[ Text | Word97 | Written Testimony ]

May 26, 1999

Thank you Mr. Chairman, Mr. Ranking Member, and the members of the Committee for the opportunity to appear before you today.

We meet at an extraordinary time – a time filled with promise and unlimited potential. I say this not just because our calendars say that we are entering a new millennium, but because the revolution in communications is transforming our world. Technology that was once found only in our science fiction can now be found on our desktops, in our cars, and in our pockets. Traditional industry boundaries are rapidly disappearing, and the communications world is converging. Already, we are seeing glimpses of a future in which phone lines will deliver movies, cable lines will carry phone calls, and the airwaves will carry both.

Now, some have said that Congress got it wrong in 1996 by not foreseeing this convergence and not anticipating the medium that undergirds it: the Internet. Examining the data, however, it becomes clear that the opposite is the case. Congress and the 1996 Telecom Act got it right. By placing competition at the foundation of our communications policy, the members of this committee and of this body set the stage for the explosive growth of the Internet, the digital economy, and the entire communications industry. You drafted the blueprint that allowed thousands of entrepreneurs from across the country to build a communications industry for the 21st century.

And if you allow me to be so bold, I believe that the technical advances unleashed by these competitive forces are what is fueling our current economic boom – the longest peacetime expansion of our economy in history. As Federal Reserve Chairman Alan Greenspan noted earlier this month, the revolution in how we process and send information has made American businesses more efficient and responsive to consumer demand, increased productivity -- without inflation, and contributed to a surge in competitive trade. To use Chairman Greenspan's words, the United States is now an "oasis of prosperity."

And the spring at the center of this oasis is the communications sector of our economy. Over the past 3 years alone, revenues in the communications sector have grown by $140 billion, climbing to a revenue level of $500 billion in 1998. With these profits, business has expanded and over 200,000 jobs have been created over the past five years.

Looking at specific industries, the growth picture is even clearer. In the wireless industry, capital investment has more than tripled since 1993 for a cumulative total of $50 billion. This has made service more reliable and affordable. Now almost 70 million Americans have a mobile phone. And over the past 5 years, 40,000 Americans have gone to work in new jobs that wireless companies have created.

In the long-distance arena, the marketplace is competitive and robust. By the end of 1997, there were over 600 long-distance providers competing for customers. As a result, the price of a interstate long-distance as well as an international call has steadily dropped, enabling more and more Americans to use these services. In fact, almost 30 billion more minutes in long-distance and international calls were made from 1996 to 1997.

In the local phone sector, this newly-born marketplace is growing. In the first quarter of 1999 alone, almost a million CLEC access lines were installed. Although still in its infancy, the competitive local exchange industry is now a sizable telecommunications force. There are now 20 publicly-traded CLEC's with a total market capitalization of $33 billion, compared to six CLEC's with a market cap of $1.3 billion prior to the passage of the 1996 Telecom Act. And as CLEC's have grown, the incumbents have not suffered, but have thrived. On average, RBOC and GTE share price was up 45 percent in 1998.

I am happy to report that over the past 18 months, the FCC – the agency that Congress entrusted to oversee this project – has taken definitive steps to make sure that this growth continues by hastening the transition to a competitive communications marketplace and making sure that it is done in a way that remains true to the intent of the Act.

In the wireless industry, the FCC has eliminated the original duopoly structure and introduced more competition by making more spectrum available. Now, in many markets, consumers have a choice of as many as 5 wireless providers, and can purchase service at prices that last year cost 40 percent less than it did three years ago.

In the multi-channel video market, we made it easier for home satellite companies to compete with cable by allowing them to take steps to increase their capacity and deliver more service to consumers. We set a timetable for making sure that consumers can buy set-top boxes from anybody willing to sell them, not just their cable company. And we cleared the way for people to affix antennas and satellite dishes on their homes and apartments.

To promote local phone competition, we've opened up the local loops. We approved a merger between AT&T and TCI, paving the way for AT&T to compete with the Bells through the cable infrastructure. We made it easier for competitors to get into the incumbent's central office. And we established rules on spectrum compatibility so that many competitors can use the network to send voice and data.

The competition unleashed in these traditional sectors also brings us closer to another goal of the Act: the deployment of advanced, broadband services to the American people. By making large blocks of spectrum available, by allowing companies to use them for any technically feasible service, and by giving newcomers access to the essential elements of incumbent phone networks, the FCC is setting the stage for a robust competition within and among sectors of the communications industry.

Unsurprisingly, with convergence has also come consolidation within and between industry groups. I understand that in a competitive world many businesses would want to take advantage of efficiencies of scale and acquire properties that complement their core businesses. But any merger must serve the public interest. And a big part of that interest is making sure that competition in telecommunications from local phone service to broadband is not stifled. It is this principle that guides me when assessing mergers before the Commission.

In drafting the Telecom Act, Congress reached back to values as old as America itself. One of these was choice – the belief that given an array of options, individuals can best decided what is best for them. Another was equality of opportunity that every American no matter where they live in our vast country should have a chance to live up to their full promise.

That is why in addition to fostering competition, we have worked to bring the Internet into our nation's schools and libraries, to craft a universal service scheme that is fair and commonsensical, and to ensure that basic as well as advanced telecommunications services reach families in rural America from farms and small towns to Indian reservations.

Finally, as old-industry boundaries fade away and competition becomes king, the FCC itself must change. Simply, the top-down regulatory model is as out of date for the 21st century as the rotary phone. We need a New FCC. To that end, the FCC prepared a report outlining what we foresee the Commission doing as competition takes root and flourishes. And last week, we held the first of three public forums to get input on how the agency can be re-engineered to better serve the American people in the coming century.

Although in its 65th year, the FCC finds itself years away from retirement. The vibrancy of the communications industry, its importance to our economy and our future, and the need for this marketplace to be a competitive and robust one, demands a vigilant FCC. I know that my staff, my fellow commissioners, and the entire agency are ready for this challenge, and I look forward to working with you in promoting competition, fostering the growth of new technology, and bringing these opportunities to the entire American people.

Thank you.