OPENING STATEMENT
of
MICHAEL K. POWELL
Chairman
Federal Communications Commission

Before the
Subcommittee on Telecommunications and the Internet
of the House Committee on Energy and Commerce


Thursday, March 29, 2001

10:00 a.m.

2123 Rayburn House Office Buildin

SUMMARY OF OPENING STATEMENT OF
FCC CHAIRMAN MICHAEL K. POWELL
BEFORE THE
SUBCOMMITTEE ON TELECOMMUNICATIONS AND THE INTERNET
OF THE HOUSE COMMITTEE ON ENERGY AND COMMERCE
MARCH 29, 2001


In order to serve the American public, the Federal Communications Commission, as an 
institution, must be efficient, effective, and responsive.  The challenges of reaching these goals at 
the Commission are complicated by the sweeping, fast-paced changes that characterize the 
industries that we regulate.  Indeed, the Commission is experiencing a challenge it has never 
faced:  each industry segment in our portfolio is in the midst of revolution, and is attempting to 
adapt to the most fundamental changes in their history.  Moreover, the changes are blurring the 
lines that once separated these industry groupings.  There are new markets, new competitors, and 
new regulatory challenges.
  
For this agency to fulfill its congressional charge, indeed to remain relevant at all, it must 
write and execute a new business plan built along four dimensions:  (1) a clear substantive policy 
vision, consistent with the various communications statutes and rules, that guides our 
deliberations; (2) a pointed emphasis on management that builds a strong team, produces a 
cohesive and efficient operation, and leads to clear and timely decisions; (3) an extensive 
training and development program to ensure that we possess independent technical and economic 
expertise; and (4) organizational restructuring to align our institution with the realities of a 
dynamic and converging marketplace.

My goal is to improve the agency on all these dimensions.  To that end, I intend to seek 
the opinions and thoughts from a wide range of participants, including this Subcommittee and 
other Members of Congress and their staffs, as well as the businesses that come before the 
Commission.  And, I want to hear from the Commission's employees.  They often know best 
how we should change and what tools they need to do their jobs.  I want to gather opinions and 
ideas, but be swift to make changes.  It is our goal to fully complete many of these changes this 
year.

Finally, I will be turning to this Subcommittee and Congress for assistance.  With regard 
to the organizational restructuring that is likely to be necessary, I hope you will concur in those 
changes.  Most critically, I look to Congress to support the Commission's budgetary needs and 
objectives.

I cannot predict the future, nor can anyone else at the Commission.  When faced with 
future challenges that are uncertain, the best approach is to build a first-class operation, with top 
talent, that is trained and disciplined enough to adapt quickly to new and changing situations.  I 
hope to build, along with my colleagues and the outstanding FCC staff, just such a unit—one 
well suited to an uncertain future.

Good morning, Mr. Chairman and other distinguished members of the House 
Subcommittee on Telecommunications and the Internet.  Thank you for inviting me here to 
discuss the Federal Communications Commission's agenda for 2001 and the agency's reform 
effort.

I am honored and humbled to lead the Commission at this time of unbelievable change in 
the communications industry.  I believe a critical part of my job is to be a leader and steward of 
the agency, and I take this responsibility very seriously.  In order to serve the American public, 
the FCC, as an institution, must be efficient, effective, and responsive.   The challenges of 
reaching these goals at the Commission are complicated by the sweeping, fast-paced changes 
that characterize the industries that we regulate.  Indeed, the Commission is experiencing a 
challenge it has never faced:  each industry segment in our portfolio is in the midst of revolution, 
and is attempting to adapt to the most fundamental changes in their history—for example, 
competition and deregulation in telephones, DTV transition in television, modem and interactive 
services in cable, wireless Internet and digital services, consumer accessible satellite service, 
broadband everywhere, and on and on.  Moreover, the changes are blurring the lines that once 
separated these industry groupings.  There are new markets, new competitors, and new 
regulatory challenges.  The game has become three-dimensional chess, where each board is 
spinning.
  
These winds of profound and dynamic change, unleashed in part by the 
Telecommunications Act of 1996, have buffeted the Commission and blown it into a position 
where its decisions have far-reaching impact on the future of communications, not only in the 
United States but throughout the world.  We have come a long way from an agency where the 
principal focus was the assignment of radio licenses, and its principal activity was conducting 
lengthy comparative hearings to assign those licenses.  This new environment is no longer linear, 
but chaotic and dynamic.  For this agency to fulfill its congressional charge, indeed to remain 
relevant at all, it must put together a new business model and build the type of team that can 
execute it effectively.  That is what we intend to do.

FCC Reform:  The New Business Plan
	I conceive of FCC reform as a comprehensive retooling and redirection of the 
Commission's entire mission.  Our approach is to write and execute a new business plan built 
along four dimensions:  (1) a clear substantive policy vision, consistent with the various 
communications statutes and rules, that guides our deliberations; (2) a pointed emphasis on 
management that builds a strong team, produces a cohesive and efficient operation, and leads to 
clear and timely decisions; (3) an extensive training and development program to ensure that we 
possess independent technical and economic expertise; and (4) organizational restructuring to 
align our institution with the realities of a dynamic and converging marketplace.

1. Substantive Vision
The industry, the capital markets, and the government find themselves navigating 
between the matured, legacy communications system and the nascent innovation-driven Internet 
space of the future.  The legacy world to our back is a proud one.  This nation built the finest 
voice communication system in the world, as well as top-notch mass media delivery systems in 
the form of radio, television, and cable.  These systems have reached maturity though:  that is, 
we understand the basic technology and architecture; we largely understand the cost 
characteristics; and, we understand what the consumer wants and what the product is.  And, 
government regulation and policy had coalesced around these understandings, principally in the 
form of regulated monopoly and oligopoly.

We now are looking up at a cresting wave of change that we are much less sure of how to 
navigate.  The digital broadband world is in its infancy, and its qualities and characteristics are 
much less clear.  The new advanced architectures and technologies are just beginning to be 
understood and deployed, with no clear winning technology or industry.  The cost characteristics 
may differ substantially from those of traditional networks to which we are accustomed.  
Broadband Internet products are still being developed and we all wait to see what service 
offerings consumers will and will not embrace.  It is a world of dynamic and chaotic 
experimentation in which any prediction of how it turns out is foolhardy.

I believe government policy needs to migrate steadily toward the digital broadband 
future, but remain humble about what it does not understand and cannot predict.  I submit that 
this digital broadband migration should be built around incubation, innovation and investment.  
At the Commission, our policy direction will focus on this migration and will have several 
directional guideposts:
? We will do everything we can to facilitate the timely and efficient deployment of 
broadband infrastructure.  In doing so, we will endeavor to promote the growth of a 
wide variety of technologies that can compete with each other for the delivery of 
content and will strive not to favor—or uniquely burden—any particular one.

? We will pursue the worthy universal service goals of ubiquity and affordability as 
new networks are deployed, but will challenge ourselves to do so in creative ways.

? We will redirect our focus onto innovation and investment.  The conditions for 
experimentation and change and the flow of money to support new ventures have 
often been misunderstood or neglected.  If the infrastructure is never invented, is 
never deployed, or lacks economic viability we will not see even a glimmer of the 
bright future we envision.

? We will harness competition and market forces to drive efficient change and resist the 
temptation, as regulators, to meld markets in our image or the image of any particular 
industry player.

? We will rationalize and harmonize regulations across industry segments wherever we 
can and wherever the statute will allow.

? We will validate regulations that constrain market activity that are necessary to 
protect consumers, or we will eliminate them.

? We will be skeptical of regulatory intervention absent evidence of persistent trends or 
clear abuse, but we will be vigilant in monitoring the evolution of these nascent 
markets.

? We will shift from constantly expanding the bevy of permissive regulations to strong 
and effective enforcement of truly necessary ones.  We will need Congress' help to 
put real teeth into our enforcement efforts.

2. Operations and Management
All the vision in the world is useless if you do not build and manage an institution that 
can execute it.  We intend to actively manage the agency.  Indecision and avoidance are not 
legitimate policies and, thus, we will strive to reduce backlogs and put systems in place that will 
prevent them from returning.  Managers will be measured, in part, on this basis.

The Commission will develop an annual strategic planning process that will be integrated 
with the federal budget cycle and the review of our performance as an institution and as 
individuals.  We are working to establish uniform measures of productivity across the agency to 
facilitate this activity.

The Commission is developing a set of internal procedures that will allow it to function 
more smoothly.  These procedures will cover subjects such as Commission deliberation, voting 
procedures and internal document security.

The Commission should continue to modernize its information technology infrastructure 
to ensure productivity gains.  We must strive to be a virtual agency—one in which someone in 
Connecticut is able to access us as easily and readily as someone on Connecticut Avenue.  We 
are working to make this goal a reality through increased electronic access capability.  We are 
engaged in a time-consuming and expensive project, but one that is critical to our ability to 
remain relevant in this new millennium.  We must continue with due speed to use the advances 
of technology to our advantage.

We have 18 major information technology systems that incorporate electronic filing or 
offer public access to data.  The industry can file most license requests, equipment 
authorizations, and comments electronically.  Seventy-two percent of our services have 
electronic filing capability, but I want to do better.  We administered well over three million 
licenses last year, so it is critical that we are efficient in this area.  It is also important that 
citizens all over America have the ability to contact us easily and from anywhere.  Currently, 
they are able to do so electronically, by phone or the old fashioned way—by letter.  Last year, we 
received well over one million inquiries from consumers.  The public must be an active voice in 
the communications transformation, for they are the ultimate beneficiaries of the abundant 
choices resulting from full and fierce competition.

We are also overlaying this virtual agency concept to the benefit of FCC staff through an 
expansive telecommuting program, which is open to all eligible employees.  Virtually 100 
percent of the Commission's employees are eligible for the telecommuting program.  
Approximately 400 of our eligible employees, about 20 percent, have chosen to telecommute on 
either a regular or ad hoc basis.  Fewer than one percent of those who wanted to telecommute 
have been turned down based on the Commission's criteria.

3. Technical and Economic Expertise
The communications revolution is being driven by advances in technology.  The 
Commission must have a strong fluency in technology.  We cannot depend on those we regulate 
for on-the-job tutorials while we make decisions.  This situation is grave.  Over the last six years, 
our engineering staff has decreased by more than 20 percent.  Within the next four years, 40 
percent of our engineering staff will be eligible to retire.  Conversely, we are not replenishing the 
coffers at the other end by bringing in new employees.  We, like other governmental departments 
and agencies, are competing for this talent in a tight labor market and are challenged to convince 
talent to enter government service.  This has been most apparent trying to recruit entry level 
engineers at the GS-5 and GS-7 levels.

To address this situation the Commission is developing an agency-wide "Excellence in 
Engineering" program.  We will examine creative ways to gain greater personnel and pay 
flexibility to attract technical talent.  Increased salaried alone, however, will not do the trick, nor 
is it the sole motivator for anyone entering government service.  We will look at ways to ensure 
technical workers are able to continue to develop in their field, through strong training and 
development programs and job rotation.  Our laboratory facilities in Columbia, Maryland, need 
to be upgraded to provide engineers with the tools to engage in critical and challenging work.  
Improvement in this area will be difficult to achieve, but we consider it imperative to our efforts 
to improve our workforce. 

It also is vital that we train our non-engineering staff in the areas of engineering and 
advanced technology.  We already have begun to develop an FCC "university" of sorts using our 
own staff and guest lecturers, and taking advantage of various programs currently available 
through the government and local academic institutions.  We can use this Washington, D.C. 
location to our advantage and tap into industry and academia.  We can use local scholars and 
have them participate in an educational curriculum, to provide lectures, to provide classroom 
instruction, to provide counsel and advice.  We need to take better advantage of our access to 
talent and knowledge.

I am putting similar emphasis on economics and market analysis.  These tools are 
essential to our agency's mission.  We have the opportunity to take advantage of both internal 
resources, visiting experts, and outside educational programs to help not only our economists 
improve their skills but to help all the FCC's employees understand better the impact of our rules 
on technological innovations, and competitive markets.

	4.	Restructuring
In addition to examining our systems and procedures, we need to look at the 
organizational structure of the agency.  Communications policy has been written in carefully 
confined buckets premised on certain types of technology.  The FCC's organizational structure 
largely mirrors that premise.  But the convergence of technology tears down those traditional 
distinctions and makes it evermore difficult to apply those labels to modern communications 
providers.  In the same way, it makes it more important than ever for us to examine whether 
those organizational buckets still hold water.

About a year ago, we began breaking down the technology-based divisions with the 
creation of the Enforcement Bureau and the Consumer Information Bureau.  With those 
reorganizations, we created two bureaus aligned along functional responsibility.  We created the 
Enforcement Bureau to improve the effectiveness of our enforcement activities in an increasingly 
competitive and converging market.  We created the Consumer Information Bureau to enhance 
consumers' ability to obtain quick, clear and consistent information about communications 
regulations and programs.  These changes have proven to be quite beneficial.  As the industry 
moves toward fuller competition, the missions of these bureaus become even more critical.  For 
consumers to take full advantage of the choices that competition brings, it is important that they 
have access to information that allows them to make an informed choice.  Their ability to easily 
and quickly convey to us instances where the markets are not providing useful information to 
consumers in a particular circumstance or with a particular business is our early warning system 
for market failure or malfeasance on the part of industry players.  While the consolidation of 
these functions is almost complete, there are some additional functions that are transferable into 
or out of those two bureaus.

We have undertaken a structural reorganization project that builds on some of the initial 
efforts of my predecessor, Chairman William E. Kennard.  Our efforts will be guided by a few 
key objectives:  (1) a functional organization designed along market lines, rather than technical 
ones; (2) a flatter substantive bureau structure; and (3) greater consolidation of key support 
functions.

	Our program will proceed in phases.  We have begun by systematically taking account of 
the agency's activities and functions to see what is working well and what is not.  From that 
review we will produce a Phase I, short term, restructuring plan and a Phase II, longer range 
plan.  The Phase II plan will consider what wholesale change is necessary and whether it is 
timely to move away even more from technology-based buckets.  The question has been asked 
whether the Commission should be aligned along functional lines—e.g., enforcement, consumer 
information, spectrum management, licensing and competition—given increased convergence in 
the industry.   This question deserves to be asked and answered.  But first, we must seek 
additional and substantial information, and be completely satisfied that it is the right thing to do, 
before we move to rearrange substantially the organizational structure of the agency.

My goal is to improve the agency on all these fronts.  An informed decision, however, is 
better than one based merely on supposition.  I intend to seek the opinions and thoughts from a 
wide range of participants as we proceed down the path of reform.  First, I look forward to 
working closely with this Subcommittee and other Members of Congress and their staffs.  
Second, I intend to hold forums to allow those that do business before us let us know how we can 
improve our processes and procedures.  Third, I want to hear from the Commission's employees.  
They often know best how we should change and what tools they need to do their jobs.  I want to 
gather opinions and ideas, but be swift to make changes.  It is our goal to fully complete many of 
these changes this year.

I will be turning to you for assistance.  With regard to the organizational restructuring 
that is likely to be necessary, I hope you will concur in those changes.  Most critically, I look to 
Congress to support the Commission's budgetary needs and objectives.  Please keep in mind that 
we are largely a fee-based agency, where those who come before us pay for the services we 
render in the form of licensing and regulatory fees.  We need to have the staff and other 
resources to provide those services efficiently, knowledgeably and decisively.  Finally, I will 
look to this Subcommittee and Congress to help us expand our authority where necessary to 
bring about competition and to more effectively enforce our rules.  For example, the authority 
given to us in Section 10 of the Communications Act to forbear from regulating when certain 
conditions are present has been quite helpful.  I would like to be able to use that ability even 
more and would welcome the opportunity to work with you to explore whether that is feasible.  
Additionally, we need tougher penalties and longer statute of limitation periods if enforcement is 
to be more effective.

Conclusion
	I cannot predict the future, nor can anyone else at the Commission.  When faced with 
future challenges that are uncertain, the best approach is to build a first-class operation, with top 
talent, that is trained and disciplined enough to adapt quickly to new and changing situations.  No 
army, for example, can know in advance what it will find when it engages on the battlefield.  The 
fog and terror of war never afford the luxury of predictability.  The key to success is to have a 
force that is well-trained in tactics, strategy and the weapons it will need.  A force that is 
disciplined and able to adjust quickly and adapt to fluid conditions—threats and opportunities 
both will present themselves through the haze.  I hope to build, along with my colleagues and the 
outstanding FCC staff, just such a unit—one well suited to an uncertain future.

Thank you.  I would be happy to answer any questions this Subcommittee may have.
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