Report to the Commissioners Creating a Federal Communications Commission for the Information Age Report of the Special Counsel to the Commission on Reinventing Government Mary Beth Richards February 1, 1995 "The FCC has established itself as the little agency that could." - Vice President Al Gore Hammer Award Ceremony August 4, 1994 Contents Executive Summary i I. Introduction 1 A. Our Recent Past Experiences Have Taught Us How to Reinvent Ourselves 1 B. Our Efforts at Transformation Have Been Substantial 3 II. The Way We Were 4 III. 1994 5 A. People and Their Work Environment 6 B. Tools 9 C. Customer Service 9 D. Regulatory Improvements 11 1. Auctions 11 2. Processing Improvements 13 IV. What is Ahead 16 A. People and Their Work Environment 16 B. Tools 17 C. Customer Service 17 D. Regulatory Improvements 18 Appendix A. Summary of Bureau and Office Recommendations for 1995 Legislative Proposals B. Summary of Bureau and Office Recommendations for 1995 Administrative Actions Executive Summary The Federal Communications Commission must transform itself from an understaffed and underfunded bureaucracy, using outmoded telephones and computers, having an outdated infrastructure, to an agency with varied and appropriate expertise and staffing, sufficient funding, adequate and consolidated space, state of the art technology, and a flexible infrastructure. This transformation is essential to the Commission's ability to carry out its mission which is crucial to America's economy and woven throughout the lives of all Americans. It is also critical to the Commission's ability to meet the continuing new challenges given to us by Congress and the increasing demands of an ever changing industry. We have begun the transformation. But there is still much more we can do. And will do. This past year we completely restructured ourself for greater efficiencies of scope, seen an increase in our staffing and budget, have and are continuing to augment staffing with new and varied expertise, have and are continuing to consolidate staff and units into a still-insufficient amount of space, and have acquired state of the art computer and telephone systems. We also have reexamined our mission, improved the efficiency of our processes and streamlined our operations, redeployed staff to higher priority functions, outsourced some functions that could be performed by the private sector, have sought and will continue to seek legislative changes to allow us to perform functions more efficiently or to stop performing functions, changed our rules to reduce filing burdens on our customers, and have begun to introduce electronic filing and commerce. A Year of Change In the last year, Commission has taken many steps to reexamine its mission, improve its processes and streamline its operations. The results of this comprehensive review of the agency and its mission include:  providing our customers and staff with new electronic and computing tools; improving the agency's overall efficiency; and helping our customers save time and money.  outsourcing functions to the private sector to gain efficiencies;  redeploying staff to higher priority functions;  recommending legislative changes that increase our responsiveness to our customers and reduce their regulatory burdens; How We Worked We started the daunting task of reinventing the Commission by doing two simple things. We asked our customers how we can improve our services to them and we asked staff how we can improve their service to our customers as well as their job content. Our customers encouraged us to realign ourselves with the way the markets were developing, to increase the accessibility of the staff and our information. They also asked us to continually rethink the way we do things so we can keep up with the rapid changes in the marketplace. We have begun implementing these changes. There has been universally positive feedback. Similarly, employees suggested streamlining the review process, delegating more authority to the staff, ensuring better coordination between the people who make the rules and those who apply them on the application processing line, and eliminating unnecessary and duplicative rules. We have been working closely with employees and union officials to implement these ideas and are continuously looking for other ideas for improving the Commission's performance. Changes to Customer Service We have made it easier for people on the outside to work with the FCC by putting in systems and policies that make it easier to communicate with FCC employees and to access information. We now put orders, decisional documents, sunshine agenda, daily digest, speeches, FCC telephone directory, and other documents on the Internet--where in a recent week we received over 35,000 requests for information. We also added fax-on-demand, which allows people to call in from a fax machine and receive information. Additionally, we now have electronic versions of FCC forms, and have distributed a series of cable forms on computer disk in Excel for Windows, Lotus for DOS and Lotus for Windows format. In the last example, the requests for disks out paced the requests for paper almost 3 to 1 and cut the time for completing the forms by 90%. We are working to make improving customer service a continuous process and recently engaged a world-renowned consulting firm to create standards for customer service for each of the Commission's major constituent services. These standards will be designed to be adaptive in order to better match the rapid evolution of the Commission's constituents and its mission. Changes for Employees Based on employees' input, we have implemented changes in management and management practices, personnel policies, appraisals and awards, training, and technical support. Some significant achievements in this area are: reducing the number of layers of management between employees and their Bureau or Office Chiefs, creating the Office of Workplace Diversity, posting vacancy announcements on the e-mail system, providing training on filling out applications for vacancies, creating ASAP ($50 on the spot awards) and time off awards, creating a graduate level engineering course offered by the George Washington University, providing EEO and diversity training for senior executives. We also put a major effort to create new management structure in the Bureaus to promote new ideas and improve customer service. The front offices now generally include a newly hired non-career person, a career employee, someone with experience within the subject area of the Bureau and a career employee who brought experience from another area. The resulting cross fertilization of knowledge and skill will be an important asset as the communications industry undergoes a tremendous change and convergence. Changing Our Organizations and Our Tools Last year the FCC undertook the largest reorganization in its history, resulting in an organizational structure that more closely resembles the industries and markets that it regulates. Of course, we implemented the reorganization keeping in mind the changes that technology and market forces will bring to the communications industry over the next few years. So far, the reorganization has eliminated overlapping functions, increased accountability and reduced intra-agency conflicts by increasing coordination and priorities among the various Bureaus. Responding to employees' requests for better tools to do their jobs, we now have access to a modern productivity tools including a voice mail system, an ISDN phone system, and a modern Windows-based computer network. In particular, the computer network has improved communications and increased productivity with special features that allow staff to receive Communications Daily and job vacancy announcements on their screen, obtain direct access to Westlaw data bases, used an on-line telephone directory of FCC staff, send and receive Internet mail and documents as well as internal FCC electronic mail. There are over 25,000 e-mail transmissions daily. We have also established microwave links to additional buildings for video access to the Commission meeting room. What is Ahead As we continue to review every function we perform and whether it is essential and appropriate that we perform it, we will continue to change our processes and rules and recommend changes to the Communications Act. This analysis is critical to the Agency's success in moving from quill pens to microprocessors, analog to digital, and the industrial age to the information age. I. INTRODUCTION A. Our Recent Past Experiences Have Taught Us How to Reinvent Ourselves The Federal Communications Commission must transform itself from an understaffed and underfunded bureaucracy, using outmoded telephones and computers, having an outdated infrastructure, to an agency with varied and appropriate expertise and staffing, sufficient funding, adequate and consolidated space, state of the art technology, and a flexible infrastructure. This transformation is essential to the Commission's ability to carry out its mission which is crucial to America's economy and woven throughout the lives of all Americans. It is also critical to the Commission's ability to meet the continuing new challenges given to us by Congress and the increasing demands of an ever changing industry. "[O]ur job at the Commission is to manage a transition of epic proportions." - Susan Ness Remarks to the Federal Communications Bar Association September 22, 1994 An independent agency, the FCC is charged with making available to all people of the United States a rapid, efficient, nationwide, and worldwide communications service. In fulfilling this mandate, the Commission performs four major functions: o spectrum allocation; o creating rules enforcing fair competition and protecting consumers where required by market conditions; o authorization of service; and o enforcement. While efficiencies can be gained in the performance of all these functions, and some can be performed by entities other than the Commission, there are some functions, particularly the policy making and enforcement functions, that are inherently the responsibility of the government, in this case the FCC. The challenge for the Commission, and all federal agencies, is to determine what is essential and perform those functions only, as efficiently as possible. "[F]or years the Commission has stated, in rulemaking after rulemaking ... that one of the principal benefits of technological development and increased competition is that it eventually render s most extrinsic regulation unnecessary." - James H. Quello Remarks at Intelvent '94 September 27, 1994 This is an historic and amazing time for the communications industry. The FCC is in the eye of the telecommunications hurricane. Companies are merging at an unprecedented rate, new technologies are being discovered that make it impossible to predict what the industry will look like in the future, foreign markets are opening, and consumers, new entrants and existing players are demanding that they have full opportunity to participate in the telecommunications revolution. The FCC must be well positioned to safeguard the access to communications pathways that will permit private enterprise to innovate new competitive services and will give citizens the benefit of the communications revolution. During a time when the FCC is faced with unprecedented policy development challenges in the cable, wireline, wireless, broadcast, and satellite areas, it must transform itself into an agency positioned to meet the challenges. Two recent legislative initiatives illustrate just how important it is that the FCC transform itself. The first is in the area of cable television. By the 1992 Cable Television Consumer Protection and Competition Act, Congress directed the FCC to issue numerous rules regarding the $23 billion cable television industry - an industry with nearly mature growth in many markets, substantial debt, monopoly rents, and a record of some customer dissatisfaction with prices and service. Chairman Quello said it was the biggest job undertaken by the Commission during his 20 years at the FCC. What is more, the 1992 Cable Act required us to undertake more than two dozen new proceedings and complete them on stringent time schedules, initially without additional staff and funding. Implementing the 1992 Cable Act was a great challenge for the FCC. The cable television industry is not a traditional public utility. It is part content and part conduit, with an ever changing competitive environment that requires new regulatory techniques and, above all, flexibility. We met the challenge, but the effort showed the need to transform ourselves. "Hundt and his people have been unfailingly open and accessible to us. We obviously continue to have some very profound policy differences, but I think we have a constructive, open dialogue with the commission." - Decker Anstrom, President National Cable Television Association Chicago Sun-Times January 2, 1995 The second is in the area of wireless telecommunications. In 1993, Congress gave us auction authority. In June 1994, the Commission allocated spectrum for broadband personal communications services (PCS) in a plan that was hailed by industry and is expected to introduce multiple competitors to the wireless marketplace and result in substantially lower prices to consumers. In addition, within one year of passage of the authorizing legislation, the Commission adopted rules and procedures for competitive bidding for spectrum-based licenses based on game theories honored with the 1994 Nobel Prize for Economics, developed an unprecedented auction system that allows marketplace forces to create efficient spectrum and geographic aggregation, and held the first-ever spectrum auction. As of January 27, 1995, the Commission has conducted four auctions and raised nearly $6 billion for the U.S. Treasury. Again we discovered the need to reinvent ourselves, even as we met the challenge. "[The FCC] made [the PCS spectrum allocation plan] a better situation for virtually everybody." - John Hulak, Telecommunications Analyst BIS Strategic Decisions New York Times June 9, 1994 Both of these responsibilities taught us the need for a highly qualified, versatile and interdisciplinary staff, state of the art technology, and the flexibility to meet challenges that are complex and unique. It also taught us that we need to resist the impulse to issue rules for all industries in precisely the same manner and adhere to existing models, just because that is the way we have done it in the past. Fair rules of competition in all markets must not be pressed from a cookie cutter model. Our policies can remove or prevent obstacles to growth and access. Successfully stimulating competition leads to lower prices, creating more choices and better and cheaper service for consumers. As the traditional telephone companies and cable operators edge closer and closer into each other's businesses, and more generally, as the formerly separate wireless and wireline, terrestrial and space segments converge into a multilane information highway, new challenges and new tasks will undoubtedly emerge. B. Our Efforts at Transformation Have Been Substantial "[W]e intend to reinvent ourselves. Consistent with the Vice President's National Performance Review of last fall, the FCC will act to: cut red tape, put the customer first, empower employees to get results; and get back to basics. We intend to make the Commission as efficient as the most efficient 21st century business. In an age of microprocessors and speed-of-light communication, there's no reason why you should tolerate quill and ink regulators." - Reed E. Hundt Remarks at the Information Superhighway Summit January 11, 1994 We have begun the transformation. But there is still much more we can do. And will do. This past year we completely restructured ourself for greater efficiencies of scope, have seen an increase in our staffing and budget, have and are continuing to augment staffing with new and varied expertise, have and are continuing to consolidate staff and units into a still- insufficient amount of space, and have acquired state of the art computer and telephone systems. We also have reexamined our mission, improved the efficiency of our processes and streamlined our operations, redeployed staff to higher priority functions, outsourced some functions that could be performed by the private sector, have sought and will continue to seek legislative changes to allow us to perform functions more efficiently or to stop performing functions, changed our rules to reduce filing burdens on our customers, and have begun to introduce electronic filing and commerce. In February 1994, the Commission appointed me to a one-year detail as Special Counsel to the Commission for Reinventing Government to determine what steps the Commission could take to implement the reinventing government strategies and to oversee those measures. This report identifies what has been done over the last year to move us from quill and ink to microprocessors. It also identifies what still needs to be done to complete the journey. II. THE WAY WE WERE This is time of historic growth and extraordinary public attention for the FCC. The industries we regulate are huge and growing at a rapid rate. In constant dollars, the industries grew from $478 billion in 1982 to $783 billion in 1993. By contrast, the Commission staff dropped by 500 Full Time Equivalents (FTE) from 2,200 in 1980 to 1,724 in 1992. Our budget also declined, in constant dollars, and, consequently, the agency's infrastructure suffered. In 1992, Congress gave the FCC new responsibility with the passage of the Cable Act. As a result, under Chairman Quello, the agency's fiscal year 1994 FTE ceiling increased by 240 to 1,964, to implement the Cable Act. The 1,964, FTEs were distributed among Bureaus and Offices as follows: 559 in Mass Media Bureau (MMB)(including the cable allocation), 374 in Field Operations Bureau (FOB), 329 in Common Carrier Bureau (CCB), 257 in Office of Managing Director (OMD), 194 in Private Radio Bureau (PRB), 98 in Office of Engineering and Technology (OET), 48 in Office of General Counsel (OGC), 35 in Offices of the Commissioners and Chairman, 17 in Office of the Administrative Law Judges (ALJ), 12 in Office of Public Affairs (OPA), 11 in Office of Plans and Policy (OPP), 9 in Review Board (RB), 7 in Office of Legislative Affairs (OLA), 8 in Office of International Communications (OIC), and 6 in Office of Inspector General (OIG). (See attached organizational chart from November 1993.) Shortly thereafter, the Commission received congressional approval to create the Cable Services Bureau (CSB). At the beginning of fiscal year 1994, the distribution of staff broke down along the following activity lines: 37.9% for enforcement, 23.3% for authorization of service, 12.9% for executive director/administrative support, 13.5% for policy/rule making, 6.1% for public information services, 3.4% for legal services, and 2.9% for international. Because of the lack of resources over the years, the tools that employees had were far from state of the art. The telephones were only one generation removed from obsolete and did not have voicemail, conference call or re-dial capabilities. As of October 1992, the FCC's Honeywell computer was almost twice the comparative age of federal government computers and three times that of Fortune 500 computers. Few employees had access to personal computers. III. 1994 It was against this landscape that you asked me to oversee the task of implementing the principles of reinventing government - cutting red tape, putting the customer first, empowering employees to get results, getting back to basics - and making the Commission work better and cost less. In the short term, I was to determine how the FCC organization could be made more efficient, better serve the public interest and be responsive to the industry. In the long term, I was to work with a task force of Bureau and Office representatives to review our functions and programs to find and eliminate things that do not need to be done by the FCC and to streamline those that do. Throughout the year I worked with countless employees dedicated to improving the agency. The accomplishments identified in this report are to their credit. Starting in February 1994, I spent several months talking with hundreds of people inside and outside the Commission and reviewing dozens of organizational proposals. The Chairman and I held meetings with essentially all employees - supervisory and non- supervisory - by conference call or in person. Those meetings provided employees the opportunity to give us suggestions for how we should be doing our job better. Employees provided concrete suggestions for how to streamline the review process, delegate more authority to the staff, ensure better coordination between the people who make the rules and those who apply them on the application processing line, and eliminate unnecessary and duplicative rules. I held scores of meetings with industry representatives and members of the communications bar to learn what the Commission should be doing, to help frame the questions that we should be asking, and to solicit their ideas about procedure that should be changed and rules that should be eliminated. Those meetings resulted in dozens of organizational proposals and other suggestions. I also met with Union representatives to solicit their comments, suggestions and approval. At the end of February, the Chairman and senior management from throughout the agency participated in a retreat led by a renowned Harvard Business School professor. The major outcome of the retreat was an agreement that the agency structure no longer met the Commission's needs. The discussions that took place at the retreat laid the foundation for subsequent organizational changes. A. People and Their Work Environment Based on these meetings and conversations, I recommended that the Commission change the structure of the agency. Thereafter, the agency undertook the largest reorganization in its history, resulting in a structure that more closely resembles the industries the FCC regulates. The reorganization was undertaken to eliminate: overlap of functions, customers having to deal with multiple Bureaus, inefficiencies caused by multiple management structures, and competing priorities within Bureaus. It was also undertaken so as to recognize the emergence of new technologies and markets that require special attention. The first of the organizational changes was the creation of the Cable Services Bureau in early 1994. Effective October 1994, we eliminated the Office of International Communications and created the International Bureau to consolidate all international and satellite functions and to have the principal representational role on behalf of the Commission at international conference, meeting and negotiations. Effective December 1994, we eliminated the Private Radio Bureau and created the Wireless Telecommunications Bureau to consolidate the responsibility for wireless telecommunications licensing and regulation and to administer the spectrum auctions. Throughout the year other changes took place. At the suggestion of employees and the Union, the Office of Workplace Diversity was created to foster a diverse workforce and to ensure equal opportunities for employment, career growth and training. The Office of Small Business Activities was made an independent office and was renamed the Office of Communication Business Opportunities (OCBO) to reflect its expanded mission to help increase opportunities for small, minority and women-owned businesses or individuals engaged in or seeking to participate in communications industries. The Office of Legislative and Inter-Governmental Affairs (OLIA)(formerly the Office of Legislative Affairs) was realigned to reflect its liaison role to other federal, state and local government agencies in addition to its continuing dialogue with the Congress. The Field Operations Bureau changed its name to the Compliance and Information Bureau (CIB) to reflect its mission better. The Competition Division was moved from CSB to the Office of General Counsel and its responsibilities were expanded to include administering analysis and advocacy of competitive market structures agency-wide. The Public Information and Reference Services and the Audio-Visual staff were moved to the Office of Public Affairs to give customers one place to go for all their information needs and to strengthen the agency's customer focus. Finally, the responsibility for Multichannel Multipoint Distribution Services (MMDS) was moved to the Mass Media Bureau and MMB's staff was augmented so as to facilitate the rapid delivery of wireless video service to the public. In addition to structural changes, about a third of the senior executives were reassigned to new positions in order to make each Bureau and Office diverse in terms of experience, civil service status, and knowledge. What resulted were Bureau front offices that generally included a newly hired non-career person, a career employee, someone with experience within the subject area of the Bureau and a career employee who brought experience from another area. The cross fertilization of knowledge and skill was important in this time of tremendous change and convergence with the communications industry and markets. In filling positions due to the increase in staffing, significant activities were launched in the area of staff recruitment to broaden our outreach activity. As a result of this expanded outreach, minority and female representation in our four primary professional occupations (accountant, attorney, economist and engineer) increased dramatically. Prior to FY94, 16% of the FCC employees in these occupations were minorities. Of the 158 such employees hired in FY94, 28% were minority. Similarly, prior to last year only 22% of the employees in these four categories were female. In FY94, 46% of new hires were female. Of the 19 new engineers hired in FY94, 53% were minority (compared to 19% of the existing FCC engineers) and 37% were female (compared to 6% of the existing FCC engineers). In addition to reorganizing the structure of the agency, we have begun to move people physically so as to consolidate Offices, Bureaus, and Divisions into contiguous space as much as possible. Even with the recent acquisition of additional space, we continue to have an insufficient amount of space for our needs. The meetings with employees and the industry also resulted in suggestions for improving how we do business. One of the major components of reinvention or re- engineering is an evaluation of the mission and functions of the Office or Bureau. During the last year, every unit did such a self examination. In October, every Bureau and Office accounted for the major functions and missions that they perform, the amount of staff time spent on the functions, the benefits of the function to the economy, consumers or other customers, and whether the function should be continued, changed or stopped. We have begun to effectuate the results of that analysis through redeployment of staff and changes to our rules and processes. We hope to effectuate the results more through the proposed changes to the Communications Act discussed below. Additionally, the Bureaus and Offices have assessed the make up of their staffs and, through ongoing hiring, are augmenting their existing staffs with new expertise. This has resulted in hiring more economists - we have hired 23 in the last year, thereby doubling our economic staff, and hope to hire about as many more within the next several months, individuals with extensive experience in the areas of computers, consumer electronics, auctions, and management, as well as with MBAs and other financial background. We have also hired individuals with stellar litigation and appellate court credentials, including a former Supreme Court law clerk and Assistant to the Solicitor General who had argued 27 cases in the Supreme Court on behalf of the federal government and another recent Supreme Court law clerk. Our Attorney Honors Program this past year was an extraordinary success. We selected 12 outstanding attorneys from over 1200 candidates. We are also initiating a summer internship program for MBA candidates, and hope to have six interns this summer. Additionally, we have borrowed individuals from other federal agencies -- FDIC and RTC -- to help with our spectrum auction, because of their particular expertise. The meetings with employees resulted in numerous suggestions for improving things in the area of management, personnel, appraisals and awards, training, and technical support. The general nature of the suggestions were passed along to management at the meetings with the supervisors. Some suggestions have been implemented and others are in the process of being implemented. In the management area, employees suggested that we improve communication, hold managers accountable, eliminate management layers, and streamline the edit and review process. In the personnel area, employees suggested that we offer more positions through the upward mobility program, that vacancy announcements be posted on the computer system, that we create a better system for employees to change jobs and move up on the career ladder, and that we need more diversity throughout the agency. In the appraisal and awards area, employees suggested that the appraisal system be improved, employees be given the chance to appraise supervisors, the award system be expanded to include a wider range of awards, and appraisals be timely. In the training area, employees suggested that the training be expanded and improved. In the technical support area, employees suggested that we use computers more, expand the availability of Westlaw and Lexis, put the FCC telephone directory on-line, use bulletin boards more, and acquire fax cards for the personal computers. Some of the things that have been done to address these suggestions include: o reducing the number of layers of management between employees and their Bureau or Office Chiefs; o creating the Office of Workplace Diversity; o posting vacancy announcements on the e-mail system; o providing training on filling out applications for vacancies; o creating ASAP ($50 on the spot awards) and time off awards; o creating an appraisal task force to review how we can improve the current appraisal system consistent with current regulations and agreements; o agency-wide AIDS awareness training; o personal computer and voice mail training; o the creation of a graduate level engineering course offered by the George Washington University; o equal employment opportunity and diversity training for senior executives; o Westlaw and Lexis access for all employees directly from their desktop personal computers; and o an on-line telephone directory. B. Tools "Those who regularly do business with the FCC may have noticed signs recently that the agency is making an effort to join the 1990s. In the past six months, the commission has introduced voice mail and E-mail and has begun filing public documents on the Internet. FCC Chairman Hundt regularly notes that the agency receives more than 4,000 Internet messages a week. These developments come only a few years after the FCC made the transition from rotary to touch-tone phones. The modernization is part of a larger effort to reorganize under Vice President Al Gore's mandat e to the federal government to reinvent itself." - Christopher Stern Broadcasting & Cable July 18, 1994 Tremendous changes have taken place over the past year in the provision of new equipment. Under the leadership of OMD, the agency acquired 1567 personal computers, 210 laser printers, 106 laptop computers, 25 fax machines, 1300 ISDN telephones, 55 cellular telephones, 299 high-density file cabinets and 1386 pieces of office furniture. In response to employees' requests for better tools to do their jobs, we now have access to a voice mail system, and a modern Windows-based computer network. The staff now receives Communications Daily and job vacancy announcements on their screen, obtains direct access to Westlaw data bases, uses an on-line telephone directory of FCC staff, sends and receives Internet mail and documents as well as internal FCC electronic mail. The staff sends and receives over 25,000 e-mail messages per day. We have also established microwave links to additional buildings for video access to the Commission meeting room. C. Customer Service "I recently completed a transaction with the Commission almost entirely over the Internet. Contacts with the Commission staff were made using e-mail and the information which I was seeking was ultimately delivered to my e-mail address, without paper correspondence or telephone calls. Although most of this happened while I was attending an all day conference, there were no telephone tag delays or other hassles because I was able to read and respond to e-mail messages during breaks in the meeting and after hours at my home computer. This is the flexibility promised by the information superhighway." - Henry E. Crawford the FCBA News August 1994 We have made it easier for people outside the FCC to access information. We now put orders, decisional documents, sunshine agenda, daily digest, speeches, FCC telephone directory, and other documents on the Internet. One recent week we received over 35,000 requests for information via the Internet. We have also implemented fax-on-demand, which allows people to call in from a fax machine and receive information. Additionally, we now have electronic versions of FCC forms, and have distributed a series of cable forms on computer disk in Excel for Windows, Lotus for DOS and Lotus for Windows format. In the last example, the requests for disks out paced the requests for paper almost 3 to 1 and cut the time for completing the forms by 90%. In 1994, the Commission responded to approximately 12,500 phone inquiries from the media and arranged and participated in approximately 300 interviews with Commissioners and senior FCC staff. We are also changing the standard for serving our customers. On September 11, 1993, the President issued an Executive Order on "Setting Customer Service Standards" which requires agencies providing service to the public to provide a quality of service that is equal to the "best in business." Last year, the Commission engaged Booz-Allen & Hamilton to assist us in implementing customer service standards. Specifically, Booz-Allen will assist in identifying our customers, design survey instruments and collect data from identified customer groups, and analyze survey data and assist with formulating service standards and developing a customer service implementation plan. We have set customer service standards in one area and are in the process of setting standards in six others. As part of its overall plan, the Commission initiated a pilot program using customers of the Private Land Mobile Radio Services. It held a series of focus groups with external customers and then asked the employees of the Gettysburg Licensing Division to develop customer service standards, using the information from the focus group. The Division implemented the following standards: o it will respond to telephone inquiries within one business day; o it will not transfer any caller more than twice - or the Bureau will obtain the information at the second transfer and call back; o it will give accurate and consistent information on FCC policy and rules; o it will give a requested form within 10 days -- in addition to giving the caller immediate access to forms through "fax-on-demand" and the Internet; o it will give materials that clearly describe the licensing process; o it will provide status information on license applications; o it will try to resolve errors in applications by telephone; and o it will send renewal notices 90 days prior to the expiration of a license. It also identified the need for an 800 number for calling the Licensing Division. We are in the process of setting customer service standards with regard to the following customer groups: broadcast applicants and licensees, common carrier telephony providers, cable local franchise authorities, wireless radio applicants and licensees, and the general public. Final standards in these areas are scheduled to be implemented within the next six months. The Bureaus have increased efforts to educate people about our rules. For example, the Commission held a series of regional seminars on cable television regulation open to state and local regulatory officials and franchising authorities. PRB and the auction team held seminars on spectrum auctions for interested participants. WTB's Auction Division has published a 30 page handout summarizing the results of all FCC auctions to date. CSB periodically issues answers to frequently asked questions about the cable regulations. "Our decision today [adopting the PCS allocation band plan] gives PCS a real opportunity to become a significant part of our future wireless infrastructure." - Andrew C. Barrett Separate Statement Re: Broadband PCS Reconsideration Order June 9, 1994 We are also trying to involve our customers more in the decision making process. For example, last June, the Commission held an en banc hearing on children's television to hear presentations from interested parties and to have a direct exchange of viewpoints on the issues raised in the children's television proceeding. Panels consisting of industry representatives, public interest groups, broadcasters, producers and children discussed topics including (1) Educational and Informational Programming: Will We Know It When We See It? (2) Educational and Informational Programming: How Much Is Enough? (3) The Economics of Providing Educational and Informational Programming for Children. We have also held meetings for interested parties in the cable home wiring area and with regard to the PCS broadband allocation proceeding. D. Regulatory Improvements 1. Auctions "The Federal Communications Commission has transformed itself from a sleepy little agency into a billion-dollar revenue raiser for the federal government. The commission -- which regulates phone, television, radio, cable and satellite companies -- tossed out its old system of giving away the airwaves for free in favor of a new plan to auction them to the highest bidder. Its auctions generated bids of more than $ 2.5 billion, kudos from Vice President Al Gore and renewed respect from the industries it regulates." - Chicago Sun-Times January 2, 1995 Led by a task force of employees from a number of Bureaus and Offices, the Commission held the first successful auction of licenses for the use of the electromagnetic radio spectrum. We have also held the largest auction of property in the history of the United States. Perhaps most impressive was the speed with which the FCC implemented its auction authority. On July 25, 1994, less than a year after Congress gave us the authority to do so, the FCC held its first auction. In the auctions that have taken place since that day in July, the auctions have generated bids of approximately $6 billion which will go to the U.S. Treasury. As of January 30, 1995, that equates to $2.6 million per FCC employee, $65 per U.S. household, and $23 per U.S. citizen. "The Commission, of under 2,000 people, set a standard for government performance. An interagency team of employees worked together with outside contractors to run auctions of electromagnetic spectrum -- never done before -- using an auction method that had never been used outside a laboratory -- electronic simultaneous multiple round bidding. Part of reinventing government is taking risks; asking government employees, asking ourselves, to do things that no one has ever done before. The FCC, under the leadership of Reed Hundt, took those risks and now we are all the beneficiaries." - Vice President Al Gore Hammer Award Ceremony August 4, 1994 "I do complement the FCC and Reed Hundt in particular for coming up with a process that's new. Everyone is generally saying the narrowband (paging) auctions were very successful." - Charles Lee, Chairman and Chief Executive GTE Chicago Sun-Times January 2, 1995 The auction team and the Commission worked hard to ensure that anyone who was interested in participation in a spectrum auction be given the opportunity to do so. The agency held a number of informational seminars -- with coast-to-coast coverage -- to let people know what we are doing and how they can get involved. It distributed hundreds of bidder's information packages with clear instructions on how to be part of the auction process. The Commission's auctions have been executed virtually flawlessly and have been praised for their fairness. Because of the auction team's outstanding work, Vice President Gore awarded the FCC one of 33 government-wide Hammer awards for excellence in government reinvention. "Clearly [the auction as a catalyst for change for other FCC programs] rubs off. It's changing the mindset here at the agency. We're looking at it in terms of the customers. We're looking at how it can be done faster, easier, better." - Gerald Vaughan, Deputy Chief, WTB Chicago Sun-Times January 2, 1995 2. Processing Improvements Throughout the year, the Bureaus and Offices have implemented a number of procedural changes or recommended rule changes to streamline processes and reduce regulatory burdens. For example, the Commission made changes in the payment collection area to make it easier for people to pay processing and regulatory fees. We now allow licensees to use credit cards to pay processing and regulatory fees and allow inspectees to use Western Union to pay fees for ship inspections. We also allow applicants, regulatees and licensees to make electronic payments for processing and regulatory fees. Other examples are: Last summer, the WTB's licensing group in Gettysburg, Pennsylvania, set up a "WorkSmart" program - modeled after one in the private sector - to improve speed-of-service, quality, customer service, communication, and to reduce costs. They have implemented suggestions including giving the processing staff authority to collect information and refund fees without supervisory approval, and streamlining the application review process by eliminating a level of review in an area where few applicant errors were found. On January 31, 1995, less than 30 days after the close of the public notice and comment period, the Commission issued licenses for the world's first "Big Leo" satellite systems. This was considerably less time than traditionally spent in the licensing process. The new satellite systems will provide both voice and data mobile satellite service, via hand-held telephones, on a global basis. The FM License Team improved the FM application forms and instructions, which resulted in an increase in error-free applications from 40% to 80%, a reduction in the backlog from 600 to 16, and a 47% improved speed of service. CCB recommended changing the information collection requirements for depreciation filings which reduces the filing requirements by 25%. On May 19,1994, the Commission adopted a MMB recommendation to reform the application process for Low Power Television stations. Specifically, the Commission modified the "letter perfect" acceptance standard for applications and replaced it with a "substantially complete" standard. The Commission also expanded the waiver policy regarding consideration of terrain shielding. Finally, the Commission authorized the use of four-letter call signs, replacing the five-character alpha-numeric call signs with should serve to enhance low power television licensees' ability to compete more effectively in the video marketplace. OET recommended, and the Commission adopted, proposed rule changes to relax the rules to allow equipment to be advertised - with the appropriate disclaimer - before it has been authorized. This action will remove the barriers to marketing equipment and promote the sale of American goods. The Commission also adopted OET's recommendation to allocate some of the 50 MHz of spectrum to be transferred from Government to private sector use for a generic fixed/mobile allocation, thereby opening the development and introduction of new radio services. OET also recommended, and the Commission adopted, rules to provide flexibility for the millimeter wave bands (above 40 GHz). This will open spectrum previously limited to military and scientific applications to commercial development. IB held a public roundtable to invite suggestions for improving the service of the Bureau. As a result of that meeting the Bureau now "grant stamps" requests for Special Temporary Authorization and pro forma transfers of control. It is releasing Public Notices twice a week which will start the 30-day clock sooner, and has committed to processing unopposed, routine international Section 214 applications within 30 days of the comment period. It is also getting more information by telephone versus through written correspondence when processing Section 214 applications. IB will hold such roundtables periodically to solicit other suggestions. MMB has designed more efficient systems for processing several types of applications. For example, in the Audio Services Division, a team has designed a new system for processing the more than 12,000 radio renewal applications that will be filed during the upcoming renewal cycle. They have created a renewal booklet that consolidates all information and forms necessary in the renewal process. They also plan to institute an "800" renewal information number and an e-mail Internet address as well as a computerized application processing system that will permit the automatic generation of deficiency letters and grants. The Division has formed a self-directed work team to develop a speedier, more consistent method of processing extension of time requests. A self-directed work team in MMB's Video Services Division produced a Notice of Proposed Rule Making to streamline filing and processing procedures for new MMDS applications, including auction procedures. The NPRM also proposes to implement an electronic filing system. As a complement to the electronic procedures, the NPRM proposes that the Commission utilize computerized interference studies, revise application forms, permit electronic payment of fees, and establish a current database with on-line viewing access to the public. The Commission upheld another team's recommended return of 4,391 new MDS station applications as unacceptable for filing. Further, the Commission adopted the recommendations of the MMDS staff team, that resolved and disposed of over 4,431 pending petitions for reconsideration. These actions reduced the backlog of legal challenges by sixty percent. In November, the Commission announced that, pursuant to an agreement with industry, it will be able to process Specialized Mobile Radio (SMR) licenses with fewer Commission resources, saving hundreds of thousands of dollars, and in about one-third the time. An industry coalition offered the use of computer resources, primarily software, which would perform frequency coordination more efficiently than the Commission had been able to perform it. The goal is to complete processing of the estimated 42,000 pending applications by the end of February. MMB recommended allowing unattended operation of broadcast stations in light of the many improvement which have been made in the stability, reliability and automatic control of transmission systems. The Commission issued a Notice of Proposed Rule Making adopting the recommendation in November 1994. Also in November, the Commission adopted MMB's recommendation to change the license renewal dates for AM, FM, and TV translators and for LPTV stations to coincide with renewal dates for full-service stations operating in the same state. By coordinating the renewal dates and merging the translator and radio/television license renewal application forms for licensees of such commonly owned station in the same state, it is expected that affected licensees will save approximately 35 minutes per combined application. For FM translator licensees alone, this will represent nearly 290 work hours. Finally, the merging of the forms and the synchronization of the renewal expiration dates will result in the savings of at least one workyear for the Commission. In December 1994, an NPRM was issued to simplify the rules for the common carrier and private operational fixed services so as to make them easier for the public to understand and use, to conform similar rule provisions, to eliminate redundancy, and to remove obsolete language. OET has prepared an item to revamp the computer equipment regulations that would save the industry time and hundreds of millions of dollars annually, while preserving the agency's responsibilities in this area. In January 1995, the Commission adopted the recommendations of a group of employees from several Bureaus called the Antenna Structure Team that would make antenna tower owners, and not the licensee on the tower, responsible for compliance with FCC regulations. This would reduce the number of registrants with the FCC from 850,000 to 70,000, and would save the Commission and industry hundreds of thousands of dollars. The General Counsel has proposed a number of specific recommendations to provide for the more timely consideration of items before the Commission and release of items adopted by the Commission. These include streamlining the editing process, releasing items immediately after they have been voted and giving Commissioners more time to review items. As Commissioner Chong noted in her recent remarks before the Federal Communications Bar Association, we have made progress on the timely release of agenda items in the past few months. Of the twenty items decided at the last three Commission meetings, six were released in eight days or less, and two of those were released on the day of the meeting. The Commission has also made strides in reducing the number of pending circulation items. Over the past year, the number of pending circulation items has been reduced by 50 percent. The backlog of circulation items -- those pending more than 30 days -- has been reduced by 50 percent as well. IV. WHAT IS AHEAD "We are in the midst of a great crossing from the Industrial Era to the Information Age - a crossing as perilous and as full of opportunity as the crossing our ancestors made between the Old World and the New." - David Osborne The Washington Post Magazine January 8, 1995 A. People and Their Work Environment We moved into fiscal year 1995 with an increased budget and FTE ceiling. The Commission was appropriated $185.8 million for fiscal year 1995 with an FTE ceiling of 2,271. The appropriation is $24.9 million above our fiscal year 1994 level and allowed us to fund 225 additional positions and provide $2.6 million for infrastructure modernization. The agency's success in the appropriations cycle reflects bipartisan support for the mission of the agency to promote competition and an appreciation for the dramatic increase in the agency's workload. After the reorganizations and with the additional staff, the fiscal year 1995 FTEs were distributed among the Bureaus and Offices as follows: 384 in CIB, 335 in MMB, 312 in WTB, 270 in CCB, 240 in OMD, 223 in CSB, 124 in IB, 98 in OET, 91 in OGC, 75 in OPA, 36 in the Offices of the Commissioners and Chairman, 24 in OPP, 17 in ALJ, 15 in OLIA, 9 in OCBO, 7 in RB, 6 in OIG, and 5 in OWD. (See attached organizational chart from November 1994.) At the beginning of fiscal year 1995, the distribution of staff broke down along the following activity lines: 28% for enforcement, 19.8% for authorization of service, 13.9% for executive director/administrative support, 18.3% for policy/rule making, 12.7% for public information service, 4.4% for legal services, and 2.9% for international. Several additional internal reorganizations will occur over the next couple of months. This month, OGC consolidated the Adjudication Division into the Administrative Law Division. As a result of the movement of the Competition Division to OGC and to help in the speedy processing of the work before it, CSB will recommend changes to its structure to break major functions into separate work units. OET has pending a proposal to reorganize to enable it to operate more efficiently and effectively, particularly with regard to the conduct of rule making proceedings. The proposal would also establish that OET's mission is to manage spectrum and proved technical leadership to create new opportunities for competitive technologies for the American public. The licensing facility in Gettysburg will undergo a redesign and refurbishing of its space, including the installation of systems furniture. OPA is examining its mission and is considering a reorganization. The work load of the ALJ and RB has decreased as a result of less adjudicatory cases and a recent court decision. A task force has been meeting since last year to reassign work from the Bureaus to the ALJ and RB and to reassign staff temporarily to other higher priority work. Finally, CIB will soon complete an evaluation of its mission and structure and will make recommendations for streamlining. B. Tools During the coming year, a greater number of employees will be able to access the agency's network from home and other remote locations, take part in video-conferences right from the conference rooms located in several of our buildings, and send documents directly from their PCs to the print plant for printing. To increase communications with the Commission, we will install a new electronic bulletin board system and a network hard drive that can be shared by all employees. Additionally, we hope to start a telecommuting pilot project over the next several months. C. Customer Service The Commission currently has more than 20 electronic filing initiative that are in various stages of development. With regard to the PCS auctions, we are considering accepting electronic filings of the auction short form. We will also be developing a new licensing system to process the filing of the auction winners. This system will incorporate provisions to facilitate electronic filing. As we continue to improve our customer service standards, we will focus generally on the agency's use of the new telephone system, especially the use of voice mail. We intend to judge ourselves against the "best in the business." We will issue standards to ensure that customers can reach the people they need and get the information they want. Our customers must be assisted, not stymied, by this technology. What our customers want most is action by the Commission. We have used various techniques to eliminate backlogs and speed processing. For example, o in the wireless cable area, we created a self-directed work team, detailed employees to the team, hired additional staff, and streamlined the process; o in the SMR area, we entered into an agreement with the industry to provide software and computer support; o in the antenna structure area, we proposed changing the rules to reduce substantially the number of entities responsible for registering; and o in the marine radio area, we are proposing that Congress change the Act to delicense this service. This is an ongoing process. We intend to continue to eliminate backlogs and speed consideration and release of our decisions. On January 31, 1995, the FCBA asked us to initiate a comprehensive review of our Bureaus and Office to ensure the greatest possible consistency of interpretation and process and of our licensing forms and processes with a view towards consolidation and simplification; to increase the accessibility of FCC records and ease of filing; and to speed FCC action. We have taken steps over the last year to do all of these things, and look forward to continuing to work with the FCBA to accomplish these shared goals. D. Regulatory Improvements "Every agency, every policy, every program, every activity, should be confronted with these questions: 'What is your mission?' 'Is it still the right mission?' 'Is it still worth doing?' 'If we were not already doing this, would we now go into it?'" - Peter F. Drucker The Atlantic Monthly February 1995 For the past several months, a task force of Bureau and Office representatives has met to suggest changes to the Communications Act and our rules that would streamline our processes, reduce regulation, get us out of non-essential functions and move us to full competition in the industry. Appended is the task force's list of recommended legislative proposals (Appendix A) and contemplated administrative actions (Appendix B). "[T]he current challenge for communications policymakers is to have the courage to sweep out antiquated policies and replace them with innovative ones -- ones that will make sense for the Information Age. To meet this challenge, I would like to suggest that policymakers, including our colleagues on the Hill, strive to do what I call "think outside of the box." - Rachelle B. Chong Remarks to the FCBA January 19, 1995 As we continue to review every function we perform and whether it is essential and appropriate that we perform it, we will continue to change our processes and rules and recommend changes to the Communications Act. This analysis is critical to the Agency's success in moving from quill pens to microprocessors, analog to digital, and the industrial age to the information age. APPENDIX A Summary of Bureau and Office Recommendations for 1995 Legislative Proposals 1. Codify Forbearance.* (Secs. 3, 203) Authorize FCC not to regulate classes of telecommunications carriers or services where unnecessary to protect the public interest. This would authorize the FCC to forbear from and streamline regulation, e.g., by eliminating the tariff filing requirement for non-dominant long distance carriers such as MCI and Sprint. This proposal would save resources, reduce paperwork, increase efficiency, and promote competition. 2. Repeal Setting of Depreciation Rates.** (Sec. 220(b)) Repeal mandatory FCC setting of depreciation rates for common carriers. This would give the FCC greater flexibility if it determined that setting depreciation rates for some or all telecommunications carriers no longer serves the public interest. 3. Authorize Physical Collocation for Expanded Interconnection.* (Sec. 201(a)) Authorize FCC to require physical collocation for expanded interconnection. This would permit the FCC to require the local exchange telephone carriers to open their central offices to the equipment of competitors. This authority would enable the FCC to implement competition in a way that best serves the public interest. 4. Authorize Expanded FCC Auction Authority. ** (Sec. 309(j)) Expand the scope of the "uses" to which competitive bidding may apply to include, but not be limited to, other scarce public resources. Possibilities include not only new spectrum licenses, but also commercially valuable telephone numbers such as 1-800 and N11 numbers, and blocks of telephone exchange numbers for new services such as Personal Communications Services. This would be a more efficient way to get these valuable public assets to those most likely to distribute them to small as well as large firms. 5. Privatize Use of Independent Auditors.** (Sec. 220) Authorize FCC to use independent auditors to augment its carrier audit program. Present authority does not permit the FCC, unlike the carriers, to hire outside, independent auditors. Commission hiring of its own independent auditors could reduce the carriers' ability to influence unduly the findings of their independent auditors. This proposal would also save money by reducing the additional staff auditors the FCC would have to hire to scrutinize the audits of the carriers' independent auditors. 6. Simplify the Federal-State Coordination Process.** (Sec. 410) Simplify and expedite the Federal-State coordination process. This would give the Commission and the states flexibility in selecting the consultative means, whether Joint Board or less formal process, best suited to resolving specific regulatory issues of mutual concern. This proposal would decrease the time and cost of resolving pressing state-Federal telecommunications issues. 7. Clarify Refund Authority.* (New sec. 229)(FCC Authorization Act of 1994) Give FCC explicit authority to order a common carrier to make refunds to other carriers and customers, if statutory and regulatory violations are proved against that carrier. This would encourage compliance with FCC rules governing common carrier charges and reduce the costs of enforcing such compliance. 8. Privatize Ship Inspections.* (Secs. 4(f)(3), 362(b), 385)(FCC Authorization Act of 1994) Authorize FCC to use private entities to conduct inspections of ship radio stations and broaden the FCC's authority to waive the now required annual ship radio station inspection. This would eliminate the current requirement that ship radio stations be inspected only by the FCC and would provide more flexibility in scheduling the required annual inspection for U.S. ships operated domestically. This would save the Commission staff and travel resources, improve inspection service to the maritime industry, and promote private sector jobs. 9. Acquire Technical Equipment by Patent License Agreements.* (Sec. 4(g)) Authorize FCC to obtain on favorable terms technical and electronic devices pursuant to negotiated patent license agreements. This proposal would enhance the Commission's ability to acquire state-of-the- art electronic equipment, significantly increase the number of units available to the Commission,and assist budgetary restraint efforts by reducing the funds that would otherwise be expended for such equipment from the FCC's budget. It is estimated that enactment of this proposal could save the Commission approximately $300,000 a year. 10. Rewrite Communications Satellite Act of 1962.** (P.L. No. 624) Rewrite law governing Comsat, INTELSAT, Inmarsat, etc. This would promote a worldwide competitive market for satellite communications services, benefiting both consumers and the satellite industry by (1) privatizing INTELSAT and Inmarsat and eliminating the privileges, immunities and special access to spectrum and orbital slots currently enjoyed by those organizations; (2) eliminating Comsat's current exclusive status as the sole U.S. investor in, and provider of, INTELSAT and Inmarsat services; and (3) developing a policy and regulatory framework that permits other U.S. carriers and users to invest in and receive services directly from INTELSAT and Inmarsat. This proposal would save agency resources by eliminating current U.S. government and FCC oversight of Comsat's involvement in INTELSAT and Inmarsat. 11. Modify Construction Permit Requirement. ** (Sec. 319(d)) Modify the prohibition against the Commission waiving the requirement for a broadcast construction permit. This proposal would give the Commission flexibility to determine when permits are necessary and when construction can be undertaken without prior approval. In circumstances where prior approval is deemed unnecessary, broadcasters would only be required to file a license application within 10 days of completing construction. This proposal would eliminate the essentially duplicative process of filing separately for both a construction permit and license in instances where elimination of the CP requirement would create little or no potential for interference. 12. Limit Silent Station Authorizations.** (Sec. 312) Provide that a license authorization for a station silent for one year automatically cancels. This would save Commission resources, eliminate undue protection of non-operational stations, and allow operational stations greater flexibility in changing frequencies and upgrading facilities. 13. Extend TV License Term.** (Sec. 307(c)) Extend TV license term from 5 to 7 years. This would make the license terms for radio and TV identical and reduce costs both for the television industry and the Commission. In view of the competitiveness of the video marketplace today, it is unlikely that the extension of the license term would be detrimental to the public interest. 14. Expedite ITFS Processing.* (Sec. 5(c))(FCC Authorization Act of 1994) Expedite processing of ITFS applications by delegating to staff routine, comparative ITFS cases. This would streamline agency processes by eliminating current, final review by the full Commission of routine comparative ITFS cases, thereby expediting new ITFS service. 15. Modify Anti-Lottery Provision.* (18 U.S.C. Sec. 1304) Legalize the broadcast or cablecast advertisement anywhere in the United States of any lottery enterprise which is lawful where conducted. This would simplify existing law, reduce current governmental responsibilities of interpretation and enforcement, increase competition among alternative advertising media, and reduce the burden of compliance for broadcasters and cable systems. 16. Simplify Broadcast License Renewal Process.* (Sec. 309) Simplify the broadcast license renewal process by establishing a two-tiered process: first, the incumbent licensee's performance during the preceding license term would be compared only against statutory standards and not against any competing applications, and second, the renewal application would be automatically granted if the statutory standards are met or exceeded, or designated for hearing if the standards are not met. This would streamline license renewal procedures, eliminating the costly process for both the agency and broadcasters of considering competing applications to a renewal application even though the incumbent's performance has been in compliance with Commission standards. 17. Delegate Equipment Testing and Certification to Private Labs.* (Sec. 302(b)) Authorize the use of private, independent testing labs to test and certify radio equipment to ensure compliance with technical standards for radio frequency (RF) emissions. This proposal would permit a reduction in the number of persons engaged in equipment testing with no adverse impact on the Commission's role in ensuring that RF emitting devices are safe. 18. Make License Modification Uniform.* (Sec. 303(f)) Eliminate the public hearing requirement concerning changes in the frequencies, authorized power, or times of operation of any station so that the written procedure provisions of Section 316 will uniformly apply to any appropriate modifications of broadcast authorizations. This could potentially save money by eliminating the need for any public hearings that would be required by existing Section 303(f) of the Act. 19. Allow Market-Based Payments for Experts and Consultants.* (Sec. 4(f)(1))(FCC Authorization Act of 1994) Authorize FCC to obtain services of non-agency experts and consultants at higher rates of daily compensation than allowed under the current GS 15- Step 10 limit. This would save the FCC permanent staffing resources, enable the Commission to offer competitive compensation to temporary, outside experts and consultants, and thus augment the FCC's existing staff expertise. 20. Delete Travel Reimbursement Authority.* (Sec. 4(g)(2))(FCC Authorization Act of 1994) Delete FCC-specific travel reimbursement authority since agency is now covered by government- wide provisions of "Ethics in Government Act of 1989" and related regulations issued by the General Services Administration. This would simplify administration of the travel reimbursement authority and eliminate duplication. 21. Extend "Older Americans Program".* (6(a) of the FCC Authorization Act of 1988)(FCC Authorization Act of 1994) Extend until rescinded the "Older Americans" program which enables the FCC to use volunteer services of older U.S. citizens. This would permit the FCC to augment its staff with specialized skills available in the older American labor pool. 22. Amend Application Fee Provisions.* (Sec. 8) (FCC Authorization Act of 1994) Authorize FCC to retain fees above a certain sum sent to the Treasury, to change or create new Section 8 fees, to allocate costs associated with legal and executive services, and to continue to collect application fees at the prior year's rates until the effective date of a new fee schedule. This proposal would bring the FCC closer to full self-funding. 23. Establish Application Fee Schedule for PCS.* (Sec. 8(g))(FCC Authorization Act of 1994) Establish a fee schedule for Personal Communications Services. This would permit the FCC to charge a processing fee for applications in these services. 24. Amend Regulatory Fee Provisions.* (Sec. 9)(FCC Authorization Act of 1994) Authorize FCC to allocate and recover legal and executive costs it incurs in the discharge of enforcement, policy and rule making, user information services and international activities, to continue to collect regulatory fees at prior year's rates until the effective date of a new fee schedule and to provide 30 days notice of fee changes. This proposal would simplify administration of the current regulatory fee program and bring the FCC closer to full self-funding. 25. Amend Regulatory Fee Categories.** (Sec. 9) Amend current statutory user fee categories to conform with recent FCC reorganization and grant FCC generic authority to further amend such categories in the future to conform to changing organizational structures and nomenclature. This would simplify administration of the current regulatory fee program. 26. Make Auction Technical Amendments.* (Sec. 309(j)(8)(B))(FCC Authorization Act of 1994) Amend the competitive bidding provisions of the Communications Act to provide FCC with more flexibility in the collection and use of auction funds and to authorize FCC to establish an interest bearing escrow account and to pay interest to unsuccessful bidders. This would permit the FCC to use funds in any year to reimburse itself for the cost of conducting the auctions. It would also ease the burden on bidders who have money on deposit with the Commission when that money would likely be earning interest if otherwise invested. 27. Grant FCC Independent Leasing Authority.** (Sec. 303(q)) Grant FCC independent leasing authority to procure its own office space like the authority already granted the Commodity Futures Trading Commission and the Securities and Exchange Commission. This proposal would streamline the agency's search for adequate office space by permitting it to go directly to the private real estate market rather than using the General Services Administration as an intermediary. The proposal could save the agency and the government money by expanding the range of competitive space solutions for the FCC and would likely result in a lower rental rate than would be available through reliance on GSA. 28. Delicense Wireless Radio Services by Rule.* (Sec. 307(e))(FCC Authorization Act of 1994) Permit FCC to authorize by rule rather than through individual licensing the operation of radio equipment on domestic ships, aircraft, and in the personal radio services. This would streamline the process for placing radio equipment in operation by eliminating the need to obtain specific licensing authority. It would eliminate over 200,000 applications for radio station licenses each year. 29. Replace Equipment on Cargo Vessels.* (Secs. 351-358) Authorize FCC to fully implement the Global Maritime Distress and Safety System (GMDSS) by giving the agency authority to relieve cargo vessel owners from the burden of current domestic radio equipment carriage requirements. This would enhance world-wide competition in the shipping industry by eliminating a requirement now generally applicable only to United States ships. Most other countries have already adopted the GMDSS and have eliminated the costly requirement to equip vessels with Morse Code equipment as well as the newer satellite radio technology of the GMDSS. 30. Expedite Licensing for Fixed Microwave Service.** (Sec. 309(c)(2)) Expedite processing of microwave applications by eliminating requirement that such applications be placed on at least 30 days public notice prior to grant. This would streamline processing by eliminating the delay in granting licenses caused by the mandatory public notice period. (Generally, these applications are not contested or could be petitioned against after the grant, so there is no need for a pre-grant public notice.) 31. Eliminate FCC Jurisdiction Over Government-Owned Ship Radio Stations.* (Secs. 305(b), 382(2)) Eliminate FCC jurisdiction over ship radios belonging to other government agencies such as the Department of Transportation and the Panama Canal Zone Authority. This would eliminate a duplication of effort between the FCC and other Federal Government agencies by eliminating the need for the FCC to review the operations of vessels operated by other agencies. 32. Modify Amateur Radio Examination Procedures.* (Sec. 4(f)(4)) Eliminate conflict-of- interest provisions for publishers to broaden the category of those authorized to administer amateur radio service examinations and eliminate burdensome record maintenance and annual financial certification requirements. This would streamline the amateur radio examination process, make a greater variety of entities eligible to administer the tests, and eliminate numerous filings with the Commission. 33. Change Statute of Limitations on Forfeitures.* (Sec. 503(b)(6)) Change the statute of limitations on forfeitures from one to five years. This would permit the Commission to better enforce its regulations by allowing a longer period of time in which to uncover violations. 34. Streamline Non-Broadcast Radio License Renewals.* (Sec. 309) Streamline or reduce comparative renewal hearings for non-broadcast radio license applicants such as cellular licensees. This would enhance renewal expectancy, reduce renewal filings for licensees, and streamline FCC renewal procedures. 35. Authorize Vanity Call Signs.* (Secs. 8(g),9(g))(FCC Authorization Act of 1994). Authorize an application fee of $150 for amateur vanity call signs, authorize these fees to be credited to the FCC's appropriation account, and delete existing fee of $7 for such call signs from Section 9(g) of the Act. This would make the vanity call sign program essentially self-funded. ___________________________________ * Previous proposal. ** New proposal. APPEN DIX B Summa ry of Bureau and Office Recommendations for 1995 Administrative Actions Simplify and clarify the ex parte rules. Simplify and clarify the criteria used in comparative hearings to choose among competing applications for new broadcast facilities. Provide uniform guidelines for confidentiality and protective orders. Amend Part 74 with regard to the Instructional Television Fixed Service to create a window filing procedure. Eliminate the Table of Allotments for FM stations and substitute a one-step application process. Revise the rules to simplify filing requirements for making specific modifications to FM facilities. Revise the rules to simplify procedures for AM stations to verify the proper performance of their directional antenna arrays. Streamline and consolidate equipment authorization process, including shifting to electronic filing. Relax the requirement for spread spectrum transmitters to reduce transmitter power when using a directional antenna. Delete the requirement for TV receiver manufacturers to file an annual report of the UHF noise figures for their receivers. Relax the authorization process for personal computers and peripherals and provide authorization of modular computer designs. Delete the requirement for TV receivers manufactured after January 1995 to incorporate closed caption compatibility for cable systems that use the Eidak encryption technology - which is never used. Relax the marketing and certain administrative rules related to equipment authorization. Remove restrictions on the use of frequencies above 40 GHz and open up spectrum for licensed and unlicensed services. Extend the experimental license period from one to three years. Eliminate the declaration requirement for importing radio frequency devices (Form 740 Program). Examine the rules to make the international Section 214 processing more efficient. Examine the rules to make satellite licensing more efficient. Privatize the HF broadcasting coordination process. Authorize the use of electronic mail and electronic filing. Make the effective date for delegated authority items the date released to the public network like Internet. Delegate to the designated frequency coordinators authority to deal with Canada for frequency coordination. Simplify procedures for certification to the requirements of the Drug Abuse Act. Allow construction before receiving the license authorization for domestic public fixed radio stations. Eliminate the requirement to file a Form 494A to certify construction. Eliminate or simplify several current filing requirements under Part 21. Allow applicants to set up Digital Termination Nodal stations anywhere within the service area. Allow DEMS applicants to file for multiple frequencies. Allow Local Television Transmission Service licensees to access other frequency pools on a temporary basis. Streamline and simplify private land mobile rules to provide more flexibility to licensees and improved channel capacity. Combine and simplify common carrier and private carrier paging rules. Simplify or eliminate several filing requirements for microwave stations, including expansion of the types of station modifications that do not require FCC approval and expanded use of video frequencies by law enforcement agencies without obtaining FCC approval. Combine and simplify common carrier and private microwave rules. Lengthen the license terms to ten years for ship and aircraft licenses (in the absence of legislation to eliminate the need for licensing). Allow amateur radio licensees to change mailing address by letter or electronic mail. Executive Summary The Federal Communications Commission must transform itself from an understaffed and underfunded bureaucracy, using outmoded telephones and computers, having an outdated infrastructure, to an agency with varied and appropriate expertise and staffing, sufficient funding, adequate and consolidated space, state of the art technology, and a flexible infrastructure. This transformation is essential to the Commission's ability to carry out its mission which is crucial to America's economy and woven throughout the lives of all Americans. It is also critical to the Commission's ability to meet the continuing new challenges given to us by Congress and the increasing demands of an ever changing industry. We have begun the transformation. But there is still much more we can do. And will do. This past year we completely restructured ourself for greater efficiencies of scope, seen an increase in our staffing and budget, have and are continuing to augment staffing with new and varied expertise, have and are continuing to consolidate staff and units into a still-insufficient amount of space, and have acquired state of the art computer and telephone systems. We also have reexamined our mission, improved the efficiency of our processes and streamlined our operations, redeployed staff to higher priority functions, outsourced some functions that could be performed by the private sector, have sought and will continue to seek legislative changes to allow us to perform functions more efficiently or to stop performing functions, changed our rules to reduce filing burdens on our customers, and have begun to introduce electronic filing and commerce. A Year of Change In the last year, Commission has taken many steps to reexamine its mission, improve its processes and streamline its operations. The results of this comprehensive review of the agency and its mission include:  providing our customers and staff with new electronic and computing tools; improving the agency's overall efficiency; and helping our customers save time and money.  outsourcing functions to the private sector to gain efficiencies;  redeploying staff to higher priority functions;  recommending legislative changes that increase our responsiveness to our customers and reduce their regulatory burdens; How We Worked We started the daunting task of reinventing the Commission by doing two simple things. We asked our customers how we can improve our services to them and we asked staff how we can improve their service to our customers as well as their job content. Our customers encouraged us to realign ourselves with the way the markets were developing, to increase the accessibility of the staff and our information. They also asked us to continually rethink the way we do things so we can keep up with the rapid changes in the marketplace. We have begun implementing these changes. There has been universally positive feedback. Similarly, employees suggested streamlining the review process, delegating more authority to the staff, ensuring better coordination between the people who make the rules and those who apply them on the application processing line, and eliminating unnecessary and duplicative rules. We have been working closely with employees and union officials to implement these ideas and are continuously looking for other ideas for improving the Commission's performance. Changes to Customer Service We have made it easier for people on the outside to work with the FCC by putting in systems and policies that make it easier to communicate with FCC employees and to access information. We now put orders, decisional documents, sunshine agenda, daily digest, speeches, FCC telephone directory, and other documents on the Internet--where in a recent week we received over 35,000 requests for information. We also added fax-on-demand, which allows people to call in from a fax machine and receive information. Additionally, we now have electronic versions of FCC forms, and have distributed a series of cable forms on computer disk in Excel for Windows, Lotus for DOS and Lotus for Windows format. In the last example, the requests for disks out paced the requests for paper almost 3 to 1 and cut the time for completing the forms by 90%. We are working to make improving customer service a continuous process and recently engaged a world-renowned consulting firm to create standards for customer service for each of the Commission's major constituent services. These standards will be designed to be adaptive in order to better match the rapid evolution of the Commission's constituents and its mission. Changes for Employees Based on employees' input, we have implemented changes in management and management practices, personnel policies, appraisals and awards, training, and technical support. Some significant achievements in this area are: reducing the number of layers of management between employees and their Bureau or Office Chiefs, creating the Office of Workplace Diversity, posting vacancy announcements on the e-mail system, providing training on filling out applications for vacancies, creating ASAP ($50 on the spot awards) and time off awards, creating a graduate level engineering course offered by the George Washington University, providing EEO and diversity training for senior executives. We also put a major effort to create new management structure in the Bureaus to promote new ideas and improve customer service. The front offices now generally include a newly hired non-career person, a career employee, someone with experience within the subject area of the Bureau and a career employee who brought experience from another area. The resulting cross fertilization of knowledge and skill will be an important asset as the communications industry undergoes a tremendous change and convergence. Changing Our Organizations and Our Tools Last year the FCC undertook the largest reorganization in its history, resulting in an organizational structure that more closely resembles the industries and markets that it regulates. Of course, we implemented the reorganization keeping in mind the changes that technology and market forces will bring to the communications industry over the next few years. So far, the reorganization has eliminated overlapping functions, increased accountability and reduced intra-agency conflicts by increasing coordination and priorities among the various Bureaus. Responding to employees' requests for better tools to do their jobs, we now have access to a modern productivity tools including a voice mail system, an ISDN phone system, and a modern Windows-based computer network. In particular, the computer network has improved communications and increased productivity with special features that allow staff to receive Communications Daily and job vacancy announcements on their screen, obtain direct access to Westlaw data bases, used an on-line telephone directory of FCC staff, send and receive Internet mail and documents as well as internal FCC electronic mail. There are over 25,000 e-mail transmissions daily. We have also established microwave links to additional buildings for video access to the Commission meeting room. What is Ahead As we continue to review every function we perform and whether it is essential and appropriate that we perform it, we will continue to change our processes and rules and recommend changes to the Communications Act. This analysis is critical to the Agency's success in moving from quill pens to microprocessors, analog to digital, and the industrial age to the information age.