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Federal Communications Commission

Before the

Year 2000 Contingency Planning for Government Conference

Arlington, Virginia
November 16, 1998

"Year 2000 Problem and the Communications Industry"

(As Prepared For Delivery)

I. Introduction

Good morning. I am delighted to be here, on the eve of the 400th day before the end of Millennium, to discuss what is, to my mind, the most pressing issue currently facing the Nation and the global community: the Year 2000 Problem.

In particular, I want to take this opportunity to share with you the challenges we face with respect to the communications infrastructure and to discuss with you the approach we have taken to tackling Y2K in this sector. Let me begin by discussing the criticality of the communications network, then highlight some of the unique hurdles with respect to this industry as well as some of the unique advantages we have in meeting the Year 2000 challenge, and, finally, say a word about the Federal Communications Commission's approach to this challenge.

II. The Criticality and Interdependency of Communications Services

The Year 2000 Problem has clearly demonstrated the inter-connectivity and inter-dependency of the communications industry. Consider that hundreds of millions of users of communications services throughout the country transmit voice, data and video information upon the domestic communications infrastructure that is composed of the wireline telephone networks, cellular and PCS networks, satellite constellations, broadcasting and cable television systems, and the Internet.

The communications infrastructure--like energy-- is one of a handful of basic building blocks upon which all other industries and programs rest. For example, critical programs, such as Defense Department command and control, Federal Reserve electronic fund transfers, and Medicare benefit payments, depend upon this ubiquitous infrastructure and, consequently, could be seriously affected if the Year 2000 Problem interrupts telephone and data networking services. Senator Bennett, Chairman of the Senate Special Committee on the Year 2000 Technology Problem, was right on the mark when he called the global communications infrastructure "the central nervous system of modern society." Ensuring the health of this nervous system is our critical task.

When we set out to meet the challenge, we began by taking stock of some of the unique difficulties and advantages presented by the communications sector, in order to develop a meaningful Year 2000 operation plan. Let me share with you some of our observations, beginning with the unique difficulties presented by the telecommunications sector.

III. Unique Year 2000 Challenges For The Communications Industry

The first challenge is due to the nature of the public switched telephone network. No single entity owns or controls it. In the United States, for example, there are the major telecommunications carriers, like the Bell Operating Companies, GTE, AT&T, MCI WorldCom and Sprint, that provide service to the majority of the country. But there are also 1,300 small to mid-size independent telephone companies that serve many rural and insular parts of the country.

Moreover, the time when our domestic economy and our daily concerns could be contained within the borders of the United States is gone. We are highly (and increasingly) dependent on communications systems that interconnect overseas. There are numerous multinational telecommunications alliances and foreign carriers on which we depend. To meaningfully answer the question whether the telecommunications network will be OK, we must consider the full range of disparate players over whom no one entity, government or private, has complete control. This poses a unique challenge for us at the FCC and in the government generally.

Second, a single end-to-end communication or data transfer does not necessarily travel the same way twice. The brilliance of the network is that it is dynamic. There are an infinite number of permutations and combinations of routing possibilities and service events to transit a voice or data call. A phone call from Washington to London one minute may travel one path, yet the very same call a minute later may take a different path. This makes it very difficult to answer the seemingly simple question of whether a call from here to there will go through on January 1, 2000. This dynamic nature contributes to the mathematical difficulty of testing the entire public telephone network for Year 2000-readiness.

To make the point, consider that GTE estimates that the number of tests that would be required to test all combinations of its equipment and operating systems would be 1029! Attempting to perform that number of tests in the time remaining, i.e., less than 13 months, is simply impossible.

Third, there is a significant amount of Customer Premises Equipment (CPE) that is in the sole possession of a seemingly infinite number of public and private entities. These potentially unprepared components and systems reside at the edges of the network, where the FCC and the carriers may know little about who has what and where we have little or no authority to compel individual users to fix the equipment. CPE and all other telephone equipment must be Year 2000-ready and able to access properly the telephone network.

Fourth, legal and regulatory liability issues are still significant barriers to the dissemination of timely and candid information about the Year 2000 readiness efforts of carriers, service providers, and manufacturers that is critical to remedying the problem. The legal concerns include issues of product disparagement, antitrust violations, third-party liability, and carrier-vendor contractual relations, just to name a few. The palpable anxiety and concern over legal and regulatory liability has thus contributed to an environment where companies are fearful of disclosing timely and candid information about their products or services. These concerns necessitate an approach that is respectful of these concerns while simultaneously not letting them frustrate the mission. Recent "Good Samaritan" legislation has aided this task significantly.

IV. Unique Advantages for the Telecommunications Industry

As daunting as the challenges are, we have a number of advantages we can leverage to remedy the Year 2000 Problem in the telecommunications industry.

First, telecommunications is an industry in which near unfailing reliability is paramount. As Frances Cairncross of the Economist noted in her September 19, 1998 survey on the Year 2000 Problem, critical industry sectors like telecommunications "depend disproportionately on networks and therefore tend to emphasise reliability and continuity." Unlike many other industries, telecommunications must operate all day, each and every day, without any downtime. As evidence of the commitment to reliability, I note that the Bellcore standard for central office switch reliability is 99.9999 percent, or a maximum of three minutes of downtime out of over 535,000 minutes in a year!

The success of a telecommunications company is measured by the reliability of its network. The major telecommunications carriers and providers understand well that they potentially face diminished good will, regulatory trouble, legal liability and financial ruin if they do not address satisfactorily the Year 2000 challenge. This "bet-the-company" aspect of any threat to network reliability is a significant advantage in our remediation efforts.

Second, because of the importance of reliability and continuity, telecommunications companies have a strong stable of trained technical experts to work the problem. And, better yet, many of these companies have had experience with similar technical challenges. When AT&T was divested, the Bell system had to pull the entire domestic network apart and reassemble it into new operational pieces. Telecommunications companies have also implemented toll-free 800 number portability and local number portability. And, perhaps the most analogous experience, the industry added the country's three-digit area code.

Third, because of the importance of network reliability, continuity, inter-connectivity and inter-operability, there are a number of first class technical consortiums and prominent trade organizations that have a long history of developing standards and addressing network issues and then sharing that work with all its members. In the United States, our telecommunications industry is actively engaged in multi-vendor intra-network testing and has been cooperating on multi-company inter-network joint testing. For example, the Telco Year 2000 Forum, which is comprised of eight large regional local exchange carriers, has contracted with Bellcore and is already performing integration testing on Year 2000-ready equipment. Their testing will be completed in the fourth quarter of 1998--nearly one month away--with a final report released in the first quarter of 1999.

Additionally, the Alliance for Telecommunications Industry Solutions (ATIS), which is an industry-funded organization whose mission is to advance new telecommunications technologies, will begin inter-operability testing on January 4, 1999, and work through February 1999. According to ATIS, the tests should encompass network configurations that serve over 90 percent of the United States. In the second quarter of 1999, ATIS's final report will be released.

Moreover, the Network Reliability and Interoperability Council, or NRIC, is another important tool the Federal Communications Commission and the industry will use to assist it in its effort to address the Year 2000 Problem. Michael Armstrong, Chairman and Chief Executive Officer of AT&T and Chairman of the Council, is heading up this effort. NRIC will be invaluable in coordinating the overall testing, collection and dissemination of information, in addition to advising the FCC on the status of industry readiness, and facilitating the development of contingency plans.

Fourth, most communications firms have contingency plans and continuity of operations procedures for potential non-Year 2000 related disruption scenarios. The industry has also established mutual assistance procedures in the event of a particularly debilitating failure where competitors will assist by carrying the affected carrier's or provider's voice, data or video traffic on their excess capacity. These plans and procedures can be adapted and modified for the Year 2000 Problem. Given the ultimate importance of contingency preparedness, the fact that such plans and procedures exist in some form or another will greatly contribute to the industry having time to anticipate any potential Year 2000 incident.

Fifth and finally, the great bulk of the communications infrastructure is largely controlled by a relatively few number of carriers, providers, and manufacturers. For example, in the United States, the top 20 local exchange and interexchange carriers control more than 97 percent of the total number of U.S. access lines. In the manufacturing context, the majority of the domestic and international telecommunications industry's equipment comes from Lucent, Alcatel, Siemens, Northern Telecom, Fujitsu, and a handful of others.

V. Federal Government Readiness Efforts

After considering these unique challenges and advantages, we crafted a basic operating model and Y2K-readiness plan that we believe will offer the best chance of minimizing the threat that the Year 2000 Problem poses for the network. It has a few central characteristics. For one, it recognizes the need for efficiency. Time is our enemy and we need a nimble fast-acting approach--"High speed and low drag" as we used to say in the Army. It is a plan that leverages the assets of the industry to the greatest extent possible and recognizes the resource limitations of our agency in terms of funding and labor, as well as our technical capabilities.

In general concept, we have adopted a public-private, "mission-oriented" partnership to ensure that users of communications services enjoy as close to the same level of quality and reliability on and after January 1, 2000, as they do today. The use of the term "mission-oriented" is intended as a filter. That is, we scrutinize every proposal or idea by asking if it will directly improve the probability of fixing this problem in the time given. If so we do it, if not it is out. I have no interest in what we have come to call CYA2K approaches.

In brief, our approach has three core components: (1) Advocacy and Outreach; (2) Monitoring and Assessment; and (3) Contingency Planning. Let me say a brief word about each.

Advocacy & Outreach

In a nutshell, our view is to never stop talking about this issue and never miss an opportunity to do so. And, secondly, deputize everyone. Some examples:

Monitoring & Assessment

Another critical obligation of the Commission is to monitor industry Year 2000-readiness efforts and to assess the pace and extent of the implementation of remedial actions. We employ a number of methods to meet this obligation. We have conducted both voluntary and mandatory surveys. We work with industry umbrella groups to get their views. And, we conduct industry forums. In June and July 1998, the Commission organized eight roundtables with representatives of different sectors of the communications industry to facilitate information sharing and see how the Commission can assist industry efforts in addressing the Year 2000 Problem. The Commission recently held a forum on maintaining Customer Premises Equipment, and later today will be hosting a four-hour long forum on emergency and public safety preparedness.

We also rely heavily on NRIC, a federal advisory council. It advises the Commission on technical issues and is taking steps to foster industry cooperation on Year 2000 compliance testing and other related problems. And, NRIC assists in our effort to keep abreast of the industry's progress.

Contingency Planning

Contingency plans are the last thing you execute, but need to be one of the first things you develop. The time is now to be working on contingency plans. We are looking for ways to leverage existing plans, processes and mechanisms to deal with network failure contingencies. In fact, we are looking at systems developed in the context of the cold war to see what we can modify to meet this newer more subtle threat. In that regard, we are working with the National Security Telecommunications Advisory Committee (NSTAC) and the National Communications System (NCS) and the communications industry to facilitate the development and, if necessary, execution of contingency plans in the event that a major service disruption should occur.

VI. Conclusion

Our task is daunting. In the midst of one of the most difficult and dire periods in our history, Winston Churchill once remarked, "Victory at all costs, victory in spite of all terror, victory however long and hard the road may be." To me, Sir Churchill's words resonate fully, for I am an optimist and believe we can significantly mitigate the Year 2000 threat.

The FCC is firmly committed to the task. As Henry Stimson said, "I know the withering effect of limited commitments and I know the regenerative effect of full action." We are in full action and will keep at it until this danger fades into the history books.

Thank you.