Copyright 2002 eMediaMillWorks, Inc.
(f/k/a Federal
Document Clearing House, Inc.)
Federal Document Clearing House
Congressional Testimony
April 17, 2002 Wednesday
SECTION: CAPITOL HILL HEARING TESTIMONY
LENGTH: 5167 words
COMMITTEE:
HOUSE APPROPRIATIONS
SUBCOMMITTEE:
COMMERCE, JUSTICE AND STATE
HEADLINE: FY 2003
APPROPRIATIONS
TESTIMONY-BY: MICHAEL K. POWELL,
CHAIRMAN
BODY: TESTIMONY
Of
MICHAEL
K. POWELL
Chairman Federal Communications Commission
Before the
Subcommittee on Commerce, Justice, State, and the Judiciary of the
Committee on Appropriations United States House of Representatives
On
the
Federal Communications Commission's Fiscal Year 2003 Budget
Estimates
Wednesday, April 17, 2002
Mr. Chairman, Ranking
Minority Member, and Members of the Subcommittee, I appreciate this opportunity
to appear before you today to provide you with a report of our work conducted
during the past calendar year and to discuss the Federal Communications
Commission's ("FCC") Fiscal Year 2003 Budget.
Last year, I appeared
before this Subcommittee for the first time and made a personal commitment to
effectuate fundamental change within the Commission. I guaranteed that the
Commission, as an institution, would complete a thorough self-examination and
develop a reform plan designed to make the FCC a more responsive, efficient and
effective agency, capable of facing the technological and economic opportunities
and challenges of the new millennium. The Commission delivered on this promise
and sent you a reprogramming request for its reorganization six months later. We
appreciate your rapid consent to our request, and we began the implementation of
our reorganization plan last month. I also pledged to enhance the Commission's
independent technical and engineering expertise. The Commission dedicated
resources to recruiting, training and retaining a solid technology-oriented
workforce under our "Excellence in Engineering" Program. We have hired 24 mid-
and senior-level and 15 entry-level engineers. We instituted training programs
to keep current and future engineers up to date in their profession. And, we
have improved the environment for engineers by purchasing equipment to
facilitate the spectrum management process, and to upgrade the Columbia,
Maryland Laboratory's testing capabilities. Our on-going efforts in this regard,
coupled with the Agency's "FCC University" and "Excellence in Economic Analysis"
initiatives, hopefully will preserve our existing wealth of FCC staff knowledge
and expertise and enhance and extend that collective knowledge well into the new
millennium.
When I last appeared before this Subcommittee, I pledged to
make the Commission a model of solid management techniques and performance. As
such, the Commission moved forward to continue to streamline agency processes
and procedures, automate agency processes, provide improved access to agency
information, and modernize its information technology infrastructure. During our
January 2002 Open Agenda Meeting, the Commission's staff delivered presentations
which demonstrated substantial improvement in backlog reduction levels and other
management benchmarks.
Finally, I also vowed that the Commission would
use the remainder of its Fiscal Year 2001 and expected Fiscal Year 2002 funds to
implement its statutory mandates and serve as a constructive and fair
independent agency, cognizant of the intent of Congress and dedicated to serving
the public interest and consumer welfare. I am confident that the Commission has
met all of these commitments and, in doing so, has raised its standards for
serving the public.
The Commission has made these achievements, however,
against the backdrop of tragic and dramatic national events. The events of
September 11, 2001, provided us all with an important lesson in the significance
of the FCC's portfolio. We know now that our society has developed more than
just an appetite for communications services-America is dependent upon these
services in times of crisis and in times of peace. A strong and competitive
communications network is essential to a healthy economy and our nation depends
on both, whether to bolster its ability to defend itself, or to communicate in
times of normalcy.
For Fiscal Year 2003, the Commission is requesting
$
278,092,000, of which $
268,327,000 will be
dedicated toward our operational requirements. Although we did not receive full
funding for our FY2002 programs, we are appreciative of this Subcommittee's
attention to our needs and your recognition of the importance of our
programming. Last year's appropriation was an important first step in ensuring
adequate funding for the Commission, and we hope that you will agree that our
FY2003 funding request is critical to accomplishing our statutory mandates.
This year, you have my personal pledge to continue driving forward in a
patient and deliberate manner-to handle the expected and the unexpected; from
homeland and internal security to biennial reviews, an expected heavy influx of
Section 271 long- distance applications, and pending major merger reviews, just
to name a few. The Commission intends to use its expected funding to continue
its campaign to upgrade the Agency's facilities, as well as to initiate and
complete critical rulemakings. The present request is the minimum amount
necessary to continue to capitalize on our past successes and to carry us
through the immense challenges of the next fiscal year. Already, Fiscal Year
2002 has been marked by a tidal wave of new policy and regulatory challenges. I
expect Fiscal Year 2003 to be at least as opportune and challenging.
FISCAL YEAR 2002: MAXIMIZING AVAILABLE RESOURCES
At the
beginning of the last century, innovations and improvements in
telecommunications services took years, and sometimes decades. Today, we develop
new communications products and services at a more rapid speed then ever before,
in an exponential fashion that makes science fiction a matter of science fact
within just a handful of years. Looking forward, that makes for policy and
management opportunities, as well as hurdles and challenges.
As a
consequence, the Commission continues to capitalize on its well-established core
competencies, especially honed over the past six years, to eliminate barriers to
entry in domestic communications markets; to deregulate where appropriate to
promote competition; to vigorously enforce Commission rules so that corporate
entities compete fairly; and, to promote competition in international
communications markets. Moreover, the Commission continues to build upon the
cornerstone principles of the public interest and general consumer welfare to
promote access to communications services for all Americans, and to promote
heightened consumer education and information.
The Commission must stay
abreast of technological advances and be prepared to face the future before the
future arrives. To do so, the Commission needs funding to improve its use of
internal technology and to develop a highly trained workforce to evaluate
communications industry trends. Last year when I appeared before you, I
discussed the Commission's critical need to upgrade its infrastructure. I also
emphasized our efforts to re-evaluate the Agency and develop a business plan to
reform its organizational structure. A well-funded infrastructure and an
efficient organizational structure are intrinsically linked. The overall ability
of the Commission to function as an institution is dependent upon the quality of
both. When I last testified, we already had made strides toward upgrading
information technology and technological resources. Less then a year after my
testimony, I sent you a report outlining a significant internal reorganization
of the Commission.
The foundation for the Commission's reorganization
rests on the shoulders of its staff-a diverse and committed group of people
dedicated to utilizing resources to maximum capacity and rebuilding a trim,
well-focused organization that meets the needs of America's communications
industries and their consumers. The reform and reorganization of the Commission
is built along four specific concepts: (1) a clear substantive policy vision;
(2) a pointed emphasis on management; (3) an extensive training and development
program; and (4) organizational restructuring. The implementation of each of
these concepts exemplifies how the Commission utilized its financial resources
during the past year, and explains our plans for additional funding in Fiscal
Year 2003.
A Clear Policy Vision
I enumerated above a set of
policy and management imperatives that will extend the Commission's mission,
evolve its operational strategies, and drive further the culture of efficient,
effective and responsive performance. First, we articulated a clear policy
vision. The Commission's staff also evaluated our activities in these identified
issue areas and tied the highlighted policies to the reform of the Commission as
an institution. We initially specified several areas for policy-making emphasis:
broadband deployment, competition policy, spectrum policy ,
building a foundation for media ownership regulation, digital television
transition, and homeland security. Although these issues sometimes overlap,
their individual significance guides our dedication of resources in the
regulatory arena.
Broadband
Recently, I noted that one of the
FCC's central policymaking objectives is, and should be, the promotion of
efficient, widespread deployment of broadband infrastructure. Recognizing the
importance of
broadband deployment-a topic of conversation that
is extensively discussed here on Capitol Hill, as well as at the Commission,
Wall Street, and Main Street-the Commission is taking a concerted, comprehensive
approach to bringing regulatory clarity to what is, at best, a murky and
confusing policy area. To that end, the Commission has committed significant
resources to initiate and consider several proceedings that pointedly address
broadband issues. Of course, our actions in this area will be grounded first and
foremost in the Act, taking into account the statutory objectives of
competition, universal service, and consumer protection.
It is important
to emphasize that while we have committed significant resources to initiating or
completing various rulemakings, the legal and regulatory issues implicated here
have yet to be resolved. But they must be resolved if we collectively intend to
facilitate the ubiquitous availability of broadband to all Americans. The
Commission welcomes the input of all Americans in our deliberative
process-including the opinions of the Members of this Subcommittee and Congress
as a whole-as we proceed in developing a regulatory framework for successful
broadband deployment. Competition Policy
Competition is a fundamental and guiding statutory principle under the
Telecommunications Act of 1996. It is the root from which most of our policy
grows. The Commission has been outspoken in its support for competition, both
inter- and intea-modal. More significantly, however, our actions have backed up
our words. We recognized that ensuring that competitors have access to those
network elements that are necessary to provide competing telecommunications
services is only half the battle as the competitive local exchange carrier
("CLEC") community told us that to be useful, network elements must be
provisioned in a timely manner. In response to these provisioning concerns, we
launched two Notice of Proposed Rulemakings on proceedings on performance
standards that begun an effort to simplify performance levels and standards to
both clarify obligations and to allow for a mechanism for swift enforcement when
those levels and standards are compromised. The Commission has also begun a
second analytical look at the regulatory implementation of the Act, through our
Triennial Review of Unbundled Network Elements Requirements NPRM, that takes
account of market experiences to determine which of our regulations are working
to provide a competitive environment for consumers and which are not.
Positive rules to promote competitive entry are meaningless without a
credible enforcement effort. Therefore, we have made enforcement a cornerstone
of our competition policy. As you will recall, last year we called on Congress
to increase dramatically the forfeiture amount allowed under the statute. We
eagerly await the fulfillment of this request, and we continue to enforce
vigorously our current rules that serve to promote competition. Indeed, we have
been diligent in our enforcement efforts, imposing major fines on Bell operating
companies for local competition failures, and augmenting our enforcement staff
with top flight litigators.
Moreover, the Commission remains vigilant in
its review of Section 271 applications. Since 2001, despite the fact that the
roadmap for Section 271 approval was drawn, three Section 271 applications
involving four states were withdrawn (and subsequently re-filed), demonstrating
the Commission's continued determination in ensuring the competitive checklist
is met and local markets are open for competition.
Spectrum Policy
The Commission's first assigned task in 1934 was to manage the spectrum.
The same basic principles articulated then continue to exist today. The
Commission has an obligation to ensure that spectrum, an important and precious
resource, is used wisely, ensuring the broadest public benefit and satisfying
urgent public safety needs.
The Commission has acted
decisively-utilizing our staff and the spectrum auctions process to follow
Congress' mandate that we work toward the rapid deployment of spectrum. During
the past few months, we have reallocated the spectrum used for channels 52-59,
designated the 4.9 GHz band for public safety purposes, and authorized the use
of spectrum for Ultra-Wideband technology. In a major rulemaking completed on
December 28, 2001, the Commission reallocated 27 MHz of spectrum transferred
from the Federal Government. This spectrum will permit the initiation of new and
flexible services-for example, in the fixed satellite service, fixed mobile
service, telemetry, and low power radio. In addition, the Commission has
experimented with innovative methods for licensing that encourage private band
management within the confines of existing statutory guidelines.
Media
Ownership Foundation
The time has come to rebuild the factual
foundations that support a contemporary regulatory regime for media ownership
regulations. Although the media landscape has changed dramatically since the
initiation of many of the Commission's ownership regulations, the long standing
goals of diversity, competition, and localism remain paramount.
As you
are aware, the U.S. Court of Appeals for the D.C. Circuit recently vacated some
of the Commission's broadcast ownership rules, and has remanded others for our
reconsideration. At the heart of the court's concern is the ability of the
Commission to justify these restrictions in light of the dynamic changes in
today's marketplace.
Long before the recent court decision, however, I
expressed concern about the quality of the record the Commission relied on in
reaching media ownership decisions. In an effort to shore up this area, I
announced the creation of a Media Ownership Working Group on October 29, 2001.
This working group is tasked with developing a solid factual and analytical
foundation for media ownership regulation. Moreover, they are working to provide
an empirical and analytical basis for the Commission to ensure that our
regulatory regime in this area actually serves the goals of diversity, localism,
and competition in the media marketplace.
It is important to note,
however, that the D.C. Circuit's recent decision found that the Act compels the
Commission to review its media ownership regulations every two years and to
repeal these regulations unless the Commission makes an affirmative finding that
the rules are necessary to serve the public interest. To address the court's
criticism that we lack a factual foundation for our ownership rules, we must
expend a meaningful amount of resources to improve the evidence before us. We
cannot afford to sit back and hope the public submits all the information we
need to make good decisions. We must be proactive in deciding what questions
need to be answered, and then to go out and answer them. That is what I have set
up the Media Ownership Working Group to do.
We then need to apply those
factual findings to our media ownership rules and determine if the rules as
written truly promote competition, diversity and localism, or whether today's
media market requires different approaches. I welcome that challenge, but must
emphasize that overhauling our knowledge base on media ownership and then
re-initializing it every two years hence will require a significant commitment
of resources.
In addition to appointing specific FCC personnel to gather
empirical information, the Commission has launched a comprehensive examination
of rules on multiple ownership of local radio stations and set interim policies
to resolve pending radio transfer applications. The Commission also, as
recommended by the prior Commission, initiated a proceeding to review the
newspaper- broadcast cross-ownership rule. The Commission also began a
rulemaking on cable ownership rules last year. In addition, the Commission has
proposed new equal employment opportunity rules for broadcast and cable. I
believe that by next year, with the proper allocation of resources within the
Commission, I will be able to report on significant beneficial progress in this
area.
Digital Television Transition
While
broadband
deployment and the inherent competitive issues involved rank as the
most important communications issues facing America, the economic by-products of
digital television ("DTV") are equally important in scope and stature.
Television is, after all, a central part of our society and provides our
citizenry with essential information and entertainment.
Consequently,
the DTV transition and its economic and regulatory implications maintain an
important place in the Commission's overall policy-making efforts. In October
2001, I announced the creation of a Digital Television Task Force. This task
force has been reviewing the ongoing transition to DTV, making recommendations
to the Commission regarding transition priorities, and facilitating discussions
among the various parties. Earlier this month, with the task force's assistance,
I released a plan seeking voluntary commitments from the major relevant
industries to move the transition forward. The plan is designed to avoid the
finger-pointing that often characterizes this debate by asking all of the
affected industries to accept an equitable share of the burden. While the
voluntary plan is not a comprehensive solution to all of the difficult issues
raised by the transition to DTV, I am hopeful that, if adopted by the industries
involved, it can provide a real boost to the transition in the coming months.
Homeland Security
In response to the events of September 11,
2001, the Commission established a Homeland Security Policy Council ("HSPC").
The formation of the HSPC and its work involves the use of significant resources
in an area that we did not consider for budgetary purposes during the Fiscal
Year 2002 appropriations process. Like other agencies, we are using our current
pool of Full-Time Employees ("FTEs") to cope with the events of September 11,
2001, and we are demanding more of them in handling their regular workload along
with new tasks. HSPC is assigned to handle overlapping security issues and
respond to specific mission objectives. First, the mission of this group is to
assist the Commission in evaluating and strengthening measures for protecting
U.S. telecommunications, broadcast and other communications infrastructure and
facilities from further terrorist attacks. Second, HSPC assists the Commission
in ensuring rapid restoration of U.S. telecommunications, broadcast, and other
communications infrastructure and facilities after disruption by a terrorist
threat or attack. Third, HSPC assists the Commission in ensuring that public
safety, public health, and other emergency and defense personnel have effective
communications services available to them in the immediate aftermath of any
terrorist attack within the United States.
Emphasis on Management
As an outgrowth of the Commission's self-examination and reform, the
Commission has placed a new emphasis on the management of available resources
and the creation of tools designed to enhance the operation of the bureaus. We
asked all managers to review their internal processes and develop real solutions
to existing problems. Specified management initiatives include: (1) backlog
reduction; (2) better use of technology, including a re-designed Internet site;
(3) improved productivity; and (4) consolidated and simplified licensing
systems.
At our January 2002 Open Agenda Meeting, most Bureau and Office
Chiefs reported on their reduction in regulatory backlogs-a matter that has
dogged the Commission. We have posted these statistics on the Commission's
Internet site (< "label="http://www.fec.gov>"> ), so that our progress
in this area is evident to the industry. One major highlight in this area is the
Wireless Telecommunications Bureau. In 1998, they had a 13.12 percent backlog of
applications pending for more then a year. By December 2001, that percentage had
dropped to 0.24 percent. Likewise, the International Bureau managed to achieve a
55 percent reduction in pending applications for Review and Petitions for
Reconsideration, as well as a 56 percent reduction in the number of existing
non-routine applications and a 25 percent reduction in existing satellite space
station applications.
This past year, the Commission's management
maximized improved information technology resources to increase responsiveness
to consumers. The FCC's redesigned Internet site is part of our management plan
to make the Agency more responsive and transparent. We average approximately
265,000 hits on a daily basis, and we were ranked third overall among federal
agencies for Internet site design. At the end of November 2001, the Commission
launched a new FCC search engine to improve its Internet site.
In
addition to a general managerial emphasis on outreach, the Commission's staff
leadership is tasked with improving bureau productivity. For instance, the
Commission instituted comprehensive accounting and reporting reform for
incumbent local exchange carriers. And, in an effort to reach out to our core
constituencies, the bureaus have all undertaken efforts designed to consolidate
and simplify licensing systems. The Commission has proposed new procedures to
increase the efficiency of satellite licensing procedures. The Commission also
has proposed a uniform system for filing informal complaints. This particular
change would promote efficiency and predictability for consumers and service
providers.
Training and Development
The Commission's long-term
policy objectives require a highly trained staff capable of adapting to
technological change and industry trends. Accordingly, the Commission has
instituted a range of training and technical initiatives: (1) the "FCC
University"; (2) the "Excellence in Engineering" Program to recruit engineers
and improve their physical resources; and (3) recruitment and retainment of
economic experts, or the so-called "Excellence in Economic Analysis" Program.
Already we have instituted internal training programs in a variety of
areas and brought outside experts in to train our staff in various disciplines.
The most successful element of this program so far, however, is the FCC's
"Excellence in Engineering" Program, initiated during the previous fiscal year
and continued with funds in our Fiscal Year 2002 appropriation. Already we have
hired 24 mid- and senior-level and 15 entry-level engineers in open FTE
positions. We have instituted a special training program to educate and retain
our technological experts. We have dedicated a substantial portion of our
funding to improving the physical infrastructure used by the engineers for
testing and other purposes. At the Columbia, Maryland Laboratory, we have
purchased five new spectrum analyzers and three new signal generators to enhance
our ability to adequately measure emissions. As a result of these improvements,
we now have the capability to take measurements at 110 GHz instead of the
outdated 30 GHz level. We also have dedicated financial resources toward the
purchase of equipment designed to measure cellular phone radiation.
Restructuring
Although managerial goals and engineering
equipment are essential components of an efficient agency dedicated to high-tech
matters, the key to ensuring a well-functioning agency is to create an
organizational backdrop that maximizes human and technological resources. On
January 17, 2002, the Commission sent the cornerstone of its improvement plan to
this Committee-a Section 605 Report detailing the reorganization of the
Commission. This past month, we began implementing that reorganization. The
Commission's plan is more then a simple retooling of an old agency-it represents
an important step in streamlining the Commission. Although there will be no
initial budgetary impact from the restructuring, we expect that in years to
come, the streamlining approach taken here will pay dividends in efficiency and
good management. I have attached to my written testimony a copy of the newly
designed organizational chart for the Commission.
We intend to dedicate
the bulk of our human resources to continue to move forward in these areas, to
make the Agency responsive to consumer and industry demands and to facilitate
telecommunications growth and deployment. The best way to accomplish this goal
is to ensure adequate funding to purchase necessary equipment, improve our
information technology capabilities, and hire and retain trained technical
personnel capable of assisting the Commission in its decision-making process.
FISCAL YEAR 2003: CONTINUING A YEAR OF PROGRESS
It is important
to note that all of the reform and restructuring efforts started in Fiscal Year
2001 continue to be limited by the available discretionary funding in Fiscal
Year 2002. Currently, 69 percent of the Fiscal Year 2002 appropriation is
earmarked for salaries and benefits. Additionally, 29 percent will cover non-
discretionary cost increases related to rent and supplies. That amount leaves
the Commission with two percent of its total appropriation to implement reform -
streamline operations, enhance technical and economic expertise, oversee
spectrum management, and provide funds for resolution of ongoing enforcement
issues such as cramming and slamming. For this reason, focussing on improving
the funding picture in the future- i.e., Fiscal Year 2003-is especially
important.
The $
268,327,000 in operational costs
requested by the Commission for Fiscal Year 2003 is the bare minimum needed to
allow us to continue the progress made during the past year. In order to achieve
our goals, and stay abreast of telecommunications developments, the Commission
must keep ahead of changes in technology, economics, and the law. Accordingly,
we are requesting $
15,066,000 for critical programmatic
initiatives. An additional $
8,190,000 would be dedicated toward
uncontrollable cost increases related to salaries, benefits, and inflationary
cost increases for rent and supplies. The Administration's request of
$
9,765,000 for retirement costs brings the total Commission
Fiscal Year 2003 budget to $
278,092,000. The Fiscal Year 2003
regulatory fee offset for the Commission would be 89 percent of the proposed
Fiscal Year 2003 budget, making our direct appropriation request from this
Committee 9.5 percent over our total fiscal year budget, or 13.5 percent with
the pension costs included.
From the perspective of funding Commission
objectives, the critical segment of the overall budget is the
$
15,066,000 dedicated to programmatic initiatives. Of that
amount, $
4,986,000 will be dedicated toward Commission employee
training, enforcement, and spectrum management initiatives. Due to national
security needs identified since September 11, 2001, the Commission also will
spend $
1,000,000 to improve internal security and support other
security efforts. The remainder of these funds, $
9,080,000,
will improve information technology critical to supporting program performance
initiatives. With these funds, the Commission will improve existing systems to
ensure compliance with Government-wide standards pertaining to system security,
accessibility, and financial management.
In addition to the policy
objectives and reform outlined in my testimony, our specific
objectives
for this funding include:
- Continued expansion of electronic filing and
other initiatives to enhance public access and expedite Commission policy
decision- making;
- Improved technical and economic expertise of staff,
- Life-cycle replacement of technical monitoring and testing equipment;
- Ongoing infrastructure improvements to Columbia laboratory facility;
- Expeditious and effective response to public requests for assistance
and information;
- Enhancement of information technology infrastructure
to make it responsive to changes in the industry; and,
- Enable the FCC
to improve its homeland security posture.
One of the Commission's main
objectives during the next year is to maintain a safe and secure working
environment for the FCC's employees and visitors who frequent the Commission. As
with most other agencies, the Commission has faced the fallout from September
11, 2001, with unanticipated costs. This year we must provide enhancements to a
variety of activities and programs, including on-site physical security;
relocation and processing of mail at multiple off-site locations; and systems
upgrades to ensure that our information technology infrastructure has adequate
cyber-security, safeguards. Although we have $
1,000,000
specifically set-aside for these projects in Fiscal Year 2003, the Commission
also has requested the use of excess regulatory fees collected in previous years
for Fiscal Year 2002 security needs. In addition to receiving full funding, we
would appreciate a favorable decision related to this request.
Without
adequate support, we will be required to eliminate some of the Commission's
programmatic initiatives, or cut back on the implementation of individual
programs. I believe that I already have made the hard choices necessary to
operate the Commission on as tight a budget as practicable. As I outlined in the
first part of my testimony, the infrastructure and manpower initiatives are
interconnected to the general health of the agency and the completion of its
core mission.
CONCLUSION
I respectfully request that this
Subcommittee grant the Commission its full funding request for Fiscal Year 2003.
Thank you. I would be happy to answer any questions this Subcommittee
may have.
LOAD-DATE: April 19, 2002