to have a 
more appreciable understanding of whether that is true, as we 
get closer and industry more thoroughly reveals where they are, 
where they aren't. But I think for the moment we are pretty 
hopeful and optimistic that we will substantially get there 
with some of the caveats I alluded to earlier, which is there 
may rise public policy questions around privacy and around 
other issues that may have to be sort of balanced against that 
objective as well. But I think we can certainly expect that 
Americans will very soon start to see and appreciate the 
benefits of those wonderful hand-held devices actually coming 
to their aid in a time of need.
    Ms. Eshoo. Thank you, Mr. Chairman.
    Mr. Upton. Mrs. Wilson.
    Mrs. Wilson. Thank you, Mr. Chairman. I want to join my 
colleagues in saying that I thought your testimony was 
refreshing and I think it will make a big change. I have to say 
that I think it was particularly thoughtful for a former Army 
officer, so I was very impressed.
    Mr. Powell. We are not so bad.
    Mrs. Wilson. A few questions on some things that I think 
are kind of important to New Mexicans as well as to the 
country. I have been kind of watching local competition and 
thinking about why things work in some places and why they 
don't work in others. And I would be interested in your 
thoughts about why local residential competition seems to be 
working in a handful of States, like Michigan, Illinois, 
Pennsylvania, and what decisions were made there that weren't 
made in most other States?
    Mr. Powell. It is a very hard question mostly because there 
are certainly two regulatory environments that can affect that 
decision. In the context of, say, Michigan, many of the 
regulatory environment and the telecommunications statutory 
environment in that jurisdiction may have a lot to do with the 
ease of entry, or the regulatory cost, or the rights of 
everything from rights-of-way, to whether you are able to dig 
up streets without opposition, to whether you are able to 
access incumbent networks at different prices. States have 
varying prices on which many services can be offered by a 
competing incumbent. Some States are most aggressive about that 
than others. And so there is a real difference in regulatory 
and political environment in different locations.
    There is also what I was alluding to before, real 
differences in the economic viability of certain models. 
Residential customers are always going to be the hardest, and 
the simple reason is, their rates across the country, due to 
our historical commitment to universal service and the 
subsidization of local rates, those rates are largely at or 
below cost in lots of parts of the country. And so an entrant 
who has to make major capital investments is often wary or last 
to offer a competitive alternative to compete for relatively 
low return, low volume--it is mostly high-volume, low-margin 
service. You have to have a whole lot of customers to make low-
margin individual customers work for you economically. And when 
you are going up against an incumbent--and that is a lot of 
growth to achieve--it is either a slow process or, in some 
instances, probably difficult or impossible process. So, those 
are some of the reasons.
    It is also why I think that we ought to be very thoughtful 
and creative about universal service going forward, not because 
the goals are unassailable as an American society, but because 
we should understand that if we can achieve ubiquity and 
affordability without similar intervention, or at least the 
same sort of thing, we might preserve more economic rationality 
in advance services so that they stay competitive.
    If $10 a month flat service can be achieved in a 
competitive market without subsidization, or you might achieve 
$7 price with subsidization and below-cost aid, you might take 
the former as more maximizing the welfare of both those 
consumers and consumers across the country because people will 
be able to viably compete for those services.
    An interesting example in Internet, National Academy of 
Sciences recently reported that 90 percent of Americans now 
have at least access to narrow-band Internet service, with ten 
competing ISPs or more. Nobody has yet offered a specific--
there are some indirect benefits ISPs have that could be called 
subsidies, but they have not yet received any direct 
subsidization, yet we have a very aggressive ISP competitive 
environment and, for most of us, ISP service is an enormous 
deal as compared to the cost of even my local phone bill.
    And so I am always cautious and careful about, yes, let us 
pursue the goals, but let us try to do it this time, as much as 
we can, by preserving competitive and economic rationality so 
we won't have to do this 30 years from now, arguing why local 
broadband competition didn't work in your State either.
    Mrs. Wilson. Let me follow up on that, if I can, and you 
have said it a couple of times in answers to questions, and you 
also say it in your testimony, about the importance of ubiquity 
and affordability as principles in pursuing universal service, 
and that we should do that in creative ways.
    Color outside the lines with me here a little bit. What are 
the creative ways that you are thinking about? Does that mean 
just no regulation? I mean, what does it mean?
    Mr. Powell. Not necessarily. I mean, I am still creating, 
so I have my Crayola with me.
    Mrs. Wilson. You can borrow mine.
    Mr. Powell. The first principle, I would say, is, we have 
very significant differences as we move to advance 
infrastructures in broadband than we did from the original 
phone experience. Example one: Broadband is going to be built 
on top of infrastructures that are largely already deployed. 
That is, telephone service reaches over 90 percent of homes in 
America, 94 percent. Cable is even higher in its reach of homes 
in America. Those are the leading broadband infrastructures. We 
will not start from scratch in laying out those 
infrastructures, we will overlay on them to provide advance 
services. That provides a huge cost advantage.
    So, you might look at policies designed to incent 
systematic upgrade as opposed to the advancement of policies 
that were originally designed for the building from scratch and 
preservation of that model.
    Technology also is our huge friend in this regard. As I 
think members from rural States have already realized, the 
challenge of the phone system was that it was a ground-based 
wire infrastructure that required enormous geographic 
sensitivity and demographic sensitivity. If you were in a rural 
area of Montana 600 miles apart, that is a lot of wire for two 
customers. But we are starting to see technological solutions 
that may be agnostic about some of those things, which is why I 
think that there is reason to be excited about satellite-
delivered services, and we should, at a minimum, be looking for 
policies that incent the continued innovation deployment of 
those services, as a universal service policy.
    I also think it is not unusual why on the Continent of 
Africa there are no wired phones in many parts of it, but there 
are wireless systems all over the place. They are solutions 
that are very applicable to environments in which wired 
infrastructure would be difficult. And as those technologies 
reach speeds that provide advance services, they may be very 
good tailored solutions for other environments.
    And I guess my creative notion is that it is a desire to be 
skeptical in dynamic about what we want to incent as opposed to 
just rotely assume that universal service means what it meant 
in the public switch telephone context.
    Mrs. Wilson. Thank you. One final question, since I didn't 
use my opening statement time. You talked about the efficient 
use of spectrum, and that is very important in rural New 
Mexico, particularly the east side where places like the Lee 
County telephone system is in the mobile market for Dallas, 
Texas. They can't compete to get any part of that spectrum for 
their some very, very rural customers, but they can't get them 
to subdivide it either. And you can put a lot more in the bowl 
if the marbles that you are putting in are smaller, if you see 
what I mean.
    Do you envision any kind of effort to yield on encumbered 
spectrum, or to kind of use-it-or-lose-it with respect to 
spectrum in different parts of the western geography?
    Mr. Powell. I don't know if I have examples specifically 
for the western geography, but we do have any number of 
policies and licensing requirements that are designed to ensure 
that you use--it-or-lose-it. We often have build-out 
benchmarks. We have payment obligations. We have other service 
rules that say, you know, if certain things don't happen by a 
certain time, other things will happen. For example, 
particularly in the satellite context, there is a whole series 
of buildout and construction milestones and, when they are not 
met, you have often forfeited your license so that we can 
auction it again.
    The point you are making is one that we have started to 
realize is an absolutely critical one, which is the Government 
has to have a way to quickly recover and get back out the 
spectrum that gets encumbered or fails for a given reason. And 
it is one of the reasons the Commission is being quite 
aggressive about protecting its right to revoke rights to use 
spectrum when we believe that it is no longer being used 
productively and we can make better use of it. I think we are 
going to have to start looking at that a lot harder, or we are 
going to have to look at ways to create a very different kind 
of allocation scheme that provides free or floating flexibility 
so that uses can be adapted and changed easier than they are 
now.
    Mrs. Wilson. Thank you, and thank you, Mr. Chairman, for 
your endurance.
    Mr. Powell. That is quite all right. That is the Army 
officer part.
    Mr. Upton. Mr. Rush.
    Mr. Rush. Thank you, Mr. Chairman.
    Chairman Powell, first of all, I congratulate you on your 
recent appointment as Chairman of the FCC. I look forward to 
working with you on issues as relates to telecommunications 
during this tenure. And I am also pleased to hear that you 
envision a Federal Communications Commission that will operate 
in an efficient and expeditious manner and faithfully that it 
will implement the Telecommunications Act of 1996.
    As you know, one of the issues that I am critically 
concerned about is the E-rate and, under the administration of 
your predecessor, this came under some pretty vicious attack by 
individuals both inside of the House of Representatives and 
outside of the House of Representatives, and I have noted you 
have stated--well, let me just ask the question, if you would 
restate it here. You might have stated it in previous 
testimony. What is your position on the E-rate?
    Mr. Powell. Interestingly enough, my position as a 
regulator is to do exactly what Congress has instructed me to 
do with regard to it, and I intend to, and have always 
attempted to faithfully apply it as robustly as it is set out 
in the statute. And whether my view as a citizen is for it or 
against it, candidly, in my own mind, is absolutely irrelevant. 
Now, even that said, I will offer it partially.
    I think there are enormous benefits of technology to our 
children and to our schools, and that is a legitimate focus of 
Government attention. We can debate honestly and above-board 
how much, how fast, which pieces and which parts, which I think 
we do and probably will continue to do. But I think the 
objective and the purpose is absolutely worthy. And I believe 
that my role as a Government official is not what my social 
view is about the legitimacy of that kind of activity versus 
another, rather it is to administer Section 254, which 
carefully instructs me. The program is in place, it is 
operating, it will continue to operate, and any debates or 
decisions about where it belongs or doesn't belong are way 
above my pay grade to which I don't really participate.
    Mr. Rush. You have made a lot of headlines recently in your 
comments referring to a ``Mercedes divide'' as opposed to a 
``digital divide''. Can you explain, what is a Mercedes divide?
    Mr. Powell. I am glad someone asked this question finally. 
It gives me an opportunity to correct what I think is a widely 
held misperception of what I said and didn't say. If you will 
indulge me, it will take a second.
    The first thing, in response to a question about the 
digital divide, you have to worry about when you are in my 
position is, ``what do you mean by it?'' The term is 
extraordinarily broad. It involves everything from notions of 
social justice to gaps in computer deployment to infrastructure 
to educational curriculum.
    One of the first points I was making is that it involves 
many of those components, only a handful of them directly 
implicate my responsibilities, and I need to be careful about 
what you are referring to here.
    The second point I was making is that we need to recognize 
that any new technology, any new product or service, in its 
infancy will tend to be adopted earlier by some communities 
than others. For example, it wouldn't be surprising to find 
that as we go through the digital TV transition that as we 
speak $3,000 television sets are only being purchased by people 
I would call ``the Haves''. They are also buying probably the 
more inferior product, but those early purchases help drive 
down the cost-of-service and increase the reliability of the 
sets so that as it becomes a mass market product it is actually 
cheaper and more reliable than it was at its early adoption.
    My only caution was that many of the broadband and advanced 
technological products are in that early phase, and that 
``snapshotting'' and telling me there is a gap or a divide 
isn't, in and of itself, in my opinion, an answer or even a 
basis on which I need to understand what needs to be done 
because the gap itself is not particularly remarkable.
    Now, that is not to express a lack of empathy or commitment 
to the objective. My view is to be rigorous about it, which is 
to say, ``Don't tell me about gaps, but let us push through and 
specifically focus on what you are talking about, what are the 
problems. And then discuss whether there is an efficient 
solution to it, first, by market forces and, alternatively, by 
Government forces.'' I will be the first person to implement 
and execute a program that is carefully focused to market 
failure or an unacceptable level of lack of ubiquity and 
affordability, but my caution was that, in my experience with 
product service and economics, that the gap itself isn't a good 
basis on which to build a solution. You have to pierce through 
that and find out where the breakdowns are.
    The regrettable comment about Mercedes--because I think it 
wrongly implies that I was suggesting luxury--was not that at 
all. My point merely was that many technologies, in their early 
period, were perceived as going to dramatically damage or 
create inequities, including the automobile at the turn of the 
century. And my point was that, over time, the automobile would 
be deployed in a manner such that the critical functionality of 
the automobile i.e., mobility is widely available to Americans. 
Not everyone will own the highest and best version of that 
product in a capital economy. I mean, there are people who 
drive the best models, and some of us will drive less expensive 
cars, but the functionality of transportation and the critical 
way that it reorders and helps our lives, is pretty widely 
available. And my only view was don't count markets out too 
early in their ability to incent ubiquitous and affordable 
deployment.
    And, finally, I said there was a danger that worries me 
just as much as the digital divide, which is making sure it is 
built at all--that is, as the patent laws recognize, and other 
intellectual property and copyright laws recognize, a 
capitalist is not going to invest heavy in infrastructure, 
build and deploy services, if he believes the minute he does so 
he will be required to deploy immediately in a ubiquitous way 
that is not economically viable. And I said, I want to make 
sure that we are all not ``Have-nots,'' so that we preserve 
enough of the incentives to invent and deploy so that these 
exciting products and services will actually come into the 
homes of Americans.
    It really is important to note that most of us are ``Have-
nots'' in broadband world. And we should absolutely be driving 
to closing any divides that persist. But I do think--it is back 
to my Crayola creative point--we should be very rigorous and 
focused on where our attention is needed as opposed to just 
kind of lingering around the idea of the gap.
    Mr. Rush. Do you agree that technology, information 
technology is changing so rapidly that if we waited for the 
markets necessary to correct the problems, that some people 
would just be so far behind that they would not be able to 
catch up because the technology changes so rapidly?
    Mr. Powell. Well, the technology does change rapidly, but 
speed and rapidity are also one of the reasons for being 
hopeful about what we all want to achieve. If you compare the 
deployment of narrow-band Internet first and broadband Internet 
second, it is one of the most remarkable paces of distribution 
in the history of any technology. I have looked at the figures 
on telephone, television, electricity, many of the services 
which are considered indispensable today, and none of them are 
even close to the pace of penetration that we are finding with 
narrow-band and broadband technology. Broadband in terms of 
advanced speeds really didn't even arrive until 1998. Six 
percent of the entire country today is subscribing to this 
service. If you look at phones, it took 27 years to reach 10 
percent penetration, 70 years to reach 50 percent, and I could 
tell a similar story about television broadcasting. This is all 
not to pooh-pooh--and I really want to emphasize the 
criticality that these services may play in our lives--only to 
suggest that we are riding a tiger that is exhibiting a lot of 
extraordinary characteristics, one of which that I am hopeful 
about is that it is racing its way around the country.
    Now, you are right, I don't deny the existence of gaps 
along economic conditions, and you will find some correlations 
in urban and rural areas, but, surprisingly, many of the 
inequities that are assumed aren't actually accurate. But if we 
identify incumbencies or breakdowns in its natural evolution, I 
would be the first there to execute a tailored solution to 
fixing that.
    Mr. Rush. Thank you, Mr. Chairman.
    Mr. Upton. Thank you.
    Mr. Terry.
    Mr. Terry. Thank you, Chairman Upton. Chairman Powell, your 
statement focused on, I think, a philosophy of reform, where 
you talk about vision statements, structural reforms, 
enforcement type reforms. Can you present to us today how much 
of the elements of reform that you envision are a matter of 
legislation--and I mean it in both the positive and negative 
way--legislation that would be required to enable your vision 
of reforms, in current legislation, that perhaps blocks, 
prevents, or perhaps makes difficult some of the reforms where 
you allow apples to compete against apples, where the current 
regulation and laws are barriers to that, as opposed to other 
elements of reform that are strictly management or dollars?
    Mr. Powell. Yes.
    Mr. Terry. You have 5 minutes.
    Mr. Powell. I will need an hour for that. In the 
development of our approach, we will absolutely and 
specifically identify where that is the case. I can tell you 
that in almost each of those dimensions I outlined, there will 
probably be a legislative component. For example, if you talk 
about the enforcement, if we are serious about the ability to 
really make a difference to enforcement, then we need to look 
at our penalty regime penalties--our penalties are set by 
statute and probably haven't been revised since 1934. If you 
are talking about the statute of limitations, that is a statute 
that we couldn't modify without congressional action. There are 
probably other substantive policy areas where there is some 
dimension of internal reform, but there also are dimensions of 
legislative reform because things that are curtailed in the 
statute are implicated. All of it takes money, which only comes 
from the Congress. And the organizational changes and 
structures often have to, by law, be approved congressionally 
both through the appropriation process and other processes.
    So, there is no way you are off the hook, I don't think----
    Mr. Terry. Don't want to be.
    Mr. Powell. [continuing] and we will try to, in working 
with you, carefully try to align the mutual objectives and, 
candidly, I will try to assume as much of the problem and 
responsibility as I can consistent with the statute, and if 
there are areas where that is not going to work but I think the 
goal is still worthy, I will have to come back to this 
subcommittee and the Congress.
    Mr. Terry. I think, for consumer sake, we need to reform 
especially structural regulatory aspects, so I will be glad to 
work with you in that respect.
    One area the gentleman from Illinois, Mr. Shimkus, had 
brought up a point, obviously, differences of opinions amongst 
them, but one theme that is consistent is a backlog. As you 
said during your statement, if you want that, you need the 
approval, if you want this, you need the approval, but yet it 
is taking an extraordinarily long time and there is a backup. 
Is there an immediate plan that you have thought of or written 
to clear this backlog and to assure the finality? Is there a 
plan in place, and what is it?
    Mr. Powell. There is a plan and directive in place, one 
which was in place the minute we arrived. The backlog 
situations vary from bureau-to-bureau. The reasons vary from 
issue-to-issue. But I think my bureaus would back me up, that 
they have been pointedly and aggressively directed to attack 
the backlog and from very early on work on a plan of operations 
to eliminate them.
    This issue became serious over a year ago, and I think many 
of the most heinous ones were eliminated, like the backlogs in 
the Wireless Telecommunication Bureau and others, and we have 
already begun to take actions on them. There were a substantial 
number of radio license transfer applications that had been 
sitting, many of which for 2 and 3 years, and we challenged 
ourselves that we either had a policy and a process for their 
disposition that was able to effectuate the purpose, or they 
were out of here. And I think we released 75 percent of them on 
the same day. We are rapidly working through the remainder 
consistent with our policy obligations. But one of my favorite 
phrases is, ``inaction and avoidance are not legitimate 
government policies,'' I don't care what the original reason 
for hesitation was, and I take moral responsibility that if I 
can't figure out what to do, then you are done. I need a 
reasonable amount of time to figure out if I don't know what to 
do, but we really have to be guided by that fundamental 
principle, and we do have very strict management guidelines 
that we are working under and that are in place for backlog.
    Mr. Upton. Thank you, Mr. Terry. Mr. Dingell.
    Mr. Dingell. Thank you, Mr. Chairman. Welcome, Mr. 
Chairman. I note only four States have been approved so far for 
Section 271 entry. The Act is in place for 5 years. Is it 
possible, Mr. Chairman, that local markets in every other State 
are not open to competitors who choose to enter?
    Mr. Powell. I doubt that is possible. We certainly are 
prepared to receive 271 applications from any State, from any 
company that is prepared to make the case that its markets are 
open. As you are well aware, we can act only when we are given 
an application, but I am excited at the prospects that we will 
see an increase in that this year.
    Mr. Dingell. I think your presence in the chair might have 
a useful impact on that set of events. However, is it possible, 
though, that companies choose not to enter, or have chosen not 
to enter up until now?
    Mr. Powell. Well, certainly.
    Mr. Dingell. Would that reason be the conditions that have 
been imposed by the Commission on entry, which go well beyond 
the authority of the Commission in connection with those 
matters, and is it possible that the companies chose not to 
enter because of the enormous profusion of paper that they had 
to submit to the Commission--in some instance, stacks this high 
from the floor--and the fact that it took so long and so much 
money for those events to come to ripeness? Is that a 
possibility, Mr. Chairman?
    Mr. Powell. I think it is fair to say it is possible that 
those things would have dissuaded decisions to apply for entry, 
sure.
    Mr. Dingell. It would have most assuredly dissuaded me. I 
am not going to ask you to tell me whether it would have 
dissuaded you, but you are a very sensible fellow, too, Mr. 
Chairman.
    Is there something in the offing that the Commission could 
do to streamline the 271 process--for example, dealing more 
expeditiously with the application, addressing the questions 
that might be raised by the State Commissions, or that are 
raised by the Department of Justice, which have led to some 
rather prolonged and prolix discussions between those Agencies 
and the Commission and the applicants?
    Mr. Powell. Yes, I think there are certainly any number of 
things that could be done, one of which I will just put under 
the banner of ``collaborative approach,'' which we were talking 
about earlier. That is prior to the filing of application we 
try to be available and be out in the States and with companies 
to make sure that they are preparing applications in a manner 
that would increase their probability of succeeding, but being 
careful not to commit to prejudge the merits of their 
submission, which we have started to do significantly more than 
we have in the past.
    I do think that we are constrained by a 90-day clock, which 
means we need to have ranges of reasonableness in which we 
can't completely and totally de novo review certain specifics, 
but can start to review more carefully whether the fundamentals 
of the provision are provided for and that there is a range of 
reasonableness that if you are within we won't necessarily 
second-guess the absolute specifics of the representation.
    And I also think, finally, there is always an issue of data 
timeliness, which has been a problem with the 90-day clock. 
Candidly, in my own view, I would have preferred a provision 
that would have allowed me to extend the 90 days by maybe----
    Mr. Dingell. I was about to ask is there something this 
committee could do, and perhaps, for the record, you could 
submit to us something that we could do on that matter. I don't 
want to make you do that at this particular time, Mr. Chairman.
    I am curious about this situation. The law requires you to 
consult with the State agencies. The law requires you to 
consult with the Department of Justice--and I emphasize the 
word ``consult.'' I am curious, what broad, sweeping powers 
does this confer either on the Department of Justice or upon 
the State agencies? In your view, what does ``consultation'' 
mean? Your predecessor had the quaint idea that it afforded 
them the right to literally dictate terms to the Commission. I 
always thought that was a rather curious interpretation of the 
word ``consultation.''
    Mr. Powell. My view is that ``consultation'' means, 
principally, that those two institutions are afforded the 
opportunity to file in the proceeding and offer their learned 
recommendation as to the outcome. I would have to note, to be 
fair, that the Department of Justice and in their view, at 
least in statute, is supposed to be afforded substantial 
weight.
    Mr. Dingell. And I applaud that, but that doesn't give them 
the power to dictate or to prolong the process, does it?
    Mr. Powell. No, it certainly doesn't, and we have recently 
often taken directions contrary to their recommendation.
    Mr. Dingell. And I am delighted to hear that. I would hope 
that there is somebody here from the Department of Justice so 
that they can hear this more sensible interpretation of the 
statute, and it bodes, I would observe, Mr. Chairman, a great 
deal of good.
    Now, I note that the statute makes it clear that the FCC 
has the responsibility to avoid mutual exclusivity in licensing 
and thereby avoid auctions when possible through the use of 
spectrum-sharing and other engineering methods. Am I correct in 
my interpretation of that matter?
    Mr. Powell. I believe so, under 309.
    Mr. Dingell. I would note, however, that Congress has 
expressed a preference for non-exclusive uses of the spectrum. 
I would not also that in many instances the FCC has taken an 
opposite course. It has actually sought to create mutual 
exclusivity so that applicants would be forced to go to 
auction. I feel this is an unwise thing. Do you have a comment 
that you would feel would be appropriate on this matter?
    Mr. Powell. Congressman, I am not sure of the specifics, 
but I certainly would, as a principle, say that it shouldn't be 
our business to create a situation that would command an 
auction if it wasn't otherwise presented.
    Mr. Dingell. Perhaps, Mr. Chairman, you would like to give 
us a comment on the matter after you have had a chance to 
review it in greater detail.
    Mr. Powell. Certainly.
    Mr. Dingell. I would note that mutual exclusivity in the 
use of the spectrum hardly confers confidence, on me at least, 
that the best and the highest use, and the wisest and the 
broadest use of the spectrum is being done under the leadership 
of the FCC. Am I correct or incorrect in that appreciation?
    Mr. Powell. I am not so sure I follow, can you state it 
again?
    Mr. Dingell. I will tell you, it was so involved that I am 
afraid I can't do it again. I think we will submit you a little 
letter on that and, if, Mr. Chairman, you would allow that to 
go in the record, I would appreciate it.
    Mr. Upton. We are going to allow all members to do that.
    Mr. Dingell. One further thought. I note that on two 
occasions, the FCC has proceeded to complete Section 271 
applications, and in those 271 applications in Texas and New 
York--and our Chairman has commented on this matter--the result 
was that AT&T has moved to enter the long distance market--
rather, to enter the local market, and that we now have 
increased competition both in long distance and in the local 
market, and the costs have fallen in both places. Am I correct 
in that appreciation, does there appear to be some connection 
between those events?
    Mr. Powell. I would think that there is a connection. The 
ability to respond competitively into your core service 
certainly is a very powerful incentive to own competing on that 
competitor's home turf. I think that was the fundamental 
congressional design, and I hope that the mutual competitive 
obligations would create incentives for each to be in each 
other's market. I don't think it is particularly surprising 
that the most prominent competitive entry are places where 
those competitors have either entered or are prepared to file 
for entry.
    Mr. Dingell. I am delighted to hear your comment, Mr. 
Chairman. I would like to address, in continuation of some 
earlier questions, the NorthPoint case. This is a matter now 
pending before the Commission, and I am going to respect your 
desire to comment or not comment, as the proprieties might 
dictate to you.
    I would observe that if mutual exclusivity enters into this 
matter, would that be an important consideration for the 
Commission because, very truthfully, we need to be sure that 
interference testing is done and that all of these things take 
place, but that we also see that the matter moves speedily and 
that there is a need both to assure that we are not going to 
have a wave of new interference put into the spectrum, but at 
the same time we are not going to try to have exclusive use of 
the spectrum where none is required.
    Now, again, Mr. Chairman, I am not trying to place you into 
a bad spot to comment on something that you feel you should 
not, but to the degree you can, would you give me your thoughts 
on this matter, please?
    Mr. Powell. Yes. I am limited in what I can say, but I 
would say that certainly mutual exclusivity is a very important 
component of what will happen next because, if it fairly is 
said that, as you have mentioned, that the situation creates 
one of mutual exclusivity, the statute compels auctioning of 
the spectrum as opposed to any other alternative. So we do have 
to be careful with respect to how that question comes out.
    Mr. Dingell. Mr. Chairman, just one more question--I thank 
you for your kindness to me. I would note that the statute does 
discourage mutual exclusivity. It says the Commission ``shall 
seek to avoid'' that, and I would assume that accompanied with 
that would also be an effort to ensure that there would be 
minimal interference. Am I correct in those interpretations?
    Mr. Powell. I believe you are, yes.
    Mr. Dingell. Mr. Chairman, you have been most gracious, 
thank you.
    Mr. Upton. Mr. Fossella.
    Mr. Fossella. Thank you, Mr. Chairman. Mr. Chairman, 
welcome. Congratulations and best of luck.
    Following up on all the talk about reform--and I guess a 
better word would probably be ``improvement''--how would you 
see--let us call it the ``cultural change''--that would need to 
occur at the FCC, given since its creation and the basis for 
its creation was to regulate, for the most part, monopolies. 
Now we are in an environment--hopefully a more pro-competitive 
environment--to shift the focus overall--not to take anything 
away from the good, hardworking individuals at the FCC, but how 
do you shift that focus to one of a regulating monopoly 
approach to one of establishing parameters to allow competition 
to flourish along service and along--instead of the way the 
current law applies?
    Mr. Powell. I think that is a good question. Cultural 
change, in any organization, is a challenge. I would submit our 
challenge is similar to those being faced by many incumbent 
carriers who also find themselves dealing with the cultural 
challenges of becoming more entrepreneurial innovative, 
responsive, and effective. So, our challenge is similar.
    I think it starts with leadership. It is what I am trying 
to do at a personal level, in those people in whom I entrust 
leadership responsibilities and in the personnel that we hire. 
I also think that you don't push cultural change on people, you 
demonstrate the rightness of the changes you are suggesting. 
And I think that our efforts at training and development and 
giving employees and professionals an opportunity to see the 
dimensions of their decisions, to have an opportunity to learn 
from what has been developed both in scholarship and out in the 
real world of companies and markets, that people will begin to 
see the impact of their decisions and have a better feel for 
and understanding what is different and what is not just the 
same.
    I think it is a natural human impulse to go with what you 
know until you know something else. And I think that the whole 
emphasis on training, development, technology, interaction, and 
customer focus, all of those things are designed to lay out 
before our talented staff of employees (a) the impact of their 
decisions, and (b) the learning that can influence how they are 
made. And ultimately they will be willing to get with the 
program. I am also a person who understands some people, will 
never get with the program, and they will not continue to have 
those responsibilities if they can't.
    Mr. Fossella. Good luck on that front. Finally, you 
mentioned in your statement you will be shifting again the 
Agency focus from ``permissive regulations to strong and 
effective enforcement of truly necessary ones''. And you state 
that Congress' assistance in putting real teeth in your 
enforcement efforts is necessary. Could you elaborate on the 
point, and does the current law provide you with enough 
enforcement authority, in your opinion?
    Mr. Powell. Yes, I think we mentioned a couple of times, I 
think that we have a sufficient amount of authority that was 
used last year to create the Enforcement Bureau. I think that 
we have people in place, I think we have policies in place, but 
I do think that we probably will need a greater focus on what 
are the full range of tools we will need, and many of those 
tools, in my opinion, are going to have to be developed in 
conjunction with Congress. And I have already mentioned the 
need for reassessing the penalties that we are able to impose. 
If you impose a $75,000 fine on a company that has net revenues 
in the millions and billions, that fine is just a cost of doing 
business. They will pay that, as opposed to actually be 
deterred of the activity.
    I also believe that if you are believer in markets and you 
are a believer in less prophylactic regulation, you can't throw 
the public interest in the toilet for laissez-faire purposes. 
You have to be prepared to demonstrate that you are sincere 
that in allowing the additional flexibility in markets, that 
you will also try to act effectively and efficiently and 
swiftly to police them when the very rules that are in place 
are flaunted. And I think that that is absolutely critical to 
an integrated policy. And I would love to come back and talk to 
the subcommittee, formally or informally, about a more 
comprehensive program and what we might need to do it.
    Mr. Fossella. Thank you. I yield back. Best of luck.
    Mr. Upton. Thank you. As you know, we have votes on now. We 
are going to take a brief recess. Mr. Pickering has gone over 
to vote. He is going to come back. He is going to take the 
gavel. He will do his questions, and I will come back and 
probably close because we will have another vote after this 
one, in about 15 minutes. So, we will take about a 7-minute 
break before Mr. Pickering is back.
    [Brief recess.]
    Mr. Upton. We will get started again, as we are expecting a 
vote in about 10 minutes. It could be a little bit less than 
that.
    I would just note, before I yield to my friend and 
colleague, Mr. Pickering, that despite giving him about a 4- or 
5-minute head start to the floor, the Big Ten beats the SEC 
again. So, with that, I yield to my friend from Mississippi, 
Mr. Pickering.
    Mr. Pickering. Mr. Chairman, thank you. We are looking for 
redemption for the SEC as well as all other things as we 
approach Easter, a time of renewal.
    Mr. Chairman, speaking of renewal, I believe, under your 
leadership, the FCC will experience that, and I just have a few 
questions. I appreciate you being patient as we broke for a 
vote.
    A number of things that are before you that are of interest 
to me--I know many of these questions have already been 
covered, so I will be as quick as possible. One in which I have 
an individual and particular interest is the FCC rulemaking 
process and implementation of the Children's Internet 
Protection Act that was a part of the Appropriation Bill last 
year.
    Tell me, what is the status of that and the Commission's 
plans of implementation? Do you expect any delays? If so, why?
    Mr. Powell. I at present don't expect any delays. I think 
we are in the process of implementation. I regret that I don't 
have, as I sit here, specific timeframes for it. We would 
certainly be happy to get back with you on that, but I think 
that--they are handing me a note--April 20.
    Mr. Pickering. That will be when the rulemaking will be 
final and implementation will begin, April 20?
    Mr. Powell. Well, let us ask the note-hander.
    Implementation by April 20.
    Mr. Pickering. Thank you very much. And may the record show 
that the FCC is meeting its statutory deadline in a very 
efficient and effective way.
    As you also know, I have a merger bill that I introduced in 
the last Congress, and hope to do again this Congress, and I 
look forward to your comments and input as we go forward in 
that process. FCC reform is going to be important to this 
committee and to the Commission, and look forward to working 
with you on that.
    I know others have mentioned 3G spectrum, and I know that 
you are between a rock and a hard place, between the choices 
that we have--or maybe it is better said that Congress is 
between a rock and a hard place in giving the policy direction 
as to where we go with 3G between the various options--but your 
technical counsel and advice and help will be greatly 
appreciated as we go forward in that debate.
    Let me, finally, conclude with some questions about where 
we are now in telecommunications policy in the 1996 Act and 
your sense of what should or could be done to accomplish the 
objectives that we all wanted and tried to achieve in the 1996 
Act.
    As you know, it was with the intent of having full 
competition in every market, and the full convergence of voice/
video/data services and applications. Five years after the Act, 
both sides would say that there is not enough competition in 
the local market. The other side would say that the 271 process 
for entry into long distance and other services has been too 
cumbersome or too long. But much of that battle over 5 years 
was in the regulatory process and then before the courts, and 
now that the FCC is poised to implement the Act and to see a 
number of 271s come in this year as more and more States see 
the competition coming, would you counsel or advise revisiting, 
revising, reforming the 1996 Act, or in this time of economic 
uncertainty, especially in the tech sector, is this the time to 
stay the course and to have the regulatory certainty and 
stability?
    Mr. Powell. I think my advice, such that it is worth 
anything, is that I think that any sort of wholesale rewriting, 
to my mind, is ill-advised unless you are very clear as to what 
it is you think you are going to replace it with.
    The legal environment, which includes the statute and 
regulatory environment, are critical components of the 
stabilization of evolving markets, and we are as much a 
contributor to risk and capital risk as anybody else. And I 
believe that it has taken us a long time to get where we are, 
longer than any of us wanted. On the other hand, I think some 
of that might have been more fully anticipated--the legal 
challenges, uncertainty, ambiguity and all of the new things we 
learn in the marketplace as we go along--but for the most part 
we have become comfortable--we sort of know the rules of the 
game. And, yes, there are rough spots. There are things that 
were unanticipated, but I do believe that most of those things 
are things that can be worked on incrementally as opposed to 
the idea that we know what we would replace the 1996 statute 
with.
    Personally I am one who chalks it as a success. I mean, I 
think it has unleashed more than we are prepared to credit it 
with, and I think that the success of what it undertook is 
measured much more than, say, the 271 in-or-out question, the 
statute is much bigger and broader than that. And I think many 
of the incentives it introduced have had farther-reaching 
implications than simply that question.
    So, certainly, it is the prerogative of Congress to want a 
different regime, but I would only advise that it would want to 
be awfully clear about what it was it was intending to replace 
it with. Otherwise, I think it is the same open, bizarre battle 
of trying to gain competitive advantage through law. It is very 
difficult to harness and control once you sort of open up the 
box again.
    I think there probably will come a day when the technology 
just will not neatly fit within the context of the statute and 
the rules, and more wholesale changes will probably be made. I 
guess, in my own personal opinion, that day isn't today.
    Mr. Pickering. Let me just have one other follow-up 
question. Given the context of the market and the capital flows 
right now in the tech and telecom sector, and especially with 
the emerging competitors, would dramatic policy change possibly 
further destabilize and possibly harm emerging competition?
    Mr. Powell. You know, there is a little bit of a 
hypothetical in your question. I think that, again, if you 
focus on capital markets particularly, you would have to say it 
could. I think a big part of the focus would depend on how the 
capital markets viewed your decision to do so. They will 
handicap anything you do, and make judgments about who they 
think are the winners and losers and, depending on how they 
perceive it, you certainly could tip the balance, at least for 
the time being, in one favor or the other, or in ways that 
might have unintended consequences.
    One of the things that is fascinating about the telecom 
policy is it has for so long been built around monopolies and 
oligopolies, many of which we sanctioned. When we introduce 
competition, we also need to advance our understanding of the 
things that go into the entry of markets, including capital 
flows and investments. Many of these things were not a 
paramount consideration when a monopoly could just slush it 
from one financial bucket to the other. Now it has very serious 
competitive consequences. And as so many members today have 
said, there is something worse than the wrong answer, it is no 
answer of uncertainty. And I think the time and process of 
establishing a completely new regulatory environment or 
completely new statute creates that kind of worry and ambiguity 
that you would want to very seriously address.
    Mr. Pickering. Thank you, Mr. Chairman, and I also want to 
thank you for earlier in the hearing saying that you plan to 
move forward with recip comp. I believe that is a needed action 
as well. Thank you for the new spirit that you bring to the 
Commission, and we look forward to working with you. Mr. 
Chairman, thank you.
    Mr. Upton. Thank you. Chairman Powell, I have talked to a 
couple of members on that last vote. We are all in agreement, 
bipartisan. I don't think we have had a more impressive--I know 
we haven't had a more impressive witness this year, and will 
probably not for sometime to come. We appreciate all the 
homework that you have done, your wonderful grasp of the 
issues, and certainly I look toward our cooperating in every 
which way to make sure that, in fact, we move this country 
forward to eliminate barriers and ensure affordability and 
access for all Americans, working with the cutting edge 
technologies that we know are before us.
    I do know that for those members who are not here now, a 
number of us would like to submit further questions. We will do 
that within a couple of days, and if you can respond in 
appropriate fashion at some point in the near future, that 
would be terrific. We look forward to working with you as we 
move ahead. Thank you very much.
    We stand adjourned.
    [Whereupon, at 2 p.m., the subcommittee was adjourned.]
    [Additional material submitted for the record follows:]

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