[2498] in Commercialization & Privatization of the Internet
Schrader's Oral Testimony
daemon@ATHENA.MIT.EDU (William Schrader)
Thu Mar 12 22:06:30 1992
Date: Thu, 12 Mar 92 22:05:29 -0500
From: wls@psi.com (William Schrader)
To: com-priv@psi.com
Cc: wls@psi.com
Mr. Boucher and Committee Members:
My name is Bill Schrader. I am president of Performance Systems
International.
Thank you for inviting me to assist your efforts in examining the
policies for managing and operating the NSFNet.
As you will read in my testimony, I believe the following issues
should be understood by the committee pertaining to actions of the
NSF in operating the NSFNet backbone and preparing for the NREN:
% A new public data internetwork industry flourishes, built on
technology developed by DARPA. It enjoys a growth rate which may
even exceed the personal computer industry for the duration of this
decade.
% In attempting to leverage its budget, the NSF used taxpayer
funds ostensibly to stimulate network research and development.
Actual technologies applied were of questionable quality, and did not
promote innovative work by industry leaders. This is an
inappropriate use of government money.
% The government has privatized the ownership of a federal
resource by modifying its contractor agreements without
administrative due process.
% This privatization was done in secret, and information was
withheld for nearly a year. The privatization agreement was
disclosed inadvertently to me by the contractor when attempting to
explain the complex "infrastructure pool" concept, and subsequently
disclosed publicly by me.
% The privatization unnecessarily provided the contractor with
an exclusive monopoly position to use federal resources paid for by
taxpayer funds.
% During the NSFNet backbone contract period from 1987 to
1992, the government allowed its contractor and subcontractor to
build conflicts of interest into the fiscal, contractual, and operational
aspects of the NSFNet backbone. The contractor and the
subcontractor have interlocked directorates and many other co-
mingled activities.
% Further conflicts of interest serve the domestic and
international interests of the contractor, and include influence and
knowledge of the government oversight advisory board (FNCAC) and
the technical standards setting body of this industry (the Internet
Activities Board and Internet Engineering Task Force).
% The NSF failed to properly oversee this $50 million contract,
paying in full for service for 15 months while, to date, the network is
still less than 50% operational. NSF actively shielded the contractor
from public or private scrutiny during this 15 month period of non-
performance, and now prepares to unnecessarily extend the five
year contract by an additional 18 months at the same full payment
stream.
The ANS, Merit, NSF, IBM, MCI partnership speaks consistently about
improving our national competitive posture, but its actions speak
more clearly. While it may not have been planned completely from
the start, five years of consistent steps leave little doubt in my mind
that ANS is now positioned as the NREN contractor with potential
for monopoly control in this explosive market.
I have tried to capture this complex situation in my written testimony.
A midcourse correction cannot undo the errors of the past, but can
better set the stage for the future. Among these critical steps are
termination of the partnership's contract on schedule and
cancellation of the proposed backbone rebid. NSF should act on its
own proposal to fund connecting institutions directly. If the NSFNet
experience is to be used to achieve the goals of NREN, then an open
and competitive marketplace must be supported rather than
hindered by government activity. A level playing field can only be
built by changing current NSF's policies which favor one contractor.
Thank you.
