William E. Kennard
Chairman, Federal Communications Commission
NARUC Winter Meeting
February 23, 1999
(as prepared for delivery)
Thank you, Bob, for that generous introduction.
And let me thank you for your friendship and your leadership on telecom issues. I feel very fortunate that my tenure as Chairman coincided with your service as Chairman of NARUC's Communications Committee. You have been a consistent voice of reason, good advice and good friendship.
I also want to thank Jim Sullivan, Nora Mead-Brownell, and Peggy Welsh for inviting me to speak with you today. You may not know this, but last week was Peggy's second anniversary as executive director of NARUC.
Let me tell you, over the past two years, Peggy has done an extraordinary job working with NARUC members and with the FCC. She, and the entire NARUC leadership, have worked hard to forge a relationship with the FCC that is open and productive. Thanks, Peggy, and congratulations.
Well, the FCC finally moved into its new offices at the Portals Building in Southwest Washington. I can look out the window at the Portals and see in the distance the Jefferson Memorial. And sometimes, I have found myself thinking about Jefferson and how much times have changed since his times. But also, how many of his words ring so true today.
Jefferson believed that government was strong when every person felt himself a part of government.
I believe that our government is strong because men and women like you are in public service. With your commitment, with your work on behalf of average, hard-working Americans, I have no doubt that the citizens in your states feel a part of their government.
We are all fortunate to be in public service and in the telecommunications sector during this time, one of the most exciting and challenging times in the history of telecommunications. It is a time marked by incredible achievements and full of immense potential.
Like you, I feel enormously privileged to be involved with the telecom industry now as we begin these historic transformations from an analog age to a digital one; from a world of monopoly to a world of competition; and from an era of basic services to an era of convergence.
This technological transformation began in our nation's labs and universities. It began with the hard work and vision of people willing to take risks on new ideas and new technologies. And it began because government created the opportunities for scientists and entrepreneurs to take these chances.
Indeed, our contribution to this communications revolution has been our privilege, our responsibility to follow through on the wishes of Congress in implementing the Telecommunications Act of 1996.
In drafting this bill, the foundational document for the competitive, high-tech world to come, Congress reached back to one our oldest values: choice.
Already, after three years, we have seen its results. Since the passage of the Telecom Act, the communications sector of our economy has grown by over $140 billion. Stock values are up and rising.
The revenues of new local service providers more than doubled in 1997, and they jumped again in 1998. And this growth has meant new jobs for approximately 25,000 more Americans in the first year of the Act alone.
One-fourth of our country's economic growth - the longest peacetime expansion of our economy in history -- has come from the information technology sector. This growth has touched the lives of almost every American. Now, average American families across this nation have a choice of a vast array of high-tech communications services, services that now cost less.
Taking a call while driving to work or at a ballgame is the norm today for the over 60 million Americans who now have mobile phones. And they use those phones to make calls that cost 40 percent less than three years ago.
Calling friends and family across this nation has gotten cheaper and cheaper as the choice of providers has risen and the market has moved from monopoly to competition.
Sending an instant message to a relative half way around the world is routine for the 25 million households now on-line.
And as more and more Americans go on-line, so has American commerce. In 1998, 26% of retailers had a website, over three times the number in 1996, and it is estimated that they did over $10 billion in sales.
It is no surprise, then, that last year, for the first time, data traffic eclipsed voice traffic on phone lines.
The telecom market is changing, changing fast, and changing for the better. What we are living through is truly revolutionary.
But, as with any monumental, transforming event, there are differences of opinion about how things should end up and what role each of us should play. In this case, sometimes our differences have mired us in litigation and distracted us from our real job - serving the American people.
For the most part, our differences have not been about where we should end up, but only about how to get there. I feel confident -- more confident today that ever before -- that we all deeply share a common bond, borne of our common goal of serving the American people. Our common goal is to serve the American people by fulfilling Congress' goal to bring competition to telecommunications, while preserving our long cherished goals of universal service.
We've had our differences about how to get there. But the common goal has always been there.
In the wake of last month's Supreme Court decision, it's time to link arms once again and reaffirm our commitment to work together to achieve that goal.
It's time for us to make sure that consumers, not lawyers, shape the telecom marketplace. It's time to tell the competitors to take their efforts out of the courtroom and into the marketplace. It's time to move on.
Now, the Supreme Court's decision leaves some issues that need clarification, including the interpretation of which network elements must be made available to competitors.
We must not allow this remand - what I consider a temporary bump in the road -- to slow our progress toward competition.
That is why I was so pleased that the regional Bell operating companies and GTE have agreed to fulfill their current obligations - as set forth in inter-connection agreements - to provide unbundled network elements while the FCC revisits this key provision of the Act.
This is the good faith needed for all of us to move forward to a competitive marketplace.
You know, I am always struck by the fact the Telecom Act of 1996 mandates cooperation as a prerequisite to competition. Incumbents must cooperate with new entrants on issues like interconnection and colocation. And, most importantly, state regulators must work with federal regulators.
Now, unfortunately, there have been reports of some companies not operating in good faith and shutting out competitors. We cannot tolerate it. We cannot hope to implement this Act if we allow any competitor to be unjustly shut out of the marketplace.
Congress called upon us, independent regulators, to write the rules to open markets to competition -- and to enforce those rules. Disputes will arise, and when they do, we have to enforce the rules.
That is why we have designated Bob Atkinson, our new Deputy Chief of the Common Carrier Bureau, to act as a liaison between the Regional Bell Operating Companies and their new competitors so that we can have an early intervention system to avoid lengthy proceedings and litigation.
That is why, over the past year, the Commission's Enforcement Division has already resolved more than 50 disputes through mediation and other informal processes. If disputes arise in the aftermath of the Supreme Court's decision, we will bring the parties together and handle them quickly.
And if we can't settle the case, we have our new "rocket docket" to end the disagreement quickly, and keep moving ahead.
Resolving these disputes in the marketplace is one of the immediate challenges left in the wake of the recent Supreme Court decision.
Another is to make sure that we are resolving the uncertain issues between us -- the states and the FCC -- left in the wake of the Supreme Court's decision.
I have heard the concerns of many states about our rules on both intra-LATA dialing parity and geographic de-averaging of the rates for unbundled network elements. I appreciate your concerns about having a reasonable transition.
So we are seriously considering an order that will establish a reasonable timeframe for you to comply with these rules.
But let me be very clear here. We are not backing away from our support for de-averaging. This is a central tenet of our competition policy. But your request that we grant a temporary extension to coordinate our efforts is a reasonable one which I can support.
We also intend to work closely with the states on the pricing issue. On this issue, while the lawyers fought it out in the appellate courts for three years, federal and state regulators quietly coalesced around pricing rules that are substantially similar in approach and procompetitive. Let's not forget that this is one of our major successes in working together to implement this Act.
There is more work to be done here. But I am confident that we will be able to put in place a process to review the various states' approaches by the summer NARUC meetings.
And while the lawyers fought it out in the appellate courts, many states rolled up their sleeves and did the hard work required under Section 271 of the Act. State regulators in New York, Texas, and Georgia are taking the lead, doing the heavy lifting, determining what must happen before consumers can get real choice in local phone service. These states are performing a real service for the rest of the country.
We can accomplish so much more for the American people as allies than as adversaries. I think that we have proven that in the past year.
And we have so much more to do. In the coming months, we will address universal service reform for non-rural companies. We will need your continued help on this.
We will need your help as we tackle the myriad consumer protection issues that are becoming so urgent as more companies compete for consumer dollars. Issues such as slamming and cramming, and "truth-in-billing," the FCC's shorthand for adequate disclosures of charges on consumer bills.
In the wireless area, we will address the issue of calling party pays. We must implement provisions in the Act to ensure that disabled Americans have access to telecommunications services.
And the Y2K problem is upon us all. I need you to work with Commissioner Michael Powell who is leading the FCC's efforts on this. Please work with him and the companies in your states to get ready.
And finally, we must always stay focused on the future -- the challenge to bring high-speed Internet access to all Americans.
I believe that the Internet -- now in its infancy -- will rival the Gutenberg press in transforming the dissemination of information on our planet.
It is a force that is changing how we work, shop, play, live, and learn. It is the foundation upon which our current and future prosperity is based. In its wires and web pages lie the future of our country and endless opportunities for its citizens.
As those who care deeply about our nation's networks, we have a great responsibility. It is our duty to make sure that all Americans - those in cities as well in the countryside, the young as well as the old, and those with every advantage and those with special needs - have high-speed access to the Internet.
If we fail to live up to this challenge, we will have failed all of those who are shut out from the economic opportunities of the 'Net and shut out from our national network and community. We will have failed the public who all of us have sworn to serve.
But I am optimistic. I do not believe that we will fail to live up to this or any of the challenges before us.
For one, we have the best framework for growth and innovation in the world.
And two, we have able and dedicated people in government overseeing it.
If we continue to work together, states and the federal government, agencies and industry, industry and consumer groups, we will accomplish much for the American people.
I am sure that we will be able to bring choice and opportunity to the people we serve. And I am sure that, working together, we will ensure that our country remains the world's leader in the Information Age.