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Tech Troubles for Bush

U.S. President faces challenges in power, telecom, and cybersecurity

7 min read

In the second Bush administration, technology policy must contend with a lack of direction. The Department of Energy must fill critical positions, the Federal Communications Commission must recover its lost authority, and the Department of Homeland Security must face up to the challenges of cybervandalism and crime.

Gridlock In George W. Bush's first six months in office, in 2001, the California electricity crisis bankrupted the state's utilities, disgracing Enron and leading to the fall of the state's governor in a highly unusual recall vote. Two years later, most of the northeastern and midwestern parts of the United States went dark in the biggest blackout in history. Meanwhile, oil and natural gas prices neared record highs. Even so, Congress remained deadlocked for four years over national energy legislation, and the candidates in the 2004 presidential campaign devoted scarcely a word to it.

There's a job to do, and a pretty good place to start would be filling the key positions in government where critical decisions about electric power will be made. One is the directorship of the U.S. Department of Energy's Office of Electric Transmission and Distribution, which until mid-2004 was occupied by the well-regarded Jimmy Glotfelty, who left to join a consultancy.

In the meantime, the office is in the hands of an acting director, who can hardly be expected to take charge emphatically, and it awaits the attention of the new DOE Secretary, Samuel Bodman, whom the Senate confirmed on 31 January. Bodman was a professor of chemical engineering at the Massachusetts Institute of Technology, in Cambridge, in the late 1960s, and later served as president of the mutual-fund giant Fidelity Investments.

The DOE transmission office, charged with studying proposed changes to the grid, is reasonably well funded. Its budget request for fiscal 2005 calls for US $121 million, about a 20 percent increase, although $19 million of this will come from a planned merger with the Office of Energy Assurance. In any event, leadership—much more than dollars—is key.

The same goes for the Federal Energy Regulatory Commission (FERC), which remains in the hands of Bush's Texas energy specialist Pat Wood III. He established a new Division of Reliability in the Office of Markets last year, gave it an ambitious mandate, and put it in the hands of Joseph H. McClelland, an electrical engineer who was the general manager of the Custer Public Power District, in Nevada. But the industry scuttlebutt has it that McClelland cannot find enough qualified people to serve on a 30-member expert advisory panel on reliability.

Last April, reacting to the final report of a task force on the August 2003 blackout, FERC announced it would no longer authorize any regional transmission authority to begin operations "until its reliability capabilities are functional." This rule was a direct response to the blackout, which was blamed in part on the failure of the Midwest Independent Transmission System Operator Inc., in Carmel, Ind., to have adequate monitoring and simulation equipment in place. The ruling affects only new authorities; thus it states, without really enforcing, the new policy of making grid oversight independent of the utilities.

FERC set up a staff task force in April 2004 to report on "potential funding mechanisms" for the North American Electricity Reliability Council—the utility-sponsored group that sets voluntary reliability rules—and to "ensure their independence from the utilities they monitor."

That's a tall order, as Wood well understands: "I cannot emphasize enough that we need legislative reform that provides a clear federal framework for developing and enforcing mandatory reliability rules," he said at the time.

—William Sweet

Crossed Wires What Is a Telecommunications Service? What is a data service? What is a phone call? Should the company that makes the call possible be regulated? These questions are becoming harder for the U.S. Federal Communications Commission to answer as the world of twisted copper wires recedes into the past. The political reflection of this shift can be seen in the string of recent federal court decisions overturning FCC rulings, calling into question its authority, and demoting it to the status of a middleman to which companies turn merely to show that they have exhausted all administrative remedies before getting their day in court.

The U.S. Supreme Court will soon decide whether the FCC or the courts will be the final arbiter of telecom policy. The FCC, having witnessed three of its attempts at creating competition in the local telephone business rejected by federal appeals courts, has, in a sense, taken the judiciary branch to court. It is seeking relief in the form of an acknowledgment that its specialized expertise should give it the final word.

The agency has been beaten back on matters big and small. Its controversial program to create competition by forcing the regional telephone companies to share their switching facilities and residential lines with competing Internet service providers and long-distance companies has repeatedly failed to pass muster with the federal courts. Under threat that its fourth attempt to develop local competition rules would be overturned by the U.S. Court of Appeals for the District of Columbia, the commissioners preserved the sharing requirement but gave up on the discounted access scheme that was the hallmark of earlier versions. In a December 2004 vote, the FCC found that competitors are not at an unfair disadvantage without discounted access to the regional companies' switching facilities.

Meanwhile, in October, the D.C. Circuit Court rejected the agency's interpretation of the Telecommunications Act of 1996 regarding an esoteric dividing line between telecom services and data services. The court ruled that cable companies had to share the lines going into their subscribers' homes with competing Internet service providers and long-distance companies, just as the local carriers had been forced to do earlier, by the FCC.

New legislation to restore the FCC's authority is not likely this year. Although the House subcommittee responsible for telecommunications has been holding hearings for almost a year, its spokesperson would say only, "There's obviously a need for a rewrite [of the 1996 law], and there's an expectation that we will go pretty far in that direction." A spokesperson for the corresponding Senate subcommittee said that it has yet to establish a timetable and that "Chairman [Ted] Stevens [R.-Alaska] has made this one of his priorities, but he insists on having listening sessions with industry leaders before moving forward."

The telecom industry may pay a price for the courtroom success of companies whose business interests put them at odds with fcc rulings

To get an idea of how far the agency has fallen, consider its five-year battle over a pedestrian matter: an auction of spectrum. The FCC sought to revoke the third-generation cellular licenses won in a 1998 auction by NextWave Telecom Inc., Greenwich, Conn., after it paid only US $500 million of the $4.7 billion winning bid before seeking bankruptcy protection. The regulator even held a second auction, which brought in $16 billion in bids. But that windfall vanished when a bankruptcy court blocked the repossession.

The FCC appealed but lost that case when the Supreme Court said the agency's regulatory interest in giving spectrum to those companies that were most likely to put it to use was outweighed by bankruptcy protections. Last year, the FCC and NextWave struck a deal that returned most of the licenses to the regulator. But the carrier sold some of the rest to Verizon Wireless, Bedminster, N.J.; Cingular Wireless, Atlanta, Ga.; and other firms, raising more than $5 billion. Though NextWave was forced to give the FCC $72 million, the result made the FCC appear toothless.

FCC spokesman David Fiske denied that the courts had pared the agency's authority. "There's no more or less litigation now than in the past," he said.

According to Harold Furchtgott-Roth, a Republican FCC commissioner during the Clinton Administration and now a consultant in Washington, the telecom industry may pay a price for the courtroom success of companies whose business interests put them at odds with FCC rulings. "The credibility of these parties in court is disturbingly large," he says. "This has created an unsettled, unstable business environment where investors don't know what to expect."

—Willie D. Jones

Cyber Insecurity? The U.S. Government's intense focus on large-scale terrorism has diverted resources from the fight against cybercrime, demoralizing the responsible officials and pushing them from government service at a startling rate. Things can only improve—and they seem likely to do so with the confirmation of Michael Chertoff, an appellate judge, as the Secretary of Homeland Security. Chertoff prosecuted terror cases as an assistant attorney general in the months following 9/11, and he has taken a strong interest in cybercrime. Among Chertoff's first tasks will be filling empty seats at Homeland Security. Robert Liscouski, a former official in the U.S. Department of State, resigned 11 January as Assistant Secretary for Infrastructure Protection and as acting director of the National Cyber Security Division. The preceding director, Amit Yoran, had abruptly resigned in October after only three months on the job.

"The fact that there's been that kind of turnover shows that something is not working," says Dan Burton, vice president of governmental affairs at the security firm Entrust Inc., in Addison, Texas, who worked closely with Liscouski and Yoran. "There was a huge focus on physical security following 9/11, as there should have been," Burton says. "But the upshot of that was: cyber was treated as a backwater issue."

Paul Kurtz, executive director of the Cyber Security Industry Alliance, Wakefield, Mass., which represents the CEOs of U.S. security companies, is pressing the Bush administration to kick cybersecurity a rung higher by giving it a department and an assistant secretary of its own within the Homeland Security Department. He applauded the administration for establishing the cybersecurity division in the first place and giving it a staff of 60 people and a budget of US $69 million in the last fiscal year.

He also praised the administration's funding for the United States Computer Emergency Readiness Team (US-CERT), a public-private venture in Arlington, Va., that gives information on cyberthreats to local governments and private firms.

However, Kurtz wants the government to worry less about an all-out cyberterrorist attack—an "e-9/11"—and more about quotidian electronic fraud, vandalism, and data theft [see IEEE Spectrum, "Terror Goes Online," January 2005]. That doesn't mean he discounts terrorism altogether. Kurtz said he is particularly concerned that terrorists might finance their operations by raiding the computer systems of banks.

"The fact that there's been that kind of turnover shows that something is not working"

— Dan Burton, vice president of governmental affairs, Entrust

The industry's concerns have been underscored by several recent incidents of cybercrime. In January, for instance, officials at George Mason University in Fairfax, Va., disclosed that computer hackers had breached a firewall of a Windows 2000 server within the university's data system. That system covers 130 other servers, including computers containing the names, photos, and Social Security numbers of 32 000 students and staff. In an e-mail message to that community, Joy Hughes, the school's vice president for information technology, wrote, "It appears that the hackers were looking for access to other campus systems rather than specific data." The incident is being investigated by the U.S. Federal Bureau of Investigation.

User account information is extremely valuable to cybercriminals. According to Burton of Entrust, which provides software to secure digital identities and information for companies and governments, Social Security numbers and their holders' identities can fetch US $10 each.

Burton says he expects things to get better when Chertoff gains confirmation as head of Homeland Security. "He knows about the issues and hopefully will bring more focus to bear on them."

—Tim Shorrock

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