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William E. Kennard
Federal Communications Commission
National Cable Television Association
Atlanta, GA
May 5, 1998

(As prepared for delivery)

Thank you, Decker, for those kind words. It's great to be here in Atlanta with you all. I've enjoyed being here and spending time with you.

Let me begin by joining in the chorus of congratulations to Bob Miron on his stewardship as NCTA chairman during the past year.

And I also want to take a moment to offer my personal thanks to someone who recently left the FCC, someone who brought dedication and energy to a difficult job. And that's Meredith Jones. As you all know, Meredith recently stepped down as Chief of our Cable Bureau. I want to thank Meredith for her tireless efforts and wish her the very best of luck in the future.

And what a thrill to have Bill Gates here this week. When I heard Bill Gates was here to make a major presentation to this convention in Atlanta, I couldn't help but think - what a great movie that would make: Gone With The Windows.

I hope Bill is still here. My friend Joel Klein at the Justice Department asked me to give Bill a message -- tell him, "Bill -- yes we are on for tennis on Saturday, and no, you can't be the only server." Joel said Bill would know what that meant.

Seriously, it is a great honor to be Chairman of the FCC, particularly at this moment in our history. I often reflect on how best I can use this position to serve our country. I believe that it comes down to two things: choice and opportunity.

I want to talk about that today: choice and opportunity, and what I believe those ideas mean for you in the cable television business and for the consumers you serve.

Choice is a simple concept. It means doing all that we can to maximize the quantity and quality of choices available to consumers.

Of one thing I am certain: a free and unfettered marketplace, in which all providers have ready access to the consumer, is the best way to foster choice. It unleashes the capital and creativity that has made our communications marketplace the very finest in the world.

Competition is the engine of choice, because competition drives down prices, fuels innovation and maximizes choice.

Opportunity is also a simple concept. Opportunity means that we must ensure that all Americans get the benefit of choice. Everybody. Whether you live in an affluent suburb, a distressed inner city, or an isolated rural area. You should have choice. Because as technology increasingly defines each person's potential in society, we need to ensure that each and every person has access to technology. As a country, we cannot afford to leave anybody behind.

During my six months as chairman of the FCC, I have been able to spend time with many of the leaders in the cable industry, many of the people in this room. I've shared some thoughts with you about these issues. I appreciate your time and your openness and your candor.

Here's some of the things I've learned.

This industry is healthy. Cable stocks are up 155% over last year.

The cable industry is making huge investments in upgrades, expanding capacity to bring broadband to the home.

In 1997, cable companies invested over six billion dollars in infrastructure improvements. Around 55% of cable homes are passed today by 550 to 750 Megahertz plant. By the end of 1998, two-way systems are expected to pass almost 45 million homes.

You continue to cluster systems to develop the economies you need for increased investment. Cable continues to increase audience share and advertising revenue.

And Wall Street is bullish on cable. Not only because the product that you deliver today has become a staple in most American homes, but also because of the potential you have to provide new services to America tomorrow.

That, in my view, is your greatest potential -- to provide wonderful new choice and opportunity for all Americans. Today your industry is poised at the beginning of its digital future -- a future defined by your ability to provide Americans with a wider pipe to pump bits of information into their homes.

And, I hope that today's cable industry, and my chairmanship, are remembered for having ushered in an unprecedented world of choice in entertainment, education, news, information, and services that are delivered into homes across America to improve the quality of life for all Americans. Let's make that our shared legacy.

From my perspective, the terrific thing about where cable is today, and where it is going, is that your path is being fueled largely by competition. Direct broadcast satellites have a digital product; you are developing one too. The telephone companies are racing to bring a high speed Internet access product to the home. And you want to beat them there.

That's the way it's supposed to work. Competition fueling choice.

When Congress passed the Telecommunications Act of 1996, it envisioned a world in which the cable and telephone industries would compete in each others' markets. It hasn't happened as fast as some expected. And not many people thought at that time that the true catalyst for competition would be Internet access. But the race is on.

Now it's not my job to pick who should win this race. My job is to make sure that there is a race, and one in which no competitor is advantaged or disadvantaged by government.

Cable enters this race with some very attractive attributes.

You've got infrastructure. Your fiber and coaxial plant can carry information up to one thousand times faster than simple copper pair.

And you have pioneering companies that have shown how convergence can work. Cox, TCI, Comcast, Time Warner, MediaOne and others are deploying cable modems. Cox and Cablevision are bundling Internet access with cable and telephone service.

And now I hear that you have formed the Cable Broadband Forum to push ahead and get the word out to consumers. This is great news. The cable industry is clearly embracing the future and bringing it to America.

Competition is fueling this investment, but digital technology makes it possible.

I believe that digital conversion is the most important force today in communications. When the history of communications in this last decade of the 20th century is written, it will no doubt be about many of the people in this room.

But it will also be, first and foremost, about digital conversion.

Too often, digital conversion is talked about as a broadcast phenomenon, the assumption being that the digital needs of broadcasters and cable operators are pretty much indistinguishable.

You know that isn't true. Cable is and has been in the forefront of digital conversion. Digital, after all, doesn't only mean sharper pictures. It means new programming. More channels. More services, telephony, Internet access. New services that will make cable even more attractive to today's subscribers and continue to lure new ones.

So what should the role of government be in the transition to digital? It's a question that we grapple with every day at the FCC.

I believe the role of government should be to foster competition and get out of the way. I mean that. So how do we do it?

First, we recognize that there are things that government is not very well equipped to do. Setting detailed technical standards. Micromanaging the programming or services you deliver. Regulation is always a poor substitute for a competitive marketplace. But it is the only solution if the market fails to generate competition, choice and opportunity.

And so we face some critical choices ahead as the industry rolls out digital.

This will not be as simple as the conversion from black and white to color because the conversion to digital involves industries working together. When RCA introduced color TV 45 years ago, the industry was more integrated. RCA provided the equipment, but it also provided the programming that made that equipment attractive.

But today no industry will be able to roll out digital unilaterally. Industries -- competitors -- will have to work together to find technical solutions for things like the set-top box. You will have to work together to propose solutions for things like must-carry. And you will have to find marketing solutions so consumers can easily adapt to the new technologies.

My preference is to allow the market to work these solutions out, but fundamentally, my job is to do everything I can to promote choice and competition. If the industries don't move quickly to reach solutions, then government must step in.

For example, Congress told the FCC to make sure set-top boxes are "commercially available." And so next month I will propose an order to implement this requirement.

I am glad to see that the cable industry is talking to the manufacturing community to work out technical solutions for set-top boxes. And I hope that you do reach a consensus. But you must do so soon -- because time is running out.

That order must not be the end of our journey. As you roll out these boxes, will we at the FCC hear complaints from some who say that the box denies them access to the customer? I hope not. And I hope you will work with us on this point. These boxes must promote choice for the American public.

So here's my message to you on set-top boxes and a lot of other things: the best way to keep us out of your business is to promote choice.

Here's another example: Congress asked the FCC to look at must-carry for the digital world. Here again, I encourage the cable and broadcast industries to work together on the must-carry issues, many of which go to the transition.

But digital broadcasts begin in November, so these issues must be worked out soon. Otherwise, the FCC will have to take the lead.

Of course, these issues become easier to resolve, and the role of government lessened, if there is competition.

So I call on the cable industry to work toward a competitive marketplace.

I call on you to support local signal carriage for DBS.

I call on you to develop set-top boxes that do not disadvantage others who want access to consumers.

I call on you to work with us to craft program access rules that work better. Rules that promote competition without discouraging innovation.

And I call on you to show restraint when it comes to rate increases. Americans should be able to afford these new services. Competition is the key to making this possible.

In my meetings with many of you over the past months, you have told me that you aren't afraid of competition.

I will take you at your word.

When the Commission sought to break open the local telephone marketplace to competition, cable was an ally. You know how to fight to open up markets. Work with me to bring competition to multichannel video markets.

Now, I have watched the explosion in the programming side of this industry. Two hundred programming networks offer subscribers an abundance of programming, for both the general and niche audiences.

Five all-news channels, 24-hour public affairs programming, and bold new networks for children -- like "Noggin" -- offer cable viewers, like me, a wealth of choice.

Cable has changed the way Americans get information and entertainment, and those changes continue.

But cable also has a responsibility.

A responsibility to bring technological advances to America's schoolchildren. I want to thank cable for its enthusiastic support of the FCC's efforts to bring America's school children the benefits of cable, and for your own efforts through Cable in the Classroom and cable's High Speed Education connection -- a pledge to equip one site in every school passed by cable with high speed Internet access. This effort is fundamental to the enrichment of our most important citizens, our children.

Getting our classrooms wired for the 21st century was one of the most important parts of the 1996 Act. In pursuing that statutory goal, I have taken a lot of heat from those who don't want America to make this investment in our kids. Well, I say we can't afford not to invest in our children. And I applaud the cable industry for joining me in that quest.

And I ask you to join me in another quest -- to reach out to the disabled community.

January 1, 2000, is the next deadline as we ramp up our closed captioning requirements, but nobody says you have to wait that long. There are millions of Americans with hearing disabilities who are anxious to get more enjoyment out of cable TV even sooner. They are waiting for you to bring it to them. So I am asking you to accelerate your closed captioning efforts.

And we should not stop there. Video description, for example, would bring television to persons with visual disabilities. You have a great product to share with these folks, and I hope you will do so.

And I cannot speak of responsibility without talking about job opportunities.

The communities you serve are made up of rich and poor, people of all colors, people with disabilities.

You have, more so than others, brought minorities and women into your ranks.

This industry can take pride in the work of the Walter Kaitz Foundation. Since 1981, this foundation has recruited minorities from diverse professional backgrounds and provided them opportunities in the cable industry.

But there is still a long way to go. You know this.

Bob Johnson told me that back when he first founded Black Entertainment Television, he used to come to these conventions and people who didn't even know him would come up and say "Hey, you must be Bob Johnson!" Now, that probably doesn't happen to Bob anymore when he comes here. But you all know that much more should be done to make your industry a better reflection of the communities you serve.

MSOs like Cox, TCI, and Time Warner have assured me that they will continue to expand opportunities for minorities and women. Why do they do this?

Not to please people in Washington. But because it's the right thing to do. It helps them infuse their companies with new talent.

It helps them show their employees that they will be treated fairly.

And it shows the communities in which they operate that they are committed to serving all people.

It's the right thing to do. It's good business.

I commend the commitment these companies have made, and ask others to do the same. And I know that because these commitments are made from the top, they will happen.

Cable celebrates a big birthday this year. Fifty years ago pioneers in the cable industry ran those first cables from mountaintops to remote communities. They started the industry that you celebrate today.

Of course, things have changed.

But no change will be more striking than the changes we'll see in the first few years of the next century.

I am convinced that your industry can be a leader in bringing the richness of broadband technology to America's homes.

I am convinced that this industry can do so in a way that maximizes choice for consumers.

I am convinced that this industry can lead the way in providing opportunity for all Americans.

So I ask you today to join me in working to bring our country choice and opportunity. If we do that, Americans will enjoy the very best that your industry has to offer.

Thank you.

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