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MARCH 4, 1997


"Progress in the Year of the Rat and

What's Hot in the Year of the Ox"

Welcome to my city -- "Baghdad by the Bay." Are we having fun yet?! While you're here, I hope you hop onto the cable cars and stroll across the Golden Gate Bridge for the view. If you are "into" cell sites, you can take the ferry to Alcatraz Island where you can see a unique kind of "cell site." Don't get locked in!! The FCC may not "bail" you out!

I also recommend you visit Chinatown. One tip: Don't mistake the touristy Grant Avenue for Chinatown. Instead, explore the narrow side streets and the back alleys, where you will find a fascinating community. For example, on Stockton Street, Chinatown's residents shop for the freshest Asian vegetables, live poultry, and seafood so fresh, it's still swimming!

Well, I confess that Chinatown is on my mind not just because we are in San Francisco, but because I was told by CTIA that 1997 was dubbed the "Year of Deployment" by many PCS licensees who will roll out their services. The "Year of Deployment" has a real Chinese sound to it.

You see, a few weeks ago here in Chinatown, the Chinese community celebrated the Year of the Rat, and celebrated the arrival of the Year of the Ox. If you are confused, let me fill you in on Chinese astrology.

Once upon a time, Buddha felt that the Chinese people were too widely scattered and in need of organization. On Chinese New Year, Buddha called all of the kingdom's animals together for a meeting, but only 12 beasts arrived. These beasts were the aggressive Rat, the hardworking Ox, the smiling Tiger, the cautious Rabbit, the impressive Dragon, the wise Snake, the gifted Horse, the artistic Goat, the merry Monkey, the proud Rooster, the faithful Dog and the meticulous Boar.

Buddha decided to honor these twelve animals for coming -- which just goes to show you can get pretty far in life by just showing up! Buddha gave each animal a year of its own, bestowing the nature and characteristics of that animal to those born in that particular year.

Suppose your company started up last year, 1996. That was the Year of the Rat. As a Rat, you are charming and aggressive, with a weakness for partying. Don't despair for your bottom line, however! Rats are very frugal, with a love for money. Rats are ambitious, and like to invent things, so maybe you can make some money that way.

This year is the Year of the Ox. According to Chinese astrology charts, this year is characterized by endurance. If your company is born in 1997, you will be bright, stubborn, and have strong ideas. But Wall Street needn't worry. Oxes achieve prosperity through hard work, persistence and patience.

If your start up is planned for 1998, your company will be born in the Year of the Tiger. Tigers have an adventurous streak, seeking out new challenges (perhaps in the local loop?), and approaching them with optimism. Tigers are courageous, sensitive and persistent. Now that you have some familiarity with the Chinese calendar, I wanted to highlight what the FCC accomplished in the Year of the Rat. I will then share what I think is hot for your industry in this Year of the Ox. And at the end of my speech, you will probably know that I was born in 1959, the Year of the Boar!


In the Year of the Rat, the FCC made tremendous progress on issues your industry cares about. We scurried to implement the 1996 Act in a way that will let competition reign in all telecom markets.

We put in place number portability rules in order to promote increased service provider choice for consumers.

We gave you an opportunity to receive support should you elect to provide universal service.

We delivered new opportunities to compete in the wireless industry, finishing the PCS and cellular unserved auctions.

We have heard your concern about the trend of local barriers to market entry, and have begun interpreting and enforcing the preemption section of the new Act, Section 253.

On siting issues, we completed our RF emissions order, and aggressively reached out to localities on siting issues.

In a September Notice of Inquiry, we took an important first step to providing access to telecommunications services and equipment to those with disabilities.

This year, the FCC intends to finish work on implementation of the 1996 Act. At yesterday's opening session, Dennis Strigl had it right when he said that "competition" is the word of the year. We plan to issue procompetitive decisions on universal service, number portability, and access charges.

I am focusing not just on getting the decisions out, but also on how they get implemented. I was distressed that yesterday, the CEO of Sprint PCS gave the FCC a low score for following through with its decisions. I want to improve that score.

We also plan to adopt more uniform rules for conducting auctions and will put more spectrum on the block for services like Wireless Communications Service, 220 MHz, paging, LMDS (Local Multipoint Distribution Service), 39 GHz, and 800 MHz.

We also would like to harmonize spectrum policies in our Unlicensed Wireless Services, address public safety spectrum needs, look at whether spectrum caps are still necessary, and consider our current construction requirements for wireless service licensees.

As you can see, the Commission has been a real Tiger on your issues. Michele Farquhar and her Wireless Bureau have pounced on issues and resolved them swiftly. I salute our Wireless Staff, who are indeed "wireless and tireless." I join the Chairman in thanking Michele for her outstanding job as Bureau Chief.

The FCC in the Year of the Rat

Let me now delve into a few of our beastly dockets. 1996 -- the Year of the Rat -- got off to an unusual start. Within the first five weeks, there was a government furlough, a blizzard, and then the passage of the historic Telecommunications Act.

Chinese astrologists tell us that the Year of the Rat is often a fast paced one, in which people are industrious and hardworking. This was an apt description of the Commission in 1996, as we worked furiously to implement the Act.


Our August interconnection order was the first major order we put out. It was 700 plus pages long, which means it can do double duty as a door stop.

All kidding aside, our hefty interconnection decision is a weighty one for your industry. This decision established a whole new regime of how your companies will interconnect with the local telephone network.

When crafting our interconnection rules, I fought hard to ensure that the FCC retained authority under Section 332 as to LEC-CMRS interconnection. I took this position because in my view, Congress created a national regulatory framework for CMRS providers in 1992. Congress was rightly concerned that imposing multiple state regulatory regimes on CMRS providers would be burdensome and inhibit the industry's growth.

I also worked to ensure that wireless providers had some key interconnection rights including: (1) the right to reciprocal and symmetrical compensation; (2) the right to reasonable, non-discriminatory rates; (3) the right to wide area interconnection; (4) the right to renegotiate certain existing agreements; and (5) the right to stop paying LECs for calls that originate on the landline network.

We also tried to establish some interim proxy rates for interconnection. Unfortunately, the pricing portion of our decision was stayed by the 8th Circuit court.

As one speaker pointed out yesterday, however, FCC decisions are one thing; marketplace reality is another. I know that despite our clear rules and our best intentions, wireless providers are having a hard time getting all of the LECs to comply with the unstayed portions of the decision.

For example, I have heard that some LECs are refusing to give wireless providers interconnection rates that have been approved in state arbitration proceedings for other carriers.

Others have told me that some LECs are refusing to pay symmetrical rates for interconnection. Several paging providers have reported that LECs are threatening to terminate interconnection arrangements unless they agree to pay to terminate traffic that originates on the LEC networks. They also said some LECs are refusing to negotiate with paging carriers in earnest.

I believe that this type of behavior violates our new interconnection rules, and that swift enforcement is warranted. If you have serious problems with your interconnection negotiations, let us know and we will do what we can to help.

Just yesterday, for example, the Common Carrier Bureau issued a letter clarifying that LECs cannot charge any CMRS providers, including paging providers, for traffic that originates on the LEC's system.

One last word: I've noted a disturbing trend which is the increasing litigation related to interconnection. Of course, all players have a right to seek judicial review of regulatory decisions. However, I share Chairman Tauzin's concern that litigation in fact delays the benefits of competition to consumers and may result in a patchwork quilt of legal interpretations.

Universal Service

The next major decision we tackled was our reform of the nation's universal service rules. A Federal-State Joint Board put out a recommended decision in November, with a final universal service decision due out by the FCC this May.

As to the Recommended Decision, I wanted to highlight a few key points that were critical to my support and important to your industry:

First, the Joint Board sought to make sure that our new rules would not discriminate in favor of an incumbent or competitive service provider or any particular technology.

Second, the Joint Board added as a guiding principle, the notion of competitive and technological neutrality. In other words, eligible telecom carriers -- regardless of their technology -- will be able to provide universal service and receive support. You can do this either as a local loop provider or as a service provider to schools, libraries, and rural health care providers.

This is important because the new law makes clear that all telecommunications carriers will be required to pay into the universal service fund -- including wireless carriers.

Now for the not so good news from your point of view. The Joint Board found that Section 332(c) does not preclude states from requiring CMRS providers to contribute to any state universal service support mechanism.

For those of you who envision getting into the local loop, I urge you to get involved in our current proxy model debate. I want to know your perspective on whether the proxy models accurately identify high cost areas. Will they provide sufficient universal service support to encourage competitive entry into these areas?

I believe that wireless carriers have a great opportunity to serve Americans as universal service providers. I urge you to be as aggressive as a Dragon when it comes to applying your technology to universal service markets.

Siting and RF Emissions

Now, on to the ever popular topic of cell siting. I hope that Section 704 has made siting faster and less controversial, especially the part that preempted local regulation of RF emissions.

In August, the FCC adopted new RF emissions guidelines based on limits in the ANSI/IEEE 1992 standard and the NCRP 1986 report. Although I had some concern about this hybrid approach, the good thing about our guidelines is that they command the broad support of federal agencies charged with the protection of the public health.

As is the case with any new law, there have been lots of questions about how Section 704 should be interpreted. To help resolve some of these issues, we formed a

Wireless Facilities Siting Task Force. Our Task Force has been aggressively reaching out to local agencies. They have been educating them through live forums, informal guidance letters, and siting Fact Sheets.

The staff also recently put out a public notice seeking comment on a CTIA petition requesting a declaratory ruling regarding cell site moratoria. Chairman Hundt sent out a letter to 33 cities highlighting the FCC's concern about the impact of moratoria. The Chairman asked why the moratoria were imposed. We hope putting the spotlight on this issue will help stem the tide of moratoria and get your sites up faster.

Preemption Petitions

Along a similar line, 1996 was also a year in which the Commission dealt with 12 preemption petitions. The petitions run the gamut from taxes to local franchising requirements. The common thread among them is that they allege that the state or local law in question constitutes entry regulation or a barrier to entry.

Let me give you a few examples. One petition challenges an Oregon State property tax assessment on a PCS license. Another involves Minnesota city ordinances that require CMRS providers to obtain a local franchise in order to use the public rights-of-way. Another involves whether the government of Guam may prevent the incumbent telephone provider from bidding on PCS licenses in the Northern Mariana Islands.

I'm quite troubled by this trend of state action that may inhibit wireless licensees from providing service. The law clearly says that states and local governments cannot regulate the rates or entry of CMRS providers. This type of state regulation was expressly preempted by Congress in Sections 332 and 253 of the Act.

We have already issued two preemption decisions, one in the Classic case and one in the New England Payphone case. You can see that we are committed to eliminating entry barriers where they exist.

E-911 and N11

Also in June of last year, the FCC adopted rules to govern the availability of basic 911 services and the implementation of enhanced 911 -- or E-911 -- for wireless services. I thought these new rules were important, because I know that many people, like those Cautious Rabbit types, buy wireless phones for security reasons. Moreover, when Americans dial 911 in an emergency, they expect help to be sent.

The goal of our order was to make it even easier for subscribers to dial 911 on their wireless phones. In addition, we wanted the public safety agencies to automatically receive the callers' phone number and location.

The call back and location information will make it much easier for emergency assistance providers to save lives and safeguard property. This is important because, as we heard yesterday from Dr. Martinez of the National Highway Traffic Safety Administration, the faster the response time, the better the outcome.

I understand that the technology is there for E-911 to be a reality. The trials have been very successful. What is critical, however, is ensuring that carriers and industry agree on standards and protocols.

I recognize that wireless providers will incur costs serving some non-subscribers under this regime. This is why I insisted that cost recovery mechanisms be established at the state and local level. I congratulate your industry and the public safety community for working together on this important issue.

I also wanted to briefly mention our recent N11 code order. To ease congestion of calls to 911 emergency services, the FCC has set aside the "311" code as a non-emergency number.

I'm told that 911 is not congested in all places, but having said that, the public safety folks tell me that people call 911 for things like directions to the baseball stadium, getting cats down from trees, and, believe it or not, instructions on how to cook a Thanksgiving turkey!

I think establishing an easy to remember non-emergency number is a terrific idea, because when people call 911, we want those calls to go through right away. However, because 311 is a non-emergency number, wireless carriers don't have the same obligations for 311 calls that they do for 911 calls.

I hope your industry will get involved in the outreach and education of the public about the new 311 code if it is activated in your service area. And I ask any members of the media to also help get the word out to the community.

What's Hot in the Year of the Ox

Okay, let's move now to what I think is going to be hot at the FCC this year, the Year of the Ox. Luckily, Ox years are characterized by endurance. Given the heavy work piled on the FCC's cart this year, we are going to need an Ox's strength to pull steadily ahead and complete our work.

Cellular Privacy

In 1997, the cellular industry may have had its ox gored a little by Congress. The Year of the Ox started off with the spotlight being put on the cellular industry on privacy

issues. Last month, the House Subcommittee on Communications held a hearing to alert Americans to the problem of cellular eavesdropping.

In the hearing room, it was shown how quickly and easily an FCC-certified scanner may be modified to scan cellular frequencies. Through the course of the hearing, it became apparent that the Commission needs to be more aggressive in enforcing our scanner regulations. Also, it became clear that the roles of the FCC and the Department of Justice need to be rationalized to make enforcement easier and swifter.

I hope that the attention that this issue received has caused the cellular industry to commit to better educate the public about privacy issues. At the FCC, we have committed to work to better prevent illegal modifications to scanners through our type acceptance process, and to step up our enforcement procedures. Last week, we issued a notice warning the public against modifying or advertising the modification of scanning receivers in order to eavesdrop on cellular telephone calls.

Driving Risks of Mobile Phones

Another potential hot issue for your industry stems from media attention on a recent Canadian study. That study found that drivers who used car phones were four times more likely to have accidents.

In light of this study, I would like to ask the industry to step up your public education efforts about safe driving habits. Stressing the risks involved and the availability of hands free technology would be helpful. I do recognize, however, what a benefit mobile phone users have been for law enforcement officials. They often aid the highway patrol in reporting accidents and reporting road hazards.

CMRS Spectrum Caps

On another topic, the FCC is considering amending its 45 MHz spectrum cap. The cap currently applies only to broadband PCS, cellular and SMR licensees who are classified as CMRS providers. We have proposed to apply the cap to all licenses in these services, regardless of whether the licensee is classified as a CMRS or Private Mobile Radio Service.

I recently have raised the issue of whether we ought to retain the CMRS spectrum cap at all, given the increased competition in the wireless marketplace. I've talked with the Bureau and they tell me there is something in the works that may address this issue. I'd be interested in hearing your thoughts.

Public Safety

Another hot topic this year at the Commission is Public Safety. We have received a detailed report from the Public Safety Wireless Advisory Committee with many good recommendations. It is now the FCC's turn to act.

I have personally put public safety towards the top of my priority list. I want to ensure that the public safety community and those private users who operate in a quasi-public fashion have the spectrum they need to deliver the very reliable communications that are necessary to save lives and protect property. I have encouraged our staff to act expeditiously on this docket, and I hope they will.

Spectrum Policy

I also think spectrum policy issues will be very hot, both at the FCC and up on the Hill. For one thing, the Commission held a spectrum en banc hearing about a year ago. It's high time that we put together a comprehensive spectrum policy statement that we all agree on that will help guide us as we move forward.

The truth is that we have been doing spectrum policy on an ad hoc basis, and I think a more consistent approach is warranted. One of our main jobs as a Commission is to manage the spectrum in the public interest. Like Commissioner Ness, I am confident that if we work together, we can put forward a sensible policy.

I know that many of you have some concerns about some of our recent spectrum management policy decisions. Commissioner Ness addressed a number of these concerns in her speech yesterday. Since she and I are in general agreement about spectrum management, I don't need to repeat what she said. However, let me make three points that I hope will provide some assurance.

First, I know some of you who bought spectrum in our recent auctions are worried that the FCC has been struck with "Auction Fever" and that we are putting too much wireless spectrum -- for example, WCS -- on the market too fast. I share Chairman Tauzin's concerns that if we keep making spectrum available, we might impede the orderly deployment of services we have already licensed.

Second, although I believe that auctions are an effective licensing method, they don't make sense for all services. I highlight the fact that Congress has carefully excluded some services from auctions, for example, private, public safety, and broadcasting. While auctions are beneficial as a licensing device, they are not a replacement for good spectrum management.

Third, from my point of view, WCS was an anomaly. I know that CTIA and many manufacturers argued that not defining a specific service would slow development of new technology, raise equipment costs, and discourage manufacturer investment.

The only reason I agreed to such a flexible allocation for WCS was because of the statutory deadlines under which we were operating. In that short time period, we did not have the luxury of time to decide which service would best serve the public interest.


You can see that the Years of the Rat and the Ox have seen the FCC working hard on your issues, and not monkeying around. Like the meticulous Boar, we are rutting through the issues with care.

So good luck in the Year of the Ox. As they say in Chinatown: Gung Hay Fat Choy, or Happy New Year!