NBS Study of the Economic Effects of Corrosion

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Background:

о The Senate Appropriation Committee Report dated
July 24, 1975 directed that "within the funds provided,
the National Bureau of Standards shall embark upon a
study of the economic effects of corrosion."

Problem:

O The National Commission on Materials Policy estimated losses of $15 billion annually directly attributable to corrosion.

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An estimated 40% of all steel production in the United
States is used to replace corroded parts and products.
The Federal government, alone, sustains 10% of these
losses.

An annual savings of $5 billion could be realized
by applying existing knowledge and technology to
corrosion prevention techniques.

Goals and Objectives of NBS Program

NBS will conduct an economic study of the effects on
corrosion in the United States.

The irreducible costs of corrosion to the U.S. economy
will be determined by applying existing prevention
technology.

NBS will monitor the application of these practices to
determine how closely the irreducible costs are approached.

Milestones:

An economist will be hired (as a consultant) to assist
NBS in the coordination and design of the "Economic
Study on Corrosion"
late May, 1976.

The responsibility of designing and monitoring the
study, as well as evaluating the final report, will be
assigned to a non-profit organization -- July, 1976.
Once the study is designed, and proposals for conducting
the study are revieweda contract will be awarded
November, 1976.

The study should be completed by March, 1977.

The final report will be evaluated during the months
of March June, 1977.

Summary of OT Program Redirection

1. Background:

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The 1976 budget reflected a proposed consolidation of the
Office of Telecommunications with the National Bureau
of Standards. This consolidation proposal was based on:
The similarity of the technical work
performed by the two agencies.

Administrative efficiencies achievable
because of the co-location of the lab-
oratories of both agencies in Boulder,
Colorado.

An opportunity to correct an imbalance in
the OT program between its directly funded
work ($1.3 million) and its reimbursable work
($10.6 million) through merger with the

NBS program.

Subsequent to the House hearing on the 1976 budget at which the proposal was discussed in depth, the Committee issued a Report, on June 20, 1975, which passed over the proposal without prejudice. The Committee cited the fact that the authorizing committee (House Interstate and Foreign Commerce) had the matter under review.

On July 10, 1975, Rep. Torbert Macdonald, Chairman of the Subcommittee on Communications, and Rep. Timothy Wirth, representing Boulder, Colorado, wrote to Secretary Morton to express concern about the proposed consolidation. This letter expressed the belief that the merger would downgrade the role of Telecommunications at a time when that role should be given more emphasis.

Secretary Morton replied on July 16, indicating that he had
decided not to implement the consolidation. This letter
also indicated that the Department's telecommunications
goals and programs would be reviewed to determine how the
Department might best support the telecommunications industy.
OT Program Review

In late July, a joint OT-DIBA task force was formed to
determine problems and develop a coordinated program
strategy in the following areas:

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Reversal of negative U.S. balance of
trade in telecommunications;

"One-stop" service to help the private
sector; and

Accelerated application of R&D results into
new products and services.

After consulting with and visiting numerous telecommunica-
tions firms and associations, the task force submitted a
report to the Secretary on October 31, 1975.

The task force reported that the telecommunications
industry is characterized by: (1) rapid technological
change; (2) severe competition; (3) a rapidly increasing
demand for existing services; and (4) interest in new
types of services at reasonable cost.

Regarding its three specific areas of investigation, the
task force reported that:

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Additional promotional efforts by DIBA aimed
at improving the balance of trade in tele-
communications could not be done without
significant additional funding. Since DIBA
has already expanded its foreign marketing
services to the telecommunications industry,
this increased program was not recommended.
Establishment of a "one step" telecommunications
service would not be desirable since the
industry itself did not favor such a move.
Additional work should be done by OT to
stimulate new applications of telecommunica-
tions technology, to transfer existing tech-
nology from Government to the private sector,
and to improve the technological basis for
regulatory decisions.

Specific new applications suggested by OT include:
Acceleration of the introduction of broadband
(cable) communications for non-entertainment
purposes, such as education and health.
Stimulating the development of direct satellite
communications systems using small earth stations
in place of the current large, and expensive,
antennas.

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Stimulating the development and application of
fiber optics for use within building complexes
as non-common carrier communications systems.
Improving the efficiency of land mobile radio
systems (citizens band and paging systems) in
terms of frequency spectrum use.

1977 Budget Implications:

O The 1977 OT budget is $1,414,000. This represents no increase over the 1976 level except for cost of living.

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The budget justification does indicate, however, that the 1977
telecommunications application program will be redirected to
focus existing resources ($241,000) on the direct satellite
communications project outlined in the task force report.

This work will be started in 1976 through reprogramming.
The Committee will be notified of this action in the near
future.

FEDERAL COMMUNICATIONS COMMISSION

STATEMENT OF RICHARD E. WILEY, CHAIRMAN

ACCOMPANIED BY:

CHARLES A. HIGGINBOTHAM, CHIEF, SAFETY AND SPECIAL
RADIO SERVICES BUREAU

C. PHYLL HORNE, CHIEF, FIELD OPERATIONS BUREAU
RAYMOND E. SPENCE, CHIEF ENGINEER

J. CLAY SMITH, ACTING ASSOCIATE GENERAL COUNSEL

R. D. LICHTWARDT, EXECUTIVE DIRECTOR

CARLOS ROBERTS, OFFICE OF PLANS AND POLICY

THOMAS P. CAMPBELL, ACTING CHIEF, FINANCIAL MANAGEMENT DIVISION

BUDGET REQUEST

Senator PASTORE. Gentlemen, the next witness is Mr. Richard E. Wiley, Chairman of the Federal Communications Commission. Mr. WILEY. Thank, you, Senator Pastore.

Senator PASTORE. For fiscal year 1977, the House provided $51,448,000 for the FCC, the full amount of the budget request. The committee is concerned about the amount of the budget request and the House allowance inasmuch as this amount may not be sufficient to fund the levels of staffing contained in the FCC budget.

The committee is also concerned about the backlogs in the applications for citizen band radio licensing and we would like to hear from Chairman Wiley on this matter.

Mr. WILEY. Thank you, Mr. Chairman, and members of the committee. We are pleased to have the opportunity to discuss with you our fiscal year 1977 budget estimates.

With me today are key members of the Commission's staff: Charlie Higginbotham, Chief, Safety and Special Radio Services Bureau; Phyll Horne, Chief, Field Operations Bureau; Carlos Roberts, Office of Plans and Policy; Clay Smith, Office of General Counsel; Ray Spence, Chief Engineer; Don Lichtwardt, Executive Director; Tom Campbell, our Budget Officer, and Mr. Arlen van Dorn, Deputy Chief of our Safety and Special Radio Bureau.

CITIZENS BAND RADIO

As you requested, I am limiting my prepared comments to current problems in the Citizens Radio Service.

Since March, 1975, applications for citizens radio licenses have increased dramatically. Before then, we were receiving approximately 200,000 license applications annually.

Our current monthly receipts of approximately 600,000 are now more than triple previous annual totals. We expect to receive

4,800,000 applications in the current fiscal year and believe this will increase to 6,800,000 in fiscal year 1977.

In response to this unparalled growth, we undertook a comprehensive review of the Citizens Radio Service.

This review considered the need for the continuation of licensing, as well as short- and long-term recommendations for improvement of the Service.

The Commission unanimously agreed that there were compelling legal and policy reasons to continue licensing, and we outlined our reasoning in our letter to you of March 22, 1976.

In addition to the overall review of our citizens radio policy, we have taken several other important actions. We have simplified our license forms and developed a temporary permit which allows newcomers to go on the air immediately.

We have also made major procedural improvements in our license processing system. These changes have increased our productivity and speed of service to the public significantly.

During the current fiscal year, we have transferred funds to the citizens radio program in an effort to keep pace with application receipts. Our letter to you of January 16, 1976, outlines our initial reprograming action.

Pursuant to your letter of March 8, 1976, the Commission redirected an additional $335,000 and 17 temporary positions to citizens radio.

As a result of these actions, we have, for the first time in recent months, reduced our average processing time to less than 30 days.

Our goal is to provide a citizens radio license in 10 to 20 days, at minimum cost to the Government. Currently, we are completing the procurement of a contract to develop a high-speed citizens radio licensing system. If successful, this new system will allow us to meet our speed of service goals while accommodating up to 1 million monthly receipts.

In addition, we expect some of our other high-volume services to benefit from the system.

CITIZENS RADIO INTERFERENCE

While the explosive growth in license applications has created severe processing problems for us, the popularity of citizens radio has also generated other major concerns, including interference to other services, enforcement of our rules, and spectrum congestion. I will address each of these problems in turn.

The Commission has taken several steps to reduce the potential interference from CB to other radio services and electronic home entertainment equipment.

We have recently released a notice of proposed rulemaking which would tighten the technial specifications for citizens radio equipment and significantly reduce its interference potential. We expect to finalize this action in July.

However, the emission of improper signals by CB equipment is only one cause of interference to home entertainment equipment.

The lack of shielding or filtering in the complainant's television receiver or stereo, for example, also contributes to the problem.