Copyright 1999 Federal News Service, Inc.
Federal News Service
MARCH 17, 1999, WEDNESDAY
SECTION: IN THE NEWS
LENGTH:
10012 words
HEADLINE: PREPARED TESTIMONY OF
WILLIAM
E. KENNARD
CHAIRMAN, FEDERAL COMMUNICATIONS COMMISSION
BEFORE THE
HOUSE COMMERCE COMMITTEE
SUBCOMMITTEE ON
TELECOMMUNICATIONS, TRADE, AND CONSUMER PROTECTION
SUBJECT - REAUTHORIZATION
OF
THE FEDERAL COMMUNICATIONS COMMISSION
BODY:
Summary
We are standing at the threshold of a new century, a century
that promises to be as revolutionary in the technology that affects our daily
lives and the future of our country as the inventions and innovations that so
profoundly shaped the past 100 years. Just as the internal combustion engine,
the telephone, and the railroad brought about our country's transformation from
an agricultural to an industrial society, the microchip, fiber-optic cables,
digital technology, and satellites are fueling our transition from an industrial
to an information-age society. As the marketplace changes, so must the Federal
Communications Commission (FCC). The top-down regulatory model of the Industrial
Age is as out of place in this new economy as the rotary telephone. As
competition and convergence develop, the FCC must streamline its operations and
continue to eliminate regulatory burdens. Technology is no longer a barrier, but
old ways of thinking are.
As my testimony, I am submitting a Report entitled
"A New Federal Communications Commission for the 21st Century." This report is
part of a continuing process of selfassessment that the Commission has been
engaging in to transform itself to meet the challenges of an information-age
economy and an ever-changing communications industry. The Report describes the
communications marketplace -- past, present, and future -- and the implications
of those changes for the FCC's structure and regulatory framework. My vision for
a "New FCC" is a bold one -- in five years, the FCC should be dramatically
changed. In a world of fully competitive communications markets, the FCC should
focus only on those core functions that are not normally addressed by market
forces. These core functions would revolve around: i) universal service,
consumer protection and information; ii) enforcement and promotion of
pro-competition goals domestically and worldwide; and iii) spectrum management.
The steps we are taking to transition to this model include: 1)
Restructuring: We are consolidating currently dispersed enforcement functions
into an Enforcement Bureau, and currently dispersed public information functions
into a Public Information Bureau. The consolidation of these two key functions
will improve efficiency and enhance the delivery of these services to the
general public and to industry. 2) Streamlining and Automation: We are investing
in new technology to create a "paperless FCC" by processing applications and
licenses faster, cheaper, and in a more consumer friendly way through electronic
filing and universal licensing. 3) Deregulation: We are completing 32
deregulation proceedings as a result of our 1998 Biennial Review of regulations,
and intend for the 2000 Biennial Review to produce even more deregulatory
actions. 4) Strategic Plan: We are preparing a five-year Strategic Plan that
will outline our timetable for restructuring and streamlining FCC functions and
management. As part of this process, we will work with Congress, state and local
governments, industry, consumer groups, and others on a critical assessment of
what the "New FCC" should look like and how we should get there.
FCC 1999
Proposed Restructuring and Streamlining Timetable* March
Submit
Reauthorization Testimony/Initial Report to Congress April/May Conduct Meetings
with Congress and other Stakeholders on Strategic Plan
May
Transmit
Current Restructuring Plan to Commissioners (Enforcement Bureau and Public
Information Bureau)
July Transmit Current Restructuring Plan to Congress and
National Treasury Employees Union Transmit Draft Strategic Plan to Congress,
OMB, and Stakeholders Organize 2000 Biennial Review Team
September
Transmit Final Strategic Plan to Congress, OMB, and Stakeholders
October
Establish Enforcement Bureau and Public Information Bureau
November
Begin Outreach on 2000 Biennial Review FY 2000 Begin Implementing Five-Year
Strategic Plan
*Note: Many of these dates are subject to change and may need
Commission or Congressional approval.
A NEW FEDERAL COMMUNICATIONS
COMMISSION FOR THE 21ST CENTURY
I. The Federal Communications Commission and
the Changing Communications Marketplace
A. Introduction
Congress enacted
the Communications Act of 1934 to provide for the widest dissemination of
communications services to the public. Section 1 of the Communications Act
states that the purpose of the Act is to "make available.., to all the people of
the United States, without discrimination.., a rapid, efficient, Nation-wide,
and world-wide wire and radio communication service.., at reasonable charges."
This goal remains vibrant today. What has changed since 1934 is the means to
get to this goal. With the passage of the Telecommunications Act of
1996 (Telecom Act), Congress recognized that
competition should be the organizing principle of our communications law and
policy and should replace micromanagement and monopoly regulation. The wisdom of
this approach has been proven in the long distance, wireless, and customer
premises equipment, where competition took hold and flourished, and consumers
receive the benefit of lower prices, greater choices, and better service.
The imperative to make the transition to fully competitive communications
markets to promote the widest deployment of communications services is more
important today than ever before. In I934, electronic communications for most
Americans meant AM radio and a telephone, and sending the occasional Western
Union telegram. Today, it means AM and FM radio, broadcast and cable TV,
wireline and wireless telephones, faxes, pagers, satellite technology, and the
Internet -- services and technologies that are central to our daily lives.
Communications technology is increasingly defining how Americans individually,
and collectively as a nation, will be competitive into the next century. It is
increasingly defining the potential of every American child.
So the goal
of bringing communications services quickly to all Americans, without
discrimination, at reasonable charges, continues to be of paramount importance.
Competition is the best way to achieve this goal, while continuing to preserve
and protect universal service and consumer protection goals.
To accomplish
this goal, our vision for the future of communications must be a bold one. We
must expect that in five years, there can be fully competitive domestic
communications markets with minimal or no regulation, including total
deregulation of all rate regulation in competitive telephone services. In such a
vibrant, competitive communications marketplace, the Federal Communications
Commission (FCC) would focus only on those core functions that cannot be
accomplished by normal market forces. We believe those core functions would
revolve around universal service, consumer protection and information;
enforcement and promotion of pro-competition goals domestically and
internationally; and spectrum management. As a result, the traditional
boundaries separating the FCC's current operating bureaus should no longer be
relevant. In five years, the FCC should bedramatically changed.
We are
working to transition the FCC to that model -- based on core functions in a
competitive communications market -- now. We are writing the blueprint for it,
beginning with this report describing the steps we are already taking. After
receiving input from our key stakeholders, we plan to develop this report into a
five-year Strategic Plan which will outline precisely our objectives and
timetable year by year for achieving our restructuring, streamlining, and
aleregulatory objectives. We must work with Congress, state and local
governments, industry, consumer groups, and others to ensure that we are on the
right track. and that we have the right tools to achieve our vision of a fully
competitive communications marketplace.
B. The State of the Industry
In
the Telecom Act, Congress directed the FCC to play a key role in creating and
implementing fair rules for this new era of competition. Over the course of the
past three years, the FCC has worked closely with Congress, the states,
industry, and consumers on numerous proceedings to fulfill the mandates of the
Telecom Act.
By many accounts, the Telecom Act is working. Many of the
fundamental prerequisites for a fully competitive communications industry are
now in place, competitive deployment of advanced broadband services is underway,
and the stage is set for continued deregulation as competition expands.
Furthermore, by many measures, the communications industry is thriving.
Since the passage of the Telecom Act, revenues of the communications sector of
our economy have grown by over $100 billion. This growth comes not only from
established providers, but also from new competitors, spurred by the
market-opening provisions of the Telecom Act. (See Appendix A, Charts I and 2)
This growth has meant new jobs for thousands of Americans.
In the wireless
industry, capital investment has more than tripled since 1993, with more than
$50 billion of cumulative investment through 1998. Mobile phones are now a
common tool for over 60 million people every day, and the wireless industry has
generated almost three times as many jobs as in 1993. (See Appendix A, Chart 3)
Consumers are beginning to benefit from the thriving communications sector
through price reductions not only of wireless calls, but also of long distance
and international calls. (See Appendix A, Charts 4 and 5) Consumers are also
beginning to enjoy more video entertainment choices through direct broadcast
satellites, which are becoming viable alternatives to cable. We are also at the
dawn of digital TV, which offers exciting new benefits for consumers in terms of
higher quality pictures and sound and innovative services. (See Appendix A,
Charts 6 and 7) As we enter this digital age, broadcast TV and radio is still
healthy, ubiquitous, and providing free, local news, entertainment, and
information to millions of Americans across the country.Beyond the traditional
communications industries, the Internet has truly revolutionized all of our
lives. According to a recent study, at least 38% of American adults (79.4
million) already are online and another 18.8 million are expect to go online in
the next year. In 1998, 26% of retailers had a website, over three times the
number in 1996, and it is estimated that they generated over $10 billion in
sales. On-line sales for 1999 are projected to be anywhere from $12 to $18
billion.
Communications markets are also becoming increasingly globalized as
the Telecom Act's procompetitive policies are being emulated around the world.
Other countries are modeling their new telecommunications authorities after the
FCC. As other countries open their communications markets and increase their
productivity, new services and business opportunities are created for U.S.
consumers and companies, as well as for consumers and companies worldwide.
C. Communications in the 21st Century
Even more change is expected in
the telecommunications marketplace of tomorrow. In the new millennium, millions
of consumers and businesses will be able to choose from a range of services and
technologies vastly different from those available today. Packetswitched
networks, running on advanced fiber optics and using open Internet Protocols to
support seamless interconnection to transport immense amounts of information,
will be ubiquitous. Millions of homes and businesses will be linked to this
"network of networks" through "always on" broadband connections. Outside the
wired confines of the home or office, "third generation" wireless technologies
will provide high-speed access wherever a consumer may be. Satellite technology
will increase the ability to transfer data and voice around the world and into
every home.
Electronic commerce will play an even more central role in the
economy of the 21st Century. Americans in the next century will be connected
throughout the day and evening, relying on advanced technologies not only to
communicate with others, but also as a vital tool for performing daily tasks
(such as shopping or banking), for interacting with government and other
institutions (such as voting, tax filing, health, and education), and for
entertainment (such as video, audio, and interactive games).
In the
marketplace of tomorrow, it is expected that traditional industry structures
will cease to exist. The "local exchange" and "long distance" telephone markets
will no longer be distinct industry segments. Video and audio programming will
be delivered by many different transmission media. In a world of "always on"
broadband telecommunications, narrow-band applications - such as our everyday
phone calls - will represent just a tiny fraction of daily traffic. Cable
operators, satellite companies, and even broadcast television stations will
compete with today's phone companies in the race to provide consumers a vast
array of communications services. In addition, telephone and utility companies
may be offering video and audio programming on a wide-scale basis. As
cross-industry mergers, joint ventures, and promotional agreements are formed to
meet users' demand, the traditional distinctionsbetween these industry segments
will blur and erode.
D. Impact of Industry Convergence
Convergence
across communications industries is already taking place, and is likely to
accelerate as competition develops further. Thus, in addition to refocusing our
resources on our core functions for a world of fully competitive communications
markets, the FCC must also assess, with the help of Congress and others, how to
streamline and consolidate our policymaking functions for a future where
convergence has blurred traditional regulatory definitions and jurisdictional
boundaries.
The issues involved in thinking about convergence and
consolidation are complex. Prior to the Telecom Act, the core of the
Communications Act was actually three separate statutes: it incorporated
portions of the 1887 Interstate Commerce Act (governing telephony), the 1927
Federal Radio Act (governing broadcasting), and the 1984 Cable Communications
Policy Act (governing cable television). Telephony is regulated one way, cable a
second, terrestrial broadcast a third, satellite broadcast a fourth. As the
historical, technological, and market boundaries distinguishing these industries
blur, the statutory differences make less and less sense. Maintaining them will
likely result in inefficient rules that stifle promising innovation and increase
opportunities for regulatory arbitrage.
Some argue for developing regulatory
principles that cut across traditional industry boundaries. For example, the
policies of interconnection, equal access, and open architecture have served
consumers well in the wireline context, a traditionally regulated industry.
Similarly, concepts of connectivity, interoperability, and openness are the
lifeblood of the Internet, an unregulated industry.
While these similar
principles appear to cut across these different media, it is unclear whether and
how the government should be involved, if at all, in applying these principles
in a world where competition will largely replace regulation.
At the very
least, as competition develops across what had been distinct industries, we
should level the regulatory playing field by leveling regulation down to the
least burdensome level necessary to protect the public interest. Our guiding
principle should be to presume that new entrants and competitors should not be
subjected to legacy regulation. This is not to say that different media, with
different technologies, must be regulated identically. Rather, we need to make
sure that the rules for different forms of media delivery, while respecting
differences in technology, reflect a coherent and sensible overall approach. To
the extent we cannot do that within the confines of the existing statute, we
need to work with Congress and others to reform the statute.II. The 21st
Century: A New Role for the FCC
A. The Transition Period
As history has
shown, markets that have been highly monopolistic do not naturally become
competitive. Strong incumbents still retain significant power in their
traditional markets and have significant financial incentives to delay the
arrival of competition. Strong and enforceable rules are needed initially so
that new entrants have a chance to compete. At the same time, historical subsidy
mechanisms for telecommunications services must be reformed to eliminate
arbitrage opportunities by both incumbents and new entrants.
The
technologies needed for the telecommunications marketplace of the future are
still evolving, and developing them fully requires significant time and
investment. Moreover, there is no guarantee that market forces will dictate that
these new technologies will be universally deployed. The massive fixed-cost
investments required in some industries will mean that new technologies
initially will be targeted primarily at businesses and higherincome households.
Even as deployment expands, the economics of these new networks may favor heavy
users over lighter users, and in some areas of the country deployment may lag
behind.
At the same time, consumer preferences will not change overnight.
The expansion of communications choices is already leading to greater consumer
confusion. Especially in a world of robust competition, consumers will need
clear and accurate information about their choices, guarantees of basic privacy,
and swift action if any company cheats rather than competes for their business.
While the opportunities for the United States and the world of a global
village are enormous, they can only be realized if other countries follow our
lead in fostering competition in national and world markets. People all over the
world benefit as more countries enter the Information Age and become trading
partners. Thus, as we continue on our own course of bringing competition to
former domestic monopoly markets, we must also continue to promote open and
competitive markets worldwide.
In sum, although the long-term future of the
telecommunications marketplace looks bright, the length and difficulty of the
transition to that future is far from certain. To achieve the goal of fully
competitive communications markets in five years, we must continue to work to
ensure that all consumers have a choice of local telephone carriers and
broadband service providers, and that companies are effectively deterred from
unscrupulous behavior. We must also continue to promote competition between
different media, promote the transition to digital technology, and continue to
ensure that all Americans have a wide and robust variety of entertainment and
information sources.B. The FCC's Role During the Transition to Competition
During the transition to fully competitive communications markets, the FCC,
working in conjunction with the states, Congress, other federal agencies,
industry, and consumer groups, has six critical goals, all derived from the
Communications Act and other applicable statutes:
Promote Competition: Goal
number one is to promote competition throughout the communications industry,
particularly in the area of local telephony. The benefits of competition are
well documented in many communications sectors -- long distance, wireless,
customer- premises equipment, and information services. The benefits of local
telephone competition are accruing at this time to large and small companies,
but not, for the most part, to residential consumers. We must work to ensure
that all communications markets are open. so that all consumers can enjoy the
benefits of competition.
To meet this goal, we must continue our efforts to
clarify the provisions of the Telecom Act relating to interconnection and
unbundled network elements, work with the Bell Operating Companies (BOCs), their
competitors, states and consumer groups on meeting the requirements of the
statute related to BOC entry into the long distance market, reform access
charges, and, as required by Sections 214 and 310(d) of the Communications Act
and section 7 of the Clayton Act, continue to review mergers of
telecommunications companies that raise significant public interest issues
related to competition and consumers.
In the mass media area, we must
continue the pro-competitive deployment of new technologies, such as digital
television and direct broadcast satellites, and the maintenance of robust
competition in the marketplace of ideas. To meet these goals, we must continue
rapid deployment of new technologies and services and regular oversight of the
structure of local markets to ensure multiple voices, all the while updating our
rules to keep pace with the everchanging mass media marketplace.
Deregulate:
Our second goal is to deregulate as competition develops. Consumers ultimately
pay the cost of unnecessary regulation, and we are committed to aggressively
eliminating unnecessarily regulatory burdens or delays. We want to eliminate
reporting and accounting requirements that no longer are necessary to serve the
public interest. Also, where competition is thriving, we intend to increase
flexibility in the pricing of access services. We have already ®ulated
the domestic, long distance market as a result of increased competition, and we
stand ready to do so for other communications markets as competition develops.
We have also streamlined our rules and privatized some of the functions involved
in the certification of telephones and other equipment. We are currently
streamlining and automating our processes to issue licenses faster, resolve
complaints quicker, and be more responsive to competitors and consumers in the
marketplace.
Protect Consumers: Our third goal is to empower consumers with
the information they need to make wise choices in a robust and competitive
marketplace, and to protect themfrom unscrupulous competitors. Consumer bills
must be truthful, clear, and understandable. We will have "zero tolerance" for
perpetrators of consumer fraud such as slamming and cramming. We will make it
easier for consumers to file complaints by phone or over the Internet, and
reduce by 50 percent the time needed to process complaints. Further, we will
remain vigilant in protecting consumer privacy. We will also continue to carry
out our statutory mandates aimed at protecting the welfare of children, such as
the laws governing obscene and indecent programming.
Bring Communications
Services and Technology to Every American: Our fourth goal is to ensure that all
Americans -- no matter where they live, what they look like, what their age, or
what special needs they have -- should have access to new technologies created
by the communications revolution. Toward this end, we must complete universal
service reform to ensure that communications services in high-cost areas of the
nation are both available and affordable. We must also ensure that our support
mechanisms and other tools to achieve universal service are compatible and
consistent with competition. We must evaluate -- and if necessary, improve --
our support mechanisms for low-income consumers, and in particular Native
Americans, whose telephone penetration rates are some of the lowest in the
country. We must make certain that the support mechanisms for schools,
libraries, and rural health care providers operate efficiently and effectively.
We must make sure that the 54 million Americans with disabilities have access to
communications networks, new technologies and services, and news and
entertainment programming. Foster Innovation: Our fifth goal is to foster
innovation. We will promote the development and deployment of high-speed
Internet connections to all Americans. That means clearing regulatory hurdles so
that innovation -- and new markets -- can flourish, We must continue to promote
the compatibility of digital video technologies with existing equipment and
services. Further, we will continue to encourage the more efficient use of the
radio spectrum so that new and expanding uses can be accommodated within this
limited resource. More generally, we will continue to promote competitive
alternatives in all communications markets.
Advance Competitive Goals
Worldwide: Our sixth goal is to advance global competition in communications
markets. The pro-competitive regulatory framework Congress set forth in the
Telecom Act is being emulated around the world through the World Trade
Organization Agreement. We will continue to assist other nations in establishing
conditions for deregulation, competition, and increased private investment in
their communications infrastructure so that they can share in the promise of the
Information Age and become our trading partners. We must continue to intensify
competition at home and create growth opportunities for U.S. companies abroad.
We will continue to promote fair spectrum use by all countries.
C. The FCC's
Core Functions in a Competitive Environment
As we accomplish our transition
goals, we set the stage for a competitive environment in which communications
markets look and function like other competitive industries. At that point, the
FCC must refocus our efforts on those functions that are appropriate for an age
of competition and convergence. In particular, we must refocus our efforts from
managing monopolies to addressing issues that will not be solved by normal
market forces. In a competitive environment, the FCC's core functions would
focus on:
Universal Service. Consumer Protection and Information. The FCC
will continue to have a critical responsibility, as dictated by our governing
statutes, to support and promote universal service and other public interest
policies. The shared aspirations and values of the American people are not
entirely met by market forces. Equal access to opportunity as well as to the
public sphere are quintessential American values upon which the communications
sector will have an increasingly large impact. We will be expected to continue
to monitor the competitive landscape on behalf of the public interest and
implement important policies such as universal service in ways compatible with
competition.
In addition, as communications markets become more competitive
and take on attributes of other competitive markets, the need for increased
information to consumers and strong consumer protection will increase. We must
work to ensure that Americans are provided with clear information so that they
can make sense of new technologies and services and choose the ones best for
them. We must also continue to monitor the marketplace for illegal or
questionable market practices.
Enforcement and Promotion of Pro-Competition
Communications Goals Domestically and Worldwide. As markets become more
competitive, the focus of industry regulation will shift from protecting buyers
of monopoly services to resolving disputes among competitors, whether over
interconnection terms and conditions, program access, equipment compatibility,
or technical interference. In the fast-paced world of competition, we must be
able to respond swiftly and effectively to such disputes to ensure that
companies do not take advantage of other companies or consumers.
The FCC is
a model for other countries of a transparent and independent government body
establishing and enforcing fair, pro- competitive rules. This model is critical
for continuing to foster fair competition domestically as well as to open
markets in other countries, to the benefit of U.S. consumers and firms and
consumers and firms worldwide. There always will be government-to-government
relations and the need to coordinate among nations as communications systems
become increasingly global. As other nations continue to move from
government-owned monopolies to competitive, privately-owned communications
firms, they will increasingly look to the FCC's experience for guidance.
Spectrum Management. The need for setting ground rules for how people use
the radio spectrum will not disappear. We need to make sure adequate spectrum
exists toaccommodate the rapid growth in existing services as well as new
applications of this national and international resource. Even with new
technologies such as software- defined radios and ultra-wideband microwave
transmission, concerns about interference will continue (and perhaps grow) and
the need for defining licensees and other users' rights will continue to be a
critical function of the government. We will thus continue to conduct auctions
of available spectrum to speed introduction of new services. In order to protect
the safety of life and property, we must also continue to consider public safety
needs as new spectrum-consuming technologies and techniques are deployed.
D.
Coordination with State and Local Governments and other Federal Agencies
In
order to fulfill our vision of a fully competitive communications marketplace in
five years, we need a national, pro-competitive, pro- consumer communications
policy, supplemented by state and local government involvement aimed at
achieving the same goal. The Telecom Act set the groundwork for this goal, and
the Commission is fulfilling its role of establishing the rules for opening
communications markets across the country, in partnership with state regulators.
The Commission must continue to work with state and local governments to promote
competition and protect consumers. Toward this end, we have instituted a Local
and State Government Advisory Committee to share information and views on many
critical communications issues. The importance of working and coordinating our
efforts in the communications arena with other federal agencies will also
continue. We work particularly closely with the Federal Trade Commission on
consumer and enforcement issues, and with the Department of Justice on
competition issues. We also work with other federal agencies on public safety,
disability, Y2K, reliability, and spectrum issues, just to name a few. We see
our role vis-a-vis other federal agencies as cooperative and reinforcing, where
appropriate.
III. The 21st Century: A New Structure for the FCC
A. The
FCC's Evolving Structure
The FCC must change its structure to match the
fast-paced world of competition and to meet our evolving goals and functions, as
derived from our authorizing statutes. Our transition goals must be accomplished
with minimal regulation or no regulation where appropriate in a competitive
marketplace. Moreover, a restructured and streamlined FCC must be in place once
full competition arrives, so that we can focus on providing consumers
information and protection, enforcing competition laws, and spectrum management.
In sum, we must be structured to react quickly to market developments, to
work more efficiently in a competitive environment, and to focus on bottom-line
results for consumers. As competition increases, we must place greater reliance
on marketplace solutions, rather than the traditional regulation of entry, exit,
and prices; and on surgical intervention rather than complex rules in the case
of marketplace failure. We must encourage private sector solutionsand
cooperation where appropriate. But we also must quickly and effectively take
necessary enforcement action to prevent abuses by communications companies who
would rather cheat than compete for consumers. Ultimately, throughout the
agency, we must be structured to render decisions quickly, predictably, and
without imposing unnecessary costs on industry or consumers.
B. Current
Restructuring Efforts
The FCC is currently structured along the technology
lines of wire, wireless, satellite, broadcast, and cable communications. As the
lines between these industries merge and blur as a result of technological
convergence and the removal of artificial barriers to entry, the FCC needs to
reorganize itself in a way that recognizes these changes and prepares for the
future. A reorganization of the agency, over time, along functional rather than
technology lines will put the FCC in a better position to carry out its core
responsibilities more productively and efficiently.
As the first step in
this process, in October 1998, Chairman Kennard announced plans to consolidate
currently dispersed enforcement functions into a new Enforcement Bureau and
currently dispersed public information functions into a Public Information
Bureau. The consolidation of these two key functions that are now spread across
the agency will improve efficiency and enhance the delivery of these services to
the general public and to industry. The consolidation of these functions will
also encourage and foster cooperation between the two new bureaus, other bureaus
and offices, and state and local governments and law enforcement agencies. The
end result will be improvements in performance of both these functions through
an improved outreach program, a better educated communications consumer, and a
more efficient, coherent enforcement program.
The new Enforcement Bureau
will replace the current Compliance and Information Bureau and, likewise, the
new Public Information Bureau will include the current Office of Public Affairs.
Therefore, the total number of bureaus and offices at the Commission will remain
the same.
The Commission is also investing in new technology to process
applications and licenses faster, cheaper, and in a more consumer friendly way
through electronic filing and universal licensing. Our goal is to move to a
"paperless FCC" that will result in improved service to the public. Examples of
these efforts include universal licensing, streamlined application processes,
revised and simplified licensing forms, blanket authorizations, authorization
for unlicensed services, and electronic filing of license applications and
certifications.
1. Enforcement Bureau
Since the Telecom Act was passed,
telephone-related complaints have increased by almost 100%. In 1996, the Common
Carrier Bureau received over 28,000 complaints; in1998, that number increased to
over 53,000 complaints. With the increase in competition, we expect even more
complaints to be filed as consumers grapple with changes in both service options
and providers. While we have been implementing streamlined, electronic processes
to address this burgeoning workload, we have also determined that the
consolidation of the Commission's currently dispersed enforcement functions into
one Enforcement Bureau is a necessary and important step to providing better
service to the public.
The Commission currently has four organizational
units dedicated principally or significantly to enforcement -- the Compliance
and Information Bureau, the Mass Media Bureau Enforcement Division, the Common
Carrier Bureau Enforcement Division and the Wireless Telecommunications Bureau
Enforcement and Consumer Information Division. Consolidating most enforcement
responsibilities of these organizations into a unified Enforcement Bureau will
result in more effective and efficient enforcement. The Enforcement Bureau will
coordinate enforcement priorities and efforts in a way that best uses limited
Commission resources to ensure compliance with the important responsibilities
assigned to the FCC by Congress. The consolidation of various FCC enforcement
functions also responds to the fact that the need for effective enforcement of
the Communications Act and related requirements is becoming even more important
as competition and deregulation increase. As communications markets become
increasingly competitive, the pace of deregulation will intensify. Those
statutory and rule provisions that remain in an increasingly competitive,
deregulatory environment will be those that Congress and the Commission have
determined remain of central importance to furthering key statutory goals --
e.g., providing a structure for competition to flourish, assisting customers and
users of communications services in being able to benefit from competitive
communications services, ensuring that spectrum is used in an efficient manner
that does not create harmful interference, and promoting public safety.
As
unnecessary regulation is eliminated and the demands of the marketplace
increase, the Commission must focus its resources on effective and swift
enforcement of the statutory and regulatory requirements that remain. The
consolidation of our enforcement activities will allow us to do just that in a
streamlined, centralized, and more effective way.
2. Public Information
Bureau
Consumer inquiries at the Commission have increased dramatically
since 1996. In 1998, we received over 460,000 phone calls to telephone service
representatives, and over 600,000 calls to our automated response system. There
were on average over 266,000 hits on the FCC's web site a day, totalling over 97
million in 1998 (up over 400% from 21 million in 1996). We expect these numbers
to increase as more consumers seek information regarding the ever growing array
of services and providers in the communications marketplace.
Currently,
consumer inquiries are handled by several different offices and bureaus
throughout the Commission and the methods used to handle these inquiries vary
widely.While each office has a small contingent of staff handling inquiries,
they have had varying degrees of success in meeting the ever increasing volume.
Although the Commission established a National Call Center in June 1996, current
processes still require a great number of consumers seeking information to
contact other offices and bureaus directly to get their questions answered.
The creation of the Public Information Bureau allows the Commission to
better serve the public by establishing a single source organization as a
"one-stop" shop or "FCC General Store" for handling all inquiries and the
general expression of views to the Commission, thereby better meeting the
public's information needs. Merging the resources of the Office of Public
Affairs, which includes public service and inquiry staffs, public notice
distribution, and the management of the FCC web site, with the FCC Call Center
will provide a streamlined, more efficient, and consolidated information source
for the public. Consumers would only have to contact one source, whether by
telephone (1-888-CALLFCC) or by E-mail or the Internet (FCCINFO@FCC.GOV). The
Public Information Bureau also plans to establish one source for mailing
inquiries to the FCC (for example, P.O. FCC).
The creation of the Public
Information Bureau will encourage more public participation in the work of the
Commission. The staff of the Public Information Bureau will conduct consumer
forums across the country to inform and solicit feedback from consumers about
the Commission's policies, goals, and objectives. This feedback will be shared
with other bureaus to help ensure that Commission rules are fair, effective, and
sensible, and that they support competition while responding to consumer
concerns. The Public Information Bureau also plans to share its databases with
state and local governments as appropriate, to coordinate our respective
abilities to respond to consumer complaints and track and address industry
abuses.
The creation of the Public Information Bureau supports the
Commission's efforts to foster a pro-competitive, deregulatory, and pro-consumer
approach to communications services. The staff of the Public Information Bureau
will provide consumers with information so that consumers can make informed
decisions regarding their communications needs. The staff of the Public
Information Bureau will also work with other bureaus to issue consumer alerts
and public service announcements to give consumers information about their
rights and information to protect themselves from unscrupulous individuals and
firms. Finally, the Public Information Bureau will provide easy public access to
FCC information as well as a convenient way for the public to make its views
known, thus supporting the Commission's efforts to assist communities across
America in dealing with complex communications issues and to provide
opportunities for a wide range of voices to be expressed publicly.
3.
Streamlining and Automating the FCC Licensing Process
The Commission's
"authorization of service" activities cover the licensing and authorization
through certification, and unlicensed approval, of radio stations and devices.
telecommunications equipment and radio operators, as well as the authorization
of common carrier and other services and facilities. The Commission has already
begun automating and reengineering our authorization of service processes across
the agency by reengineering and integrating our licensing databases and through
the implementation of electronic filing.
The Universal Licensing System
(ULS) project is fundamentally changing the way the Commission receives and
processes wireless applications. ULS will combine all licensing and spectrum
auctions systems into a single, integrated system. It collapses 40 forms into
four; allows licensees to modify online only those portions of the license that
need to be modified without resubmitting a new application; and advises filers
when they have filled out an application improperly by providing immediate
electronic notification of the error. During the month of February 1999, 75% of
receipts (916 applications) fried under the currently implemented portions of
ULS were processed in one day. Universal licensing is an example of how we are
working to change the relationship between the Commission, spectrum licensees,
and the public by increasing the accessibility of information and speeding the
licensing process, and thus competitive entry, dramatically. Universal licensing
is becoming the model for automated licensing for the entire agency.
In the
Wireless Telecommunications Bureau, electronic filing has been fully implemented
throughout the Land Mobile Radio services, antenna registration, and amateur
radio filings. More than 50% of the Wireless Telecommunications Bureau's filings
are now accomplished electronically.
Significant service improvements
are evidenced by the fact that 99% of Amateur Radio service filings are now
processed in less than five days, with most electronically filed applications
being granted overnight. The Wireless Bureau also has an initiative to transfer
the knowledge used by license examiners in manually reviewing applications to
computer programs so that applications can be received, processed, and licenses
granted in even less time.
The Mass Media Bureau is implementing a similar
electronic filing initiative. In October, the FCC issued rules that
substantially revise the application process in 15 key areas, including sales
and license renewals, in order to effectuate mandatory electronic filing for
broadcasters. When fully implemented, the new electronic filing system will
reduce the resources required to process authorizations, accelerate the grant of
authorizations, and improve public access to information about broadcast
licensees.
The Common Carrier Bureau has also implemented electronic filing
of tariffs and associated documents via the Internet. The Electronic Tariff
Filing System enables interested parties to access and download documents over
the Internet, and to file petitions to reject, or suspend and investigate tariff
filings electronically. Since July 1, 1998, over 10,000 electronictariff filings
have been received, replacing approximately 750.000 pages of information.
The results of all these streamlining efforts include a more economical use
of FCC personnel resources, improvement in processing times, the ability of our
customers to file via the Internet or through other electronic filing
mechanisms, and the ability to provide our customers with immediate status
reports on their applications as well as real time access to on-line documents.
It is estimated that our move toward a "paperless FCC" will save the public
approximately 700,000 hours of paperwork in this fiscal year alone.
4.
Budget and Workforce Impact
In anticipation of the expected increased
efficiencies our restructuring plans and other streamlining and automation
improvements will produce, the FCC is confronting the issue of how it should
look and operate in FY 2000 and beyond. We expect that our re-engineering and
restructuring efforts will yield increased efficiencies and streamlining
opportunities, particularly in the area of authorization of service, due to
automation and regulatory changes. However, these efforts will also result in
the potential displacement of staff in certain locations and a need to retrain
and reassign other staff.
Buyout authority is a tool that will enhance the
Commission's ability to alter the skills mix of its workforce to carry out its
changing mission more effectively. Targeted buyouts for staff would facilitate
our restructuring efforts in a cost-effective manner. The Commission has
requested buyout authority in its budget request for FY 2000.
The Commission
is dedicated to keeping staff informed and involved in our restructuring and
streamlining efforts, and to minimizing workplace disruption that may result
from these efforts through staff retraining, reassignment, and other methods. It
is critical, as we consider ways to restructure and streamline Commission
operations, that we continue to recognize and respect the hard work of our
employees, many of whom have been with the Commission for many years. Change is
always difficult, and it is imperative that our staff understands and supports
the necessary changes that are taking place -- and will continue to take place
-- at the Commission. Accordingly, we are working closely with the National
Treasury Employees Union (NTEU) to ensure that staff is involved in all these
issues and that their views are incorporated into the Commission's planning
process.
5. Restructuring Process and Timeline
Planning for the Public
Information Bureau began in late November 1998 and for the Enforcement Bureau in
mid-December 1998. A Task Force comprised of both managers and staff from
relevant Bureaus and Offices, as well as NTEU representatives, has been meeting
regularly since early January to consider such issues as the appropriate
functions of each of the Bureaus and their organization. Efforts have also been
made on an informal basis both inside and outside the Commission to ensure that
a wide range of ideas are considered during the planning process. A proposed
reorganization plan should be formally submitted to theCommission for its
consideration in Spring. 1999. Upon approval by the Commission. it will be
formally submitted to the NTEU and appropriate congressional committees.
C.
Restructuring to Reflect Industry Convergence
As the traditional lines
dividing communications industries blur and eventually erode. the traditional
ways of regulating or monitoring these industries will also have to change. The
FCC must think about the complex issues resulting from converging communications
markets from both a policy and structural perspective. How the FCC should be
structured to address issues arising from a more competitive, converged
communications marketplace is inextricably tied up with the policy choices that
will be made on how to address the blurring of regulatory distinctions.
From
a structural perspective, as noted in our FY2000 budget submitted to Congress,
there are a number of steps we are committed to take. We will continue to
evaluate whether certain regulations are no longer necessary in the public
interest and should be repealed or modified as required by Section 11 of the
Communications Act. We will continue to use our forbearance authority where
appropriate. We will continue our efforts to reduce reporting requirements and
eliminate unnecessary rules, and to level regulation to the least burdensome
possible, consistent with the public interest. In addition, in our FY 2000
budget, we have committed to reviewing our cable services and mass media
functions.
We recognize that much additional analysis is needed to consider
the impact of industry convergence on the FCC's policies and rules and on our
structure. We will continue to meet with Congress, our state regulatory
partners, industry, consumer groups, and others to solicit input and feedback on
our restructuring, streamlining and policy initiatives and the impact of
industry convergence.
IV. Substantive Deregulation Efforts
As
telecommunications markets become more competitive, we must eliminate regulatory
requirements that are no longer useful. We are already engaged in an ongoing
process of reviewing our entire regulatory framework to see which rules should
be eliminated or streamlined.
A. FCC Biennial Review of Regulations
In
November 1997, the Commission initiated a review of the Commission's
regulations, as required by Section 11 of the Telecom Act. Beginning in 1998 and
in every even-numbered year thereafter, the FCC must conduct a review of its
regulations regarding the provision of telecommunications service and the
Commission's broadcast ownership rules. The Telecom Act charges the Commission
with determining whether, because of increased competition, any regulation no
longer serves the public interest.Chairman Kennard announced in November 1997
that the Commission's 1998 Biennial Review would be even broader than mandated
by the Telecom Act. In addition, at the Chairman's direction, the Commission
accelerated the Congressionally-mandated biennial review requirement by
beginning in 1997 rather than in 1998. As part of the 1998 Biennial Review, each
of the operating bureaus, together with the Office of General Counsel. hosted a
series of public forums and participated in practice group sessions with the
Federal Communications Bar Association to solicit informal input from the
public. The Commission also hosted a web site on the biennial review and asked
for additional suggestions via e-mail.
After input from the public, the
Commission initiated 32 separate biennial review rulemaking proceedings,
covering multiple rule parts, aimed at deregulating or streamlining Commission
regulations. The Commission devoted substantial attention and resources to the
biennial review. Roughly two-thirds of the proceedings involved common carrier
deregulation or streamlining. The Commission also instituted a broad review of
its broadcast ownership rules. To date, the Commission has adopted orders in ten
of the 1998 biennial review proceedings, with others to be forthcoming. (See
Appendix B)
From the outset, the focus of the Biennial Review has been on
regulating in a common sense manner and relying on competition as much as
possible. The Chairman and the other Commissioners have worked together to make
the biennial review a meaningful force for deregulation and streamlining.
The 1998 review was the Commission's first biennial review, and was
being conducted while the Commission was still in the process of implementing
the Telecom Act. The Chairman and the Commission intend to build on the 1998
review so that the 2000 review and future reviews will produce even more
deregulatory actions.
B. Continued FCC Deregulation Efforts
As we move
toward our goal of fully competitive communications markets, our efforts to
streamline and eliminate unnecessary rules must be increased and expanded.
Accordingly, the 2000 Biennial Review will be a top priority for the Commission.
As we did with the 1998 review, we plan to start the 2000 review early, by
putting a team in place in 1999 to work with the Commissioners and the Bureaus
and Offices on planning and structuring the review. We will also continue to
keep our review broad in focus. The team would evaluate the success of the 1998
review and consider whether changes are necessary for the 2000 review. The team
would also consider whether any changes are needed in the methodology we have
used to review our regulations. The team would again solicit input and
recommendations from state regulators, industry, consumer groups, and others, to
ensure that the 2000 review is a major force for deregulation.
In short, we
will be guided by one principle: the elimination of rules that impede
competition and innovation and do not promote consumer welfare.
V. Strategic
Planning Efforts
A. Background
The Government Performance and Results
Act of 1993 (Results Act) provides a useful framework for a federal agency to
develop a strategic plan. The Results Act recommends including as part of such a
plan: a comprehensive mission statement; a description of the general goals the
agency wants to achieve and how they will be achieved; a discussion of the
means, strategies and resources required to achieve our goals; a discussion of
the external factors that could affect achievement of our goals; and a
discussion of the consultations that took place with customers and stakeholders
in the development of the plan. The Results Act also recommends that an agency
establish measurable objectives and a timeline to achieve the goals specified in
the strategic plan. The agency would consult with Congress and solicit input
from its customers and stakeholders. The purpose of the Results Act is to bring
private sector management techniques to public sector programs.
B. FCC
Implementation of the Results Act
When the Results Act was passed, the FCC
was already hard at work implementing similar management initiatives. In 1993,
we began the work of reinventing ourselves, streamlining and restructuring the
agency to meet the challenges of the Information Age. In the process we created
the Wireless Telecommunications and the International Bureaus. In 1995, we
issued a report -- "Creating a Federal Communications Commission for the
Information Age" -- that included numerous recommendations for administrative
and legislative changes, many of which were subsequently adopted.
Each of
our bureaus and offices developed their own mission statement, identified their
customers and surveyed them on their needs. Benchmark customer service standards
were established for each of their policy and rulemaking, authorization of
service, enforcement and public information service activities. These standards
were published on their websites and customers were periodically surveyed to
determine whether their service goals were being met.
We also volunteered to
participate in Results Act implementation pilot projects, naming the Wireless
Telecommunications Bureau's Land Mobile radio and the Office of Engineering and
Technology's Equipment Authorization activities as the agency's two
participants. We organized a Steering Committee with an ambitious schedule for
completing the requirements of the Results Act.
C. Impact of the Telecom Act
Enactment of the Telecom Act in February 1996 had a profound impact on the
FCC. Pursuant to the Telecom Act, the FCC was required to initiate numerous
rulemakings, manywith statutorily mandated and expedited notice and comment
period. The impact of implementing the Telecom Act affected every aspect of the
FCC -- its resource allocations, its schedule for rulemakings, and its very
organizational structure -- for more than two years.
Enactment of the
Telecom Act also changed the scope and level of our Results Act planning effort.
We had to reformulate our mission and performance goals in light of the Telecom
Act. We decided for the first three years after passage of the Telecom Act to
marry the major goal of the Act -- to "promote competition and reduce regulation
in order to secure lower prices and higher quality services for American
telecommunications consumers and encourage the rapid deployment of
telecommunications technologies" -- with the FCC's four major budget activities
of policy and rulemaking, authorization of service, compliance, and public
information services.
This approach worked well during the major period that
the FCC was implementing the Telecom Act. Under this approach, however, the
performance goals for each of the individual Bureaus remained a somewhat
disconnected patchwork of objectives reflecting a collection of individual
Bureaus' efforts to implement the Telecom Act. Since passage of the Telecom Act,
with the traditional distinctions between over-the-air broadcasting, cable,
wireless, wireline and satellite becoming less distinct, it is becoming clear
that the FCC must conceive a new approach to our mission and our structure.
D. New FCC Strategic Plan
The FCC has determined that we need a new
regulatory model and a new Strategic Plan that will serve as the Commission's
blueprint as we enter the 21st Century. We need a new Strategic Plan to point
the way to where we want to be and the means and resources by which we will get
there.
We are generally structuring our Strategic Plan based on our future
core functions: universal service, consumer protection and information;
enforcement and promotion of procompetition communications goals domestically
and internationally; and spectrum management. Our strategic planning efforts are
thus tied into the restructuring and streamlining efforts that are already
on-going. In addition, as noted above, we must take a hard look at how to
organize ourselves for the New Media age. The convergence of technologies and
industries require that we examine and change our stovepipe bureau structure,
and we plan to address those issues in our Strategic Plan as well.
Key
senior managers will be responsible for developing the strategic objectives and
performance goals for the Strategic Plan. As our work on restructuring proceeds,
we will convene strategic objective planning sessions to develop a planning
document for each of our core activities. We will also develop a schedule, based
on fiscal years, on how we will achieve our objectives.The Strategic Plan will
represent the cooperative work of the entire FCC, reflecting input from the
Commissioners, Bureau management, agency staff, and others affected by or
interested in the FCC's activities. In developing our Strategic Plan, we have
already started to seek input from a wide variety of FCC stakeholders and intend
to intensify our efforts in the next few months. These include other
Commissioners, Commission staff, Members of Congress and their staff, the Office
of Management and Budget (OMB), industry groups, consumer groups, academia and
others. Suggestions will be gathered on both the draft Strategic Plan and on the
steps to implement it -- including deregulatory actions, restructuring and
realignment of FCC functions and management. In addition, we plan to incorporate
comments on this document, "A New FCC for the 21 st Century," into the draft
Strategic Plan.
Our draft Strategic Plan, along with any implementation
proposals, will be made public and we will actively solicit comment. We will
issue a Public Notice encouraging the public to comment on our draft plan, which
will be displayed on our Internet Home Page by July 1999. We will hold a series
of meetings with interested groups to gain their insight into how we can better
serve the public interest. We will make particular efforts to discuss the draft
plan with Congress, the states, industry, and with consumers and small companies
affected by our work. We plan to submit a more final plan to Congress and OMB in
September 1999.
VII. Conclusion
Just as the communications industry and
other sectors of our economy are constantly adapting to change and competition,
so must the FCC. A new century and new economy demand a new FCC. We must plan
for the future, while continuing to work on the challenges we face today to
promote competition, foster innovation, and help bring the benefits of the 21 st
century to all Americans. We look forward to working with Congress, industry,
consumers, state and local governments, and others on a critical assessment of
what the "New FCC" should look like, and how we can get there.
END
LOAD-DATE: March 18, 1999
