SPEECH BY REED HUNDT CHAIRMAN FEDERAL COMMUNICATIONS COMMISSION COLUMBIA UNIVERSITY THIRD INTERNATIONAL TRAINING CONFERENCE FOR TELECOMMUNICATIONS REGULATORS NEW YORK, NEW YORK (AS PREPARED FOR DELIVERY) OCTOBER 30, 1995 ARM IN ARM, WE WELCOME THE COMMUNICATIONS REVOLUTION It is a great pleasure to be with you today at the Third International Training Conference for Telecommunications Regulators. This really should be renamed, however. I myself never use the word regulator. Perhaps this could be the First International Conference for Deregulating Telecommunications. Or it could be the First International Conference for Delivering Public Benefits from Communications. The communications revolution is for the 21st century what the industrial revolution has been for the last several hundred years: a destroyer of the status quo, an ineluctable force for change, a source of fear and turmoil, a harbinger of a higher quality of life. The geologists tell us that tectonic forces drove apart the continents and filled the gaps with great oceans that were impassable to humans for thousands of years. The communications revolution closes the continents, eliminates distance, and reshapes the possibilities for human history. The communications revolution is an amalgam of technology and ideas. Like physics and capitalism, it can't be controlled. But, like all knowledge and all ideas, it can be resisted. Or it can be embraced. This is the key choice for every government, society, and culture to make. To resist it would be like resisting the invention of paper, or the printing press, or air flight. Those who resist will be the victims of the histories of the future. Today I'll outline what we're doing in this country. And I'll close by telling you that it is imperative that all the nations of the world proceed arm in arm to welcome the communications revolution. At the FCC, we are not trying to resist the communications revolution. I admit, however, that we are trying to survive it. The FCC is the best place to be in the United States government -- that you don't have to get elected to. We are variously described as the policemen on the information superhighway, the rulewriters for a revolution, the holders of a catbird seat, the referees of the competition game, the devils who occasionally restrict monopoly prices, the captives of industry who don't do enough to break up monopolies. Here's what I think the FCC is: It is a commission of five people and a staff of about 2,000, that has a wide range of duties to act for the public with respect to all five lanes of the information superhighway: broadcast, cable, satellite, wire, and wireless. We help the United States Trade Representative negotiate trade agreements; we work with telecommunications authorities in all countries of the world; we try to write fair rules of competition for businesses and consumers in industry sectors that amount to as much as 1/7th of the U.S. economy; we try to protect consumers and promote public benefits from the communications revolution. Basically, the FCC has a twin mission. We are for private competition in communications, and are for public benefits from communications. As to competition, this current commission is the most deregulatory, pro-market, competition-encouraging, auction-holding, investment-encouraging, antimonopoly FCC in history. As to public benefits, this current commission is trying to state clearly, concretely, and specifically what public benefits should be delivered by the communications sector to each and every American. Should these include three hours of educational TV per week per TV station per market? Should these include affordable local telephone service for all Americans? Should these include communications technology -- a computer on a network -- for every child in every classroom in every school in every school district in the country? We take our general direction from Congress. And we try to fulfill our broad mandates in a way that accords with the law, applies good Chicago school economics, and accomplishes the right thing as our country deems that to be. Our independence means I take no official position on political disputes. It is designed to assure competitors that we will treat all of them fairly. All governments share the same political realities -- powerful, wealthy business interests attempt to influence any rulewriter. This is acutely the case in the communications sector, where the established businesses are everywhere far more powerful than the public interest lobby. Competition in communications means huge new investment. And that investment creates jobs and grows economies. But the competition won't come unless the competitors, and their investors, believe that an independent rulewriting agency will make sure that the new entrant has a fair chance to compete. I think, based on my own experience, that the independent agency must make its decisions on a written record; it ought to issue its decisions in writing; it ought to be subject to judicial review; it ought to receive broad powers from the legislature, but not be micromanaged by the legislature. These would be the optimal characteristics. A footnote is that the separation of broadcasting and other telcoms is not likely to continue to be rational, given the convergence of technologies. In a digital age, any medium can be used to transmit voice, video, and data. Not in the U.S. or in any other country will over the air broadcast be a unique way to deliver video. Governments will find it easier to make rational policies furthering competition and public benefits if they treat broadcasting and telcoms as related, nondistinct, jurisdictions. Let me share with you the FCC's priorities today. We have four general goals; four slightly more specific agenda items; and one bottom line on the international front. First, Create The New Information Society. Just as the printing press made the Reformation inevitable, so the combination of cheap communications and PCs -- let's call it the networked society -- will reshape all private and public institutions. We want to embrace this vision, and make it available to everyone in the country. Second, Communications and Democracy. In the U.S., the mass media threaten the viability of representative democracy for one specific reason: the desperate imperative for politicians to buy advertising time to run for office. The nearly impossible task of doing TV politics has greatly reduced the effectiveness of local, state, and federal government. For democracy to survive and thrive worldwide, the power of modern communication must be used to enhance participation and reasoned debate, not frustrate it. Three, The Jobs Dilemma. We need to admit that in modern economies modern communications does confront us with the real, chronic, and challenging problem of job elimination. The communications revolution destroys jobs. And it creates jobs. And it creates a better standard of living. But we can't deny that if we are to have a peaceful world, those caught in the transition to the information age must be helped, not discarded. Four, Keeping Government on the Job. The communications revolution will permanently alter the powers and performance of government at all levels, from the county sheriff to the United Nations. That is why there couldn't be a course of conduct more shortsighted right now than a repudiation of positive government. Instead, we should remember that government, when it is smart and responsive, is the way we act together to improve our common lot. Turning to specifics, here are the top four things the FCC should do in the next year. #1. The FCC should reform radically the fundamentals of telecommunications regulation. We need to change the access charge system; reform universal service; revise price caps; establish number portability; and impose stronger interconnection rules. #2. With respect to the airwaves: We should move to spectrum auctions and flexible use of spectrum as the twin paradigms for domestic use of the airwaves. Critics of auctions are few and uninformed. Flexible use -- in other words, use according to market conditions -- is the only way to maximize economic growth and competition. #3. We should continue to deregulate the business dimension of commercial broadcasting, such as by eliminating rules that specify rights to distribute programming in syndication. The current FCC is the most deregulatory in history for all communications industries, and particularly for broadcasting. At the same time we should, at last, after 61 years of operation under a general "public interest" standard contained in the Communication Act of 1934, better explain what this term concretely obliges industries to do in this era of the communications revolution. It is in this connection that we should develop clear rules that guarantee several hours of children's educational television required of all TV licensees. And finally, #4. Communications Must Revolutionize Education. We spend $200 billion a year in the United States on educating 45 million kids without getting a decent return on our investment. The return should be this: These kids are supposed to keep the American Dream alive. But: -- Only 12% of our classrooms have phone lines, and only 3% have computer networks. -- In the year 2000, 60% of the new jobs will require skills possessed by only 22% of the young people entering the labor market. -- Workers' lack of information literacy now costs businesses an estimated $25 billion annually in poor product quality, low productivity, and accidents. As a recent article in The New Yorker noted, if you want to address the problems created by the falling wages of the middle class we have to make this communications revolution work for all Americans. At the FCC, we should create incentives that will guarantee that modern communications technology is available to every teacher and every student in every classroom in every school in the country. For each of our children to have his or her fair chance to make the American Dream come true, each needs to be taught both with and about the latest technology. This is what Vice President Gore called for in a famous speech in Los Angeles in January 1994. And it is what President Clinton set as a national goal in his 1994 State of the Union address. Last month in San Francisco, President Clinton started laying out his plans to make sure every classroom in our country is connected to the information superhighway by the year 2000. As the President said, "Preparing our children for a lifetime of computer use is now just as essential as teaching them to read and write and do math . . . We must make technological literacy a standard." A few weeks ago, British Labour Party leader Tony Blair called for a Britain in which every school, hospital, and library is wired into the information superhighway, and every child has a laptop computer. His copying of the FCC's message was a high compliment. We have to do more in order to be copied and complimented more. Congress is in the process of working out the final provisions of a complicated Telecommunications Reform bill. The Senate version contains what is known as the Snowe- Rockefeller-Exon-Kerrey provision. It's named after the four distinguished senators who cosponsored it. The provision would permit the FCC to create financial incentives to build networks into every classroom of the country, and networks between every school in a school district. It is imperative for the future of the U.S. that this provision survive the legislative process. The House version of the bill contains a provision that would have the FCC guarantee that advanced network services are accessible and usable by people with disabilities. There are 49 million Americans with disabilities. This includes almost 4 million school-age children. These children -- your children - can have a brighter future if we all put communications technology in every classroom. It would be a sin if these two provisions did not survive the legislative process. Communications and education are not part of a nationalist agenda. On the contrary, it is a crucial challenge faced by all of our countries as we strive to prepare our children for a work world that is fundamentally changing. It's up to us -- students of the communications revolution with perhaps a bit more understanding of how radically it is changing our societies -- to persuade our governments of the need for quick action. Some of your countries, which have a more expansive view of the role of government in society, doubtless will have even more elaborate visions than these. There is room for all of them. The bottom line on the international front is this: All countries of the world should proceed arm in arm to welcome the communications revolution. Specifically, therefore, in the World Trade Organization (WTO), we should continue to press for harmonious rules of open competition in all countries. Meanwhile, this year, the FCC is going to reform the foreign ownership rules so as to make competitive opportunity abroad a key determinant of whether we allow foreign ownership of our communications properties. It is a conscious attempt to reward like-minded countries. Our preference, however, is for widespread market opening through the WTO's ongoing Negotiating Group on Basic Telecommunications (NGBT). This should be concluded early next year. A multilateral agreement within the framework of the GATS is the firmest possible foundation for global liberalization of telecommunications services. Not nearly enough countries have yet submitted a basic offer in the NGBT. I'm asking each of you personally to look into this situation in your own country and let me know if an offer is forthcoming. Now is the time to implement the best ideas for communications policies around the world. The idea of a networked economy is untested in history. If, for all its glories, it displaces workers, alienates citizens, and widens educational gaps, it will fail. It is not destined to fail. It is designed for success. Now is the time to lay the foundation for a networked society -- indeed, for a networked world -- in which the public interest and private interests can prosper, and all can have the opportunity to be winners. Thank you. -FCC-