[ Text | Word97 ]

"Regulation 2000"

Remarks By
FCC Chairman William E. Kennard
Before The
Summer 2000 Session of the
National Association of Regulatory Utility Commissioners

July 24, 2000
Los Angeles

(As prepared for delivery)


Thank you, Bob (Rowe), for that introduction, and for the opportunity to address your summer session.

This is the seventh time as Chairman that I have been privileged to speak before you at NARUC. You have been very gracious to invite me to speak at each of your conferences since I have been Chairman. I’ve missed only one meeting, and that was last March when my son Robert was born during your general session.

I decided that it was a good omen for a career in public service.

In fact, there are many good things born at NARUC . . . good ideas, good practices, good relationships . . . and we at the Federal level have gained so much from being included at your conferences, and we are the grateful beneficiaries of the many good things that happen here.

This morning I would like to have us reflect for a moment on what we have accomplished together, and what that means as we look ahead.

And I cannot reflect on what we have done together without mentioning Larry Strickling. Larry has been a brilliant leader of the Common Carrier Bureau who is leaving the Commission to return to his family in Chicago. He accomplished a great deal, and developed good relations with this organization, so his departure is a bittersweet moment. I ask all of you to acknowledge Larry’s wonderful contribution.

But my announcement is a little less bitter because I am able to announce that Dorothy Attwood, my senior legal advisor, has agreed to take Larry’s place as Chief of the Common Carrier Bureau. Many of you have worked with Dorothy already and know that she is equally brilliant and a wonderfully talented thinker and manager.

The Internet Revolution

I often start speeches by discussing technology. Someone said to me the other day, "Why do you always start your speeches by talking about technology? Hasn’t this become kind of cliché?" Well, it may be cliché to talk about how the technology revolution -- and especially the Internet -- is changing the way people live in this country. But I have no intention of changing my ways.

Because for those of us in the regulatory world who devote our lives to making sure that technology gets deployed quickly, I marvel at what we have helped to create. And, more important, the regulatory tools used to do so.

In 1995, there were three million Internet users in the U.S. Today there are over 80 million, and 53% of households are online.

It took thirty-eight years for us to reach that level of penetration for basic telephone service.

The Internet is the fastest growing communications technology the world has ever known. The Internet has a voracious appetite for bandwidth. Data traffic is doubling every 100 days. Industry is scrambling to keep up with demand.

It has spawned an alphabet soup of new industries: dot-coms, competitive local exchange carriers (CLECs), data local exchange carriers (DLECs) and now building local exchange carriers (BLECs).

Investment is up all across the board. After the 1996 Act, investment by incumbent local exchange carriers jumped approximately 20%. Aggregate industry investment after passage of the Act, including both incumbent local exchange carriers and competing carriers, nearly doubled, increasing from $30 billion to $60 billion.

And this is just the beginning. The Internet is migrating to other platforms, such as wireless, cable, and broadcast.

A Worldwide Movement

The world also is taking notice of this revolution. One of the joys of my job is the opportunity to meet with my counterparts from all over the world. My meetings with them usually start with the formality. For me, its sometimes a little unusual. There is often a translator who says, "His excellency, the Minister, is honored, that the esteemed Chairman of the Federal Communications Commission in the United States has sent his youngest son to meet us."

So they think I am a kid. But they are listening.

They are listening because we have created a system that is the envy of the rest of the world. How?

It did not happen by chance. It happened because we have the right regulatory system.

First, we early established a privatized telecommunication network and moved relatively early to break up the long distance monopoly in the United States. We owe our thanks for this to Judge Greene.

Second, we deregulated the customer premises equipment market before many of our foreign counterparts, so that anyone could plug in a fax machine, and later a modem.

Third -- perhaps the FCC’s most important decision -- we decided to leave the Internet unregulated.

To some degree, we were following our instincts: that competition drives innovation; and that there is a unique role for regulation to break open and keep open incumbent markets, and to allow entrepreneurs to innovate and grow.

Vice President Al Gore had the same ideas on an international scale. In 1994 he presented the best of what our country had learned during the early stages of the Information Revolution to the ITU Development Conference in Buenos Aires. Those recommendations were later incorporated into the World Trade Organization’s Basic Telecommunications Agreement.

Vice President Gore laid out the principles for how each country can become part of a Global Information Infrastructure, or "GII," a worldwide network of networks - - and how each country can participate in the new information economy.

He said that the key organizing principle for the GII is competition -- multiple, privately-owned service providers that give consumers choices. In order to promote and police competition, he said, there must be independent regulatory agencies with the power to bust up monopolies and the discipline to deregulate as competition takes hold. There must be open telecommunication networks, and government policies that embrace competition and the entrepreneurial spirit.

Two weeks ago the European Commission (EC) issued a bold package of proposed legislation and directives aimed at bringing the Internet revolution to Europe. They took a page right out of our book that included line-sharing, local loop unbundling, collocation and cost-based interconnection.

Some countries, such as New Zealand, are revisiting their efforts to deregulate through antitrust enforcement, and considering instead tools similar to those in the 1996 Act.

The world is embracing the principles pioneered here in the United States.

Voice for the Voiceless

Last week I testified before the House Judiciary Committee, which is considering fundamental changes to the 1996 Act. I told them that the Act is working. We don’t need to change the Act’s incentives for promoting competition.

I told them that progress is being made. I told them that moving a market from monopoly to competition is one of the hardest things to do in government. Ask Pat Wood, from Texas, and Maureen Helmer, from New York, and they will tell you.

And I told them that NARUC and the FCC are united on this issue.

I feel very proud that we are implementing the 1996 Act with you in a way that is bringing competition to the local service markets, and protecting consumers.

NARUC is the FCC’s most powerful ally in the fight for the interests of the little guy. Regulators often fight those battles alone.

Thank goodness we are allies.

And thank goodness we are winning these fights.

One fight we are winning is for the E-rate program. Thanks to the hard work of Vice President Gore, many courageous leaders in Congress like Jay Rockfeller, Bob Kerry, Olympia Snowe and Ed Markey, and many people in this very room, the E-rate program has been tremendously successful. In three years it has invested $6 billion to connect schools and libraries to the Internet. As a result, one million classrooms will be connected by the end of this year.

Another fight we are waging is opening access to the virtual world to Americans with disabilities. We’ve had success in promoting close captioning, hearing aid compatible phones, improved telecommunication relay systems, and . . . just last week . . video narrative description for the blind.

Using the tools Congress gave us in Section 706 of the 1996 Act, we are also tracking and promoting advanced telecommunications services to the rural areas of our nation.

President Clinton and Vice President Gore have made closing the digital divide a centerpiece of their Administration. In fact, just this week at the G-8 Summit in Japan the President spearheaded a resolution to get big-nation support behind closing the digital divide.

Joanne Sanford of the North Carolina Commission and I joined President Clinton on his recent visit to the little town of Whiteville, North Carolina. It was part of his Digital Divide tour. And it was the first time that a U.S. President had ever visited that little town.

It’s a town whose prospects rise and fall with the price of tobacco, and these days, the price of tobacco is down. People there are looking for hope; for economic development.

As you know, President Clinton is one of the most engaging orators of our time. He delivered a wonderfully powerful speech about growing up as a young boy in Hope, Arkansas, and how the networks of the Industrial Age -- railroads and later the interstate highway system – meant life of death to small towns like Hope and Whiteville.

And he ended by saying how his goal is to make sure that the networks of the Information Age don’t bypass these places. He said his goal is to bring broadband to every small town in America.

Well, by the time he finished, every man, woman and child in the town of Whiteville was standing and cheering for our President.

But you know, I’ll bet there weren’t many people in that crowd who even knew what broadband is. But all of them were on their feet and cheering for it.

Our job is to build on their hopes and dreams -- to make the promise of the Information Age real for people in Whiteville and small towns across our country. It is our job to make sure that our efforts are real.

Those efforts will fail unless we continue to work together. Past is prologue. We could not have made the progress we have without a state-federal partnership. A federal-state joint board did the pioneering work of drafting the blueprint for the E-rate.

The leadership of Bob Rowe and Nan Thompson were instrumental in creating the Joint Conference on Section 706.

And the states have made valuable contributions to our efforts to bring telephone service to the people living on Tribal Lands.

And last but not least, I want to thank Joan Smith, Chairman of NARUC’s Communications Committee for all of her work on these and so many other issues. From separations to CALLS, Joan has been absolutely key. Joan Smith is, quite simply, a national treasure.

The State-Federal Partnership

We have learned together that oftentimes the most important fights we wage are not the fights between the rich and the very wealthy, but between the haves and the have-nots. We regulators are the ones who give a voice to the silent have-nots, who have such a huge stake in the outcome.

And in that fight for America’s consumers, the states are often our most powerful allies. I am very proud to say that I believe we are working better today than ever before.

The states and the FCC have become closer than ever because we at the FCC have come to better appreciate and have faith in your commitment to competition. We better appreciate that it is often the states that try different things and lead the way.

And we’ve learned that when we link arms with the states, we speak with a powerful voice indeed.

We’ve learned that when we are working in partnership - - the state commissions and the FCC -- industry cannot exploit our differences.

Conversely, when we fight, industry gets a free pass. When we work together, we come up with better solutions. It’s the winning formula.

The sum total of this is simple: we have gained mutual respect. That is very precious indeed, and I am very proud of what we have accomplished together.

We must continue this spirit of teamwork as we look to the future.

Convergence is our greatest challenge. It is challenging our jurisdictions like never before, and touching every aspect of regulation. We must ensure that convergence does not undermine the competitive gains we have made.

We must also have the courage to hold the line against mergers that threaten all of our hard work.

We must help consumers navigate this transition from monopoly to competition without leaving anybody behind. It is important to maintain consumer confidence in this entire undertaking.

A good place to start is by ensuring that the industry sends consumers telephone bills that they can understand, and I am so pleased that we are working together on this as well.

In that regard, I want to thank Bill Gillis and the Consumer Affairs Committee for working so hard with us on all of the billing and numbering issues.


I believe the turning of this new century has also marked a real turning point in our work.

It was a turning point when the telecommunications revolution produced the greatest unleashing of investment and innovation in our lifetimes.

It was a turning point when people around the world discovered new ways to communicate -- ways that are dramatically changing the way people, live, work, and learn.

It was a turning point when those of us in government discovered new ways to introduce competition, but also found the discipline to deregulate once competition took root.

It was a turning point when we recognized the power of technology to uplift all people and resolved that no one be left behind.

We are all so very privileged, because for the rest of our lives, we will be able to look back on this period in history -- this extraordinary period -- and know that not only were we there, but we did the right thing.

Not the convenient or easy thing, but the right thing.

We have fought the tough fight. And I, for one, will always be very proud to say that we fought it together, with our partners in the states.

Thank you.

- - FCC - -