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William E. Kennard
Federal Communications Commission
National Association of Broadcasters
Las Vegas, Nevada
April 7, 1998

(As Prepared for Delivery)

Around 15 years ago, a very dynamic young woman bought a small AM radio station in Washington, D.C., because she believed that Washington, D.C., the Nation's Capital, should have an outlet on the airwaves devoted to news and information about the African- American community. So she decided to use a talk show format.

This was new for the station. It had played soul ever since Sam Cooke was on the charts. Her bankers didn't like the idea. They said, "Talk is not cheap. Talk is expensive. Playing records is cheap. Go back to music -- or give up the station."

But she stuck to talk. To make ends meet, she moved into the station, sleeping in a sleeping bag in her office. She took some courses on budgeting. She worked hard. And within a year the station was paying its way.

Now WOL is one of eight stations Cathy Hughes owns. The programs she airs are controversial. They have edge. They are provocative.

And she is hugely successful.

But I don't start with Cathy Hughes' story because she is so successful.

I start with Cathy because her story is about the heart and soul of your industry. Finding the pulse of the community. Broadcasting the news and information that the community wants and needs. This is what makes broadcasting different from every other mass medium today. And this is what will keep broadcasting vibrant into the future.

Today I want to talk about that future and about the transforming events taking place.

I want to talk about change and risk and opportunity.

What government's role should be.

What broadcasters' role should be.

And what we can do together.

This is not the first time I've talked about these matters at an NAB Convention. Of course, this is my first NAB Convention as FCC Chairman, but in many ways, to come to an NAB Convention is like coming home for me. It's where I started as a young lawyer. My first job out of law school was with the NAB.

In those days, I would travel around the country, visiting state broadcast conventions and meeting broadcasters.

It was a great job. I loved the wonderful mix of people who built broadcast businesses and who were a part of their communities. I loved the entrepreneurial spirit of this industry.

And I remember very well what we talked about back then.

Because, remember, at that point, broadcast TV was the main game in town. Broadcasters had 95% of the audience. But there was plenty of anxiety about the future.

Would cable erode the base? Would DBS emerge from the drawing boards and become a potent competitor? And how would broadcasting survive in a multichannel world?

Well, it's 15 years later. And guess what?

We do have a new world. Cable is a formidable competitor. We have three DBS providers.

But broadcasting is as vibrant, and successful and profitable as ever. Why? Because Americans continue to turn to broadcasting as their principal source of local news and information and high quality television programming. That's what has kept your industry strong.

And that's what can continue to keep it strong.

And the conversion to digital can make it even stronger.

Yesterday as I toured the Convention floor I started to imagine myself a few years from now, sitting in my living room in front of a big screen digital TV. At my fingertips are hundreds of streams of entertainment and information.

Infinite variety. Infinite capacity. At my fingertips.

This change we see coming has not appeared out of the blue. It is a logical continuum. I remember growing up with three channels that all signed off with the Star Spangled Banner at midnight. Later there was a steady addition of channels -- first 5, then 7, then cable with 12 channels, then 36, and up to 150. And more recently the development of remote controls and programmable VCRs allows people to surf and switch at will.

The only thing constant about this is change -- change that accelerates with each passing day.

Now, no one has figured out what the digital future will look like --- exactly. Just wander the Convention floor like I did yesterday and every person you talk to has a slightly different vision of that future. About the only certainty is that the future will be vastly different from today. And that change will come quickly.

So while I am not going to stand here and tell you how to run your businesses in the face of this change, I will tell you this. Those of you who embrace change will be the ones who lead us into the next century. And they will be the pioneers.

Change. Risk. Opportunity.

So what is the role of government in the digital era?

When I became Chairman, I outlined three principles to guide me. I call them the three C's -- Competition, Community and Common Sense. I'd like to talk about how these principles apply as we move together into the digital future.

Competition. Community. Common Sense.

First -- Competition

Competition is the first principle because competition is the engine that drives your business and our economy. The conversion to digital should be, first and foremost, about competition. Digital gives you new technology to offer new products. New ways of competing. I believe that the digital conversion will be about more than "pretty pictures." It will be broadcasters' entree into the world of broadband access to the home.

For consumers, competition means more choices.

That's why -- as Senator McCain said here on Sunday -- it's important to ensure that consumers have ways to exercise choice in a digital world.

What does that mean? It means that the Commission needs to guard against any gatekeeper who might hinder or distort the growth of the digital marketplace. As you make your choices as to content and format, others, including your competitors, are also making choices. They are making choices about set top boxes, TV sets, electronic program guides, and pathways to the Internet. For the most part, these decisions will be made in the marketplace. But I believe that no single competitor should have the power to unilaterally dictate the choices that you or I or any consumer makes.

We will examine these issues as we consider the question of "must carry" in the digital world. But understanding competition in the digital era goes beyond must carry. It's also about equipment -- equipment compatibility and the availability of equipment for consumers. No consumer wants to buy five set top boxes, six remotes and a six thousand dollar television set that doesn't work with cable.

The digital world should expand options for viewers, not limit them. It should enhance their choice of products and programming, not stifle it. I've been learning a lot about various plans for the development of set top boxes. I am pleased to hear reports that the cable industry is working on an open set top box. This is encouraging.

But, many questions remain unanswered:

How do we prevent bottlenecks from developing?

How do we ensure a quick and seamless transition for viewers?

What is the role of government in sorting out these equipment compatibility issues that must ultimately be driven by marketplace forces?

I don't know the answers to these questions -- yet. But I do know they are the right questions. And I know that broadcasters need to be involved in helping us work through these questions because it's your digital future that is at stake here.

Now, I want to talk about Community.

Cathy Hughes didn't start a talk radio show in Washington, D.C., because she thought that it would make lots of money. She saw a need in her community and she devoted all of her money and energy to serving it. Things worked out. The point is that she saw broadcasting as a way to serve her community.

As Chairman of the FCC, I pledge to do all I can to make sure that the revolution in technology, that is so changing the communications marketplace, serves to help us build better communities. Broadcasters know about community. Most of you serve your communities in many valuable ways -- every day.

I learned this during my years at the NAB and later as a lawyer representing broadcasters. Eddie, I have to tell you, I would believe this without a study. But, while most broadcasters work hard to serve their communities, not all broadcasters do. You know this. You know this because you compete against each other and you know that some broadcasters take their public interest obligations seriously. Others don't.

And I believe that those who don't demean the public interest.

That is why I am committed to having a dialogue with you and the American people on the public interest standard in the digital era. I believe that as we progress to digital, now is an appropriate time to pause and define a standard that has meaning for all broadcasters, not just those who elect to serve the public interest. I plan an inquiry on the public interest that will explore how we can ensure that all broadcasters give meaning to the public interest standard. And that inquiry should explore what the public expects from broadcasters and how we can improve the political dialogue on our airwaves and how we can improve our political broadcasting rules so they work better for the public, candidates and broadcasters. I hope that I can count on you to participate in this process, so that this isn't a proceeding that we do to the broadcast industry, but one that we do with the broadcast industry.

And the public interest also means that you must use the spectrum that Congress gave you to convert to digital TV.

You have to use it.

The rules we adopted in April required deadlines for various markets -- voluntary by November, compulsory by May and beyond.

We'll hold to those deadlines. I believe that's in the public interest. I also know that for some of you that won't be easy. And I stand ready to work with those of you who face unique tower siting problems or other obstacles. But the bottom line is: we have to get this spectrum working for the American public.

I also believe that it is in your interest. I believe that the excitement about digital out there on the Convention floor demonstrates that.

The third principle I want to talk about is Common Sense. Common sense in the way that the FCC does its business.

I spent a dozen years as a lawyer representing broadcasters before the FCC. I found it frustrating sometimes. So did my clients.

Sometimes it took too long to get a minor modification through the FCC. A client wants to move a transmitter three-quarters of a mile and it would take months. You'd file the application, get the FAA approvals, and it would sit -- unopposed.

Being slow to respond is no minor issue. Service delayed is service denied.

We've begun to change that. And the changes we're making will not only benefit digital television licensees, they'll benefit all broadcasters. Last week, the Commission proposed new rules that will streamline many of the applications that must be filed. And at the same time, we adopted rules for electronic filing of applications.

Maybe it doesn't seem like a big thing to reduce a construction permit from 16 pages to five, or to go from requiring 14 exhibits to two or three.

As a lawyer -- a recovering lawyer, my wife says -- who spent thousands of hours filing those applications, it seems like a big thing to me.

Soon you'll see filing rules that are more user-friendly. You'll also see us convert to electronic filing. Once that's in place it will be much easier to interact with the Commission and we'll be granting applications a lot more quickly.

This is not an idle exercise in bureaucratic retooling. I hope it will be a fundamental shift in the way that we do business.

My experience is that most of the time broadcasters file their applications in good faith. They play by the rules. So I'd rather use the old maxim of the Cold War: trust, but verify.

In this new era, the Commission will have to enforce its rules vigorously when they are violated. And we'll do random audits to determine if our rules are being violated. Vigorous enforcement goes hand-in-hand with a shift towards certification. Trust, but verify. This is common sense.

Your opportunity as an industry should always derive from what you do in the marketplace, not at the FCC. That's the last issue I want to talk with you about today. Opportunity.

I'm concerned that as the industry consolidates, as we have more and more stations in fewer and fewer hands, diversity of viewpoint will be hampered and opportunities for new entrants will be further reduced.

And that's why I started today by talking about Cathy Hughes.

She provides a forum for the myriad voices that make up a complex community like Washington. And broadcasting needs to better reflect the mosaic of our country.

I have thought about this for a very long time -- indeed, my entire career. And, the more I think about this, the more I find myself committed to promoting the vibrancy that comes with diversely owned media outlets. And I am increasingly concerned that at a time when our country is becoming ever more pluralistic, the media is becoming less so.

I was dismayed to see that minority broadcast ownership was a mere 3.1% in 1996. This year that's dropped to 2.8%. I am committed to reversing that trend during my chairmanship.

Now I know there are those who question the connection between ownership and content. Some say that economics drives programming, and so long as broadcasters hire local managers, stations will retain their link to the community.

But my experience teaches me otherwise. Economics drives programming formats, but when it comes to the issues of the day, the person who owns the station has the ultimate power to shape public opinion.

The population experts tell us that by the year 2050 the United States will be virtually half African-American, Hispanic and Asian.

Any industry that is not open to this burgeoning part of America will have a difficult time staying on top.

And so I come to you today with a challenge -- a challenge to work with me to realize the potential of your industry and to extend that potential to all Americans. I challenge each of you to come to me over the next 60 days with your best ideas to promote ownership, management and employment for minorities and women within your industry. Let's work together on this.

Broadcasters have risen to this challenge before. In 1978, the NAB helped to create the tax certificate policy. And I know that many of you have worked to create opportunities in your communities. I want to work with you and the NAB to come up with new ideas to promote opportunity.

Plainly, we need to confront the critical issue of access to capital. And, as I've said before, we need to confront the critical issue of training.

This is a roomful of successful broadcasters. Many of you had mentors and coaches and role models along your road to success. I know that I did -- people like Erwin Krasnow, Ken Elkins and Don Thurston. These people made a real difference in my life. How can we do the same for those on the outside of this industry who want to get in?

If we find a way, we will make a difference in your industry. I guarantee it.

Everybody has a role to play in this.

You know, there's a story you hear in Washington about Bill Bradley, in the days after he was first elected Senator.

He'd come to an event -- like this one. And he was sitting up at the dais when a waiter came by and put a pat of butter on his plate.

Senator Bradley said, "Could I have another pat of butter?"

The waiter said, "One pat per person."

The moderator heard this exchange. He was really embarrassed. He ran over to the waiter and took him aside whispering, "Perhaps you don't know who this is. It's Bill Bradley. Rhodes Scholar. All American from Princeton. All-pro with the Knicks. Senator from New Jersey. Might be President some day!"

The waiter said, "I guess you don't know who I am."

"I guess I don't. Who are you?"

"I'm the guy who controls the butter!"

In Washington, you soon learn that everybody controls something.

That's why you rarely accomplish change alone.

You do it as partners.

Over the last 50 years, government and the broadcast industry have worked together. Not perfectly. Not all the time. But usually we worked things out.

The result has been a vastly enriched cultural life for Americans.

My hope is we can work together as we face the changes of the decade to come.

Whether something as technical as a set top box or as profound as the demographic changes transforming our Nation.

And when we do, we will look back on these days the way I look back on my early days at the NAB.

A time when we saw the changes ahead and found opportunity.

Thank you.