Subject: 07/27/94 Intl Working Group Hearing Transcript NEW 08/04/94 UNITED STATES OF AMERICA * * * * * DEPARTMENT OF COMMERCE INTERNATIONAL TELECOMMUNICATIONS HEARING * * * * * THE EMERGING GLOBAL INFORMATION INFRASTRUCTURE * * * * * Wednesday, July 27, 1994 * * * * * The hearing was held in the Grand Ballroom, Georgetown, University Conference Center, Washington, D.C., at 9:00 a.m., Carol C. Darr, presiding. PRESENT: PANEL 1: HEARING BOARD: CAROL DARR, CHAIRPERSON CHARLIE RUSH, DOL/NTIA JONATHAN SALLET, DEPARTMENT OF COMMERCE SCOTT HARRIS, FCC MIKE NELSON, OSTP PANEL WITNESSES: ARTHUR K. REILLY, ATIS LEONARD KOLSKY, MOTOROLA FRED WILLIAMSON, U.S. CHAMBER OF COMMERCE DIANA L. DOUGAN, CSIS ROBERT LEVIN, VIATEL PANEL 2: HEARING BOARD: CAROL C. DARR, CHAIRPERSON CHARLIE RUSH, DOL/NTIA TOM KALIL, NEC CATHY SANDOVAL, FCC JEFF SMULYAN, HEAD, U.S. DELEGATION, KYOTO DON ABELSON, USTR MIKE NELSON, OSTP PANEL WITNESSES: BRIAN MOIR, MOIR & HARDMAN GREGG DAFFNER, PANAMSAT KEVIN J. KELLEY, QUALCOMM WENDY FRANZ, AIRTOUCH JASON S. BERMAN, RIAA PANEL 3: HEARING BOARD: CAROL C. DARR, CHAIRPERSON DON ABELSON, USTR JON BAKER, CEA DICK BEAIRD, DEPARTMENT OF STATE MINDEL DE LA TOREE, DOC DIANE CORNELL, FCC PANEL WITNESSES: MARSHALL PHELPS, IBM, CBEMA ANDREW MAISEL, SUN MICROSYSTEMS WILLARD M. BERRY, EUROPEAN-AMERICAN CHAMBER OF COMMERCE FRITZ ATTAWAY, MPAA TOM CASEY, SKADDEN, ARPS, SLATE, MEAGHER AND FLOM WARREN ZEGER, COMSAT C-O-N-T-E-N-T-S CALL TO ORDER 7 RONALD H. BROWN, SECRETARY OF COMMERCE 7 PANEL 1 - COMPONENT TECHNOLOGIES OF THE NII/GII: 23 ARTHUR K. REILLY, CHAIRMAN, COMMITTEE T1 - TELECOMMUNICATIONS 23 LEONARD KOLSKY, VICE PRESIDENT OF GLOBAL TELECOM RELATIONS, MOTOROLA 31 FRED WILLIAMSON, DIRECTOR OF IMAGING TECHNOLOGY POLICY, EASTMAN KODAK COMPANY, ON BEHALF OF THE U.S. CHAMBER OF COMMERCE 37 DIANA L. DOUGAN, CHAIR, INTERNATIONAL COMMUNICATIONS AND INFORMATION POLICY, CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES 46 ROBERT LEVIN, DIRECTOR OF PUBLIC AFFAIRS, VIATEL 55 COMMENTS AND QUESTIONS FROM HEARING BOARD 63 OPEN MIKE TESTIMONY FROM AUDIENCE 81 PANEL 2 - INFORMATION INFRASTRUCTURE TODAY 86 BRIAN MOIR, PARTNER, MOIR AND HARDMAN 87 GREGG DAFFNER, VICE PRESIDENT FOR MARKET DEVELOPMENT AND REGULATORY AFFAIRS, PANAMSAT 94 KEVIN J. KELLEY, VICE PRESIDENT FOR EXTERNAL AFFAIRS, QUALCOMM 102 WENDY FRANZ, VICE PRESIDENT FOR INTERNATIONAL PUBLIC POLICY, DEVELOPMENT, AND PLANNING, AIRTOUCH 107 JASON S. BERMAN, CHAIRMAN AND CEO, RECORDING INDUSTRY ASSOCIATION OF AMERICA 115 COMMENTS AND QUESTIONS FROM HEARING BOARD 121 PANEL 3 - PRINCIPLES OF THE GII, PART I 148 MARSHALL PHELPS, VICE PRESIDENT, INTELLECTUAL PROPERTY AND LICENSING SERVICES, IBM, ON BEHALF OF THE COMPUTER AND BUSINESS EQUIPMENT MANUFACTURERS ASSOCIATION 149 ANDREW MAISEL, DIRECTOR OF OPEN SYSTEMS TECHNOLOGIES, SUN MICROSYSTEMS 161 EMORY SIMON, EXECUTIVE DIRECTOR, ALLIANCE TO PROMOTE SOFTWARE INNOVATION, ALSO ON BEHALF OF THE BUSINESS SOFTWARE ALLIANCE 171 WILLARD BERRY, PRESIDENT, EUROPEAN-AMERICAN CHAMBER OF COMMERCE 179 FRITZ ATTAWAY, MOTION PICTURE ASSOCIATION OF AMERICA 188 TOM CASEY, SKADDEN, ARPS, SLATE, MEAGHER & FLOM 196 WARREN ZEGER, GENERAL COUNSEL, COMSAT 206 COMMENTS AND QUESTIONS FROM HEARING BOARD 213 OPEN MIKE TESTIMONY FROM THE AUDIENCE 244 P-R-O-C-E-E-D-I-N-G-S 9:21 a.m. CHAIRPERSON DARR: Good morning. I'd like to call this meeting to order. This is a hearing of the International Telecom Working Group of the Administration's Information Infrastructure Task Force. The Secretary of Commerce will be here in just a moment. Before he gets here, I'd like to introduce the hearing panel. To my far left is Mike Nelson, who's with the Office of Science and Technology Policy at the White House. Immediately to his right is Scott Harris. Scott is the new head of the International Section of the Federal Communications Commission. To my right is Jonathan Sallet. Jonathan is the head of Policy and Planning for the Department of Commerce and the Secretary's righthand person. My name is Carol Darr. I'm the Chair of the International Telecommunications Working Group, and to my right is Charlie Rush, who is the Chief Scientist of the National Telecommunications and Information Agency of the Department of Commerce. Thank you all for being here and thank you for waiting. The hearing this morning is, I think, the first in a series of events that will get the Administration's policy going on the GII. We've had a lot of internal discussions, and the Secretary will have a few remarks about that in just a few moments. It is my very great pressure and honor right now to introduce the Secretary of Commerce, Ronald H. Brown. He is the head of the Administration's Information Infrastructure Task Force. He and the Vice President has worked very carefully in setting the Administration's agenda. He is particularly interested in trade and technology, and his trade missions around the world reflect that, that he's getting it done every day with regard to trying to find American jobs abroad and in the United States. He's is here today to give us a few remarks about what he sees as the agenda for the GII. It is my pleasure to introduce Ronald H. Brown, Secretary of Commerce. (Applause.) SECRETARY BROWN: Good morning. I am very pleased to be with you this morning. It is not surprising, but gratifying to see such a good turnout for what I hope and trust will be an informative discussion, an opportunity not only to listen to those who are up here in the front of the room, but to hear from you in the audience to get the benefit of your counsel and advice as we move down uncharted waters. It seems to me that the tasks before us are extraordinarily important to the future of our country, to our effort to create an environment for sustained economic growth and job creation, our effort to raise the standard of living of the American people to make us a more productive, more competitive nation. Obviously, I'm pleased to have the opportunity to welcome all of you to this event, but before getting into any matters of substance, I do want to thank Carol Darr, the Deputy General Counsel of the Commerce Department, and all our staff at the National Information and Telecommunications Administration, and all of those who have been responsible in the Administration for putting this session together. Carol has been leading our efforts through the Telecommunications and Information Working Group on International Matters, really working to bring together those from all over the Federal Government who have an interest in the outcome of our deliberations and an interest in trying to shape our policy direction. As you're well aware, information technologies are going to unleash a torrent of opportunity, also a torrent of challenges, both domestically and internationally. Business, as I've indicated, we expect to become more competitive, and, therefore, to be able to grow, and it's clear to me that a lot of the focus is going to be on small and medium-sized companies and startup companies, entrepreneurs who have a dynamic vision of the future. We went through a period a number of years ago when companies like Apple and others were starting up, many of which started up in somebody's garage somewhere, and are now multi-billion dollar international companies employing tens of thousands of people. We expect the same to be true with telecommunications technology. New markets for our goods and services will be created. Medical treatment will be more widely available. Education should be improved, workforce training enhanced, and, ultimately, economic integration accelerated. I think as we look to our effort to first construct a national information infrastructure and then participate in the construction of a global information infrastructure. Our responsibilities are clear, hopefully as clear as our opportunities. The fact is that we've got a chance to really do some extraordinary things. Health care delivery is just one. Educational opportunity for all is another, but I think, generally, closing some of the gaps that exist in our society, both domestically and international, is one of the reasons why the President has said, for example, in reference to our national information infrastructure, that we're going to have every school, every hospital, every clinic, every library connected to our national information infrastructure by the year 2000. One thing we want to be certain of, and that is that we don't create a society of information haves and information have-nots, but rather we use these opportunities to overcome some of those gaps. The Information Infrastructure Task Force's Telecommunications Policy Working Group on International Telecommunications, which Carol Darr chairs, has focused its attention on the development of the national information infrastructure in the context of an emerging global information infrastructure. The Working Group is responsible for drafting an agenda for cooperation which will be a blueprint for the Clinton Administration's initiatives with respect to the global information infrastructure. We believe that today's hearing is absolutely critical to that policy development. The testimony here today and written submissions will clearly help to guide our thinking as we formulate the global information infrastructure objectives. Your input is essential as we consider such key questions as: what are the obstacles to interoperable and accessible networks? How can we extend local initiatives, such as Commerce Net, to the global marketplace? What types of cooperative joint ventures should the government and the private sector pursue? We currently envision the GII as a web of interconnected local, national, and regional networks. Taken as a whole, this global network of networks can substantially further economic growth and job creation, infrastructure improvements, and broad-based social discourse within and between and among all countries. The global information infrastructure will facilitate the sharing of information. It will facilitate interconnection and communication on a global basis, creating a new global information marketplace. We all know, as we talk in this hearing today, that this process has already begun. It is not waiting for this hearing or waiting for the policy declarations of the Administration. At last count, the Internet, for example, linked 140 countries, more than 2 million host computers, and 20 million users. The number of telephone lines in the world is expected to grow by more than 30 percent by the year 2000. In March of this year, Vice President Gore discussed the global information infrastructure at the ITU Telecommunications Development Conference in Buenos Aires. He set forth five fundamental principles for the GII: private investment, competition, open access, universal service, and a flexible regulatory environment -- not very much different from the principles we set for our national information infrastructure. These principles were incorporated in the Buenos Aires Declaration at the conclusion of the conference and are being put into practice not only in the United States, but also in many other countries. These principles can create the common ground for the development of the GII and provide a useful foundation upon which to build agreements on important issues such as standards and network security. International collaboration is fostering that development. The Department of Commerce's National Oceanic and Atmospheric Administration has been working with Japan's Science and Technology Agency to establish the Global Observation Information Network which will connect networks containing global observation data. Through the Global Schoolhouse Project, the Department of Education is already using low-tech video-conferencing to connect elementary school students in three states and Britain. Earlier this month in Naples I think we were probably all pleased to hear the heads of state of the seven major industrial nations and the President of the European Commission agree to President Clinton's proposal to hold a ministerial- level meeting in Brussels early next year to discuss GII issues. I'm going to have the honor and pleasure of leading the United States effort in that regard, and the Department of Commerce will be spearheading our involvement in the meeting, which will focus on how the G-7 can work together to promote innovation and the spread of new technologies through the development of an open, competitive, and integrated worldwide information infrastructure. In going into that process, we fully recognize that we have some competitors in the G-7. We understand that the will and desires of the G-7 nations will not always be consonant with the desires of developing countries as they work to build a basic telecommunications infrastructure, but we do think that communication between and among G-7 nations on these telecommunications issues is certainly an important step that cannot be overlooked. When we talk about our national information infrastructure, one aspect on which we focus is the potential for economic growth and job creation, which is clearly the hallmark of this Administration. It is what we spend the most time and attention doing. These benefits we believe will increase as we develop the GII. It is my judgment that it is in the interest of all nations to embrace the GII because it really provides an opportunity to do new things, to break out in new directions, to create an infrastructure that allows for economic growth and job creation not only here, but all around the world. The more all countries link their networks and develop their information infrastructure, the more we will all reap in terms of economic and educational and health care and environmental benefits. The GII will clearly have a tremendous impact on global productivity. It will not just build new communications and information companies an infrastructure, but it will help all companies engaged in a wide variety of endeavors to do their work more efficiently and more effectively and to reach new markets. I think that is a factor that we sometimes forget. When we talk about the GII, when we talk about telecommunications generally, we tend to think of it in terms of the telecommunications companies, of the telecommunications sector of our economy, rather than extending that vision to the profound impact these developments are going to have on all business and industry, on our ability as a nation to compete effectively in this very tough and difficult and competitive global economic environment. The United States is only one of a growing number of countries pursuing plans to develop a national information infrastructure. There's the European Union and Canada and Australia and Japan, just to name a few, and they all have embarked on ambitious programs not dissimilar from our own NII efforts, and other countries in Asia and Latin America and Eastern Europe have identified telecommunications and information technologies as essential to further economic growth and economic development. Our economies are increasingly interrelated and increasingly information-intensive. In the United States alone, approximately 60 percent of all of our workers are now knowledge workers, so- called. Twenty years ago only 50,000 computers existed in the entire world, and today more than 50,000 computers are sold worldwide every hour. That shows what kind of explosive environment we are living in. Telecommunications networks and the advanced information capabilities of these networks serve as the critical foundation for the global commerce that draws our economies closer together. According to a business communications company report in April of 1994, the current $33 billion market for telecommunications outside the United States is projected to nearly double to $64 billion by 1998. In the short term, we are, of course, focusing on our GII-related efforts in Latin America and Asia, two areas of the world with tremendous growth potential. About a year ago this time, I had the opportunity to go to Venezuela to attend a hemispheric telecommunications conference, and many of the major American telecommunications companies were there, but, more importantly, to see the telecommunications ministers and private sector individuals from all these Latin American countries so focused, so attentive, so obsessively generated activity in their countries on telecommunications was really quite astonishing. I did not recognize until that meeting the need for us to really get moving in our own planning process, in our own internal communications efforts and dialog. At the end of June of this year, just a few weeks ago, I had the opportunity to go to Argentina and Brazil and Chile with a group of CEOs, many of them from telecommunications companies, and most of the conversation, much of the focus was on telecommunications and how those countries build an infrastructure. As it turns out, Chile's going to have a fully-digitized telephone system before the United States does. It might well be the case with Mexico as well. So we shouldn't be sitting back on our laurels. We ought to understand that the competition, although focused in parts of Asia and Europe, can soon come from other parts of the world as well. In Santiago, Chile, we signed a Memorandum of Understanding regarding cooperation in the development of the GII between the United States and Chile. It is our view that that is really the first important step in building this global information infrastructure. The MOU will establish a collaborative program that will encourage and strengthen the progress of telecommunications in each country to support the network of networks to which we refer. The program will include fostering telecommunications-related trade between the United States and Chile. The program also will establish educational seminars to share information on distance learning and telemedicine, and we actually demonstrated some of the uses in telemedicine connecting Latin America in this particular case with Texas. We've done it here in the NII out at Fairfax Hospital not along ago, connecting Fairfax Hospital with the world community and West Virginia, delivering medical services through the use of telecommunications. The program will encourage the development of Internet and other electronic networks between the United States and Chilean libraries and schools and hospitals and health clinics. At the end of August, I have the good fortune again of leading a trade mission to China. One of the areas of greatest opportunity for growth in the field of telecommunications, China clearly offers tremendous opportunities for information infrastructure development and the concomitant economic growth and job creation. By one report, the Chinese government will spend in excess of $6.7 billion by 1996 to upgrade the country's communications infrastructure. By the year 2000, Beijing wants to raise that one line for every hundred Chinese to almost ten lines for every hundred. That will be the equivalent of building a new Bell Operating Company every year. To give you the sense of the dimensions of that, some of the early estimates were that they wanted to take telephone penetration from about 1 percent to a little over 7 percent between now and the year 2000, and that would be 80 million new telephone lines between now and the end of this century -- unbelievable, unbelievable opportunities in the telephone and telecommunications infrastructure arena. Let me say, finally, that the development of the global information infrastructure will clearly help bring the economic and social benefits of advanced telecommunications and information technologies to all peoples around the world, and I'm looking forward, as I indicated at the beginning, of hearing your ideas and recommendations, and would like to take this opportunity to thank you all for your valuable input. We have many of our key people from the Administration who are working on these issues who will be with you for the entire session. I'm going to have to leave to go to a meeting on Asia policy, which obviously is going to focus considerably on the issues that you're discussing. But let me just say I don't think that we can overemphasize the importance of this trek on which we are embarking, and I think the most important thing to me at least is the kind of impact we can have on the real lives of real people, how we can improve people's lives. This is not just about economic growth for economic growth's sake. This is not some ideological or philosophical task. I think if we are relentlessly pragmatic, we have to understand the implications for what we're doing on people's lives. It can change lives, and change lives for the better. It can help move people out of poverty. It can help make sick people well. It can help do many things that we did not think were possible just a few short years ago. So as we focus on those things that encourage investment and encourage competition and encourage interoperability and encourage universal access, that is all for a reason, and the reason is that we can really do some extraordinarily positive things not only for our country, but for this planet, as far as having a profound impact on people's lives, on the way they live, on the what they're able to achieve, on allowing people to achieve their fully human potential. So it is within that context that I welcome you, that I urge your participation, that I attempt to assure you that this is not an occasion for us just to talk at you, but for us to do some listening to you, and we are convinced that we can learn much through this process. So thank you very much for attending. Thank you. (Applause.) CHAIRPERSON DARR: Thank you, Mr. Secretary. Before I introduce the first hearing panel, I'd like to give you a sense of what we hope to accomplish by this hearing. In the next four or five months there are an extraordinary series of events that face the Administration on international telecommunications issues. In, let's see, in November we have the APEC conference. That will focus on telecommunications. In December, we will have the Summit of the Americas, focused on telecommunications for Latin America. Probably sometime the first of the year, we will have a G-7 conference on telecommunications that grew out of a larger G-7 conference that was just concluded. We'll then go into a series of bilaterals with various countries. Can all of you all hear me? Okay, good. Thank you. One of the things that will grow out of this hearing is the beginning of a document called the Agenda for Cooperation. Many of you will remember that last September the NII Task Force published a document called, "The NII Agenda for Action." Approximately one year later, this October, we hope to publish a GII Agenda for Cooperation. The purpose of that document will be to flesh out the Administration's policies, to flesh out the Vice President's five principles, and to have a document that we can take to various countries and tell them what the United States GII policy is. This hearing will provide input to that document, and it's not just the testimony of the people who are presenting testimony today. Any of you in the audience who wants to comment on the testimony or ideas you have growing out of this hearing, we would honestly very much like to have your thoughts, all of which will go into our document. So we would very much welcome your input. This is the beginning, we hope, of the private sector's input into the Administration's policy on GII. I'd like to turn now to introducing the panel. As I do, I'd ask each of you to stand up so that the audience can see you. The first member of the panel is Arthur K. Reilly. He's with the T1 Committee on Telecommunications. Thank you, Mr. Reilly. Our second presenter will be Leonard Kolsky from the Motorola Corporation; Fred Williamson from Eastman Kodak, who is appearing on behalf of the U.S. Chamber of Commerce; Ambassador Diana Dougan from the Center for Strategic and International Affairs; and Arthur Levin from Viatel. Our first comments will come from Mr. Reilly of the T1 Committee. MR. REILLY: Fine. Thank you very much, and good morning, Madam Chair and members of the International Telecommunications Working Group. As indicated, my name is Arthur Reilly. I'm the Chairman of Committee T1 - Telecommunications. Committee T1 is sponsored by the Alliance for Telecommunications Industry Solutions, or ATIS, and is accredited by the American National Standards Institute, ANSI. Someone will be representing ANSI tomorrow in your afternoon session. ATIS, our sponsor of Committee T1, is an industry association that is open to membership by exchange carriers, interexchange carriers, cellular providers, alternate access providers, and cable TV companies -- all U.S. telecommunications service providers who own their own investment in plant or transport or switching. Committee T1 was established to serve as the U.S. public telecommunications network standards developer. It's also the primary source for U.S. technical contributions on public telecommunications network standards for the International Telecommunications Union on the related subjects, and it's also been an initiator of national, regional, and global standards cooperation and coordination. Committee T1 was formed at the time of the AT&T divestiture a little more than ten years ago to develop U.S. standards and technical reports related to interfaces in the U.S. public telecommunications network and to develop positions on international issues as well. The T1 membership is made up of four interest groups: users and general interest, interexchange carriers, exchange carriers, and manufacturers. Since T1 is accredited by the American National Standards Institute, it's open, voluntary, balanced, consensus-based, private sector-initiated process is one that's open to all interested parties and, as such, our participants come from all around the world. Committee T1 has been set up as a model for other organizations around the world as privatization has taken place. In addition to having served as the Committee T1 Chair since 1992, an elected position by the membership of Committee T1, I'm also Director of Network Performance Requirements and Applications at Bell Communications Research or Bell Cor. I very much appreciate the opportunity to be before you today to briefly review the comments that are provided in my written testimony, overview those on Committee T1 activities to meet the user needs and our efforts to coordinate those activities with others nationally, regionally, and globally, but also to talk about our relationship in that regard to the government and to reach some conclusions and observations relative to the partnership between Committee T1, the private sector, and government relative to standardization. Since its formation, Committee T1 has had as one of its priorities to not only establish the standards for the existing network to be forward, but also to be forward-looking and look at the minimum requirements, so that we can grow the network of networks. Over the years, Committee T1 activities have been functional in nature and have looked across a broad range of technologies, looking at the functional characteristics independent of the specific technologies, so that interoperability and innerworking were possible. We looked at ranges of network interfaces, services, architectures, signaling, synchronization, et cetera. Specifically, some of the key component technologies of the NII or the GII are being standardized in Committee T1, such areas as digital access technologies; narrow band ISDN, for example; broad band ISDN; asymmetrical transfer mode, ATM; asymmetrical digital subscriber lines, ADSL, et cetera. But we've also worked in intelligence network, fiber optic systems, network survivability, Signaling System 7. These are all key component technologies of the NII and the GII of 1994-1995, but we continue to work at a pace of about approval of one standard every week, one to two standards every week, so that the GII and NII of the year 1999 and 2000 are also under development right now. Committee T1, as I mentioned, is the primary source for developing U.S. contributions to the ITU through the State Department process. There's a chart contained in my report that identifies that process and shows the parallel flow. On an annual basis Committee T1 provides approximately 500 to 1,000 contributions to the State Department process that are approved and are the basis for U.S. positions internationally. In addition to those activities, because of this strong role and commitment we have to that global activity, we are, of course, interested in having that progress, so that our own domestic work can progress. That being the case, we have initiated a number of activities nationally, globally, and regionally to look at this. One of them occurred back in 1990. Committee T1 initiated the Interregional Telecommunications Standards Conference, or ITSC. We hosted the leaders from the European Telecommunications Standards Institute, the Japanese Telecommunications Technology Committee, and the Director of the ITU to discuss issues of mutual interest and to develop the Fredericksburg Plan, which was a statement of cooperation to work together, to exchange information early in our process, and to work toward electronic document exchange to provide a means for information exchange. Those efforts have continued and today we have evolved to an organization that we refer to as the Global Standards Collaboration that met most recently in Melbourne, Australia in early 1994. We have been joined at the table by our colleagues from Canada, Korea, and Australia. So that we now have an opportunity to discuss not only the key technical issues that I mentioned before, but issues of our own individual experiences and develop agreements on such areas as openness to cooperation between our organizations. In addition to these activities at the global level, we've also been active in the region in several forms. One is the Organization of American States. We, together with the Organization of American States, CTEL, currently referred to as the Commission on Inter-American Telecommunications. We established an ad hoc group initially, and now we have a Working Group on Standards Cooperation that will be meeting for the first time in August. But we have already developed in the course of our ad hoc group white papers on the subjects of ISDN, Signaling System 7, and personal communication, and in August we'll be beginning our efforts on the area of intelligence network. One of the other activities that we have planned for our August meeting is the Committee T1 is sponsoring a seminar on Signaling System 7, so we can share not only our experiences in standardization, but also the experiences of operators with regard to operating those Signaling System 7 systems, many of which are just beginning to be introduced in the rest of the Americas. In addition to that activity, we've also sponsored the first Americas' Telecommunications Standards Symposium, and we attended the second one in Brazil, hosted by our Brazilian colleagues. We've also been active players, along with our colleagues from TIA, in the NAFTA-supported effort on the Consultative Committee Telecommunications, a trilateral group looking to work the technical issues associated with supporting the standards-related measures within NAFTA. In looking at all of the activities that we have underway and many others that I could talk about in the GII context, we look at this situation and we come to the conclusion that the relationship and the partnership between Committee T1 and the government in their role as the administrator of the ITU, as a participant in the T1 standards process, as a regulator of telecommunications in the U.S., and as an advocate for international trade, that the partnership has worked very well on behalf of the U.S., providing technical input and also providing the technical leadership to complement the activities of the U.S. Government. We see the convergence of the technologies of telecommunications, communications, and entertainment as requiring a process that stimulates competition and innovation, and we think our process of developing minimum requirements in an open, forward-looking process is, in fact, conducive to meeting those requirements. We would strongly encourage you to endorse that process and to continue to support government efforts in this regard, including the increased awareness of the industry and users to the importance of standardization and to the byproducts of that effort, which, as Secretary Brown indicated, are an element in improving the quality of life of the citizens around the world. I thank you very much for the opportunity to testify. Thank you. CHAIRPERSON DARR: Mr. Reilly, thank you very much. Mr. Kolsky? MR. KOLSKY: Thank you. Is this on (referring to the microphone)? Can people hear me in the back? CHAIRPERSON DARR: Can you hear Mr. Kolsky? Yes. MR. KOLSKY: Ms. Darr, members of the Hearing Board, I'm Len Kolsky with Motorola, and I want to discuss briefly with you the role of the wireless telecommunications technologies in the NII -- CHAIRPERSON DARR: They're having trouble hearing you. Can you speak up a little bit more into the microphone? MR. KOLSKY: Sure. How about now? CHAIRPERSON DARR: There seems to be a problem with the mike. MR. KOLSKY: How's this? Better? CHAIRPERSON DARR: Can people hear? MR. KOLSKY: How's this? CHAIRPERSON DARR: Can people hear? Yes? No? MR. KOLSKY: Yes? Okay. I'm doing a sound bite, it sounds like. It's both a good news and bad news to be among the first panelists. The good news is we have an opportunity perhaps to set the agenda and set directions. The bad news is you will hear, as Mr. Reilly commented, a lot about networks, wire line networks, and I think many people have a vision of NII as looking like a skeleton of the blood system with a lot of branches. In that equation, wireless often gets lost, and I'm concerned that as the day goes on you will forget wireless. So if there is one word you will carry away, I hope, with you, it is the importance of wireless. Of course, wire line networks will be needed. They'll be needed in and of themselves, and they will be needed to transmit wireless services. Voice, data, imaging, facsimiles -- all are going to be handled through wireless as well as wired means. Developing countries have no problem understanding the value of wireless services. Secretary Brown described China's plan to install more phone lines, and he described a fabulous effort that by the year 2000 there would be 80 million new phone lines and there would now be penetration of 7 percent. Wireless, we believe, can help that other 93 percent. We find that countries such as China are quite innovative in using wireless technologies. For example, we have done a tremendous business in selling pagers into China, and what the paging user has found is by using a pre-arranged code with the person who has the pager, you can use the neighborhood phone, one phone for several hundred people, and by a pre- arranged signal you can have a one-way message that enables those people to operate in today's world. In India, Mexico, Indonesia, all major markets globally, the ability to keep up with the wire line needs is just impossible, and they are going to continue to rely heavily on wireless communications. In developed countries -- the United States is an illustration -- the need and the appreciation of wireless is somewhat more subtle, but you're going to find that there will be wireless lands offices. As you move computers, for example, it will be done without having to rewire a building, but just literally by the use of radio. Secretary Brown mentioned that they hope to have all the schools in the United States into an NII net by the year 2000. We would offer that by using a wireless local loop and wireless technologies, either in transition or permanently, vast sums of money can be saved and still meet that year 2000 objective. The wireless units of tomorrow will be portable. It's interesting that those of you who walk around the Washington area and use our portable telephones or those of other members of the industry will find that there are frequently spots where communications are inadequate; they fade away. That's because the system in Washington, D.C., and almost every system in the United States, cellular system, was designed for mobiles. It was designed for a phone in the car, not on the person. Yet, everybody recognizes the wireless systems of tomorrow will go with the person; they will not be restricted by location. Can wireless technologies be a part of GII and NII? The answer is of course. We will need, however, the support and help of the government. In what areas? First, the U.S. Government should be technologically neutral. By that, we mean you must look at all the ingredients, all the services, and all the technologies that will be part of an NII/GII system and afford them equal treatment based on merit. Secondly, you must encourage competition. Particularly as we go into other parts of the world, there must be open access to infrastructure, provided, of course, that there will be no harm to the basic infrastructure. Second, we must stop trade barriers in forms of high tariffs, in the form of artificial restrictions. Recently, the USTR was instrumental in an agreement we formulated with Japan to further open up the cellular market. One of the big ingredients that has produced a change is that formerly in Japan the end-user could not a cellular phone; they had to lease it from the cellular operator, who then bundled that with a pretty high service fee. The new agreement calls for ownership by the end-user if he/she should so desire and lower basic tariffs. The result has been that in two months of that agreement we've almost reached 50 percent of the market that existed over the last several years. Standards -- Mr. Reilly talked about standards. They must not be used as a barrier to entry. They must be minimal to encourage technologies, particularly in the wireless area, and they must recognize intellectual property rights. Vice President Gore has set the course and every resource is needed. The U.S. Government must be the catalyst to harmonize those resources. Thank you. CHAIRPERSON DARR: Mr. Kolsky, thank you. Generally, we're going to hold comments and questions for the panelists until the very end, but Jonathan Sallet had a comment on Mr. Kolsky's remarks. MR. SALLET: I wanted to just say, because there's this question that comes up sometimes about the Administration's view of wireless technology -- now the fact that I've got two pages during the time that you were speaking demonstrates the immense value to me personally of wireless technology, but let me address it on a slightly broader scheme. You ought to know, and everybody ought to know, that our view of this is precisely what Mr. Kolsky has stated, which is we take a technologically- neutral view as a means of getting to a connected world. It is for the market to decide in large part what technologies to be used, and there are many different pathways. I was out in Las Vegas a month or so ago speaking to a different wireless group, the wireless cable people, and I said to them, our basic message is you don't have to be wired to be connected. Everybody ought to feel quite comfortable with the notion that we're focusing on connection; we're not focusing on any particular technology to get people connected. I think in that respect as we go on and talk about other aspects of this, we ought to feel comfortable, and I hope you and Motorola and other people in the industry will feel comfortable that we have taken a position that will accommodate all advancing technologies. MR. KOLSKY: I appreciate your remarks very much. MR. HARRIS: I think once again we're seeing the dangers of an overextended metaphor. Everybody talks about the information highway, and the assumption is that that's terrestrial. That's not the case. The infrastructure will have highways and skyways, satellites, cable, telephone. Every option is going to be part of this infrastructure. CHAIRPERSON DARR: Mr. Williamson, representing the Chamber of Commerce. MR. WILLIAMSON: Thank you. I am Fred Williamson. I am chairing the U.S. Chamber of Commerce Telecommunications Infrastructure Task Force. In my day job, I'm Director of Imaging Technology Policy for Eastman Kodak. On behalf of the Chamber, I very much appreciate this opportunity to address and offer the perspective of business users of the technologies, products, and services that will make up the NII and the GII. Our members believe that the development of these infrastructures will have a profound impact on America's private sector domestically and globally. Businesses, small and large, recognize that communication, information, and imaging technologies are already shaping and defining the future of the American workplace. As you know, the U.S. Chamber is the world's largest federation of businesses and associations and often the principal spokesman for the American business community. The Chamber is notable in at least three ways for the perspective it brings to issues such as those we consider today. First, there's the scope of its membership, which comprises over 215,000 individual businesses, state and local chambers, trade associations, and overseas extensions of the American business community. The importance of this broadly- based membership is enhanced by its diversity in terms of company size. While most of the nation's large companies, such as Kodak, are active, 96 percent of the members are companies with fewer than 100 employees and 71 percent have fewer than 10. Even these smaller companies, of course, are significant in their economic impact because they represent well over a million jobs, and, as we shall see, they also represent an area of considerable interest in the application of NII technologies. A second important aspect of the Chamber's membership is its industrial diversity. Essentially every standard industrial code and other business category is represented. For example, the major classifications of manufacturing, retailing, services, construction, wholesaling, finance, each have at least 10,000 Chamber members. Finally, the Chamber has significant geographic diversity amongst its membership. In addition to being present in nearly every small town and city in all 50 states, the Chamber's international reach is substantial as well in 69 American Chambers of Commerce abroad and 11 bilateral international business councils. An excellent example of this international interest is the fact that the Chamber has had a task force on telecommunications trade issues since 1988, which has been actively supporting the government's efforts to liberalize world trade in telecommunications products and services, and I believe many of you all are well aware of their work. Now that we know something about the Chamber's many members, how do we get them involved in the NII initiative? I think as we are all too well aware, there's great debate underway in this country regarding the ground rules for establishing the advanced telecommunications and information infrastructure that, along with a myriad of applications and services, will comprise the NII and, hopefully, the GII. Among the host of participants in this debate, one group has been significantly underrepresented; namely, the business user as opposed to provider of telecommunications-based services and products. We think this is especially true of small and medium-sized business users that the Secretary mentioned. In fact, if you look at the composition of the U.S. Advisory Council on the NII, I think it reflects that under-representation. The industries represented there are essentially those that create, manufacture, and sell telecommunications-based products, services, or content. There's no representation of the many small and medium-sized businesses that depend upon the use of such products and services for the survival and expansion of their business. For example, ABC Home Health Services of Brunswick, Georgia is not on the Advisory Council; neither is Mateland Travel Services of Kalispel, Montana; Paige Zabrowski Architects of Tulsa, Oklahoma, or even the National Association of Realtors here in D.C. But all of these either are or represent businesses that can offer meaningful input on how the NII and GII can affect jobs and productivity. So my purpose, then, in providing this testimony on behalf of the U.S. Chamber is to identify specifically why it's so important that the voice of the business user is heard in this debate and factored into the formulation of laws, policies, and regulations surrounding the NII. Business users are going to form a significant, if not the most significant, segment of the NII market. The investments they make, the incremental revenues and jobs they generate, and the taxes they pay will all be major contributing factors in realizing the vision of the NII. Accordingly, earlier this year the Chamber established the Telecommunications Infrastructure Task Force to focus specifically on the needs and concerns of the business user in the NII debate. The goal of this effort is to be able to make the policy establishment aware of these grassroots concerns, and that's why even though we've not yet finished our work, that we're really delighted to have the opportunity to tell you about what's underway. Let me spend just a moment on our Task Force and how it's going to operate. We have almost 100 members representing a wide range of companies, including those I mentioned earlier. They are divided into three subcommittees, each co-chaired by an industry and a state or local Chamber representative. One subcommittee is addressing the NII technology- related educational needs of Chamber members; another is getting a sense of what role members think the government should play in the NII, and the third will put together a set of business user principles that the Chamber will use to guide its public policy activities. In addition to having local Chamber members as co-chairs, our emphasis on outside-the- Beltway input is reflected in our intent to survey up to 6,000 Chamber members from all over the country using professionally-prepared survey questions to address our topic areas. Interestingly, almost 1,000 of our survey recipients are self-identified as having a sufficiently high level of interest in the subject to serve as research members of our task force. Our plan is to have the bulk of our work done by the end of the year, so the Chamber's Board of Directors can formally establish any resulting policy positions. Based on early indications from our members and other studies, it's safe to conclude that there is a very high interest in how NII-related products and services might increase the competitive posture of these businesses. At the same time there is a wi