NEWS September 7, 1994 CHAIRMAN HUNDT ENCOURAGES AFRICAN TELECOM POLICYMAKERS TO BUILD TELECOMMUNICATIONS INFRASTRUCTURES BASED ON COMPETITION In a speech delivered today to the U.S.- Africa Telecom and Broadcasting Conference, held in Arlington, VA, FCC Chairman Reed E. Hundt urged the participants to "send the message of the potential of communications to other key decisionmakers in Africa." He stressed the need to encourage competition in communications markets, especially in newly developing markets. Responding to the suggestion that in some less developed countries competition isn't viable because the country can't afford it, Chairman Hundt said "I believe countries and consumers can't afford not to have competition. Competition helps lower prices, increase efficiency, improve and expand service. It encourages the entry of the most modern technologies and increases a country's competitiveness in world market." He encouraged formation of consortia in cases where individual countries could not proceed alone. He emphasized the role telecommunications plays in education and health care. "You at this conference can tell everyone when you leave here that distance learning techniques can revolutionize education in Africa. In schools throughout the United States and in many other parts of the world, radio, television, telephones, cable and satellites are erasing barriers of time and distance between classrooms, between teachers, between students. They can do the same for Africa." He also stressed the vital role communications plays in providing medical care to even the most remote locations. No child should die in her mother's arms because the village has no telephone to call a doctor. He closed by extending an invitation to all visitors from Africa to come to the FCC to discuss any telecommunications issues, and share their experiences, views and plans. "We look forward to continuing to work together to promote telecommunications development. In the phrase of ... [a] Swahili proverb, 'One man alone cannot launch a ship.' We all need to work together to achieve our common goals. This will be a journey." "We might call it a journey down the information highway. Let that highway be a bridge across the gap between developed and developing countries. A bridge of help and hope for that mother with the dying child -- that mother in every village -- who is right now just one phone call - one impossible phone call - away from lifesaving advice for her child. Let us build that bridge together." - FCC - U.S. AFRICA TELECOM AND BROADCASTING CONFERENCE SPEECH BY REED E. HUNDT CHAIRMAN, FEDERAL COMMUNICATIONS COMMISSION SEPTEMBER 7, 1994 Your excellencies, honorable Ministers, Ambassadors, Delegates - Welcome. And thank you, Dr. Akwule, for inviting me here today and for organizing this conference that brings African and U.S. policy- makers and communications businesses together. I'd like to thank all of your for traveling so far to participate in AFCOM-'94. We are honored to have you here. I also want to thank my colleagues from the Department of State, the Department of Commerce, the World Bank and the United States private sector, for co-sponsoring this event. When I was in Buenos Aires at the World Telecommunications Development Conference in March of this year, I had the honor of meeting with a delegate from an African country who told me a story about why telecommunications is so critical to his country. He said, "Our goal is for every village to be able to make a telephone call." I asked why. He looked at me and said, "Because we have mothers holding children who are dying in their arms and but for a telephone call they have no way to get medical advice. They just need to make that one call to where we happen to have a doctor, because we can't afford doctors in every village and they need that way to connect to advice, they need that to save their children." "Just one call" "to save a life." - The words have haunted my imagination. It was at that same Buenos Aires conference that Vice President Gore shared with all of us the vision of a Global Information Infrastructure that would bring health care advice to every village and town in Africa, that would permit trade and investment to increase, that would make government work for all people and would promote democracy all over the world. We came together in Buenos Aires, as you come together here, to discuss policies which will promote the development and spread of modern communications. We came together to develop a common dream of a world in which communications would be a reliable route to a better life for everyone. This dream has power. And in Buenos Aires its power was manifested in a Declaration on Telecommunications Development adopted by the assembled delegates from 130 countries, recognizing the critical role of telecommunications in overall economic, political and social development. Specifically, the Declaration incorporated the principles suggested by Vice-President Gore of private investment, competition, open network access, flexible regulation, and universal service as key to promoting such development. The United States does not press these principles because we believe they give any country any special benefits or unique advantages in global competition. We press these principles because we believe they are preconditions for sustainable development, applicable to both developed and developing countries. It used to be thought that certain features of the so-called "1st world" were indulgences of the wealthy. Some said these alleged luxuries included modern transportation, modern communications and even democracy. Such thinking is, as Vice-President Gore has said, "patronizing nonsense." Modern communications, like modern transportation, like democracy, is in fact critical to the development of any country, society or people. Indeed, communications may be essential to the survival of any people in this rapidly changing, threatening world in which we live. There are tragically many millions in Africa for whom survival is a daily challenge. For them, communications cannot assure the end of all calamity, all sorrow. But it can do much to improve life in the short- term and the long-run. The challenge is great. As you well know, in sub-Saharan Africa today there is less than one telephone lines for every 100 people. There are more telephones in the single cities of Manhattan or Tokyo than in the whole of sub-Saharan Africa. And infrastructures linkages between nations are so shaky that calls within Africa are often sent via Europe. This triangular trade route exports revenues to Europe and further slows development in Africa. Moreover, most telephones in Africa are in urban areas. Telephone service in rural areas is extraordinarily limited. But 70 percent of Africa's inhabitants live in small villages. There is a crying need to focus attention on the rural telephone infrastructure, as you well know. Those of you in this room have the ability to send the message of the potential of communications to other key decisionmakers in Africa. The information highway will help us develop that potential. By the information highway I mean the five great parallel networks of wireline, wireless, cable, broadcast and satellite communications. These networks augur change throughout the world, and development for Africa. Many have recognized the power of those communications media. In several African nations, information distributed by mass media has already proved to be a potent force in healthcare administration. In Nigeria, radio shows give information on voluntary family planning to distant villages. In Ghana, the Ministry of Health has discovered that in battling cholera and AIDS, information provided by radio is as important as conversations with family and friends. What Ghana also discovered was that medical information was not always accurately conveyed through either medium. What is necessary is not just the one-way broadcast communication of radio or TV. What is necessary is two way communication - a telephone -- that a doctor, nurse or public health official could use to listen to a narration of a problem and prescribe the appropriate healthcare. In Rwanda, two-way portable satellite earth stations are in use now to provide medical information and assistance from all over the world. Similarly, the U.S. military used satellite links to deliver health services through Army physicians to starving people in Somolia. And sophisticated medical training and learning goes on right now among Canada, Kenya and Uganda through advanced telecommunications techniques. You at this conference can develop and deliver the message that telecommunications and mass media are also critical to the economic well-being of developing nations. With affordable, available communications, agricultural workers can benefit from access to critical market information, coordinate transportation with other farmers, and get needed parts for repairs to their valuable machines. Agricultural commodities can be transported on a timely basis, with minimal delay and spoilage. Finance, insurance, tourism and international trade are other business sectors that depend on speedy and efficient communications. Improving the communications infrastructure will help attract business investment in these and other areas. You at this conference can tell everyone when you leave here that distance learning techniques can revolutionize education in Africa. In schools throughout the United States and in many others parts of the world, radio, television, telephones, cable and satellites are erasing barriers of time and distance between classrooms, between teachers, between students. They can do the same for Africa. How long do we need to wait before all of Africa decides that modern communications systems should be available in every school in the continent? The commitment to this goal will come years before the goal can be achieved. But why can't the commitment be made soon? Telecommunications could also benefit Africa's higher education systems, just as it has done in the United States. No college or university has the resources to offer education in all subjects. But through modern communication, the expertise and resources of any college may be made available to any student, anytime, anywhere. We in the United States hope all nations move toward pluralistic politics and more open, liberal economic systems. In such systems, political discourse is indispensable. Political discourse is imperative for a free people in a self-governing society. Multiple broadcasting and communications outlets foster political discussion and successful democratic governments. Diverse voices in communications increase the level of understanding and tolerance in a country. Democracies flourish through such electronic dialogue. As African telecommunications ministers, government and operating entity representatives, you know far better than I the conditions that constrain telecommunications development in Africa. But I would like to share with you the questions that are in my mind about what may account for the relatively low level of telecommunications access in Africa. I look forward to learning your thoughts about the answers during this conference and as we continue to build on the friendships we generate here. First, to what degree is poor communications development a function of lack of demand for communications services in Africa? I am told that there are waiting lists for service almost everywhere within the continent. I am told that many thousands of people wait months and years to get service. Because of the lack of telecommunications facilities, I am told that people are forced to substitute travel for telephone calls. Even where there is a telephone, people are often forced to call through Europe to talk with someone in a neighboring city. This is one of the reasons Africa also has the highest level of demand for international calling in the world per subscriber at 213 minutes per subscriber per year. These facts suggest enormous pent- up demand for communications services in Africa. Second, to what degree does Africa's telecommunications gap stem from a lack of resources available for telecommunications investment? Where telecommunications services are provided by the government, telecommunications investments must often compete with other high priority needs for scarce public and government resources. But is this competition advisable or necessary? Competition for scarce public funds is not in our experience the way to build what we call the information highway. We believe private firms in competitive markets can make efficient investments that will create the most modern communications networks in the world. Perhaps you will also agree that private capital rather than public funds is the key to financing new and expanded telecommunications systems in Africa. Developing countries that have already privatized their state-owned telecommunications operators have seen benefits. They have reduced debt, increased infrastructure investment, fostered innovation and operating efficiencies, and provided better service to customers. For example, Chile privatized its telephone company in 1987 when there were fewer than 7 lines per 100 people. Now Chile has double that number and expects to reach more than 20 lines per 100 people. Mexico privatized its telecommunications system in 1990 when there were 6 lines per 100 people; at current growth rates Mexico expects to have 11 lines per hundred people by 1995. Other countries have followed that example, and many more are now planning privatization. As these countries have seen, telecommunications can be a self- supporting enterprise, even a very profitable one. In Africa, the average profit from telephone service is 26%, making it a potentially attractive and self-sustaining business. Third, is privatization a sufficient step in itself or is more necessary to promote communications growth? I am told by businesspersons and financiers that to attract private capital and permit telecommunications businesses to grow, a stable, open and flexible regulatory structure is essential. For example, telecommunications regulatory issues may need to be separated from postal operations. Telecommunications and mass media regulatory functions may need to be separated from the operation of any state owned or controlled communications entity. And any regulatory process will need to be open to public comment and participation, with published rules of decisionmaking. Fourth, beyond privatization and fair regulation, is it necessary to encourage competition in communications markets, especially when these are newly developing markets? I have heard it suggested that in some less developed countries competition isn't viable because the country can't afford it. Some believe monopoly is the only way to proceed. I respectfully disagree. I believe countries and consumers can't afford not to have competition. Competition helps lower prices, increase efficiency, improve and expand service. Competition encourages the entry of the most modern technologies, and increases a country's competitiveness in world markets. Our own U.S. telephone system grew in an environment of slowly developing technology. We have admittedly used the technique of permitting and even encouraging monopolies. This technique may have been right for its time, but its not right for today's ever-evolving technologies. One place where we have greatly encouraged new technological solutions to communications problems is in long-distance markets. More than 500 carriers now offer long distance service in the U.S. AT&T itself has done well in this competitive environment. But the biggest winner has been the consumer. Since the breakup of the Bell System in the U.S. in 1984, competition in the long distance telephone market has led to an average 40% decrease in domestic long distance calling prices, and calling volume has doubled. This growth in calling volume increases revenues which can be used to help meet universal service goals, among other things. With current technologies and regulations that encourage competition and private investment, the road to telecommunications infrastructure development and growth can be smooth and swift. Competition can enhance service efficiency, increase employment and build a foundation for telecommunications development and for overall economic development in the U.S., Africa, and throughout the world. Fifth, in creating a regulatory environment conducive to private investment, competition, open access and the provision of universal service, should policymakers also consider the impact of other policies on the information infrastructure? For example, the typical tariff for communications and computer equipment imported into Africa stands at 20-40 percent. This discourages capital investment needed to improve the telecommunications infrastructure. As regulations and policies are evaluated, each nation must make a careful assessment of its own economic needs and capabilities, technical requirements and politics. There is a Swahili proverb, "No one can travel by someone else's star." And it might also be said that everyone must find their own star to steer by. No nation, no people can afford not to define and meet its communications goals. Yet, it is said in Cameroon that "Rain does not fall on one roof alone." It may be that only regional alliances or consortia can achieve what individual nations cannot, through economies of scale in purchasing, contracting, financing or building. Pooling risk and credit among several nations may help make capital investment in communications infrastructure more attractive to investors and lenders. There are a number of multi-national regional projects underway or proposed. The Regional African Satellite Communications System (RASCOM) is developing a system that will link the countries of Africa through a geostationary satellite. AT&T's recently announced Africa ONE is a pan-African project of great potential. It proposes to lay an undersea cable with enormous data capacities around the African continent to vastly improve regional and international communication. Africa ONE will first link each African coastal nation, and then interconnect with inland nations. It will then join with other cables to link the world. The project organizers hope that the World Bank, as well as private and other public investors, will join with the nations of Africa to finance this venture. In addition, NYNEX has a plan called Fiber Optic Link Around the Globe (FLAG). This is a plan to link Africa, Europe and Asia through fiberoptics. As the U.S.-based exhibitors will show us at this conference, many other local, regional, national and global communications projects can spur prosperity in Africa. Many of those projects, such as several of the satellite ventures, also have the potential to help provide rural telephone service that is so vitally needed in each African country. A test for multilateral cooperation in communications is on the horizon, metaphorically and literally. In the U.S., we are about to embark on issuing authorizations for big LEOs, the low earth orbiting satellite systems that will be capable of providing data and telephone service at relatively reasonable costs to every location in the world. We are currently in the process of issuing licenses for little LEOs, which will provide data, store and forward services. LEOs could bring information about needed medical, social and business services to every village in Africa. With only limited investment in receiving equipment, modern communications could be affordable in every village, town and city in Africa. Countries can encourage the development and deployment of LEO services through their own regulatory systems. The alternative of disagreement and delay among countries is too regrettable for us to endure. Working together at the ITU's Plenipotentiary meeting in Kyoto later this month and at the World Radio Conference in 1995, a worldwide framework must be put in place that will facilitate the provision of LEO services and narrow the telecommunications gap between Africa and other parts of the world. The beneficiaries will be no less than all citizens of the world. Not just in Kyoto and Geneva, not just in this conference should we work together. We should build and expand on assistance to all developing nations of the world. For example, the U.S. Telecommunications and Training Institute (USTTI), with programs taught by private sector companies and government agencies like the FCC and Departments of State and Commerce, shares regulatory, technical and management techniques and information with regulators and service providers from around the world. Some of you, I know, have been to USTTI programs. Vice President Gore recently announced an initiative to expand USTTI to include additional courses on applications of telecommunications to business people, bankers, farmers and others. The Peace Corps is also planning to expand its telecommunications program by having volunteers work in developing countries to apply telecommunications technologies to basic needs such as food production and distribution, water and health systems. We at the FCC will continue to provide an open door to visitors from your countries who seek to discuss all of these issues. As part of a process of reorganization to make the FCC more effective and efficient, we will soon be creating a new International Bureau headed by Scott Blake Harris that will handle the FCC's international regulatory and coordination responsibilities. We sincerely hope you will accept our open invitation to share your experiences, views and plans with us. We look forward to continuing to work together to promote telecommunications development. In the phrase of another Swahili proverb, "One man alone cannot launch a ship." We all need to work together to achieve our common goals. This will be a journey. We might call it a journey down the information highway. Let that highway be a bridge across the gap between developed and developing countries. A bridge of help and hope for that mother with the dying child - that mother in every village - who is right now just one phone call - one impossible call - away from lifesaving advice for her child. Let us build that bridge together.