proving overall agency management, and initiated a restructuring process designed to ensure that the Commission of today is prepared for the regulatory mission of tomorrow. The Commission's budget request is a reflection of an imperative need. We have trimmed the fat and focused all available resources to follow through on much needed rulemaking matters, reform and restructuring, and other essential programmatic needs. I respectfully request that this Subcommittee grant the Commission its full funding request for fiscal year 2003.

Thank you. I would be happy to answer any questions this Subcommittee may have.

SUMMARY STATEMENT

Mr. POWELL. Thank you. I would like to read a brief statement concerning the Commission's fiscal year 2003 appropriations request.

It is fitting that we have this hearing on March 7, a day marked by important historical milestones for the telecommunications industry. On this day in 1876, Alexander Graham Bell received a patent for the telephone. Fifty years later, on the same day, the first successful transatlantic radiotelephone conversation took place between London and New York. In retrospect, 50 years seems like a very long period of time between these achievements. Today, we develop new communications products and services at a more rapid speed than ever before, in an exponential fashion that makes science fiction a matter of science fact within just a handful of years.

Less than 9 months ago, I appeared before this subcommittee for the first time and made a personal commitment to effectuate fundamental change within the Commission. I guaranteed that the Commission as an institution would complete a thorough self-examination and develop a reform plan designed to make the FCC more responsive, efficient, effective, and capable of facing the technological and economic opportunities and challenges of the new millennium. And, as always, to do so in a fashion that always attempts to protect consumer welfare and the public interest.

I believe that the Commission delivered on this promise. We sent you a reprogramming request for the FCC's reorganization 6 months later, in January 2002, and we deeply appreciate the chairman's rapid consent to our request.

I also pledged to enhance the Commission's independent technical and engineering expertise. The Commission dedicated resources to recruiting, training, and retaining a solid technology-oriented workforce under our Excellence in Engineering Program. We have, I am happy to report, hired 18 mid- and senior-level engineers and five entry-level engineers this year, more than the FCC has hired in nearly 20 years. We instituted training programs to keep current and future engineers up to date in their profession. And, we have improved the environment for engineers by purchasing equipment to facilitate the spectrum management process and to upgrade the Columbia, Maryland, laboratory's testing capabilities. Our ongoing efforts in this regard, coupled with the agency's FCC University and Excellence in Economic Analysis initiatives, hopefully will preserve our existing wealth of FCC staff knowledge and expertise and enhance and extend that collective knowledge into the new millennium.

When I first appeared before this subcommittee, I pledged to make the Commission a model of solid management practices. As such, the Commission moved forward to continue to streamline agency processes and procedures, automate agency processes, provide improved access to agency information, and modernize its information technology infrastructure. During our January 2002 Open Agenda Meeting, the Commission's staff delivered-with statistics showing substantial improvement in backlog reduction levels and other management benchmarks.

Finally, I also vowed that the Commission would use the remainder of its fiscal year 2001 and expected fiscal year 2002 funds to implement its statutory mandates. In this regard, the Commission has demonstrated during the past calendar year a continuation of steadfast commitment to its regulatory purpose. The fundamental mission of the Commission, as a constructive and fair independent agency, is to implement the Communications Act of 1934, as amended, in a manner that promotes competition, innovation, deregulation, and the availability of high-quality communications services for all Americans. I am confident the Commission has met this and the rest of our commitments and, in doing so, has achieved significantly higher levels of policy and management performance.

The Commission has made these achievements, however, against the backdrop of tragic and dramatic national events. The events of September 11, 2001 provided us with an important lesson in the significance of the FCC's portfolios and the networks that it oversees. We know now that our society has developed more than just an appetite for communications services. America is heavily dependent on these services in times of crisis and in times of peace. A strong and competitive communications network is essential to a healthy economy, and our Nation depends on both, whether to bolster its ability to defend itself or to communicate in times of normalcy.

I am unwavering in my commitment to implement the long-term business plan outlined in my full written statement. To effectuate our stated goals, however, the FCC has requested $278 million and 1,975 FTEs for fiscal year 2003. This request includes $9.8 million to fund the administration's Government-wide proposal to fully fund retirement costs in each agency's budget.

The Commission's requested operating costs are $268.3 million. These operational costs requested by the Commission for fiscal year 2003 are the bare minimum needed to allow us to continue the progress made during the past year. In order to achieve our goals and stay abreast of telecommunications developments, the Commission must keep ahead of changes in technology, economics, and the law. Accordingly, we are requesting $15 million for critical programmatic initiatives. An additional $8 million would be dedicated toward uncontrollable cost increases related to salaries, benefits, and inflationary cost increases for rent and supplies. The administration's request of $9.8 million for the retirement costs brings the total budget to $278,092,000. The fiscal year 2003 regulatory fee offset for the Commission would be 89 percent of the proposed fiscal year 2003 budget, making our direct appropriation request from this committee a 9.5 percent increase over total fiscal year budget last year, or 13.5 percent if you include the administration's pension costs.

From the perspective of funding Commission objectives, the critical segment of the overall budget is the $15 million dedicated to these initiatives. Of that amount, $4.9 million will be dedicated toward Commission employee training, enforcement initiatives, and spectrum management initiatives. Due to national security needs identified on September 11th, the Commission will also spend $1 million to improve internal security and support other security ef

forts. The remainder of these funds, $9 million, will include information technology critical to supporting program performance initiatives. With these funds, the Commission will improve existing systems to ensure compliance with Government-wide standards pertaining to security, accessibility, and financial management.

This year, Senators, you have my personal pledge to continue driving forward in a patient and deliberate manner-to handle the expected and the unexpected, from homeland and internal security to biennial reviews and an expected influx of 271 long-distance applications, as well as pending major merger reviews, just to name a few.

The Commission intends to use its expected funding to continue its campaign to upgrade the facilities, as well as to initiate and complete critical rulemakings.

The present request is the minimum amount necessary to continue to capitalize our past success and to carry us through the immense challenges of the next fiscal year. Already, fiscal year 2002 has been marked by a tidal wave of expected and unexpected events and policy and regulatory issues. I expect fiscal year 2003 to be at least as opportune and challenging.

For that reason, I respectfully request that this subcommittee grant the Commission its full funding request for fiscal year 2003. I thank you for your indulgence, and I am happy to answer any questions the subcommittee might have.

Senator HOLLINGS. Chairman Powell, we have no doubt about your management abilities. When you state you are going to drive forward and take care of all these challenges, however, you need to understand that as the Chairman of the FCC all you need to do is to take care of the laws that we pass. And you have just that responsibility. Instead, you seem to abandon that responsibility and assign it to the market. And you stated just 10 days ago, "My religion is the market." You don't care about these regulations. You don't care about the law or what Congress sets down. Working for the public interest, you have to have the attitude to look out for the public interest, and you say the public interest is about as empty a vessel as you can accord a regulatory agency. That is the fundamental. That is the misgiving I have of your administration over there. It just is amazing to me you just pell-mell down the road and seem to not care at all. I think you would be a wonderful executive vice president of a chamber of commerce, but not a Chairman of a regulatory commission at the Government level. Are you happy in your job?

Mr. POWELL. Extremely.

Senator HOLLINGS. And you do think that your religion is the market? Is that right?

Mr. POWELL. I don't recall ever saying that, but

Senator HOLLINGS. Well, you were quoted in USA Today just on February 25, and the other quote I used was from the American Bar Association, specifically the submission that you made with regard to NextWave. I am reading to you the law. This bothers me because we have got an important appeal by the Federal Communications Commission before the United States Supreme Court, and it is disturbing that perhaps the Commission won't make an authoritative kind of appeal.