APPENDIX A

NTIA COMMENTS ON MAY 5, 1999 DISCUSSION DRAFT

"NTIA REAUTHORIZATION ACT OF 1999"

The Administration offers the following comments on the Discussion Draft "NTIA Reauthorization Act of 1999" (dated May 5, 1999):

The funding level contained in the Discussion Draft falls short of the President's request for fiscal year 2000 and does not reflect the fiscal year 2000 budget priorities for NTIA. The President's fiscal year 2000 budget provides a funding level of an estimated $17.2 million for salaries and expenses. The President's budget request acknowledges the increasing demands on NTIA's resources and personnel as a result of the rapid growth of the telecommunications and information technology sectors of the economy. The President's request also includes additional funding to implement World Trade Organization requirements; enhance Federal radio spectrum management and efficiency; undertake a new broadband initiative for the telecommunications research facility at Boulder, Colorado; and implement Presidential Decision Directive-63 on Critical Infrastructure Protection. The Administration notes that Congress has directed NTIA to conduct 5 or more studies and staff a new Commission within the next year. Moreover, pending legislation would direct NTIA to conduct 3 or more additional studies.

The Discussion Draft does not include funds for the Telecommunications and Information Infrastructure Assistance Program (TIIAP). TIIAP provides matching grants on a competitive basis to community-based, non-profit and other public organizations, to demonstrate and promote the practical applications of new telecommunications and information technologies that improve the quality of, and the public's access to education, health care, public safety and other community-based services. In the five years of the program, NTIA has awarded 378 grants totaling $118 million, matched by an additional $180 million from the grantees and their private sector and State and local government partners. NTIA grant recipients have been recognized for their excellence on a national and international level by the Global Bangemann Challenge, the National Rural Health Association, the National Association of Development Organizations, the Medical Library Association, the National Association of Counties, and the NII/GII Awards. The President's fiscal year 2000 budget requests $20 million for this program.

Although the Public Telecommunications Facilities Program (PTFP) has not traditionally been authorized through NTIA's authorization legislation, please note that the President's fiscal year 2000 budget also requests $35 million for this program. PTFP provides matching grants on a competitive basis to community based public telecommunications entities to plan and construct facilities that provide educational and cultural service to the public. Additional funding has been requested for fiscal year 2000 to assist public broadcasters with an orderly transition to digital broadcasting within the Congressionally mandated deadline for the transition.

The Discussion Draft would also require Federal agencies to reimburse NTIA for all of the costs associated with the agency's spectrum management function. Since fiscal year 1997, the Federal agencies have been reimbursing NTIA for a portion of the costs associated with these functions. The current reimbursement rate for fiscal year 1999 and the proposed rate in the President's fiscal year 2000 budget request is 80 percent. The Administration believes the 80 percent reimbursement/20 percent appropriated funds strikes the correct balance for the funding of its spectrum management functions for the following reasons. As the President's principal adviser on telecommunications, NTIA performs certain spectrum management functions on behalf of the well-being of the nation rather than directly related to spectrum management performed on behalf of the Federal agencies. Moreover, the 20 percent appropriated funds allows NTIA to retain its independence, objectivity and flexibility to perform spectrum management functions that might not be within the narrow interests of the Federal agencies, but are necessary in the national interest, e.g., spectrum efficiency. These appropriated funds also provide bridge funding for spectrum management activities during the first quarter of the year as agency payments are received.

The Discussion Draft would also privatize NTIA's telecommunications research facility in Boulder, Colorado. Prior reviews of NTIA's Institute for Telecommunication Science (ITS) to determine its value to the nation have all reached the conclusion that there is a compelling need for a centralized, cost-effective, unbiased Federal telecommunications presence that serves the public interest and performs unique governmental engineering research. Further, the Administration believes that privatization of ITS would be detrimental to the national interest for the following reasons.

First, privatization of ITS through the sale of the laboratory would not result in any substantial revenues. The underlying laboratory assets, e.g., telecommunications measurement and testing equipment, are very specialized prototype equipment with little or no market value. The true value of the laboratory resides in the knowledge and expertise of its highly trained and specialized senior engineering and scientific staff, many of whom could be expected to leave the laboratory for other Federal employment locally (e.g., the Boulder laboratories of the National Institute of Standards and Technology or National Oceanic and Atmospheric Administration) or elsewhere to complete their Federal careers, rather than remain automatically with a privatized entity.

Second, privatizing the laboratory would eliminate an invaluable national telecommunications resource. ITS provides the Federal Government's only impartial telecommunications research and engineering capability to support the nation's telecommunications policy development efforts and Federal spectrum management mandate. For example, ITS has provided essential technical support in the following telecommunications policy areas: National Digital Television Channel Assignment Planning; spectrum occupancy and interference analyses to support national and international (e.g., World Radio Conference) spectrum planning requirements; Satellite Home Viewers Act network coverage analysis; quick response measurement support to resolve potential safety-of-life interference; and audio and video telecommunication quality of service standards development.

Third, if ITS were no longer available to conduct this research, NTIA would need additional Federal funding to accomplish its essential technical research work. For a direct appropriated investment in ITS of approximately $3 million, the Federal government and the private sector receive approximately $10 million in research results through reimbursable telecommunications research work for other Federal agencies (e.g., Departments of Defense, Justice, Transportation) and through cooperative research activities with the private sector (e.g., US West, BellAtlantic, PacTel, BellSouth, GTE, Hewlett-Packard, Netrix, Integrator Corporation, Audio Logic, American Automobile Manufacturing Association).

Finally, the Administration believes that a legislative mandate to review the long-term efficiency of NTIA is unnecessary. It is our understanding that the Department's Inspector General and the Comptroller General already have such authority. Moreover, during the past six years, NTIA has worked cooperatively with the Department's Inspector General on a number of studies examining the agency's management practices and efficiencies. For example, in 1997, the Office of the Inspector General conducted an audit of NTIA's Office of Spectrum Management (OSM) and reviewed in detail OSM's funding, fee collection and staffing practices. The Office of Inspector General determined that "no significant conditions" exist meriting the issuance of an audit report, but did note that OSM needed additional personnel and resources to meet its current and future needs and more timely reimbursement payments from Federal agencies. Since that report, OSM has worked to address these issues. Most recently, the Office of the Inspector General completed audits of NTIA's grant programs and found that both programs promote merit-based decisions. NTIA has already implemented the Office of the Inspector General's recommended improvements to the grant award processes. NTIA has also worked cooperatively with the General Accounting Office in its examination of federal funding for universal service, technology programs for schools and libraries, and law enforcement assistance, and on spectrum management issues involving the Department of Defense.