INTRODUCTORY AND WELCOMING REMARKS BY CHAIRMAN HUNDT
AT THE UNIVERSAL SERVICE ADMINISTRATIVE COMPANY
SEPTEMBER 22, 1997
[As Prepared for Delivery]
I am so pleased to see all of you here today. Thank you for agreeing to serve on the
Universal Service Administrative Company. Thank you for agreeing to serve your country.
A century ago, Alexander Graham Bell, inventor of the telephone, wrote the father of a
blind, deaf and apparently dumb girl named Hellen Keller and told him that a teacher named
Annie Sullivan might be able to help the little girl.
With this one connection, the universe of people with disabilities was permanently
altered. When Helen Keller and Annie Sullivan taught not only each other, but everyone else,
that people with disabilities can live full and productive and participating lives, prejudice and
isolation and despair were all defeated.
The telephone -- in its modern incarnation as high speed, big bandwidth, network devices
-- is now on the verge of another miracle. Modern communications is on the verge of bringing
the often lost and isolated world of elementary and secondary school education into the modern
age and revolutionizing health care in this country and guaranteeing that rural America shares
equally in the economic revolution driven by communications.
A triple play: rare and always wildly applauded.
Let's talk first about education.
Public school education is one of the glories of America. Tens of millions of Americans
of all walks of life honor this system that has created the fairest, happiest, wealthiest, and most
important country in world history.
But public school education is also, sadly, the way we teach inequality to every child in
America. From the moment a child walks into a public school he or she learns that the privileged
have certain tools and the underprivileged do not. Do you think that the children in the poor
school districts don't know that their athletic equipment is secondhand, their books were
published in another decade, their desks are broken, and the computers and communications
networks and software advertised on TV and deployed across movie screens and displayed
behind shop windows are just not there for them?
I was in Philadelphia a couple weeks ago to meet with Mayor Ed Rendell at a school that
he is bringing on line. While there I went by the middle school where I taught only 28 years ago.
What has changed? Today, the test scores are posted on the Internet: that's the good news; the
bad news is the scores are as bad as they ever were. Only 4% of the kids are above the absolute
bare minimum in test scores for math, science and reading; 37% aren't even tested because of
chronic absenteeism or inability to get through the test. What else has changed?
When I was there the kids typically had their lunch money ripped off on the way to
school. Now churches form human cordons to protect the kids on their walk to school, and as
long as the gangs are controlled inside the schools, they can buy the hot lunches that about 90%
get with a federal subsidy.
I'm sure the teachers at my old school think the way I did: Are we showing kids the way
to achieve the American Dream or are we just introducing them to the school of hard knocks?
But Mayor Rendell is going to force change. He has begged, borrowed, and persuaded
the state, the voters. And, the private sector to fund a high-speed big bandwidth data network
that is going to link together every teacher and student in Philadelphia, and then link the entire
wide area network to the world. When I was teaching in Philadelphia I had to beg for a bus to
take the kids to Independence Hall. We weren't twenty blocks away from it and not a kid in my
seventh grade class had ever been there. It was too dangerous to go that route.
The Mayor is going take Independence Hall to the kids, and while he's at it, he's going to
bring them the Library of Congress and tutors from the University of Pennsylvania and Princeton
University, if these adults are willing to make the commitment. The entire student body of the
Philadelphia school system is going to be able to respond to Microsoft's famous slogan: Where
do you want to go today? Their answer: We want to go to the school of the world, to the libraries
and teachers and fellow students and even to adults in the workplace, taking lunch time or coffee
breaks to connect to their kids' teachers, borrowing the company's data network or phone lines or
Now your purpose here at the USAC is to raise the money to make this new Philadelphia
freedom available to every child in every classroom in every county in every corner of the
country.Isn't this exciting: We have figured out how to do this without raising local telephone
rates one penny. The money comes from long distance revenue, but even there the net result of
our decisions at the FCC is to lower long distance prices to the lowest rates ever in American
history. And they're still falling.
This new program is not an E-Rate -- a term that does not fully capture the purpose of the
program -- it is a matching grant where a national pool of money is shared with local money to
make up a total expenditure of $4 billion per year on connecting every classroom to the
information highway. Our Universal service order, which we at the FCC adopted unanimously in
may, implements the unanimous recommendation of the eight-member Federal-State Joint Board
and makes clear exactly what this $4 billion will be spent for: telecommunications services, basic
conduit access to the Internet and internal connections in schools and libraries. The money will
not be spent, as some critics have charged, on items such as teacher training, personal computers
or modems. The school districts will continue to be responsible for funding these items.
This is the biggest single national effort to change education in classrooms K-12 in the
history of our country.
The credit goes to President Clinton, Vice President Gore, Senator Snowe of Maine,
Senator Rockefeller of West Virginia, Congressman Ed Markey of Massachusetts, the National
Education Association, the National School Boards Association and to the over 30 other national
education and library organizations in EDLINC, which represents parents, educators, students
and life-long learners across the country.
Many others helped, but everyone will agree with me that these are the principal heroes,
the brave warriors in the legislative fight. Everyone will remember that the House of
Representatives leadership would not permit the Telecommunications Act of 1996 to contain the
Snowe Rockefeller provision, and that Senator Snowe courageously crossed party lines to make
up a 10-8 vote for this provision in the Senate Commerce Committee.
And, everyone knows that even now powerful forces are mustered to defeat the promise
of this provision. Southwestern Bell has filed a motion with us seeking a stay against the entire
program going into effect. SBC has also filed a brief with the United States Court of Appeals for
the Fifth Circuit opposing our order. This Bell company wants to service schools its way in its
territory, and is willing to stop this program for the rest of the country, and to bar the cable
industry and the wireless industry and the computer network industry from participating in
connecting classrooms. There's a business motive behind every lawsuit in civil court; and we can
all see clearly this company wants no competition in the education market. But what they're dong
is wrong for the country, inconsistent with the law, and bad for kids.
And everyone knows that the other telephone companies have sat on their hands, letting
the one of their number fight the fight for all of them. It's a terrible shame.
Let's change the subject. Let's talk next about the revolution in health care.
Under the program that USAC, and a separate corporation called, tentatively Healthcorp, are
going to implement, we will do more to spread telemedecine across the country than has ever
been done before. This program is going to reinvent the business model for academic medical
centers and at the same time provide the highest quality of medical care that rural America has
ever seen. It will also jump start innovation in medical services, profoundly alter insurance and
medicare and medicaid reimbursement schemes,and -- most important -- save lives and enhance
quality of life.
Pretty good news wouldn't you say? Thank you Mr. President, Mr. Vice President,
Senator Snowe and Senator Rockefeller. Thanks are also due to our wonderful Advisory
Committee on Telecommunications and Health Care, chaired by Greg Lawler. The Advisory
Committee provided very valuable advice as to the ways that telecommunications can improve
access to health care in vast areas of this country that are rural.
Members of the Advisory Committee included: William C. Bailey, Southwestern Bell;
James E. Brick, West Virginia University School of Medicine; Kathryn C. Brown, NTIA;
Narciso Cano, Distributed Communications Corporation; Candy Castles, AT&T Wireless
Services, Inc.; Ronald D. Coleman, Med-Tel International; Helen R. Connors, University of
Kansas Medical Center School of Nursing; Steve Cotton, Texas Tech University of Health
Services; Ann Dean, Maryland Public Service Commission; Mary Jo Deering, U.S. Dept. of
Health & Human Services; Senator Judy L. DeMers, University of North Dakota School of
Medicine; Charles Dougherty, Creighton University; James H. "Red" Duke, Herman
Hospital/University of Texas Medical School at Houston; William L. England, Office of
Research & Demonstration, Health Care Financing Administration; Roger Guard, University of
Cincinnati Medical Center; Willaim Hawkins, Ethicon Endo-Surgery; Charles F. Holum,
Doherty, Rumble & Butler; George H. Kamp, American College of Radiology; Michael G.
Kienzle, Unviersity of Iowa College of Medicine; Joan King, National Legislative Council,
American Associaion of Retierd Persons; Joseph C. Kvedar, Parners HealthCare Systems, Inc.;
Art Lifson, CIGNA Corporation; Mary Jo MacLaughlin, Eastern Main Healthcare; Lousie
Novotny, Communications Workers of America; Robert B. Pillar, Public Utility Law Project of
New York, Inc.; Dena S. Puskin, Federal Joint Working Group on Telemedicine; Gonzalo M.
Sachez, Sioux Valley Hospital; Jay H. Sanders, The Global Telemedicine Group; Al
Sonnenstrahl, Consumers Action Network of Deaf and Hard of Hearing Americans; Thomas R.
Spacek, Bellcore; Eugene V. Sullivan, Office of Telemedicine, University of Virginia; Eric G.
Tangalos, Mayo Clinic; Cynthia Trutanic, Attorney and Private Consultant; Reed Tuckson,
Charles Drew Univeristy of Medicine and Science; Rober Waters, Center for Telemedicine Law;
Bill M. Welch, Nevada Rural Hospital Project; Brigadier General Zajtchuk, US Army Medical
Research and Material Command, US Dept. of Defense.
The other enormous task of the USAC is to administer our universal service program for
low income consumers and high cost areas. This program will ensure that everyone in America
can fit a subscription for telephone service into their budget. I mean everyone. There's no reason
why anyone should be disconnected, off the Net, out of the loop, unless of course they choose,
for the reasons that motivated Thoreau to go to Walden Pond, to live the contemplative,
Everyone on the new board that will administer universal service is charged with the high
calling and fiduciary duty to implement the FCC rules. Not one member may as a matter of law
oppose these rules and I know not one member would ever do that.
I refer especially to our state representative Allen Thoms. I note that Commissioner
Thoms has made clear that he will part company with the interests that are suing the schools and
libraries program. He hasn't joined them; he has agreed by his presence on this Board to oppose
In accepting this position on the USAC, you have all agreed to put aside your disparate
interests and work towards one, singular, unified goal -- that is, to ensure the success and
longevity of the schools and libraries discount program and the telehealth discount program.
USAC is the administrator of the entire Universal Service Fund generated by FCC rules.
In addition, we have separate corporations that administer the classroom connection funds
and the health care connection funds.
The Schools and Libraries Corporation and the Rural Health Care Corporation were
created to be independent, non-profit corporations. They are charged with managing most all
aspects of the administration of the Universal Service Fund with respect to schools, libraries and
rural health care providers. They were devised to protect the autonomy of each corporation's
directors and to allow them to push forward expeditiously with their work.
With respect to the day-to-day operation of these programs, I am confident that the
administrative structure we've established will help attract highly qualified, appropriately
reimbursed and competent management staff that will ensure accountable, cost-effective and
efficient management of the significant resources at issue.
To this end, one of each corporations' most critical decisions will be the selection of
CEO. This is probably one of the most important, if not the most important, decisions those
corporations will make.
These corporations have unique and unprecedented roles. They will each need to hire
competent, highly skilled and energetic CEO's, who will have to be paid commercially
reasonable salaries and given practical budgets for doing their enormously difficult jobs. They
have no simple task. The world of schools and the world of clinics will need new processes, new
decisionmaking, new technological understanding to make the promise of communications pay
The schools corporations and the telemedecine corporation are key to success here.
Furthermore, we need desperately more private sector involvement in these efforts. I am
practically begging for the invention of a nonprofit foundation that would help teach schools and
clinics how to buy sophisticated communications equipment. This would be such a small
investment for America's computer hardware and software businesses. And the pay off for kids
and for the companies would be huge.
This nonprofit could, among other things, link the USAC program with the huge and
marvelous charitable contributions of Bill Gates and Larry Ellison. Suppose Bill funds the
computerization of all the libraries in Alabama. Who is going to match that program up with the
funding of networks in those libraries that will occur under the Schools Corp? Ideally, there
would be a nonprofit corporation, funded by America's hardware and software businesses.
Let's get as much of all this privatized as we possibly can do. Let's not build
bureaucracies; let's build connections instead.
If we are successful in connecting America's kids, then we will cause a repurposing of
education spending in a magnitude that dwarfs previous changes in the fields. Quite literally we
will create a new market for about 15 million computers -- they may be laptops or NC's or PCs.
I have some guesses, but no desire to mandate the winner in these computer wars.
But this much is clear: The business prospect here is as bright as the education
And I haven't said anything about the huge new education software business this program
will create. The good news never stops coming.
Did I mention also that my team the Baltimore Orioles is clinching the pennant and Cal
Ripken's back is mending? This is the best of times and this is the best of times.