Chairman William E. Kennard
Federal Communications Commission
January 19, 2000
(As Prepared for Delivery)
Thank you for coming this afternoon.
This is my third annual "agenda" statement as Chairman. In preparing for today I looked at my two earlier statements, and, whereas those statements were primarily about promises made, today's statement is about promises kept.
I can report that the state of the network is excellent. Whether wired, wireless, broadcast or satellite, this growing "network of networks" that functions as the nation's central nervous system is ubiquitous, agile and robust.
The network is characterized by compatibility, co-location and interconnection, and it has become a virtual Cuisinart of convergence. It allows competitors to cooperate and compete at the same time, it transmits movies where only voice once traveled, and it provides thousands of different on-ramps to the Internet.
There also are many fewer bottlenecks -- clogged arteries -- than when I first took office, and we are performing "open network surgery" on those that remain.
American consumers are significantly better off because of this network. For example .
Now it looks like my house may be just a toaster, but a very intelligent one.
Mark Fowler was more prescient than he knew.
These phenomena have been variously called part of the Knowledge Age or the Internet Age or the Digital Age, and something larger than Guttenberg.
Whatever the label, we know that something really big is taking place. One observer called it a "10.5" on the Richter scale of social change. . . and another, a sea change in our culture.
Whether the Internet is a new level in human consciousness, or just a toaster, it did not just happen by chance. We can trace it back to the infrastructure bed of our national network, upon which it rests.
For example, I do not think the Internet explosion would have been possible without the decisions over the last twenty-five years to deregulate customers' premises equipment, such as telephones, or to leave services beyond "basic" telephone services, what we call enhanced services, unregulated.
Similarly, I do not think the Internet would have developed in the way that it has without the divestiture in 1984, because without the divestiture, the competitive long distance networks would not have been laid.
Finally, our decision to leave the Internet itself unregulated allowed the Internet to be open and unfettered, and contributed greatly to its vibrancy today.
My point is that what we do here at the beginning of the Third Millennium really matters. Third Millennium society is being shaped today. Whether it will be an open society and an opportunity society, or some alternative, turns in part on the daily, sometimes technical and prosaic, decisions we make here at the Commission.
Our "network of networks" may be a defining event that marks the beginning of the Third Millennium. It could be a seed-bed that bears fruit for decades to come.
As long as I am Chairman, the Commission will continue to be a part of this vision.
1996 Telecommunications Act
The Telecommunications Act of 1996 has contributed to the success of this network of networks.
There have been three phases to the roll-out of the 1996 Act: rulemaking, testing those rules in court, and implementation.
When I first started serving as Chairman, we had to finish writing the rules, and major parts of the Act were being reviewed by the Supreme Court. Reports of the Act's premature death were rampant.
But we have seen our way into the clear. The rules of the road are virtually complete, we have prevailed in the courts, and our authority is settled. We are now implementing the Act and seeing the results. I can say with pride that the Act is working.
This is nowhere more evident than in the bedrock ABCs of my Chairmanship: Access, Broadband and Competition.
Our aggressive implementation of the Act is generating new classes of competitors, new industries and lower prices.
I have just come this morning from a meeting of competitive local exchange carriers, or CLECs. The energy and excitement there were tremendous. Clearly that industry existed before our implementation of the 1996 Act, but never on this scale, and never at this level of intensity.
CLECs invested $18 billion in 1998, and serviced 3.4% of all telephone lines in the second quarter of 1999. This is a small but growing percentage, for they were adding a million lines a quarter in mid-1999. Their revenue share of the local service market was six percent.
In addition to CLECs, there are now DLECs (competitive local data carriers), as well as whole industries of equipment and applications that have suddenly become active players in servicing consumers.
We also have deployed spectrum for thousands of licenses for new and innovative services, such as PCS, LMDS, and DARS.
The forces unleashed by our competitive policies have resulted in more consumer choices at home, such as wireless and video connections; at the office, such as high-speed data networks; and at schools and libraries, such as the connectivity delivered through the E- Rate.
In addition to increased choices, consumers also have benefited from falling prices. Since 1994, wireless prices have dropped 40%, and wireless subscriber-ship has quadrupled.
Long-distance rates have dropped nearly 56% in real terms since divestiture in 1984. In the last two years alone, we have reduced access charges by $3.1 billion, resulting in the five-cents-a-minute offerings available to every American this very day.
Finally, partly because of the downward pressure we have brought to bear on international settlement rates, international call rates dropped 25% from 1996 to 1998.
New York State
For a look at the future of the 1996 Act, look at New York State. That is where the Act is working now. Competitive local carriers there already serve over 1.3 million business and residential telephone lines, and over 55% of those lines are delivered over the competitors' own facilities. Worldcom alone has over 200,000 local unbundled lines. AT&T was scheduled to add 30,000 unbundled lines last month (December), for an estimated total of 80,000 unbundled lines.
I also want to tip my hat to the Bell Companies. For all the differences the Commission has had through the years with the incumbent local exchange carriers, we should acknowledge that they laid the marvelous infrastructure that has made many of these competitive advances possible, and that has allowed us to become the first "Internet Nation."
And since the Supreme Court ended the debate as to whether Congress actually meant for the Bell Companies to open their markets, the companies, in a welcome change, have begun to refocus their energies toward doing just that.
I now look forward to working with these same incumbents as vigorous competitors in the new digital economy.
Finally, for the year 2000, the pace at the Commission will not slacken.
Again, looking at the ABCs of my agenda...
Access We will initiate the year with Agenda action on Low Power FM and broadcast EEO rules, both of which increase the access of Americans to the airwaves or to the industry. During the year, we will address additional access by Americans with disabilities, access for under-served areas, and access by the public through the broadcast public interest obligations. We also will be working through the Development Initiative to increase the access to international networks by under-served nations.
Broadband We will be looking closely at industry's progress in making digital televisions compatible with cable. We also will be taking steps to bring high-speed broadband service to rural areas, and to expand the opportunities for entrepreneurs to build wireless webs.
Competition We anticipate completing our review of several major merger proposals, including those of USWest/Qwest, Bell Atlantic/GTE, Sprint/Worldcom, CBS/Viacom and AT&T/Media One. We have received an application from SBC, and we anticipate receiving an application from Bell South, to provide long distance service. Finally, addressing access charge reform, including a coalition plan, CALLS, is high on our list.
Finally, we are committed to implementing the Strategic Plan we presented to Congress last October. We have begun to reinvent the Commission along functional lines, and have launched the Enforcement Bureau and the Consumer Information Bureau. We have a team working on a possible Licensing Bureau. We also have internal teams tackling specific Commission issues, such as electronic filing, merger review, the biennial review, under-served populations and spectrum efficiency.
In light of these achievements, I think we can say with confidence that in 1999, "We delivered," and that the Third Millennium has begun at the Federal Communications Commission.