In Re: ) ) A NEW FCC FOR THE ) 21ST CENTURY ) Volume: 1 Pages: 1 through 105 Place: Washington, D.C. Date: September 30, 1999 Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 Follow-Up Public Forum A NEW FCC FOR THE 21ST CENTURY The Portals 445 12th Street, S.W. Commissioners Meeting Room Washington, D.C. Thursday, September 30, 1999 The parties met, pursuant to the notice of the Chairman, at 10:00 a.m. BEFORE: HON. WILLIAM KENNARD Chairman APPEARANCES: On behalf of the Federal Communications Commission: WILLIAM KENNARD, Chairman SUSAN NESS, Commissioner KATHY BROWN, Chief of Staff ROBERT PEPPER, Office of Plans and Policy LISA GATHRER, Office of Plans and Policy MARY BETH RICHARDS Previously Participated in the Industry Forum: ALAN F. CIAMPORCERO GTE Services Corporation JONATHAN SALLET MCI-Worldcom, Inc. PAT MAHONEY Satellite Industry Association MICHELLE FARQUAR Hogan and Hartson Counsel to Western Wireless Corp. DAVID TURETSKY Teligent ROY NEEL United States Telephone Association Previously Participated in Consumer Forum: JENELL TRIGG Telecom Opportunity Institute JOANNE KUMKEAWA The Office for the Advancement of Telehealth AL SONNENSTRAHL Consumer Action Network of Death & Hard of Hearing Consumers KAREN STRAUSS National Association of the Deaf DEBRA BERLYN Competition Policy Institute CLAUDE STOUT Telecommunication for the Deaf Previously Participated in Academic Forum: STEVE POCIASK Joel Popkin & Company Economic Consulting LARRY SPIWAK Phoenix Center for Advanced Legal & Economic Public Policy Studies PETER CRAMTOM University of Maryland JANNETTE DATES Black College Communication Association JUDY HARKINS Gallaudet University New Participants: JIM BLITZ Davis Wright Tremaine LLP RICH BARTH Motorola Corporation KOFI OFORI Black College Communication Association PAM STEWART Maryland Public Utility Commission ROBERT MCDOWELL Competitive Telecommunications Association I N D E X Welcome and Introduction by Kathy Brown, Chief of Staff 5 Opening Remarks - Chairman Kennard 6 Remarks by Commissioner Ness 10 Ground rules - Kathy Brown, Chief of Staff and Moderator 10 Session 1: Create a Model Agency for the Digital Age 14 Session 2: Promote Competition in all Communications Markets 60 Session 3: Create Opportunities for All Americans to Benefit From the Communications Revolution 69 Session 4: Manage Spectrum in the Public Interest 87 Wrap-Up by Kathy Brown, Chief of Staff 101 Forum Began: 10:00 a.m. Forum Ended: 12:40 p.m. P R O C E E D I N G S CHIEF OF STAFF BROWN: Good morning, everyone. How are you? Hi, Janell. I can't tell you how grateful I am to all of you who have agreed to come back yet for another day to help us think about the future of the FCC. For those newcomers, let me also thank you very sincerely for joining us and being here to give us some input on what we believe is an extraordinarily important document that we have put together, really, with your help. I hope as you've looked through that document, you've read it closely, that you recognize yourself. If you don't, I suspect I'll hear about that today. That is why we are here, we want to hear from you. We want to understand deeply the needs of our constituent community, both the various and many consumer groups that we serve, as well as the industry that we regulate. So I, again, welcome you today and thank you sincerely, again, for being here. I'd like to introduce to you the Chairman. I know I don't need to introduce him to you but it is always fun for me to do so. The best chairman of the FCC, the most wonderful man in the city to work for, I give you Chairman Kennard. CHAIRMAN KENNARD: Thank you, Kathy. It is easy to be the best when you are the only chairman of the FCC. (Laughter.) That's easy. Thank you, very much. One of the things about being Chairman of the FCC is that you become sort of an instant authority and expert of all things involving communications. People are always coming to me and asking me to make predictions about what is going to happen in the marketplace. "Well, Mr. Chairman, when will all people in America have broad band?" or "When are we going to have true local competition?" or "When will people truly turn to their wireless phones as a real substitute for the wire line phones?" If you've noticed, you don't hear me making a lot of predictions. I usually decline these opportunities because the one thing that I have learned about being in this business today is that most predictions are wrong because the world is changing so fast, technology is so dynamic, the marketplace is so dynamic that most people who make predictions, even the most sophisticated well-trained people in the know get it wrong. The one thing that we do know about this field is that it is changing very rapidly. It will continue to do so. We also know that the internet and the whole transformation to a digital economy is very chaotic, very unpredictable, but very good for these markets and for this economy. No one could have predicted the growth of the wireless industry in this country, most people got it wrong. Nobody predicted the rise of the internet, most people got it wrong, including most people who were in policy making positions. In 1994 there were 3 million online subscribers in America. Today 50 million households are online and there are almost 200 million online subscribers worldwide. Nobody predicted that this thing, the internet, would grow that fast. I'm telling you all of this because fundamentally we're involved in an exercise that requires that we make some predictive judgements about what the marketplace is going to look like so we can design an FCC that is relevant in that marketplace. The five year plan that we have designed, I think, has a very hefty dose of humility because it fundamentally recognizes that we don't know exactly where these markets are going. In the past the FCC was organized around a marketplace that moved a lot more slowly and was, in fact, more predictable, so we could organize ourselves into neat little niches and we would have what used to be a Broadcast Bureau and is now the Mass Media Bureau and a Cable Television Bureau and a Common Carrier Bureau, basically, with the presumption that we could micromanage everything that happened in one little industry segment. Well, you all know that those days are gone. So, our strategic plan, I think, recognizes that. It has, I think, the benefits of being very general but also making some specific policy objectives and goals and timetables that we want to achieve but fundamentally recognizes that in an era of convergence we can't predict where all this is going and what we should be doing is focusing our attention on those areas where we know consumer welfare will be undermined and that is where there are competitive bottlenecks. So, if you look at our plan, as I know many of you have and many of you in fact had a role in helping us write it, you see that we are focusing a lot of our attention on trying to identify where those bottlenecks are and putting a lot more effort on the enforcement side of the house to break open those bottlenecks and enforce the rules of the road for consumers. I think this is just the right balance. I hope you think we got it right, if you didn't I'm sure you will tell us this morning, because I wanted to convey to you this morning that this effort is real, it is happening. Many of the things that we've outlined in the strategic plan have already happened. We are on the verge of setting up two new bureaus, including a new enforcement bureau which will help shift the emphasis of the agency more into the enforcement arena so that we can make sure that these competitive rules that we're will be enforced so that we can make sure that where there are market failures and people in the disability community don't get serviced that we will have a fair, effective, and fast enforcement regime. I wanted to be here today basically to thank you. I see many return faces. I appreciate that you are hanging in there with us, I'm glad you are because this is a serious effort. We are going to do something here, we are doing something here. It is an effort that I see as very much evolutionary. The process really began before we put out this blueprint, it began when we started talking about a year ago setting up these two new bureaus, which we will do fairly soon. So, please, hang in there with us, continue to have a role in the process. Your input is being heard, it is being reflected in our drafts and our documents. You will help us shape the FCC for the next millennium. It will be a very different FCC than the one you see before you today. Thank you for being here. CHIEF OF STAFF BROWN: Thank you, Mr. Chairman. We'll let Commissioner Ness settle herself a minute. COMMISSIONER NESS: Hi. CHIEF OF STAFF BROWN: We've just done introductions and you're on. CHAIRMAN KENNARD: Are you settled now? (Laughter.) COMMISSIONER NESS: I'm very settled. I'm Commissioner Ness. Hello. I'm really pleased that you all are here, that you're talking about these issues. These are things that obviously we've been thinking about, not just for the last few months but for an extended period of time. An awful lot is going on in this industry, in case folks here haven't noticed, as I know you all have. We need to think through how we best can organize ourselves to be most responsive to what is happening on so many different levels in the industry. So, I'm not going to say anything further, other than to thank you all for your participation. I look forward to speaking with you and hearing about your comments. Thank you very much. CHIEF OF STAFF BROWN: With that, a couple more comments from me and then we'll open the floor. When we lest met, I think it was primarily with the consumer citizen group, the recommendation was made that we try to combine the groups. In our first set of forums we heard from the industry, we heard from academia, we heard from consumer groups and that it would be good, and perhaps profitable, for all sides of these debates, for you to be together and to be able to hear and listen to each other. So, we tried to do that today. Again, I thank you all for engaging in this exercise experiment with us. Those of you who have engaged in strategic planning know that a strategic planning exercise attempts to set direction, it attempts to set direction over time. In order to have some clarity with respect to direction one tries to distill where you are going into a couple of powerful statements. We tried to do that and you see that the strategic plan is broken up into four areas. Now, we understand that under those general directions there is much implementation that has to take place and many policy choices that are to be made. But one of the primary and fundamental questions is, "Is this the right direction, are we going the right way?" Then under that, of course, is, "Having chosen that direction what is your battle plan?" The third question that I think is so incredibly important is, "What's your time table?" What you have in front of you, I think, is a document that sets direction and starts to talk about the battle plan. It doesn't quite, I think, flesh out all of the time tables, although, I want to assure you that we internally are doing just that. We have matrixes at this point that will boggle your mind but may also please you because we understand that if you say you're going to do something in five years that you have to start to take very specific steps in year one and try to think about year two and onward. And so we can talk a little bit about that and I will certainly take your comments on that but I wanted to assure you that we understand that that has to happen. The next area, of course, one always has to think about is resources. If one really picks a direction, has a plan, has a time table, the question is, "Do you have the people to do it and/or do you have the systems to do it? Do you have the electronic systems to do it?" In our information age and with the direction we've chosen, which is to make us a digital agency, those are very highly relevant questions and it is a very highly relevant time to be thinking about it, given that we got a continuing resolution yesterday and very iffy with respect to what the resources will be for this agency. Finally, it seems to me, and while this has gotten most of the play, it is probably the last thing one thinks about, "What is your organization around getting all that plan done? What is the most efficient way to do it?" Again, those of us who have looked at these kinds of things there are any number of ways to get it done, any number of efficient ways to get it done but one needs to pick away and do it and get everybody on board. So, that is the kind of thinking that we've been doing. I think it is the kind of thinking you see reflected, I hope it is, in the plan. What we would like this morning is some feedback on the general direction and then those specific items. The way we tried to organize the conversation is around the four areas that we've picked. So, let me just say them out loud. First, we mean to create a model agency for the digital age. Secondly, we mean to promote competition in all communications markets. Third, we mean to create opportunities for all Americans to benefit from the communication revolution. And, finally, it is our mission, we believe, to manage the spectrum in the public interest. Those are the four broad directional areas. We thought it would be enlightening to go through them one-by-one. The schedule is that we will take a half hour on each of these areas. I know this group fairly well, I suspect you will overlap and you will say whatever you want to say whenever you want to say it but I will try to organize and the staff will try to organize your comments so that they are in some sort of organizational structure when we're finished. A couple of ground rules. We, I think, last time tried to build on each others ideas as best we can. We tried not to make too long speeches. It is a fairly large group, I'll ask you to keep your comments to under two minutes, if you can. We were very successful in sort of using the Aspen approach of raising your tent card so that I can acknowledge you. Make sure I see your name. For purposes of our interpreters and also because we are on the internet and captioning, may I ask that you state your name prior to speaking and really your perspective or your organization would be helpful as well. Are there any questions? Any concerns? Yes? You need a name tag. Lisa. We can take care of that. VOICE: (Comments made off mike.) CHIEF OF STAFF BROWN: Okay, so with that, we talk -- did I cover everything, Pepper? Okay. With that, the first area of the report dealt with creating a model agency for the digital age. We talked about a flatter, faster, more functional organization. Let me throw the floor to you and let me not speak anymore. Who would like to start? CHAIRMAN KENNARD: You got it right in the nick of time. CHIEF OF STAFF BROWN: Pam, go ahead. MS. STEWART: This is Pam Stewart. I am from the State of Maryland Relay and my comments will basically be from a TRS, telecommunications relay, point of view. I think the most important thing, as far as TRS, is to make sure that the FCC stays a leader in functional equivalency. We have a lot of good regulations, we need enforcement more in TRS than we need it anyplace else because we don't have the competition there to drive the market itself. So, until we can get the market there so it is a competitive driven market we need the FCC to streamline the ways to get things done for TRS. CHIEF OF STAFF BROWN: Thank you. Steve? MR. POCIASK: Hi, I'm Steve Pociask. I'm with Joel Popkin & Company. Reviewing the plan -- and I'll try to address my comments mostly to this session. In writing strategic plans in the past -- I mean, I see a lot of good plans in this plan but in the interest of improvement I'm going to suggest a few areas where there may be some opportunities to improve it. For one, the way the plan is written it is not clear to me what the strategic imperative should be. By that, there is little information about what the deficiencies are that lead to the conclusion that there needs to be these various strategies in place. I'll just take an example that is relevant to this session. I can understand the need to increase knowledge and expertise. That is sort of a noble goal but it is not clear that there was a deficiency as an example stated in here in the plan. There are a number of examples of that where I think if you look for -- first I have to ask myself are these the right strategies but let's just accept that going forward. That is the one thing, though, that I think we need to focus on, what the strategic imperatives are. I don't know that there was like an analysis of the strengths of weaknesses of the organization, the opportunities and things such as that that would normally go into a strategic plan. But let's just accept the strategies as good. The second area I think that is an area of improvement is how do we know that there is success? I see in here that there are performance measures but they are not what I would consider to be sort of market focused milestones. By that what I think would be more helpful, rather than say that reorganization will take place over the next four years but actually state as much as possible exactly what the benefits to the consumers will be as a result of these things. So, I don't think that we've actually tied the benefits of these strategic plans to consumer benefits. So, hiring 15 percent more engineers -- just to use that example again -- it is not clear to me that that benefits consumers in what way and that the benefits are greater than the cost. Again, as I said, it seems to be a good goal but it is not clear to me what the benefits are to consumers. Those are a couple things that I feel that the plan is a little bit weak on. CHIEF OF STAFF BROWN: Thank you. Roy. MR. NEEL: Thank you, Kathy. I'm Roy Neel. I represent the United States Telephone Association, which represents the more than a thousand local exchange carriers in the country, the only part of the telecommunications industry that serves virtually every telecommunications consumer, the only part of the telecom industry with the virtually unqualified commitment to universal telephone service. This is a terrific forum. This commission at this particular point in time, in my experience of 23 years, is the most open and receptive Commission that I have ever dealt with. Our beef is more in the outcome of policy considerations than in the good work you do in receiving comment. Earlier this year I wrote to the Chairman asking that the Commission undertake a major consideration of convergence. I'm really pleased that this is embraced in the draft strategic plan but it seems to me and to the local exchange industry, the structural change will just not do the job. It is just not sufficient that the forum should focus on policies and rules that encourage investment and on customers as opposed to competitors and with a goal to bring equitable regulatory treatment to all those companies that choose to provide services in this converged marketplace, irrespective of irrelevant or historical regulatory classifications. One of the problems is that you have a five year time frame. Five years is just entirely too long. In five years the FCC could be a candidate for sunset. So, this needs to be accelerated. And truer form has got to address outlook, as opposed to simply structure. We have competition in some form in virtually every communication market but there is room for a lot more competition. The fundamental premise of regulation is that it is a poor but a necessary surrogate in the absence of competition. So, it is self evident that regulation must decrease as competition becomes more vigorous. We would hope that the Commission would accept deregulation as a co- equal mandate, along with increasing competition. There is a direct and inverse relationship between competition and deregulation. I just think it is absolutely wrong for the Commission to think that in a competitive communications market that it should have any role as a market facilitator. It just seems almost like an oxymoron. It needs to accept the fact that the end goal should be to put itself out of business. It is appropriate to have as a goal to create a model agency for the digital age but we think application processes should be sped up, in most cases limited to 90 days for review and determination and that any effort at bi- annual review be very aggressive and work toward eliminating unnecessary rules throughout the system. Thank you. CHIEF OF STAFF BROWN: Thank you, Roy. Robert. MR. MCDOWELL: Hi. Robert McDowell with the Competitive Telecommunications Association. We have over 350 members in t he competitive community, integrated communications providers, interexchange carriers, competitive local exchange carriers, internet service providers, et cetera. First of all, Mr. Chairman and Kathy, I'd like to thank you very much for inviting us here again to this forum. We certainly appreciate all of the thought that has gone into the Chairman's proposal. We want to make sure at CompTel that as the FCC does manage the transition from a monopoly driven marketplace to a competitive or competition driven marketplace that it doesn't forget some of its statutory duties and also it doesn't forget the fact that we're not there yet. Competition just simply is not there yet. We don't want the FCC to walk away from its enforcement duties under the law or we will never have meaningful competition. CompTel proposed to Congress, at Congressman Gilmore's request, a plan for restructuring the FCC. That plan included consolidating the common carrier cable, mass media and wireless bureaus into one bureau that CompTel wanted to be called the "Competition Bureau." That Competition Bureau would be divided into two halves, one half that dealt with monopoly driven industries or those where there was sufficient market power to render competition difficult or impossible and the other dealing with the areas that were more competitive. The side that would deal with the monopoly driven industries, of course would address issues arising under Section 231 or 271 of the 1976 Act. We want the new Enforcement Bureau, which we applaud, to act swiftly and to act with teeth. We have to be careful as we stare into the new dawn of the post-271 world into the whole area of backsliding. So, there appears to be a common tension between wanting to deregulate to foster competition and then having that deregulation disappear too quickly, or that regulation that would disappear to quickly, to where we are not preventing backsliding. So, as we enter this new, sort of past the sound barrier into the new world we want you to remember we're not there yet and to remain vigilant. Thank you very much for inviting us, again. CHIEF OF STAFF BROWN: Thank you. Michelle. MS. FARQUAR: Michelle Farquar, speaking on behalf of Western Wireless Corporation. First, I want to complement the FCC for undertaking this effort and for producing such a strong first document. On behalf of Western I wanted to note that one area that may not be addressed in the plan currently is what I would call industry or outside initiatives. So much of the FCC's work going forward, especially during this transition period and into the future, are really initiated not by the FCC itself but by outside forces and functions. The vehicles for that are slim and sometimes difficult and cumbersome and may not have a very routine process. Sometimes things like petitions for rulemaking, petitions for pre-emption, petitions for waiver, petitions for declaratory ruling, the process may not be clear. Sometimes it takes awhile for those to get on public notice. The FCC, I think, needs to express a greater openness to such vehicles, maybe come up with some new ones, also, give feedback earlier in the process as to whether this is something that may have legs or not. And, also, try to expedite treatment of these as they come in. CHIEF OF STAFF BROWN: Thanks, Michelle. Jonathan? MR. SALLET: I'm Jonathan Sallet, Chief Policy Counsel of MCI-Worldcom. Let me just make a couple of points, not in any formal statement but to the effect of the strategic plan, which I think is very important. I think it is very useful for an organization to try and take a look out in the years to come, difficult to often times see past the controversies of day-to-day life but important. I think in your structural suggestions you have made two that I would like to discuss specifically. One is the creation of a competition/policy bureau function. I would be inclined myself to eliminate the backslash to make this point. I think the FCC ought to be focusing its future role and questions of competition policy. I say that because I think much of the debate about regulation versus deregulation has a certain sterile quality to it. We regulate for certain purposes. I suggest that in the future FCC action will be concentrated on questions of competition policy and that therefore your distinction that you suggest in this plan between non-competitive and competitive markets and as one moves down to greater -- to the place where there are greater competitive markets across the board, issues of completion policy will still be important. Market failures will not be all legislated out of existence. There may be fewer. That would be a wonderful thing but we have no reason to think that they will not appear and, therefore, it seems to me it is quite a good idea to focus the policy efforts of the Commission, as it is reinvented, on issues of competition policy, market structure, the existence of bottlenecks, and, if necessary, the actions needed to be taken with them because I think that is a view that is in greater depth and considerably more sophistication than an inquiry that simply says, "Do we regulate? Do we not regulate?" Second point, the creation of an enforcement bureau strikes me as an extremely good idea. Enforcement issues have a certain similarity and as markets converge those issues will converge as well. It seems to me it helps accentuate my first point, that is to say there's a competition policy perspective and when issues need be dealt with enforcement is a way to do that. I will say one -- make one point about this, although I absolutely agree with the structural recommendation. I will try to heed my own admonition not to lapse entirely into the day-to-day. Our own experience with enforcement of "lay" is that the FCC has put a lot more resources into it, there are people who are working very hard to get it done, and we think that will be better with an enforcement bureau but, nonetheless, we see issues that seem to us to take a very long time to get resolved. Complaints we filed that are sitting there two years after filing. Sometimes processes that are not yet fully attuned to cutting through to the heart of an issue and resolving it one way or another. So, without suggesting that there are endemic problems, I do think it would be wrong to pass by this issue without urging you at the present time with the creation of the enforcement bureau and now to find ways to deal with what add up to be large scale issues, although on a day-to- day basis they do not seem to be systemic or organizational. Because in a fast paced world of the kind you describe in your strategic plan, moving quickly through an enforcement process, as you have recognized, is very important. I think it is fair to say we're not there yet. One last point, on information flow, which is part of your model agency. It seems to me that is exactly right. I urge that some of the aspects of this be put into place right away. Just to give one extremely minor example, it is sometimes the case, I am told, that in the last days before, say, sunshine on a major proceeding a lot of people file a lot of paper. It is just coincidence of timing, I guess. It is sometimes important to the staff that other people comment on that paper in these sometimes proposals and new facts and yet the current system often takes a long time just to get stuff on the ex-partes notice of public notice so that other parties can get it. That is a purely logistical problem but it is the kind of problem that can be solved quickly and show great effect as an early sign of the success of the strategic plan. Thank you. CHIEF OF STAFF BROWN: Thank you, Jonathan. Jannette. MS. DATES: Good morning, Mr. Chairman and Madam Moderator. Thank you so much for this opportunity. I am very pleased to address this issue of a new FCC for the 21st Century. I am with the Black College Communication Association. There are about 40 programs at historically black colleges that have communications programs. I represent that body. I am also Dean of the School of Communications at Howard. For the FCC to lead the way in this information age, it seems to me that, as you state, we have to ensure that mass communications serves every American. I think one of the ways to do that, in our opinion, is to piggyback on what Ms. Farquar said a moment ago about outside initiatives. In fact, we believe that private industry really has to participate readily with organizations such as ours in some ways that will help all of us in many ways. I will tell you what I mean by that. If we have some of the private industry support for those of us in higher education, and I'm thinking particularly about the historically black colleges that are looking at ways to improve the learning environment for their students. Our students, that is black students, will be better prepared to enter the workplace of the next millennium. One of the things that we know is true is that historically black colleges have been under served and under funded. So, our students do not have the technology and the telecommunication systems in place that some of the mainstream colleges have for getting their students competitive. So, our students need this kind of support from private industry. It seems to me that when we talk about trying to be certain that we have voices in the communications industry that are more varied, that are diverse, that we've got to do something to help black colleges because that is where a large percentage of the diversity that African Americans bring to the table comes from, as many of us know. Black colleges cannot in good faith hold out to our students that jobs will be available to them upon graduation if in fact we know that we're not preparing them because we do not have the technology and the telecommunications systems in place to get them ready for that. So, it is our argument that in fact in this structure that we are talking about for the FCC that it in fact would encourage and strongly motivate people in private industry to give help and support to historically black colleges. We applaud the Commission's commitment to promote opportunities to expand direct participation in existing and future communications businesses, as it states so clearly but we clearly do believe that this support will make all the difference in the world. Without our voices the diversity that we are talking about will not be there. If we do not have strong historically black colleges to continue that pipeline then those voices will be silenced. CHIEF OF STAFF BROWN: Thank you, Jannette. Pat. We will work up the table. Do you want to start? MS. MAHONEY: Thank you. I'm Pat Mahoney, representing the Satellite Industry Association. I would like to congratulate the Chairman and the Commission on the draft of this massive undertaking. I appreciate, again, the opportunity to participate in this process and also appreciate that the document does address many of the issues and points that were raised in the earlier fora. With respect to creating the model agency, we have some questions and concerns, as well as comments. We are pleased that there is a recognition of the need for a continued need for an international bureau but we question where satellites will be if there is also a break out of licensing and policy functions. Both SIA and the Satellite Broadcasting Communications Association address the issue in the first forum about the importance and the significance to the industry at the time of the creation of the international bureau consolidation of all of the satellite functions in one bureau. It is important that they remain together, we believe. It is also important that they remain in the international bureau because even the domestic satellites have international implications and international decisions, international -- well, implications, I guess is the best way to put it. These really do need to be together. The expertise needs to be there. The function of working within the ITU and with other countries, the coordination process, it is really important that all of the satellite functions stay together. And that seems to be somewhat inconsistent with the idea of convergence. We recognize that satellites are providing services that other terrestrial systems and other types of services are providing, so it is an issue that is somewhat inconsistent with the goal of breaking down the bureaus into functions and we recognize that. There is another issue that ended up requiring a lot of time, not just from the satellite industry this year but for about, I think, seven associations, representing thousands of companies, and that is created out, I think, in part a concern that the Commission needs to work on its relations with Congress and other agencies. I don't know where that lies in this structure. Perhaps the Consumer Information Bureau could be more like a public or external affairs bureau. There needs to be definite focus on the relations with Congress and the relationships with other agencies. The time that was spent on the defense authorization bills really educating members of Congress and their staff on this spectrum, on what the FCC does and what the NTIA does really shouldn't have been industry in there trying to educate members of Congress and their staff on these issues. We found much suspicion about the FCC and a reluctance to believe what the FCC tells Congress or tells congressional staff. And, so, I think that is a really important function the Commission needs to focus on. I'm not sure where that lies in the reorganized -- in the proposed reorganization. There was a point made by Mr. Neel in the beginning about changing the underlying rules. I read where you were going to consolidate the policy rulemaking function, I would think that that would be something that would come out of that. I would hope that would. I think of a recent example of a proceeding that originally involved other services, not just mass media, and when the report and order came out it is clearly limited to mass media and yet the issues have implications or are involved in other services and that is attribution proceeding. So, if you were representing or you were part of another industry and you wondered what the Commission's policy was on attribution now it is not really clear if it is with respect to mass media. But I hope that, like Mr. Neel expressed, it is the underlying rules that also will be looked at in a convergence -- with a view towards convergence. Finally, with respect to the procedural issues, there are some excellent ideas. Here is one area where definitely it is clear that you listened to the comments that were made at the forum. There is one provision that talks about alternative dispute resolution in the negotiated rulemakings. While those are good, I think we gave in the first forum an example of where the staff and the International Bureau actually is going beyond the negotiated rulemaking proceeding. Where the negotiated rulemaking procedure took several years in the satellite area to a process where they invited all the applicants in, proposed some ideas, worked with the applicants, and the process appears that it will be completed in a year, which is very unusual at the FCC in a proceeding where originally there were nine mutually exclusive applicants. So, I wouldn't limit your attempt to look at ways to expedite process to alternative dispute resolutions and negotiated rulemakings. CHIEF OF STAFF BROWN: Thank you. MS. MAHONEY: Thank you. CHIEF OF STAFF BROWN: We have about 15 more minutes. Believe it or not we've used all that time. Let me try to get people whose cards are up but let's try to get everyone. Debra. MS. BERLYN: Kathy, first I would like to commend all of you on the job that you did in taking about the comments of about 60 people in 10 hours and putting it all into a very concise and readable document. I think it is an excellent plan. I just have a very few comments. I was going to hold them but I see that we're getting more into the general. I'll try and address a couple things in the first part here. First of all, as I did note that you did incorporate some of the comments we made in the Consumer Forum. In the interest of consumers, I think it is an excellent idea to move toward a 100 percent electronic filing. As someone who struggles each time to get information, to get reply comments, I think it is an excellent idea. I don't know how folks out there do it and the bottom line is they don't. I think you'll see much more participation as it becomes easier. I do think, however, that you might need to hold some exceptions, that there may be some who, hard as it may be to imagine, will not have access to a network and may need to continue paper filing and getting information. Also on the general note, I'd like to see this plan -- I know the Chairman has mentioned this -- have flexibility to move and change with the successes and failures as we move from a regulatory environment to a competitive one. I think that is critical. Although five years may seem like a long time I think it will be quickly upon us and during that five year period there will be many changes. Finally, this is an excellent idea, to mix the consumers with the industry. We mentioned that in the consumer session. I thought of that as an idea that would be a broader one that could apply in the future as well. I think there are many issues of consumer protection issues that would be best served by sitting down at the beginning with consumers and the industry in trying to work together on solutions. CHIEF OF STAFF BROWN: Thank you, Debra. Diane. MS. DAVIDSON: Thank you. In the respect of brevity I will dispense with the preliminaries and just make a very few specific points on the proposal. CHIEF OF STAFF BROWN: Could I just remind you, your names and your -- MS. DAVIDSON: Oh, I'm sorry. Diane Davidson from the Walt Disney Company. First off, I think that many of the suggestions and the specific details are very good. There are a lot of good ideas in here, specifically making efforts to eliminate the layers of review in the decision making process will go along way towards speeding things up. I commend efforts along those lines. In addition, enforced timetables will also be very important. To that end I would like to suggest that in the biannual review process that is discussed. I think that you definitely need strong definite deadlines for completion of the biannual reviews. And to that end, when you talk about alternative dispute resolution and negotiated rulemakings. I think that those processes can be very helpful and very useful in many situations, however, I believe there are a number of situations where that is going to delay the process, rather than speed it up. Particularly in the context of biannual reviews, I think that in order to try to adhere to deadlines an effort will probably need to be made to cut off the negotiation part and get on with the decision making part. In addition, one comment. I am not really sure about the idea of a restructured bureau as a prototype bureau. My concern there is that that bureau will still be rooted in a specific technology. It seems to me that there will be a lot of time spent and I'm not sure that it will really be worth the effort. Instead, I think the idea of the interbureau task forces and using them more is a very good idea and perhaps an idea along those lines would be to make a focus on creating interbureau task forces that are modeled on the ultimate structure of the Commission that is envisioned in this report. Perhaps that may be a better use of resources than trying to take one bureau and restructure it. I think my last point is that an emphasis on participation in the WTO and all the other international functions is increasingly important for everyone in the industry. I know that for my own company there are a lot of people in my company that need to be educated, myself included, on these very complicated processes. I think that programs at the Commission to try to make people better understand how this works might also be a good idea to get industry participation here. Thank you very much for this opportunity. CHIEF OF STAFF BROWN: Thank you, Diane. Jim. MR. BLITZ: Thank you. Thank you to the Commission for this very worthwhile effort and for the opportunity to speak at this forum today. I'm Jim Blitz with the law firm of Davis Wright Treamine. I'm speaking not on behalf of any client but as a communications law practitioner who has practiced in front of most every Commission bureau and office for over almost 20 years at this point. One thing I've noticed in the course of my practice is the significant differences that exist between the way the various bureaus operate, the way they process applications, the way they convey information to the public and sometimes even within a specific bureau, in terms of how those functions are performed. That leads me to support the concept of reorganizational changes along more functional rather than service oriented lines. Certainly the concept of an enforcement bureau is overdue. I also strongly support the idea of a licensing bureau that would incorporate all licensing functions of the existing bureaus and offices. One example as to why that is so necessary is assignments and transfers of licenses. Large transactions that the Commission routinely processes now always involves stations in multiple services. The current procedures require the applicants and their attorneys to prepare and file numerous applications, many different forms requesting often duplicative information. Services require different types of information, some use different attribution rules, some require submission of ownership charts, organizational charts, some require submission of articles of incorporation. Some services grant special temporary authority for assignments and transfers, others do not. The procedures could be consolidated and should be consolidated into a single application with single procedures. Exhibits would be useable if there are inquiries that are unique to a specific service but the vast majority of information could be in a single form and processed by a single staff asking information about the seller, the buyer, the licenses affected, the qualifications of the buyer, other ownership interests of the buyer and so forth. This would also give a centralized place for processing of the application, streamlining information gathering, conserving Commission resources, reducing duplicative staff inquiries, and giving greater certainty to the public as well. Similarly, other licensing functions of the Commission could be consolidated, such as initial licensing, modification, and renewals. If there are issues specific to a certain service, such as Ms. Mahoney expressed, those can be processed by specialists within the bureau or perhaps even a grant within the bureau that has a certain specialization but as far as the vast majority of licensing scenarios it would make more sense and be far easier for the applicants in the public to do that through a single bureau. The second point I wanted to touch on in relation to that would be the utility of a consolidated database of everything that is filed with the Commission. The Commission has taken great strides recently in using its web site and posting information on license status and the existence of licenses but applications that are filed, petitions, letters, ex parte notices, as Mr. Sallett noted, all of them could be listed on a single consolidated database that would be maintained through the Secretary's office. Much of this, I believe, is maintained currently in some form through the Commission's fee contractor on feeble applications but some consolidated database that lists everything filed with the Commission and the status of it. That would, of course, be available on the internet. Would greatly facilitate the information flow. Thank you. CHIEF OF STAFF BROWN: Jim, thank you. If I can interject just an information point. For the last three years our request for funds to do those two things have been denied. I just want to make that case because I think it is an important one to make. Is that right, three years in a row? We have put forth a proposal to do exactly what you suggest, that is that there would be a one stop licensing kind of function and also that we would have a system where you could access the information you need. As you all know, putting together your own business and/or firms, that is a fairly initial capital intensive kind of undertaking but then reaps enormous benefits, it seems to me, over the ensuing years. So, this is a tension, it seems to me, between the plan and the implementation that I think it is worthwhile you all understand. Larry. MR. SPIWAK: Thank you, Kathy. Larry Spiwak from the Phoenix Center. We are an international think tank, stretching all the way from New Zealand to Denmark. By background, I've actually worked here as a senior line attorney. I think the proposal sets out a very ambitious plan. There is a lot of really great stuff in there about the reorganization of the FCC. I think the reality of it though, out on the street, is that it is met with a large degree of cynicism. So, the idea of an enforcement bureau is really great, the question is is do you really mean it? Are you going to do it actively and aggressively? The idea of moving documents fast through the Commission is a great thing on paper but do you mean it? Is it really going to happen? I was on the phone yesterday with a client and I told him I was going to be doing this thing and sort of chuckling over it. He said, "Well, tell them this." He is a new entrant trying to serve rural America. He has come in, he has tried to deal with the Commission. And they say, "You know, we're not even going to bother because we go in and we talk to them and they say, 'Yeah, we're going to help you out.' We don't hear anything for eight months." That is a real world anecdote that is happening out there. So, if this process is going to work it is going to take a very aggressive leadership. Having been part of a reinventing government group here at the Commission, which is no longer here, and having been here when the Cable Bureau was formed, I mean, this was all supposed to be increased management and flatter, et cetera, et cetera, and all of a sudden the lines of bureaucracy sprouted up. I mean, that's the nature of the beast here. So, you run a real danger in any restructuring that you end up having, with all good intentions, what I call the embedded plant of people have been here and are in positions of power, use the restructuring to sort of consolidate the power. So, you end up in the effort to do something good, you end up just sort of entrenching the existing status quo. Possible remedies to that, I would again suggest forming a competition division, not a competition bureau but what the Commission used to have which was a small interdisciplinary bunch of folks, lawyers, economists, MBAs, who were not part of the bureaus and who were deliberately supposed to come in and provide an alternative viewpoint or analysis to the existing bureaus, whatever you want to call the bureaus. The advantage of that is regardless of win or lose is that you ended up having some competing ideas within the Commission, such that whatever the Commission did at least it was all the issues were fully vetted. I would say I would also agree with the issue of the Secretary and the central filing. As you've heard all the anecdotes earlier today, I mean, who knows where things are filed with. I mean, even when I was at the Commission, official document sometimes come in and they are sitting in somebody's files and there is no central repository. I would recommend strongly that the FCC, which I think it does as it moves to more electronic filing it is doing an excellent job with that but having at least some point where anything that comes in it gets photostated on a PDF file so everybody can get it quickly on the Web. I do commend the FCC for an excellent Web site. Those are my points. Thank you. CHIEF OF STAFF BROWN: Thank you. Al. MR. SONNENSTRAHL(by interpreter): Good morning. My name is Al Sonnenstrahl. I represent the Consumer Action Network of, I would say, about 14 to 15 national organizations of deaf and heard of hearing Americans. First of all, I'd like to applaud the FCC for opening the door to the public and to people with disabilities. We do have to remember where we've started here with the FCC. The reason that the FCC was formed years ago was to monitor the monopoly of one telephone company and now we have more than one telephone company and we appear to have a lot of competition going on today. However, for people with disabilities, people who employ people with hearing disabilities, the monopoly continues. We don't have any laws or rules that monitor the audio aspects. I don't believe, that is, that the FCC has any rules that has to do with the use, to enforce, that is, the use of audio. However, we do need those rules in order to enforce text, captioning, and/or print information in the print format. Because we are, sadly to say, we are in the world of hearing people, in other words, the audio is a given. We don't bother to regulate that aspect. We do have some people though with hearing disabilities and those of us with those disabilities depend on information through a print format of different types. So, please don't forget that aspect that we do have some programs that need to be monitored in order to ensure full access to all people with disabilities, especially those with hearing disabilities. Thank you. CHIEF OF STAFF BROWN: Thank you, Al. Before I call the next speaker let me broaden this. I'm sure with the cards I see up this will be fine to do. As well as trying to formulate a model agency for the digital age we talked about competition as one of our core functions to promote competition in all markets and we said that our objectives are to eliminate barriers to entry, to deregulate as competition develops, to enforce the rules to businesses so they can compete fairly, and to promote competition in the international markets. As we continue this discussion let me incorporate those thoughts too. David, I'm sure you can touch on any number of them. MR. TURETSKY: I'll adapt and include those as well, very briefly. CHIEF OF STAFF BROWN: I'll go to Claude next. David, go ahead. MR. TURETSKY: I just wanted to also applaud the FCC for a terrific process and a very good and thoughtful report. I would just ask that -- and this is probably the next level digging a little deeper -- that we think about the reasons behind some of the good approaches that you've suggested and what necessarily comes with those. In particular, I think the focus on enforcement that is in the first section of the report is a terrific idea, it is crucial, and it is necessary to achieve your competition objectives, and all of our competition objectives as well. But, as we think about that I think, we need to think about enforcement policy as well. Enforcement involves a variety of levels of activity. It involves -- and here informal dispute mechanisms are valuable -- resolving individual cases that may or may not involve tremendously broad policy issues. But also enforcement, properly practiced, involves calculation of the deterrent effect of the activity. To do that the FCC, I think, needs to think about enforcement and the Enforcement Bureau not only as a dispute resolver but also as an entity that ought to have investigative abilities and ought to be able not merely to put things back the way they should have been some time ago to resolve a dispute but ought to also be able to take such bold action that there is a deterrent effect from the activities of the bureau, or whatever it will be called. That is really crucial. From my law enforcement background, we try to resolve cases but we also try to make points. When I say "make points" I don't mean we ignored the law or tried to trump something up. All I mean is that in your case selection and the amount of resources you devote and the investigative tools you use you have to bring some sort of focus as to where the problem areas are in the industry. So, I would urge people not only to think of enforcement as for a dispute resolution but rather to think of it as an aggressive deterrent oriented function as well. The other -- and I would say that that is particularly important in an evolving market that is not really competitive yet but is sort of moving along and continuing toward competition. This will be particularly important with carrier-to-carrier issues, I think, and will remain important for a longer time. On the consumer side, I think, as markets become competitive, I applaud the report for noting that there is an increased focus on interaction in communication with agencies like the Federal Trade Commission. I said before, I think once a market really moves well into the competitive framework, other than kind of carrier-to-carrier issues and spectrum issues, for example, where there is really unique complications there, the consumer and outward facing side, whether you get a bill and whether it is accurate and all that, in the competitive market is the sort of regular grist of agencies like the FTC. So, I applaud you for talking about communications there. I also applaud the focus on investment in staff. I think that is crucial. It is the kind of thing that sometimes gets forgotten in budgetary crunches and the rest, so I applaud that. CHIEF OF STAFF BROWN: Even in times of surplus. Sorry. (Laughter.) MR. TURETSKY: There you go. The last thing, jumping to your competition, to the end of your competition, number two agenda item. I think, having been in the government and having talked with regulators internationally, I'm not sure everybody appreciates just how influential the FCC can be in promoting competition policy by interacting formally and informally with regulators, policy makers, and others from abroad. I think that that is a fairly subtle and discreet function often. I think it is mentioned in the report and, I for one, have seen how influential and important that is. It is something also we shouldn't lose site of in the budget process when people talk about whether they have the money to travel or not. The kind of opportunity that can open up for U.S. and other businesses, the kind of benefits that will reap across the board are tremendous. CHIEF OF STAFF BROWN: Thank you, David. Claude, may I go back to you now? MR. STOUT (through an interpreter): Thank you. I am Claude Stout. I am with the Telecommunications for the Deaf, Incorporated. I am among several -- I represent one of several national organizations that represent over 28 million Americans who are deaf, hard of hearing, or deaf/blind. In representing those people I would like to applaud the FCC for a very pro-disability perspective amongst the Commission. This forum really reflects your commitment and efforts in that regard. I am thrilled with some of the indications in this document of the intention that you indicated to serve these populations, especially in regard to the international telecommunications services and continue with the intermural task force to look at some of the disability issues, especially in regard to the Disability Issues Task Force. I do have two or three concerns. I believe that one of the plans is to stress more what we call federal and state interaction. If the FCC is here as a newly revamped organization I think that many of the states would be well encouraged to follow suit, many public commissions who have not yet indicated a concern or observation of disability issues. We would encourage those 50 public utility commissions to work with the FCC to address disabilities issues because what you have decided should be minimal standards for telecommunications services we would like to see those 50 states also pursue minimal standards in order to raise the standards for TRS services. If you encourage them not only to meet your minimal standards but to go further then I think that we'll be able to see further progress represented amongst the individual states. We would also like to see the individual states to be able to increase TRS services and recognize that in their legislation. I'd also like to applaud your plans to adjust FCC in terms of offices based on function, rather than on technology. Having heard arguments of convergence, again I agree with that. Having the Disabilities Issues Task Force within the FCC I would like a mechanism for ensuring that each of those bureaus is able to take advantage of the expertise and input available from the DITF. I wouldn't want, for example, your Enforcement Bureau to be use -- I would want, rather, your Enforcement Bureau to have user friendly communication with the disability community and to be able to benefit from information from DITF as it regards to accessible Web site services, TTY telephone lines, and the whole gamut so that these constituencies feel comfortable in being able to access and communicate to those bureaus. As people with disabilities, we are working towards working for better relationship with industry. The reorganization plans at FCC bode well for that because we can rest assured that knowing that the work out in the field can be reflected back to you. In coming back to the FCC we want to know that we can expect quick turn around, quick response, and action from you. Again, thank you for the effort. CHIEF OF STAFF BROWN: Thank you, Claude. Jenell. MS. TRIGG: Thank you, Kathy. Good morning. I'm S. Jenell Trigg. I'm Executive Director and COO of the Telecom Opportunity Institute. Thank you again for allowing me to share some comments. My remarks are going to cover both the first section and the second section because I think there is a relationship between the two in terms of elimination of market entry barriers. I think the Commission has done a commendable job in addressing the first draft reconciling all of our different interests, as well, including all our comments. Mr. Pociask mentioned something that I thought was interesting in terms of trying to put what your recommendations are in structure, what the benefit is to the consumer and the public interest. I would like to address two specific areas. One, when we talked about the increasing of staff for engineers or technologists I believe we also mentioned in the consumer forum an increase in financial capital market experience and business experience. I think that is critical so that way you can reconcile the interests of the public record when they come in and what the real impact is on your regulations and whether they be attorneys or engineers or whatever with business experience I think that is important to add as well. You mentioned something very interesting, Kathy, about the licensing, one stop licensing, and how it is very capital intensive. Small businesses, minority businesses and women businesses certainly know this. Why not frame the licensing part of it in a market entry barriers context? Yes, as you've said in your strategic plan that it allows the Commission to leverage of staff and streamline standardize your regulatory process but it also eliminates a major market entry barrier for new entrants. If you look at the financial benefit to the consumers, again back to Mr. Pociask's comments to the public interest, of what your structure does I think maybe there is a way we can get approval for the licensing process. Let's also use Section 257. You have a statutory mandate under the 1996 Act to eliminate market entry barriers for small businesses and yet I'm surprised that nowhere in the strategic plan is that section cited. And, yet, it has a direct impact on how I think successful you will be in ensuring there's competition for everyone across all markets, particularly since the statute requires the Commission to conduct a periodic review every three years after your first report. Your first report was issued on May 8, 1997 and your 3 years happens right at the beginning of your strategic plan and even in the middle of your strategic plan. So, you've really got over your five year performance period two market entry barrier Section 257 reports. I think it would be helpful to incorporate a 257 process across the board, that way you can address not only market entry barriers for small businesses but also for minority and women owned businesses, which supports the end of universal service, your niche market serving everyone. So, I would love to see a Section 257 strategic plan implemented. You've done a fine job on the first report, how are you going to implement and integrate the second and third reports throughout your processes? CHIEF OF STAFF BROWN: Thank you, Janell. MS. TRIGG: Thank you. CHIEF OF STAFF BROWN: Alan. I really didn't forget you. MR. CIAMPORCERO: It would be justified if you did. CHIEF OF STAFF BROWN: No, no. MR. CIAMPORCERO: Five years -- I'm Alan Ciamporcero with GTE. Five years is just too long to come up with a comprehensive, fair, coherent convergence policy. You all know that. It won't satisfy the industry and it is not going to satisfy Congress. I think you guys need to come up with something that Congress is going to say, "Yeah, we'll help you with." rather than something they are going to criticize. It is a cliche now that internet change happens in dog years. It is a cliche because it is true. But, think of five years ago and where we were. The world was nothing like it is now. So, you can't wait five years or four years or three years to do this. You've got to start now with the reform. I was talking to Mary Beth before and I understand her problems. She's got budgets stretching out two or three years from now that she is working on. How do you do this in an immediate way, given the complexity of running a big agency like this? One possibility, I was looking at the suggestions, the key policy initiatives. Bullet number one is begin by selecting one current technology specific bureau as a test case. Why not instead of doing that, instead of doing that create right away an office of convergence? You could even call it "Bureau of Convergence" but I think that might create problems on the Hill and people saying that you're going to regulate the internet, which I know you don't want to do and I don't want you to do. But why not create an office of convergence and starting funnelling dockets through that office and let the legacy problems go to the legacy bureaus? For the people who think we're going to turn bad and pick on people once we get what we want, fine. That's a real concern. Let the old bureau handle that but don't let that poison the policy that is really important, the policy that's really going to determine what the next 20, 30, 40 years look like. We know what that is, it is data policy, it is internet policy. So, just a suggestion. Rather than putting a lot of work on reforming an existing bureau, why not get started right away with the new initiative and let the other stuff wither away? Thanks. CHIEF OF STAFF BROWN: Let me just put some questions out on that because I think it's a provocative idea. It seems that there is everyday kind of business that has to go on at the agency. We spoke about that, Jim, a little bit before, just the normal transactional kind of things that have to happen and they have to happen faster and they have to happen in a more transparent way and in a more efficient way. It seems to me that that's all of the licensing issues that we've talked about and some sort of information system where people have immediate information. Then there are the policies. So, it seems to me you can get that going and ought to get that going. Then there are the policy issues that we face around competition, consumer protection, spectrum management, and, clearly, convergence. We are struggling. We are listening hard to you about how we can take what we currently do, our very industry specific kinds of bureaus, and morph that into what the industry itself is morphing into. That takes a lot of energy, by the way, and a lot of administrative management skill and expertise and resources to get that done. It also takes a vision of how you do it. Obviously there are competing concerns among and between the industry itself as to how that might look. I always listen to Pat who tells me, "No, that's satellite, it's got to stay with that International Bureau." It is very interesting that when you listen to parts of the industry they would also like to sort of not be disrupted totally either. So, it would be helpful, as you are talking this through maybe adding your comments to this, how do you see that beyond the big idea of a convergence office? How would you see it working? How do you think you would interact with the Commission on big rulemaking policy issues? What would it feel like to sit in a room with your colleagues from the wireless side or the wired side or the satellite side and, increasingly, the broadcast side? You all who haven't even talked to each other very much over many years, how would that feel and what does that look like when we really start to operationalize this idea of convergence? As you talk, if you could talk about that that would be helpful to me as well. Judy, I don't think you've had an opportunity yet. CHAIRMAN KENNARD: Neither has Peter. CHIEF OF STAFF BROWN: Or Peter, okay. MS. HARKINS: I wanted to thank the Bureau, like others have, for doing such a well laid out and clear report and for including, prominently, the mention of accessibility of people with disabilities because I think it has to be said again and again. I appreciate the aggressive leadership of the Commission in this area and, I think, carrying that through the plan. In the disability area we don't often talk about competition and barriers to entry but I just wanted to bring in disability under this discussion because I think one of the things you do want us to do is go away and work with industry and not be in here so much. That is what we want to do as well. As the Chairman indicated earlier, we are dealing with this as a market failure. The very large companies will never see people with specific disabilities as a significant enough market. Therefore, the barrier to entry problem becomes very important because small businesses have always been and will continue to be important innovators for people with disabilities. They, like others, have problems when there are barriers to entry. If you look at something like local competition and the wireless offerings as being viewed as competitors to wire line local service, if we have access problems in the wireless area that is not exactly true for persons with disabilities so wire line will probably continue for a longer time to be the venue of choice, the technology of choice for them. So, in all of these areas the ability of small companies to come in and innovate for people with disabilities will be very important. CHIEF OF STAFF BROWN: Thank you, Judy. Peter, I don't think you've had an opportunity. MR. CRAMTOM: Thank you, very much. Peter Cramtom from the University of Maryland. First, I'd like to say I very much agree with what Alan said in setting up an office of convergence or something like that, with the idea being that you don't want to let the bureaucracies of the past contaminate the future. If that happens the FCC could become irrelevant and/or worse be destructive in its ultimate goals, which, of course, it doesn't want to do and judging from these and other forums is working hard to prevent. For me, the last time I was here I said the FCC's mantra should be, "Make markets work better." I continue to want to hammer that point. Anytime a decision is being made simply ask yourself, "Will this make markets work better?" If the answer is, "Yes." then go for it. If the answer is, "No." move onto something else. Lots of applications of that -- it was mentioned already, the idea that there is consensus that you need a centralized database for information and communications that come before the Commission. That is a great idea. It was suggested that as soon as something comes in photocopy it and put it in the PDF and put it on the Website. Well, and you pointed out correctly that the Congress hasn't given you the funds to do that. Well, I think there are ways for you to do it without Congress giving you funds. That is, I believe that you actually spend a lot more money by having less efficient dissemination of information and that now -- granted, technology is going to help tremendously in this -- but, today I think we're at a point where the FCC can move forward on this front in creative ways and get the job done, even if Congress doesn't see the infinite wisdom of this idea. So, one just little simple idea is to put the burden, as much as you can, of the cost of providing information on the side of the person submitting the information because it is actually a very low cost. So, rather than you photocopying things have the submitter -- have a requirement that it be submitted in PDF. Now, is that an entry barrier? No, everybody is capable or should be capable of producing a PDF file or some other portable document format. It becomes a little bit more difficult answering questions for organization, in terms of does this make markets work better because it is sort of one step for you. But, I do think, one can apply to that same reasoning in coming up with an organization and certainly the perpetuation of bureaucracies and more difficult dissemination of this information is not making markets work better. CHIEF OF STAFF BROWN: Let me, before I take the second round around the room, suggest that our schedule called for a break here. Do people think they'd like that? Let me give you all a 10 minute break but before you do, a couple of things. First, I wanted to publicly compliment Lisa Sockett, who is not here -- she is about to give birth, I think, in the next day or two -- and, Lisa Gathrer, who is over here for drafting the report. I think all of you, no matter where you might come out on any particular issue, must have been as impressed as I with the drafting of this report. So, I just want to publicly acknowledge Lisa Sockett of the Office of Plans and Policy and Lisa Gathrer, currently of the Office of Plans and Policy, under Pepper's tutelage here, for getting the drafting done. Secondly, I'd like to let everybody know that Mary Beth Richards, who has many years of experience in this area and, frankly, in my view, responsible for many of the improvements that have been made already in the agency with respect to licensing, et cetera. The Chairman has asked Mary Beth to head the implementation effort and so she will be a crucial person as we go forward. She is very crucial to us, as you know. I think she is crucial to you as well and will remain that way. Finally, I want to mention that in addition to the public forums that we've held, we held an internal employee forum and we will be doing that again as well. We actually found, and I don't want in anyway suggest that our public forums haven't been extraordinary, but that our internal forum was also extraordinary. In this building, on these floors, are people of incredible creativity, innovation, and energy. When we sat with our own folks and started to listen to the ideas that exist right here I can assure you that we were very enthusiastic. So, we will be doing another round of that and I wanted you to know that. Ten minute break and I'll call you back and then I'll go back around. Thank you. (Whereupon a brief recess was taken from 11:15 a.m. until 11:30 a.m.) CHIEF OF STAFF BROWN: Thank you, everyone. CHAIRMAN KENNARD: Pam is ready. Diane, Diane, Larry. CHIEF OF STAFF BROWN: People. Thank you. Why don't we spend another 5 or no more than 10 minutes on the discussion we were having and then I'd like to switch or move onto some of the consumer issues and also the spectrum issues. I don't need to keep you here for another hour but if we need another hour we'll take another hour. Let's see how that works. Pam, why don't you begin? MS. STEWART: Okay. I'm Pam Stewart from Maryland Relay. I would just like to strongly encourage you, as you go through all of this restructuring and convergence issues and all of that, you have an extremely -- as I know you are aware -- an extremely aggressive knowledgeable Disabilities Task Force here. They are very proactive. They go out and get the information, not only on TRS but on all issues, cellular, 911, everything to do with disabilities. I would strongly encourage you on all parts of this to have them deeply involved because quite often what you don't think on the surface would be a disability issue, when they look at it they can bring something up to you so that things can be done and taken care of proactively, rather than have to go back later and try to make a fix to make things accessible. So things won't happen like caller- ID that you have TRS people can't have. Thank you. CHIEF OF STAFF BROWN: Thank you, Pam. Let's go back to Robert. MR. MCDOWELL: A couple of things. I'm not sure if we're on Session 2 or not. CHIEF OF STAFF BROWN: Well, finish wherever you were. MR. MCDOWELL: Well, it overlaps, it converges once again. One word again, enforcement. In terms of promoting competition in all communications markets and also speaks to Session 3, which is service for all Americans. Enforcement will promote and preserve competition. We're especially concerned, as I said before, about backsliding once we enter the post-271 world. It was suggested earlier that the FCC should really just put itself out of business and that would cure all the evils here. Well, you can't put yourself out of business, provided we have two things we've focused on. One is universal service, you've got to be there for that. The other, of course, is for enforcement while we're in the middle of this transition from a monopoly driven marketplace to a competition driven marketplace. We also need enforcement, however, not just against monopolies but against competitors. That also helps competition. It also helps universal service, not just in the area of slamming and cramming but those are the two that come to mind initially. We also don't want you to forget about private sector solutions to some situations, such as a third party liability administrator, for instance, that we proposed to administer slamming complaints, et cetera. The second point is, again when it comes to competition, remember that we're not there yet. Please remember that. Some say that's because the 1996 Act is not 3.5, as one might think, it is really only about 8 months old. The monopolies that appealed the Act that they had earlier endorsed challenged your authority to implement it and they lost that point but that was only this past February. They continue to win on many other fronts so don't put yourself out of business yet. Competition isn't here yet on a local level. Thank you. CHIEF OF STAFF BROWN: Larry. MR. SPIWAK: Thank you, Kathy. This is sort of both 2 and 3, because you say you want to promote competition in all communications markets and you want to create opportunities for all Americans to benefit from the communications revolution. If you have a vibrant competitive market with good economic market performance Americans will benefit. That is the whole purpose. The public interest is a consumer welfare maximization standard. So, again, where are we standing then? I think again it comes back to an issue of regulatory cynicism. I don't doubt anybody's intention here that they really want to see competition but what do we see? On the one hand we see we want to have local competition, yet we allow all the industries to reconcentrate. We want to promote international competition, yet we are in the middle of the telecoms trade war. I think the problem is is that, with due respect to the Chairman earlier said we have no idea where it is all going. I don't think that is a correct way of approaching the issue here. I think the agency -- the empirical data bears out that those FCC paradigms that have been successful have articulated a very clear long term view of industry structure. It is not the same of managing what the market is but that saying that we want to market with low switching costs, low barriers to entry, vigorous price and non-price competition. So, I think what we need then, because firms act in relation to the structure of the market they're in. If you live in a toxic market structure you are going to make toxic decisions. If you live in a market that is conducive to competitive rivalry you are going to compete. So, I think the best way to approach this, which hasn't been done so far, is I think the FCC is lacking but needs a clear analytical framework with how to solve the problems of the day. There is sort of this piecemeal, ad hoc, indeed I would argue political approach that has been going on on a wide variety of areas. This is a complex task but if you think about it, I think through this prism, you'll get it. I think the prism should be -- the FCC should ask itself a very simple question every single thing that it does. Does its actions promote or deter entry? The issue here is that we don't want to split the pie by some sort of incommon perpetual censured resale model. We want to grow the pie. So, you need entry. If you want to move from a market characterized by one firm to multiple firms you need tangible entry. I think, unfortunately, whether by deliberate or omission, the FCC has done very little promote entry. So, I think coming up with a clear view of where we are going, as opposed to sort of saying in the abstract, "Competition is good." is the only way it is going to move forward. If not, I think this regulatory cynicism is just going to continue. I think the American public, given the structure that we're seeing develop, is going to be very upset. Thank you. CHIEF OF STAFF BROWN: Steve. MR. POCIASK: Yes, thank you. This is Steve Pociask with Joel Popkin & Company. I'd like to address just a couple of things. One is Kathy's concern over resources, another with Larry's concern over regulatory cynicism. First, I want to say that I agree with what Alan has suggested here about the convergence bureau. I think it is a good idea. I think another area that the FCC may want to focus in terms of its addressing within the strategic plan is specific methods in which to stop calcified processes that are in place to reduce hand off reviews and the steps, sort of as you might find from a benchmarking type process. In the plan we see that there is a discussion of efficient dissemination of information. We see that there is streamlining, a discussion of mechanization, deregulation, creating, you know, the convergence -- or a convergence bureau, actually but what is discussed here is that the convergence will provide opportunities to perhaps reduce the number of bureaus. I mean, all these things lead to better outcomes with less cost. So, to that regard I think if we look at the resource problem I think there needs to be some sort of prioritization of the resources and the way that would maximize consumer benefits. To use the price cap analogy, where is the productivity -- consumer productivity dividend here? Where does this plan demonstrate that deregulation means less regulation and less regulatory costs? There should be a direct measure to that for consumers or even tax payer savings. Where does this plan say that convergence means fewer bureaus which means less cost? I think if we can build some of those concepts into measurable milestones the plan would be much more successful to take high level strategy and build them down into tactics and day-to-day operation, otherwise, to Larry's point, I think what we may have is, "Well, it's a nice plan but it will never actually reap the benefits." That is the source that some of the regulatory cynicism, I think, that he is picking up. Thank you. CHIEF OF STAFF BROWN: Thank you, Steve. Larry. MR. SARJEANT: Yes, a couple of things, Kathy. Thank you. First, I wanted to endorse the comments of Diane from Disney with respect to biannual review and the importance of timely decision making in that context. I wanted to clarify, in case there was some questions bout what Roy said earlier. While I don't think it is constructed as to who appealed what how and when, I think Roy's point was simply this, five years out none of us are smart enough to see what the world will be then. So, to the extent that this process is going to be useful, it needs to be accelerated in the time frame. We'll take care of five years out when we get there and have a better view of what that will be. In terms of convergence, I think Alan's idea is an excellent idea and, certainly, USTA would support that notion. Finally, on the question you raised earlier about how you would go about moving down the road of what I will call "holistic" rulemaking or convergence-based rulemaking. Some of us actually do have some experience in pulling the disparate pieces together. From my experiences with U.S. West and One Voice and international operations with domestic and wireless and cable and wire line, it has to start with a common database of facts. We have to be able to pull the disparate pieces of information together. Everybody won't agree on what the right common set of facts are but there has to be a common set of facts as the starting point for the analysis and it has to go beyond any particular industry in order to have that kind of holistic discussion and decision making. CHIEF OF STAFF BROWN: Michelle. Thank you, Larry. MS. FARQUAR: Michelle Farquar. I wanted to speak specifically to the convergence or need for convergence between goals one and three. Specifically, Wester Wireless was very pleased to see the universal service goals listed under goal three with respect to the form and autotechnology neutral basis and also improving penetration, on the one hand. On the other hand, if it proceeds under the current course and track with the docket-by-docket slow procedures, both within the FCC and the joint board and the states it could take not 5 years but maybe 10 years to really get where we need to be. I would like to encourage the FCC to look at new techniques and tools it can use, maybe on an informal basis, in terms of giving states better guidance on these issues, maybe even on an informal level at the staff level, as opposed to at the commissioner level to try to achieve some of these goals and reforms sooner, especially with respect to the eligible telecom carrier process with the states, which is becoming a patchwork quilt quite quickly. One good example of that is Western Wireless now has three different results, one just yesterday, from Minnesota granting it ETC status; one from South Dakota denying an ETC status; and one from Wyoming, which punted on the issue and said, "The FCC should resolve this." all on virtually identical sets of facts. I know it feels very strongly that the FCC needs to help it on working on these issues and working through that. I think that same method and approach could on some of the issues under goal three as well. CHIEF OF STAFF BROWN: Let me move folks then toward the third area that we've identified as our directional mission and that is to promote opportunities for all Americans to benefit from the communications revolution. Let me suggest that this area, just like the competition area and just like our administrative side, is really changing because of convergence. The needs of consumers are changing because of competition. The underlying goals and values, really, of the whole American notion of communication, however, seem to remain the same. That is, there is a notion in this country of ubiquity. There is a notion about universality, if we look at telephone service, if we look at free over the air broadcast. There is a notion that we want to ensure that these opportunities reach everyone. Someone said, I think it was Larry, that if the market works everyone will see the benefits. Yet, we sit with various consumer groups who raise their hand and say, "Not me yet." What do we do about that? Should we do anything? Does government have a role, does it not? What is the role of industry? What is the role of the consumer groups themselves with respect to these issues? We've heard a lot about rural America. We hear a lot about innercity America. We hear a lot about folks on Native American lands who have 40 percent telephone penetration. We hear a lot about folks who have access to the internet and those who don't. We hear a lot about the disabled community who doesn't yet have full access to all our technologies. So the question becomes, "What, if anything, is the role of the FCC, of government generally and the FCC specifically in this area?" We've tried to list a couple of things that we think are core to the mission and we certainly invite, now, your comments on those. Al, may I start with you? MR. SONNENSTRAHL (through an interpreter): I believe that -- again, my name is Al Sonnenstrahl from the Consumer Action Network. I believe that the FCC should expand their role and work with other federal agencies that may need more involvement in interagency efforts because, for example, access to information is more and more important in today's world. But, each agency has different responsibilities and many jurisdictions involved. For example, with the Department of Education their responsibilities for education of children, especially people with disabilities, Department of Education has a responsibility to ensure that every disabled child has equal access to information, depending on how they are able to monitor how up-to-date the area of technology is for that child. Many deaf children are lost in a mainstream program because the school systems, in their particular districts, don't have equal access to providing information to people with hearing loss. It may be that the FCC should be more involved in that area. CHIEF OF STAFF BROWN: Thank you. Kofi, we will hear from you. MR. OFORI: Good morning. My name is Kofi Ofori. I am here today representing the Black College Communications Association, a consortium of 38 schools' communications at historically black colleges and universities. I see a lot of familiar faces in the room. It is a pleasure to be back here again. At the outset I just want to make some comments about this fundamental thrust towards reliance upon marketplace forces. The Commission has said that it wants to achieve competition, in other words, give consumer choices, which is fine, at the same time it says it wants to have ubiquitous access, particularly in the area of advanced communication services. I think the Commission needs to continue to think about again whether these dual goals of consumer choice and ubiquitous access can be achieved only by relying upon marketplace forces to achieve that. There is no evidence that solely relying upon the marketplace will achieve ubiquitous access, particularly in the area of advanced communications concerns. More to specific interests of the Black College Communications System, Dr. Dates was here earlier this morning and made some points that pertain to organizational structure. I wanted to read a proportion of our prepared remarks that address this session three. "The Black College Communications Association applauds the Commission's commitment to promoting opportunities, to expand direct participation in existing and future communications businesses, as stated in Section C-2 of the Draft Strategic Plan. However, such a commitment is empty if the Commission neglects to identify funds to complete Addoran studies in order for affirmative action programs to withstand judicial scrutiny." So we feel it is very important that the Commission, if it is really serious about achieving this objective in terms of access on a representation for all Americans that it must complete these Addoran studies. BCCA also believes that the key policy initiatives under Section C-2 should be amended to require broadcasters and telecommunications firms to identify steps that they have taken to overcome the digital divide that exists in higher education, particularly at colleges and universities that supply them with the vast majority of minority students with degrees in mass communications, film, and journalism. Sixty percent of the African Americans graduating with degrees from communication programs attend HBCUs. However, when we compare the resources of schools' communications established by HBCUs with the resources of the white schools' communications we find vast differences that materially undermine the ability of black students to compete in the work force. In a truly competitive environment one set of competitors cannot be handicapped merely because they cannot afford to attend a school's communication that offers the best in terms of information technology and endowed faculty. The Black College Communications Association is taking steps to overcome the digital divide that exists in its notes. Our annual video conference that will be held October 27 of this year will address many of these issues. We are proud of the fact that Chairman Kennard has agreed to speak at this conference. However, our work cannot be done alone, without the help of the private sector. Although there are many ways in which the private sector can be of assistance there are two that are very significant. The private sector can assist BCCA member institutions in their efforts to ensure that course offerings keep pace with the dynamic changes that have occurred in the marketplace. Originally established in the early 1970s, the curricula at BCCA member institutions must be revised to reflect the convergence that has taken place in technology in the marketplace over the past 30 years. Second, there is a need for the private sector to help underwrite the cost of suitable information technology that will enable BCCA faculty and students to enjoy the benefits of distance learning and to engage in collaborative research and studies. Again, we applaud the steps the Commission has taken in the past and plan to take in the future in terms of promoting inclusion in the communications arena. However, we urge the Commission not to lose site of the fact that higher education plays an important role in terms of supplying the marketplace with people that have the skills and talents to make America competitive. If there are insufficiencies in the sector of higher education then there will be insufficiencies in the marketplace, insufficiencies that will ultimately detract from the ability of industry to be ethnically diverse and to serve the growing multi-ethnic market. In closing, I believe that the Commission is breaking new ground that will set the stage for the regulatory framework of the future. EEO enforcement and strategic partnerships between private sector and higher education are two cornerstones that I believe should be part of the regulatory future. Thank you. CHIEF OF STAFF BROWN: Thank you. Peter. MR. CRAMTOM: Thank you. Peter Cramtom, University of Maryland, still. (Laughter.) First, I wanted to make one comment related to something that was said earlier, just to clarify. I think it is clarification, anyway, on something that Steve said. That is, when measuring the success of the reduced regulation one simply should not look at the FCC budget to see if that has gone down. That narrow view would be totally inappropriate. For example, it might be much more costly to promote competitive markets than it is to regulate a monopolist. So one really has to look at the bang for the buck. Every dollar the FCC is spending, how much value are we getting for that. My guess is if the FCC does its job well it is going to be tremendously high, much higher than most any company could produce, if they are doing their job really well. That is what I hope the FCC will do and I'm confident they are going to work hard to do that. Now, on the issue of opportunities for all let me comment on Larry's point that if markets work the rest will follow. I believe that that really should be your guiding principle. I think there is a lot of evidence to suggest that that is successful. It may take a little while for it to trickle down to everybody but it eventually will. Digital technologies allow it trickle much much faster. So that's why getting the markets right really is the key step. Now, getting the markets right might, as I said, involve -- because these are not trivial markets to get right -- it may involve a substantial expenditure of resources on the part of the FCC but they have to be extremely. These would be resources to reduce entry barriers, to reduce transaction costs in the markets, to provide and define property rights clearly. The FCC must be very, very, very careful when it steps in thinking that it is doing something to help some particular group because if they don't -- I think it is great and necessary to step in and help particular groups on occasions. There are good ways to do it and bad ways to do it. The problem is usually when you step in you do it the wrong way. For example, to be specific, in spectrum options two instruments were used. Well, there were set asides for small businesses, then there was also bidding products and installment payments. Take the C-block auctions, small businesses, they need installment payments, one might think. Yet, a set aside action that is restricted to small businesses it is not at all clear you need to give this targeted group something that is already a set aside to the group, but what was the consequence of the installment payments? Basically, the rewards didn't go to the small business group, they went to bankruptcy attorneys. More than anybody else that is the only group that benefitted. At whose expense? Everybody's expense. Consumers expense, largely. Most of the C-block spectrum remains unused or underdeveloped because installment payments were used to help that particular group, the small businesses. Now, in contrast, bidding credits worked wonderfully. Bidding credits are a subsidy to new entrants. That is reducing entry barriers and that is a tremendous vehicle to direct subsidy to new entrants. So I applaud the FCC for using those directed measures that are consistent with markets. Using measures that are inconsistent with markets is simply bad economics. CHIEF OF STAFF BROWN: Thank you. Jenell. MS. TRIGG: Thank you, Kathy. S. Jenell Trigg, with the Telecom Opportunity Institute. By the way, we say TTOI for short. This section of the strategic plan is very interesting to us, particularly since we are a non-profit corporation, dedicated to promoting career opportunities in telecommunications for minorities, women, and at risk youth. We are also helping to bridge the digital divide across the country for providing internet computer use training courses. Interesting that you mentioned C-block. I have my own opinion on C-block, but the underlying concern is, of course, access to capital for small business, minorities, and women. In order to address specifically or narrowly tailored if we need to address particularly minority and women ownership, I'm surprised that the report did not mention some of the external factors in terms of some of the legal obstacles in addressing minority ownership, particularly. I am also surprised that the report did not discuss its efforts to do an Addoran Study, which has been long coming, a full blown Addoran Study that looks at the legal predicate, looks at the factual and the anecdotal and statistical evidence to promote minority businesses. That is absolutely necessary. If you are really going to address opportunities for all it is important to have a diverse entrepreneur opportunity for minorities and women, not just because it is politically correct but because it is economically correct. Small businesses, minorities businesses, women owned businesses serve niche markets that no one else reaches. They serve under served markets that no one else reaches or finds economically conducive to do so. So the Commission has an obligation, yes, indeed, to promote small minority and women, but unless you've got the actual data to support any regulation, that is -- and I hate to use the term "race based" -- but you've got to have an Addoran Study. I would love to see the strategic plan include steps for an Addoran Study. If indeed it is cost prohibitive, and I know it is because I've done some of the research when I was here at the FCC, then let's look at some of that interagency relationships. Let's look at a joint partnership, possibly with the SBA and Department of Commerce and NTIA to do a full blown telecommunications study on entry barriers for minorities and women. So I encourage the Commission to look at the Addoran Studies, some of the minority and women issues, economic issues, more so access to capital, in this overall plan. CHIEF OF STAFF BROWN: Thank you. Pam. MS. STEWART: Pam Stewart with Maryland Relay. Those of us in relay would just love to see relay be totally competitive issue where it didn't have to be regulated but it is just not there yet. Competition is extremely limited in the TRS area because the existing market is very small, but the potential market is extremely large. Although most of us don't know or do business with a deaf or heard of hearing person, just about all of us know someone who has hearing loss who doesn't use the phone anymore or misunderstands or asks you to make phone calls for them. These are all potential relay users. To get these people to use the relay and then make it a potential viable market for competition to open up we would like the FCC to get involved with some national advertising. We cannot depend on the phone companies, the providers themselves, to do it because it is a competition issue with them. If we could have the FCC do national advertising to let every American out there know that when they start losing hearing or start losing the ability to speak they don't have to stop doing business with everybody else, that they can use relay, that they have it there to use, then it will enlarge the market and make it a competitive market that phone companies will want to get in and not have to be regulated and told to get in. CHIEF OF STAFF BROWN: I noted that Maryland Relay actually had a bunch of PSAs and some spots. I just noticed them on the TV recently. Was that funded by you, the state, by whom? MS. STEWART: Yes, we did. Maryland is very proactive in advertising. In our RFP we put money aside. Maryland is, by far, the minority in that. Most states relays are tucked in a little tiny place in the PFC and somebody has this as 100th of their job. As you know, that kind of thing doesn't get -- CHIEF OF STAFF BROWN: There it was on our TV. MS. STEWART: Right, it is a very important choice that our boss, Kirk Becker, decided that this has to be something that is done in Maryland because we do have an extremely large deaf and hard of hearing community here in Maryland. I'm sure you are all aware of that, with Galludet being right here. A lot of people come from all over the world and stay in the Maryland/D.C. area. The other thing that we think is very important is the education of TRS for the general public. Again, to make this so that it is a viable option to all those people who have hearing loss through aging and now also with our young people with the trends in listening to music. I'm sure you've all stood on a corner and had your heart go beating because somebody with all of their windows up has their music so loud that it is affecting you as they drive by. Well, it is also affecting their ears. So we're going to have a very, very large community here that has significant hearing loss. There have been a lot of studies done on that. The existing technology and enhancements that are accessible for everybody else right now on your standard phone are not available in most TRS systems. Just little things like carrier of choice, being able to pickup any 10- 10-whatever number can't be done through relay right now. I think Caller-ID, we can't have Caller-ID because the anty is not passed from the incoming caller to the outgoing party right now. Just things that we all take for granted, a person is paying for on their home phone for a regular standard phone call but they cannot get it through TRS. Due to the current TRS market technical changes enhancements to TRS platforms are not cost effective and therefore they are not undertaken without mandatory FCC regulations. So we would just like to, again, stress that you guys really keep involved in that and help us get the word out to everybody out there so that eventually TRS will be its own market and phone companies will want to get involved in it because it is a profitable business. CHIEF OF STAFF BROWN: Thank you, Pam. Joanne. I'm Joanne Kumekawa with The Office for the Advancement of Telehealth. Thank you for letting me be here. I'm going to address some of the things that Kathy actually talked about at the beginning of this section. We try to provide healthcare services to the underserved. Those folks are the ones Kathy talked about originally. I mean people on tribal lands, folks in insular areas like the Pacific and people in rural areas. These are the people who have not had competition come to their area. We provide health services, using advanced technologies and computer technologies but without the infrastructure it is very difficult to not only provide the advance telecommunications technologies but also the healthcare. Most of these folks don't have access to basic healthcare. So when you are talking about getting these services out to these folks you are also talking about their ability to access not just TV or telephone but also access to basic healthcare. Again, like everybody else, we really want to work closely with the FCC, particularly in the universal service area because not only are you going to get telephones out there but you're going to get diagnoses for a heart attack. Some of these folks have to travel 300 miles just to see a nurse. With advanced communications they can do a consultation by going to their local clinic, which is a lot closer, and it can save their lives. My aunt, for example, has to be Medivaced out of Hela, Hawaii to the Big Island in the Pacific. It is not that it is a really rural area -- and I've lived there -- but most of the specialists are off island and it can mean life or death for these folks. So having the access to the telecommunications means more than just a phone call to your mom. So, as Kathy knows, we have a lot of issues about how universal service can help these particular areas and provide them either with discounts for healthcare or just funding for infrastructure. CHIEF OF STAFF BROWN: Thank you, Joanne. Al, I think you're up. MR. SONNENSTRAHL: Again, I'm Al Sonnenstrahl from Consumer Action Network. I would like to reinforce some of the comments that Pam Stewart had just made in regards to relay services. I notice in the report on number 17 of the Appendix D that it mentions the provision of international relay services. Here it also talks about the interstate relay services and foreign relay services that are a wonderful approach. But, my concern is more in terms of the quality of the relay services. We depend on intrastate relay services in reality and there is no competition within intrastate relay services. That causes a lot of variation in the quality of service provided throughout the country. For example, during Hurricane Floyd the Florida Relay Service was closed for a few days and the deaf community had no access to information at all. Florida was one of many states that had the monopoly of relay services. There is no way to get another relay service for an intrastate service there. So whichever end you are going for, through an interstate relay service, which is being regulated by the state or an intrastate, by the FCC, as Mr. Stout mentioned, we need to develop stronger ties with those states' PUCs in order to make sure that the relay services are standardized throughout the country and are consistent. I would encourage competition for the intrastate relay services. Amen. CHIEF OF STAFF BROWN: Thank you. One thing a forum like this may do, and this I think goes to any number of consumer issues, is to focus on the issue Peter brought up, what are the market based kinds of techniques that can be used to address these very real consumer problems. One of the things I would like to suggest to all of you, and you don't need us from the FCC sitting here to do it, is to try and engage with each other, consumer with industry and perhaps some of the economists and folks who understand these mechanisms, to come up with an approach that may work. Relay is a very, I think, wonderful example of a system that got put in place one way, that is it was very exclusively put into place for one particular group and has shown itself to be highly beneficial, not to just that one group but to many now, where there have been some attempts to bring competition and where there have been some clear barriers. It would be a wonderful exercise, in my view, for folks to sit down and think through that model and how it can increase and enhance consumer benefits. Just an example, I think, of the kinds of things, at least, we have been thinking about and would like very much to see a sort of concerted effort by the constituent groups to the FCC. Let me move on to spectrum management. It is the last of the areas. One of our most valuable resources in this country is our airwaves. Many of our advanced technologies are dependent upon use of those airwaves. We see as part of our central mission, the management, at least on the commercial side together with our colleagues over at NTIA on the government side of those airways. I think this commission has led the world in coming up with ways to ensure that we have a more competitive market through use of the airwaves. We know we have more to do. There is always more to do. Particularly as technology changes there is more opportunity to do different things. We have listed as our goals here to create more efficient spectrum markets and to increase the amount of spectrum available. So feedback on that, please. Rich. MR. BARTH: Thank you, Kathy. Perhaps it is appropriate that since Com Daily listed me as the first speaker of the day, because alphabetically I cam first on the list, that I'm the last speaker of the day because the spectrum management issue is the one that Motorola, my employer, feels most passionate about with respect to this particular agenda. I'd like to begin by making sort of some broad comments about your next steps forward with respect to implementing the report, drop down to some specific process problems with respect to spectrum management, and then highlight one issue, a key issue for us, on spectrum management that we believe needs some focus in the Commission's deliberations. At the broadest level we have heard some discussion today of concerns regarding cynicism in the implementation of a plan that appears to be this bold and this far reach. We have heard some concerns about the bureaucracies taking captive those who want to implement some of the very positive changes here. I would suggest that the Commission does have some serious process problems that really should be addressed along the way to implementing the plan. I think that industry is not particularly attracted to a Commission and I'm sure the Commission itself is not particularly pleased with some of the process problems that in fact start at the very top. When there are votes taken at agenda meetings on items that are supposedly written and then it takes months, literally, to get those items out you start to put into question the Commission's procedures and processes in going about its work, its transparency that you referred to earlier and the important need for that. I think that the Commission needs to examine, at its most fundamental level, the procedures and processes that it is using. Interestingly, Motorola has adopted internally a process that the U.S. Government has the focus and spotlight on and that, indeed, is the Baldridge criteria for performance excellence. I think that the Commission would do well in its seeking to implement these fairly bold and dramatic changes if it stepped back, took a breath, and looked at how it is going to implement them, rather than busy itself with trying to do so right off the bat. The Baldridge criteria include some fundamental issues, such as leadership and the quality of the leadership that is going about the implementation of the process -- with no criticism to Mary Beth who you have identified as the leader of the implementation effort. Strategic planning, the metrics that several people have identified here that I think are a little bit missing. You've got time tables for doing things but not necessarily the metrics for evaluating where you are today with respect to your effectiveness at implementing things and where you want to be in the future. It is hard, the Baldridge criteria are about results and that is what I think you are most concerned with is the results with implementing your plan. By stepping back again and going after more rigorous process I think you would find you'd get there quicker, which you have heard many calls for today, rather than the five year plan, and get there far more effectively. The particular arena of spectrum management I think is one that causes us concern, as we have said in the en banc hearings several months ago and I would really reiterate today. You have in the Commission a process for spectrum management that is excellent insofar as how far it goes, which is to the bureau chief level. There are efforts there to hammer out, almost literally, by the chair of your Spectrum Committee internally, efforts by Dale Hatfield to try to resolve the myriad of spectrum issues that come up before the Commission on a day-to-day basis, questions that affect the competitiveness of various segments of particularly the wireless industry. That process does not go far enough. Once every several year en bancs on the issue of spectrum management that engage the chairman and the other four commissioners are very helpful but every couple of years is not the frequency that those individuals need to take up some of these serious issues. So we said it back in April, we've had an excellent round of meetings with some of the key staff and have gotten, I would suggest, quite a bit of agreement that something more needs to be done. But particularly in the interim period between now and when you finally get to some sort of nirvana, new state of organization that resolves issues more effectively I would submit that you quickly need to implement a mechanism, a spectrum council at a higher level. A spectrum commissioner was suggested by one of the FCC staff, just like you have a defense commissioner, an international commissioner, a Y2K commissioner. A spectrum commissioner has been used in the past effectively by the FCC and I think should be considered again. The most important issue that this new body, I think, could take up is the one of flexibility in spectrum management. The word "flexibility" is used by everyone very freely and everyone who uses the word with respect to spectrum management has a different meaning attached to it. It allows for a great deal of apparent agreement by everyone as to the meaning of the word, when indeed there is not a lot of agreement with the meaning of the word. I'd like to draw an analogous situation to another Motorola issue, which is a $1.5 billion investment, not dissimilar to many that are made in the wireless industry but in this case it is our $1.5 billion investment in a semiconductor facility in China. We could send over the building equipment, we could send over all the semiconductor assembly pieces of equipment that costs hundreds of millions of dollars per piece and we could send back to China the 200 experts that we've trained to manage that facility and give them flexibility to build semiconductor chips. I suggest if we did that it would be akin to burning $1.5 billion in an incinerator, rather than setting up a facility that should be flexible in meeting consumer and customer demands. You send in a construction team to build the building with plans. You send in the technicians to put the assembly line together. But then you give those technicians and the workers on the line enormous flexibility in what they produce, how they produce it, buying new equipment that offers greater productivity. What I'm suggesting is flexibility is necessary at a certain point in the process of building a structure around which people can make investments that make sense. Absent that structure, absent some sort of framework that calls for some sort of service model and rules for spectrum, you will find chaos in the marketplace that will put us back into the kind of results with spectrum utilization of the WCS auctions. The word "flexibility" is critical. It is used in the report here, and it is used in a fairly controlled fashion with respect to the other issues of spectrum management. But to us, you are facing imminent decisions on issues such the allocation of spectrum in the 746 to 806 band that is required to be auctioned in the near term and, most likely, is going to be required by Congress to be auctioned next year. There is no reason the flexibility can't be determined by a high level council to be within certain parameters. And that allocation, to certain kinds of services, particularly 3G and private mobile services, shouldn't be accomplishable within the time that Congress will probably allot you. All of the FCC procedures and processes don't have to take years to implement. Having the proper framework for decision making, having the proper framework for issues such as flexibility and the structure. I think the Commission could find itself far more effective in meeting the needs of all of the marketplace that are represented in this room today. Thank you. CHIEF OF STAFF BROWN: Thank you, Rich. Pat. MS. MAHONEY: Thank you, Kathy. Pat Mahoney, with the Satellite Industry Association. The SIA supports the Commission's goal for increased flexibility and most definitely in spectrum but we have some concerns. Listening to the last topic, when especially talking about the needs of populations that receive no service, I'm sure I don't need to remind people that satellites are ubiquitous and can reach all areas and populations. They need to be commercially viable and they need spectrum and that's why the Commission has to consider some of the unique aspects of satellites and satellite licensing and regulation. The U.S. is responsible for the health of the satellite industry worldwide. The U.S. is the leader of the satellite issue worldwide. Satellites take long lead time to construct; they have incredible investment costs; great risks; and, as the Commission has recognized, auctions won't work in the satellite industry, particularly for global or international spectrum. Therefore, the questions of what about when you have shared users of spectrum -- and most of the use of spectrum is shared -- what are the respective rights of the users? What happens when one industry got its spectrum through an auction but the other user of the spectrum, the co-primary user, did not, especially if the one that did not get its spectrum through the auction process needs to improve or update? What happens when one industry has renewal expectancy and the others do not? In the satellite industry, historically, there is no concept of renewal expectance so what happens at the end of a system when the operator wants to continue to provide service and wants to improve to keep up with technology that has grown in the intervening years but, in the meantime, there are users of the spectrum for other purposes that obtained their spectrum from auction and believe that any new use of the spectrum would be contrary to their interests? One other concern that we have is in the pursuit of making more spectrum available that the Commission not be tempted, and we think the Commission is tempted, to give spectrum to services that can be auctioned, because money can be generated versus allocating it for satellites where the Commission has recognized spectrum cannot be auctioned. Finally, with respect to globalization and, towards the end of this section, where the Commission specifically talks about the need to build regional and global acceptance of U.S. spectrum views and initiatives by engaging other governments and organizations in constructive discussions. I think that at a minimum that we would request that that be rewritten. The Commission cannot act in a vacuum and then go around in the world and try and sell its position and abdicate that the rest of the world follow its position. The Commission ought to be working with other administrations to achieve consensus and to become more active in the ITU and other regional intergovernmental organizations to build consensus. It will actually lead the Commission to what it wants to do, but I certainly wouldn't say it the way it is said here. Thank you. CHIEF OF STAFF BROWN: Let me remind everyone that we will have -- we do have an e-mail address set up. For those kind of very specific things, I suggest that you give it to us in writing because I think we will probably be able to absorb it better, particularly folks who are going another round on this. Peter. MR. CRAMTOM: Thank you. Peter Cramtom, University of Maryland. First, I want to apologize a little bit that so far when auctions are mentioned only blemishes have been mentioned. I think I've heard two, which I think is all the auction blemishes that there were, the C-block and WCS. So when one is looking at making markets work better one should look at what has happened with the auction program as a phenomenal success overall, which it really has been. It has brought tremendous value to every consumer in the United States and benefits around the world. So on spectrum management policy, this is a very difficult problem. So more spectrum, yeah, more spectrum is a good thing but the timing of the release of spectrum is actually a serious issue. WCS is a good example of that. It takes time to build the structure and reduce the uncertainties and have the technology develop so that infrastructure can be effectively used and valued by industry. In the auction program one of the things that can be further developed that I know people are talking about is two-sided auctions. Right now -- so far the FCC has been in the business of selling spectrum licenses but, indeed, there are lots of situations where there are incumbents out there and they should be able to throw their spectrum into the pot and sell it within the same auction so bidders would have the flexibility to move, to buy or sell, depending on what the marketplace was saying. In terms of the marketplace, I think it is very important to have -- when deciding on allocations, to have market-based tests whenever possible. Kathy was talking about devices that can help disadvantaged groups or certain special interests that aren't well served by simply open competition. Well, it tends to be those instruments that are market-based, have some market-based focus, and that is the domination of, say, bidding credits over installment payments or even set asides. I agree completely with Rich on flexibility, that isn't just everybody, yeah, go do whatever you want. The structure is needed, at least in probably our lifetimes. Granted, down the road, just wide open space and instantaneous real time spectrum options for all the band width that's there is going to be the thing of the day, but today we need a little bit more structure to get us there. CHIEF OF STAFF BROWN: Thank you, Peter. I'm going to go to Michelle and then Al and then I'm going to wrap up, unless somebody else tells me now that they have something more that they want to do. So, Michelle, can I go to you? MS. FARQUAR: Michelle Farquar, speaking simply as a former bureaucrat at this point. (Laughter.) CHIEF OF STAFF BROWN: No, bureau chief. MS. FARQUAR: Bureau chief. (Laughter.) A couple of quick points. First, Kathy had asked earlier about the convergence model. I think spectrum management is a great example where that has already started happening within the FCC and bureau chiefs and bureau staff have been forced to work together. Overall the process has done well, it keeps improving over time, I've noticed. I think it is a great model for having that broaden the competition in other policy areas. It has been painful, I think, but it can work and should work and I think it will work better once the bureau staff remove those industry oriented hats that they have always worn in the past. Then I also wanted to point out two almost contradictory dichotomies between one issue that is not really raised in the report and that is the role of the FCC staff and bureaus versus the role of the commissioners on a range of issues, all process oriented, and also the role of the FCC versus other government agencies. I think overall the FCC commissioners have not spent enough time or don't have the time maybe to focus on spectrum management big picture issues. A lot of that has been de facto delegated to the staff and to other government agencies. It creates a bit of a black box for the general public and also leads to situations like the recent 3G decision by the Federal Government that may deny the wireless industry adequate 3G spectrum where there is no FCC commissioner stamped decision on such issues. Maybe that is the type of decision that should be approved by a regulatory agency, as opposed to some black box process where there is feedback received from industry but then suddenly it's removed from the hands that know and you're not sure what the outcome is and why it has been reached. On the other hand, the commissioners may spend too much time in their docket-by-docket decision making on the nitty gritty nuts and bolts that could be done better at the staff level. So I wanted to point out some of those issues. CHIEF OF STAFF BROWN: I still note all the time how much the sort of deliberation is driven by whatever issue the industry, frankly, thinks is hot at the moment. It discourages me because the issue that may be hot at the moment may well be an important issue but it is not always the overriding issue. It is not always the theoretical underpinnings of the issue. So part of our processes as we think about this is how to get to the foundational issues, perhaps a little bit more in focus. Al, could I ask you to wrap up for us? MR. SONNENSTAHL: This is Al Sonnenstahl from Consumer Action Network. In talking about flexibility and inflexibility of the spectrum, I look at the TV, I see the captioning services here -- and this is based on line 21, which makes the captioning possible. In other words, that is a line that is reserved for the captioning. Now, I'm not in this field in depth but I'm trying to think in terms of the future and the possibility of exploring reserving particular parts of the spectrum for special purposes. For small populations, for example, the emergency access system, the emergency alerting system. I use a pager and I could envision a way that a pager could be tied to a particular frequency where some kind of system could be used to reach out using, you know, to those limited number of folks for particular purchases. As Pam Stewart mentioned, we need to get the Disabled Issues Task Force more involved in these kinds of aspects. I think they can be involved in the discussions as to spectrum, in looking at exploring possibilities of having some of the spectrum reserved for people with disabilities. CHIEF OF STAFF BROWN: Thank you, Al. Well, I want to thank you and hope that you listened and learned, as I have, as we seek all the various perspectives on where we're going in this telecommunications revolution and how the FCC ought to keep up with it in many ways. We, obviously, have many challenges before us to meet what is an extraordinary time. There are things happening -- I sat here, I just thought, "Oh my Lord, I wonder in the last two hours -- because I knew what was going on this morning -- how many firms have combined or actually decided not to do business and how many consumers think they got a god deal this morning and how many consumers think they got a bad deal this morning." It is all sitting on my desk right now, I can assure you. (Laughter.) But it is happening that fast that it is sometimes dizzying and overwhelming. These kind of forums and this kind of occasion, frankly, to focus on a strategic plan as not perfect as it yet may be, is an opportunity, actually, to look at the present, look at the future. I think, Larry, that five years doesn't take care of itself. If we didn't do what we were doing five years ago we wouldn't be where we are now. So while I do believe that things will change in a way we perhaps can't quite anticipate, I think I agree with Larry that there are some things that if we do them wrong now will have horrible consequences, and if we do them right now will actually yield the right consequences out. So it is worthwhile for us to sit and really think about those things deeply. Some of the feedback I just heard was, again, a lot about convergence. We will again think about that. I thought we got some valuable push back on what our first steps ought to be in addressing that issue, so the big policy issues. Again we hear about day-to-day trying to do business with us and how easy or how hard that is and how we had better address that sooner, rather than later. And again that issue of speed, always that issue of speed. Both -- I think I was hearing a lot about informal decision making processes, different kinds of decision making processes that we ought to think about and invent. But I also heard that we had ought to look at our regular processes, like getting the order out the door, and making sure that those things are also under control. I heard strongly that we need a matrix and we need benchmarking for success and we need performance measures. I can tell you, because we've sat together now so many times, that in a regulatory agency there are obviously things we can do and folks on the inside want to count sort of the numbers of pieces of paper they put out the door, which of course is not any sort of notion of success. On the other hand, if what your notion of success is that you have a competitive market and/or you have more consumers served, of course there are zillions of external factors that affect that success. So you see this push/pull, particularly inside government with, "Well, I really am not responsible fully for that satellite getting up." There are 20 other reasons why it may or may not work but, certainly, we are responsible for creating an environment. Measurements of that are very difficult, very difficult qualitative measurements. So I invite any feedback. It is the hardest part of this. Any feedback you would like to give us on what the qualitative measurements ought to be, on what the matrixes could look like, and what benchmarks are. I would urge you to start with actually what the qualitative benchmarks are and then we can argue over the timing. I know both of them are very important -- do it in a year or do it in three years -- that's an important question in and of itself. But getting the benchmarks right, seems to me, also very important. A child first sits up and then a child crawls and then a child walks. So we know there are things that one has to do in order, or at least in some sort of organizational kind of way. To the extent you could give us feedback on that, we would appreciate it. Next steps. We will take everything we have been given, we will do some more work internally. We know, and you didn't raise it today but we know there are some gaps in our own report. The public safety area some folks have told me is not adequately addressed. I don't think we have adequately addressed yet our whole merger review issue. I think Congress is telling that to us loudly. I think events are forcing us to realize that extent of our jurisdiction and our resources on a rapidly changing industry is going to cause us to look closely at that. I heard very loudly that our biannual review should not just be some sort of symbolic thing but really needs to be a vehicle for a lot of the deregulatory kinds of things we ought to do to get rid of regulations that are really in this day and age much too costly. So we know we need to do those things. You will see in the next couple of months our rolling out both the organizational change, the biannual review issues, the issues on how we can be better faster. And you will see us clawing and fighting for the money we need to actually become a digital age agency. So I again thank you all for being here. I appreciate, sincerely appreciate your input and hope you will stay in touch with us. Thank you. (Whereupon, at 12:40 p.m., the forum was adjourned.) \\ \\ \\ \\ \\ \\ \\ \\ \\ \\ \\ \\ \\ \\ \\ \\ \\ \\ \\ \\ REPORTER'S CERTIFICATE FCC DOCKET NO.: N/A CASE TITLE: A NEW FCC FOR THE 21ST CENTURY HEARING DATE: September 30, 1999 LOCATION: Washington, D.C. I hereby certify that the proceedings and evidence are contained fully and accurately on the tapes and notes reported by me at the hearing in the above case before the Federal Communications Commission. Date: _09-30-99_ __Sharon Bellamy_____________ Official Reporter Heritage Reporting Corporation 1220 L Street, N.W., Suite 600 Washington, D.C. 20005-4018 TRANSCRIBER'S CERTIFICATE I hereby certify that the proceedings and evidence were fully and accurately transcribed from the tapes and notes provided by the above named reporter in the above case before the Federal Communications Commission. Date: _10-11-99_ __Rose Kolb___________________ Official Transcriber Heritage Reporting Corporation PROOFREADER'S CERTIFICATE I hereby certify that the transcript of the proceedings and evidence in the above referenced case that was held before the Federal Communications Commission was proofread on the date specified below. Date: _10-12-99_ __Lorenzo Jones_______________ Official Proofreader Heritage Reporting Corporation