[ Text Version ]

Remarks by
William E. Kennard, Chairman
Federal Communications Commission
to WIRELESS 98, Atlanta, Ga.
February 23, 1998

I have a lot to tell you about things going on in Washington. But I want to start by telling you about somebody from the tiny village of Bora in Bangladesh.

Her name is Noa Jahan Begum. And if you walked up to her house now, you'd see twenty or thirty -- or fifty -- people. They're her customers. Some sit in her house, on chairs if they get there early enough. Others sit on the floor. The rest are lined up outside. And this goes on every day.

Why? What's happened to transform a woman who had no work nine months ago into an entrepreneurial success story? She got a loan from Gramin Bank -- and bought a cell phone. Noa Begum lives only 20 miles from Daka, the capital of Bangladesh. Still, most of her neighbors have never even seen a phone -- or a light bulb for that matter. To get a message to relatives in Daka they would walk. To call a relative, say, in New York City, they'd go to the city -- then wait days for a pay phone. Because to the rural poor, your technology has become a sure way to a better life. These new wireless phones give isolated people a link to the rest of the world. They help them in the most urgent ways.

If you talk to economists at the World Bank, they'll tell you that the key to including poor people everywhere in the larger global economy is radio based technology. They have an opportunity they've never had in the whole span of human history.

And that's what I want to talk about today.

The opportunity you have. The opportunity the world has. And the responsibilities it imposes on us all.

I have to admit -- this story has a resonance for me thatgoes beyond its meaning for this industry. Because I feel that -- like this woman in Bangladesh -- I was lucky enough to grow up in an era in this country when there were possibilities never before possible for my family. My entering telecommunications is a legacy of the people who wanted to reach out and create opportunity where it did not exist before. I got started when a TV station in San Francisco started a minority internship for college students and went out and recruited me.

Sometimes we see historic shifts in the way we viewourselves and our place in the world. It may be a college student like me finding new opportunities never before possible, in an expanding field, or an isolated village given the ability to make a phone call. Or it may be an industry, given a chance to become part of the mainstream. That's what's happened to wireless.

All of us remember when wireless was an outsider. Patronizing security analysts saw the possibility that you might complement the networks of the wireline telephone companies one day. Some said there would be about 900,000 wireless subscribers by the year 2000. CTIA says that today there are more than 54 million, and counting.

Why were the analysts wrong? Some of you probably say that analysts are always wrong about wireless. But back then it wasn't all lack of foresight. After all, the equipment itself was initially clumsy. We called phones "bricks" -- and for good reason. The batteries were so large we had to carry them in bags. Service was mobile, all right. But hardly portable.

And there were other problems. You had trouble gaining access to the larger telecom network. Some service providers weren't even allowed to interconnect. Or else providers could connect -- for an outrageous price. Because of that price your customers were the privileged and well off. What changed things?

What made it so every second person on Peachtree Street here in Atlanta seems to be walking along with a cell phone the size of a wallet pressed to his ear, or slipping it in and out of his jacket pocket? You could undoubtedly come up with a list that would include brilliant physicists...innovative venture capitalists ... tough marketers . . . good managers. You'd be right.

But I'd like to point to one decision made by government. The Budget Act of 1993.

That Act of Congress helped to make wireless what it is today. It leveled the playing field between competitors by mandating that the same regulatory scheme apply to all similar mobile wireless services -- and that we would keep regulation to the absolute minimum necessary to ensure competition.

It gave the FCC discretion to avoid most common carrier regulation that would inhibit the growth of this industry. It gave us auction authority and declared that in using auctions to license spectrum-based services we had to make available opportunities for minorities, women, small businesses and rural telcos And here is a vital point.

It recognized PCS and other wireless technologies on the horizon as not just complements to the telephone network but potential competitors, and ultimately, as substitutes. I remember that time very well. I'd just come to the FCC as General Counsel when we were implementing the new law. Personally, I was pretty sympathetic towards this industry that had been dismissed for so many years and denied the same opportunities as other telecom providers. I also thought it had great potential. Which is why I enjoyed so much of my early tenure as General Counsel implementing auction authority.

I'll never forget getting set for our first auction. We'd spent the weekend before testing the software for it. It totally crashed. Technicians stayed up all night to get it fixed on time.

I'll never forget the auction, either: all those people cooped up at the Shoreham Hotel in Washington, snooping around to find out who other the bidders were, wandering into the FCC booth pretending they were lost to see what they could learn. It did work out, though.

And look what has happened since.

Those auctions in 1995 and '96 instantly created new competitors. Cellular duopoly? No such thing anymore. Competition? We now routinely have four or five wireless companies in every major city in America.

Customers love wireless. And why not? It frees you from the network. Instead of you coming to the network the network comes to you. And wireless customers are always looking for that new handset chock full of new functions.

Less regulation. More competitors. Lower prices for consumers. All this has spurred unprecedented growth in subscribers. As our LMDS auctions get underway, the result will be facilities-based competitors with enormous capacity -- as much as fiber optic cable. Wireless has arrived. You've changed the way America communicates. You should be proud of this accomplishment. I'm proud of role that the FCC has played in your success. And I'm proud that I have been fortunate enough to have been a part of it.

That's not to say that there aren't many challenges ahead before wireless becomes a true substitute for wireline service. Some key decisions are ahead . . . areas where the wrong decisions can be costly. Here are a few:

Interconnection. It must be based on forward-looking economic costs. Until this becomes the norm, interconnection will impede the move from complement to substitute. Wireless competitors cannot keep paying above cost for interconnection. If they do, they will hit a wall -- quickly -- when they try to drop prices.

Competition. By that I mean, how to prepare for it. There are tools all telecom competitors need to succeed: number portability, for example, and the flexibility to use spectrum to meet changing market demands.

Competitors must equip themselves right from the beginning with these tools.

Another competitive imperative is to make sure that we have a technology-neutral allocation of network resources. This means avoiding numbering exhaustion, avoiding overlay plans that aren't competitively neutral, and making sure that unbundled network elements are available at reasonable prices.

Tower siting. Of course, wireless is a great advantage in a place like Bangladesh. You can put up towers anywhere. You don't face competitors with millions of miles of copper wire already in place. Here, you face the power of entrenched incumbents. Any land use board who hears testimony about how ugly towers are can delay you, then extend the delay until your opportunity disappears.

I am optimistic that this problem can be solved. But the way to solve it is not to insist that the heavy hand of the federal government roll over local governments. I have no intention of turning the FCC into a national zoning board; that is not in my interests or yours.

We need to work together to find solutions to this problem that all parties can live with. Colocation solutions. Model local ordinances. I stand ready to help, but the industry must show a commitment to work with local governments to find creative solutions.

And there are other areas in which we all must work as partners not only for the well being of this industry but for the well being of society.

You know, a Gold's Gym just opened in my neighborhood. And if you go in there, you have these marketing people in their purple shirts, showing you the stationary bikes and weight rooms and aerobics classes and then they whip out a rate card with all the special privileges, so instead of having dinner you'll go to the club and ride a bike until you're too tired to move.

When you join a club, you're entitled to all the benefits that the other members enjoy.

Wireless is a full-fledged member of the telecom club. You are entitled to all the benefits of the other members. But it also means responsibilities. Your industry knows about the responsibility of providing universal service. The CTIA Foundation pioneered innovative ways to bring wireless technology to schools. And through the Safe Schools and Crime Watch programs, you continue to use your technology to help make America's schools and neighborhoods safer places.

But universal service also means contributing to the nation's universal service fund. There's nothing new about this obligation. It's the law, it's the right thing to do, and it's good business. The telecommunications industry has had the job of delivering universal service to Americans virtually since the development of the telephone. At first, this meant a phone in the corner store, then a phone in every home, and now the law says it means service to schools, libraries and rural health clinics. As rates for interconnection decline, wireless providers should bear their fair share of universal service costs. And they should do so directly. That's what the law requires.

E-911 is another responsibility that comes with membership in the club. If you market yourself as a safety service, consumers will take you at your word. Sure you face different technical challenges than the wireline companies. But 911 calls must go through, and you should develop callback and location capability. We have already seen some encouraging trials of location technology. Although the Commission's location requirement will not go into effect until 2001, I hope you will meet this requirement earlier.

The American people have come to expect that their telecommunications networks -- all of them -- will help get them emergency assistance when they need it. They are outraged every time they learn that someone was injured or died because their wireless phone didn't work with the 911 system. It may be hard to do, but it is about delivering customers the service they expect. It's not an unfunded mandate -- it's serving the customer. Providing E911 services will protect your customers and move us closer to the day when consumers view wireless as a complete substitute for wireline.

Membership in the club also means service to the disabled community. Two years ago Congress required that you provide them access. How do we do it? The best way is to consider access issues at the front end -- during the development and design process. It is an area where the truly innovative can help the disabled -- and create a lucrative market.

After all, look at other products first designed as "disability solutions": vibrating pagers, ball mouses, speaker phones. They are on the mass market now.

Speaker phones, Motorola's new talking pager, and PacBell's priority ringing service can be used by everybody. At the Winter Olympics, Japan's NTT is testing another product with great potential for more than the disabled. It's a mobile phone that can be worn like a watch, weighs less than two ounces and uses voice-recognition, not a keyboard.

Obviously, these are things that you do to serve the public interest. It is the job of government to be the guardian of the public interest. But I believe that the public interest will be served by a strong, competitive wireless industry. I have no interest in seeing wireless companies look for opportunity in Bangladesh instead of Baltimore.

Yours is an industry that still holds great risk, but also holds the promise of great rewards and growth and opportunity.

As wireless networks join the telecom club, they can break down local exchange bottlenecks and create a seamless national wireless network. We at the FCC want to see this vision unfold. We believe shaping our future will be the work of those who do not fear change but embrace it. So let us work together. Let us work candidly and as partners.

For we are embarking on a journey that has many pathways to reward, whether we are walking along Peachtree Street in Atlanta or on a dirt road in a tiny village in Bangladesh.

- FCC -