Thank you for joining us today. The year 2000 will be upon us in 276 days, 10 hours and 59 minutes, but who is counting? Actually, we are. Today, I am pleased to announce the release of the FCC's Y2K Communications Sector Report - an extensive analysis of the readiness of the telecommunications industries to have their computers ready and able for the new millennium on January 1, 2000.

I am pleased to recognize two key officials who have played vital leadership roles in working on the Y2K issue:

• John Koskinen of the President's Council on Year 2000 Conversion, who coordinates the Federal Government's efforts with respect to the Y2K problem and with whom I work closely as Co-chair of the Council's working group on telecommunications; and

• Michael Armstrong--CEO of AT&T, who also chairs the Network Reliability and Interoperability Council (NRIC), a federal advisory group to the FCC whose efforts with respect to the Y2K problem have been invaluable.

I would also like to acknowledge William Kennard, Chairman of the Federal Communications Commission, and thank him for his support, encouragement, and commitment of time and resources.

This Report analyzes the Y2K readiness as of January 1999 of five industry sectors: (1) wireline telephone; (2) wireless telephone; (3) cable television; (4) broadcast television and radio; and (5) satellite.

It also contains special sections dedicated to the international telephone network and emergency services.

In addition, we have attempted to offer limited, but useful consumer tips for each of these services.

Today's interim report card on the Y2K readiness of the communications industries is mixed, but we are guardedly optimistic about this industry as a whole. In the Report, we cover each sector in detail, but let me offer some general observations:

• High marks for the largest companies in each separate sector that have already completed Y2K fixes, and have systems in place to quickly resolve any isolated and minor disruptions. These large companies serve much of the population, which indicates that the vast majority of the consumer public will experience minimal disruptions.

• Warning grades for smaller and medium-size companies that have been proceeding too slowly in addressing potential Y2K issues. These smaller companies have either not adopted the necessary systematic approach to preventing Y2K problems, or have adopted systematic approaches with completion deadlines dangerously close to January 1, 2000, leaving little time to solve problems discovered in their testing processes.

• Below average grades for sectors that have failed to provide full and complete information to allow us to assess their readiness and to validate their claims that they are, or will be, Y2K ready. Although they may be doing well, we have no choice but to acknowledge some risk in sectors whose companies are unwilling to respond to requests for information.

The assessments are based on information collected from a number of sources, including FCC-sponsored public and private forums, industry umbrella groups, the work of NRIC, and voluntary and mandatory surveys of each sector.

It is important to remember that Y2K remediation is the responsibility of industry, collectively, and each company, individually. Nonetheless, we recognize the important role our agency can, and has, played in coordinating activity and facilitating the flow of critical information.

In fulfilling this role, we have employed a three-dimensional approach that drives all of our efforts on the Y2K issue: (1) outreach and advocacy--to raise awareness; (2) monitoring and assessment--to keep track of industry efforts and to facilitate the development of workable solutions; and (3) contingency planning--to ensure that the industry has a plan to deal with inevitable failures. This Report is one product of that process.

Though we can prod, facilitate, coordinate and even threaten industry to fix this problem, the ultimate responsibility rests with them to deploy the resources and execute a remediation plan that will ensure service to their customers. . . our citizens. While some companies should be proud of the progress that is reflected in this Report, they dare not pause, for time continues to tick away and this is a task for which there are no extensions.

I am going to take just a few minutes now to highlight our assessments in each sector:

WIRELINE

Perhaps, of all these industries, the most critical to the nation is the wireline telephone network. The telephone network is a critical infrastructure upon which virtually everyone relies. It is vast and complex, and consists of many players that must work together to complete a single phone call.

The wireline telecommunications industry, however, is probably better equipped to address these challenges than most. These companies maintain a high level of reliability, have top quality experts, and are working together to address the Y2K problem.

Our assessment of the wireline industry divides the industry into two groups: 1) the seven largest local telephone carriers providing service to 92% of the country, which are participating in the NRIC assessment process, and 2) the remaining small and medium size carriers that the Commission surveyed directly.

Our analysis reveals that the largest local and long distance carriers have nearly completed their Y2K remediation. These carriers are expected to be 100 percent ready, including having their contingency plans in place, by the second quarter of this year. The same is true for the largest long distance carriers that account for 82% of total U.S. long distance revenues. This means that the vast majority of telephone consumers can expect few, if any, Y2K disruptions.

The remaining carriers, however, lag behind the large carriers in their remediation and contingency planning. Nearly half of those surveyed by the Commission reported not having a formal plan in place for managing the Y2K problem. This is obviously of concern to us and we will be redoubling our efforts with respect to these carriers.

As anyone who has studied this problem will tell you, testing is critical to having any real confidence in remediation results. In this sector, we have had fairly rigorous and comprehensive testing. And, the reports are encouraging. After 6 months of testing, the industry found only 6 anomalies, which have now been fixed. More testing results will be released in April 1999. These results give us confidence that their survey responses and our guarded optimism is justified.

WIRELESS

According to the industry, wireless handsets have very few Y2K problems associated with them. The Commission's survey revealed a similar gap between the readiness of large and small wireless carriers. Our assessment, however, was hampered by a disappointingly low response rate from the wireless carriers that we surveyed. As a result, we must acknowledge a certain degree of risk with this industry until we are able to assess a broader portion of the industry. We intend to continue working with this industry to get a better picture of its overall efforts.

BROADCAST

The broadcasting industry appears to be adequately readying itself for the Year 2000, and we believe the public will continue to have access to broadcast services throughout the year 2000 date rollover. Unlike some other industries, there is a high degree of redundancy in the broadcasting industry, as most Americans receive many no-cost over-the-air broadcast signals. Thus, if one station were to potentially go down, a viewer or listener could switch to another station.

CABLE

According to our survey results, Y2K problems are not likely to cripple cable system operations and it appears that the vast majority of the nation's 65 million cable subscribers will continue to receive cable service on January 1, 2000. It should be remembered, however, that cable receives its video channels from a variety of sources, including broadcast signals and satellite programming. As a result, isolated channel outages and limited problems may be encountered.

SATELLITE

The industry consensus is that the Y2K problem is unlikely to affect satellites now in orbit. Few satellites actually have date sensitive components and the more likely area of difficulty will be in the ground segment. We received quantifiable data from only 12 of 32 operators contacted, however, so we do not feel we have enough information to speak authoritatively on the status of readiness of this industry.

INTERNATIONAL

In this Report, we convey the findings released by NRIC in January 1999 on the risk facing the international network. Those findings reaffirm our concern that other parts of the world are not as far along as we would like or expect. This area will require intensified attention.

EMERGENCY SERVICES

The Report dedicates a special section to emergency services. Testing to date has not revealed problems with remediated 911 equipment. Nonetheless, some of the enhanced systems possess fairly sophisticated equipment for identifying callers, problems and locations. Though nothing we have seen suggests widespread problems, we think it prudent to expect some delays in call processing in some systems. In emergency situations, time can be of the essence, so we will continue to work diligently with this sector.

CONCLUSION

We are guardedly optimistic of the overall assessment of telecommunications industry readiness and activities in preparing for the year 2000. Interestingly enough, the results in these sectors mirror those of other industries with regard to the disparity between the readiness of the larger companies and some of the smaller and medium sized companies.

This assessment is merely a snapshot as of January 1, 1999. Fortunately, the Y2K remediation process is an on-going one, not a static one. For our part, we are going to continue to monitor and prod the companies in the telecommunications sector to explore ways to reduce this gap between large and small company readiness.

Everyone in the industry needs the next assessment to show them receiving a big "E" for effort.