Copyright 1999 Federal News Service, Inc.
Federal News Service
MAY 26, 1999, WEDNESDAY
SECTION: IN THE NEWS
LENGTH:
6618 words
HEADLINE: PREPARED STATEMENT OF
WILLIAM
E. KENNARD
CHAIRMAN, FEDERAL COMMUNICATIONS COMMISSION
BEFORE THE
SENATE COMMITTEE ON COMMERCE, SCIENCE AND TRANSPORTATION
SUBJECT - FEDERAL COMMUNICATIONS COMMISSION OVERSIGHT HEARING
BODY:
Mr. Chairman and Members of the
Subcommittee, thank you for the opportunity to review with you today the FCC's
performance during the last eighteen months and how we have fulfilled our
statutory obligations. Much of our work over the last eighteen months has
continued to focus on implementing and enforcing the Telecommunications Act of
1996. Because so much of that Act was focused on promoting competition in local
telecommunications services, encouraging deployment of advanced services, and
deregulating where possible, I will focus my remarks today on these subjects.
Overview
I am pleased to report that the Act is working: competition is
growing in a wide range of telecommunications markets -- we see increased
competition among long distance providers and consumers are beginning to have
competitive choices for many local telecommunications services for the first
time. The competitive deployment of advanced broadband services is spreading
rapidly, and we are removing large amounts of historical regulation,
particularly through the biennial review process and the forbearance authority
granted in the Act.
Today, we see tantalizing glimpses of this competitive,
deregulated future. Many markets, such as wireless and long distance markets are
quite competitive and many -- but not all -- of the fundamental prerequisites
for fully competitive, deregulated local telecommunications markets are now in
place as the result of Congressional mandates in the Act, and the rapid
implementation of the Act by the FCC and our colleagues in the State Public
Utility Commissions.This is not to say that fully competitive markets are
inevitable and that we can now declare victory and simply walk away. Vigorous
enforcement of the fundamental prerequisites for competitive markets and active,
intelligent dispute resolution will remain necessary for some years to come,
particularly if we are to avoid the kind of lengthy antitrust litigation that
plagued the development of long distance competition. Indeed, today we are at
that very delicate "tipping point": with just a little more time -- and probably
a lot more effort -- we'll be "over the top" and competition will gain a firm
foothold. But if we are unable or unwilling to make this effort, the momentum
toward competitive markets will slow, the balance will tip the other way and
just as inevitably send us back to 1996 and even 1990.
The coming year
promises to hold breakthroughs in many telecommunications markets. The
market-opening process in the Act has worked in tandem with the incentives and
protections of Section 271 of the Act. I am encouraged by the progress being
made by some of the Bell Operating Companies toward meeting the checklist
requirements of Section 271. I look forward to the day that I can join my fellow
Commissioners in granting a meritorious application for entry into interLATA
telecommunications markets and seeing that decision withstand judicial scrutiny
in the D.C. Circuit.
I also anticipate substantial developments in the
coming year with respect to the rapid deployment of advanced telecommunications
services, including increased deployment in rural areas. In particular,
broadband services delivered over DSL or cable modems should increase
dramatically in residential markets throughout the country. Wireless competition
also will continue to grow,and it is not unreasonable to begin looking to the
day where wireless telephony services will be viewed by some consumers as a
substitute for wireline services. We should also see increased progress towards
open markets internationally, and it should be a good year for the development
of exciting new satellite services.
In sum, we are on the right track. Our
implementation of the Congressional framework is working and we will have
competitive, deregulated telecommunications markets in all sectors of the
industry, and in all parts of the country, if we stay on course. It will take
diligence and hard work by the FCC and our partners in the State Public Utility
Commissions before fully competitive local markets are the norm, but I know that
the dedicated women and men at the FCC and the State Commissions are ready and
willing to undertake this hard work. I hope that all the members of the Commerce
Committee, the Senate and the entire Congress will support us in this effort.
Good News: The Telecommunications Sector Is Thriving
By every measure,
the telecommunications industry is thriving. One- fourth of our country's recent
economic growth has come from the information technology sector. Since the
passage of the Telecommunications Act, revenues of the communications sector of
our economy have grown by over $140 billion. For 1998, it is estimated that the
communications sector of our economy will have revenues in excess of $500
billion dollars. The market values of most companies in the telecommunications
sector have increased substantially, indicating that Wall Street anticipatesthat
the overall growth from competition will exceed lost market shares. In other
words. telecommunications is like a rapidly enlarging pie that is big enough for
many new participants: it is not a "zero sum" game.
This growth has not
happened by accident. It is the direct result of sound Congressional policies
that have been implemented and enforced by the FCC and the states. The old
regulatory structure guaranteed that telecommunications markets would display
the attributes of monopoly -- lack of choice, consumer dissatisfaction, delays
in deploying new services, excessive regulation, and slow growth. As we replace
this structure with a framework for competitive, deregulated markets and begin
to change attitudes through vigorous enforcement of the new framework, we are
experiencing a blossoming in telecommunications that touches the lives of almost
every American. Now, a growing number of American families across this nation
have a choice of a vast array of high-tech communications services, and those
services offer far greater capabilities, with far greater quality, and often at
lower prices.
This growth comes not only from established providers but,
since the passage of the Act, wew clearly see benefits flowing from the new
competitors that are emerging as a result of the implementation of the Act by
the FCC and the states. As barriers to entry have been removed and the
fundamental rights that are necessary for competitive provision of
telecommunications have been established, new finns have been showing up all
over the country to take advantage of the pent-up demand for choices, new
services, and lower prices. For example, the revenuesof new local service
providers more than doubled in 1997, and they increased substantially again in
1998. And this growth has meant new jobs for thousands of Americans.
In the
wireless industry, Congress and the FCC have created the conditions for
substantial growth. The FCC has auctioned off large mounts of spectrum, making
it possible for new firms to enter markets, and we have worked hard to address
some of the fundamental conditions for vigorous competition, such as
interconnection. As a result, annual capital investment more than tripled
between 1993 and 1998, with more than $50 billion of cumulative investment
through 1998. Similarly, the wireless industry generated almost three times as
many jobs last year as in 1993. The industry did all this while the cost of
service to the consumer dropped. A wireless telephone is no longer a luxury for
the privileged. Instead, with the advances in cellular service, the advent of
PCS and digital services, and most importantly, increased competition--choices
of providers offering comparable service--mobile telephones axe now a common
communications tool for over seventy million people.
Together with
Congress and the Executive Branch, we have also promoted open entry and
procompetitive polices throughout the world, ranging from FCC policies to reduce
international settlement rates to the adoption of the landmark World Trade
Organization (WTO) agreement on telecommunications services. Together with the
growth in our domestic markets, these policies will help ensure that companies
such as AT&T, BellSouth, MCI Worldcom, Ameritech, Sprint, SBC, Bell Atlantic
and U S West have the opportunity to stay among the top twenty
telecommunications companies, by revenue, worldwide. Similarly, GE Americom,
Hughes, Loraland PanAmSat are among the top twenty satellite service providers,
by revenue, worldwide. And US satellite manufacturers such as Hughes, Lockheed
Martin, Loral, Motorola and Orbital Sciences maintain a strong lead in
contracting and subcontracting satellite systems worldwide.
I can't finish a
summary of the sector without mentioning the Internet. It goes without saying
that the Internet is booming, creating new jobs, new and better means of
education and commerce. The Internet is a testament to a wise regulatory policy:
don't regulate unless there is a clearly demonstrable need to do so. The FCC
established a "hands off" policy three decades ago as evidenced by the original
Computer Inquiry, and I can assure you that the FCC will not regulate Internet
services. In fact, I believe that the unregulated, highly competitive Internet
is a useful model for the more traditional telecommunications sectors. Of
course, the basic legal prerequisites for competitive markets such as property
rights and laws governing contractual relations should be enforced by the
appropriate authorities.
These are just a few examples of how the wise
policies adopted by Congress and implemented by the FCC and the states have
produced a telecommunications economy that is thriving, and are doing so in an
increasingly competitive environment.
Status of Competition
Let me take
a few minutes to give you an idea of how competition is evolving, starting with
markets for long distance telecommunications services. There are now over 600
long distanceproviders offering services, some on their own facilities, some
entirely by resale and still others by a combination of owned facilities and
resale. The vibrant competition between these firms has given customers a wide
range of choices of providers and services, which has made an appreciable
difference on the prices most consumers pay for long distance services. Long
distance prices have steadily dropped over the past few years. The average cost
of domestic interstate long distance dropped from 11.8 cents per minute to 10.3
cents per minute from 1996 to 1997. At the same time, the average rate per
minute for an international call dropped from $0.70 in 1996 to $0.64 in 1997.
Consumers have responded to these rate reductions by increasing their use of
these services. Interstate and international calling increased to 5.00 billion
minutes in 1998.
The wireless industry is surging. Everything that is
supposed to be up is up, everything that is supposed to be down is down.
Subscribership is up, jobs are up, investment is up, consumer bills are down,
and the wait for a license is down. What is important to remember is that this
surge of the wireless industry followed the elimination of the original duopoly
structure and the introduction of competition by making more spectrum available
to more players. In other words, Congressional and FCC policies to foster
competition have worked for consumers' benefit and we expect that our local
competition policies will bring similar benefits to wireline services.
The
international market is also flourishing. With the adoption and implementation
of the WTO Agreement countries representing 90% of the $600 billion global
market for basic telecommunications have pledged to open their markets to
international competition. We havebeen successful in our negotiation of
bi-lateral agreements with other governments to permit provision of satellite
service in their countries, such as Mexico and Argentina. We are also seeing
substantial progress with international settlement rates as a result of the WTO
Agreement and FCC decisions such as the International Settlement Rate
("Benchmarks") Order recently affirmed by the D.C. Circuit.
Domestically,
local competition is still nascent, but it is making significant strides. The
revenues of local service competitors in 1998 were about $4 billion. It is
estimated that new local competitors now provide, over their own networks or by
reselling incumbent company lines and unbundled loops, service to between four
and five million telephone lines to customers--between two to three percent of
the nation's total telephone lines.
Local competitors are taking an
increasing share of nationwide local service revenues. Local competition is
broadening: new competitors are reselling incumbent company lines in almost
every state -- and about 40% of the incumbent lines they resell are connected to
residences; new facilities-based competitors are active in almost every state.
Local competitors continue to attract investment capital and deploy their
networks. Industry sources report that 20 publicly traded competitive local
exchange carriers (CLECs) have a total market capitalization of $33 billion
-compared to six such companies with $1.3 billion of total market capitalization
prior to the 1996 Act. And these new competitors are working faster and working
smarter. They continue to build fiber optic-based networks at a faster rate than
incumbents.Advanced Services / Broadband Deployment
I would
like to speak briefly about the progress in the last three years in the area of
"advanced telecommunications capability," or "broadband" as it is popularly
known.
What is broadband? It is two-way communications of voice, data and
images via any technology and, most importantly, at vastly higher speeds than
most consumers have ever had in their homes. In practical terms, broadband will
make it possible to change web pages as fast as you can flip through the pages
of a book; will make possible two-way video conferencing in the home so that
family members can see each other instead of just talking; and can make possible
the downloading of feature length movies in minutes.
Broadband can also
greatly increase the possibilities of distance learning and medical treatment at
home; and its potential for persons with disabilities -- for increased
communications via sign language or speech reading with the advantage of facial
expressions and other nuances, and the possibility of text-based Internet pages
converted into braille -- is enormous.
Section 706 of the 1996 Act, of
course, directs the Commission to encourage the deployment of broadband to all
Americans on a reasonable and timely basis. We released a Report in January on
our nation's progress towards that goal.Our Report is just a snapshot taken a
few seconds after the starting gun of a very long race -- we and the runners in
that race have a long way to go. In our Report, we concluded that advanced
telecommunications capabilities are being rolled out in this country at a rate
that outpaces the rollout of previous breakthrough products and services in the
communications field. So, by this objective measure, we are ahead of the curve.
On a subjective level, however. I am impatient. I want the Internet to go faster
and farther for all Americans, and I am particularly concerned about deployment
in rural areas and inner cities. We must ensure that a geometric increase in the
deployment of advanced services is not accompanied by a geometric increase in
the urbanrural disparity.
At this early stage, the signs are encouraging. We
see two things, in particular.
First, since the 1996 Act, there has been an
enormous amount of activity in the broadband area. Investment in broadband
facilities has been tens of billions of dollars -- large sums even by the
standards of this business. In what is usually the most difficult part of this
business to enter -the so-called "last mile" to the home -- many companies are
building last miles, or giving serious study to the idea.
- Local exchange
carriers, both incumbent and competitive, are deploying new technology that has
reinvigorated the ubiquitous and simple copper telephone loops into effective
and low cost broadband connections for residential consumers as well as
businesses.
- Cable television companies are adding two-way broadband
capabilities to their networks which are inherently focused on residential
consumers, including rural and non-urban areas.
- Electrical power
utilities, wireless cable companies, mobile and fixed radio companies, and many
satellite companies are building or planning broadband systems -- some with
revolutionary new technologies -- to serve residential consumers.
Second, in
terms of residential subscribers who are paying for the service, today broadband
is on par with, or ahead of, the telephone, black-and-white and color
television, and cellular service at the same stage in their deployment. And
according to the cable and telephone companies, by the end of this year they
will be offering broadband to millions of residences.
As mentioned above, we
at the FCC are committed to the greatest vigilance in ensuring that broadband
services are deployed as rapidly as possible in rural areas that have been
historically bypassed by competition and technological advances. In this regard,
I am pleased to note that broadband services are being offered to residential
consumers in a number of small towns and rural areas, which indicates that rural
areas do not present intractable problems for broadband
deployment. Rural areas may be targeted especially by satellite
companies, which already have the highest proportion of their customers for
Direct Broadcast Satellite television services in rural areas. I would also like
to thank those senators who joined with Senators Daschle and Dorgan in their
letter to me last week. They have made recommendations that hold promise for
rural America, and I look forward to working with them.The success of broadband
so far is the result of many longstanding FCC policies. For example, the FCC has
sought to facilitate new competition in all phases of the telecommunications
business, enforcing unbundling requirements so that newcomers have fair access
to elements of the incumbent networks, and allocating large blocks of spectrum
in ways that make them useable for any technically feasible service.
Because
this is the very early stage in broadband's deployment, the
nature of consumer demand is very unclear. Certainly, at present, it seems that
many companies are entering broadband and offering it at consumer-friendly
prices, and residential consumers are starting to find out about broadband. The
market seems to be working and the best role for government is to observe,
monitor and enforce our long- standing policies of promoting competition and
providing the spectrum and access rights that are the building blocks for a
competitive market.
Telecommunications Mergers and Acquisitions:
Reconsolidation or Foundation for the Future?
A strong effort to firmly
establish competition in local markets and your support of this goal is all the
more necessary since the telecommunications industry is experiencing a wave of
mergers and acquisitions. As this Committee is aware, smaller companies are
"bulking up" by merging with each other, and major "name brand"
telecommunications companies are also merging with one another as well as
acquiring smaller companies.This activity could portend a reconsolidation of the
telecommunications industry that prevents competition, to the public's
detriment, or it could establish a strong foundation for aggressive competition
and innovation that greatly benefits the public.
With the stakes so high,
when formerly monopolized markets are being opened to competition, it is
essential that we do as much as we can to prevent anything that will retard the
development of competition. This means lowering entry barriers, ensuring
efficient interconnection of facilities, and encouraging the development and
deployment of new technologies. This also means that the Commission needs to be
particularly careful in evaluating mergers during this time of change and
uncertainty, because a merger, once consummated, cannot easily be broken up. You
can't unscramble an egg.
"Good" mergers can spur competition by creating
merged entities that can compete more aggressively and that can more quickly
move into previously monopolized markets. If this competition develops, it will
make it possible to substantially deregulate the local exchange markets, just as
strong competition justified the substantial deregulation of the long distance
and wireless markets. Similarly, a vertical merger between two firms that do not
appear to be likely significant competitors in each other's markets may generate
public benefits without imposing anticompetitive costs.
But "bad" mergers
are likely to slow the development of competition. Among the anticompetitive
harms arising from a "bad" merger are: eliminating firms that would have
enteredmarkets; raising barriers to entry; discouraging investment; increasing
the ability of the merged entity to engage in anticompetitive conduct; and
making it more difficult for the Commission and State Public Utility Commissions
to monitor and implement procompetitive policies. What makes evaluation of
telecommunications mergers so difficult is that regulatory barriers to entry
have, until recently, prevented many of these companies from competing with each
other. Accordingly, it is not enough to simply consider whether existing rivalry
between the firms would suffer, which is the focus of most traditional antitrust
merger analysis. Rather, one must consider whether, but for the merger, the
companies would have entered each other's markets and spurred the development of
competition in formerly monopolized markets. In this time of great change and
uncertainty, the FCC needs to be particularly vigilant to prevent any
developments, including mergers, to slow the development of competition. That is
why the FCC and, in some cases, State Public Utility Commissions, need to apply
their unique knowledge, expertise and judgement in reviewing proposed mergers
and acquisitions.
In essence, there are three points to be asked regarding
mergers:
Do we want a cartel or competition? The Department of Justice
typically evaluates competition that currently exists and, under existing
antitrust precedent, it faces obstacles to challenging mergers between companies
that do not currently compete. In contrast, the FCC is charged with creating the
conditions for competition called for by the 1996 Act.Second, a merger, left
un-reviewed by FCC, could violate the Communications Act. The FCC must enforce
the telecommunications laws and ensure compliance with the Communications Act.
Finally, we always use the same standard -- the public interest test.
Moreover, we always use an open and transparent process that is fully consistent
with the Administrative Procedure Act. All interested parties, including the
applicants and members of the public, must have the opportunity to participate
and be heard. The FCC also must respond to the concerns raised in the record and
explain its decision in writing in its order, which may be reviewed by the
appellate courts.
Barriers to Competition Remain
Some of the most
crucial prerequisites for local competition take a considerable period of time
to put in place, even under the best of circumstances. Unfortunately, but not
surprisingly, the availability of some of the most important prerequisites have
been delayed, sometimes through litigation, sometimes through the intransigence
of parties that are threatened by competition, and sometimes through the sheer
scale and complexity of the task.
This latter factor -- the sheer complexity
of the task -- cannot be ignored: the development of local exchange competition
is simply an order of magnitude more complicated, more laborintensive and more
capital-intensive than was the development of long distance competition.While
the industry players actually have to do the work, regulators can play a
critical role by getting the players together, insisting that a solution be
found, setting standards and deadlines. and resolving implementation disputes.
For example, by facilitating the development of the technical solution and
establishing a clear implementation schedule for Local Number Portability, the
FCC played a catalytic role in eliminating one complex technical barrier to
competition.
Although some amount of litigation is inevitable, the Supreme
Court's recent reaffirmation of the FCC's fundamental responsibility to
implement the Act has removed considerable uncertainty that may have been
slowing the development of local competition. Another major barrier to local
competition will fall as soon as the FCC is able to complete the determination
later this year of what network elements should be unbundled -- in accordance
with the Supreme Court's remand.
To keep markets open and the competitive
momentum going, the FCC will act as the liaison between the incumbent LECs and
the CLECs to minimize disputes and avoid lengthy proceedings and litigation.
Where the FCC's intervention cannot quickly resolve interconnection problems
informally, we are using our "rocket docket" to adjudicate these disagreements
quickly, and to keep the market functioning smoothly.
Universal
Service and Access Charge Reform
Another area that has direct implications
for the state of competition in the local market is our system of universal
service subsidies and our interrelated access charge system. The Commissionis
currently engaged in a monumental undertaking which is known as universal
service reform. The efforts Congress undertook to make universal service a part
of the Telecommunications Act of 1996 were Herculean. We are working to ensure
that our reformation of the universal service mechanisms embrace the vision you
had when you passed legislation codifying universal service. In fact, tomorrow
the Commission will take yet another step toward the reforms we need to make in
order to accomplish the goals you established.
As we move forward with
universal service reform, we must be vigilant to balance caution and ambition.
Our goal, like yours, is to ensure we satisfy the Telecommunications Act's clear
policy of ensuring the availability of affordable phone service to consumers in
all regions of the nation. Overzealousness or inaction could undermine this very
clear policy goal. As you know, the FCC adopted a forward looking cost model
last fall. Tomorrow I will recommend that my colleagues adopt an order and a
further notice on the Federal State Joint Board recommendations and a further
notice on the elements or "inputs" to be used within the model. I will urge my
fellow commissioners to adopt many of the recommendations of the Federal State
Joint Board, and put out for comment those recommendations that require further
discussion among interested parties. I will also recommend that we look for
comment on the actual inputs we will use in the cost model in order to implement
the new universal service mechanism that is specific, predictable and
sufficient. We are working diligently to adopt a final mechanism for the
non-rural companies in September, for implementation in January 2000.Recognizing
that access to technology is essential for future jobs and an important step
necessary to close the digital divide, I have also consistently advocated the
Congressionally-created universal service support for service to classrooms and
libraries -- the so-called E-rate. Under my tenure, the Commission finalized
implementation of the E-rate and prioritized assistance so that the most needy
would receive the biggest benefit. Moreover, the Commission ensured that strong
program controls were in place. According to one study, 87% of Americans support
the e-rate. This past year, 32,000 school districts, schools, and libraries from
across the nation submitted applications for E-rate funding. At tomorrow's
Commission meeting, I will be recommending that we fully-fund the E-rate program
so that we can meet this demand and continue the work we've done this past year.
With this funding, we'll be able to connect one-third of public schools
throughout rural America. We look forward to working with you as we bring your
vision of a reformed universal service mechanism to fruition.
Consumer
Initiatives
Throughout my tenure, I have sought to stress the importance of
promoting competition while making sure it is not at the expense of consumers.
Towards this end, we have taken a number of steps to ensure that consumers
receive the benefits of the communications revolution.
- We have adopted
Truth in Billing rules, to ensure that phone bills are clear and easy to read
and that no service charges are "crammed" onto the bills of consumers who didn't
order or understand. These new rules require that bills be clear and
understandable; new charges behighlighted; all charges have clear explanations
about what they are and who to contact if there is a problem; and the bills
state clearly which charges, if not paid. will result in termination of service.
- We now offer on the FCC's own website a "Parents, Kids, and Communications
Page." This site gives parents easy-to-understand information on some of the
tools available to them when their children navigate the Internet and other
media. We have included information on a whole range of filtering software,
information on how to block 1-900 calls, information on how to get a cable
'lock-box' to block out certain channels, and an explanation of the TV ratings
system and the V-chip.
- The FCC recently adopted tough new rules to take
the profit out of slamming altogether. In 1998, the Commission also assessed or
proposed more than $15 million in fines for "slamming" violations and now is
consistently proposing slamming fines of over $1 million.
Unfortunately,
once again litigation is inhibiting our ability to enforce these new rules. In
addition, for the first time ever, we revoked a carrier's license to provide
interstate services because of slamming abuses. We also brokered and endorsed
industry-developed guidelines to stop "cramming" that have significantly reduced
the number of cramming complaints and issued rules to protect consumer privacy
concerning the use and disclosure of personalinformation to marketers.
- At
our Commission Agenda meeting just two weeks ago, we adopted rules that will
improve the ability of cellular phone users to complete wireless 911 calls. This
will improve the security and safety of analog cellular users, especially in
rural and suburban areas. The Commission approved three mechanisms for use by
the cellular industry, any of which will result in more wireless 911 calls being
completed than occurs today. We also took steps to improve consumer choice and
foster competition regarding the commercial availability of navigation devices
(e.g cable television set-top boxes).
- We recently ordered long distance
carriers to publicly post their rates on the Internet, in an easy-to-understand,
clear format, permitting millions of Americans on-line to find out easily about
long-distance rates. Newspapers and consumer groups will be able to make this
information available to those not yet on-line. This action will make it easier
for consumers to obtain information to help select the long distance plan that
best suits their individual needs, once underlying litigation about our decision
to require detariffing is resolved.
- We also are taking steps to ensure
that the fifty-four million people with disabilities are not left out of the
communications revolution. We have also strengthened closed captioning rules so
that persons who are deaf or hard-of-hearing will have access to more programs
on television; proposed new rules for telecommunications relay services and
proposed to require the provision of speech-to- speech relay service; advocated
that industry provide solutions to the problem of compatibility between digital
wireless phones and TTYs; proposed rules to make telecommunications services and
equipment accessible to persons with disabilities; and are also working with the
Architectural and Transportation Barriers Compliance Board to propose rules on
accessibility requirements for federal agencies when they use or purchase
electronic and information technology.
A New FCC for the Twenty-First
Century
I am submitting as part of my testimony today a report entitled "A
New Federal Communications Commission for the Twenty-First Century." The Report
describes the communications marketplace -- past, present, and future -- and the
implications of those changes for the FCC's structure and regulatory framework.
It is part of a continuing process of self-assessment 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. This
process of dramatic evolution at the FCC is required by the changes wrought in
the Telecommunications Act of 1996, and it is consistent with the approach taken
in the Act. The Act was evolutionary instead of revolutionary: rather than
discarding the old regulatory framework at once, which would have been highly
disruptive and fraught with uncertainty, Congress created a new
"pro-competitive, de-regulatory policy framework" while explicitly preserving
the existing regulatory framework and directing the FCC to forbear from the old
regulations as competition developed. Nonetheless, the pace and magnitude of
change set in motion by the 1996 Act is truly breathtaking.
My vision for a
"New FCC" is a bold one -- the FCC should change dramatically over the next five
years. The FCC must undergo truly significant change to match the rapid
evolution inmarkets set in motion by the 1996 Act. 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
should 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 an 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 covering hundreds
of rules 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 conducting three public forums with industry, consumer groups,
state and local governments, and academic experts to solicit input on what the
FCC's role should be in the Twenty-First Century, how we should be structured,
and how we can work more efficiently and effectively to deliver services to the
public. We have also established an e-mail site, "newfcc@fcc.gov" to receive
additional input from the public on the above questions. The result of this
effort will be a draft Strategic Plan coveringa five-year period which we will
submit to Congress in July 1999 for its review, and on which we will seek
additional public comment.
Conclusion
We have come a long way towards a
more competitive market place in communications, but we have much more work to
do. The transition from monopoly regulation to open markets, from today's
technologies to tomorrow's breakthroughs, is not yet complete. For the coming
year our agenda is clear: promote competition, foster new technologies, protect
consumers, and ensure that all Americans have access to the communications
revolution.
These will be the goals that guide us as we implement the
Supreme Court's instructions on UNEs, as we continue opening local phone
markets, as we work to make communications available to all Americans, as we
review the mergers now before the Commission as well as those we may receive.
The agenda for this year continues on the foundation laid last year:
competition, community, common sense. We have a lot of work to do, and we have
the will to do it well.
- We will promote competition in all sectors of the
marketplace. We will reform access charges, and ensure that proposed mergers are
pro- competitive and benefit consumers.
- We will continue to deregulate as
competition develops, eliminating any unnecessary regulatory burdens, reducing
reporting requirements, streamlining rules and our own internal functions.
-
We will continue to protect consumers from unscrupulous competitors, and give
customers the information they need to make wise choices in a robust and
competitive marketplace. We will continue our policy of "zero tolerance" for
those competitors who would rather cheat than compete.
- We will work to
ensure that the Act's provisions on RBOC entry into the long distance
marketplace are implemented in a manner that promotes competition and consumer
welfare and is fair to all of the parties.
- We will ensure broad access to
communications services and technologies for all Americans, no matter where they
live. We will complete universal service reforms, continue oversight of the
schools and libraries and rural health care universal service programs,
encourage accessibility of emergency information via closed-captioning and video
description, and ensure that the 54 million Americans with disabilities can use
and have access to the communications network.
- We will foster innovation,
working to ensure that America remains the world's leader in innovation. We will
continue to promote the development and deployment of high speedInternet access,
promote compatibility of digital video technologies with existing equipment and
services, and promote competitive alternatives to cable and broadcast TV.
-
Finally, we will advance these concepts worldwide, serving as an example and
advocate of telecommunications competition worldwide. We will work to encourage
the development of international standards for global interconnectivity, work to
promote the fair use of spectrum through the WRC 2000, work on the worldwide
adoption of the WTO Agreement for Basic Telecommunications, and aggressively
enforce the FCC's International Settlement Rate ("Benchmark") Order to reduce
rates for international calls. We will continue to assist other nations in
establishing conditions for deregulation, competition, and increased private
investment in their telecommunications infrastructure so that they too, can
share in the promise of the Information Age, and become our trading partners.
This is an important and dynamic time in the history of telecommunications
policy. I look forward to continuing to work with this Committee and other
members of Congress so that the decisions we make today ensure that all
Americans -- irrespective of where they live, their race, their age, or their
special needs -- can share in the promise of the Information Age.
Thank you.
I look forward to answering any questions you may have.
END
LOAD-DATE: May 27, 1999 
