SPEECH BY CHAIRMAN REED HUNDT, FEDERAL COMMUNICATIONS COMMISSION, TO THE INTERACTIVE SERVICES ASSOCIATION'S 11TH ANNUAL CONFERENCE SAN DIEGO, CALIF. July 23, 1996 "Everyone Has a Public Interest Commitment in a Free Society" I was going to speak to you in a virtual mode, via satellite. A change of plans takes me to a meeting in Los Angeles this afternoon with what was the National Association of Regulatory Utility Commissioners but will soon be the National Association of Deregulatory Utility Commissioners. That's why I've swung by San Diego to see you the old fashioned way --live. Forgive me. The Telecommunications Act of 1996 is the boldest prescription for economic and social change that has been passed by Congress in many years. It launches the biggest attack on a monopoly since the breakup of the Standard Oil Trust 85 years ago. It frees the telephone companies to become value added, demand oriented, high growth companies. It brings new opportunities to hundreds of firms, many represented here in this room. It will lead to huge new investment, booming job growth, high productivity gains and a revolution in education. We're in a communications revolution. ISA has demonstrated its willingness to address challenges in this new age by your work on Project OPEN and your education of members about pay-per-call rules. Your industry benefits when everyone plays by the rules in providing pay-per-call services. Your consumer education and enforcement of pay-per-call rules will pay off in fewer complaints and greater customer satisfaction with your services Our policies at the FCC and at the state level should be firmly focused on private competition in communications and public benefits from communications. Another way to describe our goals is that we have three major objectives: bandwidth and access, more bandwidth and more access, and even more bandwidth and even more access. That's what our policies should promote, facilitate, encourage, or at least avoid deterring. The traditional communications industries think they are in the telephone business, or the broadcast business, or the satellite business. They don't think they are in the access and bandwidth business -- but they are. And so are we at the FCC and the state commissions. In the Bandwidth Act of 1996 -- excuse me, I meant the Telecommunications Act of 1996 --Congress gave the FCC a mandate to open up local communications markets to real competition. This is the hardest non-wartime job ever given to one administrative agency in our country's history. But if we are successful, we will give new business opportunities to you and new control, choice and products to all Americans. These new opportunities will lead to a boom in bandwidth to businesses and residences, and we will see the spread of access to all libraries and classrooms. And that in fact will be the construction of the information highway called for by Al Gore 20 years ago and pressed for by President Clinton since he was elected. I am especially pleased to be able to welcome a virtual presentation by the man who coined the phrase information highway more than 20 year ago, who challenged us as a nation to bring the wonders of this information technology into every classroom in the country, who along with President Clinton and a bipartisan Congress fought for our brilliant new communications law, who began an inexorable transformation of the overregulated international communications businesses with his famous Buenos Aires vision of the networks as a great nerve of intelligence wrapped around a globe, who I am proud to say has been a friend and inspiration for 35 years. Speaking to us in a virtual and time shifted mode is one of the greatest leaders of the communications revolution, here is Vice President Al Gore. [three minute Gore tape airs] [return after Gore tape] Well I couldn't have said it better. But since I'm here in person and ready to be interactive, I hope you don't mind if I say it again. When I talk about bandwidth, I'm talking, of course, about everything from broadcast TV to multimedia to lots more technologies that can teach and inspire and entertain plus give us universal availability. In other words, bandwidth equals DBS and Digital TV and analog broadcast and all the things we know, use and enjoy today. And when I talk about access, I'm talking about universally available free TV, universal phone service, networking every classroom. The bandwidth should be built by private competition. And it should carry some minimum amount of content that may not be commercially very rewarding, but that gives us public benefits. This is the reason we we are pressing for three hours of children's educational television to be shown by each broadcaster. Some say it will no longer be necessary to ask broadcast networks to do children's television when we have millions of bits per second from DBS and DTV raining down on very home. I disagree. It would be better to state clearly that all bandwidth users should do their part to serve the public interest. And under all circumstances that means taking action that isn't necessarily compelled by the premises of the competitive market. We should embrace market values and family values -- but we should remember that they're not the same. One reason we're fighting for a rule guaranteeing three hours of educational TV from every broadcaster is that if the American people can't get from their own airwaves even that modest a public benefit, then we'll have to conclude that today's broadcasters will never fulfill their public interest duties. I heard that Andy Grove of Intel predicted that, by the turn of the century, there will be more hours devoted to interactive media than to broadcast. I suspect this estimate overestimates the rate at which price points and passivity will go down. I think the high production values and magical salesmanship of one-to-many communication will continue to capture audience. One-to-many broadcast might be terrestrial over-the-air or satellite delivered or it might even be over the Net, driven by the innovations of Pointcast, Microsoft and others. Because we don't know all the ways broadcasting will happen, we need a public interest ethic in all communications businesses. But we're right to focus now on a single industry that uses the most valuable portion of the public's airwaves: the over-the-air broadcasters. A free society needs free TV to help educate, inform, and even entertain. Clearly commercial broadcasters do plenty to entertain kids but could do more to educate them. We need more public service announcements about the dangers of drugs, about the problem of truancy, about the value of education. And we need at least three hours of educational programming a week. As President Clinton will say when he meets with broadcasters at the White House next Monday, this is not too much to ask. It's only two percent of a week's time. If Coca Cola spent just one percent of its advertising budget (so richly spent now on the Olympics, for example) on supporting an educational television series for a year, we'd have another Sesame Street on commercial TV. My 14-year-old could watch the Olympics and my seven-year-old could watch some 21st century Barney. We're rich enough in wealth. We ought to be rich enough in spirit and invention to try to reach all our children. The networks are fighting us. They say they air lots of public interest programming -- and then they talk about the Olympics. The networks say the government should not tell them what to show, even if they are using public airwaves for their broadcasts. Of course in a free society, government should not tell broadcasters what point of view, what opinions, what ideas it should broadcast. When we ask broadcasters to air three hours of children's educational television a week, we in government don't in any way aspire to tell a broadcaster what to teach, how to teach it, or what point of view should be adopted in the teaching. We won't meddle whether the teaching is evolution or creationism; whether the network focuses on reading, writing or 'rithmetic; whether the network uses real teachers or cartoon figures to help us educate our kids. Common sense and constitutional law expertise tell us that the First Amendment can't possibly be violated by asking trustees of public property to educate and inform kids. After all, that's what we ask two million government employees to do every day. They're called teachers. Indeed what ought to be frightening for Americans is the idea that the networks' lawyers could read the First Amendment to bar us from asking broadcasters to use the public property of the airwaves to do even a tiny little bit on a regularly scheduled basis every week to help us teach kids. As long as our kids are told you can watch the Olympics or get some education on the TV, but you can't get both, then we are passing up the opportunity to do the right thing for those kids. The television license holders who have that view diminish their claim on the public trust. And they beg us to ask them, what public ethic do you follow when you decide how to use your magical medium, your grant of bandwidth and your universal access? Our policy of promoting bandwidth and access also requires that we deregulate as much as we can in the commercial dimension of communications markets. This is the most deregulatory FCC in history--for broadcasters, telephone companies, and all new entrants in communications markets. But people often oppose our deregulatory direction. For example, the America's Carriers' Telecommunications Association has asked the FCC to restrict the sale of "Internet phone" software, because the providers of that software are exempted from rules applied to telecommunications carriers. This will be a hotter issue with the Intel and Microsoft innovations in Internet phone coming on stream. We shouldn't try to impose old rules on new ideas. I'm against subjecting Internet telephony to the old rules that apply to conventional circuit-switched voice carriers, even while we're trying to change those rules. Others want us to make Internet service providers pay interstate access charges that long-distance carriers pay to local phone companies for originating and terminating calls. Let's not apply out-of date rules to new situations, even as we are trying to reform the creaky old access charge regime. Just like broadcasters, the Internet community must have a public interest commitment. This should include at least helping us educate kids in classrooms with the Internet. Of course, if kids have access to the Internet at home and in classrooms, then parents and teachers need software filters and other tools that empower them to make choices. I've talked to Tim Berners-Lee about this: he invented the World Wide Web and he's working on the new inventions we need to let children ride the information highway from Carthage, Tennessee to the Library of Congress without passing through the cyber equivalent of the red light district. ISA is tackling this problem by joining the National Consumers League to form Project OPEN to provide the information online users and especially parents want and need. As a parent, I thank you for your efforts. The private-sector focus and the public interest commitment of any communications firm will be about bandwidth and access. The most sophisticated and powerful network means nothing for people who aren't connected. Metcalfe's Law says the network is more valuable if more people have access. Imagine the value creation we will get if we bring two million teachers and 45 million kids to the Net. Just as education should be accessible free, over the air through broadcast TV, so should it be accessible in each classroom on the Net. Can it be that we have a 700-billion-dollar-a-year information technology industry and yet we can't afford to give every teacher the tools we give every shipping clerk at Wal-mart? Or that we could afford to network every classroom by the beginning of the next century, but somehow we just neglected to do it. What can we tell the children we would so disappoint? We were too busy making money? We forgot? The truth is, there would be no excuse if we failed to bring the information world into every classroom. It will cost at the most $10 billion over five years to network every classroom. This is 10 billion out of about 5 trillion dollars of revenue in the information sector of our economy, which is 0.2 percent. That's so small. Even three hours of educational TV is two percent of the week's hours. I said 0.2 percent was the percentage of the information sector of the economy, and relative to just telecommunications providers the number is between one to two percent over five years. No matter how you measure it, the cost of networking every classroom is painfully modest. What if we networked every classroom? Would it help our country if every child had a better chance to grow up to be a Bill Gates or a Paul Allen? When Bill Gates and Paul Allen were in an 8th grade classroom in the Lakeside school in Seattle they had access to essentially all the computer equipment that then existed. Not everyone has their personal gifts. Everyone should have their chances. We can't succeed in the networking of every classroom without business leadership. Schools don't have the resources to hire and train the people with the expertise to make all the purchasing decisions that are necessary. They need just as much help as I do in installing a computer and making a network run -- and that's a lot. We need business to take the leadership. We shouldn't let the responsibility lie solely with the FCC and its state counterparts. We can handle the faucet. We can make sure the flow of funds from telecom providers to build and use this network is sufficient. But what we need, clearly, is a business and education council to plan the whole networking effort. Who would like to be in charge? We can copy from Smart Valley and from Net Day -- two quintessentially Californian efforts to network classrooms. But let's not kid ourselves: to network schools in New Mexico and New Jersey, in North Dakota and North Carolina, you can't just count on the serendipity of propinquity. You can't assume every classroom is a bit's throw or a byte away from the headquarters of a great computer company so that the company can just reach out and network someone. It will take a whole country to network our children. Who would like to run our Advisory Council? And who will prime the pump? Last month, I challenged the Internet community to provide two years of free Internet access to classrooms and libraries. Many will respond. Many more would respond if we only had networks built inside all classrooms. So I'm saying, Uncle Sam wants you. I want to thank you for having me here today. You all are the future. The Telecom Act will open the door to countless business opportunities and to many ways to make the world a better place. I don't see any natural limits to the private and public benefits of the communications revolution. But it all depends, at the beginning and in the end, on you. Thank you