Mr. Chairman and Members of the Subcommittee, thank you for the opportunity to review with you today the FCC's performance during the last eighteen months and how we have fulfilled our statutory obligations. Much of our work over the last eighteen months has continued to focus on implementing and enforcing the Telecommunications Act of 1996. Because so much of that Act was focused on promoting competition in local telecommunications services, encouraging deployment of advanced services, and deregulating where possible, I will focus my remarks today on these subjects.

Overview

I am pleased to report that the Act is working: competition is growing in a wide range of telecommunications markets -- we see increased competition among long distance providers and consumers are beginning to have competitive choices for many local telecommunications services for the first time. The competitive deployment of advanced broadband services is spreading rapidly, and we are removing large amounts of historical regulation, particularly through the biennial review process and the forbearance authority granted in the Act.

Today, we see tantalizing glimpses of this competitive, deregulated future. Many markets, such as wireless and long distance markets are quite competitive and many -- but not all -- of the fundamental prerequisites for fully competitive, deregulated local telecommunications markets are now in place as the result of Congressional mandates in the Act, and the rapid implementation of the Act by the FCC and our colleagues in the State Public Utility Commissions.

This is not to say that fully competitive markets are inevitable and that we can now declare victory and simply walk away. Vigorous enforcement of the fundamental prerequisites for competitive markets and active, intelligent dispute resolution will remain necessary for some years to come, particularly if we are to avoid the kind of lengthy antitrust litigation that plagued the development of long distance competition. Indeed, today we are at that very delicate "tipping point": with just a little more time -- and probably a lot more effort -- we'll be "over the top" and competition will gain a firm foothold. But if we are unable or unwilling to make this effort, the momentum toward competitive markets will slow, the balance will tip the other way and just as inevitably send us back to 1996 and even 1990.

The coming year promises to hold breakthroughs in many telecommunications markets. The market-opening process in the Act has worked in tandem with the incentives and protections of Section 271 of the Act. I am encouraged by the progress being made by some of the Bell Operating Companies toward meeting the checklist requirements of Section 271. I look forward to the day that I can join my fellow Commissioners in granting a meritorious application for entry into interLATA telecommunications markets and seeing that decision withstand judicial scrutiny in the D.C. Circuit.

I also anticipate substantial developments in the coming year with respect to the rapid deployment of advanced telecommunications services, including increased deployment in rural areas. In particular, broadband services delivered over DSL or cable modems should increase dramatically in residential markets throughout the country. Wireless competition also will continue to grow, and it is not unreasonable to begin looking to the day where wireless telephony services will be viewed by some consumers as a substitute for wireline services. We should also see increased progress towards open markets internationally, and it should be a good year for the development of exciting new satellite services.

In sum, we are on the right track. Our implementation of the Congressional framework is working and we will have competitive, deregulated telecommunications markets in all sectors of the industry, and in all parts of the country, if we stay on course. It will take diligence and hard work by the FCC and our partners in the State Public Utility Commissions before fully competitive local markets are the norm, but I know that the dedicated women and men at the FCC and the State Commissions are ready and willing to undertake this hard work. I hope that all the members of the Commerce Committee, the Senate and the entire Congress will support us in this effort.

Good News: The Telecommunications Sector Is Thriving

By every measure, the telecommunications industry is thriving. One-fourth of our country's recent economic growth has come from the information technology sector. Since the passage of the Telecommunications Act, revenues of the communications sector of our economy have grown by over $140 billion. For 1998, it is estimated that the communications sector of our economy will have revenues in excess of $500 billion dollars. The market values of most companies in the telecommunications sector have increased substantially, indicating that Wall Street anticipates that the overall growth from competition will exceed lost market shares. In other words, telecommunications is like a rapidly enlarging pie that is big enough for many new participants; it is not a "zero sum" game.

This growth has not happened by accident. It is the direct result of sound Congressional policies that have been implemented and enforced by the FCC and the states. The old regulatory structure guaranteed that telecommunications markets would display the attributes of monopoly -- lack of choice, consumer dissatisfaction, delays in deploying new services, excessive regulation, and slow growth. As we replace this structure with a framework for competitive, deregulated markets and begin to change attitudes through vigorous enforcement of the new framework, we are experiencing a blossoming in telecommunications that touches the lives of almost every American. Now, a growing number of American families across this nation have a choice of a vast array of high-tech communications services, and those services offer far greater capabilities, with far greater quality, and often at lower prices.

This growth comes not only from established providers but, since the passage of the Act, we can now clearly see benefits flowing from the new competitors that are emerging as a result of the implementation of the Act by the FCC and the states. As barriers to entry have been removed and the fundamental rights that are necessary for competitive provision of telecommunications have been established, new firms have been showing up all over the country to take advantage of the pent-up demand for choices, new services, and lower prices. For example, the revenues of new local service providers more than doubled in 1997, and they increased substantially again in 1998. And this growth has meant new jobs for thousands of Americans.

In the wireless industry, Congress and the FCC have created the conditions for substantial growth. The FCC has auctioned off large amounts of spectrum, making it possible for new firms to enter markets, and we have worked hard to address some of the fundamental conditions for vigorous competition, such as interconnection. As a result, annual capital investment more than tripled between 1993 and 1998, with more than $50 billion of cumulative investment through 1998. Similarly, the wireless industry generated almost three times as many jobs last year as in 1993. The industry did all this while the cost of service to the consumer dropped. A wireless telephone is no longer a luxury for the privileged. Instead, with the advances in cellular service, the advent of PCS and digital services, and most importantly, increased competition--choices of providers offering comparable service--mobile telephones are now a common communications tool for over seventy million people.

Together with Congress and the Executive Branch, we have also promoted open entry and pro-competitive polices throughout the world, ranging from FCC policies to reduce international settlement rates to the adoption of the landmark World Trade Organization (WTO) agreement on telecommunications services. Together with the growth in our domestic markets, these policies will help ensure that companies such as AT&T, BellSouth, MCI Worldcom, Ameritech, Sprint, SBC, Bell Atlantic and U S West have the opportunity to stay among the top twenty telecommunications companies, by revenue, worldwide. Similarly, GE Americom, Hughes, Loral and PanAmSat are among the top twenty satellite service providers, by revenue, worldwide. And US satellite manufacturers such as Hughes, Lockheed Martin, Loral, Motorola and Orbital Sciences maintain a strong lead in contracting and subcontracting satellite systems worldwide.

I can't finish a summary of the sector without mentioning the Internet. It goes without saying that the Internet is booming, creating new jobs, new and better means of education and commerce. The Internet is a testament to a wise regulatory policy: don't regulate unless there is a clearly demonstrable need to do so. The FCC established a "hands off" policy three decades ago as evidenced by the original Computer Inquiry, and I can assure you that the FCC will not regulate Internet services. In fact, I believe that the unregulated, highly competitive Internet is a useful model for the more traditional telecommunications sectors. Of course, the basic legal prerequisites for competitive markets such as property rights and laws governing contractual relations should be enforced by the appropriate authorities.

These are just a few examples of how the wise policies adopted by Congress and implemented by the FCC and the states have produced a telecommunications economy that is thriving, and are doing so in an increasingly competitive environment.

Status of Competition

Let me take a few minutes to give you an idea of how competition is evolving, starting with markets for long distance telecommunications services. There are now over 600 long distance providers offering services, some on their own facilities, some entirely by resale and still others by a combination of owned facilities and resale. The vibrant competition between these firms has given customers a wide range of choices of providers and services, which has made an appreciable difference on the prices most consumers pay for long distance services. Long distance prices have steadily dropped over the past few years. The average cost of domestic interstate long distance dropped from 11.8 cents per minute to 10.3 cents per minute from 1996 to 1997. At the same time, the average rate per minute for an international call dropped from $0.70 in 1996 to $0.64 in 1997. Consumers have responded to these rate reductions by increasing their use of these services. Interstate and international calling increased to 500 billion minutes in 1998.

The wireless industry is surging. Everything that is supposed to be up is up, everything that is supposed to be down is down. Subscribership is up, jobs are up, investment is up, consumer bills are down, and the wait for a license is down. What is important to remember is that this surge of the wireless industry followed the elimination of the original duopoly structure and the introduction of competition by making more spectrum available to more players. In other words, Congressional and FCC policies to foster competition have worked for consumers' benefit and we expect that our local competition policies will bring similar benefits to wireline services.

The international market is also flourishing. With the adoption and implementation of the WTO Agreement countries representing 90% of the $600 billion global market for basic telecommunications have pledged to open their markets to international competition. We have been successful in our negotiation of bi-lateral agreements with other governments to permit provision of satellite service in their countries, such as Mexico and Argentina. We are also seeing substantial progress with international settlement rates as a result of the WTO Agreement and FCC decisions such as the International Settlement Rate ("Benchmarks") Order recently affirmed by the D.C. Circuit.

Domestically, local competition is still nascent, but it is making significant strides. The revenues of local service competitors in 1998 were about $4 billion. It is estimated that new local competitors now provide, over their own networks or by reselling incumbent company lines and unbundled loops, service to between four and five million telephone lines to customers--between two to three percent of the nation's total telephone lines.

Local competitors are taking an increasing share of nationwide local service revenues. Local competition is broadening: new competitors are reselling incumbent company lines in almost every state -- and about 40% of the incumbent lines they resell are connected to residences; new facilities-based competitors are active in almost every state. Local competitors continue to attract investment capital and deploy their networks. Industry sources report that 20 publicly traded competitive local exchange carriers (CLECs) have a total market capitalization of $33 billion -- compared to six such companies with $1.3 billion of total market capitalization prior to the 1996 Act. And these new competitors are working faster and working smarter. They continue to build fiber optic-based networks at a faster rate than incumbents.

Advanced Services / Broadband Deployment

I would like to speak briefly about the progress in the last three years in the area of "advanced telecommunications capability," or "broadband" as it is popularly known.

What is broadband? It is two-way communications of voice, data and images via any technology and, most importantly, at vastly higher speeds than most consumers have ever had in their homes. In practical terms, broadband will make it possible to change web pages as fast as you can flip through the pages of a book; will make possible two-way video conferencing in the home so that family members can see each other instead of just talking; and can make possible the downloading of feature length movies in minutes.

Broadband can also greatly increase the possibilities of distance learning and medical treatment at home; and its potential for persons with disabilities -- for increased communications via sign language or speech reading with the advantage of facial expressions and other nuances, and the possibility of text-based Internet pages converted into braille -- is enormous.

Section 706 of the 1996 Act, of course, directs the Commission to encourage the deployment of broadband to all Americans on a reasonable and timely basis. We released a Report in January on our nation's progress towards that goal.

Our Report is just a snapshot taken a few seconds after the starting gun of a very long race -- we and the runners in that race have a long way to go. In our Report, we concluded that advanced telecommunications capabilities are being rolled out in this country at a rate that outpaces the rollout of previous breakthrough products and services in the communications field. So, by this objective measure, we are ahead of the curve. On a subjective level, however, I am impatient. I want the Internet to go faster and farther for all Americans, and I am particularly concerned about deployment in rural areas and inner cities. We must ensure that a geometric increase in the deployment of advanced services is not accompanied by a geometric increase in the urban-rural disparity.

At this early stage, the signs are encouraging. We see two things, in particular.

First, since the 1996 Act, there has been an enormous amount of activity in the broadband area. Investment in broadband facilities has been tens of billions of dollars -- large sums even by the standards of this business. In what is usually the most difficult part of this business to enter -- the so-called "last mile" to the home -- many companies are building last miles, or giving serious study to the idea.

• Local exchange carriers, both incumbent and competitive, are deploying new technology that has reinvigorated the ubiquitous and simple copper telephone loops into effective and low cost broadband connections for residential consumers as well as businesses.

• Cable television companies are adding two-way broadband capabilities to their networks which are inherently focused on residential consumers, including rural and non-urban areas.

• Electrical power utilities, wireless cable companies, mobile and fixed radio companies, and many satellite companies are building or planning broadband systems -- some with revolutionary new technologies -- to serve residential consumers.

Second, in terms of residential subscribers who are paying for the service, today broadband is on par with, or ahead of, the telephone, black-and-white and color television, and cellular service at the same stage in their deployment. And according to the cable and telephone companies, by the end of this year they will be offering broadband to millions of residences.

As mentioned above, we at the FCC are committed to the greatest vigilance in ensuring that broadband services are deployed as rapidly as possible in rural areas that have been historically bypassed by competition and technological advances. In this regard, I am pleased to note that broadband services are being offered to residential consumers in a number of small towns and rural areas, which indicates that rural areas do not present intractable problems for broadband deployment. Rural areas may be targeted especially by satellite companies, which already have the highest proportion of their customers for Direct Broadcast Satellite television services in rural areas. I would also like to thank those senators who joined with Senators Daschle and Dorgan in their letter to me last week. They have made recommendations that hold promise for rural America, and I look forward to working with them.

The success of broadband so far is the result of many longstanding FCC policies. For example, the FCC has sought to facilitate new competition in all phases of the telecommunications business, enforcing unbundling requirements so that newcomers have fair access to elements of the incumbent networks, and allocating large blocks of spectrum in ways that make them useable for any technically feasible service.

Because this is the very early stage in broadband's deployment, the nature of consumer demand is very unclear. Certainly, at present, it seems that many companies are entering broadband and offering it at consumer-friendly prices, and residential consumers are starting to find out about broadband. The market seems to be working and the best role for government is to observe, monitor and enforce our long-standing policies of promoting competition and providing the spectrum and access rights that are the building blocks for a competitive market.

Telecommunications Mergers and Acquisitions: Reconsolidation or Foundation for the Future?

A strong effort to firmly establish competition in local markets and your support of this goal is all the more necessary since the telecommunications industry is experiencing a wave of mergers and acquisitions. As this Committee is aware, smaller companies are "bulking up" by merging with each other, and major "name brand" telecommunications companies are also merging with one another as well as acquiring smaller companies.

This activity could portend a reconsolidation of the telecommunications industry that prevents competition, to the public's detriment, or it could establish a strong foundation for aggressive competition and innovation that greatly benefits the public.

With the stakes so high, when formerly monopolized markets are being opened to competition, it is essential that we do as much as we can to prevent anything that will retard the development of competition. This means lowering entry barriers, ensuring efficient interconnection of facilities, and encouraging the development and deployment of new technologies. This also means that the Commission needs to be particularly careful in evaluating mergers during this time of change and uncertainty, because a merger, once consummated, cannot easily be broken up. You can't unscramble an egg.

"Good" mergers can spur competition by creating merged entities that can compete more aggressively and that can more quickly move into previously monopolized markets. If this competition develops, it will make it possible to substantially deregulate the local exchange markets, just as strong competition justified the substantial deregulation of the long distance and wireless markets. Similarly, a vertical merger between two firms that do not appear to be likely significant competitors in each other's markets may generate public benefits without imposing anticompetitive costs.

But "bad" mergers are likely to slow the development of competition. Among the anticompetitive harms arising from a "bad" merger are: eliminating firms that would have entered markets; raising barriers to entry; discouraging investment; increasing the ability of the merged entity to engage in anticompetitive conduct; and making it more difficult for the Commission and State Public Utility Commissions to monitor and implement procompetitive policies. What makes evaluation of telecommunications mergers so difficult is that regulatory barriers to entry have, until recently, prevented many of these companies from competing with each other. Accordingly, it is not enough to simply consider whether existing rivalry between the firms would suffer, which is the focus of most traditional antitrust merger analysis. Rather, one must consider whether, but for the merger, the companies would have entered each other's markets and spurred the development of competition in formerly monopolized markets.

In this time of great change and uncertainty, the FCC needs to be particularly vigilant to prevent any developments, including mergers, to slow the development of competition. That is why the FCC and, in some cases, State Public Utility Commissions, need to apply their unique knowledge, expertise and judgement in reviewing proposed mergers and acquisitions.

In essence, there are three points to be asked regarding mergers:

Do we want a cartel or competition? The Department of Justice typically evaluates competition that currently exists and, under existing antitrust precedent, it faces obstacles to challenging mergers between companies that do not currently compete. In contrast, the FCC is charged with creating the conditions for competition called for by the 1996 Act.

Second, a merger, left un-reviewed by FCC, could violate the Communications Act. The FCC must enforce the telecommunications laws and ensure compliance with the Communications Act.

Finally, we always use the same standard -- the public interest test. Moreover, we always use an open and transparent process that is fully consistent with the Administrative Procedure Act. All interested parties, including the applicants and members of the public, must have the opportunity to participate and be heard. The FCC also must respond to the concerns raised in the record and explain its decision in writing in its order, which may be reviewed by the appellate courts.

Barriers to Competition Remain

Some of the most crucial prerequisites for local competition take a considerable period of time to put in place, even under the best of circumstances. Unfortunately, but not surprisingly, the availability of some of the most important prerequisites have been delayed, sometimes through litigation, sometimes through the intransigence of parties that are threatened by competition, and sometimes through the sheer scale and complexity of the task.

This latter factor -- the sheer complexity of the task -- cannot be ignored: the development of local exchange competition is simply an order of magnitude more complicated, more labor-intensive and more capital-intensive than was the development of long distance competition.

While the industry players actually have to do the work, regulators can play a critical role by getting the players together, insisting that a solution be found, setting standards and deadlines, and resolving implementation disputes. For example, by facilitating the development of the technical solution and establishing a clear implementation schedule for Local Number Portability, the FCC played a catalytic role in eliminating one complex technical barrier to competition.

Although some amount of litigation is inevitable, the Supreme Court's recent reaffirmation of the FCC's fundamental responsibility to implement the Act has removed considerable uncertainty that may have been slowing the development of local competition. Another major barrier to local competition will fall as soon as the FCC is able to complete the determination later this year of what network elements should be unbundled -- in accordance with the Supreme Court's remand.

To keep markets open and the competitive momentum going, the FCC will act as the liaison between the incumbent LECs and the CLECs to minimize disputes and avoid lengthy proceedings and litigation. Where the FCC's intervention cannot quickly resolve interconnection problems informally, we are using our "rocket docket" to adjudicate these disagreements quickly, and to keep the market functioning smoothly.

Universal Service and Access Charge Reform

Another area that has direct implications for the state of competition in the local market is our system of universal service subsidies and our interrelated access charge system. The Commission is currently engaged in a monumental undertaking which is known as universal service reform. The efforts Congress undertook to make universal service a part of the Telecommunications Act of 1996 were Herculean. We are working to ensure that our reformation of the universal service mechanisms embrace the vision you had when you passed legislation codifying universal service. In fact, tomorrow the Commission will take yet another step toward the reforms we need to make in order to accomplish the goals you established.

As we move forward with universal service reform, we must be vigilant to balance caution and ambition. Our goal, like yours, is to ensure we satisfy the Telecommunications Act's clear policy of ensuring the availability of affordable phone service to consumers in all regions of the nation. Overzealousness or inaction could undermine this very clear policy goal. As you know, the FCC adopted a forward looking cost model last fall. Tomorrow I will recommend that my colleagues adopt an order and a further notice on the Federal State Joint Board recommendations and a further notice on the elements or "inputs" to be used within the model. I will urge my fellow commissioners to adopt many of the recommendations of the Federal State Joint Board, and put out for comment those recommendations that require further discussion among interested parties. I will also recommend that we look for comment on the actual inputs we will use in the cost model in order to implement the new universal service mechanism that is specific, predictable and sufficient. We are working diligently to adopt a final mechanism for the non-rural companies in September, for implementation in January 2000.

Recognizing that access to technology is essential for future jobs and an important step necessary to close the digital divide, I have also consistently advocated the Congressionally-created universal service support for service to classrooms and libraries -- the so-called E-rate. Under my tenure, the Commission finalized implementation of the E-rate and prioritized assistance so that the most needy would receive the biggest benefit. Moreover, the Commission ensured that strong program controls were in place. According to one study, 87% of Americans support the e-rate. This past year, 32,000 school districts, schools, and libraries from across the nation submitted applications for E-rate funding. At tomorrow's Commission meeting, I will be recommending that we fully-fund the E-rate program so that we can meet this demand and continue the work we've done this past year. With this funding, we'll be able to connect one-third of public schools throughout rural America. We look forward to working with you as we bring your vision of a reformed universal service mechanism to fruition.

Consumer Initiatives

Throughout my tenure, I have sought to stress the importance of promoting competition while making sure it is not at the expense of consumers. Towards this end, we have taken a number of steps to ensure that consumers receive the benefits of the communications revolution.

• We have adopted Truth in Billing rules, to ensure that phone bills are clear and easy to read and that no service charges are "crammed" onto the bills of consumers who didn't order or understand. These new rules require that bills be clear and understandable; new charges be highlighted; all charges have clear explanations about what they are and who to contact if there is a problem; and the bills state clearly which charges, if not paid, will result in termination of service.

• We now offer on the FCC's own website a "Parents, Kids, and Communications Page." This site gives parents easy-to-understand information on some of the tools available to them when their children navigate the Internet and other media. We have included information on a whole range of filtering software, information on how to block 1-900 calls, information on how to get a cable 'lock-box' to block out certain channels, and an explanation of the TV ratings system and the V-chip.

• The FCC recently adopted tough new rules to take the profit out of slamming altogether. In 1998, the Commission also assessed or proposed more than $15 million in fines for "slamming" violations and now is consistently proposing slamming fines of over $1 million. Unfortunately, once again litigation is inhibiting our ability to enforce these new rules. In addition, for the first time ever, we revoked a carrier's license to provide interstate services because of slamming abuses. We also brokered and endorsed industry-developed guidelines to stop "cramming" that have significantly reduced the number of cramming complaints and issued rules to protect consumer privacy concerning the use and disclosure of personal information to marketers.

• At our Commission Agenda meeting just two weeks ago, we adopted rules that will improve the ability of cellular phone users to complete wireless 911 calls. This will improve the security and safety of analog cellular users, especially in rural and suburban areas. The Commission approved three mechanisms for use by the cellular industry, any of which will result in more wireless 911 calls being completed than occurs today. We also took steps to improve consumer choice and foster competition regarding the commercial availability of navigation devices (e.g cable television set-top boxes).

• We recently ordered long distance carriers to publicly post their rates on the Internet, in an easy-to-understand, clear format, permitting millions of Americans on-line to find out easily about long-distance rates. Newspapers and consumer groups will be able to make this information available to those not yet on-line. This action will make it easier for consumers to obtain information to help select the long distance plan that best suits their individual needs, once underlying litigation about our decision to require detariffing is resolved.

• We also are taking steps to ensure that the fifty-four million people with disabilities are not left out of the communications revolution. We have also strengthened closed captioning rules so that persons who are deaf or hard-of-hearing will have access to more programs on television; proposed new rules for telecommunications relay services and proposed to require the provision of speech-to-speech relay service; advocated that industry provide solutions to the problem of compatibility between digital wireless phones and TTYs; proposed rules to make telecommunications services and equipment accessible to persons with disabilities; and are also working with the Architectural and Transportation Barriers Compliance Board to propose rules on accessibility requirements for federal agencies when they use or purchase electronic and information technology.

A New FCC for the Twenty-First Century

I am submitting as part of my testimony today a report entitled "A New Federal Communications Commission for the Twenty-First Century." The Report describes the communications marketplace -- past, present, and future -- and the implications of those changes for the FCC's structure and regulatory framework. It is part of a continuing process of self-assessment that the Commission has been engaging in to transform itself to meet the challenges of an information-age economy and an ever-changing communications industry. This process of dramatic evolution at the FCC is required by the changes wrought in the Telecommunications Act of 1996, and it is consistent with the approach taken in the Act. The Act was evolutionary instead of revolutionary: rather than discarding the old regulatory framework at once, which would have been highly disruptive and fraught with uncertainty, Congress created a new "pro-competitive, de-regulatory policy framework" while explicitly preserving the existing regulatory framework and directing the FCC to forbear from the old regulations as competition developed. Nonetheless, the pace and magnitude of change set in motion by the 1996 Act is truly breathtaking.

My vision for a "New FCC" is a bold one -- the FCC should change dramatically over the next five years. The FCC must undergo truly significant change to match the rapid evolution in markets set in motion by the 1996 Act. In a world of fully competitive communications markets, the FCC should focus only on those core functions that are not normally addressed by market forces. These core functions should revolve around: i) universal service, consumer protection and information; ii) enforcement and promotion of pro-competition goals domestically and worldwide; and iii) spectrum management.

The steps we are taking to transition to this model include: 1) Restructuring: We are consolidating currently dispersed enforcement functions into an Enforcement Bureau, and currently dispersed public information functions into an Information Bureau. The consolidation of these two key functions will improve efficiency and enhance the delivery of these services to the general public and to industry. 2) Streamlining and Automation: We are investing in new technology to create a "paperless FCC" by processing applications and licenses faster, cheaper, and in a more consumer friendly way through electronic filing and universal licensing. 3) Deregulation: We are completing 32 deregulation proceedings covering hundreds of rules as a result of our 1998 Biennial Review of regulations, and intend for the 2000 Biennial Review to produce even more deregulatory actions. 4) Strategic Plan: We are conducting three public forums with industry, consumer groups, state and local governments, and academic experts to solicit input on what the FCC's role should be in the Twenty-First Century, how we should be structured, and how we can work more efficiently and effectively to deliver services to the public. We have also established an e-mail site, "newfcc@fcc.gov" to receive additional input from the public on the above questions. The result of this effort will be a draft Strategic Plan covering a five-year period which we will submit to Congress in July 1999 for its review, and on which we will seek additional public comment.

Conclusion

We have come a long way towards a more competitive market place in communications, but we have much more work to do. The transition from monopoly regulation to open markets, from today's technologies to tomorrow's breakthroughs, is not yet complete. For the coming year our agenda is clear: promote competition, foster new technologies, protect consumers, and ensure that all Americans have access to the communications revolution.

These will be the goals that guide us as we implement the Supreme Court's instructions on UNEs, as we continue opening local phone markets, as we work to make communications available to all Americans, as we review the mergers now before the Commission as well as those we may receive.

The agenda for this year continues on the foundation laid last year: competition, community, common sense. We have a lot of work to do, and we have the will to do it well.

• We will promote competition in all sectors of the marketplace. We will reform access charges, and ensure that proposed mergers are pro-competitive and benefit consumers.

• We will continue to deregulate as competition develops, eliminating any unnecessary regulatory burdens, reducing reporting requirements, streamlining rules and our own internal functions.

• We will continue to protect consumers from unscrupulous competitors, and give customers the information they need to make wise choices in a robust and competitive marketplace. We will continue our policy of "zero tolerance" for those competitors who would rather cheat than compete.

• We will work to ensure that the Act's provisions on RBOC entry into the long distance marketplace are implemented in a manner that promotes competition and consumer welfare and is fair to all of the parties.

• We will ensure broad access to communications services and technologies for all Americans, no matter where they live. We will complete universal service reforms, continue oversight of the schools and libraries and rural health care universal service programs, encourage accessibility of emergency information via closed-captioning and video description, and ensure that the 54 million Americans with disabilities can use and have access to the communications network.

• We will foster innovation, working to ensure that America remains the world's leader in innovation. We will continue to promote the development and deployment of high speed Internet access, promote compatibility of digital video technologies with existing equipment and services, and promote competitive alternatives to cable and broadcast TV.

• Finally, we will advance these concepts worldwide, serving as an example and advocate of telecommunications competition worldwide. We will work to encourage the development of international standards for global interconnectivity, work to promote the fair use of spectrum through the WRC 2000, work on the worldwide adoption of the WTO Agreement for Basic Telecommunications, and aggressively enforce the FCC's International Settlement Rate ("Benchmark") Order to reduce rates for international calls. We will continue to assist other nations in establishing conditions for deregulation, competition, and increased private investment in their telecommunications infrastructure so that they too, can share in the promise of the Information Age, and become our trading partners.

This is an important and dynamic time in the history of telecommunications policy. I look forward to continuing to work with this Committee and other members of Congress so that the decisions we make today ensure that all Americans -- irrespective of where they live, their race, their age, or their special needs -- can share in the promise of the Information Age.

Thank you. I look forward to answering any questions you may have.

We are standing at the threshold of a new century, a century that promises to be as revolutionary in the technology that affects our daily lives and the future of our country as the inventions and innovations that so profoundly shaped the past 100 years. Just as the internal combustion engine, the telephone, and the railroad brought about our country's transformation from an agricultural to an industrial society, the microchip, fiber-optic cables, digital technology, and satellites are fueling our transition from an industrial to an information-age society. As the marketplace changes, so must the Federal Communications Commission (FCC). The top-down regulatory model of the Industrial Age is as out of place in this new economy as the rotary telephone. As competition and convergence develop, the FCC must streamline its operations and continue to eliminate regulatory burdens. Technology is no longer a barrier, but old ways of thinking are.

Enclosed is a Report entitled "A New Federal Communications Commission for the 21st Century." This report is part of a continuing process of self-assessment that the Commission has been engaging in to transform itself to meet the challenges of an information-age economy and an ever-changing communications industry. The Report describes the communications marketplace -- past, present, and future -- and the implications of those changes for the FCC's structure and regulatory framework.

My vision for a "New FCC" is a bold one -- in five years, the FCC should be dramatically changed. In a world of fully competitive communications markets, the FCC should focus only on those core functions that are not normally addressed by market forces. These core functions would revolve around: i) universal service, consumer protection and information; ii) enforcement and promotion of pro-competition goals domestically and worldwide; and iii) spectrum management.

The steps we are taking to transition to this model include: 1) Restructuring: We are consolidating currently dispersed enforcement functions into an Enforcement Bureau, and currently dispersed public information functions into a Public Information Bureau. The consolidation of these two key functions will improve efficiency and enhance the delivery of these services to the general public and to industry. 2) Streamlining and Automation: We are investing in new technology to create a "paperless FCC" by processing applications, licenses, and consumer complaints faster, cheaper, and in a more consumer friendly way through electronic filing and universal licensing. 3) Deregulation: We are completing 32 deregulation proceedings covering multiple rule parts as a result of our 1998 Biennial Review of regulations, and intend for the 2000 Biennial Review to produce even more deregulatory actions. 4) Strategic Plan: We are preparing a five-year Strategic Plan that will outline our timetable for restructuring and streamlining FCC functions and management. As part of this process, we will work with Congress, state and local governments, industry, consumer groups, and others on a critical assessment of what the "New FCC" should look like and how we should get there.

*Note: Many of these dates are subject to change and may need Commission or Congressional approval.

A New Federal Communications Commission for the 21st Century Report