ASSISTANT SECRETARY FOR COMMUNICATIONS AND INFORMATION
NATIONAL TELECOMMUNICATIONS AND INFORMATION ADMINISTRATION
U.S. DEPARTMENT OF COMMERCE
FISCAL YEAR 1997 NTIA APPROPRIATIONS
COMMERCE, JUSTICE, STATE,
THE JUDICIARY, AND RELATED AGENCIES
COMMITTEE ON APPROPRIATIONS
HOUSE OF REPRESENTATIVES
MAY 7, 1996
Mr. Chairman and Members of the Committee:
Thank you for this opportunity to testify before you today on the 1997 budget request of the Department of Commerce's National Telecommunications and Information Administration (NTIA).
It is an honor to be before you today, although I testify following the great loss of Commerce Secretary Ronald H. Brown and eleven other Commerce Department colleagues. Secretary Brown helped to spur the growth of the emerging information superhighway, and was deeply committed to ensuring that its benefits reach all Americans. NTIA continues to try to fulfill his vision and strive to reach these goals each day.
And we are strongly supported in this by the new Secretary of Commerce, Mickey Kantor. Secretary Kantor brings tremendous strength to the Department, and an equally deep commitment to the issues Ron Brown dedicated his life to. Secretary Kantor has also dedicated himself in his personal and professional life to opening up opportunities for all Americans. His skill and experience as U.S. Trade Representative bring important strengths to the Department and to NTIA as we work to convince other countries to open their markets to competitive forces. We are looking forward to working very closely with Secretary Kantor, and I know that this Committee will have the opportunity to explore these important issues with him in the coming months.
As the President's principal advisor on domestic and international telecommunications and information policy, NTIA develops and advocates Administration and Commerce Department policies that involve telecommunications and information-related industries which will soon account for more than 15 percent of our domestic economy. Generating more than $680 billion in annual revenues, the telecommunications and information sectors represent the growth industries of the next century. These sectors comprise a broad range of services and products, including those offered by wired and wireless telephony, broadcast and cable television, the Internet, satellites, and other delivery systems. Passage of the Telecommunications Act of 1996 is expected to bring competition, innovation, and lower prices in these sectors.
NTIA is requesting $88 million for its diverse programs and activities in the upcoming fiscal year. With less than 300 employees, NTIA does a tremendous amount with limited resources. A more detailed summary of NTIA's budget request for FY 1997 is included later in my testimony.
Mr. Chairman, over the last year NTIA has instituted severe cost-cutting and streamlining of operations. These cost-cutting measures have had a dramatic impact on the agency. For example, we are losing much of our talent, which must be cutting-edge to deal with the sweeping technological change in the telecommunications and information sectors. As one of the first agencies to use the Internet to provide information to the public, NTIA is losing many of our people who best know the Internet. We have also lost many first-rate engineers from our spectrum management shop which fuels the development of more efficient, technologically advanced, spectrum technologies for agencies across the Federal Government. These cuts have had an impact. The historically superior job we have done for the American people is threatened by the reductions in our appropriations at a time that the telecommunications sector is growing by leaps and bounds and employing more Americans every day. I sometimes use the employment section of the Washington Post to make this point -- it is full of high-tech job announcements that most kids coming out of school today have no hope of qualifying for. This is our challenge and I urge Members of this Committee to consider this enormous challenge in your deliberations on the budget.
NTIA's budget request is essential for the agency to pursue its international and domestic initiatives, bringing new opportunities and benefits to American businesses and American consumers. NTIA's programs focus on three major priorities: (1) promoting competition and opening markets, both domestic and global; (2) managing federal spectrum use to improve efficiency and the public safety, increase private sector access to spectrum resources, and plan for future spectrum needs; and (3) promoting universal access and affordable telecommunications services for all Americans.
Promoting Competition and Opening Markets
NTIA actively promotes competition and open markets through domestic and international telecommunications policy development and advocacy, efficient spectrum management and reallocation of spectrum to private sector users, and telecommunications research. NTIA has tenaciously worked to eliminate barriers to competition in the telecommunications industry while protecting consumers. NTIA advocates policies to spur innovation, encourage competition, and create jobs. NTIA has led efforts to provide rural and underserved areas with access to educational opportunities, job training, and better medical care through advanced telecommunications services. NTIA performs cutting-edge research, such as finding ways to use higher frequency spectrum for new wireless services, and develops positions on a wide range of policy issues, such as, universal service, spectrum auctions, and privacy on electronic networks.
NTIA made substantial contributions to the recently enacted Telecommunications Act of 1996, the most significant change to the Nation's communications law in over sixty years. As important as passage of the legislation was, the true benefits of the law will only be seen as it is implemented, largely through rulemakings by the Federal Communications Commission (FCC). The Administration's objectives in implementing the Act will mirror its priorities during passage of the Act, to stimulate investment in the information infrastructure, promote competition among providers, provide open access for all citizens to the information superhighway, strengthen and improve universal service, and provide families with technologies to navigate the growing array of telecommunications and media choices.
NTIA will advocate on behalf of the American people pro-competitive and pro-consumer policies regarding implementation of the Telecommunication Act's provisions. It will do so in many ways, and particularly in formal comments to the FCC and the Joint Board, which is charged with implementing many of the Act's provisions. For example, as the definition of universal service is updated for the next century, NTIA will be working to ensure that the Administration's priorities for connecting rural Americans to advanced networks and ensuring that telecommunications rates for services are comparable between rural and urban areas.
NTIA activities have made contributions to national policy that have long term and tangible benefits to the American people. For example, NTIA's multi-year development and advocacy of a policy to permit the FCC to use auctions in the assignment of radio frequency licenses helped to bring about the first-ever such auctions. These auctions provide a more efficient and faster way for the FCC to choose licensees and, to date, have resulted in over $20 billion in deficit reduction to the U.S. Treasury.
The Administration's telecommunications and information policies developed and advocated by NTIA for domestic markets serve as an important model for international efforts to open global markets to competition. This liberalization, in turn, provides U.S. firms with greater opportunities to be successful participants in those markets.
NTIA is a strong advocate for competitive markets globally in bilateral, multilateral and regional negotiations. For example, NTIA is coordinating the United States Government's participation in the Information Society and Development Conference (ISAD) in South Africa, scheduled for May 13-15. This is a follow up to the G7 Ministerial Conference that took place in February 1995 in Brussels, Belgium, which resulted in an agreement among seven of the world's economic leaders on principles necessary for the development of a global information infrastructure. This conference is designed to integrate participation from developing countries in the G7 program for building the global information society.
NTIA will also participate in the International Telecommunication Union's World Radiocommunication Conference (WRC) in 1997 in Geneva. WRC-97 will give the U.S. an opportunity to promote additional spectrum allocations for mobile satellite services, including low earth orbiting satellites and new non-geostationary fixed satellites, and adoption of new regulations for maritime safety services worldwide. NTIA will focus particular attention on ensuring that newly emerging U.S. companies can obtain the scarce spectrum resources they need -- orbital slots and radio frequencies -- to provide the latest technology-based communications services worldwide.
NTIA will cosponsor, together with the Telecommunications Industry Association, the third Latin American Telecommunications Summit (LATS) in Mexico in the fall of this year as a follow-up to the Summit of the Americas Trade and Commerce Forum in Denver, Colorado this past July. I served as co-chair of an Information Infrastructure Workshop, which recommended a deadline of 2005 for moving to more pro-competitive telecommunications markets.
NTIA will continue its active advocacy for reform and restructuring within the Intelsat and Inmarsat global satellite organizations. Introducing market incentives will enhance competitive opportunities for a large number of U.S. firms who are seeking fair market access to provide services, and who generally use U.S. equipment providers.
NTIA will also continue to promote high quality U.S. standards for data, voice and video communications in international fora. Through its role in international standard setting, NTIA promotes U.S. business entry into foreign markets.
By helping to open international markets to U.S. industries, and promoting international standards that enhance the competitiveness of U.S. firms overseas, NTIA is working to ensure that the United States remains a world leader in the telecommunications and information revolution.
Improving Federal Spectrum Users' Efficiency, Increasing Private Sector Access to Spectrum, and Planning for Future Spectrum Needs
NTIA manages the Federal Government's use of spectrum by ensuring the most effective use of government spectrum by Federal Government agencies, as well as the efficient distribution of spectrum to multiple users. In doing so, NTIA balances the need to provide adequate spectrum for critical government uses with the need to spur innovation by freeing up spectrum for private sector use.
NTIA has promoted federal users' efficient use of spectrum in several ways. NTIA conducts research to develop spectrum efficiency techniques that allow for greater private and public use of spectrum on a shared basis. For example, technologies that minimize interference with other users on a shared band, allow for multiple users on a band, or compressing radio signals in other ways.
NTIA also directs federal users to purchase more efficient equipment in order to make the best use of scarce spectrum. NTIA has directed federal mobile radio users to adopt narrowband technology by replacing their equipment over the next ten years. In many cases federal users will be using more efficient 12.5 KHz equipment, which represents a doubling of spectrum efficiency, before commercial users have made the transition.
NTIA has been working to make more spectrum used by federal government agencies available to private sectors users. Since 1978, NTIA has coordinated the reallocation of about 5,000 MHz of federal government spectrum to permit greater private sector use. In addition, NTIA has identified 235 MHz of federal spectrum for transfer to the private sector for new, innovative technologies. 95 MHz of this spectrum has already been transferred for reallocation to private sector users and the remainder will be transferred by the year 2004.
The process of identifying this spectrum for transfer involved an intensive review and analysis of federal and private sector spectrum use as well as detailed estimates of future spectrum needs. NTIA carefully selected the 235 MHz to minimize the costs and mission impacts to federal users who are required to move and to maximize the value of the spectrum transferred to private use.
As part of this process, NTIA initiated a long-term study of spectrum use. In the first phase, NTIA reviewed current spectrum use and published a report, U.S. National Spectrum Requirements: Projections and Trends, estimating future spectrum requirements in the private and public sectors. The report concluded that mobile radio services need for spectrum will double by the year 2005. In October 1995, NTIA published a second report Land Mobile Spectrum Planning Options, which examined private and public sector requirements, including those of the public safety services, in detail. This report made several recommendations for increasing spectrum efficiencies and reallocating spectrum to meet the future needs of public safety users.
Building on this and other work, NTIA and the FCC created the Public Safety Wireless Advisory Committee (PSWAC). This group was established, with strong leadership and support from Members of the Appropriations Committee, to define public safety communications needs at the federal, state, and local level and make recommendations for future spectrum use for public safety. With more than 450 members, the PSWAC is working diligently to define these needs and recommend solutions to the interoperability and spectrum scarcity problems we are facing.
PSWAC is addressing the interoperability of equipment used by federal, state and local government agencies, for example, when several levels of government respond to an emergency such as the Oklahoma City bombing. Incompatible equipment frustrates public safety and law enforcement agencies attempts to coordinate in emergency situations. The PSWAC is also examining solutions to the scarcity of spectrum including the use of spectrum efficient systems, like narrowband, multiple access, and overlay technologies; commercial services; commercial, off-the-shelf radios to realize economies of scale; and increased shared and joint use of systems by federal, state and local agencies. The PSWAC will make recommendations to NTIA and the FCC in September 1996 regarding additional spectrum requirements of public safety entities through the year 2010. I look forward to these recommendations and the challenges they will present with a single, dedicated purpose in mind -- the protection of vital public safety and national security wireless communications.
Ensuring Access for the Underserved
NTIA works to ensure access for all Americans to communications and information networks. On the policy front, NTIA has been in the forefront of efforts to redefine universal service to telecommunications services to ensure that rural Americans have access to the same new services being offered in urban and suburban America. Over the past 40 years, rural Americans have gone from about 60 percent having basic phone service to 94 percent today. This is due in large part to our commitment as a nation to universal service policies. In the recent report, "Falling Through the Net: A Survey of the `Have Nots' in Rural and Urban America", NTIA documented the relatively low penetration of telephone connections and computer and modem ownership in rural and inner city communities.
In a 1996 filing with the FCC, we recommended that the Commission set a national subscribership goal for the year 2000 to ensure that the telephone penetration level for all segments of society will be at least equal to the national average existing as of November 1996. In addition, we believe that schools, libraries, and other "community access centers" should be expeditiously connected to the NII as an integral part of making access to advanced telecommunications and information services more readily available. As the Telecommunications Act of 1996 is implemented, NTIA will continue to be a strong advocate for rural and underserved Americans, undertaking research, filing comments with the FCC, and participating in a variety of fora to ensure that these communities have access to these services, and the opportunities they provide, at reasonable rates.
Congressional interest in broad network access to new services reflected in the Telecommunications Act of 1996 directive to the Secretary of Commerce to report on the use of advanced telecommunications networks for medical services, or "telemedicine". NTIA, working with the Department of Health and Human Services will report on telemedicine initiatives and the way that these advanced services can be made available to remote areas.
In addition to promoting access in domestic and international policymaking, NTIA seeks to address these disparities by funding projects that can help make the information age accessible to all Americans, regardless of where they live, how large their incomes are, or how much schooling they have attained.
NTIA's Telecommunications Information Infrastructure Assistance Program (TIIAP) provides matching grants to schools, libraries, hospitals, state and local governments and other non-profit entities. Last year, TIIAP leveraged $35.7 million in federal funds with $60 million in private, state and local funding. We awarded 117 grants to projects in 47 states, and the District of Columbia. More than 75 percent of the funds went to projects serving rural America or traditionally underserved Americans living in urban areas.
For example, in Somerset, Kentucky, the Center for Rural Development is using a TIIAP grant to provide distance learning classes to the 40,000 citizens of a three-county area. Citizens will benefit from the classes, and, in turn, a better-trained workforce will help local businesses compete in the global economy. The project demonstrates how information infrastructure can level the playing field by bringing new educational opportunities to a traditionally underserved area.
TIIAP provided a grant to the West Virginia Community Action Directors Association, which is educating community-based agencies in the use of information technology. Covering all 55 counties in the State, Community Action's major goal is to empower communities to become self reliant, while developing a master plan for infrastructure development in the State.
Teachers in a rural five-county region of Northern West Virginia are getting better training thanks to a TIIAP grant. The West Virginia University College of Human Resources has set up a network that links its resources and the Internet to 13 K-12 schools. Teachers at these schools are using the network as they participate in an innovative teacher training program. Like many TIIAP grants, this project is supported by a substantial private sector investment, in this case from Bell Atlantic.
In the border region of West Texas, law enforcement agencies are using the video, audio and data conferencing capabilities provided by a new fiber optic network. The network allows local police departments, the sheriff's office, a juvenile detention program and the district attorney's office to coordinate their activities. This TIIAP grant illustrates how agencies can work together, using information infrastructure to work more efficiently and effectively as they protect the safety of the public.
A hospital in rural Kansas is demonstrating a cost-effective home health care system for the elderly and disabled. By using local cable systems to support video "visits," the project eliminates the many wasted hours home health aides spend driving from home to home. In addition to improving the health care provided to the patient because of more frequent checkups, the use of technology will provide enormous financial savings over traditional institutional care, which often results from a lack of home health care.
"Plugged In", a youth center in the low-income community of East Palo Alto, California offers learning through technology, providing free access to computers, the Internet, and training to kids and to the community at large. The project introduces electronic networks to address the specific needs of a variety of community members -- children, teens, adults, and community leaders. Every day, kids drop by Plugged In and line up to work in a state-of-the-art multimedia lab, setting up their own businesses for creating home pages, and videoconferencing with others around the nation and the world. By capturing imaginations and teaching marketable skills, Plugged In is developing a successful model for introducing computer and communications technologies in a low-income, urban setting.
These are just a few of the many examples of how TIIAP projects are demonstrating new ways to reduce the barriers of isolation in rural areas and to overcome the problems of our inner cities. These projects serve as blueprints that can be used by others in the future. With limited funds available and huge demand for services, public institutions such as schools, libraries, hospitals, and police departments can use the models developed under the TIIAP program to guide their own decisions and invest scarce resources wisely.
Finally, NTIA promotes access for minorities to telecommunications networks and services and advocates policies that increase minority ownership of telecommunications businesses. NTIA provides information to minority entrepreneurs in the telecommunications field, and recently published a report identifying financial barriers faced by minority entrepreneurs and small businesses seeking to compete in the telecommunications industries and suggesting possible financing strategies. In addition, NTIA tracks minority ownership in broadcasting; provides business training opportunities for new minority broadcast station owners; sponsors workshops and participates in conferences designed to increase awareness of opportunities for minorities in telecommunications.
NTIA is requesting $88 million for its diverse programs in fiscal 1997.
Salaries and Expenses
The $18.5 million appropriation request for salaries and expenses for FY 1997 would support four major NTIA activities: domestic telecommunications policymaking, international telecommunications policymaking, spectrum management, and telecommunications research and engineering. The FY 1997 salaries and expenses request contains an increase for preliminary costs related to the planning and hosting of the 1998 Plenipotentiary Conference in Minneapolis -- a conference the U.S. last hosted in 1947.
Domestic Telecommunications Policy Analysis
NTIA develops and articulates Administration policies on a wide range of domestic telecommunications and information policy issues. These issues are increasingly complex, reflecting the rapid changes in telecommunications technology, its application to the marketplace, and a broadening of the number and types of players. Issues include the appropriate regulatory approach to the convergence of traditional common carrier telephony, cable television and computer services; the improvement of radio spectrum management (e.g., spectrum auctions); mass media (radio - television) ownership; advanced television (ATV); Internet development; and content oriented issues such as privacy and media violence.
International Telecommunications Policy Analysis
NTIA plans to continue to analyze, formulate, and develop regulatory and technical policies to improve the competitiveness of the American telecommunications industry, and to provide access for American consumers to high quality, competitively-priced international telecommunications services. NTIA will continue its efforts to promote competition and open markets for U.S. telecommunications service providers and equipment suppliers in bilateral, regional, and multilateral meetings. In particular
NTIA will continue to monitor and, as appropriate, participate in international standards-setting fora to ensure that the interests of U.S. telecommunications equipment manufacturers and service providers are adequately represented.
Of special note is an increase of $1.5 million for NTIA for coordinating preparation for the International Telecommunication Union's (ITU) Plenipotentiary Conference, which will be held in Minneapolis. The U.S. last hosted this important conference in 1947. The total cost for hosting the conference is approximately $14 million over several years. The $1.5 million requested by NTIA in FY 1997 will be used to make preliminary conference arrangements. The responsibility for planning and hosting the Conference will be shared equally between NTIA and the Department of State.
The Conference, which is held once every four years, will set the ITU's course of action, make changes in international spectrum allocations, and provide U.S. telecommunications equipment and service providers an extraordinary opportunity to demonstrate their capabilities to senior foreign government officials and private sector representatives. As host of the Conference, the United States has a unique opportunity to shape the course of the ITU during a critical period and to focus ITU members' attention on the Western Hemisphere's pro-competitive environment while many ITU member nations are themselves addressing privatization and competition within their own telecommunications sector.
NTIA will continue its role as manager of the federal radio spectrum to ensure that all vital radiocommunication needs for national security, safety (such as in air traffic control), protection (law enforcement), and other public services such as weather forecasting, natural resource and national park management, and space research are adequately met. When doing this, NTIA must ensure that the Federal Government uses the minimum amount of spectrum to perform its various missions, thus allowing unused or under used spectrum to be freed for private sector and other non-federal government use and maximizing the benefits to the American public. In this role, NTIA also has significant responsibilities in the development of international spectrum allocations, regulations and technical standards.
NTIA's spectrum office will also work to support the work, and implement the recommendations, of the Public Safety Wireless Advisory Committee (PSWAC). Including technical support, projecting future spectrum needs,
In addition, this year NTIA worked with Congress, and the Members of this Committee, to establish a cost recovery process which requires federal government agencies that use spectrum to pay for NTIA's spectrum management services. With the enactment of the Omnibus Appropriations Act of 1996 (P.L. 104-134), NTIA is authorized to charge and retain funds for federal spectrum management services. NTIA is working with the Department of Commerce and the Office of Management and Budget (OMB) to establish a cost recovery process.
NTIA's research laboratory in Boulder, Colorado, the Institute for Telecommunication Sciences (ITS), conducts applied research and engineering to develop new spectrum and networking technologies and to foster improved spectrum management techniques. For example, research on advanced broadband networks transmission standards, such as ISDN, as well as pioneering research in radio frequency characteristics, directly assist U.S. companies competing domestically and in international markets in their efforts to introduce and implement advanced telecommunications products and services. Long term research at ITS includes experimentation to find ways to use higher frequency spectrum that is not now viable for many services, thus increasing the total amount of useable spectrum as well as work to develop measurement methods to more effectively assess the performance of data, audio, video and multimedia communication services.
Telecommunications and Information Infrastructure Assistance Program
The relatively new TIIAP program has received bipartisan support. Members of this Committee have supported this program as an important vehicle for providing access to the information superhighway. The President has requested $59 million for TIIAP in FY 1997. TIIAP supports demonstration projects to create models that can be replicated in communities across the nation. In addition, TIIAP will automatically set aside 35 percent of its FY 1996 funding for smaller, access grants, which are targeted to address disparities in rural and other traditionally underserved populations. We are using this part of the program as a means to provide direct assistance to develop the information infrastructure in America's neediest communities. We stand ready to work with this Committee to improve the program in other ways so that more Americans might obtain the benefits of, and have access to, advanced telecommunications networks.
Despite uncertainties over the final funding level for FY 1996, TIIAP received applications requesting nearly 15 times the amount of grant funds available. Projects were submitted from all 50 states, from rural and urban areas, from medical centers to elder care centers to junior high schools. Upon completion of program reviews, NTIA anticipates issuing grants in August.
Public Broadcasting Facilities
NTIA has a long-standing commitment to public broadcasting. The $8 million requested for the Public Telecommunications Facilities Program (PTFP) for this year will allow the most urgent and highest priority grant applications to be addressed. The broad nature of the program will allow the Federal Government to fund projects that promote: signal expansion and technological upgrades; distance learning connections; and access for the visually impaired, the hearing deficient and minority audiences.
Public telecommunications is in a period of rapid change and technological advancement. This program has been key in providing the needed funds to meet the highest priority telecommunications equipment needs throughout the United States and its territories. For example, over 25 million Americans are still without even one public radio signal. This program will fund, for the first time, the extension of a public radio signal to many of these communities, enabling them to benefit from the many fine educational and cultural programs that exist on public radio.
Public television will be improved through the replacement of antiquated equipment which will meet the standards needed to remain competitive in a changing and often demanding environment.
Children's Educational Television
NTIA is requesting $2.5 million in funding to support the National Endowment for Children's Educational Television (NECET). Although the program was not appropriated funds in FY 1996, this program is a sound investment in our nation's future. As the only federal program dedicated exclusively to the funding of educational programming for children, NECET represents a positive force in our nation's ongoing effort to improve the quality of children's television programming. The Endowment, which was established under the Children's Television Act of 1990, has funded popular, award-winning programs currently on the air, including Storytime, a reading series that brings to life books for 3 to 7 year olds, and Ghostwriter, a literacy series for 7 to 10 year olds that teaches reading through solving mysteries, both airing on PBS. A recently funded program called The Eddie Files, will feature an award-winning Harlem math teacher to interest 9 to 11 year olds in math and science.
Public interest in NECET has been very strong. Since its inception, NECET received over 575 applications from 43 states requesting over $225 million in funding for the creation and production of children's television series, individual programs, pilot programs, and a variety of pre-production activities. Television has great potential as a teacher -- and this program will help ensure that children have choices for educational programming. Current corporate, foundation and government funding for children's educational television programming in the United States remains extremely low, particularly in comparison to the level of such funding in many other nations.
NTIA is in a unique position to influence significantly the ability of U.S. companies to compete in the global marketplace of the 21st century and to enhance the benefits to the public of a strong, competitive telecommunications industry and infrastructure. We appreciate this Committee's past support, and look forward to working with you in the future.