Remarks of William E. Kennard
Chairman, Federal Communications Commission
AFCOM 2000 Conference
Fair Lakes, Virginia
August 1, 2000
(As prepared for release)
Thank you, Professor Akwule, for that very kind introduction.
Honorable Ministers, Distinguished Guests, Ladies and Gentlemen:
It is a great pleasure to be here again at AFCOM. I am particularly delighted to see so many familiar faces again, not the least my good friend, Ray Akwule.
As many of you know, it was one year ago - - in the keynote address of this very conference - - that I announced the creation of the Chairman’s Development Initiative. Conversations I had with Ray shortly after I became Chairman really helped to shape that Initiative. Since then, he has kept us motivated and focused on working for all of Africa.
I appreciate all your support and help, Ray, and I look forward to working with you on your newest project, the "Center for Media Research and Telecommunications," at George Mason University.
Hamadoun Toure is also here today. Hamadoun has brought new energy and initiative to the ITU Development Bureau, and I applaud him for that. We in the U.S. are grateful for his efforts.
I have also had the great pleasure of meeting with Ivy Matsepe-Casaburri on several occasions now. I share her desire to see Africa leap-frog into the next generation technologically, and to see South Africa’s residents reap the benefits of the Information Age in health, education, and economic rewards.
As Chairman of the Federal Communications Commission, I go many places and I see many things. I see all the latest gadgets. I see cities teeming with fiber optic lines, and I meet the twenty- and thirty-something billionaires who have made their fortunes in cyberspace.
But none of these compare with what I saw in Africa. Visiting Africa since I last saw you was possibly the greatest highlight of my chairmanship.
What an extraordinary continent. Extraordinary in your natural resources and in your natural beauty, but most of all, extraordinary in your people.
Everywhere I went I saw hope and eagerness written on the faces of your people, from your boardrooms to your market squares.
I saw an Africa that is hungry for progress, an Africa that is restless and ambitious.
I predict that this hunger for progress will ensure that the next hundred years will be Africa’s century.
Our job now is to lay the foundation. We are the foot-soldiers of this future, and I am proud to serve alongside of you.
Africa needs infrastructure. It needs the telecommunications highways, the wireless towers, and the fiber optic footpaths that link its villages to its universities, its manufacturers to the world’s markets.
But this infrastructure will not be built by government. It will be built by the private sector. And the only way to attract private investment is to have fair and independent regulatory bodies that support competitive markets, and that give investors the confidence and predictability they need to make their investments.
This was the conclusion of the world’s communications leaders in 1994, at the ITU Development Conference in Buenos Aires. That conference 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.
The key organizing principle of the GII is competition – multiple, privately-owned networks that give consumers choice. To promote competition, there must be independent regulatory agencies with the power to break up monopolies, and the discipline to deregulate as competition takes hold. These are the very principles embodied in the Telecommunications Act of 1996.
Two weeks ago the European Commission (EC) issued a bold package of proposed legislation and directives aimed at bringing the Internet revolution to Europe. It is no coincidence that the EC's initiative is a close cousin to the 1996 Act. Those principles are becoming universal as countries rush to embrace competition as the organizing principle of the telecom sector.
The principles of the GII apply to Africa too. If we are ever going to have a truly global information infrastructure, there must be an African information infrastructure. If there is to be a GII, there must be an AII. Anything less is unacceptable.
The Development Initiative: Design and Implementation
It has become cliché at these conferences to expound on the virtue of the GII. Yet, as the saying goes, when it’s all said and done, too much has been said and too little has been done.
That’s why, during my tenure as FCC Chairman, we have taken action.
We created the Development Initiative, a commitment to work with developing nations seeking to sustain their place in the Global Information Society through implementing the goals of the WTO Basic Telecom Services Agreement: promoting competition, liberalizing markets, and adopting open, pro-competitive, and transparent regulatory policies.
This last year we entered agreements with South Africa, Uganda and Ghana to share ideas on open markets, competition, spectrum management and licensing. These two-way partnerships allow us to demonstrate the critical links between privatization and investment, and competition and universal service. We consult with our partners on a regular basis to ensure steady progress toward their goals.
In Southern Africa last summer I met with 12 nations from the Southern African Development Community (SADC) in Botswana. I also met with the counselors and regulators of South Africa Telecommunications Regulatory Authority (SATRA) in South Africa. I signed a Work Plan with SATRA, and had the pleasure of conducting an FCC regulatory workshop with SATRA. I now look forward to working with ICASA, the successor organization to SATRA.
We invited representatives from the regulatory authorities of South Africa, Uganda, and Ghana to visit the FCC last spring, and together we were able to fashion a set of regulators’ tools tailored to each particular nation.
We chose these countries in part because of their ability to be regional leaders, to serve as catalysts for the advancement of regulatory reform in their regions. In addition, we looked at the potential already present in their existing regulatory environment, their level of need, their commitment to change, and their interest in working with us. Although there were clearly many other qualified candidates, we believe that these three nations are an excellent start.
Out of the focused attention on these three countries, we have been able to develop several resources that can benefit countries in all regions -- those participating in the initiative and beyond.
First, we designed a system of courses that highlights the practical aspects of modern regulation. The courses contain eight modules, ranging from an overview and universal service, to regulatory institutions, competition, interconnection, spectrum management, mass media, and the Internet.
Second, as you may recall, at AFCOM ’99 I announced the availability of the FCC’s Connecting the Globe: A Regulator’s Guide to Building a Global Information Community. This is a how-to handbook on telecommunications regulation that may be able to be applied to local country conditions. We have copies in English in print and on our web site, and French and Spanish versions are coming soon.
In February of this year, we published a second book – Connecting the Globe: The Africa Initiative, which focuses on Africa. It describes the FCC’s successes in its development efforts in Africa, and contains copies of the Work Plans signed with Ghana, Uganda, and South Africa. It also is available on our web.
We had the generous help of many parties in creating these courses and handbooks, and in making them available. Lane Smith and Ed Malloy at USAID were instrumental in the handbook translations. And Hamadoun Toure of ITU and the Telecommunication Industry Association’s Matthew Flanagan, Eric Nelson and Christine Keck made it possible for several policy makers from the developing world to travel to the States and participate in the first FCC-designed course on telecommunications policy and regulation.
I am very pleased to announce today that we are exploring how we might work with Cisco Systems to make this FCC course available in an interactive on-line format, so that regulators from around the world will be able to use it.
The Ends: Uplifting People
Our next challenge is to build on the success of these first few country agreements.
There are many encouraging reports of how this nascent AII is already transforming African life.
Africa has become one of the fastest growing markets for cellular phones. Almost 20 new mobile networks were deployed between 1997 and 1998 alone. In Uganda and Ghana that year, mobile cellular teledensity increased 80% and 300% respectively!
Since 1997, 1.6 million new phone lines have been laid down in South Africa, one million of them in poor areas. 86,000 public telephones, including the first telephones to 2000 villages, have also been installed.
Uganda’s government sold 51% of UTL to a German-Swiss-South African consortium for $33.5 million.
Botswana and Zimbabwe both agreed to new, lower accounting settlement rates to the benefit of consumers there and around the world.
And today, village computer centers in East Africa help farmers check the going prices for their produce in the city, and thus avoid arbitrary markups by middlemen.
Today, rural artists and craftsmen in remote villages can reach a global market for their handmade products, thanks to non-profit Internet sites such as Buy-Afrika.com
The Africa Virtual University, a satellite-supplied distance learning project whose headquarters was inaugurated in Nairobi last week, has already allowed over 12,000 students to take engineering and science courses, and over 2500 professionals to attend seminars on management and e-commerce.
I was very pleased to see President Clinton’s "Global Call to Action" at the recent G-8 Summit, which addressed the growing international "digital divide" among nations. The President recognized the FCC's "Development Initiative" in the G-8 document, "A List of Public and Private Sector Alternatives to Bring the Digital Opportunity to Developing Countries."
Japan, in fact, launched the summit by introducing a proposal that would spend $15 billion and train a force of 10,000 technicians over the next five years to help wire developing countries.
I have great hopes that Japan’s generous offer will encourage other world powers to donate considerable funds to the project of telecom development in the near future.
The Means: Robust Competition
In the final analysis, however, the future of Africa is in the hands of the leaders and regulators of Africa - - in your hands. You in this room are the key to a vigorous and competitive telecommunications market in Africa. You create and set the conditions for growth.
I am convinced that the only way to make the African Information Infrastructure real is through vigorous competition.
You must have the legal tools - - and importantly, the political will - - to break up monopolies, foster competition and engender a robust competitive marketplace.
In Morocco, the King put his support behind a set of fair and open competitive rules. As a result, in February Morocco received one billion dollars for the second mobile license in that country.
Here in the U.S., we have been through 30 years of breaking up monopolies and deregulating markets. The result is that since 1984 long distance rates have dropped 56%, to as low as five-cents-a-minute. Telephone penetration is 94% and equipment such as computers and modems and answering machines is practically jumping off the shelves and into consumers’ shopping baskets. Seventy-five percent of Americans have a choice of five or more wireless mobile carries and 50% of users access the Internet other than through the incumbent local telephone company.
Skeptics will argue that market-driven competition and universal access are mutually exclusive. They say that mandated connections undermine the requirement of making a profit, and pit shareholders against the general citizenry.
They are wrong. First, competition spurs universal service by forcing providers to extend their networks in search of new customers. Second, for those areas that would not otherwise be served if left only to market forces, universal subsidies can be provided by requiring that each private carrier contribute a proportionate amount to a pool that supports access for all, so that the competitive playing field stays level.
Other skeptics argue that utility monopolies are natural and unavoidable because of the huge capital investment required and the physical limitations of rights-of-way.
But technology has now evolved to a point that competitors can plug into a monopoly network without disturbing the service quality of the monopoly. That’s called unbundling. What’s more, we can require the monopolist to allow the competitor’s connecting equipment to be placed near the monopolist’s equipment. That’s called co-location.
Unbundling and co-location, together with network interconnection, are three of the great marvels of modern regulatory reform. They spell the end of natural monopolies, and the replacement by new competitive entry -- a great boon to consumers everywhere.
Vigilance is Eternal
So the simple answer is competition, but, as is often the case, simple does not mean easy.
Here in the United States, we must continue to work hard to pry open historic monopoly markets and keep them open through government intervention. Each day at the FCC, I work hard to foster competition in the local loop and to ensure that our poor and rural areas are all included in the Information Age.
I sometimes envy Africa’s remarkable opportunity to bypass the difficult intermediate steps we have been through, and to move directly to advanced technologies. Indeed, some of the world’s most sophisticated national networks are in Botswana and Rwanda, where 100% of their main lines are digital, compared to just 50% in the U.S.
What Must Be Done
So you have the unique opportunity to leap-frog ahead in regulatory reform - - to take the world’s best practices and put them to work for your people.
In technology, that may mean jumping over the problems of the copper wire to take advantage of wireless and satellite. In market structures, that may mean designing a fully competitive market from the ground up.
Your governments should break down the old Berlin Walls of trade barriers and tariffs, and open up to the world wide web of communications equipment, software, and e-commerce.
Your public policy should stimulate teleports and investment pools, and encourage blanket licensing, mutual recognition agreements and type-approvals.
And like the African Virtual University, I hope you will watch for voluntary opportunities to link universities, schools, libraries, and job markets…public institutions that can nurture the aspirations of all people.
There is the relatively easy step of establishing a regional database of who regulates which service, and what the minimum requirements are. These databases will serve as gateways for foreign investment, and encourage harmonization and best-practices among nations.
And I hope you will consider flat-rate pricing for Internet access. That is one reason Internet penetration is exploding in the U.S.
Private Sector Challenge
But the G-8 Summit issued a challenge not only to governments, but also to the private sector.
Today, I want to challenge American companies to invest in Africa’s communication infrastructure.
French companies are doing it. The Germans are doing it. The Malaysians are doing it.
And more American companies should be doing it.
An investment in Africa is a good return on both capital and people, so this is a chance to do well and do good at the same time. SBC’s investment in South Africa is a prime example of this.
I am convinced that Africa will have a telecommunications infrastructure that rivals any on the planet. You will have high teledensity rates. You will have high Internet penetration - it’s just a matter of time.
And it will come a lot faster if we work together and commit to the hard things. And I believe that, when that happens, people will look back and they’ll say "Well, what was the turning point? What made this happen?"
And, unquestionably, people are going to look at this period in history and realize that at the dawning of this new century, there was a change. Governments in Africa and around the world made a commitment to do things differently in telecommunications, break open old monopolies, embrace competition, and back the small, up-start entrepreneurial companies that are going to make a difference.
And, when we look back on that period in history, I will remember all the friends I made in this room and know that we were the pioneers who made this happen, and that will be a wonderful legacy for us all.
Thank you very much.
-- FCC --