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Testimony of Assistant Secretary Irving on the Department of Commerce Dismantling Act of 1995

July 24, 1995






H.R. 1756, the Department of Commerce Dismantling Act of 1995





JULY 24, 1995


Mr. Chairman, members of the Committee. It is a pleasure to be here today to discuss the work of the National Telecommunications and Information Administration, an agency within the Commerce Department, which I have had the privilege and honor of heading since 1993.

I would like to start my remarks by underscoring a point made by Secretary Brown earlier today. The Secretary said that proposals to dismantle the Commerce Department and scatter its functions among different agencies is "tantamount to unilateral disarmament in the battle for global competitiveness." As the Secretary noted: "Such an approach will leave us less able to compete and undermine our economic security."

Efforts to dismantle the Commerce Department are extremely short-sighted. The Commerce Department's mission to help stimulate innovation at home and boost U.S. exports overseas is crucial to enabling this country to compete in the global marketplace. Doing away with Commerce and shuffling its functions around to other agencies and departments makes little economic or policy sense. Such an action would weaken our ability to meet the internationally competitive demands of the 21st century, hurt our economy, and send the wrong message to the nation and world.

Nowhere is the short-sightedness of the goal to eliminate Commerce more apparent than in the area of telecommunications and information technologies. These are the markets of the future, both at home and abroad.

Today, I will highlight NTIA's key operations that are essential to promoting continued growth in these critical areas. NTIA's international and domestic policy operations, its spectrum functions, and its efforts to ensure widespread access to the benefits of advanced technologies are interconnected elements that will help the U.S. maintain its global leadership and remain competitive worldwide.

In 1995, one-half of all capital investment in America, broadly defined, will be in computers and telecommunications. By the year 2000, telecommunications and information-related industries will account for approximately 20 percent of our entire U.S. economy. And by the early 21st Century, the global information industry is expected to reach $3 trillion.

Telecommunications and information issues are dynamic, they are multi-disciplinary, and they are complex. The Nation needs the expertise of the National Telecommunications and Information Administration to continue to lead in this area and to ensure that the benefits of the Information Age reach all Americans.

As Secretary Brown noted, our economic success depends on our being able to compete around the world. We cannot do so if other countries continue to protect their monopoly telecommunications providers, but we will be tremendously successful if they open their markets to competition.

Last week, I participated in bilateral negotiations in Brussels where we discussed the opening of European markets to competition. The United States helped establish a specific timetable for the steps needed to move toward a telecommunications system with many providers. The day after our meeting, the European Commission adopted an accelerated telecom liberalization timetable. This will directly benefit U.S. companies who are eager to compete and invest abroad.

As Administrator of NTIA, I have spent the last two years on similar missions, working to convince other countries to dramatically change the way they operate their telecommunications networks to encourage more openness so that U.S. businesses can compete. I have spent countless hours with my counterparts around the world discussing, debating, and persuading them of the benefits of competition and the technical and policy changes necessary to get there.

These efforts have already resulted in benefits for U.S. companies. For instance, as a result the Department's participation in the Latin American Telecom Summits, U.S. companies have secured hundreds of millions of dollars worth of contracts. NTIA's efforts to encourage adoption of procompetitive policies in Eastern Europe have also paid off. In the past two years, both Hungary and the Czech Republic have privatized their state-owned telephone companies. Privatization, while only an initial step, puts these two former Communist states ahead of many nations. And, in the meantime, two U.S. firms, and their employees, are benefitting -- Ameritech in Hungary and AT&T in the Czech Republic.

Every nation I meet with has a ministerial level officer for telecommunications. In most countries, the government owns the telecommunications system. My official government position enables me to discuss with officials from these governments the fundamental structural, technical and policy changes that will be necessary to their telecommunications infrastructure and help bring about a competitive global marketplace in telecommunications.

ome have argued that the U.S. Trade Representative could perform these functions. While USTR does an outstanding job in removing barriers to U.S. goods overseas, that agency cannot do the job of NTIA. It does not have the depth of expertise in telecommunications that NTIA has. In fact, it often relies on the expertise of NTIA and the Department. Our relationship with USTR is one of many instances in which the Department of Commerce provides economic, sector and country specific expertise that is critical to effective work at the international economic negotiating table.

NTIA's work in the international arena also involves securing radio spectrum for new, emerging telecommunications technologies. NTIA is working through international organizations to make sure that there is enough space set aside for new innovative satellite services such as Globalstar, Iridium, Teledesic, and Odyssey. This is the next generation of communications technology, promising consumers more choice and lower prices, and the U.S. companies have leadership positions in the development and implementation of such systems.

Mr. Chairman, these new systems will not be developed unless we secure orbital slots for their satellites, and that requires agreements with other governments. In addition, in these international arenas, NTIA secures necessary spectrum for important government uses including those affecting national security and public safety. The need to coordinate with and obtain approval from other governments will become even more important as we move into an era with greater reliance on international communications and satellite-based systems.

While playing an important role in promoting competition overseas, NTIA also works hard to advance new opportunities for businesses and consumers at home.

NTIA developed and promoted the spectrum auction policies that have provided the basis for the FCC's recent spectrum auctions for personal communication services, the next generation of cellular phones and other technologies. It is estimated that these auctions will bring in $9 billion to the Federal treasury.

As manager of the Federal government's spectrum, NTIA works hard to get Federal users to use their radio frequencies more efficiently. Our efforts have paid off. We have identified 235 MHz of Federal spectrum to be transferred to the private sector to spur innovative services. It's worth pointing out how significant this amount of spectrum is. . .today's entire cellular telephone industry is allocated only 50 MHz.

The bills to dismantle Commerce would abolish NTIA but transfer NTIA's spectrum management functions to the FCC. This would be a serious mistake. The FCC is an independent regulatory body that manages the commercial use of spectrum. Transferring management of the Federal spectrum to the FCC would raise concerns regarding interference with the President's constitutional authority, particularly with respect to the national defense and foreign affairs.

We have been promoting more efficient spectrum use by these agencies, and more can and will be done. However, it makes no sense to throw agencies with national security and public safety requirements for spectrum into direct competition with commercial users. Critical government functions must be kept separate from the commercial allocation decisions made by the FCC.

Some people have suggested that the FCC could do NTIA's job, not only in federal spectrum management, but in international and domestic policymaking. But this runs counter to longstanding U.S. policy and growing international consensus that the Executive Branch should not have direct regulatory authority over the telecommunications industry. The logic for this separation is sound. It is designed to limit political influence on important regulatory decisions.

As the President's adviser on domestic and international telecommunications issues, NTIA uses its technical and policy expertise to ensure that the public benefits from any changes in telecommunications policies and laws.

NTIA is currently working to ensure that all Americans benefit from advanced technologies and that no one is left out of the Information Age. The agency currently administers three grant programs that serve as catalysts for connecting people to computer networks who would not otherwise be served by commercial providers, and for advancing important educational services that also are not provided by commercial entities.

Through our grants, NTIA has, for example, assisted states such as North Carolina in linking physicians in rural hospitals with major medical centers in the state for emergency care. We have funded the development of distance learning programs in rural areas in 15 Western states. And our grants to public television and radio have provided the hardware for Alaska Public Radio to reach remote communities with no access to daily newspapers or television. Among the most successful and highly regarded children's educational television programs, Storytime and Ghostwriter, were created through a small grant from NTIA.

Mr. Chairman, the Commerce Department and NTIA both serve vital roles. All organizations should be subject to continued scrutiny to ensure that they are operating efficiently and effectively. Unnecessary functions and activities should be eliminated and privatization should be utilized where appropriate. But we should not - must not - eliminate programs and responsibilities that are critical to our economic future. With a budget of roughly $100 million, NTIA works very hard to spur innovation and job creation and promote a competitive marketplace that will result in more choices and lower prices. The American people are being well-served by NTIA and the Commerce Department. Unnecessary functions and activities should be eliminated and privatization should be utilized where appropriate. But we should not - must not - eliminate programs and responsibilities that are critical to our economic future. With a budget of roughly $100 million, NTIA works very hard to spur innovation and job creation and promote a competitive marketplace that will result in more choices and lower prices. The American people are being well-served by NTIA and the Commerce Department.