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Remarks of William E. Kennard
Federal Communications Commission
Networking '98
April 16, 1998
Washington, D.C.

(as prepared for delivery)

Good Morning. Thank you for the invitation to be here today to address the Educom Conference. This group remains on the cutting edge in bringing technology to America's colleges and universities.

Standing before you today reminds me of my days at Stanford. I'll never forget the time two of my buddies decided to drive all the way to Los Angeles for a long weekend. They had an exam on Monday morning and they fully intended to get back in time. But they had a little too much fun in L.A. and didn't get back until Monday afternoon, too late for the exam. So they slinked into the professor's office and one of them told a little fib. He said they had been on their way to class to take the exam but had gotten a flat tire and that's why they were late. They begged the professor for a chance to take the exam. To their surprise, the professor seemed rather accommodating. "A flat tire, eh? OK, you can take the test." My friends were amazed that the professor had fallen for the flat tire story. And so after putting each of the students in a separate classroom, the professor gave them an exam that consisted of a very simple question: which tire?

It truly is an honor to be the Chairman of the Federal Communications Commission at such an interesting and challenging time in the communications industry. Every FCC Chairman says how interesting times are, I know, but I do believe this is a particularly challenging time to be Chairman of the Federal Communications Commission. Having been a communications lawyer for over 15 years, there is something special about these times.

Technological changes continue to revolutionize telecommunications. The digitization of communications is breaking down barriers among communications services, and giving providers a wider array of options of delivering services to consumers. And competition, as it comes slowly but surely to monopoly markets and continues to grow others, will be the gasoline that fuels this engine of tremendous technological growth.

But I know that I'm preaching to the choir here. From the Internet to digital cable to digital television, you know that all communications are becoming bits. Bits that can be voice, video, audio, data or more. Bits that can be massaged, processed, and manipulated to allow telephone calls to begin in English and end in Spanish. Bits that can revolutionize the way our children learn in school, in libraries after school, and at home.

But those bits do little good if they can't reach us. So as communications become bits, an important focus of communications policy must be to ensure that our country has the bandwidth to transport the bits.

I believe that bandwidth will be like computing power -- you can never have too much of it. And each of our communications mediums -- the telephone network, the cable network, terrestrial and satellite wireless networks, and television and radio broadcast stations -- are increasingly going to become different high speed delivery methods for the bits to travel our country.

This is a profound challenge for the FCC. And a profound opportunity.

To step up to this opportunity, we must keep in mind, as the saying goes, "to govern is to choose." And in the area of telecommunications policy, the choices can seem bewilderingly complicated, as they are lobbied in technological detail with billions of dollars at stake.

The key to success will be to separate the false choices from the hard choices, and not to lose sight of our bottom line. The false choices are those that the opponents of change use to try to distract us from moving forward. The hard choices are those that involve the truly difficult issues on which reasonable, well-intentioned people can disagree. The bottom line is that we must have the courage of our convictions to find ways to facilitate the deployment of new technologies and to ensure that these technologies are available to everyone -- all Americans. Especially to the nearly 86% of students from economically disadvantaged homes who don't have access to advanced communications technology at home, and who won't be able to compete with the nearly identical percentage of students from affluent homes who do.

A false choice is the notion that policy-makers have to choose between fostering competition or fostering innovation. This is also sometimes packaged as "just protect my monopoly, and I'll give you innovation." In fact, this is exactly wrong. It is competition that spurs innovation as firms constantly seek to innovate in order to gain an advantage in the marketplace.

That's not to say that getting there will be easy. There are many hard choices before us in this area. Most will come as we make decisions about the intersection of old technologies and new technologies.

The bottom line for me, however, is that the best way to ensure America has sufficient bandwidth to meet the growing demand from new users, new uses, and new applications is to harness the competitive engine that has already served us so well in this area. The best way to ensure more bandwidth is to encourage local competition, by having as many providers -- new players as well as incumbents -- competing to deploy faster access networks. They should compete with their technologies as well as their services and prices. And we in government, whether at the FCC or at state commissions, should examine our rules to make sure that we're not standing in the way of new investment in higher bandwidth networks.

You clearly understand the importance of increasing bandwidth and making it widely available. Your institutions represent some of the largest users -- and creators -- of high bandwidth applications. America's colleges led the way in developing and using the Internet. And now you are at the forefront of creating the demand for and developing Internet 2.

Your students and faculty benefit from easy access to high-bandwidth networks linking them together on campus and off, and to the rest of the world. But the benefits of bandwidth can't stop with your students and faculty. The benefits of bandwidth can't stop at the edges of your campus. Unlike 10 years ago, when the Internet was primarily a research network connecting islands of university and government computer networks, today the Net is an important tool for commerce, entertainment and, most importantly, learning, for all Americans.

Your next generation of students is in primary and secondary schools today. These students need access to the high-bandwidth networks that you and your college students have come to rely upon over the last decade. Today's school children and their teachers and parents need access to the learning tools that you take for granted at colleges and universities today.

A bi-partisan majority in Congress recognized this when it updated the concept of universal service for a competitive marketplace and an information age. It recommitted our nation to providing affordable telephone service to rural and high cost areas in the country and directed for the first time that universal service be extended to provide advanced telecommunications to schools and libraries.

Whether it's serving the farm laborer in Mississippi, the ranchhand in Wyoming, the poor family in Indiana, the community library in rural Arizona, the rural health care clinic in Appalachia, or the school in inner-city Atlanta -- I am committed to ensuring that each and every aspect of universal service is implemented to the full extent of the Act. It's the law. And, it's the right thing to do.

With respect to schools and libraries, we are implementing Congress's vision as well. The National Governors Association said it best. In February it sent a letter to Senators Lott and Daschle, and Representatives Gingrich and Gephardt, where the governors commended the House and Senate leadership and members of Congress for establishing the discount for schools and libraries. The Nation's governors urged Congress to "maintain the integrity of the program as contained in the original Act, including providing adequate funding for the first year of the program and thereafter."

Now Congress didn't give us specific guidance about how it wanted this job accomplished. It did not give the FCC a detailed blueprint on how to implement a funding mechanism for schools, libraries, and rural health care clinics. And while we cannot be certain exactly what Congress envisioned, in my six months as Chairman of the FCC, it has become very clear to me what Congress did not intend. Congress did not want local and long distance rates going up. Congress did not want the rural and poorest schools to be left out or left behind. Congress did not want consumer confusion about their telephone bills. Congress did not want a big government bureaucracy to administer the universal service program. And Congress did not want the schools and library discount mechanismto undermine the support that ensures that telephone service in high cost areas is affordable.

Very simply, we can and wewill have a program that fulfills Congress's vision. I am committed to making that happen. Let me address each of these concerns.

1) Congress did not want local and long distance rates going up -- nor did it want customer confusion about telephone bills.

This point is crucial: the introduction of the new universal service support mechanisms for schools, libraries, rural health care providers, and high cost areas cannot and will not force local telephone companies and long distance companies to make across-the-board rate hikes for local and toll services. But it is another false choice to say that we must either increase rates or have no changes in universal service. Our communications sector enjoys tremendous growth and ever-increasing productivity. We can both support the universal service system our country needs, and continue the historic downward trend of overall telecommunications rates.

And going forward, I am committed to ensuring that we implement universal service in a way that does not increase local or long distance rates overall. The Commission should not fund universal service at a level that is more than what we need. Which is to say, funding should not exceed demand. Likewise, the Commission should not fund universal service at a level that is more than we can afford.

The variable in all this, frankly, is demand. The initial window in which schools and libraries could apply for universal service support just closed. We should know in the next two weeks what the total demand is. And then the Commission can do what it takes -- and we will do what it takes -- to make sure that universal support does not end up increasing everyone's phone bill.

But there are also limits to what the Commission can do, particularly in largely deregulated markets such as long distance. We have not raised, and we will not raise, long distance companies' overall costs of doing business. New universal service contributions have been more than offset by other cost reductions. But, in a deregulated business, the competing firms determine the rates that they charge for the services they offer. And the way they charge for their services varies.

Which brings me to consumer confusion. In this instance, some carriers have introduced new charges on their bills that have produced widespread consumer confusion. While this does not mean that rates went up, I am troubled by the complaints the FCC has received about consumer confusion. With all these changes, it is important that carriers not just tell half the truth, but the full truth -- cost decreases as well as cost increases. And carriers should not be precluded from doing so simply because other carriers perform their billing services. Consumers must be well-informed in order to reap the benefits that a competitive market offers. The National Association of Regulatory Utility Commissioners expressed similar concerns about this problem in a resolution about carrier billing practices that was passed at the recent NARUC meeting in Washington. In light of these concerns, I have asked the FCC's Common Carrier Bureau to gather information about industry billing practices so that the Commission can consider whether the industry needs to undertake consumer education initiatives.

2) Congress did not want rural and poor schools to be left out or left behind.

I am absolutely committed to ensuring that schools in rural areas and schools in the poorest school districts are able to take full advantage of the benefits provided by the universal service support mechanism for schools and libraries. The discount must -- let me repeat -- must -- go first and foremost to those places where it is most desperately needed. If there is more demand for discounts than we can afford, we must make sure that the poor and rural schools come first. This is something I am not willing to compromise on. Not now. Not ever.

3) Congress did not want a big government bureaucracy to administer the universal service program.

And we don't have one. You know it's as easy to make jokes about bureaucracy in government as it is to make jokes about lawyers. Believe me, I hear both kinds. But this is no joke: the Schools and Libraries Corporation has 13 employees. That's 13 employees who have coordinated the processing of over 45,000 applications for the universal service discount to date. I am so proud of their accomplishments. Because of the hard work of a small but diligent staff, the interest and enthusiasm about the Snowe-Rockefeller-Exon-Kerrey provision has been overwhelming. Everywhere I go, principals, teachers, and parents tell me how excited they are to take advantage of the opportunity afforded them by Congress.

Now recently some in Congress have asked that we reorganize the administrative structure of the U.S. support mechanism for schools, libraries, and rural health care facilities. I intend, in the next few weeks, to propose ways to consolidate and streamline universal service administration further so that we have the most effective, efficient and accountable universal service administrative process possible. The American public deserves no less.

But there are a few bottom line principles we must follow here as well. I will not propose that we run all administrative tasks from the FCC. That is neither workable, nor good policy. I will not propose to throw out the baby with the bath water. We need to preserve the expertise and systems that have already been built to deliver universal service. And any changes must be implemented in ways that do not disrupt the delivery of universal service to the country.

4) Congress did not want the schools and library program to undermine the support that ensures that telephone service in high cost areas is affordable.

It won't. Plain and simple. Those who fear the changes that must take place to achieve Congress's universal service mandate are trying to frame the debate around the false choice that we have to choose between providing connections to schools and libraries or continuing support to rural America. This is a classic example of the zero-sum thinking that will lead our country down a technological dead end.

Congress has directed us to fund service to rural America, while at the same time ensuring that schools, libraries, and rural health care providers have affordable access to advanced telecommunications. That's the law. It's our duty and I am committed to fulfilling it.

When I thought about these issues in preparing for this speech, I started to think about a bunch of sixth graders running around on a playground somewhere. A bunch of sixth graders that you folks might think of as the Class of 2008. And I thought about them in relation to an article in the newspaper the other day that said that after scrapping an affirmative action admissions program, the University of California will see a huge drop in the number of minorities in next year's entering class.

Now some commentators hailed it as an end of reverse-discrimination. They said the playing field was now level. But what does it mean to say we have a level playing field in college admissions, if we do not have a level playing field in the elementary and high schools that are trying to prepare kids for college?

How on earth can the inner city black child sitting in sixth grade math class today, who has only a 1 in 2 chance of having Internet and computer access in classs, hope to compete for a space in the Class of 2008 with the nearly 80% of students in schools in affluent areas who have computers?

The only answer is that we make sure that the universal service discount for schools and libraries reaches everyone. That's the bottom line. Those kids are the future of our nation. And it is on their behalf that I thank you for your support.