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Remarks of William E. Kennard
Chairman, Federal Communications Commission
Georgetown University Law Center Continuing Legal Education Seminar
"The New FCC"
Washington, D.C.
October 1, 1998
(as prepared for delivery)

Good morning.

Today I am going to address the future of the Federal Communications Commission and how we should prepare to face the challenges of competition, digitization and convergence.

The FCC's immediate job is to foster and encourage the transition of the communications industry from a regulated to a competitive environment. In Section 1 of the Communications Act, Congress said it created the Commission "for the purpose of . . . making available to all the people of the United States, without discrimination on the basis of race, color, religion, national origin or sex, a rapid, efficient, Nation-wide and world-wide wire and radio communications service with adequate facilities at reasonable charges, for the purposes of the national defense, [and] for the purpose of promoting safety of life and property through the use of wire and radio communication."

We must faithfully carry out the mandate that Congress gave us for competition, universal service, and efficient spectrum use in a manner that ensures fully competitive markets on a permanent, sustainable basis.

Six Key Responsibilities of the FCC

Let me highlight six key responsibilities as we move to a competitive environment:

1. Eliminate or mitigate bottlenecks and maintain a competitive market structure. The key to a "pro-competitive, deregulatory" communications policy is competition rather than monopoly. We must act to remove bottlenecks where the exercise of market power permits them to appear and we must maintain a competitive market structure. This means establishing interconnection standards for telecommunications technologies where warranted, overseeing compatibility standards, and establishing the obligations, where necessary, of firms to extend services to others.

2. Deregulating communications services when consumers can choose the best combination of price, service and quality for their needs. This is the "de-regulatory" part of the "pro-competitive, deregulatory" approach. This means writing fair rules of competition, eliminating and discarding regulations no longer necessary (like we're doing in the Biennial Review currently underway), and finding sensible ways to regulate non-competitive services that remain -- and having the wisdom to distinguish between the two.

3. Protecting consumers. As we move towards a competitive marketplace and encourage wider entry, we need to acknowledge that not all competitors are scrupulous, and not all means of garnering competitive advantages are fair to consumers, especially those consumers who are used to obtaining telecommunications services from regulated monopolists.

4. Promoting efficient use of the electromagnetic spectrum. Assuring that the spectrum is used efficiently and flexibly, and that those licensed to use it can do so free of unwarranted interference. Promoting efficient use does not, however, mean micromanaging that use. Experience has shown us that broad flexibility for licensees enhances efficient use of the spectrum, and permits licensees and the marketplace to develop the products that consumers want.

5. Strengthening the community. Our communications laws have never reflected only economic efficiency. They have always embraced more: that communications services should be widespread, tie our communities together, and help us build a stronger, more prosperous, and safer world with greater opportunity for all and opportunities for a wide range of voices to be expressed publicly. We must ensure that communications embodies the American values in the law: universal service to promote ubiquitous phone service and economic opportunity for all Americans, including rural areas, classrooms, and rural health centers; access for people with disabilities; spectrum for public safety needs; elimination of market entry barriers for small business and new entrants; and diversity of ownership and employment.

6. Advancing our guiding principles world-wide. Even in 1934, Congress recognized that we needed world-wide communications services. The communications industry is truly global today. As the world leader in communications services and innovation, the U.S. sets the standard for promoting open and competitive markets.

As we fulfill these six critical responsibilities given to us by Congress, our agenda is overflowing. Major action areas include: working to develop a new plan for universal service incorporating high cost as well as access reform; finishing the Telecom Act's assignments such as 271 applications, CALEA, and ensuring that the 54 million Americans with disabilities have access to the tools of the telecommunications revolution. We are also active on other fronts including: ensuring the smooth and efficient transition to digital; reforming broadcast ownership rules; evaluating proposed mergers in the telecom, broadcasting and wireless industries; preparing for the World Radio Conference; and working with all of the world's industries to minimize the impact of the Y2K problem.

This agenda requires that the New FCC be smarter, more innovative, more business-like, and more functional, all this while our workload is increasing and our staff size remains constant.

We must change while moving forward at top speed. It's like redesigning a fully-loaded 747 while still in the air. And while some thought back in 1996 that implementing the Telecom Act would just be a short commuter flight, we all now know that we must go cross-country.


In a fast-moving marketplace, the FCC has to find ways to facilitate solutions and provide guidance to industries and the public without burdening the marketplace or engaging in lengthy, ponderous procedures. We must learn to solve problems differently and to work smarter.

We have done this by hiring a chief economist and increasing economics resources throughout the agency. However economics isn't the only discipline that we need to be smart about in this new world of converging and competing technologies. We also need to be smart about technology, where it's headed, and what the implications are for markets, competition, and consumers.

In order to meet this challenge, I brought in Dale Hatfield as our Chief Techologist who is now overseeing our Office of Engineering and Technology which contains some of the best spectrum engineers in the world. We've also attracted some of the best network technical talent anywhere from universities and worldclass operations such as Bellcore.

But in this dynamic field, in house talent, no matter how good, is not enough. We need to work with the smartest and brightest people in industry and academia to stay ahead of the curve to help us avoid outmoded technological assumptions as well as avoid falling into the trap of believing the false promises of vaporware.

Therefore, building on a recommendation of the FCBA, today I am pleased to announce the formation of a Technical Advisory Committee, which will be headed by Dale Hatfield. This advisory committee, which will include members from industry, academia, and government, will provide technical advice to the Commission on innovations in the communications industry.


In order to work smarter, we're finding ways to innovate. Let me give you some examples. Recently the Commission oversaw the development of voluntary telecommunications industry "best practices" guidelines to address the consumer problem called "cramming." We brokered an agreement between the wireless industry and state and local governments to address communications tower siting moratoria. We have called upon the cable and consumer electronics industries to develop a marketplace solution on digital TV set-top box standards. The lesson is: a business solution to a business problem is always better than a regulatory solution to a business problem.


Speaking of being more business-like, we're investing in new technology to do our job faster, cheaper, and in a more consumer friendly way with new processes you've asked for such as the electronic filing and the Wireless Telecommunications Bureau's Universal Licensing System. With Universal Wireless Licensing we have fundamentally changed the way the Commission receives and processes wireless applications. It collapses 40 forms into four; allows licensees to modify online only those portions of the license that need to be modified without resubmitting a new application; advises you when you have filled out the application improperly by immediately notifying you electronically; and has allowed us to save the public over 700,000 hours of paperwork for FCC filings in the next fiscal year alone.

Universal Wireless Licensing is an example of how we are working to change the relationship between the FCC, spectrum licensees, and the public by increasing the accessibility of information and speeding the licensing process, and thus competitive entry, dramatically. And consider what else happens -- with commercial broadcast station auctions and the deployment of other new spectrum-based services, the Wireless Telecommunications Bureau can increasingly become the model for automated licensing for the entire agency.


New technology and processes are not enough for a 21st century FCC. Industry convergence and competition just will not allow us to continue to function as we have for more than 60 years. In some ways, the Communications Act of 1934 actually is at least three separate Acts stapled together -- portions of the 1887 Interstate Commerce Act, the 1927 Federal Radio Act, and the 1984 Cable Television Act. Of course there have been amendments to what became Titles II, III, and VI in the Communications Act over the years, most importantly in 1992 and 1996, but fundamentally, we're living with a law dating back to as early as 1887.

When wireless carriers compete with wireline carriers, when cable companies provide telephone service, when broadcasters transmit data, when you can use fixed microwave licenses to transmit video or data, and when you can make a local telephone call via a satellite, the world has changed. Over time, we're going to have to change, too.

The reality of convergence requires us to think broadly about how we should look and how we should operate in the 21st century. We need to begin to reorganize ourselves along the functional lines that make more sense in a world in which consumers and service providers no longer see distinct markets organized along traditional industry boundaries.

While the Bureau and Office structure that originated in 1934 makes little sense in an era of convergence and inevitably and the Commission must reorganize itself along functional lines, we cannot rebuild the overloaded plane in flight by taking off two wings and the tail and moving the parts around before landing. The responsibilities given to us by Congress on behalf of the American people cannot be disrupted, but it is clear that we need to change our structure to become a 21st century agency.

While adjusting to the blurring boundaries of convergence, we also are faced with new challenges created by competition. The good news is that competition is growing, bringing enormous benefits to consumers. But, as in virtually every other competitive market, consumers' needs for information and protection from unscrupulous firms are increasing in our corner of the world.

In light of both the demands of convergence and increased consumer needs, I am announcing today that we plan to consolidate the Commission's consumer protection and information functions that are now spread across the agency into an Enforcement Bureau and a Public Information Bureau. These two functions -- providing swift and effective enforcement to protect consumers and competition and providing consumers with information about their rights in a competitive environment -- are even more critical in a competitive world.

Everyone knows -- whether in business or in government -- that the talent and dedication of your people make or break your organization. We can't do the job I have described without a top-flight staff. Over 220 people, ten percent of our staff, have left the agency since the first of the year -- most for better offers. To attract good people we have to support them. And to change the mix of personnel in response to workload demand we need private sector management tools like buyouts and early out authority.

Today is the first day of the new fiscal year. We're working smarter. We're more innovative. We're more business-like. And we're more functional. We have fewer rules and processes today than we did a year ago. We're working with Congress and following its mandates. And, most importantly, we're headed in the right direction.

The Mission: A Strong, Independent Agency Respected Around the World

The FCC is a strong independent agency respected around the world. This is driven home to me whenever I meet with my counterparts from governments around the world. I am struck by their interest in this agency. Why? Think about the WTO Agreement on Basic Telecommunications Services. Our country was the driving force behind the WTO. The core of that treaty is a strong, independent, and impartial arbiter. That's what the FCC stands for around the world. Whatever changes we make, we must preserve this core value.

And you, perhaps more than any other audience I speak with, should ensure that we have the resources and the wherewithal to do our job.

We are granting more licenses, we are authorizing more service, and having to approve more major mergers than any Commission in history. We also are confronted with consumer complaints such as cramming, slamming, and protecting information about consumers. And we are doing this with no additional staff and a real reduction in our budget. In reality, we are doing more with less.

So let us work together to build a new FCC. The two initiatives I've announced today -- reorganizing the Commission's consumer functions of enforcement and public information and creating a new advisory committee of leading technologists -- are significant first steps in building an FCC for the 21st century.

At the end of the day you need intelligent, impartial, and thoughtful people to give your client a fair hearing. That's what the FCC stands for. That is who the employees of the FCC are. They are an outstanding group of women and men. I appreciate them and am very proud of their outstanding work. I know it is because of them that we will accomplish our mission of serving the American people.

Thank you. And I look forward to continuing our work together.