[Senate Hearing 106-1097]
[From the U.S. Government Publishing Office]
NOMINATION OF SUSAN NESS, TO BE A MEMBER OF THE FEDERAL COMMUNICATIONS
COMMISSION
=======================================================================
HEARING
before the
COMMITTEE ON COMMERCE,
SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
ONE HUNDRED SIXTH CONGRESS
SECOND SESSION
__________
MARCH 22, 2000
__________
Printed for the use of the Committee on Commerce, Science, and
Transportation
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SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
ONE HUNDRED SIXTH CONGRESS
SECOND SESSION
JOHN McCAIN, Arizona, Chairman
TED STEVENS, Alaska ERNEST F. HOLLINGS, South Carolina
CONRAD BURNS, Montana DANIEL K. INOUYE, Hawaii
SLADE GORTON, Washington JOHN D. ROCKEFELLER IV, West
TRENT LOTT, Mississippi Virginia
KAY BAILEY HUTCHISON, Texas JOHN F. KERRY, Massachusetts
OLYMPIA J. SNOWE, Maine JOHN B. BREAUX, Louisiana
JOHN ASHCROFT, Missouri RICHARD H. BRYAN, Nevada
BILL FRIST, Tennessee BYRON L. DORGAN, North Dakota
SPENCER ABRAHAM, Michigan RON WYDEN, Oregon
SAM BROWNBACK, Kansas MAX CLELAND, Georgia
Mark Buse, Republican Staff Director
Martha P. Allbright, Republican General Counsel
Kevin D. Kayes, Democratic Staff Director
Moses Boyd, Democratic Chief Counsel
C O N T E N T S
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Page
Hearing held on March 22, 2000................................... 1
Statement of Senator Burns....................................... 1
Prepared statement........................................... 1
Statement of Senator Dorgan...................................... 19
Statement of Senator Hollings.................................... 2
Prepared statement........................................... 2
Statement of Senator Inouye...................................... 7
Statement of Senator Rockefeller................................. 5
Statement of Senator Snowe....................................... 26
Prepared statement........................................... 27
Witnesses
Mikulski, Hon. Barbara A., U.S. Senator from Maryland............ 4
Prepared statement........................................... 5
Ness, Hon. Susan, Commissioner, Federal Communications Commission 7
Prepared statement........................................... 8
Biographical information..................................... 9
Sarbanes, Hon. Paul S., U.S. Senator from Maryland............... 3
Appendix
Response to written questions submitted by Hon. Sam Brownback to:
Susan Ness................................................... 35
Response to written questions submitted by Hon. Conrad Burns to:
Susan Ness................................................... 40
Response to written questions submitted by Hon. Max Cleland to:
Susan Ness................................................... 43
Response to written questions submitted by Hon. Trent Lott to:
Susan Ness................................................... 45
Response to written questions submitted by Hon. John McCain to:
Susan Ness................................................... 45
NOMINATION OF SUSAN NESS, TO BE A MEMBER OF THE FEDERAL COMMUNICATIONS
COMMISSION
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WEDNESDAY, MARCH 22, 2000
U.S. Senate,
Committee on Commerce, Science, and Transportation,
Washington, DC.
The committee met, pursuant to notice, at 9:30 a.m. in room
SR-253, Russell Senate Office Building, Hon. Conrad Burns
presiding.
Staff members assigned to this hearing: Virginia Pounds,
Republican Professional Staff; and Jonathan Oakman, Democratic
Staff
Assistant.
OPENING STATEMENT OF HON. CONRAD BURNS,
U.S. SENATOR FROM MONTANA
Senator Burns. I call the Committee to order, and thank you
for coming this morning. Our special guest this morning as we
have our first hearing or the hearing for the reappointment of
Ms. Ness to the Federal Communications Commission. We welcome
you here this morning and appreciate you coming. We also
welcome our two guests. I don't have much of a statement to
make prior to the--I will reflect that in my questions, and I
would move my spotlight to my ranking member on this Committee,
Senator Hollings.
[The prepared statement of Senator Burns follows:]
Prepared Statement of Hon. Conrad Burns, U.S. Senator from Montana
I would like to welcome everyone to today's hearing. Without
question, the Federal Communications Commission is one of the most
critical agencies in ensuring this nation's future, particularly given
the explosion of information technologies and the Internet. Given this
fact, today's hearing on the reconfirmation of Commissioner Ness takes
on added gravity.
I certainly am impressed with Commissioner Ness' commitment to
public service and her reputation for accessibility. The Commissioner
has always had an open-door policy and I applaud her for that. I am
concerned, however, with three issues in particular: the continuing
failure of the Commission to properly implement Section 706, its ill-
conceived low power radio proposal and lack of common sense on the
cross-ownership issue. I look forward to hearing more from the
Commissioner about her positions on these issues.
I am very disturbed by the Commission's delay in properly using the
authority granted to it under Section 706 of the Telecommunications
Act. I authored Section 706 during the crafting of the Act to provide
deregulatory incentives so that telecommunications firms would invest
in broadband technologies. The Section directs the FCC to make these
technologies available to ``all Americans.'' Yet in its report on
broadband deployment last year, the Commission refused to use its
Section 706 authority, citing the spread of broadband technologies
across the nation, even though only 2% of Americans had broadband
access. Simple common sense dictates that less than two percent
deployment does not equal ``all Americans.''
I will not allow Section 706 to be dismantled through FCC inaction.
Broadband access is as important to our small businesses in Montana as
water is to agriculture. With broadband access, high-tech Montana
companies can compete on the same basis as large corporations in the
global markets being made possible by the surge in e-commerce. The
Communications Subcommittee will be holding a hearing on broadband
deployment and Section 706 next Tuesday and I expect it will be one of
the most important hearings of the year.
I am also very concerned about the Commission's recent actions on
low power radio. I remain to be convinced that the concerns about
interference with existing broadcasters have been properly addressed. I
should note that public radio has been among the most vocal critics of
this proposal. Instead of essentially legalizing pirate radio in the
guise of serving some vague public interest goal, the Commission should
be working with nonprofits to take advantage of new technologies. In
the last six months, there has been an explosion of Internet radio
broadcasting, for instance. Using the Internet, individuals and small
nonprofits have been creating their own global broadcasting
distribution networks with minimal costs and no interference issues.
Yet the Commission continues to ram forward with this ill-conceived
scheme. I certainly look forward to Commissioner Ness further
explaining her thinking and actions on this issue.
The Commission's outdated position on cross-ownership is also of
great concern to me. Broadcasters and newspaper owners have
consistently urged that the newspaper-broadcast cross-ownership ban
should be eliminated, arguing in particular that unprecedented growth
in the number of new communications outlets make the rule an
anachronism. I agree with that view. One cannot credibly say that a
``scarcity'' of communications voices exists today.
I am also concerned about the Commission's continuing delay in
issuing a comprehensive universal service order, among other issues. I
look forward to further exploring these matters today. Thank you.
STATEMENT OF HON. ERNEST F. HOLLINGS,
U.S. SENATOR FROM SOUTH CAROLINA
Senator Hollings. I include my statement in the record and
yield to our distinguished Senators who are prepared to
introduce the witness.
[The prepared statement of Senator Hollings follows:]
Prepared Statement of Hon. Ernest F. Hollings,
U.S. Senator from South Carolina
I thank Chairman McCain for agreeing to holding this nomination
hearing for Commissioner Ness early in the legislative year.
Commissioner Ness has served as a Commissioner since 1994 during a
challenging and exciting time at the FCC. She has worked diligently to
implement the Telecommunications Act of 1996 and has been an advocate
for competition. In addition, to her day-to-day duties, Commissioner
Ness has immersed herself in issues of international telecommunications
policy and chairs the Federal-State Joint Board on Universal Service. I
thank her for her service and for her dedication to developing sound
telecommunications policy.
As the FCC fulfills its duty of regulating the telecommunications
industry, there are two specific challenges that the FCC must meet
successfully. The first is promoting competition in the local phone
market, and the second is protecting the public interest.
Soon after the passage of the Telecommunications Act of 1996 a
slate of 271 applications that did not meet the 14 point checklist were
filed at the FCC. However, today companies are beginning to take the
271 process more seriously. This has resulted in the FCC granting Bell
Atlantic's 271 application in New York. I understand that Bell Atlantic
has since had some problems meeting the requirements of Section 271,
and has entered a consent decree with the FCC to pay $27 million in
fines. Therefore, as the FCC reviews 271 applications it is important
that the FCC grants only those applications that truly meet the
requirements of Section 271, and at a minimum, meet the standard in its
Bell Atlantic decision. The FCC must also have in place the necessary
enforcement tools to address compliance issues that may arise.
The drafters of the Communications Act of 1934 had considerable
foresight when they included provisions in the Act requiring the FCC to
make decisions in accordance with the public interest. This standard is
particularly important in light of the great number of mergers
occurring in the telecommunications market. We have seen the number of
Bell phone companies go from seven to four because of mergers, and the
FCC recently authorized the merger of a Bell company and a long
distance company. There has been tremendous consolidation in the radio
industry and there are now pending mergers such as AOL and Time Warner
which, if approved, would allow the merged company to leverage its
market power across several media platforms. In this environment the
FCC must be able to utilize its public interest standard to ensure
that: consumers are protected, rates are reasonable and affordable,
service offerings are responsive to consumer needs, and companies
continue to provide new and innovative services.
I welcome Commissioner Ness today and look forward to hearing her
testimony.
Senator Burns. Mr. Brownback?
Senator Brownback. I want to hear from our distinguished
colleagues.
Senator Burns. We appreciate your coming this morning and
your interest in this appointment, and I would ask at this time
is Mr. Sarbanes ready to introduce his special guest?
STATEMENT OF HON. PAUL S. SARBANES,
U.S. SENATOR FROM MARYLAND
Senator Sarbanes. Thank you very much, Mr. Chairman,
Senator Hollings, Senator Brownback. I'm very pleased to be
here to indicate my very strong support for the reconfirmation
of Susan Ness as the Commissioner of the Federal Communications
Commission. In my view, she's done an outstanding job in this
role. I think she's served our nation well.
As you know, she was appointed to the Commission in 1994.
During her tenure there, she's chaired the Commission's
Federal/State Joint Board charged with addressing universal
telephone service issues. She's been the Commission's lead
representative for the 1995-1997 World Radio Communications
Conference. She's currently a member of the National
Association of Regulatory Utility Commissioners Committee on
Communications and the Federal Communications Bar Association.
The Committee knows well that she's been an active
proponent of fair competition both domestically and globally.
She's worked hard to promote the advancement of new
technologies, expand economic opportunities, reduce regulatory
uncertainty. She's played a key role in shaping policies for
the efficient management of the radio spectrum. She's credited
with helping to forge a consensus on the digital television
standard, on guidelines to improve the quality and quantity of
children's educational television program. She's worked
tirelessly to facilitate delivery of advanced
telecommunications systems to the classroom and to community
libraries so that all children can participate in the
telecommunications and information revolution.
She had a very distinguished record before coming to the
Commission, although obviously her performance there is a
critical standard in judging her reconfirmation. She has been a
senior lender to communication companies as the vice-president
of a regional financial institution. She has been assistant
counsel in a House Committee on banking currency in housing.
She has been a very active leader in our community in Maryland,
a Chair of the Montgomery County Charter Review Commission,
Vice Chair of the County's Task Force on Community Access to
Television.
She has done I think a terrific job in handling some very
tough problems before the Commission. I think she's reflected
prudence, intelligence, fair and balanced judgment and I
strongly urge the Committee to permit her to carry forward her
good work by reconfirming her for another term on the FCC.
Thank you very much.
Senator Burns. Thank you, Senator Sarbanes. Senator
Mikulski.
STATEMENT OF HON. BARBARA A. MIKULSKI,
U.S. SENATOR FROM MARYLAND
Senator Mikulski. Thank you very much, Mr. Chairman. I will
just highlight some additional comments. I believe my senior
colleague covered a lot of the information that I wish to
convey as well and ask unanimous consent that my statement go
into the record.
Senator Burns. Without objection.
Senator Mikulski. Mr. Chairman, I, too, wholeheartedly
endorse the renomination of Susan Ness to be a Commissioner at
the FCC. I think she brings competence, I think she brings
experience and I think she brings a sense of community because
sometimes we get so fascinated by technology--what are the new
regulatory--we forget that really ultimately,
telecommunications is to serve the consumer and to help bring
the world together, either business to business or business to
consumers or people to people. I believe she brings that
backbone and those insights.
She brought to the Commission initially an incredible
educational background, a graduate from Douglass College, in
addition to that, a law degree from Boston College and then
went on and got a Master's Degree in Business Administration
from Wharton. Now, that's a pretty excellent background to
bring to the technical issues facing FCC and the need to
understand both the law as well as the business aspects.
We have been particularly proud of the job she's done in
the FCC and the challenges that she's taken a very keen
interest in improving children's educational TV, promoting
universal service and universal access, again, a very keen
interest to be sure that you don't have a digital divide in the
United States of America between our children who have access
to technology and those who don't, the roll-out of digital
television, new wireless service, expanding competition in
telephone and video, efficient spectrum management. Then she's
also taken the work of unnecessary regulations, not what else
can we do but what don't we have to do so we don't have to
shackle this new world of E business and E buzz.
In her work at the Federal/State Joint Board, she has
represented us in World Radio Communications conferences in
Switzerland. She was the FCC's rep in 1995 and 1997 and one of
the areas that she's expressed interest in, I know the
Committee was very strong in this, this opening overseas
market. If we invent it, we want to be able to sell it and I
think she's been a real champion of that.
She's been recognized by her peers, a recipient of the
International Radio and TV Society Foundation. Electronic Media
named her as one of 12 to watch in 1997 and she was honored by
the Women of Wireless and the American Women in Radio and TV
for all of her efforts.
I know that her family's here and they have been very proud
of her work as the two Senators have, and I believe that she
will ably do it, continue to do a very able job on the
Commission. And I think anybody who brings her owns mitts is
always prepared for anything that lies ahead so I
wholeheartedly endorse her renomination.
[The prepared statement of Senator Mikulski follows:]
Prepared Statement of Hon. Barbara A. Mikulski,
U.S. Senator from Maryland
I am happy to be here this morning to introduce FCC Commissioner
Susan Ness for reconfirmation to the FCC.
Commissioner Ness was originally appointed to the FCC by President
Clinton in 1994 and has been the Commission's senior member since
November 1997. Commissioner Ness has been a dedicated and tireless
worker in helping to formulate communications policies that will
benefit the quality of life for future generations. Commissioner Ness
currently chairs the Federal-State Joint Board which is charged with
addressing universal telephone service issues and has served as the
FCC's lead representative at the 1995 and 1997 World Radiocommunication
Conferences in Geneva, Switzerland.
Among her many accomplishments during her FCC tenure, Commissioner
Ness has worked to: improve children's educational television; promote
universal telephone service; connect classrooms and libraries to the
Internet; roll out digital television service; introduce new wireless
services; expand telephone and video competition; promote efficient
spectrum management; open overseas markets; and eliminate unnecessary
regulations.
In recognition of her accomplishments Commissioner Ness was chosen
as a recipient of the International Radio and Television Society
Foundation Award and was selected one of Electronic Media's ``12 to
Watch in 1997.'' She has also been honored by Women of Wireless and by
the American Women in Radio and Television for her efforts on behalf of
women.
Prior to coming to the FCC, Commissioner Ness was a senior lender
to communications companies as a vice president of a regional financial
institution. A lawyer by profession, she also served as Assistant
Counsel to the Committee on Banking, Currency and Housing in the U.S.
House of Representatives. She also founded
and directed the Judicial Appointments Project of the National Women's
Political
Caucus.
Commissioner Ness is a graduate of Douglass College where she
received a B.A. in 1970. There she served on the Board of Directors of
WRSU Radio. She received a Juris Doctor, cum laude from Boston College
Law School and a Masters in Business Administration from The Wharton
School of The University of Pennsylvania.
Another 5 years for Commissioner Ness will be good for the FCC and
good for the country. I wholeheartedly support Commissioner Ness's
renomination and urge a swift reconfirmation.
Senator Burns. Thank you, Senator Mikulski. Before we take
your statement, Commissioner, we have been joined by the
distinguished Senator from West Virginia. Mr. Rockefeller, do
you have a statement? We have already made ours.
STATEMENT OF HON. JOHN D. ROCKEFELLER, IV,
U.S. SENATOR FROM WEST VIRGINIA
Senator Rockefeller. I know it and that is the reason I
called you last night with great respect to ask your permission
if I could talk for about 60 seconds, and you said yes. I want
to do that because I so strongly support Susan Ness and I think
it is incredibly important for the FCC that she be renominated.
This has been a two-year process. She has more experience
than anybody on the FCC. She's taken from the telecommunication
to regulation act every single aspect of that and worked it
through. We've spent endless hours working together overcoming
problems and she's patient, understanding, knows it. I didn't
even know about The Wharton School until I was reading about it
last night, but that's just another dimension.
She's been very strong on universal service, she's been
very strong on consumer interest, and very strong on trying to
get compromise for a digital television standard effective on
that. She's pushed to move new technologies toward the
marketplace as quickly as possible, which I think is important
for a Commissioner, and she's been a very effective advocate
for spectrum management policies that create a level playing
field for all kinds of technologies.
But given all that, still I think the experience is the
thing which is so important, the stability which is needed on
the FCC. I sorely suspect that they're understaffed, that
they're under-funded, and I will have questions for her on
that, but I'm extremely supportive of her renomination. I think
it's an absolute must for the success of the FCC in a situation
where all the work that she does is moving much more quickly
than we in Congress, where our committees were set up just
after the second World War are prepared to deal with them, so
we really need Susan Ness.
Thank you, Mr. Chairman.
Senator Burns. Thank you, Senator. Now we'll have a
statement from Ms. Ness and welcome this morning and before
this Committee.
Senator Hollings. Mr. Chairman, let me just say hearing all
these laudatory statements, that I think of the comment made by
Winston Churchill in July 1945. We had VE Day on May the 8th of
1945 and the end of July, Mr. Churchill was voted out of office
by Clement Atlee, and under the rule in the United Kingdom,
you're supposed to be outside, which he was, of 10 Downing with
his clothing rack and his chest of drawers.
And the BBC said, ``Mr. Prime Minister, what is your
comment?''
He said, ``The British people are a funny lot. They show
their gratitude for a job well done by promptly voting you out
of office.''
Here was a fellow who had won the war to end all wars and
in just 3 months' time they were getting rid of him. And Ms.
Ness has been held up now since, what, almost a year, having
done an outstanding job. As Churchill says, don't look for
gratitude, which she's got some good friends here, and you
waited entirely too long.
The only reason I asked, Mr. Chairman, for you to yield
just a second is because I wanted to commend the Commission on
its rulings with respect to Section 271 now that we have had
Bell Atlantic. You've instituted an Enforcement Bureau, and
let's continue with that, because that's highly important that
we don't think to just get approval and then they don't have to
still comply with their 14-point checklist. The lawyers for the
Bell companies wrote those 14 points, and I'm very, very much
along with Senator Rockefeller in support of your renomination,
and I hope we can get it in the next markup here so we can get
it to the floor. Thank you, Mr. Chairman.
Senator Burns. Thank you, Senator. I was doing pretty good
about keeping the speeches down up here.
Senator Hollings. Well, she deserved the comment, and I've
got to get to another one.
[The prepared statement of Senator Inouye follows:]
Prepared Statement of Hon. Daniel K. Inouye, U.S. Senator from Hawaii
I thank the Chairman for holding a hearing on the nomination of
Commissioner Susan Ness for a second term as Commissioner of the
Federal Communications Commission (FCC). Commissioner Ness' term
expired last year and given her work at the FCC, it is important that
this committee take a serious look at renominating her to serve a
second term at the FCC.
Prior to going to the FCC, Commissioner Ness had a great deal of
experience in the communications world, particularly in the area of
finance, and while at the FCC, she has built admirably on that
experience. Commissioner Ness spent nearly 10 years in the
communications industries division of the American Securities Bank in
Washington, D.C. she also served as an Assistant Counsel to the House
Committee on Banking, Currency, and Housing.
At the FCC, Commissioner Ness has certainly distinguished herself.
She has taken a special interest in international and wireless
communications policy and has represented the United States and the FCC
well in international arenas. I would also like to recognize
Commissioner Ness for her dedicated service as Commissioner during a
historic and challenging time at the FCC as it implements the
Telecommunications Act of 1996. In this context, Commissioner Ness has
had to deal with difficult issues such as universal service, access
charge reform, and opening the local phone markets to competition.
I welcome Commissioner Ness. I thank her for her hard work at the
FCC, and I look forward to hearing her testimony.
Senator Burns. Well, I think maybe with citing Churchill
and his demise after World War II, it stood by the old
Presbyterian saying that no good deed shall go unpunished, and
we may be in that sort of a situation, but I understand that it
is the Chairman of--the full Committee's intent is to move this
nomination out of Committee, and that's what I understand now,
anyway, and I think that's a good sign.
Ms. Ness, we look forward to your opening statement and
thank you for coming this morning and, you know, if the other
two Senators want to be excused, I know they don't have
anything else to do today. You might want to introduce your
family, if you'd like.
STATEMENT OF HON. SUSAN NESS, COMMISSIONER,
FEDERAL COMMUNICATIONS COMMISSION
Ms. Ness. Thank you very much, Mr. Chairman. I would like
to introduce the members of my family who are here today.
First, my husband, Larry Schneider, my best friend for the last
25 years. My daughter Elisabeth Schneider--why don't you stand?
And my eleven-year-old son and computer advisor, David
Schneider.
Senator Burns. He taught you how to use it, didn't he? I
know about that.
Ms. Ness. I'd also like to acknowledge my mother, Ruth
Ness, who would have liked to have been here today but she is
with my 102-year-old grandmother who unfortunately entered the
hospital earlier this week. And I know during my last
confirmation hearing, my then 97-year-old grandmother had
watched on C-SPAN and had alerted the family to the fact that
it was being covered. I see that C-SPAN is here today.
Hopefully, my grandmother is in a position to watch once again.
I know she would be if she can.
I also want to thank Chairman McCain for agreeing to hold
the hearing today, and thank you very much, Chairman Burns, for
agreeing to preside today.
I also would like to thank Senator Hollings for all of his
help in providing me with this opportunity today, and my home
Senators Barbara Mikulski and Paul Sarbanes for their very,
very generous introduction, their support and their friendship.
I have been privileged to serve our country at a time of
explosive growth and change in the telecommunications industry.
We, the Commission, are at the epicenter of a fundamental
transition that is changing the way we live, work and play.
We're transitioning from a monopoly based to a competitive-
based industry, from an analog to a digital world, from
narrowband to broadband, from fixed applications to mobile
applications, from circuit-switched to packet-switched and from
a traditional economy to an Internet-based economy.
Lest we be complacent, the Commission is also transitioning
from the implementation stage of the Telecommunications Act to
the enforcement stage of that Act. And all of this has been
happening on my watch. New technologies, new media, new
business plans are emerging every day. Our challenge at the
Commission is to facilitate innovation and encourage investment
in this dynamic information age.
And our commitment is to ensure that all Americans have
access to the telecommunications tools so vital in this new
economy. I'm invigorated by the challenge and both inspired and
humbled by this commitment to the American people. For me,
there could be no better place to serve the country than at the
FCC, and at this time. With your consent I would like very much
to continue to serve, and I thank you for this extraordinary
opportunity.
[The prepared statement and biographical information of Ms.
Ness follow:]
Prepared Statement of Hon. Susan Ness, Commissioner,
Federal Communications Commission
Mr. Chairman and distinguished members of the Committee:
It is an honor to appear before you today.
I want to begin by thanking both the Committee Chairman, Senator
McCain, for scheduling this hearing and the Subcommittee Chairman,
Senator Burns, for agreeing to chair it. I also want to thank the
Ranking Member, Senator Hollings, for his invaluable assistance, and
the senators from my home state of Maryland, Senator Mikulski and
Senator Sarbanes, for their support and friendship.
It is a great privilege to be entrusted--along with my four
colleagues and a staff of dedicated employees--with implementation of
our Nation's communications laws. Through the Commission's
implementation of those laws, we seek to effectuate your vision--that I
share--of competition and innovation throughout the communications
industry; of access for all Americans to advanced services; of
elimination of outdated regulations; and of opened global markets. I
appreciate the opportunity you have given me to serve in a position to
promote these goals, and with your consent, I will continue to do so.
I have been fortunate to serve at an extraordinary time. When I
first appeared before this Committee in 1994, the Internet was still a
nascent network used predominantly by academia. Less than 10 percent of
Americans had cellular phones. Spectrum licenses were awarded by
lotteries, not auctions. There was no direct broadcast satellite
service. And local telephone competition was largely a dream.
Today, the Internet has revolutionized the way we live, work, and
play. Over sixty percent of Americans now use the World Wide Web on a
regular basis. Eighty million Americans subscribe to mobile telephone
service. Over 8,000 spectrum licenses have been awarded by auction.
Direct broadcast satellite is the fastest-growing video service. And
there are a multitude of new companies aiming to provide consumers with
choices for their local and advanced telecommunications services.
But the best is yet to come.
Over the next five years and beyond, the Internet will profoundly
change the way we live and work. The convergence of previously separate
industries will allow information and content, whether voice, data or
video, to be transmitted virtually any time and any place over an ever-
expanding number of paths. Multiple broadband pipelines, both wired and
wireless, will bring a new generation of applications to consumers.
Millions of devices, from soda machines to mobile phones will
communicate directly on the Internet. New technologies such as software
defined radio and spread spectrum devices, will fundamentally challenge
the way we think of spectrum allocation. Together, these innovations
will provide consumers with a wealth of new choices and lower prices.
Our task is to insure that all Americans have access to the wealth of
benefits and opportunities flowing from this telecommunications
revolution.
Mr. Chairman, the future depends upon innovation. And the
Commission plays an important role. We foster innovation when we create
opportunities for new technologies, whether wired or wireless, to reach
users. We foster innovation when we reform rules and practices that
impede competitive forces. And we foster innovation when we reduce
barriers to investment and open markets to competition. But we must do
so at a pace consistent with digital age speed and efficiency.
We live in a global economy. Countries around the world have looked
to the leadership of the United States in opening telecommunications
markets to competition. We can be proud of our record at home and
abroad.
Mr. Chairman, I am excited about the future. That is why I am so
enthusiastic about participating in the effort to transform your vision
into reality. That is why I would be honored to serve the American
people during this time of unprecedented change.
Thank you.
a. biographical information
1. Name: (Include any former names or nick names used.) Susan Paula
Ness.
2. Position to which nominated: Commissioner, Federal
Communications Commission.
3. Date of nomination: July 19, 1999.
4. Address: (List current place of residence and office addresses.)
Residence: 5505 Devon Road Bethesda, Maryland 20814. Office: Federal
Communications Commission, 445 12th Street, S.W., Washington, D.C.
20554.
5. Date and place of birth: August 11, 1948, Elizabeth, New Jersey.
6. Marital status: (Include maiden name of wife or husband's name.)
Married to Lawrence Alan Schneider.
7. Names and ages of children: (Include stepchildren and children
from previous marriages.) Elisabeth Ness Schneider, August 14, 1984 (14
years old); David Ness Schneider, July 6, 1988 (11 years old).
8. Education: (List secondary and higher education institutions,
dates attended, degree received and date degree granted.) The Wharton
School, Graduate Division (University of Pennsylvania), September 1981-
May 1983, MBA, May 1983; Boston College Law School, September 1971-May
1974, J.D., May 1974; Douglass College (Rutgers University), September
1966-May 1970, B.A., May 1970; Sarah Lawrence College (Geneva,
Switzerland program), Oct. 1968-May 1969; Verona High School, Verona,
NJ, Diploma, June 1966.
9. Employment record: (List all jobs held since college, including
the title or description of job, name of employer, location of work,
and dates of employment.)
1994-Present Federal Communications Commission, Washington,
D.C., Commissioner.
1983-1992 American Security Bank, Communications
Industries Division, Washington, D.C., VP/
Group Head (1988-1992), Vice President (1986-
1992), Asst. Vice President (1984-86), Asst.
Treasurer (1984), Corp. Banking Rep. (1983-
84).
1978-1981 National Women's Political Caucus, Washington,
D.C., Director, Judicial Appointments
Project.
1977-1982 Consultant (self employed), Bethesda,
Maryland, Consultant, Consumer Credit/
Government Relations.
1975-1977 Committee on Banking, Currency & Housing--U.S.
House of Representatives, Washington, D.C.,
Assistant Counsel (Full Committee).
1974-1975 Consumer Product Safety Commission,
Washington, D.C., Attorney/Advisor.
Summer 1973 Nessen & Csaplar, Boston, MA, Summer
Associate.
Summer 1972 San Francisco Neighborhood Legal Services, San
Francisco, CA, Summer Law Clerk.
1970-1971 Harvard School of Public Health, Boston, MA,
Administrative Assistant.
Summer 1970 NBBS (Dutch Student Travel Bureau), Leiden,
The Netherlands, U.S. Representative (Student
Tours).
10. Government experience: (List any advisory, consultative,
honorary or other part-time service or positions with Federal, State,
or local governments, other than those listed above.)
1987-1994 Montgomery County Charter Review Commission,
Montgomery County (MD), Chair 1991-1994,
Member 1987-1994.
1984 Montgomery County Task Force on Community
Access Television, Montgomery County (MD),
Vice Chair.
1978 Dept. of Housing & Urban Development, Project
on Women & Mortgage Credit, Washington, D.C.,
Project consultant.
1978-81 Montgomery County Commission for Women,
Montgomery County, MD, President 1980-1981,
Financial Officer 1979-80, Member 1978-80.
1977 Department of Commerce, Office of Legislative
Affairs, Washington, D.C., 30 Day Consultant.
11. Business relationships: (List all positions held as an officer,
director, trustee, partner, proprietor, agent, representative, or
consultant of any corporation, company, firm, partnership, or other
business enterprise, educational or other institution.) Trustee of
Trust Under Will of Edward S. Ness (father) (simple testamentary
trust); Member, Advisory Board, Gruss Public Policy Fellowship Program,
The Wharton School, University of Pennsylvania (unpaid).
12. Memberships: (List all memberships and offices held in
professional, fraternal, scholarly, civic, business, charitable and
other organizations.) I am admitted to the practice of law in the
District of Columbia and maintain active membership status. I am also
admitted to the practice of law in the State of Maryland, but have
taken inactive status for the duration of my time at the FCC. Other
memberships: Federal Communications Bar Association, Leadership
Washington (Class of 1988), Wharton Alumni Club of Washington, Boston
College Law School Alumni Association, South Bradley Hills Neighborhood
Association, National Association of Women Judges (associate member),
Smithsonian Institution (Resident Associate), WETA contributor, United
States Holocaust Memorial Museum, American Women in Radio and
Television (honorary member), Walt Whitman Parent, Student, Teacher
Association, Maret Parent Teacher Association, DNC Women's Leadership
Forum, Renaissance Weekend, Har Shalom Synagogue, Emily's List.
13. Political affiliations and activities:
(a) List all offices with a political party which you have held or
any public office for which you have been a candidate. Democratic
Precinct Chair (Resigned 1994).
(b) List all memberships and offices held in and services rendered
to all political parties or election committees during the last 10
years. During the past 10 years (prior to entering government service)
I was active in numerous national and local Democratic party campaigns
and political activities as a volunteer advisor and/or financial
contributor. Since entering government service, I have limited my
activities to certain memberships and financial contributions, as
indicated below:
Clinton for President 1991-92 (Co-Chair, Montgomery County, MD
primary and general election, National Finance Committee), Bruce Adams
for County Executive (Montgomery County, MD (1992-94) (Treasurer)),
Bruce Adams for County Council (Montgomery County, MD) (Finance Chair),
DNC Business Council (member 1992-94), DNC Trustee (1993), DNC Women's
Leadership Forum (current member), Maryland Democratic Party (current
member), Democratic Leadership Council (current member), EMILY's List
(current member).
(c) Itemize all political contributions to any individual, campaign
organization, political party, political action committee, or similar
entity of $500 or more for the past 10 years.
1990 Friends of Sid Kramer $500
1991 Clinton Committee `91 $1,000
1991 Clinton Committee `91 $1,000 (spouse)
1992 Democratic National Committee $650 (convention
package)
1992 Don Bonker for Senate $500
1992 Don Bonker for Senate $500
1992 DNC Victory Fund $2,000 (joint)
1993 Friends of Bruce Adams $500
1993 Maryland Democratic Party $500
1994 Women's Forum, DNC $1,000
1995 Clinton/Gore `96 Primary Committee $1,000
1995 Clinton/Gore `96 Primary Committee $1,000 (spouse)
1996 DNC Federal Account $2,000 (spouse)
1996 Friends of Chris Dodd $500 (spouse)
1996 Women's Leadership Forum, DNC $1,000
1998 Mikulski For Senate $500
1998 Power & Leadership in U.S. Senate $500
1998 Women's Leadership Forum, DNC $1,000
1999 Gore 2000 $1,000 (spouse)
14. Honors and awards: (List all scholarships, fellowships,
honorary degrees, honorary society memberships, military medals and any
other special recognition for outstanding service or achievements.)
International Radio and Television Society Foundation, award for
achievements in electronic media, New York, NY (May 1999); Rutgers
University Hall of Distinguished Alumni, elected in 1998; Douglass
Society, Douglass College, elected 1997; Women of Wireless, Certificate
of Achievement; American Women in Radio and Television Award; Boston
College Law School, Juris Doctor, cum laude.
15. Published writings: (List the titles, publishers, and dates of
books, articles, reports, or other published materials which you have
written.) Ness, Gender Stereotypes Still Need to Change, (letter),
Wireless Week, March 8, 1999; Ness, Auction Integrity Vital, Wireless
Week, January 26, 1998; Ness, Heads Up Call for Children's TV,
(letter), Washington Post, October 4, 1997; Ness, Libraries: A Critical
Lane on the Information Superhighway, llinois Libraries, Vol. 79 No. 2,
Spring 1997; Ness, Spectrum Management Principles for the Twenty First
Century, The National Regulatory Research Institute Quarterly Bulletin,
Volume 3, Fall 1996; Ness, Upgrading What TV Offers Children,
Washington Times, September 14, 1996, at A13; Ness, Responsible TV,
Washington Post, October 27, 1995, at A24; Ness, Reflections on the
Sixtieth Anniversary of the Communications Act, Federal Communications
Law Journal, Volume 47, No. 2., December 1994, at 311; Wechsler & Ness,
Power Plays, Ms. Magazine, February 1980, at 27; Ness & Wechsler, Women
Judges--Why so Few?, Graduate Woman, November-December 1979, at 10;
Ness, A Sexist Process Keeps Qualified Women Off the Bench, Washington
Post, March 26, 1978, Outlook Section, at C-6; Various Reports of the
Montgomery County Commission for Women (1979-80); Report of the
Montgomery County Task Force on Community Access Television, March 1,
1984; Report of the Montgomery County Charter Review Commission, May 1,
1992; Report of the Montgomery County Charter Review Commission, May 1,
1990.
16. Speeches: Provide the Committee with two copies of any formal
speeches you have delivered during the last 5 years which you have
copies of on topics relevant to the position for which you have been
nominated. Package and index attached.*
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* The speeches have been retained in the Committee's files.
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17. Selection:
(a) Do you know why you were chosen for this nomination by the
President? Although I have not spoken with the President about his
decision, I assume that he chose to nominate me for the same reasons he
did five years ago, as well as his assessment of my track record over
the past five years. Initially, I believe he selected me for my
expertise in communications finance, and for my dedication to serve the
American public. Over the past five years, I believe I have established
myself as thoughtful, hard-working, knowledgeable, and fair, with a
strong commitment to promoting competition and serving the interests of
consumers.
(b) What do you believe in your background or employment experience
affirmatively qualifies you for this particular appointment? My five
year record as an FCC Commissioner best qualifies me for reappointment.
I am the only Commissioner at present who has served more than two
years and the only one who has participated throughout the Commission's
implementation of the Telecommunications Act of 1996. I have a thorough
knowledge of the legal, policy, technical, and economic issues with
which the Commission has been grappling as we transition from a
monopoly to a competitive marketplace. I also have considerable
experience in the art of consensus-building, and have demonstrated the
ability to interpret and follow the law, and to meet statutory
deadlines. I believe I have an excellent working relationship with the
industry, with our colleagues in state and local government, with
consumers, and with our global trading partners. I have worked closely
and cooperatively with the Congress, especially with our oversight
committee.
Prior to becoming a Commissioner, I was vice president and group
head of the Communications Industries Division of a regional bank. I
worked closely with communications companies nationwide that were
expanding their businesses, creating jobs and contributing to economic
growth. As a result, I developed an understanding of the financial
circumstances and business plans of rural telephone companies, long
distance providers, wireless carriers, satellite companies, radio and
TV broadcasters, and cable companies and programmers, among others, and
the impact of government regulation on these entities. I have brought
this business perspective--as well as my earlier experience on Capitol
Hill and as a consumer advocate--to my work as a Commissioner.
In addition to my professional career, prior to joining the
Commission, I served my local community as the chair or vice chair of
several county government commissions. My work on the FCC reflects my
sensitivity to community needs.
So much of what the Commission does will impact the lives of future
generations. I am fortunate that my two children actively use and
benefit from information age technologies. I am committed to doing what
I can to spur the availability and affordability of broadband networks
so that children from all walks of life are empowered to achieve their
full potential.
b. future employment relationships
1. Will you sever all connections with your present employers,
business firms, business associations or business organizations if you
are confirmed by the Senate? I did so prior to joining the Federal
Communications Commission in 1994.
2. Do you have any plans, commitments or agreements to pursue
outside employment, with or without compensation, during your service
with the government? If so, explain. No.
3. Do you have any plans, commitments or agreements after
completing government service to resume employment, affiliation or
practice with your previous employer, business firm, association or
organization? No.
4. Has anybody made a commitment to employ your services in any
capacity after you leave government service? No.
5. If confirmed, do you expect to serve out your full term or until
the next Presidential election, whichever is applicable? If confirmed,
I would be honored to serve my full term.
c. potential conflicts of interest
1. Describe all financial arrangements, deferred compensation
agreements, and other continuing dealings with business associates,
clients or customers. I have a vested interest in a defined benefits
pension fund from NationsBank, successor to American Security Bank,
which will pay a monthly annuity, beginning, September 1, 2014. I have
no control over the funds, and do not know the value of the pension,
who manages the pension funds, or the assets in which the fund is
invested.
2. Indicate any investments, obligations, liabilities, or other
relationships which could involve potential conflicts of interest in
the position to which you have been nominated. When I joined the
Commission in 1994, my husband converted from an equity partner to a
contract partner in the law firm of Arnold & Porter to insulate our
family from any earnings resulting from the firm's representation of
communications clients. Nonetheless, I consider whether it is necessary
to recuse myself if Arnold & Porter represents a client in an
adjudicatory proceeding, and I confer with the Commission's Office of
General Counsel as necessary to ensure that I avoid any appearance of
conflict of interest.
3. Describe any business relationship, dealing, or financial
transaction which you have had during the last 10 years, whether for
yourself, on behalf of a client, or acting as an agent, that could in
any way constitute or result in a possible conflict of interest in the
position to which you have been nominated? I am aware of no such
potential conflicts of interest.
4. Describe any activity during the past 10 years in which you have
engaged for the purpose of directly or indirectly influencing the
passage, defeat or modification of any legislation or affecting the
administration and execution of law or public policy. My primary
responsibility as a Commissioner has been to implement the laws that
Congress writes, not to lobby for changes in those laws. Nonetheless,
during my tenure at the FCC, I have occasionally expressed to Members
of the Senate and House, and in public meetings, my views on
legislation. For example, I spoke publicly and privately in 1994 and
1995 of my hope that Congress would enact comprehensive communications
legislation, as ultimately occurred in 1996. I have also testified on
slamming issues at several Senate field hearings.
Occasionally, I joined with other Commissioners in suggesting
various revisions in the Communications Act (many of these were enacted
in the Telecommunications Act of 1996). At one point I recall joining
my colleagues in a letter concerning the adequacy of the Commission's
annual appropriation. I have spoken about the desirability of amending
the Government in the Sunshine Act, and of confirming the public
ownership of radio spectrum. I also have answered questions in private
meetings with Representatives and Senators, and in public oversight
hearings, concerning various other legislative proposals.
I participated in the negotiation of the World Trade Organization
agreement on telecommunications services, and I have served as a senior
member of the FCC delegation in bilateral and multilateral negotiations
on WTO implementation, the World Radio Conferences of 1995 and 1997,
and various related international matters. In these activities, I have
conferred from time to time with members of Congress, as well as with
officials of the Department of Commerce, State Department, and U.S.
Trade Representative.
And, within the specified jurisdiction of the Commission, I have
affected the administration or execution of law or public policy in
hundreds of proceedings over the past five years, both through my
participation in the Commission's deliberations and through the votes
that I have cast.
Prior to joining the FCC, I participated actively at the state and
local level on public policy matters in my home state of Maryland. I
served as the chair of the Montgomery County Charter Review Commission.
In that capacity, I testified before our County Council and the State
legislature on county charter matters.
5. Explain how you will resolve any potential conflict of interest,
including any that may be disclosed by your responses to the above
items. (Please provide a copy of any trust or other agreements.) I try
to conduct myself in a manner that minimizes the potential for any
conflicts of interest--or appearances of conflict--to arise. Whenever
an ethical issue is presented, I consult my conscience, my advisors
and, where appropriate, our Office of General Counsel ethics experts,
for guidance. I recognize that public office is a public trust, and I
am committed to maintaining a high ethical standard for myself and for
my staff.
6. Do you agree to have written opinions provided to the Committee
by the designated agency ethics officer of the agency to which you are
nominated and by the Office of Government Ethics concerning potential
conflicts of interest or any legal impediments to your serving in this
position? Yes.
d. legal matters
1. Have you ever been disciplined or cited for a breach of ethics
for unprofessional conduct by, or been the subject of a complaint to
any court, administrative agency, professional association,
disciplinary committee, or other professional group? If so, provide
details. No.
2. Have you ever been investigated, arrested, charged or held by
any Federal, State, or other law enforcement authority for violation of
any Federal, State, county, or municipal law, regulation or ordinance,
other than a minor traffic offense? If so, provide details. No.
3. Have you or any business of which you are or were an officer
ever been involved as a party in interest in an administrative agency
proceeding or civil litigation? If so, provide details? No.
4. Have you ever been convicted (including pleas of guilty or nolo
contendere) of any criminal violation other than a minor traffic
offense? No.
5. Please advise the Committee of any additional information,
favorable or unfavorable, which you feel should be considered in
connection with your nomination. I have nothing specific to add at this
time, but would be pleased to respond to any additional questions the
Committee may ask.
e. relationship with committee
1. Will you ensure that your department/agency complies with
deadlines set by congressional committees for information? I will do
everything within my power to ensure that the FCC complies with
deadlines set by congressional committees for information.
2. Will you ensure that your department/agency does whatever it can
to protect congressional witnesses and whistle blowers from reprisal
for their testimony and disclosures? I will do everything within my
power to ensure that the FCC protects congressional witnesses and
whistle blowers from reprisal for their testimony and disclosures.
3. Will you cooperate in providing the committee with requested
witnesses, to include technical experts and career employees with
firsthand knowledge of matters of interest to the committee? I will
cooperate fully with the Committee to provide it with the witnesses it
needs and desires.
4. Are you willing to appear and testify before any duly
constituted committee of the Congress on such occasions as you may be
reasonably requested to do so? Yes, I would be happy to appear and
testify.
f. general qualifications and views
1. Please describe how your previous professional experience and
education qualifies you for the position for which you have been
nominated. I believe my experience as a lawyer (including service on
one congressional committee staff) and as a banker (working with
virtually every sector of the communications industry) were excellent
training for this position. But at this juncture I believe it is my
experience as a Commissioner, making literally thousands of decisions
and dealing with virtually every provision of the Communication Act and
related laws, that is most relevant. I have worked diligently to
implement the laws Congress has enacted; I have listened carefully to
the concerns of industry and consumers; and I have forged a strong
working relationship with my FCC colleagues and with our state
commission counterparts to expedite the arrival of competition,
streamline or eliminate regulation, and preserve access to
telecommunications and information services at affordable prices for
all.
2. What skills do you believe you may be lacking which may be
necessary to successfully carry out this position? What steps can be
taken to obtain those skills? I believe that I have the skills
necessary to successfully carry out my responsibilities as a member of
the FCC. Nonetheless, if confirmed to another term, as I have done over
the past five years, I would strive to increase my knowledge and
improve my skills to continue to merit the public trust.
3. Why do you wish to serve in the position for which you have been
nominated? I am deeply committed to serving the American public, and
believe I can best do so at this time by continuing in my position as
an FCC Commissioner. I care passionately about the issues before us. We
are at a pivotal time in the transition from monopoly to competition in
communications and much is left to be done. If confirmed by the Senate,
I would welcome the opportunity to continue to play a role in ensuring
that the communications laws are properly implemented.
In carrying out the laws Congress has enacted, we have greatly
enhanced the lives of Americans, from accelerating the introduction of
new technologies and services, to establishing rules that will enable
people with disabilities to have meaningful access to
telecommunications products and services, and children--especially from
low income and rural districts--to have classroom access to the
Internet. I believe that I have contributed significantly to the
decisions which this Commission has rendered over the past five years.
As I noted, there is much left to be done. I want to promote
increased competition in all communications markets (especially local
telephony and multichannel video services), ensure that rural Americans
participate fully in the benefits of communications advances, eliminate
unnecessary regulation, promote efficient spectrum usage, open overseas
markets, and protect the interests of children (V-chip, E-rate, and
children's educational television programming).
I believe that the quality of FCC decision making on these and
other issues will be strengthened by my continued participation. The
agency has four relatively new Commissioners. I provide continuity,
institutional knowledge, and historical insights that might otherwise
be lacking.
4. What goals have you established for your first two years in this
position, if confirmed? If confirmed, my principal goal would be to
continue faithfully to implement the communications laws of the United
States for the benefit of the American public. Specific priorities
during the next two years include: (1) further strengthening of the
support regime for telephone service in high-cost areas; (2) approving
meritorious applications for long distance relief filed by Bell
companies; (3) promoting the deployment of advanced (broadband)
communications services to all Americans; (4) expediting review of
telecommunications mergers; (5) completing revisions to broadcast
ownership rules; (6) eliminating regulations that are no longer needed
and streamlining those that are more burdensome than necessary; (7)
ensuring a successful implementation of digital television; (8)
advancing the interests of U.S. companies and U.S. consumers in the
next World Radio Conference; (9) nurturing the growth of wireless
services (terrestrial and satellite); and (10) promoting policies for
efficient spectrum management. For further elaboration, see answer to
Question F.6. below.
5. Please discuss your philosophical views on the role of
government. Include a discussion of when you believe the government
should involve itself in the private sector, when should society's
problems be left to the private sector, and what standards should be
used to determine when a government program is no longer necessary.
First and foremost, I want to distinguish between the role of Congress
in making the laws and that of an FCC Commissioner in implementing
them. My principal responsibility as a Commissioner is to follow
faithfully the law as Congress wrote it, regardless of whether I might
have chosen a different course if I had discretion to do so.
Generally speaking, I tend not to believe in ``big government'' or
``no government'' but in ``smart government.'' I believe in the
supremacy of markets in allocating resources, setting prices, picking
winners and losers, etc. But government can play an important role in
correcting market failures, mediating disputes, and protecting
consumers.
The role of government can better be assessed in the context of
specific examples than in the abstract. In the case of digital
television, for example, I thought it was right for the government to
add its imprimatur to the standard that had been developed by industry;
virtually all industry representatives felt this would assist in
expediting a successful transition to DTV. In the case of Personal
Communications Services, however, I elected for the government not to
mandate a particular transmission methodology, and I believe the
competition between GSM, TDMA, and CDMA has been beneficial. I believe
government still plays a useful role in spectrum allocations, but in
the assignment process I believe that a market mechanism (auctions)
produces fairer and faster results when there are competing
applications than other approaches (such as comparative hearings, which
require subjective decisions).
Often, the issue is not whether ``government'' or the ``market'' is
better, but how government can help to create conditions that will
allow greater reliance on competition, and less on regulation. Local
telephone competition is a case in point. Here, Section 251 requires
some significant government intervention to create opportunities for
greater competition, but as that competition emerges the need for
entry, exit, and price regulation will diminish, and such regulation
may well hamper greater competition.
Wireless services provide another example, but one where the
evolution of competition is more advanced. Early in my tenure, we
adopted the PCS band plan and PCS auction rules and then conducted the
A and B block auctions. Those actions, by government, enabled the
introduction of additional competition in a market that had previously
been a duopoly. Soon thereafter, we were confronted with petitions by
states that wished to continue to regulate the prices for commercial
mobile radio services. Based on our assessment of the prospects for
competition, we denied the petitions, and ended rate regulation for
CMRS. The results have been every bit as good as we had hoped they
would be. Yet even the robust wireless competition that has emerged in
the larger markets has not eliminated the need to address such wireless
issues as hearing aid compatibility, E911 location information, or
issues relating to the Communications Assistance to Law Enforcement
Act.
Congress has provided the FCC with appropriate guidance--and
authority--concerning the removal of unnecessary regulations. Under
Section 10 of the Communications Act--a tool I find very useful--we can
and must eliminate any regulation that is not necessary to maintain
just and reasonable prices, practices, etc., that is not necessary for
the protection of consumers, and where removal is consistent with the
public interest. We have repeatedly used that authority to examine our
rules and to eliminate those which are no longer needed. I am also an
advocate for the use of properly tailored sunset provisions in
regulations.
Finally, given the dizzying speed with which telecommunications
technology and the marketplace are changing, it is critical for the
Commission to step back and review our rules to determine whether the
underlying purpose is still valid, whether the rules are in fact
achieving that objective, and whether there is a less burdensome way to
accomplish it. The biennial review provision of the Telecommunications
Act (Section 11) is one vehicle for conducting such a review. I will
not hesitate to revisit decisions which I have rendered where changed
market conditions warrant.
6. In your own words, please describe the agency's current
missions, major programs, and major operational objectives. The
Commission's mission is outlined in the Conference Report accompanying
the Telecommunications Act of 1996: ``to provide for a pro-competitive,
de-regulatory national policy framework designed to accelerate rapidly
private sector deployment of advanced telecommunications and
information technologies and services to all Americans by opening all
telecommunications markets to competition . . .''
Much of our present focus is on completing orders to implement the
provisions of the Act. In our otherwise successful defense of our local
competition order, the Supreme Court remanded one piece--what
constitutes an unbundled network element (UNE) (Section
251(c)(3),(d)(2))--to the Commission for further review. In addition to
the UNE remand, we must further refine support mechanisms for telephone
service in high-cost areas (Section 254), and evaluate forthcoming
applications for Bell company entry into long distance (Section 271).
We must conduct thorough but expeditious evaluations of proposed
mergers (Sections 214 and 310), combat slamming (Section 258), and
implement the Communications Assistance to Law Enforcement Act (Section
229).
We are finally completing our review of our broadcast ownership and
attribution rules, and finding ways to accelerate review of future
broadcast transactions. We must continue to oversee the transition from
analog to digital television broadcasting, facilitate the introduction
of digital radio broadcasting, ensure compliance with the V-Chip law
and the Children's Television Act, and ensure that advanced
telecommunications capabilities are being deployed to all Americans on
a reasonable and timely basis.
Our mission also includes managing the radio spectrum for non-
government uses. A major focus is WRC 2000, in which spectrum managers
around the globe will convene to establish the spectrum rules of the
road. We must engage in these debates--well in advance of WRC 2000--if
we are to have an impact on outcomes that will affect billions of
dollars of U.S. business.
7. In reference to question number six, what forces are likely to
result in changes to the mission of this agency over the coming five
years? The communications marketplace is changing and, as it does, so
too must the FCC. The most notable change that we are working to bring
about is to increase competition in all markets, especially those
currently characterized by little competition today (local telephone
service and multi-channel video service). Increased competition will
mean less prescriptive regulation, and we will need to adjust and
streamline our rules as competitive developments warrant. Our efforts
will be assisted by changes in technology, which are blurring the lines
between previously discrete fields and making it easier, for example,
for cable companies to offer telephone services, telephone companies to
offer video services, and both to offer high-speed Internet access
services.
Increasingly, our spectrum policies are being challenged by new
proposals for band sharing. We must refine our spectrum management
policies to expedite the deployment of new wireless technologies while
protecting existing services from unacceptable levels of interference.
Chairman Kennard has initiated a process to plan for the FCC of the
future. A wide variety of stakeholders has been consulted. My
colleagues and I need to review the many suggestions that have been
received and work together to see which ones make sense and which do
not, and to determine the appropriate scope and timing of the various
changes we do decide to make. Structural changes (such as the recent
proposal to create an Enforcement Bureau and a Public Information
Bureau) and potential statutory changes will, of course, be presented
to Congress for review.
8. In further reference to question number six, what are the likely
outside forces which may prevent the agency from accomplishing its
mission? What do you believe to be the top three challenges facing the
board/commission and why? The FCC's ability to do its job is dependent
first and foremost on our professional staff of lawyers, engineers,
economists, analysts, and other experts. We are extremely fortunate to
have exceptionally knowledgeable and talented people working diligently
to administer the Communications Act, and we are also fortunate that
Congress has appropriated the funds necessary to fulfill our
responsibilities and to deploy efficiency-enhancing technology (e.g.,
for electronic filing initiatives). But budget limitations have
nonetheless hindered our ability to attract new talent to replace those
who have left.
The propensity for service providers to litigate instead of compete
unnecessarily delays the implementation of FCC decisions. Judicial
review (though a vital element of our system of laws) is an ``outside
force'' that sometimes impedes the Commission from accomplishing its
mission. The Supreme Court eventually overturned the 8th Circuit's
ruling on the FCC's local competition order, but for two intervening
years the environment for investment and competition was clouded.
Our highest priority is to ensure that all Americans can enjoy the
best communications and information services possible, at affordable
prices. The three top challenges in meeting this priority are to (1)
promote competition whenever possible, (2) continue to address the
unique needs of rural Americans and those with low incomes, and (3)
eliminate those rules that have outlived their usefulness. As we pursue
these and related issues, we can expect occasional criticism from
industry participants, consumers, reviewing courts, and others, but we
need to see this transition through with decisions that are clear,
fair, prompt, and consistent with the law.
9. In further reference to question number six, what factors in
your opinion have kept the board/commission from achieving its missions
over the past several years? I believe that the FCC is achieving its
missions. The Commission embraced the many assignments in the
Telecommunications Act with a firm commitment to implement the law
faithfully and to meet the many statutory deadlines. I am proud of so
many hard-working staff members whose efforts led to completion of
every rulemaking on time. I am also proud that my colleagues on the
Hundt Commission were able to achieve unanimity throughout that
process.
It is not inconsistent with the foregoing to observe that our work
is not yet completed. I have always believed, for example, that
replacing the telephone monopoly with a competitive telecommunications
environment would take a number of years. Unnecessary litigation and
footdragging have been a source of delay, but fundamentally the process
of opening the telephone network to competition (with resale, unbundled
network elements, collocation, number portability, construction and
interconnection of new facilities, etc.) is inevitably complicated and
slow. Moreover, our authority to effectuate changes is shared with our
state colleagues. But (as I described more fully in a January 1999
speech supplied in response to Question
A. 16), I believe we are generally on track and beginning to see the
desired results. Generally speaking, most Americans are receiving more
and better communications services, and paying less, than ever before.
Similarly, with respect to telephone service in rural areas, we
have not yet completed adapting federal support mechanisms to a
competitive environment. The analytic and political difficulties are
quite substantial. But while we try to craft a compromise regime that
will assure affordable universal service for all, we have taken steps
to ensure that there is no diminution of support available to rural
subscribers, and telephone service remains affordable throughout the
nation.
One indication of the FCC's success in achieving its missions is
the tendency of other nations to follow the U.S. example. The policies
of the Communications Act and of FCC rulemakings as well as the concept
of an independent commission are being emulated in many countries
around the world.
10. Who are the stakeholders in the work of this agency? Our
principal stakeholders are the 273 million Americans who depend on
communications to conduct their businesses, communicate with their
families and friends, obtain news and information, and be entertained.
Various statutory provisions also require particularized attention to
the needs of low-income consumers, those in rural, insular, and high-
cost areas, students and teachers, library patrons, rural health care
providers, and people with disabilities. Other stakeholders include
various industry sectors: large and small incumbent and competitive
telephone companies, cable operators and programmers, radio and TV
broadcasters, wireless carriers, satellite operators, international
carriers, equipment manufacturers, law enforcement officials, public
safety officials, and information service providers, among others.
11. What is the proper relationship between your position, if
confirmed, and the stakeholders identified in question number ten. In
every proceeding presented to the Commissioners, I believe it is our
responsibility to review the law, afford all interested parties an
opportunity to express their views, consider these views and the
recommendations of our staff and to reach our best possible independent
judgment on the merits. I do not believe we should favor or disfavor
any particular consumer group or industry sector but rather provide a
neutral forum that rules fairly, wisely, consistently, and
expeditiously. Ultimately, our responsibility is to the law and to the
American people, subject to your oversight and that of the courts, not
to any particular group or sector.
12. Please describe your philosophy of supervisor/employee
relationships. Generally, what supervisory model do you follow? Have
any employee complaints been brought against you? I have a personal
staff of five--three professionals and two administrative. As a result,
I find it reasonably easy to stay informed of their activities and
provide whatever direction is required. Each of my advisors has direct
access to me at any time, day or night, and we communicate regularly in
person, by e-mail, and by telephone. I rely on my staff for their
expertise, judgment, and discretion, but I alone am responsible for the
decisions I make.
No employee complaints have been brought to my attention. Indeed, I
have been fortunate to have an exceptionally able staff that has served
for unusually long periods of time relative to the average tenure for
legal advisors.
13. Describe your working relationship, if any, with the Congress.
Does your professional experience include working with committees of
Congress? If yes, please describe. The Commission was established by
Congress to implement its communications laws, and I am committed to
consulting with Congress to insure that we are fulfilling our duties to
the American public. Over the past five years, I have worked closely
with Congress in a variety of ways. Throughout my tenure, I have
regularly made myself available to Members of Congress, on both sides
of the aisle and both sides of Capitol Hill to discuss issues, brief
them on developments at the Commission, and solicit their views and
concerns. I have participated in numerous group and one-on-one meetings
with Senators and Representatives and conferred in person or by
telephone on scores of occasions with congressional staff.
More formally, I have testified at periodic oversight hearings held
by the House and Senate Commerce Committees, and their Communications
Subcommittees. I have also testified before several Senate Commerce
Communications Subcommittee field hearings on slamming, before the
Senate Government Operations subcommittee on slamming, and before the
House Judiciary Committee on mergers. I have responded to many
congressional letters.
Prior to my experience at the Commission, I worked with committees
of Congress both as assistant counsel to the House Banking Committee
and, later, as the head of a coalition striving to increase the number
of women in the federal judiciary.
If confirmed, I pledge to continue to work closely with Congress to
ensure that the laws are faithfully implemented.
14. Please explain how you will work with this Committee and other
stakeholders to ensure that regulations issued by your board/commission
comply with the spirit of the laws passed by Congress. Over the past
five years, I have tried my best to take into account the views and
concerns of the members of this Committee and to keep you informed of
our activities. If I am confirmed for another term, I will continue to
listen to any Member, at any time, regarding whatever issues we are
considering.
I recognize that members at times have differing views about the
meaning of various statutory provisions. I will read and reread the
law; and I will stand ready to explain the reasons why I believe every
vote that I cast is consistent with the letter and spirit of the laws
passed by Congress.
15. In the areas under the board/commission jurisdiction, what
legislative action(s) should Congress consider as priorities? Please
state your personal views. I hope Congress will pass legislation
confirming that a license to use radio spectrum is a conditional
privilege and is not an asset that can be treated as part of an estate
in bankruptcy and therefore tied up for years. I also hope Congress
will support (though no legislation is needed) the proposed
establishment of a new Enforcement Bureau and Consumer Information
Bureau. I look forward to Congress completing action on the Satellite
Home Viewer Act and Intelsat privatization. I also hope that Congress
adopts a program for tax certificates to facilitate first-time minority
and female owners' investment in broadcast properties.
I would like Congress to consider giving the Commission authority
to set fees for private use of the radio frequency spectrum so that the
American public reaps the benefit of spectrum usage.
16. Please discuss your views on the appropriate relationship
between a voting member of an independent board or commission and the
wishes of a particular president. Fundamentally, I believe that FCC
Commissioners must exercise independent judgment on all matters coming
before the Commission. I listen closely to, and consider carefully,
whatever recommendations are made by industry chieftains, members of
the public, and political leaders, both in the Congress and in the
Administration (including the President), but at the end of the day I
believe that each Commissioner must exercise his or her own best
judgment, within the statutory framework established by Congress.
Senator Burns. Thank you very much, Commissioner. We've
been joined by the distinguished Senator from North Dakota,
west of the river, we might add, Senator Dorgan.
STATEMENT OF HON. BYRON L. DORGAN,
U.S. SENATOR FROM NORTH DAKOTA
Senator Dorgan. Mr. Chairman, thank you very much. I'm
pleased to be here to support the nomination of Commissioner
Ness. I think Senator Rockefeller indicated that this is a
Commission that very much needs her continued leadership. We
have four other members of the Commission who are relatively
new. I voted for all of them and I'm proud they're there, but
Commissioner Ness has been there and is the, as Senator
Rockefeller indicated, the institutional memory.
But, more important from my standpoint and I think the
standpoint of perhaps you and others, Mr. Chairman, is as we
implement the Telecommunications Act, the use of the Universal
Service Fund to build out the infrastructure for advanced
telecommunications services will have a lot to do with how this
country looks in the future. It will have a lot to do with
where people live, where jobs are created, where people move,
where people do business.
If we have a country in which there is a digital divide and
small towns and rural areas do not have the larger pipes or the
advanced services through which data can move, they are
destined not to attract economic development and jobs and new
opportunities. They are destined to be in that circumstance. We
must avoid that at all cost, and we must take steps and actions
to make sure that the Universal Service Fund is used as the Act
was written and intended.
The Universal Service Fund in the Telecommunications Act is
designed not only to facilitate the services of telephones at
affordable prices, and comparable service but in addition to
that, we wrote into the Act that it relates to advanced
telecommunications services or broadband, as well, so the
connection of the Universal Service Fund to that requirement
and that opportunity is critically important. There's no one on
the Commission who has a better understanding of that or
understands the urgency of that better than Commissioner Ness.
As someone representing a rural state, it is imperative that we
keep Commissioner Ness on that Commission fighting for those
issues.
This is not a case of her fighting our fight on these
issues at the expense of someone else. This isn't a zero-sum
game. It is the fact that the implementation of the
Telecommunications Act is working quite well in some areas of
the country. There is robust, aggressive competition where
there is an income stream to justify it, and we all understand
that.
I just had a meeting a moment ago when a colleague of mine,
Senator Burns, took out his Palm VII and someone said, ``Is
that wireless?''
He said, ``Yes, but it doesn't work in Montana.''
And the point he was making just by answering the inquiry
was yeah, this is wireless and it's wonderful, I'm glad I have
it this morning in Washington, DC but in Montana, it doesn't
work. Wouldn't work in North Dakota, either, because we don't
have ubiquitous services all across this country and the build-
out isn't occurring at the same pace in all areas.
I think everyone at this dais at this point has an interest
in seeing that rural areas experience the full flower of
opportunity coming from the Telecommunications Act. No one on
the Commission has as strong a voice on those issues as
Commissioner Ness. That is why this hearing is important. I
deeply appreciate your holding it. I hope we can move
expeditiously on this nomination.
Senator Burns. Well, like I said, the Chairman has already
indicated that he is going to move this nomination out of
Committee so we're happy about that.
Commissioner Ness, thank you for coming this morning. Let
me start off by--I don't know of anybody that I've had the
opportunity to work with since I come to Washington, DC, and
since you were put on the Commission that we have had a very,
very good working relationship and I want--and I appreciate
your accessibility. Also, we've done some things in the country
and you've been very, very, very active in furthering those
things, and those things we are concerned about in rural areas
and how universal service works and how we are seeing the roll-
out.
There's a couple of areas that I have concerns about, if
you would just help me along a little bit, that has to do with
Section 706, of course, in the Telecom Act. I had quite a lot
to do with that Section and the build-out of technology into
rural areas and this type thing and broadband deployment in
this thing.
Could you give the Committee your view of the current state
of that broadband roll-out in America and specifically in rural
areas? How do you think we're progressing in implementing 706?
Ms. Ness. Thank you, Senator. We have been working very
hard to implement Section 706. I think it was an inspired
section of the Act because it is vital that all areas of the
country have access to advanced communications under a roll-out
that is reasonable and timely.
We have convened, together with our colleagues at the State
Commissions, a Joint Commission to hold a series of hearings
across the country. I'm going to be participating in a number
of those hearings to determine to what extent the roll-out is
taking place and what impediments there may be to a more rapid
roll-out. We've instituted a couple of proceedings, one of
which is dealing primarily with Indian reservations, to ensure
that advanced communications do not stop at the door of the
reservations.
We are working with rural telephone companies to make sure
that they are full participants in this process.
Senator Burns. Do you think the Commission has been
aggressive, as aggressive as it should have been in
implementing 706?
Ms. Ness. Senator, we can always do more, as we attempt to
implement that section. We are hoping, by virtue of our
upcoming report, to look over all of the issues soup to nuts.
Senator Dorgan. Give me an idea of when you start looking
at a section like that in the deployment of broadband, have we
had a disagreement on the Commission on how it should be
implemented or what the Commission should be doing. We're
seeing now some broadband move into rural areas. Now, let's
face it, now, in my state of Montana and like the state of West
Virginia and the state of North Dakota, we are not exactly--
Billings, Montana may be rural by the measurement that we use
nationwide, and then when we go to Lewistown, Montana, that's
frontier, and going back to some old terms used in Medicare and
things. But we're seeing some things happen out there. We think
probably it just hasn't happened fast enough.
Ms. Ness. Senator, the transition from narrowband to a
broadband economy is happening far more rapidly than anyone
would have expected. It does require a tremendous amount of
investment on the part of providers of these services. We're
trying to do everything we can to have multiple opportunities.
For example, in some rural areas it could very well be that
wireless is a great solution to reach hard-to-reach areas.
Satellites may very well be a way of reaching many of these
communities and so we have, in fact, a proceeding underway on
satellites to determine how they can participate more actively
in providing universal service with broadband facilities.
Again, this is vitally important and we are trying to see where
the impediments are and what we can do, proactively, to move it
along more rapidly.
Senator Burns. Senator Dorgan is exactly right on the
build-out, and if we're going to have any kind of economic
chance to stay up with the rest of the world in a national or a
global economy, broadband is essential out there. We've got a
situation now in rural America that is not a very pretty
picture, and until America wants to pay more for its bread,
we're going to continue to be in a very, very--in an economic
state that we're very uncomfortable in in our area, so we know
it's very important. Senator Brownback?
Senator Brownback. Thank you very much, Mr. Chairman. Thank
you, Commissioner Ness, for coming in front of the group and
answering some questions.
I want to turn if I could to some specific questions
regarding particularly Bell Atlantic's application to get into
in-region long distance service in New York, but not so much
that but the template it sets for future roll-outs there.
In the separate statement that you issued in conjunction
with the Commission's approval of Bell Atlantic's application
to provide in-region long distance service in New York, you
indicated that it would have been in your words unfair to
penalize Bell Atlantic for its record on DSL loop performance
at this time, close quote. You state that, quote, because the
consumer market for broadband services has only recently begun
to develop, end quote, the FCC collaborative process did not
adequately address the ordering and provisioning of DSL-capable
loops. Then you go on to say that our evaluation of future
applications will be focused on this issue.
Now, in reading all of those together it sounds a lot like
that you may be favoring an ever-expanding checklist before
other applicants are going to be allowed these same
opportunities that were provided to Bell Atlantic, and I'm
concerned if that is the case, if there's going to be more
items on the checklist, that people don't know about, and I
would like for you to tell us today, is the checklist set now
for applicants seeking to provide that long distance service?
Ms. Ness. Yes, Senator, the checklist is set. When Congress
enacted the Telecom Act, the checklist was very clear. In
implementing that act, we have been working cooperatively with
the carriers so that they know what is expected of them.
Broadband delivery of DSL services is a telecommunications
service. Loops must be made available. There are technical
issues associated with providing DSL-ready loops. We have been
trying to work through these technical issues with the
carriers. I felt in the case of New York that during the
collaborative process, we had not talked sufficiently about DSL
service because it was just beginning to roll out, and I
thought it would be unfair to weigh that piece so heavily.
Going forward, DSL, as we talked a few minutes ago, is
rolling out much more rapidly than we would have earlier
envisioned. It is important competitively and it is one service
that we are and will be focusing on.
Senator Brownback. So the checklist for future applications
will remain the same as it was for Bell Atlantic's application
when it went through the FCC?
Ms. Ness. The requirement to make loops available, yes.
Senator Brownback. And there will not be additional items
added to the checklist.
Ms. Ness. I do not believe this is an additional item, it
is focusing on specifically making sure that there are
telecommunications loops available.
Senator Brownback. I want to make sure that companies in
making their applications know here's the hurdles we have to
clear and that they're set and there are not additional ones
that are put after the first one has been cleared.
We passed the Act in 1996. We're now in 2000 and it seems
like it's taken quite a while to implement this Act, and I
would hope that those checklists could be set, firmed up and
everybody know what they have to meet to get into long distance
services.
In your statement accompanying the Commission's May 7, 1997
Universal Service Order you indicated you thought the FCC had
made substantial progress and established a clear timetable for
implementation of that Telecommunications Act which was enacted
into law February 8th of 1996, which in telecommunications
development is ancient history, I suppose, given this rate of
change.
Did you really think that 4 years after the bill became law
that the FCC would still not have fully implemented the high-
cost provisions of Section 254? Do you consider how long it has
taken and how much further we have to go for a clear timetable
there?
Ms. Ness. Senator, certainly universal service, in
particular, high cost, is an area we care about tremendously.
That's one of the cornerstones of the Act. I would have liked
to have taken less time. It is very complex. We have been
proceeding in a manner to ensure particularly in rural and
high-cost areas that everyone has access to telecommunications
at comparable rates and comparable services. When you try to
revise pieces of this, you want to do it carefully so that you
don't cause any harm, and we believe that we've done that.
We've completed work with the larger carriers. We're working
closely with the rural carriers to ensure that they can
continue to provide the wonderful services that they provide to
the rural community without displacement. We have come a long
way to accomplish that working with our colleagues in the
states and I think we're well on track to have completed that.
Senator Brownback. If I might submit to you, 4 years is a
long time, given the rate of change that's taken place in
telecommunications and the platform for the new economy that
it's providing, and by not having this issue resolved, it
further impedes investment into rural and other high-cost
areas. I would really hope we could step, you know, step up the
implementation of that so the rural areas and those providing
telephony and other services would know what they've got to
work with. I think that's just an important thing to have.
One final question, if I could. Last year I introduced
legislation that prohibits the application of spectrum caps to
new spectrum that is auctioned in the future. One of the
reasons I introduced the bill was to accelerate the
introduction of advance services, including wireless Internet
access and other data services, for which operators need
substantially more spectrum in order to provide the service.
Given the fact that some of the spectrums from C and F block
licenses is not currently being used, is it safe to conclude
that relief from the spectrum cap could be granted for these
licenses without risking industry consolidation? If so,
shouldn't relief be granted to ensure that advance wireless
services develop without behind relevancies?
Ms. Ness. Senator, I care very much about competition and
the availability of advanced services, particularly wireless
services. This is a matter that is currently before us, and we
will take your views under advisement. Recently, we implemented
another requirement, which is to make available by auction
channels 60 to 69. We did so without putting a spectrum cap on
that. That's another swath of spectrum that will be available
for advanced services.
Senator Brownback. Well, I'd hoped that we could provide
those and make them available so that more of the advance
services would be available. Mr. Chairman, thank you very much.
Senator Burns. Senator Rockefeller?
Senator Rockefeller. Thank you, Mr. Chairman.
Commissioner Ness, when I made my introductory remarks----
Senator Burns. Excuse me, Senator, I don't want to
interrupt you but we've got a vote on. How do you want to do
this? I'll go vote.
Senator Rockefeller. OK, and then we'll come back.
Senator Burns. OK.
Senator Rockefeller. It's very interesting, in fact, that
our Committee system was in fact set up many, many years ago
having absolutely no idea of the science and technology kinds
of changes. Then you have the phenomenon of a Senate where, oh,
I guess there's maybe a couple in their 40's, 50's, 60's, 70's,
80's and 90's are the ages, and so therefore, our making a
policy or deciding not to make policy for the purposes of the
advancement of science and technology in telecommunications is
very important. But it also, I think, means that the Federal
Communications Commission is even more important, because we
really don't have the experience by virtue of generation,
although many of us are trying, that the Commission does, and
particularly you, because as I indicated, you are the only
member of the Commission who has served since, you know, the
Telecommunications Act was passed.
Senator Brownback indicated that that was really a very
long time ago, but it seems like yesterday, and what I would
like to do, if you would sort of reflect on some of the issues
that--you've learned from this very kind of difficult
transition from what appeared to be a relatively clear act to
the four years. That includes, as I indicated, under-funding,
getting sued for every single thing that you do or whatever.
But what is it that you've learned? Because I think your
experience is really important here.
Ms. Ness. Thank you very much, Senator. Yes, I have
participated in the implementation of the entire Act and, as a
result of that, I've had a chance to see the interplay of all
of the sections of the Act, in particular, how we go about
meeting the goals, the interplay of the goals of competition,
for example, and serving rural communities.
I'm very sensitive to these types of issues. It's given me
an opportunity to understand the relationships that we have
with the states, how we work together to provide seamless
transition from monopoly to competition. It's given me an
opportunity to work with some of our foreign colleagues, to
find ways to work together to introduce competition abroad.
We stand as a model for many countries in how one opens the
market to competition and so the experience of implementing our
Act has helped us to work globally as well as nationally.
Lastly, it has also shown me the impact that all of our
activities have on consumers. I want to make sure that the
consumers at the end of the day reap the benefits of all that
is going on in the communications arena. Thank you.
Senator Rockefeller. Thank you. Senator Snowe and I later
this week are going to be introducing a rural
telecommunications bill that addresses what Senator Dorgan is
also very concerned about, and that is the build-out of
broadband in rural areas or, rather, the lack of build-out. And
it's very interesting to look at what Bell Atlantic and others
plan in terms of broadband in West Virginia, and it basically
covers five of our 55 counties and ignores all the others. And
that gets you into another definition of the digital divide,
not just the use of computers but the use of data flow,
individual, you know, flow, and all the rest of it and at what
speed--you know, what's the upload, what's the download time,
et cetera.
And so Senator Snowe and I are going to be introducing this
bill which provides a tax credit to them. And I'm not
necessarily a tax credit type of Senator, but I think that, you
know, if that will help telecommunications expand and build out
into rural areas, and we define rural areas in a particular
way--and this doesn't go on forever. This is sunsetted after 3
years, but we want to give them the start.
Can you sort of look out at the future on the question of
the digital divide? Most people on this Committee come from
rural states and very much like the Finance Committee, which
used to be an Oil and Gas Committee, is now pretty much a rural
Committee, and I would just be interested in your concept in
terms of what it might be like in 10 years or what needs to
happen over those 10 years.
Ms. Ness. Senator, the beauty of telecommunications and
broadband communications is you can create industries any time,
any place. This presents a great opportunity for rejuvenation
of rural economies, so I'm very excited. In fact, I'm bullish
on doing what we can to make sure that the rural areas have
access to broadband telecommunications facilities. Just because
a fiber line passes by a rural community doesn't necessarily
mean that the inhabitants of that community will have access to
those facilities. We want to find ways that we can make that
happen.
But in my view, there will be, because of changes in
technology, declining costs in so many of these delivery
mechanisms. We have an opportunity to make sure that rural
areas can partake and benefit from these technologies.
Senator Rockefeller. You know, Senator Dorgan said that
comparable services include not just universal service but also
broadband, and that's in the law, and yet here I am offering a
tax credit bill to try and entice companies to do something
which under the law they ought to be doing, and that worries
me. And even the tax credit bill which Senator Snowe and I are
going to introduce, I think the telecommunications companies
like that but, on the other hand, even that will not cover all
of West Virginia. It's only going to be--or all of Maine or all
of North Dakota. It's just going to be an increment of
improvement and I think that, you know, I just think that's
terribly important.
I visited in one of our most remote communities last week.
I was in two of them, and in one of them, there was an Internet
company because there had been a special build-out for them but
for nobody else within a hundred miles in any direction.
Ms. Ness. One of the things that I've asked the Joint Board
to do this year is to re-examine the definition of universal
service. It is an evolving set of obligations and we will be
looking at that probably beginning this summer.
Senator Rockefeller. Thank you.
Senator Dorgan. Commissioner, I believe neither Senator
Snowe nor I have voted and there's a vote probably about to
finish so we will have to leave in a moment, and I'm unable to
come back because I'm Ranking Member on an appropriations
subcommittee that is meeting as well, so I have to be there.
But let me mention a couple of quick items, and I'll be very
brief. First of all, there's no living American who can
interpret his or her phone bill these days. You know, you get a
phone bill for 25 dollars and it's eight and a half pages and
completely not understandable.
I mean, there's no way to interpret or to understand it.
And I actually just made some calls to the carrier some while
ago just for fun to see if they could explain it to me and they
couldn't, so the people who sent me the bill don't know why
they send me the bill, and it's eight to ten pages for $30. So
that's not your fault, but would you work on that?
Ms. Ness. We have approved a truth-in-billing rulemaking to
try to address some of these problems so that everyone knows
exactly what is on their bill and that there is simple language
identifying the charges. But I sympathize with you, Senator.
Just recently I received a bill and I looked at it and I could
not believe the charges because I made one international phone
call and had not presubscribed to an international plan.
Senator Dorgan. Second on the issue of truth in billing, I
have felt that you should connect access charge reform to
universal service. What's happened is you're giving companies
access charge reductions to the tune of billions of dollars and
they take those reductions and they smile and they say that's
fine, we like that, but now what we're going to do is to tell
the consumer in one line on our billing the universal service
requirement. So they put a few dollars on that phone bill that
says, ``Here's what we've got to do because the government says
we have to do it.'' This is the additional charge. They don't
tell the consumer the full story. They also had a reduction,
incidentally, that exceeds that additional charge. Truth in
billing would require that they tell the customer the whole
story, and that is something we ought to be concerned about. I
think you ought to tie access charge reform specifically to
universal service--connect those two numbers.
Finally, the Senator from Kansas raised a point I just want
to make briefly. We set up the checklist not as a barrier,
necessarily. We want those companies that want to meet the
checklist, go through it, and become competitive and do long
distance. We want them to do that and so we want the checklist
not to be an insurmountable barrier, but the reason that this
hasn't happened as quickly as some would suggest. The Senator
from Kansas wondered why some companies have not made it a
decision, and they want to make the checklist. It requires a
company that says my company's goal is to meet this checklist,
then take steps to do it.
Some companies have been pretty slow off the blocks in that
regard, but for those that want to (and now many of them do),
we don't want meeting the checklist to be an insurmountable
barrier--we want it to be reasonable. I'm going to ask--Bob
Rowe from the National Association of Rural Utility
Commissioners is working on a regional test to OSS testing
under the 271 process. I would like for you to share your
thoughts with the Committee on that. And I probably won't be
able to listen to them, and so if you will perhaps send me a
note on that, I would appreciate it. I've got to go vote. Did
you vote?
Senator Burns. Yes.
Senator Dorgan. Well, easy for you to laugh, then. We
haven't voted and I have been taking some time that Senator
Snowe perhaps wants to take as well, so Commissioner Ness,
consider those issues. Thank you for being here. I'm a strong
supporter of your nomination. Thank you very much.
Senator Burns. Senator Snowe.
STATEMENT OF HON. OLYMPIA J. SNOWE,
U.S. SENATOR FROM MAINE
Senator Snowe. Thank you, Mr. Chairman. I'm sorry that I
wasn't able to be here earlier but there are so many
conflicting meetings this morning.
I want to take this opportunity to welcome Commissioner
Ness to this Committee and for her nomination for a second term
on the FCC. I applaud her for the work that she has done,
particularly in the area in upholding the universal service
subsidy and providing the discounts to schools and libraries
and health care facilities in all parts of the country. And
beyond her commitment in providing leadership at the FCC and
chairing the Joint State-Federal Board on Universal Service.
Commissioner Ness also is very knowledgeable and experienced in
so many of the telecommunications matters that are going to
have an impact on the future of this country and is also
committed to enforcing the laws as Congress intended.
Commissioner Ness, we appreciate your commitment to
enforcing the laws according to the spirit of the statutes as
passed by Congress over the years concerning
telecommunications.
As Senator Rockefeller indicated, I do share his concern
about the extent to which competition has reached the rural
areas. Certainly, the intent of the Telecommunications Act in
the deregulation of the telecommunications industry was to
bring competition to the rural areas of the country, as well.
That has been much slower, and I hope that the FCC and you will
give it specific attention, particularly in terms of bringing
broadband to rural areas, and that's why Senator Rockefeller
and I are looking at providing a tax credit as a way of
expediting broadband delivery to rural areas. In addition, I
hope that you can address this Committee in terms of what the
FCC is doing to bring about competition in all areas because it
is going to continue to make a difference in the have and have-
nots technologically in America.
The second area of interest and of concern perhaps is the
mergers that are taking place. And obviously, we've seen a
ground-
breaking, unprecedented merger between AOL and Time-Warner that
may or may not have advantages or disadvantages at this time. I
think it is difficult to say, but I would also appreciate your
views and perspective on these mergers and what kind of
benefits or disadvantages do they bring to the consumers and
what can we expect in the future.
So again, Commissioner Ness, thank you for the work that
you have done and I hope that we can expedite your
reconfirmation here because I think you have done a superb job
on the Commission. Thank you, Mr. Chairman.
[The prepared statement of Senator Snowe follows:]
Prepared Statement of Hon. Olympia J. Snowe, U.S. Senator from Maine
Mr. Chairman, the world of telecommunications is changing and
advancing at an unprecedented pace, which leads to ever-increasing
demands on the FCC. In light of these rapid changes and increasing
demands, it is critical that prospective FCC Commissioners have the
knowledge, experience, and ability to forge coalitions that are needed
to effectively do their jobs. All of these attributes are possessed by
Commissioner Ness, and I strongly support her re-appointment
accordingly.
Mr. Chairman, I believe that Susan Ness is not only well-qualified
to serve at the FCC during this critical juncture in telecommunications
history, but she has also proven herself to be invaluable member of the
commission who would leave a substantial void if the full Senate fails
to re-confirm her in the weeks/months ahead.
For instance, not only does Commissioner Ness chair the Federal-
State Board on Universal Service--a job that requires a close working
relationship and ability to build coalitions with state and local
governments and private companies--but she has also led the charge for
American interests as the lead representative from the FCC at the 1995
and 1997 World Radio Conferences.
However, there is more to being an FCC Commissioner than simply
being knowledgeable of the issues or the leader of a delegation--there
is also a need to be a stalwart for enforcing the laws passed by
Congress as intended, and to have a vision for how the numerous
policies carried out by the FCC will converge and impact Americans for
years to come.
Again, I believe that Commissioner Ness has a proven record in this
regard, and I hope that she will use today's hearing to highlight not
only her credentials and experience, but also her zealousness to
enforce the laws as intended and her vision of telecommunications in
the next century.
In the process of laying out her vision for the 21st Century, I do
not ask that Commissioner Ness pre-judge matters that are currently
before the FCC or that will likely be before the Commission in the
upcoming months. Rather, I am hopeful that she will give us a broad
view of how she sees telecommunications technologies affecting the
lives of the American people and what role she sees the FCC playing to
facilitate the development and introduction of these technologies in
the marketplace. Because ultimately, new technologies are not created
to simply ``build a better mousetrap''--rather, they are built to
better people's lives.
I would like to thank Commissioner Ness for being with us this
morning, and look forward to a robust discussion of her experience and
vision that will shape her approach to numerous telecommunications
issues in the years ahead.
Ultimately, I believe Commissioner Ness stands second to none in
terms of her experience and qualifications to serve a second term at
the FCC, and urge that my colleagues move toward the rapid
consideration and re-confirmation of Commissioner Ness in the weeks
ahead. Thank you, Mr. Chairman.
Senator Burns. Did you want to react to that question of
the effect of the mergers?
Ms. Ness. I would be happy to. First, to the question as to
what we expect to see in the future, I think we're in line for
many, many more mergers as companies are going global. As
companies continue to consolidate, it is a time of uncertainty,
and one way of addressing uncertainty oftentimes is to combine.
Many of these mergers will provide great consumer benefits,
some will not. And it's the role of the Commission to make a
determination whether a merger is in the public interest and,
if not, is there something that can be done to ensure that it
would be in the public interest?
We have tried to exercise that obligation with sensitivity
and restraint. What we have not done as well as we should is to
do it more rapidly, and that is one commitment that I make to
try to see to it that our process works more rapidly, because
when you're in the middle of a merger, you lose out on many of
the benefits of competition in the marketplace because you are
so focused on completing that merger.
Senator Snowe. Thank you.
Senator Burns. Thank you, Senator Snowe. Going on in this,
in some mergers I think you're entirely correct, some mergers
are beneficial to the consumer and also the way we do business,
some are not, and you have to look I guess at mergers on a
case-by-case basis.
It's interesting the AOL and the Time-Warner. Up until this
point, I think the Internet was sort of technology driven. And
we knew at some date content would take over and be the driving
force of the Internet, and I think we have entered the era of
that. There are some areas of that that concern you, there are
some areas that I think will be very beneficial.
Sometimes when mergers happen, everybody that is under that
same tent it seems like it's very competitive with each other,
and if that competition continues, why, I think that's a very
good sign.
Let's go into another area. And I still have some concerns
about low-power radio. It just seems like the Commission
without the direction of Congress just took off and started
making policy with regard to low-power radio, and some of our
most vocal critics has been those folks in public radio, the
translater interference, this kind of interference, and I would
just like your view on low power. Why do you think the
Commission has to take an active role that goes beyond the
intent, what I believe is not the intent of Congress?
Ms. Ness. Senator, we have seen a great consolidation in
radio, and as a result of that, many community groups are not
in a position to be able to take advantage of this extremely
important medium. I care very much about enabling these voices
to have an opportunity to broadcast, but I also care very much
that we do not destroy the integrity of the FM band and thus,
my involvement in this has been to ensure that the integrity of
the FM band is preserved, that we do not have interference with
existing radio stations. I also want to make sure that existing
radio stations can transition into the digital world by going
digital. So I took it upon myself to look at those issues as we
considered this new service.
I've been told by our engineers this is not a problem. I am
very concerned about translators. And if it turns out that
there is a specific problem, I would like to address it.
Senator Burns. Why would we--even though the engineers at
the FCC maybe do not have the same concerns as engineers across
the country, I mean, I've not been into one major market and
talked to engineering people that do not have concerns. Why do
we have this difference of opinion?
Ms. Ness. Senator, I am concerned about interference. I can
tell you that the engineers at the Commission are very
dedicated engineers. They've looked at it in a number of
different ways. We did not go ahead with second adjacent
channel. I made sure that was completely off the table. We did
not go ahead with thousand-watt stations. I made sure that was
completely off the table. I wanted to make sure that if someone
had to move from one tower to the next, for example, because
there was a digital television station coming in, whatever it
might be, that they would be protected.
I am concerned about translators. They provide a wonderful
service in the United States. I am told that the engineering
works. If it does not work, if there is interference, we need
to know about it and we need to address it.
Senator Burns. That's sort of trying to address the stolen
property after the horse has left the barn. If you do have
problems, it's pretty hard to recall those licenses.
Ms. Ness. Our engineers who have been involved in broadcast
for a very long time tell us that under these parameters, the
parameters that have been set, that this should not cause undue
interference. I will be vigilant to ensure that such is the
case because, as I said when we started the conversation, I
care very much about the integrity of the FM band.
Senator Burns. Let's go from that, from low power. You see,
I have the opinion that even though low power and some folks
who want to put a low-power station should go through the same
rigors of establishing a radio station that any other
commercial broadcaster or public broadcaster makes when they
establish an entity to do that and apply for spectrum in order
to do it.
Let's go from there to cross-ownership, your views on
cross-ownership. We have between newspapers and cable and
broadcast industries and those entities, I would like your
views on that, please.
Ms. Ness. Certainly, Senator. The world has changed. The
world has changed dramatically over the last couple of years
and it seems to me that it is timely for us to be looking at
the cross-ownership rules. I believe an item was just delivered
to us that will address cross-ownership of both television and
radio with newspapers, and I intend to look very carefully at
the issues raised when I vote that item.
Senator Burns. Do you have a guiding principle whenever you
start making these decisions on cross-ownership?
Ms. Ness. I look at the marketplace, not as it has been,
but where it is and where it is going in the future. I do not
believe in regulation if it is not essential to preserve
certain underlying values. I care about diversity of voices in
the marketplace but again, I want to make sure that our rules
are not overly restrictive. And certainly, the broadcast
ownership rules that we approved last summer suggest that it is
a very different world based upon the underlying values of the
Telecom Act.
Senator Burns. Give me a for-instance. We have--let's just
take my home town. We've got I think five or six FMs and maybe
four AMs and one newspaper. Is there any way that you have a
philosophy on should the newspaper be able to own--and we have
three television stations. Any guiding light on should a
newspaper in Billings, Montana be able to own a broadcast
property there under those conditions?
Ms. Ness. Senator, I'm not familiar with your market. As an
underlying principle I would say once again if there is
diversity of voices, that is important, but I would also--I
also understand that there are a number of different proposals
that are on the table that would look at size of market, for
example, and until I've had an opportunity to hear those
proposals and talk with folks, I would be hesitant to give you
an opinion. The only thing I will commit to is that I will look
very carefully at the issues because we're in a changing
economy, and I know that all broadcasters and newspaper
publishers are trying their best to compete in what is a
rapidly changing world.
Senator Burns. Thank you, Commissioner. We have been joined
by Senator Cleland. Senator? We welcome your comments and if
you have any questions of the Commissioner. Thank you for
coming.
Senator Cleland. Well, thank you very much, Mr. Chairman. I
couldn't help but compare your home town with my home town. My
home town had no radios, no television, no newspaper, which is
why I got elected. Mr. Chairman, today----
Senator Burns. That's like the old Harry Truman statement:
Spend the first 6 months when you're here trying to figure out
how you got here, then the next 6 months trying to figure out
how everybody else got here.
Senator Cleland. Glad to be with you, Ms. Ness. Thank you
for the job that you've done.
Ms. Ness. Thank you, Senator Cleland.
Senator Cleland. May I say that you're asking us for an
additional 5-year term as a member of the FCC. In Georgia, your
oversight as a member of the FCC is pretty important to us. It
means millions of dollars in funding for school children and
libraries to access the Internet. It means children's
educational programming. It means insuring spectrum access for
utility workers after a tornado enabling the troops of the 82d
Airborne at Fort Benning to have more than adequate
communication capability with their commanding officers when
performing defense maneuvers. I'm an old Army Signal Officer so
I know that very well.
It means guidance along the road to local telephone
competition. It means developing further robust competition
among Internet service providers. More and more of them are
making their homes in my state and access to broadband
services--a number of services in addition to just telephone.
It means media integrity.
I look forward to hearing some of your ideas about your
philosophy of the last 5 years of service and what you would
like to do the next five. Mr. Chairman, I have a couple of
questions.
Senator Burns. You may proceed.
Senator Cleland. Ms. Ness, as you know, Section 706 of the
1996 Telecommunications Act encourages the deployment of
``advanced telecommunications capability.'' The report the FCC
issued in response stated that this technology is being
deployed on a timely basis. I would like to know what is your
opinion on the employment of advanced services and what type of
role do you see the E rate Program playing in achieving the
goals of Section 706?
Ms. Ness. Senator, we have endeavored to review the
deployment of advanced services every year. That report was a
snapshot at the very beginning. We are conducting hearings
around the country together with our state colleagues to see
how well the deployment is progressing and whether it is
leaving certain communities behind. We hope to identify any
barriers to deployment, and to take action on those barriers.
So while the initial report suggested that it was rolling out
in timely fashion, we are continuing to be vigilant to see if
that continues to be the case and whether any communities are
being left behind. It is a vital opportunity, particularly for
rural communities, for economic growth to have
access to broadband, and we're committed to ensuring that it
happens.
Senator Cleland. The 1996 act also requires co-location and
interconnection with existing ILECs, incumbent local exchange
carriers in their facilities. In your statement following the
approval of Bell Atlantic's Section 271 application you
indicated that previous FCC decisions, ``adequately addressed
the ordering and provisioning of extant DSL loops;'' however,
you said our evaluation of future applications will, indeed,
focus on this issue.
What does this mean for future applicants? I know that Bell
South is seeking the same kind of approval as Bell Atlantic.
Ms. Ness. On 271, Senator, I think we turned the corner.
I'm very encouraged by the hard work that the Bell operating
companies and the State Commissions and the competitive
carriers are engaging in to make this work. There's a
demonstrable advancement that is taking place certainly over
the past year or so. We approved one application. We expect to
approve more. DSL and broadband services are very important to
the communities and we hope to see the provisioning of lines
that are DSL capable to roll out expeditiously as well to make
those available to competitors.
Senator Cleland. You believe your reviews are being done in
a timely manner?
Ms. Ness. Section 271 requires us to reach our conclusions
in 90 days. We have met every deadline.
Senator Cleland. That is quite a challenge and well done.
Ms. Ness. Again, I want to commend the states, because they
have really labored very hard to make sure that we have the
information available, and I want to commend the carriers who
have been working very hard to implement the tasks needed to
open the markets to competition.
Senator Cleland. Thank you very much. Well said. I've been
informed of the excellent work the FCC's wireless bureau has
done in reducing its backlog of paperwork. A great deal of the
work the wireless bureau does directly impacts the spectrum
allocation in the United States, which I hear is increasingly a
challenge.
As you know, there's a great deal of exciting wireless
technology that claims to reduce the amount of spectrum needed
for this technology to operate while increasing the power and
capability of wireless products.
Ms. Ness, I believe you're aware of the importance of
spectrum management. Would you like to comment on the emphasis
the wireless bureau has placed on acting on technology of the
claims to increase the amount of spectrum available?
Ms. Ness. I'm very excited about the possibility of new
technologies that will turn spectrum management essentially on
its head. We just initiated a proceeding on software defined
radio. We have another proceeding underway on ultra wideband.
Both of these technologies will work to provide more
opportunities for both broadband deployment and specialized
services throughout the bands of spectrum. These are very
complex issues, and one of the biggest responsibilities of the
Commission is to ensure that spectrum is made available and in
a manner that does not interfere with existing users of
spectrum. We take that responsibility very seriously. I would
like to see us work even more closely with our colleagues at
NTIA to ensure that bands can be made available for newer
services.
Senator Cleland. Ms. Ness, just kind of a philosophical
question here. Five years ago when you were approved by the
Senate to sit on the FCC, so much of the technology and so many
of the companies that are out there today in many ways didn't
even exist or, shall we say, were not even on the radar screen
5 years ago. Just seeing that incredible advance of technology,
and the incredible investment in information and
telecommunications technologies and companies that raise hair
on our heads whenever we contemplate the billions and hundreds
of billions invested in these companies, isn't it quite a
challenge as we walk into the 21st century together that over
the next 5 years, just what might happen? You might see a need
for the FCC to update or revamp or come up to speed on, and
adjust or reform some of its practices and its own workings in
order to keep up with the world that is growing exponentially
at an incredible rate of speed.
Ms. Ness. Yes, Senator, there are a number of things that
we are doing to modernize the FCC, if you will, including
streamlining application requirements. We are looking at
restructuring the agency along more functional lines. This
might be very helpful because of convergence to be able to have
the expertise within a bureau to address those policy concerns.
As I mentioned earlier, we are really moving, transitioning
from implementing the Act to enforcing the Act and thus, we
have set up an enforcement bureau to respond rapidly when there
are violations under the Act so that folks cannot game the
regulatory process. It seems to me we need to be more
responsive by eliminating, through forbearance, unnecessary
regulations, and I suspect we will be moving more rapidly in
that direction.
Lastly, I know Senator Rockefeller had asked about
resources at the Commission. One area where we desperately need
more resources is in engineering. I would like to see us more
and more work with industries to ensure that new technologies
can be rolled out as rapidly as possible without interfering
with existing users of the spectrum, and that is going to take
even more engineers than we have today, but I think that that
is a worthy goal. It is a complex world and we would like to
get as many new services out as rapidly as possible in a
responsible manner.
Senator Cleland. When I look at just the last 5 years and
look at the prospect of what might happen in the information
technology and telecommunications in the next 5 years, it's
stunning what might happen in the next ten. So I just offer my
word of support not only for your nomination and your further
service on the FCC, but count on me to help you adapt to the
need for speed in this incredible world where government
hopefully can adapt quickly enough and surely enough to be
responsive to industry but also continue to protect the public
interest. Thank you very much for your service. Thank you, Mr.
Chairman.
Senator Burns. Thank you, Senator. I had another line of
questioning. I didn't get all the information I wanted.
Senator Rockefeller, do you have any other questions at
this time or any comment?
Senator Rockefeller. No, Mr. Chairman, but I would like to
note that which I did not before, that Commissioner Tristani is
here and I just think that's very nice.
Ms. Ness. I want to thank all of my colleagues on the
Commission. They have been terrific to work with.
Senator Burns. I want to do some followup with you,
Commissioner, with regard to I want to ask you--and I think
this is better done in probably a private conversation, not
keeping it from anyone, but I have some concerns about how we
deal with spectrum and how we go through the auction business
and how we handle it if it's repossessed and how we should use
that and the FCC's role. I think we're going to consider in
Congress how we deal with spectrum once it is owned and how
much control do we have to relinquish as a government, or do we
lose complete control of that spectrum?
I would like to kind of ferret that out a little bit with
you, and I think we can do that in private conversation, but
there are some things happening that does concern Congress or
at least this Member of Congress, anyway, with regard to
dealing with spectrum and allocations and its use.
And there are other Senators who have indicated they have
some questions for you, also. I would ask you that you might
respond to the individual Senators and to the Committee for its
review, and that's all the questions I have today, other than
the fact that I'll be in touch with you as far as the spectrum
is concerned.
But I want to thank you for coming today and responding to
the questions, and appreciate your cooperation and I look
forward in moving this nomination.
Ms. Ness. Thank you very much, Senator.
Senator Burns. This hearing is closed.
[Whereupon, at 10:45 a.m., the committee adjourned.]
A P P E N D I X
Response to Written Questions Submitted by Hon. Sam Brownback
to Susan Ness
Question 1. In the separate statement that you issued in
conjunction with the Commission's approval of Bell Atlantic's
application to provide in-region, long-distance service in New York,
you indicated that it would have been ``unfair to penalize Bell
Atlantic for its record on DSL loop performance at this time.'' You
state that ``[b]ecause the consumer market for broadband services has
only recently begun to develop, the FCC's collaborative process did not
adequately address the ordering and provisioning of xDSL-capable
loops.''
You go on to say that ``our evaluation of future applications . . .
will indeed focus on this issue.'' Are you saying that we do not know
today all the criteria that will be used to evaluate future
applications? Are you saying that you anticipate that the goalposts for
a successful 271 petition could change with each new application if
something new happens in the marketplace?
Answer. The statute makes clear that the Commission cannot limit or
extend the competitive checklist in section 271. The section 271
checklist requires that Bell companies make unbundled loops available
to competitors. In 1996, in the Local Competition Order, the Commission
made clear that access to loops includes an obligation to provide
unbundled loops capable of supporting xDSL technologies.
Nevertheless, although the obligation to provide access to xDSL-
capable loops was clear before the first section 271 application was
filed, I believed it would have been unfair to deny Bell Atlantic's
application on this basis for several reasons. First, competitors had
been ordering xDSL-capable loops from Bell Atlantic for a limited
period of time. Second, there was a surge in requests for xDSL-capable
loops in the month immediately prior to the filing of the application.
Third, because competitors had only recently begun to order large
numbers of such loops, the New York Public Service Commission had not
addressed xDSL-specific issues until August 1999 when it initiated a
collaborative process to resolve competitors' concerns. Similarly,
neither Bell companies nor competitors had raised the ordering and
provisioning of xDSL-capable loops in either the collaborative process
or previous section 271 proceedings, and therefore, the Commission had
not previously been presented with the issue in those contexts.
Thus, given this set of circumstances, I concluded that it would
have been unfair to penalize Bell Atlantic due to the evolving data in
the record on Bell Atlantic's provisioning of xDSL-capable loops.
Nevertheless, it would not be unfair to look at this market-opening
obligation in future section 271 applications, because competitors are
ordering increasing numbers of xDSL-capable loops and states are
developing performance measurements and standards in this area.
Question 2. I would like to ask you about a statement you made in
conjunction with the approval of the SBC-Ameritech merger. You stated
that ``[a]bsent conditions, the record is compelling that the
combination of SBC and Ameritech would not serve the public interest.''
Where do you think that the FCC derives the authority to impose the
onerous conditions that were imposed upon SBC and Ameritech in order
for their merger to be approved? You forced these companies, as you
have done with many companies in other merger approvals, to agree to
conditions that you could not have mustered 3 votes to force them to
accept in a general rulemaking. Why do you think that the FCC has the
authority to impose conditions in the context of approving a merger
that it could not impose in a general rulemaking? And if you think that
such terms could be imposed in a general rulemaking, why didn't the FCC
initiate one and impose these conditions on SBC and Ameritech that way?
Answer. In the case of SBC/Ameritech, the record indicated that, on
balance, the proposed transaction would not have been in the public
interest absent conditions. The merger of two of the largest incumbent
phone companies that together comprise one-third of the nation's access
lines threatened specific harms identified in the Commission's
decision, including the elimination of a significant competitor both
within and outside of each company's region, increased incentive and
ability to discriminate against other service providers, and less
ability to use benchmarks to detect discrimination and monitor
compliance with the statute and the Commission's rules. Although the
Commission determined that the public interest harms of this
transaction outweighed the benefits, the conditions that were proposed
offset the harms that the transaction would cause. These proposed
conditions were placed on the public record for comment.
These conditions addressed the harms of the transaction by, among
other things, helping to ensure that the local market is open to
competition and that this transaction would lead to improved services
for consumers. Some argue that certain of these conditions were not
tailored in a sufficiently narrow manner to address only the harms
caused by the merger. In this case, I believed, on balance, that the
transaction, as presented to the Commission with these conditions,
served the public
interest.
As to whether a condition should be adopted in the context of an
application, as opposed to a rulemaking of general applicability, it
may be appropriate to impose or accept conditions as part of an
application when the specific consolidation may harm competition or
have other consequences that are adverse to the objectives of the
Communications Act. A condition that commits the merging parties to
actions that would reduce or offset the damage that would otherwise be
caused by the consolidation may shift the balance in favor of approval.
Since the harm in question may be merger-specific, it may be
appropriate for the relief also to be merger-specific, and not to apply
to other parties who will not be receiving the benefits of
consolidation. For example, in U S WEST/Qwest, although opponents of
the transaction sought similar market-opening improvements, the
Commission expressly declined to impose those conditions, because it
concluded that the public interest benefits of the transaction
outweighed the harms without the need for any such conditions.
Question 3. Should the unbundling obligations of Section 251(c)(3)
be a permanent requirement? If there are three or more facilities-based
competitors in a market, should Section 251(c)(3) of the Act cease to
apply to an ILEC? What about five or more facilities-based competitors?
Does it matter whether the facilities-based competitors are all
wireline carriers? What if five facilities-based carriers are offering
voice services, but not data services?
Answer. The Commission made clear in the order adopted last
September that the unbundling obligations in Section 251(c)(3) are not
permanent obligations. Rather, the Commission noted that, as market
conditions change and new technologies develop, elements that currently
must be unbundled will likely no longer meet the
criteria for unbundling. Accordingly, the Commission concluded that it
should periodically reexamine the availability of alternative sources
of network elements to
determine whether specific elements must continue to be unbundled. As
competition takes hold, I fully expect that the unbundling requirements
will be scaled back further.
The existence of a significant level of facilities-based
competition provides significant probative evidence that an efficient
competitor is able to self-provision a network element or obtain it
from a third-party. Nevertheless, there is no specific metric that
definitively demonstrates when an element no longer needs to be
unbundled. As the question recognizes, facilities-based competitors may
only be serving certain customers or offering certain services. As a
result, the Commission established specific criteria to be used to
determine when, as a practical matter, a requesting carrier ought
reasonably to be expected to be capable of self-provisioning an element
or obtaining it from other market participants.
Moreover, beyond modifications to the list of elements that must be
unbundled, Congress indicated that the Commission can forbear from the
requirements in Section 251(c)(3) once those requirements have been
fully implemented and the statutory criteria in section 10 have been
met.
Question 4. You initially voted to incorporate groundbreaking
Commission policy in an approval of the transfer of a television
license involving WQED Pittsburgh. You, Chairman Kennard, and
Commissioner Tristani voted to impose ``guidelines'' that would have
tread rather recklessly on the programming decisions made by non-
commercial educational broadcast licensees.
In your separate statement that you issued in conjunction with the
order, you indicated that you and your colleagues ``have an obligation
to provide additional guidance to FCC staff, as well as to applicants
and existing licensees, if we are to be able to assess whether a
broadcaster's judgment is reasonable.'' Yet, you also indicated that
``[w]hile there may be additional guidance concerning the types of
programming that would or would not qualify, . . . I do not believe
that it would be appropriate to go beyond our elaboration today, absent
public discussion and comment.''
My question to you is how you draw a distinction between what
programming content regulation can and should be imposed in the context
of a license swap and what can only occur through public discussion and
comment? Why did you initially think that any programming content
regulation could be imposed other than in the normal notice and comment
process?
Answer. I do not believe that the Commission should impose new
programming content regulations in the context of license assignment
proceedings. On occasion, in adjudicating petitions to deny an
application for Commission consent to the assignment of a license, the
FCC is called upon to interpret existing rules or policies to resolve
the contested matters. The Supreme Court has recognized that on
occasion administrative agencies must have the power to interpret and
apply their substantive rules on a case-by-case basis. SEC v. Chenery,
332 U.S. 194, 203 (1947).
In the WQED, Pittsburgh case, at the time of the initial vote, I
believed that the Commission was interpreting a rule already on the
books pursuant to the authority recognized by the Supreme Court in
Chenery. While it understandably may appear hard to discern from the
actual language of the additional guidance, it was my intention to
avoid having the Commission tread ``recklessly on the programming
decisions made by non-commercial educational broadcast licensees.''
Indeed, in my separate statement I indicated that I ``would continue to
defer to the judgment of an applicant or licensee concerning the
educational nature of its programming,'' unless that judgment was
arbitrary or unreasonable. See Separate Statement, at 4 citing Way of
the Cross, 102 F.C.C.2d at 1372 n.8 (1985).
After issuing the decision, I realized that I had made a mistake
and immediately took steps to correct it by rescinding the additional
guidance. Had I followed more carefully my own guidance in supporting
the grant of the application, including the concern you cite regarding
an elaboration without public comment, I might have reached this
conclusion prior to the issuance of the initial decision. The case
highlights for me the importance of narrowly applying the authority
recognized in Chenery, especially where the interpretation may be
construed as imposing additional content regulation.
Question 5. In your statement regarding the Federal-State Joint
Board's November 23, 1998 recommendations, you state that ``[a] model
is the only tool that has been identified to permit objective
assessment of special needs that may require increased federal support
to particular study areas. But we will not use this tool unless it has
achieved a level of accuracy, predictability, and openness that earns
it broad acceptance.''
Do you really think that the model implemented by the Commission
this past Fall has earned broad acceptance? There has been a
substantial amount of criticism about the model that it takes too long
to run, that the numbers still don't add up. How is the model accurate,
predictable, and open?
Answer. No economic model is perfect. Despite the criticisms of the
cost model, however, no one has proposed a better alternative for
objectively estimating non-rural carriers' forward-looking cost of
providing service, which is the basis for prices in a competitive
market. When used to estimate forward-looking costs on a statewide
basis, the model appears to have gained a reasonable level of
acceptance.
Core principles underlying the Commission's adoption of the cost
model are that the model and the process used to create it be open and
predictable. Because the Commission has adhered to these principles,
interested parties have been able to replicate and verify the cost
model's results. The benefits of a transparent system were seen
recently when industry members brought to the Commission's attention a
transcription and programming error that has since been corrected.
In addition, this open process enables parties to critique the cost
model and propose modifications that can improve it. As the Commission
recognized in the orders it adopted last fall, it will need to continue
to study how the model itself should change to reflect changing
circumstances. FCC staff and staff of the Federal-State Joint Board on
Universal Service continue to analyze the model in an effort to make it
even more accurate. We need to continue these efforts and watch closely
the implementation of the model to ensure that it achieves the
objective of estimating forward-looking costs in an accurate and
predictable manner. As issues come to light, we need to address them.
Question 6. In your statement accompanying the Commission's May 7,
1997 universal service order, you indicated that you thought that the
FCC had made ``substantial progress'' and established ``a clear
timetable for implementation.'' The Telecommunications Act was enacted
into law on February 8, 1996. Did you really think that four years
after the bill became law that the FCC would still not have fully
implemented the high-cost provisions of Section 254? Do you consider
how long it has taken and how much farther we have to go a clear
timetable?
Answer. I share your frustration regarding the time it has taken to
complete universal service reform. I would have preferred to complete
the process earlier. Nevertheless, the Commission has made substantial
progress and I believe we are on the right track.
We have reformed the high-cost mechanism for non-rural carriers,
and they are making the transition to a support mechanism based on
forward-looking costs. We have also made universal service support
portable so that competitors who win customers can receive the same
support that the incumbent would have received.
Nevertheless, although we have made significant progress on these
complex issues, much remains to be done. Recognizing the unique
circumstances facing rural carriers, the FCC worked with rural carrier
associations to establish a separate track for rural carriers. The
Federal-State Joint Board on Universal Service convened a Rural Task
Force that must recommend by October 1st, an appropriate universal
service regime that reflects the different cost structures of rural
carriers. Once the Rural Task Force has issued its recommendation, I
will urge the Joint Board and the FCC to move as rapidly as possible to
complete the process. I recognize that uncertainty can be a major
impediment to investment. At the same time, however, we must take the
time to ensure that any mechanism we adopt makes sense for rural
carriers and is faithful to the Communications Act's core principle
that all Americans should have access to reasonably comparable services
at reasonably comparable rates. This effort is too important not to get
right. In the meantime, we have sought to ensure that rural carriers
receive adequate support from the current mechanism in order to prevent
upward pressure on rates in rural areas.
I would also have preferred to proceed concurrently with reform of
high cost support and access charges. If we are going to get universal
service mechanisms for high cost areas right, we must identify high
cost support that is implicit in access charges. We are currently
considering an industry proposal for access charge reform for price-cap
carriers. In addition, numerous rural carriers, along with their
associations, are developing an analogous proposal that would address
access charges, universal service, and separations. We must make
resolution of these complex and interrelated issues a top priority. At
the same time, as we address access charge reform, we need to make sure
that consumers, including residential and low-volume consumers, will
receive the benefits of cost savings due to access charge reductions.
Question 7. The FCC has expressed its intent to reauction certain C
and F block PCS licenses in July of this year. These licenses were
previously auctioned, but never built out and never paid for. Last
year, I introduced legislation that prohibits the application of
spectrum caps to new spectrum that is auctioned in the future. One of
the reasons that I introduced this bill was to accelerate the
introduction of advanced services including wireless Internet access
and other data services for which operators need substantially more
spectrum in order to provide the service. Given the fact that some of
the spectrum from C and F block licenses is not currently being used,
is it safe to conclude that relief from the spectrum cap could be
granted for these licenses without risking industry consolidation? If
so, shouldn't relief be granted to ensure that advanced wireless
services develop without hindrance? If not, why not?
Answer. The Commission presently has pending before it a number of
requests and responsive pleadings concerning the reauction of certain C
and F block PCS licenses, including issues related to Section 20.6 of
the FCC's rules (the ``spectrum cap''). We will receive additional
pleadings on the issues later this month. I do not wish to prejudge the
issues raised in these requests and pleadings.
Strong arguments have been made that removing those licenses not
presently being used to provide service from the application of the
spectrum cap would not cause industry consolidation. It is also
important for the FCC to enable licensees to provide advanced wireless
services if they choose to do so. It was precisely for that reason that
I supported language in our spectrum cap decision last fall to provide
for waivers to facilitate the deployment of next generation wireless
services. As a general matter, I would like to see more spectrum made
available to new entrants and existing licensees for the provision of
advanced services.
Question 8. In the order adopting licensing and service rules
governing the 36 MHz of commercial spectrum located in the 700 MHz band
to be auctioned this Spring, the FCC found that ``the spectrum cap for
the existing 180 megahertz of CMRS spectrum provides a sufficient
safeguard against excessive consolidation of CMRS spectrum.'' If you
agree with this statement, do you support my legislation that would
preclude the FCC from applying the spectrum cap to all future auctions,
which would leave the rules governing the existing 180 megahertz
intact?
Answer. I supported our conclusion that ``the spectrum cap for the
existing 180 megahertz of CMRS spectrum provides a sufficient safeguard
against excessive consolidation of CMRS spectrum.'' Indeed, I elected
not to apply the spectrum cap to the 30 MHz in Channels 60-69 to be
auctioned this spring. I would be extremely hesitant to apply Section
20.6 to any further allocations of spectrum, and believe that parties
seeking the applicability of such restrictions would bear a heavy, if
not insurmountable, burden. Of course, if a party were to argue that we
should make the restrictions of Section 20.6 applicable to a new
allocation of spectrum, I would be obligated to consider that argument
on the basis of the laws and factual record applicable to that
proceeding.
Question 9. With recent industry consolidation, there are now five
national wireless carriers. How many carriers need to offer service in
a given market before the current wireless spectrum is no longer
necessary?
Answer. The Commission released its most recent order on spectrum
aggregation limits on September 22, 1999. In that order, the Commission
cited certain theory and research that tended to show that the
competitive nature of a market was enhanced significantly when the
number of competitors in a market was increased from three competitors
to four competitors, and again when increased to five competitors.
Beyond five competitors, the evidence and theory did not establish as
significant a change in the competitiveness of the market.
Question 10. Given the FCC's new duopoly and one-to-a-market rules,
why should the newspaper/broadcast crossownership rule remain
unchanged? Why should newspapers be precluded from the broadcasting
business when one single owner can have as many as two television
stations and six radio stations in the same market? Do you support
issuing a notice of proposed rulemaking on this issue?
Answer. Yes, I support reexamining this rule in light of sweeping
changes in the media marketplace since the inception of the rule. Such
an assessment is timely. The Commission is in the process of completing
its Biennial Review of broadcast ownership rules. I plan to carefully
consider the changing marketplace, including the consolidation of radio
and television properties within a market, cable clustering, access to
information over the Internet, DBS, and other forms of information
distribution, as well as other probative information on the record
before I draw any conclusions.
Question 11. Given events such as the AOL-Time Warner merger, the
announced acquisition of Times Mirror by Tribune, and the consolidation
of cable companies, is the 35% national ownership cap for television
broadcasters still necessary? If so, what goals does the cap accomplish
considering the current makeup of the marketplace for video programming
and distribution, as well as the Internet?
Answer. The 35% cap is a subject of our currently pending Biennial
Review and adjudicatory proceedings. I want to consider all viewpoints
before deciding whether we should alter or remove the cap. Questions
have been raised as to whether the underlying purpose of the rule in
ensuring viewpoint diversity by limiting the market reach of any single
broadcaster is still relevant today. I will examine all of the facts
presented before determining whether the rule should be modified or
eliminated.
Question 12. Is a strong must-carry requirement for cable systems
to carry DTV signals necessary to achieve a successful transition by
television broadcasters from analog to digital operations?
Answer. As a general matter, I prefer to see resolution of this
issue through marketplace forces, to the extent possible. There is
little dispute that broadcasters' digital signals will be carried in
lieu of the analog signals once conversion is completed.
As cable systems expand and modernize to accommodate digital
channels and Internet access, they will add capacity that could be used
to carry the digital broadcast signal. Some cable multiple system
operators have pledged to carry the digital broadcast signal in
addition to the analog signal if the programming is different and of
interest to subscribers. I have strongly encouraged cable operators and
broadcasters to sit down and discuss digital cable carriage in
conjunction with retransmission consent negotiations. When a must-carry
rulemaking is presented for a vote, I will consider the extent to which
cable operators and broadcasters have worked together to craft digital
carriage arrangements.
If broadcasters' digital signals are not carried by cable
operators, the digital transition could be hindered. Given cable
television's current market penetration rate of less than 70%, however,
cable carriage by itself would not be sufficient to complete the
transition under the 85% DTV penetration benchmark set by Congress in
the Balanced Budget Act of 1997.
______
Response to Written Questions Submitted by Hon. Conrad Burns
to Susan Ness
(1) I am concerned that the FCC refuses to acknowledge the property
rights of winning bidders of spectrum licenses in those licenses and
that the Commission apparently considers itself exempt from the
Bankruptcy Code and its automatic stay provisions. The FCC cannot
simply repossess people's property, including spectrum, except by due
process of law, including bankruptcy law.
The Commission has sought exemption from the bankruptcy laws to
repossess spectrum in recent appropriations bills, and Chairman Kennard
recently asked a Senate Committee to give the Commission such special
treatment. Congress has refused to do so, and I agree with the
lawmakers who have jurisdiction over the Bankruptcy Code that the FCC
should not be given special treatment superior to that of other
private, secured creditors.
Question. In your view, does the Commission deserve special
dispensation from the Bankruptcy Code? If so, why?
Answer. In my view, the FCC is not receiving special dispensation
from the Bankruptcy Code. Instead, the FCC has acted consistently with
the principle that a licensee has only the rights specified in the
terms of the license. The licenses issued by the FCC to which you refer
expressly stated on the face of the license that failure to comply with
the condition for full and timely payment pursuant to the Commission's
rules resulted in the automatic cancellation of the license. In seeking
to enforce its rules and the terms of its licenses, the Commission
seeks only to protect the integrity of its auction licensing process
established under Section 309 of the Act, not to obtain special
dispensation from the Bankruptcy Code. The United States Court of
Appeals for the Second Circuit already has held that bankruptcy courts
cannot change the terms and conditions of FCC licenses, including
payment requirements. NextWave Personal Comm., Inc. v. FCC, 200 F.3d 43
(2d Cir. 1999). While I recognize that these issues are still being
litigated in the courts, my goal is to preserve the integrity of the
auction process and to prevent purchasers of licenses at auction from
using the Bankruptcy Code to escape their obligation to comply with
their commitments to the American people.
Question. Please describe your views on spectrum management.
Answer. Here are some of my thoughts on spectrum policy and
spectrum management:
My goal is to make spectrum available in ways that provide maximum
benefits for the American public. Allocations and service rules for
spectrum should be as flexible as possible to enable the licensee to
respond to a rapidly changing marketplace without having to obtain
regulatory dispensation. We should inform the public as far in advance
as possible of our plans to make spectrum bands available so that
prospective licensees can develop and execute viable business plans. To
the extent feasible, we should recognize international implications of
spectrum use, and consult with our trading partners to harmonize
spectrum band allocations to spread the cost of equipment development
across more users, thereby lowering the cost of service to the consumer
and facilitating global communications. We should be technology
neutral, yet encourage open systems and connectivity where appropriate.
Auctions are the most efficient means of swiftly and equitably
licensing providers to expedite commercial service to the public.
However, we must also ensure that adequate spectrum is available for
public safely, amateur, scientific, and other applications where
auctions are not appropriate. The FCC should also make available
adequate unlicensed spectrum so that entrepreneurs can develop a host
of new and innovative services.
We must streamline our processes to eliminate unnecessary delay in
the approval of new technologies. The FCC plays a critical role in
ensuring that licensees can operate free of harmful interference. We
must find better ways of resolving competing and contradictory analyses
of interference for new technologies or new sharing proposals so that
we can make most efficient use of spectrum. One approach might be for
the FCC to oversee an interference testing plan, in which all
interested parties are invited to participate. That could alleviate the
battle of the engineering reports. Finally, we must adopt processes
that swiftly resolve interference claims when they occur.
Question. Do you consider spectrum a public resource?
Answer. Yes.
Question. Is the primary goal of spectrum management the
maximization of revenue or the most efficient technological use of the
spectrum?
Answer. The primary goal of spectrum management is to ensure that
the public reaps the greatest benefit from services provided through
the use of spectrum. As a general matter we rely on market forces to
achieve that goal. Through its rules, the FCC also encourages the most
efficient technological use of the spectrum.
Question. What improvements do think can be made in spectrum
management policy?
Answer. We need to look more holistically at the spectrum available
for commercial applications. Previously, we focused on spectrum issues
on an ad hoc basis, one band at a time. In establishing rules for a
single band, we addressed policy issues that affected many bands.
Because the FCC focused on one band at a time, industry did not know
what other spectrum would be made available at a later point in time.
And the policies we adopted in wireless proceedings had the potential
to conflict with our international objectives.
To address these issues, we have elevated the spectrum policy
function at the Commission through the establishment of the Spectrum
Policy Executive Committee, which is comprised of the Wireless,
International, Mass Media bureau chiefs, and the head of the Office of
Engineering and Technology. That body formulates spectrum policies for
Commission approval. Last fall, the Commission adopted a Spectrum
Policy Statement, which described our spectrum policies and listed a
multitude of spectrum bands that the FCC was considering making
available for use. Such policies include, among others, providing
flexibility in spectrum allocations and service rules and being
technology neutral. These changes have been beneficial.
In addition to the changes we have already begun to implement, we
must redouble our efforts to resolve more rapidly conflicting
performance and interference issues. We must do so even in the face of
increasing demand for spectrum, increasing technical complexity, and
rapid technological change. Also, we must continue to work with our
counterparts abroad for more global harmonization of spectrum
allocations, where feasible.
Question. Please describe your views on private property rights as
they apply to spectrum management policy.
Answer. As a general matter, I believe that licensees should have
the flexibility and discretion to decide the most desirable method for
serving the public. Nevertheless, licensees cannot have the authority
to violate the Commission's rules or disserve express Commission
policy, especially based on claims that they hold property rights in
the license. Moreover, the Commission appropriately retains the
ability, where justified by the broad public interest, to reallocate
spectrum from one use
to another, and to move incumbents in order to introduce new and more
efficient
services.
The ``property'' right of licensees in their licenses is prescribed
by the Communications Act. Under Section 301 of the Communications Act,
each licensee only holds its license pursuant to ``the terms and
conditions of the license'' and has no ``ownership'' interest in the
spectrum (which belongs to the American people). Section 309(j)(6)(C)
specifically provides that ``Nothing in this subsection or the use of
competitive bidding shall diminish the authority of the Commission
under other provisions of this Act to regulate or reclaim spectrum
licenses.''
(2) Last year, the Commission granted waivers of its rules to allow the
introduction of ``ultra-wide band'' (``UWB'') equipment capable of
transmitting across large swaths of bandwidth, including spectrum
dedicated for critical safety operations. The waiver limited the number
of units that could be introduced into the market; one of the
ostensible purposes of the waiver was to allow for the testing of UWB
equipment for its ability to operate without interfering with existing
users of the affected spectrum.
As I understand it, this equipment has not been tested and serious
concerns have been raised over whether this equipment can operate
without interfering with operational public safety services.
Nonetheless, I am informed, the Commission is close to issuing a Notice
of Proposed Rulemaking (``NPRM'') for the purpose of establishing rules
and procedures for commercial exploitation of UWB equipment.
Question. What is motivating the federal government to move so
quickly on a rule-making strategy that could well affect public safety
in the absence of thorough technical studies?
Answer. The Commission has moved cautiously and with great
sensitivity in evaluating proposals regarding UWB. For a number of
years, proponents of this technology have been requesting Commission
action simply to investigate the possibility of establishing rules that
would permit the deployment of UWB. In September of 1998, the
Commission issued a Notice of Inquiry (``NOI'') asking questions about
the UWB technology, and has received over 125 responses to the NOI. The
Commission has taken over 18 months to consider the responses, and to
work with NTIA in an effort to reach a better understanding on issues
involving UWB.
Our approach to a rulemaking for UWB is to ask the public to
comment on a wide range of issues regarding the technology and
potential for interference. The NOI provided us with an appropriate
basis to proceed further--again, cautiously--with a proposed rulemaking
that does not necessarily assume a particular outcome, but rather asks
questions about appropriate rules for UWB. I have met with members of
the GPS community who believe they could be adversely affected by UWB
operation and I have assured them that no final rules will be adopted
permitting deployment of UWB that could impact on GPS operations unless
and until the Commission has determined that UWB will not cause harmful
interference--especially where public safety is concerned. I believe
this process will be enhanced by conducting a general rulemaking that
has as its goal the development of a record on potential interference
issues. I view the rulemaking process as an opportunity to ask
appropriate questions to resolve the issues that have been in
contention for some time.
I have called for joint testing of UWB by the GPS and UWB
communities--ideally with the direct involvement of NTIA and FCC staff.
This testing should be concluded before any rules are finalized that
could adversely impact public safety. The Commission has a statutory
obligation to protect public safety uses of the spectrum as well as a
statutory obligation to foster the development of new and beneficial
technologies, including those that support public safety.
Question. From a procedural standpoint, why is the Commission
considering leapfrogging the established practice of testing new
equipment and services prior to initiating a rulemaking proceeding?
Shouldn't the Commission first conduct verifiable tests of the
interoperability of UWBs with existing services before it commences a
NPRM that establishes rules for UWB operations?
Answer. The Commission is not proposing to leapfrog the established
process. The Commission has conducted initial testing in connection
with granting the very limited waivers you reference. As discussed
above, the Commission already has proceeded with a Notice of Inquiry,
issued more than 18 months ago. As I discussed above, any NPRM
addressing UWB will ask questions, explore alternatives and to seek
data to support rules for the operation of UWB that will insure that
there will not be harmful interference. Again, rules will not be
adopted until the UWB and public safety community undertake appropriate
tests and we are satisfied that we have adequately addressed
interference questions.
Question. Recently industry suggested to me that they have been
informed by government representatives that the UWB NPRM is on a
``fast-track.''
Is it the FCC's position that this NPRM is on a ``fast track?''
Answer. The process for assessing potential rules for UWB operation
has not proceeded on a faster track than traditional rulemaking
proceedings; indeed, we have been criticized for proceeding too slowly.
The supporters of UWB technology first contacted the Commission many
years ago. The NOI was initiated more than 18 months ago. As discussed
above, an NPRM will further the goal of resolving questions of
potential interference by seeking comment from the public on specific
issues.
Question. Wouldn't you agree that, because public safety is
implicated by this application, the Commission should at a minimum
ensure that the UWB equipment has been tested by independent entities
and the results of these tests clearly show that UWB equipment will not
interfere with critical public safety services prior to initiating the
NPRM?
Answer. I agree that the Commission has an obligation to protect
public safety uses of spectrum. I also expect that the record developed
in response to the issuance of an NPRM will include the results of
testing that addresses interference questions that have emerged in the
UWB debate. Historically, the Commission has invited the submission of
test data in response to technical issues raised in rulemakings
involving new technologies or services. The issuance of an NPRM can
clarify the issues that must be addressed in subsequent testing. There
is no safety risk to the public, because an NPRM does not adopt any
rules; it builds an appropriate and complete record for Commission
consideration.
Question. What is preventing the Commission from immediately
delaying the rule-making process until independent and complete
technical studies are undertaken regarding the impact of UWB
applications on the frequency bands involving safety-of-life services?
Answer. The Commission is obligated to protect public safety and to
serve the public interest by authorizing new services that do not
conflict with that goal. Indeed, the FCC has a duty not to hinder
technological innovation. See 47 U.S.C. Sec. 7(b). In furthering these
goals, we have an obligation to reach prudent decisions without undue
delay. Therefore the Commission should not delay asking the appropriate
questions regarding interference until after completion of testing. The
questions posed in an NPRM both spur and guide appropriate testing.
Question. Industry has suggested that the approach that the
Commission is considering with respect to this ``fast track rule-making
process'' has effectively shifted the burden of proof from an applicant
seeking to introduce a new device into a public safety arena to already
existing safety-of-life services.
Is it the Commission's intention to shift the burden here?
Do you think that it is wise for the Commission to shift the burden
where safety of life services are implicated?
Answer. I do not believe the Commission will shift the burden in a
manner inconsistent with the mandate of Congress. Section 7(a) of the
Communications Act of 1934, as amended, plainly states that ``[i]t
shall be the policy of the United States to encourage the provision of
new technologies and services to the public. Any person or party (other
than the Commission who opposes a new technology or service proposed to
be permitted under this Act shall have the burden to demonstrate that
such proposal is inconsistent with the public interest.'' In evaluating
the public interest, the Commission makes every effort to ensure that
spectrum used for public safety services is protected.
Question. With the rapid emergence of wireless communications
applications, and urgent need to protect the integrity of the aviation
safety zone (e.g., passengers not allowed to operate laptops and cell
phones during the ascent and descent phases), why hasn't the government
initiated spectrum harmonization studies?
Answer. To a great extent, electromagnetic compatibility issues
involving uses of spectrum are addressed in the context of specific
proposals. This is why the Commission seeks comments on out-of-band
emissions limits in nearly any rulemaking concerning the allocation of
spectrum for new services. Beyond the Commission's direct efforts,
however, standards bodies, other agencies and joint government-industry
organizations also deal with such compatibility issues. For example,
the Radio Technical Commission for Aeronautics (``RTCA'') examined the
use of passenger-carried electronic devices aboard aircraft and the FAA
commissioned the Applied Physics Laboratory of Johns Hopkins University
to study interference threats to aviation's use of GPS. I believe the
RTCA is examining compatibility between aviation's use of GPS and UWB.
Finally, I understand that the Commission's Technological Advisory
Council is considering a study that will examine the overall noise
floor and the implications of additional operations that contribute to
the noise floor. A study of this kind will necessarily involve much
more than just consideration of what contribution to the noise floor
might result from UWB.
Question. The National Research Council has indicated it would take
18 months and half a million dollars to test UWB equipment's
compatibility with existing public safety services.
Have any studies of this nature been initiated or funded?
Answer. I do not believe that the NRC proposal has been initiated
or funded. I have heard that NTIA anticipates studying UWB
compatibility with certain government uses and that the Department of
Transportation plans to do so as well. I would, note, however, that
many of the subjects proposed for review in the NRC study are matters
addressed in the Commission's NOI proceeding and are matters on which
we would invite comment in any NPRM.
Question. How is this consistent with the NPRM time scale?
Answer. The Commission has no predetermined time scale for
conclusion of its NPRM. I believe that any interference tests should
take as long as necessary to provide the information needed to answer
questions posed in an NPRM.
Question. Are these studies underway by the Commission or under the
oversight of any agency of the Federal Government?
Answer. As noted above, I understand that both NTIA and DOT plan to
conduct studies. I also expect that various other interested parties
will have testing conducted by independent laboratories. As noted
above, I have encouraged the parties to agree upon joint testing under
the auspices of NTIA.
______
Response to Written Questions Submitted by Hon. Max Cleland
to Susan Ness
Question 1. Could you please comment on the status of FCC merger
reviews? Do you believe these reviews are done in a timely manner?
Answer. In most cases, the Commission expeditiously processes
applications for approval of the assignment or transfer of control of
licenses. I am concerned, however, that in certain cases, the
Commission has not moved with sufficient speed to render a decision on
merger applications. I understand that delay creates uncertainty that
makes it difficult for businesses to develop and implement plans that
will lead to a more competitive telecommunications marketplace.
The Commission needs to do a better job of deciding promptly which
mergers will serve the public interest and which will not. To
accomplish this objective, the Commission should commit to a more
predictable timetable for identifying and resolving the issues
presented by mergers. In particular, the Commission should take the
following steps: (1) place applications on public notice expeditiously
upon receipt, and call for the filing of comments and petitions to deny
on appropriate dates, usually within 30 days; (2) commit to a specific
time frame for identifying any additional information that the
applicants must submit, or any issues that the applicants must address;
and (3) limit the time period during which any permitted ex parte
communications are permitted to occur, and after that time period,
proceed expeditiously to a decision. As a general matter, I believe
that reviews of complex transactions should be completed within 180
days, if proponents submit requested documentation in timely fashion.
Time constraints, however, should not enable merger applicants to game
the process by running out the clock.
Question 2. For the most part, the FCC has chosen to forbear on
regulating advanced services. However, as you know, telephone companies
are subject to regulation with respect to their deployment of DSL
service. Obviously, they are thought of as ``different'' in the eyes of
regulators. How do you view the phone companies as a different kind of
player with respect to their role in developing broadband
communications?
Answer. The Internet has grown enormously in recent years with
minimal government regulation. The FCC has not regulated the Internet
in the past, does not do so now, and has no intention of doing so in
the future. The underlying services provided by telephone companies
that consumers use to access the Internet, however, are
telecommunications services subject to the framework that Congress
established in the Communications Act. The Act does not distinguish
between voice and data services. Rather, Congress established a regime
to promote competition throughout all telecommunications markets.
The Commission, for its part, has sought to carry out Congress'
pro-competitive and deregulatory objectives in all telecommunications
markets, including the advanced services market. For instance, to
promote competition in broadband services, the Commission adopted rules
to ensure that competitors can obtain access to loops and collocation
space. At the same time, however, the Commission also determined that
incumbent carriers generally are not required to unbundle facilities
they use to provide advanced services, including packet switches and
DSLAMs. Moreover, the Commission has held that, when a carrier sells
advanced services in bulk to an Internet provider, those services are
not subject to the wholesale discount requirement in Section 251(c)(4).
With respect to the rollout of broadband, I am committed to
ensuring that advanced communications are made available to all
Americans on a reasonable and timely basis. In a world that is
increasingly dependent on information technology, access to broadband
services is becoming the key to economic prosperity. The government's
role is not to pick winners and losers. Rather, as underscored in
Section 706 of the Telecommunications Act of 1996, our job is to reduce
barriers to deployment and competition so that companies are able to
invest and innovate. In this way, we can make sure that broadband
services roll out as quickly as the technology and the economics allow
in all areas of the country, including rural and lower-income areas.
The Commission is currently in the middle of its second inquiry on
the deployment of advanced services pursuant to Section 706. In this
proceeding, we are examining steps we can take not only to promote the
deployment of advanced telecommunications capability but also to
facilitate consumer choice among broadband service suppliers.
Question 3. I understand the Commission recently relaxed its
ownership restrictions on local television stations and is now
permitting greater joint ownership among television stations serving
the same market. I also understand that newspapers are seeking similar
relief. Do you foresee Commission action on behalf of newspaper owners?
Answer. The Commission currently has before it a draft Biennial
Review report addressing the newspaper/broadcast cross ownership
prohibition, among other things. I am committed to reviewing this
report carefully and acting on it promptly. The Biennial Review
provides an opportunity to consider developments in the media
marketplace and determine whether they warrant elimination or
modification of some or all of our cross-ownership and multiple
ownership rules.
The communications marketplace has changed significantly during the
course of the past few years. In addition to newspapers, radio and
television, consumers increasingly have access to a wide assortment of
other sources of news and information. Cable television, satellite
services, and the Internet have had a profound effect on the
marketplace. Growing access to those sources must be balanced against
the fact that newspapers and television stations remain the dominant
sources of local news and information for most consumers.
The new local ownership rules to which you refer also are an
important factor to be considered in determining whether to relax the
prohibition against cross ownership of newspapers and radio stations
and newspapers and television stations in a local market.
I am aware of several proposals to amend the current newspaper/
broadcast cross-ownership prohibition. While I cannot predict what
action the Commission will take, I will carefully consider these
proposals as I examine the Biennial Review report.
______
Response to Written Questions Submitted by Hon. Trent Lott to Susan
Ness
Question. As you are aware, the ultrawide band industry has been
seeking regulatory approval for its important technology for several
years. However, the companies that would utilize this technology still
do not have the authorizations necessary to bring their revolutionary
products to U.S. customers. I am concerned about this delay. As
highlighted in recent press articles, there are numerous public safety
benefits of UWB technology. Also, UWB technology may alleviate the
impending wireless bottleneck by utilizing previously ignored parts of
the radio spectrum.
I commend you for your role in advancing and accelerating the
deployment of new technologies, and would appreciate hearing your views
on the status of the rulemaking process and the necessary testing to
deploy the UWB technology.
Answer. I look forward to the Commission's release of a notice of
proposed rulemaking (NPRM) on UWB in the near future. I share your view
that UWB technology may prove to be extremely beneficial on a variety
of fronts, including public safety. At the same time, I am mindful of
the fact that there have been claims that the introduction of UWB
technology could create harmful interference, especially to public
safety services. As the agency charged with managing non-federal uses
of the electromagnetic spectrum, I believe we must guard against such
interference. Any NPRM will build upon the experience gained with
initial testing of UWB devices in connection with the waivers issued
last summer for such equipment, the record in response to the Notice of
Inquiry we issued in September 1998 concerning UWB, and the FCC's
experience with other devices. At the same time, I believe that the
Commission must encourage and consider additional testing in order to
assist in the resolution of conflicting claims as to the compatibility
of UWB with existing services. Testing should be used as a light in the
search for truth, however, and not as a means for casting the long
shadow of undue delay.
______
Response to Written Questions Submitted by Hon. John McCain
to Susan Ness
1. General
Question. If you had the chance to change only one of the many
votes you have cast during your tenure as a Commissioner, which one
would it be?
Answer. Out of the approximately 2,500 votes I have cast since
joining the FCC, I most regret having voted to permit winning bidders
for the ``C'' Block licenses in the personal communications service
(``PCS'') to pay for their licenses by making installment payments.
Although Section 309(j)(4)(A) of the Communications Act of 1934, as
amended, instructed the Commission to consider the use of installment
payments, it did not mandate the use of such payments. The Commission
had hoped to enable entrepreneurial companies with limited access to
up-front capital to be able to bid at auction, construct a network, and
compete to offer services to the public. Some licensees are
successfully doing so today. Unfortunately, some bidders became over-
extended and ultimately failed to make timely payments for their
licenses. The unintended consequences of authorizing installment
payments have been delays in the provision of service to the public and
protracted litigation in which the Commission has had to protect the
integrity of its licensing process.
Question. What are the three most important problems facing the FCC
today, and what would you do to address them?
Answer. First, the FCC must allocate suitable spectrum for the
provision of new and advanced wireless services. Often such allocations
necessitate resolving difficult spectrum sharing issues between varied
users of the spectrum. The Commission is also evaluating proposals to
authorize the operation of devices that use spectrum in fundamentally
different ways, which also raise questions concerning potential
interference with existing services and the Commission's ability to
police such interference.
Given the rapidly changing marketplace for wireless communications,
the Commission should provide for flexible use of the spectrum wherever
such flexibility will not compromise protecting other primary users
from harmful interference. In some cases, the Commission simply will
have to make difficult choices regarding allocations, and then
promulgate rules that provide incentive for the most efficient
resolution of sharing or relocation issues through the operation of
market forces. Also, the Commission should expend every effort to
encourage and participate in the testing of new spectrally efficient
technologies so that they may be authorized under conditions that do
not adversely interfere with current users. These technologies hold the
promise of reducing the constraints on the allocation and use of
spectrum.
Our spectrum responsibilities make it especially important that the
Commission be able to attract qualified engineers and other staff with
sufficient industry and technical expertise to resolve questions
concerning spectrum interference and other technical questions related
to the use of spectrum. While the Commission has attracted a number of
superb engineers and technical experts, time and time again the
resolution of many of our most difficult questions depends upon answers
to complicated claims regarding interference and spectrally efficient
operation of equipment. The FCC must continue to attract and develop
quality technical expertise and personnel to address these issues.
Second, the FCC is seeking to foster the deployment of advanced
services across the nation in a manner that makes the benefits of these
advanced services available to all Americans. At the same time, it is
seeking to rely on the competitive forces of the marketplace and avoid
burdensome regulation and upward pressure on the cost of providing
telecommunications services.
The Commission must continue to exercise restraint in the
regulation of advanced services. It must continue to license the
provision of as many wireless and satellite services as possible, not
only to provide for competition, but to permit these services to reach
segments of our population that are not reached as easily through wired
networks. The Commission must continue to educate itself about the
needs of rural and urban communities and ensure that the universal
service funding mechanisms adopted by the Commission serve the
objectives that were the basis of Congress' adoption of the
Telecommunications Act of 1996.
Third, the Commission needs to do a better job of managing its
review of mergers. I discuss this issue in greater detail in response
to question 3 below.
2. International Spectrum Issues
Question. Based on your experience in past World Administrative
Radio Conferences, what improvements would you make to the process by
which the U.S. plans for, and participates in, international spectrum
allocation meetings?
Answer. World Administrative Radio Conference decisions have a
profound impact on U.S. business, domestically and globally. The U.S.
is but one vote out of more than 150 countries represented.
Historically, the U.S. has been slow to formulate its positions and to
circulate them to other administrations, and slow to depart from a
position even when changes in the international environment indicate
adopting a different course would be advantageous. Often, the U.S. has
entered negotiations with other administrations too late in the process
to avoid major clashes at conferences.
We have learned from our mistakes. After the 1997 conference, I
advocated that a number of changes be made. Many have been adopted,
which should lead to a better outcome at the WRC-2000 conference this
May. The FCC submitted its recommendations early, and the U.S.
circulated its draft positions in advance of regional conferences so
that other administrations could work with us to reach consensus on
proposals. The White House appointed our head of delegation early
enough to enable meaningful participation in bilateral and multilateral
meetings, and has given high level attention to WRC issues so that
disputes within the U.S. government could be resolved quickly. Finally,
regional conferences of spectrum managers are now open to outside
observers, enabling countries to exchange information earlier in the
process. This should reduce the number and magnitude of issues
remaining in dispute at the opening of WRC-2000.
I have one other recommendation: The U.S. government should earmark
additional funds to enable more participation by U.S. government
experts in regional and bilateral meetings. The FCC is a vital member
of the U.S. team. We have the technical expertise and global
relationships to resolve difficult issues, but we lack the budget to do
so. When the U.S. has taken the time to visit other delegations, the
outcome has been greater support for our proposals.
3. FCC Merger Reviews
Question. I realize that you support continuing the FCC's authority
to review telecom mergers. Based on your five years' experience, is
there any aspect of the current process that needs improvement, and, if
so, what specific changes would you make?
Answer. While I support the FCC's continued authority to review
mergers of communications companies, I believe we can and should
improve the process. Specifically, the Commission needs to ensure that
its review of the largest and most complicated mergers is conducted in
a more expeditious and transparent manner under standards that are
consistently and equitably applied. Undue delays stifle the development
of competition.
In most cases, the Commission expeditiously processes routine
applications for approval of the assignment or transfer of control of
licenses. Over the past several years, however, the Commission has been
called upon to rule on several exceptionally large mergers. These
transactions have posed significant public policy considerations and
have implicated existing FCC rules. Often they have engendered
significant opposition, not just from competitors or customers of the
licensees, but from members of the public as well. While I generally
believe that our efforts to resolve the issues raised in the
application proceedings have had positive intentions and results, we
can and should make changes to expedite the process and to make it more
transparent to the public.
First, the Commission should commit to a more predictable timetable
for identifying and resolving the issues presented by mergers. The
Commission should place applications on public notice immediately upon
receipt, and call for the filing of comments and petitions to deny on
appropriate dates, usually within 30 days. The Commission should commit
to a specific time frame for identifying any additional information
that the applicants must submit, or any issues that the applicants must
address. As a general matter, I believe that reviews of complex
transactions should be completed within 180 days, if proponents submit
requested documentation in timely fashion. Time constraints should not
enable merger applicants to game the process by running out the clock.
Second, the Commission should ensure that its processes are open
and transparent. The Commission should be judicious in its use of the
``permit but disclose'' process in license transfer proceedings, and
limit the period for such interaction when it is used. The Commission
should be diligent in ensuring that the contents of any claims or
proposals made in such meetings appear in the public record. Commission
requests for information should be reduced to writing and placed in the
public record.
Finally, the Commission should be prepared to so rule when a
proposed transaction, as originally proposed, is not in the public
interest. If we consider conditioning the grant, such conditions should
be narrowly tailored and designed to address identified merger-specific
ills. We should refrain from imposing conditions that are more
appropriate for a rulemaking of general applicability.
4. Newspaper and Mass Media Ownership Restrictions
Question. Would you agree that radio and TV stations, cable TV
channels, newspapers and the Internet are among the many competing
sources of news and information available to consumers today?
Answer. Yes. The media landscape has changed significantly. Cable
TV channels have become important sources of news and information for
some consumers. Others turn regularly to the Internet. Newspapers and
magazines continue to be major sources of news and information as well.
Question. If so, why does the Commission count ONLY radio and TV
stations for purposes of applying its new local broadcast ownership
rules?
Answer. In applying the radio/TV cross-ownership rule, in addition
to broadcast stations, the Commission counts both a cable system and a
daily newspaper as marketplace voices.
In the TV duopoly rule, in order to simplify the test, the
Commission limited its voice count to radio and television stations,
but set the threshold number of voices at a level that recognized the
impact of cable television, satellites, newspapers and Internet access
on marketplace diversity.
Radio and television stations are the only communications vehicles
licensed by the Commission. In most markets, there are far more
applicants than there are licenses available. Therefore, given the
continued reliance by the public on television and radio for most news
and information, it remains in the public interest to broadly
disseminate broadcast licenses.
Question. When the local cable TV operator can offer (and even own)
dozens of different channels of cable programming, why does the
Commission prohibit a local newspaper from owning even one local TV
station?
Answer. Broadcast television stations and newspapers remain the
most influential sources of local news and information for the public.
To promote viewpoint diversity, the Commission historically has
prohibited the common ownership of broadcast and newspapers in the same
market.
I believe that the competitive marketplace has changed
significantly over the past few years, propelled by the clustering of
cable systems within a geographic market, the advent of the Internet,
local stations carried on satellite, digital television and other
emerging sources of information. Moreover, relationships between
content providers and distribution outlets are shifting dramatically,
changing the underlying economics of information and entertainment
production and dissemination. Therefore, I believe that it is timely
for us to revisit our newspaper/broadcast cross-ownership rules to
determine whether they continue to serve the public interest. The
Commission is examining all of our broadcast rules under its Biennial
Review, and I plan to take a fresh look at both the radio and
television cross-ownership rules in the course of that review.
Question. When the Internet enables any user to interact with a
virtually endless variety of different sources of information and
viewpoints, how does the Commission justify retaining ANY broadcast
ownership restrictions based on the need to assure ``viewpoint
diversity''?
Answer. As noted above, I agree that the marketplace has changed
dramatically over the past few years. Last summer, the FCC
significantly relaxed the one-to-a-market rule and television duopoly
rules to reflect marketplace realities. Our Biennial Review, currently
before the Commission, provides an opportunity to reexamine all of our
rules to determine whether they continue to serve the public interest.
I plan to take a fresh look at these rules.
While I agree that the Internet provides an endless variety of
sources of information and viewpoints, not all of the population has
access to the Internet at home. Far fewer still enjoy broadband
Internet access. As we examine our ownership rules, I look forward to
reviewing any studies that may be submitted regarding how the Internet
is changing the public's consumption of information and whether it is
reducing the preeminent role historically played by the broadcast
industry.
5. Deregulation and Forbearance
Question. You have said that the FCC must know ``not just when to
regulate, but when to deregulate.'' Section 10 of the 1996 Telecom Act
states that the FCC must abstain from regulation if it determines that
(1) enforcement is not necessary to ensure that charges and practices
are just and reasonable; (2) enforcement is not necessary for
protection of consumers; and (3) forbearance is consistent with the
public interest.
What competitive indicators do you look for, and what type of
record showing do you require, in evaluating forbearance requests?
Answer. An important objective of the Telecommunications Act of
1996 is deregulation of telecommunications markets. As competition
develops and expands in telecommunications markets, many rules and
statutory provisions designed for monopoly markets may no longer be
necessary, and indeed, may adversely affect innovation and competition.
In Section 10, Congress provided the Commission with a powerful and
precise deregulatory tool. I believe we must use this forbearance tool
even more aggressively in the future as competition develops further.
We have used our forbearance authority, as well as our preexisting
ability to eliminate or modify our rules, to reduce burdens on
carriers. Among other things, we have eliminated and streamlined: (1)
requirements for mid-sized and small carriers; (2) accounting
requirements for all carriers; (3) tariff-filing requirements; and (4)
pre-approval requirements prior to offering new or expanded services.
We have also provided a blueprint for deregulating access services as
competition increases. Sometimes we have chosen to address a problem
raised in a forbearance petition by way of a rulemaking that would have
broader applicability.
Regarding the record showing, the starting point for any
forbearance analysis is the three-prong test in the statute. Parties
seeking forbearance should set forth an explanation of how the
statutory criteria are met. In applying the congressionally mandated
standards, the Commission should conduct a comprehensive and aggressive
Section 10 analysis so that we can eliminate unnecessary regulations
that detract from competition while preserving those that continue to
serve vital purposes. I do not believe that the burden of proof lies
exclusively on the shoulders of forbearance proponents.
As for competitive indicators, I would first note that the
statutory criteria can be better assessed in the context of specific
examples than in the abstract. In particular, where the forbearance
petition relates to a congressional statute (as opposed to Commission
regulation), I would consider carefully Congress's underlying policy
objectives for that provision. If the statutory provision were enacted
to address lack of competition in the marketplace, I would find it
useful to review data demonstrating the changed competitive
circumstances and dynamics of the relevant market(s).
Congress has given the Commission appropriate guidance in Section
10 concerning the removal of unnecessary regulation. The provision
requires forbearance when market forces can ensure that prices and
practices are just and reasonable, when consumers will be protected,
and when the public interest will be served. As competition develops,
we should rely to an even greater extent on market solutions, rather
than traditional economic regulation. In addition, we should
proactively use our forbearance power not only when the development of
competition justifies the easing of regulation, but also when doing so
will accelerate the development of competition without harming
consumers.
6. Digital Television
Question. Recently the cable and consumer electronics industries
came to an agreement on standards for cable-ready digital television
sets. When can we expect to see similar progress between copyright
holders and equipment manufacturers? What is the Commission's role in
such negotiations?
Answer. The off-air availability of first quality digital product
is a critical component of the broadcast transition from analog to
digital. Few consumers will be interested in digital broadcast if
compelling programming has not been made available.
Copyright holders and equipment manufacturers have been in
protracted negotiations for well over a year on adoption of a copy
protection technology and the terms for licensing its use. Currently,
the leading contender is the ``5C'' technology, and the five companies
that own the technology have been meeting periodically with major film
companies to try to reach an agreement on the technology. I do not know
when they will reach an agreement. The film companies apparently differ
among themselves in their priorities and attitudes with respect to 5C.
I believe that government has the obligation to ensure that the
American public has access to the best free digital broadcast system
possible and that the transition from analog to digital is as smooth as
possible for our citizenry.
The Commission can play a role in facilitating inter-industry
agreements, preferably, without regulation. I have always favored
marketplace solutions to these issues. To this end, I have occasionally
convened meetings of the heads of all of the trade associations with a
stake in the digital transition to identify outstanding issues and to
set deadlines by which the parties would resolve them. The Commission,
however, should intervene if parties fail to reach agreement, consumers
are harmed, and the Commission has sufficient legal authority to act.
Further Questions
1. General:
Initial question. If you had the chance to change only one of the many
votes you have cast during your tenure as a Commissioner, which one
would it be?
Question 1. Further question: Your response to this question was
that you most regret having voted in favor of allowing PCS C Block
licensees to utilize installment payments, in part because, ``The
unintended consequences of authorizing installment payments have been
delays in the provision of service to the public . . .''
In your judgment, do any of the Commission's other C Block
implementing rules create a tension between the goals of increasing the
number of small business competitors in the market and enhancing
consumer welfare most effectively?
Answer. Whenever the Commission adopts rules that limit the
availability of spectrum to specific uses or users--either through
technical restrictions or through eligibility requirements--a tension
is created between the benefits achieved by the restriction and the
benefits that might be obtained from more flexible rules.
In the C Block service rules, I supported the Commission's efforts
under Section 24.709 to ensure that consumers would reap the benefits
of competition in the provision of personal communications services
(``PCS'') from small businesses and other statutorily designated
entities. The C Block rules, in their entirety, were designed to enable
entrepreneurial companies with limited access to up-front capital
required for auctions to enter the market, construct facilities, and
offer service to the public.
A variety of qualifying entities have acquired C Block licenses,
and are providing new, innovative and competitive communications
services to the public as a result of the eligibility restrictions.
Among other things, these services have addressed the need for more
rapid deployment of service in rural areas and service plans that
target users beyond high-end business consumers.
As you may be aware, we currently are considering requests to
reevaluate these rules in conjunction with the reauction of C Block
spectrum. As I review the requests to alter the eligibility rules for
future C Block auctions, I will take into account the dynamics of the
marketplace today to see whether the restrictions continue to serve the
public interest.
Question 2. Other Commission rules and policies would appear to
create similar tensions between these same goals. Please assess the
extent to which the following ostensibly competition-enhancing rules
do, or do not, unintentionally compromise the goal of efficiently
giving better service to the average consumer: (a) the effect of the
rules implementing Sections 251 and 271 in providing average
residential consumers with more choices among competing providers of
local and long-distance telephone service; (b) the effect the
application of these rules has had in providing average residential
consumers with more choices among competing providers of high-speed
broadband service; and (c) the effect that maintaining the newspaper-
broadcast cross-ownership restriction has in assuring that average
consumers have access to a diverse array of print and electronic
sources of news and information.
Answer. (a) The framework that Congress established in Sections 251
and 271, and the Commission's implementation of those sections, ensure
that consumers reap the benefits of increased competition in both local
and long-distance markets. Sections 251 and 271 enable Bell companies
to participate in the long-distance market, but only after they have
opened their local markets to competition. The experience in New York
illustrates that, when barriers to competition are removed, competitors
will enter all segments of the local market, including the facilities-
based residential market. And once a Bell Company has fulfilled its
responsibility to open its local market to competition, Bell Company
participation in the long-distance market leads to intensified
competition in that market.
(b) The Commission has sought to carry out Congress' pro-
competitive and deregulatory objectives in the advanced services market
not only to promote the deployment of broadband services, but also to
facilitate consumer choice among broadband service suppliers. I am
encouraged that companies in virtually all segments of the
communications industry--including wireline, cable, wireless, and
satellite--are rushing to deploy broadband services.
For instance, to promote competition in wireline broadband
services, the Commission adopted rules to ensure that competitors can
obtain access to loops and collocation space, as Congress directed in
Section 251. In addition, the Commission ruled that customers of
incumbent carriers may choose to receive high-speed broadband services
from a competitor, while receiving voice services from the incumbent.
At the same time, however, the Commission determined that incumbent
carriers generally are not required to unbundle facilities they use to
provide advanced services, including packet switches and DSLAMs. In
addition, the Commission has held that, when a carrier sells advanced
services in bulk to an Internet provider, those services are generally
not subject to the wholesale discount requirement in Section 251(c)(4).
In all of these actions, the Commission's objective has been to reduce
barriers to competition so that companies are able to invest and
innovate and consumers reap the benefits of a multiplicity of
providers.
(c) In the case of the newspaper/broadcast cross ownership rule,
the historic purpose of the rule has been to foster diversity of
viewpoints between a local broadcaster and a local newspaper,
maintaining two voices as opposed to one among the sources consumers
traditionally rely upon for their news and information. To that extent,
the intended purpose of the rule and the actual effect of the rule are
the same.
However, as I have previously recognized, changes in the media
marketplace warrant the Commission examining whether the historic
purpose of the rule still has merit, and whether the rule should be
modified to account for changes in the media landscape. I plan to take
a fresh look at the newspaper/broadcast cross ownership rule in the
context of the Biennial Review item currently before the Commission, at
which time I will examine carefully the public record on this issue.
Initial question. What are the three most important problems facing the
FCC today, and what would you do to address them?
Question 3. In your answer you alluded to the difficulty of
attracting and retaining qualified technical experts, particularly
engineers. As you know, the Commission's technical expertise in the
technology and economics of the telecommunications industry is the
principal factor limiting the scope of the judicial review that
Congress authorized in the Administrative Procedure Act (the ``APA'').
The American Bar Association is currently preparing a Restatement of
Administrative Law that will address this, and other, issues relating
to the scope of judicial review of Commission action.
The following questions seek further information on your views on
the Commission's technical expertise and the doctrines that govern the
availability and scope of judicial review of Commission actions under
the APA:
A. Although courts have articulated tests for distinguishing
reviewable ``final agency action'' from non-reviewable agency actions,
they have also called such tests ``baffling,'' ``confused'' and
``enshrouded in considerable smog.'' The Administrative Conference of
the United States (``ACUS'') has proposed that the Commission and other
agencies should have to state affirmatively when they issue
``guidances'' or other documents that are not intended to have the
force and effect of law that would render them immediately reviewable
under the APA. Do you support the ACUS recommendation, and if not, what
alternative standards would you propose for identifying those
Commission actions that should be subject to judicial review?
Answer. As a general matter, I do not believe that the Federal
Communications Commission, or other administrative agencies, should
adopt ``guidances'' or other documents that affect the substantive
legal rights of regulated entities and have such actions escape
judicial review. Any final administrative action that affects the
substantive legal rights of a party should be subject to judicial
review.
B. The American Bar Association's Restatement of Administrative Law
proceeds, for now, from a 1986 analysis that concludes that ``[t]he
vigor with which such review [of agency action] is conducted will
depend on the individual judge's assessment of competing policies.''
See Ronald M. Levin, Scope-of-Review Doctrine Restated: An
Administrative Law Section Report, 38 Admin. L. Rev. 233, 253 (1986).
Do you support the so-called ``hard look'' line of cases that would
allow reviewing courts to ``extensively examin[e] the agency's
analysis''? See id. at 260.
Answer. As the article cited in your question recognizes, the
``hard look'' doctrine for review of agency decisions raises some
controversial issues and is met with some skepticism. See Ronald M.
Levin, Scope-of-Review Doctrine Restated: An Administrative Law Section
Report, 38 Admin. L. Rev. 233, 259 (1986) (``hard look'' line of cases
``should be read with some skepticism, for the type of judicial
argument that they reflect is highly controversial, and the Supreme
Court guidance concerning it is uncertain''). I do believe that
rigorous judicial scrutiny of agency work product serves ``a valuable
quality control function'' where it is accomplished through an
intensive examination of the agency's own analysis. In this respect,
the Commission is forced to take a ``hard look'' at its own decision
making, which it should do regardless of the standard of judicial
review that is applicable.
On the other hand, to the extent that such review involves the
substitution of the judgment of judges on the merits, the ``hard look''
could impair the coherence of regulatory programs. Such review also may
strain the technical competence of the judiciary in highly technical
areas where the agency is authorized to develop and retain expert
personnel. See id. at 260. Given these concerns, ``hard look'' review
of agency action should permit the reviewing court to rigorously review
the agency's analysis and rationale for its decision, but not
substitute its own judgment for the judgement of the agency where the
agency determination is reasonable or based upon agency expertise.
C. In Fresno Mobile Radio. Inc. v. F.C.C., 165 F.3d 965, 970 (D.C.
Cir. 1999), the D.C. Circuit rejected the Commission's conclusion that
incumbent SMR license-holders would be more likely to warehouse SMR
spectrum than EA license-holders. The Court called the Commission's
conclusion ``a foolish notion that should not be entertained by anyone
who has had even a single undergraduate course in economics.''
(1) Please explain why the D.C. Circuit was or was not correct when
it concluded that the Commission's disparate treatment of EA and
incumbent SMR licensees was based upon an economic analysis that
constituted ``a foolish notion that should not be entertained by anyone
who has had even a single undergraduate course in economics?''
Answer. In Fresno Mobile Radio, Inc. v. FCC, 165 F.3d 965 (D.C.
Cir. 1999), the court of appeals upheld the majority of the
Commission's rules relating to a new class of radio spectrum licenses
for bandwidth in the 800 MHz range. The one aspect of those rules that
the court invalidated involved the Commission's interim construction
requirements. Under those requirements, licensees that had recently
obtained licenses at auction (EA licensees) were allowed to provide
service within their geographic areas more gradually than were
incumbent SMR licensees that had received licenses under a different
set of rules not involving a competitive bidding process. The
Commission justified that distinction in treatment on two different
grounds, both of which were rejected by the court. Your question
relates to the second, alternative justification, which the Commission
addressed in one sentence of its order: ``Moreover, the competitive
bidding process provides incentives for EA licenses to build out
quickly, and thus reduces the likelihood that a longer construction
period would lead to spectrum warehousing.'' Amendment of Part 90 of
the Commission's Rules, Memorandum Opinion and Order on
Reconsideration, 12 F.C.C. Rcd9972, para. 81 (1997).
As I understand this language, the Commission reasoned that a
licensee that had recently secured the considerable financing necessary
to prevail at auction would feel more pressure to earn an immediate
return on its investment than would licensees that had never incurred
any similar expense in obtaining their spectrum. As the D.C. Circuit
explained, that reasoning, without more, is inconsistent with a basic
textbook axiom of economic behavior, under which ideally rational
actors ignore sunk costs when making business decisions. 165 F.3d at
969. The court suggested that the Commission's approach might have been
justifiable if lenders or others had imposed ``institutional
constraint[s]'' on the build-out choices of EA licensees, but, the
court observed, the Commission had made no such finding, and its
rationale thus lacked an empirical foundation. Id. On remand, the
Commission addressed the court's concerns by, among other things,
authorizing incumbent SMR licensees to choose a build-out regime
similar to the one recently adopted for EA licensees. See Amendment of
Part 90 of the Commission's Rules to Facilitate Future Development of
SMR Systems in the 800 MHz Frequency Band, FCC No. 99-399 (Dec. 23,
1999). I fully supported the decision to alter our rules rather than
look to bolster the decision with an empirical foundation.
D. If you disagree with the D.C. Circuit's analysis, please provide
citations to the briefs and the administrative record filed by the
Commission that show that your arguments were presented and explained
to private industry and the Court.
Answer. As explained above, I have accepted the D.C. Circuit's
analysis in the Fresno Mobile Radio decision.
Question 4. In your response to the initial question, you state
your goal of ``promulgat[ing] rules that provide incentive for the most
efficient resolution of sharing or relocation issues through the
operation of market forces.'' Many would suggest that market forces,
not regulation, provide the greatest incentives for efficient
resolution of most problems, and that regulation often impedes, rather
than helps, market forces achieve efficiency. Please give three
examples of Commission rules that, in your judgment, have facilitated
the operation of market forces. In each case, please explain what
specific market incentives the rule provided that the market did not,
what additional burdens or costs the rule imposed, and the specific
reasons why you believe that the rule was justified in light of these
costs.
Answer. In my response to the initial question, I acknowledged that
at times, the Commission will have to make difficult choices regarding
spectrum allocations, and then promulgate rules that provide incentive
for the most efficient resolution of sharing or relocation issues
through the operation of market forces. This acknowledgement arose
specifically because I believe that market forces, not regulation,
generally provide the greatest incentives for efficient resolution of
most problems, and that regulation often impedes, rather than helps,
market forces achieve efficiency.
Examples of Commission actions that have facilitated the operation
of market forces include:
(1) In WT Docket No. 95-157, the Commission adopted rules covering
the relocation of fixed microwave services from the 1850-1990 MHz
frequencies to provide for the establishment of services using emerging
technologies. These rules were part of the Commission's efforts to
allocate spectrum for use in the provision of, among other things, new
personal communications services (``PCS''). The Commission provided for
first, a voluntary relocation period, and then, subsequently, a
mandatory relocation period, to ensure that newly-licensed PCS
operators could obtain the use of the spectrum that they won at
auction. By providing for a separate voluntary relocation period
followed by a mandatory relocation period, the Commission provided
incentives for PCS operators and fixed microwave licensees to agree
upon a market-based price for relocation. The relocation requirement
for fixed microwave licensees was the ``burden or cost'' imposed by the
rules. The relocation was justified by the public interest in the
allocation for PCS services and the need to prevent interference
between PCS and microwave operations.
(2) Last fall, the Commission modified its rules requiring
commercial mobile radio service providers to establish and implement
plans to provide wireless emergency 911 (``E-911'') services. In that
action, the Commission adopted new rules that permit carriers to select
from two different technologies to provide wireless E-911 service--
``hand-set based'' solutions and ``network-based'' solutions. Although
slightly different timing and measurement requirements apply to each
technology, the rules were designed to achieve regulatory parity for
both technologies so that market forces would determine which
technology a carrier selects. The ``burden or cost'' will be the cost
to the carrier, and ultimately to the public, for electing an E-911
solution and implementing it within the time set forth in the FCC's
rules. The rules are justified by the public benefit derived by
expedited initiation of wireless E-911 service.
(3) As required by Congress, the Commission promulgated rules that
call for an auction of the spectrum in the 746-806 MHz band.
Specifically, in June 2000, the Commission will auction 30 MHz of
spectrum. The spectrum will be auctioned in two paired 5 and 10 MHz
blocks, with 6 regional licenses for each paired block. In adopting
these frequency blocks and geographic regions, the Commission declined
to allocate the spectrum in one nationwide 30 MHz block, and also
declined to break the spectrum up into smaller regional or frequency
blocks. Some parties advocated one nationwide 30 MHz license, to enable
them to provide a nationwide fixed broadband service. Some wireless
carriers planning to provide new ``third generation'' mobile services
argued that a nationwide allocation of 30 MHz would hinder their
ability to purchase the spectrum license for regional service. Some
sought smaller allocations in 50 or 176 geographic regions. So that
market forces--not government regulation--would determine the use of
this spectrum, the Commission divided the spectrum into 6 large
regional blocks of 10 or 20 MHz, and allowed the blocks to be
aggregated. Admittedly, there is a ``burden or cost'' to aggregate six
regions of 10 and 20 MHz blocks. However, the Commission's action was a
practical way to allow bidders with different business plans to acquire
the spectrum under a set of rules that did not favor one service over
another.
Question 5. You further state in your initial response that the
Commission must allocate ``suitable spectrum'' for the provision of new
and advanced wireless services. In light of the ever-increasing
scarcity of spectrum resources, how do you define ``suitable
spectrum?'' Do you account for future growth in making this
determination? If so, what time frame do you consider and what factors
do you use to analyze growth projections?
Answer. In answering the first set of questions, I stated that the
FCC must allocate ``suitable spectrum'' for the provision of new and
advanced wireless services. In using the term ``suitable spectrum,'' I
meant spectrum that has the appropriate propagation characteristics and
channel capacity to support advanced mobile, or fixed, wireless
services. For example, it is difficult to provide mobile terrestrial
services in bands well above 3GHz. It would be inappropriate to allow
high powered services on bands where there would be interference with
bands reserved for public safety users. Finally, the blocks should be
wide enough to accommodate anticipated services, and large enough for
both initial and future growth of the service.
When looking at potential allocations of spectrum, I do take into
account future growth in service. An appropriate time frame should
extend beyond a decade or more, although such projections are extremely
difficult to make reliably given the dramatic changes that can occur.
Generally, I consider projections submitted by the applicants, FCC
technical experts, and other commenting parties. Also, I must consider
the number of licenses to be awarded in the band.
In resolving difficult sharing issues, one must take into account,
not just the original service provider, but the aggregate impact on
existing and future services when multiple licensees are providing
service in the band.
Question 6. Please elaborate on the specific steps the Commission
takes in ``resolving difficult spectrum sharing issues.'' Does the
Commission conduct its own independent technical analysis? If not, what
steps does the Commission take to verify contradictory technical
analysis submitted to substantiate interference claims?
Answer. In cases where there is debate or conflict over spectrum
sharing or interference issues, the Commission uses its own engineering
experts, where feasible, to conduct an independent technical analysis.
Such assessment may include a review of the literature, a detailed
technical analysis of conflicting submissions by parties with divergent
views, laboratory testing in our own facilities, or occasionally, field
testing. Unfortunately, budgetary constraints at the FCC limit the
extent of the FCC field tests.
The Commission relies on the knowledge and experience of its
technical staff for analysis in resolving the contradictory technical
claims submitted to substantiate interference. Occasionally, I have
advocated joint testing, with FCC oversight, in cases where parties
make contradictory technical assertions of interference. Such joint
testing with Commission participation would reduce disputes based on
methodology of the testing, and would resolve interference claims more
quickly.
2. On international spectrum issues:
Initial question: Based on your experience in past World Administrative
Radio Conferences, what improvements would you make to the process by
which the U.S. plans for, and participates in, international spectrum
allocation meetings?
Question 7. In your answer to this initial question, you indicate
that the Commission needs more money in order to attract and retain
qualified technical capacity. You also indicate that the FCC needs more
money to send technical experts to the World Radiocommunication
Conference. What criteria do you propose should be used to determine
whether persons proposed for international travel are, in fact,
technical experts whose presence will benefit U.S. industry? And what
mechanism do you propose that Congress should use for holding the
Commission accountable for these decisions? Finally, in your view, to
what extent would this need for additional money be reduced if
international travel were limited to satellite coordinations and WRC-
related activities?
Answer. The private sector repeatedly has lauded the FCC members of
the WRC and bilateral telecommunications delegations for their
professionalism, expertise, and ability to work with industry as well
as our government colleagues and other administrations to resolve
difficult technical and policy issues. I have confidence in the ability
of our bureau chiefs to select those employees best able to fill the
staffing needs of a particular delegation. As a general matter, I would
expect those individuals assigned to represent the United States
government and the FCC at the WRC (and preparatory and regional
sessions leading up to the Conference) to have the professional
education, expertise and experience needed to analyze highly complex
technical issues under pressure. These individuals also should possess
a sound understanding of the practical or ``real-world'' consequences
of complex technical proposals. Ideally, they should have experience in
international negotiations on WRC issues and to have a reputation or
authority that will command respect from negotiators from other
administrations. Finally, it is desirable that such individuals possess
an ability to work well in a team during long periods of intense
negotiations.
I believe that the normal congressional oversight function is
adequate to hold the Commission accountable for its spending on
international travel. Members of Congress can ascertain the identity
and background of any Commission personnel participating in the WRC or
its preparatory process. The FCC should regularly brief Congress on the
progress being made on WRC. In addition, Congressional staff members
previously have attended such conferences and were able to assess
directly the performance of delegation members. The FCC should be held
accountable for its international travel expenditures, especially in
light of our budgetary constraints.
Finally, in stating that the United States government earmark
additional funds for participation in regional and bilateral meetings,
I meant to encompass all aspects of WRC preparation, not just the
regional and bilateral meetings. I have been told by industry
representatives that our presence (or absence) at such meetings makes a
difference. And of course, we must continue to fund satellite
coordination activities. I would not recommend limiting FCC
participation to international spectrum matters, however. Our
participation in bilateral meetings with our counterparts from other
countries has helped to open foreign markets to competition, lower
international accounting rates, eliminate time-consuming type-approval
processes for telecommunications equipment, and resolve other
telecommunications licensing issues. These negotiations and agreements
protect U.S. consumers, enhance competition domestically and globally,
as well as protect critical military, public safety systems, and other
services from interference.
Question 8. What do you believe are some of the issues that will
pose the greatest challenges to the national security interests of the
United States during WRC-2000?
Answer. I rely on the NTIA and their clients (i.e., the Department
of Defense and the National Security Agency) to alert us to the
critical issues implicating the national security of the United States
as we plan for and participate in the world radio conferences. This
year, I anticipate at least two issues at WRC-2000 of concern to DOD
and the NSA: First, several administrations may seek to establish a
mobile satellite service in frequency bands where the United States
government uses global position systems and technology. Second; one of
the frequency bands targeted by some administrations for third
generation mobile services includes 1755-1850 MHz--frequencies that
presently are allocated to the Department of Defense. Within the U.S.
government, there have been extensive discussions early on with the
Department of Defense so that the delegation would understand the
Department's
concerns.
Question 9. Over the past few years, the national security
community has expressed concern with the reallocation of some spectrum
from the Department of Defense to the commercial sector, and over
reports of interference between systems of the Department of Defense
and the private sector. Do you believe that the current process is
adequate to ensure a fair allocation of spectrum to meet the needs of
the government, and the Department of Defense in particular, as well as
the needs of the commercial sector? What, if any changes would you
recommend?
Answer. Under the current process, Congress has enacted legislation
whenever
it has determined that the public would best be served by reallocating
spectrum from government use to the commercial sector. Given the
current scarcity of unencumbered spectrum, the private sector
understandably desires even greater access to spectrum reserved for
federal government use and argues that government should be required to
be more spectrally efficient. At the same time, the Department of
Defense argues that its retention and use of spectrum is essential to
protect the national security of the United States. I am encouraged
that NTIA has initiated a dialogue with industry to explore ways to
maximize the efficiency with which U.S. government uses spectrum.
These dialogues may also identify chunks of spectrum that can be
used by industry without significant adverse effect on federal
government operations. I have urged such exchanges in the past, and
commend NTIA for this initiative.
Additionally, I recognize that the Commission must give serious
consideration at an early stage to NTIA and DOD concerns regarding any
proposed FCC spectrum allocations or rules that might adversely impact
U.S. government operations. I support more regular exchanges between
the FCC and NTIA/DOD on spectrum matters. I am pleased that the FCC's
Spectrum Policy Executive Committee has begun to participate in such
exchanges. We regularly try to obtain NTIA comments on proposals before
releasing a notice of proposed rulemaking on matters that affect
government systems. While the Commission must follow the Administrative
Procedure Act in finalizing its rules, NTIA participation at an early
stage ultimately will expedite resolution of issues.
Question 10. Do you support the development of better receiver
standards to ensure that systems operating in adjacent frequencies do
not receive interference from one another?
Answer. I support efforts by industry to develop receivers
appropriate to the circumstances of the particular radio service in
conjunction with which they are used. In some cases, voluntary industry
standards may be a useful means of reducing the susceptibility of
receivers to interference from undesired signals. While the Commission
has authority to establish interference susceptibility standards for
home electronic equipment, I am not aware that the Commission has ever
chosen to use this authority except in conjunction with implementation
of the All-Channel Receiver Act. Despite the FCC's historic restraint
in adopting receiver standards, given the increased demand for
spectrum, I am willing to explore all options for improving spectrum
efficiency, including, as a last resort, proceedings to establish
better receiver standards.
Question 11. Can we expect the U.S. to harmonize its spectrum
allocations with the rest of the world in order to promote advanced
wireless services such as 3G? Isn't such harmonization necessary for
U.S. manufacturers and service providers to achieve parity with foreign
competitors?
Answer. While it might be desirable for the United States and other
administrations to harmonize spectrum allocations, particularly with
respect to advanced wireless services such as 3G, such a result will be
extremely difficult to accomplish. First, it is unlikely that the rest
of the world will be able to agree on a frequency band or bands that
will harmonize globally the spectrum in which 3G services will be
provided. Europe, Canada, Asia and the South and Latin American
countries have not suggested any consistent approach to harmonization
of spectrum for 3G. Moreover, the bands that have emerged as the most
popular proposals in certain regions of the world are, in the United
States, either allocated to the Department of Defense or heavily
encumbered by licensees of Instructional Fixed Television Service or
Multichannel Multipoint Distribution Services.
U.S. and foreign manufacturers and 3G service providers would
indeed benefit from a globally harmonized 3G allocation. This is one
reason why products utilizing software defined radio technology which
permit operation in a much wider range of frequencies hold such promise
to reduce the burdens of disparate allocations.
Question 12. Please explain your views on the appropriate
government role on technology standards. Wouldn't the adoption of an
FCC standard for advanced wireless technologies, such as 3G, improve
U.S. competitiveness in the worldwide market?
Answer. As a general matter, I support the operation of market
forces and voluntary industry initiatives to develop and establish
technology standards. Such flexibility has facilitated technological
innovation, as technologies compete in the marketplace. There are
tradeoffs, however. A global standard enables manufacturers to amortize
costs across a larger number of units, lowering the cost to consumers.
Additionally, common equipment standards may increase service
competition because the cost to the consumer of switching providers is
less if the consumer does not have to buy a new handset. Moreover,
where there is a common standard and common spectrum allocation,
consumers are not inconvenienced when traveling abroad.
Because the U.S. has pursued a course of ``flexibility'' and Europe
has maintained an industrial policy of establishing technical
standards, many believe that the U.S. has fallen behind its trading
partners in the provision of mobile wireless services. This divergence
of approaches has been the source of much international negotiation
over the past two years.
While in the short term, regulatory flexibility may permit the
development of divergent standards that delay ubiquity or
interoperability of service, in the long term, consumers will benefit
from continued improvements in technology. The key may be to require
interoperability of systems and where feasible, to look for global
spectrum to allocate. Longer term, technologies such as software
defined radio may eventually obviate the need for uniform global
spectrum allocations or standards. And the U.S. should work with
industry and our trading partners to identify early on common spectrum
for advanced services.
Notwithstanding my general preference for flexible standards and
allocations, I will not hesitate to press industry to adopt open
standards. I also will not hesitate to ratify an industry-developed
standard (such as digital television), if I am convinced such action is
essential for consumers to reap the benefits of a new service.
3. On FCC Merger Reviews:
Initial question: I realize that you support continuing the FCC's
authority to review telecom mergers. Based on your five years'
experience, is there any aspect of the current process that needs
improvement, and, if so, what specific changes would you make?
Question 13. You have indicated that when the Commission conducts
merger review, it should impose only ``voluntary conditions'' that are
``narrowly tailored and designed to address identified merger-specific
ills'' and that ``refrain from imposing conditions that are more
appropriate for a rulemaking of general applicability.'' Do you believe
that ``voluntary conditions'' accepted by companies seeking to
consummate a merger are ``final agency action'' reviewable under the
APA, and if not, what language would you propose adding to the APA or
the Communications Acts to ensure that even ``voluntary'' merger
conditions can be reviewed by courts to ensure that they meet your
proposed requirements for merger conditions?
Answer. Section 402(b) of the Communications Act of 1934, as
amended, permits applicants to appeal from decisions and orders of the
Commission if their application ``is denied by the Commission.'' 47
U.S.C. Sec. 402(b)(l-2). Under Section 402(b)(6) of the Act, appeals
also are available to ``any other person who is aggrieved or whose
interests are adversely affected by any order of the Commission
granting or denying any application.'' Section 402(b) generally has
been construed to prevent an applicant from seeking review of a
decision granting its application, even where conditions have been
imposed on the grant, an interpretation that is consistent with the
Commission's rules.
If Congress wants to permit judicial review of conditions placed on
a grant, it could amend Section 402(b)(6) to authorize appeals by ``any
person, including an applicant, who is aggrieved or whose interests are
adversely affected by any order of the Commission granting or denying
any application.'' I would agree with the notion that parties should be
able to seek review of agency actions that adversely affect their
interests, including conditions placed on the grants of their
authorizations. On the other hand, if I were to support such review, it
would be limited by two concerns. First, applicants generally are
required to exhaust their administrative remedies before the agency
prior to seeking review in court. If an applicant does not challenge
the imposition of a condition before the agency, both the reviewing
court and the agency are placed in a difficult, if not untenable,
position in considering the appeal. The agency, as a deliberative body,
will not have had the opportunity to express its rationale for the
imposition of the condition. Second, court actions eliminating or
modifying conditions imposed on the grant of an application may alter
the public interest analysis underlying the grant, and make decisions
on remand from such reversal problematic, especially where, as usual,
the transaction already has been consummated.
These concerns only strengthen the belief I expressed in my initial
answer that the process is best served where, conditions are ``narrowly
tailored and designed to address identified merger-specific ills.'' I
note that in my initial answer, in stating this belief, I did not
differentiate between ``voluntary conditions'' and ``conditions.''
Question 14. Please explain where, in the continuum between the
following opposite views, your own views are:
(A) In a free market, regulated companies have a presumptive right
to merge with other companies. Government bears the burden of showing
how, and why, certain aspects of a proposed merger would harm the
public interest, and any remedies or conditions imposed by government
should be narrowly tailored to address the demonstrable harms that
would otherwise occur by virtue of the merger's unconditioned
consummation.
(B) In the interests of consumers, regulated companies have no
presumptive right to merge. The companies, not the government, bear the
burden of showing how, and why, a proposed merger would further the
overall public interest. Government is free to impose conditions on a
merger that in its judgment would advance the public interest,
regardless of how closely related the conditions are to the prevention
of demonstrable harm that would not occur but for the merger's
unconditioned consummation.
Answer. My views come much closer to the first of these two
statements than to the second. I differ only as to the burden of proof,
which, as with other applications, lies with the applicant. But in the
great majority of mergers reviewed by the Commission under Sections 214
and 310 of the Communications Act, this burden is easily and routinely
met.
Question 15. Please show how the FCC's recent SBC/Ameritech, Bell
Atlantic/NYNEX, AT&T/TCI and US WEST/Qwest merger decisions exemplify
your views as you expressed them in your answer to the above question.
Answer. These mergers are several of the largest and most complex
that the Commission has addressed during the past few years. Each of
them has engendered significant opposition and has posed significant
public policy considerations.
First, in evaluating these applications, we have sought to engage
in a transparent process, consistently trying to improve it in a manner
that encourages public comment. Each of these applications was put out
for public comment, and, in certain cases, public forums were held at
which time the public was encouraged to air its views. In the case of
SBC/Ameritech, proposed conditions were also placed on the public
record for comment. Nevertheless, as I stated in my responses to the
original questions, this is an area in which the Commission can and
should strive for improvement. We must engage in an open dialogue on
the record with all stakeholders. In this way, we can ensure a decision
that is widely accepted as fair.
Second, although the review of some of these transactions was
completed in a reasonable period of time (the AT&T/TCI review, for
example, was completed in less than 180 days), I am very concerned that
the Commission did not move with sufficient speed to render a decision
in all of these transactions. As I have stated publicly and repeatedly,
the Commission should resolve such applications far more rapidly than
it has in the past.
Third, in the vast majority of transactions the Commission reviews,
the Commission has determined that the transactions would serve the
public interest without conditions. At times, and in these
transactions, the Commission has expressly declined to impose
conditions that were requested by opponents, but that were not
necessary to address merger-specific harms. For example, in AT&T/TCI,
we expressly declined to impose ``open access'' requirements. In US
WEST/Qwest, we expressly declined to require market-opening
improvements or the creation of a separate affiliate.
At other times, the Commission has adopted conditions that ensure
compliance with the statutes and the Commission's rules. For example,
the Commission determined that the US WEST/Qwest merger would serve the
public interest provided that the applicants comply with Section 271 by
carrying out their proposal to divest their in-region interLATA
customers.
In still other cases, the Commission has adopted conditions or
accepted proposals designed to ensure that the public interest benefits
of a transaction outweigh its harms. Some argue that certain of these
conditions were not tailored in a sufficiently narrow manner to address
only the harms caused by the merger. In these complex cases, I
supported the acceptance of these conditions because I believed, on
balance, that the transaction, as presented to the Commission with
these conditions, served the public interest. Nevertheless, as I have
indicated, the Commission should endeavor to ensure that any conditions
it imposes are designed to address merger-specific ills.
Question 16. Please indicate which paragraphs of the Commission's
Bell Atlantic/NYNEX order do not duplicate the type of antitrust and
competition analysis customarily performed by the Department of Justice
in DOJ's merger review process.
Answer. In the Bell Atlantic/NYNEX order, the Commission undertook
an analysis that differed in significant ways from the analysis
performed by the Department of Justice (DOJ). A full comparison with
the DOJ analysis is not possible, because unlike the FCC, the DOJ did
not issue an extensive document setting forth the analysis. The
Commission, unlike DOJ, has the obligation to enforce specific
requirements and provisions of the Communications Act that are outside
of the DOJ's merger review process. To carry out its responsibility,
the Commission examined whether the transaction would further the aims
of the Communications Act, and whether the public interest benefits of
the transaction outweigh the harms. To demonstrate the differences in
the analysis, an illustrative, although not exhaustive, list of
paragraphs from the Bell Atlantic/NYNEX order follows the points below.
Although the DOJ and the Commission used a similar analysis to
assess the relevant product and geographic markets, the analyses were
not duplicative because the facts assessed were used to evaluate
different statutory objectives. The DOJ, under the primary federal
antitrust laws, examined whether the proposed merger would
significantly lessen competition. The Commission examined whether, on
balance, the transaction would promote the competition and deregulation
that Congress sought to foster in the Telecommunications Act of 1996
(``1996 Act''). Recognizing that the relevant markets were undergoing a
rapid and dynamic transition from monopoly to competition, the
Commission assessed the impact on competition both during the
implementation of the 1996 Act and as implementation of the statute
alters market structure in the future. See, e.g., para.para. 7, 10, 37-
48, 66, 96-100. The Commission also took into account declining entry
barriers by, among other things, identifying as market participants not
only firms that are currently in the market, but also those firms that
were previously precluded from the market by barriers that the 1996 Act
had sought to eliminate. See, e.g., para.para. 7, 58, 60, 80-94, 126-
127.
Unlike the DOJ, the Commission further examined whether
consolidation within the industry would substantially frustrate or
impair the Commission's implementation or enforcement of the
Communications Act. For example, the Commission examined the ability of
the Commission to use benchmarks to detect discrimination and monitor
compliance with the statute and the Commission's rules. See, e.g.,
para.para. 16, 147-152.
In addition, the Commission examined other benefits and harms of
the merger, including the effects of the merger on the incentives for
implementation of the market opening provisions of the 1996 Act. The
Commission also examined whether the transaction would affect the
quality of telecommunications services provided to consumers or would
result in the provision of enhanced or new services to consumers. See,
e.g., para.para. 153-176.
4. Newpaper and Mass Media Ownership Restrictions:
Initial question: Would you agree that radio and TV stations, cable TV
channels, newspapers and the Internet are among the many competing
sources of news and information available to consumers today?
Question 17. If so, why does the Commission count only radio and TV
stations for purposes of applying its new local broadcast ownership
rules?
Answer. With regard to local radio station ownership, Section
202(b)(1) of the Telecommunications Act of 1996 states unambiguously
that the Commission ``shall'' revise its local radio ownership rules to
correspond to the provisions of that Section, which states that a party
may own, operate or control ``up to'' stated numbers of AM and/or FM
stations, depending on the total number of stations in the local
market. Although subsection (b)(2) states that the Commission has the
discretion to allow parties to exceed the numerical limitations set
forth in subsection (b)(1), the statute fails in any way to suggest
that the Commission has the discretion to limit the number of local
stations the statute would otherwise allow a party to acquire. The
legislative history is consistent with this reading of the statute:
``[Section 202(b)(1)] directs the Commission to further modify its
rules with respect to the number of radio stations a party may own,
operate, or control in a local market. Subsection (b)(2) provides an
exception to the local market limits, where the acquisition or interest
in a radio station will result in an increase in the number of radio
stations'' (emphasis added).
Notwithstanding the evidently clear wording and intent of the law,
the Commission is purported to be considering adopting more stringent
limitations on local radio ownership, consisting of ``guidelines'' on
the percentage of concentration in the local radio advertising revenues
that a given local radio station consolidation would produce.
Question 18. How do you interpret the cited provisions of the 1996
Telecom Act and accompanying legislative history? Do you read them to
empower the Commission to reduce the number of stations the statute
otherwise permits one party to acquire, or do you read them to empower
a party to acquire any number and complement of stations ``up to'' the
limits set by the statute without other FCC regulatory constraint?
Answer. I do not believe that, under Section 202(b)(1) or (2), the
Commission has discretion to reduce the numerical ownership limits
established by the statute. Shortly after passage of the
Telecommunications Act of 1996, the Commission amended its rules to
account for the new statutory numerical limits.
Section 202(b), however, did not remove the Commission's
longstanding obligation to consider the public interest, including
market concentration, in any transfer of control or assignment
application proceeding. Instead, Section 310(d) of the Communications
Act of 1934 requires the Commission to review all assignment and
transfer applications for broadcast licenses and to grant them only if
so doing would serve the public interest, convenience and necessity.
The Commission has long considered the effect of a proposed
transaction on competition in relevant broadcast markets to be a
critical component of this public interest review, and the courts have
long agreed with this approach. As the Supreme Court noted in FCC v.
RCA Communications, Inc., ``there can be no doubt that competition is a
relevant factor in weighing the public interest.'' Had Congress
intended to exclude a public interest analysis in all radio license
transfers and assignments, it would have so stated. A radio merger that
results in over 95% of a relevant market being controlled by the top
two radio licensees, for example, poses a public interest concern, and
merits Commission scrutiny even in cases where the numerical test is
met. Notwithstanding the residual ``public interest'' analysis that is
applied in assessing license assignment and transfer applications, the
Commission's record is clear in effectuating the intent of Congress to
allow significant radio market concentration.
Question 19. If you believe the Commission retains discretion to
reduce the number of stations that may be acquired in a local market,
do you believe that the degree of resulting concentration in the radio
advertising market would be an appropriate benchmark? If so, please
provide an analysis of why, including (a) an explanation of the
correlation between the interests of the listening audience and the
interests of local advertisers; (b) your analysis of the Commission's
statutory authority, and its institutional expertise, in regulating
commercial advertising.
Answer. Advertising revenue share may be an appropriate proxy for
evaluating market concentration under the public interest test. The
Commission's concern in avoiding the aggregation of market power by
broadcast owners is directed not so much at protecting local
advertisers in the first instance as at preventing adverse effects on
listeners. If, for example, a single competitor acquires sufficient
market power through consolidation, it may be able to exercise that
power to deter entry, disadvantage rivals, or cause otherwise efficient
rivals to exit from the market and thus deprive the consumer of
independent voices. Moreover, vigorous competition among market
stations compels competitors to produce a better product--better
programming--which directly benefits the listening public.
This use of advertising market share as one of several indicators
of market concentration is not ``regulating commercial advertising.''
The Commission does not regulate the price, quantity, or quality of
radio advertising aired by commercial radio stations. I do not believe
that the Commission has either the statutory authority or the
institutional expertise for such regulation.
Question 20. Please state whether the Commission is, or is not,
considering the implementation of any such ``guidelines.'' If so,
please state (1) when their completion is anticipated; (2) whether to
your knowledge any proposed radio station acquisitions otherwise
consistent with Section 202(b)(1) are being held in abeyance pending
their implementation; and (3) whether to your knowledge any other
federal agency has jurisdiction to oversee issues involving competition
in local advertising markets, including radio advertising.
Answer. (1) I do not know whether Chairman Kennard intends to
address the radio merger review process through merger guidelines or a
Notice of Proposed Rulemaking. As I do not control the agency's agenda,
I cannot comment on if or when such action would be taken. I do believe
that broadcasters and the public are entitled to voice their views on
the factors the Commission should consider in determining whether an
acquisition is in the public interest. When broadcasters were limited
to only two AM and two FM stations in a market, there was little need
to be concerned with abuse of market power. A rulemaking to establish
guidelines (or rules) would provide the industry and other members of
the public with an opportunity to examine the rapidly evolving
marketplace and determine at what point, if at all, consolidation harms
the public interest. I would prefer a public rulemaking.
(2) I do not support holding applications for radio station
acquisitions in abeyance pending implementation of any guidelines or a
rulemaking. The Commission should render its decisions quickly after an
opportunity for notice and public comment. Extensive delays in ruling
on applications imposes hardship on applicants. To my knowledge, action
on pending radio merger transactions is not being withheld pending
consideration of any possible guidelines.
(3) Other federal agencies, such as DOJ and FTC, have authority
under the antitrust statutes to examine competition in local
advertising markets. Their standard of review of competition issues in
radio advertising markets differs from the Commission's public interest
standard and the exercise of their jurisdiction to review radio merger
cases is, unlike the Commission's, subject to the Department's
discretion. As I have said, however, there should be improved
coordination between the FCC and other federal agencies in the merger
review process.
Initial question: When the local cable TV operator can offer (and even
own) dozens of different channels of cable programming, why does the
Commission prohibit a local newspaper from owning even one local TV
station?
Question 21. In your response to this question, you state that,
``television stations and newspapers remain the most influential
sources of local news and information for the public,'' and that
``[G]iven the continued reliance by the public on television and radio
for most news and information, it remains in the public interest to
broadly disseminate broadcast licenses,'' I presume your view is that
broadcast television will remain an important source of news and
information for the average consumer for the foreseeable future.
Answer. I do believe that broadcast television will remain an
important source of news and information for the average consumer for
the foreseeable future.
Question 22. Please indicate what evidence there is that a
newspaper's ownership of a television station in any of the nation's
fifty largest TV markets would reduce the diversity of voices in a
market more sharply than a television station's ownership of a second
television station in that market.
Answer. The Commission's adoption many years ago of the rule
barring cross-ownership of a television station and a daily newspaper
published within the service area of that television station was based
on the record in that proceeding and its predictive judgment that such
a combination would unduly harm diversity. Such predictive judgment
historically has been founded on the unique position daily newspapers
hold in local markets, as evidenced by, among other things, their
limited number and the substantial share of local advertising revenues
they typically garner. As I have stated, however, I believe it is
timely for us to revisit our newspaper/broadcast cross-ownership rules
as part of our biennial review. We should ascertain whether there are
any material differences between newspaper/television station
combinations and local television duopolies. We should also examine
whether the size of market has an impact on the number of outlets for
news and information.
Question 23. Given the fact that newspapers typically have more
staff and resources than broadcast stations, and can therefore cover
local issues more thoroughly, permitting common ownership of local
newspapers and TV stations would allow the co-owned TV station to cover
more events and issues and to cover them more thoroughly. In light of
your statement that the public relies heavily on television for news
and information, why wouldn't it benefit the public to allow common
ownership of newspapers and television stations in the same market?
Answer. In some markets, both a broadcast station and a newspaper
independently have staff and resources that will cover local issues
thoroughly. These two independent sources of local news may well be the
dominant sources of local news and information. In this instance, the
public will not benefit if the competing viewpoints that might be
fostered from separate ownership and control of these dominant sources
of local news and information are brought under common control. Such a
combination could be especially troubling if those seeking public
office are precluded from coverage on the two most prevalent sources of
news and information in a community because of common ownership.
Nevertheless, I have recognized that the media landscape has
changed significantly in the years following the time that the
Commission adopted its prohibition on newspaper/broadcast cross-
ownership. With the advent of more broadcast stations, the growth in
cable news and information channels, and the availability of news and
information on the Internet and other outlets, newspapers and
television stations may not be as dominant a source of local news and
information as they once were. Moreover, the common ownership of local
newspapers and television stations could enable a jointly owned
television station to initiate greater and deeper coverage of news and
issues than it would otherwise be able to do.
The Commission will examine all of its broadcast rules in its
Biennial Review, and I plan to take a fresh look at both the radio and
television cross-ownership rules in the course of that review.
Question 24. If the average consumer continues to depend on local
television stations for news and information, why has the Commission
not yet resolved the issue of local television broadcasters' digital
must-carry rights?
Answer. I do not control the Commission agenda. There is great
uncertainty in the marketplace, and broadcasters and cable operators
alike need to know what rules, if any, will be imposed. I have
expressed to the Chairman my desire to resolve the digital must carry
item as soon as possible. The staff has had sufficient time to consider
parties' arguments and prepare recommendations to the Commission.
Question 25. If the Commission were to decline to extend digital
must-carry rights to all local television stations, how would the
Commission justify requiring all broadcasters to provide a minimum of
three hours per week of educational children's programming?
Answer. In the case of analog television broadcasting, where both
must-carry and children's television rules have been prescribed,
neither is dependent upon the other. There is no linkage between the
two. Must-carry is an outgrowth of the Cable Act of 1992. The
children's television rules (which do not establish a hard-and-fast
three-hour-per-week requirement but rather allow licensees a measure of
flexibility) were prescribed to implement the Children's Television Act
of 1990 (``CTA''). In exchange for a free television broadcast license,
broadcasters are expected to serve their communities. Congress in 1990
determined that children constitute a significant segment of the
underserved community and that they are entitled to educational
programming. Our rules implementing the CTA were designed to strike a
fair balance.
The Commission has made no determinations regarding the
applicability of must-carry rights to digital television signals or
regarding the children's television programming requirements applicable
to digital television broadcasting. The former is the subject of a
pending notice of proposed rulemaking, and the latter is encompassed
within a pending notice of inquiry. I will want to acquaint myself with
the comments of interested parties, the recommendations of FCC staff,
and the views of my colleagues before making any decision on either
subject.
Initial question: When the Internet enables any user to interact with a
virtually endless variety of different sources of information and
viewpoints, how does the Commission justify retaining any broadcast
ownership restrictions based on the need to assure ``viewpoint
diversity''?
Question 26. In responding to this question, your support for the
current ownership rules appears to rely, in part, on the fact that
``not all of the population has access to the Internet at home.'' In
your view, at what point do you consider an alternative source of news
and information to be ``available'' for the purpose of reducing or
eliminating scarcity-based broadcast regulation?
Answer. I stated in my answer to your initial question that, ``[a]s
we examine our ownership rules [in the Biennial Review], I look forward
to reviewing any studies that may be submitted regarding how the
Internet is changing the public's consumption of information and
whether [the Internet] is reducing the preeminent role historically
played by the broadcast industry.'' If this appeared to be unqualified
``support for current ownership rules,'' that certainly was not my
intent.
Congress and the Supreme Court have treated broadcast media as
uniquely able to reach a mass audience. For example, the enactment of
the 1992 Cable Act and the Supreme Court's decision on the FCC's must
carry rules in Turner Broadcasting System, Inc. v. FCC both were
premised on findings that television broadcasting is uniquely able to
reach a mass audience. If the Internet or other alternative sources of
local news and information were able to reach the same mass audience to
the same degree, the outcome in Turner may have been different.
Current Internet availability may justify reducing broadcast
regulation to some extent, but the degree of such deregulation would
depend entirely on evidence of the public's reliance on the Internet
for local news and information. That is why I look forward to reviewing
the studies to which I referred in my original answer, as we consider
the issues raised in the Biennial Review.
Question 27. Should universal service subsidies be expanded to fund
the deployment of data networks and computers to every home?
Answer. The Federal-State Joint Board on Universal Service is
undertaking a proceeding this year to reexamine the definition of
universal service. Section 254 makes clear that the definition of
universal service is an evolving one that must take into account
technological advances.
Through this proceeding, we will determine the extent to which
specific services, including broadband services that would allow high-
speed transmission of data and other information, meet the criteria
that Congress established in section 254.
The Commission, however, consistent with Congress' directive in
section 254, has not contemplated extending universal service support
to provide computers to every home. Indeed, in implementing the schools
and libraries support mechanism, the Commission, based on the Joint
Board's recommendations, expressly declined to provide support for
personal computers in the classroom.
5. On deregulation and forbearance:
Initial question: You have said that the FCC must know ``not just when
to regulate, but when to deregulate.'' Section 10 of the 1996 Telecom
Act states that the FCC must abstain from regulation if it determines
that (1) enforcement is not necessary to ensure that charges and
practices are just and reasonable; (2) enforcement is not necessary for
protection of consumers; and (3) forbearance is consistent with the
public interest.
What competitive indicators do you look for, and what type of
record showing do you require, in evaluating forbearance requests?
Question 28. In your response, you cite the fact that the
Commission had ``used our forbearance authority . . . to reduce burdens
on carriers.'' Can you explain why it took the Commission fifteen
months to issue a decision on the forbearance petition filed by ITTA
and then another six weeks to issue the text of the order? Please
explain what you will do to assure that the goals of fostering
competition in a dynamic marketplace are not frustrated by inexcusable
Commission delay in issuing decisions on forbearance petitions in the
future.
Answer. I share your concern that, in certain cases, the Commission
has not moved with sufficient speed to render a decision on forbearance
petitions. I understand that delay creates uncertainty and unnecessary
costs. Although I do not determine when orders addressing forbearance
petitions are provided to the Commissioners, I would expect that the
Commissioners would receive such orders as quickly as possible after
the record closes. I have expressed my view that the Commissioners
should receive draft orders in sufficient time so that the vast
majority of petitions are acted on and issued within the twelve-month
period provided in the statute. The statutory three-month extension
should only be used in extraordinary circumstances. I currently have
designated someone in my office to be primarily responsible for
forbearance petitions, including tracking the status of any pending
requests for forbearance.
Question 29. Please explain why you believe that the costs of
requiring small and midsize telephone companies to comply with
structural separations requirements outweighs the benefit of enhancing
their ability to more efficiently optimize their networks and service
offerings.
Answer. In response to a forbearance petition filed by the
Independent Telephone and Telecommunications Alliance, the Commission
took significant steps to reduce burdens on small and mid-sized
carriers. One request that the Commission did not grant, however, was
forbearance from the requirements that incumbent local exchange
carriers must offer in-region long-distance and commercial mobile radio
services (``CMRS'') through separate affiliates. These requirements are
intended to prevent carriers with market power from misallocating costs
and to facilitate detection of discrimination against unaffiliated
long-distance and CMRS providers.
These separation rules, however, were designed for markets that
lack local competition. As competition develops further in the local
exchange market, these rules should no longer be necessary. As I
indicated when the Commission decided this issue, I look forward to
working with small and mid-sized carriers to develop a record that
demonstrates that the statutory forbearance criteria have been met.
Moreover, I do not believe that the burden of proof lies exclusively on
the shoulders of forbearance proponents. The Commission needs to be
comprehensive and aggressive in its forbearance analysis so that we can
eliminate rules that are no longer necessary and that detract from
competition and innovation.
Question 30. Manufacturers now must wait several months for FCC
approval to market new equipment designs. What steps are being taken to
improve the FCC processes so that domestic manufacturers are not
subjected to unnecessary delays? Do competitive forces exist that may
obviate the need for such rigorous FCC review?
Answer. The Commission has recently taken several actions to
streamline its equipment authorization requirements. Many types of
equipment that formerly required FCC approval can now be self-
authorized by the manufacturer. Certain equipment that poses a high
risk of interference or noncompliance currently requires certification
by the Commission. Moreover, the Commission recently has reduced the
speed-of-service for processing applications for certification to 36
days through implementation of electronic filing and other measures. In
the near future the Commission plans to designate private sector
Telecommunications Certification Bodies (TCBs) that will be empowered
to certify equipment instead of the Commission. This should make the
certification process more convenient and less time consuming for
manufacturers. The Commission is also in the process of implementing
Mutual Recognition Agreements with Europe and Asia that will allow TCBs
from the United States to certify telecommunications equipment for
direct export to foreign markets. The Commission also plans to initiate
a proceeding to streamline its Part 68 requirements for equipment that
connects to the public switched telephone network by relying
increasingly on the industry to develop standards and authorize
equipment.
6. On digital TV:
Initial question: Recently the cable and consumer electronics
industries came to an agreement on standards for cable-ready digital
television sets. When can we expect to see similar progress between
copyright holders and equipment manufacturers? What is the Commission's
role in such negotiations?
Question 31. What role do you expect the FCC to play in the
voluntary negotiations between broadcast licensees operating on
channels 52-69 and new commercial users that purchased their licenses
for use of that spectrum at auction? What is the implication of these
private negotiations on public safety use of the 700 MHz band
allocation?
Answer. The Commission has adopted rules that will govern the
purchase of licenses for frequencies between 746-806 MHz, covering the
channels 60-69 on which some broadcasters currently operate. A number
of parties have filed petitions for reconsideration in the Channel 60-
69 proceeding. One petitioner has requested that the Commission adopt
rules that will facilitate voluntary negotiations between new entrants
and incumbent broadcasters that could lead to a more rapid transition
to digital television as well as a more rapid use of the spectrum by
new entrants for new digital services. I expect that any rules the
Commission adopts will reflect the public interest in permitting
voluntary relocation, the more rapid transition to digital television,
and the more expeditious provision of new services in the band to the
public. These concepts are still in formation, and we have not yet
heard from the public. In reviewing proposed rules, I would expect the
Commission to evaluate whether Commission action approving a request to
implement the result of voluntary negotiations will violate its
statutory authority or result in a loss of service to the public.
Private negotiations that result in a more rapid transition to
digital television, hastening broadcast stations move to their digital
channel assignments, will help public safety organizations to use this
band more expeditiously. First, because of adjacent channel
interference issues, new commercial licensees will want to clear the
channels adjacent to their frequencies in order to operate without
interference. I therefore expect that new commercial licensees will
want to negotiate for a faster transition for broadcasters currently on
television channels designated for use by public safety. Second, for
the same adjacent channel interference reason, public safety users will
benefit when a commercial operator negotiates with a broadcaster to
move to its operation to a channel outside of the 746-806 MHz band.