Text Version


December 16, 1997

Tysons Corner, VA

I. Consumers love information. All consumers: rich, poor, consumers under all circumstances.

President Reagan used to tell the following story which illustrates the importance of information to consumers.

In the former Soviet Union, people worked very hard and earned very little money. Even when they earned some money, they would have to wait in endless lines to spend it. One of the most expensive items to purchase was a car. It represented years worth of labor.

The story goes that a worker waited for days in a line to purchase a car. He got to the front of the line, plopped down several billion rubles and signed up for a car.

The Soviet bureaucrat looked at the poor worker, at his papers and his life time earnings, and he smiled: "Comrade, come back here in ten years, and your car will be ready for you."

The poor Soviet worker looked concerned. He said: "Will the car be ready in the morning or the evening?"

The bureaucrat responded: "Comrade, what difference does it make? It is ten years from now."

The poor worker said simply, "I hope that it is in the afternoon. You see, the plumber is coming in the morning."

Even in Soviet Russia, consumers valued information, and they did not want government workers to hide information from them.

Information is even more valuable in a competitive market. American consumers billions of dollars annually to purchase information simply to learn more about the products and services that are available in the market. And advertisers and marketers spend tens of billions of dollars to get their message to the American public.

Americans love to know how much different goods and services cost and how much they can save by comparison shopping.

And they want to know how much they pay in taxes and fees and charges set up by the government.

Walk into any store in America and purchase any item and you will receive a receipt with the price of the purchased item and an itemization of the government-mandated fees and taxes paid that are directly attributable to the purchase.

It is transparent. There you have a receipt of your purchases and how much you paid in taxes. That is how competitive work. That is how consumers insist that competitive markets work. Consumers would rebel if a business stated the price of a product was 95 cents but ended up costing a dollar becuase of otherwise hidden taxes.

If only telephone bills were like the receipts in a competitive market. Take a good hard look at your telephone bill the next time you pay it. Sure, some government-mandated charges are listed, such as the subscriber line charge. But not all charges.

Where are the government-approved access charges that you pay for each long-distance call? Not listed.

Where will the new government-approved universal service fees for each service be? Not listed.

In the telephone business, unlisted numbers used to mean a seven- digit number that could not be distributed without the consent of the subscriber.

Today, unlisted numbers have a new meaning. They include the costs that subscribers never see for access charges and other government-approved charges.

In a world of pure monopolies, these unlisted numbers do not matter.

In a world of pure monopolies, the consumer has no choice but to pay the bill. Take it or leave it.

But in a competitive world, consumers can use more information. They want to see those unlisted numbers. If they think access charges are too high, perhaps they can find a competitor who will charge less. Or they can insist on paying less.

That is how competitive markets work. Let the consumer have as much information as possible.

But that is not how regulators always work. Sometimes they suggest that you keep consumers in the dark. Don't tell them how much their accesss charges are. Don't tell them about this charge and that charge. Just keep them in the dark.

But that is not how consumers see the picture. A hidden charge here. A hidden charge there. And pretty soon you are talking about real money.

It doesn't have to be millions or billions to be real money. To consumers, it is real money if it belongs to them.

And it is lost money if it is taken away.

No consumer likes to lose his or her money.

Especially in taxes and charges.

Especially in taxes and charges they do not know about.

Especially when the taxes and charges were expressly hidden by the government.

II. Consumers can go to businesses rather than to the government

In the old world of the Soviet Union, consumers had to go to the government to receive the most basic of goods and services, whether food or cars, plumbing or telephone service. There was little if any direct linkage between consumers and businesses.

The 1996 Act represents a paradigm shift among 3 important elements in the market: consumers, businesses, and the government. Under the old paradigm, government told businesses how to run their business, which customers they could serve and which they could not.

which services they could offer, and which they could not.

which territories they could serve, and which they could not.

And innovation.

Forget it. Wait in line.

Under the old paradigm, government also told consumers how to run their lives, which businesses they could purchase from, and which they could not.

And new services.

Forget it. Wait in line.

Under the old way of thinking, consumers and businesses served at the will of government, and not vice versa.

Under the Telecommunications Act of 1996, the old way of thinking vanishes.

The government no longer tells businesses what they can do.

The government no longer tells consumers what they can do.

Freed from the constraints of government regulation, business looks for guidance to the most important people in the world:the American consumers.

Under the Telecomm Act, it is consumers who say which services they want and where they want them.

Under the Telecomm Act, it is consumers in the market, not regulators, who set prices.

Under the Telecomm Act, it is consumers in the market, not regulators, who say what new services they want and how much they are willing to pay for them.

And it is businesses, not regulators, who discover the new innovations of technology.

Under the Telecomm Act, it is consumers, not regulators who are sovereign.

Consumers rule. It is their interest that is served. It is their wishes that are filled. And that is the way that it ought to be.

The 20th Century has witnessed a struggle between two forms of government. In one, the driving motivation was that supply created demand. Governments regulated supply, and consumers would follow. In the other, demand created supply. Mighty armies, mighty dictators, and mighty tyrrants have all cast their lot with the former approach to government. They have all lost.

III. For more than 6 decades, the Communications Act has been infused with a famous two-word concept: public interest. For many of those decades, public interest has been interpreted to mean carte blanche for the government to intervene.

It had no basis in clearly and demonstrably looking after the interest of the consumer. I believe that that needs to change.

I believe that the public interest is the consumer interest. And I beleive that it is best fulfilled in free and competitive markets. That is where consumers are sovereign, not regulators. There are times for the government to intervene, but only when the benefits clearly outweigh the costs. And only when those benefitss can be clearly demonstrated over time.

If I have but one message to leave with you, it is this: there is a new telecommunications market. You no longer need to be experts in law and bureaucracy to compete in this market. You do not need to beg before the FCC. You do not need to wait in line for ten years.

Instead, you need to be faithful to your customers. You must love them. You must cherish them. They are sovereign; the government regulators are not. Serve your customers well, and your business will flourish. Indeed, you must protect them from overzealous government regulators.

IV. The best friend that a consumer has is not a bureaucrat, or a politician, or a regulator, or even a consumer advocate.

The best friend of a consumer is a salesman walking down the street saying offering a better service at a lower price.

And the best friends five minutes later is another salesman.

I am proud to be here today with a group of the best friends that American consumers ever had.

I wish you well in your endeavors.

Be a good friend to the American consumer.

You are doing a great job. Thank you, and Godspeed.