January 30, 1998

Good morning. I want to talk with you this morning about two topics, the second anniversary of the Telecommunications Act of 1996 and my agenda for the year.

It occurred to me this morning that only in Washington could the second anniversary of the enactment of legislation be the occasion for a press conference. But since I know that many of you have written or will write about this, let me share some observations with you.

There are those who have already declared the 1996 Telecom Act to be a failure. The King is dead. Well, long live the King. Because as Commissioner Powell said so eloquently yesterday, the debate over whether the Act is working is "tiresome" and "irrelevant." As was amply demonstrated during the Commission's en banc hearing on the status of local telephone competition, the Act has successfully moved us in the right direction -- toward greater competition.

Is competition as broad or as deep yet as we would like? No. But the telecommunications landscape is not a desert. We are beginning to see the early, promising buds of competition. Our job is to nurture those buds, protect them from a premature frost, and to encourage even wider growth for competition, especially for residential consumers. Because we know that competition is like a wild flower: once it takes root, it wants to spread and bloom.

We cannot forget that our actions have led the world to embrace competition over monopoly. The landmark World Trade Organization Agreement on Basic Telecommunications Services, which was signed last year and which has now begun to take effect, will bring competition to international telecommunications.

That Agreement was a direct result of the leadership shown by the 1996 Act. That is why it is so important for us to remain vigilant in promoting procompetitive policies in this country -- because the world is watching.

The 1996 Act ended legal barriers to entry in local telecommunications embodied in many state laws. There are now over 100 competitive local exchange carriers around the country. The top 10 CLECs have switches in 132 cities spanning 33 states and the District of Columbia. The 1996 Act created a framework for the creation of approximately 2,400 interconnection agreements. Over the past two years, $14 billion has been invested in competitive local exchange carriers, and their combined market capitalization is over $20 billion.

This is progress. Of course, we have much further to go. In particular, too few residential consumers have the opportunity to choose among competing providers of local exchange services. There are some promising prospects as cable companies and companies affiliated with utility companies begin to provide residential local telephone service, but competition has yet to blossom in the residential market.

And the courts clearly have slowed the pace of development of competition. Judicial rulings have added to uncertainty, disrupting investment planning and frustrating promising entry strategies.

In video markets, although the pace of the development of cable competition is troubling and will not likely be sufficient to keep cable prices in check after March 1999, the Commission has continued to work to create a more competitive marketplace. We have also implemented the Act's provisions regarding restrictions on over-the-air reception devices. By striking down inappropriate governmental and non-governmental restrictions on the installation, maintenance and use of these receivers, the Commission has expanded the choices available to video consumers.

Clearly, there is more work to be done to deliver real cable choice for Americans, but we are moving in the right direction. I am encouraged, for example, that we have received over 200 applications to participate in the upcoming LMDS auctions which will give providers over 1,000 MHz of new spectrum to provide video and other broadband services.

The 1996 Act is delivering other benefits as well. Beginning today, schools and libraries began to submit applications for universal service support to connect our classrooms and libraries to the Internet.

Here is some news hot off the wire. The website opened this morning at 5:00 am. This website allows schools and libraries to file their applications electronically. As of 10:00 am today, 143 applications had been filed electronically; 291 schools are currently on-line filling out the applications; and 973 applications have been received by mail.

These schools and libraries are making the investments to prepare our children to be the productive workforce we need for the twenty-first century. And without these investments, we face the very real prospect that our high-tech economy will find itself short hundreds of thousands of skilled workers.

In fact, today in the computer industry, 350,000 high wage, high tech jobs remain unfilled because U.S. companies cannot find workers with high technology skills. Their response? Many companies are importing software engineers and systems analysts from overseas because they cannot find skilled American workers. That is just one example of why it is so important for us to make the investments to bring technology to our schools so we can prepare our children for the Information Age.

The country is seeing many other benefits of the 1996 Act. Wireless telephone prices are dropping rapidly. In the nine months from April to December 1997, prices for cellular and PCS services dropped over 12% for low volume customers and over 31% for high volume customers. Long distance rates fell 5.3% between January 1996 and November 1997. Long distance prices are now the lowest they have ever been. And everyday, yet another long distance company interrupts your dinner to offer you an even better deal.

Two years after the enactment of the Telecom Act, we are coming along in terms of delivering the Act's benefits to the American people.

For the coming year, it should not be surprising that our agenda will be dominated by our efforts to advance Competition and Community with Common Sense.

At the head of my priorities will be to continue to attempt to deliver choice in telecommunications, especially local telecommunications, to the American people. In particular, we must strive to see choice of local telephone providers reach more residential subscribers.

We must also continue to find ways to ensure that rates remain affordable and that telecommunications services remain comparable in all areas of this country. This is a critical issue. Universal service has been a hallmark of our telecommunications system since the invention of the telephone. We must continue to preserve and enhance universal service as competition increases. We cannot allow rural America to become a "have not" zone in the telecommunications age. We will address these issues in two steps, with an order on a mechanism for estimating forward looking costs in the first quarter of 1998, and with an order on input for that mechanism and other implementation issues by the end of the third quarter.

We will continue to work to deliver universal service to our nation's classrooms and libraries, and to connect these centers of learning to the Internet. We must also finish implementing ways to provide rural heath care providers access to modern telecommunications facilities to allow better, faster diagnoses and treatments.

We will continue to seek ways to increase cable competition, and to assess whether we need to refine our cable rate regulations. As I said previously, I remain concerned that competition will not arrive in time to provide a true marketplace restraint on price increases by March 1999.

We must also finish the implementation of digital television. This includes not just the service rules and allotment plans, but must-carry rules and public interest obligations. I intend to begin the must carry and public interest proceedings during the first quarter of 1998.

We also must move forward to complete work on V-chip standards and TV ratings. I expect to bring these items before the Commission by early March, so that the industry can put these important tools in the hands of America's parents.

Like its appetite for ever-increasing computing power, I believe our nation will have an ever more voracious appetite for data transmission capacity, sometimes called "bandwidth." The key to satisfying this appetite will be to create real opportunities for companies to compete to deliver high bandwidth services over the "last mile" to consumers. Competition in our backbone networks today is driving backbone providers to keep increasing the capacity and speed of the backbones. We need to bring that competitive drive to expand capacity and improve service to the final links to consumers.

Finally, throughout all of our proceedings, we must seek to ensure that our booming communications markets are creating opportunities for participation by all Americans. We must move forward to ensure that we are providing opportunities for employment, access and ownership, particularly for those who remain underrepresented in the ownership and employment ranks of these businesses -- minorities, women, the disabled.

The communications and information industries represent the fastest growing sectors of our economy -- over $800 billion last year. We should seek to create and expand opportunities in every sector of the communications marketplace and do all we can to make sure that no one is left behind.

Last August, the Commission adopted rules to increase the amount of closed captioned video programming available to the 22 million Americans with hearing disabilities regardless of whether they receive their television signals from cable, DBS, wireless cable, or through over-the-air broadcast. This is a vitally important step in making sure that disabled Americans get access. And in March, I plan to initiate another proceeding under Section 255 to propose ways to facilitate access to telecommunications equipment by disabled persons.

I've outlined what I believe to be the overarching goals for the agency. Let me take a moment now, and tick off some of the specific proceedings and timetables for implementing this agenda.

Competition

The Commission will devote much of its time to implementing the procompetitive provisions the 1996 Act. Here are some of the major items that I plan to present to the Commission during the first half of this year.

1. A Notice of Proposed Rulemaking to delineate further operating support systems to propose performance assessment and reporting mechanisms.

2. An order establishing mechanisms for the recovery of costs for long-term number portability.

3. An order outlining pricing flexibility for local exchange carriers as they face new competition.

4. An order addressing the appropriate regulatory treatment of CMRS carriers who provide fixed or combined fixed-mobile services.

5. Earlier this week, we released a public notice outlining the schedules for establishing a dialogue with parties involved in the Section 271 process.

   We will also spend a lot of time on universal service issues.

   1. We will select a mechanism to calculate the cost of providing universal telephone service for rural areas.

   2. We will, of course, be completing a report to Congress discussing new technology and universal service. Our deadline on that report is April 10.

   3. We will announce the new FCC members of the universal service joint board.

      Multichannel Video

      In the multichannel video area, we will have:

      1. an order on the horizontal ownership rules -- the rules which address the number of cable subscribers an MSO can serve nationwide;

      2. an order establishing the DBS service rules;

      3. an order on ways to strengthen enforcement of program access requirements; and

      4. an order addressing the new statutory provisions on Over the Air Reception Devices -- issues remain, for example, the issue of how to deal with certain landlord-tenant situations.

         (By the way, this list is not exhaustive. It does not include a number of adjudicatory matters, such as the 271 cases and the pending mergers, Primestar & MCI\Worldcom, for example, which, of course we will also be addressing in 1998.)

         Mass Media

         1. In the V-chip area, we will address two orders to implement statutory provisions. We will consider an order to determine whether the industry ratings system is "acceptable"; and an order outlining the technical requirements for the V-chip. I plan to present these V-chip orders in early March.

         2. In the Digital Television area, we will have:
            1. an order to address the must carry obligations;

            2. an order to address public interest obligations;

            3. an order to establish a fee structure for ancillary and supplementary services; and

            4. an order to address tower siting issues.

            5. Ownership issues will also be a big part of the Mass Media agenda.
               1. We will consider a review of the Broadcast Ownership rules as required by the 1996 Act: ownership rules not already the subject of pending rulemaking proceedings, such as:
                  1. the newspaper\television cross ownership rule,
                  2. the UHF discount,
                  3. the cable\television cross ownership rule, and
                  4. the impact of statutory changes in the 1996 Act on the marketplace.

                  5. We will also resolve pending rulemakings involving the broadcast ownership rules, including:
                     1. the local TV ownership rules (TV duopoly, radio\TV cross ownership; and TV LMAs), and
                     2. the attribution rules.

                        Wireless

                        1. We will conduct the LMDS auction in February.

                        2. We will proceed with the licensing of spectrum reserved for public safety use in 60-69 MHz.

                        3. We will address petitions for reconsideration of the C-Block restructuring orders.

                           Bandwidth

                           We will commence a proceeding to develop ways to stimulate innovation and investment in high capacity data transmissions.

                           Opportunity Agenda

                           In all of the Commission's work, I will urge the Commission to remain focused on ways to create opportunities for new entrants, particularly small, minority and women owned businesses. Specifically, in 1998, we will:

                           1. complete the Adarand study;

                           2. complete the Bechtel remand proceeding;

                           3. complete the pending rulemaking on ways to advance minority and female ownership in broadcasting; and

                           4. complete the rulemaking proceeding on ways to improve the EEO rules for the broadcast service.

                              Well, as you can see, we have a very ambitious agenda for 1998. I am confident that we can accomplish it.

                              I feel very fortunate to be able to work with so talented a group of Commissioners. The complement of skills that the other Commissioners bring to this challenge is truly impressive and we are working well together. So I believe that we can accomplish a lot.

                              We also have a staff here that just never ceases to amaze me in their ability to produce consistently high quality work under unbelievably difficult deadlines and circumstances.

                              But I think I speak for all of us at the Commission in saying that we feel honored and privileged to be working at the Commission at this important time in the history of communications law and policy.

                              When the history of communications policy in this decade is written, I believe it will be largely about two transforming events: the move to embrace competition as an organizing principal in the law and the conversion from analog to digital technology.

                              First and foremost competition. Competition has been a goal of communications policymakers for many years now. With the 1996 Act, it has become our national policy and the organizing force of much of our work here. This Act gives us tools to accelerate the pace of competition and I am confident that we can do so.

                              Second, digital conversion. Virtually every sector is undergoing this transition: Analog to digital radio. Analog to digital cellular networks. Analog to digital telephone networks. Analog to digital television. The virtually infinite versatility and capacity of digital technology is giving consumers products that are nothing short of magical and, it is providing communications companies new ways to deliver those products.

                              And together, these two transforming forces -- competition and digital conversion -- challenge the FCC to make sure that we have a regulatory regime that accommodates change at a pace that we have not encountered before. I am confident that we are up to the challenge.

                              I would be happy to take a few questions.