Testimony of Assistant Secretary Irving on Reauthorization of NTIA

Topics/Subtopics: 
May 11, 1999

TESTIMONY OF LARRY IRVING

ASSISTANT SECRETARY FOR COMMUNICATIONS AND INFORMATION

NATIONAL TELECOMMUNICATIONS AND INFORMATION ADMINISTRATION (NTIA)

U.S. DEPARTMENT OF COMMERCE

ON

REAUTHORIZATION OF NTIA

BEFORE THE SUBCOMMITTEE ON

TELECOMMUNICATIONS, TRADE, AND CONSUMER PROTECTION

COMMITTEE ON COMMERCE

U.S. HOUSE OF REPRESENTATIVES

MAY 11, 1999

 


SUMMARY

 

NTIA is the principal adviser on telecommunications and information policy issues in the Executive Branch. NTIA helps develop and present the Administration's position on issues before the Federal Communications Commission (FCC) and other domestic and international fora.

Given the increasing significance of the telecommunications and information sectors to our nation's economy, NTIA's role is more important than ever. We are using our expertise and leadership to address cutting-edge questions regarding electronic commerce, the deployment of high-speed broadband networks, and the implementation of international and bilateral telecommunications agreements, among numerous other issues.

NTIA is also responsible for managing the Federal use of radio spectrum. NTIA coordinates spectrum use by Federal agencies, working to avoid potential interference between users and to ensure that spectrum is available for future needs. Such spectrum coordination is key to the success of public safety efforts, air traffic control, national defense, national resource management, and other vital government functions. NTIA's telecommunications and spectrum management efforts are supported by its telecommunications research laboratory, which conducts cutting-edge research on issues of significance to both the public and private sector.

Finally, NTIA manages two federal grant programs, which help expand access to new technologies. The Telecommunications and Information Infrastructure Assistance Program (TIIAP) provides matching grants to non-profits and public entities that are using new technologies in innovative ways to reach those in rural, low-income, and traditionally underserved areas. NTIA's Public Telecommunications Facilities Program (PTFP) supports the maintenance and improvement of public broadcasting facilities throughout the United States and its territories.

In order to carry out its increasing responsibilities, NTIA's budget request for FY 2000 is $72,369,000, with a staffing level of 336 FTEs. The increase over FY 1999's budget will go towards enhancing Federal radio spectrum management; upgrading our telecommunications research facility; implementing World Trade Organization requirements; and implementing the Presidential Critical Infrastructure Protection (CIP) program.

NTIA's programs would be significantly curtailed by the Discussion Draft "NTIA Reauthorization Act of 1999." Among other things, the Discussion Draft does not authorize funding for TIIAP. It would also privatize NTIA's research labs, eliminating an important resource for Federal agencies. And it would change the funding ratio for NTIA's spectrum management program, eliminating funds to conduct spectrum management functions on behalf of the national interest. The Administration therefore opposes the Discussion Draft.

I have also attached to my written testimony two appendices. The first is NTIA's Comments on the Discussion Draft "NTIA Reathorization Act of 1999." The second is a list of Recent Congressional Studies for NTIA and Potential Studies Proposed by Congress.



Mr. Chairman and Members of the Committee:

Thank you for this opportunity to testify today on the reauthorization of the Department of Commerce's National Telecommunications and Information Administration (NTIA).

Today, I would like to describe NTIA's unique role in developing and advocating policy in the telecommunications and information technology sectors; summarize our FY 2000 Budget Request; and highlight our key programs and initiatives. I have also attached to my testimony two appendices. The first is NTIA's Comments on the Discussion Draft "NTIA Reauthorization Act of 1999." The second is a list of Recent Congressional Studies for NTIA and Potential Studies Proposed by Congress.
 

 

INTRODUCTION

NTIA's UNIQUE ROLE

NTIA is the principal adviser on telecommunications and information policy issues in the Executive Branch. In this role, NTIA helps develop and present the Administration's position on these issues before the Federal Communications Commission (FCC) and other domestic and international fora. NTIA's goal is to assist the Administration and Secretary of Commerce William M. Daley in promoting the role of the nation's telecommunications and information industries by creating more job opportunities, enhancing U.S. competitiveness in the global economy, and ensuring that all Americans benefit from the digital age.

NTIA is unique among Federal government agencies. The agency's expertise encompasses every aspect of telecommunications and information technology. In addition to advocating the Administration's positions on domestic and international issues, we also manage the Federal use of the spectrum; resolve complex technical issues through cutting-edge research in our laboratories; administer infrastructure grants to promote the development of a widely accessible information infrastructure; and manage grants to help public broadcasting maintain their infrastructure and transition to the digital age.

NTIA's role in these areas is more important than ever, given the ever-increasing significance of the telecommunications and information technology (IT) sectors to our nation. Today, these technologies are driving this country's economic growth. The White House Council of Economic Advisors recently determined that revenues of communications services and equipment companies rose over 60 percent in the last five years. Over a third of real domestic product growth in the past three years has come from IT industries. More than 7 million people are now employed by IT industries and earn wages that are almost two-thirds higher than the average for all private sector jobs. And, investments in new technologies - including computers, satellites, wireless devices, and information processing systems - account for over 45 percent of total real business equipment investment.

New technologies will shape our economy even more significantly in the 21st century, particularly with the growth of the Internet and electronic commerce. Today, some 160 million worldwide are going online to shop, invest, trade, and e-mail, according to Nua Internet Surveys. That figure is expected to increase to 320 million by the end of next year. As more people and businesses connect online, the "virtual marketplace" will become commonplace. Electronic commerce among businesses is expected to grow more than fifteen-fold in the next few years, from $64 billion in 1999 to $980 billion in 2003, according to International Data Corporation analysts.

The heightened importance of the telecommunications and information sectors has engendered new and pressing policy development and advocacy needs. NTIA is using its expertise, leadership, and vision to address these urgent new questions.

In order to sustain the rapid development of our information infrastructure, NTIA is considering ways to promote the deployment of high-speed broadband networks, and to insure that information and telecommunications services are available and affordable for all Americans. We are facilitating the development of electronic commerce ("e-commerce") by addressing new questions of consumer privacy, security, and domain name management. We are also working with other nations to promote a market-driven, flexible and decentralized, and technology-neutral approach to e-commerce policy. And, we are coordinating efforts under the federal Critical Infrastructure Protection (CIP) plan to ensure that our telecommunications and information infrastructures are secured against physical and cyber attacks.

NTIA's management of the federal use of radio spectrum is also promoting public safety and competition. As the managers of federal spectrum, we are trying to improve efficiency, increase private access to spectrum resources, and plan for future spectrum needs, including those relating to public safety. These goals will become ever-more important as global uses of satellite and wireless devices increase.

We are also working to open up wireless and wirelined markets to competition, both domestically and internationally. NTIA helped secure the success of the World Trade Organization (WTO) Agreement on basic telecommunications services in March 1997. Nearly 70 countries, representing approximately 95% of the world's telecommunications revenues, agreed to liberalize their telecommunications markets under that Agreement. NTIA is now working to ensure, among other things, that the signatories comply with their countries' regulatory principles in implementing the WTO Agreement.

NTIA's expertise in these areas will help resolve some of the critical questions in our global economy. The demands on our expertise and personnel are growing rapidly, however, as the telecommunications and information sectors take on increasing importance. Virtually every day, we address new technologies and new issues. The importance of these issues is reflected in the increasing number of requests we have also received from the White House, the Department of Commerce, other Federal agencies, and Congress. At the same time, our staffing levels have declined in recent years. In 1994, NTIA had 361 employees; today, we have 267. NTIA's budget request for FY 2000 should provide necessary resources to help us respond to the increasing number of demands and challenges as we enter the new digital economy of the 21st century.
 

OVERVIEW OF FY2000 BUDGET ESTIMATES

Let me start by giving an overview of NTIA's proposed FY 2000 budget. NTIA's budget request for FY 2000 is $72,369,000, with a staffing level of 336 FTEs. This represents an increase of $23,604,000 over NTIA's FY 1999 funding level and an increase of 48 FTEs. NTIA is seeking $17,212,000 for Salaries & Expenses (S&E). This includes increases for enhancing Federal radio spectrum management; upgrading our telecommunications research facility; implementing World Trade Organization requirements; and implementing the Presidential Critical Infrastructure Protection (CIP) program. NTIA is also requesting $20,102,000 to fund the Telecommunications and Information Infrastructure Assistance Program (TIIAP), and $35,055,000 to fund the Public Telecommunications Facilities Program (PTFP). The PTFP request is part of an Administration initiative with the Corporation of Public Broadcasting to assist broadcasting stations during the transition to digital broadcasting.

This funding will help NTIA maintain and augment its existing programs, which support the development of the nation's information and telecommunications sectors. I would now like to describe highlights of these, and other of NTIA's programs, which are critical to the continued development of our telecommunications and information technology sectors.
 

 

HIGHLIGHTS OF NTIA'S PROGRAM OPERATIONS

DOMESTIC POLICY

NTIA's domestic policy activities support NTIA's responsibilities as principal adviser to the President on telecommunications and information policies. The goal of these activities is to enhance the public interest by generating, articulating, and advocating creative and influential policies and programs in the telecommunications and information sectors.

While NTIA believes that open markets, competition, and industry development serve the public interest, NTIA also works to ensure the public interest in other ways. Foremost among these issues are those related to access to basic and advanced telecommunications services, the ability for people to control indecent or violent information coming into their homes, the transition to digital television, and encouraging minority participation in telecommunications. NTIA has also played a significant role in promoting electronic commerce and developing Internet policy, discussed in a separate section below. Throughout its existence, NTIA has developed and advocated policies to support the public interest in many areas such as these, and will continue to do so.

NTIA frequently files comments with the Federal Communications Commission (FCC) to represent the Administration's position on a broad range of matters. This year, for example, our filings included comments on the broadcast ownership rules; "truth-in-billing" on local telephone bills; the definition of "over the air signals" for purposes of the Satellite Home Viewers Act; guidelines to promote the deployment of broadband services; and tariffs relating to digital subscriber loops (DSL).

As mentioned above, NTIA is also increasingly called upon for its telecommunications expertise. We assist the White House and other Federal agencies in implementing the pro-competitive goals of the Telecommunications Act of 1996, addressing issues relating to new technologies, and promoting affordable access to the nation's growing information infrastructure. NTIA also will be an integral part of a congressionally mandated commission on Internet content as a result of the Children's Online Protection Act.

Promoting Competition

NTIA continues to work towards eliminating barriers to competition in the telecommunications industry while protecting consumers. Throughout NTIA's twenty-year history, this agency has been at the forefront of pro-competitive telecommunications issues. Among other things, we contributed our expertise to debates concerning first passage, then implementation, of the Telecommunications Act of 1996. This Act required the FCC to adopt regulations regarding such things as access charges, universal service to rural and other areas, interconnection, and broadband services. NTIA filed comments in each of these areas.

Going forward, NTIA will continue to articulate policies on a host of issues surrounding new, better and lower priced communications products and services. We are continuing to advocate policies that spur innovation, encourage competition, and create jobs. NTIA will suggest, for example, ways to encourage the availability of new services to rural and underserved communities and will identify impediments to the growth and vitality of industry sectors.

Addressing New Technologies

New technologies and new competitive providers are also spawning new questions in domestic policy. Foremost among these issues are those related to the growth of the Internet, the transition to digital television, and the widespread availability of wireless communications devices. NTIA has met these challenges in various ways. We often focus our limited resources on identifying and analyzing "over-the-horizon" issues well before they become widely known even among telecommunications professionals. One such issue is that of "Internet telephony," the use of the Internet or Internet Protocol, in place of traditional long distance telephony. NTIA sponsored a forum in 1997 to bring together technical and industry experts with policymakers. In comments to the FCC that same year, NTIA took the view that this technology should be allowed to grow and therefore should not come under full common carrier regulation.

The intersection of industry sectors is also raising additional sets of issues regarding technological convergence. The telephone network, for example, is increasingly used to transmit data, and the television provides viewers access to the World Wide Web. As a result, we are seeing varied and unique combinations of previously discrete technologies. Such convergence presents major challenges to the existing regulatory infrastructure, and NTIA is examining new regulatory issues and challenges.

Competition, Diversity, and the Public Interest in Mass Media

NTIA has been active in mass media issues as well. Several years ago, we promoted inclusion of provisions in the 1996 Telecommunications Act calling for a voluntary television ratings system and the requirement that all new television sets be equipped with a "V-Chip." NTIA believes that the V-chip, in particular, will help parents choose which television programming is suitable for their children. As the first television sets containing the V-Chip become available this year, we will lead efforts to monitor implementation of the V-Chip requirement.

NTIA has also worked to advance policies to protect and extend the public interest in many other contexts as well. We believe that, as with other telecommunications services, robust competition in the video services markets will serve the public interest by providing consumers with greater choices, lower prices, and better services. Thus, for example, we wrote to the FCC last year regarding the matter of delivery via satellite of television network signals to households unable to receive local broadcast signals. We urged the FCC to adopt a definition and measurement of "over the air grade B signal intensity" to promote consumer choice and competition. More recently, NTIA helped develop the Administration position on pending legislative proposals to modify the Satellite Home Viewer Act.

In developing mass media policies, competition often supports the additional goal of providing a diversity of voices to be heard by the American people. NTIA has been monitoring trends towards concentration in the ownership of radio and television stations. The Telecommunications Act of 1996 relaxed broadcast ownership rules and directed the FCC to review the public interest merit of remaining rules every two years. In February of this year, NTIA wrote to FCC Chairman Kennard supporting relaxation of some broadcast ownership rules while maintaining others.

NTIA's involvement with the mass media also extends to new broadcast services, such as the upcoming transition to advanced television. Most notably, NTIA served as Secretariat for the President's Advisory Committee on the Obligations of Digital Television Broadcasters, which presented its report in December 1998. In the role of secretariat, NTIA did not direct or influence the recommendation of the committee. NTIA was pleased to be a part of this consensus-building process, which brought together experts from the broadcasting industry, the public interest community, and academia to look at the future of television. Now that the work of this committee is complete, NTIA plans to continue policy development in this field.

Minority Ownership

Another of NTIA's goals is to enhance minority participation in telecommunications. NTIA's Minority Telecommunications Development Program (MTDP) is undertaking specific efforts in this regard, including: (1) directing ComTrain, a training program to assist new minority commercial broadcast owners; (2) disseminating information and conducting seminars on ownership opportunities in telecommunications (3) developing and commenting on legislative and regulatory proposals that promote minority ownership in telecommunications; (4) working with industry, and other government agencies on initiatives to increase public/private sector assistance to minorities interested in ownership of telecommunications businesses and services; (5) promoting TELECAP, a study of capital development strategies for minority investment in telecommunications; and (6) tracking minority ownership in broadcasting. NTIA will also continue to analyze policies that affect minority participation in telecommunications.

Universal Access

Ensuring universal access to communications and information networks also remains a high priority for NTIA. We have been leading 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.

NTIA has undertaken numerous activities to promote universal service. In the 1995 and 1998 Falling Through the Net reports, 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.

As the Telecommunications Act of 1996 continues to be 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.

NTIA has vigorously argued for the connection of schools, libraries, and other "community access centers" to the National Information Infrastructure. This step is integral to making access to advanced telecommunications and information services more readily available. Technology will be central to the mission of our nation's schools in our country. Numerous studies demonstrate the advantages afforded to students who have access to this technology. As the President has clearly stated, in order to succeed in the 21st century, our children must attain technological knowledge and tools. NTIA continues working to ensure that these tools are broadly available to the public.
 

ELECTRONIC COMMERCE

In addition to the domestic policy issues listed above, NTIA is playing a pivotal role in the Administration's cross-cutting efforts to develop electronic commerce and Internet policy. NTIA has been at the forefront of these issues, both domestically and internationally. We were a key participant in the development of the Administration's electronic commerce policy, reflected in A Framework For Global Electronic Commerce, issued in July 1997. Since then, NTIA has been a key participant in the White House's Electronic Commerce Working Group on such issues of broadband deployment, online content, domain name management, and consumer protection. Finally, NTIA has also played a leading role internationally by representing the United States government at bilateral discussions and at international fora. We have advocated the tremendous benefit of the Internet and electronic commerce to other nations' economies, as well as the merits of a non-regulatory, market-driven approach to the development of electronic commerce.

Domain Name Management

Since July 1997, NTIA has also been the lead agency responsible for implementing the President's directive to privatize the management of Internet domain name system (DNS) functions and increase competition in the registration of Internet domain names. The Statement of Policy on the Management of Internet Names and Addresses, which resulted from extensive public consultations, invited the private sector to create a new, not-for-profit corporation to undertake management of DNS functions and was universally well received. The private sector responded by creating the Internet Corporation for Assigned Names and Numbers (ICANN) to assume this management responsibility.

Currently, NTIA is working with ICANN under a Memorandum of Understanding to develop the procedures and steps necessary to complete a smooth and stable transition from the government to the private sector by September 2000. NTIA is also working with ICANN and Network Solutions to introduce competition in domain name registration services. On April 21, 1999, ICANN announced the names of 34 companies that have been accredited to begin registering names in the .com, .net and .org domains within the next 60 days. We believe that this competition will result in lower prices, greater choice, and better registration services for all users of the World Wide Web and we look forward to our continued work on these issues.

We have had numerous discussions with the staff of House Commerce Committee Chairman Bliley on the progress being made on this issue, and will continue to keep them informed of developments in this area.

Privacy

NTIA has also been at the forefront in addressing privacy on the Internet. We played a leading role in encouraging private industry and privacy advocacy groups to develop and adopt effective codes of conduct and technological tools to protect privacy on the Internet. Following extensive consultation with the private sector in January 1998, NTIA and the Department of Commerce issued The Elements of Effective Self Regulation for Protection of Privacy, which expresses our view that effective self regulation involves substantive rules, the means to ensure that consumers know the rules, that companies comply with them, and that consumers have appropriate recourse when injuries result from noncompliance.

In June 1998, the Department of Commerce held a public meeting on privacy, coordinated by NTIA. Although industry was somewhat slow to take up the self-regulation challenge, there are signs that business leaders are beginning to understand the need to take decisive action on privacy. For example, the Online Privacy Alliance (OPA), a consortium of information technology companies and industry associations, representing over 80 global corporations and associations, requires its members to adopt and post privacy policies consistent with OPA guidelines and participate in a self-regulatory enforcement mechanism provided through third parties such as BBBOnLine and TRUSTe. We will continue to closely monitor their progress.

NTIA has been involved in examining other issues of domestic privacy. For example, NTIA has met with leaders in the area of online profiling by Internet advertisers and is planning a meeting in July 1999, in collaboration with the Federal Trade Commission (FTC), to examine the issue in a public forum.

Controlling Indecent and Violent Content

NTIA will continue to examine policies that empower parents and other individuals to control the nature of information that comes into their homes, particularly that which is indecent or violent. NTIA supports the free flow of information over the Internet or through television and radio. It therefore has directed its policy positions towards developing tools to allow individuals to determine the types of material they receive.

NTIA has helped promote online content initiatives, such as "green spaces" to help parents and others find Web sites suitable for their children. We were designated as the Secretariat for the Congressionally-appointed Child Online Protection Act (COPA) Commission. We look forward to working with the Commission in producing a report on child online safety issues.

All of these efforts take on new importance, following the senseless killings at Columbine High School in Littleton, Colorado. NTIA will continue to work on national policies to help citizens control the type of information their children receive, while not impinging on fundamental free speech rights.

Consumer Protection

Another critical issue is online consumer protection. We know that consumers will be reluctant to shop on the Internet unless they feel confident that they will get what they pay for online and that redress will be available if they do not. Therefore, NTIA has facilitated private sector outreach in developing US policy in this area.

NTIA is working both domestically and within a number of international fora to foster the development of effective consumer protections for consumers participating in electronic commerce. In cooperation with the FTC and other government agencies, we have also helped to shape the policy debate in the Organization for Economic Cooperation and Development (OECD) regarding the development of guidelines for online consumer protection. The issue of online consumer protection intersects with many other e-commerce issues in which NTIA is active, such as jurisdiction, privacy, security, and authentication. NTIA provides an important broad perspective on these issues when formulating policy approaches for electronic commerce consumer protection.

International Advocacy

Finally, as the representative of the United States government, NTIA has been working to build international consensus for a non-regulatory, market driven approach to the development of electronic commerce. We know that the Internet allows its users to exchange ideas and to experience the freedom of public speech of political expression, unlike any other medium before it. In many parts of the world, including Asia and Eastern Europe, the Internet is used by citizens to promote and spread the values of democratic government. Our efforts to promote greater use of the Internet and other new technologies should also facilitate the promotion of democratic values.

NTIA is actively engaged in discussions, both bilaterally and in international fora, to ensure that the "rules of the road" for the Information Superhighway are pro-competitive, empower end users, and avoid establishing artificial impediments to the conduct of global electronic commerce over the Internet. NTIA led the U.S. negotiations on Internet and electronic commerce issues at the International Telecommunication Union's (ITU) Plenipotentiary Conference in November 1998. NTIA has also been a leader formulating best practices for Internet infrastructure deployment in developing countries.
 

INTERNATIONAL POLICY

In addition to Internet and e-commerce issues, NTIA plays a key role on a range of other important international matters. As the representative of the U.S. government, we are working to attain an international consensus on open, competitive telecommunications policy; develop international satellite communications policy; and open foreign markets to U.S. industries. NTIA's efforts in these areas are spurring the development of the telecommunications and information sectors on both a national and global level.

International Telecommunications Policy

NTIA continues to play a lead role in promoting and building international consensus for open, competitive telecommunications networks, which creates opportunities for U.S. businesses abroad and offers market-based solutions to close the digital global divide.

We are a strong advocate for liberalization and privatization both in developed and developing country fora. For example, NTIA promotes implementation of the World Trade Organization's (WTO) Basic Agreement on Telecommunications, which calls for the liberalization of signing nations' telecommunications markets. We have also helped develop and implement training workshops for foreign telecommunications regulatory authorities, which focused on implementing the WTO Basic Telecommunications Agreement and covered a range of issues, including interconnection, spectrum management and universal service. NTIA has also served as a U.S. Vice-Chair at both the ITU World Telecommunications Development Conference in Malta and at the Plenipotentiary Conference held in Minneapolis last November. In our view, the ITU conference would not have been such a success without the Federal support provided by the Congress.

Additionally, we have sponsored several international telecommunications summits in cooperation with the Telecommunications Industry Association (TIA) and the International Trade Administration (ITA). These summits bring together government officials and telecommunications industry representatives to discuss major policy matters affecting specific regions. They provide a unique opportunity for foreign government officials and business representatives to meet privately with senior U.S. telecommunications industry representatives.

Currently, NTIA is planning the fifth Latin American Telecommunications Summit (LATS). Industry participants report that previous LATS have facilitated millions of dollars in sales and invaluable contacts with Latin American government and industry representatives. In March 1999, NTIA, TIA and ITA also collaborated on the second China-U.S. Telecommunications Summit (CATS) in Guangzhou, China, where 32 U.S. companies met with Chinese telecommunications officials, and Chinese telecommunications and IT companies. One company reported that the summit provided "immediate opportunities that may not have developed without the summit" and that they "were approached with proposals for joint ventures and set plans for further high level negotiations for deals that could run into hundreds of millions of dollars."

In addition to our activities in international fora, we have also pursued other steps to open markets to U.S. companies. Recently, NTIA helped assess the anti-competitive impact of Deutsche Telekom's interconnection policy. Working with U.S. companies seeking to enter the newly-liberalized German telecommunications market and with other agencies, NTIA found that certain changes made market entry by new service providers more difficult. NTIA has supported efforts to bring about appropriate corrective action.

NTIA is also supporting the U.S. wireless industry in proposing multiple standards for third generation (3G) wireless systems. NTIA is advocating the industry's position through the ITU and is further advocating that other governments similarly support the outcome of the ITU deliberations. NTIA and other agencies have successfully obtained assurances from the European Union Commission that the European Union member states will respect the recommendations developed by the ITU for 3G systems and offer licenses on a technology-neutral and non-discriminatory basis.

Finally, NTIA has been an active and longstanding advocate for reform of international accounting rates (i.e., those charges paid by U.S. carriers, such as AT&T, Sprint and MCI WorldCom to foreign carriers to terminate traffic at the foreign destination). NTIA seeks to lower accounting rates by bringing them in line with cost. We have helped shape U.S. advocacy and outreach efforts at the ITU, where member countries are seeking to reach an agreement on accounting rate reform. In 1999, NTIA has been concentrating its efforts on transitional arrangements for lesser and the least developed countries, which may need more time to adjust their rates to international competitive market pressures.

International Satellite Policy

NTIA also continues to play a pivotal role in the development and implementation of the U.S. policy objective of increasing competition in the international satellite communications sector.

On April 15, 1999 Inmarsat was privatized, completing a process begun over 5 years ago. We expect that INTELSAT itself will be fully privatized in the next several years. Throughout, NTIA has advocated policy changes to increase global competition in the international satellite communications sector. Iridium recently stated that it is able to offer service in 150 countries and expects this number to increase to 230 by year end. Moreover, ICO Global has, as NTIA consistently insisted, issued an initial public (stock) offering diluting control by former Inmarsat signatories and two U.S. firms (TRW and Hughes) have become strategic investors in ICO. The United States government, with NTIA's leadership, has pursued a procompetitive outcome in the face of opposition from other nations, and we are confident of achieving a similar result with INTELSAT's privatization.

As a result of the International Anti-Bribery and Fair Competition Act of 1998, NTIA will be conducting a study of any advantages accruing to the intergovernmental satellite organizations (INTELSAT and Inmarsat; the ISOs) as a result of their unique status. NTIA's report will examine any advantages affecting market access which result from government ownership, government contracts to the signatories, favorable tax or regulatory treatment for the signatories or from use of the ISOs' privileges and immunities. The study will be included in the Secretary's report to Congress.
 

SPECTRUM MANAGEMENT

Another of NTIA's chief roles is to manage the radio frequency spectrum that is used by Federal agencies in satisfying their legislatively assigned missions. In this role, NTIA processes the Federal agencies' requests for frequency assignments; provides Executive Branch leadership in coordinating both current and future spectrum requirements among the Federal agencies and with the FCC; develops and promotes positions at Treaty Conferences and other technical and management fora of the International Telecommunication Union regarding United States spectrum management interests; and supports specialized administration initiatives that are designed to achieve specific improvements in areas such as air traffic safety, federal spectrum management procedures, protection of critical infrastructures, and public safety.

The fundamental goal of spectrum management at NTIA, as it is worldwide, is to avert potential interference between users and to ensure that spectrum is available for future needs. NTIA's spectrum coordination is therefore critical to the success of air traffic control, national defense, national resource management, and other vital government functions.

Nevertheless, further coordination efforts are essential, particularly for public safety purposes. The horrific incident in Littleton, Colorado last month demonstrates the need for further coordination among communications systems. We understand that a number of the local, state, and federal agencies lacked interoperable communications systems, making the coordination of a response more difficult. NTIA will be looking more closely in the coming year at new ways to manage spectrum to help coordinate public safety efforts.

Satisfying Spectrum Needs

NTIA continues to coordinate the spectrum needs of the Federal Government by processing frequency assignment requests by some 53 Federal agencies. NTIA processes 300 to 400 such requests daily through an automated screening process to correct errors in the data and ensure conformity of rules and regulations and through a coordination process with Federal spectrum-using agencies via the Interdepartment Radio Advisory Committee (IRAC) to ensure interference free operation. In addition, NTIA also certifies spectrum availability of approximately 60 to 70 new major radiocommunications annually.

NTIA also provides leadership for and manages the activities of the IRAC, a body of representatives from twenty major Federal agencies. The IRAC has provided valuable advice to the Executive Branch on numerous spectrum policies and issues for the past 75 years. NTIA has maintained a constant relationship with the FCC both through the IRAC and directly to ensure compatible operations. This is especially important today since the vast majority of the spectrum is no longer divided into exclusive private-sector and Federal-sector bands, but is shared by all users in the United States.

Spectrum Efficiency

The Federal Government constantly seeks to modernize its radiocommunications, increase the amount of information transmitted per unit bandwidth, and expand the use of more efficient digital technology and the use of private sector radiocommunications. In order to improve Federal spectrum use, NTIA uses the following management tools. First, NTIA requires that every Federal Government user requesting a frequency assignment determine whether its need can be met by a private or commercially available service provider. This policy has helped encourage consideration of commercial services by many Federal Government agencies, including the Department of Defense.

Second, we promote the use of new spectrum efficient technologies. The Federal Government is a leader in developing new spectrum-efficient techniques such as narrowbanding, digital modulation, and spectrum sharing as well as in the use of the highest quality spectrum-efficient equipment. These techniques will lead to nearly double the number of frequencies available for land mobile communications. NTIA has required that all Federal users move to more efficient 12.5 KHz equipment for mobile communications by 2005 or 2008, depending on the frequency bands in which they operate.

Third, NTIA collects fees from Federal agencies for its spectrum management services, pursuant to Congressional mandate. Congress initially directed NTIA to begin a process to collect fees from federal agencies in the FY 1996 Appropriations bill for NTIA. At the same time, Congress reduced the amount of direct appropriations to NTIA by the amount of the fees. Because of serious difficulties in collecting fees in FY 1996, Congress subsequently passed a law directing Federal agencies to cease using the spectrum if such fees were not paid. Based on this legislation, NTIA and the Federal agencies entered into agreements in which the agencies agreed to pay their prorated share. These fees cover 80% of the Spectrum Management's funding requirement. Although we continue to experience some delay in payments because of the different methods of payment within the Federal agencies, NTIA has received the requested funds from the agencies. We are pleased with the progress that has been made with this program.

Increasing Private Sector Access to Spectrum

NTIA continues to work with the FCC, the private sector, and Federal agencies to promote sharing of spectrum, where feasible, with private sector users. Since 1978, NTIA has coordinated the reallocation of more than 5,000 MHz of spectrum to exclusive private use or greater shared use with private sector entities. This is a significant amount of spectrum -- today's entire wireless telephone system, including cellular and personal communications systems, is allocated only 170 MHz.

Spectrum reallocation and reimbursement

Over the past several years, NTIA has begun to reallocate 235 MHz of spectrum from Federal Government use to the private sector. The process for identifying spectrum for reallocation was based on a two year study which took into account two major factors: (1) the impact on the Federal agencies, in terms of mission, costs, and potential reduction of services to the public, and (2) the benefits expected to be realized by the public. Based on the extensive planning and coordination with the FCC, government agencies, and the public to produce this report, NTIA identified an additional 35 MHz of Federal spectrum to transfer to private use. NTIA has already reallocated 195 MHz of the previously identified spectrum. The remaining spectrum is scheduled for auction by the FCC by 2002, in accordance with the Balanced Budget Act of 1997.

NTIA has also recently transferred spectrum to the private sector to support satellite systems. During the International Telecommunication Union World Radiocommunication Conference (ITU/WRC) in October 1995, NTIA coordinated the release of 3 MHz of Federal Government spectrum for exclusive use in mobile satellite systems (low earth orbiting satellites, or LEOs). NTIA has also arranged for shared use of 360 MHz of Federal Government spectrum for mobile satellite links for big LEOs.

Most recently, NTIA identified 20 MHz of spectrum for reallocation by the FCC to private sector uses and assignment by competitive bidding in accordance with the Balanced Budget Act of 1997. Proceeds of these auctions were originally to be contributed towards balancing the Federal budget by fiscal year 2002. Federal agencies' relocation costs associated with this reallocation are in excess of $ 1 billion. Under the recently enacted defense authorization statute, these affected Federal agencies will be reimbursed for their relocation costs by the winners of the spectrum auctions of the 20 MHz and the previously identified 1710-1755 MHz band. NTIA will work closely with the Office of Management and Budget, the FCC, and affected Federal agencies to see that this process is successful. We appreciate the Commerce Committee's support in securing this legislative authority.

Planning for Future Spectrum Needs

Reinventing the spectrum authorization process

NTIA began a program in 1993 to develop an automated Federal spectrum management system to provide a standardized, automated method for Federal agencies to submit applications for spectrum support, select spectrum that is interference free, and validate that the spectrum requested is within the rules and regulations governing spectrum authorization. This system will allow NTIA to make the spectrum management process more efficient and responsive, more accessible, and less bureaucratic. NTIA introduced the Joint Spectrum Management System for windows (JSMSw) in March 1997. Based on feedback the Federal agency users, JSMSw has been revised to make it efficient and effective. Improvements will continue on JSMSw to make it even more effective and to make actual use of spectrum more efficient. JSMSw provides spectrum management tools to spectrum managers in the field so that they can manage their own use of the spectrum, use the spectrum more efficiently, and more rapidly obtain spectrum to meet their needs. Seventeen seminars have been conducted by NTIA for Federal agency spectrum managers in the use and application of JSMS.

Public Safety Needs

One of the most pressing Federal spectrum needs is that of public safety. Under Congressional leadership, NTIA and the FCC established the Public Safety Wireless Advisory Committee (PSWAC) in 1995. The Committee was composed of appointees from Federal, State, and local governments and private sector public safety organizations. The goals were to evaluate the wireless communications needs of public safety agencies through the year 2010 and recommend possible solutions to the lack of available spectrum and interoperability problems. In September 1996, PSWAC submitted a report outlining the public safety community's need for additional spectrum, improved interoperability, more flexible licensing policies, and increased sharing of spectrum resources. Many of the PSWAC recommendations have now been adopted.

The FCC is currently conducting a rulemaking to provide the state and local public safety community with 24 MHz of spectrum that will be made available when broadcast TV migrates to other portions of spectrum as part of the deployment of digital television. NTIA is working with the FCC to develop procedures for licensing of this spectrum and to provide a means to establish interoperability between state, local and the Federal government. To this end, NTIA will be participating in the FCC's recently established Public Safety National Coordination Committee. The advisory committee will develop an operational plan to achieve national interoperability, as well as technical standards to achieve full interoperability and network integration. The work of the committee is to be completed by September 2000.

As provided for in the FY 1999 budget, NTIA is increasing its public safety staff to identify the long-range spectrum requirements for the next 10 years and develop a strategy to provide sufficient spectrum for growth of current services, advanced technologies, and interoperability requirements. Through these efforts, we will continue to ensure that spectrum is available for Federal Government and the public safety community to meet the needs of law enforcement, national security, safe airways, disaster and environmental control, and the promotion of safe living conditions.

Global Positioning System (GPS) Expansion.

NTIA is also addressing issues that will protect the radio spectrum currently used by the global positioning system (GPS) and facilitate the expansion of GPS services. GPS is a worldwide utility that provides precise position, velocity, and time information anywhere in the world. GPS information is used by the public and private sectors in such areas as aviation, maritime and waterways, public transportation, railroads, telecommunications, surveying, defense, weather, environmental protection, and law enforcement.

In order for GPS to be used reliably and confidently as a worldwide utility, the radio spectrum within which it operates must be protected. NTIA is responsible for leading the efforts in preparation for the World Radio Conference 2000 to protect the radio spectrum used by GPS.

NTIA is also dedicated to making spectrum available for the expansion of GPS. The President's FY 2000 budget would provide for two new signals for civilian uses of GPS. One of the signals will be available for general applications. The other signal will be located in a portion of the spectrum allocated to aeronautical radionavigation services for aeronautical safety applications.

NTIA will be addressing the associated international spectrum issues at forthcoming technical fora and the World Radiocommunications Conference 2000. NTIA will also continue its efforts to work with the Department of Transportation, the Department of Defense, the Department of State, the FCC, and the private sector to ensure that spectrum is available in the future for this purpose.

Infrastructure Protection

Finally, NTIA has taken a leading role in protecting the national information infrastructure. As information and telecommunications systems become increasingly critical to our daily communications and our national economy, protection of this infrastructure is also becoming a priority for the nation. In May 1998, the President issued a Decision Directive (PDD-63) to create a public/private partnership to address the nation's need to protect our critical infrastructures from purposeful attacks. PDD-63 designated the Department of Commerce as the lead agency to conduct a vulnerability assessment to protect the nation's information and communication infrastructure. The Secretary of Commerce assigned NTIA the responsibility to carry out this program.

NTIA is planning to undertake numerous activities as lead agency. Among other things, we will be working with industry to raise awareness of the threat to, and vulnerabilities of, their infrastructure. NTIA will also work with industry to develop plans to mitigate the risks, deal with attacks, and reconstruct damaged infrastructure. Additionally, we will encourage the adoption of security standards and best practices, not only within the United States, but also among our major industrialized partners. Our goal is to harmonize our efforts with other countries and take best advantage of their developments in technology and policy because this infrastructure is inherently global.

Throughout this process, we will be working closely with industry, as most of the information and communications infrastructure is owned and operated by the private sector. We are working with three key trade associations -- the Information Technology Association of America (ITAA); the United States Telephone Association (USTA) and the Telecommunications Industries Association (TIA). In addition, NTIA has established close working relations with other government agencies, which will contribute to the effort. These include the National Communications System (NCS), the President's National Security Telecommunications Advisory Committee (NSTAC), the Federal Communications Commission's Network Reliability and Interoperability Council (NRIC) and the FBI's National Infrastructure Protection Center (NIPC). These close working relationships should ensure the cooperation of industry and government in our efforts to protect the nation's infrastructure.
 

TELECOMMUNICATIONS RESEARCH

NTIA is greatly assisted on spectrum management and other telecommunications issues by its laboratory in Boulder, Colorado. The laboratory, operated by NTIA's Institute for Telecommunication Sciences (ITS), performs state-of-the-art telecommunications research to support NTIA and Department of Commerce goals. It also conducts specific research under reimbursable agreements with other Federal agencies and under cooperative research agreements with private sector partners.

ITS is an active contributor to many agency endeavors, including those dealing with spectrum efficiency and sharing issues, digital television, broadband wireless technology and convergence issues, advanced video and voice performance testing and standards development, Internet technology issues, and critical information and communication infrastructure research and development. Most recently, ITS provided essential information with respect to signal contours for purposes of the Satellite Home Viewers Act and related proceedings.

The Value of Federal Research

ITS's research laboratory plays a critical role in telecommunications research because it is is unbiased and cuts across government and industry needs. In many instances, ITS's input is essential to resolving pressing technical questions that can't be resolved by industry. For example, ITS's research laboratory recently assisted the FCC in the development of the national digital television channel assignment plan to facilitate the introduction of Digital Television (DTV) across the United States. Without this work, digital television channel assignments could not have been made in a timely and effective way, potentially costing television broadcasters millions of dollars due to increased interference. Private sector experts probably could not have done this work in an unbiased fashion, since their livelihood depends on the continued affiliation with their broadcast customers.

In another recent example, ITS participated in international frequency band allocation proceedings for direct satellite audio broadcasts. ITS was tasked to determine the viability of the proposed bands in the United States. ITS's measurements, which showed that the satellite signals could not be received, prevented the investment of billions of dollars in potentially unusable satellites. The private sector probably could not have provided such measurements, because they would be considered biased and would not have had the same influence as Government measurements. Additionally, industry did not have the means to make these measurements in a short time frame.

Over the years, there have been numerous external and internal reviews of NTIA's laboratory. All these reviews concluded that there is a compelling need for a centralized Federal telecommunications laboratory that serves the public interest by undertaking uniquely governmental research functions in a cost-effective fashion. The ITS laboratory is essential because it is guided by the public interest, not profit motives. A centralized laboratory is also crucial to preventing the duplication of telecommunications research efforts among Federal agencies.

Review of Telecommunications and Information Technology (IT) Systems

ITS also provides expert advice to government agencies with regard to telecommunication and IT planning and implementation. The laboratory helps these agencies provide cost-effective and interoperable systems to accomplish their missions. For example, ITS provided the U.S. Forest Service a national strategic plan for upgrading telecommunications and IT systems across all National Forests; assisted the Department of Transportation in developing a national Intelligent Transportation System to aid traffic control and general public transportation safety; analyzed Federal Railway Administration telecommunication requirements for rail safety and positive train control systems; evaluated and designed Federal Aviation Administration augmentations to Global Positioning System capabilities for air traffic control and ship navigation; and conducted engineering studies and developed standards for the National Communications System to assure interoperability and continuity of operations during national emergencies.

ITS is also playing a central role in the Department of Justice's Interoperability Standards Task Force (a consolidated effort of several Justice information integration programs), which is aimed at establishing telecommunications interoperability and effective information sharing among agencies in the local, State, and Federal criminal justice and public safety communities. ITS has the responsibility for identifying and analyzing the user needs at all levels and for proposing a comprehensive set of interoperability standards that will allow a nationwide criminal justice and public safety enterprise network.

Spectrum Use

Finally, NTIA's laboratory provides significant information on spectrum use. ITS maintains the Nation's database of radio propagation characteristics for the entire radio spectrum to help improve radio communications in the U.S. and internationally. The database provides the foundation for models used by NTIA to prepare domestic and international radio standards and spectrum sharing agreements, by NTIA and the FCC in national spectrum management, and by the broad community of private sector and government users for planning, designing, and implementing radio telecommunication systems. This information also facilitates work on advances in telecommunications technology -- such as personal communications services and high definition television--to benefit all citizens.

ITS also provides comprehensive measurements of spectrum use and occupancy. These measurements provide critical information for spectrum policy and regulation which otherwise would be based solely on information contained in licensing documents and other records. This measurement capability is also used to solve difficult radio interference problems. Suspected radio interference between Government agencies, or the Government and private sector, can become contentious. ITS, because of its neutrality and expertise, is able to establish the trust of the parties and develop the evidence regarding any suspected interference. ITS has been able to quickly resolve many interference problems that other Government agencies and private sector organizations were not able to resolve.

ITS is proposing in FY 2000 a Broadband Initiative to develop the fourth generation of its Radio Spectrum Measurement System. This work is required to keep pace with the changes in spectrum use brought about by the deployment of new technologies such as spread spectrum wireless communications. Without the initiative, ITS will not be able to maintain its capability to make comprehensive spectrum use and occupancy measurements and to quickly resolve suspected interference by Government systems to private sector operations.

An FY 2000 initiative has been proposed for ITS to lead efforts in Critical Infrastructure Protection (CIP) research related to telecommunications and information technology. With its tremendous expertise and experience, ITS is a natural candidate to lead these efforts. ITS will develop a process for characterizing the assets of existing infrastructures, work with other Federal agencies and industry to identify threats and vulnerabilities to specific parts of the infrastructure, and define and evaluate mitigation strategies based on existing and emerging products and technologies.
 

GRANT PROGRAMS

Another significant area of NTIA's activities is its two grant programs, which help expand access to new technologies. Having documented the "digital divide," NTIA is also seeking to bridge the divide between those with access to new technologies, and those without. The Telecommunications and Information Infrastructure Assistance Program (TIIAP) provides matching grants to non-profits and public entities that are using new technologies in innovative ways to reach those in rural, low-income, and traditionally underserved areas. NTIA's Public Telecommunications Facilities Program (PTFP) supports the maintenance and improvement of public broadcasting facilities throughout the United States and its territories. Both programs are ensuring that Americans have greater access to the benefits provided in our digital age.

Telecommunications and Information Infrastructure Assistance Program

Since 1994, TIIAP has helped underserved communities use information infrastructure to improve the quality of, and the public's access to, lifelong learning, health care, public safety, and other community based services. TIIAP provides critical seed money, without which many innovative and vital applications would not take root and grow in these communities. We have awarded 378 grants to schools, libraries, hospitals, State and local governments and other non-profit entities in all 50 states, the District of Columbia and the U.S. Virgin Islands.

This competitive program has been able to award only one out of every 14 applications. Over the first five years of the program, NTIA received almost 5400 applications. Approximately $118 million in federal grants have been matched by more than $180 million in non-federal funds. In 1998 alone, TIIAP leveraged $18.5 million in federal funds matched by $24 million in private, State and local funding and awarded 46 grants from over 750 applicants to projects in 35 states and the District of Columbia. For 1999, TIIAP has received 702 applications seeking over $278 million in grant funds. These applications represent more than sixteen times what NTIA can fund, making TIIAP one of the most competitive federal grant programs.

TIIAP has an excellent track record of supporting highly successful information infrastructure projects in underserved communities. The program leverages a modest federal investment into significant community investments and provides national models for public and nonprofit organizations to follow.

For example, through a TIIAP grant to the City of Winston-Salem, fire department vehicles responding to emergencies in Winston-Salem and surrounding communities have access to graphic information about the emergency sites as they respond. Detailed images of all city buildings have been created and made accessible in the fire department vehicles by using technologies such as document imaging, geographic information systems (GIS), mobile computers, and global positioning technology. By giving fire fighters better decision-making options during emergency responses, the system enables them to fight and contain fires more effectively, to save lives and property, and, in some cases, prevent fires from spreading to other locations. This project has received international acclaim -- it was recently selected as a finalist in the prestigious Global Bangemann Challenge, which honors "the best information technology projects that cities can show."

A TIIAP grant has also provided Internet connectivity for chronically-ill children at the University of Mississippi Medical Center. This connectivity enables these patients to continue their education and maintain contact with peers, teachers, and parents. Through the TIIAP grant, both hospitalized and homebound patients can use laptop computers and desktop video conferencing to gain access to their teachers, their classroom assignments, and their friends and families. Its impact on their emotional well-being, as well as their continued classroom involvement, is invaluable.

The benefits of the TIIAP grant program were confirmed recently by an independent evaluation by Westat of projects funded in the program's first two years. Among other things, the evaluation found that 90 percent of the projects are still in operation, and that the majority of projects reported meeting or exceeding nearly all of their objectives. Most important, the projects are sustaining themselves beyond the federal grant period and are generating new funds. Each grant dollar has generated another four non-federal dollars to support information infrastructure. In addition to matching funds, the grants led to investments that expanded their services beyond the original scope and further investments to support spin-off activities.

The projects' role as national models further leverages the TIIAP investment. Extensive outreach by the projects in response to the tremendous interest is spreading the benefits of the TIIAP grants to other communities. The 206 organizations surveyed in the independent study reported responding to 79,000 unsolicited requests for information and hosted visitors representing over 5,000 organizations.

The evaluation also found that TIIAP projects help communities in need and serve a diverse public. Sixty-five percent of the projects involved rural areas, while 48 percent served the inner cities. Fifty-nine percent reached those living in extreme poverty and 42 percent involved users with disabilities.

TIIAP grants provide the catalyst for the vast majority of these programs. Seventy-five percent of grant recipients reported to Westat that their projects never would have happened without the TIIAP funds. Of the remaining 25 percent, 90 percent indicated that, without TIIAP support, the projects would have either reached significantly fewer people, or have been substantially delayed, or dramatically reduced their range of services.

For a modest federal investment, TIIAP is providing a tremendous body of knowledge on which policy makers, community leaders, and technologists in the private, public, and nonprofit sectors can rely as they work to ensure that advanced telecommunications and information technologies reach the farthest corners of our nation. The excellence of the TIIAP-funded projects is reflected in the nationwide and international acclaim they receive. For example, four TIIAP grant recipients were recently named on a short list of finalists in the Global Bangemann Challenge, which honors the best information technology projects that cities can show. TIIAP projects have also received awards from the NII/GII awards competition, the National Rural Health Association, the National Association of Development Organizations, the Medical Library Association, and the National Association of Counties, among many others.

Most importantly, TIIAP is strengthening our communities by revolutionizing how we learn, how we take care of our sick, how we control crime, and how we create opportunities for people most in need.

Public Telecommunications Facilities Program (PTFP)

NTIA's PTFP has helped public broadcasters maintain and expand their equipment and facilities for the last 35 years. The grants achieve three Congressionally mandated objectives: (1) extend delivery of public telecommunications services to as many American as possible by the most effective and efficient means; (2) increase public telecommunications services and facilities available to, operated by and owned by minorities and women; and (3) strengthen the capability of existing public broadcasting stations.

Facilities funded by PTFP have given millions of Americans access to the educational and cultural programming of public broadcasting. With the program's assistance, a public television signal now reaches about 95% of our nation's population and public radio reaches approximately 90% of the population. NTIA and its predecessor agencies have assisted noncommercial entities to acquire the necessary hardware to produce and broadcast public television and radio programs, radio reading services, and descriptive video services for the disabled. NTIA also supports the delivery of instructional and educational services by a broad array of community institutions.

Since PTFP's inception, over $500 million in federal funds has been invested in the public broadcasting infrastructure. Local communities have provided upward of another $500 million dollars to match the federal grants. In 1998, NTIA awarded $19.9 million for 115 projects in 41 states to facilitate the expansion of public broadcasting services to communities across the country and ensure the continuation of service. After receiving clearance from the FCC, NTIA recently awarded three addition projects from 1998. A number of the awards will expand access to public radio to 450,000 persons who presently do not receive any signal. Communities such as Santa Rosa, CA; Wilmington, DE; Kilauea Town, on the island of Kauai, HI; Leonardtown, MD; Manteo, Buxton, and Waves, NC; Manahawkin, NJ; Lund and Ely, NV; the Duck Valley Reservation of the Shoshone-Paiute Tribes in Owyhee, NV; Defiance, OH; and Vernal/Uintah, UT, will receive either their first public radio service or greatly expanded service.

The President's FY 2000 budget requests $450 million over 5 years to go towards the conversion of digital television. In April 1997, the FCC issued regulations requiring broadcasters to transition from analog to digital broadcasting. Public broadcasters must convert to digital broadcasting by May 1, 2003. This deadline allows the analog spectrum to be turned over to commercial users by the 2006 date established by Congress and mandated in the Federal Balanced Budget Act of 1997. The President's budget requests advance appropriations for a multi-year effort to allow advance planning and certainty in the public broadcasting system's transition to digital broadcasting. In FY 2000, the Administration is seeking $35 million from Congress to the PTFP. The $35 million request is part of the $450 million initiative, now in its second year. The initiative seeks funds in both the Corporation for Public Broadcasting and PTFP. Funding through PTFP will be targeted for digital transmission equipment, while funding for Corporation for Public Broadcasting will support necessary expenses related to digital program production and development.

Public broadcasting stations are undertaking an enormous new financial burden as they transition to the digital format. Over $700 million is needed for the nation's public television stations to meet the FCC's minimum digital broadcast pass through requirements. The conversion will place an enormous strain on the already precarious budgets of many of the public broadcasting stations. Federal assistance is critical during this transition period. For almost half the public television licensees, the cost of conversion to digital is projected to exceed their annual revenues. If stations are forced to convert without assistance, many stations will be forced to go off the air or reduce hours of operation, adversely affecting programming quality and diversity.

PTFP will take special measures to assure that the full potential of the new digital technology is used to provide the most economical means possible of providing public broadcasting services. Special consideration will be given to stations broadcasting in under served markets, especially those in rural, remote, or disadvantaged communities. In addition to digital conversion assistance, PTFP will continue its traditional support to expand the availability of public broadcasting services to those areas without such service. PTFP also will assist public radio and television stations to continue providing their existing analog service during the federally mandated transition period.

Since September, NTIA has awarded fifty-two awards to assist public television stations with the purchase of digital-ready or digital-compatible equipment. Three of these projects-KCTS-TV, Ch. 9, Seattle; KQED-TV, Ch. 9, San Francisco; and KCET-TV, Ch. 28, Los Angeles-will allow stations to complete their full digital conversion. Another grant will permit KERA-TV, Ch. 13, Dallas, TX, to share the cost of a digital TV antenna, thus allowing the station to remain on its current tower and greatly assist in its digital conversion.

As a result of an emergency grant to the Mississippi Authority for Education Television, the state network restored analog public television service to the Jackson area and allowed the Jackson station to broadcast experimental digital programming. NTIA funded a new tower and transmission equipment in response to the collapse of the commercial tower on which the public television station's antenna had been located.

These examples demonstrate NTIA's efforts to preserve public broadcasting, bring service to remote and rural communities, and encourage efficient technologies. NTIA will follow the same objectives as we assist public television with digital conversion and ensure that all public television transmitters are converted by 2003.
 

AGENCY OPERATIONS

NTIA is also committed to improving agency operations and management. Beginning in 1990, Congress passed several major pieces of legislation governing the way Federal departments and agencies operate, specifically:

-- the Chief Financial Officers Act of 1990, as amended by the Government Management Reform Act of 1994;

-- the Government Performance and Results Act of 1993; and

-- the Clinger-Cohen Act of 1996.

NTIA has made significant progress in implementing these laws. The Chief Financial Officers Act requires Federal departments and agencies to prepare annual financial statements and have those statements audited in accordance with generally accepted auditing standards. The Department of Commerce is committed to improving financial information and financial management capabilities. NTIA was one of the first Commerce agencies to receive an unqualified opinion on its financial statements for 1993, and has continued to receive unqualified opinions on all subsequent statements. Since 1995, the audits conducted have been formal full scope audits. The unqualified opinions confirm that NTIA's financial statements fairly present the financial position of the agency.

Under the guidance provided by the Government Performance and Results Act (GPRA), NTIA has established a strategic planning process and developed an agency strategic plan. During the past year, NTIA's senior managers have focused on redefining NTIA's goals and objectives and succeeded in reducing the agency goals from seven to four. A continuing emphasis has been placed on measuring performance, both internally and at the Department level. NTIA's internal planning process is designed to complement and reinforce the Department of Commerce planning efforts. NTIA managers have embraced the planning process as a way to improve our management and maximize the return to the public from the agency resources available.

NTIA is also supporting the Department's efforts to properly implement the philosophy of the Clinger-Cohen Act. Clinger-Cohen (also called the Information Technology Management Reform Act) is designed to improve our management of the information technology investments necessary to enable us to fulfil our missions. The information technology investments NTIA makes are directly linked to our business needs. The strategic and operational information technology plans directly support for the agency's goals and objectives. NTIA has processes in place designed to ensure that all major information technology investments are evaluated in terms of the overall business value to the organization. In addition, NTIA's laboratory (ITS) is performing a Telecommunications Assessment across all bureaus and agencies of the Department to provide the current status of telecommunications and information technology assets for Commerce management, and to allow informed decision-making on future evolutions in the infrastructure.

NTIA has declared two information technology systems to be mission critical for year 2000 efforts: the Spectrum Frequency Management Systems and the Grants Processing System. Both these systems are year 2000 compliant. NTIA is in the process of developing year 2000 contingency plans for its own essential operations and working with the Department of Commerce to ensure telecommunications and other services are available for essential personnel.
 

CONCLUSION

NTIA serves a critical role in developing and promoting policy in all areas relating to the telecommunications and information sectors. We have taken the lead, both on the domestic and international front, in setting forth positions in spectrum management, universal service, broadband networks, global competition, and electronic commerce - to name a few key areas. Given the increasing importance of these issues to our domestic and global economy, NTIA is playing an increasingly significant role in its position as representative of the U.S. government and Executive Branch advisor.

As NTIA Assistant Secretary for six years, I continue to be proud of the role we play and the accomplishments we have achieved. We hope to continue to address the myriad new issues in telecommunications and information technology with the same level of expertise and thoroughness that we have always displayed. This objective has become increasingly difficult, however, as the issues and demands on NTIA have increased, and the staff levels have decreased. I fear that NTIA's leadership in the dynamic and expanding telecommunications and information arena could be compromised without adequate resources. We therefore appreciate the support of this Committee as it considers our FY2000 Budget Estimates so that NTIA can continue to play a leadership role.